Commons Sitting of 5 July 1960

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

    Regent's Park (Sports Pavilion)
    Sir W. Wakefieldasked the Minister of Works if he is now in a position to state when it is expected that work will begin on the rebuilding of the Bernhard Baron Sports Pavilion in Regent's Park; and when it is expected that the work will be completed and the pavilion available for use.
    The Minister of Works (Lord John Hope): I hope, as I informed my hon. Friend in reply to his Question on 17th November, 1959, that, if funds can be made available, the building of a new pavilion on this site will start in 1961. Work would then be due for completion early in 1963.
    Sir W. Wakefield: I thank the Minister for that reply. Do I understand aright that it is now certain that the work will start in 1961 and will be finished in accordance with what he has just told the House?
    Lord John Hope: The start of the work depends on the availability of funds next year. That depends on Government policy when the Estimates are put in, but I hope that the answer is "Yes".

    Industrial Monuments
    Mr. Boydenasked the Minister of Works what systematic steps he is taking to preserve outstanding examples of early British industrial monuments.
    Lord John Hope: I await with interest the outcome of the general survey of industrial monuments which the Council for British Archeology plans to carry
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    out, starting with a pilot survey in Staffordshire. In the meantime, I am willing to consider the use of my powers to protect any outstanding examples in this field which may be in special danger of destruction.
    Mr. Boyden: Does the Minister realise that the Ministry of Works has been waiting since 1954 to take action in this matter and that it has been singularly unsuccessful in persuading industry to do much about the problem? Does he realise that popular opinion is very much in advance of the Ministry of Works, and that the least he ought to have is a small staff of his own and a budgetary allocation in order to protect the very important ancient monuments of our industrial history?
    Lord John Hope: The hon. Gentleman is entitled to have his supplementary question ready before my Answer comes, but I think that, if he reads my Answer, he will see that it is encouraging in the way he wants it to be.

    Ancient Monuments Board (Recommendation)
    Mr. Boydenasked the Minister of Works why he has not accepted the recommendation of the Ancient Monuments Board for England that every scheduled monument should exhibit a public notice board describing its historical significance.
    Lord John Hope: All ancient monuments which come within my full control are named. Some have a description of their historical significance. To extend this to all scheduled monuments, which number 7,000 and which often comprise only indentations and undulations in the ground, for example, a barrow, despite their importance would not in my view justify the expenditure of £70,000 which is the amount which would be involved.
    Mr. Boyden: Is the Minister aware that the committee which advises him on these matters has been advising him since 1957 that it is very necessary to safeguard these monuments and that continuous destruction is going on for lack of action? Further, is he aware that the exaggerated language which he charged me with using on a previous occasion was the language of his own advisory committee?
    Lord John Hope: There is all the difference in the world between protecting an ancient monument of a certain sort and putting a sign on it. We do our best always to see that they are protected, but it is not always easy.
    Mr. Fletcher: Is the Minister saying that he would like to do this if the Chancellor agrees?
    Lord John Hope: No, Sir. If the hon. Gentleman is asking for my opinion, as I think he is, it is that I do not think that this expenditure would be justified.

    Lodges, Hyde Park
    Mr. Liptonasked the Minister of Works which lodges in Hyde Parke will be re-sited as the result of the Park Lane development scheme; and what will be the cost.
    Lord John Hope: Cumberland Lodge and Grosvenor Gate Lodge, at a cost of approximately £11,000 and £10,000 respectively.
    Mr. Lipton: Is it not clear from that Answer that it will cost about £21,000 to move two lodges 60 yards or so? Dots not it confirm the public's impression that when it comes to Hyde Park the Minister is up to no good and is very expensive, to boot?
    Lord John Hope: No, I do not think that it means that at all.

    British Museum Extension (Site)
    Mr. Fletcherasked the Minister of Works what steps he is taking to acquire the site to the south of the British Museum extending to New Oxford Street designed to house the new National Library which is proposed as part of the scheme announced for the expansion and rebuilding of the British Museum.
    Lord John Hope: Negotiations have already opened for the purchase of a substantial part of the site and, subject to the availability of funds, it is hoped to complete the purchase of the whole of the site in a programme spread over the next six or seven years.
    Mr. Fletcher: When the Minister talks about the availability of funds, what does he mean? Is it not the case that this project has been agreed by the
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    Government? Is it not the duty of the Minister to acquire the site so that the project can be carried out?
    Lord John Hope: I very much hope that it can be carried out, but I am bound to make it conditional on the money being available. I can do nothing else.
    Mrs. Castle: Is it not a fact that the longer the acquisition of the site is delayed the more public funds are likely to be involved in acquiring it? Would it not be good economy to get going now in view of the present gross inflation of site values?
    Lord John Hope: I think that there is something in what the hon. Lady says and that is why I hope very much that we shall be able to do it.

    Official Car Service (Drivers)
    Mrs. Castleasked the Minister of Work how many men and women, respectively, are employed in the official car service under his Department; and what are their respective rates of pay.
    Lord John Hope: As the Answer contains a table of figures I will, with pre-mission, circulate it in the OFFICIAL REPORT.
    Mrs. Castle: Is it not a fact that Ministers are being driven about by girls in green who get 85 per cent. of the men's rate for identical work which they certainly do with identical efficiency, and ought not women Members of the Government to go on strike against this exploitation of their sex which they would not tolerate for a moment in their own position? Will the Minister approach the Chancellor and ask him to apply the principle of equal pay for identical work to the staff of his own Department?
    Lord John Hope: The fact is that in the other organisations it is not universal practice by any means to pay men and women equal rates for driving duties. If the hon. Lady has a complaint about the general rule or custom, it is not really for me to answer a Question about it.
    Mrs. Castle: But does the Minister realise that what I am referring to is the fact that the girls who drive Ministers about receive only 85 per cent. of the rate of men drivers, although their work is entirely similar? Indeed, if their work

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    was not efficient, Ministers would not trust their lives to them. Is not this an intolerable situation, particularly in view of the fact that in the passenger transport industry—on the buses, for instance —the girls a£re receiving equal pay? Ought they not to receive it from the Government?

    GOVERNMENT CAR SERVICE

    RATES OF PAY AND NUMBERS OF STAFF AT 1ST JULY, 1960

    Grade

    London

    Provinces

    Men

    Women

    Men

    Women

    Numbers

    Weekly Pay Rate

    Numbers

    Weekly Pay Rate

    Numbers

    Weekly Pay Rate

    Numbers

    Weekly Pay Rate

    s.

    d.

    s.

    d.

    s.

    d.

    s.

    d.

    Head Driver

    4

    209

    0

    6

    209

    0

    —

    201

    0

    5

    201

    0

    3*

    187

    2

    Leading Driver

    1

    204

    0

    2

    204

    0

    —

    196

    0

    5

    196

    0

    10*

    182

    2

    Male Car Driver

    45

    197

    0

    —

    —

    31

    189

    0

    —

    —

    Female Driver, Gde. I

    —

    —

    30

    197

    0

    —

    —

    9

    189

    0

    Female Driver, Gde. II

    —

    —

    47

    182

    7

    —

    —

    52

    175

    2

    Female Driver, Gde. III

    —

    —

    —

    168

    2

    —

    —

    3

    161

    4

    Total

    50

    —

    85

    —

    31

    —

    87

    —

    GRAND TOTAL … 253

    * Supervising Grade II drivers only.

    In addition to the above, there are 47 men and 16 women in 28 supervisory and ancillary grades

    Excavations (Archaeological Finds)
    Mr. Fletcherasked the Minister of Works what are the reasons which prevent his Department from accepting ownership of articles of archaeological value discovered as a result of excavations for commerical purposes, such as those contemplated by the Esso Petroleum Company.
    Lord John Hope: The treatment and display of newly discovered articles of archaeological interest is a responsibility proper to museums. My Department's functions are limited by Statute to the care and protection of structural monuments. This long-established distinction works satisfactorily, and I see no reason to disturb it.
    Lord John Hope: There may be a general question here, of course, but I am bound to repeat to the hon. Lady that I am not going against what is the generally accepted rule for drivers in other organisations apart from my own Ministry.
    Following is the answer:
    Mr. Fletcher: Is not this an absurd inter-Governmental muddle? Is not the Minister aware that the Esso Petroleum Company, which is promoting the Bill, has agreed that if, in the course of excavations for its pipeline, it finds any material of archaeæological or historical interest it is prepared to hand it over to the Government? All that we are asking the Minister to decide is that he will accept it. Cannot he make arrangements with the Treasury so that either he or the museums will accept anything of interest which is found?
    Lord John Hope: It is not the practice for us to receive anything of this sort, and I do not see why we should make an exception in this case. The Esso Petroleum Company has been extremely

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    co-operative and has agreed to make anything that it finds available to the museums. I do not want to alter a practice which is working extremely well. If it did not work well, then I think that it would be wise to alter it.

  SCOTLAND

    Dental Care (Expectant and Nursing Mothers)
    Miss Herbisonasked the Secretary of State for Scotland what proportion of the money spent by local health authorities on the dental care of nursing and expectant mothers is provided by his Department.
    The Secretary of State for Scotland (Mr. John Maclay): Local health authorities' expenditure on this service is taken into account in fixing the aggregate amount of general grant payable, but no part of that grant is paid specifically for this or any other particular service.
    Miss Herbison: Does not the Minister think that the case of Mrs. Whyte, a constituent of mine, which I have brought before him on two occasions, has been turned down because of the working of the general grant? Is he not aware that my constituent has been very unjustly treated and that possibly the local authority feels that it can do nothing because of the working of the general grant?
    Mr. Maclay: I have explained the circumstances of this case in great detail to the hon. Lady, and, while I have sympathy with her constituent, I have no power to order what she has asked me to do. I cannot see a connection with the general grant in this case.
    Miss Herbison: The Minister will be aware that sympathy will not pay the costs which my constituent has had to pay for something which she ought not to have had to pay for at all.
    Mr. Maclay: As the hon. Lady will have noticed from the letters which I have written to her on this subject, that is a matter for the local authority concerned, and I have no power to deal with it.

    Police Force
    Mr. Dempseyasked the Secretary of State for Scotland if he has considered the recent report of Her Majesty's Inspector of Constabulary in Scotland; and what measures he proposes to take with a view to eliminating the amount of wastage among probationer constables, which the report discloses.
    Mr. Maclay: Yes, Sir. Before deciding whether any additional measures are needed to deal with wastage, I propose to await the interim report of the Royal Commission on the Police, which is expected before the end of the year.
    Mr. Dempsey: Is the right hon. Gentleman aware that the Scottish police force, which, in my opinion, is efficient and well officered, has been labouring under considerable shortages for some time? Does he realise that one of the best ways of attracting the most suitable men and women into this work is by making the remuneration much more attractive, otherwise we shall get only what we pay for?
    Mr. Maclay: As the hon. Gentleman knows, that is one of the matters under consideration by the Royal Commission, and I must await its recommendations.

    Barlinnie Prison (Young Offenders)
    Mr. Dempseyasked the Secretary of State for Scotland how many offenders, under 18 years of age and under 16 years of age, respectively, were detained in Barlinnie Prison during the year 1959.
    Mr. Maclay: I am circulating in the OFFICIAL REPORT a table giving details by different categories of detention of the 44 boys and one girl under 18 who were detained in Barlinnie Prison on 1st July, 1960. I regret that corresponding figures for the whole of 1959 are not available.
    Mr. Dempsey: Does not the right hon. Gentleman realise that it is very desirable that young offenders should be placed somewhere where they can be completely segregated from habitual criminals? Will he consider the matter with a view to eliminating this practice in Barlinnie Prison?
    Mr. Maclay: I am very much aware of the desirability of what the hon.

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    Member asks for. I will gladly discuss the problem and some of the details with him, because they are too complicated for question and answer.
    Following is the table:

    OFFENDERS UNDER 18 YEARS OF AGE DETAINED IN BARLINNIE PRISON ON 1ST JULY, 1960

    Males

    Females

    (a) Remanded in custody in prison as unfit for detention in remand homes—

    (i) under 16 years of age

    1

    1

    (ii) 16 and under 17

    2

    nil

    (b) Awaiting trial, aged 17 but under 18

    15

    —

    (c) Convicted but awaiting sentence, aged 16 but under 18

    4

    —

    (d) Sentenced to borstal training and awaiting transfer to borstal institutions

    1

    —

    (e) Serving sentences of imprisonment, aged 17 but under 18

    17

    —

    (f) Borstal licenceholders aged 17 but under 18 recalled for further training

    2

    —

    (g) Others

    2

    —

    Total

    44

    1

    Note: Those in categories (a)—(d) have no contact with the main prison population; category (f) is accommodated in an entirely separate section of the prison; and those in category (e) are kept separate from adult prisoners as far as possible.

    Social and Economic Developments
    Mr. Rankinasked the Secretary of State for Scotland to what extent he estimates that the increase in the Bank Rate will contract social and economic developments in Scotland; and if he will make a statement.
    Mr. Maclay: It is the Government's belief that this and other measures in the field of monetary policy will not inhibit sound and worth-while development in Scotland.
    Mr. Rankin: Is the right hon. Gentleman telling us that our road, housing and education programmes will not be cut despite the Government's restrictionist financial policies? Will industry be expanded in order to absorb Scotland's unemployed? Is that what the right hon. Gentleman is telling us?
    Mr. Maclay: The hon. Gentleman, I think, is anticipating other Questions on the Order Paper.
    Mr. Rankin: I am not anticipating anything.
    Mr. Maclay: The hon. Gentleman will remember that last week I dealt with a number of Questions on this subject, and I do not wish today to add to what I have said.
    Mr. John MacLeod: Will my right hon. Friend assure the House that there will be no cut or delay in the Highland road programme which is so important for the economy of the whole area and which has been neglected for years?
    Mr. Maclay: I can certainly say that considerations which apply specially to Scotland are being very much taken into account.
    Mr. T. Fraser: Does the right hon. Gentleman think that there is any need for a curb on the economic and industrial expansion of Scotland?
    Mr. Maclay: The hon. Gentleman is trying to draw me with a supplementary question which I do not propose to answer.

    Forestry
    Mr. Woodburnasked the Secretary of State for Scotland whether there has been any change in afforestation policy in view of the modern estimates of future need for timber.
    Mr. Maclay: No, Sir. There have been no changes of sufficient magnitude since the policy was reviewed in 1958 to justify a change in the planting programme then approved for the ten years from 1959 to 1968.
    Mr. Woodburn: As there will probably be a decrease in the use of timber for props, and as the timber programme as originally forecast may not be required, is the Forestry Commission considering planting other types of tree and adjusting its planting programme to fit in with the needs of agriculture?
    Mr. Maclay: All the changing demands for timber are taken into account in considering the long-term programmes of the Forestry Commission.

    New Roads, Bathgate
    Mr. Woodburnasked the Secretary of State for Scotland when the new roads for servicing the British Motor Corporation factory at Bathgate are likely to be

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    started and completed; and what part of the normal programme is to be curtailed to balance the extra outlay.
    Mr. Maclay: It is intended that work should start in August and be completed by May, 1961. The cost will be met out of funds available for major improvement works this year, but these funds must always be administered flexibly in order to allow for schemes of special urgency and it is not yet possible to say precisely what adjustment of the programme may be necessary.
    Mr. Woodburn: In other words, these flowery words mean that something else will be cut in order to provide this extra road for the B.M.C. In view of what has been said about unemployment in Scotland and the availability of labour and road-making machinery, does not the right hon. Gentleman think it disgraceful that, because this extra work has to be done, other valuable road work in Scotland must be stopped?
    Mr. Maclay: The right hon. Gentleman really should not always assume the worst. It is a great mistake.

    Loch Ness (Scientific Expedition)
    Mr. Hector Hughesasked the Secretary of State for Scotland if he is aware that a scientific expedition from Oxford and Cambridge Universities, jointly, has been organised to explore the depths of Loch Ness in the current month of July to seek a solution of the mystery of the monster of Loch Ness; what assistance his Department plans to give the expedition; and what steps he is taking to protect the wild life of Loch Ness and to record the scientific results of the expedition.
    Mr. Maclay: I have seen reports about this expedition which do not suggest that danger to wild life should arise. I have no plans to give assistance although some information about eels has already been given to a member of the expedition. The recording of such scientific results as may emerge is a matter for the organisers of the expedition.
    Mr. Hughes: Does the Secretary of State realise that, when he says he has no plans, that is an old story characteristic of his policy in Scotland? Does he realise that the matter referred to in the Question has passed beyond the realms of fantasy and that it is a job for him
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    and the Minister of Science to investigate the potentialities of Scotland, which have been much neglected in the past?
    Mr. Maclay: If I were asked for further assistance, I might look to see whether I could give it, but the whole question of monsters and other things must be left to the scientific examination which, undoubtedly, it is receiving.

    Road Programme
    Mr. Manuelasked the Secretary of State for Scotland what decision he has reached with regard to augmenting the present road programmes, in order to reduce the increasing number of accidents causing injury and death on the roads.
    Mr. Maclay: The current road programme runs to 31st March, 1962, and I have no announcement to make as to its revision.
    Mr. Manuel: Will the Secretary of State stop dodging these great Scottish issues when trying to reply to Questions? Is he not aware of the growing concern among Scottish local authorities about the increasing deterioration of our roads? Will not he make some inquiry into what is happening in Northern Ireland and Eire, where, obviously, national road plans are in operation? It would do the right hon. Gentleman and his Department a great deal of good if he found out what was happening there and did something like it in Scotland.
    Mr. Maclay: I was not aware of any question in that supplementary. In reply to it, however, I will say that if the hon. Member studies what has happened concerning expenditure on the improvement of roads in Scotland in recent years, he will realise that very useful progress is being made.
    Mr. Steele: Will the Secretary of State look at the second part of the Question and indicate whether any conclusions have been reached concerning the suggestion made in the Scottish Grand Committee that a full-time official should be appointed in his Department to look after road safety?
    Mr. Maclay: That hardly arises out of the Question and I should not like to give a categorical answer at this moment.

    Law Reform Committee (Report)
    Mr. Stodartasked the Secretary of State for Scotland what action he proposes to take on the recommendations of the Law Reform Committee for Scotland with regard to the existing law of security; and if he will make a statement.
    Mr. Maclay: I will, with permission, answer Questions Nos. 17 and 31 together—
    Mr. Hector Hughes: On a point of order. I object to my Question, No. 31, being answered with No. 17. My Question was addressed to the Lord Advocate. It is about a Report of a Committee appointed by the Lord Advocate, a Report to the Lord Advocate. It is about lawyers and by lawyers and the Secretary of State is not competent to deal with it.
    Mr. Speaker: There are a number of topics there, only one of which can be pursued. I understand that the hon. and learned Member does not want Question No. 31 to be answered with No. 17. No doubt, in those circumstances—
    Mr. Hughes: Further to that point of order. I wrote you a letter, Mr. Speaker, in which I gave my reasons for this objection. You replied, Mr. Speaker, saying that it was not part of your function to interfere with the transfer of Questions—
    Mr. Speaker: Order. I did not say that. I am obliged to the hon. and learned Member for his courtesy in writing to me. He was complaining about the transfer of his Question and I explained to him that there would be difficulties in the Chair allowing him to argue the matter at Question Time, because transfer raises no point of order for the Chair. The Chair is not responsible.
    Mr. Hughes: With the greatest respect, Mr. Speaker, the doctrine of noninterference may be carried to excess and interfere with the due answering of Questions in this House.
    Mr. Speaker: It may do all sorts of things, but what it does not do is to raise a point of order for me. That is why I cannot allow, even with every ground of affection and admiration, even
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    the hon. and learned Member to argue about it now.
    Mr. Hughes: This is a very important matter, Mr. Speaker—
    Mr. Speaker: It may be, but it is not a point of order, so I cannot allow the hon. and learned Member to argue about it now.
    Mr. Maclayrose—
    Mr. Hughes: I submit, with respect, Mr. Speaker, that it is a point of order. This doctrine may be carried to excess. Take, for example, a Question to the Minister of Agriculture, Fisheries and Food which is transferred to the Minister of Defence—
    Mr. Speaker: Order. I must insist on the hon. and learned Member desisting, because I have to look after the interests of the House as a whole. I am afraid that it is not a point of order.
    Mr. Maclay: I am in a slight dilemma as to whether I am to reply to Question No. 17 separately.
    Mr. Speaker: No. 17 alone.
    Mr. Maclay: The Law Reform Committee has suggested that the changes in the law required to give effect to its recommendations could be effected by amendment of the Companies Act, 1948. Company law is the responsibility of my right hon. Friend the President of the Board of Trade and I am in touch with him on this matter.
    Mr. Stodart: While thanking my right hon. Friend for that Answer so far as it goes, may I ask whether he is aware of the view expressed in the Report that inability to create a security over movables is one of the reasons which has prevented sufficient Scottish capital being invested in Scotland and has, in the words of the Report, caused a barrier to successful economic development? As it is the Government's declared intention to do as much as they can to solve the unemployment problem, will my right hon. Friend do all in his power to overcome this barrier?
    Mr. Maclay: I am fully seized of the point which my hon. Friend makes. I am discussing it with my right hon. Friend. It is possible to over-estimate the importance of the matter, but I agree that it has great importance.
    Mr. D. Johnston: Am I right in thinking—
    Mr. Hector Hughes: On a point of
    order. [HON. MEMBERS: "Oh."] My Question was replied to. May I ask a supplementary?
    Mr. Speaker: To separate the issues, I indicated to the Minister that I would be grateful if he did not reply to No. 31 and he complied with that indication.
    Mr. Johnston: Am I right in thinking that this is the Eighth Report of the Law Reform Committee for Scotland, that in seven of those Reports recommendations for legislation have been made by the Committee, that in only two cases has legislation followed and that on both occasions the legislation was initiated by the Opposition? In these circumstances, is there any reason to think that this Report is more likely to result in legislation than any of the other seven Reports?
    Mr. Maclay: I should require carefully to check the hon. and learned Member's statistics, because they are not quite right. I am sure that this matter will be followed up with the usual speed and energy with which all these matters are followed up.
    Mr. Johnston: The right hon. Gentleman says "the usual speed and energy". Are we to expect that the usual speed and energy will result in legislation on one of the earlier special Reports, that on intestate succession which has been outstanding for nine years?
    Mr. Maclay: The speed of legislation depends not only on myself, but also on hon. Members who sit in the Scottish Grand Committee and the Scottish Standing Committee.
    Mr. Hector Hughesasked the Secretary of State for Scotland what steps he plans to take to implement the recommendations made in the Eighth Report of the Law Reform Committee for Scotland, Command Paper No. 1017; in taking such steps, what regard he will have to the note by Professor T. B. Smith in Appendix I; and what account he has taken of the suggestions in Appendix II which were not included in the recommendations.
    Mr. Maclay: As I said in reply to Question No. 17, the Law Reform Committee has suggested that the changes in
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    the law required to give effect to its recommendations could be effected by amendment of the Companies Act, 1948. Company law is the responsibility of my right hon. Friend the President of the Board of Trade and I am in touch with him on this matter.
    Mr. Hughes: Is the Secretary of State aware that I am sorry that we will not hear the Lord Advocate's voice on this Question? Is he aware that the original remit was too narrow and had to be widened, as a result of which the labours of this Committee were greatly extended and involved investigation of various systems of law ranging from Ancient Rome up to English law today? If all these labours have been crowned with success, will the right hon. Gentleman give us an assurance that the Committee's recommendations will be put into force without the usual delay?
    Mr. Maclay: I have noted with great interest what the hon. and learned Member has said. I was nervous that he was going to insist upon my explaining the words "hypothecation" and "impignoration", which appear in Appendix I of the Report, and I did not propose to do so. I have noted what the hon. and learned Member has said about the need for urgency.
    Mr. Johnston: Does not the difficulty in pronunciation which the right hon. Gentleman experienced show the folly of his leading on questions of law such as this, which might be better dealt with by the Lord Advocate, to whom the Question was originally addressed?
    Mr. Maclay: On the other hand, the mispronunciation is that which would be experienced by any member of the public who happened to read the Report.
    Mr. Fraser: Is the right hon. Gentleman creating a precedent for the practice of assuming the right to reply to Questions on a Report which has been addressed to Parliament by the Lord Advocate?
    Mr. Maclay: I will investigate the precise reason for the transfer of the Question, but obviously the reason is that the recommendations become the responsibility of my right hon. Friend the President of the Board of Trade.
    Mr. Rankin: On a point of order. Will you give the House your guidance,

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    Mr. Speaker, on the result of the protest made by my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) about the answering of Questions together? Has a precedent now been created?
    Mr. Speaker: No. I made it quite clear. Because a number of issues were arising I thought that it seemed obvious that we should get on better if the Minister replied to the Questions separately.
    Mr. Rankin: Further to that point of order. Is it, then, the case that if one of the hon. Members concerned lodges a determined protest the Minister will not answer two or three or more Questions, with permission or without?
    Mr. Speaker: The hon. Member knows quite well that no precedent is created by this. I have repeatedly explained that I have no power to compel a Minister to answer Questions in any way.

    Local Government and Miscellaneous Financial Provisions Act
    Dr. Dickson Mabonasked the Secretary of State for Scotland when he intends to issue regulations defining major redevelopment under the Local Government and Miscellaneous Financial Provisions (Scotland) Act, 1958.
    Mr. Maclay: I am sending this week to the local authority associations, as a basis for consultations with them, proposals for the revision of the grant regulations under the Town and Country Planning (Scotland) Acts in the light of the provisions of the 1958 Act.
    Dr. Mabon: Does the right hon. Gentleman realise that the local authorities are extremely dissatisfied with the consistently long delay in initiating these regulations? To make amends for this rather shameful business, will the right hon. Gentleman now give an assurance that the regulations will be sensible enough to ensure that not every case of central development by local authorities will have to go to him for individual decision?
    Mr. Maclay: This has been a complex matter, as the hon. Member knows, and discussions have taken place with the
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    local authorities concerned and the local authority associations. I will certainly see that everything is done to hurry the matter as fast as we can.

    Hospital Building Programme
    19. Dr. Dickson Mabonasked the Secretary of State for Scotland to what extent he intends increasing the present hospital building programme in Scotland in the light of recent announcements by the Government.
    Mr. Maclay: As I announced last November, I expect expenditure on hospital building to increase from £3·25 million in 1960–61 to £3·9 million in 1961–62.
    Dr. Mabon: The Secretary of State has not answered the point of the Question about the present hospital building programme. In consideration of previous replies which the right hon. Gentleman has given about this matter and in view of the special provisions within the Government's credit squeeze and other restrictions, does not the Secretary of State agree that this is the time to increase the public works programme in Scotland to offset the influence of Bank Rate and other Government economic decisions that will adversely affect Scotland's unemployment position?
    Mr. Maclay: I do not understand the hon. Member's supplementary question, because in my reply I gave the facts about the present building programme, which is increasing.

    Bonded Warehouses (Fire Alarm Systems)
    Mr. Rankinasked the Secretary of State for Scotland whether he is aware of the recent recommendation of a Glasgow jury that fire alarm systems should be fitted in all bonded warehouses; and what steps he proposes to take to give effect to this recommendation.
    Mr. Maclay: I am aware of the recommendation referred to. When I have received and studied the transcript of the evidence given at the inquiry I shall discuss the question with other Ministers concerned.
    Mr. Rankin: Does the right hon. Gentleman realise that some rather disturbing facts came out at the inquiry?

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    If he cannot say anything at the moment, will he give the assurance that he will follow up this matter with unusual speed and energy?
    Mr. Maclay: No, Sir—with my customary speed and energy.

    New Hospital, Dundee (Cost)
    Mr. G. M. Thomsonasked the Secretary of State for Scotland the estimated final cost of the new hospital proposed for Dundee.
    Mr. Maclay: It is not possible to estimate the final cost of this hospital until sketch plans have been prepared. These will not be available for some time yet.
    Mr. Thomson: Is the Secretary of State aware that the Government's decision to build this hospital was originally announced as part of the pre-General Eleclion programme in 1955? Is he also aware that the starting date for the building of this hospital is now to be in 1963, that costs are rising and there is a waste of public money? Will not he reconsider the decision and bring forward the starting date of this hospital?
    Mr. Maclay: The hon. Gentleman knows my views on this matter. It is not a question of money that has been holding this up, certainly in these latter stages. It is a question of getting the right plans properly drawn up for a hospital which will be of great importance for the future, and I agree that sometimes there is an element of the ideal being the enemy of the best.
    Mr, Strachey: Is it not really a scandal that a start on this hospital has fallen back eight years and cannot the Secretary of State now give us a firm estimate of the cost and of when the hospital will be started?
    Mr. Maclay: I cannot at the moment, for the reasons I have given; but I assure the right hon. Gentleman that we are anxious to get on with the building of this hospital as fast as we can.

    Public Expenditure
    Mr. G. M. Thomsonasked the Secretary of State for Scotland if he will make a statement on the Government's intentions regarding a review of public expenditure in Scotland.
    Mr. Maclay: The question is under urgent consideration and I am therefore not in a position at the moment to make a statement.
    Mr. Thomson: Will the Secretary of State tell us whether he has been instructed by his right hon. Friend the Chancellor of the Exchequer to freeze public expenditure in Scotland during 1960–61 at the level of the last financial year and, if that is so, will he give the House an assurance that he will fight this decision in view of Scotland's special need in relation to unemployment?
    Mr. Maclay: I have no intention of adding to the reply which I have already given to the hon. Member's Question, because I am not able to do so. As I have said in reply to other Questions, special considerations in Scotland are always relevant and are realised to be so.
    Mr. Rankin: Is it not the case that the Chancellor of the Exchequer has said in the House that United Kingdom expenditure will be frozen at the 1961 limit during 1962, and can the Secretary of State tell us whether or not that will apply to Scotland?
    Mr. Maclay: The statement about general intention does not necessarily apply to individual details within the general intention.

    Local Authorities (Land)
    Mr. Willisasked the Secretary of State for Scotland what extra financial burden he estimates will he borne in the current financial year by local authorities in Scotland, as the result of the requirement to pay market value instead of existing use value for land compulsorily acquired.
    Mr. Maclay: A precise estimate is impracticable, but I have no reason to think that additional capital expenditure will exceed the figure of £300,000 which I mentioned when the Town and Country Planning Bill was before Parliament.
    Mr. Willis: Is the £300,000 the figure for this year? Does not the right hon. Gentleman think that this is rather a big sum to pay for the follies of Tory legislation?
    Mr. Maclay: I said that a precise estimate requested for this year is impracticable and the £300,000 is an estimate of the capital expenditure. What the hon. Gentleman has in mind, I think, is the interest payments that will arise.
    Mr. Willisasked the Secretary of State for Scotland what steps he proposes to take to prevent the exploitation of local authorities in Scotland by land speculators.
    Mr. Maclay: I have no evidence to suggest that local authorities in Scotland are being exploited in this way.
    Mr. Willis: In view of the present trends regarding land speculation, will the right hon. Gentleman keep this very much in mind and take immediate action, whenever he has any evidence, to prevent local authorities from being exploited?
    Mr. Maclay: I shall be interested to hear of any particular case where the local authorities may have been affected in the way in which the hon. Gentleman suggests.
    Mr. Lipton: Will the Secretary of State advise the Minister of Housing and Local Government how to avoid this exploitation, which is apparently not going on in Scotland but which is only too prevalent in England?
    Mr. Maclay: I am always prepared to give any help that I can to my colleagues in the Government, but I have enough troubles on my hands regarding Scotland at the moment.

    Crofter's House (Member's Letter)
    Miss Herbisonasked the Secretary of State for Scotland if he will make a statement on the question of the crofter's house to which the hon. Member for Lanarkshire, North, has drawn his attention in correspondence.
    Mr. Maclay: As I have already explained in correspondence, the Crofters Commission decided after consulting me as landlord and granting the crofter a hearing, that the croft house in question was required for the future occupation of the croft and should not be separated from the land. The dispossessed absentee crofter's request to retain ownership of the house was accordingly not approved by the Commission whose decision in these matters is final.
    Miss Herbison: Is the Minister aware that in his latest letter to me on this case there was a number of statements which just were not true? What is he doing in the meantime to find out the exact truth about this matter? Is it not a serious matter that a house built by this man's father, with no help from anywhere financially—the local authority or the Government—should be taken from him and that he should be dispossessed?
    Mr. Maclay: The hon. Lady is, I think, very well aware of the complexities of this whole crofting problem and the problems which the Crofters Commission finds itself up against. It should be borne in mind that in this case the former tenant has a house and a job and had never worked on the croft and that the new tenant, a married man with three children, has crofting experience and is urgently in need of a house.
    Miss Herbison: It is quite untrue to say that this man has done no work on the croft. The Minister has that information. Is he aware that there have been houses lying empty for ten years where the new crofter and his family could have lived?
    Mr. Maclay: If the hon. Lady can say where the facts are wrong, I will, of course, follow them up and find out whether they are wrong.
    Miss Herbison: But I have given them to the right hon. Gentleman.

    Shops, Offices and Warehouses (Fire Prevention)
    Mr. Hannanasked the Secretary of State for Scotland if he will, as a matter of urgency, take whatever steps are necessary, legislative and administrative, to ensure adequate and efficient systems of fire prevention, fire warning and fire escape in shops, offices and warehouses.
    Mr. Maclay: My colleagues and I are reviewing the matter, but I am afraid that I am not in a position to make any statement today.
    Mr. Hannan: Is the right hon. Gentleman aware that fire prevention officers at the moment cannot tender advice unless they are invited by the proprietors, and that in various areas there is doubt about which is the responsible authority? In view of the urgency of this matter, as

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    exemplified in Liverpool and elsewhere, will he bear in mind that fire risks obtain in warehouses other than bonded warehoues?
    Mr. Maclay: I am very well aware of the urgency of this situation and I have been trying to get over, by public statement, the desirability that proprietors of warehouses should consult the fire officers about safety precautions.
    Mr. Ross: Does the right hon. Gentleman appreciate that the Select Committee on Estimates drew the attention of the Minister responsible to the importance of this seven years ago? Are we to take it that nothing has been done?
    Mr. Maclay: There are various powers in various Acts which apply to certain types of premises, but we are examining the whole question urgently.

    House Purchase and Housing Act, 1959
    Mr. Rossasked the Secretary of State for Scotland (1) how many applications have been made for improvement grants in respect of tenant-occupied houses since the passing of the House Purchase and Housing Act, 1959;
    (2) in respect of how many tenant-occupied houses in Scotland application has been made for standard grants under Part III of the House Purchase and Housing Act, 1959.
    Mr. Maclay: I regret that separate figures for owner-occupied and tenant-occupied houses are not at present available. They are, however, now being collected, and figures for the first six months of this year will be published in the next Quarterly Housing Return in a few weeks' time.
    Mr. Ross: I thank the Secretary of State for that reply. Does he appreciate that this is where we really want information to find out whether this Act is working, because it is in tenant-occupied property that there is the greatest scope and most urgent need for imprcvement and, from our experience in the past, it is in this sphere of housing that there is least action?
    Mr. Maclay: I certainly agree with the hon. Gentleman that we need this information.

    Site, Summerston
    Mr. Hannanasked the Secretary of State for Scotland the reasons for the delay in coming to a decision about the site at Summerston for housing purposes; and if he will make a statement.
    Mr. Maclay: A proposal to use an area at Summerston for housing purposes is included in the Quinquennial Review of the City Development Plan which was submitted to me by Glasgow Corporation on 1st July. As required by Statute the proposals in the Review are being advertised by the Corporation and objections may be made by interested parties. Until objections have been received and considered, I cannot make any decision on the proposals.
    Mr. Hannan: Is the right hon. Gentleman aware that it is now over three years since the first inquiry was held into this matter? In view of the urgency —I appreciate that replies have to be awaited to the advertisement—will he thereafter give an assurance that he will at the earliest opportunity come to a decision about it?
    Mr. Maclay: The hon. Member will appreciate that I am just as concerned as he is about the difficulty of getting on with this problem, and I can assure him that we will do all that we can to expedite the matter.

    North of Scotland Hydro-Electric Board
    Mr. Grimondasked the Secretary of State for Scotland if he has given further consideration under the capital development programme to assisting the North of Scotland Hydro-Electric Board in connecting up areas and islands still without electricity; and if he will use the provisions of Section 7 of the Local Employment Act in this regard.
    Mr. Maclay: The problem of rural electrification in the Hydro-Board's area is under examination and I am unable to make any statement at present.
    Mr. Grimond: Is it not the case that this must have been under examination for some time, because the Hydro-Electric Board is in the position that it has now reached these outlying areas, which are very expensive to connect up, and it really needs the Government's

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    decision as to whether they are going to do it or not? Can the Secretary of State tell us when that decision will be reached?
    Mr. Maclay: I cannot forecast how soon there will be a decision or make any announcement. The matter is being examined. It raises great difficulties as the hon. Gentleman knows, but I will press on with it, as usual.
    Mr. Fraser: Is not the right hon. Gentleman aware that this problem has been obvious for a very long time, and that from time to time we have been told that Her Majesty's Government have no statutory power to help in this kind of provision, but is not the power in Section 7 of the Local Employment Act and will he say whether that power will be used?
    Mr. Maclay: I am not at all satisfied that that power applies, but I will examine it.

    Lord Advocate (Questions)
    Mr. W. Hamiltonasked the Lord Advocate what is the estimated increase in cost in his Department consequent on his appearance on the Order of Questions.
    The Lord Advocate (Mr. William Grant): None, Sir.
    Mr. Hamilton: Is the right hon. and learned Gentleman aware, then, that we are probably now getting value for money? Would he agree that it would be still cheaper and better all round for him not to be here at all.
    The Lord Advocate: I shall be agreeably surprised and flattered if I feel that the fact that I now take the top of the list on certain days leads to hon. Members asking additional Questions in order to have the pleasure of hearing my voice.

  TRADE AND COMMERCE

    Imports (Quota Restrictions)
    Mr. Jayasked the President of the Board of Trade what has been the total value in the present year of United Kingdom imports of a type from which quota restrictions have been removed in the past two years.
    The Minister of State, Board of Trade (Mr. F. J. Erroll): I regret that this information is not readily available.
    Mr. Jay: Can the Minister explain why that was so, and if he cannot give the figure now, will he give it to us within a reasonable period of time?
    Mr. Erroll: The reason is that the liberalisation measures of the last two years covered a very large number of individual commodities and applied only to certain areas. Therefore, it would require a great deal of additional work to extract the information in the form which the right hon. Gentleman requires. If he cares to have a word with me about the matter, I shall be glad to see whether I can help him in any way.

    European Common Market
    Mr. Donnellyasked the President of the Board of Trade what progress he has made towards the entry of Great Britain into the European Common Market.
    Mr. Erroll: The subject of the longterm relations between countries of the European Free Trade Association and the European Economic Community remains on the Agenda of the Trade Committee in Paris, but no progress can be made until there is a general desire for a negotiation.
    Mr. Donnelly: Is the right hon. Gentleman aware that the implication of what the Prime Minister said to the House a few days ago was that the British Government have no intention of entering the European market? If that situation continues, could the right hon. Gentleman say what advice he would tender to British industry which at the moment exports to countries of the Common Market? Should industrialists continue to put their investment into factories in this country or should they consider additional investment on the Continent of Europe?
    Mr. Erroll: Advice to British industry is a question quite other than that on the Order Paper.
    Mr. Lindsay: Is my right hon. Friend aware that many of us feel that our exclusion from the Common Market is infinitely more serious than is generally

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    realised and that, therefore, every possible effort must be continuously made to try to get our participation?
    Mr. Erroll: We are, of course, continuing to make those efforts, but I repeat what I said in my main Answer, that there must be a general desire for negotiation.
    Mr. Chetwynd: Is it not clear that France and Germany have now strong objections to our entering the Common Market? What plans has the right hon. Gentleman for meeting that situation?
    Mr. Erroll: I am not aware of those strong objections.
    Mr. Osborne: Is the desire to negotiate completely lacking from the other side, and are there any obstacles on our side?
    Mr. Erroll: I was referring to the Trade Committee which met recently and at which we hoped there would be some discussion of a long-term solution. Members of the Six who were present said they preferred to discuss short-term matters.
    Mr. Grimond: What proposals are the Government putting forward?
    Mr. Erroll: We have suggested that at the Trade Committee we should discuss the measures necessary to achieve a long-term solution.
    Mr. Gaitskell: Does the right hon. Gentleman's earlier reply mean that it is Her Majesty's Government's view that there is no desire to negotiate on the other side? If that is the case, what do Her Majesty's Government propose to do?
    Mr. Erroll: I was saying that at the meeting of the Trade Committee there did not appear a desire to negotiate on long-term matters but a preference, on the other hand, to discuss short-term palliatives. The Committee will meet again and we shall see what takes place there.

    Citrus Imports
    Mr. C. Hoyleasked the President of tire Board of Trade what proportion of the citrus imports into the United Kingdom, for the two years to the latest convenient date, came from the Union of South Africa and the British West
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    Indies, respectively; and what contracts have been made for such imports from these two areas for the period 1960–62.
    Mr. Erroll: The proportions by value of the total imports of citrus fruits, fresh and preserved, and citrus fruit juices during the two years ending April, 1960, from the Union of South Africa and the British West Indies were, respectively, 20·2 per cent, and 4·8 per cent. Contracts, other than those made by Her Majesty's Government for concentrated orange juice for the Welfare Foods Service, are the subject of commercial negotions about which I can give no information. I understand from my right hon. Friend the Minister of Agriculture, Fisheries and Food that contracts have been made covering imports of concentrated orange juice during 1960 but not yet for any subsequent years.
    Mr. Royle: In view of the things said in yesterday's debate and the general attitude of the British public towards the Union of South Africa, will not the right hon. Gentleman do more to encourage imports from a part of the Commonwealth which has proved that a multi-racial society can exist very successfully and so help the West Indies in a way in which that is not being done at the moment?
    Mr. Erroll: The import of citrus fruits from the two areas in question are matters for private commercial arrangements.

    Motor-car Industry, Scotland (Negotiations)
    Mr. Hoyasked the President of the Board of Trade if he will make a statement regarding the negotiations, in which his Department is engaged, for the establishment of a motor-car industry in Scotland by the Rootes group.
    The Parliamentary Secretary to the Board of Trade (Mr. John Rodgers): The negotiations have been carried a long way and my right hon. Friend hopes that they will be successfully concluded shortly. They are, of course, confidential and I cannot make any further statement on them.
    Mr. Hoy: Negotiations have been going on for a very long time. Is the Parliamentary Secretary aware that only

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    last week, Lord Rootes, on his return from America, delivered a speech in which he said that the reason for the delay was the Government's action? Can we have an assurance from the hon. Gentleman now that there will be no further difficulties and that we shall be able to go ahead with this desirable project in Scotland?
    Mr. Rodgers: I recognise that it is a very desirable project and I hope that it goes ahead. Rootes is in negotiation with B.O.T.A.C. and it is up to it to make recommendations.

    Industry, North-Eastern Area
    Mr. Shortasked the President of the Board of Trade (1) whether he will increase the assistance offered to industries expanding in the north-east of England, under the Local Employment Act, to compensate for the restriction of credit by the banks;
    (2) what effect the recently announced credit restrictions will have on assistance given under the Local Employment Act in the north-east of England.
    Mr. J. Rodgers: Within the powers conferred on the Government by the Local Employment Act my purpose is to assist industry to expand in development districts in the North-East and elsewhere, I certainly do not intend to operate those powers more restrictively as a result of the measures recently announced.
    Mr. Short: I am asking the Minister to be a little less restrictive—a little more expansive. Is he aware that the policy which the Government are pursuing is fantastic? Is he aware that the banks in the North-East are becoming very reluctant to give any worth-while assistance to industry expanding in the area? I am sure that he will be aware of the recent case which I drew to the notice of the Board of Trade. Is it not a ridiculous and unintelligent policy to offer credit with one hand under the Local Employment Act and to take it away with the other by restricting credit from the banks?
    Mr. Rodgers: Under the old Act we were lenders of last resort. Now we are lenders of equal status with the banks. The procedure does not operate in the way the hon. Gentleman has suggested.
    Mr. Jay: Is it sensible to have a credit squeeze which hits equally areas of unemployment like the North-East and congested areas like London?
    Mr. Rodgers: That is another question.
    Mr. Gower: Dealing with the problem of these areas generally, is it not fair to say that the restriction on general credit in some ways increases the value of the special assistance given under the Act?
    Mr. Rodgers: It could well work that way.
    Mr. Speaker: Mr. Grey.
    Mr. Short: On a point of order, Mr. Speaker. Might I ask a further—
    Mr. Speaker: I have called the next Question.

    Hire-Purchase Debt
    Mr. Greyasked the President of the Board of Trade by what percentage the hire-purchase debt per head of the population has risen in the north-east of England in the past twelve months compared with the rise in Great Britain.
    Mr. J. Rodgers: I regret that there is no separate information for the different regions of the country; for the country as a whole hire-purchase debt per head of population rose about 40 per cent. between May, 1959, and May, 1960.
    Mr. Grey: Is the Parliamentary Secretary aware that the hire-purchase debt in the North-East is less than anywhere else in the country? As there is no inflation there, will he give an assurance that he will use caution in dealing with the situation and do his best to insulate the North-East from the full effects of the credit restriction?
    Mr. Rodgers: We will do our best to steer new industries there to deal with the undoubted unemployment situation which exists.
    Mr. Short: Is the hon. Gentleman aware of the recent case of an industrialist whom I took to see his officials at the Board of Trade? The industrialist was refused any credit by the Government and refused any worth-while credit

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    by the banks. How does the hon. Gentleman reconcile that sort of case with the Answer which he gave to me just now and the Answer which he has given to my hon. Friend?
    Mr. Rodgers: I am afraid that I cannot go into individual cases.

    INTERNATIONAL SITUATION
    Mr. Donnellyasked the Prime Minister whether he will now propose an early meeting of the Heads of Governments of the United Kingdom, France, Western Germany and the United States of America to consider the international situation and to co-ordinate Western policies.
    The Prime Minister (Mr. Harold Macmillan): While I doubt whether such a meeting would be timely at present, I entirely agree with the hon. Member on the need for a co-ordinated Western assessment of the international situation and the working out of future Western policy. Consultations to this end are already taking place in the North Atlantic Treaty Organisation, and elsewhere.
    Mr. Donnelly: Is the right hon. Gentleman aware that since the collapse of his Summit policy the ideas—and their value —emanating from the head of the British Government have been noticeable by their absence? Can the right hon. Gentleman say what positive steps the British Government are taking more than just the normal routine negotiations?
    The Prime Minister: I do not see why the hon. Gentleman should be rude to me. I am not a member of his Party.
    Mr. Healey: As, contrary to what the Prime Minister told the House in error last week, there are now no current agreed proposals by the Western Powers on disarmament, can the right hon. Gentleman say what steps are being taker to produce an agreed Western policy on this subject? Can he, in particular, assure the House that he will support the French position about controlling the means of delivery of nuclear weapons?
    The Prime Minister: The question of disarmament and the best next step to take are now being discussed between the Governments concerned.
    Mr. Gaitskell: Is the Prime Minister really satisfied that the arrangements for consultation through the N.A.T.O. Council are adequate? Is he aware that considerable concern has been created by the report that the United States Government have offered the missile Polaris to Germany? Were Her Majesty's Government consulted before that offer was made? Is there not a strong case for some new and high-level piece of machinery so that decisions of this kind are taken by members of the alliance not independently but jointly?
    The Prime Minister: The consultations in N.A.T.O. go on all the time, of course. The original Question was whether I would now arrange a meeting of the Heads of Governments of the United Kingdom, France, Western Germany and the United States of America. I should have thought that reflection would have shown that this was not a very suitable moment for me to try to organise a meeting of the President of the United States and the other two Heads of Governments concerned.
    Mr. S. Silverman: Does not the right hon. Gentleman consider that at this juncture in international affairs it is far more necessary that our policy should be right than that it should be agreed with other people?
    The Prime Minister: That is a reflection involving a lot of moral problems to which I should like to give further thought, but, on the face of it, I think there is a good deal to be said for the hon. Gentleman's view.
    Mr. Fletcher: Will the Prime Minister say what the Government's view is with regard to the proposal by the United States that the missile Polaris should be given to the West German Government? Is not this the kind of matter which should be discussed with the Western allies?
    The Prime Minister: If the hon. Gentleman will table a Question about Polaris, I will try to answer it.

    TOURISM
    Mr. Awberyasked the Prime Minister if he is aware of the rapidly growing number of tourists coming to and going out of this country; and if he

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    will appoint a Minister of Tourism to give advice and guidance to the British holiday industry in order to obtain for the United Kingdom a greater share of this international industry.
    The Prime Minister: I welcome the increase of tourist traffic. The answer to the second part of the Question is "No, Sir".
    Mr. Awbery: Is the Prime Minister aware that some countries on the Continent derive a large amount of their revenue, if not the greater part of it, from the tourist trade? Is he aware that the tourist trade is expanding rapidly in this country and that thousands of people are opening up independent agencies? Will he do something to co-ordinate this industry so that we can get the maximum of benefit from it?
    The Prime Minister: The tourist trade is, of course, of very great importance to us. Our earnings from this source increased between 1958 and 1959 from £138 million to £155 million. I must, of course, say that a lot of our people go abroad and spend a great deal of money too, and all that perhaps helps the world to go on. What I am asked is whether the appointment of a Minister with this co-ordinating function is wise or necessary. While there are a good many offices concerned with different aspects—such as the Home Office with the licensing laws, the dates of summer time, passports, Customs and so on—I do not really think that a Minister would have a rôle to play which would be valuable. I think it is best for us to work through the inter-Departmental methods, using as our main agent the British Travel and Holidays Association, which, in my opinion, does a very good job.

    UNITED STATES FORCES, UNITED KINGDOM
    Mr. Warbeyasked the Prime Minister whether he will publish the terms of the agreement with the Government of the United States regarding joint control of the employment of United States forces stationed in the United Kingdom.
    The Prime Minister: An understanding was reached between the United
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    Kingdom and United States Governments in October, 1951, during Mr. Attlee's Premiership under which the use in an emergency of bases in this country by United States forces was accepted to be a matter for joint decision by the two Governments in the light of the circumstances prevailing at the time. As I told the House on 12th December, 1957, this understanding depended upon no formal document, but was accepted as a mutually satisfactory arrangement. It was subsequently confirmed in the joint statement issued by my right hon. Friend the Member for Woodford (Sir W. Churchill) and President Truman in Washington on 9th January, 1952.
    Mr. Warbey: Is the Prime Minister aware that what we should like to know is whether under this agreement the British Government are in a position to forbid the use of these bases for activities of a provocative or risky character? For example, can the Government veto the use of the bases for aerial reconnaissance flights over the Soviet Union or for patrol exercises and patrol flights of aircraft carrying nuclear weapons?
    The Prime Minister: With regard to the second part of the supplementary question, it was all explained in great detail, I think, in about February, 1958, and it has been several times put forward to the House.
    With regard to the first part of the hon. Gentleman's supplementary question, while it is perfectly true that what I would call the original agreement made by Mr. Attlee and confirmed by my right hon. Friend the Member for Woodford (Sir W. Churchill) referred to the use of the bases in an emergency, I think we have sufficiently close relations to cover the point which the hon. Gentleman has in mind.
    Mr. Warbey: Would the Prime Minister say that such an action as the sending of an aircraft on an aerial reconnaissance flight over the Soviet Union would be regarded as an emergency within the terms of the agreement?
    The Prime Minister: It would depend on the circumstances.
    Mr. Healey: Is the right hon. Gentleman aware that evidence has already been given to a United States Senate Committee that U2 aeroplanes have

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    flown on reconnaissance flights from Lakenheath aerodrome in Britain? Had these flights the approval of the British Government? If not, what protest has he made?
    The Prime Minister: If that question is put on the Order Paper, I will do my best to answer it. I have not seen the Report of this Committee. If my attention is called to this matter, I will certainly look at it.
    Mr. Healey: Is the Prime Minister aware that I put this precise Question on the Order Paper to him and that he transferred it to the Secretary of State for Air who, in a Written Answer—the Question was not reached—said that he was not prepared to give any information on this matter? Will the right hon. Gentleman come clean with the House on this, because there is great feeling in the country?
    The Prime Minister: If the Question is put again to me, I can only answer in the terms of my right hon. Friend the Secretary of State for Air.
    Mr. Healey: In that case will the Prime Minister not mislead the House by pretending that he is prepared to supply information on it when in fact he is not?
    The Prime Minister: I was not aware of the precise circumstances of this. If the hon. Gentleman wishes to make offensive remarks to me, I will answer him back. I do not intend to give any answer without reflection and without seeing the Question on the Order Paper.
    Mr. Healey: If the right hon. Gentleman is not aware of what is happening in his private office, and of what the Government are doing in disarmament negotiations, what is the purpose in his holding his office any longer?
    The Prime Minister: If a Question of this kind is raised, I will see it in writing before I answer it. In this case, I transferred the Question, as I understand it, to my right hon. Friend the Secretary of State for Air, who has answered it. It was rather disingenuous of the hon. Gentleman not to have said so when he asked the supplementary question.
    Mr. P. Noel-Baker: Do we understand that U2 flights have taken place from this country and that the Prime Minister was unaware of it?
    The Prime Minister: No, Sir. If the right hon. Gentleman will put down a Question on a matter of this kind I will answer it. It is very well known that on a matter of this kind I am entitled to see the Question and to answer after consideration, when I have seen it.
    Mr. Gaitskell: Will the right lion. Gentleman give an undertaking that if a Question is put down to him on this matter it will not be transferred to another Minister?
    The Prime Minister: This was a routine transfer. I cannot honestly follow every Question put down on the Order Paper. In my private office, Questions are transferred every day. If the Leader of the Opposition—or any other Member, now that my attention has been called specially to it—puts down a Question in these or any other terms, I will answer it. But the right hon. Gentleman must know that Questions are transferred backwards and forwards and I am not always consulted on every point. Now that my attention has been called to it, if this Question is asked I will do my best, after reflection, to answer in what I believe to be the best interests of the country.
    Sir A. V. Harvey: Will my right hon. Friend also inquire whether or not the United States aircraft flew from this country in the days of the Labour Government? We should like to know.

BUSINESS OF THE HOUSE
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.]

MINISTERIAL STATEMENTS
Mr. Lipton: On point of order, Mr. Speaker. Am I to understand that the Minister of Housing and Local Government has not sought your permission to answer Oral Questions about land speculation—
Mr. Speaker: The hon. Gentleman cannot raise that now, because we have passed on. We have passed the Motion relating to public business.
Mr. Lipton: I would like to make a further submission, Sir. Assuming that that is so-and I have no doubt that it is the case-may I ask for your guidance on this point?
The Minister of Housing and Local Government has thought fit to make a statement to the Press, which appears in today's Daily Mail, on this very issue. The point I put to you, Mr. Speaker, is that there is a growing practice on the part of Ministers of Her Majesty's Government to make statements to the Press on important matters before making them to this House. What steps can we take to ensure that on important questions such as land speculation Ministers make statements to this House in the first place and not to the Press?
Mr. Speaker: If the hon. Gentleman feels that his experience in the House is insufficient to assist him, I will try to give him guidance privately. In my public office it is not my duty to seek to give guidance, but to rule in accordance with the rules of order.

ORDERS OF THE DAY
  WAYS AND MEANS [29th June]
  Resolutions reported,
ESTATE DUTY (GRADUATION OF CHARGE WHERE BENEFITS FROM COMPANY SURRENDERED)
That, with a view to providing for the graduation of charges to estate duty where benefits from companies are surrendered, it is expedient to authorise such incidental charges to the duty as may arise from amending the provisions of the Finance Act, 1940, relating to duty in respect of a deceased's benefits from certain companies.

RETIREMENT ANNUITY PREMIUMS (INCIDENTAL CHARGES)
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise any incidental charge to income tax which may arise from provisions extending the relief for retirement annuity premiums as respects all past years.
First 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.
Second 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 Resolutions.

FINANCE BILL
Order for consideration, as amended, read.
3.33 p.m.
The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I beg to move,
That the Bill be recommitted to a Committee of the whole House in respect of the Amendments to Clause 19, page 14, line 3; Clause 20, page 16, line 12; Clause 21, page 17, lines 24, 26, 33, 36, 37, 41, and 44 and page 18, lines 6, 12 and 14; Clause 23, page 20, lines 36 and 42; Clause 25, page 22, lines 27, 30 and 41, and page 23, line 15; Clause 26, page 23, lines 24, 25 and 42 and page 24, line 5; Clause 27, page 25, line 37, page 26, line 26,

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and page 27, lines 11, 12, 15, 20, 24, 25 and 28; Clause 32, page 30, line 22; Clause 33, page 31, line 17; Clause 34, page 32, line 44; Clause 35, page 33, line 14; Clause 40, page 39, lines 30 and 34; Clause 41, page 40, line 17; Clause 60, page 50, line 43; Clause 65, page 54, line 28; Clause 67, page 55, line 43; Schedule 4, page 72, lines 42 and 44; and Schedule 7, page 81, column 3, line 30; and the new Clauses (Confirmation of double-taxation Agreement with the Republic of Ireland), (Estate duty: graduation of charge where benefits from company surrendered) and (Modification of s. 50 in relation to partnerships) and the new Schedule (Agreement between the Government of the United Kingdom and the Government of the Republic of Ireland with respect to certain exemptions from tax), standing on the Notice Paper in the name of the Chancellor of the Exchequer.
Mr. Speaker: Perhaps I had better indicate that I am prepared to select only in a modified form the Amendment of the hon. Member for Gloucester (Mr. Diamond) to the Recommittal Motion. If he would be good enough to confine his Amendment to Clause 30, page 28, line 29, and to Schedule 4, page 72, line 39, I would be prepared to select it in that form.
Mr. John Diamond (Gloucester): On a point of order. Would it not be in order to move it in that form a little later, after discussion of the Chancellor of the Exchequer's Motion?
Mr. Speaker: Certainly. I thought that it would be convenient if I indicated that now.
Mr. Harold Wilson (Huyton): On a point of order. I am not sure, Mr. Speaker, whether you have formally put the Chancellor of the Exchequer's Motion.
Mr. Speaker: I interrupted the discussion to indicate my intention.
Mr. Wilson: I rise to oppose the Chancellor's Motion because of the quite unprecedented way in which the House has been treated by the Government in respect of the Report stage and recommittal of the Bill. During earlier stages of the Bill there have been far more Government Amendments than we have ever known in any previous Finance Bill since the war. That is an indication of the very muddled character of the Government's mind on this question. I am not referring to the changes made following representations made in Committee, but to those made after second thoughts and muddled reconsideration.
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Whether the Chancellor is responsible —if he has any authority any more in his Department is doubtful from some of the statements which we have read lately—or whether it was the Attorney-General or the Solicitor-General we do not know, but even before today the House has never been treated in the way the Government have treated it over this Bill.
As a House, we have a responsibility for control over finance and control over taxation, and this is not the way to do it. Altogether, there are 201 Amendments or new Clauses on the Notice Paper, every one of which, if selected, if the House is to do its duty, should be properly debated. Of that 201, the Chancellor has put down no fewer that 129.
There has been no case, certainly since the war and, I believe, not in all our fiscal history, when the Chancellor has put down so many Amendments on Report. It may be that one or two are the result of assurances which he gave at an earlier stage that he would consider this or that point, but there are very few of those and I think that they would not reach double figures. Nevertheless, there are 129 Amendments in the name of the Chancellor.
It is not for anyone on either side of the House to question your selection of Amendments for discussion, Mr. Speaker, but it is quite obvious that if there is a limited amount of time available for Report—and on that question I propose to say a word in a moment—the number of Amendments which you feel you can select, and which can reasonably and adequately be considered in that period, will be affected by the number of Amendments in the name of the Chancellor of the Exchequer, which, of course, are automatically selected.
Therefore, I suggest that, because of what the Chancellor has done in tabling these Amendments, the House is denied its normal rights, on Report, of putting down and having considered Amendments which will be appropriate both to the Bill itself and to the new Clauses which may be moved from either side of the House. As I have said, in the main these 129 Amendments do not represent reconsideration of points raised in debate in Committee. They represent some

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administrative or legal muddle between the Treasury and the Law Officers, or whoever is responsible for advising the Chancellor on these legal questions—I do not know whether the Attorney-General wants to take the responsibility for all this or not.
In almost every case they are particularly difficult Amendments. In the main, they are not Amendments which will be easily comprehended by any hon. Member who is not blessed, or cursed, with legal training or great knowledge of accountancy, and yet all of us have the duty of properly considering them.
Many of them were put down by the Chancellor at a late stage and a number of them were put down in a form which made it almost impossible to consider them. I mention those Amendments, for example, where the Chancellor put down one Amendment to a Clause a few days ago and, when one had finally comprehended that, another Amendment was later put dawn which threw the meaning of the Clause in an entirely different direction. That has meant that the amount of preparatory work to be done by hon. Members has been doubled. I therefore feel that we should make it quite clear to the Government—and in this I hope that we shall have the support of hon. Members opposite—that this is not the way to treat the House of Commons when dealing with fiscal legislation.
Mr. Ede (South Shields): Or any legislation.
Mr. Wilson: Or any legislation—I quite agree with my right hon. Friend, but I am sure that he will agree that the House has rather more responsibility towards financial legislation.
A great fuss about it, quite rightly and properly, has been kicked up by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and other hon. Members at various times this year, and yet we are treated like this and have 129 Amendments which we are supposed to consider and debate adequately.
I wonder whether the Chancellor has made any calculation of how he thinks the House can get through these Amendments in the time. Has he worked it
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out? If we allowed only 20 minutes for each of the Chancellor's Amendments, we would take 40 hours of debate—more than 40 hours.
Mr. Gerald Nabarro (Kidderminster): Forty-three.
Mr. Wilson: Forty-three.
That allows no time for Divisions, including those genuine Divisions pressed from this side of the House and the "phoney" Divisions called by hon. Members opposite, who do not usually go into the Lobby. I except the hon. Member for Kidderminster (Mr. Nabarro), who has shown a little more courage this year than in past years, which we very much welcome.
This means that the Government are making no allowance for any Amendments to be moved by anyone from this side of the House or by back benchers opposite. This means 43 hours of uninterrupted debate to get the Bill through the Report stage in two days.
3.45 p.m.
I make it quite plain to the Patronage Secretary that when we agreed to do our best to help him get the Report stage in two days—and we agreed because we considered that the House was rather tired of the Bill—it was not with any understanding that there were to be 129 Government Amendments on Report. At least, we could have expected some intimation that we were to have that kind of Bill. The Patronage Secretary must have known that the Chancellor of the Exchequer and the Attorney-General were in such a state of muddle that they were to put down so many Amendments.
I hope that before we are asked to vote on this Recommittal Motion the Chancellor will tell us how he thinks we can get through this business. Does he expect the House to let his Amendments go through on the nod, without adequate debate? Is that what he is hoping to achieve? Or does he hope that, once again, we will bale him out by withdrawing many Amendments, to which we attach importance, so that we can get through in reasonable time? Or is there to be coercion of hon. Members opposite —which so far has not been very effective—
Mr. Nabarro: There is no coercion so far as I am concerned.
Mr. Wilson: —to get them to withdraw, or not to press, their Amendments? What thought has been given by those responsible for these Amendments and for planning the time of the House to the way in which the debate is to be conducted?
If it is considered reasonable that two days be allocated to Report, as has been done in past years when we have had a reasonable division of the time of the House between Government and Opposition and between Opposition and Government back benchers, I wonder how mud time the Chancellor thinks will be left after the Recommittal Motion has been dealt with. Recommittal may or may not be regarded as technically part of the Report stage—and there are always arguments about that—but it is quite clear that some of the Amendments from page 2611 to page 2623 of the Notice Paper, 13 pages of Amendments on Recommittal, are of considerable importance. It is quite clear that the Report stage will not be begun before a fairly late hour tonight. How the Patronage Secretary will then be able to say that we shall have two days on what I would call a genuine Report stage. I do not understand.
For those reasons, unless we get from the Chancellor a clear explanation of how this has happened, and a proper expression of apology to the House for this unprecedented treatment of hon. Members, we shall oppose the Recommittal Motion in the Division Lobby.
Mr. Amory: I am amazed by what the right hon. Member for Huyton (Mr. EL Wilson) has said. We are here dealing with complicated, difficult and important matters and with a long Bill, as I made clear to the House when the Bill came before us on Second Reading. This is the first time that I have heard complaint because the Government have listened to what has been said in Committee and have attempted progressively to improve the Bill. I made it perfectly clear at the start of the Committee stage that I should listen to what the Committee said and that I hoped that we would be able to improve the Bill further. We have done exactly that.
The number of Amendments looks formidable on paper, but I think that it will be found that many of them are linked together to form one group. I
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do not want to cut debate short, but many of the Amendments will be self-explanatory, or almost so, because they give effect to points which we said we would consider.
I am amazed that the right hon. Gentleman, of all people, should complain, because, after listening to what the Committee said, the Government have taken action to improve the Bill still further. I hope that we shall soon start on our work and that we shall continue in that spirit.
Mr. H. Wilson: Is the right hon. Gentleman aware that we have studied the Amendments and that hardly any fall into the category he has mentioned? In the course of our discussions, when we get to the Bill, will he indicate which fall into that category?
Mr. Diamond Mr. Diamond rose—
Mr. Speaker: It might be wise if I were to remind the hon. Member for Gloucester (Mr. Diamond) that if he wants to move his Amendment in the form that I indicated he must not speak to the main Motion.
Mr. Diamond: I am grateful to you, Mr. Speaker. It was for that reason that I refrained from rising earlier.
I beg to move, at the end to add:
"and in respect of the Amendments to Clause 30, page 28, line 29; and Schedule 4, page 72, line 39, standing on the Notice Paper in the name of Mr. Diamond".
Mr. Speaker: The Question is—
Mr. Donald Chapman: On a point of order. As you will know, Mr. Speaker, there are about 40 pages of Amendments on the Notice Paper. If it is convenient to ask you now, can you tell us at what time it became known which Amendments would be selected, and whether any list was posted? You will be aware that we have come to the House with 40 pages of Amendments and with most of us having no idea which have been selected. I do not know at what time of the day any list was made available, but we are faced with a formidable list of intensely technical Amendments on which some of us have spent many hours' study, and now we find that many of them will not be discussed. How has the convenience of the House been served in this instance?
Mr. Speaker: The hon. Member rose while I was proposing the Question.
Question, That those words be there added, put and agreed to.
Mr. Eric Fletcher: On a point of order. I am not clear about the procedure in this case. I understood that you originally suggested to the hon. Member for Gloucester (Mr. Diamond) that he should amend his Amendment by limiting it to Clause 30, page 28, line 29 and to Schedule 4, page 72, line 39. I gather that my hon. Friend did not avail himself of that opportunity of amending his Amendment.
Mr. Speaker: What I understood the hon. Member for Gloucester (Mr. Diamond) to be doing was moving his Amendment in the form in which I had told him I would be prepared to select it. As the hon. Member for Islington, East (Mr. Fletcher) will realise, that confined the Motion to the Amendments to Clause 30, page 28, line 39 and Schedule 4, page 72, line 39. The Amendment was moved in that form and has now been agreed to by the House.
I now take the opportunity of answering the hon. Member for Birmingham, Northfield (Mr. Chapman), who asked about the convenience of the House. One seeks to serve the convenience of the House as best may be. As far as I remember, the process of selection by the Chair—and I distinguish myself from the Chairman because I do not know the position with regard to him—was finished about 12 noon. I then dictated the result to the appropriate officer of mine and had it passed out.
In the case of the Chair it is not the practice to publish a list, but I am sorry if that mechanism did not result in the hon. Member's being informed. If he will see me privately, I will find out how and by what means he seeks his information in this case, because I desire to save hon. Members the trouble to which they are otherwise subjected.
Mr. Chapman: I am obliged to you for what you have said, Mr. Speaker, but the situation is almost intolerable when we have a list of Amendments as long as this and then find that half of them are not being called. Would it be possible for you to consider some means
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of informing the House at an earlier time than three or four hours before the debate is due to begin, much of which time is taken up with lunch?
Mr. Speaker: I will do all I can to lessen the burden on hon. Members. I have suffered from it miserably myself in relation to Finance Bills. I know the difficulty, and it will be borne in mind, but it is not possible to consider the precise selection until the Notice Paper is complete. That rather imposes a zero hour with regard to the starting time for selection.
Mr. J. Enoch Powell: I beg to move, at the end to add:
"and in respect of the Amendment to Clause 61, page 52, line 11, standing on the Notice Paper in the name of Mr. J. Enoch Powell".
Mr. Fletcher: I oppose the Amendment. I feel that the House is in considerable difficulty about the procedure at which we have now arrived. As my right hon. Friend the Member for Huy-ton (Mr. H. Wilson) said, there are on today's Notice Paper over 200 Amendments and new Clauses, of which over 129 are in the name of the Chancellor of the Exchequer. In accordance with the custom of the House we shall no doubt have to deal with, and perhaps debate, each of those Amendments. It is obvious that they will all be called.
In addition to those 129 Amendments there are 72 Amendments on the Notice Paper in the names of my right hon. and hon. Friends and in the names of the hon. Members opposite below the Gangway. The hon. Member for Wolverhampton, South-West (Mr. Powell) is now proposing, as an Amendment to the Chancellor's Motion for Recommittal, that the Bill should also be recommitted in respect of an Amendment which he has chosen to put down. I object to that. The House should also object to it, because it is obvious that there is a limit to the time available for discussing the Report stage of this very complicated Finance Bill. As you yourself indicated, Mr. Speaker, you are not prepared to put to the House the Amendment which my hon. Friend the Member for Gloucester has put on the Notice
Paper—
Mr. Speaker: The hon. Member for Gloucester (Mr. Diamond) may have put

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it on the Notice Paper, but it was not put to the House in that form. The hon. Member for Islington, East (Mr. Fletcher) is at present confined by the rules of order to the question of the second Amendment to the Chancellor's Motion.
Mr. Fletcher: The House will be in a very grave difficulty if it accepts the Amendment to the Chancellor's Motion, because hon. Members will involve themselves in considerations with regard to a timetable. I was pointing out that whereas, according to the Notice Paper, my hon. Friend the Member for Gloucester was proposing the Bill's Recommittal in respect of several Amendments, in response to your suggestion he has confined his Amendment to the originally proposed Motion for Recommittal to two Amendments, one to Clause 30 and one to the Fourth Schedule.
I have had an opportunity of considering the Amendment to Clause 61, page 52, line 11, in which the hon. Member for Wolverhampton, South-West is interested. I am not sure whether this consideration applies to the Government Front Bench or tc the Opposition Front Bench, but at this stage back benchers have no means of knowing which Amendments you are proposing to select on Report. You were good enough to make a few observations on that subject to us just now.
When we considered the Finance Bill in Committee the Chairman of Ways and Means, for the convenience of hon. Members, put up a notice in the Lobby indicating which Amendments were to be selected. In so far as the Report stage is concerned we have no means of knowing which of these 72 Amendments are to be called apart from the 129 put down by the Chancellor of the Exchequer.
4.0 p.m.
I think it reasonable to assume, although I may be wrong, that they will not all be called. I make that assumption because, were they all called, according to my calculations it would take seven or eight days of the sittings of the House to deal with them, in addition 10 the Amendments in the name of the Chancellor of the Exchequer. Therefore, if I am correct in assuming that, apart from the 129 Amendments in the name of the Chancellor, the whole 72
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other Amendments will not be called, it follows, Mr. Speaker, if you have not already done so, that you will have to adopt some process of selection of those Amendments now on the Notice Paper that you are proposing to call for debate in the time which will be available.
I do not know whether that time is limited, but judging from recent history I assume that it is. I feel a great difficulty in supporting the Amendment in the name of the hon. Member for Wolverhampton, South-West (Mr. Powell), because if the Amendment be accepted and if the Bill be recommitted —as I hope it will not be—in respect of the Amendment to Clause 61, page 52, line 11, it follows that that Amendment will have an equal chance with the other 71 of being selected for debate. I think it reasonable to assume that if the Bill is recommitted in respect of that Amendment there is, at any rate, some chance—I put it no higher—that that Amendment might be selected by you for debate.
Were that to happen, it seems to me that it would seriously prejudice the chances of the various Amendments in the names of my right hon. and hon. Friends being called and I attach far more importance to them than I do to the Amendment in the name of the hon. Member for Wolverhampton, South-West. I do not think that it would be appropriate at this stage for me to deploy an argument with regard to the Amendment for the hon. Member for Wolverhampton, South-West, but I think it right to say that we are already committed to embark upon a wholly unprecedented discussion of a whole series of highly complicated and controversial Clauses of the Bill. I have never known an occasion when a Finance Bill has been introduced with such little forethought—
Mr. Speaker: The observations of the hon. Member must relate to the Amendment to which he is speaking. That has nothing to do with the introduction of the Finance Bill.
Mr. Frank Bowles: I am glad, Mr. Speaker, that you have cut out some of the Amendments which it was proposed to discuss on Report stage. We are all getting rather tired of the

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Bill. But I wonder how it is that Mr. Speaker can limit the Amendments to be selected by the Chairman of Ways and Means. Can you, Sir, tell me how it is that you selected the Amendment in the name of my hon. Friend the Member for Gloucester (Mr. Diamond)?
Mr. Speaker: It seems to me a strange puzzle for one with the hon. Gentleman's great wisdom in this field. Perhaps the hon. Gentleman was not present but I intimated that the only form in which I was prepared to select the hon. Member's Amendment to the Recommittal Motion was in a modified form.
Mr. Bowles: I was present and I did hear that, Sir. I am not criticising your action, Mr. Speaker. I am very glad that you were able to limit the number of Amendments selected by the Chairman of Ways and Means. But I was interested to know how it was that you are able to do so.
Mr. Speaker: I do not do anything of the kind. I select Amendments to the Motion of the Chancellor for Recommittal of the Bill. That falls within my province. I intimated that I was only prepared to select the first one in a modified form. I do not invent these tortures. This has been done by the House and my predecessors for a long time.
Mr. Glenvil Hall: Might not it save time and enable us to get on with the real business if you, Mr. Speaker, will intimate whether you will accept the Amendment in the name of the hon. Member for Wolverhampton, South-West (Mr. Powell)?
lion. Members: It has been selected.
Mr. Speaker: Order. There is here some desperate confusion. The Question was, in fact, proposed by me and discussion on it is going on. That indicates that, so far as the Chair is concerned, the Amendment is acceptable.
Mr. Fletcher: If I may interrupt the speech I was making to you, Mr. Speaker, to add a word to that point of order—
Mr. Speaker: I hope that the hon. Gentleman will not do that.
Mr. Fletcher: I venture to do so only in the interests of the procedural arrangements of the House. Surely it must be
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right for the House to decide, if it wishes, on what Amendments it is prepared to have a Recommittal Motion agreed. It is your prerogative, Mr. Speaker, to decide what Amendments shall be called. Surely the House must reserve the right to decide questions of Recommittal. Surely the position must be that the Chancellor proposes the Recommittal—
Mr. Speaker: I am sorry. I am now confused. The hon. Member is in a position to address the House if he so wishes, or to address me, I suppose, on a point of order. I am not clear what he is doing. I am not appropriating or using any power which the Chair does not already possess. One of them is to select the Amendments to the Recommittal Motion.
Mr. Fletcher: I am hoping to address you, Sir, on a point of order. I think that it of great importance in relation to the future conduct of the procedure of this House—the point of order as raised by my hon. Friend the Member for Nuneaton (Mr. Bowles) and supported by my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall).
As I understand it, the point of order is this. The House, if necessary by a vote, can decide whether or not a Bill shall be recommitted and whether it should be recommitted to the whole House or, if necessary, to a Standing Committee. As I understand it, the House can decide to recommit a Bill either in respect of Amendments proposed by the Chancellor of the Exchequer, or by any hon. Member on this or the other side of the House.
Once the House has decided whether or not there should be a Recommittal in respect of certain Amendments, it is then your prerogative, Mr. Speaker, to decide what Amendments shall be called. It seems to me, with respect, that it would be depriving the House of its rights if you were to limit the right of the House on Recommittal, if hon. Members desire and if the House, by a vote, decides, that a Bill shall be recommitted. I suggest, with respect, that is a matter for the House to decide.
If the House decided that it wanted the Bill to be recommitted in respect of all the Amendments on the Notice Paper in the name of my hon. Friend the Member for Gloucester, the House would be so entitled to decide. The House having done so, you, Mr. Speaker, would be perfectly entitled to decide which

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Amendments should be called or which should not be called—
Mr. Bowles: No, that is wrong.
Mr. Fletcher: With respect, to preserve the rights of the House, I hope that it will be agreed that I have correctly stated the procedural position.
Mr. Speaker: The hon. Member has got it wrong. The House confers on the Chair certain powers of selection. One of those is to select the Amendments to a Recommittal Motion. That is all that I have purported to do. I do not think that the hon. Gentleman need trouble about it; the books are full of precedents for that kind of operation. I cannot give them to him out of my head, but they can be sorted out at some other time if he is interested. The strict position is that there is an Amendment before the House standing in the name of the hon. Member for Wolverhampton, South-West (Mr. Powell)
Mr. William Ross: I hope that my hon. Friend the Member for Islington, East (Mr. Fletcher) will not persist in his opposition to the Amendment which is before the House. I think that he was very unfair to the hon. Member for Wolverhampton, South-West (Mr. Powell). He suggested that the Amendment should not be pressed, but that the Amendment to the Bill should take its place in relation to other matters discussed on Report, but, as I understand, unless that Amendment is dealt with in Committee, it will not be moved at all.
My hon. Friend desires to be fair to the hon. Member for Wolverhampton, South-West, but if he suggests that we have already got so much to do that we cannot accept this Amendment, which would add to the amount of work we have to do, my hon. Friend is being unfair because he is blaming the hon. Member for Wolverhampton, South-West for something which actually is the fault of the Government. The effect of the action of the Government in putting down so many Amendments on Recommittal in respect of which you, Mr. Speaker, do not exercise any discrimination the Government think that the Bill should be improved in a particular manner, is that the Government Amendments come automatically before the House.
It is not even the Chancellor of the Exchequer who is at fault. It has been
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suggested that 129 Government Amendments are involved. If the Chancellor recognises that the Bill is so faulty, it is our duty to put it right. We cannot allow faulty legislation to go forward undiscussed. We must take whatever action is necessary, but the point is that we have not time to discuss it. For some reason or other we have the idea in our heads that we shall not have time. My right hon. Friend the Member for Huyton (Mr. H. Wilson) suggested that if 20 minutes were taken in discussion of each Government Amendment that would take 43 hours, but my right hon. Friend apparently forgot that we might wish to vote against some of those Amendments. My right hon. Friend the Member for Huyton also forgot that, in addition, the Amendments affect 16 Clauses—
Mr. Speaker: I think that there is some difficulty about this. May I ask the hon. Member to remember that his observations must be addressed to the particular Amendment in the name of the hon. Member for Wolverhampton, South-West (Mr. Powell)?
Mr. Ross: Yes, Mr. Speaker, but we have to appreciate that this would be adding to our temporary difficulties over the amount of time available. The position is that after dealing with the Clauses we shall reach the Question, "That the Clause stand part of the Bill". If that applied to the 16 Clauses and to the Schedules, much more than 43 hours would be involved.
Mr. H. Wilson: My hon. Friend will realise that I said that to debate these Amendments alone would take 43 hours. I was well aware, indeed I mentioned the point, that more time would be taken in Divisions. Clearly, we should take 60, 70 or 80 hours, at a minimum, for the whole debate. My reference to 43 hours was in relation to the Chancellor's Amendments only.
Mr. Ross: The more we appreciate the position, the more we appreciate how bad a Bill this is and how necessary it is to amend it. The Leader of the House ought to be here to see that we have more time to do our work properly.
Question, That those words be there added, put and agreed to.
Main Question, as amended, again proposed.
4.15 p.m.
Mr. Ede: I understand we are now able to resume the discussion which was initiated by my right hon. Friend the Member for Huyton (Mr. H. Wilson). I want to add my protest to his at the way in which the House is being treated at this stage of the Bill.
It is customary to regard the Finance Bill as the most important Bill of the year. Generally, it occupies on the Floor of the House more time than any other Bill. I could not have resisted the Amendment moved to the Chancellor's Motion by the hon. Member for Wolverhampton, South-West (Mr. Powell), on the sound ground that "dog does not eat dog." He is a back bencher the same as I am. If he wants to get some position for a back bencher which he can only get in this way, I feel bound to support him, even though it might mean that some other matter I wished to discuss might be squeezed out as a result. That is the kind of dog fight we can quite properly get into if we both recognise our canine attitude to the whole matter.
The Government ask us to consider 129 Amendments. Even on the assumption that some of them will be taken together and that, on occasions, the whole of the debate will consist of the right hon. Gentleman or one of the Ministers associated with him merely standing after the first Amendment has been disposed of and saying "Drafting", or, if he cannot understand it at all and the rest of us cannot, saying, "Purely drafting", that would take a very great deal of time. I cannot think that my right hon. Friends who are responsible on this side of the House for dealing with what are called the usual channels could have had any conception that this was the kind of thing that we were to be asked to do when two days were suggested for the Report stage of the Bill.
I am one of those who are opposed to the Finance Bill being taken in Committee upstairs, because I believe that the traditional duty of this House carefully to scrutinise all Government demands for expenditure is one that, even in these days, we must carry out to the best of our ability. I hope that this is not one of the efforts that are being made to prove that the Finance Bill is really too burdensome for the House of Commons to undertake. That is a departure from the historic tradition of
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the House to which I cannot think that anyone who really respects the traditions of the House could ever contemplate assenting.
Unfortunately, we have had a series of Bills this Session in Committee upstairs when it has been quite clear that the Government had no intention of accepting Amendments. The House was expected to believe that only a Government draftsman can draft a Measure, that any form of words put forward by an ordinary hon. Member can always be dismissed in the words of the Minister, "I do not like the drafting of this. Although the idea is good these words are quite unacceptable." It is the duty of the House of Commons to examine all Bills in Committee, whether upstairs or on the Floor of the House, with meticulous care.
If the Government find that as a result of the arguments to which they have listened it is necessary to amend a Bill —and that, I understand, is the defence of the Chancellor, who tells us that he has been so generous in listening to what my right hon. Friends and others have said—[Interruption.] Some hon. Members opposite expressed their admiration of him at various stages of the Bill in a purely negative form. I am glad that the hon. Member for Kidderminster (Mr. Nabarro) nods in approbation of that, although, curiously enough, on this occasion he confines himself to silent recognition of the accuracy of the statements which are being made about him.
Mr. Nabarro: I am just waiting to see what happens. That is the prudent thing to do, having regard to the extraordinary complexity of this situation.
Mr. Speaker: I am waiting to be quite sure that we remain within the rules of order. Perhaps I might remind the right hon. Gentleman that the debate on the Recommittal Motion is restricted to the purpose and extent of the proposed recommittal.
Mr. Ede: I hope that that was precisely the point which I had reached, although perhaps I may have gone, as is not unusual on these occasions, by a rather devious route to get to that point.
The Chancellor says that he is amazed at my right hon. Friend because the majority of these Amendments have been put down to meet points that are

249
raised by hon. Members. Whether that be so or not, we are faced with the situation that we have a tremendous task in front of us if we are merely to have explanations from the Treasury Bench as to what they propose to do, and we are then left to say, "You have done exactly what we asked, and, therefore, there is no more to say about it." I hope that a future Finance Bill will never come to the Report stage in the condition which this one has reached, and that the House, when it starts on the Report stage, will never again have to contemplate the length of discussion and the number of Amendments that we have to deal with today.
Mr. H. Wilson: I beg to move, That the debate be now adjourned.
For nearly an hour we have been debating a question of fundamental con-
cern to the rights of the House and of hon. Members, and during all this time the Leader of the House has not thought fit to be present. That is quite scandalous when something of this magnitude has arisen, affecting the responsibilities of the Leader of the House. He should have had something to do with approving or disapproving and considering these things being put on the Notice Paper. We ought to adjourn our debate until some such time as the Leader of the House can see fit to be present to listen to what the House has to say.
Whereupon Mr. SPEAKER, pursuant to Standing Order No. 26 (Dilatory Motion in abuse of rules of House), put the Question forthwith, That the debate be now adjourned:—
The House divided: Ayes 179, Noes 239.

Division No. 127.]

AYES

[4.23 p.m.

Abse, Leo

Crey, Charles

Mallalieu, E. L. (Brigg)

Ainsley, William

Griffiths, Rt. Hon. James (Llanelly)

Manuel, A C.

Albu, Austen

Griffiths, W. (Exchange)

Mapp, Charles

Aliaun, Frank (Salford, E.)

Grimond, J.

Marsh, Richard

Awbery, Stan

Gunter, Ray

Mason, Roy

Bacon, Miss Alice

Hale, Leslie (Oldham, W.)

Mayhew, Christopher

Baxter, William (Stirlingshire, W.)

Hall, Rt. Hon, Glenvil (Colne Valley)

Mellish, R. J.

Benson, Sir George

Hamilton, William (West Fife)

Mendelson, J. J.

Boardman, H.

Hannan, William

Millan, Bruce

Bowden, Herbert w. (Leics, S.W.)

Hart, Mrs. Judith

Mitchison, G. R.

Bowles, Frank

Hayman, F. H.

Monslow, Walter

Boyden, James

Hesley, Denis

Moody, A. S.

Braddock, Mrs. E. M.

Henderson, Rt.Hn.Arthur(RwlyRegis)

Morris, John

Brown, Rt. Hon. George (Belper)

Herbison, Miss Margaret

Moyle, Arthur

Brown, Thomas (Ince)

Hilton, A. V.

Mulley, Frederick

Butler, Herbert (Hackney, C.)

Holman, Percy

Neal, Harold

Butler, Mrs. Joyce (Wood Green)

Holt, Arthur

Noel-Baker, Rt. Hn. Philip (Derby, S.)

Castle, Mrs. Barbara

Houghton, Douglas

Oliver, G. H.

Chapman, Donald

Hoy, James H.

Oswald, Thomas

Chetwynd, George

Hughes, Cledwyn (Anglesey)

Owen, Will

Cliffe, Michael

Hughes, Emrys (S. Ayrshire)

Pannell, Charles (Leeds, W.)

Craddock, George (Bradford, S.)

Hunter, A. E.

Paton, John

Crosland, Anthony

Hynd, H. (Aoorington)

Pavitt, Laurence

Cullen, Mrs. Alice

Hynd, John (Attercliffe)

Pearson, Arthur (Pontypridd)

Davies, G. Elfed (Rhondda, E.)

Irvine, A. J. (Edge Hill)

Peart, Frederick

Davies, Harold (Leek)

Irving, Sydney (Dartford)

Pentland, Norman

Davies, Ifor (Cower)

Janner, Barnett

Price, J. T. (Westhoughton)

Deer, George

Jay, Rt. Hon. Douglas

Probert, Arthur

Dempsey, James

Jenkins, Roy (Stechford)

Randall, Harry

Diamond, John

Johnson, Carol (Lewisham, s.)

Rankin, John

Dodds, Norman

Johnston, Douglas (paisley)

Reid, William

Donnelly, Desmond

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

Roberts, Goronwy (Caernarvon)

Driberg, Tom

Jones, Dan (Burnley)

Robinson, Kenneth (St. Pancras, N.)

Dugdale, Rt. Hon. John

Jones, Jaok (Rotherham)

Ross, William

Ede, Fit. Hon. Chuter

Jones, J. Idwal (Wrexham)

Royle, Charles (Salford, West)

Edelman, Maurloe

Jones, T. W. (Merioneth)

Shinwell, Rt. Hon. E.

Edwards, Rt. Hon. Ness (Caerphilly)

Kelley, Richard

Short, Edward

Edwards, Robert (Bilston)

Key, Rt. Hon. C. W.

Silverman, Julius (Aston)

Edwards, Walter (Stepney)

King, Dr. Horace

Silverman, Sydney (Nelson)

Evans, Albert

Lawson, George

Slater, Mrs. Harriet (Stoke, N.)

Fitch, Alan

Ledger, Ron

Slater, Joseph (Sedgefield)

Fletcher, Eric

Lee, Frederick (Newton)

Small, William

Foot, Dingle

Lever, L. M. (Ardwiek)

Smith, Ellis (Stoke, S.)

Forman, J. C.

Lipton, Marcus

Snow, Julian

Fraser, Thomas (Hamilton)

Logan, David

Spriggs, Leslie

Gaitskell, Rt. Hon. Hugh

McCann, John

Steele, Thomas

Galpern, Sir Myer

MaeColl, James

Stonehouse, John

Ginsburg, David

Mclnnes, James

Stones, William

Gordon Walker, Rt. Hon. P. C.

McKay, John (Wallsend)

Strachey, Rt. Hon. John

Gourlay, Harry

Mahon, Simon

Summerskill, Dr, Rt. Hon. Edith

Swain, Thomas

Wainwright, Edwin

Willis, E. G. (Edinburgh, E.)

Swingler, Stephen

Warbey, William

Wilson, Rt. Hon. Harold (Huyton)

Sylvester, George

Watkins, Tudor

Winterbottom, R. E.

Taylor, Bernard (Manefield)

Weitzman, David

Woodburn, Rt. Hon. A.

Taylor, John (Weit Lothian)

Wells, Percy (Faversham)

Woof, Robert

Thomae, lorwarth (Rhondda, W.)

Wheeldon, W. E.

Yates, Victor (Ladywood)

Thompson, Dr. Alan (Dunfermline)

White, Mrs. Eirene

Zilliacus, K.

Thomson, G. M. (Dundee, E.)

Whitlock, William

Timmons, John

Willey, Frederick

TELLERS FOR THE AYES:

Tomney, Frank

Williams, D. J. (Neath)

Mr. Redhead and Mr. Cronin.

Wade, Donald

Williams, W. R. (Openshaw)

NOES

Aitken, W. T.

Glover, Sir Douglas

MacLeod, John (Ross & Cromarty)

Allason, James

Glyn, Sir Richard (Dorset, N.)

McMaster, Stanley R.

Alport, Rt. Hon. C. J. M.

Goodhew, Victor

Macmillan, Maurice (Halifax)

Amory,Rt.Hn.D.Heathcoat(Tiv'tn)

Gower, Raymond

Macpherson, Niall (Dumfries)

Arbuthnot, John

Grant, Rt. Hon. William (Woodside)

Maddan, Martin

Balniel, Lord

Green, Alan

Maginnis, John E.

Barber, Anthony

Grimston, Sir Robert

Maitland, Cdr. Sir John

Barlow, Sir John

Hall, John (Wycombe)

Manningham-Buller, Rt. Hn. Sir R.

Barter, John

Hamilton, Michael (Wellingborough)

Markham, Major Sir Frank

Batsford, Brian

Harris, Frederic (Croydon, N.W.)

Marples, Rt Hon. Ernest

Beamish, Col. Tufton

Harris, Reader (Heston)

Marshall, Douglas

Bennett, Dr. Reginald (Gos & Fhm)

Harrison, Brian (Maldon)

Marten, Neil

Berkeley, Humphry

Harrison, Col. J. H. (Eye)

Mathew, Robert (Honiton)

Bevins, Rt. Hon. Reginald (Toxteth)

Harvey, Sir Arthur Vers (Macclesf'd)

Matthews, Gordon (Meriden)

Bidgood, John C.

Harvey, John (Walthamstow, E.)

Maudling, Rt. Hon. Reginald

Biggs-Davison, John

Harvey Anderson, Miss

Mawby, Ray

Bingham, R. M.

Hay, John

Mills, Stratton

Birch, Rt. Hon. Niget

Henderson, John (Cathoart)

Montgomery, Fergus

Bishop, F. P.

Hendry, Forbes

Moore, Sir Thomas

Bossom, Clive

Hicks Beach, Maj. W.

Morgan, William

Bourne-Arton, A.

Hiley, Joseph

Nabarro, Gerald

Box, Donald

Hill, Dr. Rt. Hon. Charles (Luton)

Neave, Alrey

Boyle, Sir Edward

Hill, J. E. B. (S. Norfolk)

Nicholls, Harmar

Braine, Bernard

Hinchingbrooke, Viscount

Nugent, Sir Richard

Brewis, John

Hirst, Geoffrey

Oakshott, Sir Hendria

Brooke, Rt. Hon. Henry

Hobson, John

Ormsby-Gore, Rt. Hon. D.

Brooman-While, R.

Hocking, Philip N.

Osborn, John (Hallam)

Browne, Percy (Torrington)

Holland, Philip

Osborne, Cyril (Louth)

Campbell, Sir David (Belfast, S.)

Hope, Rt. Hon. Lord John

Page, John (Harrow, West)

Carr, Compton (Barons Court)

Hopkins, Alan

Pannell, Norman (Kirkdale)

Carr, Robert (Mitcham)

Howard, Gerald (Cambridgeshire)

Partridge, E.

Channon, H. P. G.

Howard, John (Southampton, Test)

Pearson, Frank (Clitheroe)

Chataway, Christopher

Hughes Hallett, Vice-Admiral John

Peel, John

Chichester-Clark, R.

Hughes-Young, Michael

Peroival, Ian

Clarke, Brig, Terence (Portsmth, W.)

Hutchison, Michael Clark

Pickthorn, Sir Kenneth

Cole, Norman

Iremonger, T. L.

Pike, Miss Mervyn

Collard, Richard

Irvine, Bryant Godman (Rye)

Pilkington, Capt. Richard

Cooke, Robert

Jackson, John

Pitman, I. J.

Cooper-Key, Sir Neill

James, David

Pitt, Miss Edith

Cordeaux, Lt.-Col. J. K.

Jenkins, Robert (Dulwich)

Powell, J. Enoch

Cordle, John

Johnson, Dr. Donald (Carlisle)

Price, David (Eastleigh)

Corfield, F. V.

Johnson, Eric (Blackley)

Prior-Palmer, Brig. Sir Otho

Costain, A. P.

Johnson Smith, Geoffrey

Proudfoot, Wilfred

Courtney, Cdr. Anthony

Joseph, Sir Keith

Redmayne, Rt. Hon. Martin

Craddock, Sir Beresford

Kerans, Cdr. J. S.

Rees, Hugh

Critchley, Julian

Kerby, Capt. Henry

Rees-Davies, W. R.

Crosthwaite-Eyre, Col. O. E.

Kerr, Sir Hamilton

Renton, David

Crowder, F. P.

Kershaw, Anthony

Ridley, Hon. Nicholas

Cunningham, Knox

Kirk, Peter

Roberts, Sir Peter (Heeley)

Dalkeith, Earl of

Kitson, Timothy

Robertson, Sir David

Dance, James

Lagden, Godfrey

Robson Brown, Sir William

d'Avigdor-Goldsmid, Sir Henry

Lancaster, Col. C. G.

Roots, William

de Ferranti, Basil

Leavey, J. A.

Ropner, Col. Sir Leonard

Donaldson, Cmdr. C. E. M.

Leburn, Gilmour

Royle, Anthony (Richmond, Surrey)

Drayson, G. B.

Lilley, F. J. P.

Sandys, Rt. Hon. Duncan

Duncan, Sir James

Lindsay, Martin

Scott-Hopkins, James

Eden, John

Linstead, Sir Hugh

Sharples, Richard

Elliott, R. W.

Litchfield, Capt. John

Shaw, M.

Emery, Peter

Longbottom, Charles

Shepherd, William

Emmet, Hon. Mrs. Evelyn

Longden, Gilbert

Simon, Sir Jocelyn

Farey-Jones, F. W.

Loveys, Walter H.

Skeet, T. H. H.

Fell, Anthony

Low, Rt. Hon. Sir Toby

Smith, Dudley(Br'ntf'd & Chiswick)

Finlay, Graeme

Lucas-Tooth, Sir Hugh

Smithers, Peter

Fisher, Nigel

McAdden, Stephen

Smyth, Brig. Sir John (Norwood)

Fletcher-Cooke, Charles

MacArthur, Ian

Spearman, Sir Alexander

Forrest, George

McLaren, Martin

Speir, Rupert

Fraser, Hn. Hugh (Stafford & Stone)

McLaughlin, Mrs. Patricia

Stevens, Geoffrey

Fraser, Ian (Plymouth, Sutton)

Maclay, Rt. Hon. John

Steward, Harold (Stockport, S.)

Galbraith, Hon. T. G. D.

Maclean, Sir Fitzroy (Bute & N.Ayrs.)

Storey, Sir Samuel

Gammans, Lady

McLean, Neil (Inverness)

Studholme, Sir Henry

George, J. C. (Pollok)

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

Summers. Sir Spencer (Aylesbury)

252

253

Tapsell, Peter

Vane, W. M. F.

Williams, Dudley (Exeter)

Taylor, Sir Charles (Eastbourne)

Vaughan-Morgan, Sir John

Williams, Paul (Sunderland, S.)

Thatcher, Mrs. Margaret

Vickers, Miss Joan

Wills, Sir Gerald (Bridgwater)

Thomas, Leslie (Canterbury)

Wakefield, Edward (Derbyshire, W.)

Wise, A. R.

Thomas, Peter (Conway)

Wakefield, Sir Wavell (St. M'lebone)

Woodhouse, C. M.

Thompson, Kenneth (Walton)

Walker-Smith, Rt. Hon. Derek

Woodnutt, Mark

Tiley, Arthur (Bradford, W.)

Watkinson, Rt. Hon. Harold

Tilney, John (Wavertree)

Watts, James

TELLERS FOR THE NOES

Turner, Colin

Wells, John (Maidstone)

Mr. Bryan and Mr. Noble.

Turton, Rt. Hon. R. H.

Whitelaw, William

Original Question, as amended, again proposed.
Mr. G. R. Mitchison: I do not think that the House ought to be content either with the absence of the Leader of the House, which it has just supported, or with the fact that there have been so few protests against what is a scandalous state of affairs. Having put, or caused to be put, over 120 Amendments on the Notice Paper, the Chancellor can apparently defend them only by saying that these arise out of Committee proceedings. The plain fact is that the majority of the Amendments do not arise out of Committee proceedings and, accepting, as of course I do, the absolute honesty of the Chancellor, my only conclusion is that he does not know his own Amendments, how they arose, or what is their purpose.
What is the object of taking a Finance Bill in this detail? It is to give hon. Members on both sides of the House an opportunity in Committee to suggest alterations to the Bill in one form or another and to give the Government an opportunity of taking those suggestions on their merits and dealing with them by acceptance, modification or rejection.
The Amendments which we are now asked to consider all come at the very end of the Bill, and in those circumstances private Members have no opportunity, if they make sound criticism, of having that criticism properly considered and dealt with in the way in which Amendments can be dealt with during the Committee stage. It is, therefore, all wrong that on any important Bill this mass of Amendments should turn up at this late stage. It is doubly wrong on the Finance Bill. We must consider how it has happened.
When it was introduced, the Bill bore the signs of not having been properly considered in advance. It departed from the Budget statement. Its language was confined. What it was after was far from clear to those who had to consider what was legal and what was not legal
254
for them to do. It was, of course—it still is—an extremely complicated Bill. It has not been made any simpler by the Amendments which have been introduced from time to time and those which we are now being asked to consider.
I say to the Government, "If you cannot bring in a Finance Bill which is reasonably coherent, clear and static in the sense that you will not depart from it as it goes through the House, then you had better bring in two Finance Bills, rather than try to do it in this muddled way, for the effect of it is that the House as an organ of control over our national expenditure becomes comparatively useless at this stage". Surely that is the last thing we want. Surely hon. Members opposite, who make a fuss about the public control of expenditure, cannot back their own Government in taking this procedural matter in this way and so depriving the House of its opportunity of proper control.
This is a very serious matter. This is a Bill which has been introduced in a hurry and which was ill-considered and ill-digested, and we are asked to accept the consequences of the Government's muddle and confusion. It is disgraceful that we should be asked to do it, and doubly disgraceful that we should be asked to do it on a Finance Bill. It is our duty as the Opposition to stand up for the rights of the House and for the institutions of Parliamentary democracy, and to say to the Government, "This is a method of wrecking effective democracy and effective financial control in this country. Stop it or get out."
Mr. Chapman: I have already made my protest, on a point of order to you. Mr. Speaker, about the muddle in which today's proceedings are bound to involve us. When we came to the House today we found that, owing partly to the difficulties which you are in, but mainly to the extraordinary length and complexity of the Government's Amendments, we were faced with 40 pages, mainly of intensely technical, Amendments.

255
We come here ready to discuss some of them as best we can. I am not criticising you, Sir, but we then find that there is no list in the Lobby to show which Amendments are selected, which all adds to the utter confusion. We find that you have to advise an hon. Member to move his Motion in a particular form, depending upon your selection of Clauses and Amendments. In the end, we are bound to go through the day not knowing whether we have prepared in vain, or have come here to do any worth-while business.
The reason I oppose the Motion, as amended, is that in my view it epitomises the case for taking these technical Clauses of the Finance Bill off the Floor of the House, not recommitting them to a Committee of the whole House as the Motion requires, but committing them to a Committee upstairs.
May I give the House a few figures which I have been able to find during an hour's research in the Library? We have occupied about 400 pages of HANSARD on the Committee stage of the Bill. Of those 400 pages, we first occupied 150 pages discussing those things which this House as a House should be discussing—the rate of Income Tax, the rate of Profits Tax, Entertainments Duty, and such subjects as that. We went on to roughly another 150 pages, no fewer, on technical problems of tax evasion, dividend stripping, and evading Income Tax by disguising revenue as capital gains in the form of land and property dealing. We went on for page after page in HANSARD, 150 out of 300, dealing continuously with technical matters, with the House three parts empty and showing no real interest, because it is a Committee function to do the detailed technical job of scrutinising that part of the Bill.
Mr. Diamond: I am following my hon. Friend's argument most closely. He has just said that there was scant attendance. In fact, every hon. Member who was present will know that the Government back benches were fuller than I have ever known them for any length of time on any Bill of any kind, and I would like to ask my hon. Friend which Committee he had in mind that could accommodate all the hon. Members who wanted to take part?
Mr. Chapman: My hon. Friend will recall that the benches opposite—and I do not wish to make a strongly partisan point here—were full mainly when we were dealing with hobby farming, and virtually only then. It was that that really packed the Committee at that time—
Mr. Frederic Harris: When we discussed the whole of the Commonwealth yesterday, there were generally about five Labour Members present in the afternoon and evening.
Mr. Chapman: I am not talking about yesterday, but about the Finance Bill; and whether we should spend, not one day on the Commonwealth but six, nine and 12 days every year in Committee on the Finance Bill when such large sections of it are so intensely technical.
That is what happened in Committee. Let us look now at what is happening today. We have 40 pages of Amendments. From the late information I have received, Mr. Speaker, I gather that you have not selected 10 pages of the Amendments. That leaves 30 pages. I find that 16 of those 30 pages are mainly, again, to do with tax avoidance, and technical matters involving Clauses 19 to 32.
It is really farcical. Not only do we come here today not knowing whether Amendments are selected, and being involved in last-minute preparation, but we are now in the situation that for six or eight hours—perhaps longer—we must debate technical matters that should be dealt with at leisure in a Standing Committee for two and a half hours at a time—which is the usual length of time that Committees sit—with ample time for reflection and preparation in between. That is the proper way to handle technical matters like this.
My right hon. Friend the Member for South Shields (Mr. Ede) said that he did not believe that the Finance Bill should be sent to a Committee. I hope that, on reflection, he will agree, as many hon. Members will agree, that the real job of scrutinising taxation of major moment should remain on the Floor of the House, but that when technical matters are contained in a Bill of such length and complexity as this year's Finance Bill those matters should be dealt with in a Committee; that we should turn to that procedure which, I

257
think, was envisaged by the Select Committee on Procedure, taking perhaps half the Bill on the Floor of the House and the other half in a Committee.
I hope very sincerely, because I have done some work on the Bill, that this year will mark the watershed, and that if we are ever again in for Bills like this we will discuss the whole question of whether part, at least, should be dealt with in a Committee—
Mr. H. Wilson: I hope that my hon. Friend will acknowledge that whether the main part of the Committee stage should be taken in a Committee or on the Floor of the House—and here I very much agree with my right hon. Friend the Member for South Shields (Mr. Ede) — the position seems to be—under this Government, with the deplorable legal advice they seem to be getting, and the muddle that the Treasury is in—we should still face a prolonged Recommittal and Report stage, wherever the Committee was.
Mr. Chapman: I agree that that is how it has turned out—
Mr. Ede: My hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) expressed a hope with regard to me Perhaps I may tell him that he is disappointed.
Mr. Chapman: That remains for discussion on another occasion, but I hope that my right hon. Friend will agree thus far; that if there is a case for taking part of the Finance Bill in a Committee—
Mr. Ede: But I do not accept that there is.
4.45 p.m.
Mr. Chapman: My right hon. Friend should be a little more generous than that. He should admit that one sometimes has to consider whether, if there might be a case for something like that, today's example might be a good one to quote. In other words, if there ever was a case at all, I would say that the experience this year will be one of the best examples we shall be able to bring forward in support of arguing that it is necessary that part, at least, of the Bill should be dealt with in a Committee.
I agree, of course, with my right hon. Friend the Member for Huyton (Mr. H. Wilson) that on this occasion, under this Government, we might have been faced
258
with another long Recommittal procedure, but we would first have had an opportunity to deal with it in a Committee. If that had been done, we would have sat for two and a half hours at a time, with many technical people debating and exploring the technicalities, and there would have been that interval in which the Government could have had second thoughts. I would have helped in that respect.
However, we are debating this Recommittal Motion. I restate my belief that Parliament is not well served by conducting its business in this way, and I hope that this is the last year we shall get into such a muddle.
Mr. Amory: Since the right hon. Gentleman spoke, I have not had time to analyse in detail the Amendments and new Clauses, but I am still of the opinion that the majority of those put down by the Government are the result of, and stem from, considerations during the Committee stage. We tried to put them down in as good time as we could, and most of them have been down for some days. In view of the harmonious proceedings that we have had so far, I would have expected that, if he was dissatisfied, the right hon. Gentleman would have made his approaches to me and not have waited until today.
So far, we have got through our business on the Bill with reasonable despatch and in reasonable time. I hope that we shall continue that spirit, and apply ourselves now without further expenditure of time to the formidable task—as I admit and agree that it is—that lies ahead of us.
Mr. Fletcher: The Chancellor has made a most extraordinary statement. He started by saying that he had not had time to analyse the Amendments that he has put down—
Mr. Amory: Since the right hon. Member for Huyton (Mr. H. Wilson) spoke.
Mr. Fletcher: Surely the Chancellor should have analysed them before my right hon. Friend spoke. For the right hon. Gentleman to admit that he has not analysed—
Mr. Amory: I think that the hon. Gentleman is not being reasonable.

259
What I meant by "analysing" was analysing which Amendments arise directly from our considerations in Committee, and which have been put down for other reasons. It was purely that analysis to which I was referring, and I think that every other hon. Member of the Committee was quite clear about that.
Mr. Fletcher: I am very sorry. My natural inclination is to try to be generous to the Chancellor and always to give him the benefit of the doubt, but he does not make matters very easy for me.
When the right hon. Gentleman first addressed the Committee in support of the Recommittal Motion he should have known how many of these 129 Amendments were the result of proposals made from this side, and how many resulted from other causes. We have taken the trouble to analyse these 129 Amendments and, lest there may be any misunderstanding about it, I say that the whole burden of our complaint on the Recommittal Motion is that the overwhelming majority of the 129 Amendments in the name of the Chancellor of the Exchequer do not arise as a result of constructive suggestions that we have made.
A few of them do, but the overwhelming majority of them are purely and simply the result of muddle and mismanagement and mistakes by the Chancellor and by the Treasury in the Bill they produced. Most of them flow directly from the failure of the Chancellor, the Attorney-General and his advisers to produce this Bill to Parliament in a proper form. They are the result of discoveries, at a late stage, of legal and technical Amendments that must be made by the Government to make some parts of the Bill intelligible. The whole burden of our protest is that the Chancellor and the Government are really treating the House with contempt. They are introducing a most technical and complicated Bill which has been discussed in Committee, and, at this very late stage, they have discovered that Clause after Clause is neither intelligible nor valid unless subjected to the 129 Amendments tabled for the Report stage.
We should be failing in our duty if we did not make it plain to the country that this is the kind of muddled adminis-
260
tration in which the Chancellor of the Exchequer is leading us. It makes it very difficult for the House of Commons to carry out its traditional duty of criticising the fiscal policy of the Government. What has happened? Since the Bill passed its Committee stage, the Chancellor of the Exchequer has raised the Bank Rate. He has introduced a credit squeeze. He has altered the whole fiscal policy. Now we are being asked to decide on 129 Amendments of a technical character.
To make things worse, we were asked before we knew the bulk, volume and complexity of the Amendments to try to do all this in two days. I am not surprised that the right hon. Gentleman has announced his desire to resign from his office. I have every sympathy with him. The only thing puzzling me is the curious competition between the Minister of Education and the Minister of Housing and Local Government to succeed him.
Mr. Speaker: Order. The hon. Member must remember the Motion to which he is speaking.
Sir Thomas Moore: On a point of order. Can one protest at this series of competitive speeches, even using exactly the same language as the speech made by the hon. and learned Member for Kettering (Mr. Mitchison)?
Mr. Speaker: Not quite yet. I am listening.
Mr. H. Wilson: On a point of order. Since many of the Clauses in respect of which Recommittal is being asked of the House involve administration by the Chancellor of the Exchequer, and since we have come to accept, over a period, certain assurances given by the right hon. Gentleman that he will administer these Clauses in this or that particular way, I submit to you, Mr. Speaker, that it is relevant for my hon. Friend to raise the point that at the very moment when we are being asked to recommit we do not even know who the next Chancellor of the Exchequer will be. Since it would appear relevant for my hon. Friend to say that, I wish to ask him why he confined himself to those two right hon Gentlemen—
Mr. Speaker: Order. Since I have ruled the hon. Member for Islington,

261
East (Mr. Fletcher) out of order, I cannot allow the right hon. Gentleman to go out of order rather worse on the same Motion. I am not of the opinion that succession to the Chancellorship, if any, is a matter in order on the Question before the House.
Mr. Fletcher: If that is your Ruling, Mr. Speaker, I do not intend to pursue for a moment the question of the successor to the Chancellorship, if any. I desire to say this, because it is relevant to the Recommittal Motion. I can quite understand—indeed, I can sympathise with—the desire of the Chancellor of the Exchequer to resign from the heavy burden of his office in view of the intolerable confusion which the present Finance Bill has produced.
I do not criticise the right hon. Gentleman. I sympathise with him. I quite understand his emotions and sentiments. It must have been an intolerable strain to think out, draft and table 129 Amendments to a Bill which he produced as recently as two or three months ago, knowing when he did so that under the provisions of the "Gibson Bowles Act"—I say that without any disrespect to my hon. Friend the Member for Nuneaton (Mr. Bowles)—unless the Bill was carried into law within a certain time the Resolutions which the House passed at the end of his Budget speech so that they could have the effect of law would cease to have the effect of law.
Mr. Douglas Jay: The right hon. Gentleman did not know that, either.
Mr. Fletcher: I can understand the difficulties, trials and tribulations which the right hon. Gentleman must have had to suffer in the last few months knowing that this voluminous and complex Bill with all its technicalities is based on Resolutions which will be in force for a limited time unless the House carries the Bill.
We are being asked now to rush 129 Amendments through in two days. I do not think that this is treating the House of Commons with respect. Sometimes the House is criticised in the Press for not doing its elementary duty of controlling the Government in matters of finance. I am most anxious that we
262
should fulfil our duty. I am anxious that we should not connive at complicated measures of finance being passed into law without adequate and full opportunities of discussing them.
I am appalled at the suggestion that the right hon. Gentleman should come here this afternoon and propose a Recommittal Motion in the unexplained absence of the Leader of the House. No reason has been given why the Leader of the House is not here to support the Chancellor of the Exchequer and justify the extraordinary precipitousness in dealing with this complicated matter. We have a duty to the country. We know that the Chancellor is tired. We know that the Government are tired.
Further than that, we know that they are trying to camouflage their deficiencies and negligence by trying to deflect the attention of the public to other matters. It is obvious that the one serious matter on which the attention of the public ought to be concentrated at present is the deficiencnes of this Government, and notably the deficiencies and muddle of the Government in dealing with the finances of this country and not having any coherent fiscal policy.
Mr. Speaker: Order. I must rely on the hon. Gentleman's discretion to remain within the rules of order.
Mr. Fletcher: I apologise, Mr. Speaker, if I am carried away. If I am carried away, it is only because I feel so strongly that it is in the interests of the country to resist the Recommittal Motion. I resist the Motion because I think that it is typical of the conduct of the Government. It is the kind of thing which this country, if well informed, would want to condemn tooth and nail, because it is symbolic—
Mr. Nabarro: It is intolerable.
Mr. Fletcher: It is not only intolerable. It is symbolic of the methods to which the Government have descended.
Mr. Nabarro:Not treating the House with respect.
Mr. Fletcher: It is symbolic of their attitude in trying to put through complicated fiscal legislation of this kind in a great rush and trying to pretend that these matters are so technical that they

263
do not bear examination. Having presented the Finance Bill in April, on 5th July the right hon. Gentleman comes forward in a white sheet, without a glimmer of excuse, without the support of the Leader of the House, with the tentative support of the Attorney-General in a very belated manner, and moves this Motion.
For the right hon. Gentleman, now on the eve of his resignation, with which we all sympathise, to put forward this preposterous plan and ask the House to carry it through in a day and a half is typical of the depths to which the Government will sink. I hope that the House will reject the Motion as a condemnation of the total inadequacy of the Government to look after the fiscal affairs of the country.
Mr. George Wigg: On a point of order. I would not have intervened in the debate had it not been for the running stream of comments from the hon. Member for Kidderminster (Mr. Nabarro).
Mr. Speaker: That is not in order on this Question. Perhaps the hon. Member will get on to something else.
Mr. Wigg: With respect, if it is in order for the hon. Member for Kidderminster to utter those comments without comment from the Chair, it is at least equally in order for me to comment on them.
Mr. Speaker: I did not hear them. There are some hon. Members who seem to find it difficult to listen, but I should be obliged if the hon. Member will confine himself to the Recommittal Motion.
Mr. Wigg: Needless to say, I will adhere to your direction, Mr. Speaker. But I must point out that the hon. Member for Kidderminster does not exactly whisper. I can only note with regret that the more offensive of his comments escaped your attention. It is not only what he said, but what he did. I understood that it was a requirement of the customs of the House that an hon. Member should take his place and keep it, but the hon. Gentleman, to my observation, has sat in one place and then another, twice he went out and then returned to his seat—
Mr. Speaker: I still have difficulty in relating the peregrinations of the hon.
264
Member for Kidderminster (Mr. Nabarro) to the Motion.
Mr. Wigg: These remarks, Mr. Speaker, are directed to points of order both in relation to what the hon. Member said and what he did, although both may have escaped your notice.
One can understand that the hon. Member for Kidderminster is in a mood of joy today because he has been elected one of the best dressed men of the year. I congratulate him, but for one awful moment I noticed a hole in his sock. He must be careful. I congratulate the hon. Member today because, a year ago, he spent a great deal of time and money on it but he was pipped at the post by the President of the Board of Trade. I can never understand just—
Mr. Speaker: I am very sorry but, although I have many responsibilities in the Chair, I cannot yet follow why this is a point of order.
Mr. Wigg: I have now left the point of order, Sir, and I was coming on to my general remarks.
The hon. Member for Kidderminster failed last year to achieve what is, after all, his lifelong ambition, to be a tailor's dummy. The President of the Board of Trade succeeded. I presume that both are now candidates to become Chancellor of the Exchequer. It is only right to point out that they need one qualification for that office which a tailor's dummy does not need, that is to say, integrity.
Mr. Fletcher: And intelligence.
Mr Wigg: Yes, and intelligence.
If the hon. Member for Kidderminster had possessed both those qualifications, he would have come to the House of Commons today and not sat there making offensive remarks at my hon. Friends but would have risen to his feet and expressed the concern which any hon. Member should feel about the rights of the House of Commons. The procedure which the Government are forcing through today is an offence against the rights of the House. This kind of thing is happening week by week and month by month. The rights of hon. Members are being whittled away. The whole thing is treated as a piece of buffoonery. Nothing is reported about it. But, in the times in which we

265
live, democracy is on trial, and today it has received another blow.
5.0 p.m.
If there was one task which I should have expected the hon. Member for Kidderminster to show concern about, it would be the watch-dog function of the House of Commons over finance. The procedures which the Government have produced today are a travesty, and I am sure that the Patronage Secretary, for whom I have great respect, ought, before he goes to sleep tonight, to have a look at the precedent which he is establishing today. Although we understand that the Chancellor is not to be with us much longer, he surely is concerned for the rights of the House of Commons and its privileges, and I should have thought that the wisest thing would be for the Government to agree to accept a Motion for the Adjournment of the House, to think again, and do the job in accordance with our ancient traditions.
Mr. H. Wilson: The last thing the Patronage Secretary can hope to do is to go to sleep tonight.
I do not want to prolong the debate unduly, but I wish to express agreement with what my hon. Friend the Member for Dudley (Mr. Wigg) has just said.
Mr. Nabarro: About the hole in my sock?
Mr. Wilson: No, about the levity with which some hon. Members opposite treat what is a very serious matter affecting the rights of the House and of hon. Members. I ask right hon. and hon. Members opposite what their attitude would have been if a Labour Chancellor, ten years ago, had come to the House of Commons at the Report stage with 129 Amendments after an unprecedented number of re-thinks, changes of view and changes of drafting in Committee. Of course, they would have kept the House up all night, night after night dealing with the thing. Now, we have a situation where hon. Members opposite—I am not referring just to the buffooning of the hon. Member for Kidderminister (Mr. Nabarro) who has just walked out, but to others from whom we should expect a rather more serious approach—treat the matter before us this afternoon quite lightly. We have had no protest from hon. Members on the benches opposite.
266
Another thing to which attention should be drawn is the fact that the Leader of the House has not seen fit to be here for this important debate. He should have been here for two reasons. First, he represents the House as a whole and he should be concerned about the rights of hon. Members in all parts of it. Secondly, he has a very real responsibility for the planning of the Parliamentary timetable. It is he who tells us each week what is to be debated next week. He must bear a very heavy responsibility. He had enough power, if he wanted to use it, to tell the Chancellor that he was not standing for this. He had enough power, if he wanted to use it, when he saw what was happening, to get the Chancellor and the Attorney-General and bang their heads together at an earlier stage to induce them to produce something reasonable earlier in the year to enable the House to deal with it properly. Apparently, the right hon. Gentleman has such scant regard for his duties that he feels it necessary neither to be here nor to send an apology or an adequate explanation for his absence.
We understand that Ministers sometimes have to be elsewhere, but we have today been debating one of the fundamental issues in the control of the House of Commons over the Executive and over finance. Also, we have been holding the Government to account for what has been an unprecedented muddle in the drafting of the Finance Bill. I should have thought that the Chancellor or someone would have told us when, in past years, we have a Finance Bill which had so many Amendments of this character. Of course, the answer probably is that there has never been one in all history.
Where do the Government think they are going in the matter of the timetable? We are asked to recommit. I suggest that Recommittal involves the reconsideration of a great number of Clauses. If we decide not to recommit, we shall be able to make faster progress and deal with the Report stage properly. My hon. Friend the Member for Islington, East (Mr. Fletcher) referred to the Provisional Collection of Taxes Act, 1913. All of us know that this Bill has to receive the Royal Assent within four months of the Budget day Resolutions. Budget day was

267
4th April. This means that by 4th August the Bill must have gone through all its stages.
By convention and custom over many years, it has been usual for the Finance Bill to be in another place for one month before the four months elapse. I know that during the last year or two the Government have fallen down badly on that, but, nevertheless, we are here asked to arrogate to ourselves the right to hold up the Bill still further by this unnecessary recommittal purely because the Chancellor failed to discover earlier that he needed all these Amendments or, if he did discover it, because the Attorney-General was a little unproductive and lethargic in producing the drafts required.
We are entitled to know, before we take this step and recommit, when the Chancellor knew that all these Amendments were necessary. Did he know at the time of the Committee stage? He has tried to spin the yarn about the Amendments being due to assurances he had given. When he was pressed about this, he said that he thought that the Committee would want him to improve the Bill and he now says that all these Amendments are designed to improve it. Did anyone think that the Chancellor would put down Amendments designed to worsen the Bill? Obviously, he put them down because he thought he would improve the Bill.
Whose Bill is it that the Chancellor wants to improve? It is his own. He has had many opportunities at every stage to ensure that the Bill would be in an adequate state for consideration by the House. After all, he had six months between the election and Budget day to consider what he wanted to introduce in the House, and between Budget day and the presenting of the Finance Bill he had a lot more time. Why has he taken all this time to decide what is the appropriate form of words?
Apart from the new Clauses, the Bill completed its Committee stage before the Whitsun Recess. Was it or was it not then clear to the Chancellor that all these Amendments would be needed? If it was clear, why did the Leader of the House propose that we should take a fortnight off at Whitsun so that hon. Members opposite could go to Ascot?
268
I except from my remarks here my right hon. Friend the Member for South Shields (Mr. Ede). We all know of his long service and we are all prepared to exempt him on special occasions of that kind. I know something of what my right hon. Friend did at that time, and we had a long discussion about it But, in order that hon. Members opposite could get that week off to go to Ascot, we have had to rush the concluding stages of the Bill so that the provisions of the Provisional Collection of Taxes Act, 1913, could be honoured. The co-operation on the Bill has been unique in the history of Finance Bills. Time after time we withdrew Amendments during the Committee stage. Time after time I asked my hon. Friends not to pursue a particular point so that we could make progress with the Bill. In spite of all that and after agreeing that we would try to complete the Report stage in two days, we are faced with this activity on the part of the Chancellor.
Why could not the right hon. Gentleman have made it clear to the House before the Whitsun Recess that this would be the position? If he had, I am sure that a different attitude would have been adopted towards the extra week which the Patronage Secretary gave to hon. Members opposite.
Mr. Ellis Smith: Throughout the passages of Erskine May dealing with the Finance Bill it is made clear that the House of Commons is the supreme authority for dealing with matters of finance. I should like to ask my right hon. Friend whether there has been adequate consultation on the Bill. If he accepts my premise with regard to past practice in the House, should not there have been consultation so that adequate time could be provided for a reasoned consideration of the Bill?
Mr. Wilson: My hon. Friend is very suspicious about consultations on adequate time being given to the Bill. I want to tell him straight away that, so far as I am aware, there has been no consultation between the two sides of the House about the content of the Notice Paper. There were consultations in which we indicated the hope that we could complete the Report stage in two days, but that was on the assumption that normal time would be allowed to debate the Amendments which we tabled

269
and any other Amendments. It was never understood and nor were we at any time given any indication that we would be faced with an unprecedentedly heavy Notice Paper on Recommital and the Report stage.
I do not wish to detain the House any further. In view of the highly unsatisfactory procedure which has been followed and the utter failure of the Government to be able to produce a Bill drafted in such a way that it could stand up even to their own rather uncritical examination for more than a fortnight at a time, in view of the discourtesy shown to the House by the Leader of the House in not being
present, and in view of our concern to assert the rights of the House as a whole and of hon. Members on both sides of the House individually over matters of finance, we intend to oppose the Motion.
Mr. Wigg: On a point of order. I made a slip when I said that the hon. Member for Kidderminster (Mr. Nabarro) was beaten in 1959 in a race for the rôle of tailor's dummy by the President of the Board of Trade. I was wrong. It was the Minister of Education.
Original Question, as amended, put:—
The House divided: Ayes 256, Noes 185.

Division No. 128.]

AYES

[5.13 p.m.

Aitken, W. T.

de Ferranti, Basil

Irvine, Bryant Godman (Rye)

Allan, Robert (Paddington, S.)

Donaldson, Cmdr. C. E. M.

Jackson, John

Allason, James

Drayson, G. B.

James, David

Alport, Rt. Hon. C. J. M.

Duncan, Sir James

Jenkins, Robert (Dulwich)

Amory,Rt.Hn.D.Heathcoat(Tiv'tn)

Eden, John

Johnson, Dr. Donald (Carlisle)

Arbuthnot, John

Elliott, R. W.

Johnson, Eric (Blackley)

Atkins, Humphrey

Emery, Peter

Johnson Smith, Geoffrey

Balniel, Lord

Emmet, Hon. Mrs. Evelyn

Jones, Rt. Hn. Aubrey (Hall Green)

Barber, Anthony

Farey-Jones, F. W.

Joseph, Sir Keith

Barlow, Sir John

Fell, Anthony

Kerans, Cdr. J. S.

Barter, John

Finlay, Graeme

Kerby, Capt. Henry

Batsford, Brian

Fisher, Nigel

Kerr, Sir Hamilton

Baxter, Sir Beverley (Southgate)

Fletcher-Cooke, Charles

Kershaw, Anthony

Beamish, Col. Tufton

Forrest, George

Kirk, Peter

Bennett, Dr. Reginald (Gos & Fhm)

Fraser, Hn. Hugh(Stafford & Stone)

Kitson, Timothy

Berkeley, Humphry

Fraser, Ian (Plymouth, Sutton)

Lagden, Godfrey

Bevins, Rt. Hon. Reginald (Toxteth)

Galbraith, Hon. T. G. D.

Leavey, J. A.

Bidgood, John C.

Gammans, Lady

Leburn, Gilmour

Biggs-Davison, John

Gardner, Edward

Lilley, F. J. P.

Bingham, R. M.

George, J. C. (Pollok)

Lindsay, Martin

Birch, Rt. Hon. Nigel

Glover, Sir Douglas

Linstead, Sir Hugh

Bishop, F. P.

Glyn, Sir Richard (Dorset, N.)

Litchfield, Capt. John

Bossom, Clive

Goodhew, Victor

Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

Bourne-Arton, A.

Gower, Raymond

Longbottom, Charles

Box, Donald

Grant, Rt. Hon. William(Woodside)

Longden, Gilbert

Boyle, Sir Edward

Green, Alan

Loveys, Walter H.

Braine, Bernard

Grimston, Sir Robert

Low, Rt. Hon. Sir Toby

Brewis, John

Hall, John (Wycombe)

Lucas-Tooth, Sir Hugh

Browne, Percy (Torrington)

Hamilton, Michael (Wellingborough)

McAdden, Stephen

Bryan, Paul

Harris, Frederic (Croydon, N.W.)

MacArthur, Ian

Bullard, Denys

Harris, Reader (Heston)

McLaren, Martin

Butcher, Sir Herbert

Harrison, Brian (Maldon)

McLaughlin, Mrs. Patricia

Campbell, Sir David (Belfast, S.)

Harrison, Col. J. H. (Eye)

Maclay, Rt. Hon. John

Carr, Compton (Barons Court)

Harvey, Sir Arthur Vere (Macclesf'd)

Maclean, Sir Fitzroy(Bute&N.Ayrs.)

Carr, Robert (Mitcham)

Harvey, John (Walthamstowe, E.)

McLean, Neil (Inverness)

Cary, Sir Robert

Harvie Anderson, Miss

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

Channon, H. P. G

Hay, John

MacLeod, John (Ross & Cromarty)

Chataway, Christopher

Heald, Rt. Hon. Sir Lionel

McMaster, Stanley R.

Chichester-Clark, R.

Henderson, John (Cathcart)

Macmillan, Maurice (Halifax)

Clarke, Brig. Terence (Portsmth, W.)

Hendry, Forbes

Macpherson, Niall (Dumfries)

Cole, Norman

Hicks Beach, Maj. W.

Maddan, Martin

Collard, Richard

Hiley, Joseph

Maginnis, John E.

Cooper, Robert

Hill, Dr. Rt. Hon. Charles (Luton)

Maitland, Cdr. Sir John

Cooper, A. E.

Hill, J. E. B. (S. Norfolk)

Manningham-Buller, Rt. Hn. Sir R.

Cooper-Key, Sir Neill

Hinchingbrooke, Viscount

Markham, Major Sir Frank

Cordeaux, Lt.-Col. J. K.

Hirst, Geoffrey

Marples, Rt. Hon. Ernest

Cordle, John

Hobson, John

Marshall, Douglas

Corfield, F. V.

Hocking, Philip N.

Marten, Neil

Costain, A. P.

Holland, Philip

Mathew, Robert (Honiton)

Courtney, Cdr. Anthony

Hope, Rt. Hon. Lord John

Matthews, Gordon (Meriden)

Craddock, Sir Beresford

Hopkins, Alan

Maudling, Rt. Hon. Reginald

Critchley, Julian

Howard, Gerald (Cambridgeshire)

Mawby, Ray

Crosthwaite-Eyre, Col. O. E.

Howard, John (Southampton, Test)

Mills, Stratton

Cunningham, Knox

Hughes Hallett, Vice-Admiral John

Molson, Rt. Hon. Hugh

Dalkeith, Earl of

Hughes-Young, Michael

Montgomery, Fergus

Dance, James

Hutchison, Michael Clark

Moore, Sir Thomas

d'Avigdor-Goldsmid, Sir Henry

Iremonger, T. L.

Morgan, William

Nabarro, Gerald

Roberts, Sir Peter (Heeley)

Thompson, Kenneth (Walton)

Neave, Airey

Robertson, Sir David

Thornton-Kemsley, Sir Colin

Nicholls, Harmar

Robinson, Sir Roland (Blackpool,S.)

Tiley, Arthur (Bradford, W.)

Nugent, Sir Richard

Robson Brown, Sir William

Tilney, John (Wavertree)

Oakshott, Sir Hendrie

Roots, William

Turner, Colin

Ormsby Gore, Rt. Hon. D.

Ropner, Col. Sir Leonard

Turton, Rt. Hon. R. H.

Osborne, John (Hallam)

Royle, Anthony (Richmond, Surrey)

Tweedsmuir, Lady

Osborne, Cyril (Louth)

Scott-Hopkins, James

van Straubenzee, W. R,

Page, John (Harrow, West)

Sharples, Richard

Vane, W. M. F.

Pannell, Norman (Kirkdale)

Shaw, M.

Vaughan-Morgan, Sir John

Partridge, E.

Shepherd, William

Vickers, Miss Joan

Pearson, Frank (Clitheroe)

Simon, Sir Jocelyn

Wakefield, Edward (Derbyshire, W.)

Peel, John

Skeet, T. H. H.

Wakefield, Sir Waveil(St. M'lebone)

Percival, Ian

Smith, Dudley(Br'ntf'rd & Chiswiok)

Walker-Smith, Rt. Hon. Derek

Pickthorn, Sir Kenneth

Smithers, Peter

Wall, Patrick

Pike, Miss Mervyn

Smyth,Brig. Sir John (Norwood)

Ward, Dame Irene (Tynemouth)

Pilkington, Capt. Richard

Spearman, Sir Alexander

Watkinson, Rt. Hon. Harold

Pitman, I. J.

Speir, Rupert

Watts, James

Pitt, Miss Edith

Stevens, Geoffrey

Wells, John (Maidstone)

Powell, J. Enoch

Steward, Harold (Stockport, S.)

Whitelaw, William

Price, David (Eastleigh)

Storey, Sir Samuel

Williams, Dudley (Exeter)

Prior-Palmer, Brig. Sir Otho

Studholme, Sir Henry

Williams, Paul (Sunderland, S.)

Proudfoot, Wilfred

Summers, Sir Spencer (Aylesbury)

Wills, Sir Gerald (Bridgwater)

Rawlinson, Peter

Tapselt, Peter

Wise, A. R.

Redmayne, Rt. Hon. Martin

Taylor, Sir Charles (Eastbourne)

Woodhouse, C. M.

Rees, Hugh

Taylor, W. J. (Bradford, N.)

Woodnutt, Mark

Rees-Davies, W. R.

Thatcher, Mrs. Margaret

Renton, David

Thomas, Leslie (Canterbury)

TELLERS FOR THE AYES:

Ridley, Hon. Nicholas

Thomas, Peter (Conway)

Mr. Brooman-White and Mr. Noble.

NOES

Abse, Leo

Grimond, J.

Mellish, R. J.

Ainsley, William

Gunter, Ray

Mendelson, J. J.

Albu, Austen

Hale, Leslie (Oldham, W.)

Millan, Bruce

Allaun, Frank (Salford, E.)

Hall, Rt. Hn. Glenvil (Colne Valley)

Mitchison, G. R.

Awbery, Stan

Hamilton, William (West Fife)

Monslow, Walter

Bacon, Miss Alice

Hannan, William

Moody, A. S.

Baxter, William (Stirlingshire, W.)

Hart, Mrs. Judith

Morris, John

Benson, Sir George

Hayman, F. H.

Moyle, Arthur

Boardman, H.

Healey, Denis

Mulley, Frederick

Bowden, Herbert W. (Leics. S.W.)

Henderson, Rt.Hn. Arthur (Rwly Regis)

Neal, Harold

Bowles, Frank

Herbison, Miss Margaret

Noel-Baker, Rt. Hn. Philip (Derby, S.)

Boyden, James

Hilton, A. V.

Oliver, G. H.

Braddock, Mrs. E. M.

Holman, Percy

Oswald, Thomas

Brown, Rt. Hon. George (Belper)

Holt, Arthur

Owen, Will

Brown, Thomas (Ince)

Houghton, Douglas

Pannell, Charles (Leeds, W.)

Butler, Herbert (Hackney, C.)

Hoy, James H.

Parkin, B. T. (Paddington, N.)

Butler, Mrs. Joyce (Wood Green)

Hughes, Cledwyn (Anglesey)

Paton, John

Callaghan, James

Hunter, A. E.

Pavitt, Laurence

Castle, Mrs. Barbara

Hynd, H. (Accrington)

Pearson, Arthur (Pontypridd)

Chapman, Donald

Hynd, John (Attercliffe)

Peart, Frederick

Cliffe, Michael

Irvine, A. J. (Edge Hill)

Pentland, Norman

Craddock, George (Bradford, S.)

Irving, Sydney (Dartford)

Price, J. T. (Westhoughton)

Cronin, John

Janner, Barnett

Probert, Arthur

Crosland, Anthony

Jay, Rt. Hon. Douglas

Pursey, Cmdr. Harry

Cullen, Mrs. Alice

Jenkins, Roy (Stechford)

Randall, Harry

Davies, G. Elfed (Rhondda, E.)

Johnson, Carol (Lewisham, S.)

Reid, William

Davies, Harold (Leek)

Johnston, Douglas (Paisley)

Reynolds, G. W.

Davies, Ifor (Gower)

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

Roberts, Goronwy (Caernarvon)

Deer, George

Jones, Dan (Burnley)

Robinson, Kenneth (St. Pancras, N.)

Delargy, Hugh

Jones, Jack (Rotherham)

Ross, William

Dempsey, James

Jones, J. Idwal (Wrexham)

Royle, Charles (Salford, West)

Diamond, John

Jones, T. W. (Merioneth)

Shinwell, Rt. Hon. E.

Dodds, Norman

Kelley, Richard

Short, Edward

Donnelly, Desmond

Kenyon, Clifford

Silverman, Julius (Aston)

Ede, Rt. Hon. Chuter

Key, Rt. Hon. C. W.

Silverman, Sydney (Nelson)

Edelman, Maurice

King, Dr. Horace

Skeffington, Arthur

Edwards, Rt. Hon. Ness (Caerphilly)

Ledger, Ron

Slater, Mrs. Harriet (Stoke, N.)

Edwards, Robert (Bilston)

Lee, Frederick (Newton)

Slater, Joseph (Sedgefield)

Edwards, Walter (Stepney)

Lever, L. M. (Ardwick)

Small, William

Evans, Albert

Lipton, Marcus

Smith, Ellis (Stoke, S.)

Fitch, Alan

Logan, David

Snow, Julian

Fletcher, Eric

Mabon, Dr. J. Dickson

Soskioe, Rt. Hon. Sir Frank

Foot, Dingle

McCann, John

Spriggs, Leslie

Forman, J. C.

MacColl, James

Steele, Thomas

Fraser, Thomas (Hamilton)

McInnes, James

Stonehouse, John

Gaitskell, Rt. Hon. Hugh

McKay, John (Wallsend)

Stones, William

Galpern, Sir Myer

Mahon, Simon

Summerskill, Dr. Rt. Hon. Edith

Ginsberg, David

Mallalieu, E. L. (Brigg)

Swain, Thomas

Gordon Walker, Rt. Hon. P. C.

Manuel, A. C.

Swingler, Stephen

Gourlay, Harry

Mapp, Charles

Sylvester, George

Grey, Charles

Marsh, Richard

Taylor, Bernard (Mansfield)

Griffiths, Rt. Hon. James (Llanelly)

Mason, Roy

Taylor, John (West Lothian)

Griffiths, W. (Exchange)

Mayhew, Christopher

Thomas, Iorwerth (Rhondda, W.)

272

273

Thompson, Dr. Alan (Dunfermline)

Wells, Percy (Faversham)

Wilson, Rt. Hon. Harold (Huyton)

Thomson, G. M. (Dundee, E.)

Wheeldon, W. E.

Winterbottom, R. E.

Timmons John

White, Mrs. Elrene

Woodburn, Rt. Hon. A.

Tomney, Frank

Whitlook, William

Woof, Robert

Ungoed-Thomas, Sir Lynn

Wigg, George

Yates, Victor (Ladywood)

Wade, Donald

Willey, Frederick

Zilliaous, K

Wainwright, Edwin

Williams, D. J. (Neath)

Warbey, William

Williams, Rev. LI. (Abertillery)

TELLERS FOR THE NOES:

Watkins, Tudor

Williams, W. R. (Openshaw)

Mr. Lawson and Mr. Redhead.

Weitzman, David

Willis, E. G. (Edinburgh, E.)

Bill immediately considered in Committee.
[Sir GORDON TOUCHE in the Chair]

Clause 19.—(RESTRICTION OF RELIEF FOR LOSSES.)
Mr. Amory: I beg to move, in page 14, line 3, at the end to insert:
The foregoing provisions of this subsection shall apply to allowances under Part X (except Chapter IV thereof) or Part XI of the Act of 1952 in respect of expenditure incurred after the fifth day of April, nineteen hundred and sixty, as they apply to losses.
When the Clause was considered in Committee, I was asked questions on the proposals as they affected capital allowances. The object of the Amendment is to make it clear beyond question that in relation to subsection (2) capital allowances will be dealt with in the same way as losses. Section 20 of the Finance Act. 1953, provided that where one company in a group made a loss and another company in the group made a profit the loss of the other company could be set off against a subvention payment made by the company making a profit. Subsection (2) of the Clause provides that hobby losses incurred by a company shall be disregarded in such a computation.
Section 20 of the 1953 Act deals with losses and capital allowances separately. For greater clarity, it has been thought well to introduce the Amendment to make it clear that the provisions of subsection (2) follow those of subsection (1) of the Clause and that capital allowances will there be dealt with in the same way as losses are provided for.
Mr. Diamond: Two points immediately come to mind. One understands what the Chancellor of the Exchequer has said. First, he has said that he wants subsection (2) to permit the same waste of revenue as subsection (1) permits inasmuch as those who are adjudged hobby traders, mainly hobby farmers, although they are accepted and
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regarded and declared to be hobby traders, should be allowed to recoup from the Revenue in the future tax in respect of equipment purchased prior to the commencement of the operation of the Bill in so far as that equipment has not been wholly allowed by way of capital allowances against taxable profits and for tax purposes.
Therefore, we are back on the same regrettable principle—quite logically, as far as the Chancellor is concerned—of having machinery whereby we establish that certain individuals are not really trading and should not, therefore, be thought to be trading and to get advantages from that for tax purposes; yet nevertheless, having reached that conclusion, we adjudge that they shall be entitled to a certain element of benefit notwithstanding that it is in respect of something which occurred prior to the operation of the Bill.
I can only repeat what was said on the Clause by many of my hon. Friends in Committee—I dare say I even said it myself: that this is a most regrettable principle to follow. It would not be retrospective in any sense to say that as from the date of the operation of the Bill, unallowed capital expenditure of hobby farmers shall be treated for tax purposes according to the wishes of the House of Commons: namely, that a person who is a hobby farmer should get no benefit.
Mr. Leslie Hale: Does this mean that if I start growing cucumbers I can now get a tax allowance on my lawn mower?
Mr. Diamond: It means that if my hon. Friend starts selling his cucumbers to the extent of two small cucumbers a year—sufficient to establish that he is carrying on a business—and he is clearly not carrying it on seriously with a view to making a profit but with a view to growing the odd cucumber for his own enjoyment and as a hobby and

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to satisfy all sorts of curious psychological urges—I make no connection between the cucumber and the psychological urges —he will be perfectly entitled in future to claim for the expensive lawn mower which he bought in the past and which has not been entirely written down to nothing for tax purposes and shall continue to have capital allowances set against the rest of his income as a Member of Parliament, as a solicitor and as a holder of investments of some kind or another, notwithstanding that he is carrying on purely a hobby.
Mr. Hale: I am much obliged.
Mr. Diamond: In case my hon. Friend was not present throughout the whole of our Committee proceedings from the beginning to the bitter end, I should explain —I am sure that my hon. Friend would not so recognise it if I did not explain—that this is part of a Bill which seeks to stop tax avoidance. It is not part of a Bill which seeks to encourage and endorse tax avoidance. It is, theoretically, a Bill which is devoted entirely to the opposite purpose. Therefore, although one recognises immediately the logic of the Chancellor's argument in introducing the same kind of provision for subvention payments under subsection (2) as there was for ordinary trading under subsection (1), one regrets the principle behind both those subsections.
My second point relates to the discussions that we have had. My recollection may be at fault, but I do not recollect that during Committee we discussed subvention payments at all.
Mr. Amory: I thought I remembered mentioning them myself. I will, however, check on that.
Mr. Diamond: The Chancellor certainly may have mentioned them himself, although I do not recollect it. It may have been a short reference. Certainly, my impression was that we did not discuss them in the sense that any Amendment was put down to deal with subvention payments and as far as I am aware, subsection (2) escaped discussion completely.
5.30 p.m.
The reason why I mention all this is that we are invited to believe that this Amendment, and not necessarily this Amendment but the majority of Amend
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ments that we are to discuss, arises out of consideration in Committee. My very sincere and fairly firm recollection is that not one hon. Member on either side of the Committee raised a point at all on this subsection. This would not mean that they did not raise points on other Amendments and other Clauses. I am dealing with this particular one as it is the first to be considered by us immediately after Recommittal of the Bill.
Mr. Amory: I think several of my hon. Friends asked me the question as to exactly the treatment to be given to capital allowances under this Clause.
Mr. Diamond: I accept what the Chancellor says. That may very well have taken place. That is proving the point that I am leading up to.
This is an Amendment introduced on second thoughts to improve the Bill. Had there been adequate time to give the matter the fullest consideration, this Amendment would have been introduced into the Bill originally. Quite obviously, this is the kind of Amendment we see when we have looked at the Bill and seen that we have made a certain provision under subsection (1) and that there should be the same provision in subsection (2). It is certainly wise to have second thoughts and that the second thoughts should be incorporated in the Bill, but it is even wiser that they should be incorporated in the Bill in the first place.
I am making this point only because it is typical of what I think we shall see as we go through the Amendments. This is one of the enormous number of Amendments which arise in one of these two ways. Either it is second thoughts or, as we shall see, it is a further attempt to stop up loopholes which are capable of being stopped up in the unsatisfactory way which the Government are proposing to stop them up, because, as they may recollect, there was reference once or twice during the Committee stage to the position where there is an inadequate structure of taxation under which too limited a form of income is accepted as the basis of our tax system.
It is for these two reasons that we now have this further Amendment which, as the Chancellor says, follows the logic of his earlier subsection, and it has to that extent made the Clause clearer and

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the intention of the Government more readily understood. It makes it perfectly obvious that they are prepared to deal with the hobby farmer, or any other tax avoider, with kid gloves, but only with kid gloves.
Mr. Mitchison: May I ask the Chancellor two questions? I have been looking at the record and I find it difficult to see to what precise observation this Amendment is directed. No doubt there is something somewhere.
Mr. Amory: Not precise observation.
Mr. Mitchison: I am not clear whether this Amendment does or does not fall within the class of Amendments that arise out of discussion in Committee. So far it seems that it does not fall in that class., and the matter, raised by my hon. Friend the Member for Gloucester (Mr. Diamond) is, therefore, of some slight importance.
The two questions are these. First, does this Amendment make any difference? I am not clear from what the Chancellor said whether this Amendment added substantially to the provisions of the Bill or whether it was intended to clarify a doubtful position. If it is the latter, I take it that what is really happening in connection with this Amendment is that the Government drafted this part of the Bill in a hurry and want to make it clearer. Perhaps we could be told whether it is adding anything or whether it is merely a clarifying Amendment.
Secondly, I note that it includes the part of the 1952 Act which relates to scientific research but it does not include allowances on agricultural buildings which are specifically excepted. The position then is this: that while expenditure on, say, a tractor or other agricultural machinery is to be treated in one way, expenditure on agricultural buildings is to be treated in another way and is, in fact so far as this Amendment goes to continue to be allowed to the hobby farmer. All I can say about that—and we have put no Amendment down to this Clause—is that it seems to me, as indeed it did in Committee, quite illogical that expenditure on farm machinery and expenditure on agricultural buildings, on the assumption that the taxpayer is not a real farmer, if I may put it that way, should be treated differently for this purpose.
Mr. Amory: In reply to the hon. and learned Member for Kettering (Mr. Mitchison), the answer to the first question is that the introduction of this Amendment does not alter the provisions in any way. It is for greater clarity. Our attention was called to the need for that by some of the questions asked by my hon. Friends, who urged me to make it clear beyond doubt how we would deal with capital allowances.
The answer to the second question which the hon. and learned Gentleman asked is that this makes no difference at all to the treatment which we explained and recommended and which the Committee adopted as regards capital expenditure on agricultural buildings as against equipment. For the reasons which we gave in Committee, we felt it reasonable that agricultural buildings should be exempted from the measures which we were proposing to apply to equipment, because we felt that, in general, expenditure on new agricultural buildings was likely to be of value in the long term.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 20.—(SALE OF SHARES IN CERTAIN TRADING COMPANIES.)
The Economic Secretary to the Treasury (Mr. Anthony Barber): I beg to move, in page 16, line 12, after "thereto" to insert:
"and the said sale was not of all the issued shares".
The Committee will be pleased to know that this Amendment relates to a series of precise observations made by the hon. Member for Glasgow, Craigton (Mr. Millan), who put forward a suggestion in Committee which I agreed to consider. Although he will be fully aware of the implications of this, perhaps I should tell the Committee the way the sale of the shares is caught by this Clause. The notional profit of the company is derived, where the sale is of shares in the company all of one class, from the consideration received for the sale of those shares. Complications arise where there are different classes of shares, and in that case provision was made for an alternative basis of computation by reference to the company's trading stock.

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The point which the hon. Member for Craigton made in Committee was that there was no reason for proceeding with this alternative basis where there was a sale of all the shares of every class, even though there are different classes of shares. We have considered this and, although I think that it is unlikely to have much practical effect, I am sure that on reflection what the hon. Gentleman said is right and that there is much to be said for the view that the basic scheme of the Clause should be followed wherever possible. That is the purpose of this Amendment.
Mr. Bruce Milian: I wish merely to thank the Economic Secretary for accepting the point which I raised earlier.
Mr. Mitchison: The Committee also appreciates the character of the Amendment. It follows exactly, but for the insertion of the word "said", an Amendment put down in the names of two of my hon. Friends. What it comes to is that, naturally, if one is to take the proper consideration for the purposes of this Clause one would take the actual consideration.
The only case where any difficulty arises is where there is a part sale and there are various kinds of shares in the company. Accordingly there is a proviso to meet that case. But it was absurd to suppose for one moment that the proviso ought to have been applied to a case where all the shares are sold whatever the respective rights of the shares may have been. This was the point which my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) raised in Committee. While we congratulate the Government on having accepted the point, we commiserate with them in having been unable to think of it first themselves.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 21.—(PROVISIONS AS TO CERTAIN BUILDING COMPANIES NOT CARRYING ON A TRADE.)
The Solicitor-General (Sir Jocelyn Simon): I beg to move, in page 17, line 24, to leave out "forms a substantial part of the value of the" and to insert:
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"or the aggregate value of that interest and any interest which the company so has at that time in any other building (not being a building completed more than six years before that time) the erection of which was carried out or secured by the company, amounts to one-fifth or more of the net".
The Committee will remember that Clause 21 applies Clause 20 to a special case of a building society whose memorandum and articles of association are so framed that it can be argued that its purpose throughout was to hold the building as an investment. Clause 21 (1) imposes a charge to tax by reason of certain sales of shares in such a company, and subsection (3) imposes a charge on the liquidation of such a company. But both apply under the Clause as drawn where the value of the interest in the building forms a substantial part of the value of the assets of the company.
Before the hon. and learned Member for Kettering (Mr. Mitchison) can say it, I accept that the point with which we are now dealing was first thought of by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). He asked what was the meaning of the words "substantial part". I said that it would vary in the consideration of the court according to the circumstances, and he drew attention to the fact that it might lead to uncertainty and difficulties in the interpretation.
I promised to consider the point and my right hon. Friend has decided that it should be met by the substitution in both Clauses 20 and 21—and we shall be dealing with Clause 20 on Report—of a definition based on a specified proportion, actually one-fifth or more, of the net assets. But once one gets away from the phrase "substantial part", which allows the court to look at the circumstances, there is the possibility that one is opening a loophole to evasion if one stops there. One might have a company which is operating on a large scale and at the critical time has more than five buildings which it can dispose of in a way at which the Clause aims. It might be in a position to maintain that not one of those buildings looked at by itself formed a substantial part of its assets. We have, therefore, dealt with that point as well, and it is because we deal with it that the matter has to be dealt with on recommittal.
It would be for the convenience of the Committee if we could discuss this

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Amendment with the following Amendments which come with it, because I have dealt with all these points in my observations: In page 17, line 26, leave out "in the building is" and insert "or interests are".
In line 22, after "building", insert:
"or any such other building as aforesaid."
In line 36, after "building" insert:
"or any such other building as aforesaid."
In page 18, line 6, leave out "formed a substantial part of the value of the" and insert:
"or the aggregate value of the interest and any interest which the company so had immediately before that time in any other building (not being a building completed more than six years before that time) the erection of which was carried out or secured by the company, amounted to one-fifth or more of the net.
In line 12, after "interest", insert "or interests".
In line 14, after "building", insert "or buildings".
The Temporary Chairman (Mr. F. Blackburn): Yes, if that meets the convenience of the Committee.
Mr. J. T. Price: I intervene to break my lance with the Solicitor-General about the way in which he dismisses the term "substantial". I am not out of sympathy with the purpose of tie Amendment, but when he says that the question of "substantial" must be construed in relation to the circumstances I understand that that, of course, also is a piece of administration, but he says that all these arguments will be referred to the lower court.
This is a favourite device of the Treasury in getting away with administrative murder in all sorts of ways. It is not sufficient to say that some learned magistrate or judge will be called upon to construe what is meant by "substantial". Before any matter becomes the subject of any kind of litigation the Revenue officers who have to make administrative decisions have to consider what they mean by "substantial". It is in the general context of Government policy to suggest in all these matters, when they are challenged from whatever quarter, that some judge will be able to construe this in a fair and judicial manner, but before a judge is called upon to do so some functionary of a
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Department will be called upon to construe it.
5.45 p.m.
It is not in relation only to these matters that I raise my voice mildly in protest. In the generality of cases there is a tendency for a highly-placed Minister of the Crown to dismiss the fact that power is given to administrators in Government Departments to construe these things. Whilst one must have common sense and a sense of balance in all these matters, to give such wide discretion very often to people called upon to administer very weighty problems is a highly dangerous thing for Parliament to do. I rose to say that and have said it in perhaps a more elaborate way than I had thought of doing so, but it wants saying frequently that we are not entitled to assume that these matters will go in the majority of cases to judges. They will go to functionaries in Government Departments who will use discretion in an arbitrary manner.
Mr. Geoffrey Stevens: It was with a view to eliminating uncertainty and administrative difficulties that in Committee I suggested that "substantial" is a word that can be interpreted by different people in different ways in different circumstances, and I am grateful to my hon. and learned Friend the Solicitor-General for providing more definite words which will have that very result so that there will be less difficulty in administering these cases.
Mr. Diamond: This is a very valid point indeed. The hon. Member for Portsmouth, Langstone (Mr. Stevens), who everybody knows is a chartered accountant, thought of this point because, of course, if the Government think that tax will be collected by process of going to court they clearly have an utterly incomplete idea of the way in which the matter works. If people have to go to court on more than a very tiny fraction of the cases involved, the tax collecting machine will come to a full stop.
This is why I welcome the hon. Member's suggestion that it should be possible far a difficult point to be cleared as between the taxpayer or his agents and the inspector of taxes through knowing what it is that Parliament had in mind and not having to go to the extent in

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many cases of resorting to the courts and having the courts decide what is or what is not the meaning of "substantial" and, what is even worse, having the threat of going to law which the Revenue can afford and which the taxpayer mostly cannot. This threat of going to law over the taxpayer or his agents serves to get an unfair advantage in the transaction. Therefore, I welcome the suggestion made by the hon. Member for Langstone, and I am sure that the Government have been wise to adopt it.
I think it is a very acceptable definition of "substantial". I was afraid that there might be some argument in some quarters of the Committee that the figure was too low. However, I think it is the right figure. I am sure that the Amendment will prove acceptable to the Committee.
Mr. Mitchison: Like my hon. Friend the Member for Gloucester (Mr. Diamond), I might have felt a little doubtful about the figure, but not, I think, in anti-avoidance legislation.
This is a hybrid Amendment. Part of it comes, it is true, from the discussions in Committee—almost the first clear case that we have had, although I think there was one other. The second part does not. The point was always there as to whether one was to count in "any other building" in deciding whether it was a substantial part or one-fifth part of the total. I do not see how a court could have taken "any other building" on the original language of the Clause. I should require at least three English Law Officers to convince me that the court could have done so, and there are only two.
The reason, or one of the reasons, is, I think, that when one comes to look at the other buildings which are to be taken into account, they are not other buildings in which the company has an interest. They cannot be. They are the more recently built group of buildings and have to be defined accordingly as buildings within the last six years. I feel certain that some direction of this sort was originally required to stop up a loophole in the Clause and that this is yet another case where the Government in framing tax avoidance legislation failed to cover a loophole in their own provisions and are now at the last
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moment doing so. Better late than never, and, of course, we do not object to the Amendment.
Mr. Milan: Like other hon. Members, I welcome this provision. There is one small point that the Government might consider, and that concerns net assets. Previously we have been talking about "assets", which are more easily capable of definition. We are now talking about "net assets". It would perhaps make the Clause even more precise if we inserted a definition of "net assets".
In Clause 20, in which we deal with the value of assets, various rules are laid down about the value of capital assets and so on. In this Clause we have nothing like that. I imagine that in marginal cases where the asset being disposed of was about the 20 per cent. level there might be a certain amount of difficulty if there were no precise definition of "net assets". This is not likely to happen in many cases, perhaps, but it is a point worth considering.
Amendment agreed to.
Further Amendments made: In page 17, line 26, leave out "in the building is" and insert "or interests are".
In line 33, after "building", insert:
"or any such other building as aforesaid".
In line 36, after "building", insert:
"or any such other building as aforesaid".
—[The Solicitor-General.]
Mr. Barber: I beg to move, in page 17, line 37, at the end to insert:
"or
(c) has sold or created such an interest to or in favour of any person, and the purchaser of the shares or any such associated company acquires the interest, either before the sale of the shares or after the sale in pursuance of arrangements made not later than the sale,".
The purpose of this Amendment and the next Amendment is to strengthen subsection (2) of the Clause. The subsection as drafted could apparently be avoided by the device of selling a building to an intermediary, and, being an intermediary who was not associated within the meaning of the Clause with either the vendor or the purchaser, the intermediary would then sell to the purchaser, probably taking a suitable commission for himself on the way.
The Amendment, accordingly, provides that if an interest in a building

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has been sold by a company to any person and the purchaser of the shares or his associated company subsequently acquires the interest either before the sale of the shares or after the sale in pursuance of arrangements which were made not later than the sale of the shares, subsection (1) shall still apply as if the interest in the building belonged to the company at the time when the shares were sold. This will make it impossible to deploy that sort of device. The next Amendment is consequential.
Mr. Diamond: Of course, we accept this as an improvement. There is only one question that I should like to address to the Economic Secretary. As this is an improvement in our anti-tax avoidance legislation which has occurred to the Government after thinking about the matter, and it has taken a few weeks, perhaps, or a few days to think of this, how many more such Amendments would occur to the Government if they were given further time and how many more Amendments will be found to be necessary during the course of the next 3, 6, 9 or 12 months, or before we get the next Finance Bill?
If on this occasion and every previous occasion it has been shown to be absolutely necessary as between the Second Reading and the Committee stage of the Finance Bill to have second, third or fourth thoughts on tightening up these anti-tax avoidance provisions, does it not logically follow that it will be found necessary to do that again in the future? When are we to come to a system of taxation under which this sort of non-sense is not necessary time and time again?
Mr. Mitchison: There really is point in that question by my hon. Friend the Member for Gloucester (Mr. Diamond). If the Economic Secretary is unwilling to answer in that form, perhaps I might put in another.
This is, of course, a case where a particular method of evasion was thought of, just as the previous set of Amendments showed a certain loophole. Has the Treasury a purely seasonal interest in loopholes and evasions? Is it that at this time of the year the minds of those at the Treasury are more than usually alert to the possibilities of these things,
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or do they run on month by month with fresh inspirations about avoidance or evasion flashing before them?
How comes it? Is there a department —I suppose there must be—which considers these things? Are those at the Treasury moved by the impulses of early summer particularly, or do they equally think of this kind of thing in the winter? The hon. Gentleman will see that there is a serious point in the question asked by my hon. Friend. If these things are not sufficiently thought of at the time of the preparation of the Bill and even in Committee, when the collective intellect of the Government, or at any late the financial part of it, is directed to consider these things, surely it demonstrates that we want something more than this kind of provision if we are to deal with this kind of difficulty.
Clause 21 (2, b) at present deals with the case of creating an interest in favour of "that person"—I omit the words "associated company" for the sake of simplicity. The words we are now being asked to insert deal with the creating of an interest in favour of "any person," and subsequently the purchaser of the shares acquires the interest. It must be the case, if that is so, that he need not acquire the interest from the last mentioned person in favour of whom it was created but may acquire it through a chain of people. Is that what is intended? What, in short, does "interest" mean?
6.0 p.m.
Does it mean the particular interest that was created by the company, the particular interest that rested with the person who is mentioned in line 1 of this Amendment? Or does it mean that there may be a sale or creation of interest? If it afterwards gets into the hands of the purchaser of the shares, or the associated company, do the provisions of this subsection operate? Is it intended to deal with a whole chain of people, some of whom may take the commission which aroused the not unnatural suspicions of the Solicitor-General, who saw the possibility in the circumstances? Some may resemble the aunt of the hon. Member for Basingstoke (Mr. Denzil Freeth) whom we accepted during the Committee proceedings as the typical innocent person.
Mr. Chapman: Are the Government still permanently closed to the suggestions that we have made from this side of the Committee year after year, about stopping up these loopholes? Every time we get the Chancellor of the Exchequer coming into the Committee with his Budget he tells us of loopholes. I can almost remember the words. He says: "I regret to have to inform the Committee that since I opened my last Budget ways have been found …" He then explains how various tax avoiders have discovered loopholes not only in last year's Budget but in the previous year's as well.
We then get my hon. Friend the Member for Gloucester (Mr. Diamond) saying, "I told you so. When we passed this last year I explained how we would find that this year we would have exactly these loopholes." Then the Chancellor replies: "We are absolutely certain that we have found the last loophole."
Mr. Amory: I must protest. I have never gone as far as saying that.
Mr. Chapman: The right hon. Gentleman has not done that but he has, every year, said, "We have sufficient confidence that we have stopped enough loopholes to decide not to accept the Opposition's alternative approach to this problem." Despite all that, he comes along in the following year with a few more loopholes and proceeds to stop them up. The Government have now found two loopholes which they hope this Clause will stop up. A number of us who know this type of activity are convinced that there will be more loopholes by next year. Do the Government still firmly declare that their faces are completely set against our method of approach to this problem? Are they going on stopping up loopholes every year, saying that many more millions of £s have been made in this way and that they will go on trying their method instead of our method of proceeding more generally against these evasive devices and declaring them illegal?
Mr. Barber: While I am sure the Committee is interested in what the hon. Member for Birmingham, Northfield (Mr. Chapman) has been saying, it would hardly be appropriate for me, on an Amendment of this kind, to go into the more general question of whether or not
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we should have such things as a capital gains tax.
The hon. and learned Member for Kettering (Mr. Mitchison) raised a technical point, asking what was the meaning of the word "interest" in the Amendment, and whether or not this would apply to a series of purchases, sales or transfers of property. The interest which is referred to is the interest mentioned in line 23, page 17. The hon. and learned Gentleman is correct in thinking that this would cover a series of transactions, sales and transfers.
I should point out, however—although I do not think that he personally thought this—that it would not follow that any intermediary would be in any way penalised, because the person who is charged to tax under this Clause is the person or company which sells the shares. It would apply to a series of transactions, always assuming that the sale of the interest, or the creation of the interest, was made in the words of the concluding line of the Amendment
"…in pursuance of arrangements made not later than the sale,".
In other words it could not have been affected by a series of transactions, all made for the purpose of eventually putting the interest in the hands of an ultimate purchaser.
Mr. Mitchison: That lets out the aunt unless one keeps her in the dark. What happens if one splits up the interest and then it is passed by various people, to whom it has been sold, to the company? Is that covered?
Mr. Barber: Without notice of that point, I would think that if one split it up, each part would be an interest within the meaning of these words and so, if the other conditions of the Clause were satisfied, it would be caught.
Perhaps I might make a general observation about the stopping up of loopholes. It is fair to mention that throughout the year the Inland Revenue is concerned with the avoidance devices which come to its notice. What we are concerned with here is trying to limit, or, if possible, to do away with as far as we can, the avoidance devices which might conceivably arise out of this Clause, which has not hitherto operated. It is not an easy matter. We do our best. We receive advice not only from hon.

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Members but from many other sources and we look into each possibility and deal with it as best we can.
Amendment agreed to.
Further Amendment made: In page 17, line 41, after "(b)", insert "or"(c)".—[Mr Barber.]
Mr. Barber: I beg to move, in page 17, line 44, at end to insert:
(3) Where a building has been or has begun to be erected by a company on land belonging to an associated company, and after the erection has been begun and not later than six years after its completion a person acquires control of the first company, then as respects sales to that person of shares in the company owning the land (whether effected before or after that person acquires control of the first company) the foregoing subsections shall apply as they apply to such a company as is therein mentioned but with the substitution for references to an interest in the building of references to an interest in the land.
This Amendment is designed to stop the possible way of avoiding Clause 21. The Clause applies to the sale of the shares in a company whose activities consist of or include
"… the erection or the securing of the erection of a building …"
It has been pointed out that operators could set up two companies—one to put up the building and the other to own or acquire a lease of the land on which the building is to be erected. They could then sell the shares in the building company to the ultimate purchaser at a low price, so that there would be little or no profit charged under this Clause, and then cream off profit by selling shares in the land-owning company at a high price.
The Amendment accordingly provide that, where a company within the scope of Clause 21 has put up a building on land belonging to an associated company, subsections (1) and (2) shall apply to the land-owning company as they apply to the building company. The result will be that it will not be possible by that device to avoid these provisions.
Mr. Diamond: This is a complicated matter. It may well be that what I am about to ask the Economic Secretary will be greater nonsense than what I usually say. Does the hon. Gentleman think that he has got this Amendment in the right place? He has got it after the first two subsections so as to cover trans-
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actions which they describe. However, the existing subsection deals with the avoidance of the effects of this legislation by the process of liquidation. I am concerned about whether in fact the process of liquidation is still not left as a loophole for the company which has attempted to avoid the impact of this Clause by having its land held by an associated company.
What the Amendment seeks to do is to stop up the loophole of the building company and the land-owning company being two separate entities and the profit being taken on the land-owning company as a sale. It does not deal with the liquidation of the land-owning company. One way of avoiding taxable profit on the trading transaction is to sell the shares in the company and turn it into a capital profit on the shares. Another way is to liquidate and thereby avoid a surplus which is a trading surplus liable to taxation. The Government have seen this and in their existing subsection (3) have sought to catch companies in subsections (1) and (2) which try to avoid the impact of the consequence of the Clause by liquidating. I hope I am making myself clear to the Economic Secretary.
Would it not be better for this Amendment to catch liquidation as well as the present proposed method of selling the land separately? In short, the Government have sought to stop one of the alternative methods of tax avoidance in this particular transaction, but not both. The Bill as drafted stops both where there is one company owning land and building. Should not the Government try to stop both where there are two companies, one owning land and one owning the building?
I hope that I have made that question clear and my doubts clear. The Amendment seems acceptable. It is, in the same way as the previous Amendment, second thoughts on stopping up loopholes and, of course, human beings have further thoughts and the longer they think about things, the more that is so. If only there were plenty of time to consider the matter, there would no doubt be more Amendments. If this consideration had gone on for a month instead of a week after the last stage, there would be more Amendments showing how ridiculous it is to attempt effectively to stop up loopholes in this patchwork fashion.
6.15 p.m.
Mr. Chapman: Following on what my hon. Friend the Member for Gloucester (Mr. Diamond) has just said, may I ask a question about the words "associated company"? I am not at all happy with the Amendment with these words in it, unless there is special justification for them. If someone sets out to evade the intention of the Clause in this way, then it is quite open to them to do so by an arrangement involving another company but without that company necessarily being an associated company. There is possibly an immediate loophole again created of doing it through independent companies which are not associated but which are amenable to one sort of control. I am beginning to think that this is becoming like a will-o'-the-wisp and that we will go on chasing like this. I ask for a serious reply on this issue. I am sure it is possible to manipulate this sort of transaction without the companies being associated. The whole intention of the Clause will be evaded if that is so.
Mr. Millan: I support what my hon. Friends have said. This matter was raised in Committee when we were dealing with the definition of associated companies in Clause 41. At that time, the Solicitor-General explained the term "associated companies" completely in shareholding terms. It was a question of the actual shareholding. Clause 41 says:
"…companies shall be treated as associated companies if one has control of the other or others, or any person has control of both or all of them."
The hon. and learned Gentleman said that in interpreting the word "control" one had regard purely and simply to the shareholding position.
As my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) said, it is perfectly possible for companies to be associated in a completely informal sense, therefore escaping this kind of Amendment. All that is required is two individuals or two groups of individuals, to come to some sort of an informal arrangement, one of the groups or one of the persons owning the land and the other erecting the building. There is an informal arrangement to split the difference, the tax-free profit, in one way or another.
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The Government will have to study this question of associated companies. I do not want to anticipate a later discussion, but I notice that in the Amendment to Clause 23, page 20, line 42, we have, in a different context, a very much wider definition of association in the sense that we are talking about—
"two or more persons acting together…"
to secure a certain thing. In dealing with the problem of associated companies, that is the kind of definition we want. I hope that the Government will look at this seriously. I am sure that this is one of the things about which they will come back next year and say, "Unfortunately, we have discovered one of the ways of evading what we proposed last year; it is for people to get together without any formal shareholding relationship." We do not want that to happen. It can be put right this year and I hope that the right hon. Gentleman will study our suggestions.
Mr. J. T. Price: Like my hon. Friends, I have some sympathy with the intentions of the Amendment. However, I just do not believe that it will achieve its purpose. This debate illustrates, as well as anything can, another aspect of all these manipulative operations which the Treasury has tried to stop up in one way or another. It also illustrates the rottenness of the society in which we live and the diabolical ingenuity with which highly professional people will apply their brains to defeating the purpose of the Legislature.
I draw attention to the fact that where taxation is involved and where there may be a dispute between the taxpayer and the Inland Revenue, then, I have always understood, the Statute of Limitations does not apply and there is no limit on the period over which it is possible to recover money properly due to the Treasury. However, freely to construe the Amendment, its intention is that if one company takes over another, that will not apply not later than six years after the erection of the building.
Why introduce the principle contained in the Statute of Limitations into this sort of legislation? No such limitation applies in regard to the other transactions which the right hon. Gentleman's officers have to deal with. Is this not another example of the process to which we have been objecting year after year?

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I remember, five years ago at least, drafting a very imperfect Amendment which may have been unsatisfactory in its text but which provided that if a man engaged in transactions designed to defeat the Inland Revenue and avoid tax, those transactions should be illegal acts. The Treasury has always resisted this approach to the problem.
Year after year there is the superficial appearance of a sustained effort by various Treasury Ministers to deal with this question. They stop up one loophole and set in motion the fertile brains of a lot of gentlemen in the City of London who find other loopholes by which to defeat the Treasury's purposes. The Chancellor of the Exchequer tells us that he has the best intentions, and that he wants to do a certain thing, but when he locks the pantry door to make secure the property of the Crown in order to stop these persons breaking in he always, kindly and courteously, leaves the key under the mat. These people have only to pick it up in order to open the door and go off again on next year's picnic.
We need a much more radical and fundamental approach to the problem. I hope that the Chancellor or the Solicitor-General will explain the reference to the limitation of six years. If two people in associated companies arrange tacitly between themselves certain transactions of this kind in order to defeat the Inland Revenue they will not be baulked by this provision. They will see that the matter is disclosed after six years have elapsed, when they are outside the net set by the provision. I do not see the logic behind its insertion. If a contract is made, under the ordinary provisions of the law it is still a contract whether or not it is written. It needs only to be tacit to avoid being caught by this provision. May we have some further enlightenment on this point?
Mr. Hale: It may be for the convenience of the Committee if I make my point before the Financial Secretary replies. First, I want to put in a word for the tax dodgers. I would not pay a single penny to the Government that I could not afford to pay, and I cannot see why this sort of thing should be regarded as a crime. I cannot see why a Government who threw away £100 million on a useless weapon which will not work should expect every loyal
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citizen to contribute every farthing they ask him, without argument. On the other hand, I agree that it is our duty to see that the law is obeyed. On the whole, all Her Majesty's citizens pay the amount which is properly levied upon them without indulging in fantastic devices to avoid it.
We are seeking to catch mainly certain people who dwell in the City of London; we do not possess such people in Oldham. I completely agree with my hon. Friend on this point. I have not devoted my mind to the Clause, but I should have thought there were about sixteen obvious ways of avoiding its provisions. Before enumerating them, however, I want to go back to a previous discussion. We are now discussing the eighth or ninth Amendment, but we shall have no Second Reading of the Clause, nor shall we have a discussion on the Question, That the Clause, as amended, stand part of the Bill. I do not believe that there are ten Members who think that they are absolutely clear in their minds as to what the Clause will mean, with its Amendments, and I am prepared to bet a substantial sum of money that 90 per cent. of those who do are wrong in their belief.
We can have two separate companies with no interlocking share arrangement. They can be within the same family of persons, operating together but carrying on different trades. Instead of having a number of companies in which 50 per cent. of the shares are owned by two people we can have two companies in one of which one man has 90 per cent. of the shares and in the other—a quite separate company—another man has 90 per cent. of the shares. It is said that there must be a sale within six years, but in future there will not be a sale within six years; there will be a lease with an option to purchase. That lease with an option to purchase is absolutely safe; it cannot be broken, and six years and one day from the time of the agreement that option will be exercised. A note will be sent from Jones to Brown, and Brown will write a polite note back saying, "We are sorry you have done it, but we realise that there is a good saving in tax." So it will go on. There are only two ways of dealing with this matter, and they have been put to the Chancellor time after time.

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We were told that this Budget would tackle this matter. I do not know how many thousands of pounds of fees will be spent in trying to find out, through the courts, what the Clause means. When a Committee has had to work in conditions like these history has shown time after time that the courts have said that a relevant provision passed by the Committee does not mean what the Committee was told it meant. Quite properly, our courts have no power to have regard to what is said here; they have only the right to determine what words mean in their legal sense when they are embodied in the Statutes.
I have grave doubts whether the words mean what the Solicitor-General thinks they mean, and I am as reasonably certain as I can be that even if they do mean what he says they will not suffice for more than a few days to prevent the form of tax avoidance which he has in mind, which can so obviously and easily be circumvented.
Mr. Barber: The hon. Member for Westhoughton (Mr. J. T. Price) asked why we imposed the limitation of six years. I explained this when we were in Committee before, but I will add now, for his benefit, that the purpose is to catch a sale of a building which is in reality a trading asset but which the operator is trying to sell under the guise of a capital asset. Consequently, we have to fix a period. It is nothing to do with the Statute of Limitations.
Mr. J. T. Price: It is a rather remarkable coincidence that the limitation embodied in the Clause coincides with the limitation under the Statute of Limitations.
Mr. Barber: I am advised by my hon. and learned Friend that the period in the Statute of Limitations is three years. When I first considered the Clause in draft no mention was made to me that it was intended to follow the Statute of Limitations.
Mr. Douglas Houghton: The period of six years is a hallowed one in Income Tax law and administration.
Mr. Barber: Reference was also made to the possibility of avoidance because of the reference to "associated company". It has been pointed out that Clause 41 provides that:
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"For the purpose of this Part of this Act two or more companies shall be treated as associated companies if one has control of the other or others, or any person has control of both or all of them."
My hon. and learned Friend has explained what was meant by "control" in those circumstances. I believe he said it was shareholding control. When the Bill was in draft we considered whether this definition of associated companies would be adequate, and from our past experience we came to the conclusion that it would be.
6.30 p.m.
Mr. Chapman: That does not answer the point. The hon. Gentleman is admitting that the Clause and the Amendment as drafted can catch only within a very narrow definition of an associated company. We are saying that this will be done by companies not in association in the strict legal definition. Is the hon. Gentleman going to do anything about that?
Mr. Barber: I take the point contained in the hon. Gentleman's observation, but obviously there is a limit to which one can go and to which it would be right to go, in dealing with the various forms of association. Obviously, if we are to apply such provisions as these, which are very stringent, there must be some limit to the form of association covered by the Clause. I can only say again that I have made inquiries and from our experience we consider that this definition is sufficient to catch the people whom we are seeking to catch.
Mr. Hale: Does a company own land if it has a lease for 999 years?
Mr. Barber: In the Amendment the hon. Gentleman will see that the expression is
"land belonging to an associated company"—
Mr. Hale: "Belonging to".
Mr. Barber: The hon. Gentleman asks, does it own the land—
Mr. Hale: Well, does it?
Mr. Barber: —which is very important. Those words were carefully chosen, because, obviously, they catch the company which has not acquired the freehold of the land, but has acquired a lease perhaps—
Mr. Chapman: In the Amendment appear the words "owning the land".
Mr. Barber: Yes, but if the hon. Gentleman will look he will see that it refers to where the building was begun
"to be erected by a company on land belonging to an associated company".
Mr. Chapman: Read on.
Mr. Barber: That covers the case where a company has acquired a lease for a period—
Mr. Chapman: Read on.
Mr. Barber: I have read on—and that being the case, this will cover the particular case, and these words will achieve that.
Mr. Hale: With respect to the hon. Gentleman, it cuts it out completely. The reference is to a company owning the land, the land belonging to the same company. If there is a company with a 959-year lease the company owning the land is the company having the reversion. On the hon. Gentleman's own definition—which, incidentally, I suggest is the wrong definition—the company to which it belongs is the company to which it is leased.
Mr. Diamond: Has the Economic Secretary sat down or is he going to reply to that point which I raised?
Mr. Barber: I have made inquiries of my hon. and learned Friend and I am told that the word "owning" as well as the words "belonging to" would cover a long lease of the land.
Mr. Diamond: I addressed what I thought was a perfectly serious point to the Economic Secretary about whether this Clause was in the wrong place and whether it did not catch what the Government were seeking to catch. I should have thought that the hon. Gentleman had had ample time to consider it and that we might be told whether or not that is caught by the Clause, and if it is not, quite caught, that they will think about it again. I do not know whether the hon. Gentleman is in a position to answer, but in order to give him further time to take advice on the matter, let me return to the point raised by my hon. Friend with regard to this question of associated companies.
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This is the second time the Government have taken the attitude of sticking to an interpretation of this matter which depends purely on a formal connection between two companies. I hope that they will not go on with this absurdity when they know that in a year's time they will have to put the matter right. It is not a question of conjecture that people will avoid this provision by having an informal connection. It is a question of fact that they are avoiding it by having informal connections.
Why should not people, if they are getting money for nothing, be prepared to rely on an agreement, which, admittedly, they cannot produce in court? They are prepared to rely on such an agreement. If, however, the other party, not being a gentleman, is not prepared to honour it—because he does not belong to the old boy's league —the swag is not shared. If he does honour it the swag is shared and the intention of Parliament is avoided.
It is wrong for the Government to stick to the absurdly artificial limit which has been put on the word "association". Here there is an attempt to avoid tax. The Government, by the words in a later Amendment, to which it would be out of order for me to refer now, show that they are not married to this. Of course, there is association where one has a technical and formal association by means of shares or voting power, or in some other way; but there are all sorts of other forms of association, as we know. People get together, when it is worth while from a business point of view to do so, in order to make capital or profit and share it between themselves.
There is nothing in the law to prevent them from doing so, and the more the hon. Gentleman continues to refer to this, the more he is signposting and highlighting the road for would-be tax avoiders. It is not a question of putting the key under the mat but rather of hanging it on the knocker of the front door with a searchlight playing on it, so that all may see it from a distance.
I suggest that we should not allow the Government to continue to take this absurdly limited point of view when it is only a question of saying to the Parliamentary draftsman, "Give us a more comprehensive drafting". We suggested

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one at the earlier stages when my hon. Friend the Member for Glasgow, Graigton (Mr. Millan) and I put down an Amendment which was not called. It may have been in a puerile form, but at all events we tried to show that this definition is too narrow. The Government would not go as wide as we should have liked them to do and say that companies are associated if they enter into any transaction other than transactions between parties at arm's length. If the transaction is at arm's length, companies are not associated; but if it is not, they are.
If the Government are not prepared to accept a definition as wide as that, at all events they should meet us half-way. To stick to this definition is hopeless, and highlights the way to tax evasion. It will lead to enormous trouble, and to difficulties to which my hon. Friend has referred. Next year I shall be in the impossible position of wanting to say, "I told you so," but being too much of a gentleman to do so.
Mr. Mitchison: I hope that we shall have a reply from the Economic Secretary.
Mr. Barber: I can only repeat again that the definition of associated companies was considered at the time of drafting. Obviously, a relevant consideration in a Clause of this kind is how far one can go in defining associated companies. I repeat that we have considered this and—these are not light words—what I think important is that this was considered in the light of experience and what has happened in the past, and with a view to catching the sort of people we wanted to catch by this Clause. We are satisfied that by the definition of associated companies provided for in Clause 41 we are going as far as is reasonable in the circumstances.
The other point made was with reference to liquidation of the landowning company. By such a liquidation presumably the land would be sold off and the operators would be left with their building company. Of course, the connection with the land would have gone. Again I have made inquiries about this and I can assure hon. Members that we are satisfied that the profit on a subsequent manipulation of the building company, the only one remaining in
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being, would be caught by the Clause as drafted. This was the point which was examined, and we are satisfied that the new Amendment will be satisfactory to deal with the position.
Mr. Mitchison: This particular point was collected by the Government from experience. It did not, apparently, arise out of discussions in Committee, but how long is this experience? Is it an experience which began at about the Committee stage and has now come to fruition, or is it—as I hope is the case—something riper and more ancient than that? If it is the latter, what exactly has happened? Did the Government investigate this question and then, at some period between the Committee stage and now, say, "Well there is something which experience should have taught us but which, unfortunately, we forgot to put into the Bill"? Is that the history?
Whatever it is, I say in all seriousness that it is a very unsatisfactory position. I was not at all surprised to hear my ingenious hon. Friend the Member for Oldham, West (Mr. Hale) say that he could think of sixteen ways of getting round this Clause. I was waiting to hear what they were, but he never told us. After discussion of this and previous Amendments, I am left in this position. The original provision was admittedly imperfect It had holes in it and the Government have since thought of ways of stopping up those holes, ways dependent in this case on experience. What was lacking was Government thinking about this particular point. I should have thought that on the law of probability they had not covered the lot and that the sixteen methods present in the mind of my hon. Friend really arise. All the odds are that they have not covered the lot.
My hon. Friend the Member for Glasgow, Craigton (Mr. Milian), with a hopefulness which on this point I cannot share, trusted that the Government would put the matter right. He was calling attention at that point to some of these deficiencies, but this is introduced on Recommittal at the very last stage of the Bill. How are the Government to put these matters right? Suppose that, for once in a way, the Government have made a mistake and it has been pointed out by my hon. Friend the Member for Glasgow, Craigton. It is conceivable that

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it may happen again on Report, but, if it happens again on Report, what is the result? I believe it is years since a Government have tried to make Amendments to a Finance Bill in the Lords. I think that is now unprecedented, although I suppose it is technically possible.
Mr. J. T. Price: It is very undesirable.
Mr. Mitchison: It is very undesirable, I quite agree. That is the result of this kind of thing being discussed at this stage. It is really lamentable. Cannot the Government start doing their thinking for next year now in the hope, if not in the confidence, that they will still be in office when the next Finance Bill is presented? The history of this matter is a most discreditable business and the discussion we have had on this Amendment illustrates it absolutely and completely.
Here is an Amendment on Recommittal based on experience. It is brought up at the very last moment by the Government when it is too late to make this Amendment paralleled by Amendment after Amendment which ought to he made, but which will never see the light of day because the Government coadjutors will not think of them until too late.
6.45 p.m.
Mr. Millan: I want to mention briefly again the point raised by my hon. Friend the Member for Gloucester (Mr. Diamond) about the question of winding up a company because, so far as I could see, the Economic Secretary failed to answer it.
The Economic Secretary said that the profit made would be caught through the building company, but my hon. Friend was talking the whole time about the land-owning company. He was talking about the winding-up of the landowning company. It is difficult to see why the provision in subsection (2) should not also apply to the land-owning company. That was a simple point my hon. Friend made, but nothing the Economic Secretary said dealt with it. I am sure that my hon. Friend was raising this matter only in a questioning manner. I do not think that he was being dogmatic about it. There may be a good reason why the Government have done this in this way. The Economic
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Secretary has in no way explained it and we must press him to give an explanation.
Mr. Chapman: We are in an utterly astonishing situation. I do not recall a situation such as this on a Finance Bill in any previous year since I have been a member of the House of Commons. First, we warned the Government as we dealt with the earlier Amendments to the Clause that no sooner would it be passed into law than every possible means of evading it would be uncovered. Then, within ten minutes, we come to one immediate way in which the intention of the Clause can be evaded. We then pointed it out to the Economic Secretary, who understands what we are getting at, but his whole answer is that the matter has been considered and the Government propose to do nothing about it.
The Chancellor ought not to sit there all the time saying nothing. I hope that he will reply to this discussion. At every stage when we have raised matters of tax avoidance in Committee he has said," If ways of evasion are brought to my notice, I shall immediately see that they are stopped up." Now he has sat silent while one way of evading the provisions of the Clause, the simplest way imaginable, has been put to the Committee. He has not even authorised his hon. Friend to say that the Government will look at the matter again. He said that the Government would consider the drafting of the Clause on the lines of the way in which people have been acting up to the introduction of this Clause.
It may be that, because people have been acting so far with little limitation, they have not been as astute or manipulative as to do what we are suggesting they may do. If a restrictive Clause like this is introduced, their minds will go towards the manipulative procedure which we have been outlining. Just because it has not been happening so far, we cannot say that it will not happen the moment the Bill becomes law.
We must have some reply from the Chancellor on this point. We have put a clear case of possible avoidance. It is as clear as daylight and could be used by anyone wanting to make a cool million or two in the next few years. We have put the case with every possible restraint we could summon on an issue about which we feel very strongly. We

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have spoken clearly and our points are accepted. Yet we have the intolerable situation, which is utterly astonishing, that the Chancellor will allow a clear means of tax avoidance to be trumpeted from the Chamber without saying how he proposes to stop it.
Mr. Amory: We have considered these matters very carefully and we believe that we have designed this Clause in a way which will catch the kind of cases we are out to catch. We have listened to what the hon. Member for Birmingham, Northfield (Mr. Chapman) and other hon. Members have said. We do not share their views. We believe that, substantially, this will catch the cases we are after. If in the light of experience we find that that is not so, we shall see what other steps are required. The measure we have brought forward is one which we think will be effective to catch the cases that we are out to catch.
Mr. H. Wilson: The Chancellor and his predecessors have been invariably over-optimistic about this sort of thing for the past five years, and invariably they have been proved wrong. It really is not good to say, "We think this is all right and we will go on as we are going. We shall watch it and then take action." We now know that the Chancellor himself has set himself against any retrospective action, despite the brave speech he made on the 1958 Budget. In any case, we understand that the right hon. Gentleman will not be in charge of these matters in the future. With respect to the Chancellor, he is leaving the door open, as I understand from what my hon. Friends have said, with no means at all of dealing with the situation between now and at any rate next Budget Day.
I make this final appeal to the Chancellor. We all recognise the difficulties of the time-table, and none better than I. We recognise the impossibility of dealing with this in another place, and I hope that neither this Chancellor nor any other will ever do anything to upset the traditional rights as between the two Houses. Despite our opposition to the recommittal this afternoon, if the Chancellor feels that he could by further consideration between now and tomorrow get this matter put right, and if tomorrow, by any of the workings of the procedure of the House—
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and it is not for me to say how it should be done, because the Chancellor can get his advice—the Chancellor feels that it would be possible to recommit tomorrow, or that it could be done on Report stage tomorrow, I can tell him that we shall not oppose the Recommittal, but that we shall facilitate anything he may do to tighten up this important point.
I do not know whether it is technically or procedurally possible to do it, but I hope that the Chancellor will not leave it in his present mood of over-optimism. Despite what we said about this big Recommittal which we debated this afternoon, if he can find means of dealing with this matter by an appropriate Amendment, either on Recommittal tomorrow or on Report, he can count on our support. My hon. Friends and all of us on this side of the Committee have said that we mean business about it, and we have not had from the Chancellor a form of words that will be adequate.
Amendment agreed to.
Further Amendments made: In page 18, line 6, leave out
"formed a substantial part of the value of the"
and insert
"or the aggregate value of the interest and any interest which the company so had immediately before that time in any other building (not being a building completed more than six years before that time) the erection of which was carried out or secured by the company, amounted to one-fifth or more of the net".
In line 12, after "interest", insert "or interests".
In line 14, after "building", insert "or buildings".—[The Solicitor-General.]
Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
Mr. Mitchison: Clause 21 deals with companies which are putting up buildings on land, and to some extent, as was explained to us, by companies which may own the land on which these buildings are being put up. It follows a Clause dealing with various forms of trade, specifying particularly the trade of dealing in land or buildings.
It seems to me significant in present circumstances that we have to take special measures in a Finance Bill to prevent tax avoidance in the case of dealings in land and dealings in buildings, because the profits that are being made

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in that direction in present circumstances are not only so much greater than they have been in the past, but so much greater in relation to the work and resources required to earn—if that is the right word—those profits that, naturally, people are striving to the utmost of their ability to keep the profits out of land and buildings as capital and not to have to pay Income Tax on them. These are the types of trade which they select, and which have to be provided for in this Finance Bill.
I have not the least doubt that the Treasury, in framing these Clauses, and particularly that which we are now discussing, has made its own investigations into what is happening, but though the form of the tax avoidance has been explained to us, the extent of it has not been explained. It relates to the extent to which these abnormal profits are being made out of dealings in land and buildings at present, and I trust that the Solicitor-General will pass on to the Committee a little of the information that must have moved the Treasury to put these Clauses in the Bill.
What is the extent of the profits now being made on land and buildings? How quickly are they being made? Are they much greater in London and around London than they are elsewhere? Is the statement true that they have trebled in a short period recently? Is it, at any rate, true to say that they have increased, to everyone's surprise except those who are conducting the dealings, and that they have increased quite lately and quite largely? We are entitled to some information on these matters. We cannot, in discussing this Clause, consider the causes of what has been happening, but the extent of what is going on seems to me a very fair matter for comment.
I repeat that my reason for saying this is that this Clause deals specifically with land and buildings and the profits which are being made out of them, and the preceding Clause, though it does not deal only or specifically with these cases, at any rate mentions similar transactions. I want to give the Government as much help as I can in providing this information. There have been some very strange cases. We have heard of astronomical prices being obtained, but those do not necessarily give the profits
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which have been made. A case was reported in the paper this morning of £250,000 being offered for half-an-acre in Luton.
Mr. E. Partridge: It has been denied.
7.0 p.m.
Mr. Mitchison: Perhaps we could be told the true facts.
It would be interesting to know what has been happening in the London area where the great pressure to get houses at any reasonable figure has itself resulted in a considerable rise in the price of any land where there is planning permission to build houses. This applies not only in London but in the areas around London, and it raises all sorts of questions of the greatest public importance which obviously we cannot discuss on this Question. I am merely asking for information, and I hope that the Government have a little more information than I have been able to collect from such sources as The Times this morning and the Financial Times of last Friday, in which quite a number of figures were given. In preparing such a Clause as this, the Treasury must have had much more information.
May I summarise my questions? What is the extent of tax avoidance of the kind contemplated by this Clause, and, if it is necessary to do the two together —and it may well be—of tax avoidance in connection with land and buildings of the character contemplated by this and the previous Clause? That is the first question.
The second question is, has the Treasury any information on the profits which have attracted this tax avoidance? Have they any information as to their size or as to the extent to which they have developed recently, if I may use those words? Is it true—I merely give this as an instance—that they have trebled in quite a short recent period? Is that the information in the Government's possession?
Mr. Diamond: The short appearance of the Leader of the House was most welcome. I do not know the precise reason that he joined us; I hoped that it was to listen to the points which I am about to make on the difficulty which faces us as a result of the procedure which we are following. It may be that

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he came to see why one of the Government's supporters was so incensed with what the Government are doing that he made his appearance, no doubt with his seconds, prepared to fight it out to the bitter end. But perhaps the Home Secretary was not aware of that.
We are invited to deal with the Question whether the Clause, as amended, should stand part of the Bill, and we are about to agree that in its present form it should stand part of the Bill. Very soon we are to disagree with that and to say that it should not stand part in its present form but should be altered, because there are subsequent Amendments to the Clause. There is to be no interval of time between this stage and the later stage in which we can collect our thoughts and see where we are before we start going somewhere else, and it is always useful to know from where you start before you proceed to progress.
The difficulties with which we are faced arise partly from the volume of Amendments on Recommittal and partly from the fact that we have no interval between Recommittal and Report. As the Economic Secretary pointed out, one of the Amendments made to Clause 21—that to define "substantial" by calling it one-fifth—was justified on the basis that it is the same as in Clause 20. But it is not the same as in Clause 20. It is the same as Clause 20 will be by the time we have finished all stages of the Bill and dealt with the Amendments to Clause 20, assuming that we deal with them in a certain way and that certain Government Amendments are called.
The reason that we are accepting the Clause is that it does not tie up at this stage with another Clause and with a provision which is on all fours—and if that sounds nonsense, that is exactly the point I am trying to make; that it is nonsensical that we should be compelled to deal with the matter in this way. As you will have observed, Sir Norman, the Clause is out of order on its drafting.
The Temporary Chairman (Sir Norman Hulbert): The hon. Member having made his point on the procedural matter, I hope that he will now come back to the Question.
Mr. Diamond: I am saying that the Clause, as amended, should stand part
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of the Bill because in its present form it is quite unreadable, quite unintelligible and quite nonsensical, and this shows what a mess we are in with the present method by which the Government carry on their business. It will continue to be nonsensical until we reach the later stage of the proceedings, when we can remove the nonsense.
If hon. Members look at subsection (2) they will read it in the following way:
"Where before the sale of shares mentioned in the foregoing subsection the company has—(b) has created … (c) has sold.…"
In other words, it reads:
"Where … the company has has created … and has has sold".
This is by a "has-has" Government. I wish I could say by a has-been Government.
We are in this difficulty and we can make no protest other than to draw attention to the situation. I wish the Leader of the House had been here to sympathise with us in our difficulty and to realise what a lot of nonsense is being made of this attempt by Parliament to control the expenditure of the country.
The Solicitor-General: The hon. and learned Member for Kettering (Mr. Mitchison) asked me a number of questions to which, I confess at the outset, I am unable to provide an answer. He asked the extent of the tax avoidance against which these Clauses are aimed. The right hon. Member for Huyton (Mr. H. Wilson) asked me that earlier, and I had to explain that of necessity we cannot provide that information because those profits are outside the tax net. But we believe that the losses have been substantial, and for that reason my right hon. Friend asked the Committee to pass Clause 20 and the consequential Clauses, one of which we are discussing.
The hon. and learned Member asked me about the profits which have attracted tax in transactions relating to buildings and land. I am afraid that it is not possible to give him any information about recent movements of profits in that respect, because any information that we have relates only to a previous tax year, and even with that year it is not possible to break down the information between one part of the country and another. Some information on a very generalised basis is given in the Report of the Commissioners of Inland Revenue,

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but if the hon. and learned Member wants more information perhaps he will put down a Question, and my right hon. Friend will answer it as best he can on such information as we have available.
I do not think that I need say any more in relation to the points made by the hon. Member for Gloucester (Mr. Diamond). We are in a difficulty in proceeding in two stages. I am afraid that that is inherent in our procedure. Some of these Amendments involve, some incidentally and some substantially, the levying of a charge, and we therefore have to proceed in two stages. I think that the hon. Gentleman was quite right in drawing attention to what looks, at any rate, like a gramatical solecism in subsection (2). I saw from the Notice Paper that his eye had alighted on it, but we can consider that when the Amendment is reached.
Mr. Ede: The hon. Member for Portsmouth, Langstone (Mr. Stevens) was congratulated upon having found an alternative, acceptable to the Government, to the word "substantial," but, in fact, the Solicitor-General has brought the word back into our discussion because he tells us that the loss to the Revenue, which this Clause is meant to remedy, is substantial. What does that mean in relation to this sort of transaction? Does it mean that the loss runs into millions of £s, or tens of millions of £s—or is it something under £1 million? The answer, of course, depends on the number of transactions and the amount of money involved in each, but, the Committee having got rid of the word "substantial" from the Clause, I do not think that the hon. and learned Gentleman should try to get out of answering my hon. and learned Friend the Member for Kettering (Mr. Mitchison) by bringing in such a vague word.
The Solicitor-General: I am afraid that, despite the blandishments of the right hon. Member for South Shields (Mr. Ede), I cannot go further than to say that it is substantial. The Inland Revenue has had one or two test cases and is investigating others, but very large sums of money are involved, and the amount is increasing.
Mr. Chapman: Unlike my hon. Friends, I feel that the best thing we can do with this Clause is to oppose it. We have now reached a stage at
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which, owing to our discussion on the previous Amendment, we have in the Clause as it now stands a completely fool-proof way of evading its whole intention. The whole thing is hardly worth the paper on which it is printed.
If you are a big-time operator in this way, Sir Norman, and wish to carry on with the kind of evasion that was being practised before the Clause was put in the Bill, we have now written in for you, if you are that sort of person, and have sign-posted by our discussions exactly what you must do to carry on as before. If you are one of these operators, and want to be able to get out of certain sales—
The Temporary Chairman: Order. It would probably be better if the hon. Gentleman were a little more impersonal.
Mr. Chapman: I was putting it in that form, Sir Norman, in order to highlight my point, but if you do not wish, quite rightly, to he associated with these people, I will put it more impersonally and refer to anybody. Let me, however, take you through the steps that other people will take. An operator will say, "I want to avoid the Clause. I want, in effect, to sell shares of companies in such a way that what should really be profits from the sale of buildings become capital transactions." That is what the Clause tries to catch.
He will say, "I don't want to be caught. I don't want to pay any taxes in this way, so I shall not do any of the simple straightforward things that the Clause seeks to catch. I am way beyond that. Those methods are too out-dated." He will go by the signposts that we have put in this afternoon, which means that when he starts the whole operation of making this money in this way—making millions, as it may be, by this form of speculation—he will not do it by being so simple as just to form one company.
He will say, "I will get together with other business men who in no way can be called an associated company with me —not legally, anyhow, or in a way that can be caught by the Bill's definition. We will have it all on a good old boys' interlocking business relationship in which we shall all share the swag in a few years' time. When we start the operation, we shall form two companies, one to deal in the land and one to deal in

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the buildings. Then, because we are not associated, we shall carefully arrange that most of the profit is made on the land and not on the buildings and, in a few years' time, we shall get a nice tax-free capital gain."
As I read the Clause as it is now drafted that is the simple signposted way to avoid its implications. Every big-time operator will now say, "Thank you very much, Mr. Chancellor of the Exchequer. I never thought that you meant what you said about catching tax avoiders, and I see that you leave a loophole every year. This year it is a nice big one."
I really am astonished that this should be put through the House of Commons without even a denial from the Chancellor that this is true, because very quickly now it will go forward as the law of the land, and be something that we are supposed to honour. I really am astonished. In all those circumstances, it surprises me that my hon. Friends should feel like supporting the Clause as now drafted. I feel more like going into the Division Lobby and voting it down as the thoroughly simple farce it now is, with this great loophole in it.
7.15 p.m.
Mr. Millan: I fully support what my hon. Friends have said about the Clause, but I want only to speak about the other aspect that was raised originally by my hon. Friend the Member for Gloucester (Mr. Diamond), and was not satisfactorily dealt with—the point about winding up, with particular reference to the circumstances in which there are two associated companies, one the landowning company and one the building company.
Quite apart from whether the winding-up provision ought to apply to the landowning company as well as to the building company, the Government ought to consider how subsection (3) works in the winding-up procedure, because then the untaxed profits that are to be taken into account are those that would have been produced by a sale of the interest in the open market immediately before the time at which the company is wound up.
If two associated companies are both wound up, and if the Clause applies to both, that is perfectly all right, but if only one is wound up, assessing the
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profit from the point of view of the value of the interest disposed of in the open market might very well not give the correct result. Here we are assuming that there is a certain amount of manipulation, and it may be possible for the manipulation to be so arranged that the provisions of subsection (3) would not bring into charge the amount that the Government correctly think should be brought into charge.
I do not want to go into that at any length, because it sounds rather a technical point, but we have had no satisfaction on that winding-up procedure. I hope that the Government will look into the question raised by my hon. Friend, and also into the question of the open-market value in a situation in which both companies, the land-owning company and the building company, are not wound up simultaneously. I feel that a possible loophole exists here.
Question put and agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 23. —(SUPPLEMENTARY PROVISIONS AS TO SS. 20 TO 22.)
The Solicitor-General: I beg to move, in page 20, line 36, at the end to insert:
(3) Where a person acquires control of a company at any time,—

(a) any sale of shares in the company, whether to that person or to a person from whom he acquires the shares directly or indirectly, which took place before that time and was effected in pursuance of arrangements for transferring control of the company, or

(b) any sale of shares in the company to another person from whom the first-mentioned person acquired them, directly or indirectly, being a sale which took place after that time and was effected in pursuance of arrangements for transferring the shares to the first-mentioned person,

shall be treated for the purposes of the three foregoing sections as a sale in consequence of which the immediate purchaser will have control of the company.
The point was put to me in Committee by my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth) and the hon. Member for Glasgow, Craigton (Mr. Milian) that under the Clause this position might arise. There might be a sale of 49 per cent. of the shares by a person who ultimately aimed at control, which is not caught by the Clause, followed by the sale of the 2 per cent. which gave control by a perfectly innocent shareholder who knew nothing about the

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transaction to obtain control. That would be caught, because that is the transaction which gave control, followed by the sale of the remaining 49 per cent. to the original purchaser, which would be caught and rightly caught.
I urged that in the case of the 2 per cent. transaction, even though the vendor was in every sense an innocent person, it was not unjust to tax her. I say "her" because for some reason it was my hon. Friend's aunt who was the perpetrator of the transaction. I urged that it was not unjust to tax her because she well Id obtain her share of the trading pro it which the device converts into a capital form, and it was therefore fair enough to bring the minority shareholder within the Clause.
That argument commended itself to the Committee, but it involves that it world be unjust in those circumstances to leave out of the Clause the first 49 per cent. transaction. I am taking extreme figures in this case. Therefore, the first thing which the new subsection is designed to do is to bring the first transaction within the Clause. It also guards against the possibility of getting round these Clauses by the device of selling shares to the ultimate purchaser through an intermediary.
Mr. Millan: I am sure that all hon. Members will be very glad to accept the Amendment, which meets one of the objections previously raised to the Clause. We should congratulate the Government on seeing this point, even if only at this late stage.
What is particularly commendable in the drafting of the Amendment is the use of the rather general phrase in paragraph (a):
"effected in pursuance of arrangements for transferring control of the company".
Having used language like this in the Amendment, might not the Government consider further using such language, not perhaps in this Bill, because there is hardly time now, but in future legislation? If we aim at absolute precision in these matters we end with an extremely complicated Bill which does not in the long run serve the purpose for which it was intended. It is right that legislation should use terms which are general but at the same time precise enough for the purposes for which the legislation is being passed. That is the
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particularly satisfactory feature of the Amendment.
Amendment agreed to.
Mr. Barber: I beg to move, in page 20, line 42, at the end to add:
(4) For the purposes aforesaid two or more persons aoting together to secure or exercise control of a company shall be treated in relation to that company as a single person.
The Amendment introduces into the Clause a new subsection in order to secure that, if two or more persons act together to obtain control of a company within Clauses 20 or 21, with a view, for example, to making joint use of its trading stock, the provisions of those Clauses will apply to the sale of shares. The Committee will remember that in our previous deliberations the hon. and learned Member for Kettering (Mr. Mitchison) moved an Amendment designed to cover this very point, and I undertook to give it further consideration. We have done so, and the Amendment achieves the object which we had in mind.
Mr. Diamond: We are all grateful to the Government for once more accepting an Amendment originally moved by someone on this side. The only reason I rise is because on this occasion it was moved by one of my hon. Friends in particular, as the Economic Secretary said. The previous Amendment was designed to cover a point picked up by my hon. Friend the Member for Glasgow. Craigton (Mr. Millan), who was much too modest to claim any credit for it in the remarks he made a short time ago.
I want to dwell again on the same point. We apologise for having to persuade by irritation, but no method short of that seems to make any impact on the minds of Ministers. The Amendment says that:
"two or more persons acting together shall be treated … as a single person."
That is an eminently satisfactory and desirable method of describing an association. In subsection (2) twenty lines are used, but there is no greater clarity or effectiveness than there is in this simple two-line Amendment.
I commend not only the Amendment, which the Government have moved because they accepted suggestions made from this side, but the use of these words. I hope that even at this late

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stage it is possible for the mind of the Government to move even an inch or two per day to the point at which they will realise that the words which they will now have in several places in their own Bill are infinitely better than the words which they have said they must restrict themselves to in defining associated companies. Associated persons are persons who act together. Why are not associated companies companies which act together for the purposes of acquiring control? Why are the Government being so obscurely obstinate on a very simple point like this, unless they do not mean business?
Mr. Houghton: The Solicitor-General will have realised by now that there is no end to this; it just goes on and on. That is how it is likely to be. It is evident from the Amendment that we not only have to deal with the actions of an individual, but with avoidance conspiracies. The devices which people will get up to are beyond the fertile imagination of Inland Revenue officials who are constantly applying their thoughts to this matter.
I rise for two reasons. The first is to acknowledge, in the temporary absence of my hon. and learned Friend the Member for Kettering (Mr. Mitchison), the reference made by the Solicitor-General to the Amendment he moved in Committee. I thank the Government for having considered the point and moving this Amendment, which I am sure my hon. and learned Friend appreciates.
Secondly, it is very difficult on all these occasions to resist the temptation to make the general point about anti-avoidance and the tedium—one might say the penance—which we are going through in this Committee to frustrate the iniquities of the tax-avoiding fraternity. It makes one wonder more acutely as we proceed with the final stages of the Bill whether this is the way to do it.
7.30 p.m.
I shall not dwell on the point because it would be carrying the discussion too far. I have sat here for the last several hours and through the previous Committee proceedings and seen hon. Members and Ministers and their advisers
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grappling with the complexities of this problem. We have just passed an Amendment which one has to read half a dozen times before one can thoroughly understand it. This is the type of legislation which we are presenting to the taxpayers at large. There is no doubt that all efforts will be made to circumvent what we are doing now. If we had referred to two persons in the Amendment that would not have been enough. We had to refer to two or more. That is typical of the way in which we are having to close the smaller loopholes ad infinitum after we think we have closed the big loopholes.
I am sure that after the Bill has been passed there will be reflections in many quarters on the adventure of a Finance Bill which makes a really determined attempt to stop anti-avoidance practices. I could well understand, although it is to be deprecated, all concerned throwing up their hands in despair and saying, "Let avoidance go on". We must soldier on. However difficult this legislation may be, I believe that finally the answer will come with a much bolder and much more drastic approach. Whether people like it or not, whether they object to omnibus legislation or not, whether they object to retrospection or not, we must do it the bold way or the whole system of taxation will continue to be in disrepute, and we shall see many people going about the country apparently able to throw parties at which they can afford to miss £4,000 pepper-pots. One wonders from where on earth they get the money. Are they property sharks, or Surtax payers paying 19s. 6d. in the £? From where do they get the money to lavish on their guests by the hundreds and thousands? That is what the people of Britain are asking.
This is part of the elaborate apparatus to stop these practices. I hope that our efforts this year will have greater success than those of the past, but do not let us be disappointed if next year Ministers get up at the Dispatch Box and say, "We are very sorry to say that in the last twelve months we have become wiser and sadder men".
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 25.—(SALE OF SHARES IN INVEST-MENT COMPANY TO ASSOCIATED DEAL-ING COMPANY.)
The Solicitor-General: I beg to move. in page 22, line 27, to leave out "issued" and insert "acquired by the seller".
Would it be convenient, Mr. Blackburn, if with this Amendment we took that in line 30?
The Temporary Chairman (Mr. F. Blackburn): Yes.
The Solicitor-General: Broadly speaking, Clause 25 applies where a person sells shares in his own investment company to his own dealing company. Instead of applying to sale of shares issued after the beginning of the year 1960–61, it will apply to sales of shares acquired after the beginning of that year.
The Amendment picks up a point which was made—
Mr. Diamond: Hear, hear.
The Solicitor-General: I am glad to acknowledge this. I hope that I acknowledged it in the case of the hon. Member for Glasgow, Craigton (Mr. Millen) on the last Amendment. I think that I did so. I certainly acknowledge it in the case of the hon. Member for Gloucester. (Mr. Diamond) on this Amendment. He pointed out a weakness in the Clause as drawn, although, as I said, it seemed to me that his suggestion to put it right went much too far in that it involved major retrospection.
The Amendment is necessary because, as the Clause stands, it would be possible for an operator wishing to practise the device at which the Clause is aimed to dodge it by buying up companies whose shares were issued before the beginning of the year 1960–61. The Amendment is designed to anticipate and prevent that device.
Amendment agreed to.
Further Amendment made: In page 22, line 30, leave out "issued and insert acquired".—[The Solicitor-General.]
The Solicitor-General: I beg to move, in page 22, line 41, to leave out from "seller" to "and" in line 43, and to insert:
"so elects, up to the full amount of the said consideration reduced by the amount of the consideration (if any) paid for the shares or for the alteration of the rights".
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Again, this picks up a point to which the hon. Member for Glasgow, Craigton (Mr. Millan) drew attention in Committee. The hon. Member and I had a rather sterile discussion in which I think that we were both right to some extent and both wrong to some extent. At any rate, it has been useful to be able to reflect on the point to which he drew attention and which I think the Amendment meets.
As I have said, Clause 25 deals with a person who sells shares in his own investment company to his own dealing company and provides that he is to he charged to tax on an amount equal to the profit which the investment company would have made if it had sold the underlying assets which the shares represent to the dealing company for the consideration which that company paid for the shares. In certain circumstances, that profit could be more than the difference between the amount which the seller paid for the shares in the investment company and the amount for which he sold them.
Perhaps it would be easiest to give an example. Suppose that the person who sells the shares had originally paid £10,000 for them but the underlying assets which that represented were worth only £9,000—in other words, he paid more because he anticipated the appreciation which would take place in the underlying assets and, therefore, in the value of his shares. Suppose that when he sells the underlying assets are worth £12,000 and he, therefore, sells for £12,000. The company's profit would be £3,000, but that is too much to charge him with 'because he has, in fact, made a profit of only £2,000 on the deal.
The way in which we have tried to deal with that problem is to give him an option to pay the tax on the £2,000, since he will exercise that option only where the profit which he has made is smaller than the profit which the company would have made if one looks to the underlying assets. That seems to me to meet the point which the hon. Gentleman made without falling into some of the difficulties which I pointed out at the time and which I have tried to put more clearly today.
Mr. Millan: One point arises when we consider the matter from the viewpoint of the associated dealing company

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that is buying the shares. The transaction is a sale at an inflated price of shares in an investment company to an associated dealing company. The reason for bringing the sale and the profit on it into tax is that any difference between the true value of the shares and the inflated price can be shuffled off by the dealing company which buys the shares as a trading loss and as a deduction from the profits.
The way in which the Amendment will work is that it can be something less that is assessable from the point of view of the investment company than what is gained as a reduction in taxable profit on the part of the associated dealing company. To that extent, there is something to be said for my original proposal in Committee when compared with what the Government are doing now. Nevertheless, the amended Clause will be a considerable improvement on the Clause as it was before. Therefore, I am glad to support it. I would still have preferred, however, that my earlier suggestion had been accepted that all that was necessary was to omit the words which are now being omitted in subsection (2) and not to put anything in their place.
Amendment agreed to.
The Solicitor-General: I beg to move, in page 23, line 15, at the end to add:
(5) References in subsection (1) or (4) of this section to the sale of shares to such a dealing company as is therein mentioned include references to the sale of the shares to a person not being such a dealing company in any case where the shares are subsequently acquired by such a dealing company in pursuance of arrangements for their eventual acquisition by it made not later than the sale to the said person, and in any such case the shares shall be deemed for the purposes of this section to have been sold to the said person for the consideration paid for them by the dealing company.
The Amendment is designed to ensure that the Clause could not be dodged by arrangements for the sale of shares in an investment company to a dealing company through an intermediary. This picks up a point made to me in Committee by my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth), when I said that a transaction through a jobber at arm's length would not be caught by the Clause. I still think that that is right, and, of course, we are not concerned with that type of transaction.
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The possibility remains, however, that arrangements might be made with an intermediary for a purchase and resale by him in such circumstances that it was not possible to establish that the intermediary's intervention was, to repeat the phrase I used before, merely colourable, and that the provisions of the Clause would thus be avoided. The new subsection (5) is designed to strike at that possibility of avoidance.
Amendment agreed to.
Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
Mr. Diamond: Having regard to the acceptance of one of the Government Amendments, we are now in the position that instead of the whole of the difference of £3,000 quoted by the Solicitor-General in the price of the assets going free of tax, £2,000 is to be taxed and £1,000 goes free of tax. The Government are meeting my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) up to a certain point. I am quoting the Solicitor-General's own figure to repeat the case in its simplest form.
On the figures given by the Government, they have met our point as to 66⅔ of the way. I do not know how one divides one point into one-third or two-thirds. Assuming that it is mathematically possible, the Government have met us two-thirds of the way. If, however, the figures were different, it might be seen that the Government were looking after the Revenue instead of meeting us.
We welcome the fact that the Government have to some extent met the point. We hope that if we continue to press it, they will concede the whole point. Bit by bit, we get there. Little by little we hope in time with patience to help the Government to do their job of protecting the Revenue. I have made the point sufficiently clearly. Had my hon. Friend's original Amendment been accepted, we would have caught the £3,000 to which the Solicitor-General has referred. As the Clause is amended, we catch £2,000 of it. I am all for catching the whole lot.
7.45 p.m.
The Solicitor-General: This argument goes back to the Amendment which I moved earlier. The Committee must appreciate the reason for what we have

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done. The fact remains that in the example I gave, the person who bought the shares in the investment company and sold them to his own dealing company made a profit of only £2,000 on those shares. It would be grossly unfair to tax him as if he had made £3,000. Thai is an example of what could well happen.
I gave a much more extreme case in the previous discussion, when I instanced a person who had subscribed £100,000 for shares in an investment company and who had later sold the shares to his own dealing company when there had been a capital appreciation of a few hundred pounds in the holding of the investment company. Such a person might find himself liable to tax, not only on the few hundred pounds, but on the £100,000. That could arise if the shares had been issued on special terms so that the £100,000 was a payment for an already existing capital appreciation in the hands of an investment company. That is an extreme case, but it marks a genuine point which we have tried to meet at the same time as meeting the perfectly valid point to which the hon. Member for Craigton (Mr. Millan) drew attention.
Question put and agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 26.—(SALE OF SECURITIES CUM-DIVIDEND.)
The Financial Secretary to the Treasury (Sir Edward Boyle): I beg to move, in page 23, line 24, at the beginning to insert "subsections (2) and (3) of".
The Temporary Chairman (Mr. F. Blackburn): I understand that this Amendment goes with the following one, in page 23, line 25, at end insert "after due deduction of tax".
Sir E. Boyle: Yes, Mr. Blackburn.
Soldiering on, as the hon. Member for Sowerby (Mr. Houghton) would say, we now come to the Amendments to Clause 26. The two substantive Government Amendments to the Clause are both in the direction of tightening up the Clause. If I interpreted correctly the feelings of
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hon. Members in Committee, that will not be unwelcome.
The second of the two Amendments arises in this way and I take the second one first because this should make my exposition clearer. As the Committee is aware, the Clause is devised to make the seller of what might be called a manufactured dividend liable to the Revenue for tax on that dividend. As originally drafted, the Clause would only charge tax on the net payment for which the seller was required to pay under his contract, not on the gross payment, the tax on which, as the Clause was originally drafted, the Inland Revenue was at risk of having to repay.
The defect arises in this way. The Clause as it now is works by making the seller of the manufactured dividend liable to tax as if he had made an actual payment falling within Section 170 of the 1952 Act. The defect arose on the original drafting of the Clause, because it said that Section 170 was to apply as if the payment by the seller fell within that Section. We have completely remedied that defect by saying that Section 170 shall apply as if the payment were an annual payment made after due deduction of tax. Thus the Amendment will require the seller to account for tax on the gross amount of the payment—that is to say, the tax which he pretends he has borne.
The first of the two Amendments is a drafting and paving Amendment for the second one, which I have just described. Subsections (2) and (3) of Section 170 impose the charge in respect of payments to which that Section applies. It is only necessary, therefore, to apply those two subsections to payments falling under the Clause. Subsection (1) of Section 170, which describes the payments within the Section, cannot be applied to the Clause now that it specifies that the manufactured dividend is to be treated as an annual payment within the charge imposed by Section 170 made after due deduction of tax.
It is our belief that we have now dealt with the point. There is no danger now that tax will be charged only on the net payment and not on the gross payment. I hope that with this explanation, the Committee may agree to the two Amendments.
Mr. Diamond: If it is not the intention of any other hon. Member to address the Committee, I would seek leave, Mr. Blackburn, at this moment to move the Amendment in the name of my hon. Friend the Member for Glasgow, Craig-ton (Mr. Millan) and myself.
The Temporary Chairman: I call the hon. Member for Gloucester (Mr. Diamond).
Mr. Diamond: I beg to move, as an Amendment to the proposed Amendment, to leave out "and (3)" and insert "(3) and (4)".
This is a simple Amendment. Looking at Section 170 I can quite see the reasons for making reference to parts of that Section instead of the whole of it inasmuch as subsection (1) of that Section is no longer needed. What I am unable to see is why it would not be an advantage to retain subsection (4).
The effect of my Amendment would be that the Chancellor's Amendment would read "at the beginning, insert subsections (2), (3) and (4)." We are really only dealing with the addition of subsection (4) which seems to give advantages to the Revenue in enabling it to deal with any assessment which arises in this way. I have no doubt that there is an explanation for it, and that the Government would not have overlooked such a simple matter as the last subsection of a Section and I am sure that they will give a very adequate answer.
Sir E. Boyle: I will give as simple an explanation as I can. The point is that subsections (2) and (3) of Section 170 of the 1952 Act contain the charging provisions and subsection (4) is simply the machinery provision which relates to appeals against assessment in connection with tax and so on.
I have taken the best advice that I can on this and I am assured that the application of subsections (2) and (3) automatically brings in the machinery provisions of subsection (4). Therefore the specific application of and reference to subsection (4) in this Clause is unnecessary. I have taken the best advice I can. There is no difference between us as to the aim that we wish to achieve and I hope that with that explanation the hon. Gentleman may feel able to withdraw his Amendment.
Mr. Mitchison: As a matter of fact, subsection (3) is really a machinery subsection, too, and I cannot quite see why the Government should not put in a specific reference to subsection (4). I do not want to argue the point, but if we put in two subsections and pointedly, as it were, omit the other, there may be some doubt in the matter. But, again, as the Scotsman said about the holy water, if I am not being irreverent "It can do no harm and it may do some good". I hope that the Government will accept the Amendment if only as a small tribute to the excellent work that my two hon. Friends the Member for Gloucester (Mr. Diamond) and the Member for Glasgow, Craigton (Mr. Millan), who like to be mentioned together, have done throughout the proceedings on this Bill.
Sir E. Boyle: On the last point of the hon. and learned Member for Kettering (Mr. Mitchison), may I say that I have heard tributes in the last half hour to the two hon. Members to whom he referred. I gladly join in those tributes, and I hope that at a later stage of the Bill I shall have the chance of distributing one or two prizes.
On the specific point under discussion I am assured that it is unnecessary to mention subsection (4) here and I must on that point stand on the advice that I have given to the Committee.
Mr. Diamond: I am invited to withdraw the Amendment on being satisfied that it is not necessary. I wish that I could say that I was satisfied. I heard what the Financial Secretary has said but I am certainly not satisfied. I admit that I know nothing about drafting and I am not a lawyer, but I am told that the reason we do not include subsection (4) is that we want that subsection in the Clause. This does not seem to me the most powerful reason that the Financial Secretary could have adduced. In view, however, of the responsibility that he takes in making the statements, and the advice that he has in making them, I would not dream of inviting any hon. Friend of mine to press the matter to a Division, but I cannot withdraw the Amendment.
The Temporary Chairman (Mr. Blackburn): The Question is—
Mr. Mitchison: May I point out, Mr. Blackburn, that my hon. Friend the Member for Gloucester (Mr. Diamond) did not withdraw his Amendment or ask leave to do so?
The Temporary Chairman: I am sorry. I misunderstood the hon. Member for Gloucester.

5

(4) Where the seller is resident in the United Kingdom and purchased the securities (otherwise than through a broker) from a person not so resident, then except where the contract for that purchase was made before the seventh day of July, nineteen hundred and sixty, paragraph (b) of subsection (1) of this section shall have effect as if after the word "say" there were inserted the word "either" and as if for the words from "either as" to the end of the paragraph there were inserted the words "as the registered holder of the securities or that he shows to the satisfaction of the Special Commissioners that he acquired the securities, directly or indirectly, from a person who was so entitled to the payment".

10

(5) Where the seller under such a contract as is mentioned in paragraph (a) of subsection (1) of this section is not resident in the United Kingdom, and the sale is effected through a broker, that subsection shall not apply but, except where the contract was made before the seventh day of July, nineteen hundred and sixty, unless the broker shows to the satisfaction of the Special Commissioners either that the seller was entitled to the payment of interest as the registered holder of the securities or that the seller acquired the securities, directly or indirectly, from a person who was so entitled to the payment, subsections (2) and (3) of section one hundred and seventy of the Act of 1952 shall apply as if the payment through the broker of the amount of the payment of interest were an annual payment by the broker made, after due deduction of tax, wholly out of such a source as is mentioned in the said subsection (1).

15

20

This is quite an important Amendment, although I do not think that I need spend very long in explaining it. It introduces two new subsections which are to deal with the possibility that dividends may be manufactured by persons resident abroad who sell the securities in question either directly or indirectly through the Stock Exchange at this end.
As it stands, the Clause imposes a theoretical charge on a non-resident who sells what has been termed for the purpose of the Clause a manufactured dividend, but the liability would, in practice, be unenforceable as the Clause stands because the Revenue would probably be unable to track down the seller or collect the tax from him if it did. Inquiries have been received about the position under the Clause where non-residents sell cum-dividend. If the weaknesses of the Revenue's position became known without any further subsection being added there is a real danger of the purpose of the Clause being greatly jeopardised.
Let me explain briefly to the Committee the two new subsections (4) and (5) which I am now proposing. The new subsection (4) endeavours to guard against the possibility that a resident in
Amendment to the proposed Amendment negatived.
Proposed words there inserted.
Amendment made: In page 23, line 25, at end insert "after due deduction of tax".—[Sir E. Boyle.]
Sir E. Boyle: I beg to move, in page 23, line 42, at the end to insert:
the United Kingdom may buy from a foreign seller securities with a manufactured dividend and in turn sell these securities under a contract whereby he has to account for the dividend to the final purchaser. Subsection (4) plants a liability to account to the Revenue for tax in respect of any dividend on securities sold, in circumstances falling within subsection (1, a) of the Clause, by a resident who had purchased the securities from a non-resident, unless the resident was directly entitled to the interest as the registered holder of the securities or shows to the satisfaction of the Special Commissioners that he acquired the securities, directly or indirectly, from a person who was so entitled to the payment. That means that if a seller abroad manufactured the dividend, and a United Kingdom purchaser from him sold cum-dividend, the person in the United Kingdom would have to find the tax on the dividend. If the non-resident was himself the registered holder of the securities or had bought them from another person who was so registered then it would be up to the United Kingdom resident, either by producing the dividend voucher or otherwise, to show that he was outside the scope of the subsection. This means that a United Kingdom purchaser direct from a foreign seller will

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have to make sure that he is buying a genuine dividend from the person overseas, and if not he himself would be in a very disadvantageous position with the Revenue.
8.0 p.m.
Subsection (5) deals with a case where a non-resident sells securities cum dividend on the United Kingdom Stock Exchange through a broker in circumstances that fall within subsection (1, a) of the Clause. In that case the broker is made liable to account for tax on the dividend to the Revenue unless he can show that the non-resident seller was entitled to payment of dividend as a registered holder, or acquired the securities directly or indirectly from a person so entitled.
As far as I can see, these two subsections are watertight. They will guard against the danger we obviously have to consider very carefully that dividends may be manufactured by persons resident abroad selling securities through the Stock Exchange. This is an important Amendment for the purpose of ensuring that the Clause does its job.
Mr. Diamond: Before moving to the Amendment to the proposed Amendment in my name and in that of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan), I accept entirely—
The Temporary Chairman (Mr. F. Blackburn): I take it that the hon. Member knows that only the second and third of his Amendments put down to the proposed Amendment, those in lines 8 and 16, are selected.
Mr. Diamond: I am grateful to you, Mr. Blackburn. I was not aware whether the fourth Amendment, in line 17, was originally selected but it seems now that there would be no longer any point in moving it.
The Temporary Chairman: It deals with a matter we have already disposed of and therefore falls.
Mr. Diamond: Perhaps it will be simpler if I move the first of my two selected Amendments to the proposed Amendment and also speak to the second which would insert "cum dividend" in line 16.
I beg to move, as an Amendment to the proposed Amendment, in line 8, after "securities" to insert "cum-dividend".
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I am pleased but a little bemused at the Financial Secretary's world of fantasy where there is apparently this method of creating counterfeit money, that is, a tax deduction voucher not based on reality but which is a completely fraudulent document. There is this oppportunity of creating counterfeit money in such a way as is not illegal and which can be done, not, as we thought, merely by operations on the Stock Exchange here between residents, but also by non-residents. One talks of this matter with some diffidence because it is a new realm of avoidance about which one knew nothing, and it comes to light only as the Government give examples of it.
I entirely accept that the proposed provisions are valuable, but if there is value in third or fourth thoughts one wonders what the fifth or sixth thoughts will be and what further thoughts it will be necessary to put into legislation next year notwithstanding the Financial Secretary's brave words—and no one hopes more than I do that he will not have to swallow them—that this is a watertight Government Amendment. This is a shocking state of affairs. As the Attorney-General said on Second Reading, it is not a question of tax avoidance only. It goes far beyond that.
My Amendments to the proposed Amendment are intended merely to make clear that the acquisition of securities is intended to mean the acquisition of securities cum-dividend and it is, therefore, surely more explicit if the words "cum-dividend" are inserted. The Amendment to the Amendment makes clear that the buyer who acquires securities and subsequently sells them and creates dividends in this way is a buyer who has bought cum-dividend.
Mr. Glenvil Hall: I wonder whether the Financial Secretary will give us some idea of the extent of this practice to which the Amendment was directed. I am filled with gloom and despondency by the fact that here, on Recommittal, weeks and weeks after the Finance Bill has been printed, circulated and discussed and when, as far as we knew, the Government had put in provisions to deal with this kind of thing. this now comes to light and has to be dealt with at this late hour. Could the Financial Secretary give us some idea how long this kind of thing has been going on? I take it that it is

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not too widespread, but apparently it has been going on for some time. Can he tell us how far it has gone?
Mr. Mitchison: On a point of order. I wanted to make a few observations relevant to the main Amendment. I understand that we are now discussing simply the question whether "cum-dividend should be inserted after the word "securities".
The Temporary Chairman: Only the hon. Member for Gloucester (Mr. Diamond) rose to his feet when I put the Question, and therefore I called him, taking it that no other hon. Member wished to speak.
Mr. Mitchison: I am not in any way dissenting from that. I am inquiring whether I should say now what I have to say or after we have dealt with the Amendment to the Amendment.
The Temporary Chairman: I think that it would be better if we got rid of the Amendment to the Amendment first of all.
Sir E. Boyle: I propose to reply to the Amendment to the Amendment and on the main Amendment I might reply to the right hon. Member for Colne Valley (Mr. Glenvil Hall). I think that I can put the fears of the hon. Member for Gloucester (Mr. Diamond) at rest. He has a perfectly reasonable point. The position under the new subsection (4) is that if a United Kingdom resident buys securities ex-dividend from a nonresident registered holder and sells them cum a manufactured dividend, the payment of interest—the amount of which he has to pay to the purchaser under his contract for sale—will not be the payment of interest to which the registered holder was entitled. Therefore the seller will not be able to satisfy conditions for exemption from the Clause.
The key words I commend to the hon. Member for Gloucester are the words "the payment". That means the payment of interest, in the closing words of subsection (1, b), because these words, as applied to subsection (4), must be taken as meaning the payment of interest which the seller has to hand on under his contract for sale.
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As for subsection (5), dealing with sales by a non-resident through a broker, the Clause will apply in practice in the following way. A non-resident seller of securities cum dividend has made a contract under which he has to pay to the purchaser the amount of a periodical payment of interest so as to bring subsection (5) into operation. Here again there would be no exemption for the case where the seller acquired the shares ex-dividend from the registered holder, because the payment to which the registered holder is entitled is not then the payment of interest—the amount of which the seller has to pay to the purchaser. This means that the hon. Member's Amendments to the Amendment are not really necessary.
On the other hand, I agree in principle that the Amendments to the Amendment are perfectly reasonable and I would advise the Committee to accept them but for one thing. This is that they would not do in the form in which they are drafted, because I am advised that no meaning could be attached legally to the phrase "cum dividend" without definition. The Clause refers to
"a contract … under which the seller is required to pay to the purchaser the amount of a periodical payment of interest …"
and the words "cum dividend" are what a non-laywer would call a useful shorthand reference to such a contract, but they would not do in the Clause on their own. I am quite certain that the Amendments to the Amendment are not necessary. In principle there is no harm in them, but I hope that with this explanation the hon. Member will be ready to withdraw the Amendment to the Amendment.
Mr. Diamond: I am grateful to the Financial Secretary for his very lucid reply on a difficult and abstruse subject. I anticipated that there would be a difficulty. The reason why I had the temerity to table my Amendments is that the rubric to the Clause says:
"Sale of securities cum-dividend."
In my simplicity. I assumed that if the rubric referred to sales cum-dividend the Government knew what they were talking about and that there was some meaning to be attached to the words.
In view of the assurance that the Government do not know what they are talking about and that no meaning

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attaches to the term "cum-dividend", and if the hon. Gentleman says that for the purpose of the Statute there is no close definition of "cum-dividend", as I imagine he may, and also having regard to the very full reply which the Financial Secretary has made and the consideration which he has given to the point, for which I am grateful, I beg to ask leave to withdraw the Amendment to the proposed Amendment.
Amendment to the proposed Amendment, by leave, withdrawn.
Mr. Mitchison: I support the request made by my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) for a little more information about what has been happening in this connection.
I am afraid that the Financial Secretary will never qualify for membership of the I.T.D.A.—The International Tax Dodgers' Association. I did not know that it existed, but it rather looks as if it does. We should all like to know what has provoked this Clause, how serious the provocation has been and how long it has been going on—if, indeed, it has been going on.
Mr. Diamond: My hon. and learned Friend is jocularly referring to a most serious matter. He is talking about the International Tax Dodgers' Association. He has the name not quite right. It is called the International Fiscal Association. It meets and it passes resolutions —the last one that it passed was on 18th May, 1960—and it has circulated every accountant hon. Member on both sides of the House of Commons with that resolution.
Mr. Mitchison: An arrow shot at random sometimes hits the mark, and this seems to be such a case. My hon. Friends and I would like to know—probably hon. Members on both sides of the Committee would like to know—what has been happening about this and what the seriousness of the matter is; for example, whether the Financial Secretary has ever heard of the interesting body which has just been referred to by my hon. Friend the Member for Gloucester (Mr. Diamond) or whether this is, in fact, pure lucubration by the Treasury—that is, consideration of the possibilities without any instances.
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The second question that I want to ask is, I think, tolerably clear. Am I right in supposing that, whatever the origin of this Amendment—this important Amendment, I agree—it did not originate out of discussions in Committee?
Sir E. Boyle: On the hon. and learned Gentleman's second point, I think he is quite correct in this instance. We had a fairly full debate on the Question, "That the Clause stand part of the Bill" —it was then Clause 25—and I do not remember any hon. Member on either side raising the point.
My answer to the question about how long this racket has been going on is that I do not know, but I said in Committee that if we did not have this Clause I was satisfied that a good many millions of pounds of revenue— I cannot be more specific than that—would be at stake. I can add two things to that. First, if we did not have the Amendment which I have moved I have not much doubt that the few people—the relatively few people—who have been exploiting the device at which the Clause is aimed would soon start to circumvent its provisions either by carrying out the transaction through associates overseas or by themselves setting up an overseas organisation for that purpose.
Lastly, I think it is fair to say that, of all the Clauses on tax avoidance that we have had. this one comes into a rather different category because this is a straight swindle at the expense of the honest taxpayer. It is pretending something to be so when it is not so. I should not hesitate to call this tax evasion rather than just tax avoidance. It is manufacturing a dividend in order to get a totally unfair and wrong tax advantage and milking the Revenue.
I say those words because I believe we have taken pretty powerful steps here to bring the racket to an end, but I can assure the Committee that if there is any question of the provisions of the Clause being circumvented I have no doubt that whoever is Chancellor of the Exchequer in a future year will wish to make even more sure that the Clause is watertight, and I am sure that in doing so he will have the support of the whole Committee.
Mr. Mitchison: Will he do it retrospectively?
Sir E. Boyle: I should not like to give any undertaking on that score.
8.15 p.m.
Mr. Ede: I think it is worth while drawing attention to the actual operations of the body to which my hon. Friend the Member for Gloucester (Mr. Diamond) alluded. He has handed to me the document which he has received. It is headed "The International Fiscal Association", and in a covering letter the people writing to him describe this as the United Kingdom Branch, and their address is 122, Leadenhall Street. London, E.C.3.
They have sent him what they describe as:
"…a copy of the resolution passed at the Annual General Meeting of the United Kingdom Branch on 19th May, 1960:
'This meeting of the United Kingdom Branch of the International Fiscal Association (a) deplores the terms of certain Clauses of the current Finance Bill which purport to convert what would otherwise be capital into income for the purposes of the Income Tax Acts and of Clauses such as Clause 26. …"
which is the one we are now discussing—
The Temporary Chairman: Order. I let the right hon. Gentleman proceed to ascertain whether I could link what he was saying and reading with the Amendment, but I find it rather difficult to do so.
Mr. Ede: Perhaps, Mr. Blackburn, I may be allowed to allude to this on the Question, "That the Clause stand part of the Bill".
Mr. Mitchison: On a point of order, Mr. Blackburn. Is not my right hon. Friend producing something which is at any rate getting very near the mischief aimed at by the Amendment? The mischief aimed at is, not to put it too high, an international arrangement to dodge taxes in this particular way. I understood my right hon. Friend to be producing a circular from a body which appeared to be engaged or to be likely to be engaged in something of the sort. I am sure he would not wish to press it too far, but perhaps an allusion of that sort might be admissible.
The Temporary Chairman: I allowed the right hon. Gentleman to proceed for some time in the hope that I should be
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able to link what he was saying with the Amendment which we are discussing, but I am afraid that I found it impossible, and that is why I stopped him.
Mr. Ede: I have no grievance, Mr. Blackburn.
Amendment agreed to.
Sir E. Boyle: I beg to move, in page 24, line 5, at the end to insert:
"broker" means a member of a stock exchange in the United Kingdom other than a jobber
The Amendment is merely consequential on the new subsection (5).
Mr. Mitchison: What is a "jobber"? Is he defined? Is he "a member of a stock exchange in the United Kingdom other than a broker"?
Sir E. Boyle: The Amendment adds to the definition subsection by simply defining a "broker", that is to say:
"…a member of a stock exchange in the United Kingdom other than a jobber."
As to the question about how a "jobber" is defined, I should require judicial notice of the question.
Mr. Diamond: Perhaps I may help the hon. Gentleman. All he requires to do is to look at the Bill, for Clause 26 (5) says:
" 'jobber' means a member of the London Stock Exchange who is recognised by the committee thereof as carrying on the business of a jobber".
Sir E. Boyle: I am sorry.
Amendment altered to.
Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
Mr. Diamond: I am most grateful for the words, and the feeling behind them, used by the Financial Secretary in connection with what he rightly called "this racket". The only thing I cannot understand about this Clause is that being a racket and being something, as the Attorney-General said, more than tax evasion—I believe he said that when winding up the Second Reading debate—
The Attorney-General: There is no need for the hon. Gentleman to look it up. I cannot remember exactly what I said in that speech, but if it will satisfy him I will say it now.
Mr. Diamond: I am very grateful to the right hon. and learned Gentleman. This is something quite outside the normal realm of tax avoidance and tax avoidance legislation which we have been discussing. I cannot understand why the perpetrators of this racket cannot be got at by common law or be prosecuted for doing something which seems to the ordinary man in the street and to Members on both sides of the Committee to be a plain fraud. I appreciate that all these Amendments are necessary to stop Income Tax avoidance, but in this case something more than fiscal legislation is required—prosecution is needed.
The Attorney-General: I do not think that it is, for this reason: in the simple case the person who manufacturers the dividend is not the person who claims back the tax from the Inland Revenue. He gets his profit on the price he gets for the shares, having paid them cum dividend, cum manufactured dividend. The person who obtains money from the Inland Revenue is the recipient. I do not think that it is possible—though I sympathise with the hon. Gentleman, and there is no reluctance to prosecute in cases of fraud where circumstances warrant it—that a prosecution would lie here.
Mr. Diamond: I assume that the right hon. and learned Gentleman is saying that these cannot be caught as a conspiracy—one person conspiring with another to defeat the Inland Revenue. I understand that these transactions do not take place until two people get together.
The Attorney-General: Proof of conspiracy is always difficult, depending on the evidence available. I would not hold out any hopes of evidence forthcoming to warrant a prosecution of that kind.
Mr. Mitchison: I shall say nothing in general about the Clause, but one small point is rather doubtful. It says that a broker
"…means a member of a stock exchange in the United Kingdom, other than a jobber;".
and that a jobber
"…means a member of the London Stock Exchange who is recognised by the committee thereof as carrying on business of a jobber;".
I do not know if there is such a thing as a provincial jobber. If there is, he
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now becomes a broker because he is not a member of the London Stock Exchange recognised by its committee as carrying on business as a jobber. It is possible that the Government may be able to answer that point now. It depends on the way in which provincial Stock Exchanges carry on their business. If there are provincial jobbers, there is real point in this and it could be set right by an Amendment put down today and dealt with on Report tomorrow.
Sir E. Boyle: This point came up on Committee. We discussed it on Clause 25, and I cannot add to what I said then when dealing with provincial stock exchanges—that a dealing broker dues the same work as a jobber of the London Stock Exchange. I will check up on that point again, but I cannot go further at the moment.
Mr. Mitchison: That would be all right if it were the same point, but it is not. The hon. Gentleman has just put in an Amendment which says that a broker is
"… a member of a stock exchange in the United Kingdom other than a jobber;"
When we turn to see what a jobber is, he is defined in appropriate terms relating only to the London Stock Exchange. Accordingly, every member of a provincial stock exchange must, on these two definitions—the Attorney-General will see what I mean—be a broker. It is possible that he is, and that the use of the phrase "dealing broker", or something of that kind, covers it. I mention this point because we are all anxious that this Clause should be effective, and if there is such a thing as a provincial jobber, then these two definitions between them need alteration. If there is not such a thing, the question does not arise. If there is, the question should be dealt with tomorrow.
Mr. Diamond: My hon. and learned Friend's point is extremely valid and well made. The matter occurred to me and I made exhaustive inquiries. I was told that there was no provincial stock exchange on which there was a jobber.
Question put and agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 27.—(CANCELLATION OF TAX ADVANTAGES FROM CERTAIN TRANS-ACTIONS IN SECURITIES.)
The Attorney-General: I beg to move, in page 25, line 37, at the end to insert:
"(the amount to be returned being chargeable under Case VI of Schedule D and recoverable accordingly)"
When this Clause was considered in Committee the Government accepted an Amendment moved by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). In accepting it, I said that as the Amendment was not precise enough in one or two respects from a technical point of view, there might have to be a slight tidying up by way of consequential Amendments on Report. This is now the tidying up to which I referred. Clause 27 (3) says that the tax advantage which may be secured can be nullified in various ways
"… by such of the following adjustments, that is to say an assessment or additional assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made …"
That is all right as far as it goes, but it does not go far enough because it does not indicate the way in which the return of that repayment can be obtained by the Inland Revenue. We propose by this Amendment to put in the words in brackets
"(the amount to be returned being chargeable under Case VI of Schedule D and recoverable accordingly)".
This means that the process of collection will operate in the ordinary fashion to get the amount which should be returned. It is a tidying up Amendment.
Amendment agreed to.
8.30 p.m.
The Attorney-General: I beg to move, in page 26, line 26, to leave out "this section may" and to insert:
"subsection (3) of this section may within thirty days by notice to the clerk to the Special Commissioners".
This, again, is an Amendment to tidy up the provisions in subsection (6), which, as the Committee will remember, gives a right of appeal to a person to whom notice has been given under the provisions of this Clause. As it stands, the subsection does not prescribe any time limit within which that right of appeal can be exercised by giving a notice. A time limit is clearly necessary and, in
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accordance with the provisions of tax appeals generally, the Amendment requires the taxpayer to give notice of appeal within the standard time limit of thirty days.
It was said by my hon. and learned Friend the Solicitor-General in Committee that an Amendment on these lines would be necessary. In fact, there was an Amendment on the Order Paper which would have covered the point, but we did not move that Amendment because, as the Committee may remember, we had altered the wording of the earlier provisions to delete, among other things, a reference to direction, and as the Amendment contained the word "direction", it was not apt to be moved in.
Amendment agreed to.
The Attorney-General: I beg to move, in page 27, line 11, at the end to insert:
(9) Without prejudice to the generality of the foregoing subsection, on an appeal under this section the Special Commissioners or the tribunal shall have power to cancel or vary a notice under subsection (3) of this section or to vary or quash an assessment made in accordance with such a notice, but the bringing of an appeal or the statement of a case shall not affect the validity of a notice given or of any other thing done in pursuance of the said subsection (3) pending the determination of the proceedings.
On reflection, again, it was thought desirable that there should be no doubts as to the powers of the Special Commissioners and the Tribunals on an appeal, to whichever of them the appeal might be made. It was felt, when we went through the matter again, that doubts might arise about their powers and about the effect of the pending appeal proceedings upon the action taken, or to be taken, under the Clause.
The Committee will remember that the machinery in the Clause is that a notice in writing is served by the Commissioners of Inland Revenue on the person affected and that that notice also specifies one or more of the various methods of assessment which may be necessary for counteracting the tax advantage in question.
The new subsection deals with two distinct points. The first one makes it clear that the Special Commissioners, or, in the case of a re-hearing, the Tribunal, will have authority not only to annul or revise in any way the notice given under subsection (3), but also to

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vary or quash an assessment made in accordance with that notice. The last part of the subsection ensures that the existence of an appeal against the notice shall not affect its validity pending the determination of the appeal proceedings.
A provision on these lines is necessary because it would otherwise probably be held that an assessment needed to counteract a tax advantage could not be made until an appeal against a notice had been finally determined, and if the appeal were taken to the courts, its final determination might be delayed until the six-year time limit for making the assessment had elapsed. It is therefore necessary to make this provision and I hope that with that explanation the Committee will accept the Amendment.
Amendment agreed to.
The Attorney-General: I beg to move, in page 27, line 12, to leave out "If" and to insert:
"The following provisions shall have effect where in pursuance of this subsection."
It may be convenient with this also to discuss the Amendments in lines 15, 20, 24, 25 and 28.
The Deputy-Chairman (Major Sir William Anstruther-Gray): That will be convenient.
The Attorney-General: An undertaking was given in Committee to consider setting a time limit for the disposal of applications for clearance. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) raised this issue and spoke in support of an Amendment in the name of my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) which was not entirely satisfactory and which was dealt with by my hon. and learned Friend the Solicitor-General, who explained why it could not be accepted.
These Amendments seek to provide satisfactory machinery to deal with the issue which my hon. Friends raised. The first Amendment paves the way for the second and the others are all consequential upon the second. Together the Amendments have the result that, when the Commissioners receive an application, they can, within thirty days of its receipt, ask for additional information if they think that the information given in the application is insufficient for them to
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form a proper conclusion on the matter. That is covered by paragraph (a) in the second Amendment. It is obviously right that the Commissioners should have the power within the time limit to request further information.
Under that provision the applicant must give the required information within thirty days or such further time as the Commissioners allow, and if he does not do so the application lapses. If he provides the information the Commissioners have another thirty days in which to notify him of their decision, or to ask for any necessary further information. The Amendment makes it clear that a reply that the Commissioners are not satisfied that the case does not fall within the Clause satisfies the obligation laid down by it.
I hope that that will suffice to explain what we are seeking to do. I submit that provisions of this sort are reasonable, and constitute part of what one might call the polishing up of the Clause, which is very important and falls within the words used by the hon. Member for Gloucester (Mr. Diamond) in relation to the previous Clause.
Mr. Powell: The six Amendments which we are now considering are among a large number of Government Amendments on the Notice Paper which are fulfilments of undertakings given in Committee. In this case their effect is not to close an additional loophole but to create an additional protection for the benefit of the subject. The procedure under the Clause, whereby a clearance can be obtained from the Commissioner by a taxpayer, is undoubtedly a valuable one, which will give considerable reassurance as to the working of the Clause; but it could not be regarded as satisfactory if there were no time limit, and, without wishing to cast any reflection upon the expedition with which the Commissioners would endeavour to perform the duties placed upon them under the Clause, I have no doubt that the existence of a specific time limit in the Clause will be a reassurance and will greatly facilitate the intended operation of this part of the Clause.
I am grateful to my right hon. and learned Friend for the way in which he has responded to the points which were put to him.
Amendment agreed to.
Further Amendments made: In page 27, line 15, leave out:
"and
(b)the Commissioners"
and insert" that is to say—

(a) if the Commissioners are of opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this subsection, they shall within thirty days of the receipt thereof notify to the said person what further information they require for those purposes, and unless that further information is furnished to the Commissioners within thirty days from the notification or such further time as the Commissioners may allow they shall not be required to proceed further under this subsection;

(b) subject to the foregoing paragraph, the Commissioners shall within thirty days of the receipt of the particulars, or where that paragraph has effect of all further information required, notify the said person whether or not they".

In line 20, leave out from beginning to "this" in line 21 and insert:
"and if the Commissioners notify him that they are so satisfied".
In line 24, leave out "the particulars" and insert:
"if the particulars, and any further information".
In line 25, leave out "shall be" and insert "are not".
In line 28, leave out from "Commissioners" to "any" in line 30.—[The Attorney-General.]
Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
Mr. Ede: When we were dealing with Clause 26, I was making some remarks based upon a document placed in my hand by my hon. Friend the Member for Gloucester (Mr. Diamond). I had got some way through a quotation from that document when it became clear that it related to Clause 26 of the Bill as introduced to the House, which Clause has now become Clause 27. It would be a gross imposition on my part to read again such of the document as I have already read, and I therefore hope that I may be allowed to go on from the point that I had reached. Anyone who is sufficiently interested will find that the two quotations are sufficiently close together to enable him to have the whole of the document in front of him.
I had got as far as the words, "such as Clause 26", when it became clear
342
that I had made an error. The document goes on:
"which affect the taxpayer's long established right to arrange his affairs to advantage within the framework of the Income Tax Acts."
As I understand it, after the Bill becomes law he will still retain that privilege, although it may require a little more ingenuity on his part to be able to take advantage of it. It goes on:
"(b) believes that legislation which ignores the fundamental principle that income tax is a tax on income sets a bad example to other countries."
I understand that one of the problems elsewhere is that it is more difficult to collect Income Tax outside this country than inside, even now, and I can only hope that the good example set in this country will become infectious in the few other countries where the payment of Income Tax appears to be regarded as one of the cardinal sins.
Question put and agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 30.—(AMENDMENT OF S. 4 OF FINANCE (No. 2) ACT, 1955.)
Mr. Diamond: I beg to move, in page 28, line 29, to leave out fifth day of April, nineteen hundred and sixty and insert:
"twenty-sixth day of October, nineteen hundred and fifty-five ".
Clause 30 refers back to the Finance (No. 2) Act, 1955, and the effect of the Clause is to amend that Act. I will therefore refer the Committee to Section 4 of the 1955 Act and remind them that this was the first of many occasions—no doubt there will be many more in the future—when the Committee had to deal with dividend stripping. The method then adopted was to say that the dividend should be regarded as a trading profit and be brought into account in computing profits. That has continued and there is no problem about it.
The 1955 Act limited the kind of shares on which dividends had to be so brought into profit to shares acquired after the 26th day of October, 1955, and not more than six years before the date on which the dividend becomes payable. That was the original position in 1955. We start with the date of that Act, in

343
October, 1955, and we limit it for six years from the date on which the dividend becomes payable.
Under Clause 30 of the current Finance Bill the Government propose, very properly, to omit this reference to six years, because the Government have realised that when one is getting something for nothing it is no great privation to have to wait for six years and a day to get it. This bright thought has at last penetrated the Government's mind and they are realising that such people have been avoiding the impact of this Section by waiting for six years because when one is making a profit of the colossal dimensions involved one does not mind waiting for six years. During the Committee stage discussions I quoted one transaction involving £4 million of tax-free capital profit. From what the Chancellor says, one knows that this device has cost the Revenue something like £100 million in respect of what is already known and excluding what is not known but what will come to the attention of the Government later.
It has occurred to the Government that it is worth while for people to sit down quietly and wait for six years and a day for profits amounting to £4 million. It may be a great privation to the ordinary citizen, but he is prepared out of a patriotic sense and because he is a law-abiding citizen to wait for six years and a day to collect £4 million. The Government have realised this and, therefore, they are amending the 1955 legislation by saying that no matter how long people have to wait for a dividend, they cannot avoid the impact of the 1955 legislation by merely postponing the date; because whatever period elapses before the declaration of the dividend, it will be brought into tax.
8.45 p.m.
The Government are proposing to alter the relevant date in the 1955 Act to 5th April, 1960. In the Amendment, which I put strongly before the Committee, I suggest that the original date should stand. That is the extent of the point I am asking the Committee to be good enough to give attention to. There is no question of retrospection whatsoever if the anti-tax avoidance Clause is left in its original form as regards the date. Just be-
344
cause the period of waiting has now been extended from six years to infinity there is no earthly reason for saying, I am sure the hon. Member for Carlton (Sir K. Pickthorn), who has strong views on this topic, will agree, that there is an element of retrospection in saying that this exclusion of the six years' limit should apply only to shares acquired after the new Measure comes into force.
There is no element of retrospection because the six years will not have expired. Unless my arithmetic is wrong, six years from October, 1955, brings us to October, 1961. We are legislating for the period of 1961 onwards and we are legislating in June and July of 1960. I therefore strongly suggest, and mention this in case it should be put as a ground of reply, that there can be no element of retrospection and no justification for refusing the Amendment on those grounds.
Having dealt with it in the negative way and said that there is no case for refusing the Amendment, I say there is every case for accepting the Amendment. It was wrong of the Government in the first place to imagine for a moment that people would not be prepared to wait more than six years for such a juicy reward. Of course they are prepared to wait six years and the Government have now realised it. They should, therefore, leave it at that. The alteration of the six years' limitation was a wise one, but any further alteration is most unwise. This unwisdom would be removed by accepting the Amendment.
Sir E. Boyle: I have listened with attention to the hon. Member for Gloucester (Mr. Diamond). I cannot agree with him that the acceptance of this Amendment would not involve retrospective legislation. It seems to me that clearly it would, in the most naked way possible. Section 4 of the 1955 Act specifically stated that these provisions were not to apply where the shares to be stripped had been held for more than six years.
We may have been right or wrong in doing that. We need not argue the past again, but that was what the Act specifically stated. Therefore, all those who acquired shares before the beginning of this year were entitled to assume that there could be no question of the application of Section 4 to the stripping

345
operation being carried out after the six-year period had elapsed. To accept the Amendment would be certain to extend retrospection in those cases in such a way as is most objectionable to a large number of hon. Members in the Committee.
I do not propose to argue the point at length. We have argued this matter of retrospection in the past on a very large number of cases. In our view, there is a very considerable difference between the sort of retrospection which would be involved in this Amendment and the sort which would be involved in the Whitworth Park Clause of the Bill.
Mr. Mitchison: Is not this provision of the 1955 Finance Act the very one on which the present Minister of Housing and Local Government, when he was holding the office which the hon. Gentleman now holds, made an intimation which was regarded by some people at any rate as a promise of retrospective legislation in certain circumstances?
Sir E. Boyle: It was perfectly true and, as a Treasury Minister of those days, I take a special share of responsibility, that a statement was made by my right hon. Friend the Minister of Housing and Local Government, but the Finance Bill of 1958 has intervened in the meantime and a statement was made on this matter by my right hon. Friend the Chancellor on that occasion. The Government in no way want to run away from the fact, which is perfectly true and I make no apology for it, that on this matter the policy of the Government changed between the statement made by my right hon. Friend in 1955 and the Finance Bill of 1958.
Mr. Diamond: Is it not the case that the opinion of his right hon. Friend changed between the introduction of the Budget of 1958 and the introduction of the Finance Bill in 1958?
Sir E. Boyle: I am not talking about the opinion of my right hon. Friend. I am talking specifically about the policy of the Government, of which my right hon. Friend is a part. The policy of the Government on this matter was laid down clearly during the debate. I remember exactly what happened in that year, as the hon. Member will. The
346
policy of the Government was laid down quite clearly in the Finance Bill of 1958, and it is on that policy that we take our stand now. I am bound to say that, judged by that policy, I have no doubt whatever in advising my hon. Friends to reject this Amendment.
Mr. Mitchison: The Financial Secretary may have no doubt, but nor have I in the opposite sense. As he confirmed, this is the other provision in connection with which this undertaking or intimation, call it what we will, was given by the present Minister of Housing and Local Government. The right hon. Gentleman seemed to us on this side of the Committee, and always has seemed, to have said quite clearly that if these provisions were not sufficient, retrospective legislation would be introduced. Therefore, if this were a case of retrospective legislation, I think that we could rely on what was then said. We are told that it is a case of retrospection, because people may have made certain arrangements—I do not know what the arrangements would be—and may be entitled to expect that things would stay as they are.
Am I entitled to expect that the Estate Duty levied on my estate when I die, as no doubt I soon shall, will be that which is at present current, or am I not entitled to expect that this is a matter subject to changes of policy? If we are to found all this on what people are entitled to expect, what on earth are they entitled to expect about the Government's policy on retrospection? Let us look at the position. In 1955 the Government were prepared to introduce retrospective legislation. Then, when the matter arose in 1958 at the time of the Budget, the Government—because, after all, in these matters the Chancellor speaks for and is the Government—were prepared to introduce retrospective legislation. But when we came to the Finance Bill of that year, the policy of this weathercock Government turned right round and they were no longer prepared to introduce retrospective legislation.
We all know and always have known the reason for it. The reason was that between the Budget and the Finance Bill, the Chancellor was unable to stand up to the 1922 Committee. It is just as simple as that. If we are to found the provisions on people's expectations, what

347
on earth are they to suppose, in this world of changing legislation, is the weight to be attributed to Governmental policy at any given minute after that show-up? I have never heard a thinner case put forward.
Sir Kenneth Pickthorn: The hon. and learned Gentleman must not say that again.
Mr. Mitchison: I am sorry to disappoint the hon. Member for Carlton (Sir K. Pickthorn), but the trouble lies with the Government. They put forward the thinnest possible case. I would not have thought it possible to put up a thinner one, and yet the next time they put one up, it is an even thinner case. It does not depend on me.
This seems to me to be an absolutely right and reasonable Amendment. The objections to it are completely unconvincing, even if there were no question of changes in Government policy. So far as I can see, there is no retrospective legislation involved at all, and no one in this country is entitled to assume that the current fiscal provisions will stay for ever. I hope, therefore, that my hon. and right hon. Friends will divide in support of this Amendment.
Mr. Milan: What the Financial Secretary to the Treasury said will apply only to those who have been indulging in this activity subsequent to 1958. Taking his argument at face value, people who indulged in this activity between October, 1955 and 1958, must have known, when they did it, that they were incurring the danger of being subject to retrospective legislation. In fact, it is not retrospective legislation at all, because the six months' period, even from October, 1955, has not expired; but at the least in those transactions between 1955 and 1958 there must have been the expectation that retrospective legislation would be introduced.m
Sir E. Boyle: Not retrospective legislation to nullify the effect of Clause 4. When my right hon. Friend in 1955 gave the warning which has been mentioned, no one had any reason to think at that time that the Government would necessarily alter the six-year rule, and it would be a totally unreasonable use of retrospective legislation, even apart from the
348
point of principle, to use it when amending a Clause which the Government passed in the very Finance Bill to which the hon. Member referred.
Mr. Mitchison: What was said on that occasion was that, if the provisions then enacted were insufficient, others would be introduced with retrospective effect. They have proved to be insufficient, at any rate to the extent of £4 million and of the many other millions of pounds which my hon. Friend the Member for Gloucester (Mr. Diamond) mentioned.
Mr. Millan: If what my hon. and learned Friend said is correct, it seems to me that what was said in 1955 was the clearest warning to dividend strippers that if their activities could not be curbed with the six-year limitation, then retrospectively there would be put into operation legislation which would curb their activities. I read the report of the debates on the 1959 Finance Bill, and it seemed to me to be the Government's clear intention that dividend stripping, as it was taking place at that time, should be caught by the new legislation. The Government were giving the clearest warning to dividend strippers that their activity would have to cease.
If, in those circumstances, people persisted in dividend stripping, then it seems to me that it is quite disingenuous of them to look at the Finance Bill as it would be amended if this Amendment were accepted and to complain that that introduces an element of retrospective legislation. The Amendment would simply be discharging the warning which the Government gave in the clearest possible terms in 1955. I therefore hope that the Committee will accept it.
However strong in principle may be the arguments against retrospective legislation, we do well to keep in mind that we are dealing not with bona fide commercial transactions but with disreputable transactions the main aim of which is the avoidance of taxation liability. Principle apart, there is a considerable difference between retrospective legislation which is dealing with genuine commercial transactions and retrospective legislation which deals with that kind of disreputable transaction meant to be covered by the 1955 Finance Act. Bearing in mind that fact, and the kind of

349
transaction with which we are dealing, and the warning given in 1955, I cannot see why it is not consistent for the Government to accept the Amendment.
Mr. Jay: Will the Financial Secretary think again on this issue? He has told the Committee that the Government are completely on the run in the face of tax dodgers. It was a well-established principle, right up to the Finance Bill of 1958, that if a Treasury Minister gave a warning on a certain date that if a practice were continued there might subsequently be legislation to stop it retrospective to that date, then the Government wore quite justified in introducing retrospective legislation in that sense.
Sir K. Pickthorn: It was not well established.
9.0 p.m.
Mr. Jay: As the hon. Member for Carlton (Sir K. Pickthorn) knows, this principle was followed by Sir John Simon, as Chancellor, by Mr. Neville Chamberlain, as Chancellor before the war, and by Sir Stafford Cripps, as Chancellor after the war. I should have thought that to be good enough authority for all parties in this Committee. That principle was accepted by the present Chancellor when he introduced the 1958 Finance Bill. It was only during the Committee stage on that Bill that he went back on that well-accepted principle.
The Government are now not merely giving way on that precedent, in the face of the tax dodgers, but are going further. They now tell us that, in spite of all these warnings, if a transaction had been entered into by dividend strippers with the intention of evading the will of Parliament, and if it had been done before the passing of that Act, nevertheless it would be retrospective legislation to say that the tax should be paid at a date subsequent to the passing of the Act. That seems to be carrying the definition of retrospective legislation, even if it were not tax evaders with whom we were dealing, to absolutely fantastic lengths.
I agree with my hon. and learned Friend the Member for Kettering (Mr. Mitchison) that it would be as reasonable for me to say that because, two years ago, I contracted to receive a cer-
350
tain income from some one, and because the Government two years later raised the rate of Income Tax, it was restrospective legislation, and I should not be required to pay the tax. This has been carried to the most ridiculous lengths. It simply means that the Government are prepared to give way in the face of demands from tax dodgers that we on this side certainly cannot accept. I should like the Financial Secretary—or perhaps, the Chancellor—to tell us whether this is their considered view, and whether they are determined to resist this Amendment.
Mr. Diamond: I must say, with all the restraint I can muster, that I regard this as an utterly preposterous attitude for the Government to adopt, and in the greatest possible contrast to the helpful and co-operative attitude the Financial Secretary and the Solicitor-General have just been displaying towards the jobbers' racket with which we have just finished dealing.
We must remember—and I think that, as well, the present Minister of Housing when Financial Secretary was also involved in making the statement on this—that, at the time, there was the clearest possible intention on the part of the Government, clearly stated, to stop dividend stripping. They said that that was what they intended to stop, and that they intended to stop it in the particular way in which they introduced the legislation in 1955.
They need not rely on any question of retrospection. They said that they were out to stop dividend stripping, and later said that they would introduce retrospective legislation—and they did. Why did they run away from that retrospective legislation? "Because," said the Chancellor, "this is going outside the scope of that warning." The retrospective legislation, as introduced in a relevant Section of the 1958 Finance Act, was alleged, quite correctly, to go outside the warning because it included something in the 1955 Act and something beyond it. The two were, unfortunately, merged together. That was the justification. It was not that the Government had gone back on their warning, or that they did not want to stop dividend stripping in this way. They merely went back on their retrospection because they said that the retrospective legislation would affect

351
something beyond the point where the warning had reference.
What are we getting to now? Let us remember what dividend stripping is about. It concerns a person who devises a method of putting a shovel into the Treasury, filling it with golden coins and bringing it out again. He creates no benefit, no wealth, no asset of any kind. He merely engages in a device as a result of which he becomes the richer and the rest of us become the poorer. It is as simple as that.
The whole country is against this. I thought that the Government were against it. Yet, notwithstanding the brave words they used at the time, they are now saying, "We think that because the burglar who came into the Treasury with his shovel, ready to push it in, had the expectation that he had only to sit on it for six years when it was full, he should be entitled to sit on his shovel and all he has to do is wait the remainder of the six years".
That is utterly preposterous. It is not sufficiently strong to put it as my right hon. and hon. Friends have done, as if it were a question of earning a salary and being promised an income. It is engaging in a transaction. It is a sordid transaction to begin with, but not quite an illegal transaction. Here the Government are upholding the rights of the perpetrator of such an action. They are upholding the rights of someone who enters into a transaction of that kind because he could rely on a six years' wait. I only wish that I had ten votes in the Division Lobby.
The Deputy-Chairman: The Question is—
Mr. Mitchison: Are we to have no answer from the Government? A good deal has been said since we had the first answer from the Financial Secretary, and we found it an unconvincing answer. Since then he has been asked several pertinent questions. The Committee is entitled to answers to those questions. Is it still said that this is retrospective legislation? Is that the defence of the Government? Do they pay no regard to what happened in 1955 and 1958, or are they so ashamed of it that they do not want to discuss it?
Sir E. Boyle: I will reply briefly to the last two questions the hon. and learned Gentleman asked me. First, we still think that this is retrospective legislation, because of the answer I gave earlier. The hon. and learned Gentleman then asked me, "What about what was said in 1955?". I will repeat what I said in an intervention when the hon. Member for Glasgow, Craigton (Mr. Millan) was speaking. The warning given by my right hon. Friend the present Minister of Housing and Local Government on that occasion was in this form:
"If clever people should discover ways and means of getting round this legislation — the Government will not hesitate to stop any such loophole by further legislation and to make such legislation retrospective."—[OFFICIAL REPORT, 13th December, 1955; Vol. 547, c. 1022.]
In my earlier reply I said—I stand by this—that Government policy on this matter was designed in 1958, but I quite agree—I make no apology this evening for the fact; I honestly admit it—that Government policy on this matter changed between 1955 and 1958. Quite apart from that, one must remember that it was the same Clause to which my right hon. Friend the present Minister of Housing and Local Government was referring that brought in legislatively the six-year limitation. My right hon. Friend gave that warning, but I do not believe that anybody reading the debates could reasonably be expected to think that the warning could apply to the six-year limitation.
Therefore, quite apart from the general objection which we on this side have to retrospective legislation, it would be particularly unjustified on this occasion to make this Clause retrospective. It is for those reasons that I invite the Committee to reject the Amendment.
Mr. Jay: Can the Financial Secretary tell us whether, on the principle of giving a warning and then introducing retrospective legislation, he himself agrees with the Government's policy as it was stated in 1955 or as it was stated after 1958? What is his own view?
Sir E. Boyle: I will state my own view. Government policy was quite clearly stated in 1958. As a member of the Government at that time, I took my full share of responsibility for it, as I do to this day. Quite apart from the general statement of policy which was made in that year, for the reasons I gave just now

353
it would be particularly unjustified to make Clause 30 retrospective this year.
Mr. Jay: Does the Financial Secretary agree with Government policy as it has developed since 1958, or does he not?
Question put, That the words proposed to be left out stand part of the Clause:——
The Committee divided: Ayes 222, Noes 162.

Division No. 129.]

AYES

[9.10 p.m.

Aitken, W. T.

Green, Alan

Nugent Sir Richard

Allason, James

Hall, John (Wycombe)

Oakshott, Sir Hendrie

Alport, Rt. Hon. C. J. M.

Hamilton, Michael (Wellingborough)

Osborne, Cyril (Louth)

Amory, Rt. Hn. D. Heathcoat (Tiv'ton)

Harris, Frederic (Croydon, N.W.)

Page, A. j. (Harrow, West)

Arbuthnot, John

Harris, Reader (Heston)

Pannell, Norman (Kirkdale)

Atkins, Humphrey

Harrison, Brian (Maldon)

Partridge, E.

Balniel, Lord

Harrison, Col. J. H. (Eye)

Pearson, Frank (Clitheroe)

Barber, Anthony

Harvey, John (Walthamstow, E.)

Peel, John

Barlow, Sir John

Hay, John

Percival, Ian

Barter, John

Hendry, Forbes

Pickthorn, Sir Kenneth

Batsford, Brian

Hicks Beach, Maj. W.

Pike, Miss Mervyn

Baxter, Sir Beverley (Southgate)

Hill, J. E. B. (S. Norfolk)

Pilkington, Capt. Richard

Beamish, Col. Tufton

Hirst, Geoffrey

Pitman, I. J.

Bennett, F. M. (Torquay)

Hobson, John

Pitt, Miss Edith

Bennett, Dr. Reginald (Gos & Fhm)

Hocking, Phllip N.

Powell, J. Enoch

Berkeley, Humphry

Holland, Phllip

Price, David (Eastleigh)

Biggs-Davison, John

Holt, Arthur

Prior, J. M. L.

Bingham, R. M.

Hopkins, Alan

Prior-Palmer, Brig. Sir Otho

Bishop, F. P.

Hornby, R. P.

Proudfoot, Wllfred

Bossom, Clive

Hornsby-Smith, Rt. Hon. Patricia

Rawlinson, Peter

Bourne-Arton, A.

Howard, Gerald (Cambridgeshire)

Redmayne, Rt. Hon. Martin

Box, Donald

Hughes-Young, Michael

Rees-Davies, W. R.

Boyle, Sir Edward

Hutchison, Michael Clark

Ridley, Hon. Nicholas

Brewis, John

Iremonger, T. L.

Robinson, sir Roland (Blackpool, S.)

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

Irvine, Bryant Godman (Rye)

Robson Brown, Sir William

Brooman-White, R.

Jackson, John

Roots, William

Browne, Percy (Torrington)

James, David

Ropner, Col. Sir Leonard

Bryan, Paul

Johnson, Dr. Donald (Carlisle)

Scott-Hopkins, James

Bullard, Denys

Johnson, Eric (Blackley)

Sharples, Richard

Butcher, Sir Herbert

Johnson Smith, Geoffrey

Shaw, M.

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

Jones, Rt. Hn. Aubrey (Hall Green)

Simon, Sir Jocelyn

Carr, Compton (Barons Court)

Kerans, Cdr. J. S.

Skeet, T. H. H.

Chataway, Christopher

Kerby, Capt. Henry

Smith, Dudley (Br'ntf'rd & Chiswick)

Clarke, Brig. Terence (Portsmth, W.)

Kerr, Sir Hamilton

Smithers, Peter

Cole, Norman

Kershaw, Anthony

Spearman, Sir Alexander

Collard, Richard

Kirk, Peter

Speir, Rupert

Cooper, A. E.

Kitson, Timothy

Steward, Harold (Stockport, S.)

Cordeaux, Lt.-Col. J. K.

Leavey, J. A.

Storey, Sir Samuel

Cordle, John

Leburn, Gilmour

Studholme, Sir Henry

Corfield, F. V.

Lewis, Kenneth (Rutland)

Summers, Sir Spencer (Aylesbury)

Costain, A. P.

Lilley, F. J. P.

Tapsell, Peter

Courtney, Cdr. Anthony

Llnstead, Sir Hugh

Taylor, W. J. (Bradford, N.)

Craddock, Sir Beresford

Litchfield, Capt. John

Temple, John M.

Critchley, Julian

Longbottom, Charles

Thatcher, Mrs. Margaret

Crosthwaite-Eyre, Col. O. E.

Longden, Gilbert

Thomas, Leslie (Canterbury)

Crowder, F. P.

Loveys, Walter H.

Thomas, Peter (Conway)

Cunningham, Knox

Low, Rt. Hon. Sir Toby

Thornton-Kemsley, Sir Colin

Curran, Charles

Lucas-Tooth, Sir Hugh

Tiley, Arthur (Bradford, W.)

Currie, G. B. H.

McAddam, Stephen

Tilney, John (Wavertree)

Dalkeith, Earl of

MacArthur, Ian

Turner, Colin

Dance, James

McLaren, Martin

Turton, R. Hon. R. H.

d'Avigdor-Goldsmid, Sir Henry

McLaughlin, Mrs. Patricia

van Straubenzee, W. R.

de Ferranti, Basil

Maclean, Sir Fitzroy(Bute & N.Ayrs.)

Vane, W. M. F.

Donaldson, Cmdr. C. E. M.

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

Vickers, Miss Joan

Drayson, G. B.

MacLeod, John (Ross & Cromarty)

Wade, Donald

Duncan, Sir James

McMaster, Stanley R.

Wakefield, Edward (Derbyshire, W.)

Eden, John

Macmillan, Maurice (Halifax)

Wakefield, Sir Wavell (St. M'lebone)

Elliott, R. W.

Macpherson, Niall (Dumfries)

Wall, Patrick

Emery, Peter

Maddan, Martin

Ward, Dame Irene (Tynemouth)

Emmet, Hon. Mrs. Evelyn

Maginnls, John E.

Watkinson, Rt. Hon. Harold

Farr, John

Maitland, Cdr. Sir John

Watts, James

Fell, Anthony

Manningham-Buller, Rt. Hn. Sir R.

Wells, John (Maldstone)

Finlay, Graeme

Markham, Major Sir Frank

Whitelaw, William

Fisher, Nigel

Mariowe, Anthony

Williams, Dudley (Exeter)

Fletcher-Cooke, Charles

Marshall, Douglas

Williams, Paul (Sunderland, S.)

Forrest, George

Marten, Neil

Wills, Sir Gerald (Bridgwater)

Fraser, Ian (Plymouth, Sutton)

Mathew, Robert (Honiton)

Wise, A. R.

Galbraith, Hon. T. G. D.

Matthews, Gordon (Meriden)

Wolrige-Gordon, Patrick

Gammans, Lady

Mawby, Ray

Woodhouse, C. M.

George, J. C. (Pollok)

Mills, Stratton

Woodnutt, Mark

Glover, Sir Douglas

Montgomery, Fergus

Worsley, Marcus

Glyn, Sir Richard (Dorset, N.)

Morgan, William

Yates, William (The Wrekin)

Goodhew, Victor

Mott-Radclyffe, Sir Charles

Gower, Raymond

Nabarro, Geraid

TELLERS FOR THE AYES:

Grant, Rt. Hon. William (Woodside)

Nicholls, Harmar

Mr. Gibson-Watt and

Mr. Chichester-Clark.

NOES

Ainsley, William

Hilton, A. V.

Owen, Will

Albu, Austen

Holman, Percy

Parker, John (Dagenham)

Allaun, Frank (Salford, E.)

Houghton, Douglas

Paton, John

Awbery, Stan

Hoy, James, H.

Pearson, Arthur (Pontypridd)

Bacon, Miss Alice

Hughes, Cledwyn (Anglesey)

Pentland, Norman

Baxter, William (Stirlingshire, W.)

Hughes, Emrys (S. Ayrshire)

Price, J. T. (Westhoughton)

Benson, Sir George

Hughes, Hector (Aberdeen, N.)

Pursey, Cmdr. Harry

Boardman, H.

Hunter, A. E.

Randall, Harry

Bowden, Herbert W. (Leics, S.W.)

Hynd, H. (Accrington)

Rankin, John

Bowles, Frank

Hynd, John (Attercliffe)

Redhead, E. C.

Boyden, James

Irvine, A. J. (Edge Hill)

Reynolds, G. W.

Braddock, Mrs, E. M.

Irving, Sydney (Dartford)

Roberts, Goronwy (Caernarvon)

Brown, Rt. Hon. George (Belper)

Janner, Barnett

Ross, William

Brown, Thomas (Ince)

Jay, Rt. Hon. Douglas

Short, Edward

Butler, Herbert (Hackney, C.)

Jenkins, Roy (Stechford)

Silverman, Sydney (Nelson)

Castle, Mrs. Barbara

Johnson, Carol (Lewisham, S.)

Skeffington, Arthur

Chetwynd, George

Johnston, Douglas (Paisley)

Slater, Mrs. Harriet (Stoke, N.)

Cliffe, Michael

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

Slater, Joseph (Sedgefield)

Craddock, George (Bradford S.)

Jones, Dan (Burnley)

Small, William

Cronin, John

Jones, Jack (Rotherham)

Smith, Ellis (Stoke, S.)

Crosland, Anthony

Jones, J. Idwal (Wrexham)

Sorensen, R. W.

Crossman, R. H. S.

Jones, T. W. (Merioneth)

Soskice, Rt. Hon. Sir Frank

Cullen, Mrs. Alice

Kelley, Richard

Spriggs, Leslie

Davies, G. Elfed (Rhondda, E.)

Kenyon, Clifford

Steele, Thomas

Davies, Ifor (Gower)

Key, Rt. Hon. C. W.

Stewart, Michael (Fulham)

Davies, S. O. (Merttyr)

King, Dr. Horace

Stones, William

Deer, George

Lawson, George

Strachey, Rt. Hon. John

Delargy, Hugh

Ledger, Ron

Summerskill, Dr. Rt. Hon. Edith

Dempsey, James

Lee, Frederick (Newton)

Sylvester, George

Diamond, John

Lever, L. M. (Ardwick)

Taylor, Bernard (Mansfield)

Dodds, Norman

Logan, David

Taylor, John (West Lothian)

Donnelly, Desmond

Mabon, Dr. j. Dickson

Thomas, Iorwerth (Rhondda, W.)

Ede, Rt. Hon. Chuter

McCann, John

Thompson, Dr. Alan (Dunfermline)

Edwards, Rt. Hon. Ness (Caerphilly)

MacColl, James

Thomson, G. M. (Dundee, E.)

Fitch, Alan

McInnes, James

Thornton, Ernest

Fletcher, Eric

McKay, John (Wallsend)

Timmons, John

Foot, Dingle

Mallalieu, E. L. (Brigg)

Ungoed-Thomas, Sir Lynn

Forman, J. C.

Manuel, A. C.

Wainwright, Edwin

Fraser, Thomas (Hamilton)

Mapp, Charles

Warbey, William

Gaitskell, Rt. Hon. Hugh

Marsh, Richard

Watkins, Tudor

Galpern, Sir Myer

Mayson, Roy

Wells, Percy (Favereham)

Glnsburg, David

Mayhew, Christopher

Wheeldon, W. E.

Gordon Walker, Rt. Hon. P. C.

Melliah, R. J.

White, Mrs. Eirene

Gourlay, Harry

Millan, Bruce

Whitlock, William

Grey, Charles

Mitchison, G. R.

Willey, Frederick

Griffiths, Rt. Hon. James (Llanelly)

Monslow, Walter

Williams, D. J. (Neath)

Griffiths, W. (Exchange)

Moody, A. S.

Williams, W. R. (Openshaw)

Gunter, Ray

Morris, John

Willis, E. G. (Edinburgh, E.)

Hale, Leslle (Oldham, W.)

Mort, D. L.

Winterbottom, R. E.

Hall, Rt. Hon. Glenvil (Colne Valley)

Moyle, Arthur

Woodburn, Rt. Hon. A.

Hamilton, William (West Fife)

Mulley, Frederick

Woof, Robert

Hannan, William

Neal, Harold

Yates, Victor (Ladywood)

Hart, Mrs. Judith

Noel-Baker,Rt.Hn.Phllip (Derby, S.)

Hayman, F. H.

Oliver, G. H.

TELLERS FOR THE NOES:

Herbison, Miss Margaret

Oswald, Thomas

Mr. Probert and Mr. Mahon.

Clause ordered to stand part of the Bill.

Clause 32.—(SUPPLEMENTARY PROVISIONS AS TO TAX UNDER S. 31.)
Mr. Barber: I beg to move, in page 30, line 22, at the beginning to insert:
"In the case of a transfer for value of the right to receive any such sums as are described in subsection (2) of section thirty-one of this Act, any tax chargeable by virtue of that section shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arm's length, in respect of the value of the right transferred as between parties at arm's length), and references in that section to sums received shall be construed accordingly.
(2)".
This Amendment introduces a new subsection at the beginning of the Clause
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to deal with the case where a retired businessman assigns the right to a post-cessation receipt falling within Clause 31 —for example, a debt which was formerly written off as bad. The Clause as drafted would not charge the person who has retired on what he received for assigning the right to his post-cessation receipt. Under the existing law, the person who assigned the right to a business debt while still carrying on the business would have the consideration of the assignment brought in as a business receipt. The Committee will agree that it is only reasonable and logical that a retired businessman or his executor should be treated in a corresponding

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way and should be taxed on the consideration. That is the effect of the Amendment.
Mr. Mitchison: is this an Amendment that arose out of discussion in Committee?
Mr. Barber: No, Sir. This is an Amendment which arose out of further consideration after the Committee stage.
Mr. Glenvil Hall: Why is it that these considerations have only just been arrived at? Why were they not thought of during all the months when the Treasury was preparing the forthcoming Finance Bill and deciding, as it normally does, quite early, to do certain things about tax avoidance in order to close loopholes? Why is it that now, within two days of the Third Reading of the Bill, this has been brought to the attention of the House of Commons and authority is asked for this Amendment to the Bill?
Mr. Barber: The right hon. Gentleman will realise that from the moment when a Bill is published consideration is given to matters which arise not only from debates in the House of Commons. I cannot offhand inform the Committee exactly how the point arose, but, obviously, all the way through the various stages of the Bill consideration and reconsideration are given. Our sole purpose, which will commend itself to the Committee, is to produce the best and most effective Bill we can. In that aim, we are helped to a great extent by what is said in Committee by hon. Members, but we are also helped to some extent by what is said and written outside and by further consideration which is given by all concerned.
Mr. Glenvil Hall: I am not criticising the hon. Gentleman or his right hon. Friend. In these matters, quite properly and naturally, they are in the hands of the Inland Revenue or the Customs and Excise Departments. My point is that the Treasury officials should have something quite strong to say to members of the Inland Revenue staff who fail to bring this kind of thing to their attention until now.
Mr. Barber: I do not know whether the right hon. Gentleman was present when I dealt with a similar suggestion that was made earlier. It is much easier
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to deal with tax avoidance devices which are actually taking place. Here we are dealing with provisions for tightening the tax code and we are trying to anticipate devices which may or may not be employed in the future. In other words, it is a much more difficult task to deal with possibilities that might arise on new legislation, many of them hypothetical matters, than to deal with actual cases of avoidance which have already come to light.
I want to be fair about this. Of course, it would have been much better had we been able to include this proposal in the first print of the Bill. I would be the first to agree to that, but it is a little unfair to blame those who assist us in the Inland Revenue or elsewhere with the preparation of these Bills. It is a very important and a very difficult task, and I would have thought that in general they would have deserved credit.
Mr. Glenvil Hall: I do not for a moment desire to be unfair, but less than an hour ago we were dealing with a very important Amendment to Clause 26. The Financial Secretary was good enough to tell us that the kind of mischief being aimed at had been going on for quite a while. I admit that in this case this is something which has not yet happened, but which might happen. But during this debate we have dealt with matters which, quite frankly, have been going on for same time. Surely the Inland Revenue knew about them, and if it did I think that in all fairness to the Chancellor it should have called his attention to them when the Bill was being drafted.
Mr. J. T. Price: I have no desire unduly to delay the passing of the Amendment, to which I do not object, but I want to reinforce what my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) has said, for quite a different reason. It is that, when a very advanced stage of the Finance Bill has been reached—the sort of stage we are at now, and all the usual parleys have gone on between the usual channels to fix a time limit, which in this case happens to be two days—if at that stage the apparatus behind the Chancellor should bring out from the pigeon-holes all sorts of attractive ideas from the Minister's point of view and introduce

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them when there is no chance of having their merits properly debated, I say that that is constitutionally objectionable. The House of Commons should be on its guard against this kind of thing.
If it is to be the accepted practice of the House or of the Committee to agree to the Treasury's right to introduce over a hundred Amendments at this stage, whatever their merits, merely for the convenience of the administration when hon. Members, and particularly backbenchers, cannot conceivably have the facilities at their disposal to discuss the merits of highly controversial questions, then I raise it as a matter of constitutional importance and I hope that in future whatever Chancellor of whatever party holds office will be on guard against this sort of thing to which many of us strongly object.
Mr. Amory: I am not sure whether the hon. Member for Westhoughton (Mr. J. T. Price) was implying that my officials in any way had deliberately held back until a late stage of the Bill Amendments which they thought ought to be made. I assure him that there is nothing whatever in that. What we have done, and I think it is the right thing to do, is to listen to everything that is said in Committee and to read carefully every criticism that is made of the Bill as published. Each of these suggestions and proposals has been very carefully considered by us. We have, rightly or wrongly, adopted every one that seemed to us would improve the Bill, even though it has meant putting down Amendments after the Committee stage within the last fortnight.
I might have done the other thing and said, "Even though this is a good Amendment I will not put it forward. At this late stage the House would prefer that it was not made." If I have been guilty in that respect, I plead guilty. If the Committee or the House feels that I would have done better not to have brought forward Amendments which I was convinced would improve the Bill after I had received the suggestions, and that I was wrong in doing so, I am sorry. But on balance, even although it has involved, as I recognise, some inconvenience to the Committee and to the House. I still think that I was right to accept and bring forward Amendments which on
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consideration I felt would improve the Bill.
Mr. Mitchison: I had not intended to address the Committee again on the Amendment, but I asked whether this was an Amendment which arose in any way from discussions in Committee. The answer was that it was not. I have asked similar questions about a number of similar Amendments, including an important one about transactions with foreigners which we were discussing a short time ago. The right hon. Gentleman ought to stop saying that all these Amendments come out of Amendments in Committee.
Mr. Amory: Really, I did not say that. I said at the beginning that many of the Amendments had come out of discussions in Committee, but since then I think on one occasion I said, and my hon. Friend has said it, that a number of them have arisen from representations which we have received or criticisms we have read of our proposals in the Bill to which we have given consideration and as a result have produced these Amendments.
9.30 p.m.
Mr. Mitchison: I have listened to successive explanations about Amendments and I would add another considerable class—Amendments which have occurred to the Government or their advisers on further meditation about what they were doing. One of them, we were told, was the result of experience—an experience which, curiously enough, happened to mature into an Amendment between the Committee stage and the Report stage of the Finance Bill, an unfortunate moment for the maturing of Governmental lucubrations on financial matters. It puts the House of Commons in the position of not being able to deal properly with last-minute alterations where no Amendment from the back benches or either Front Bench is really possible unless one is able to hit the point exactly. But only my two hon. Friends who are accountants succeed from time to time in doing that. The rest of us find it very difficult, and the Treasury is pretty critical about Amendments.
This Amendment was introduced, we were told, as a matter of fairness. Well, I am quite prepared to accept the right hon. Gentleman's explanation that the

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unfairness was brought to his attention in this instance by representations. That may well have been so. It was an expression of the Government's good intentions. I should like to say about the Government's good intentions that no doubt they exist—some of them at any rate—but unlike other good intentions, they do not pave the way to hell, even for tax dodgers.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 33.—(RECEIPTS AND LOSSES ACCRUING AFTER CHANGE TREATED AS DISCONTINUANCE UNDER FINANCE ACT, 1953, s. 19.)
Mr. Barber: I beg to move, in page 31, line 17, to leave out subsection (2) and to insert:
(2) Sections thirty-one and thirty-two of this Act shall apply in the case of any such change as aforesaid as if the trade, profession or vocation had been permanently discontinued:
Provided that where the right to receive any sums to which the said section thirty-one applies is or was transferred, at the time of the change, to the persons carrying on the trade, profession or vocation after the change. tax shall not be charged by virtue of that section, but (except where the change took place before the sixth day of April, nineteen hundred and sixty) any sums received by those persons by virtue of the transfer shall be treated for all purposes as receipts to be brought into the computation of profits or gains of the trade, profession or vocation in the period in which they are received.
This is a somewhat lengthy Amendment, but, as I shall seek to show the Committee, it is in part consequential on the last Amendment which the Committee has just passed.
Subsection (2) of Clause 33 as drafted deals with the case where on:
".. a change in the persons engaged in carrying on …"
a business the predecessor transfers to a successor at the time when the business is discontinued the right to certain sums—for example, a debt written off for tax purposes—sums which would be within Clause 31 if the purchaser had kept the right to them.
Under the present law neither the predecessor nor the successor would be chargeable if the successor recovered a bad debt, a debt which had been written off in the computation of the pre-
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decessor's taxable profits. The existing subsection (2), which the Amendment seeks to delete, prescribes that such recoveries should be brought in as a trading receipt of the successor.
As the present subsection (2) is drafted, it seeks to secure this result by applying Clause 31. But the effect of the new subsection (1) which was introduced into Clause 32 a few minutes ago is to cut off from the purview of Clause 31 a person to whom the right to receive the sums to which it applies is transferred. The new subsection (2) explicitly states that if the right to sums to which Clause 31 applies is transferred to a successor at the time of the:
"…change in the persons carrying on…"
the business, then tax shall not be charged under Clause 31 but the sums received by the successor shall be treated for all purposes as receipts of his business.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 34.—(WORK IN PROGRESS AT DISCONTINUANCE OF PROFESSIONS AND VOCATIONS.)
Mr. Barber: I beg to move, in page 32, line 44, at the end to add:
(6) This section applies and applies only to discontinuances occurring after the fifth day of April, nineteen hundred and sixty.
Clause 34 introduces new rules for the valuation of work in progress at the discontinuance of a profession or vocation, and also deals in certain minor respects with Section 143 of the Income Tax Act, 1952, concerning the valuation of stock in trade. It has been pointed out that, as drafted, the Clause leaves considerable uncertainty as to its operative date, and the Amendment therefore makes it clear that it is to apply, and to apply only, to discontinuance occurring after 5th April, 1960.
Mr. Diamond: I rise only to make absolutely sure that this is not introducing a new provision but is merely underlining or clarifying what is already in the Clause. It is making the Government's views about retrospection painfully clear but is not bringing in anything that is not already contained in the Clause.
Mr. Barber: I agree entirely with the hon. Gentleman, except that I would have said that it was making the Government's views agreeably clear.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 35.—(DEBTS SET OFF AGAINST PROFITS AND SUBSEQUENTLY RELEASED.)
Mr. Barber: I beg to move, in page 33, in line 14, at the end to insert:
(3) This section applies and applies only to a release effected after the fifth day of April, nineteen hundred and sixty.
This Amendment is similar to the previous one. Clause 35 provides for the charging to tax where a person carrying on a business has had a deduction in computing his profits for tax purposes for a debt due from him, and his creditors subsequently release him. As the Clause is drafted it is not clear whether this applies only to debts released after the Bill becomes an Act, or to debts released, whether or not before the 5th April, 1960, in a period on which the assessment for 1960–61 fell to be based. It is desirable to remove this uncertainty. The Amendment specifies that the Clause applies only to debts released after 5th April, 1960.
Mr. Diamond: I repeat the same comment which I made before—that this does not, I suspect, do anything new but merely underlines what the Government's intentions are, and makes their views about retrospection painfully clear.
Mr. Houghton: My anxiety in the matter is to know why two successive Amendments were necessary to repair an omission from the original Clauses. Is it the assumption that this would have been effective from the date of the passing of the Bill but that it is now desired to make it effective from Budget day? It is a strange omission. How did it come about that no effective date was given in either of these two Clauses?
Mr. Barber: This is clearly an omission in these two Clauses, and quite frankly, it would have been better if these two Amendments had been inserted originally. So far as I am aware—and I dealt with these Clauses earlier in the Committee—these were not points that were raised then. But they have been
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brought to our attention and we thought it right and proper to provide this Amendment and the last one. They go to the root of the matter and make it clear when these provisions become operative and will help to avoid litigation.
Mr. Mitchison: Is it not the case that these two Clauses could have had effect only from the passing of the Bill, whether or not that effect related to the action taken or to the occurrence upon which action was taken? Accordingly, the effect of this Amendment and the last one is to vary what would have been the result of these two Clauses without them. I believe that this is introducing retrospective legislation in a mild form, because if these Clauses were not introduced, then the provisions in question would take effect as from the passing of the Act instead of from 5th April.
Mr. Barber: With respect to the hon. and learned Member for Kettering (Mr. Mitchison), that is not so. To confine myself to the Amendment to Clause 35, there is considerable doubt as to whether it would apply after the coming into force of the Bill, which was a point which the hon. and learned Gentleman made, or whether it would apply to an assessment for the fiscal year 1960–61, even though the debt was released in a previous period. That was something which we felt had to be resolved, but it is not as simple as merely saying that there was some doubt as to whether it should apply after or before the coming into force of the Bill. In any event, the very fact that there has been some doubt on this point shows that the doubt should be resolved.
Mr. Glenvil Hall: Am I right in thinking that in most cases, whether these words are included or not, the Clause would bite on most assessments for the year 1960–61, because, unless an organisation or a company has a tax year different from the ordinary Inland Revenue year, it is bound to come somewhere in the year 1960–61, whether it bites from August or from 5th April? Is that not so?
Mr. Barber: It is not quite that, because the year of assessment is always from April to April whatever the accounting period of the company or

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individual is. What is certainly open to argument is when, without the Amendment, the Clause becomes effective for the year of assessment 1960–61. That could mean that a debt which is set off and subsequently released and covered by Clause 35, the whole of which operation had been completed before my right hon. Friend introduced his Budget and certainly before the First Reading of the Finance Bill, could have been brought into account in this year of assessment, and I think that the Committee will agree that that would be unfair and that the fairest date is 5th April.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 40.—(RETIRFMENT ANNUITIES: RELIEF FOR PREMIUMS.)
Sir E. Boyle: I beg to move, in page 39, line 30, to leave out from "effect" to "as" in line 31 and to insert:
"and be deemed always to have had effect".
It may be convenient with this to take the Amendment in page 39, line 34 at the end to add:
"and an election for the purposes of the said subsection (3) relating to a premium paid after the end of a year of assessment and before the date of the notice of assessment for that year shall in no case be out of time if made before the end of February, nineteen hundred and sixty-one".
I can assure the hon. and learned Member for Kettering (Mr. Mitchison) that these two Amendments arise directly out of questions put to me by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) during the Committee stage.
When we were debating Clause 40, my hon. Friend pointed out that the Clause was drafted to correct an error which could have been to the disadvantage of the subject. In his view, it was only equitable that the error should be put right as from 1956, when it was made. I have consulted my right hon. Friend on this matter and the new Resolution which the Committee passed a few days ago and these Amendments are the result of our considerations.
The first of the Amendments provides that Clause 40 shall be deemed always to have had effect and the second Amendment is consequential and extends the
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time limit for making elections under Section 23 (3) of the Finance Act, 1956, in cases to which Clause 40 applies.
Mr. Diamond: Is it not perfectly clear that we are now dealing with the reverse side of the Government's coin which does not often see daylight? I drew the attention of the Committee on previous Amendments to the Government's refusal to tarnish their pure and clear policy of avoiding retrospection at any cost because we were about to come to these Amendments in which the Government propose retrospection for two years and for which we have had no explanation.
We had a very full explanation from the Financial Secretary about the stripper when it came to making absolutely sure that those who were helping those engaged on dividend stripping could rely on the Government's promise not unduly to interfere in their activity, and he made it perfectly clear that he set great store on the Government's new policy of not having retrospection in any circumstances. Will the hon. Gentleman now explain why somewhere between 1955 and 1958 the Government's view on retrospection changed?
9.45 p.m.
In 1955 they promised, with very brave words, through the Minister of Housing and Local Government and the Financial Secretary himself, not to hesitate to introduce retrospective legislation. In 1958, as we now understand the Financial Secretary, they said, "We have changed our minds; we are wholly against retrospection." In 1960 they produce an Amendment which deals with matters retrospectively to 1958. We are getting into considerable difficulty with regard to the Government's principles on retrospection. Have they any principles in the matter, or are they merely out to help the tax dodger and not to have regard to their other responsibilities?
Mr. Powell: What my right hon. Friend the Chancellor has done here is of no small importance, although it probably affects very few people. Although hon. Members on both sides of the Committee understand very well what they mean, they talk loosely about the wrongfulness of retrospective legislation. By

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this they mean the wrongfulness of retrospective legislation which imposes a burden or penalty, or some disadvantage upon the subject. Nobody has ever supposed that there was any objection to retrospective legislation which indemnified or relieved the subject, and that is what we are doing here. We are relieving him from the effects or an error made by this Committee.
It is of no small importance that my right hon. Friend has gone to the trouble of putting down a new Ways and Means Resolution in order to make the Amendment possible, and deliberately seeing that the correction of this error went back to the point of time when it was committed. There is no contradiction at all between what is being done here and our objection to retrospection which is to the disadvantage of the subject. I am sure that I speak for all hon. Members on this side of the Committee when I thank my right hon. Friend for his attention to the point.
Mr. Mitchison: Some day I shall write an essay on the place of retrospective legislation in a property-owning demotracy.
Amendment agreed to.
Further Amendment made: In page 39, line 34, at end add:
"and an election for the purposes of the said subsection (3) relating to premium paid after the end of a year of assessment and before the date of the notice of assessment for that year shall in no case be out of time if made before the end of February, nineteen hundred and sixty-one ".—[Sir E. Boyle.]
Clause, as amended, ordered to stand part of the Bill.

Clause 41.—(INTERPRETATION OF PART II.)
Sir E. Boyle: I beg to move, in page 40, line 17, to leave out "stocks and shares" and to insert:
"shares, 'shares', except where the context otherwise requires, includes stock."
The Amendment is a drafting Amendment and puts right a drafting omission in subsection (4). The definition to be amended is that of securities, which is defined in the original version as including stocks and shares. There are various anti-avoidance Clauses in the Bill, especially Clauses 20 to 25, which we have considered today and shall be
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considering again tomorrow, which deal with transactions such as sales of shares in a company and prescribe the tax consequences which follow on such sales in certain circumstances. As the Bill is drafted I am told that it would be possible to get round these provisions if a company's shares were formally converted into stock. The Amendment precludes this possibility by making the reference to shares include a reference to stock, except where the context otherwise requires.
This is the kind of point which is easy to miss when one is drafting a Clause, and I am glad it has been possible to clear up the matter before the Bill reaches its final stage.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 60.—(INTERPRETATION OF PART III.)
The Lord Advocate (Mr. William Grant): I beg to move, in page 50, line 43, at the beginning to insert:
For the purposes of this Part of this Act, an assessment made in the partnership name and the tax charged in such an assessment shall, according to the law in Scotland as well as according to the law elsewhere in the United Kingdom, be deemed to be respectively an assessment made on the partners and tax charged on and payable by them.
This Amendment arises out of the difference in partnership law in England and in Scotland. Unlike England, in Scotland a partnership is a separate legal entity quite apart from the separate partners. The effect of the Amendment is to ensure that the penalty provision of Clause 44 and Clauses 45 and 47 operate with equal severity, or lack of it, in Scotland and England. It also ensures that the proposed new Clause on the Notice Paper to which I will refer briefly —Modification of Section 50 in relation to Partnerships—shall operate in Scotland as in England.
Mr. Mitchison: Appreciating the difficulties of imprisoning a partnership as distinct from those of imprisoning the partners, we see the point of this Amendment.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 61.—(ESTATE DUTY: GRADUATION OF CHARGE ON GIFTS, ETC.)
Sir Henry d'Avigdor-Goldsmid: I beg to move, in page 52, line 11, at the end to insert:
(e) the ceasing of any direction or power made or given in any instrument by way of voluntary settlement inter vivos executed on or before the fifth day of April, nineteen hundred and sixty, to the effect that the income of the property thereby settled should or might be accumulated for a period not exceeding five years from the date on which the settlement took effect.
This is the Estate Duty Clause which grants modification in respect of transfers made inter vivos which would previously have been caught owing to the death of the transferror taking place before the end of the five-year period. Those modifications are detailed in the first part of the Clause and there is no need for me to repeat them.
The Amendment takes up a point made by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) when this Clause was discussed during the Committee stage proceedings. My hon. Friend made a speech on the Motion, That the Clause stand part of the Bill, indicating that there are a number of settlements which provide that the income from trust funds shall be accumulated for five years or the life of the settlor. It seemed reasonable then to my hon. Friend and it seems reasonable to me now that such accumulated income should be treated in the same way as the remainder of the contents of the estate in the event of death occurring within the five-year period subject to the modifications in the first subsection of this Clause.
In answering my hon. Friend the Financial Secretary said:
"The point is a fair one, but the proposal…goes rather beyond the scope of the Clause.—[OFFICIAL REPORT, 31st May, 1960; Vol. 624, c. 1289.]
I hope that by raising this matter now my hon. Friend has had time to think it over and perhaps to see how far it does go beyond the scope of the Clause and whether it could not be usefully included within the scope of the Clause.
To most members of the legal profession it would seem reasonable to treat all parts of an estate for the purposes of Estate Duty on the same basis and not to make this differentiation between one part of the estate and the accumulated
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income which forms part of it. As the hon. and learned Member for Kettering (Mr. Mitchison) pointed out, it appears that any Amendments drafted by members of the accountancy profession have much chance of commending themselves to the Government. I am not a member of that profession but my hon. Friend the Member for Langstone is, and so in that hope I commend this Amendment to the House.
Sir E. Boyle: As my hon. Friend the Member for Walsall, South (Sir H. d'Avigdar-Goldsmid) has said, this matter was raised during the Committee stage discussions by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). On that occasion I said that I would look at the point. It seems to me to go rather beyond the scope of the Clause. I am sorry to break the entente which existed so happily between myself and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) on Clause 40, and also the entente which I hope we shall have on another Clause which appears later on the Notice Paper.
On this occasion I feel bound to adhere to the view expressed in Committee that this proposed Amendment goes beyond the scope of the Clause and, quite frankly, I cannot advise the Committee to accept it. In the first place, the drafting of the Amendment seems to have gone rather awry. If we look at subsection (1) we find that it works by looking at the length of time between the relevant event—for example, the making of the gift—and the death of the donor. Subsection (2) gives a list of relevant dispositions and events.
This Amendment is tied to that list but, as drafted, it would mean that the relevant date would be the date of the death of the testator, so obviously no time would elapse between the relevant event and the death of the testator. For that reason it is not satisfactory as it stands, but, apart from the drafting, I adhere to the view that this Amendment goes beyond the scope of what we are trying to do in this Clause.
Of course, whenever any new relief is introduced in our Estate Duty law, a number of people will find that they have arranged their affairs in the past in a way which does not now afford them the benefit of the relief. I should have

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thought this is an inevitable risk and one has to be careful about mitigating the hardship by a special and artificial relief. I also think that there would be something anomalous in allowing the relief when the period of accumulation is five years and the settlor dies after three years, but not when the period of accumulation is ten or fifteen years and the settlor dies after three years.
For all these reasons, the unsatisfactory drafting, the fact that I think it goes beyond the scope of the Clause, and I feel the principle would be doubtful anyway as I think the case is outside the scope of the Clause, this is not an Amendment which my right hon. Friend could accept this year.
Mr. Powell: I feel that the point my hon. Friend the Financial Secretary has made on the drafting of this Amendment must, of course, be immediately admitted. I also submit to the Committee that he is probably on strong ground in saying that in order to meet this point fully and logically one would have to go beyond the scope of the present Clause. He referred, for example, to accumulations over a longer period than five years. Nevertheless, I put this to him. Here is something which he himself in Committee described as a fair point and I did not understand him this evening to disagree with my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) in his contention that these accumulated sums added to the estate were part of the estate and should be treated in the same way.
One appreciates the virtual impossibility, especially in view of the somewhat wider scope of the Amendment, of dealing with it now at this stage of the Bill, but I venture to hope that before we part with it my hon. Friend may indicate that this is something which, prima facie, needs correction and will be borne in mind for a future Finance Bill.
Sir E. Boyle: I wish to add that I said, I agree, in Committee, that this is certainly a fair point for consideration. So indeed it is, but I could not this evening give any undertaking about acceptance of this principle for a future year or go beyond what I have said, although of course my right hon. Friend will take note of the strong feelings which exist in this matter.
10.0 p.m.
Mr. Glenvil Hall: Are there strong feelings on this matter? I should have thought that the concessions made in this Bill were pretty good, that we ought to accept them for what they are, and then see from experience what happens during the coming year. I hope that the Financial Secretary will not make any promises for further Amendments next year or in the foreseeable future. Let us see how we get on. The concessions already made by the Chancellor of the Exchequer are pretty far-reaching, and I think we ought to accept them in that spirit, and, having got three-quarters of the cake, not ask for the whole.
Sir H. d'Avigdor-Goldsmid: In view of the views that have been expressed, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause ordered to stand part of the Bill.

Clause 65.—(ASSIMILATION OF AUTHO RISED UNIT TRUST SCHEMES TO INVESTMENT COMPANIES: (INCOME TAX).)
Sir E. Boyle: I beg to move, in page 54, line 28, to leave out from "rights" to the end and insert:
"the date of payment, in the case of income not paid to unit holders, being taken to be—

(a) the date or latest date provided by the terms of the scheme for any distribution in respect of the distribution period in question;

(b) if no date is so provided, the last day of the distribution period.

(2) Without prejudice to the generality of the foregoing subsection".
This Amendment simply fixes the date on which income not paid to unit holders is to be regarded as arising to them for tax purposes under the new arrangements for unit trusts. As it does no more than that, in the circumstances, I do not think that I need trouble the Committee with a long speech.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 67.—(SUPPLEMENTARY PROVISIONS RELATING TO SS. 65 AND 66.)
Amendment made: In page 55, line 43, after "In", insert "section sixty-five of this Act and".—[Sir E. Boyle.]
Clause, as amended, ordered to stand part of the Bill.

New Clause.—(CONFIRMATION OF DOUBLE TAXATION AGREEMENT WITH THE REPUBLIC OF IRELAND.)
(1) The Agreement made on the twenty-third day of June, nineteen hundred and sixty, between the Governments of the United Kingdom and the Republic of Ireland relating to the Agreements set out in the Eighteenth Schedule to the Act of 1952 (which first-mentioned Agreement is set out in the Schedule (Agreement between the Government of the United Kingdom and the Government of the Republic of Ireland with respect to certain exemptions from tax) to this Act) is hereby confirmed, and, subject to the necessary steps being taken to give it the force of law in the Republic of Ireland, shall have effect accordingly.
(2) In subsection (2) of section three hundred and forty-nine of the Act of 1952 for the words from "and by the Agreement" to "1959" there shall be substituted the words "and by the Agreements set out in the Seventh Schedule to the Finance Act, 1959, and the Schedule (Agreement between the Government of the United Kingdom and the Government of the Republic of Ireland with respect to certain exemptions from tax) to the Finance Act, 1960".
(3) For the purpose of carrying out any obligation of the Government of the United Kingdom under Article 2 of the Agreement set out in the said Schedule (Agreement between the Government of the United Kingdom and the Government of the Republic of Ireland with respect to certain exemptions from tax), Her Majesty may by Order in Council direct that any provisions of the Income Tax Acts specified in the Order (being provisions affecting in any way exemptions from income tax of persons resident in the United Kingdom) shall not affect, and be deemed not to have affected, exemptions from income tax which persons enjoy as not resident in the United Kingdom but resident in the Republic of Ireland.—[Sir E. Boyle.]
Brought up, and read the First time.
Sir E. Boyle: I beg to move, That the Clause be read a Second time.
I assume that it will be convenient to the Committee to take the new Schedule —Agreement between the Government of the United Kingdom and the Government of the Republic of Ireland with respect to certain exemptions from tax—together with this new Clause, because that is the Schedule to which it is related. This new Clause confirms an Agreement made on 23rd June of this year between the Government of the United Kingdom and the Government of the Irish Republic with respect to certain exemptions from tax. This is a matter which has a long and somewhat complicated history, with which I do not think I need trouble the Committee, though the matter has given a certain amount of trouble in past
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years. It will be for the satisfaction of the whole Committee that last year we entered into an Agreement with the Irish Republic to make it clear beyond any doubt that avoidance devices against which the two countries had enacted specific legislation could not be practised under cover of the exemptions provided by the Double Income Tax Agreement between the two countries. That Agreement was confirmed by Section 29 of the Finance Act, 1959, and indeed is set out in the Seventh Schedule to that Act.
In view of the introduction in our current Finance Bill of further provisions against tax avoidance, with which the Committee, I am sure, is only too familiar, a new amending Agreement has been negotiated with the Irish Republic so as to restate in more general terms the Agreement of last year. My right hon. Friend announced in a Parliamentary Answer on 21st June, that such an agreement was in the course of being negotiated. The Agreement has now been published as a White Paper and is set out in the proposed new Schedule which is to be found on the Notice Paper.
I do not think I need say any more in introducing this new Clause, which simply implements that Agreement, and will make the anti-avoidance measures of this Finance Bill more effective.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause. —(ESTATE DUTY: GRADUA TION OF CHARGE WHERE BENEFITS FROM COMPANY SURRENDERED.)
(1) Where, in the case of a person dying after the fourth day of April, nineteen hundred and sixty, such a surrender as is mentioned in subsection (1) of section forty-eight of the Finance Act, 1940 (under which a surrender of title to benefits from a company will not defeat a charge to estate duty under section forty-six of that Act), is made bona fide at a time before the beginning of the two years ending with the death, the amount of any benefits treated as accruing to the deceased from the company which are so treated by virtue only of the operation of the said section forty-eight in relation to that surrender shall be reduced—

(a) by fifteen per cent. thereof if the said time fell during the first of the three years ending with the death,

(b) by thirty per cent. thereof if it fell during the first of the four years ending with the death, or

(c) by sixty per cent. thereof if it fell earlier.

(2) Where subsection (2) of section fifty-one of the Finance Act, 1940 (under which where estate duty is payable in respect of shares or debentures by virtue of which benefits accrued to the deceased, relief from duty under section forty-six of the Act is given by reference to the value of the shares or debentures), has effect as respects any shares or debentures by reason of any benefits being treated as accruing to the deceased, being benefits of which under the foregoing subsection the amount is reduced by any perentage, paragraphs (a) and (b) of the said subsection (2) shall so have effect as if for references to the value of the shares of debentures there were substituted references to their value reduced in the proportion which that percentage of the amount of the said benefits bears to the amount of all benefits accruing or treated as accruing to the deceased from the company by virtue of any interest that he at any time had in the shares or debentures or by virtue of a power's having at any time been exercisable by him or with his consent in relation thereto, and other references in the said section fifty-one shall be construed accordingly.—[Sir E. Boyle.]
Brought up, and read the First time.
Sir E. Boyle: I beg to move, That the Clause be read a Second time.
This new Clause extends the graduated relief provided by Clause 61 of this year's Finance Bill to cases where the deceased person, more than two years before his death, gave up his title to benefits from companies which attract duty under Section 46 of the well-known Finance Act of 1940.
Under Section 46 and subsequent related provisions of the Finance Act, 1940, duty is charged in certain circumstances where a deceased person had at some time transferred property to a one-man company and, within the last five years, had received or could have received benefit from it. If the deceased had surrendered his title to benefits within five years before his death, Section 48 of the Finance Act, 1940, provides that a charge may yet be made as if he had not done so.
In Committee, when we were debating what was Clause 59, my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) raised the point that in his view graduation ought to be allowed where the title to benefit had been surrendered in cases of this kind. My right hon. Friend examined this proposal. In his view, as I indicated in Committee, my hon. Friend had made a very reasonable point. For that reason we put down a new Ways and
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Means Resolution. The new Clause adopts the proposal which my hon. Friend moved in Committee though not, as he will recognise, in quite the form in which he proposed it.
In my view this in no way adds a new principle or any substantive controversial point to our discussions in Committee on what was Clause 59, which we debated at some length. The new Clause merely extends the graduation which ought to be allowed in this case. Whatever may be hon. Members' views on the principle of the Clause, I think that this tidying up provision is a reasonable addition to the Bill.
Mr. Mitchison: We do not particularly like the occasion of this Clause. These arrangements with and about companies were and are open to a good deal of criticism. More particularly we do not like, and we divided against, the proposal to reduce by graduation the rates of Estate Duty during the five years after a gift inter vivos.
On the other hand, if we are to have such a graduation it seems very difficult to distinguish this case from the simpler cases provided for in the Bill. We therefore reserve all our objections to the graduation in principle, as we intended to reserve them when the amended Clause was passed a few moments ago. While doing so, we shall not divide against the new Clause.
Sir H. d'Avigdor-Goldsmid: Notwithstanding his well-known dislike of monkeying about with companies, when his party were in power the hon. and learned Member for Kettering (Mr. Mitchison) supported the extension from three to five years of what I will briefly call the death duty rule. I therefore expect that he will regard it as logical for him to accept the graduation.
Mr. Mitchison: Will the hon. Member explain the logic of what appears to me to be a remarkable proposition?
Sir H. d'Avigdor-Goldsmid: I do not want to detain the Committee. I thought that I had made a quite unremarkable statement. When the hon. and learned Member's party were in power they extended the mischief of the death duty exemption up to five years and took specific action to catch transactions of the class covered by the Clause. It

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therefore appears to be entirely logical, now that the mischief of the five years has been somewhat mitigated, that it should apply equally to those transactions caught by the Clause. I hope that this logic will now appeal to the hon. and learned Gentleman.
Having just had a dusty answer from him, may I thank my hon. Friend the Financial Secretary for giving me a good answer on this occasion?
Mr. J. T. Price: Since the hon. Member for Walsall, South (Sir H. d'AvigdorGoldsmid) is making an appeal based in his own submission on logic, I must for a moment follow up his logic. If he believes that a former Labour Government created some form of mischief in extending the period from three years to five years, is he suggesting that in next year's Finance Bill—it is too late this year—he will seek to bring forward an Amendment to reduce the period from three years to five years?
As we are dealing with a property interest, and the effect in many respects of Estate Duty being mitigated, has any computation been made by the Treasury of the impact on Estate Duty yield? I do not remember ever being told the financial impact on the yield, and I think that, with very great respect, I am entitled to ask for some kind of estimate of what is involved in terms of hard cash.
Sir E. Boyle: I can answer the hon. Gentleman in one sentence. My right hon. Friend said, and I repeat it, that the total cost of accepting Clause 61, the principle of which we are not now discussing, would, in a full year, be rather more than £2 million. As far as I can tell the Committee, the cost of accepting the new Clause, arising out of what was put forward in Committee by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor Goldsmid) will be negligible in relation to the total amount, and I was glad to hear what I thought was the very fair speech of the hon. and learned Member for Kettering (Mr. Mitchison).
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause.—(MODIFICATION OF S. 50 IN RELATION TO PARTNERSHIPS.)
(1) The following provisions of this section shall have effect where such an assessment as is mentioned in subsection (1) of section fifty of this Act was made on any person who at any time carried on a trade, profession or vocation in partnership with any other person (whether the assessment was made in respect of the profits or gains thereof or not).
(2) In this section—
"the business" means the trade, profession or vocation mentioned in subsection (1) of this section;
"the normal year" has the same meaning as in section fifty of this Act;
"the person in default" means the person mentioned in subsection (1) of that section.
(3) Subject to subsection (5) of this section, an assessment in respect of the profits or gains of the business may be made under the said section fifty not only on the person in default but on any person who carried on the business at any time in the year for which the assessment is made and either—

(a) then carried it on in partnership with the person in default or with a person who at any time in the normal year carried it on in partnership with the person in default; or

(b) at any time in the normal year carried on the business in partnership with the person in default;

and may be made for the purpose of making good to the Crown a loss of tax attributable to the neglect of any person who carried on the business at any time in the year for which the assessment is made.
(4) For the purpose of determining whether leave may be given for the making of such an assessment on two or more persons who carried on the business in partnership subsections (5) and (6) of the said section fifty shall have effect as if the neglect referred to therein were the neglect of any of those persons and as if the assessments referred to therein were assessments made on any one of those persons
(5) Where such an assessment is made on two or more persons who carried on the business in partnership and those persons include any person (in this subsection referred to as "the exempted partner") who was not charged in any such assessment as is mentioned in subsection (1) of this section, the tax charged in the assessment—

(a) shall not include tax on so much of the profits or gains as would fall to be included in the exempted partner's total income; and

(b) shall not be recoverable from the exempted partner:

and where a person who was not charged as aforesaid carried on the business otherwise than in partnership no such assessment shall be made on him.—[The Solicitor-General.]
Brought up, and read the First time.
The Solicitor-General: I beg to move, That the Clause be read a Second time.
This Clause is designed to extend the provisions of Clause 50 so as to make it work properly in relation to partnerships. The Committee will remember that Clause 50, in brief, provides that where an assessment has been made on any person within the normal six-year period for any year which is, in this Clause and in Clause 50, referred to as the normal year, in order to recover tax lost owing to his default, the assessment may be made on him for a year not more than six years earlier to recover tax so lost.

That is referred to in the other Clause, though not in this one, as the "earlier year". Where the assessment has been made on him for that purpose in the earlier year, an assessment may be made on him—but then only with the leave of the general or special commissioners—for the same purpose for a still earlier year, provided that it is not more than six years earlier, and so on.
That Clause does not work in relation to partnerships. It is doubtful whether it works even in the case of a simple partnership, where there has been no change in the members of the partnership between the normal year and the earlier year. The reason is that Clause 50, in terms, enables an assessment to be made only on the person in default, but in the case of a partnership, the assessment has to be made in the partnership name; in other words, on all the partners. Certainly, in the less simple case where there has been a change in the partners between the normal year and the earlier year, the Clause definitely breaks down.
The broad effect of the new Clause is that a person who is involved, whether as a partner or otherwise, in a Income Tax default in the normal year can be taxed for the earlier year, but if he is not involved in the normal year he cannot be taxed for the earlier year. For technical reasons, his name may have to appear in the assessment in the partnership name for the earlier year, but he is let out by an exemption clause.
10.15 p.m.
The scheme is that neglect by any one partner in relation to partnership affairs —that is to say, in relation to partnership return and accounts—is treated as
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the neglect of all the people who are partners at the time. Neglect by one partner taints all the others who are his partners at the time. Therefore, where there has been no change in the partners between the normal year and the earlier year, neglect of any of the partners in relation to partnership affairs in the normal year enables an assessment to be made on the whole of the partnership profits for the earlier year, provided that there has been a neglect in the earlier year.
The same applies where the only change consists in taking in an additional partner. Where a person has gone out of the partnership between the normal year and the earlier year, the assessment for the earlier year for technical reasons has to be made in the name of the partnership, but as a general rule tax will not be charged on the share of the partnership profits which is appropriate to the partner who has gone out and the tax charged on the other partners' shares will not be recoverable from him.
There is one exception from that proposition. If the partner who left the partnership was himself in default in relation to his personal return for the normal year, the tax charged in the assessment on the partnership for the earlier year will include the tax on his share of the partnership profits as well as on the shares of the partners who remain in the partnership, because his own personal default will reopen the partnership accounts as against him.
As it is a complicated Clause, the best thing I can do is to explain the various circumstances in which it might work and show how it works. Take, first, the case where A is operating the business sole in the normal year and in partnership with B in the earlier year. A and B are jointly assessable in the partnership name for the earlier year, whether the neglect in that year in relation to partnership affairs was A's or B's. But B, the partner in the earlier year, is an exempted partner and the tax on his share of the partnership is not recoverable from him.
The second case is A and B in partnership in the normal year, but A sole in the earlier year. That is the converse of the first case I put. A is assessable for the earlier year, whether the neglect

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in relation to partnership affairs in the normal year was that of A or B.
The third case is A and B in partnership in the normal year and B and C in partnership in the earlier year. B and C are then jointly assessable in the partnership name for the earlier year, whether the neglect in relation to partnership affairs in the normal year is that of A or B, or whether the neglect in relation to partnership affairs in the earlier year was that of B or C. But C, unless he was himself guilty of neglect in relation to his personal return, is an exempted person. His share of the tax is not recoverable. C was a partner in the earlier year, not a partner in the normal year, and the new Clause bites only on a person on whom an assessment is made in the normal year.
I apologise to the Committee for this involved explanation, but this is a complicated matter and I thought that it would be better, particularly as it may be studied elsewhere, if I gave the various permutations and combinations. The fourth case is A and B in partnership in the normal year, C and D in partnership in an earlier year—a complete change of partnership. An assessment cannot be made for the earlier year unless either C or D, or both of them, were in default in relation to their personal affairs in a normal year. If only one of them was in default in relation to his personal affairs in a normal year, an assessment for the earlier year can be made in the partnership name, but the other partner is an exempted partner and the tax on his share of the profits is not recoverable.
The last case, the Committee will be glad to hear, that I propose to give is this. A and B in partnership in the normal year, A sole in the earlier year. In the normal year the partnership affairs are in order, but B, not A, was in default in relation to his personal return. That case would be technically within subsection (3) so as to enable an assessment to be made on A in respect of the business profits for the earlier year, but the last two lines of subsection (5) preclude the making of an assessment on him.
I have already apologised for reducing our proceedings almost to an algebraical formula, and I apologise again for the complexities of this new Clause, but I hope
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that it is apparent, as I have outlined it to the Committee, that it fits into the scheme of Clause 50 as outlined by my right hon. and learned Friend the Attorney-General in Committee and applies that scheme to partnerships.
Mr. Glenvil Hall: I am grateful, as all of us must be, to the Solicitor-General for that very full and lucid explanation. Frankly, it boils down to this: may we be assured that no partner who is responsible for a default, a neglect or fraud escapes even if he has left the partnership?
The Solicitor-General: Yes, that is so. What we are concerned with here is the reopening of an earlier assessment.
Mr. Houghton: Obviously at this time of night we will have to take a good deal on trust. It seems to me that this reinforces my plea, made so frequently, which has fallen on deaf ears, namely, that when new Clauses of this sort are introduced there should be an explanatory memorandum with them. It is straining the patience and application of the Committee to introduce a proposal of this kind at this hour and at this stage of the Bill without some prior explanation.
What the Solicitor-General has done is to read out an explanation for the benefit of those who will study HANSARD tomorrow rather than for the benefit of the Committee. Indeed, he said that the words would be studied elsewhere. He knows that probably they will be of more use to people who can read his words tomorrow than to those who have to deal with this proposal now. There he sits, stuffed, indeed bulging, with explanations of this and other proposals, yet we are denied a simple explanation until he stands up and more or less reads it to us.
Clearly, we do not want partners to be punished for the default of others or those who have left the partnership to be pursued for defaults. There are many difficulties about partnerships and we have had many permutations of them. As far as we can tell, it looks all right, but that is not saying very much at this moment.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

Fourth Schedule.—(RELIEFS IN RESPECT OF TAX UNDER SECTION THIRTY-SIX.)
Mr. Milian: I beg to move, in page 72, line 39, to leave out "one-twentieth" and to insert "three-eightieths."
The Fourth Schedule deals with compensation for loss of office. The Committee will recall that the first £5,000 paid as compensation for loss of office is not assessable to tax under the Bill. Apart from the £5,000, however, there can be substituted a standard capital superannuation benefit, which is calculated under the Schedule. In calculating the standard capital superannuation benefit, what is done is that an allowance of one-twentieth of the annual salary averaged over the last three years of service is allowed for each year of service. If, however, we compare the calculation of this notional lump sum, called the standard capital superannuation benefit. under the Schedule with a roughly similar provision for approved superannuation schemes—that is, superannuation schemes approved for taxation purposes—we have the difference that the lump sum payment under an approved scheme is calculated on roughly a fraction of three-eightieths, whereas the lump sum payment under the Fourth Schedule is calculated on a fraction of one-twentieth.
We are entitled to know why there should be this distinction between the standard capital superannuation benefit and the normal provisions which are made for approved superannuation schemes. After all, we are trying to put people who suffer loss of office and who get these compensation payments, which come under Clause 36 of the Bill, on roughly a similar footing for taxation purposes as other people who get lump sums under approved superannuation schemes.
This is a point which I raised on the Schedule in Committee. At that time, the Financial Secretary replied that
"In some circumstances"—
he was dealing with approved superannuation schemes—
"the fraction might be slightly more than three-eightieths. Since it is necessary for the purposes of the Schedule to have a simple
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fraction, one-twentieth has been chosen as a sort of rounded-up figure."—(OFFICIAL REPORT, 26th May, 1960; Vol. 624, c. 790.]
That strikes me as an utterly inadequate explanation.
Why is it necessary, for the purposes of the Schedule, to have a simple fraction? There is nothing else in the Schedule which is the least bit simple and there does not seem to be the least necessity to have a simple fraction here. In any event, if we want a simple fraction, the nearest simple fraction to three-eightieths is not one-twentieth, but one-twenty-fifth. Three-eightieths is 3¾ per cent. To round that up, we get a figure of 4 per cent., which is one-twenty-fifth. In the Schedule, we have a rounding-up of 3¾ per cent. to 5 per cent. That is quite unnecessary and indefensible.
The point is by no means a small one. If we calculated a standard capital superannuation benefit under the Schedule as it stands at a rate of 5 per cent. for each year of service or one-twentieth and the standard capital superannuation benefit amounted to £10,000, which it might do, to calculate at 3¾ per cent. or three-eightieths the equivalent figure would be £7,500. This is by no means an extravagant example. It is the sort of example which is likely often to arise in practice.
10.30 p.m.
It really does make a considerable difference to Clause 36 and the Fourth Schedule whether the sum which is allowed tax-free is either, say, £10,000 on the one hand or £7,500 on the other. I do think that the explanation we were given when this matter was raised previously in Committee was quite inadequate. There may be a better explanation; if so, I hope we shall hear it tonight; but to say that it is necessary for the purposes of this Schedule to have a simple fraction and then to take one-twentieth as a sort of "rounded-up figure" seems to me to be not giving the Committee the sort of explanation the Committee really requires. I hope that the Committee will press this Amendment on the Government
Sir E. Boyle: My remarks on an earlier Amendment that there would be an occasion later in the proceedings on the Bill for prize giving lead me now to say I gladly award the hon. Member for Glasgow, Craigton (Mr. Milian) his

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prize at this moment. Especially when one considers that he is taking part for the first time in proceedings on a Finance Bill. Certainly a prize is due to the hon. Member if only for his proficiency on the Fourth Schedule, which is not one of the more immediately accessible parts of this year's Finance Bill. I would also say to the Committee, in view of the quotation from one of my own speeches, not, I suspect, as the result of independent research, by Mr. Harold Wincott in the Financial Times and also by the Star, that I am going to take special care over the commas when seeing how my speeches on the Schedule are reported on Report.
I have looked at the matter again since we discussed it in Committee before. I certainly think it is necessary, as I said, that we have here a simple fraction. There is an additional argument which I did not put before why I think this fraction of one-twentieth is not an unreasonable one.
It is quite true that the figure of three-eightieths which is proposed in the Amendment is the figure which obtains in the Civil Service Superannuation Scheme. On the other hand, I think it is worth remembering how that fraction of three-eightieths appeared in that scheme. The lump sum produced by the application of this fraction, namely, three-eightieths, was originally about one-quarter in value of the total retirement benefit, and so the general practice in the case of approved superannuation schemes is to permit the lump sum equal to one-quarter in value of the value of the total retirement benefit.
Of course, in recent years there has been some increase in the expectation of life, and that has resulted in the calculation on this basis being somewhat more generous than the calculation based on the three-eightieths of retirement salary. So I think, having looked at it again, that acceptance of the Amendment would mean that the lump sum exempted in the Fourth Schedule to this Bill would be somewhat less generous than most individuals would have got under an approved scheme if there had been one.
I can only repeat to the Committee that I think that the figure of one-twentieth we are proposing is not an unreasonable one. I think that my
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description of it as an "approximated and rounded up figure" was reasonable, particularly so because we have to have a simple figure for administrative purposes. I do not think myself that there is any great advantage in having any intermediate figure between three-eightieths and one-twentieth. Having considered this matter again, while I understand that the hon. Member has not changed his view, I can only give the Committee my own advice that the fraction we originally proposed of one-twentieth is not an unreasonable fraction to accept.
Mr. Mitchison: There was certainly not a little circumlocution about that. The short answer to the talk about the simple fraction is that it does not lie in the mouth of a Government who keep Income tax at a standard rate of 7s. 9d. in the £ to talk too much about simple fractions; for 7s. 6d. is one side and 8s. is the other, and whichever be the rate either is more simple than 7s. 9d.
Really that sort of argument is quite unconvincing. I should have thought that if we have three-eightieths in the Civil Service arrangement it is better on that account. I should have thought that if we are to lean to one side or the other in this figure it is better to lean to the lower fraction, for the reason that what the Government are doing here is exempting people from a provision designed to limit severely the golden handshake operation—an operation which I should not have thought anybody in the Committee would approve. [Interruption]. Well, I do not know about the other side of the Committee, but that is what we on this side would say. In these circumstances I would much prefer three-eightieths, first because it is nearer the truth, secondly because it is the Civil Service figure, and thirdly because the defence put up for one-twentieth, with great respect to the Financial Secretary for whom I have the highest esteem, is completely bogus from beginning to end.
Mr. Glenvil Hall: The Financial Secretary said earlier that he would distribute prizes. When he began I gathered that one was about to be given during the speech he made on the Amendment. He indicated more or less that what my hon. Friend the Member for Glasgow, Craigton (Mr. Millan)

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said covered everything, and then he ended by neither distributing the prize nor accepting the Amendment. Where are we on the Amendment? Surely the hon. Gentleman does not propose to leave it there.
Mr. J. T. Price: I do not wish to be unfair to the Financial Secretary, who usually comes well briefed to the Committee with some evidence of having done his homework, and very difficult it is at times. But surely this sort of argument in trying to defend this proposition is not worthy of him. It is no use his trying to bluff his way through this and confuse us by quoting mortality figures and the impact of the improvement in those figures on this question. It is a quite irrelevant argument.
Stripped of its superficialities, this is a simple question. It is that under existing arrangements superannuitants who take part of their benefit as a lump sum are given the existing concession of three-eightieths. It has been the constant endeavour of many people who are professionally and technically interested in superannuation funds to limit as far as possible that proportion of the benefit which is paid out in a lump sum. Strong influences have been brought to bear to limit this sort of thing. When we come to deal with the consequences of what has been euphemistically called the golden hand-shake, the handing out of capital sums as compensation to redundant directors and people of that order, this proposal gives under the terms of the Schedule a preferential benefit of one-twentieth. What is it? Let us reduce it in mathematical terms. It is four-eightieths against three-eightieths.
Mr. Ross: An additional eightieth.
Mr. Price: I do not want a blackboard to demonstrate in this Chamber that one-twentieth is the same as four-eightieths and, therefore, the difference we are discussing is one-eightieth. Bertrand Russell once said that even the most abstract philosophical concept could be reduced with a clear-thinking mind to mathematical terms.
I am not here to argue that, and I should find it very difficult to do so, particularly at this time of night. Nevertheless, that is what we are dealing with
388
here—the difference between four-eightieths which the Treasury are handing out to the golden handshake boys and three-eightieths which we are giving to our hard-working civil servants and all the thousands of beneficiaries who have been members of industrial pension funds for many years.
I object, and I would be prepared to counsel my colleagues who decide these things that this is a matter of principle on which we should be prepared to divide the Committee. This proposal is not justifiable. If the Chancellor and his colleagues on the Treasury Bench are not able to give us an assurance that they will reconsider this, I hope very strongly that my hon. Friends will divide the Committee and register our protest against it.
Sir E. Boyle: Listening to the hon. Member for Westhoughton (Mr. J. T. Price), I was reminded of the concluding lines of Housman's Parody of a Greek Tragedy, in which the victim says "Aye, aye, another blow. That makes the third", and the chorus says "If that be so, thy state of health is poor but thine arithmetic is quite correct." The hon. Gentleman's calculations worked out absolutely right.
I have considered this, as I promised the Committee, since we last discussed it on the Committee stage. I would again make the point that we do not, of course, want to erode the whole principle of the Schedule and the Clauses to which it applies. We are dealing here with a form of tax avoidance, one of many with which we are dealing in the Bill, but if we accepted the Amendment it would mean that the lump sum exempted under the Schedule would in many cases be less generous than an individual could have got under an approved scheme if he had been in an approved scheme. It is primarily on this ground that my right hon. Friend believes that the fraction of one-twentieth is a fair and reasonable one, and it is for these reasons that I invite the Committee to reject the Amendment.
Mr. Diamond: It was a great pity that the Financial Secretary introduced the argument that it was a convenient fraction to use one-twentieth rather than three-eightieths, because when one descends to arguments like that it gives the impression that there is no real

389
argument to rely on and that one is reduced to an unreal argument of that kind. It is a very simple matter. One has to do the sum one way or the other. The person retires and has been so many years employed, and one takes the number of years and multiplies them by four-eightieths or three-eightieths. It cannot really be said that the argument of convenience carries any weight at all.
The proposal gives additional relief from Income Tax and Surtax of 33⅓ per cent. It is a simple thing on looking at it. As my hon. Friend pointed out, it is a question of three-eightieths or four-eightieths. It is a question of a proportion of 3:4. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) gave the example of £7,500 as against £10,000.
It is an increase of £2,500 on £7,500, which is an increase of one-third in the amount which escapes Income Tax and Surtax, the combined rate of which might be 15s. or 16s. in the £. The Government are giving a benefit there of one-third compared with what is regarded as acceptable to the whole of the Civil Service and to members of all approved schemes.
We ought to stand firm on this. We suspect that the Government do not mean business on the golden handshake, and unless they accept our Amendment they show that they do not mean business.
Question put, That "one-twentieth" stand part of the Schedule:—
The Committee divided: Ayes 184, Noes 118.

Division No. 130.]

AYES

[10.44 p.m].

Aitken, W. T.

Gammans, Lady

MoMaster, Stanley R.

Allason, James

Gibson-Watt, David

Maddan, Martin

Amory,Rt.Hn.D.Heathcoat(Tiv'tn)

Glover, Sir Douglas

Maginnis, John E.

Arbuthnot, John

Glyn, Sir Richard (Dorset, N.)

Markham, Major Sir Frank

Atkins, Humphrey

Goodhew, Victor

Marten, Neil

Balniel, Lord

Gower, Raymond

Mathew, Robert (Honiton)

Barber, Anthony

Green, Alan

Matthews, Gordon (Meriden)

Barlow, Sir John

Grimston, Sir Robert

Mawby, Ray

Barter, John

Hall, John (Wycombe)

Mills, Stratton

Batsford, Brian

Hamilton, Michael (Wellingborough)

Montgomery, Fergus

Baxter, Sir Beverley (Southgate)

Harris, Frederic (Croydon, N.W.)

Morgan, William

Bennett, F. M. (Torquay)

Harrison, Col. J. H. (Eye)

Nabarro, Gerald

Berkeley, Humphry

Harvey, John (Waithamstow, E.)

Nugent, Sir Richard

Biggs-Davison, John

Heald, Rt. Hon. Sir Lionel

Pannell, Norman (Kirkdale)

Bingham, R. M.

Hendry, Forbes

Partridge, E.

Birch, Rt. Hon. Nigel

Hill, J. E. B. (S. Norfolk)

Pearson, Frank (Clitheroe)

Bishop, F. P.

Hirst, Geoffrey

Peel, John

Bossom, Clive

Hocking, Philip N.

Percival, Ian

Bourne-Arton, A.

Holland, Philip

Pickthorn, Sir Kenneth

Box, Donald

Holt, Arthur

Pike, Miss Mervyn

Boyle, Sir Edward

Hopkins, Alan

Pilkington, Capt. Richard

Brewis, John

Hornsby-Smith, Rt. Hon. Patriola

Pitman, I. J.

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

Howard, Gerald (Cambridgeshire)

Pitt, Miss Edith

Bryan, Paul

Hughes-Young, Michael

Powell, J. Enoch

Bullard, Denys

Hutchison, Michael Clark

Price, David (Eastleigh)

Butcher, Sir Herbert

Iremonger, T. L.

Prior, J. M. L.

Carr, Compton (Barone Court)

Irvine, Bryant Godman (Rye)

Prior-Palmer, Brig. Sir Otho

Chataway, Christopher

Jackson, John

Proudfoot, Wilfred

Clarke, Brig. Terence (Portsmth, W.)

James, David

Ramsden, James

Cole, Norman

Jenkins, Robert (Dulwich)

Redmayne, Rt. Hon. Martin

Collard, Richard

Johnson, Dr. Donald (Carlisle)

Rees, Hugh

Cooper, A. E.

Johnson, Eric (Blackley)

Rees-Davies, W. R.

Cordeaux, Lt.-Col. J. K.

Johnson Smith, Geoffrey

Ridley, Hon. Nicholas

Cordle, John

Jones, Rt. Hn. Aubrey (Hall Green)

Ridsdale, Julian

Corfield, F. V.

Kerans, Cdr. J. S.

Roberts, Sir Peter (Heeley)

Courtney, Cdr. Anthony

Kerby, Capt. Henry

Robinson, Sir Roland (Blackpool, S.)

Craddock, Sir Beresford

Kerr, Sir Hamilton

Roots, William

Critchley, Julian

Kershaw, Anthony

Ropner, Col. Sir Leonard

Crosthwaite-Eyre, Col. O. E.

Kirk, Peter

Scott-Hopkins, James

Curran, Charles

Kitson, Timothy

Sharples, Richard

Currie, G. B. H.

Leavey, J. A.

Shaw, M.

Dalkeith, Earl of

Leburn, Gilmour

Simon, Sir Jocelyn

d'Avigdor-Goldsmid, Sir Henry

Lewis, Kenneth (Rutland)

Skeet, T. H. H.

de Ferranti, Basil

Lilley, F. J. P.

Smith, Dudley (Br'ntf'rd & Chiswick)

Donaldson, cmdr. C. E. M.

Litchfield, Capt. John

Smithers, Peter

Drayson, G. B.

Longbottom, Charles

Spearman, Sir Alexander

Elliott, R. W.

Loveys, Walter H.

Steward, Harold (Stockport, S.)

Emery, Peter

Low, Rt. Hon. Sir Toby

Storey, Sir Samuel

Farr, John

Lucas-Tooth, Sir Hugh

Summers, Sir Spencer (Aylesbury)

Fell, Anthony

MacArthur, Ian

Tapsell, Peter

Finlay, Graeme

McLaren, Martin

Taylor, W. J. (Bradford, N.)

Fisher, Nigel

McLaughlin, Mrs, Patricia

Temple, John M.

Fletcher-Cooke, Charles

Maclean,Sir Fitzroy (Bute&N. Ayrs.)

Thomas, Peter (Conway)

Fraser, Ian (Plymouth, Sutton)

MacLeod, John (Ross & Cromarty)

Thompson, Kenneth (Walton)

Thornton-Kemsley, Sir Colin

Wall, Patrick

Wolrige-Gordon, Patrick

Tiley, Arthur (Bradford, W.)

Ward, Dame Irene (Tynemouth)

Woodhouse, C.M.

Turner, Colin

Watts, James

Woodnutt, Mark

van Straubenzee, W. R.

Wells, John (Maidstone)

Worsley, Marcus

Vane, W. M. F.

Whitelaw, William

Yates, William (The Wrekin)

Vickers, Miss Joan

Williams, Dudley (Exeter)

Wakefield, Edward (Derbyshire, W.)

Williams, Paul (Sunderland, S.)

TELLERS FOR THE AYES:

Wakefield, Sir Wavell (St M'lebone)

Wise, A. R.

Mr. Brooman-White and

Mr. Chichester-Clark.

NOES

Ainsley, William

Hayman, F. H.

Price, J. T. (Westhoughton)

Allaun, Frank (Salford)

Herbison, Miss Margaret

Probert, Arthur

Awbery, Stan

Hilton, A. V.

Randall, Harry

Bacon, Miss Alice

Holman, Percy

Redhead, E. C.

Baxter, William (Stirlingshire, W.)

Houghton, Douglas

Reynolds, G. W.

Bowden, Herbert W. (Leics, S.W.)

Hoy, James H.

Roberts, Goronwy (Caernarvon)

Bowles, Frank

Hughes, Cledwyn (Anglesey)

Ross, William

Boyden, James

Hughes, Emerys (S. Ayrshire)

Skeffington, Arthur

Braddock, Mrs. E. M.

Hughes, Hector (Aberdeen, N.)

Slater, Mrs. Harriet (Stoke, N.)

Brown, Thomas (Ince)

Hunter, A. E.

Slater, Joseph (Sedgefield)

Butler, Herbert (Hackney, C.)

Hynd, H. (Accrington)

Small, William

Castle, Mrs. Barbara

Hynd, John (Attercliffe)

Smith, Ellis (Stoke, S.)

Cliffe, Michael

Janner, Barnett

Soskice, Rt. Hon. Sir Frank

Craddock, George (Bradford, S.)

Jay, Rt. Hon. Douglas

Spriggs, Leslie

Crosland, Anthony

Jenkins, Roy (Stechford)

Stewart, Michael (Fulham)

Crossman, R. H. S.

Jones, Jack (Rotherham)

Stones, William

Cullen, Mrs. Alice

Jones, J. Idwal (Wrexham)

Strachey, Rt. Hon. John

Davies, G. Elfed (Rhondda, E.)

Jones, T. w. (Merioneth)

Sylvester, George

Davies, Ifor (Gower)

Kelley, Richard

Taylor, Bernard (Mansfield)

Deer, George

Kanyon, Clifford

Taylor, John (West Lothian)

Dempsey, James

King, Dr. Horace

Thomas, Ionwerth (Rhondda, W.)

Diamond, John

Lawson, George

Thompson, Dr. Alan (Dunfermline)

Dodds, Norman

Mabon, Dr. J. Dickson

Thomson, G. M. (Dundee, E.)

Donnelly, Desmond

McCann, John

Thornton, Ernest

Ede, Rt. Hon. Chute

MaoColl, James

Timmons, John

Fitch, Allan

McInnes, James

Ungoed-Thomas, Sir Lynn

Fletcher, Eric

McKay, John (Wallsend)

Wainwright, Edwin

Foot, Dingle

Mahon, Simon

Watkins, Tudor

Forman, J. C.

Manuel, A. C.

Wheeldon, W. E.

Fraser, Thomas (Hamilton)

Mapp, Charles

White, Mrs. Eirene

Galpern, Sir Myer

Mason, Roy

Whitlock, William

Ginsburg, David

Millan, Bruce

Williams, W. R. (Openshaw)

Gordon-Walker, Rt. Hon. P. C.

Mitchison, G. R.

Willis, E. G. (Edinburgh, E.)

Gourlay, Harry

Monslow, Walter

Winterbottom, R. E.

Grey, Charles

Moody, A. S.

Woodburn, Rt. Hon. A.

Griffiths, Rt. Hon. James (Llanelly)

Morris, John

Woof, Robert

Griffiths, W. (Exchange)

Mulley, Frederick

Yates, Victor (Ladywood)

Gunter, Ray

Noel-Baker,Rt.Hn.Philip(Derby,S.)

Hall, Rt. Hon. Glenvil (Colne Valley)

Oram, A. E.

TELLERS FOR THE NOES:

Hannan, William

Oswald, Thomas

Mr. Sydney Irving and Mr. Short.

Hart, Mrs. Judith

Pentland, Norman

Sir E. Boyle: I beg to move, in page 72, line 42, to leave out "an amount equal" and to insert:
"a sum equal to the amount or, as the case may be,".
It might be convenient if we take this Amendment together with the next Amendment, in line 44, after "tax)", insert "received or".
As I shall try to explain, the first Amendment is in a sense consequential on the second, which is the principal Amendment. These Amendments cure what I think will be generally agreed to be a defect in paragraph 4 of the Fourth Schedule. The Committee will remember that the paragraph defines what we mean by standard capital superannuation benefit. Paragraph 3 of the Schedule gives relief, in the case of a payment which is not a payment for loss of office, on the excess of the standard capital
392
superannuation benefit over £5,000, and paragraph 4 lays down the rules for calculating the standard capital superannuation benefit.
The first step is to take, broadly speaking, one-twentieth of the retiring salary for each year of service. Sub-paragraph (c) of paragraph 4 provides that there has to be deducted from this amount any tax-free lump sum receivable under a pension scheme. The trouble is that the Schedule as originally drafted provided that in calculating the standard capital superannuation benefit a deduction should be made for the value of the tax-free lump sum received or to be received under certain schemes or certain funds. In the Schedule as amended in Committee we substituted the word "receivable." This was to cover the case of a man whose retirement benefits under a scheme had not yet become due and who

393
might reasonably contend that no lump sum was to be received—I will put in a comma here in view of my previous experience—because when the time came he might not exercise his option to take any of the benefit in the form of a lump sum.
It was thought at that time that the word "receivable" would cover anything which had already been received or could in future be received as a lump sum. On further consideration of this Schedule, it seemed possible that it could be argued that sums actually received before the relevant date for the purposes of this Schedule were not covered. If that argument succeeded, it would mean that the taxpayer might be entitled to relief on a standard capital superannuation benefit without any deduction for a lump sum actually received from a pension scheme.
As a result of the second of these Amendments, there will have to be deducted any tax-free lump sum received, or receivable, from a pension scheme. I think it will be generally agreed by those who approve the principle of the Schedule, and in particular those like the hon. Member for Glasgow, Craigton (Mr. Millan) and the hon. Member for Gloucester (Mr. Diamond), who felt that the Schedule was a little loose in its original drafting, that this Amendment makes an improvement.
The first of the two Amendments is in a sense consequential on the second. Paragraph 4 (c) at present refers to the value at the relevant date of a lump sum payment. It is apt to cover the case where it is necessary to value as at the relevant date a payment to be received in the future, but I think the Committee will appreciate it is not apt wording in view of a payment already received. Under the Amendment the amount to be deducted will be a sum equal to the amount or to the value of the lump sum, and this will cover both types of case.
I have explained this at a little length because this is an important Schedule and these Amendments improve the situation and lay down beyond peradventure that people will not get more than their proper payment under the terms of the Schedule as it will now be drafted.
Mr. Jay: Is this a case where the Committee asked the Government to make
394
a change and the Government accepted it, or where the Government simply had second thoughts about their own Bill?
Sir E. Boyle: It is a little between the two. I think I can say that without equivocation. I do not remember the specific point, although a number of others were raised on the Fourth Schedule.
Mr. Mitchison: They were raised on the Bill as a whole.
Sir E. Boyle: We discussed the Fourth Schedule for about an hour and a half in Committee. As a result of that discussion, I came to the conclusion that possibly I had not myself given quite so much care to the study of he Schedule as was ideal. I have particularly looked at the Schedule between that stage and the next to see whether there might be any points where the wording needed tidying. It was in effect as a result of the exhaustive examination and scrutiny by hon. Members opposite and some of my hon. Friends that we came to realise that these words were needed.
Dr. Horace King: The hon. Gentleman has made a perfectly lucid explanation, but could he tell us why we have to have such an elaborate form of words when all that has been done could have been done by substituting the words, "or received" or "receivable"?
Sir E. Boyle: I rather doubt whether it is quite so simple. A great many complaints were received about the drafting of this Schedule when we discussed it in Committee. I have made inquiries and I am assured that a rather expansive draft—that is to say, avoiding some of the rather more difficult subsections which hon. Members did not like, such as paragraph 8 and so on—would have involved an exceptionally long Schedule.
The wording of the Schedule shows the great difficulty of dealing with some of these tax avoidance Clauses by specific powers in every case. I will not enlarge on that at this hour of the day. But the wording shows the great difficulty even of isolating what may seem a relatively simple example of tax avoidance, at the same time retaining all the words in the Schedule which are necessary if the Clause is to be effective.
Amendment agreed to.
Further Amendment made: In page 72, line 44, after "tax)", insert "received or".—[Sir E. Boyle.]
Motion made, and Question proposed, That the Schedule, as amended, be the Fourth Schedule to the Bill.
11.0 p.m.
Mr. Glenvil Hall: We should not pass the Schedule without making one or two further comments on what has happened during the debate this evening. If I may say so without offence, the Financial Secretary has little on which to congratulate himself on the way in which he has dealt with Amendments to the Schedule.
My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) in an excellent speech, moved an Amendment standing in his name and that of my hon. Friend the Member for Gloucester (Mr. Diamond). The Financial Secretary began by paying him a compliment, as though he were a master handing out a prize, and we thought that he would accept what was a straightforward Amendment which any reasonable Government would have included in the Bill from the beginning. Not a bit of it. While admitting that the arguments were strong, in the end he turned the Amendment down in what I thought was a rather derisory manner—
The Chairman (Sir Gordon Touche): Order. The right hon. Member cannot discuss on this Question an Amendment which has been negatived on a Division.
Mr. Glenvil Hall: I bow to your Ruling, Sir Gordon, and I will not pursue that point. I will deal with the Schedule as it stands. It will hand out very large sums to individuals while denying them to civil servants and others who in my view are as much entitled to them.
Mr. W. R. Williams: More entitled to them.
Mr. Glenvil Hall: As my hon. Friend says, they are more entitled to this treatment. Yet we do not hear a single squeak from anyone on the Conservative benches when an injustice of this kind is perpetrated, without a blush, by the Treasury. I protest most strongly against the Schedule being passed in this form.
Question put and agreed to.
Schedule, as amended, agreed to.

Seventh Schedule.—(ENACTMENTS REPEALED.)
Sir E. Boyle: I beg to move, in page 81, column 3, to leave out line 30 and to insert:
Section six.
In section twenty-nine, in sub-section (2), the words from the beginning to "1959; and".
Section thirty-six.
The Schedule already repeals Sections 6 and 36 of the Finance Act, 1959, and the Amendment merely adds to the repeals the first part of Section 29 (2) of that Act. That repeal is consequential on subsection (2) of the new Clause which we have just discussed—Confirmation of double-taxation Agreement with the Republic of Ireland.
Mr. Stanley McMaster: It is stated in the fourth line of the Schedule that it is an agreement between the United Kingdom and the Republic of Ireland—
Mr. Mitchison: On a point of order. Is not the hon. Member speaking to the wrong Amendment?
The Chairman: Yes. I do not think that he is on the right Amendment.
Amendment agreed to.
Schedule, as amended, agreed to.

New Schedule.—(AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM AND THE GOVERNMENT OF THE REPUBLIC OF IRELAND WITH RESPECT TO CERTAIN EXEMPTIONS FROM TAX.)
The Government of the United Kingdom and the Government of the Republic of Ireland,
Considering the Agreement of the 14th April, 1926, between the British Government and the Government of the Irish Free State in pursuance of which exemptions from tax are conferred on persons resident in one only of the countries from tax under the law of the other,
Considering that legislation may be enacted in either country to maintain the proper incidence of liability to income tax and to prevent the obtaining of undue tax advantages,
Considering that such legislation may be insufficiently effective unless, as well as applying to persons resident in the country where it is enacted, it applies also to persons not so resident but resident in the other of the two countries and accordingly affects exemptions from tax conferred in pursuance of the said Agreement of 1926,
Recognising that the legislation which was the subject of the Agreement of the 4th April, 1959, made between the two Governments

397
affected the said exemptions in particular ways, and desiring to supplement that Agreement by a more general Agreement,
Desiring to declare that save as provided by this Agreement the continuance in force of the said Agreement of 1926 shall not be affected by the enactment of such legislation,
Have agreed as follows:—
Article 1
Legislation enacted in either country at any time after the date of this Agreement and affecting in any way exemptions from income tax of that country of persons resident in that country shall, except as otherwise provided by the legislation and subject to the next following Article of this Agreement, have the like effect on exemptions from that tax which persons enjoy as not resident in that country but resident in the other of the two countries, and the enactment of such legislation shall not affect the continuance in force of the said Agreement of 1926, as amended by Agreements of the 25th April, 1928, and the 21st July, 1947, and the 4th April, 1959, and this Agreement.
Article 2
If the Government of either country represents that any provisions of legislation enacted in the other country, being provisions falling within Article 1 of this Agreement, are nevertheless not within the intention of the Agreement, the two Governments shall consult and if they agree that Article 1 ought not to apply the Government of the country in which the legislation was enacted shall take the necessary steps to secure that the said provisions shall not affect, or be deemed to have affected, exemptions from the income tax of that country which persons enjoy as not resident therein but resident in the other country.
Article 3
This Agreement shall become effective on the exchange of notes confirming that the necessary steps have been taken to give it the force of law in the United Kingdom and the Republic of Ireland, and thereafter shall remain effective only so long as it has the force of law in both countries.
Dated this 23rd day of June, 1960.
For the Government of the United Kingdom
D. HEATHCOAT AMORY
For the Government of the Republic of Ireland
SEAMAS O RIAIN
—[Sir E. Boyle.]
Brought up, read the First and Second time, and added to the Bill.
Bill reported, with Amendments; as amended (in Committee and on Recommittal), considered.

New Clause.—(RELAXATION OF TERMS OF CERTAIN RELIEFS UNDER IMPORT DUTIES ACT, 1958.)
(1) In subsection (4) of section six of the Import Duties Act, 1958 (under which a direction giving exemption from duty is to be
398
of no effect if the goods have been removed from Customs control without due notice to the Commissioners), for the words"be of no effect" there shall be substituted the words"have effect to such extent (if any) as the Commissioners of Customs and Excise (hereinafter referred to as 'the Commissioners') may allow".
(2) In subsection (3) of section seven of the said Act of 1958 (under which the Commissioners shall not exercise their power under that section of remitting or repaying duty except on a written application made by the importer before the articles are released from Customs control) after the word"importer" there shall be inserted the words" and an application for the exercise of that power must, except where the Commissioners otherwise allow, be made".—[Mr. Barber.]
Brought up, and read the First time.
Mr. Barber: I beg to move, That the Clause be read a Second time.
This Clause is a corollary to Clause 72 of the Bill as it stands. The House will remember that Clause 72 extends to Purchase Tax certain import duty reliefs. The purpose of the new Clause is to secure that the discretion that is conferred by subsection (2) of Clause 72 to accept belated claims for relief from Purchase Tax—that is, claims after goods have been released from Customs controls—should apply to relief from import duty. It is a minor Amendment, the primary purpose of which is to keep in line claims for relief from import duty and Purchase Tax, and will obviously be of advantage to those who make the claims.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause.—(APPLICATION OF PART III TO CERTAIN REGULATIONS MADE WITH CONCURRENCE OF COMMISSIONERS OF INLAND REVENUE.)
In subsection (3) of section three of the National Insurance Act, 1959 (which imposes for a failure to comply with regulations made by virtue of that section the penalties provided by subsection (5) of section one hundred and fifty-seven of the Income Tax Act, 1952), for the words from the beginning to "this section" there shall be substituted the words "Sections forty-four to forty-six of the Finance Act, 1960, shall apply in relation to regulations made by virtue of this section as they apply in relation to regulations made under section one hundred and fifty-seven of the Income Tax Act, 1952," and for the words "so made" there shall be substituted the words" made by virtue of this section".—[The Solicitor-General.]
Brought up, and read the First time.
The Solicitor-General: I beg to move, that the Clause be read a Second time.
Section 157 (5) of the Income Tax Act, 1952, lays down certain penalties for failure to comply with certain requirements of the P.A.Y.E. regulations as to furnishing of information, making returns, and so on. Section 3 (3) of the National Insurance Act, 1959, applied those penalties to failure to supply information for the purposes of the graduated pensions scheme. The P.A.Y.E. penalties are now being altered by the Finance Bill, and Section 157 (5) of the 1952 Act is repealed by Clause 42 of this Bill and by the Seventh Schedule, and the new penalties set out in Clauses 44 to 46 are substituted. The object of the new Clause is to make it clear that the new Income Tax penalties are to run for the National Insurance purpose.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause.—(INCREASE OF RELIEF IN RESPECT OF CHILDREN NOT OVER THE AGE OF ELEVEN YEARS.)
(I) In paragraph (a) of subsection (1) of section two hundred and twelve of the Act of 1952 (amounts of relief in respect of children) for the reference to one hundred pounds there shall be substituted a reference to one hundred and ten pounds.
(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section one hundred and fifty-seven (Pay as you earn) of the Act of 1952 before the twenty-second day of June, nineteen hundred and sixty.—[Mr. Houghton.]
Brought up, and read the First time.
Mr. Houghton: I beg to move, That the Clause be read a Second time.
Mr. Deputy-Speaker (Sir Gordon Touche): It would be convenient to discuss with this new Clause the new Clause—Increase of personal reliefs—and the new Clause—Increase of a personal relief.
Mr. Houghton: Yes. That will be convenient to me and to the House, I am sure.
For the first time today we come to a matter concerning the ordinary taxpayer in the street. For hours past we have been dealing with dividend strippers, hobby farmers, golden handshakers, and all sorts of people who have been
400
raiding the Chancellor's hen-roost. Only now at this late hour are we able to spare a little time for the general taxpayer—the married man, the single person, and the family man.
I wish to draw the attention of the House to the need for some relief in personal allowances. Last year the Chancellor of the Exchequer reduced the standard rate by 9d. in the £. We criticised the concentration of tax reliefs on the standard rate. We pointed out that in 1955 his predecessor, when reducing the standard rate of Income Tax by 6d., accompanied it by widespread improvements in personal reliefs. But last year the right hon. Gentleman felt it to be a good thing from the point of view of the economy and desirable from the point of view of taxpayers generally, especially industry, that he should concentrate the reliefs he could give in the Income Tax field on the standard rate. He said last year that it was the turn of the standard rate. We all assumed that this year it would be the turn of personal reliefs, if indeed anybody gets a turn in matters of Income Tax reliefs year by year.
It is significant that in the Bill the only reliefs which the right hon. Gentleman has been able to give to taxpayers generally are these. He has increased the personal relief for those who have dependent relatives from £60 to £75 a year. He has increased the relief for the taxpayer who has a housekeeper from £60 to £75. He has introduced a modest but welcome new relief for widowers and widows with young children who do not qualify for housekeeper relief but whose claim to some special tax allowance was generally acknowledged by the House. There is nothing in the Bill to improve child relief or personal reliefs for married and single persons.
The Clause proposes one special relief in respect of children. It is a proposal to increase the lowest tier of child allowance from £100 to £110, leaving alone the £125 for the over elevens and the £150 for the over sixteens still at school.
This admittedly asks the right hon. Gentleman for considerable reliefs in total tax, though the proposal we are making in regard to child relief is much more modest than the one we made in 1958 and again in 1959 to increase the child allowance by £25. In framing the present proposal we have had regard to the right

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hon. Gentleman's natural restraint on tax relief this year.
We are bound to admit that in the recent history of the child relief there have been very favourable improvements. Since 1951 the child allowance for a child under 11 has been increased by 40 per cent., from £70 to £100. For a child between 12 and 16 the increase has been 80 per cent., from £70 to £125. For the over 16 and still at school the increase has been over 100 per cent., from £70 to £150.
11.15 p.m.
These are spectacular increases, but even so they have to be put into the general picture of the tax burden on the family man today. If the pre-war personal allowance were translated into current money values, the 1950 child allowance of £40 would be £140 today.
Our proposal in respect of child relief is based on nothing more than this: first, that it should have been the turn of personal reliefs for some improvement this year; and, secondly, only modest improvements are possible and not all-round changes. But we certainly believe that the child allowance commands attention at all times because of the family man's position in society. We think that the lower tier of child relief is entitled to special attention this time because it was left out of the Chancellor's bounty in 1957. In 1952 all child allowances were increased from £70 to £85; in 1955 all child allowances were increased from £85 to £100; but in 1957 the allowance for the older children was increased while the standard allowance of £100 for the younger children was left alone. While the older children have had their reliefs increased by £25 and £50 respectively, therefore, the younger child has continued to impoverish his parents unheeded by the Chancellor.
On all these matters at this stage the question of cost to the Exchequer will arise. It is a great pity that such a minor improvement should cost relatively so much, although it would be a maximum benefit to the taxpayer of £3 15s. 3d. a year, plus in some cases some additional relief for Surtax payers. Yet, while the total cost may be as much as £8 million, we should bear in mind that the increase in the dependent relative relief will cost over £6 million in a full year, and we
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think that the Chancellor should be able to spare reliefs of equal amounts for children as for dependent relatives.
In mentioning cost, it is interesting for the House to note that the cost of such a small concession as this shows how wide is the net cast by Income Tax. After all we hear about the family man paying little or no tax, we find that to give an extra £10 in relief to children under the age of eleven may cost between £8 million and £10 million.
I may in passing just refer to our other two new Clauses. The first—Increase of personal reliefs—is much more ambitious than the second—Increase of a personal relief—and proposes to increase the married relief rom £240 to £250 and the single relief from £140 to £150. The second is confined to an increase for the married man only, from £240 to £250. I know that the Chancellor will say that the double relief, for single and married persons of £10 each, may cost £40 million to £50 million and that the £10 increase for the married man alone might cost £20 million, despite, as I have said, the smallness of the reduction in actual tax, amounting to £3 15s. for the married man, plus certain additional benefits in the case of Surtax payers.
The Chancellor may say, "I cannot afford it this year. It is not in keeping with my general budgetary and financial policy to grant reliefs on this scale at this time." That, I am sure, is what he will tell us.
To that, we say that if the Chancellor is in search of additional revenue to cover this type of deserving relief, we can tell him where to go for it. There is no doubt that since the Bill was introduced into the House, there has been a greater public awareness of the speculation in land value that is going on and the enormous untaxed capital gains that are being made by many people—those who started small and are now big, those who started poor and now boast, or others do on their behalf, that they are millionaires.
There is no doubt that in present circumstances the most crying scandal of our fiscal system is our failure to tax these substantial capital gains. Had the Chancellor constructed his Budget on more ambitious and equitable lines, there is little question that he would

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have been able to grant substantial reliefs to personal taxpayers this year, as it was their expectation that they would benefit from concessions after the concentration of reliefs last year on the standard rate.
We impress upon the Chancellor that he has in the three new Clauses a choice of reliefs to personal taxpayers. The one that we would especially commend to him, because it is more modest in cost and makes, perhaps, the strongest appeal to the House, would be the additional relief for the younger children.
Mr. Amory: The hon. Member for Sowerby (Mr. Houghton), as is his custom, has made his case with great moderation and I do not quarrel in any way with the new Clauses that have been put forward. My hon. Friends and I on this side are conscious that, in spite of the reductions which we have made in the rates over recent years, the level of direct taxation is still very high. We for our part have been a good deal more ready to reduce those rates when opportunity has permitted than right hon. and hon. Members opposite were in their time in office.
The hon. Member for Sowerby has mentioned that these personal allowances have not gone up in proportion to the changes in the value of money since pre-war. That may well be so, but it is not an accepted principle of taxation that either these allowances or the rates of taxation should vary in proportion necessarily to changes in the value of money. These allowances are merely part of our overall scheme of graduation.
If one looks into that more closely, however, one finds that hon. Members opposite, during their period of office, did little to follow that principle, because there were no spectacular increases in these allowances during their time. Between pre-war and 1945, the price level went up about 60 per cent., but by 1948 the Labour Government had only just about got back, or little better than got back, the pre-war money value of these allowances. Between 1948 and 1951, they increased these allowances much less than the increase in the price level.
During our time in office, the price level has gone up about 25 per cent. But
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the increases in these allowances has been greater than that. I will not go through them all, because the hon. Member for Sowerby accurately stated the percentages by which the children's allowances had been raised over recent years—42 per cent. in the case of the younger children, 80 per cent. in the case of the over-elevens and over 100 per cent. in the case of the older children. I have always thought that that considerable increase in the allowance for the older children, introduced by my right hon. Friend the Member for Monmouth (Mr. Thorneycroft) in 1957. was a very good provision.
In the case of the single person, we have increased the rates by 27 per cent., which is more than the price level has changed, and the same in the case of the married allowances. In the 1957 Budget there was the big increase, to which I have referred, in the graduated allowance for children and a special relief for the elderly.
In 1958 I introduced reliefs again for the elderly, and in 1959, as the hon. Gentleman has just very fairly stated, I said I considered that it was the turn of the standard rate; and this year I have proposed the increases of £15 in the housekeeper's and dependent relative's allowances. There are also the new allowances for widows and for widowers with children.
Let us now turn to the cost of these Clauses. According to our estimates, the hon. Gentleman has under-estimated the cost. Our forecast is that the proposal which he and his hon. Friends have put forward for the children's allowance would cost £13 millions in a full year, while the proposal for the married man would cost £29 millions. It would cost £57 millions in a full year if we conceded the single as well as the married allowance, and, taken together, I am afraid that it is quite impossible to contemplate increases of that order this year.
I would remind the House that the object of this Budget was to make a contribution towards keeping the economy in balance and ensuring price stability; and I think that price stability is the greatest service which one can render to those who have family responsibilities or, indeed, to all who find the burden of direct taxation rather heavy.

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If I had proposed a net reduction in taxation it would have resulted in increased spending power and that would have been in clear conflict with the needs of the economy this year.
I cannot recommend the House to accept these new Clauses because they really are in conflict with the needs of the economy. Another reason is that this proposal is impossible because I cannot afford reliefs of the scale involved.
Mr. Jay: The Chancellor's reply was very disappointing and his complete refusal to make any concession on these personal allowances is in strange contrast with his gentleness towards the dividend strippers and the hobby farmers. The fact is that over these last three years, very considerable concessions have been given in direct taxation, but they have almost all gone to the benefit of business profit rather than to personal incomes.
We have, in fact, had no concession on the major personal allowances since 1957. In the whole of the three years of the right hon. Gentleman's Chancellorship, the personal allowances have got very little indeed; and since this is the Chancellor's last chance—or so we are led to believe—would he not consider again his hardness of heart towards these personal allowances? He cannot deny that we had last year a major reduction in the standard rate of tax, but most of the benefit goes to business profits and not to personal incomes; and in so far as it does go to personal incomes, it goes more to the higher than to the lower range. We have also had a considerable reduction of Profits Tax; so again, most of the benefit goes to businesses.
I should have thought that whether one argues on the basis of incentive, or on the basis of need—and they are the most usual arguments for reductions of Income Tax—by far the strongest argument is for some concession on these personal allowances.
11.30 p.m.
On grounds of incentive I would have thought the Chancellor would not have denied that there is a far stronger case for Income Tax reliefs on personal earned incomes than on any other type
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of incomes which bear tax. If, on the other hand, one argues on grounds of need, I do not think there can be any doubt whatever that there is a much stronger case for a reduction in the personal allowance rather than for a straight reduction in the standard rate. Yet last year the Chancellor was willing to concede something like £300 million in reliefs in tax very largely in the reduction of the standard rate of Income Tax, and this year he is not prepared to find even the £13 million which, he said, was the sum which would be conceded if our proposal in the case of the child allowance were met.
I think that of all the proposals my hon. Friend put forward there is the strongest case of all for further relief for the younger children. I have never been as sure as the Chancellor is that the discrimination between children of different age, introduced three years ago, is really justifiable, but even if it is justifiable I think that there is an extremely strong case for increasing the relief in the case of those children who have got the smallest.
The Chancellor argued that in the last few years he had increased the reliefs to a greater extent to countervail any fall in the value of money than the Labour Government had in previous years. What he did not tell us was that, as The Times showed in an article just before the Budget, if we examine Income Tax over the last five or six years the remarkable fact we find is that the proportion of personal incomes taken in Income Tax has actually risen in the five years before this Budget, and since the biggest reliefs by way of the standard rate have been given to the biggest incomes bearing Income Tax, if the average proportion has risen, it follows inevitably that the lower incomes paying Income Tax must be paying a higher proportion now than they were four or five years ago. So I think there is very little in the Chancellor's argument that he has given sufficient relief by way of personal allowance to allow for the fall in the value of money during those years. The fact is that he has given the great part of relief over his three years' term to business profits and the highest personal incomes. He has done extremely little for personal allowances, where clearly the need is greatest.

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I say again that this is his last chance. If he is not a little more forthcoming before we have finished, my hon. Friends will, I hope, carry this matter to a Division, to register our opinion tonight, and, if the Chancellor does not give way, to be a strong incentive to his successor,
whoever he may be, to give any reliefs next year in this form, rather than by any reduction in the standard rate.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 90, Noes 172.

Division No. 131.]

AYES

[11.33 pm.

Ainsley, William

Hayman, F. H.

Randall, Harry

Allaun, Frank (Salford, E.)

Herbison, Miss Margaret

Redhead, E. C.

Awbery, Stan

Hilton, A. V.

Reynolds, G. W.

Bacon, Miss Alice

Holman, Percy

Roberts, Goronwy (Caernarvon)

Baxter, William (Stirlingshire, W.)

Houghton, Douglas

Ross, William

Bowden, Herbert W. (Leics, S.W.)

Hughes, Cledwyn (Anglesey)

Slater, Mrs. Harriet (Stoke, N.)

Braddock, Mrs. E. M.

Hughes, Hector (Aberdeen, N.)

Slater, Joseph (Sedgefield)

Brown, Thomas (Ince)

Hunter, A. E.

Small, William

Cliffe, Michael

Hynd, John (Attercllffe)

Smith, Ellis (Stoke, S.)

Craddock, George (Bradford, S.)

Jay, Rt. Hon. Douglas

Snow, Julian

Crosland, Anthony

Jenkins, Roy (Stechford)

Soskice, Rt. Hon. Sir Frank

Cullen, Mrs. Alice

Jones, Jack (Rotherham)

Spriggs, Leslie

Davies, G. Elfed (Rhondda, E.)

Jones, J. Idwal (Wrexham)

Stewart, Michael (Fulham)

Davies, Ifor (Gower)

Kelley, Richard

Strachey, Rt. Hon. John

Dempsey, James

Kenyon, Clifford

Sylvester, George

Diamond, John

King, Dr. Horace

Taylor, Bernard (Mansfield)

Dodds, Norman

Mabon, Dr. J. Dickson

Thomas, Iorwerth (Rhondda, W.)

Donnelly, Desmond

MacColl, James

Thompson, Dr. Alan (Dunfermline)

Fitch, Alan

McInnes, James

Timmons, John

Foot, Dingle

Mahon, Simon

Ungoed-Thomas, Sir Lynn

Forman, J. C.

Manuel, A. C.

Wainwright, Edwin

Fraser, Thomas (Hamilton)

Mapp, Charles

Wheeldon, W. E.

Galpern, Sir Meyer

Mason, Roy

Whitlock, William

Gordon walker, Rt. Hon. P. C.

Millan, Bruce

Williams, W. R. (Openshaw)

Gourlay, Harry

Mitchison, G. R.

Willis, E. G. (Edinburgh, E.)

Grey, Charles

Monslow, Walter

Winterbottom, R. E.

Griffiths, W. (Exchange)

Morris, John

Woof, Robert

Grimond, J.

Oram, A. E.

Yates, Victor (Ladywood)

Hall, Rt. Hon. Glenvil (Colne Valley)

Pentland, Norman

Hannan, William

Price, J. T. (Westhoughton)

TELLERS FOR THE AYES:

Hart, Mrs. Judith

Probert, Arthur

Mr. Sydney Irving and Mr. Lawson.

NOES

Aitken, W. T.

Dalkeith, Earl of

Jackson, John

Allason, James

d'Avigdor-Goldsmid, Sir Henry

James, David

Amory,Rt.Hn.D.Heathcoat(Tiv'tn)

de Ferranti, Basil

Jenkins, Robert (Dulwich)

Arbuthnot, John

Donaldson, Cmdr. C. E. M.

Johnson, Dr. Donald (Carlisle)

Atkins, Humphrey

Drayson, G. B.

Johnson, Eric (Blackley)

Barber, Anthony

Elliott, R. W.

Jones, Rt. Hn. Aubrey (Hall Green)

Barlow, Sir John

Emery, Peter

Kerans, Cdr. J. S.

Barter, John

Farr, John

Kerby, Capt. Henry

Batsford, Brian

Fell, Anthony

Kerr, Sir Hamilton

Berkeley, Humphry

Finlay, Graeme

Kershaw, Anthony

Biggs-Davison, John

Fisher, Nigel

Kirk, Peter

Bingham, R. M.

Fraser, Ian (Plymouth, Sutton)

Kitson, Timothy

Birch, Rt. Hon. Nigel

Gammans, Lady

Leavey, J. A.

Bishop, F. P.

George, J. C. (Pollok)

Lewis, Kenneth (Rutland)

Bossom, Clive

Gibson-Watt, David

Lilley, F. J. P.

Bourne-Arton, A.

Glover, Sir Douglas

Litchfield, Capt. John

Box, Donald

Glyn, Sir Richard (Dorset, N.)

Longbottom, Charles

Boyle, Sir Edward

Goodhew, Victor

Loveys, Walter H.

Brewis, John

Gower, Raymond

Low, Rt. Hon. Sir Toby

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

Green, Alan

Lucas-Tooth, Sir Hugh

Brooman-White, R.

Grimston, Sir Robert

MacArthur, Ian

Browne, Percy (Torrington)

Hall, John (Wycombe)

McLaren, Martin

Bryan, Paul

Hamilton, Michael (Wellingborough)

McLaughlin, Mrs. Patricia

Bullard, Denys

Harris, Frederic (Croydon, N.W.)

Maclean,SirFitzroy(Bute&N.Ayrs.)

Carr, Compton (Barons Court)

Harvey, John (Walthamstow, E.)

MacLeod, John (Ross & Cromarty)

Chataway. Christopher

Heald, Rt. Hon. Sir Lionel

McMaster, Stanley R.

Chichester-Clark, R.

Hendry, Forbes

Maddan, Martin

Clarke, Brig. Terence (Portsmih, W.)

Hirst, Geoffrey

Maginnis, John E.

Collard, Richard

Hocking, Philip N.

Markham, Major Sir Frank

Cordeaux, Lt.-Col. J. K.

Holland, Philip

Marten, Neil

Cordle, John

Hopkins, Alan

Mathew, Robert (Honiton)

Corfield, F. V.

Hornsby-Smith, Rt. Hon. Patricia

Matthews, Gordon (Merlden)

Craddock, Sir Beresford

Howard, Gerald (Cambridgeshire)

Mawby, Ray

Critchley, Julian

Hughes-Young, Michael

Mills, Stratton

Crosthwaite-Eyre, Col. O. E.

Hutchison, Michael Clark

Montgomery, Fergus

Curran, Charles

Iremonger, T. L.

Nabarro, Gerald

Currie, G. B. H.

Irvine, Bryant Godman (Rye)

Nugent, Sir Richard

Osborn, John (Hallam)

Roberts, Sir Peter (Heeley)

van Strautaenzee, W. R.

Pannell, Norman (Kirkdale)

Roots, William

Vickers, Miss Joan

Partridge, E.

Ropner, Col. Sir Leonard

Wakefield, Edward (Derbyshire, W.)

Pearson, FranK (Clitheroe)

Scott-Hopkins, James

Wakefield, Sir Wavell (St. M'lebone)

Peel, John

Sharples, Richard

Wall, Patrick

Percival, Ian

Shaw, M.

Ward, Dame Irene (Tynemouth)

Pickthorn, Sir Kenneth

Simon, Sir Jocelyn

Watts, James

Pike, Miss Mervyn

Skeet, T. H. H.

Wells, John (Maidstone)

Pilkington, Capt. Richard

Smith, Dudley (Br'ntf'rd & Chiswiek)

Whitelaw, William

Pitman, I. J.

Smithers, Peter

Williams, Dudley (Exeter)

Pitt, Miss Edith

Stevens, Geoffrey

Williams, Paul (Sunderland, S.)

Powell, J. Enoch

Steward, Harold (Stockport, S.)

Wise, A. R.

Price, David (Eastleigh)

Storey, Sir Samuel

Wolrige-Gordon, Patrick

Prior, J. M. L.

Summers, Sir Spencer (Aylesbury)

Woodhouse, C. M.

Prior-Palmer, Brig. Sir Otho

Tapsell, Peter

Woodnutt, Mark

Proudfoot, Wilfred

Taylor. W. J. (Bradford, N.)

Worsley, Marcus

Ramsden, James

Temple, John M.

Yates, William (The Wrekin)

Redmayne, Rt. Hon. Martin

Thomas, Peter (Conway)

Rees, Hugh

Thornton-Kemsley, Sir Colin

TELLERS FOR THE NOES:

Rees-Davies, W. R.

Tiley, Arthur (Bradford, W.)

Colonel J. H. Harrison and

Ridley Hon. Nicholas

Tilney, John (Wavertree)

Mr. J. E. B. Hill.

Ridsdale, Julian

Turner, Colin

Mr. Amory: I beg to move, That further consideration of the Bill, as amended, be adjourned.
We have completed a lot of work today and made a great deal of useful progress. Though our work tomorrow looks quite formidable on paper, and is formidable, I think that we shall be able to give full consideration to all the Amendments and new Clauses which have been tabled and still complete the Bill at a reasonable hour. It is in that hope that I move the Motion.
Question put and agreed to.
Bill, as amended (in Committee and on Recommittal), to be further considered Tomorrow.

ADMINISTRATION OF JUSTICE [MONEY]
Resolution reported,
That, for the purposes of any Act of the present Session to make further provision for appeals to the House of Lords in criminal cases, it is expedient to authorise the payment out of moneys provided by Parliament of any sums required or authorised to be so paid by or by virtue of the said Act of the present Session.
Resolution agreed to.

PROPERTY, ECCLESTON SQUARE (USE)
Motion made, and Question proposed, That this House do now adjourn.—[Col. J. H. Harrison.]
11.43 p.m.
Sir Colin Thornton-Kemsley: I think I owe it to you, Mr. Speaker, and the House to explain why I, the Member for what many would consider to be a remote Scottish constituency, am interesting myself tonight in the affairs of a constituent of yours in Eccleston Square in the City of Westminster. I do it because you are precluded from raising these matters on the Floor of the House, and indeed it would not be possible for you to do so, and you have done me the honour of suggesting that I, who have perhaps always taken some interest in planning matters, with which this is concerned, should raise this matter on your behalf.
The facts are these. Your constituent, Mr. Speaker, a Mr. Ancrum Evans, chartered accountant, has a house, No. 8 Eccleston Square, and the adjoining mews property, No. 8 Hugh Mews, Westminster—a large London house facing the square with basements, ground floor and four upper storeys, with the rather typical mews addition of two storeys. He acquired that in 1951 and proceeded later, in 1957, to acquire the adjoining house, No. 9 Eccleston Square.
In the meantime, in 1953, he had acquired from the London County Council a personal planning permission to use three rooms, two of them on the ground floor and one of them on the first floor, in No. 8 Eccleston Square for the purposes of his own professional business as a chartered accountant. In 1957, he acquired the adjoining house, as I have said, together with the two-storey mews at the back, No. 9 Hugh Mews. At that time, in 1957, there were two rooms on the ground floor of No. 9 Hugh Mews which were used as an office and store in connection with a builder's yard, and there is no question about there being an established business user for this purpose of an office and store in No. 9 Eccleston Square from the appointed day under the Town and Country Planning Act, 1947.
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The planning position was that Mr. Ancrum Evans had personal planning permission, lasting so long as he remained a resident in No. 8 Eccleston Square, to use the three rooms in No. 8 as offices for the purposes of his own professional business. He also had an established business user in respect of two rooms in No. 9.
In the summer of 1958, Mr. Evans undertook structural alterations of the two adjoining houses which were part of a terrace. He made intercommunicating doors on the ground floor level and at the first and second floor levels, so that both houses were intercommunicating on three floors. He has since occupied them entirely as one residence and they are separately assessed as one hereditament for rating purposes. I have before me the latest demand note for the number in the rate book—4/964, 8 and 9 Eccleston Square—
"Offices, house, garages and premises, including 8 and 9 Hugh Mews. Rateable value £568."
In the meantime, Mr. Evans, who is practising from that house under the address No. 8 Eccleston Square as a chartered accountant in the name of the firm of Rutherfords—he is himself a Fellow of the Institute of Chartered Accountants—had taken in a young partner, Mr. T. H. D. Green. Mr. Green is a bachelor and a very hapy arrangement was made whereby he should live on the premises where he worked.
The occupants of the one hereditament are as follows—I make no apology for bringing these facts to the notice of my hon. Friend the Parliamentary Secretary, because it is important that the House should understand exactly the problem involved. There is Mr. Evans' mother, the Hon. Mrs. Evans, and her sister-in-law; there is an old friend of the family whose age, I believe, is over 80; there is Mr. Ancrum Evans and his wife and four small children. I say "small" because the youngest is 1 year old and the oldest is 10. There is the partner, Mr. Green, and a resident caretaker and his wife. Mr. Evans and his partner work on the premises, with a resident caretaker and a cleaner who does the office cleaning and so on.
I suggest that this is a very happy arrangement, in fact it is a model arrangement. Here is a family house

413
where the head of the house is working and making no demand on the public transport services. He is not making a daily journey to his office by car, he is not a commuter and he and his partner are living on the premises. I think it is an ideal arrangement and one which the planners ought to welcome.
But the young family is growing up. I told the House that the present personal planning permission allows Mr. Evans the use of two rooms on the ground floor of No. 8 as his personal offices and one room, which was formerly a studio on the first floor of No. 8, for office purposes. That studio is quite a big room. I have plans before me and I have taken measurements and so on, and it is a room of about 270 square feet. It is on the first floor which is not very convenient from the business point of view. Mr. Evans wants to make that room into a nursery for the young family. All he asks is that personal planning permission for one room on the first floor of No. 8 should be transferred to equivalent but smaller rooms—one or two, or perhaps three, it would be a case of measuring up—in No. 9 which is still part of the same hereditament.
He wants to change from the first floor studio to equivalent floor space—I make a point of that—in No. 9 and he has been refused permission to do so by the London County Council. Naturally, he appealed and his appeal was heard at a public inquiry in May of last year. It was turned down.
I have tried to be as fair as I can and I hope that my hon. Friend will agree that everything I have said is factual. The reasons given for the refusal to allow this simple thing were, first, it was said that this was a residential zone in which the London County Council had consistently opposed non-conforming uses. Secondly, it was said that planning permission for this purpose would create a precedent. Thirdly—this was not said at the time but it has been said by my right hon. Friend the Minister in a letter which I have here of 13th November, 1959, and from which I quote—this had a further objectionable feature in that it involved the introduction of an office use into a house, No. 9, which had not hitherto been used for business purposes.
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I pause there because that is quite untrue. My right hon. Friend was misinformed when he said that. As I have already shown, there is an established user in No. 9, but in so far as that is a point, I want to make this clear because I want to make a suggestion to my hon. Friend. It is absolutely clear that No. 8 is the business address; 8, Eccleston Square appears on Messrs. Rutherford's notepaper. It happens that No. 8 has an imposing portico and people approaching it would never think of going to No. 9, where there is a separate front door. It is No. 8 that attracts them and that is the entrance through which the very few clients who go to see Mr. Ancrum Evans and his partner approach his offices. There is no indication that they go to No. 9.
In so far as my right hon. Friend feared that by granting planning permission to use a couple of rooms in No. 9 for office purposes he would be granting a new planning permission for Nos. 8 and 9, which had not so far had it, I make the point that that is not the case. Even if it were, no one from the outside could possibly tell. There would be no difference because people go through the portico of No. 8. It is as simple as that. The real trouble is that there is no such use recognised in the Use Classes Order as part-residential and part-office.
Of course, this is not the right place to submit it, but we, want a new class in the Use Classes Order, something which might possibly be called a professional office use by a resident occupier. I personally would not at all mind if a proviso were added that the space used for exclusive professional use should not exceed 25 per cent. of the whole, or something like that. A new Use Classes Order provision is needed to cover this kind of personal professional use in the residence of a professional man.
I turn to the London County Council objection that this is a residential zone. I am informed on very good authority by people who have made an exhaustive search into all the users of the residences around Eccleston Square that the position is as follows. One end of Eccleston Square is business user. They are concerned with only three sides of the square which are residential. I am informed that on those three sides which are

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residential no fewer than thirty-three houses are occupied by business or professional firms or societies. So we have at one end business users and at the other end coaches going to and from Elizabeth Street and frequently coaches go down one side of the square, using it as a short cut. It is also used as a car park. The whole place is one great car park. To talk about it as residential is really to stretch the imagination. It is used for all sorts of purposes as well as residential.
The London County Council made the point that no permission for nonresidential user in the square has been granted since 1955, when the development plan was approved. I am not at all sure that that is correct. Indeed, it certainly is not the case in respect of No. 58, which is the Buddhist Headquarters and in respect of which the Buddhist Society in August, 1956. was given personal permission to use some rooms as offices.
But I do not rest my case on any point like that. I think that essentially, stripped of all its irrelevancies, this case is basically simple. At a time when there is so much for the planners to do, when we are all concerned about industrial location and about competing demands on a declining area of open land in this country, and when the House is rightly concerned about the rocketing price of land, for planners to go to the absurd lengths of refusing a professional man permission to change the use of one room in his house and to transfer that use to another room in the same hereditament is to bring planning into disrepute.
We all agree, I am sure, that planning ought to be flexible. I can imagine nothing more rigid than a grant of planning permission in respect of specific, named rooms and an obstinate refusal, which has been apparent throughout the case, by the London County Council and, I am bound to say, by the Minister, too, to permit a transfer of that permission from one room to another in the same hereditament. The need for flexibility has never been more clearly demonstrated than in this case, when it arose because the children in the family were growing up and a room was needed on the first floor in which they
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could have a nursery. To have this rigid inflexibility and to say, "You shall not have a nursery in that room because we, the planners, say that you must not and say that you must have your office there and in no other room, not even on the equivalent floor space in the same hereditament," is ridiculous.
I want to be absolutely frank with the House. I am not dealing with one of my constituents. If I were I would say the same thing, and I would say the same thing if he were present tonight to hear the debate. I have some sympathy with my hon. Friend. Mr. Speaker, your constituent feels strongly about this matter—I think understandably and rightly. He has expressed himself with force, and if he has made himself a nuisance about it, I do not blame him. I think that he was justified in doing so, and I do not think that that ought to count against him. I suggest in all seriousness to my hon. Friend that he and I should get together, have a talk and see whether we cannot resolve this difficulty. It should not be impossible for two sensible persons to get together and to find some way out of this situation.
12.4 a.m.
The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph): My hon. Friend the Member for North Angus and Mearns (Sir C. Thornton-Kemsley) has been most courteous, as usual, and has been most fair and cogent in what he has said. Obviously if I were to answer him by chaffering details of square footage and superficial area I should prove conclusively that planning was as rigid as he hoped that it was not.
There is a bigger principle behind this repeated refusal of planning permission to your constituent, Mr. Speaker. I could take issue on the details of the suggested equivalent change of use. I could quarrel with some of the figures which my hon. Friend has put forward. But that is not my object this evening. There is a desperate shortage of residential space in London, particularly in areas which are most suitable for living space—namely, the areas which are zoned for residential use. On the other hand, there is quite a lot of office space of different ages and different sizes, and no doubt different prices, into which a professional man could fit himself.

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When Mr. Evans sought planning permission from the L.C.C. in 1953, he got planning permission only on a personal basis while he himself should live on the premises in question. He now wants to swop out of these premises into an adjacent one, and says that he will give up his present office user in No. 8. I have absolutely no doubt that he means this, but while he continues to reside in what is a single hereditament it could be very awkward for the planning authority if, in fact, he were to continue to make use, or permit use to be continued, of his existing offices as well as the new one.
The fact really is, however, that since Mr. Evans got permission in 1953, planning policy in London to restrict office user in residential zones has grown a great deal tougher, and it has grown a great deal tougher particularly since 1955. There has been a steadily increasing recognition that we must, in the desperate shortage of residential space, very seriously see that the space is kept for residential use and save from office use as much suitable residential space as is humanly possible.
I doubt whether Mr. Evans would have got his personal planning permission had he been applying for it now. Since he has applied for it now, he is asking approval, in fact, to extend an office use into the neighbouring house that he has bought. The effect of this would be that he would exclude the possibility of space in that neighbouring house, now unused, being used in future for residential purposes, and it is that, above all, that seems to me to justify the refusal of the London County Council, and the refusal of my right hon. Friend on appeal, to give him what he wants.
It is open to Mr. Evans to say, as my hon. Friend said very vigorously, that the whole square is littered with office user. Of course it is, but as far as I am aware no permission for office user has been given since the more recent change in planning policy to which I have referred. My hon. Friend says that he thinks he can show us one property for which such user has been granted. That is news to me. As far as I am aware, no such planning permission has been given since 1955.
I must say that I support very strongly the view of the London County Council, and of my right hon. Friend, that Mr.
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Evans should seek offices for his expanding business somewhere outside a residential zone, and should not seek to infect with office use the adjacent house. In fact, I very much hope that he will accept the situation, and will make available for residential use, either by himself or by others, the space in No. 9 which, as came out at the inquiry, could be converted, at a certain expense, into residential use.
I do not for a moment seek to suggest that taxpayers' money would be available for that particular operation, but, of course, it will be known to my hon. Friend that the taxpayer does make money available as a grant towards the conversion or improvement of a new unit of dwelling space.
Mr. Evans got personal planning permission in the much less tough planning days, in this sense, of 1953. I do not know whether he got it just for himself, or for himself and an assistant, or for himself and a secretary, but from what knowledge I have of the case it seems to me that his firm has now grown and that, therefore, the purpose for which the planning permission was sought—and the purpose for which that planning permission was given—has now changed.
His business has grown. Planning policy about offices has grown tougher, and the recognition of the need to preserve space for residential purposes has grown tougher. Nor can I accept my hon. Friend's contention that were Mr. Evans to be permitted to open offices in No. 9, no evidence would be available to the outsider, so that no precedent would he known. The very fact that we have had this debate will surely mean that anybody seeking to show a precedent to the London County Council why it should allow office space in a residential zone ensures that that is not the case.
I cannot accept either my hon. Friend's very carefully thought out view about the Use Classes Order. That does not make any distinction between one sort of office and another, and I ask my hon. Friend to recognise that it is not relevant in this case.
I must point out that Mr. Evans has, through my hon. Friend, very vigorously sought his rights. It is open to him to make another planning application. I am not for a moment suggesting what the

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result of such a planning application would be, but every citizen can renew his planning application and, if it is turned down, it is open to him to appeal and my right hon. Friend must then reach a decision. If Mr. Evans can show new facts—my hon. Friend has not convinced me this evening that there are any new facts—no doubt he will consider that course.
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Finally, I ask my lion. Friend to accept that this is not a narrow decision taken by using a ruler to measure a plan, though no doubt the decision might be justified on those grounds. The decision arises from a much tougher planning policy, with whose purposes I am sure that the whole House agrees.
Question put and agreed to.
Adjourned accordingly at eleven minutes past Twelve o'clock.