HC Deb 29 May 1962 vol 660 cc1245-77

(1) Section one hundred and forty of the Income Tax Act, 1952 (Payment for technical education), shall apply to a payment of wages made to an apprentice of the claimant, being an apprentice undergoing, whether in the place of business of the claimant or elsewhere, a course of instruction approved by the Commissioners after consultation with the Industrial Training Council, as it applies to such a payment as is mentioned in that section.

(2) Where by virtue of the said section one hundred and forty or of the said section as applied by the last foregoing subsection a payment may be deducted as an expense in computing the profits or gains of a trade for the purposes of income tax, there may be made in addition to that deduction a further deduction equal to one third of the first-mentioned deduction and the said section one hundred and forty shall apply to that further deduction as it applies to the first-mentioned deduction.

(3) This section shall not apply in relation to more than five persons in respect of whom the claimant makes such payments as are mentioned in the said section one hundred and forty or in subsection (1) of this section.

(4) Nothing in this section shall affect any deduction from the profits or gains of a trade which may be made for the purposes of income tax otherwise than by virtue of this section:

Provided that the same deduction shall not be made both by virtue of this section and otherwise.—[Mr. Albu.]

Brought up, and read the First time.

Mr. Austen Albu (Edmonton)

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

The Deputy-Chairman

With this Clause it would be convenient to discuss the new Clause —Professional payments to educational establishments.

Mr. Albu

That will be convenient, Sir Robert. This Clause deals with relief in respect of apprentices. Section 140 of the Income Tax Act, 1952, relates to payments made by a firm to a technical college or to a university on behalf of its employees, mainly apprentices. This is not the first time that this Clause has been moved but, as we know, it is sometimes a case of second or third time lucky. I am very glad to see the Parliamentary Secretary to the Ministry of Labour present tonight. The purpose of the Clause is two-fold. The first purpose is to put up the relief to one and one-third times the payment made. The second purpose is to extend the relief at the higher rate—that is to say, at one and one-third—to the wages paid to an apprentice undergoing an approved course of instruction, whether in a works or, with the increasing number of commercial apprentices, even in an office, In other words, whereas at present the relief is extended to payments made to technical colleges and universities—of course, there is ordinary relief for the ordinary wages—the Clause increases the amount of relief to one and one-third both for wages and for payments made to educational institutions.

We have limited the number of apprentices who will be covered in this way to five, the intention being to provide the greatest incentive to the small firms, where it is generally considered that the need is greatest. Nobody doubts our need for more skilled workers, and in the last few years continuing discussions have been going on both about the number of apprentices and the quality of apprentice training. On several occasions we have pressed the Government to take advantage of the bulge coming out of the schools so as to be able to train the greater number of skilled workers that most of us think will be needed in the future. The Ministry of Labour has been having discussions with both sides of industry about the form that apprenticeships should take.

In recent months there has been a slight rise in the overall numbers of those undergoing what are called apprenticeships or learnerships—although I do not know much about their quality—but it is really only proportionate to the rise in age groups. It is certainly not happening at a sufficiently fast rate to take account of the urgent needs of the country. The recent study made by the Ministry of Labour of the composition of the unemployed and all other existing information shows that there is still a great need for more skilled workers in many trades.

But this is not merely the current situation. Most of us believe that, with the changing composition of industry, the need to use our technological lead as other countries develop their own industries, and the need to increase our exports, especially of capital goods, in highly scientific fields, the number of skilled workers required will be greater than can be measured merely by extrapolating the present trend. This was the mistake made by the Committee on Scientific Manpower, and this mistake is also made by those who attempt to discover what will be the need for skilled workers. The trend will rise very rapidly in the next few years.

It is generally believed that it is the small firms which are not doing their share, and it is therefore slightly surprising to find, in the recent report published by the Engineering Employers' Federation on Recruitment and Training of Young Persons in the Engineering Industry—where they have divided the ratio of apprentices to skilled workers according to the size of the firm—that there is an inverse ratio between the size of the firm and the number of apprentices. The ratio of apprentices to skilled men is highest in the small firms and becomes progressively lower as the firms become bigger.

The Parliamentary Secretary to the Ministry of Labour (Mr. Alan Green)

indicated assent.

Mr. Albu

I see that the Parliamentary Secretary nods his head. That is a surprising result—so surprising that I suspect that the hon. Gentleman is as suspicious of the figures as I am. I suspect that the real truth is that in the small firms many apprentices are receiving little or no training, and are in fact being used merely as cheap labour. Certainly the large engineering firms which have elaborate training schemes, with training workshops, proper instructors and proper courses, have said in recent years that they are doing as much as they possibly can do to train skilled workers, and that they lose these skilled workers to the smaller firms, which do not provide the same amount of training. I suspect that the reason for these figures is that the larger firms provide very good training and produce very highly skilled workers, whereas the training received in many smaller firms is minimal.

The same report makes it clear that only just over one-third of the workers in the appropriate age group—that is to say, 16—are attending a works school in a proper training workshop. It is generally agreed that in engineering and many similar industries it is essential to obtain as many apprentices as possible for initial training in a workshop, under properly qualified instructors, if the subsequent apprentice training is to be really good. It is the only way in which good habits of work can be learned—quite apart from the theoretical instruction—and it provides the best and most up-to-date method of ensuring that the processes carried on in the trade can be learned.

7.45 p.m.

I am certain that the early months which a young man spends in industry very much determine his attitude to work for the rest of his life, apart altogether from the quality and skill which he acquires. This is also shown in the report. There is a very high level of wastages from apprenticeships, especially in the early months. The reason given in the report is not that the apprentices are generally unsuitable, but that they become "browned-off";they do not know where they are going, and do not get any lead—and they probably get no instruction.

This is a serious matter. It is all very well to have a large number of people claiming that they are receiving apprenticeships; but many of these figures are based on what the small employers or the apprentices themselves say. An apprentice may say, "I am serving an apprenticeship", when it is probably not an apprenticeship at all. If the figures are also inflated by a high degree of wastage—or, rather, if the higher figures are deflated by a high degree of wastage—we are losing, and the total number coming out at the end will be less than anticipated.

Small firms may not be able to afford proper training workshops or works schools, and they certainly cannot afford qualified instructors, but they should be encouraged to use the training workshops in Ministry of Labour training centres and training colleges where these are provided. I am talking not of the pre-apprenticeship period but of the first months or the first year of the apprenticeship. The unions are becoming increasingly aware of the fact that this is part of the apprenticeship.

I heard a very interesting discussion on the subject this year, at Folkestone, by the National Committee of the Amalgamated Engineering Union. That union is by no means the least militant, or the most pliable, but it is becoming extremely flexible in its attitude towards apprenticeships, and now realises that with the changing pattern of technologi- cal needs it may be necessary also to change the pattern of apprenticeships. It is prepared to recognise that the time spent in training in a workshop outside the firm can be counted towards the apprenticeship. In passing, before I am called to order, I should say that this will need a larger number of trained craft instructors than now exist.

The new Clause would allow relief in respect of apprentices in technical education only for a course of instruction approved by the Commissioners after consultation with the Industrial Training Council. I inserted that provision because this Council is the best that there is at the moment. If it were given this function it might well develop some real authority. This would enable the Government not only to increase the number of apprenticeships because of the incentive given, but also to improve the quality of apprentice training because the relief would not be given unless the training were approved.

I consider this matter to be extremely urgent. Although in this country we have some outstanding apprenticeship schemes, and some firms have done outstanding work, generally speaking the level is probably inferior to that in most European countries. At the recent conference on the subject held by the British Association for Commercial and Industrial Education it was almost unanimously agreed that there was a need for some body to control the standards of apprentice training. It was felt that it could no longer be left to individual firms to call something a training and aprenticeship which in fact covered no systematic or formal instruction whatsoever.

This matter will become increasingly important especially if, in the end, we enter the European Economic Community. One of the aims of the Community is to try to bring about some generally agreed principles for occupational training, presumably in aid of those clauses in the Treaty referring to the free movement of labour;but also, I think, because the Community realises that if the European economy is to continue there is a need for industrial training. The Commissioners have put forward proposals for general principles and a common policy for occupational training which I am sure is being studied by the Ministry. It certainly should be. I believe it will be found necessary far us to improve our methods.

I have no doubt that the Financial Secretary will talk about the difficulties connected with this proposed new Clause. For example, for what period are the payments to be made; for how many years? I do not wish to commit myself in what is a highly controversial argument. But perhaps I may go so far as to say that I am prepared to see the relief given for three years without this in any way committing either side of industry to what should be the full period of apprentice training. In my opinion the period should be three years. This could be done in another way. But it should be a period of an approved form of training—approved by the Industrial Training Council, or same other body if the Minister can find some other better body to do it—or a period of training agreed between the trade unions and industry. It could be a period in which a man is coming up to his full rate of pay. I do not think we need argue about what it is called.

Any such period of training would have to start with a period in a works school or training workshop under properly qualified inspectors and continue with approved in-works periods up to a total of three years at the minimum. There might be other ways of doing it but there would not be much difficulty in defining that from the point of view of the Commissioners. There may be objections to the principle of allowing relief at more than 100 per cent. of expenditure, but that is not new. The investment allowance does this already and I was interested to see recently that the Canadian Government propose to allow one and one-third relief on sums spent on research by Canadian industry. I do not think that the Canadian Government have gone so far as to put that on the Statute Book, but I understand that it is a proposal. So the idea of allowing more than 100 per cent. relief as a subsidy or incentive to people to do things we want them to do is not new.

What would it cost? This is always a difficult question for the layman to work out. The amount cannot be very great. I suggest that about £2 million is probably near the mark. I should think that it would be well worth that. Not only would there be an incentive to increase the number of apprentices, but, what is equally or perhaps more important, it would provide an incentive for better apprenticeship schemes in those firms, mainly the smaller firms, which so far do not have these schemes. It would not have much effect on the big firms which have good schemes, but it would greatly improve the quality because there would be less wastage because of people being half-trained.

This type of relief is likely to provide a reward for the economy as a whole which would be much greater than the cost to the taxpayer and it is a type of relief which I think the Government should consider seriously. The idea has been proposed two or three times before. My experience is that if one proposes something on two or three occasions, eventually one may win. I hope that on this occasion the Financial Secretary will be more forthcoming than on the last occasion.

Mr. Geoffrey Stevens (Portsmouth, Langstone)

I do not know anyone who has been a more consistent advocate of more technical and scientific education, both inside this Chamber and outside, than the hon. Member for Edmonton (Mr. Albu). I doubt whether the hon. Gentleman is satisfied with the progress made in the last few years. There has been substantial progress, but I doubt whether he is satisfied, so I would remind him of the old adage that Constant dripping hollows out a stone. I am not suggesting that any of my right hon. and hon. Friends on the Front Bench bear the slightest resemblance to anything of that sort. But if the hon. Member is not satisfied I hope that he will not relax his efforts.

I cannot find it in my heart to disagree with anything he has said save for one thing. The hon. Gentleman did what I should have thought impossible. He tried to give some estimate of the cost which would be involved were this new Clause accepted. I have no more knowledge than he has on the subject, but had I been the hon. Gentleman I do not think I would have ventured a figure, because it is extremely difficult.

Mr. Albu

There is no magic in the figure I gave. I took the number of apprentices which the Ministry of Labour reports to exist and what I thought might, roughly, be their wages, and I averaged it out over three years and from there on the hon. Gentleman can work out the rest.

Mr. Stevens

I accept that. But surely the whole object of the new Clause is to increase the number of apprentices and so automatically the cost would increase as well.

I suggest that the cost of implementing the provisions in this new Clause would be very much greater than the cost involved by the acceptance of the new Clause—Professional Payments to Educational Establishments—which we are discussing with the hon. Gentleman's new Clause. Whereas his Clause extends the payment of wages to apprentices, the new Clause to which I have referred would make a very modest extension of the existing Section 140 of the Income Tax Act, 1952.

As the hon. Gentleman has said, it deals with the allowances for tax purposes on payments made by a trader to a university, college or other establishments for technical training in the trade to which the trader belongs haying established proof for the purposes of Section 140 by the Minister of Education. This is not the first time that this subject has been debated. Indeed, an Amendment to the Finance Bill No. 2 which became the Finance Act of 1946, was moved by Lord Gridley, then Sir Arnold Gridley, the Member for Stockport, to add the words, "or profession" after the word "trade" wherever the word "trade" appeared. Lord Gridley made a short speech and was followed by my hon. Friend the Member for Ayr (Sir T. Moore) who made a much longer speech. The late Lord Dalton, the then Chancellor, wound up. He said he was not prepared to advise the Committee to accept the addition of the words "or profession", but he did not reject the principle. He said that this concession was a new idea and he thought it would be wise to go step by step and stage by stage and let the concession apply to payments by traders in the first instance and see how it worked out. He did not exclude the possibility of extending it to the professions at a later date. It is sixteen years since then—a very much later date. The point made by Lord Gridley and my hon. Friend the Member for Ayr was to ask why this distinction was made between traders and professional people.

8.0 p.m.

Is it a good thing to increase the number of traders and a bad thing to increase the numbers in the professions? Do we not need more engineers and technicians? I should have thought so. There seems to be no logical reason for this distinction. There may well have been a practical one, and Lord Dalton suggested that we should take this matter stage by stage. I believe that the Section has worked very well, and I see no reason why we should not now consider extending it to the professions.

The hon. Member for Edmonton was venturesome in hazarding a figure for the cost of his new Clause. I shall not hazard a guess at the cost of mine in adding the words "or professions", except to say that I am sure that it would be trifling, because the educational establishments concerned must be approved for that purpose by the Minister of Education and, consequently, the number of such colleges and institutions would be limited. Since it seems such a dogicial thing to do and since it is sixteen years since the Committee agreed that it should go forward stage by stage, I hope that my hon. Friend the Financial Secretary will be able to say that he is agreeable to my proposal.

Mr. Harold Finch (Bedwellty)

The purpose of the Amendment is to give some added inducement to the small employer to do something more than he is doing now by way of providing apprenticeship schemes and training young people in skilled occupations. We need more technicians and craftsmen if we are to be successful in competition with other countries. We are short of them, and I am sure that the Committee will recognise that the position is becoming in some respects very serious. We are falling behind other nations in producing conditions which will enable the country through its technicians and craftsmen to meet present-day competition.

Many of the larger firms have been doing a great deal in training young people. They have the resources and are able to do the job. They have their own training schemes and they train many young men and women for technical work, but the smaller employer is at a serious disadvantage. Many small employers normally find it difficult to carry unproductive labour costs, and the majority of firms employ fewer than 100 people. This is the trouble when we consider apprenticeship schemes in this country, and the purpose of the Amendment is to give these people additional help.

The Government issue White Papers and give instructions to the Ministry of Labour to encourage apprenticeship schemes, but here is a great opportunity to do something tangible to help the smaller employers to train young people. While the costs incurred by a company in training labour can be considered a long-term investment, many small firms have not the wherewithal for this purpose, and the cost involved is heaviest during the first twelve months when young people have to attend a technical college or an institute. The small employer is unable to meet these costs and he is discouraged by the seeming lack of enthusiasm for apprenticeship schemes.

We must realise that apprenticeship schemes depend upon the employer. It is he and not the education authorities who is responsible for the apprentices. It is wrong to put an apprentice on full-time production work, inasmuch as by so doing he is not receiving instruction in the wider aspects of the vocation for which he is trained. But the employer loses his services in these apprenticeship schemes.

In some areas, such as Treforest, there are group apprenticeship schemes under which an employer will release his apprentice to go to another employer for a time to gain additional knowledge and experience, but the first employer loses the advantage of the training in those circumstances. In South Wales, many large employers such as the Steel Company of Wales, Richard Thomas &Baldwins and the nationalised coal industry have their own training schemes, and they spend a great deal of money on the education of their apprentices in the Cardiff School of Technology. The small employer cannot do this, and yet the future of the appren- tice depends to a large extent on what the small employer can do for him.

I notice that the Western Mail recently reported a meeting of the Welsh Board of Industry where it was stated that although 4,200 apprentices were taken on in Wales in 1961, an increase of nearly 25 per cent. over 1960, the absorption of young people into industry was still 10 per cent. below the national average. Here again this is largely due to the difficulties of the smaller employer. The Western Mail pointed out in a leading article that any incentive that in any way would help the small employer to adopt these apprenticeship schemes would be very valuable to the country and to the employer himself.

Day releases are of some assistance to young apprentices, but they are not entirely satisfactory. Some apprentices work an afternoon shift or a night shift and attend evening classes. My hon. Friend the Member for Edmonton said that young men get fed up with it. There is too much for them to do and they are discouraged. We also make use of block releases and sandwich courses, but these are costly.

The Amendment seeks to give these employers some help. I hope that the Government will assist in this matter. Whether they do it strictly on the lines of the Amendment is neither here nor there. They may well have something else in their minds. It is our purpose to improve apprenticeship schemes and to put the country in a better competitive position. We are falling behind, and the difficulty arises with the small employer. The costs are too much for him, but if he is given an incentive tonight through action on the part of the Chancellor he will be encouraged to give greater help to young apprentices who desire to take up these schemes but who are now barred in many cases because their employer is not in a financial position to help them.

Mr. B. T. Parkin (Paddington, North)

I would not presume to try to add to the forceful arguments advanced by my hon. Friend the Member for Edmonton (Mr. Albu), who has put so much time and skill into his work on this subject, here and outside, but before the Minister replies I should like to call his attention to one particular aspect of the problem, which I hope will interest him, and which is extremely important. It is the London aspect.

There was a time when parents seeking to indenture their children as apprentices would, probably wisely, seek out a small employer. Even the one-man business could in those days have offered the best training a young boy could hope for. The difficulty in the London area now is to find small firms in small industries which will offer the same kind of opening. The Ministry of Labour does first-class work in London, and its officials give the best advice to parents seeking it, but it is natural that they should know most about the biggest firms that have the best schemes.

There is developing in London the strange phenomenon of small, skilled industries being squeezed out—a sort of Gresham's Law operation—because they do not offer opportunities to children leaving school to learn some of the very important crafts and skills that ought to be preserved. When the small, skilled industries are squeezed out they are replaced by industries offering less prospect to skill, and that we cannot afford in London.

In the big overcrowded cities there is already enough demand to put the severest strain on our capacity to find dwelling accommodation for those earning modest wages in semi-skilled and unskilled service occupations. We cannot afford a layer of surplus fat in the form of more semi-skilled and unskilled industries setting up in such factories as survive even with the strictest supervision of the planning authorities; the sort of industrial undertakings in the big cities of which no one ought to be proud, offering, as they do, a refuge to the type of people who ought, with all the advantages that the big cities can offer, to be doing better.

All the big cities, and particularly London, can offer technical training of every possible variety. Whatever one wants to learn one has, in London, only to make a telephone call to find some class to join, some way of getting the book learning about the skills of all these industries. Unfortunately, to get an apprenticeship where one can put that learning to practical application in day-to-day work is, indeed a rare thing.

I hope that the Minister will consider that aspect when he replies. I know that his right hon. Friend the Minister of Labour will confirm what I say, and I hope that what I say will be accepted as an additional argument for seeking any device that can be found, including this one, to attract the smaller employer into going to the Ministry of Labour and making contacts with parents. There, again, it is so much more difficult for the small man in London to get suitable apprentices. London is not a village or small town where everyone knows of a small business that can give training in certain skills. It is a question of getting parents to meet employers and employers to meet potential apprentices. A small push in that direction might save these small but important industries that one would much rather have in London than the agglomeration of unskilled work in slum factories.

8.15 p.m.

Mr. Cledwyn Hughes (Anglesey)

Notwithstanding the admirable speech of my hon. Friend the Member for Paddington, North (Mr. Parkin), I venture to say that this new Clause is of greater significance to Wales than to any other part of the United Kingdom, as I shall seek to show.

Over a wide area of mid-Wales we have the problem of depopulation, and in other parts of the Principality we have the problem of high and chronic unemployment. I refer to those two major problems only in passing—we have debated them many times in the House, and will return to them again in the Welsh Grand Committee tomorrow morning when we discuss rural Wales—but the reference is relevant, because where there is a shortage of work there are very few facilities for apprenticeships.

That is why such a large proportion of our boy and girl school leavers have to leave Wales and their own localities and go to the industrial conurbations of England to become apprenticed or get other training. That is a process that we want to stop; it has gone on for far too long.

In a Parliamentary Answer on 21st May, the Minister of Labour gave some very alarming details of the situation in Wales. Of the number leaving school between December, 1961, and—presumably—21st May, only 19 per cent. of boys and 4 per cent, of girls obtained apprenticeships. As the national average is 35 per cent. for boys and 7 per cent. for girls, our average is just above half the national average. The Government should take some positive, constructive steps to ensure that in Wales generally and particularly in Mid-Wales and North Wales, a greater number of these boys and girls have the opportunity of apprenticing themselves.

The education authorities in Wales have done a good job; they have made adequate provision. As my hon. Friend the Member for Bedwellty (Mr. Finch) said, there is ample provision in South Wales. In North Wales, Flintshire and Denbighshire we have excellent technical colleges, but the industries there are small—outside Wrexham and industrial Flintshire—very successful but very small. Many of the industries I have in mind are peculiarly suitable for apprenticeship purposes. The Report of the Rural Industries Bureau for 1959 instances the kind of small industries that have in recent years been built up in the rural areas. It states: It might surprise some that amongst the small producers with whom the Bureau has been in touch, and has helped, are manufacturers of dentists' chairs, glass fibre kitchen sinks, scientific instruments, television masts and aerials, surgical appliances for spastics, plastic flooring, lithographic printing machines, and many hundreds of other products equally as diverse and unrelated. These new industries are being built up in the rural areas and are making an important contribution, but because of the lack of means, the industrialists concerned are not able to take apprentices as they would wish. Therefore, I welcome the proposed new Clause. I am not suggesting that it would solve the entire problem. It may need redrafting but, nevertheless, it would help to increase the number of apprentices in the area.

Educational opportunities are as good in Wales as anywhere else. The percentage of our grammar school leavers entering university is, with Scotland, the highest in the United Kingdom. There is a need for some positive Government action to assist us and the proposed new Clause may be the way in which we can be most effectively helped. I hope that the Financial Secretary will accept it, or at least suggest an alternative which will be an inducement and an encouragement to employees.

Sir E. Boyle

This has been an interesting debate. It is always a pleasure to hear the hon. Member for Edmonton (Mr. Albu) speak on questions dealing with technical education and industrial training and there were moments in the discussion when I felt that I had strayed into a Ministry of Labour Supply day and I am sure that the Committee is extremely glad that we have had the company of the Parliamentary Secretary to the Ministry of Labour throughout the debate on this subject.

The intention of the new Clause in the name of the hon. Member for Edmonton —on which I shall spend the greater part of my remarks although I shall later come to the matters being discussed with it—is to give, through the taxation system, a Government subsidy in aid of the non-productive wages paid to apprentices who are released to undergo formal instruction, and also the costs of other training.

This is an important subject and it is the first time we have discussed it since the Finance Bill of 1959. It might be helpful and, I hope, in order, if I set the scene for my reply by first saying something about the existing tax treatment of expenditure associated with apprenticeship schemes. This treatment is really generous although I realise that there are a certain number of misconceptions prevalent about it. As our tax code now stands, both the Revenue expenditure and capital outlay which a trader may incur in connection with apprentice training schemes receive some recognition.

Revenue expenditure is deductible as a trading expense in the ordinary way and capital outlay on the provision of assets which the trader uses for training purposes can be the subject of a claim for the ordinary scheme of capital allowances appropriate to the asset in question. That means, first, that the wages paid to apprentices are deductible in full, notwithstanding that part of the wages may relate to periods when the apprentice has been released from productive work to attend classes at technical college or institution.

Secondly, the tuition fees which traders pay to an institution which these juveniles attend for further education are also deductible, just like any other revenue expenditure on welfare. I am told that if a trader himself organises courses of instruction on his own factory premises, the remuneration of the instructors can be deducted as well. Thirdly, the assets which the trader provides in connection with a scheme of his own for the training of apprentices and semi-skilled manual workers will generally rank as industrial assets. An extension to his factory to afford accommodation for training would rank as an industrial building and the movable equipment would rank as plant and machinery. Thus he can claim allowances in respect of all of this outlay.

In addition, there is special relief, to which reference has already been made, in respect of payments for technical education conferred by Section 140 of the 1952 Income Tax Act. That Section was intended to give a trader a tax deduction for a donation to an approved technical college to support the giving of technical education in some subject relating to his trade in any case where no such deduction would otherwise have been due.

All that added together seems to me quite reasonably generous tax treatment. I am tempted to anticipate a rather obvious question. I have not made a study of other countries in Western Europe but I can assure hon. Members that the points I have mentioned must rank as being reasonably generous tax treatment.

Mr. G. R. Mitchison (Kettering)

Supposing there is, as we were told there was in Wales, an apprenticeship scheme within an industry. Do the benefits which the Financial Secretary mentioned accrue to someone who is a partner or takes part in such a scheme—such as an employee—irrespective of whether the instruction is given in his own place of employment or somewhere else? Are the firms participating treated as a unit for tax purposes?

Sir E. Boyle

I think that that was implicit in what I was saying but I will gladly consider the matter further. I should have thought, however, that that was implicit from the remarks I have made.

One idea that has got around is that the Inland Revenue imposes some restriction on the allowance for tax purposes of apprentices' wages. There is no truth in this. The wages of apprentices rank as a deduction for Income Tax and Profits Tax. Admittedly it is sometimes said that this allowance covers only about a half of the wages paid in respect of the hours during which an apprentice is released for formal instruction. The point is that the wages paid in respect of these hours are wages paid for hours which add nothing to current production and the expenditure to some extent must be paid out of the trader's own pocket, even after the tax allowances have been taken into account. That does not mean, as some have suggested—and this is not true—that only a half of that wage payment is accepted by the Revenue as business expenditure, for it is all accepted.

A second misconception is prevalent —that it is part of the function of Section 140 of the Act to give a deduction when the trader pays tuition fees for the instruction of his apprentices. That is indeed a misconception, because Section 140 does not come into the picture at that point. It is really a very limited purpose which I have described —simply that the fees would be deductible in the normal way as ordinary business expenses.

I want now seriously to consider the objectives which lie behind the proposed new Clause and I must make a few comments on the drafting, because, with great respect to hon. Gentlemen opposite, its drafting does not come up to the extremely high standard of the drafting that we have had on Amendments to the Bill. Subsection (1) of the draft new Clause states: Section one hundred and forty of the…Act …shall apply to a payment of wages made to an apprentice …undergoing…a course of instruction …as it applies to such a payment as is mentioned in that section. The whole point of Section 140 is that it deals with donations which would not be deductible under the general rule for computing trade profits whereas apprentices' wages are so deductible. Thus subsection (1) would not achieve anything at all and the same objection affects subsection (2). I do not wish to be niggardly about its drafting, but the closing words of subsection (2) can only mean that the Clause, as it were, chases its own tail. The last three or four lines, taken on their face value, would seem to state that if the bonus of one-third is to be treated as it is within Section 140, the proposed new Clause would give a further bonus of one-ninth, one-twenty-seventh, and so on.

It is some years since I took the school certificate, but, if I remember rightly, the sum of the convergent series one-third, one-ninth, one-twenty-seventh, and so on, is one-half, and that, for the sum to infinity of a geometrical progression, the formula is R over 1 minus R. Perhaps that was not the intention of hon. Members in framing the subsection. There are some obscurities in subsection (3) with which I shall not trouble. It seems to me that the wage payments, which are ostensibly the chief concern of the new Clause, would fall completely outside it. The only effect of the Clause would be to increase by a bonus addition, which hon. Members in the law would enjoy calculating for themselves, the deduction already given under Section 140 for donations to approved technical colleges and other institutions. I do not think the Committee would be well advised to accept this suggestion.

The deduction allowed in Section 140 cases is in itself anomalous in that it is at variance with the general principles regarding the taxation of business profits. It is an exception to the general principle that, to be deductible in computing trading profits, expenditure should possess a direct connection with the process of earning those profits. I do not suggest for a moment that we should here and now do away with Section 140, but I do not believe it can be sensible to single out this fairly limited deduction in Section 140 for a bonus addition.

8.30 p.m.

I should now like to comment on what I believe is the real intention behind the Clause—[HON. MEMBERS: "Hear, hear."] —I apologise for being so long. I think that it was reasonable to point out what is already done in this tax field and then to point out that the new Clause as drafted did not carry out what I believe is the intention of hon. Members opposite.

I come to the question as to whether we should try to contrive through the tax system some kind of subsidy in connection with apprenticeship training. The whole question of apprenticeship training was fully discussed in the debate on 31st May last year. As has been said tonight, considerable progress has been made since that date, and mare boys and girls obtained apprenticeships and learnerships in 1961 than ever before. The numbers were 115,000 boys, which is 37.9 per cent. of all boys entering employment, and 20,500 girls, which is 7.2 per cent. of all girls entering employment. The figures for boys are a record both in numbers and as a percentage. The percentage for girls has been beaten before, but I am told that the overall figure for boys and girls is a record. The number of boys is 11 per cent. up on 1960 and the number of girls is 3 per cent. up. What is more, this increase is being maintained. In the first four months of 1960, the number of boys who obtained apprenticeships or learnerships was 39,000 as against 36,900 in the first six months of 1961, and the number of girls was 7,900 as against 7,300 in the first six months of 1961.

I am sure that no one in the Committee would wish to dispute that investment in skilled labour—investment in human beings, one might say—is even more important than adequate investment in machines, but, none the less, I do not believe it would be right to use the tax system as a means of giving a Government subsidy towards the cost of apprentice training. Apart from the principle involved, there would be serious difficulties in singling out expenditure on apprenticeship training as the subject of a special taxation bonus. A wage payment to an apprentice in respect of the hours during which he is released from productive work for instruction is, no doubt, extremely desirable from the economic and social points of view—I do not dispute that—but it is by no means the only form of payment which could be said to be desirable socially but which makes no direct contribution, or less than the normal contribution, to output.

I do not believe that, if we agreed to this proposal, it would stop there. I have no doubt that a similar claim would sooner or later be put forward in respect of a number of other things. Let me mention two or three. For example, sick pay to employees absent through the consequences of illness or injury; compensation payments to wage earners displaced by a re-organisation scheme;or—surely hon. Members will agree that this is a fair example—the wages of disabled persons whose productivity is less than that of a person without a similar handicap. I am sure that all these are cases for which a strong social claim could he made.

Even to give effect to the present intention of hon. Members opposite would cost a good deal more. I must ask the Committee to excuse me from giving a precise figure, because this is a difficult matter. I thought, however, that the figure given by the hon. Member for Edmonton was a good deal too low.

Mr. Albu

The hon. Gentleman is talking about the number of reliefs which might be given for good social reasons, but the purpose of my Clause is to provide an incentive for apprenticeships. Is he suggesting that tax relief should never be used as an incentive? Surely, an investment allowance is not given on social grounds.

Sir E. Boyle

First, one has to consider investment in plant and machinery. Here, we are dealing with investment in human beings. It would not be possible to single out expenditure on apprenticeship training on economic and social grounds and not expect analogous claims to be made. I am sure that they would be made. I am not even sure that we could stop where I said that we could stop just now.

If we once started using taxation as a method of giving a hidden Government subsidy, there would be considerable pressure on the Government, first to grant tax reliefs for various forms of expenditure for which a good social case could be made but which did not rank for deduction under the ordinary rules, and, secondly, to give a fixed reduction for desirable expenditure which already ranked for tax relief.

The Government realise the need to stimulate the training of apprentices, and in spite of the encouraging figures I have quoted this is certainly not a subject about which any of us should be complacent. None of us, still less a Member like myself, who represents a Midlands constituency, can be in any doubt about the increasing need for skilled workers. Quite apart from technical education, industrial training also is a subject of major importance, and it will clearly be one to which the National Economic Development Council will give attention. My right hon. and learned Friend the Chancellor of the Exchequer referred to this possibility in his Budget speech, when he said: The Council will be considering matters under the direct control of Government …and matters which will more directly concern both sides of industry, for example, the recruitment and training of labour, restrictive practices, efficiency in management, the better use of skilled manpower."—[OFFICIAL REPORT, 9th April, 1962;Vol. 657, c. 969.]

Mr. C. Hughes

The hon. Gentleman has not directed his attention to the deplorable state of affairs in Wales. Where such a state of affairs exists, some special inducement should be given.

Sir E. Boyle

I cannot answer in detail about Wales, but I am bound to say that of all types of special inducement, discriminatory tax relief, so to speak—one that discriminates between one area and another—is about the worst. That adds to all the arguments I have used. It is one thing to have the Local Employment Act—quite another to use the taxation system for that sort of purpose.

Mr. C. Hughes

It would not be discriminating between one area and another but between one country and another.

Sir E. Boyle

These are points of terminology. If we deal with that, we shall make slow progress with the Bill. However desirable it may be to get more skilled workers, I cannot believe that the right way to solving the problem lies in giving special fiscal concessions which are hard to justify in principle and which, in practice, would be inequitable and difficult to work out. It would be invidious and against general confidence in the broad fairness of our taxation system to attempt to pick and choose between different types of socially desirable expenditures on human beings. Taking into account the unsatisfactory nature of the Clause of the hon. Member for Edmonton in itself, and also the difficulties both of principle and practice to which I have drawn attention, I must ask the Committee not to approve it.

I want to say now a word about the other Clause we are discussing. I can be a good deal briefer about this one. It seeks to give the taxpayer, relying on a provision assessable under Case II of Schedule D, the same relief in respect of gifts for technical education as is enjoyed by traders under provisions introduced in 1946 by the late Lord Dalton. Those provisions were deliberately included, as my hon. Friend the Member for Nottingham, South (Mr. W. Clark) admitted, in 1946. I have already stated that Section 140 is, in a sense, anomalous. It is at variance with the general principles governing the taxation of trading profits. This anomaly was created in 1946 in the national interest in order to encourage ever-increasing productivity.

I do not believe that we should be wise to enlarge Section 140 in the way which my hon. Friend suggested. I can say that the particular problem to which my hon. Friend drew attention could, in some circumstances, be met in another way, at any rate to some extent, if the institution receiving a payment could be set up as a charity. Individuals and members of partnerships making annual payments to it under its covenant would be able to get effective Income Tax relief for those payments. Looking back on the legislation as a whole, I do not think that it would be wise at this time to extend the ambit of Section 140 in the way my hon. Friend suggested.

Mr. Mitchison

The finale was magnificent. The idea of the Law Society as a charity is attractive but somewhat new. The speech as a whole was, if the Financial Secretary will allow me to say so with all respect to him, in the worst Treasury tone.

This Clause was discussed and criticised on almost exactly the same grounds in 1959. We did not alter it because, after all, what we really wanted to raise was a substantial question. We are bold enough to think that it does raise a substantial question.

There are two points. The first is about the present position. It is, of course, perfectly clear that wages paid to an apprentice are deductible as a trade expense. No one ignores that and no one doubts it. It is also perfectly clear that Section 140 of the 1952 Act provides for something rather different, that is to say, payments made by an employer to an educational establishment in respect of one of his own apprentices.

What strikes us about this is that these two things are not quite as separate as the separation which no doubt exists for taxation purposes. I think that the vital case is the kind of case that my hon. Friend mentioned in Wales. The difficulty about apprentices at present in a great many parts of the country and in a great many industries is that if we were to confine apprenticeships to a single man taking a single apprenticeship we should get nothing done at all. There are not enough large firms which take apprentices and there is not sufficient collaboration, as we see it, between the firms in the industry.

There are innumerable industries, one in my own constituency—the boot and shoe industry—which are traditionally small firm industries. There are parts of the country where this kind of difficulty is cropping up over apprenticeships. I remember my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) complaining about apprenticeship schemes in Cardiff on the ground that the local arrangements were not sufficiently elastic to allow apprenticeships to be given full effect to, and consequently there were many school leavers who wanted to become apprentices who were unable to do so. I am not denying that improvements have been made, but I want more to be made.

I come to the taxation position. I cannot see the difficulty of extending the provisions of Section 140, which already apply to educational establishments, to somebody else's works which are in effect acting as an educational establishment in the trade for the apprentice of a small employer. Is there any reason why the small employer who is entitled to deduct the cost of sending his apprentice to a school or institute of some sort should not be allowed to do so if he sends him to a large firm and has him taught there? At present, such a large firm, although it is training a man, is not treated as an educational establishment.

8.45 p.m.

I was very interested in what the hon. Gentleman had to say about group schemes of this kind, but he did not strike me as having had this kind of point very clearly in mind. I am not concerned with the drafting of the new Clause, although I do not think that it is quite as bad as the hon. Gentleman made out. It was put down deliberately in the same form because we wanted to raise the same series of points which have acquired added force in the interval.

The second point is the bonus element, the extra third. There are many instances, and the hon. Gentleman himself mentioned the obvious one. If there is an investment allowance for machinery, why cannot there be an investment allowance for apprentices? What is the difference when considering industry's future? If people are to be allowed an investment allowance and special tax treatment for the money they spend on scientific research in aid of their industry, why should they not be given similar treatment for what they do in the way of training, apprentices? I can see nothing do the least wrong or illogical in using the tax system for this purpose if there are, as there are, investment allowances and if one of the things specifically included is research and the like.

I think that we have heard a very narrow Treasury point of view and I thought that round the corner at intervals peeped the rather shy figure of a former Parliamentary Secretary to the Ministry of Education; but he found the atmosphere a little drafty and he hastily retired and went on with the Treasury brief. That is not the way that this sort of subject ought to be treated. If, for some reason or other, this is not the way to do it—and I appreciate that this is difficult ground and the sort of thing over which Government technical help is needed—the Government ought not to have waited for the Opposition to raise the matter three or four years after first raising it. They should have come forward with their own provisions to this end before now.

There is no doubt that there are anomalies, anomalies between one kind of instruction and another and anomalies between instruction in one place and instruction in another. There is no doubt that, although there has been improvement, there is every ground, even if only in fairness, for ask- ing for a tax inducement. I say on the ground of fairness because I understand that many employers who take apprentices do not do so for the money they get out of it or necessarily because they are to get the future work of the apprentices, but because they think that it is right that it should be done. If there are such employers and we want to increase their number, surely something of this kind is called for.

I hope that the Government will approach this matter from a less narrow point of view. We are not too well off in this country for apprentices and technicians and others upon whose skill we must increasingly depend to keep our position and our standard of living in the world. We have tried and succeeded in the past in doing a great deal more than that and if we are to go on doing it—whether we are dealing with skilled work and the possibility of skilled work by hand, or by brain, or a mixture of the two—we have to do all we possibly can to forward it in this country of all others. I have always been proud of what has been done in this country in that way, whether with eminent scientists or skilled workmen and not least by the type of people who carry on the small businesses in some parts of London, one or two of which have already been mentioned.

There has been any amount of special skills in areas such as, for instance, Holborn, up by the railway stations, and other parts of London that I can think of—I am a Londoner. There is a tradition there of small businesses in particular skills. That has, of course, been translated into bigger factories and bigger units of industries. But we are slipping behind in comparison with other countries in this respect. We really must consider what inducements we can obtain, and, above all when dealing with apprenticeships, whether the right unit in which to organise the apprenticeship system is not something larger than the small factory which is the actual operative unit in some trades. It is not a matter that one wants to discuss at great length now, but the broad reasons for that seem to be absolutely convincing, and a reply based on the kind of criticisms that the hon. Gentleman rather shyly made is not of much use to the Committee. What we want to know is why the Government object to this encouragement of apprenticeship and to the fostering of certain skills.

I should like to say a word about the proposed new Clause in the name of the hon. Member for Portsmouth, Langstone (Mr. Stevens). I appreciate the difficulties. One of them is perhaps that with regard to trade apprenticeship in the usual sense of the word it is often the case that the employer expects to get some future benefit from it. But those who go perhaps as articled clerks in some profession or another are usually taking what is really a course of instruction and going elsewhere when they have finished it. I see that there are distinctions between the two rôles of apprenticeship or articling, but I am bound to say that I think the Government are taking rather a narrow view of the whole question.

While I am primarily speaking to the Amendment put forward from this side of the Committee, if that were accepted I would hope that the rather larger question might be considered. The Section about which we are talking was brought in in 1946 under the Labour Government. Some water has flowed down the river since then, even under Tory Governments, and it is about time that the provision was enlarged.

Dr. J. Dickson Mabon (Greenock)

I hope that the Financial Secretary will respond to the question which has been put to him. With the natural patience of my countrymen, I have sat here listening contentedly to the speeches in the hope that the answer that we got would be as sensible as we expect from the hon. Gentleman, but I was disappointed.

There were at least two major contradictions in the hon. Gentleman's speech. In the first place, in the earlier part of his argument he said how generous the provisions were, and then he went on to condemn the idea of giving fiscal preference of this kind for this purpose as being very unsound in principle and very bad in practice. At this point I must say that I hope my hon. Friends will press the Amendment, even though it is defective in a number of drafting ways, to the point of a Division. It is quite reasonable that we should assert that the Government are wrong in dismissing the principle just as they have done.

The other contradiction was when the hon. Gentleman talked about the number of apprenticeships being at a record level and being very satisfactory, and later went on to say that no one could be complacent about the situation. No one in the counry has gone on record as saying that the rate of progress of apprenticeships is satisfactory, and no one, certainly not in Scotland, has said that the rate of increase in apprentices taking day release classes is at all satisfactory. That is, surely, the purpose of the exercise.

If the Financial Secretary is telling us that the Government recognise that the rate is not at all the rate that we want but at the same time there are no fiscal means now whereby we can promote it, I should find that an astonishing argument. But even if the hon. Gentleman said that. surely he would be able to say that the Parliamentary Secretary to the Ministry of Labour was going to make a statement later on, let us say, about the introduction of compulsory day release to provide some mechanism whereby industrialists would take on more apprenticeships. The Government cannot skate out of this part of the Finance Bill with the assertion that there are no fiscal means and that the principle is bad.

If the Financial Secretary is speaking on behalf of the Government, he should give a coherent answer to our very good argument, which affects so many of our constituents—admittedly, some who do not vote for us at this juncture but on whom, nevertheless, the future of the nation depends. I thought that it was agreed by both sides that we wanted to invest more and more in our skilled personnel. Practically the only raw material that Britain has is its skilled personnel for training.

Surely, therefore, it would be reasonable for the hon. Gentleman to respond, to express his regret at having said that in principle the Government are opposed to this proposal and to say that although they may not accept the Clause, he accepts that there is, possibly, an argument for fiscal inducement to improve the rate of apprenticeships. Surely, the hon. Gentleman will go at least as far as that. We do not ask him to say anything specific. We merely ask him to keep his mind open.

The Financial Secretary said that the National Economic Development Council was considering the matter and might make a recommendation. Are we to take it that if it recommends that there should be fiscal preference the Treasury with its cold, blank face will say that it cannot be done? Surely, it would not repudiate its brain child at this juncture.

The hon. Gentleman should not have been as firm and severe in what he said in his closing remarks about fiscal aids for apprenticeships. I plead with him, as we expect of a man of his intelligence and education, to put aside his dull, contradictory Treasury brief and to admit instead that there may he substance in the argument that by fiscal means we can aid industrialists, upon whom we depend, to step up the recruitment of apprentices and that we can aid them to encourage their apprentices to take more day-release classes and to take more advantage of technical education. If the hon. Gentleman goes as far as that, we will be content. If he does not, it is only right to challenge the Government on this issue.

Sir E. Boyle

We have been discussing the new Clause—very properly, for it concerns an important subject—for an hour and a half, but it is the usual experience of the Committee on the Finance Bill that approximately an hour and a half is a reasonable time to take on one new Clause. I will, however, respond to one point raised by the hon. and learned Member for Kettering (Mr. Mitchison) and answer the points raised by the hon. Member for Greenock (Dr. Dickson Mabon).

In answer to the hon. and learned Member for Kettering, I have ascertained the precise facts. Payments for the training of an employee's apprenticeship are allowable quite apart from Section 140 and an employer would be allowed the cost of paying for training in another's factory or in a group scheme quite apart from Section 140. This comes under the general principles which I enunciated at the start of my speech.

Mr. Mitchison

Is not the greater part of subsection (1) of the Clause already law and, therefore, it is practised?

Sir E. Boyle

Yes. I explained that it seemed to me that subsection (1) did not add to or subtract much from the situation and that the Clause made the mistake, as many people do, of assuming that Section 140 was relevant where it was not.

I am not unduly worried by the accusations of logical incoherence brought against me by the hon. Member for Greenock. There is nothing incoherent, for example, in saying that the trend of apprenticeships is a good one. The trend of the figures is good, but the result is not as good as we would like. I am happy to settle with the hon. Member for that formulation.

I purposely said something about our tax code as it now stood, and I mentioned what our tax system does in connection with apprenticeship training schemes. It is perfectly consistent to say what I did and at the same time to have doubts, which I expressed to the Committee, whether the tax system is well designed to perform the task which hon. Members had in mind when introducing the new Clause.

9.0 p.m.

In answer to the hon. Member's final point, I say that the Chancellor made quite clear in his Budget statement that the N.E.D.C. will be considering many matters affecting economic growth, and of course that includes recruitment and training for labour as well as a host of other important issues. What we have been discussing tonight has a bearing on all this, but I think it too early to say whether any particular fiscal measure would be the right way of tackling this intricate problem. I have given the Committee some reasons—which I stand by—for saying that I think there are some dangers in adopting this particular proposal, both on principle and in practice, but that does not mean that we have closed our minds for ever to all ideas of some fiscal measure for apprentice training if that can be justified on its merits, and we shall take full note of what the N.E.D.C. may recommend.

Mr. Mitchison

Since the responsibility rests with the Government and not with the N.E.D.C., since they have had three years to consider it and since they have altogether failed to meet the point to make an inducement for apprentice training and the like in this country, I shall advise my hon. Friends to divide the Committee.

Division No. 207.] AYES [9.1 p.m.
Abse, Leo Hart, Mrs. Judith Peart, Frederick
Ainsley, William Hayman, F. H. Pentland, Norman
Albu, Austen Henderson, Rt. Hn. Arthur (Rwly Regis) Price, J. T. (Westhoughton)
Allaun, Frank (Salford, E.) Holman, Percy Probert, Arthur
Allen, Scholefield (Crewe) Hooson, H. E. Proctor, W. T.
Awbery, Stan Houghton, Douglas Randall, Harry
Bennett, J. (Glasgow, Bridgeton) Howell, Denis (Small Heath) Rankin John
Benson, Sir George Hoy, James H. Roberts, Albert (Normanton)
Blackburn, F. Hughes, Cledwyn (Anglesey) Roberts, Goronwy (Caernarvon)
Blyton, William Hunter, A. E. Robertson, John (Paisley)
Boardman, H. Irvine, A. J. (Edge Hill) Rodgers, W. T. (Stockton)
Bowden, Rt. Hn. H.W. (Leics. S.W.) Irving, Sydney (Dartford) Rogers, G. H. R. (Kensington, N.)
Boyden, James Jeger, George Ross, William
Brockway, A. Fenner Jenkins, Roy (Stechford) Short, Edward
Broughton, Dr. A. D. D. Johnson, Carol (Lewisham, S.) Silverman, Julius (Aston)
Brown, Rt. Hon. George (Belper) Jones, Dan (Burnley) Silverman, Sydney (Nelson)
Brown, Thomas (Ince) Jones, J. Idwal (Wrexham) Skeffington, Arthur
Butler, Herbert (Hackney, C.) Jones, T. W. (Merioneth) Slater, Mrs. Harriet (Stoke, N.)
Callaghan, James Kelley, Richard Slater, Joseph (Sedgefield)
Castle, Mrs. Barbara Kenyon, Clifford Smith, Ellis (Stoke, S.)
Chapman, Donald Key, Rt. Hon. C. W. Snow, Julian
Collick, Percy Lawson, George Soskice, Rt. Hon. Sir Frank
Craddock, George (Bradford, S.) Ledger, Ron Spriggs Leslie
Crossman, R. H. S. Lee, Frederick (Newton) Steel Thomas
Cullen, Mrs. Alice Lever, L. M. (Ardwick) Stewart, Michael (Fulham)
Darling, George Lewis, Arthur (West Ham, N.) Stonehouse, John
Davies, G. Elfed (Rhondda, E.) Loughlin, Charles Stones, William
Davies, Harold (Leek) Mabon, Dr. J. Dickson Stross, Dr.Barnett (Stoke-on-Trent, C.)
Davies, Ifor (Gower) MacDermot, Niall Swingler, Stephen
Davies, S. O. (Merthyr) McInnes, James Taverne, D.
Deer, George McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Delargy, Hugh McLeavy, Frank Thornton, Ernest
Diamond, John MacPherson, Malcolm (Stirling) Timmons, John
Ede, Rt. Hon. C. Mallalieu, J.P.W. (Huddersfield, E.) Tomney, Frank
Edwards, Rt. Hon. Ness (Caerphilly) Manuel, Archie Wade, Donald
Edwards, Robert (Bilston) Mayhew, Christopher Wainwright, Edwin
Edwards, Walter (Stepney) Millan, Bruce Warbey, William
Evans, Albert Mitchison, G. R. Watkins, Tudor
Finch, Harold Monslow, Walter Weitzman, David
Fitch, Alan Moody, A. S. Wells, William (Walsall, N.)
Forman, J. C. Morris, John Willey, Frederick
Fraser, Thomas (Hamilton) Moyde, Arthur Williams, D. J. (Neath)
Galpern, Sir Myer Mulley, Frederick Williams, LI. (Abertillery)
Ginsburg, David Oram, A. E. Williams, W. T. (Warrington)
Gordon Walker, Rt. Hon. P. C. Oswald, Thomas Willis, E. G. (Edinburgh, E.)
Gourlay, Harry Owen, Will Wilson, Rt. Hon. Harold (Hyton)
Grey, Charles Padley, W. E. Woodburn, Rt. Hon. A.
Griffiths, David (Rother Valley) Pannell, Charles (Leeds, W.) Woof, Robert
Griffiths, Rt. Hon. James (Llanelly) Pargiter, G. A. Wyatt, Woodrow
Griffiths, W. (Exchange) Parker, John
Hale, Leslie (Oldham, W.) Parkin, B. T.
Hall, Rt. Hn. Glenvil (Colne Valley) Paton, John TELLERS FOR THE AYES:
Hamilton, William (West Fife) Pavitt, Laurence Mr. Charles A. Howell and
Harper, Joseph Pearson, Arthur (Pontypridd) Mr. Redhead.
Agnew, Sir Peter Bishop, F. P. Chataway, Christopher
Aitken, W. T. Black, Sir Cyril Chichester-Clark, R.
Allan, Robert (Paddington, S.) Bourne-Arton, A. Clark, Henry (Antrim, N.)
Allason, James Box, Donald Clark, William (Nottingham, S.)
Arbuthnot, John Boyle, Sir Edward Clarke, Brig. Terence (Portsmth, W.)
Ashton, Sir Hubert Braine, Bernard Cole, Norman
Barber, Anthony Brewis, John Cooke, Robert
Barlow, Sir John Bromley-Davenport, Lt.-Col. Sir Walter Cooper, A. E.
Barter, John Brooke, Rt. Hon. Henry Cordeaux, Lt.-Col. J. K.
Batsford, Brian Brooman-White, R. Corfield, F. V.
Beamish, Col. Sir Tufton Brown, Alan (Tottenham) Costain, A. P.
Bell, Ronald Browne, Percy (Torrington) Coulson, Michael
Berkeley, Humphry Bullard, Denys Craddock, Sir Beresford
Bidgood, John C. Bullus, Wing Commander Eric Crosthwaite-Eyre, Col. Sir Oliver
Bitten, John Burden, F. A. Crowder, F. P.
Biggs-Davison, John Campbell, Gordon (Moray & Nairn) Curran, Charles
Bingham, R. M. Carr, Compton (Barons Court) Currie, G. B. H.
Birch, Rt. Hon. Nigel Carr, Robert (Mitcham) Dalkeith Earl of

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

The Committee divided: Ayes 157, Noes 224.

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