Commons Sitting of 7 July 1959

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  SOUTH WALES TRANSPORT BILL [Lords] (By Order)
  Second Reading deferred till Thursday at Seven o'clock.
ORAL ANSWERS TO QUESTIONS
  ST. HELENA

    Agricultural Holdings
    Mr. C. Hughesasked the Secretary of State for the Colonies what steps are being taken in St. Helena to satisfy applicants for agricultural holdings.
    The Under-Secretary of State for the Colonies (Mr. Julian Amery): Seventy-eight acres of Government land have been let to 209 tenants as food gardens. Twenty-six applicants are on the waiting list for similar tenancies and holdings are now being prepared which will provide for sixteen of these.
    Two holdings large enough to support full-time farmers have also been let recently.
    The Government hope to be able to provide further holdings of this size from privately-owned land. They are now negotiating to buy this.
    Mr. Hughes: Can the Under-Secretary of State say what steps are being taken to acquire the very large farm now available for sale in St. Helena and, if the land is acquired, how many holdings will be available?
    Mr. Amery: This was the land to which I was referring in my reply. I cannot say exactly how many holdings it would provide.

    Emigration
    Mr. C. Hughesasked the Secretary of State for the Colonies what assistance is now given to St. Helenians who desire to emigrate to this country.
    Mr. J. Amery: A scheme is in operation for placing St. Helenian men between the ages of 20 and 30 in employment in the hotel and catering industry in this country.
    Where necessary assistance is given towards the cost of passages.
    Mr. Hughes: Is the Under-Secretary of State aware that planned and balanced emigration of St. Helenians to this country would do a great deal to improve matters there? Would he look into the entire position in greater detail in order to widen the range of opportunities available to St. Helenians in this country?
    Mr. Amery: We have been looking into the matter since November, 1958. Nine St. Helenian men have been found employment in hotels in this country, but there are very few applicants for the vacancies available.
    Mr. Gower: Could this matter be treated with a great deal of caution? Will my hon. Friend take account of the fact that when, for example, people from the island of Pitcairn were moved to a part of Australia, it was found that they did not easily adapt themselves to the different living conditions there and, indeed, were particularly prone to certain illnesses?
    Mr. Amery: I will certainly note what my hon. Friend has said, but I understand that St. Helenians who have come over here have settled in very well.

  NYASALAND

    African Congress
    Mr. G. M. Thomsonasked the Secretary of State for the Colonies the number of branches of the Nyasaland African Congress which were banned under the emergency legislation; and what steps have been taken by the Government of Nyasaland to prevent new branches from being formed.
    The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): One hundred and sixty-seven branches. As the Nyasaland African Congress is now proscribed

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    any person forming new branches would be liable to prosecution under the Penal Code.
    Mr. Thomson: Is the Secretary of State aware that all our colonial history shows that it is not possible to suppress by force a genuinely nationalist movement, however difficult it may be at any one time in its behaviour, and will he, therefore, reconsider his policy of declaring the organisation an illegal one?
    Mr. Lennox-Boyd: No. Sir.

    Detainees
    Mr. Swinglerasked the Secretary of State for the Colonies what is now the number of detainees in Nyasaland; for what reasons they are still being detained; for how long it is proposed to detain them; and by what method they may secure release.
    Mr. Lennox-Boyd: My latest information is that 552 Africans are detained. They are being held in order to ensure the maintenance of law and order in the territory and their detention will continue until the Governor is satisfied that it is no longer necessary for this purpose. Detainees may appeal to the Governor or to the Advisory Committee if they consider that they are being unjustly detained.
    Mr. Swingler: What principle of justice now operates in Nyasaland? Is it that the innocent have to prove their innocence, or that the authorities have to prove that the people they detain are guilty? Or do the Government claim arbitrary powers to detain 500 citizens, whether they are guilty or innocent?
    Mr. Lennox-Boyd: No, Sir. The principles of justice are those that must obtain in territories where a state of emergency applies and where certain people have to be detained when, in the view of the Governor, they constitute a threat to law and order. As far as possible, people against whom evidence is forthcoming are made the subject of specific charges. I am always very anxious that where people are detained specific charges should be brought, wherever possible, but the House knows that there are difficulties in places where intimidation is widespread. I would remind the House that 300 detainees have been released out of the 850 detained and that this process is continual.
    Mr. P. Williams: Are not the regulations and the methods of detention very similar to those which were carried through during the crisis in Malaya?
    Mr. Lennox-Boyd: Yes, Sir. I have the liveliest memories of members of the Socialist Government defending the detention without trial of tens of thousands of people, a fact which is apparently forgotten not only by right hon. Gentlemen opposite but by some of their back benchers now.
    Mr. Callaghan: Is not the real reason why these men are locked up that they combined together in an organisation to secede from the Federation? Did the Colonial Secretary see yesterday the Governor's statement that there is still continued unrest in Nyasaland? How does he propose to get out of this dead-end into which he has got himself?
    Mr. Lennox-Boyd: The reason is not that those men objected to federation. Constitutional objection to federation is perfectly proper. There is a different reason, as the House knows—
    Mr. Callaghan: We do not know.
    Mr. Lennox-Boyd: There is actually a threat to law and order, for which people have been detained. I saw the Governor's statement yesterday and I thought it was a very true one.
    Mr. Callaghan: If it is true, would the Colonial Secretary address himself to the last half of my Question, which was how he proposes to move on from the situation in which disturbance to law and order has existed, certainly since the beginning of the spring, and in which all African leaders of any mettle are locked up while the Africans themselves have no arms to use against the forces of law and order? How does he propose to reconcile that situation?
    Mr. Lennox-Boyd: The Governor did not suggest that the situation had not improved, but he drew attention to the fact that certain tensions still exist. I would not accept the hon. Member's statement of the quality of those leaders who are now detained.

    Political Associations
    Mr. Swingierasked the Secretary of State for the Colonies what political associations of Africans are now permitted to exist in Nyasaland.
    Mr. Lennox-Boyd: Any political association, other than the proscribed Nyasaland African Congress and its Women's and Youth League.
    Mr. Swingler: What are the principles followed, and can we not have a clear explanation now of exactly why the Nyasaland African Congress is to remain proscribed? Does the Answer of the right hon. Gentleman indicate that another African Congress might now be formed and that the reason for the formation of another Congress is so that Africans may have some means of political expression?
    Mr. Lennox-Boyd: I can give no answer about potential bodies without knowing their objects. It is for the Governor to decide, in the light of their declared objects and their behaviour. As for the Nyasaland African Congress and the reason for suspension, I have nothing to add to the statement I made at the time, which explained quite clearly why the organisation was proscribed.
    Mr. Callaghan: If another organisation is formed on a perfectly lawful basis to oppose the policy of federation, can the Colonial Secretary tell us whether such an organisation will be permitted to organise throughout the Protectorate?
    Mr. Lennox-Boyd: No one with any sense of responsibility would answer a hypothetical question of that kind. The hon. Gentleman must despair of ever holding responsibility if he asks questions of that kind. It would be necessary to judge the purposes, declared and real, of any organisation before I could announce what the Government's attitude would be. If the hon. Gentleman ever had any responsibility at all for administration he would know that no one could give a different answer from mine.
    Mr. Callaghan: The Colonial Secretary always tries to get away with it on that sort of ground. Will he answer this question? Is it not the case that all the political leaders who are now not in jail, like Mr. Wellington Chirwa, have expressed themselves in opposition to federation? Is there any possibility of organising any political organisation at all in the territories which is not opposed to federation as it stands? If so, is it not fair to ask the Colonial Secretary to say what he means when he says that it
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    would be permitted, provided it was not following unlawful pursuits?
    Mr. Lennox-Boyd: I have already stated repeatedly that opposition in a constitutional way to federation is certainly not illegal and that it would not be a basis for proscription.

    Church of Scotland (Rev. Tom Colvin)
    Mr. G. M. Thomsonasked the Secretary of State for the Colonies what representations he has had from the Church of Scotland on the interference with their work in Nyasaland caused by the refusal of the Federal Government to allow the Rev. Tom Colvin to return to his post in Blantyre, Nyasaland; what reply he has made; and what steps he is taking to enable the work of the Church of Scotland to be carried on.
    Mr. Lennox-Boyd: I received a letter from the General Secretary of the Foreign Mission Committee of the Church of Scotland, who also made similar representations to my noble Friend.
    I have replied that the matter was one for the Federal authorities. I have now received a further letter which I am considering.
    As regards the latter part of the Question, I hope the Church of Scotland will be able to make satisfactory arrangements for the replacement of Mr. Colvin.
    Mr. Thomson: Is the Secretary of State aware that that is a most unsatisfactory and shocking reply? Is he aware that the Rev. Tom Colvin has a fine record of improving the social and educational services for the people of Nyasaland, on which so much hope for a decent future for that country depends? Can the Secretary of State say what assurances he has sought and obtained from the Federal Government that other Scottish missionaries shall be allowed to move freely between this country and the Protectorate when doing this splendid work in that country?
    Mr. Lennox-Boyd: This matter has already been thoroughly ventilated in the House and it has been made quite clear that the responsibility for declaring anybody a prohibited immigrant does not rest with me or with my right hon. and noble Friend, but with the Government of the Federation.

    Detention Camp, Kanjedza (Commission of Inquiry)
    Mrs. Whiteasked the Secretary of State for the Colonies what inquiries have been held into allegations of improper treatment of detainees at Kanjedza, Nyasaland; and if he will make a statement.
    Mr. Brockwayasked the Secretary of State for the Colonies what arrangements have been made by the Nyasaland Government for the inspection by prison visitors or other independent persons of the detention camp at Kanjedza; how many such visits to the camp have so far been made; and what facilities are provided for detainees to make complaints to such visitors in the absence of camp officials.
    Mr. Lennox-Boyd: With regard to the first part of the Question of the hon. Member for Eton and Slough (Mr. Brockway) I can only add, in amplification of the reply given to the hon. Member for Orkney and Shetland (Mr. Grimond) on 30th June, that, in addition to the visit of a Red Cross delegate, three visits have been made by visiting justices, and also many visits at different times by Press representatives. There have also been at least four visits of inspection by ministers of religion, in addition to pastoral visits made on one afternoon every week, which are themselves additional to private visits and Sunday services.
    The visiting justices, the Red Cross delegate and the ministers on formal inspection have heard complaints privately. No difficulties are placed in the way of detainees wishing to make private complaints to recognised visitors on inspections, and no such request has ever been refused.
    In order to examine the administration and conditions at Kanjedza, a Commission of Inquiry is shortly to be appointed by the Federal Government, in consultation with the Nyasaland Government.
    Mrs. White: Can the right hon. Gentleman say what arrangements there are for liaison with the Federal Government? Is he aware that there are people in this House who are disturbed at the reports we have had about conditions in this camp? As it appears, from the Answer to the hon. Member for Orkney and Shetland (Mr. Grimond), to be a Federal
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    responsibility, can the right hon. Gentleman say how our responsibilities are carried out?
    Mr. Lennox-Boyd: There is close liaison in this matter. It is a Federal responsibility but naturally the territorial Government have a close interest here and the very fact that I have just announced that a Commission of Inquiry will be appointed by the Federal Government in consultation with the Nyasaland Government shows not only a desire to make sure that everything is being run properly but also a recognition of the joint interest of the two Governments in proper conditions.
    Mr. Brockway: Has the right hon. Gentleman seen the report in Dissent, a periodical published by moderate Europeans in Central Africa, regarding the conditions in this detention camp? Is he aware that that report shows that detainees were chained together and kept for eight hours with their hands on their heads sitting on the floor against a wall, and that after those eight hours they were compelled to spend the rest of the night chained together sleeping on a cement floor? Is not this a disgrace to British civilisation and ought not the right hon. Gentleman to do something to stop these conditions in our detention camps?
    Mr. Lennox-Boyd: I think it would be very unfortunate if the hon. Gentleman tried to give the public the impression that anything he happens to read in any periodical of any kind is necessarily true. I have announced the steps that have been taken—the many visits of ministers of religion and others, the visit of a Red Cross delegate, and the impending Commission of Inquiry. I, for one, with a sense of responsibility, would rate their opinions far above a report in a sheet, a very obscure sheet, which the hon. Gentleman trots out as though it were the Gospel truth.

    Future Status
    Mr. Storehouseasked the Secretary of State for the Colonies what discussions he is proposing to have with the Governments and elected members of Tanganyika and Nyasaland with regard to the future status of the Nyasaland Protectorate, in view of concern in Tanganyika about the future relations between these neighbouring territories.
    Mr. Lennox-Boyd: None, Sir.
    Mr. Stonehouse: Is the right hon. Gentleman aware that there is very great concern in Tanganyika about the state of tension in Nyasaland, in view of the fact that these countries share a common frontier? Will he consult representative leaders from Tanganyika, in particular Mr. Nyerere, about the position in Nyasaland? Is not he aware that people in Tanganyika are as concerned as any other State would be about the possibility of there being an undemocratic State on their frontier?
    Mr. Lennox-Boyd: Those concerned with the government of the vast territory of Tanganyika have plenty to occupy their minds in their own territory.

    Constitution
    Mr. J. Johnsonasked the Secretary of State for the Colonies when he will be able to make a statement regarding further constitutional advance in the Nyasaland Protectorate.
    Mr. Wallasked the Secretary of State for the Colonies if he is yet in a position to make a statement about the future constitution of Nyasaland.
    Mr. Lennox-Boyd: I have nothing at present to add to the reply given to the hon. Member for Cardiff, South-East (Mr. Callaghan) by my hon. Friend the Parliamentary Under-Secretary of State on 4th June, but I hope to be able to make an announcement very shortly.
    Mr. Johnson: Can the Minister confirm from his own visit to Nyasaland that not only African leaders like Dr. Banda, but Europeans like Mr. Dixon and Mr. Michael Black, thought in terms of a future African State? Why cannot the Minister be bolder and say that this is the future of this Protectorate? Cannot he see that on this issue alone Central Africa can possibly founder?
    Mr. Lennox-Boyd: I would ask the hon. Member and those who know Nyasaland to wait for the statement that I have promised to make.
    Mr. Wall: Will my right hon. Friend make a statement before the summer Recess?
    Mr. Lennox-Boyd: Yes.

  WEST INDIES

    Citrus Industry
    Mr. Royleasked the Secretary of State for the Colonies if he will make a statement on the present situation with regard to the citrus industry in the West Indies and its future prospects, in view of the dollar liberalisation proposals advocated by the United Kingdom Government.
    Mr. Fisherasked the Secretary of State for the Colonies if the West Indian citrus industry negotiations are still continuing; and whether he will make a further statement.
    Mr. Chapmanasked the Secretary of State for the Colonies what official representations have been made to him by the Federation of the West Indies with regard to the future of the citrus industry; what requests have been made; and if he will make a statement.
    Mr. Lennox-Boyd: The talks with the West Indian delegation about their citrus industry are still in progress. I cannot at present add to the reply I gave on 30th June to Questions by my hon. Friend and other hon. Members. A wide field of rather technical matters is being covered in their talks. I shall certainly be ready to make a statement on the outcome as soon as I can.
    Mr. Royle: Does the right hon. Gentleman's reply indicate that in the last week there has been no real progress on this matter? May I also ask him whether it is any use thinking in terms of development plans and research programmes unless there is a guaranteed market for the goods, and will he, therefore, use his influence with his right hon. Friends who are so responsible?
    Mr. Lennox-Boyd: It would certainly be wrong for the hon. Gentleman to read into my Answer that no progress has been made. Progress has been made. I am myself meeting them tomorrow, when I hope very much that some of the difficulties will be ironed out.
    Mr. Fisher: While I am aware of my right hon. Friend's personal sympathy in the matter, may I ask him to bear in mind that the negotiations have now been going on for over six weeks? Could he tell us when the last meeting took

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    place, when the next meeting will take place, and whether he sees any hope of a settlement of the negotiations before the summer Recess?
    Mr. Lennox-Boyd: There have been a number of meetings of subcommittees. I do not think it would be profitable for the eventual outcome we all hope to see if I gave my hon. Friend public information about what is continuing amicably in private. I hope very much that there will be a satisfactory solution. This is not an easy matter. It involves the reconciliation of our duties to the West Indies, their duties to themselves and our international obligations, but I believe it can be resolved satisfactorily and I will make a statement as soon as I can.
    Mr. Blenkinsopasked the Secretary of State for the Colonies what development and research schemes have been set up in the West Indies Federation for the assistance and encouragement of the citrus industry; and to what extent the United Kingdom will offer long-term contracts and an assured market to the industry to ensure that the maximum benefit is obtained from these schemes by the West Indies.
    Mr. Lennox-Boyd: I would refer the hon. Member to my reply on 30th June to a question by the hon. Member for Stockton-on-Tees (Mr. Chetwynd). No development and research schemes other than the Price Assistance Scheme I then mentioned, have yet been set up specifically and solely for the benefit of the citrus industry. The need for such schemes is being discussed in the present talks with a West Indian delegation. As to long-term contracts there are differences between sugar and citrus products. There is in force a ten-year contract for welfare orange juice negotiated by the Ministry of Food in 1950. Any question about this would be for my right hon. Friend the Minister of Agriculture, Fisheries and Food.
    Mr. Blenkinsop: Is not the right hon. Gentleman aware of the real anxiety which exists about the future of this industry, especially because of the prospects for development and research? Is he aware how important is the whole of this industry to the West Indies? Can he give some further assurance?
    Mr. Lennox-Boyd: I agree with what the hon. Gentleman has said, but I have nothing to add to what I said before—that I will make a statement as soon as possible.

    Health Services (Senior Medical Posts)
    Mr. Blenkinsopasked the Secretary of State for the Colonies what progress has been made in filling vacancies in senior medical posts in health services in the West Indies.
    Mr. J. Amery: Senior medical posts in the West Indies are as far as possible filled by promotion within the local medical services. In the last twelve months there have been twelve such posts which my right hon. Friend has been asked to fill.
    Of these, two medical administrative posts and two specialist posts have been filled, and four of the other vacancies were only notified last month.
    Mr. Blenkinsop: Does the hon. Gentleman realise that a number of senior posts are still vacant and that these must be filled, at any rate at the present time, from this country? Has he or his right hon. Friend had discussions with the Ministry of Labour about the possibility of further secondments from hospitals in this country to countries like the West Indies?
    Mr. Amery: I will certainly look into the hon. Gentleman's suggestion.

  NORTHERN RHODESIA

    Mr. Kenneth Kaunda
    Mr. Swinglerasked the Secretary of State for the Colonies on what evidence and charges Mr. Kenneth Kaunda has been tried and convicted by a court in Northern Rhodesia; and if he will place a transcript of the trial in the Library.
    Mr. J. Amery: I would refer the hon. Member to the Answer given by my right hon. Friend to the Question by the hon. Member for Wednesbury (Mr. Stonehouse) on 30th June.
    Mr. Swingler: Will the hon. Gentleman take steps to speed up the placing of the transcript of the trial in the

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    Library? Further, is the Under-Secretary of State aware that many people suspect that Mr. Kaunda has been charged more on account of his political views than anything else, in spite of his known appeal against violence in Northern Rhodesia? Will the Minister also state what legal aid and advice is provided for Mr. Kaunda?
    Mr. Amery: The reply to the first part of that supplementary question is that we hope to have the material placed in the Library very soon. With regard to the second part, Mr. Kaunda has give notice of appeal in the matter, so presumably he is satisfied, as the hon. Member will see, with the judicial machinery provided. [HON. MEMBERS: "No."] In view of that notice of appeal, the hon. Gentleman will not expect me to comment on the other points.
    Mr. Swingler: What free legal advice has been provided for Mr. Kaunda?
    Mr. Amery: There is provision for free legal aid and Mr. Kaunda has given notice of appeal.

  CENTRAL AFRICA

    United Kingdom Citizens (Freedom of Movement)
    Miss Herbisonasked the Secretary of State for the Colonies whether, at the 1960 constitutional conference on Central Africa, he will arrange for discussion of, and seek a solution to, the difficulties encountered by United Kingdom citizens in moving to and from the territories of the Federation.
    Mr. Brockwayasked the Secretary of State for the Colonies whether, at the 1960 Constitutional Conference on Central Africa, he will arrange for discussion of, and seek a solution to, the difficulties encountered by United Kingdom citizens in moving to and from the territories of the Federation.
    Mr. Lennox-Boyd: For the constitutional position I would refer the hon. Members to the reply given by my hon. Friend the Under-Secretary of State for Commonwealth Relations to the hon. Member for Orkney and Shetland (Mr. Grimond) on 25th June. I should prefer not to start listing now particular items for discussion at the 1960 Constitutional Review Conference.
    Miss Herbison: Does not the Colonial Secretary agree that if Africans, in Nyasaland particularly, knew that the British Government wished this matter to be discussed when the Congress comes, it might do a little to get rid of the tensions about which we heard only yesterday? Does not the right hon. Gentleman realise that with regard to the prohibited immigrant the Rev. Tom Colvin, both the Church of Scotland and the Rev. Tom Colvin himself have done everything possible to get the reasons, but no reasons are forthcoming? Surely the right hon. Gentleman can add something to the reply he has given.
    Mr. Lennox-Boyd: I cannot add to the Answer which I have already given.
    Mr. Brockway: Is not the right hon. Gentleman's Answer very humiliating from the point of view of the British Government and the British Parliament? Is it not the case that a Member of Parliament has been refused permission to go into a British Protectorate—[HON. MEMBERS: "Hear, hear."]—and that a British missionary has not been allowed to return to a British Protectorate and that if this kind of thing were done in a Communist country the right hon. Gentleman would be among the first to protest against it?
    Mr. Lennox-Boyd: The hon. Gentleman likes to have the luxury of getting it both ways. He is constantly pressing for the surrender of powers by this House to Colonial Governments, and when those powers are transferred—
    Mr. Brockway: To peoples' Governments—
    Mr. Lennox-Boyd: —and then used, he expects me to be responsible for their use, for the use of powers which were freely surrendered by this House. I cannot add to the Answer which I have given.
    Mr. Bottomley: Was not what the Under-Secretary of State for Commonwealth Relations said supported by the right hon. Gentleman, and does not this apply both ways? Is it not wrong for the Federal Government to push on with a Federal Police Force and things of that kind before the 1960 conference takes place?
    Mr. Lennox-Boyd: That is quite another matter and does not arise out

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    of the Questions I have answered. I do not know what the right hon. Gentleman has in mind when he talks about a Federal Police Force, but if he wants to ask Questions about it he had better address them to the Under-Secretary of State for Commonwealth Relations.

  ZANZIBAR

    Rutti Bulsara (Newspaper Article)
    Mr. J. Johnsonasked the Secretary of State for the Colonies the content of the article in the newspaper. Vanguard, for which Rutti Bulsara, a prominent member of the Zanzibar Nationalist Party, was bound over for two years after being found guilty of printing and publishing this seditious article; and if he will make a statement.
    Mr. J. Amery: The owner of the Dinar Press in Zanzibar, who is also Publicity Secretary of the Zanzibar Nationalist Party, was charged last month on three counts, of printing, publishing and being in possession of a seditious publication.
    On all these counts he was found guilty and was bound over, his printing machine being confiscated for one year.
    I am circulating in the OFFICIAL REPORT details of the offending words in the Vanguard article.
    Mr. Johnson: What was this sedition? As this was an article about the future independence of Zanzibar, will the Minister confirm that the two main parties in Zanzibar, the Afro-Shirazi and the Zanzibar Nationalist Party, are united on a common policy for early self-government? Will not the Minister be sensible about this and advance Zanzibaris into positions of authority where they may make decisions for their own people about their own affairs?
    Mr. Lennox-Boyd: Perhaps the hon. Member will wait until a copy of the offending text is placed in the Library.
    Following are the details:
    "But and it is a big but the Zanzibar Government are deliberately fomenting racial hatred in Zanzibar where practically none exists and they do this for no better purpose than to extend their tenure of office by that old gag of divide and rule."

    Administration (African Advancement)
    Mr. J. Johnsonasked the Secretary of State for the Colonies what steps the Zanzibar Government is taking to give Africans experience and advancement in the administration of Zanzibar.
    Mr. J. Amery: The Zanzibar Government's policy is progressively to staff the public service with suitably qualified Zanzibaris. In addition to local training to this end opportunities exist for Zanzibaris to take technical, technological and professional courses abroad. These arrangements serve Africans as well as members of the other communities who have the requisite promise or attainment.
    Mr. Johnson: Can the hon. Gentleman confirm the substance of the impression gained by myself and many other people when visiting Zanzibar, that the Administration is still well staffed by expatriates? Would the Minister see that there are fewer expatriates in the Administration, and advance more quickly the Africans and Arabs into positions of responsibility?
    Mr. Amery: The Zanzibar Government is doing its best to advance Africans and Arabs but the efficiency of the Administration must be its first care.

  BERMUDA

    Admiralty Jurisdiction
    Mr. Knox Cunninghamasked the Secretary of State for the Colonies under what Statute the Bermuda Supreme Court exercises Admiralty jurisdiction; and when an Order in Council will be made under Section 56 of the Administration of Justice Act, 1956, to establish Admiralty jurisdiction in Bermuda comparable with that exercised by the courts of the United Kingdom.
    Mr. J. Amery: Under the Colonial Courts of Admiralty Act, 1890.
    The overseas territories have not yet been consulted about the extension to their territories of the Administration of Justice Act, 1956, but I shall shortly be consulting Bermuda and other colonial administrations on this subject.
    Mr. Knox Cunningham: May I ask my hon. Friend whether, were an approach made by the appropriate authority in Bermuda, he would be prepared to make the necessary Order? Since the United Kingdom has ratified the 1952 International Convention relating to the arrest of sea-going ships, are not we in breach of that Convention if this Order is not made?
    Mr. Amery: I am advised that the position is that the United Kingdom, having ratified the Convention on its own behalf, has power at any time under Article 18 to notify the Bureau Power, which is Belgium, that this provision shall extend to any of the territories for whose international relations Her Majesty's Government are responsible.

  UGANDA

    Buganda (Situation)
    Mr. Stonehouseasked the Secretary of State for the Colonies if he will make a further statement on the measures being taken to deal with the situation in Uganda with particular reference to relations between the Buganda and the Uganda Government, in view of continuing unrest.
    Mr. Lennox-Boyd: The Protectorate Government have extended the declaration of Buganda as a disturbed area until the 30th September, though if, as it is hoped, the situation returns to normal meanwhile this order will be rescinded in respect of all or part of the Province. Serious incidents of intimidation and violence continue, but there is rather better co-operation between the Protectorate and Buganda administration and police in maintaining law and order.
    The denunciation of violence and intimidation by His Highness the Kabaka's Ministers early in June appear to have had a moderating effect since these offences were less frequent during the rest of the month. But the position has recently deteriorated and I very much hope that His Highness The Kabaka's Ministers will make further and consistent efforts to bring to an end the boycott and violence resulting from it.
    Mr. Stonehouse: Is the Minister aware that there is much resentment in Uganda
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    about the quite unnecessary comments made last week by the right hon. Gentleman concerning the visit of my right hon. Friend the Member for West Bromwich (Mr. Dugdale) to Buganda? Is he aware that I have heard from several representative correspondents in Uganda that there has been much appreciation arising out of the visit of my right hon. Friend? What arrangements has the Minister made for the settlement of the constitutional impasse between Buganda and the rest of Uganda? Does the Minister intend to grasp the problem with the energy needed?
    Mr. Lennox-Boyd: There are far more important problems to settle than the conduct of the right hon. Member for West Bromwich (Mr. Dugdale). I said what the procedure was for the settlement of the Uganda problem. In regard to the conduct of the right hon. Gentleman, all I have heard is that people are surprised at the moderation of the language that I used.

  MALTA

    Dockyard
    Mr. Wallasked the Secretary of State for the Colonies what progress has been made in the civilianisation of Malta Dockyard; and if he will make a statement.
    Mr. Lennox-Boyd: In my statement of 31st July last, I informed the House of Her Majesty's Government's decision that the Malta dockyard should be converted to a commercial yard and transferred to a commercial ship-repairing firm. From then onwards Messrs. C. H. Bailey of South Wales, worked in close consultation with Her Majesty's Government on the conversion plans and other arrangements for the take-over. These arrangements, including the formation of the local company (Bailey (Malta) Ltd.) which is to run the dockyard, were completed in March. A 99-years' lease was signed in Malta on 29th March and Bailey (Malta) Ltd. took over the dockyard on 30th March. When the dockyard was handed over about 6,000 Admiralty employees were discharged and immediately re-employed by Baileys. I understand that planning for the physical conversion and extension of the dockyard, towards the cost of which Her

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    Majesty's Government are making available a sum of up to £6 million, has now reached an advanced stage. Since the hand-over the dockyard has been occupied with its normal level of naval work and in addition twelve commercial ships and one warship have been handled there. Nine other specific inquiries calling for tenders for work on commercial ships are at present being dealt with by Baileys.
    Mr. Wall: I thank my right hon. Friend for that reply. Does it not illustrate that Her Majesty's Government are doing all that they can to put Malta on its feet economically? Can my right hon. Friend assure the House that once economic success has been achieved in Malta an equally rapid constitutional advance may be made?
    Mr. Lennox-Boyd: It is important to get the economic position of Malta firmly established. I share with my hon. Friend the desire that at the appropriate time a more liberal constitution shall be restored.
    Mr. Callaghan: In view of the early part of the Secretary of State's Answer, may I ask whether the right hon. Gentleman is still satisfied that it will be possible for Baileys to continue to employ 6,000 dockyard workers?
    Mr. Lennox-Boyd: Nothing has happened to alter the optimistic estimate that I was able to give the House at an earlier date.

  KENYA

    Mr. Japheta Oyangi (Imprisonment)
    Mr. Stonehouseasked the Secretary of State for the Colonies on what charges and with what evidence Mr. Japheta Oyangi, former organising secretary of the Nairobi People's Convention Party, was sentenced to nine months' imprisonment in Kenya.
    Mr. J. Amery: Oyangi was charged with and convicted of having in his possession, without lawful excuse, two seditious publications.
    The evidence consisted of these documents, together with proof of their possession by Oyangi.
    Mr. Stonehouse: Would the Under-Secretary of State explain what these
    1102
    seditious documents were? Is he aware that the documents were in fact non-Communist information about Kenya? Is it not outrageous that the Kenya authorities should continue their persecution of quite legitimate political organisations?
    Mr. Amery: I do not think that arises in the least. One publication is called "The Kenya Problem," one sentence of which was held by the court to be seditious. The other was a letter, addressed to an organisation outside Kenya, and again held to be seditious. This was a decision of the court under a section of the law which was in force while the Labour Government were in power and has not since been altered. Mr. Oyangi has not seen fit to appeal.

    Mr. Sullivan and Mr. Coutts
    Mr. K. Robinsonasked the Secretary of State for the Colonies if he will make a statement summarising the findings of the tribunal which considered the charges against Mr. Sullivan and Mr. Coutts; and when the report of the tribunal will be published as a White Paper.
    Mr. Lennox-Boyd: Naturally the Governor and I must first give consideration to the Committee's Report.
    I hope that it will be possible to publish the Report by the end of next week.
    As to the proceedings and exhibits, I will place copies in the Library as soon as we can publish the Report.
    Mr. Robinson: Since the Colonial Secretary has had this Report for nearly a week, is it asking too much for him to tell the House now whether these charges have been substantiated or the men have been exonerated?
    Mr. Lennox-Boyd: I made it clear last week that this Report deals with the conduct of two officials and demands very serious consideration. The inquiry was conducted with remarkable rapidity but very great thoroughness, and we are doing the same with regard to our consideration of it. As I have told the House, I very much hope that it will be possible to publish the Report by the end of next week, but that must wait until the Government and I have considered the Committee's Report.

  HONG KONG

    Women and Young Persons (Hours of Work)
    Mr. Thorntonasked the Secretary of State for the Colonies if he will make a statement, with particular reference to the hours of work of women and young persons, on the operation of the new Factory and Industrial Undertakings Regulations in Hong Kong, which came into effect on 1st January, 1959.
    Mr. Lennox-Boyd: The regulations limit hours of work of women and young persons over 16 in industrial employment to 60 hours a week and provide for a weekly day of rest. Transitional provisions empowered the Commissioner of Labour to extend the maximum to 66 hours during the six months ended 30th June. The number of factories granted this dispensation fell from 159 in January to 35 in April and 24 in May. The latter figure included 9 cotton spinning and 3 cotton weaving mills.

    Dogs and Cats (Slaughter)
    Mr. Rankinasked the Secretary of State for the Colonies if he will urge on the Hong Kong Government the desirability of establishing licensed premises within their territory for the humane slaughter of dogs and cats used for food.
    Mr. J. Amery: No, Sir.
    Mr. Rankin: That is a much briefer Answer than I received two years ago. Has the hon. Gentleman no defence for this? Can he tell me why it is that if these animals have to die in order to increase the potency of the Chinaman in Hong Kong, an island that is already overcrowded, they should die in these conditions? Why should they not be humanely slaughtered?
    Mr. Amery: There are great difficulties in this matter. If we were to legalise the slaughter of dogs and cats there is a serious danger that there would be importation of dogs from China, possibly by smugglers. There is no rabies control in China. The law is difficult to enforce, because it is difficult to distinguish between a dog lover and a dog eater
    Mr. Rankin: On a point of order. If we can deal with foot-and-mouth disease in this country, can we not deal with rabies in Hong Kong?
    Mr. Speaker: That is not a point of order at all. The hon. Member should know that.

  ADEN

    Upper Yafa (Disturbances)
    Mr. F. Noel-Bakerasked the Secretary of State for the Colonies what casualties resulted from air raids by Royal Air Force aircraft during recent disturbances in Upper Yafa; and if he will make a statement.
    Mr. Lennox-Boyd: There were no casualties. Aircraft were used at the request of the Upper Yafa Sultan and his son to destroy houses of specified tribal leaders in the Sultanate who had been working to undermine the authority of the Sultan, with assistance from the Yemen. Due warning of the impending operation was given to the tribesmen concerned in leaflets dropped from the air and by word of mouth from the Sultan's representatives. The houses were empty when destroyed.
    Mr. Noel-Baker: Is it correct that aircraft were in operation over three days, 15th, 16th and 18th June, and very extensive damage was done?
    Mr. Lennox-Boyd: What happened was that effective bloodless police measures were taken in mountainous country where that is the only way to maintain proper authority.

    Yemeni Immigrants
    Mr. Wallasked the Secretary of State for the Colonies what is being done to restrict emigration from the Yemen into Aden; and to what degree this movement of casual labour is causing unemployment in the Colony.
    Mr. Lennox-Boyd: In practice there are no restrictions imposed by the Aden Colony and Protectorate Governments on the transit of persons back and forth between the Colony, the Protectorate and the Yemen. There is some unemployment in the Colony and the possible effect of the migrant Yemeni labour on this is kept under review.
    Mr. Wall: Will my right hon. Friend recognise that there is anxiety in the Colony over this movement of labour

    1105
    from the Yemen? Will he keep the matter under review in spite of the difficulties?
    Mr. Lennox-Boyd: I will certainly keep it under review.

    Qat
    Mr. Sorensenasked the Secretary of State for the Colonies whether the importation and transport of qat is now completely prohibited in Aden and the Aden Protectorate; whether medical opinion is conclusive that it is deleterious; and to what extent this narcotic leaf is illegally imported and chewed in these areas.
    Mr. J. Amery: There is no control of the import of qat into the Protectorate; import into Aden Colony is by licensed importers.
    The latter part of the Question does not therefore arise.
    The commission of inquiry set up by the Government of Aden in 1958 concluded that qat, unless used to excess, is not injurious.
    Mr. Sorensen: Is the hon. Gentleman aware that it has been alleged that the consumption or chewing of gum is distinctly deleterious? Can he say whether anything further is being done in order to make sure whether it is highly dangerous to human life and health, and, if so, to take measures accordingly?
    Mr. Amery: I have been given to understand that unless taken to excess it does not do real harm to anybody's health.

    Frontier (Incident)
    Mr. Sorensenasked the Secretary of State for the Colonies what were the circumstances of the Aden Protectorate recent frontier incident, including the ambush; to what extent subversion continues in the Protectorate; and what further progress has been made in federation.
    Mr. Lennox-Boyd: There have been no significant incidents on the Aden Protectorate frontier in recent weeks. There was an ambush on 30th June in the Upper Aulagi sheikdom, at Said, which is not near the frontier, when I am sorry to say one Aden Protectorate Levy was killed and three were wounded.
    1106
    Yemeni subversion of Protectorate tribesmen still continues, though it is hoped that the growing solidarity of the new Federation will gradually help to counter this.
    The Federation is continuing with the task of building up its administration.
    Mr. Sorensen: Can the Minister say whether any more areas have now come into the Federation, or whether there are the same number as before?
    Mr. Lennox-Boyd: Three more areas have joined. I will circulate details if the hon. Member wishes.

    Education
    Mr. Sorensenasked the Secretary of State for the Colonies what advance has been made, and is contemplated, in respect of primary education in Aden and in the Aden Protectorate, in particular, the extension of education for girls; and how many boys and girls, respectively, are now receiving primary education in the two areas.
    Mr. J. Amery: During the past five years the number of primary school pupils in the Colony increased from 4,714 to 7,680. In the Protectorate the increase was from 5,456 to 11,555.
    These figures include increases in primary school girl pupils from 1,562 to 2,607 in the Colony, and from 269 to 627 in the Protectorate.
    Proposals for further expansion of primary education are under consideration.
    Mr. Sorensen: Can the Minister state when we are likely to get a more definite report as to the acceleration of education, particularly for girls, in respect not only of the Colony but of the Protectorate?
    Mr. Amery: In the Colony every encouragement is given, but the hon. Member will realise that there are traditional obstacles to rapid progress in these matters.

  SOUTHERN RHODESIA

    Unlawful Organisations Act (Charges)
    Mr. Callaghanasked the Secretary of State for the Colonies the nature of the charges made against eighty-six Nyasa Africans under Section 9 (A) of the

    1107
    Southern Rhodesia Unlawful Organisations Act; and the result of the inquiry by the representative of the Governor of Nyasaland in Salisbury.
    Mr. Lennox-Boyd: They have all been charged with being members of an unlawful organisation. The Nyasaland Government's representative has been supplied with full particulars of each of the persons charged.
    Mr. Callaghan: Is it the case that their crime consisted of sending contributions back to the African National Congress in Nyasaland? Is that really to be made the subject of a charge and consequent possible imprisonment, or a fine?
    Mr. Lennox-Boyd: The hon. Member knows that these people have been charged with different offences. It would be impossible for me to give a general answer unless I went into every case.
    Mr. Callaghan: Has not the right hon. Gentleman read the Federation's newsletter, which published the nature of the charges, and said that these people were charged because they sent their contributions back home? Have we really reached this state of things in a British Colony?
    Mr. Lennox-Boyd: When one is dealing with a number of people charged with different offences it is impossible to give a general answer. Those people who have been charged, in the proper way, have been convicted, and I have no further comment to make.

  JUDICIAL SEPARATION
  Mrs. Whiteasked the Attorney-General what consideration is being given to the amendment of the law concerning judicial separation, in view of renewed public interest in the matter.
  The Attorney-General (Sir Reginald Manningham-Buller): This question was fully considered by the Royal Commission on Marriage and Divorce, whose Report was presented to Parliament only three years ago. No new factors have since arisen. The Commission unanimously recommended that there should continue to be a choice between divorce and judicial separation and that it was esentially a matter for the individual who desires relief to decide which form
  1108
  of remedy he should seek, but that the right to obtain a judicial separation on the grounds of insanity, desertion and failure to comply with a decree for restitution of conjugal rights should be abolished.
  Very few cases are brought on these grounds, and I am afraid I cannot hold out any hope of early legislation on this subject.
  Mrs. White: In view of a recent court case in which a woman who had had a child by another man during her marriage was able to keep her husband separate but tied for life, does not the right hon. and learned Gentleman think that the time has now come for us to consider not only the Report of the last Royal Commission but the Report of the Royal Commission of 1912? Does not he think that sufficient time has passed for a mature consideration to have been given to the Reports of both Royal Commissions? Will he consider making changes in the law, both in respect of the major recommendations in the 1912 Report and the relatively minor ones to which he has referred?
  The Attorney-General: The recent Royal Commission considered all the recommendations of the 1912 Royal Commission.

  MINISTRY OF WORKS

    Big Ben
    Mr. Frank Allaunasked the Minister of Works whether he will consider silencing Big Ben between midnight and 6 o'clock a.m., in the interests of patients in St. Thomas's hospital and of other residents.
    The Parliamentary Secretary to the Ministry of Works (Mr. Harmar Nicholls): My right hon. Friend has had no request that this should be done from the authorities of St. Thomas's Hospital; nor has he any evidence of a general demand.
    Mr. Allaun: I appreciate your special interest in this matter as a resident, Mr. Speaker. Is the hon. Gentleman aware that patients whom I recently visited in St. Thomas's Hospital have told me that they cannot sleep because of this booming nuisance every fifteen minutes? Is he aware that other famous chimes, such

    1109
    as those of York Minster, Lincoln Cathedral and Coventry Cathedral, are stopped at night, and also that clocks were made for men and not men for clocks?
    Mr. Nicholls: There would be technical objections to interfering with the mechanism of the clock. St. Thomas's Hospital has made it clear recently that it has had no general complaint to justify this action and, from a personal point of view, I can tell the hon. Member that I slept for two years in St. Stephen's Club, which is the nearest point to the clock, and I can assure him that I slept very well.

    National Gallery (Hampton Site)
    Mr. Gresham Cookeasked the Minister of Works if, when choosing a design for the Hampton site next to the National Gallery, he will select one in general harmony with the existing building.
    The Minister of Works (Mr. Hugh Molson): The design of a building on this site must clearly respect its surroundings.
    Mr. Gresham Cooke: I thank my right hon. Friend for that reply, which I did not quite hear. Is he aware that most people would think it a deplorable blight on London if the Sunday Times winning design were chosen, and that most people think that something more in harmony with the present National Gallery should be accepted? Possibly something with strong vertical lines would be the answer for that site.
    Mr. Molson: There is no intention of adopting any of those designs for a building there at present, but that competition has undoubtedly elicited many interesting suggestions, which will be taken into account.
    Mr. Strauss: Does the Minister agree that while there might be a case for having a modern building there, the worst possible solution would be a design which tried to effect a bastard compromise between the classical style and the modern idiom?
    Mr. Molson: There is a great deal in what the right hon. Gentleman has said. At present, my Department is in consultation with the National Gallery and the
    1110
    National Portrait Gallery to see in what way the whole site can most satisfactorily be redeveloped.

    Brick Supplies, West Middlesex
    Mr. Keswickasked the Minister of Works if he is aware of the concern of some local authorities that a shortage of bricks in West Middlesex may hold up their housebuilding programme; and what further steps he proposes to take to ensure that house building is not held up on this account.
    Mr. Molson: I am aware of this concern and brickmakers are trying to ensure deliveries to sites where work is in progress or ready to start. At the same time builders have been asked to refrain from excessive ordering and stocking and to make use of local resources. I hope that these measures will minimise building delays.
    Mr. Beswick: Is the right hon. Gentleman aware that the slightly improved quota which his colleague the Minister of Housing and Local Government has allowed local authorities for this year will be frustrated unless local authorities can get the bricks to build the houses? Is there not a feeling in the south of England that there is now virtually a monopoly in the making of bricks and that the monopoly concerned finds it more profitable to deliver to the North? Is there anything in that feeling?
    Mr. Molson: No. I am entirely satisfied that the manufacturers of fletton bricks are trying to distribute them where the need is greatest. I think that they are doing everything possible to ensure that work is not delayed.

  ARABIAN PENINSULA (MILITARY OPERATIONS)
  Mr. P. Noel-Bakerasked the Prime Minister if he will now lay a White Paper before the House giving an account of the military operations in which British troops, warships and aircraft have taken part in the Arabian peninsula since January, 1955.
  The Prime Minister (Mr. Harold Macmillan): I have nothing to add to the reply I gave to the right hon. Gentleman on 6th November last.
  Mr. Noel-Baker: Does the Prime Minister recall writing to me last August that he had carefully considered the proposal for a White Paper, but that, as the military operations had not yet been terminated, it would be premature to issue one? Does he think it right that British Forces should continue to operate in the Arabian Peninsula for four years and that Parliament should know nothing about what they are doing, or why they are doing it?
  The Prime Minister: The operations are on a very small scale and are somewhat sporadic, and I do not think that now would be an appropriate moment to issue a White Paper?
  Mr. Noel-Baker: Can the Prime Minister say when he thinks it will be appropriate? Will he explain the nature of the 12,000 operational sorties which, the Secretary of State for Air told us, the R.A.F. carried out in the Peninsula last year?
  The Prime Minister: I quite recognise that Parliament should be informed, and it is informed. The Oman operations were very fully reported at the time. The operations in the Aden Protectorate, as the House has just been told, were of a small and sporadic character, and I do not see that any useful purpose would now be served by cataloguing all those in a White Paper.
  Mr. Gaitskell: Why is the Prime Minister withholding this information from the House? Can there be any objection to giving information over a period of four years as to what our troops and other forces have been doing in the Arabian Peninsula?
  The Prime Minister: I think that there are disadvantages and I do not see any great advantages.
  Mr. Gaitskell: In that case, what are the disadvantages?
  The Prime Minister: Cataloguing a large number of operations over a very wide territory with no particular relation one to the other.
  Mr. Noel-Baker: Does not the Prime Minister think that it would be an advantage to throw light on the fact that British troops were used to suppress the Imam of Oman when it was thought that there was oil at Fahud which was found
  1112
  not to be the case, since when the operations there have been abandoned?
  The Prime Minister: No, Sir. The 1957 operations, which are of course completed, were fully reported at the time and were discussed in the House. I entirely repudiate the insinuations which the right hon. Gentleman has made and which I believe to be quite unworthy of him.

  LORD PRESIDENT OF THE COUNCIL (SPEECH)
  Mr. Emrys Hughesasked the Prime Minister whether the speech of the Lord President of the Council in London on 24th June about hydrogen bomb policy represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir.
  Mr. Hughes: Can the Prime Minister tell us whether Lord Hailsham's statement that nothing would induce us willingly to become an American satellite instead of a friendly ally is Government policy? Are the Government contemplating a hydrogen bomb policy independent of America?
  The Prime Minister: I have read my noble Friend's speech, and as I understand it he took the theme that the best way of dealing with these problems was to get multilateral agreement covering both conventional and unconventional disarmament However, I am bound to say that I have observed slight differences of emphasis, or small differences of approach, in dealing with this problem in different parts of the House. If the hon. Member is reproaching the Government for any slight difference of the precise way these things are stated, I refer him to the parable of the mote and the beam.
  Mr. Gaitskell: Would the Prime Minister reply to my hon. Friend's supplementary question? Does he think that it was wise for the noble Lord to say that if we did not have nuclear weapons of our own, we should become a satellite instead of an ally of America? Does he think that that was a wise thing to say since no other member of N.A.T.O. has independent nuclear weapons of its own? Are we, therefore, to assume that it is the Government's view that all other members of N.A.T.O. are satellites, except ourselves?
  The Prime Minister: I would not like to do anything to draw the right hon. Gentleman prematurely into this discussion. Possibly tomorrow night he will develop his views at greater length, in which case I will do my best to answer them in debate. I am bound to say that I regard the fact that successive British Governments, starting with the Labour Government and followed by three Conservative Governments, have continued with the policy of an independent deterrent as having given us some advantage in this country which we should not lightly throw away

  SUMMIT CONFERENCE
  Mr. A. Hendersonasked the Prime Minister whether he will discuss with Mr. Khrushchev at the forthcoming Summit Conference the desirability of reaching early agreement on the abolition of all weapons of mass destruction, both nuclear and conventional.
  The Prime Minister: We have not yet reached the point of deciding what topics should be discussed at a Summit meeting, but I am bearing in mind the possibility of discussing general disarmament at such a meeting.
  Mr. Henderson: In order to break the present deadlock, would the Prime Minister consider at the appropriate time proposing to Mr. Khrushchev the desirability of going back to the Anglo-French proposals, which covered comprehensive disarmament and which, together with the Soviet memorandum of 10th May, 1955, might constitute the basis of resumed disarmament negotiations?
  The Prime Minister: I am certainly grateful for the right hon. and learned Gentleman's suggestion, which I will bear in mind. What I hope is that if and when we get a summit meeting, after disposing of the most urgent questions, if we can do so—the future of Berlin and so forth—we shall proceed at least to some preliminary discussion of the best way to tackle the disarmament problem.

  CHANCELLOR ADENAUER
  Mr. Healeyasked the Prime Minister what official reply he has received from Chancellor Adenauer to his invitation to visit Great Britain.
  The Prime Minister: It was originally arranged that the Federal German Chancellor should come to London in December, 1958, but he was forced to cancel his visit because of illness. No fresh date for a visit has yet been fixed.
  I shall be pleased to see the Chancellor at any convenient time, although in view of the imminent resumption of the Foreign Ministers' Conference it is difficult at present to say what would be a suitable time.
  Mr. Healey: Does the Prime Minister envisage that the German Chancellor should visit Britain before the President of France does?
  The Prime Minister: Two separate kinds of question are contemplated. I will make a statement about the possible visit by President de Gaulle as soon as precedent and formality allow me to do so. President de Gaulle is a Head of State. This is a question of the visit of the Chancellor, which is on quite a different basis.

  AIRCRAFT INDUSTRY
  Mr. Wiggasked the Prime Minister what recent personal examination he has given to the state of the British aircraft industry; and whether he will make a statement.
  The Prime Minister: There are a number of important problems concerning the aircraft industry to which my colleagues and I have given and are giving a great deal of thought. I do not think that any statement at this stage would be appropriate.
  Mr. Wigg: Has the Prime Minister's attention been drawn to the statement of the Minister of Supply in the House yesterday, that the state of the aircraft industry gave rise to satisfaction in nobody's breast? Is that view shared by the right hon. Gentleman and, if so, what is he going to do about it?
  The Prime Minister: We all know that the greatest problem which lies before this industry is the possibility and method of widening its markets, both civil and military, since most of the difficulties of the industry can be traced to insufficient orders for these immensely expensive machines to justify and make

  1115
  profitable their undertaking. Therefore, I think that the most useful part of our help might be to see whether these orders can in some way be increased.
  Mr. Speaker: Mr. Wigg.
  Mr. Shinwell—
  Mr. Speaker: Mr. Shinwell.
  Mr. Wigg: On a point of order, Mr. Speaker. While I am always willing to defer to my right hon. Friend, on this occasion did you not call me before him?
  Mr. Speaker: I called the hon. Gentleman, but then I observed the right lion. Gentleman rise and so I called him. Mr. Shinwell.
  Mr. Shinwell: May I ask the right hon. Gentleman whether, in view of allegations about delay in introducing certain types of aircraft, and in view of some confusion in the industry and the possibility of certain types of aircraft, for both military and civilian purposes, becoming obsolete, and even obsolescent, because of delay in production, he is satisfied with the present position? Will he not in the circumstances institute some form of inquiry, perhaps Departmental or perhaps of an independent character, in order to give assurances to the country and the House that the position in the industry is satisfactory?
  The Prime Minister: As the right hon. Gentleman knows, this is a very
  1116
  complicated question, and I could not really deal with it by question and answer. I will bear in mind what the right hon. Gentleman says. For the moment I am trying, with my colleagues, to give very special attention to ascertaining what progress can be made.
  Mr. Wigg: Is it a fact that the Prime Minister is so much concerned with markets that he personally intervened recently and persuaded Mr. Nehru to take the Avro 748 and also undertook to supply India with the Bloodhound missile?
  The Prime Minister: I should like notice of that supplementary question in greater detail, but in this case there are two aircraft which are generally regarded and popularly described as Dakota replacements, and the Government are giving support to both.

BUSINESS OF THE HOUSE
Proceedings of the Committee on Navy, Army and Air Expenditure, 1957–58, exempted, at this day's Sitting, from the Provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]
Ordered,
That the Finance Bill, as amended, may be considered immediately after the recommittal of the Bill and Report thereof, notwithstanding the practice of this House as to the interval between the stages of such a Bill.—[Mr. Amory.]

ORDERS OF THE DAY

  WAYS AND MEANS
  [1st July]
  Resolution reported,

  INCOME TAX (PENSION ANNUITY BUSINESS IN THE REPUBLIC OF IRELAND)
  That it is expedient to authorise any incidental charge to income tax which may arise from extending the operation of section four hundred and twenty-nine of the Income Tax Act, 1952, in the case of assurance companies carrying on pension annuity business in the Republic of Ireland.
  Resolution read a Second time.
  Question, That this House doth agree with the Committee in the said Resolution, put forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions), and agreed to.
  Instruction to any Committee to whom the Finance Bill may be recommitted that they have power to make provision therein pursuant to the said Resolution.

FINANCE BILL
Order for consideration, as amended, read.
Bill recommitted to a Committee of the whole House in respect of the Amendments to Clause 11, page 12, lines 6 and 9; Clause 28, page 24, lines 7, 18, 23, 24, 28, and 36 and page 25, line 3; and the new Clauses (Pension annuity business transacted in Republic of Ireland), and (investment allowance where ship purchased before taking over from builder), standing on the Notice Paper in the name of the Chancellor of the Exchequer.—[Mr. Amory.]
Bill immediately considered in Committee.
[Sir CHARLES MACANDREW in the Chair]

Clause 11.—AGRICULTURAL TRACTORS: CARRIAGE OF PRODUCE ETC. AT AGRI CULTURAL RATE OF DUTY.)
3.33 p.m.
The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Richard Nugent): I beg to move, in page 12, line 6 to leave out "in" and to insert:
"for the purposes of all or any of the following paragraphs by".
1118
It might be for the convenience of the Committee if I dealt, at the same time, with the Amendment in line 9.
The Amendments will have the effect of widening Clause 11 as now drafted, and they follow representations received from the farming and agricultural machinery interests after they had had a chance to study the Clause. The Clause will allow my right hon. Friend to make regulations with regard to farm machinery going on roads, and these interests have represented to us that as the Clause stands the regulations could not be made to allow certain movements of farm machinery on roads which ought reasonably and properly to take place. It is to widen the Clause in this respect that we put forward these Amendments. I do not think I need go into the technical details.
Mr. Ernest Davies: I think that the Joint Parliamentary Secretary might give us a little more information about what the Clause does exactly. He states that the Amendments widen the provision relating to agricultural vehicles going on the roads, but one cannot allow any relaxation of the present regulations without obtaining a certain amount of assurance, particularly with regard to safety.
As far as I can make out from reading the very complicated wording of these Amendments, which replace very much of the originally drafted Clause, it seems that we shall have a lot of push and pull vehicles on the roads. It appears to me that one will be able to have a trailer behind and transport box in front. I may be wrong, but I think that it would help the Committee if we were given a little more explanation.
I believe that there are some 144,000 agricultural vehicles which are licensed under the special provisions of the £2 duty, and if all these are to have the regulations relaxed and will be able to pull as well as push vehicles on the road, then there might be congestion as between one agricultural holding and another or in respect of the carrying of farmers' produce to the market towns.
I hope that the hon. Gentleman will give us a little more explanation. I presume that the vehicles which these agricultural vehicles—which are to a large extent tractors—will pull or push will

1119
be confined to the carriage of farm goods; that is, goods in connection with the carrying out of farming by the owner of the vehicle—and will not be able to carry the goods of other persons. Also, what regulations has the Minister in mind? It seems to me that if we approve the Amendments we shall be giving the Minister a blank cheque to make regulations regarding agricultural vehicles of which we shall be in complete ignorance. We ought to know a little more about this, if the Joint Parliamentary Secretary will be so good as to reply.
Mr. Nugent: I shall be very pleased to do so. It is a complicated matter, and I did not wish to trouble the Committee with more details than it requires.
The Clause, as drafted, would allow a transport box to be carried on a tractor and farm goods to be carried in it. It would also enable regulations to be made to allow a tractor to carry a piece of farm machinery, when loaded, on the back of the vehicle and a small transport box on the other end of it; in other words, two implements—one a piece of farm machinery and the other a transport box—at the same time.
The Clause as drafted would not allow the tractor to carry goods in the transport box on the front of the tractor if the piece of farm machinery on the back of the tractor was carrying goods. The Clause as drafted now would enable the regulation to allow goods to be carried on both the pieces of machinery. In practice, it is necessary for a farmer to carry on his tractor a piece of machinery like a seed drill, which would have corn seed or grass seed in it, on the back of the tractor. On the front of the tractor, in the carrying part, he would carry a few sacks of grain, but, as the Clause is drafted, if there were any seeds remaining in the seed drill when the tractor went on the road, an offence would be committed.
Quite clearly, there are times when the seed drill has a little seed left in it, or a chemical sprayer may have a little spray left in it. It is necessary to widen the Clause so that in these complicated agricultural matters we may have the little flexibility which this Amendment would provide. We think that it is a reasonable Amendment. I had a little
1120
experience of agricultural matters in my former office and I can assure the Committee that this Amendment will provide a little flexibility in the movement of machines to fields not adjacent to the farm.
This will be so in the case of the buck rake which farmers use to carry grass about. Our intention would be not to widen the use of the buck rake, which is something which could be dangerous if it went any distance behind the tractor on a public road, and not to widen that to fields not actually adjacent to the farm.
I can give the hon. Member the assurance that what we are doing here will not add to the danger on the road. It is doing no more than to legalise what would be normal, proper farming practice and, if we make regulations, we shall see that they are carefully drawn so that that can be fulfilled. The hon. Member asked whether this would permit the farmer to carry his own goods. The answer is, "Yes". This is for the farmer himself. I think that I have covered the point about the regulations we have in mind Those regulations will deal with the details of the picture I have outlined. After Parliament has approved the Finance Bill, we shall lay regulations covering this matter and I think that they will be perfectly reasonable.
Amendment agreed to.
Further Amendment made: In page 12, line 9, leave out from "the" to end of line 19 and insert:
"following provisions shall have effect—

(a) the limitation in subsection (1) of this section to one appliance shall have effect as a limitation to two appliances of which at least one must be an appliance specified for the purposes of this paragraph, but if two appliances are used they must be fitted at opposite ends of the vehicle;

(b) regulations under this section may provide for all or any of the following matters where an appliance specified for the purposes of this paragraph is being used, that is to say, that subsection (1) of this section shall not apply unless the specified appliance is fitted to the specified end of the vehicle, or unless the use of the specified, or any, appliance is limited to specified goods or burden or to use in specified circumstances;

(c) regulations under this section may provide that paragraph (b) of subsection (1) of this section shall not have effect in relation to appliances specified for the purposes of this paragraph, but that in relation thereto

1121
subsection (3) of this section shall have effect with the substitution of such shorter distance as may be specified.

In paragraphs (a) to (c) of this subsection specified 'means specified by regulations under this section, and references to use are references to use for the carriage of goods or burden; and regulations under this section may make different provisions in relation to different descriptions of specified appliances",—[Mr. Nugent.]
Clause, as amended, ordered to stand part of the Bill.

Clause 28.—(ESTATE DUTY: LIFE INSURANCE POLICIES.)
The Solicitor - General (Sir Harry Hylton-Foster): I beg to move, in page 24, line 7, to leave out from the second "and" to "operates" in line 8 and to insert:
"by reason of assignment or otherwise, the payment".
This is the first of seven Amendments all directed to one point only. I hope that I may be allowed to refer to the other ones so as not to have to plague the Committee with more than one speech. The Amendments deal with a point to which my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) drew attention in Committee. Subsections (2) and (3) of the Bill are drawn on the basis of references to policies assigned "to" a person and the person is called the "donee". Therefore, if the donor has not given the policy direct to the beneficiary but to trustees in trust for the beneficiary, under the system of the Clause at present it would be the trustees who would be the donee.
The trouble with that is that subsection (4, b) of the Clause makes provision in relation to valuation of the policy where the beneficiary has divested himself of the policy before the death of the assured, and the policy's value in that case is to be the value at the time of the disposal. That is the perfectly right result when whatever has happened to the policy alters the beneficial ownership of it, but it produces the wrong result where, for instance, all that has happened is that there has been an alteration in the trustees and the beneficiary still in effect has his policy.
It is to get rid of that difficulty that these Amendments, of which this is the first, are proposed. The gist of the matter is in the Amendment suggested to page 24, line 36, to alter paragraph (b). The effect
1122
is to make the subsection apply only when the policy is disposed of in a way which alters the beneficial interest in the policy. The other Amendments are consequential.
There is one point of substance to which I should draw attention. Subsection (3) as at present drawn is in terms of reference to an "assignment". We want a wider term than assignment to cover one case, namely, the case where the donor makes a gift of the policy by way of a declaration of trust but the policy remains in his name. Hence "any dealing".
3.45 p.m.
Mr. G. R. Mitchison: Obviously, this is a matter which should concern the beneficiary's interest and I entirely agree with the right hon. and learned Gentleman that so much ought not to turn on the death of the trustee, even a bare trustee miscalled the donee.
Mr. Charles Fletcher-Cooke: As my right hon. and learned Friend has kindly reconsidered this matter and put these Amendments in a form which no doubt is much better, I thank him for that. I am sorry that the more specific matters I raised on Clause 28 have not been so kindly received, but one must be thankful for small mercies.
The Chairman: I take it that I have the leave of the Committee to put all these seven Amendments together.
Amendment agreed to.
Further Amendments made: In page 24, line 18, leave out from "of" to "property" in line 20 and insert:
"any dealing with a policy of life assurance".
In line 23, leave out "assignor" and insert "assured".
In line 24, leave out "assignor's" and insert "assured's"
In line 28, leave out "assignment" and insert "dealing with the policy".
In line 36, leave out from "apply" to "its" in line 45 and insert:
"in relation to any payment of a premium or dealing with a policy if any dealing with the policy has subsequently taken place either so as to alter the beneficial interest in the rights under the policy or by way of surrender, but in such a case the value shall be ascertained by reference to the time of the subsequent dealing (or of the first, if there has been more than one), and shall be taken to be the value

1123
at that time of the consideration therefor, or if there was no consideration or (in the case of a dealing other than a surrender)".
In page 25, line 3, leave out from beginning to end of line 6 and insert:

(a) where paragraph (a) of the foregoing subsection applies, have been paid before the maturity of the policy, or

(b) where paragraph (b) of that subsection applies, have been paid before the time by reference to which the value of the policy falls to be ascertained.—[The Solicitor-General.]

Clause, as amended, ordered to stand part of the Bill.

New Clause.—(PENSION ANNUITY BUSI NESS TRANSACTED IN REPUBLIC OF IRELAND.)
(1) Where an assurance company having its head office in the United Kingdom carries on business in the Republic of Ireland, and under provisions of the law of that country corresponding with section twenty-four of the Finance Act, 1956, exemption from income tax is allowable in respect of income from investments and deposits referable to pension annuity business, section four hundred and twenty-nine of the Income Tax Act, 1952 (under which income from investments of the foreign life assurance fund of an assurance company is treated for income tax purposes as if the company were not ordinarily resident in the United Kingdom), shall apply in relation to the income as if paragraph 3 of Part III of the Eighteenth Schedule to that Act (which excludes from foreign life assurance business any business transacted in the Republic of Ireland) did not have effect.
(2) Sub-paragraph (1) of paragraph 2 of Part III of the said Eighteenth Schedule (which charges tax under Case IV or Case V of Schedule D. on profits or gains arising in the Republic of Ireland, on the full amount of the income arising in the year of assessment, whether remitted to the United Kingdom or not) shall have effect subject to the foregoing subsection.—[Mr. Simon]
Brought up, and read the First time.
The Financial Secretary to the Treasury (Mr. J. E. S. Simon): I beg to move, That the Clause be read a Second time.
This new Clause is designed to solve a taxation difficulty which has been encountered, as a result of recent Irish legislation, by United Kingdom life assurance companies transacting certain types of life business in the Republic of Ireland. The difficulty arises from the Republic's 1958 Finance Act, which gave exemption from tax on the part of an assurance company's invested income referable to what is called the "pension annuity business". Their legislation corresponds exactly to similar provisions in our Finance Act of 1956, which the
1124
Committee will remember. The "pension annuity business ", broadly speaking, is, first, contracts with approved superannuation funds set up by employers for their employees, and, secondly, approved retirement annuity contracts or trust schemes for self-employed persons and persons in non-pensionable employment. What the Irish legislation does, just as ours does, is to give exemption from tax on income from that business.
A complication has arisen owing to the unique nature of the Double Taxation Agreement between this country and Ireland. Uniquely, in that Double Taxation Agreement, the income is not taxed in the country of origin, but is taxed in the country of receipt. That means, therefore, that the United Kingdom life offices doing business in Ireland do not get any benefit from the exemption given by the Irish legislation, whereas their competitors, foreign companies with offices set up there, do get such an exemption. On the contrary, the United Kingdom life offices are taxed in this country on their receipts, and, therefore, operate at a competitive disadvantage.
Their case has been represented to my right hon. Friend, who thinks that it is well-founded and that a comparatively simple solution can be found. It can be found by slightly extending the scope of relief from Income Tax which is already available—that is, under Section 429 of the Income Tax Act, 1952—in respect of the income of the foreign life assurance fund of a United Kingdom life assurance company. The foreign life assurance fund means, in effect, the invested reserves which a company holds as cover for its liability under life assurance and annuity contracts granted to overseas policy holders by overseas branches and agencies; and the investment income from such a fund is free from United Kingdom tax to the extent that it is not remitted to this country or is obtained from the type of British Government security which pays tax-free interest to non-residents.
At present, transactions in the Irish Republic are excluded from consideration in reckoning the tax relief under that provision. Therefore, it seems to us that an apt solution to the difficulty is to allow the pension annuity business done in the Republic of Ireland, but not other business done there, to be

1125
included in determining the amount of overseas business which is to count towards establishing how much United Kingdom tax relief is available for the investment income of such a company's foreign life assurance fund.
To do that is in line with the original plan of my right hon. Friend, which was to preserve the competitive position of overseas branches of United Kingdom life assurance companies. The cost is probably less than a quarter of a million pounds, and I commend the new Clause to the Committee.
Mr. Gordon Walker: The only part of the right hon. and learned Gentleman's lucid explanation which I could not follow is why the foreign life assurance funds were ever excluded from benefit in the case of the Republic of Ireland. It is, after all, for the purpose of companies operating in foreign countries. Was it done as the result of some administrative decision, or was it a quite unintentional consequence of a Statute which we have already passed?
Mr. Simon: It was quite intentional, and the reason is that, because of the nature of the Double Taxation Agreement, if they had not been excluded, they would have paid tax neither to the country of origin, which is Ireland, nor to this country.
Mr. Gordon Walker: Now that they are excluded, are they not in that state now?
Mr. Simon: They are, so that they can now compete with Irish counpanies. In other words, we are giving them the same exemption as applies to the foreign life assurance funds in relation to other countries.
Question put and agreed to.
Clause read a Second time and added to the Bill.

New Clause.—(INVESTMENT ALLOWANCE WHERE SHIP PURCHASED BEFORE TAKING OVER FROM BUILDER.)
(1) Subject to the provisions of this section, where after the seventh day of April, nineteen hundred and fifty-nine, a person incurs capital expenditure on the provision of a ship the expenditure shall not be prevented from being treated for investment allowance purposes as incurred on the provision of a new asset by the property in the ship or any part thereof having previously passed to a person other than the person incurring the expenditure if the ship has not been taken over from the builder by any such other person.
1126
(2) The foregoing subsection shall not apply if any person other than the person incurring the expenditure has become entitled to an investment allowance in respect of the ship or would have become entitled to such an allowance by virtue of this section but for the limitation contained in the foregoing subsection to expenditure incurred after the said seventh day of April:
Provided that where such an other person has, or would have, become entitled as aforesaid as respects part only of his capital expenditure on the provision of the ship, the foregoing subsection shall apply, but the amount of expenditure in respect of which an investment allowance may be made by virtue of this section shall not exceed the amount qualifying for an investment allowance apart from any operation of the said limitation, reduced by the amount of the said part of the other person's capital expenditure.
(3) Where rights under a contract for the provision of a ship are assigned after the ship has been begun, and either—

(a) the assignor is a body of persons over whom the assignee has control (within the meaning assigned to that expression by subsection (1) of section three hundred and thirty-three of the Income Tax Act, 1952), or the assignee is a body of persons over whom the assignor has such control, or both the assignor and the assignee are bodies of persons and some other person has such control over both of them or

(b) it appears with respect to the assignment, or with respect to transactions of which the assignment is one, that the sole or main benefit which, apart from the provisions of this subsection, might have been expected to accrue to the parties of any of them was the obtaining of an increased investment allowance.

then in relation to the making of any investment allowance falling to be made by virtue of this section no part of the consideration for the assignment shall be treated as expenditure incurred on the provision of the ship, but nothing in this subsection shall affect the consideration for a sale to the assignee of so much of the ship as is in existence before the assignment.
References in paragraph (a) of this subsection to a body of persons include references to a partnership.
(4) The Fourteenth Schedule to the Income Tax Act 1952 (which, where there is a sale between a buyer and a seller who are associated, makes special provision as to the price at which for income tax purposes the property is to be taken to have been sold), shall not operate so as to increase the amount of any investment allowance falling to be made by virtue of this section.
(5) Expenditure shall not be treated for the purposes of this section as having been incurred after the said seventh day of April by reason only of subsection (2) of section two hundred and seventy-nine of the Income Tax Act, 1952 (which relates to expenditure incurred by a person for the purposes of a trade before he begins to carry it on).—[Mr. Simon.]
Brought up, and read the First time.
Mr. Simon: I beg to move, That the Clause be read a Second time.
We discussed this matter in Committee on an Amendment moved by my hon. Friend the Member for Southampton, Test (Mr. J. Howard), and I do not expect that hon. Members will want me to go again through the technicalities, which were well rehearsed then both by my hon. Friend and myself.
The short point is that there is one type of contract, out of four possible types of contract, for the purchase of a ship where the investment allowance is not obtainable, either directly by a transfer of the investment allowance from the original purchaser of the ship to the second purchaser, or indirectly through being reflected in the price, by the second purchaser in this country. It arises from a technicality in the law whereby the investment allowance is obtainable only if the ship is new and not second-hand. As I pointed out in Committee, that means unused and not second-hand and since some meaning must be given to "unused" which is different from second-hand, the investment allowance would not be obtainable in such a case.
The purpose of the Clause clearly commended itself to the Committee when we discussed it. It failed on a technical point, which I pointed out to the Committee and to my hon. Friend, and we believe that the Clause as now drafted puts the matter right.
Mr. Frederick Willey: I welcomed the effort of the hon. Member for Southampton, Test (Mr. J. Howard), and, equally, I welcome the draftsmanship for which the Financial Secretary to the Treasury may claim credit in the new Clause. It is a useful new Clause, and it will help both shipping and shipbuilding. I am sorry that the Financial Secretary did not exercise the virtuosity which he displayed when we were discussing this before, but there is a simple and lucid explanation of the purpose of this Clause to be found in the OFFICIAL REPORT, to which I would refer any hon. Member who is in any difficulty about it.
While I am sure that the new Clause will help the industry, I do not want to be thought ungenerous or ungrateful, but I hope, at the same time, that the Government
1128
are giving serious thought to the very real difficulties of both these essential industries. I will not transgress any further, having drawn the attention of the Financial Secretary to the difficulties facing these industries. Certainly in the shipbuilding industry we appreciate this as a valuable concession.
Mr. John Howard: May I say a few words of appreciation to my right hon. Friend the Chancellor of the Exchequer for the trouble he has taken in drafting the necessary new Clause and in finding the precise form of words to deal with this anomaly? I am quite certain that the rectification of this discrepancy will be of assistance in the shipping industry, and that all four types of contract will now be treated in the same way, and that, therefore, shipowners who wish to add a new ship to the British merchant fleet will be able to receive the investment allowance in future.
Mr. Douglas Marshall: As I supported this proposal originally in Committee, I, too, wish to thank the Chancellor, and at the same time the Treasury officials who have managed to find a form of words to cover the principle to which the Committee agreed.
Question put and agreed to.
Clause read a Second time and added to the Bill.
Bill reported with Amendments; as amended (in Committee and on recommittal), considered.

New Clause.—(DEPENDENT RELATIVES.)
Section two hundred and sixteen of the Income Tax Act, 1952, shall have effect as if the reference to the mother being widowed included—

(a) a reference to her living apart from her husband, and

(b) a reference to her being a single woman, in consequence of dissolution or annulment of marriage:

Provided that no person shall by virtue of this section be entitled to less relief under the Income Tax Act, 1952, than he would be entitled to if this section had not been passed.—[Mr. Simon.]
Brought up, and read the First time.
4.0 p.m.
Mr. Simon: I beg to move, That the Clause be read a Second time.
This arises on a matter which we discussed in Committee when considering a new clause moved by the hon.

1129
Member for Sowerby (Mr. Houghton). It was a suggestion which obviously commended itself in general to the Committee.
Sir Toby Low: On a point of order, Mr. Deputy-Speaker. On the Notice Paper there are new Clauses which come before this new Clause. Can you enlighten the House as to why we should not be taking them?
Mr. Deputy-Speaker (Sir Charles MacAndrew): We have not moved quite so quickly, I think, as the Financial Secretary has. I think that we should be discussing the new Clause (Relief from entertainments duty).
Mr. Gerald Nabarro: Further to that point of order, Mr. Deputy-Speaker. Is it not a fact that, at the moment, the Financial Secretary is moving the Second Reading of the new Clause (Dependent relatives)? Are we not to deal with the first new Clause, which deals with relief from Entertainments Duty?
Mr. Deputy-Speaker: I think that the mistake has just been discovered.
Mr. Simon: I must apologise to the House for "muscling in", if I may use that expression, in front of my right hon. Friend. It was inadvertence on my part. Having moved the Second Reading of the new Clause relating to dependent relatives, I do not know whether I can now retire, as it were, and move it again later.
Mr. Deputy-Speaker: It has not been put yet from the Chair. I think that we should carry on with the first one.
Mr. Stephen Swingler: On a point of order, Mr. Deputy-Speaker. The first new Clause deals with relief from Entertainments Duty. There is another new Clause, No. 26 on the Notice Paper (Reduction of scope of entertainments duty). May we take them together?
Mr. Deputy-Speaker: Mr. Speaker has not selected that one.
Mrs. Eirene White: Further to that point of order. Can you tell us, Mr. Deputy-Speaker, about the Amendments to the Chancellor's new Clause? Will they be taken subsequently?
Mr. Deputy-Speaker: We do not deal with them until the new Clause is given a Second Reading.

New Clause.—(RELIEF FROM ENTERTAIN MENTS DUTY.)
(1) Subject to the provisions of this section, where the entertainments duty chargeable in respect of the entertainments given by any person at any place in the week beginning with the second day of August, nineteen hundred and fifty-nine, or any subsequent week exceeds twenty pounds, he shall be entitled to deduct that amount from the duty which he would otherwise be required to pay over to the Commissioners of Customs and Excise, and where that duty does not exceed twenty pounds he shall not be required to pay over to them any duty in respect of the entertainments given by him in that place in that week.
(2) Where in any such week as aforesaid two or more persons give chargeable entertainments at the same place, the foregoing subsection shall have effect in relation to each of them with the substitution for twenty pounds of an amount which bears to twenty pounds the same proportion as the number of days or parts of a day in that week on which he gives a chargeable entertainment in that place bears to the aggregate of the numbers of days or parts of days in that week on which both or all of them give chargeable entertainments there.
(3) Expressions used in this section and in the Entertainments Duty Act, 1958, have the same meaning in this section as in that Act, except that "chargeable entertainment" does not include an entertainment where, by reason of any exemption or the amount of the payments for admission, no duty is chargeable. —[Mr. Amory.]
Brought up, and read the First time.
The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I beg to move, That the Clause be read a Second time.
This new Clause embodies the principles of a new Clause tabled by my right hon. Friend the Member for Blackpool, North (Sir T. Low) during our discussions in Committee. I had to resist that new Clause because it had certain technical defects, and for that reason only. The effect of this new Clause is to reduce by £20 each week the Entertainments Duty payable in respect of admissions to each place of entertainment. There is a provision for the apportionment of the relief when a cinema is used by two or more proprietors. I am informed that this is done in certain cases. There are some small cinemas, for instance, where the afternoon show is given by one proprietor and the evening show is given by another. I cannot tell the House how frequently this happens.

1131
The new Clause gives relief to the cinema industry in a way which, in my view, gives most help to those who need it most.
Mr. Mitchison: On a point of order, Mr. Deputy-Speaker. Should we be in order, on this new Clause, in referring to the new Clause (Reduction of scope of entertainments duty, which deals with a similar subject?
Mr. Deputy-Speaker: Mr. Speaker has not selected that Clause.
Mr. Mitchison: Further to that point of order. Without it being selected, may we refer to it?
Mr. Deputy-Speaker: No. It will not be called.
Mr. Swingler: Further to that point of order, Mr. Deputy-Speaker. The point of the new Clause (Reduction of scope of entertainments duty) was not discussed in Committee. Although I appreciate that we cannot challenge Mr. Speaker's decision in not selecting that new Clause for discussion, I take it that we are permitted to discuss the subject, that is, methods of reducing Entertainments Duty alternative to the one now proposed by the Chancellor.
Mr. Deputy-Speaker: Certainly. That is the idea of the debate. If hon. Members dislike this new Clause, because it does not do this or that, and they prefer something else, they will not give it a Second Reading.
Mr. John Rankin: Further to that point of order, Mr. Deputy-Speaker. I am sorry to press the point, but I did not quite catch your concluding sentence. The new Clause (Reduction of scope of entertainments duty), which stands in my name and the names of two of my hon. Friends, is one which has not been discussed at any stage, although I did refer on a previous occasion to the 2s. tax-free allowance. It has not been selected, but may we take it, nevertheless, that we are not prevented from using the argument it contains in dealing with the Chancellor's new Clause?
Mr. Deputy-Speaker: That is the point of the debate. This new Clause may be negatived on Second Reading because it
1132
does not include this, that, or the other thing which hon. Members want.
Mr. Amory: I was saying that the proposed new Clause gives relief in a way which, I think, will be of most assistance to those cinemas which are in need. As I said in Committee, I am particularly concerned about the position of small country cinemas and cinemas serving small market towns which have only one cinema. I know that many such cinemas are having great difficulty in staying open, and, if they are forced to close, the result may be to leave their audiences without any alternative cinema within reasonably easy travelling distance. The Clause will, of course, help all cinemas, but, proportionately, its benefit will be greater for the smaller cinemas and less for the larger cinemas in the big towns.
In this respect, it seems to do better than the alternative ways of giving relief which have been suggested, such as, for instance, the method suggested in the new Clause (Reduction of scope of entertainments duty) standing in the name of the hon. Member for Glasgow, Govan (Mr. Rankin) and his hon. Friends. To start with, the hon. Gentleman's method would be more costly to the Exchequer than what I now propose. To increase the exemption limit to 2s. 6d. would cost £5¼ million. That may commend it to the hon. Gentleman—
Mr. Rankin: But not to the Chancellor.
Mr. Amory: Even the modest increase of the limit to 2s. would cost £3¼ million, which is still slightly more than the cost of my proposal.
What is more important, I think, is that the greatest benefit of a concession on the lines suggested by hon. Members opposite would go to those who need it least. The relief would be based on the number of admissions and would, therefore, be greatest for the large cinema drawing a capacity audience, the one which is most prosperous, I should have thought, and least for the cinema having the smaller audience and, therefore, one would suppose, being in greatest difficulty.
At the same time, most of the small cinemas, would still have to pay some duty on admissions to the dearer seats, whereas the new Clause I am proposing will relieve a large number of small

1133
cinemas from tax altogether. I think that about 1,500 cinemas usually pay less than £20 in duty each week, and practically all these will, under my new Clause, pay no duty at all.
In Committee, the hon. Member for Walthamstow, West (Mr. Redhead) objected to the principle embodied in this new Clause because, in his view, it was an undesirable precedent that cinema exhibitors should be told to collect duty from the public and then be allowed to keep for themselves up to £20 of what they collect. If we examine it and think about it a little more, we shall see that there is not a great deal in that argument.
This proposal will have the same effect on the cash position of a cinema proprietor as a straightforward reduction in duty. It will be just as easy for him, if he wishes, to pass on the benefit of this concession to the public. The arithmetical computation presents no difficulty. I have no reason to suppose that in existing circumstances; when many of them are hard pressed financially, cinema proprietors propose to pass on to the public the benefit of this or any other concession that might be proposed on this occasion. The benefit which the public will derive will be that a number of cinemas which otherwise might have had to close will now, thanks to this relief, be able to stay open.
There is, at the same time, one reason why this concession is of more benefit to cinema proprietors than a straightforward reduction in duty would have been. That is the effect on the film levy. As the House may be aware, the limit for exemption from this levy is based on net takings—that is, on gross takings, less Entertainments Duty. A reduction in duty automatically increases net takings and would, therefore, make a number of cinemas now exempt subject to the levy. The Clause, as it is drafted, does not have that effect. It does not alter the amount of duty chargeable, but does alter the amount to be paid over to the Customs and Excise. In consequence of that, no cinema previously exempt from the levy will have to pay it as a result of the Clause.
I will not say anything now about the Amendment dealing with the date at which this new Clause will take effect. I shall be glad to say something about that when the Amendment is called. For
1134
the reasons I have mentioned, I do not think that we could find a way in which we could distribute this sort of sum which would be more greatly to the benefit of the type of cinema that we are all most anxious to help. I therefore recommend the Clause as it is drafted for the favourable approval of the House.
Mrs. White: As the right hon. Gentleman knows, our main quarrel with the Clause is not so much the method, but the amount involved. As we have said at earlier stages in our discussions, we think that the result of this proposal is inadequate for the needs of the cinema industry at present. We on this side of the House believe that the time has come when Entertainments Duty should be abolished altogether. This is not the place or time to discuss that again in detail, but I think that we should make our position perfectly clear.
The new Clause which has not been selected, but to which reference has already been made, would go some little way towards meeting our position. As the Chancellor has said, if the exemption limit were raised to 2s. 6d. the reduction would be a little over £5 million, which would be roughly double what he is proposing in the Clause. That would doubtless be an improvement, although I repeat that we think that the time has come when this discriminatory tax should be abolished.
4.15 p.m.
Having said that, I wish to make further reference to the method chosen by the Chancellor. The right hon. Gentleman rightly said that the Clause will have the same effect upon the cash position of the exhibitor as a straightforward reduction in Entertainments Duty. I am very glad that the right hon. Gentleman has made it perfectly clear that there will be no change in the position of those who pay the statutory levy. They will remain exactly as they are now. That was not at all clear during the Committee stage.
Can the Chancellor take this a little further? By his method the cinema exhibitor will receive, if he collects as much as £20 in duty per week, upwards of £1,000 a year. That is presumably not to be considered as part of his normal income, or is it? For example, can we be told whether that will be counted

1135
for Profits Tax or Income Tax, or is this something which is taken right outside the normal income of a cinema exhibitor? If it is, the larger and more prosperous exhibitor to whom the Chancellor referred will obtain his £1,000 or so tax-free, as well as the smaller exhibitor whom the right hon. Gentleman is so particularly anxious to accommodate.
This is a very important point because, although this year the Chancellor has made a relatively small concession, we all hope that the time will come when whoever is in his place will make a very much larger one. If, as we trust, my right hon. Friend the Member for Huyton (Mr. H. Wilson) is in that place next year, we shall have no trouble, because the duty will be abolished. [HON. MEMBERS: "Oh."] I have no doubt whatever on that count.
As we are discussing this matter of principle, one should at least take the hypothetical case that there might still be a Chancellor of the Exchequer present who will make a considerably greater remission than that made this year, but not total abolition. Instead of having only £20 a week passed on, £40 or £60 a week, for the sake of argument, would be kept in the hands of the exhibitors instead of being sent on to the Customs and Excise and, also, would not be considered when other taxation was being taken into account.
Therefore, we are entitled to have an explanation from the Chancellor. As we have said at earlier stages of the Bill, we on this side are not happy at this method of not having a straight reduction in the duty. This is almost farming out taxes—that brought about the fall of France before the Revolution, as the Chancellor no doubt recalls—by allowing persons to keep in their own hands money which, in the proper course of events, should reach the Revenue. We are not necessarily financial purists in all circumstances, but we feel that it is our duty to draw the attention of the House to this change in principle which is embodied in the Clause.
The Chancellor is certainly over-optimistic in supposing that the very small relief proposed will have the effect of keeping open any very considerable number of cinemas which might otherwise close. That it is some relief is
1136
obvious, but the effect, even on the exhibitors, will probably be a great deal less than the right hon. Gentleman apparently supposes.
If, as the Chancellor suggests, this money is regarded as tax and not as ordinary income, the custom of the trade leads to the result that the whole of this money will remain in the hands of the exhibitors. The "break" figure, as it is called, between the renter of the film and the exhibitor is normally settled on the basis of tax having been paid. Therefore, the whole of this remission is obviously intended by the Chancellor, judging by what he has said this afternoon, to go to the exhibitor.
In all previous remissions of taxation for this industry the industry as a whole has been taken into account and not just the exhibiting end, but the proposed method means that the film producer on this occasion has no hope of obtaining any direct benefit from the tax remission. In this connection, if nobody else has done so, I should like to draw to the right hon. Gentleman's attention some remarks made last week at a meeting of the Executive Council of the British Film Production Association by its president. Mr. Watkins, who said categorically that the Council must
"… rebut the Chancellor's statement during the Committee stage of the Finance Bill that the producers were not in any difficulty."
As I think I commented at the time, the Chancellor seemed to be remarkably complacent at that moment about the film production position. Mr. Watkins says very forcibly that the producers are facing serious difficulties, and I have no doubt that while they are glad that the exhibitors may be benefited by this proposal they must feel serious disquiet at a principle being introduced in dealing with this duty which, if carried any further in subsequent years, would mean that the producers stood to get nothing from this method of remitting taxation.
That seems to be a very serious objection to the method selected by the right hon. Gentleman, and I think that he owes it to those at the production end of the industry, at least, to say something of his views on their difficulties, because I can assure him that their position is by no means as favourable as he appeared to think. I very much hope that he has had further advice since he made

1137
the remark in the earlier stages of our discussions that caused very considerable concern in producer circles.
I do not wish to comment on the details of subsection (2) which, as far as we can tell, should probably work satisfactorily; and the matter of the date we can, I hope, discuss very shortly. Therefore, I sum up by saying that we are not satisfied with the amount of the concession granted by this new Clause, nor are we satisfied with the method of granting it but, of course, we have to be thankful for this very small mercy.
Mr. Swingler: It remains a mystery how the Chancellor came to adopt this present view, and I do not suppose that this afternoon we can go much further into that. On Budget day, in spite of all the representations made to him on the subject of Entertainments Duty, the right hon. Gentleman apparently had no intention of reducing it at all. He had received deputations from the trade, he had answered numerous Questions from hon. Members dealing with the decline in cinema admissions and the closure of cinemas—including cinemas in his own constituency—but had set his mind against acceding to the requests made to him.
Since then, however, the Chancellor has been subject—and I welcome it—to a certain amount of pressure, or backstairs intrigue—we can call it what we like—which has brought him to this present view on Report. Without running into the next discussion, perhaps I might express the view that, in those circumstances, it is only fair that the Chancellor should carry out his intentions as though he had adopted them on Budget day, and not add a further belatedness to this comparatively minor concession that he has produced. At any rate, he should be as fair as was the Tory Chancellor of the Exchequer in 1958 in regard to the date of the concession—but we will come on to that in a moment.
What worries us is the very small nature of this concession, as well as the amount of pressure that was required to extract it. It really is not very relevant to the present situation. If the views on Entertainments Duty over the last few years were examined, it could be very easily shown, I think, that those who have spoken as critics from the back
1138
benches have been correct in their forecasts about the underestimation of the problems of the film industry and the cinema trade.
The fact is that nearly all the reductions of this duty have been too little and too late to save large numbers of small cinemas, to do very much to arrest the general decline in cinema attendances, or to permit any large sums of money to pass from the exhibiting to the production end of the trade so as to give a real stimulus to export as well as to home market film production. That has been the general tendency.
This year, it has been clearly revealed by the right hon. Gentleman that in the Treasury there is an obstinate opinion in favour of a permanent tax on the cinema trade. That did not apply to the theatre, to football or to cricket but, as I say, the Chancellor has revealed that there is in the Treasury an idea that some form of tax on the people's entertainment should be a permanent feature of our taxation and, because there are big tycoons on the exhibiting side, that it should be the cinemas that should bear it, even though it may deny the amenity of the cinema to the rural areas or permanently cripple part of the film production industry.
That is a very bad thing, because I continue to think that the abolition of any form of tax on this sharply-declining industry is long overdue. Nobody will deny that it is a sharply-declining industry. That it has gone into a swan dive is revealed by the bankruptcies that have occurred, and by the large numbers that have gone out of the trade. We know that there are those in this House who want to kill a large part of the inlustry and do not at all mind that it is declining at the present rate, but no one can really justify the amount of taxation that the Chancellor is leaving on an industry that will continue to decline. I am sure that next year we shall again be discussing in this Chamber the further decline in cinema attendances, the further closures of cinemas in many parts of the country, and the necessity of trying to pump some more finance into the production end of the industry if we are to maintain any level of film exports at all.
Therefore, I believe that the new Clause (Reduction of scope of entertainments duty) not selected, standing in

1139
the names of my hon. Friends and myself to be better than this one, because it gives the much bigger concession that the industry needs at the present time. Indeed, what the industry needed was abolition of the duty, but the Chancellor has turned that down, and has given to the trade only a very small shot in the arm—if one can call it that at all—and one that falls far below what is necessary and desirable to put this industry in order.
4.30 p.m.
Mr. Rankin: The contention between the Chancellor and those of us who support the new Clause is on a mere matter of money. The Chancellor may think that a strange phrase to come from a Scotsman in view of the fact that he said that the Scots were a very expensive item in the national budget. But he will realise that my position here is purely vicarious. I am not talking for Scots. I am talking for other people, and chiefly for the English on the benches behind him, who have been somewhat tongue-tied so far.
Mr. Nabarro: On a point of order, Mr. Deputy-Speaker. Can you put this matter into good order and resolve it? The last three speakers have been called from the other side of the House, notwithstanding the fact that three of my hon. Friends rose on each occasion. Is it correct for hon. Members on this side to be impugned in this fashion by the hon. Member who is speaking when we are doing our best to catch the eye of the Chair and cannot catch it?
Mr. Deputy-Speaker: I have only just taken the Chair, but I think that if the hon. Gentleman is patient he may be lucky.
Mr. Frederic Harris: Further to that point of order, Mr. Deputy-Speaker. May I respectfully say that I have been in the House for eleven years and I have never before known an occasion when three hon. Members opposite have been called one after the other while hon. Members on this side of the House have been trying to get into the debate.
Mr. Deputy-Speaker: That is not a point of order. It is entirely within the discretion of the Chair as to who is called.
Mr. Rankin: I am sorry that a few harmless words should have stirred up so much trouble on the other side of the House. The hon. Member for Kidderminster (Mr. Nabarro) shows how ineffective hon. Members opposite are, because surely the kindliest thing to catch in this House is the Speaker's eye, and they have failed entirely to do that.
Mr. Nabarro: I did not rise to my feet.
Mr. Rankin: If the hon. Member did not rise, I do not know what he is complaining about.
Mr. Geoffrey Hirst: He is complaining on our behalf.
Mr. Rankin: May I proceed with what I hope to say without interruption, because I am anxious to be helpful?
I was saying that the difference between the Chancellor and those of us on this side of the House is merely a matter of money, and the amount of money is not so great, because he proposes to inject into the cinema industry £2¼ million, and we, who regard the situation as more precarious than he does, want to put £5¼ million into the industry.
I would remind the right hon. Gentleman that on 14th April this year, in reply to a Question which I put to him about the cost of our proposal, he said that the trouble was not the duty at all; it was merely that a sufficient number of persons did not go to the cinema. I wonder why it was that between 14th April and 10th June he decided that part of the trouble resided with the duty? There must be a story there that is worth telling. What convinced him and, having been convinced that the trouble lay with the duty, why does he apply it only to 886 cinemas? That is something that he has got to justify.
The great mass of cinemas in this country is in that independent middle block numbering 2,390 and one or two other units—I believe 2,394 altogether. Those are the cinemas whose seating capacity lies between 501 and 1,500. Those figures were supplied to me in a return by the Board of Trade in its publication of 3rd April. This great group of 2,394, on the Chancellor's own confession this afternoon, will not be greatly helped by what he is doing. Those

1141
cinemas will, of course, get £20 a week, but then, after we have subtracted the £20, their tax liability will still be so great as ultimately to close down more and more of these cinemas.
The more of these cinemas that the right hon. Gentleman closes down the more will he reduce the statutory levy and the more will he endanger the export of British films—an absolute necessity in the view of all hon. Members on this side of the House—because of the lack of a good home market. If we are not to get the home market which we could only get with help from the Chancellor—more help than has been given so far—we shall endanger our export trade, and if we do that we shall endanger British film production as a whole. The Chancellor knows that argument very well, and, because he knows it, I do not understand why he did not underline it in words of glowing hope by saying that he would apply the logic which is enshrined in the new Clause (Reduction of scope of entertainments duty), standing in my name. It was a good Clause, as the Chancellor knows.
The Chancellor said, first, that it was not practicable. But, surely, if we can work the tax-free allowance now as we are doing, we can still work it if we raise the limit to 2s. 6d. There can be no argument about that. If we change the tax-free limit it must still be workable. I see that the Chancellor is in consultation. I do not know whether he is verifying my figures. I take it that we shall hear something about this, and that it may be possible to bridge this unbridgeable gap between £2¼ million and £5¼ million.
If I may say a word which will appeal to Scottish cinema managers, I would ask the Chancellor to consider one matter in connection with his proposed new Clause. Of course, I do not object to what he is giving. We will take anything—except the present Chancellor, of course. We should like another one. However, that opportunity will come later. We will take what is given, and I do not quarrel with the machinery of the Clause. I would ask the Chancellor to consider the fact that the holiday season in Scotland is now in full swing. July is the great holiday month. The season starts at the beginning of June and it
1142
goes through July and on to August when, of course, we give way to the English, who invade our territory for murderous purposes.
The Chancellor wants this Clause to help the small man. The small cinema proprietors in the Scottish holiday resorts look forward to the holiday period to make up for the long barren spell of the winter, and just now the visitors will be coming to these resorts about which the hon. Member for North Angust and Mearns (Sir C. Thornton-Kemsley) spoke in Committee.
Mr. William Shepherd: On a point of order, Mr. Deputy-Speaker. Am I right in assuming that we are not now discussing the Amendments to this proposed new Clause? I understand that the hon. Gentleman intends to talk about the timing of this remission, but I was under the impression that we were to discuss the question of the timing later.
Mr. Rankin: Further to that point of order. The hon. Member may not have seen that in the new Clause there is a reference to the Entertainments Duty chargeable starting on "the second day of August". If that is contained in the new Clause I understand that at least I may make passing reference to that date.
Mr. Deputy-Speaker: The Amendment will be called after the new Clause has had a Second Reading.
Mr. Rankin: I shall reinforce later what I was about to say. This will give the Chancellor a period in which he can think about what will be said later in the debate. There is no harm in warning the right hon. Gentleman that he may have one or two arguments to counter.
I am suggesting that he should consider another date which I shall suggest to him, with your help, Mr. Deputy-Speaker, later. I will not mention the date now, but I feel that the date in the new Clause will not be as helpful as the right hon. Gentleman himself desires to be because it will not give as much benefit to these cinemas during the Summer, since it falls in the last holiday month in the Scottish year. It does not matter to anyone who is interested in carpets, but it matters to those who are interested in cinemas. They want

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to see as many people as possible attending the cinemas. I hope that the Chancellor will reconsider the date 2nd August and substitute a more helpful date.
That is all I want to say at the moment. I could have said more but I shall forbear so as to give to hon. Members opposite, who are so anxious to talk, the chance to show the other weaknesses which lie in this new Clause, which commends itself to the small man but, in my view, ignores the great mass of cinemas, which today need as much help as the small man is being given.
Mr. Nabarro: I want to intervene only for a moment to say that in the course of the last two or three years the Chancellor has been extremely generous to the cinema industry. Last year, he reduced the duty by £14 million. This year, he proposes in the new Clause to reduce it by a further £2½ million. That will leave a residual of only £6¾ million to be paid by the cinema industry in duty.
I think that that compares very favourably with the amount of duty which is to be paid by the principal competitors of cinema—namely, television. If television is to be taxed at the rate of £30 million per annum in Purchase Tax, with a further £10 million per annum in allocation of licence duty—a total of £40 million—in my view it is not unreasonable that the cinema industry should make a contribution to the revenue of a modest £6¾ million. That is a ratio of £6 to £1, weighted in favour of the cinema. It means that the television industry is carrying about six times as much in taxation and duty as is the cinema. The hon. Member for Newcastle-under-Lyme (Mr. Swingler) nods. These are established figures.
Mr. Rankin: Surely the hon. Member realises that the major circuits in the cinema industry, such as Granada and A.B.C., are all concerned in television and are paying their cinema tax out of television profits. For example, last week A.B.C. declared 40 per cent. profits. This was because of television, not because of cinemas.
Mr. Nabarro: That is an entirely irrelevant argument. All profits of all corporations are appropriately assessed to both Profits Tax and Income Tax. If the
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television companies make a large sum on their annual trading account by way of profits, they will surely pay an aggregate of 48¾ per cent. annually as between Profits Tax and Income Tax.
4.45 p.m.
The third point which I make is the critical point in the debate. There are greatly changing social habits in this country, arising from television. It is manifest nonsense to say that the decline of the cinema is largely due to the incidence of this relatively small amount of Entertainments Duty. The reason for the decline in the popularity of the cinema is assuredly the competition of the cinema set in the form of a television in 8½ million homes. Based on present statistics, with about £40 million annually, being paid by television interests as an amalgam of the licence fee allocation and Purchase Tax, it is certainly not unreasonable that one-sixth of that sum, namely, £6¾ million net, after this Clause is effective, should be paid by the cinema industry as its contribution to the national revenue.
Mrs. White: Does not the hon. Member agree that in his arithmetic he should add the Purchase Tax paid by the cinema exhibitor on all his equipment, seating, carpets and other facilities? Is not that a perfectly fair way of computing the total tax paid?
Mr. Nabarro: No. I entirely disagree. Certainly, the cinema exhibitor has to pay a small sum in Purchase Tax—12½ per cent.—on the floor coverings, including carpets, in his cinema, but the viewer of a television set in his home has to pay a substantial sum in beer duty upon his convivial refreshments while he is watching the television set in his house. That is a comparable form of indirect taxation. The point made by the hon. Lady is entirely invalid.
Mr. Barnett Janner: I had not intended to intervene in the debate until I heard the so-called argument of the hon. Member for Kidderminster (Mr. Nabarro).
Mr. Nabarro: It was a jolly good argument.
Mr. Janner: Let us see whether it was a jolly good argument.

1145
The hon. Member contended that there is no longer any need for that form of entertainment given by cinemas because it is being entirely superseded by a different form of entertainment. If he were right there would be something to be said for not removing the tax entirely, but in my view it is not consistent either with the facts or with the type of argument used by the Government on previous occasions on forms of entertainment.
The Chancellor told us previously that he did not intend to drive out of existence any reasonable form of entertainment by the tax which was being imposed, and that if it were found that the incidence of taxation was such that it would drive a form of entertainment out of existence, the tax would be removed. Accordingly, it was removed from certain forms of entertainment such as boxing and football. The cinema exhibitors are in a precarious position.
Mr. F. A. Burden: When the hon. Member is comparing the cinema with television and with boxing and football he is not comparing like with like. In one case it is live entertainment and in the other it is canned entertainment.
Mr. Janner: That is precisely my argument. The hon. Member for Kidderminster compared two forms of entertainment. The cinema is a form of entertainment which appeals to certain people, and there are a large number of people who still wish to go to cinemas. We can start with that presumption, and if we accept it we should give facilities for the trade to continue and not, as the hon. Member for Kidderminster wanted, try to make everybody sit at home at a television set, whether wanting to go to the cinema or not.
Cinemas throughout the country are closing down. We have that sad experience in my constituency. One of the main reasons for not being able to continue is that this tax operates against them. If it were removed, there would be an incentive to those who are running this form of wholesome exhibition to provide what a large section of the community believe is necessary for them.
I am very upset about the present position of the cinemas. I have seen the people who are concerned with it in Leicester. I know what the population
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of Leicester wants. I agree that, in the main, people are turning to television, but there is a considerable section of the community in Leicester which wants to continue to go to the cinemas. Cinemas have to renew their equipment and to make their amusement attractive to people who will have to leave their television sets, and all that costs money. I hope that the Chancellor will examine what has been said on previous occasions about other forms of entertainment and will see that the cinema industry is not pushed out of existence.
The cinema industry obviously wants to remain in existence. It has served a very great purpose and has done something for the people which cannot be assessed in ordinary financial terms. It is worth while to continue it, and the people want it to continue. We ought not to strangle it by imposing a tax which is quite unjustifiable, the removal of which would mean a very small burden on the Exchequer.
Mr. Shepherd: It would be ungrateful of me if I did not say how pleased I am to see on the Notice Paper a proposal which I have put forward in this House for many years in respect of the cinema industry. Despite the rather disgruntled view—[HON. MEMBERS: "Sour."]—sour view expressed from the benches opposite—
Mr. Rankin: No. On a point of order. Is it within the realms of fair debate, Mr. Deputy-Speaker, that the course of this even-tempered discussion should be utterly misrepresented by the hon. Member for Cheadle (Mr. Shepherd)?
Mr. Deputy-Speaker: If anything is being said which is out of order I shall stop it.
Mr. Shepherd: I do not think that there is reasonable doubt that the course proposed is the best method of giving the greatest relief to those who need it in this industry, especially when we are dealing with a limited sum of money. Therefore, I agree heartily with my right hon. Friend. The assumption that the money which is repaid in the form of tax is to lie in the hands of the exhibitor untouched is something which I could not possibly concede. I am sure that when my right hon. Friend replies he will set at rest any doubt which may exist on that score.

1147
There will be more than the Revenue after this £20. The hon. Member for Nottingham, West (Sir T. O'Brien) and his union will be after part of it. The hon. Lady the Member for Flint, East (Mrs. White) suggested that the money could not benefit the producer. That is rather a naive view. If an exhibitor were doing rather better there would obviously be a tendency for the renter to ask more onerous terms from the exhibitor, and I should be surprised if, after twelve months, the producer did not get something out of the pool.
The point made by the hon. Lady the Member for Flint, East requires an answer. She rather chastised my right hon. Friend for taking too rosy a view of the industry. I would like to chastise her—if I may put it in those terms—for taking too dismal a view of it. If she would look at the figures I think she would find the position not quite so discomforting as she has imagined. If she went further into them she would find that the amount of money invested in films in this country has been probably an all-time record. Although there may have been slightly fewer films produced, much more money was spent on each film. The position of the producer is nothing like as deplorable as the hon. Lady makes out.
I did not follow the arguments of the hon. Member for Leicester, North-West (Mr. Janner) about absolute remission. We could not give £9 million for the salvation of the cinema industry.
Mr. Janner: Why not?
Mr. Shepherd: Some of the remission would undoubtedly fall by the wayside. Of course, that argument applies to what we are proposing to do now, I admit, but a very large part of total remission would go to the well-equipped and well-financed large circuits, probably £4 million or £5 million although they are not in need of assistance, having rationalised themselves. Because we could not spend £9 million on the salvation of the cinema industry, my right hon. Friend the Chancellor of the Exchequer is justified in bringing forward this limited assistance, directed specifically at the areas most in need of support.
This industry needs watching. It may be that the views which I now express
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will need revision twelve months' hence. If the industry then needs further assistance, I am sure that my right hon. Friend—who will still be here—will give it.
Mr. Janner: Will the hon. Gentleman say whether it is true or untrue that many cinemas are closing? If it is true, what on earth is the use of imposing a tax which contributes towards this situation?
5.0 p.m.
Mr. D. Marshall: In opening the debate my right hon. Friend said that two things had influenced him in his decision. One was whether there was an alternative, and the other was the question of variety in rural districts. I can assure my right hon. Friend that those of us who live in rural districts, and have friends who have been wondering whether or not these small cinemas can keep open, are extremely grateful for what he has done. I have received many letters asking me to convey the thanks of the writers to my right hon. Friend, and I am glad that I have had the opportunity to do so.
Mr. Hirst: I thank my right hon. Friend for introducing the Clause, which follows up all but one of the requirements I mentioned on behalf of my right hon. and hon. Friends in Committee. We had better deal with the exception later. The Clause includes the additional point in regard to the exemption limit.
I take a poor view of the Opposition, who have been a little sour this afternoon. The Clause represents a further reduction on top of the reduction last year and a previous reduction. Over £20 million has been remitted by the Conservative Government. Although it is true that the circumstances were quite different, in the days of the Labour Government the only thing they did in this matter was to raise the tax. In view of that, they might have been more generous and forthcoming today. From the letters I receive, and from the contacts I have made in my long experience of the matter, I know how grateful people are for this concession.
Mr. Harold Wilson: The hon. Member has made a comparison between the situation now and that which existed at the time of the Labour Government. Can he say how many

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cinemas closed during the Labour Government's tenure of office, and how many have closed during the last eight years of Conservative Government?
Mr. Hirst: That has nothing to do with the matter. The right hon. Gentleman forgets that, owing to the increased prosperity under Conservative rule, there are now 8 million television sets.
My hon. Friend the Member for Cheadle (Mr. Shepherd) and the hon. Member for Flint, East (Mrs. White) referred to the amount of benefit which this reduction in Entertainments Duty will confer upon the industry. The hon. Lady made the same point today as she did in Committee, and I cannot see her argument. I do not think that I ever will see it. She said that the whole amount goes to the exhibitor, but that is not so. After Entertainments Duty has been deducted a great deal of the division takes place upon a percentage basis. About half goes to the exhibitors and another half to the renters, and included in the latter half is a production element. It is an indirect benefit to the whole industry.
I made that point in Committee, and I think that most hon. Members agreed with me then. We must not look at this question, or expect the industry to look at it, from the selfish aspect of one side. We cannot split exhibition from distribution or production. The three must be helped, and must go forward and be made efficient together. I maintain that what my right hon. Friend has done achieves precisely that end.
The concession will certainly help the medium-sized cinemas. The hon. Member for Glasgow, Govan (Mr. Rankin), in a rather off-moment speech, said that £20 million, or £1,000 a year, would not be of direct benefit to them. He argued that they would make more profits and be taxed on them. I would point out that they are not taxed on losses. Of course, this concession is a benefit to them, as it is through the whole range of cinemas. I am grateful to my right hon. Friend for conferring it.
Mr. John Baird: I am reluctant to enter this debate, but I must make one point after listening to some of the speeches of hon. Members opposite. If we are going to subsidise a dying industry we shall waste
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our money. The only way in which this concession will help is by getting more people into the cinema. The hon. Member for Cheadle (Mr. Shepherd) told us that some of this concession will go to the workers in the cinema industry and some to the producers, exhibitors and renters. I should like to know how much will be left for the general public who visit the cinemas. If all this money is handed back to the industry and no concession is made for the public whom we are trying to encourage to visit the cinemas more often, we are wasting our time and money. The sum suggested is far too meagre. The only way to get more people into the cinemas and, thereby, to encourage the industry, is to make the concession much more substantial.
Mr. Burden: I find it very difficult to understand many of the arguments put forward by the Opposition. If we examine the Government's record in regard to the cinema industry we find that last year they gave tax remissions amounting to £14 million and that this year the figure amounts to £2½ million. In addition, the entertainments industry should be specially grateful to the Conservative Government, for they have also abolished the tax on the live theatre, as well as on cricket, football, boxing and greyhound racing. All this adds up to a fairly good effort on behalf of the entertainments industry generally.
Mr. Swingler: The hon. Member talked about tax reliefs amounting to £14 million last year and £2½ million this year. Does not the hon. Member agree that those are purely theoretical and notional figures? If the Chancellor had maintained the existing rate of Entertainments Duty last year he would never have collected £14 million, any more than he would have collected £2½ million this year.
Mr. Burden: My figures are just as notional in a downward direction as the figures were notional in an upward direction when the Opposition were the Government.
The hon. Member for Leicester, Northwest (Mr. Janner) said that people could not afford to go to the cinema in Leicester. If that is the view of the Opposition this tax allowance will certainly not make it possible for more people to go. As my hon. Friend the

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Member for Kidderminster (Mr. Nabarro) said, there is a changing patern of public need for entertainment. If the Opposition became the Government I wonder whether they would immediately abolish I.T.V. They fought against it very hard before it was introduced, and I have no doubt that they were then bearing in mind the interests of the cinema industry.
Mr. H. Wilson: Does the hon. Gentleman recall that the fight was led in another place by Lord Hailsham? Will the hon. Member put his question to Lord Hailsham?
Mr. Burden: My noble Friend is quite capable of looking after himself without any help from the right hon. Gentleman.
Mr. Wilson: I am only aware that Lord Hailsham entirely refuses to answer any challenge which is put to him.
Mr. Burden: My noble Friend is used to dealing with heavyweights. I do not see why he should be expected to take on lightweights.
Mr. Rankin: On a point of order. Is is not true that Lord Hailsham is gradually coming down into the lightweight class?
The Chairman: That is not a point of order.
Mr. Burden: Some concern has been expressed about the production side of the industry, and my hon. Friend the Member for Cheadle (Mr. Shepherd) made some particularly good points in that connection. I would remind hon. Members opposite that a very great sphere for the production of films in this country is opening in the television world. Many of the television films which employ our artistes are now going to America and the Commonwealth, and they ensure further employment in the industry besides earning us a good deal of overseas currency.
We come back to the fundamental point that, whatever we may say in this House, we cannot change the pattern of life. If a really good film comes out—and there are very few of these—the cinema which shows it is always full. Nowadays people can sit the whole evening and see on television short films comparable to the sort of second-feature films that they used to have to go to the
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cinema to see. It means, of course, that the public has become much more selective. That is inevitable, because so few great films are made today that only one or two cinemas in each town can show them at the same time. The cinemas that show them are filled with people wishing to see them, but the ordinary public just will not turn up, whatever my right hon. Friend or anybody else may do, to see sub-standard films when they can watch television in their homes.
I think that, generally, my right hon. Friend has done a great deal for the cinema industry, and, indeed, all that he possibly could have done at this stage.
Mr. Amory: There are only one or two comments I wish to make in amplification of what I said at the beginning of the discussion. I would like to thank my hon. Friends who have spoken for their appreciation of the proposal which I am making today
Mr. H. Wilson: Although we are all delighted to hear the Chancellor, has he not omitted a pure formality—should he not have asked the leave of the House before making a second speech?
Mr. Amory: I agree. If the House will allow me to speak a second time, I should like to do so. The right hon. Gentleman has quite properly reminded me of that.
Mr. Deputy-Speaker: The right hon. Gentleman moved the new Clause and he has the right to speak again.
Mr. Amory: May I propose an amendment, and say that the remark of the right hon. Gentleman was most improperly, instead of properly, made?
As I was saying, I should like to thank my hon. Friends for the appreciation they have shown of my proposal. There has been some discussion as to whether the reception given to the proposal from the benches opposite has been somewhat less than enthusiastic. I think it was the hon. Member for Leicester, North-West (Mr. Janner) who admitted that he felt disgruntled. I remember P. G. Wodehouse in one of his books referring to someone and saying that if he was not disgruntled he was certainly not positively gruntled. I think that applies to the kind of attitude shown by the hon. Gentleman today.

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In reply to the hon. Lady the Member for Flint, East (Mrs. White), I would say that this payment of £20 a week will be income in the hands of the recipient, that is, the proprietor of the cinema, in exactly the same way as any other income received from his business and box office takings, and, therefore, that it will be taxable. The hon. Lady also raised the question of the share as between the exhibitor and the renter. Of course, that is entirely a matter for the trade to settle. Members of the trade have an arrangement which they have agreed among themselves for settling the apportionment of their present income. It would be for them to consider, in the light of what the House decides, whether they would wish to continue that arrangement or substitute some other arrangement. I think that also answers the point raised by the hon. Member for Wolverhampton, North-East (Mr. Baird) about the benefit that would accrue to the general public. It would, of course, be entirely for an individual cinema proprietor to decide whether he wished to pass on any of this benefit to the public in lower prices.
The hon. Member for Glasgow, Govan (Mr. Rankin) said something that seemed to me to imply that he thought we were not helping all cinemas by this proposal. I think he will agree that we are helping all cinemas that, in fact, pay Entertainments Duty at the present time.
Mr. Rankin: I think I made it perfectly clear that while, of course, every cinema will retain the £20, the tax liability for the 2,394 cinemas which I have mentioned beyond the £20 is too great.
5.15 p.m.
Mr. Amory: I would not dispute that, and I apologise to the hon. Gentleman if I did not completely understand his point. The hon. Gentleman asked me whether I had changed my mind and referred to a previous statement I made that in my opinion the main cause of the plight of the cinema industry is really basically lack of attendance. No, I have not changed my mind about that. I gave that as my opinion last year and I still think that is the reason this year. But, having stated that as the main reason for its plight, that did not, of course, prevent me understanding the plight and helping within the scope that
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I thought justifiable. This will be the third year running that the Government hve relieved the cinema industry.
Mr. Nabarro: That is what I said.
Mr. Rankin: We know that.
Mr. Amory: I realise that this is a very limited sum which I feel able to devote to this purpose. I understand full well that many hon. Gentlemen wish very much that it could have been possible to make it a bigger sum. I understand that, and I too wish that it had been posible. But this year, in the context of everything that has been done, I judged that this was as much as I could devote to this purpose.
I did change my mind to this extent. At the time of the Budget I did not think that I could justify even this sum for the assistance of the industry. It may be that the points made by hon. Gentlemen on both sides of the House in our debates have emphasised to me the extent of the plight that the industry is in. Particularly was I sympathetic to the position of those cinemas in the smaller towns and where there is only one cinema in a town. There was a borderline case which I felt I could help within the means that I could devote to this object. I hope that the method we have chosen is not going to lead to a general farming out of taxes in the way the hon. Lady reminded me was common in the days before the French Revolution. I think the Minister concerned was a M. Necker or a M. Turgot—I do not know which.
Mrs. White: M. Necker.
Mr. Amory: I have not much in common with M. Necker. Certainly I shall not leave the country rather hurriedly as he did. It is even rumoured that a diamond necklace left the country at the same time. However, I must not pursue that matter further.
Finally, I recommend the House to accept the proposal as a practical contribution to the problem of which we are all conscious.
Mr. H. Wilson: I do not propose to detain the House for more than a minute or two. I think that our attitude has been made clear. We wanted the complete abolition of the Entertainments Duty. The point has been made in many

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parts of the House that the public has now to a considerable extent deserted the cinema for television. We believe that other forms of entertainment are much more profitable and capable of making a greater contribution to the Chancellor's requirements than is the cinema industry. That has been our view. We pressed it to a Division in Committee when we were, unfortunately, and not for the first time—though I think for the last time—outnumbered. On that occasion we failed to carry the Chancellor with us.
We obviously welcome the small relief as far as it goes, and that is why we do not propose to vote against it. At the same time, we think that it is too small, and, for the reasons given by my right hon. Friend, that it has been done in a wrong way and raises a number of awkward problems. I hope that the Chancellor's proposal is not going to lead to a widespread system of abuse in the collection of taxes by the extension of the use of publicans, in the biblical sense of the phrase. I hope that these fears will prove to be unfounded.
We do not believe that the right hon. Gentleman has gone anything like far enough and that, in so far as he has made a small concession, he could have done it better in other ways. However, as I have said, we do not propose to vote against the Clause.
Question put and agreed to.
Clause read a Second time.
Mrs. White: I beg to move, as an Amendment to the proposed Clause, to leave out "second day of August" and to insert "tenth day of June".
This is, of course, a relatively minor matter, but we think that the Chancellor would be very well advised to accept this Amendment and to make this small concession. He will appreciate that what we are asking him to do is to allow this tax relief to run from the day on which he made the announcement in the House of Commons. One of my hon. Friends, I think, suggested that he should go back as far as Budget day and compared the case with that in 1958, but in 1958 we had a Budget Resolution and the situation is, therefore, not strictly comparable. We, therefore, feel that the proper date on which we may reasonably ask that this tax rate should
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be begun is the day on which the Chancellor informed the House that it was his intention to make this remission.
This is of some importance to the seaside resorts and to holiday trade in general. The Chancellor will appreciate that his method of £20 a week remission is not as helpful as it might be to cinemas which depend on seasonal trade, because a number of them may collect in duty more than £20 in the height of the season and will, therefore, have to pay over the balance to the Revenue, whereas in the winter months they may make considerably less than £20. He has made no provision in the Clause for a P.A.Y.E. arrangement for carrying it from one week to another. Therefore, he has a particular obligation to look at the position of the seasonal cinemas. It is with them in view that we move this Amendment.
It is only for this year that this applies. It is a matter of some seven weeks and a maximum of £140 per cinema. We feel it is a very small concession for the Chancellor to make when the total concession he is making is a relatively minor one for the industry.
My hon. Friend the Member for Glasgow, Govan (Mr. Rankin) has mentioned that in Scotland July, in particular, is a very popular holiday month. It is true of a number of other resorts that they reckon to do a considerable part of their holiday trade before August.
I hope that for these reasons the Chancellor will feel inclined to accept this Amendment. It is true that the date proposed comes into mid-week, but I do not think that the arithmetic involved is great. We think that this is the proper date, constitutionally speaking, to choose.
Mr. Rankin: I beg to second the Amendment.
If the right hon. Gentleman will accept this Amendment he will be doing something which will be of immediate benefit to the type of cinema to which my hon. Friend the Member for Flint, East (Mrs. White) has referred. When I was speaking earlier I referred, as hon. Members on both sides will recollect, to the position of Scotland—and I hope that Scotland is never a tedious subject even to the hon. Gentleman who has just quietly

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suggested it is. It is a fact that it is during the holiday season that these cinemas hope to recoup themselves for the period of small admissions during the long out of season months. If the day proposed in the new Clause remained, a great many of those cinemas would still hot get the benefit which I am perfectly certain the right hon. Gentleman wants to see them get. We on this side are neither disgruntled nor gruntled on this matter. We merely want to be helpful to this industry in the seaside resorts. It will be of some benefit to them if the Chancellor will think of another date.
My hon. Friend said that 10th June fell in the middle of a week and that, therefore, the arithmetic might be a little difficult for the Treasury. I do not know, hut I do not want to create any difficulty for the Treasury in adding and subtracting and multiplying and doing all those mysterious things with the money. The hon. Member for Cheadle (Mr. Shepherd) has tabled an Amendment suggesting that the date should be 7th June, and that involves retrospective payments. There may be a difficulty about that date, too. If there is any difficulty about the date, then 14th June, which is the beginning of a week, should involve no difficulty on the mathematical side whatever, and is a difference of only a day or two.
So we are giving the Chancellor all the help which a good Opposition can possibly give in these circumstances, and I hope that he will respond by accepting the Amendment.
Mr. Deputy-Speaker: Before I call the Economic Secretary, I wish to apologise to the House, because I made a mistake a few minutes ago. The right hon. Gentleman the Chancellor of the Exchequer had not the right to reply to the previous debate.
Mr. Amory: In view of that, Mr. Deputy-Speaker, may I withdraw the word "improper" which I subsequently used in reference to the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) and replace it with the word "proper", which I had originally used?
Mr. Deputy-Speaker: I apologise to the House. I was wrong.
The Economic Secretary to the Treasury (Mr. F. J. Erroll): I think it
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might assist the House if I were to intervene at this stage in this short debate on the Amendment to the proposed Clause. While we fully appreciate the reasons which prompted the hon. Lady the Member for Flint, East (Mrs. White) to propose the date 10th June, it would, of course, be a difficult date to use, because it would come in the middle of a single week when the tax due is normally paid weekly. For that reason, we would very much prefer the Amendment on the Paper in the name of my hon. Friend the Member for Cheadle (Mr. Shepherd), which proposes 7th June. This, being a Sunday would be the correct day on which to make the change, and that day of the week has already been incorporated in our new Clause, namely, Sunday, 2nd August.
However, there is the question whether one should go back in point of time in this way on the Report stage of a Finance Bill. There are, of course, perfectly respectable precedents for choosing the date of 2nd August which is proposed in our Clause. When the duty was being altered in 1950 on Report of the Finance Bill of that year, and on Report of the Bill in 1951, and again on Report of the Bill of 1952, the changes in the cinema tax, as it is popularly called, the Entertainments Duty, were all made effective subsequent to the passing of the Measure.
Mrs. White: The hon. Gentleman will appreciate that what he is now referring to was a straight reduction in tax where the question of the seasonal effect did not apply?
Mr. Erroll: Quite.
In 1952, on Report, the Amendment was for a reduction of the duty on the 9d. seats, but as the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) referred to 1950, the change was a relatively small adjustment, only a matter of £300,000 per annum.
My right hon. Friend has considerable sympathy with the object of the hon. Lady's Amendment. He has particularly in mind the special difficulties of the cinemas at seaside resorts to which the hon. Lady and the hon. Member for Glasgow, Govan (Mr. Rankin) referred. However, there is a difficulty, because the Amendment, quite apart from the date

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question, whether the date should be 7th June or 10th June, would not have the effect intended.
5.30 p.m.
It is rather complicated to explain, but if hon. Members will look at Subsection (1) they will see that the new Clause enables a person to deduct the amount of £20 from the duty which he would otherwise be required to pay. As he pays weekly, he will have already made a number of payments, and the Amendment in the form described would not empower the Customs to make refunds. Nor would the person be able to make deductions from the weekly payments until the Finance Bill had become an Act. As soon as it is an Act, he would be able to deduct his £20 per week. So the insertion of this altered date as of itself would not provide the relief which is desired.
Mr. Rankin: Does the hon. Gentleman now realise that if the Chancellor had accepted my suggestion that the tax relief should be raised from 1s. 6d. to 2s. he would still have given the same amount and have been able to make a retrospective payment?
Mr. Erroll: The hon. Gentleman should credit us with a certain amount of ingenuity. We have been thinking about this matter, and we have devised a method whereby the relief can be given back to the 7th June this year. If the hon. Lady would be prepared to withdraw her Amendment, I would then immediately propose a manuscript Amendment, which I would explain to the House and which, I hope, the House would accept.
Mrs. White: I beg to ask leave to withdraw the Amendment to the proposed Clause.
Amendment, by leave, withdrawn.
Mr. Erroll: I beg to move as an Amendment to the proposed Clause, at the end to add:
"(4) In respect of the week beginning with the seventh day of June 1959 and subsequent weeks before the one beginning with the said second day of August the Commissioners of Customs and Excise shall make such repayments of duty as are necessary to secure that no greater amount of duty shall be ultimately paid than if the foregoing provisions of this section had applied to those weeks."
Mr. Douglas Jay: Can the hon. Gentleman now tell us
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whether these refunds of duty will be taxable income in the hands of the recipients?
Mr. Erroll: I think the right hon. Gentleman might allow me to explain this Amendment before he starts questioning me on it.
The effect of the Amendment is that proprietors will go on paying as at present until 2nd August. Then repayments will be made in respect of the first £20 or such lesser sum as may be repayable in each week dating back to 7th June. The House will have noticed that we have adopted the date of 7th June, which was the date proposed by my hon. Friend the Member for Cheadle. This relief is quite substantial. It will amount to approximately £400,000 of extra relief to the cinema industry. It will be afforded to the industry this year, and it will come quickly. This sum will be made available by going back eight weeks. Instead of starting the relief on 2nd August, if the Amendment is accepted by the House, the effective date will be brought back to 7th June and repayments will be made as soon as possible after 2nd August.
I hope the House will be satisfied with my brief explanation. We are sorry that it was not possible to table the Amendment on the Notice Paper so that hon. Members could have studied it, but I hope that what I have said will make it quite plain to hon. Members and that they will agree to its acceptance.
Mrs. White: We are delighted for once at the ingenuity of the Treasury. We, of course, accept the proposed Amendment to the Clause in the spirit in which it is moved. We fully appreciate that it is very much easier to do this at the beginning of a week. We did not wish to deprive the industry of any days of tax remission it might enjoy. On the other hand, bearing in mind the very strong feeling of hon. Members opposite against any retrospective legislation, we thought that even three days might be more than they could swallow. Therefore, we were, as I think I explained, keeping this matter of constitutional propriety in view when we suggested the tenth day of June.
If hon. Members opposite can spare it with their consciences to be retrospective for three days, we shall assume that this is a mere peccadillo and we shall not hold it against them on future

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occasions. I am sure that the proposed relief will be very much welcomed in various seaside resorts. It is true that the seaside resorts seem generally to be represented by Conservative Members of Parliament, and it may be that that consideration was in the Chancellor's mind when he decided to make this remission. Nevertheless, we do not wish on this occasion to be churlish or disgruntled, and we welcome the Amendment.
Sir T. Low: I do not want to rise to the bait which the hon. Lady the Member for Flint, East (Mrs. White) held out to us about retrospective legislation. She has not understood the case from this side of the House, which is opposed to the introduction of tax affecting acts which were, at the time when they were done, free of tax or subject to a lower tax. We have never carried the case to a doctrinaire extreme, which is so typical of hon. Members opposite.
I want to say thank you to my right hon. Friend the Chancellor and to my hon. Friend the Economic Secretary for having made this Amendment and for the ingenuity which they have shown at the very last minute. I welcome it very much. At the same time, I apologise to the House for my absence during the last hour on an unavoidable matter. I also express my thanks to them for adopting the general effect and principle of the Clause standing in my name on the Committee stage.
I am happy to say, now that the date has been altered, that they have gone far nearer to the general effect of that Clause than they had when the second day of August was in the Clause without this proviso.
On this Amendment the seaside resort point has not had a chance so far of being put from this side of the House. My right hon. Friend will be aware, as the hon. Lady for Flint, East said, that a great many of us represent seaside resorts, and we have been aware of the specially bad effect that this would have on seaside resort cinemas unless the Clause had been amended as it has been. It is for that reason, as I happen to represent the premier seaside resort in this country, that I should like to thank my hon. Friend for the Amendment.
Mr. H. Wilson: I would not have spoken on this Amendment had it not
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been for the right hon. Gentleman the Member for Blackpool, North (Sir T. Low), I do not intend to be drawn into an argument on retrospective legislation, apart from the fact that I would very soon be out of order. I would, however, point out to him and to other hon. Members opposite that they are guilty of having voted for an iniquitous piece of legislation in this present Session, which is not to the benefit of the taxpayer but to his detriment, in town and country planning. I shall not pursue that because I would be out of order.
Obviously, we welcome the fact that the Government have moved a manuscript Amendment, but it might have been better and more convenient to have put the Amendment on the Notice Paper. I do not know why they should not have done that. They had plenty of time to think about it. It would not be convenient to propose a change in the date mentioned in the Amendment, but since the right hon. Member for Blackpool, North has mentioned that this stems from a proposal made in Committee in his name, would it not have been simpler to back-date it not to the 7th June but to the date when it became known in the newspapers that the Government intended to accept an Amendment in the right hon. Gentleman's name, since that was a Sunday and it would have been as appropriate from the taxpayer's point of view as the date now proposed?
Mr. Shepherd: I should like to thank my right hon. Friend the Chancellor and my hon. Friend the Economic Secretary to the Treasury for incorporating my Amendment in the manuscript Amendment. I am sorry that I put my Amendment down in the form I did. I realised that it might be inadequate, but late on Friday night I had not the time nor the ability to make the necessary construction. I am grateful to my right hon. Friend and my hon. Friend for this assistance to the seaside cinemas. This is one of those occasions when we can fiscally differentiate between the socially desirable and the socially undesirable, and the seaside cinemas have to keep going in winter time to provide an essential service in the summer.
Amendment agreed to.
Clause, as amended, added to the Bill.

New Clause.—(VEHICLES (EXCISE): INVALID CARRIAGES.)
(1) In paragraph (g) of subsection (1) of section seven of the Vehicles (Excise) Act, 1949 (which exempts vehicles not exceeding five hundredweight in weight unladen which are adapted and used for invalids), for the words "five hundredweight" there shall be substituted the words "six hundredweight".
(2) This section shall come into operation on the first day of January, nineteen hundred and sixty.—[Mr. Nugent.]
Brought up, and read the First time.
Mr. Nugent: I beg to move. That the Clause be read a Second time.
This new Clause fulfils an undertaking which I gave in Committee that the Government would move, on Report, a new Clause raising the weight limit of invalid carriages from 5 cwt. to 6 cwt. unladen for Excise Duty exemption, This would give the benefit of remission of Excise Duty to drivers of invalid carriages constructed with modern improvements and comforts and thereby exceeding the previous tax-free limit of 5 cwt. These have been growing in number in recent years. The initiative for this change came from my hon. Friend the Member for Harwich (Mr. Ridsdale), who moved a new Clause in Committee, and I should like now to extend my congratulations to him.
Mr. Tom Brown: I want to express my appreciation to the hon. Gentleman for introducing the Clause. It gives some assistance to those paraplegic cases who are now asking not for a single-seat invalid carriage, but for one which will carry two persons and which exceeds the weight of 5 cwt. mentioned in the Act. The Amendment will go a long way towards meeting the desires of these unfortunate men who have to use invalid carriages.
Mr. Nugent: As a rule this will not make provision for carrying two.
Question put and agreed to.
Clause read a Second time and added to the Bill.

New Clause.—(DEPENDENT RELATIVES.)
Section two hundred and sixteen of the income Tax Act, 1952, shall have effect as if the reference to the mother being widowed included—

(a) a reference to her living apart from her husband, and

(b) a reference to her being a single woman, in consequence of dissolution or annulment of marriage:

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Provided that no person shall by virtue of this section be entitled to less relief under the Income Tax Act, 1952, than he would be entitled to if this section had not been passed.—[Mr. Simon.]
Brought up, and read the First time.
5.45 p.m.
Mr. Simon: I beg to move, That the Clause be read a Second time.
This is the new Clause which I started to move a little time ago, having "jumped the gun". It arises out of an Amendment proposed by the hon. Member for Sowerby (Mr. Houghton) in Committee, which was based on a recommendation of the Royal Commission on the Taxation of Profits and Income. The effect of the hon. Member's new Clause was to extend the dependent relative allowance to a taxpayer who maintained his mother or his mother-in-law, even though she was not incapacitated, if she had been deserted by her husband.
That proposal in itself seemed to receive the general assent of the Committee, but my hon. Friend the Member for South Angus (Sir J. Duncan) pointed out, in a way which, I think, convinced the Committee, that it was quite anomalous to limit any concession to the case of a deserted wife and leave outside the concession the case of a wife divorced on some other account than desertion, or where the desertion had been terminated by a separation order or separation agreement, or, indeed, when the marriage had been terminated by an annulment.
In view of the welcome given to the principle of that new Clause, and of the criticism put forward by my hon. Friend, I told the Committee that my right hon. Friend accepted the object which the hon. Member for Sowerby had in mind, but that he proposed to put down a new Clause at this stage which would extend the concession to the wider ambit of the cases mentioned by my hon. Friend. The new Clause does that.
Paragraph (a) includes any woman who is living apart from her husband. That, of course, means living apart in intention and not merely geographically—living apart in such circumstances that the separation is likely to be permanent, It also covers all the cases where the state of desertion has been terminated in the sort of circumstances which I have mentioned, cases where there has been a

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divorce or a judicial separation on some ground other than desertion. Paragraph (b) is the reference to the dissolution of the marriage by divorce, on the various grounds, or by annulment.
In these circumstances, I hope that the new Clause will commend itself to the House.
Mrs. White: Once again, we are very glad to have a new Clause. As the Financial Secretary has said, it is rather wider than that originally proposed by my hon. Friend the Member for Sowerby (Mr. Houghton) who, unfortunately, is not able to be here at the moment. My hon. Friend was much gratified to find that the new Clause had been tabled in this form. It removes an obvious anomaly and it is very satisfactory that for once, at any rate, women who are for all practical purposes in precisely the same position in the matter of their social obligations are to be treated alike whatever their legal or marital state.
Sir J. Duncan: My hon. Friend was kind enough to mention the references I made to the Clause proposed during the Committee stage and I thank him and his right hon. Friend for going so far to meet the point. I am grateful that my right hon. Friend has been able to devise words which cover a wider range than the hon. Member for Sowerby (Mr. Houghton) wanted to cover in his Clause.
May I ask a question on paragraph (a), which refers to a mother living apart from her husband? I was wondering how this would work administratively. What documents, what proof, would the Inland Revenue require as evidence that the spouses were living apart on purpose and not merely geographically? I suppose that this goes wider than judicial separation? It would be an unjudicial separation if the parties concerned decided to part. What evidence, therefore, would the Inland Revenue require before the allowance could be granted in respect of such a dependent relative?
Mr. Simon: The Inland Revenue normally in such circumstances would accept the claim of the taxpayer. It is only where there is reason to doubt the statement that the Inland Revenue would call for independent substantiation. In that case it would challenge the claim
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and leave it to the taxpayer to prove his case.
Question put and agreed to.
Clause read a Second time and added to the Bill.

New Clause.—(UPPER LIMIT OF STAMP DUTY ON SALES, ETC., FOR LESS THAN FIVE POUNDS.)
(1) Where stamp duty is chargeable under the head of charge "Conveyance or Transfer on sale" in the First Schedule to the Stamp Act, 1891, and the amount or value of the consideration for the sale is less than five pounds, the duty shall not exceed sixpence for every twenty-five shillings or fractional part of twenty-five shillings of the consideration; and the amount of any duty chargeable by reference to the said head of charge shall be calculated accordingly.
(2) This section shall apply in relation to instruments made or executed after the beginning of August, nineteen hundred and fifty-nine.—[Mr. Amory.]
Brought up, and read the First time.
Mr. Erroll: I beg to move, That the Clause be read a Second time.
This Clause has been put down by my right hon. Friend as the result of an undertaking given by my hon. and learned Friend the Financial Secretary to the Treasury during the Committee stage of the Bill. It proposes to introduce a further graduation of the Stamp Duty scale applicable to conveyances or transfers of sale where the consideration does not exceed £5, and consequently to reduce the duty in such cases. We do not expect that this Clause will have much application to transfers of sales of stocks and marketable securities on the Stock Exchange, since dealings in such small amounts are relatively rare. The proposal will have more effect when one takes into account the relief from Stamp Duty on bearer shares. The main object of the proposal is to give effect to a relief on bearer shares of a nominal value of less than £5.
As the House will know, bearer shares are liable to a duty equal to three times the duty which would be payable on the transfer of a share for a consideration equal to its nominal value. The rate of duty on share transfers is broadly 2 per cent., and the rate on bearer shares is therefore broadly 6 per cent. of the nominal value. It might be simplest if I give an example to the House.

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In the case of a share which is transferred for a consideration of £1, under the present law the duty payable on the transfer is 2s., which would be the same as on a transfer for £5. Under the Clause put down during the Committee stage, and under this Clause, the duty is restricted to 6d. In the case of bearer shares, taking the equivalent bearer share of £1, it is liable at present to a duty of 6s. With this Clause the duty on the £1 bearer share will be reduced to 1s. 6d.
In relation to stocks and shares and bearer shares, the new Clause has precisely the same effect as the one put down in Committee. In relation to other property, which is also covered, the Clause avoids the imposition of halfpennies of duty by restricting the duty to 6d. or multiples of 6d. I hope that this brief explanation will enable the House to accept the Clause.
Mr. Mitchison: I do not want to make a speech, Sir; I merely want to ask the hon. Gentleman a question. I understand that the Treasury opinion is that this Clause will not make much difference on the Stock Exchange because there are few transactions of this kind on the Stock Exchange. What other transactions has the Treasury in mind? For instance, I believe that some companies are now making arrangements for peddling bearer shares at companies' offices or factories. Are those the transactions to which the Clause is directed? If not, what other types of transactions have there been in the past to which this reduction would be likely to apply? I am not touching on the merits of the matter.
Mr. Enroll: The Clause would undoubtedly help the scheme which attracted a certain amount of publicity when it was announced. Similarly, it will help any other transactions in bearer shares where the present incidence of the Stamp Duty is unreasonably harsh because it is levied at three times the amount levied in the case of ordinary shares.
Mr. Mitchison: I am sorry to press the hon. Gentleman before he sits down. My question was, in addition to that type of transaction, has there been any other type of transaction to which the Clause would be likely to apply? I find it difficult to think of one. The Stamp Office
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must have great experience in these matters. If so, have there been frequent transfers of bearer bonds of such small amounts? Has any inquiry been made about it?
Mr. Erroll: Not many, but it happens from time to time.
Mr. Edward do Cann: Since I was responsible in Committee for moving the Amendment to which my hon. Friend has referred, I should like to take this opportunity of thanking my right hon. Friend and my hon. and learned Friend for having honoured the undertaking which they then gave to table a Clause of this kind.
Mr. Jay: We would like to be quite clear what it is the Economic Secretary is here proposing. If I understood him aright, I gathered that the Government are not making a general concession on the Stamp Duty in order to assist the small saver in all cases where there is a purchase of securities below a certain level. The concession they are here making refers simply to bearer securities. The hon. Gentleman is seeking to correct an anomaly which he feels exists at present as between bearer securities and other types. If that is what he is doing, I dare say it can be substantiated that this is only a technical change of no great consequence, except in the case of certain types of investment.
I am not sure that the types he mentioned would recommend themselves very much to some hon. Members on this side of the House. The hon. Gentleman referred rather briefly to the Aims of Industry scheme, as it has generally been called, which consisted mainly of the sale of bearer securities to employees in factories, where what were principally in mind were the shares of the firm owning the factory in question. We cannot debate here the merits of this as an investment proposition, but the scheme was much criticised as such. From the point of view of purchases, therefore, it would not be a great recommendation for the Clause if this is what the hon. Gentleman wishes to assist. If he were making a concession to assist the small saver generally in getting his savings into safe and well-invested media we should feel a great deal of sympathy, but I gather that he is merely making a technical change which will affect only a

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limited class of securities. Could he make this clear before we leave the Clause?
6.0 p.m.
Mr. Erroll: It affects the shares transferred on the Stock Exchange to a small extent, but it has more effect on small quantities of bearer shares where the nominal value does not exceed £5. It was felt that the bearer shares under £5 were suffering a penal rate of duty compared with shares of similar size which are bought and sold on the Stock Exchange. This small change removes not exactly an injustice, but a certain element of unfairness and discrimination against bearer shares which, when traded in in small amounts, might be seen to be discriminated against.
Mr. Jay: Does the hon. Gentleman expect that this will have any practical effect except in the case of the Aims of Industry scheme which he mentioned?
Mr. Erroll: We will see.
Mr. Mitchison: From the Economic Secretary's answer, I come to the conclusion that this proposal has one purpose and one purpose only, namely, to lower the duty at present payable on bearer shares which are peddled in accordance with the Aims of Industry scheme. This anomaly, as it has been so called, has existed for a very long time. So far as I know, there has never been any complaint about it for the very simple reason that there have been very few transactions of this kind and therefore it has not led to any general sense of injustice.
I regard the removal of this anomaly, as it is called by the Economic Secretary, as nothing more than a scheme to assist the Aims of Industry project at the expense of the revenue. No doubt it will be of some assistance. Logically, it may be said that a minimum limit at the beginning of any scale of this kind is not an entirely logical matter and should be removed. Whatever may be the form of the transaction and however small it may be in content—nobody would pretend that it was anything more than small in content—I feel that there is an objection in principle to an amendment of long existing law and practice where there has, so far as I know, been no
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injustice felt and no complaint, when the object appears to be simply and solely to favour a scheme promoted by a body which I regard as part of the political organisation of the Conservative Party.
Mr. du Cann: The hon. and learned Gentleman said that no injustice has been felt in the past about these rates of Stamp Duty. With respect to him, that is not so. It may well be that the effect of the new Clause will be slight in the general context, but the rate of Stamp Duty in general has been a source of grievance to thinking people experienced in these matters for very many years.
Mr. Mitchison: That is a different point. I pressed the Economic Secretary for an answer about the other transactions, if any, which it was thought would be affected by this proposal. The answer, in plain English, was that there are very few of them. For that reason I do not think that there has ever been any complaint about it. There has been on the Statute Book a lower limit in this case, as in other cases, for a long time. As I say, there has never been any complaint so far as I know. I can only speak from what I know and it is possible that some right hon. and hon. Members opposite may know of a person who is particularly aggrieved by having had to pay too much on a single transaction of a very small amount.
When one exercises a little horse sense in the matter and looks at the motive of the proposal, I should have thought that it is obvious that it is to assist the Aims of Industry scheme at the expense of the Revenue. I disapprove of that, because I consider the Aims of Industry scheme to be an instrument of the Conservative Party.
This is a small matter. I do not know whether it is worth dividing about it. Logically, there is something to be said for it, but, politically, I do not like it.
Sir T. Low: I do not understand the attitude of the hon. and learned Member for Kettering (Mr. Mitchison) at all. I should have thought that, representing the other side of the House, he would be interested in the small savings of the wage earner and the small income man. As I understand, it is a good thing and not a bad thing to move any obstacle in the way of their investing in equities,

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ordinary shares, or anything else in the same way as he, with his larger income, or any hon. Member, or anybody else, can invest.
When it is manifest, in theory, at any rate, that the rigid minimum which will be affected by the proposed Clause must have penalised the small man, I do not see why the hon. and learned Gentleman should object to it. The only point of the hon. and learned Gentleman seems to be that this proposal may possibly help most a scheme called the Aims of Industry scheme, about which various opinions are held in various quarters of the House. Like the right hon. Member of Battersea, North (Mr. Jay), I do not think that it is the best kind of scheme, but it is a scheme. The important thing about the proposal is that it will help the man with a small amount of money to invest. That is a good thing. It is certainly something which we on this side have been supporting for some time and which I should have thought some of the hon. and learned Gentlemen's colleagues would support even if he does not support it.
Mr. Mitchison: By leave of the House, I should like to reply to the right hon. Member for Blackpool, North (Sir T. Low). There is a difference between some hon. Members opposite and myself, but I am not convinced about the merits of the scheme to which reference has been made for the reason which I gave. The conclusion which I draw is that the small investor has not been penalised in the past and I think that the reason is fairly simple.
Bearer bonds are not a form of security in which the small investor usually invests. They have been used in connection with the scheme because they suit the particular machinery of it, but it must have been very rare for a small investor to buy such a small amount of bearer bonds in the past. They are not the kind of things into which a small investor puts his money.
Question put and agreed to
Clause read a Second time, and added to the Bill.

New Clause.—(INCOME TAX: NON- FERROUS METAL MINES IN UNITED KINGDOM.)
Exemption shall be granted from tax chargeable under Schedule D in respect of the profits of a trade set up after the fifth day of April, nineteen hundred and fifty-nine, which consists of the working of a non-ferrous metalliferous mine within the United Kingdom but such exemption to tax shall only apply to the profits derived from this operation of the mine during the period of thirty-six months commencing with the day on which the mine first came into regular production of ore:
In this section "regular production of ore" means production in reasonable commercial quantities and shall not be deemed to apply to ore extracted in the development period in searching for or in discovering and testing deposits or in winning access thereto.—[Mr. D. Marshall.]
Brought up, and read the First time.
Mr. D. Marshall: I beg to move, That the Clause be read a Second time.
Would it be convenient, Mr. Deputy-Speaker, to take with this proposal the following new Clause (Profits tax: non-ferrous metal mines in United Kingdom)?
Mr. Deputy-Speaker: Yes.
Mr. Marshall: Hon. Members who have studied these Clauses will observe that there is no necessity to speak to the Second new Clause because, if the Government should agree with the principle that lies behind the first, the second Clause would be agreed to automatically.
The last time that I had the opportunity in the House to raise the subject matter of this proposal was about three years ago. The reaction which has been shown to it has been strange. The reaction of the Socialist Government was exactly similar to that of the present Government. The strange thing is that when a solitary bird is on the back benches, whether Socialist or Conservative, great sympathy and understanding is always shown towards this matter, but as soon as he becomes part of a covey on the Front Benches, the keepers of the Chancellor of the Exchequer and the Economic Secretary come in and say that the proposal should be resisted.
The last time that it was resisted the Economic Secretary used a very strange argument against it. He said that the proposal was so drafted that it might cause considerable difficulty to those interested in mining overseas. I pointed out at the time that the Clause was so

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drafted as to limit its effect to the United Kingdom and that it was so stated in the Clause. He was good enough to say that he had not noticed that and it was not part of the argument—although at the time it was part of the argument.
The object of this proposal is simple. Technical experts on this subject sincerely believe that lying hidden in the United Kingdom is considerable mineral wealth which has not yet been discovered or developed and that its development would prove a source of considerable wealth to this country. All hon. Members are aware that there was a time when, in Cornwall, the amount of tin extracted formed one of the greatest means of wealth for the nation. It is interesting to remember and to reflect on the fact that that source of wealth did not cease. Mining did not stop because the supply of tin ran out. It stopped because alluvial workings were started in Malaya and elsewhere and tin was produced at a price with which we in this country could not compete.
The experts believe that over the next twenty years the production from metalliferous mines in the world is likely to be insufficient to meet world need. Consequently, it is now a question whether it may be possible, by the use of new and modern methods of extracting these minerals, not only to compete with other sources of supply in other part of the world but to secure a reserve of wealth which would be available to us. This principle has been recognised by other countries, including Canada and Australia. It has been recognised in the United States, and two or three years ago it was recognised in Eire as well. The Governments of those countries passed legislation more or less similar to that contained in these Clauses to deal with the situation. It is sad to think that the legislation put on the Statute Books in those countries is more or less the same as that which I and other hon. Members have, over the last fourteen years, endeavoured to persuade Her Majesty's Governments to accept.
6.15 p.m.
If we were in some way trying to lessen the amount of revenue which the Chancellor desires to have, I assure hon. Members that I would not be guilty of hypocrisy by attempting to move this Clause. But the truth is that everyone
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has agreed that more or less the extraction by tax of £400 million less is approximately the right figure, and, consequently, there has been little in the different arguments in the House over the Finance Bill where sums of considerable size have been involved and make no sense of the Budget balance if it alters £400 million.
These new Clauses and their provisions would not involve any relief of taxation during the financial year. We are not asking for any relief for taxation over a considerable period of years. We ask that those people who sincerely believe that there may be wealth lying hidden in the hills in this land should be given an opportunity to speculate with a view to developing that wealth and that for three years after production has started they should have a tax-free holiday. That proposition has been accepted by Canada-Australia and Eire. After that period whatever profit may be earned as a result of such a venture would be liable to the full tax burden.
We suggest that this provides a way to get additional wealth for this country. It has been estimated that it might provide £400 million per annum. That is not my figure but one quoted by the experts. We suggest that in a few years the Chancellor of the Exchequer would have that amount upon which to levy taxation and thereby relieve the overall tax figure.
I have an idea that, once again, the Economic Secretary to the Treasury will advance the reasons why this should not be done. Year after year we have heard that argument from Treasury Ministers. I shall be sorry if that is so and if, once again, we miss the opportunity to give the initiative to people to develop the natural wealth of the United Kingdom.
Mr. Geoffrey Wilson: I beg to second the Motion.
I do so because I believe that the acceptance of this and the following Clause would have a material affect on the unemployment problem in Cornwall. As all hon. Members will know, in Cornwall we have the misfortune to have a higher rate of unemployment than the national average and anything we can do, however small may be the effort, to reduce that rate would be appreciated.

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As my hon. Friend the Member for Bodmin (Mr. D. Marshall) said, the reason for the decline in the mining of tin and other non-ferrous metals in Cornwall was not because supplies ran out but because of under-selling and the development of mining in other countries. The production costs have gone up in other countries and it has been suggested that we might investigate the possibilities of resuming mining in this country. We know that there is plenty of material to be mined, but, mostly, it lies rather deep in areas which have been mined for generations and which are honeycombed with old workings.
Anyone proposing to start a new mine is liable to meet with difficulties because of flooding and it could prove a costly business. Therefore, under existing conditions of taxation people are not prepared to take the risk. But were such people given a tax-free holiday over a period of three years in order to see what they could do, it is quite possible that someone would be prepared to develop mining in Great Britain, and, as a Cornishman, I have particularly in mind the possibilities in Cornwall. The development might prove substantial and become an eventual source of revenue.
I cannot understand why these Clauses which have been put forward before have not been accepted. Their acceptance would not cost the Revenue anything. Nobody is starting new mining industries in Cornwall or elsewhere in Britain at the present time. Certainly I know of no non-ferrous mining as a new venture at the moment, and one would not suppose that if a new venture were started the Revenue would lose anything.
These new Clauses are an inducement for people who want to take an adventurous course to embark on it in circumstances which might be of considerable benefit not only to the Revenue at some later date but as an immediate source of providing employment in an area where unemployment is above the average.
Mr. F. H. Hayman: I support the Clause because, as a Cornish Member, I am interested in this mining industry. As a Cornishman I have known the mining industry all my life and my constituency
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used to be known as "the mining constituency". The purpose of the Clause is to ease the position of companies which may want to prospect for fresh sources of metal in Cornwall.
About an hour and a half ago the Parliamentary Secretaries of the Board of Trade and the Ministry of Labour received a deputation from the Cornish group of trades councils about the high unemployment in Cornwall, and this question of the taxation of mines was put forward. We badly need fresh industry. This is one of the oldest industries in the United Kingdom and if we are to relieve our unemployment position in Cornwall we must get fresh industry. I feel that the Government ought to go further and arrange to prospect themselves for the mineral which is said by experts to be there. I hope, therefore, that not only will some relief be given to metalliferous mining but to quarrying as well because we need to take advantage now of the indigenous sources of raw material in the county.
Mr. D. Marshall: It is not a question of relief; it is a question of incentive This incentive is given in other mining parts of the world but is not given in this country.
Mr. Hayman: It is a relief from taxation now as an incentive for fresh mining enterprises.
Mr. Erroll: I have great sympathy with my hon. Friend the Member for Bodmin (Mr. D. Marshall) over his repeated attempts to move the new Clause and have it accepted. I have shared his experience in a number of my own Amendments which I used to move when I was a back bencher. While I sympathise with him to the full, I doubt if I can give him very much comfort this afternoon, much as I would like to do so.
The present treatment of mines for taxation purposes is really quite generous. Their trade receipts are credited and ordinary revenue expenditure is debited in the normal way. Allowances are given to write off capital expenditure on machinery and plant, industrial buildings and mining works, to replace buildings, surface roads, and the like, and also for exploration and development. Furthermore, abortive exploration expenditure is allowed as a trading

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expenditure at the time when the search is abandoned. Capital expenditure generally within the scheme is effectively written off over the life of the source; and any capital loss relating to such expenditure which may result from the special hazards of mining is thus allowed off for taxation purposes.
My hon. Friend very frankly and honestly called the proposal a three-year tax holiday, which is just what it is. He suggested that it might well have an important effect on the development of new non-ferrous mines. That must be a matter for conjecture. It may be that a stimulus of this sort would have the effects he predicts, but it may be that a three-year tax holiday would not be sufficient to cause enterprises to undertake new work.
Mr. D. Marshall: I said that I did not mind if it were five years.
Mr. Erroll: My hon. Friend's interruption illustrates our difficulty. If we were to concede three years, it would not be very long before we were being asked to concede a five-year tax holiday, and we might get to the stage where mining in this country did not have to bear tax at all.
I was interested in the point made by my hon. Friend the Member for Truro (Mr. G. Wilson). He pointed out that it would not cost the Revenue anything if we accepted the Clause. That throws some light on whether the Clause, if accepted, would be as effective as the proposer would hope. The Royal Commission on the Taxation of Profits and Income went into the whole question of the tax treatment of mining concerns. It did not come out in favour of any scheme for special depletion allowances such as operate in Canada and elsewhere.
Mr. G. Wilson: Nothing would be lost because nothing is going on now. Something might be gained because this might be an inducement to provide the help to start something new which would not otherwise be done. The people concerned would go to Spain or Ireland, or some other place.
Mr. Erroll: I accept that. I did not wish unwittingly to turn my hon. Friend's point against the proposer of the Clause. I only wanted to illustrate how necessarily speculative any conjectures about
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the effects of such a new Clause would be if it were accepted.
My hon. Friend mentioned the favourable tax treatment accorded in Australia, the United States, Canada and Eire. He pointed out that this tax help was granted in those countries. It is always easy to pick out a favourable piece of tax treatment from the taxation laws of another country and suggest that it ought to be applied to our own taxation system, but I think that to make a proper comparison one should examine not only the whole system of taxation of mining enterprises in this country, but also the way in which the mining industries grew up, and the circumstances surrounding the nature of the systems of taxation that have been adopted.
We would be right to stick to the views given by the Royal Commission. While the Commission was actually referring to depletion allowances, what paragraph 445 of the Report says applies equally to my hon. Friend's proposal. The Report says:
"… we do not consider that the circumstances of a mining venture are sufficiently peculiar to warrant its operator being granted a form of depreciation allowance which is of a different nature from that granted to the rest of industry and commerce under our system."
While the Royal Commission was referring to depletion allowances, I think what it said applies equally to the concept of a three-year tax holiday.
Mr. Jay: It is a fact that the Royal Commission did not consider the specific suggestion now being made by hon. Gentlemen opposite.
6.30 p.m.
Mr. Erroll: I accept that. The Royal Commission did, however, go into the question of mining taxation very thoroughly. Its conclusion on this point has particular relevance to the concept of a tax holiday, which is a concept quite outside our present taxation arrangements.
My hon. Friend the Member for Bodmin referred to the occasion when he last raised this matter in 1956. He may, therefore, remember what my right hon. Friend the Prime Minister, then Chancellor of the Exchequer, said. My right hon. Friend said that he
"must ask the Committee to think seriously before we start applying to other and developing industries a principle which is quite contrary to all our tradition. Whatever might be

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the best means of assisting these industries, I do not think it would be right for the Committee to use a method so unusual and with such possible dangerous repercussions."—[OFFICIAL REPORT, 19th June, 1956; Vol. 554. c. 1398.]
My right hon. Friend did, however, say that he would consider whether further assistance of any kind could be given towards the exploitation of mineral resources. That consideration has since been made and the whole question has been further examined. The Government, however, have decided that they could not agree to a discriminatory form of taxation relief such as that proposed, which is quite foreign to our United Kingdom tax system and quite unrelated to the capital expended. I am sorry to have to disappoint my hon. Friend, whom I would very much like to have been able to meet, but on this occasion I am sorry to say that we cannot accept his Clause.
Mr. Jay: The Economic Secretary is rather unsympathetic and negative in turning down this suggestion quite as flatly as he has done this afternoon. He said that these mines enjoy the ordinary Income Tax arrangements for depreciation allowance, and so on. Of course they do. We all recognise that. The argument of the hon. Member for Bodmin (Mr. D. Marshall), however, was that some special relief or incentive should be given in this case.
The Economic Secretary also said that if we have a tax holiday of three years, somebody may come afterwards and suggest that it should be five years and, therefore, we must not have a tax holiday at all. That argument could be advanced against the proposal that the Economic Secretary himself made in our last discussion relating to bearer securities. It could be said that if somebody suggested a minimum of a certain figure and that were accepted, there would then be a proposal to go still lower, so, therefore, we should not agree to anything at all.
There was no substance in that part of the Economic Secretary's argument. He quoted the Royal Commission referring to a quite different proposal relating to depreciation allowances. The Royal Commission may or may not be correct about that, but it did not specifically consider the suggestion for the
1180
tax holiday which the hon. Member for Bodmin is now making.
The suggestion which has been made this afternoon is not identical but more or less analogous to the investment allowance. It is similar to the suggestion for having a selective investment allowances for particular industries as an incentive to investment and development. That is what the hon. Member for Bodmin is really suggesting. Therefore, it is nothing other than a quite respectable proposition which is being put before the House. If the proposition is to be sustained, it must be sustained not on the purely tax law sort of arguments with which the Royal Commission was mainly concerned and with which the Economic Secretary dealt entirely in his reply. It has to be argued on economic grounds.
The hon. Member for Bomdin and his hon. Friend the Member for Truro (Mr. G. Wilson), who supported him, had a good deal of reason and substance on their side. The proposition simply is that we should seek by this special method to develop particular metal resources of the United Kingdom which hitherto may not have been discovered or exploited.
Without going into the whole argument, I would have thought that for the United Kingdom there is an extremely strong argument on all grounds for trying to discover and use such natural resources as we have in these islands. We have, perhaps, both the most difficult balance of payments problem and the biggest problem of paying for imports of almost any country in the world. We are also very little blessed with natural raw materials in any great demand thoughout the world today. That prima facie establishes a strong case for giving a special incentive on economic grounds for people searching for minerals of this kind in our own islands.
My hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) and the other hon. Members who have spoken put a cogent point when they reminded us that it so happens that the areas where these minerals are, or are likely to be, found in these islands are areas suffering from an unemployment problem. That is true of Cornwall in the tin areas and also parts of Wales where metals have been mined in the past and where, the hon. Member for Bodmin may be

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right in supposing or people may be right in guessing, metals exist which have not yet been discovered or exploited. On unemployment grounds, also, one could establish a special case for this proposal, which, naturally, the Royal Commission did not take into account.
Will the Economic Secretary be prepared to accept this proposal in a slightly modified form? As I understand it, the Clause would grant a tax holiday to the mining concern for the first three years from the date at which production started. Presumably, therefore, if the two Clauses were inserted in the Bill and if production had begun before the present Bill became law but it became law within the three-year period, that concern would get the relief proposed in the Clause. Since we are trying to give an incentive to things that have not yet happened, and not an award to those who have taken the decision already, it would be possible, I suppose, in modified form to say that we accept the proposal but that it shall not apply in any case where the three-year period has already begun when the Bill becomes law.
To help the Economic Secretary's conscience as well as to meet the points made by the hon. Members who have supported the Clause, would the Economic Secretary be willing to consider that slightly modified form of this proposal?
Mr. Austen Albu: I want briefly to bring a powerful voice from outside the Chamber in support of the argument. I do not know whether the Economic Secretary read the report in the Observer of the observations of Mr. S. P. Chambers, who recently became Chairman of I.C.I. He is reported to have said that he considered that the present rather good situation for our exports is not likely necessarily to continue for long. He therefore holds the view that we should do all we can to reduce the amount of our imports.
It is not surprising that Mr. Chambers, now the chairman of our largest manufacturers of fertilisers, is interested that we should increase the amount of our home production of food. His arguments, however, were genuine and they strongly support the case that any incentive, however small, towards making ourselves rather more self-sufficient in raw
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materials as well as in foodstuffs is desirable. These are powerful arguments coming from a source which is by no means necessarily friendly to what is called dirigisme, or restrictive arguments or policies.
I hope that even if the Economic Secretary's own back benchers and the power of the Opposition is not strong enough to change the views of the Treasury, perhaps a very large Income Tax payer such as I.C.I. may make the hon. Gentleman change his mind.
Question put and negatived.

New Clause.—(EXEMPTION FROM ESTATE DUTY OF MONEY PASSING TO CERTAIN GALLERIES, MUSEUMS, ETC.)
(1) Where money passes or is deemed to pass on the death of a person dying after the commencement of this Act to a body to which this section applies, that money shall not be taken into account for the purpose of estimating the principal value of the estate passing on the death or the rate at which estate duty is chargeable thereon and that money shall be exempt from estate duty.
(2) The bodies to which this section applies are the National Gallery, British Museum or any other similar national institution, the National Art Collections Fund, the society known as "the Friends of the National Libraries "or any other fund or society formed for the purpose of contributions to public museums, galleries or libraries and accepted by the Treasury as of public importance for that purpose.—[Mrs. White.]
Brought up, and read the First time.
Mrs. White: I beg to move, That the Clause be read a Second time.
As the Financial Secretary is no doubt aware, this new Clause is based on a recent recommendation of the Standing Commission on Museums and Galleries. One of the duties laid upon that Commission is to stimulate the generosity and direct the efforts of those who aspire to become public benefactors. In pursuance of that duty, the Commission has been considering what could be done by way of alteration to the taxation law to stimulate the generosity of potential benefactors.
On page 10 of its latest Report, the Commission sets out a reasoned argument for making some changes in the incidence of Estate Duty which the Commission believes would be of very great value to our national and other public collections. The Commission also makes suggestions about Income Tax and Surtax.

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Naturally, we considered both sets of suggestions, but we considered that the suggestion for possible remission of Income Tax or Surtax, which is common practice in the United States of America and has done a great deal to bring the collections in the United States to their present very high standard, might lead to certain abuses. We believe that we should not follow that line without further reflection. However, we feel that a very strong case has been made out for some alteration in Estate Duty law.
As the House is no doubt very well aware, there is a long and respectable history in this matter. It goes back to the Finance Act, 1894, when it was decided that articles of historic or aesthetic importance should be exempt from Estate Duty, by kind permission of the Treasury, on certain conditions. That principle has been developed down the years by one Chancellor after another, until we have the present situation in which, in many different circumstances, books, pictures, manuscripts, scientific instruments and other objects may be exempted from being aggregated in the value of an estate for the purposes of Estate Duty, usually with the sanction of the Treasury and on certain conditions as to where the objects should remain. They may also be given free of duty to our great national collections.
I could go into considerable detail on this matter. I have armed myself with Green's "Death Duties", Fourth Edition, but I refrain from doing so because I know that some of my hon. Friends wish to speak and I hope that some hon. Members opposite will also take part. However, I will make the point that there is an anomaly that whereas gifts in kind are exempt, gifts in cash to the national institutions are not exempt but are taxed in the ordinary way. Even that is not universally true, because if land or a building is given to the National Trust, money for the maintenance thereof, or for chattels, may be exempted from duty. However, so far as I am aware, and I am supported in this by the Report of the Standing Commission, gifts in cash to the national collections or other public collections are not so exempt.
Thus we have this rather absurd situation that if one gives a picture which is valued at, say, £10,000—and perhaps
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we should now raise our sights and put it at nearer £250,000—the picture itself can be given to the National Gallery or the Wallace Collection or any other national collection without ranking for Estate Duty, while if the generous benefactor gives the money with which to purchase the picture, his estate has to bear the duty. That is a foolish anomaly, particularly as many institutions which may be beneficiaries under our proposals are themselves in receipt of public funds.
6.45 p.m.
I remind hon. Members that the national institutions, which have to be approved by the Treasury before any exemption can hold good, include many which appear in Class IV of our Civil Estimates. It seems a pity, to say the least, that our taxation policy should be such as to deter possible benefactors from making cash benefactions to the British Museum, the Natural History Museum, the National Gallery, the Tate Gallery, the Science Museum, the Royal Scottish Museum, and the other establishments concerned.
Quite deliberately, we have not extended our proposals to some of the other bodies to which gifts in kind can be given free of duty and which have been mentioned in previous legislation. They include municipal corporations, universities, and so on. At this stage at any rate it seems desirable to limit our proposals to the great national collections or other public museums, galleries or libraries which are accepted by the Treasury as being of public importance.
Dr. Barnett Stross: This proposal would not prevent the Treasury adding to the list—for example, suggesting that a regional body concerned with the welfare of museums in the provinces should be added to the list at a later date and thus benefiting.
Mrs. White: No. So far as I am aware, the Treasury would not need this new Clause, as under previous legislation it has complete discretion about which bodies it accepts as being of public importance.
I do not wish to labour the argument because it seems self-evident that there is an anomaly if one can give something in kind duty-free, but is precluded from giving the cash equivalent. No one wishes

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to penalise his heirs, which is the result of the present state of the law. I think that we are fully justified in asking the House to consider this recommendation from a learned and experienced body, I hope that the Chancellor will agree that one further step should now be taken in supporting these institutions.
It is true that they have been granted a little extra from the Treasury in the last few months, but that little is far too small to enable our great national institutions to fulfill their functions. This is a relatively painless way of inducing private benefactors to support the arts and learning in this country.
The party opposite usually lays very great stress on the virtues and merits not merely of private enterprise but of private benefactions, and I suppose that this suggestion is completely consonant with Conservative philosophy and that hon. Members opposite agree that these institutions should depend rather more on private benefactors than they do now. This would be an extremely effective way of drawing out from the larger estates, which are subject to the highest rates of Estate Duty, money which might otherwise not reach these institutions.
Dr. Stross: I beg to second the Motion.
I feel that the Clause is so modest in its request and so narrowly framed that it should meet with complete sympathy and understanding from the Treasury. If it went as far as the recommendations of the Standing Commission, I think we should all have some doubts. Having studied these full recommendations, we realise that if the Treasury were to accept them as they stand in the Report of the Standing Commission we should be competing with American patrons who are benefactors to their own institutions.
The prices of works of art would continue to soar more sharply than they have done up to the present, and many of us are very doubtful whether we could deny what was said in 1955, when the whole matter was looked at by the Royal Commission, namely, that it would be a dubious method of bringing about widespread patronage of the arts. None the less, it is, I think, impossible for anyone to deny that, as it stands, we have a completely illogical situation
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when one can give a gift worth £x, but not give the sum of money instead of the gift. Therefore, neither in logic nor in equity does it seem that a defence of the present situation can be made.
To show how narrow the Clause is, one has only to realise that in America any would-be patron can, if his income be large, make a declaration that in eight of the previous ten years 90 per cent. of his income has consisted of the tax that he pays plus the bequests that he makes. There is no limit whatsoever after that to what he may purchase for himself and keep for himself throughout his lifetime on condition that he bequeaths it to an appropriate institution. This is not something for which we are pleading. I mention it only to show how narrow and very modest the Clause is.
I am not sure whether I was on good ground when I intervened a little earlier, but we know that the Museums Association in trying to help museums and art galleries throughout the country has set up a regional organisation in the Southwest, and it may be that it would be possible if the Clause were accepted for such a regional organisation to be added to the list so that gifts of money could be made to it. Again, this could be very welcome to the Treasury, which must be aware, I hope, by now that there is considerable public opinion pressing upon the Chancellor the view that the situation in the provinces is not good.
It is not only the Standing Commission that has made this clear. In a report by Lord Bridges and his colleagues entitled "Help for the Arts", a report to the Gulbenkian Foundation published recently, the same problem is offered to us and very strong advice and exhortation given that we should not fall between two stools. If we are to have private patronage, we must make it possible. If we are to have public patronage, then the Government will have to be very much more generous.
The Daily Telegraph the other day gave us all some advice which I find reasonable. This was on 20th June. It referred, again, to the serious plight of the provincial museums service. It pointed out that there are two rival theories in the world. Some countries feel that they must rely entirely upon public patronage; that is to say, the

1187
Government must find all the money. That is the case in the Soviet Union. In the United States the exact opposite is the case; private patronage finds all the help that is needed, and the private patron is, therefore, encouraged by means of tax remission.
We do not do either of those things very well, it seems. At least, that is what the Daily Telegraph suggests. Whereas the Soviet Union this year is finding £1¼ million for the purchase of paintings by living artists alone, we know that the purchase grants to our national institutions, although considerably greater this year than they were, are still small in comparison with £1¼ million in respect only of living artists. Therefore, we should not make the mistake of failing to do the one thing or the other.
I notice that recently advice has been given to the country by the Bow Group. I have in my hand a report in the Manchester Guardian of 1st July, and one of the recommendations is apparently that there should be Income Tax remission on the purchase price of paintings where these are accepted by a museum or gallery as a gift to be made on the owner's death. This advice goes very much further than the Clause. So far, as I said earlier, and as my hon. Friend the Member for Flint, East (Mrs. White) said, we are dubious as to whether it might not allow abuse, but the Bow Group's proposals were printed and brought before us by the Conservative Political Centre. I wonder whether the Financial Secretary, if he is not influenced by what I am saying, is prepared to be influenced by his own colleagues and the organisation that he supports.
It is not likely that our proposal would cost the Treasury a great deal, but whatever was given in this way to assist museums and galleries throughout the country—in the first place, the national collections, and later on, perhaps, others if the list is enlarged—would ultimately save the Treasury having to find money. We know that a certain amount of money must be found if we are not to have the general museum service breaking down, and it must be accepted that it is in a parlous plight throughout the provinces. This gives real point to our plea that our narrow and modest Clause should receive the assent of the Treasury.
Sir Hamilton Kerr: I listened with interest to the arguments outlined by the hon. Lady the Member for Flint, East (Mrs. White) in support of the Clause, the purpose of which is to exempt from Estate Duty moneys bequeathed to certain specified galleries. It seems to me a logical extension of the existing law which permits works of art where given to national collections to be exempted from Estate Duty. Someone once said—I cannot remember who it was; it might have been Louis XIV—that the trumpet of art sounds louder through space and time than any other trumpet. That certainly seems to be true today. We read in the newspapers of sales at Christies and Sotheby's where about £750,000 is obtained by the auctioneer in about seven minutes, or roughly £100,000 a minute.
7.0 p.m.
I believe that the situation arises from two causes which we should consider. The first is that this country, in spite of losses, is still an Aladdin's cave of treasure. In the past we have obtained many great treasures, but it is equally true that unfortunately we have allowed many great treasures to be sent overseas. I suppose it is true that the collection of Charles I was the finest Royal collection ever made and, under the Commonwealth, it was sold at ridiculous prices—prices which even the Venetian Ambassador described as "prezzi vilissimi"; which we might translate as "the lowest possible price". It obtained—if my calculation is correct—the huge sum of £1,080,000 10s. 2d. Sir Robert Walpole's collection from Houghton provided the foundation for the collection of Catherine the Great at the Hermitage. If the Waverley Committee had existed in those days, perhaps those losses might have been avoided.
We read in the Gulbenkian Report that the United States citizen, if he spends up to 20 per cent. of his annual income, can obtain exemption from taxes to that amount. Furthermore, as was quoted by the hon. Member opposite, if in any one year of assessment the citizen can prove that in that year and in eight of the ten preceding years he has spent up to 90 per cent. of his income he can obtain exemption from Income Tax altogether. Nor do the advantages stop there, because he can enjoy the use of those works of

1189
art in his own home for his lifetime, provided they go at his death to one of the national museums. Many people in this country believe that we should follow the American example. The Gulbenkian Committee seems sympathetic to that point of view, but, on the other hand, we must frankly recognise that others oppose it.
The Royal Commission on Taxation of Profits and Income was opposed to the idea, and the Waverley Committee was hostile. The more modest proposal advanced in the new Clause is only to increase the facilities for giving works of art to galleries in cash by exempting them from duty. It seems to me it would have one great practical result, that the Treasury might in future be spared giving ever-increasing sums to the national galleries from the donations of private collectors.
I should like to support the point made by the hon. Member for Stoke-on-Trent, Central (Dr. Stross) that if we consider this policy we must likewise consider the provincial galleries which, as we know, are in a very bad way. The Chancellor was so generous to us on 23rd January and we know he is sympathetic to the cause of art that he will realise the salient factors of the situation, which are: the enormous price of works of art at present, that this country is a treasure cave, although a dwindling treasure cave, and the purchases by American buyers send up the prices. I am sure my right hon. Friend's ingenuity will find a solution.
Mr. Simon: This new Clause was proposed in a very agreeable speech, if she will allow me to say so, by the hon. Member for Flint, East (Mrs. White), supported by the hon. Member for Stoke-on-Trent, Central (Dr. Stross). We have had a particularly felicitous contribution, such as we enjoy on these occasions, from my hon. Friend the Member for Cambridge (Sir H. Kerr).
The hon. Member for Stoke-on-Trent, Central was sure that the Clause would meet with our sympathy and understanding. I can assure him that it does, but I am afraid I cannot go on to assure him that it meets with our assent. It seems to me that there is a fundamental fallacy underlying the Clause and the speeches which have been made in support of it.
1190
The hon. Lady said that this is a relatively painless way of supporting the arts, and the hon. Member for Stoke-on-Trent, Central said that it would spare the Treasury from having to find the money. But the Treasury has not got any money; the money is the taxpayer's, and it makes no difference from the point of view of the taxpayer whether the money is found by a direct grant borne on a Vote, or found by forgoing some revenue that otherwise would be available. There is, however, a fundamental difference between the two methods. As long as it is a grant in aid it is subject to the control of Parliament, whereas if it is a matter of forgoing revenue it is a matter of fiscal remission. Whether it is Income Tax, Surtax or Estate Duty, Parliament has not got the same control—indeed, Parliament has not got any control.
In the case of Estate Duty running at the very high rate that it does at the moment, this proposal would mean that it would depend on the particular taxpayer—the particular testator—whether the State might have to contribute itself up to 80 per cent. in any particular year in supplement of a gift, or towards a gift. Therefore, it seems that when one is considering a fiscal remission or a direct vote there are overwhelming arguments in favour of a direct vote.
I was very glad to hear my hon. Friend pay a tribute to the interest of my right hon. Friend in this matter. On 23rd January this year we made a big step forward. I am bound to point out to the House that in our Estimates for this year we are providing for almost double the sum spent in 1951–52. That shows that we are prepared to take a step forward here. We have in fact taken a big step forward, which I believe is in consonance with the general wishes of the country, in support of the arts; but it seems to me the right way to do it is the way of a direct vote of Parliament in support of the purchasing powers, the staffing, maintenance and so on, rather than by these fiscal incentives.
The hon. Lady and various other hon. Members say that we already give a fiscal incentive in the case of specific objects bequeathed to the various museums and galleries going beyond the beneficiaries under this Clause. That is true. There is already complete exemption from duty in their case, but it seems

1191
that there is a fundamental difference—indeed, more than one fundamental difference—between the case of a specific object and a fund of money such as we are concerned with in this new Clause. In the first place, in the case of a specific object there is no fund out of which duty could be paid by the beneficiary, whereas in the case of a fund, by definition, there is the means of paying the duty that is exigible.
Secondly, the object of the legislation which has gone before as to specific objects was designed to keep collections together and to channel works of art, works of historical and scientific performance and so on, as they came into the market, towards the public galleries. That, of course, does not apply to a fund of money. It seems to us that there is no reason why there should be a deliberate encouragement to people to leave their estates for this particular purpose rather than for any other national purpose or for any charity, and, as I ventured to point out, partly in some cases largely at the expense of the Exchequer.
Thirdly, in the case of specific objects, there is control by the Treasury. As the hon. Lady pointed out, it is subject to Treasury consent. Treasury Ministers are therefore responsible to Parliament, and there is the possibility, in the case of specific objects, of Treasury control, also, the exemption is limited to objects of national importance, or scientific or national historical interest and so on.
In the end, it comes to this. There is already a benefit under the Estate Duty code in favour of these various galleries and all other charities in the case of gifts inter vivos, but in the case of anybody other than a charitable body the duty will be levied if the testator does not survive for five years after the making of the gift. In the case of a charity, he has to survive only one year, so that there is already a great incentive. The proposal here is that there shall nevertheless be an Estate Duty exemption even if he goes on enjoying his monetary property up to the moment of his death.
Are we justified in operating our Estate Duty exemption in favour of this particular type of benefit and leaving out all the other types of charitable bodies? The hon. Lady and her hon. Friend the
1192
Member for Stoke-on-Trent, Central talked about anomalies, but surely it would be quite anomalous to say that we will give exemption if money is left to the Victoria and Albert Museum but not if it is left to the British Empire Cancer Campaign, that there should be exemption if it is left to the British Museum but not if it is left to Dr. Barnardo's Homes—for the Science Museum but not for the Churchill College, for the Friends of the National Libraries but not for the Royal National Lifeboat Institution, the National Gallery but not missionary activity for a leper colony, and so on.
One could multiply the examples. Although we pride ourselves on being dilettante in many ways, I do not believe that any such distinction would commend itself to the House; and therefore I could not recommend acceptance of this new Clause.
Mr. Mitchison: The Financial Secretary to the Treasury laid down a rule to which there are so many exceptions that he spent the rest of his speech explaining them away. That raises one's doubts about the rule. Let us see what, in fact, we are doing.
The present position, as I understand it, is that gifts of objects of special aesthetic national importance, to use the language of Section 40 of the" Finance Act, 1930, quite roughly, are exempt from Estate Duty and are not therefore exigible, subject to certain provisions in a subsequent Statute about allowing the public to have a look at them from time to time. That is the present position
The result of that is that this particular exception applies in relation to gifts of any sort and not merely where the property passes to one of these institutions. They come in in relation to sale afterwards. Consequently, there already is a pretty large hole in this type of matter in our Estate Duty provisions, but, of course, it is not the only hole. The present position is that, in certain circumstances, gifts not merely of land but of chattels to all other national bodies may be exempt from the duty; for instance, the land given to the National Trust and chattels of historic value in a property which passes to a public institution, or, again, if we turn to money, the funds to maintain one thing or another.

1193
I therefore find it hard, in the middle of these exceptions, to believe that the rule is as absolute or the reasons for it as cogent as the hon. and learned Gentleman would have us believe. I agree with him that, at the end of the day, one has to look at the broad reasons for this kind of exception. It is quite definitely in favour of objects which are, very broadly, of outstanding aesthetic or historical importance and in favour of certain national institutions, but the two things may go quite considerably together. This Clause has no relation to what is given. It relates solely to these institutions.
It is said that there is a difference between leaving a valuable picture to the National Gallery and leaving a sum of money. There is a difference, but I should have thought that if one is looking at the sense of the matter, the difference is a much more practical one than any which has been indicated already. I agree that increases have been made in the public contributions to these bodies. I do not agree that these increases make the contributions at present either generous or sufficient.
I believe that we ought to do a great deal more than we are doing at present if we are to keep our national heritage in these matters, whether those at present are in public or private hands, more or less intact. After all, it is a heritage which we have acquired not only from native artists and workers, but also from purchases made in the past by the galleries and by private individuals in this country from abroad. It is only lately that we have had to accept any need to limit exports. We used to be an importing country for this kind of thing.
7.15 p.m.
Even accepting the narrower definition, I believe that anybody who reads the interesting document of the Standing Commission or looks at the facts must agree that our present contributions, even increased, are still insufficient. Perhaps the best instance is that, even with the standing amount of money given to these institutions year by year, when any particularly notable picture or collection became available, and it was desired to make the acquisition, even as recently as in the case of the Ucello painting, "St. George and the
1194
Dragon "and the Dyson Perrins Manuscripts, they had to have a special supplement from the Treasury for the purchase, because the standing contributions were insufficient.
The effect of this will be to put a bequest on the same footing as a gift inter vivos made at any period more than a year before death. That is the only effect, and all the discussion about Parliamentary control and the rest of it seems to me to take on rather a different aspect when one considers that there is no reason at present why a man should pay any Estate Duty if he makes gifts to the National Gallery more than a year before his death. We recognise the particular case, because we make a distinction, to which the hon. and learned Gentleman referred, of one-year gifts of this kind inter vivos and five-year gifts in ordinary cases.
What is to be the result? There are few people who are in a position to bequeath outstanding works of art to our national galleries. Some of them may do so and some may not, but comparatively few are in a position to do it. There will be many people who will be in a position and willing to make gifts of this kind, and to whom this kind of provision would act as a real incentive.
There is this difference between the gift of a picture worth, let us say, £100,000 and a gift of £100,000 in cash. In the first place, the £100,000 in cash may come from a considerable number of people, none of whom is in the position to give a single picture. In the second case, the £100,000, when it gets there, will be applied by way of purchases by people who are experts, not only in the aesthetic merit of particular works of art but also in the particular shortages of the public galleries. They all have their own individual shortages and if we give them enough money they can use it in that way.
I do not for a moment suggest that the acceptance of such a provision as this would be an excuse for the Government lowering their grants. I do not think it would be, and my reason is that I do not think that the grants are sufficient. If, however, the Chancellor of the day takes the opposite view, the matter is not so free from control as the hon. and learned Member suggests, for if he feels that contributions from private

1195
sources have been more than sufficient, he will no doubt take that fact into consideration when dealing with the public money.
What is the objection to this kind of provision? It seems to me to have every advantage and to follow a line which, whether logical or not, is at any rate well established. I cannot appreciate the Government's reason for refusing something which would always mean some gain to the national institutions. I agree that the loss of death duties is a material factor, but at the end of the day there will be some gain. If there is a question between that and public funds, it can be adjusted by taking the full tax into consideration, but my view and. I believe, that of my hon. Friends is that the contributions made out of public funds to our museums and galleries are not sufficient and are not creditable to a nation of our wealth and with our tradition of appreciation of works of this kind.
I therefore hope that the House will give the Clause its approval, notwithstanding what the hon. and learned Member has said. I feel that his objections were too technical and that the practical and moral reasons for the acceptance of the Clause far outweigh anything that he said.
Mr. W. R. Rees-Davies: Before we conclude what has been a wholly admirable debate, I want to say that I support very strongly the views expressed by my hon. and learned Friend on behalf of the Chancellor. They are absolutely right for two reasons. However much I support them, I do not think that the galleries and museums can be expected to receive their benefit in the form of a general fiscal favour along the lines which have been suggested. I agree with everything said both by my hon. Friend the Member for Cambridge (Sir H. Kerr) and by the hon. Lady the Member for Flint, East (Mrs. White) about the necessity to improve the grants for galleries and the position of the museums. I speak as a dilettante in this matter. I have no objection to dilettantism, but I have objections to dilettantism when it is at the expense of other equally deserving causes in this country.
1196
It seems to me that the right way to deal with this problem is not only by direct vote, for I think that the people as a whole must make their contribution to what they wish to achieve. I think that it is high time that the people did this, because I believe that they are only too ready to make a contribution to secure that our museums and galleries are the finest in the world. In this connection, I think that it is more than time that the galleries sought to implement their power to ensure that the public makes a contribution. I hope that the Tate Gallery, as a great leader, will seek to do so.
In the galleries throughout Europe everybody makes a contribution towards their purchases by the amount he pays for admission. I believe that a sum of money should be paid to secure admission into our galleries and museums and that when this is done we are entitled to ask the Chancellor to match £ for £. If the public are willing to pay money to enjoy visiting our national galleries, I believe that the Chancellor should dip into his purse readily to ensure that this money is matched. I therefore believe that the system should not be one of general fiscal favour of this nature. It should not be only a direct vote, but a direct vote together with contributions such as I have described.
Heirlooms are another matter. Death duties are too high, and I believe that a special fiscal favour may be right to an estate, because it is not much use having historic houses without historic personality, furniture, jewellery, pictures, and objets de vertu. I believe that we need an heirloom policy to ensure protection not only of the house, but of the treasures that go into it, but I do not think that that is a matter for this debate. That is a matter for another time and another place.
For those reasons, I greatly hope that everyone will feel that, having had this debate, we need not press it to a Division, because it is essentially a matter in which all hon. Members are trying to find a way to ensure what is to the benefit of the country in the future.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 195, Noes 227.

Division No. 161.]

AYES

[7.26 p.m.

Abse, Leo

Hannan, W.

Price, Philips (Gloucestershire, W.)

Ainsley, J. W.

Hastings, S.

Probert, A. R.

Albu, A. H.

Hayman, F. H.

Proctor, W. T.

Allaun, Frank (Salford, E.)

Healey, Denis

Pursey, Cmdr. H.

Bacon, Miss Alice

Henderson Rt. Hn. A. (Rwly Regis)

Rankin, John

Baird, J.

Herbison, Miss M.

Redhead, E. C.

Balfour, A.

Hewitson, Capt. M

Reeves, J.

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

Hobson, C. R. (Keighley)

Rhodes, H.

Benson, Sir George

Holman, P.

Robens, Rt. Hon. A.

Beswick, Frank

Houghton, Douglas

Roberts, Goronwy (Caernarvon)

Bevan, Rt. Hon. A. (Ebbw Vale)

Howell, Charles (Perry Barr)

Robinson, Kenneth (St. Panoras, N.)

Blackburn, F.

Hoy, J. H.

Ross, William

Blenkinsop, A.

Hughes, Cledwyn (Anglesey)

Royle, C.

Blyton, W. R.

Hughes, Emrys (S. Ayrshire)

Short, E. W.

Boardman, H.

Hughes, Hector (Aberdeen, N.)

Silverman, Julius (Aston)

Bottomley, Rt. Hon. A. G.

Hunter, A. E.

Silverman, Sydney (Nelson)

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

Hynd, H. (Accrington)

Simmons, C. J. (Brierley Hill)

Bowles, F. G.

Hynd, J. B. (Attercliffe)

Skeffington, A. M.

Boyd, T. C.

Irving, Sydney (Dartford)

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

Braddock, Mrs. Elizabeth

Janner, B.

Slater, J. (Sedgefield)

Brockway, A. F.

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

Smith, Ellis (Stoke, S.)

Broughton, Dr. A. D, D.

Jenkins, Roy (Stechford)

Snow, J. W.

Brown, Thomas (Ince)

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

Sorensen, R. W.

Burke, W. A.

Jones, J. Idwal (Wrexham)

Soskice, Rt. Hon. Sir Frank

Burton, Miss F. E.

Jones, T. W. (Merioneth)

Sparks, J. A.

Butler, Herbert (Hackney, C.)

Key, Rt. Hon. C. W.

Spriggs, Leslie

Butler, Mrs. Joyce (Wood Green)

King, Dr. H, M.

Steele, T.

Callaghan, L. J.

Lawson, G. M.

Stonehouse, John

Carmichael, J.

Lee, Frederick (Newton)

Stones, W. (Consett)

Castle, Mrs. B. A.

Lee, Miss Jennie (Cannock)

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

Champion A. J.

Lever, Leslie (Ardwick)

Summerskill, Rt. Hon. E.

Chapman, W. D.

Lewis, Arthur

Swingler, S. T.

Cliffe, Michael

Lindgren, G. S.

Sylvester, G. O.

Clunie, J.

Mabon, Dr. J. Dickson

Symonds, J. B.

Coldrick, W.

McAlister, Mrs. Mary

Taylor, Bernard (Mansfield)

Corbet, Mrs. Freda

McCann, J.

Taylor, John (West Lothian)

Craddock, George (Bradford, S.)

MacColl, J. E.

Thomas, Iorwerth (Rhondda, W.)

Cronin, J. D.

MacDermot, Niall

Thornton, E.

Crossman, R. H. S.

McInnes, J.

Darling, George (Hillsborough)

McLeavy, Frank

Tomney, F.

Davies, Ernest (Enfield, E.)

MacPherson, Malcolm (Stirling)

Ungoed-Thomas, Sir Lynn

Davies. S. O. (Merthyr)

Mahon, Simon

Viant, S. P.

Deer, G.

Mallalieu, J. P. W. (Huddersfd, E.)

Warbey, W. N.

de Freitas, Geoffrey

Mann, Mrs. Jean

Watkins, T. E.

Delargy, H. J.

Mason, Roy

Weitzman, D.

Diamond, John

Mayhew, C. P.

Wells, Percy (Faversham)

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

Mikardo, Ian

Wheeldon, W. E.

Ede, Rt. Hon. J. C.

White, Mrs. Eirene (E. Flint)

Edelman, M.

Mitchison, G. R.

White, Henry (Derbyshire, N. E.)

Edwards, W. J. (Stepney)

Monslow, W.

Wilcock, Group Capt. C. A. B.

Evans, Edward (Lowestoft)

Morris, Percy (Swansea, W.)

Wilkins, W. A.

Fernyhough, E.

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

Willey, Frederick

Fitch, A. E. (Wigan)

Mort, D. L.

Williams, David (Neath)

Fletcher, Eric

Moyle, A.

Williams, Rev. Llywelvn (Ab'tillery)

Foot, D. M.

Mulley, F. W.

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

Forman, J. c.

Noel-Baker, Francis (Swindon)

Williams, W. R. (Openshaw)

Fraser, Thomas (Hamilton)

O'Brien, Sir Thomas

Williams, W. T. (Barons Court)

George, Lady Megan Lloyd (Car'then)

Oliver, G. H.

Willis, Eustace (Edinburgh, E.)

Gibson, C. W.

Oram, A. E.

Wilson, Rt. Hon. Harold (Huyton)

Gordon Walker, Rt. Hon. P. C.

Orbach, M.

Winterbottom, Richard

Grenfell, Rt. Hon. D. R.

Oswald, T.

Woof, R. E.

Grey, C. F.

Padley, W. E.

Yates, V. (Ladywood)

Griffiths, David (Rother Valley)

Palmer, A. M. F.

Zilliacus, K.

Griffiths, Rt. Hon. James (Lianelly)

Pargiter, G. A.

Hale, Leslie

Pearson, A.

TELLERS FOR THE AYES:

Hall, Rt. Hn. Glenvil (Colne Valley)

Pentland, N.

Mr. Holmes and Mr. J. T. Price.

Hamilton, W. W.

Popplewell, E.

NOES

Agnew, Sir Peter

Baxter, Sir Beverley

Bossom, Sir Alfred

Aitken, W. T.

Bell, Philip (Bolton, E.)

Bowen, E. R. (Cardigan)

Amory, Rt. Hn. Heathcoat (Tiverton)

Bell, Ronald (Bucks, S.)

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

Anstruther-Cray, Major Sir William

Bennett, F. M. (Torquay)

Boyle, Sir Edward

Arbuthnot, John

Bennett, Dr. Reginald

Brewis, John

Armstrong, C. W.

Bevins, J. R. (Toxteth)

Browne, J. Nixon (Craigton)

Atkins, H. E.

Biggs-Davison, J. A.

Bryan, P.

Baldock, Lt.-Cmdr. J. M.

Bingham, R. M.

Bullus, Wing Commander E. E.

Baldwin, Sir Archer

Birch, Rt. Hon. Nigel

Burden, F. F. A.

Balniel, Lord

Bishop, F. P.

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

Barber, Anthony

Black, Sir Cyril

Carr, Robert

Barter, John

Body, R. F.

Cary, Sir Robert

Batsford, Brian

Bonham Carter, Mark

Clarke, Brig, Terence (Portsmth, W.)

1198

1199

Conant, Maj. Sir Roger

Horobin, Sir Ian

Pike, Miss Mervyn

Cooke, Robert

Horsbrugh, Rt. Hon. Dame Florence

Pilkington, Capt. R. A.

Cooper, A. E.

Howard, Gerald (Cambridgeshire)

Pitman, I. J,

Cooper-Key, E. M.

Howard, John (Test)

Pitt, Miss E. M.

Cordeaux, Lt.-Col. J. K.

Hughes Hallett, Vice-Admiral J.

Pott, H. P.

Corfield, F. V.

Hughes-Young, M. H. C.

Powell, J. Enoch

Courtney, Cdr. Anthony

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

Price, David (Eastleigh)

Craddock, Beresford (Spelthorne)

Hutchison, Sir James (Scotstoun)

Price, Henry (Lewisham, W.)

Crosthwaite-Eyre, Col. O. E.

Hylton-Foster, Rt. Hon. Sir Harry

Prior-Palmer, Brig. Sir Otho

Crowder, Sir John (Finchley)

Iremonger, T. L.

Profumo, J. D.

Crowder, Petre (Ruislip—Northwood)

Irvine, Bryant Godman (Rye)

Rawlinson, Peter

Cunningham, Knox

Jennings, J. C. (Burton)

Redmayne, M.

Currie, G. B. H.

Jennings, Sir Roland (Hallam)

Rees-Davies, W. R.

Dance, J. C. G.

Johnson, Dr. Donald (Carlisle)

Remnant, Hon. P.

Davidson, Viscountess

Johnson, Eric (Blackley)

Renton, D. L. M.

D'Avigdor-Goldsmid, Sir Henry

Joseph, Sir Keith

Ridsdale, J. E.

Deedes, W. F.

Kerby, Capt. H. B.

Rippon, A. G. F.

de Ferranti, Basil

Kerr, Sir Hamilton

Roberts, Sir Peter (Heeley)

Dodds-Parker, A. D.

Kimball, M.

Robinson, Sir Roland (Blackpool, S.)

Donaldson, Cmdr. C. E. McA.

Lambton, Viscount

Robson Brown, Sir William

Doughty, C. J. A.

Lancaster, Col. C. G.

Roper, Sir Harold

du Cann, E. D. L.

Langford-Holt, J. A.

Russell, R. S.

Duncan, Sir James

Leavey, J. A.

Scott-Miller, Cmdr. R.

Duthie, Sir William

Leburn, W. G.

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

Eden, J. B. (Bournemouth, West)

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

Smithers, Peter (Winchester)

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

Legh, Hon. Peter (Petersfield)

Stanley, Capt. Hon. Richard

Emmet, Hon. Mrs. Evelyn

Lindsay, Hon. James (Devon, N.)

Stevens, Geoffrey

Erroll, F. J.

Lindsay, Martin (Solihull)

Steward, Harold (Stockport, S)

Finlay, Graeme

Linstead, Sir H. N.

Steward, Sir William (Woolwich, W.)

Fisher, Nigel

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

Storey, S.

Fletcher-Cooke, C.

Longden, Gilbert

Studholme, Sir Henry

Forrest, G.

Loveys, Walter H.

Summers, Sir Spencer

Galbraith, Hon. T. G. D.

Low, Rt. Hon. Sir Toby

Taylor, Sir Charles (Eastbourne)

Gammans, Lady

Lucas, Sir Jocelyn (Portsmouth, S.)

Taylor, William (Bradford, N.)

George, J. C. (Pollok)

Lucas, P. B. (Brentford & Chiswick)

Teeling, W.

Gibson-Watt, D.

Lucas-Tooth, Sir Hugh

Thomas, Leslie (Canterbury)

Glover, D.

Macdonald, Sir Peter

Thompson, Kenneth (Walton)

Goodhart, Philip

McMaster, Stanley

Thompson, R. (Croydon, S.)

Gough, C. F. H.

Macmillan, Maurice (Halifax)

Thorneycroft, Rt. Hon. P.

Gower, H. R.

Macpherson, Niall (Dumfries)

Thornton-Kemsley, Sir Colin

Graham, Sir Fergus

Maddan, Martin

Tiley, A. (Bradford, W.)

Grant, Rt. Hon. W. (Woodside)

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

Turton, Rt. Hon. R. H.

Green, A.

Maitland, Hon. Patrick (Lanark)

Vane, W. M. F.

Gresham Cooke, R.

Manningham-Buller, Rt. Hn. Sir R.

Vickers, Miss Joan

Grimond, J.

Markham, Major Sir Frank

Vosper, Rt. Hon. D. F.

Grimston, Sir Robert (Westbury)

Marlowe, A. A. H.

Wade, D. W.

Grosvenor, Lt.-Col. R. G.

Marshall, Douglas

Wakefield, Edward (Derbyshire, W.)

Gurden, Harold

Mawby, R. L.

Wakefield, Sir Wavell (St. M'lebone)

Hall, John (Wycombe)

Medlicott, Sir Frank

Wall, Patrick

Harrison, Col. J. H. (Eye)

Milligan, Rt. Hon. W. R.

Ward, Dame Irene (Tynemouth)

Harvey, John (Walthamstow, E.)

Nabarro, G. D. N.

Webbe, Sir H.

Heald, Rt. Hon. Sir Lionel

Nairn, D. L. S.

Webster, David

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

Nicholson, Sir Godfrey (Farnham)

Whitelaw, W. S. I.

Henderson-Stewart, Sir James

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

Williams, Paul (Sunderland, S.)

Hesketh, R. F.

Noble, Comdr. Rt. Hon. Sir Allan

Williams, R. Dudley (Exeter)

Hicks-Beach, Maj. W. W.

Noble, Michael (Argyll)

Wills, Sir Gerald (Bridgwater)

Hill, John (S. Norfolk)

Nugent, Richard

Wilson, Geoffrey (Truro)

Hinchingbrooke, Viscount

Oakshott, Sir Hendrie

Wolrige-Gordon, Patrick

Hirst, Geoffrey

O'Neill, Hn. Phelim (Co. Antrim, N.)

Woollam, John Victor

Hobson, John (Warwick & Leam'gt'n)

Holland-Martin, C. J.

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

Yates, William (The Wrekin)

Holt, A. F.

Page, R. G.

Hope, Lord John

Partridge, E.

TELLERS FOR THE NOES:

Hornby, R. P.

Peel, W. J.

Mr. Brooman-White and

Hornsby-Smith, Miss M. P.

Pickthorn, Sir Kenneth

Chichester-Clark.

New Clause.—(REDUCTION OF RATE OF PROFITS TAX IN CERTAIN CASES.)
As from the beginning of August, nineteen hundred and fifty-nine, and in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955, subsection (1) of section twenty-five of the Finance Act, 1958 (which provides for profits tax to be charged at the rate of ten per cent.), shall have effect with the substitution of the word "three" for the word "ten".—[Mr. Oram.]
Brought up, and read the First time.
Mr. A. E. Oram: I beg to move, That the Clause be read a Second time.
Mr. Speaker: This Clause can also be discussed with the Clause (Exemption of building societies from charge to profits tax) standing in the names of the hon. Member for Huddersfield, West (Mr. Wade) and other hon. Members, although that Clause has not been selected.
Mr. Oram: We have tabled this Clause to give the Chancellor an opportunity

1201
of putting right what we consider to have been a wrong he did to the Cooperative movement in his Budget of last year. In that Budget he brought about changes in the application of Profits Tax. The rates had previously been 30 per cent. on distributed profits and 3 per cent. on undistributed profits. The right hon. Gentleman merged those two rates into a new rate of 10 per cent. That had a depressing effect on cooperative societies. It relieved the payers of Profits Tax generally of about £16 million of Profits Tax, but increased by £1¾ million the burden borne by cooperative societies. That seemed particularly onerous and ironical to us in the Co-operative movement, because the Chancellor in introducing this part of his Budget last year said that it was not his intention to gain more revenue from that tax change. The right hon. Gentleman has certainly been gaining over the past year a considerable increase in Profits Tax from co-operative societies.
Hon. Members may wonder why the effect has been different on co-operative societies as compared with other payers of Profits Tax. The reason is that, under the previous scheme, with the two rates of Profits Tax co-operative societies were charged exclusively at the lower rate of 3 per cent. for undistributed profits, because under that system it was recognised that a co-operative society is a two-fold institution. It is a trading institution seeking to pursue trade through its shops and factories. It is also, and to a very large extent, a small savings or thrift institution. It was because of that dual nature of a co-operative society that the previous arrangement had been arrived at.
What the Chancellor did last year was to abandon any recognition of the different financial nature of a co-operative society compared with an ordinary company, and he charged both kinds of organisation according to the same formula of Profits Tax. The right hon. Gentleman claimed last year—I have no doubt that he will again claim this evening—that at the same time as he did that he made what he called a concession to co-operative societies. He claimed that, by allowing them to deduct that part of their profits which they pay as interest on their shares as an expense against Profits Tax, he was giving them what he called a concession. One of
1202
the recommendations of the Royal Commission on the Taxation of Profits and Income was that that allowance should be made were the two rates to be unified.
My point is that the Royal Commission did not put forward that proposal in any sense as a concession to co-operative societies. In that part of its Report, the Commission made the point that cooperative shares are withdrawable on demand and, because of that, are always at par. They are not bought and sold on the Stock Exchange. Whenever a shareholder withdraws a £1 share it is always worth £1.
The Commission said that what are called co-operative shares are, in fact, closely comparable with the loan capital in an ordinary company. The loan capital in an ordinary company has been allowable as an expense against Profits Tax ever since the differential rate of that tax was introduced in, I think, 1947. Therefore, this provision brought in by the Chancellor last year, far from being a concession, was really only a bit of belated justice to co-operative societies in respect of their share capital.
During the Committee stage of the Finance Bill we debated small savings within co-operative societies, and an that occasion a number of my hon. Friends explained at considerable length the difference between their financing and that of ordinary companies. I have already made the point that the share capital of the societies is withdrawable and is therefore always at par, but there are many other differences.
A co-operative member is prevented by law from holding more than £500 worth of shares in a society. The Registrar of Friendly Societies requires hat the societies shall pay only a low fixed interest on their shares. There is the provision that voting power is not in accordance with the amount of capital held but in accordance with the principle of one person having one vote. I could list quite a number of important differences between the two kinds of trading organisations.
We are not complaining about these provisions of the Industrial and Provident Societies Acts. We welcome them. They are the very basis of our democratic method of trading. We pride ourselves on having 12 million shareholders and that not one of those shareholders

1203
has a very large holding. In fact, the average is only some £20 per member.
On the other hand, when it comes to providing capital for trading undertakings, these provisions which, in another sense we welcome, turn out to be a handicap, and mean that those methods of finance that are open to public companies—by getting subscriptions on the Stock Exchange and so on—are not open to the societies. We would not wish that they should be, but it means that they have to depend and will always need to depend very much on the amount they are able to plough back from their profits in any trading period.
One of our strongest objections to what the Chancellor did last year is that that ploughing-back operation has been made all the more difficult for society management committees. Indeed, by raising the rate of tax from 3 per cent. to 10 per cent. the right hon. Gentleman has made that operation three times more difficult.
I would remind the right hon. Gentleman, as I reminded him last year, that it is not just a question of how this tax affects co-operative consumer societies. It very seriously affects agricultural cooperative societies. They, too, have great difficulty in getting adequate capital, and they complain that this Profits Tax provision hits them very hard and prevents them ploughing back as much as they would wish.
I urge the Chancellor, therefore, to have second thoughts now, and to recognise, as he failed to recognise last year, that a co-operative society is a financial and social undertaking completely different from an ordinary company. If he recognises that, then he should also logically recognise that we cannot apply the same tax formula to two such different kinds of institution and expect justice to emerge as the end result. It is on those grounds that I believe that justice can be done only by restoring the position, as this new Clause seeks to do, to the situation existing before last year's Budget.
7.45 p.m.
Mr. Arthur Palmer: I beg to second the Motion.
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I agree with my hon. Friend the Member for East Ham, South (Mr. Oram) that it gives the Chancellor an opportunity to put right what many of us think was an injustice to the Co-operative movement, perhaps an unintentional one, brought about by the changes made in the taxation of profits in last year's Budget, and although our arguments are not exactly new they are none the less sound on that account.
In case it is thought that this is some kind of rather special pleading on behalf of a perhaps narrow section of the community, I would point out that the Cooperative movement is a very widely-based, far-flung and democratic organisation. Further, when I read from time to time the speeches made by hon. Members opposite in their constituencies, I find that they often say that they give full support to the ideas and ideals of co-operation.
However, in spite of the service in terms of words that is often paid to the principles of co-operation by people of all political complexions, I agree with my hon. Friend that there seems a lack of appreciation of the fact that the co-operative society is, in its nature, a very different kind of economic unit from a normal trading company. But, in asking the Chancellor to think again, I repeat that we are going far beyond special pleading on behalf of a particular economic interest, and are speaking on behalf of a vast number of British men and women and their families.
I am no financier. I am a simple engineer who, perhaps, does not always fully understand these things, but with an ordinary-style trading company I suggest there is bound to be a quite legitimate but distinct division between the owners or shareholders on the one hand and the consumers to whom the products are sold on the other. That is a quite natural and understandable division. They are not the same people.
Therefore, if profits are made by the normal type of trading company, they can be distributed either as dividends to the shareholders or retained, as they often are—and the one practice is not exclusive of the other—as financial assets of the business. But if these courses are pursued with wisdom, the results are bound to be advantageous to the shareholders and, in the majority of cases,

1205
will tend to increase the value of the holdings. Therefore, the case for taxing distributed and undistributed profits on the same basis may be at least logical if not always sensible in the case of an ordinary trading company, since in each case one is dealing with wealth which represents an appreciation in value to the individuals concerned.
But with a co-operative society we are dealing with a horse of a very different colour. A co-operative society exists not for the purpose of creating wealth for individuals but for mutual trading on an economic basis, and value comes to the member of the co-operative society only in direct proportion to his active participation in buying and consuming from the society. That is a very real difference. As my hon. Friend the Member for East Ham, South said, the money paid out in dividends on purchases from co-operative societies, and on money retained in the society for that matter, does not add anything to the share values because the member of the society cannot sell his share at an enhanced value. He can only put money in or draw it out. Therefore, it seems to many of us that it is a little hard that co-operative societies should be treated now for the purpose of taxation on their undistributed surplus on the same basis as ordinary commercial companies.
The proposed new Clause—and this is my final and sincere plea to the Chancellor—seeks, in the interest of justice, and in order to encourage a very desirable form of economic enterprise, to treat the co-operative societies for taxation differently because they are in fact different. I hope he will agree to adopt it.
Mr. I. J. Pitman: I believe that I shall be in order in supporting not only this proposed new Clause relating to the Industrial and Provident Societies Acts but also the proposed new Clause (Exemption of building societies from charge to profits tax). One of the reasons why I plead strongly with my right hon. Friend the Chancellor of the Exchequer in this respect is that, very rightly, he has been reducing Profits Tax and removing the discrimination between tax on distributed profits and tax on undistributed profits; and on that basis, of reducing what I hold to be a bad tax, I hope that he will support the elimina-
1206
tion of that tax on co-operative societies and on building societies.
What the hon. Member for East Ham, South (Mr. Oram) has said on behalf of co-operative societies is so very true of building societies also. They really need to use their profits to build up their expansion and stability. The right hon. Member for Colne Valley (Mr. Glenvil Hall) and the hon. Member for Huddersfield, West (Mr. Wade) will be giving in great detail the difficulties which the building societies, with the co-operative societies, find in achieving the stability and expansion for which this House looks to them. If we wish to tax institutions it is much better to tax them at a higher rate of Income Tax qua institution than to make this ridiculous arrangement of discriminating between one kind of profit that is taxed and another kind of profit which is exempt from tax altogether.
The hon. Member for East Ham, South pointed out that loan capital is exempt in the case of the ordinary company. Why should it be exempt? What possible argument is there for saying of two people who are interested in the profits of a company and who have put up the capital for the development of that company, the one who should be exempt from tax is the one who has first call on those profits, namely, the lender of debenture money, the man who provides the building and charges the rent for it, who provides loan capital and so on, and that the people upon whom the tax should be levied are those who take the initiative and the risk, the entrepreneurs who are developing the business? It is a cockeyed and topsy-turvy arrangement that because, for the purposes of the Companies Act and for the protection of the creditors, an auditor is forced to draw a line between profit which ranks ahead of the interest to the creditors and profit which ranks behind the interest of the creditors, we should make that irrelevant differentiation the basis of taxation.
The whole structure of Profits Tax is based upon that wholly false premise, and in consequence we get a situation in which, shall we say, a very rich millionaire who is drawing out his money in debenture interest and in note interest, does not even indirectly pay a penny of this institutional taxation, whereas in a profit-sharing scheme the people in the

1207
works who are holding the shares which rank after the creditors are taxed.
If that is in essence a bad tax, why cannot we start to remove that tax for the benefit of the building societies and the co-operative societies which face this very real problem? By all means, if it is essential to introduce institutional taxation and to include co-operative societies and building societies as institutions trading for profit, we can, if the House so agrees, bring them in, but let us, at any rate, take the opportunity of these two new Clauses to found the taxation of institutions upon a sound basis. That can be done only if the Chancellor accepts these two Clauses and gives these two worthy bodies a chance of survival.
Mr. Donald Wade: Mr. Speaker has indicated that the proposed new Clause relating to the exemption of building societies from charge to Profits Tax may be discussed with this new Clause, and I should like to follow the hon. Member for Bath (Mr. Pitman) in referring to the subject matter of that Clause, which is supported by a number of right hon. and hon. Members in all parties.
The object of the Clause is to provide for the total exemption of building societies from Profits Tax on their surpluses. I have raised this subject before with partial success, but not to the extent of achieving the abolition of Profits Tax, and I can only hope that persistence will eventually triumph. I certainly support the observations of the hon. Member for Bath.
In view of the fact that these two Clauses are being taken together, it would be as well to point out that the problems of the building societies and the co-operative societies are not entirely the same. There are some distinctions which must be made. I do not wish to belittle the importance of the case that has been made for reducing the rate of Profits Tax on bodies such as the co-operative societies, but I think it should be made clear that building societies come into a special class of their own. This should be mentioned to avoid confusion and also for the reason that, whatever decision may be reached as to the liability of budding societies to Profits Tax, such a decision could not be regarded as creating a precedent in respect of other claims for relief. I know that that point is one
1208
which sometimes affects the Chancellor's mind.
8.0 p.m.
In previous debates, the different nature of building societies has always been recognised and on more than one occasion the observations of the late Lord Simon, then Sir John Simon, speaking on this subject in 1937, have been quoted. His remarks have gained almost the authority of a judicial decision. The particular statement I have in mind reads:
"Building societies stand in a class by themselves. They are not in competition with retail traders. They are not engaged in ordinary trade activities. They play an important part in the solution and treatment of the housing problem. They have constantly been regarded by Parliament as entitled to consideration on those grounds. They were, indeed, from the beginning exempted from the Corporation Profits Tax and from the first edition of the National Defence Contribution."—[Official Report. 14th July, 1937; Vol. 326, c. 1298.]
That building societies should be regarded as being in a class on their own was acknowledged by the right hon. Member for Colne Valley (Mr. Glenvil Hall) on 16th July, 1947, when speaking in his capacity as Financial Secretary to the Treasury. He stressed the distinction between building societies and cooperative societies. I hope that those who are advocating the case for the cooperative societies will not misunderstand me. I am quite willing to support their case, but I think it only fair to make the distinction.
Other comparisons between building societies and other bodies have been attempted. Last year, when the subject was debated, the Paymaster-General contended that building societies were comparable with investment trusts. He appeared to use this as one argument to justify the continued imposition of the tax on building societies. This contention should not be allowed to go unchallenged. It is not really a fair comparison, and it would be very unfortunate if the decision of the Government on this subject to continue the imposition of Profits Tax on building societies were to be based on a misapprehension.
As I understand, an investment trust may take the form either of a joint stock company or a unit trust. In both cases, those responsible endeavour to make profits, and in both cases there are persons to whom such profits may be distributed. In the joint stock company, there

1209
is the equity shareholder. In the unit trust, there is the unit holder who, in many respects, is in a position similar to that of the equity shareholder. In both cases, there are persons who may receive not only profits in the form of dividends but also capital gains.
In building societies, the circumstances are entirely different. There is no one who may receive either dividends or capital gains. Unfortunately, the issue is sometimes confused by likening depositors in a building society to ordinary shareholders. There is, of course a fundamental difference. The Chancellor, in altering the method of calculating liability to Profits Tax last year, recognised this fundamental difference. Interest paid by a building society is now rightly deducted before arriving at the figure upon which Profits Tax is calculated, but the question at issue, on which the Chancellor must still be challenged, is whether any Profits Tax should be charged at all.
In the debate on 2nd July, 1957, I suggested that building societies had three characteristics all of which were relevant in considering whether it was right to impose upon them this liability to Profits Tax. In the first place, unlike the co-operative societies, a building society is not allowed to engage in trading activities, as Sir John Simon, as he then was, pointed out. A building society does not compete with commercial concerns. It is not permitted to sell goods or property except in its position as mortgagee. Building societies are debarred by Statute, by the Act of 1874 and subsequent Acts, from trade or commerce. It cannot, therefore, be argued that it would be inequitable to grant relief to building societies while continuing to impose the tax on trading companies.
Secondly, building societies play an important part in the savings movement and can rightly be regarded as a special form of savings organisation. Thirdly, as I have already said, it is not the function of a building society to make profits. In a building society's balance sheet, one finds no record of profits and no equity shareholders to whom such profits could be distributed. The first and third characteristics I have mentioned are all-important. It would be quite logical to remove the tax since there are no profits. It would not create any injustice to
1210
others because there are no others in a similar position to that of the building societies.
A building society, of course, may have a surplus, but this is not the same thing as profits. It is the duty of a society to use any surplus to increase its reserves and thus enable it to expand. Indeed, I should like to see more and more people able to borrow from building societies, as well as from other sources, to buy their own homes. I would rather see that than see building societies restricted and, as a result, having to ration the loans they are able to grant. We have seen that happening from time to time since the war. It is certainly illogical for the Government to lend money to the building societies to help them to expand while, at the same time, imposing a tax which has the indirect effect of restricting their expansion.
As I have observed already, the only question is whether or not the Chancellor should take part of these potential reserves as if they were profits. Since building societies do not make profits, the societies have always considered it unfair that they should be subject to this tax. That is their main ground of objection to it. Further, there is the effect of the tax on reserves. This is all the more important now that building societies have been granted trustee status. In the House Purchase and Housing Act of this year the Government have recognised the importance of reserves and the need for retaining an adequate reserve ratio. The Taxation Committee of the Building Societies Association and the Council consider that the ratio of reserves to total assets should not be allowed to fall any further. I agree with them in that.
The figures which have been supplied to me indicate that the change which the Chancellor made a year ago in the method of calculating liability to Profits Tax has not led to any increase in the reserve ratio. It may be that if the rate of Profits Tax charged on building societies had been retained at the concessional rate of 2 per cent. instead of being raised to 10 per cent. the reserve ratio might have been improved. But that, of course, is a hypothetical question because it was, in fact, raised to 10 per cent.

1211
I do not wish to minimise the relief derived from the change which the Chancellor made in the method of calculating liability to tax, but it still remains true that substantial sums are being collected as a result of this somewhat anomalous Profits Tax. For example, in the year 1955–56, the amount paid in Profits Tax by building societies was £1½ million. That was under the old method of calculation. For the year 1958–59, the estimated figure, under the new method of calculation, is £1,700,000, which is rather more. It is true, of course, that it would be very much more under the old method of calculation. I give the figures merely to show by the comparison that, even under the new method, the total amount is rising.
It may be contended that, whatever the merits of the case, the Treasury obtains this revenue and it does not wish to lose it. In other words, the Chancellor may say that he collects this money and is jolly well going to keep it. That, at any rate, is logical. The tax itself is quite illogical. I would point out that it is only fair, I think, to recollect that it was largely due to fortuitous circumstances many years ago that the building societies were caught up in the Profits Tax net and furthermore that the money which the Treasury extract in this way would, but for this tax, be invested in Government securities by the building societies as part of their reserves. I should have thought that that was something which the Government should encourage.
I think, therefore, that the conventional arguments about not losing revenue scarcely apply in this case. I submit that from every angle there seems to be a very strong case for exempting the building societies altogether from this tax. I hope that before the debate is over the Chancellor will see fit to remove what the building societies have always regarded as an unjust anomaly.
8.15 p.m.
Mr. Frank Beswick: I want to return briefly to the Clause which stands in my name and the names of my hon. Friends. We are grateful for the incidental support which has been given to us by the hon. Members for Bath (Mr. Pitman) and Huddersfield, West (Mr. Wade), but I would, with respect
1212
to both hon. Members, suggest that the case for the societies registered under the Industrial and Provident Society Act is even stronger than that of the building societies.
I agree with the hon. Member for Huddersfield, West that there are some differences between the building societies and the co-operative societies. I suggest to him that one difference is that the co-operative societies are more democratically controlled. There is more member participation in the co-operative societies than in the building societies. There is an exercise in social responsibility with the Co-operative movement which is greater even than with the building societies.
I think that a case can be made on social grounds for the new Clause which my hon. Friend the Member for East Ham, South (Mr. Oram) moved so well. Both he and my hon. Friend the Member for Cleveland (Mr. Palmer) stated the facts extremely well. The figures are not in dispute. The change in the Finance Act about which we complain had the effect of relieving companies registered under the Companies Act of about £16 million a year, then imposed an extra burden on the co-operative societies of about £1·3 million, and even the building societies, about which the hon. Member for Huddersfield, West spoke, enjoyed a relief of about £1 million as a result of the change in last year's Finance Act.
My case is that when we are contemplating further reliefs, when the relief to companies registered under the Companies Act will be even greater this year, then we ought to be in a position not to penalise the Co-operative movement, but, at any rate, to return to the status quo. I agree that the experience that we have had since the change in the Act of last year does to some extent justify the flat rate of Profits Tax. It has become more and more apparent that the money ploughed back as undistributed profits in the ordinary company has had the effect of pushing up share values. It has increased capital values.
There have been tax-free profits and capital gains which have resulted, to some extent, from the favourable rate of Profits Tax previously applied to undistributed profits. But, as my hon. Friend the Member for East Ham, South said,

1213
there is no such thing as a capital gain in the Co-operative movement. There is no possibility of share appreciation. The case, therefore, for special treatment with regard to tax on surpluses or profits, call it what we will, is made out on that account.
The further point which I want to put to the Chancellor of the Exchequer is this. The Chancellor, for whom I have very great respect, always tries, it seems to me, to put before the British public an image of the sort of man he wishes to see and encourage. He tries to portray and create an image of a sturdy, independent and thrifty man. That is the type of individual we are given to understand the Chancellor wishes to encourage in the society which he wants to create. But what is the reality behind the image? He has not encouraged the sturdy, independent and thrifty man. It is the "wise guy", the "Smart Alec", the speculator, the clever operator in the City who has benefited from the changes in the Finance Bill. I do not want to get on to party political grounds. There is no reason why we should debate this matter as a party issue, because there are co-operative societies which in the past have been supported and today are supported by people of all political persuasions.
Even in that land of free enterprise, the capitalist heaven of the United States, the Co-operative movement is forging ahead. The co-operative societies there, especially in the farming areas of the Middle West, have resulted in the elimination of the middle man and of the credit usurers. They have enabled the farmers to bring down the cost of living and to give to the consumer a fairer price. I remember my attention being called to a fertiliser mill in the Middle West. Prices of fertilisers had been brought down by the efforts of the farmers who had banded together in a co-operative society. When passing this fertiliser mill, I saw a notice which read, "Farmers have paid for many mills. This one they really own."
That is the sort of thing that the Chancellor says he wants to encourage, that kind of self-help among people cooperating together in a way which is not only financially and economically advantageous but is also helpful to the creation of the character and spirit which we want to see in this country.
1214
Is the Chancellor satisfied with the emphasis which he has placed on the Finance Bill? He has given all the help and encouragement to the type of individual that I should have thought he would not wish to encourage. The other day, my right hon. Friend the Member for Huyton (Mr. H. Wilson) went through a list of the people who have gained tax-free—
Mr. Deputy-Speaker (Sir Gordon Touche): Order. The hon. Member is getting away from the new Clause.
Mr. Beswick: I can see why you think that, Mr. Deputy-Speaker, but I wish to emphasise that, although there are these hard facts and figures which have been emphasised by my hon. Friends, there is another side of the case which I am trying to put. There is a social side as well as an economic side, and I should have thought that it was the social side, in particular, to which the Chancellor should listen. I did not propose to pursue the other point at great length. I simply proposed to say to the right hon. Gentleman that, whereas it is undeniable that he has encouraged individuals in tax-free gains, he has done nothing for the movement that has helped to create this fine and valuable spirit in Britain. He has done nothing to help the Co-operative movement.
There have been other Clauses before the House in which the right hon. Gentleman has discriminated against the Cooperative movement. I therefore ask him to look at this proposal with the greatest sympathy that he can muster to see whether he can accept it, not only as a help economically to the nation, but also as a help in the creation of something which is probably even better than economic values—something which will assist the moral fibre of this nation, to which I know the right hon. Gentleman gives so much interest.
Mr. Amory: We have had an excellent debate on this subject. I disagree with practically nothing that any hon. Member has said, except the conclusions that some hon. Gentlemen have reached. I do not resent at all what the hon. Member for Uxbridge (Mr. Beswick) has said, although he has, perhaps, gone a little far and not been quite fair to the proposals I have made in the Budget. The reduction in the standard rate of Income

1215
Tax is of benefit to the Co-operative movement and to the building societies, too—in fact, to everybody.
In reply to the hon. Member for Cleveland (Mr. Palmer), I have no bricks to throw against the Co-operative movement or the building societies. The hon. Member for Uxbridge is quite right. It is not a party matter. The Co-operative movement spreads widely throughout our national life and in all its manifestations it makes a sound contribution to our economy, as it does to the economy of other countries. I have, therefore, no bricks whatever to throw against the Co-operative movement or the building societies.
The new Clause, moved by the hon. Member for East Ham, South (Mr. Oram), seeks to give co-operative societies relief from Profits Tax by reducing the rate paid by them from the current rate of 10 per cent. to 3 per cent. As the hon. Member said, the Clause raises issues with which hon. Members will be familiar and which we discussed fairly fully on last year's Finance Bill.
Reference has been made to the new Clause in the name of the hon. Member for Huddersfield, West (Mr. Wade) proposing that building societies should be completely exempted from the tax. I will refer to that presently. Part IV of the Finance Act, 1958, gave effect to the recommendations of the Royal Commission of the Taxation of Profits and Income for reforming the Profits Tax. That was the main reason why I proposed those reforms last year. I was convinced by the arguments of the Royal Commission.
The differential scheme of tax which had been in force between 1947 and last year was abolished and for chargeable periods ending after the beginning of April, 1958, the profits of companies and similar bodies were charged at the flat rate of 10 per cent. At the same time, effect was given by Section 26 (2) of the Act to the recommendation of the Royal Commission in regard to Co-operative societies. They were allowed a deduction in computing their profits for tax purposes, in respect of the interest paid on the shares, as the hon. Member for East Ham, South has said. The balance of the profits of societies was
1216
made subject to tax at the new uniform rate of 10 per cent. That is what is current now.
Under the differential scheme previously in force, co-operative societies were charged a tax of 3 per cent. on their profits without any deduction for the share interest which they paid. The present proposal would reduce the rate of tax from 10 per cent. to 3 per cent., but the societies would continue to be entitled to the deduction in respect of share interest which was allowed by last year's Finance Act.
I am well aware that if the supporters of the new Clause had sought to restore fully the position that obtained before last year's Finance Act, their proposal might well have been ruled out of order. Addressing my remarks to the Clause as it stands, however, it would not only put co-operative societies in a privileged position by comparison with other trading concerns, but it would, at the same time, give them more favourable treatment than they have ever enjoyed before. Hon. Members will not be surprised, therefore, to hear that I must regard that as an unacceptable proposition.
Hon. Members have been at pains to point out the differences between cooperative societies and other trading concerns. My reply must be that to the extent that that is so—and I agree that there are differences—the fact is already recognised by the existing law. It is true, as the Royal Commission said in relation to dividends on members' shares, that
"the distinction between a member and a mere creditor by deposit"
is
"a very fine one ".
It is for that reason that societies are now allowed to deduct share interest in computing their profits for Profits Tax purposes. It is only the balance of their profits which are put to reserve that is charged to the tax and it would not be reasonable for one class of trader to be charged on such profits at 3 per cent. while others are charged at 10 per cent. when the two types of trader may well be competing against one another.
My whole aim in last year's reforms was, as far as possible, to get cooperative societies treated fairly relative to the other kinds of concerns with which they might be trading in competition.

1217
That is a reasonable proposition to put forward and a reasonable position to try to reach.
It has been suggested that the basis on which co-operative societies were chargeable before the flat rate was introduced was reasonable and that they ought not to be subjected to increased liability as a result of last year's reform. I own that I was disappointed when I found that it worked out that way. I admit that the reform which I proposed last year in the Profits Tax was a rough and ready one and that some people gained and some suffered. To obtain the position that I felt it right to obtain, however, I could not find any way in which those unevennesses in the effects could be evened out. I knew last year that it would work out disadvantageously and the figure which has been quoted of the extent—£1·3 million—is right. I would not, however, find a way in which that could be avoided while still aiming at the position in which there would be fair treatment between the co-operative societies and other traders of the same kind with whom they compete.
Mr. Beswick: The Chancellor has said that he could not find a way to remove this penalty of £1·3 million. Surely, if the tax were levied at the lower rate, it would do away with that effect.
Mr. Amory: I qualified my remarks by stressing the need for fairness to the other concerns with whom the cooperative societies would be competing. The same thing happened between one company and another. There were unevennesses of this kind, and one company had to pay more and another less according to their dividend distribution policy.
Mr. Oram: While it may be true that some companies were better off and some worse off, is it not true that all cooperative societies were distinctly worse off? In fact, they found themselves paying something like twice the amount of Profits Tax which they had previously paid.
Mr. Amory: I understand that was not literally so. Most co-operative societies found themselves better off, but some who had to pay more found themselves worse off. But I do not think that I can substantiate that in detail by quoting cases. If the hon. Gentleman thinks it is not so, perhaps he will write and take me
1218
up on that, and we will see. But that is my impression.
I think that under the differentials scheme which obtained co-operative societies were then probably treated about as fairly as could be worked out, but when once we abolished the differential scheme and went to a uniform scheme then, I think, the treatment which was proposed last year was in fact the fair treatment, if we were to treat them on the same basis as other concerns.
8.30 p.m.
Building societies are charged Profits Tax now at 10 per cent.—I was going to say on their retained profits, but I will now say on their surplus, in view of what the hon. Member for Huddersfield, West said—after deducting the dividends they put on their shares as well as on the deposit interest they pay, and also any Income Tax they pay in respect of such dividends and interest. Again, that treatment follows the recommendations of the Royal Commission, and it was fully considered last year. It worked the other way with the building societies and they were rather better off, not worse off, but that was not premeditated by me. That was the way it worked out if we gave them uniform treatment.
I will not follow the point made by my hon. Friend the Member for Bath (Mr. Pitman) which was on the rather wider question of Profits Tax, except to agree with him that it is largely, for good or ill, a tax on the equities of a business.
I have looked at the matter again. I fully acknowledge the part which the cooperative societies and the building societies play. After considering it again I can see no reason for departing from the view which all my predecessors have taken that the building societies should be subject to the tax like other companies and societies.
As regards the new Clause relating to the co-operative societies, my conclusion again is that given the existence of a flat rate of Profits Tax the present arrangements for charging—
Mr. Palmer: The right hon. Gentleman seems to be admitting that some kind of injustice was done to the co-operative societies. That is the general drift of his argument. If he is explaining our argument away on the ground that it would

1219
swing the pendulum too much in favour of the co-operative societies, then if 3 per cent. were too much of a swing, would it not be possible to have a percentage which would be just about right?
Mr. Amory: I am afraid I have not explained myself well, if that is the effect my words have had on the hon. Gentleman. I do not feel that there is any injustice in this system. I believe, on the contrary, that the proposals we made last year give fair treatment and justice between the co-operative societies and the companies and other concerns with which they compete. I do not think there is really any injustice, although there has been an additional burden on them. I do not dispute that, but that is not the same thing as doing injustice. Not at all. If it were, I should have a great many injustices on my conscience.
In conclusion, I will sum up by saying that, after looking into it, neither in the case of the building societies nor of the co-operative societies can I find anything unjust, unreasonable or unfair in the treatment which they were given last year, and I believe that the case for the reduction to 3 per cent. has not really been made out.
Mr. H. Wilson: It has been an interesting and, I think, a good-tempered debate. I think all of us were a little surprised at the drift of the Chancellor's concluding remarks. After admitting that last year he was trying to bring some relief in his tax changes, he admitted that, so far from their getting any relief, they have had to bear an additional burden. He then said that he did not think that it was an injustice but that that was just an additional burden for them to carry. Having already shown by the strength of his argument that he considered the burden to be unjust—
Mr. Amory: Oh, no.
Mr. Wilson: The Chancellor cannot make his speech again.
Mr. Amory: With the permission of the House.
Mr. Wilson: I am glad the right hon. Gentleman has got it right this time.
I do not want to go over the main arguments we had last year when the
1220
Chancellor made what many of us considered to be the highly retrograde step of unifying two rates of Profits Tax. At that time we warned him what the effect would be. We said that it would encourage, and not only encourage but reward, those companies which have been making fairly lavish dividend distributions against the wishes of successive Chancellors of the Exchequer while, at the same time, it would penalise all the private enterprise companies which had shown dividend restraint at the request of successive Chancellors of the Exchequer. We pointed out that that would be the effect. We said that this would reward the brewery companies, the property companies and the rest. That is exactly what has happened. This Chancellor, like many of his predecessors, has always had a soft spot for the brewery companies, the property companies and those whose services to the nation are a great deal less than some of our more productive organisations, and organisations covered in the Clause which we are now debating.
Our forecast of this particular change last year was that it would, of course, give a new incentive to increased dividend distribution, and that has certainly happened. A great deal of the boom on the Stock Exchange over the past few months has been caused by the Chancellor's action a year ago. It has not been that industry has been more profitable. We have had a long run of company statements which show that they made less profits. Many companies have been able to distribute more in dividends despite lower profits. That was predictable, and we predicted it, as a result of what the Chancellor set out to do last year.
The third development which we forecast was, of course, the great injustice that would be done to a whole range of undertakings which existed for service rather than for profit. I should be out of order to repeat all that we warned the Chancellor about in relation to the Mersey Tunnel fund, the local authorities, some of the charitable institutions and some of the institutions associated with various Nonconformist Churches. I think that the hon. Member for Huddersfield, West (Mr. Wade) had something to say about that last year.
I cannot go into all that on the rather narrow Clause that we are now discussing,

1221
but we issued a very strong warning as to what would be the effect on the co-operative societies. That our warnings were justified has been made clear by the Chancellor tonight. Even though he does not think this a wanton additional burden on these abodes and temples of thrift, he does not think that it is an injustice. This has just happened. He has gone ahead regardless of the warnings given, and he does not attempt to answer any of the arguments. He says, "I have listened to all the arguments and, on balance, I think this is right". That is typical of the Chancellor's replies and the only one that we get from him. He never attempts to deal with the points raised on the Finance Bill.
He says, "I have listened to all that you have to say and I have every sympathy with what you say, but I do not agree with the conclusion, and I am not going to do it." If he is really shaken by the arguments—if one can imagine the Chancellor being shaken by anything—he says, "I have considered it all, but, on balance, I think that what I have said was right." Is that the sort of argument to use in the House of Commons? He should tell us why he thought it right and why he considers the arguments put forward by my hon. Friends, with very much persuasiveness and eloquence, to be wrong. He has not done that tonight and he did not do it a year ago in relation to the co-operative societies.
I do not want to repeat the convincing arguments made by the mover and seconder of the Clause and by my hon. Friend the Member for Uxbridge (Mr. Beswick), who supported it, but I would draw attention to the remarkable speech of the hon. Member for Bath (Mr. Pitman) who, I thought, made a very powerful plea both on behalf of the co-operative societies and the building societies and dealt with many of the anomalies—the Chancellor would not consider them injustices—of the present
system of Profits Tax as between loan capital, debenture and equity shares and the rest. Without repeating what has been said, I want to underline one point that has been made for the co-operative societies which are very different from any private enterprise institutions
There was not room in the debate we had a week ago on take-over bids and some of the abuses of Profits Tax to include the co-operative societies, because one does not get the sort of abuse that we were then debating. Shares in co-operative societies are not traded on the Stock Exchange. They are not capable of capital gains. The same is true of the building societies, as I have said year after year at this Dispatch Box. Shares are bought from and sold back to the building society or the co-operative society at their par value and that makes a big difference. If there is a case for a Profits Tax in its present form it is that to some extent it takes back for society some of the profits made out of society, and this underlines the need for a fair system of tax.
On all these grounds, since we have no capital gains tax and the co-operative societies have to pay 10 per cent. Profits Tax in exactly the same way as a company in which large capital gains are possible, we consider the Chancellor, to coin a phrase, has "failed the nation" in the reply given to us tonight. The penalty for that he will find in due course. The Amendment is a token of the much broader argument we pursued last year, but it is one to which we attach great importance and about which we feel strongly. We are not prepared to accept the Chancellor's reply. We share his sense of injustice, even if he recoils from the use of the word, and we propose to express his and our sense of injustice in the Division Lobby.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 194, Noes 217.

Division No. 162.]

AYES

[8.44 p.m.

Abse, Leo

Bevan, Rt. Hon. A. (Ebbw Vale)

Boyd, T. C.

Ainsley, J. W.

Blackburn, F.

Braddock, Mrs. Elizabeth

Albu, A. H.

Blenkinsop, A.

Brockway, A. F.

Allaun, Frank (Salford, E.)

Blyton, W. R.

Broughton, Dr. A. D. D.

Bacon, Miss Alice

Boardman, H.

Brown, Thomas (Ince)

Balfour, A.

Bottomley, Rt. Hon. A. G.

Burke, W. A.

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

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

Burton, Miss F. E.

Benson, Sir George

Bowen, E. R. (Cardigan)

Butler, Herbert (Hackney, C.)

Beswick, Frank

Bowles, F. G.

Butler, Mrs. Joyce (Wood Green)

Carmichael, J.

Irving, Sydney (Dartford)

Roberts, Goronwy (Caernarvon)

Castle, Mrs. B. A.

Janner, B.

Robinson, Kenneth (St. Pancras, N.)

Champion, A. J.

Jay, Rt. Hon. D. P. T

Ross, William

Chapman, W. D.

Johnson, James (Rugby)

Royle, C.

Chetwynd, G. R.

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

Short, E. W.

Cliff, Michael

Jones, Jack (Rotherham)

Silverman, Julius (Aston)

Clunie, J.

Jones, J. Idwal (Wrexham)

Silverman, Sydney (Nelson)

Coldrick, W.

Key, Rt. Hon. C. W.

Skeffington, A. M.

Corbet, Mrs. Freda

King, Dr. H. M.

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

Craddock, George (Bradford, S.)

Lawson, G. M.

Slater, J. (Sedgefield)

Cronin, J. D.

Lee, Frederick (Newton)

Smith, Ellis (Stoke S.)

Crossman, R, H. S.

Lee, Miss Jennie (Cannock)

Sorensen, R. W.

Darling, George (Hillsborough)

Lever, Harold (Cheatham)

Sparks, J. A.

Davies, Ernest (Enfield, E.)

Lever, Leslie (Ardwick)

Spriggs, Leslie

Davies, S. O. (Merthyr)

Lewis, Arthur

Steele, T.

Deer, G.

Mabon, Dr. J. Dickson

Stonehouse, John

de Freitas, Geoffrey

McAlister, Mrs. Mary

Stones, W. (Consett)

Delargy, H. J.

McCann, J.

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

Diamond. John

MacColl, J. E.

Swingler, S. T.

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

MacDermot, Niall

Sylvester, G. O.

Ede, Rt. Hon, J. C.

McInnes, J.

Symonds, J. B.

Edelman, M.

McLeavy, Frank

Taylor, Bernard (Mansfield)

Evans, Edward (Lowestoft)

MacPherson, Malcolm (Stirling)

Taylor, John (West Lothian)

Fernyhough, E.

Mahon, Simon

Thomas, Iorwerth (Rhondda, W.)

Fitch, A. E. (Wigan)

Mallalieu, J. P. W. (Huddersfd, E.)

Thomson, George (Dundee, E.)

Fletcher, Eric

Mann, Mrs. Jean

Thornton, E.

Forman, J. C.

Mason, Roy

Tomney, F.

Fraser, Thomas (Hamilton)

Mayhew, C. P.

Ungoed-Thomas, Sir Lynn

George, Lady Megan Lloyd (Car'then)

Mikardo, Ian

Usborne, H. C.

Gibson, C. W,

Mitchison, G. R.

Viant, S. P.

Grenfell, Rt. Hon. D. R.

Monslow, W.

Wade, D. W.

Grey, C. F.

Morris, Percy (Swansea, W.)

Warbey, W. N.

Griffiths, David (Rother Valley)

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

Watkins, T. E.

Griffiths, Rt. Hon. James (Lianelly)

Mort, D. L.

Weitzman, D.

Grimond, J.

Moyle, A.

Wells, Percy (Faversham)

Hale, Leslie

Mulley, F. W.

Wheeldon, W. E.

Hall, Rt. Hn. Glenvil (Colne Valley)

Noel-Baker, Francis (Swindon)

White, Mrs. Eirene (E. Flint)

Hamilton, W. W.

O'Brien, Sir Thomas

White, Henry (Derbyshire, N. E.)

Hannan, W.

Oliver, G. H.

Wilcock, Group Capt. C. A. B.

Hastings, S.

Oram, A. E.

Wilkins, W. A.

Hayman, F. H.

Orbach, M.

Willey, Frederick

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

Oswald, T.

Williams, David (Neath)

Harbison, Miss M.

Padley, W. E.

Williams, Rev. Llywelyn (Ab'tillery)

Hewitson, Capt. M.

Palmer, A. M. F.

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

Hobson, C. R. (Keighley)

Pargiter, G. A.

Williams, W. R. (Openshaw)

Holman, P.

Peart, T. F.

Williams, W. T. (Barons Court)

Holmes, Horace

Pentland, N.

Willis, Eustace (Edinburgh, E.)

Holt, A. F.

Price, J. T. (Westhoughton)

Wilson, Rt. Hon. Harold (Huyton)

Houghton, Douglas

Price, Philips (Gloucestershire, W.)

Winterbottom, Richard

Howell, Charles (Perry Barr)

Probert, A. R.

Woodburn, Rt. Hon. A.

Hoy, J. H.

Pursey, Cmdr. H.

Woof, R. E.

Hughes, Cledwyn (Anglesey)

Rankin, John

Yates, V. (Ladywood)

Hughes, Emrys (S. Ayrshire)

Redhead, E. C.

Zilliacus, K.

Hughes, Hector (Aberdeen, N.)

Reeves, J.

Hunter, A. E.

Reynolds, G. W.

TELLERS FOR THE AYES:

Hynd, H. (Accrington)

Rhodes, H.

Mr. Pearson and Mr. Simmons.

Hynd, J. B. (Attercliffe)

Robens, Rt. Hon. A.

NOES

Agnew, Sir Peter

Brewis, John

Dodds-Parker, A. D.

Aitken, W. T.

Brooman-White, R. C.

Donaldson, Cmdr. C E. MoA.

Amory, Rt. Hn. Heathcoat (Tiverton)

Browne, J. Nixon (Craigton)

Doughty, C. J. A.

Anstruther-Gray, Major Sir William

Bryan, P.

Drayson, G. B.

Arbuthnot, John

Bullus, Wing Commander E. E,

du Cann, E. D. L.

Armstrong, C. W.

Burden, F. F. A.

Duncan, Sir James

Atkins, H. E.

Carr, Robert

Eden, J. B. (Bournemouth, West)

Baldwin, Sir Archer

Cary, Sir Robert

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

Barber, Anthony

Chichester-Clark, R.

Emmet, Hon. Mrs. Evelyn

Barter, John

Clarke, Brig, Terence (Portsmth, W.)

Errington, Sir Eric

Batsford, Brian

Conant, Maj. Sir Roger

Erroll, F. J.

Baxter, Sir Beverley

Cooke, Robert

Finlay, Graeme

Bell, Philip (Bolton, E.)

Cooper-Key, E. M.

Fisher, Nigel

Bell, Ronald (Bucks, S.)

Cordeaux, Lt.-Col. J. K.

Fletcher-Cooke, c.

Bennett, F. M. (Torquay)

Corfield, F. V.

Forrest, G.

Bevins, J. R. (Toxteth)

Courtney, Cdr. Anthony

Freeth, Denzil

Biggs-Davison, J. A.

Craddock, Beresford (Spelthorne)

Galbraith, Hon. T. G. D.

Bingham, R. M.

Crowder, Sir John (Finchley)

Gammans, Lady

Birch, Rt. Hon. Nigel

Cunningham, Knox

George, J. C. (Pollok)

Bishop, F. P.

Currie, G- B. H.

Gibson-Watt, D.

Black, Sir Cyril

Dance, J. C. G.

Glover, D.

Body, R. F.

Davidson, Viscountess

Glyn, Col. Richard H.

Bossom, Sir Alfred

D'Avigdor-Goldsmid, Sir Henry

Goodhart, Philip

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

Deedes, W. F.

Gough, C. F. H.

Boyle, Sir Edward

de Ferranti, Basil

Gower, H. R.

1224

1225

Graham, Sir Fergus

Low, Rt. Hon. Sir Toby

Rippon, A. G. F.

Grant, Rt. Hon. W. (Woodside)

Lucas, Sir Joselyn (Portsmouth, S.)

Roberts, Sir Peter (Heeley)

Green, A.

Lucas, P. B. (Brentford & Chiswick)

Robinson, Sir Roland (Blackpool, S.)

Gresham Cooke, R.

Lucas-Tooth, Sir Hugh

Robson Brown, Sir William

Grimston, Sir Robert (Westbury)

Macdonald, Sir Peter

Roper, Sir Harold

Grosvenor, Lt.-Col. R. G.

McMaster, Stanley

Russell, R. S.

Gurden, Harold

Macpherson, Niall (Dumfries)

Scott-Miller, Cmdr. R.

Hall, John (Wycombe)

Maddan, Martin

Shepherd, William

Harrison, A. B. C. (Maldon)

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

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

Harrison, Col. J. H. (Eye)

Maitland, Hon. Patrick (Lanark)

Smithers, Peter (Winchester)

Harvey, John (Walthamstow, E.)

Manningham-Buller, Rt. Hn. Sir R.

Stanley, Capt. Hon. Richard

Heald, Rt. Hon. Sir Lionel

Markham, Major Sir Frank

Stevens, Geoffrey

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

Marlowe, A. A. H.

Steward, Harold (Stockport, S.)

Henderson-Stewart, Sir James

Marples, Rt. Hon. A. E.

Steward, Sir William (Woolwich, W.)

Hesketh, R. F.

Marshall, Douglas

Stoddart-Scott, Col. Sir Malcolm

Hicks-Beach, Maj. W. W.

Maudling, Rt. Hon. R.

Storey, S.

Hirst, Geoffrey

Mawby, R. L.

Stuart, Rt. Hon. James (Moray)

Hobson, John (Warwick & Leam'gt'n)

Medlicott, Sir Frank

Summers, Sir Spencer

Holland-Martin, C. J.

Nabarro, G. D. N.

Taylor, Sir Charles (Eastbourne)

Hornby, R. P.

Nicholson, Sir Godfrey (Farnham)

Taylor, William (Bradford, N.)

Horobin, Sir Ian

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

Teeling, W.

Howard, Gerald (Cambridgeshire)

Noble, Michael (Argyll)

Thomas, Leslie (Canterbury)

Howard, John (Test)

Nugent, Richard

Thompson, Kenneth (Walton)

Hughes Hallett, Vice-Admiral J.

Oakshott, Sir Hendrie

Thompson, R. (Croydon, S.)

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

O'Neill, Hn. Phelim (Co. Antrim, N.)

Thornton- Kemsley, Sir Colin

Hutchison, Sir James (Scotstoun)

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

Tiley, A. (Bradford, W.)

Hylton-Foster, Rt. Hon. Sir Harry

Osborne, C.

Tilney, John (Wavertree)

Iremonger, T. L.

Page, R. G.

Turton, Rt. Hon. R. H.

Jennings, J. C. (Burton)

Partridge, E.

Vane, W. M. F.

Johnson, Dr. Donald (Carlisle)

Peel, W. J.

Vickers, Miss Joan

Johnson, Eric (Blackley)

Pickthorn, Sir Kenneth

Vosper, Rt. Hon D. F.

Joseph, Sir Keith

Pike, Miss Mervyn

Wakefield, Edward (Derbyshire, W.)

Kaberry, D.

Pilkington, Capt. R. A.

Wakefield, Sir Wavell (St. M'lebone)

Kerby, Capt- H. B.

Pitman, I. J.

Wall, Patrick

Kerr, Sir Hamilton

Pitt, Miss E. M.

Ward, Dame Irene (Tynemouth)

Kimball, M.

Pott, H. P.

Webbe, Sir H.

Lambton, Viscount

Powell, J. Enoch

Webster, David

Lancaster, Col. C. G.

Price, David (Eastleigh)

Whitelaw, W. S. I.

Langford-Holt, J. A.

Price, Henry (Lewisham, W.)

Williams, Paul (Sunderland, S.)

Leavey, J. A.

Prior-Palmer, Brig. Sir Otto

Williams, R. Dudley (Exeter)

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

Profumo, J. D.

Wills, Sir Gerald (Bridgwater)

Legh, Hon. Peter (Petersfield)

Ramsden, J. E.

Wilson, Geoffrey (Truro)

Lindsay, Hon. James (Devon, N.)

Rawlinson, Peter

Wolrige-Gordon, Patrick

Lindsay, Martin (Solihull)

Redmayne, M.

Woollam, John Victor

Linstead, Sir H. N.

Rees-Davies, W. R.

Yates, William (The Wrekin)

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

Remnant, Hon. P.

Longden, Gilbert

Renton, D. L. M.

TELLERS FOR THE NOES:

Loveys, Walter H.

Ridsdale, J. E.

Mr. Hughes-Young and

Mr. J. E. B. Hill.

New Clause.—(RELIEF IN RESPECT OF APPRENTICES AND TECHNICAL EDUCA TION.)
(1) Section one hundred and forty of the Income Tax Act, 1952 (Payment for technical education), shall apply to a payment of wages made to an apprentice of the claimant, being an apprentice undergoing, whether in the place of business of the claimant or elsewhere, a course of instruction approved by the Commissioners after consultation with the Industrial Training Council, as it applies to such a payment as is mentioned in that section.
(2) Where by virtue of the said section one hundred and forty or of the said section as applied by the last foregoing subsection a payment may be deducted as an expense in computing the profits or gains of a trade for the purposes of income tax, there may be made in addition to that deduction a further deduction equal to one-third of the first-mentioned deduction and the said section one hundred and forty shall apply to that further deduction as it applies to the first-mentioned deduction.
(3) This section shall not apply in relation to more than five persons in respect of whom the claimant makes such payments as are mentioned in the said section one hundred and forty or in subsection (1) of this section.
(4) Nothing in this section shall affect any deduction from the profits or gains of a trade which may be made for purposes of income tax otherwise than by virtue of this section:
Provided that the same deduction shall not be made both by virtue of this section and otherwise.—[Mr. Albu.]
Brought up, and read the First time.
Mr. Austen Albu: I beg to move, That the Clause be read a Second time.
I am moving the new Clause in furtherance of a promise, or threat, that I made on the occasion of the debate on apprenticeship that we had on 3rd April. I do not intend to repeat the arguments used very powerfully in that debate by my right hon. Friend the Member for Blyth (Mr. Robens) and other hon. Members on both sides of the House. On that occasion very general anxiety was expressed about the position of apprenticeship in this country, and I do not think that those anxieties were relieved by the debate or by the Government's reply to it.

1227
The purpose of this complicated-looking Clause is to give an incentive in the form of an additional tax relief over and above the normal tax relief which an employer would get for the wages of an apprentice or for the cost of his technical education. It is to increase the amount that he will receive by one-third, provided, however, that the apprenticeship scheme is one which has been approved by the Commissioners after consultation with the Industrial Training Council, and one would presume that it would always include not only an adequate system of training within the workshop but at least one day per week release for attendance at a technical college for the theoretical part of the training.
The general anxiety which is expressed both inside and outside the House of Commons about the apprenticeship situation was not relieved by the figures which were given by the Parliamentary Secretary to the Ministry of Labour in the debate on 3rd April, nor by his reply to a Question on 8th May, which showed that the peak of the entry into apprenticeship was reached in 1955, that the figures have been lower every year since, and that in 1958 the number of boys entering apprenticeship schemes was the lowest since 1955. That is in spite of the very substantial increase in the number now leaving our secondary schools.
It is generally known that a good deal of this problem, though not by any means all of it, is caused by the small firms who make very little contribution to apprenticeships. The new Clause, as will be seen when I describe it in rather more detail in a moment, is directed to the small and medium-sized firms, firms with fewer than 500 employees each who together employ rather more than half the industrial workers in the country.
These small firms cannot really afford what is today considered to be an adequate system of apprenticeship. The Economic Secretary is well aware what an adequate system of apprenticeship is, because he served one in one of the most distinguished companies in this country which has a very fine apprenticeship system for all levels of apprentices. However, many firms cannot afford to have either proper training workshops, which are now considered to be an essential first part of an apprenticeship scheme, or proper training officers who can supervise
1228
the apprentices during the course of their training. It is also claimed that they cannot afford the payment of wages for the day per week on which an apprentice during the whole of the five years of his apprenticeship should be released for study at a technical college.
To overcome some of these difficulties, there have been instituted group schemes of apprenticeship by various organisations, the most well-known of which is the Engineering Industry Group Apprenticeship Scheme. These group schemes provide that in one of the larger workshops or a technical college there shall be available an apprentice training workshop and proper supervision by a training officer for the group in the scheme. These schemes are particularly directed to small and medium-sized firms and they have had a fair amount of success. Unfortunately, for a reason I cannot understand, they have been opposed by the Engineering Employers' Federation officially, although of course a great many of its members must be participating in them. It is very extraordinary that, in view of the fact that this body has put forward no alternative scheme, this action should have been taken.
To encourage smaller firms to participate, it is generally felt that either a stick or a carrot is needed and this proposal is in the form of a carrot. It is a form of tax relief, or some might say that it is more than a tax relief, to encourage them to enter and take part in properly constituted schemes. If this new Clause were accepted and if it were the case that the Industrial Training Council, or some other body, were to give approval to such schemes, I have no doubt it would insist on the conditions of some sort of training workshop, some sort of apprentices' supervisor or education officer for the scheme, with some sort of supervision of the apprentices during their period of apprenticeship.
Many ways have been suggested by which we can get more apprentices, but this way of some sort of tax relief has received a great deal of support. For instance, in The Times of 16th February a leading article discussing the various proposals for assisting the growth of the number of apprentices said:
"Perhaps the most promising is the suggestion that the Government should make tax allowances for the days on which apprentice" are released to go to technical schools."

1229
This form of tax relief was a suggestion made by Mr. E. L. G. Robbins, a partner of the firm of consultants who manage the engineering industry's scheme. His scheme envisaged a fixed amount to be paid per apprentice based on the number of days an apprentice was released to a technical college. Under this arrangement the incentive would be considerably greater at the beginning of the apprenticeship when the apprentice's wages were lower and he was less productive and it would be lowest at the end of the apprenticeship, when he was considered by the employer to be more productive.
In the proposal put forward in the new Clause, however, the scheme would take account of the variations of wages because it would be proportionate to the wages which would grow during the apprenticeship. It also has this advantage, that it would maintain the incentive when the worker is most valuable to the employer, but when it is equally important to prevent any temptation to stop the apprentice receiving training in the workshop or by release to a technical college. If one takes the average wage of an apprentice at about 15s. a day, the extra relief would amount to the tax on 5s. a day and come to about £30 a year. That is rather more than Mr. Robbins's scheme, but it takes account not only of the training time in the workshop but also of any subscription to maintain the group scheme, which has to be paid in order to pay the salary of an education officer and other administrative expenses of the scheme as well as the simple wages of the day release.
9.0 p.m.
Mr. Robbins has made an estimate that today there might be approximately 36,000 apprentices in small firms in engineering, the field to which he referred, though it is applicable to other industries as well. He estimated that his scheme would in fact cost, if the number of apprentices in the small firms were doubled, something like £1½ million. I think that the scheme proposed in my new Clause would cost rather more—something between £2 million and £3 million—but that would only be on the condition that the number of apprentices in the small firms reached something like double the present number. If it did not, not only would
1230
the scheme be less effective but it would cost less as well. If it were to be successful, it would certainly be well worth the amount of money which it would cost the Treasury, because there is no doubt that this is an extremely important and very difficult subject.
It has been argued, I know, by the Ministry of Labour or the Treasury that this incentive is not very great and is not likely to have any effect. I think this is not true in the case of the smaller firms. In the new Clause it is proposed to restrict the number of apprentices to five so that, in fact, it would have very little effect on the large firms, but quite a substantial effect on small and medium-sized firms. It is the general view of those who know anything about this and have gone into this matter that it would have some effect, though I am not suggesting that this is the only thing that we have to do in this field. It would make a start and perhaps begin again to increase the number of those entering apprenticeships.
I am well aware that some purists in taxation matters may not like a scheme of this sort, but I suggest that there is a precedent for it and that is the investment allowances. Under the investment allowances, the purchaser of new capital equipment gets back more in depreciation than he actually paid for the plant, and in this case the employer will be allowed taxation relief on more than he pays out in wages.
It is, therefore, comparable to the investment allowances, and I hope that the Chancellor, who once, I believe, looked not unfavourably on a scheme of this sort, will look at it again and see if he cannot accept it.
Mr. Frederick Mulley: I beg to second the Motion.
I support the case which has been admirably put by my hon. Friend the Member for Edmonton (Mr. Albu) because I think it is most important that we should invest in the manpower in our industry as we do in the capital equipment which it deploys. While this scheme may be open to technical objections, I hope that the Chancellor will not seek to turn it down only on that ground.
We are all concerned about the need for more technical education and more

1231
apprentices, and it is generally agreed that the training of apprentices is not mainly, or, indeed, in many cases to any considerable extent, an advantage to the firm in which the apprentice is trained. In many industries this is regarded as a good thing. After serving a period of apprenticeship in one firm he goes elsewhere, at least for some years, in order to get a wider experience. It is quite clear that firms which do that make a contribution not only to themselves but to the whole trade or industry with which they are concerned.
I feel that the comparison between this proposal and the investment allowances is a very forceful one. We are all agreed about the need for further technical education, and while the Government are doing something, though not as much as some of us would like to see, in the way of providing the actual technical education and colleges and so on, it is not going to be very successful unless it is met with enthusiasm on the part of the employers and the apprentices concerned. This proposal in the new Clause will assist many apprentices to go forward and take full advantage of such technical education as there is.
As a final word, I would recommend to the Chancellor a good old-fashioned argument. If it succeeds we shall all be very pleased, though it may have cost money, but if it fails and does not lead to the expansion of technical education and an increase in the number of apprentices it will not be very expensive. I hope that we shall have a favourable answer from the Treasury.
Mr. Erroll: As I understand the speeches of the hon. Member for Edmonton (Mr. Albu) and Sheffield, Park (Mr. Mulley), they were both proposing two things—first, that a tax relief should be given in respect of certain aspects of apprenticeship training, and secondly, that there should be a bonus element in these reliefs. I am in some difficulty because the new Clause is linked with Section 140 of the Income Tax, 1952, which has a rather different purpose from that of the new Clause. Section 140 is designed to provide a tax relief for donations to technical colleges and institutions where, but for the existence of the Section, the donation would not
1232
attract the relief. That Section is perfectly appropriate for its purpose, but hardly seems the right Section on to which to graft reliefs for apprenticeship training, which are in large part granted already.
It might help hon. Members if I explained the existing tax treatment. Wages which are paid to apprentices are deductible at present, in full, like the wages of any other members of the trader's labour force, even though part of the period may relate to time spent in a technical training college or otherwise away from the site of the trader's business. The costs of instruction are already covered. Tuition fees which the trader pays to an institution, for example, where his juvenile employees are getting part-time daily education courses, are allowed in full, and if the trader himself organises a course of instruction in his own factory the expenses of doing so are similarly allowed in full.
Mr. Mulley: The hon. Member has missed the point which we are trying to make. All wages in the factory are set against tax, but the wages of apprentices are often paid without any direct return in the factory. We are asking for some bonus element. By the depreciation allowance the cost of the asset is met over the years, but by means of the investment allowance something extra is given because it is desirable in the national interest to encourage that form of expenditure. In the same way this is a kind of expenditure which we want to encourage and not leave on the same basis as the expenditure on any other labour in the factory.
Mr. Erroll: The new Clause seeks first to extend the relief which is already given, in subsection (1), and to apply a bonus element, in subsection (2). I thought that the fair approach was to outline the relief already given, which I think ought to help hon. Members to realise that in fact very full relief is given. I then intend to turn to the bonus element.
I have dealt with wages, which are allowed in full, and the cost of instruction, which is also allowed in full. As for capital outlay, the assets which are provided in connection with any training scheme are treated in the same way as any other industrial asset. As the picture

1233
is today, the full costs of training apprentices, whether it be wages, costs of instruction or the provision of the necessary schools and educational plant and machinery, are allowed as expenses in connection with the trader's business. Therefore, subsection (1) is unnecessary as the reliefs are already fully provided for.
We come now to the bonus element. This raises a matter of principle. It is always very difficult to breach a well established principle. The problem is whether one should start to pick and choose between different forms of socially desirable business outlay. We all agree that an extension of apprentice training schemes is a good thing, is desirable and should be encouraged, but the question is whether it should be encouraged by means of a kind of bonus element in the fiscal system. I suggest that it would be most undesirable to adopt a bonus element in this particular case as a means of promoting additional apprenticeship schemes.
Mr. Albu: Is not the investment allowance a breach of principle of the same sort?
Mr. Erroll: Hardly the same sort, because that relates particularly to capital expenditure—and capital expenditure over the whole field of private industry—whereas this is an apprenticeship training scheme and falls into the category of one of a number of socially desirable forms of business activity. On the other hand, we are not doing nothing about this.
Mr. Jay: Is this not investment in human skill in the future?
Mr. Erroll: I think there is a great difference between a generalised investment in human skill and capital investment in a particular piece of plant or machinery belonging to the company. It may be true that it is investment in human skill, but the humans concerned may leave the particular plant and go elsewhere. I do not think it would be right to regard the human beings as mere machines to be treated as the sort of people that should attract investment allowances.
Mr. Jay: If that is the argument of the Economic Secretary, should not the Inland Revenue, as opposed to the firm,
1234
look at this from the national point of view?
Mr. Erroll: That is just what the Government have done. We have looked at this from the national point of view and have decided that the proper thing to do is to make a direct grant in aid, as announced in April, of £75,000 to the Industrial Training Council. We feel that that is a much better way of providing the necessary stimulus to this desirable social end rather than by what would be a very substantial breach of principle in the fiscal code of this country. I hope that hon. Members will agree that this is the right line to adopt, namely, to maintain the grant in aid rather than to adapt the fiscal system to deal with what can be only one of many forms of socially desirable expenditure.
Mr. H. Wilson: It is obvious that there is a clear clash of principle on this issue between the two sides of the House. My hon. Friend the Member for Edmonton (Mr. Albu) and my hon. Friend the Member for Sheffield, Park (Mr. Mulley) made it very clear—there was no attempt to disguise it—that they regarded this as being in the nature of an investment allowance for the training of skill. There can be no argument about the need for training for skill.
The point was made particularly by both of my hon. Friends, and reinforced by the Economic Secretary, that it may not pay an individual firm, from the point of view of its narrow conception of its own profit, to train a boy in a particular skill because, as the Economic Secretary said, the boy may leave and go to another firm. However that may be, it is highly desirable from the national point of view that that boy should be trained. That is why, even though it may not pay the firm, the firm must, in effect, be subsidised to do it by a bonus element of this kind.
The Economic Secretary pointed out that £75,000 had been granted to the Industrial Training Council. That is a pitifully inadequate amount for the sort of problem of which we are speaking. In a moment I shall quote a few figures on this point, but when my hon. Friend the Member for Sheffield, Park developed his arguments he was emphasising that this is capital investment in human beings, which is just as much

1235
capital investment as investment in a machine, a piece of plant or a building. The Economic Secretary was just a shade too clever when he said that we wanted to treat human beings as if they were machines, but there is no need to treat them worse—
9.15 p.m.
Mr. Erroll: I am surprised to hear the right hon. Gentleman suggest that we should treat human beings as machines.
Mr. Wilson: Had the hon. Gentleman not been in such a hurry he would have heard me say that his argument was not to treat them as machines, but as worse than machines.
Our argument is that from the fiscal point of view we should treat them not worse than machines. If it is important to have investment in machines, it is equally important—more important—to have investment in skill but, from the fiscal point of view, the hon. Gentleman is proposing to treat them as less eligible than are the machines of industry. It is a very typical Conservative approach. They will give subsidies to machines but not to human beings. The Economic Secretary cannot ride off on that attitude,
I do not want to take this discussion back to the interesting debate that we had a week ago on some of the shortcomings and abuses of private industry, but it is shocking that we can have all these vast amounts of money floating about in the City for the purpose of these purely "spivvish" sorts of occupations, concerned with take-over bids, and so on. There is no limit put on the amount of money available for that. There is no limit put on the amount available for social entertainment, or on the amount that the Government think it right should be spent on advertising and sales promotion and the rest. But when it comes to something that really vitally affects our industrial future, namely, apprenticeships, we have presented to us all the arguments put forward by the Economic Secretary.
It is right to say that, technically, this Amendment is not perfect, but that is no reflection on my hon. and learned Friend the Member for Kettering (Mr. Mitchison), who had so much to do with
1236
the drafting of it. The reason for its not being technically perfect is that there are severe limitations—
Major Sir Frank Markham: Another dispute in the Labour Party.
Mr. Wilson: We have often said, and, indeed, it is usual to say, that an Amendment is not technically perfect, because, owing to the rules of order, an Opposition, without the Queen's Recommendation, cannot always draft Amendments in the form that they would wish. Therefore, if this is not technically perfect, it is no reflection on my hon. and learned Friend, but—
Sir F. Markham: That was a bull's eye on the right hon. Gentleman's own Front Bench.
Mr. Wilson: I do not quite understand the hon. and gallant Member's reference to bulls' eyes. I have tried to explain the simple point of order involved in this which, at this moment, I think it is rather over his head; the point being that, because of certain implications of the rules of order, it is not always possible for an Opposition to move an Amendment in the form that they would like.
Technically perfect or not, however, this Amendment was inspired by the extremely constructive debate we had in the House on 30th April, which I think hon. Members in all parts of the House felt had been an extremely valuable and realistic one. In particular, of course, tribute was paid—I think from the Government Front Bench—to what was said by my right hon. Friend the Member for Blyth (Mr. Robens), who opened the debate, and who, among a number of constructive proposals, suggested that there should be some tax incentive—the carrot rather than the stick—in respect of the training of apprentices.
Nobody can doubt the importance of this proposal. As my right hon. Friend then pointed out, the number of children reaching 15 years of age today is about 16 per cent. higher than it was in 1956, but, by 1962, it will be well over 50 per cent. more than the present level. As he said, up to the present time we have been talking about 100,000 school leavers a year ready to be apprenticed as skilled craftsmen, but it is quite clear that we

1237
shall have to increase skilled apprenticeships for well over 135,000 school leavers a year.
My right hon. Friend dealt with many of the problems. I should be out of order to go into all of them in detail, but he finally referred to the training by private industry. I think that it is generally conceded that nationalised industry is doing a first-class job in the training of apprentices, and it is equally conceded that a number of private firms are doing likewise. My right hon. Friend the Member for Blyth referred to a company in which the Economic Secretary was once employed as being a model of its kind not only in this country but in the whole Western world.
In private industry there will be a requirement of over 20 per cent. more apprentices to be trained. The figures which were given in the debate to which I referred are not, I think, challenged and they suggested that the cost would be between £15 million and £20 million a year. This is a very formidable figure. The £75,000 to which the Economic Secretary referred will not make much of a contribution. Some of the big firms can look after themselves. Some of them, in fact, accepted an obligation to train not only for themselves but for industry generally. With the small firms the main hope must rest with the group schemes, but one of the biggest problems is to get a lot of small firms together to form these group schemes, as was recognised in the debate two months ago.
In my own constituency I have been involved in meetings with industrialists on this problem. A number of small public-spirited industrialists are concerned about the problem of school leavers a year or two from now. There is in my division the equivalent of a new town, a Liverpool overspill housing estate at Kirby, an estate which was meant to provide employment for the whole of Mersey-side, and it is now clear that that estate cannot find enough jobs for the new school leavers from the four new comprehensive schools established in that area. We are facing a very serious problem as these comprehensive schools turn out more and more school leavers and there is no work for them.
Some of these small industrialists employing 30 or 35 people are going out of their way, at some expense to them-selves,
1238
to provide apprenticeships even when they know that in the long term they will not be able to utilise the services of the boys and girls whom they train. That kind of effort has got to be made all over the country by small firms if we are to provide the number of apprentices needed. This job cannot be done by a firm looking at its own balance sheet, even over a long term. It has got to be done on a national basis, and that is why my hon. Friends argue that in addition to those items which are correctly and legitimately allowed, there needs to be what the Economic Secretary calls a bonus element in the nature of an investment allowance for the training of our young people on whom the industrial future of this country depends.
The hon. Gentleman has turned down this new Clause for rather narrow and inadequate reasons and we therefore propose to press this matter in the Division Lobby.
Miss Margaret Herbison: I am sorry that the Government have found it impossible to accept this new Clause. My right hon. Friend the Member for Huyton (Mr. H. Wilson) has remarked on the need for the training of many more apprentices in our country. We in Scotland are particularly badly hit. There are very few opportunities open at present for young boys and girls leaving school. Only a fortnight ago a headmaster told me of a firm that had eight apprenticeships to offer in Lanarkshire, and 350 boys applied. Examples like that could be multiplied all over Scotland, and I am sure also in many parts of England.
It seems to me that there are two sides to the argument—first, the responsibility of any Government towards the young people and their future, and secondly, the much wider responsibility to the national well-being as a whole.
The attitude of the Government on this new Clause is in line with many of their actions. They have told us tonight that they agree completely that there should be subsidies for machinery, but there are all sorts of reasons why there cannot be subsidies for the training of human beings. If no help is forthcoming for the training of young boys and girls, there will be no training at all for them and the outcome will be either unemployment or blind-alley jobs for them. This is in line

1239
with the Government's attitude on housing. They are perfectly willing to give a good subsidy for the building of pigsties, but not a penny of subsidy for general housing needs of the people.
In one area in my constituency, more than 100 school leavers left last Tuesday, and the employers round about could not find a single job for them, not even an apprenticeship. Surely, the Government
must appreciate the very great difficulties being experienced in certain parts of the United Kingdom and they must realise that, by accepting the new Clause moved and supported on this side of the House, they would be doing a very great deal to help both the apprentices and the nation.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 178, Noes 211.

Division No. 163.]

AYES

[9.27 p.m.

Abse, Leo

Hayman, F. H.

Pursey, Cmdr. H.

Ainsley, J. W.

Herbison, Miss M.

Rankin, John

Albu, A. H.

Hobson, C. R. (Keighley)

Redhead, E. C.

Allaun, Frank (Salford, E.)

Holman, P.

Reeves, J.

Bacon, Miss Alice

Holmes, Horace

Reynolds, G. W.

Balfour, A.

Holt, A. F.

Rhodes, H.

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

Houghton, Douglas

Robens, Rt. Hon. A.

Benson, Sir George

Howell, Charles (Perry Barr)

Roberts, Goronwy (Caernarvon)

Bevan, Rt. Hon. A. (Ebbw Vale)

Hoy, J. H.

Robinson Kennth (St. Pancras, N.)

Blackburn, F.

Hughes, Cledwyn (Anglesey)

Ross, William

Blenkinsop, A.

Hughes, Emrya (S. Ayrshire)

Royle, C.

Blyton, W. R.

Hughes, Hector (Aberdeen, N.)

Short, E. W.

Boardman, H.

Hunter, A. E.

Silverman, Julius (Aston)

Bottomley, Rt. Hon. A. G.

Hynd, H. (Accrington)

Skeffington, A. M.

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

Hynd, J. B. (Attercliffe)

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

Bowen, E. R. (Cardigan)

Irving, Sydney (Dartford)

Slater, J. (Sedgefield)

Bowles, F. G.

Janner, B.

Smith, Ellis (Stoke, S.)

Boyd, T. C.

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

Sorensen, R. W.

Braddook, Mrs. Elizabeth

Johnson, James (Rugby)

Sparks, J. A.

Brockway, A. F.

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

Spriggs, Leslie

Broughton, Dr. A. D. D.

Jones, Jack (Rotherham)

Steele, T.

Brown, Thomas (Ince)

Jones, J. Idwal (Wrexham)

Stonehouse, John

Burke, W. A.

Key, Rt. Hon. C. W.

Stones, W. (Consett)

Butler, Herbert (Hackney, C.)

King, Dr. H. M.

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

Butler, Mrs. Joyce (Wood Green)

Lawson, G. M.

Swingler, S. T.

Carmichael, J.

Lee, Frederick (Newton)

Sylvester, G. O.

Castle, Mrs. B. A.

Lee, Miss Jennie (Cannock)

Symonds, J. B.

Champion, A. J.

Lever, Harold (Cheetham)

Taylor, Bernard (Mansfield)

Chapman, W. D.

Lever, Leslie (Ardwick)

Taylor, John (West Lothian)

Chetwynd, G. R.

Lewis, Arthur

Thomas, Iorwerth (Rhondda, W.)

Cliffe, Michael

Mabon, Dr. J. Dickson

Thomson, George (Dundee, E.)

Clunie, J.

McAlister, Mrs. Mary

Thornton, E.

Coldrick, W.

McCann, J.

Tomney, F.

Corbet, Mrs. Freda

MacColl, J. E.

Ungoed-Thomas, Sir Lynn

Craddock, George (Bradford, S.)

MacDermot, Niall

Usborne, H. C.

Cronin, J. D.

McInnes, J.

Wade, D. W.

Crossman, R. H. S.

McLeavy, Frank

Warbey, W. N.

Darling, George (Hillsborough)

Mahon, Simon

Watkins, T. E.

Davies, Ernest (Enfield, E.)

Mallalieu, J. P. W. (Huddersfd, E.)

Weitzman, D.

Deer, G.

Mann, Mrs. Jean

Wheeldon, W. E.

de Freitas, Geoffrey

Mason, Roy

White, Mrs. Eirene (E. Flint)

Diamond, John

Mikardo, Ian

White, Henry (Derbyshire, N. E.)

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

Mitchison, G. R.

Wilcock, Group Capt. C. A. B.

Ede, Rt. Hon. J. C.

Monslow, W.

Wilkins, W. A.

Edelman, M.

Morris, Percy (Swansea, W.)

Willey, Frederick

Fernyhough, E.

Mort, D. L.

Williams, David (Neath)

Fitch, A. E. (Wigan)

Moyle, A.

Williams, Rev. Llywelyn (Ab'tillery)

Fletcher, Eric

Mulley, F. W.

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

Forman, J. C.

Noel-Baker, Francis (Swindon)

Williams, W. R. (Openshaw)

O'Brien, Sir Thomas

Williams, W. T. (Barons Court)

Fraser, Thomas (Hamilton)

Oliver, G. H.

Willis, Eustace (Edinburgh, E.)

George, Lady Megan Lloyd (Car'then)

Oram, A. E.

Wilson, Rt. Hon. Harold (Huyton)

Gibson, C. W.

Orbach, M.

Winterbottom, Richard

Grey, C. F.

Oswald, T.

Woodburn, Rt. Hon. A.

Griffiths, David (Rother valley)

Padley, W. E.

Woof, R. E.

Grimond, J.

Pargiter, G, A.

Yates, V. (Ladywood)

Hale, Leslie

Peart, T. F.

Zilliacus, K.

Hall, Rt. Hn. Glenvil (Colne Valley)

Pentland, N.

Hamilton, W. W.

Price, J. T. (Westhoughton)

TELLERS FOR THE AYES:

Hannan, W.

Price, Philips (Gloucestershire, W.)

Mr. Pearson and Mr. Simmons.

Hastings, S.

Probert, A. R.

NOES

Agnew, Sir Peter

Goodhart, Philip

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

Aitken, W. T.

Gower, H. R.

Noble, Michael (Argyll)

Amory, Rt. Hn. Heathcoat (Tiverton)

Graham, Sir Fergus

Nugent, Richard

Anstruther-Gray, Major Sir William

Grant, Rt. Hon. W. (Woodside)

Oakshott, Sir Hendrie

Arbuthnot, John

Green, A.

O'Neill, Hn. Phelim (Co. Antrim, N.)

Armstrong, C. W.

Gresham Cooke R.

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

Atkins, H. E.

Grimston, Sir Robert (Westbury)

Osborne, C.

Baldwin, Sir Archer

Grosvenor, Lt.-Col. R. G.

Page, R. G.

Barber, Anthony

Gurden, Harold

Partridge, E.

Barter, John

Hall, John (Wycombe)

Peel, W. J.

Batsford, Brian

Harrison, A. B. C. (Maldon)

Pickthorn, Sir Kenneth

Baxter, Sir Beverley

Harrison, Col. J. H. (Eye)

Pike, Miss Mervyn

Bell, Philip (Bolton, E.)

Harvey, John (Walthamstow, E.)

Plikington, Capt. R. A.

Bell, Ronald (Bucks, S.)

Heald, Rt. Hon. Sir Lionel

Pitman, I. J.

Bennett, F. M. (Torquay)

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

Pitt, Miss E. M.

Bevins, J. R. (Toxteth)

Henderson-Stewart, Sir James

Pott, H. P.

Biggs-Davison, J. A.

Hesketh, R. F.

Powell, J. Enoch

Bingham, R. M.

Hill, John (S. Norfolk)

Price, David (Eastleigh)

Birch, Rt. Hon. Nigel

Hirst, Geoffrey

Price, Henry (Lewisham, W.)

Bishop, F. P.

Hobson, John (Warwick & Leam'gt'n)

Prior-Palmer, Brig. Sir Otho

Black, Sir Cyril

Holland-Martin, C. J.

Ramsden, J. E.

Body, R. F.

Hornby, R. P.

Rawlinson, Peter

Bossom, Sir Alfred

Hornsby-Smith, Miss M. P.

Redmayne, M.

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

Horobin, Sir Ian

Renton, D. L. M.

Boyle, Sir Edward

Howard, Gerald (Cambridgeshire)

Ridsdale, J. E.

Brewis, John

Howard, John (Test)

Rippon, A. G. F.

Brooman-White, R. C.

Hughes Hallett, Vice-Admiral J.

Roberts, Sir Peter (Heeley)

Browne, J. Nixon (Craigton)

Hughes-Young, M. H. C.

Robinson, Sir Roland (Blackpool, S,)

Bullus, Wing Commander E. E.

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

Robson Brown, Sir William

Burden, F. F. A.

Hutchison, Sir James (Scotstoun)

Roper, Sir Harold

Carr, Robert

Hylton-Foster, Rt. Hon. Sir Harry

Russell, R. S.

Cary, Sir Robert

Iremonger, T. L.

Scott-Miller, Cmdr. R.

Chichester-Clark, R.

Jennings, J. C. (Burton)

Shepherd, William

Clarke, Brig, Terence (Portsmth, W.)

Jennings, Sir Roland (Hallam)

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

Conant, Maj. Sir Roger

Johnson, Dr. Donald (Carlisle)

Smithers, Peter (Winchester)

Cooke, Robert

Johnson, Eric (Blackley)

Stanley, Capt. Hon. Richard

Cooper, A. E.

Joseph, Sir Keith

Stevens, Geoffrey

Cooper-Key, E. M.

Kaberry, D.

Steward, Harold (Stockport, S.)

Cordeaux, Lt.-Col. J. K.

Kerby, Capt. H. B.

Steward, Sir William (Woolwich, W.)

Corfield, F. V.

Kerr, Sir Hamilton

Stoddart-Scott, Col. Sir Malcolm

Courtney, Cdr. Anthony

Kimball, M.

Storey, S.

Craddock, Beresford (Spelthorne)

Lancaster, Col. C. G.

Stuart, Rt. Hon. James (Moray)

Crowder, Sir John (Finchley)

Langford-Holt, J. A.

Summers, Sir Spencer

Cunningham, Knox

Leavey, J. A.

Taylor, Sir Charles (Eastbourne)

Currle, G. B. H.

Leburn, W. G.

Taylor, William (Bradford, N.)

Dance, J. C. G.

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

Teeling, W.

Davidson, Viscountess

Legh, Hon. Peter (Petersfield)

Thompson, Kenneth (Walton)

D'Avigrtor-Goldsmid, Sir Henry

Lindsay, Hon. James (Devon, N.)

Thompson, R. (Croydon, S.)

Deedes, W. F.

Lindsay, Martin (Solihull)

Thornton-Kemsley, Sir Colin

de Ferrantl, Basil

Linstead, Sir H. N.

Tiley, A. (Bradford, W.)

Dodds-Parker, A, D.

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

Tilney, John (Wavertree)

Donaldson, Cmdr. C. E. McA.

Longden, Gilbert

Turton, Rt. Hon. R. H.

Doughty, C. J. A.

Loveys, Walter H.

Tweedsmuir, Lady

Drayson, G. B.

Low, Rt. Hon. Sir Toby

Vane, W. M. F.

du Cann, E. D. L.

Lucas, P. B. (Brentford & Chiswick)

Vickers, Miss Joan

Duncan, Sir James

Lucas-Tooth, Sir Hugh

Vosper, Rt. Hon. D. F.

Eden, J. B. (Bournemouth, West)

Macdonald, Sir Peter

Wakefield, Edward (Derbyshire, W.)

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

McMaster, Stanley

Wakefield, Sir Wavell (St. M'lebone)

Errington, Sir Eric

Maddan, Martin

Wall, Patrick

Erroll, F. J.

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

Ward, Dame Irene (Tynemouth)

Finlay, Graeme

Maitland, Hon. Patrick (Lanark)

Webbe, Sir H.

Fisher, Nigel

Manningham-Buller, Rt. Hn. Sir R.

Webster, David

Markham, Major Sir Frank

Williams, Paul (Sunderland, S.)

Fletcher-Cooke, C.

Marlowe, A. A. H.

Williams, R. Dudley (Exeter)

Forrest, G.

Marples, Rt. Hon. A. E.

Wills, Sir Gerald (Bridgwater)

Freeth, Denzil

Marshall, Douglas

Wilson, Geoffrey (Truro)

Galbraith, Hon. T. G. D.

Maudling, Rt. Hon. R.

Wolrige-Gordon, Patrick

Gammans, Lady

Mawby, R. L.

Woollam, John Victor

George, J. C. (Pollok)

Medlicott, Sir Frank

Yates, William (The Wrekin)

Gibson-Watt, D.

Nabarro, G. D. N,

Glover, D.

Nairn, D. L. S.

TELLERS FOR THE NOES:

Glyn, Col. Richard H.

Nicholson, Sir Godfrey (Farnham)

Mr. Bryan and Mr. Whitelaw.

New Clause.—(EXEMPTION OF PARKING METER OPERATIONS FROM INCOME TAX AND PROFITS TAX.)
Income tax and profits tax shall not be charged in respect of income or profits arising to a local authority from parking places designated
1242
on highways under the Road Traffic Act, 1956.—[Mr. Gresham Cooke.]
Brought up, and read the First time.
Mr. R. Gresham Cooke: I beg to move, That the Clause be read a Second time.

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The object of the Clause is to exempt from Income Tax and Profits Tax the surplus that is derived from parking meters.
Mr. Ernest Davies: May we discuss at the same time, Mr. Speaker, the new Clause (Parking places: surpluses of local authorities)?
Mr. Speaker: The hon. Member for Enfield, East (Mr. Ernest Davies) has two new Clauses, the first of which (Parking places: surpluses or deficits of local authorities) is out of order, because it might impose a charge. There is, however, no reason why we should not discuss now the other new Clause to which the hon. Member has drawn attention.
Mr. Davies: Thank you, Mr. Speaker.
Mr. Gresham Cooke: When the Road Traffic Bill was before the two Houses of Parliament, it took a long time to go through. In fact, an abortive Bill was presented earlier in the other place before the Bill reached this House. One of the reasons for that long period of gestation was that there was considerable dispute about whether parking meters should be introduced into this country. The end of that dispute was that a compromise acceptable to all the parties was reached, namely, that the surplus moneys derived from parking meters should be spent only on the provision of new off-street parking spaces.
That compromise was embodied in Section 23 (2) of the Road Traffic Act, 1956, which states that
"any surplus shall be applied for all or any of the purposes specified in the next following subsection, and in so far as not so applied shall be appropriated to the carrying out of some specific project falling within those purposes and carried forward until applied to the carrying out thereof".
Under Section 23, the three purposes are, first,
"the making good to the general rate fund of any amounts charged to that fund under the last foregoing subsection in the four years immediately preceding the financial year in question"—
that is, to cover the capital expenditure or the losses that might be incurred in putting up the parking meters. The second purpose was
"meeting all or any part of the cost of the provision and maintenance by the local
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authority of parking accommodation for vehicles ".
The third purpose was
"the making to other local authorities, to any county council, or, with the consent of the Minister, to other persons, of contributions towards the cost of the provision and maintenance … of parking accommodation"
in adjoining areas.
During the lengthy discussions of the Bill in Committee the question was frequently asked whether there were any other purposes to which this money could be applied and whether it could be taken by the central Government for any other purpose. The then Minister of Transport and Civil Aviation, the present Minister of Pensions and National Insurance, said in answer to that question:
"One or two hon. Members have raised questions about the use of the moneys. I have, I hope, in the drafting of the Bill tied them up securely to be used for that purpose, and that purpose only. I really think, though I am subject to correction at any stage, that the provisions of the Bill are as clear and as emphatic as possible and that the moneys can be used only for that purpose. An hon. Member may say that it will always be possible for another Government to come along with another Bill to divert the revenue. I think that would be extremely difficult from a practical point of view. First, the revenue is going to local authorities and not to the central Government."—[OFFICIAL REPORT, Standing Committee B, 1st November, 1955; c. 241.]
The then Parliamentary Secretary to the Ministry of Transport and Civil Aviation, now the Minister of Works, said on the same subject:
"It has, I think, done a great deal to disarm criticism of these proposals that the whole of the profits made from parking meters are obliged, under the provisions of the Bill, to be used for the provision of off-the-street parking accommodation."—[OFFICIAL REPORT, 30th May, 1956; Vol. 553, c. 291.]
The Earl of Selkirk, in another place, said:
"We think that we have drawn this clause pretty tightly, and if any noble Lord can show me how the local authority can dispose of their funds otherwise than in maintaining and providing parking meters or providing for off-street parking, I shall be interested to know. It means that all the proceeds of parking meters are quite certain to be dedicated to the provision of off-street parking."—[OFFICIAL REPORT, House of Lords, 3rd July, 1956; Vol. 198, c. 341.]
I quote all that to show that if Ministers at that time knew that tax was to be levied on the surpluses from parking meters they did not divulge it. I think that the reason that they did not is

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that they did not know, because it was never contemplated at that stage that tax would be levied on the surpluses of these meters. That is why tonight that I think the House is entitled to an explanation of how it comes about that tax should be levied on these surpluses.
In Westminster City Council's area already parking meters have been put up, in Mayfair and elsewhere. I understand that the surplus on those meters last year was about £3,800.
Mr. Ernest Davies: Not a full year.
Mr. Gresham Cooke: Not a full year. The surplus in the current year is expected to be about £8,950. If this is to be subject to tax, Profits Tax and Income Tax, it will be reduced by nearly 50 per cent.
That would be very disappointing because Westminster City Council requires every penny it can get to put up these expensive off-street parking places, which it is proposing to put up, and it has been told by the Inland Revenue that these surpluses are liable to tax. Indeed, the Chancellor of the Exchequer confirmed that in reply to a Question, when he said that they were liable to Income Tax.
Presumably what is true of Westminster will be true of the other ten boroughs in various parts of the country which have just received authority to set up parking meters. The Chancellor in his reply to this point said that such profits might be set off against loan interest or losses which might be incurred on other trading activities.
To my mind what that really means is that a local authority is only in the same position as any other trader, who can set off losses against his profits, but I do not think that these surpluses are in that category at all. There may be local authorities who have no losses to set off against the surpluses and the whole of their surpluses would be liable to tax. In truth, I believe that the money set aside for the provision of off-street parking places under Section 23 is really held in trust for public purposes and is not the result of a trading activity. For instance, the surplus could not be applied to appropriations for the relief of rates in a general way, as other surpluses from other trading activities can be. This seems to me to differentiate
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these surpluses from those of trading profits.
The real question on which we want an explanation is whether it is right that a tax should be charged on surpluses from parking meters which are going up all over the country. Personally, being a member of the Road Traffic Committee at that time, and hearing the explanation of the Ministers at that time, I am at present of the view that it would be wrong to levy Income Tax and Profits Tax on surpluses from parking meters.
Mr. Eric Johnson: I beg to second the Motion.
The purpose of this Clause is both to clarify the position even more than was done by the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation in the debate on the parking regulations on 30th June and also to provide that the income from this source shall not be subject to taxation. It is a matter which is of special importance to Manchester, which has just acquired the power to provide parking meter schemes under the new regulations and has extensive schemes for providing off-street parking facilities.
As my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) pointed out, it has always been assumed that the whole of the revenue from this source would be available for local authorities to use for the providing of off-street parking facilities because that was quite clearly the intention of the Road Traffic Act, 1956, to which my hon. Friend has referred. There is no need for me to repeat what he said on the subect of the Act.
It seems to me that if the provisions of that Act are carried out as they are meant to be, there can be no profit from parking meters to tax until off-street parking facilities have been provided by the local authorities, which have been given the power to do so, for an ever-increasing number of cars.
One other small point which I should like to make is that parking meters of themselves are of no value at all. They depend for their use on the highways assigned on which the parked vehicles can stand. It is, therefore, not unreasonable to suggest that if there is any surplus remaining from the takings of the parking meters that should be made

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available to the local authorities for the very great cost which they incur in keeping up the highways—a matter in which they certainly make no profit but, indeed, make a very large loss
It was neither envisaged nor intended when the 1956 Act was being discussed in this House that profits on parking meters should be taxed. It would seem to be clearly quite wrong to separate one part of a local authority's activities in connection with highways on which it may make a profit, namely, parking meters, from the much larger part of its activities on which it makes a very substantial loss. I believe that the new Clause would put matters beyond any doubt and I hope that my right hon. Friend will see his way to accept it.
9.45 p.m.
Mr. Ernest Davies: There is also a new Clause on the Notice Paper (Parking places: surpluses of local authorities) in my name and that of my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), which reads:
"Any surplus in the account of income and expenditure kept by a local authority under subsection (1) of section twenty-three of the Road Traffic Act, 1956 (which makes financial provisions in relation to parking places designated under that Act), shall be disregarded for all purposes of the Income Tax Acts."
This Clause has the same intention as the Clause which we are now discussing. When the Financial Secretary informs the House that he intends to accept this proposal in principle, I trust that he will find that the wording of that Clause is more suitable to the Treasury and fits in better with the Finance Bill than that of the Clause which has just been moved.
The intention is exactly the same—to exempt revenue from parking meters from Income Tax. I think that most hon. Members have come to accept that parking meters combined with off-street parking is the best way in which to regulate the parking of vehicles in congested areas. Certainly, in Lonodn the trial scheme in Westminster has worked out well, inasumch as traffic is flowing far more freely through the areas where meters operate. The scheme is now to be extended not only to other areas in the centre of London, but to ten cities outside.
The importance of parking meters is that they regulate short-time parking to
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provide revenue which can be devoted to the provision of off-street parking. As the hon. Member for Twickenham (Mr. Gresham Cooke) pointed out, every assurance was given by Government spokesmen during the debates on the Road Traffic Act, 1956, that there could be no diversion of funds from the purposes for which the Act provided, but, of course, those spokesmen forgot about the Treasury. They did not intentionally mislead the House, or lead hon. Members in the then Committee up the garden, but they had clean forgotten that the Treasury would do its utmost to see that money which was raised by local councils was not diverted to a useful purpose, but went to the Treasury itself.
Unfortunately, there is danger of that happening now. We have asked Questions in the House concerning this and it has been made clear by spokesmen for the Treasury and the Ministry of Transport that, as the Income Tax statutes are interpreted by the Treasury, the income raised from parking meters will be subject to tax. As the hon. Member for Twickenham said, it is not good enough to say that the tax claimed can be set off against deficits on the provision of off-street parking. It is true that large numbers of garages may not make a profit on the letting of space for long-term parking, and it has been argued that as the provision of off-street parking is bound to result in a deficit the Income Tax liability does not matter.
In a debate on the Parking Places (Extension outside London No. 1) Order, 1959, on 30th June, the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation said:
"If the meter revenues were used in combination with the financing of off-street garages, those revenues would very rapidly be swallowed up by the losses made in operating the garages, so there would be no question of tax liability arising."—[OFFICIAL REPORT, 30th June, 1959; Vol. 608, c. 412.]
That may be so if the councils themselves provide the garages and operate them at a loss, but if they are successful in operating them at a profit practically half the money arising from parking meters will go to the Treasury.
I can also think of circumstances in which the revenue would attract tax before it was devoted to this purpose. For instance, the Act provides that councils which operate parking-meter

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schemes can finance private garages. The money can be used to assist or subsidise private enterprise garages. What is the position if a private enterprise garage is operating at a profit, but the local authority decides to contribute something towards that garage in order to be sure that off-street parking is provided, or because it has given that undertaking over a period of years? Does it mean, then, that this money will be taxed before it makes its contribution to the private enterprise garage? Surely if that garage is operating at a profit the Treasury will say that, although the money has been devoted to that purpose, it must be subject to tax
There is another circumstance in which the suggestion of the Financial Secretary will not apply, because it was provided that the money from the meters could accumulate over a period of four years, that the money could go to a fund and not be allocated to the provision of off-street parking for four years. I cannot see the Treasury standing idly by during that four-year period while the money is accumulating and saying that because, in four years, the council may be subsidising a private enterprise garage, or even considering building a garage for itself, the money will not be taxed in the meantime. If the Treasury did say that, it would mean that it was changing its nature.
There is no protection in the claim that this does not matter since losses can be set off against tax liability. I suggest that the Treasury should be honest about this for once and should take account of the assurances repeatedly given in Standing Committee, on the Floor of the House and in another place. The assurances were definite and they were to the effect that if we granted the right to charge for parking on the highway, that money could be used for no purpose other than providing off-street parking facilities.
As has been said, there is no point in having parking meters and reducing the amount of parking space on the highway unless there is provision for the vehicles which cannot find parking space to be stored elsewhere. I suggest that the Financial Secretary should consider the statements made by his colleagues and should try to make an honest man of the Treasury.
Mr. G. Wilson: I want very briefly to support what my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) has said. I, too, was a member of the Standing Committee which dealt with the Road Traffic Act, 1956, and I confirm that the prolonged argument in that Committee turned on whether parking meters were to be regarded as a trading activity. The compromise eventually reached definitely gave members of the Committee the impression that the one thing which parking meters were not to be was a trading activity on the part of the council.
If they are not a trading activity, the argument that profits can be set off against losses does not arise. To use that argument implies that Parliament has given local councils authority to trade, and that was certainly not the intention of the Committee. We intended that all surplus moneys over the cost of providing parking meters should be used for off-street parking.
Although the practical effect of accepting this Clause might be very small, because in most cases the councils can avoid tax by setting off any profit made against any loss, psychologically it is important that there should be some provision of this nature, since we may otherwise revive the arguments about parking meters, an argument which was settled only on the assumption that a parking meter was not an opportunity for a council to trade, but was something which would assist off-street parking.
10.0 p.m.
Mr. Simon: The hon. Member for Enfield, East (Mr. Ernest Davies) went so far as to say that instead of the fund in question being used for a useful purpose half was devoted to the Treasury itself. He will forgive me for saying that that seemed to me to be a false antithesis. I understand that the parking meter scheme has been a very great success—indeed, it would be fair to say that it has been an unqualified success—and I can quite understand the speeches that have been made today expressing anxiety as to how the revenues from parking meters are to be used.
I have read carefully the debates that took place on the Bill, and I must say that I do not think there was anything said as to whether the Committee or the Minister was talking about net proceeds or gross proceeds. I think it was made

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abundantly clear that the revenues from the parking meters would not be diverted, as my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) said, to such extraneous purposes as, for example, the general relief of rates, but would be used for the specific purposes laid down in the three paragraphs which were set out in the Clause. But that left it entirely at large and to be governed by the general fiscal law as to whether those revenues which were being talked about were the net revenues or the gross revenues, and it still remains today that the only purpose for which the net revenues can be used are the purposes set out in those paragraphs.
However, it is a fundamental fiscal principle in this country, one which has been reiterated and relied upon by successive Governments, that all income, whether it is the income of an individual, a local authority or a company, is liable to tax. Nor does it matter for that purpose for what reason the income is to be diverted. That was laid down by the House of Lords a considerable time ago in a case affecting a local authority, and it has been accepted by successive Governments. That is the law that covers this case, and it is right that it should do so, because it is surely inequitable to isolate particularly a trading activity which is being carried on in the middle of the economy from its fair contribution to the general expenses of government.
Having said that, I consider that the local authorities are in a very favourable position in relation to their trading activities. It is true that they are liable to pay tax on the profits of their trading activities, but, like a private individual, they can set off those profits against any loan interest they may have to pay. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) said that that puts them in no more favourable a position than a private individual carrying on a trade. That is not right. The private individual carrying on a trade normally trades at a profit, and normally his profits exceed the loan interest that he has to pay. That is not so with a local authority. With a local authority, ordinarily speaking, the loan interest that it has far exceeds any profit which it makes on its trading activities. So the fact that the local authority will have to
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pay tax on the gross revenues of its parking meters activities will not increase in any way its liability to tax unless and until its income exceeds the sum that it has to pay by way of loan interest.
That covers the point made by the hon. Member for Enfield, East when he referred to the four years' acccumulation period, but once a local authority starts to build a garage or other off-street parking facilities, clearly it will make a loss on that activity and that, again, can be set off against the revenue on its trading activities in relation to the parking meter scheme.
Those are the general principles which cover this case, and there is no argument at all for taking this particular trading activity of a local authority out of the general fiscal law. My hon. Friend the Member for Twickenham said that Westminster City Council needs every penny it gets from the scheme in order to be able to have off-street parking facilities. If I am right in saying that no local authority will have to pay more tax than it did before unless the unlikely and exceptional event comes about that its income exceeds its total loan interest, Westminster City Council will have every penny available. Any local authority, unless it has a greater income than its loan interest, will have every penny available to provide the off-street parking facilities.
Mr. Arthur Holt: The point made by the hon. and learned Gentleman seems to turn on these words, "trading interest". May I put this to him? After all, there was no possibility of the corporation carrying on a trade, if that is the suitable word in this case, until Parliament created it. It is not a question of there being an ordinary trading interest; it is a special circumstance created by Parliament, and, in those special circumstances, why cannot Parliament make special provision about the income that comes to it, namely, that it should not be taxed?
Mr. Simon: Of course Parliament could do that—I think a great constitutional lawyer once said that Parliament can do anything but make a man a woman or a woman a man—but that is not what Parliament has done in respect of any other activity of a local authority. The

1253
railways carried on their activities by virtue of an Act of Parliament, but that did not prevent their having to pay Income Tax and other taxes on their revenue. So, with great respect to the hon. Member, it is no answer to say that this particular activity was the creation of Parliament. That does not take it out of the general principle that income, from whatever source and to whatever purpose it is devoted pays tax, or is liable prima facie to pay tax, although it is set off by other activities.
Sir Hugh Lucas-Tooth: There is another point here. In ascertaining the net profit from the business, are local authorities entitled to set off the cost of maintaining the services of the roads, which, after all, is part of the business for keeping the cars?
Mr. Simon: I should not have thought so, but it does not work in that way. The local authority presumably raises the loan which it uses for its road maintenance activities. It is the interest on that loan which is in effect set off against its trading profit. I hope that answers my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth).
I desire to say only this in conclusion. I realise that this to some extent is a debating point, because I realise that the first new Clause is necessarily out of order as no new Clause or Amendment can be moved, except from this bench, which would impose a charge. Nevertheless, it is the new Clause in the name of my hon. Friend the Member for Twickenham on which we shall be voting or, at any, on which we have to take a decision.
The same point arises on the new Clause in the name of the hon. Member opposite, which we are discussing, namely, that although the new Clause would exonerate the local authority from paying tax on the income from a parking meter, it would not impose any restriction on its setting-off any loss from the scheme. In other words, on the actual new Clause that we are debating, what the local authorities are seeking to do is to have the best of both worlds. I realise that that necessarily arises out of the rules of order, but it does mean that the new Clause is, in that respect, quite unacceptable.
Mr. H. Wilson: May I put this point to the hon. and learned Gentleman? He has based the whole of his arguments on the trading services of a local authority. Would it not be possible for him to look at it in an entirely different way, and I would suggest there are two ways in which he might do so, in order to answer this debate? Could he not regard this either as a method of regulating traffic, which it is—regulating parking—a deterrent, the revenue from which is purely incidental, or, alternatively, could he not regard it as a tax on parking given by Parliament to the local authority. Does he think it right for the Treasury to tax the profits of a local tax given to the local authority by Parliament?
Mr. Simon: I think it would be straining language to regard this as a local tax granted to local authorities by Parliament. The fact remains that this does not depend, so far as Income Tax is concerned, on it being trading income. What it is is the income of the local authority. It would be exactly the same if the local authority had income from investments; it is taxable. It does not depend on it being trading income. The law says that the income, from whatever source it arises and to whatever object it is devoted, is taxable, and it must make its fair contribution.
Mr. Mitchison: What we want to do, by means of this new Clause, is to put some sense into the law. Everybody on that Committee assumed that this money would not be treated as trading profit or taxed by the Treasury. That is perfectly clear. I was on that Committee myself, and no one ever thought that the Treasury was quite like the Moloch it has proved to be.
To put the matter very shortly, whatever the law may be on the matter, no ordinary person regards as income that which he cannot spend, but which he has to put back into the same job from which he got it.
The second point is that these parking places are a public service. They cannot exist at all unless a Minister of the Crown has designated them. Is he trading when he is designating them, I wonder? What about the local authorities themselves? Can they spend the money? Can they do anything with it?

1255
Surely, if the Treasury, for a change, would recognise what was said to the Committee by Ministers of the Crown and what was understood by everybody in the Committee, and would apply a little horse sense to this, it would realise that it is not trading at all but the provision of a public service. It has to be ordered by a Minister, and the profits, so-called, cannot be used for any other purpose than providing more parking facilities. Whatever the law may be, if it is not in the sense of this new Clause, it jolly well ought to be.
Mr. Philip Bell: I do not think the argument put forward by my right hon. and learned Friend will stand even a moment's examination. Let us look at the great principle involved here. Let us take the case of a charity which carries on a profit-making concern or business. That charity cannot spend the money as it likes, but can only spend it for charitable purposes. The charity will pay Income Tax if it earns profits by trading or by any gainful occupation.
The question whether one should pay tax does not turn on what is done with the money when one gets it. The question is whether one is, in fact, carrying
on a business, or something in the nature of a business. If we once determined that by what people did with their profits when they got them it seems to me that very few people would be paying tax at all, for everybody would find a good reason, such as looking after an old relative, for saying that they were not making a profit.
Mr. Gresham Cooke: I am not entirely satisfied about this.
Mr. Deputy-Speaker: And I shall not be satisfied if the hon. Member speaks again in the debate.
Mr. Gresham Cooke: I was about to ask the leave of the House to withdraw the Motion in the hope that the Treasury would read my speech and accept the proposition next year. I beg to ask leave to withdraw the Motion.
Mr. Deputy-Speaker: Is it the wish of the House that the Motion be withdrawn?
Hon. Members: No.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 139, Noes 181.

Division No. 164.]

AYES

[10.15 p.m.

Ainsley, J. W.

Fletcher, Eric

MacDermot, Niall

Albu, A. H.

Forman, J. C.

McInnes, J.

Allaun, Frank (Salford, E.)

Fraser, Thomas (Hamilton)

Mahon, Simon

Bacon, Miss Alice

Grey, C. F.

Mann, Mrs. Jean

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

Griffiths, David (Rother Valley)

Mason, Roy

Benson, Sir George

Grimond, J.

Mikardo, Ian

Bevan, Rt. Hon. A. (Ebbw Vale)

Hale, Leslie

Mitchison, G. R.

Blackburn, F.

Hall, Rt. Hn. Glenvil (Colne Valley)

Monslow, W.

Blenkinsop, A.

Hannan, W.

Morris, Percy (Swansea, W.)

Blyton, W. R.

Hayman, F. H.

Mulley, F. W.

Boardman, H,

Herbison, Miss M.

Noel-Baker, Francis (Swindon)

Bottomley, Rt. Hon. A. G.

Holman, P,

O'Brien, Sir Thomas

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

Holt, A. F.

Oliver, G. H.

Bowen, E. R. (Cardigan)

Houghton, Douglas

Oram, A. E.

Bowies, F. G.

Howell, Charles (Perry Barr)

Orbach, M.

Boyd, T. C.

Hoy, J. H.

Oswald, T.

Braddock, Mrs. Elizabeth

Hughes, Emrys (S. Ayrshire)

Padley, W. E.

Brockway, A. F.

Hughes, Hector (Aberdeen, N.)

Pargiter, G. A.

Broughton, Dr. A. D. D.

Hunter, A. E.

Pearson, A.

Brown, Rt. Hon. George (Belper)

Hynd, H. (Accrington)

Peart, T. F.

Brown, Thomas (Ince)

Hynd, J. B. (Attercliffe)

Pentland, N.

Burke, W. A.

Irving, Sydney (Dartford)

Popplewell, E.

Butler, Mrs. Joyce (Wood Green)

Janner, B.

Price, J. T. (Westhoughton)

Champion, A. J.

Jenkins, Roy (Stechford)

Price, Philips (Gloucestershire, W.)

Cliffe, Michael

Johnson, James (Rugby)

Probert, A. R.

Coldrick, W.

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

Pursey, Cmdr. H.

Craddock, George (Bradford, S.)

Jones, Jack (Rotherham)

Redhead, E. C.

Cronin, J. D.

King, Dr. H. M.

Reynolds, G. W.

Crossman, R. H. S.

Lawson, G. M

Rhodes, H.

Davies, Ernest (Enfield, E.)

Lee, Frederick (Newton)

Roberts, Goronwy (Caernarvon)

Deer, G.

Lee, Miss Jennie (Cannock)

Ross, William

Diamond, John

Lever, Harold (Cheetham)

Silverman, Julius (Aston)

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

Lever, Leslie (Ardwick)

Skeffington, A. M.

Ede, Rt. Hon. J. C.

Mabon, Dr. J. Dickson

Slater, J. (Sedgefield)

Fernyhough, E.

McAlister, Mrs. Mary

Smith, Ellis (Stoke, S.)

Fitch, A. E. (Wigan)

MacColl, J. E.

Sorensen, R. W.

Sparks, J. A.

Ungoed-Thomas, Sir Lynn

Williams, W. R. (Openshaw)

Spriggs, Leslie

Usborne, H. C.

Williams, W. T. (Barons Court)

Steele, T.

Wade, D. W.

Willis, Eustace (Edinburgh, E.)

Stonehouse, John

Watkins, T. E.

Wilson, Rt. Hon. Harold (Huyton)

Stones, W. (Consett)

Weitzman, D.

Winterbottom, Richard

Symonds, J. B.

Wheeldon, W. E.

Woodburn, Rt. Hon. A.

Taylor, Bernard (Mansfield)

White, Mrs. Eirene (E. Flint)

Woof, R. E.

Taylor, John (West Lothian)

Wilcock, Group Capt. C. A. B.

Yates, V. (Ladywood)

Thomas, Iorwerth (Rhondda, W.)

Willey, Frederick

Zilliacus, K.

Thomson, George (Dundee, E.)

Williams, David (Neath)

Thornton, E.

Williams, Rev. Llywelyn (Ab'tillery)

TELLERS FOR THE AYES:

Mr. Wilkins and Mr. Simmons

NOES

Agnew, Sir Peter

Glyn, Col. Richard H.

O'Neill, Hn. Phelim (Co. Antrim, N.)

Aitken, W. T.

Goodhart, Philip

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

Amory, Rt. Hn. Heathcoat (Tiverton)

Cower, H. R.

Osborne, C.

Anstruther-Gray, Major Sir William

Graham, Sir Fergus

Page, R. G.

Arbuthnot, John

Green, A.

Partridge, E.

Armstrong, C. W.

Gresham Cooke, R.

Peel, W. J.

Atkins, H. E.

Grosvenor Lt.-Col. R. G.

Pickthorn, Sir Kenneth

Baldwin, Sir Archer

Gurden, Harold

Pilkington, Capt. R. A.

Barter, John

Hall, John (Wycombe)

Pitman, I. J.

Batsford, Brian

Harrison, Col. J. H. (Eye)

Pitt, Miss E. M.

Baxter, Sir Beverley

Harvey, John (Walthamstow, E.)

Pott, H. P.

Bell, Philip (Bolton, E.)

Heald, Rt. Hon. Sir Lionel

Powell, J. Enoch

Bennett, F. M. (Torquay)

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

Price, David (Eastleigh)

Bevins, J. R. (Toxteth)

Henderson-Stewart, Sir James

Prior-Palmer, Brig. Sir Otho

Biggs-Davison, J. A.

Hesketh, R. F.

Ramsden, J. E.

Bingham, R. M,

Hill, John (S. Norfolk)

Rawlinson, Peter

Birch, Rt. Hon. Nigel

Hirst, Geoffrey

Redmayne, M.

Bishop, F. P.

Hobson, John (Warwick & Leam'gt'n)

Renton, D. L. M.

Black, Sir Cyril

Holland-Martin, C. J.

Ridsdale, J. E.

Body, R. F.

Hornby, R. P.

Roberts, Sir Peter (Heeley)

Boyle, Sir Edward

Hornsby-Smith, Miss M. P.

Robinson, Sir Roland (Blackpool, S.)

Brewis, John

Horobin, Sir Ian

Roper, Sir Harold

Bryan, P.

Howard, Gerald (Cambridgeshire)

Russell, R. S.

Burden, F. F. A.

Howard, John (Test)

Shepherd, William

Carr, Robert

Hughes, Hallett, Vice-Admiral J.

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

Cary, Sir Robert

Hughes-Young, M. H. C.

Smithers, Peter (Winchester)

Chichester-Clarke, R.

Hutchison, MichaelClark (E'b'gh, S.)

Stanley, Capt. Hon. Richard

Clarke, Brig, Terence (Portsmth, W.)

Hylton-Foster, Rt. Hon. Sir Harry

Stevens, Geoffrey

Conant, Maj. Sir Roger

Iremonger, T. L.

Steward, Harold (Stockport, S.)

Cooke, Robert

Jennings, J. C. (Burton)

Steward, Sir William (Woolwich, W.)

Cooper, A. E.

Johnson, Dr. Donald (Carlisle)

Stoddart-Scott, Col. Sir Malcolm

Cooper-Key, E. M.

Johnson, Eric (Blackley)

Storey, S.

Cordeaux, Lt.-Col. J. K.

Kaberry, D.

Stuart, Rt. Hon. James (Moray)

Corfield, F. V.

Kerby, Capt. H. B.

Summers, Sir Spencer

Courtney, Cdr. Anthony

Kimball, M.

Taylor, Sir Charles (Eastbourne)

Craddock, Beresford (Spelthorne)

Langford-Holt, J. A.

Taylor, William (Bradford, N.)

Crosthwaite-Eyre, Col. O. E.

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

Teeling, W.

Cunningham, Knox

Legh, Hon. Peter (Petersfield)

Thompson, Kenneth (Walton)

Currie, G. B. H.

Lindsay, Hon. James (Devon, N.)

Thompson, R. (Croydon, S.)

Dance, J. C. G.

Lindsay, Martin (Solihull)

Thornton-Kemsley, Sir Colin

Davidson, Viscountess

Linstead, Sir H. N.

Tweedsmuir, Lady

D'Avigdor-Goldsmid, Sir Henry

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

Vickers, Miss Joan

Deedes, W. F.

Longden, Gilbert

Vosper, Rt. Hon. D. F.

de Ferranti, Basil

Loveys, Walter H.

Wakefield, Edward (Derbyshire, W.)

Dodds-Parker, A. D.

Low, Rt. Hon. Sir Toby

Wakefield, Sir Wavell (St. M'lebone)

Donaldson, Cmdr. C. E. McA.

Lucas-Tooth, Sir Hugh

Wall, Patrick

Doughty, C. J. A.

Macdonald, Sir Peter

Ward, Dame Irene (Tynemouth)

Drayson, G. B.

McMaster, Stanley

Webbe, Sir H.

du Cann, E. D. L.

Macmillan, Maurice (Halifax)

Webster, David

Duncan, Sir James

Maddan, Martin

Whitelaw, W. S. I.

Eden, J. B. (Bournemouth, West)

Manningham-Buller, Rt. Hn. Sir R.

Williams, Paul (Sunderland, S.)

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

Markham, Major Sir Frank

Williams, R. Dudley (Exeter)

Errington, Sir Eric

Marlowe, A. A. H.

Wills, Sir Gerald (Bridgwater)

Erroll, F. J.

Marples, Rt. Hon. A. E.

Wilson, Ceoffrey (Truro)

Finlay, Graeme

Mawby, R. L.

Wolrige-Cordon, Patrick

Fisher, Nigel

Medlicott, Sir Frank

Woollam, John Victor

Fletcher-Cooke, C.

Nabarro, G. D. N.

Yates, William (The Wrekin)

Forrest, G.

Nairn, D. L. S.

Freeth, Denzil

Nicholson, Sir Godfrey (Farnham)

TELLERS FOR THE NOES:

Gammans, Lady

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

Mr. Brooman-White and

George, J. C. (Pollok)

Noble, Michael (Argyll)

Mr. Gibson-Watt

Glover, D.

Nugent, Richard

New Clause.—(RELIEF FOR BLIND MAN WITH GUIDE DOG.)
In Part VIII of the Income Tax Act, 1952, there shall be inserted the following section:—
"217A. If the claimant, by reason of his blindness, is compelled to depend upon the services of a dog, maintained by him as a guide, he shall be entitled to a deduction from the amount of tax with which he is chargeable equal to tax at the standard rate on twenty pounds".—[Mr. Cronin.]
Brought up, and read the First time.
Mr. John Cronin: I beg to move, That the Clause be read a Second time.
I propose to perform this task with reasonable celerity, in view of the lateness of the hour. Hon. Gentlemen must remember that this is a grave subject and, therefore, cannot be treated too cursorily. English tax law has recognised not merely the size of the taxpayer's income, but also his taxable capacity. For that reason, for several years we on this side of the House have moved new Clauses to give relief to disabled and blind people.
On every occasion those Clauses have been rejected by successive Conservative Chancellors. It therefore seems to me that the thing to do tonight is to approach the problem on a limited front, so we have chosen a very deserving type of case where the tax relief is clear-cut and simple. We want to obtain some relief for the blind man in view of his difficulty in paying tax on the expenses incurred in keeping his dog.
The purpose of a guide dog is to enable a blind man to go out of doors. With it, the man can travel to work, and can, therefore, save the rest of the community expense by providing for himself. It enables him to be independent, and so releases other people, who would normally have to accompany him out of doors, to perform more productive tasks or services for the rest of the community. It enables the blind man to get sufficient exercise and so keeps him in health, again avoiding his becoming a burden on the community financially through the National Health Service.
I need not say that possession of one of these animals has a tremendous psychological effect on the blind man in that he is able to get out and widen his
1260
social circle. It really makes an immense difference to his whole happiness and well-being. It is likely that now that blind children are receiving more adequate training there will in future be an even bigger demand for guide dogs.
Having a blind dog involves considerable cost. The dogs are usually Labradors, collies or Alsations. They are all big, and all consume at least 1 lb. to 2 lbs. of meat a day. I understand from the Guide Dogs for the Blind Association that the cost is at least 15s. a week for a blind man who has a family, and who can, therefore, supplement the dog's diet with scraps, or about £1 a week for the blind person who is a bachelor or a spinster.
This is a very heavy financial burden, and this new Clause goes only part of the way in giving assistance. I understand that even the Guide Dogs for the Blind Association has to give some of its money to subsidise people who possess guide dogs, and so is unable to use all its resources to provide more dogs. We ought not to neglect completely the aspect of the welfare of the animals themselves. We are a dog-loving nation and have a tradition of being as humane as possible to animals. If the new Clause were to be accepted, this would, I think, be the first occasion when an Income Tax concession would be directly applicable to a very deserving type of animal.
The Chancellor is aware that there is strong public feeling about this. The hon. Member for Bolton, West (Mr. Holt) raised the matter at Question Time on 9th June, and when the Chancellor turned down his request there was considerable indignation in the national Press during the next few days. I do not think that I can do better than quote John Gordon, who commented on this in the Sunday Express on 14th June—
Hon. Members: Do not spoil it.
Mr. Cronin: It does not spoil the case.
John Gordon commented:
"Another case for the Ministry of Common Sense—if we had enough common sense to establish one. The Chancellor of the Exchequer, asked to make the cost of keeping a guide dog a deductible expense on a blind

1261
man's tax claim, declined. Why? Because he explained the cost of getting to work isn't allowable against tax, and, in his view, a blind man's dog comes under the getting to work rule.
Did you ever hear a more fatuous excuse for bureaucratic nonsense?"
I do not think that the views of John Gordon usually meet unanimous concurrence on this side of the House, but on this occasion he spoke with the voice of the nation.
10.30 p.m.
We ought to examine the Chancellor's objections. He has said that there is a rule that the expense of travelling to work is not an allowable expense, and it could not be departed from. If he consults his legal advisers—no doubt he has done so—he will find that the rule is based on the decision in Ricketts v. Colquhoun, in 1926. If he reads Simon's Income Tax, Vol. 2, paragraph 702, he will find that that decision was based on the fact that where a man lives is at his own discretion and travelling to work is, therefore, not in the performance of his duty.
This Clause involves a completely different principle. We are not asking for relief in respect of a travelling expense which is at the taxpayer's own discretion. We are asking for a relief in respect of additional expense which is not at the taxpayer's discretion. It is a relief required because he is blind and needs a guide dog. It is in no sense a matter for the taxpayer's discretion, and, therefore, the principle does not apply. Of course, the Clause does not refer merely to blind persons who travel to work. It applies to widows and people of small means who are blind and to various categories of blind person.
The new Clause has great administrative simplicity. There can be no argument about the amount of the relief. It is clear-cut—£20. There can be no difficulty at all about deciding what a guide dog is. It is a readily definable category of animal, and the animal must be with the blind person. The cost will be very small indeed, if there is a cost at all. I understand that there are now 500 guide dogs in use, and there is a waiting list for another 200 guide dogs. At present, therefore, the concession could not cost more than £7,000 a year. I venture to suggest that that small sum would be much more than offset by the
1262
savings resulting from blind persons being able to work and keep in good health.
The Chancellor may suggest that this relief will be applicable only to Income Tax payers. I hope that he will not say that, because that is the excuse which has been given by successive Chancellors of the Exchequer for rejecting every progressive proposal from this side of the House.
I should be failing in my duty if I did not, in conclusion, refer to the very favourable treatment given to other categories of taxpayer. Hon. Members on both sides of the House are aware of the ubiquitous and ostentatious high living indulged in today which is paid for by expenses deductible from taxable income. Hon. Members will agree—to take one example—that the members of the Institute of Directors have never had it so good.
I suggest that, if the Government accept all these tax-free extravagances which are now ordinary commercial practice, and if they reject, year after year, the reliefs for disabled persons for which we ask, they should surely have the grace to accept this small new concession to give relief to a limited number of blind persons.
Mr. Ellis Smith: I beg to second the Motion.
Mr. Amory: I wish that I could recommend the acceptance of this new Clause, but I cannot. I agree that the hon. Member for Loughborough (Mr. Cronin) has made a narrow proposal which, by itself in isolation, would be bound to command all our sympathy. Unfortunately, it would involve starting out on a new principle and entering upon an entirely new kind of fiscal relief. The Clause deals exclusively with the blind, but I must, I fear, in describing the difficulties, stray a little into mentioning the problems of people who are severely handicapped in other ways. A Clause to provide tax relief for the 100 per cent. disabled was moved and rejected during the Committee stage of the Bill. However deep the sympathy we may have for the blind man with his guide dog, a sympathy which is bound to be reinforced with the admiration we must feel for the courage and almost invariable cheerfulness of blind people, we must not forget that there are others who

1263
are equally handicapped and whom the House would, I am sure, equally wish to help.
Among the blind themselves, there are cases in which, for one reason or another, guide dogs are not appropriate. Indeed, the provision of guide dogs is only one, and that a relatively small, part of the welfare services for the blind with which the community, through the Government, local authorities and voluntary efforts, assists. Of about 10,000 blind people in non-sheltered employment, there are fewer than 1,000 with guide dogs.
If help were to be given, it could not stop here. It would lead into an ever-widening field, because there are others who would be equally deserving, even among the blind. Some blind people have to have someone to take them to their place of work or to come and help them at home. In many cases, they have to recompense those people for their trouble and expense. Furthermore, blind people have to pay someone to drive them to and from their work because public transport may be unsuitable. Blindness is only one form of disability that rightly excites our sympathy. There is the poliomyelitis victim or the spastic, or the person suffering from multiple sclerosis.
My trouble is that I can see no way of justifying help for one class of blind people without extension not only to other categories of blind people, but to many seriously disabled people and many who are ill in various ways as well.
We all want to help people who are suffering need in those categories, but the question is whether this tax allowance is the right way of doing it. When this matter arose in Committee in the case of the 100 per cent. disabled, I had to say that I did not feel that it was the right way of helping people in need in those ways and that the right way was by giving direct help. If we rely on these taxation reliefs, it is a hit-and-miss principle. We would help some who may be in need, but we would miss helping many more who would be among the most deserving cases.
Very few blind people would be liable to tax. Therefore, they would not be in a position to get any benefit from
1264
this proposal. Many of those who are unemployable receive National Assistance, and those in receipt of National Assistance would not, at the same time, get a benefit under this tax proposal.
The best way is helping by direct assistance, particularly in the case of the blind. The special problems of the blind are, rightly, recognised in the scale of National Assistance benefit, which is substantially higher for them than for the normal beneficiaries. Indeed, when one partner in a married couple is blind, the new scale which we now propose is over £1 a week more for the blind partner than for a normal person. That is absolutely right.
There are special provisions for the earlier payment of old-age pensions and special legislation to enable the Minister of Labour and local authorities to give many other forms of help, assistance, encouragement and training to blind people, such as home visitors and teachers, workshops and hostels for them and special assistance in finding work.
Those seem to me the best and most effective ways of helping, and to be far more effective than anything that could b done in this field. I do not believe that helping by fiscal concession is really the way to help in these cases. Therefore, while deeply sympathetic towards the motives which have prompted the moving of the Clause, I must none the less say that I do not think it is a suitable or appropriate way of doing what we want to do. That being so, I must recommend the House not to accept the Clause.
Mr. H. Wilson: I want to say right away to the right hon. Gentleman that the answer which he has given is not really good enough and that I believe it offends the conscience of the whole House. His argument, and we are getting rather tired of it, is that he is sympathetic to what the Clause proposes but is not going to do anything about it. He then produces quite inadequate reasons for doing nothing.
The right hon. Gentleman's argument is that because the Clause would create anomalies he is allowing the injustice to continue. We had the same thing from him month after month in relation to post-war credits in respect of hardship. He then said that it would create

1265
anomalies and that it was not possible to find a definition of hardship. In the end he took his courage in both hands—and I pay a tribute to him for this—and dealt with the matter in the Budget. We gave him full support in resisting the pressure of anomalies that might result. On that occasion he was tackling a much more difficult problem than the one before him at the moment.
It is quite obvious that the right hon. Gentleman has listened too much to the advice of those who say, "You must not do this; it will create a precedent." Some of the most courageous decisions in the history of British government have been those which have created precedents in every sphere of life. I well remember the late George Tomlinson saying what happened when he arrived at the Ministry of Labour in wartime as a Parliamentary Secretary, and wanted to do something humane and reasonable. His civil servants said, "You cannot do that; it will create a precedent," to which George Tomlinson replied, "You fellows are good at following precedents; Ministers are here to create them." I think that on this occasion the Chancellor ought to have taken that line and recognised the force of these arguments.
We are getting near the end of the debates on this year's Finance Bill. Taking these debates in conjunction with the sort of thing we were debating a week ago yesterday, about the "spiv" State, take-over bids, and all the rest, I think that a horrible contrast is developing. And the right hon. Gentleman is doing nothing to remove it. He allows these things to go on in the City. They are created by private enterprise and laissez faire, and so they continue. When the right hon. Gentleman has a chance to make a very small concession to help an admittedly small number of people who are suffering great hardship he refuses to do so.
We have had this sort of attitude on the part of the right hon. Gentleman for a long time and it does not go well with the speeches that he makes. At a time when the Chancellor is enabling many people to make a lot of money he is refusing to do anything about the removal of the prescription charge which was imposed in a period of alleged stringency by the present Prime Minister.
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But, as I say, he allows large fortunes to be made in the "spiv" State.
Here is another case on which he could have taken action. It would not have been a very difficult thing to do. We are not pressing the point originally made by the hon. Member for Bolton, West (Mr. Holt), who suggested that this was a matter which should be allowed as a tax deductible item, as an expense of earning a wage or a salary. When the matter was raised at Question Time the right hon. Gentleman said, with some degree of logic, that we did not allow in our tax system any payment for getting to work. We are all in favour, for it would have opened a very wide door.
We can imagine company directors and others making hundreds, if not thousands, of pounds a year out of a decision of that kind. [Laughter.] I do not know what hon. Gentlemen opposite find amusing in this subject, but it would be very easy for someone living in, say, the West Country to travel up to London to take part in a monthly board meeting and to charge the whole cost of the journey. That relief would be open to abuse, and if hon. Members opposite think it would not the Chancellor can no doubt assure them on the matter.
10.45 p.m.
Perhaps the Chancellor was right in resisting that kind of relief. It was for that reason we tabled this new Clause, which would make the relief a straight personal allowance based on disability. We accept what the Chancellor says that there are other kinds of hardship, but we think that he should have the courage to deal with some of them as well. If the country can afford all the wasteful expenditure on the things I have mentioned earlier tonight, from advertising to lush business expenses and the rest, surely it could find the £7,000 or £8,000 involved if the Chancellor accepted the new Clause.
Mr. Holt: I am very disappointed with the Chancellor's reply. I suggest that tomorrow he looks at his speech. He will find that the first part did not tie to the second part. In the first part he said we could not go in for allowances of the type I orginally suggested because there were many other people who had disabilities and they were not included and he could not single out one group. In the second part he talked about

1267
people who have already been given various kinds of concession and allowances through National Assistance, the provision of pensions, and so on.
I am sure that nobody here wants one form of Amendment or new Clause more than another. All we are asking is that extra expense which a blind man incurs through having a guide dog should be recognised, and that in some way the Chancellor should help him meet the expense. I do not think that the question of expenses in going to work being chargeable or not arises, because the blind man who goes to work has an extra expense that other people do not have. There is a reason for regarding that expense in a different way. I do not mind whether it is dealt with on one basis or another.
The right hon. Gentleman elaborated the point that it was not right to deal with the matter in a fiscal manner, but he himself had already moved a new Clause by which he widened the benefit, the fiscal benefit, given to some people who are handicapped. He did it by increasing the number of invalid carriages to be exempt from Excise, by changing the weight factor from 5 cwt. to 6 cwt. There was an instance of handicapped people being exempted from some tax. Why, then, is it that like assistance is not given to another
person who is handicapped in a different way and gets about and does a proper job and earns a proper wage and is, therefore, not a burden on the State, as many other blind people are who, for one reason or another, do not do ordinary jobs, probably because they are incapable of doing them?
There is a man in my constituency whom I have in mind. I have put his case to the Treasury about four or five years ago. That man does a job as a telephonist at a Ministry of Labour office in Bolton. No doubt, other hon. Members can mention other similar cases from their constituencies. Men like him are not a burden on the State, but have overcome their handicap and carry out a proper job. But they have an extra expense in overcoming that handicap.
It is just not good enough for the Chancellor to explain, as he has done on previous occasions, his great sympathy without making an effort to meet us in seeing how the difficulty can be got over. If the new Clause is not adequate, or does not meet the case from the Treasury's point of view, it is up to the right hon. Gentleman to suggest something different.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 116, Noes 167.

Division No. 165.]

AYES

[10.50 p.m.

Ainsley, J. W.

Fitch, A. E. (Wigan)

McInnes, J.

Albu, A. H.

Forman, J. C.

Mahon, Simon

Allaun, Frank (Salford, E.)

Fraser, Thomas (Hamilton)

Mann, Mrs. Jean

Bacon, Miss Alice

Grey, C. F.

Mason, Roy

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

Grimond, J.

Mitchison, G. R.

Benson, Sir George

Hall, Rt. Hn. Glenvil (Colne Valley)

Monslow, W.

Blackburn, F.

Hannan, W.

Morris, Percy (Swansea, W.)

Blenkinsop, A.

Hayman, F. H.

Mulley, F. W.

Blyton, W. R.

Herbison, Miss M.

Noel-Baker, Francis (Swindon)

Boardman, H.

Holt, A. F.

O'Brien, Sir Thomas

Bottomley, Rt. Hon. A. G.

Houghton, Douglas

Oram, A. E.

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

Howell, Charles (Perry Barr)

Oswald, T.

Bowen, E. R. (Cardigan)

Hoy, J. H.

Padley, W. E.

Bowles, F. G.

Hughes, Emrys (S. Ayrshire)

Pargiter, G. A.

Boyd, T. C.

Hughes, Hector (Aberdeen, N.)

Peart T. F.

Braddock, Mrs. Elizabeth

Hunter, A. E.

Pentland, N.

Brockway, A, F.

Hynd, H, (Accrington)

Popplewell, E.

Brown, Rt. Hon. George (Belper)

Hynd, J. B. (Attercliffe)

Price, J. T, (Westhoughton)

Butler, Mrs. Joyce (Wood Green)

Irving, Sydney (Dartford)

Price, Philips (Gloucestershire, W.)

Champion, A. J.

Janner, B.

Probert, A.

Cliffe, Michael

Johnson, James (Rugby)

Redhead, E. C.

Coldrick, W.

Jones, Jack (Rotherham)

Reynolds, G. W.

Craddock, George (Bradford, S.)

King, Dr. H. M.

Rhodes, H.

Cronin, J. D.

Lawson, G. M.

Roberts, Albert (Normanton)

Davies, Ernest (Enfield, E.)

Lee, Frederick (Newton)

Roberts, Goronwy (Caernarvon)

Deer, G.

Lever, Harold (Cheetham)

Ross, William

Diamond, John

Lever, Leslie (Ardwick)

Silverman, Julius (Aston)

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

Mabon, Dr. J. Dickson

Skeffington, A. M.

Ede, Rt. Hon. J. C.

McAlister, Mrs. Mary

Slater, J. (Sedgefield)

Edwards, Rt. Hon. Ness (Caerphilly)

MacColl, J. E.

Smith, Ellis (Stoke, S.)

Fernyhough, E.

MacDermot, Niall

Sparks, J. A.

Spriggs, Leslie

Ungoed-Thomas, Sir Lynn

Winterbottom, Richard

Steele, T.

Usborne, H. C.

Woodburn, Rt. Hon. A.

Storehouse, John

Wade, D, W,

Woof, R. E.

Stones, W. (Consett)

Weitzman, D.

Yates, V. (Ladywood)

Symonds, J. B.

Wheeldon, W. E.

Zilliacus, K.

Taylor, Bernard (Mansfield)

White, Mrs. Eirene (E. Flint)

Thomas, Iorwerth (Rhondda, W.)

Willey, Frederick

TELLERS FOR THE AYES:

Thomson, George (Dundee, E.)

Willis, Eustace (Edinburgh, E.)

Mr. Wilkins and Mr. Simmons.

Thornton, E.

Wilson, Rt. Hon. Harold (Huyton)

NOES

Agnew, Sir Peter

Glyn, Col. Richard H.

Nugent, Richard

Aitken, W. T.

Goodhart, Philip

O'Neill, Hn. Phelim (Co. Antrim, N.)

Amory, Rt. Hn. Heathcoat (Tiverton)

Gower, H. R,

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

Anstruther-Gray, Major Sir William

Graham, Sir Fergus

Osborne, C.

Arbuthnot, John

Green, A.

Page, R. G.

Armstrong, C. W.

Gresham Cooke, R.

Pannell, N. A. (Kirkdale)

Atkins, H. E.

Grosvenor, Lt.-Col. R. G.

Partridge, E.

Baldwin, Sir Archer

Gurden, Harold

Peel, W. J.

Barter, John

Harrison, Col. J. H. (Eye)

Pickthorn, Sir Kenneth

Batsford, Brian

Harvey, John (Walthamstow, E.)

Pilkington, Capt. R. A.

Bell, Philip (Bolton, E.)

Heald, Rt. Hon. Sir Lionel

Pitman, I. J.

Bidgood, J. C.

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

Pitt, Miss E. M.

Biggs-Davison, J. A.

Henderson-Stewart, Sir James

Pott, H. P.

Bingham, R. M.

Hesketh, R. F.

Powell, J. Enoch

Birch, Rt. Hon. Nigel

Hill, John (S. Norfolk)

Price, David (Eastleigh)

Bishop, F. P.

Hirst, Geoffrey

Prior-Palmer, Brig. Sir Otho

Black, Sir Cyril

Hobson, John (Warwick & Leam'gt'n)

Ramsden, J. E.

Body, R. F.

Holland-Martin, C. J.

Rawlinson, Peter

Boyle, Sir Edward

Hornby, R. P.

Redmayne, M.

Brewis, John

Hornsby-Smith, Miss M. P.

Ridsdale, J. E.

Brooman-White, R. C.

Horobin, Sir Ian

Roberts, Sir Peter (Heeley)

Bryan, P.

Howard, Gerald (Cambridgeshire)

Robinson, Sir Roland (Blackpool, S.)

Burden, F- F. A.

Howard, John (Test)

Roper, Sir, Harold

Cary, Sir Robert

Hughes Hallett, Vice-Admiral J.

Russell, R. S.

Conant, Maj. Sir Roger

Hughes-Young, M. H. C.

Shepherd, William

Cooke, Robert

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

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

Cooper-Key, E. M.

Hylton-Foster, Rt. Hon. Sir Harry

Smithers, Peter (Winchester)

Cordeaux, Lt.-Col. J. K.

Iremonger, T. L.

Stevens, Geoffrey

Corfield, F. V.

Jennings, J. C. (Burton)

Steward, Harold (Stockport, S.)

Courtney, Cdr- Anthony

Johnson, Eric (Blackley)

Steward, Sir William (Woolwich, W.)

Craddock, Beresford (Spelthorne)

Kaberry, D.

Stoddart-Scott, Col. Sir Malcolm

Crosthwaite-Eyre, Col. O. E.

Kerby, Capt. H. B.

Storey, S.

Cunningham, Knox

Kimball, M.

Stuart, Rt. Hon. James (Moray)

Currie, G. B. H.

Langford-Holt, J. A.

Summers, Sir Spencer

Dance, J. C. C.

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

Taylor, Sir Charles (Eastbourne)

Davidson, Viscountess

Legh, Hon. Peter (Petersfield)

Taylor, William (Bradford, N.)

D'Avigdor-Goldsmid, Sir Henry

Lindsay, Hon. James (Devon, N.)

Teeling, W.

Deedes, w. F.

Lindsay, Martin (Solihull)

Thompson, Kenneth (Walton)

de Ferranti, Basil

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

Thompson, R. (Croydon, S.)

Dodds-Parker, A. D.

Longden, Gilbert

Thornton-Kemsley, Sir Colin

Donaldson, Cmdr. C. E. McA.

Loveys, Walter H.

Tweedsmuir, Lady

Doughty, C. J. A.

Low, Rt. Hon. Sir Toby

Vickers, Miss Joan

Drayson, G. B.

Lucas-Tooth, Sir Hugh

Vosper, Rt. Hon. D. F.

du Cann, E. D. L.

Macdonald, Sir Peter

Wakefield, Edward (Derbyshire, W.)

Duncan, Sir James

McMaster, Stanley

Wall, Patrick

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

Maddan, Martin

Ward, Dame Irene (Tynemouth)

Errington, Sir Eric

Manningham-Buller, Rt. Hn. Sir R.

Webster, David

Erroll, F. J.

Markham, Major Sir Frank

Williams, Paul (Sunderand, S.)

Finlay, Graeme

Marlowe, A. A. H.

Williams, R. Dudley (Exeter)

Fisher, Nigel

Marples, Rt. Hon. A. E.

Wilson, Geoffrey (Truro)

Fletcher-Cooke, C.

Mawby, R. L.

Wolrige-Gordon, Patrick

Forrest, G.

Medlicott, Sir Frank

Woollam, John Victor

Freeth, Denzil

Nabarro, G. D. N.

Yates, William (The Wrekin)

Gammans, Lady

Nairn, D. L. S.

George, J. C. (Pollok)

Nicholson, Sir Godfrey (Farnham)

TELLERS FOR THE NOES:

Gibson-Watt, D.

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

Mr. Chichester-Clark and

Glover, D.

Noble, Michael (Argyll)

Mr. Whitelaw.

Clause 4.—(EXCISE LICENCES REQUIRED FOR REGISTERED CLUBS: ABOLITION OF DUTY ON STATEMENTS.)
11.0 p.m.

The House will remember that in Committee my hon. Friend the Member for Wycombe (Mr. John Hall) proposed an Amendment in respect of the licence duty payable by small clubs which wished to sell intoxicating liquor mainly as a sideline to their social, sporting or athletic activities. My right hon. Friend the Chancellor undertook to see to what extent he could give some relief to the small clubs, though not, of course, in the exact form proposed by my hon. Friend, because that proposal was defeated.
The Amendment is the result of my right hon. Friend's study. Briefly, it means that a small club whose purchases of liquor during the course of a year amount to £200 or less will be entitled to claim a refund of half of the club licence. Thus, if its purchases are less than £200 it will be able to claim a refund of £2 10s. on the total cost of a £5 licence.
It might help the House if I gave some of the results of our analysis of the problem. There are rather more than 23,000 clubs registered in Great Britain for the sale of intoxicating liquors. In 1958 just under 5,000 paid less than £5 club duty and about 3,000 paid less than £2 10s., and of those 3,000 about 400 did not buy any liquor at all during
1272
1958. The Amendment would provide a relief for some 3,150 clubs, and it would also mean that the 400 or so clubs which, although registered, did not buy any intoxicating liquor would be able to claim as a refund the whole of the licence duty.
Another point which I think it worth mentioning is that we chose the figure of £2 10s. because it was halfway between not paying anything at all and paying £5. It seemed that a halfway house was about right in this context, because what might seem at first sight more attractive, namely, a rebate of £3 10s., making a payment of only 30s. necessary, would unduly restrict the scope of relief, and going to £2 10s. enables a larger number of clubs to benefit, though some of the smaller ones will not benefit quite so much.
I hope that the House will approve the Amendment, which goes some way to meet the wishes expressed during the earlier stages of the Bill.
Mr. Ede: I beg to move, as an Amendment to the proposed Amendment, in line 7, to leave out from the beginning to the second "the" in line 10.
It seems to me that the machinery proposed by the Government to deal

1273
with this matter is altogether too elaborate. As part of the reason for having the £5 flat rate in dealing with these small clubs was that it would avoid a lot of bookkeeping, I am bound to say that I was very surprised to find the requirement
"being an application made in such form and containing such particulars as the Commissioners may direct and supported by the production of such accounts, invoices, receipts or other documents relating to purchases of intoxicating liquor as the Commissioners may require and (in any case) accompanied by the licence …"
If the secretary has mislaid the licence or for some other reason it has disappeared—perhaps somebody has used it as a pipe-lighter; all sorts of queer things go on in these small clubs—what is to happen then? For this small thing, to have invented so elaborate an apparatus appears to me to be quite out of place.
I had drafted an Amendment before the Government's Amendment appeared. I have now submitted a series of Amendments with a view to simplifying the whole thing so that a statutory declaration by the appropriate officer of the club shall be sufficient; and the penalties for making a false statutory declaration are certainly heavy enough to deter anyone from monkeying about. The hon. Gentleman has the great advantage that when it comes to the supervision of clubs every publican is on the look-out to see how he can prove that a club which he assumes may be interfering with his business can be brought within the ambit of the law.
Perhaps it would be for the convenience of the House if I read how the Chancellor's Amendment would read if the Amendment and my following Amendment, in line 10, were adopted. It is entirely an effort to simplify the arrangement to secure that what I gather everyone wants to do is done.
"(6) Where, on an application to the Commissioners made by the person in possession of a club licence—

(a) within one month after the licence ceased to be in force or such further time as the Commissioners may allow, or

(b) on his surrendering the licence at an earlier time,

the Commissioners are satisfied by the production of a statutory declaration made by that person—

(i) that during the period for which the licence was in force the purchases, if any,
1274
of intoxicating liquor to be supplied in or to the club or on behalf of the club to the members thereof did not exceed the amount of four hundred pounds,

the Commissioners shall repay if there were no such purchases, the duty on the licence or, if there were such purchases, threepence in the pound in respect of every pound of difference between the total of the purchases and the said amount; and any such repayment shall be made to the applicant.
For the purposes of this subsection the duty on a club licence shall be taken to be the duty payable on the grant of the licence less any amount falling to be repaid or remitted under the foregoing subsection."
All of us acquainted with this class of club and the Chancellor's aim to help, which I have tried to help a little further, will be quite sure that under such an arrangement what the Chancellor requires can be done with a minimum of burden on the secretary and other officers of the club.
Mr. Erroll: We had considered something on the lines suggested by the right hon. Gentleman the Member for South Shields (Mr. Ede), but we think that detailed returns would be required from all clubs unless one accepted also the suggestion for a statutory declaration. The plain fact is that a statutory declaration would not be satisfactory, because repayment does necessitate proper verification of the trader's statements.
We ask for the licence to be surrendered to make sure that the repayment is made to the person to whom it is properly due, and production of the licence shows that it is the right person.
Mr. Ede: If he loses the licence what happens?
Mr. Erroll: We would take the necessary steps to deal with a situation of that sort. It might well be possible to verify from our own records that he had paid licence duty.
In our own Amendment we lay down that the statement may be made
in such form and containing such particulars as the Commissioners may direct …
That does not mean that in all cases they will have to see the full records, and that is one of the advantages of our proposal as this is a flat-rate relief. Where a club is selling a much smaller quantity than £200 in a year all that will be necessary will be a simple statement to that effect.

1275
Only a detailed verification will be required in a borderline case where they hoped to be just below the £200, but, when one looks into the matter, it is just over. That is why it is necessary to examine the trader's own statement in such cases.
Mr. Mitchison: If, in one club, the amount is £199 and in another club it is £201, the £199 man will get £2 10s. benefit and the £201 man will get no benefit.
Mr. Erroll: I think that that type of marginal case is inherent in any flat-rate relief scheme. The alternative is to do it on the basis of a poundage refund, which would mean that all clubs would have to submit full returns, all of which would have to be verified, and that would be very much more difficult to adminster.
For the reasons I have explained, it would not be practicable to rely on a statutory declaration where the amount to be refunded would vary in accordance with the amount of liquor consumed and so declared. I hope that the House will agree that it would not be right to accept the Amendments to the proposed Amendment because, so far from making matters simpler for the clubs, in many cases they would add to their difficulties.
Mr. John Hall: I listened to the suggestion of the right hon. Member for South Shields (Mr. Ede) with great interest, because I am certain that all hon. Members would welcome any means of simplifying the effect of legislation on the individual, but I must admit that I could not see that the suggestion would simplify the legislation. One thought which occurred to me while the right hon. Member was speaking was that a statutory declaration would have to be sworn before a commissioner of oaths, which would cost 5s.—
Mr. Ede: Or before a justice of the peace. I have done many of them for nothing.
Mr. Hall: Perhaps a justice of the peace could not be found round the corner.
I rise to thank my hon. Friend the Economic Secretary for the great trouble he has taken to try to find a way to meet the point raised in the Amendment which my hon. and gallant Friend the Member for Dorset, North (Colonel R. H. Glyn)
1276
and I put forward in Committee. I wish to thank my hon. Friend for having arrived at a compromise which, while it does not meet all the points we had in mind and go all the way to meet the substance of that Amendment, will help a great deal. I am sure that my hon. Friend's Amendment will be very much appreciated by many clubs throughout the country.
Amendment to the proposed Amendment negatived.
Proposed words there inserted in the Bill.

Clause 10.—(VEHICLES (EXCISE) HACKNEY CARRIAGES.)
Mr. Ernest Davies: I beg to move, in page 10, line 41, to leave out from "four" to the end of line 43 and to insert:
"and not more than twenty persons, twelve pounds;

(iii) if the vehicle has seating capacity for more than twenty persons, twelve pounds and ten shillings."

The purpose of this Amendment is to reduce further the amount of vehicle Excise duty payable on buses and coaches, that is, public service vehicles. The Clause as it stands provides for Excise duty of £12 on vehicles up to 20 seats and, for vehicles of over 20 seats, an additional 10s. per seat. The purport of this Amendment is that vehicles with more than 20 seats shall pay only the flat rate of £12 10s.
At this late hour I do not want to embark on a discussion of the difficulties of the road passenger transport industry, particularly in rural areas. We had a debate on this Clause in Committee and a debate on a new Clause designed to assist rural transport particularly. When he proposed this Clause, and previously in his Budget statement, the Chancellor admitted that conditions in the road passenger transport industry were difficult and said he wanted to help the industry.
The Chancellor's concession, which is only of £3½ million in a full year, makes only a farthing a vehicle-mile difference and is little relief when losses are up to 2s. a vehicle-mile at present. Hon. Members opposite suggested that the Chancellor should go further and suggested the rate in the Amendment. In

1277
the previous year we had moved an Amendment to that effect. In view of the Chancellor's adamant refusal to go any further in the previous debates, we felt it desirable to place the Amendment on the Notice Paper.
11.15 p.m.
This concession can be granted because it makes a difference of only £1 million out of a total vehicle Excise Duty of about £106 million a year, a total which is increasing at the rate of £6 million a year. Half-a-million additional cars are being brought on to the road each year, the tax on each being £12 10s., and the total vehicle Excise Duty is rising at over £6 million a year.
To assist the road passenger industry by a further £1 million would not be great assistance to the industry, but might make marginal differences between certain services being dropped or continued. The need for further assistance to the industry is urgent, because the speed with which branch railway lines are being closed is increasing. Where these are closed it is essential that alternative services should be offered.
Since the previous debates the Central Transport Consultative Committee has brought out its annual report, drawing attention to the difficulty of rural road passenger transport services being provided as an alternative to railway services. Referring to bus operators, the Report commented:
"All these companies are finding that the number of unremunerative rural services which they are operating is steadily increasing, and whereas in the past these services lost at the most only a few pence per car-mile, the losses per car-mile are now sometimes measured in shillings. In these circumstances it is not reasonable to expect these undertakings, or indeed any similar undertakings, whether controlled by the Commission or not, to provide an alternative service in lieu of an uneconomic rail service which has been closed for lack of public support unless the financial return per car-mile equals the outgoings."
There is more to that effect, but I will not weary the House with it. It is clear that if some further assistance is not given to the road passenger industry there will be further curtailments of essential services in those less densely populated areas, and particularly in rural areas.
Unfortunately, not only the rural services are suffering. The various municipalities,
1278
which are the main providers of services in the urban areas, are finding it increasingly difficult to maintain their services at the frequency and density provided in the past. In many cases fares have had to be raised. While the Amendment would not bring great relief, it might make a difference. In Birmingham, about £37,000 would be saved if it were accepted.
The Chancellor has admitted the difficulties. He has said that he would like to go further, but that he could find no way of doing so. He has accepted that the vehicle Excise Duty can be reduced—he has reduced it by £3½ million. Here is a way of reducing it by a further £½ million while still attracting a considerable revenue. He would also have a tidier administrative structure. A flat rate of £12 10s., with £12 for smaller vehicles, would obviously be far easier to administer.
A committee has been appointed to inquire into the difficulties of rural transport. Its setting up was announced on 11th May, and we were promised the terms of reference later, but we still have not been given the names of the chairman and members. I do not think that the industry can await the findings of that committee before getting further relief. We have all had experience of the length of time such committees sit, the evidence they take, the time it takes them to compile their reports; and then there is Government indecision as to what action shall be taken following publication of reports.
I therefore suggest to the Economic Secretary that here is a further opportunity for the Chancellor to do what he has stated he wishes to do—bring greater relief to the road passenger transport industry, particularly in the rural areas. It would cost him only £1 million out of the £106 he gets from taxing those who travel daily to and from their work.
Mr. Mitchison: I beg formally to second the Amendment.
Mr. Erroll: The object of Clause 10 is to afford some financial help to the operators of bus services, and the hon. Member for Enfield, East (Mr. Ernest Davies) has suggested that my right hon. Friend could have gone further than he

1279
has felt able to do. The hon. Member produced some very persuasive arguments suggesting that as the yield of Excise duty was growing year by year the loss of a mere £1 million, as he put it, could quite readily be afforded. Well, every £1 million count these days, as they always have done, and my right hon. Friend does not feel that he can go further than he has done in his original proposals.
After all, the reductions in the duty amount in total to about two-thirds of the present revenue from buses, trolley buses and coaches, which at present yield a total of about £5½ million. In a full year, the amended rates of duty will cost about £3·6 million, and, of course, there is the extra £2·5 million of refunds being made this year.
The Amendment suggests that the graduated scale should be replaced by a flat rate, but I think that the hon. Gentleman would agree that there should be some regard to the size of the vehicle, particularly as there are such very considerable discrepancies in size—between the minibus, with 12 seats, or the 20-seater, and the average double-decker with its 60 seats. That being so, a graded rate of duty would seem appropriate, while, at the same time, we have been successful in providing a substantial measure of relief.
The hon. Gentleman gave the impression that the relief so far has had no effect, but that is not the information we have. We understand that some companies have announced that the relief should help them to keep their rural services going, while a few others have actually gone further, and have approached local authorities with a view to the restoration of services previously withdrawn. We can, therefore, feel confident that the rates proposed in Clause 10 are already being felt as a substantial benefit to the bus industry.
In view of that, my right hon. Friend feels that it would be right to wait for the result of the committee which was set up to examine trends in rural bus services. I hope that it will not take so long to report as the hon. Member fears it will. In the circumstances, I advise the House to reject the Amendment.
Amendment negatived.

Clause 11.—(AGRICULTURAL TRACTORS: CARRIAGE OF PRODUCE ETC. AT AGRI CULTURAL RATE OF DUTY.)
Mr. Nugent: I beg to move, in page 12, line 22, to leave out from the third "of" to "and" in line 23 and to insert:
(a) a back wheel, in a case where only one appliance is being used for the carriage of goods or burden, and is fitted to the back of the vehicle,
(b) any wheel on one side of the vehicle, in any other case.
This Amendment completes the process begun by the Amendments which were put down on the Recommittal stage and approved by the Committee to amend Clause 11 and have the effect of giving rather more flexibility in the regulations and the law governing the use of tractors carrying loads on the public roads.
The actual effect of this Amendment is as follows. The concession in Clause 11 (1) that a tractor may carry a loaded transport box on the public road is denied by subsection (5), as drafted, to three-wheeled tractors or tractors with front wheels less than 4 ft. apart. Some tractors having a very narrow front axle are used for farm work. The Amendment will have the effect of extending the concession allowing the carrying of a loaded transport box on the rear of a tractor to three-wheeled tractors or tractors with the front wheels close together provided that the rear wheels are not less than 4 ft. apart.
It is perfectly safe to make this Amendment. It was a small point put to us by the agricultural interests after the Clause was drafted, and I commend the Amendment to the House with confidence.
Mr. Mitchison: I must be very stupid, but I do not understand this. We are told that the effect of the Amendment is to apply the concession to certain three-wheeled vehicles, but subsection (5) of the Clause still seems to begin by saying:
"Subsection (1) of this section shall not apply to three-wheeled vehicles"
and, after that, it embarks on an essay in three-dimensional mathematics which is, no doubt, quite familiar to the Ministry of Transport and Civil Aviation but which is a little difficult for anyone else to follow.

1281
Will the hon. Gentleman explain how this concession to certain three-wheeled vehicles can be reconciled with the statement at the beginning that it is not to apply to three-wheeled vehicles?
Mr. Nugent: Far be it from me to explain the mysteries of the draftsman, but the effect of leaving out the words from line 22 from the third "of" to "and" in line 23 and inserting these words on the Notice Paper will be to qualify the opening words of subsection (5) in such a way that the widening that I explained will take place. I agree that, sometimes, the draftsman's skill is something which perplexes my layman's mind, but I assure the hon. and learned Member for Kettering (Mr. Mitchison) that that is what it means. I am sure that that will be the effect.
Amendment agreed to.

Clause 20.—(PURCHASE AND SALE OF SECURITIES: DEALERS IN SECURITIES.)
Mr. Simon: I beg to move, in page 19, line 3, at the end to insert:
(5) Subsection (1) of this section shall not apply if the securities are overseas securities bought by the first buyer on a stock exchange outside the United Kingdom in the ordinary course of his trade as a dealer in securities and the following conditions are satisfied, namely—

(a) the interest is brought into account in computing for the purposes of the Income Tax Acts the profits arising from or less sustained in the trade;

(b) the first buyer has not claimed, and undertakes not to claim, any relief available to him in respect of the interest under section two hundred and one of the Income Tax Act, 1952 (relief from tax on dividends from overseas companies who have paid United Kingdom income tax); and

(c) where credit against income tax or profits tax would fall to be allowed in respect of the interest under section three hundred and forty-seven or three hundred and forty-eight of the Income Tax Act, 1952 (double taxation relief), the first buyer elects that credit shall not be so allowed.

In this subsection "overseas securities" means securities of the government of, or of a body of persons resident in, any country or territory outside the United Kingdom and the Republic of Ireland.
Clause 20 is the second of the Clauses which deal with bond washing. It is the one which relates to dealers in securities. The House will remember that, in Committee, the position of the arbitrageur was raised, and in reply, I think,
1282
to my hon. Friend the Member for Taunton (Mr. du Cann) I undertook to look further into the matter to make sure that, while making certain that we were not opening any door to a recrudescence of bond washing, we did not, consistent with that purpose, stop any legitimate business of any sort, including the business of dealing in internationally quoted stocks in more than one market. I subsequently had the advantage of representations, both by letter and by interview, from my hon. Friend the Member for Taunton and I am grateful for his help in the matter.
11.30 p.m.
In the result, my right hon. Friend has put down the Amendment, which, subject to fairly stringent safeguards, provides for the position of dealers who undertake the type of business of arbitrage that we discussed in Committee, and ensures that their business is not interfered with further than is necessary to prevent bond washing.
The Amendment gives a conditional exemption from the Clause for arbitrage deals in overseas securities. The limitations which it is necessary to impose are, first, that the cum dividend purchase, which was the first step in the deal, took place on an overseas stock exchange and, secondly, that the dividend obtained in the course of the deal is not made the subject of a claim for any sort of double taxation relief.
Paragraphs (b) and (c) of the Amendment deal with the two sorts of double taxation relief which might be claimed, paragraph (b) relating to a rather specialised type and paragraph (c) to the ordinary type. In paragraph (a), the interest on the dividend must be brought into account in the dealer's accounts for the purpose of assessing his profits to tax. The other limitations are that the deal must take place on a foreign stock exchange and in the ordinary course of the dealer's business as a dealer in securities.
I am ready to explain the matter further if the House should wish, but I hope that my hon. Friend the Member for Taunton and the House will feel that we have gone a considerable way to meet my hon. Friend's representations while, at the same time, making sure that the avenue was not open to renewed bond washing.
Mr. du Cann: I should like to thank my hon. and learned Friend, and, indeed, my right hon. Friend the Chancellor of the Exchequer, for recognising that there was substance in the earlier complaint made in Committee to the effect that those engaged in the legitimate business of arbitrage in securities were being unfairly treated—indeed, to some extent penalised—by the Clause as originally drafted. As my hon. and learned Friend said, the Amendment goes some way to meeting the objections that were quite rightly made at that time.
On the other hand, however, it is clear that those people who are engaged in arbitrage in securities will still be penalised to some extent by comparison with their overseas competitors, even though the Clause is being amended. That is doubly hard, for they are innocent people. There is no suggestion that they are bond washers. Indeed, they are positively virtuous in the sense that they are active in earning foreign currency for the country. It is true that not many firms are affected. Perhaps, if more were affected, we might have heard more on this subject. That does not, however, mitigate the hardship upon those concerned.
If, as I hope, the House accepts the Amendment, the Clause will have been twice amended. I am sorry that my right hon. Friend the Chancellor cannot go further, helpful though the Amendment is, because I still think that the Clause, even when amended, will have some restrictive effect on arbitrage in securities in the City of London. I know that that is not intended, but I feel certain that that is what is bound to happen.
I should like, very quickly, to give two examples of what I believe are the obvious defects of the Clause as amended. First, although there is the exemption for discount houses, jobbers and country brokers, there is no exemption for merchant bankers and brokers. They are the people who actually go out and get the business. On the face of it that seems somewhat unfair.
Secondly, I would like to refer particularly to the words
"on a stock exchange outside the United Kingdom."
The fact is that much dealing in other parts of the world is not done on stock
1284
exchanges as we understand them in the United Kingdom. That is so on the Continent of Europe where, for example, if one wishes to deal in securities, one may go direct to the banks or institutions concerned rather than through a normal, orthodox stock exchange because they, as we understand them, do not exist.
There is nothing wrong with these markets and nothing improper, but they are not stock exchanges as we understand them. This is particularly so in the United States, where there is an over-the-counter market which deals in United States banking and insurance shares and even in Commonwealth stocks and foreign bonds.
What, in effect, the Clause will mean if unamended is that this sort of market is excluded from ordinary consideration. I suggest that that is not entirely reasonable, particularly when one bears in mind that the Bank of England recognises markets of this sort from the point of view of exchange control.
I have an Amendment on the Notice Paper which I had hoped would rectify this position. It was not for discussion this evening. Indeed, I would be out of order in discussing it further, but I would like to ask my hon. and learned Friend this question. What does it matter whether these securities are bought on a stock exchange or on a market of the sort I have described? I suggest that it does not matter at all. I hope very much that my hon. and learned Friend will either be able to tell me that the kind of market I have described is covered by the words
"on a stock exchange outside the United Kingdom"
or, alternatively, that he will watch the position as time goes on with a view to introducing amending legislation in next year's Finance Bill should that be found to be necessary.
Mr. Mitchison: Apparently there is no satisfying an arbitrager. I understand that he is an innocent person who never fails to make a profit in foreign currency. When he is introduced to the harsh machinery of Parliament he must really feel quite out of place. He would, perhaps, be happier in Taunton, or London, as the case may be.

1285
I am bound to say that this sort of discussion frightens me a little. If distinctions of this kind are really as important as they appear to be and if we are dealing in such a nebulous atmosphere of what is and what is not legitimate and illegitimate, ought it not, perhaps, to be left to the sober opinion of those engaged in making profits out of the transactions?
This kind of thing makes me feel more and more the difficulty of drafting Clauses which will really meet the mischief aimed at without interfering with what general public opinion, as distinct from technical opinion, would consider to be proper trading and dealing. I am not going back on all that at this late hour. I really do not understand what is meant by "overseas securities." They are an integral part of the Clause, and, so far as they are securities of a foreign Government, I understand what is meant.
But what is meant by
"securities … of a body of persons resident"
in a foreign country? I suppose that a foreign company is a person, as it always is for Income Tax purposes, but a foreign partnership I do not know. What really is meant by
"a body of persons resident"
in a foreign country? Why should it always have to be "persons" in the plural? It appears to exclude a company, on the one hand; it appears to exclude any sort of entity of any kind. I cannot see what kind of thing it is.
I am not an expert in arbitrage. Why is it that this peculiar phrase is used, and what, in plain English, are the Government talking about when they put it in? I wonder whether the hon. and learned Gentleman can explain to us the meaning of this definition and, as I am sure he will, its complete sufficiency for the purpose he has in mind.
Mr. Simon: Perhaps I may speak again with the permission of the House?
My hon. Friend the Member for Taunton (Mr. du Cann) asked me two questions about, or rather, levelled two criticisms against, this Amendment. In the first place, he said that although the Amendment exempts jobbers it does not exempt merchant bankers or brokers. With very great respect to him, I do not think that he is right in that respect. It
1286
is perfectly true that, in so far as the domestic activities of the merchant bankers and brokers are concerned, they are caught by the Clause, but there is nothing to prevent them taking advantage of this Amendment in so far as they are dealing in securities in the ordinary course of their buying them on a stock exchange outside the United Kingdom. So that merchant bankers and brokers are within the Amendment.
My hon. Friend then asked me, why do we have the phrase "on a stock exchange"? I think that the first answer to that is that those words occurred in my hon. Friend's Amendment in Committee. So perhaps it was rather natural for us to think that that was the real mischief at which he was aiming. But I think it goes a bit further than that. The activity must be in a recognised and authorised and regulated market to ensure that the transaction is a genuine one and not a colourable one, say, between an English dealer and an agent or partner abroad.
I will consider carefully the case my hon. Friend mentioned of the rather irregular market which seems to exist in the United States and Canada, and if there is legitimate business in the sense that we have been discussing which would suffer from this Clause as drawn at the moment, and which should be exempted, we will consider the matter sympathetically before the next Finance Bill.
The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) asked me about the definition of "overseas securities." It means
"securities of the government of, or of a body of persons resident in, any country or territory outside the United Kingdom."
That means a company or another body whose head office and seat and directing power is abroad. I understand that that is statutorily defined. The words are a statutory phrase which is defined in Section 526 (1) of the Income Tax Act, 1952.
Mr. Mitchison: May I ask the hon. and learned Gentleman which is resident somewhere else outside the United Kingdom? Is it the body or the persons?
Mr. Simon: No. The test is that the head seat and directing power is outside the United Kingdom, and I think that

1287
it is a question of fact, if necessary for the courts in any particular case.
Amendment agreed to.

Clause 21.—(PURCHASE AND SALE OF SECURITIES: PERSONS ENTITLED TO EXEMPTIONS.)
11.45 p.m.
Mr. du Cann: I beg to move, in page 19, line 17, to leave out "in the Republic of Ireland" and to insert "outside the United Kingdom."
As I suggested on another occasion, Clause 21 is a gain, in the sense that we hope that it will lead to the prevention of bond washing, but it is clear that businesses in London dealing in overseas securities, including Commonwealth stock, will be restricted if the Clause stands unamended. The Clause is a net aimed at those entitled under any enactment to an exemption from Income Tax. We are all agreed that that is important, but many people in the City think, and hon. Members may think, too, that the net is cast very wide in the sense that it is bound to catch the innocent as well as the guilty.
I refer to the position of bankers, brokers and all other agents acting on behalf of non-United Kingdom residents in the purchase and sale of overseas securities, including Commonwealth registered companies, and including foreign bonds, in London. I include agents responsible for the collection of dividends in respect of securities held in safe custody in the United Kingdom for customers resident abroad. These are wide-ranging categories and hon. Members may think them important. London is a growing market in overseas securities, a development which is to be warmly welcomed. It is becoming again the financial centre of the world and an important source of earning of foreign currency.
I should like to give an example of what in my judgment, and as I am advised, will happen if the Clause is unamended. Suppose a dealer in Paris instructs London brokers to buy stock of an overseas company, for example, a gold-mining share, cum-dividend in London. If, before the stock has been registered in his name, and within a month, he sells the stock, and then ex-dividend, the operation of Sections 120 and 190 of the Finance Act, 1952,
1288
which otherwise would give him the opportunity to reclaim tax, would be excluded by the Clause. Therefore, the dealer in Paris—and this would apply to any dealer in any other centre—would be unable to reclaim tax which the British Government would have collected and to which the British Government would not have been entitled.
In effect, therefore, as the Clause stands, a foreigner who decides in future to buy an overseas stock in the United Kingdom cum-dividend may not sell for a month unless he is prepared to suffer United Kingdom tax to which he is not liable on the dividend due to him. It needs also to be emphasised that one never knows whether physical delivery will take place cum or ex-dividend, as there are often delays in registering stock. The foreign buyer will certainly not appreciate, as we do, the Chancellor's motives in endeavouring to avoid bond washing.
Nor, I imagine, will he sympathise with my right hon. Friend. As hon. Members can probably imagine, what will happen will be that he will say, "In future I will deal elsewhere if I am liable to tax in this way", because there is a great deal of competition in this kind of business in securities in the European Common Market, in New York, and in Johannesburg where none of these restraints apply.
These deals have nothing whatever to do with bond washing. I do not believe that the ramifications of the Clause, unamended, are even now understood and I should like to ask my hon. and learned Friend a question on this important subject. What will happen if a British holder of overseas stock, which includes Commonwealth stock, sells it cum-dividend to a non-resident of the United Kingdom, assuming that the buyer sells it within a month and it becomes ex-dividend during that time? The buyer will suffer British Income Tax which he will be unable to reclaim.
It may well be that he will attempt to reclaim the tax from the British holder, that is to say, he will look to the British holder to supply him with the gross dividend. The British holder, of course, will have had not the gross dividend but the net dividend. I wonder what will happen if perfectly respectable people, institutions and pensions funds, and so

1289
on, sell some of these overseas securities and find themselves liable for a claim for gross dividend of that sort.
The Amendment would not involve tax evasion. As the law stands, any attempt made on behalf of a non-United Kingdom resident to bear payment of dividend or interest without deduction of United Kingdom tax must be accompanied by a declaration giving the name of the beneficial owner of the dividend or interest. Therefore, unless a false declaration is made, under present legislation it is impossible for a non-resident to be given as a nominee of a resident in the United Kingdom from the point of view of tax avoidance, so that the Amendment could not affect the Inland Revenue at that stage.
In an excellent article in the Financial Times, a few days ago, Mr. Harold Wincott said this:
"The bath water involved in bond washing is pretty dirty water. But that is no reason for killing the virtuous baby which is in the bath only by accident."
If my hon. and learned Friend finds himself unable to accept the Amendment, I hope that he will undertake to watch the situation closely with a view to introducing amending legislation next year if it proves to be a fact, as I fear it may be, that we in Britain are losing business because of the operation of this Clause.
Mr. Geoffrey Stevens: I beg to second the Amendment.
My hon. Friend the Member for Taunton (Mr. du Cann) made an exceptionally clear speech and I do not wish to add any more, save to say that he rightly said that in an endeavour to snare the guilty one might accidentally embrace the innocent as well. Without the Amendment, the Clause does just that.
Although London is no longer the financial centre of the world, it is certainly the financial centre of the sterling area and is a very important part of the international trade and commerce of the world. I believe that in trying to ensnare the dirty water of the bond washers we have gone rather too far with the Clause and that we shall damage the international position of London. I very much hope that my right hon. Friend
1290
will consider the Amendment very carefully indeed.
Mr. Simon: The effect of the Amendment would be to put any non-resident person beyond the reach of the Clause which relates to the bond washing by cum and ex transactions in securities. This is the Clause relating to exempt institutions or persons. We have excluded only residents in the Irish Republic, because the tax law of the Republic of Ireland will contain bond washing provisions precisely corresponding to those which we have made in this year's Finance Bill. Therefore, in any event those residents will be covered by Irish legislation.
If we extend exemption beyond that, to other foreign residents, we open the Clause wide to bond washing possibilities. It is quite true that London is an important international exchange. It is very true that we do not want to do anything to interfere with that, provided that it does not open the way to abuses of our tax laws by foreign residents—and more than we wish to see it done through the bond washing operations of our own nationals.
If the foreign purchaser is a bona fide investor and holds the security for more than a month, Clause 21 does not bite and is, therefore, not likely to be a disincentive to his buying in London. If, however, he does not hold the security for a month, unless we bring him within the ambit of the Clause he can carry on precisely the sort of transactions at which we are aiming in the Clause; in other words, being an exempt person, buying a dividend, and, therefore, buying a tax exemption and a tax claim against the Exchequer. It seems to me that it would be just as mischievous to have a foreign resident who can make a business of buying up dividends, in effect, with the object of reclaiming the tax on them from the Exchequer as to have that happening in the case of any exempt institution or person resident in this country.
My hon. Friend said that the Amendment would not involve tax evasion. That seems to me in itself tax evasion. But one must also bear in mind that the foreign resident would be likely to be buying from a resident in the United Kingdom, and it would be possible for that person to have held the security for the bulk of the six months' period during which the dividend was accruing, only

1291
to sell it a few days before the stock went ex-dividend. In that case, it would be quite open for a Surtax payer in this country to sell the stock cum-dividend to a foreign resident and then to buy back a similar stock after that stock had gone ex-dividend.
The effect of that would be that he would get rid of the dividend on which he would be liable to pay a high rate of taxation, which would not be of much interest to him, but he would have made a capital profit by selling higher cum-dividend and buying back at a lower price ex-dividend, and that capital profit would not be taxable. Therefore, it seems to me that on that side, too, the Amendment would leave the way open for tax evasion.
Even in the case of a foreign resident who wants or needs to hold the stock for only a very short time, there is still a considerable incentive to buy in the United Kingdom rather than abroad. That is for a reason which my hon. Friend gave, that the cum-dividend price of an overseas security on the London Stock Exchange reflects the net dividend after deducting United Kingdom tax at the standard rate because the market price is made, by and large, by residents in the United Kingdom who are subject to United Kingdom tax; and, therefore, the foreign investor has still an incentive, it seems to me, to buy in this country as he will be buying more cheaply.
For those reasons, it seems to me that the Amendment is unacceptable, and I would ask my hon. Friend to withdraw it.
Mr. Mitchison: I congratulate the Financial Secretary upon his lucidity. In view of our satisfactory agreement with the Republic of Ireland, I stand convinced of the necessity to bite the dirty bath water.
Mr. du Cann: It seems to me that what my hon. and learned Friend has said serves well to emphasise the complexity of these matters. I would respectfully join issue with him on one or two of the things that he said. In particular, he said that there must be evasion of British tax. I do not see how there could be evasion of British tax—
Mr. Speaker: Order. The hon. Gentleman is not entitled to make a second
1292
speech on the matter. I thought that he was rising to ask leave to withdraw the Amendment. If not, I must proceed to put the Question.
Mr. du Cann: I was rising to do that, Mr. Speaker, but I was so carried away with the importance of the matter that I was about to make one or two points. I apologise to you and the House.
In view of what the Financial Secretary has said, I beg to ask leave to withdraw the Amendment. At the same time, I would ask my hon. and learned Friend to watch the situation very carefully, for it does require watching.
Amendment, by leave, withdrawn

Clause 28.—(ESTATE DUTY: LIFE INSURANCE POLICIES.)
12 midnight.
Mr. Philip Bell: I beg to move, in page 25, line 29, at the end to insert
"except that subsection (2) of this section shall not apply in a case (not being a case where subsection (3) of this section applies) where the policy matured, or was surrendered, before the twenty-second day of that month."
Perhaps I may make this Amendment intelligible to those who do not practise this obscure subject by saying that the object is to protect rights which were vested up to the time of the publication of the Finance Bill. The position is that ordinarily, under Section 21 of the Finance Act, 1894, Estate Duty is paid on policy moneys which usually become payable on the death of the person who took out the policy, but if the policy did not exist because it had matured before-hand, or had been surrendered, then no Estate Duty was levied.
The Clause we are now concerned with has brought in something new. If this Clause were passed no longer would duty be paid on the whole of the policy moneys, but only on a proportion related to the amount of the premiums paid. That will not apply, of course, until the date named in Clause 9, 7th April, 1959, so that in the case of a person dying after that date the method of levying tax where there has been a policy has been altered rather to the detriment of the taxpayer.
What is the effect of that provision on the concession he already enjoys? It will, in fact, remove it, because it would not be right, in my view, that it should affect policies that have already matured

1293
or been surrendered prior to this date, or perhaps have been in the hands of the holders prior to the publication of the Finance Bill.
The object of my Amendment is that those people who, as the law stood, were not liable to pay any tax because the policy had matured or had been surrendered, should not, by virtue of the Clause, pay any tax if the moneys reached their hands prior to the publication of the Finance Bill.
Mr. Stevens: I beg to second the Amendment.
In view of the clear exposition which my hon. and gallant Friend the Member for Bolton, East (Mr. Philip Bell) has given about the meaning of the Amendment I feel it is unnecessary for me to try to make it any clearer, and at this late hour perhaps the House will be grateful for that.
The Solicitor-General: This being a Clause aimed at granting relief from Estate Duty, one has to look long and late to find a point at which it might not do so. In this case, as I understand what my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) has been saying with great clarity, one has to find a given policy taken out or assigned more than five years before the death of the assured. It has to be either an endowment policy which matured during the assured's lifetime and within five years of his death, or be a policy surrendered by the donee within five years of the assured's death.
Under the law as it is, there would be no claim for duty in those cases even if the assured had paid premiums within five years before death. That is for technical reasons which no one, not even, with respect, the hon. Member for Belper (Mr. George Brown) would be interested in, and I do not propose to trouble the House with them.
The result is that the policy money, or the surrender money, might be in the hands of the beneficiary when he had no expectation of having to pay any duty until he has seen the terms of this Finance Bill. In the circumstances, it would seem that my hon. and learned Friend's Amendment accurately hits the very small target and we would invite the House to accept it.
Amendment agreed to.

Clause 29,—(ESTATE DUTY: AMENDMENTS AS TO EXCLUSION OF DONOR, OR OWNER OF AN INTEREST, FROM POSSESSION OR BENEFIT.)
The Solicitor-General: I beg to move, in page 25, fine 40, after "land", to insert
"or actual enjoyment of an incorporeal right over the land".
I cannot move this Amendment with quite such precision and speed. It is all about gifts inter vivos where the donor retains possession and enjoyment of the property during his lifetime, or where the donor secures to himself some benefit in some other way. Such gifts, the House will remember, are liable to duty on the death of the donor whenever the gift was made, unless the donor gives up possession or enjoyment outside five years of his death. We sailed along merrily until an Australian case in the Judicial Committee of the Privy Council, having the name of Chick, and the object of this Clause is to restore the practice before the case of Chick.
Under the old practice if the donor subsequently occupied the property on lease from the donee for full consideration, there was no claim for duty on the very sensible principle that it seemed that the donor had as much fun out of the gift as he might anyway and it was just as though he let the property to a third party at a full economic rent. That became no longer the position and the Clause was put in to restore the old practice.
This Amendment is necessary, not to alter the principle, but to correct a detail in favour of the taxpayer. It has been represented to us, in particular by the Law Society, that the Clause, which is framed—with reference to line 40 on page 25—in terms of "actual occupation of the land or actual possession of the chattels" would not cover the case where the donor paid the full economic rent, may I suggest, for the enjoyment of shooting rights or a right of way held from the donee. Provided that were done for a full economic rent, it would not be right that the enjoyment should give rise to a claim for Estate Duty and, accordingly, we have thought fit to submit to the House that it is right to proffer these words dealing with the enjoyment of an incorporeal right, a provision the full content of which I do not understand even at this time of the

1295
night, but covering I think something like an easement and certainly to cover sporting rights or a right to take timber or any of those other jollifications over land which one can enjoy at a full economic rent.
Mr. Mitchison: This seems wholly reasonable, but, since this is an incorporeal right over the land, I suggest, with respect to the right hon. and learned Gentleman, it is a profit à prendre and not reasonable.
Mr. H. Wilson: In view of the important qualification made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), could we have the views of the Solicitor-General on whether he agrees? If he is not in a position to give an authoritative reply, will he send for the Attorney-General, so that we can have the whole issue completely confused?
The Solicitor-General: If I may have the leave of the House, in courtesy to the right hon. Member for Huyton (Mr. H. Wilson), I should say nothing gives me more pleasure than to say that I agree with the hon. and learned Member, but the words in the Clause mean exactly as stated, namely, the actual enjoyment of an incorporeal right over the land and it does not seem to matter very much whether rent is allowable at profit à prendre or easement or any other jollifications of which I reminded the House.
Amendment agreed to.

Second Schedule.—(MODIFICATIONS CON SEQUENTIAL ON REPEAL OF FOURTH SCHEDULE TO CUSTOMS AND EXCISE ACT, 1952.)
Mr. Erroll: I beg to move, in page 29, line 13, to leave out from "on" to the end of the line and to insert:
"at the premises for which such certificate is held, being business carried on in that year by or on behalf of a person holding a certificate in respect of those premises."
This Amendment is intended to meet a small drafting defect in paragraph 1 of the Second Schedule and to ensure that, as was intended, paragraphs 1 and 2 of the Second Schedule shall reproduce as nearly as possible the Temperance (Scotland) Act before the change in the liquor licensing system this year. I hope that the House will accept the Amendment.
Amendment agreed to.
Mr. Erroll: I beg to move, in page 30, line 23, at the end to insert:

THE LICENSING (SCOTLAND) ACT, 1959
6. In subsection (4) of section one hundred and eleven, for the words from "satisfies the licensing court" to the end of the subsection there shall be substituted the words "produces to the licensing court a statement by the Commissioners certifying that in their opinion the receipts from the sale of exciseable liquor in the preceding year were less, in the case of a restaurant, than three-fifths or, in the case of a hotel, than one-half of the total receipts in that year from the business of all descriptions carried on at the premises for which such certificate is held, being business carried on in that year by or on behalf of a person holding a certificate in respect of those premises".
7. After subsection (4) of section one hundred and eleven there shall be inserted the following subsection:—
"(5) In calculating receipts for the purposes of the last foregoing subsection, the year shall be the twelve months ending on the thirty-first day of December or such other day as the Commissioners may fix for any area or to meet the circumstances of a particular case or cases".
This is a purely technical Amendment. Its effect is to provide that the consequential Amendment of the Temperance (Scotland) Act, 1913, effected by Clause 2 (6) and the Second Schedule of the Bill, will continue to apply after the Scottish licensing law has been consolidated in the Licensing (Scotland) Bill.
Mr. H. Wilson: In view of the late hour, I will not press for what obviously any Opposition would have the right to press—the presence of the Secretary of State for Scotland and the Lord Advocate.
Mr. George Brown: Do not fetch them.
Mr. Wilson: It is unheard of an Amendment of this degree of complexity to be moved at this stage of the Finance Bill without having the full legal support of the Minister in question. I will not embarrass the Economic Secretary by asking him what this Amendment means, because I know that he does not know either. It would not be fair to ask the Financial Secretary to the Treasury, because he is an English lawyer and this raises questions of Scottish law.
I will do my best to hold down my hon. and learned Friend the Member for Kettering (Mr. Mitchison), but since this is the last Amendment on this year's Finance Bill, and since the Treasury team opposite will not be here to have anything to do with next year's Finance Bill,

1297
I cannot ask for any assurance about this. With that warning, I think that we can let the Amendment go.
Amendment agreed to.
Bill to be read the Third time this day and to be printed. [Bill 131.]

NAVY, ARMY AND AIR EXPENDITURE, 1957–58
Considered in Committee.
[Sir CHARLES MACANDREW in the Chair]
1. Whereas it appears by the Navy Appropriation Account for the year ended 31st March 1958, that the aggregate Expenditure on

SCHEDULE

No. of Vote

Navy Services, 1957–58 Votes

DEFICITS

SURPLUSES

Excesses of Actual over Estimated Gross Expenditure

Deficiencies of Actual as compared with Estimated Receipts

Surpluses of Estimated over Actual Gross Expenditure

Surpluses of Actual as compared with Estimated Receipts

£

s.

d.

£

s.

d.

£

s.

d.

£

s.

d.

1

Pay, &c., of the Royal Navy and Royal Marines

444,514

17

7

—

—

49,580

2

5

2

Victualling and Clothing for the Navy

—

160,656

19

1

491,192

18

4

—

3

Medical Establishments and Services

85,920

7

0

—

—

24,099

14

7

4

Civilians employed on Fleet Services

—

—

38,187

0

1

10,835

0

5

5

Educational Services

5,249

15

8

61,213

14

11

—

—

6

Scientific Services

—

38,664

15

2

379,411

12

3

—

7

Royal Naval Reserves

—

—

99,530

7

8

318

14

2

8

Shipbuilding, Repairs, Maintenance, &c.:

Section I.— Personnel—

93,760

1

7

—

—

132,399

8

7

Section II. — Matériel

—

67,060

3

9

446,138

1

6

—

Section III.— Contract Work

—

—

1,165,020

10

5

1,704,731

12

2

9

Naval Armaments

—

1,032,754

13

10

27,537

1

11

—

10

Works, Buildings and Repairs at Home and Abroad

—

90,998

6

2

696,133

10

5

—

11

Miscellaneous Effective Services

—

105,666

18

6

379,547

7

11

—

12

Admiralty Office

—

—

36,590

2

3

4,298

13

5

13

Non-Effective Services

368,790

7

5

—

—

74,807

7

1

14

Merchant Shipbuilding and Repair

2,829

5

3

—

—

—

15

Additional Married Quarters

—

56,401

4

3

56,401

4

3

—

—

Balances Irrecoverable and Claims Abandoned

16,293

3

0

—

—

—

1,017,357

17

6

1,613,416

15

8

3,815,689

17

0

2,001,070

12

10

Total Deficits:

Total Surpluses:

£2,630,774 13s. 2d.

£5,816,760 9s. l0d.

Net Surplus £3,185,985 16s. 8d.

Navy Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Navy Services over the net Expenditure is £3,185,985 16s. 8d., viz.:—

£

s.

d.

Total Surpluses

…

5,816,760

9

10

Total Deficits

…

2,630,774

13

2

Net Surplus

…

£3,185,985

16

8

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Navy Services as is necessary to make good the said total deficit on other Grants for Navy Services.
Motion made, and Question proposed, That the application of such sums be sanctioned.—[Mr. Simon.]
12.15 a.m.
Mr. George Brown: Are we not to have any explanation of this Motion? I am bound to say that I do not quite understand what we are doing at this stage. No Service Minister is here, although there are many Service Ministers and Under-Secretaries. Not one of them is here.
This Estimate, dealing with the Navy, shows a net surplus of £3 million. I find it difficult to understand. We ought to have an explanation. I gather that we have failed to spend moneys which the House intended the Government to spend upon such very goods things as naval armaments, in which respect the Government have failed by over £1 million to spend the money provided. The Government are using money which they did not spend on the armaments for Her Majesty's ships to carry over to other things. I understand that I cannot query the purpose for which the money was originally voted, but I am a little bothered why we have not spent money on armaments for Her Majesty's ships and have turned it to some quite different purpose. The hon. and learned Gentleman, even though he has had a long day explaining such things as usherettes or asherettes and other things that I do not understand, should tell us something about this.
My first question is why we switch £1 million from naval armament to all sorts of things that look to me to be things we could do without. And why do Her Majesty's Government have £100,000—or it may be millions—for effective services which they did not spend? And why should they be transferring £300,000 to non-effective services? I am all for Her Majesty's Government spending money on effective services, but I just cannot see much reason for spending it on non-effective services. I should like to know why Her Majesty's Government are transferring money Parliament has voted for effective services to non-effective services. It seems to be an issue not only of money but of principle. On the whole, one would like expenditure to be effective rather than non-effective.
1300
If I switch from the thing labelled "Deficits" to the thing labelled "Surpluses", I again find myself, if I may say so, in a complete fog. Under "Surpluses" we have a column headed "Surpluses of Estimated over Actual Gross Expenditure." I want to know how we can have such a thing. It is not a surplus at all. It really means that Her Majesty's Government did not manage to do the job for which the Minister of Defence took credit. I should have thought it a deficit if the job was not done.
I look further down and find—under "Shipbuilding, Repairs, Maintenance, &c."—"Section III—Contract Work." There we have a surplus of estimated over actual gross expenditure—meaning that we did not do the job—to the tune of £1,165,000, while, on the other hand, we have a surplus of actual as compared with estimated receipts of £1,700,000. I do not quite know what we are doing. I assume from that that we did not repair Her Majesty's ships but did repair a lot of other people's ships, and I must ask why we should, in fact, spend our time in the dockyards working on other people's ships and earning some money, and not working on Her Majesty's ships, and then switching the one to the other
There are a number of explanations needed. I have contented myself with asking three questions. It is only because it is now early in the morning that I ask only those three; but before I am prepared to allow this Vote, I feel that we should be given some explanations.
The Financial Secretary to the Treasury (Mr. J. E. S. Simon): I gladly respond to the right hon. Gentleman's invitation, though he is in error when he thinks that I have been speaking about usherettes. It must have been some other Treasury Minister speaking in the debate on the cinema duty whom the right hon Gentleman has in mind. I had nothing to do with that.
The Motions before the Committee seek the approval of the Committee for the Treasury's provisional virement between one Vote and the other. As the right hon. Gentleman knows, in the Appropriation Act each year the Treasury is given provisional power to use the surpluses which arise from underspending on one Vote in relation to an

1301
Armed Service to meet any overspending that may occur on another Vote.
The reason why the Service Ministers are not present now is that any matter that calls for a reply for them would be out of order. All we are concerned with now, under the rules of order, is, as I understand it, a pure question of accountancy: namely, was the Treasury correct in exercising the virement in the way it did within the discretion given to it by the Appropriation Act?
In fact, the Treasury exercised the very wide discretion given by the Appropriation Act within certain rules that have, over the decades, been agreed with the Public Accounts Committee, and I do not think that it is necessary to go into those. It is sufficient to say that the Treasury's provisional exercise of virement is reported to the Public Accounts Committee yearly. As regards this year, the Public Accounts Committee, in its Second Report, Session 1958–59, says that it sees
"no reason why Parliament should not sanction the virement temporarily authorised by the Treasury"
in relation to the Army and Air Services
"in their Minutes laid before the House in February, 1959".
The deficits involved are not out of scale with the amounts for which Parliament has given the authority requested in previous years. In fact, none of the deficits is of an unusual nature.
In the actual accounts, the first column shows the excesses of actual over estimated gross expenditure, and, therefore, it relates to the overspending. The third column shows the underspending, the surplus of the estimated over the actual gross expenditure. Inevitably, in each year, certain of the Votes are overspent and others are underspent. Provided that the total at the bottom of the third column is in excess of the total of the first column, virement can properly take place. There is no particular amount appropriated between any one Vote which is shown in the third column in relation to any one Vote shown in the first column. It is the total of the underspendings which are appropriated to the total of the overspendings, provided, that is, that there is no deficit of an unusual nature which would need to be reported specifically to Parliament.
1302
The same thing, mutatis mutandis, applies to the second and fourth columns. I hope that the right hon. Gentleman will be content with that explanation.
Mr. G. Brown: No. That sounds wonderful, but I have never heard more words used to less purpose in my life. [Laughter.] If hon. Members now beyond the Bar would come into the Committee we should be delighted to have their help in this matter. I am doing my very best to understand this. I see in the first column of the account relating to Navy Services Votes that there is a figure of £1,032,000 odd. It is Vote 9, Naval Armaments, and the column is headed,
"Deficiencies of Actual as compared with Estimated Receipts".
So we expected to arm somebody to the tune of £1 million and we failed to arm whoever it was. I presume it was not ourselves. Whom did we expect to arm to the tune of £1 million, and, having failed to arm him, how can we transfer that to somebody else? If we did not arm Colonel Nasser to the tune of £1 million, how can we transfer that to some ships of our own? What have we done with it? I am bound to ask the hon. and learned Gentleman to explain exactly what this means. What £1 million have we got, from whom have we got it, and to what purpose have we put it?
Mr. Simon: I will try to help the right hon. Gentleman, although the actual details of how that sum is arrived at are really not within my purview. That sum of £1,032,000 odd is a deficiency of receipts, in the sense that we estimated in respect of receipts that we, should be receiving a sum in excess of that which was actually received, and the difference was £1,032,000.
Mr. Brown: Oh.
Mr. Simon: I will send for the Estimates themselves, although, of course, it is open to the right hon. Gentleman, just as it is open to me, to look up Vote 9 in the Naval Estimates. I find that the explanation of the difference that appears in the Appropriation Account, Navy Services, 1957–58, is that the volume of repayment work for other Governments was smaller and settlement for work completed was slower than was anticipated.
Mr. Brown: It does not mean Nasser?
Mr. Simon: I cannot tell the right hon. Gentleman what the work was. It does not appear on the face of the Estimates. If the right hon. Gentleman wanted to know, he would have to put down a Question to the Service Minister concerned.
All we are concerned with on the Resolution is the pure accountancy of it. In so far as there was a deficiency in a receipt, that can be totalled up with the other deficiencies in receipt, and provided that the surpluses in the receipts on the other Votes in the fourth column exceed the total of the deficiencies in the receipts in the second column, virement can take place.
Mr. Brown: This is nearly making a farce of the proceedings of the House of Commons. If it is a completely automatic arrangement, I cannot see why, at half-past twelve in the morning, we are brought here to approve it. If it appears on the Order Paper, one would have thought that it was for the purpose of enabling us to check what the Government are doing. We have a Minister who is one of the most friendly, pleasant, attractive, helpful and efficient, but with all the good will in the world he cannot deal with this matter. He has no clue why this is so; he cannot tell us. He simply says that all we are asked to approve is the accountancy.
This seems to be a misuse of the arrangements of the House. I want to know to whom we were expecting to sell armaments and failed to sell them, and why, having failed to sell armaments, that should create a surplus that can be used to deal with things for which we voted money. We voted money for other good purposes for the Navy, which money was not spent. We thought we would get money for armaments, which money we did not get, and we rather exchanged these items.
This seems to the Opposition to be a peculiar proceeding. I still do not have any idea where we made money and where we lost it. We are presented with this virement. If we have to do it at this time of morning, it makes no sense at all. I am bound to protest at its being taken at this hour. I protest that the Ministers who might know about it are not here tonight. We are exchanging
1304
figures in accounts that make no sense either to the Minister or to ourselves.
Mr. Simon: I need only add this in courtesy to the right hon. Gentleman. The procedure which we are adopting this evening and the general procedure of virement between one Vote and another is of long standing in the House of Commons. It has been considered to serve a useful purpose and it has recently been reviewed by the Select Committee on Procedure. No doubt, there will be an opportunity to discuss whether it is a worth-while procedure when the Report of the Select Committee is discussed.
As I said earlier concerning the details, the actual work contained in each of the Votes is a matter for the Service Minister, but it is not discussable on the Monk Resolutions. It is not discussable on this Motion. There is a great safeguard here in the review of the Treasury's exercise of virement, by the Public Accounts Committee, which goes into these matters in great detail and has said that there is no reason why the House should not give its approval.
Mr. John Dugdale: In all my experience at the Admiralty, I never knew a time when a Service Minister was not present at the discussion of these Resolutions. As my right hon. Friend the Member for Belper (Mr. G. Brown) has said, it is extraordinary that there should not be a Service Minister present today.
Question put and agreed to.
II. Whereas it appears by the Army Appropriation Account for the year ended 31st day of March 1958, that the aggregate Expenditure on Army Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Army Services over the net Expenditure is £4,766,640 0s. 0d., viz.:—

£

s.

d.

Total Surpluses

…

21,091,193

0

11

Total Deficits

…

16,324,553

0

11

Net Surplus

…

£4,766,640

0

0

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:
(1) the application of so much of the realised surplus on Vote 8 for Army Services as is necessary to meet the net deficit of £422,944 4s. 9d. on Vote 11 that would otherwise have been met by issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Acts, 1949 and 1953.

1305
(2) the application of so much of the remainder of the said total surpluses on certain Grants for Army Services as is necessary

SCHEDULE

No. of Vote

Navy Services, 1957–58 Votes

DEFICITS

SURPLUSES

Excesses of Actual over Estimated Gross Expenditure

Deficiencies of Actual as compared with Estimated Receipts

Surpluses of Estimated over Actual Gross Expenditure

Surpluses of Actual as compared with Estimated Receipts

£

s.

d.

£

s.

d.

£

s.

d.

£

s.

d.

1

Pay, &c., of the Army

4,435,602

7

7

—

—

482,884

0

2

2

Reserve Forces, Territorial Army Home Guard and Cadet Forces

1,351,263

13

9

—

—

108,316

5

0

3

War Office

61,795

6

3

—

—

5,918

16

10

4

Civilians

834,053

15

5

382,543

9

1

—

—

5

Movements

2,590,806

3

3

—

—

101,799

10

3

6

Supplies, &c.

—

2,975,487

2

1

3,210,666

4

2

—

7

Stores

—

—

8,506,602

6

11

3,537 292

7

2

8

Works, Buildings and Lands

—

—

2,629,454

0

0

885,734

9

7

9

Miscellaneous Effective Services

—

—

1,168,277

15

5

63,491

15

2

10

Non-Effective Services

2,893,442

13

2

—

—

63,699

15

0

11

Additional Married Quarters

—

750,000

0

0

327,055

15

3

—

—

Balances Irrecoverable and Claims Abandoned

49,558

10

4

—

—

—

12,216,522

9

9

4,108,030

11

2

15,842,056

1

9

5,249,136

19

2

Total Deficits:

Total Surpluses:

£16,324,553 0s. 11d.

£21,091,193 0s. 11d.

Net Surplus £4,766,640

Motion made, and Question proposed, That the application of such sums be sanctioned.—[Mr. Simon.]
12.30 a.m.
Mr. G. Brown: I am sorry, but I am bound again, with your permission, Sir Charles, to ask a question about this Estimate. Here again, I suspect that we are going to be in the same difficulty. The hon. and learned Gentleman the Financial Secretary will not know why it happened, but it appears that we had a surplus of estimate over actual gross expenditure, which extraordinary language means that we did not spend the money that we should have spent on stores for the Army to the tune of £8½ million. That really means that we failed to give the Army the trucks, the guns and the other things it needs to the tune of £8½ million.
We appear to be transferring this sum to things like movements, moving men
1306
to make good the remainder of the said total deficits on other Grants for Army Services.
up and down the world—which, on the whole, is a bad thing—and all sorts of other things. I cannot quite understand why the Committee should approve the accountancy of transferring money that is voted for the effective end of the Army to be used for the ineffective end of the Army. I should like to know why £8½ million—
Major H. Legge-Bourke: On a point of order. Could you please advise the Committee, Sir Charles, whether or not the right hon. Member for Belper (Mr. G. Brown) is in order, because if we are allowed to ask why one Vote is different from another we are surely dealing with matters normally raised on the Estimates. I thought that my hon. and learned Friend the Financial Secretary had made it clear that he was merely following the precedent of many years' standing. It makes it very difficult for us to know whether what the

1307
right hon. Gentleman is doing is in order or not.
Mr. Brown: I am raising the question of accountancy. I understand from the Financial Secretary that the issue is the accountancy involved in exchanging one Vote to cover another Vote. That is the only point which I am raising. I am asking why the money on one Vote is transferred to another Vote. I submit with great respect, Sir Charles, that that is what the virement Resolution intends.
The Chairman: The Question I have to put is—
Mr. Brown: I have had the pleasure of knowing you for a long time now, Sir Charles. I was in the middle of deploying an argument when I was interrupted by the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) on a point of order which was obviously not a point of order, because you did not reply to it.
The Chairman: I will reply to the point of order. The merits or demerits of the expenditure do not arise. The fact that irrelevancies may have been allowed in the past does not make them relevant now.
Mr. Brown: I quite agree with that, Sir Charles. The point to which I should like an answer is simply why we should switch money which we were prepared to vote for the Army to different things which are not so effective from the point of view of producing a good Army, and much of it going into movements. I am not going into the relevancy of one thing or the irrelevancy of another, but it seems to me that one ought not to make this switch. In fact, if money is saved on the armaments of the Army that may be a good thing or a bad thing. I would think that it was a bad thing. I do not think that we should switch this money and use it for moving troops up and down the world. I shall be glad to hear why that switch was made.
Mr. Simon: There was some underspending on Vote 7 on stores, a surplus of estimated over actual expenditure, which means that the total amount that Parliament voted for stores was not spent. The reason why it was not spent and whether it should have been spent is a
1308
matter for the Service Minister, but not on this Question, as I understand the procedure. We simply start with the fact that there was a surplus on that Vote. It is not discussable on this procedure. On certain of the other Votes in the first column there was a deficit. Again, it is not for us to discuss whether that deficit was wrongly or rightly incurred. The only question is whether the deficit was of such a nature that it ought not to be covered by the virement—by the use of the surplus on some other Vote.
None of the deficits in column one, or indeed column two, is in any way extraordinary, nor is the total amount which is vired in this account in any way extraordinary. The Public Accounts Committee has said there is no reason why virement should not take place which has been provisionally agreed by the Treasury under the authority of Parliament. Therefore, with respect, I ask the Committee now to agree to this Motion.
Mr. G. Brown: That is not an answer. All that the hon. and learned Gentleman says is, "I do not know why the surplus has occurred. I do not why we spent more than we should. Anyhow, it is not my business." Then he says, "The Public Accounts Committee seems to be satisfied and that should be the end of it." If it should be the end of it, then it should have ended with the Public Accounts Committee, but it is now brought to the Committee of the Whole House because we here have to take the responsibility for it.
I am bound to say, speaking for myself—and I am not making fun of this at all—that if we failed to arm Her Majesty's Forces to the tune of £8½ million I do not see why it should be transferred to pay for rather more movement than we thought was going to occur. It seems to me that this transference is extraordinary. I must not go into the merits. That obviously puts me at a disadvantage, but every single debate we have had, Sir Charles, as you well know, about the state of Her Majesty's Forces has dealt with their ill equipment, the fact that they are not properly armed, and that they have not proper mobility.
It is asking me to do too much to agree that money which could have been spent,

1309
which should have been spent, should be switched to pay for things I would rather not have had. I would not have liked to have had so much movement up and down the pipeline. I should have liked to have had more aeroplanes. I should have liked to have had more guns. I should have liked to have had more business end for the Army.
We are put in an impossible position. The thing is so narrow. I must ask the Committee, and hon. Gentlemen on the other side, such as the hon. and gallant Gentleman the Member for the Isle of Ely (Major Legge-Bourke), who should be, and I am sure is, very concerned about this, to say that it is wrong to cheat the Army of the armaments and the stores which it ought to have and then to switch the money to a thing called movement which, I suspect, is a thing which it ought not to have had. I am not prepared to allow the switch to be made.
Question put and agreed to.

SCHEDULE

No. of Vote

Navy Services, 1957–58 Votes

DEFICITS

SURPLUSES

Excesses of Actual over Estimated Gross Expenditure

Deficiencies of Actual as compared with Estimated Receipts

Surpluses of Estimated over Actual Gross Expenditure

Surpluses of Actual as compared with Estimated Receipts

£

s.

d.

£

s.

d.

£

s.

d.

£

s.

d.

1

Pay, &c., of the Air Force

209,302

18

11

—

—

246,417

10

0

2

Reserve and Auxiliary Services

—

4,398

11

8

60,112

7

11

—

3

Air Ministry

—

18,810

12

4

7,822

12

1

—

4

Civilians at Out-stations

85,702

12

7

46,665

16

0

—

—

5

Movements

—

—

226,578

0

2

272,067

8

4

6

Supplies

646,165

8

4

—

—

273,539

14

4

7

Aircraft and Stores

—

563, 153

4

1

1,796,220

10

5

—

8

Works and Lands

—

—

9,244,689

14

11

832,473

13

2

9

Miscellaneous Effective Services

—

417,915

5

10

1,072,036

6

3

—

10

Non-effective Services

—

—

777,088

11

9

40,307

2

7

11

Additional Married Quarters

—

1,800,000

0

0

177, 244

8

1

—

—

Balances Irrecoverable and Claims Abandoned

21,837

8

4

—

—

—

963,008

8

2

2 850,943

9

11

13,361,792

11

7

1,664,805

8

5

Total Deficits:

Total Surpluses:

£3,813,951 18s. 1d.

£15,026,598 0s. 0d.

Net Surplus £11,212,646 1s. 11d.

Motion made, and Question proposed, sanctioned.—[Mr. Simon.]
III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March 1958, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Air Services over the net Expenditure is £11,212,646 1s. 11d., viz.:—

£

s.

d.

Total Surpluses

…

15,026,598

0

0

Total Deficits

…

3,813,951

18

1

Net Surplus

…

£11,212,646

1

11

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:—

(1) the application of so much of the realised surplus on Vote 8 for Air Services as is necessary to meet the net deficit of £1,622,755 11s. 11d. on Vote 11 that would otherwise have been met by issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Acts, 1949 and 1953.

(2) the application of so much of the remainder of the said total surpluses on certain Grants for Air Services as is necessary to make good the remainder of the said total deficits on other Grants for Ac-Services.

That the application of such sums be
Mr. G. Brown: Here we have the same thing. I am sure many hon. Gentlemen want to get home, and to them it must seem tiresome that one should go on with this—[HON. MEMBERS: "Hear, hear"]—but, Sir Charles, one does this for the good of the Services and for the good of the defence policies of the country.
Here again, we come to exactly the same problem. I put it to the Financial Secretary again. Clearly I shall receive no sensible answer, but it seems to me that my job is to put it on the record. When we on this side of the Committee become the Government, which will happen quite soon, hon. Members opposite can use my argument against us. I use the argument quite seriously, knowing that that will happen. It is a peculiar and ridiculous situation. Here again, we have saved money; that is to say, we have failed to spend money on aircraft and stores. I would hazard a guess that there is no hon. Member present who does not think it an absolute disgrace that we have failed to give the Air Force the aircraft it should have.
Here we take a credit for aircraft and stores to the tune of £2 million and we switch it to all sorts of other things, including provision for civilians at out-stations. I ask the hon. and learned Gentleman, knowing very well that he will be able to give me no reply but will do it as charmingly as he can, why we failed to spend £2 million on aircraft and stores which the Air Force badly needs and on which the House wanted to spend money and we then switched the money to something else.
Under this arrangement is being hidden a very considerable sin. The Secretary of State for Air should explain why he failed to spend the money on aircraft and then asked for a little more money for other things. But the right hon. Gentleman ducks out from under. He does not explain why he did not get the aircraft which the Air Force ought to have had, and he gets away with the other money, which I do not much mind his having. But this matter should have been dealt with properly so that we would have had a Service Minister accounting to the House of Commons for the failure to give Her Majesty's Air Force the aeroplanes it should have had. This is the sort of problem that arose all through the 30s
1312
when the Government, of the same party, failed to give the country the aeroplanes that it should have had.
Major Legge-Bourke: That comes very well from the right hon. Gentleman.
Mr. Brown: Yes, indeed, quite well from me, but jolly badly from the hon. and gallant Member, who supports a party which failed to give the country the defence which it should have had before the war and sent the troops in 1939 into battle with only 30 tanks for all the money which the Tory Party spent on defence.
Sir James Duncan: The right hon. Gentleman's party was against armaments all the way through.
Mr. Brown: Maybe we voted against expending the money, but the party opposite failed to spend the money on the purpose for which it was voted. I would point out to the hon. Member for South Angus (Sir J. Duncan) that the issue tonight on the question of virement is whether the money was spent on the purpose for which is was voted. The point I am making is that before the war we voted money for tanks which was not spent on tanks. [An HON. MEMBER: "The party opposite did not."] We were not the Government. The result was that our chaps went into battle as a result of the policy of the party opposite with only 30 tanks between them and the whole German army.
I object to this virement tonight because I suspect that the same thing is happening. This is a serious argument. We are invited by the Minister of Defence to vote money for ships and for tanks and, in this case, for aircraft, and then the money is not spent on those things and the men in the Forces are starved. The hon. and learned Gentleman comes along with his charming, smiling face to say that it is all right and that we are switching the money to something else, and we all agree because it is late at night or early in the morning.
12.45 a.m.
The truth of the matter is that everybody thinks that we have bought the aircraft to the tune of whatever was the figure for which we voted, whereas in fact we have bought them to the tune

1313
of £2 million less than that. I do not see why we should be cheated of the provision of £2 million worth of aircraft and yet not have the Secretary of State for Air or the Minister of Supply here to tell us why the aircraft have not been bought. It is no good switching the money from effective to non-effective ends and then saying that it is merely a matter of accountancy. This cloaks a complete breakdown to that extent.
If the House of Commons is to do its job properly, we cannot vote money for aircraft and then switch it to other things and kid the House and the country that we are following the purpose for which the money was voted.
The hon. Member for Preston, North (Mr. J. Amery), whose father played such an heroic and noble part in these matters in the years before the war, when there was all this nonsense, knows exactly what I am talking about. At the cost of keeping hon. Members from their beds, I object to saying that failing to give the Air Force "teeth" is a matter of accountancy. Hon. Members opposite think that they can get away with it without giving any explanation, but I very much object to the whole procedure.
Vice-Admiral John Hughes Hallett: In dealing with these very small sums which appear in these accounts, is it right to assume that there was in fact a shortfall of so much money in the material actually delivered? Could it not equally well be accounted for by delays in settling the accounts?
Mr. Simon: Yes, my hon. and gallant Friend is correct. There are many reasons why there might be an underspending. There is no question of these matters being hidden from the House of Commons, or from the public. They are reported in the Appropriation Accounts, which show exactly what the underspending or overspending is. They are reported to the Public Accounts Committee and reported on by that Committee. Indeed,
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the whole thing appears on the Order Paper this evening. The explanation of the Vote to which the right hon. Gentleman referred is given on pages 17 and 19 of the Air Appropriation Accounts.
What it comes to is that the right hon. Gentleman does not approve of the principle of virement. He does not approve of the fact that a surplus on one Vote can be used to make up an overspending on another. Of course, that issue does not arise this evening. It is a matter of the procedure of the House of Commons. It has stood for over a century, and perhaps it is a little late at night to call it into question.
Mr. G. Brown: It is not enough to say that it has stood for over a century. That is a good Tory attitude to life and in a way it is part of the business of progressives, like those who sit on this side of the Committee, to challenge things which have stood for over a century.
My point, to which I think that I should have an answer, is that it is wrong to transfer money which was intended to provide aircraft and stores, that is, the business end of the Air Force, to Votes which are not the business end of the Air Force. In general and in principle it might be all right to transfer money from one account to another. I am asking the hon. and learned Gentleman to justify this transfer. I would be in favour of transferring money for one non-business end to another non-business end.
I think I am entitled to invite the Committee not to approve this proposal unless the hon. and learned Gentleman can explain why £1¾ million voted for the business end of the Air Force has been transferred to a non-business end.
Question put and agreed to.
Resolutions to be reported.
Report to be received this day.

UGANDA (DISTURBANCES)
Motion made, and Question proposed. That this House do now adjourn.—[Mr. Finlay.]
12.51 a.m.
Mr. John Dugdale: I am glad that even at this late hour the Under-Secretary of State is present although a number of other Ministers who should have been here are absent. I make no apology even at this hour for raising this question, which is of tremendous importance to the people of Uganda, and, indeed, to a large number of people in Africa, and, I would venture to say, to many people also in England, Scotland and Wales.
Last Tuesday the Secretary of State for the Colonies refused to have an inquiry into the shooting that took place by the police at Katwe in Uganda. He told me, in effect, that my evidence was wrong, that he did not trust the sources from which it came, that no one had been killed and, therefore, that it did not matter very much. I differ from him in both respects. In the first place, I do not claim any infallibility for my evidence. The right hon. Gentleman does for his, and I think it is wrong for a Secretary of State to claim infallibility for evidence and to refuse an inquiry. Once he begins to do that he is on a very dangerous and slippery slope.
In the second place, apparently the right hon. Gentleman thinks nothing of the fact that seven people were wounded by the police. I do, and many people in this country do. If seven people had been wounded by the police in this country there would most certainly have been an inquiry. Why is it that if seven people in England are wounded by the police there is an inquiry, and if seven Africans are wounded by the police in Uganda it is not right that there should be an inquiry? One cannot work on two principles. One has to have exactly the same principle for both countries, and I believe that every African would hold that view too.
Let me refer first to the background to the shooting. On 9th April a police ordinance was issued. It said:
"To declare that … it shall be unlawful for any person or persons to convene an assembly at which it is reasonable to suppose
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that more than two hundred and fifty persons will be present unless a permit has been obtained by such person or persons to convene such assembly."
To start with, who is to decide that it is reasonable to suppose that more than 250 persons will be present? It is a ludicrous ordinance. How can anybody know in advance that there will be 250 people?
Secondly, why is it necessary to have such an ordinance? There had been no incident in which the police fired on a crowd since 1949, so far as I know. That was a long time ago. Also, it is since the introduction of this ordinance that the incident has occurred. The ordinance would, therefore, seem to have produced a worse state of affairs than existed before, quite unnecessarily. I would add that on the last occasion when the police fired on a crowd an inquiry was ordered, and there was an inquiry by Sir Donald Kingdon, who was the former Acting Chief Justice. It is just such an inquiry for which I ask now.
The facts were that on Thursday, 4th June, it was a nice fine day and a crowd of people in a suburb of Kampala decided they would like to dance, sing and play games and watch wrestling matches. If the Under-Secretary of State for the Colonies says that is not true, I would remind him that the newspapers in Uganda, including British newspapers which support the Government and which differ from me in many respects and have passed many strictures on me, said that this gathering was in no way political and was a gathering of people amusing themselves.
But the police came along and said that the ordinance stated that not more than 250 must be present, and they said "Break up the meeting." I would like to quote what the Colonial Secretary said in his original reply, describing apparently what the police found:
"They were drumming and dancing and in 'an excited state'.
As outdoor gathering of more than 250 had been declared illegal without a permit, the police officer investigated. One of the men wearing a tie with the letters U.N.M. on it and many of the people were shouting 'freedom' ".—[OFFICIAL REPORT, 11th June, 1959; Vol. 606, c. 1161.]
I would ask whether the Under-Secretary is aware that people are constantly shouting "freedom" in Uganda. I was

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at a football match out there at about that time, and several thousand people were shouting "freedom", yet none was arrested. Why was that? If whenever people shout "freedom" in Uganda they are to be arrested, a large portion of the population will be arrested in a short time.
The Secretary of State's report says that one known U.N.M. leader was seen on the outskirts of the crowd. That apparently made the police think it was not a bona fide social gathering. That leader was probably Mr. Ntambi. He is chairman of the Uganda Traders Association, and he was indeed a former member of the proscribed Uganda National Movement. He was there because his office was quite close to the scene, and he heard a great disturbance and noise and went out to see what was happening. He has since been charged, but when the time came to bring him to court the prosecutor asked leave to withdraw the charges because it was found on further consideration that there was insufficient evidence. Yet the presence of this man at the scene was one of the reasons for making the police think that it was an illegal meeting which they ought to break up.
Most of the people, when called upon to do so, dispersed. About a hundred or so remained. These people had no right to remain, I agree, but I would ask you, Mr. Speaker, if you were at an entertainment of this character and the police suddenly came and told you to disperse, would you not feel a little angry? Would not any hon. Member feel angry? After a time they became so angry that they started shouting and abusing the police and refusing to move. That is what happened, so the police fired, first of all tear gas, and then, later, gun shot. They fired, as far as I can see, rather wildly. I myself saw marks in houses about a quarter of a mile away, and I think that they might have fired, if at all, with greater accuracy and care. As far as I could see, they had no reason to fire at all. I frankly agree that it is very hard to stand here and say whether or not at a given moment if one were a policeman in a given place one should or should not open fire. I agree it is difficult for the police to decide that, but I should say they were put in that position by the ordinance the Government
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brought in. Why should they be put in that position?
I now turn to something that happened after the shooting but was directly connected with it. I went to visit the hospital and saw people there who were ill. As I told the House, I saw one woman who had, not shrapnel, but gunshot wounds in her chest. She was having blood transfusions and was in a bad state. Two days afterwards I went to the scene where the shooting took place and saw a man who said, "I want to see my sister-in-law. I want to take my brother to see her. He has been trying to see her all this time and cannot see her in hospital ". I found it was this same woman. I said, "I will go immediately to the hospital and you shall see her." I went and found a policeman standing in front of the ward refusing permission to anyone to see what were called "accused persons". prisoners.
What were they accused of? Their only crime, as far as I could see, was that they were wounded. Nothing was proved against them. I understand that most of them have been discharged as not guilty and no case has been brought against them. In fact, I gather from the Secretary of State that no case was made against them. These persons when sick have the right to see their next of kin. I immediately rang up the assistant commissioner of police who was horrified to find that permission had not been granted. Why should what the Secretary of State calls "an innocent abroad" have to go to the hospital to see that these people should be allowed to see their next of kin? That does not seem to be a satisfactory state of affairs.
I sum up with a few general observations. My own impressions are, first, that the people of Uganda are a friendly people. There is no Communism there; at any rate it is negligible and I did not find any. I do not think the Colonial Office believes there is any there. It certainly is not in the Uganda National Movement. There are no white settlers there and no problem like that to disturb the country. There is only a kind of schoolmasterly paternalism which upsets the people considerably, a sort of ham-handedness and also, of course, the close neighbourhood of Kenya with all its problems. If the Government are not careful, they will drive these very

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friendly people into the same kind of attitude as the people of Nyasaland. That is something we have to be careful about. I hope they will not. It will be entirely the fault of Her Majesty's Government if these people become unfriendly.
The second thing is that the orders to the police were exceedingly vague and exceedingly difficult to execute. The third thing is that while I believe the top police officers are good, I think it quite possible that some of the juniors are not of the highest standard. I should like to have an inquiry into this. I think it one of the things which should be inquired into. Of course, this is nothing beside the horrors of Hola, but are we to have no inquiry until something on the level of Hola is reached? Is that the attitude the Government take up?
I believe we should find where the blame, if any lies, because only in that way can the Government prove to the people of Uganda, and indeed to the world, that they are as deeply concerned about the manner in which the police treat Africans as they are about the manner in which police treat people in this country. Until the people in Uganda can be satisfied of that, they can have no confidence in Her Majesty's Government. I ask the Government to have such an inquiry.
1.5 a.m.
The Under-Secretary of State for the Colonies (Mr. Julian Amery): Let me deal first of all with the background to this situation and with the facts.
In February, the Uganda National Movement was formed under the leadership of Mr. Kamya. In support of its policy and aims it declared a boycott of non-African goods and public transport services. By mid-April the policy of boycott had led to acts of violence and a good deal of intimidation, mostly practised against Africans. Bars were threatened in the towns, and bar-owners and barmen. Coffee and banana plants were cut down on smallholdings, and as a result of the boycott there was a certain amount of unemployment. In one instance at least the unemployed organised themselves into a body and clashed with the Uganda National Movement because they held the movement responsible for their lack of work.
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As a result, certain districts of Buganda were declared "gazetted areas" in which, among other things, meetings of over 250 people were declared illegal. On 23rd May, because these disturbances had spread, the whole of Buganda was declared a disturbed area in which the police were empowered to control movements and weapons, to declare curfews and to prevent and prohibit meetings of more than 250 people. At the same time the Uganda National Movement was declared an illegal organisation, although its members tried to evade this decision by re-forming themselves first of all into the Uganda Freedom Movement and later into the Uganda Freedom Convention.
On 30th May six of the ringleaders of this movement were arrested under the provisions of the Deportation Ordinance. On 4th June the right hon. Member for West Bromwich (Mr. Dugdale) arrived on the invitation, I understand, of the former Convention leaders who had deposited a sum of money to enable two Members of the House of Commons to go to Uganda, This was the day of the incident at Katwe. Katwe is a densely populated quarter of Kampala. It is in a disturbed area, where no meetings of more than 250 people were allowed. There was a certain tension that day. The Convention leaders had declared three days mourning for the arrest of those of their number who had been detained. Shops had been closed. The authorities, though vigilant, were calm. That morning there was a small demonstration at Natate to celebrate the right hon. Gentleman's arrival; they were told that he "was going to set us free." This gave rise to no trouble. There was a football match in the afternoon, Buganda against the Middlesex Wanderers, and here again there was no trouble.
At 5 p.m. a crowd gathered in an open space near the new market in Katwe. It decided that it would hold a Ngoma, or dance. Sheep and goats were slaughtered and there were certain social activities to which the right hon. Gentleman referred. According to all the reports at our disposal, the atmosphere was fairly tense.
Mr. John Stonehouse: Whose reports are they?
Mr. Amery: Reports which we have received from the Government in

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Uganda. Many of the crowd were wearing either Convention mourning or Convention political favours. There were active members of the Convention movement among then. The crowd rose to well over 250. The police officer at patrol, with the help of the Muluka Chief, attempted to persuade people to disperse, but they were only partly successful. The crowd fell to about 100, but the right hon. Gentleman is wrong in thinking that it stayed at that low number, because it built up again to well over 250. It was in these circumstances that the police sent for reinforcements.
When the reinforcements arrived the police officer called on the crowd to disperse within ten minutes. More reinforcements arrived under a more senior officer and a fresh warning to the crowd was issued in English, Swahili and Luganda. About this time individuals in the crowd began to collect and pile stones. Five minutes after the last warning—in other words, five minutes after the ten minutes had elapsed—the senior officer ordered the baton sections to form up, and they advanced towards the crowd with a view to dispersing them in fulfilment of their duty to see that the law was maintained and that a crowd of over 250 was not allowed to continue. They came under very severe stoning at 20 yards' range—so severe that the baton section had to be withdrawn. The tear-gas section was then called up and this, again, proved ineffective.
By this time, the crowd was already a thousand strong, and the police—about 54 other ranks and seven officers—found themselves surrounded, and were driven back to their transport under heavy stoning. There were a number of police casualties. The right hon. Gentleman said that there was no reason for them to fire at all. Our evidence is that the police were in imminent danger of being over-run by the crowd, and it was in those circumstances that the officer in charge ordered the Greener gun section to fire. The Greener gun, as the right hon. Gentleman knows, is a kind of shotgun that fires with a deafening noise, gives an impressive flash, and has a wide spread of small shot which, unless it hits a vital spot, is very seldom lethal. In those circumstances, the officer in charge had, in our view, no choice but to give the order to fire.
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Presently, further reinforcements arrived—two officers and 64 other ranks. Their transport was halted by stoning before they could arrive to the support of their colleagues, and they, too, were forced to fire their Greener guns before they could get through to their colleagues. As a result of the shooting, dispersal of the crowd began, although stoning by small groups continued after the fall of night and until about 10.15 p.m.
Altogether, 29 shots were fired, although a number of the shots were fired over the heads of the crowd. The police first fired warning shots over the heads of the crowd and then had to fire into it. As far as I know, nine Africans were wounded, of whom seven were detained in hospital. One woman, as the tight hon. Gentleman said, was seriously wounded, but nobody was killed. Of the police, 44 were injured, though none seriously.
I understood the right hon. Gentleman to say that nobody had been found guilty, or that very few had. Sixteen people were charged with taking part in a riot. Of these, four were released for lack of evidence, five were convicted and given the choice of a 400s. fine or four months' imprisonment, four were convicted and sentenced to four months in prison, one was acquitted, and two cases are pending.
I do not think that the facts are in doubt. The crowd was over 250 strong, so that the police had a duty incumbent on them to disperse it, all the more so as they had reason to believe that there was an element of political agitation in it—
Mr. Dugdale: Is it correct to say that there were about 500 when they were first asked to disperse and that, as a result of their being asked, it rose to 1,000?
Mr. Amery: When the shooting began there were more than 1,000—or about 1,000.
There was evidence to the police that there was an element of political agitation. The people were called on to disperse in accordance with law. The minimum force was used, in the sense that an attempt was first made to disperse them by words, then by batons,

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then by tear gas, and only when all else had failed and the police were in danger of being over-run themselves did they resort to shooting. The evidence of the violence is that 44 police had been injured as against only nine of their assailants. There were no fatal casualties, and we think that the police acted reasonably in the face of severe provocation. In those circumstances, quite frankly, we see no reason for an inquiry
In certain respects, the stories that the right hon. Gentleman and I have told the House differ, and differ in the interpretation put on the incident. In such matters, we have to consider the veracity or reliability of witnesses. I therefore feel bound to comment a little on the right hon. Gentleman's visit in more general terms. Whether it was wise for a Privy Counsellor and a former Minister of State at the Colonial Office to go to Uganda as the guest of the leaders of a movement that had already been banned in Uganda is a matter for the House to judge. I would have thought that when he got there he would have been well advised to have sought official advice about the situation as well as the advice of his hosts. When the hon. Member for Wednesbury (Mr. Stone-house) went out on a rather controversial visit some time ago, he observed the courtesies very fully and saw the authorities as well as the others.
Mr. Dugdale: I really must—
Mr. Amery: Will the right hon. Gentleman let me finish the sentence? If he will allow me to take it a little further, I will then give way. The right hon. Gentleman visited the Resident of Uganda, but he visited him accompanied by one of his hosts. As a Privy Councillor and a former Minister of State, he would have received confidential information had he gone alone. He chose not to go alone. He did not see the Governor or the Chief Secretary until just before the end of his visit.
At Iginga, the right hon. Gentleman put a question to those who met him which gave them the impression, and, I think, would have given any reasonable person the impression, that he wanted to compare the present Governor unfavourably with his predecessor. I say
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nothing about bad manners in a matter of this sort, but it seems to me unwise of the right hon. Gentleman who had not even seen the Governor himself at that stage.
Mr. Dugdale: I did see the Chief Secretary as early as was possible. I did not see the Governor because the Governor was constantly on safari and found himself unable to see me.
Mr. Amery: The information we have is that the Governor had hoped, when the right hon. Gentleman arrived, that the right hon. Gentleman would call upon him. He did not choose to do so, and, no doubt, the Governor had other engagements later on during the right hon. Gentleman's visit. In the early stage, no effort seems to have been made by the right hon. Gentleman to see the Governor. I should like to take this opportunity of saying that we have full confidence in the Governor.
Now as regards his credibility, the right hon. Gentleman in a statement on 11th June implied that the Asian community was opposed to minority safeguards. Here is a statement made by the Central Council of Indian Associations and the Central Council of Muslim Associations:
"This question of the representation of non-Africans in the Legislative Council is under consideration by the two Central Councils.
No decisions have been reached, and will not be reached until we have our respective conferences, probably next month.
We expressly pointed out "—
this is to the right hon. Gentleman—
"that the Central Council has not formulated any views. Until this was done, we were not in a position to convey the views of the Asian community.
We asked him not to misinterpret our views in any public statement."
What did the Representative Members' Organisation, the Members of the Legislature, say? They said:
"The Representative Members' Organisation deprecated very strongly the remarks attributed to Mr. Dugdale as printed in the Uganda Argus on Friday, 12th June.
This gentleman came to Uganda at the invitation of a political party, previously proscribed under another name, and after listening to them and spending a few days in Uganda, has the temerity to criticise this Government and its method to seeking to restore order."

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These are Africans and Asians speaking, not Europeans; there is a very small proportion of Europeans among them. The statement concludes:
"It is to be hoped that the British public are made aware of the fact that the reports circulated by the gentleman in question are calculated to do untold harm among the law-abiding citizens of this country and create completely false ideas in the minds of the readers of the English Press."
The right hon. Gentleman has been described in the Uganda Press as "the innocent abroad". In the light of his experience and past position, such innocence seems to me to verge dangerously on lunacy.
Looking to the future, the boycott still goes on, though rather less rigidly. Boycott, intimidation and violence can be brought to an end only with the wholehearted co-operation of the Buganda Government. We look to fruitful discussions with the Kabaka locally so that the position of Buganda can be fully considered in the context of the general constitutional inquiry. These discussions cannot start until the boycott has come to an end, and, indeed, it is very unlikely that discussions could profitably take place until Buganda has resumed its membership of the Legislative Council. We continue to look to the Kabaka and his Ministers to do all that they possibly can to restore the situation in Buganda to normality.
1.20 a.m.
Mr. John Stonehouse: The hon. Gentleman has given us a very unsatisfactory reply to the very restrained speech made by my right hon. Friend the Member for West Bromwich
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(Mr. Dugdale). My right hon. Friend limited himself to dealing with the Katwe incident, but we have not had a single word to justify the order which was given to the police to enforce a thoroughly unsatisfactory ordnance restricting the size of crowds to 250 in an area which, as the Under-Secretary of State himself has admitted, is a densely populated one. I know the area around Katwe very well. I lived quite near it for two years. In that area, within a matter of minutes, it is possible for a crowd of 1,000 or more to collect. It is quite obvious that, if there was a disturbance or a crowd there, other people within a few hundred yards would collect in no time at all. In the circumstances, it is quite wrong to expect the police to enforce the ordnance limiting the size of crowds to 250.
The reason for this incident goes back to the wholly unsatisfactory administration of the situation in Uganda and also to the state of impasse between Buganda and the Uganda Government, for which the Under-Secretary and the Colonial Secretary must accept most of the responsibility, arising as it does from the aftermath of the deportation of the Kabaka for which the previous Colonial Secretary was responsible.
The Question having been proposed after Ten o'clock on Tuesday evening, and the debate having continued for half an hour, Mr. Speaker adjourned the House without Question put, pursuant to the Standing Order
Adjourned at twenty-one minutes past One o'clock.