Commons Sitting of 4 May 1961

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  BRITISH TRANSPORT COMMISSION BILL
  [Queen's Consent, on behalf of the Crown, signified.]
  Bill read the Third time and passed.

ORAL ANSWERS TO QUESTIONS
  BASUTOLAND

    Situation, Maseru
    Mr. Brockwayasked the Secretary of State for Commonwealth Relations if he will now make a statement about the situation in Basutoland following the banning of public meetings and the detention of 50 persons in Maseru.
    The Joint Under-Secretary of State for Commonwealth Relations (Mr. Bernard Braine): The High Commissioner has reported that a further seven persons were arrested on charges of intimidation in addition to those mentioned in the statement given to the House on 30th March. Of these, two have been convicted, two were acquitted, and the cases against the remaining three are still under investigation.
    Mr. Brockway: Could the hon. Gentleman say whether the ban on the meetings has now been lifted? That is the more serious point.
    Mr. Braine: Yes. I think so. The immediate cause of this situation, of course, was a strike which spread beyond the control of the organisers owing to intimidation by hooligans who took advantage of the situation. I am happy to say that the situation in Maseru remains normal.

  BECHUANALAND

    Mineral Resources (Exploitation)
    Mr. Brockwayasked the Secretary of State for Commonwealth Relations what agreement has been reached between the Rhodesian Selection Trust and the Bamangwato tribal authority in Bechuanaland fox the exploitation of mineral resources.
    Mr. Braine: I assume that the hon. Member is referring to the mineral concession granted by the Bamangwato Tribe to Bamangwato Concessions Ltd., a company in the Rhodesian Selection Trust Group. Details of this concession were given to the House on 2nd March, 1960, in reply to a Question by the right hon. Member fox Wakefield (Mr. Creech Jones).
    Mr. Brockway: Has there not been some development since? Can the hon. Gentleman say whether, for example, the Africans who are employed are to be allowed to enter skilled trades and whether trade unions will be permitted under this agreement? Can the hon. Gentleman also indicate how far the profits will pass to the Bamangwato tribe?
    Mr. Braine: The company is carrying out extensive prospecting at present in the selected areas. These operations take time. As regards employment, the occasion has not yet arisen for the employment of much skilled labour, but some Bamangwato have been engaged in semi-skilled work, and the company has established mining schools in two centres.
    As regards the benefits to the tribe—and, after all, the agreement was freely entered into between the tribe and the company—the company will pay the tribe at the rate of £3,000 per annum during the period of exclusive exploration rights. This is quite apart from a rental of about £2,000 per annum, and, of course, any mining company formed will pay the tribe a royalty of 15 per cent. of the excess of sales revenue over costs.
    Mr. Brockway: What about the trade unions?
    Mr. Braine: I have no information on that matter. If the hon. Gentleman cares to put down a Question I will do my best to answer it.

    Administrative Capital
    Mr. H. Clarkasked the Secretary of State for Commonwealth Relations what steps are being taken to remove the administrative capital of Bechuanaland from Mafeking into Bechuanaland itself.
    The Secretary of State for Commonwealth Relations (Mr. Duncan Sandys): I cannot yet add anything to the information given by my hon. Friend on 24th April.
    Mr. Clark: Would not my right hon. Friend agree that a move of this nature has been desirable for a very long time, purely for administrative reasons? Will not he give consideration to building a new capital, possibly near Gaberones, because none of the towns in the Protectorate is entirely suitable as a capital? They either have no water or are too far from railway lines.
    Mr. Sandys: As my hon. Friend has indicated, that is really one of the problems. A move of this kind is really quite an expensive affair. None the less, as I have already indicated, this is one of the matters being reviewed at present, and I can assure my hon. Friend that his suggestion will be borne in mind.
    Mr. Emery: Does my right hon. Friend realise that that Answer was exactly the same as the Answer I received to approximately the same Question put down a year ago? This is a capital of a territory entirely outside its own territory. This is crazy, and something must be done about it very quickly.
    Mr. Sandys: There is no harm in consistency.

  COMMONWEALTH RELATIONS

    Migration to United Kingdom
    Mr. C. Osborneasked the Secretary of State for Commonwealth Relations which Commonwealth Governments have protested to him over the proposed restrictions of Commonwealth immigration into the United Kingdom; what were the grounds for their objections; what replies he has sent; and if he will make a statement.
    Mr. Sandys: My hon. Friend's Question is based on a misapprehension. The Government have not put forward any proposals of this kind.
    Mr. Osborne: Will my right hon. Friend say what reasonable grounds any Commonwealth Government could have, when those proposals are put forward, for objecting to our having restrictions on immigration into this country, since they all exercise the same sort of restraint in their own countries?
    Mr. Sandys: Perhaps my hon. Friend will put that question down if, or when, the proposals are formulated.

    Commonwealth Parliamentary Conference
    Sir R. Robinsonasked the Secretary of State for Commonwealth Relations if he will make a statement about the Commonwealth Parliamentary Conference to be held in London later this year.
    Mr. Sandys: As the House knows, the Seventh Commonwealth Parliamentary Conference will be held in London in September.
    The Queen has graciously consented to open the Conference in Westminster Hall on Monday, 25th September. Members of both Houses will be invited to attend this ceremony. Her Majesty has also given permission for the Conference to hold its other sessions in the Royal Gallery.
    This Conference will be of great importance; and I am sure that hon. Members will join with the United Kingdom branch of the Association in giving a warm welcome to our fellow Members from overseas and will do all they can to help make this meeting an outstanding success.
    Mr. Shinwell: Do I understand that all hon. and right hon. Members will be entitled to attend the Conference? Are they to be selected, and, if selected, who is to select them, and on what basis?
    Mr. Sandys: The United Kingdom branch will be on the same footing as other branches, that is to say, there will be a delegation from the United Kingdom to the Conference. The delegation will be chosen by the usual procedure by the United Kingdom branch.
    Mr. Shinwell: That is precisely what I was getting at. For a Conference of this sort, hon. Members are at the mercy either of the executive of the C.P.A. or of some other body which is to select the delegates. I am not speaking for myself, but is it possible to make an application so that one who has views about the Commonwealth and its development may attend?
    Mr. Sandys: I suggest that the right hon. Gentleman should address his inquiries to the United Kingdom branch. As for the executive, we had a meeting yesterday—I do not know whether the right hon. Gentleman was present—when we elected the new executive, so the right hon. Gentleman has had his opportunity through normal democratic processes to choose the executive which will be responsible.
    Mr. Marquand: May I officially from this Box say that on this side of the House we warmly welcome the statement which the Secretary of State has made? We are sure that it will be welcomed, not only throughout the country but throughout the Commonwealth, where people will be particularly pleased that the Head of the Commonwealth is to open the proceedings.

  EDUCATION

    Nursing (Preparatory Courses)
    Mr. W. Clarkasked the Minister of Education what is the number of schools the curricula of which include nursing.
    The Minister of Education (Sir David Eccles): Precise information is not available but a large number of secondary schools provide preparatory courses for pupils who intend to enter the nursing profession.
    Mr. Clark: Will my right hon. Friend consider issuing a circular to all local education authorities pointing out the advantages of including nursing in their curricula so that, in two or three years, the obvious shortage of nurses which now exists will be alleviated?
    Sir D. Eccles: In the short time available, I have tried to ascertain whether these courses either in schools or in technical colleges meet the demand.
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    The best of my information to date is that they do, but, in view of my hon. Friend's Question, I will keep the matter under review.

    Industry and Science (Specialisation)
    Mr. Hollandasked the Minister of Education what steps he is taking to meet the restrictive demand created by the narrowing fields of specialisation in industry and science without sacrificing or endangering the provision of broadly based education.
    Sir D. Eccles: I do not control what is taught in the schools, nor the university and other requirements which influence school curricula, but a good deal of thought is being given to ways of striking a better balance between specialised and non-specialised studies, and Her Majesty's Inspectors are playing their part in this.
    Mr. Holland: I thank my right hon. Friend for that very helpful reply. Is there not a real danger that the pressure of specialisation in the universities, colleges and schools may well tend to defeat its own object of producing the people we want to keep this country in the forefront of scientific and technological advance?
    Sir D. Eccles: Yes, there is too much pressure. The only way to relieve it is to have more university places, which we are now providing.

    Woodwork (Home-grown Timber)
    Mr. Wingfield Digbyasked the Minister of Education what steps he is taking to encourage education authorities to ensure that home-grown timber is used for the training of young people in woodworking.
    Sir D. Eccles: Local education authorities are free to decide what timber to use to meet their special requirements. I am, however, grateful to my hon. Friend for drawing attention to this matter and I hope that, where suitable, local education authorities will use home timber.
    Mr. Digby: Is my right hon. Friend aware that, although we still have relatively the smallest forest area in the whole of Europe, more home-grown

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    timber is coming along and it is important that people should be taught how to use and work with it?
    Sir D. Eccles: I agree.

    Teacher Training Colleges
    Mr. Boydenasked the Minister of Education which training college projects, planned to be completed by September, 1961, are likely now to be delayed; and for what reasons.
    Sir D. Eccles: The first phase of the training college expansion programme was planned for completion in September, 1962, and I am advised that 12,000 new places should be ready on time.
    Mr. Boyden: May I encourage the Minister to expand the programme a little more in the future?
    Sir D. Eccles: We have another 12,000 places planned to come in after September, 1962. It will be a great strain to get them in, but I hope for the best.
    Mr. Boydenasked the Minister of Education how many men and women students, respectively, seeking places in training colleges have not yet been accepted; and how many vacancies still exist.
    Sir D. Eccles: Recruitment for next session is not yet completed. By the beginning of April, about 2,000 men and 3,500 women applicants with at least the minimum academic qualifications had not so far been accepted, and there were still vacancies for about 650 men and 900 women.
    Mr. Boyden: Does not this mean that there is still more need for training college places every year? Cannot the Minister take emergency steps to increase the number of places?
    Sir D. Eccles: It is very gratifying that so many candidates are coming forward, but it is essential also to raise the quality of the profession, and this can be done only if there is some measure of selection.
    Mr. Chetwynd: How is the central clearing house working to deal with this vexed problem?
    Sir D. Eccles: I think it is working well. Places have already been offered to 4,350 men and 11,000 women.

    King Edward VI Grammar School, Totnes
    Mr. Mawbyasked the Minister of Education whether he will now give the starting date for the new school to replace the King Edward VI Grammar School at Totnes.
    Sir D. Eccles: The authority has not included this project, which covers also the replacement of the girls' grammar school, in the proposals for 1963–65. I understand, however, that it will put it in its next submission, and I will then consider it on its merits.
    Mr. Mawby: Does my right hon. Friend realise that the citizens of Totnes will be very dissatisfied with that reply, because another generation of children at this grammar school will be condemned to receive their education in very difficult circumstances in totally inadequate accommodation?
    Sir D. Eccles: I agree that the school has poor buildings, but it is for the authority to decide its priorities.
    Mr. Mawby: Owing to the unsatisfactory nature of the reply, I give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

    School Meals
    Mrs. Whiteasked the Minister of Education what consideration is being given to revising the present allocation of money for school meals between labour costs and the purchase of food.
    The Parliamentary Secretary to the Ministry of Education (Mr. Kenneth Thompson): The unit cost per meal is fixed annually for each authority for food and overheads separately. The amount allowed is so assessed as to ensure adequate standards at a reasonable cost, in the light of current prices and wages rates.
    Mrs. White: Will the Minister look at the matter again? Is he not aware that the organisers of school meals find their task made more difficult because, if the cost of food is kept completely separate from other costs, they are inhibited from purchasing pre-prepared foods because to do so would make the cost of the food too high although the

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    relative cost of labour would be reduced? This is causing a great deal of dissatisfaction in the schools meals service.
    Mr. Thompson: That is a very interesting suggestion, and I will look into it.

    Training Ship "Foudroyant" (Course)
    Sir W. Bromley-Davenportasked the Minister of Education what is the total cost of providing holidays on floating warships to those boys who fail to win academic awards; whether this is a yearly or more frequent happening; and how much it will cost over the next five years.
    Sir D. Eccles: I understand that my hon. and gallant Friend is referring to a course on the training ship "Foudroyant" to which local education authorities are sending about 70 boys who have been recommended for the course by the School Sailing Association. The cost to the local education authority for each boy is about £7. The Answer to the second and third parts of the Question will depend on the authorities' opinion of the value of the experiment.

    School Children (Maintenance Allowances)
    Mr. Willeyasked the Minister of Education how many education authorities are providing maintenance allowances for school children over the age of 15 years below those recommended by the Weaver Working Party.
    Sir D. Eccles: I am asking local education authorities for this information and will write to the hon. Member as soon as I can.

    Secondary School Examinations Council (Report)
    Mr. Willeyasked the Minister of Education whether he will make a statement on the Report on Secondary School Examinations other than the General Certificate of Education.
    Sir D. Eccles: I have been awaiting the considered advice of the Secondary School Examinations Council on this subject. This has only just reached me, and I have not yet had time to consider it.
    Mr. Willey: I am sure that the House is very glad to know that the S.S.E.C. has reached conclusions. Will the right hon. Gentleman assure the House that the Report will be published as soon as possible and that he will formulate his own views of it equally expeditiously?
    Sir D. Eccles: Yes. I will have the Report published as soon as possible. This raises a major issue in education policy and it may take us a little time to consider it.

  SOUTHERN CAMEROONS

    British Troops
    Mr. Wingfield Digbyasked the Secretary of State for the Colonies whether it is intended to continue to station British troops in the British Cameroons now that the plebiscite is over and the territory is to be divided between Nigeria and the Cameroon Republic.
    The Secretary of State for the Colonies (Mr. Iain Macleod): As I stated in my reply to my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) on 7th February, the British troops now in the Southern Cameroons will be withdrawn when United Kingdom trusteeship over the territory comes to an end.
    Mr. Tilney: When will that be?
    Mr. Macleod: The date fixed for it by the United Nations is 1st October, 1961.

  THE WEST INDIES

    Immigration Restrictions
    Mr. Gresham Cookeasked the Secretary of State for the Colonies whether he is aware that many of the West Indian colonies from which emigrants are allowed free entry into Great Britain impose restrictions on immigration into their territory from Great Britain and other British West Indian colonies; and whether any changes with regard to these restrictions are contemplated in the near future.
    Mr. Iain Macleod: I am aware that the West Indian territories impose restrictions on immigration. Freedom of movement between the various islands will be considered at the Inter-Governmental Conference of the Federal and Territorial

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    Governments in Port of Spain which began on 2nd May.
    Mr. Gresham Cooke: Will my right hon. Friend bear in mind that the fact that there is restriction on movement between the islands, preventing people in one island from taking jobs in another, is one of the factors which causes many Jamaicans to come to this country? Is he aware that it removes the moral basis of demands which are made that freedom to come to this country should be retained in the future?
    Mr. Macleod: There are restrictions, which vary from island to island and, in the Federation, impede the free flow of people who wish to travel, but clearly this is a matter which they themselves should consider, and they are meeting at the moment in the Inter-Governmental Conference

  EAST AFRICA

    High Commission Staff
    Mr. Tilneyasked the Secretary of State for the Colonies (1) what discussions he has had with the East African High Commission Association of Professional, Technical and Executive Officers; if he is satisfied that the future of overseas civil servants serving in the East Africa High Commission is secure; and whether, on any fundamental change in conditions of service, members of Her Majesty's Overseas Civil Service will be given the option to retire on compensation;
    (2) whether, after the grant of independence to Tanganyika, the staff of the East Africa High Commission will be required to serve in the newly independent territory.
    Mr. Iain Macleod: I had discussions on the future position of East Africa High Commission staff with representatives of the staff associations in February. I am circulating in the OFFICIAL REPORT the text of an agreed communiqué issued to the Press after the discussions.
    I fully understand and sympathise with the Staff Side's natural desire for an early statement but, since the shape of the future relationship which may be possible between an independent Tanganyika and the interterritorial organisation is to be discussed in London in June, I am unable at present to make a final announcement on the future of the staff in relation to employment in Tanganyika.
    Mr. Tilney: Has my right hon. Friend's attention been called to the deplorable and untrue statement of the publicity secretary of the Tanganyika African National Union that the British are enemies of the Africans? Is he aware of the damage to morale which that untrue statement may cause? Because of the vital importance of keeping the High Commission in being, will he consider consulting the representatives of the staff pari passu with the June consultations?
    Mr. Macleod: I think it right to consult them, and I think that it would be right after the June consultations have taken place. I entirely agree that a most untrue statement was made, but the statement on which I prefer to rely is the categorical assurance given by Mr. Nyerere, the Prime Minister of Tanganyika, and I will print this as part of the White Paper. It is an assurance about matters which were raised by the East Africa High Commission staff.
    Following is the communiqué:
    Talks between the Secretary of State for the Colonies (Mr. Iain Macleod) and officials and representatives of both the Official and Staff Sides of the three Administrations of the East Africa High Commission, have been conducted during the past week. They included discussion on the future position of High Commission staff after self-government and eventual independence in Tanganyika.
    The delegation of the staff associations represented that the attainment of internal self-government by one territory was a significant political change so fundamentally affecting the High Commission staff as to justify the introduction of a compensation scheme under which High Commission officers would have the right to choose whether to leave without losing their pension and compensation rights or whether to continue in service. To meet the needs of the situation, however, they put forward a scheme which provided, under safeguards, for High Commission officers to continue to work as at present in Tanganyika during its period of full internal self-government but not during its period of full independence.
    The Secretary of State agreed that the High Commission did not fall precisely into the pattern of compensation principles that had been devised primarily for territorial Governments. He confirmed that he would feel it right that there should be a general compensation scheme for High Commission staff not later than the date when the second of the three constituent territories became independent. He added that constitutional changes might lead to consultation with the authorities concerned on the possibility of the introduction of a general compensation scheme even before then.
    At the present stage, it was not possible to forecast what changes would take place in the constitution of the High Commission when Tanganyika became independent, nor what

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    precisely the effect of such changes would be on the staff of the High Commission and his own responsibility for them. But if the changes justified a compensation scheme, appropriate proposals for one would be made. He did not feel able at present to pronounce finally on the Staff Side's claim that they should as a matter of principle not be required to work in an independent territory in which Her Majesty's Government had no jurisdiction or control.
    He thought the position would be clearer after the March Constitutional Conference in Dar-es-Salaam when among other things the relationship of Tanganyika to the High Commission in the future would naturally be discussed. At the Conference, arrangements would also have to be worked out for the continuation of the High Commission services in Tanganyika, during the period of internal self-government. It would, of course, be necessary to take fully into account at that time the need to make suitable arrangements to safeguard the rights and general conditions of service of High Commission staff, to which he attached particular importance.
    The Secretary of State also recognised that the position of the staff would be affected by any further proposals for the localisation of the High Commission service which might, for example, result from the report on this subject by Sir Richard Ramage. That report would, he understood, shortly be presented to the authorities of the High Commission and if as a result of it a policy was adopted of increased localisation in such a way as to affect existing service rights in respect of career prospects, this would necessitate the introduction of a limited compensation scheme appropriate to the circumstances. He added that something of a similar nature was presently being considered in Uganda.
    While for reasons that he had explained to the delegates, the Secretary of State felt that it was not possible at present to be specific about either the timing or the extent of any compensation scheme until the future developments in both the constitutional and the service fields could be seen more clearly, he fully sympathised with the Staff Side's need of a clear understanding on their future. He hoped that in the light of developments in the constitutional and service fields a detailed programme could be drawn up and he undertook that he would ask the appropriate authorities in East Africa to consider the matter further in consultation with himself as soon as possible after the outcome of the March conference, and that there would then be further discussions with the Staff Associations in which representatives of the Colonial Office would take part.

  NORTHERN RHODESIA

    Elections (South African Citizens)
    Mr. Stonehouseasked the Secretary of State for the Colonies whether he proposes to allow South African citizens to vote in the Northern Rhodesia
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    elections after South Africa becomes a Republic.
    Mr. Iain Macleod: South African citizenship as such is not a qualification for the vote in Northern Rhodesia.
    I see no reason to alter the position that anyone, of whatever origin, who fulfils the nationality and other qualifications prescribed within Northern Rhodesia is eligible to register and vote.
    Mr. Stonehouse: Is the Minister aware that this matter is very important, bearing on the talks due to take place in Lusaka? Is he aware that it would be most unfortunate if open advocates of apartheid from a foreign country were allowed to participate as electors, and presumably as candidates, in this election?
    Mr. Macleod: I think that that is an absurd approach to the problem. It is wrong to think that in South Africa everybody, whatever the colour of his face, for example, approves of the racial policies of the Government. We must judge this by the situation in Northern Rhodesia. It may well be that somebody has dual citizenship and is entitled to vote there. If so, he should be fully entitled to vote in the Northern Rhodesia elections.
    Mr. Biggs-Davison: Does not my right hon. Friend agree that it would be less anomalous for South Africans to vote in Northern Rhodesia than for Portuguese to vote in Nyasaland elections?
    Mr. Macleod: My hon. Friend knows very well that that is a very different question. The question of the Portuguese voting in Nyasaland arose because of the impossibility of distinguishing between those who were Portuguese-born and those who were born in Nyasaland.
    Mr. Callaghan: If we are considering imposing these restrictions on the franchise, should we not bear in mind that we are more likely to have a stable Government in these African territories when more people living there are entitled to share in selecting their governors?
    Mr. Macleod: I am not sure that I see much relevance in that supplementary question. The qualification in Northern

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    Rhodesia is that a person must be a citizen of the United Kingdom or Colonies or of the Federation or a British-protected person by virtue of his connection with the Territory—and in my opinion the essential words are
    "by virtue of his connection with the Territory."
    Mr. Callaghan: Is not the right hon. Gentleman aware that it is very difficult for a peasant hoeing his beans in Northern Rhodesia to understand why he cannot have a vote when his brother living across the border in Tanganyika has a vote?

    Public Meetings
    Mr. Dugdaleasked the Secretary of State for the Colonies under what regulation persons holding meetings in Northern Rhodesia are ordered to take out insurance policies in case of disturbance; and whether it is his intention to continue to compel them so to do.
    Mr. Iain Macleod: There are no provisions in Northern Rhodesian law whereby persons holding meetings can be required to take out insurance policies; and there is no record of anyone having been ordered to do so.
    Mr. Dugdale: Does the right hon. Gentleman realise that many people in Northern Rhodesia who thought that there were such provisions will be delighted to hear him say so?

    Mr. Kenneth Kaunda
    Mr. Dugdaleasked the Secretary of State for the Colonies for how long it is intended that Mr. Kenneth Kaunda is to be refused permission to enter Northern Province, Barotseland, and parts of Eastern Province.
    Mr. Iain Macleod: Mr. Kaunda has not been refused permission to enter the Northern and Eastern Provinces, and in fact visited the Northern Province recently. On one occasion last year, certain native authorities required him, under powers vested in them by the Native Authority Ordinance, to leave their particular areas of the Northern Province. The entry of persons into Barotseland is a matter for the Litunga.

    Constitution (Discussions)
    Mr. Biggs-Davisonasked the Secretary of State for the Colonies what stage has now been reached in the constitutional discussions in Lusaka.
    Mr. Iain Macleod: The Governor has had discussions with each of the political groups represented at the London Conference on the outline plan in the White Paper and the detailed suggestions which he circulated. He expects to hold further consultations with all groups before making his recommendations.
    Mr. Biggs-Davison: Would my right hon. Friend agree that the result of the Southern Rhodesia referendum and the future of the Federation itself may largely depend on the speedy and satisfactory conclusion of these talks? Can he give an assurance that his constitutional proposals are being and can be interpreted with flexibility?
    Mr. Macleod: On the last point, we certainly made our position quite clear—that we have published the White Paper and we are prepared to consider schemes within the framework of the White Paper. I do not think that the date of the Southern Rhodesia referendum has been announced and, therefore, it is not possible to be precise in relation to the Northern Rhodesia talks, but I should have thought it very likely that the result of the talks will be made public well before the referendum.

  GAMBIA

    Constitutional Conference
    Mr. Callaghanasked the Secretary of State for the Colonies whether he will invite the General Workers' Union of Gambia to be represented at the forthcoming Constitutional Conference.
    Mr. Iain Macleod: The Conference has been summoned by the Governor. Invitations have been extended only to political parties, the Chiefs, and three individuals on a personal basis. The General Workers' Union has not been invited but Mr. Jallow, its Secretary-General, has received one of the personal invitations.

  TANGANYIKA

    Leaseholder Farmers
    Mr. Turtonasked the Secretary of State for the Colonies what provision he intends to make for leaseholder farmers in Tanganyika who desire to leave their farms after Tanganyika becomes independent.
    Mr. Iain Macleod: I have no evidence to suggest that any special provision is necessary. Since the introduction of responsible government in September 1960, Ministers of the Tanganyika Government have given assurances—for example of their intention to maintain the sanctity of all titles to land granted under the law—which I understand have been warmly welcomed by leasehold farmers of all races in the territory.
    Mr. Turton: Is my right hon. Friend aware that these farmers were invited to Tanganyika by Her Majesty's Government and that their leases were extended from 33 to 60 years by Her Majesty's Government? For that reason, is there not a responsibility to ensure that if they do not want to stay there they are given some compensation when they leave?
    Mr. Macleod: I was not sure from the Question whether it was directed to those of British, Greek, Asian or African origin, all of whom have titles to land in Tanganyika. The essential point is that as soon as Tanganyika achieved responsible Government—and this has been repeated on a number of occasions since—the Minister responsible, Chief Fundikira, gave in most categorical terms an assurance that all titles to land would be respected. If I may say so, I should very much like to see that assurance given by Ministers in other territories.
    Mr. Turton: Will not my right hon. Friend underwrite that guarantee?
    Mr. Macleod: No. I think that it would be utterly wrong to assume that a guarantee given by a responsible Minister of a territory which is now at the stage of full internal self-government will not be carried out.

  KENYA

    Unlawful Oaths
    Mr. Turtonasked the Secretary of State for the Colonies how many persons have been convicted in Kenya during the last six months on charges of oath-taking or administering oaths.
    Mr. Iain Macleod: Seven persons have been convicted of administering unlawful oaths in the past six months. Two further cases are pending before the court. Eleven persons have been convicted for taking oaths.
    Mr. Turton: Is my right hon. Friend aware that quite recently, on 29th January, magistrates in the court declared that the Mau Mau society was again active? If that is so, should not more steps be taken to bring these oath-takers to justice?
    Mr. Macleod: The cases which I have mentioned, in which the sentences have varied from nine months to seven years, are evidence that firm steps are being taken. As I am sure my right hon. Friend remembers well, when there were signs of a recrudescence of oath-taking some time ago the Governor, with, of course my full support, moved at once and very firmly against it

    Salaries (Flemming Report)
    Mr. H. Clarkasked the Secretary of State for the Colonies if he is aware of the increasing concern felt by overseas service officers and other Government servants in Kenya about the method being adopted to implement the Flemming Report on Salaries; and what reply he has given to the letters on this subject sent to him by the Kenya Senior Civil Servants Association.
    Mr. Iain Macleod: I am aware of this concern. I have not yet received any letters on the subject sent to me by the Kenya Senior Civil Servants Association but I understand that one is on the way to me and I will of course be ready to look into any representations which may be made to me.
    Mr. Clark: Would my right hon. Friend give special consideration to a change being made in the educational allowance in the implementation of the Flemming Report? Is he aware that the educational allowance, above all others, would play a part in the decision that dozens of civil servants will take whether to stay in Kenya or come back home?
    Mr. Macleod: I will gladly look into it. I hope that hon. Members who have received these letters will realise that the report on the O.S.A. scheme and the Flemming Report have to be read together and that both are a recognition of Her Majesty's Government's determination to do everything they can for all those who serve in these territories.
    Mr. Callaghan: If there is a difference between these officers and the

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    Colonial Office, not only in this organisation but in others, who settles the dispute? Does the right hon. Gentleman reserve the right to have the last word?
    Mr. Macleod: In a matter like that it would be normal for an association, as often happens in the case of East Africa, to make special representations to me. Clearly I in my turn, and this is common form if it is a financial matter, must carry the Treasury with me before any alteration in the scheme can be made. Such an alteration, if agreed with the Treasury and myself, could then be made to a scheme.
    Mr. Callaghan: Does not the right hon. Gentleman realise that in the eyes of many of these civil servants the Colonial Secretary and the Treasury may be in league against them and it is no comfort to them to know that the right hon. Gentleman has to carry the Treasury with them? Is he aware that I have received a dozen memorials from different organisations throughout East Africa complaining about the implementation of the Flemming Report? I do not know whether the right hon. Gentleman has received them yet. Will he consider whether some arbitration machinery should be set up to consider the disputes that seem to be arising between him and these organisations?
    Mr. Macleod: That any Minister in any Government has to carry the Treasury with him, as the hon. Member knows very well, is one of the facts of life of government, and nothing more than that should be read into it. The amount of money which we have to put on the backs of British taxpayers for these schemes show that we have the warmest sympathy of the Chancellor of the Exchequer and the Treasury in this matter. I am ready to consult closely on these matters either with the Kenya Association or with other associations of the Civil Service in Colonial Territories.

    Legislative Council (Ministerial Appointments)
    Sir A. Hurdasked the Secretary of State for the Colonies if he will make a further statement about the formation of a Government in Kenya and the allocation of ministerial posts between elected and nominated members of the Legislative Council.
    Mr. Iain Macleod: I will, with permission, circulate the list of the new Ministers so far appointed in the OFFICIAL REPORT.
    Mr. Hurd: Will my right hon. Friend convey to the Governor of Kenya, Sir Patrick Renison, our appreciation of his efforts to form a responsible Government from all races? Will he also tell him of our determination here to give full support to the Government in maintaining law and order and in carrying out urgently needed development in land settlement and education so that confidence in the future of Kenya may be maintained?
    Mr. Macleod: I very much agree with all the points my hon. Friend has made and particularly with his tribute to Sir Patrick Renison in what has been a difficult task over the past few weeks.
    Mr. Callaghan: While no one wishes to make the task of the new Governor more difficult, may I ask whether we ought not to be careful in the House about appearing to side with a Government against a political party in a territory, especially when the Government concerned is a minority party?
    Mr. Macleod: On the contrary, I do not regard this in any way as a minority Government. It is unquestionably the strongest cohesive bloc there is in the Legislative Council in Kenya and there is no question of this or any side of the House siding with any particular party. But the other African party to which the hon. Member refers was invited first, by virtue of its size, and rightly so, to form a Government but when it declined, for whatever reason, the Governor was unquestionably right to form a Government of all races based on the alternative.
    Following is the list:
    The following elected members of the Legislative Council have been appointed to Ministerial posts:
    Mr. R. G. Ngala, Minister for Education.
    Mr. M. Muliro, Minister for Commerce, Industry and Communications.
    Mr. T. Towett, Minister for Labour and Housing.
    Mr. W. B. Havelock, Minister for Local Government and Lands.
    Mr. P. D. Marrian, Minister for Tourism, Forests and Wild Life.
    Mr. A. Jamidar, Minister for Works.
    The following appointments of ex officio members have been made:
    Sir Walter Coutts, Chief Secretary.
    Mr. E. N. Griffith-Jones, Minister for Legal Affairs.
    Mr. K. W. S. Mackenzie, Minister for Finance and Development
    Mr. A. C. C. Swann, Minister for Internal Security and Defence.
    Mr. R. J. M. Swynnerton and Mr. M. N. Evans have been appointed Temporary Ministers for Agriculture and Health respectively, pending the appointment of elected members of Legislative Council to these offices.

    Financial Aid
    Mr. P. Williamsasked the Secretary of State for the Colonies whether he will now announce the Government's plans for providing further financial support to the Government of Kenya.
    Sir T. Beamishasked the Secretary of State for the Colonies what is the present annual scale of financial aid from all Government sources to Kenya; what approximate increases are under discussion; and if he will give an assurance that such increases will be maintained at a sufficient level to ensure a sound and progressive economy in Kenya.
    Mr. Iain Macleod: Provision is already made in United Kingdom Votes for aid of about £7½ million to Kenya in the current financial year. In addition, further assistance on budgetary account and for development will be necessary, and I am engaged in negotiations with a Kenya Government delegation whose representations I will naturally consider as sympathetically as I can.
    Mr. Williams: Is my right hon. Friend aware that, now that the new Government has been formed, the most important thing is to reverse the trend of the withdrawal of overseas money from Kenya? Is he aware that anything that can be done by him in this matter will be thoroughly welcomed? Can he give a further assurance that, in discussing further financial support, particular attention will be paid to finance for providing further technical education?
    Mr. Macleod: The Kenya Government delegation, to which I referred and
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    with which I am now consulting, has arrived with a number of proposals, including some for education. I cannot commit myself, in answer to a supplementary question, to particular sums of money, but my hon. Friend will understand that I mean what I say when I state that I will consider and meet the delegation's representations as sympathetically as I can.
    Sir T. Beamish: In view of the inevitable loss of confidence and the drain on Kenya's economy in the election period, and the fact that a broadly based non-racial Government has been formed—which we welcome—is my right hon. Friend aware that he will have a great deal of support in this House if he treats all reasonable demands for economic and financial aid in the most generous way possible?
    Mr. Macleod: I have given an undertaking in my main Answer, and I repeat it now. Anything that I can do to help, I will do.
    Mr. J. Hynd: The right hon. Gentleman mentioned a figure of £ 7½ million. Though welcome, that is only about one-third of the amount given to the Cunard Steamship Company, Ltd. Will he reconsider this?
    Mr. Macleod: If we take into account both that sum and what is planned, we find that it is a very large percentage indeed of the ordinary Kenya budget.

  COLONIAL TERRITORIES

    Migration to United Kingdom
    Mr. C. Osborneasked the Secretary of State for the Colonies what factors cause him to oppose any restriction of emigration from Colonial Territories into the United Kingdom, in view of the grave disquiet of the general public at Her Majesty's Government's refusal to take action in this matter.
    Mr. Iain Macleod: As has been made clear, Her Majesty's Government, while watching the situation with care and concern, have not reached firm conclusions on a matter which raises an important question of principle and involves our relations with other countries in the Commonwealth.
    Mr. Osborne: Whilst recognising the grave and difficult problems which face the Government in making this decision, may I impress upon my right hon. Friend how deep is the anxiety felt by people in this country at this growing problem? Will my right hon. Friend urge his Cabinet colleagues to do something quickly please?
    Mr. Macleod: I share that anxiety. The statement which I made, which was of course agreed by all the Ministers and Departments concerned, indicates no change whatever in Her Majesty's Government's view on this matter. I would feel that on this almost all the House should unite on two things—first, that the figures for 1960 and the first quarter of 1961 are frankly very disturbing indeed, but secondly that it would be extremely distasteful if we had to come to the point of imposing legislation which would run counter to the very long-established tradition of Britain being the centre for the Commonwealth countries.
    Sir J. Duncan: Would my right hon. Friend agree that it would be easy to take action now in advance but that if conditions changed in this country, with an increase in unemployment, and if immigration increased as it has done in the last few months, the problem would become much more difficult to deal with?
    Mr. Macleod: In one sense what my hon. Friend says is perfectly true. In another sense it works in exactly the opposite way, because the figures of immigration are immensely sensitive to the employment situation in this country, as the small recession which we had two years ago showed.
    Mr. D. Howell: Is the right hon. Gentleman aware that in the recent Small Heath by-election the Conservative candidate talked about nothing else but this racial matter and he had a catastrophic defeat?
    Mr. Macleod: I do not know what happened in the by-play at the Small Heath by-election but I believe that almost everybody would agree that it would be very sad if we had to depart from our traditional position in this
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    matter. Everybody ought to be concerned at the figures of immigration as the statistics have shown them.

  MALTA

    Tourist Industry
    Mr. Teelingasked the Secretary of State for the Colonies what reply he has received from the Governor of Malta to his letter concerning the former Chairman of the Malta Tourist Board and the expenditure of the monies allocated for the Tourist Board.
    Mr. Iain Macleod: The amount allocated for capital expenditure on tourist development over the five years ending in 1963–64 is £545,000. Expenditure in the first two years was £183,245. Recurrent expenditure borne on the Malta Budget was £168,681 in the same period. No action by Her Majesty's Government appears to arise from the reports referred to.
    Mr. Teeling: My right hon friend has said nothing about the former Chairman of the Tourist Board, although I asked him about that matter. Why was it that the members of the Board felt that the scandal of his departure was such that they wished to resign en masse, while the Governor asked them not to?
    Mr. Macleod: All expenditure was approved by the Board. It seems clear that there was no misuse of public funds. These reports are, in the first instance, for consideration by the Governor of Malta.
    Mr. Stonehouse: Is the right hon. Gentleman aware that there is very strong feeling in Malta about the use of these funds, and a general wish that there should be an independent inquiry into the activities of the Board? Will he look at this again?
    Mr. Macleod: I was not aware of any strong feeling in Malta to that effect, but I have noted what the hon. Member has said and will bring it to the Governor's attention.
    Mr. Teeling: On a point of order, Mr. Speaker. In view of the rather unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the adjournment at the earliest opportunity.

  AGRICULTURE, FISHERIES AND FOOD

    Fuel Oil (Duty)
    Mr. P. Browneasked the Minister of Agriculture, Fisheries and Food (1) what representations he has had from the National Farmers' Union about the increased cost to the industry of the imposition of the 2d. a gallon tax on fuel oil;
    (2) what representations he has had from horticultural interests about the increased cost to the industry of the imposition of the 2d. a gallon tax on fuel oil.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. W. M. F. Vane): My right hon. Friend has discussed this question with representatives of the National Fanners' Union, and has received written representations from the President of the Union and from the Chairman of its Central Horticultural Committee. He is now considering these representations and others which he has received from the Tomato and Cucumber Marketing Board, the British Flower Industry Association and a number of local growers' associations and individual growers.
    Mr. Browne: I thought that there were two separate Questions here. However, I will ask two supplementary questions together. First, in considering representations from the N.F.U. as such, will my hon. Friend bear in mind that, unlike any other industry in this country, any increase in cost cannot be passed on to the consumer? [HON. MEMBERS: "Oh".] Whatever Members opposite may say, that is so. Secondly, does not my hon. Friend think that this increase in fuel costs for the glasshouse industry will vitiate any improvements it got as a result of the tariff last year?
    Mr. Vane: My right hon. Friend will bear all these factors in mind. The tariff on tomatoes must have had some effect, but it is wrong to over-simplify the effect of tariffs on prices in this country without going into all the factors involved.
    Sir D. Walker-Smith: Does my hon. Friend agree that it is a somewhat puzzling and paradoxical situation that growers, who were expressly exhorted
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    by the Government to convert from solid fuel to oil heating, should now be penalised for so doing?
    Mr. Vane: I could not support what my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) has said about that, because there has not been express exhortation to convert any heating system to oil. What we have done is to encourage the improvement of heating equipment generally.

    European Common Market
    Mr. Ridleyasked the Minister of Agriculture, Fisheries and Food how many members of his staff are employed in studying the development of agricultural policy in the Common Market countries.
    Mr. Vane: None of my right hon. Friend's staff is engaged solely on this, but officers whose duties include overseas trade are expected as a matter of course to keep abreast of developments in all countries with whom we have trade relations.
    Mr. Ridley: Has my hon. Friend's attention been drawn to an article in today's Farming Express, which says that Britain is to join the Common Market and that the Conservative Chief Whip has given Tory Members for agricultural constituencies a confidential briefing on this subject? [HON. MEMBERS: "Oh."] As my hon. Friends and I—representing agricultural constituencies—have not received such a briefing, will my hon. Friend assure us that his own staff is looking into this matter very carefully and is trying to formulate proposals to bring British agriculture to the stage where it might be possible to join the Common Market?
    Mr. Vane: The Farming Express is not the mouthpiece of Government policy. I can assure my hon. Friend that in the Agriculture Department there is an adequate staff, and two External Relations Divisions keep in touch with all such developments as my hon. Friend has in mind.
    Mr. Grimond: If the Farming Express is not, can the hon. Gentleman tell us what is the mouthpiece of Government policy on the Common Market? We

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    have had the most contradictory leakages. For instance, there were the wonderful words of the Prime Minister that we should not rush into this matter.
    Mr. Vane: That is not a question which should be addressed to me.

    Bulls
    Mr. de Freitasasked the Minister of Agriculture, Fisheries and Food whether he will arrange for bulls of the three leading British beef breeds, Hereford, Angus, and Lincoln Red, to be tested in the same way and under the same conditions as the French Charollais bulls.
    Mr. Vane: Details of the Charollais trial have still to be settled and we are arranging to consult the interested organisations about this. We would hope, however, to arrange for certain farmers participating in the trial to rear a number of British beef/dairy crosses alongside the Charollais/dairy crosses.
    Mr. de Freitas: Will the hon. Gentleman make it clear that, when Charollais are to be tested, it is meaningless unless the leading British beef breed bulls are tested under similar conditions?
    Mr. Vane: I thought that my reply implied that it is intended to carry out certain trials, although I would not necessarily say that one beef breed was better than any other.

    Poultry (Post-Mortem Service)
    Mr. Mawbyasked the Minister of Agriculture, Fisheries and Food if he is satisfied that the amount now charged for post mortem on poultry will not deter small poultry keepers from using this service; and if he will make a statement.
    Mr. Vane: Since the fees for post-mortem examination of poultry at the Ministry's Laboratories were increased, the number of specimens submitted has fallen, but I cannot say how much of this fall is attributable to small poultry keepers. These fees were originally fixed in 1925 and had become almost nominal. Even at these new rates, the service will not yet be self-supporting but, as already announced, it is my right hon. Friend's intention to introduce full economic fees on 1st December, 1961.
    Mr. Mawby: While thanking my hon. Friend for that reply, may I ask him to take into account the fact that many eggs are produced by backyard poultry-keepers? Will not the charge for post-mortem examinations mean danger of a disease not being diagnosed because the owner may bury the evidence?
    Mr. Vane: I am aware of the dangers from disease, but it is in the interests of any poultry-keeper who suspects that one of his birds has died of disease to have a post-mortem examination carried out. There are many ways open to him. The veterinary profession in private practice is available. This does not seem to be a service which the State is justified in running at well below cost.

    Wood Pigeons
    Sir A. Hurdasked the Minister of Agriculture, Fisheries and Food to what extent rabbit clearance societies have been able to operate the scheme for providing subsidised cartridges for shooting wood pigeons; and if he is aware that in some districts there has been no organised shooting this spring and the wood pigeons have been left to multiply with consequent damage to tillage crops and clover leys.
    Mr. Vane: One hundred and sixty-three societies are making use of these arrangements. In some counties organised shooting has not been on the same scale as in previous years, but as societies extend their areas I hope the gaps will be filled. In some areas, of course, shoots, other than those organised by rabbit clearance societies, have taken place for many years and continue to do so.
    Sir A. Hurd: Will my hon. Friend look at the way in which the scheme is working, as it is not giving satisfaction in most districts, and will he see whether he can get an improvement before next year?
    Mr. Vane: Yes.

  SECRETARY OF STATE FOR SCOTLAND (SPEECH)
  Mr. Stonehouseasked the Prime Minister if the speech of the Secretary of State for Scotland to the Scottish Conference of the Conservative and Unionist Parties about the responsibilities of

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  Ministers represents the policy of Her Majesty's Government.
  The Prime Minister (Mr. Harold Macmillan): My right hon. Friend the Secretary of State for Scotland informs me that he did not deal with this subject.
  Mr. Stonehouse: Is the Prime Minister aware that the Secretary of State for Scotland gave the impression that he was overworked and underpaid, and that the Glasgow Herald referred to him as a Pooh-Bah? Was it not highly significant that he made his speech on the day after the Chancellor of the Exchequer said in this House that the Secretary of State for Scotland's salary of £5,000 a year was an insufficient income in today's circumstances? What does the Prime Minister intend to do about it?
  The Prime Minister: With regard to the first part of the supplementary question—that my right hon. Friend is overworked and underpaid—I think that all hon. Members feel that about themselves. As regards the second part, I think that all my right hon. Friend was saying was that the Scottish Office had a very wide responsibility because it dealt with a very wide number of subjects which in England were given to special Ministers. That was what he was saying.

  SPACE RESEARCH
  Mr. D. Priceasked the Prime Minister whether the speech of the Minister for Science to the Geological Society on 26th April, 1961, dealing with the use of manpower to develop a rocket for space research and civil science, represents the policy of Her Majesty's Government.
  Mr. Emrys Hughesasked the Prime Minister whether the speech of the Minister for Science to the Geological Society on 26th April, 1961, on science and the future of Great Britain represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir. In the passage in my noble Friend's speech to which I assume these Questions refer, he was reaffirming his acceptance of the view of the Advisory Council on Scientific Policy that a full scale space pro-
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  gramme on a purely national basis, including the development of a large launcher, would not be justified solely on pure scientific research grounds.
  The wider problem of developing a launcher for heavy satellites is under discussion in Europe at the present time and any further statement of policy on this matter must await the outcome of the discussions.
  Mr. Price: Is my right hon. Friend aware that, whatever may be the argument on purely scientific grounds, on technological and commercial grounds Britain cannot afford not to take part in space technology, and would not my right hon. Friend agree that my right hon. Friend the Minister of Aviation would be more assisted in his negotiations in Europe if we made it clear that, whatever be the outcome of these negotiations, we are prepared to do something ourselves in this field?
  The Prime Minister: As to the negotiations, they are in the hands of the Minister, and I hope very much that we shall be able to get the joint scheme because of the enormous sums involved if this is to be really pressed forward in all its aspects. That is the thing we ought seriously to consider.
  Mr. Hughes: Is the Prime Minister aware that the National Coal Board is allowed only the comparatively small sum of £5 million for scientific research compared with the £25 million or so for the Navy? Will he see that more scientific research is encouraged in the coal industry before going into outer space?
  The Prime Minister: It is exactly these claims which have to be considered, and the Government are advised by the National Council as to the best priorities.
  Mr. Peart: Is the Prime Minister aware that on Tuesday the Parliamentary Secretary for Science announced Government policy, and this was not very satisfactory as there is a feeling that the Commonwealth could do something about it? Is this because two years ago when Prime Minister Diefenbaker suggested to the British Government that there should be a joint British-Canadian effort it was refused by the British Government? When will we have some action on this?
  The Prime Minister: The two Commonwealth Governments primarily concerned are the Canadian and Australian Governments, both of whom are being consulted on this matter.
  Mr. Gresham Cooke: Has my right hon. Friend seen it reported that the cost of the Russian rocket programme today for launching heavy satellites is about equal to the cost of the whole of our defence programme? If, therefore, it meant either putting up Income Tax by 1s. or 2s. or depressing the standard of living, to go in for a heavy rocket programme, people in this country would not think it worth while.
  The Prime Minister: All these matters are palpably matters of the expenditure of money, but money is merely a way of expressing what resources should be given to what particular projects. As everybody knows, to get those priorities right is a difficult matter.

  GENEVA CONFERENCE ON NUCLEAR TESTS
  Mr. Healeyasked the Prime Minister whether he will consider making a personal appeal to Mr. Khrushchev concerning the nuclear test conference in Geneva.
  The Prime Minister: I will bear the hon. Member's suggestion in mind. I regard the outcome of the Geneva conference negotiations as a matter of great importance and I am ready to consider at the appropriate time any course of action that seems likely to assist towards the resumption of constructive negotiation there.
  Mr. Healey: I welcome the Prime Minister's reply. Is he aware that many of us have regarded agreement on the test ban as by far the most hopeful subject for agreement in the disarmament field between East and West, and that many of us are deeply disappointed by the recent attitude of the Soviet Government on this issue? Will he find some means of informing Mr. Khrushchev of the extent to which continued Soviet intransigence on this issue will undermine the position of all those in the West, of all parties and of all countries, who believe that it is urgently necessary to try to reach some agree-
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  ment between the West and the East on the problem of general disarmament?
  The Prime Minister: I am grateful for what the hon. Gentleman said, which expresses the view we all feel. This is the most hopeful of the things we have tried. It has been a very long, tedious, and difficult negotiation. I take some hope from the fact that it is still going on, and I assure the hon. Gentleman that we will not let it simply drift into collapse without a real effort to bring it to some advance, and I hope conclusion.
  Miss Lee: Does the right hon. Gentleman agree that it is not possible to separate foreign policy from defence issues? Will he, therefore, see that Britain's position in relation to Cuba is made perfectly clear so that the Soviet Union may be encouraged to co-operate more on these proposals?
  The Prime Minister: That may be perfectly true as far as foreign policy as a whole is concerned. Nevertheless, the rather retrograde action, as we think, of the Russian negotiators was taken some weeks or months ago. We were disappointed that they appeared to withdraw from a position which we thought was really hopeful. We are still trying to bring them back to it.
  Mr. Fell: Would my right hon. Friend agree that the conference on nuclear tests has become an absolute farce and is being used by the Soviet Union to cover its depredations into the forces of law and order throughout the world, and that what we ought to concentrate on is trying to restore law and order in those areas where Communist Russia is being most successful in getting rid of it?
  The Prime Minister: That is another and larger question. With all the faults of the conference—it has made very slow progress—I think this has been achieved, that there have been no explosions in the atmosphere by any of the three Powers concerned since the conference sat.

  PUBLIC INQUIRIES
  Mr. Liptonasked the Prime Minister when he expects to announce the result of the discussions between the Lord

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  Chancellor and the Chairman of the Council on Tribunals relating to the conduct of Ministers in public inquiries.
  The Prime Minister: My noble Friend the Lord Chancellor discussed the matter yesterday with the Chairman of the Council on Tribunals and some of his colleagues on the Council. He is considering the matter and expects to make a full statement on Monday.
  Mr. Lipton: Is the Prime Minister aware that widespread and responsible public opinion views with considerable disfavour the slippery tactics of the Minister of Housing and Local Government and the Lord Chancellor in connection with the chalk pit inquiry?
  Hon. Members: Withdraw.
  Mr. Speaker: I must require the hon. Member to withdraw that expression.
  Mr. Lipton: I withdraw those words and substitute, "the dubious tactics of the Minister of Housing and Local Government and the Lord Chancellor in connection with the chalk pit inquiry". Will the right hon. Gentleman give an undertaking that this murky business will be cleared up satisfactorily not later than Monday next?
  The Prime Minister: I cannot rival the hon. Member in his choice of epithets, but I should have thought that the word "slippery" was the last word I would have applied to the Lord Chancellor. There will be a statement on Monday. I am well aware of public interest, but I think that it would be better to await the statement and then see what the situation is.
  Mr. G. Brown: The Prime Minister's absolving the Lord Chancellor from a charge of being "slippery"—[HON. MEMBERS: "Question."]—is a very interesting and remarkable thing—[HON. MEMBERS: "Question."] Are you aware, Sir, that the case of Satan rebuking sin is one thing, but Satan encouraging sin is a different matter altogether? Slippery is slippery, whether it is the Lord Chancellor or the Prime Minister, and both are experts.
  Hon. Members: Withdraw.
  Mr. Speaker: The right hon. Member must have omitted to remember the with-
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  drawal that I required of his hon. Friend. Perhaps he would put the matter right.
  Mr. Brown: Yes, Mr. Speaker, I remembered. I thought that I should probably be asked to withdraw that word, and I do so, and introduce instead the word "devious". Had I not been provoked by the moronic chorus opposite I would not have made the reference. I was here between 1945 and 1951, and nothing that we can do now could equal what the party opposite did then.
  Mr. Speaker: If the right hon. Gentleman has been here all that time he will remember that this is Question Time.
  Mr. Brown: I was here then, Mr. Speaker, and you were not, and I know what the party opposite did then—and the right hon. Member for Woodford (Sir W. Churchill) more than anybody—
  Mr. Speaker: I am sorry, but the right hon. Gentleman has failed to take the hint. The rules of order require him at this time to confine himself to questions.
  Mr. Brown: Yes, and the rules of order also require—[Interruption.] As long as hon. Members opposite shout I shall answer back. If I am not allowed to put the question then I will treat them—
  Mr. Speaker: Order. I am sure that hon. Members would not desire to put any obstacle in the way of the right hon. Gentleman keeping in order.
  Mr. Brown: The question I rise to ask is whether the statement that is to be made on Monday is to be made in this House, wherever else it is made, so that we may cross-question the Minister responsible. We are very concerned at what appears to have happened here, especially about the transfer of Questions from the Law Officer who, to us, appears responsible, to the Minister, who is in the dock. Will the Prime Minister assure us that a statement will be made in this House on Monday?
  The Prime Minister: On Monday there is to be a debate in another place, which I understand arises on a Motion of one of the noble Lords on the Labour side, and it is very proper that the Lord Chancellor should make a statement in

  1601
  reply to that Motion. After that, questions may be asked, which I or other Ministers will do our best to answer, and if there were a requirement for a debate one could no doubt be arranged through the usual channels.
  Mr. Brown: But my hon. Friend's Question today arises out of the transfer of a Question the other day, which we disputed at the time. Could not the Prime Minister, out of courtesy to this House if for no other reason, arrange for a statement to be made in this House on Monday so that, if we wish, we may ask supplementary questions arising out of an incident that happened in this House?
  The Prime Minister: This does not arise out of the transfer of a Question. It is a simple Question, asking when the Prime Minister proposes to announce the result of the discussions between the Lord Chancellor and the Chairman. I said that as there is to be a debate in another place on Monday it seemed not unreasonable that the statement should be made there.
  Mr. Gaitskell: If a Question were put down to the Prime Minister, or whoever is the appropriate Minister—about which there seems to be some doubt—could not it be arranged for that Question to be answered on Monday?
  The Prime Minister: If the Question were put down to me I could answer it on Tuesday, which would probably provide a better opportunity for supplementary questions to be asked, and for questions to be asked arising out of the debate.

UNPARLIAMENTARY EXPRESSIONS
Mr. Ness Edwards: On a point of order. You have ruled, Mr. Speaker, that the term "slippery" is an unparliamentary word. Since when has that become so? Within my recollection a right hon. Member opposite repeatedly referred to a "slippery Sam", and there was an occasion when another right hon. Member was referred to as "leaving a trail of slime across the Floor of the House." Are we now becoming a mealy-mouthed assembly?
Mr. Speaker: With respect, I think that the right hon. Gentleman is on a different point. If an unparliamentary expression is used in debate there may be grounds for requiring it to be withdrawn, but at Question Time epithets are inappropriate, under a different rule relating to Questions. It was on that that I required the withdrawal.
Mr. Ness Edwards: Can you supply a reference for that Ruling, Mr. Speaker.
Mr. Speaker: Looking at the first page I open in the current edition of Erskine May—page 358—it is proposition (2), in the middle of the page.
Mr. Callaghan: Are we to take it that it is out of order to say that the Lord Privy Seal is slippery at Question Time, but that it is in order to say that he is slippery during a debate?
Mr. Speaker: When the hon. Member says it—and I am not giving him the slightest encouragement to say it—I will rule upon it. My reason is that the exact implications of the word used depend so much on the context, and I do not like to make abstract Rulings on a dictionary basis.

BUSINESS OF THE HOUSE
Mr. Gaitskell: May I ask the Leader of the House whether he will state the business of the House for next week?
Mr. Butler: Yes, Sir. The business for next week will be as follows:
MONDAY, 8TH MAY—Supply [13th Allotted Day]: Committee.
A debate will take place on Apprenticeship and Training for Industry.
Consideration of the Motion relating to the Cotton Industry Development Council (Amendment No. 4) Order.
TUESDAY, 9TH MAY—Committee and remaining stages of the Covent Garden Market Bill.
Concluding stages of the Land Drainage Bill.
Consideration of the Motions to approve the Ploughing Grants Scheme, 1961 and a similar Scheme for Scotland.
WEDNESDAY, 10TH MAY—Completion of the remaining stages of the Rating, and Valuation Bill.
Committee and remaining stages of the Department of Technical Cooperation Bill.
Report and Third Reading of the Local Authorities (Expenditure on Special Purposes) (Scotland) Bill.
THURSDAY, 11TH MAY—Supply [14th Allotted Day]: Committee.
A debate will take place on Education in Scotland.
FRIDAY, 12TH MAY—Consideration of private Members' Motions.
Mr. Gaitskell: Can the right hon. Gentleman say something about the business for Monday week, as he usually does on these occasions? Will he bear in mind that it is the beginning of the last week before the Whitsun Recess, and that we have asked for and hope to have a two-day debate on foreign affairs?
Mr. Butler: I was not saying anything about the business on Monday, 15th May, because we wish to be certain of making progress with Government business in the coming week. Therefore, I have not said anything about the exact time of the debate on foreign affairs. I am aware that a request has been made for a two-day debate, but before that is finally agreed we want to be certain about the progress we make with business.
Sir H. Legge-Bourke: May we have a suspension of the Standing Order for Tuesday's business? The Covent Garden Bill is of wide interest to a great many horticulturists, as well as to the merchants in the market. I would also remind my right hon. Friend that the Land Drainage Bill is far from complete.
Mr. Butler: I will bear those matters in mind.
Mr. Jay: Can the right hon. Gentleman, say whether the Weights and Measures Bill has now been abandoned by the Government, despite the fact that a great deal of time has been devoted to that Bill by the House of Lords? Are we to understand that the whole of the legislative programme of the Government has got into such a muddle, as a result of the introduction of the Health Service charges Bills, that a number of valuable Bills are to be abandoned altogether?
Mr. Butler: I have no statement to make today about the Weights and Measures Bill. I do not accept the right hon. Gentleman's suggestion that the Government's legislative programme is in a state of disarray. We have made precisely the progress we expected with our programme. Despite certain efforts of right hon. and hon. Gentlemen opposite, we are making perfectly satisfactory progress.
Sir L. Ropner: Can my right hon. Friend say when a start will be made with the Committee stage of the Finance Bill?
Mr. Butler: That will depend on the further announcement I will make on the business for next week.
Mr. Grimond: I understand that there is to be a statement on security. If so, can the right hon. Gentleman say whether there will be opportunity for debating the subject?
Mr. Butler: My right hon. Friend the Prime Minister will shortly be making a statement on the matter.
Mr. Peyton: I am sure that the right hon. Gentleman will agree that great anxiety has been aroused throughout the country by the recent strike in the London docks. Can he say whether hon. Members will have an opportunity of debating this subject in the near future?
Mr. Butler: I do not think that there will be an opportunity to debate that before Whitsun.
Mr. G. Thomas: As the Leader of the House must be aware, the people of Wales have been waiting for three months for him to give us an opportunity of discussing the leasehold problem. Since that is operating to the great disadvantage of our people, can an early opportunity be provided for a debate in the House on the working of that system?
Mr. Butler: This is one of many important problems, but I do not see an early opportunity of debating the matter, despite the persistence of the hon. Member.
Dame Irene Ward: Would it be possible, before we take the final stages of the Rating and Valuation Bill, to have

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a general debate on shipbuilding, ship-repairing and shipping generally? Hon. Members on both sides of the House have been pressing for a debate on this subject for some time.
Mr. Butler: I have noted that request on a previous occasion, and I can take note of it again now.
Mr. S. Silverman: Can the Leader of the House say whether the two-day foreign affairs debate will take place before the Government, and perhaps the world, are irrevocably committed to courses about the outstanding issues which are causing grave anxiety? Is the right hon. Gentleman aware that there is a wide difference of opinion in the House about the conduct of Her Majesty's Government's affairs at the United Nations, that a great number of hon. Members are not persuaded—as the Government appear to be persuaded—that the United States Administration had nothing whatever to do with the Cuban adventure, and that we desire to debate this matter so that the Government shall understand what is the general feeling of the House before the matter proceeds further?
Mr. Butler: Without necessarily accepting the argument of the hon. Member, I am aware that these and many other matters, in so far as they are permitted to be in order by the Chair, may be raised during the foreign affairs debate.
Mr. Fell: Among the manifold duties of my right hon. Friend, has he had time to look at the Motion, in the name of about 90 of his hon. Friends, concerning President Tshombe, and the position in the Congo, and consider whether it is possible for an early debate to be arranged?
[That this House urges Her Majesty's Government, in view of the increasing threat to law and order in the Congo and especially in Katanga, and the consequent threat to neighbouring British territories, arising from the arrest of President Tshombe in violation of the safe-conduct he was guaranteed by the Congo Government, to take immediate steps to press Mr. Hammerskjold personally to intervene to secure President Tshombe's release, in accordance with the original United Nations Congo resolution.]
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I notice that next week we are to debate education in Scotland and I am wondering whether, because of the large amount of money we are spending in the Congo, and the importance and urgency of the matter, we might have an early debate on the whole question of our contribution towards the United Nations in aid of the Congo.
Mr. Butler: I am aware of the Motion, and I have some notes about it with me, but perhaps the matter might be raised during the course of the foreign affairs debate.
Mr. M. Foot: Is the Leader of the House aware that there is considerable concern among many hon. Members about the delay in having a debate in which we can discuss what has happened in Cuba, particularly in view of the statement, made on behalf of the Government, that they were not intending to make any representations whatever to the United States about this matter? Will the Leader of the House take into account that even if he has not received any representation through the usual channels, a large number of hon. Members want to discuss this situation?
Mr. Butler: I would not wish to go into the merits or otherwise of this matter at business time. I am aware of the desire of many hon. Members to discuss this subject and, in so far as it is accepted by the Chair, it will be in order to debate this subject during the foreign affairs debate. There is a variety of channels, and I endeavour to keep in touch with them all.
Mr. M. Foot: Could we not discuss this matter next week, instead of the Rating and Valuation Bill?
Mr. Butler: I have announced the business for next week and I think that it would be desirable that the foregin affairs debate should take place the week after.
Mr. Hector Hughes: Is the right hon. Gentleman aware that Britain is suffering terrible losses in productivity, that there is the threat of great unemployment, because of the serious situation in our shipyards, and, following on the question asked by the hon. Lady the Member for Tynemouth (Dame Irene Ward), can the

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Leader of the House tell us when there will be a debate on this important subject?
Mr. Butler: I realise the special importance of this subject, but I would rather not give an indication before Whitsun.
Mr. Awbery: The Leader of the House will recall that a few months ago the Report of the Blood Commission was presented to him. As it is the intention of the Government to introduce a new Constitution in Malta this year, will the right hon. Gentleman arrange for a discussion to take place at an early date on the Commission's Report?
Mr. Butler: I will discuss that with my right hon. Friend.
Mr. G. M. Thomson: Further to the question put to the Leader of the House a moment ago by the hon. Member for Yarmouth (Mr. Fell), concerning the possible postponing of the debate on Scottish education, will the right hon. Gentleman remember that although there may be a great deal of trouble in the Congo, there are also many troubles with Scottish education? The Leader of the House will be aware that a teachers' strike is pending.
Mr. Butler: It is usual, each year, to devote a Supply Day to Scottish affairs and often the subject of education is chosen for that day. This year, we have purposely kept this date free.
Mr. Gresham Cooke: Has any decision been taken about the Whitsun Recess? If so, can my right hon. Friend make a statement on that subject?
Mr. Butler: We hope to adjourn for the Whitsun Recess on 19th May. The date we come back depends on the progress that is made with Government business. I will make an announcement in due course for the general convenience of hon. Members as soon as that is convenient.
Mr. S. Silverman: Is the House to understand from what the right hon. Gentleman said in reply to my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) that a decision has been taken to have the foreign affairs debate the
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week after next? The Leader of the House did not say that in any of his previous answers, but I think that he did say it in reply to my hon. Friend the Member for Ebbw Vale.
Mr. Butler: Yes, that is the last week before Whitsun. I indicated previously that there would be a debate on foreign affairs, and I consider that that is the time when it should be held.
Mr. M. Foot: Is there one good reason why we should not have the foreign affairs debate next week? Can the Leader of the House tell us whether he has received any representations through the usual channels for having a debate next week on this subject? Surely, since many statements are being published in the United States Press to the effect that people in America may be contemplating the same kind of action that they took concerning Cuba before, there is an urgent need for this debate.
I should like to know whether the decision not to have a debate next week was made by the Leader of the House, or made as a result of representations received through the usual channels.
Mr. Butler: The decision was made by the Government and announced by the Leader of the House. We take into account all the representations that are made to us. It is, naturally, impossible to please everyone, but the Government are trying to get as broad a debate as we can on foreign affairs before Whitsun. It happens to suit better to have the debate the week after next.
Mr. Fell: May I support the hon. Member for Ebbw Vale (Mr. M. Foot)—[HON. MEMBERS: "Hear, hear."]—for entirely different reasons—in the plea that he is making for a foreign affairs debate next week? It is not good enough to say that it suits things better to have it the week after. In fact, the Leader of the House must know that it suits things much better to have a foreign affairs debate next week, for many matters of the greatest possible urgency are arising at this moment, to which we ought to be paying attention. Will he please reconsider the matter?
Mr. Butler: I cannot reconsider the matter, but I am, of course, open at all times to representations.

SECURITY PROCEDURES (CASE OF GEORGE BLAKE)
The Prime Minister (Mr. Harold Macmillan): With permission, Sir, I think it right to make a statement about the grave case of George Blake.
Mr. Emrys Hughes: On a point of order, Mr. Speaker. On the B.B.C. news bulletin at one o'clock it was stated that there was an appeal. I should like, therefore, to have your guidance as to how far this statement is in breach of the rule of the House that, pending an appeal, such matters are sub judice?
Mr. Speaker: I think that I should say that: by courtesy I am supplied with a copy of what the Prime Minister is to say, and that I do not think that it involves any infringement of the sub judice rule, acknowledging the fact of an appeal against sentence.
Mr. Emrys Hughes: Further to that point of order. In view of the fact that this is an appeal against sentence, is it not possible that any statement made by the Prime Minister might influence the Court of Appeal either to increase or perhaps diminish the sentence?
Mr. Speaker: We shall have to listen to what is said not only by the Prime Minister, but by everybody, because something might infringe the rules. But I do not think that we need anticipate an infringement before it has happened. The Prime Minister.
The Prime Minister: With permission, I think it right to make a statement about the grave case of George Blake.
As the House knows, Blake pleaded guilty yesterday to five counts charging him with offences against Section 1 of the Official Secrets Act. I am informed that he has ten days within which to apply for leave to appeal against sentence; and, if he does apply, some time must elapse before the matter is discussed. I naturally wish to give the House as much information as I can consistently with the national interest and without prejudicing any appeal against the sentence.
Blake, who is a British subject by birth, served with credit through the war in the Royal Naval Volunteer Reserve In 1948, he was temporarily employed as Vice-Consul, Seoul, where he was interned
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by the Chinese and held for nearly three years in captivity. Although he no doubt underwent a certain amount of ill treatment, in common with others who were interned, he was subject to none of the brainwashing which military prisoners suffered. After his release, and after having been subjected to a very thorough security vetting, Blake was employed for a period with British Military Government in Berlin and subsequently attached for a time to the Foreign Office in London. In September, 1960, he was sent to learn Arabic in the Lebanon. Blake was never an established member of the Foreign Service.
There is no reason to doubt that until 1951 he gave loyal service to this country. It was during his internment in Korea that he decided, as he has said,
"to join the Communist side".
It would appear that he voluntarily became a convert to what most of this House would regard as an evil faith. However regrettable we may regard such a conversion, it does not, of course, constitute criminal conduct. But to this he added treachery to the State. He agreed, in his own words,
"to make available to the Soviet Intelligence such information as came his way in the course of his duties".
It was for doing this that he was tried and sentenced.
I would again emphasise that his action was not the result of brainwashing or intimidation while a prisoner. Nor did he fall to any of the other kinds of pressure which are sometimes employed in these circumstances—
Mr. S. Silverman: On a point of order, Mr. Speaker. I apologise to the right hon. Gentleman. I know that it is an important matter, but surely statements made in this House, while an appeal against sentence must be pending, relating to the conduct of the accused man, and how he may or may not have been influenced to commit offences to which he has confessed, must be directly relevant to any argument that is to be presented by his counsel to the Court of Criminal Appeal in mitigation of sentence and, therefore, must be sub judice at this stage.
Mr. Speaker: The hon. Gentleman is right about sub judice as to brain washing, but if we can get away from that I do

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not think that anything in this statement is objectionable yet.
Mr. Grimond: Surely it is impossible to deal with this case without using all sorts of words which could bear an implication—the word "Communism" or "brainwashing".
Mr. Silverman: And "evil faith."
Mr. Grimond: I should welcome a general statement on security, but I should be grateful for guidance about how far we can go in the peculiar circumstances of this particular case.
Mr. Speaker: I cannot dictate the words used or the topic discussed. I cannot stop anybody unless I feel that the rules are infringed. In applying the rule here, I think that I must bear in mind, in favour of the statement, that this was a case where a man pleaded guilty, and, obviously, did not challenge what was quoted from his statement, from what we have seen. I bear that in mind when considering the point at which the rule comes into force.
Mr. Wigg: It will be within your recollection, Mr. Speaker, that when the Lonsdale case was under consideration you were kind enough to confirm a Ruling in Erskine May that what decides whether a matter can be discussed is not whether an announcement has been made that an appeal is to be lodged, but whether, in fact, an appeal has been lodged at the Central Registry. That is not the case here. Therefore, it would appear that this statement is subject to the same Ruling as in the Lonsdale case.
Mr. Speaker: I am sorry, I may be under an illusion. I thought that the hon. Member for South Ayrshire (Mr. Emrys Hughes) was telling me that, in fact, the news was now recorded that an appeal had been lodged. I was dealing with that fact in favour of the application of the rule. I was assuming that to be a fact. If an appeal has not been lodged, what the hon. Gentleman said is right.
Mr. Shinwell: On a point of order. I am under the impression—I am open to correction—that the official Opposition have made a request to the Prime Minister to make a statement on this matter. That is what I understand.
Mr. Gaitskell Mr. Gaitskell indicated assent.
Mr. Shinwell: If the Prime Minister is making a statement in reply to a request from the Official Opposition, the right hon. Gentleman obviously has to say something about the case, and no doubt questions will be asked. We have either to hear the statement, or to have no statement at all; and if we are to have no statement at all, a protest would be made from this side of the House.
Mr. Speaker: Will the right hon. Gentleman state what he believes to be the point of order which he desires to raise?
Mr. Shinwell: Several points of order have been raised which seem to indicate that there are some of my hon. Friends who do not wish a statement to be made about this matter. But I understand that a request has been made on the part of the Official Opposition for a statement, and obviously, if a statement is to be made, the Prime Minister must say something.
Mr. Speaker: There is not a point of order in that.
Mr. S. Silverman: May I submit to you, Mr. Speaker, that the question of whether a statement is in order or is not in order, having regard to the rule in sub judice cases, is not affected at all by anybody's desire or anybody's request. A statement on the subject is either in order or it is not. Having regard to the extreme difficulty of making a statement which avoids offence to the rule, and the even greater difficulty in asking supplementary questions which may be an offence to the rule, would not it be very much wiser that this statement should be deferred until after the appeal is heard?
Mr. Speaker: There are two points in that. The first is one which I have already indicated to the right hon. Member for Easington (Mr. Shinwell), that no point of order arises out of the proposition about who desired or did not desire a statement. The second point is that the rule does not apply unless notice of an appeal has been given. I understand that notice has not been given.
Mr. Emrys Hughes: Further to that point of order, Mr. Speaker. I listened to the B.B.C. news at one o'clock and

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the point was very definitely made that an appeal was going to be made—[HON. MEMBERS: "Ah."]—I understand, against sentence. My submission is that the statement the Prime Minister is making may or may not influence the question of the length of sentence. I submit that if the Prime Minister makes a statement—the Prime Minister is the most important person in this country—that must have a tendency to influence the Court of Appeal in relation to the length of sentence.
Mr. Speaker: The hon. Member has not got the point, with all respect and without discourtesy to him. Our rule in these circumstances about sub judice operates from the moment when, in fact, notice of appeal has been given. That was not what the hon. Member heard on the B.B.C. news, according to his own statement. I do hope that we can now make progress.
The Prime Minister: Perhaps the House will allow me to say that I was in doubt whether, for the reasons given, it was proper for me to make a statement. I think that in view of the fact that this man has pleaded guilty nothing I propose to say—and I have had it carefully looked at—could influence the Court in the way suggested. In view of the importance of the subject, it seems to me, on the whole, on balance, right for me to make a statement today, but I shall bear in mind—and I have tried to bear in mind in the writing of this statement—the very proper point which was raised.
I was saying that Blake did not fall to any of the other kinds of pressure which are sometimes employed in these circumstances. He received no money for his services. He was never at any time a member of the Communist Party or any of its affiliated organisations. What he did was done, in the words of the Lord Chief Justice, as the result of
"conversion to a genuine belief in the Communist system."
In these circumstances, suspicion would not easily be aroused in relation to a man who had served his country well for some eight years, who gave every appearance of leading a normal and respectable life, but who had decided to betray his country for ideological reasons. Indeed, having agreed to work
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for the Russians he was careful not to arouse suspicion and to conceal his conversion to Communism.
Eventually, however, his activities were uncovered and the result was his trial at the Old Bailey. He had access to information of importance, and he passed it on. As my right hon. and learned Friend the Attorney-General said in open court, he has done serious damage to the interests of this country. As to that, it would not be right, nor would it be in the public interest, for me to say more than was said in open court yesterday. I can, however, assure hon. Members that Blake's disclosures will not have done irreparable damage. In particular, he did not have access to secret information on defence, nuclear or atomic matters.
Such cases as this are, I hope, extremely rare; but by reason of their very nature they are very difficult to detect or prevent by any security procedures. No such procedures can guarantee to catch a man who changes his allegiance and skilfully conceals his conversion. I do not therefore think that any inquiry such as that now being conducted in relation to another case—with which Blake's case has no connection and affords no parallel—would serve any useful purpose. But I can assure the House that I am reviewing all the circumstances with very great care to see whether there are any possible further measures which could be taken to protect this country from treachery of this kind.
While I recognise to the full the responsibility that rests on Her Majesty's Government, I should be very willing to discuss with the right hon. Gentleman the Leader of the Opposition and any Privy Counsellor that he might wish to have associated with him the circumstances of this case and the matters that arise from it.
Mr. Gaitskell: Is the Prime Minister aware that we are grateful to him for making the statement today? I am sure this was in the public interest and I do not think that any harm has been done so far as a possible appeal is concerned. Is he further aware that there is widespread disquiet that this kind of thing could have been allowed to happen and that a man could for nine-and-a-half years have supplied information to the

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Soviet Union and thus, in the words of the Lord Chief Justice, rendered much of this country's efforts completely useless?
In view of the somewhat delicate judicial situation, I do not propose to put any detailed questions, but I should like to put one question to the Prime Minister arising out of his closing words. He would, I am sure, be aware that it is very difficult for the House to handle these security matters. It is hard, on the one side, to expect the Government to give secrets away, but it is equally difficult to reassure the House unless we are told something.
In these circumstances, I should consider it right to accept the right hon. Gentleman's invitation, but I ask him this. Is he aware that in our opinion, as we look at the matter at present, we feel that to reassure public opinion private conversations between the leaders of the Government and the leaders of the Opposition do not quite match up to the case and that, in our opinion, some kind of inquiry—I shall not discuss the exact form—is necessary to assure the public that the right things are being done to prevent this sort of thing happening again?
The Prime Minister: I am grateful to the right hon. Gentleman for what he has said. Perhaps he would allow me to leave it in this way. If we could have our discussion and the whole circumstances of the case be made fully known to him we could then discuss—although the responsibility, of course, is mine—what is the best course to take in the public interest. There is an inquiry going on on certain aspects of security, that is, the counter-security measures. That may be able to give us some useful information which we might need for further inquiry into this kind of measure, but I feel that it would be helpful if we could discuss this case in its detail. Then, although I take full responsibility, I should at least know that the right hon. Gentleman and his leading colleagues were aware of the difficulties and problems presented.
Mr. Gaitskell: I appreciate that, but I take it that the Prime Minister does not rule out the possibility of a further inquiry if it should seem to be necessary following our discussion.
The Prime Minister: I certainly do not rule that out, but possibly after the report of the present Committee we might have to widen its scope.
Dame Irene Ward: Am I right in assuming from what my right hon. Friend said that there were no adverse reports of any kind lying against George Black before he was brought before the court?
The Prime Minister: None at all.
Mr. C. Pannell: Can the Prime Minister assure the House that there is nothing that he has told the Press in confidence which he has failed to give the House this afternoon? I put that to him because a rumour is circulating to that effect and I should like him to be able to deny it.
The Prime Minister: I have not, as far as I know, given any statement to the Press, except, of course, that it has been warned that it must keep within certain rules which are well known on certain subjects.
Mr. Marsh: Would the Prime Minister deny that a statement has, in fact, been sent to the Press setting out the things which the Press must not report? Is it not also a fact that, while this gentleman may not have been an established servant of the Foreign Office, he was, in fact, employed on Foreign Office intelligence? Would the Prime Minister also accept his degree of personal responsibility for this particular situation and the fact that a large number of members of the public are becoming increasingly worried by the growing evidence of the crass incompetence in his administration?
The Prime Minister: I do not think that I have anything to add to what I have said and I do not think that it would be right for me to add to anything said in camera. It was for that reason that the Lord Chief Justice decided to hold part of the case in camera.
Mr. Wigg: Will the Prime Minister agree that there are two aspects of this case? First, have any regulations, whatever they may be, governing primary Government officials been carried out? Secondly, are those regulations adequate to the case? Under the first heading he will no doubt remember that on 7th

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November, 1955, he told the House that positive vetting had been introduced in the Foreign Office for those dealing with classified materials. Will the right hon. Gentleman give the House an assurance that positive vetting was carried out in the case of Mr. George Blake?
The Prime Minister: There are two points there. The regulations regarding employment are complicated on the nationality question, as, perhaps, the hon. Member knows. In the old days, one had to have two British parents to be a member of the Foreign Service. That, incidentally, would have ruled out both my right hon. Friend the Member for Woodford (Sir W. Churchill) and myself had we wished to enter it. That requirement has been, and can be, waived in proper circumstances by the Secretary of State. Then, there is a quite separate question as to the vetting procedures. I assure the hon. Member that they were applied in the ordinary way.
Mr. J. T. Price: Whilst I recognise, like every other hon. Member, the need for restraint in handling this most serious matter, is it not remarkable that this man, who by the Prime Minister's own admission was not even an established member of the Foreign Service, should have access to this top secret information? Would it not be appropriate, if the Prime Minister does not think that public security is involved, to give us a little more information about what department of the Foreign service it was in which this man was engaged and whether somebody is being shielded? Could we not have a little more information about it?
What disturbs me is that a man who by any account, on the Prime Minister's statement, must have been a very junior servant of the Crown, should, for nine-and-a-half years, be able to have access to this most vital information which has been disclosed to a hostile Power.
The Prime Minister: The point has been raised whether it was wise to employ in Government service a man who had been a prisoner in Communist hands. [HON. MEMBERS: "NO."] I beg pardon, but I have seen that raised a good deal in this matter. If such a rule were to be made, it would cause grave hardship and injustice to many distinguished men. It is right to say that, because it has been so widely mentioned.
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On the second question, it is not only persons in key positions or important posts who have access to secret information. It has necessarily to be handled by selected people of almost all grades from time to time—that is inevitable. But the rule of the need to know is, of course, applied and secret material is not handled except by persons, whether established or unestablished, and whatever their grade, who have passed through the security procedures.
Sir A. V. Harvey: When my right hon. Friend said that he would discuss the matter with the Leader of the Opposition and Privy Councillors of the Opposition, did he mean that he would also discuss it with Privy Councillors on this side of the House who do not hold Ministerial posts?
The Prime Minister: I will certainly consider that. It has been a very old rule in these matters to restrict this to Privy Councillors, who are bound by rather special oath, and within a very narrow circle. If there were a view—I do not think that the Leader of the Opposition would object if I thought it right—that I should inform a Privy Councillor who was not necessarily a member of the Government, I would consider that.
I would rather keep to the old rule, that the Leader of the Opposition, who has a special place which is now recognised in our Constitution, and the Prime Minister of the day should discuss these matters together with, perhaps, one or two of their trusted colleagues who have held high office.
Mr. Holt: Is the Prime Minister aware that what is troubling many people is why, if the Russians know all about this person, security reasons prevent the House of Commons knowing more about him?
The Prime Minister: Anyone who has been engaged upon or who has knowledge about these matters knows that that is rather too simple a view. It was for that very reason that the Lord Chief Justice decided to hold the trial in camera.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. We cannot debate this matter now.

MINISTERIAL STATEMENTS
Viscount Hinchingbrooke: May I raise with you, Mr. Speaker, a point of order about prior publicity which is given to statements made at the Dispatch Box? We are not supposed to have eyes or ears for anything except what takes place on the Floor of the House, but in the past we have noticed the growing practice of issuing statements to the Press before they are made at the Dispatch Box.
I should be grateful, Mr. Speaker, if you would take this matter into consideration over the weekend and, perhaps, make a statement to the House during the course of next week as to the general propriety of the practice in relation to the dignity of our proceedings.
Mr. Speaker: I have not sufficiently in mind what the noble Lord is complaining about. Is it the suggestion that this particular statement was issued to the Press before it was made here?
Viscount Hinchingbrooke: It was apparent to all of us that in the middle of the Prime Minister's statement there was a great shuffling of paper up in the Press Gallery as the pages were turned over. I am wondering what would have happened if the representations made by the hon. Member for South Ayrshire (Mr. Emrys Hughes) had been borne out by the facts and an appeal had been lodged, in which event, Mr. Speaker, you would have curtailed the proceedings, prevented the Prime Minister from continuing his statement, and there would have been other parties elsewhere who were in possession of the whole of it.
Mr. Speaker: All kinds of problems would arise had that happened. I am obliged to the noble Lord for his explanation. He will understand that I am prevented by a canopy from being as wise as he is. I will consider what he has put to me.
Mr. J. Hynd: Further to that point of order. Apart from the incidents to which the noble Lord referred, I believe that the foreign Press has been able to publish full reports of the evidence that was heard in camera in this case. That seems to suggest that not only was the statement handed out while the Prime Minister was speaking, but that other
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information was given to Press sources long before any information was given to this House—and information which went far beyond anything which has been given to this House. Is it in order for such information to be given in these matters before the House of Commons is appraised of it?
Mr. Speaker: I understood the hon. Member to be saying that somebody has published evidence that was given in camera. In that event, we can safely leave it to the Lord Chief Justice and his colleagues.
Mr. Ronald Bell: Further to the point of order raised by my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke). It has been obvious to hon. Members on the Floor of the House with an uninterrupted view of the Press Gallery that for many years, and by various different Governments, this practice has been followed of releasing statements to the Press before they were delivered in this House. When you are considering this matter, Mr. Speaker, will you have it in mind that what is, perhaps, now becoming respectable antiquity for this practice should not justify it if it is undesirable from the point of view of the interests of this House?
Mr. Speaker: I will bear in mind what the hon. Member has said. It must be obvious that, at first glance, there may be a quite sensible purpose in allowing the Press to have a simultaneous handout so that it gets an accurate report of what one is trying to read when making a statement. That might be so. I will not, however, prejudge the matter. I will consider it.
Mr. Emrys Hughes: Further to that point of order. In view of the fact that the matter has in some ways created a precedent of statements being made when an appeal is pending, and that there is strong complaint in the Press that a directive was given to suppress information which has since been revealed by a question by my hon. Friend the Member for Greenwich (Mr. Marsh), will you further consider the question of preventing statements of this kind, which might remotely affect the possibility of the sentence being altered? Can you give us an assurance. Mr. Speaker, that

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the Prime Minister will not give a directive to suppress the proceedings of the House of Commons?
Mr. Speaker: I can give no assurance as to what the Prime Minister will think it right or not right to do in any circumstances. That is no part of my duty.
With regard to the other matter, I follow the practice of the House and I cannot change it. The House can change it. The sub judice rule applies only in the circumstances which I indicated earlier to the hon. Member and to the House.
Mr. S. Silverman: At the same time as you are considering the point raised by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), I wonder whether, Mr. Speaker, you would consider whether our practice with regard to questions sub judice should not be assimilated to the practice outside. What I have in mind is that where a period is provided by Statute during which a man may think over whether to appeal, it is the practice among newspapers, and in other places, not to comment upon it until the time provided by Statute for appeal has passed. The reason for that, I apprehend—
Mr. Speaker: Order. I am sorry to stop the hon. Member, but I understand the point. At one time, the House went into the question of whether the sub judice practice applied during the time when an appeal could be lodged or as from the moment when it was, in fact, lodged. It is clear that the practice of the House is that the rule operates as from when the appeal is made. I cannot argue the merits of a possible change, because I cannot change the practice. The House could change it if it wished.
Mr. Silverman: I wonder whether you can help us, Mr. Speaker, in considering how the House might take an opportunity of considering how it ought to make the change. Obviously, a great deal of irreparable damage might be done during the intervening period and then an appeal might be lodged, when the mischief could not be overtaken.
Mr. Speaker: The hon. Member knows that he can put down a Motion to that effect. If he could get it considered by the House, that would provide the opportunity. At the moment, I do not know of any other method. One thing that is quite clear is that we cannot debate the matter now.

ORDERS OF THE DAY

  FINANCE BILL
  Order for Second Reading read.
  4.22 p.m.
  The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I beg to move, That the Bill be now read a Second time.
  I will deal in turn with the three parts of the Bill: Part I, Customs and Excise; Part II, Income Tax; and Part III General and Supplementary.
  In Part I, Clauses 1, 2 and 5 deal with the proposed increases in indirect taxation—television advertisements, heavy oils, and vehicle Excise Duty. Obviously new taxes or increases in existing taxes cannot be popular; nevertheless, I consider that what I have proposed under these three heads is right if we are to achieve the necessary surplus above the line of £500 million. No doubt these new taxes will be debated at length in Committee.
  At this stage, I have only these comments to make. The new duty on television advertisements will become one of the programme companies' costs of operation, and this, together with their other costs, they will recoup from advertisers to such extent as the balance of supply and demand for television advertising time may allow. This is normal with indirect taxation and it is what would seem to happen with any form of taxation of the programme companies. I have already noticed that the companies intend to deal with this matter in differing ways.
  With regard to Clause 2, I am aware that the new duty on heavy oils will not be popular. Obviously, it will bear more heavily in some sectors than in others. Over the whole field of industry, the increase in costs will be only a fraction of 1 per cent. But weighed against the contribution to economic stability, which, I believe, the yield of the duty will make, I do not consider that the burden is out of proportion.
  With regard to the vehicle Excise duty, I will only repeat what I said in my Budget speech: the rates on goods vehicles have remained virtually unchanged since 1933, and the flat rate for private cars has not changed since 1953. I do not think that this increase imposes
  1624
  an intolerable burden upon either the commercial operator or the private motorist.
  Clause 3 deals with an amendment of the definition of pool betting. This is a consequence of the High Court decision in the Stockport county case, and it is needed to safeguard the yield from the pool betting duty. The amount at risk, I am told, could be about £2 million. The Stockport county judgment had the effect of exempting from the duty certain types of pool betting. It laid down that if there is a pool whose rules provide for a power of selection on the part of the entrant, but either that power of selection is not exercised by any of the entrants or only by a very few, then it is not a pool liable to the pool betting duty. In effect, it is to be regarded as a lottery and not a pool.
  This Clause attempts to draw as clear a line as possible between competitions liable to the pool betting duty and those that are lotteries, whether lawful or unlawful. The liability to duty will depend upon the published rules and not only on the practice. A competition of the sort I have described, where a power of selection is provided for in the rules, would be liable to the pool betting duty, even if this power were not exercised or was only exercised by a few.
  This, of course, will not in any way change the position that certain lotteries are lawful not only because of the purposes for which they are run but because the prizes and the stakes are small. I want to make it quite clear that this will not affect such lotteries, and I would remind the House that the limit is a total of £750 staked in one lottery. Such small lotteries will remain exempt from duty whether or not the practice or the rules provide for an element of selection by those who take part. I have explained this at some length, because I know that a great many people are concerned in this type of small lottery and I wish to make it quite clear that they will not be affected by this Clause.
  Clause 4 deals with a quite different aspect of the Pool Betting Duty. The Legislature of the Isle of Man has for some time had under consideration a Bill to legalise pool betting, which is at present unlawful in the island. If this were to happen and no provision were

  1625
  to be made in the Isle of Man for Pool Betting Duty, there would inevitably be the risk that pool betting business now conducted in the United Kingdom would be attracted to the Isle of Man. This would involve a loss of revenue to our Exchequer.
  The problem has been discussed with the Isle of Man authorities, and we have come to the conclusion that the best solution would be for the Isle of Man to impose a Pool Betting Duty at the same rate as our own. We have also agreed that in that event it would be right to pool the receipts of these duties and to share them between the British and Manx Exchequers proportionately; in other words, on the basis of residential population.
  Under Clause 4, these duties will be brought within the scope of what are called the Common Purse arrangements with the Isle of Man. These provide for the sharing of the receipts of a number of Customs and Excise Duties.
  Clause 7 provides for a change in regard to agricultural tractors. This change is made, not in the interests of the Revenue but of safety. The House will remember that in the 1959 Finance Act there was a Section dealing with agricultural tractors used to carry goods in a removable container or transport box. Subject to various qualifications, a farm tractor licensed at the special agricultural rate could be used to carry farm produce or implements without becoming subject to the higher rate of duty as would have been the case if it was treated as a goods vehicle. This concession was withheld from three-wheel tractors on safety grounds, the point being that if a heavy load were to be carried on a three-wheel tractor there was the risk that it might overturn.
  My right hon. Friend the Minister of Transport has recently had his attention drawn to the fact that there are some four-wheel tractors in use on farms which have their two front wheels so close together that they are not much more stable than a genuine three-wheel tractor. In the general interest of safety, it is desired to put this type of four-wheel tractor on the same footing as the three-wheel tractor. That is the purpose of this Clause.
  1626
  Clause 8 contains the first of the economic regulators for which I have asked powers, and I will deal with it later.
  I come to Part II. Clauses 9 and 10 fix the standard rate of Income Tax for 1961–62, and the Surtax rates for both 1960–61 and 1961–62; in other words, the Surtax that will be payable on 1st January, 1962, and also that which will be payable on 1st January, 1963. I am asking the House to fix the Surtax rates for those two years; in other words, to decide this year on the Surtax payable on 1st January, 1963.
  Clause 11 sets out the new Surtax reliefs for earned income. There are two main features. The first, as I mentioned in my Budget speech, is that the earned income relief now running for Income Tax only is to be allowed for Surtax purposes; in other words, two-ninths up to £4,005, and one-ninth up to £9,945. This relief will apply whatever the size of the earned income forming part of the Surtax payer's income, although, of course, if the earned income is small the deduction on acount of it will be correspondingly small.
  The second feature is that the Surtax starting point for earned income only is to be raised, and that is called in the Bill the Surtax earning allowance. It applies only where the earned income, reduced by the appropriate earned income relief, exceeds £2,000 and, as I said in my Budget speech, the combination of the two reliefs means, in effect, that no earned income of any amount up to £5,000 will of itself attract Surtax liability.
  These proposals relating to Surtax have been subjected to three criticisms. The first is on the ground that it is an excessive relief. I do not accept that criticism. Owing to the changed value of money and the incidence of direct taxation, I believe that many people in the managerial and professional classes have been suffering a substantial disincentive.
  The second criticism is that I have been unfair to Surtax payers who have investment incomes only. I am not in favour of too great a distinction between earned incomes and investment incomes, because the latter is very often derived from savings from past earnings. [HON. MEMBERS: "Hear, hear."] What I would say to my hon. Friends who

  1627
  approve my last statement is that what one would like to do in this respect must be governed by the amount of relief that can be afforded. As my primary purpose is to give an added incentive to earnings in this range, I believe that what I have proposed is not unreasonable.
  The third criticism is that my new scheme is not perfectly symmetrical in its application to certain types of mixed incomes. There have been certain comments in the Press about that. I admit it at once, but my main purpose is to deal with earned incomes, and I think that I have adopted the right order of priority, and my faith in these proposals as a stimulus to enterprise and initiative is unshaken.
  Clauses 14, 15 and 16 all deal with overseas income. Clause 14 enables account to be taken of exemptions from overseas taxation given to promote development. That idea has already been welcomed, for example, by the Government of Pakistan. It will be of assistance in the development of the less-developed countries, an objective of which I believe the whole House thoroughly approves.
  Clauses 15 and 16 remove certain anomalies in the complicated field of double taxation relief, and I believe that they will be welcomed by United Kingdom concerns operating abroad. I admit at once that these three Clauses do not go as far as I have been asked to go, but they go as far as it is possible for me to go this year.
  I dealt in my Budget speech with Clause 17, which unifies the tax treatment of ministers of religion living in parsonage houses or manses.
  Clause 18 proposes a measure of relief for pension funds administered in this country solely for the benefit of employees working overseas. What it does is to treat the funds in question for tax purposes as though they belonged to persons not resident in the United Kingdom. It means that the income arising to these funds from overseas shares or securities or British Government securities that carry special relief from tax for overseas residents will not be charged with United Kingdom Income Tax. That seems to be in accordance with the reality of the position.
  1628
  Coming to Part III, Clause 26 deals with the surcharge on employers. It is the second suggested economic regulator, and I will deal with this also later in my speech.
  Clause 27 proposes an increase in the rate of Profits Tax. It is suggested that this increase, this new burden, is unfair to equity shareholders. Taking all the circumstances into account—in other words, the growth in profits, the level of dividend distributions and the appreciation in share values—I do not consider that this is an unfair way of meeting the cost of the Surtax remissions.
  It is suggested that this will reduce funds available for investment. In view of the fact that I am retaining investment and initial allowances in respect of expenditure on new assets at their present favourable rates, I do not believe that my proposal will, in fact, have any material effect upon investment.
  I put to the House, quite frankly, my position in this matter. I was not prepared to make the cost of the Surtax reliefs for earned income a charge on next year's revenue without taking steps to increase that revenue to an extent broadly equal to the cost. Of the various courses open to me, I am of the opinion that this increase in Profits Tax is the least objectionable. Almost all of it will fall on companies which, according to almost all the representations I have received from the business world, will benefit from the incentive given by my Surtax reliefs.
  Clause 28 carries out an undertaking given last year to my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), when he moved a Clause on the subject. Broadly speaking, it provides that, with certain very limited exceptions, assessment of Excess Profits Tax, of Excess Profits Levy, and of the special contribution cannot be made after the passing of this Bill into law except in cases of wilful default or fraud.
  Clause 29 deals with Stamp Duty on bills of exchange. I think that this is a useful Clause, embodying a change to which, perhaps, sufficient attention has not yet been paid. Bills of exchange, except those that are payable on demand or not more than three days after sight are now liable to ad valorem duty on a

  1629
  scale that runs up to 1s. on a hundred pounds or fractions of a hundred pounds. It has not been the weight of this duty that has caused the trouble; it is rather been the practical difficulty for traders of keeping a supply of bills stamped with the right amount of duty, or a supply of the special adhesive stamps applying to foreign bills, and of ensuring that the right kinds of stamp are used on the different kinds of bill.
  The proposed Clause will get rid of this difficulty in a practical way by fixing a common stamp duty of 2d. for all bills of exchange. I remind the House that the cost of this is not inconsiderable—it is £1½ million in a full year—and I think that it will be of considerable help to those who have to deal with this type of transaction.
  Clause 30 deals with a technical Stamp Duty point that arises mainly in connection with transfers of local authority and Commonwealth and Colonial Government stocks. As things are, when a jobber in these stocks has temporarily to obtain stock to enable him to fulfil a bargain and later restores it, two lots of ad valorem Stamp Duty may have to be paid on what is essentially one transaction, one transfer of stock from a seller to a buyer. This has tended to impede the smooth working of the market in these stocks. What is more, the burden of the double duty has frequently fallen on the Governments or local authorities concerned in cases where they have agreed to pay the duty on transfers of their stocks. The matter is somewhat complicated, but I am satisfied that this double liability to duty is not justified, and this Clause will remedy the position.
  Clauses 31 and 32 deal with minor provisions relating to the National Debt. Clause 31 follows upon the changed relationship between the Exchequer and the Post Office after the Post Office Act, 1961. It provides for the transfer from the Post Office to the Exchequer of the money received in respect of savings stamps and tokens still outstanding. The liability to holders of stamps and tokens will, in future, rank as part of the National Debt rather than as a commercial liability to the Post Office.
  I now come to Clause 32, which deals with the Ottoman Guaranteed Loan of 1855. This loan has had a long and
  1630
  chequered career since it was issued at the time of the Crimean War—indeed, the original guarantee produced a remarkable coalition against it; Mr. Disraeli, Mr. Gladstone and Mr. Cobden. I will not weary the House with a detained exposition of the series of events that have led the United Kingdom to undertake the entire responsibility for the loan. In the last thirty years, however, it has been de facto part of the National Debt. I now intend to honour the undertaking given in 1929 by my right hon. Friend the Member for Woodford (Sir W. Churchill), then Chancellor of the Exchequer, and Clause 32 authorises the issue from the Consolidated Fund of not more than £200,000 to enable us to do this.
  I return now to Clauses 8 and 26 embodying the powers for the Government to use two new economic instruments in the forthcoming year should it prove necessary. I have been very interested in the reactions they have aroused, which are in accordance with the general rule. If nothing new is proposed, the Government are out of touch, tired and totally lacking in leadership. As soon as they do propose something new, there is a concentration of criticism to show the complete iniquity of the new ideas. However that may be, I think that there is wide acceptance of the desirability of measures to reduce the dependence of the Government of the day upon monetary and credit controls. I do not underrate the importance or the novelty of the powers which I am asking Parliament to give to the Government. However, as I explained in my Budget speech, I have sought, as will have been seen from the Clauses, to hem these powers about with the fullest safeguards.
  The first power, and any Order made under it, will lapse next year unless Parliament sees fit to renew the power by provisions in the next Finance Bill. With regard to the second power, I have specifically stated that it is to be regarded as a temporary expedient for this year only. Should something in the nature of what is called a payroll tax be considered expedient next year, I shall submit new proposals. In any case, Orders made during this financial year under these Clauses will requite validation by affirmative Resolution of this House.
  Mr. Douglas Jay: Since the Chancellor says that he is hemming these powers about with safeguards, will he say, with regard to the Excise proposal, whether he is asking for powers which would enable him to raise taxation by a substantial amount, perhaps in the middle of August, and then not receive ratification from the House of Commons until two months later?
  Mr. Lloyd: I said, of course, that the Government would come to the House of Commons for validation for the powers. I think I gave an example. It seemed to me that if the House were to meet a week later, obviously, one would not recall the House specially; but if a measure of this importance were taken, say, three days after the House had risen, it would seem inconceivable that the Government of the day would not recall the House of Commons to debate the matter.
  Mr. Jay: The Chancellor has not quite answered the point. We are dealing with legislation. Would it be possible, under the Finance Bill as it now stands, for him to make these changes in taxation in, say, the middle of August and not have the Order approved by the House until late in October when the House met?
  Mr. Lloyd: The right hon. Gentleman is, of course, quite right; that would be the legal position under this procedure. There will be no difference between this procedure and other procedures which were, I think, put in the Finance Act of 1948 with regard to certain matters. It will be the normal procedure. What I said, however, was that, in common sense and reason, I could not conceive it possible that a Government would put on new taxation at the rate of £200 million a year and then let the House be for two months without an opportunity to discuss it.
  I turn now to the suitability of these fiscal weapons for the purposes for which they are designed. I will take the indirect revenue duties surcharge and rebate first. It has been objected against this that if used as a surcharge it would fall upon items of consumption which are already subject to tax and will put up prices to the consumer. I do not deny that it will put up prices to the
  1632
  consumer if used as a surcharge. It will have the opposite effect if used to give rebates. If taxation of the consumer is to be used for purposes of economic regulation, that can be done only by raising or lowering prices to the consumer, by taking more or less of his purchasing power into the public purse.
  The surcharge will be so widely spread that, even if it were necessary to impose it at the maximum rate, it ought not anywhere to be serious in its effects. The top rate of Purchase Tax, for instance, would rise in those circumstances by 5 per cent. of the wholesale value. The 12½ per cent. rate of Purchase Tax, which falls on a wider range of goods, would be increased by just over 1 per cent. of the wholesale value. It is obvious that if I were to attempt to withdraw purchasing power from the consumer at the rate of £200 million a year by increasing some narrower range of indirect taxes, the results for those affected would, by comparison, be drastic indeed.
  The suggestion has been made that this proposal involves grave uncertainty hanging over the business community. I do not accept that. There is already power to vary Purchase Tax, subject to the approval of the House. There is power to alter the Bank Rate. There is power to introduce hire-purchase restrictions. It is always open to a Government to introduce an Autumn Budget. I do not consider that this new proposal increases the uncertainty at all. In fact, because of the limitation of the change to 10 per cent. spread over most of the field of indirect taxation, I should have thought that the uncertainty was lessened.
  The second instrument, the employer surcharge, has caused more controversy than any other of my proposals. There are considerable disadvantages and advantages about this surcharge. I have tried to be frank with the House about both. It will be possible to deal with the position of different categories of contributors in different ways. I refer to juveniles, women, or retired people. It will not be possible—I say this quite openly to the House—under the method proposed to differentiate between areas. In the special case of Northern Ireland, there is, of course, a difference there in that there is a separate

  1633
  Insurance Fund into which insurance contributions are paid and a separate Exchequer which will receive the proceeds of the surcharge. So the surcharge, if imposed, will be collected and retained by the Northern Ireland Government, and there is no limit upon their discretion to use the proceeds as they think fit.
  I admit that any sort of payroll tax is open to criticism if it does not enable the Government to differentiate between areas, industries and categories of workers. That is the disadvantage of my proposal. The advantage of my proposal for this year is that no new administrative machine is required or would be needed for its collection. It would be widely spread, and its yield would be substantial. As I have said before, any regulator worthy of its salt is bound to cause trouble, inconvenience and, perhaps, hardship. What I have tried to do is to find methods which carry with them the least in the way of objections and disadvantages. As I have explained in the case of the employer surcharge, I shall, in the course of the coming year, examine other methods of levying a surcharge of this sort if it seems right so to do.
  Mr. Cyril Osborne: Does my right hon. and learned Friend think that the rate is heavy enough to be effective? It has been argued in certain industrial circles that employers could carry 4s. per worker without feeling it. If it is really to be effective, ought it not to be much more savagely heavy?
  Mr. Lloyd: My immediate purpose, as I explained, is to withdraw purchasing power. The fact that it is at the rate of £200 million a year is important; the sum is substantial and, from that point of view, I think that the sum is right. I did say in my Budget speech that it has the added advantage of being an incentive to economy in labour. I am inclined to agree with my hon. Friend inasmuch as I think that, if we were to have a payroll tax solely for that purpose, it might have to be much larger in scale, and also it probably would have to be accompanied by changes in company taxation. That is a wider issue into which I do not wish to go now. I am dealing with what is a temporary expedient for this year.
  Mr. Jay: Is the Chancellor now saying that it is not one object of the payroll tax to induce employers to economise in labour?
  Mr. Lloyd: I never said that it was the prime object. I said in my Budget speech that it would have that added advantage Those were the words I used. That is what I am saying now. It will be an incentive, though, as my hon. Friend the Member for Louth (Mr. C. Osborne) says, not a very fierce incentive, to economise in labour.
  Mr. William Warbey: Is the Chancellor now saying that the main purpose of the payroll tax is to remove purchasing power because the tax will add to the cost of living?
  Mr. Lloyd: I thought I had made it clear when I was introducing my Budget that I thought that monetary measures, putting up the Bank rate, introducing hire-purchase restrictions, and so on, had too restricting an effect, and I thought that we wanted economic regulators of broader effect. The first one goes straight into consumption. The second is a charge on employers, which would have the effect of taking purchasing power out of the economy at the rate of £200 million a year. That is its purpose. I thought I had made that clear. I did say also that it would have the added advantage of directing attention to the importance of economising in what is now our scarcest commodity, labour.
  The answer to the criticisms which are made of these two regulators is that a situation might arise—though, by providing for a surplus above the line of £500 million, I have done a great deal to prevent it arising—in which the pressure of demand upon resources might be so great that drastic steps would have to be taken to curb inflation and to make resources available for export.
  I feel that I must have more instruments available in reserve than hitherto to enable me to deal with such a situation, and to deal with it ahead of a real crisis. I sincerely hope that the situation will not arise in which either regulator will need to be used. It is for the business community and both sides of industry to make certain that the necessity does not arise, and, obviously the consumers also have their part to play. Nevertheless I feel

  1635
  that I would be failing in what I conceive to be my duty if I did not ask the House to equip me with these powers.
  I do not accept that the proposals embodied in this Bill benefit only the wealthy classes. I have already spoken of the changes in the value of money and of the incidence of taxation, and I gave figures about the gross income which would have been needed in 1937 and 1912 to be equivalent, after taxation, to a gross income of £5,000 today. I repeat the figures. The equivalent in 1937 was £1,400, and in 1912 £770. But, leaving on one side the wealth of the persons benefited, my real object is to give a dynamic boost to the economy by these proposals. [HON. MEMBERS: "Oh."] Well, I have received a great deal of advice on this point, both publicly and privately, in the last six months, and the overwhelming emphasis of this advice has been that the most effective way to help the British economy at this time is to increase the incentives to people who are in managerial and professional occupations.
  Mr. Arthur Woodburn: Is it not the case that this relief is being given to the very people who benefit most from all the incidental perquisites of expense accounts and other things which are a very great inducement to people?
  Mr. Lloyd: I do not accept that for a moment. I have done something in other provisions of the Bill to deal with expense accounts.
  The argument is put forward that financial incentives are irrelevant—that people do not really work for money. All I say to that is that if the Government sought to introduce that kind of argument into ordinary wage negotiations they would be ridiculed out of court. No Budget will by itself solve the economic problems of the country, but this Budget is, in my view, what the present economic situation calls for.
  I claim for it that it is tough in the surplus which it secures, that it is right in its priorities for tax remission, that its new imposts are widely spread, and that it contains some new ideas and new powers about economic regulation which I think are necessary. It is sound, because it will promote the interests of the whole community. I ask for a
  1636
  Second Reading of the Bill, stressing once more that it is only the first stage in fiscal plans which I hope to have the opportunity of developing as time goes on.
  4.54 p.m.
  Mr. Harold Wilson: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House declines to give a Second Reading to a Bill which, while making no proposals designed to solve the economic problems facing the country, proposes changes in taxation which provide great remissions of taxation to a minority of wealthier sections of the community and does nothing to relieve the difficulties of the great majority of taxpayers."
  The Chancellor, in his speech, I think very helpfully to the House, covered the Finance Bill Clause by Clause, and he told us a bit about each of them. I do not propose to follow him in that this afternoon. I think that there is a limit to what the House can stand, and I want, in any case, to reserve my own comments on the less important Clauses for the Committee stage. I do, however, propose to deal with some of the main Clauses and with the general strategy of the Bill.
  First, in the Customs and Excise group, as the Chancellor said, we have the television duty. This we have welcomed, although we have suggested to the Chancellor that he should have gone further and should have imposed a special advertising tax on pharmaceuticals the yield from which could have been used to remit the National Health Service charges. Some hon. Gentlemen at Question Time the other day expressed surprise that this tax will be passed on to the advertisers and thence to the consumer. I am very surprised that anyone should feel that there was occasion for surprise here, because that is what commercial television is about. There is that prevailing fallacy in the country that independent television is in some sense free to the viewer. In fact, independent television costs the nation about £80 million a year—a great deal more than B.B.C. television costs us—but, in any case, whatever other hon. Members may think, the Chancellor is in no doubt about it at all, because he admitted this on television on the evening of Budget day. In answer to a question from Mr. Harris, he said that of course it would be passed on to the consumer.

  1637
  This tax raises the whole question of advertising expenditure, now running in this country at £450 million a year. I should have thought that any hon. Member in any part of the House would admit that this is an excessive drain on our national resources of money, of manpower and of materials, and that it contrasts, as I said in the Budget debate, with the expenditure by private industry on scientific research in industry of only £136 million. Quite simply, if advertising expendture were halved and industry's expenditure on scientific research were trebled, the country would be in a much healthier state, and I suggest that this is an immediate target for the Government. During the Committee stage we shall probably have some more detailed proposals to make.
  Nevertheless, Clause 1 is a step in the right direction. We have suggested it for a number of years now to successive Chancellors, and last year we proposed that the Chancellor should do it in the form of an Excise Duty, and that has been done. This raises much wider issues which I hope the Government are considering and not just waiting for the Report of the Pilkington Committee. These issues are the award by the Government, or by an authority set up by the Government, to private individuals of a franchise to make large profits of a quasi-monopoly character, at any rate, in the area where they are operating.
  This is something pretty new in British political history. It goes back to King James I and the Statute of Monopolies. I think that King James used to exact a pretty heavy price from the people to whom he granted monopolies, but under this Government these franchises, which have been described by one operator as licences to print money, have been handed out by the Government without any attempt to get an adequate return for the taxpayers. Now, the Chancellor says he is to try to get 10 per cent. of the revenue back but, looking at the broader problem, he is not doing enough. I commend to the Chancellor the Report of the Public Accounts Committee for the year 1957–58, before I had anything to do with the Committee, and also the Report for last year, when an all-party Committee expressed some very strong views on the free grant of franchise.
  1638
  Turning from television to oil, we welcome in general the Government's decision to end the anomaly which has existed, for perfectly good reasons, since 1947. What the Chancellor has done by putting all forms of oil on a similar basis of taxation is to increase the incentive to the consumer in general to use indigenous, home-produced fuel, particularly coal, but also Scottish shale oil, while, at the same time, slightly diminishing the incentive to make this country more dependent on imported oil, some of it coming from very vulnerable parts of the world. When we first put forward this proposal a year or two ago—this is another of our proposals which the right hon. and learned Gentleman has adopted—we suggested that the yield from it should be devoted to removing entirely the taxation on diesel oil for road passenger transport. Three halfpence or 1⅔ d. per gallon would just about have produced enough revenue for that purpose. We deplore the fact that the Chancellor, having put on the tax as we suggested, has not used the proceeds for that purpose.
  There is one part of the Clause dealing with oil duties to which we are strongly opposed, and that is the provision that paraffin should be subject to this particular tax. Although it is very difficult to draw a line between different types of oil, there is no doubt that paraffin is very much needed in rural areas, in areas where other forms of heating are limited and sometimes in areas where other forms of lighting are not available, despite the remarkable progress in rural electrification under public ownership in recent years. I understand that there are paraffin heaters in about 6 million homes. The Chancellor should look again at this matter. We will give him a chance to do so, because on the Committee stage we shall move an Amendment to exempt paraffin from this proposal.
  I do not wish to say much on vehicle duties today, because these were fully discussed on the Budget. We certainly intend to table a number of Amendments to the Schedule on duties which the Chancellor has prepared for us. But I commend to the Chancellor—and, as I have made clear on past occasions, I speak only for myself here—the idea that, instead of a flat rate duty for motor cars, while I am not suggesting getting back to the horsepower tax because of

  1639
  the distortion in engine design that that involves, I suggest that there is much to be said for relating the tax to the size of the car and the amount of space which it occupies, whether parked or moving on the Queen's highway.
  Mr. Gerald Nabarro Mr. Gerald Nabarro (Kidderminster) indicated dissent.
  Mr. Wilson: I can understand the hon. Member for Kidderminster (Mr. Nabarro) shaking his head. I was not suggesting an additional tax on the badges displayed on the front of cars.
  Mr. Nabarro: I was not shaking my head for that reason. I was doing so because I recalled with some nostalgia that when the right hon. Gentleman was a Member of the Socialist Government ten years ago he accepted the argument that the design of vehicles was badly warped by a differential vehicles tax. What he is now suggesting, namely, that vehicles should be taxed on size, is exactly analogous. The design would be warped and exports would be damaged.
  Mr. Wilson: Obviously the hon. Gentleman was not listening carefully to what I said. I said that I accepted the argument of twelve years ago concerning the distortion of engine design because the horsepower tax was an artificial form of tax. That is quite different from measuring the floor area or ground area of the car. Compared with those days, our exports have developed very much in medium-sized cars rather than in large-sized cars, whereas all of us at that time thought that there would be a big expansion in larger cars. The size of some of the cars, especially imported cars, which we see on the streets and blocking the parking spaces make any car which the hon. Gentleman has ever driven seem quite pigmy by comparison. In view of that, I think that even he will agree that there is a case for doing what I suggest.
  Mr. Nabarro: No, I do not agree. What about a Rolls Royce car? I invite the right hon. Gentleman to consider the case of the Jaguar E type car, which is very long and very spacious and today one of our biggest lines in the export market. What would happen to production and design if his suggestion of a tax based on size were adopted for a very valuable design of that kind?
  Mr. Wilson: I am surprised to hear it suggested that buyers of such Jaguars suffer from disincentives to buy because of taxation or Excise Duty. Since the hon. Gentleman has mentioned Rolls Royce cars, by far the largest proportion of Rolls Royce cars sold on the home market are paid for not by individuals but by the Chancellor of the Exchequer on business accounts.
  Mr. Nabarro: Not entirely.
  Mr. Wilson: I did not say entirely. We have all had the letter from the Chairman of Rolls Royce Limited. He has said so. It confirms what we all thought.
  There is one problem which I should mention to the Chancellor. It has been referred to in correspondence which I, at any rate, have seen. By increasing the flat-rate duty the right hon. and learned Gentleman has borne more heavily on those who have been licensing their cars for a quarterly rather than an annual basis. Since the tax takes effect immediately, people who could not pay the whole amount at once will be paying more than the rest of us who bought a licence for the whole year. Perhaps the Chancellor will look at that matter before we reach the Committee stage.
  I now come to the right hon. and learned Gentleman's regulators, the first of which is in Clause 8. We welcome the Government's conversion to our view about the danger of over-reliance on monetary policy. Many have been the times when we tabled Motions and went into the Division Lobbies about it. The Chancellor is proving a slow convert, but at any rate a convert, which is more than can be said for his predecessor, to the view which we and the Radcliffe Committee expressed on this point. Obviously, he has become very perturbed about the jerky effects of hire-purchase changes, which are over-selective in their effect on certain industries and which can have a damaging effect on employment. The Chancellor is turning away from this over-reliance on these monetary weapons and on hire-purchase control, but, in looking at the first of the regulators, that dealing with tax on commodities in Clause 8, the House should note that this gives the Chancellor power to levy by administrative order £200 million worth of additional taxation

  1641
  without immediate recourse to Parliament. This is something about which the House of Commons should be concerned, particularly on the Finance Bill.
  In terms of surrendering this House's control over the taxing power in the interests of economic planning, the way in which the Chancellor is doing it is going too far. I do not suggest that any John Hampden will rise in protest against what the Chancellor is doing, or that it is on a par with ship money, or anything of that kind. But it oversteps the margins of the relation between the Government and the House in the matter of taxing power.
  In 1955, the then Chancellor of the Exchequer, who got in a mess by his over-prodigal hand-out before the 1955 election, remunerative though that was in electoral terms, had to face the discipline of an Autumn Budget. It was quite a discipline. On the other hand, if the present Chancellor of the Exchequer got into any difficulties of that kind, he could simply sign an order and get £200 million in additional taxation, far more than the former Chancellor got by the whole of the Autumn Budget, and he would not have to recall Parliament immediately.
  Mr. Nabarro: We would see to it that he did, do not worry.
  Mr. Wilson: Again in 1956, at the time of Suez, would not this have been a temptation to the then Chancellor, now the Prime Minister, who surrendered all the financial interests of which he was supposed to be steward in order to pursue that venture, to take his pen in financial difficulties and sign an order putting up all taxation by £200 million? He raised taxation on petrol, but he had to come to the House and move a Ways and Means Resolution and go through all the stages of a Bill in December, 1956, before he could raise that sum of money, with bitter criticism from this side of the House.
  The Third Schedule of the Bill provides that there must be Parliamentary ratification within twenty-eight days, but I understand that this twenty-eight days excludes the period of Prorogation, dissolution and the Summer Adjournment and the Chancellor could be enjoying his extra-Parliamentary taxation for three months or more without summon-
  1642
  ing the House. Some of us find the reference to dissolution a little sinister. Clause 8 gives power to lower as well as to raise taxation. Far be it from me to suggest that the present Prime Minister, even in the stress of an election, would depart from those high principles which he has made peculiarly his own. But discerning observers have noted from time to time that, in addition to the noble higher self which we have come to know, there is a more earthy self in the Prime Minister's make-up occasionally struggling for mastery and that these struggles might be reinforced by some of the right hon. Gentleman's advisers in the Conservative Central Office.
  We feel that this House has a duty to protect the right hon. Gentleman against those internal stresses and divisions and to keep his feet firmly treading on those high-principled lines which he always treads when the law prevents him from doing anything else. We shall therefore move an Amendment to provide that an Order made under Clause 8 requires affirmative ratification within seven days of its being made, and if the House were not sitting it would, of course, have to be recalled within that period of seven days.
  The only other matter on this particular regulator is that it still seems odd to us that the Chancellor, having gone to these rather unusual lengths on commodity taxation, still refuses to do what we proposed in earlier debates on tax avoidance, namely, to take power by order to deal with new and unscrupulous means of tax avoidance, subject to ratification in the following year's Finance Bill. It seems rather odd that the right hon. and learned Gentleman will use this tax, which falls, of course, more than proportionately on ordinary families, while there is no suggestion here about increasing Surtax during the period of the emergency or other forms of direct taxation. All that is proposed is that there should be an increase on taxed commodities. The right hon. and learned Gentleman will do that, but he will not use the same power to deal with the problem of rather unscrupulous tax avoidance which we have had to face in successive Finance Bills.
  With regard to the payroll tax, I dealt with this matter rather fully, as far as I was concerned, on the Budget, and, of

  1643
  course, on the Money Resolution, and my hon. Friend the Member for Newton (Mr. Lee) and other of my hon. Friends dealt with the matter at such length as they were allowed under the rules of order. My hon. Friend the Member for Sowerby (Mr. Houghton) proposes to deal with the subject more fully this evening if he catches the eye of Mr. Speaker. Therefore, I will content myself with saying on the payroll tax that on due consideration we feel that our first reactions to the tax were right both as to the effects of the proposed surcharge on different industries—some industries will pay far more than others—as to the effects of the tax on areas of differing degrees of prosperity, Scotland, the North-East Coast, South Wales and, of course, Northern Ireland, and also so far as the effects of the tax are concerned on particular types of essential services, local authorities, the hospital service and the rest.
  We feel that we have had powerful and for us unaccustomed reinforcement on this matter from the Federation of British Industries, the National Union of Manufacturers and the British Employers' Confederation. I am not quite sure whether the Institute of Directors supports us on the matter or not. But we are in unusual company in criticising this tax. I would commend to the Chancellor a letter which appeared this morning in The Times. It was written by someone who has never, I suspect, voted for our party, but, nevertheless, there was some very good, hard industrial common sense in the letter about the effects on industry of the payroll tax. I commend the letter to the Chancellor. We shall vote against this Clause, but foreseeing the ever-present danger that we may be defeated in the Vote, despite the powerful reinforcements, we shall move precautionary Amendments for the exemption of particular areas and industries.
  I now come to the main tax changes—direct taxation in Part II of the Bill. Of course, the whole section here really centres on the Chancellor's proposals for Surtax. Today the Chancellor said not unfairly in his peroration that as far as the Bill is concerned the imposts are widely spread. They are indeed widely spread over a wide section of the com-
  1644
  munity, and if we add to these the imposts which the right hon. and learned Gentleman imposed, in fact, on the Health Service, then they are spread very widely indeed.
  What we complain about is that a Bill which spreads the imposts so widely over the mass of the population just confines its hand-outs to a very small section of it. Every ordinary family in the country is now paying more as a result of taxation introduced during the past three months while a very small proportion of taxpayers—between 300,000 and 400,000—have received major remissions of tax amounting to a total, in some cases, of £1,775 a year—an increased spendable income of £35 a week—as a result of the Bill, and this at a time when the Chancellor is telling wage earners on £9 and £10 a week to show restraint in wage demands.
  In what kind of a world does the right hon. and learned Gentleman think he is living? There are some, of course, who will be paying more in direct taxation apart from the poll tax. It is extraordinary, because of the astonishing failure of the Chancellor to raise age relief for old people on small fixed incomes, to realise that old-age pensioners who have received from the Government this miserable, inadequate and overdue increase last month, will, if they have an additional pension or earn a little by doing part-time work, now be paying more in direct taxation than they were two months ago. That will be the effect of the present taxation arrangements.
  April, 1961, has been a wonderful month for social justice—Surtax payers relieved of tax on the grand scale and some old-age pensioners ekeing out an existence actually paying more in tax.
  Sir Beresford Craddock: Will the right hon. Gentleman give us an example of figures so that we can understand his point?
  Mr. Wilson: I gather that the hon. Gentleman has not received letters on the subject, as most of us have. The fact is, of course, that anyone who has a small supplementary pension of any kind, or who is earning a little by part-time work, will, as a result of the quite beggarly but measurable increase in retirement pension given last month,

  1645
  now be receiving a slightly higher income, and this will take some of them over the margin for old-age Income Tax relief. And there is a great bump up when we get over that margin. The result will be that some old-age pensioners will pay tax who were not paying tax last year. As I have said, we think that this is intolerable.
  I give notice not merely to advance the education of the hon. Gentleman, who, I know, will want to study the details that we shall give to the House, but to the Chancellor, that the first Amendment that we shall move to the Bill by way of a new Clause will be to extend age relief. I appeal to the Chancellor in the name of humanity to accept that new Clause.
  There are, of course, other anomalies in that part of the Bill dealing with direct taxation. Many of us drew attention in the Budget debate to the bizarre provisions by which the single man gains more than the family man under the Surtax proposals. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) drew attention to the very small extra allowance on the new Surtax scales which is allowed net to a family man for meeting his family responsibilities as compared with a single man.
  There are, of course, other anomalies. The Chancellor referred to what was called the lack of symmetry in these proposals. One of these asymmetrical examples was the subject of recent comment in the Press. For anyone with any investment income at all, provided that it is larger than the sum of his personal allowance, there will now be what one of our national newspapers has called a "Surtax belt" through which he will pass as his earned income increases, only to emerge later paying no more Surtax until his earned income reaches £5,000 a year.
  This Surtax belt ends in all cases at the caballistic figure of £2,571. No one quite understands why. But, to take one example, a single man with an investment income of £440 a year and a salary of £2,000 a year pays no Surtax at all. But if he then earns an extra £600 he starts to pay Surtax on £440. If he then earns a further £600, he attracts no extra Surtax, and the marginal rate of tax actually falls as the
  1646
  income increases. A most extraordinary provision in a tax table.
  Compared with this whimsical distribution of tax liabilities, even housey-housey is a scientifically predictable instrument of social justice, but this is what the Chancellor has achieved. The more one's income rises, the less tax one pays, and then one goes back to start paying it all over again. This is a matter which we can examine later in Committee, for it is very complicated and technical and I will leave it now.
  I now turn to our main case against the Chancellor's Surtax concessions. First, they must be set, as I have said, against the poll tax and the Health Service charges. Even if the Chancellor, with his rather warped ideas of social justice, thought that there was a case here, he could hardly justify it at the very time of the additional charges on the Health Service.
  Secondly—and this is interesting—the Chancellor has utterly destroyed the balance between taxation of the wealthier taxpayers and taxation of ordinary families. He has not only destroyed the balance which has grown up since the war, despite the steady policy of erosion in recent Budgets, but he has actually made the country's tax system a great deal more regressive, less progressive, even than it was pre-war. That is a very serious charge to make against the right hon. and learned Gentleman, and I propose to substantiate it.
  In 1938–39, the Surtax yield was £62 million, whereas Income Tax, excluding Surtax, yielded £336 million. After the Bill takes effect, the Surtax yield will be £127 million, rather more than double the pre-war figure, while the estimated Income Tax yield for next year will be £2,728 million, and it is estimated that at present rates of revenue and with expansion it will probably be running at about £3,000 million in 1962–63.
  In other words, compared with prewar, the Surtax yield in terms of money will be only just more than double and in real terms a good deal less, while Income Tax will be up more than ninefold and the poll tax contributions will have risen more than tenfold. To put it another way; I do not think that any of us on either side of the House regard the Chamberlain era as characterised by a marked

  1647
  sense of social justice, either in terms of economic rewards or fiscal structure; even so, in 1938–39, Surtax accounted for 16 per cent. of the total yield of personal taxation, while in 1962–63, when these provisions become effective, Surtax will be about 4 per cent. of the total yield of personal taxation. I do not think that any one can maintain that that bears much relation to social justice.
  Mr. R. Gresham Cooke: Will not the right hon. Gentleman agree that millions more taxpayers are brought into the net by rising income over the years?
  Mr. Wilson: I shall have much to say about that later. I am glad that the hon. Member for Twickenham (Mr. Gresham Cooke) is here, because I shall have something special for him.
  If we consider it in terms not of yield, but of individuals, as the hon. Member suggests, if the Chancellor can contemplate so un Treasury-like a conception; in 1938–39, there were 3·9 million Income Tax payers, of whom 105,000 were Surtax payers, while last year, out of 188 million Income Tax payers, there were 388,000 Surtax payers, or rather less than 2 per cent. of the total Income Tax paying population. The Chancellor has been rather coy about telling us how many people will be taken out of the range of taxation, but under the Bill the number of Surtax payers will be hardly any higher than it was pre-war, and it will probably be less than 1 per cent. of all Income Tax payers in the country.
  I know that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) probably thinks that that is quite justified, but those facts make nonsense of Tory claims that ten years of Tory Chancellors have shifted the burden of taxation away from the small man. On the contrary, as I have just shown, they have not only reversed the immediate post-war trend towards greater equality, but have created a system far more inequitable than it was pre-war, in the days of Mr. Chamberlain and Sir John Simon, and to say that is to use the language of superlatives.
  Of course that does not stop the claims being made. The other day, just after the Budget, the Prime Minister was speaking in Ayr. I understand that the Conservatives lost a seat in consequence.
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  The Prime Minister was speaking to a gathering known as the Scottish Unionists. We always wonder why the party opposite has so many aliases, but that is, apparently, the name by which it is known north of the Border. The Prime Minister ventured into the subject of taxation and produced some remarkable figures. He said
  "In the last year of the Socialist Utopia"—
  "Socialist Utopia" is a very good phrase—
  "a married man with two children of school age, whose wages were £12 a week, paid £35 a year Income Tax. Since 1957, he has paid no Income Tax at all."
  Let us subject that flight of fiscal fancy to the discipline of cold fact. I have taken the figures of this man earning £12 a week—we were not quite sure what was the age of the children at school to whom the right hon. Gentleman was referring, but I have taken the figures from the latest tax table and assumed that they were under 11—in 1951, he earned £624 and paid in taxation not £35, but £40 10s.—I will give that to the Prime Minister right away. He was obviously looking up his train in the wrong year's Bradshaw. If his income stayed at £12 a week, he would obviously have suffered a very serious fall in living standards because of the rise in the cost of living since 1951. The Financial Secretary, in a Written Answer on 20th March, said that such a man would have to be getting £709 a year now to have the same purchasing power. A man earning £790 a year and with two children would now be paying £29 14s. 8d. in tax, which is £10 15s. 4d. less than in 1951. There is, therefore, still a reduction compared with 1951.
  Let us take it further. His contributions on poll tax account, his weekly National Insurance and National Health contributions—and here I am entirely excluding so-called superannuation contributions—have gone up from 4s. 11d. a week to 10s. 9d. a week, which is an increase of 5s. 10d. a week, or £15 3s. 4d. a year. In other words, taking the Prime Minister's example, the man is £10 15s. 4d. better off on Income Tax and £15 3s. 4d. worse off on poll tax, so that net he is £4 8s. a year or about 1s. 7½ d. a week worse off. I am taking the Prime Minister's own figures, subject to any amount of checking which

  1649
  hon. Members opposite may care to give them.
  Let us take the £5,000-a-year married man with two children. In 1951, he paid £2,484 a year in tax. His present equivalent income, according to the Financial Secretary, is £6,327, and under the Bill he will pay £1,875 a year in tax, so that his tax bill is £600 a year less than it was. So, while the £12 a week man is paying a little more, the £5,000 a year man is paying £12 a week less.
  I must make it clear that all the figures I have quoted in this example—those which the Prime Minister chose for me: I did not choose them myself—are on the basis of returned figures of income and make no allowance for the prodigious development of untaxed income—"perks", expenses, or capital gains, where very large sums accrue to the untaxed spendable income of some people, particularly in the Schedule D category. The Financial Secretary is now leaving the Chamber. If he is going to check my figures, I do not think that he will find that I am wrong.
  I come to another serious criticism of the Bill. In his Budget speech, the Chancellor explained the timing of the Surtax concessions by saying that the reduction taking effect on 1st January, 1963, would relate to income earned in the present financial year, 1961–62, which has just started. He said:
  "It would be illogical to reduce what is already payable on past efforts on the ground of giving an incentive to future effort."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c.820.]
  That is just what he is doing. The argument that he used is true for Schedule E, for which it is the 1961–62 income that is relevant, but it is not true for the very large field of surtaxable income earned under Schedule D, a field which embraces a multitude of sins in terms of tax avoidance, business expenses and the rest. There is far more opportunity for that in Schedule D than, as we have often argued, in Schedule E.
  The Surtax payable on 1st January, 1963, is, for most people, the Schedule D income already earned in the year which ended on 5th April last. So, in the sacred name of incentive, the right hon. and learned Gentleman is giving a vast handout on money already earned. Even
  1650
  incentives to Surtax payers, about whom we have heard so much, can hardly operate retrospectively.
  The determined drive towards inequality which marks the Budget has been highlighted by two further developments since the Budget. One was the Chancellor's Freudian pronouncement when winding up the Budget debate, when he asked us to shed a tear for the difficulties of the poverty-stricken £5,000 a year man. This deserves to rank with the classics of Conservative philosophy. I am sure that it will be permanently enshrined among those classics.
  If the £5,000 a year man faces such difficulties, would not even the Chancellor agree that that £500 a year man faces much greater difficulties? The Chancellor would, presumably, agree with that simple logic. By the logic of his own argument, does he not agree that even after the recent increase, an old-age pensioner couple living on about 90s. a week, or £234 a year, are likely to be facing even greater difficulties than the £5,000 a year man about whom the right hon. and learned Gentleman spoke?
  I hope that the Chancellor agrees about this. If not, I am sure that he will tell me so. If he does agree, we are bound to ask why he has not done something about it. Why did he not make the old, the sick, the disabled and the ex-Civil Service pensioner and others living on small fixed incomes the first charge on his Budget? The Chancellor rejected that for political reasons, not as between parties, but within his own party.
  Mr. Nabarro: Hear, hear.
  Mr. Wilson: I was not going to flatter the hon. Gentleman, but I think that we can say that the Budget is the price that the nation must pay for the Salisbury revolt within the Conservative Party. As somebody said, it was the price that was paid for the Chancellor's ambition; but I would reject that explanation.
  The other development since the Budget is the publication of the first full-scale earnings survey since the war, a frank and revealing document which blew away a great deal of the Tory mythology about the affluent society. The Guardian headline on this was, "Industrial earnings myths shattered." The Chancellor equates £5,000 a year with financial difficulties, but when we

  1651
  look at the earnings survey we find that of manual workers only one in nine earns as much as £1,000 a year. Nearly one in five—18 per cent.—earns less than £11 a week. Another 10 per cent. earn £11–£12 a week, another 10 per cent. earn £12–£13 a week and yet another 10 per cent. earn £13–£14 a week.
  Thus, half the manual workers earn less than £14 a week. In the light of the facts I have given, I do not think that there is a single Tory, except, possibly, the noble Lord the Member for Dorset, South and his hon. Friend the Member for Kidderminster—
  Mr. Nabarro: I am pleased to be asociated with the noble Lord.
  Mr. Wilson: They belong to different worlds and different ages, and probably they are in agreement on this.
  I do not think that there is a single other Tory who would defend the Budget by the test of social justice, although the President of the Board of Trade did, I notice, go so far as to describe it in the Budget debate as a belated act of social justice. That is not a defence from hon. Members opposite. The argument is in terms of economic incentives.
  Surtax payers who have been moping around looking like the first half of a Horlick's advertisement, unable to put forth their best effort because of malnutrition, night starvation or Surtax frustration, are now leaping from their beds at the crack of dawn, rushing round, organising everybody, producing more, cutting down their lunch hour and the time they spend away from the office, exporting more, importing less—or is it more; I still have not understood that—exuding dynamism and virility and carrying on their broad shoulders the whole nation to a higher plateau of shared prosperity. That is the argument that we are given as a result of the Budget.
  That is not fanciful. In the Budget debate, we had the moving words of the hon. Member for Twickenham (Mr. Gresham Cooke). He said:
  "Top management mainly works very hard in this country, but we cannot be sure about all top management. Some executives must get up a bit earlier in the morning. When I go to Germany I am always amazed to find that one can pick up the telephone at 8 o'clock or 8.30 in the morning and be sure of contacting the managing director at his works."
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  And so the hon. Member went on. He added:
  "I know that in the North of England most executives get to the office at 9 o'clock, but there are too many in London who do not get there very much before 10 o'clock. I know that because I have seen some of them on Woking Station at 9 o'clock. However, I think the Surtax remission will encourage the younger executives to get on and get up a little earlier—".—[OFFICIAL REPORT, 19th April, 1961; Vol 638. c.1217.]
  The young executives! I find this very moving. I understand that former Lancashire knockers-up are moving into Surrey and tapping the upper windows of stockbroker Tudor residences and that British Railways are putting on early morning Surtax specials.
  I wonder whether what the hon. Gentleman said is really happening. I wonder whether this theory is universally valid, as we are told. There used to be a deep-rooted dyed-in-the-wool Tory argument that most people used to a given standard of living would work less hard if they could attain that standard with less work. When there was a question of paying miners more, the Tory argument was that, if they could obtain the money necessary to maintain their established standard of living by working four days instead of five days, the only result of a wage increase would be more absenteeism and less work.
  Is it not just possible that this argument might apply to some of the Surtax payers? A rich farmer told me the other day that he regarded the Budget as an incentive. Hitherto, he had ploughed back his profits into the farm. Now, it is worth while taking them out and spending them. Was that the kind of incentive that the Chancellor of the Exchequer had in mind?
  The incentive argument may have a grain of truth in it, but for the greater part most fair-minded people will realise that there is something rather "phoney" about it. By far the greatest proportion of Surtax payers, by the nature of their employment, can make little contribution to exports or essential investment. It is a gross slander on those who can make a contribution to exports to say that they were following a policy of ca' canny until 17th April, 1961. In the present orientation of our economy, with the emphasis in favour of advertising against research, home market sales promotion against exports, public relations rather

  1653
  than public service, the incentive argument, if it is true, may have results very far from those that the nation needs.
  The class differentiation on income and its treatment which characterises the Budget is marked by an equal refusal to do anything about capital and capital gains. Once again, since the Budget we have authoritative figures of capital holdings. For those with incomes over £2,000, the average holding of capital is probably as much as ten years' income. At the top of the pyramid in this property-owning democracy there are about 20,000 persons with more than £100,000 each and the average holding is £250,000. At the bottom, there are 16 million property-owning democrats who have less than £100 each, with an average of less than £50.
  It is estimated that 1 per cent. of British adults own 43 per cent. of the total net capital of the country and that the top 10 per cent. own 79 per cent. of it. The figures suggest that the distribution is more unequal in this country even than in the United States of America, where the top 1 per cent. own, it is estimated, only 24 per cent. These figures underline the glaring failure of the Chancellor to tackle the problem of death duty avoidance by trusts, covenants, limited companies and gifts inter vivos.
  Some years ago, in a Finance Bill debate, I defined death duties as a tax on distrustful parents, but the total yield from death duty revenues, which is still little above pre-war despite the change in property values, shows how much it is being rendered ineffective by various kinds of perfectly legal avoidance. The House may have seen a report in the Daily Telegraph about a noble marquess, whom I will not name, who left £75,000. The Daily Telegraph, which went into a very long account of all the properties and land that he held all over the country, said that this was
  "a good example of the efficacy of handing over property to heirs before it is too late."
  It went on to list the noble marquess's estates as
  "well over £1 million"
  and of their being transferred through the Marquess of So-and-so Estates Limited.
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  On business expenses and cars we shall have an opportunity of a thorough debate in Committee and I will content myself with reminding the Chancellor—and I hope that he will study it, because we shall have cause to remind him of the exact words—of the much more realistic approach of the United States Government in this matter. I hope that the Chancellor will study the message which President Kennedy sent to Congress asking for a complete change in the American attitude to tax-free expenses—expense account meals, the use of hunting lodges and business trips as a means of getting additional personal expenses disguised as business deals. I will not worry the House now with the quotation, but in Committee I hope to have the chance of deploying this powerful appeal from President Kennedy.
  Our own Chancellor, despite his speech, does nothing. We are always told that if Surtax were raised there would be less "fiddling" of expense accounts, but why not ensure that there is less? Why does the Chancellor net legislate to ensure that it does not happen? Why put a premium on the dishonesty of some people as compared with others? We have referred to the problem of the Rolls Royce and we shall want to discuss that difficulty in Committee. But, apart from this, the Chancellor reads homilies to the business-expense fraternity. He makes frightening noises and does nothing. It is the old story of the velvet hand in the iron glove, but on these matters we shall have concrete proposals to put forward.
  This Budget is, in our view, manifestly the most unjust Budget introduced in the House since the war. It has been called the first Tory Budget in that time. It is utterly irrelevant to the major economic problems, our limping production, our inadequate exports, our grave balance-of-payments position, the erosion of our gold reserves, and our inadequate provision for capital investment and for scientific research. Instead of tackling these problems, the Chancellor has introduced an introverted Budget, introverted to the problems and the desires of the class that his party exists to serve. The right hon. and learned Gentleman has produced a more unjust fiscal structure even than that which the country had in the Chamberlain era.

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  For these reasons, we shall take tonight the unusual and grave step of voting against the Second Reading of the Finance Bill.
  5.44 p.m.
  Mr. Antony Buck: The trepidation which a Member feels on rising for the first time to address the House is fortunately something which hon. Members do not have to imagine, because every hon. Member has himself experienced this phenomenon. Relying on that, I crave the indulgence of the House for the inadequacies and faults which I fear will be found in the course of this my maiden speech.
  The Colchester division which I have the privilege of representing had for about eleven years as its Member the noble Lord, Lord Alport as he now is. In my work in the House in future I cannot hope to bring to bear anything of the skill and ability which he brought to bear on his work in the House, but I shall be well content if I can bring to bear even a small part of that sincerity and conscientiousness which was so much a feature, with his ability and skill, of the noble Lord's work in this House.
  The Colchester division consists of an ancient borough which combines with its age a modern, twentieth century vigour. It comprises as well an area of villages and country parts where agriculture and horticulture and local industries abound. When the House considers that there is to be added to these the great and ancient oyster industry, hon. Members will realise how proud I am to represent this constituency. The oyster is a mollusc of great deliciousness and succulence, and I will do everything I can to defend it as such against noxious effluent or against any other enemy which may beset it. I understand that its attributes are not always fully appreciated by the Front Bench, but I will defend it in any way I can. But because it is an organism which lives silent and confined in a shell, I feel that I ought to imitate it no longer, and, therefore, I will make a number of observations on the Bill before the House.
  I should like, initially, to congratulate wholeheartedly my right hon. and learned Friend the Chancellor of the Exchequer on finding a place in the Bill
  1656
  for giving relief to a small minority of persons who have not the support of a large organisation or a powerful lobby, nor great financial support. I refer to the relief which the Chancellor is giving to the victims of Nazism. Here is a piece of retrospective legislation which I think all of us in all parts of the House can welcome wholeheartedly. I think that the fact that he has given a place in the Bill to a class of persons which has no great electoral significance and no powerful backing will bring my right hon. and learned Friend universal approbation. At this time inevitably there is very much in the minds of all of us the terror and horror of Nazi persecution, and anything that can be done by us or by my right hon. and learned Friend to allay the miseries of those who have been fortunate enough to survive the persecutions of Nazism will be welcomed.
  The universal approbation which the inclusion of this Clause will bring to the Chancellor may, and I hope it will, encourage him to go on to assist other small minority groups which have a good case. I hope that it will be considered appropriate that I, as the representative of a constituency which has an ancient military tradition, should mention briefly in this context the position of the Service pensioner and of the Service widow. This is a matter which has been put in detail before the House by many hon. and right hon. Members from both sides.
  Suffice to say, it is the impression of many people on both sides of the House and in the country that this class of pensioner, particularly the widow, has not had a fair share of the country's increased prosperity. It is my hope, and the expectation of hon. Members on this side of the House, that the passage of the Bill will bring about just such an opulent society as the right hon. Member for Huyton (Mr. H. Wilson) so eloquently—if I may say so with humility—adumbrated. I hope that, as more money becomes available, my right hon. and learned Friend will see fit to turn his attention, encouraged by the universal approbation for his gesture to the victims of Nazi persecution, to persons in this and other minority groups.
  I am conscious of the hard battle which my right hon. and learned Friend is waging against inflation. It is waged

  1657
  particularly for those on small fixed incomes. But that argument is a little more difficult to get over to some of those in receipt of pensions, because they have such very small sums to be inflated or deflated. That is the first aspect of the Bill to which I want to refer.
  I also wish, respectfully, to refer to the payroll tax. I am bound to say that I have grave doubts about this fiscal weapon. I have very little quarrel with my right hon. and learned Friend over the fact that he has given himself the power to impose the extra tax, but I exhort him with all my strength not to use it. This may well be one of those cases where the possession of the whip may be more effective than the use of its lash.
  The use of this weapon would bring great hardship to those areas where there is unemployment and would run counter to the policy, rightly pursued by the Government in those areas, to get rid of unemployment. I am sure that my right hon. and learned Friend will have this fact well in mind, certainly by the end of this debate, when he will have heard the speeches of hon. Members on both sides of the House representing places like Ulster and Scotland.
  This aspect does not concern my constituency because, I am glad to say, there is virtually no unemployment in Colchester. But we have there a large number of firms working hard and competing in the export market, and they have had considerable success in recent years in establishing and developing their position in that market. But, of course, conditions are not easy for them. The imposition of this payroll tax, would, as I see it, make things just that little bit more difficult for them in the competition with which they are coping so courageously at the moment. Nor would a payroll tax help the position of agriculture or horticulture. Perhaps they are both minorities in the community, but a trust that they will receive the sympathetic attention of the Chancellor in relation to the position of the tax on oil. But that is something which is a side issue to the point I am making.
  The payroll tax would cause in the area in which I am particularly interested difficulties in exporting, and it would also cause difficulties to agriculture and horticulture. Finally, it would
  1658
  cause difficulties for the very small employer. I have had letters from people who would, but for disability in the war or from some other cause, have been engaged in one man businesses but who now have to have one or two assistants. It may be said that such businesses are uneconomic, but these people work hard and earn a small living, although they have to employ one or two people to assist them. Their position would be gravely affected were the Chancellor to find himself forced to use this regulator, with which it is useful to be armed but which should only be used in an extreme situation.
  Finally, I would remind the House that on 23rd January, 1810, Sir Robert Peel made his maiden speech. He is a statesman who is admired very much on both sides of the House. He said that he would not have obtruded himself on the attention of the House had not he been convinced that the House would extend to him indulgence and patience. The House has extended indulgence and patience to me, and I am indeed grateful.
  4.55 p.m.
  Mr. Scholefield Allen: After nearly sixteen years in the House, it has fallen to me for the first time to follow a maiden speaker. There are hon. Members, I can assure the hon. Member for Colchester (Mr. Buck), who, in following maiden speakers, have found it very difficult to speak sincerely, because some maiden speeches—many made by hon. Members who have proved to be distinguished Members of the House thereafter—have failed this great ordeal. But the hon. Member's speech was almost a breathless adventure. He spoke out. As far as I could see, he used no notes except one containing the reference to Sir Robert Peel. He spoke with great eloquence, sincerity and knowledge. We shall all hear him again with delight, because he showed that he himself is a "succulent mollusc", like the Colchester oysters of which he spoke.
  I am sorry, however, that he chose to make his maiden speech on an occasion like this, selecting this dismal Budget to show us how eloquent and knowledgeable he is. I noticed that he had to dig very deeply before he could find anything that met with his satisfaction. The first thing he mentioned was the relief given to the

  1659
  victims of Nazism. Secondly, he failed to find in the Budget—and this is what we complain of—any help for the poor widow and for the Service pensioners. These were the two matters which he was constrained to speak about, because of the paucity of good things in the Bill.
  The hon. Member also strayed quite outside the Finance Bill when he mentioned the plight of those on small fixed incomes. Sometimes, if he sits in his present place, he will find sitting behind him the hon. Lady the hon. Member for Tynemouth (Dame Irene Ward), who has campaigned for these people. She was so indignant with this Budget that she voted with us in disgust because nothing had been done by the Chancellor of the Exchequer for the benefit of the people on small fixed incomes. I again congratulate the hon. Member on a magnificent speech on such poor material.
  It is only six weeks ago that I had an opportunity of making a speech during the debates on the new charges and contributions for the National Health Service, when 10d. a week poll tax was put on the poor and on the workers of the country, irrespective of their earnings, and when higher charges were imposed for prescriptions and for welfare foods for mothers. The Government then placed a poll tax of £65 million a year on a wide range of earners. We said then that this was a curtain-raiser to the Budget. We said that the Government were collecting this money so that when the Budget was presented the Surtax payers could be given some relief. We are not surprised to find that that has happened.
  I am sorry that the Chancellor of the Exchequer has left the Chamber to get some refreshment, because the first time I said that he had a Liberal past he was not present. When he was a candidate for Macclesfield, about twenty years ago, no doubt he had a few good Liberal principles, but he seems to have forgotten the simplest of them. Anyone convinced of the value of Liberal principles would never let go the broad principle that the heaviest burdens should be put on the broadest backs, and that direct taxation is to be preferred to indirect taxation, because the former is paid on the basis of the income earned and the latter falls on everybody, what-
  1660
  evern his income. The miser will get out of paying indirect tax although he has to pay on income. It is, therefore, fairer for many reasons to have direct rather than indirect taxation. The policy of the Government during the last few months has been to reverse that Liberal principle.
  The Guardian pointed out that since the war each successive Budget was, by and large, based on that principle and that this Budget represented the new Toryism. It said:
  "The big concession to Surtax payers, just when the effective burdens of taxes on the poorer classes has just been raised through new health charges and higher insurance contributions, mark a deliberate retreat from the notions of fairness and social equality that have governed British policy over the last fifteen years."
  The justification for this is a new definition of the poor. No one but the Chancellor would have dreamt of trying to make us weep over the lot of the man earning between £2,000 and £5,000 a year.
  I do not suppose that the Chancellor's words will ever be forgotten. They are worth repeating. He said:
  "Some hon. Members have said that my Budget will make those already rich richer still. I think that they are out of touch and out of date. A man who is earning £5,000 gross today is not rich unless he has large private means as well. No doubt forty or fifty years ago, on that sort of income, one could have had a house in London, a house in the country, a large domestic staff and still have been able to save. But today a man earning £5,000 gross"—
  and think of the poor Members of Parliament—
  "unless he has private means, has the greatest difficulty in providing out of his income—[HON. MEMBERS: "No."]—has the greatest difficulty indeed in providing out of his income for the education of his family and for saving. That is a fact of life, and Surtax for him, as I say, unless he has private means is at present penal."—[OFFICIAL REPORT, 20th April, 1961, Vol. 638, c.1516–17.]
  I do not know how millions of people outside could have read that without roaring with laughter. I visited my constituency last weekend and met a number of people. They greeted that statement with ribald laughter and said, "Really, the man must be an extraordinary creature if he thinks that people on incomes of between £2,000 and £5,000 a year are poor". My railwaymen threatened a strike about twelve months

  1661
  ago, and many of them are still working for a wage of under £10 a week. Tens of thousands of people in Crewe are doing that, and to tell them that a man on £2,000 to £5,000 a year is poor sets them laughing until they are almost silly.
  Viscount Hinchingbrooke: It sets them laughing but it does not cause them to strike.
  Mr. Scholefield Allen: It is a wonder that it does not. If the Chancellor goes on, as he rather hinted he might, to give further relief to Surtax payers, they might strike. What the right hon. and learned Gentleman said should be very helpful to the noble Lord, because the Chancellor said that there had been complaints that no relief had been given to people with unearned incomes. He went on to say that there was something to be said for this criticism because unearned income came from savings and, therefore, those people ought to have some relief. I wonder whether, next year, there will be a further increase of 10d. a week on the National Health contributions and further relief for Surtax payers with unearned incomes.
  In all my experience no Budget has received as bad a Press as this one. All the organs of Tory opinion have condemned it. The Guardian had no doubt about it.
  Mr. Nabarro: What did the Guardian say?
  Mr. Scholefield Allen: I read it once. If the hon. Gentleman had been listening, instead of talking so much, he would have heard it.
  Mr. Nabarro Mr. Nabarro rose—
  Mr. Scholefield Allen: The hon. Gentleman cannot talk all the time. He must allow me to make my speech.
  Mr. Nabarro: The Guardian supported the Budget.
  Mr. Scholefield Allen: The hon. Gentleman is the world's prize interrupter.
  The Daily Mail said that there was no comfort in the Budget for the broad mass of the people. The Daily Express said:
  "A good Budget for one small class—the big speculators."
  1662
  The Daily Sketch said:
  "It is not simply that the Surtax payers get an incentive bonus and the average wage-earner gets nothing."
  The Chancellor's preoccupation with wealth has led him once again to ignore, for example, the plight of the widow, to which the hon. Member for Colchester referred.
  The only increase which the Chancellor proposes to make is the tax paid on profits which will be passed on to the consumer in due course. This will lead to higher prices and to further demands for wage increases. There is no specific help in the Budget for the exporter. These benefits are given alike to the importers, to the exporters, to the speculators and to the Clores. Incentives should have been given to those engaged in the export trade. There should have been incentives for the firms assisting in export orders. When the late Sir Stafford Cripps was Chancellor of the Exchequer he found no difficulty in assisting the export industry by budgetary means.
  This is a period of crisis and a balance of payments problem which is the worst for ten or fifteen years, yet this is the moment when the Chancellor decides to distribute £85 million to the richest people in the country.
  6.10 p.m.
  Sir Derek Walker-Smith: I know that I shall have the unanimous approbation of the House if I start by extending warm congratulations to my hon. Friend the Member for Colchester (Mr. Buck). Over the years I have listened to many maiden speeches and I can testify that this is in the first rank of the best maiden speeches to which it has been my privilege to listen. The House is fortunate to have so worthy a successor to one who was an old and intimate friend of so many of us. I am sure that we all wish my hon. Friend well in his contributions to our debates, and hope that there will be many of them.
  I should also like to be able to extend congratulations to the hon. and learned Member for Crewe (Mr. Scholefield Allen) on his speech, but I could not do so with the same conscientious sincerity as that with which I have just congratulated my hon. Friend. As a distinguished ornament of the legal profession, the hon. and learned Member

  1663
  should know that he ought to check his references before citing cases, and the reference to the Guardian was an unfortunate one, because he should have known that it saluted the Budget as
  "a bold programme which ought to lead to vast expansion."
  Mr. Scholefield Allen: Read it all
  Sir D. Walker-Smith: It might be tedious repetition to read the whole of an article from the Guardian.
  Mr. Scholefield Allen: I presume that the right hon. and learned Member has read the first paragraph of the article, stating that the Budget marked
  "a deliberate retreat from the notions of fairness and social equality that have governed British policy over the past fifteen years".
  Sir D. Walker-Smith: The hon. and learned Member is now reading from a précis—
  Mr. Scholefield Allen Mr. Scholefield Allen rose—
  Sir D. Walker-Smith: I cannot give way.
  Dr. J. Dickson Mabon: Withdraw. My hon. and learned Friend is not reading from a précis.
  Sir D. Walker-Smith: If the hon. and learned Gentleman says that he is reading from the text of the article, I entirely accept it, although I repeat that one must challenge him on the broad effect of the interpretation he gave of what the Guardian said.
  The House also very much enjoyed the speech of the right hon. Member for Huyton (Mr. H. Wilson), especially the jokes with which he greatly entertained us. The only drawback to his speeches is that when he comes to the serious parts they are almost as funny as those which are supposed to be funny.
  I congratulate my right hon. and learned Friend on his Budget and on the Bill in that he has brought to them a broad vision and an imaginative concept not altogether characteristic of the generality of our post-war Budgets. If we are now starting on the long processes of scrutiny and constructive criticism, hon. Members on this side will, in Committee, speak with constructive intent and against the background of appreciation for the way in which the Chancellor has approached his Budget task.
  1664
  Like his seven predecessors as post-war Chancellors, he, in the exercise of his vision and insight, is subject to two main inhibiting circumstances, the first being the annual discipline of the Finance Bill, which has to serve two purposes in one Measure—the provision of the annual finances of the nation together with the implementation of proposals for the reform of the tax structure. That means that, generally speaking, our Finance Bills are both long and necessarily incomplete. Their incompleteness is evidenced by the slow implementation of some of the recommendations of the Royal Commission and other salutary reforms, and in Committee some of my hon. Friends and I will put forward suggestions in that regard on points which have so far escaped the constructive attention of the Chancellor.
  The other inhibiting circumstance is the enormous weight of public expenditure which limits the freedom of manœuvre of Chancellors of the Exchequer in the present age. An expenditure of £6,000 million above the line and £1,000 million below the line is about fifty times the expenditure involved in Mr. Gladstone's Budgets, that is to say, an increase of fifty times in just over twice as many years. This represents an enormous burden which makes it very difficult for any Chancellor, however good his intentions, to provide the sort of tax structure which we should like.
  I appreciate that this is not a matter which can be dealt with in the context of a single Finance Bill. In February I sought to make a constructive contribution in this respect, with this fact in mind, when I suggested that the time had come to appoint a Royal Commission to review the financing of our social services in the context of contemporary economic conditions and the nation's resources.
  Mr. Woodburn: The right hon. and learned Gentleman says that £6,000 million is an enormous burden. But the Chancellor takes it in and also pays it out again. A good deal goes in interest on war loans. The Chancellor takes the money in to pay for defence and for the social services for which we should have to pay individually if he did not do it. How does that make it a burden on the State? If it is convenient for the Chancellor to do it, is not that less of a

  1665
  burden upon the individual than it would be if that individual had to do it himself?
  Sir D. Walker-Smith: No. It is a burden on the taxpayer and an inhibition upon the freedom of the Chancellor. The right hon. Gentleman will have in mind the figure of £6,000 million expenditure above the line included £1,600 million on defence, over £3,000 million on the Civil Estimates and only about £800 million on the Consolidated Fund. If he puts the figures into that pattern he will realise that his point is not well-founded.
  I was about to refer to my suggestion of a Royal Commission, which would be a constructive contribution at present. I put it initially, in the form of a Parliamentary Question, to the Prime Minister, and the subsequent sequence of events is one with which the House is not unfamiliar. It was transferred to the Chancellor, and was ultimately answered by the Financial Secretary. I make no complaint of that, because, although the voice was the voice of Jacob, the hand was no doubt the hand of Esau. My complaint was that Esau had not written a more constructive Answer. If not actually a dusty Answer, it was an arid Answer not instinct with the urge for positive action but reflecting a passive quietism. In short, the answer was "No".
  The Financial Secretary to the Treasury (Sir Edward Boyle): It was my right hon. and learned Friend who, many years ago, was kind enough to tell me that if "No, Sir" is ever a possible answer to a Parliamentary Question it is invariably the correct answer.
  Sir D. Walker-Smith: I cannot but think that that advice was tendered to my hon. Friend when we were both gamekeepers, and that it would not apply in the capacity of poacher. Since that time my right hon. and learned Friend has stated that he has initiated a study of our public expenditure in the context of the growth of our resources over the next five years.
  We look forward to hearing more about that, but it seems to be a rather limited and private study, and I cannot altogether accept it as a substitute for the wider and longer term proposal which I ventured to make. Although it did not find favour with the Govern-
  1666
  ment —and I am disappointed about that—I am glad to find that it has awakened reinforcing echoes among informed and thinking people.
  Against that background, I find the Chancellor's primary object in his Budget completely acceptable. It is a counter-inflationary Budget with the necessary consequence of an increased above-the-line surplus and a much smaller overall deficit. That is a good object, and my criticisms of the Bill are directed to those points on which I think the actual measures do not tie in with the object, in that some of them contain inflationary elements themselves.
  The main measures by which the Chancellor hopes to achieve his objects fall into two categories—the economic regulators and the imposition of new taxes. The former have the advantage, from the taxpayer's point of view, that they do not impose any immediate, or indeed precise, tax imposts on the taxpayer. But these measures, taken together, amount to a departure from the practice of the last ten years, during which Conservative Chancellors have sought to rely mainly on monetary measures, and marks a reoccupation by fiscal measures of the throne on which they sat during the period of the Labour Government, and from which they were deposed for most of the last decade.
  The pattern of our economy today may make this increased reliance on fiscal measures necessary. It also, however, increases the necessity for hon. Members to give a jealous and careful scrutiny to the measures proposed.
  The economic regulators must be dealt with separately, because very different considerations apply. So far as the Purchase Tax regulator—the Clause 8 regulator—is concerned, we are operating on reasonably familiar ground. It is much less a shot in the dark than is the payroll regulator, and is, therefore, much less likely to miss its mark. We have experience of variations of Purchase Tax and similar matters in the ordinary annual context of the Budget, but, in addition, we have the analagous experience of variation by Statutory Instrument of hire-purchase restrictions.
  When I was in the economic departments I had close experience of this latter operation. Technically, it is an efficient mechanism. The blows which

  1667
  we struck on that sector of the economy were sharp and sudden, swift and secret. Although they were painful to the recipient, they brought a good measure of relief and benefit to the economy as a whole.
  Even so, I always had misgivings about those operations. This was partly because they were directed at a narrow and limited sector of the economy. One of the virtues of the present proposal is that it gets rid of that disadvantage and extends the operation to a wider range. But there are certain other difficulties which hon. Members should recognise. There is the difficulty of the effect of these sudden changes on business and commercial planning, there is difficulty in regard to forestalling and other devices. But the main difficulty I have in mind is that of timing, which is of paramount importance.
  With these sorts of economic regulators, pinpoint precision is required if they are to serve the economic purposes for which they are designed. Otherwise, the position might arise where it is possible to apply the measures in such a way as to reinforce a deflationary trend which, while it has not yet manifested itself above the surface, has already become the main motive power beneath the surface.
  That is something that cannot be written into the Statute, and that is why, from an economic as well as a constitutional point of view, it is necessary that the House should retain control—and the House does retain control under the operation of the affirmative Resolution in the Third Schedule.
  Mr. John Diamond: I am extremely interested in the argument being adduced by the right hon. and learned Gentleman, but, on this question of timing, would he not agree that more important than timing is the power that the Government should have to act quickly, in consultation with hon. Members of this House?
  Sir D. Walker-Smith: I regret that the right hon. Member for Huyton is not in his place to hear the hon. Member for Gloucester (Mr. Diamond), who has such knowledge of these matters, so effectively answer the main criticism which the right hon. Member for Huyton made an regard to the payroll tax. There
  1668
  must, of course, be the highest common factor of Parliamentary control and speed of operation in order that the regulator may serve its economic purpose.
  Different considerations apply to the payroll regulator. Instead of operating on ground which has been partly tried, with the payroll regulator we are on entirely new ground. So much has been said in criticism of the payroll regulator, in financial and commercial circles, that it is almost a challenge to one's ingenuity to think of something to say in its defence. I have done my best, out of good will to my right hon. Friends; but my ingenuity does not take me further in this context than to say that way back in the misty origins of this proposal there was a germ of a good idea to serve a real economic purpose. The purpose is to give an incentive to employers to economise in the use of labour, or as a deterrent against extravagance in its use. This is necessary not only in order to keep costs competitive but to prevent individual industries with the capacity for economic growth from being frustrated by the lack of labour.
  That is a good economic purpose, but I doubt if the machinery devised is apt to achieve that aim. The machinery would appear to have been directed more towards the mere raising of revenue than towards the economic purpose of economising labour. Therefore, what might have been a good idea to assist industry has been transformed into a mechanism for extracting money from industry.
  It is fair to say that Clause 26 is really only a ballon d'essai. It has so many difficulties and imperfections that I imagine that the Chancellor will be content to leave it on the ground. I do not ask him to take the Clause back, but to leave it on the ground and not to bring in the payroll regulator within the time limit of the Bill.
  In turning to the subject of the imposition of new taxes, I am conscious of how easy it is to criticise taxes from these benches, where we do not have the responsibility that rests with the Chancellor.
  I know that my right hon. and learned Friend takes the point that he needs all these taxes in order to build up this impressive above-the-line surplus. But while recognising that, I am disappointed

  1669
  that so large an element in this taxation is taxation on industry, because taxation on industry is itself an element in cost inflation. I therefore feel that it would have been better if industry could have been spared at any rate some of this taxation. Of course, it is very tempting to a Chancellor to levy taxation on industry because it is primarily taxation on companies; and it is less politically unpopular to tax companies than to tax individuals. We all know the old saying that corporations have no souls to be damned and no posteriors to be kicked. But what is more important in this context is that they have no votes to be registered. Therefore, it is politically easier to tax companies.
  I do not think that that fact reflects much credit on us who are politicians because it is a short-term view. In the long-term, if we get too much taxation on industry, we cripple our competitive power, which means a diminution of the standard of life of all of us, and our last case is worse than the first. So we should not lightly impose taxes on companies and on industry because they are inflationary and inhibit production and exports.
  The main tax which I have in mind in this context is, of course, the tax on fuel oil, which is predominantly a tax on industry because 95 per cent. of its anticipated £50 million yield will come from industry. There is an average increase of 17 per cent. on the fuel oil costs of the average industrial user and up to a quarter in the case of a good many large companies. In the export market this increase in cost will raise our prices and be one further factor making it difficult to us to compete internationally. In the home market the tendency will be to pass the increased cost on to the consumer. There will be a rise in prices and a rise in the cost of living index, which will inject a further inflationary impulse into the economy. This I take to be inconsistent with the primary purpose of a counter-inflationary Budget. It is a trespass against the good intentions of the Bill and an inflationary cuckoo in the Chancellor's budgetary nest.
  I am not very impressed with the reasons for imposing it, though I appreciate the revenue-raising reasons, but I am
  1670
  particularly unimpressed with the reason referred to by the right hon. Member for Huyton, that the tax has not operated for fourteen years. Surely we are not proposing to accept the heterodox principle that every tax remission and tax alleviation carries with it the condition that it will be reimposed in the passage of time. I should not like to accept that principle, still less should I like to think—as in this case—that where a Socialist Chancellor has loosed a Conservative Chancellor would bind. I should not like to think that in this context, or in any other, the little finger of my right hon. and learned Friend was going to be thicker than the late Sir Stafford's loins.
  I do not like the tax because of its impact on industry. I could give a number of examples but I will not do so, having regard to the time of the House. I will give only one example because it is the most striking and because it happens to affect a large number of conscientious and hard-working citizens in my own constituency. I refer to the impact on the horticultural industry. Here the impact can be seen from a survey taken by the Lea Valley Growers' Association of 34 growers cultivating 186 acres of heated glass. They found through the survey that there would be annual addition to their expenditure from this tax of over £59,000, which works out at no less than about £320 an acre. I need not take up the time of the House—hon. Members know them well—by referring to the special disabilities and disadvantages under which the horticultural industry labours. As hon. Members know, the industry does not have the advantage of the Agriculture Acts. They know that it has been passing through a particularly difficult time, and therefore this impost may well be the deciding factor in whether their struggle for survival can succeed or not.
  Most important in this context, surely, is that many of these growers converted to oil because the Government thought that it was a good idea and wanted them to do so. If they are now to be taxed for so doing, surely that makes nonsense of economic and business planning and may involve the calling into question of the good faith of the Government in this matter. I do not regard the tax on fuel oil as a good tax, but I know that from a practical point of view we cannot expect the Chancellor to take back this year a

  1671
  tax which looms as large as this in his Budget. But if this tax is to go on, then I must ask him to do two things. First, to exempt horticulture from its provisions, for the reasons which I have given; and, secondly, to take out of the Bill Clause 2 (2) which imposes a tax on oil stored perfectly properly, according to ordinary business usage, because, as my right hon. and learned Friend will appreciate, this provision offends against our constitutional principle of not making tax retrospective.
  I will conclude with one short general observation arising out of what I have said. I repeat that the main purpose of this Budget is a proper and public-spirited purpose and one that should be commended. Where there are errors—and it is in the nature of these speeches that the larger proportion of one's speech must be spent on the points one criticises rather than on the much larger points which one commends—those errors have a common denominator and a common cause. They arise through an insufficient appreciation—if I may respectfully say so—of the impact of these measures on industry. I think that to some extent it reflects Treasury thinking to see the budgetry provisions too narrowly in a fiscal and financial context and not sufficiently in the wider ambit of the impact on industry.
  We know that all over the world Ministers of Finance and their officials are toiling to see how they can fashion their tax arrangements so as to impose the minimum handicap on industry. In this country, which, more than any other, is dependent on industry and overseas trade, we cannot afford to lag one iota behind in seeking to achieve the same result. We are fortunate in having a Chancellor of the Exchequer of great ability. I hope that the tenure of office of my right hon. and learned Friend will be longer than the average of his seven post-war predecessors, and I am sure that if he will have this concept in mind he can in his future Budgets render a signal service in strengthening our economy and sustaining our forward progress.
  6.40 p.m.
  Mr. A. Woodburn: The speech of the right hon. and learned Member for
  1672
  Hertfordshire, East (Sir D. Walker-Smith) has been very interesting and was efficiently delivered. The most impressive point he made was at the end, when he talked about the problem facing the horticultural industry in his constituency. The figures he gave were impressive. If the other figures about which he was talking earlier had been equally accurate that part of his speech might have been equally effective.
  It was not to his credit that he repeated cheap stuff about the public burden of money which the Chancellor has to spend. He detailed a good many things which no Chancellor has any option but to spend money on, such as defence and the charges for past and present debts; and then he came to public expenditure under the Civil Votes. He did not analyse that very clearly. Is he suggesting that the Chancellor should spend less on roads? Anyone with any sense realises that we ought to spend more on roads. Is he suggesting that instead of the Chancellor helping local authorities they should raise all their money by rates? For a former Minister of Health, of all people, to suggest that we should go back to the idea of everyone paying for his doctor and for hospital treatment was something which did not do him justice.
  The right hon. and learned Gentleman did a service in showing how ridiculous is the idea that the taxation which the Chancellor raises is something which can be done without and that it is only due to some frivolous idea on the part of the Treasury which likes to raise money. Taxation is necessary, and in some cases, as in public health, as the right hon. and learned Member knows, there is not enough spent. If that is the effective way of raising the money and spending it, we ought to continue in that way.
  Sir D. Walker-Smith: I do not think I can leave it on record that as a former Minister of Health I made any suggestion that people should pay for their doctors. I made no such suggestion and had none in mind. My proposal, which the right hon. Member can look up in the debate on 9th February, was for a Royal Commission to review the financing of the social services. That was all.
  Mr. Woodburn: The implication was that there were some economies which

  1673
  could be made in this direction. Every Government has tried that, and the right hon. and learned Member as Minister of Health tried it. I commend his behaviour as Minister of Health in trying to develop the Health Service. I think this suggestion was a thoughtless remark which comes from reading too much Conservative literature.
  I congratulate the Chancellor on having produced some new ideas. One of the most difficult things for a Chancellor to do is to find new ideas to produce in connection with Budgets or taxation. He has introduced instruments to try to level out the humps, the slumps and booms such as we had in pre-war years and those which may come in the future. Clearly, anyone who can invent an instrument to prevent these unnecessary ups and downs of our commercial life will be doing a service to the nation. He has done his best to find solutions for these difficulties.
  Whenever a Chancellor finds solutions for difficulties everyone then produces difficulties for his solutions. It is quite easy to do that. Naturally, that is one of the jobs which comes in criticism from an Opposition, or even from the Chancellor's own supporters. Everyone sees more difficulties in addition to those which the Chancellor has already discovered.
  I do not say that the instruments he has proposed are perfect, but we must give them a trial. They are certainly better than using the hire-purchase method of one minute suddenly stopping the sale of washing machines and refrigerators and the next minute trying to expand their sale. If something can be done which works more smoothly that will be better. In any case, we have no option because use of the hire purchase instrument has been exhausted.
  During 1959, when they were preparing for the election, banks and hire-purchase companies said, "Let it rip, boys" and everyone was invited to pledge his income for the next ten or fifteen years. Three years after that has been done that income cannot be pledged again for ten or fifteen years. That method has been exhausted as a way of putting on the brake. When brakes are put on there is squealing. The human being differs
  1674
  from the machine in that he squeals before the brakes go on.
  If inflation threatens and the Chancellor wants to curb it, he has to stop someone spending. That is simple. The question is, who is to be stopped from spending, how is he to be stopped, where and when? Our criticism in the past has been that the stopping of spending has been too indiscriminate. In some ways, we also criticised the use of the Bank Rate as a blind instrument which injured people who were exporting, just as it held up those who were building racecourse tracks.
  I have always held the view that we should discriminate between those carrying on industry for the benefit of the public and those engaged in enterprises which have no social benefit. The idea that housing should be treated in the same way as horse race and greyhound tracks has always seemed to me quite ridiculous. I have always been in favour of having graded interest charges for different types of services. There should be lower charges for public services and, say, for industrialists who go to the Highlands to start industry there rather than to the Midlands and to London where they cannot help making money. The Colonial Secretary has applied this principle to Malta. He has a wonderful scheme whereby while industry is being developed there it is relieved of paying Income Tax.
  Such instruments are extremely valuable and should be used for the location of industry where it is needed. If much more industry comes to the Midlands and London, traffic there will be blocked and finally come to a stop. The Chancellor is at least to be congratulated on making an attempt to find some new instrument to deal with this problem. No one can raise objection to taxation of some kind putting a curb on spending. It would be better to start at the other end and to prevent costs rising.
  We had this difficulty when we were in Government. The late Sir Stafford Cripps made an appeal to companies, trade unions and workers, to everyone, to try to restrain development of income and raise the production of the country. It is possible to do that from a moral basis where we try to treat everyone fairly. It becomes quite impossible if suddenly reliefs in taxation are given

  1675
  only to a certain group of people with between £2,000 and £5,000 a year. The Government have no moral basis to say to the man with £11 or £12 a week, "Hold back. We are going to give money to the Surtax payer". With the imposition of a poll tax on the one hand and this relief of Surtax on the other, it is impossible on any moral ground to apply restraint at the beginning. So the restraint has to come after costs rise, and they have to be cut down.
  I wish the Government would take the hon. Member for Bath (Mr. Pitman) into consultation, because he is an expert on organisation and methods. I had the honour of introducing the Report on the Organisation and Methods Subcommittee of the Select Committee on National Expenditure. In that speech I instanced some of the things we did in this country which seemed simply fantastic. Speaking from memory, at that time there were five or six people entitled to go into a poor person's home to find out what his income was, what his conditions were and whether he was entitled to different kinds of relief. It was ridiculous.
  This is going on today, because under the financial arrangements which the Government have introduced this year it is possible for an old-age pensioner who is not entitled to supplementary benefit to be obliged to travel by bus to a National Assistance office, if he is to recover money paid for prescriptions, in order to qualify for 2s. relief on a prescription. The Government tell an old lady that she must travel five or ten miles to the central office to collect 2s. or 3s. in order to take it back and to hand it over to the chemist, for him to hand it back to the Government. Is this not chasing one's tail economically? I am sure that the hon. Member for Bath, with his knowledge of organisation and methods, could greatly improve on the Government's method of doing this.
  If a company had an executive officer who is not working well because his salary does not sufficiently inspire him, the company has a very simple remedy: it can give him a rise in salary, and that counts as a cost on which the company does not pay Income Tax. But the Government say, "The companies do not know what they are doing. We will give
  1676
  the man a rise in salary. The Government will take profits from the company by taxation, bring them to the Treasury, carry out a burdensome procedure and then hand the money to the executive as a rise in salary in terms of taxation remission." In fact it could be done without the money ever leaving the office of the firm concerned. If the firm did it, then it could be discriminatory. When the Government do it, it is non-discriminatory and everybody gets it whether they play any part in exports or not.
  No one will believe the story that the Surtax relief is an inspiration to people to export more or to make progress in science. That could be done without all this circumlocution. I believe that the hon. Member for Bath left an organisation and methods department behind him, and the Government should bring it into the Treasury to examine Treasury methods of finance.
  What is the purpose of the tax on television? It taxes advertisements for soap and detergents. In order to put a tax on soap and detergents, the Government start by putting a tax on television which gradually works round to the soap. If they want to tax soap, why not do so directly? Why have all this paraphernalia of going through television and pretending that we are taxing television when we are taxing the user of soap? If there is any advantage in taxing the user of soap—we previously encouraged the use of soap because we believed that cleanliness was next to godliness, but it may be different with detergents—then why not do so directly?
  There is another roundabout—the machinery for the payroll tax. The arrangement for imposing an extra tax has been introduced because we might be faced with a financial crisis during the year. Where will the financial crisis arise? It will come from all the speculators who expect a big rake-off from capital appreciation if they can get the £ going up and down in the world financial centres. But instead of dealing with the speculators and those who gain from the capital appreciation rake-off if they start a crisis, the Government determine that industry must pay 4s. a head on its workers and that consumers must pay an increased tax. The crisis is being caused by one set of people and the

  1677
  Government are punishing another. This reminds me of the story of the whipping boy of James I. He used George Buchanan as a whipping boy; if he did anything wrong, poor George Buchanan was whipped. If the speculators cause a crisis, the Government do not deal with the speculators; they tax the consumer.
  On Sunday morning I was listening to some people on the wireless talking about public schools, and I have never heard anything more tragic in my life. We heard a woman speak who went charring in the mornings and of her husband, who otherwise could have afforded a car, cycling to work and teaching at night-school in order to send their one ewe lamb to a public school. Others were doing similar things. When the question was asked why they did it, a noble Lord who took part in the programme had to admit that it was very largely snobbery. [HON. MEMBERS: "No."] They gain some advantages, as they think, through their boys being able to look after themselves and being self-controlled, but I am horrified to think of these families exhausting themselves to send their sons to public school. It is all very well for millionaires, such as some hon. Members opposite, who can easily spare the money, but these people with £2,000 a year get into all the difficulties of which the Chancellor spoke. The Chancellor wept tears about their difficulties in sending their sons to public schools, when, as the noble Lord admitted, they would get a far better education if they went to secondary schools.
  Mr. Nabarro: Who was the noble Lord?
  Mr. Woodburn: I do not know. There are a few of them.
  Mr. Nabarro: Who was the noble Lord on the programme?
  Mr. Woodburn: The hon. Member should ask the B.B.C. and not ask me. He was described as a member of one of the oldest and noblest families of England. He sends his own two sons to public school not because he can afford it but because, curiously enough, he says that it will enable them to get into the right places later on—as if being the sons of one of the oldest families in
  1678
  this country would not get them there anyway!
  In any case, this is the kind of reason given for asking us to agree to the relief in Surtax. It was pathetic and, indeed, tragic to listen to this discussion. If that is the reason that people need this Surtax relief, then the sooner they are relieved of the problem altogether the better; either abolish the public schools or make it impossible for them to continue this practice by not giving them taxation relief.
  It is wrong that there should be these jumps in taxation. There may be an argument against Surtax and against a person suddenly having to pay Surtax when his income reaches £2,000 a year. It is like the sound barrier to an aeroplane. We can reach a certain speed and are then brought to a halt by the sound barrier. Sooner or later the Treasury must get down to the business of producing a graduated system of Income Tax right up the scale so that it follows a curve which is reasonable and acceptable to all people paying Income Tax.
  There ought to be not these jumps but a steady increase in graduated taxation so that, as far as possible, people pay according to their ability to pay. I agree that we cannot get rid of the poll tax altogether, because for some curious reason the public do not like paying taxes even according to their ability to pay. There are some things in this world which are regarded as sins, such as paying rents and paying taxes. People like to pay their taxes in a way which prevents them from realising that they are paying them. They like to have the twilight sleep to which the right hon. Member for Monmouth (Mr. Thorney-croft) sometimes referred in another connection. They like to pay their taxes without knowing anything about it.
  That is their ideal, and we must accept it. The Chancellor must pay attention to it. But even so, the system must be fair, and I repeat—I cannot say this too often—that one of the most shameful things about our financial transactions is that the Government this year have interfered between a sick person and the medicine which he needs. Since I last spoke on the subject the pharmacists have pointed out what has been pointed out before—that old people are

  1679
  going into chemists' shops and asking, "Which of these items of the prescription can I take, because I cannot afford to buy them all?" This has been done in order to save a few pounds at a time when millions of pounds are being handed to people who in many cases do not need it. I hope that the Government, even at this late stage, will reconsider that part of it. It may seem that in mentioning this at the end of my speech I regard it as a rather small item, but that is not the case, because I regard it as the worst flaw in the whole of the Government's financial arrangements this year. I hope that the Chancellor and the Government will reconsider it and wipe it out altogether as a stain on their proceedings.
  7.0 p.m.
  Sir Beresford Craddock: In view of the time factor I shall comment very briefly on one or two points made by the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn). I feel that it is my duty to correct him when he suggests that my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) said that there should be a cutting down of some of the expenditure on the social services. That was quite unworthy of the right hon. Gentleman. My right hon. and learned Friend made no such suggestion. Indeed, he was tackling the very point which the right hon. Gentleman himself tried to make. We are faced with a very substantial burden of expenditure that it is quite impossible to avoid, and that difficulty will face us for many years to come.
  I also think that the right hon. Gentleman's remarks about the public schools were rather unworthy of a Privy Councillor. That sort of attitude disturbs me. I do not wish to enter into personalities, but I did not got to a public school myself and I had a struggle to get a good education; but from my experience and observation of life I feel that the public school system in England is a first-class system. I hope that it will be maintained and that nothing will be done to destroy it. Furthermore, I hope that even more boys are given a chance of a public school education.
  Mr. Woodburn: I think that it would be advisable for every child to have a
  1680
  period of residential education. The hon. Member may regard that as a form of public school education. What I think pathetic is that people should ruin themselves in the stupid fashion which I have mentioned in order to send their children to a public school.
  Sir B. Craddock: Like the right hon. Gentleman I come from over the Border, and I am sure that he will agree that we find a few stupid people in every section of society and in every country. I do not want to take up the time of the House with extraneous matters or, indeed, with vulgar fractions, but I feel that I am entitled to address a few remarks to the right hon. Member for Huyton (Mr. H. Wilson). I am sorry that he is not in the Chamber, but I warned him that I should be addressing some of my remarks to him, and saying why I think that I am entitled to do so.
  The right hon. Gentleman spoke about some of the proposals of the Chancellor of the Exchequer and the effect which those proposals would have on the old-age pensioners. I could not follow the right hon. Gentleman's argument and asked him whether he would give a concrete example in figures. With his usual bitter tongue, instead of trying to be polite about it, he said that if I would just listen to him it might improve my education. May I say—and I want it on the record—that I am always out to get more education and to learn something, but I prefer to choose my masters.
  The trouble with the right hon. Member for Huyton—and I have listened to him on many occasions when he has made speeches on the Budget and finance—is that he spoils fairly good matter with bitter personal attacks. For years he has been attacking my right hon. Friends personally. This is what I object to. I do not object to attacks on policy, but I do object to the personal attacks which one has listened to for years on the Prime Minister and the Chancellor and many other right hon. Members on the Treasury Front Bench. I think that it is poor. He seems to have got away with it fairly well. I think, however, that the time has come when a slight reply should be made to him.
  When my right hon. Friend the Prime Minister was Chancellor of the Exchequer the right hon. Member for Huyton began

  1681
  his reply to the Budget proposals with a bit of doggerel which went something like, "Turn Gladstone's face to the wall, Harold"—all very amusing. I will be kind to the right hon. Gentleman and flatter him by giving him a little doggerel of my own. I hope that he will read it and inwardly learn and digest it:
  "Turn your face to the wall, Harold.
  Sez I, sez I, to myself.
  I deserted B., to follow G.,
  Now I find myself on the shelf.
  But the winds of change are blowing, Harold,
  May they come with a mighty rush,
  May they blow behind me and sweep away G,
  I pray them, my leader, to crush."
  I want to turn to rather more pleasant matters for a few minutes. I should like to join in the congratulations to my hon. Friend the Member for Colchester (Mr. Buck) on his maiden speech. I am sure that we all agree that it was a very excellent effort. It reminded me with slight feelings of nostalgia of my own maiden speech which I made on the Budget of 1950, when we all sat elsewhere and the late and much respected Sir Stafford Cripps was Chancellor of the Exchequer. On that occasion one of the principal spokesmen of the Conservative Opposition was my right hon. and learned Friend who is now the Chancellor. At that time, when I was a newcomer, he gave me some very kindly advice. Therefore, apart from other considerations, I am delighted to see him in his high office, and I wish him every success possible in the future.
  For many a long day I have held the view that there has been, and still is, a section of thought in this country which feels that the world owes us a living. I do not subscribe to that point of view. I have taken the view, and I have expresed it in the House and on the platform on many occasions, that we shall be in a very difficult and sometimes dangerous position for some years to come.
  Mr. C. Osborne: We are now.
  Sir B. Craddock: I am very glad to know that my knowledgeable Friend the hon. Member for Louth (Mr. C. Osborne) agrees, because I am sure that that is right.
  Until we can get our reserves up to a far higher figure than they stand today I believe that we shall always have these
  1682
  difficulties. We saw from the return published yesterday that there had been a fall in our reserves. I do not think that that should worry us too much because, as I think the financial Press said, it was mostly hot money leaving the country, and our reserves, even with that loss, may be in a sounder position than they were even a few days ago. Nevertheless, I feel that until we get our reserves up to £3,000 million or £4,000 million, three to four times what they are today, we shall always have these difficulties and our economic and financial position may well remain precarious.
  Viewing our financial and economic problems against that background, I ask myself how my right hon. and learned Friend's Budget proposals fit into the picture. I believe that he has tackled this very difficult problem in a very sensible and, if I may say so, courageous manner. His proposals are designed to result in a very small deficit overall, and it is courageous in the highest degree that he should have tackled this problem in this way.
  It will, naturally, take time to improve the position, but I hope that in his Budgets of the next, say, five or six years, the Chancellor will continue the good work, when I believe that it will be possible each year, for some years, to improve our reserves by between £200 million and £250 million and, as a result, build them up to a very satisfactory sum. From what one knows of his proposals already, I am sure that he has that in mind.
  Despite what the right hon. Gentleman the Member for Huyton said about giving me further education, I think that no matter how long we are in this House we are always learning. One thing we learn is that no matter what is said on the other side of the House, or even from the back benchers here, there is little chance of persuading the Chancellor to make substantial alterations in his proposals.
  Another is that after we have listened to one or two speeches from the Front Benches, and after one or two back benchers on either side have spoken, there is little more to be said. It is in that position that I find myself now. My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) has touched on the very points with which I had hoped to deal,

  1683
  but, if I may, I shall make my remarks as I intended, because, as I think my right hon. and learned Friend already knows, my approach to these matters is somewhat different from his.
  Let us consider these two so-called regulators. I agree that to add 10 per cent. to Customs and Excise Duties is a far better way of dealing with consumption, if it has to be out down, than was the old means of severer hire-purchase regulations, and the like. Speaking of hire purchase, I hope that the Government will maintain the present rates for some time to come. Being a little old-fashioned in my outlook on financial matters, I am not very keen about hire purchase. It has its good points, and can play an important part in the economy, but the danger is that with it, as with so many other things, there is abuse.
  I was interested to read in the financial columns of The Times the other day an article dealing with the report issued by an organisation whose main function is to deal with hire-purchase transactions. The article said that this report suggested that in a very few years the hire-purchase debt may rise to as much as £2,500 million. I must say that if it is to increase at that rate it should be watched very carefully indeed.
  I agree with my right hon. and learned Friend that, apart from the fact that the payroll tax can be used to take consuming power from the economy if necessary, it may have the effect—or ought to have the effect—of encouraging the efficient use of labour. I must confess, however, that I share the doubts that have already been expressed as to whether this particular method will have the desired effect even if it has to be put into operation.
  I want to give the House an example that always comes to my mind when the discussion is about the efficient use of labour. A few years ago, there was a recession—though not quite as bad as the recent one—in the motor car industry. With some of my colleagues, I met some of the directors of the various Midlands firms in order to see whether there was any way in which we could help.
  I was absolutely staggered to be told by a director of one company that it had for years been carrying on its pay-
  1684
  roll 2,000 more employees than it really needed. With the best will in the world I could not regard that as efficient use of labour—or, indeed, as efficient management. While I am not happy about my right hon. and learned Friend's suggestion of a payroll tax, I believe that consideration should be given in future to the efficient use of labour—
  Mr. Douglas Houghton: Did those people tell the hon. Gentleman why they were doing that? Did they give him a reason for doing it?
  Sir B. Craddock: I am much obliged to the hon. Gentleman for asking that question. I did not want to touch on it, because it is sometimes rather a delicate matter. They gave two reasons. First, it was being done because of the restrictive practices of the trade unions. Secondly, in that recession there was such competition for labour that they had to keep those people on, so to speak, to have a surplus. As I say, I had not intended to enlarge on it, but I am much obliged to the hon. Gentleman for giving me the chance of giving the reasons.
  I am glad that my right hon. and learned Friend will keep on the two regulators only as a temporary measure, so to speak; that, if brought in, they will have to come before the House for ratification at least once a year. That is absolutely essential. I have the very greatest admiration for our Civil Service, but I feel that there is far too much power, not only in Whitehall but in the town hall. We have to watch that very carefully. The more one sees of these matters and the more one considers them the more one must feel that quite a strong case can be made out for the Ombudsman.
  I take a different view from that of my right hon. and learned Friend the Member for Hertfordshire, East on the increased duty on fuel oil. One of the things that alarms me whenever a tax is increased is that the cry goes up from somebody, or some section, whether it is the individual or industry, "This will hurt us." It is inevitable that when one is compelled to increase taxation, someone will suffer.
  Quite frankly, what disturbs me about industry today is that whenever anything like this happens, the increase is passed on to the consumer. I should have

  1685
  thought that one of the main objects of business, would be to try, if possible, to absorb these increased costs so that it would not be necessary to pass them on to the consumer. This additional tax brings in £50 million a year and, I can see no very strong objection to it.
  It has been asked whether this tax is designed to help the coal industry and, in fairness, I cannot feel that it is wrong if it does. It is our duty to help our own industries. To use a hackneyed but, nevertheless, true phrase, "Charity begins at home", and I would like to see more help given to our own industries rather than that we should pour money overseas where there is doubtful security in the long-term future.
  I want, finally, to refer to Surtax. I shall not go into all the arguments for and against what I consider to be an excellent measure. It has been said that it will increase incentive. I believe that it will, particularly in the salary bracket of £2,000 to £5,000 a year. I will give the House an example which came to my notice. The son of a constituent of mine, an able young man of 34 or 35, is occupying a responsible position as the manager of a branch of a large company in the north of England. Strange to say, he is earning the same sum as Members of Parliament are paid, namely, £1,750 a year.
  His company want him to come to London and to take a responsible position at its head office at a salary of £3,500 a year. He will not do it and his argument is that he will have to sell up his home and come to London and buy a new house—with which he may be helped by the company—and that his living expenses, and so on, will be higher and, above all, that he will come into the Surtax range and not be any better off than he was with £1,750 in the North.
  There must be thousands of similar cases throughout the country, and my only regret about Surtax is that unearned income, as it is called, has not been included. The phrase "unearned income" is a misnomer. I prefer to call it "savings income" and increased savings is one of the things we need and such a concession would encourage saving.
  Mr. S. O. Davies: There may be some inducement to the Surtax payer, but does not the hon. Member agree that it would be a tremendous incentive to the £10 or £12-a-week family man if anything were done by the Government to improve his conditions in industry?
  Sir B. Craddock: I am sure that the hon. Member would agree that during the past few years every section of the taxpaying community has had some relief from Budgets introduced by successive Chancellors and that this class of taxpayer should be given some relief as an act of common fairness, justice and decency.
  I am sure that the Bill will be carried through the House, but, much more important, I am certain that the Chancellor's proposals have been accepted by thinking people throughout the country, as sensible and courageous.
  7.24 p.m.
  Mr. J. Grimond: I have known the hon. Member for Spelthorne (Sir B. Craddock) for a long time, but, as he says, we are always learning new things. I knew that he was a successful musician and successful politician and a successful business man, but I never knew that he was a poet, and I congratulate him on this new outbreak, rather late in life, and I look forward to further maiden poems in the House of Commons.
  His closing remarks struck me as odd. If the Budget has commended itself widely to thinking people, they have not made that very clear at the ballot box. I am interested in the reaction to the Budget on the Tory benches, because it is about the same year by year. Hon. Members opposite praise it in general and condemn it in every particular.
  The Chancellor must be particularly disappointed by the reaction to what is obviously one of his pets—his little scheme for a payroll tax. It has been referred to on the benches opposite as an interesting ballon d'essai, but it is clear that the Tories hope that the balloon will never leave the ground. Most keen balloonists want to get afloat at some time, but I have a feeling that that will never happen in this case, because there are few more vulnerable things to attack than a balloon. Hon. Members who saw the film "Kind Hearts

  1687
  and Coronets" will remember the words: "I shot an arrow in the air; it fell to earth in Berkeley Square". If the Chancellor brought in a payroll tax, that might happen.
  The other think that usually happens on the benches opposite is that there is a paean of praise for the the incoming Chancellor. Each new Chancellor is hailed with high hope and a shower of compliments, but when he departs he is sent upstairs, or even further away. The curious thing is that for most of the people in the country these high hopes and new departures are not apparent. What is apparent is that our economy has remained very much in the same rut for the last ten years. We have lacked growth and we have always been on the edge of a balance of payments crisis.
  The Budget's unpopularity in the country is due not solely to the Chancellor's preoccupation with Surtax payers, but to the growing realisation of the Government's complacency with the country's economic performance. The troubles of our economy stick out a mile. As has so often been said, we lag behind other great industrial countries in our rate of growth and we are losing our share of the export markets. At the same time, our reserves are constantly in danger of falling below the tolerable limit and we get nowhere near earning a surplus of £300 million which Conservative Chancellors have told us is the minimum we need.
  Every now and again, The Times publishes one of those little graphs showing how the value of the £ has declined quite steadily and almost at the same rate under Tory Governments as under Labour Governments—and what trouble the Labour Government got into in the days when the Tories were the Opposition!
  In the circumstances, one would have expected a Finance Bill deliberately designed to encourage productivity and efficiency. The first question we have to ask is whether there is anything in this Finance Bill which will do that. The only thing which Government speakers have pointed to as an incentive to productivity is the reduction in the Surtax rate. I do not deny that there are people in the £2,000–£5,000 bracket who are deterred from changing their
  1688
  jobs because of the high rate of taxation. That is the point. It does not follow that they will get up earlier or work harder because they have had this concession, but it will create more mobility at an admittedly important point in the economy. I admit that, but the change should have been introduced as part of a general revision of taxation, with a graduated Income Tax and some scheme for encouraging wider share ownership—co-ownership and profit-sharing—with a tax on short-term capital gains and on increases in land values. In that context it would have made sense and would have been combined with a general incentive to the community.
  I do not altogether despair of the Government bringing in a capital gains tax, because we can be sure that Conservative Governments will encourage something and then knock it on the head. As the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) pointed out, the Government had done just that by encouraging horticulturists to change over to fuel oil and then putting an extra tax on it. Having encouraged trustees to go into the equity market, they will soon introduce a capital gains tax.
  There are no other major proposals in the Budget aimed at meeting the country's pressing need for a more efficient and lively economy. The various Government spokesmen have made no effort to make out a case that there is anything else in the Budget. With the present difficulties with exports, I should have thought that the Government would have attempted to reduce costs. Instead, they have increased the duty on fuel oil, which cannot be considered encouraging to industry, agriculture or horticulture and which is certainly not a direct inducement to lower costs. They have perpetuated the double taxation of companies and, whatever the Chancellor may say, the result of the increase in Profits Tax must be to reduce, at least to some extent, the amount of money available for investment.
  One would have thought that we could have had a cut in tariffs to make our economy rather more lively, and to reduce costs, but when an hon. Member asked a Question the other day, the President of the Board of Trade still refused to remove the duty on machinery

  1689
  of under £2,000 in value, even if it was not made in this country, but which was essential for a small business which, in turn, might help the export trade.
  I do not suggest that the increase in the vehicle licence will be a very severe addition to costs, but I protest against the argument put forward by the Chancellor in favour of it. The argument seems to be that if a duty has not been increased for some years, it is therefore its turn for an increase now. I protest against that, and we cannot accept the new proposition that any taxation which has not been increased for five years must automatically go up.
  If we examine this Budget for its relevance to growth it fails, and growth is, I maintain, if not the most essential one of the two most essential needs in the economy. The other is to have growth without ravening inflation. The Chancellor's object with the proposed regulators which are to be brought in is to prevent inflation in the economy. They are to be used to skim money income if the circumstances demand it. The first criticism which I have of these regulators is that if they are brought in early in August we should either have to have Parliament back or we should lose one of our most cherished privileges—the right to discuss taxation, if not in advance of its being levied at any rate soon after.
  There is a genuine difficulty here with any regulator, and that is that we must bring it in quickly. I agree that it is somewhat anomalous that we debate some minor matters at some considerable length, but we are under no obligation, and seldom do, to debate very important increases in the rate of interest. There is an anomaly in the situation in that we can increase the Purchase Tax by regulations, but I beg the Government to realise that there is great anxiety about the possible size of these new departures—which has been said to amount to £200 million—particularly with the payroll tax. I beg them also to realise that however we may admire and respect them—much or little—it is not enough to say, "We would not do anything wicked". The point is that it is the duty of the House to see that the Government could not do anything wicked; not to rely on their good will.
  If we look at the payroll tax, I do not deny that there may be a case for
  1690
  a tax designed to increase the use of machinery in some industries at the expense of labour if an industry is using too much labour. This tax is not designed to do that, but is simply designed as an economic regulator, in which case it could have some very undersirable results in its present form. It would fall with peculiar severity on some industries which cannot avoid employing much labour, and among these industries are the shipyards and the nationalised industries. The nationalised industries would be pushed into the red by the tax and would simply go back to the taxpayers with demands that their deficits must be met. I very much doubt whether that is what the Government desire. Surely, if we should have this tax at all, there must be some method of differentiation. I appreciate that there is some differentiation in the Bill as between different classes of employed, but the difficulty is that with this sort of taxation there must be differentiation between districts or between industries.
  Mr. Jay: I am sure that the hon. Gentleman will realise that, as it stands, it would apply also to the police and the fire service.
  Mr. Grimond: I agree, and to education and farming, and it will hit all the people in the north of Scotland where some labour is employed on the farms and could not be dismised.
  Let us look at the circumstances in which the regulator might be used when inflation at home is drawing in more imports than exports justify. What are the export industries going to say at this juncture when they have to face this direct and deliberate addition to their costs? I do not think that the Government will have a very happy time. The argument is, quite rightly, that the charge is too small to affect the general employment of labour in, for instance, the motor industry, but this is going to be a direct overall increase in costs which in some industries will be serious.
  Furthermore, the implication behind the tax is most peculiar. It surely is that either labour is too cheap—and, if so, why not put up wages—or that we should up value the £ because the whole of British costs are too cheap and out of step with the rest of the world. This cannot have been seriously in the

  1691
  minds of the Government. Finally, it is another extension of the growing tendency to use industry for tax collection. I do not think that we realise how much time and energy is taken up in industry by doing this work of tax collection.
  As to the other regulator, the increase or decrease in the Purchase Tax, this seems to me more defensible, but it is a haphazard instrument. What the Chancellor is going to do is for purely economic reasons and because we may get into balance of payments difficulties, to increase the duty on those commodities that already bear a heavy duty, whether there is any justification or penalising them any further or not. We simply increase or decrease the cost of things that already bear a high rate of excise duty. We may want to do that or we may not, and it is quite conceivable that we may not, and I should think that for that purpose this is a very blunt instrument, and most of the economic instruments we have had have been blunt enough.
  I should like to see in this Bill an indication that there is going to be radical change in budgetary methods. I should like to have seen a longer term Budget for capital needs and I should also like to have seen targets at which we may aim some plans for growth and some method of relating the Estimates to the taxation that has to be raised to meet them. I should like to have seen a real incentive to productivity. I therefore believe that this Budget and this Finance Bill are not giving the nation the lead that it needs. I do not believe that growth is sufficiently in the forefront of the Government's mind. I do not believe that the Government have realised that if they are to tackle something like Surtax, it should be done as part of a general overhaul of the whole system of taxation.
  Indeed, if I felt that this was the beginning, the turning over of a new leaf by the Tory Party, I should take a more favourable view, but leaf after leaf has been turned over in this painful book, and still we are in the position in which we continue to face this dilemma of stagnation, on the one hand, or the threat of inflation on the other.
  7.38 p.m.
  Sir Alexander Spearman: The hon. Member for Orkney and Shetland (Mr. Grimond)
  1692
  seems to think that we have had a rather humdrum Budget. As he knows, I quite often agree with him, but this is not one of those occasions. I believe that my right hon. and learned Friend's Budget will go down in history as a most notable one, because he has brought up to date, or, at any rate, brought more up to date, the machinery for guiding the economy.
  In this House, we all support the policy of full employment, though we do not all agree on defining what is the optimum figure of full employment. It seems to me that we do not sufficiently realise that, like many other things, a price has to be paid. We have to plan and manipulate the economy so that there is always a fair balance between the supply of goods and the demand for them, and, above all, we must combat inflation, because inflation is always hurtful and can be disastrous. I do not believe that, with the previous machinery, it was possible for the Chancellor to do that as well as it should be done.
  I do not believe that the economy can be guided by fiscal changes at yearly intervals, because there are so many unforeseen and unforeseeable things which occur in twelve months. For that reason, the Chancellor has had to rely a great deal on the monetary weapon. I believe that that is indisputable and that used drastically enough it is immensely effective. But the monetary weapon does hit investment and most of us wish to restrict excessive demand by cutting down consumption. For that reason, I believe that fiscal measures must be taken in conjunction with the monetary weapon all through the year and, therefore, I warmly support the introduction of the regulators.
  There are two things that I wish to say about these regulators. First, I still regret that the Chancellor has not seen his way to bringing in a sales tax of some sort, because I believe that that would be a more flexible and effective weapon which would distort the economy less. I have always been told that one of the objections to it is the number of collection centres which would be necessary. It has been suggested to me that that might be solved by having a flat-rate tax on retailers' turnover to be administered by the Inland Revenue, which has already the knowledge of profits which should enable it to check

  1693
  and prevent tax evasion. I wonder whether the Treasury has considered this and, if not, whether it is not worth very careful examination.
  My second point about the regulators concerns the timing of them. When there is something unpopular to do, it is very tempting to wait until the need to do it is obvious to everyone. In this case, if my right hon. and learned Friend waits until it is obvious he will have waited too long. Surely it is much better to prevent a dangerous situation occurring by taking relatively small steps than to try to cure a dangerous situation, which means taking drastic steps. I make the guess that the time may not be far off when my right hon. and learned Friend will have to use at any rate one of these regulators.
  I should like, briefly, to give my reasons for saying this so that my hon. Friend the Financial Secretary can comment on them and destroy them if he will. I think that it is possible to make a rough guess about the increase in resources in the course of the year because, with employment at its present level, there can be no great increase in production above the average increase in growth, which is about 3 per cent. If there is a 3 per cent. increase in the gross national product this year, that will give added resources of about £750 million. On the other hand, Government expenditure on services is increasing by about £100 million. Investment looks like going up by about £400 million. That leaves a balance of £250 million.
  But the Chancellor has predicted an increase in consumption of 3½ per cent. I am not sure that he has not understated the figure. Three-and-a-half per cent. is £525 million, so that it looks as though we are faced with a gap of over £200 million. In making this rough and ready calculation, I have ignored the reduction in stock accumulation, because I cannot see that that is likely to decline by more than £350 million, which is the amount of the balance of payments deficit.
  The second reason why I believe that this is a very notable Budget and will, I hope, be a pattern for Conservative thought in future is that my right hon. and learned Friend seems to be striking at poverty rather than at inequality. I
  1694
  do not believe that the nation as a whole minds very much—[Interruption.] I am excluding those who are trying to get votes—if the well-off become a bit better off if in the process the poor become less poor.
  I cannot believe in people who say that the heavy tax burden is not a disincentive. If, by further exertions, by risks to his possessions or health, or by taking less leisure, a person who, before the Budget, was earning £5,000, can increase his income to £6,000, in this country he will get only £400 of this increase. In the United States, France and Germany he would get nearly double that sum. This must be some disincentive to greater effort. Some hon. Members, including the hon. and learned Member for Crewe (Mr. Scholefield Allen), seemed to think that the only thing that mattered was to encourage exports. I am as aware as anyone of the urgent need to increase our exports. But it is no solution just to divert more goods to the export market.
  It is no good exporting more unless we can either expand production or cut down demand here. Unless we do that, all that will happen is that prices will increase. If we export more or import less the result is higher prices. Balance of payments deficits and inflation are alternatives. They are symptoms of the same disease. I think that, on the whole, the deficit on balance of payments is probably the lesser evil of the two, because it is more easily reversible.
  I am sorry that the right hon. Member for Huyton (Mr. H. W. Wilson) is not present, because I propose to comment, not on the speech that he made today, but on the one he made in the Budget debate. He made a most remarkable statement. He said:
  "Let me tell hon. Members opposite what our position would have been if we had increased production in this country since 1951 only as much as the rest of Western Europe. It is not much to ask…."—[OFFICIAL REPORT, 18th April, 1951; Vol. 638, c.980.]
  The right hon. Gentleman often chooses to amuse rather than to instruct us, and perhaps I am wrong in taking seriously what he said on that occasion, but it is inconceivable that a serious-minded man could say that production in this country or in the United States of America could have increased since 1951 as much as it increased in Western Europe.
  Mr. James Dempsey: Why?
  Sir A. Spearman: In 1951, in Germany, France and other Western European countries there were the men, the "know-how" and the skill, but there was no capital equipment, partly because of the devastation of the war and partly because, particularly in France, they were tremendously backward in their organisation and modernisation. Therefore, a very small investment would produce an enormous return.
  Let me give an extreme and obvious example. If a small piece of a long railway line is not working, the investment spent on repairing it would bring a gigantic return. If the right hon. Gentleman starts at one, it is easy to get a 100 per cent. increase. If he starts at 100 it is a good deal more difficult. If he walks at one mile an hour, he can quadruple his speed fairly easily, but if he walks at four miles an hour he will find it very difficult to walk four times as fast. So far behind was Western Europe in capital equipment that, in spite of reservoirs of labour which we do not have, natural resources which we do not have and a less heavy tax burden, the income per head is still lower there than it is here.
  Mr. Cyril Bence: Some of those things may be true in respect of Germany, but I hope that the hon. Member appreciates that for six years France has had the serious problem for her national economy of having to use 600,000 troops.
  Sir A. Spearman: I said earlier that France's equipment in 1951, or even in 1956, was infinitely less than ours. What matters is the point from which one starts.
  I do not say that there is anything to be complacent about concerning our position, although I take a different view from the gloomy one of the hon. Member for Orkney and Shetland. Since 1952, the gross national product has increased by 25 per cent., an average of 3 per cent per year. From 1948 to 1953, for which period the present Government were not largely responsible, the annual growth was 2½ per cent. From 1953 to 1960, when the present Government have been responsible for the economy, the
  1696
  growth has been 3¼ per cent., which is a little more than in the United States and double the pre-war figure. I repeat that there is nothing to be complacent about, but, equally, there is no need to take as gloomy a view as is suggested by those whose political outlook colours their views.
  If we could get more mobility of labour or fewer restrictive practices, we could push up the growth a little more. The quickest way to increase growth would be for the Government to make it impossible for incompetent firms to carry one. Too often there is pressure from both sides of the House, not least from the right hon. Member for Huyton, to make it easy for the incompetent to carry on. It is not only in war that it pays to reinforce success rather than failure.
  My fear is that consumption will increase rapidly. It looks to me as though wages will increase at a bigger rate than hitherto. If that happens, there will be no surplus capacity. Almost every industrialist will be able to sell almost everything he makes. In that event, there will be no competition to keep prices down and there will be immense competition for labour. The result will be that wages go up at a faster rate than production. That, inevitably, means inflation. The remedy is to check demand.
  I should like to ask my right hon. and learned Friend two questions. I believe that if he is to take action in time, he may have to use his regulators. Can he use them before August? Can he use them before the Finance Bill is passed? If not, should he not consider taking powers so to do?
  7.53 p.m.
  Mr. John Diamond: The hon. Member for Scarborough and Whitby (Sir A. Spearman) said that the Chancellor's Budget was a notable one, and with that I agree. It was not notable, however, for the reasons that the hon. Member suggested. It is a notable Budget because, far from being a Budget which gives to the rich and to the poor at the same time, it is a Budget which gives exclusively to the rich. I do not know to which part of the Finance Bill the hon. Member was referring when he made his statement, which to me was completely unintelligible, that nobody

  1697
  minded the rich being made richer if the poor became better off at the same time.
  Sir A. Spearman: The object of the tax concessions is not to reward the rich who have investments but to give an incentive to earners. I believe that that will stimulate production. The object is not to reward but to stimulate the economy.
  Mr. Diamond: I am glad that the hon. Member has altered his first point, because he made a mistake in what he said earlier. He is now making the different point that the Finance Bill will stimulate production, but again the hon. Member is wrong. There is nothing to show that the reduction in Surtax will stimulate production. There are four well-documented, authoritative, exhaustive reports to show precisely the opposite. I will not bore the House with them again; I quoted all of them when I had the good fortune to be called in the Budget debate.
  There is nobody here who has yet said, "I myself will work harder as a result of Surtax relief". We are always told of somebody who knows somebody else, or we are told that it must be the case that a certain class of person will work harder for reasons of mobility or something else.
  We were told of the man who refused to move from his job in the provinces to a job in London at a much increased salary because he could not afford to do so, notwithstanding the increase in salary, mainly as a result of the increased cost of living in London and partly because of the deductions which his higher income would bring in terms of tax. Only three weeks ago, a mother came to see me about her boy who had a good job in Gloucester. He had been offered a Government job in London but could not take it. He would have commenced at a small salary, but the cost of renting rooms in London was prohibitive. That boy was not in the £5,000, the £2,000 or the £1,000 a year range. He was well below that. The reason had nothing to do with Surtax.
  The hon. Member for Scarborough and Whitby will forgive me if I say that it is a notable Budget but that he has made a notable speech in that he omitted to mention the whole impact of
  1698
  the Budget. I was sorry to hear the hon. Member, who usually is so fair and knowledgeable in economic matters, refer to a sales tax without dealing with the main argument against it. The reason why everyone on this side protests bitterly against it is that it is a regressive tax, and it is from regressive taxation by the Government that we suffer enough already.
  I wish to turn for a moment to the regulators, concerning which constructive views have been expressed from both sides. Of course, we welcome new ideas and we welcome good economic planning devices. What we do not welcome is methods which parade as economic planning devices but which are no such thing, which are too blunt or too inept to be economic planning devices.
  To make the point clearer, I turn first to the payroll tax. That tax satisfies the criterion that it is new and the criterion that it is intended to be a planning instrument. It is not a planning instrument. It is a lack-of-planning instrument. It is too broad, too wide and too clumsy to achieve any given object. It has been a little difficult for us to know what its object was, but we think that that has been made clear from the Chancellor's speech today. It is mainly an economic regulator, and, incidentally, the Chancellor tails us it will have the advantage of directing labour to where it can be most economically employed, thus economising in labour. I say that this cannot possibly happen, and for a variety of reasons I hope that we shall not see this regulator brought into being.
  I have said that I welcome new ideas and real economic planning instruments, but I go further. I welcome the decision of the Government to recognise that there may be occasions between Budgets when they must act fast and in secrecy—that is, without giving notice or warning, which a Budget debate would give, of what is to be done.
  I recognise all this in principle. The other regulator may satisfy most of these principles a good deal better, but the payroll tax does not satisfy any of them. As for its incidental effect on getting labour where it is needed, we all know that the shortage of labour is the shortage of skilled labour. Skilled labour is not ony valuable in itself but we should realise that it has charge of tens of

  1699
  thousands of pounds' worth of plant. The proportion of plant investment in each skilled labourer is extremely high, and it is getting higher. An employer who must keep expensive plant turning over and fully engaged absolutely must have skilled men to operate it, and however expensive a man might be he is a tiny cost in relation to the plant which he will operate and look after.
  It is, therefore, nonsense for anyone to think that an employer who is keeping a man on part-time and paying him £15 a week, and perhaps not even using him at all during a period which he thinks is a temporary depression which will improve later on, will get rid of the man because he has to pay £10 a year extra or 4s. a week to keep him. He will not do it. He will pay £1,000 a year if he keeps the man for a whole year. Does anyone suggest that the 53rd week, which the tax will amount to, will make a difference to the employer's decision? Of course it will not. Therefore, this tax is not likely to have a desirable effect in that respect.
  Its effect on marginal industries will be wholly damaging. It will be damaging in the North-East, in Scotland and in Northern Ireland, because it is there were employers can barely afford to keep their staff and workers fully employed that the extra cost will have an effect. This will be so not only where it is a case of keeping men fully employed, but where it is already difficult to keep disabled men employed. The first to go will be those who are least productive, not the most productive. They will be those whom we already find difficulty in keeping employed—the disabled workers, the unsatisfactory workers, the problem workers, and others of their kind.
  All these are the side effects of this payroll tax. It would be thoroughly unsatisfactory. The Government should realise that the motor car manufacter who because of the Government's lack of planning ability experienced a dip in his need for labour, and against whom this sort of legislation is aimed, was right and the Government were wrong. He did right in hanging on to labour which was not being used and which since the artificial hire-purchase restrictions imposed by the Government were removed is now again needed. Enormous capital invest-
  1700
  ment is represented in these men, in the training they get, in their ability to work on certain machines, and in their team work. The Government live in the clouds when it comes to this sort of thing, and to suggest that this 4s. a week will have any effect is totally unrealistic.
  This, therefore, is the main reason why we must dismiss the payroll tax, but there are other reasons. It does not conform at all with the principle that it should be the kind of tax which may be needed in an emergency. The House is right in demanding that if the Government anticipate needing a tax of this complexity and novelty, with all its possible side effects, they should say so and the House should be allowed to debate it fully at the time. It should not be introduced by a side-method, as it is intended at the moment to introduce it.
  No one can say what its exact effects will be, because no one knows when the Government will introduce it. We cannot discuss it in a vacuum, and when the Government want to introduce the tax the opportunity to discuss it fully will be denied to us. We shall have only a two-hour debate at ten o'clock or at one o'clock in the morning, unless the Government are generous and give us a little more time. That is an unsatisfactory way of debating, arguing and reconsidering a most important and far-reaching new tax of this kind.
  The Government have the powers of the other regulator, the Excise charges, which will give them £200 million. If the Government wish to have these powers as well, they should bring a Bill before the House and let us debate it. They should not bring in a payroll tax by a side-wind when it cannot be debated fully. If Excise Duty is to be put up by 5 per cent. or 10 per cent. notice cannot be given of it. Obviously unsatisfactory results would arise if the Government said, "We are bringing in a Bill in a month's time which will bring down or put up Customs and Excise Duties." Everything would go haywire, but there is nothing in the payroll tax which demands that it should be decided upon in secrecy.
  There is no reason why we should not have a Bill to go into Committee six months before the tax was needed. Indeed, there might be an advantage in having full warning of the coming of the

  1701
  tax. There is no reason for using a Statutory Instrument, which avoids giving notice, in the case of a payroll tax. Some of the Chancellor's hon. Friends have said that this tax is a ballon d'essai which will not leave the ground. I shall do my best in the Division Lobby not to prick it so that it never leaves the ground.
  The advantages of new ideas, of planning instruments, of secrecy and of power for the Government to act quickly at the right time are all arguments that appeal to me, and as far as the Excise Duties are concerned we should give these new ideas a try, subject to certain modifications. The regulator relating to Excise Duties satisfies all these criteria. It is something that we are well used to. We know exactly what we are giving the Government power to do. This instrument is not blunt.
  The Government already have power under the 1948 Act to vary Purchase Tax items not only between classes but between individual goods. If they use that power, combined with the power which from now on they are asking in respect of Customs and Excise, they need not have a blunt instrument at all. They could increase Excise Duties by a modest amount and deal with Purchase Tax items at the same time. This would provide a much more precise planning instrument than might appear on the surface. It requires secrecy, but that is something to which we are accustomed. Subject to polishing it up somewhat in Committee, I think we ought to give the Government an opportunity of showing how this instrument works in terms of good economic planning and of keeping the ship on an even keel and not waiting for it to go far too much over on one side and then being compelled to have a big heave and finishing up with its going far too much over on the other side.
  I should like to refer to the subject of Surtax, to which so many references have already been made, because it is absolutely essential that we should bring a little light to bear on this matter. I apologise for repeating what I have said on a previous occasion, but we must get out of our minds the idea that Surtax is a separate tax. It is, in fact, merely an imposition of additional rates of tax on income over £2,000 a year. Every hon. Member can read the Bill
  1702
  and find that statement there if he is not satisfied with what I am saying.
  Sir E. Boyle: I hope that the right hon. Member for Huyton (Mr. H. Wilson) will also be impressed by that point, because it invalidates the peculiar calculations which he gave us today.
  Mr. Diamond: I am making my own speech. I have no difficulty in seeing eye to eye with my right hon. Friend the Member for Huyton and helping him as much as I am able on the Committee stage. I do not appreciate the point put by the Financial Secretary.
  I listened to my right hon. Friend's speech and heard nothing which contradicts what I am now saying. But it is always solid ground to keep to the facts, so let us look at Clauses 9 and 10 of the Bill. Clause 9 reads:
  "Income Tax for the year 1961–62 shall be charged at the standard rate of seven shillings and ninepence in the pound, and in the case of an individual whose total income exceeds two thousand pounds shall be charged in respect of the excess at rates in the pound…"
  Clause 10 reads:
  "Income Tax for the year 1960–61 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1959–60."
  Those words cannot be denied. Surtax is simply a charge at additional rates of Income Tax in respect of income over £2,000. At least it was so until this Bill came along. I must make that point, because there is this idea that there are two classes of taxpayers—Income Tax payers and Surtax payers—and that Income Tax payers have had a good time, with their taxes having been removed by a benevolent Government, while the poor Surtax payers have had no relief whatever. Let us realise that the two are one and the same taxed at different rates. Let us also look at what has happened to the poor Surtax payer during the present Government's term of office since 1951.
  I shall take only three figures, not because I want to select figures which make my argument—any figure would do that—but because in a debate of this kind one cannot rely on hon. Members carrying the figures in their minds. The standard case is that of a married man with two children, and I will keep to him throughout. The hon. Member for Scarborough and Whitby, who has left his

  1703
  seat—I understand that it may be necessary—mentioned the case of a young man getting somewhat over £2,000 a year.
  The first case I take is that of a man earning £2,500 a year. I want to show the relief he has had and what relief he is to get under this Bill which is supposed to give him such tremendous incentive to increase efficiency. This is the man who is the executive or manager who is helping in the export trade. And this is the figure which will give him added incentive.
  So far this man has had—I have not the figures with me—a modest reduction, but the reduction which is now proposed for him is that in every £ he will now earn, his tax instead of being 4s. 4d. will be 4s. 2d. That is 2d. in the £ relief for the £2,500 a year man, who is a good example, we are told, of the important junior executive, the sort of fellow who has considerable responsibility, the man the Government want to help because of his importance to the export drive. They are giving him, on his £50 a week, the large inducement of 2d. in the £. Presumably, he will now go to work singing every morning and saying what a wonderful thing it is to have a Conservative Government, because on every £ he earns he will get, from now on, an extra 2d. and will, presumably, roll up his sleeves as a result.
  Mr. Norman Cole: This relief is not intended to keep the man where he is now but as an incentive to get where he would like to get. In any case, I doubt if a £2,500 a year man, taking into account all the ordinary allowances, would be in the Surtax range.
  Mr. Diamond: I am quoting figures from the Financial Statement. I am giving the effective rate quoted in the tables. If the hon. Member for Bedfordshire, South (Mr. Cole) will look at the table on page 30 of the Financial Statement, he will see that a man, married with two children, and earning £2,500 a year, has an effective tax rate of 4s. 4½ d. That rate will be 4s. 2½ d., showing the magnanimous deduction of 2d. in the £ for his encouragement. I have to give that rate to begin with, because we understand by the figures that this vigorous and hard working individual with £50 a week gets nothing
  1704
  else in encouragement of the export drive.
  Let us look now at more substantial income earners who have been so neglected, we are told, by the Government hitherto—the men earning £5,000 a year and £10,000 a year. The man with £5,000 a year, married with two children, has already received, during these past ten years of Conservative Government, a reduction of £700. He now pays £700 a year less tax than he did in 1951–52. The man, also married with two children, who earns £10,000 a year pays more than £1,400 a year less than he did in 1951–52. Those are the reliefs which these so-called Surtax payers have received so far. Now this Bill proposes to give an extra £445 to the £5,000 a year man. He has already had £700 taken off his tax, so that in this coming year his total reduction will be increased to approximately £1,150. That is the reduction which he will have had in ten years.
  The man earning £10,000 a year will, according to the tables, have a reduction of £1,240 in one go under this Bill. He has already, however, had a reduction of £1,400, so the total will be approximately £2,640 as a result of combined Conservative Budgets since the Conservatives took office.
  Members opposite must think us absolutely devoid of feeling if we do not writhe at the injustice which these figures represent. We cannot understand them, and they cannot understand us in this matter. I cannot understand them saying that this is fair and proper. I think that it is loathsome to pick on the richest section of the community and give it these enormous gifts out of the general pool of the general wealth to which we all contribute. This does not only stem from earned income, but also benefits unearned income.
  It is loathsome to select that group of people and give them these advantages when, at the bottom of the scale, there have been new National Health Contributions and increased charges for the National Health Service. It makes me ashamed to be a Member of Parliament.
  Mr. Nabarro: The hon. Gentleman's argument might have been valid if he had taken the trouble to read the correct figures from the correct table. In the case of a married man with two children

  1705
  not over 11 the Surtax liability of a man with an entirely earned income of £5,000 is £445. After the change it will be £320. The net reduction is, therefore, £125 and not the figure he gave, which was many times higher.
  Mr. Diamond: As usual, the hon. Gentleman is wrong. He cannot even read. He is reading from the wrong table. He was reading from the table dealing with income half earned and half from investments.
  In this speech the Chancellor told us specifically that the benefit came from earned income, and every hon. Member, if he wants to be honest with himself, will agree that as we listened to the Budget speech we came to the conclusion that this Surtax relief would be relief for earned income. The Chancellor said that three or four times. I ask the hon. Member for Kidderminster (Mr. Nabarro) to look at the table to see what happens when there is partly earned income and partly unearned income.
  Let us consider a man with £4,000 a year, half of each; £2,000 of that is therefore unearned. If he has £2,000 earned, as we know from the previous table, he gets no advantage at all. If, instead of having £2,000 earned, he has £2,000 earned and £2,000 unearned, he gets a reduction in Surtax from £235 to £157, a reduction of £80. That reduction is attributable solely to the fact that he has £2,000 unearned.
  The Economic Secretary can contradict me if I am incorrectly quoting a single figure. As a result of the Budget, the man who has an unearned income of £2,000 will get that additional relief because he has in addition £2,000 earned income, but if he has earned income alone he will get no relief. The tables are conclusive. I say that the Chancellor was misleading, not wrong, as the hon. Member for Kidderminster always is.
  The Economic Secretary to the Treasury (Mr. Anthony Barber): The hon. Gentleman says that the Chancellor was misleading. My right hon. and learned Friend said:
  "But because Surtax is a tax on total income they will affect the total burden of tax on mixed incomes comprising some earnings and some income from investments. But the relief will only flow from and be related to the amount earned."
  That is the position.
  Mr. Diamond: But earlier the Chancellor had said:
  "Accordingly, I think it right to take action to modify, as far as earned incomes are concerned, the present rules. The changes I propose will be applicable to incomes earned—I repeat earned—during this new financial year and thereafter."—[OFFICIAL REPORT, 17th April, 1961; Vol 638, c.820–1.]
  Mr. Barber: I can only say that if the hon. Gentleman can find anywhere anything which changes the rules relating to unearned income I have not seen it.
  Mr. Diamond: My point has been well made and well taken. The Chancellor was not helping hon. Members to understand fully the effect of his changes when he made his Budget speech. He left us with the impression that this would be a reduction on earned incomes, and earned incomes alone. The tables demonstrate that one gets relief on unearned income. The Economic Secretary has made the point that by reading the later words of the Chancellor one could read that into them. There is no question about it. We are all agreed that this relief on earned income is a relief on unearned income as well in its effect, and that this advantage will go solely to those who have these substantial incomes.
  All those who earn below £2,500, and the millions who according to the recent figures earn £12, £13 or £14 a week will get, I was going to say nothing; they will not get nothing, they will get a slap in the face. They are being told that they must not ask for more wages. They are being told that rises in wages are overtaking rises in production. They are being told that the country's balance of payments position is in difficulty. They are being told that they must work harder, and they are encouraged by £60 million odd being taken away from the sick and the needy and given to the Surtax payer. It is loathsome.
  8.26 p.m.
  Sir Harry Legge-Bourke: Coming out of the debate there has been one clear distinction between the two sides of the House. It was clearly demonstrated by the hon. Member for Gloucester (Mr. Diamond).
  I think that there is a genuine feeling among some hon. Gentlemen opposite that the principal object of a Budget is to do social justice, and therefore, because that is the principal object of a

  1707
  Budget, it must also be the object of a subsequent Finance Bill. There are other hon. Members—and I count myself as one of them—who believe that the purpose of a Budget and of the subsequent Finance Bill is totally different.
  It seems to me that the first object of any Chancellor, with his Budget and subsequently with his Finance Bill, is to ensure, first, that the £ sterling is kept as strong as possible; and, secondly, so far as it lies within the power of a Chancellor to do it by fiscal measures requiring legislation, to ensure that an unnecessary acceleration of inflation does not take place—in other words, that the internal value of the £ remains steady as well as the external value. If one accepts that the principal objects of a Budget are those which I have described, I think that one ought to like this Budget. If one says that the principal object of a Budget is to do social justice regardless of the other objects, obviously one dislikes this Budget intensely. I do not dispute that.
  The trouble has been that we have not had enough Budgets which were heartily disliked by people who believe that the object of a Budget is social justice and nothing else.
  Mr. Donald Chapman: Nobody has ever said that.
  Sir H. Legge-Bourke: There are other ways of bringing about social justice, and I support many of those measures. All those measures which went through the House between 1945 and 1950 in respect of the Welfare State still have my fullest support. But those are not matters for the Budget. We deal with questions of social justice to mankind in quite a different way from Budgets and Finance Bills—or we ought to.
  I welcome this Budget more than any since the war; indeed, this is the only Budget or Finance Bill debate that I have sought to take part in, and that is because, for the first time, it puts priorities which should be at the top right at the top. My hon. Friend the Member for Louth (Mr. C. Osborne) is always pouring out pæons of praise for the late Sir Stafford Cripps, but my feeling is that he was trying to do both things at the same time, which it is not possible to do. We cannot, at one and the same time, try to put the right priorities at the top and
  1708
  also make the Budget a vehicle of social justice.
  This Budget is designed to put the £ sterling as top priority, to be safeguarded in whatever the Chancellor does. He is right to put it there. In a negative way, the most socially unjust thing to do is to let the £ sterling go hang. Then the poorest always suffer first. Although the machinery devised in the Finance Bill should not have as its primary aim the dispensing of social justice, if the priorities in the Budget and Finance Bill are wrong social injustice follows very rapidly.
  But we must ask ourselves whether the methods that the Chancellor has chosen, if they are right for the £ sterling, are necessarily right for the prevention of inflation. In this respect, I am not quite so happy about the Budget. It is essential not only to look after the £ sterling and make it a reputable currency, in which other nations want to have their reserves; we must also ensure that, internally, either in the form of cost inflation or price inflation, we do not price ourselves out of the market in an endeavour to produce more of whatever it may be. This is where the argument lies in the Finance Bill. Inflation could easily be increased rapidly by some of the measures in it if they were used at the wrong time or at the wrong place.
  There are two Clauses above all others which matter to me. One deals with the right to alter Excise Duties internally, up or down by 20 per cent., and the other with the payroll tax. The figure that stares me in the face in this respect comes from a study of the Economic Survey for this year—a figure referring to our balance of payments situation. Since 1958, our imports of semi-manufactured goods have risen by £310 million and our imports of fully manufactured goods by £224 million—a total increase of £534 million. In the same period our exports under all headings have risen by only £360 million.
  Since 1958, our balance of payments has worsened by £428 million on visible account and £635 million on total current account. I believe that the Government genuinely think that what has been happening in the last few years has been a stacking up, which we are now to draw upon to increase our exports sufficiently to stop the rot that has set in.

  1709
  Imports of basic materials in that same period went up by only £174 million, compared with the increase of £224 million for fully manufactured imports. I agree that many of the semi-manufactured goods can be turned into useful exports on which we will earn money. But I do not believe that this Budget really tackles this problem, which has been under-estimated, even in the debate today.
  I welcome the point the Chancellor stressed in his speech, that the simplification of the Stamp Duty on bills of exchange would assist our exports. That simplification will be of enormous importance to British industry, particularly to some of the smaller firms which have to rely on this method and which dislike going into a lot of calculations.
  I am the chairman of a small company which is trying to export. Of the equipment we are selling, 40 per cent. of it is being exported without a single bit of assistance from the Government. It is the little things that annoy the smaller companies which wish to export, but which do not have the staff or the time to deal with these niggling matters. These companies appreciate such things as the simplification of the Stamp Duty on bills of exchange.
  We have to read the Budget in the light of the improved export guarantee machinery which has been announced by the President of the Board of Trade. That improved machinery ties up with this Budget, but I am still doubtful whether we are going to do the job in the time available to us. Every time the Government use any of the regulating powers which the Chancellor proposes to take in such a way as to inflate prices, our chances of succeeding in the task confronting the country will be made more difficult. I do not think that we shall solve the problem without taking powers additional to those proposed in the Bill. The Government will have to take emergency action over imports, as well as doing everything they can to increase exports.
  The time is overdue for us to take one power which need not necessarily upset the long-term policies which the Government have been trying to pursue. When we see that the balance of payments situation is getting out of hand, or is heading for a crisis, or that the
  1710
  market is collapsing—so that many workers will be thrown into unemployment—we should be ready to impose a direct embargo until the market has recovered.
  If the Government took that power they would probably never use it, but the threat of using it might have the desired effect. The Board of Trade often say, "You cannot do this, or you cannot do that, because the risk of retaliation is too great." I think that that is also the view of the hon. Gentleman the Member for Bolton, West (Mr. Holt), who is mumbling something.
  Mr. Arthur Holt Mr. Arthur Holt (Bolton, West) rose—
  Sir H. Legge-Bourke: I will not give way to the hon. Gentleman at the moment. If he does hold that view, it is a typically Liberal one.
  I do not believe that any sensible nation likes to see either its potential suppliers or its potential markets getting into such a mess in their own economies that they collapse. That is the weakness of saying that retaliation is the obvious danger. I am not frightened of retaliation. I am more frightened that people will switch away from Britain and will go into the dollar area rather than remain in the sterling area. That is what we have to watch, and I admit that if we took the sort of power I am recommending the Government would have to use it very carefully.
  We want more and more countries relying on sterling. We are backing the sterling area, and, of course, we want to increase the business in the sterling area. But if we do not do something to prevent unnecessary imports at a time when our balance of payments position is worsening with a positively terrifying rapidity, it seems to me that we have not much hope; and though hon. Members opposite may think that this Finance Bill is unjust, it will not be a patch on Finance Bills of the future.
  I shall do everything possible to assist the Chancellor to achieve his aims. I think that they are absolutely right. I hope to goodness that the methods he has chosen to achieve them will also prove right. But my right hon. and learned Friend must make careful use of the proviso in Clause 26, which deals with the payroll tax. I was a little

  1711
  shocked when he said today that he did not think that he could discriminate very much—this was the impression I got—between those upon which he would levy a payroll tax and those upon whom he would not.
  The proviso says:
  "Provided that different rates of surcharge may be prescribed for different descriptions of persons, and if it is so prescribed surcharges shall not be payable in respect of a prescribed description of persons."
  It all depends on the meaning of "description of persons". If we propose to distinguish between sexes or ages, and nothing else, that will not be sufficient. We must realise that a payroll tax could be very damaging to the small trader. I have heard that view expressed on a number of occasions.
  I can see quite plainly what the payroll tax is designed to do. That is a foundation stone laying ceremony. We are laying the foundation for an altogether new type of company taxation designed to ensure that every man employed in industry is equipped with the maximum amount of horse-power at his lbow to enable him to produce the maximum amount in the most efficient way and at the best possible price. Now we are laying the foundation upon which future Finance Bills will be designed. I applaud that process. But if we are proposing to use this tax for quite different purposes this year—as a "long stop" in the event of our not getting the Budget surplus in any other way—I hope that the Chancellor will be very careful about how he uses it.
  My right hon. and learned Friend could be very unjust in this connection. He may use this tax in such a way as to make it a highly inflationary factor in the economy. The cost of 4s. a head per week could be passed straight on to the consumer, which would be inflationary. For those reasons I say that my right hon. and learned Friend must be careful about how he uses this tax.
  Although in the external situation he must be careful against whom or in favour of whom he discriminates, I think that my right hon. and learned Friend is correct in seeking to put sterling on top and to make anti-inflation his next priority; and, in seeking to achieve these ends, to get a Budget surplus of £500
  1712
  million. I am entirely in favour of that surplus. The Chancellor could not get it if he tried to make the Budget an instrument of social justice. If hon. Members wish to know why, I beg them to read the speech of my hon. Friend the Member for Preston, South (Mr. Green) during the Budget debate. We have been overspending. We have issued, roughly, £100 million a year in unbacked money. That seems to be to dictate a little retrenchment this year. I congratulate the Chancellor on having the courage to do it. I am sure that he is right and I wish him luck in his aim.
  8.45 p.m.
  Mr. Bruce Millan: I am not sure that I was able to follow all the arguments of the hon. Member for the Isle of Ely (Sir H. Legge-Bourke), but I gathered that he was making some rather fundamental and serious criticisms of the present state of our economy. From that point of view, a great deal of what he said will find agreement on this side of the House. It contrasted very much with the complacency of some of the speeches we have heard from his hon. Friends in this debate and in the debate on the Budget.
  I was not quite sure how he found the actual fiscal measures which have been taken in the Budget matching the seriousness of the economic situation. I do not think that the remission of bills or exchange stamp duty, for example, is more than a marginal contribution for the benefit of exports to the problem of the balance of payments, the problem of keeping the £ sterling strong and so on. Yet that was the only part of the Budget which the hon. Member mentioned with any approval and, as I say, it does not match up with the situation at all.
  I must also take issue with him when he says that we on this side of the House are primarily or exclusively concerned with the social justice aspect of a Budget and not concerned with other things such as the strength of the £ sterling. None of us has used that argument at all. The point we have made is that social justice is not incompatible with those other aims. What is wrong with the present Budget is twofold. It fails to tackle the really difficult and essential

  1713
  economic problems and, on the other hand, it is not a Budget for social justice but, on the contrary, is socially extremely unjust.
  There are a number of omissions from the Budget as regards aspects of the taxation structure of the country which call for action. The most important of these is a capital gains tax. I do not propose to say much about that now, but if we are talking in terms of social justice we ought to be talking in terms of spreading the tax burden fairly over large numbers of the community. The most obvious defect in the taxation system at present is the absence of capital gains taxation. There is another aspect of taxation about which I want to speak. When we have a particular form of taxation we ought to see that it is spread fairly among the people whom it is intended should pay it. We ought to see that my one means or another certain people whom it is intended should pay are not able to avoid paying taxation.
  Last year we had a number of very complicated provisions in the Finance Act dealing with the question of tax avoidance from the point of view of property companies, dividend stripping, and so on. Some of us took the view that the provisions in last years' Finance Act were not nearly foolproof enough and that there were a number of obvious defects in those provisions. Our view has been borne out by a number of things which have happened in the past year. Many hon. Members must have had cases drawn to their attention of people who have been able to avoid what the Government claim to be very important pieces of legislation contained in that Finance Act. The Government then admitted that at least one ought to try to do something about tax avoidance.
  I want to refer to another form of tax avoidance which has been mentioned not at all in this debate nor in the Budget debate, but which, perhaps, is just as important as avoidance of Income Tax. I refer to avoidance of Estate Duty. My right hon. Friend the Member for Huyton (Mr. H. Wilson) mentioned this afternoon that the spread of property-owning in this country was still very unbalanced, although we are meant to have a property owning democracy; a few people own a very large proportion of the
  1714
  property. That is despite the fact that we have had high rates of Estate Duty over many years. In the very large estates the rate of Estate Duty looks almost confiscatory.
  Although we have these very high rates of Estate Duty, the amount of money paid into the Treasury in Estate Duty is not rising in proportion to the growth of wealth within the community. One would expect increased receipts from this duty; because of the differential rates of Estate Duty, the increase in receipts ought to go up rather more rapidly than the growth of wealth within the community, because a good deal of the accumulation of wealth is among people who have a lot of money and who therefore ought to be paying the higher rates of Estate Duty. In fact we have had only small increases, and in some years none at all, in the amount being paid to the Exchequer through Estate Duty.
  The reason is that our Estate Duty legislation is riddled with loopholes, and increasing advantage is being taken of them, particularly by people with large estates. I want to mention one or two points to which the Chancellor ought to give attention. One is the question of gifts inter vivos—in other words, gifts which are given more than five years before the death of the donor do not rank for Estate Duty. One form of gift which is quite common and which must cost the Exchequer considerable sums is the gift inter vivos by way of marriage covenant, because such a gift need not conform to the five-year rule. A donor can make a gift by marriage covenant only a month or two before his death and it will not rank for Estate Duty. Obviously there is a case for making some exceptional rule for marriage covenants, but there might be an example where a man owns £50,000 and makes a covenant of £40,000 only a month or two before his death. It is not reasonable in those circumstances that the gift should completely fail to rank for Estate Duty. There is a case for some exceptional treatment of marriage covenants, but there is also a strong case for saying that these covenants which avoid Estate Duty should not be for amounts which are out of all proportion to the total estate of the donor, who is eventually the deceased.

  1715
  Another means of avoiding Estate Duty which is becoming increasingly common and is somewhat similar in principle to gifts inter vivos is the use of assurance policies. If a donor has an assurance policy on his own life which is for the benefit of his wife and children, then Estate Duty can be avoided when the policy is cashed on death; either it does not rank at all for Estate Duty purposes or, in other circumstances, it ranks only according to the amount of premiums which have been paid within five years of death.
  Substantial sums of money must be lost to the Exchequer in the avoidance of Estate Duty by means of these assurance policies, and the Government ought to look at this matter. It is only another example of the very favourable treatment which is given to assurance policies altogether in our taxation system. Sometimes I think that we give far too favourable treatment to assurance policies compared with other forms of saving in the whole of our taxation structure, and the Government certainly ought to look at this aspect of Estate Duty.
  All that the Government have done recently about gifts inter vivos is to introduce a provision into the 1960 Act which makes these gifts even more profitable than they are at present. It provides for reductions in the amount which ranks for duty under gifts given in the third, fourth and fifth year before the donor's death.
  Another matter which must again be losing the Government a good deal of money is the provision that agricultural property ranks only for Estate Duty purposes to the extent of 45 per cent. of its value. There may be a case for this in regard to the working farmer but there is no case for it with regard to the gentleman farmer or the landowner who has lots of other money in other forms of estate. There, again, I think that the Government are losing money and that they ought to do something about it.
  Another scandalous thing, in particular, is the provision that fixed property or immovable or heritable property abroad is not subject to Estate Duty. One sees in The Times—I have cuttings here and I have seen others recently—of people advertising and asking people in this country to buy leasehold property
  1716
  in the Bahamas, obtaining a good income during their lifetime and avoiding Estate Duty when eventually they die. I have a small cutting from The Times of someone in the Bahamas who advertises in these terms:
  "I am seeking a person or syndicate wishing to save quite legally from £100,000 to £1 million in inheritance taxes and meantime enjoy about 10 per cent. net free of income taxes on the property investment".
  An address is given in the Bahamas. This is happening on a large scale. These people draw an income from the property all their lives and when they die the property does not rank for Estate Duty. The people who are indulging in this practice are normally not small men with a few thousand pounds to spare but people with considerable sums of money.
  It is also possible, I understand, to make a gift of property in one or another of these territories in a foreign country and, even though the gift is within five years of death, because the property gifted is immovable property abroad no Estate Duty is payable. This is becoming a major racket, so much so that people who sell property in the Bahamas and elsewhere will guarantee that on death—that is, after Estate Duty has been avoided—they will buy back the property. Therefore, if one pays £100,000 for property in the Bahamas one avoids Estate Duty, the former vendors buy the property back, giving £100,000, less a discount, and sell it again to someone else who, in turn, avoids Estate Duty. This racket is indefensible, and obviously it has a number of refinements.
  There is also—and this may appeal to the hon. Member for the Isle of Ely—the balance of payments question involved. One is asked to think of entrepreneurs putting their money into risk-taking adventures abroad and helping with the development of underdeveloped areas and the rest. It would be interesting to know how much of the private investment abroad is in properties, in the Bahamas and elsewhere, for the sole purpose of avoiding estate duty.
  It is not everyone, obviously, who indulges in this sort of activity. To sum up, it amounts to this. Estate Duty now is a duty Chat one pays only if one wishes

  1717
  to. If one does not want to pay Estate Duty, there are all sorts of provisions—one might almost say that the Government encourage it—that enable one to avoid paying it. That is certainly not a wholesome state of affairs, and I would like to think that the Government might go into this whole question because, apart from the criticisms I have been making, it has an element of unfairness amongst different taxpayers, some of whom are willing not only to abide by the letter but also by spirit of the law while others are more concerned with avoiding as much taxation as they possibly can.
  The fact that people can avoid Estate Duty, the fact that there is the business expenses racket, the fact that the Government are giving away large sums of money in Surtax, and all the rest of it, breeds quite a cynical attitude among the ordinary wage and salary earners who pay their P.A.Y.E. every week and who, whether they wish to or not, cannot avoid paying their fair share of taxation. There is a feeling of cynicism and frustration about the present situation, and it is high time—it is long past time—that the Government looked at some of the obvious anomalies and dodges that are a disgrace to our present taxation system.
  9.0 p.m.
  Mr. Douglas Marshall: The hon. Member for Glasgow, Craigton (Mr. Millan) will forgive me if I do not follow him in his argument, but as I know that the hon. Member for Sowerby (Mr. Houghton) wishes to address the House at 9.10 p.m., I have only nine minutes in which to make my two or three points.
  The important part of the Budget is the target of £500 million above the line. That is the Budget. It sets the pattern, and it is an extremely important pattern to set, not only in relation to £ sterling and to avoiding a new inflation, but also in relation to those in other countries that have not the free form of parliamentary life that we have, who can control their people's standard of living in such a way that capital injection in the country concerned can be determined by those who are dictating affairs. I am sure that, at heart, there is no one in this House who does not realise that within thirty or forty years from now that may well be a very serious matter for us.
  1718
  The decision on this £500 million above the line is the right one, but when it comes to how we should make the pattern from that decision then, in truth, possibly every hon. and right hon. Member would make a Budget of his own, and I very much doubt whether anyone would be completely in agreement with any other hon. Member's.
  Because of the shortage of time. I will refer to only two points. The economic regulators, which mean that the Chancellor of the Exchequer can take instant action and then seek an affirmative Resolution here, have been more or less accepted—and I am slightly surprised at it—by all hon. Members. They may have quarrelled with the type of instrument that has been devised, but I, who have listened to almost every speech—and I tried to speak during the Budget debate—have not heard anybody actually suggest that this new and novel method of treating our affairs, and not trusting only in the instrument of the Bank Rate and of hire purchase, is not a good thing.
  When we come to the actual instruments the Government have chosen, I confess that the payroll tax gives me considerable anxiety. The idea of such a tax, if used with a certain flexibility that might well make a certain area more profitable, might be a good one. I cannot think that an overall charge will get us very far. I say that because while in industry wages may be running at about £15 or £20 a week, so that the sum of 4s. is a very small consideration, in agriculture or in very small businesses it will be felt as an exceedingly heavy charge. There is not sufficient flexibility in this instrument, and I hope that my right hon. and learned Friend will consider very carefully before he puts it into operation. On the other hand, if he has proposed it now so that it can be discussed as a novel instrument, with a view to introducing it in a more flexible form in the next Budget, possibly as permanent legislation, that might be a good thing.
  I shall not refer to the other regulator, because I have very little time and there are two other points I want to make. One is concerned with fuel tax. Nobody likes an extra tax, but if it is agreed that we should have £500 million above the line, if tax is reduced in one respect, we have to decide in what respect it is to

  1719
  be increased. I have every intention of adding my name to an Amendment asking my right hon. and learned Friend to reconsider the position of horticulture. This position is now absurd. First of all, the Government have made it possible for the industry to make itself efficient, and there have been agreements negotiated through G.A.T.T. and so on to alter tariffs so as to protect the industry, and then that protection has been smashed down by the increase in the tax on fuel oil. This increase is of considerable importance to the industry, and I sincerely trust that my right hon. and learned Friend will reconsider it.
  Finally, I must admit that I am extremely disappointed with my right hon. and learned Friend, as I have been disappointed with every Chancellor since 1945, because, like his predecessors, he seems to be incapable of understanding the wealth which might be derived by the insertion of a simple Clause in the Finance Bill designed for the development of the metalliferous mining industry of this country.
  Mr. Jay: Hear, hear.
  Mr. Marshall: I am very glad to hear the right hon. Gentleman say "Hear, hear", because he has supported me again and again through the years. It is strange that before an hon. Member becomes Chancellor of the Exchequer he appears thoroughly to agree with my view on this matter but the moment he gets to the Treasury something completely alters him. My view cannot be all that wrong, because Canada agrees with it, as do the United States of America, Australia and Eire. We are not getting anything from this industry at present, as far as new projects are concerned, and the Exchequer is not deriving any tax thereby. This is purely a matter of new development and incentive.
  The clock is striking for me and I never let down an hon. Member opposite. There are still the Committee and Report stages to come, and I hope that my right hon. and learned Friend will think again about the matters which I have mentioned.
  9.9 p.m.
  Mr. Douglas Honghton: I am grateful to the hon. Member for Bodmin (Mr. Marshall) for curtailing his
  1720
  remarks so as to allow me to intervene at this stage, which I hope will be for the convenience of the House.
  The right hon. and learned Gentleman the Chancellor of the Exchequer has derived little comfort from the debate. The Chancellor had to wait until a quarter to eight before there was a speech from hon. Members opposite which gave any real praise to the Bill. That came from the hon. Member for Scarborough and Whitby (Sir A. Spearman). It surprised me to hear him say that it was possible that the Chancellor would go down in history for this Budget.
  The nearest to the speech of the hon. Member for Scarborough and Whitby was that of the hon. and gallant Member for the Isle of Ely (Sir H. Legge-Bourke), who said a few moments ago that the Chancellor's aim was plumb right, but went on to say that he hoped he was using the right sort of weapon. Again, in the very last speech of all, to which we have just listened from the hon. Member for Bodmin, serious anxiety about one important feature of this Bill was expressed by him.
  Another interesting feature of the debate is that we have heard more about planning from the benches opposite than for many a long day. Hon. Member's opposite are beginning to realise that the Chancellor's armoury for curbing inflation and regulating the economy has up to now been quite inadequate, has led to a good deal of hardship, and that it has, on the whole, demonstrably failed. In this Budget, the right hon. and learned Gentleman is adding to the weapons which he will use, but he is not there yet, and I think that experience will show that these attempts to regulate the economy by monetary and fiscal methods will not alone suffice. However, we shall examine both these regulators very much more closely later.
  I wish to congratulate the hon. Member for Colchester (Mr. Buck) on his maiden speech. I am sure that the whole House listened to it with appreciation, and if the hon. Gentleman is an addition to our debates on economic and financial affairs I can assure him that he will be very welcome. He said that Colchester combined ancient history with twentieth century vigour. I was

  1721
  waiting impatiently for him to say that the Surtax relief in this Budget would stimulate the twentieth century vigour of the leading citizens of Colchester. Instead, he turned straight to oysters, and at last the oyster has a champion in this House. But the end of the oyster, after all, is in being eaten at expensive restaurants generally much frequented by taxpayers or others on expense accounts, so the hon. Gentleman had an interest to declare on behalf of his constituency in the Chancellor's proposals.
  It was noteworthy that in his speech the hon. Gentleman expressed grave doubts about the proposed payroll tax and said that he hoped it would never be used. So this is the Government's new deterrent—this time an economic deterrent—and it is to be the fear of the use of it which will regulate our economy. We shall see.
  The hon. Member for Spelthorne (Sir B. Craddock), who I see is just coming back to his place, complained about some of the things my right hon. Friend the Member for Huyton (Mr. H. Wilson) says in these debates about right hon. Gentlemen opposite and past Members of Conservative Administrations. Surely, the House enjoys these sallies. Hon. Members know that they are not uttered in malice, and I think it would be a very bad thing for our debates if we were deprived of the sparkling wit of my right hon. Friend, even though it is very frequently at the expense of hon. and right hon. Members opposite.
  Sir B. Craddock: My objection was that the right hon. Gentleman is too inclined to indulge in bitter personal attacks—[HON. MEMBERS: "No."]—which I think is wrong.
  Mr. Houghton: Hon. Members on both sides of the House heard my right hon. Friend, and I doubt whether they would associate themselves with that criticism. However, the hon. Gentleman went on to read some doggerel. Last week, my hon. Friend the Member for Kilmarnock (Mr. Ross) had some doggerel. If this goes on, it will be necessary to appoint a Parliamentary Poet Laureate, or, better still, to facilitate the return to the House of Sir A. P. Herbert, whom I once heard deliver a
  1722
  whole speech in verse, which was admirable and far better than that of the hon. Gentleman.
  The hon. Gentleman also challenged my right hon. Friend to produce some examples of the injustices being done to old people in this Bill. There may be some misunderstanding about that. There is nothing in the Bill which imposes additional Income Tax on old-age pensioners, but my right hon. Friend was referring to age exemption, age relief and small incomes relief. The old-age pension, having increased, will bring some people from the protection of age exemption into tax liability.
  I can give the hon. Gentleman an example. Take the case of a married man whose pension from his employment is £204, whose retirement pension is £208, and whose property tax is £28. His total income is £440. As a married man, he gets complete exemption under the age exemption provisions. His retirement pension will rise to £240 and his total income will be increased to £472. The tax that he will have to pay on that income is 7s. a week. Therefore, from complete exemption, he now has to pay 7s. a week, which comes out of his increase in pension of 12s. 6d. a week. I can give a similar example of a single man who will pay an increase in tax of 4s. out of the increase of 7s. 6d. in his retirement pension.
  What we are saying to the Chancellor is that we hope that he will favourably consider moving the limits of income to relieve those whose pensions are decreased by additional tax on that account. He has done it in Clause 12 in respect of the dependent relative relief. He has moved the income limits upwards in order not to disqualify a person from dependent relative relief because that relative is receiving the higher retirement pension. We are asking the Chancellor to review the limits for the three reliefs which I have mentioned so as to give them a corresponding advantage.
  Sir B. Craddock Sir B. Craddock rose—
  Mr. Houghton: I hope that the hon. Gentleman will not interrupt me, because I want to sit down at twenty-five minutes to Ten.
  Sir B. Craddock: I only want to thank the hon. Gentleman—
  Mr. Houghton: I am obliged for that. We will be able to go into these matters more fully later. I hope that the Chancellor will seriously consider the matter to which I have referred.
  I wish now to pass to a matter which has received practically no attention in the debate except from my right hon. Friend the Member for Huyton. I refer to what is commonly called the expenses racket. My right hon. Friend referred to the stern words uttered by President Kennedy concerning a similar abuse of tax reliefs in the United States. The Guardian of 21st April states:
  "The President recommended that the cost of business entertainment and the upkeep of facilities for entertaining be disallowed in full as tax deductions. Restrictions should also be imposed on tax reliefs on the cost of business gifts, expenses of business trips combined with vacations and excessive personal living expenses on business travel."
  He also said—and this bears on the point raised by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan)—that there had been
  "unjustifiable use of tax havens…in order to shelter from tax."
  The President also had remedies in mind for that.
  The Chancellor said in his Budget speech that he found this a very troublesome and complicated matter and that he proposed to give it further thought. I will leave this with him. The Government should announce that they are resolved to end the manifestly undesirable social and fiscal consequences of the exploitation of expenses for tax relief. The Government should express their desire to discuss ways and means of doing this with the British Employers' Confederation, the Federation of British Industries, the T.U.C. and representative bodies or associations of executive and professional staffs, including the various professional institutions and learned societies. After those discussions, the Government should seriously get down to a plan to check this constant and ever-growing abuse.
  What is needed more than anything else is to require employers, and to adjust the tax rules to compel employers, to arrange the conditions of service, pay and expenses of their employees so that the Inland Revenue may cease to subsidise or act as scrutineers and auditors
  1724
  of employees' expense accounts, which are the employer's job and he should do it. It is not the job of the Inland Revenue.
  I come now to the troublesome payroll tax. There is general agreement on both sides that the Chancellor has thrown out of the window almost completely any idea that the payroll tax would be used for the purpose of encouraging mobility of labour, on which many exaggerated things are said, or that it will encourage very much the economical or efficient use of labour. Those, if they come about, will be by-products of the payroll tax. They are not its primary purpose.
  The Chancellor of the Exchequer said in his speech that the payroll tax would have the added advantage of helping in those three respects, but he said that the primary purpose of this tax was to reduce the purchasing power of the community. How will that be done through this instrument? It is not a revenue tax. It is an economic weapon. It is part of an economic blanket. If it means anything at all, the payroll tax will amount to economic sanctions against wage increases by making it more difficult for employers to concede them. What other purpose can it have, unless it is something worse? If a wage freeze is not enough, and it is the most that the payroll tax could achieve, will wage cuts follow? Is that the object of this tax? Could it be intended to enforce wage cuts?
  If a wage freeze is the economic aim of the payroll tax, what will all this do to industrial relations? Consider the circumstances in which the tax will be imposed. Almost certainly, it will not be imposed alone. If there is one weapon to be used and not both of them, it will be the other one; it will be Clause 8 and not Clause 26. If Clause 26 is called into action, Clause 8 will be called into action, too. That means that both will be in operation. That means, surely, that when this tax is put on, additional tax will be put on goods which attract Purchase and other indirect taxation. A double brake will go on and, surely, the result will be a sharp increase in price."
  If that brake is applied in a period of rising prices, when inflation is creeping in and has to be checked, the Chancellor will be imposing a payroll tax at the

  1725
  very moment when wage pressures will be mounting, and he will be directing it at the most explosive point in industrial relations. The other regulator, the higher indirect taxes, would at least leave people with the option of not buying goods at higher prices. A payroll regulator will either bring about a standstill in wages or go further and aim at reducing pay.
  What does the Chancellor think employers will do when the payroll tax comes into operation? Will they refuse wage increases and have trouble? Will they move to cut wages and have graver trouble, or will they decide to pay the tax and grant the wage increases? If so, what will be the economic consequences of their action? Will that mean higher prices or unemployment, or both? And when all this is going on, what kind of protection will the Chancellor give to retirement pensioners, to those on National Assistance, and to the thousands of people who are sick, disabled, and poor. I hope that the Financial Secretary will be able to plot his way through this uncharted sea and show the House just how his right hon. and learned Friend will reach his destination.
  I would remark on administration that I was astonished that an additional stamp was to be used for the purpose of collecting the payroll tax. How long a time will elapse between the Chancellor giving his sailing orders and the ship getting under way? I strongly fear that there will be sufficient time for all the opposition and the protests and the reaction to the payroll tax to mount to most formidable strength.
  That perhaps is enough for the Financial Secretary to be getting on with about the payroll tax. We shall have plenty of opportunity to probe further, but do not let us leave everything until the Committee stage. There is a great deal that we want cleared up before the Bill is given a Second Reading, and, judging by some of the criticisms and misgivings expressed on the other side of the House, hon. Members opposite must be waiting for an assurance before they will be willing to give it a Second Reading.
  When we come to the end of the day, however, the House and the country must realise that this Bill, being the Bill
  1726
  of the Budget, is a counter-inflationary Bill. It plans for the highest planned surplus above the line and the lowest planned deficit below the line for over ten years, and we should not let the Chancellor's promissory note on Surtax relief hide the fact that he is imposing over £80 million of additional taxation in the current financial year and that the only tax relief in the Bill, of over £1 million, is in consequence of higher National Insurance contributions. But there is not even in the Clause dealing with the National Insurance contributions any relief for the higher National Health contributions which are to be paid in July.
  The Chancellor has planned ahead to give in 1962–63 £83 million to Surtax payers in tax relief, which will be offset by £70 million of additional tax in the form of Profits Tax. In addition, there is the £3 million which he is hoping to get on the restriction of capital allowance to ordinary motor cars. He will also have the advantage of a full year of the tax on oil and on motor vehicles, so that in 1962–63 the Bill will produce net additional taxation of £70 million after setting off the cost of the Surtax relief.
  Taking the two years, 1961 and 1962, together, the Chancellor is imposing £230 million in extra taxes and giving Surtax reliefs costing £83 million in the same period, resulting in a net additional taxation of £150 million over the two years, with another £400 million of taxation up his sleeve in Clauses 8 and 26.
  Why has the Chancellor made his Surtax proposals this year—the year of higher National Health charges, of higher National Insurance contributions, and of a counter-inflationary Budget? Why is he leapfrogging into 1962–63 to promise Surtax reliefs then, when he could have made the promise next year, when he will see the economy at closer range than he can now? He has nailed the Surtax reliefs to his masthead for the Budget of 1962, and that, in our view, is a thoroughly reprehensible and unwise thing to have done.
  I repeat what I have said previously. If the Surtax provisions have no economic purpose—and I see no such purpose in them—why are they in the

  1727
  Budget at all? It cannot be for administrative convenience. All this talk about additional incentives has been ridiculed already in many quarters. I believe that this is a blatant, mid-term political move. The attitude is that if it is to be done at all, it should be done in the middle of a Parliament, and, if it is done then, it should be a good and hearty relief of Surtax so that the Chancellor does not have to tamper with it again. No doubt he is saying to himself that he can fill the gap a little nearer to the next General Election with more popular tax reliefs when the Surtax reliefs in this Budget will be forgotten.
  Can he really say that these Surtax reliefs are necessary for the expansion of the economy? What priority have they in economic terms? There can be no consideration of equity this year to justify reliefs on this scale and in these circumstances. Had the Chancellor felt it necessary to do something, he could have done something, and quite a lot, at considerably less cost to the revenue than the proposals he has made.
  We feel, therefore, that there is nothing in this Bill which will stimulate growth or will encourage expansion. The Chancellor is poising the economy on an extremely unstable point. He is placing the economic life of the nation in the hands of 300,000 Surtax payers. When he says, as he did at the conclusion of his speech today, that this Bill will give a dynamic boost to the economy, we all stand aghast and incredulous. He really cannot mean it. All he probably means is that this will bring some measure of peace into the torn Conservative Party. To write political motives into the profit and loss account and the nation's balance sheet is disreputable.
  9.34 p.m.
  The Financial Secretary to the Treasury (Sir Edward Boyle): I am sure that the House is grateful to the hon. Member for Sowerby (Mr. Houghton) for demonstrating, with such vigour and clarity, that my right hon. and learned Friend the Chancellor of the Exchequer has not only produced a very firm Budget for this year, but has already made extremely prudent budgetary provision for the financial year 1962–63 as
  1728
  well. With that part of the hon. Member's speech, I would certainly wish to associate myself. He has put a number of points which my right hon. and learned Friend will consider between now and the next stage of the Bill. I hope that he will forgive me, however, if I do not, in view of the time, anticipate the debate which we shall doubtless have on Clause 26.
  Before I come to the Opposition Amendment, I have tonight the pleasant task, to which I have been greatly looking forward all evening, of congratulating my hon. Friend the Member for Colchester (Mr. Buck) on what I think the House felt was an outstanding maiden speech. I think we all feel that the most difficult thing, in making a maiden speech, is to strike a precise balance between, on the one hand, confidence, and, on the other, due diffidence. I have never known that balance struck more happily than it was struck by my hon. Friend.
  I assure my hon. Friend that in saying that, I am not in any way staking a claim to be invited to a Colchester oyster feast, because it so happens that oysters disagree with me. My hon. Friend did very well to devote part of his speech to that subject and we all felt that his speech was well suited to a successor to so very thoughtful and sincere a Member as Lord Alport.
  I turn now to the Opposition Amendment. We have not today heard very much about the first half of it. It strikes me that the accusation in the Amendment that this Finance Bill makes
  "no proposals designed to solve the economic problems facing the country"
  comes rather oddly from the party opposite, because we all remember that large Budget surpluses were a highly important element in the economic policy of right hon. and hon. Gentlemen opposite when they were in power.
  Only this morning I looked at the Budget speech of 1949, of the late Sir Stafford Cripps, in which he proposed to budget for a revenue surplus of £492 million, a figure very close to the surplus for which my right hon. and learned Friend is budgeting this year. I think that anyone who had the temerity to suggest to Sir Stafford Cripps that a surplus of £492 million was irrelevant to the

  1729
  economic problems facing the country in 1949 would have received a caustic answer at the conclusion of the debate.
  The fact is—hon. Members know it perfectly well, we all know it—that no Government can achieve a balance between our productive resources and the claims made on them without the use of some economic controls which are widespread and unselective in their incidence. My right hon. and learned Friend made his point of view clear in his Budget speech, when he said that the Budget should remain the chief instrument of general economic control, and a strong budgetary policy, so far from being irrelevant to our economic problems, is one essential pre-condition of our achieving in Britain at one and the same time a healthy balance of payments, a stable currency, and a high and rising level of prosperity.
  However much dispute there may be between us about certain features of this Budget, I think that there can be little dispute as to the problems which faced my right hon. and learned Friend when he was framing his Budget proposals. First, there was the danger that what my right hon. and learned Friend described in his Budget speech as
  "strong inflationary forces working on home demand".—[OFFICIAL REPORT, 17th April, 1961, Vol. 638, c.800.]
  would, unless they were curtailed, put up costs and handicap our exports. In this connection, right hon. and hon. Gentlemen opposite seemed to me to have been over-impressed by the fact that the index of industrial production, after its very steep rise in 1959, has been on a sort of plateau since April of last year.
  In his Budget speech, my right hon. and learned Friend gave the House good reasons for thinking that there would be a large increase in the demand falling on our productive system during the rest of this year. I must say that all recent trends seem to have borne out what my right hon. and learned Friend forecast. If one looks first at private consumption, there has been a sharp increase in retail sales shown in the March figures, and I am sure that the hon. Member for Scarborough and Whitby (Sir A. Spearman), who made an extremely thoughtful speech, was right to draw attention to the very likely strong trend in consumer spending this year.
  1730
  On the side of capital investment, the signs of a continued upward trend are still appearing, and in the motor car industry hon. Members will have noticed the considerable recovery from the depressed state of the later months of 1958 which has taken place this year. Ministry of Labour figures for the numbers of workers temporarily stopped have reflected this recovery in a very striking way. Over the country as a whole the pressure of demand for labour is at a very high level, and there is every reason to expect, from now on, a substantial rate of growth in home demand.
  Whatever is wrong with our economy today it is certainly not an insufficient level of activity. I cannot believe that any hon. Member seriously doubts that my right hon. and learned Friend has been right to use his Budget as a means of keeping these expansionary forces within bounds and of moderating the total growth of home demand so as to leave room both for the expanding trend of capital investment and also for an increase in exports.
  Mention of exports leads me to the second problem which faced my right hon. and learned Friend, namely, the balance of payments. I want to make it clear that nobody on this side of the House wishes in any way to gloss over the fact that this is a very real economic problem—indeed, probably the most serious which faces this country today. It is true that there has recently been a slight tendency to improvement so far as commodity trade is concerned. Exports have been rising once again from the rather depressed level of last autumn, while imports have shown some tendency to fall. But the underlying situation remains unsatisfactory and, as hon. Members are well aware, in the last few months the inflow of capital funds which helped us out last year has been reversed.
  I totally reject the charge that this Budget will not make any contribution to the solution of our balance of payments difficulties. In my view, such an accusation simply cannot be sustained, whether one is considering either the short-term or the long-term. In the first place, as I have pointed out, the Budget will prove definitely disinflationary in

  1731
  its effect. It must always be disagreeable for any Chancellor to have to impose additional taxation, but this year my right hon. and learned Friend believed that some reduction in home purchasing power was essential, to make room for an improvement in our balance of payments.
  At this point, I should like to say a word to those, like my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), who addressed us so interestingly this afternoon, who still hold, in a modified form, the view that no increase in indirect taxation can ever prove disinflationary. The simplest way to consider the matter is to bear in mind the fact that the problem of excess demand is not quite identical with the problem of rising prices. If we allow demand to outstrip our productive resources, then we are inevitably faced not only with rising costs, but also with balance of payments difficulties and problems of acute labour shortage. But it is equally true to say that there is only one way to cope with the problem of excess demand, and that is by limiting or curtailing the general level of purchasing power by some means or another.
  I can assure hon. Members that my right hon. and learned Friend recognises as clearly as anyone the disadvantages of very high rates of taxation, both direct and indirect. But I should have thought that post-war experience had shown very clearly that, granted high taxation is an evil, the consequences of an excessive level of home demand are more disagreeable still. At any rate, I should make it quite plain that, while my right hon. and learned Friend will take due note of all the points which have been raised today, he regards his prospective revenue surplus of £500 million and the very small prospective overall deficit as fundamental to his Budget strategy this year.
  Sir D. Walker-Smith: I did not say that all indirect taxation was necessarily inflationary. What I did say was that, prima jacie, taxation of industry is inflationary, because it increases costs of production.
  Sir E. Boyle: I heard my right hon. and learned Friend's speech. The Chancellor, when opening the debate today,
  1732
  pointed out that the proposed tax on oil would affect industrial costs by only a small fraction of 1 per cent., and it is important for hon. Members to remember that.
  My right hon. and learned Friend also raised the question of arrangements that have been made for dealing with stocks of heavy oil. I can assure hon. Members that there is no question of retrospection. The position on Budget day was that some stocks of heavy oil were in the refineries and bonded warehouses and were already under Revenue control for purposes of the duty on light oils, and, under the law, when heavy oils became liable to duty this would apply to deliveries from these refineries and warehouses.
  Other stocks of heavy oil were already out of bond, and it would have been completely inequitable to have treated heavy oils differently, according to whether they were in or out of bond. In order to avoid this inequity, they were all made liable for duty upon delivery for home use.
  My right hon. and learned Friend's Budget surplus is not the only way in which the Budget will contribute to the solution of our balance of payments problem. I believe that, in the long run, the proposals for the two new economic regulators will prove even more important. These regulators will enable my right hon. and learned Friend, if it should be necessary between one Budget and the next, to take action effectively to lower or to raise the level of home demand. What is more, these regulators will enable him to curtail demand in such a way that the main brunt of the correcting action will not fall on capital investment.
  We can discuss these regulators in detail when we come to the Committee stage of the Bill, but I should like to repeat tonight what I said in the Budget debate, namely, that if these proposals are approved I believe that my right hon. and learned Friend will be in a stronger position to promote a steady rate of economic progress than any other Finance Minister in the Western world.
  I must ask any hon. Member who is critical of the principle of these regulators whether he has any alternative. Would any hon. Member prefer the

  1733
  Government to rely on general monetary measures, or more selective measures, like hire-purchase controls? Does any hon. Member really suppose, if we were to return to a system of selective physical controls, that it would be possible to lessen the pressure of home demand by anything approaching £200 million, which can be done by the application of one of these regulators alone?
  No Government can manage without the use of some general economic regulators, and I believe that it is only right, in the economic circumstances of today, that the Chancellor should have the powers for which he is asking. In answering my hon. Friend the Member for Scarborough and Whitby, I can say that neither of these regulators can be used until the Finance Bill has been passed, but I believe that it will be of enormous value to have them in reserve. It will increase confidence in our ability to manage our economy and to avoid the risk of a dangerous crisis.
  The second part of the Opposition Amendment criticises the Surtax reliefs and complains that my right hon. and learned Friend has done nothing to relieve the difficulties of the great majority of taxpayers. I must make two points clear on this part of the Opposition Amendment. First my right hon. and hon. Friends and I do not feel in the least apologetic in defending these Surtax reliefs. Secondly, we reject absolutely the charge that the Government have favoured Surtax payers at the expense of other members of the community.
  It is easy to forget just how much the present Government have done in recent years to help the overwhelming majority of taxpayers. Comparing personal allowances and reliefs now in force with those that were in force ten years ago, one finds a great improvement which has helped all taxpayers, including the great majority with lower incomes. In 1951, the single person's allowance was £110; it is now £140. The married man's allowance in 1951 was £190. It is now—
  Mr. H. Wilson Mr. H. Wilson rose—
  Sir E. Boyle: I have some more figures here which I wish to quote. The right hon. Gentleman addressed the House for quite a long time, but when I have given my figures I will gladly give way and
  1734
  allow the right hon. Gentleman to give one or two.
  The married man's allowance in 1951 was £190. It is now £240. The earned income relief fraction in 1951 was one-fifth. It is now two-ninths, on all the lower ranges of earned income. The child allowances in 1951 was a flat £70; it is now £100 for children up to 11, £125 for children between 11 and 16, and £150 for children over 16. May I add that I think this increased child allowance has proved a particularly timely concession at a period when, thanks to the success of the Government's education policies, more and more children are staying on at secondary schools and other schools of every kind beyond the statutory school-leaving age.
  The reduced rates of tax on the first slices of the taxable income of individuals in 1951 were 3s. in the £ on the first £50 of taxable income and 5s. 6d. in the £ on the next £200. At that point, in 1951, the standard rate of 9s. 6d. came into force. Today, the first £60 is taxable at 1s. 9d.; the next £150 at 4s. 3d.; the next £150 at 6s. 3d., and today the standard rate thereafter is not 9s. 6d., but 7s. 9d. I give these figures to show the substantial reduction which we have made in taxation on lower incomes.
  Mr. H. Wilson: Did not the hon. Gentleman himself tell us, in a Written Answer on 20th March, that the 1951 figures have to be increased by 26½ per cent. because of the rise in the cost of living since that time? The figures he gave show a reduction of those personal allowances. Does not the hon. Gentleman agree that, according to his own table of figures, given on 20th March, the burden on lower incomes is higher in relation to the increased cost of living even than in 1951?
  Sir E. Boyle: One thing which the right hon. Gentleman ought to remember when considering these figures is that today there are about 11½ million people with incomes of between £500 and £1,000 a year after tax has been paid, compared with the figure of between 2 million and 3 million people with that rate of income in 1951. The figures of the right hon. Gentleman are correct, but if we are to argue about statistics there are an enormous number of statistics which have to be taken into account.

  1735
  I hope that the House will not forget that there has been, on a calculation in a Fabian pamphlet, a 20 per cent. rise in the standard of living of working-class families compared with 1950, and that we are spending about 90 per cent. more on the social services today than ten years ago. With respect to the right hon. Member for Huyton (Mr. H. Wilson), it is no good talking as though ordinary people on low incomes are not, on an average, substantially better off today.
  I do not wish to weary the House with a great many more figures, but perhaps I may refer to one other category of persons which we should not forget, and which has been mentioned in the debate, namely, the elderly people living on small fixed incomes. It is worth remembering that the income limit for age relief was £500 in 1951. It is £800 today. My right hon. Friend the present Minister of Aviation introduced age exemption in 1957, and this exemption was raised by Lord Amory in 1958, so that no single person of retirement age pays tax on an income below £275, nor a married couple past retiring age if their income is less than £440. I reject completely the charge that the Government have neglected the needs of poorer taxpayers.
  For the last few minutes of my speech I wish to pass to the Government's Surtax proposals, considered on their own merits. We on this side of the House stand firm in our belief that it is absolutely right—right in economic terms and, I add, right in moral terms—for the level of Surtax on earnings to be revised at a time when the nation has been growing steadily richer.
  As I said in the Budget debate, no Labour Chancellor would have dared to levy Surtax on a man earning £1,000 a year in 1938. By the same token, it cannot be right to levy Surtax, on top of what is still a high rate of Income Tax, on a man earning £3,000 a year today. We shall never have a properly competitive economy, characterised by real enterprise and drive, if we apply severe discouragement through the tax system to a key group of our technical, managerial and professional people.
  It surely cannot be right that our tax treatment of men earning salaries in the region of £3,000 or £4,000 a year should
  1736
  be substantially less generous than that of our two principal trade competitors. On this point, I must say a word about the speech of the right hon. Member for Huyton, who said that the direct tax system today was more regressive than before the war and tried to prove the point by comparing relative yields of Income Tax and Surtax before and after the war.
  I shall use the moderate language of one historian criticising another in footnotes, and say that I hope the House will not assume without question that the right hon. Gentleman's calculations were necessarily correct, or bear the implications he said they did. A system of direct taxation does not become more regressive merely because a larger proportion of the yield of direct tax is levied under the heading of Income Tax rather than Surtax.
  The right hon. Gentleman, in his calculations, completely ignored the fact that the standard rate of Income Tax today is 7s. 9d. compared with 5s. 6d. in 1938–39. If we are considering the progressive nature of the tax system it must be a relevant consideration that the top rate of Surtax before the war left a man with 5s. in the £, on all incomes over £30,000; whereas the top rate in 1962–63, after my right hon. and learned Friend's proposals come into force, will leave him with not 5s., but 2s. 3d., not on all incomes over £30,000, but on incomes over about £20,000.
  The right hon. Gentleman made great play with the fact that Surtax yielded 16 per cent. of the total yield from direct taxes before the war. Sixteen per cent. of total yield of direct taxes today would amount to about £600 million. If Surtax yielded £600 million today under present conditions it would mean that the average Surtax payer would be able to keep less than £50 of the surtaxable slice of his income. I ask the right hon. Member seriously to think whether it would be possible to fulfil the "Wilson Four-Year Plan" under these conditions.
  It just is not true to say that we have a regressive tax system today. As I pointed out in the Second Reading debate on the National Health Service Contributions Bill, our highly progressive system of Income Tax and Surtax yields a higher proportion of total tax revenue today than it did when the

  1737
  party opposite was in office—44½ per cent. as compared with 43 per cent. in the financial year 1951–52. This per-centage figure will be even higher next year. It is nonsense to make out that the taxpayer today is not paying a fair share of what my right hon. and learned Friend requires.
  On the moral issue, I just cannot see how it can possibly be regarded as a mark of a just society to penalise success and blunt reward for exceptional ability. I cannot see that it makes any sense at all to write off Surtax payers, in the words of the Amendment, as
  "a minority of wealthier sections of the community."
  Of course, it is a mark of a just society that we should extend opportunity to those who are the least fortunate, for example, to a child severely handicapped through no fault of its own. But it is equally just and right that we should not appear to penalise unfairly a professional man with a family, increasing his earnings from year to year as the result of his own ability and effort.
  We on this side of the House believe in ensuring, as far as we can, fair treatment for every section of the community. We are not going to be deterred from
  the pursuit of this objective merely because one most important section of the community is less numerous than the rest.
  Many points were raised in the debate which we can discuss further in Committee. A number of my hon. Friends from Northern Ireland, are concerned, for example, about the payroll regulator, and I am authorised by my right hon. and learned Friend to say that in formulating any more permanent proposals, should he decide to do so, he will give serious consideration to the special circumstances affecting Northern Ireland.
  These and many other matters we can consider in Committee. I believe that my hon. Friend the Member for Scarborough and Whitby was right when he referred to this as an historic and important Budget. I believe that it will help us to fulfil all the economic objectives which are most important to the nation, and I confidently invite the House to reject the Amendment and to give the Bill a Second Reading.
  Question put, That the words proposed to be left out stand part of the Question:—
  The House divided: Ayes 309, Noes 223.

  Division No. 158.]

  AYES

  [10.1 p.m.

  Agnew, Sir Peter

  Bryan, Paul

  Dance, James

  Altken, W. T.

  Buck, Antony

  d'Avigdor-Goldsmid, Sir Henry

  Allan, Robert (Paddington, S.)

  Bullard, Denys

  Deedes, W. F.

  Allason, James

  Bullus, Wing Commander Eric

  de Ferranti, Basil

  Arbuthnot, John

  Burden, F. A.

  Digby, Simon Wingfield

  Ashton, Sir Hubert

  Butcher, Sir Herbert

  Doughty, Charles

  Atkins, Humphrey

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

  du Cann, Edward

  Balniel, Lord

  Campbell, Sir David (Belfast, S.)

  Duncan, Sir James

  Barber, Anthony

  Campbell, Cordon (Moray & Nairn)

  Eccles, Rt. Hon. David

  Barlow, Sir John

  Carr, Compton (Barons Court)

  Eden, John

  Barter, John

  Carr, Robert (Mitcham)

  Elliot, Capt. Walter (Carshalton)

  Batsford, Brian

  Cary, Sir Robert

  Elliott,R. W. (Nwcstle-upon-Tyne, N.)

  Baxter, Sir Beverley (Southgate)

  Channon, H. P. G.

  Emery, Peter

  Bell, Ronald

  Chataway, Christopher

  Emmet, Hon. Mrs. Evelyn

  Bennett, F. M. (Torquay)

  Chichester-Clark, R.

  Errington, Sir Eric

  Bennett, Or. Reginald (Gos & Fhm)

  Clark, Henry (Antrim, N.)

  Farey-Jones, F. W.

  Berkeley, Humphry

  Clark, William (Nottingham, S.)

  Farr, John

  Bevins, Rt. Hon. Reginald (Toxteth)

  Clarke, Brig. Terence (Portsmth, W.)

  Fell, Anthony

  Bidgood, John C.

  Cleaver, Leonard

  Finlay, Graeme

  Biggs-Davison, John

  Cole, Norman

  Foster, John

  Bingham, R. M.

  Collard, Richard

  Fraser, Hn. Hugh (Stafford & Stone)

  Birch, Rt. Hon. Nigel

  Cooper, A. E.

  Fraser, Ian (Plymouth, Sutton)

  Bishop, F. P.

  Cooper-Key, Sir Neill

  Freeth, Denzil

  Black, Sir Cyril

  Cordeaux, Lt.-Col. J. K.

  Galbraith, Hon. T. G. D.

  Bossom, Clive

  Corfield, F. V.

  Gammans, Lady

  Bourne-Arton, A.

  Costain, A. P.

  Gardner, Edward

  Box, Donald

  Coulson, J. M.

  George, J. C. (Pollok)

  Boyd-Carpenter, Rt. Hon. John

  Courtney. Cdr. Anthony

  Gibson-Watt, David

  Boyle, Sir Edward

  Craddock, Sir Beresford

  Glover, Sir Douglas

  Braine, Bernard

  Critchley, Julian

  Glyn, Dr. Alan (Clapham)

  Brewis, John

  Crosthwaite-Eyre, Col. O. E.

  Glyn, Sir Richard (Dorset, N.)

  Bromley-Davenport, Lt.-Col. Sir Walter

  Crowder, F. P.

  Goodhart, Philip

  Brooman-White, R.

  Cunningham, Knox

  Goodhew, Victor

  Brown. Alan (Tottenham)

  Curran, Charles

  Gough, Frederick

  Browne, Percy (Torrington)

  Dalkeith, Earl of

  Gower, Raymond

  Grant, Rt. Hon. William

  MacArthur, Ian

  Rodgers, John (Sevenoaks)

  Green, Alan

  McLaren, Martin

  Roots, William

  Gresham Cooke, R.

  Maclay, Rt. Hon. John

  Ropner, Col. Sir Leonard

  Grimston, Sir Robert

  Maclean, SirFitzroy (Bute&N.Ayrs.)

  Russell, Ronald

  Grosvenor, Lt.-col. R. G.

  McLean, Neil (Inverness)

  Sandys, Rt. Hon. Duncan

  Gurden, Harold

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

  Scott-Hopkins, James

  Hall, John (Wycombe)

  MacLeod, John (Ross & Cromarty)

  Seymour, Leslie

  Hamilton, Michael (Wellingborough)

  Macmillan, Rt. Hn. Harold(Bromley)

  Sharples, Richard

  Hare, Rt. Hon. John

  Macmillan, Maurice (Halifax)

  Shaw, M.

  Harris, Reader (Heston)

  Macpherson, Niall (Dumfries)

  Shepherd, William

  Harrison, Brian (Maldon)

  Maddan, Martin

  Simon, Rt. Hon. Sir Jocelyn

  Harvey, Sir Arthur Vere (Macclesf'd)

  Maitland, Sir John

  Skeet, T. H. H.

  Harvey, John (Walthamstow, E.)

  Manningham-Buller, Rt. Hn. Sir R.

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

  Harvie Anderson, Miss

  Markham, Major Sir Frank

  Smithers, Peter

  Hastings, Stephen

  Marlowe, Anthony

  Smyth, Brig. Sir John (Norwood)

  Heald, Rt. Hon. Sir Lionel

  Marples, Rt. Hon. Ernest

  Spearman, Sir Alexander

  Henderson, John (Cathcart)

  Marshall, Douglas

  Speir, Rupert

  Henderson-Stewart, Sir James

  Marten, Neil

  Stanley, Hon. Richard

  Hendry, Forbes

  Mathew, Robert (Honiton)

  Stevens, Geoffrey

  Hiley, Joseph

  Matthews, Gordon (Meriden)

  Steward, Harold (Stockport, S.)

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

  Maudling, Rt. Hon. Reginald

  Stoddart-Scott, Col. Sir Malcolm

  Hinchingbrooke, Viscount

  Mawby, Ray

  Storey, Sir Samuel

  Hirst, Geoffrey

  Maxwell-Hyslop, R. J.

  Studholme, Sir Henry

  Hobson, John

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

  Summers, Sir Spencer (Aylesbury)

  Hocking, Philip N.

  Mills, Stratton

  Sumner, Donald (Orpington)

  Holland, Philip

  Montgomery, Fergus

  Talbot, John E.

  Hollingworth, John

  More, Jasper (Ludlow)

  Tapsell, Peter

  Hope, Rt. Hon. Lord John

  Morgan, William

  Taylor, Sir Charles (Eastbourne)

  Hopkins, Alan

  Morrison, John

  Taylor, Edwin (Bolton, E.)

  Hornby, R. P.

  Mott-Radclyffe, Sir Charles

  Teeling, William

  Hornsby-Smith, Rt. Hon. Patricia

  Nabarro, Gerald

  Temple, John M.

  Howard, Hon. G. R. (St. Ives)

  Nicholls, Sir Harmar

  Thatoher, Mrs. Margaret

  Howard, John (Southampton, Test)

  Nicholson, Sir Godfrey

  Thomas, Leslie (Canterbury)

  Hughes Hallett, Vice-Admiral John

  Noble, Michael

  Thomas, Peter (Conway)

  Hughes-Young, Michael

  Nugent, Sir Richard

  Thorneycroft, Rt. Hon. Peter

  Hulbert, Sir Norman

  Oakshott, Sir Hendrie

  Thornton-Kemsley, Sir Colin

  Hurd, Sir Anthony

  Orr, Capt. L. P. S.

  Tiley, Arthur (Bradford, W.)

  Hutchison, Michael Clark

  Orr-Ewing, C. Ian

  Tilney, John (Wavertree)

  Iremonger, T. L.

  Osborn, John (Hallam)

  Turner, Colin

  Irvine, Bryant Godman (Rye)

  Osborne, Cyril (Louth)

  Turton, Rt. Hon. R. H.

  Jackson, John

  Page, John (Harrow, West)

  Tweedsmuir, Lady

  James, David

  Page, Graham (Crosby)

  van Straubenzee, W. R.

  Johnson, Dr. Donald (Carlisle)

  Pannell, Norman (Kirkdale)

  Vane, W. M. F.

  Johnson, Eric (Blackley)

  Partridge, E.

  Vaughan-Morgan, Sir John

  Johnson Smith, Geoffrey

  Pearson, Frank (Clitheroe)

  Vickers, Miss Joan

  Jones, Rt. Hn. Aubrey (Hall Green)

  Peel, John

  Vosper, Rt. Hon. Dennis

  Joseph, Sir Keith

  Percival, Ian

  Wakefield, Edward (Derbyshire, W.)

  Kerans, Cdr. J. S.

  Peyton, John

  Wakefield, Sir Wavell (St. M'lebone)

  Kerby, Capt. Henry

  Pickthorn, Sir Kenneth

  Walder, David

  Kerr, Sir Hamilton

  Pike, Miss Mervyn

  Walker, Peter

  Kershaw, Anthony

  Pilkington, Sir Richard

  Walker-Smith, Rt. Hon. Sir Derek

  Kimball, Marcus

  Pitt, Miss Edith

  Ward, Dame Irene

  Kirk, Peter

  Pott, Percivall

  Watkinson, Rt. Hon. Harold

  Lagden, Godfrey

  Price, David (Eastleigh)

  Wells, John (Maidstone)

  Langford-Holt, J.

  Prior, J. M. L.

  Whitelaw, William

  Leavey, J. A.

  Profumo, Rt. Hon. John

  Williams, Dudley (Exeter)

  Leburn, Gilmour

  Proudfoot, Wilfred

  Williams, Paul (Sunderland, S.)

  Legge-Bourke, Sir Harry

  Pym, Francis

  Wills, Sir Gerald (Bridgwater)

  Lewis, Kermeth (Rutland)

  Quennell, Miss J. M.

  Wilson, Geoffrey (Truro)

  Lilley, F. J. P.

  Ramsden, James

  Wise, A. R.

  Lindsay, Martin

  Rawlinson, Peter

  Woodhouse, C. M.

  Linstead, Sir Hugh

  Redmayne, Rt. Hon. Martin

  Woodnutt, Mark

  Litchfield, Capt. John

  Rees, Hugh

  Woollam, John

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

  Renton, David

  Worsley, Marcus

  Lloyd, Rt. Hon. Selwyn (Wirral)

  Ridley, Hon. Nicholas

  Yates, William (The Wrekin)

  Longbottom, Charles

  Ridsdale, Julian

  Longden, Gilbert

  Rippon, Geoffrey

  TELLERS FOR THE AYES:

  Loveys, Walter H.

  Roberts, Sir Peter (Heeley)

  Colonel J. H. Harrison and

  Lucas-Tooth, Sir Hugh

  Robinson, Sir Roland (Blackpool, S.)

  Mr. J. E. B. Hill.

  McAdden, Stephen

  NOES

  Abse, Leo

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

  Chapman, Donald

  Ainsley, William

  Bowen, Roderic (Cardigan)

  Chetwynd, George

  Allaun, Frank (Salford, E.)

  Bowles, Frank

  Cliffe, Michael

  Allen, Scholefield (Crewe)

  Boyden, James

  Collick, Percy

  Awbery, Stan

  Brockway, A. Fenner

  Corbet, Mrs. Freda

  Bacon, Miss Alice

  Broughton, Dr. A. D. D.

  Craddock, George (Bladford, S.)

  Bence, Cyril (Dunbartonshire, E.)

  Brown, Thomas (Ince)

  Crosland, Anthony

  Benson, Sir George

  Butler, Herbert (Hackney, C.)

  Cullen, Mrs. Alice

  Blackburn, P.

  Butler, Mrs. Joyce (Wood Green)

  Darling, George

  Blyton, William

  Callaghan, James

  Davies, G. Elfed (Rhondda, E.)

  Boardman, H.

  Castle, Mrs. Barbara

  Davies, Harold (Leek)

  1740

  1741

  Davies, Ifor (Gower)

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

  Randall, Harry

  Davies, S. O. (Merthyr)

  Jones, Dan (Burnley)

  Rankin, John

  Deer, George

  Jones, Elwyn (West Ham, S.)

  Redhead, E. C.

  de Freitas, Geoffrey

  Jones, Jack (Rotherham)

  Reid, William

  Delargy, Hugh

  Jones, J. Idwal (Wrexham)

  Reynolds, G. W.

  Dempsey, James

  Jones, T. W. (Merioneth)

  Rhodes, H.

  Diamond, John

  Kelley, Richard

  Roberts, Albert (Normanton)

  Dodds, Norman

  Kenyon, Clifford

  Roberts, Goronwy (Caernarvon)

  Donaldson, Cmdr. C. E. M.

  Key, Rt. Hon. C. W.

  Robertson, J. (Paisley)

  Dugdale, Rt. Hon. John

  Ledger, Ron

  Robinson, Kenneth (St. Pancras, N.)

  Ede, Rt. Hon. C.

  Lee, Frederick (Newton)

  Ross, William

  Edelman, Maurice

  Lee, Miss Jennie (Cannock)

  Royle, Charles (Salford, West)

  Edwards, Rt. Hon. Ness (Caerphilly)

  Lever, Harold (Cheetham)

  Shinwell, Rt. Hon. E.

  Edwards, Robert (Bilston)

  Lever, L. M. (Aldwick)

  Short, Edward

  Edwards, Walter (Stepney)

  Lewis, Arthur (West Ham, N.)

  Silverman, Julius (Aston)

  Evans, Albert

  Lipton, Marcus

  Silverman, Sydney (Nelson)

  Fernyhough, E.

  Loughlin, Charles

  Skeffington, Arthur

  Finch, Harold

  Mabon, Dr. J. Dickson

  Slater, Mrs. Harriet (Stoke, N.)

  Fletcher, Eric

  McCann, John

  Slater, Joseph (Sedgefield)

  Foot, Michael (Ebbw Vale)

  MacColl, James

  Small, William

  Forman, J. C.

  McInnes, James

  Smith, Ellis (Stoke, S.)

  Fraser, Thomas (Hamilton)

  McKay, John (Wallsend)

  Snow, Julian

  Gaitskell, Rt. Hon. Hugh

  Mackie, John

  Sorensen, R. W.

  Galpern, Sir Myer

  McLeavy, Frank

  Soskice, Rt. Hon. Sir Frank

  George, Lady Megan Lloyd(Crmrthn)

  MacMillan, Malcolm (Western Isles)

  Spriggs, Leslie

  Ginsburg, David

  MacPherson, Malcolm (Stirling)

  Stewart, Michael (Fulham)

  Gooch, E. G.

  Mallalieu, E. L. (Brigg)

  Stonehouse, John

  Gordon Walker, Rt. Hon. P. C.

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

  Stones, William

  Gourlay, Harry

  Manuel, A, C.

  Strauss, Rt. Hn. G. R. (Vauxhall)

  Greenwood, Anthony

  Mapp, Charles

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

  Grey, Charles

  Marquand, Rt. Hon. H. A.

  Swain, Thomas

  Griffiths, David (Rother Valley)

  Marsh, Richard

  Swingler, Stephen

  Grimths, Rt. Hon. James (Llanelly)

  Mason, Roy

  Sylvester, George

  Griffiths, W. (Exchange)

  Mayhew, Christopher

  Symonds, J. B.

  Grimond, J.

  Mellish, R. J.

  Taylor, Bernard (Mansfield)

  Gunter, Ray

  Mendelson, J. J.

  Thomas, George (Cardiff, W.)

  Hale, Leslie (Oldham, W.)

  Millan, Bruce

  Thomas, Iorwerth (Rhondda, W.)

  Hall, Rt. Hn. Glenvil (Colne Valley)

  Milne, Edward J.

  Thompson, Dr. Alan (Dunfermline)

  Hamilton, William (West Fife)

  Mitchison, G. R.

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

  Hannan, William

  Monslow, Walter

  Thornton, Ernest

  Hart, Mrs. Judith

  Moody, A. S.

  Timmons, John

  Hayman, F. H.

  Morris, John

  Tomney, Frank

  Healey, Denis

  Mort, D. L.

  Ungoed-Thomas, Sir Lynn

  Henderson, Rt. Hn. Arthur(Rwly Regis)

  Moyle, Arthur

  Wainwright, Edwin

  Herbison, Miss Margaret

  Neal, Harold

  Warbey, William

  Hewitson, Capt. M.

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

  Weitzman, David

  Hill, J. (Midlothian)

  Oliver, G. H.

  Wells, Percy (Faversham)

  Hilton, A. V.

  Oram, A. E.

  Wells, William (Walsall. N.)

  Holman, Percy

  Oswald, Thomas

  White, Mrs. Elrene

  Holt, Arthur

  Owen, Will

  Whitlock, William

  Houghton, Douglas

  Padley, W. E.

  Wigg, George

  Howell, CharlesA. (B'ham, PerryBarr)

  Pargiter, G. A.

  Wilcock, Group Capt. C. A. B.

  Hoy, James H.

  Parker, John

  Willey, Frederick

  Hughes, Cledwyn (Anglesey)

  Parkin, B. T.

  Williams, D. J. (Neath)

  Hughes, Emrys (S. Ayrshire)

  Pearson, Arthur (Pontypridd)

  Williams, Ll. (Abertillery)

  Hughes, Hector (Aberdeen, N.)

  Peart, Frederick

  Williams, W. R. (Openshaw)

  Hunter, A. E.

  Pentland, Norman

  Williams, W. T. (Warrington)

  Hynd, H. (Accrington)

  Plummer, Sir Leslie

  Wilson, Rt. Hon. Harold (Huyton)

  Hynd, H. (Attercliffe)

  Popplewell, Ernest

  Woodburn, Rt. Hon. A.

  Irvine, A. J. (Edge Hill)

  Prentice, R. E.

  Woof, Robert

  Irving, Sydney (Dartford)

  Price, J. T. (Westhoughton)

  Yates, Victor (Ladywood)

  Jay, Rt. Hon. Douglas

  Probert, Arthur

  Jeger, George

  Proctor, W. T.

  TELLERS FOR THE NOES:

  Jenkins, Roy (Stechford)

  Pursey, Cmdr. Harry

  Mr. John Taylor and

  Johnson, Carol (Lewisham, S.)

  Mr. G. H. R. Rogers.

  Bill read a Second time and committed to a Committee of the whole House.
  Committee Tomorrow.

  PUBLIC ACCOUNTS
  Vice-Admiral John Hughes Hallett discharged from the Committee of Public Accounts; Sir Gerald Wills added.—[Mr. E. Wakefield.]

  WAR PENSIONER, SCOTLAND (MOTOR CAR)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]
  10.14 p.m.
  Mr. William Hamilton: I would like to draw the attention of the House to the case of Mr. G. A. Rogers of Oakley, in Fife. This is the second Adjournment debate I have had on this case. The first debate took place on 25th October of last year, on the first day of our return from the Summer Recess. I think that the results of that Adjournment debate were highly successful from the point of view of both Mr. Rogers and myself, and I should like to take this opportunity of thanking the Ministry of National Insurance for the consideration it gave to this case and the results of that consideration. Mr. Rogers got substantial back payment of his pension and was very pleased with the outcome.
  The point I now want to make is that money alone does not alleviate the hardship of this case. Money can never give this man, his wife and his family, the normal life that they could have expected to enjoy before the terrible war experiences of Rogers took their toll. It was a recognition of those harsh facts that impelled me in the former debate to request the Scottish Office to examine the possibility of supplying a motor vehicle to my constituent.
  I shall not repeat the history of the case. Suffice it to say that Rogers is now 39 years of age, and his wife, I think, is of a comparable age. As a result of his war experiences on the Russian run—continually bombed back and forth, twice within an ace of being drowned—this man is now completely unemployable. He is in receipt of the unemployability supplement and of the constant attendance allowance, and is on 100 per cent. pension.
  Financially, as I have said, that is probably satisfactory, but it certainly cannot be called affluence. Even assuming that it is financially satisfactory, it remains the fact that Rogers and his wife are confined within the four walls of their house for the rest of their lives. Rogers is so incapacitated that he cannot even get to
  1744
  a football match at Dunfermline, three miles away.
  I made my representations for a car in the first instance through the Ministry of National Insurance as long ago as 29th February, 1960. That letter was sent to the Scottish Office, from whom I received a reply dated 8th April, 1960. In other words, there was a delay of nearly six weeks before I got that reply. I make little complaint on that score, because one understands that investigations had taken place, but in view of the anxiety of Mr. Rogers and his wife at that time about the outcome, I think that the Department ought to do something to inject a greater sense of urgency into its officials particularly in cases of this kind. These cases must, by their very nature, be rare, and I think that the hon. Gentleman should tell his officials that these cases do come along, and they must be treated with the very highest priority, because I must point out that this sort of thing was twice repeated later on.
  Rogers had been examined at the Limb and Appliance Centre at Edinburgh on 28th September, 1959, and found to be ineligible for the supply of a motor-propelled vehicle. The grounds for refusal were:
  "…disability—psychoneurosis—does not bring him within the groups of severely disabled who are given motor propelled tricycles because of total or almost total loss of the use of both legs. He does not need a tricycle to get to and from his work…."
  That is the burden of our complaint not only in this but in other cases, because many of my colleagues in the House have similar cases and this is not the first time that this kind of matter has been raised. The letter goes on:
  "I am afraid that I can only confirm that it is not possible to solve Mr. Rogers' problem by supplying a motor propelled tricycle."
  That was in April, 1960.
  I again raised the matter in August, 1960, when the hon. Gentleman was more forthcoming and gave more information about the supply of Morris Minor motor cars being available to ex-members of the Forces and the Mercantile Marine in receipt of 100 per cent. disablement pension. But only three categories qualify—the double amputee with at least one above the knee, those who suffer from paraplegia and are

  1745
  unable to work, and those suffering from physical disability which results in total loss or almost total loss of both legs. That was the further information which the hon. Gentleman gave to me. He also said that further extensions of this scheme were being made, but only to help those who would be able to work—still this provision—and therefore Rogers was rejected.
  That was the position when I took up the Adjournment debate on 25th October last year with a Scottish Minister in attendance. On that occasion, the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance indicated that arrangements were made to have Rogers further medically examined in connection with his application for a motor-car. Again, there was delay. That debate was on 25th October, but I did not get a reply from the Scottish Office until 2nd February of this year—a delay of three months—during which time I had I do not know how many letters from Rogers. The hon. Gentleman must remember that he is a nervous case. His nerve is completely shattered, and he and his wife were living on tenterhooks for three months wondering what was to happen and whether a bit of pleasure could be injected into their lives. I could do nothing about it, because the letter was in the Department.
  The reply came on 2nd February, and if it had contained worth-while news one would have said that it was well worth waiting three months, but in fact there was no advance whatever. A medical examination had taken place, but he was still ineligible for a car. The quotation I take from that letter is this:
  "The only possibility would be if he required it for the purposes of employment, but I understand that he is not at work. If his circumstances should change in this respect it would, of course, always be possible for his case to be reconsidered."
  But, of course, the hon. Gentleman knew then that Rogers was in full receipt of the unemployability supplement, so that, in effect, one Minister was saying that he can never be employed, while the hon. Gentleman was saying, "If he gets a job, we might consider giving him a car."
  It seems to me to be quite absurd. Here we have a man who was in the service of his country in one of the most dangerous exploits of the war, who suf-
  1746
  fered grievous physical harm during that Russian run. It may well have been that another man on the same ship could have suffered almost identical harm, but, in the nature of things, he might have been able to get a job, while Rogers was not. A man who gets the job, which in itself is giving that man additional pleasure and additional independence, gets a car, while a man who cannot get a job does not get a car. To me, this is quite outrageous.
  It took the hon. Gentleman six weeks again to say "No". I took the case up on 2nd March of this year, when I asked the hon. Gentleman to look at it again, and there has been this further delay of almost exactly six weeks to the day again to say "No". Up to now, I have been rather restrained in presenting this case, and nobody knows more than I how difficult that is. I find it very difficult to restrain myself in these circumstances, when I see cases like this and look around elsewhere and see the greatest extravagance in other fields. The hon. Gentleman knows full well that for the last few weeks I have been conducting a campaign against extravagance in other fields, particularly with Royal Palaces. I need not quote all the specific examples which I have mentioned in the House. I merely quote two. This year, £6,000 is to be spent on renewing the railings round Holyrood House. This year, £50,000 is to be spent on the provision of a home in Kensington Palace for Princess Margaret. These moneys are to be spent when I am pleading for a little car for a man who gave his all for his country. In these circumstances, it is very difficult to be reasonable.
  I do not know what discretionary powers the Joint Under-Secretary of State has nor what humanity there is in him. I believe that there is some. All that I ask him to do is to look at this case again and to strain the law to breaking point to provide this man and his wife with a tiny prospect of enjoying their lives a little more than their immediate future seems to hold for them.
  10.26 p.m.
  The Joint Under-Secretary of State for Scotland (Mr. T. G. D. Galbraith): I should like to begin by congratulating the hon. Member for Fife, West (Mr. W. Hamilton) on the persuasive way in which he has presented his case, which

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  is a very moving one, and also on the reasonable manner in which he presented it. I know how strongly he feels about this case. I congratulate him, too, on his persistence in trying over a fairly long period to obtain for his constituent what he believes to be his constituent's due as some slight recompense for all that he suffered during the war in the service of his country. This is an aspect to which no one can be unsympathetic; indeed, it is recognised in the preferential treatment which is already accorded to Service pensioners.
  As a result of the previous correspondence which I have had with the hon. Gentleman, and in the light of this debate, I have taken the opportunity to review the whole case most thoroughly and to look particularly at the possibility of helping Mr. Rogers further. These are the reasons why it has sometimes taken rather a long time to reply to the hon. Gentleman's communications. These delays are a sign not of inefficiency but of seeing whether it was possible to help Mr. Rogers. I hope that the hon. Gentleman will accept that. Apart from that, I do not think there is any disagreement between the hon. Gentleman and myself about the facts. Broadly, they are as he stated them.
  Before I go into the details of this case, it might be for the convenience of the House if I first explained the arrangements which are made for the operation of the scheme for the provision of tricycles and cars to war pensioners so that the House may have the matter in perspective. The scheme goes back to the end of the First World War, when severely disabled war pensioners were supplied with invalid chairs or hand-propelled tricycles, if they needed them for the purposes of their employment. By 1920, motorised units had become available and two categories were recognised as being eligible for them—those with amputations and those who were paraplegics. In 1934, a third category was added, that of permanent loco-motor disablement, other than paraplegia.
  Subsequently, the design of these tricycles was improved, but in spite of this in 1948 the right hon. Member for Middlesbrough, East (Mr. Marquand) announced that it was the intention of the then Government
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  "…to provide a limited number of small cars, not exceeding 1,500…to certain classes of very seriously disabled war pensioners who may elect to receive a car in place of the motor propelled tricycle to which they are entitled…."—[OFFICIAL REPORT, 27th July, 1948; Vol. 454, c.1103.]
  This principle enunciated by the right hon. Gentleman still guides this Government, though in fulfilment of our election promises the ceiling which previously existed has been removed in accordance with the answer given in this House to a Question on 4th April, 1960. So the categories of eligibility for these vehicles remain today broadly the same as they were in 1948, when the issue of cars was first made.
  I am certain the hon. Gentleman will appreciate that in a scheme such as this for the supply of tricycles and mini-cars to war pensioners it is absolutely essential that all the pensioners should be able to feel that they can rely upon a uniform treatment of all applications. The present Government, therefore, as well as the previous one, have tried to achieve uniformity first of all, by having certain medical categories for eligibility and, secondly, by vetting in the central Government Departments all the applications that are received so as to ensure that the scheme is uniformly administered throughout the whole country.
  The medical categories of pensioners who are eligible are those which I described to the hon. Gentleman in the letter which I sent him on 5th October. For the benefit of the House I should like to repeat them. They are: first, those who have suffered amputation of both legs, at least one above the knee; secondly, those who are suffering from paraplegia and who to all intents and purposes are unable to walk; and, thirdly, those who are suffering from a physical disability—I emphasise the word "physical"—which results in the total or almost total loss of use of both legs. In addition to these three main groups, less severely disabled pensioners are brought within the scheme if they need cars in order to get to their work. This is the point which the hon. Gentleman made, and I will later on deal with it in greater detail.
  Unfortunately, as the hon. Gentleman will realise from this description of the various categories, Mr. Rogers does not come within any of them, and it is this fact which creates all the difficulty.

  1749
  The hon. Gentleman may wonder-indeed, he indicated that he did wonder—why Mr. Rogers, since he has a 100 per cent. disability pension, and since he cannot walk, should not qualify for a car. The reason for this is that we have not felt able to give cars or tricycles to those whose inability to walk derives from anything other than a direct physical defect. So those who suffer from heart complaints that affect the use of their legs, or lung complaints that affect the use of their legs or, as in this case, nervous complaints which produce hysterical paralysis which affects the use of their legs are not eligible for cars or tricycles. If people suffering in these ways from indirect physical complaints were eligible it would vastly increase the scope of the scheme.
  The trouble—I do ask the hon. Gentleman to accept this—is that Mr. Rogers is not just a borderline case who may be pushed over the border with a little goodwill and a little stretching of a point here and there. I can assure the hon. Gentleman that if that was all there was to it there would be no difficulty at all. But the trouble is that if Mr. Rogers were granted a car, it would mean creating an entirely new category, which involves considering 1,700 cases in Scotland alone—because that is the number of disabled pensioners in Scotland who are in receipt of supplementary allowances similar to those which Mr. Rogers is receiving. I may add that the United Kingdom figure for people in the same category as Mr. Rogers is as high as 19,000, a very considerable figure. The suggested change would obviously involve substantial extra costs beyond those of the scheme announced in April last year.
  To widen the medical categories of eligibility in this way so as to include severely disabled pensioners with hysterical paralysis, heart, lung or other systematic diseases which affect locomotion is thus clearly a development of considerable magnitude and though I fully understand the hon. Member's reason for making the suggestion, I am afraid that the development would be on such a scale that it is something which the Government cannot contemplate.
  The hon. Member, as well as making the point about 100 per cent. disability,
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  asked why ability to work should count particularly in this matter. Ever since the inception of the scheme—which goes back a long time, long before the present Government were in power—ability to work has been one of the principal criteria for considering eligibility of the less severely disabled. It is the less severely disabled to which it applies.
  I agree that it may seem unfair that the most incapacitated pensioner like Mr. Rogers should get the least help. But we must recognise that the longer a man can work, the better it is for him mentally—quite apart from the benefit in earnings to himself and his family. If a car can keep him at work, I think he should have a car, even if by itself his medical condition would not have entitled him to it. That is why work is an important criterion.
  I have told the hon. Member in correspondence that we are always willing to look again at Mr. Rogers' application for a car if he finds employment. From what the hon. Member has said, this seems unlikely at the moment. But the welfare officer of the Ministry of Pensions and National Insurance can sometimes help even badly disabled people to get a job. If the Ministry is successful in this, they will get in touch with the Department of Health, as is their practice, so that the new circumstances can be considered. I am sorry, therefore, that on this point, this is as far as I can go to help the hon. Member.
  I admit that the hon. Member did not go as far as he might have gone in asking why we could not cut this or that item of expenditure or increase the level of taxation and use the money to pay for an extension of the car service. It is easy for people who have warm-hearted inclinations to make suggestions of that sort. We all have sympathy with that attitude, but it is quite another matter when one has the responsibility for raising the money and, in the process of doing that, having too high taxation and killing the goose that lays the golden egg. That is a consideration which hon. Members opposite are in constant danger of forgetting. Yet these are the things which must be remembered if one has the responsibility within the general framework of an expanding service—I stress that it is expanding—of deciding what are to be the priorities. In an ideal world, it is

  1751
  easy to decide what should be done, but we have to work within practical limits.
  I should like to quote a remark of my hon. and learned Friend the then Minister of Health, who, replying to a debate on this subject in June, 1960, said:
  "It is obvious that there will be times when our will is not matched by our means, and there will inevitably be times when our purse does not allow us to go as far as our hearts would take us."—[OFFICIAL REPORT, 30th June, 1960; Vol. 625, c.1676–7.]
  That is unfortunately still the position with regard to the extension which the grant of a car to Mr. Rogers would involve.
  I therefore regret that I am not able to satisfy the plea of the hon. Member. I hope, however, that I have shown him that Mr. Rogers' case has been considered thoroughly and sympathetically and with a real desire to grant his wishes rather than an attempt to reject them.
  I can assure the House that there is nothing negative about the Government's approach to this problem. All the time, within the limits set, we are trying to stretch points and to give cars in borderline cases. I remind the hon. Member that Conservatives do care, although he may not believe it. I hope that I have shown him what is perhaps more important than sympathy—that over the years our good intentions have resulted in a considerable improvement in the lot of the war pensioners. I see no reason why this process should not continue, but the expression of this general hope, is I am afraid, as far as I can go tonight.
  10.40 p.m.
  Miss Margaret Herbison: My hon. Friend the Member for Fife, West (Mr. Hamilton) will be far from satisfied with that reply. What is the reason for the Government's refusal to grant Mr. Rogers one of these
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  cars? It has been made clear in the Joint Under-Secretary of State's reply that it is the financial cost to the country. He tells us that there would be 19,000 of these cases.
  I would like him to calculate what the cost would be of providing cars for these people, and how that would compare with the £83 million that, in a full year, the Surtax payers are to get. Would not a generous Government have thought that they could give some happiness, some hope, to 19,000 of these people—
  Mr. Hamilton: And their wives—
  Miss Herbison:—by using part of that £83 million? Does not the Joint Under-Secretary of State think it strange that if a pensioner has a broken back, is a paraplegic, or has lost his limbs, the Government will give him a car, yet if he has the type of disability of Mr. Rogers—a disability which leads to depression not only for the victim but for his family when they come into contact with him—they will not give him a car? Is it not just as important that this group of severely disabled people should have the same treatment as the paraplegics or those who have lost their limbs?
  The Joint Under-Secretary of State said the pensioners want to be convinced that there is uniform treatment of allocation. Because of that, he cannot stretch a point for Mr. Rogers. I agree that pensioners and almost all decent minded people want to have uniform treatment of allocation—
  The Question having been proposed after Ten o'clock and the debate having continued for half-an-hour, Mr. DEPUTY-SPEAKER adjourned the House without question put, pursuant to the Standing Order.
  Adjourned at sixteen minutes to Eleven o'clock.