§ (1) Where in accordance with a co-ownership scheme approved as is provided in this section a body corporate makes an appropriation within the meaning of this section, a sum equal to one hundred per cent. of the amount of the appropriation shall be allowed to be deducted as an expense in computing the profits or gains of the said body corporate for the purposes of income tax and profits tax.
§ (2) For the purposes of this section a body corporate shall be deemed to have made an appropriation of the amount hereinafter specified in the following circumstances, that is to say:—
- (a) Where a body corporate has applied profits to or towards the paying up of shares in the said body corporate held by persons employed by it, the amount equal to the profits so applied; or
- (b) where shares in a body corporate have been purchased at the expense of the body corporate with a view to their resale to persons employed by said body corporate or to their being transferred to such persons and have been so sold or transferred, the amount by which their purchase price is in excess of any value or money paid or given by the employees in respect of such sale or transfer.
§ (3) For the purposes of this section "co-ownership scheme" means a scheme which is approved for those purposes by the Commissioners of Inland Revenue, and, subject as hereinafter provided, the said Commissioners shall not approve any fund unless it is shown to their satisfaction that:—
- (a) the object of the scheme is to enable persons employed by a body corporate to acquire on favourable terms and hold shares therein;
- (b) the scheme applies generally to persons employed by the body corporate and is not restricted to any particular class or classes of such persons;
- (c) the shares acquired under the scheme by persons employed by the body corporate are deposited by said body corporate on their behalf in Employees Saving's Accounts as is provided in section (Tax reliefs and deferment of taxation for Employee's Savings Accounts) of this Act;
- (d) the value of shares so deposited under any scheme on behalf of any individual shall not exceed the sum of one hundred pounds in any year of assessment; and
- (e) the scheme contains no provisions in any way restricting the right of any person to hold or dispose of shares already acquired by him under the scheme in the event that he ceases to be employed by the body corporate.
§ (4) Approval under the last foregoing subsection shall not be withheld by reason only that:—
- (a) employees with less than a specified period of service with the body corporate are excluded in whole or in part from the scheme;
- (b) employees with more than a specified period of service are entitled to proportionately greater benefits under the scheme;
- (c) the scheme provides for the exclusion of persons not required to devote the whole or substantially the whole of their time to the service of the body corporate;
- (d) the benefit accruing to individuals by reason of an appropriation is related to the wage or salary earned by them;
- (e) the scheme makes reasonable provision that no person may assign shares in respect of which he has benefited from an appropriation without first offering them to existing shareholders; or
- (f) benefits accrue under a scheme only to such individuals as elect to participate in it, provided that, subject to the foregoing provisions of this subsection, employees are generally entitled so to elect and such entitlement is not restricted to any class or classes of employees.
§ (5) The Commissioners of Inland Revenue may make regulations generally for the purpose of carrying this section into effect, and, in particular, may by such regulations:—
- (a) require the body corporate to deliver to the said Commissioners such information and particulars as the said Commissioners may reasonably require for the purposes of this section;
- (b) prescribe the manner in which claims for relief under this part of this Act are to be made and approved and in which applications for the approval of a co-ownership scheme are to be made, and
- (c) provide for the withdrawal of approval in the case of a scheme which ceases to satisfy the requirements of this section.
§ (6) The power conferred by subsection (5) to make regulations shall be exercisable by statutory instrument.—[Mr. Wade.]
§ Brought up and read the First time.
§ Mr. Donald Wade (Huddersfield, West)
I beg to move, that the Clause be read a Second time.
I should explain that, although the title refers to Profits Tax, the Clause covers Income Tax. I shall refer to that fact again in a few moments. The Clause deals with one aspect of our policy of co-ownership. I do not propose to restate the whole case for a 513 wider distribution of individually owned capital wealth, or even for employee shareholding, but I shall be glad to answer any objections which may be raised during the debate. I have one or two general observations to make before referring to the Clause in detail.
In considering the future development of industry, it is important that we should have some positive aims. First, it is not good enough merely to be against an extension of State ownership or, on the other hand, against private capitalism. Nor, in my view, does it suffice to say that one is in favour of a mixed economy. We hear that expression used very often today, but it is not always clear what is meant. If we mean a mixture of State Socialism and monopoly capitalism I am not very enthusiastic about it, but if we mean that there is a value in the private sector of industry and in private enterprise, and that we wish to see an extension of the idea of partnership in industry, I think that it is to be commended.
Secondly, all kinds of gimmicks have been put forward in recent years to persuade people to buy industrial shares. So long as they are well advised, that is all to the good. I want to see this extension of ownership and people owning more shares in industry, but the mere purchasing of shares on the stock market does not necessarily create this greater sense of partnership, whereas employee shareholding may help to bring this about.
Thirdly, in the past it has been suggested that it is not a good idea for employees to put their money into the firm in which they work, or for anyone to have all his eggs in one basket. I appreciate that argument, but a great deal of study has been given to this matter in recent years and many firms have worked out employee shareholding schemes in which the employees have shares not only in the firm in which they work, but in other firms as well. The risk is well spread. A great deal of thought has been given to the subject, and the kind of pitfalls that were met with twenty-five years ago are not necessarily met with today.
So much for the objections. I agree that creating an employee shareholding scheme is no substitute for good human relationships in industry, which are absolutely vital, but very often one finds that 514 there is a better chance of creating this improved atmosphere where there is a sharing of ownership, profits and responsibilities. That is fundamental to the idea of co-ownership.
The Clause is one of a number of proposals designed to facilitate the introduction of co-ownership schemes. At the same time, it would facilitate the extension of what I call popular ownership. I believe that it was during the Second Reading debate on last year's Finance Bill that I said that I would like to see a whole part of the Bill devoted to this extension of ownership and the encouragement of employee shareholding, and so on. We have separate parts in Finance Bills, but no post-war Government have thought it worth while to devote one part to this subject. There have been expressions of good will, but very little more.
This may be due to the belief that it is no concern of the Treasury—that what employers do about their shares and the introduction of these schemes is no concern of the Government, but is a matter which each firm must decide for itself. That is not altogether true. The idea that Finance Bills are concerned only with revenue raising is a complete fallacy. They have far-reaching consequences, both social and political. They have an effect upon the structure of industry and, sometimes, upon society itself. I had this fact in mind in tabling the Clause. One of its aims is to ensure that there will be specific recognition of co-owner-ship in our tax laws. One of the effects of passing the Clause would be that the Inland Revenue authorities would give official recognition to co-ownership schemes.
There is nothing very unusual in that, in principle. Pension schemes and life assurance schemes are recognised, and I would like to see co-ownership officially recognised. Of course, it can be encouraged in other ways. Earlier this evening a statement was made about the sale of S. G. Brown Ltd. I should like to see, as a condition of sale, the introduction of an employees' shareholding scheme, to ensure that the workers in the firm would enjoy any benefits of future prosperity. I put that proposal forward a year ago, and I am 515 sorry that the Government did not adopt it. However, I must not pursue that matter now.
§ Mr. John McCann (Rochdale)
Would not the hon. Member have preferred its not being sold at all, but remaining for the benefit of the country in general?
§ Mr. Wade
That is a different matter, which I must not discuss now. But I met representatives from the firm and they were interested in the suggestions put forward to the Government at the time.
I wish to see the policy of co-ownership officially recognised in our Income Tax laws and, at the same time, some of the tax obstacles removed. The following proposed new Clause Tax—reliefs and deferment of taxation for Employee's Savings Accounts—is not being called, and we must not discuss it. I would only say that it is similar to the Clause which was debated two years ago, and which, unfortunately, was not accepted. It related to tax obstacles as they affected employees, whereas the Clause that we are now debating relates to tax obstacles as they affect employers.
§ The Financial Secretary to the Treasury (Sir Edward Boyle)
I realise that only the Clause that we are now discussing has been selected, but the Clause and the following Clause are closely knit, and it might be for the convenience of the Committee if hon. Members were allowed to make an occasional reference to the following Clause. Would that be permissible, Mr. Blackburn?
§ The Temporary Chairman (Mr. F. Blackburn)
No. It would be entirely out of order. The hon. Member for Huddersfield, West (Mr. Wade) has been out of order in dealing with the Clause, and we had better keep the debate confined to the Clause which has been moved.
§ Mr. McCann
Is it not a fact that there have been co-ownership schemes where an attempt has been made to differentiate between a man getting a straight payment which is liable to Income Tax as a bonus, or shares which, under the law that we are not discussing, are free of Income Tax?
§ The Temporary Chairman
So long as the hon. Member relates his speech 516 to the new Clause which has been moved he will be in order.
§ Mr. Wade
I may be able to deal with the point while debating the new Clause No. 22, but it was by way of explanation that I pointed out that the Clause related in particular to the difficulties of the employer as opposed to those of the employee.
This new Clause is designed to facilitate the creation of employee shareholding schemes. It is true that a number of firms have drawn up schemes under the existing law. I will not enter into an explanation about how that is done. Generally, it is done by creating trustees and making payments to trustees. But it is all rather difficult and involved under the present law, and I suggest that there is no reason why the difficulties should remain. Let me give the simplest possible case.
If, at the end of the financial year, a firm has a surplus to distribute, if it distributes the surplus to the employees in the form of a cash bonus, that is clearly an expense which can be deducted before the payment of tax. But if the equivalent distribution is made in the form of shares the amount is not deductible before arriving at the amount of tax to be paid by the company. There are other problems concerning the employee. If he gets a share certificate he will at once himself be assessed. But I cannot discuss that, as this Clause relates only to the employer.
I wish to see an alteration in our Finance Acts in order to make it easier for a firm which wishes to adopt an employee shareholding scheme and to ensure that where shares are allotted in lieu of a cash bonus it will not put the firm at a disadvantage either as regards Profits Tax or Income Tax. Otherwise, I think that there will be a penalty on the firm adopting an employee shareholding scheme.
That is not only my personal opinion. For a number of years we have advocated this and as far back as 1956—although the wording was slightly different the intent was the same—I moved a new Clause which was commented on in the issue of the Economist of 30th June, 1956, as follows:…the most important of the Liberal amendments would have removed a disability from genuine share distribution schemes as 517 distinct from the milder and more usual form of scheme whereby employees get a cash bonus.The writer continued:As the Liberal amendment would have been an incentive to saving, instead of spending, it is a pity that the Government did not let it go through.That is the principle of this Clause, all the details are concerned merely with ensuring that it facilitates genuine co-ownership schemes. The idea is not merely to help a few top executives. The reason for the details—
Mr. J. T. Price
Will the hon. Gentleman explain whether he is proposing, as part of this transaction, that new categories of employee shareholdings should be created or merely that existing shares already allocated under the companies' articles are to be obtained in some way through the Stock Exchange and held in reserve to be distributed? Otherwise, what he is proposing is that the capital of the company be increased by a large infusion of employee shareholdings without the disabilities which usually accompany such an extension of capital.
§ Mr. Wade
I think that one has to consider each firm individually regarding an increase in the amount of shares and whether that it advisable. I think I understand the point which the hon. Gentleman has advanced and I am trying to answer it. I am endeavouring to obtain the introduction of this principle. Once we have the principle a firm would have to consider whether it wished to capitalise some of its profits and issue shares to its employees, or whether it wished to put money on one side through trustees to buy shares already on the market. It is a matter for each firm to consider, but I think that the first thing is to get the principle adopted.
The reason for the details in the Clause is to ensure, as I have said, that these are genuine co-ownership schemes. Subsection (1) defines the appropriation to be allowed to be set off for Income Tax and Profits Tax purposes. Subsection (2) deals with that in further detail. It appears to us that the best method would be to lay down certain principles which must be observed in a co-ownership scheme and that the scheme should be approved by the Inland Revenue. I suggest that while we make them as flexible as possible there 518 should be certain rules applicable to co-ownership schemes.
In the first place, they should apply to employees generally and not be just a "top hat" scheme. Secondly, I suggest that they might be operated through an employees' savings account, but I cannot pursue that because it would involve the other new Clause on the Notice Paper. I hope that the Chancellor will not take a technical point and say that he cannot accept this Clause merely because it refers to something which is elaborated in another Clause. One can get round that. If the Chancellor will accept the principle of the Clause, that is not an insuperable objection. I recognise that this point arises in paragraph (c) of subsection (3), but we can get over that difficulty.
Subsection (3, d), is limited to a total of £100 in any year of assessment per individual. That, I think is reasonable, at any rate to start.
§ 8.30 p.m.
§ Mr. Joseph Slater (Sedgefield)
The hon. Member said that this new Clause is to try to get a principle accepted in regard to the bonus that a company is prepared to grant because of the proceeds in regard to profits. If production goes up in a particular week the employer grants the employee facilities on a bonus for a particular week, but how would the Clause affect that individual seeing that he is already taxed on that bonus, which is part of his wages?
§ Mr. Wade
I argued this two years ago in debates on the Finance Bill then. I provided the answer and suggested how the difficulty should be overcome. I cannot deal with it now, because it comes under the Clause which has not been called. There is an answer and I shall be pleased to explain it to the hon. Member, but I am debarred by the Chair from doing so tonight. I am sorry that that is so, but perhaps the hon. Member will have a look at the observations I made two years ago.
Subsection (3, e) suggests that there-should be no general restriction on sale and employees should have the right of resale. Those are the general rules, but subsection (4) of the Clause begins:Approval under the last foregoing subsection shall not be withheld by reason only that:—519 I will summarise the paragraphs. It should not be withheld because the employees have to qualify by a certain period of service. For instance, under some schemes one has to be in employment for a year before qualifying. This is not compulsory, but it would not be ruled out for that reason.
It would not be ruled out if those with more than a specified period of service were entitled to proportionately greater benefits. It would not be ruled out if certain part-time employees were excluded. It would not be ruled out if the benefits were related to the wage or salary. That is to say, those on a higher salary might get more shares than those on a lower salary. It would not be ruled out because the scheme makes reasonable provision that no person may assign shares before first offering them back to the firm. If the scheme contained a provision for offering the shares back when leaving, that would not invalidate the scheme.
§ Mr. McCann
I am interested in that point, because subsection (3, e) says:the scheme contains no provisions in any way restricting the right of any person to hold or dispose of shares…" But the hon. Member goes on to include them.
§ Mr. Wade
That is a fair point. The general principle would be that there should be a right to sell, but it would not be invalidated in any particular scheme if there were a provision for first offering the shares to other employees.
Finally—and I think that this is reasonable—there should be a right of individuals to elect to participate or not to participate. The scheme would not be bad merely because there was freedom to be in or out. I think that would enable a wide variety of schemes to be adopted. Circumstances differ very greatly between one firm and another. We do not want to make this too rigid. We have tried to draft it so that a wide variety of schemes would qualify and we have tried to lay down certain general principles which we think reasonable. I hope that the Chancellor will accept, if not in detail, at any rate the intention underlying the Clause. I hope that we shall have something more than an expression of good will.
520 At the end of the debate in 1958, the Chancellor said, with respect to the Clause to which I have referred:I have looked carefully at the interesting suggestions made in the Clause moved by the hon. Member for Huddersfield, West (Mr. Wade). I have looked at it with a not unfriendly eye."—[OFFICIAL. REPORT, 2nd July, 1958; Vol. 590, c. 1494.]The right hon. Gentleman then proceeded to reject it. We have heard that kind of thing before. If the Clause is not accepted, I hope that we shall have a firm undertaking to introduce on Report a Clause which will adequately cover the point I have been trying to make. Earlier in our debates we heard a request for action. This is an occasion for action on a very reasonable point. Now is the opportunity.
§ Mr. Gower
I added my name to the new Clause, as I have in previous years, because I support the objective which the hon. Member for Huddersfield, West (Mr. Wade) has in mind. Like him, I sincerely hope that the Government will not reject the Clause merely because of its wording, for it deals with very difficult material. Like him, too, I hope that we shall move a stage nearer tonight to the acceptance of the principle behind the Clause.
The House of Commons has expressed its approval of the principles which lie behind schemes of this character. In the Parliament of 1951–55 I had the honour, on a Friday, of introducing a Motion which called attention to the advantages which have accrued from the extension in industry of pension schemes and profit-sharing and co-partnership schemes. That Motion went rather wider than this new Clause. It was debated in great detail and it had the support of hon. Members in all parties. It was approved by the House without a Division. As a result of that Motion, certain undertakings were given, including an undertaking that there would be published in the Ministry of Labour Gazette every year details about the progress of such schemes.
I am not entirely happy about the wording of the new Clause and I do not doubt that holes could be picked in it. I am not quite happy that the Clause goes far enough, because there are reputable schemes of profit sharing which I should like to see included. Parliament has given sanction to the 521 idea that fiscal encouragement should be given to such schemes as insurance and pension schemes within industry, but so far we have not continued, as logically we should, to give similar fiscal encouragement to schemes of this character.
§ Mr. Wade
In the Clause which my hon. Friends and I tabled two years ago—a Clause which was not called—there were some fiscal inducements. My only reason for not including them tonight is that I wanted to do everything possible to ease the Chancellor's task in accepting the Clause. I have not gone back on the general idea of inducement, but I am making it a little easier for the Treasury to accept the Clause.
§ Mr. Gower
I am grateful to the hon. Member. I was coming to that point.
As he said, it is important at this stage that the Government should at least say not only that they regard the extension of these schemes as advantageous and desirable but also that they are prepared in future to give something like official recognition and help to the development of such schemes. I feel sure that the Labour Party should be just as firm in its support of this principle. In the debate in an earlier Parliament to which I have referred hon. Members pointed out the splendid contribution which had been made, above all, by the Co-operative movement in this work. Knowing how many hon. Members opposite regard this as a valuable contribution, I feel that they should lend much support to this principle.
§ Mr. George Darling (Sheffield, Hillsborough)
Is the hon. Member aware that the Co-operative movement would receive no benefit at all from the tax relief under this Clause?
§ Mr. Gower
I appreciate that there are many loopholes in this wording, but I feel that we should be making a valuable start. Indeed, we should do that if we heard a forthcoming speech from my hon. Friend the Financial Secretary, a speech in which he showed that there is something more than mere sympathy for what has been achieved in the past. What has been achieved in the past has been done without any Government recognition. It has been done in a loose and somewhat haphazard manner, with 522 little or no assistance from any official body, certainly not from the Government.
Numerous advantages can accrue from the extension of the principle. Many of them have been referred to in the past. One which particularly appeals to me is that such schemes tend in some degree to narrow the frontiers which have sometimes separated the different parties in industry. They tend not so much to create a spirit as to reflect a spirit. In most cases they are the culmination rather than the beginning of a better spirit.
I hope that my hon. Friend the Financial Secretary will approach the Clause in the mood that these schemes are eminently desirable and that they are just as much to be encouraged as private industrial pension schemes, which already have a good deal of fiscal help from Governments of all kinds. In that mood it is a privilege for me to say a few words in support of the principle behind the Clause.
§ Mr. Grimond
The Clause has been admirably explained by my hon. Friend the Member for Huddersfield, West (Mr. Wade). I very much echo the closing words of the hon. Member for Barry (Mr. Gower). I hope that we shall get from the Government and from the Committee some recognition of the importance of co-ownership. I hope that they will not be held back by any dog-in-the-manger attitude that the Clause may not benefit everybody or that there may be other ways of developing this for the general good.
I regret that, in a Budget in which there were few major fiscal changes and comparatively little alteration in the amount of taxation, the Chancellor of the Exchequer did not take the opportunity to introduce various reforms in the methods and incidence of taxation, such as the reform we are now discussing. This could have been done without adding greatly to purchasing power and without increasing whatever threat there may be of inflation.
At the moment, a most necessary thing is to alter our taxation system so as to encourage savings investment and the spread of ownership. That is what the Clause seeks to do. If we did that, we should at one blow encourage more productivity by giving incentives and 523 thereby restoring some of the dynamism which our economy has lacked over the last ten years. We should do that without running into the danger of inflation. We should improve industrial relations and share out more fairly the proceeds of private enterprise.
The argument is sometimes advanced that that is all very well as far as it goes; it may benefit people who are in a position to acquire shares in certain private enterprises, but it will not benefit the public at large. I do not think that that is the case. To have a fair and dynamic economy is of the greatest benefit to everybody. It is agreed on both sides that we have to run an economy in which as well as a public sector there is a large private sector. We must look continually at the private sector and try to improve it.
I sometimes think that the Labour Panty has treated the private sector of industry a little like the Liberal Party used to treat public houses—they were so disreputable that one could not talk about reforming them. This is a mistaken view, and I hope that we shall be always seeking to reform the methods of private enterprise and interest people in it.
Over recent years, more and more firms have shown themselves willing to initiate profit-sharing or co-ownership schemes. About 3½ million people now own shares of some sort. As my hon. Friend pointed out, it is already possible to charge the expenses of these schemes against profits if one sets up a complicated scheme with trustees, but our aim is to make the process easier, to make it attractive, to give genuine ownership and not merely a cash bonus, and that process is safeguarded by the powers that we suggest should be given to the Commissioners.
I want to reinforce what my hon. Friend said in his quotation from the Economist. When a similar Clause was put down before, it was approved as a means of encouraging savings, and I would also draw the attention of the Committee to the remarks of the City Editor of The Times in 1958 when he said that a further extension of profit-sharing schemes in industry would depend on some tax concessions. He pointed out 524 that there were serious barriers in Schedules D and E. We have been largely concerned with the removal of barriers, and not with discrimination by giving concessions.
I want to turn, if I may, to some of the objections that are made against this new Clause. I sometimes feel that in these debates the Chancellor should ponder the well-known story of the man who said, "I want a one-armed lawyer." When his friend asked "Why—what is the advantage of a one-armed lawyer?" the man replied, "Well, you see, all the lawyers I go to say,' On the one hand, it is an excellent case and you may win but, on the other hand, you haven't a very good case. and may lose." In these debates the Chancellor keeps on saying that such and such is a splendid proposal but, on the other hand, there are serious objections to it. That has certainly been his attitude in previous debates on the subject.
The right hon. Gentleman has previously argued that co-ownership is a symptom and not a cause of good industrial relations. I certainly agree that it is not by any means everything. We do not pretend that it is. It is not a substitute for high wages. It is certainly not a substitute for consultation and, indeed, it is no substitute for a much firmer recognition of the status of labour throughout industry. Nevertheless, I say that it is an important integral part of the whole movement towards a better relationship.
The Chancellor has also argued that it was wrong to encourage savings by tax concessions, and has in earlier debates quoted the Royal Commission's Report in support of that contention. To some extent, this new Clause seeks a removal of barriers but I suppose that it may be taken as a concession. However, I do not think that that argument can now lie in the Chancellor's mouth, because we are always encouraging various forms of savings by concessions of one kind and another.
The Financial Secretary will no doubt say that he is in sympathy with this new Clause, but the final argument against it will be that this cannot be done this year. Last year, we had a Budget in which a good deal was given away, and the Chancellor then rejected various reforms on the ground that, though he 525 approved of them in principle, he had already given so much that to give more was impossible. This year, he says that he feels he cannot give any tax concessions. Therefore, once again, it is not possible to move. It is high time that co-ownership—call it what one will—was recognised in this country and encouragement given to firms in some way to take their workers into partnership.
As has already been said, this may be a badly drafted Clause. It is well known that private Members are in some difficulty in drafting such things, but the Government could easily put it right. It may be that it should be combined with a save-as-you-earn scheme, and if so, the argument of cost may be advanced. I do not know what it would cost to implement this new Clause and the Clause—Tax reliefs and deferment of taxation for Employee's Savings Accounts—which goes with it, but I seriously suggest to the Committee that it would be well worth while.
As I say, we have to make our system of private enterprise work better. We have to try to break out of this rather unhappy cycle of increased production, followed by threat of inflation, balance-of-payments difficulties and reimposition of controls. We have to give incentives. We have to interest the workers more directly in the system by which the country makes its wealth and they earn their wages, and if this year the Chancellor will have the courage to grasp this opportunity we can at least make this small move to get out of some of the difficulties of the private enterprise side of the economy with, I think, resultant savings, and without running into any serious dangers of increasing inflationary pressure.
§ Mr. William Small (Glasgow, Scotstoun)
I was rather intrigued by the over-simplification of this Clause on the principle of co-ownership, because there is one firm in this country which operates a co-ownership profit sharing scheme which is threatening the employees with the withdrawal of their rights under the scheme if they take unconstitutional action within any factory. Oversimplification of the promotion of such development is that it endangers employer-employee relationship.
In practice, it is not so simple, because we are giving over to the salaried 526 individuals in industry, who already enjoy salaries of £5,000 against the workers with £500, a disproportionate allocation by the fact that they are now getting a contribution in excess of their existing salary by preferential Income Tax rates of 5s. 6d. in the £. The oversimplification of giving tax relief based on profit sharing should, I think, be examined.
§ Mr. George Darling (Sheffield, Hillsborough)
The Leader of the Liberal Party said that this was probably a very badly drafted Clause and might be full of loopholes. That is perfectly true, and I will point out some of them in a moment. I think that the Government would have great difficulty in trying to put this Clause into any workable shape. The whole matter, I suggest, has to be approached completely afresh.
We are not opposed to profit sharing and to the workers getting a greater share of the income from industry. We are not opposed to the workers of this country, if they want to own shares in industry, buying them—it is a free country—but we cannot agree to a proposition where the workers have no choice at all as to whether the bonus is to be paid to them in the form of cash or shares.
§ Mr. Darling
I am sorry, Mr. Blackburn, but the Liberal Party is now behind me and that makes it rather difficult, but I shall keep in order.
We cannot agree with the principle that lies behind this Clause, or appears to lie behind it, that before an employee can have a stake in the industry in which he works, a stake which would allow him either through his trade union or shop committee or whatever it is to express views to the management and take part in the management and control of the company, he must become a shareholder. We say that, in our view, the workers in industry have a complete right to share in the management of the industry 527 whether or not they have any shareholdings. That is not implicit in the Clause, but I will come to that again in a moment.
I think it should be noted that there is a question of arithmetic involved. All the successful profit-sharing schemes are in the highly mechanised industries with low labour costs and making goods for which there is a steady or expanding demand. The Clause suggests that this kind of scheme could operate in all kinds of industry. I think that, if we examine the situation, the proposers of this approach would find that it would be extremely difficult indeed to operate profit-sharing schemes or bonus distribution schemes on anything like the scale that we now have in some of the larger low labour cost industries, in industries which have high labour costs. It is quite untrue to say, as is sometimes suggested, that good labour relations are confined to profit-sharing firms.
I do not wish to develop this point too much, but it is a very important point which should be examined. It is the nature of the industries, and not profit sharing, which makes for good relations, and it is wrong to ignore the profit-making and profit distribution difficulties of industries with high labour costs and uncertain markets. Neither the co-owner-ship schemes dealt with in this Clause nor any other profit-sharing scheme of a like kind could apply to much more than one-third of the employees in the country, because it would be extremely difficult for the workers who are engaged in public services like local government, in transport, in the docks and in many of the forms of distribution and so on to have any profit-sharing scheme prepared for them.
I do not want to develop the argument much further—I should probably get out of order if I did—but we say that the complicated arrangements which are proposed in this scheme seem to us to defeat the purpose which the Liberal Party itself has in mind. It is surely easier to have a straightforward bonus distribution and encourage employers, if they wish to do so and if the employees agree, to have the workers' share of the profits of the company paid out in a straightforward manner in the form of a cash bonus at the end of the firm's accounting period. I am making a good Liberal 528 proposal. It gives the worker the opportunity of deciding what he is going to do with the bonus that he gets—whether to spend it or buy shares or do something else with it.
Although the hon. Member for Huddersfield, West (Mr. Wade) rather played down the risk element of a worker having both his savings and his employment in the same firm, I think this is something that we should take seriously into account. We must warn small savers of the pitfalls of risk taking. That is why the unit trust movement has grown up. That is why we encourage the unit trust movement. If people with small savings wish to put their savings into equity shares, it is much better to spread the risk rather than to have all their savings that they put into equities in one form.
We suggest that it would be wrong to encourage workers to put their savings into the firm in which they are employed. Take the firm of Hoover, for example. I thought that firm was a "blue chip" company, but here are 800 workers who, if this firm had a profit-sharing scheme—I do not know whether it has or not—and if they had their savings in that firm, would be in difficulties if they happened to be on the list of dismissals.
We say that the workers should have a perfect right to put their share of the profits that they get from their employment into whatever savings they may choose, and to protect the small savers we suggest that they should he encouraged to invest in unit trusts, or National Savings, Defence Bonds, industrial and provident societies, trustee savings banks and so on.
May I repeat what I said in an intervention when the hon. Member for Barry (Mr. Gower) was speaking, that one of our objections to the scheme being put forward in this fashion is that the greatest profit-sharing and co-partnership scheme of all, the Co-operative movement, which pays Profits Tax, would get no tax relief at all.
§ 9.0 p.m.
§ Mr. Darling
If this is to encourage co-ownership schemes, as they are called, surely the biggest and best co-owner-ship scheme of all should have some advantage from it.
§ Mr. Arthur Holt (Bolton, West)
The Liberal Party voted for the Opposition's new Clause moved at an earlier stage of the debate.
§ Mr. Darling
Yes, but that would give relief only in regard to savings, and I should have thought that, under this kind of scheme, the same relief should be obtained. But there are other objections. Not only would the scheme not apply to co-operative societies, but, according to the Clause as drafted, there are no protective rules in it such as there are in the Co-operative movement to protect shareholders in various ways.
For example, there is no suggestion here that a company must pay recognised rates of pay before qualifying for tax relief. There is no provision for representatives of the workers to be on the committee or whatever association is to run the trust funds, the savings accounts. Apparently, they are to be run entirely by the management. According to the Clause as drafted—I am merely pointing out loopholes—there is no provision for employee representation. We regard that as a fundamental mistake if the schemes are to have any value in profit sharing.
Moreover—I do not know whether the Financial Secretary will deal with this—the scheme could be used by a company to obtain what, in effect, would be cheap tax-free loans from its employees if it issued special shares, perhaps with low rates of interest, no voting rights, and so forth. There is nothing in the Clause as drafted—I am trying to be brief and I shall not elaborate the point—to prevent a company issuing what might be called second grade shares to employees in receipt of shares distributed by it. This must be looked at very carefully. We would lay it down as a general principle in any scheme under which workers could buy shares in a company that the shares that they could buy should be ordinary or preference shares, and there should not be any second grade shares of any kind available for them. Also, the shares must have voting rights. That is another principle which we would lay down.
There are more loopholes. No doubt the Financial Secretary has seized upon them as we have seized upon them. I will not develop them now. If we had a chance to debate profit-sharing in a 530 wider context, which is what I should prefer, we should draw attention to the defects in this scheme in detail, and we should be quite willing to put forward suggestions of our own for putting workers' participation in industry on a much firmer basis and making the scheme more practical and fairer than it appears to be in this new Clause.
We appreciate the desire of the Liberal Party to give the worker a better status in industry, to make him something more than a hired hand, but the fundamental defect, as we see it, is the assumption that the worker must become a shareholder before his status can be improved. We reject the idea that he must, so to speak, buy his better status by becoming a shareholder. We believe that the worker's status is determined by his employment, by his being on the staff, by the contribution he makes to the progress and prosperity of the company.
§ Mr. Darling
I agree entirely with my hon. Friend. Whether it is as administrator, technician, skilled worker or unskilled worker, the worker, in our view, has a perfect right to become part and parcel of the concern in which he works. He has a right to take his share in the management, through his organisations, and any suggestion that he ought to become a shareholder before his status can be improved we reject absolutely.
There are other defects in the proposal before us which I could develop if we had time. In view of the hour, I will content myself with those few criticisms of the scheme and ask for the view of the Government.
§ Sir E. Boyle
After the sounding brass of the hon. Member for Kidderminster (Mr. Nabarro), the Committee will have found the quiet, mellow string tone of the hon. Member for Huddersfield, West (Mr. Wade) a pleasant and refreshing experience. I should like to congratulate him most sincerely on the thoughtful way he moved the new Clause and the feeling that he obviously put into his speech. I should also like to congratulate the hon. Member for Sheffield, Hillsborough (Mr. Darling), who, I think, we hear too rarely in debates on Finance Bills, on the lucid and fair manner in which he criticised this proposal.
531 Of course, co-partnership and co-ownership schemes are important, and, as I shall show, employers who wish to carry out co-ownership schemes are in a better position in our tax system than is always realised in this Committee. There are two points that I should like to make. First, we in this Committee ought to be very careful not to get into a frame of mind which holds that co-ownership and co-partnership are good things and that, therefore, because this new Clause is about co-ownership and co-partnership we should vote for it. As I shall show, this proposal has some rather serious defects. In discussing this subject, it is wrong to suppose that one can generalise too much about the proper relationship between Government and industry. One thing about which I am absolutely convinced is that words ending in "ism" are apt to be dangerous in considering this matter.
Let me say a word or two about the position of employers under our present law, because it is worth remembering. In the first place, where any scheme consists in the payment of a direct bonus, whether computed by reference to output, dividends or any other way, the bonus ranks as a deduction in computing business profits for Income Tax and Profits Tax. Secondly, if an employer buys shares in the open market for his employees, it depends on the nature of the arrangements whether relief from Income Tax or Profits Tax is due. It was for that reason, among others, that, shortly after Sir Anthony Eden became Prime Minister, in 1955, the present Government offered help from the Inland Revenue to those companies which wished to set up co-partnership schemes. A number of inquiries have been received, but I am told that the problem that a company may not be entitled to a tax deduction has not proved an important discouragement.
Finally—and this is important, too—when employees receive dividends, either on ordinary shares or on special employee shares, the employer recoups himself for Income Tax suffered by reduction from the dividend and is thus left bearing no Income Tax on the dividend. It is quite true that no similar Profits Tax relief is available, but it is worth pointing out—and I promise not to de- 532 velop the point—that the bringing together of the two Profits Tax rates has proved of assistance.
Since 1958, when Profits Tax was converted into a flat-rate tax on total profits, the complaint that dividends on shares issued under a profit-sharing scheme attracted the distributive rate of Profits Tax has disappeared. When considering this subject, we ought to remember the many ways in which, under our present tax system, it is not so very difficult to introduce and encourage schemes of co-partnership and co-ownership.
Let me now deal with the new Clause which we are discussing. The proposal of the hon. Member for Huddersfield, West is, to some extent, in line with earlier proposals of the Liberal Party in so far as the hon. Member's proposals relate to the treatment of an employer's appropriation towards providing shares under a co-partnership scheme. But the proposals go very much further than that. They are not confined to those employed by concerns with co-owner-ship schemes. They extend to all employees whose employers fall in with the proposed scheme for "Employees' Savings Accounts". They apply not only to shares issued under co-ownership schemes, but to all deposits by employers, whether in the form of shares in the employing concern or other shares or securities or cash.
I quite understand the reason for this rather wider proposal, and the hon. Member explained it fairly when moving the Clause. The development in Liberal Party policy is intended primarily to counter the general criticisms which were often made in the past of proposals that were confined to co-ownership schemes, namely, that such schemes encourage workers to put their eggs in one basket, and some of them might thereby prove a hindrance to the mobility of labour.
It is fair also to say that the hon. Member's scheme met the objections to earlier proposals that they gave an unjustifiable tax advantage to the employees of a company which has a co-ownership scheme as against those who work for a concern which does not have co-owner-ship or those who are self-employed. That is true, and I quite understand the reason for the development of Liberal Party policy. The earlier proposals were relatively limited in their application. 533 Over the whole field of employers, the number of those able and willing to offer shares to their employees on favourable terms as part of a co-ownership scheme, even given the sort of inducement contained in the Clause. must be in a minority.
Let us see where these new proposals take us. The hon. Member for Hillsborough was fair in making the point that the major effect of the new proposals would no longer be the fostering and encouragement of co-ownership. They are now designed to encourage general investment by allowing special facilities for the building up by employees, or the self-employed, of a fund of invested capital at the rate of up to £100 a year. There are no provisions to ensure that the deposits are used for shareholding rather than for other forms of investment. It is not unfair to say that these new proposals amount to a scheme for fostering saving through a particular form of "bank account."
Although the Clause goes well beyond fostering co-ownership schemes, it can be said that these proposals give us the worst of all worlds, because the kind of savings that are covered are more varied than in past proposals. Even so, the scheme as the hon. Member presented it is far from comprehensive. There are forms of saving at least as meritorious for which it does not provide any tax incentive—for example, saving to buy one's house through a building society, or the ploughing back of profits by a self-employed person in his own business.
That leads us—we cannot avoid considering the Clause in this context—to the whole question of the proper treatment of personal savings for Income Tax purposes. One is bound to go to the view of the Royal Commission in Chapter 3 of its final Report. At the risk of being tedious, I find myself forced to repeat both what the Royal Commission said on that occasion and what my right hon. Friend the Chancellor of the Exchequer said when he replied to a not dissimilar Clause in 1958.
The Royal Commission took the view that saving related to the making of reasonable provision against retirement, death or emergency, could be looked at as a specially deserving category; and for this reason it commended the existing allowances for superannuation and life 534 insurance. In paragraph 76, the Royal Commission said:If life insurance relief and the relief for National Insurance contributions are retained, and if superannuation relief is developed to what we regard as its logical conclusion, we think that the tax system will be making as much concession to savings as it is reasonable or proper that it should. However desirable for economic reasons the encouragement of personal saving, measures adopted for its encouragement should lie outside the sphere of the Income Tax system, to the general equitable principles of which differentiation measured by saving is not, as we have said, either easily or closely related.I quote those words again because there is a great deal of sense and justice in them.
At the risk of wearying the Committee, I must remind hon. Members of what my right hon. Friend said when replying to the 1958 Clause. It applies closely to the Clause that we are discussing.
My right hon. Friend said:In general, it seems to me that the principle on which we work—and I think it is a sound one—is that Income Tax should fall impartially on all income from all sources, regardless whether that income is spent or saved. The proposal made in the Clause conflicts with that principle. It goes wider than encouraging employee shareholding, because the relief applies to stocks and shares other than the stocks and shares of the employing company. I can only guess the cost, but it might amount to a considerable sum, and though I will always promise to consider any constructive scheme—and this is a constructive scheme—for a good object like this, I am forced to the conclusion that the proposal would prove not only a rather complicated way but also a very expensive way of encouraging personal savings, so it is with some regret that I do not feel able to recommend the Committee to accept the Clause."—[OFFICIAL REPORT, 2nd July, 1958; Vol. 590, c. 1495–6.]The Leader of the Liberal Party quoted the story of the one-armed lawyer, and perhaps I may be allowed to quote, in return, from F. M. Cornford's "Microcosmographia Academica", the remark that there is only one reason for doing anything and all the rest of the arguments are for doing nothing. The argument for the Clause was fairly put by the hon. Member for Huddersfield, West, but I say with conviction that the hon. Member for Hillsborough and myself between us have put to the Committee some good reasons for not accepting the Clause.
535 I will not weary the Committee by developing the case at greater length now, but the Government cannot regard the Liberal Party's proposals as sound in this instance. By the way, how convenient it is that by the accident of our Parliamentary conventions the number of signatures which can be accommodated for a new Clause on the Notice Paper is the exact number of the Liberal Party. We much value tonight the presence throughout the debate of the whole of the Liberal Party, except for the hon. and learned Member for Cardigan (Mr. Bowen), who, I know, is indisposed. Otherwise, I am sure that he would have been here.
I do not believe that co-partnership and co-ownership schemes are badly treated under our present tax system. Certainly, one of the main aims of the Government's financial policy remains the encouragement of personal savings, and the success of that policy has been shown by the much higher level of personal savings over the last few years. We believe that personal savings, alongside compulsory savings, have a part to play in increasing the rate of investment without inflation. But, for the reasons I have given, without any prejudice against co-partnership and co-ownership as such, I feel bound to recommend the Committee to reject the Clause
§ Mr. Holt
The hon. Member for Sheffield, Hillsborough (Mr. Darling) has had a great deal to say about the inadequacy of the Clause but not a single point that he raised was a valid criticism of the Clause or of the scheme. The hon. Member had a very flattering reference from the Financial Secretary but I thought that it was unwarranted and I shall be delighted to send him our pamphlet which deals with every point that he raised. The Financial Secretary did not reply to this Clause. He replied to a Clause which is not for discussion today. The one we are discussing makes a perfectly simple point. The hon. Member for Hillsborough can have all the consultation he likes. There is no sug- 536 gestion that there should not be consultation between employers and employees.
§ Mr. Holt
The hon. Member misses the whole point. These kinds of schemes will not work in any case in a company which has not a proper employer-employee relationship. These are not schemes which will create out of entirely unsatisfactory conditions a paradise of employer-employee relations. This was made clear by the Leader of the Liberal Party. This is one contribution towards improving relationships between employers and employees. Joint consultation at the highest level is a prerequisite before these schemes can work.
Certainly one of the things which would be discussed between employers and employees and directors of companies would be whether any surplus which was available at the end of the year would be better spent by giving it to employees in the form of shares, so that the money would be retained in the company for its development, or whether it would be better, if the company did not require the money, for it to go out as a bonus to the employees.
To suggest that this is an inadequate industrial charter is beside the point. It is not intended to be an industrial charter. We have had enough of that from the other side, and have seen nothing done about it for ten years. This is a perfectly simple plan to put the giving of shares to employees on the same basis as far as taxation is concerned as the giving of a bonus. That is the simple point, and in order to arrange this with the Inland Revenue, one has to produce a Clause of this kind. I have not heard a single valid criticism today about the details of this Clause. The criticisms are either that we have brought in too many other things in a Clause which we are not actually discussing, or that we have not brought in some other things which it was not our intention to bring in, and which have nothing to do with the subject under discussion.
§ Mr. John Diamond (Gloucester)
Will the hon. Gentleman explain what he means? He has just said that this is meant to put it on all-fours with a bonus for tax purposes, but when a company 537 pays a bonus, the recipient does pay tax on it. Is he suggesting that the recipients of shares under this scheme should pay tax on the nominal value of the shares, or what does he mean?
§ Mr. Holt
If the hon. Member for Gloucester (Mr. Diamond) would read this Clause and get himself in order, he would realise that the whole discussion was about employers. The other Clause deals with employees, and that has not been discussed today. The Clause we are discussing deals with companies and their tax position. That is the situation, and if the hon. Gentleman wants to have that explained to him, he will find that it was very carefully explained when we debated this matter on 25th June. 1956. If he will look at the speech which I then made, which he will find in col. 198 of HANSARD, he will see the whole thing simply laid out with facts and figures.
I do not wish to delay the Committee much longer, because it is quite apparent that we are going to get nowhere with the Government, in spite of the fact that, in 1955, when Sir Anthony Eden, then the Leader of the Labour Party—[HON. MEMBERS: "Oh."]—that was a slip, but I think it was probably very appropriate, because he was talking about nationalisation and said that nobody now believed in it, and that something else was required. He said that the idea behind nationalisation was that one should en
§ deavour to bring into industry a spirit of co-operation which was motivated by something other than profit. That is excellent, but although nationalisation is now widely accepted as something which should not be developed further since it has not in fact brought such a spirit, that does not mean that we should cease to try to find other ways in which we can adjust or improve private enterprise so as to bring that kind of spirit into it.
§ I think that that can be done by encouraging a spirit in industry in which people recognise their responsibilities and recognise that they are becoming involved. One of the ways of doing that—and I stress that it is only one of the ways and is not a way which necessarily interests everbody, but is a way which interests some—is to encourage and facilitate more ownership in that industry. That is the simple point which we are trying to make in the new Clause.
§ It is time that both the Government and the Opposition paid more attention to this subject in detail. Apparently, they do not approve of this method, but it is then up to them to produce some other tangible alternative. Something will have to be done. The situation cannot be left as it is. Nobody can pretend that the present climate of industry is satisfactory or that it should not be altered. It will be altered. There will be changes in industry and in the structure of the relationship between employers and employees. As nationalisation is out for most of the private sector of industry, we want to know what the other two parties' alternatives are if they do not support this proposal.
§ Question put, That the Clause be read a Second time:—
§ The Committee divided: Ayes 3, Noes 234.539
Division No. 116.]
|Davies, Rt. Hn. Clement (Montgomery)||Thorpe, Jeremy||TELLERS FOR THE AYES:|
|Grimond, J.||Mr. Wade and Mr. Holt.|
|Aitken, W. T.||Gibson-Watt, David||Nugent, Sir Richard|
|Allason, James||Glover, Sir Douglas||Oakshott, Sir Hendrie|
|Amory. Rt. Hon. D. Heathcoat (Tiv'tn)||Glyn, Dr. Alan (Clapham)||Orr-Ewing, C. Ian|
|Ashton, Sir Hubert||Glyn, Sir Richard (Dorset, N.)||Osborn, John (Hallam)|
|Atkins, Humphrey||Goodhart, Philip||Osborne, Cyril (Louth)|
|Barber, Anthony||Goodhew, Victor||Page, A. J. (Harrow, West)|
|Barlow, Sir John||Gower, Raymond||Page, Graham|
|Barter, John||Grant, Rt. Hon. William (Woodside)||Pannell, Norman (Kirkdale)|
|Batsford, Brian||Green, Alan||Pearson, Frank (Clitheroe)|
|Baxter, Sir Beverley (Southgate)||Gresham Cooke, R.||Peel, John|
|Beamish, Col. Tufton||Grosvenor, Lt.-Col. R. G.||Percival, Ian|
|Bennett, F. M. (Torquay)||Hamilton, Michael (Wellingborough)||Peyton, John|
|Berkeley, Humphry||Harris, Frederic (Croydon, N.W.)||Pickthorn, Sir Kenneth|
|Bidgood, John C.||Harris, Reader (Heston)||Pilkington, Capt. Richard|
|Biggs-Davison, John||Harrison, Brian (Maldon)||Pott, Percivall|
|Bingham, R. M.||Harrison, Col. J. H. (Eye)||Powell, J. Enoch|
|Birch, Rt. Hon. Nigel||Harvey, John (Walthamstow, E.)||Price, David (Eastleigh)|
|Bishop, F. P.||Henderson, John (Cathcart)||Prior, J. M. L.|
|Black, Sir Cyril||Hendry, Forbes||Prior-Palmer, Brig. Sir Otho|
|Bossom, Clive||Hicks Beach, Maj. W.||Profumo, Rt. Hon. John|
|Bourne-Arton, A.||Hiley, Joseph||Ramsden, James|
|Box, Donald||Hill, Mrs. Eveline (Wythenshawe)||Rawlinson, Peter|
|Boyd-Carpenter, Rt. Hon. John||Hill, J. E. B. (S. Norfolk)||Redmayne, Rt. Hon. Martin|
|Boyle, Sir Edward||Hirst, Geoffrey||Rees, Hugh|
|Braine, Bernard||Holland, Philip||Rees-Davies, W. R.|
|Brewis, John||Hopkins, Alan||Renton, David|
|Bromley-Davenport, Lt.-Col. W. H.||Hornsby-Smith, Rt. Hon. Patricia||Ridley, Hon. Nicholas|
|Bryan, Paul||Howard, Gerald (Cambridgeshire)||Roberts, Sir Peter (Heeley)|
|Bullus, Wing Commander Eric||Howard, John (Southampton, Test)||Roots, William|
|Burden, F. A.||Hughes Hallet, Vice-Admiral John||Ropner, Col. Sir Leonard|
|Butcher, Sir Herbert||Hughes-Young, Michael||Scott-Hopkins, James|
|Butler, Rt. Hn. R. A.(Saffron Walden)||Hutchison, Michael Clark||Sharples, Richard|
|Campbell, Gordon (Moray & Nairn)||Irvine, Bryant Godman (Rye)||Shaw, M.|
|Carr, Compton (Barons Court)||Jackson, John||Skeet, T. H. H.|
|Carr, Robert (Mitcham)||James, David||Smith, Ellis (Stoke, S.)|
|Cary, Sir Robert||Jenkins, Robert (Dulwich)||Smyth, Brig. Sir John (Norwood)|
|Chataway, Christopher||Jennings, J. C.||Spearman, Sir Alexander|
|Clark, Henry (Antrim, N.)||Johnson, Dr. Donald (Carlisle)||Speir, Rupert|
|Clark, William (Nottingham, S.)||Johnson, Eric (Blackley)||Stevens, Geoffrey|
|Clarke, Brig. Terence (Portsmth, W.)||Jones, Rt. Hn. Aubrey (Hall Green)||Steward, Harold (Stockport, S.)|
|Collard, Richard||Kerans, Cdr. J. S.||Stodart, J. A.|
|Cooper, A. E.||Kerby, Capt. Henry||Stoddart-Scott, Col. Sir Malcolm|
|Cooper-Key, Sir Neill||Kimball, Marcus||Storey, Sir Samuel|
|Cordeaux, Lt.-Col. J. K.||Kirk, Peter||Studholme, Sir Henry|
|Cordle, John||Leather, E. H. C.||Summers, Sir Spencer (Aylesbury)|
|Corfield, F. V.||Leavey, J. A.||Sumner, Donald (Orpington)|
|Costain, A. P.||Legge-Bourke, Maj. Sir Harry||Talbot, John E.|
|Coulson, J. M.||Lewis, Kenneth (Rutland)||Tapsell, Peter|
|Courtney, Cdr. Anthony||Lilley, F. J. P||Teeling, William|
|Craddock, Sir Beresford||Lindsay, Martin||Thomas, Leslie (Canterbury)|
|Critchley, Julian||Linstead, Sir Hugh||Thomas, Peter (Conway)|
|Crosthwaite-Eyre, Col. O. E.||Litchfield, Capt. John||Thompson, Kenneth (Walton)|
|Crowder, F. P.||Longbottom, Charles||Thompson, Richard (Croydon, S.)|
|Cunningham, Knox||Longden, Gilbert||Thornton-Kemsley, Sir Colin|
|Curran, Charles||Loveys, Walter H.||Tiley, Arthur (Bradford, W.)|
|Currie, G. B. H.||Low, Rt. Hon. Sir Toby||Tilney, John (Wavertree)|
|Dance, James||Lucas-Tooth, Sir Hugh.||Turner, Colin|
|d'Avigdor-Goldsmid, Sir Henry||McAdden, Stephen||Turton, Rt. Hon. R. H.|
|Deedes, W. F.||MacArthur, Ian||van Straubenzee, W. R.|
|de Ferranti, Basil||McLaren, Martin||Vane, W. M. F.|
|Donaldson, Cmdr. C. E. M.||McLaughlin, Mrs. Patricia||Vickers, Miss Joan|
|Doughty, Charles||MacLeod, John (Ross & Cromarty)||Wakefield, Edward (Derbyshire, W|
|Drayson, G. B.||McMaster, Stanley R.||Ward, Dame Irene (Tynemouth)|
|du Cann, Edward||Macpherson, Niall (Dumfries)||Watts, James|
|Duncan, sir James||Maddan, Martin||Wells, John (Maidstone)|
|Elliott, R. W.||Maginnis, John E.||Whitelaw, William|
|Emery, Peter||Markham, Major Sir Frank||Williams, Paul (Sunderland, S.)|
|Emmet, Hon. Mrs. Evelyn||Marlowe, Anthony||Wills, Sir Gerald (Bridgwater)|
|Errington, Sir Eric||Marshall, Douglas||Wilson, Geoffrey (Truro)|
|Farey-Jones, F. W.||Marten, Neil||Wise, A. R|
|Farr, John||Matthews, Gordon (Meriden)||Wolrige-Gordon, Patrick|
|Finlay, Graeme||Maudling, Rt. Hon. Reginald||Woodhouse, C. M.|
|Fisher, Nigel||Mawby, Ray||Woodmitt, Mark|
|Fletcher-Cooke, Charles||Maydon, Lt.-Cmdr. S. L. C.||Woollam, John|
|Fraser, Hn. Hugh (Stafford & Stone)||Montgomery, Fergus||Worsley, Marcus|
|Fraser, Ian (Plymouth, Sutton)|
|Freeth, Denzil||Morgan, William||TELLERS FOR THE NOES:|
|Gammans, Lady||Mott-Radclyffe, Sir Charles||Mr. Brooman-White and|
|Gardner, Edward||Neave, Airey||Mr. Chichester-Clark.|
|George, J. C. (Pollok)||Noble, Michael|