HC Deb 29 May 1962 vol 660 cc1207-41

(1) For the purposes of child allowance under the Income Tax Acts a child's earnings during the year in which the child leaves school shall be disregarded; and accordingly section two hundred and twelve (children) of the Income Tax Act, 1952, shall have effect with the addition at the end of subsection (4) (limit of child's income and disregard of educational endowments) of the words "or which the child earns during the year of assessment in which the child leaves school."

(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the twenty, second day of June, nineteen hundred and sixty-two—[Mr. Houghton.]

Brought up, and read the First time.

Mr. Douglas Houghton (Sowerby)

I beg to move, That the Clause be read a Second time.

It might be convenient, Sir Norman, to take with this new Clause the new Clause—Extension of child allowance—and the new Clause—Increase in child allowance.

This new Clause has three qualities —it is novel, it is simple, and it would not cost the Chancellor very much. As to its novelty, many of these new Clauses are debated in a different atmosphere and with a different budgetary background year after year. They reflect particular grievances with our taxation system, or contain demands to meet particular circumstances. This new Clause deals with something that has been ventilated from time to time in Committee stages of Finance Bills in the past, but never before have we brought forward a proposal to deal with it.

I hope that it will appeal to the Chancellor. It attempts to deal with the grievance of the withdrawal from the parents of child relief in a year during which a child leaves school and goes to work. 'As the Committee knows, child relief from the parents' Income Tax is not given if the income of a child in its own right exceeds £100 in the year of assessment. That applies whether the income is investment income or earned income.

In the case of investment income, the parents generally know from previous years the approximate amount of income the child will receive, and the question of whether or not they are entitled to the relief can usually be settled before the tax year begins. In the case of children leaving school and earning, no similar prediction is possible. In fact, the parents cannot be certain that the child will, in fact, leave school in a particular year, nor do they know that, even if the child does leave school, it will earn over £100 by the end of the tax year.

The Inland Revenue deal with the situation in two ways. One way is to look at the ages of children on the tax returns, presume that a child will leave school, and presume that it will earn £100 before the end of the tax year. That presumption rests on the belief that the child will leave school at the end of the summer term and begin to earn and that, at present rates of pay, it will earn more than £100 by the following 5th April.

In such cases the Inland Revenue withdraws the child's allowance from the parents tax coding for the year. When a parent says, "Where is my child allowance?" the Inland Revenue replies," In your own interests, we have not given it to you because we think that this child may leave school and earn more than £100 before the end of the tax year and you would be very upset if you had the child relief on your P.A.Y.E. week after week and were later told that it had to be withdrawn and that you owed the Department something." In some cases, the parent acquiesces in a step that deprives him of child relief in the expectation that, in any case, he might not be entitled to it by the end of the year.

In other circumstances, the child relief is given. The children may leave school, begin work and earn more than £100 by the end of the year. When the Inland Revenue get to know about that, it withdraws retrospectively that relief which has been given on the parent's Income Tax. Sometimes the Inland Revenue is informed by the parents that the child has left school, has started work and is earning so much a week and that it looks as though the child will earn more than £100 by the end of the tax year so the relief had better be withdrawn. Those parents are not only honest and straightforward, but know their Income Tax as well.

In other cases, the Inland Revenue is not aware that the child has started work and has earned that amount by the end of the year. When the Depart- ment does hear of it, the allowance is withdrawn retrospectively. In fairness, it is unusual, indeed, for the parents to be asked for a cash lump sum payment on the withdrawal of the child allowance. The usual practice is, in the departmental jargon, to "code it in"; that is to say, the amount of tax due is worked into the code number, so that the extra amount of tax is recovered on top of normal P.A.Y.E. in the course of the ensuing tax year. That is very convenient to those affected.

What I plead for in this new Clause is that in the year in which the child leaves school the earnings of that child should be totally disregarded for the purpose of the tax relief of the parents; in other words, I ask that the child's earnings in that year shall be treated exactly as if they were an educational endowment. I do not, of course, ask the Committee to equate earnings with an educational endowment; I merely say that the new Clause would give to earnings in the year in which the child leaves school the same tax treatment as an educational endowment—which, as hon. Members know, does not disqualify the parents from child relief.

I am sure that most hon. Members have had letters or visits from parents complaining about this awkward business of child relief in the year in which the child is leaving school. Parents do not want a relief which they will later have to repay. They feel that it is somewhat unfair to have the relief withdrawn in a most expensive year in the child's life. Many parents say that the children have gone from school uniforms to working clothes;that they have had to fit them out with clothing suitable for their job. The children have ceased to be school children and have become adults and workers and have to mix with others. There arises the whole question of their contribution to the upkeep of the home, and how much of their earnings they shall spend on themselves. There are few parents who are not prepared to assert that in the year in which their children leave school they are put to a good deal more expense than in the year before or expect to have in the year after. In asking for this new treatment of earnings in the year in which the child leaves school we are not only seeking to avoid a good deal of messing about with the parent's Income Tax. We think that it is justified on the merits of the case.

6.0 p.m.

While I have been dealing with the proposed new Clause standing in my name, our discussion is also associated with the proposed new Clause concerning the extension of child allowance and that concerning an increase in child allowance. I have no wish to anticipate any discussion on the two latter Clauses except to point out that they are not directly related to the point in the Clause in my name, though they deal with the equally troublesome problem of a cut off at precisely £100 in the income of the child for tax relief. That is to say, if the income of the child is up to £100 the parent gets full tax relief but if it is £101 the parent gets no relief at all, and the two proposed Clauses being discussed with this one deal with a tapering arrangement.

Those two new Clauses would assist me in the problem being dealt with in my new Clause, because if there were a tapering arrangement when a child leaves school and begins to earn—even if it is somewhat more than £100 in the same tax year—the parents would not be deprived wholly of the child allowance if, under a tapering arrangement, some proportion of the child allowance was still granted to them. In that sense the three Clauses deal with a common problem but the one in my name deals expressly with the problem of the child leaving school and earning money in the same tax year.

Mr. William Clark (Nottingham, South)

With his usual expertise the hon. Member for Sowerby (Mr. Houghton) has explained the machinations as to how child allowances are granted under the P.A.Y.E. system, and so on. I do not go quite all the way with him regarding the proposed new Clause in his name, although there was a good deal in what he said with which I agree. The fallacy of his argument concerns his remarks about a child leaving school and earning more than £100. Many children, even leaving in the summer term before the succeeding 5th April, earn £100. Therefore, his Clause would divide children into two classes, those who earn £100 or less and those who earn £100 or more.

Mr. Houghton

I am saying that they are at present divided into two classes—those who earn more than £100 and those who earn less. My proposed new Clause says, in effect, that we should disregard the earnings of the child in that year, however large or small they may be. Instead of dividing them I am uniting them in one comprehensive disregard.

Mr. Clark

I take the point. But in the proposed new Clause in my name dealing with an increase in child allowance I have attempted to bring the allowance down to a more realistic level so that, if a child allowance is being paid, it can take into account income above £100. It is, after all, nonsensical for it to he £100, in which case the parent gets an allowance, but that, if it should be £101, the parent loses it. I should have thought that the Treasury could accept the principle which is operated for dependants' relief where it is reduced pound for pound. Surely that is a good principle and precedent on which to base child allowances?

This would be easy in application, there would be no difficulty concerning P.A.Y.E. and it would avoid the problem which the hon. Member for Sowerby pointed out where one has a re-coding in the succeeding year for a child leaving school. To a certain extent we taper off the financial burden which must be borne by parents, and I hope that the Financial Secretary will hold out some hope that the income limit of children will be made a little more realistic so that it will not suddenly be cut off at £100 but will, instead, be cut off pound for pound over the £100 mark in the same way as we deal with dependant relatives' allowances.

Mr. Bruce Millan (Glasgow, Craigton)

The difficulty we are attempting to remove by the three proposed new Clauses has already been well explained. I agree with my hon. Friend the Member for Sowerby (Mr. Houghton) that the most important person we should be trying to help is the parent of a child who leaves school during the Income Tax year, and I certainly support the Clause in the name of the hon. Member for Sowerby from this point of view.

The Clause in the name of the hon. Member for Nottingham, South (Mr. W. Clark)—Increase in child allowance goes a good deal further because it would provide assistance to any parent regardless of how the child's income was obtained. The Clause standing in my name, the extension of child allowance, is similar to that in the name of the hon. Member for Nottingham, South in that respect, although it would be rather less expensive to the Revenue because the income limit laid down in my proposed new Clause is rather less generous than that contained in the other.

The important point to consider is that parents feel that they are being treated unfairly—either when they find that the Inland Revenue has stopped their child allowance before the child has left school or if they find later in the year that they have been getting an allowance and have suddenly accumulated a debt because the child's income has gone beyond £100. This limit of £100 beyond which no allowance can be paid is really artificial. I realise that there must be a limit of some sort but there should be some system that provides that there is not just a complete change from getting an allowance to getting nothing at all.

The hon. Member for Nottingham, South drew an analogy with the dependant's allowance and, of course, the proposed new Clauses in his name and in mine are designed to bring child allowances into line with the dependant's allowances. I will anticipate what the Financial Secretary will say when he comes to reply. He will probably say that for dependant's allowances it is not terribly difficult for the Revenue to operate a sliding scale system because the dependant's income is likely to be known in advance so that there is no need for this tiresome adjustment at the end of the year. He will probably say, regarding children—particularly when the child is leaving school—that such a practice might not be so easy. There is a certain point in that but it can apply only to the child leaving school because the child who has an income of up to £100 has probably got a fixed income which is strictly in line with the dependants relief. We come down to the practical difficulties concerning the child leaving school. I accept that there would be a certain amount of difficulty in operating this and that there would have to be some forecast of what the child's income is likely to be.

The choice is really between making that forecast and an adjustment at the end of the year or continuing with the present system. I have no hesitation in saying that greater injustice and a considerable amount of trouble are caused by the Revenue continuing the present system. Therefore, despite the administrative difficulties, I hope that the Financial Secretary will at least accept the principle of the new Clause.

When this matter was discussed on the Finance Bill, 1957, it was said that there would be about 300,000 cases a year and that it would require about 450 additional Inland Revenue staff to deal with them. I see the Financial Secretary nodding his head. I must, therefore, have my figures right. I do not believe that it would need 450 additional staff to deal with an adjustment like this. That would mean that, for each additional member of the staff, there would be over 600 cases to be dealt with in a year—in other words, that it would take one complete Inland Revenue staff day to deal with two adjustments of children's allowances of this sort.

I just do not believe that it would require anything like as many additional staff as was suggested in 1957. If these figures are repeated this afternoon, I say that the Treasury's case is not good enough and that the Inland Revenue and the Government should consider this matter again. I hope that I am wrong in anticipating what the Financial Secretary will say and that he will accept one of the new Clauses, which deal with a very real difficulty and which, if accepted, would get rid of a considerable sense of injustice among parents about the operation of the present child allowances.

Mr. Michael Shaw (Brighouse and Spenborough)

I have a great deal of sympathy for the new Clause moved by the hon. Member for Sowerby (Mr. Houghton) with his usual clarity. He looked at it, very properly, from the Inland Revenue's point of view. Looking at it from the professional accountant's point of view, it is messy to have to deal with the child allowance during the last year of school. It is perhaps even more mess when we have to deal with the case of the child who goes on to further whole-time education, because the habit sometimes is to drop the child allowance more or less automatically every year just to ensure that the Inland Revenue does not slip up in allowing it for too long a period. The small but cumulative effect if it happens in many cases is that every year one has to take up the question of altering the coding notice for one's client so that his child allowance can be re-entered on the coding notice. The accountant then adopts this as the usual practice but one year later finds that it is necessary to send the notice back to be re-altered because it is decided that the child should go into gainful employment in which he will be earning more than £100 a year.

Another feature which I do not like about this allowance is that there is an element of restrospection about it. At the beginning of the year, the parent is entitled to it. In my experience, more often than not, he obtains the benefit of the allowance. Most children begin working in the autumn, and it is not until the back end of the Income Tax year, possibly the last few weeks, that it is certain that the £100 will be exceeded. The result is that the coding notice is altered at the last moment, which is very unpopular with the taxpayer, or, as the hon. Member for Sowerby said, it is coded into the next year and the parent who thought that he had got his child off his hands finds that he is still paying for him. That is unfair.

Very few allowances, if any, work in this manner. The single allowance which is enjoyed by the fiancée before she gets married is not taken from her when she is married. She is entitled to it in full provided that her income is sufficient to cover it. On the other hand, the lucky man who is getting married, usually just before 5th April, collects the whole of his marriage allowance. There seems to be no difficulty, although her status has not been kept throughout the year, in having the whole of the allowance granted for that year.

6.15 p.m.

I wonder whether the Treasury is afraid of giving this child allowance to a parent in respect of a child at the same time as the child obtains a personal allowance in his own right through his earnings during the second half of the year. Since the single allowance and marriage allowance are granted in the same year, why should not the same principle be adopted in the case of the parent whose child begins to earn in the second half of the year? Because it would cost so little and because it would count in only one year, why should not such a system be adopted?

I am not happy about one curious point in the new Clause. Knowing by whom it has been drafted, I am not sure whether it has been drafted in this form deliberately, or, if I may say with all due humility, in error. Why does the new Clause refer to the amount which the child earns during the year of assessment in which the child leaves school? I should like it to refer to the year in which the child ceases to enjoy full-time education. More often than not, a child is more expensive the older he becomes. I should have thought that the year in which a child went to a university, or wherever it may be, would be much more expensive to the parent than the year when he reached the age of 16, or whatever it may be, when he leaves school.

Subject to what I have said, I view the new Clause with the greatest possible sympathy.

Mr. Bellenger

In a long experience in Parliament, I have generally found on the Finance Bill that it is seldom that the Treasury spokesman gives way, whatever arguments may be advanced. We have heard a reasoned argument from the hon. Member for Brighouse and Spenborough (Mr. Shaw), and I hope that the Committee will look at the matter in that perspective.

My hon. Friend the Member for Sowerby (Mr. Houghton) said that the cost of implementing the new Clause would be very small. Perhaps the Financial Secretary will help to put the matter in proper perspective by telling us how much it would cost. However, if my hon. Friend is right, I should have thought that this was not an occasion on which Parliament should deal with dry-as-dust words or with Treasury briefs such as the one which, no doubt, the Financial Secretary has, but one when we should deal with matters in a human way, subject to the cost.

What would be a human way to deal with this matter? The parent, not the child, gets this allowance because the child is a burden or a liability on the parent. If the child leaves school during the financial year, it may be said that he ceases to be a burden on the parent. When the child becomes a wage earner in his own right, the Treasury takes its cut from his wages through P.A.Y.E. But every married Member of this Cornmittee—and I hope that the Financial Secretary is paying attention to this—who is a parent knows that if a child is born just the right side of the financial year the parent immediately becomes entitled to a child allowance. It is all, as it were, the luck of the draw. If the child is born within that financial year by one day only, the parent will get his £100. If, as the hon. Member for Brighouse and Spenborough has said, a couple marry just inside the financial ear—as many do, purposelyamp—they not only get £140 single allowance but also £240 married allowance.

Always, of course, bearing in mind the cost which the Financial Secretary will shortly tell us about, it all boils down to the question of whether Parliament is to act in a human way, at very little cost to the Revenue, by saying that the parent who has budgeted for his child over the whole year, and has borne the burden of keeping him a whole year, shall be entitled to the £100 child allowance and that it shall not, to use the words of the right hon. Member for Woodford (Sir W. Churchill) when he was Chancellor of the Exchequer, be "clawed back" from him.

We should give this concession to the parent who has not found the child allowance of £100 a year sufficient to enable him to keep that child in proper circumstances. Or must the Inland Revenue have its full pound of flesh, as I mentioned last week, and claim that as the child has now started earning it will take its cut from his earnings in his own right while, in addition taking back the allowance from his parent because the child has not remained at school to the full limit of the financial year?

Is not this an argument to appeal to hon. Members opposite? In the event of the Financial Secretary resisting this Clause, I suppose that they will go into the Division Lobby in his support. I can understand that attitude on most issues, but this is one issue which should not be decided on party lines. It is one at which, for once in a while—very seldom do we do it—Parliament should look in human terms. I urge the Committee to support the Clause. I urge the Financial Secretary to give way and so earn, at long last, some little credit for the Government. Everybody knows that they need it.

Mr. J. A. Leavey (Heywood and Royton)

I want briefly to support the plea made by hon. Members on both sides of the Committee. It is not often that one gets an opportunity of saying that one wholeheartedly supports all the speeches on both sides, so this one is not to be missed. The arguments adduced by the hon. Member for Sowerby (Mr. Houghton) appealed to me but I wonder whether, if a child is in full-time education, it would not be better to use the phrase suggested by my hon. Friend the Member for Brighouse and Spenborough (Mr. Shaw).

There is also the question of whether one day would qualify, as it does in the case of the married allowance, for parents' relief for the whole year, or whether we would have to write into this provision a minimum period. It could be that the child was in full-time education until the 6th April, which would mean that it was in full-time education for only one day of a financial year, and one wonders whether relief should be applied, in such cases, for the whole of that year.

I do not want to go again over the general point arising from the other two Clauses we are discussing. The arguments have been powerful. It seems to me that, when this Committee decided that if a child has an income of £99 the parent should be entitled to relief, it was not intended that if the income was £101, the parent should get no relief. It seems at least improbable that that was the intent of Parliament.

I am not happy about the argument that my hon. Friend the Financial Secretary will oppose this on the grounds that it is administratively difficult or inconvenient. This is seldom a convincing argument, because one must remind my hon. Friend that Inland Revenue officials, although many of us have great respect for them, are, after all, public servants. They are certainly subject to difficulties, but if it is concluded that the present position should be changed, they should find ways of meeting the proposal.

I know that it is difficult for my hon. Friend to meet pleas from hon. Members on this side of the Committee for what are, in effect, increased burdens on the taxpayer at a time when he is also often being asked to reduce Government expenditure, for it is these small items which make a large contribution to the whole. I appreciate that difficulty. None the less, since this proposal seems to have the wholehearted support of both sides of the Committee, I hope that he will give an encouraging answer, at least on the administrative difficulty. There might be a compromise proposal to get over this, which would not involve the enormous number of Revenue man hours referred to by the hon. Member for Sowerby. I support the pleas that have been made.

Mr. Tomney

I am sure that the Financial Secretary cannot refuse to accept this Clause in view of the general opinion expressed by hon. Members on both sides of the Committee. Nevertheless, I shall not be surprised if he finds a way round it. I can appreciate the desire of the Treasury to have everything nice and cushy. I can appreciate the fact that countless fathers are penalised in one way or another because they do not reclaim what is due to them under the present system.

One cannot help thinking that the present provision was drawn up when employment was more on a geographical basis than it is today. The sentiments expressed by my hon. Friend the Member for Sowerby (Mr. Houghton) were the real basis of what is involved here. This is the additional expense which parents are put to in the first year after a child leaves school to take up a job or a career. In the case of children taking up professions, the outlay is usually greater.

What has happened to the pattern of employment, at least since the war? In the new towns, for instance, the opportunities for careers for youngsters are limited, for they are populated overwhelmingly by young married couples with children. Vacancies may not arise regularly to a great extent, which means that young people often have to travel in order to take up their first jobs. There are children today who are spending more on travelling to and from work than they earn in the first year of their employment. That is why this Section of the Income Tax Act, which was framed for other days, is not sensible today.

If a boy is apprenticed to a trade or articled to a profession there are many things, such as books or drawing materials, which he has to buy in connection with that trade or profession during his first year of employment, and the father finds that it is a heavy expense to launch his son on a career.

The proposal of my hon. Friend that a child's earnings during the year in which the child leaves school should be disregarded is a reasonable one. Whatever difficulties the Treasury may find, they are not big enough to warrant the refusal of benefit to parents who are trying to launch their children in jobs or careers.

I know something about the ambitions of ordinary people for their children. In the main they want their children to do better than they themselves have done, and they are prepared to make sacrifices for them; but the Treasury should not also ask them to make sacrifices. I do not know what excuses the Economic Secretary will think up, but they will have to be good ones. This is a new Clause which in equity he cannot possibly refuse to accept. It will confer a benefit in the first year in which a child leaves school when the parents' worry is greatest and when relief is most needed. If the Economic Secretary accepts this new Clause—and I cannot see how he can refuse it in view of the general opinions expressed—it will confer a real service on parents.

6.30 p.m.

Mr. Edwin Wainwright (Dearne Valley)

I hope that the Financial Secretary will take note not only of the frontal attack in respect of these proposed new Clauses but also of the rearguard action. It is always more dangerous to be attacked from behind than from the front. As so many of his hon. Friends have spoken in favour of the principle behind these Clauses, I hope that he will give way on this issue. The Clauses dealing with the extension of child allowance and increase in child allowance may be called complicated and they may cause a good deal of administrative work. That no doubt will be the argument which the Minister will use. But if that argument is used in respect of those Clauses, it cannot be used in regard to the Clause concerning disregard of earnings. There will be no administrative difficulty at all about that Clause, and no increased work would be required to introduce its principle.

The first year that a child starts work has been mentioned as one of the most costly years, no matter what kind of work the child undertakes. The clothes which it has been wearing at school will not be suitable. New clothes have to be bought for the young boy or girl commencing work. The thought in the heart of any boy or girl going to work for the first time is, "I am now commencing life on my own and I want to make a contribution to the household." What kind of contribution can a boy make? It is a very small one and the father may easily get into difficulties in trying to help him.

The Inland Revenue will say that this young person will be earning above £100 in the present financial year and therefore Income Tax allowance will not be allowed. Supposing that in the first month of commencing work, after Income Tax allowance has been stopped, a boy goes off work because of sickness or accident. He may be away for only a short period of time, but the father is responsible for keeping his child. I know that it may be said that if the father is working he cannot claim National Assistance for this young person but the young person can claim. That is a ridiculous state of affairs, because if the young person goes to the National Assistance Board he will be refused benefit because he will be living at home. Therefore, the father is not only denied Income Tax allowance for this young person, but he is also denied any contribution from income or wages which could be made by that young person.

We must not forget that a young person cannot claim sickness or unemployment benefit, or benefit under the Industrial Injuries Acts because he has not sufficient stamps on his card to enable him to qualify. Therefore, the family is worse off than before the boy or girl started work. I hope that the Financial Secretary will take these matters into consideration.

There is always a demarcation line where benefits are allowed or refused, but I hope that the Financial Secretary will not use the argument of the demarcation line on this issue. My hon. Friends have explained the difference that can result in respect of Income Tax allowance if a child is born either on the 5th or 6th of April, and also in respect of the date on which a young couple get married. There must be some demarcation line and no argument of that kind ought to be used.

My hon. Friend the Member for Hammersmith, North (Mr. Tomney) mentioned the cost of travel, and it is true that travel is very costly, especially for the low wage earner, the boy or girl just starting work and having to pay the same fares as an adult whose wages may be ten times as much.

I hope that the Financial Secretary will look more cheerfully at this issue and be a little more graceful about accepting the new Clause, especially the first of three which we are discussing. If he cannot accept the other two now, I hope that he will consider them with a view to making a similar provision at a later date. There would be no administrative cost involved in the implementation of the first new Clause and, as it has been supported by many hon. Members opposite as well as on this side, I hope that the Financial Secretary will accept it and put it into operation.

Sir William Robson Brown (Esher)

There have been so many powerful and convincing arguments from both sides of the Committee in support of this new Clause that I shall make what is probably the shortest speech in this or any other Session by appealing to my distinguished bachelor friend on the Government Front Bench to have some sympathy with married people in these circumstances. The only thing which will convince me in anything he will say is on the score of excessive cost. I hope that the figures will not reveal that and that on one occasion at least the Committee will be united, Front Benches and back benches alike, on at least one new Clause,

6.45 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle)

The hon. Member for Hammersmith, North (Mr. Tomney) said that he thought that the Treasury must capitulate on this occasion, given the completely unanimous view expressed on both sides of the Committee. I can only say that it is evident that he was not here for our proceedings last Friday. I well remember my own first Session in Parliament when it fell to me to move two or three new Clauses from the back benches on the other side of the Committee when the right hon. and learned Gentleman the Member for Newport (Sir F. Soskice) was a Law Officer, and he was a much better goal keeper than ever I shall be in this Committee. I hove that the Committee will have noticed the presence of my hon. Friend the Parliamentary Secretary to the Ministry of Education. On an earlier Clause of the Bill, exception was taken from the Front Bench opposite when my right hon. Friend the Secretary of State for War was not here. We took that rebuke in the spirit in which it was offered, and that is why my hon. Friend the Parliamentary Secretary is with us for this discussion.

Mr. Ross

Can the hon. Gentleman tell us where the Secretary of State for Scotland is, as he is responsible for education in Scotland?

Sir E. Boyle

I do not know where he is, but I suspect that he is better employed than he would be as a second Minister listening to this debate.

The other thing I have to do is to reply to the right hon. Member for Bassetlaw (Mr. Bellenger), who hoped that I would not speak from a Treasury brief. I have notes for a speech, but I do not in fact have a brief before me. We were told by one of your predecessors, Sir James, that he never objected to seeing Members rise with notes for a speech because there was then a fair chance that their speech would have a beginning, a middle, and an end. That is wise advice when one is dealing with very complicated matters on the Finance Bill.

In this group of new Clauses we are dealing with proposed Amendments to Section 212 (4) of the Income Tax Act, 1952, which provides that the child allowance shall not be given in respect of any child who is entitled in his own right to an income greater than £100 a year. As the Committee will know, there is a proviso to that subsection which says that in the child's income for this purpose, income from a scholarship, bursary or other similar educational endowment is to be ignored. The first new Clauseamp—and I shall take that first and deal with the other two later—would add a further item of income to be disregarded, namely, a child's earnings during the Income Tax year in which he leaves school. The cost of this proposal is a good deal higher than has been suggested by hon. Members on either side of the Committee. It is estimated at £10 million in a full year, and I must tell the Committee straight away that on the ground of cost alone the Chancellor could not accept this proposal.

Mr. Bellenger

That is in relation to the parents, ignoring the earnings of the child.

Sir E. Boyle

That is the cost of doing what is proposed in the new Clause.

The Committee ought also to consider the principle involved. I do not think anyone on either side of the Committee would seriously dispute the necessity for some limit on the child's income. The allowance, after all, is a relief. I noticed that the hon. Member for Sowerby (Mr. Houghton) quite rightly referred to this as child relief. It is a relief to those who have dependent children to support, and ever since this relief was first introduced, everyone has always recognised that there must come a point at which there could not be justified both an allowance against the parents' income in respect of the child and at the same time an ordinary single person's personal allowance against the child's own income. In other words, there must come a point at which duplication of personal allowances could not be defended, and the question is simply at what point this duplication should cease.

It is a point on which Parliament has taken different views over the years. This income limit was originally set at £40 in 1920. It has been raised from time to time and was last increased in the Finance Act, 1957, from £85 to the present figure of £100. The first new Clause proposes not to abolish this limit of £100, but rather to exclude a particular source of income for a particular year.

I cannot see that any very strong case for this proposal can be made in respect of the period after the child's first job has begun. It is true that a child's earnings at the start of his first job may need to be earmarked to be spent, for example, on special clothing or equipment. I recognise that, but, after all, this may also happen to a wage or salary earner at almost any point of his working life, and the child in question has earned the money even though part of it may need to be used in a particular way.

Our whole system of direct taxation is based on the principle that taxpayers are charged according to their general economic circumstances. It is one thing to have, as we rightly have, a carefully devised system of tax allowances, but it would be quite another to say that a taxpayer should not be charged on his earnings because of certain particular expenses that he, or his parents, have to bear at a particular point in his life.

The other argument which one often hears in support of a proposal like this is that at the beginning of the tax year in which children leave school they are still, as a general rule, entirely dependent on their parents for support. That is an argument with which one must have a certain degree of sympathy, but I must remind hon. Members of the very important principle recognised by the Radcliffe Commission as applicable to personal allowances, and I quote two or three sentences from paragraph 152 of the Radcliffe Commission's Second Report. …income tax is an annual tax that has got to be administered. It is a tax that has to be collected each year from many millions of the population …the range of allowances must be limited to certain broad categories of distinction that commend themselves by their obvious justice: they must be simple in their terms and free from detailed refinements. It is in accordance with that principle that personal allowances for the tax year are regarded as a unit. There cannot be, as a practical matter, any elaborate system of apportionment. The amount of the child's own income has to be taken into account over the same entire tax year as that for which the parents' claim for allowances is made.

I do not think that one can draw an analogy between income derived from earnings and scholarship income which is already disregarded when calculating the child's income. It seems quite reasonable to maintain on the one hand that an educational award, like a scholarship, ought to be given special privileges for tax purposes, while a child's earnings in the year in which he leaves school must be regarded as income, just like any other earnings. It would surely be wrong to deal with such earnings in a special manner merely because the child was attending school at the start of that year.

I have devoted some time to the principle of this new Clause because, as I have said, it would be expensive. Not only would it be too expensive for this year, but I think that hon. Members, even those on the back benches, should think very hard before committing themselves to the support of the principle enshrined in the first of the new Clauses.

Sir W. Robson Brown

I wonder what my hon. Friend's views are with regard to apprentices, who are very similar to people undertaking further education, and whose earnings are very much less than they would be if they were doing an ordinary common or garden manual jab.

Sir E. Boyle

We shall be coming to the subject of the apprentices on another new Clause. Briefly, I would say that I realise, of course, the problems of people undergoing particular kinds of training, but I am still not convinced that the Committee would be well advised to support what would be a fairly big departure in our tax system as described in the first new Clause, which would cost a great deal of money.

I would rather turn now to the cost of the two other new Clauses that we are considering, which deal with the same point in a different way. The idea of both these Clauses is to give a partial child allowance to children with incomes above the statutory limit of £100.

The new Clause in the name of the hon. Member for Glasgow, Craigton (Mr. Milian), which is ingeniously worded, proposes that where a child's income is over £100 but not over £200, a partial allowance should be granted on a diminishing scale. The alternative proposal by my hon. Friend the Member for Nottingham, South (Mr. W. Clark) and other hon. Friends of mine contemplates that the partial allowance should be the sum arrived at by subtracting from the normal child allowance a £for every £by which the child's income exceeds the statutory limit.

These are both ingenious proposals, and I apply that remark particularly to that by the hon. Member for Craigton, who made an attractive speech to the Committee. He has obviously given the matter a great deal of thought. I rather dissent from the view of the hon. Member for Dearne Valley (Mr. Wainwright) that the first of the proposed new Clauses is the best. In replying to the Clauses, I would say frankly that of all the starters in this race the one that caught my eye the most was that proposed by the hon. Member for Craigton, which is certainly a very ingeniously-worked-out one. It has the merit also, as I think he rather suggested, of being cheaper than the proposal by my hon. Friend. My hon. Friend's proposal would cost about £8 million in a full year, which is about double the cost of the new Clause proposed by the hon. Member for Craigton.

I am, indeed, not sure whether the new Clause proposed by my hon. Friend would quite carry out his purpose. As drafted, it fails to get rid of the express words in Section 212 (4) which preclude any allowance at all when the child's own income exceeds £100.

The idea of a tapering off of the child's allowance has been discussed on a number of occasions since 1951. It was discused in 1952, 1954 and again in 1957. As I was in the Treasury in 1955 and 1956, this is not to me quite such a hardy perennial as some other subjects such as shale oil, which we tend to discuss year by year.

Indeed, I fully accept that the case for some tapering provision in connection with the child's allowance is in theory reasonable enough. I know it seems unfair to many people that when a child has an income of £100 his father can claim the full figure in his relief—£100, £125 or £150 according to age—but that as soon as the child's income exceeds £100, however small the excess is, his father can claim no relief at all.

But I must tell the Committee, as many of my predecessors have done—though I assure hon. Members that this will not be my last word on the Clause —that whatever may be said in theory in favour of a tapering provision, any proposal of this kind would give rise to really considerable administrative difficulties, particularly in relation to P.A.Y.E. As this point has been mentioned by a number of hon. Members, perhaps I could explain how this difficulty comes about.

The trouble is that P.A.Y.E. works smoothly only when the code number given to an employee before the beginning of the year accurately reflects the allowances to which he is entitled for that year. With a standard income limit for child allowance, no serious difficulty arises. It is not necessary to estimate exactly what will be a child's allowance for the coming year. One has only to estimate whether or not it will exceed the prescribed figure of £100. I am assured that in the overwhelming majority of cases the answer on this point is entirely plain. Of course, there are individual cases in which the coding turns out to have been wrong because in the event the child's income goes up from below £100 to above it or, which is less likely, falls back below it. But I am assured that these cases are very much the exception and not the rule.

But if for a large number of cases the tax clerk had to estimate just where in the income range stretching above £100 the child's expected income was likely to fall, it would be necessary to ask taxpayers to state beforehand the probable incomes of their children, and after the end of the year to state the actual amount. Moreover, each case would have to be re-examined by the tax office after the end of the year, and unless the estimate of the child's income had proved sufficiently accurate to make no significant difference to the allowance due, an assessment would have to be made on the child's parent, which would involve further work because of the need either to repay any tax overpaid or to recover any tax underpaid on the basis of the original coding.

Mr. Bellenger

I am very interested in the point which the hon. Gentleman is putting. I quite appreciate the administrative difficulties. But could he tell me what the position would be of a parent whose child had an estimated income of just over £100 and, therefore, the parent was not eligible for child allowance, but, with things as they are at the moment—dividends dropping and so forth—the child's income dropped just below the £100 at the end of the year? What does the parent do then?

Sir E. Boyle

I have explained that there are individual cases in which the coding turns out to have been wrong. This matter then has to be looked at again. But I am assured—on this point I can only state what is the best advice, administratively, that I have received—that, contrary to what is suggested sometimes, these cases are very much in the minority.

I am sure that the Committee will realise from what I have said just how much the proposal would complicate the working of the P.A.Y.E. machine. It is a cardinal principle of our P.A.Y.E. system to ensure that in as wide a range of cases as possible, the correct tax is deducted from an employee's earnings in the course of his tax yeas. When this happens—I am told that it happens in about six-sevenths of all cases—no formal assessment need be made and no further work is necessary for that year.

The introduction of any tapering provisions under which in many cases the allowance could not be finally determined until the child's income for the year was known would obviously be a nuisance from the point of view of the taxpayer. It would substantially increase the work to be done by tax offices. I am assured that it would inevitably call for some hundreds of extra staff. In answer to the point raised by the hon. Member for Craigton, who firmly stated his disbelief, I have checked the matter, and it seems to me that the figures presented to the Committee some years ago really were correct.

I recognise that the hon. Member for Craigton has chosen his particular formula in the hope of meeting these administrative objections so far as possible. His formula, as he explained, divides the range of the child's income from £100 to £200 into four zones. Within each of the zones the amount of the allowance is constant even though the child's income may vary within the particular zones. I recognise that this ingenious device might certainly be expected to reduce the number of cases where the code number originally given to the parents proves in the event to be incorrect because the child's income turns out to be different from the estimate. I think it would be fair to say that, compared with the proposal by my hon. Friend, the formula of the hon. Member for Craigton would be slightly less expensive in staff, though I am told that there would not really be very much in it.

7.0 p.m.

It is not easy to make an accurate forecast when dealing with this kind of question, but the formula of the hon. Member for Craigton would not significantly alter the estimate given five years ago by my right hon. Friend the present Minister of Health to the effect that any tapering-off provision in connection with the child allowance would require approximately 450 extra staff.

I am sure that my right hon. and learned Friend the Chancellor will take full note of the strong views which have been expressed on both sides of the Committee. I am not pretending that I consider the present position at all ideal —clearly it is not. The trouble is that when looking at the formula of the hon. Member for Craigton, the saving in staff might be quite small if unforeseen changes in employment conditions made it difficult to make forecasts falling within the ranges of tolerance that the hon. Member provides. With rather wider ranges and with a tapering provision in the cases where the income is, say, between £100 and £150, it would be administratively easier but, obviously, considerably more costly.

On a combination of cost and administrative grounds, I cannot advise the Committee to accept this proposal this year. My right hon. and learned Friend will. However, take note of the views which have been expressed. Between now and next year's Bill, we will consider both the administrative aspect and the cost aspect. If within the ambit of what may be possible in any future Finance Bill we can find a scheme which is both administratively practicable in terms of staff and not too ruinously expensive compared with other tax priorities, my right hon. and learned Friend will certainly consider it. It must, however, be recognised that what has been said in the past is correct and that I cannot this afternoon advise the Committee to accept the new Clauses.

Mr. W. Clark

Will my hon. Friend answer this question: if it is logical to apply a tapering provision £for £for dependent relative relief, why is it not logical to do it for child relief? Why are there not the same administrative difficulties in the case of the dependent relative relief?

Sir E. Boyle

I have a note about this but did not want to speak too long. I will explain why the difficulties which I have described did not prevent the tapering of the dependent relative allowance. The majority of dependent relatives have no means beyond the standard National Insurance retirement pension. In all these cases, the full allowance is due and there is no Question of any adjustment being necessary. In those cases where there is a small income from other sources—for example, a small annuity, which happens in a number of cases—again the income is fairly steady. Thus the coding on account of the dependent relative allowance which is made before the end of the year can usually prove fairly accurate. In the case of a child who is working, however, the presumption is that the income may well increase.

I do not want to enter controversial fields, but, whether we have an incomes policy or not, my hon. Friend will realise that any estimate based on facts as they are before the beginning of the tax year may well be put out by changes in the average level of earnings in a number of industries during the year. There is, however, a considerable difference between the circumstances of those who are starting work and those who are entitled to the dependent relative allowance.

Sir W. Robson Brown

When I interjected, my hon. Friend said that he would reply specifically to the problems of apprentices and their peculiar position.

The Deputy-Chairman (Sir Robert Grimston)

That would arise better on a later new Clause.

Mr. Houghton

The Financial Secretary said that he had some notes of a speech and also a brief, but that he preferred to speak from the notes. I could not tell the difference. In some parts the hon. Gentleman's speech was a summary of his brief; other parts were an exact copy of it.

In a few moments, I suppose, the Committee will show the impotence of the British House of Commons. All the speeches that have been made on both sides are in favour of some concession being made. I am sure that had all other hon. Members been present they would have been of the same mind. And yet, apparently, or so it seems, the House of Commons cannot decide to make a concession on which we are all so united.

It is a pity to have to divide the Committee in such circumstances, because there is really no division in the Committee. It is a division between the Treasury Bench and the rest of the Committee. I am sorry that it may come to a Division, because so far the Financial Secretary has given no indication that he can make any concession. Since, however, he spent so much of his time on the tapering proposals, I should like to say something about them.

The hon. Gentleman believes that in theory there is something in favour of tapering provisions. Of course there is, because the Royal Commission strongly advocated their introduction into the child relief. I acknowledge that there is a good deal of work in this matter, but the Royal Commission made proposals regarding child relief which would have meant a great deal more work than this. The Commission felt, however, that it was necessary to reconstruct the relief on satisfactory lines.

The Financial Secretary will remember that not only did the Royal Commission recommend a tapering arrangement for child relief, but recommended varying the amount of relief according to the income of the parent. That recommendation is to be found in paragraph 179 of the second Report of the Radcliffe Commission (Cmnd. 9105.)

The Commission went on to combine with that proposal a tapering plan for child relief. Some years ago, the Government decided not to accept the recommendations of paragraph 179 and not to have child relief graduated according to the income of the parent. Instead, they introduced the existing three-tier child relief of £100, £125 and £150, according to age. The Government did nothing about the tapering recommendation.

In paragraph 184, the Radcliffe Commission recommended: Hitherto we have discussed the form of a tapering provision on the assumption that our recommendation for proportional allowances was being put in to operation. Even if it were not, we should still regard a tapering provision of some sort as a necessary improvement of the present scheme. So that even though the Government rejected the proposals for proportional allowances, the case for tapering still remains.

In paragraph 182, the Royal Commission stated: There is no doubt an administrative advantage in a rule so simple as this which allows the parent £85 "— as it then was— or nothing, but, despite our preference for simplicity in all these rules, we think that the present one is so arbitrary as to be unfair It is unfairness with which we are dealing.

Although there may be administrative difficulty and work in adopting a tapering provision, it is necessary sometimes for that work to be done to get fairness in the tax system. We cannot always subordinate fairness in the tax system to administrative convenience. I know that in many respects P.A.Y.E. has put a straitjacket, so to speak, on much that we would wish to do in the Income Tax system but which the P.A.Y.E. arrangements inhibit.

All that the Financial Secretary has done in regard to the proposed tapering arrangement is to say that the Chancellor will take note of it. I can quite understand it if he regards the proposal of the hon. Member for Nottingham, South (Mr. W. Clark) as less acceptable than the proposal of my hon. Friend the Member for Glasgow, Craigton (Mr. Milan) because it so happens that in paragraph 183 of the Report of the Radcliffe Commission, from which I quoted, there was a criticism of the £for £tapering arrangement. I quote again from that paragraph: On the whole we think that the simple rule of reducing the allowance otherwise due by £1 for every £of the child's income would be unsuitable, for it would involve a great deal of work, much of it fruitless, in checking all children's incomes and any increase in a child's income, such as may well happen when employment begins, would result in underpayment of tax by the parent, needing to be recouped later under P.A.Y.E. or otherwise. The proposal of my hon. Friend the Member for Craigton was not, of course, considered by the Commission because it was working out its tapering arrangement on a different basis.

The Financial Secretary is always given the unpleasant tasks in discussions on the Finance Bill. He promised again that the Chancellor will consider this matter for another year. Last year he promised that personal reliefs as a whole would be reconsidered. He was hopeful then that we should see the outcome of further consideration of the whole pattern of personal allowances. The years go by and we do not come to this matter. Nothing has been done about personal allowances generally since 1955 and nothing has been done about child relief since 1957. When can we expect to have these reforms considered and brought to the House?

I now turn to the proposal introduced in the new Clause in my name—on a very narrow point, as I explained. It deals with a particular grievance which I do not think any tapering arrangement would entirely do away with, that of earnings in the first year on leaving school. It is one which I think appeals to everyone's sense of fairness. There is no algebra about it, no proportions about it, and no complications about it. It is simple; we just ignore the child's earned income for the year when the child leaves school. That would appeal to people as being simple as well as fair.

The hon. Member for Brighouse and Spenborough (Mr. Shaw) said that he would have approved of this new Clause far more had it provided for a child giving up full-time extended education. The new Clause was intended to cover that. It certainly introduces the word "school" which I do not believe is to be found in the Income Tax Act. The Income Tax Act calls a school "an educational establishment". I have no objection to substituting the words "an educational establishment" for the word "school" in the new Clause if that would make it more comprehensive and more understandable. Certainly it was intended that whenever the child leaves school the earnings of the child should be ignored for tax purposes.

7.15 p.m.

Mr. Shaw

In fact the word "school" is mentioned in the Act, but among many other things. The Act says: receiving full-time instruction in a university, college. school or other educational establishment.

Mr. Houghton

That shows that there are not the difficulties about the word school "which the hon. Member appeared to find. I think we can agree that this new Clause is intended to cover school, academy, university or any other educational establishment.

The hon. Member for Heywood and Royton (Mr. Leavey) asked, what about children who might leave school on the day after the beginning of the tax year? The parent would then be able to ignore the child's earnings for the whole of the rest of the tax year. I do not think that marginal case need trouble the Committee. In all cases if a parent were arranging the affairs of the child suited best to his own tax liability the probability is that that would extend and not shorten the child's stay at school. In any case there are marginal anomalies, if one could call them that, in many other reliefs now provided for under the Income Tax Acts. They are there because it is far too much trouble to erect the apparatus necessary to restrain people from getting an undue advantage.

The hon. Member for Brighouse and Spenborough referred to the fact that a single woman getting married during the tax year still has her personal allowance for a full year set off against her earnings as a single woman. Then, the day after she marries, she is entitled to the special earned income relief for married women for the whole year to he set off against her earnings as a married woman. If she arranges to get married about the month of October and stays at work, she gets one full set of reliefs before the date of marriage and another, and reduced rate reliefs as well, after her marriage—both within the tax year. In addition, the husband gets a married man's allowance for the whole year. There is no doubt that a very large tax bounty is given to newly-weds who know the way around the Income Tax Act.

Also, a child born on the last day of the tax year qualifies the parent for a tax relief for the whole year. A great deal of the agitation in prospective fathers in the latter days of March and the early days of April is not only anxiety for the welfare of the mother and child, but rather wondering whether the child will be born before midnight on 5th April. If it is born one minute before midnight he gets tax relief on £100 according to the rate of tax he pays, and it may be £100 at 7s. 9d. He qualifies for Surtax relief as well where that would be appropriate. These anomalies are accepted as part of the rough and tumble of the Income Tax Act. Those who can arrange their affairs in a way to get the best advantage do not find that the Chancellor is churlish. He does not come to the House and propose anti-avoidance measures and things of that kind. I see no reason why it should be done in a case of this kind.

We are most disappointed with the reply by the Financial Secretary. It will be necessary to ask the Committee to take a little more notice of his unfavourable reply than by just bottling up our disappointment and passing on to the next business. It is too bad that the united wish of the Committee cannot prevail. What is the good of showing our schoolchildren around the Palace of Westminster and saying to our friends from colonial legislatures, "Here is the Mother of Parliaments. This is where power rests supreme in the hands of the people" and so on, when here we are wanting a very small concession but apparently the party system, the Whips and everything else combine to frustrate the will of Parliament?

I think the Financial Secretary has taken upon himself a much bigger responsibility than he should have. He is undermining the prestige of Parliament as well as rejecting a perfectly reasonable new Clause.

Division No. 205.] AYES [7.20 p.m.
Abse, Leo Hamilton, William (West Fife) Pavitt, Laurence
Ainsley, William Harper, Joseph Pearson, Arthur (Pontypridd)
Albu, Austen Hart, Mrs. Judith Peart, Frederick
Allaun, Frank (Salford, E.) Hayman, F. H. Pentland, Norman
Allen, Scholefield (Crewe) Henderson, Rt.Hn.Arthur (RwlyRegis) Price, J. T. (Westhoughton)
Baird, John Hewitson, Capt. M. Probert, Arthur
Bennett, J. (Glasgow, Bridgeton) Holman, Percy Proctor, W. T.
Benson, Sir George Hooson, A. E. Randall, Harry
Blackburn, F. Houghton, Douglas Rankin, John
Blyton, William Howell, Denis (Small Heath) Roberts, Albert (Normanton)
Boardman, H. Hoy, James H. Roberts, Coronwy (Caernarvon)
Bowden, Rt. Hn. H. W.(Leics, S.W.) Hughes, Cledwyn (Anglesey) Robertson, John (Paisley)
Bowles, Frank Hughes, Emrys (S. Ayrshire) Rodgers, W. T. (Stockton)
Boyden, James Hunter, A. E. Rogers, G. H. R. (Kensington, N.)
Brockway, A. Fenner Irvine, A. J. (Edge Hill) Ross, William
Brougtiton, Dr. A. D. D. Irving, Sydney (Darttord) Short, Edward
Brown, Rt. Hon. George (Belper) Jenkins, Roy (Stechford) Silverman, Julius (Aston)
Brown, Thomas (Ince) Johnson, Carol (Lewisham, S.) Silverman, Sydney (Nelson)
Butler, Herbert (Hackney, C.) Jones, Dan (Burnley) Skeffington, Arthur
Callaghan, James Jones, Jack (Rotherham) Slater, Mrs. Harriet (Stoke, N.)
Castle, Mrs. Barbara Jones, J. Idwal (Wrexham) Slater, Joseph (Sedgefield)
Chapman, Donald Jones, T. W. (Merioneth) Smith, Ellis (Stoke, S.)
Collick, Percy Kelley, Richard Soskice, Rt. Hon. Sir Frank
Craddock, George (Bradford, S.) Kenyon, Clifford Spriggs, Leslie
Crossman, R. H. S. Key, Rt. Hon. C. W. Steele, Thomas
Cullen, Mrs. Alice Lawson, George Stewart, Michael (Fulham)
Darling, George Ledger, Ron Stonehouse, John
Davies, G. Elfed (Rhondda, E.) Lee, Frederick (Newton) Stones, William
Davies. Harold (Leek) Lever, L. M. (Ardwick) Strachey, Rt. Hon. John
Davies, S. O. (Merthyr) Lewis, Arthur (West Ham, N.) Stross, Dr.Barnett (Stoke-on-Trent,C.)
Deer, George Loughlin, Charles Swingler, Stephen
Delargy, Hugh Mabon, Dr. J. Dickson Taylor, Bernard (Mansfield)
Diamond, John Mclnnes, James Thornton, Ernest
Driberg, Tom McKay, John (Wallsend) Timmons, John
Ede, Rt. Hon. C. McLeavy, Frank Tomney, Frank
Edwards, Rt. Hon. Ness (Caerphilly) MacPherson, Malcolm (Stirling) Wade, Donald
Edwards, Robert (Bilston) Mallalleu, J.P.W. (Huddersfield, E.) Wainwright, Edwin
Edwards, Walter (Stepney) Manuel, Archie Warbey, William
Evans, Albert Mayhew, Christopher Watkins, Tudor
Finch, Harold Millan, Bruce Weitzman, David
Fitch, Alan Mitchison, G. R. Wells, Percy (Faversham)
Fletcher, Eric Monslow, Walter Wells, William (Walsall, N.)
Forman, J. C. Moody, A. S. Willey, Frederick
Fraser, Thomas (Hamilton) Morris, John Williams, D. J. (Neath)
Gaitskell, Rt. Hon. Hugh Moyle, Arthur Williams, LI. (Abertillery)
Galpern, Sir Myer Mulley, Frederick Williams, W. T. (Warrington)
Ginsburg, David Oliver, G. H. Willis, E. G. (Edinburgh, E.)
Gordon Walker, Rt. Hon. P. C. Oram, A. E. Wilson, Rt. Hon. Harold (Huyton)
Gourlay, Harry Oswald, Thomas Woof, Robert
Grey, Charles Owen, Will Yates, Victor (Ladywood)
Griffiths, David (Rother Valley) Padley, W. E.
Griffiths, Rt. Hon. James (Llanelly) Pannell, Charles (Leeds, W.) TELLERS FOR THE AYES:
Griffiths, W. (Exchange) Pargiter, G. A. Mr. Charles A. Howell and
Hale, Leslie (Oldham, W.) Parker, John Mr. Redhead.
Hall, Rt. Hn. Glenvil (Cotne Valley) Parkin, B. T.
Agnew, Sir Peter Bishop, F. P. Carr, Robert (Mitcham)
Aitken, W. T. Black, Sir Cyril Chichester-Clark, R.
Allan, Robert (Paddington, S.) Bourne-Arton, A. Clark, Henry (Antrim, N.)
Allason, James Box, Donald Clarke, Brig. Terence(Portsmth, W.)
Arbuthnot, John Boyd-Carpenter, Rt. Hon. John Cleaver, Leonard
Ashton, Sir Hubert Boyle, Sir Edward Cole, Norman
Atkins, Humphrey Braine, Bernard Cooke, Robert
Barber, Anthony Brewis, John Cooper, A. E,
Barlow, Sir John Brooke, Rt. Hon. Henry Cordeaux, Lt.-Col. J. K.
Barter, John Brooman-White, R. Corfield, F. V.
Batsford, Brian Brown, Alan (Tottenham) Costain, A, P.
Beamish, Col. Sir Tufton Browne, Percy (Torrington) Coulson, Michael
Bell, Ronald Bullard, Denys Courtney, Cdr. Anthony
Berkeley, Humphry Bullus, Wing Commander Eric Craddock, Sir Beresford
Bidgood, John C. Burden, F. A. Crosthwaite-Eyre, Col. Sir Oliver
Biffen, John Butler, Rt.Hn.R.A. (Saffron Walden) Crowder, F. P.
Bingham, R. M. Campbell, Gordon (Moray & Nairn) Cunningham, Knox
Birch, Rt. Hon. Nigel Carr, Compton (Barons Court) Curran, Charles

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 160, Noes 223.

Currie, G. B. H. Lancaster, Col. C. C. Prior, J. M. L.
Dalkeith, Earl of Langford-Holt, Sir John Prior-Palmer, Brig. Sir Otho
Dance, James Leather, E. H. C. Profumo, Rt. Hon. John
d'Avigdor-Goldsmid, Sir Henry Legge-Bourke, Sir Harry Proudfoot, Wilfred
Deedes, W. F. Lewis, Kenneth (Rutland) Pym, Francis
de Ferranti, Basil Litchfield, Capt. John Quennell, Miss J. M.
Digby, Simon Wingfield Lloyd, Rt.Hn. Geoffrey (Sut'nC'dfleld) Rawlinson, Peter
Donaldson, Cmdr. C. E. M. Lloyd, Rt. Hon. Selwyn (Wirral) Redmayne, Rt. Hon. Martin
Drayson, G. B. Loveys, Walter H. Renton, David
du Cann, Edward Lucas, Sir Jocelyn Ridley, Hon. Nicholas
Elliot, Capt. Walter (Carshalton) Lucas-Tooth, Sir Hugh Rodgers, John (Sevenoaks)
Elliott, R. w. (Nwcastle-upon-Tyne, N.) McAdden, Stephen Roots, William
Errington, Sir Eric MacArthur, Ian Russell, Ronald
Farey-Jones, F. W. McLaren, Martin Scott-Hopkins, James
Farr, John McLaughlin, Mrs. Patricia Shepherd, William
Finlay, Graeme Maclay, Rt. Hon. John Skeet, T. H. H.
Fisher, Nigel Maclean, Sir Fitzroy (Bute & N. Ayrs.) Smith, Dudley (Br'ntf'd & Chiswick)
Fraser, lan (Plymouth, Sutton) Macleod, Rt. Hn. lain (Enfield, w.) Smyth, Brig. Sir John (Norwood)
Freeth, Denzil MacLeod, John (Ross & Cromarty) Spearman, Sir Alexander
Galbraith, Hon. T. G. D. Macmillan, Maurice (Halifax) Stanley, Hon. Richard
Gammans, Lady Macpherson, Niall (Dumfries) Stevens, Geoffrey
Gilmour, Sir John Maitland, Sir John Steward, Harold (Stockport, S.)
Goodhart, Philip Manningham-Buller, Rt. Hn. Sir R. Stodart, J. A.
Goodhew, Victor Markham, Major Sir Frank Stoddart-Scott, Col. Sir Malcolm
Gower, Raymond Marlowe, Anthony Storey, Sir Samuel
Grant, Rt. Hon. William Marshall, Douglas Studholme, Sir Henry
Grant-Ferris, Wg. Cdr. R. Marten, Neil Tapsell, Peter
Green, Alan Matthews, Gordon (Meriden) Taylor, Sir Charles (Eastbourne)
Hall, John (Wycombe) Maxwell-Hyslop, R. J. Taylor, Frank (M'ch'st'r, Moss Side)
Hamilton, Michael (Wellingborough) Maydon, Lt.-Cmdr. S. L. C. Teeling, Sir William
Harris, Frederic (Croydon, N.W.) Mills, Stratton Temple, John M.
Harris, Reader (Heston) Miscampbell, Norman Thatcher, Mrs. Margaret
Harrison, Brian (Maidon) Montgomery, Fergus Thomas, Leslie (Canterbury)
Harvie Anderson, Miss More, Jasper (Ludlow) Thompson, Kenneth (Walton)
Hastings, Stephen Morgan, William Thornton-Kemsley, Sir Colin
Hay, John Morrison, John Tiley, Arthur (Bradford, W.)
Heald, Rt. Hon. Sir Lionel Mott-Radclyffe, Sir Charles Touche, Rt. Hon. Sir Gordon
Hinchingbrooke, Viscount Nabarro, Gerald Turner, Colin
Hirst, Geoffrey Neave, Airey Turton, Rt. Hon. R. H.
Hocking, Philip N. Nicholson, Sir Godfrey van Straubenzee, W. R.
Holland, Philip Noble, Michael Vane, W. M. F.
Hollingworth John Nugent, Rt. Hon. Sir Richard Vosper, Rt. Hon. Dennis
Hornby, R. P. Oakshott, Sir Hendrie Wakefield, Sir Wavell
Hornsby-Smith, Rt. Hon. Dame P. Osborn, John (Hallam) Walker, Peter
Howard, John (Southampton, Test) Osborne, Sir Cyril (Louth) Wells, John (Maidstone)
Hughes Hallett, Vice-Admiral John Page, Graham (Crosby) Williams, Dudley (Exeter)
Hughes-Young, Michael Pannell, Norman (Kirkdale) Williams, Paul (Sunderland, S.)
Hurd, Sir Anthony Pearson, Frank (Clitheroe) Wills, Sir Gerald (Bridgwater)
Hutchison, Michael Clark Peel, John Wilson, Geoffrey (Truro)
Irvine, Bryant Godman (Rye) Percival, Ian Wise, A. R.
Johnson, Eric (Blackley) Pickthorn, Sir Kenneth Wolrige-Gordon, Patrick
Johnson Smith, Geoffrey Pilkington, Sir Richard Worsley, Marcus
Jones, Rt. Hn. Aubrey (Hall Green) Pitman, Sir James Yates, William (The Wrekin)
Kerans, Cdr. J. S. Pitt, Miss Edith
Kerby, Capt. Henry Pott, Percivall
Kimball, Marcus Powell, Rt. Hon. J. Enoch TELLERS FOR THE NOES:
Lagden, Godfrey Price, David (Eastleigh) Mr. Whitelaw and Mr. Rees.
Lambton, Viscount Price, H. A. (Lewisham, W.)