Commons Sitting of 12 June 1958

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS

  KASHMIR (DR. GRAHAM'S REPORT)
  Mr. F. M. Bennettasked the Under-Secretary of State for Commonwealth Relations whether he will instruct the United Kingdom representative on the United Nations Security Council to try to ensure early consideration of Dr. Graham's mediation Report on Kashmir.
  The Minister of State for Foreign Affairs (Commander Allan Noble): I have been asked to reply to this and other Questions for my hon. Friend today.
  The United Kingdom Government are in consultation both with the Indian and the Pakistani Governments about the situation following the presentation by Dr. Graham of his Report. Clearly at the appropriate stage the United Nations Security Council will consider it. The timing of such consideration is, however, a matter for discussion between the members of the Security Council and the parties concerned. The United Kingdom representative to the United Nations will be instructed to agree to any proposal for a meeting of the Security Council which is acceptable to the two parties.
  Mr. Bennett: While regretting that, unlike Pakistan, India saw fit to condemn these proposals in advance, may I ask my right hon. and gallant Friend whether, nevertheless, he will do his best to ensure reasonable consideration by all the parties concerned of what is the first genuine compromise attempt for some time to reach a settlement in this longstanding dispute at as early a date as possible?
  Commander Noble: As my hon. Friend said in reply to a Question on
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  15th May, Her Majesty's Government have always worked for a settlement by agreement between the parties concerned, and we will continue to support efforts to reach agreement which would give effect to resolutions of the United Nations.

  HIGH COMMISSION TERRITORIES

    Basutos (Union of South Africa)
    Mr. Brockwayasked the Under-Secretary of State for Commonwealth Relations what arrangements have been made for negotiations between the Government of the Union of South Africa, the High Commissioner, and the Basutoland National Council regarding the repatriation of Basutos from the Union to Basutoland.
    Commander Noble: In 1957 the Union Government stated their intention to take action against leaders of certain unruly gangs by declaring as undesirable inhabitants of the Union, and deporting to Basutoland, those who belong to Basutoland. The legal requirements for residence in and deportation from the Union are a matter for the Union legislature. No question therefore arose of negotiations between the High Commissioner and the Union Government, but the High Commissioner was assured that he would be given prior information of all proposed deportations to Basutoland. On 21st April, 1958, the Basutoland Entry and Residence Proclamation, 1958, was promulgated by the High Commissioner, after full consultation with the Basutoland National Council. This Proclamation regulates entry into Basutoland.
    Mr. Brockway: While thanking the right hon. and gallant Gentleman for that detailed Answer, may I ask whether it is a fact that there are two aspects to this matter? One is that Basutos were concerned in disturbances, but the other, and much more serious, is the requirement now for every Basuto in an urban area to receive a permit, and the fact that there is power to deport him within three days when that permit is refused. In these circumstances, will the Government do something to protect the Basutos who are affected?
    Commander Noble: Her Majesty's Government, of course, are giving very

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    serious consideration to this problem, but what the hon. Member raises is rather a different question. There is no reason to suppose that the Union authorities will fail to give the High Commissioner in advance the names of Africans from the Territories whom they propose to declare undesirable inhabitants of the Union. A list of such names is expected shortly.

    Homicide Act, 1957
    Mr. Brockwayasked the Under-Secretary of State for Commonwealth Relations if he will authorise the High Commissioner to extend to the Protectorates of Bechuanaland, Basutoland, and Swaziland the provisions of the Homicide Act, 1957.
    Commander Noble: The substantive law relating to homicide in the three High Commission Territories is Roman Dutch criminal law. My noble Friend does not consider it appropriate to apply the Homicide Act, 1957, as such, to these Territories; but he is consulting the High Commissioner as to whether any amendment of the law now in force there would be desirable in the light of the provisions of the Act.
    Mr. Brockway: The right hon. and gallant Gentleman will know the concern in Basutoland now about certain death sentences. Can these death sentences be postponed until that discussion has taken place about some amendment of the law?
    Commander Noble: I do not think that I can go quite as far as the hon. Member asks in his supplementary question, but while the provisions of the Territory law are being reviewed, all cases will be looked at in the light of possible amendments.

    High Commissioner
    Mr. H. Hyndasked the Under-Secretary of State for Commonwealth Relations whether he will take the opportunity now afforded by the retirement of the present High Commissioner in South Africa to separate that post from the one of High Commissioner for Basutoland, the Bechuanaland Protectorate, and Swaziland.
    Mr. Dugdaleasked the Under-Secretary of State for Commonwealth
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    Relations whether, in view of the increasing burden of work falling on the holder of the joint offices of High Commissioner to the Union of South Africa and High Commissioner for Basutoland, Bechuanaland Protectorate, and Swaziland, he will take the opportunity presented by the retirement of the present holder of these two offices to make separate appointments for each of them.
    Commander Noble: No, Sir. As my hon. Friend informed the hon. Member for Eton and Slough (Mr. Brockway) on 3rd April, my noble Friend is satisfied that the advantages of the present arrangement outweigh any possible disadvantages.
    Mr. Hynd: Does the Minister realise that the present administrative arrangement is not only unwieldy but causes delay, because everything has to go through the Union of South Africa? More important than that, does not he realise that there is a question of principle involved here, and that the people of these three High Commission Territories have certain objections to being governed by the High Commissioner of South Africa, particularly in view of recent developments in the Union?
    Commander Noble: First, may I say in answer to the supplementary question that I do not think the present arrangement is unwieldy. The economies of the High Commission Territories are closely bound up with the Union of South Africa, the political developments of the Territories are liable to have repercussions in the Union and vice versa, and therefore there is obvious advantage in the person responsible for the administration of the Territories being closely in touch also with the developments in the Union.
    Mr. Dugdale: Is the right hon. and gallant Gentleman aware that to combine these two posts is about as foolish as it would be to combine the post of Ambassador to Italy with the Governorship of Malta? Does not he realise that it is a very important task to govern these three Territories and that it cannot be done by a man who is also Ambassador to a country which has a totally different outlook?
    Commander Noble: I answered a Question on this subject put by the right hon. Gentleman on 5th July, 1956, when I think he asked practically the same supplementary question. I would say that our opinion has not changed since then.
    Mr. Hynd: Not since 1066.

    Swaziland (Constitution, Economy and Development)
    Mr. Brockwayasked the Under-Secretary of State for Commonwealth Relations what reply has been made to the request by the Swazi Progressive Association, addressed to the Resident Commissioner in 1956, for an inquiry into the constitution, economy, and development of Swaziland.
    Commander Noble: The request of the Swaziland Progressive Association was referred by the Resident Commissioner to the Paramount Chief in Council as representing the Swazi nation. The Council stated that it wished to discuss it with the President of the Association, who was so informed and agreed with this course. The Resident Commissioner has not yet learned whether this discussion has taken place.
    Mr. Brockway: While recognising that 1956 is some distance away, may I ask whether the right hon. and gallant Gentleman is aware that apparently this document has been lost in the process of exchanges between one office and another? Would he consider seriously the proposals it makes for the democratisation of Swaziland, for extending the magnificent example we have given in afforestation schemes, for economic development, and particularly for raising the appalling wage standards?
    Commander Noble: I do not think I have anything to add to my original Answer, but I will certainly see whether anything can be done to find the document which the hon. Gentleman thinks is lost.

    Co-operative Officers
    Mr. Dugdaleasked the Under-Secretary of State for Commonwealth Relations how many co-operative officers there are in Basutoland. Swaziland and Bechuanaland.
    Commander Noble: There are twelve co-operative officers in Basutoland and none in the Bechuanaland Protectorate and Swaziland.
    Mr. Dugdale: Will the right hon. and gallant Gentleman consider appointing some for the other two Territories? If they are desirable in one Territory, surely they are desirable in the other two?
    Commander Noble: The reason why there are no co-operative officers in the Bechuanaland Protectorate is that there are no co-operatives. There are only two co-operatives in Swaziland and no co-operative officers have been appointed yet. It is intended to appoint officers when the territorial financial position permits.
    Mr. Bottomley: Has any consideration been given to the circular sent out by the Colonial Office in, I think, 1946, encouraging the formation of co-operative organisations in territories outside the Dominions? Has any action been taken upon it?
    Commander Noble: My hon. Friend dealt with this in some detail in reply to a Question put by the hon. Member for Wednesbury (Mr. Stonehouse) on 22nd May, and I think he made it clear that we are anxious to give any help we can in the development of co-operatives, if required by the areas themselves.
    Mr. Dugdale: Is the right hon. and gallant Gentleman aware that his answer is not really very satisfactory, even if it is a little smart? The point is that co-operative officers are expected to help in the formation of co-operatives, and if there are no co-operative officers there will not be any co-operatives.
    Commander Noble: I do not think that is necessarily the case but, as both my hon. Friend and I have said, Her Majesty's Government are only too keen to give any help they can in this matter.

  COMMONWEALTH RELATIONS

    Natural Resources and Development
    Mr. Bottomleyasked the Under-Secretary of State for Commonwealth Relations if he is now in a position to

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    made a statement about the Commonwealth Economic Committee's inquiry into the natural resources and development potential of the Commonwealth.
    Commander Noble: As my hon. Friend told the House on 28th April, the Commonwealth Economic Committee has already published the first volume of its Review, which deals in general terms with production, consumption, trade, prices and kindred matters in respect of Commonwealth raw materials. The second volume contains detailed studies of the raw materials in each Commonwealth country and work on this is still in progress.
    Mr. Bottomley: Can the Minister of State say whether this second report will be ready in time for the Commonwealth Economic Conference at Montreal this year?
    Commander Noble: I am afraid I cannot give that answer. As the right hon. Gentleman knows, it is a most comprehensive study. I know that the Commonwealth Economic Committee will produce it as soon as possible.
    Mr. Bottomley: Is not it most important that this document should be available, since it is the very basis of the work which the conference is to do? I hope the Minister will encourage the Committee to press on with it.
    Commander Noble: I quite agree that it will be a most important document, and for that reason I am sure the Committee will do everything possible to have it ready by that date.

    Trade and Economic Conference
    Mr. Sydney Irvingasked the Under-Secretary of State for Commonwealth Relations if the problem of international price stabilisation will be on the agenda of the Ministerial Commonwealth Trade and Economic Conference to be held in Montreal in September.
    Commander Noble: Yes, Sir. This important subject is bound to be among the questions for consideration at Montreal. In this connection I would refer the hon. Member to what my hon. Friend said on this point during the debate on 28th April.
    Mr. Irving: Would the right hon. and gallant Gentleman bear in mind that there are hon. Members on both sides of the House who think that this is one of the most important and urgent of the subjects that are to be discussed at the Commonwealth Economic Conference, and that failure to deal with this problem will inhibit the proper development of the Commonwealth, and indeed of the Western world? Will he at the same time give favourable consideration to the proposals put forward by Colonel L. St. Clare Grondona on stabilisation in his book "Utilising World Abundance"?
    Commander Noble: Her Majesty's Government fully realise the importance of this subject and will be ready to discuss it at Montreal.

    Education Conference
    Mr. J. Johnsonasked the Under-Secretary of State for Commonwealth Relations when the last Imperial Education Conference was held; and whether he will give favourable consideration to the holding of a Commonwealth Education Conference.
    Commander Noble: The last Imperial Education Conference was held in 1927. My noble Friend is always ready, in consultation with my right hon. Friend, the Minister of Education, to give favourable consideration to the holding of a Commonwealth Education Conference if other Commonwealth countries should desire one.
    Mr. Johnson: Does not the right hon. and gallant Gentleman think that thirty years is an awfully long time before the English-speaking nations in the Commonwealth get together? If the export of educational values is thought to be important, will he consult the Minister of Education and suggest that it is time we had another conference?
    Commander Noble: There has been a continuous exchange of information between Commonwealth education experts. They meet each other frequently on occasions like the Commonwealth Universities Conference which will be held in Canada this summer. These talks have recently taken the place of the education conferences in the past.

  GHANA ARMY (BRITISH OFFICERS)
  Mr. John Hallasked the Under-Secretary of State for Commonwealth Relations what proposals he has for withdrawing British officers now serving with the Ghana army.
  Commander Noble: The replacement of British officers now serving with the Ghana Army by Ghanaian officers is a matter which receives constant attention. In addition to the Ghana officers already serving in the Ghana Army there is a steady flow of Ghana officers being trained in the United Kingdom for service in their own country.
  Mr. Hall: Can my right hon. and gallant Friend say if there is any truth in the Report published in the Ashanti Pioneer on 26th April that the United Arab Republic had been asked by the Ghana Government to send a military mission to train the Ghana Army?
  Commander Noble: If my hon. Friend wants an answer to that question, he had better put it down, as it is rather far from the original Question.

  NEW ZEALAND (FINANCE)
  Mr. Shinwellasked the Under-Secretary of State for Commonwealth Relations whether the present financial difficulties of the New Zealand Government have been brought to the attention of Her Majesty's Government; and what help has been offered to the New Zealand Government by the United Kingdom.
  Commander Noble: Yes, Sir. We were glad to agree to New Zealand raising a loan of £20 million on the London market last April.
  Mr. Shinwell: But is the right hon. and gallant Gentleman aware that this loan, floated on the London market, was hardly a success? Is not it essential that some further help should be afforded to New Zealand in its present financial difficulties? May I ask, further, whether the financial difficulties which beset New Zealand at the present time will be reviewed by the Commonwealth Economic Conference?
  Commander Noble: I expect the right hon. Gentleman knows that the recent
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  loan was the largest raised by any Commonwealth country since the war on the London market. We have had no further request but we would, of course, consider one if it were made. Whether this is to be discussed at Montreal is a matter for New Zealand.
  Mr. Shinwell: Is not it time that we gave some consideration to the financial position and difficulties of some of the older Commonwealth countries as well as seeking to afford assistance to what are called the uncommitted countries?
  Commander Noble: Her Majesty's Government are in constant touch with all Governments of the Commonwealth and these matters can be raised on any occasion.
  Mr. F. M. Bennett: As the loan on the London market has been mentioned and its success queried, may I ask if it is not a fact that, although it was not very acceptable to the public at that time, it was all taken up by the underwriters and the New Zealand Government got its money?
  Commander Noble: That, I think, is the position.

  EDUCATION

    Secondary Schools (Science Laboratories)
    Mr. J. Johnsonasked the Minister of Education what steps he is taking to provide additional science laboratory accommodation for State secondary schools.
    The Minister of Education (Mr. Geoffrey Lloyd): I have invited local education authorities to submit proposals of this kind so that I can consider their inclusion in next year's building programme.
    Mr. Johnson: I thank the right hon. Gentleman for that reply, but is not he aware that the independent sector of public schools is getting lavish bequests from the big industrial firms in respect of science laboratory accommodation and that if he does not help our State schools in a somewhat better fashion the gulf between the two sectors will simply widen, to the disadvantage of the State secondary schools?
    Mr. Lloyd: We have in the current year's programme seventy-eight projects of this kind costing about £2 million.

    Block Grants
    Mr. Swinglerasked the Minister of Education if he will invite representatives of the seventeen national bodies which have expressed opposition to the block grant system to discuss with him Her Majesty's Government's policy on this matter.
    Mr. Geoffrey Lloyd: No, Sir. I have already received representative deputations.
    Mr. Swingler: Is not it the situation that all the important bodies in the education world have expressed opposition to the block grant system but the Government have decided to disregard that advice completely and go ahead? Is not it the case, therefore, that the Minister is in duty bound to explain to the leaders of the education world, who are unanimously against the system, why the Government completely disregard their advice, and discuss with them the implications of future co-operation, if that is possible?
    Mr. Lloyd: I dealt with that precise point in my speech on the Second Reading of the Local Government Bill.
    Mr. M. Stewart: Is not the right hon. Gentleman's chief difficulty in acceding to my hon. Friend's suggestion that if he got the seventeen bodies to talk to him on the subject he would be unable to conceal his own agreement with them on the matter?

    Size of Classes
    Mr. Swinglerasked the Minister of Education if he will now fix target dates for the reduction of primary and secondary classes to maxima of 40 and 30 pupils apiece, respectively.
    Mr. Geoffrey Lloyd: No, Sir. It would be quite unrealistic to fix a date at present.
    Mr. Swingler: Is not it a little unrealistic for everybody to continue paying lip-service to this? Is not the situation that, although there are decisive differences in many fields of education policy, this is a reform for which there is common consent and to which everybody
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    pays lip-service, and it is one of the most important things that we should achieve? Would not it be an expression of common determination to recruit sufficient teachers and build sufficient schools if the Ministry now set a date for the achievement of this important objective?
    Mr. Lloyd: In the case of primary school classes, there has, of course, been considerable progress in the last few years in reducing the number of over-large classes, but the progress in respect of secondary schools is not nearly so great.

    Home Safety
    Dr. D. Johnsonasked the Minister of Education what steps he is taking to give guidance to children of school age in respect of the elementary principles of home safety.
    Mr. Geoffrey Lloyd: I am sending my hon. Friend a copy of my Department's handbook of suggestions for teachers on health education, which includes a section on accidents at home.
    Mr. Hastings: Is the right hon. Gentleman aware of the enormous success of instruction in schools on road safety, especially when it is given by uniformed policemen? Could something of the sort be given to children in elementary schools by some specialists in home safety?
    Mr. Lloyd: That is primarily a matter for the local education authorities, but I think it is an interesting idea.

    Junction Road School, Stainforth (New Kitchen)
    Mr. G. Jegerasked the Minister of Education why he refuses to allow the new kitchen at Junction Road School, Stainforth, near Doncaster, to be equipped with stainless steel sink units; what alternative proposals have been made; and what difference in cost is involved.
    Mr. Geoffrey Lloyd: I have now approved this proposal as an experiment.

    School Meals (Potatoes)
    Mr. Doddsasked the Minister of Education the response to the circular sent to local education authorities on the need for substitutes for potatoes for school dinners on economy grounds;

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    what were the substitutes suggested; and if he is satisfied that economies warranting the issue of the circular are possible.
    Mr. Geoffrey Lloyd: I am sending the hon. Member the detailed information for which he asks but, on the general issue, I am determined to pursue all sensible economies wherever this can be done without damage to the children's health or education.
    Mr. Dodds: Is the right hon. Gentleman aware that experts state that it is fantastic to suggest that rice or spaghetti can be substituted for potatoes as an economy measure? May we have an assurance that the main purpose of the circular was to have bread substituted for potatoes? Will the right hon. Gentleman again give an assurance that the health of the children will not be endangered by the desire for economies, and that the standards of school meals will not be lowered?
    Mr. Lloyd: I think that this was really only sensible housekeeping in respect of school meals. Because of the circumstance of the bad crop of potatoes, the price rose. I have no doubt that individual housewives made their own adjustments. It was our responsibility, because an extra expenditure of upwards of £750,000 might have been involved, to ascertain whether a reasonable economy could be achieved. We received suggestions from some of the local authorities themselves, and we thought it was right to make this suggestion quickly to all the local authorities.
    Dr. Stross: Will the Minister accept that the principal source for school children of vitamin C in their diet is potatoes, and that no alternative of which we know is of any use whatsoever as a substitute for vitamin C?
    Mr. Lloyd: I should not like to enter into a medical discussion with the hon. Gentleman about vitamin C. but oranges are also an important source of vitamin C. We have, after all, to remember that this was only a temporary change which would obviously be put right as the season proceeded. I would offer hon. Members and also the children the encouragement that we are entering the new potato season. Although I would assure hon. Members that we do not
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    buy the very high-priced early potatoes, nevertheless, early new potatoes will fairly soon be appearing in school meals.

    Teachers
    Mr. G. Longdenasked the Minister of Education if he will now make a statement about the steps he is taking to increase the supply of teachers.
    Mr. Geoffrey Lloyd: Yes, Sir. Recruitment to the teaching profession continues to be very good, but recent losses have been unexpectedly high. In any case more teachers will be needed in the 1960s as a result of the higher birth rate and the increasing number of children staying on at school after the age of 15. I have therefore asked the training colleges to take emergency steps to admit as many additional students as they can this year and next. I have also put in hand the first instalment of a permanent expansion. These measures should enable the colleges to train about a thousand extra teachers a year after the introduction of the three-year course. I shall consider what further expansion is likely to be needed when I have the advice of the National Advisory Council for the Training and Supply of Teachers.
    Mr. Longden: I thank my right hon. Friend for that answer. Is he aware that this will generally be considered a very satisfactory and positive step along what will be a long road?
    Mr. M. Stewart: Is the right hon. Gentleman aware that his Answer will give considerable, if rather delayed, satisfaction to those of my hon. Friends who have been asking for this for some years? Can he say whether it is also proposed to try to get an increased supply of graduate teachers from the universities?
    Mr. Lloyd: We shall certainly consider that, and, of course, the rising numbers of graduates will assist very much in that direction.

    Training College Places
    Mr. J. Johnsonasked the Minister of Education if he will give an estimate of the number of VIth Form girls at secondary schools who have not yet been accepted at training colleges in England and Wales; and what steps he is taking to reduce this number as early as possible.
    Mr. Geoffrey Lloyd: I cannot give such an estimate but I have just announced that more training college places will be available this autumn.
    Mr. Johnson: Is the Minister aware that he never gives me a factual answer? Is he aware that there is still much anxiety among parents and teachers about this matter? Has he thought any more about the answer which he gave me some months ago about the Government being a clearing house in this matter, since there is a need for much more invigilation by his Department in this matter of placing young ladies in these teaching colleges?
    Mr. Lloyd: The fact that there is a large number of applicants for the training colleges is a healthy sign in that it shows that there are many people who are ready to enter the profession. However, it does not necessarily follow that everybody who presents herself for admission to a college is necessarily suitable to be a teacher.
    Mr. Johnson: Will the right hon. Gentleman consider making a public statement on this matter, because there is much anxiety in the schools and among parents on this subject?
    Mr. Lloyd: I will certainly consider that.

  TRADE AND COMMERCE

    Haggis (Exports to Canada)
    Mr. Hector Hughesasked the President of the Board of Trade if he is aware that the import of haggis into Canada has been prohibited by regulations made under the Canada Pure Food and Drugs Act on the ground that haggis is not a pure food; that hitherto Scotland has done extensive and profitable trade in haggis with Canada; that this prohibition will inflict great loss on Scottish trade; and if he will make representations to the Canadian Government in order to have these regulations withdrawn so that Scottish trade with Canada in haggis may be resumed and extended.
    The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan): I think there has been some misunderstanding. We have made inquiries in Ottawa and I can confirm that there has been no recent change in the regulations affecting
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    the import into Canada of haggis from Scotland.
    Mr. Hughes: Does the Minister realise that that Answer will be received with satisfaction by all who wish to see the Canadians properly nourished, and ancient traditions preserved?
    Mr. Vaughan-Morgan: I am all in favour of the export of this delectable delicacy.
    Sir F. Medlicott: In view of the discussion on Question No. 25, cannot my hon. Friend try to do some business with the Ministry of Education so that the value of this admirable food may become more widely known and appreciated in England as well as in Canada?
    Mr. Vaughan-Morgan: I am in favour of exports.

    Canada (Minister's Visit)
    Mr. Hector Hughesasked the President of the Board of Trade if he will make a statement on his visit to Canada with particular reference to its bearing on the development of trade between Canada and Scotland.
    Mr. Vaughan-Morgan: My right hon. Friend visited Montreal, on his way to Venezuela and Brazil, to have discussions with Canadian Ministers and to attend the dinner given by the Dollar Sterling Trade Council in honour of the delegation from the Dollar Exports Council then visiting Canada. He was much impressed by the keen interest expressed by the Canadians to extend their trade with the United Kingdom, including Scotland.
    Mr. Hughes: Can the Minister say whether before his departure the President of the Board of Trade had a consultation with the Secretary of State for Scotland with a view to dealing with the matters dealt with in my Question but not dealt with in the Answer, and can he say whether at that dinner in Ottawa they had haggis?
    Mr. Vaughan-Morgan: My right hon. Friend is in constant touch with the Secretary of State for Scotland, but his visit to Canada on this occasion was limited to two days, one of which was a Sunday, and I am afraid that I cannot say exactly in detail what subjects were discussed and whether haggis was on the menu.

    Cotton Industry
    Sir J. Barlowasked the President of the Board of Trade whether he is satisfied that the cotton industry is taking every advantage of science and technology, with a view to maintaining the home market and development abroad: and if he will make a statement.
    Mr. Vaughan-Morgan: I know that a great deal has been done in the cotton industry to take advantage of developments in science and technology, and of course I am aware of the outstanding work and international reputation of the British Cotton Industry Research Association. It is common knowledge that as in other industries all firms are not equally advanced in this respect.
    Sir J. Barlowasked the President of the Board of Trade how many spinning mills and weaving sheds in the United Kingdom have closed in each of the last five years; and to what extent he anticipates there will be further closures during the present year.
    Mr. Vaughan-Morgan: I assume that my hon. Friend is referring to the cotton industry. The number of spinning, doubling and weaving units in Great Britain which informed the Ministry of Labour of their intention to close down in each of the years in question was as follows: 1954, 15; 1955, 90; 1956, 96; 1957, 60; and 1958—to end of May—46. I do not think it would be right for me to try to forecast what further closures may occur this year. Such a forecast might well be wrong and misleading.
    Sir J. Barlow: Is my hon. Friend aware of the very deep concern in Lancashire at the diminution of the industry and the closure of these mills? What action does he propose to take to prevent further closures?
    Mr. Vaughan-Morgan: My hon. Friend has asked me to prophesy the number of closures which will take place, but I am hesitant to venture a prophecy because it would be affected by a number of factors, including, for example, the steps which have been taken by the weaving section of the industry with the purpose of buying up redundant mills. As to the steps being taken, my hon. Friend knows as well as I do that the industries of this and other Commonwealth countries are in touch with each other and
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    we all hope that negotiations will eventually result in agreement.
    Mr. H. Wilson: Is not the hon. Gentleman aware that the solution lies not in buying up redundant mills but in action by the Government? Is the hon. Gentleman aware that it is now four years since the Cotton Board, as a matter of urgency, raised this matter with the Government and that the Board asked for urgent action from the right hon. Gentleman the Member for Woodford (Sir W. Churchill) as early as March, 1955? Will the hon. Gentleman tell the House of a single action which has been taken by the Government to help the cotton industry in those four years?
    Mr. Vaughan-Morgan: As the right hon. Gentleman knows, the Government have tried to promote negotiations between the countries most closely concerned in this matter.
    Mr. J. T. Price: Will the hon. Gentleman say more specifically, in view of the deplorable history of the Lancashire industry during recent years, at what stage the Government will intervene to prevent the complete destruction of the trade of Lancashire? To what point must the industry contract before any steps are taken to prevent the continuation of unfair competition from countries which are employing labour under what are in effect slave conditions, with which this country should never be expected to compete on equal terms? Will he give some assurance that Lancashire's interests will be seriously considered in the coming months before there is a complete collapse of the whole industry?
    Mr. Vaughan-Morgan: I can assure the hon. Member that we are constantly aware of the anxieties of Lancashire in this matter. The conditions in other countries to which the hon. Member referred are not at this stage matter for me.
    Mr. S. Silverman: Is the hon. Member aware that there is a close relationship between the figures he gave of the closing of mills and the figures of imported sweated labour cotton goods from Hong Kong? Is he aware that in seven years the amount has risen from 20 million yards in the first of the seven years to 100 million yards last year? Is the hon. Member aware that, since the cotton trade now depends principally upon domestic

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    consumption and not so much on exports as it did, it is impossible to keep the cotton industry alive against competition of this kind?
    Mr. Vaughan-Morgan: That raises issues rather wider than those in the original Question.
    Mr. Green: Can my hon. Friend confirm that imports for the home market of foreign cloth from China and Japan have been drastically curtailed and kept down ever since 1951? Will he further confirm that his Department is seriously interested in seeking a real agreement on the imports of cloth from under-developed Commonwealth countries whose interests the Opposition so assiduously seek to promote when it does not affect them? Will he also confirm that his Department has a real interest—[HON. MEMBERS: "Speech."]—I am asking a question—in the maintenance of the social life of the Lancashire cotton towns and especially the small villages there?
    Mr. Vaughan-Morgan: It is quite correct, as my hon. Friend says, that imports from China and Japan are on quota. The only unrestricted imports are from Commonwealth countries and Her Majesty's Government's policy remains the same.
    Mr. H. Wilson: Is not the hon. Gentleman aware that clear and concrete proposals were put forward for dealing with this matter, without quotas, from this side of the House in the last debate on cotton, on 9th March, 1955? Is he further aware that if the Government had adopted the proposals then put forward by this side and the cotton unions, probably 100 or 150 of the mills that have closed since that date would not have closed?
    Mr. Vaughan-Morgan: I have read the right hon. Gentleman's proposals for the cotton industry and I am still not quite certain whether or not he proposes to stop the imports.
    Mr. Wilson: What is the hon. Member's proposal.
    Mr. Jay: Are not labour conditions in Hong Kong a direct responsibility of Her Majesty's Government? Would not it be in the interests both of Hong Kong and Lancashire that they should be more civilised?
    Mr. Vaughan-Morgan: Any question of labour conditions in Hong Kong is a matter for the Colonial Secretary.

    Chilean Trade Delegation
    Mr. Gowerasked the President of the Board of Trade why, in view of the successful visit of a Canadian trade mission to Wales earlier this year, he failed to ensure the inclusion of Wales in the itinerary arranged for a trade delegation from Chile now in the United Kingdom; and if he will make a statement.
    Mr. Vaughan-Morgan: The members of this mission asked to see particular sections of British industry and their tour was arranged accordingly.
    Mr. Gower: Can my hon. Friend say whether there was any consultation between his or any other Department and the members of the mission before its arrival?
    Mr. Vaughan-Morgan: The itinerary was arranged as requested by members of the mission. A number of firms issued invitations to them, but no invitation was issued by a firm in Wales.

    Cinema Admissions
    Mr. Rankinasked the President of the Board of Trade the percentage change in cinema admissions in the first quarter of 1958 compared with the same quarter of 1957; and what indication he will give of the pattern of attendances after the first quarter of 1958.
    Mr. Vaughan-Morgan: Statistics of cinema admissions in the first quarter of 1958 are not yet complete but preliminary estimates indicate that they were over 20 per cent. lower than in the corresponding quarter of 1957. As regards the second part of the Question, I cannot make a forecast of cinema attendances.
    Mr. Rankin: Can the Minister say when the Government mean to temper the wind to the shorn lamb? Does not he realise that the figures we have at present indicate that attendances this year will reach a new low of 17 million? Does not that indicate that a reduction in tax is no solution, and that the industry can be saved only by the abolition of this tax?
    Mr. Vaughan-Morgan: That question raises rather different issues. The hon. Member asked me to make a forecast—and it depends on a good many factors, not excluding the weather and the quality of the films.

    Weights and Measures
    Miss Burtonasked the President of the Board of Trade if he will make a statement concerning the progress of the preparations he is now making to introduce, as an interim measure, regulations under existing legislation pending a new Weights and Measures Bill.
    Mr. Vaughan-Morgan: The representations made as a result of the statutory consultations are being studied and, where necessary, discussed with the organisations concerned. A number of organisations have not yet replied, but this will not delay a decision.
    Miss Burton: Is the Minister aware that on 21st May last the Parliamentary Secretary was quoted in The Times as saying that for many years this Government had been trying to find time to introduce a new Weights and Measures Act? Can he give the House an assurance that such a Measure will be introduced in the immediate future—or will there be a further wait, until the party on this side of the House becomes the Government?
    Mr. Vaughan-Morgan: The Question relates to the regulations, and my right hon. Friend hopes and expects to lay them at the beginning of the next Session.
    Miss Burton: It would have been a help if the Minister had said that to begin with.

    Machine Tool Exports
    Miss Burtonasked the President of the Board of Trade whether he is aware of the difficulties being experienced by British manufacturers in their endeavours to export machine tools to Iron Curtain countries, and that prior to their being able to accept an order a minimum procedure lasting six weeks is involved; and if he will take steps to shorten this period.
    Mr. Vaughan-Morgan: Most machine tools do not require export licences. For
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    the rest, I am not aware of any unreasonable delays in dealing with applications for licences. There is no minimum procedure of six weeks, but cases which have to be referred to our partners in the Paris Group are bound to take a little time.
    Miss Burton: I am not sure if I heard the Minister correctly. Did he say that most machine tools were not on the embargo list?
    Mr. Vaughan-Morgan: I said that they did not require export licences.
    Miss Burton: Why, then, do the manufacturers in Coventry understand the position quite differently? Is the Minister aware that those manufacturers have written to me saying that there is a procedure which takes a minimum of six weeks in the Co-ordinating Committee? Are the manufacturers wrong or is the Minister wrong?
    Mr. Vaughan-Morgan: I can assure the hon. Lady that the manufacturers are wrong. I think that she is generalising from a particular case affecting a firm in her constituency. I think that there has been a misunderstanding on her part.
    Miss Burton: The Minister is wrong there.
    Miss Burtonasked the President of the Board of Trade whether he is aware of the anxiety among British machine tool manufacturers at the diversion of embargoed machine tools orders from this country to Western Germany, and that machines required for the production of agricultural bearings are included; and how soon he expects to remove these from the embargo list.
    Mr. Vaughan-Morgan: We do from time to time hear of complaints, but so far I have seen no convincing evidence of any failure on the part of our partners in the Paris Group to honour the obligations which they, like us, have freely accepted. As regards the second part of the Question, it is too soon yet to say if or when particular types of machine will be removed from the embargo list.
    Miss Burton: Dealing with the last part of the hon. Gentleman's Answer first, is he aware that for some time his right hon. Friend has been telling us that

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    this embargo list is to be shortened? Secondly, if the manufacturers send him details of orders which have gone to Western Germany, will he be prepared to admit his mistake?
    Mr. Vaughan-Morgan: If the hon. Lady will give me those particulars I shall certainly look into them.

    Exports to China
    Mr. Rankinasked the President of the Board of Trade to what extent the relaxation of the embargo on 30th May last has resulted in an increase in British exports to China; and if he will make a statement.
    Mr. Vaughan-Morgan: There has recently been an increase in our exports to China, but there has been no increase in exports of formerly embargoed goods However, trade figures later this year may reflect an improvement due to orders currently being placed here by the Chinese purchasing mission.
    Mr. Rankin: Can the Minister confirm, in relation to those goods—in addition to some of the formerly embargoed goods, such as copper—that although the embargo has been relaxed a new and arbitrary restrictive list has been produced which is hindering exports of certain goods?
    Mr. Vaughan-Morgan: It is not a very specific question. In general, the pattern of our exports is determined by the purchasing policy of the Chinese authorities, but the purchasing mission has placed substantial orders here.
    Mr. Jay: As there is such a general wish among British industry for a further relaxation of this list, can the Minister say whether the Government are making further progress in that direction?
    Mr. Vaughan-Morgan: I think that the right hon. Gentleman knows that the strategic controls for exports to China and the Sino-Soviet bloc are being reviewed by the Co-ordinating Committee in Paris. We hope that it will arrive at a decision as soon as possible.

    Wool Textiles (Canadian Import Duties)
    Mr. Wadeasked the President of the Board of Trade what representations he has made to the Government of
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    Canada on the subject of import duties on British wool textiles, having regard to the serious effect which any increase in such duties would have upon trade between Britain and Canada.
    Mr. Vaughan-Morgan: As soon as the report of the Canadian Tariff Board on wool textiles was available, my right hon. Friend sent a message to the Canadian Government expressing our serious concern that no harm should be done to this very important British export to Canada.
    Mr. Wade: Although the proposed increases have not yet been put into effect, does the Minister agree that they are directly aimed at British wool textiles, and that they will have a very serious effect not only on the British wool textile industry but also on the flow of trade between Canada and this country, which should be encouraged?
    Mr. Vaughan-Morgan: We have drawn these points to the attention of the Canadian Government. Their policy has not been announced, and I hope that due heed will be given to the very strong representations that have been made.
    Mr. Hirst: Will my hon. Friend draw particular attention to the unfair discrimination involved in the proposals? Compared with 1954, when the last inquiry took place, can he confirm that the British trade portion of the imports has fallen slightly from 39 per cent. to 37 per cent., while the trade of its competitors—mostly from Italy—has increased five times? Is not it a fact, therefore, that the proposals indicate a clear discrimination which is not in accord with the declared aims of the Canadian Government?
    Mr. Vaughan-Morgan: We have drawn the attention of the Canadian Government to the inconsistency between the measures recommended and the wish of both Governments to increase trade between the two countries.

  NATIONAL FINANCE

    Estate Duty (Valuation of Land)
    Captain Corfieldasked the Chancellor of the Exchequer whether he will introduce legislation to place the valuation of land for the purposes of Estate Duty on the same basis as that adopted for the valuation of land for the purpose

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    of compensation where land is acquired by Government Departments or local authorities under compulsory powers.
    The Financial Secretary to the Treasury (Mr. J. E. S. Simon): No, Sir.
    Captain Corfield: Am I to take it from my hon. and learned Friend's Answer that he is satisfied with the basis of valuation for Estate Duty purposes? If so, does not it follow that the basis of valuation for compensation is highly unsatisfactory and urgently needs revision? May I further ask him whether, and in what way, any recognition of the unfairness of compensation is made in relation to Estate Duty where compulsory acquisition closely follows inheritance?
    Mr Simon: The answer to the first part of my hon. and gallant Friend's supplementary question is, "Yes, I am satisfied that the basis of valuation here is fair." As for the second part, my hon. and gallant Friend has a Bill pending before the House at this moment, and it would not be appropriate for me to comment upon it. As for the third part, there is a provision in the law whereby, if property which has borne Estate Duty is compulsorily acquired within five years of the date on which the duty was paid, the value for Estate Duty purposes is reduced to the amount of the compensation.

    Universities
    Mr. Mossasked the Chancellor of the Exchequer whether he is aware that several new universities will need to be built in order to cope with an increased number of students in the period 1965–70; and if he will make a statement on the steps which Her Majesty's Government are taking to provide for this.
    Mr. Simon: As my right hon. Friend the Chancellor of the Exchequer explained in his statement of 20th February, the Government have authorised the preparation of a university building programme for the years 1960 to 1963, designed to provide for the increased student numbers that are expected. Most of the expansion will take place at existing universities, but one new institution is planned in Sussex.
    Mr. Moss: Is not it a fact that these plans, while very welcome, are based upon the assumption that there will be 124,000 university students by 1965 and
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    thereafter an increase of 10 per cent. to 136,000 from 1965 to 1970? Has the Minister seen the recent report of the Association of University Teachers which says that, in fact, the number will be 145,000 and will require the construction of five new universities of the size of the present University of Manchester?
    Mr. Simon: The hon. Gentleman will remember that in his statement my right hon. Friend did not exclude an increase in the programme, if the economic condition of the country permitted. I have read the reported views of the Association of University Teachers. I think the figure mentioned was based on the number the association thought could be accommodated in the universities, and it based its view of the requirement of new universities on the fact that it thought that no university should exceed 4,500 places. That is not the view of those who advise Her Majesty's Government, nor is it shared by many educationists.

    Customs (Gifts and Second-hand Articles)
    Mr. Hector Hughesasked the Chancellor of the Exchequer if he is aware that present regulations enable Customs and Excise officers to seize from travellers coming into Britain imported gifts and imported second-hand articles which they suspect are dutiable and, on non-payment of duty, to have them valued by undisclosed valuers, and that these regulations operate harshly; and if he will so amend the regulations as to ensure that bona fide gifts and bona fide second-hand articles may, on credible evidence being adduced, be imported by bona fide travellers free of duty.
    Mr. Simon: No Sir. The Customs are not empowered to seize imported articles merely because they suspect that the articles are dutiable. My right hon. Friend is satisfied that the Customs do not make harsh use of the statutory authority which they have to seize goods on which they have reason to believe the duty legally due has not been paid. He cannot agree to introduce the legislation necessary to free imported gifts and second-hand articles from liability to duty.
    Mr. Hughes: Does not the Minister realise that here is a real wrong which

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    is awaiting a remedy; that there is a conflict between natural justice and the avarice of the Customs and Excise? Does he realise, moreover, that it is a threat to our tourist industry and its subsidiary industries which provide a large proportion of the national income? Will he look into this again in relation to the particular matters about which I wrote to him?
    Mr. Simon: Save that I agree with the hon. and learned Gentleman that the tourist industry makes a valuable contribution to the economy of this country, the answer to each part of his supplementary question is. "No, Sir".

    National Gallery (Adjoining Site)
    Mr. Parkerasked the Chancellor of the Exchequer whether he has now authorised the purchase of the vacant site adjoining the National Gallery to enable a more satisfactory display to be made of its pictures, especially of recent acquisitions.
    Mr. Simon: I would refer the hon. Member to the Answer given by my right hon. Friend, the Minister of Works, on 10th June to the hon. Lady the Member for Flint, East (Mrs. White).
    Mr. Parker: Will the Minister bear in mind that there is much feeling that this opportunity ought not to be allowed to slip by?
    Mr. Simon: My right hon. Friend has taken note of public opinion as well as of all other considerations in this matter.
    Mr. K. Robinson: Will the hon. and learned Gentleman see that the Government take some initiative in this matter; that they do not sit back and wait until the site is acquired, but find out whether it will be available to them?
    Mr. Simon: My right hon. Friend is in close touch with my right hon. Friend the Minister of Works.

    Voluntary Wage Agreements
    Mr. D. Jonesasked the Chancellor of the Exchequer if he will identify the voluntary wage agreements which are causing him anxiety.
    The Paymaster-General (Mr. Reginald Maudling): No, Sir; I do not propose to particularise.
    Mr. Jones: If the Chancellor of the Exchequer will not particularise, how can he say that the productivity in any particular industry will not match wage increases given? If the right hon. Gentleman is not prepared to tell this House and the country on what he bases his opinion, would not it be better for him to be more specific rather than to generalise in the way he did last week?
    Mr. Maudling: My right hon. Friend said that a number of voluntary wage settlements had been made recently which had given him cause for a good deal of anxiety because they seemed bigger than any probable increase in productivity. My right hon. Friend would be entirely failing in his duty if he did not constantly put to the public that any general increase in wage levels in advance of a general increase in productivity is bound to result in higher prices.
    Hon. Members: What about the Rent Act?
    Mr. Robens: The Chancellor has been invited to identify the wage increases which give him this anxiety. Will he do that?
    Mr. Maudling: I have been perfectly clear. He will not.
    Mr. J. Griffiths: May we take it that the Government do not desire to see any voluntary agreements at all on wages?
    Mr. Maudling: The right hon. Gentleman is quite aware that the answer to that question is, "No."
    Mr. Shinwell: Are not we entitled to know what the Chancellor really means? Is he aware that there are some services in industry where there is no possibility at present of an increase in productivity? Are we to understand that there are to be no increases in wages despite the increase in the cost of living? Is it the policy of the Government that the standard of living is to be reduced?
    Mr. Maudling: The right hon. Gentleman is exactly on the point that if there is a general increase in wages in advance of a general increase in productivity, there must be inflation. In industries where the increase in productivity is at the maximum, if the total increase in those

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    industries is absorbed in increased wages, there will be nothing left for other people. The right hon. Gentleman is quite right.
    Mr. H. Wilson: Will the right hon. Gentleman say whether he thinks that rent increases have gone further than the rise in productivity? Will he say, secondly, in view of the references of the Chancellor to the need for increasing productivity, whether it is a fact that only the Government's policy of deliberately holding down production has prevented a much bigger increase?
    Mr. Maudling: The answer to the first of those supplementary questions is, "No." The answer to the second is that the Government's policy is responsible for the great strengthening of the position of the £ sterling in recent months.
    Mr. Robens: Will the right hon. Gentleman help us to make a decision about this? The Chancellor of the Exchequer has indicated his anxiety about some wage increases. If he wishes the trade union movement to assist him, would not it be as well if he said which increases cause him anxiety so that we may look at them and come to a decision upon them?
    Mr. Maudling: The trade union movement would resent the Chancellor expressing a view—[HON. MEMBERS: "Then why do it?"]—on individual wage settlements reached by voluntary agreement. On the other hand, the Chancellor would be entirely wrong if he did not point out to the nation that wage increases as a whole, if in advance of increased productivity, are bound to give rise to further inflation.

  RADIOACTIVITY, CORNWALL
  Mr. Haymanasked the Prime Minister whether he will make a statement on the high degree of radioactivity in Cornwall.
  The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I have been asked to reply.
  The average level of radioactivity in all areas containing granite is somewhat higher than elsewhere. The level in such areas in Cornwall, in general, is no higher than this average.
  Mr. Hayman: Can the right hon. Gentleman say whether radioactivity from geological sources is higher or lower than radioactivity from fall-out?
  Mr. Butler: I should need to examine that supplementary question with great care and send an answer to the hon. Gentleman.

  SWALLOW AIRCRAFT (PROJECT)
  Mr. de Freitasasked the Prime Minister, in view of the fact that it is widely believed by the military aviation experts in the North Atlantic Treaty Organisation countries that Dr. Barnes Wallis's variable geometry aeroplane promises to be the greatest single technical advancing aeroplanes since the war, whether he will hold an inquiry into the circumstances of the withdrawal of Government backing for its development.
  Mr. R. A. Butler: I have been asked to reply.
  The facts are known and, as my right hon. Friend the Minister of Supply stated to the House on 22nd May, alternative proposals embodying the principle of variable geometry have been invited from the company. Such proposals have been received and are now under consideration. A further inquiry is not therefore necessary.
  Mr. de Freitas: Do not the facts disclose that there is a very grave danger that this development, which may be the greatest in aviation since the jet, may have to leave this country unless the Government take a very far-sighted view, which unfortunately at present they do not appear to be doing?
  Mr. Butler: I indicated in my answers on Tuesday that it was not the intention of the Government to neglect this remarkable development in science.
  Major Legge-Bourke: In view of the wording of the original Question, may I ask if my right hon. Friend will bear in mind that the significance of this conception is quite as important in the civil field as in the military field and that it can be applied to any size of aircraft from the Gnat to the biggest ever thought of?
  Mr. Butler: I understand that to be the case.

BUSINESS OF THE HOUSE
Mr. J. Griffiths: May I ask the Leader of the House whether he will state the business for next week?
The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:
MONDAY, 16TH JUNE—Report and Third Reading of the Opencast Coal Bill.
TUESDAY, 17TH JUNE and WEDNESDAY, 18TH JUNE—We shall make further progress in Committee with the Finance Bill.
THURSDAY, 19TH JUNE—Supply [16th Allotted Day]: Committee.
Debate on Shipping and Shipbuilding.
FRIDAY, 20TH JUNE—Consideration of Private Members' Bills.
Mr. Bowles: Will the right hon. Gentleman give serious consideration to the view which is held by many hon. Members that the Committee stage of the Finance Bill should, in future, be taken upstairs in Standing Committee? The Government, as he knows perfectly well, are always able, and will be able later this afternoon, to refuse debates to hon. Members on other subjects, debates which they, and perhaps other Members of Parliament, regard as very important.
Mr. Butler: That would be a major change in our procedure. It has always been traditional for the Finance Bill, largely for the benefit of hon. Members, to be taken on the Floor. However, this is the sort of question which ought to be considered by the Select Committee on Procedure, which is now sitting. That would be the right place to ventilate such an idea.
Sir F. Medlicott: Can my right hon. Friend say how soon he anticipates it may be possible to find time to debate the Report of the Committee on Bankruptcy Law Amendment?
Mr. Butler: There are many candidates for debate, and I shall certainly see that that one takes its place in the queue.
Mr. Shinwell: Reverting to the question asked by my hon. Friend the Member for Nuneaton (Mr. Bowles) on the
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subject of procedure, would not the Leader of the House agree, having regard to all the considerations involved—the waste of time of the House, the nonattendance of Members during debates, and the like—that the time has come for a major change in the procedure of the House? Does he not think that it would be to the advantage of the House and of democracy in general if we used the House more as a sounding board to illuminate the minds of the public on important topics, rather than have discussions, as I ventured to say the other day in an Adjournment debate, on such things as cosmetics, babies' dusting powder, babies' nappies and ladies' unmentionables?
Mr. Butler: Those are all matters of a certain importance and I am sure that we should not underestimate their relevance to public affairs. At the same time, as Leader of the House, I would certainly hope that the Select Committee on Procedure, which we have deliberately set up, will turn its mind to these issues and to the interest obviously exhibited in them by hon. Members. I have not yet given evidence to that Committee. I am in process of doing my best to furnish my mind on what I believe to be the general wishes of the House, consonant with the age in which we live.
Mr. Donnelly: Will the right hon. Gentleman consider the prospect of having a debate on the Wolfenden Report? Has he made any further progress in considering whether to have a debate before the end of July?
Mr. Butler: I had better not make any observation on that at the moment, because the subject is the second Order for discussion tomorrow. Whether it will be reached, I cannot say, but it is on the Order Paper as the second Order. Apart from that, it is always open to the Opposition to choose a Supply Day. I certainly think that an estimation of public opinion, as reflected in this House, would be of value.
Mr. J. Griffiths: Is it not the tradition of this House that when we consider such Reports it is the duty of the Government to provide time for debate?
Mr. Hyde: Is my right hon. Friend aware that if he would provide a day for the consideration of this Report I should

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be very pleased to withdraw my Motion, which has been put down for tomorrow?
[To call attention to the Report of the Departmental Committee on Homosexuality and Prostitution; and to move, That this House takes note of the Report of the Committee on Homosexual Offences and Prostitution.]
Mr. H. Morrison: Can the right hon. Gentleman say now when he will be able to provide time for the debate which was promised for after the Whitsun Recess on the Report of the Committee of Privileges?
Mr. Butler: I rather expected that that important question would be asked. I had intended to have a preliminary conversation with the Leader of the Opposition as to which day would be convenient, but as he is away today and I gathered that I could not see him before the end of the week, and certainly not before I announced the business for next week, I postponed consideration of a day when a Motion might be tabled.
There is a case for a Motion to refer the matter back to the Committee of Privileges. If the right hon. Gentleman wished to discuss it with me I should like to make arrangements by which we would have only one debate on the matter, as it would be rather difficult to find time for two days before we adjourn. As this is not only a matter for the Leader of the House and the Opposition, but also for private Members, I will be at the service of private Members if they wish to make representations to me.
Sir G. Nicholson: With reference to the debate on a Motion concerning the privileges of the House, will my right hon. Friend bear in mind that he will be moving a Motion not as a member of the Government, but as Leader of the House? In view of that, will he undertake that the Whips will not be on, but that there shall be a free vote?
Mr. Butler: On the question of referring back to the Committee of Privileges, my hon. Friend might not feel that that is a matter which raises such violent principle as what would happen if we were considering the actual question of any sanction to be taken in any such matter. If it is just a procedural matter I think it more than likely that it will be treated
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as an ordinary Motion which is officially supported by the Government.
Mr. Ernest Davies: Before the Recess the Leader of the House undertook to look into the question of having an early debate on the question of vehicle testing. Does he appreciate that it is desirable to have a debate before the regulations are laid, as once they are laid they cannot be amended, and that the Opposition wish to make their views known about testing being done by private garages which may be interested parties?
Mr. Butler: I had better see what the period for laying the regulations is, so that there shall be no short circuiting of the matter, before I reply to the hon. Member.
Mr. Ede: There is notice of a Prayer on the Order Paper dealing with the amalgamation of the police forces of Cardiganshire and Carmarthenshire. Rumour has reached me that it was proposed to take that Prayer on Monday. Whenever it is to be taken, may we take it that arrangements will be made for the debate to start comparatively early in the evening?
Mr. Butler: We are at present discussing this matter through the usual channels. It does not look quite so likely as it did that the Prayer will come on on Monday. It may be after that, in which case I will inform the right hon. Member.
Mr. H. Morrison: Further to the question of the debate on privileges, speaking purely for myself, I see no objection to seeking to take the two points on one day. But is it not a fact that Reports of the Committee of Privileges are normally debated with the Whips off? If I may say so, I am very much surprised to hear that the Leader of the House is proposing to put the Whips on in the debate on the point of substance about this Report. May I therefore ask whether, in accordance with practice, he will take the Whips off?
Mr. Butler: Perhaps the right hon. Gentleman did not apprehend what I said or intended to say, which was that if it was a procedural question of referring the matter to the Committee of Privileges I thought it would be legitimate

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to treat that as an ordinary Motion with ordinary Government support. If it were the Report of the Committee of Privileges itself, the main issue, it would be wiser to take it as an ordinary open question and Members be allowed to vote as they liked.
Sir G. Nicholson: I cannot see the distinction between Government action on what my right hon. Friend calls a procedural Motion and on the other sort of Motion with regard to the Committee of Privileges. Surely, in all matters concerning the Committee of Privileges, my right hon. Friend is acting as the Leader of the House and not as a member of the Government. I would ask him to think again on that point.
Mr. Butler: It may not be necessary to have a debate, if we are asking the Committee of Privileges to look at this matter in the light of its Report. I rather wish to get agreement with the Leader of the Opposition that that matter should be formal. Then we could have our main debate when the matter came back again. Thereby we could have two discussions which were in no way inhibited. On the second occasion the House would, I think, wish to have as free a vote as possible.
Mr. Grey: In view of the fact that there is a Motion on the Order Paper on opencast mining, signed by a number of my hon. Friends and myself, does not the right hon. Gentleman think that it would be much better to take a debate on that Motion before proceeding with the Opencast Coal Bill?
[That this House, bearing in mind the likelihood that some collieries may be closed, either because of exhaustion of seams or high stocks of coal, that redundancy will result, and that this process will create a considerable recruiting problem when a policy of national expansion is resumed, calls upon H.M. Government to issue a direction to the National Coal Board to reduce the output of opencast coal until the demand for coal supplies increases to the point when additional supplies of opencast coal are required.]
Mr. Butler: I was aware of the hon. Member's Motion, but we cannot put off further consideration of the later stages of the Bill.
Mr. S. Silverman: May I refer the Leader of the House for a moment to the matter of the Committee of Privileges? Is it not correct that the Report from the Committee of Privileges was really incomplete in that it left one question open and the House decided to refer it for a judicial opinion? Now that the judicial opinion has been received, there is no question of substance to be discussed by the House until the Committee of Privileges has made a complete Report.
Mr. Butler: I am obliged to the House for the interchanges that we have had. They may make it possible for me to put a Motion on the Order Paper early next week, referring this matter back to the Committee of Privileges. We could take that Motion formally and await the final conclusion of the Report of the Committee of Privileges for our debate. That would save time and give us a much better opportunity for discussion.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 11th June].
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 3.—(ENTERTAINMENTS DUTY.)
    3.43 p.m.
    Mrs. Eirene White: I beg to move, in page 2, line 32, to leave out "one shilling and sixpence" and to insert "two shillings".
    Perhaps, Sir Charles, you would be agreeable that we should discuss with this Amendment the preceding Amendment in the name of my hon. Friend the Member for Govan (Mr. Rankin), in page 2, line 30, to leave out "one-third" and to insert "one-sixth", which has not been selected.
    The aim of both Amendments is to extend to some degree the proposals made by the Chancellor of the Exchequer for the reduction of Entertainments Duty, or as I prefer to call it, the "cinema tax", because this duty affects nowadays no other form of entertainment but cinemas. We are, of course, aware that the reduction this year is of great substance. It has been welcomed by the cinema industry.
    On the other hand, as the Government know, the case put forward by the industry was not for the partial remission of the tax, but for its total abolition. I know that some hon. Members who take a very keen interest in this matter will wish at a later stage to adduce arguments for total abolition, but we recognise that for any Chancellor to deprive himself of such substantial revenue as would be involved in the total abolition of this tax is a little too much to expect. There is a strong case this year, whatever might be done in subsequent Budgets, for something a little more generous than has been proposed.
    Then comes the question of method. One method is to vary the proportion of tax to be levied on the amount of the seat price above 1s. 6d. At present, the proposal is that we take out one-third of the price above 1s. 6d. One can vary that proportion. The other way, which has certain advantages, is to increase the
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    minimum figure from 1s. 6d. to 2s. If we did that, and exempt all seat prices from 2s. downwards, it would have a particularly beneficial effect on the smaller cinemas which, on the whole, receive the sympathy of this Committee. The smaller cinema is not necessarily the cheapest. There are one or two in London which are not very large, but which are extremely expensive. In most towns and villages, however, the smaller cinema has much the larger proportion of inexpensive seats.
    Cinematograph exhibitors who tried to work out the effects of the Amendment tell us that if we increased to 2s. the sum below which no tax will be levied, about 750 cinemas would be freed entirely from the payment of Entertainments Duty. Under the present proposal of the Chancellor that 1s. 6d. should be the limit, about 147 cinemas would pay no tax at all, in addition, of course, to the remission of the tax on the cheaper seats of all other cinemas. They tell us that if we made this further Amendment there would be another 750 cinemas freed, making almost 900 in all entirely exempt from the payment of this tax. That would clearly be a very great benefit to smaller cinema exhibitors, many of whom have had a very difficult time.
    Even in the last few weeks, since the Chancellor opened his Budget, there have been fairly encouraging signs that, given very good pictures, it is still possible to draw large audiences to cinemas. It so happens that in the last few weeks there have been films which have been outstanding in their box office takings and which have brought a breath of encouragement to the industry. Nevertheless, outstanding pictures do not reach the small cinemas which we are now discussing and which cause us much concern, until they have been shown already in first-run, second-run and possibly even third-run houses. It takes a very long time for a picture like "The Bridge on the River Kwai" to reach the smaller cinemas, even if it ever reaches them at all. The smaller cinemas are not always in a position to book them. The fact that there are outstanding pictures cannot be used as an argument for refusing further relief to the cinemas which we are now discussing.
    I cannot estimate the cost of this proposed Amendment, but I think I am right in saying that it would be about

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    another £5 million. That may sound a very considerable concession. But, after all, the Chancellor has to look at this from the long-term point of view. If the tax remains sufficiently onerous, the small cinemas will be driven out of business altogether. We know that cinemas have been closing because of financial difficulties, and if a further number of them close, then, of course, the Chancellor receives less tax.
    Therefore, the Chancellor should balance any proposed remission of tax against the possibility that if the remission is not granted the cinemas may have to close their doors. If they go under in the struggle against television and other forms of entertainment he will be left without this tax, which will leave him worse off in the long run than if he made some adjustment now.
    Those of us who follow the fortunes of this industry, and who have spoken on this matter many limes in the House, are fully aware of some of the difficulties which still face the industry in spite of the help given by the Chancellor this year. We still feel that the tax which is now levied on cinemas only, and, as I have said, on no other form of entertainment, and which is levied without any regard at all to whether the establishment concerned is making a profit or a loss, is a tax which has really had its day.
    I repeat that we understand that it may be difficult for the Chancellor to do more now than he has done in the sense of total abolition and that is why we are confining ourselves, in this Amendment, to a relatively small further concession.
    We had yesterday the annual Report of the National Film Finance Corporation for the year ended 31st March, 1958. It points out that where British film production is concerned, which is of extreme importance to us, it will get roughly 10 per cent. of the remission which has been already proposed. I think that many people do not realise what a relatively small amount of the gross takings of the cinemas ultimately reaches the producer of the films on which the cinemas depend. In the speech which Mr. John Davis recently gave to the Chartered Institute of Secretaries—a speech which I commend to anyone who
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    wishes to learn the facts about the cinema industry—he points out that of the gross takings at the box office, which, in the last few years, have been, in very round figures, about £100 million a year, only about £15 million a year reaches the producer.
    The Paymaster-General (Mr. Reginald Maudling): On the figure which the hon. Lady represents as the amount going to the producer, has she taken into account the alteration of the levy? If she does, I think she will find that the proportion is a good deal higher than 10 per cent.
    Mrs. White: The right hon. Gentleman is, of course, quite right. The Report from which I was quoting was up to March of this year. We have had some adjustments in the levy which also affect the other figure which I was about to give. Even so, and notwithstanding some improvement in the levy, one must remind oneself that the film producers do not get anything like as large an amount as, I think, the general public supposes them to get out of the gross takings at the box office.
    We still do not know what arrangements the cinema industry itself intends to make as to the possible division of the spoils, if I may put it that way. That is still being actively discussed by the various interests. In fact, the National Film Finance Corporation also draws attention to the fact that it hopes that the arrangements made in this respect will be such as will benefit the film producers. We have had many discussions on the general state of this industry and I know that my hon. Friends wish to put a number of points, so I will not unduly detain the Committee. I would only say that I think that we have a very strong case for suggesting that the Chancellor might go a little further this year than he has gone in the direction I have indicated. This would be of further assistance to the small cinema.
    The Paymaster-General has mentioned the levy. One has to recall that, with all the changes that have taken place, there are certain small cinemas which are now liable for levy which were not previously liable to levy. We have discussed that on previous occasions when the regulations of the levy were before us and I do not wish to enter into that now. It is, however, a point which one should have

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    in mind when considering the position of these smaller establishments.
    I think that if the other Amendment were accepted it would free entirely a further 750 cinemas. That is a very substantial number. There are about 4,000 cinemas in the country, and to relieve a further 750 entirely from tax, with all the bothers of collection, and so on, would, I think, be well worth doing. It would not relieve to any great extent the larger or more prosperous cinemas, because in them the great majority of seats cost 2s. or more. They are the ones which are benefiting primarily from the big pictures shown in their cinemas. I am talking not only of pictures of outstanding quality, but also of those which require very elaborate screens and projection arrangements, which may draw the public by their novelty or by their intrinsic merit, and which do not affect the smaller cinemas at all because they are not in a position to install the equipment required. For that reason the smaller cinema, relative to the larger cinema, is being placed in a very disadvantageous position because it cannot compete with Todd-A.O., or any of the other special attractions which the major cinemas are now going in for.
    We have a good case for suggesting that the Chancellor should go a little further. He may feel that the Amendment that we have suggested is not the most desirable one and he may prefer the method suggested by my hon. Friends in the previous Amendment. That Amendment would take a proportion rather than alter the proposed maximum amount. I think myself that the suggestion of 2s. is probably the better. It is an amount easy to administer, and it would have the effect of helping the smaller cinemas in a way in which the other Amendment would not. Whichever one he chooses—and we should be glad to know the one which he prefers—I think that there is a strong case for something more being done this year towards the removing of a tax which has now so little justification.
    4.0 p.m.
    Mr. A. E. Cooper: I have much sympathy with the case made by the hon. Lady the Member for Flint, East (Mrs. White), but I think that we are not getting down to fundamentals with this industry. The remission which my right hon. Friend has given in the
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    Budget has in no case been passed on to the consumer. In other words, the cinemas, small and large, will continue to play to the same small audiences to which they have played for a long time. All that will happen is that in some cases the loss margin will be reduced or the profit margin will be somewhat increased.
    I submit to the Committee that we have to ask: why are the cinemas playing to half-empty houses? The answer, surely, is very simple. The industry, by and large, is producing very poor films. For pictures such as "The Bridge over the River Kwai" there is no difficulty whatever in filling the cinemas over and over again. There is plenty of evidence of that from certain films which are in the West End, have been there for some time and, because of their merits, will be there for a long time yet. It has been proved over and over again that the suburban cinemas will be packed night after night for films of high quality.
    It therefore seems to me that what the cinema industry must do on the production side is to get round to the production of high quality films. All hon. Members associated with industry know perfectly well that if we produce a bad product in industry we expect to suffer for it. I do not see why the cinema industry should be relieved from the effects of competition, as we are apparently expecting it to be relieved. I submit that the hon. Lady and her hon. Friends who have great interest in this matter, would do well to point out to the production side that it is at that end of the industry that the remedy for the malaise of the industry lies.
    Mr. John Rankin: I should like to make my points on the Amendment standing in my name and the names of some of my hon. Friends, to line 30. Before developing in a little more detail what I intend to say, I should like to say a word, not in reply to the hon. Member for Ilford, South (Mr. Cooper), but in supplementation of what he said, because he has suggested that a good deal of the trouble which resides on the exhibiting side of the industry today is due to the poverty of the films being shown.
    The productive side is tied to the admission side. The amount of money which is devoted to the production of films depends

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    almost wholly on the number of people who go to see the films, and that number is steadily dropping.
    Mr. Ellis Smith: They see them in their own homes.
    Mr. Rankin: That is a point which we might develop later, but it is not pertinent to the narrow aspect of the Amendments. Many of us hope to develop it on the Question, "That the Clause stand part of the Bill," and my hon. Friend's co-operation will then be very warmly appreciated.
    Mr. Ellis Smith: I am not out of sympathy with my hon. Friend's plea. I was only trying to emphasise the point.
    Mr. Rankin: I certainly agree that there is competition from television.
    The hon. Member for Ilford, South has stated a dilemma, and that dilemma must be broken at some point. We feel that if it were broken at the point of taxation we should be making a contribution to greater vigour within the industry which would result in better production and better films. He must realise that taxation is very heavy on the British film industry—relatively much heavier than that on the American film industry, because no tax is paid in America on any seat under 6s. 9d. We have no situation in this country which corresponds to that in any way at all. British films, on both the exhibiting and production sides, have been under very heavy competition from the Americans, and the handicap which has been placed on the British film industry has been placed there largely by the Government through taxation which is for too heavy.
    That is why we feel that the dilemma, which has been so well stated by the hon. Member, is perhaps most appropriately dealt with from the point at which we are attacking it. I believe that the Government realise that fully, because this afternoon, in reply to my Question, the President of the Board of Trade was compelled to admit that if we compared attendances for the first quarter of 1958 with those for the similar quarter in 1957, the fall was 20 per cent. That is a very serious decline. Already, the industry calculates that if that trend continues this year will see a "new low" in total attendances. If that happens, less money will go into the productive side in the making of films, and
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    when that happens the quality may suffer along the lines which the hon. Member feared.
    In fact, however, his fears are not so real as he imagined, because, despite the handicap of heavy taxation, British film production, over the last few years, has been showing a marked improvement in quality. I need only mention a film like "Richard III". The hon. Member for Ilford, South mentioned "The Bridge over the River Kwai". Those will compare with productions in any part of the world. Within the last month we have had, "Witness for the Prosecution", with Charles Laughton in the leading rôle giving a dramatic performance which has probably never been excelled in the theatre at its best. This is the effort of the British film industry despite the handicap placed on it by taxation. We who want to see British films doing well ought to aid them by whatever means are most appropriate These two Amendments are methods of helping it, and I do not think we shall be choosey if the Government adopt either of them.
    Perhaps I might now say a word or two in support of the Amendment in my name, the effect of which would be to ease still further, by halving it, the burden of Entertainments Duty on the cinema, which is the only form of entertainment now left to bear that tax. That is a stain that we want to wipe out. There is no such thing now as Entertainments Duty—it is a cinema tax, and in that connection I should like to draw attention to what the Chancellor said on 15th April last:
    'I must say frankly that it cannot possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public. If people prefer to occupy more of their leisure time in other forms of entertainment and less in film-going, some reduction in the number of cinemas seems inevitable. However, I am satisfied that the present level of the duty is, in the changed circumstances, now too high and should be substantially reduced."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 68–9.]
    The part of that passage that I think worth noting is that in which he says:
    "… some reduction in the number of cinemas seems inevitable."
    I do not know exactly what could be done for them, because I imagine that on both sides of the Committee it is accepted that there will be a reduction in the number of cinemas. It might even be said that the number of people

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    now attending cinemas is levelling out at the pre-war figure. The likely attendance of between 17 million and 18 million is practically that of 1938. It would, therefore, seem as though some form of rationalisation was taking place—a steadying up in the numbers.
    Coming from the Chancellor, however, the words
    "… some reduction in the number of cinemas seems inevitable"
    assume a different significance. Why must the Chancellor take it upon himself to hasten this inevitable reduction by continuing the imposition of cinema tax? The right hon. Gentleman said that the duty was too high and should now be substantially reduced. In other words, he says that the effect of the duty is to reduce the number of cinemas, and he therefore continues the duty in order to continue increasing the number of cinemas that close down—
    Mr. Maudling: My right hon. Friend said that the duty should be substantially reduced, and he did substantially reduce it.
    Mr. Rankin: Yes, but since he reduced it 20 cinemas have closed.
    It is, therefore, fair to say that even though the duty has been substantially reduced its very existence explains why cinemas are still closing. The duty ought to be abolished but, as I have already said, that is a wider aspect that we must leave until we debate the Question "That the Clause stand part of the Bill." However, I hope that we shall have an assurance that it is not Government policy to rationalise the exhibiting side by fiscal means.
    It would seem fair to assume that the Chancellor cannot be keeping on this tax for the revenue that he hopes to get from it. He said in his Budget speech that the reduction would cost £14½ million in a full year, and that he was giving away more than half of the then yield, but the tax yield for April of this year—the Budget month—was £2,190,000; or an annual rate of £26,280,000—not £29 million. It was falling in the very month when the Chancellor was cutting the tax. Since then, attendances have continued to fall because, as I have just said, a further 20 cinemas have closed since the Budget was announced.
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    4.15 p.m.
    The Chancellor's relief, therefore, could not save them, because it was too late and it was too little. That, indeed, is one of the criticisms that we might fairly make of the Government: that what they have done, even though it has been welcome in itself, has, in almost every case, been done a year too late. They did not act nearly so quickly as did the United States Government. When the American film industry over two years ago was in the state that ours is now, the American Government acted immediately, and acted in a more comprehensive way. The result has been that there has been some revival in the United States. That is a point that we can make, and it is one about which I hope the Chancellor will think when he is considering these Amendments.
    When we look at the April figures, after allowing for the Budget reduction, I do not think that the right hon. Gentleman can expect to get more than £13 million of revenue in the financial year, even if attendances remain static, but I think that it will be agreed from what has been said this afternoon that these attendances are expected to fall by a further 15 per cent. on the 1957 figures. Today's figure indicated 20 per cent., so that in a full financial year the Chancellor will be lucky if, on present tendencies, he nets £11 million—and if cinemas were to continue to close at a still more rapid rate even that figure might be substantially less.
    If the Chancellor cannot see his way to abolish the tax this year—although I think that he has still the opportunity—I press him to accept the first Amendment. I imagine that, at the very most, it would not cost him more than £5 million, but it would at least ensure that fewer, if any more, cinemas closed, and if attendance figures improve it could well cost him even less than £5 million.
    There is an alternative, of course, and it is one which I am sure he wants to avoid. If he does not do this, he may find that next year he is finally forced to abolish the tax—I am not making a prophecy about that—because I agree that the right hon. Gentleman realises now that that is the logical outcome of what is being done at present. It is better to abolish it altogether than to wait until so few cinemas may be open that there is

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    no alternative left. He may well by then have destroyed an industry which has been a very good dollar earner indeed, earning much foreign currency abroad.
    I am sure that the right hon. Gentleman will agree with me that if the industry is to continue earning that money abroad it can do so only if there is a good domestic market. We can only get that good domestic market, sound and stable, if the tax is halved, as I suggest, and finally, I hope, when we come to next year, completely abolished.
    Mr. Geoffrey Hirst: I am not unmindful of the extent to which my right hon. Friend the Chancellor of the Exchequer has helped in the substantial—which is the correct word to use—reduction in the Entertainments Duty this year, and I cannot be unmindful of the fact that Conservative Governments in earlier years have made some other reduction in the tax, all of which I applaud. I am not going to be ungracious about it, but I am going to be consistent, because I have often addressed the Committee on the subject, and hon. Members have been kind enough to listen to me.
    I accept the fact that the policy which we have carried out over the years, in the context of the speech of my hon. Friend the Member for Ilford, South (Mr. Cooper), but not as he developed it, has to some extent been tinkering with the problem, and I agree that the lesson was learned much better in the United States than here, to which fact I myself drew attention last year. Sometimes, this moving backwards by stages can, in the long run, cost more than recognising the problem for what it is, facing it and deciding on what type of surgery is required to complete the cure, in so far as the Entertainments Duty itself is in any way a cure.
    We have, perhaps, been in a little difficulty about that. I think that the discussion of this Amendment, which leans towards a further reduction, is helpful and wise. The hon. Member for Govan (Mr. Rankin) made a great point about the 20 cinemas that have been closed recently, and I feel that we have got to get the priorities right. I do not believe that Entertainments Duty is by any means the be-all and end-all of cinema closures. To a great extent, it is not. What it does affect is the overall
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    health of the industry. Attendances have been falling and this is part of a vicious circle. It is also largely because of the competition from other forms of entertainment, and because of the fact that the public will now only go to see films of a character quite different from the entertainment which they can get at home.
    This vicious circle also affects the extent to which Entertainments Duty, or cinema tax, as the hon. Lady the Member for Flint, East (Mrs. White) called it. which I think is a more correct name for it, if it is reduced, will enable the industry to help itself by making exhibitions more ready to supply cash for production funds, and, in turn, to increase the number of good films produced, and also to encourage cinemas through all that process to spend money on improving their efficiency and introduce new techniques when big enough to take them—and many are big enough to take them now.
    It is all a sort of vicious circle, and to the extent to which the right atmosphere can be created the Government can play a large part in this business. It is rather like sailing a rocky boat and the Government trying, by life-belts or launching a lifeboat, to rescue people. The better way would be to launch a new boat which does not need to have a lifeboat for this purpose, though I feel that my right hon. Friend has himself taken the biggest step of all Conservative Chancellors in recent years to achieve this purpose and to help this industry.
    I do not propose to use one of the bisques which I sometimes afford myself, though they do not come from the Whips Office, and I do not wish to range myself against the Government on this occasion. But I do want to point the story that comes out of this Amendment, because I think that the Opposition are right to bring it forward. I hope that the lesson will be learned, though I do not want to press it today, and I shall not do so, except possibly for some nominal taxation to square it up with the new forms of entertainment, such as television. I think that as soon as the Entertainments Duty is removed the more likely it is that the industry will adapt itself to modern considerations and techniques and do more to help itself, without Government support. That is what it wants and can do, if it knows that such a policy will be followed.
    Mr. Stephen Swingler: I agree fully with the hon. Member for Ilford, South (Mr. Cooper) when he says that the cinema industry has suffered so much from Government half-measures, under all Governments, since the industry itself began, but, having said that, I part company from the hon. Gentleman, because I disagree so fully with everything else he said.
    The hon. Gentleman introduced two typical fallacies about the industry. One was that the decline in attendances at the cinemas has something to do with quality. I just do not believe it. I should like to believe that there was some connection between the two, and, obviously, in particular cases, such as those of some of the films which have been quoted here today, including "The Bridge Over the River Kwai", one can point to certain evidence. I do not believe that there is either much more or much less rubbish being shown, though there is plenty of it, in the cinemas in 1958 than there was in 1948.
    Today, there is an annual rate of only 900 million attendances, and in 1948 it was 1,500 million. We cannot account for that difference by pointing to quality. I do not think that it has anything at all to do with it. But we can account for that difference by pointing to the fact that there are 8 million television licences today, which have very much more to do with it. One might also point to the fact that today there is less money jingling in people's pockets. There is a whole series of factors, and the quality of films is only one of very many factors which have influenced it.
    The other thing which the hon. Gentleman said, or inferred, was that quality pays, and therefore, if only the film industry would put its house in order and produce good quality films, everything would be all right. He said, quite naturally, and I agree with him, that those who produce bad products, as in other fields, ought to suffer for it, but I believe, after a modest study of the history and problems of the film industry, that that is not so. The whole problem facing the British film industry in all its history has been that good quality just does not automatically pay. In fact, the producers of films, both good and bad, in the United Kingdom, nearly always lose. It is quite rare for them to be able to get
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    their money back. Because of that situation, the House of Commons has long been troubled with various kinds of legislation, as well as with problems connected with fiscal interference with the industry.
    4.30 p.m.
    Mr. Hirst: Is the hon. Gentleman speaking about good quality films, or good entertainment quality?
    Mr. Swingler: In all respects, good entertainment quality or any other quality. There may be others with greater knowledge who will challenge me on this, but there are films which have been very good box office and excellent entertainment and highly popular, but on which the producers have not got their money back.
    The reason has been that there are certain specific characteristics about the film producing industry. One is the very high capital cost of producing films and another is the limitation of the British market as such. A third characteristic is the fact that American producers have a tremendous advantage in the enormous American market which they can use before sending their films into the British market. That gives them an additional profit, so they can afford to sell their films here more cheaply—and there is also the fact that Hollywood is very highly capitalised and advertised. There are special factors in the history and economics of the film producing industry which mean that one cannot draw simple analogies with other industries.
    In considering taxation on the cinema industry, we must recognise that the imposition of that taxation is completely arbitrary. We recognise that with other aspects of indirect taxation. The level of that taxation is charged according to the state of the industry and its alleged capacity to bear a certain amount of taxation, to provide a certain amount of revenue to the Exchequer. The second consideration is the desirability of fostering the industry and trade.
    I know that in the past some hon. Members have supported maintaining a certain level of taxation on cinemas in order to streamline the trade. They regard it as a good thing that a number of cinemas have closed partly because of the weight of taxation because, as some of them have said and written, they

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    thought that the country was "overcinemaed". They held the view that it was not a good argument to say that tax relief should be given to save some small cinemas from being closed down, since they believed that with developing television such cinemas ought to be closed down.
    A good case can certainly be made in that direction, but it is clear, on the basis of the state of the trade and taking into account what has been done for theatres and football matches, and so on, that there is an overwhelming case for a bigger reduction in taxation than the Chancellor has granted this time. One has to judge the Chancellor's actions in relation to the prosperity of the cinemas and of the production industry.
    There was in 1947 a decline of 18 per cent. in cinema attendances and by Christmas, 1957, we had reached the end of a period in which 400 cinemas had closed because of declining attendances and because of the margins which cinema proprietors had to pay taxation. Cinema proprietors, therefore, had an overwhelming case for the abolition of the tax, or at least its drastic reduction for their economic salvation.
    Moreover, those who say that the country has been or is now "overcinemaed" and that it is, therefore, not a bad thing that some cinemas should close must appreciate that the effect of the tax and the effect of this state of the cinema industry is to play into the hands of a few oligarchs. That is what is happening. The steady closure of the small cinemas, in spite of this concession, will eventually land us in a state where cinemas are divided between the Rank empire and the A.B.C. empire. We shall be faced with monopolistic concerns.
    I should have thought that that was a very bad thing. That process can be arrested only by reduction in taxation and by giving sufficient relief to small and medium-sized cinemas to enable them to stay open in this period of severe competition from television. That is a strong case in favour of giving a greater amount of relief, because the present relief is not sufficient to keep many of the small cinemas open for very much longer.
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    The second part of the case which we must consider is the desirability of fostering and attempting to promote the industry. I have already said that it is always difficult for film producers to make any money and to stay solvent, because of the difficulties of the preponderance of Hollywood productions and the economic advantages which the American industry has, and because of the limitations of the British market and the crazy economics of the cinema trade itself.
    If we think that British film production is important, it must have a favourable attitude from the State if it is to continue. To the extent that the producer benefits from tax relief, we ought to consider giving more tax relief. The amount which has so far been given is not sufficient to promote very much more film production. Only a small part of the relief will go back to production and it is production which is in a critical condition and whose continuance will affect the prospects of continuing the promotion of British films abroad, which, in recent years, has been so important.
    I know that a number of hon. Members were recently much influenced by the speech of Mr. Kenneth More about the effects and influence of British films in Commonwealth countries like India and Pakistan. British films are now making an impact in the South American market and considerable progress has been made in the United States. The continuance of this development and the maintenance of even the present level of production undoubtedly depends on seeing that more money goes back to the producer, both from the box office and from the British Film Production Fund.
    I am very glad that the statutory levy has been raised and that that money will flow to those producers whose films are commercial successes at the box office. Because this is important in relation to possible dollar savings, as well as to the economic and social value of promoting British film exports, I ask the Chancellor to pay attention to the need of British film producers to get a fair share of the tax reliefs that are given.
    Although some say that we should be gracious and congratulate the Chancellor on the step that he has taken in giving this tax relief, I believe that he was compelled this year, by the economic facts

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    of the cinema trade and the film industry, to give substantial relief. I am sorry that he has not taken the opportunity to abolish the tax altogether but has left the cinema as the only form of entertainment which is taxed in this country, in spite of the enormous number of cinemas forced to close because of their economic situation.
    I ask the Chancellor to remember, lest we face a worse position next year, that he is contributing, by retaining this level of tax, to further monopolistic tendencies in the industry which can kill a great deal of its initiative as well as be extremely dangerous for the variety of entertainment offered to the people. The right hon. Gentleman should make the further concession for which my hon. Friends are asking.
    Mr. William Shepherd: I hope that hon. Members, particularly hon. Members opposite, will forgive me if I say that I have been very disappointed by the tone of this debate. It gives an extraordinarily bad lead to the industry. The tone set is not one of the industry now facing its problems and defeating them but of again throwing itself back on the thought that, if only the Government gave a little more relief, all its problems would disappear. If I may say so, this debate has, so far, done a serious disservice to the cinema industry.
    We must face the fact that had right hon. Gentlemen opposite been on this side of the Committee the relief to the industry this year would have been about the same. There is no doubt about that.
    Mr. Swingler indicated dissent.
    Mr. Shepherd: I cannot bet on this, but if I did I should be very sure of winning money. Right hon. Gentlemen opposite would not have attempted a greater level of relief than has been attempted by the Government. I am quite certain that they, had they been on these benches, would have been resisting these Amendments as I hope that my right hon. Friend will resist them.
    We have heard a great deal about the closing of cinemas, but we should try to put the matter in perspective. In the 1930s, there was a great spate of cinema building, to new and luxurious standards. The fact that hon. Gentlemen so often forget is that, had there not been a war,
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    whether Entertainments Duty had been raised or not, a great number of those cinemas would have gone out of existence long before now. What happened? We finished the war with about 200 more cinemas than when we started.
    In other words, instead of the ordinary economic trends being followed and older cinemas going out of business because of the great inrush of new cinemas, the war stimulated the demand for attendances, and we had more cinemas at the end of the war than at the beginning. Small halls, drill halls and other such places were converted for cinema projection.
    Mr. John Cronin: I think that the hon. Member is not paying sufficient attention to the importance of the big increase in the standard of living of the people since the war, largely as a result of the policies of the Governments immediately following the war. There has been a substantial increase in the population, also. Therefore, one would expect a large increase in the number of cinemas.
    Mr. Shepherd: No. The increase in the standard of living is one of the reasons that the smaller, older, less luxurious cinemas find it difficult to continue. A man who was out of work and wanted a 9d. seat had to put up with anything. Today, that man has a job and he wants a good seat. That is an additional reason that the smaller and older cinemas find it hard to continue.
    Had it not been for the intervention of the war, by the normal process of attrition, some cinemas would have closed many years ago. Yet, as I say, we ended the war with 200 more than when we began.
    Mr. Donald Chapman: How can that be so? We have heard of cinemas which, in fact, were all still making a profit apart from Entertainments Duty. The hon. Gentleman's argument presupposes that Entertainments Duty always went on at this very high level.
    4.45 p.m.
    Mr. Shepherd: They were not all making a profit irrespective of Entertainments Duty. A number of cinemas, even those run by the chains, were certainly not making a profit even if one took into

    435
    account the abolition of Entertainments Duty. They have closed many. I hope that hon. Gentlemen will be realistic about this, because we undoubtedly have too many cinemas. But for the intervention of the war, which created an artificial situation, many of the cinemas which now exist—even some of those now making a profit—would have gone out of business.
    I listened to the hon. Member for Govan (Mr. Rankin) with absolute amazement. I thought he had been on a space trip, for he had really neglected to find out what had been happening in the past few months. It is no good talking about the doom of the cinema. There has been far too much of such talk by those in the industry. We are doing no service to the industry if we adopt that sort of approach. Why talk about cinema attendances declining when the fact is that cinema attendances are rising?
    The first quarter of this year gives a most encouraging indication. I am told that the second quarter, despite the bus strike which affects attendances in London, will show a very encouraging trend, also. If that is the case, we must not talk about the decline of the cinema. The industry itself is doing damage to its own prospects by talking about its business as a dying one.
    I believe that the cinema today is on the upgrade, and I disagree violently with the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who talked about quality as being unimportant. If we produce the right product, we can do the business. Of that I am convinced. Certainly, the cinema has little to fear in the long run from television.
    Mr. Swingler: Really.
    Mr. Shepherd: The hon. Gentleman says "Really", but let him address his mind to the facts. If a television company tries to produce an hour's entertainment, it can spend on it, at the very most, about £10,000. A film will have as much as £2 million spent on it. "Ben Hur" is being made in Rome at the moment, at a cost of £5 million. A television company cannot compete in real entertainment value with the cinema. I hope, therefore, that we shall not have this pessimistic attitude about television.
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    I believe that the cinema can beat television every time in terms of entertainment, and I hope that we shall all look to the increasing attendances of the last few months as a sign that the cinema need have no craven fear of television.
    The hon. Member said that quality did not matter. I could not disagree with that more. I am quite certain that if, for instance, it were made easier in the cinema business to make a profit, it would not necessarily guarantee that the product would be better. I believe that the stimulus in the industry now is a very real one. If it produces films of good enough entertainment value, which may be a different thing from quality, it can get the business. It is doing that today. The films of the last four or five months have been of exceptionally good quality and they are drawing in the customers.
    It is becoming increasingly clear that the independent is to play a much bigger part in production than ever before. Large schedules by big companies are proving to be impracticable, for reasons into which I will not go. I rejoice that the independent producer is, apparently, once again, to come into his own and to be a vital force in the business.
    I hope that all of us here will do all we can to make London and the surrounding area a centre of international production, and I hope that the Government will do all they can to that end. Some members of the trade have been trying recently to restrict the definition of a British film with a view to limiting the advantages which partially foreign-made films have here from quota facilities. I hope that the Government will not take any notice of those people. We want to encourage as many people as we can to come here to make films, and I hope that the trade unions concerned, particularly the A.C.T.A.T., will do all possible to ensure that these people are not driven away by restrictive practices.
    Mr. John Diamond: I am obliged to the hon. Gentleman for giving way. I am carefully following everything that he is saying, and I particularly agree that we should do everything possible to encourage people to come here to make films. But will he say, sooner or later, whether he is supporting these Amendments and whether he thinks that one way of encouraging people to go to the cinema is to reduce cinema tax?
    Mr. Shepherd: Of course I am in favour of reducing the tax and abolishing it altogether; but in the light of the existing economic circumstances I am satisfied that what my right hon. Friend has done is fair to the industry, and I stand by that. I repeat what I have already said, that I do not think that if the right hon. Friends of the hon. Member for Gloucester (Mr. Diamond) had been sitting on this side they would have done anything different. What my right hon. Friend has done is just and adequate in the circumstances.
    I am pleased that British film producers have stimulated their export sales. This is vitally important to us, because we cannot hope to recover the costs of production—which are increasing because films are better produced and better finished than in the past—from the home market. It is encouraging to find that we are getting more and more receipts from overseas.
    I hope that my right hon. Friend will continue to watch carefully and sympathetically the progress of this industry. My own feeling is that the industry can now bear this weight of taxation and can progress on the present basis. If it is shown that this feeling is wrong, then I look to my right hon. Friend to take action next year. However, I hope that the industry, meanwhile, will seize its opportunities and will cease to talk as though it is a finished industry. It attracts 900 million people or more each year. It has a turnover of over £100 million each year, and is the major entertainment industry in the country. It has a better prospect of winning adherents than any other form of entertainment. If it seizes its opportunities, it can regain its former prosperity.
    Mr. Cronin: I am always interested to hear a speech by the hon. Member for Cheadle (Mr. Shepherd). His contributions to our debates are usually very helpful and intelligent, but I think on this occasion some of us must have considerable difficulty in accepting some of his statements. For example, I am sure that cinema attendances have been rising in the last few months, but that is a very short-term way of looking at the matter. He must be aware that there has been a drop in the last 10 years of about 40 per cent., which is a gigantic fall.
    438
    Most of us in the Committee have received the submission to the Chancellor of the Exchequer by the All Industry Tax Committee of the film industry. According to the figures, admissions were 1,514 million in 1948, but that had dropped to 905 million in 1957. Therefore, I think it is going a little too far to congratulate the industry on a rise based on the last few months.
    Mr. Shepherd: That document also says that there is likely to be almost a similar fall this year as compared with last year, whereas, in fact, the attendances are rising.
    Mr. Cronin: I do not think that affects the main argument. What we are suggesting to the Chancellor and the Paymaster-General is that in view of the enormous fall in attendances there should be further relief in Entertainments Duty.
    My hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler) pointed out that the cinema industry is falling more and more under the control of the oligarchy. On general principles, that is obviously undesirable. Perhaps "oligopoly" is the proper word. I do not think we can escape from the fact that that is the tendency which is affecting so many forms of industry.
    We heard from the hon. Member for Ilford, South (Mr. Cooper) that the film industry would be able to look after itself much better if it produced films of higher quality. But there are certain problems here. One is that the industry has to produce enough films to fill the screens. That obviously means that the resources available have to be stretched further than would be helpful. Secondly, from where is the capital expenditure coming for these films of higher quality? A high quality film usually needs a large and heavy financial outlay, and there simply are not the profits available to plough back to produce the necessary capital resources.
    Of course, these difficulties are made even worse because the film industry shares the difficulties of all industries generally in suffering from the very restrictive monetary policy of the Government over the last two years. In improving the quality of films, the important thing is to ensure that there will be

    439
    a return for the necessary capital expenditure. Unfortunately, that money cannot be raised from private resources in the present rather low state of the film industry.
    We have had a discussion on two Amendments, one so ably moved by my hon. Friend the Member for Flint, East (Mrs. White) and the other moved by the hon. Member for Glasgow, Govan (Mr. Rankin). The second Amendment has certain advantages in that it perhaps produces more benefit for the smaller cinema. All of us are in favour of smaller cinemas as a general matter of principle.
    Mrs. White: Except the hon. Member for Cheadle (Mr. Shepherd).
    Mr. Cronin: Except the hon. Member for Cheadle. He takes such a lugubrious view of the fact that there are 200 extra cinemas that one cannot be expected to be too sympathetic on that matter.
    I do not think the Committee should be completely mesmerised by the misfortunes of the small cinemas. Where small cinemas are providing entertainment for a small community which cannot be entertained elsewhere or are providing an important public service, obviously we must do everything possible to retain them. But when they are merely alternatives to other more efficient cinemas, one must expect in the course of things that they will tend to decline in numbers. Therefore, I do not think that the Committee should be completely carried away by this idea of supporting small cinemas, although when they are efficient and are providing a useful service we must obviously bear that in mind.
    It has been made clear in the debate that there is a strong case in equity for reducing the Entertainments Duty. I think we ought to congratulate the Government on having reduced the duty as substantially as they have.
    Mr. Diamond: Not at all.
    Mr. Cronin: I cannot agree with my hon. Friend there. I think that we ought to congratulate the Government. The case for reducing the duty is overwhelmingly obvious. So often one comes across occasions where the Government cannot see something that is obvious.
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    When they do, we must give them some measure of credit.
    Mr. Diamond: What it is so obvious that the Government have not seen is this. Is it not the case that there should be no cinema tax whatsoever?
    Mr. Cronin: Perhaps one might more usefully argue that point on the Question, "That the Clause stand part of the Bill." However, the Government have moved in the right direction, and that is something. We are so accustomed to the Government moving sideways or backwards, but not forwards in the right direction. Therefore, it would not be inappropriate to accord some measure of credit for the relief that they have given in this case.
    5.0 p.m.
    One of the important aspects of this matter, which has been pointed out by my hon. Friend the Member for Flint, East and also by my hon. Friend the Member for Newcastle-under-Lyme, is that the cinema industry is very important to us in the export market. It is a most helpful factor in the balance of payments, and it would be a much more helpful factor if it had not been penalised to such an excessive extent by the Entertainments Duty.
    Many of these points would be more helpfully raised on the debate on the Motion, "That the Clause stand part of the Bill." I should, however, like to emphasise that if one of these Amendments is accepted it will certainly be helpful to the public interest generally. We have producers, directors and a cinema industry of very high quality—it may well be the very finest in the world. At the moment, the industry is carrying a heavy handicap. If that were removed or, at least, more substantially alleviated, it would be more satisfactory for the general economic future of the country.
    Mr. Maudling: We are dealing with two Amendments, the first of which is designed to give a general further reduction of duty to the cinema industry. That Amendment was not selected, but it appears on the Order Paper in the name of the hon. Member for Govan (Mr. Rankin). The cost of that would be about £5¼ million in a full year. The other Amendment, moved by the hon. Lady the Member for Flint, East (Mrs. White), is particularly designed to help the small

    441
    cinema, which was what the hon. Lady rather emphasised in her speech. The cost of that Amendment would be rather less than the hon. Lady estimated; it would be about £4 million in a full year. Both Amendments, however, involve substantial sums. I must say straight away that they are not sums which my right hon. Friend the Chancellor feels he could recommend the Committee to concede at this stage of our affairs.
    In this year's Budget, my right hon. Friend has done quite a lot to help the cinema industry. From some of the speeches which have been made, and, indeed, from some of the interjections from various sides of the Committee, this point did not seem to be sufficiently realised. In his Budget speech, my right hon. Friend said:
    "In reaching this decision, I have had fully in mind the difficulty which the fall in box office takings has caused to the industry as a whole—producers as well as exhibitors. I believe that we need to sustain a vigorous British film production industry."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 69.]
    The measures taken by my right hon. Friend in the light of that attitude involve reducing the total weight of duty upon the cinema industry by £14½ million in a full year, which is more than half the total present yield of the duty. That is a very large reduction indeed. In fact, in the course of some of our earlier debates on Purchase Tax, I have heard it commented that the Chancellor can find a lot of money for the cinema industry but cannot find £2 million for the bicycle industry and £3 million for this, that and the other. Fourteen-and-a-half million pounds is a very large sum in a Budget which, although it makes substantial concessions, does not scatter largesse everywhere. It is rather less than gracious of people not to recognise what a substantial move my right hon. Friend the Chancellor has made in the context of this particular Budget.
    I was grateful that the hon. Member for Loughborough (Mr. Cronin) acknowledged that, but he somewhat tempered his acknowledgment by his usual "dig" at the ability of the Government to observe only the obvious. I sometimes wish that when the hon. Member makes his speeches on economics, he had a similar ability to observe the obvious, but I cannot always say that he has.
    The effect of this reduction of duty is to reduce by more than half the total
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    yield of duty at present paid by the industry. That will mean that the net box office receipts, after deduction of tax, will increase by more than 25 per cent. That, surely, is a substantial increase and should be a big assistance to the cinema industry, as, I think, has been recognised by the industry since the Budget speech.
    Of course, the industry is not wholly satisfied; it wanted the tax entirely abolished. I think it has, however, been recognised by the industry that the move made by my right hon. Friend was a very helpful one. Indeed, at an earlier stage, the hon. Lady the Member for Flint, East—and nothing that she said this afternoon was in any way inconsistent with her earlier speech—said in the Budget debate:
    "I am inclined to think that the Chancellor has perhaps gone as far as could reasonably be expected this year, but he will understand that the industry will naturally expect some further relief in the future."—[OFFICIAL REPORT, 16th April, 1958; Vol. 586, c. 265.]
    With neither half of that statement would I quarrel. It is natural for industries always to expect further relief in the future and I trust that under the present Government those expectations will, in due course, be fulfilled in the case of every industry which has expectations. How long that would take is, however, another matter. So far as this year is concerned, the hon. Lady conceded that my right hon. Friend might be said to have gone as far as he could reasonably be expected to go.
    The greater part of the £14½ million relief resulting from this reduction in tax will accrue to the exhibitors. As for the producers, to whom reference has been made by the hon. Lady, by the hon. Member for Newcastle-under-Lyme (Mr. Swingler), the hon. Member for Govan and other hon. Members this afternoon, the funds accruing to them, when we take into account the adjustment of the levy, will be rather larger than the hon. Lady suggested. She suggested that a figure of 10 per cent. would go back to the British producers. That is perfectly true—
    Mrs. White: From the Entertainments Duty.
    Mr. Maudling: Yes. The hon. Lady will, however, find that, taking into account the levy, the total additional

    443
    amount that the producers receive will be very nearly double the 10 per cent. which she has in mind.
    Mrs. White: I was talking about the percentage of the Entertainments Duty relief. The right hon. Gentleman is talking about a gross amount, but we are not discussing receipts from the levy. The 10 per cent. is, I believe, an accurate figure for the Entertainments Duty relief.
    Mr. Maudling: I am not quarrelling with the hon. Lady's figures. It is not altogether irrelevant to take into account the adjustment in the levy which is now going on. The two things are happening simultaneously, and the total additional amount of funds coming into the production end of the industry will be about twice the figure of 10 per cent. for the Entertainments Duty relief to which the hon. Lady referred, although she was quite right in saying that only about 10 per cent. will accrue to the producers from the relief of duty.
    Mr. Swingler: The producers were expecting £3¾ million from the levy in any case, because that is provided for in the Act. When the right hon. Gentleman refers to a doubling of the 10 per cent. mentioned by my hon. Friend, does he mean that there is to be an increased amount from the levy and that this accounts for the difference, or is he taking into account some other figure for the levy?
    Mr. Maudling: The figures I am given show that the additional amount coming in through the levy and through the reduction of Entertainments Duty will be somewhere above £2½ million. The hon. Member will find that that is the position, although I agree that the actual details are not complete.
    Mr. Douglas Jay: Does that not mean, presumably, the raising of the levy back to what it was originally intended to be from the low level to which it has fallen in recent months?
    Mr. Maudling: I think so. This matter has, of course, been considered in the recent discussions on the levy. I agree that what I am saying about the levy is not strictly relevant to the discussion on Entertainments Duty, but I am trying to give a picture which will compare the
    444
    position of producers over the next year with what it has been. I quite accept that that is not strictly relevant to what we are saying about the Entertainments Duty.
    The first Amendment was designed to give a further relief of £5¼ million to the industry as a whole. In the circumstances of the current Budget, my right hon. Friend could not possibly accept this suggestion. He said also in his Budget speech:
    "I must say frankly that it cannot possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public.".—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 68–9.]
    The hon. Member for Govan quoted that passage in the course of his speech earlier this afternoon.
    There could be a great deal of argument how much various influences have contributed to producing this sudden surprising break in cinema attendances. As I understand it, experience in this country has been different from America, in that in America there has been a rather steep decline, whereas attendances here held up fairly well for a time and then there was a sudden break. Television may have played a big part. Entertainments Duty, of course, has its influence. The cost of the films, certainly, has an influence as well. From my acquaintance with people in the film industry, my opinion is that no one knows for certain what is the cause of this sudden change in the fortunes of the industry.
    I think that my right hon. Friend has recognised the position of the industry, and also the competitive position compared with television, in producing a reduction in the pre-Budget level of Entertainments Duty of, on the average, 58 per cent. Therefore, I am afraid that I cannot recommend the Committee to accept any suggestion that my right hon. Friend should go further in the way of concessions to the industry as a whole.
    I will deal now with the second point specifically raised by the hon. Lady the Member for Flint, East about the small cinema. Here, again, I am afraid that I cannot recommend the Committee to accept the proposal, and I am not sure that the hon. Lady will be entirely surprised at that. She moved the Amendment with moderation. She always

    445
    moves her Amendments, as we appreciate, with moderation, and on this occasion her arguments were also moderate, as was her style of address.
    Frankly, the case here for special treatment for the small cinema is not a very strong one. We could argue whether a small cinema is entitled to special treatment just because it is small. I agree with what the hon. Member for Loughborough said, that the question is whether as it is small and because it is serving some purpose in the community it therefore needs special treatment, but to say that just because it is small it needs special treatment seems to be a dangerous point of view. I know that if I push that argument too far I shall get into trouble with the hon. Member for Newcastle-under-Lyme for being an oligarchist or oligopolist.
    In the changes which my right hon. Friend has introduced, the weighting is in favour of the small cinema. The general average reduction of duty is 58 per cent. whereas in the case of the smallest category of cinema, seating about 500, the reduction will be something over 70 per cent. in the weekly rate of duty. Therefore, there is a weighting in favour of the smaller cinemas. Once again, to quote from the speech of the hon. Lady the Member for Flint, East in an earlier stage on the Bill, she said that the smaller cinemas were likely to benefit. Therefore, I think that one of the social concerns we have about these cinemas may have been met to some degree. I think the hon. Lady will recognise that we have gone some way in the direction she has in mind.
    There are special provisions applying to rural cinemas and cinemas in areas where the population is sparse. These have recently been extended, and since this extension we have had very few complaints. Our impression is that the point on cinemas in rural areas is pretty satisfactorily met. In these circumstances, I do not feel that on this Amendment either the case is made out for a further reduction of duty, particularly when, as I said earlier, the amount of money involved is as much as £4 million.
    To sum up, my right hon. Friend feels that this year he has, by reducing the duty by more than half, really done a great deal to help the industry which is admittedly facing considerable difficulty
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    and that in all the circumstances he cannot possibly accept Amendments which propose further reductions in the duty this year.
    Mr. Jay: We have had a very interesting debate with very little passion on either side, in which, as the right hon. Gentleman said, we have put forward moderate proposals with moderate arguments advanced for them. We have not proposed the total abolition of the duty. I only want to say now that the right hon. Gentleman has not convinced me that he has yet gone far enough to prevent a further rapid decline in the industry.
    I do not claim to be a great expert on the film industry, but it seems to me very likely that the Entertainments Duty is not the whole, perhaps not even the most important, reason for the sharp decline in attendances over the last two years, and particularly in the last year. But there is no question at all that the decline is a fact. It is no doubt probable that the main single reason has been the competition of television, and also, of course, the fact that cinema attendances greatly expanded during the war and just afterwards when there were no alternative forms of entertainment. Of course, when that situation had passed away we should naturally expect cinema attendances to decline.
    5.15 p.m.
    I hope the right hon. Gentleman would agree that, when an industry is in that sense in a weak position and in a falling market, if we impose or, indeed, even maintain tax on it, we accelerate the decline. Therefore, in that sense, the existence of the tax is a cause of the decline, and I do not think the right hon. Gentleman would deny as a matter of ordinary economics that, of course, existence of the tax accelerates the decline in that situation. Incidentally, the right hon. Gentleman said that the sharpness of the decline during last winter was rather unexplained. I should have thought that the Government's general credit squeeze and deflation policies had something to do with it. After all, the cost of living has been going up and there has been an attempt to freeze money wages. Therefore, it is only natural that the wage-earning population has economised on some of the slightly less essential things.
    Mr. Maudling: Is it not a fact that personal consumption has been rising?
    Mr. Jay: Nevertheless, unemployment and under-employment have been increasing faster in the last six months than at any time since the war.
    However, leaving aside the general situation, I want to ask the right hon. Gentleman this. The Government might have taken the line, "We are really not interested in the cinema or film industry one way or another. It is a business. Let it expand or contract according to the demand of the public. It has nothing to do with the Chancellor of the Exchequer one way or another." In fact, I believe that none of us takes that attitude for two reasons. First of all, we all agree that we want to see a British film production industry and also that we cannot have a reasonably flourishing film production industry unless there is a film exhibiting industry, a cinema industry, of reasonable size in the country. For that reason, we have adopted the levy and the National Film Finance Corporation and so on.
    Incidentally, I thought the right hon. Gentleman was a bit complacent when adding in the levy as the extra income which the producers were supposed to get. I think I am right in saying that all that has happened is that Parliament passed an Act in which the figure of £3¾ million was inserted as the sum which the producers could expect to get. In point of fact, due to this depression, the figure fell a large way below what they had been statutorily promised and the Government are now putting it back to where it was. I think that throws a slightly different light on the matter.
    The other reason why the Government cannot disinterest themselves altogether is that the cinema industry, after all, is still a source of revenue to the Government. Surely, it is unwise to press it so hard when it is in difficulties that the very revenue itself may be lost in the longer term. The Minister said that a very generous concession of £141 million had
    been made by the Chancellor this year. Of course, that figure depends on all sorts or hypothetical estimates. That figure was for a full year, which presumably means April, 1959, to April, 1960. Therefore, the figure rests on an estimate of what cinema attendances would have been had there been no concession and what they will be with this concession in force. Both estimates, I should have thought—no doubt the Exchequer makes the best estimate that any human agency could make—must be extremely hypothetical.
    Nevertheless, the Treasury's real interest in these things, leaving aside the wider considerations, is whether the decline of the industry is not being forced at such a rate that in a very few years' time the Exchequer itself will lose even in terms of revenue.
    Even allowing for the other causes, is the right hon. Gentleman quite sure that it is wise even to maintain the duty at the rate still now in force when we recognise all the other admitted difficulties which the industry is likely to face? The right hon. Gentleman did not fully answer one other question which was put to him. Is it not the case with this decline, due to all causes, including tax, that the preponderance of these chains on the exhibiting side of the industry is steadily increasing as the decline of the industry goes on?
    Are we not all agreed, even if opinion as to remedy differs, that it is undesirable that the domination of the exhibiting side of the industry by two combines should be allowed to go too far? Is the right hon. Gentleman not satisfied that by accepting the Amendment he could have done something also to maintain the more independent cinemas and to provide more alternative outlets for those who are still producing British films?
    Question put, That "one shilling and sixpence" stand part of the Clause:—
    The Committee divided: Ayes 226, Noes 189.

    Division No. 150.]

    AYES

    [5.24 p.m.

    Agnew, Sir Peter

    Ashton, H.

    Barber, Anthony

    Aitken, W. T.

    Astor, Hon. J. J.

    Barlow, Sir John

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

    Atkins, H. E.

    Barter, John

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Baldock, Lt.-Cmdr. J. M.

    Bell, Philip (Bolton, E.)

    Arbuthnot, John

    Baldwin, A. E.

    Bell, Ronald (Bucks, S.)

    Armstrong, C. W.

    Balniel, Lord

    Bennett, F. M. (Torquay)

    Bennett, Dr. Reginald

    Harrison, A. B. C. (Maldon)

    Nairn, D. L. S.

    Bevins, J. R. (Toxteth)

    Harrison, Col. J. H. (Eye)

    Neave, Airey

    Biggs-Davison, J. A.

    Harvey, John (Walthamstow, E.)

    Noble, Comdr. Rt. Hon. Allan

    Bingham, R. M.

    Head, Rt. Hon. A. H.

    Nugent, G. R. H.

    Birch, Rt. Hon. Nigel

    Heald, Rt. Hon. Sir Lionel

    Oakshott, H. D.

    Bishop, F. P.

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

    Orr, Capt. L. P. S.

    Black, C. W.

    Henderson-Stewart, Sir James

    Osborne, C.

    Body, R. F.

    Hill, Mrs. E. (Wythenshawe)

    Page, R. G.

    Bossom, Sir Alfred

    Hinchingbrooke, Viscount

    Pannell, N. A. (Kirkdale)

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

    Hirst, Geoffrey

    Partridge, E.

    Boyle, Sir Edward

    Hornby, R. P.

    Peel, W. J.

    Braine B. R.

    Hornsby-Smith, Miss M. P.

    Pickthorn, K. W. M.

    Braithwaite, Sir Albert (Harrow, W.)

    Horobin, Sir Ian

    Pike, Miss Mervyn

    Brooke, Rt. Hon. Henry

    Horsbrugh, Rt. Hon. Dame Florence

    Pilkington, Capt. R. A.

    Bryan, P.

    Howard, Gerald (Cambridgeshire)

    Pitman, I. J.

    Burden, F. F. A.

    Howard, John (Test)

    Pitt, Miss E. M.

    Butcher, Sir Herbert

    Hughes Hallett, Vice-Admiral J.

    Price, David (Eastleigh)

    Butler, Rt. Hn. R. A. (Saffron Walden)

    Hulbert, Sir Norman

    Price, Henry (Lewisham, W.)

    Campbell, Sir David

    Hurd, A. R.

    Prior-Palmer, Brig. O. L.

    Carr, Robert

    Hutchison, Michael Clark (E'b'gh, S.)

    Redmayne, M.

    Chichester-Clark, R.

    Hutchison, Sir James (Scotstoun)

    Remnant, Hon. P.

    Clarke, Brig. Terence (Portsmth, W.)

    Hyde, Montgomery

    Renton, D. L. M.

    Cooper, A. E.

    Hylton-Foster, Rt. Hon. Sir Harry

    Ridsdale, J. E.

    Cooper-Key, E. M.

    Iremonger, T. L.

    Roberts, Sir Peter (Heeley)

    Cordeaux, Lt.-Col. J. K.

    Irvine, Bryant Godman (Rye)

    Robertson, Sir David

    Corfield, Capt. F. V.

    Johnson, Dr. Donald (Carlisle)

    Robinson, Sir Roland (Blackpool, S.)

    Craddook, Beresford (Spelthorne)

    Johnson, Eric (Blackley)

    Rodgers, John (Sevenoaks)

    Crosthwaite-Eyre, Col. O. E.

    Joseph, Sir Keith

    Roper, Sir Harold

    Crowder, Sir John (Finchley)

    Joynson-Hicks, Hon. Sir Lancelot

    Russell, R. S.

    Cunningham, Knox

    Keegan, D.

    Sharples, R. C.

    Currie, G. B. H.

    Kerby, Capt. H. B.

    Shepherd, William

    Dance, J. C. G.

    Kerr, Sir Hamilton

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

    Davidson, Viscountess

    Kershaw, J. A.

    Smithers, Peter (Winchester)

    Deedes, W. F.

    Lambton, Viscount

    Smyth, Brig. Sir John (Norwood)

    Dodds-Parker, A. D.

    Langford-Holt, J. A.

    Speir, R. M.

    Donaldson, Cmdr. C. E. McA.

    Leather, E. H. C.

    Stanley, Capt. Hon. Richard

    Doughty, C. J. A.

    Leavey, J. A.

    Stevens, Geoffrey

    Drayson, G. B.

    Leburn, W. G.

    Steward, Harold (Stockport, S.)

    du Cann, E. D. L.

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

    Steward, Sir William (Woolwich, W.)

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

    Legh, Hon. Peter (Petersfield)

    Storey, S.

    Duncan, Sir James

    Lindsay, Hon. James (Devon, N.)

    Stuart, Rt. Hon. James (Moray)

    Duthie, W. S.

    Lindsay, Martin (Solihull)

    Studholme, Sir Henry

    Eden, J. B. (Bournemouth, West)

    Linstead, Sir H. N.

    Summers, Sir Spencer

    Elliott, R. W. (Ne'castle upon Tyne, N.)

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

    Taylor, Sir Charles (Eastbourne)

    Errington, Sir Eric

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Farey-Jones, F. W.

    Low, Rt. Hon. Sir Toby

    Teeling, W.

    Fell, A.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Temple, John M.

    Finlay, Graeme

    Lucas, P. B. (Brentford & Chiswick)

    Thomas, Leslie (Canterbury)

    Fisher, Nigel

    Lucas-Tooth, Sir Hugh

    Thomas, P. J. M. (Conway)

    Fletcher-Cooke, C.

    McAdden, S. J.

    Thompson, Kenneth (Walton)

    Foster, John

    Macdonald, Sir Peter

    Thorneycroft, Rt. Hon. P.

    Fraser, Sir Ian (M'cmbe & Lonsdale)

    Mackeson, Brig. Sir Harry

    Thornton-Kemsley, Sir Colin

    Freeth, Denzil

    McKibbin, Alan

    Tilney, John (Wavertree)

    Gammans, Lady

    Mackie, J. H. (Galloway)

    Turton, Rt. Hon. R. H.

    Garner-Evans, E. H.

    McLaughlin, Mrs. P.

    Vane, W. M. F.

    Glyn, Col. Richard H.

    McLean, Neil (Inverness)

    Vaughan-Morgan, J. K.

    Godber, J. B.

    Macleod, Rt. Hn. Iain (Enfield, W.)

    Vickers, Miss Joan

    Gough, C. F. H.

    Macmillan, Maurice (Halifax)

    Vosper, Rt. Hon. D. F.

    Gower, H. R.

    Maddan, Martin

    Wakefield Edward (Derbyshire, W.)

    Graham, Sir Fergus

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

    Wakefield, Sir Wavell (St. M'lebone)

    Grant, W. (Woodside)

    Maitland, Hon. Patrick (Lanark)

    Wall, Patrick

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

    Manningham-Buller, Rt. Hn. Sir R.

    Ward, Dame Irene (Tynemouth)

    Green, A.

    Markham, Major Sir Frank

    Ward, Dame Irene (Tynemouth)

    Gresham Cooke, R.

    Marlowe, A. A. H.

    Whitelaw, W. S. I.

    Grimston, Hon. John (St. Albans)

    Marshall, Douglas

    Wilson, Geoffrey (Truro)

    Grimston, Sir Robert (Westbury)

    Mathew, H.

    Wood, Hon. R.

    Gurden, Harold

    Maudling, Rt. Hon. R.

    Woollam, John Victor

    Hall, John (Wycombe)

    Mawby, R. L.

    Hare, Rt. Hon. J. H.

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

    TELLERS FOR THE AYES:

    Harris, Frederic (Croydon, N. W.)

    Milligan, Rt. Hon. W. R.

    Sir G. Wills and Mr. Hughes-Young.

    Harris, Reader (Heston)

    Nabarro, G. D. N.

    NOES

    Ainsley, J. W.

    Benson, Sir George

    Brockway, A. F.

    Albu, A. H.

    Beswick, Frank

    Broughton, Dr. A. D. D.

    Allaun, Frank (Salford, E.)

    Blenkinsop, A.

    Brown, Thomas (Ince)

    Allen, Arthur (Bosworth)

    Blyton, W. R.

    Burton, Miss F. E.

    Allen, Scholefield (Crewe)

    Boardman, H.

    Butler, Herbert (Hackney, C.)

    Bacon, Miss Alice

    Bonham Carter, Mark

    Butler, Mrs. Joyce (Wood Green)

    Baird, J.

    Bottomley, Rt. Hon. A. G.

    Callaghan, L. J.

    Balfour, A.

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

    Carmichael, J.

    Bellenger, Rt. Hon. F. J.

    Bowen, E. R. (Cardigan)

    Champion, A. J.

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

    Bowles, F. G.

    Chapman, W. D.

    450

    451

    Clunie, J.

    Jenkins, Roy (Stechford)

    Price, J. T. (Wetthoughton)

    Coldrick, W.

    Johnson, James (Rugby)

    Proctor, W. T.

    Collins, V. J. (Shoreditch & Finsbury)

    Jones, David (The Hartlepools)

    Pursey, Cmdr. H.

    Corbet, Mrs. Freda

    Jones, Jack (Rotherham)

    Rankin, John

    Cove, W. G.

    Jones, J. Idwal (Wrexham)

    Redhead, E. C.

    Craddock, George (Bradford, S.)

    Jones, T. W. (Merioneth)

    Reid, William

    Cronin, J. D.

    Kenyon, C.

    Robens, Rt. Hon. A.

    Cullen, Mrs. A.

    Key, Rt. Hon. C. W.

    Robinson, Kenneth (St. Pancras, N.)

    Davies, Rt. Hon. Clement (Montgomery)

    King, Dr. H. M.

    Ross, William

    Davies, Ernest (Enfield, E.)

    Lawson, G. M.

    Royle, C.

    Davies, Stephen (Merthyr)

    Lee, Frederick (Newton)

    Shinwell, Rt. Hon. E.

    de Freitas, Geoffrey

    Lee, Miss Jennie (Cannock)

    Short, E. W.

    Diamond, John

    Lewis, Arthur

    Silverman, Julius (Aston)

    Dodds, N. N.

    Lindgren, G. S.

    Silverman, Sydney (Nelson)

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

    Lipton, Marcus

    Simmons, C. J. (Brierley Hill)

    Dye, S.

    Mabon, Dr. J. Dickson

    Skeffington, A. M.

    Ede, Rt. Hon. J. C.

    McAlister, Mrs. Mary

    Slater, Mrs. H. (Stoke, N.)

    Edelman, M.

    McCann, J.

    Slater, J. (Sedgefield)

    Edwards, Robert (Bilston)

    MacColl, J. E.

    Smith, Ellis (Stoke, S.)

    Evans, Albert (Islington, S. W.)

    McGhee, H. G.

    Soskice, Rt. Hon. Sir Frank

    Fernyhough, E.

    McInnes, J.

    Sparks, J. A.

    Foot, D. M.

    McLeavy, Frank

    Stewart, Michael (Fulham)

    Forman, J. C.

    MacPherson, Malcolm (Stirling)

    Stonehouse, John

    George, Lady Megan Lloyd (Car'then)

    Mahon, Simon

    Stones, W. (Consett)

    Gordon Walker, Rt. Hon. P. C.

    Mallalieu, E. L. (Brigg)

    Strauss, Rt. Hon. George (Vauxhall)

    Grey, C. F.

    Marquand, Rt. Hon. H. A.

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

    Griffiths, David (Rother Valley)

    Mayhew, C. P.

    Summerskill, Rt. Hon. E.

    Griffiths, Rt. Hon. James (Llanelly)

    Mellish, R. J.

    Swingler, S. T.

    Grimond, J.

    Messer, Sir F.

    Hale, Leslie

    Mikardo, Ian

    Sylvester, G. O.

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Mitchison, G. R.

    Taylor, Bernard (Mansfield)

    Hamilton, W. W.

    Monslow, W.

    Thomson, George (Dundee, E.)

    Hannan, W.

    Moody, A. S.

    Thornton, E.

    Harrison, J. (Nottingham, N.)

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

    Tomney, F.

    Hastings, S.

    Moss, R.

    Ungoed-Thomas, Sir Lynn

    Hayman, F. H.

    Moyle, A.

    Wade, D. W.

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

    Neal, Harold (Bolsover)

    Warbey, W. N.

    Herbison, Miss M.

    Noel-Baker, Francis (Swindon)

    Watkins, T. E.

    Hewitson, Capt. M.

    O'Brien, Sir Thomas

    Weitzman, D.

    Hobson, C. R. (Keighley)

    Oliver, G. H.

    Wheeldon, W. E.

    Holman, P.

    Oram, A. E.

    White, Mrs. Eirene (E. Flint)

    Holmes, Horace

    Oswald, T.

    Wigg, George

    Houghton, Douglas

    Owen, W. J.

    Wilkins W. A.

    Howell, Charles (Perry Barr)

    Padley, W. E.

    Willey, Frederick

    Hoy, J. H.

    Paget, R. T.

    Williams, Rev. Llywelyn (Ab'tillery)

    Hughes, Emrys (S. Ayrshire)

    Paling, Rt. Hon. W. (Dearne Valley)

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

    Hunter, A. E.

    Palmer, A. M. F.

    Williams, W. T. (Barons Court)

    Hynd, H. (Accrington)

    Pannell, Charles (Leeds, W.)

    Willis, Eustace (Edinburgh, E.)

    Hynd, J. B. (Attercliffe)

    Parker, J.

    Wilson, Rt. Hon. Harold (Huyton)

    Irvine, A. J. (Edge Hill)

    Pearson, A.

    Winterbottom, Richard

    Irving, Sydney (Dartford)

    Peart, T. F.

    Yates, V. (Ladywood)

    Isaacs, Rt. Hon. G. A.

    Pentland, N.

    Zilliacus, K.

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

    Popplewell, E.

    Jeger, George (Goole)

    Prentice, R. E.

    TELLERS FOR THE NOES:

    Mr. J. Taylor and Mr. Deer.

    Motion made and Question proposed, That the Clause stand part of the Bill.
    The Temporary Chairman (Sir G. Nicholson): I should remind hon. Members that most of the points in the Clause have been traversed during the debate on the Amendments, and I hope hon. Members will not cover them again. Mr. Hunter.
    Mr. A. E. Hunter: On this question, Sir Godfrey, I want to put the case for the complete repeal of Entertainments Duty. The cinema industry is an important one when it is remembered that there are 80,000 people employed in renting, film production, exhibiting and distribution. Therefore, when we debate the effect of Entertainments Duty upon cinemas we must take into account the livelihood and the welfare of approximately
    452
    80,000 people, a number of whom are unfortunately in the lower earnings groups.
    Whilst I realise that the Chancellor has taken a big step forward in reducing Entertainment Duty on cinemas, I feel that the case for its complete repeal is overwhelming. Entertainments Duty was first imposed during the First World War, in 1915 or 1916. I was a young boy at that time, and I remember that "The Bing Boys on Broadway" was then showing in one of the London theatres. So Entertainments Duty was introduced well over forty years ago, and although at that time it was stressed strongly that the tax was only a war-time measure, it is still with us. Of course, cinemas were in their early stages then. Today, with the cinema industry showing signs of a decline, there is a very strong case for

    453
    relieving it of this tax. It is true that although it has been removed from the theatres, they still have their difficulties, especially in the provincial towns.
    Mr. Ellis Smith: The logic of that is against the Clause.
    Mr. Hunter: My hon. Friend says that the logic of that is against the Clause. The Clause makes Entertainments Duty payable and if we vote against the Clause in a majority it will mean that the tax will be abolished. I do not know whether my hon. Friends will divide the Committee on this Question.
    There were not many cinemas in the early days of Entertainments Duty, so it fell mainly on the theatre. After the advent of the talkies in the latter part of the twenties, there was a rapid growth in cinemas. I can speak with some little knowledge of the cinema building which went on at that time, In fact, there was mushroom growth. Personally, I think there was over-expansion. However, conditions were easy for financing projects of that type. Building costs were fairly cheap in 1928 and 1929, and in the early 1930's raw materials were cheap also. So the advent of the talkies was a great attraction to the public and we saw cinemas going up all over the country. It is true that a large amount of American capital helped to finance their building in order to exhibit American films in this country.
    There is no excuse why Entertainments Duty should be retained today, because the experience of the last ten years has shown that there has been a rapid decline in attendances and in box office receipts. Entertainments Duty is not a tax on profits but a tax on receipts. Before any money is drawn for the cost of production of films and for the upkeep and maintenance of the cinemas the tax is levied on box office receipts. It cannot be argued today that an industry which is showing a steep decline and which is faced with the competition of television is able to bear this tax. My hon. Friend referred to the 8 million television sets in this country, and television is only in its early days yet. With the introduction of colour television in the near future the cinemas will face even greater competition, and though hon. Members say the remedy is better films, let us remember there can also be better television programmes. I do not believe
    454
    it will be possible to keep open the same number of cinemas in the future, even with the production of better films, because the industry needs this relief in order to modernise and redecorate the buildings and to repair the seats and carpets and improve the wages of its employees. So I feel that the Government are not justified in retaining this tax and that the Chancellor should abolish it altogether.
    Another point is the value to this country of exporting our films. Good British films of a high entertainment value can help to show the British way of life. Not only have they a cultural value, but they also help our export trade, not only in Western and Eastern Europe and the Commonwealth, but throughout the world. Yet our films cannot compete in the export trade without a home market, so we need a certain number of cinemas open in this country to maintain cinema finance for British films for home and abroad.
    I do not think there will be again a rapid expansion of cinemas in view of the high cost of building and of equipment and the falling attendances. One has only to walk round London to see that famous cinemas are disappearing and are being replaced by blocks of offices and stores. The financial people know what they are doing, and they see the decline in the cinema industry. When one considers the experience of the past ten years and remembers that in 1957 there was a drop in attendances of 18 per cent., it will be realised that there is an overwhelming case for the cinema no longer paying Entertainments Duty, just as there was for the living theatre, which most hon. Members supported. The Government, therefore, should make this further gesture of repealing entirely the Entertainments Duty on the cinema.
    Sir Thomas O'Brien: In response to the appeal made by the Temporary Chairman, there is no point in traversing again the arguments which we used in the debates on the Amendments. I wish just to make a very brief statement.
    It is very gratifying to the film industry, and to me in particular, that so much interest has been shown during the last two or three years by hon. Members in all parts of the House in the plight of the

    455
    film industry in relation to Entertainments Duty. Many years ago, I was practically a lone voice in the House in dealing with not only the problems of Entertainments Duty but the other problems which from time to time beset the film industry. I appreciate very much the speeches which have been made in this debate and in other debates about the film industry by hon. Members opposite and my colleagues.
    Frankly, I voice the opinion of the entire industry—the employers and the trade unions—in expressing my very great appreciation of the manner and capacity with which my hon. Friend the Member for Flint, East (Mrs. White) has conducted her task in the House in matters concerning the film industry. It is noteworthy that in the House of Commons the industry has many friends on both sides. Consequently, this ought not to be regarded as a party matter at all.
    I appeal to the Paymaster-General to represent to the Chancellor that he should not repeat the mistake which was made on the theatre side. We fought very hard to abolish the tax on the living theatre, and eventually sheer, stark pressure of events compelled the Government to abolish it, but it came too late to be of any vital use in preventing many theatres from closing. Once a cinema or theatre closes it is almost impossible for it to reopen. For the sake of another year, I beg the Chancellor completely to wipe out the duty on the cinema. It is the only remnant of the 1917–18 Entertainments Duty. It is no good thinking of saving cinemas a year from now. If a number of cinemas close in the meantime as a result of the impossible tax burdens which they are carrying, they will be unable to open again.
    I appeal to hon. Members to keep in mind what was said by my hon. Friend the Member for Feltham (Mr. Hunter). There are 80,000 employees in the film industry represented by my organisation and others—film studio employees, film distribution employees and cinema employees. A little while ago I was at a meeting with the cinema employers trying with my colleagues to negotiate a reasonable share of the relief in taxation for cinema wages, which I am also doing in respect of film studio wages.
    It is not a matter of trying to invade the inflationary spiral; it is a matter of
    456
    obtaining justice. The cinema wages of this country are notoriously below standard, and we feel—rightly, I am sure, and I am certain that we shall have the good will of the House of Commons; I appreciate that this cannot be made a condition—that when we come to an agreement on wages and conditions for film industry workers the employers will be generous enough to allow some part of the concession given by the Government to go into the wage packets of those who have served the industry so well.
    5.45 p.m.
    Mr. Diamond: When I had the good fortune to address the House in the course of the Budget debate, I made it clear that my view at that time was that the Chancellor's gesture, made the previous day, by offering a reduction of half of the Entertainments Duty did not meet the needs of the situation. I have listened to all the speeches made since and have heard nothing whatever to cause me to alter my mind in the slightest degree. Indeed, nearly all the arguments used during the discussion we have just had were in support not of the Amendments but of the complete abolition of the tax.
    I rest my case first on the fact that, however much the Government may be criticised for having in previous years made their concessions both too little and too late, they have no justification for continuing the tax at any level this year because they know that the most likely result in the current fiscal year is that with no Entertainments Duty at all being levied there will be a loss to the cinema exhibitors of some £3 million. Although in previous years there has been some taxable capacity and, therefore, some justification for a level of tax, the present situation is that there is no taxable capacity left. The Government are no longer taxing cinema profits; they are taxing cinema losses.
    That is the first point, and it is based on figures which have been supplied by the all-industry committee. They have been submitted each year to the Government and have been shown in previous years to err on the side of caution. They may very well be shown in twelve months' time to have erred on the side of caution this year also.
    The argument can be advanced that, although there is no justification for continuing any rate of tax at all for the

    457
    current year, this is due to the fact that the industry itself has not done everything it could to put its own house in order, and that if it had adopted some of the many suggestions made by hon. Members in various parts of the House it would be likely to make not a loss but a profit and once more justified the levying of a rate of tax.
    The suggestion which is most frequently made is that we should produce good films—as if the production industry sets out to spend millions of pounds and devote a great deal of time and labour to the production of bad films. Everybody in this country and America tries to produce good films, the best possible films having regard to the different criteria of what is good and what is good "box office". How could it possibly be thought that over the years from 1948 there has been a steady decline in the production of good films, which is the only cause to which one can look to account for the steady decline in the numbers of people going to the cinemas, which has been accentuated from time to time and particularly in the last three years.
    It cannot be the case that it is a question of lack of quality of films. Nor, if one thinks about it—though it must be admitted that a better film produces a better return—could it be held for long to be that it is just as simple a matter as trying to get a good film. Those who have some experience of this matter know that what is a good film in one area is not a good film in another. What goes down in Baker Street does not go down in Tooting, as I know from my own knowledge. Therefore, we should not use these terms about good films too readily and—as the hon. Member for Ilford, South (Mr. Cooper) did—offer suggestions from great experience of some other industry to those who do their best to try to make this a successful industry.
    The trend has been obvious in this country since 1948. It has also been seen in America. What can one conclude from that? It would be very helpful if every film were a winner, but it is just beyond the capacity of man to produce winners every time. Of course, it would be nice if every one of us, when addressing meetings at by-elections, had audiences running into hundreds or thousands, as we used to do, and if we had the same sort of "admissions" comparatively as some of us used to have. But few of
    458
    us have audiences of that size nowadays. Certainly I do not. No doubt, my hon. Friend the Member for Ebbw Vale (Mr. Bevan) gets his audiences of 2,000, because he is a winner. The hon. Member for Gloucester (Mr. Diamond) is not a winner. He has to be satisfied with the normal attendance of 10, 15 or 20 as the case may be.
    Mr. Maudling: Is the hon. Gentleman suggesting that that is due to any form of Entertainments Duty?
    Mr. Diamond: I am suggesting that the argument that to solve the problem one should produce the best possible films is sound in theory but impracticable. It is beyond the capacity of man to produce the best possible every time. Therefore, we cannot look to the production of films as being the source of the problem. We cannot say to the cinema industry, "Put your house in order by means of the production of better films and then you will be able to bear the burden of taxation." Nor can we say to the cinema industry, "Provide even plushier carpets or seats that you can sink into almost out of sight, and the greater the comfort and the greater the sense of luxury the sooner will you be able to put your house in order."
    I wish I could draw some conclusion from the number of occasions when I have spent thousands of pounds upon a particular cinema in redecoration and making it more comfortable, and seen the admissions go down, and the number of occasions on which I have spent 6d. and seen admissions go up.
    Mr. Shepherd: Will the hon. Gentleman say why he thinks attendances are rising this year compared with last year?
    Mr. Diamond: No, I certainly will not, because it is far too short a period and far too small an example from which to draw any conclusions. The hon. Member would be extremely unwise—more unwise than he normally is—if he ignored the trend of ten years. I know what is behind his question. He is anxious that we should have a flourishing cinema industry. So am I, and I am going to try to indicate how to achieve that.
    We are dealing with the question whether the cinema industry can put its house in order and therefore bear the burden of this continuing rate of cinema tax which the Chancellor seeks to impose

    459
    on it. Another obvious way of putting its house in order is to increase what I would call its ancillary activities. I hope the Committee understands that the cinema exhibition industry is politely called by that name but in fact consists of the provision of ice cream and other things to eat and drink, with a film thrown in. I hope it is realised that the time has long since gone—it had gone years and years ago—when the cinema could support itself out of its own proper trading. One has to resort to every possible means of increasing the receipts from all sorts of outside activities, such as the provision of cafés, restaurants, dancing and a whole host of things which have nothing whatever to do with the exhibition of films.
    Therefore, I deny that there is any obvious method whereby the cinemas can put their house in order by some simple expedient of this kind. It would be wrong to suppose that they have been ignoring the trends and that they have been taking no account of the competition of television and other things.
    The next question to be asked is the very fair one—will the abolition of Entertainments Duty solve all these problems? Will it result in every cinema which is at present in existence keeping its doors open? Of course not. This is not the solution of the whole problem. All I would say is that so long as we have this tax, the whole of the activities of the cinema industry will be devoted to campaigning to get rid of the tax instead of to the more constructional rationalisation problems which are needed.
    So long as a country is not free it will devote all its energies to achieving its freedom, and only after that will it start solving its own internal domestic problems. My view is that exactly the same thing applies to the cinema industry. It has many things to do, and it is not our function or within our power in this Committee to discuss or suggest what all of them are. What we are entitled to consider here is the extent to which the continuance of Entertainments Duty prevents the cinemas from solving their own problems. It is a very heavy barrier to their doing that very thing.
    The Committee should realise that the function of a managing director of a company owning cinemas has been and still is to forecast the future and decide
    460
    what action to take—not to decide whether to put a cinema here or there, or whether to close a cinema, or whether to install a bigger screen or a different shaped screen, or more seats or fewer seats. His function is to try to anticipate what the Chancellor of the Exchequer is going to do in next year's Budget. That one act of the Chancellor of the Exchequer is more important than any other series of acts that he could possibly take.
    Of course, the present reduction in Entertainments Duty amounts to millions of pounds in terms of box office—more than any other single thing that the Chancellor could do. That is why it is such a dominant argument, that all other arguments fall into fifth or tenth place. That is not a healthy state of affairs for an industry. I have been fortunate enough to have guessed what respective Chancellors of the Exchequer would do within half a million three years running. I could not expect my luck to continue. But that is surely a criticism of the way in which the cinema industry has to be run, that it has to be concerned almost exclusively with that one problem instead of the various other problems with which it should rightly deal.
    There is no question in anybody's mind that the cinema industry cannot afford to be taxed. It cannot afford a proper standard of wages. It cannot afford any of the things which would justify it continuing to call itself a healthy industry. By a curious coincidence I find that I have made my few notes on the back of a cutting from The Times which states:
    "Cinema staff turnover impedes union'."
    It goes on to say:
    "Women who 'no sooner start work in a cinema than they leave,' were described as a 'great impediment' to union organisation by … general president of the National Association of Theatrical and Kine Employees, in London yesterday."
    "Women who no sooner start work in a cinema than they leave"—whoever has had that experience is a lucky man. My experience is that many women leave before they start. One engages them and expects them to come along. One has to comply with licensing conditions, to see that certain numbers are engaged, but when the time arrives for them to attend they do not turn up—not even on the

    461
    first occasion—because the standard of wages is too low. With that low standard of wages the industry is facing a loss of £3 million, without bearing any tax. Every additional penny that is paid away in tax increases the losses of the industry.
    I say to my own Front Bench, who have put forward arguments with moderation and skill, that they should have courage. They should not be inhibited in any sense by their own responsibilities in view of the fact that they would occupy the Front Bench opposite when the next Budget is to be considered in twelve months' time. The facts are so obvious that any Chancellor will have to extinguish the tax next year at the latest. My right hon. Friends might just as well have taken their courage in their hands and said quite clearly—as the arguments which they used should have led them to say—"When we come back to office in twelve months' time or less we shall, without hesitation, extinguish the remainder of this tax."
    I am grateful to the Chancellor for being good enough to listen to my remarks, and I would ask him to consider whether he wants to collect these dwindling bits of revenue or have a healthy industry. If he wants to help the industry—and I should have thought that all sections of the Committee wanted to do that—he will without hesitation extinguish the remainder of this cinema tax.
    6.0 p.m.
    Mr. Maudling: At the beginning of the debate. Sir Gordon, your predecessor pointed out that, inevitably, much of the argument which would arise on the Question, "That the Clause stand part of the Bill," would have been traversed in the course of discussions on the Amendments. I am, therefore, in a somewhat difficult position, because there is little left for me to say. That being so, I am sure that the Committee will not want me to say it.
    The fact is that on the earlier Amendment an argument was put forward for a reduction in the duty on the cinema. I have put the reason why my right hon. Friend cannot agree to a further reduction in duty, and that being so a fortiori, he could not agree to a complete abolition. Were I to go over the whole ground again I should only adduce the same arguments; therefore, for the benefit of hon. Members on both sides, I shall not repeat
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    them. I will only say that my right hon. Friend cannot go any further this year in reducing the duty on the cinema.
    Although I speak with some temerity in the matter, in view of the great knowledge of hon. Members who have spoken in the last few minutes, I do not entirely share all the pessimism of the hon. Member for Gloucester (Mr. Diamond). My hon. Friend the Member for Cheadle (Mr. Shepherd) has been accused of rashness—a very unusual charge to be levelled against him—but I might accuse hon. Members opposite quite fairly of a certain amount of pessimism. It would be wrong to assume that the cinema industry, with its great talents and enterprise, assisted by the substantial reduction in duty, cannot cope with the difficulties facing it.
    That is certainly both the belief and the very sincere hope of my right hon. Friend and his colleagues in the Government. We hope that the relief that we have made will enable the cinema industry to establish itself and to achieve a future which we all want to see it achieve, both in production and exhibition. For the present, however, my right hon. Friend could not possibly accept an abolition of the duty and, therefore, cannot accept the Amendment.
    Mrs. White: I ought to say that although I do not expect the Government to make any further concession in this matter, those of my hon. Friends who have spoken happen to be those with the greatest first-hand experience in the industry, both on the exhibiting side and in the organisation of workers. I therefore feel that some attention should be paid by those whose knowledge of the industry is purely theoretical to the arguments of those who have had to wrestle with the day-to-day problems of the industry.
    My hon. Friend the Member for Gloucester (Mr. Diamond) has had an extensive and very successful experience in the industry, but he was so daunted by the obduracy of various Chancellors of the Exchequer that he has found it wise to turn his great talents to other spheres. Had he felt that there was a hope of the early relief for which he has been pleading today there is little doubt that he would have declared a present interest, instead of the past interest in the exhibiting side of the industry.
    Mr. Shepherd: Perhaps the hon. Member sold out at a capital profit.
    Mrs. White: It does not lie in the mouth of the hon. Member to complain on that score. He might have done that in good time. Be that as it may, we should pay some attention to the experiences of those who have had direct responsibilities in this industry, and we shall have to give great weight to the arguments put forward. What differences exist between us relate to the matter of timing. We have great sympathy with the direction in which their arguments are taking us.
    The Paymaster-General has expressed the hope, which we all share, that the industry will overcome its present difficulties successfully. One of the great difficulties on the exhibiting side is that besides the three major circuits, there are half a dozen circuits of moderate size—Essoldo, Granada and the rest—most of which have other interests besides exhibiting films, and they therefore have the capital with which to manœuvre. But there are many cinemas which are giving a good service to the public—and not merely of the kind referred to by the hon. Member for Cheadle (Mr. Shepherd)—which will probably have to go out of business because they just have not the necessary resources to sustain them. I am thinking of those which are not too badly placed and which follow an intelligent policy by which, nevertheless, have not got the resources needed for reconstruction and readjustment.
    I wish that I could see greater signs of rationalisation on the exhibiting side, although I recognise that outside the circuits it is difficult to obtain the room for manœuvre to adjust to a changing position. A man may have half a dozen or a dozen cinemas. He is not a circuit proprietor, and with the present burden of tax he has not a sufficient margin to reorganise his cinemas as he should. It is quite possible that some cinemas in a group of that kind are not viable and should be closed, but to complete that operation and readjust himself the proprietor needs a little margin.
    The real case for the abolition of the tax is that that margin, for most of these people whose sole interest is cinema exhibiting and who do not have all these other interests of the Rank Organisation
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    and others with a foot in the television world, is insufficient to enable them to do what we should like them to do in the way of reorganising themselves. We do not propose to take the matter to a Division, but I hope that the Government will take note of the very powerful arguments which have been adduced by those with great experience in the industry.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 4.—(WINES.)
    The Deputy-Chairman (Sir Gordon Touche): As the effect of the Clause depends upon the contents of the Third Schedule it might be convenient to the Committee to have a debate on the Third Schedule and to take the Clause formally.
    Mr. Maudling: That would be convenient, Sir Gordon.
    Mr. John Dugdale: If we want to have a wider discussion, involving the duty on wines generally, ought not that to be held on the Question "That the Clause stand part of the Bill"? We shall be much more limited if we deal solely with the Schedule.
    The Deputy-Chairman: The right hon. Gentleman is entitled to discuss the Question, "That the Clause stand part of the Bill", but it will mean a duplication of the debate.
    Mrs. White: What do you intend to do, Sir Gordon, in respect of the Amendments to the Schedule, of which there is a large number?
    The Deputy-Chairman: The Amendments to the Schedule have all been selected and are to be discussed together.
    Mr. Harold Wilson: Is it quite clear that when we come to the Question "That this Schedule be the Third Schedule to the Bill"—after the Amendments have been dealt with—the discussion can be as wide as it would be if we discussed the Question "That the Clause stand part of the Bill"? From my experience of past Finance Bill debates, I would say that it is a little unusual to let a Clause go by on the nod, and then take up the principle involved in it in a discussion on the relevant Schedule. More often we have

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    had a discussion on the Clause governing the Schedule and, as in the case which occurred last night, the Schedule has gone through fairly quickly.
    The Deputy-Chairman: I am in the hands of the Committee.
    Mr. Maudling: May I suggest that the Schedule sets out the rates of Customs and duty on all forms of wine, and therefore we could discuss the whole question of wine duties when discussing that. The Amendments deal with the particular question of a further reduction in the duty on heavy wines. If we could have a discussion on the Motion "That the Clause stand part of the Bill," which would cover the whole question of wine duties, light and heavy, perhaps afterwards we could go back to any votes that arise on the particular question of the heavy wine duty.
    Mr. H. Wilson: I should have thought the most convenient way would be to have a discussion on the Question "That the Clause stand part of the Bill," it being understood that since Clause 4 gives effect to the Schedule anything in the Schedule is relevant for a general discussion on the wine duties. Surely a discussion of that kind would not preclude the moving and discussing of individual Amendments on the Schedule, but I am quite sure the Committee would wish to restrain itself in discussing the Question "That this Schedule be the Third Schedule to the Bill." Of course, no one can diminish the rights of any hon. Member, but if we could have a general discussion on the Question" That the Clause stand part of the Bill" and a further debate on the Amendments called, there would not be much desire to pursue the matter further on the Question "That this Schedule be the Third Schedule to the Bill."
    Motion made and Question proposed, That the Clause stand part of the Bill.
    Mr. R. T. Paget: The particular point to which I wish to address myself on Clause 4 is the position of heavy wines in relation to light wines and, in particular, the question of port. Sherry is in a different position, although we shall probably have to deal with these wines together. That is largely because of a change of fashion which has brought a new demand for sherry in the form of sherry parties. Contrary to the general impression, port has not been
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    a rich man's drink. Over 90 per cent. of the port which is drunk has always been part of the public-house trade. Although the consumption of sherry has suffered, as has port consumption, in the public-house trade, sherry has found a new market, but port has not.
    Port is pre-eminently an English wine, and one which I believe is drunk only in England. [HON. MEMBERS: "No."] It is very nearly the case that it is drunk only in England. Very little port is drunk in Portugal; and what people drink as port in Portugal could hardly be recognised as the port wine drunk in England. It is not a natural wine, it is a blended wine, and is blended specially for the English market. It has a tradition within all levels of society. The tradition known best is, of course, the heavy vintage ports which are very remarkable wines, but which represent only a small part of the trade. It is equally the case, or certainly it was until the war, that it is very much a traditional wine in working-class society. It is a wine which was, at least before the war, a feature of jollifications and celebrations.
    6.15 p.m.
    When I speak of port as an English wine, it is probably the one wine for which the capital for its production is, in the main, that of English companies. We have a very large British investment in the port wine trade. Probably it is a great deal larger than in any other. That being so, to me it seems odd that since the war we should have singled out port for discriminatory treatment. I do not think the Revenue has benefited as a result.
    The consumption of port wine today is and has remained pretty level at rather less than half the pre-war consumption. The revenue front the tax on port has been multiplied more than five times compared with the pre-war tax, whereas that on light wines has been raised to a much less extent. The tax on port is 50s. a gallon, or 44s., and that on light wines only 13s. When the tax on light wines was 25s., about double the present rate, consumption was pushed down, as has been the case with port, to below half the pre-war average. With the reduction of the duty by half, the consumption of light wines has risen to considerably above pre-war level. So by reducing the duty on light wines, although

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    there was a temporary loss to the Revenue, within the short period of two years the Revenue had caught up and the receipts were the same as at the higher level of tax. Now it is double what it was at the time the tax was reduced. The amount secured from light wines in 1948–49, when the tax was 25s. a gallon, was only about half what is secured now with the tax at just over half that amount, at 13s. a gallon.
    If that be the experience after reducing the tax on light wines, is it likely that it would cost the Revenue anything if we reduced the tax on port in the same way as in 1948–49 we reduced the tax on light wines, that is to say, if we brought it down to 26s. which would be the equivalent? If the experience of reducing the tax on light wine is anything to go by, such a reduction would probably cost the Revenue nothing at all.
    Would it be a good thing if the consumption of port went up? On the whole, I think the answer is "Yes". It is not a question of people drinking either port or lemonade. Broadly speaking, people drink either port or spirits, and it is with spirits rather than with light wines that port is in competition. I consider port to be a far healthier and a better drink than spirits. I believe the old idea that port created gout is universally accepted as wholly fallacious and that port has nothing in the world to do with gout. As one who has suffered very severely from gout, I speak as an expert.
    Mr. E. C. Redhead: Does my hon. and learned Friend drink port?
    Mr. Paget: No, I have never been a heavy port drinker. As a matter of fact, it is not a wine which I have ever liked. I much prefer a light wine, but my taste is not shared by a great many other people. There are a tremendous number of people who enjoy port. If it had not been priced out of the market, or if it were brought back to a reasonable price relative with its competitors, I believe there would be a very considerable rise in consumption.
    The final point I make is the balance of payments argument. The position with regard to Portugal, which, after all,
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    is our oldest ally, is that it is one of the relatively few Continental countries with whom we have a quite substantial balance of payments in our favour. That is to say, Portugal imports from us considerably more than we import from her. I should have thought, therefore, that there was a considerable case for doing something to help the Portuguese for a variety of reasons. Among them sentiment plays a part—this very ancient alliance, this old tradition by which English firms have been established there, many of them now in their sixth and seventh generations. I should have thought that there was a case for doing something fairly substantial to help an old ally and a present valuable customer.
    For this variety of reasons, I feel the time has come when the Revenue's discrimination against heavy wine, in particular port, should be brought to an end and that it should be treated on the same level as light wine.
    Mr. R. Gresham Cooke: I, also, would like to say a word on the subject of duty on heavy wines. I believe that very many people in this country are extremely grateful to the Chancellor for the reduction that he has brought about this year.
    As has been said by the hon. and learned Member for Northampton (Mr. Paget), it is now well established that port is drunk very much more in "pubs" than clubs. Before the war, port and lemon was a standard drink in the public house, but so far as I know port and lemon is very little drunk today. That reflects the decline in port drinking which is taking place generally. We must also congratulate the port wine trade on having passed on the full reduction of 2s. a bottle to the public. For that, I am sure that the public is grateful. I understand that although this reduction has given port wine drinking a fillip, it will not rescue the trade entirely from its difficulties. They hope that next year the Chancellor will be able to make a further reduction in duty.
    Before the war, the ratio between light wine and heavy wine was as two to one. The duty on heavy wine was exactly double what it was on light wine, but today, with the duty at 38s. a gallon on heavy wine and only 13s. a gallon on light wine, the ratio is more like three to one against heavy wine. It would

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    seem that there is a really good case for bringing the ratio to its pre-war level of two to one and seeking a reduction of heavy wine duty to 24s. a gallon instead of 38s. I trust that the Chancellor will look at the matter sympathetically and consider whether he can go a further step by bringing it down another 12s. or 14s. a gallon next year to bring the ratio between light and heavy wines to the prewar level.
    Another matter to which I wish to draw the attention of the Paymaster-General is the question of vermouth. The port wine trade has passed on the 2s. a bottle reduction to the public, but I do not think anything like the due proportion of the reduction on vermouth has been passed on. A constituent of mine told me that the reduction in the price of vermouth was only 6d. a bottle. I went to my wine merchant and tried to find what reduction had been made and he told me that so far no reduction has been made.
    I understand that vermouth is a blended wine and we do not know what proportions of light wine and heavy wine are comprised in it. Assuming that the proportion were 50 per cent., we would expect a reduction of about 1s. Obviously, it is not quite such a proportion and no doubt in the blend there is more light wine than heavy wine. Perhaps the Paymaster-General can throw more light on the matter and say what proportion there is in vermouth and whether the reduction in the duty is passed on to the public. Although it is fully passed on for port, I think it doubtful whether it is passed on for vermouth.
    Mr. Ernest Davies: I wish to support my hon. and learned Friend the Member for Northampton (Mr. Paget) in his contention that the relationship of taxation on light and heavy wines will still be out of proportion, even after the change made by this Clause.
    It seems somewhat ironic that the two Chancellors of the Exchequer whom one would look upon as the most austere and abstemious during the last decade have been those who have introduced a reduction in the taxation of alcoholic beverages and thereby have been inclined to stimulate the consumption of these beverages. One would have expected that it would have been the Lord Privy Seal who would
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    have taken such a step, because of his known partiality for over-ripe pheasant and vintage port.
    The loss to the Revenue, estimated by the Chancellor in his Budget statement, would be between £2¾. million and £3 million. If that were to be a permanent loss I think that hon. Members on this side of the Committee would question whether this priority was right. In recent discussions on Purchase Tax we would have pointed out that there were various consumer goods which we would like to see relieved rather than the reduction in this duty. But I think that the Chancellor believed, as part of his experience has shown, that when there is a reduction in tax on consumer goods the demand increases and that in the long run the Revenue loses nothing. In fact, history has often shown that the Revenue gains.
    6.30 p.m.
    That certainly has been so with light wines, as was pointed out by my hon. and learned Friend the Member for Northampton (Mr. Paget). Sir Stafford Cripps reduced very substantially in 1949 the duty on light wines; since then the consumption has doubled. That principle could be applied, with advantage to the Treasury, in many other cases. I noticed the other day that the Postmaster-General stated he very much regretted that telephone subscribers made only two local calls per day on the average and that losses were, therefore, incurred on local calls. Perhaps if, instead of raising the cost of local calls, abolishing the free calls and increasing the charge to 3d. he had kept it at its existing level or even reduced it, the position so far as local calls are concerned would improve. I hope that, by contrast, the way in which the Chancellor of the Exchequer has acted in the present case will benefit the Revenue.
    The revenue from port wine has been static for several years at about £4 million, whereas the revenue from light wines has been steadily increasing since the reduction of taxation. I believe that the revenue is now about seven times what it was in 1949. The revenue on heavy wines has not risen to more than about 2½ times that of before the war. It is surprising to hear that 90 per cent. of the consumption of port wine is in public houses, a fact which is not generally appreciated. Indeed, the consumption of

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    port has been steadily declining in public houses, as any publican will tell. It is not likely that consumption in public houses will be very greatly stimulated by the reduction. The price of a glass of port and lemon will be reduced by about 1d. or 2d., which does not make a great deal of difference. There has been a change in public taste and it will be very difficult to recapture the demand.
    On the other hand, experience has shown, in the short time since the reduction was made, that the home consumption of port, and even of sherry, has substantially increased. If that is the case, I agree that it shows that demand will shift. If there is an increase in consumption of these wines leading to a reduction in the consumption of spirits, that is all to the good. The Port Wine Trade Association is to be congratulated on its extremely clever and successful lobbying and upon impressing the Chancellor of the Exchequer, in spite of his known tastes.
    The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): May I ask the hon. Member what my "known tastes" are? They are quite unknown to me.
    Mr. Davies: Perhaps I am assuming too much. The Press has built up the Chancellor as a most abstemious man and we congratulate him upon it. Perhaps he will change his tastes when he reads the Port Wine Trade Association literature which has been sent to many hon. Members. The memorandum in which it was urging this reduction states:
    "There are few alcoholic drinks more tonic and better calculated to maintain the health, well-being and vigour of the consumer especially in a climate such as ours."
    The memorandum goes on to support the contention that port does not cause gout. It says:
    "The suggestion that port drinking is in anyway connected with gout is quite unfounded. It was the overall excessive intake of rich foods, wines, spirits and liqueurs which was basically responsible for the prevalence of gout in the eighteenth and nineteenth centuries."
    If that is so, the Chancellor is to be congraulated upon introducing the Clause.
    Apart from port and sherry, which are heavy wines, equally important are the Commonwealth wines, of which there is increasing consumption in this country.
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    This reduction in the duty will benefit them to some extent, and to that extent it is welcome. There is a strong case for this reduction and an equally strong one for a further reduction. The relationship of heavy to light wines in respect of the duties is out of proportion to their relative merits and to their strength. Before the war, the taxation of heavy wines was twice that of light wines. Before the Budget it was four times and now it is reduced to three times.
    I trust that experience during this year will be such that the Revenue will benefit and that the Chancellor will then be in a position to revert to the pre-war position in his next Budget. If he is still at the Treasury and the Government are still in office, he may be able to reduce the taxation of heavy wines further, so that it is twice instead of three times the prewar taxation on light wines.
    Mr. Dugdale: Unlike my hon. and learned Friend the Member for Northampton (Mr. Paget), I like port. I have drunk quite a lot of port and I have no gout. In spite of that, I still think that if the Chancellor has any money to spend on reducing the duty on wines he might consider spending it on lighter wines rather than on heavier wines.
    My hon. and learned Friend engaged in a somewhat specious argument in saying that port was an alternative to spirits, that therefore it was desirable that we should drink port, and that that was a good reason for reducing the duty. It is even more desirable to drink light wine, like burgundy and claret. In doing so we should be consuming a less strong alcohol, but at the same time helping another alliance which is of equal importance to us. I refer to the alliance with France. If we are to talk about alliances, and if I had to choose between the one and the other, I would prefer the alliance with France to that with Portugal. I do not think that the Chancellor was influenced by these matters in reducing the duty.
    It would be a very great advantage to this country if we were to drink more light wines, if they became more popular and if our people did, as is done in France, drink wine as an ordinary beverage. It is now something special, bought for a special occasion, because it is very expensive. If the Chancellor wishes further to reduce the duty on wines I

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    hope he will consider light wines before heavier wines. Subject to that comment, I would not disagree with a reduction of any duty on wine.
    Mr. Ray Mawby: I would add my congratulations to my right hon. Friend the Chancellor of the Exchequer on reducing the taxation on port wine. I agree with everything that has been said on this subject. Port is a fine drink, and we ought to make certain that it has as low a taxation as possible.
    The point has been made that if more port were consumed less spirits would be consumed, the inference being that there is a choice between the two. Tastes have changed over the last few years and now the greatest opponent to port in the public-house trade is the perry type of drink, like the "Baby Cham". It is an entirely new type of drink which has attained great popularity. We cannot just take this point of port versus spirits.
    The idea that we in this country ought to drink more light wines is, I think, wrong. I have always preferred as my main drink good English beer, and I think that it is right that we should continue to drink good English beer. Therefore, so far as light wines are concerned, I think that Philip Harben has done a great deal in showing the British housewife how she can, with the judicious use of light wines, enhance her cookery. To suggest that we should now try to induce the ordinary chap in the local pub to drink wine instead of beer would, I think, be a very bad step to take. I think that light wines are extremely popular and that the duty on them is about right at the present time. So far as the fortified wines are concerned, I should like to see the duty less, but I rejoice in the fact that it has been reduced.
    Mr. Cronin: I do not think that I can quite follow the hon. Member for Totnes (Mr. Mawby) in saying that the taste for port or heavy wines has changed substantially in recent years. I think that the real situation is that the consumption of port has been enormously reduced by the duty on it. A simple example of that is the Christmas trade in port and sherry. There is an enormously sharp increase in the consumption of heavy wines during Christmas; this shows that there is a real taste for these wines, but that they are considered something of a
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    luxury, and, of course, the luxury is due to the heavy cost imposed by the duty.
    I sympathise entirely with my right hon. Friend the Member for West Bromwich (Mr. Dugdale) in his wish to popularise the consumption of light wines. I think that most people agree that light wines are a higher and better form of drinking from a purely gustatory point of view than beer. The more that people have a higher standard of living so far as drinks are concerned the better. But I do not agree with my right hon. Friend when he says that people who drink light wines drink less alcohol. One can drink a bottle of light wine to one glass of port and it is more abstemious to drink port in those circumstances.
    I should like to reinforce the excellent argument of my hon. and learned Friend the Member for Northampton (Mr. Paget) and my hon. Friend the Member for Enfield, East (Mr. Ernest Davies). They have pointed out, I think conclusively and decisively, that, even in spite of the Chancellor's present concession, the duty on heavy wines is too high, and that it is quite probable that if the duty were reduced further there might be an actual increase in the yield. That may be a hypothetical supposition, but that is what happened when the late Sir Stafford Cripps reduced the duty on light wines, and I think that we can reasonably expect that that might well follow in this case.
    Heavy wines deserve the sympathy of the Committee for several reasons. One is that, contrary to the impression of many people, they are consumed to a large extent by the low income groups. One understands, for instance, that 90 per cent. of the consumption of port is in public houses or from bottles supplied to the workers and their families. Therefore, a reduction of the duty will produce an easement among a section of the community where it is desirable. In other words, it will be a more progressive type of tax if it is reduced.
    6.45 p.m.
    These heavy wines are drunk chiefly in places of public entertainment and they form a very important alternative to either beer or spirits. Some of us here may think that spirits are less desirable drinks from a social point of view for obvious reasons, but many people who take their refreshment in public houses cannot cope

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    with the uncomfortable feeling of distension engendered by beer, so port seems to be a pleasant and convincing middle course when one wants to take alcoholic refreshment.
    Another important consideration is that reinforced wines are usually considered to be a more elegant drink and more suitable for family use, and I think that some further concession would be of great value to the family side of the population.
    Mr. Sydney Silverman: Does my hon. Friend think that these light wines might satisfy the need of the Scotsman who explained that he gave up drinking because if he drank whisky he was "tight" before he was full whereas if he drank beer he was full before he was "tight".
    Mr. Cronin: That seems to be an esoteric point. Heavy wines have certain very practical economic qualities. When one buys a bottle of heavy wine, it does keep. It will keep possibly for one, two or several weeks, whereas a bottle of light wine is much less pleasant the next day and, on the third day, is usually undrinkable. The advantage of heavy wine is that it is economic to buy and keep on the sideboard in a working man's house. It is consumed in a moderate manner, a glass at a time, and there is no rush to finish the whole bottle.
    Some of my hon. Friends have referred to medical matters. That well-known authority my hon. and learned Friend the Member for Northampton has assured us that port does not cause gout. He is particularly expert in that, and I should be inclined to reinforce his view. I think that it probably has the blessing of the whole medical profession. Alcohol in general is a rather important medical substance. It certainly has important qualities. It stimulates the appetite, it has a sedative effect and it is being realised more and more that it is very valuable for relieving pain. These reinforced wines are a most convenient vehicle for administering this drug.
    That seems to be another argument why the duty on port and reinforced wines generally should be substantially reduced. I think that we can all congratulate the Chancellor on having taken the action that he has. It is certainly a bold and
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    great move to have done this, and we would like him to study this matter carefully to see whether some further reduction can be given.
    Mr. John Arbuthnot: I think that the Committee has shown complete unanimity on two things. The first is that we are unanimous in saying "Thank you" to the Chancellor for the step which he has already taken. We are grateful to him and we think that he has done the right thing. The second thing on which there is unanimity is that we hope that this is just a half-way house. It has been suggested that the idea of a further reduction in the duty on heavy wines, possibly leading to an increase in the ultimate yield to the Exchequer, is a bit of speculation and possibly hypothetical.
    If it is hypothetical and if it is a speculation, it is a speculation with a substantial body of evidence to give it support. The body of evidence which gives it support is what happened with light wines. When the duty was halved on light wines the net result to the Exchequer, within a matter of 18 months, was a greater revenue. There is no reason to believe that the same would not occur with heavy wines. These are early days to see what the result of what my right hon. Friend has done will be from a revenue point of view, but the consumption of heavy wines has already taken a turn for the better since my right hon. Friend reduced the duty. We hope, however, that in his next Budget he will be be able to go the whole hog and do the equivalent of what was done for the light wines—to halve the duty compared with what it was before my right hon. Friend introduced this Budget.
    We should bear in mind that it is of particular help because our oldest ally, Portugal, is one of the beneficiaries of the reduction in duty which my right hon. Friend has introduced. In addition, a great many firms which are producing port in Portugal and firms which are shippers of port come from this country. The reduction is benefiting our oldest ally and is also being of benefit to our own people who are in the trade. I join with those hon. Members who have expressed congratulations to my right hon. Friend which, it will be clear to him, are universal in the Committee.
    Mrs. White: I feel that we need some social research on this matter, and perhaps in replying to the debate the Paymaster-General will be able to inform us whether any such research was carried out by his right hon. Friend or whether his right hon. Friend looked at this matter entirely from the revenue point of view. Is that the only reason which induced him to reduce the tax on this class of alcoholic drink?
    We have had so many different opinions from hon. Members on both sides of the Committee about what is the substitute for port, whether it is beer, gin or "Baby Cham," that it is quite confusing. I should have thought that the friends of the hon. Member for Totnes (Mr. Mawby) who patronise perry or "Baby Cham," which is the trade name of it, probably did not drink alcoholic drinks at all when port was relatively less expensive; they probably did not go into a public house, or, if they did, they probably did not drink alcoholic beverages. I cannot believe that anybody would descend to perry or "Baby Cham" if he had ever been a port drinker. I hesitate to be dogmatic about this. It may be that in Totnes there are such people.
    Mr. Jay: That is why they vote for the hon. Member for Totnes (Mr. Mawby).
    Mrs. White: Other beverages are included in the group which we are discussing, such as sherry, vermouth and similar drinks, including Dubonnet, which are far more civilised aperitifs than gin. But that is a personal predilection.
    It is desirable to know whether any study has been made of the drinking habits of the British public and whether the Chancellor knew what he was doing when he decided to reduce the duty on these heavy wines. If he took the step advocated in an Amendment which we shall discuss shortly and reduced the duty still further, then from the purely revenue point of view, and without taking sides one way or another about the merits of these drinks from the social or economic point of view, I believe that he would achieve his purpose even better. Looked at purely from the point of view of the revenue, the reduction which he has made although fairly substantial, is not sub-
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    stantial enough to make sufficient difference in the price of a glass sold in the public house for it to have any significant impact on the customer. If one is buying a drink by the glass in a public house and has to decide between one drink and another, a difference of a penny a glass will be neither here nor there. If we are to try to get a substantial increase in consumption and thereby compensate for the apparent loss of revenue, then we must do it in such a way as to make an adequate impression upon the consumer.
    The Chancellor may have done that for wines sold by the bottle, bought to consume at home, through the fact that these are now 2s. a bottle cheaper—and a little cheaper for Commonwealth wines. South African sherry is not a bad drink. On the other hand, I doubt whether he has achieved his aim for the public house trade in port, which is what is upsetting the port wine industry. I understand that the vintage ports consumed in the clubs which hon. Members opposite frequent are still selling pretty well and that the trade has not declined at that end. I understand that the decline has been greatest in the public house trade.
    While not wishing to express an opinion one way or another about the merits of port and sherry and other fortified wines as drinks, compared with other forms of alcohol, we think that from the purely financial point of view there is much to be said for a further reduction in the duty, in order, as happened in light wines, ultimately to compensate the revenue for the apparent decrease proposed by the Chancellor.
    Mr. Maudling: As some hon. Members are aware, this is a matter which is close to my heart. I am glad that my right hon. Friend was able to introduce this reduction in the duty on heavy wines. I am not myself a consumer of heavy wines, for I prefer the lighter types.
    The hon. Lady the Member for Flint, East (Mrs. White) asked whether any social research had been carried out into the best substitutes for port. I am not aware of any official research, although I have been carrying on a personal research into this matter for many years, and I have concluded that it is a research which will continue for the rest of my life and that I shall never be satisfied with the answer.

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    Generally, I think the Committee welcomes this proposal to reduce the duties on heavy wines, which have been standing at a very high level. I will not enter into the arguments on the various points which hon. Members have raised. I think that the hon. and learned Member for Northampton (Mr. Paget) was wrong in saying that port was exclusively an English drink. Perhaps he was thinking of vintage port. Ordinary light ports are widely drunk on the Continent of Europe.
    I was also asked whether port competes with light wines. I have no doubt that there is considerable competition between sherry and light French white wines drunk before a meal. There is also competition between vintage port and brandy drunk after a meal. I think there is competition between all types of alcoholic drink, and it is difficult to single out one from the other. I therefore think that if we reduced the duty on heavy wines as far as some hon. Members suggest, on the ground that they are very much an English drink, we should get serious criticism from other hon. Members that we had not done the same for whisky on the ground that it was a national drink. We must bear these matters in mind.
    The effect of these reductions in the duty has been to reduce the average duty per bottle of heavy wines—broadly speaking, port and sherry—by 2s. a bottle. This has, in our experience, been passed on by the trade to the consumer.
    7.0 p.m.
    My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) raised the question of vermouth. It is very hard to be exact here, because vermouth, as he says, is a blended wine, the proportion of heavy wine in it varying very much. I know that in at least one case there is no heavy wine in it at all. Clearly, the reduction could not in any way be the full 2s., and I think that the figure he quoted of 6d. is probably a reasonably fair figure for a number of vermouths because, as I say, they vary from having no heavy wine in them at all to having a noticeable quantity of heavy wine in the mixture, so that it is impossible to generalise.
    The effect of the reduction in the duty will, of course, be to help those countries that supply us with the heavier types of wine, and, in particular, I am sure the Committee will be glad to welcome it for
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    the assistance it should bring to Australia and South Africa. As compared with pre-war, sales of Australian heavy wine have fallen very much indeed. On the other hand, sales of the South African heavy wines have held up well, because the South Africans have, as I think every one agrees, been doing a great deal to improve the quality of their sherries, which are now quite excellent.
    Our friends the Portuguese—our ancient allies—should benefit, because the sales of their port wines are much less than half the pre-war level. On the other hand, the sale of Spanish sherries, in spite of the Imperial preferential margins, is substantial. Spanish sherries—this always interests me in view of the high quality of South African sherries—have maintained the full pre-war level of their sales here. All those countries should benefit to one extent or another by this reduction in duty.
    I would not agree with what one or two hon. Members have said about the decline in port wine drinking being due almost entirely to the rate of duty. I should have thought that it was due, almost certainly, to a change in public taste rather than to the level of duty. I think that this is very much borne out by the fact that while the consumption of port has fallen very heavily compared with pre-war, the consumption of sherry has remained at the same level, though both wines pay the same rate of duty. Therefore, I am sure that the port wine trade itself would recognise that in this case there has been a notable change in public opinion.
    Nevertheless, it is clear that the heavy wine has been bearing a very high rate of duty. My right hon. Friend is glad that he has been able to make this substantial reduction and that it has been passed on by the trade to the consuming public, but he feels that this is the limit to which he can go at present. It is interesting to speculate, as several hon. Members on both sides have done, that a further reduction might bring a further increase in consumption and, therefore, by the law of increasing returns, not mean any real loss to the Revenue.
    Figures have been quoted of the consumption of light wines, which now stands at about twice its pre-war level and which has shown a very marked increase in recent years, since the reduction in the

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    rate of the light wine duty in 1948–49. Again, I am not at all certain that the increase in consumption is altogether due to the reduction in duty rather than to a change in public taste. A good deal of the remarkable increase in light wine drinking is the result, I am sure, of travel on the Continent of Europe by all sections of the community.
    I do not think, therefore, that one should assume that a further reduction in the duty would lead to a proportionate increase in consumption, but I know that my right hon. Friend will very carefully watch the effect this reduction has on the sale of heavy wines. I am sure that I am not going any further than he would like when I say that I for one hope that, even though the duty had been reduced this year, this rate will not last for ever, but I think that, for this year, it will have to remain as it is.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 5.—(SWEETS.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Redhead: I have an Amendment, Mr. Blackburn, in page 4, line 16, to leave out "sweets" and to insert:
    "wines and fermented drinks made from fruit other than grape and from mead and metheglin".
    The Temporary Chairman (Mr. F. Blackburn): The Amendment to Clause 5 is not selected.
    Mr. Redhead: Speaking on the Clause, then—
    The Temporary Chairman: A debate on the Question "That the Clause stand part of the Bill" would cover the debate on the Amendment to the Fourth Schedule—page 6, line 7, leave out "£1 8s. 6d." and insert "£1 1s. 0d."—since the Schedule deals merely with the rates. It would not, therefore, be possible to repeat the debate later. If the hon. Member wishes to speak on the Question "That the Clause stand part of the Bill", I think that that debate will have to cover the Amendment to the Fourth Schedule.
    Mr. Redhead: Does that mean that we are taking them together? I am not sure that I follow your Ruling.
    The Temporary Chairman: I am sure that it would be much better if the hon. Member made his speech on the Fourth Schedule, because the Clause deals merely with the rate, and the Amendment to the Fourth Schedule seeks to alter the rate.
    Mr. Jay: The debate on the Fourth Schedule will follow our discussion of Clause 5, will it not, in the way that we are now proposing to take it?
    The Temporary Chairman: No—the Third Schedule, and then the Fourth Schedule.
    Mr. Jay: Between Clause 5 and Clause 6?
    The Temporary Chairman: Yes.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Consideration of postponed Clauses 6 to 34 and of new Clauses further postponed till after consideration of Schedules 3 and 4.—[Mr. Maudling.]

    Third Schedule.—(WINES (RATES OF CUSTOMS DUTY).)
    The Temporary Chairman: I think that all the Amendments to the Third Schedule conveniently go together.
    Mr. Redhead: I beg to move, in page 45, line 40, to leave out "£1 18s. 0d." and to insert "£1 12s. 0d."
    I am sure that after the very interesting discussion we have had on Clause 4, it will be unnecessary for me to traverse all the arguments that may be adduced in support of this series of Amendments. I feel that the Paymaster-General has, perhaps, already indicated what the Government's attitude will be to them, but I think that the discussion we have had on Clause 4 has been of such a character as to encourage the Chancellor to continue the universal welcome afforded to the reduction he has made and, perhaps, induce him to go a little further in the proposal that has received such support.
    I am not able to bring to bear any expert knowledge such as some of my hon. Friends have shown in the earlier discussion. I must say that I was highly interested to hear the rival claims for the different types of alcoholic liquor, and I

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    found myself, after the Committee had been carefully mixing its drinks, with more intelligence on the subject that I had before, though I am not able, I am afraid, to follow the Economic Secretary in his personal research and life-long study.
    What the Chancellor has proposed is a reduction of 12s. a gallon, or 2s. a bottle. We are told that this is the first reduction in heavy wine duty that has been made in living memory. The Chancellor explained it as going some way in seeking to correct the balance of the duty as between the light and the heavy wines and the consequent distortion in trade and demand that has occurred. It seemed to me that when the Chancellor said "some way" he was a little apprehensive that what he was proposing might not have met with the universal approval accorded to it by this Committee. I therefore hope that he may still be induced to go that little stage further that is suggested in the Amendment.
    Light wine consumption, after all, has been steadily rising in this country for a considerable time. An increase of one million gallons occurred during 1956–57 over the previous year, and it now runs at about twice the pre-war level—and the light wines have had a rate of duty very substantially less than that on heavy wine. Under the Chancellor's proposals, we still have a grave disproportion in the rate of heavy wine duty, which will now be of the order of about three times the amount of the duty on light wines.
    This Amendment, and those that are being considered with it, would redress that balance a little and would narrow the gap. It would involve no more than the slightest risk of lost revenue, but would probably give confidence to those who argued on Clause 4 that we might go substantially further without endangering the Revenue, because the experience in the light wine trade would encourage the view that some similar increase in consumption would compensate for loss of revenue on the heavy wines.
    Mr. Ernest Davies: Having already spoken on the Question "That the Clause stand part of the Bill," there is very little I can add, but there are two points on which I should like to support my hon. Friend the Member
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    for Walthamstow, West (Mr. Redhead) in urging that there might be a further reduction in the duty on these heavy wines.
    The first arises out of our relationship with Portugal. The Paymaster-General quite rightly drew the attention of the Committee to the fact that it will help our ally by increasing trade with Portugal in port wine. So far, the effect of the high duty on heavy wines since the war has led to a deterioration in our position in that country, and particularly in Oporto itself, which, as the Paymaster-General knows, is the centre of the port wine trade. This trade was entirely built up by British firms, but over the last decade there has been a diminution in the number of British firms operating there, partly due to the heavy duty and the reduced consumption of port in this country, and partly due, of course, to the action of the Portuguese Government themselves in stimulating national control of capital investment in their own country.
    The fact remains that since the war some ten British port shipping firms in Oporto have had to close down, and have had to do so because of the decline in the sterling trade. I happen to have been in Oporto last year, and nobody can go there and meet the British interests in the port wine trade without being impressed both by the British tradition which survives there, with the Factory House still remaining in British possession as a club or centre, and with the concern which is shared by all British interests in Oporto lest they shall be driven out of the country because of the inadequacy of the trade in port wine.
    I think it would be very regrettable if, because the Government do not feel able to reduce the duty on port wine to the same proportion as it stood to that on light wines before the war, trade is not stimulated sufficiently to keep those firms in business. That is the first point which I wanted to stress in regard to this matter.
    The second is that the Paymaster-General referred to the change of taste which was largely responsible for the diminution of the consumption of port wine. That is partially true, but I do not think the fact can be ignored that the change of taste has been very largely

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    influenced by the high price of the heavy wines. Before the war, a dock-glass of port wine in a public house generally cost 8d.; today, before this reduction, it was generally about half-a-crown, and may now have come down to 2s. 3d. When the price goes up to that extent, which is far greater than the rise in the price of beer, for instance, or even in the price of spirits, it influences very considerably this switch in taste from port wine, which was a very common drink with the lower income groups before the war, particularly in the case of women. It is that which has led to the change in taste.
    7.15 p.m.
    The right hon. Gentleman also stated that, in the case of sherry, consumption had stood up, but I think other factors apply there. There is a certain snob value about sherry for some unknown reason. It is considered the thing to do, it is considered "U" to serve sherry before a meal in one's own home when one is having guests for dinner. There is a steady consumption of sherry, which is likely to remain with the improvement in the standard of living, which does not apply in the case of port, which mainly is not an aperitif but an after-dinner drink. I would draw the attention of the Paymaster-General to that fact.
    I do not think that the change of taste has come about without having been influenced by the fact that the duty on port wine itself is very high. If it were possible to give serious consideration to this Amendment, which, unfortunately, the Paymaster-General has already rejected—though he himself would like to see a reduction in the duty and hopes for it next year—I think the debate might serve some useful purpose.
    Mr. Maudling: The arguments in support of the Amendment under discussion have tended to follow the debate we had on the Question "That the Clause stand part of the Bill," and I think it would be the general agreement of the Committee, and certainly would meet with my agreement, that it is a very desirable thing, if it were possible, to reduce further the prices of wines, be they heavy or light, but the actual proposal to reduce further at this moment the rate of duty on heavy wines is not one which my right hon. Friend the Chancellor can accept.
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    My right hon. Friend fully recognises the arguments that have been put forward from both sides of the Committee, for example, about the comparative cost of heavy wines, and about British trading interests in the Oporto district, which was mentioned by my hon. Friend the Member for Dover (Mr. Arbuthnot) and by the hon. Member for Enfield, East (Mr. Ernest Davies). These were the reasons why he decided to make this substantial cut in the duty this year which will cost, in his estimate, something under £3 million. The best estimate we can make of the cost of the Amendment would be over £1¾ million in a full year. That is something which the Committee as a whole would agree would be too much to concede, particularly in relation to other sums which we have been refusing to concede during the progress of this Committee stage.
    There remains the argument that a further reduction in the duty would result in increased consumption, so that the Government would not suffer a loss of revenue. I cannot feel myself entirely convinced by that; at any rate, not sufficiently convinced to take a chance on it at this stage. No doubt the experience of what happens in the next year or two on the basis of the existing or proposed rates of duty will be very instructive. For the time being, however, my right hon. Friend feels that he has done all he can do, though he has been glad to do it, and all that he can rightly do at this stage, for the heavy wine consumer and the heavy wine trade. I hope, therefore, in these circumstances, that the Committee will not feel it necessary to press this Amendment.
    Mr. Jay: Can the right hon. Gentleman tell us how much weight he attaches to the argument advanced from both sides of the Committee that British trading interests in Oporto and in Portugal were suffering as a result of the decline in the port wine trade? If it is the case that British exports from this country to Portugal are suffering from a decline in this connection, it seems to me that it is obviously a rather cogent argument that has been advanced, and that it might conceivably influence whoever is at the Treasury, if not this year, then probably next year. Would the right hon. Gentleman say whether he thinks there is some force in that argument?
    Mr. Maudling: There certainly is force in that argument, and we are anxious to increase our trade with Portugal. I think it is likely that further consumption of Portuguese wines might expand our exports to Portgual, but we are not working on a bilateral basis. All European trade is on a multilateral basis, and Portugal is a member of the European Payments Union. The net effect of buying more Portuguese wine would be that we would have to pay 75 per cent. in gold for any additional purchases cleared through E.P.U. It is difficult to be dogmatic about the expansion of trade with Portugal, but we are most anxious about it and we will continue to bear it in mind.
    Amendment negatived.
    Motion made, and Question proposed, That this Schedule be the Third Schedule to the Bill.
    Mr. Cronin: We have extensively discussed a proposal for the reduction of the duty on port wine, but there may still be some purpose in pointing out that there is a case for reducing further the duty on light wines. I think it is generally accepted that light wines are considered to be a superior form of alcoholic beverage to beer, and it seems to me that an increase in the standard of living of the population should run parri passu with the increasing consumption of light wines.
    I think that rather earlier in the debate my hon. Friend the Member for Flint, East (Mrs. White) asked the Paymaster-General if there had been some social research. It is always an involved question, but in a country such as Switzerland where light wines and beer are equally obtainable it has been found that with an increase in the standard of living of the population there is a large increase in the consumption of wine and a corresponding decrease in the consumption of beer. It seems that an increase in the consumption of light wine would be desirable from the point of view of the standard of living. It seems rather an anomalous situation that in France the actual production of light wine is so much less than what could be produced. In fact, the French cannot dispose of the limited amount—I say "limited" in view of their resources—of wine which they manufacture. It seems unfortunate that the population of this country should be prevented from
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    drinking this wine, which is in such superfluity in France, very largely by the heavy rate of duty.
    I need not point out that light wines are a very valuable Commonwealth product, and it would be of the utmost importance to Commonwealth trade if there were further reductions in the duty. Therefore, I hope that the Chancellor will give further consideration to this matter and perhaps when he introduces his Budget next year we may see some corresponding reduction.
    Question put and agreed to.
    Schedule agreed to.

    Fourth Schedule.—(SWEETS (RATES OF EXCISE DUTY)).
    Mr. Redhead: I beg to move, in page 46, line 7, to leave out "£1 8s. 6d." and to insert "£1 1s. 0d.".
    This Schedule has relation to the description of sweets, a most confusing and deceptive description which I had hoped the Chancellor might have been induced to consider because it no longer has any intelligible meaning to the layman. In the Second Reading debate the Financial Secretary told us, obviously having been somewhat puzzled by the terms himself, that he had discovered that it was an archaic term of a statutory character and had its origin in the seventeenth century. He went on to tell us—although I must confess that some of my colleagues and I thought that the word "sweets" referred to items of confectionery such as chocolate liqueurs—that the word "sweets" was
    "used rather than 'wine' because it covers fermented drinks made from fruit other than grape and also mead and metheglin."—[OFFICIAL REPORT, 12th May, 1958; Vol. 588, c. 37.]
    That is the category with which we are dealing. It is significant that the Department of Customs and Excise in its Report avoids the term "sweets" altogether and refers to "British wines". That, presumably, is what we are doing.
    The point of the Amendment is simple, and it will go a little way to rectify what seems to me to be a slight anomaly which the Chancellor has introduced in the changes which he has proposed under this heading. In this Schedule he reduces the Excise duty on these British wines which exceed 27 degrees proof spirit by 12s. a gallon on the still wines and 8s.

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    a gallon on the sparkling wines, but he makes no change in the light wines which do not exceed 27 degrees proof spirit.
    I appreciate the purpose which has already been explained—that is, to provide a corollary to the changes in the rate of duty which have been introduced in respect of imported heavy wines. But what has been done distorts the pattern of duty as between the light and the heavy wines in this class of British wines in a manner which he has avoided doing in respect of the imported wines. Hitherto the heavier sparkling wine has always been subject to a higher rate of duty than in the case of the light sparkling wine. But now what he has done is to put them precisely on the same level of 28s. 6d. I cannot see the equity of that. Neither can I see that it is directly in accord with what has been done in relation to the imported wines where a distinction is still maintained as between light and heavy. The Amendment seeks, therefore, to correct that apparent anomaly by reducing the duty on the light sparkling wines from 28s. 6d. to 21s. per gallon.
    I would add this further consideration in this respect, that such a reduction would make for a fairer and more equitable basis of trading as between the producers of the British light sparkling wines and their newer and more sophisticated competitors, the perry type of beverage advertised and sold under names such as "champagne perry" or "genuine champagne perry", the vast majority of which are not chargeable to duty at all, although I appreciate that the stronger perries under the 1956 Act were to be treated as British wines under this heading for Excise purposes.
    I think there is a case for a reduction here which would not be inconsistent with what the Chancellor has proposed for the imported wines, and that it would not cost the Revenue more than about £50,000.
    Mr. Maudling: The hon. Member has raised two points. The first is the question of the use of the word "sweets" which I agree at first sight is always rather baffling. He has put on the Order Paper an Amendment which is not being called and which, therefore, cannot be discussed, but I would say that if it had been called I should have had to point
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    out that it would not meet the point because it is technically defective.
    The expression "sweets" is a term that has been in use for a long time, and is well known in the trade. It is used in other legislation—licensing legislation, for example. The term "sweets" is defined in Section 307 of the Customs and Excise Act, 1952, so that I think its continuing use is for the general convenience of all concerned. It means:
    "any liquor which is made from fruit and sugar or from fruit or sugar mixed with any other material and which has undergone a process of fermentation in the manufacture thereof …"
    I find it difficult to think of many drinks which are made from fruit other than grape. I can think of the Tartars of the Oxus who fermented the milk of mares. I do not think it is a matter of widespread importance, but I think that the word "sweets", although it is a strange word, has stood the test of time and is well-known. I doubt whether it would be worth while to alter it, as any alteration would involve the use of twenty words instead of one.
    Mr. Redhead: Could the right hon. Gentleman explain why, if the definition be correct, mead and metheglin are held to be caught under the heading, as mead is a product of fermented honey?
    Mr. Maudling: The definition in the Customs and Excise Act goes on to say:
    "… and includes British wines, made wines, mead and metheglin."
    Mead and metheglin are specified. I think it would be better to leave that as it is.
    The second point made by the hon. Member baffles me completely. He talked about the unfortunate position of heavy British sparkling wines. I have always been baffled to know what is a heavy sparkling wine. I have never come across sparkling port or sparkling sherry. I have consulted those who advise me on this matter and I have got the impression that neither have they come across a sparkling heavy wine. But for the sake of tidiness a category of this character is inserted in the Finance Acts in case somebdy should produce a heavy sparkling wine. As far as I know, there is no such product, and it sounds as if it would be quite nauseating if one were produced.
    I do not think that the point is a very substantial one. In any event, to do

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    what the Amendment is designed to do—this is the serious answer—namely, to reduce the duty on light British sparkling Wines, would be impossible, for this reason. It has always been the established practice that these duties on British wines and the duties on imported Commonwealth wines should move together. I do not think that we could reduce the duty on light British sparkling wines without doing the same for the Commonwealth. Under the G.A.T.T., we could not, I am afraid, do it for the Commonwealth without doing it for the other producers of sparkling wines, of which, of course, the principal item at the moment is champagne. In view of the present buoyancy of the champagne trade, I do not think there is a case now for a reduction in duty which would, because of our obligations, have to include champagne.
    I cannot, therefore, advise the Committee to accept the Amendment, but I hope that I can console the hon. Member for Walthamstow, West (Mr. Redhead) by saying that I do not think that its non-acceptance will, in practice, do any harm because, as far as I know, no producers of heavy sparkling wines are to be found.
    Amendment negatived.
    Schedule agreed to.

    Clause 6.—(REPEAL OF SPIRITS DUTY ON CERTAIN METHYL ALCOHOL.)
    7.30 p.m.
    Mr. Cronin: I beg to move, in page 4, line 21, to leave out from "alcohol" to "shall" in line 22.
    This Amendment might seem to be a somewhat esoteric one, but it is put down largely for the purpose of understanding what is in the Government's mind. We understood from the Chancellor in his Budget speech that the tax was being removed from methyl alcohol because it was a poison and, therefore, not likely to be drunk. It was, on that account, removed from the category of substances such as spirits, sweets and wines. In the actual Bill we find these words:
    "Methyl alcohol, notwithstanding that it is so purified or prepared as to be potable …"
    In other words, if by some chance it were possible to make methyl alcohol a drinkable substance, it would then have the same privileges. On the face of it, there
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    seems to be some anomalous thinking in the drafting of the Clause.
    It seems also that there is a lack of scientific information available to whoever drafted this Clause. My recollection of methyl alcohol, from my student days, is that it is a pure substance. It has the formula CH3OH. There is no way of changing it without changing the actual nature of the substance. So, while the Clause as drafted envisages that it can be purified, the matter is not really very clear. Indeed, this substance which cannot be changed except by changing its nature completely is a deadly poison, and it is rather difficult, therefore, to imagine how it could be made potable. If the Minister would elucidate these rather difficult points, we should be very grateful.
    Mr. Maudling: The answer to the interesting point which the hon. Member for Loughborough (Mr. Cronin) has raised is that it is perfectly possible for a poison to be potable. I imagine that the word "potable" refers to the condition of the substance and whether one can drink it. The fact that it will poison a man who drinks it does not make it undrinkable; it merely makes it very unwise to drink it. These words are really purely explanatory. Their elimination would have no effect on the substance of the Clause, but I think that they are probably useful as explanation.
    As I understand it, methyl alcohol has always been known to be poisonous, but there was a rumour some years ago that a brilliant German scientist had devised a way of turning it into a drink. Thereupon, rightly and properly, the Customs and Excise authorities decided that its use must be controlled lest a loophole were here opened in the law imposing duties on potable spirits. Fortunately, this rumour appears to have been false, but it still seems to be the case that methyl alcohol, even with its impurities removed, may be regarded as potable, though poisonous.
    I shall not enter into any scientific argument with the hon. Gentleman on this matter, because I know that on these subjects he will defeat me every time because he knows far more than I. I imagine that by purification or preparation is probably meant the removal of impurities or foreign bodies from the spirit. I am not quite sure. Certainly, as I understand it, it is, at any rate theoretically, possible

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    for methyl alcohol to be prepared so as to be potable, although it would remain poisonous. The purpose of the words is to make it perfectly clear that methyl alcohol is no longer to be liable for the spirits duty even if it is in such a form as to be drinkable. As has been pointed out, the reason that it will not be taxed is that, so far from being a spirit which one would drink, it is a spirit which would poison anyone drinking it.
    I hope that that explanation of this rather tortuous point will satisfy the hon. Gentleman. As I say, these words are intended purely as clarification. Their removal would make no change of substance, but would, I feel, make the Clause slightly less clear than it is at the moment.
    Mr. Jay: I am quite inexperienced as regards methyl alcohol, and I am quite prepared to believe that poisons may be potable. Also, I have studied the story about the German scientist. None the less, I still do not see what is gained by having these words in the Clause. It seems to me that the sense of the Clause would be exactly the same if one left out the words beginning with "notwithstanding that".
    I approach this matter as a matter of logic and language only, and I feel that we ought to spend a minute or two trying to ensure that our legislation means what it should. If we were to say that the House of Commons, notwithstanding that the seats are made of wood, shall be deemed to be situated in Scotland, or, even, that the Paymaster-General, notwithstanding that he represents a North London constituency, shall be deemed to live in Algeria, the sense would be the same in both cases if we left out the words beginning "notwithstanding that". We could just as well say in the Clause that
    "methyl alcohol … shall not be deemed. to be spirits",
    and so on.
    The right hon. Gentleman said that the words were put in because they are explanatory and make for clarity. But surely, if we are to draft Bills with that approach all sorts of interesting statements might be made about many of the things mentioned in the various Clauses which might give us interesting information about this and that throughout the Bill. But is it really the usual principle
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    to add words which have no effect at all on the total legal effect of the Clause? I should like the right hon. Gentleman to consider the matter again for a moment or two. Am I right in thinking that these words have no effect whatever upon the legal meaning of the Clause, and, if that be so, is it really usual in such cases to put in such words.
    Mr. Maudling: I am advised that these words have no effect on the substance of the Clause, and I understand from the drafters that it is a normal thing to do. I think that the point is a logical one The Clause says that methyl alcohol, notwithstanding that it be so purified or prepared as to be potable, shall not be deemed to be spirits, and so on. When it has been so prepared, of course, it is a potable spirit, and it is usual, of course, for potable spirits to be liable to duty. These words emphasise that this particular form of potable spirit, although potable, will not be liable to the duty which all other forms of potable spirit have to carry.
    I think that that is right and logical, although I will gladly look at the point the right hon. Gentleman raises. I am advised that these words have no effect in substance, but it is a nice point of drafting which follows the conventions. However, I will, with pleasure, consider whether there might be an improvement.
    Mr. Jay: The words have no legislative effect at all, but are merely a kindly hint to the reader.
    Mr. Cronin: We are not quite satisfied with the Paymaster-General's explanation. I hope he will consider further whether an alteration should be made in the drafting. He tells us that methyl alcohol is being relieved of duty because it is poisonous though potable; yet it would still be relieved of duty because it is poisonous.
    Mr. Maudling: I said that it can be regarded as potable even though it is poisonous.
    Mr. Cronin: That still does not clarify the situation. It seems to me that this additional phrase is incomprehensible to the Paymaster-General and everyone else on the Government Front Bench. There has been no answer to my point that methyl alcohol cannot be purified.

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    It cannot be made a potable substance in any reasonable sense of the word.
    I do not propose to press the Amendment further, but I hope that the Paymaster-General will take some further action, particularly as he points out that this phrase has no effect at all on the sense or substance of the Clause. In the meantime, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.

    Clause 7.—(DATE AND PERIODS OF ROAD VEHICLE LICENCES.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Ernest Davies: I do not think that this Clause need detain the Committee for more than a few moments. However, I should like the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation to clarify one or two points. As I understand, this Clause will enable motor vehicle excise licences to be taken out at certain fixed dates during the year for a twelve-month period, or, presumably, for a shorter period, instead of their all expiring, as they do, at the end of the normal four quarters of the year or on 31st December at the end of each year. That is to say, at present there are certain peak periods, of which the end of December and the beginning of January are the greatest, when the licences fall due for renewal.
    In his Budget speech the Chancellor explained that the intention was that in future it would be possible for licences to be taken out on the first day of the first month in which they are required for periods of four, eight and twelve months. I do not understand why he should have selected the periods of four, eight or twelve months. Why is the system of being able to take them out for quarterly periods—which is the normal system and which is understood by people—being changed to three periods during the year? As far as I can see from the Clause, it is not obligatory. In other words, the Clause would permit the quarterly system to continue.
    However, I am sure that the intention or the Clause is acceptable to hon. Members on both sides, because it results in a substantial administrative reform. It
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    has been most inconvenient for local authorities, under the present system, to have the vast majority of motor vehicle licences falling due on 1st January of each year and having to recruit temporary staff to cope with the applications for renewal. If by substitution of this procedure there is a spreading of the load, as it were, over the whole year, clearly it will be of considerable benefit to the issuing authorities and will ultimately result in a reduction in administrative costs.
    7.45 p.m.
    The Chancellor estimated that it would cost £2 million in the first full year of the change, because there will be, as it were, a deferred income. A lot of licences will be renewed over subsequent periods and will not be automatically renewed on 1st January next year. That means that there will be a deferred revenue, but it is not lost; it is merely put off. Once that £2 million has been deferred it does not recur. It is not a recurring loss.
    This is certainly a wise administrative change which I am sure will be welcomed by local authorities which issue the licences. However, I should like to know from the Parliamentary Secretary exactly what are his intentions. What is the plan that the Ministry has in mind? The Chancellor said in his Budget speech that details of the arrangements would be announced in due course by his right hon. Friend the Minister of Transport and Civil Aviation. Perhaps the hon. Gentleman will be able to announce those details tonight. They should certainly be given to the House before the Bill is on the Statute Book.
    In Section 2 (a) it is rightly provided that where payments are made for broken periods of the year the payments should be in
    "no less proportion than the number of months for which the licence is taken out bears to a year."
    That is understandable. But under subsection (b), where they are taken out of broken periods they
    "shall not exceed for each month of the period ten per cent. of the duty on the corresponding annual licence."
    If licences are taken out for a broken period as they have been in the past—for three months in a number of cases—I have never understood why the

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    licence holder had to pay a higher sum for the three months than he had if he took it out for twelve months.
    Admittedly, there may be a slight increase in administrative costs, but, on the other hand, it does not seem fair on the licence holder to charge him 10 per cent. more, as is permitted under the Clause, if he decides to take out his licence for three or four months, as now will be the case, instead of twelve months. Why should he have to pay 10 per cent. more as a penalty in those circumstances? After all, the Treasury gets the not inconsiderable sum of £12 10s. from most vehicles. What is the justification for this penalty upon the licence holder who prefers to take his licence out for a broken period? In many cases the car may be laid up a part of the year, which is in some way an advantage from the point of view of road congestion.
    There is one final point which I should like to put. Will there be a continuation of the system whereby the post offices issue the licences at certain periods of the year? Up to the beginning of January of each year applicants can lodge their forms at the post offices and receive their licences over the counter straight away. This is certainly the case in London. But after a certain period that lapses and application has to be made to County Hall.
    When the system of being able to take out a licence from the first of any month for a period of four, eight, or twelve months comes into force, is it proposed that it will always be possible to go to the post office to obtain a licence? Certainly, it will be a great advantage if that is the case, because it will save either sending the application by post or visiting County Hall or other municipal offices. I should like to know from the Parliamentary Secretary whether, now that licences will be obtainable all through the year rather than fall due at peak periods, the system of issuing licences at post offices will continue.
    I should be glad if the Parliamentary Secretary would clarify those points when he replies. As I have said, this is clearly a desirable administrative change which, in the long run, should result in the spreading of the work for municipalities and should benefit those who apply for vehicle licences.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): As the hon. Member for Enfield, East (Mr. Ernest Davies) apprehends, the purpose of the Clause is broadly, as he said, to get rid of the seasonal peak and to relieve the administrative burden that occurs at peak periods, which is increasing every year as we get an extra half-million vehicles on the roads; and, secondly, to give a useful convenience to motorists in that in future, instead of having to conform with the calendar quarters or months, the licence will start from the beginning of the month in which the licence is required. Both from the viewpoint of the motorist and the point of view of administration, this will be a real benefit.
    The hon. Member's first question asked why my right hon. Friend the Chancellor of the Exchequer suggested the intention of making periods of one-third of a year instead of quarterly. The procedure for bringing in this innovation is for my right hon. Friend the Minister of Transport and Civil Aviation to make an Order. That power is contained in subsection (1) of the Clause. In due course, my right hon. Friend will come forward with his Order before the end of this year, in good time to bring the new scheme into operation next year.
    Our reason for changing to the basis of four, eight and twelve months instead of quarterly periods is an administrative convenience. It will reduce the number of licences in the year from four to three, so that there will be some reduction in the number of licences running. Our view was that this would reduce the administrative costs. On the other hand, however, as the motorist will get the advantage of being able to begin his licence from the beginning of the month in which he wishes to put his vehicle on the road, he will not be put to additional expense, because he will have the licence for four months instead of for three-monthly periods. In practice, that should be found to work quite conveniently to suit everybody.
    Mr. Ernest Davies: Does that mean that in future the licence will be only for four, eight or twelve months and that it will not be possible to have a quarterly licence? Does this mean that if a person wishes to renew a licence, not for the

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    whole year, but for a quarter, as can be done at present, he must renew it for four months and not for three months?
    Mr. Nugent: That is right. In future, four months will be the minimum instead of three months at present, but the motorist will get the convenience of starting his licence from the beginning of the month in which he wishes it to start. He will still have the same right to claim for a rebate for any complete month in which he does not use the vehicle.
    The hon. Member correctly told the Committee the effect on the revenue, that in the first year in which we alter the calendar basis there will be a loss of £2 million, which will be made up in subsequent years. As I have said, the Government's plan will in due course be published as an Order by my right hon. hon. Friend. That will bring into being the new machinery and the new arrangements.
    Mr. Davies: The Chancellor stated that the Minister of Transport would give the details. The Joint Parliamentary Secretary will know that once an Order is in draft—in this case, presumably, it can be prayed against—it must be either accepted or rejected; it is too late to take into account the views of hon. Members. I was hoping that since it was stated that details would be published, they would be given to the House and the views of hon. Members could be expressed upon them one way or the other before the Order is laid.
    Mr. Nugent: I was endeavouring to give the hon. Member the intentions of my right hon. Friend in the scheme. It will be on the basis of thirds of the year instead of quarters. The periods will begin from the beginning of the month in which the owner of a vehicle wishes to license his vehicle and it will run quite simply in the terms that the hon. Member has indicated. In the original Order, we do not intend to bring in the provision, which subsection (6) outlines, which would alter the calendar basis of the annual licence.
    Our intention is to see whether the new licences coming in each year will be sufficient to shift the burden off the calendar basis to avoid the seasonal peaks. If it does, we shall not need to employ that device. If it does not, in
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    the course of a year or so, when we have been able to see how the new arrangement works, it may be necessary to introduce another Order which will give the licensing authority—that is, ourselves, through the county councils—the necessary authority to alter the calendar basis so that applicants who apply for a licence for a year will be given the option of changing either to eleven months or a period of up to fifteen months, to shift them off the annual peak of December-January.
    We intend, however, to wait for the first year or so to see whether that is necessary. It may well not be necessary because the new licences coming in at the rate of half a million a year may be enough on their own to shift the seasonal peak. That is, broadly, our intention.
    Concerning broken periods, the hon. Member made a plea which must have been felt by many motorists in the past. He asked why they get a rebate on only a 10 per cent. basis if they have quarterly licences. The answer is that that is the established basis because of the extra administrative cost, as the hon. Member apprehended. There is no other basis for the lower rate. It costs rather more to deal with the extra number of licences and, therefore, the 10 per cent. basis has been established. The change that we are making leaves that position untouched. Incidentally, there will be a slightly less unfavourable rate for the eight-month licence than for the four-month licence.
    The hon. Member also asked about the issue of licences from post offices. The answer is that the same facilities could be provided as now. I agree that as we shift off the seasonal peak that should be a very great convenience indeed in the case of renewals in the future. I hope that the Committee may now be ready to approve the Clause.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 8.—(USE OF MOTOR VEHICLE UNLICENSED ON WAY TO OR FROM COMPULSORY TEST, ETC.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Ernest Davies: I have only one or two small points to raise on the Clause.

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    It is introduced, I understand, to enable motorists to take their vehicles to be tested when compulsory testing is introduced, as it will be shortly, for old vehicles. They will be able to take them to the testing station even if they are unlicensed and, if they decide to take them away to have the necessary repairs done should they not pass the test, to be able to take them away to a place where they wish the repairs to be done. That seems to me to be highly desirable.
    I am particularly glad it is provided that motorists shall be able to take their vehicles away because, as it is proposed by the Government that most of the testing shall be done in private garages, if motorists were not able to take them away from the private garage and their vehicles had failed to pass the test it would be necessary to have the repairs done by the garage which was responsible for testing the vehicles. As these garages are in any case probably not entirely disinterested, this would be an added incentive to find fault with the cars, which would require repairs being done in their garages.
    I also note, however, that in the Clause it is provided that this applies only where application has been made for a test by previous arrangements—that is, that no motorist will be allowed to drive away his car, which is required to be tested, has not been tested and which has not been licensed, by saying that he is on his way to have it tested, because he will always have to prove, I take it, that he has made an arrangement to have it tested.
    The necessity of the Clause arises largely from the manner in which the Government are instituting the testing. Instead of having it done by State testing stations and by municipalities, it is being put in the hands of private garages and, therefore, these extra precautions have to be introduced. Certainly, in those circumstances, the Clause appears necessary and cannot be opposed.
    8.0 p.m.
    Mr. G. R. Mitchison: I want to make only one inquiry. I see the point of putting in the reference to a "previous arrangement". I suppose that it is to prevent the motorist getting off by saying that he had just thought of
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    resorting to a garage and having a test carried out. As my hon. Friend has just pointed out, that is particularly advisable in view of the provisions concerning the tests. But what happens if the motorist says, "I had a previous arrangement"? What check is there on him? Surely all that has been done is to remove the matter one stage further and add a little to the seriousness of the fib, if any, which the motorist may be tempted to make. He now says, "I am now going to the garage in order to have a compulsory test done", and he has only to add the words, "I rang up the garage the other day and fixed it", and all is well.
    It seems a little illusory, if that is the reason why the reference has been put into the Clause, and if it is intended to serve as some form of protection. Have the Government considered exactly what attitude would be taken in the case of a mechanically-propelled vehicle found in use on public roads? Have they considered what questions would be required to be put, and what answer would be accepted—and what would be taken as a sufficient excuse to bring the motorist within the ambit of the Clause?
    I am not suggesting that something of the sort is not right and proper, but I wonder whether sufficient consideration has been given to the way in which the process will work. No doubt the police have been consulted in the matter. It would be interesting to know the point of view of the Metropolitan Police, and whether they think that this concession can be used—notwithstanding the reference to a previous arrangement—as a method of allowing a man to go along the road scot-free when he has perhaps omitted to take out his licence in time, or has committed another of the minor offences possible in this connection.
    Mr. Nugent: The words "by previous arrangement" have been correctly interpreted by the hon. Member for Enfield, East (Mr. Ernest Davies). I was glad to hear him welcome the arrangement, which, as he observed, is really no more than machinery to key in with the testing scheme and make it legal for a vehicle to be taken on the road without a Road Fund licence for the purpose of a test and for repairs if the motorist, after a test, wishes to take it elsewhere. The words were put in to provide a simple check that the motorist was in fact taking

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    the vehicle to be tested and not just motoring around for his own purposes.
    The effectiveness of the provision will depend upon the evidence of the testing station. I am certain that in normal circumstances a testing station will be completely reliable for that purpose, and, where the police apprehend a car moving on the road without a licence, if the driver says that he is on the way to the testing station the police can ask him which testing station he is going to and whether he has an appointment. If, on checking up, they find that he has, it will be sufficient to justify his continuing.
    It is not impossible that there might be collusion between the motorist and the garage, but human nature is usually not so frail that that simple arrangement would break down. Normally it would be reasonably fool-proof if the police checked straight away with the testing station to find out whether an appointment had been made. I think that that would be an effective practical arrangement.
    Mr. Mitchison: I have often heard that truth was to be found at the bottom of a well, but I never expected to look for it with such certainty in a garage. I understand that the official view is that if the motorist says, "I have a previous arrangement", and the garage says, "No, you have not", the motorist is then liable to proceedings, in which no doubt someone from the garage would be called upon to give evidence and the matter might resolve into a question of which side should be believed.
    Surely this is an odd arrangement? I could understand it in relation to an official garage, but when we are dealing with private garages, ought not they to be obliged to keep some record of appointments, as a check? Otherwise there will be very unfortunate word-for-word differences.
    Mr. Nugent: Yes; I take the hon. and learned Member's point. I think that that would be a good arrangement, and I shall be glad to see that it is put into action. It would undoubtedly substantiate verbal arrangements. It ought to be quite easy to do. Records must be kept of the testing, and it would be quite simple to provide that there should be a booking of appointments. I am grateful to the hon. and learned Member
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    for his suggestion, and I shall be glad to see that it is put into practice. We want to make this arrangement work in a sound and respectable fashion. I hope that with that assurance hon. Members will be ready to accept the Clause.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 9.—(DOG LICENCES.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Redhead: I should like to know whether the Committee can be afforded a somewhat clearer and fuller explanation of what appears on the face of it to be the rather obscure purpose lying behind the Clause. Section 6 of the Finance Act, 1908, to which the Clause has reference, provides that
    "There shall be transferred to the local authorities in England and Wales"—
    but, for some obscure reason, not Scotland—
    "the power to levy duties on certain licences and to keep the revenues derived from those licence duties."
    The appropriate Section, however, had a proviso which laid down that, if the rate of any such duty was subsequently altered, that duty, unless Parliament made provision to the contrary, would cease to be a duty to which the Section applied. In other words, if the rates of duty as they then were were subsequently increased the revenue would cease to accrue to the local authorities concerned and would revert to the Crown.
    The Clause proposes that that proviso shall cease to apply in respect of the duty on dog licences. In the Second Reading debate on the Bill the Financial Secretary said, quite correctly, that the only licence duties which now remained in this category of transferred licences were gun, game and dog licences, and he went on to explain that the proviso to Section 6 (4) of the Act of 1908 was of a character
    "to prevent a consolidation of the law in this sphere which is very much needed—it is old and, therefore, prolix—because two codes of law, one involving the local and the other the national taxation would be required."—[OFFICIAL REPORT. 12th May, 1958; Vol. 587, c. 38]
    He said that the Clause made no substantial change in the law as such, and was designed merely to make way for a consolidation of the law.
    The Financial Secretary to the Treasury (Mr. J. E. S. Simon): If I said, "old and, therefore, prolix", the "therefore" was purely a slip of the tongue.
    Mr. Redhead: I accept the hon. and learned Member's correction; I was quoting from HANSARD.
    If the Clause is designed merely as a preface to some requisite consolidation of the law in this respect, why, seeing that gun, game and dog licences survive in this sphere, is the present Clause confined to dog licences? Why should not gun and game licences be brought into the review? It seems to me that consolidation should cover the whole field.
    Secondly, I wish to ask: are we to take it that, apart from consolidation—I must confess my first reaction to this Clause was to think that this was probably its purpose—the Government have in mind to make an onslaught on dog licences and to increase the rate of duty? If any such purpose is in mind—I have heard advocacy for it which I am not myself advancing, and the present amount of the licence has remained static for many years—why should not that have been done in this Bill? I find no indication of that intention in this Bill. This leaves us confused and unsatisfied about the purpose behind this Clause.
    If it be a question of paving the way for consolidation, can we be given some indication of the nature of that consolidation? May we be told why it is that the Clause provides only for dog licences when, seemingly, gun and game licences should be similarly brought within the sphere of any consolidation thought to be requisite?
    The Solicitor-General (Sir Harry Hylton-Foster): The suspicions of the hon. Member for Walthamstow, West (Mr. Redhead), though worthy enough on the face of them, are unjustified. There is no intention of interfering with the dog licence duty. If there were, it would require legislation, so that Parliament would have to be firmly acquainted with it, and we should have the advantage of the views of the hon. Member if he felt pained about the changes proposed.
    This is included as a Clause in the Bill simply because it was asked for by those concerned with the magic of consolida-
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    tion. I could not indicate to the Committee anything of the precise nature of the consolidation intended. It is a matter examined in due course by a consolidation Committee and soundly vetted before it reaches Parliament at all.
    If the hon. Member will glance at the dog licence law—I do not like the word "prolix", although my hon. and learned Friend used it—he will find that it is a bit of a legislative "jungle" and one has to probe over the Statute Book. Taking a rough shot myself, I would commend the attention of the hon. Member to a couple of Statutes, in 1867 and in 1878, and to the Protection of Animals (Cruelty to Dogs) Act of 1933. It is scattered in rather wordy provisions, and it is thought to be an advantage that the law relating to dog licences should be consolidated.
    I have not examined the details relating to the law on those other licences. So far as I am aware, no one desires to consolidate the law relating to them which depends on other Statutes, but no harm, so far as I know, would be done by their inclusion in this context. But as no one desires to consolidate them, and as this Clause is only to make provision for the consolidation of Statutes relating to dog licences, it was not thought necessary to deal with the other types of local authority licences at this time. If the need arose, no doubt it could be done in a future Bill, but at present there is no need to do so—although the hon. and learned Member for Kettering (Mr. Mitchison) almost rose from his seat just now to say that there is. No doubt the hon. and learned Gentleman will be able to explain to the Committee why.
    8.15 p.m.
    Mr. Mitchison: The "hon. and learned Member" to whom I think the right hon. and learned Gentleman was referring is not concerned with that. What he is concerned with is to know why this Clause is here. At present, not having, perhaps, conducted sufficient researches into the history of dog, gun and game licences, I am completely in the dark about why this Clause is required. That simple question seems to me to be what we are now considering.
    The present position is that there are three types of licences—dog, gun and

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    game. If I may take the language of the Government Bill as correct
    "on a change in the rate of any duty transferred by that section to local authorities in England and Wales the transfer becomes inoperative"
    and therefore, presumably, unless this Clause is put through, something would happen when the dog licence was changed. But nobody proposes to change the dog licence. Therefore, I fail to see the reason for putting this Clause in the Bill.
    Then the right hon. and learned Gentleman tells the Committee that the reason is that somebody wants to consolidate something. He does not say what form the consolidation is to take or the reason for it. He does not even say how much is to be consolidated and simply hides—for lack of anything better to hide behind—behind the unknown dictate of a consolidation Committee. I quite understand that consolidation Committees have their purposes, but it is news to me that they are the people who draft and put forward those very important instruments of Government—Finance Bills—and that, simply for a reason so inadequately and incompletely described by the right hon. and learned Gentleman, we have now to consider this Clause today.
    Perhaps I may ask the right hon. and learned Gentleman this very simple question: what would be the difference in the position if we refuse to accept this Clause from the position if we accept it? Would it not simply be that when matters got to some further stage and the labours of the consolidation Committee approached fruition, it might have to add something to those labours; but that so far as the Exchequer, and the taxpaper, and the national economy and the rest of it is concerned, it is rather extraordinary that we are asked to pass, in a Measure for saving the nation—which is conducting a fight against inflation; saving the dollar exchange and, goodness knows, all the things we do in the Finance Bill—a Clause, the effect of which, if any, is at present completely obscure?
    I think that we are entitled to ask the Government the simple question: what is this Clause for? What would be the difference if we refused to accept it? Would anybody be one penny better off or one penny worse off as a result of the
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    omission of this Clause from a Bill which calls itself a Finance Bill?
    To put the matter a little more generally, cannot the Government—having regard to the numerous recommendations of Royal Commissions about reforming taxation and reforming the administration and all the bright suggestions put on the Order Paper by hon. Members—think of something a little more useful than this Clause appears to be? If, in fact, we are to pass this Clause, the substantial question still remains unanswered. This will no doubt provide, if and when the dog licence is changed, that the revenue will not necessarily be taken from the local authority. What is to happen if the gun or game licences are changed? Is the revenue then to be taken from the local authorities and, if so, on what ground?
    Lastly—this question seems to me to have become extremely pertinent—we remember the debate about what was popularly known as the "Leak" and the adventures of a former Economic Secretary to the Treasury on a grouse moor. Has this any connection with that? Is this peculiar treatment being confined to dog licences, and not intended for gun and game licences, because the Government have some vested interest in grouse moors and somehow manage to shoot grouse without having dogs to retrieve them?
    The Solicitor-General: Not for the first time, I have been guilty of the discourtesy of failing to realise that it is not sufficient to give an answer to the hon. and learned Gentleman once. The substantial point, why this Clause has to be in the Bill for consolidation, was first given by my hon. and learned Friend the Financial Secretary during the Second Reading debate.
    I realise quite well that the hon. and learned Member is too busy to have time to read speeches of that kind. It was repeated a few moments ago by the hon. Member for Walthamstow, West (Mr. Redhead). I was guilty of the discourtesy of not repeating it myself, but if it will assist the hon. and learned Member and the Committee, I will do so. While the proviso remains in the law, any consolidation of the enactments relating to dog licences would involve a provision for a double parallel code, one for collection on a national

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    basis and one for collection on a local authority basis.
    Primarily to avoid that complication in a consolidation Bill, the Clause is included because the requisite amendment could not otherwise be made in the process of consolidation. There is no dark mystery regarding dollars, grouse moors or £ s. d., nor what might happen if the money were taken from local authorities in future. None of these dark suspicions of the hon. and learned Member really arises.
    Mr. Mitchison: I am still not satisfied with the explanation given by the right hon. and learned Gentleman. He has not answered the question I asked. This is the Finance Bill, which is supposed to be concerned with regulating the national economy and not with consolidating statutes. Would it make any difference to anybody if the Clause were not passed? It would no doubt make the process of future legislation a little different, but that is all.
    As I understand, the right hon. and learned Gentleman is now admitting that this Clause, this sublime Clause, this noble Clause, embodying the financial policy of the Government, has been put in here solely and entirely for the purpose of not putting it into a subsequent consolidation Measure and thereby making it a consolidation Measure without amendments, whereas it would have been a consolidation Measure with amendments.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 10.—(CHARGE OF TAX FOR 1958–59.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Diamond: May I preface the few remarks I wish to make on this Clause with an apology for a seeming discourtesy in having to leave the Chamber before the points I raise can possibly be given in a speech winding up the debate? Unfortunately, I have to leave for my constituency to deal early in the morning with a most important appointment with reference to unemployed airport workers in Gloucester.
    You, Sir Charles, will understand, that matter affecting, as it does, 3,000 workers in one factory alone, it is right that an
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    hon. Member should keep such an appointment, even though he shows apparent discourtesy by not waiting until the end of a particular debate. I offer that apology to the Chancellor and the Financial Secretary because, whatever we say about them, no one can deny that they are extremely courteous. I was going to say that the Chancellor is nothing if not courteous, but, in view of his answers to our requests earlier, I would say he is nothing but courtesy, for all we got out of him was courtesy.
    This Clause is a short Clause, but it is the most important Clause in the whole Bill. The standard rate of Income Tax is the one thing everybody has his eye on from one Budget day to the next. The fact that it is a short Clause in a Bill which contains thirty-four Clauses and nine Schedules should not mislead us into believing that it is an unimportant Clause. We are in danger, as was noticed in earlier discussions on Business today, of giving the impression that the Finance Bill is not a matter of importance to be discussed in the Chamber, but one which should be sent upstairs.
    There is a danger that one might not realise, because there are no Amendments put down to the Clause, that it is a Clause of such importance that it requires a little time to deal with it fully. I am only sorry that because of the usual expeditious way with which you, Sir Charles, have conducted the business of the Committee, I am compelled to address you before having a full opportunity to consider the remarks I wish to make and am still somewhat in the frame of mind of asking about Entertainments Duty in relation to the cinema industry.
    This Clause, the dominant Clause of the Bill, is typical of the rest of the Budget, completely unimaginative and providing virtually everything as before. The standard rate is to be 8s. 6d. as before. No doubt because of the importance of this Clause the benches opposite are practically as full as the benches on this side of the Committee.
    Mr. J. Grimond: Not quite.
    Mr. Diamond: For the whole of the past year there have been forecasts, estimates, and financial articles on the need for the new Chancellor and the Conservative Government to do something about

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    the standard rate of Income Tax. Nothing could be more important and nothing, I should have thought, would have been more pressed by the hordes of back benchers who are supporting the Treasury Bench at present. I am not here to plead for an increase in the standard rate of Income Tax, far from it. It would not be in order for me to do so. I am here to do what the supporters of the Treasury Bench ought to be doing, criticising the Government for their lack of imagination and the fact that they have not got the ability by any of their policies to reduce the rate of tax and at the same time to raise the necessary revenue to provide the services the country needs.
    That is a considerable criticism. It arises mainly from the economic policy of the Government, which is deliberately directed towards holding down production. As a result, production has stagnated over the last three years. That being the case, a standard rate of Income Tax produced less than otherwise it would produce. If one had increasing production, factory wheels turning and more efficiency as a result of full order books with great demand and purchasing power, and the consumer needing this, that and the other, there would, of course, be an increase in the production of individual firms and an increase in their profits.
    As a result, the same standard rate would produce greater revenue. To put it the other way, a reduction in the standard rate would have produced the same amount of revenue. Had the economic policy of the Government been directed towards increased production, we could have afforded what many people and many hon. Members on both sides of the Committee would be most anxious to see achieved, some reduction—how much one could not say without going through the figures most carefully—in the standard rate, and still have enabled the Government to have the revenue it needs for the social services and all the other services to be supplied.
    8.30 p.m.
    The Government have not seen fit to do it. The Chancellor is still of the opinion that purchasing power, which would send the wheels of industry round faster and produce the increased profits which are so necessary for the revenue which the Chancellor needs, must come
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    down. The right hon. Gentleman has gone so far as to intervene in private wage negotiations—an extraordinary attitude for any Chancellor to adopt—and to say that particular wage negotiations were inflationary. We do not normally accept such an attitude in this Chamber without asking for details, and if details are not given we are inclined to say that the allegation is, in fact, a smear. An allegation unsupported by details is a smear.
    It is regrettable that the Chancellor has taken that point of view and has not told us with which particular wage negotiations he was concerned. The standard rate of tax referred to in the Clause could have been reduced if we had had the increased production which arises from increased purchasing power, which itself arises from the wage negotiations which have been so recently referred to.
    We could have had a reduction in the standard rate for a variety of further reasons. One that occurs to me immediately is the additional revenue that would come to the Treasury if it had set its mind to cutting out tax avoidance. I am referring not to tax evasion, which Inland Revenue officials are doing everything they can to pursue, but to tax avoidance which the Treasury and the Chancellor know about and which the right hon. Gentleman smiles upon and accepts. Why does the Chancellor want people to assume that a taxpayer is better off supporting his mistress than supporting his wife? That is a question which the Chancellor, in his completely impartial and independent position, should be in a position to answer.
    Notice taken that 40 Members were not present;
    Committee counted and, 40 Members being present—
    Mr. Diamond: My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) has produced, by calling a count, a much larger attendance in the Chamber to listen to my remarks on the subject of tax avoidance than I had before.
    Mr. S. Silverman: It is now up to my hon. Friend to hold them.
    Mr. Diamond: I was referring to the serious aspect of this matter, that disposable income should be regarded as

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    a charge on one's income. This is a frequent method of tax avoidance, as the result of which revenue is lost, and makes it impossible for Chancellors of the Exchequer to reduce the standard rate of Income Tax, although otherwise they might desire to do so. This is a somewhat technical matter, so I will explain in a little more detail what I have in mind.
    It is Income Tax law that, provided one enters into a binding covenant to dispose of part of one's income for a period of seven years, that is to say, at least six years and one day, that income is no longer regarded as one's income but as income of the recipient, to whom it is payable under whatever form of deed of covenant it may be. In very many cases the disposable income, which in all other circumstances is regarded as income remaining after taxation, is treated for these purposes as income before taxation. The amount of the covenant is regarded as a charge on one's income.
    Why should this be so? One can understand it in the case of a normal charge, like a rate of interest, which is very much higher than it used to be in the days when I was previously a Member of Parliament. Mortgage interest which one has to pay is obviously a charge upon one's income, but why should this be the case with regard to disposable income? This is one of the major leaks by which taxation is lost to the Revenue and the standard rate of tax has to be kept at its present figure, in order to produce the necessary revenue, instead of being reduced to a much smaller figure. Why seven years? Why cannot it be a different number of years? Why is it, as I say, that a man maintaining his mistress and paying her under deed of covenant a large sum of money should be able to charge the whole of that against his Income Tax or certainly against his Surtax? Why is it that there should be loss of this revenue to the Government when a married man who is keeping his wife gets no such benefit?
    Mr. John Hall: Money under a seven years' covenant becomes the income of the recipient to whom it is paid. This system is also used very largely in connection with charities. It would be a great pity to stop that.
    Mr. Diamond: I am most grateful to the hon. Gentleman for his intervention for more reasons than one His first point is perfectly true, and that is exactly what we are complaining about. We are complaining that the income of a donor is regarded as the income of the recipient when in normal common sense it is not. Income is not transferred. The donor makes a present. If I make a present to my child on Saturday of 6d. or 7d., because I am feeling in a generous frame of mind, that does not become the income of the child; it is a present made by one person to another. It does not cease to be a present because of the formality of entering into a seven years' covenant. Why is it a present if it is for six years and a charge on income if it is six years and a day?
    Surely that is a pure technicality in order to enable income to be transferred from one person to another, for tax to be avoided, for income to be lost to the Revenue and for the Chancellor to be put in the position whereby he has to keep a higher standard rate of tax, with all the difficulties and great deterrent effect that a rate of tax like this has.
    There are many other questions of avoidance to which I should like to refer, but I think that I have made the point that avoidance is one of the matters to which the Chancellor should turn his mind. Instead of accepting this state of affairs to which I have referred, he could very easily alter it and make Income Tax tally with common sense and a situation arise whereby one's own income remains one's income and if one pays it away as a present it is still a present, and not anyone else's income. That is one example and there are many others. It would be against the public interest for someone to display too great a knowledge of the methods of how tax is legally avoided. I will, therefore, turn to the next aspect of this matter.
    Mr. John Hall: Do I understand the hon. Gentleman to be asking that all gifts should be made taxable in the hands of the donor? Would he apply that to all voluntary contributions, to contributions made to the church on Sunday or Easter offerings that are made to the incumbent of a parish?
    Mr. Diamond: Those are very interesting questions, each one of which should be considered very fully before I

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    attempted to give an answer. I do not think that it would be in order for me to go into them at great length. But one's own income is one's own income and one does not dispose of that income to anyone else merely by covenanting it by a formal document. No one can change the nature of his own income. I will answer the hon. Gentleman's question as to gifts to charities. There is no reason why the law cannot be so altered that the payment of income to a mistress and the payment of income to a charity are treated differently. There is no reason at all. In fact it is treated differently at the moment.
    Why should there be an advantage to a man who keeps a mistress as opposed to a man who pays to a charity? The man who keeps a mistress has the expense deducted from his Surtax, which is a very considerable Surtax saving, whereas the man who, instead of paying hundreds of pounds to his mistress, pays the money to charity or a church or an educational institute of a different kind, gets no Surtax relief at all.
    Mr. John Hall: I understand that the example which the hon. Member has quoted so often is that of the employment of a mistress. It is quite possible to take a mistress on a purely commercial employment basis, in which case one would pay a salary or a wage and presumably one would also be liable to pay National Insurance contributions. In those circumstances, it seems to me that anybody who wished to do such a thing could do it legally by taking an employee.
    Mr. Diamond: I am afraid that the hon. Member is most anxious to take me away from this Clause and I am most anxious to stick to it.
    The Temporary Chairman (Mr. F. Blackburn): I do not think the hon. Member for Gloucester (Mr. Diamond) needs a great deal of encouragement to get away from the Clause. The Question is very narrow and refers only to 8s. 6d. in the £.
    Mr. Diamond: I am grateful to you, Mr. Blackburn, for strengthening me when I was in need of strength. This Clause is indeed a short Clause. If I may repeat what I said before you occupied the
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    Chair, although it is a short Clause it is, in effect, the most important Clause in the Finance Bill. It is the one Clause which the public understand and to which they look.
    The public as a whole do not understand what we talk about in general terms and they do not understand all the details we have to consider. Many take the view that time is wasted on these matters. When I went home later last night I called at a garage for petrol. The garage proprietor, realising that I was late, said, "I suppose you have been talking about the bus strike." In a matter like the bus strike, ordinary people believe that the House would need many hours of debate. They do not realise that the Finance Bill of necessity takes a considerable time, if we are to consider it fully.
    When we come to the most important Clause, not only in the Finance Bill but in terms of the philosophies of the two parties, we must spend some time on it. The one thing which every Conservative hon. Member, both inside the House and out, has been urging upon his Government is a reduction of taxation. When it comes to such a Clause, therefore, it is necessary that we should draw attention to the fact that the same unimaginative approach that was brought to bear on the whole Budget has been brought to bear on the Clause and that we are left with a Clause providing for the same standard rate of Income Tax as in previous years. There was not one word about it in the Budget—no word of explanation why we could not have the reduction to which we all looked forward.
    I think it is right that I should explain from these benches that many of us, ordinary back bench Members, take the view that it would be in the interest of the nation to impose a lower rate of tax. It would be of benefit to many. There are those who feel that a heavy rate of tax is a deterrent. Whether it is a deterrent or not depends on whether the taxpayer feels that it is a deterrent. It is as simple as that. The argument is often produced that if you pay 8s. 6d. in the £ you have only 11 s. 6d. left and therefore you have to work harder to produce £1 to spend than if the tax were only 5s. and you had 15s. left. The greater the rate of tax, the harder you have to work for the same amount left to spend. That is one argument.

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    My argument is, what does the taxpayer feel? Does he feel that a rate of tax at 8s. 6d. in the £ is a deterrent and a discouragement to that greater effort which is so much needed at present? It is felt very largely on both sides of the Committee and outside that it is such a deterrent.
    The standard rate of Income Tax could so easily be reduced. The apparent weight of the burden could be lifted from the shoulders of many taxpayers. It could be reduced if, in the first place, greater attention were given to tax avoidance and if the various and very obvious methods of tax avoidance, which cost the Revenue a great deal of money, were stopped. It could be reduced, of course, if the Government were prepared to broaden the base of taxation. It is of no benefit to us that tax should be at a very high rate merely because it takes the shape of a very tall burden based on a very narrow base. If it were much more broadly based, if instead of collecting Income Tax solely on the items on which it is collected now, it were collected on many other things, then we should have a much wider base on which to collect the tax to produce the same revenue.
    I am not arguing for a reduction in the total revenue. That is a matter of supply and we need the revenue to get the services. I am arguing for a reduction in the standard rate of tax. I am arguing that if that tax were much more broadly based, with more categories of income, the rate could be reduced but the same revenue produced.
    8.45 p.m.
    I could give many examples. An obvious one is capital profits. Why should not Income Tax take a much wider view of income, and include capital profits? In this country we take a very Insular view of income, and think that it consists only of those things that the Finance Acts and the rulings of the court have decided are income. Why should we not take the more progressive view of our capitalist friends in America, and include capital profits?
    A short time ago I was challenged with having made a capital profit. The hon. Member for Cheadle (Mr. Shepherd) suggested that when I sold my interests in some cinemas I had made some capital profit. I can only say that a managing director who does not leave a business
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    better than he found it should not have the job. Nobody objects to making capital profits. They are being made all day long. In a progressive instead of a stagnant economy, capital profits are the order of the day. The objection is not to their being made but to their being made free of tax.
    This Clause refers to the standard rate of tax, a rate that is narrowly based. It is true that it also refers to
    "… such higher rates in respect of the excess as Parliament may hereafter determine,"
    but that is more clearly defined in Clause 11, on which I am sure many more hon. Members will be anxious to speak.
    I conclude by saying that it is to be regretted that the Chancellor has not come forward with even a token reduction in the standard rate, as though he thought it of so little importance as not to mention, so far as I recollect, in his Budget speech that he was anxious to achieve a reduction in it, but for this or that reason could not do so. It is to be regretted that the real cause of our being compelled to maintain such a high standard rate is the stagnation in our economy, the refusal to look to tax avoidance for tax revenue, and the refusal to take a broader view of the source of income.
    Mr. J. Grimond: I, too, would like to touch on some of the matters dealt with by the hon. Member for Gloucester (Mr. Diamond). It is certainly one of the country's high priorities to encourage production, so long as that production comes from greater efficiency and is of real service to the country.
    I have long felt that wives were extremely unfairly treated. This subsidy, as it almost is, paid to immorality under the tax laws is entirely wrong, and I hope that now that we have a Chancellor who cannot be said to be biased in the matter he will look at it with an impartial eye and take some of the tax off those who provide the coming generation.
    As to a capital gains tax or capital tax, I would only say that, at the moment, owing to the beneficence of the Conservative Government, I should have thought that most people were faced with capital losses, so I do not feel sure that, at the present time, this would be a very useful contribution to the revenue.

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    I should also like to emphasise, with the hon. Member for Gloucester, that this is a most important Clause. I believe that we should soon have a debate about the whole structure of taxation—quite apart from its rates and the Budget and so forth—because I think that it is becoming a most appalling cat's cradle. Not only do I think that the total of taxation is too high, but that it falls far too hardly on earnings.
    In this country today, the one thing a man has to aim at is to make some sort of gain outside of earnings. If he wins something on the pools, or finds a rich aunt who will die and leave him money, or if he buys up a derelict company and produces a capital gain, it is, of course, not taxed, but if he is someone who is trained in a profession or in his job and works at it all his life, at the end of it all he may well find that, owing to the incidence of taxation on his earnings, he has been unable to save, and, compared with the man who has a lucky fluke on the Stock Exchange or on the pools, he is very badly placed.
    I believe that a rate of 8s. 6d. in the £ of Income Tax is a deterrent and is unfair on probably the most worthy section of the community, those who earn by their work and skill. I personally believe that we could reduce taxation; I believe that we should cease to make our own nuclear bombs, but the particular point that I want to make tonight is not only that we ought to reduce taxation on earnings, but also that the House of Commons is losing control over Government expenditure to a great extent. This is another subject to which, sooner or later, we shall have to give attention. In my view, the sooner the better, because it is now a very urgent matter.
    I would also agree that there is a case for broadening the base of taxation. I do not want at this time of night to go into great detail about that, but I have some sympathy with a proposal for which I readily give credit to the party which occupies most of this side of the House. I think that taxation on expenditure, if it could be worked out, might be desirable, as against this concentration of taxation on earnings.
    I am not and never have been wholly against Income Tax, because I think it has a certain obvious justice about it.
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    It is fairly plainly understood in this country, and it ensures that we can grade taxation so that those able to pay within reason pay the bulk of the Income Tax. But it is too high today. It is a deterrent on the people who by their own efforts contribute very greatly to the prosperity of the country. I feel myself, too, that this matter of the structure of taxation should be taken out of the general context of the Budget debates and be debated separately, together with the whole organisation of the revenue and expenditure of the tax system.
    Finally, I would reiterate my belief that there are certain economies which could be made in Government expenditure, and that this is urgent, if we are to run the economy in its present form, in which we rely a great deal on private enterprise and upon rewards for taking risks and for doing hard work, and in which, quite rightly, the working people are making great demands on the standards of living. The total amount taken out of earnings by the Government is too high, and I would point out that it is higher, I suspect, than appears to be the case. More and more people are moving up into the higher tax brackets, and although from time to time a Conservative Government has reduced the rate of tax, the real total of the tax reductions is not so great as would appear at first sight.
    Mr. Douglas Houghton: I think the Leader of the Liberal Party was speaking with even more confidence than usual. It seemed to me that we were being reassured that the Liberal Party has a policy, perhaps not a policy for a Liberal Government, but a policy for a Labour Government, or for a Conservative Government if the Liberal Party held the balance of power.
    Of course, foremost in the classical Liberal dogma is the idea that taxation is too high. "Peace, Retrenchment and Reform" were the slogans of the Liberal Party which I remember in my early days when my father first introduced me to political life. A lot of people say that taxation is too high. Some say that Income Tax is too high, while others say that taxation generally is too high, and yet the present level of taxation is the expressed will of Parliament. Supposedly, and I think truly, in very large measure it reflects the will of the people.

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    Surely when we criticise the level of taxation we have to bear in mind that we are attempting to maintain a high level of social expenditure, a huge defence programme and at the same time provide a surplus over current demand for investment, for increased industrial capacity and production, not to mention the need for still more investment in the Commonwealth and in the Colonies.
    That is a very tall order for a country like ours living by trade and commerce, a converter of raw materials into manufactured goods for export. Yet we are tolerably successful. We have our difficulties. We have our problems of balance of payments, confidence in sterling and so forth with which we are very familiar, and we have to be on our guard the whole time because we live a very precarious economic existence.
    I think, however, that the general denunciation of the level of taxation is irresponsible. All who condemn the present level of taxation should say what they propose to do about it, either in reductions in expenditure or in the strengthening of the administration of the various systems of taxation, or what other remedy they may have in mind for this evil which they wish to see reduced or eliminated. I think it was Ivor Brown who said, "When you hear a man in the train going to business in the morning say to his neighbour 'I see we have increased our Income Tax by 6d. in the £' then you may be sure that you have a true democracy." But, of course, we never do increase our Income Tax by 6d. in the £. It is always "they" who have increased our Income Tax.
    Yet, as I said a moment ago, if this Parliament means anything in our democracy, we are speaking on behalf of the people and what we do is in their name and they should share the responsibility with us in so doing. I believe that the attitude of many people to taxation is not only a sign of weakness in our democratic system but is also a sign of moral decadence. [Interruption.] I am saying that those who are criticising the level of taxation are presumably doing so because they dissent from what has been done in their name, and, as I shall show in a minute, many of them who do criticise it indulge in malpractices which should be condemned by this House.
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    I do not agree with the Leader of the Liberal Party that taxation is anything like the disincentive that it is frequenly made out to be. I know that one can argue for a long time about this. It depends on one's point of view and social attitudes and so on. But my firm belief is that most people are not deterred by the level of taxation in endeavours which they believe to be worthy or satisfying or in many cases for the good of the community.
    9.0 p.m.
    I believe that if one has an interesting vocation, it scarcely matters what the Chancellor of the Exchequer does with one's pay; one cannot stop doing it. One gains a great deal more out of it than monetary reward. I believe that the services rendered in this country voluntarily are without parallel anywhere in the world. Enormous effort, zeal and endurance go into tasks which are often either not remunerated at all or for which the financial rewards are nominal only. There are some people, no doubt, who find that their zeal or desire for further effort is slackened by the prospect of higher taxation, but I think that they are a minority.
    There are two ways of reducing this high rate of taxation of which many complain. One is to reduce expenditure. The other is to increase the yield of taxation within the framework of the existing tax, which I believe could be done. My hon. Friend the Member for Gloucester (Mr. Diamond) has been saying something on this theme. I consider that the Chancellor should regard with concern the growing practice of making payments in kind. I believe that we shall shortly need a new Truck Act to stop more and more payments for services rendered being made in kind. Luncheon vouchers are one example. There is a luncheon voucher industry. There are luncheon voucher agencies and clearing houses, and there is a whole paraphernalia now connected with this new currency of the luncheon voucher which carries a value in goods, if not in services, in very many ways. There are concessions given to workers in particular vocations, from which the public service is remarkably free.
    Mr. E. Partridge: Would the hon. Gentleman care to relate

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    that to industrial canteens also, or does he put them in an entirely different category?
    Mr. Houghton: I will mention industrial canteens. Up to a point, they are welfare services.
    Mr. Partridge: So are luncheon vouchers.
    Mr. Houghton: Beyond that point, the industrial canteen ceases to be a welfare service and makes what is really an addition to pay.
    There are concessionary fares and concessionary coal. I know that this is of long standing. It is nothing new. One finds in the Report of the Commissioners of Inland Revenue that, where the National Coal Board gives money in lieu of concessionary coal, the Revenue exempts it from tax as an extra-statutory concession. All right. That may be one way, for all I know, of keeping industrial peace in the coal industry. There are subsidised holidays. There is the use of motor cars. There are rent-free houses or houses let to employees at nominal rents. All these are features of the growing practice of making payments in kind.
    When Sir Stafford Cripps introduced his Finance Bill in 1948, he introduced some very stringent provisions to check payments in kind to directors and others engaged in business receiving more than £2,000 a year. The terms of the Act are very tightly drawn. These concessions I am speaking about are being granted to those receiving less than £2,000 a year who are not directors of companies. It would be undesirable if this kind of thing were to become a widespread form of tax avoidance.
    Recently a man complained to me that a young traveller whom he had taken on in his business had let him down. He told me some of the things that he had given in addition to remuneration. They were quite startling. Among them was the use of a car. When the depreciation allowance had wiped out its capital value the man could then dispose of it and keep the money. Within limits no questions would be asked about whether he used petrol for personal or business reasons. He was given luncheon credits of a substantial amount, which were doubled, if not trebled, if he took anyone out to lunch with him.
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    These are things which do not in the ordinary way come to the notice of the Inland Revenue and, therefore, are perhaps not widely known among those who are considering the levels of remuneration. But they certainly come into any examination of comparable rewards for work done in one vocation or another. The Royal Commission on the Civil Service which dealt with Civil Service pay had something to say about that matter.
    Then there is the perennial problem of expenses allowed under Schedule E. Four hundred and forty million pounds of expenses a year are set off from tax liability under Schedule E. My estimate is that the tax on expenses wholly, exclusively and necessarily incurred in the performance of the office amounts to £150 million a year. That is more than the cost of all the Income Tax concessions given in the 1955 Budget, which included a reduction in the standard rate of tax of 6d., a reduction in the differential rates of 3d. and certain increased personal allowances as well. I mention that to show what £150 million means when it is applied to the reduction in the standard rate of taxation and to larger reliefs. I do not say that all the expenses which are allowed against Schedule E assessments are not wholly, exclusively and necessarily incurred in the performance of the office. I draw attention to the magnitude of this matter and to the importance of any marginal leakage or slackness in administration.
    The trading expenses on profits and gains under Schedule D are much less well known. They are not identifiable. These are all included in the trading expenses of the business, and it is often difficult for the Inland Revenue to find out what is the true measure. I think we must acknowledge that it is very extensive.
    I know that I may be thought to be biased in this matter or too much of a puritan, but I believe there will be no real health in our Income Tax system until entertainment ceases to be an admissible deduction from taxable profits or emoluments under Schedule E.
    Then we come to the under-assessment of profits. In a speech I made in the Budget debate, I drew attention to what I thought were some remarkable figures of the relative smallness of the assessable profits, or a large proportion of profits and gains, assessed under Schedule D.
    The Temporary Chairman: The hon. Member is going in great detail into all these matters and is not relating his argument to the question of the 8s. 6d. standard rate. He is entitled to mention these matters, but scarcely to discuss them in the detail which he is at present doing.
    Mr. Houghton: Thank you, Mr. Blackburn. Probably I am going into a little too much detail on what is an assortment or collection of items which are respects in which the administration of the tax can be strengthened. If that were done, we could get the standard rate down. I have illustrated that if we can fortify the revenue by £150 million we can begin to do something about the standard rate. I will not go unduly into detail, I shall certainly not go into these figures again, but I remind the Committee that that is something that should be looked into.
    Then there is tax due and unpaid, £70 or £80 million of it at the end of a financial year. Some £200 million eventually will be due to the Revenue which has not been collected. Look what some of our music hall stars do. I have had more questions put to me by people about why the Inland Revenue cannot pin these people down than on any other subject recently; but I will not go into details on that. These are features of the administration which need attention.
    Concerning unpaid tax, what is the good of the credit squeeze if taxpayers use the money which they should be paying to the Revenue in lieu of a loan from the bank? After all, a person can use Income Tax money for a few months before anything happens to him. He can use it for three months before interest is charged on it, and then only at 3 per cent. For somebody who owes a large sum, the economics of not paying tax are worth close examination. The results are quite startling. All these things relate to the level of taxation. If people paid more of their proper dues and paid more promptly, it would be possible to reduce the standard rate of tax.
    I hope I do not do the Government an injustice, still less do I want to do any injustice to the Chancellor of the Exchequer, for whom I have a high personal regard, but there is a feeling that the Government are showing tenderness for tax avoiders and tax fiddlers.
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    That is something which the Chancellor should do his best to remove.
    There are recommendations in the Royal Commission's Report. In parenthesis, I remind the Leader of the Liberal Party that discussions on the structure of the tax have been undertaken at some length in the Report of the Radcliffe Commission. There are recommendations in the Report which would help to strengthen the administration of the tax. They are small matters, but important. There are a number of new Clauses on the Order Paper which would implement the recommendations of the Royal Commission. I am sorry that the Chancellor has not adopted more of them before now. Some of them, important ones, his predecessors did adopt and it was timely that they should.
    I can only throw out the suggestion which I have made on previous occasions. All that happens when I throw out suggestions, however, is that the Financial Secretary says that he has carefully considered them but they are not practicable, although he does not explain why. On Second Reading, he made a speech which seemed to me to be ample evidence of the need for a memorandum.
    I have suggested a Tax Administration Act, where many of these problems of administration could be dealt with separately from the Finance Bill. I throw out that suggestion once more. It would enable us to debate some of these matters unhurried by the time-table on the Finance Bill and without getting them mixed up with many other matters which, at the Finance Bill stage, are obviously of great importance.
    I conclude by saying that on the issue of a reduction in the standard rate of tax there are many respects in which the administration of tax could be strengthened so as to lead to that desirable end.
    9.15 p.m.
    Mr. Shepherd: I merely want to comment upon one aspect of what the hon. Member for Sowerby (Mr. Houghton) has told the Committee. There is a good deal of substance in the view that in the ensuing year it would be desirable for my right hon. Friend to see how far he could reduce the standard rate of Income Tax by a more rigorous pursuit of those who exploit the expenses racket. I know that it is customary for those who use these expenses, and even the

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    Institute of Directors—of which I am a member—to say that there is no such exploitation, or racket, but that is entirely untrue; there is a very serious racket in expenses, and to my mind it is dangerous to the social structure of the nation.
    It is dangerous because there is quite a large body of intelligent and responsible people in our community who, being in a position where they cannot exploit this expenses racket, and have to face the rigours of high taxation and a high cost of living, look with some concern upon those who, in many respects, are less worthy of merit than they but who manage to live very luxurious lives with a minimum of effort. It cannot be good for a society to have one part of its responsible membership aggrieved because another section is exploiting certain aspects of taxation.
    The Temporary Chairman: The hon. Member is going into very great detail. He should relate his argument to the question of the standard rate of tax.
    Mr. Shepherd: The whole purpose of my remarks is to say that if, in the ensuing year, my right hon. Friend the Chancellor could look at these abuses we might be able to reduce the standard rate and do something about Surtax. I should certainly prefer to see a rigorous drive against the person who exploits the expenses racket and an improvement in the Surtax position. In deference to your wishes, however, Mr. Blackburn, I will not go into further detail upon the matter. I have said enough to indicate that I consider the present state of affairs in respect of expenses to be entirely unsatisfactory, and a danger to our community. My right hon. Friend would do well if he made an easement in the standard rate and in Surtax and, in return, applied a more rigorous test to expenses.
    Mr. Arthur Holt: I had not intended to intervene, but after some of the remarks of the hon. Member for Sowerby (Mr. Houghton), particularly about the Liberal Party, I felt that I ought to say a few words. At the beginning of his speech the hon. Member left the impression—at any rate, with me—that he thought it almost immoral to reduce the standard rate of Income Tax. He quoted the case of many people who did much excellent service with very little reward. This seemed to him to indicate
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    that it was a fallacy to say that a high rate of Income Tax was a disincentive. This implied that he would have no hesitation in raising Income Tax by another 1s. in the £. We cannot have it both ways, but it seemed to be an argument for continuing to flog a willing horse. The fact that some people will provide the whole of their services free does not seem to be something which should be introduced into an argument about the level of the standard rate of Income Tax.
    The hon. Gentleman also seemed to imply that it was immoral for people to suggest that the tax should be cut, or that if they did make that suggestion, there should also be a suggestion for an equivalent saving in Government expenditure. The Leader of the Liberal Party drew attention to the fact that he was in favour of Britain ceasing to manufacture the H-bomb. The cost of making the H-bomb alone is esimated at £150 million. He mentioned the burden being carried by the Treasury of the huge defence budget and the cost of the Welfare State and the large surplus for investment. He suggested that we should see whether we can cut some of this expenditure or move it into another sphere.
    The Liberal Party has suggested that we make cuts in defence and that a serious attempt should be made to provide the capital necessary for the nationalised industries from sources outside the Budget. Were that done, a considerable saving in Government expenditure could be made which might result in a substantial cut in the standard rate of Income Tax—perhaps about 1s. in the £.
    Mr. Jay: On a point of order, Mr. Blackburn. Although it did seem to me that it might be in order to discuss Income Tax, the hon. Member for Cheadle (Mr. Shepherd) was not allowed to do so. Therefore, is it in order to discuss defence expenditure?
    The Temporary Chairman: The hon. Member for Cheadle (Mr. Shepherd) was allowed to discuss Income Tax and was going into great detail about one aspect of it. When I stopped him he was not relating his argument to the question of the 8s. 6d. in the £ Income Tax. I take it that the hon. Member for Bolton, West (Mr. Holt) is speaking about defence expenditure to show that there could be a reduction in the 8s. 6d. standard rate of Income Tax.
    Mr. Holt: I have no intention of developing the Liberal Party's case for the cessation of the manufacture of the H-bomb. I am merely saying that it would save £150 million, and perhaps as much as £200 million. That would save some Government expenditure and allow a cut in the standard rate of Income Tax.
    The hon. Member for Sowerby suggested that it was immoral to talk about cutting the standard rate of taxation unless we said where a saving could be made in Government expenditure. I wanted to make clear that the Liberal Party is not immoral and has made suggestions about where cuts could be made, so that an amount could be cut from the standard rate of tax.
    The Temporary Chairman: Order. The morals of the Liberal Party are not in question. The Question is—
    Mr. Roy Jenkins: But, Mr. Blackburn, are we not to have a reply from the Government on this important matter? I thought that we should hear from the Chancellor.
    Mr. Amory: I was waiting to see whether any other right hon. or hon. Gentleman wished to speak.
    I should like to make a few remarks about this Clause, which is in common form for a Finance Bill. Its purpose is to fix the standard rate of Income Tax for the coming year. It also provides for Surtax rates for the coming year to be determined by Parliament in next year's Finance Bill; that is, Surtax to be payable on 1st January, 1960. I thought it strange to hear hon. Gentlemen opposite appealing for a lower rate of Income Tax, because it will be within the memory of the Committee that in their last year of office they put up the rate of Income Tax to 9s. 6d. and the present rate is a 1s. in the £ lower than when they left office.
    I should, of course, have been delighted if in my judgment I had found it possible to reduce the standard rate this year. There can have been few Chancellors who would not have liked to make a start in their first Budget by reducing the standard rate, but, as I said in my Budget speech, I concluded that if I were to have remitted a substantial amount in taxation for this year the result would have been to jeopardise the consolidation of our economic position, which still
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    must be our main task. So the purposes of the changes I made were to strengthen the economy, to improve the tax system at a number of points, and to deal with several cases of special need. I am afraid that the amount of revenue I judged would be available made it impossible for me this time to make a reduction in the standard rate of tax.
    I suppose that it is always tempting to look on a Budget in isolation and then to complain of the things which have not been done in it, but I should like to ask the Committee to look at this Budget against the background of previous Budgets. Since 1951 the standard rate of Income Tax has been reduced by 1s. The single allowance, the married allowance and the child allowance have all been increased.
    A married couple with two children between the ages of 11 and 16 and earning £600 would have paid £35 in tax in 1951–52: today, they pay nothing. If they had been earning £1,000 a year they would have paid £167 in 1951–52: they now pay £69. If they were earning £2,000 a year in 1951–52 they would have paid £547: now they pay £393. Substantial help has also been given to those on very small incomes and to the elderly.
    Mr. Jay: Apropos of these calculations, can the right hon. Gentleman say whether the income now left after taxation represents as much in purchasing power as it did in 1951?
    Mr. Amory: No, but we have to set against that the average income per head of the population in money terms, which has gone up very considerably. The reductions that have been made also caused a number of taxpayers to become exempt from tax altogether. It is significant that if the 1951 rates of tax were in force today a further 2¾ million of the population would be liable to Income Tax.
    I wish to refer to one or two remarks made by the hon. Member for Gloucester (Mr. Diamond). He apologised that he would have to leave the Committee, and I quite understand why he is not able to be here to hear my answers. The hon. Member said that owing to the economic policies of the present Government we appeared to be unable to raise sufficient revenue to reduce taxation. Under our

    531
    present policies we are succeeding in raising more revenue in the aggregate at considerably lower rates. That is an important point. The contribution that this Finance Bill will make this year will be a reduction in taxation of £108 million a year.
    The hon. Member gave us a short eulogy on capital profits and said they resulted from an expanding economy. They do to some extent, but I should say they result far more and are far more likely to result from an inflationary economy. If we can once get inflation behind us I do not think we need worry too much about capital gains. The hon. Member raised some doubts about the desirability, as I understood him, of covenants. The treatment of payments under conversant was dealt with in Chapter 6 of the Final Report of the Royal Commission. The conclusion of the Commission was that these instruments should be recognised as legitimate and sound, and the Commission did not criticise the seven-year period.
    9.30 p.m.
    The hon. Member for Sowerby (Mr. Houghton) gave us the benefit of his remarks. I always listen with interest and great respect to whatever he has to say on these subjects. I had the pleasure of accompanying the hon. Gentleman to India just before Christmas, and I was not surprised to find that our hosts quickly recognised the wide experience the hon. Gentleman had had in these subjects. They listened, too, with interest to any advice he had to give them.
    I thought he answered to some extent some of the lucubrations of the hon. Member for Gloucester about the present level of taxation. I agree with him that a job means to most people more than the money they get out of it. I am always sorry for people who are doing a job when that is not the situation. A happy man should get more out of his work than merely the money return.
    The hon. Member mentioned payments in kind. I agree with him that they confront us with a very real problem. That applies also to expenses. He referred to the remarks made by my hon. Friend the Member for Cheadle (Mr. Shepherd). I do not deny that expenses are also a problem. I think the hon. Member for
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    Sowerby will agree that it is extremely difficult to devise rules that deal with either or both of these things and that are strict enough to control expenses and payments in kind and yet are fair and reasonable and do not involve too detailed interference with the activities concerned.
    I have only been in my present position for a short time, but those are two of the problems which I shall try to keep under review. Any improvements that can be legitimately and fairly made I shall try to bring forward.
    The hon. Member for Sowerby said that he felt there were signs of too great tenderness in the present Government to tax avoidance. I should be very sorry if I thought that were so. I will put it on record that my aim is to support the Inland Revenue in all fair and reasonable measures for securing payment of tax due.
    References were made to the aggregation of income between husband and wife, and one hon. Member mentioned that I am a bachelor. That does not stop me from holding very strong views on the proper treatment of wives. I shall always do my utmost to see that justice prevails there. Again I propose to quote views which have even more relevance than my own views, those of the Royal Commission, in Chapter 6 of its second Report. The Royal Commission approved the principle of aggregation of income and thought in fact that the treatment at present given to the earnings of married women was in some ways too favourable.
    It is a broad matter on which we have to weigh up the gains and losses, the pros and cons. By and large, I think that the principle of aggregation is extremely difficult to criticise, compared with the alternative. I am not sure whether we have the balance just right in every way, but if we have not we must, from time to time, try to make improvements.
    While this year I have not found it possible to reduce the standard rate, I certainly hope that in future, and particularly if we can get inflation well behind us, further reductions in the standard rate of Income Tax will become possible. Striking reductions in taxation call for substantial reductions in expenditure. That is by no means easy,

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    because there is no question about it that reductions in expenditure are by no means as popular as reductions in taxation.
    Since 1951, as I said in my Budget speech, the percentage of the national product taken by Government expenditure has fallen from 29 per cent. to 25 per cent. It is our aim that that trend should continue, and if that happens it will pave the way in due course for a further lightening of the burden of taxation. I believe that most hon. Members will understand that this year it would have been a mistake to have made a reduction in the standard rate, and I hope, therefore, that the Committee will find the Clause as it is drafted acceptable to it.
    Mr. Roy Jenkins: This is a most important Clause. It raises over £2,000 million of revenue, which is more than 40 per cent. of the total Budget, and I am glad that this year, as has not always been the case in the past, we have the Chancellor of the Exchequer himself replying to the debate on a Clause of this importance.
    The Chancellor spoke to us in his normally conciliatory manner. I think, none the less, that he made one or two points which should certainly not be allowed to pass without comment. First, there was his view that apparently the Labour Party had permanently disqualified itself from believing in a reduction of the standard rate of Income Tax in almost all circumstances because the Leader of the Opposition in his 1951 Budget put the standard rate up to 9s. 6d.
    This seems to me a very extraordinary proposition. That was in a period of war—minor war, but war—and a period of very heavy rearmament. In any case, my right hon. Friend did not put up the standard rate nearly as fast as did Sir Kingsley Wood and other Chancellors during the war. Unless one argued that on that basis the Conservative Party was disqualified for ever from believing in a reduction in the standard rate, the argument cannot be applied against this side of the Committee.
    The Chancellor made an even more surprising statement about capital gains because he implied that if we got inflation out of our system we need not worry from a taxation point of view about
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    capital gains which my hon. Friend the Member for Gloucester (Mr. Diamond) had implied were a natural result—I agree with him—of a buoyant expanding system. But are we to believe, as I would certainly hope not, that the Chancellor has given up all hope of having a buoyant expanding system again?
    Mr. Amory: No.
    Mr. Jenkins: I am glad that that is not so. Therefore, presumably if we get inflation right out of our system there is no question of having purely inflationary capital gains. We should have capital gains because companies would be growing in their real value and earning power. If we get gains of that sort which have no element of inflation in them, it is all the more desirable that they should be taxed than if they were purely inflationary capital gains. One could argue that if a capital gain accrues and argue the individual who gets it no better off in real terms than he would otherwise have been, that is not a real capital gain and he ought perhaps not to be so liable for tax as he otherwise would be.
    It is not a straightforward argument because, associated with it, is the question of whether someone getting capital gain should be allowed to contract out of the inflation more than someone not making the gain. There is a mixed argument for something to be said on both sides so far as inflationary capital gains are concerned. If we have capital gains which are not inflationary and which to the whole extent make the taxpayer receiving better off in real terms, then surely the argument, not for saying that he should not make them but for excluding them entirely from the range of taxation and for putting the man getting them in an entirely different position from someone depending on earned income, is very much weaker indeed. I certainly hope that the Chancellor will take the view that in considering a capital gains tax, which I hope he has not put entirely out of his mind, the case for it would in no way be weakened, but would in fact be strengthened if we moved entirely away from an inflationary position and from an inflationary capital gain.
    We have had a wide-ranging debate with no fewer than two contributions from the Liberal Party. At one time, in a Committee which was not in general

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    excessively full, we had almost a 100 per cent. presence of Liberal Members. It seems to me that it is 50 per cent. now.
    Mr. Grimond: It is 33⅓ per cent. The mathematics of the hon. Member who is officially winding up for the Opposition do not give us complete confidence in him.
    Mr. Jenkins: It is not that I am unable to work out the figures, but that I cannot remember the total Liberal membership.
    It is natural and important that we should have Liberal contributions on this subject. After all, we should remember that Mr. Gladstone fought an election on the abolition of the Income Tax. We should perhaps also remember that he lost the election very heavily. I understand that the hon. Member for Orkney and Shetland (Mr. Grimond) did not advocate the abolition of Income Tax or anything approaching it. He and his hon. Friends ranged fairly widely over such questions as the hydrogen bomb and defence expenditure, and perhaps it would be fair to say that these speeches were occasioned by the Clause rather than about the Clause. None the less, we greatly welcome those two contributions.
    What is more surprising is that this year we have not had, either to this Clause, or to the immediately following Clause dealing with Surtax, which is closely associated with it, any back bench Conservative amendments. In previous years we have generally had at any rate that token Conservative back bench attack on the level of direct taxation, taking the form either of Amendments to this Clause or of Amendments to the Surtax Clause. Last year it took the form of an Amendment to the Surtax Clause moved by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) in very strong terms, but this evening he is not even present.
    It is, of course, on this Clause that we must consider arguments about the effect on our economy generally of the present burden of high taxation, if we are to consider them in the course of the Finance Bill. It is still readily assumed, I think, by hon. Members opposite that Income Tax at the rate of 8s. 6d, in the must still have a very depressing effect and that the lower the rate of tax the more buoyant the economy must be and
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    the more incentives one would expect to be at work.
    There may well be some force in this argument, but it is hardly to be supported by the recent historical facts in this field, and as I have always understood that the Conservative Party wish to pass as an empirical party, as opposed to us on this side of the Committee, whom they like to see as a doctrinaire party, I am sure that they wish to be greatly influenced in considering this matter not by what they think ought to happen but by what has in fact happened.
    The sorry history is that while our production did fairly well under a standard rate of 9s. 6d. and of 9s. in the £, as soon as the rate went down to 8s. 6d. our production immediately ceased to expand. I do not wish to go as far as to suggest that there was any necessary connection between these two events. I do not wish to suggest that the reduction in the standard rate to 8s. 6d. in itself made it impossible for us to have any further expansion in production.
    Mr. Amory: I am sure that the hon. Gentleman will agree that the present level of production, even if it is stationary for the time, is an all-time record.
    Mr. Jenkins: That is rather like saying, "A Chancellor of my age is an all-time record at the present moment." It is not very significant. There are very few years in our history, other than those of the major slumps, in which that proposition would not have been true. That, in itself, is really not the significant fact. It is the rate of growth that is important. Nevertheless, the fact remains that since we had this reduction to 8s. 6d. we have not had any expansion in this field.
    9.45 p.m.
    What is our attitude on this side to the rate of direct taxation? I certainly would not take the view that heavy taxation, whether direct or indirect, was in any way desirable in itself. On the contrary, I think that it is desirable to reduce taxation as quickly as we reasonably can, but we certainly should not reduce direct taxation at the expense of slashing and undesirable reductions in necessary expenditure or of putting further burdens on indirect taxation. In so far as we can, we should get the rate of direct taxation down. It bears very heavily on many people, and particularly on those

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    living wholly on earned incomes and unable to take advantage of tax avoidance in one form or another, or to get heavy expenses.
    I am sure that the correct approach to get direct taxation down is, first of all, to get rid of the gross inequity there is at present as a result of the different treatment of expenses as between those who happen to be on Schedule D and those who happen to be on Schedule E. Secondly, we should mount a big offensive to broaden the basis of taxation. The key to reducing the rates is to broaden the base on which they are levied. I think that there is an extreme unhealthiness in our present system. It is an inverted code of extremely high rates erected on a relatively narrow basis of income. There is so much income that is outside the tax net, and that leads to an addition of the spending power of the individual receiving it. I am sure that we would have a more realistic and much fairer system of taxation if we were to provide a broader basis with rather lower nominal rates.
    The third approach is to return, as quickly as possible, to a policy of expansion; not resting on what is, I think, the meaningless proposition that, in absolute terms, we are at record levels now, but being concerned with our relative rate of growth as compared with our competitors, and realising that a rapidly-growing economy offers, amongst other advantages—not a major one, perhaps, but among the minor advantages—a much greater possibility of reducing the rates of direct and indirect taxation than does a stagnant economy.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 11 ordered to stand part of the Bill.
    To report Progress and ask leave to sit again.—[Mr. Amory.]
    Committee report Progress; to sit again upon Monday next.

  EAST COAST PORTS (CUSTOMS FACILITIES)
  Motion made, and Question proposed, That this House do now adjourn.— [Colonel J. H. Harrison.]
  9.49 p.m.
  Mr. Brian Harrison: I want to draw the attention of the House to the Customs facilities in some of our small ports on the East Coast and, in particular, to refer to two small ports in my constituency, one in the Borough of Maldon and that at Heybridge Basin. For a very long time those have been ports where cargoes have been imported from and exported to the Continent of Europe bust at present, owing to the inadequacy of the Customs facilities and the arrangements whereby the cargoes can be inspected, trade is almost at a standstill.
  One or two things are, however, permitted to be brought into these ports. For instance, at Heybridge, most of the eels which eventually come as jellied eels into the shops still come in owing to a special arrangement that has been made, and in Maldon itself a certain amount of timber is cleared, again by special arrangement, and brought in to some of the big firms which operate in Maldon.
  It is the desire of the Maldon Borough Council and also of Chelmer and Black-water Navigation, Ltd., which controls the Port of Heybridge, that the company should be able to use these ports to bring in more goods from Europe and also for exports. I think that it will be increasingly important, if, as most of us hope, the Free Trade Area negotiations go forward, that these small ports should be available and capable of being used for this kind of operation.
  I have said that these ports have been used for this sort of thing for many years. In fact, Maldon, as far back as 1540, had its own Board of Admiralty and received certain concessions, largely because it had helped London when London was short of food and, at one time later, during the Black Death. There are still two bonded wharves and one free wharf, but these are difficult to use, as my hon. and learned Friend's Department does not make available sufficient personnel or adequate

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  arrangements for cargoes to be inspected and cleared.
  The chief goods which it is wished to import and export from these ports are some horticultural products and same food from the Continent of Europe. During the period of a shortage of potatoes in this country, which we are just getting over, there was a chance of bringing in small boats of up to 250 tons from the Continent with cargoes of potatoes, but they had to be diverted to other ports, so the small ports like Maldon and Heybridge missed the opportunity of keeping themselves alive and their facilities operating, as well as getting the benefit of that trade.
  It is extremely important that these ports should be allowed to keep going and not fall into disuse and disrepair. It is important because these small towns are finding it difficult to induce industry and commerce to go there, which would help to keep the life of a small area like that from dying.
  At the same time, there is a very strong reason, from the defence point of view, why these ports should be kept operating. If, and heaven forbid that it should happen, there is a nuclear war, there will be pockets of survival which it will be increasingly difficult to reach and to bring succour to those surviving if the present facilities, limited as they are now, are no longer in existence because of the policy of cutting down the number of Customs officers or the availability of such officers has led to the decay of these small ports. That is one of the things which this method of refusing Customs facilities has tended to create.
  It has not been announced that it is the policy of the Government to close these small ports or to change the facilities for international trade. This has been a policy of refusing facilities to enable people to bring in goods to these areas.
  There is another very important point. It is possible to bring certain types of goods to ports like Maldon much more economically than if they were landed in the Port of London. I have recently been given by a local firm some estimates of the comparative rates of delivering goods to London after having been cleared through the ports. Whereas a type of commodity such as potatoes, to which the firm was referring, could have been handled and delivered to the London
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  markets for about 28s. 6d. a ton if they were landed at Maldon, had they come through the Port of London the cost would have been 51s. 1d. The possibility of enabling certain types of goods to arrive in this country more cheaply, or conversely to be exported more economically, should weigh very heavily with my hon. and learned Friend's Department when dealing with my plea for better Customs facilities in the area.
  There is already a Customs officer in Maldon. I am at a loss to ascertain exactly what are the full duties of this officer and of the other representatives of the Treasury who look after these matters. As far as I can see, their job is primarily to prevent people from exporting and importing goods through these ports, whereas I should have thought it would be possible for them to use their time just as efficiently and much more productively by assisting people either to import or export.
  At present the facilities at Maldon are not good. There are certain very definite objections to them, and I can understand the reluctance of the Department to grant increased facilities. But if the Department is prepared to put forward suggestions for the improvement of these facilities, whether by arranging for landings to be made at the Town Quay rather than at the present site, or by other means, the Maldon Borough Council will do everything in its power to meet the requirements of the Customs and Excise. Already, Chelmer and Blackwater Navigation Ltd. has provided weighing facilities and an office at Heybridge basin to facilitate the work that is being done there in connection with eels and one or two other things which occasionally are allowed in.
  We feel that a valuable trade could be built up in this area with the Continent of Europe. We feel that such items as horticultural produce when there is a shortage in this country, timber on a larger scale, and possibly ballast, could be brought into Maldon and Heybridge with advantage. The export business which could be developed through these ports is of particular importance.
  It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]
  Mr. Harrison: Exports from the area are of particular importance to the agricultural community. For instance, there is a growing export trade in seed corn from Essex to the Continent, Essex, of course, being the leading agricultural seed growing area in the United Kingdom. This trade can be further developed.
  There is, however, another rather interesting development. Some countries have been learning a little more about farm mechanisation. In East Anglia, farmers try to keep their plant up to date so that their farm production can be as economic as possible. Their turnover of machinery is largely dependent on their obtaining a good price for second-hand machinery, and a market has been developed on the Continent of Europe for second-hand agricultural machines. This has helped to sustain the price which farmers in Essex have been receiving for their second-hand machinery, which, in turn, has enabled them to buy the most modern plant necessary for farming their own acres.
  My hon. and learned Friend may feel that the granting of increased facilities to some of the minor ports would lead to greatly increased costs. I doubt very much whether this need be so, particularly as there are fairly large Customs establishments in some of the other ports which cannot satisfactorily handle the cargo. With the use of motor-cycles for transport, it ought not to be difficult to have the necessary officers down to inspect and check the cargoes which it is desired to import or export.
  I should be most grateful if my hon. and learned Friend would consider the points sympathetically. It would be a tragedy if some of these attractive minor ports on the East Coast became no more than tourist resorts or places that people just went to look at. They would slowly decay. At present, with their facilities, they are, or could be, an asset to the area, and I feel that it would be a great tragedy were we to allow this asset to deteriorate so that we were not able to take the advantages they offer in the importing and exporting of many locally valuable products.
  10.4 p.m.
  The Financial Secretary to the Treasury (Mr. J. E. S. Simon): The last time I spoke in juxtaposition to my hon. Friend
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  the Member for Maldon (Mr. B. Harrison) was at the very beginning of this Parliament, during the debate on the Address, when he, a new Member of Parliament, was chosen to second the Address. All hon. Members will remember the very felicitous way in which he did it, and, in particular, will remember how his speech was obviously animated by pride for the ancient town which he had been chosen to represent. His speech today showed, if I may say so with respect, not only the same distinction but also the same zeal for the interests of his area and pride in the tradition of the town which is the centre of his constituency.
  My hon. Friend asked me to look at this question sympathetically, and I think it would be difficult to do otherwise after the speech we have heard. However, there are conflicting interests here. On the one side my hon. Friend has put certain of the interests as well as they could be put. There is the interest of the local trader. His interest is obviously to have Customs facilities on his doorstep in so far as he is an individual trader. He wants to be able to move his goods to the nearest port, the nearest wharf, the nearest jetty, or to move his goods from those places into his own workshop. Equally, the individual consumer has the same interest. He wants the goods from abroad to be moved to the jetty and the wharf which is on his doorstep and, as I think my hon. Friend correctly said, the casts will then he lower, the transport costs will be less, and the goods will be cheaper.
  Another matter which my hon. Friend mentioned also appealed to me very much. He said that it is important that small ports should not be allowed to fall into disuse and disrepair. That certainly appealed to everything that I hold at the centre of my political philosophy, namely, the preservation of a proper balance between town and country, between metropolis and provinces, and particularly the preservation of the ancient traditional life of the countryside. That side of the argument could not have been put better than it was put by my hon. Friend.
  There is another side, however. I dealt with the interests of the individual trader, but he is, in fact, a member of the trading community. There his interests lie in the apposite direction. In so

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  far as he is a member of the trading community, he is interested in the efficiency and economy of the Customs administration. He may be one of those traders whose trade is protected my import duties. It is to his interest that the dutiable goods which come into this country are properly examined and that there is no leakage so that the protective duty fails to perform its purpose. In particular, it is in his interest that there should be no leakage, no smuggling, so that the tax or revenue which the Customs duty is supposed to bring in is the less, because in so far as it is the less he as a trader and taxpayer has to pay more.
  Finally, in so far as the trader is a citizen there is the disastrous moral effect, which I know my hon. Friend recognises, when the revenue system of a country is flouted. Therefore, as a member of the trading community and as a citizen he has an interest in the efficiency of the Customs system. Secondly, as a taxpayer he has an interest in its economy. Although it may be to his interest as an individual at Maldon to be able to move his goods to the nearest jetty or get his goods from the nearest jetty with a Customs officer specially for him sitting on the end of the jetty whose services are at his command, that is not in his interest as a taxpayer. As a taxpayer his interest is that the Customs administration should be properly deployed.
  As is very common, I thought that my hon. Friend was showing a passion for economy in general, but when it came to a particular austerity that passion became very lukewarm and, indeed, a slight and platonic affection, if not, as I think it was in his case, a positive distaste for the economy that it demands. When one relates the interests of the individual traders in Maldon and Heybridge to the fact that they are all part of a vast trading community, one must remember that they, too, are genuinely interested in the efficiency, economy and proper deployment of the Customs' services.
  It is for those reasons, against that background, that for many years the Customs have adopted a system of canalisation of trade. That goes back, certainly so far as Statute is concerned, to an Act of Queen Elizabeth I, and it has been adopted ever since. A system which has been tried and found satisfactory and
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  preserved over so many years is likely to be one which has been proved by time. It was recently examined by the Select Committee on Estimates in 1956 as well as by a Government examination a few years earlier, and it was approved.
  What that system of canalisation demands is that Customs facilities should be granted for the importation of goods—this applies to sea, air or land transport—only to sufficient ports to meet the genuine needs of the foreign trade of the locality without the extravagant use of official staff, and to those adequately equipped for dealing with the goods imported.
  At the moment the total number of Customs staff dealing with the importation and exportation of goods at those ports is of the order of 4,000. That is a formidable number. Are we really prepared, at a moment when we are looking for Government economy, for purely local interests to contemplate an enormous increase in that branch of the Civil Service which is concerned with the Customs administration?
  I have said that the matter was examined quite recently by a Government Committee. The Select Committee on Estimates of this House re-examined it in December, 1956, and found no evidence to suggest that an inadequate service was being provided in consequence of the system of canalisation. However, that system is by no means rigid. The Customs authorities are always prepared, within the general principles which I have tried to indicate, to look at new applications. In fact, although in the last two years they have rejected 16 applications for the approval of regular landing and shipping facilities on the ground that the cargoes contemplated could be conveniently handled at another place already approved and with staff available, they have during that time approved 35 seaports as well as some airports. I hope that this will satisfy my hon. Friend that the system is by no means rigid.
  I turn now to the particular case mentioned by my hon. Friend, the port of Maldon and Heybridge Basin. My hon. Friend was prepared to agree that those places do not have good facilities. He put it mildly. In fact, neither Maldon nor Heybridge Basin possesses adequate facilities for the Customs control and check of dutiable fruit and vegetables. At Maldon, the wharf proposed for use

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  was not enclosed in any way and was open to the public. At Heybridge, there are no sheds and no rail and very poor road communications.
  Neither of those places, therefore, would have fulfilled the requirement of the security of the revenue. In so far as there was a leak of revenue, it would mean that the citizens of Maldon and Heybridge, equally with their fellow citizens throughout the country at large, would have to pay additional taxation to make up for the loss, quite apart from the damage that arises morally and socially where there is serious smuggling and pilfering in defiance of the Customs administration.
  Secondly, the proposed importation would have involved a very wasteful use of the Customs' limited manpower. My hon. Friend said that there is a Customs officer at Maldon, and he asked what he does and whether he would not be better employed seeing that goods come in rather than preventing them. In point of fact he is a general station officer. He has very many Customs and Excise duties. He is primarily an Excise officer. The Customs and Excise are responsible for the administration of Purchase Tax as well as all the Excise and Customs duties. He could certainly not perform the tasks that my hon. Friend suggested without substantial reinforcement.
  Finally, my hon. Friend mentioned the effect of the Free Trade Area upon these eastern ports. I think that the answer to that is that the Customs have never decided, and never purported or attempted to decide, where trade should go. Over the centuries their staff has followed the trade into the regular seaports. It was the seaports which were created, and the Customs staff followed. Wherever a new or growing demand can be sufficiently established, Customs staff is provided as necessary.
  If there is a progressive reduction of Customs duties as a result of the setting up of a Free Trade Area, the trade interests concerned will have ample time to make out their case to the Customs for additional facilities in the loading and unloading of goods at small ports, and the Customs will have time to observe the actual and possible development and to consider any propositions put to them in
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  the flexible and constructive manner that I have tried to indicate has animated their response to my hon. Friend's view.
  10.17 p.m.
  Mr. Charles Doughty: Having listened to the speeches of my hon. Friend the Member for Maldon (Mr. B. Harrison) and my hon. and learned Friend the Finanical Secretary, all I can say is that I entirely agree with them both. My hon. Friend the Member for Maldon, who is a most assiduous advocate of the interests of his constituency, made a strong case for the ports of Maldon and Heybridge having a Customs officer to assist the local people in the import and export of the goods they wish to trade in, and the Financial Secretary explained why that could not be done. He failed, however, to say through which ports those goods could be exported and imported. He referred to their canalisation, without saying through which canals they were to go.
  However, it is clear from what he said that if the people in the neighbourhood of Maldon and Heybridge had to send their goods a great distance it would hardly be fair to force them to do so on the ground of canalisation. Looking at the map, one finds that the smaller ports on the East Coast are faced across the North Sea by important ports on the Continent, and there is no reason as far as I can see why the trade from those Continental ports should be forced to go to the larger ports in this country, where there is certainly very great difficulty at the moment in dealing with cargoes.
  I entirely agree with the Financial Secretary that to provide a Customs staff at ports which are not equipped to deal with these small amounts of foreign trade is an unnecessary extravagance, but I would ask him to collaborate with my hon. Friend the Member for Maldon in order that the ports can be put into a slightly better condition, when I am sure that he will be delighted to provide a small and suitable staff of Customs officers for the people of Maldon and Heybridge, who are so well represented by their Member.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes past Ten o'clock.