Clause 7.—(EXTENSION TO PURCHASE TAX OF PROVISIONAL COLLECTION OF TAXES ACT, 1913.) (Hansard, 28 May 1957)

§ Mr. Jay
This is a rather interesting Clause, upon which I think we ought to have some discussion and also an explanation from the Government. The Clause applies the Provisional Collection of Taxes Act, 1913, to Purchase Tax. That Act arose out of the prolonged struggles which Mr. David Lloyd George had with the reactionary and obstructionist Tory Party of those days. I understand that it lays down that if, at the end of the Budget debate, the House passes Resolutions altering the level of certain taxes, it shall be legal for the Government to impose those taxes in the interval between the passing of the Budget Resolutions and the granting of the Royal Assent to the Finance Bill—usually about the first week in August.
I think that many hon. Members are wondering why it is necessary to apply this Act to Purchase Tax at this late date. Has it not been legal up to now for Governments to impose Purchase Tax changes before the granting of the Royal Assent to Finance Bills? If it is legal, why must we have this Clause in 1957? I should have thought that if a respectable married couple, who had been living as man and wife for many years, suddenly announced that they proposed to go through the marriage ceremony, it might spread a certain amount of gossip and rumour in the neighbourhood.
Is the Financial Secretary telling us that the whole business has been illegal and illegitimate up to now? Was the Lord Privy Seal illegally imposing his increase in Purchase Tax after 26th October, 1955, when the Budget of that year was introduced? Have all Governments since April, 1940, been in this rather curious position? If not, why must we have the Clause?
I am the more puzzled because it was the late Sir John Simon—a very eminent lawyer—who first introduced Purchase Tax in April, 1940, in a Government of 345 Conservatives and Liberals. No members of the Labour Party helped to introduce Purchase Tax. Presumably Sir John Simon, as Chancellor of the Exchequer, took the view that it was legal and that there was no need to have this Clause relating to the Provisional Collection of Taxes Act, 1913, in the Finance Bill which introduced Purchase Tax. Will the Financial Secretary tell us why we have to make an honest man or woman of Purchase Tax at this late stage? Quite apart from anything else, has the whole business been illegal for all the years since 1940?

§ Mr. Powell
As the right hon. Gentleman has pointed out, since the Provisional Collection of Taxes Act applies to Income Tax and duties of Customs and Excise it does not apply to Purchase Tax, which is not technically a duty of Customs and Excise. The result is that there is no legal authority for a change in rates of Purchase Tax until a Finance Bill becomes law. That has been the case since 1940 until the present day. It has not had a great practical effect, because Purchase Tax is normally collected quarterly and, therefore, before the additional or the varied sums became due in the ordinary course the authority of the Act upon the Statute Book has normally been available.
Since that legal authority has been given as from Budget date—or whatever date is in the Bill—by the fact of the Bill reaching the Statute Book, the payments which have been made in advance have, in fact, been legalised by the Bill becoming law. I think that hon. Members on both sides of the Committee will agree, however, that it is undesirable that that procedure should continue, even though it has little practical effect. It might have a practical effect in cases where it is desirable to collect Purchase Tax monthly, and where it might be difficult, therefore, to prosecute in the event of default. So, both for practical reasons of that kind, and because it is undesirable that taxes should be collected at a different level from that provided by law in anticipation of lawful authority, I suggest that the Committee should agree to the addition of this Clause to the Bill.

§ Mr. Eric Fletcher (Islington, East)
We have had a most extraordinary statement from the Financial Secretary, and we 346 shall require something far more convincing from the Treasury Bench before we accept the Clause. I had hoped that we might have the assistance of the Attorney-General or the Solicitor-General on this subject. Far from that being the case, the hon. Gentleman has sought to belittle this Clause. He knows that it raises a serious constitutional principle. I was amazed to find that this apparently innocuous Clause was slipped into the Finance Bill without a single word of explanation from the Minister during his Second Reading speech. Had it not been for the probing of my right hon. Friend the Member for Battersea, North (Mr. Jay) we should not have had even the lame explanation which we have heard this evening.
This matter arose and produced a great Parliamentary and constitutional storm in 1913. The Minister knows perfectly well that the Provisional Collection of Taxes Act, 1913, took a long time to pass through this House. The difficulty arose because of the courageous action of Mr. Gibson Bowles in challenging the conduct of the Crown in raising taxes without the authority of Parliament. Acting in succession to John Hampden, Mr. Gibson Bowles challenged the practice which had been going on for a long time. He said that neither a Resolution of the Committee of Ways and Means nor a Resolution of this House gave the Crown any power to raise taxes until Parliament had enacted that taxation, although it had been the practice and usage for seventy or eighty years to collect taxes on the authority of a Resolution without waiting for the action of Parliament.
When he challenged the legality of the position in the law courts Mr. Gibson Bowles was upheld by Mr. Justice Parker. Therefore, it is no excuse for the Minister to attempt to justify the Clause by saying that the practice has gone on since 1940. That will not do at all. What happened in 1913, which resulted in the Act passed in that year, was that Mr. Justice Parker said that the action which had hitherto taken place was an infringement of the Bill of Rights. He said that the Bill of Rights was still good law and provided that Parliament alone—

§ Mr. Ede (South Shields)
Tell the Attorney-General that it is still good law.

§ Mr. Fletcher
—must authorise the collection of taxes. I have no doubt 347 that we shall have the Attorney-General present before long.
Giving judgment, Mr. Justice Parker said: The Bill of Rights remains unrepealed and no practice or custom, however prolonged or however acquiesced in on the part of the subject, can be relied on by the Crown as justifying any infringement of its provisions. Mr. Justice Parker pointed out that the Parliamentary practice which enables us to have these debates on the Budget, which has enshrined the freedom of speech which ensures that a Finance Bill is not passed into law until we have had the opportunities that we cherish so much of criticising every sentence in it, is designed for the protection of the subject. It would, therefore, be a very odd thing if it could be relied on as justifying the Crown in levying taxation merely because Resolutions have to be passed as a preliminary to a Finance Bill. That was the situation which produced the stormy scenes in this House in 1913.
It is true that Parliament passed the Provisional Collection of Taxes Act, which enabled the Crown to act on a Resolution of the House, but be it noted that the Act was specifically limited to Income Tax and Customs and Excise duties. A very stormy debate took place on the very question which the Financial Secretary is now asking us to consider, whether the Act of 1913 should or should not be extended to other taxes. The position today, as it has been since 1913, is that the Act is deliberately limited to Income Tax and to Customs and Excise duties. It does not apply, for example, to Surtax. It never has done. It does not apply to Profits Tax. It never has done. It does not apply to taxes like the Entertainments Duty or to Purchase Tax, and there is very good reason why it should not.

§ Mr. Roy Jenkins
What was the position before 1913? What was the position in 1909, when there was a year without a Finance Bill?

§ Mr. Fletcher
If my hon. Friend will read in HANSARD, Vol. II, the debate which took place in 1913, he will see that before 1913 the irregular practice had grown up whereby the Crown, without challenge, collected taxes on the authority of a Resolution. His Majesty's judges 348 held that that was quite wrong and was contrary to the Bill of Rights.
The question to which we have to address our minds today is the very one which exercised this House in 1913, namely, whether the Act permitting the Crown to act on the authority of a Resolution should be extended from the Income Tax and Customs and Excise duties to other taxes or whether it should not. Parliament, in 1913, after protracted debates, and for very good reasons which were valid then and are equally valid today, decided quite deliberately that that permission should be confined to the Income Tax and Customs and Excise duties, and should not be extended to any other taxes. What the Financial Secretary is inviting us to do, almost by a side wind, by a very subtle introduction, sub silentio—

§ Mr. Ede
Sub rosa.

§ Mr. Fletcher
—is to reverse the historical decision taken in 1913. The reasons which prompted that decision in 1913 are precisely the same today as they were then.
The result of Mr. Gibson Bowles' action was that the then Chancellor of the Exchequer, Mr. Lloyd George, first introduced certain Resolutions on 7th April, 1913, intending them to be the basis for the provisional collection of taxes. At the outset, Mr. Lloyd George intended that the Act which he was inviting Parliament to pass should apply to all taxes: new taxes, revisions of taxation, repeals, variations of existing taxes, renewals, and so forth. He had not got very far in his argument on that subject when he found that there was a great deal of opposition from his own supporters, from Members with such famous names as Mr. Hayes Fisher, Mr. Cassel, and others. They pointed out that what might be justified in the case of Income Tax and Customs duties ought not to be applied to new taxes. Otherwise the Crown would be able to introduce all kinds of new taxes and to give effect to them without Parliament having an opportunity of debating them. That was contrary to everything laid down since the Bill of Rights.
It is rather curious that although Mr. Lloyd George, the Liberal Chancellor of the Exchequer of those days, found 349 vehement protests about his actions by his Liberal supporters, Mr. Austen Chamberlain, as he then was, speaking for the Conservative Party, thought that it might not be at all a bad idea that the Resolutions should apply to new taxes. Mr. Austen Chamberlain told Mr. Lloyd George that he hoped that Mr. Lloyd George would not accept the Amendments of his Liberal supporters, but would permit the legislation then proposed to apply to new taxes. Then the debate continued, and hon. Members who are interested in the historic debates of that year will find that important contributions were made by Sir Rufus Isaacs, Sir John Simon, Sir Alfred Cripps, Lord Hugh Cecil, Mr. Healy, Mr. Joynson-Hicks and others.
Eventually, after all the arguments had been weighed, Mr. Lloyd George, with his usual discretion and instinctive sense of the feelings of Parliament, gave way to the wishes of the House, and he said that he recognised that there was a difference between new taxes and variations of old ones. He said: I say there is a substantial difference… There is a great difference between imposing a new duty on a subject not considered dutiable in the past, and imposing a duty on something which has been, for fifty or a hundred years, recognised as fair matter for taxation.….—[OFFICIAL REPORT, 9th April. 1913; Vol II, c. 1258.] Therefore, the Act of 1913 was virtually confined to Income Tax and matters of Customs, and Section 3 of the Act specified that it should only apply in those cases. It is for that reason that until today no Minister on the Treasury Bench has dared to suggest to Parliament that it should be extended to any other taxes.
I think, as my right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out—and I think the Minister agreed with him—that never since Purchase Tax was first thought of until this day has anybody thought it right that the Act of 1913 should apply to it. This is not a case of trying to legalise something that has been accepted in the past. That is not the case at all; it never has been the law.
The Act of 1913 has never applied retrospectively to Purchase Tax. We shall have something to say about the retrospective operation of some sections of the Finance Bill later, and different considerations might well apply, but in this particu- 350 lar matter I am quite sure that I am speaking for a number of my hon. Friends who have followed this question when I say that it would be a departure from all constitutional precedent for that very unusual Act of 1913 to be invoked in this case.
One of the eminent spokesmen described the Act as one of the most revolutionary Measures he had ever heard of. That may have been an exaggeration, but it indicates the importance which was attached to it in those days. The Minister said that it had no practical consequence. He did not give a very coherent, and certainly no convincing, explanation why it is introduced now although it never has been introduced before. As my right hon. Friend said, if it has not been necessary in the past, why is it necessary now?

§ Mr. Powell
The 1913 Act was considered necessary to legalise a position which had gone on for much longer than twenty years.

§ Mr. Fletcher
It obviously was necessary because of the judgment of Mr. Justice Parker in the Gibson Bowles case, but there is no reason for extending it further. No practical difficulty should arise. Rates of Purchase Tax should not be increased without the authority of Parliament. It is a little significant that the Minister seeks to introduce this Clause in this particular year when, of course, it can have no adverse operation on the taxpayer because Purchase Tax is being reduced. Therefore, I thought, as my right hon. Friend said, that it would be quite wrong for us to pass over this Clause without indicating the very considerable and very important questions of constitutional history and Privilege which lay behind it.

§ Mr. Hale
I do not think that the House of Commons has for a very long time been presented with such a situation as that presented tonight. We have had, as my hon. Friend the Member for Islington, East (Mr. E. Fletcher) has said—and we are all grateful to him and to my right hon. Friend the Member for Battersea, North (Mr. Jay) for raising what is obviously a constitutional point of considerable importance—a Clause presented to the House without any explanation. It my right hon. Friend had not risen to his feet half an hour ago it might have passed 351 on the nod. It is a proposal to vary the provisions of a most important constitutional document of British history and a proposal to vary it substantially as an adjunct to the ordinary Finance Bill of the year.
This proposal is now presented to the Committee in the absence of the Attorney-General and the Solicitor-General. Both Law Officers of the Crown are absent and no explanation has been given to the Committee of their absence. No one has even thought fit to apologise in any way for their absence and, apparently, the Financial Secretary had no intention of making any explanation to the Committee at all until he was challenged and it was virtually demanded by my hon. Friend.
What is the explanation? It is that Her Majesty's advisers have been collecting money by false pretences from the public for about seventeen years. Her Majesty's varied advisers have been imposing illegal taxes and validating them retrospectively. We have collected taxes from the community which we had no right or power to impose for periods in respect of which there was no legislative sanction for them.
Having discovered this, the hon. Member said, "We did not think to make a statement to the House and say that we have been advised that we have been doing something illegal for seventeen years." Far from that, no information was given, and an attempt was made to slip it through on the sly, rather in the manner of the gentleman on the train doing the three card trick and slipping in the knave after the cards have been laid before the victim.

§ Mr. John Mackie (Galloway)
The queen.

§ Mr. Hale
I agree. It is "Find the lady." This is a department in which I do not claim to have the knowledge of hon. Members opposite and I would welcome their experience.

§ Mr. Ede
It is the dealer who is the knave in those cases.

§ Mr. Hale
Indeed, as my right hon. Friend says, there is a knave and there is a gentleman who thinks himself a joker and who ceases to joke shortly afterwards. If I went into the whole details 352 of this I might venture on the fringes of order, and I would not wish to do that.
So far as I know, the only explanation is that made by the Financial Secretary, in the absence of the Chancellor. This Government have never received any vote of confidence from the community. They were foisted on the country by the noble Marquess who has publicly acknowledged his mistake. It is perfectly clear now that he would pick the Lord Privy Seal if he had the chance. This Government ask the Committee, as an act of kindness and courtesy, to say, "Look here, boys, we realise that you are in a jam and we are anxious to support you and get you out of the difficulty."
The difficulty about the proposition is this: it is not a new problem. It was not a new problem in 1913, for it had been fairly well known since about 1842. The House began to collect Income Tax in 1842 by means of a Resolution. The point was taken and was raised, and in those days we had exactly what happens today; the Minister gets up and says, "We consulted the relevant authorities and we have taken the best advice we can." What is "the best advice we can," we have never been discourteous enough to particularise. In any event, we are assured, "This is all right."
This went on for some years until the Government got cold feet again, in 1876. in which year they passed the Customs Consolidation Act, which was intended at least to give some legislative sanction for the post-validation of Customs collection. My hon. Friend, who is an expert in this matter, modestly inquired, no doubt not seeking information but anxious to bring to light an important point—and it was an important point—what was the situation in 1909. The situation in 1909 was just what the Financial Secretary has now disclosed; Ministers have been obtaining money from the public by fraud for years.
It may well be that the fact that there was no Budget in 1909 meant that this was the first year in which Ministers had a clear conscience and were not liable for impeachment.

§ Mr. Ede
There was no Finance Act in 1909 because another place, anxious to commit suicide, threw Mr. Lloyd George's Budget out.

§ Mr. Hale
Yes, indeed. I personally think that that anxiety to commit suicide ought to have been encouraged. I do not want to develop that, although I am grateful to my right hon. Friend for that reminder.
This has been going on, with Ministers knowingly and criminally obtaining taxes without legislative sanction over a period of 115 years. From time to time their attention has been called to it. could well understand it if Ministers said, "In 1940 we were rather preoccupied with other matters; we regret this position and we have tried to put it right as soon as we can". But to come here in 1957 on the matter is a public scandal.
Some hon. Members may say that Labour Ministers did it as well, but it is fair to remember in mitigation that at least we were principally engaged in decreasing Purchase Tax, not increasing it, as Tory Ministers have been engaged in increasing it. In any event, it is never much use for people in the dock to say that other people ought to be in the dock with them or, if hon. Members like, that others are in the dock with them. Ministers having wantonly accepted the government of the country without a vote of confidence and having assumed the government of the country, they can hardly pass the blame for their present acts on to their predecessors.
The Provisional Collection of Taxes Act, 1913, was a Measure of very considerable complexity and difficulty. It is quite a short Measure, but it provided a wholly new system and a whole series of safeguards, in view of the criticism of the original Financial Resolution. The procedure in 1913 was, perhaps, a little different from ours.

§ Mr. Kershaw
On a point of order. Did you, a second ago, Mr. Hynd, hear Big Ben striking ten o'clock? Would you please say what the time is?

§ The Temporary Chairman (Mr. H. Hynd)
I understand that our clock is right and that Big Ben is wrong.

§ Mr. Hale
I can well understand the preoccupation of Big Ben, who has presided over these deliberations—or misdemeanours—all through these eighty years. If, in these circumstances, Big Ben has been preoccupied for a matter of ten minutes from performing its normal 354 duties, I am bound to say that I am not astonished and that I have more sympathy with the clock than with the Minister.
The Act of 1913 was an extremely delicate and difficult Act. Everyone realised that there was a problem—a problem which had been made more manifest through the case of Gibson Bowles v. the Bank of England, when it was decided, and decided in a way which the Government of the day and their advisers hardly thought fit to challenge by appeal to a higher court, that one may not pass a Resolution of the House of Commons for the collection of money and act upon that Resolution and collect money until one had full Parliamentary sanction.
We then had the elaborate provisions which have worked fairly well and which provide that the Resolution of the Committee of Ways and Means on the introduction of the Budget shall have effect, subject to a whole series of safeguards. One is the confirmation within four days and another the second step within ten days, and, finally, there is the passing of the whole Measure in the early part of the grouse and salmon season. That is why we have to discuss these matters late at night to get them to another place in time for the Bill to come back and receive its final sanction before the provisions of the Provisional Collection of Taxes Act have taken effect.
In relation to such matters as Income Tax, it may be that the situation has worked well and nobody would wish to disturb it. As the then Mr. Lloyd George pointed out in the course of his speech. Income Tax used to be collected on a triennial basis, being assessed on a three-year basis. Even in 1913 there was the option of being assessed on the average of three years, so that the necessity of immediate collection was not quite as urgent as it is now.
Then, however, we come to the practical difficulty. What the Minister is saying is that he or his predecessors have committed an accidental fraud upon the community; that unknowingly—ignorance of the law is no excuse, but it can be to some extent a mitigation—he has imposed taxes without legal sanction. Now, in the course of Clause 7, he is saying that he wishes to commit what is obviously a deliberate fraud upon the community, because he is asking that 355 these provisions shall apply to Purchase Tax.
The provision of the 1913 Act is that if the Government fail in their financial measures, if they do not obtain Parliamentary support and legislative sanction, if the Finance Bill is not passed or, indeed, if the particular proposal contained in any one Clause to which the Act relates is rejected, if the variation of tax is not approved or the new tax is not imposed, then the onus is upon the Government to repay the money.
How can Purchase Tax be repaid? Will the Economic Secretary apply his mind to this? I have a great respect for his ability and his integrity, although he has had to plead guilty to some offences today. If I buy a pair of shoes on 1st May or, perhaps, on 10th April, the day after the Purchase Tax on shoes has been increased, who will be able to say who I am or where I bought the shoes or what record will there be of the transaction on 31st August. How many retailers have a list of their cash customers?

§ Mr. Godfrey Nicholson (Farnham)
I must remind the hon. Member that the purchaser of a pair of shoes does not pay the Purchase Tax. It is the manufacturer who pays it.

§ Mr. Hale
He passes it on.

§ Mr. Nicholson
That is a different thing.

§ Mr. Hale
Let us examine the financial implications of this. I might go into a shop and ask for a pair of shoes. I do not know whether my figures are accurate. I do not recall the precise amount of tax. I cannot even be sure that the Purchase Tax is on shoes, but I think it is. Suppose that I go into a shop and buy goods which are subject to Purchase Tax. I might go in and buy what we were talking about just now—a Dishmaster—and I pay £132 for it. The Dishmaster people tell me that they could sell it to me for about £85 but for the wretched Chancellor, who has smacked about £45 tax on it. Who pays that?

§ Mr. Nicholson
The hon. Member does not pay the tax.

§ Mr. Hale
Of course I do. I pay £45 to the manufacturer, who pays it to the Government. Suppose that the Govern- 356 ment are defeated—heaven knows, they are in a shaky condition. There are three by-elections to be decided within a few days and anything might happen. It is all very well for hon. Members opposite to smile, but they have short memories. It was only a few months since they were declaring that Sir Anthony Eden would be Prime Minister for many years to come.
Governments have a somewhat uncertain tenure of office. Even this Government have already suffered one loss and have had the cessation of the support of some of their most intelligent stalwarts. I would have thought that men of great ability and certainly men of great integrity, men who know rather more about other things than about politics, have seceded from the Government.
10.15 p.m.
It really is nonsense to say that this cannot happen. Even those who are reluctantly following the Government at the moment are having a very uneasy time. We have seen wrestling with conscience going on almost in public and rather painfully during the last few months. The hon. and gallant Member for Down, South (Captain Orr) laughs, but Northern Ireland is, perhaps, not so active politically as some parts of England. [HON. MEMBERS: "Oh."] Well, I do not want to deny that there is political activity in Northern Ireland. Let me say at once that there may be in some senses more political activity in Northern Ireland than in England, but I would say that, perhaps, the reaction of the liberal-minded in Northern Ireland is not as apparent to the same extent as, perhaps, it is in some of our English constituencies. However, I may be wrong. I sometimes am.
What happens? I am waiting for the hon. Member for Farnham (Mr. Nicholson) to interrupt again, because he was the one who suggested that if we do not validiate the tax the Government send £45 back to the manufacturer. What does the manufacturer do with it? He puts it in his pocket. He has defrauded me of £45. It is out of my pocket; it has gone to the Government; it has gone back to the manufacturer: it never comes back to me. It is, of course, possible and even probable that the seller of the Dishmaster would know my name, 357 but the many sellers of the many other and various articles on which Purchase Tax is levied would not know my name if I were to buy any of them.
The whole proposal is frankly and obviously impossible, and, being impossible, it is dishonest. So we are in the situation that one of Her Majesty's advisers, and a respected adviser, makes this proposal. I say "respected adviser," for I certainly do not make any attack upon his very high character. It is one of the unfortunate consequences of being a member of a Tory Government that he gets placed in these fantastic dilemmas, through the operation of Toryism.
He comes along and says, "I have sinned. Will you say to me, 'Go thou, and sin no more'?" We say, "But your very proposal is rather a worse sin. It is impossible to give you Parliamentary absolution while you are contemplating even worse crimes in the immediate future." [Laughter.] But surely. I know that at this hour of the night, a quarter past ten by the clock in the Chamber, five minutes past ten by Big Ben, we sometimes tend to become a little less serious than we otherwise are, but the average person in Oldham or Bourne-mouth or wherever it may be wants to know, if he has paid what proves to be an illegal tax, what provision there is for repayment. What are the proposals of the Government to repay it? If the Government are not prepared to say that, it is impossible for any rational Committee to permit this proposal to go through.
I just do not see how it can be done. Under the provisions of the Provisional Collection of Taxes Act, 1913, there are at least three provisions— I think there are four, but there are certainly three—under which a Resolution of the Committee of Ways and Means, provisionally validated on Budget day, becomes inoperative and the money becomes repayable. It becomes inoperative if the Budget is not approved by the House within four days. It becomes inoperative if the Second Reading of the Bill does not take place within ten days. It becomes inoperative if the Third Reading does not take place—well, originally the date was fixed at 31st August, but I am not sure whether that date still stands.
In any event, the threat the Fairy Queen made to the Peers on behalf of Strephon 358 has rarely been implemented. [Interruption.] My right hon. Friend the Member for Battersea, North (Mr. Jay) does not seem to recall the reference. It is: You shall sit if he sees reason Through the grouse and salmon season. Peers shall teem in Christendom, And a duke's exalted station Be attainable by competitive examination. In view of recent events perhaps there ought to be some special provision for marquesses, and the Government have contemplated introducing a political test for marquesses, but no other proposals for reform of the Lords, or substantially altering the dates of sittings of the House, have been forthcoming.
So I ask the Financial Secretary or the Economic Secretary if I may use a mild vulgarism, to "come clean" and to let us know the magnitude of the errors which have been committed in the past.
Let us know the extent to which they have obtained money by false pretences from the community. Let us know, therefore, the extent of the defalcations which we are being asked to validate, and let the Minister tell us in detail what his proposals are for the repayment of a tax if the Budget is defeated. On this, I know that I can make an appeal for the first time in my life for co-operation through the usual channels, because it will be remembered that if the Government are defeated the repayment must be made by the Government who succeed them, and the responsibility quite possibly will fall upon my hon. Friend the Member for Huyton (Mr. H. Wilson), or any other of my right hon. Friends, to try to put right the mischief that will be caused if we unheedingly pass this Clause tonight.

§ Mr. Ede
I regret that the Financial Secretary did not rise after the speech of my hon. Friend the Member for Islington, East (Mr. E. Fletcher) and that of my hon. Friend the Member for Oldham. West (Mr. Hale), because this is a matter that cannot be allowed to rest with the explanation that has already been given.

§ Mr. Powell
I thought I saw the right hon. Gentleman rise.

§ Mr. Ede
I was waiting, and on these occasions one knows that if one waits too long the Chairman rises and puts the Question and then one is hindered by one's own modesty.
359 Who discovered this? Was it discovered in the Treasury? Was is discovered by the Law Officers? [HON. MEMBERS: "Where are they?"] One never knows. Flashes of genius come in the most unexpected places. Was it, and I am rather inclined to take that view myself, that a Parliamentary draftsman discovered it? I understand that it is a very technical point as to why Purchase Tax is not a tax under Customs and Excise, but apparently the Government have been advised now that it is not, and, therefore, the Provisional Collection of Taxes, 1913, does not apply to it. I hope that we can be told who discovered it, because I think that this person is worthy of recognition. As I wander about the place I see statues erected to people who by no means have reached this high level of Parliamentary rectitude.
It is a pity that, as we were to discuss what is purely a legal matter, none of the Law Officers has been present this evening to help us. I see that the Lord Advocate is within sight and is even within the Committee, though he is not in a position from which he can help us by an oral approach to the subject. This thing has apparently blown up quite unexpectedly to the Financial Secretary. He could hardly have expected to hear completely extempore the speech of my hon. Friend the Member for Islington, East, who had apparently spotted the difficulty better than any other hon. Member and had prepared a completely convincing analysis of the situation to submit to us.
No matter what the Financial Secretary says tonight, I should like to be advised by the Law Officers of the Crown before I assented to any proposition that can now be put forward. I hope that the Financial Secretary will tell us as much as he can about the various points that have been raised. I think it would be as well if I suggested to my hon. Friends that when we get to the Report stage, unless we receive a convincing explanation this evening, an Amendment should be put on the Notice Paper to omit the Clause from the Bill, if only to receive an explanation from authoritative quarters of the exact reasons why this has happened. I particularly hope that the Financial Secretary will draw the attention of the Attorney-General to the quotation made in the judgment which 360 dealt with the Bill of Rights and its application to this matter, for I think that on this point the Attorney-General himself is in need of some enlightenment and advice.
It is a pity that we have not had a better explanation tonight. I can only hope that before the Bill leaves this House we shall have a convincing explanation of why the Clause is necessary, and who was the genius who discovered that the Clause ought to be in the Bill.

§ Mr. Powell
I am sorry that it would be wrong for me to respond to the last invitation of the right hon. Gentleman, for he is aware, much more than I am, of the anonymity which very properly veils the persons of those who advise the Government on these matters, and who discover the necessity or desirability of provisions of this kind. I can, therefore, only properly say 'I am advised' that this provision is desirable for the reasons which I gave earlier, and which I will elaborate in a moment.

§ Mr. Ede
I was hoping that the hon. Gentleman would say that he was the person who discovered it.

§ Mr. Powell
May I deal now with the question of the hon. Gentleman the Member for Oldham, West (Mr. Hale) about repayment? Purchase tax is collected from the wholesaler, and it is to the wholesaler that it would fall to be repaid in the circumstances set out in the 1913 Act. As regards further persons who, directly or indirectly, in the course of trade and business may have borne the burden of the imposition, their position will be no different here from what it is in regard to duties of Customs and Excise at present under the 1913 Act.

§ Mr. Hale
If the hon. Gentleman will forgive me for interrupting, this was raised in the debate of 1913. It is true that if a man has drunk a glass of whisky and has paid tax and the tax comes off subsequently, it is difficult to repay it, especially if he drinks it on 10th April and then the tax is defeated. That point was well understood—there is a point of impossibility. But it is nonsense to say that it is impossible to keep a list of people who pay Purchase Tax in these circumstances. Unless some provisions are introduced for them, it means that 361 in some cases very large sums are mulcted from the purchaser.
Now let me consider the position of the wholesaler. It means, virtually speaking, that the wholesaler can be sued by anybody who cares to assert that they bought something off him for cash and have paid duty on it. He may he in the position of receiving a hundred county court summonses because, unless some provisions as to records are proposed, there is no way of checking liability to payment.

§ Mr. Powell
The point is that the wholesaler is accountable for this duty, and the position of subsequent purchasers and dealers in the item is no different from that in the case of duties of Customs and Excise as provided for at present under the 1913 Act.
Despite the speeches which have been made, I do not think there is any difference of opinion in the Committee as to the desirability of this provision. We are all agreed that when changes in Purchase Tax are made they must take effect from the date of the announcement. Accordingly, we write into the Clause, as we have done into the Clause which the Committee have just added to the Bill, the day after Budget day as the commencing date.
As Purchase Tax is not at present covered by the 1913 Act—and I do not think that we can lay too much constitutional stress upon the fact that our forefathers, in 1913, did not include it among the taxes covered by that Act—there is no legal authority for the collection of the newly varied amounts of Purchase Tax until Royal Assent. That means that a person accountable for Purchase Tax could, in the meantime, decline to pay the varied amounts, but that they could be recovered from him by virtue of the Act of Parliament after it reached the Statute Book.
10.30 p.m.
As I explained earlier, this difficulty is not really serious, not only because of the common sense which is brought to bear on the matter from both sides, but also because, normally, Purchase Tax is accounted for only quarterly and the Act has generally reached the Statute Book by the time the first payments of the varied amounts fall to be made.
362 Nevertheless, the feeling in the Committee clearly is that it would be wrong for payments to be made, even intentionally and knowingly on both sides, without legal authority if we can give the appropriate legal authority by bringing this tax within the scope of the 1913 Act. That is, in fact, the very simple purpose of the Clause.

§ Mr. Roy Jenkins
What the Financial Secretary has done in his second speech is to make a fairly substantial case for saying that while we have Purchase Tax we require a provision of this sort. What he has not done is to explain why it was not introduced when Sir John Simon first introduced Purchase Tax, or to say, that being so, why this year should have been selected to introduce the Clause.
My hon. Friend the Member for Islington, East (Mr. E. Fletcher) made a typically lucid speech, marred only by a very few historical inaccuracies, such as the belief that Mr. Hayes Fisher was a Liberal, whereas he was a Conservative Member of Parliament, and one or two other points, not perhaps of major importance in determining our attitude to Clause 7 but none the less of some minor importance.
My hon. Friend brought out clearly the very much greater attention paid in the House in 1913 to constitutional issues of this sort than is done today. Hon. Members have tonight asked where the Law Officers of the Crown are. However, I am not sure how much the Law Officers would help us if they were here.

§ Mr. Kershaw
If this is indeed such a very knotty point of law, I observe that there is only one right hon. and learned Gentleman on the other side of the Committee. Would it not be desirable that the right hon. and learned Member for St. Helens (Sir H. Shawcross), assuming that the hon. Member for Stechford (Mr. Roy Jenkins) knows where he is. should assist in this discussion?

§ Mr. Jenkins
I have never understood that, even under the regime of the present Attorney-General, it was the duty of the Opposition Front Bench to explain Government legislation to the House of Commons. If that is the view which the hon. Member for Stroud (Mr. Kershaw wishes to put forward. I think it would be one which we would certainly consider, though it would be a novel one.
363 I was saying that my hon. Friend brought out how much greater attention was paid to these matters in those days. I would not put much stress on the absence of the Law Officers, but I think one should put a certain amount of stress on the absence of the Chancellor of the Exchequer. Revenue from Purchase Tax must be ten or twenty times the combined revenue from Income Tax and Customs and Excise Duties in 1913, but in 1913 there was no question of the Financial Secretary of the day being in charge of the debate in the absence of the Chancellor. My hon. Friend quoted frequently from the speech of the Chancellor of 1913, who was there throughout the debate and intervened frequently.

§ Mr. Nicholson
There was a good Opposition in those days.

§ Mr. Jenkins
The intervention, while I would not accept it as it stands, underlines a point that I was about to make. The period around 1913 was not a quiet Parliamentary one when it might have been argued that the House had nothing to think about except the particular Bill before it. It was a period of Welsh disestablishment, Irish Home Rule and other major issues, and there were major clashes in the House.

§ Mr. Glenvil Hall (Colne Valley)
And suffragettes.

§ Mr. Jenkins
And suffragettes, as my right hon. Friend says. There were many other issues claiming the attention of the House and the nation and the most prominent members of the Government, but that did not prevent the Chancellor of the Exchequer of the day from being on the Front Bench throughout the debate, moving a Motion, and replying to the debate. It is clear from the interventions reported in HANSARD, which my hon. Friend the Member for Islington, East, has shown to me, that the Chancellor was there to take part at any moment if necessary.
Yet here, when we are considering an extension of the 1913 provision, an extension which, measured arithmetically in money terms, is far more important than the 1913 provision itself, we have no sign at all of the Chancellor. We do not even have the active intervention of the Econo- 364 mic Secretary. I should have thought that, the Financial Secretary having proved somewhat inadequate and having got into some difficulty in his first intervention, the Economic Secretary would have wished to speak when a second Government intervention was called for. I am sorry that he did not feel able or find it necessary to do that.
What I think we still have completely unanswered is the question why this Clause is put forward now. In 1913 we had Mr. Justice Parker's remarks in the Gibson Bowles case which clearly provoked the Government into doing some thing. We also had the position in which, only four years previously, the House and the nation had had to be without a Finance Bill for twelve months because of the action of the House of Lords.
I do not know whether the Government are taking the position of Lord Salisbury so seriously that they are expecting some action of the House of Lords against this Finance Bill. If that were so, it would, of course, be a possible explanation of the Clause, and it would bring it to some extent on all-fours with the 1913 provision: but if that is not so we are bound to feel that even after the two rather arid interventions of the Financial Secretary we are still in the position of not knowing what is really behind the Government's mind in this matter and of feeling, too, that a very important provision has been put before the Committee in a rather frivolous way without the presence of either of the Law Officers or of the Chancellor of the Exchequer. That is something which the Committee should deplore.

§ Mr. Jay
While we are waiting for the Attorney-General, can the Financial Secretary explain this? He has twice rested his argument on the fact that the Government are in the habit of collecting Purchase Tax quarterly. Therefore, he says, by the time that the money is, in fact, collected a Bill has always received the Royal Assent and everything is in order.
Normally, the Budget Resolutions are passed in the first week of April and the Finance Bill receives the Royal Assent in the first week of August. From the first week of April to the first week of August is four months, not three. If the Treasury always collects Purchase Tax quarterly, how can it avoid collecting it at least once 365 during a period of four months? If it has done that, how is it that it has not been acting illegally in the past?

§ Mr. Glenvil Hall
I think that my right hon. Friend is slightly in error when he copies the Financial Secretary in saying that this money is collected quarterly. It is collected by the wholesaler from the retailer as the goods are sent and bills are paid. What the Financial Secretary meant was that it is paid to the Exchequer quarterly—not collected.

§ Mr. Rankin
There is one point about the Clause which intrigues me. My hon. Friend the Member for Oldham, West (Mr. Hale) asked how it would be operated. I recollect that last Tuesday, when we were discussing Entertainments Duty. I moved three Amendments which provided for a rebate scheme to help small cinema proprietors. That rebate scheme suggested that £22 10s. should he rebated to small cinema proprietors whose drawings did not exceed £125 a week. The Government said that such a scheme could not be worked. However desirable it was, it was not a scheme that could be accepted, for the simple reason that there was no way of tracing the persons who paid the tax.
It was argued that to pay the £22 10s. to the proprietor was wrong and that it was something which the Government had no right to do. It was refunding money to a person who had not paid it and until a scheme could be devised whereby the tax paid on entering the cinema could be refunded to the person who had paid it, the Government could have nothing to do with the Amendments. So they were all rejected.
The small cinema proprietor is in a position similar to that of the wholesaler. He collects a certain amount of money which he forwards to the Government. We are now being told that it is possible to return that money which the wholesaler has collected to the person who, in the first case, paid the tax on the goods which were subject to Purchase Tax. That is the essence of the scheme before us. How will it work? If the money collected by the small cinema proprietor in Entertainments Duty cannot be passed to the person who paid it originally, how will the wholesaler be able to pay back the money paid in Purchase Tax by the person who bought the goods in the retail shop?
366 If that can be done, why did the Government, last Tuesday, reject Amendments of similar quality on the ground that the scheme could not be worked? How can the one be worked and not the other? If the Government were right last Tuesday, obviously, by the arguments which they put for rejecting my Amendments, they stand condemned tonight on the issue now before us.

§ Mr. F. H. Hayman (Falmouth and Camborne)
The hon. Member for Farnham (Mr. Nicholson) said that the Opposition, in 1913, were much more vigorous in their ability adequately to tackle the Chancellor of the Exchequer of that day, but I suggest that Government back benchers today are so docile that even on an important issue of taxation they remain silent. We do not know whether they have been ordered to remain silent by the Patronage Secretary. At any rate, we have heard this evening that in 1913 Government back benchers were active in criticising their own Chancellor, so active that the Chancellor had in the end to give way. Rarely in the history of Parliament have Government back benchers been so docile as they are today.

Mr. H. Wilson
I beg to move, That the Chairman do report Progress and ask leave to sit again.
I move this Motion to give the Chancellor—I thought that he would be here—an opportunity to tell the Committee what plans the Government have for the rest of the evening, so that the Committee can make its disposition accordingly.

§ Mr. Powell
In the absence of the Chancellor I think I can say that, as the next two Clauses are short and perhaps will not give rise to much debate, it would be reasonable if we dealt with them this evening.

Mr. Wilson
I am sure that the Chancellor—who has just come into the Chamber—will be glad to know that the Financial Secretary has made a brief statement about the Government's intentions, which has now been communicated to him. I do not think that he wants to correct the impression given by the Financial Secretary. Perhaps I should make it clear to the Chancellor that some 367 feeling was expressed during the last few minutes—when the Chancellor was not here—on Clause 7, and that some comments about the absence of the Law Officers were made. I do not want to make a point about that in relation to Clauses 8 and 9.
10.45 p.m.
This is the Financial Secretary's first and, we trust, last Finance Bill in his present capacity. That is not meant as any reflection upon the courtesy with which he has dealt with the Amendments that he has handled, but it raises the wider question of changes of Government.
I would tell the Financial Secretary, however, that I think he is rather optimistic in saying that Clauses 8 and 9 are short and do not raise much in the way of debate, because I am sure that it will be within the recollection of many hon. Members that in past years the Clause which lays down the standard rate of Income Tax, and is required to be repeated annually, very often gives rise to considerable debate. Certainly, when hon. Members opposite formed the Opposition they used to indulge in the longest possible debates on these occasions, and I am sure that the Economic Secretary was one of the most active Members then. It was their policy to harry Governments, but we have shown much greater restraint. We have certainly shown a greater respect for Parliament. It is also possible that a long debate could take place on the rate of Surtax.
I rise now only to say that I think that the Government have made considerable progress in the last three days and I am sure that it would be the wish of the whole Committee that we should start fresh tomorrow afternoon with a discussion on Clause 10. I am glad that the Chancellor was agreeable to our view that we ought not to start Clause 10 at a late hour, because it is a Clause in which the whole country is greatly interested and one upon which many hon. Members wish to speak. It would be a pity to have to discuss it at this time.
I would not want to do anything that would in any way infringe the right of hon. Members to have a debate on Clauses 8 and 9, but my own recommendation would be that although we are 368 fully entitled to have a major debate, starting about now, on the whole question of the level of Income Tax and the Government's policy to reduce Government expenditure, and so on, we should not indulge in such a debate this evening. There may be another occasion later, and we should refresh ourselves, so far as that is possible, between now and tomorrow afternoon so that we can have a proper debate on the various Amendments proposed to Clause 10, which in the belief of many hon. Members is the nub of the Bill, and the one which we must examine most carefully.
I recommend my hon. Friends to accept the proposal made by the Financial Secretary that we should facilitate the progress of the Bill tonight so far as Clause 8 and 9 are concerned, and then give the most thorough, exhaustive and constructive examination to the Clauses which will be before us tomorrow afternoon. I cannot speak for my hon. Friends, and I cannot interfere with their freedom of debate, but it would be for the convenience of the Committee if we facilitated, so far as possible, the discussion of the following two Clauses, upon which there are no Amendments and, as far as I know, no basic controversy such as might be tested in the Division Lobbies.
I hope that the Chancellor will notice once again how, this year, as last year, we are being so helpful and constructive in facilitating the speed of passage of a Bill about which we have very many reservations.

§ Mr. Ede
While the Chancellor of the Exchequer was absent—and I make no complaint about that—there was a prolonged discussion on Clause 7, which included a most erudite and well-documented speech by my hon. Friend the Member for Islington, East (Mr. E. Fletcher) on the constitutional propriety of including the Clause in the Bill. I hope that the right hon. Gentleman will take the opportunity, if not of reading the whole debate, at least of reading the speech of my hon. Friend the Member for Islington, East. When we reach the Report stage we shall move to delete the Clause from the Bill, if only to get an explanation from the Law Officers of the Crown, and possibly from the right hon. Gentleman himself, of the reasons for including it in the Bill.

§ Mr. Thorneycroft
I am always interested in the interventions of the hon. Member for Islington, East (Mr. E. Fletcher) and I am sure that I shall profit from this one. I make no apology for not being present when the hon. Gentleman was speaking, because I have been fairly constant in my attendance during these debates.
I thank the right hon. Member for Huyton (Mr. H. Wilson) for what he said. We are making progress with the Bill and giving it full and proper discussion. I agree that the right course would be to make a fresh start tomorrow on Clause 10, to which the main Amendments have been put down.

Mr. H. Wilson
I beg to ask leave to withdraw the Motion.