Commons Sitting of 30 May 1962

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MELVILLE TRUST ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  BRITISH ARMY

    National Service Men
    Mr. Spriggsasked the Secretary of State for War if he will consider discharging all National Service men who are married with family responsibilities, and where their skilled labour is required in industry.
    The Under-Secretary of State for War (Mr. James Ramsden): The exemption of National Service men by categories was fully discussed during the proceedings on the Army Reserve Act, and I would refer the hon. Gentleman in particular to my right hon. Friend's remarks on 19th December, 1961 [OFFICIAL REPORT, col. 1252.] But my right hon. Friend is always prepared to consider appeals by individuals.
    Mr. Spriggs: I should like to ask the Under-Secretary and, through him, his right hon. Friend whether they will give consideration to my proposals in view of the fact that many of these young men have left behind them wives and young families, many of them in bad housing conditions and in lodgings where overcrowding is prevalent. If proof of these conditions is provided, will the Minister give consideration to such cases?
    Mr. Ramsden: We discussed fully in the House the possibility of exempting categories, and I am sure that the House
    1332
    was right to confirm our view that this is not practicable, because, as the hon. Member knows, we are always prepared to consider individual cases on their merits.
    Mr. Frank Allaun: Will the Minister reconsider at least exempting such men from the further six months' call-up? Is it not an added injury when such men, who many of us believe should not have been called up at all, have this extra burden imposed upon them?
    Mr. Ramsden: Marriage and domestic responsibilities in themselves are not necessarily grounds for compassionate treatment; they have never been recognised as such throughout the period of National Service. I repeat that the important thing is that we should look at individual cases, and this, of course, we do with the greatest care.
    Mr. Frank Allaunasked the Secretary of State for War how many of the British National Service men in Germany so far conscripted for an extra six months have sought exemption; and how many have been granted it.
    Mr. Dempseyasked the Secretary of State for War the number of National Service men, at the latest convenient date, originally detained to serve the additional six months period who have been released from Her Majesty's Forces after appealing against retention.
    The Secretary of State for War (Mr. John Profumo): Five hundred and ninety-one National Service men have so far submitted appeals against retention, of which forty are still being considered. One hundred and four have been released.
    Mr. Allaun: Is the Minister aware that most of the men who have not sought exemption have refrained because they are without hope of obtaining it and that their families, particularly in the North-West, are receiving widespread reports of bitterness about the additional six months' call-up?
    Mr. Profumo: If what the hon. Member says is correct, I am wholly unaware of it. Everybody who has been held back has been made fully aware of his right to appeal. As far as I am aware, these appeals are coming forward when they are genuine. If the hon. Member has any particular case in mind, I will gladly look at it.

    Chieftain Tank
    Sir Richard Glynasked the Secretary of State for War whether he has any further information to give about progress on the Chieftain tank.
    Mr. Profumo: In my speech on the Army Estimates on 8th March, I explained that the Chieftain tank is having some teething troubles. During trials with the engine running at full power the gearbox became overheated. The cause of the overheating is known, and modifications are now being tested; these will put production back by about six months. I much regret this delay, but I am confident that the trouble will be overcome.
    Sir Richard Glyn: Can my right hon. Friend say whether the tank will be entirely satisfactory at the end of this time? Can he, further, say whether any oversea s orders for it have been cancelled?
    Mr. Profumo: I am very hopeful that the tank will be, as we thought it would, a great success when it comes out of these trials. I confirm that so far no overseas orders have been cancelled. We have told the Federal German Republic that delivery of the prototype will be delayed by these development troubles.
    Mr. Paget: This is most interesting. Will the Secretary of State tell us what overseas orders there are?
    Mr. Profumo: The overseas order which we at present have is from the Federal German Republic; but this has not been affected by what I have just announced.
    Mr. Paget: One prototype?
    Mr. Profumo: Yes, but this is an overseas order and it has not been affected. Perhaps the hon. and learned Member will realise that this tank looks like being a world beater. I hope that he will not cast aspersions on it, because there may well be other inquiries.

    Officers and other Ranks
    Mr. Wingfield Digbyasked the Secretary of State for War (1) why the ratio of general officers or equivalent to total strength of the Army has risen from 1:2,887, to 1:1,586 in the
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    last ten years; and what is his policy in this regard;
    (2) why the officer/other rank ratio in the Army has risen from 1: 11· 8 to 1:7· 8 in the last ten years; and what is his policy in this regard.
    Mr. Ramsden: My right hon. Friend's policy is that every officer post should be established and graded on the basis of responsibility, and they are all kept under review. The ratio has risen in the last ten years because of the ever-increasing power and complexity of weapons in relation to manpower, the runout of National Service men and extensive civilianisation. General officer appointments in particular are related to the commitments of the Army rather than its strength.
    Mr. Digby: Is not this a very expensive policy? Are not we approaching the stage when we shall have to have a general officer for the equivalent of every battalion? Furthermore, is there not the danger of depreciating the prestige of general officers and also depreciating the prestige of officers and of noncommissioned officers and warrant officers, who have played such a big part in the Army in the past?
    Mr. Ramsden: No Sir; I do not think so. There are many officer appointments— for example, on the staff— which have no direct relationship to other rank strength. There is the point about civilianisation which I have already mentioned. There are officers seconded to Commonwealth forces and there are attachments to N.A.T.O. and, of course, postings to the Territorial Army. This is all bound to work in the direction which I have tried to explain to my hon. Friend.
    Sir G. Nicholson: Is not this increase in the ratio of general officers an undesirable form of inflation? It is happening throughout every form of life, including every diplomatic mission and embassy. Ought not a stop to be put to it? Surely, it has its dangers.
    Mr. Ramsden: These posts are filled by general officers only when the responsibility which they discharge warrants an appointment of that kind. There is machinery in the War Office for reviewing establishments quite independent of the military, and this is continuously in operation.

    B.A.O.R. (Exercises)
    Mr. Morrisasked the Secretary of State for War how many major exercises are planned for the British Army of the Rhine in the current year relying on both nuclear and non-nuclear weapons, and non-nuclear weapons alone, respectively; and to what extent the new strategy of the North Atlantic Treaty Organisation has been taken into consideration in planning exercises for the British Army of the Rhine.
    Mr. Profumo: There will be three major exercises on the ground, and five command post exercises. All will include the use of both nuclear and conventional weapons, and take fully into account the latest strategic concepts of the Alliance.
    Mr. Morris: Can the Secretary of State indicate at what level and for how long B.A.O.R. could engage in combat without resort to nuclear weapons and to what extent B.A.O.R. is trained to engage in an operation of that nature?
    Mr. Profumo: That is much wider than the Question on the Order Paper. I can, however, assure the hon. Member that B.A.O.R. is not dragging its feet in this respect. The training schemes are absolutely up to the minute and are quite in line with the requirement of S.A.C.E.U.R.
    Mr. Gordon Walker: Would it not be wise to have at least one exercise in which there is no resort whatever to nuclear weapons, just to see that it is possible to fight a non-nuclear engagement?
    Mr. Profumo: I repeat that the best way of doing these things— and this is with the agreement of the Supreme Commander— is to have the exercises on a basis of both hypotheses, because one never knows what will happen. This is what we have always done and it seems to be in line with what is expected.

    W.R.A.C. Camp, Richmond Park
    Mr. A. Royleasked the Secretary of State for War when the Women's Royal Army Corps camp in Richmond Park will be closed; and on what date the site will be cleared.
    Mr. Ramsden: I expect that the W.R.A.C. camp in Richmond Park will be closed and the site cleared by late autumn 1964.
    Mr. Royle: Is my hon. Friend aware that his reply will be well received by the many users of this park? Can he say whether there is any chance of speeding up this programme?
    Mr. Ramsden: I realise the very great concern there has been on the part of my hon. Friend's constituents, and I am glad that, so far as that is concerned, the end of the road is in sight. We cannot close this camp until the barracks at Mill Hill are completed, and that will not be, I am afraid, earlier than the date I have indicated.

    Brigade of Gurkhas
    Sir J. Smythasked the Secretary of State for War (1) what part Gurkha troops will play in the new model, voluntary, long-service British Army.
    (2) whether he is contemplating any changes in the role of Gurkha troops at present being employed as part of the British defence forces.
    Mr Scott-Hopkinsasked the Secretary of State for War, what are his plans for the future of the Brigade of Gurkhas; and if he will make a statement.
    Mr. Profumo: During the Army Estimates debate on 8th March, I told the House that the commitments which are set out in the Defence White Paper required further study before any final manpower ceilings could be determined, and that this included among other things a review of the Brigade of Gurkhas. I confirm that no decisions have yet been taken. The general issue is one which will have to be considered in the context of the future size and shape of the all-Regular Army. Much will depend on the progress of Army recruitment and on the future of Greater Malaysia. Therefore we do not propose to take any decision on this matter until next year.
    Sir J. Smyth: I am grateful to my right hon. Friend for that reply. Does he realise that the Brigade of Gurkhas has

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    been definitely told— and I have checked this very carefully indeed— that it may expect a cut of up to 50 per cent. in its strength in the near future, and that this is causing great concern and resentment in the Brigade of Gurkhas and also in the Nepalese Government? If there is nothing in this suggestion, I should be very grateful if my right hon. Friend would absolutely contradict it, because I can tell him that it is having a very bad effect and that it would be very stupid indeed to cut off such a wonderful supply of manpower just at this time.
    Mr. Profumo: I am grateful to my hon. and gallant Friend, who has great associations with the Gurkhas. I hope that what I have said will reassure not only the House but the Brigade of Gurkhas in the knowledge that we have taken no decision and shall not take any hasty decision.
    Mr. Scott-Hopkins: As the Gurkhas are some of the finest fighting troops in the world and we may well need them in the future in South-East Asia, will my right hon. Friend give an assurance that there will be no cut in the Brigade of Gurkhas in the foreseeable future until we are quite certain that we can reach our own recruiting target in this country?
    Mr. Profumo: I entirely agree with all that my hon. Friend has said about the Brigade of Gurkhas, their prowess and connection with the British Army, and their great traditions. I cannot go further than the Answer that I have given to the Question. My hon. Friend will see that it is fairly wide. I give the undertaking that the look that we are having at this problem will be very thorough indeed and that we would not take any action which would contravene what my hon. Friend has just stated.
    Mr. Paget: Will the right hon. Gentleman say a little more about this and indicate that any reconsideration will not be in a downward direction? We have had conscription reintroduced and, with the recruiting programme going better than was expected, we are still short of our treaty commitments. To suggest that we are going to get rid of some of our best volunteers, now that we are going in for a volunteer Army, seems a little fantastic.
    Mr. Profumo: I cannot go further than I have already gone. I have given the House an undertaking that nothing will be done this year and that we are looking into the matter in the context of what has been said by me and by my right hon. Friend the Minister of Defence in connection with the Defence White Paper.
    Sir H. Legge-Bourke: Would not my right hon. Friend agree that the success of the latest White Paper policy must depend on our having troops that can be used in any part of the world should the need arise? Will he explain to the House a little more clearly whether or not one of the difficulties over the future of the Gurkhas may not be the fact that they cannot always be used where we should like them to be used?
    Mr. Profumo: That is one of the problems that we are having a look at with regard to the future. Up to the present time, we have not had to use the Gurkhas outside the Far East in peace time, where they have been very fully employed. This is one of the problems that we are examining.
    Sir J. Smyth: Would my hon. Friend agree that we have used Gurkhas when we have been up against it in almost every part of the world? There is nothing at all in the suggestion that the Gurkhas can be used only in certain parts of the world. They are most ready to be used anywhere the need is greatest, and, goodness knows, we have need of them in many parts of the world today.
    Mr. Profumo: I can give my hon. and gallant Friend the undertaking that so long as we have need for the Gurkhas we shall do nothing to disturb their entity. I am telling the House that, among many other things, we are having an examination of the future size and deployment of the Brigade.
    Mr. S. Silverman: If we are to understand from the right hon. Gentleman's answer to supplementary questions that he agreed with what his hon. and gallant Friend was suggesting, would he tell us exactly in what operations in South-East Asia it is proposed to use Gurkha troops? Will he bear in mind that if it has anything to do with the present dispute in Laos, he would not have the support of the House for using Gurkhas or any other troops there?
    Mr. Profumo: I think that the House knows what I moan. The Gurkhas have performed useful functions in Hong Kong, Malaya and Singapore. I have not said anything at all about Laos. I am saying to my hon. and gallant Friend, who has a deep and abiding interest in this matter, that we are not considering tampering with the Gurkhas who have played a brilliant part in the past to their own great glory and to the benefit of this country.

    Arms and Ammunition (Sale and Purchase)
    Mr. Scott-Hopkinsasked the Secretary of State for War if he is satisfied with the operation of the agreements relating to the sale and purchase of arms and ammunition between this country and Britain's allies in the North Atlantic Treaty Organisation; and if he will make a statement.
    Mr. Ramsden: Apart from the agreement which my right hon. Friend the Chief Secretary to the Treasury has been recently negotiating with the Federal Republic of Germany, there are no agreements about sales and purchases of arms and ammunition. As I assured my hon. Friend last week, the overall balance of transactions between this country and our allies is not unfavourable to us.
    Mr. Scott-Hopkins: Will my hon. Friend give an ssurance that he will do the maximum he can to encourage the sale of British arms, such as the Chieftain tank, and so on, to our N.A.T.O. allies and that he will do the maximum he can to see that there is maximum uniformity in weapons within the N.A.T.O. alliance?
    Mr. Ramsden: Yes, certainly, within the accepted limits of my right hon. Friend's policy.

    Miners (Recruitment)
    Mr. W. Hamiltonasked the Secretary of State for War how many miners or ex-miners have been recruited in Scotland in each of the last four years; and how many of them have been from Ayrshire, Lanarkshire and Fifeshire, respectively.
    Mr. Ramsden: The figures for miners recruited in the whole of Scotland are as follows:

    1958

    …

    …

    …

    …

    391

    1959

    …

    …

    …

    …

    471

    1960

    …

    …

    …

    …

    341

    1961

    …

    …

    …

    …

    241

    Figures are not available to show which counties they have come from.
    Mr. Hamilton: Why cannot the Minister get the figures for each county? Is he aware that there is a feeling that because of the rundown in the mining industry miners are increasingly turning to the Armed Forces— partly because of that, and partly because the Army is not subject, like the mining industry, to the pay pause policy of the Government? Will he seek to get more detailed figures than those which he has given to the House, because he has no answered the Question on the Paper?
    Mr. Ramsden: I could give the figures by recruiting offices, which correspond broadly, but not exactly, to the counties. I will gladly, if the hon. Member wishes, circulate them in the OFFICIAL REPORT. As for the second part of the hon. Member's supplementary question, I do not think the figures bear out his imputation, because the trend of those recruited from the mines has been falling sharply, particularly between 1960 and 1961, whereas the overall figure for recruiting in Scotland is up by 20 per cent. Therefore, I do not think the figures substantiate what the hon. Member is trying to say.
    The following is the information:

    FIGURES BY RECRUITING OFFICES

    —

    1958

    1959

    1960

    1961

    Ayrshire (Dumfries)

    20

    43

    28

    31

    Lanarkshire (Glasgow)

    80

    60

    68

    47

    Fifeshire (Dundee)

    100

    160

    94

    79

    Recruits
    Captain Litchfieldasked the Secretary of State for War whether all volunteers wishing to enter regiments for which recruiting is at present restricted are absorbed into other units.
    Mr. Morrisasked the Secretary of State for War how many men, who

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    were suitable as recruits, were not accepted as such in recent months because of restrictions on recruiting in the units which they sought to join.
    Mr. Profumo: Volunteers for regiments and corps for which recruiting is restricted are encouraged, so far as possible, to join other units. But they cannot be forced to join against their wishes. I regret that I cannot give an estimate of the numbers of those who have been affected in this way, but there is no evidence that there has been any serious loss of recruits to the Army.
    Captain Litchfield: In the present state of recruitment does my right hon. Friend think that it is really acceptable to lose would-he recruits to the Army because some regiments may be larger than others? Is not a man in uniform with a weapon in his hands in the wrong regiment better than no man at all? Will my right hon. Friend confirm his support for the principle of reinforcing success, as has been done with such success by the Admiralty in the case of the Royal Marines?
    Mr. Profumo: There is nothing new in this. There have always been recruiting ceilings, even before the war, and they are set by the general manpower ceiling imposed by Vote A. All that has happened is that for the past twenty years it has not presented any problem because we have had conscription. If we are to have a balanced Army we must have a balanced intake. I think we have got it about right.
    Mr. Morris: Surely the House should be told how many men were involved? How many would-be recruits were refused? Could not the seventeen units referred to last week be altered? Were any National Service men retained for an extra six months in those seventeen units and the Highland Brigade?
    Mr. Profumo: I have already told the hon. Gentleman that I have no evidence of any serious loss, but I cannot give accurate figures. I have not got the figures. It is very difficult to break them down. But there is no evidence of serious loss of would-be recruits. This is a well-established form of recruiting. One of the difficulties is that recruiting varies from year to year and from month
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    to month. A unit which does well one minute may not do so well the next. I am anxious not to alter the procedure.
    Mr. Morris: Will the right hon. Gentleman answer the last part of my supplementary question? Were any National Service men retained in those seventeen units and the Highland Brigade?
    Mr. Profumo: I am afraid I shall have to have notice of that question.

    Applications for Discharge (Parliamentary Elections)
    Mr. Pagetasked the Secretary of State for War what criterion is used to assess the exigencies of the Service when considering applications from officers and other ranks for discharge for the purpose of nomination to Parliamentary elections.
    Mr. Profumo: As nominations for Parliamentary elections of members of the Armed Forces have so far been rare, it has been possible to give a generous interpretation to exigencies of the Service.
    Mr. Paget: I know that there was a precedent in the case of the hon. Member for Bute and North Ayrshire (Sir F. Maclean) whom the right hon. Gentleman the Member for Woodford (Sir W. Churchill) referred to as making a private convenience of the Mother of Parliaments— but that was to get into the Army, not to get out of it. In this case, now that it is becoming clear that there is a cut-rate back door to the Army, at £ 150 instead of the more usual £ 200, are not ballot papers for by-elections about to get a bit unwieldy?
    Mr. Profumo: It seems to me that if I am to exercise my powers correctly I should not put any undue difficulties in the way of people who genuinely want to stand for Parliament, when serving in the Army—
    Mr. W. Hamilton: Especially Liberals.
    Mr. Profumo: I do not know about Liberals. It may well be that I shall have to offer a bounty to hon. Gentlemen opposite later on. However, I think it would be wrong for me to try to interpret this anything but loosely. Therefore, I shall be very anxious not to

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    change the present Regulations unless there were widespread misuse of the privilege.
    Mr. Lipton: Is it within the recollection of the right hon. Gentleman that in 1945 Service candidates were given three weeks' leave of absence without pay if they wanted to be candidates, and that if they got into the House they went out of the Army, and that if they did not get into the House they reported back for duty— an excellent arrangement by which the Army and the House of Commons both benefited? Cannot we have the same system now?
    Mr. Profumo: I do not know that I can go the whole way with the hon. Gentleman, but that was under special war-time legislation. If the hon. Gentleman would prefer to go back to that he should consult his right hon. Friend the Member for Easington (Mr. Shinwell), who changed the Regulations and brought them into line with what I have just announced.

  SCOTLAND

    Housing, Caithness (Personal Case)
    Sir D. Robertsonasked the Secretary of State for Scotland, if he will now use his powers under Section 48 of the Housing (Scotland) Act, 1950, to direct Caithness County Council to prepare and submit to him forthwith proposals for the rehousing of Mr. William Calder, of Castletown, a disabled ex-Service man of the First World War, who is living in a house without water, lighting or sanitation.
    The Secretary of State for Scotland (Mr. John Maclay): I have no power to issue directions about an individual case. The county council's progress in rehousing families from unfit houses generally is not such as to call for my intervention.
    Sir D. Robertson: Does the right hon. Gentleman realise that this applicant has spent all his life, except the years he spent in the Army in the First World War, in agriculture? He is a farm worker, and he is now 70 years of age. Surely there must be something radically wrong? I have been trying for over two years to get this man a house, but with
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    out success. I hope that the Secretary of State can intervene.
    Mr. Maclay: I am afraid I am advised that it would be quite outwith my power to intervene in an individual case of this kind, but doubtless the hon. Member's remarks will be noted by the local authority.

    Pontoon Dock, Aberdeen
    Mr. Hector Hughesasked the Secretary of State for Scotland what progress he has made in resolving the financial complexities referred to in his letter early in 1962 to the hon. and learned Member for Aberdeen, North, arising from the report of the Joint Working Party, set up by him, to plan the provision of a pontoon dock for Aberdeen; and when the construction of that pontoon dock will commence.
    Mr. Maclay: I understand that the joint working party— which was set up by the Aberdeen Harbour Board and not by myself— is considering a report by a firm of industrial consultants who were engaged to examine the problem of dock replacement with particular reference to costs, and economic viability.
    Mr. Hughes: Does not the Secretary of State realise that it is thoroughly unpatriotic, uneconomic and ridiculous on the part of the Government to deny work, or money for important work, of this sort and yet seek to provide grants and loans for foreign shipyards, thereby driving British shipyard workers out of employment, and will he take urgent steps to see that this pontoon dock is started at once?
    Mr. Maclay: No. As I explained in my original Answer, it is a matter still for the Aberdeen Harbour Board. I have not said the Government would not supply money to help the building of it. The position is that the Government would consider the question of assistance under the Local Employment Act so far as the undertaking would provide additional employment.

    Disabled War Pensioners (Cars)
    Mr. Willisasked the Secretary of State for Scotland how many cars have been distributed to disabled war pensioners in Scotland as a result of the extension of the scheme in 1960.
    Mr. Maclay: One hundred and sixty-six.
    Mr. Willis: In view of the fact that the Government appear to have completed this particular programme on time, would the right hon. Gentleman approach his hon. and right hon. Friends to see whether this scheme could now be extended to miners and other industrial workers?
    Mr. Maclay: This question was fully debated two years ago and again as recently as 29th January last. The position remains that the provision of cars as part of this preferential treatment is reserved for war pensioners, and the Government really cannot undertake to provide cars for N.H.S. patients.

    Fishing Vessels (Construction)
    Mr. Hoyasked the Secretary of State for Scotland what consultations he had with the fishing and shipbuilding industries in Scotland before agreeing to the decision to allow the building of fishing vessels in foreign shipyards with the aid of subsidies provided by the British taxpayer.
    Mr. Maclay: None, Sir.
    Mr. Hoy: That is a surprising Answer. How does the Secretary of State know that this will best serve the interests of the fishing fleets, as was stated by his right hon. Friend the Minister of Agriculture, Fisheries and Food in a Written Answer on Monday, if he did not consult the fishing industry? Is this another case of the man in Whitehall knowing best?
    Mr. Maclay: The hon. Gentleman's Question has two parts. Consultation with the shipbuilding industry is a matter for my right hon. Friend the Minister of Transport. This cannot be to the detriment of the fishing industry and, therefore, I did not consider that any consultations were called for.
    Mr. Hoy: Does not the right hon. Gentleman know that his right hon. Friend stated in a Written Answer on Monday that the Government decided that consultations were not necessary because the decision was in the interest of the British fishing industry? Is not this going much too far? If a decision like this is to be made, ought not the
    1346
    industries concerned to be consulted before it is made?
    Mr. Maclay: The hon. Gentleman has referred to a reply given by my right hon. Friend the Minister of Agriculture, Fisheries and Food, to which I would not add. I have explained my position in regard to that part of the Question relating to consultations with the shipbuilding industry, and I have given my view about consultation with the fishing industry.
    Lady Tweedsmuir: Does my right hon. Friend realise that this decision is of very great importance to the wellbeing of Scotland as a whole? Had he consulted shipbuilders who happen also to be trawler owners, he would have been informed that the shipbuilders themselves are against this decision because they already have to compete against hidden subsidies to foreign competitors and, as trawler owners, they are against it because they do not like to see their own taxpayers' money used to subsidise foreign firms.
    Mr. Maclay: I have sufficient faith in the skill and ability of Scottish boat builders to believe that they can hold their own with anyone in the world.
    Mr. Manuel: Does not the right hon. Gentleman understand what a monstrous mistake he has made in this decision? Is not he aware of the poverty, unemployment and worrying problems which the smaller shipyards throughout Scotland are experiencing at present? Why has he proposed this misuse of public money, taxpayers' money, to subsidise foreign yards to build ships of a type which are indigenous to Scotland and which should be provided by Scottish workmen?
    Mr. Maclay: The hon. Gentleman will appreciate that the object of these subsidies is to help the fishing industry. As I have said, I do not for a moment accept that Scottish— or British— yards cannot compete with anyone in the world.
    Mr. P. Williams: May a Welshman representing an English constituency intervene, since this subject goes much wider than just Scotland? This is a matter of confidence in the Government's ability to look out for the

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    interests of the shipbuilding industry, which is highly suspect. Does not my right hon. Friend understand that this decision is a regrettable one, whether the yards be Scottish or English yards? Would it help my right hon. Friend if some of us on this side were to put down a Question so that this decision could be reversed next wek?
    Mr. Maclay: My hon. Friend will appreciate that the Questions directed to me relate to Scotland, and I should not be right in entering into other discussions at this moment.
    Mr. Emrys Hughes: In view of the unsatisfactory nature of those replies, I beg to give notice that I shall raise this matter on the Adjournment at the earliest opportunity.
    Mr. Speaker: There is another Question today which goes right into the same subject matter.
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland what regard was had to the difficulties facing the smaller shipbuilding yards in Scotland which build the inshore fishing fleets when it was decided to make grants and loans available for vessels built in foreign ports.
    Mr. Maclay: These grants and loans are given for the benefit of the fishing industry, but, of course, the position of the smaller shipbuilding yards was taken into account.
    Mr. Wolrige-Gordon: All of us share my right hon. Friend's faith in the Scottish boat building industry, but what these people are afraid of is hidden subsidies assisting foreign yards to build our kind of boats at a disadvantage to ourselves. Will my right hon. Friend take some action to ensure that the same kind of assistance and work is given to these yards to do the work which they do so well?
    Mr. Maclay: I sincerely hope that they will go on getting their full share of orders. I am advised that, if there were a question of a problem created by subsidised foreign yards, it would be open to the shipbuilding industry here to make an application under our antidumping legislation if it were suffering from or were threatened with material damage as a result of ships being built by and purchased from subsidised yards.
    Mr. Shinwell: As this matter affects not only Scotland but the whole country, will the Secretary of State explain why these orders are going abroad? Is it because foreign yards are able to build the ships at lower cost after tenders have been sent out, or is there some other reason such as the question of delivery? What is the reason why the ships are not being built in this country?
    Mr. Maclay: This is the difficulty if I get drawn too far on this question. The right hon. Gentleman is talking about something which has not yet happened. This is something which will happen in the future. [HON. MEMBERS: "Will it?"] I do not say that these orders will go abroad in the future, but the questions relate to something which has not yet happened.
    Mr. Wolrige-Gordon: How will antidumping duties be applied in restricting boats being built abroad and then being sold in this country? My right hon. Friend made some mention of it, but how will the thing work, and will it be effective?
    Mr. Maclay: That is a matter which is under consideration, and the question should be addressed to my right hon. Friend the Minister of Transport.
    Mr. Hoy: The right hon. Gentleman has said that he hopes that British shipyards will receive their share in the future, but is not he aware that every ship built under the grants and loans scheme has been built by British shipyards so that any reduction of orders must by that amount mean less work for British shipyards and British workers?
    Mr. Maclay: I do not know why the hon. Gentleman is so certain that they will not be able to compete and get the orders.
    Lady Tweedsmuir: Is my right hon. Friend aware that, because of the difficulties facing shipbuilding generally, it is not only the smaller shipyards referred to in the Question which are affected but also larger shipyards which now rely on trawlers for orders because they cannot get the bigger boats which they used to build in the past? Does not my right hon. Friend realise that this inexplicable decision will adversely affect Scottish shipyards?
    Mr. Maclay: I do not think that I can add to the replies I have already given.
    Sir J. Gilmourasked the Secretary of State for Scotland how many fishing vessels of 40 ft. overall length or over have been built in Scottish yards in each of the last five years; and how many are now being built.
    Mr. Maclay: Since the beginning of 1957, 373 fishing vessels of 40 ft. overall length and over have been built with grant aid in Scottish yards and 16 are in course of construction. With permission, I shall circulate the numbers for each year in the OFFICIAL REPORT. I regret that I have no information about the number built without grant aid.
    Sir J. Gilmour: Do not the figures indicate that, since many of the shipbuilding yards are in development districts, there is an urgent need for my right hon. Friend to stimulate the building of ships in these yards at this moment?
    Mr. Maclay: I am sure that my hon. Friend will agree that it would not be right to stimulate the building of fishing boats if there are not fish for the boats to catch or if the owners do not consider that there are.
    Sir J. Gilmour: Is my right hon. Friend aware that there is a very large body of opinion in this country which wishes to see this country's fishery limits extended so that the fish would be caught by British boats instead of by foreign boats? If that were done, should not we be able to build more boats?
    Mr. Maclay: That is definitely another question.
    Mr. Hoy: Is the right hon. Gentleman aware that any falling off in the number of boats being built at present has been due to policies adopted by the White Fish Authority, backed by the right hon. Gentleman, to restrict the number of boats built under these schemes? While that situation obtains, is it not all the more difficult to understand why the right hon. Gentleman has made the decision to which we have been referring?
    Mr. Maclay: The hon. Gentleman will know that the White Fish Authority had consultations with the trawler owners before coming to its decisions.
    Following is the information:

    Totals

    1957

    …

    …

    68

    1958

    …

    …

    82

    1959

    …

    …

    67

    1960

    …

    …

    87

    1961

    …

    …

    55

    1962— completed

    …

    …

    14

    still building

    …

    …

    16

    389

    Mr. Hoyasked the Secretary of State for Scotland what were the international obligations that compelled him to agree to allow fishing vessels for British owners to be built in foreign shipyards with the assistance of British subsidies.
    Mr. Maclay: This decision was taken by the Government having regard to the interests of the fishing industry and our international obligations. These obligations are that, under the General Agreement on Tariffs and Trade, and the Convention establishing the European Free Trade Association, special facilities to purchasers may not be restricted to purchases in the country giving those facilities.
    Mr. Hoy: First, how does the right hon. Gentleman know that it was in the interests of the British fishing industry when he did not consult the industry? Secondly, if this was done, not with a view to helping the fishing industry, as the right hon. Gentleman said earlier, but to satisfy the needs of countries other than Britain, does not he think that, in view of this iniquity, he should reconsider it and cancel it immediately?
    Mr. Maclay: Clearly, a number of considerations were involved in this decision. I do not think that I can add to what I have said in answer to a previous Question.
    Sir J. Duncan: Although my right hon. Friend is getting the thick end of the stick this afternoon, he was in various answers mentioned two other Ministers— the Minister of Transport and the Minister of Agriculture. Will he therefore reconsider the whole matter in consultation with those Ministers and with the Cabinet?
    Mr. Maclay: I have carefully noted all that has been said, but I cannot add to the replies which I have given.
    Mr. Hoy: In view of the unsatisfactory nature of all these replies, I beg to give notice that I will raise this matter on the Adjournment.
    Mr. Speaker: I am in difficulty, because the hon. Member for South Ayrshire (Mr. Emrys Hughes) also gave notice in respect of something which I think he described as "this matter". Can the hon. Member for Edinburgh, Leith (Mr. Hoy) help by confining his notice to a numbered Question?
    Mr. Emrys Hughes: On a point of order. Since notice has been given by my hon. Friend the Member for Edinburgh, Leith (Mr. Hoy), in obedience to my Front Bench I will withdraw my notice.
    Mr. Speaker: I should still be assisted if the hon. Member related the notice to a particular Question.
    Mr. Hoy: I will direct my notice to Questions Numbers 26 and 31, Mr. Speaker.
    Mr. Speaker: I will accept it in relation to Question No. 31. The other Question is out of time.
    Mr. W. Hamiltonasked the Secretary of State for Scotland how many protests he has received from local authorities concerning the proposal to give grants and loans to foreign shipyards in respect of vessels and engines built for British owners; and whether he will consult with such authorities to ascertain their detailed views on the matter.
    Mr. Maclay: So far I have received protests from eight local authorities regarding the Government's decision to make grants and loans available to our fishing industry for vessels and engines built abroad. This decision has been taken in the interests of the fishing industry, as I said before, and because of our international obligations, and the question of consultation with local authorities does not arise.
    Mr. Hamilton: Does not this Answer and several other Answers which the right hon. Gentleman has given this afternoon show the flat-footed attitude and approach of the Government on this issue and an arrogant disregard of the democratic processes even to the point of the form in which the announce
    1352
    ment was made to the House originally? In view of the opinions expressed on both sides of the House, will the right hon. Gentleman take steps within the Cabinet to rescind this decision?
    Mr. Maclay: It is always a very nice point to decide how many people one should consult or should not consult before coming to a decision as a Government. I am sometimes criticised for consulting too many people. In answer to the latter part of the hon. Gentleman's supplementary question, I cannot add to what I have already said.

    Victoria Hospital, Kirkcaldy
    Mr. Gourlayasked the Secretary of State for Scotland when the building of the second extension to Victoria Hospital, Kirkcaldy, will start; and when he expects it to be ready for use.
    Mr. Maclay: The tenders for this project have just been received by the regional hospital board. The precise starting date will be settled with the successful tenderer. As I told the hon. Member on 7th February, the present estimated construction period is two and a half years.
    Mr. Gourlay: Is the Secretary of State aware that there is a grave shortage of geriatric beds, particularly in Fife, which will not be relieved until this hospital is completed? Will he take every step possible to ensure the most rapid completion of the hospital in Kirkcaldy.
    Mr. Maclay: I am very anxious to see this hospital completed as soon as possible.

    Teachers
    Mr. G. M. Thomsonasked the Secretary of State for Scotland what investigations he is making into the possibilities of experiments with teams of teachers as a means of making the most efficient use of trained teachers in Scottish schools.
    Mr. Maclay: I am certainly anxious to see our teaching resources deployed to the maximum advantage. Teaching in secondary schools is already largely organised on a team basis, but I am sure that education authorities and head teachers will keep any further possibilities of this kind in mind.
    Mr. Thomson: Will the Secretary of State, in consultation with the approate educational bodies, look more closely into some of the interesting experiments carried out in America and in some schools here in using large lecture groups for some lessons and small tutorial groups for others? Is he aware that they seem to have shown quite remarkable economies in manpower Where they have been tried?
    Mr. Maclay: I know that these experiments are extremely interesting and should be studied very carefully. Ultimately, I think, it is a matter for the directors of education and head teachers to decide how to follow them up, but I am glad that the hon. Gentleman has raised the question.

    Toothill Committee (Report)
    Mr. Willisasked the Secretary of State for Scotland whether he has now completed his study of the Report of the Toothill Committee; and what steps he is taking to implement its recommendations.
    Mr. Maclay: Some of those recommendations of the Toothill Report which concern the Government raise issues of policy which go very wide and are still being examined jointly by the Departments most directly concerned. A statement on the Report will be made as soon as practicable.
    Mr. Willis: The Secretary of State has had this Report for seven or eight months. Is it not time that this matter was treated much more urgently in view of the very serious situation in Scotland? Can the right hon. Gentleman say when we are likely to have the results of the considerations?
    Mr. Maclay: I should not like to be tied to a definite date yet. I shall certainly say something about this very complex matter before the Summer Recess. The Committee made many recommendations, as the hon. Gentleman knows. A number of outside bodies are involved as well as Government Departments. While I shall not reply for the outside bodies, I must take some of their views into consideration.
    Mr. Manuel: Will the Secretary of State give the House an opportunity fully to consider the recommendations
    1354
    in the Report in order to assist him in implementing them?
    Mr. Maclay: I understand that there is every likelihood that, as in previous years, there will be a full debate on the Floor of the House on employment in Scotland under the arrangements which existed in previous years.

    North of Scotland (Electricity Prices)
    Mr. Millanasked the Secretary of State for Scotland what communication he has had from the Electricity Consultative Council for the North of Scotland district regarding the recently announced price increases for electricity; and what reply he has sent.
    Mr. Rossasked the Secretary of State for Scotland whether the Electricity Consultative Council for the North of Scotland district approved the recently announced electricity price increases for its area.
    Mr. Maclay: The Electricity Consultative Council for the North of Scotland district wrote to me setting out its objections to the Board's proposed tariff increases and on 11th May I met a deputation from the council. After considering its arguments I wrote to it explaining that by relating the Board's financial objective under the White Paper (Cmnd. No. 1337) not to the capital employed but to the increases in tariffs which would have to be made by the South Board, I had taken account of the different circumstances of the North of Scotland Board's area. I also emphasised the importance of the Government's policy of ensuring that the finances of the nationalised industries should be put on a sound basis and that for this reason I could not accept its representations.
    Mr. Millan: Is not this the first time the Consultative Council has made representations against a price increase, and has not it done so because the Hydro-Electric Board did not want to increase its prices but was forced to increase them by the Secretary of State? Is not this a thoroughly regrettable decision and has it not caused considerable disquiet throughout Scotland, particularly with regard to the effect it is likely to have on Highland development and industry?
    Mr. Maclay: The hon. Gentleman is correct in saying that this is the first time the Consultative Council has made representations in this respect. Every other electricity board in Great Britain has increased its tariffs since the last increase of the North of Scotland Hydro-Electric Board, and, as the latest fixing of the Board's target maintains its relative position in comparison with charges in other areas, this should not introduce any new factor affecting depopulation or the attraction of new industry.
    Mr. Speaker: Mr. Millan.
    Mr. Ross—
    Mr. Speaker: I beg the hon. Gentleman's pardon. He was so far from his usual place that I failed to see him.
    Mr. Ross: You will be aware, Mr. Speaker, that the Electricity Board that we are discussing is very far from other electricity boards. It also has special responsibilities to industry. We therefore expect it to be treated differently when it comes to charges. Is not the right hon. Gentleman aware that these increases have caused considerable dismay and will undermine the good work done by the Board with the very reasonable co-operation of the Consultative Council? Will the right hon. Gentleman reconsider this matter?
    Mr. Maclay: No, I will not reconsider it. If the hon. Gentleman studies the Answer which I have given, he will see the reasons for the decision which I made. The effect of this increase in charges on an average house in the area is 6d. a week, on an average small farm 10½ d. a week, and on an average large farm not more than 3s. 6d. a week.
    Mr. G. M. Thomsonasked the Secretary of State for Scotland what representations he has had from consumers concerning the price increases recently announced by the North of Scotland Hydro-Electric Board.
    Mr. Maclay: None Sir, though I did receive representations on behalf of consumers from the Electricity Consultative Council.
    Mr. Thomson: Is the right hon. Gentleman aware that consumers are supposed to be represented by the Consultative Council? What is the use of
    1356
    this Council if, for the first time in fourteen years it disagrees with an increase in price, the Secretary of State overrides both it and the Board itself? Is the right hon. Gentleman aware that, by his decision to pay attention to accountants more than to crofters, he is betraying the original spirit of the Act?
    Mr. Maclay: No, Sir. What I said earlier is correct— that in improving the economic scene in the Highlands we must build on sound foundations. That I am determined to do.
    Mr. Millan: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment.

    North of Scotland Hydro-Electric Board (Finance)
    Mr. Millanasked the Secretary of State for Scotland what consultations he has had with the North of Scotland Hydro-Electric Board regarding its financial obligations under the White Paper, Command Paper No. 1337.
    Mr. Lawsonasked the Secretary of State for Scotland what discussions he had with the North of Scotland Hydro-Electric Board before the Board announced its recent price increases; and whether he took account of the effect of these increases on Highland development and industry.
    Mr. Steeleasked the Secretary of State for Scotland what financial objectives have been set for the North of Scotland Hydro-Electric Board under the White Paper, Command Paper No. 1337.
    Mr. Maclay: The North of Scotland Hydro-Electric Board has agreed, pending the Mackenzie Committee report, to apply such tariff changes as will produce a percentage increase in the income derived from its own consumers similar to that which is to be achieved by the South of Scotland Electricity Board. In suggesting a financial objective in these terms I had in mind the special circumstances of the North of Scotland Board and the fact that an increase of this kind preserves the relative position of the North of Scotland Board's area in such matters as Highland development and the attraction of industry.
    Mr. Millan: Will the Secretary of State explain exactly what this means to electricity consumers in terms of money? Is it not misleading to say that the Board has agreed these financial objectives since this price increase, which it is putting into operation because of the financial objectives, is something which it desperately did not want to enforce?
    Mr. Maclay: To be fair to everyone concerned, the Board was very concerned about this matter, and I explained fully to the Board the reasons for the White Paper and these financial objectives, and it agreed to carry out the policy which I explained.
    Mr. Lawson: As the Board itself and the Consultative Council are both opposed to the line being taken by the right hon. Gentleman, and since both are responsible bodies, does not this suggest that he, in his concern for financial considerations, is in danger of defeating the purpose for which this Board was set up?
    Mr. Maclay: No, Sir. In any efforts to improve the economy of the Highlands and the whole of Scotland we must be certain that we are building on solid economic foundations. I do not think that what would amount to a concealed subsidy is the right way to do it.
    Mr. Steele: The right hon. Gentleman has not given us a figure, but if one relates this increase to the increase made by the South of Scotland Electricity Board, it means a 10 per cent. rise. Is he aware that the then hon. Member for Glasgow, Pollok (Mr. George), on the Second Reading of the Hydro-Electric Development (Scotland) Act, 1943, indicated that he did not think that electricity by itself would bring new industry to the Highlands and that something more would be required? Does not the right hon. Gentleman agree that the present Chairman of the Hydro-Electricity Board then said that it would need cheap electricity? How will this increase assist the Chairman in his efforts?
    Mr. Maclay: I do not think that it has ever been argued that it should be uneconomic electricity.
    Mr. Millan: As the Board made a surplus of £1¾ million last year, is it
    1358
    not wrong that it should be forced to impose a further price increase?
    Mr. Maclay: If the hon. Gentleman will study the capital cost of the Board's operations, and relate it to the White Paper on the financial and economic obligations of the nationalised industries, he will realise the reasons for what I have done.

    Hunterston Nuclear Power Station
    Mr. Rankinasked the Secretary of State for Scotland what consultations he has had with the South of Scotland Electricity Board regarding the timetable for the construction and the cost of Hunterston nuclear power station.
    Mr. Nabarroasked the Secretary of State for Scotland what was the capital sum originally authorised to the South of Scotland Electricity Board for the Hunterston nuclear power station; when authorisation was given; what capital sum has been spent to the latest convenient date; what is the estimated capital sum to completion; when completion is anticipated; what estimate he has made of the cost of electricity generation per unit, and the cost per kilowatt installed in respect of this power station, compared with orthodox thermal coal burning stations and hydroelectric power stations in Scotland, both as at the latest convenient dates; and whether he will now make a further statement concerning progress in construction at Hunterston.
    Mr. Maclay: The South of Scotland Electricity Board keeps me generally informed about all aspects of the progress of Hunterston. I am advised by the Board that the pressure test on the first reactor vessel will take place in a few days' time. The first reactor is expected to go critical next year; it should be in full production in mid-1964 and the second at the end of the same year.
    Output is now estimated to be 320 megawatts and may be higher; the price has not yet been finally adjusted in terms of the contract, but the Board expects that it will not greatly exceed £ 165 per kilowatt and that the cost per unit will be about 1d.
    I am arranging to circulate the answers to the detailed points raised by

    1359
    my hon. Friend the Member for Kidderminster (Mr. Nabarro).
    Mr. Rankin: Is the right hon. Gentleman aware that the blame for the mess, muddle and mismanagement which has characterised the building of this project must rest squarely on the shoulders of the Government? In view of that, how can he charge to electricity consumers the cost of the Government's errors?
    Further, can he tell us why no contract was entered into and no contract yet exists with regard to the price of this job and to a completion date, in view of the fact that nearly £ 70 million has already been consumed? Could he also tell us why no overall authority or director was appointed to see that the job was completed within the original time laid down?
    Mr. Maclay: The hon. Gentleman has made a number of statements which I do not accept. I do not accept the figures of costs he has produced nor almost any of the details in his supplementary question. It is extremely difficult to deal at Question Time with that form of supplementary question.
    Mr. Nabarro: Whilst dissociating myself at once from the statement by the hon. Member for Glasgow, Govan (Mr. Rankin) that there has been muddle and mismanagement in this very important venture, may I ask my right hon. Friend whether he would not agree that the highly complex construction of a major nuclear power station of this kind involves largely an element of experimentation and that it was nearly impossible accurately to assess capital cost at the outset?
    Would my right hon. Friend therefore publish a statement, to supplement the figures in the OFFICIAL REPORT, at an early date, giving precise details of the element of cost anticipated compared with the sum authorised on capital account by him when the authorisation was first made?
    Mr. Maclay: I certainly agree that there have been difficulties and delays at this station. There has been a series of practical and design difficulties which are most regrettable; but apart from labour troubles on the site, such difficulties as those indicated by my hon. Friend the Member for Kidderminster (Mr. Nabarro) are really inseparable
    1360
    from the most effective development of the new techniques which have been evolved in constructing this station. If my hon. Friend studies the information which I am circulating in the OFFICIAL REPORT, and lets me know if he wants more, I will try to supply it.
    Mr. Mason: Is this not proving to be a disgraceful and quite regrettable episode in the development of a new industry under this Government's guidance? The project itself is not all that new. It is not a revolutionary technique and much of the development of the station came from designs well known before the start. It is now estimated that this will cost £67 million, which is much more than the original estimate. What is the right hon. Gentleman going to do about it? Who is to pay the excess over the original estimate?
    Mr. Maclay: The hon. Gentleman assumes a figure of cost that I do not accept. If he works out an estimated cost from my answers, he will get nearer the point. It is correct to say that the final cost cannot yet be determined, but if he looks at the figures I have already given, he will see that the cost will not greatly exceed £165 a kilowatt.
    Mr. Rankin: In view of the entirely unsatisfactory nature of the Secretary of State's reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest, opportunity.
    following is the information:

    1. Formal consent to the Hunterston Power Station was given on 29th July, 1957, and in November, 1957, provision was made in the capital investment programme of the South of Scotland Electricity Board for expenditure of £ 38 million on the construction of the station plus £ 9 million for the cost of the nuclear fuel.

    2. By the end of May, 1962, the South Board will have paid £ 36· 4 million to the contractor.

    3. In terms of the contract the price has to be adjusted in respect of alterations to the civil engineering works arising out of site conditions at Hunterston, modifications to the reactor design and variations in the cost of labour and materials. Until these have been agreed the ultimate cost of the station cannot be exactly determined.

    4. The first reactor is expected to be commissioned in mid-1964 and the second at the end of the same year.

    5. The Board expects that the cost per unit generated will be about 1d. and that the price per kilowatt sent out will not greatly exceed £ 165.

    6. The cost of thermal stations at present under construction is about £ 40 per kilowatt

    1361
    sent out; and the cost of generating at Kincardine at 75 per cent, load factor 0· 6d. per unit.

    7. According to the 1961 Report of the North of Scotland Hydro-Electric Board the average cost of all its completed hydro stations was about £ 175 per kilowatt sent out and the average cost of generation was about 0· 79d. per unit an 1960 and 0· 65d. per unit in 1961.

    Technical College, Motherwell
    Mr. Lawsonasked the Secretary of State for Scotland if he will now give further information on the date for the commencement of building of the technical college at Motherwell.
    Mr. Maclay: The position is unchanged since my reply to the hon. Member on 31st January, 1962, when the education authority's estimated date of commencement was given as February, 1964.
    Mr. Lawson: Since the right hon. Gentleman is considering the introduction of compulsory day-release classes, and since Lanarkshire is inadequately equipped to handle such classes, will he do very much better than he has up to now? This college should have been started in 1960 and finished in 1963. The date he has given for the commencement is hopelessly short of the needs of the area.
    Mr. Maclay: The date of starting and of completion of this project is not in my hands. I am, of course, involved, but the decision is not for me in this respect. I understand that the local education authority is proceeding with the planning stage, and I have not yet received a final submission from it. I shall continue to do all I can, but this is essentially a matter for the education authority.

  ROYAL AIR FORCE

    Thor Missile Sites
    Mr. Masonasked the Secretary of State for Air what consultations he has had, and with whom, regarding the value of the Thor missile sites in this country.
    The Secretary of State for Air (Mr. Julian Amery): This is a matter which I review regularly with my advisers.
    Mr. Mason: Is it not time that we ran down these weapons and their bases in this country? Is it not the case that Thor is aggressive in intent, is antiquated, and is a first-strike weapon which costs £ 6 million a year to maintain? Is it not time that we got rid of it?
    Mr. Amery: No, Sir, I do not think so. As I have frequently tried to explain, so long as the threat to these islands is predominately from manned aircraft, the warning time is considerable, and Thor is an effective second-strike weapon.
    Mr. Collard: Will my right hon. Friend treat with suspicion advice on this subject from members of the Labour Party, whose declared policy it is to neglect and eventually to abolish the independent nuclear deterrent, if given a chance?
    Mr. Gordon Walker: Would not the right hon. Gentleman agree that the arguments for and against maintaining, Thor are wholly different from the one about whether we should have an independent nuclear deterrent? They are quite separate issues and it is false to mix the two.
    Mr. Amery: I am well aware that the right hon. Gentleman and his right hon. and hon. Friends for some reason see advantages in having a weapon under American custody.
    Sir A. V. Harvey: Will my right hon. Friend bear in mind that the right hon. Member for Smethwick (Mr. Gordon Walker) said in the defence debate recently that he was quite prepared to see the V-bomber force run down almost out of existence? The right hon. Gentleman wants the best of both worlds.

TRAVEL AGENCIES (REGISTRATION)
3.30 p.m.
Mr. Edward Milne: I beg to move,
That leave be given to bring in a Bill to provide for the registration of travel agencies; and for purposes connected therewith.
I hope that the House will treat this request to introduce a Bill with generosity and understanding. The extent of the problem is well known to many hon. Members on both sides of the House and considerable correspondence from my constituency and other parts of the country has indicated its nature and extent.
Holidays and holiday-making have become one of our major industries and about £ 600 million per annum is spent on them. Considerable revenue from overseas visitors, estimated at roughly £ 200 million to £ 240 million a year, is making tourism one of our most important industries. It is said that it is increasingly difficult to stay at home and keep up with the Joneses.
This has led, particularly in the West End of London, to an elaborate display of sunshine posters, chromium fronted and similar buildings to house businesses which do not have a solid foundation. While the very reputable Association of British Travel Agents, which has raised its membership from about 120 in 1950 to about 1,000 by the end of 1961, claims that its membership covers about 90 per cent. of the travel agents in Britain, it is significant that almost half of the travel advertisements in the Press are placed by people who are almost unknown in the travel agency business and who are outwith the scope of that organisation. We often hear of these unorganised bodies being unable to meet their commitments to their customers and being unable to meet emergencies in the course of holiday-making. In some cases the agencies blatantly disregard the amounts paid and the needs and wishes of their customers.
It is often argued when one is presenting a case of this description that it is only the most gullible who are caught by the spurious traders in any set-up, in any trade or profession. I want to give the House two examples from a considerable number to indicate the
1364
seriousness of the problem about which I am suggesting that we should legislate.
The first concerns a prominent person connected with one of the larger consumer research organisations, a person completely fitted to evaluate the quality of goods and services provided for the public. In December of last year, this person decided to contact a travel agency with a view to a holiday in Spain. A number of difficulties were placed in his way immediately, but after a deposit of £ 20 had been paid, together with the 30s. additionally required for cables to Spain, full payment for the holiday was requested in cash— not by cheque— to the amount of £ 71 8s.
It was then discovered that the charge for the hotel in Spain was made at the rate of 42s. per day. When this person checked and protested, it was discovered that the hotel, which, although advertised as of top quality was by no means in that category, was charging the agency at the rate of 27s. per day. This information has been checked both at the hotel and the Spanish Tourist Office.
The second case which I want briefly to outline concerns a constituent of an hon. Member opposite who booked with an agency for a trip to Greece and Italy, the agency being not far from the precincts of the House and on the surface seemingly extremely reputable. It advertises in The Times,the Guardian,the Sunday Express,the Daily Mail and other newspapers. The agency first offered accommodation in the course of an all-embracing tour at a rate of £ 2 per day. But because the Olympic Games were taking place in Rome at the time and because of the supposed difficulties of being able to obtain accommodation, the rate was increased to £ 5 1s. The Italian Embassy afterwards confirmed, when inquiries were made, that the charge for the hotel had been at the rate of £ 2 3s. per day.
In those cases I have not illustrated many of the other difficulties encountered by the customers of these agencies, but they are typical not only of the experience of these people, but of that of many others from one end of the country to the other. The cost of the tour, which was advertised at about £ 72 per head, turned out to reach a figure nearer £ 130. Despite the promises in the brochures and advertisements, if the

1365
persons taking that tour had kept strictly to its limits, all they would have seen abroad would have been the ports of call and the railway stations through which they passed.
I think that those two cases perfectly well illustrate the need for steps to be taken to protect the public in this matter. The Association of British Travel Agents and its code of conduct, the integrity, competence and high standard of service given by the profession will be the background to the standard needed in this flourishing industry. It has been the custom and tradition of the House to protect the public against unscrupulous traders and it has always been prepared to legislate when the need is demonstrated. I feel that even in the short time at my disposal the need for this type of legislation has been demonstrated, and I trust that the House will agree to the Motion and allow the Bill to go forward to its Second Reading.
Question put and agreed to.
Bill ordered to be brought in by Mr. Edward Milne, Mr. Charles Loughlin, Mr. Robert Edwards, Mr. William Owen, Mr. M. Edelman, Mr. Charles Grey, Mr. E. W. Short, Mr. George Darling, and Dr. J. Dickson Mabon.

TRAVEL AGENCIES (REGISTRATION)
Bill to provide for the registration of travel agencies; and for purposes connected "therewith, presented accordingly and read the First time; to be read a Second time upon Friday and to be printed. [Bill 119.]
ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress 29th May].
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

  FINANCE BILL

    New Clause.— (REDUCTION OF RATE OF PROFITS TAX ON CO-OPERATIVE SOCIETIES, & C.)
    (1) As from the beginning of August, nineteen hundred and sixty-two, and in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts, 1893 to 1961, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955, the rate at which the profits tax is to be charged shall be three per cent.
    (2) This section shall have effect notwithstanding any enactment to the contrary whether in this Act or elsewhere.— [Dr. Dickson Mabon.]
    Brought up and read the First Time.
    3.41 p.m.
    Dr. J. Dickson Mabon: I beg to move, That the Clause be read a Second time.
    The Chairman: I think that it will be convenient to discuss also the new Clause— Exemption of building societies from income tax and profits tax— the new Clause—Income tax and profits tax: exception of building societies— and the new Clause—Building societies to be exempt from income tax and profits tax.
    Dr. Mabon: I hope that because of what we have heard recently from the Prime Minister we may have a change of heart by the Treasury. The Prime Minister has been saying that the class war is dead. I hope that that is true, and if it is we ought to see to it that the postures of the class war are ended. I wish that the Conservative Party would realise that co-operative societies— and by co-operative societies I do not mean only the agricultural ones— are extremely valuable and play an excellent part in our economy both in a retail and wholesale form.
    The object of the Clause is to restore the position which existed for seven years under Conservative rule. In fact, it existed from 1947, when Labour introduced the matter, to 1958. At that time

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    the Finance Bill introduced by Lord Amory increased the rate of Profits Tax on co-operative societies from 3 per cent. to 10 per cent, while, at the same time, the tax on private companies was reduced from 30 per cent. to 10 per cent.
    The basic argument of those who believe that this change to uniformity is a fair thing in relation to co-operative societies is that there is no fundamental difference between a co-operative and a limited liability company. I submit that this is not true and that there is a fundamental difference between the shares of the co-operative society and the shares of a joint stock company.
    If Conservatives accept that it is logical that they should impose this tax, and reject this Clause or any variant of it which seeks to make such a distinction, I can only interpret the Government's refusal to do this as being due either to a lack of understanding, or because they wish to maintain this posture of the class war.
    In discussing the distinction between co-operative societies and limited liability companies, there are two fundamental points to bear in mind. Cooperative societies do not distribute profits in the same way as do limited liability companies. This is known to all who are members of a society, and ought to be known by hon. Gentlemen opposite in case they are not members of a society. The rate of interest which shareholders get in relation to their share capital is decided not by co-operative societies, but by the Registrar of Friendly Societies and it is not, therefore, the mechanism of the market by which the rates of interest are laid down in relation to cooperative societies. Here lies the fundamental difference between the joint stock company and the co-operative society.
    In addition, one has only to look at the structure of shareholding in cooperative societies to realise that this is mainly an imposition on working-class savings; an imposition on the savings of middle and lower class people. In 1960, the average member of a cooperative society held £ 19 6s. share capital and £ 3 loan capital. Average share interest in 1960 was 2· 95 per cent. Surely this is indicative that this is an organisation dealing with people in the lower income groups, an organisation
    1368
    which stimulates thrift, and an organisation which, on the basis of these figures, is not concerned with seeking to get out of its taxation responsibilities. A further point is that co-operative society shares do not attract speculative interest. They remain at par, and, therefore, cannot result in capital gains.
    Surely those two fundamental distinctions between the shareholders of cooperative societies and the shareholders of private companies are in themselves enough to show that there ought to be different fiscal treatment afforded to the co-operative societies as distinct from the limited liability companies? The aim of co-operative societies is to minimise profit for shareholders and to maximise the benefits to consumer members. This is the aim not only of retail societies— and this is clear to anyone who studies the position— but also of wholesale societies, because if one looks at the constitution of the wholesale societies one sees that they are interlocked with the retail societies. There are about 15 million people in this country who are members of co-operative societies and nearly 850 societies.
    Those who believe that this change in taxation in 1958 was unjust are all the more concerned because they see that as a result of changes made in 1960 and 1962 there has been a further imposition of tax on the lower income groups in relation to those who are members of the co-operative society. In 1958, there was an increase in tax from 3 per cent. to 10 per cent., which meant that £ 1· 3 million was raised in extra taxation from incomes mainly of wage earners. In 1960, by changing the level of Profits Tax, while making no fiscal discrimination between co-operative societies and joint stock companies, the amount of tax raised by Profits Tax was £ 500,000 more than in 1960. In this Budget an additional £ 0· 45 million is to be raised, which means that since this change was made in 1958 additional taxation on lower middle and working class savings in the co-operative societies amounts to £ 2¼ million.
    Surely it is reasonable to ask the Treasury to look at this again. It seems to many of us that this tax is most unjust. It can be truly said that since 1958, under a Conservative Government, the joint stock companies have been

    1369
    paying half the pre-1958 rate, while the co-operative societies have been paying five times the pre-1958 rate. This is most unjust, and I hope that we will not be treated to the briefs that were read in the past when Lord Amory and his assistants refused to listen to our pleas in this matter, and refused to recognise the effects that this tax would have on co-operative trade and development.
    I hope that we shall have some enlightened thinking from the Treasury this time, and that the Treasury Ministers will bear in mind the Prime Minister's view that we ought to look at these projects of social endeavour, these alternative ways of organising society, not in a hostile way but in a way that seeks to find a society which accepts private enterprise, on the one hand, and the endeavours of the co-operative movement, on the other. I hope that the Treasury will give us a favourable reply to the new Clause.
    Mr. William Clark: We are discussing with this new Clause, the new Clause—Exemption of building societies from income tax and profits tax— which has been drafted to exclude "Special advances" because, obviously, building societies have two types of business, namely, owner-occupier, and special advances, which include some commercial business. It is only that part of their business relating to owner-occupiers with which my new Clause deals.
    This is an endeavour to give some assistance to the hard pressed owner-occupier who is paying for his house— the man in the income range of £ 800 to £ 1,800 or £ 2,000 a year. Without aid, obviously, building societies must charge their borrowers a rate of interest which allows them to borrow from the public, and, obviously, the rate of interest which they charge on mortgages is dependent upon economic circumstances and the economic conditions affecting the Bank Rate and other sorts of interest.
    I do not think that it is any argument to say that because a man is an owner-occupier buying his own house, and because the rates of interest have increased, he is necessarily getting an advantage because the capital value of the house is rising every day. The
    1370
    owner-occupier is not, in fact, in business to buy and sell houses. He sells his house only if his employment changes or if, because of certain circumstances, he has to move. Surely, if he does move, the expense of buying a new house, together with the legal expenses and stamp duties involved in selling his own, more than equal the profit which he may have had. I hope, therefore, that we shall not hear very much of the argument that, because mortgage interest rates have gone up, the capital value of the property has also gone up.
    In 1961– 62, the total amount of Income Tax and Profits Tax paid by building societies was £ 54 million, but if we exclude the special advances— and, quite obviously, I have taken an arbitrary figure here— £ 9 million of that £ 54 million is income from Profits Tax. If the new Clause— Exemption of building societies from income tax and profits tax— were accepted, the cost to the Exchequer would be about £ 45 million, and I readily accept that this would be a tremendous burden on the Exchequer.
    Anything that is done would be a political decision, but I would remind the Committee that a political decision had been given in regard to houses before building society interest rates were changed. We should remember that council house subsidies— and I am not saying this in any way to suggest that council house subsidies should necessarily be reduced— are costing the country about £ 75 million a year. That is a political decision that £ 75 million of the revenue should go towards the assistance of council house tenants.
    Pre-war, the building of council houses was a social service but, postwar, this idea of social service has been rather lost. It was a definite political decision to continue building houses with subsidies. I appreciate the fact that my right hon. Friend the Minister of Housing and Local Government has changed the subsidies on council houses, but, nevertheless, the fact remains that today we are paying £ 75 million a year in those subsidies.
    The simple argument about building societies is that they are not in the same position as ordinary limited companies or trading companies. They are a sort of mutual trust. They are not in business for profit, and I think that there is some

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    justification for considering whether we could not give more help to this sort of mutual trust in order to further the provision of houses for would-be owner occupiers. We must remember that any relief that is given by the Government, either this year or in a subsequent Finance Bill, must be passed on to the borrower. This is of paramount importance, and I am sure that the building societies throughout the country would accept it.
    If building societies alone were exempted from Profits Tax, it would mean that interest rates would come down by only about a quarter of 1 per cent. Although this would be some help to owner-occupiers buying their own houses, it is not such a great help as if Income Tax were exempted. If Income Tax and Profits Tax were exempted, it would mean that interest rates could come down by 1¾ per cent. Instead of being 7 per cent., the interest rate would be about 5¼ per cent.
    I appreciate that a political decision has to be taken, but I also appreciate that in the circumstances in which this Finance Bill was drafted, £ 45 million would be a tremendous charge on the Exchequer. I ask the Minister to give sympathetic consideration to a scheme that would assist owner-occupiers throughout the country, through a reduction either in Profits Tax or Income Tax for building societies, so that these societies would be able to reduce their rates of interest, and, therefore more and more people would be able to afford to buy their own houses.
    Mr. Donald Wade: You have indicated, Sir William, that the new Clause—Income tax and profits tax: exemption of building societies— in the names of my right hon. Friend, my hon. Friends and myself, may be discussed with the new Clause now before the Committee. There are three new Clauses, all with similar intent, and the third is that in the name of the right hon. Member for Colne Valley (Mr. Glenvil Hall), so that each of the three parties is represented and the Chancellor will be able to take his pick.
    I think that I am right in saying that in all cases the object is to abolish Income Tax and Profits Tax on building
    1372
    society surpluses. In former debates on this subject, it has been argued from the Treasury Bench that if there is a liability to Income Tax it is unreasonable to ask for the reduction or abolition of Profits Tax from building society surpluses. Today, we are asking for the removal of both those taxes on surpluses, so that we are, at any rate, being logical, according to the views expressed in other debates in past years from the Treasury Bench.
    This does not affect the tax payable in respect of interest paid to investors in building societies, which is dealt with separately, and there is no suggestion that that should be altered. The arrangements as between the building societies and the Treasury will continue regarding the interest paid out to depositors. I think that that is clear, and that we are only concerned with Income Tax and Profits Tax on building society surpluses. I think that "surpluses" is the right word, because I do not think that they are profits in the strict sense. If we abolished Income Tax on these surpluses, we should be reverting to the position prior to 1932, when Income Tax was first introduced on building society surpluses.
    There is some difference in the wording of the three new Clauses now under consideration, but I do not think that they are of major importance. In the new Clause in the name of the hon. Member for Nottingham, South (Mr. W. Clark), which has already been referred to, profits on special advances are excluded. I appreciate that point, and if the Chancellor were to accept that new Clause, I should be quite content. In regard to the new Clause in the name of the right hon. Member for Colne Valley, which has not yet been referred to, there is a specific reference to the arrangement under Section 445 of the Income Tax Act, 1952. That wording is quite appropriate, and I have no objection to it.
    4.0 p.m.
    As I understand it, the Treasury's argument is that to relieve building societies in this way would create a dangerous precedent; that once this concession had been made all kinds of other bodies would ask for similiar concessions. I do not regard that as a fair point. Building societies are in a special

    1373
    class. We are discussing the subject of building societies together with cooperatives, and we must, therefore, consider the distinction between them. I am not opposing the proposal put forward by the co-operatives; I appreciate the arguments, and I have no reason to oppose their case. I merely point out that there is a distinction between co-operatives and building societies, which has been clearly recognised in earlier debates. There is a dictum of the late Lord Simon on the subject, which as far as I know has never been controverted.
    Building societies are not in competition with bodies engaged in trade. Their nearest competitor is the savings movement. The removal of this tax on surpluses would mean the removal of an anomaly. It is not so much a concession for which we are asking as a request for fairer taxation treatment of building societies.
    We must, therefore, consider the subject on its merits, without regard to any other trading concern or any other kind of body. I look on the building society movement as part of the general National Savings movement, and there are four points to be made in favour of this request for relief. First, the tax which we are now discussing was imposed more by chance than by design. It is not necessary to go over the history of the matter; it has been referred to in earlier debates. The way in which building societies came to be subject to Profits Tax in addition to Income Tax was very fortuitous.
    Secondly, to the extent that the surpluses are not used to reduce the rates of mortgage interest they have to be invested in Government securities, and are therefore a form of savings. They are either savings invested in Government securities or the savings of individuals who are buying their houses through the building society movement. We are therefore here concerned with taxing savings.
    Thirdly, the method of taxing building societies at present is a contributory factor in keeping up the interest rates charged to borrowers. I am not sure that I agree with the hon. Member for Nottingham, South about the amount of benefit that would accrue to the home buyer if Income Tax and Profits Tax on surpluses were removed. I understand
    1374
    that the benefit would amount to ¼ per cent. I question the larger figure which the hon. Member mentioned.
    But this is the aspect in which the general public is interested. We often have complaints from people who are buying their own homes about the high rate of interest they have to pay. They complain about the way in which it adds to the burden of buying the homes in which they live. Building societies cannot do very much about this, because they have very little room to manoeuvre. If their interest rates are high, it is the direct or perhaps indirect— consequence of Government policy. It is due partly to the ruling level of interest rates, which affects the amount which the building societies must charge to their borrowers and it affects the cost of raising money.
    Fourthly, the tax on surpluses has some effect on the rates charged to borrowers, and to that extent it is the home buyers who suffer. Furthermore, this form of tax is bound to restrict to some extent the expansion of the building society movement, since it affects the amount of the reserves and therefore the building up of the reserves.
    Yesterday, the Chief Secretary to the Treasury— if I understood him correctly — made a distinction between voluntary savings and compulsory savings. He said that he preferred voluntary saving, but that where that was not sufficient it was necessary to use the method of compulsory saving— in other words, taxation. This is a form of compulsory saving, but not one which should be welcomed. It would be very much better if more money were put voluntarily into the building society movement and if more people bought their own homes without having to pay such high rates of interest. In the long run, the effect of Government policy is to increase the amount of compulsory saving and thereby, to some extent, to handicap voluntary saving. I would have thought that it would be worth while, from every point of view, to abolish both Income Tax and Profits Tax on the surpluses. The only question is whether there should be any limitation.
    We can obtain some interesting information from other countries. For example, in Queensland building societies in general are not liable to tax. They are liable in respect of

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    incomes such as rent, which are considered to be outside the societies' normal functions. In the United States of America, building societies are exempt from tax until their reserves exceed 8 per cent. of their total assets. My view is that the American solution is better than the method of taxation here. If I were in the Chancellor's position I would abolish Income Tax and Profits Tax on surpluses and would give careful consideration to the introduction of provisions similar to those which operate in America.
    I am not very worried as to which of the three Clauses affecting building societies should be accepted. If the wording of any one is better than the wording of mine I shall be content to accept the advice of the Treasury. But there is a strong case for abolishing both Profits Tax and Income Tax on building society surpluses, and I hope that the Chancellor will appreciate the way in which the case has been put forward by hon. Members on both sides of the Committee.
    Mr. John M. Temple: I support the new Clause—Relief of Income Tax and Profits Tax on Building Societies— which has been so ably put forward by the hon. Member for Nottingham, South (Mr. W. Clark). This new Clause would exempt building societies from Income Tax and Profits Tax under certain circumstances. I am under no delusions as to the difficulty of getting my right hon. and learned Friend the Chancellor to accept any new Clauses, and I shall, therefore, seek to do two extraordinarily difficult things. First, I shall seek to prove to my right hon. and learned Friend that there is a special case to be argued for building societies and, secondly, that, as Chancellor of the Exchequer, he might gain by accepting this Clause.
    Building societies have an extremely good record over the last ten years in respect of the collection of savings from the community. In that period they have attracted twice as much in savings as the whole of the National Savings movement, and to that extent my right hon. and learned Friend owes a deep debt of gratitude to the building society movement. It is performing an immense social service. It has no equity share-
    1376
    holders to share in any of the profits, should profits be made. Without its help the great Conservative housing programme, which has been so successful over the last ten years, would have been nothing like so successful. We look to the building society movement in the future to carry a great part of our housing drive.
    It is right that my right hon. and learned Friend should give positive encouragement to home ownership. During the last few months the Bank Rate has fallen from 7 per cent. to 4½ per cent., but the borrowing rate from building societies has not fallen. If I were Chancellor I should be very concerned about that, and about the long-term rate of interest on irredeemable Government securities.
    It is a tragedy that War Loan is standing at about 55, giving a return of over 6 per cent., and the same return is demanded when borrowers obtain advances from building societies. In July, my right hon. and learned Friend, no doubt for very good reasons, withdrew that part of the House Purchase and Housing Act under which building societies could grant loans to those people who wanted to buy the older properties. In my opinion, this is not positive encouragement to prospective home owners. If my right hon. and learned Friend accepts our new Clause, or only part of it, he will be giving the positive encouragement to home owners which I believe to be so vital today.
    I draw my right hon. and learned Friend's attention to the fact that the £ 100 million which was advanced under the House Purchase and Housing Act was not money lost to the Treasury, but money which will come back to him in course of time. I have stated what the Chancellor might gain by accepting this Clause, and also that there is a special case for building societies. May I mention two particular facets in this Clause? First, the standard rate of Income Tax is charged on that section of building society surpluses— not profits — which they are placing to reserves. That allocation of money now attracts a tax of about £ 9 million a year. In addition, Profits Tax is charged on these surpluses, and that charge is about £ 3 million a year.

    1377
    I read with the greatest possible interest the address by Sir Harold Bellman, Chairman of the Abbey National Building Society, on 27th March, in which he referred to the fact that twenty-five years ago he was a member of a deputation which waited on the then Chancellor of the Exchequer, Sir John Simon, and that as a result of the representations of that deputation Sir John Simon accepted that building societies were in a special position and exempted them entirely from the National Defence Contribution. I should like to quote from the. speech, in which he referred to the Chancellor's action by saying:
    "Sir John Simon, then Chancellor of the Exchequer, justified the concession by stating that in the opinion of the Government, building societies stood in a class by themselves."
    Time went by, and in 1947 the National Defence Contribution was replaced by Profits Tax, and at that time a decision was taken by the then Government to bring building societies within the ambit of Profits Tax. I believe that that was a most unfortunate decision, bringing building societies for the first time within the ambit of Profits Tax, whereas the Chancellor of the Exchequer in 1937 had accepted that they were in a special position.
    4.15 p.m.
    Mr. Douglas Jay: When they were brought into tax in 1947 it was at the lower rate of Profits Tax. It was because the present Government abolished the discrimination in Profits Tax that they have found themselves in difficulties.
    Mr. Temple: I am very surprised that the Labour Party claims any credit for such a very bad precedent.
    I am prepared to do a deal with the Chancellor of the Exchequer. I have mentioned two facets of this new Clause, and I am prepared to sit down at once if my right hon. and learned Friend will rise and say, "I will accept those two narrow facets of the Clause". But my right hon. and learned Friend has not jumped to his feet. I will make him a further offer— a bargain offer— and say that if he jumps to his feet at once and says, "I will accept the Profits Tax section of this new Clause alone", costing him only £ 3 million a year, I will sit down.
    1378
    I am extremely disappointed that my right hon. and learned Friend has not responded, and I must, therefore, deploy the remainder of my case. It would be highly desirable to exempt the building societies movement from all Income Tax. In that case, my hon. Friend the Member for Nottingham, South (Mr. W. Clark) is quite right in saying that building societies would be able to lower interest rates by 1½ per cent. or more.
    We are all agreed that houses for future generations must be built. My right hon. Friend the Minister of Housing and Local Government has estimated that 6 million houses must be built in the next twenty years. This is the point on which my right hon. and learned Friend the Chancellor of the Exchequer might well gain from our new Clause. I believe that if he does not accept a new Clause of this nature, exempting building societies and encouraging home ownership, then we shall have to build more council houses, and if more council houses have to be built then the subsidy which will have to be borne by the Exchequer will increase. The cost to the ratepayers will also increase. To that extent, little loss would, in fact, be involved to the Chancellor of the Exchequer by accepting a Clause of this nature, and it would give positive encouragement to more home ownership.
    I am very disappointed that my right hon. and learned Friend has not risen to respond to either of my offers. I very much hope that he will remember that the building society movement is an extraordinarily powerful movement, doing an immense social service. I trust that he will give encouragement to that movement and to owner-occupiers throughout the country.
    Mr. Glenvil Hall: I, too, have a new Clause on the Notice Paper, in much the same terms as those in the names of the Liberal Party and the hon. Member for Nottingham, South (Mr. W. Clark). As the hon. Member for Huddersfield, West (Mr. Wade) said, this is not a party matter. This is pressure by all parties, and it has been going on to my knowledge for the best part of ten years. Year after year we have attempted to get the Chancellor of the Exchequer to do justice to the building societies. Instead of his doing so, the right hon. and learned Gentleman

    1379
    has made the burden upon them infinitely worse.
    As the hon. Member for the City of Chester (Mr. Temple) said, in 1932 a deputation from the building societies went to see the Chancellor of the Exchequer, the late Lord Simon, then Sir John Simon, and he admitted quite definitely that building societies came into a different category from ordinary trading concerns. It was easy for him to reach that conclusion, because they are in a class apart, as are co-operative societies. They pay no dividends, although I know that co-operative societies do on purchases. They make a surplus; but they do not distribute the surplus. They declare no dividend, and they do not trade in the ordinary way, and any surplus which they make is used for the benefit of the members of the society which makes the surplus.
    In addition, if it were not for the societies the Government would have to step in and do something to help people to buy their houses. At the moment, they borrow largely in the open market at current rates of interest and then re-lend to house purchasers, and this takes a burden from the Government. The Government, instead of penalising building societies, should recognise their value. I could, I think, outline the speech which the Economic Secretary will make, because it has been made from that Box year after year. He will say, first, that the Government are only following the decision of the Royal Commission, which was in favour of building societies being taxed. When the hon. Gentleman replies to this debate, perhaps we can be told where in the Report of the Royal Commission there is any indication that the Commission came down on the side of taxing building societies in the way that they are now taxed.
    As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, when Labour was in office the Government made a special rate applicable to building societies. A few years ago, when the difference between the dividend distributed and the non-distributed profits rates were made one, the building societies found themselves paying as much as any trading concern. I put this to the Economic Secretary. It has been
    1380
    put to him year after year, but I put it to him once more. Is it not grossly unjust to treat building societies in this way. They help people to save and provide houses for those who need accommodation. They assist the Government in every possible way. It is unfair that these societies should be mulcted in this fashion. Previous Government have realised that building societies are quite definitely in a different category from trading concerns.
    There is a feeling in some quarters that building societies do not pay Income Tax. That is partly due to the fact that they pay a composite rate direct. I am not one who thinks that that special rate helps building societies to pay less than they should. It is an arrangement which suits the Inland Revenue very much. A large number of those who have money in building societies are people of small means who do not pay Income Tax anyway. The arrangement must mean that, on balance, the Inland Revenue gets more than it would otherwise get. It certainly is saved a great deal of trouble. But for this arrangement, people would have to have sums they had paid refunded to them, and that would involve a great deal of work for the Inland Revenue.
    I am positive that the pressure now being brought to bear on the Government is a proper one. The fact that all parties are sharing in it underlines what I and others are saying. I hope that on this occasion the Economic Secretary will agree with the hon. Member for the City of Chester, who has spread himself in trying to put the case to the Government. He obviously feels deeply. I think that he made an exceedingly good one. If the Chancellor cannot see the light after what has been said so far in this debate, I am afraid that he never will see it.
    Mr. Raymond Gower: The case for this series of new Clauses has been put with great clarity and moderation by my hon. Friend the Member for Nottingham, South (Mr. W. Clark) and other hon. Members. They have emphasised that the function of the building societies since the last war has been of invaluable help. The notable expansion of home ownership would have been quite inconceivable without their

    1381
    work. Undoubtedly, they have increased the scale of their operations. They have had to do that in response to increased demand.
    Nevertheless, there has been evidence in most parts of the country at different times of the tremendous strain on the resources of the societies. It must be within the experience of hon. and right hon. Members on both sides of the Committee that prospective purchasers of houses are frequently unable to obtain the mortgage advances which they need. In some parts of the country, for reasons which I deplore, local authorities do not use the powers conferred on them by Parliament to grant mortgages. They could do so and have all their administrative expenses covered and make a small profit. Why some local authorities have stopped doing that is quite inconceivable. In those areas building societies have rather strictly to ration the amount of money they advance. There is almost a standstill except in the minority of cases in which people can find the cash or make private arrangements for mortgages to buy private houses.
    Everyone who buys a house in some degree relieves the community of a possible burden. In the absence of such self-provision, a large number of these marginal cases would have to be provided with council houses in the manner which was described by my hon. Friend the Member for the City of Chester (Mr. Temple). In many cases that would lead to an increase in public expenditure. It would increase even further the annual sum of £ 75 million for council houses in all parts of the country. On both sides of the Committee we have proved by our policies that we deem it legitimate for sums of public money to be expended on the provision of council houses in that way. That being so, there is an exceedingly strong case for giving some help to an agency which provides the person of modest means with the opportunity of home ownership.
    Other things being equal, the modest acquisition of property, particularly of a house in which one lives, while not necessarily creating a better citizen, is likely to inculcate the virtues we seek to encourage. We on these benches have constantly said that we favour a wider dispersion of property ownership, par-
    1382
    ticularly in houses. In this country we have achieved a great deal in that direction, but we still lag very much behind other countries, particularly North America. We have still a long way to go before we can say we have achieved our goal. The main agency to assist us in this laudable ideal is the movement that we are discussing, the building societies.
    The services which building societies render have never been needed to a greater degree by a large number of people of comparatively modest means than today. I therefore hope that my right hon. and learned Friend will listen to the request made by several of my hon. Friends that he should ascertain how he can take a practical step— if he cannot accept our Clause in full— towards helping building societies, and thereby house purchasers, more than has been done so far.
    4.30 p.m.
    Mr. John Rankin: The hon. Member for the City of Chester (Mr. Temple) said that he found it very difficult to move the Chancellor, and I could not agree with him more. Some of my colleagues and I have been engaging in that unrewarding occupation for more years than we would now like to count. The hon. Gentleman even offered to sit down in the middle of his speech if his right hon. and learned Friend would rise to the fly that he was casting. No hon. Member could make a greater sacrifice than to indulge in a voluntary silence to accomplish his end and, of course, silence has been shown as one method of achieving an end. It is now engaged in for other purposes that are somewhat remote from the present discussion.
    The hon. Member for Huddersfield, West (Mr. Wade) chose, perhaps properly, to indicate that there were differences between us. I imagine that to be one of the best ways of playing into the Chancellor's hands. Last evening, when we were engaged in a similar venture to this, the Chief Secretary of the Treasury immediately seized on little differences that had cropped up during the debate—
    Mr. Wade: On this occasion, I said that the Chancellor could take his pick. and I should be quite content.
    Mr. Rankin: That is not very good salesmanship. We should not let the Chancellor have his pick, because he might pick wrongly. He might ignore the plea that Co-operative Members have made during the last five years. If he has to take a pick, we must ask him to pick ours—
    Mr. Wade: I do not want to create misunderstanding. I was referring to the three new Clauses relating to building societies. I was not referring to the co-operative movement.
    Mr. Rankin: We have now made it quite clear that for this purpose we are one united body, and that just as last night we joined together to advance the cause of the savings movement and to ask the Chancellor to encourage it by a preferential tax, so today we join together to ask him to encourage the new Clauses relating to such important businesses as the co-operative movement and the building societies. I hope that we shall press the Chancellor unitedly for the achievement of our common purpose.
    I support entirely what has been said about the building societies. I am a member of the Co-operative Building Society and, largely because of that, I am living in a house bought with the savings that I invested month by month over many years. I therefore support the aim of the hon. Member for the City of Chester, and I ask for his support of our new Clause relating to Profits Tax on co-operative societies.
    The right hon. and learned Gentleman does not give an encouraging nod to that, but, after all, the big challenge here is whether or not, if he refuses to listen to our plea on Profits Tax— as he did on savings last night— hon. Members opposite who make powerful speeches in support of their nostrums will go into the Lobby with us to register our disapproval of and dissent from the policies which the Government is now pursuing.
    I want, in particular, to support what my hon. Friend the Member for Greenock (Dr. Dickson Mabon) has said so impressively and eloquently. That, of course, comes naturally to him. As a Scotsman, it is born in him, and as one who breathes the free air of Greenock, it comes from him, naturally,
    1384
    rhythmically and, at times, almost poetically. I am certain that his arguments will have a powerful effect on the Chancellor. Incidentally, with all due respect to the Economic Secretary— whom I love to hear— and who has so often said "No", I hope that he will today, as a variation, say "Yes" to our request.
    Our claim is fairly simple. We in the co-operative movement want to restore the tax position which operated up to the passing of the Finance Act of 1958. Until then, the co-operative trading side was assessed as though it made no distribution of profits to shareholders. The result was that the 3 per cent. rate was applied to surpluses. That was done because the Government accepted that co-operative trading methods were not patterned after those of the limited liability companies. The Government accepted that the cooperative purpose in trading was to minimise profits to shareholders and maximise benefits to consumers. Cooperatives still follow the business plan of pre-1958 days although, of course, it is naturally expressed in modern terms.
    It is not the co-operatives' way of creating their surpluses that has changed, but the Chancellor's attitude to those surpluses. Formerly, he regarded them as undistributed profits; he now taxes them as though they were distributed. Formerly, they were regarded as not being earned, utilised and treated like big business profits; now they are regarded in exactly the same light, for taxation purposes, as big business profits.
    If that were all, it might not be so bad but, in practice, the co-operative movement is being taxed ever so much heavier than it was prior to 1958. Compared with conditions then, the Chancellor has increased by five times the tax rate paid by the trading side of the co-operative movement. Instead of paying 3 per cent. Profits Tax on surpluses, as we did in 1958, we now pay 15 per cent. The tax on limited liability companies has been reduced by 50 per cent. and that is not following a very fair principle in taxation affairs.
    It is quite wrong. Some people call this political discrimination. I hope that the Chancellor will take note of these

    1385
    facts, because it is well known that a large slice— I do not wish to be offensive in these remarks— of the Tory Party income in carved from the juicy roasts provided by their Government. On the other hand, the co-operative movement is known to lean closely towards the Labour movement; but the Co-operative Party has scanty political funds. I could put these two acknowledged facts together and make them add up to six or seven. I will content myself, however, by saying that I hope the Chancellor will seriously consider this aspect, for a great many people consider that there is obvious discrimination between the two different forms of business and that this discrimination is at least rather strange.
    We have the first form of business— the co-operative form— with a working-class origin offering a co-operative way of trading. It is being harshly treated. The other system creates profit from the public need for private purposes. That system is being preferentially treated as I have shown by the figures I have quoted.
    Mr. John Hall: For the guidance of hon. Members who have been interested in the argument being adduced by the hon. Member, would he quote the respective rates of Profits Tax now borne by private industry— little and big businesses— and the rate borne by the co-operative trading concerns? Would he refer more specifically to the figure which, he says, has been reduced by 50 per cent.?
    Mr. Rankin: I thought that the figures were well known. In 1958, the Profits Tax imposed on co-operative trading surpluses was 3 per cent., while the other tax was 30 per cent. They were collapsed into a general tax of 10 per cent. and, thus, the co-operatives had to pay 10 per cent. instead of 3 per cent. while the tax on limited liability companies was reduced from 30 per cent. to 10 per cent. Since that time Profits Tax has gone up to 12½ per cent., then 15 per cent. and therefore the tax on cooperative surpluses has risen five times while the tax on limited liability companies has been reduced by 50 per cent.
    That is by no means fair treatment. Preference has obviously been shown and one naturally wants to know what
    1386
    arguments there are in favour of this discrimination. I have been told that the Chancellor acted on a recommendation in the Report of the Royal Commission. That may be true and, for the moment, I shall accept the Chancellor's statement on its face value for whatever it may be worth. In my view, it is only an excuse, because there are so many recommendations of the Royal Commission which the Chancellor has disregarded for so many years that I naturally wonder why he should place so much reliance on this particular recommendation.
    4.45 p.m.
    The Economic Secretary put forward a second reason last year when he said that the Government were bound to treat the co-operative trading movement in this way because they wanted to be fair to their trading competitors. I do not regard that as a genuine reason. The co-operative movement sells the great mass of its goods at prices which are comparable— and, in some cases, regulated— or exactly the same as private traders.
    In addition, from the surpluses created by its trading, the co-operative movement provides a great range of social and educational activities which the private trader simply does not venture to engage upon. Therefore, if there is any unfairness, it is not against the private trader but against the co-operative movement and it is because of that that I am asking the Chancellor seriously to consider this matter.
    There is now a common purpose uniting both sides of the Committee in seeking an allevation of Profits Tax for the co-operative movement, and the building societies as specified in the other proposed new Clauses. I hope that hon. Members who sponsored those Clauses, assuming that the Economic Secretary will not give a promise either of acceptance, even partially, or of reconsideration, will unite with us in marching into the Lobby to support them.
    Sir Cyril Black: I am sorry to strike a discordant note, but I must count myself out as far as the one united body to which the hon. Member for Glasgow, Govan (Mr. Rankin) referred is concerned. I have been actively engaged in the building society

    1387
    movement for over twenty-five years and I agree with everything that has been said about its social purposes, for it plays an invaluable part in the economic and social life of the country.
    But when we examine the case dispassionately, we discover that what we have been listening to is special pleading on behalf of building societies which could not, with consistency, be granted without being applied to a considerable range of other business enterprises.
    It ought to be clear to the Committee that the three new Clauses dealing with building societies, which are being debated together, do not seek to achieve the same object, if, indeed, they achieve the objects described by those who put them forward. The hon. Member for Huddersfield, West (Mr. Wade) made it clear that he was seeking exemption for the profits of building societies from Income Tax which they bear at the standard rate and from Profits Tax, whereas my hon. Friend the Member for Nottingham, South (Mr. W. Clark) also desired to extend the concession to that part of the tax which relates to interest paid to shareholders and depositors and is paid not at the standard rate but at a specially agreed composite rate settled with the Inland Revenue. That was the purpose which my hon. Friend commended to the Committee, and it is, of course, quite different from the purpose of the hon. Member for Huddersfield, West.
    I do not want to deploy all the arguments in this matter. It was debated at great length last year and has been debated in previous years. I made a speech of considerable length on the last occasion. Last year and in previous years the plea was for a concession related to Profits Tax only, whereas on this occasion it is desired to extend the concession to include Income Tax. This year's proposal has perhaps the merits of greater consistency than the claims put forward in former years, but it becomes less realistic because of the very much larger loss which would be incurred by the Treasury if this year's demands were met.
    I think that hon. Members are familiar with most of the arguments, but I want to deal with one which has been mentioned by two or three speakers today
    1388
    and which is an argument that I cannot for one moment accept. It is, stated, quite simply, that building societies are not profit-earning organisations and that nothing they earn can properly be described as a profit. One of my hon. Friends used the phrase that building societies are not really in business for profit, and the right hon. Member for Colne Valley (Mr. Glenvil Hall) said that he preferred to use the word "surplus" as he did not consider that building societies earned profits. It is that point of view only that I want to combat today.
    I want to read to the Committee a paragraph from a recent article on building society operations, written by a well-known financial journalist. It puts the case very clearly. It says:
    "Just as the butcher, the baker and the candlestick-maker have their wares to sell, so have the building societies their commodities to sell. The tradesmen have to face the problems of their jobs squarely and take such action as will enable them to buy their raw materials and to sell them at the market rate. So building societies, dominated as they arc by the money market rates, should get down squarely and honestly to the job of buying and selling money.
    Building societies are not philanthropic or quasi-benevolent organisations; they are businesses, just as much as are the businesses of the butcher, the baker and the candlestick-maker. The difference between the profits of the former and those of the latter is more imaginary than real; the tradesmen put their profits into their own pockets, while building societies credit their profits to the societies themselves… The profit motive, no matter how much we may blether about 'non-profit making organisations' and raise our hands in horror at the mention of the word, is active in both cases.
    I have yet to meet a butcher, baker or candlestick-maker who does not wish to make a profit and expand his business, or a building society which does not wish to make its 10 per cent. increased growth each year."
    I would not have stated the functions of building societies in quite those terms, not because I do not believe that they earn profits— I am quite persuaded that they do— but because I think that this is a rather crude way of describing the business in which building societies are involved.
    I would say, however, and on this note I conclude, that if hon. Members are inclined to quarrel with this definition they may be interested to know that it appeared in the issue of October of last year of the Building Societies Gazette,

    1389
    which is generally regarded as the mouthpiece of the building society movement. Whatever the arguments may be on general political as distinct from fiscal grounds for making a special concession in the case of building societies, the argument that they do not earn profits and do not exist to earn them is an argument that just does not bear examination.
    Mr. Sydney Irving: The hon. Member for Wimbledon (Sir C. Black) has accused us of special pleading. I deny that absolutely. The co-operative movement has never claimed for itself anything which it would not give to any similar organisation. In our consideration of small savings last night we were quite happy that any concession accorded to the movement should be granted to any similar form of small savings. What we feel to be unjust is that organisations which are dissimilar should be treated in like fashion and that the co-operative movement should be considered in the same way as joint stock companies when its whole aim is totally dissimilar.
    While not dissenting in any way from the views of my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall), I should like to confine my remarks to the new Clause moved by my hon. Friend the Member for Greenock (Dr. Dickson Mabon). This exposes another example of discrimination against the co-operative movement. In a democratic society one would expect that one object of Government policy would be to assist voluntary and democratic organisations, especially those with the history of the co-operative movement in encouraging thrift and self-help among workpeople. Yet in 1958 the Government made this punitive imposition on the co-operative movement which, to date, has cost the movement £ 2¼ million.
    I am sorry that the hon. Member for Wycombe (Mr. John Hall), who intervened when my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) spoke, did not agree that this is a double penalty, because at the same time as this has created an additional burden on the co-operative movement the Chancellor has improved the position of the joint stock companies by reducing the tax on distributed profits from 30 per cent. to
    1390
    10 per cent. Government action has reduced the pool from which dividend is paid and this has placed a burden on the many millions of consumers who draw upon that pool.
    We believe that it is grossly unfair to treat co-operative shares in the same way as those of joint stock companies. In joint stock companies there is no limit to the potential dividends paid on ordinary shares and no limit to the individual person's holding, whereas in the co-operative movement the dividend is limited to 2½ per cent. to 3½ per cent. by the Registrar. There is also no possibility of capital appreciation, and there are no one-for-one bonus issues as there are in many joint stock companies. The holding of shares in a co-operative society is limited by Statute and, in any case, about 32 per cent. of the total share capital of co-operative societies is invested in Government securities. We believe that there is no case in equity for the continuation of this imposition and I hope that the Chancellor will be able to end it by accepting the new Clause.
    5.0 p.m.
    Mr. Nigel Fisher: I will not follow the hon. Member for Dartford (Mr. Irving) into the co-operative argument because I do not know anything about it. I merely wish to support the building society Clauses in this batch of new Clauses which we are now discussing.
    I suppose that I ought to make the usual declaration of interest, as I have done for many years, as a director of and an investor in a building society and as a vice-president of the Building Societies Association, although the latter interest is honorary rather than financial.
    Many of us have argued this case so often over the years that it is becoming quite difficult to think of new ways of stating the same arguments. They have been put excellently again today, from both sides of the Committee. I think it is significant— I believe it was the right hon. Member for Colne Valley (Mr. Glenvil Hall) who pointed this out— that this case is always argued from both sides of the Committee by representatives of all three political parties and there is therefore no party motive whatever. Indeed, what actuates us in this sort of debate is simply a desire to put

    1391
    right an injustice and correct an anomaly. I do not think I am overstating the position when I say that.
    We base our argument on the fact that the building societies are not engaged in trade and do not make commercial profits, although my hon. Friend the Member for Wimbledon (Sir. C Black) may say they do. They have no equity shareholdings. Surpluses put to reserve could not benefit any shareholders. Building societies began as savings organisations, and that is what they still are today. I maintain that they are non-profit-making institutions, with a social as opposed to a commercial purpose. My hon. Friend the Member for Wimbledon said that building societies want to grow. Of course they do, but they do not want to grow by making profits, because they do not make them. They want to grow by making more advances on mortgage, which is the purpose for which they exist and for which they were started.
    All this used to be admitted by the Treasury. For sixty years building societies were not taxed. But now the tax privileges which are still given to other forms of savings, such as life insurance, are no longer given to building societies. Last year my hon. Friend the Economic Secretary acknowledged that building societies have no equity shareholdings and that the surpluses put to reserve could not benefit any investors as capital gain and could only benefit would-be home-owners. Yet in the same breath he claimed to rely on the view of the Royal Commission that building societies carry on a commercial business and make profits. That was simply asserted. There was no evidence produced. It was simply an assertion by my hon. Friend because the Royal Commission had said so.
    We all know how Profits Tax came to be imposed upon building societies. We all know the story of the National Defence Contribution. Most of us feel that when this tax was replaced by Profits Tax in 1947 the original position of building societies should have been restored at that time.
    The second argument on which the Economic Secretary relied was that building societies could not be considered in isolation, and on this point
    1392
    the Chief Secretary to the Treasury in the debate last night on small savings was, I thought, rather clever from his own point of view. He lumped all these different forms of savings institutions together. He said that if we gave the cooperative societies a tax relief it would cost £ 2½ million. He said that was not very much but that if we put them all together it would cost a great sum of money which the Treasury could not possibly afford.
    That is rather clever political gamesmanship, but that is all it is. One says first of all that no particular case can be considered in isolation. Then one says that if all the cases are taken together it becomes much too expensive for the Treasury to consider. So it is never necessary to argue the merits of any particular case which is being advanced. I call that political gamesmanship. Not that I decry it. I think this is about the only argument that the Treasury can possibly deploy against the clear equity of the case which my hon. Friends and hon. Members opposite have submitted.
    I do not feel it is right to lump these different pleas together. It is not right to consider the building societies with the co-operative societies and say that because relief is accorded to one it must necessarily be accorded to the other. They are not in the same category. Co-operative societies are, after all, engaged in trade. Building societies are not. We have often heard the dictum of Lord Simon, when Chancellor of the Exchequer, that building societies are in a special position. He said that they were in a class apart for taxation purposes because they are non-profit-making organisations and savings organisations with a social as opposed to a commercial purpose.
    I should like to know whether Lord Simon's dictum is now denied by the Treasury and, if so, why? If building societies were in a special position in those days, what has happened in the operations of building societies in the last quarter of a century to make them no longer in that special position? I would say that there has been no basic change in the operation of building societies, and if there has been no change why has there been this change in Treasury thinking? How much longer have we to go on year after year with

    1393
    this flat, barren, unsupported negative from a series of Treasury Ministers who, I suppose, would all claim to support the concept of a property-owning democracy but who do very little in practice to bring it about when they are in office?
    I cannot feel hopeful, in a Budget of this sort which can make no overall tax deductions of any size, that we shall get far with these new Clauses this year. I do not think there is a spirit of optimism on either side of the Committee with regard to the outcome of this debate. I can only draw a little crumb of hope and comfort for the future from a comment that my hon. Friend made last year when he promised that when the structure of taxation comes to be altered, with possibly the amalgamation of Income Tax and Profits Tax, the special position of building societies would certainly be considered. He made my point on that occasion that building societies are in a special position. I think I have quoted his words accurately. I hope it will in fact he considered during the current year and before the next Budget.
    I hope my hon. Friend will at least be able to tell us that this afternoon. And I hope that one day in the not too distant future a Treasury Minister will defy all the precedents created by his predecessors and will come down to the House of Commons and give practical recognition— not just lip-service— to the value of building societies to the community by restoring to them the tax position which they once enjoyed and which, I believe, they are entitled to enjoy again.
    Mr. Frank Tomney: According to my logic, a surplus by any other name is still a profit. One thing that the hon. Member for Wimbledon (Sir C. Black) did very effectively this afternoon was to shed a lot of crocodile tears about building societies. In political thinking— and this is, after all, a political forum— it is best to put first things first. What we are arguing about principally, although we have not said so, is the complete failure of the Government's economic policy in the last ten years to control rises in interest rates throughout the country, which has led directly to the imposition of high interest rates on would-be borrowers who, by borrowing money to provide the
    1394
    country with a capital asset in the form of bricks and mortar, are rendering a service to the country.
    If there is one lesson which has surely been learned in the country by now, it is that in times of consumer and inflationary pressures there has got to be something of a managed economy. That is what has not been done, and that is why there has been this outcry by the people for whom these crocodile tears are being shed this afternoon.
    The kernel of this debate is the interest rates which people cannot afford to pay. In moving new Clause 12—Reduction of rate of profits tax on co-operative societies, & c.— the hon. Member for Greenock (Dr. Dickson Mabon) made reference to people who have to move from job to job and from house to house. Prices are not constant; jobs are not constant; wages are not constant, and housing prices are not constant. I know of cases where Rolls Royce engineers who were out of work in Scotland moved to London and had to pay £ 1,000 more for the same type of house than they did in Scotland. The difficulty which young people have is not that they are unable to make the repayments to building socieies out of income; it is to acquire the initial capital to put down as a deposit for the purchase of a house.
    The hon. Member for Wimbledon is quite right when he says that building societies are trading concerns. They trade in money. They borrow money and they lend it at the best rates, and the fact that they have an arrangement with the Treasury regarding dividend payments does not divorce them one iota from commercial practices. Therefore, if we take the words of the Minister of Housing that we are faced with a prospect of getting 6 million houses in the next ten or fifteen years, one is led to ask, who is going to provide them and at what rates?
    This country has a permanent housing problem. Of course the building societies render a great service— no one denies that— and of course the person buying his own house is adding to the capital resources of the nation. The prime difficulty arises from the Government's economic policies. The framing of these policies and their execution prevent people in the first place from being able to acquire the capital with which to buy a house.

    1395
    This is the real argument, and all the crocodile tears will not wash it away. In Finance Bill after Finance Bill hon. Members exercise their function as Members of Parliament to promote interests, sectional or otherwise. But when the economy is running away the effect of all this always comes back to the people least able to bear it. If one is clever enough, rich enough and mentally agile enough one can usually get out of one's difficulties.
    In the main, it is the productive workers, the sheet anchor of the nation's economy, who have to face this recurring burden year after year. There are at least 800,000 marriages each year. The London County Council has a waiting list of 150,000, 50,000 of which are dire cases. Government policies have forced up prices of land and rents, and they have made the position of those on housing waiting lists and local authorities wishing to deal with the problem more difficult.
    Let us start where we should start— on the Government's interest rates. They are the prime reason for the present difficulty. If the Government are to solve this problem some economic thinking must be done in the Treasury about how it is to be done, because we may be entering a period of intense competition in world markets. Unless something is done we are going to make our industrial population immobile because a man cannot transfer his home and family elsewhere unless he has a house to go to. The necessary houses cannot be built within measurable time and they will never be built unless special arrangements are entered into, either through the building societies or otherwise, to take the burden off the backs of the people who cannot bear them.
    5.15 p.m.
    Mr. Alan Brown: With reference to new Clause 12—Reduction of rate of profits tax on co-operative societies, & c.— I wish to say a few words in support of small shopkeepers. I prefer, as did the hon. Member for Huddersfield. West (Mr. Wade), to keep quite separate the question of building societies, as dealt with in new Clause 27 —Exemption of building societies from income tax and profits tax— because I
    1396
    understand that in this respect the Cooperative Building Society is quite separate from the other business trading activities of the co-operative societies. The hon. Member for Greenock (Dr. Dickson Mabon), who moved Clause 12, implied that the co-operative societies are not in the nature of being big business. The paid-up capital of the Co-operative Wholesale Society alone— that is not counting the 850 other societies involved— is no less, according to the Stock Exchange Manual, than £ 30,600,000. Therefore, the question arises, what exactly constitutes big business?
    I see no valid reason why the Committee should accept Clause 12 as it stands. I have no objection to Clause 27. I am talking only about Clause 12. I am of the opinion that it would be right and proper for us to reject Clause 12 because we are being asked to say that the retail trading section of the already gigantic co-operative society should be given the privilege of enjoying special financial concessions which, in my view, are clearly calculated to enhance its profits.
    Is it right that these large trading concerns should be given preferential treatment which is denied to small shopkeepers? Britain, as has been said so often, is a nation of shopkeepers. How can the proposition of equality of treatment for all be upheld if the interest of the many is to be subjected in the interest of the few?
    Dr. Dickson Mabon: Is the hon. Gentleman aware that his figures do not really substantiate his case? He mentioned the figure of £ 30 million, but may I tell him that the share capital is well over £ 200 million? What he has to take into account is the fact that 13 million members participate in the ownership of that capital. The figures which I gave averaged and amounted to — and let us remember that these are accumulations over years— less than £ 20 in actual share capital per head. The hon. Gentleman talks about allowing these moneys to be made from that capital. The co-operative societies are enjoined by the Registrar of Friendly Societies not to pay high rates of interest but only a fixed rate of interest, which, as I said, was less than 3 per cent. in 1960.
    Mr. Brown: I will deal with the main points at the end of my speech. Suffice to say that I was only taking the figure given by the Stock Exchange Manual when I mentioned £ 30 million. The fact that the figure is really £ 200 million is a measure of how little we know about the whole business.
    Let all those who embark willingly into the hazardous field of trading for profit— as I have myself done that in the past— do so on equal terms and not seek to obtain, as the co-operative societies are doing for themselves, advantages which they deny to others.
    Dr. Dickson Mabon: Shame. That is grossly untrue.
    Mr. Brown: We have heard a great deal of late about the demerits of monopolies and of big business. Certainly, among all those who have been loud in their denunciation of the so-called threats to our financial stability, it would be fair to say that the voice of the small shopkeeper has been the quietest. For all that, however, he more than anybody else has for long suffered the most.
    There is absolutely no difference to the shopkeeper between the high-pressure competition sustained by the co-operative societies and the high-pressure competition sustained by the so-called privately-owned chain stores but whose shares, incidentally, are publicly owned, such as Woolworth, Sainsbury, and Marks and Spencer. To the private trader, there is no difference.
    The contention made from the benches opposite that the profit of the co-operative business is distributed to co-operative shareholders is a little misleading. The fact is that the bulk of the profits are diverted, as we all know, from the trading sector of the co-operative societies and are applied to other purposes. I shall not go into those other purposes. [HON. MEMBERS: "Why not?"] Because hon. Members know what they are. Suffice it to say that the small balance which remains is returned to the customer in the form of dividends, a dividend which, however, is not regarded by the small shopkeeper as abona fide dividend in the true sense of company law but as an advanced form of price-cutting technique. Hon. Members know that this is true.
    Dr. Dickson Mabon: On a point of order. May I ask you, Mr. Thomas, whether the assertion that the hon. Member has made is true? Are you aware of that?
    The Temporary Chairman (Mr. George Thomas): I think that the hon. Member did not really mean what he said.
    Mr. Norman Dodds: Start again.
    Mr. Brown: There is no need to start again. The point I am making is simply this. We all know what a shareholder is in terms of company law, but in terms of co-operative trading the shareholder is the customer. Thus it is that the dividend that is returned to the customer is considered by many private traders as being in the nature of a form of price-cutting. For example, the shareholders in Woolworth's receive a dividend from head office. Perhaps we are all customers at some time of Woolworth's, but that does not make us shareholders. If we were given a rebate, it would be considered to be a form of price-cutting.
    Mr. A. E. Oram: That is quite right. Our case is that the co-operative dividend is a reduction in price which is determined at the end of the trading period. The hon. Member is not suddenly producing a new-found truth. It is the whole base of the cooperative method that we reduce prices by the payment of consumer dividends.
    Mr. Brown: I am indebted to the hon. Member for that assistance.
    Mr. Oram: The hon. Member needs a lot more.
    Mr. Brown: Surely, it is our duty to maintain the principle of equality of opportunity, both in business and in other walks of life.
    Let us by all means assist and encourage those who fall below a certain standard of living and help those who need assistance. Let us by all means apply sanctions to those who by reason of uninhibited greed and ambition are guilty of conduct detrimental to the well-being of our society. I am now referring briefly to monopolies. To accept the new Clause moved by the hon. Member for Greenock, and in so doing to give

    1399
    deliberate privileged treatment to one section of business, would be both unjust and unfair.
    The Economic Secretary to the Treasury (Mr. Anthony Barber): If I may say so, with respect, I thought it a little odd at first to discuss in the same debate new Clauses concerning the taxation of building societies and the taxation of co-operative societies. However, I think it is the most convenient way of proceeding, because one of the basic issues is relevant both to building societies and to co-operative societies, and, indeed, to all the new Clauses which are the subject of this debate. I should like first to deal with some aspects which are peculiar to building societies, then to consider those aspects which are relevant only in the case of co-operative societies, and finally to refer to certain basic considerations which the Committee should consider and which are relevant to both types of society.
    Nobody would pretend that all the points which have been made in the debate were new. It follows that some of my remarks in reply inevitably will cover familiar ground. [Interruption.]I am sorry that hon. Members opposite are so concerned about my hon. Friend the Member for Tottenham (Mr. A. Brown), who made a very good speech.
    The new Clause in the name of the Leader of the Liberal Party—(Income tax and profits tax: exemption of building societies.)— proposes that no Income Tax or Profits Tax should be charged on the profits of building societies. This Clause differs from that in the name of my hon. Friend the Member for Nottingham, South (Mr. W. Clark)—(Exemption of building societies from income tax and profits tax.)— in that his Clause would exclude from that exemption profits from special advances. Otherwise, the Clauses are more or less the same. I want to come without delay to the issues of substance involved in these new Clauses, but there are three comparatively minor points that I should place on record at the outset.
    First, the definition of "'building society "in the two Clauses to which I have referred is
    "any undertaking registered and submitting accounts to the Registrar of Friendly Societies."
    1400
    That would include a wide range of concerns other than building societies— for example, industrial and provident societies, and co-operative societies. I am not sure whether my hon. Friends wish to exempt them also from taxation. The definition would also include benevolent societies and working-men's clubs. The third new Clause relating to building societies— (Building Societies to be exempt from income tax and profits tax.)— in the name of the right hon. Member for colne Valley (Mr. Glenvil Hall) avoids such a wide definition.
    Mr. Temple: I had the privilege of making two suggestions to my right hon. and learned Friend the Chancellor of the Exchequer. I should like to make a third offer, that if my hon. Friend can redraft a Clause redefining building societies I am sure that it would be acceptable to us.
    Mr. Barber: It would be helpful if my hon. Friend awaited to hear what I have to say, because I was about to deal with the broader issues. I thought it well, however, to point out the effect of the Clause.
    Another important implication in the drafting of the Clause is that for technical reasons, with which I will not weary the Committee, it would not confer any effective benefit upon building societies so far as Income Tax is concerned. However, I need not trouble the Committee with that point, because it has been made clear in speeches in support of the new Clauses that the intention is to provide exemption from both Profits Tax and Income Tax, although difference of opinion has been expressed as to the extent to which it is desired to exempt them from Income Tax.
    My third preliminary point is that as my hon. Friend the Member for Nottingham, South pointed out, his new Clause differs from that in the name of the Liberal Party in that my hon. Friend's Clause proposes to exclude from exemption any profits from special advances. The Committee is familiar with the definition of special advances, so I need not go over that ground. Concerning this particular exclusion I doubt very much as a matter of reality whether a distinction should be made for tax purposes between the profits of a society from its ordinary business as

    1401
    contrasted with those which accrue from the making of special advances. After all, both parts of the profit or surplus, whatever it is called, arise from the lending of money on interest and the arguments seem to me to favour not treating them differently for tax purposes. Moreover, special advances form only a small proportion of the total business of building societies, and the exclusion of profits and special advances from this proposed exemption would not make a very significant difference to its cost.
    I come now to the substance of the matter, which is the contention that building societies should not be charged Profits Tax and Income Tax on their surplus", as hon. Members have described it. This proposal is only a natural extension of the proposal which we debated at length last year, namely, that building societies should be exempted from the increase in the rate of Profits Tax proposed at that time.
    5.30 p.m.
    There are two broad aspects which the Committee has to consider. My hon. Friend the Member for Nottingham, South said that we should recognise that building societies were not in business to make a profit. Of course, as the right hon. Member for Colne Valley and other hon. Members have said, there is a significant difference between an institution such as a building society and what I might call an ordinary trading concern. The fact remains that the societies carry on a business and make surpluses or profits. On this point my hon. Friend the Member for Wimbledon (Sir C. Black) and the hon. Member for Hammersmith, North (Mr. Tomney) are quite right.
    My hon. Friend the Member for Surbiton (Mr. Fisher) asked me a specific question— whether I agreed that building societies were in a special position. Certainly, I do. Indeed, as far as Profits Tax is concerned, the difference between a building society's shareholders and those of an ordinary limited company is already recognised in arriving at their Profits Tax liability, because share interest paid by the building society to its shareholders has been allowed as a deduction in computing its profits since the change in 1958, whereas the dividends paid to ordinary company shareholders
    1402
    are not allowed as a deduction in that way. The surplus, that is to say the amount which the societies put to reserve after deducting their outgoings by way of interest and other expenses is, in my submission, a true profit.
    Reference has been made to the Royal Commission on Taxation. The whole matter was considered at length by the Commission. It reached the conclusion that wherever profits of a corporate body emerge they should be taxed impartially without regard to the nature of the business from which they arose. I will come back to this later, because this is an aspect that relates both to building societies and co-operative societies. Suffice it to say now that, in the light of the view expressed by the Royal Commission, my right hon. Friend does not feel that we should modify the general principle.
    I know that it is sometimes contended that, because of the pressure of taxation, building societies are prevented from building up adequate reserves. It is quite true that the ratio of total reserves to total assets has fallen somewhat during the '50s when the societies' assets, as the Committee knows, have been leaping ahead year after year. But it is not irrelevant to note that in the last two years the reserve ratio has begun to rise slowly and that last year there was a record addition of reserves of £ 13½ million.
    It is difficult to form any decisive opinion on the amount of the reserve required by a society. The figure fixed by the House Purchase and Housing Act, 1959, referred to by my hon. Friend the Member for the City of Chester (Mr. Temple) as the minimum required to qualify a society for trustee status was 2½ per cent., and most societies are comfortably above that level.
    In view of what has been said, I hope that I can, with respect to those hon. Members who have spoken, suggest that the Committee should be realistic about the effect on mortgage rates of an exemption such as I understand the Clauses to propose for building societies. My hon. Friend the Member for Nottingham, South and my hon. Friend the Member for the City of Chester said, in effect, that if Income Tax and Profits Tax were removed this would allow for a reduction of perhaps 1¾ per cent. or

    1403
    2 per cent. in the rate of interest. But I think that I should point out to the Committee that in a publication called Building Society Affairs,published by the Building Societies Association in February this year, it pointed out that a building society bears tax in three ways. First, it referred to the composite rate in respect of interest paid to the investors; secondly, to the Income Tax on its "surplus"; and, thirdly, to the Profits Tax on its "surplus" or profit. It went on to say:
    "Now the time for the Budget is drawing near the Association has again appealed to the Chancellor of the Exchequer to exempt building societies from tax in the last two categories."
    That is to say, Income Tax and Profits Tax from charges.
    I think it is the first time that I have heard it suggested that they should also be exempt from tax which is paid under composite rate arrangements. I think that the hon. Member for Huddersfield, West (Mr. Wade) certainly would not go further than the request made by the Building Societies Association. If we did no more than accede to the request of the Association, the effect which this would be likely to have on the mortgage rate would be to reduce it by only one quarter of 1 per cent. and, therefore, I think that the Committee should bear in mind what the effect of this proposal would be.
    Mr. Glenvil Hall: I accept the figure of one-quarter of 1 per cent. The hon. Member for Huddersfield, West mentioned¼ per cent. and, as he spoke, I nodded in agreement. May I point out that, so far as my own Clause is concerned, it does not include the composite rate?
    Mr. Barber: I had noted that point, and that is one of the ways in which it differs from the other proposed new Clause.
    Mr. W. Clark: If the composite rate were included for exemption it would give about 1 ¾ per cent. reduction, and, as I said during my speech, that is a political decision and I am not claiming the logicality of that. If it were considered a special case and the three items for taxation were exempt it would be a reduction of 1¾ per cent.
    Mr. Barber: My hon. Friend is quite right in what he said. I wanted only to point out that as he represented his case he was going a great deal further than, as far as I know, has ever been suggested in the past.
    I would mention one further point about the societies. Despite what has been said, it is a fact that between 1950 and 1961 their total assets have increased from £ 1,256 million to £ 3,436 million. I think it is fair to say that, despite the fact that this taxation is an additional burden on building societies, they have not fared too badly in those years.
    I ask the Committee and my hon. Friends in particular, and perhaps the Liberal Party also, to bear in mind one other factor when considering the broad political question of home ownership. That is that the owner-occupier of residential property is in the future to be exempt from charge of tax under Schedule A.
    Before I come to the aspect common to both the building societies and cooperative societies, I should like to say something about the special position of the co-operative societies. After all, the first Clause with which we have been concerned in this debate is concerned solely with co-operative societies. It would reduce the rates of Profits Tax alone payable by co-operative societies to 3 per cent.
    Before 1958, the date referred to so often during this debate, co-operative societies were liable to Profits Tax at that rate of 3 per cent., but there were, of course, at that time, two important differences. In the first place there was the two-tiered system of Profits Tax which the Royal Commission recommended should be abandoned, and secondly share interest payable by co-operative societies was not deductible in the computation of their profits for tax purposes.
    Of the hon. Gentlemen who have spoken on this none of them has referred to this particular point, and indeed the hon. Gentleman the Member for Dartford (Mr. Sydney Irving) spoke as though the shares of the co-operative societies were treated in the same way as the shares of joint stock companies. In fact they were before 1958, but the whole situation was changed at that time because the Royal Commission recommended two changes. First of all it

    1405
    recommended that when the flat rate Profits Tax was introduced the co-operative societies should be charged in the same way as other concerns, and secondly it recommended that share interest should rank as a deduction in the computation of their profits. Both these recommendations were carried into effect.
    Mr. Oram: The hon. Gentleman makes the point that the Royal Commission made these recommendations in connection with reduction of share interest, but does he not recall also that it said that the shares of co-operative societies were practically the same as loan capital in the case of companies? If this is accepted, surely this was not a concession to co-operative societies introduced in 1958 but something which ought to have been conceded in the earlier years. It was in this respect merely catching up with time.
    Mr. Barber: With respect, I do not think it was merely catching up with time because the position was exactly the same in the years immediately after the end of the war, in the '50s. There may well be something in what the hon. Gentleman says about the realities of the situation. All I am trying to do is to point out to the Committee that the difference between the shares of the Co-operative societies and those of limited liability companies, pointed out by the hon. Gentleman the Member for Greenock (Dr. Dickson Mabon), has been recognised, and was recognised in the legislation of 1958.
    It seems to me that there is really one overriding reason for taxing Co-operative societies in the same way as other trading concerns, and that is, as my hon. Friend the Member for Tottenham said, that over a wide field they are in direct competition with other trading concerns. There is no question of treating co-operative societies, in the words of the hon. Member for Greenock, in a hostile manner, or, as somebody else said, of involving political discrimination. The object is to treat co-operative societies and other trading institutions equitably and fairly.
    Profits Tax is levied on the profits of trades and businesses carried on by corporate and similar bodies, and it really cannot be denied that co-operative societies are engaged in trading
    1406
    activities and that they are doing so with a view to making profits. Indeed the hon. Member for Greenock admitted this. It really would be grossly inequitable if they were to have preferential tax treatment as compared with their competitors, many of them small businesses, frequently selling identical or almost identical goods to the same classes of persons. I ask the Committee what possible justification there is for tax relief directed to this one category of trader. Indeed, to use the words of the hon. Member for Dartford and the hon. Member for Glasgow, Govan (Mr. Rankin), if we accede to the request which has been made on behalf of the Co-operative societies, this would be discrimination of the most obvious kind.
    This brings me finally to the important recommendation of the Royal Commission which, I believe, is relevant not only to co-operative societies but, despite what the right hon. Gentleman the Member for Colne Valley has said, also to building societies. This is so important I feel that I should remind the Committee of the words which were used. This is what the Royal Commission said:
    "The main principle that we wish to see adopted is that a tax on the profits of corporations should apply to all profits without distinction between corporations the ownership of which is vested in the State and other corporations, or between corporations formed to serve public services and those formed to serve private purposes."
    I shall not weary the Committee by reading the rest of the paragraph, but it is also relevant and it supports the position which I have just read.
    5.45 p.m.
    I am quite sure that the general principle is the right one to be applied both to building societies and co-operative societies, but in fact, if the principle were to be breached the cost would be fairly considerable. To exempt building societies alone from Income Tax and Profits Tax on their surpluses would cost some £ 15 million a year. That, as I say, as I understand it, is the cost of the Building Societies Association's proposal. But to go further, as my hon. Friend contemplated throughout, in other words to abolish also the composite rate, would involve a total cost of something like £ 60 million.
    Mr. Temple: Would my hon. Friend tell me what it would cost not to go that far but to relieve building societies of Profits Tax alone?
    Mr. Barber: The split between Profits Tax and Income Tax so far as building societies is concerned is £ 4 million a year in respect of Profits Tax and £ 11 million in respect of Income Tax, in each case on the building societies' surpluses. But, despite what the hon. Member for Huddersfield, West said, this would not in fact be the end of the matter. If the relevant criterion was not the profits being made but the destination of those profits and the nature of the business, then I think that my hon. Friend was quite right in suggesting that the almost inevitable consequence would be exemptions elsewhere, and the cost to the Exchequer might well be over £ 25 million or so.
    With respect to my hon. Friend the Member for Surbiton, who I thought otherwise put his speech in most moderate language, to say that to bring forward the argument I am now bringing forward is a sort of political gamesmanship is not facing up to the facts, but even if we could consider building societies in isolation a considerable sum of money would be involved and then the factor of cost alone would rule it out this year, as my hon. Friend the Member for Surbiton recognised. I am sure my other hon. Friends will bear this in mind.
    I must in all frankness conclude by saying that the basic objection to these new Clauses is that they run counter to the general principle propounded by the Royal Commission and accepted by my right hon. and learned Friend.
    Mr. G. R. Mitchison: It is, perhaps, symptomatic of the times that the greater part of the speech of the Economic Secretary was directed to dealing with his hon. Friends behind him rather than with his enemies in front. He found it convenient that these matters should be considered together. So, I can assure him, do they. They are able to support building societies even in their somewhat extravagant claims— more extravagant than any put forward from this side— with their voices and not be compelled to do so with their votes. They will remember that the steel magnates, in propaganding on another
    1408
    matter some time ago, pointed out that what they wanted were not their votes but their voices. No doubt the building societies will be content with the voices which they have heard in such passionate eloquence from the benches opposite today.
    I, however, would prefer to discuss for a little the subject upon which we shall shortly have to divide, and that is the question of the co-operative movement. May I tell the Committee a fairy story?
    Mr. Frederic Harris: Not for the first time.
    Mr. Mitchison: I found it in my little book of fiscal fables the other day. I opened it, and I turned over to the story about temporary Income Tax and the uses of the Road Fund and things of that sort and at last I came to the fairy story which was called "Profits Tax", and it said this. Once upon a time there was a tax on profits and it was called a Profits Tax. Then they no longer levied it only on profits but they continued to call it a Profits Tax. And so everyone lived unhappily ever afterwards— except the Treasury Ministers. That is very much what has happened in this case.
    If one wishes to consider the Profits Tax in relation to the co-operative movement, one ought to consider also what the co-operative societies do. They have a broad social purpose which goes rather beyond any question of competition with private traders and which definitely merits consideration. The retail societies— I need hardly remind the Committee— began because people in the north of England found that the prices they were being charged for the necessities of life were more than they could afford. They thought that they could obtain what they wanted more cheaply by buying things for themselves and distributing them, and they formed societies for the purpose. The members of those societies were the first cooperators. In fact, they antedated the Rochdale pioneers by quite a time. That was a co-operative movement, and it is essentially in the same spirit and for the same purpose that the co-operative movement works today.
    Today, the co-operative societies try to make their purchases as cheaply as they can for their members. It is a

    1409
    very strange view of the matter to regard the dividends which are distributed by co-operative societies as anything more than a convenient way of bringing down the price, in the long run, as far as the societies as a body can afford. I regard the co-operative societies as being essentially engaged in a job which is different from that of other trading bodies in the ordinary sense of the word.
    One must not neglect this aspect of the matter. It has great practical significance. In fact, the membership of the co-operative societies was originally working-class. That is a word which I rather dislike, but the membership was originally of that character. Of course, it is much broader nowadays, but the main purpose always is to obtain the goods they need to buy as cheaply as they can.
    The dividends serve another purpose, and here again there is no parallel with the ordinary shop trader. The co-operative societies are, in fact, one of the most important sources of savings in this country. We discussed this matter the other day and I shall say no more about it now except to remind the Committee that a co-operative society is a different sort of institution from the small trader, of whom one hon. Member spoke with such deep feeling, and, equally, it is a fundamentally different institution from the large department store.
    The case one can make about it, if one intends to stick to the idea of profits, is that the profits in this context are not profits. That is the very simple point which the co-operative movement has always put forward. As a matter of logic, it is right. It is equally true, of course, that the Profits Tax nowadays is not levied only on what are strictly profits and that it falls on all sorts of activities like municipal trading in various forms which are distinguishable from profits in the form in which profits most commonly occur.
    I look at the matter a little more broadly. Once one passes the stage of being logical about it— I can quite see the argument of any Chancellor or Royal Commission not wishing to be too logical— one comes to the question of
    1410
    whether one ought or ought not to accept social considerations. Here the history is important.
    It is true that an anomaly was removed in 1958. That was all that that change amounted to. It arose from the use of the word "shares", which meant something quite different in co-operative societies and in ordinary limited liability companies, and this difference had, I think, led to a confusion as to what the nature of these shares really was. That was what happened in 1958, and one cannot make anything more out of it. The position used to be that Profits Tax was divided according to whether the profits were distributed or not. A co-operative society was not, in fact, distributing profits and, therefore it paid the lower undistributed rate. At the time it was, I think, 3 per cent.
    The object of our proposal in regard to co-operative societies is to put matters back to that state of affairs. We have been very moderate about it. Logically, we might have said that they should pay no Profits tax at all, but I think that the fairy story has a moral to it. We have long abandoned strict logic in the matter. Therefore, although 3 per cent. is a somewhat illogical concession, all those who support the new Clause, as I do, regard it as a reasonable concession, and we do not want to be greedy about it.
    I have heard no opposition, except from the Treasury Bench, to our proposal put in that way and on those grounds. I assure the Economic Secretary that his speech sounded a little better than last year's. There is something to be said for mixing a couple of things. It brightens up the business, as it were, and I quite appreciate that the hon. Gentleman took full advantage of his opportunity. We were all interested and glad to hoar him. But for sense in his argument, for meeting the position of the co-operative movement in the matter, for treating what are not in fact profits in the way they ought to be treated, his speech was really no better than it was last time. It was a little more graceful, a little more mixed, it had a little more colour, it was, perhaps, a shade longer— he had to deal with two subjects, of course— and it was a little more lively, but no more.

    1411
    The hon. Gentleman was quite fierce when dealing with his hon. Friends behind him. But as regards the co-operative movement his answer was as tame as the co-operative movement itself sometimes does not entirely avoid being. Co-operators are very gentle people. They are not fierce. They serve a good social purpose. The co-operative movement draws its membership from all classes of society. It ought not to be
    given what is, in truth, rather unfair treatment because it does not fit nicely and tidily into the framework of capitalist society. It is a good social movement. It should be encouraged, and we shall support the new Clause.
    Question put,That the Clause be read a Second time: —
    The Committee divided:Ayes 167, Noes 234.

    Division No. 209.]

    AYES

    [5.57 p.m.

    Abse, Leo

    Healey, Denis

    Paton, John

    Albu, Austen

    Henderson, Rt. Hn. Arthur(Rwly Regis)

    Pavitt, Laurence

    Allaun, Frank (Salford, E.)

    Herbison, Miss Margaret

    Pearson, Arthur (Pontypridd)

    Allen, Scholefield (Crewe)

    Hill, J. (Midlothian)

    Peart, Frederick

    Awbery, Stan

    Holman, Percy

    Plummer, Sir Leslie

    Bacon, Miss Alice

    Holt, Arthur

    Price, J. T, (Westhoughton)

    Bellenger, Rt. Hon. F. J.

    Houghton, Douglas

    Probert, Arthur

    Bennett, J. (Glasgow, Bridgeton)

    Howell, Denis (Small Heath)

    Proctor, W. T.

    Benson, Sir George

    Hoy, James H.

    Pursey, Cmdr. Harry

    Blackburn, F.

    Hughes, Cledwyn (Anglesey)

    Randall, Harry

    Blyton, William

    Hughes, Emrys (S. Ayrshire)

    Rankin, John

    Boardman, H.

    Hughes, Hector (Aberdeen, N.)

    Rhodes, H.

    Bowdon, Rt. Hn. H. w.(Leics, S.W.)

    Hunter, A. E.

    Roberts, Albert (Normanton)

    Bowles, Frank

    Hynd, H. (Accrington)

    Roberts, Goronwy (Caernarvon)

    Brockway, A. Fenner

    Hynd, John (Attercliffe)

    Robertson, John (Paisley)

    Brown, Thomas (Ince)

    Irving, Sydney (Dartford)

    Robinson, Kenneth (St. Pancras, N.)

    Butler, Herbert (Hackney, C.)

    Jay, Rt. Hon. Douglas

    Rogers, G. H. R. (Kensington, N.)

    Callaghan, James

    Jeger, George

    Rose, William

    Collick, Percy

    Jenkins, Roy (Stechford)

    Shinwell, Rt. Hon. E.

    Corbet, Mrs. Freda

    Jones, Dan (Burnley)

    Short, Edward

    Craddock, George (Bradford, S.)

    Jones, Jack (Rotherham)

    Silverman, Julius (Aston)

    Crosland, Anthony

    Jones, J. Idwal (Wrexham)

    Skeffington, Arthur

    Crossman, R. H. S.

    Jones, T. W. (Merioneth)

    Slater, Mrs. Harriet (Stoke, N.)

    Cullen, Mrs. Alice

    Kenyon, Clifford

    Smith, Ellis (Stoke, S.)

    Darling, George

    Key, Rt. Hon. C. W.

    Sorensen, R. W.

    Davies, G. Elfed (Rhondda, E.)

    Law ton, George

    Sprlggs, Leslie

    Davies, Harold (Leek)

    Lee, Frederick (Newton)

    Steele, Thomas

    Davies, Ifor (Gower)

    Lee, Miss Jennie (Cannock)

    Stewart, Michael (Fulham)

    Davies, S. O. (Merthyr)

    Lewis, Arthur (West Ham, N.)

    Stones, William

    Diamond, John

    Lipton, Marcus

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

    Dodds, Norman

    Loughlin, Charles

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

    Donnelly, Desmond

    Mabon, Dr. J. Dickson

    Swingler, Stephen

    Driberg, Tom

    MacDermot, Niall

    Taverne, D.

    Ede, Rt. Hon. C.

    McKay, John (Wallsend)

    Taylor, Bernard (Mansfield)

    Edelman, Maurice

    Mackie, John (Enfield, East)

    Thomas, lorwerth (Rhondda, W.)

    Edwards, Rt. Hon. Ness (Caerphilly)

    McLeavy, Frank

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

    Edwards, Walter (Stepney)

    MacPherson, Malcolm (Stirling)

    Thornton, Ernest

    Evans, Albert

    Mallalieu, J.p.w. (Huddersfield,E.)

    Timmons, John

    Finch, Harold

    Manuel, Archie

    Tomney, Frank

    Fitch, Alan

    Mason, Roy

    Wade, Donald

    Fletcher, Erie

    Mayhew, Christopher

    Warbey, William

    Foot, Michael (Ebbw Vale)

    Mellish, R. J.

    Watkins, Tudor

    Forman, J. C.

    Mendelson, J. J.

    Weitzman, David

    Fraser, Thomas (Hamilton)

    Millan, Bruce

    Wells, Percy (Faversham)

    Galpern, Sir Myer

    Mitchison, G. R.

    Willey, Frederick

    Ginsburg, David

    Monslow, Walter

    Williams, D. J. (Neath)

    Gordon Walker, Rt. Hon. P. C.

    Morris, John

    Williams, LI. (Abertillery)

    Gourlay, Harry

    Moyle, Arthur

    Williams, w. R. (Openshaw)

    Grey, Charles

    Neal, Harold

    Williams, W. T. (Warrington)

    Griffiths, David (Rother Valley)

    Oliver, G. H.

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

    Griffiths, Rt. Hon. James (Llanelly)

    Oram, A. E.

    Woof, Robert

    Griffiths, W. (Exchange)

    Oswald, Thomas

    Yates, Victor (Ladywood)

    Hale, Leslie (Oldham, W.)

    Owen, Will

    Zilliacus, K.

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Padley, W. E.

    Hamilton, William (West Fife)

    Pannell, Charles (Leeds, W.)

    TELLERS FOR THE AYES:

    Harper, Joseph

    Pargiter, G. A.

    Dr. Broughton and Mr. Redhead.

    Hayman, F. H.

    Parkin, B. T.

    NOES

    Agnew, Sir Peter

    Barlow, Sir John

    Bidgood, John C.

    Altken, W. T.

    Batsford, Brian

    Biffen, John

    Allan, Robert (Paddington, S.)

    Bell, Ronald

    Biggs-Davison, John

    Ashton, Sir Hubert

    Bennett, F. M. (Torquay)

    Bingham, R. M.

    Atkins, Humphrey

    Berkeley, Humphry

    Birch, Rt. Hon. Nigel

    Barber, Anthony

    Bevins, Rt. Hon. Reginald

    Bishop, F. P.

    Black, Sir Cyril

    Hay, John

    Page, John (Harrow, West)

    Bossom, Clive

    Heald, Rt. Hon. Sir Lionel

    Panned, Norman (Kirkdale)

    Bourne-Arton, A.

    Henderson, John (Cathcart)

    Partridge, E.

    Box, Donald

    Hiley, Joseph

    Pearson, Frank (Clitheroe)

    Boyd-Carpenter, Rt. Hon. J.

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

    Peel, John

    Boyle, Sir Edward

    Hill, Mrs. Eveline (Wythenshawe)

    Percival, Ian

    Brewis, John

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

    Pickthorn, Sir Kenneth

    Bromley-Davenport,Lt. -Col. Sir Walter

    Hinchingbrooke, Viscount

    Pike, Miss Mervyn

    Brooke, Rt. Hon. Henry

    Hirst, Geoffrey

    Pilkington, Sir Richard

    Brown, Alan (Tottenham)

    Hocking, Philip N.

    Pitman, Sir James

    Browne, Percy (Torrington)

    Holland, Philip

    Pitt, Miss Edith

    Bullard, Denys

    Hopkins, Alan

    Prior, J. M. L.

    Bullus, Wing Commander Eric

    Howard, John (Southampton, Test)

    Prior-Palmer, Brig. Sir Otho

    Burden, F. A.

    Hughes Hallett, Vice-Admiral John

    Profumo, Rt. Hon. John

    Butler, Rt.Hn.R.A. (SaffronWalden)

    Hughes-Young, Michael

    Pym, Francis

    Campbell, Sir David (Belfast, S.)

    Hulbert, Sir Norman

    Ramsden, James

    Campbell, Gordon (Moray & Nairn)

    Hurd, Sir Anthony

    Rawlinson, Peter

    Carr, Robert (Mitcham)

    Hutchison, Michael Clark

    Redmayne, Rt. Hon. Martin

    Cary, Sir Robert

    Iremonger, T. L.

    Rees, Hugh

    Channon, H. P. G.

    Irvine, Bryant Godman (Rye)

    Rees-Davies, W. R.

    Chataway, Christopher

    James, David

    Renton, David

    Chichester-Clark, R.

    Jenkins, Robert (Dulwich)

    Ridley, Hon. Nicholas

    Clark, Henry (Antrim, N.)

    Johnson, Dr. Donald (Carlisle)

    Ridsdale, Julian

    Clark, William (Nottingham, S.)

    Johnson, Eric (Blackley)

    Robertson, Sir D. (C'thn's & S'th'ld)

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson Smith, Geoffrey

    Robinson, Rt. Hn. Sir R. (B' pool, S.)

    Cole, Norman

    Jones, Rt. Hn. Aubrey (Hall Green)

    Rodgers, John (Sevenoaks)

    Cooke, Robert

    Kerans, Cdr. J. S.

    Roots, William

    Cooper, A. E.

    Kerby, Capt. Henry

    Ropner, Col. Sir Leonard

    Cordeaux, Lt.-Col. J. K.

    Kitson, Timothy

    Scott-Hopkins, James

    Cordle, John

    Lancaster, Col. C. G.

    Seymour, Leslie

    Corfield, F. V.

    Leather, E. H. C.

    Shaw, M.

    Costain, A. P.

    Leavey, J. A.

    Skeet, T. H. H.

    Courtney, Cdr. Anthony

    Leburn, Gilmour

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

    Craddock, Sir Beresford

    Lewis, Kenneth (Rutland)

    Smithers, Peter

    Currie, G. B. H.

    Lilley, F. J. P.

    Smyth, Brig. Sir John (Norwood)

    Dalkeith, Earl of

    Litchfield, Capt. John

    Spearman, Sir Alexander

    Dance, James

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

    Stodart, J. A.

    d' Avigdor-Goldsmid, Sir Henry

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Stoddart-Scott, Col. Sir Malcolm

    Deedes, W. F.

    Longden, Gilbert

    Storey, Sir Samuel

    de Ferranti, Basil

    Loveys, Walter H.

    Studholme, Sir Henry

    Digby, Simon Wingfield

    Lucas-Tooth, Sir Hugh

    Summers, Sir Spencer

    Donaldson, Cmdr. C. E. M.

    McAdden, Stephen

    Tapsell, Peter

    Doughty, Charles

    MacArthur, Ian

    Taylor, Sir Charles (Eastbourne)

    du Cann, Edward

    McLaren, Martin

    Taylor, Frank (M'ch'st'r, Moss Side)

    Duncan, Sir James

    Maclay, Rt. Hon. John

    Teeling, Sir William

    Eccles, Rt. Hon. Sir David

    Maclean, SirFitzroy(Bute& N.Ayrs.)

    Temple, John M.

    Elliot, Capt. Walter (Carshalton)

    McLean, Neil (Inverness)

    Thomas, Leslie (Canterbury)

    Elliott, R. w, (Nwcastle-upon-Tyne,N.)

    Macleod, Rt. Hn. lain (Enfield, w.)

    Thorneycroft, Rt. Hon. Peter

    Emmet, Hon. Mrs. Evelyn

    Macpherson, Niall (Dumfries)

    Thornton- Kemsley, Sir Colin

    Errington, Sir Eric

    Maddan, Martin

    Tiley, Arthur (Bradford, W.)

    Farey-Jones, F. W.

    Maltland, Sir John

    Tilney, John (Wavertree)

    Farr, John

    Manningham-Buller, Rt. Hn. Sir R.

    Touche, Rt. Hon. Sir Gordon

    Finlay, Graeme

    Markham, Major Sir Frank

    Turner, Colin

    Fisher, Nigel

    Marshall, Douglas

    Turton, Rt. Hon. R. H.

    Fraser, Ian (Plymouth, Sutton)

    Marten, Neil

    Tweedsmuir, Lady

    Freeth, Denzil

    Mathew, Robert (Honiton)

    Vickers, Miss Joan

    Galbralth, Hon. T. G. D.

    Matthews, Gordon (Meriden)

    Vosper, Rt. Hon. Dennis

    Gammans, Lady

    Maxwell-Hyslop, R. J.

    Wakefield, Sir Wavell

    Gardner, Edward

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

    Walker, Peter

    Gibson-Watt, David

    Mills, Stratton

    Ward, Dame Irene

    Gilmour, Sir John

    Miscampbell, Norman

    Wells, John (Maidstone)

    Glyn, Dr. Alan (Clapham)

    More, Jasper (Ludlow)

    Williams, Dudley (Exeter)

    Clyn, Sir Richard (Dorset, N.)

    Morgan, William

    Wills, Sir Gerald (Bridgwater)

    Gower, Raymond

    Morrison, John

    Wise, A. R.

    Grant, Rt. Hon. William

    Mott-Radclyffe, Sir Charles

    Wolrige-Gordon, Patrick

    Grant-Ferris, Wg. Cdr. R.

    Nicholls, Sir Harmar

    Wood, Rt. Hon. Richard

    Green, Alan

    Nicholson, sir Godfrey

    Woodhouse, C. M.

    Hall, John (Wycombe)

    Nugent, Rt. Hon. Sir Richard

    Woollam, John

    Harris, Frederic (Croydon N.W.)

    Oakshott, Sir Hendrie

    Worsley, Marcus

    Harris, Reader (Heaton)

    Orr, Capt. L. P. S.

    Yates, William (The Wrekin)

    Harrison, Col. Sir Harwood (Eye)

    Orr-Ewing, C. Ian

    Harvey, Sir Arthur Vere (Macclesf'd)

    Osborne, Sir Cyril (Louth)

    TELLERS FOR THE NOES:

    Harvie Anderson, Miss

    Page, Graham (Crosby)

    Mr. Whitelaw and

    Mr. Michael Hamilton.

    New Clause.—(ONE HUNDRED PER CENT. DISABLED.)
    The following section shall be added to Part VIII of the Income Tax Act, 1952:—
    "228A. If the claimant proves that during the whole of the year of assessment—
    1414

    (a) he has been in receipt of a war disablement pension or an industrial injury pension granted by the Ministry of Pensions and National Insurance and determined by reference to one hundred per cent. disablement; or

    (b) though not in receipt of a one hundred per cent. disablement pension or industrial injury pension he nevertheless is

    1415
    disabled in manner and degree equivalent to one hundred per cent. disablement.

    he shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on one hundred pounds".— [Mr. Jay.]
    Brought up, and read the First time.
    Mr. Jay: I beg to move, That the Clause be read a Second time.
    The Deputy-Chairman (Sir Robert Grimston): We can discuss with this new Clause other new Clauses—Increase of relief for claimant depending on services of a daughter— Relief for blind man with guide dog— Relief for disabled persons— and— Blind persons.
    Mr. Jay: These new Clauses propose various tax reliefs for those suffering from a disability of one kind or another. The principal new Clause is that entitled One hundred per cent. disabled,which proposes a relief of £ 100 for those suffering from a 100 per cent. disablement. It is the most important proposal, and I will, therefore, concentrate on it.
    I notice that the Economic Secretary has left us for some relief or refreshment and has been replaced by the Chief Secretary to the Treasury. The Economic Secretary spent a good deal of time in his speech, during the discussion on the last new Clause, in urging us to pay attention to the Radcliffe Commission's Report on the Taxation of Profits and Income. I ask the Chief Secretary to pay attention to that Report in this case, because this proposal for relief for a 100 per cent. disablement directly follows that Commission's Report in April, 1954. It is extraordinary that the Government, which have carried out so many of the Commission's recommendations and have so often quoted its arguments in defence of their policy, should have obstinately refused year after year to put into effect this unanimous recommendation for which there is the strongest possible case on fiscal and human grounds.
    Throughout the debates on the Bill, the Government have made practically no concessions. It is making rather a farce of these debates if the Government, on every proposal, simply turn up with the old negative arguments and refuse to listen to the opinions of the Committee. As the Chief Secretary to the Treasury must know by this time, the
    1416
    Royal Commission argued that one could not defend the present situation, in which there were fragmentary and partial reliefs for certain forms of disability, and, also, that a more concrete and defensible relief should be given.
    To the Economic Secretary, in our last discussion, the Commission's views were so important that he himself read them out to the Committee, and I will do the same for my case. Paragraph 201 of its Report said:
    "… there are many kinds of disability… so severe that they modify the whole conditions of a person's life and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his income. The present isolated provision which we have mentioned "—
    that is what the Commission called the "second branch" of the dependent relief allowance—
    "depends upon a combination of such special circumstances that it cannot be supported… Our general conclusion is that grave disability ought to be the subject of an allowance."
    After some consideration, the Commission decided that it would be administratively possible and, indeed, quite straightforward to make the standard to qualify for a disability allowance that of the 100 per cent., or total, disablement, as applied by the then Ministry of Pensions, which is now incorporated in the Ministry of Pensions and National Insurance.
    The argument of the Commission was that not merely earning power but also the commitments and liabilities of an individual are affected by disablement in a great many ways. It is not only the earning power with which we are concerned. Somebody suffering from a somewhat advanced disability may, so that he can carry out his work or live an ordinary life, have to acquire special forms of clothing or equipment. He may need special help and attendance. He may need special equipment to be able to travel to work.
    In the unanimous view of the Royal Commission, this made out a case for a special form of relief. Obviously, the man in these circumstances has not the same taxable capacity as a perfectly fit man receiving the same income. The extraordinary thing is that this argument has been repeatedly advanced, but no good reasons have been advanced by the Treasury as to why the proposal

    1417
    should not be accepted. I asked the right hon. and learned Gentleman what the cost would be. It must surely be small. There cannot be a very large number of people in this situation. Probably, most of them are fairly small earners and, therefore, not a great amount of money would be involved. What is involved could hardly be better spent.
    Two years ago, when the Financial Secretary to the Treasury explained why this could not be done, he said that it would not be of very much help to a number of disabled persons, because what they would gain on this allowance they would lose on others. If that is the Government's view, it shows that very little money would be lost by the Exchequer if this proposal were carried out.
    The second argument adduced by the Financial Secretary two years ago is always the last refuge of Treasury Ministers in despair. We were told that if we did this it would open the door to doing a lot of things to other people. We always know that there is not a very great argument left when that is advanced. But notice that the Government are not averse to opening doors when it suits them. This year, the Chancellor has opened a lot of doors very wide by his decision on Schedule A. If he does not mind opening doors in that case, I wonder why he is opposed to opening a few small chinks by accepting this proposal.
    The next argument put forward by the Financial Secretary two years ago was that, if the Government gave this Income Tax relief to disabled persons, it would not help people who were not paying Income Tax. On that argument we would never give any Income Tax reliefs at all because, whenever a new relief was suggested, it could be rejected on the ground that it would not help those who were not paying Income Tax.
    6.15 p.m.
    Then we were told that the difficulty was that the expenses and the commitments these people suffer vary from one person to another, so that one could not make a completely fair contribution to their troubles by this form of relief. That, again, could be said about a great
    1418
    many other Income Tax allowances. Indeed, it could be said about the vast range of business expenses, where, no doubt, the amounts vary very much from one man to another. But no one says that we should not have business expenses because of that. That argument does not carry much weight, either.
    The Financial Secretary's final argument was that, though, no doubt, these people deserved help, and it was possible to do it this way, and the Commission had authoritatively recommended it, nevertheless the Government's view was that it was much better to help these people not by Income Tax reliefs, but by some form of social service payments.
    Some of my hon. Friends then asked him whether, if he would not do something by way of tax reliefs, he would give an assurance there and then that he proposed to carry out the offer he was holding out to help in some other way. Of course, the hon. Gentleman took refuge in generalities and said:
    "My right hon. Friend will certainly consult his colleagues in the social service Ministries and consider sympathetically whether there are detailed instances in which these examples "—
    that was the other forms of payment—
    "ought to be increased. We have not closed our minds on these matters".— [OFFICIAL. REPORT, 21st June, 1960; Vol. 625, c. 350.]
    Two years ago, the Committee was asked not to press the matter further on the ground that the Government might be able to think of some other way of helping these people. I now ask the Chief Secretary whether anything has been done to carry out that assurance. If it has not been done, I think that the Committee is not being properly treated. The argument put forward by Ministers bereft of other arguments was that, though these people deserved help, this was not the way to do it, and the Government could help them in some other way. Then, with the Committee lulled into some sort of quietness by this argument, the Ministers went away and a year or two later we find that nothing has happened. That is not good enough.
    I hope that the Chief Secretary will be able to tell us either that he will accept this proposal, or that the Government are carrying out the alternative proposals which they brandished before us two years ago. It will be exceedingly

    1419
    disappointing if he is not prepared to do one or the other today.
    Miss Joan Vickers: I am glad to have the opportunity to speak about the new Clause in my name—Blind persons.
    My hon. Friend the Financial Secretary was kind enough to receive a deputation including a number of blind persons and myself. This is the third or fourth time that we have had a deputation to the Treasury on this question of Income Tax allowances for those who are working and who have to have constant help. We have had sympathetic hearings, but I regret to say that nothing has happened. Blindness is a disability which is so severe as to modify the whole condition of a blind person's life. It imposes upon a man a constant levy of extra expense which affects his taxable capacity. The time has now come to make a special allowance for these people.
    Such blind people were recommended for this concession in the Royal Commission on the Taxation of Profits and Income, which was presented to the House in April, 1961. Treasury Ministers always say that it is very difficult to divide one type of handicapped person from another, but that difficulty does not arise in this case, because blind persons have to be registered, so that their disability and their number are known. There is, therefore, no difficulty about making the distinction in this category of disabled persons.
    Experience has shown that blind people have heavy expenses. They have to have guides and very often have to take a taxi or car when other people can travel by bus. Although they are capable of getting about remarkably well, traffic today is very thick and they need help to cross the roads and to get on crowded trains, and so on. If they have to go abroad, they have to take a secretary or a guide. Those things do not apply to other disabled persons who can get to work by themselves, or who are provided with special cars.
    It is very strange that those who cannot help themselves are helped very adequately under the National Assistance Act, 1948, while those who are willing to help themselves and go out
    1420
    to work to compete in the world get no incentive. If the income of the people whom I am discussing is higher than what they would get from National Assistance, and what is given to those who cannot work, they get no special consideration.
    The people in whom I am particularly interested are those who are doing an excellent job and serving their country well by not calling upon the taxpayer in any way to help them and who are supporting themselves and their family. I have particularly in mind the work which most of them do and which brings great help to a number of other people — the blind who work for the blind. The fact that they can direct an organisation working for the blind, or do secretarial work for it, must give enormous encouragement to other blind people who can then know that blind people can rise to these highly reponsible positions and earn good salaries.
    Because the number of these people who are working is not large, the amount lost to the Treasury would be small. What is the objection to helping these people? If the amount is small and they can be distinguished from other types of disabled people, why cannot they be given some consideration? Why cannot we act as other countries do? For instance, Australia, New Zealand, Sweden and Finland, to name only a few, all give the blind pensions without a means test. In this country, if a person is 100 per cent. disabled because of war or industrial injury, he can get a constant attendance allowance; but if he is born blind, or is blinded in some other accident, for instance, while he is at school, he does not get any help with Income Tax relief. But in other countries there are tax reliefs and constant attendance allowances. I should like this matter to be considered again.
    Paragraphs 201 and 203 of the Royal Commission's Report recommended special allowances of £ 100 for the gravely disabled, and the Royal Commission particularly cited the blind. Blindness is a category which is mentioned in the Report as a disability demonstrably set apart from others, because everyone can tell who has this disability.
    Canada has very good systems for the blind and has a tax allowance under an

    1421
    Act of 1945 which allows them 480 dollars per annum. In Canada, as in other countries, there is an allowance for an attendant if his salary is more than 480 dollars per annum. A single man has an allowance of 1,110 dollars and a married man an allowance of 1,600 dollars. I am glad to say the blind couples are separately assessed for Income Tax, and that particularly beneficial. In New Zealand, there is a tax-free pension of £ 414 0s. 6d. and, again, there is no means test. The blind in Malaya and Ceylon are freed from taxation on earned income. It is a fairly now thing for the people of those countries to be able to earn. During the last three or four years their numbers have greatly increased, but the relief is still allowed, In Switzerland, there is a tax-free concession of 900 francs and in the German Federal Republic a tax-free concession of 200 marks.
    If other countries can manage to distinguish between this type of disablement and others, and are able to give this relief, I hope that my right hon. and learned Friend will soon find it possible for this country to follow suit. We have given a lead in work for the blind as a whole, but in this respect we are considerably behind other countries. I hope that my new Clause will be accepted and that these blind persons will get What is their due for the service which they give to their country by being self-supporting and not asking for money from taxation.
    Mr. H. Rhodes: In September I shall have been disabled precisely twice as long as I was not disabled prior to 1918. I frequently go to Roehampton Hospital where I am a governor and the honorary treasurer. I see the results of the campaigns, particularly in Malaya, and also the people who are now approaching the end of their days and who need treatment in Roehampton and other hospitals. I think that these suggested provisions can go some way towards creating a feeling that these people are not forgotten.
    I am not 100 per cent. disabled, but I know the consequences of disablement because I cannot stand for very long, for instance at a bus stop. The result is that to get through a day's work I have to use taxis. During the course of a
    1422
    Parliamentary day I probably spend 10s. or 12s. more than the average hon. Member who is able to take a bus. When I was putting in my return last year I applied to the Income Tax authorities for relief on account of the taxi fares which I needed to pay to get to the House, but I was turned down. It was said that I ought to be able to get a bus or some other form of public transport. If there is one case in the country— articulate in my case— there must be thousands more who are suffering simply because they cannot get about and who cannot bring their cases to the notice of those who are able to do something about it.
    6.30 p.m.
    It may be thought that there are not many of these cases, but let me give the Committee an example of what happened in my area not long ago. A few months ago the people in the community in which I live— which is a predominantly working-class community but, nevertheless, very well to do by comparison with many other areas— thought that we should start a scheme to provide meals on wheels. This caused an uproar because many people thought it was a disgrace that there should be anybody in our community who was suffering from a 100 per cent. incapacity and was not already being looked after. When it came-to the point, however, it was found that in our community of about 15,000 there were 82 people who were totally disabled. They were not noticed in the ordinary way, for the simple reason that they never went out and were not to be seen sitting on the pavement having a chat.
    I ask the Chief Secretary to accede to this request. The right hon. Gentleman seemed to be presenting a stony face to the Committee when my right hon. Friend the Member for Battersea, North (Mr. Jay) was talking about this new Clause, but I should like to take him to one or two places where the granting of this relief would bring great joy to many people. I apologise to the Committee for having brought in a personal note, but I hope that the Chief Secretary will do something to help these people.
    Mr. Charles Doughty: The hon. Member for Ashton-under-Lyne (Mr. H. Rhodes) need not

    1423
    apologise to the Committee for introducing such a personal note, but I am sure that the Committee will be surprised to hear that he is partially disabled, because he always looks so fit and well when he comes into the precincts of the House. We naturally accept all that he said about his disability.
    My plea to the Chief Secretary is to ask him to look favourably on the claim for help for those who are 100 per cent disabled. I am associated with the National Spastics Council and I know something of the financial difficulties of these people with a 100 per cent. disablement. I do not put forward any claim on grounds of sentiment. We are all sympathetic towards people who have this serious disability, but sympathy is not enough. In a Finance Bill we have to consider the expenses and costs to which these people are put, and it is on this ground that I support the pleas put forward to consider these 100 per cent. disabled people.
    They have more expenses than the ordinary person who is not disabled. They have the cost of their appliances, their wheel chairs, or whatever it may be. I agree that some are provided under the National Health Service, but I do not think that this covers all the expenses to which they are necessarily put. They have much greater travelling expenses and much greater expenses in securing assistance of every kind.
    The Chief Secretary may say that he cannot open the door to every one of these expenses being allowed. One knows that the Chief Secretary has to look after the finances of the country, but what is involved in this request? My right hon. Friend is able to get the figures, and I am not, but I am sure that it would not be too great a sum for the country to pay. I am sure that the country could afford to help these 100 per cent. disabled people who so much deserve this financial support and relief.
    Mr. Charles Loughlin: I add my plea to those which have been made to the Government to consider helping the people referred to in the new Clauses which we are discussing.
    1424
    It is significant that as these matters are discussed year after year on the Finance Bill very few back benchers oppose the attempts that are made to get relief for the blind and disabled. In the few years that I have been here, I cannot remember an occasion when back benchers have opposed attempts to provide help for these people. If that is true, and I believe it is, it is incumbent on Treasury Ministers to prove conclusively that it is not possible to meet the wishes of back benchers. If there is a division of opinion between back benchers, there may be some question whether the Treasury Minister concerned has a responsibility to prove why something cannot be done, but if there is unanimity among such hon. Members he is duty bound to prove conclusively that the concessions for which we are asking are impossible.
    I do not think that an accurate estimate has been made of what these reliefs would cost, but I am convinced that the cost would be infinitesimal compared with the relief which would be provided to the people affected. Most of us accept what was said by the hon. and learned Member for Surrey, East (Mr. Doughty), that these disabled people necessarily incur additional expenses, and I think that most of us can call to mind cases of people being involved in additional expense to provide themselves with appliances which are not provided under the National Health Service, appliances which are necessary to enable them to enjoy a reasonably full and complete life.
    One case immediately comes to mind. I do not suggest that the person concerned pays Income Tax, though there are doubtless many cases where similarly disabled people do pay Income Tax. I take the view that if a person is handicapped it is essential to do everything we can to see that he leads as full and complete a life as possible, even to the point of being able to work alongside his fellow men.
    The person about whom I am thinking is a war victim. Because of his disablement, he is in receipt of a war pension, and he has a clerical job at the local bus depot. We live in a small town. The distances to be travelled are very small in comparison with those in the larger towns and cities, and I think

    1425
    it is more significant in the sense that this constituent of mine, because of his war disabilities, has to have a motor car, which he himself purchased, so that he can go from his home to his work. It would be impossible for him to walk, and it is very difficult for him to board a bus. In addition to the initial cost of his motor car, there is also the cost of the petrol and of other expenses in which he is involved week by week. This is a case which comes readily to my mind and which, although I do not wish to exaggerate, I think would be one in which the person concerned would be paying Income Tax, so that this proposal would give him a measure of relief.
    Most hon. Members of this Committee accept the principle which underlies these new Clauses. I appreciate that it might De that the amount involved in tax relief on this occasion is such that it would impose an undue burden upon the community. I believe that, where we have unanimity of opinion on an issue of this kind on both sides of the Committee— and I still feel that this is a Members' House and not the Executive's House— before it is refused by the Executive it is incumbent upon them to prove that it will indeed put an undue burden on the community which the community could not afford.
    The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke): There is nothing at all between us in our sympathy with the people whose difficulties we are discussing today. I think that a particularly moving element has been introduced into the debate this year by the personal reminiscences of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). These 100 per cent. disabled, through no fault of their own, are severely handicapped as compared with the rest of us. Indeed, I sometimes think that the rest of us are not sufficiently frequently conscious of our good fortune.
    Over years past the view has been taken by successive Chancellors of the Exchequer of different parties that the right way to deal with this problem is not by tax relief, but by direct social benefit. I must say, at the beginning of my speech, that my right hon. and learned Friend the Chancellor takes the same view, and that he does not think that a case has been made for reversing
    1426
    that policy. The view I have expressed on his behalf is not based on the ground of cost. The amount of money involved here is not large. The hon. Member for Gloucestershire, West (Mr. Loughlin) thought that perhaps it might be, but the financial effect of the new Clause to which the right hon. Member for Battersea, North (Mr. Jay) devoted most of his speech would be a loss of revenue of £ 750,000.
    Mr. Loughlin: For the sake of the record, may I point out that I did not think it would be large at all? I simply said that the only ground on which the Minister could refuse to accept the new Clause, in face of the unanimity of the Committee, would be that it would constitute an undue burden on the community. I did not think that it would.
    6.45 p.m.
    Mr. Brooke: Both the hon. Member himself and other right hon. and hon. Members have asked me what the cost would be. They said they had not heard it mentioned before, and I thought that, in candour to the Committee, I should give that figure at the outset of my speech.
    Miss Vickers: How can my right hon. Friend give social benefits to somebody paying Income Tax?
    Mr. Brooke: There are a number of services for the disabled through which a great many people benefit, even those who are working and who are relatively well off.
    May I now develop my speech, and go back to the speech with which the right hon. Member for Battersea, North opened this discussion?
    The right hon. Gentleman referred to the 1954 Report of the Royal Commission and said that he was seeking to get the Government to accept a recommendation of the Commission. In fact, as I am sure he himself appreciates, the new Clause which he has put forward does not reflect the Commission's recommendation. What the Commission said was that it favoured an allowance, which should not be less than £ 100 a year, for the 100 per cent. disabled, on the understanding that the same person should not receive both that allowance and tax-free benefits in relation to his disability.
    The Commission also recommended that other reliefs, particularly the

    1427
    daughter's services allowance, to which one of the new Clauses refers, should be withdrawn if its recommendation was carried out. That makes the Commission's recommendation very much less attractive to a large number of people, because anybody who is 100 per cent. dsiabled and has the basic war disabled pension will be receiving a tax-free sum very much larger than the tax-free sum which this new Clause would give him.
    Mr. Jay: Is the Chief Secretary willing to accept this proposal, either in the form put forward by the Royal Commission, or in the form which we are putting forward this afternoon?
    Mr. Brooke: No. As the right hon. Gentleman knows, it has been discussed on four, if not five, different Finance Bills since the Royal Commission's Report was published, and on each occasion the spokesman on behalf of the Chancellor of the Exchequer has explained that this is not the best way of proceeding, because of the unfairness which would be involved if we were to do this. Naturally, a tax-free allowance is attractive to everybody, and it is helpful to everybody, but is this the right way to seek to take account of the variety of extra expenses to which the disabled person is put?
    This new Clause refers solely to those with 100 per cent. disablement. Could one give a tax-free allowance to those with 100 per cent. disablement and deny anything at all to those with 90 per cent. disablement? If one did it, I feel quite sure that there would soon be people arguing, and arguing cogently, that the man who had lost one leg above the knee is just as much entitled to tax relief as those who are technically 100 per cent. disabled, though he himself is not. If we depart from the test of 100 per cent. disablement, where do we stop? How can we define those who are disabled in such a way that they should deserve this tax-free allowance?
    That is the practical difficulty which I must ask the Committee to face. We are dealing with human beings, and we ought not to legislate so as to create unfairnesses between one class of person and another, with both of whom we all feel a very natural sympathy. That is why successive Governments have
    1428
    taken the view that special help to the disabled, however they are disabled, should be given in a way that will bring the greatest benefit to those who need help most.
    Frankly, I must say to the Committee that that cannot be done by fiscal means. I say that not merely on the basis of the obvious point that the tax relief will help the poorest least. I say it because the degree of extra expense to which a disabled person may be put does not necessarily vary with the degree of his disablement. Some who are 100 per cent. disabled may, in fact, be put to much smaller expense in the course of their working life than others who suffer a technically slighter degree of disablement. The right way to help is, as we do, through direct social service benefits.
    I come to the speech of my hon. Friend the Member for Plymouth, Devonport (Miss Vickers), who was very persuasive. I think that she would probably argue that even if this could not be done for all the disabled it could be done for those who are blind, because they are a clearly defined class and one would not have the difficulty about 75 per cent., 90 per cent., or 100 per cent. disablement. I think that if my hon. Friend ponders on this she will see how difficult it would be to confine a relief like this to the totally blind without extending it to many other types of disablement.
    It is the blind who attract a very, special sympathy because we all so greatly value our eyesight, but my hon. and learned Friend the Member for Surrey, East (Mr. Doughty) mentioned the spastics and we can all think of people suffering from forms of paralysis, and so on, who may have just as great needs and difficulties as those who are wholly blind. There are about 11,000 blind people in employment. It is believed that about 4,000 of those are in sheltered employment, so there would be 7,000 who, as it were, are ordinarily employed. Some of those may be earning quite high salaries. It is very difficult to say that those people in particular should be singled out from all the other classes of disabled for tax relief.
    We see the difficulty when we look at another Clause in this group, the one which suggests that there should be tax

    1429
    relief in respect of guide dogs for the blind. That, at first sight, seems attractive, but if we ask that there should be tax relief for the cost of a guide dog how can we defend ourselves against the charge that we were being unfair to those who go to work, not with the help of a guide dog, but by being driven by someone whom they have to pay, or by making some other arrangements at their own cost? We would have to look at all this together.
    Mr. J. T. Price: Surely the Royal Commission was quite familiar with all these arguments, which are a survival from bumbledon. If we cannot remove all injustice must we not attempt to remove a partial injustice? The argument is that until we have universal virtue we must not deal with any vice which can be localised, or give a relief which can be a starting point of a new system of dispensing justice. The Royal Commission went through all this, yet in spite of that it made its recommendations. I cannot understand the right hon. Gentleman persisting in this line of argument.
    Mr. Brooke: If the hon. Member says that everything recommended to the House by an outside body such as a Royal Commission should automatically be accepted, I should be very interested to hear him developing that argument when we come to deal with London local government.
    The point is that if we are to embark on any system of tax relief for the disabled we must first be sure that the plan will be completely fair as between one person and another. No one has yet been able to discover a way of doing that. No one has been able to discover a way of tailoring the tax relief for people with various classes and degrees of disablement.
    May I return to the point made by my hon. Friend the Member for Devon-port about the practice in other countries? It is true that in a number of countries there is tax relief for people who suffer from a variety of forms of disablement. It is normally given as a kind of extension of tax relief for various medical and surgical expenses. I am not sure if my hon. Friend was conveying this to the Committee, but she would be mistaken if she thought
    1430
    that it was common elsewhere to have what she is advocating, that is, a special form of tax relief for the blind. In fact, there are only three other countries, I am advised, which have a tax relief confined to the blind. I think that that proves the point I made about how hard and unfair it would be if we were to devise some form of tax relief for a particular class of disabled person and not for the others.
    Certain points are raised in other Clauses in this group. There is a Clause about investment income. I do not know whether the hon. Member for Sowerby (Mr. Houghton) or others will refer to that, but I should not like to pass it by without any mention. That, again, would not be a fair way of proceeding. That Clause, which, at first sight, looks attractive, would give a very large degree of tax relief to people with larger incomes, much larger than those referred to in the main new Clause under discussion.
    There is another new Clause which suggests that the tax allowance for the services of a daughter should be increased from £ 40 to £ 50. That is an allowance which has not been abolished, as the Royal Commission recommended, but, because it contains all the anomalous features pointed out by the Commission, successive Governments have decided not to increase it.
    No, the continuing view of this Government, as of its predecessors, is that the right way to try to help those who are disabled in any manner is through the social services. The right hon. Member for Battersea, North asked what was done about that. He will know of the continuous enlargement of the home help services of local authorities, of the services that are provided by the welfare authorities for the blind, the deaf and the otherwise handicapped, the provision of medical and surgical appliances, the cars for war pensioners, and so forth. He will know that since this matter was discussed in 1960 pensions generally have been increased, National Assistance rates have been increased, and, in particular, industrial injuries benefits have been increased. The right hon. Gentleman may recollect that the rates of clothing allowance for the disabled have also been increased by 25 per cent. since this matter was last under discussion. The

    1431
    undertaking given then by the Financial Secretary has been amply fulfilled. It will continue to be the determination of the Government to see that these people are looked after as well as possible in the right way, which is by social service benefits, With regret, I must ask the Committee not to accept the new principle embodied in these Clauses for direct tax relief, because that would not be the fairest way of helping these people.
    7.0 p.m.
    Mr. Loughlin: Before the Chief Secretary sits down, will he now deal—particularly as he has dealt with some social service benefits—with the point raised by his hon. Friend the Member for Plymouth, Devonport (Miss Vickers), who asked him to tell the Committee what social services were available to people already paying Income Tax?
    Mr. Brooke: Those who are already paying Income Tax can have the assistance of all the services that are made available by the welfare authorities for the blind and the otherwise handicapped. The services are available to those people, as to everyone else.
    Mr. Loughlin: They are all on the means test.
    Mr. Brooke: They are not on the means test.
    Mr. Jay: The right hon. Gentleman's speech was profoundly unsatisfactory, even for him, and it is a pity that he should have introduced party points about London local government into a human issue like this.
    I agree, of course, that the fairest way to meet this problem is relief for 100 per cent. disablement, which would include the blind, about whom the hon. Member for Plymouth, Devonport (Miss Vickers) spoke. What does the Chief Secretary really say? First, he admits that the cost is very small—almost trivial; about £¾ million. I cannot believe that the Committee would wish to deny help on that ground. Secondly, he returns to the argument which we have had year after year that the best way to give help is by social service payments rather than by relief from taxation. He says that all Governments of all parties have taken that view, but the Royal Commission reported in 1954 and
    1432
    there has only been a Government of one party and one view on this subject since then. That has entirely altered the situation, because the Royal Commission, which was a body of responsible people with a duty towards our tax system, considered all those arguments. Nevertheless, it made this recommendation.
    What is so profoundly unsatisfactory is that two years ago we had from the Financial Secretary a virtual promise that if help was not given in this way it would be given in an alternative fashion through the social services. The Chief Secretary now tries to claim that this has been done, but what he mentioned was not special help for the 100 per cent. disabled but general increases in social service payments, such as National Assistance, which have, in fact, been made because of rises in the cost of living during that period. He mentioned the rises in benefits, but he did not mention the simultaneous rises in the cost of living which in the last twelve months have proceeded at 5½ per cent.—a rate greater than for many years past. It is, therefore, no fulfilment of that pledge to give special help to 100 per cent. disabled people to say that there have been certain rises in general social service payments.
    The right hon. Gentleman has not given any good reason for turning down this proposal, and he has not been able to show that the Government have fulfilled that two-year-old pledge. Before the Committee comes to a decision, will he not give a vestige of evidence that something has been given, or will be given, to assist these people?
    Mr. J. T. Price: Like my right hon. Friend the Member for Battersea, North (Mr. Jay), I stand aghast at the Chief Secretary's perfunctory reply. We all have people in our constituencies, regardless of party politics, who have such an independent spirit and such an independent attitude to their own disability that they often hesitate to seek the advantage of the existing social services. The Chief Secretary's arguments, which we have heard before in different form, are quite unconvincing. They are defeated even on technical grounds, quite aside from all the human considerations which we have been trying to infuse into this debate.

    1433
    His arguments are defeated on technical grounds by the very fact that the Government, in spite of what we regard as their defects and shortcomings, have at least given special exemption on grounds of age. In other words, the broad stream of citizens and taxpayers who are over 65 years of age but who may have no disability in the physical sense to which we are here referring, are accepted by the Government, by the State, and by the fiscal authorities as suffering from a form of disability, in that their old age distinguishes them from younger people. Those people get a special allowance of either £40 or £50 a year based on the extra expense to which they are put in getting about, in getting domestic service and in getting those little extra medicines and luxuries that they need. I take a broad conspectus of "medicine", because some old people may look upon a glass of whisky as the best tonic—
    Mr. Loughlin: On a point of order, Sir Robert. May we have a little less noise from below the Bar?
    The Deputy-Chairman: Hon. Members below the Bar should not talk loudly enough for other hon. Members to hear them.
    Mr. Price: I do not want to labour this point because, from what has already been said, it is quite clear that if the Chamber had been relatively full of hon. Members who could have listened to the debate, a free vote would have shown that this Committee has a generous enough heart to grant such a concession as this to seriously disabled people.
    It is no use Treasury Ministers telling us that there are other methods of giving this relief to the unfortunate people for whom we now plead. What social services are available to seriously disabled persons? War pensioners have special provision made for them in the form of wheel chairs, mechanically-propelled vehicles for the very seriously disabled, and so on. They also have the services of the welfare officers. But what services are available for such seriously disabled people as my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who told the Committee of his very grave First World War injury?
    1434
    Mention has been made of the activities of certain Government Departments, but in many ways the present social services work in a very piecemeal fashion. There is the seriously disabled person who needs domestic assistance. We all know how difficult it is in these times for anyone, regardless of personal means, to obtain satisfactory or suitable domestic assistance. Perhaps the seriously disabled person would like a home help. In every locality there are devoted and dedicated people who do magnificent work as home helps, but the administration of that system is based on a means test—
    Mr. Loughlin: Exactly.
    Mr. Price: A home help is not avail, able to anyone, regardless of family income. Let not the Government ride off on the fairly tale that because someone is in need a sort of Father Christmas Government have someone round the corner waiting to help.
    Again, the meals-on-wheels service is a godsend to many people, who get a good meal that they othewise would not have. But the meals are not necessarily free. In many districts there is a means test. The House of Commons is formed, by and large, of a set of reasonably intelligent people who are not prepared to be hoodwinked by the sort of blah we have just received. I am speaking in this way because I feel that hon. Members are sick and tired of having these hackneyed and tortuous arguments trotted out simply because some clerk in the Treasury does not like the sort of system we are proposing. I hope that those who share my views, including hon. Gentlemen opposite, will forgive me, for I have no wish to be discourteous. I hope that they will join with us in trying to persuade the Government to do something this year for these people.
    Mr. Rhodes: It is distressing to hear the Chief Secretary reciting his objections and making the classic comparisons that are always so odious. I would remind him of the old saying that one half of the world does not know how the other half lives. Having listened to his reply, I am not at all surprised.
    I would also remind the Chief Secretary about the conscript who is now in hospital, who has been 100 per cent. incapacitated for nearly twenty years,

    1435
    and who, throughout these years, has been trying to give his family, which is growing up, as good a start in life as anyone else. The strain that has been on him all these years in trying to do the best for his family puts him in hospital every year for at least three months.
    When he goes into hospital he is 100 per cent. incapacitated—in more senses than one—but it so happens that he has not got a job for which he receives his money when he is in hospital. However, his earnings during the remaining nine months or so of the year bring him into the Income Tax paying category. It seems a really mean thing, when considering the plight of a man who could not please himself as to his occupation at an early age—as anyone in industry or commerce has been able to do—and who has had to spend the rest of his life under a severe handicap, that we should have had that sort of reply from the Chief Secretary.
    If the Chief Secretary will not agree to our proposals now, I suggest that there should be such an upsurge of feeling among hon. Members on behalf of those who are disabled and lying in hospital, or who have been forgotten and are in remote parts of our constituencies —as I illustrated earlier—and whom we rooted out when the meals on wheels service was started, as would persuade the Government to come to their aid. It is time that those who are thinking only in terms of raw materials thought of the poor beggars who are 100 per cent. disabled.
    7.15 p.m.
    Mr. Loughlin: We are now seeing the contrast between the type of speech that was made before the Chief Secretary replied and the heated speeches of hon. Members following his reply. Previously, hon. Members were attempting to make a reasoned plea in favour of the case. We have tried not to be passionate about this. One hon. Member wondered why the Chief Secretary had been brought in to speak. It would seem that the right hon. Gentleman's reply itself answered that question.
    I do not know of any hon. Member in the Committee who could have been so cold or more remotely unconcerned about the people for whom we are seeking relief which would cost so little. The
    1436
    Chief Secretary's performance was disgraceful. I do not wish to become over-passionate on the subject, because, with the exception of the Chief Secretary, all hon. Members could be impassioned on this issue. The Chief Secretary could not become passionate, for he is worse than any desiccated calculating machine I have ever known.
    Since a number of hon. Members opposite obviously feel on this issue as do my hon. Friends, I appeal to them to join us in trying to persuade the Government of the equity of what is being claimed. After all, it would not cost a great deal, but it would do a lot to give justice to the few people who are desperately in need of help.
    Dame Irene Ward: I should like to add my plea to the Government, because I cannot see why, on some of the issues on which the Committee is in complete agreement, our desires—the desires of the back benchers —should not be met. I have listened to I do snot know how many Budgets and Finance Bills and we are always told that there will be a new system of taxation, that it will be brought up to date, that it will be altered, or that there will be a new approach. But every time a small thing like this comes along difficulties are placed in its way.
    On this occasion I do not see why there should be any real difficulty despite the fact that we have been told that what is sought cannot be given. We have always made a distinction—at any rate, about the war disabled—and I wish to suggest two ways in which the money which is needed might be found. Pocket money is paid to people living in Part III accommodation. I was instrumental in introducing the first part of that scheme which provided pocket money, so I certainly could not oppose the system.
    However, people living in Part III accommodation now have practically everything given to them, and rightly so. They are living in comfortable and happy circumstances, yet each week they receive 11s. pocket money which they are hardly able or in a position to spend. That has been carried forward, with increases, for many years so I do not see why we cannot make a move in another direction. We seem to be so

    1437
    set in our ways that we cannot take a single step forward in a good cause. Every time these issues come up we hear No, no, no "from the Government Front Bench, and that is most frustrating, unkind and devastating.
    My second suggestion is concerned with the Income Tax allowances given to widows and widowers who keep resident housekeepers. If one can afford to keep a resident housekeeper—and the allowance is now up to £75—one must certainly be in reasonably good financial circumstances. Apparently this has gone on for forty years. When I protested to my right hon. Friend, and said that I should like that money spent on some of these other things, he said that it could not be altered because it had gone on for all those years. But we might now start doing something this year for somebody else. I am not trying to balance one section of the community against another, but if my right hon. Friend thinks that it is fair to have special allowances for widows and widowers, why cannot we have special tax allowances for these people?
    I do not think that Ministers are so busy that they do not know about the kind of humane things which would not only please back-benchers on both sides of the Committee, but would please democracy and the people in this country. I sincerely hope that there will be second thoughts on this matter.
    Mr. James Callaghan: When I saw the hon. Lady the Member for Tynemouth (Dame Irene Ward) arrive in the Committee I felt like Wellington at the Battle of Waterloo when Marshal Blucher arrived at teatime. She, too, arrived at a fortunate moment because I knew that we could rely upon her support and sympathy.
    All of us who have watched the rhythm, the ebb and flow of the progress of Finance Bills realise that there is a time when the Government are at the sticking point. I say to the Chief Secretary to the Treasury that he has arrived at the sticking point now, and I hope that he will not force the Committee to dispose of the Clause without a much more detailed reply than we have had so far. We have spent five or six days in Committee on the Finance Bill without receiving a single concession from the Government. They have made up
    1438
    their mind to come to the Committee and announce their decisions and to give no concessions at all whatever the merits of the argument. Alas, the Chamber has not always been full enough to bring real pressure to bear upon the Government at any given time, but we are now fortunate enough to have many hon. Members listening to a debate on an issue which it should be impossible for the Government to resist and impossible for the sense of the Committee not to make itself felt.
    I should like to rehearse the one simple point that a proposal was made by the expert Royal Commission on the Taxation of Profits and Income that persons who were industrially injured 100 per cent. or suffered war disability to that extent should be given a tax-free allowance, over and above their pension, from their other earnings. The Chief Secretary to the Treasury turns that aside and asks, "Are we going to accept every recommendation made by a Royal Commission?" He replies that of course we are not, but he is not entitled to ray on a point like that. He should produce substantive reasons for objecting to a proposal like this. He has produced none.
    It does not interest me in the least to hear that this subject has been discussed four times before. If the answers on previous occasions have been of the character that we have heard this afternoon I can only say with respect that the Committee must then have been too easily satisfied, and much more easily satisfied than I hope it will be today. I hope that we shall go on with this debate until we have a satisfactory answer.
    I do not know whether he included the concession of relief in respect of guide dogs and other things, but the main point made by the Chief Secretary today was that the present concession cost £750,000 at the maximum and was probably less. That is the total cost that even the Treasury can find and it may well be less. Even on a basis where the Budget is balanced to such a fine point that we have come to the position when £750,000 will disturb it, I very much doubt whether the Committee would feel that our national safety, the future of sterling, exchange rates and the whole of the Stock Exchange, not

    1439
    to mention the future of British industry, would be endangered by a measure of the kind that we propose. We all know that in the end the Budget will be several million pounds either side of the point at which the Chancellor has said it will stand, either on revenue or expenditure. The Chief Secretary has the duty to the Committee to give us frank reasons, apart from questions of precedence or of not accepting what a Royal Commission has said, why he refuses to give this concession.
    As far as I could see, there was only one argument that the right hon. Gentleman could produce, and he produced it and made the best of it. It was that if the concession is made to the 100 per cent. disabled man, what about the man who is 90 per cent. disabled? I freely concede that point to the right hon. Gentleman. He may will be subject to pressure later on in respect of such a person. I agree that once we open the door to a concession of this sort the Government may well be subjected to further pressure to extend it at a later date. The Committee must acknowledge that point and give it to the right hon. Gentleman.
    This does not apply to the proposal made by the hon. Lady the Member for Plymouth, Devonport (Miss Vickers). Quite clearly, a person is either blind or is not, and therefore in that case there cannot be any real extension of this concession. But in the case of the new Clause moved from this side of the Committee the Chief Secretary might find himself on a slippery slope. But let us suppose that he is involved in the question of a concession costing £½ million in two or three years' time. Is this such a serious consequence that he must deny now a recommendation which has the support of every hon. Member?
    It is not true to suggest that we do not have anomalies in the tax system now and that we should not do justice to one group of people because we cannot do justice to everyone. The whole taxation system is one of rough justice. We have exemptions now in the tax system based not on any logical foundation, but on the fact that the House of Commons decided that a particular group should not bear taxation in the way other groups must bear it. If the Committee
    1440
    cannot make a decision of that kind from time to time we might as well all pack up and go home. We have not been able to make any impression on the Government so far, but the Chief Secretary knows that the foundation of the Revenue and of the Treasury will not crumble if the Government make this concession.
    I should like to make another point which I believe to be apposite and which I intend to rub home at every opportunity. It is that if the personal allowances were higher today, as they should be, there would be no call for this Clause, because not so many of these people would be affected by taxation levels as are affected today. If the personal allowances were higher, then obviously more people would secure the benefit of exemption from taxation. But this concession, proposed by both sides of the Committee, as so many others, the right hon. Gentleman regards from the viewpoint of a financial purist, as I am sure the Inland Revenue regards it. The right hon. Gentleman and the Inland Revenue look upon it as disfiguring the classical severe lines of our fiscal system. The right hon. Gentleman has got into difficulties and is being subjected to these pressures, and he is being called upon to disfigure the clean lines of the system because the present personal allowances are too low. I say to him, therefore, that if he will only take steps to increase the allowances he will be able to avoid the kind of discussion that we are having today.
    I should like to see the Committee really assert itself tonight. I believe that it could do so and that hon. Members opposite would not be endangering anything but would be saying that the Committee and the House of Commons believe that our industrial victims and war victims are entitled to this consideration. We pay honour to both. In South Wales it is probably true to say that we see more of the industrial victims than of the war-disabled victims. Many of the sights that we have seen in South Wales as in many industrial areas would lead all of us to believe that these men and women, totally disabled as a result of services to industry as well as in the Forces, are entitled to a little extra consideration from the Committee.
    Not only is this plea made on the ground of pure sentiment but the Royal

    1441
    Commission found the case made out on the ground of cold logic and decided that this thing should be done. Now, only the Chief Secretary to the Treasury and £750,000 stand between us as a Committee and as a nation giving this concession. I hope that the Committee will continue to press the Chief Secretary and to hold him up on the Clause and refuse to let him move from it until we have had a satisfactory answer and the promise of some action.
    7.30 p.m.
    Mr. Brooke: I think that the Committee would wish me to speak again, especially as a number of hon. Members who are now here were not present when I spoke before.
    The hon. Member for Cardiff, South-East (Mr. Callaghan) is not correct in saying that the only difficulty apparent here is that of distinguishing between the person with 100 per cent. disablement and the person with 75 per cent. or 90 per cent. disablement. This is a very serious difficulty, as he was frank enough to recognise. He pointed out that if this concession were given to those with 100 per cent. disablement there would be pressure from the next level and it would go on and it would be extremely hard to know where one could draw the line with fairness.
    I should like to take up a point made by the hon. Member for Westhoughton (Mr. J. T. Price), who said that it had been found easy to grant age relief to all those over 65. I am not sure whether he appreciates that the reason for that is quite different. The reason is to give to the elderly people living on income from their savings the same relief as they would have if they were living on a pension that they had earned. That is the justification of the age relief, and it is on rather a different basis.
    I should like to say to my hon. Friend the Member for Tynemouth (Dame Irene Ward) that this is not a question of finding the money. I think it will be within the recollection of the Committee that from the beginning I have said that there was no difficulty as to the amount of money involved. The difficulty is in the question of fairness. The hon. Member for Cardiff, South-East drew attention to the unfairness that will always arise on the limit of any change which might be made here. There is also the fact
    1442
    that there is no way whatever of shaping tax relief so that it will in any way accord with the extra expense that is imposed on people suffering from different disablements. Not one of these Clauses would do the job that hon. Members want. It is perfectly true they would all give some tax relief to somebody—I do not deny that for a moment —but the Committee, in all its considerations of tax matters, is always concerned also about fairness between one person and another.
    For the reasons which I gave—I will not repeat my previous speech—it has not been found possible to shape a plan for tax relief for disablement that would be fair and related to the different needs of different people. It is not that this proposal has been considered unsympathetically. It was first considered by my right hon. Friend the Home Secretary when he was Chancellor of the Exchequer, and I do not think anyone on either side of the Committee would suggest that he was a hard and callous man. It has been considered by each Chancellor of the Exchequer since then, and each one of them has been so conscious of the difficulties which I have described and which have been described by my hon. Friend the Financial Secretary and other Ministers on previous occasions that they have all come to the conclusion that, in the interests of fairness of the tax system, they could not recommend the Committee to proceed in this way, and that the right way to help disabled people is by social benefits of one kind or another directed to the specific needs of each class of person.
    Mr. Jay: The right hon. Gentleman says that this proposal would not be appropriate because it would not give relief proportionate to the expenses involved with each individual. Would he not agree that that argument would apply to the child allowance? The child allowance does not give relief exactly or even roughly proportionate to the expenses of any particular person. Would he argue that we ought not to have child allowance?
    Mr. Brooke: No, I was not arguing that. When it was put to me that there should be this tax relief in order to provide for additional expense that was

    1443
    incurred by people with 100 per cent. disablement, I had to point out to the Committee that it would be a very rough and ready way of doing it and would not, in fact, be related sufficiently closely to the relative needs of different people. That is why I say that it is better to help these people, with whom we all have the utmost sympathy, by direct and not by indirect means.
    Mrs. Slater: I do not know how long Parliament and the country as a whole are prepared to continue listening to this kind of parsimonious argument which we continually get from the Chief Secretary. The trouble with him is that he speaks in a quiet voice with a charming little smile on his face—
    Mr. Loughlin: Charming?
    Mrs. Slater: Yes, charming, but with a very hard heart and a hard face behind the smile. He thinks that he can get away almost with murder behind that smile.
    The right hon. Gentleman's argument is that it would be difficult to give this concession because of unfairness as between one person and another. Does he not know that one of the Christian facts which everybody ought to learn is that we should help those whose need is greatest? Surely those who are suffering 100 per cent. war disablement or 100 per cent. industrial injury are among those who need the greatest help?
    The right hon. Gentleman talks about the social services. Some of us have rather longer memories than others. Whenever we discuss the social services, including pensions and National Insurance, we are always reminded by hon. Members opposite that the time has arrived when a greater means test ought to be applied. Every one of the social services which the right hon. Gentleman mentioned is operated only by a means test. People do not get home help without a means test. They have to pay for it according to their income. The Meals on Wheels Service is a very good service, but it is only applied on a means test basis. These people, whom we ought to be helping in every possible way, are dealt with on a means test basis in exactly the same way as the old-age pensioners, disabled persons and every other person in need.
    1444
    Sometimes we make exceptions. There are exceptions to every Act of Parliament. Here is a case where the right hon. Gentleman for once ought to put his heart behind his smile instead of regarding the matter in this cold-hearted, ruthless way. He ought to know that these people suffer very real disadvantages. Does he realise, for instance, that many of them with 100 per cent. disablement are dependent on other members of their families? Many of them have to be wheeled about. Their furniture, doors and other fitments in their houses are affected by the wheel chairs and other aids which they are obliged to employ.
    All those things constitute an added burden on the family. Very often their clothes wear out more quickly because of the implements which they have to use. Many of them need extra nourishment. No doubt, we shall be told that they get extra benefit to enable them to obtain that nourishment, but the overriding fact is that much of the joy of life has been taken from these people because of their disablement. They cannot go out and enjoy God's fresh air as easily as we can. They cannot easily go out and enjoy culture like others of us. Many of them are dependent upon others to help them.
    Surely, to help these people, the right hon. Gentleman could at least shift away from his cold facts. He says that it is not the money that matters, but simply the fairness of the tax system. We have been very unfair in the tax system in the last few years. This is a case in which we could be fair, just and generous to not a very large number of people. In appealing to the right hon. Gentleman, although I have no real hope of persuading him, I ask those hon. Members opposite who are guided very often by considerations of humanity either to vote with us or, at least, not to vote with the Government on the new Clause.
    Miss Vickers: I wish to put only one point to my right hon. Friend concerning my new Clause. In reply to me, he said that three countries had instituted the provision for which I am asking. Will he assure me that he will examine the way in which they work the system in the hope that we may be able to get it in this country next year?
    Mr. Arthur Lewis: Surely the Chief Secretary has had ample opportunity to consider the matter. Why should he have a longer period in which to consider the humane request put forward by the hon. Lady the Member for Devonport (Miss Vickers) in her new Clause? I cannot see why, at this late stage, the hon. Lady should suggest that the Minister should have time to consider and to make another promise that, perhaps, this time next year he may consider it. When next year comes, he will say, "We have given it consideration, but we have not been able to come to a conclusion."
    I cannot see how any hon. Member can support the Chief Secretary in his arguments. All that is being asked is consideration for men or women who have given literally almost all that they could give to their country except life itself and who are 100 per cent. disabled, either by industrial injury or as a result of military service. [Laughter.] This is no laughing matter. The hon. Member for Chigwell (Mr. Biggs-Davison) simply comes in to take part in a Division and takes no part in the discussion. Hon. Members opposite generally come in to divide so that they can then get out to a dinner, or to other engagements. Let them listen or go out again, but not laugh. This is not a laughing matter.
    We are speaking of men who have been totally disabled in the service of their country, who get a 100 per cent. disability pension. All we ask is that they should get Income Tax relief. The Treasury has told us that the maximum cost in a year would be £¾ million. Hon. Members opposite who have been laughing made no complaint about the £84 million for the Surtax payers. They supported that. I am not arguing whether they should or should not have done so. If, however, they believed that that was right, how can they logically say that the people on whose behalf we are pleading should not have a miserly £¾ million a year by way of tax relief?
    I suppose that when the Division is called, the few of those hon. Members opposite who have put their names to the new Clause, and who have listened to the debate, will troop into the Lobby to support the Government although
    1446
    they know in their heart of hearts that the attitude of the Government towards these new Clauses is entirely unjustified.
    7.45 p.m.
    Mr. Loughlin: I am sorry that the Chief Secretary was in charge of the debate. Before he spoke, there was no question of political difference of any kind. There was unanimity on the back benches on both sides. I hope that irrespective of whatever passion has been aroused, hon. Members opposite will do something for the people of whom we are speaking.
    Do not let us get into these passionate political differences, whether concerning Surtax or anything else, because we are dealing with a simple matter of human suffering and difficulty. I make a special plea to hon. Members on the Government side, because at one time this evening they were with us, as I am with the hon. Lady the Member for Plymouth, Devonport (Miss Vickers) in her new Clause. I plead with hon. Members opposite to let us forget any political differences that we may have. Let us maintain our unanimity against the Executive on this issue.
    The Executive have not been able to face my challenge that when there is back-bench unanimity on both sides it is incumbent upon the Treasury to prove conclusively that the cost of the proposed reform would be an undue burden on the community. The Executive have failed to do that and I ask hon. Members to challenge them on this issue.
    Mr. Callaghan: I appreciate your anxiety to get on, Mr. Arbuthnot, and I agree that we have had a long time on the new Clause. I am entitled to deduce from that that there is considerable feeling about the new Clause, as there is. I also remind the Chief Secretary that not a voice has been raised against it in argument except his own.
    I regard the right hon Gentleman as the rather unwilling tool of the Treasury on this occasion. I would not normally accuse him of being an unwilling tool, because he is too strong-minded, but I believe that this time he has been overborne by bureaucratic arguments which do not stand up and by administrative difficulties which, I admit, are real. I freely admit that there are administrative difficulties about this

    1447
    proposal, and that the right hon. Gentleman is right to emphasise them. Equally, if the Committee is convinced, it has the right to say, "Never mind the administrative difficulties. We quite agree that this proposal will not do 100 per cent. justice to everybody, but it will do 100 per cent. justice to 80 per cent. of the people." That is what we ask.
    I am grateful for the new Clause which has been referred to by the hon. Lady the Member for Plymouth, Devonport (Miss Vickers) and by the hon. Lady the Member for Tynemouth (Dame Irene Ward), both of whom are stalwarts on this issue. We know that theirs is not a mere professional interest; but one which arises from the fact that they have both studied these matters carefully. I do not wish to say anything improper about hon. Gentlemen opposite. I believe that many of their hearts are with us, too, and that, if they felt like speaking, they would be speaking with us tonight. I realise that they will not vote against their Government, although that would not ruin the Government any more than they are ruined already.
    Nevertheless, in view of what I may claim to be the unspoken support of a great many hon. Members below the Gangway, as well as the spoken support of everyone who has contributed to the debate, I make this claim to the Chief Secretary. The Committee is entitled to ask the right hon. Gentleman to consider the matter before Report. We will come to a conclusion upon it, but in view of the feeling which has been expressed here, we ask him, as Chief Secretary to the Treasury, responsible to the House of Commons, to re-examine this issue once again.
    Before we part with the matter, I ask the right hon. Gentleman whether he will be willing to do that and, having examined the administrative difficulties, to come back to the House and tell us whether, on merit as distinct from administrative difficulties, he does not believe that this proposal should be conceded, that he will help the Committee to find a way of meeting the difficulties of administrative inconvenience which have emerged, and find means of helping the people who, the whole Committee accepts, have a special claim on the compassion of the nation and upon our
    1448
    sense of propriety when dealing with fiscal issues of this sort. I ask the Chief Secretary to undertake to consider the matter again between now and Report.
    Mr. Brooke: I am sure that the hon. Member for Cardiff, South-East (Mr. Callaghan), who is very fair-minded, will understand that I cannot commit my right hon. and learned Friend the Chancellor of the Exchequer. I shall certainly report to him the sense of the Committee. It seems to me most unlikely that this problem, which has baffled successive Chancellors for a great number of years, will be found soluble in a few weeks. I shall certainly discuss the matter with my right hon. and learned Friend and tell him that views were very strongly expressed on both sides of the Committee.
    The hon. Member for Cardiff, South-East has been very frank in accepting that the difficulties we are in are not of my invention. They are genuine difficulties which over a period of years have held up action. I therefore cannot give any undertaking that we shall find a quick solution to them, but I shall certainly convey to my right hon. and learned Friend the fact that strong feeling was expressed on both sides of the Committee and that if some solution could be found the Committee would welcome it.
    Mr. Callaghan: I thank the Chief Secretary to the Treasury for what he has said. I am sure that he will report it to the Chancellor of the Exchequer. I know that his right hon. and learned Friend has other engagements, but I wish that he were here to learn the sense of the Committee on this matter. I am, however, sure that it will be conveyed to him.
    As to the administrative difficulties, I hope that the Chief Secretary will not rely on my support too much. I accept that there are administrative complications, but I do not accept, even if those complications cannot be set on one side, that they are of such a character that they ought to stand in the way of making these reforms. If I were in the position of the right hon. Gentleman I would make the reforms irrespective of administrative complications and tell the Inland Revenue to get on with them. I

    1449
    have seen this happen in the past in connection with P.A.Y.E. We were told for so long that we could not have the P.A.Y.E, system in this country, and we were rebuked for even attempting to devise one. We have, however, worked it, more or less successfully, for twenty years.
    I do not accept the administrative difficulties as overriding the will of the Committee when it has clearly expressed a wish that this should be done. I know that there are in the Inland Revenue people who are ingenious enough to overcome the difficulties, and I hope that the right hon. Gentleman will be able to come back to the Committee with a different answer.
    Dame Irene Ward: I ask my right hon. Friend whether as an earnest of his good intentions, having listened very carefully to his last few words, he will accept the Amendment moved by my hon. Friend the Member for Plymouth, Devonport (Miss Vickers) because there cannot be any administrative difficulties about it.
    The Temporary Chairman (Mr. Arbuthnot): The hon. Member for Plymouth, Devonport (Miss Vickers) has not moved an Amendment.
    Dame Irene Ward: I refer to the new Clause moved on behalf of the blind. I apologise for not being in the Chamber because I was engaged on a committee. I want to know whether the Chief Secretary to the Treasury can say that he will accept that Clause. There can be no administrative difficulty if other countries have been able to put it into operation.
    We are practical people on this side of the Committee and if my right hon. Friend can tell us that he will make a concession in respect of totally blind people, we know that he will try to get something done about it by his right hon. and learned Friend. If it is a fact that the Chief Secretary sits here and cannot give any concession because his right hon. and learned Friend is not here, then his right hon. and learned Friend should be on the Front Bench the whole time, otherwise it makes absolute nonsense of discussions in the Committee. Will my right hon. Friend please tell me whether he will accept this Clause as an earnest of his good intentions?
    Mr. Glenvil Hall: May I ask the Chief Secretary for one other assurance? I am sure that we are all glad that he has met the sense of the Committee in the way he has. I am positive, too, that when he sees his right hon. and learned Friend he will put the case to him and make quite clear to him, which will not appear from reading the debate in HANSARD, just how deep feeling has run on both sides of the Committee.
    It is possible that we shall have a Division on this Clause. It might be that the right hon. Gentleman would then say that it wiped out the promise that he has given and that the Committee, having come to a decision favourable to him, nothing further need be done on Report. That is one way of looking at it. During my fairly long experience in the House of Commons I have seen Ministers ride oft in that way. I am positive that the right hon. Gentleman will not do that. I ask him to give an assurance that if we proceed to a vote on this new Clause it will make no difference to him and that he will make the representations to his right hon. and learned Friend that he has promised.
    Mr. Brooke: I should like to reply to my hon. Friend the Member for Plymouth, Devonport (Miss Vickers) and to my hon. Friend the Member for Tyne-mouth (Dame Irene Ward). I am not quite sure whether my hon. Friend the Member for Tynemouth was in the Committee when I was dealing with the new Clause about the blind and said that it did not seem right to single out one class of disabled men and act for them while neglecting others. When referring to that Clause, I pointed out to my hon. Friend the Member for Devonport that there are only three countries in the world which provide a tax allowance for blind people, singling out blind people as distinct from all others. That is the reason why I cannot advise the Committee to accept that Clause any more than I can advise it to accept the Clause—100 per cent. disabled.
    I would say to the right hon. Member for Colne Valley (Mr. Glenvil Hall)—he and I have been in the House of Commons together for a long time and he was a Treasury Minister at one time—that I am sure he will accept my word

    1451
    that I do not regard a Division as wiping out any words that I have spoken in the Committee.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 152, Noes 203.

    Division No. 210.]

    AYES

    [7.58 p.m.

    Abse, Leo

    Hooson, H. E.

    Peart, Frederick

    Albu, Austen

    Houghton, Douglas

    Price, J. T. (Westhoughton)

    Allaun, Frank (Salford, E.)

    Howell, Denis (Small Heath)

    Probert, Arthur

    Allen, Scholefield (Crewe)

    Hoy, James H.

    Proctor, W. T.

    Awbery, Stan

    Hughes, Cledwyn (Anglesey)

    Pursey, Cmdr. Harry

    Bacon, Miss Alice

    Hunter, A. E.

    Randall, Harry

    Bellenger, Rt. Hon. F. J.

    Hynd, H. (Accrington)

    Redhead, E. C.

    Bennett, J. (Glasgow, Bridgeton)

    Irving, Sydney (Dartford)

    Rhodes, H.

    Benson, Sir George

    Jay, Rt. Hon. Douglas

    Roberts, Goronwy (Caernarvon)

    Blackburn, F.

    Jeger, George

    Robertson, John (Paisley)

    Boardman, H.

    Jenkins, Roy (Stechford)

    Robinson, Kenneth (St. Pancras, N.)

    Bowden, Rt. Hn. H. W.(Leica, S.W.)

    Johnson, Carol (Lewlsham, S.)

    Rodgers, W. T. (Stockton)

    Bowles, Frank

    Jones, Dan (Burnley)

    Rogers, G. H. R. (Kensington, N.)

    Brockway, A. Fenner

    Jones, Jack (Rotherham)

    Ross, William

    Brown, Thomas (Ince)

    Jones, J. Idwal (Wrexham)

    Short, Edward

    Butler, Herbert (Hackney, C.)

    Kelley, Richard

    Silverman, Julius (Aston)

    Butler, Mrs. Joyce (Wood Green)

    Kenyon, Clifford

    Skeffington, Arthur

    Callaghan, James

    Key, Rt. Hon. C. W.

    Slater, Mrs. Harriet (Stoke, N.)

    Collick, Percy

    Lawson, George

    Smith, Ellis (Stoke, S.)

    Corbet, Mrs. Freda

    Lee, Frederick (Newton)

    Snow, Julian

    Craddock, George (Bradford, S.)

    Lee, Miss Jennie (Cannock)

    Sorensen, R. W.

    Crosland, Anthony

    Lewis, Arthur (West Ham, N.)

    Spriggs, Leslie

    Darling, George

    Loughlin, Charles

    Steele, Thomas

    Davies, G. Elfed (Rhondda, E.)

    Lubbock, Eric

    Stewart, Michael (Fulham)

    Davies, Harold (Leek)

    Mabon, Dr. J. Dickson

    Stones, William

    Davies, S. O. (Merthyr)

    McKay, John (Wallsend)

    Swingler, Stephen

    Diamond, John

    Mackie, John (Enfield, East)

    Taverne, D.

    Dodds, Norman

    McLeavy, Frank

    Taylor, Bernard (Mansfield)

    Ede, Rt. Hon. C.

    MacPherson, Malcolm (Stirling)

    Thomas, Iorwerth (Rhondda, W.)

    Edelman, Maurice

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

    Thornton, Ernest

    Edwards, Rt. Hon. Ness (Caerphilly)

    Manuel, Archie

    Timmons, John

    Edwards, Robert (Bilston)

    Mason, Roy

    Tomney, Frank

    Edwards, Walter (Stepney)

    Mayhew, Christopher

    Wade, Donald

    Evans, Albert

    Mendelson, J. J.

    Wainwright, Edwin

    Finch, Harold

    Millan, Bruce

    Warbey, William

    Fitch, Alan

    Mitchlson, G. R.

    Ward, Dame Irene

    Fletcher, Eric

    Monslow, Walter

    Watkins, Tudor

    Forman, J. C.

    Moody, A. S.

    Weltzman, David

    Fraser, Thomas (Hamilton)

    Morris, John

    Wells, Percy (Faversham)

    Galpern, Sir Myer

    Moyle, Arthur

    Willey, Frederick

    Ginsburg, David

    Neal, Harold

    Williams, D. J. (Neath)

    Gordon Walker, Rt. Hon. P. C.

    Noel-Baker, Francis (Swindon)

    Williams, LI. (Abertillery)

    Gourlay, Harry

    Oliver, G. H.

    Williams, W. R. (Openshaw)

    Griffiths, Rt. Hon. James (Lianelly)

    Oswald, Thomas

    Williams, W. T. (Warrington)

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Owen, Will

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

    Hamilton, William (West Fife)

    Padley, W. E.

    Woof, Robert

    Harper, Joseph

    Panned, Charles (Leeds, W.)

    Yates, Victor (Ladywood)

    Hayman, F. H.

    Pargiter, G. A.

    Zilliacus, K.

    Henderson,Rt.Hn.Arthur (RwlyRegis)

    Parker, John

    Herbison, Miss Margaret

    Paton, John

    TELLERS FOR THE AYES:

    Hill, J. (Midlothian)

    Pavitt, Laurence

    Mr. Ifor Davies and Mr. Grey.

    Holman, Percy

    Pearson, Arthur (Pontypridd)

    NOES

    Agnew, Sir Peter

    Boyle, Sir Edward

    Cordeaux, Lt.-Col. J. K.

    Altken, W. T.

    Brewis, John

    Corfield, F. V.

    Ashton, Sir Hubert

    Bromley-Davenport,Lt.-Col.SirWalter

    Costain, A. P.

    Atkins, Humphrey

    Brooke, Rt. Hon. Henry

    Coulson, Michael

    Barber, Anthony

    Brown, Alan (Tottenham)

    Courtney, Cdr. Anthony

    Barlow, Sir John

    Browne, Percy (Torrington)

    Craddock, Sir Beresford

    Barter, John

    Bullard, Denys

    Currie, G. B. H.

    Beamish, Col. Sir Tufton

    Bullus, Wing Commander Eric

    Dalkeith, Earl of

    Bell, Ronald

    Burden, F. A.

    Dance, James

    Berkeley, Humphry

    Campbell, Gordon (Moray & Nairn)

    Deedes, W. F.

    Bevins, Rt. Hon. Reginald

    Carr, Robert (Mitcham)

    de Ferranti, Basil

    Biffen, John

    Cary, Sir Robert

    Digby, Simon Wingfield

    Biggs-Davison, John

    Channon, H. P. G.

    Donaldson, Cmdr. C. E. M.

    Bingham, R. M.

    Chichester-Clark, R.

    Doughty, Charles

    Birch, Rt. Hon. Nigel

    Clark, Henry (Antrim, N.)

    du Cann, Edward

    Bishop, F. P.

    Clark, William (Nottingham, S.)

    Duncan, Sir James

    Black, Sir Cyril

    Cole, Norman

    Eden, John

    Bossom, Clive

    Collard, Richard

    Elliot, Capt. Walter (Carshalton)

    Box, Donald

    Cooke, Robert

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

    Boyd-Carpenter Rt. Hon. John

    Cooper, A. E.

    Emmet, Hon. Mrs. Evelyn

    Errington, Sir Eric

    Loveys, Walter H.

    Ridley, Hon. Nicholas

    Farr, John

    Lucas-Tooth, Sir Hugh

    Rippon, Geoffrey

    Finlay, Graeme

    McAdden, Stephen

    Roots, William

    Fisher, Nigel

    MacArthur, Ian

    Ropner, Col. Sir Leonard

    Gammans, Lady

    McLaren, Martin

    Russell, Ronald

    Gibson-Watt, David

    Maclean, SirFitzroy(Bute&N.Ayrs.)

    Scott-Hopkins, James

    Gilmour, Sir John

    McLean, Neil (Inverness)

    Shaw, M.

    Glyn, Dr. Alan (Clapham)

    MacLeod, John (Ross & Cromarty)

    Skeet, T. H. H.

    Goodhew, Victor

    Macpherson, Niall (Dumfries)

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

    Cower, Raymond

    Maddan, Martin

    Smithers, Peter

    Grant, Rt. Hon. William

    Maitland, Sir John

    Smyth, Brig. Sir John (Norwood)

    Grant-Ferris, Wg. Cdr. R.

    Markham, Major Sir Frank

    Spearman, Sir Alexander

    Green, Alan

    Marten, Neil

    Steward, Harold (Stockport, S.)

    Hall, John (Wycombe)

    Mathew, Robert (Honlton)

    Stodart, J. A.

    Hamilton, Michael (Wellingborough)

    Matthews, Gordon (Meriden)

    Storey, Sir Samuel

    Harris, Reader (Heston)

    Maxwell-Hyslop, R. J.

    Studholme, Sir Henry

    Harrison, Brian (Maldon)

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

    Summers, Sir Spencer

    Harrison, Col. Sir Harwood (Eye)

    Miscampbell, Norman

    Tapsell, Peter

    Harvie Anderson, Miss

    More, Jasper (Ludlow)

    Taylor, Sir Charles (Eastbourne)

    Hastings, Stephen

    Morgan, William

    Taylor, Frank (M'ch'st'r, Moss Side)

    Heald, Rt. Hon. Sir Lionel

    Morrison, John

    Teeling, Sir William

    Henderson, John (Cathcart)

    Mott-Radclyffe, Sir Charles

    Temple, John M.

    Hiley, Joseph

    Nabarro, Gerald

    Thatcher, Mrs. Margaret

    Hill, Mrs. Eveline (Wythenshawe)

    Nicholson, Sir Godfrey

    Thomas, Leslie (Canterbury)

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

    Noble, Michael

    Thomas, Peter (Conway)

    Hirst, Geoffrey

    Nugent, Rt. Hon. Sir Richard

    Thornton- Kemsley, Sir Colin

    Hocking, Philip N.

    Oakshott, Sir Hendrie

    Tiley, Arthur (Bradford, W.)

    Holland, Philip

    Osborne, Sir Cyril (Louth)

    Touche, Rt. Hon. Sir Gordon

    Hollingworth, John

    Page, Graham (Crosby)

    Turner, Colin

    Howard, John (Southampton, Test)

    Page, John (Harrow, West)

    Turton, Rt. Hon. R. H.

    Hughes Hallett, Vice-Admiral John

    Pannell, Norman (Kirkdale)

    Vane, W. M. F.

    Hughes-Young, Michael

    Partridge, E.

    Vosper, Rt. Hon. Denis

    Hulbert, Sir Norman

    Pearson, Frank (Clitheroe)

    Wakefield, Sir Waved

    Hurd, Sir Anthony

    Percival, Ian

    Walker, Peter

    Iremonger, T. L.

    Pickthorn, Sir Kenneth

    Walker-Smith, Rt. Hon. Sir Derek

    Irvine, Bryant Godman (Rye)

    Pike, Miss Mervyn

    Wells, John (Maidstone)

    James, David

    Pilkington, Sir Richard

    Whitelaw, William

    Jenkins, Robert (Dulwich)

    Pitt, Miss Edith

    Williams, Dudley (Exeter)

    Johnson, Dr. Donald (Carlisle)

    Pott, Percivall

    Williams, Paul (Sunderland, S.)

    Johnson, Eric (Blackley)

    Powell, Rt. Hon. J. Enoch

    Wills, Sir Gerald (Bridgwater)

    Johnson Smith, Geoffrey

    Price, David (Eastleigh)

    Wise, A. R.

    Kerans, Cdr. J. S.

    Prior, J. M. L.

    Wolrige-Gordon, Patrick

    Kerby, Capt. Henry

    Prior-Palmer, Brig. Sir Otho

    Wood, Rt. Hon. Richard

    Leather, E. H. C.

    Profumo, Rt. Hon. John

    Woollam, John

    Leavey, J. A.

    Pym, Francis

    Worsley, Marcus

    Lewis, Kenneth (Rutland)

    Rawlinson, Peter

    Lilley, F. J. P.

    Redmayne, Rt. Hon. Martin

    TELLERS FOR THE NOES:

    Litchfield, Capt. John

    Rees, Hugh

    Mr. Batsford and Mr. Ian Fraser.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Renton, David

    The Temporary Chairman: The next new Clause selected is that in the name of the hon. Member for West Ham, North (Mr. A. Lewis)—Abolition of pool betting duty on bets on dog racecourses.
    Dr. Dickson Mabon: On a point of order. Surely there must be an error. The next new Clause after the one we have just disposed of is one relating to Scotland—Exemption from excise duty of Scottish shale oil. Surely we ought to be going on to that matter, which concerns Scotland very much because many people in Scotland have lost their jobs lately, yet we have passed over that new Clause to come to a new Clause about—
    The Temporary Chairman: Order. The next new Clause selected is in the name of the hon. Member for West Ham, North and the Chair's selection is not debatable.
    Mr. William Ross: Further to that point of order—
    The Temporary Chairman: It cannot be. There was not a point of order.
    Mr. Ross: On a point of order. I know that it is outwith the bounds of probability to probe the mysteries of selection by the Chairman of Ways and Means, but could you give me your guidance, Mr. Arbuthnot, as to how the failure to select the new Clause—Exemption from excise duty of Scottish shale oil —will affect the selection—
    The Temporary Chairman: Order. The selection by the Chair is not debatable. Mr. Lewis.
    Mr. Bruce Millan Mr. Bruce Millan (Glasgow, Craigton) rose—
    The Temporary Chairman: Order, Mr. Lewis.
    Mr. Millan: On a point of order. May I at least have your guidance, Mr. Arbuthnot, on this? Does the fact that the new Clause about Scottish shale

    1455
    oil has not been selected at this stage preclude it from being set down again for consideration on Report?
    The Temporary Chairman: It does not preclude it from being set down again, but it cannot be discussed now.
    Dr. Mabon: On a point of order. How can we find out—outside this Chamber, of course—what are the reasons for the selection? I am not asking for them just now, but how do hon. Members ascertain how they can have justice done?
    The Temporary Chairman: The Chair does not give reasons for selection.
    Dr. Mabon: That is not a reason.

    New Clause.—(ABOLITION OF POOL BETTING DUTY ON BETS ON DOG RACECOURSES.)
    Section six of and the Fifth Schedule to the Finance (No. 2) Act, 1947 (which imposes the pool betting duty and makes provision as to such duty), shall cease to apply to bets made by way of a totalisator set up on a dog racecourse.—[Mr. A. Lewis.]
    Brought up, and read the First time.
    Mr. A. Lewis: I beg to move, That the Clause be read a Second time.
    I am sorry that my hon. Friends on this side who so actively, conscientiously and consistently represent Scotland have not been successful in having their new Clause—Exemption from excise duty on Scottish shale oil—selected. My only regret is that there were not a few hon. Members from Scotland on the opposite benches to support them. However, if I were to continue on that line, Mr. Arbuthnot, you would rule me out of order.
    I do not need to declare to the Committee that I have no connection with greyhounds. The fact that I have no such connection physically will be apparent to hon. Members, but neither have I any financial or other connection whatever. If any hon. Member is inclined to sling out gibes, I assure him that I get no hand-outs or payments of any kind. I am not a director of any stadium. I am not even a partner in the syndicate which is, I think, run by the hon. Member for Hornchurch (Mr. Lagden)—who is not here at present—and some of his colleagues.
    1456
    The grounds for my interest in this matter are two. In the first place, there is in West Ham a very fine greyhound track, one of the best, if not the best, in the country. It is certainly the best in London. In the second place, my interest lies in the fact that, for twelve years or so, I, together with several hon. Members on both sides, have consistently opposed this tax purely on the ground that it is discriminatory.
    Before explaining the matter, I am happy to pay a tribute to the Economic Secretary. I myself, and I am sure those who are interested in this matter with me, appreciate very much the kind and courteous manner in which he has received many deputations, notably the recent deputation which called upon him to argue the case before the Budget this year.
    The Chief Secretary to the Treasury, in speaking to an earlier new Clause, said that we should not have taxation which is unfair as between one person and another. He said this on several occasion's. I hope to show that there is discrimination against those who follow greyhound racing. There may be many people who are not interested in this sport. I myself go very rarely to greyhound racing. I know nothing about the intricacies of the betting. All I knew is that there is obvious unfairness.
    When one of my constituents, an engineer, a bricklayer, a docker, a carpenter, or whatever he may be, goes to my West Ham greyhound track and puts a bet on the totalisator, before the race takes place he has lost 10 per cent. in Pool Betting Duty. I do not object to the 10 per cent. What I object to is that if a wealthy person, or, for that matter, the same engineer, bricklayer, docker or carpenter, wants to take a day off to go to the horse races, he can put the same type of bet on the same type of totalisator made by the same company and operated in exactly the same way and he will pay no tax at all. Plainly, this is discriminatory and unfair.
    8.15 p.m.
    The Treasury may say that it wants the money. It may be said that the Treasury would like to impose a betting tax. All right. It may suggest 10 per cent., 5 per cent. or 2 per cent. as a tax on all forms of betting, gaming and

    1457
    gambling. If that were to be done, no one would object. I should not object. I should agree that, in the circumstances, it would probably be the fairest and best way of bringing money into the Treasury.
    Incidentally, it is mainly in the evening that greyhound racing takes place. The chap who goes there is usually someone who has finished his day's work and takes pleasure in greyhound racing. He does not take time off from work to go. This 10 per cent. tax is not just imposed once. It is cumulative. He pays 10 per cent. after 10 per cent. If there are eight races in the evening, by the time the chap has finished he has lost the equivalent of eight times 10 per cent. Customarily, greyhound races are held twice a week. If a chap happens to be able to go twice a week, and he puts his two "bob" on each race, he will have paid out 10 per cent. in tax on each of those sixteen races because each bet is subject to the 10 per cent.
    It might be argued that someone who goes to greyhound races should pay a 10 per cent. admission charge or a 10 per cent. tax. Perhaps there would be some logic in that. But, to be fair, the tax ought to apply to horse racing and it ought to apply to betting and gambling of all kinds, to chemin de fer and the rest. If the Treasury wants to get in a lot of money, that is the way to do it.
    This is not a new issue. The 10 per cent. Pool Betting Duty was first introduced in 1948. Ever since then, it has been acknowledged by each Minister at the Treasury that there is discrimination, that it is completely unfair. The only reason they have given has been that it is an easy tax to collect, and, they say, "Why should we do away with it?".
    This is not a fair way of taxing the people. Whether one does or does not go to greyhound races is immaterial. Whether or not one goes to horse races is immaterial. We are here to see that taxation is equitable and fairly shared out among all citizens, whether or not we ourselves are personally affected.
    Since the tax was introduced, there have been many changes. There has been a drastic reduction in the return which the Treasury gains from the 10 per cent. levy on the totalisator. There are
    1458
    several reasons for this. One is that some people who used to go to greyhound races do not go now. They watch television, they go to bingo, or they have other amusements. Another reason, perhaps, is that the weather is getting worse each year that goes by, so people prefer to stay at home on that account.
    One of the main reasons is that the wise punter, the wise man who backs greyhounds—and there are many—and particularly the heavy backer decides that he will no longer go to a greyhound race track to put £1, £2 or £100 on the totalisator since he knows that, in that case, he will immediately lose 10 per cent. of his stake before the race starts, whereas, if he stays at home and telephones the bookmaker, he can get better odds and lose no tax at all. Or better still, thanks to the assistance and generosity of the Government in introducing betting shops, he can go to a betting shop on any street corner, put his bet on and pay no tax. Therefore, why should he trouble to go along and put a bet on a totalisator when he can put it on outside and in fact get 10 per cent. better odds?
    The tracks take, in addition, a 6 per cent. administrative charge which they have been drawing ever since 1934 for the running and administration of the totalisator and of what I might call the track facilities. Therefore, in reality the punter loses 16 per cent. before he puts his bet on.
    I emphasise that I do not suggest that people who go horse racing should be taxed just because those who go greyhound racing are taxed. I suggest that we should treat them all alike. Since horse racing is not taxed, greyhound racing should not be taxed. If greyhound racing must be taxed, then all form of betting and gambling should be taxed.
    I have referred to the bookmaker who is in a betting shop or the bookmaker whom one can contact on the telephone. As I say, if a punter bets with him he pays no tax. But if that bookmaker goes to a greyhound track he pays a special Government licence fee or levy ranging from £6 to £48 an evening, depending on what part of the stadium he stands in. Yet that same bookmaker with the same staff and offering the same odds can go to a horse racing track and

    1459
    pay no duty. This shows that there is discrimination.
    My view is that for many years there has been a good horse racing lobby in both Houses of Parliament. A number of right hon. and hon. Members on both sides of the House of Commons and a number of members of the other place have actively supported, owned and taken part in horse racing. I am convinced that some of these noble and landed aristocrats and titled people have been able to get away with it because they are owners and take part in horse racing whereas most but not all of the owners and followers of greyhound racing are more ordinary individuals.
    As I said, there has been a fall-off in the revenue returns to the Treasury, and I explained some of the reasons for it. On many occasions when I have had the pleasure of leading deputations to the Treasury, the various Chancellors of the Exchequer and Treasury Ministers have said that it is not their intention to tax greyhound racing tracks out of existence. But that has happened in many instances. Forty greyhound racing tracks have had to close. I do not suggest that the sole reason for this was the tax. But I do suggest that it has, in part, been responsible for the closing of these tracks. If people who now place their bets outside the tracks had the opportunity to bet on greyhound racing on the same basis as those who bet on horse racing and on bingo and on other gambling sports, they would place them on the totalisator inside the stadium because they would not lose the 10 per cent. which they pay in the pool betting duty.
    When I met the Economic Secretary recently, I used an analogy which I thought was apposite. I asked him whether he thought it fair and proper that a man who bought a packet of Wills Woodbines had to pay a tobacco tax of 10 per cent, whereas the man who went to the same tobacconists and bought a packet of Wills Gold Flake, a more expensive type of cigarette, did not have to pay any tax. No doubt the hon. Gentleman will say that that is not a fair analogy, but I think that it is. He will say that there is a difference between horse racing and greyhound racing.
    We have heard it argued before that horse racing draws in revenue to the
    1460
    Treasury because it earns dollars by the export of livestock. But if one compares the figures of imports with the figures of exports, one will find that there is not much in it. But even if that were a fair and logical argument, the same argument could be used with regard to greyhound racing. If there were the same opportunities for the export of greyhounds as there are for the export of racehorses, then, no doubt, quite a lot of foreign currency would be earned, particularly by exports to America, perhaps not as much as is earned by the export of racehorses, but pro rata to the amount allegedly earned by the export of racehorses. I have here figures which show that as much as £1 million to £1½ million has been earned by the export of racehorses, but in many cases the cost of the imports far exceeded the money earned by the export of livestock to hard currency areas.
    A number of greyhound tracks support the claim which I am making tonight. This is not because it will benefit the tracks in any way, because it is obvious that if my proposal is accepted it is the punter who will get the benefit of it since by Statute the track promoters are limited to their 6 per cent.; that is the maximum that they can deduct. If there were any reduction in the tax it would not affect the track promoters.
    I have already said that I have no interest in this matter, but I was very pleased to receive from the chairman of Wimbledon Stadium a statement which I think he has either sent out or is to send out to his shareholders because one shareholder raised this matter with him. He has made out a very strong case in writing, much stronger than that which I have made out. It would take me far too long—and I am sure that the Committee would not welcome it—to go through this statement in detail. I want the hon. Gentleman to read it. I will see that it is passed to him.
    Mr. Barber: I have a copy.
    8.30 p.m.
    Mr. Lewis: That is good. I hope that he has read it, particularly the reference to greyhound race courses as being places of pleasure. I know that many people, quite wrongly, frown upon greyhound racing. Yet many of them go to Epsom or to Ascot—I am passing no adverse

    1461
    comment on it—and they will be at the Derby next Wednesday. Indeed, this Chamber will he as empty then as it is now because of the Derby. Good luck to them. They will all be backing horses.
    Mr. Ede: I shall be there, too.
    Mr. Lewis: Yes, my right hon. Friend will also be there, and I hope he backs winners. But he will not pay tax, nor will anyone else who goes to the Derby. Greyhound tracks are, however, frowned upon. Yet they give great assistance in many ways to building up Britain's reputation in sport. White City is a greyhound racing stadium but does an enormous amount of good work for athletics.
    I only wish that the hon. Member for Lewisham, North (Mr. Chataway) were here. He gained a great reputation before entering this House as a wonderful runner. I am sure that he could say that he has run on many occasions at White City, bringing prestige to himself and his country. He could not have done that if White City had not been there—and White City would not have been there had it not been for greyhound racing, which also gains the revenue to pay for the stadium's rates, taxes and maintenance.
    Equally fortunately, Spurs have won the Cup twice at Wembley, which is a great stadium. Wembley has put Britain on the map in football and athletics and many other sporting activities. I understand that it is to be built up as probably the greatest sporting arena in the world and that it is to have a seating capacity of 100,000, complete with sun roof. It will cost £½ million.
    How will this be paid for? The stadium is not paid for by the football crowds. It is paid for because greyhound racing is run there twice a week and the management are able to get from the punters sufficient money for rates and taxes, with more left over to put into the track for the future. I could quote a number of instances. Harringay Stadium is run by the Greyhound Racing Association. It has done an enormous amount of work for charity. A recent charity race there raised a lot of money for under-privileged and handicapped children. In West Ham, the
    1462
    track is made available without charge to boys playing football and for athletics. It has been made readily available for children's sports.
    I am not singling out any of the tracks; I left West Ham to the last because I did not want it to be thought that I was picking out my own area. All these tracks have done an enormous amount of good work in helping forward sport and athletics and charitable enterprises. Do they get any help from the Treasury? None at all. Instead, they are discriminated against in this and in every other way. They are limited in the number of times a week they can open. They are allowed to open only twice a week. Now I understand that there is talk of betting shops being allowed to open later. I can see you looking at me again, Mr. Arbuthnot, because I am getting back to the question of the 10 per cent. duty, but there is a relevance in this case.
    If these betting shops are open later at night there will be more encouragement for people who would normally go to the greyhound track to go to the shops instead. This would mean that they would not put the money on the totalisator at the track. Although it may not be the Economic Secretary's responsibility, I hope that he will have a word with the Home Secretary and point out to him that this would be yet another discrimination and would also be bad from the Treasury's point of view.
    The hon. Gentleman knows that over the last few years I and many of my right hon. and hon. Friends on both sides of the Committee have raised many questions on this matter. At long last we have got the Treasury to agree—I think—that something must be done. In answer to a Question last week, we were told that the Government would have a review of betting, gambling and taxation. That is good news, but it will not be a good enough answer to this debate. The Treasury has had since 1948—fourteen years—in which to make this review. It is not good enough now to tell us that we ought not to press this matter because the Treasury is to investigate and review it.
    I put it back to the Economic Secretary the other way round and say that as this fraternity has suffered for fourteen years it ought to have the next few

    1463
    years without discrimination. Let the tax be dropped now and then we can be certain that the Treasury will quickly get down to the job of having this review. I am certain that if we accept the suggestion, which I am sure that the Economic Secretary will make, namely, that we should not press the now Clause because there is to be a general review, by this time next year something will have happened. Perhaps the Economic Secretary will not be in his present office. I sincerely hope that he has a senior position. But I hope even more that he has no job and that we have another Government. But if we have another Government we might find the Treasury still saying that this matter is under consideration.
    If there has to be taxation, let it be fair and proper taxation on all forms of betting and gambling. There are 101 ways in which it could be fair and proper. The Treasury could get hundreds of millions of £s of revenue without any trouble, and if the Economic Secretary likes to see me privately later I will explain how it can be done. If I give the details here, I shall be out of order, for we are now dealing with a new Clause for the abolition of the 10 per cent. duty on totalisators. I shall be out of order if I mention football pools, but the Pool Betting Duty is not only discriminatory but unfair and something which should be immediately abolished. I ask the Economic Secretary to accept the new Clause and not put us off until next year.
    Mr. Fisher: I support the new Clause which has been moved so ably and comprehensively by the hon. Member for West Ham, North (Mr. A. Lewis), and the Economic Secretary will be glad to hear that I can cut down the length of my own speech because many of my arguments have already been deployed. Like the hon. Member for West Ham, North, I have no interest to declare; indeed, I probably go to horse racing more often than I go to dog racing.
    The justice of the case is what commands our support. When the late Sir Stafford Cripps imposed this discriminatory tax in 1947, there was perhaps some reason for his decision. At that time, rationing was still in force—it was very soon after the war—and people had not
    1464
    very much on which to spend their money. I think that most hon. Members would agree that the end of the war had brought a desire for better times and less austerity after the war years, rather as the restoration of King Charles II, 300 years ago, had brought a desire among the people for better times after the Cromwellian Protectorate.
    The situation when Sir Stafford Cripps brought in this tax was that there was not much money and not many things in the shops for people to buy, so they turned instead to greyhound racing tracks. The result was that attendances rose and the profits of the the greyhound race companies rose, too. When a particular category of companies suddenly starts to become exceptionally profitable, it is always a sitting duck for any hard-up Chancellor. I do not wonder at that and I do not complain of it. Indeed, we saw the same thing last year when my right hon. and learned Friend suddenly decided to tax television advertising. That was done under a misapprehension, because that tax did not, in fact, fall on the television companies. But Sir Stafford Cripps knew what he was doing in 1947, even if my right hon. and learned Friend did not know quite what he was doing last year with the television tax.
    However, the 10 per cent. duty on greyhound racing effectively reduced the profits of the greyhound companies and it has exactly the same effect today, but in circumstances which have changed. Today, the profits would have been much lower anyway, because the whole setup is quite different and greyhound track attendances are very much lower than they were fourteen years ago. The 10 per cent. duty brings in about £6 million today, far less than when it was first imposed. This is a clear example of the law of diminishing returns.
    The tax has always been unfair to greyhound racing compared with horse racing. The hon. Member for West Ham, North made the point that out of every £100 staked on the greyhound tote, the Government take £10 before the winnings are paid out, whereas on the horse tote no such duty is imposed.
    8.45 p.m.
    There are, of course, many other anomalies between the two sports. Horse racing gets 2 per cent. of the

    1465
    bookmakers' net profits, whereas there is no such levy to assist greyhound racing. On the horse tote credit off-the-course betting is allowed, whereas on the greyhound tote it is not.
    I do not know why there are these differences between two identical forms of gambling. I have never taken the view—and I know that the hon. Member for West Ham, North does not—that gambling should not be the subject of a special duty. Of course, there is a case for a special extra tax on gambling as such, but I think that there is no case for a discriminatory tax on one form of gambling as opposed to any other.
    As the hon. Member for West Ham, North said, what was unfair in 1947 has become much more unfair today, because the 1960 Act has legalised forms of betting like bingo, chemin de fer, and betting shops which, like the horse Tote, pay no special duty. A man can go into a betting shop and place his bet. By so doing he can save his fare to the racecourse and save his entrance money, so there is, naturally, a great temptation for him to have his bet in this way.
    The effect on greyhound track attendances has been quite serious. They are 15 to 20 per cent. down this year compared with the same period last year, and whereas the turnover on the horse tote has gone up, the turnover on the greyhound tote has gone down. One reason—and the hon. Member for West Ham, North made this point—but certainly not the only reason, for this, is that the horse tote is exempt from Pool Betting Duty, whereas the greyhound tote bears the full brunt of it. I see no reason for this discrimination. I shall be surprised if my hon. Friend can deploy a case which convinces us of the equity of this tax. I think that the only way in which he can seek to justify the tax is to say that it brings in some cash which he cannot afford to do without.
    That is a proper argument for a Treasury Minister to make. I am not carping about it, but I suggest that if it is merely the cash in which he is interested and not the principle—and I believe that he will admit that when he replies—I urge him to look at gambling as a whole. The amount of money spent on gambling does not vary very much from year to year. It runs
    1466
    at about £750 million a year. It is quite a lot of money. It is spent with credit bookmakers, on horse and greyhound totes, and on the pools, and to those we can add, since the passing of the 1960 Act, betting shops, bingo, chemin de fer, and so on.
    The same amount of money is now being spent, but it is being spent over a somewhat wider field—quite a fertile field, quite a good field for the Revenue to look at, and I should like the Chancellor to agree to look at it as a whole, and not just view one part of the field, the greyhound tracks and the pools, because these are the only two which at the moment are making a contribution. I believe that it would pay him to look at the whole field of gambling, and that it would be fair as between all gambling interests.
    The legalisation of new forms of gambling by the 1960 Act gives my hon. Friend the opportunity to do what I suggest, which he did not have before because one cannot tax an illegality. That was the position before, and, indeed, it was my right hon. and learned Friend's excuse, for not looking at other forms of gambling. Now that those other forms of gambling have been made legal the whole field is widened, and any argument of this sort which he might have considered advancing in the past no longer applies.
    I do not know what my hon. Friend will say in reply to the debate. If he promises to bring in next year a tax on all forms of gambling I shall be pleased. I think that that would be a wise, sensible and equitable decision, and under those circumstances I would consider withdrawing the new Clause. I must, of course, make it clear that in saying that I am speaking for myself and not for the hon. Member for West Ham, North.
    I do not want to quarrel with my hon. Friend the Economic Secretary twice in one evening, because we have already had a battle of words on some earlier new Clauses, but if he cannot make such a promise we would be in some difficulty. I do not know whether the hon. Member for West Ham, North, in those circumstances, would consider that we should press the matter to a Division. In the absence of an undertaking about what the Government have in mind for the future, I personally would find it

    1467
    very difficult to accord my support to them for the continuance of this tax, because I consider that it operates unfairly and at the expense of one form of gambling, which is no more reprehensible than any other form of gambling.
    Mr. Albert Roberts: I should like to make my contribution to this debate, because I think this is a worthy cause. I wish to make my position quite clear and say that as a Member of Parliament I try to interest myself in constituency matters and make investigations into those activities which are often debated here.
    I come from the same part of the country as the Economic Secretary, and I have to some extent interested myself in the sport. I am part-owner of a greyhound, not because I want to indulge in gambling but merely because I wanted to find out what kind of a sport this is. I have been on a racecourse on two occasions. In my opinion greyhound racing is a far cleaner sport than horse racing. On a racecourse one sees a certain amount of drunkenness, and crown and anchor and other forms of gambling being engaged in by those trying to take money away from innocent people. Personally, I loathe attending horse races, and that is why I do not now go to see them.
    Returning to the subject of greyhound racing, I have been to a meeting on four or five occasions. I am not interested in gambling or in making money, but this Chamber is not by any means a court of law. Since I attend a place of worship—a chapel—I believe in being temperate in all things, and that is why I feel that this form of sport deserves this relief. It has been said that horse racing is the sport of kings, and greyhound racing can be the sport of the ordinary people.
    It has been pointed out that this tax is to some extent a very discriminatory tax, which, in my opinion, it is. A former Chancellor of the Exchequer said a short time ago that if his family were in mortal danger the first things he would save would be his wife and his horse and then himself. If I were placed in those circumstances, I would first save my wife, then my dog and then myself. I well remember seeing a picture of the Chancellor of the Exchequer, on the day
    1468
    before he introduced his Budget, walking in a meadow with a dog, presumably to get some solace. Being a dog lover myself, I can well understand the right hon. Gentleman having a dog for his companion.
    I think that greyhound racing is a very clean sport. It has been pointed out by previous speakers that, to a certain extent, this tax was introduced to mop up some of the spare money that was moving about the country in those days. If that is the case, I think the time has now arrived when serious consideration should be given to the removal of this discriminatory tax. It has been proved that attendances are now going down. It has been proved that some of the stadiums around London are in need of more support. It has been pointed out that to some extent they render a public service. Apart from having greyhound racing, the stadiums provide a venue for other sports. The White City is an example. At that stadium there are athletics, motor-cycle track racing and so on.
    I want to bring to the attention of the Committee the condition of some of the provincial tracks. In the provinces the ordinary man and woman attend greyhound meetings. The sport has to bear this penal tax of 10 per cent. I was always taught that one of the canons of taxation is equity. There is no equity about this. No hon. Member can argue that there is any sense of equity about the tax which is now imposed on tote betting at greyhound stadiums.
    Two years ago I had the opportunity of meeting the Chancellor and I found that there was no argument against this proposal. In 1960 the Government took £8 million from those who attend greyhound racing. Every time a greyhound runs in a race £20 is taken by the Treasury. The Economic Secretary should prevail on the Chancellor to do something about this matter. If he says that the Government need the £8 million I have no objection, but the money should be drawn off in a fair way. It is entirely wrong to penalise one section of sport alone. The Economic Secretary comes from the West Riding, as I do. If he goes to Doncaster or Leeds he will find that stadiums there are struggling for existence.
    We go on year after year keeping this burdensome tax on greyhound racing. I

    1469
    am not against those who want to go horse racing. I believe that the ordinary man and woman should have some outlet for their enthusiasms. I do not like to see people flocking to bingo halls. I think they could spend their time in a far better way. I invite any hon. Member to visit a greyhound track. There he can have a meal and a drink, and he need not bet. If he wants to have a small bet, he can do so. It is a very clean sport and something which should have the support of this Committee. It should not be thought of as something which is corrupt.
    I have the courage of my convictions and I mix with church people. I go to chapel and I have gone into the pulpit. I believe this is a good clean sport and I want to encourage it as far as possible. I think it entirely wrong to give something to horse racing and to leave this tax on greyhound racing. As I said, I was invited to become part-owner of a dog. I do not want to win money, but I have learned a lot. It has given me enough information to realise that this is a sport which should be encouraged. It gets people into the fresh air and encourages them to conduct themselves in a good way. It does not encourage them to gamble. Why on earth should those who like to have a flutter be turned away and encouraged to use betting shops? That gives an advantage against those who attend greyhound race meetings and who pay for admission to tracks. This discrimination should not continue.
    It has always been said by Chancellors that this 10 per cent. was not imposed as a permanent tax but as a temporary measure, yet it has gone on for fourteen years. Declining attendances have caused certain tracks to close down, including those at Newcastle, Stoke-on-Trent and Warrington, and forty totalisators have been closed, leaving a monopoly of betting with the bookmakers. Is that a satisfactory state of affairs? The pitmen of Newcastle, who like to see their whippets running, were the pioneers of this kind of racing. The provinces are suffering badly because of this tax. I hope that the Economic Secretary, accepting what has been said by the two previous speakers, will not promise us jam tomorrow but will give us jam today.
    9.0 p.m.
    Mr. A. E. Cooper: The hon. Member for Normanton (Mr. A. Roberts) referred to horse racing as the sport of kings and to greyhound racing as the sport of the common people. Bearing in mind what happened a fortnight ago at Wembley, I think that we could now call greyhound racing the sport of princes. The Duke of Edinburgh and other members of the Royal Family have interested themselves in it, and I suppose that it can now be considered to have become respectable, although it was never anything other than respectable. It has always been a very fine sport, and the perpetuation of this discriminatory tax is just one of those Treasury nonsenses with which our taxation system is riddled.
    I appeal to my hon. Friend tonight, as I appealed a week or two ago, to realise the seriousness with which hon. Members debate new Clauses on a very wide variety of subjects. They are put down year after year, and we get the same sort of reply from the Chancellor of the day. There is always some reason for saying that something cannot be done. I assure my hon. Friend that we do not put down these new Clauses for fun; there is a serious intent behind them.
    This new Clause relates to a great sport in which many thousands of men and women earn their daily bread and butter, and the inequity of this tax cannot be defended. It is difficult to understand why greyhound racing, as such, has been sorted out in this way. My hon. Friend the Member for Surbiton (Mr. Fisher) was partly right in referring to the arguments of 1948, but this discrimination against greyhound racing as opposed to horse racing needs a thorough Treasury explanation.
    All we are asking is that greyhound racing and horse racing should be treated alike. If the Chancellor says, "I cannot afford £8 million this year," let him introduce a new Clause on Report to put a similar tax on horse racing. I do not think that the greyhound racing people would then object at all. They would at least see that there was some fairness about the whole thing. As it is, there is complete injustice which is a blot on our taxation system and which must be removed.

    1471
    My own wish is that we could have totalisator betting for both greyhound racing and horse racing; that bookmakers, as such, would disappear from the scene, and all betting be done as it is in some Continental countries and in large parts of the United States. If that were done, I am sure that both sports would benefit to a much greater extent than they do at present, and there would be less likelihood of jiggery-pokery in them. Again, I ask my hon. Friend not to treat this debate in any light way, but to give the Committee a reasoned argument one way or the other.
    Mr. David Weitzman: My direct interest in this matter lies in the fact that adjoining my constituency is the Clapton Stadium which has given a great deal of pleasure to many thousands of my constituents for a considerable time.
    I have listened carefully to all the speeches made in support of the proposed new Clause, and my hon. Friend the Member for West Ham, North (Mr. A. Lewis) certainly made a powerful case in its favour. I am therefore waiting patiently to hear what possible answer there can be why this proposal should not be accepted. I am, frankly, not so much concerned with the argument as to whether one sport is better than another; whether horse racing is better than greyhound racing, or vice versa. Greyhound racing exists and is followed by many thousands of people.
    Since so many people attend greyhound racing and since, as far as I can see, there is nothing wrong with it, why is it penalised compared with other sports? I have heard it said that there was a good reason why the tax was imposed in 1948. That may be so, and I have no doubt that the Labour Chancellor at that time had a good reason for imposing it. What is wrong with this Tory Government? Because there was a good reason for a Labour Chancellor introducing the tax, is there any reason, since the necessity for it has disappeared, why the Government should not now get rid of it?
    I have tried to think of a possible answer why it should not now be abolished, and the only one that might
    1472
    be put forward is, I suppose, the old hoary answer that the money is needed. That is not a sufficient answer because if the money is so needed why should this form of taxation not be completely fair? The fairness of taxation is, surely, an elementary principle of our tax system and to impose what is, on the face of it, an obviously discriminatory tax, is unjust and something should be done to rectify the position.
    If the money is needed there are a number of avenues open to the Treasury through which to raise it. If the Government consider that it is right to continue with this form of taxation, then let it be imposed fairly on the different types of sports. As the hon. Member for West Ham, North said, there are many forms of gambling waiting for the Government to deal with if they really need the money. If the Government proposed to tax these other forms of gambling we might discuss and argue the case, but it would seem fair that gambling should be taxed equitably and as a Whole. To take one particular form of gaming and discriminate against it is obviously unfair, and I await with great interest the answer that might be given in opposition to the proposed new Clause.
    The Earl of Dalkeith: Unlike the hon. Member for Normanton (Mr. A. Roberts), who declared his interest as being the owner of part of a greyhound—he did not say which part —I have no similar interest to declare in either greyhound or horse racing, for I seldom go to either of them unless I am taken. However, I have an interest in the whole conception of greyhound racing in that I have a fine stadium in my constituency. Last year, I investigated the whole question of the Pool Betting Duty and I came to the conclusion that it is a most unfair and inequitable tax inasmuch as it is placed on this sport and not on others.
    I rise only to express my sympathy for the proposed new Clause which has been well put forward by the hon. Member for West Ham, North (Mr. A. Lewis) and also by my hon. Friend the Member for Surbiton (Mr. Fisher). They have covered practically every point in connection with the matter and I hope that, even if my right hon. and learned Friend the Chancellor cannot abolish the Pool

    1473
    Betting Duty immediately, he will include it in a review of all forms of taxation for gambling so that it is not singled out in the way it is at present. I look forward to hearing the reply we shall receive on this subject.
    Mr. Ede: I support the new Clause. I do not think that one can defend any discrimination in this matter between one form of organised gambling and another. To attempt to do it is to attempt the impossible. There is only one discrimination that I know much about. My hon. Friend the Member for West Ham, North (Mr. A. Lewis) tells me that he can bet on the totalisator at a greyhound racing track for 2s. If he comes to Epsom next week he will not be able to get his bet on under 4s. That is not the fault of the Government, but that is a discrimination in my hon. Friend's favour which I much resent his having.
    Mr. A. Lewis: I am sure that my right hon. Friend will allow me to say, perhaps rather facetiously, that he follows the rich man's sport and I follow the poor man's sport.
    Mr. Ede: Oh, no. I have had a good deal to do with racing tracks and there is no discrimination on the ground of class. My hon. Friend runs the same risk as I do when he enjoys his sport and there can be no justification for continuing the present discrimination. It can be altered in more than one way, but the Government ought to find some way of ending it.
    Mr. Eric Johnson: My interest is mainly in horse racing rather than dog racing, but that does not mean that I think it is right to maintain a dog racing tax which is obviously unfair. I see no argument in favour of maintaining it. I wish to detain the Committee only long enough to express my support for the new Clause. As for one being the sport of the rich and the other the sport of the poor, I suggest that if an hon. Member follows either of them long enough he will become poor anyway, unless he has the good fortune to be a bookmaker.
    Mr. Barber: The literal effect of the Clause would be to exempt from Pool Betting Duty bets made by way of the Totalisator at dog racing courses. But if we accept, as I am sure all hon. Mem-
    1474
    bers who have spoken will agree, that the bookmaker's licence duty would also have to go, being, as it is, a duty imposed merely to contervail, to use the technical term, the duty on the Totalisator, and both duties were to be abolished, the cost would be about £7½ million a year.
    I am grateful to the hon. Member for West Ham, North (Mr. A. Lewis) for his generous words about the discussion which we had a short time ago at the Treasury. He brought with him a gentleman from the Greyhound Express and we had a very full talk. I think that the hon. Member will agree that I was given quite a lot of inside information. In the unhappy event, referred to by the hon. Member, of my some time being out of office, I am sure that it I were to consult him I should not be destitute for long.
    I want to assure my hon. Friend the Member for Ilford, South (Mr. Cooper) that I have considered the new Clause very seriously. I can tell him, and other hon. Members who have urged that we should give serious consideration to this matter, that this has been done. This is not something that has been lightly passed by in the pre-Budget consideration given to these matters by my right hon. and learned Friend.
    There are three considerations to which the Committee should devote its attention. First, there is the question of equity, secondly, there is the state of the greyhound racing business, to which reference has been made, and, thirdly, there is the question of cost. As for the first, the aspect of equity, I agree with my hon. Friend the Member for Surbiton (Mr. Fisher) and the hon. Member for West Ham, North that as between horse racing and greyhound racing this duty is discriminatory. There is nothing new about the discrimination. It has always been so, ever since it was first introduced about fifteen years ago by the late Lord Dalton. At that time and in subsequent years the House of Commons has taken the view that in all the circumstances this discrimination was justified.
    9.15 p.m.
    Mr. A. Lewis: It is not fair to say that the House of Commons has always accepted that view, because we have never had a vote on it to test the feeling of the House.
    Mr. Barber: I am sorry, but I thought there had been a Division in an earlier year.
    Mr. Lewis: No, we have never raised it in this form until today.
    Mr. Barber: At any rate, that was the view taken by the House when it was first introduced by the late Lord Dalton. It is clear from all the speeches which have been made this evening, from both sides of the Committee, that a different view is taken by those hon. Members who have spoken. My hon. Friend the Member for Surbiton said that in his view circumstances had changed since the duty was first imposed.
    I want to say two things on the general aspect of this tax. First, for reasons with which the Committee is now all too familiar, my right hon. and learned Friend decided that in this Budget he should, in the general interest, consolidate all the major duties covered by the Customs and Excise surcharge which was imposed for the first time last year. This meant retaining the increased duties on wines, spirits, beer, cigarettes, petrol, oil, television advertisements and pool betting.
    But although it has not been mentioned by any speaker this evening, I am sure that it will not have escaped the notice of hon. Members that in Clause 1 of the Bill as it was presented to the Committee, and as it now stands, pool betting on dog racing tracks was specifically excluded from the consolidation. It follows that so far as the duty which is the subject of this new Clause is concerned, the Budget has already, I agree to a comparatively minor extent, resulted in some reduction.
    I make this point not because I want to exaggerate the extent of the reduction, but so that the Committee shall know that the question of this duty was obviously very much in the mind of my right hon. and learned Friend prior to the Budget. Indeed, it has been treated, apart from one or two other minor duties, in quite a different way from all the other duties which were concerned with the Customs and Excise surcharge.
    The second point that I want to make on the more general aspect of the matter is this. When we were considering Clause 1 a number of hon. Members—I think that the hon. Member for West
    1476
    Ham, North was one of them—advocated that there should be a tax on betting over a wider field and my hon. Friend the Member for Surbiton, I think, made the same point again this evening. He said that we should look at the whole field of gambling. I have already said on a previous occasion that we would consider carefully those views which are, I know, sincerely held by many hon. Members. Of course, in any general review of a possible extension of the tax on betting, the position of the tax on Totalisators at dog racing tracks, and the countervailing licence duty on bookmakers which goes with it, would be a most relevant factor.
    Mr. A. Lewis: Of course it would be a relevant factor, but would the Minister go one step further and say that in any review that is made not only would it be a relevant factor, but that the matter would be dealt with on the basis of all forms of betting being fairly and properly treated, whatever taxation may be decided upon?
    Mr. Barber: As the hon. Member knows, I could not in fairness give any undertaking about what may happen as a result of the review. All I am saying is that this will take place.
    I must, however, warn the Committee on one aspect. Imposing and collecting a new duty, and particularly preventing its evasion, is not always as simple as might at first sight appear. In considering new extensions of duties, we have to consider carefully the extent to which efficient and economic collection of duty is possible. This was another matter which the hon. Member put to me when came to see me at the Treasury.
    I should like for a few minutes to consider the effect of the duty on the turnover at greyhound racing tracks. The hon. Member for West Ham, North said that there had been a drastic reduction. It is true that a duty at the rate of 10 per cent. must have some adverse effect. On the other hand, it would be wrong to conclude that the decline in turnover since the war has been due primarily to the duty.
    I have all the figures and should like to mention just one fact. Turnover of totalisators at greyhound tracks during the last ten years has been running at about £60 million a year, yet in the last

    1477
    year before the tax was introduced by Lord Dalton the turnover fell by more than £60 million. In other words, in that one year alone before the tax was introduced, there was a drop in turnover which was more than the average turnover for each of the last ten years. During the past ten years, as the hon. Member will be able to confirm, the turnover has remained remarkably steady. For example, ten years ago the turnover was £63·6 million. Last year, it was £61·3 million. The figures of the past ten years show remarkably little variation.
    Mr. A. Lewis: Going back to 1948, the Treasury got roughly £9½ million on the introduction of the tax. Last year, the figure was down to just over £6½ million. There has, therefore, been a fall of £3 million.
    Mr. Barber: It is true that in the first year, 1948–49, the duty collected was £9·4 million. Two years later, in 1950–51, it had fallen to £6·8 million. Now, eleven years later, it is still £6·1 million. In the year immediately before the introduction of the tax, however, the turnover of the totalisators fell from £199 million to £131 million. This is a relevant factor, because it shows fairly conclusively that it is an exaggeration to suggest that the fall in turnover is due primarily to the tax.
    Mr. A. Roberts: Why should a person who backs a dog at a race meeting on the tote pay tax, whereas a person backing a horse on the tote does not pay the tax?
    Mr. Barber: The hon. Member has misunderstood me. I was dealing with the point made by the hon. Member for West Ham, North, which is a relevant factor, and the likely effect, as far as we can judge it, of this duty on greyhound racing.
    I turn now to a consideration which has been in the minds of hon. Members who have spoken and which is certainly the most immediately relevant consideration—that is, the cost. As I said at the outset—
    Mr. Loughlin: Will the hon. Gentleman apply his mind to the turnover in dog racing to ensure that the position is correctly stated? Obviously, in ten
    1478
    years, the income per head of the population spent in pleasures of all kinds has increased. This applies equally to greyhound racegoers as to anybody else. Is it not true, therefore, that if the figure remains relatively static at £60 million, in real terms there is a reduction?
    Mr. Barber: I thought it right to give the figures because the hon. Member for West Ham, North—I noted his words—said that there had been a drastic reduction.
    Mr. A. Lewis: No. I said that the tax was one of the reasons for the reduction, but mentioned also bingo, television and other factors which accounted for some of it. I said that there had been a fall, but not that it had been drastic.
    Mr. Barber: I had better not pursue it, but if I am in order I will wager the hon. Gentleman £1 to 1d. that he said that there had been a drastic reduction.
    To return to the immediately relevant aspect, as I said at the outset the cost would be £6 million a year and together with the countervailing duty £7½ million.
    Mr. Lewis: Should I be in order, Sir William, in accepting the wager which the Minister has made of £1 to a 1d.? If so, I should like to do so, but not on the tote, because I should lose 10 per cent. tax.
    Mr. Barber: The cost would amount to £7½ million a year. If the total burden of taxation were to be reduced by £7½ million this year, is it conceivable that betting on greyhound tracks should have priority? I know how strongly the hon. Member for West Ham, North feels about this matter. In his exuberance he has contrived to ensure that on today's Notice Paper his name appears twice, in support of this Clause—a unique tribute to his assiduity.
    Mr. Lewis: I must not blame the Table for the mistake. All I can say is that the writing of some hon. Members is so bad that the Clerks could not differentiate between one bad signature, namely, my own, and that of another hon. Member whose name is nothing

    1479
    like mine. I excuse the Table completely, of course, but I did not sign twice.
    Mr. Barber: Perhaps I may conclude by asking again: is it really conceivable that betting on greyhound tracks should have priority this year? I do not think that even the hon. Member for West Ham, North would put his proposal before the other needs of some of his constituents.
    Mr. Fisher: This was not our point. We never asked that this tax should be removed and given priority in that way. All our speeches have been directed to the argument that my hon. Friend mentioned in his earlier reply, that we would like to see it spread so as to avoid the discriminatory element, but not to abolish £7½ million revenue. That was never suggested on either side of the Committee.
    Mr. Barber: I am grateful to my hon. Friend for clarifying that point.
    For reasons of order which are well understood, this Clause can only be concerned with the abolition of duty on greyhound tracks and not with the imposition of duty elsewhere. I should tell the Committee in fairness, in view of what I said on a previous occasion and also again today, that there can be no question of any immediate extension of taxation with this object. I have told the Committee what my right hon. and learned Friend proposes to do in the normal course during the coming year. The fact is—I mentioned this in view of the fact that the hon. Gentleman referred to the possibility of a Division on the Clause—that if the Clause were accepted it would result in a drop in revenue of £7½ million. I have tried to be as forthcoming as possible on this Clause. I am sure that the hon. Member for West Ham, North, who is so very fair about these matters, will understand that I cannot go any further. I therefore hope that in those circumstances he will not press the Clause this year.
    Mr. Loughlin: I shall not detain the Committee long, but I have been interested in the reply to which we have just listened. There is one thing about the Economic Secretary when dealing with these matters on the Finance Bill—he is always very patient and always
    1480
    very pleasant, but he is not very helpful. We find that difficult to appreciate.
    9.30 p.m.
    The only issue here is on the question of equity. We say that the Government should at some stage, if not at this stage, consider the question whether it is equitable for one type of race track goer to have a tax imposed upon him while it is not imposed upon another. I do not think it is a question of the rich man's sport and the poor man's sport. I think it is completely accidental. I do not think that the Chancellor of the Exchequer considers whether the race goer is wearing a top hat or a cap. Indeed, if experience proves anything it surely proves that if the Chancellor thinks the man in the top hat can pay more tax, the Chancellor is more likely to impose a tax upon him than on the fellow in the cloth cap.
    Once we accept that, then we should have some intimation from the Government that they will consider the matter now or on Report, if that is possible within the rules of procedure. They ought to give some indication that at some point of time they will actually consider the issue on the question of equity. The Economic Secretary said that there was likely to be a review, but when challenged on it he did not give an assurance on this question of equity. I think that he ought to be a little more forthcomiing and say that the Government agree that if a tax applies to one sort of racegoer it should apply to the other as well.
    Mr. A. Lewis: Sir William, you must have been very interested in this discussion. While appreciating the courtesy with which the Economic Secretary spoke, I must say that he really did not give us anything. All he did was to stand at that Box and admit —almost the whole of his speech admitted—each point put to him from both sides of the Committee. He said in effect, "It is true. It is correct. All that has been said is right." He said it was discriminatory. It is discriminatory; it always has been discriminatory. Because a thing has always been unfair and has always been discriminatory, that does not mean that it always should be, but the attitude of the Economic Secretary appears to be that that was and is the case.

    1481
    The hon. Gentleman then went on to say that we had not mentioned the fact that the surcharge had been dropped and that the 1 per cent. was off. This is a strange thing. He puts a percentage on and admits it is unfair and discriminatory and he adds to the discrimination and then he says, "Ah, but we have taken off the further surcharge. Therefore, you ought to be thankful for that small mercy." He went on to say what the reduction of this tax would mean.
    I just do not understand the hon. Gentleman's attitude. He admits it is discriminatory and unfair and he agrees that there is no logic in it and then he says that because we are getting between £7 million and £8 million a year from this tax we cannot afford to drop it. In other words, if we got only £100,000 a year, then, because the damage would not be so great and because it would not be so grossly unfair because only £100,000 a year was being paid, he would agree to drop it, but ecause it is between £7 million and £8 million a year, because it has been going on for fourteen years, because it is a big grievance and because it is a punishment, and a very severe punishment, he says we must continue it. I cannot understand his form of logic. Although the tax is unfair and discriminatory, nothing is to be done about it. To talk about whether or not the money is used in other ways is neither here nor there. The fact is that the Treasury has been getting this money wrongly for fourteen years.
    The Economic Secretary could now agree to drop the tax altogether and immediately get down to the job of finding out how any necessary taxation could be done fairly and properly. There are 101 ways of doing it. For almost fourteen years the same thing has been said over and over again by Treasury Ministers. Because they think that there would be difficulties, they will not agree to remove the tax. The hon. Gentleman does not know. He has not tried. Let him now remove the tax and put it on a fair basis. The Chief Secretary to the Treasury spoke about wanting to see taxation fair to all. Here there is £7½ million worth of unfairness a year, and yet the tax is to be kept on. The hon. Gentleman will not even go so far as to say that in any general review which he has half promised—he would not
    1482
    give a pledge about it—something would be done to ensure fairness all the way through in regard to the taxing of all forms of betting and gaming. If the hon. Gentleman cannot go any further, I shall ask my hon. Friends seriously to consider taking the matter to a Division.
    Mr. John McKay: In my district, this is a rather important issue. We have the Gosforth racecourse and we have dog racing also. I feel that I have a duty to perform in this matter in support of the new Clause.
    Although we may talk about fairness and justice, we cannot expect in the House of Commons to obtain justice in the fullest sense in all matters. The Economic Secretary has told us that the abolition of the tax would cost a good deal of money, and this is one of the arguments he uses against it. In spite of almost unanimous support for the new Clause, regardless of the views which have been put, of the strength of the case itself and of considerations of justice, the Government refuse to make a move. In logic, there is no argument which can be advanced against this proposal.
    The only reason why I do not participate in greyhound racing or in horse racing is the difficulty of finding the winners. I think that that is the difficulty of many of those who engage in them. Sport in itself is a great thing, but anyone who believes that greyhound racing is a sport has no idea of what sport is. I do not think there is much sport about greyhound racing. It is operated purely for gambling purposes. We in this country do not look on gambling as something odd. Whether one gambles on greyhound racing or on the Stock Exchange, it is still gambling. The purpose is the same—to try to get money regardless of the effects on society.
    As I have said, we cannot expect justice in this Chamber. Anyone who has much experience of the House knows that the Government are not particularly concerned with justice. When they either support or oppose a proposal, it is for a political reason. There is no doubt about what the Government should do here. I feel that this proposal has the support of the majority of hon. Members, both Labour and Conservative.

    1483
    If it is possible to influence the Government's mind, there is only one thing which they can do, and that is to accept the new Clause.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 45, Noes 179.

    Division No. 211.]

    AYES

    [9.43 p.m.

    Awbery, Stan

    Hynd, H. (Accrington)

    Silverman, Julius (Aston)

    Bennett, J. (Glasgow, Bridgeton)

    Irving, Sydney (Dartford)

    Skeffington, Arthur

    Brockway, A. Fenner

    Kelley, Richard

    Smith, Ellis (Stoke, S.)

    Brown, Thomas (Ince)

    Loughlin, Charles

    Snow, Julian

    Cliffe, Michael

    Lubbock, Eric

    Spriggs, Leslie

    Craddock, George (Bradford, S.)

    McKay, John (Wallsend)

    Stones, William

    Darling, George

    Mason, Roy

    Taylor, Bernard (Mansfield)

    Davies, Harold (Leek)

    Neal, Harold

    Thornton, Ernest

    Dodds, Norman

    Oswald, Thomas

    Tomney, Frank

    Ede, Rt. Hon. C.

    Owen, Will

    Wainwright, Edwin

    Edwards, Robert (Bilston)

    Parker, John

    Weitzman, David

    Harper, Joseph

    Pavitt, Laurence

    Woof, Robert

    Hill, J. (Midlothian)

    Pearson, Arthur (Pontypridd)

    Yates, Victor (Ladywood)

    Howell, Charles A. (Perry Barr)

    Probert, Arthur

    Howell, Denis (Small Heath)

    Proctor, W. T.

    TELLERS FOR THE AYES:

    Hunter, A. E.

    Rodgers, W. T. (Stockton)

    Mr. Arthur Lewis and

    Mr. Albert Roberts.

    NOES

    Altken, W. T.

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Oakshott, Sir Hendrie

    Ashton, Sir Hubert

    Hall, John (Wycombe)

    Osborne, Sir Cyril (Louth)

    Atkins, Humphrey

    Hamilton, Michael (Wellingborough)

    Page, John (Harrow, West)

    Barber, Anthony

    Harrison, Brian (Maldon)

    Page, Graham (Crosby)

    Barlow Sir John

    Harrison, Col. Sir Harwood (Eye)

    Paget, R. T.

    Barter, John

    Hastings, Stephen '

    Pannell, Norman (Kirkdale)

    Batsford, Brian

    Heald, Rt. Hon. Sir Lionel

    Partridge, E.

    Bell, Ronald

    Hiley, Joseph

    Pearson, Frank (Clitheroe)

    Bennett, F. M. (Torquay)

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

    Percival, Ian

    Biffen, John

    Hirst, Geoffrey

    Pickthorn, Sir Kenneth

    Biggs-Davison, John

    Hocking, Philip N.

    Pilkington, Sir Richard

    Bingham, R. M.

    Holland, Philip

    Pitt, Miss Edith

    Birch, Rt. Hon. Nigel

    Hollingworth, John

    Pott, Percivall

    Bishop, F. P.

    Howard, John (Southampton, Test)

    Powell, Rt. Hon. J. Enoch

    Box, Donald

    Hughes Hallett, Vice-Admiral John

    Prior, J. M. L.

    Boyle, Sir Edward

    Hughes-Young, Michael

    Prior-Palmer, Brig. Sir Otho

    Bromley-Davenport,Lt.-Col.SirWalter

    Hurd, Sir Anthony

    Profumo, Rt. Hon. John

    Brooke, Rt. Hon. Henry

    Hutchison, Michael Clark

    Pym, Francis

    Brown, Alan (Tottenham)

    Iremonger, T. L.

    Rawlinson, Peter

    Browne, Percy (Torrington)

    Irvine, Bryant Godman (Rye)

    Redmayne, Rt. Hon. Martin

    Bullard, Denys

    James, David

    Rees, Hugh

    Campbell, Gordon (Moray A Nairn)

    Jenkins, Robert (Dulwich)

    Renton, David

    Carr, Robert (Mitcham)

    Johnson, Dr. Donald (Carlisle)

    Ridley, Hon. Nicholas

    Cary, Sir Robert

    Kerans, Cdr. J. S.

    Ridsdale, Julian

    Channon, H. P. G.

    Kitson, Timothy

    Rippon, Geoffrey

    Clark, Henry (Antrim N.)

    Leavey, J. A.

    Robinson, Rt. Hn. Sir R. (B'pool S.)

    Clark, William (Nottingham, S.)

    Leburn, Gilmour

    Rodgers, John (Sevenoaks)

    Collard, Richard

    Lewis, Kenneth (Rutland)

    Roots, William

    Cooke, Robert

    Lilley, F. J. P.

    Ropner, Col. Sir Leonard

    Cooper, A. E.

    Litchfield, Capt. John

    Russell, Ronald

    Cordeaux, Lt.-Col. J. K.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Scott-Hopkins, James

    Costain, A. P.

    Longden, Gilbert

    Seymour, Leslie

    Coulson, Michael

    Loveys, Walter H.

    Shaw, M.

    Courtney, Cdr. Anthony

    Lucas-Tooth, Sir Hugh

    Skeet, T. H. H.

    Craddock, Sir Beresford

    McAdden, Stephen

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

    Deedes, W. F.

    MacArthur, Ian

    Smithers, Peter

    de Ferranti, Basil

    McLaren, Martin

    Spearman, Sir Alexander

    Donaldson, Cmdr. C. E. M.

    Maclean,SirFitzroy(Bute&N.Ayrs.)

    Steward, Harold (Stockport, S.)

    Doughty, Charles

    McLean, Neil (Inverness)

    Stodart, J. A.

    du Cann, Edward

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

    Storey, Sir Samuel

    Eccles, Rt. Hon. Sir David

    Macpherson, Niall (Dumfries)

    Studholme, Sir Henry

    Elliot, Capt. Walter (Carshalton)

    Maddan, Martin

    Summers, Sir Spencer

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

    Maitland, Sir John

    Talbot, John E.

    Emmet, Hon. Mrs. Evelyn

    Marten, Nell

    Taylor, Sir Charles (Eastbourne)

    Finlay, Graeme

    Matthews, Cordon (Meriden)

    Taylor, Frank (M'ch'st'r, Moss Side)

    Fraser, Ian (Plymouth, Sutton)

    Maxwell-Hyslop, R. J.

    Teeling, Sir William

    Gardner, Edward

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

    Temple, John M.

    Gibson-Watt, David

    Mills, Stratton

    Thomas Peter (Conway)

    Gilmour, Sir John

    Miscampbell, Norman

    Thornton-Kemsley, Sir Colin

    Glyn, Dr. Alan (Clapham)

    More, Jasper (Ludlow)

    Tiley, Arthur (Bradford, W.)

    Goodhew, Victor

    Morgan, William

    Touche, Rt. Hon. Sir Gordon

    Gower, Raymond

    Mott-Radclyffe, Sir Charles

    Turner, Colin

    Grant-Ferris, Wg. Cdr. R.

    Nabarro, Gerald

    Turton, Rt. Hon. R. H.

    Green, Alan

    Nicholson, Sir Godfrey

    Vickers, Miss Joan

    Gresham Cooke, R.

    Noble, Michael

    Vosper, Rt. Hon. Dennis

    Wakefield, Sir Wave11

    Wills, Sir Gerald (Bridgwater)

    Worsley, Marcus

    Walker, Peter

    Wilson, Geoffrey (Truro)

    Yates, William (The Wrekin)

    Walker-Smith, Rt. Hon. Sir Derek

    Wise, A. R.

    Ward, Dame Irene

    Wolrige-Gordon, Patrick

    TELLERS FOR THE NOES:

    Wells, John (Maidstone)

    Wood, Rt. Hon. Richard

    Mr. Chichestcr-Clark and

    Williams, Dudley (Exeter)

    Woollam, John

    Mr. Whitelaw.

    New Clause.—(INCOME TAX ALLOWANCE FOR IMPROVEMENTS TO RENTED PROPERTIES.)
    Where a landlord carries out improvements to controlled rented living accommodation then an annual allowance of ten per cent. of such cost to him shall he allowed for the ten years following as a deduction from gross rents received.—[Mr. W. Clark.]
    Brought up, and read the First time.
    Mr. W. Clark: I beg to move, That the Clause be read a Second time.
    The purpose of the new Clause is simple, and I hope that we will not spend too long on it, because it deals with a reasonably narrow point.
    The idea of the new Clause is to accelerate the modernisation of rented property. I fully appreciate that if one wants to improve rented property one can take advantage of improvement grants and standard grants, but I remind the Committee that, whereas standard grants are mandatory on local authorities, improvement grants are only discretionary and are not operated by all local authorities throughout the country.
    When one applies for an improvement grant, assuming that the local authority will accept it, quite often one gets the position where the landlord spends far more money on the property than is allowable for grant. I think that a simple example will explain the point I am trying to make. If one is spending £500 on improvement of property—and I hope that the Committee appreciate that it is only rent-controlled property in which I am interested in this new Clause —more often than not the local authority, the surveyors and so on, cut that figure from £500 to some lesser figure to take note of the maintenance element in the improvement. For the sake of my hypothetical example of £500, let us say that £100 is deducted as being ordinary maintenance which will obviously be allowed to the landlord under an ordinary maintenance claim. It leaves him with £400 as actual improvement to the property, and if the local authority concerned is operating the improvement grants scheme—and I remind the Committee that is discretion-
    1486
    ary—it means that the landlord pays out £200 on improvements.
    I appreciate that under the Housing Acts he can get an allowance for increased rental on this £200 improvement, and he can increase the rental of this controlled property to the extent of £25, but if one looks at this more closely, after deducting Income Tax at 7s. 9d. in the £ from £25, the landlord is left with a return of about £15 a year not for the £200 that he has spent. I think that that is working against the success that one hoped the improvement grants scheme would bring in the housing situation.
    Without deploying all the arguments, I am sure that everyone agrees that there is a tremendous amount of modernisation to be done in this country, and I am suggesting that the improvement grants could be improved. I am suggesting in this new Clause that of the improvement element of £200, 10 per cent. each year for ten years should be allowed as a deduction from gross rents. Then, if he were allowed to charge a capital allowance, or whatever it was called, of £20 per year, being 10 per cent, of £200, instead of a net return of £15, his return would be about £23.
    I do not intend to detain the Committee much longer, but I ask my hon. Friend whether he will give sympathetic consideration to this sort of allowance or benefit to landlords of rented property. It should be remembered that any improvement in property—and I have given figures to show that it is not all jam and honey for the landlord—would affect tenants all over the country and enable them to live in proper surroundings.
    With that brief introduction, I hope that my hon. Friend will find it in his heart to say that he will look at this sympathetically. I do not know what it would cost the Revenue, but whatever it was it would be spread over 20 years.
    Mr. Mitchison: I hope that the Government will be sympathetic to somebody else who has hardly been mentioned, the tenant. The landlord is

    1487
    not content with getting 7½ per cent. net on his outlay. It is proposed that he should be given 11½ per cent. net at the expense of other taxpayers. I see no reason whatever for any such concession, and I think it rather remarkable that seven hon. Members opposite have thought fit to put their names to this new Clause. They will not, of course, vote for it. They know that it is too ridiculous for that.
    As the hon. Member for Nottingham, South (Mr. W. Clark) frankly explained, the position about these improvement grants is that not only can a person get a considerable contribution from the local authority, but that the figures to which the hon. Gentleman was referring represent an increase of rent against the tenant of a controlled rented property.
    I should have thought that the Tory Party, with the Rent Act behind it, had done enough against the tenant already. The trouble about improvement grants is simply this, that landlords of private rented property are very slow to apply them, and if the Minister of Housing and Local Government were here he would be bound to say that that has been the difficulty for some considerable time.
    When this matter came before us during the course of legislation, the Tory Party voted solidly against a proposal that the tenant should be allowed to make the landlord pat in the necessary improvements. Apparently the only use which the Tory Party has for improvements is to increase the landlords' income, partly at the expense of the taxpayer, and partly at the expense of the tenant.
    10.0 p.m.
    Mr. Percy Browne: I am surprised to find the hon. and learned Member for Kettering (Mr. Mitchison) so incredibly out of touch with things as they are in the country. I want to go a little further in support of the new Clause than my hon. Friend has done in moving it, and I should like the hon. and learned Gentleman to come with me to the country districts, where he will find that many landlords are working people.
    The hon. and learned Gentleman has said that he does not like the expression
    1488
    "working class". Nor do I. I would call them ordinary working people, who own one or two properties, who are, in fact, unable under the Rent Restrictions Act and the £30 rateable value limit in the country, as it is now, to afford any improvements at all, to the detriment, not only of the property, but also of the tenants. The hon. and learned Gentleman may laugh, but if he came to my constituency I should be able to show him properties which come in this category. It seems to me that it is ridiculous for the Government to encourage the building of new houses on virgin land, while, at the same time, they allow structurally sound houses to fall into wrack and ruin, because the small landlords are unable to afford sufficient funds to make these improvements for the benefit of the properties, the landlords and the tenants.
    It is a fact that while the standard grant of £150 and a discretionary grant of £400 have been provided in spite of these, the landlord himself is bound to pay a considerable sum towards the improvements if they are to be done, and with properties such as I have just mentioned, they find it very difficult, if they have not got the money themselves, to provide it.
    Mr. Mitchison: I must point out to the hon. Gentleman that this Clause does not help the landlord to put up any money whatever. It merely increases the return on whatever money he does put up.
    Mr. Browne: Exactly. This is the point that I am making, and I am sorry if I have not been sufficiently explicit for the hon. and learned Gentleman to understand it. I trust that tomorrow he will read HANSARD to see what I have said. He will find that I am suggesting that this new Clause will help the small landlord who may have been left one or two properties, like a man who once worked for me. He was left two cottages, in one of which he lived himself, but he could not afford to do the improvements, nor to raise the money to do them. As the hon. and learned Gentleman well knows, if landlords are to provide these four amenities to comply with the regulations, they cost a considerable sum more than the £150 of the standard grant.

    1489
    I should have thought that this Clause would have been accepted by both sides of the Committee, because it would increase the amount of accommodation in the country and would enable landlords to improve properties which otherwise would go to wrack and ruin. The Government have paid a great deal of lip service to a "property-owning democracy". I regret that they have done nothing to encourage landlords to build houses for rent, which must be the future trend if we believe in the mobility of labour and want to increase the amount of accommodation. I believe that the Clause will do something to alleviate this difficulty, and I hope that it will be supported.
    The Financial Secretary to the Treasury (Sir Edward Boyle): This debate, short as it has been, has managed to engender, as this subject always does, a certain amount of controversy, and it reminds me of the wise remark of a famous historian, Sir Lewis Namier, that history is the story of the interplay between groups of men and tracts of land. I never hear this subject debated nowadays without feeling that he had something on his side.
    This new Clause provides that where a landlord carries out improvements to what is described in the new Clause as "controlled rented living accommodation that is to say, living accommodation subject to statutory rent control—then, an annual allowance of 10 per cent. of the cost shall be allowed for the 10 years following as a deduction from the gross rents received. It is a rather curious feature of the Clause as drafted—I criticised the drafting of a Clause put forward from the other side of the Committee yesterday, and I must in fairness do the same today with my hon. Friend's new Clause—that it makes no specific reference to taxation, though the rubric makes it quite clear that the intention of my hon. Friend is that the deduction should be allowed for Income Tax purposes. The expenditure which would be relieved under this Clause is capital expenditure and as such it would not normally qualify for relief from Income Tax. As the Committee will be aware, under the Income Tax Act, 1952 allowances may be given for capital expenditure on industrial
    1490
    buildings and to a certain extent on agricultural works, but not on dwelling-houses or commercial buildings. I notice that the proposal of my hon. Friends in this Clause bears a rather strong resemblance to the allowance which is given for new agricultural works under Section 314 of the 1952 Income Tax Act.
    I must say that at first sight I had some sympathy with this proposal. It is certainly a great deal more restricted in its scope than many proposals of a similar kind which have been put forward at one time or another. It relates only to improvements effected by landlords in properties subject to rent control. I appreciate the force of the argument that if a landlord is prevented from getting back the cost of improvements by raising the rent he ought to be given some other financial inducement to keep properties in good repair. I do not think one can stress the point too often that if we want to achieve steady rate of growth based on a first-class competitive national economic position it is important that we should make the best economic use of the assets we already have.
    Mr. Mitchison: The landlord is already allowed a statutory 2½ per cent. I am sure the hon. Gentleman has that in mind.
    Sir E. Boyle: Yes. I was merely saying that he ought to be given some financial inducement. I am coming to the 1961 Act very shortly in my speech.
    There is one defect in the proposal of my hon. Friends to which I wish to draw attention before coming to the main argument which I wish to put before the Committee. Except in those cases where a subsidy has been granted, rent control ceases when the property becomes vacant. In practice, the property is then usually sold, so that the landlord recovers the value of any capital expenditure he has incurred. The Clause makes no provision for anything of the nature of an Income Tax "balancing charge" to recoup the Income Tax relief given by the proposed allowance for improvements. I think I should carry my hon. Friends with me in saying that in principle it would not be equitable that a landlord should receive tax relief not only on the capital expenditure but on an expense which did

    1491
    not leave him permanently out of pocket in the end. There is, however, a much more important reason and I come to the principal reason why, while I have considerable sympathy with the object of the Clause, I would not advise the Committee to accept it.
    The reason is that the Government have already taken certain measures designed to encourage improvements to rent controlled living accommodation. I think we ought to see how those are working out before we adopt a proposal which would constitute a very big new departure in our system of capital allowances. The Rent Act, 1957, allowed a landlord to increase his rent in consequence of improvements to the property provided that the tenant had consented both to the improvements and to the increased rent.
    The limit of the increase in rent permissible under Section 5 of the 1957 Act was originally 8 per cent. of the amount expended on the improvement by the landlord, but the Housing Act, 1961, which came into force as recently as 24th November last year, raised the proportion of the net cost of improvements which can be added to the rent from 8 per cent. to 12½ per cent. That is the point I want to put to my hon. Friends because I am not sure that it is quite realised.
    In the debate on the Second Reading of the Bill last year my right hon. Friend who was then Minister of Housing and Local Government explained that this figure of 12½ per cent. had been fixed in the light of the existing tax position. He said these words, and I make one quotation from his speech because I think it extremely relevant to this debate, in talking about the change from 8 to 12½ per cent.:
    "This 8 per cent. is not a clear return. It is subject to Income Tax, like other forms of income. In the case of companies it is subject to Profits Tax as well. Out of what remains after tax has been paid the owner has to amortise this expenditure over the likely life of the property before he can get any return at all on his capital expenditure.
    Properties improved with the aid of standard grants may have a life of no more than fifteen years in front of them. In such cases a gross return of 8 per cent. not only provides no incentive to the landlord; it does not even leave him with enough to redeem his original expenditure after Income Tax has been paid at the standard rate…I am proposing,
    1492
    therefore…to increase the permitted return to 12½ per cent. This is reckoned, of course, only on the landlord's share of the expenditure…"—[OFFICIAL REPORT, 27th March. 1961; Vol. 637, col. 971.]
    I think that those words made it perfectly plain that the figure of 12½ per cent. for the permitted return—and the increase from 8 per cent. to 12½ per cent. —had been decided on in the light of our present rates of taxation. I therefore cannot help feeling that, even if there were no other considerations at all, it would hardly be consistent with the Government's approach during the passage of that Bill for us to alter the tax position only a bare six months after the Bill had passed into law. That is my principal reason—and, I think, a fair one—for asking my hon. Friends not to press this new Clause tonight.
    There is further evidence that the Government are not neglecting the social problem that has given rise to this new Clause. In addition to the scheme of rent increases for improvements, there is also a system of direct grants to landlords and owner-occupiers by local authorities for part of the cost of improvements. The Committee will know that the principal provision here is in Section 30 of the Housing (Financial Provisions) Act, 1958. Under Section 32, a grant of up to half the expenditure may be made, with an overall limit of £400 per dwelling. Furthermore, under the House Purchase and Housing Act, 1959, the local authority is obliged—subject always to the tenant's consent—to make such improvement grants where the improvement consists in installing a bath or shower, a wash-hand basin, or w.c., or certain other essential things.
    The Committee may remember that earlier this month my right hon. Friend the Minister of Housing and Local Government said that he was not fully satisfied with the use that was being made of those grants, and went on to say:
    "I believe…that more good can be done in the next phase if authorities could select particular areas of their towns to demonstrate to landlords and tenants alike what can be done, picking out streets where improvement or conversion is worth tackling and approaching landlords and tenants to enlist their interest."—[OFFICIAL REPORT, 2nd May, 1952; Vol. 658, c. 1144–5.]
    When we add that legislation together, it seems to me that the Government

    1493
    certainly have not neglected this important question of giving sufficient inducement to landlords to keep rent-controlled accommodation in proper repair. I entirely agree with my hon. Friends that this is an important subject both on social and economic grounds—and I hope that the Committee will have noticed that we have the pleasure in this debate of the presence of my hon. Friend the Parliamentary Secretary to the Ministry of Housing—but do let us remember, as I have said, that it was only at the end of 1961 that the amount of the landlord's net cost of improvements which could be added to the controlled rent was increased from 8 per cent. to 12½ per cent.
    That amount was fixed on the assumption that the additional rent would be subject to tax at normal rates. It is too early to estimate the result of that Act and, by the same token, I am sure that, a bare six months afterwards, it could not be right to grant an Income Tax allowance which would not only mark a very big departure in our scheme of capital allowances, but would upset the basis of legislation that has only recently been altered with the existing tax position in mind.
    It is for those reasons that, while I have considerable sympathy with the objectives of those who have moved and supported the new Clause, I could not advise the Committee to accept it. Therefore, in view of that explanation, I would ask my hon. Friends not to press it.
    10.15 p.m.
    Mr. Geoffrey Hirst: As hon. Members will observe, the home team is still batting—stonewalling as efficiently as ever. I must say, however, that the Financial Secretary, with his charm, persuasiveness and keen intellect, is a more interesting batsman, even if he makes no runs, than some other hon. Members on the Treasury Bench. We can, on that account alone, be impressed by his speech, but I cannot entirely join with the hon. and learned Member for Kettering (Mr. Mitchison) for, unlike him, I am not a wopping great landlord, if he will forgive the phrase.
    Mr. Mitchison: Nor am I.
    Hon. Members: Oh.
    Mr. Hirst: I understood that the hon. and learned Gentleman owned an acre or two.
    When I hear the hon. and learned Member for Kettering speak on this subject I am always under the impression that the scene becomes rather like a bull fight, where there are no bulls but only red flags.
    My remarks so far have not been entirely germane, so I must come to the matter at hand. While I have some sympathy with the views expressed by my hon. Friends, even if I do not share all of them, I must admit that I feel disappointed. The Financial Secretary always impresses me. I have great respect for him, but it is really tiresome, to be frank, to have this sort of stuff trotted out to us.
    The point at issue has already been explained and whatever this shopping list of legislation is all about, this business of it containing one potato, one banana and one totato would not keep anyone alive for very long. It may be a shopping list, but it is not a very adequate one. It seems fantastic that we should have spent in pursuance of a policy—which, incidentally, I would like to see more adequately pursued—great sums of money for building up our housing resources in this country and that, in spite of the magnificent effort of the Tory Party, it is still far short of what is actually needed. We really are treating this subject in an awfully bureaucratic way. While we spend these vast sums of money and while the subsidies are prodigious we find sensible, intelligent, well-educated and brilliant young men on the Front Bench arguing about £20 here or £30 there.
    Let us have a sense of proportion about this. I am not quite sure whether I get angry or just fed up over this. The Treasury representatives just do not seem to grasp the fundamental point which exercises the minds of we back benchers. Many of them were so much more brilliant when they were on the back benches, as I remember so well. This is really a simple issue, and it will be a shame if we are to continue to be bowed down with talk of administrative convenience, so-called fairness, and similar arguments which get us nowhere but which are adopted merely for argument's sake.

    1495
    I am rather attracted to some of those phrases—like "knock-about" and "tumbledown"—used by the hon. Member for Sowerby (Mr. Houghton). I like his phrases, in a way. They express so keenly and sincerely with much greater plausibility the views which I sometimes hold on a proposed new Clause such as that which we are now discussing.
    I was cross last night, and I have no doubt that I shall be cross again before we are through with the Finance Bill. I suppose, however, that it is only right that we should have our moods, for it would be rather tedious if we spoke in the same vein the whole time. I sometimes like to think that we can adopt one technique on one occasion and another technique when discussing another matter. I have been listening to the same sort of Civil Service handouts being trotted out by Ministers for twelve years now. Some Hon. Members have been listening to them for thirty years. I do not know how they have lasted so long.
    Whatever one might say about the way in which the Civil Service works and how it operates according to its prescribed ways, we are, by the proposed new Clause, trying to improve the facilities and comfort of tenants and the capacity of landlords to make provision for them. When my hon. Friend the Member for Torrington (Mr. P. Browne) spoke of how well we all knew about what was happening in this direction, I was tempted to tell him that this does not apply to his constituency alone. It applies throughout the country and when a man gets a few £s to invest in a house he does not automatically become a bloated landlord like a Clore or Cotton. They do not all become hon. Members for Kettering, for some of them are in quite a modest way.
    Mr. Mitchison: I cannot stand this any longer. I wish that the hon. Member
    1496
    would tell me whether he intends to divide the Committee or not.
    Mr. Hirst: It is not a question of dividing. I am trying to get the Government to see the merits of a first-class back-bench proposal. If I use the hon and learned Member for Kettering by way of illustration he only adds to my case, and he must forgive me if I find it amusing. I hope that my hon. Friend the Financial Secretary will find that I have been thoroughly gracious towards his speech, in spite of difficulties, but with all possible persuasiveness and with all the fun and the odd quips, I still say that here we have a first-class Clause the design of which may not be perfect but which obviously has a clear intent.
    One thing that gets people down is the perpetual knocking down of back-bench Amendments or Clauses, whether from this side or the other side of the Committee, on the ground that because of the way they are drafted they do not do something which we want to do. It is a lovely way out, and perhaps if I stood at the Dispatch Box, which God forbid, I might use that excuse as well. But it does not get us anywhere. It does not profit us or add much to the strength, dignity and standing of those who answer debates, if year after year they say that the way a Clause is drafted is undesirable and they never produce the answer for which back-benchers have prayed or have demanded.
    Mr. W. Clark: Any disappointment is difficult to accept, but in view of the Financial Secretary's reply to the effect that we should see how the present provision goes on, because it has been in operation only for six months, and in the hope of better things to come, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(REBATE FOR EXPORT EARNINGS.)
    From the income tax and profits tax payable by a trading concern there shall be granted as a deduction from tax payable in the year following assessment an amount of one per cent of export turnover as certified by the auditors to the concern and agreed with the Commissioners of Inland Revenue.—[Mr. W. Clark.]
    Brought up, and read the First time.
    Mr. W. Clark: I beg to move, That the Clause be read a Second time.
    I should like to say at the outset how grateful we are for the presence of my right hon. and learned Friend the Chancellor of the Exchequer who, I understand, will reply to the debate. The hour is late and I do not want to delay the Committee. I fully appreciate that the new Clause is, if not incorrectly, then probably inadequately drafted. Its object is to give a rebate through the fiscal system for exports on turnover.
    If we take exports at £4,000 million a year, to give a 1 per cent. rebate would cost the Exchequer £40 million. As I have said, the Clause probably requires amendment and redrafting, but to put the case as shortly as possible, I would say that we must accept that throughout the world many of our competitors are, in one way or another, through their taxation system, giving an incentive to their own exporters
    One has only to mention West Germany with its turnover tax, France with its added tax value, and Italy and Japan, four of our greatest competitors, who help their exporters, through the taxation system. I agree that it would be much better for all concerned if all export incentives ware deleted, and this is the policy of Her Majesty's Government. But we have to accept the facts of life. Our competitors do not play the game this way. They are giving tax incentives to their exporters. We must therefore look at our taxation system and consider whether we cannot recast it so that we can give our exporters an advantage equal to that of our competitors. The F.B.I. report came out flatly against export subsidies but—and this is not always mentioned—the report also says that the Government should look at the
    1498
    whole taxation system to see whether it could be recast in order to assist exporters more. Obviously any recasting of our taxation system would take a long time; I suppose a conservative estimate of that would be about two years. However, I am certain that we must do something in the long term to put our exporters on a par with exporters in competing countries.
    So far as the short time view is concerned, our balance of payments position at the moment seems perfectly satisfactory, or as satisfactory as one might expect. But if in the short term it were to appear likely to worsen, then, despite our agreement with G.A.T.T., the Government should see whether it is possible to get G.A.T.T. to agree to give an export incentive.
    As I said earlier, I do not wish to prolong the debate. Most of the arguments that can be deployed are known to hon. Members. I should like once again to thank my right hon. and learned Friend the Chancellor of the Exchequer for being here to reply to this debate.
    Mr. Tomney: I hope the hon. Member for Nottingham, South (Mr. W. Clark) will not withdraw this Clause if he should get a dusty answer from the Chancellor. He has opened a debate far wider than I believe he appreciates, and if the Chancellor's reply is unsatisfactory there ought to be a Division on the Clause.
    The hon. Member referred to our balance of payments position and the situation of British exporters in the highly competive and specialised world of commercial manufacture. It is true that the manufactures that we are exporting have in the last ten years, in a period of consumer demand, enjoyed a very advantageous position, and so have other countries. But other countries have been looking further ahead than we have. The hon. Gentleman mentioned Germany and France in particular, with special credits and tax remissions for exports. We in this country may, before we know where we are, be faced with a problem concerning our capital industries, to which problem there is no easy answer, even by tax concessions of the kind to which the hon. Gentleman referred.

    1499
    Tonight I have received a deputation from men employed in an aircraft factory in a constituency next to mine, many of the men living in my constituency. These men are 80 per cent. skilled throughout the whole factory, enjoying pension conditions, in an industry which has specialised in aeroplane engines for forty years. The factory is owned by Messrs. Napier. The change in demand for aircraft, due to changing demands in the Services, has resulted in a complete run-down in this industry which has been employing men in an age group for which alternative employment will not be easy—men mostly in their 40's and 50's.
    There is, however, a double edge to this problem. In the engineering industry, which has been crying out for apprentices for years, the estimated amount spent on each apprentice by an engineering employer works out over a term of apprenticeship at £1,200. Therefore, in addition to losing the trade, we are also losing the capital value of the apprentice engineer Who may not be able to find alternative employment.
    10.30 p.m.
    How far does the Tory Party want to go? Germany, for example, which was completely devastated by bombs, had the advantage of building up from scratch new industry, buildings and plant. France, after a succession of Governments, and whose economic conditions put her in peril for years, has adopted fiscal measures and planning which has put French industry at the top within a period of five years. This country has done nothing except to join in the bonanza throughout the world for consumer goods, which in the long run are not beneficial to British industry. This nation, whose reputation was built upon its engineering capacity and its capital goods, should have looked to its resources far sooner than we have done.
    To whom will this fiddling little Clause, with its rebate for exporters, apply? To whisky exporters or to capital engineering exporters? It should apply in far broader terms than the hon. Member for Nottingham, South (Mr. W. Clark) has mentioned. If an industry like the aircraft industry is faced with the prospect of not getting markets for its products—
    1500
    and American competition is severe—what must it do?
    Would the party opposite support, for instance, a proposal for special terms of credit, ten years in arrear, to countries which cannot afford prompt payment—to India or to China, for example, with their huge markets for helicopters, or to Russia or the South Americans, who cannot afford to operate the normal commercial methods? Are the Government prepared to do that to retain in this country skilled personnel who may be needed in an emergency?
    Having geared the population to a high degree of efficiency and built them up into an engineering force, will the Government adopt fiscal policies which do not guarantee their future or will they acknowledge that we are in competition with the rest of the world and that the Germans, for example, have had special protection from their Government?
    Are the Government prepared to extend to countries which cannot afford to pay through the normal operations of finance a longer term of credit at a lower rate of interest, and how will they set about it? It will not be done by the new Clause. British industry is at the point of change and will meet difficulties whether we join the Common Market or not. We cannot in this respect depend upon the Commonwealth, because our share of its trade has been falling.
    If our competitors overseas are given tax concession advantages which are not applicable to our industries, is the remedy to make the consumer industries enjoy big exports and pay for our capital industries which are essential for the prosperity of the nation? The new Clause is not the way to do it. Our problem is to maintain our residue of capital manufacturing plant and labour on an extended basis, and the Conservative Party must think in much broader terms if it is to do a real service to the country.
    Mr. Gower: When this sort of proposal has been raised in general terms in the past, we have been told that such a concession is undesirable in itself. We have been told that it is undesirable because it would confer a benefit only on the exporter and not on some of the industries which supply him. We have been told that it is undesirable because it might lead to a sort of war

    1501
    between exporting countries which would be self-defeating and we have been advised that some of our exporting rivals who had used devices of this kind had undertaken to cease doing so. In spite of all those arguments, it seems to me that, in seeking perfect justice internally here, we have been neglecting to give our industry a fair chance in dealing with these competitors who certainly have not ceased to use devices of this kind. The fact is that today we are fighting the export battle in many cases like a man fighting with his hand tied behind his back, while our competitors have been going ahead with all sorts of advantages and incentives which are given to these exporters.
    I have been brought up against this in a very active way by having one or two constituents who not only have business interests in this country but, by reason of compensation they have had following the Jewish persecution in Germany, have also returned to the ownership of factories on the continent, and they have assured me that in their German-owned firms they have advantages in seeking exports which they do not get in their British-owned firms here. It seems to me that that alone establishes the case, if not for the terms of this new Clause, certainly for a much more go ahead policy by the Treasury and, indeed, by the Board of Trade, to see what can be done in this direction.
    I sincerely hope, therefore, that my right hon. and learned Friend will be able at least to give us an assurance that in future greater effort will be made by the Government, and in particular by the Treasury, to see what reasonable advantages can be given to our exporters in what is, after all, a very desperate competitive battle. We may try to observe the rules of cricket, the rules of the game, but they are not always observed by our competitors.
    Mr. Hirst: In view of my earlier remarks, I want to say I am glad to see the captain of the team put himself in to bat. I cannot really imagine that we are going to score any more runs, but at least he knows only too well that I like to see him in his proper place.
    Mr. Loughlin: Last man in.
    Mr. Hirst: I am very grateful to the Chancellor for coming in to listen to this short discussion.
    I cannot interpret all my hon. Friends' views, but I think I am not going too far when I say that I imagine that this new Clause is—as I myself, at least, have said it is—a probing amendment in the hope that the Chancellor is going to give us some indication of what we intend to do in the light of the circumstances which surround us.
    The report of the Federation of British Industries has been referred to. If I have got to declare an interest in this—I have not really—it is that I do serve on a number of the Federation's committees. The report has sometimes been divorced from its broad surroundings. It is absolutely true, and I share this view, that the Federation did report itself against export subsidies. I do not want my right hon. and learned Friend to think I am appealing here in any sense for subsidies, but the report made perfectly clear in the context that the Federation anticipated and hoped that there would be a reorganisation of the whole taxation system so that our traders would thereby be helped to compete with their competitors abroad. I think that wants to be put like that, because this statement has been divorced from its proper context.
    Nobody on either side of this Committee can conceivably want our traders not to be able to compete on fair and equitable terms with their competitors in the world. It is not entirely so. It is perfectly clear that for some time all sorts of systems have been worked and are working—and not just tax rebate schemes—which have and have had a subtle influence in France and Italy—detrimental to our exporters. I hope we can have a statement that this point is being taken and action taken to solve it, perhaps through international machinery which exists, or by some other method, to ensure that our traders can compete—and not only on the basis of the Common Market—and have a fair crack vis-á-vis their competitors abroad in the areas in which they work.
    That is what we are hoping to get. It may be a tall order to expect the Chancellor to answer the whole case; some

    1503
    of it falls within the responsibility of the President of the Board of Trade.
    A lot of people in this country, and, indeed, quite a few in this Committee, are not satisfied at the present time that Her Majesty's Government are as sufficiently realistic and as trade-minded as other countries are in their various policies, and recognise to the full the need to ensure that our exporters are not placed at a disadvantage because we choose to show to the rest of the world, though we are not in the same position as in the past, a sort of wonderful example. Of course, it was a great treasure to be able to do that, but it cannot be maintained for all time when our sphere of influence is not as great as it was in years gone by.
    If we accept that as the situation, then we must fight all the harder to ensure that our position remains where it should be—that is, competitive in fairnes and in equity. We must not live in a fool's paradise but must meet the situation really firmly.
    The Chancellor of the Exchequer (Mr. Selwyn Lloyd): If I may say so without unduly restricting my opportunities in the Committee, I agree with a great deal that has been said from both sides during the debate. I am not going to take drafting points. My hon. Friend is quite right. There are some, and also there is the question of cost. I think that my hon. Friend who moved the new Clause mentioned the figure of £40 million, but it would, in fact, cost between £35 million and £40 million.
    I am sympathetic to the spirit behind the Clause, which is export promotion. No single topic has taken up more of my time since I became Chancellor of the Exchequer than export promotion. With my right hon. Friend the Secretary of State for the Colonies and my right hon. Friend the President of the Board of Trade, we have carried out a complete reorganisation of the credit facilities for exports. In answer to what the hon. Member for Hammersmith, North (Mr. Tomney) said, these were particularly designed to help the heavy industries. In fact, we have gone so far that some of our competitors have said that we have overstepped the line of fairness in our export facilities.
    1504
    It must also be remembered that we want exports for which we are paid and it will not solve our difficulties to go on giving more and more credit facilities to countries whose credit worthiness is not very great, to say the least of it. I believe that we have been absolutely right in what we have done so far. I think that we have now a very good system both of credit insurance and also of improved methods for the provision of medium and longer term credits in which the banks and the insurance companies are co-operating.
    The Government have co-operated to the fullest capacity in the work of export promotion. I think that we can take some credit for the very great success in what has been happening in Stockholm this week. I think that it has been a very well run piece of work, and I am sure that it will benefit our exporters very much. As I say, I want to do everything that can be done to help to promote exports. I have been searching for incentives, but they must be those which come within the spirit and letter of our international obligations. In this I am certainly borne out by the Report of the Forbes Committee. I certainly had the point put to me time and time again by the T.U.C., and I think that I can call in aid the hon. Member for Cardiff, South-East (Mr. Callaghan), who said:
    "I would also give export incentives. The Chancellor is wrong about this"—
    I do not know why the hon. Gentleman should say that—
    "There should be financial export incentives, which, I am certain, could be devised to coincide with our international obligations."—[OFFICIAL REPORT, 10th April, 1962; Vol. 657, c. 1173.]
    The hon. Gentleman said that on 10th April.
    My whole trouble has been to find incentives which coincided with our international obligations.
    10.45 p.m.
    We do not pursue this policy of trying to preserve some international rules in this matter because we want perfect justice. We do it because we think that it is in the practical interests of this country, in our economic interests, to try to have these rules preserved. When people say that they are not being observed by other countries, I ask for

    1505
    the evidence. I do not always receive the evidence to support these statements, but I tell the Committee frankly that there are certain things being done by Italy, for instance, which are not consistent with the rules. Representations have been made to the Italian Government about this, and they are being made also, I understand, by other members of the E.E.C.
    There is an arrangement in France which, in our view, would not come within the rules in relation to depreciation, and that is being changed. The French are altering their depreciation methods from the straight line method to the reducing balance method of calculation, in which case, I understand, the objection will no longer apply. Japan is the third country. We have made representations in regard to the Japanese arrangements for a tax concession which is due to expire in 1964. This is a matter very much under current discussion.
    Those are the only three countries involved, with one or two exceptions where matters do not affect us so much, namely, Australia and the Irish Republic. Apart from those, I have given the situation in regard to our three main competitors.
    It is frequently alleged that there is a benefit to the German exporter from the turnover tax and there is benefit to the French exporter from the added value tax. Those propositions are disputed. What I have accepted fully and in good faith is the recommendation of the Forbes Committee that the Government should make an urgent study of the fiscal system with the object of determining whether the export effort could be assisted by changes in the present pattern of the distribution of taxation and in the type and scope of indirect taxation. We are doing that, and pushing ahead as quickly as we can.
    One of my hon. Friends said that, of course, if we were to recast the whole system of indirect taxation, it would take about two years. Also, if we are thinking of a major operation like that, we have to be very certain that we are right. For instance, about a year ago, the turnover tax was all the rage. I am told that the Germans are off that now and they are on to the French added value tax. I understand also that both the French
    1506
    and the Germans have a sneaking liking for our system of the Purchase Tax type of operation. I am pressing on with this business. I am having full and detailed studies made of the alternative systems, and I am certain that we must think very seriously about this matter, whether we go into or stay out of the European Economic Community.
    We have had some arguments about the distribution of taxation already at other stages of the Bill. We must have the proportions right between indirect and direct taxation, and we must consider whether our present methods of indirect taxation are those best designed both to keep the right sort of economic climate at home and to give the maximum benefit to our exporters.
    I assure the Committee that I am not in the least complacent or satisfied or, indeed, idle about this matter. One spends a great deal of time thinking about it. I promise that I shall press on with the study I have already instructed shall be carried out in regard to these two particular taxes, the turnover tax or the added value tax, and whether it would be beneficial for us to undertake the major operation of trying to change over. In the circumstances, I hope that my hon. Friends will not press the new Clause. In any case, I do not think that it is the right new Clause even from their point of view, though I assure them that I have full sympathy for the motives which led them to put it down.
    Mr. Hirst: I am sure that the answer will be "Yes" to this question. Will my right hon. Friend say that the study to which he has referred will include a study of relative differences in depreciation allowances, which went quite well for us in the United Kingdom in the first year but afterwards turned out rather badly? Will that be one of the aspects of the taxation system to be considered?
    Mr. Lloyd: It will not be included in this particular study because I have already had a separate study made of it. This, too, is a matter which has been very much in my mind. I do not think that we are anything like as badly off as we think we are. In all these things it is the grass on the other side of the fence which seems greener. I do not think that our system is as bad or as

    1507
    long drawn out, relatively, as is sometimes suggested. I have had comparative analyses made. I would be glad to talk to my hon. Friend about it. The time may come for some action on it.
    Mr. Callaghan: The Committee has listened with attention to the right hon. and learned Gentleman, and I do not think we should part with this Clause yet, because if there is one thing that should concern the right hon. and learned Gentleman more than anything else, it is, as he said, exports. Indeed, exports must be an obsession with any Chancellor, and I was glad to hear what he said on the subject.
    As I have looked round during the past few months, I have felt that the Government are paying considerable attention to this problem in a number of what I call minor ways. I hope that this is not offensive, but it seems to me that they are rather small things. The arrangement with the insurance companies by which they undertook to set aside £100 million was helpful, and the banks undertook to do the same thing. The trade fairs are also helpful, and I congratulate the Government on what they are doing in that regard.
    But the fact remains that at the end of the day the situation is almost wholly unsatisfactory. I am sure that it must have been disappointing to the Chancellor to find that, after his July measures, exports fell back from the level they had obtained during the first and second quarters of last year, and in the third and fourth quarters were lower than in the first two quarters. In the first quarter of this year they were still lower than they were before the pay pause was introduced, taken on a quarterly basis. This must have been disappointing even more to him than to the rest of us.
    I want to make a complaint here. I do not know whether it is due to electoral considerations or not, but the Government are constantly in a state of Freudian complex on this matter. They are torn between telling the truth and wondering about electoral prospects. We have been through the phase in which we were told the truth about exports. Now, alas, we are going through the phase when the Government are considering electoral prospects, or are being
    1508
    misled by the slight increase that has taken place in the first four months of this year.
    There has been a slight increase in exports by comparison with the miserable level they sank to in the second half of last year. We have been told in the newspapers—I do not hold the Chancellor responsible for the headlines but certainly there is some inspiration somewhere—that we are on the up and up, that things are getting better, and that, thanks to last July's measures, we are on the way. That is really complete rubbish. Within six months we could be back in the same position that we were a year ago.
    It gives me no great pleasure to say that, although there might be some party advantage in doing so, but the sort of increase we have had in our exports goes nowhere at all towards solving our problem. We cannot hold the Government wholly responsible for this, although I must say that whoever coined the foolish phrase "exporting is fun" should have his head examined and be drummed out of the Government.
    Exporting is not fun. It is jolly hard work. It means much research into markets, the necessity to go abroad, and the filling in of forms, among other things. To say that it is fun seems to me to be the product of the amateur mind at its worst. What is needed is a substantial change of attitude by many of the people concerned with exports. Take the case of Fords—
    The Deputy-Chairman: Order. I must remind the hon. Gentleman that we are discussing a Clause which is quite limited in scope. It can, of course, to some extent be used as a peg on which to hang illustrations but he must not go too far in connection with exports.
    Mr. Callaghan: I am sorry, Sir Robert. Perhaps I was going a little far, but I thought that the Chancellor put a tin opener into the tin and opened it up quite a bit for us. However, I will try to relate what I am saying to the question of fiscal incentives.
    On the whole, I support the idea behind the Clause, but I do not think that the fiscal incentives which might be devised in this or any other Clause would be sufficient. I do not know whether I am in order in referring to a

    1509
    firm where I believe fiscal incentives would have little effect—Fords. The position in Fords is a disgrace to everybody concerned. There seems to be no industrial leadership and no industrial discipline of any sort, and the sooner that situation is cleared up the better it will be for the nation as a whole.
    I am sure that unless we get a different approach to problems in our industries, especially in the motor car industry, which is letting the nation down in its attitude to these problems, a different approach by both management and employees, there will not be much use in relying on simple, small, fiscal incentives of this sort. I am certain that it cannot be done from this Committee or from the Government but must be done locally, and I regret very much the absence of discipline on the one side and leadership on the other, particularly in Fords.
    I readily concede that so far I have not been able to devise a scheme of fiscal incentives—but my knowledge of Income Tax is extremely rusty—which will keep us within the four walls of what we desire. I sent one scheme to the Chancellor, or the President of the Board of Trade, but I was told that it was out of order. If he tells me that he cannot find one, and I know how ingenious the Inland Revenue is, then I suppose that may be true.
    Nevertheless, I shall ask the hon. Member for Nottingham, South (Mr. W. Clark) to vote for his new Clause. I want an opportunity of expressing in the Lobby my belief that whether this new Clause meets it or not, there is a case, because of the obsession which any Chancellor and the Committee must have with exports, for carrying to the limit the question of whether we can find some way of helping our exporters to do a much more difficult job than the
    people who are supplying the home market are doing.
    I do not mind using discriminatory taxation if it is discrimination in a good cause, and I think that the Committee would agree that discrimination in favour of getting more exports is a matter of saving the country's position. If there is one thing we need above all, as the Chancellor has told us more than once, it is that we should have a high rate of growth. We cannot achieve that until exports go up. I believe that part, but only part of that, is to give some fiscal incentive to exporters.
    If the hon. Member will press his new Clause, we shall be glad to support him in the Lobby on the general principle of the approach which I have indicated and not because we think that his new Clause is technically perfect.
    Mr. W. Clark: I think that all hon. Members will agree that we have had a worth-while debate on exports. The hon. Member for Cardiff, South-East (Mr. Callaghan) has been a little unfair, because I think that the Chancellor has given a categoric assurance that he is going into the matter. I think that everyone will agree that the new Clause is so simple in its application that it would probably not help exports. But the object has been achieved, and the hon. Member for Cardiff, South-East agreed that this has been a worth-while debate. It has been a peg on which to hang our arguments and, in view of my right hon. and learned Friend's categoric assurance, I beg to ask leave to withdraw the Motion.
    Several Hon. Members: No.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 56, Noes 138.

    Division No. 212.]

    AYES

    [10.59 p.m.

    Abse, Leo

    Fletcher, Eric

    Hunter, A. E.

    Awbery, Stan

    Forman, J. C.

    Irving, Sydney (Dartford)

    Bennett, J. (Glasgow, Bridgeton)

    Fraser, Thomas (Hamilton)

    Jenkins, Roy (Stechford)

    Blackburn, F.

    Galpern, Sir Myer

    Jones, Dan (Burnley)

    Bowden, Rt. Hn. H.W. (Leics. S.W.)

    Ginsburg, David

    Jones, Jack (Rotherham)

    Callaghan, James

    Gourlay, Harry

    Kelley, Richard

    Cliffe, Michael

    Harper, Joseph

    Lawson, George

    Crosland, Anthony

    Hayman, F. H.

    Lewis, Arthur (West Ham, N.)

    Davies, G. Elfed (Rhondda, E.)

    Herbison, Miss Margaret

    Millan, Bruce

    Davies, Ifor (Gower)

    Hill, J. (Midlothian)

    Mitchison, G. R.

    Diamond, John

    Houghton, Douglas

    Noel-Baker, Francis (Swindon)

    Finch, Harold

    Howell, Denis (Small Heath)

    Oram, A. E.

    Fitch, Alan

    Hoy, James H.

    Pearson, Frank (Clitheroe)

    Pursey, Cmdr. Harry

    Stewart, Michael (Fulham)

    Williams, W. T. (Warrington)

    Redhead, E. C.

    Stones, William

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

    Rodgers, W. T. (Stockton)

    Taverne, D.

    Zilliacus, K.

    Ross, William

    Thomas, lorwerth (Rhondda, W.)

    Short, Edward

    Wainwright, Edwin

    TELLERS FOR THE AYES:

    Soskice, Rt. Hon. Sir Frank

    Williams, LI. (Abertillery)

    Mr. Charles A. Howell and

    Spriggs, Leslie

    Williams, W. R. (Openshaw)

    Mr. Grey

    NOES

    Agnew, Sir Peter

    Glyn, Dr. Alan (Clapham)

    Powell, Rt. Hon. J. Enoch

    Aitken, W. T,

    Gower, Raymond

    Price, David (Eastleigh)

    Ashton, Sir Hubert

    Green, Alan

    Prior, J. M. L.

    Atkins, Humphrey

    Gresham Cooke, R.

    Prior-Palmer, Brig. Sir Otho

    Barber, Anthony

    Hamilton, Michael (Wellingborough)

    Pym, Francis

    Batsford, Brian

    Harrison, Col. Sir Harwood (Eye)

    Rawlinson, Peter

    Bennett, F. M. (Torquay)

    Hastings, Stephen

    Redmayne, Rt. Hon. Martin

    Berkeley, Humphry

    Heald, Rt. Hon. Sir Lionel

    Rees, Hugh

    Biffen, John

    Hiley, Joseph

    Ridsdale Julian

    Biggs-Davison, John

    Hirst, Geoffrey

    Robinson, Rt. Hn. Sir R. (B'pool, S.)

    Bingham, R. M.

    Holland, Philip

    Roots William

    Birch, Rt. Hon. Nigel

    Hollingworth, John

    Scott-Hopkins, James

    Bishop, F. P.

    Hughes-Young, Michael

    Seymour, Leslie

    Black, Sir Cyril

    Irvine, Bryant Godman (Rye)

    Shaw, M.

    Bossom, Clive

    James, David

    Skeet, T. H. H.

    Box, Donald

    Johnson, Dr. Donald (Carlisle)

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

    Boyle, Sir Edward

    Johnson, Eric (Blackley)

    Smithers, Peter

    Brewis, John

    Kitson, Timothy

    Steward, Harold (Stockport, S.)

    Brooke, Rt. Hon. Henry

    Leavey, J. A.

    Studholme, Sir Henry

    Brown, Alan (Tottenham)

    Lewis, Kenneth (Rutland)

    Summers, Sir Spencer

    Browne, Percy (Torrington)

    Lilley, F. J. P.

    Talbot, John E.

    Bullard, Denys

    Litchfield, Capt. John

    Tapsell. Peter

    Campbell, Gordon (Moray & Nairn)

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Taylor, Sir Charles (Eastbourne)

    Carr, Robert (Mitcham)

    Longden, Gilbert

    Taylor, Frank (M'ch'st'r, Moss Side)

    Channon, H. P. O.

    Loveys, Walter H.

    Teeling, Sir William

    Chichester-Clark, R.

    Lucas-Tooth, Sir Hugh

    Temple, John M.

    Clark, Henry (Antrim, N.)

    McAdden, Stephen

    Thomas, Peter (Conway)

    Clark, William (Nottingham, S.)

    Mac Arthur, Ian

    Tiley, Arthur (Bradford, W.)

    Collard, Richard

    McLaren, Martin

    Turner, Colin

    Cordeaux, Lt.-Col. J. K.

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

    Vickers, Miss Joan

    Coulson, Michael

    Macpherson, Niall (Dumfries)

    Vosper, Rt. Hon. Dennis

    Courtney, Cdr. Anthony

    Maddan, Martin

    Wakefleld, Sir Wavell

    Craddock, Sir Beresford

    Marten, Neil

    Walker, Peter

    Currie, G. B. H.

    Mathew, Robert (Honiton)

    Walker-Smith, Rt. Hon. Sir Derek

    Dalkeith, Earl of

    Maxwell-Hyslop, R. J.

    Ward, Dame Irene

    Deeds, W. F.

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

    Williams, Dudley (Exeter)

    Donaldson, Cmdr. C. E. M.

    Mills, Stratton

    Williams, Paul (Sunderland, S.)

    du Cann, Edward

    Miscampbell Norman

    Wills, Sir Gerald (Bridgwater)

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

    More, Jasper (Ludlow)

    Wilson, Geoffrey (Truro)

    Errington, Sir Eric

    Noble, Michael

    Wolrige-Gordon, Patrick

    Finlay, Graeme

    Oakshott, Sir Hendrie

    Wood, Rt. Hon. Richard

    Fisher, Nigel

    Page, Graham (Crosby)

    Woollam, John

    Fraser, Ian (Plymouth, Sutton)

    Partridge, E.

    Worsley, Marcus

    Gammans, Lady

    Pearson, Arthur (Pontypridd)

    Yates, William (The Wrekin)

    Gardner, Edward

    Peel, John

    Gibson-Watt, David

    Percival, Ian

    TELLERS FOR THE NOES:

    Gilmour, Sir John

    Pitt, Miss Edith

    Mr. J. E. B. Hill and Mr. Whitelaw.

    New Clause.—(ABOLITION OF STAMP DUTY ON CONVEYANCE AND TRANSFER OF STOCKS AND SHARES.)
    In relation to instruments made or executed on or after the first day of August nineteen hundred and sixty-two, the head of charge Conveyance or Transfer on Sale in the First Schedule to the Stamp Act, 1891, shall cease to apply to conveyances and transfers of stocks and shares.—[Mr. Deedes.]
    Brought up, and read the First time.
    Mr. W. F. Deedes: I beg to move, That the Clause be read a Second time.
    This new Clause is directed to the Stamp Duty on the transfer of stocks and shares. We think that there is a case for the Committee and the Chan-
    1512
    cellor to give this matter fresh and critical attention. I do not want to trouble the Committee at this hour with the history behind this duty except to say that the duty is one of a range imposed in 1891 and doubled in 1947 by the then Chancellor, Mr. Dalton. The duty was then raised from 1 per cent. to 2 per cent. It was raised by the Chancellor in 1947 on the ground that no important change had occurred since Sir Austen Chamberlain had doubled other duties under the Act in 1920, two years after World War I. This being two years after World War II, the Chancellor thought there was a case for an increase. It was, perhaps, more symmetrical than sensible. It was then estimated that

    1513
    doubling the tax would yield another £20 million, and I think that today, in all, it brings in about £50 million. I am aware that property adds probably 50 per cent to that sum but does not carry the same international consideration.
    It is clearly easy to collect this duty, and I have no doubt at all that that to some extent accounts for its continuance, but other considerations now sharply arise. Foremost among them is the place of the City of London as the principal international market in the world, and the place to which it aspires in the period that lies immediately ahead.
    There is no question that the transfer Stamp Duty is a disincentive to overseas investment in British securities through the London market, and there now seems a strong possibility that the influence of the Common Market will lead, not to the expansion of the City's international business, but to an increasing trend to conduct transactions in British securities overseas rather than in the London market.
    This was discussed last October by delegates to the Conference of European Stock Exchanges in London, when it was confirmed that foreigners not only regard the duty as a barrier to investment but that they can, and do, take steps to avoid paying it. It is a fact that foreign markets are developing in a number of British-registered securities. By remaining in the name of a foreign nominee corporation, and by the issue of subsidiary certificates, these securities can be transferred permanently without payment of the duty. According to the latest return, over 2 million shares in Imperial Chemical Industries are registered in the name of Sicovam, which is also reported to be the third largest registered holder in Courtaulds Ltd.
    It could be added, of course, that this duty is an obstacle to the small invester, a fact that must be borne in mind by a Government that seeks to encourage the wider ownership of shares. But it is our position in foreign markets that is the main point that we want to press in this new Clause. I would remind the Committee of the position in another field enjoyed by the auctioneering firms of Sotheby and Christie. They occupy
    1514
    that position in the world of international auctioneering very much because of the fact that their terms compare favourably even with those offered by Paris and New York.
    We believe that this juncture in our relations with Europe is the moment to consider afresh the handicap imposed on our international business. The removal of the duty would make sense to a lot of people, both here and abroad. Moreover, it would do much to restore confidence in London's place as an international business centre. I assure my right hon. Friend that this is not simply a plea, as many of the speeches made on a Finance Bill must be, for the relief of taxation, but a plea for a fresh assessment by him of what is at stake in this field of our international and invisible earnings. Such an assessment must show the unwisdom of this duty in present circumstances.
    11.15 p.m.
    Mr. Brian Harrison: I rise to support the proposed new Clause. Shortly before by right hon. and learned Friend introduced his Budget I spent a fortnight in Germany, not with any politicians or military experts, but mainly with bankers. I came back absolutely convinced that in the Common Market Germany was determined to dominate the financial side. It was said to me time and again that they had no fear of any competition from the market in London as long as there was a 2 per cent. duty such as we are seeking by this proposed now Clause to remove.
    It was said to me quite spontaneously time and again, and it was obvious that the psychological effect of such a charge was tremendous and would cause a great loss of business to London if and when we join the Common Market. I am not in a position to judge what the value of the City of London is as a financial institution and an invisible export to Britain. I know that in some of the commodity markets it is arguable whether it contributes a lot to our balance of payments position.
    I would have thought that, in the money market sphere at any rate, there was a considerable or potential benefit to our balance of payments and to the financial strength of this country. It seems illogical, therefore, that we should

    1515
    cut our own throat and this possible advantage by this charge. I would also think that it was singularly appropriate that the charge should be removed when there was a compensating charge in the form of a speculative gains tax introduced in the same Finance Bill.
    I ask my right hon. and learned Friend, therefore, to look carefully at this problem to see whether, on stocks and shares, apart from property, it is not possible to remove the Stamp Duty so that the City of London may be able to contribute very greatly to the prosperity and balance of payments of this country should we enter the Common Market.
    Mr. F. M. Bennett: I have only a word to add to what has already been so ably said, but if it were earlier we might have a lengthy useful discussion on this subject. As has been pointed out, because of the introduction of a speculative gains tax it would seem that good domestic reasons make it opportune and desirable that the Stamp Duty were removed.
    I will concentrate my remarks on one feature which has already been mentioned; our present capacity for international competition. It is not a hypothetical proposition which is contained in the proposed new Clause, because I happen to know of one instance where a short time ago a large American institution wanted to invest in Europe. That organisation's representatives came to London with the intention of investing through London. They then went to the Continent and found that they would save a considerable amount of money if they invested there rather than through London—all because of the 2 per cent. Stamp Duty.
    The suggestion has been made that its removal will be important if we enter the Common Market. The whole point is that it will be equally important if we do not because, if we stay out, it will be more important than ever that we are fully competitive. At the moment someone wishing to invest in a certain market must choose between coming to London, where he pays the 2 per cent. Stamp Duty, or going to the Continent, where he pays nothing.
    If one looks at the Continental Stock Exchanges one finds that they mark up
    1516
    prices so as to be just under the cost of buying securities, available there, and through London, with the 2 per cent. Stamp Duty. One immediately sees the advantage of buying on the Continent. It is always dangerous to prophesy, but I have no hesitation in saying that it is an absolute certainty, whether or not my right hon. and learned Friend feels able to make some concession tonight, that it will not be long before he is forced, by events, to make it. It may be this year or next but there cannot be the slightest doubt that, sooner or later, a Chancellor will have to withdraw the Stamp Duty. He will find that the remorseless course of events will make him withdraw something which is putting us in London at a disadvantage with our competitors. This will obtain whether or not we go into the Common Market.
    Mr. Edward du Cann: I should like to endorse what my hon. Friends have said in their cogent arguments. One of the most striking features of our balance-of-payments position last year was the increase in overseas investment in United Kingdom securities. I speak without refreshing my memory, but I believe that during the whole year the total investment was about £186 million of which about £155 million came within the last six months of the year, which is a practical indication of interest in our market now being taken by overseas investors. It is true to say that London is potentially the finest, most efficient and effective market in the world. If we go into the Common Market we want to develop it as such.
    I hope that the Chancellor will be able to tell the Committee that this is a matter which he has in mind and will continue to have in mind in the future. I hope that he will regard this as one of several related matters which require consideration at the same time. It is true to say that the incidence of the 2 per cent. ad valorem transfer duty is a brake on investment and a deterrent to home and overseas investment. Similarly it is true that the rate of duty charged on the transfer of bearer securities requires examination. It is equally true that the whole machinery of transfer requires examination and improvement, and that the rate of withholding

    1517
    tax is a larger deterrent to overseas investment in United Kingdom securities than any of the matters so far mentioned. I hope that my right hon. and learned Friend will be able to say that this whole matter, including the quantum of ad valorem duty, is being examined and that he will do his best to see that our hopes for the development of the London market in future will be realised.
    Mr. Hirst: The Committee is hopelessly overdue for some concession from the Government on this Bill. It has been perfectly apalling to sit here all these days without having the slightest concession. I am the first to admit the realism of what the new Clause means and that few of us imagine that my right hon. and learned Friend can meet this item at present. I am not sure of the figures, but I think that something like £50 million would be involved.
    I do not want to get into difficulties for the future, but I would be reasonably satisfied if I felt confident that the Chancellor had taken the point and realised, as my hon. Friends have made only too clear, that this will not be in future entirely a matter of choice. Therefore, my right hon. and learned Friend might as well get down to thinking that something must be done in future whether or not it unbalances his Budget.
    The international aspect has been stressed and that is by far the most important. I support my hon. Friend the Member for Taunton (Mr. du Cann) in what he said about the whole system of Stamp Duty, transfers and the rest. We are behind the times. We are in no position to compete internationally. It is not the fault of the organisations concerned but of the Treasury, which has never allowed us to get into proper trim.
    The Stamp Duty is also one of those other additional disincentives to saving. Whatever happens to the Stock Exchange —and a few people have learned recently that it does not always go one way—saving enables more and more people to take a larger and larger share in running the country's industry. It is by far the best way. This is a disincentive. I hope that in this context of saving my right hon. and learned Friend will realise that this is an additional factor that this Clause seeks to meet, over and above that which is involved in international competitiveness to which attention has
    1518
    been drawn. He not only has an obligation to this country in the international scene but a long overdue regard for the need to encourage saving which is one of the fundamentals of Tory policy which in this field—not in others—we have been neglecting.
    I never expect very much on these occasions, but I hope that I shall not be disappointed, and that my right hon. and learned Friend will not need one of those unfortunate demonstrations which are sometimes needed to make the Government take notice of us.
    Mr. Selwyn Lloyd: I am grateful to my hon. Friends for the way in which they have advocated this new Clause. Obviously I shall not avail myself of one argument to which my hon. Friend the Member for Ashford (Mr. Deedes) referred. It is true that this is the cheapest of all the Inland Revenues to collect, but I promise that I will not be unduly biased in favour of it for that reason, although it is not altogether irrelevant.
    It was suggested that I should start thinking about some of these matters, and I agree with my hon. Friend the Member for Taunton (Mr. du Cann) that there are wider issues involved here. There are current considerations of the question of transfer going on, and this is part of a rather larger problem. We have been doing some thinking about those wider issues. The responsibility does not rest wholly with us, but it may be necessary for us to facilitate what other people have decided upon by a use of the legislative process. That matter is in hand and I do not think we are responsible for delays in respect of it.
    The main argument in all the speeches has been the international consideration. It has been suggested that the present rate of duty is a disincentive. I must say to my hon. Friend the Member for Taunton that the figures which he gave do not show much sign of it being a disincentive. In fact, there has been a very considerable movement into stocks and shares of this country from Europe and elsewhere. Of course, it is possible to take two views about this type of business, but I do not think the Stamp Duty is a disincentive.
    Nevertheless, having made these reservations, I think the arguments put forward are very persuasive and I have

    1519
    much sympathy with them. I promise to consider them carefully, but I say frankly that this proposal would cost £50 million in a full year. Moreover, I do not think it would be easy to stop it there, and if it were continued to conveyances of other property such as land and houses it would cost £75 million in a full year. I am afraid that anything of that sort is not possible within the framework of this Finance Bill.
    I also promise to remember what my hon. Friend the Member for Taunton said about priorities when considering future action in this field. We must be careful to get the priorities right. Having said that, I hope my hon. Friend will not press this proposed Clause.
    Mr. Jay: The Chancellor, in the course of future deliberations, should also take note of this fact. Investment by overseas persons in this country, which may or may not be desirable on other grounds, leads not to invisible exports but to invisible imports. It leads to the payment of dividends from this country to overseas, and therefore the whole of that case for this Clause is invalid.
    11.30 p.m.
    Mr. Deedes: I am grateful to my right hon. and learned Friend for what, I thought, was a sprig of hope which ended his speech in reply to the new Clause. In the circumstances, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    The Chairman: In calling the next new Clause—(Allowance for travel to work)—I think that it will be convenient also to discuss the later new Clause—(Allowance for travelling expenses.)
    Sir Charles Taylor: On a point of order, Sir William. Is it fair to call the new Clause at this time of night, at half-past eleven? It is a Clause about which many people feel strongly. Could we not move, That the Chairman do report Progress and ask leave to sit again?
    The Chairman: I would not be prepared to accept that Motion. It is perfectly in order to move the Clause.

    New Clause.—(ALLOWANCE FOR TRAVEL TO WORK.)
    In connection with any assessment for liability for income tax, where a person proves that he has incurred expenditure by way of fares paid on public transport in travelling between his normal residence and the place where the income is earned he shall be allowed such expenditure as an expense wholly, necessarily and exclusively incurred by him in earning such income.—[Mr. Channon]
    Brought up, and read the First time.
    Mr. H. P. G. Channon: I beg to move, That the Clause be read a Second time.
    Unlike my hon. Friend the Member for Shipley (Mr. Hirst), I cannot pretend to be an old soldier in the affairs of this Committee. If anything, I am a fairly new recruit. Therefore, I am optimistic as to the fate that awaits my new Clause.
    Mr. Hirst: My hon. Friend will learn.
    Mr. Channon: This is, indeed, the first time I have ever dared to intervene in a discussion in Committee on the Finance Bill. I am emboldened to do so because of the deep interest felt by many people, of which my hon. Friend the Member for Eastbourne (Sir C. Taylor) has spoken. This is a matter of great concern to large sectors of the population.
    As far as I know, the proposal contained in the new Clause has never been debated specifically in this Committee or the House, although a new Clause in the name of my hon. and learned Friend the Member for Hove (Mr. Marlowe) was discussed in June, 1960, and we are discussing another in his name with mine. The difference between my hon. and learned Friend's proposal in 1960 and my new Clause tonight is that he would place a limit on the amount that could be claimed as legitimate travelling expenses.
    I wish briefly, in view of the lateness of the hour, to outline the case of the commuter public. There are in my constituency and in that of my hon. Friend the Member for Southend, East (Mr. McAdden), who has been an enthusiastic protagonist of the commuter's cause, many thousands of people who come up to work each day in London. Hon. Members who either live or work in London should be delighted about that, because it is surely indisputable that we

    1521
    do not want our big cities—not only Landon—to become even more crowded.
    I understand and I hear from London Members that there is an acute shortage of housing in London. In that case, my right hon. Friend the Minister of Housing and Local Government should be delighted that everyone who works in London does not also live there, otherwise the acute shortage of accommodation would be even worse.
    There is no doubt that large numbers of people, either just before or just after the war, moved out of London to live but continued to work here because they were told that they would thereby get cheap fares to work. I do not want to weary the Committee with a table of figures, but since, obviously, my constituency is the one which I know best, I should like to give one brief example of the type of effect that that had upon people who travel to work each day.
    In 1938, the yearly season ticket rate from Southend to Fenchurch Street was £24 19s. These figures will concern my hon. Friends, because they will be typical of many other constituencies. In 1946, a yearly season ticket cost £34 4s., and by October, 1950, the figure had risen to £44 11s. Under the temporary order of the Transport Tribunal this year, to be introduced, I believe, with effect from 3rd June, the cost is now to be £93 12s. It can be claimed with justification that this more than doubling of the fare during the past eleven years has become a serious problem for those who travel to work from constituencies like mine. One of my hon. Friends exclaims "Oh." Does he disagree with me?
    No one would pretend that people whose railway fares have doubled in the last 11 years have not a serious problem indeed, and it is a problem which they cannot escape, and there seems no ground to hope that in future this will not be further increased. I think it is very clear that the fares paid by people who have to travel to work day by day have shot up astronomically.
    There may be hon. Members opposite who think they ought to subsidise railway fares to help with this problem. I am not one of those who believe the railways should be a social service, and I do not blame Dr. Beeching for putting fares up if he thinks it necessary in the
    1522
    interests of the railways, because it is his job to make the railways pay—a difficult enough job it must be, and always will be. I think the problem is completely different, because equity in taxation is placed fairly and squarely on my right hon. and learned Friend the Chancellor.
    On the last occasion this Committee discussed a similar proposal by my hon. and learned Friend the Member for Hove (Mr. Marlowe) there had been a long discussion on the nature of business expenses and what should or should not be allowed to rank as business expenses. I think I am right in saying, though I say so with some trepidation in the presence of the hon. Member for Sowerby (Mr. Houghton), that the Inland Revenue allows any expenses which are wholly, necessarily and exclusively incurred by the claimant in his business.
    Mr. Douglas Houghton: In the performance of his office.
    Mr. Channon: I am most grateful to the hon. Gentleman. He knows these technicalities so well and I do not know them as well yet.
    I know it has been said that these railway season tickets to work are not such expenses, but I must say that in logic I completely fail to understand this argument, because I do not believe the Inland Revenue or any hon. Member imagine that people travel to London day by day, frequently in overcrowded and uncomfortable conditions, just for the fun of it. They travel because they have to work there, and if they did not work in London they would not come, and if they did come it would be no part of my case that they should be allowed to claim the expense.
    My right hon. and learned Friend has introduced into his Budget this year a speculative gains tax, not just for revenue purposes, as he himself has said, but because he thought it just and equitable that such gains should be taxed. I suggest to my right hon. and learned Friend and to the Economic Secretary that the discontent there is in the country about business expenses in general is that some people get away with a great deal and some people have their expenses rigorously scrutinised and have a very difficult time. This may or may not be a feeling which is justified, but I am convinced that there is no reason whatever in logic why a managing director of a

    1523
    firm may be picked up by a car with a chauffeur and taken to his office and have that treated as an allowable expense while my constituents who have to travel in difficult circumstances to London day by day to work do not.
    My hon. and learned Friend in the 1960 debate on a similar Clause to this drew attention to the fact that it was in relation to public transport. I should have thought my right hon. Friend the Minister of Transport—and I hope my right hon. Friends will take the point—would be grateful that in this new Clause my hon. Friends and I do not encourage even more private cars to come to London than do come at present. Of course, that would increase the cost of the proposal enormously.
    The difference between my new Clause and the new Clause of my hon. and learned Friend the Member for Hove is that his would place a limit of £104 a year, or £2 a week, upon such expenses. My purpose is to draw attention to the principle, and I think that if the Committee accepts the argument for the principle it will also agree in logic that there should be no limit, provided the expenses can be shown genuinely to have been incurred in the way I have outlined. I recognise that for revenue purposes it may be impracticable all at once to adopt the proposals I have put forward, in which case I would be prepared to adopt as a first stage the proposal of my hon and learned Friend the Member for Hove.
    I will not make more than a passing reference to the Amendment in the name of the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), but I would ask why the hon. Gentleman placed it on the Order Paper when on the last occasion that we debated the matter he put down an Amendment in exactly the terms of the new Clause which I have moved tonight. However, the hon. Gentleman was not present on either occasion.
    I think the whole Committee would join with me in saying what I personally feel about the absence of the hon. Member for Orpington (Mr. Lubbock), and of any other hon. Member of the Liberal Party who has in the past laid claim to support commuters and the travelling public, that after tonight no
    1524
    member of the Liberal Party can say that they have any real interest in the matter.
    Mr. Paul Williams: Is my hon. Friend aware that on this occasion there is complete unanimity among the members of the Liberal Party?
    Mr. Channon: I do not want to be drawn any further on that subject.
    I would point out that any travelling expenses that I propose should be exempted would have to be not only wholly and exclusively incurred but also necessarily incurred, in which case I should not think that the travel of the office boy would be an allowable expense. Indeed it would not, and under my proposed Clause it would never become one.
    Before I sit down I wish briefly to deal with two other points. It will be no good my hon. Friend saying that it is a new principle.
    Sir Spencer Summers: My hon. Friend laid great stress on "necessarily incurred" in this context. Will he say how he deals with the distance from work that it would be necessary for that person to live?
    Mr. Channon: It varies very much indeed, but if someone is at the moment genuinely going to a place to work day after day then it should be allowed.
    Sir S. Summers: Surely it could be argued that it was necessary for such a person to live nearer if he wished to claim the expense?
    Mr. Channon: My hon. Friend may take that view, but I think it is different from that of my right hon. Friend the Minister for Housing and Local Government and others. With respect, I do not think that my hon. Friend is on a good point there.
    As I was saying, it will be no good my hon. Friend the Economic Secretary saying that this is a new principle and cannot be accepted on those grounds, because the hon. Member for Sowerby said earlier that there was a clear precedent in the Finance Act, 1942, later embodied in Section 159 of the Income Tax Act, 1952, under which a small

    1525
    allowance was given to a person incurring extra travelling costs because
    "…his place of work or his residence has changed through circumstances connected with the war…"
    I noticed the other day that one of my hon. Friends suggested that this allowance should be abolished. I do not share that point of view. Indeed, I think that it should be considerably expanded.
    Mr. Houghton: Has the hon. Gentleman read paragraph 237 of the final Report of the Radcliffe Committee?
    Mr. Channon: I have in my hand the Report of the Royal Commission on Taxation of Profits, and I was about to invite the attention of the Committee to paragraphs 236 and 237 of that Report, because, as the hon. Member for Sowerby says, the Royal Commission recommended that there should not be the allowance that I propose this evening. It is foolish for an hon. Member to set himself up against a distinguished Royal Commission. I would refer the hon. Gentleman in particular, and the Committee as a whole, all the members of which, I am sure, are seized with the point, not only to paragraphs 236 and 237 of the Report, but also to paragraph 240. I will quote from paragraph 240 for the benefit of the hon. Member for Sowerby.
    Mr. Callaghan: He knows all about it.
    11.45 p.m.
    Mr. Channon: Then I will quote it for the benefit of my hon. Friend the Economic Secretary:
    "Cases like these show that there is often a very narrow dividing line between the expenses of travelling in the course of a job (which are deductible) and the expenses of travelling to and from a job (which are not). A man whose employment takes him between, say, office and factory or between two factories can deduct his travel expenses; so he can, if his employment takes him from home for one or more nights. On the other hand, theoretically, if he went from home to the office one day and to the factory on another, he would not be allowed the expenses of travel on either day."
    If anyone can defend that as logical or fair taxation in the 1960s, I shall be very surprised to hear it. I am sure that my hon. Friend the Financial Secretary, if he takes the surprising course of resisting my new Clause, will do so on quite different arguments.
    1526
    In his last speech on the subject, my hon. and learned Friend the Member for Hove drew attention to the fact that, if this rule were changed, those who drew retirement pensions and were limited by the earnings rule would have a further disincentive to taking a job in that most of the small amounts they were allowed to earn could be eaten up in travelling expenses. I quite appreciate that acceptance of the principle of the new Clause would be both difficult and expensive. Obviously, there would have to be a lower limit; otherwise, we should have days wasted on a few pennies and shillings. There might have to be an upper limit on the ground of cost. I hope that my hon. Friend the Economic Secretary, if he has to reject the Clause, will not do so upon narrow theoretical grounds but will deal with the principle of it. There are many thousands of people who travel to work each day, unpleasant and expensive as that may be, and they are completely at the mercy of Dr. Beeching.
    Mr. Callaghan: At the mercy of the Government.
    Mr. Channon: I am glad to hear these interruptions in my speech. I hope that the hon. Member for Cardiff, South-East will support me, though, having regard to the attitude taken by his hon. Friend the Member for Sowerby last time, I rather doubt it.
    Mr. Denis Howell: If the travelling public want to take themselves out of the mercy of Dr. Beeching and buy a car, then the hon. Gentleman wishes to exclude them automatically from the benefit he proposes.
    Mr. Channon: For precisely the reason I gave a few minutes ago, if the hon. Member had followed me. It seems to me to be absolutely futile to argue that we should have even more cars on the roads than we have already. Perhaps it is all right in Birmingham, but it is certainly not all right in London.
    No matter how high the fares may go—and they have risen sharply in recent years—my constituents, and the constituents of many hon. Members, have to go on paying these fares unless they are prepared to take the agonising decision of either changing their whole home life or changing their present excellent

    1527
    jobs and finding that there are not, perhaps, good equivalent jobs in the neighbourhood.
    As Members of Parliament, we are in a particularly difficult situation. It is continually pointed out to me in my constituency that we have free travel either by public transport or by private car when we go from our constituencies to the House of Commons. No doubt, that is wholly, necessarily and exclusively incurred in being a Member of Parliament. But I assure the Economic Secretary that the expenses of these daily travellers is equally so.
    I ask my hon. Friend not to underestimate people's feelings and their wish to share in the rising standing of living. It is true, of course, that the first interest of people is that their cost of living should remain steady. My hon. Friend may say that he has overwhelming grounds for saying that my scheme, or even a modification of it, is impossible; but they will have to be completely compelling, and the cost would have to be enormous, before I could take that view.
    At the time when the Government have bravely brought in the Transport Bill effectively to reorganise the railway system, I ask my hon. Friend not to forget the people who travel on the railways at ever increasing cost—and the people who travel on them more than anyone else are the daily commuters to work. Even if he can make no concession, perhaps he can use his influence to persuade the B. T. C. to do something for these people, who are completely at the mercy of Dr. Beeching and rail fares and have no alternative but to go on paying ever increasing costs. It is in the hope of doing something to help these commuters, or at least of ventilating their case in this Committee, that I have moved this Clause.
    Mr. Stephen McAdden: I am delighted to have the opportunity of following my hon. Friend the Member for Southend, West (Mr. Channon). It is true that he is not an old soldier in this Committee, but the principle of his Clause is, for it has been put down in previous years. Unfortunately, there is validity in the point made by my hon. Friend the Member for Eastbourne (Sir C. Taylor) that it is regrettable that a matter of such con
    1528
    cern should fall to be discussed at such a late hour. The last occasion on which this arose, in 1960, was in the small hours of the morning, when hardly any one was present.
    There are rather more present tonight, but many of those who profess to take an interest in the subject are not to be found. It was stated in my constituency two weeks ago that the principle of the Clause was the official policy of the Liberal Party, but not one Liberal has bothered to come to this debate.
    It is important to appreciate that the arguments which might have been advanced with validity against the Clause in former times do not hold now. It has been argued that the question of where a person lives in relation to his work is a matter of personal choice, and if he finds it inconvenient or expensive to travel twenty miles to work, he should move nearer. That argument does not hold good today.
    Mr. Callaghan: Not under the Rent Act.
    Mr. McAdden: Whether it be due to the Rent Act or not, I do not mind the hon. Member making a debating point of it, but the fact remains that it is not so easy to live near one's employment as it was. I am glad to have the support of the Opposition Front Bench in that.
    This principle has been resisted in the past by the trade union movement, which was frightened of the effect on trade unionists already enjoying the benefit of free travel. In the last twelve months, however, the T U C. has had a change of heart and has agreed to support the principle. I am delighted. I hope that the hon. Member for Cardiff, South-East (Mr. Callaghan) will make a fiery speech in support of the principle. I am sure he would like to be in line with trade union thinking on this matter.
    I hope that the Chancellor will also pay attention to the illogical way in which we treat travel to and from work. On the Underground, I see notices advertising vacancies. They state that the people working on the Underground can have free travel both on and off duty. If this is not a permitted expense for the purpose of earning a living, then presumably it is an emolument of office.

    1529
    If it is an emolument of office, do the Income Tax authorities gross up for the purposes of taxation the emoluments involved in free travel on and off duty? If they do not, why should there be this disparity of treatment between people employed on London Underground and those who live in my constituency and who do not enjoy these benefits and privileges? These are matters which should be considered by my right hon. and learned Friend. Those who have to travel long distances to attend their place of employment have a much stronger case for claiming these as legitimate expenses than those already recognised in the use of luncheon vouchers for free meals.
    Mr. Leslie Spriggs: Does the hon. Member for Southend, East (Mr. McAdden) appreciate that if the Income Tax inspectors take any more from the railwaymen by not allowing them free travel many railwaymen will have nothing left?
    Mr. McAdden: I am not suggesting that the Income Tax inspectors should take more from the railwaymen. I am only pointing out the illogicality of the treatment of these forms of employment. If the wages of railwaymen are being kept down by this concealed subsidy of free travel on and off duty, I would prefer it to be abolished and the railwaymen paid better wages but paying their own fares. If the Chancellor can treat one section of the public in that way, let him treat all members of the public in the same way.
    Hon. Members opposite know that in the building trade, for example, the Income Tax authorities allow men to claim travel expenses at the rate of 4d. a mile from the employment exchange nearest their home to where they work. That is done at the discretion of the Income Tax authorities. Why should there be this preferential treatment for building trade workers and not the chap who happens to be a bank clerk?
    My hon. Friend the Member for Southend, West pointed out that the new Clause was restricted to public transport and the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) is anxious that we should widen its scope. We are concerned only with
    1530
    public transport, because if the new Clause were extended to cover cars—and the hon. Member prefers travelling in cars to travelling in public transport —it would be of great benefit to my right hon. Friend the Minister of Transport, and he needs some help from time to time.
    Parking on the Embankment has recently been reduced or stopped. A man interviewed on television was asked why he drove his car to London every day and then left it parked on the Embankment all day long. He said that the reason was that he lived at West Ham. But there is a perfectly good train service from West Ham which could put him down at Blackfriars, the Temple, or Charing Cross, and there is no need for him to use a car. The only reason, as everybody knows, is that one can find all sorts of arguments to convince the Income Tax inspector that one's car is required for the purposes of one's business and not just for getting one from home to one's place of employment. We all know that these "fiddles" go on and that there is no secret about them. Therefore, I am sure that much of the traffic which comes into London and other great cities would be prevented by the granting of this concession.
    If my right hon. and learned Friend says that the expense would be very great and that the Treasury cannot afford it and that we have not suggested other ways of raising the revenue which would be lost, that is not the point. If it is fair and just that people should be entitled to these things, the Treasury must devise some other ways of raising money. If the Treasury is short of ideas, I should be happy and delighted to offer some suggestions. The Economic Secretary will remember that only a couple of days ago I made some very valuable suggestions to him, from which I hope that he will profit, of ways in which revenue might be raised. I am sure that people would prefer money to be raised in that direction than by seeking to place the insufferable burden of a high cost of transport on people who have to travel to where they earn their livelihoods when it is Government policy to get people away from the large industrial centres.

    1531
    For those reasons, and those advanced by my hon. Friend the Member for Southend, West, I hope that it will not be thought that this is a matter which concerns merely the great County Borough of Southend. This is a matter which concerns all those who have large numbers of people living outside our industrial centres. I hope that a great deal of consideration will be given to this question, and that we shall not be written off with the excuse that it will cost a lot of money, because if a thing is unjust we should not take money from it in this way. We should find some other way of getting it. There is no justification for saying that because it will mean the loss of a lot of money to stop it we should go on doing it. I support my hon. Friend, and I hope that the Chancellor will give earnest consideration to this proposal.
    12 m.
    Mr. Julian Ridsdale: I am afraid that the Committee is running rather late, like British Railways, but I hope not to detain the Committee for too long. I welcome the opportunity which this new Clause gives for raising the problem of railway commuters who are a little further away from London than are the constituents of my hon. Friends.
    The commuters to whom I am referring are those who live 70 miles from London. My hon. Friend the Member for Barry (Mr. Gower) may laugh, but he does not understand the intense feelings of some of these commuters who have had their railway fares increased by no less than 100 per cent. in the last five years. This is a considerable increase for professional and small business men, and I welcome this opportunity to ask whether anything can be done to help them.
    I have been told that to agree to the proposals in this new Clause would cost £120 million. If this is so, then obviously in the content of this Budget this proposal is a non-runner. But are the Government aware of the feedings of these travellers? A few years ago they were told by the British Transport Commission that cheap and reasonable fares were available for them. The fact is, however, that in the last two or three years their fares have been increased by 100 per cent. These people sold
    1532
    their houses in London and went to live in new houses seventy miles away in north-east Essex. They are not now able to repurchase their old houses because house prices have risen considerably in London. As a result, they find themselves in an extremely difficult situation.
    I suggest that a better way of dealing with this is for the Government or the British Transport Commission to give long distance travellers a rebate of, say, 5 per cent. up to 50 miles, and 10 per cent. up to 70 miles. It is in the interests of the housing problem in London to encourage commuting, but the British Transport Commission seems to do everything possible to stop such travellers. Indeed, the Commission seems to be acting—
    The Deputy-Chairman: Order. On this new Clause we are not discussing the British Transport Commission. We are discussing a tax rebate for travelling expenses.
    Mr. Ridsdale: I appreciate that, Sir Robert. I was putting forward a possible alternative which has been proposed by the Seaside Resorts Committee. I accept your Ruling, but I plead with the Government to press for some alternative arrangements if they do not think that this new Clause is acceptable.
    Mr. John Biggs-Davison: I shall be brief, as the hour was late and has now become early and the case is clear. If it was not clear before the new Clause was moved, it was certainly made clear by the time my hon. Friend and constituent the hon. Member for Southend, West (Mr. Channon) sat down having made a persuasive speech which has been followed by others almost as convincing. I must confess that I had a moment of anguished doubt about the validity of this new Clause when I was told by my hon. Friend for the other Southend constituency, the hon. Member for Southend, East (Mr. McAdden), that it embodied the official policy of the Liberal Party. [HON. MEMBERS: Where are they? "] I notice that they are not here this morning and therefore I presume that the policy of the Liberal Party has changed.
    The argument adduced by my hon. Friends has been built, quite properly, on the experience and difficulties of

    1533
    their constituents. Those difficulties apply to my constituents also. They are looking forward to yet another swingeing increase in fares which is now upon them. As has been pointed out, they travel in congested conditions which make one wonder if they ought not to be paid to travel in such conditions.
    My right hon. and learned Friend the Chancellor is in some difficulty, but I hope that the words to which he is so courteously and attentively listening at this moment will help him to keep in mind the plight of the commuting public who play such a vital part in the life of the country and that their plight will be in his mind in the years to come.
    Sir C. Taylor: I am not quite sure that this new Clause is worded rightly, but it is not for back benchers to teach the Government how to word new Clauses for the Finance Bill. I think the intention of the Clause has been correctly stated.
    Hon. Members of this House get free travel, not only between this House and their constituencies, but between this House and their homes. They are allowed free rail travel. I understand that they are also allowed expenses for their cars when they are used to travel between this House and their homes. If that is so, and I believe it is, we ought either to apply a self-denying ordinance to ourselves or to give the same facilities to every man engaged in work and business in any job throughout the country. I know of young accountants who travel a short distance from their homes to their offices and then they go to Eastbourne or Letchworth or wherever they are doing a job because they are not allowed travelling expenses between their homes and places of work. They therefore have to make a short journey to their offices and then go to their place of work. That shows the stupidity of the present arrangement.
    Many private firms and public companies send out buses to collect their work people from all over the countryside. They do not get charged expenses for that. That is another good argument for this Clause. We were told at the end of the war and subsequently that London was becoming overcrowded. More and more flats and houses had to be built, but they were very expensive and were not available immediately after
    1534
    the war. So a great many people moved out to the nearer suburbs and even to places such as Eastbourne and Brighton, which are a reasonable distance to travel to work in London. They moved because London was overcrowded.
    They moved out to what was then reasonably-priced accommodation in Brighton, Eastbourne, Hastings, and other places but, since then, the cost of their season tickets has gone up and up. They did not move there at the request of the Government, but it was certainly suggested that London was becoming overcrowded with both motor cars and people, and they now find it impossible to travel to London daily to their work. They have been fooled, because their expenses are now so high that they can no longer afford to make that journey.
    My right hon. and learned Friend will probably say that if this Clause were to be accepted it would cost £100 million or £150 million, but that is not the relevant point. As I said at the beginning, we, as Members of Parliament get free travel between this House and our homes. We set an example to the country, and if, as Members of Parliament, we get that free travel between our place of work and our homes, then so should all the other people who commute to London from places like Eastbourne, Brighton and Hastings.
    Mr. Deedes: Whatever my right hon. and learned Friend says in reply, there is one aspect of this question to which I am quite certain he will, have to give increasing attention. There may be a strong element of injustice in an arrangement which permits some people to make the journey to their place of business by motor car while others have to travel to their work by train, but more important is the strong and growing element of congestion and inefficiency in a system which encourages people to use their motor cars and discourages them from using public transport. A well-informed report on the country's transport situation stresses the future need at least to maintain the public transport we now have and, if anything, to improve it. In the view of many, the motor car cannot and will not do much more to relieve the problem of getting commuters in and out of London, but will aggravate it.

    1535
    The new Clause does not simply affect the pocket of the daily commuter. It touches the much wider question of the movement of population from home to work and back again. Sooner or later, if we are to avoid the most disagreeable forms of physical control, we must turn our minds to a fiscal solution, and it is that sort of fiscal solution that the new Clause provides. I hope that my right hon. and learned Friend will not dispose of it without appreciating the long-range possibility that lies ahead.
    Mr. Callaghan: I was interested to hear the hon. Member for Eastbourne (Sir C. Taylor) advance the view that we get remuneration for travelling between our homes and Westminster. That is true, and to that extent we are distinguished—and it is a not very palatable distinction—but before the hon. Member spends all the money he gets from the Fees Office, I warn him that he had better remember that the payment will be returned to the Public Departments section of the Inland Revenue and be chargeable to tax, because that sum is taxable. If any employer of people living in Southend cared to contribute towards the cost of their travelling expenses he would be free to do so, and, of course, that sum would be taxable in the hands of the employee.
    12.15 a.m.
    One solution to this growing problem would be for employers, who are now finding it difficult to get some staff in London, to pay some of their travelling expenses in the same way as they are supplying luncheon vouchers.
    Mr. McAdden: While what the hon. Member for Cardiff, South-East (Mr. Callaghan) said may be broadly true in some cases, it is certainly not true of the building trade in which 4d. a mile is given and which is recognised by the Inland Revenue as being not liable for tax.
    Mr. Callaghan: I understand that that is so, but it is not for me to make a case for the Inland Revenue. That matter should be directed to the Chancellor, and I know that the hon. Member for Southend, East (Mr. McAdden) has raised it with his right hon. and learned Friend. In this connection, however—if I might whisper a word in
    1536
    the Chancellor's ear—I understand that the reason for the difference is that office workers have a fixed point of employment while those employed in the building industry have not, for they shift from one site to another and there is, therefore, a difference in the type of employment.
    I have considerable sympathy for people who find themselves in a difficult position regarding travelling to and from work. However, my sympathy applies to many, but to not all of them, because if someone deliberately chooses to live in a salubrious neighbourhood like Southend or Brighton—I do not wish to be unfair; both are nice places —they must take what is coming to them if fares go up. They have, after all, made a free choice.
    I am sympathetic to the second generation who have no real freedom of movement and who are obliged, for employment reasons, to come to London. They find it extremely difficult to pay their travelling expenses and it certainly would not be fair to say to them "You chose to live there. If you do not like it go back to Southend and try to find a job there."
    I was glad to hear the realistic remarks of the hon. Member for Ashford (Mr. Deedes), who said—and he has said this on previous occasions—that southeast England is becoming a vast industrial sewer. Indeed, we have seen its character change over the last 30 years.
    Mr. Deedes Mr. Deedes indicated dissent.
    Mr. Callaghan: I see that the hon. Member for Ashford disclaims authorship of that phrase, in which case I will gladly take responsibility for it. We may tinker with the problem, but we really need a proper system of industrial planning. The ruthlessness which reflects so much on our civilisation concerns this separation of a man's place of work with the place where he lives.
    We have had a great deal of these difficulties in South Wales. Since 1926, when the pits were closed during the General Strike, it;has been traditional for many miners to travel long distances —30 or 40 miles—to the pits in West Wales, and this has resulted in the breaking up of many desirable community elements. In due course we shall

    1537
    have to face the question of how we are to try to get some social integration between the place of home and the place of work and restore a real community sense. However, that is going far wider than the proposed new Clause.
    We are dealing with a vital problem, and while the proposal under discussion would not solve it, it would help a number of people who are in great difficulty. The real solution is a much deeper one. If hon. Gentlemen opposite wish to defeat the Government tonight it is in their power to do so. When I was asked to take part in this discussion I wondered whether I was taking part in a serious debate or a charade.
    Is this a sham fight or is it not? If hon. Members want the new Cause they know very well that they can defeat the Government if they wish. Before I declare what I shall do, I should like to know whether hon. Members opposite will go into the Lobbies tonight. If they do, we shall see something most spectacular which we have not seen before during these debates. I do not think that an hon. Member is entitled to chide us on this side of the Committee if he is not prepared to carry his fighting speech to a conclusion. I shall wait to see what that conclusion will be in the few moments remaining to us.
    Mr. Robert Carr: Most of my hon. Friends who have spoken represent constituents who live much further from London than do my constituents. It may be said that people who live 50 miles, 60 miles or 70 miles from London have gone to live farther out than is strictly necessary, but in the conditions of a great city like London that could not be said about those who live in my constituency, a mere 13 miles or so from the centre of London.
    I am well aware, however, that the increases in fares in recent years is a considerable cause of anxiety and, to those on a narrowly balanced budget, a cause of hardship to people living even that distance away. Whether or not there is a practical method of dealing with this problem in the context of the present economic situation, I strongly support the point made by my hon. Friend the Member for Ashford (Mr. Deedes) that there is a major economic
    1538
    and social problem here. It is not good enough merely to dismiss this, as I realise the Chancellor may have to dismiss it tonight, on the ground of the cost being impossible to bear this year. The economic and social problems involved in this subject must be given other and deeper consideration.
    In looking at this question of what is or is not allowable as expenses, the Chancellor must endeavour to obtain greater fairness than there is at present. Otherwise it is not tolerable to go on saying to people that they must go on indefinitely paying higher and higher fares to travel in worse and worse conditions.
    Mr. Marcus Worsley: I should like to emphasise that there are hon. Members on this side of the Committee who do not agree with this proposed new Clause.
    Mr. Channon: Shame.
    Mr. Worsley: I emphasise that the Conservative Party has not been wholly taken over by commuter interests. The effect inevitably of any such concession as is proposed, and I hope that my right hon. and learned Friend will resist it, will be in the nature of a subsidy for the commuter.
    Mr. McAdden: Nonsense.
    Mr. Worsley: Inevitably so. The cost has been variously given up to £150 million and hon. Members surely will not suggest that this money will be handed over by the Chancellor without compensating taxation.
    Mr. McAdden: My hon. Friend is suggesting that this is a subsidy and presupposes that the commuter is not today paying economic fares for his transport. If a railway cannot run on commuter business it might as well go out of business.
    Mr. Worsley: Whether the commuter pays an economic price or not is not the point. The proposition in the Clause is that the cost of travel should be an allowable expense. This means that the Chancellor will receive less money from Income Tax. If he is to spend the same money he will need to obtain it elsewhere and my constituents, who are intelligent enough to live in a place where they can walk or bicycle to work will be penalised.
    Mr. Gilbert Longden: In reply to the hon. Member for Cardiff, South-East (Mr. Callaghan), whether or not we choose to divide against the Government this evening, it must be said that this has been a subject which is well worth raising because it affects millions of people. I am amazed that only six Members of the Labour Party have been in the Committee while we have debated this subject. Although five of them have put down an Amendment to the Clause, not one of them is present, and although we are told that this is part of the Liberal programme, not a single Liberal Member has been here.
    This whole matter arises from the total failure of the massive and expensive apparatus of town and country planning to bring the worker near his work. I am prompted to support this Clause because we Members of Parliament are not only allowed to set off the cost of our travel between our homes and our place of work but we are actually repaid because of it. Why, therefore, should not these millions of people who have to travel up to London to work at tremendous inconvenience and discomfort be allowed to set off the cost of so doing against their tax?
    I cannot believe that this proposal would cost £150 million, although no doubt we shall be told by the Economic Secretary when he replies. I ask my right hon. and learned Friend the Chancellor to consider the matter favourably, if not this year, in future Budgets.
    Mr. Barber: As my hon. Friends the Members for Southend, West (Mr. Channon) and Ashford (Mr. Deedes) have said, the issue raised in these new Clauses is one of very great concern to many people. Reference was made by my hon. Friend the Member for Southend, West and also by my hon. Friend the Member for Harwich (Mr. Ridsdale) to certain aspects of the policies of the British Transport Commission. I should be out of order, in view of what you said, Sir Robert, if I were to pursue that point. I would only say that I have no doubt that my right hon. Friend the Minister of Transport will be taking note of what has been said in the course of this debate.
    Like my hon. Friend the Member for Hertfordshire, South-West (Mr. Longden), I have been astonished that
    1540
    not a single Member of the Liberal Party has been present throughout the whole of the debate, not even—if I may be a little more specific—the hon. Member for Orpington. I can only assume that he is travelling between his place of work and his home. Whatever views the Liberal Party may have on this matter —and I thought they had expressed a firm view, but I may be wrong—it is really surprising that not one has stayed to hear the arguments on a matter of such importance.
    My hon. Friend the Member for Hertfordshire, South-West passed certain strictures on the Labour Party on the lack of numbers here this evening; but perhaps I may express my gratitude to the three hon. Members on the Opposition Front Bench for the courteous way in which they have listened and to the one hon. Member who has taken part in the debate.
    Mr. Callaghan: The hon. Member has referred to us in terms with which I cannot disagree. I must say, however, that there have been many occasions during these debates when the Government benches have been practically empty though we have raised questions which we thought were equally important about personal allowances, affecting many millions of people in this country. I do not think the hon. Gentleman will score many party points in that way. There have been many occasions when I would have liked some help from hon. Members opposite if only they had been here.
    Mr. Barber: I am sure that if the hon. Gentleman will change his policies he will get a lot of help.
    The Clauses raise questions both of administration and of equity. As has been pointed out by one or two hon. Members, we have the advantage that the matters which we are considering were also considered by the Royal Commission. The Commission came down decisively against any such allowance as is suggested in these new Clauses.
    12.30 a.m.
    My hon. Friend the Member for Southend, West referred to the general question of business expenses. There has, I know, of late been a lot of criticism of the extent to which some taxpayers claim expenses to be set off

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    against their profits or their income. The basic difficulty is so to restrict the existing legal criteria as to exclude unwarranted expenses claims without at the same time excluding claims which, on grounds of common sense, are manifestly reasonable and should be allowed.
    My hon. Friend referred to the legal position. It is clear that the only expenses which are allowed in the case of people assessed under Schedule E is expenditure wholly, exclusively and necessarily incurred in the performance of the duties of an office or employment. This is not merely a decision taken by the Inland Revenue, as my hon. Friend seemed at one time to suggest. It is a decision which has been confirmed by the courts. I refer, of course, to the decision that travelling between one's home and place of work is not an allowable expense.
    I am sure that the whole Committee will agree with the Royal Commission that in logic,
    "the claim would fail on the ground that profits are made or remuneration earned by the work done at the place of work, and that the cost of getting to and from the place is not a charge upon those moneys."
    My hon. Friends are saying that there are wider considerations which make it desirable to breach the ordinary principles. The Royal Commission had no doubt that this should not be done. I should, however, like to examine the considerations which my hon. Friends have put forward.
    Consider, first, the case of those who work in the large cities. Most hon. Members who have spoken have had the City of London in mind. Some people are able to choose whether they live in the city itself or in the country, with all the additional expense of travelling to and fro. Other people, while they may have some choice as to where they live, have oniy a limited choice because of the shortage of accommodation or, indeed, because of the cost of accommodation in built-up areas.
    It would obviously be impossible for the Inland Revenue—or, indeed, for anybody else—to distinguish between these two categories of people. Yet nobody. I should have thought, would deny that in many cases the man who chooses to live in the country, or in a
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    London suburb for that matter, is able to live more cheaply than if he were living in the centre of the city. Frequently he is financially better off, and this financial advantage exists whether he voluntarily chooses the area where he lives or whether he can find a suitable house only in that area. As the Royal Commission recognsed, there is a large element of personal choice in the decision where to live.
    Even outside the big cities, the experience of other hon. Members will be much the same as mine. In my constituency, for example, people have come to me in the hope that I might intercede with the local council to enable them to move from an old council house in the centre of the town to a better one on one of the newer estates outside the town. These are not professional people or white-collar workers but are men who simply prefer to live in a more congenial area, and perhaps from the viewpoint of their families in a more healthy area, and are prepared to shoulder the extra cost of travelling. When moving from that category of person to the middle-income groups and even further up the income scale, there is frequently a considerable element of choice involved in where a person lives.
    I cannot believe that it would be right in principle to give a special tax allowance in respect of travelling to and from work to somebody who has chosen to live a considerable distance away. It must be accepted that it would be quite impossible from a practical point of view to distinguish those cases where there is genuinely no element of choice.
    There is, as has been pointed out, one exception to the general rule—under the Finance Act, 1942, dealing with the special circumstances of the war and the post-war years. It was referred to by my hon. Friend the Member for Southend, West. I should point out to my hon. Friend that the Inland Revenue has had the greatest difficulty in administering that Section, and as, I think, my hon. Friend knows, the Royal Commission did advise that it should be repealed. It follows that it would be impossible to devise a relief which would be both fair and practicable, and, of course, almost everybody is involved in some cost in getting to and from his place of work.

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    I must in frankness tell the Committee that, quite apart from the insuperable administrative difficulties which I do not think anybody would deny, I do not think that it would be right in principle to give this special tax allowance, and I would remind the Committee—because I think it is important and it has not been read out yet—of what the Royal Commission said, after referring to the basic rules about expenses allowed for tax purposes. It went on to say this, and it is highly relevant to the matter we are discussing:
    "We think that this argument is supported by the wider consideration"—
    this is under the heading, "Travel between home and work"—
    "that (a)as virtually every earner has some cost to meet in getting to and from work, an allowance would be claimed for nearly every earned income, and (b) the amount of the allowance would vary very much as between one taxpayer and another, according to the distance between his home and his place of work. Now a large element of personal choice enters into his decision where he will live and where he will work. One man may live further from his work for the sake of lower living costs or other advantages for himself and his family, another may live nearer but at a higher cost in other respects. Since the tax system does not take account of the variations in living costs and other advantages, it seems to us undoubtedly the better rule that it should refuse any allowance for the particular cost of travel from home to work, the significance of which is so much bound up with these other factors."
    Mr. Channon: Since my hon. Friend has quoted the Royal Commission, and I quoted a passage from its Report to help me, will my hon. Friend say how he reconciles that with paragraph 240, which I quoted?
    Mr. Barber: Yes. What the Royal Commission was saying in the first few lines which my hon. Friend quotes from paragraph 240 was that it is sometimes, as a question of fact, difficult to decide whether a person is travelling from his home to his place of work or whether he is travelling on the duties with which his business is concerned. I think one example was given in the course of this debate, namely that building workers who may have to travel from site to site, and there are other instances of men who, for example, travel around repairing lifts, and so on. It must be a question of fact in each case. There will be,
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    as the Royal Commission was saying, borderline cases.
    I do not wish to appear to be facetious, because I recognise that this is a very important matter, but I hope I may be allowed to make just one further quotation, and this is from an article by Mr. George Schwartz in The Sunday Times of 8th April. This is what he write:
    "Fares are a sore point at the moment with the British public which after centuries of endurance has got tired of paying the full cost of everything it gets. The correspondence in the papers testifies to the revolt against this old-fashioned economic discipline. Thus it is urged that people who come to work in London from outside should be given some relief for the cost of travel possibly by allowing the cost as a deduction from taxable income. This at once provokes the claim that people who live and work in London should be given some relief because of the higher cost of living in London. So there is a case for subsidising people who travel into London and those who don't have to travel into London, lending force to the old saying, 'Distance is no object.'"
    I do not take that too seriously—
    Mr. J. A. Leavey: It is even worse than that, is it not, because the commuting service is a subsidised service? It is one of the services which do not pay. Therefore, in a large number of cases those who use the commuter service already get subsidies.
    Mr. Barber: I am afraid that my knowledge is not sufficiently specialised to answer that question.
    There are two other matters to which I wish briefly to refer. The first is that both Clauses would, as has been pointed out, limit the allowance to fares paid on public transport. I appreciate from what my hon. Friend the Member for Southend, East (Mr. McAdden) said that what my hon. Friends are trying to do is to limit the extent of the claims that would be made. I will not go into this in detail because, obviously, there are two different views on the matter. I would only express the doubt whether it would be fair to proceed in this way.
    Even though some of my hon. Friends may take a different view from that which was put forward by the Royal Commission—and, after all, it was a conclusive view—I would ask them to consider very seriously whether, even

    1545
    if the view which I have expressed is wrong, it would really be right this year to select this form of expenditure for tax relief. My hon. Friend the Member for Southend, East seemed to think, from the way in which he presented his case, that the question of cost was really of little relevance. Now I should say in all frankness to the Committee that it really is impossible to give any precise estimate of the cost. But it would certainly run into many tens of millions, and I think that the best I can do in order to give the Committee some idea of how the cost would work out, is to mention that to give all wage and salary earners an allowance of 10s. a week for travelling to and from work would cost something in the region of £150 million a year. Even if my hon. Friend thinks that as an average for the country as a whole 10s. is too much and if one says 5s. per head a week, it still comes to £75 million a year.
    To sum up—I believe it is right in these matters to be perfectly frank—it seems to me to be wrong in principle to give a tax allowance for travelling to and from work when the individual is able to choose his place of residence, and it is not practicable to provide for those other cases where a man has no choice.
    I believe that the very firm conclusion reached by the Royal Commission is the right one. But even if it were wrong, I am sure that my hon. Friends will agree that the very considerable cost of the new Clause is not something which my right hon. and learned Friend could contemplate this year. Therefore, even though my hon. Friends may disagree with the principles which I have enunciated, I hope that on the narrower ground of cost they will take the responsible view and will not press the Motion.
    Mr. Channon: I must say that I am deeply disappointed with the speech of my hon. Friend from Yorkshire and, indeed, with the intervention by my hon. Friend the Member for Heywood and Royton (Mr. Leavey) from Lancashire. However, I am very grateful to my hon. Friend for his long, careful and clear reply. I should think that the Committee would feel that his last point is perhaps the one which should weigh most. I am horrified to think that a tax relief of even 10s. a week per head
    1546
    of the travelling population would cost as much as £150 million a year.
    Although I feel that in equity our case is very clear, I am sure my hon. Friends would agree with me—this has always been my belief—that it is paramount to ensure that the cost of living remains steady for our constituents. I hope that my hon. Friend will bring the matter to the attention of his right hon. Friend the Minister of Transport, as he intimated he would do in the early stages of his speech, and will give consideration to the view put forward by my hon. Friend the Member for Ashford (Mr. Deedes).
    In view of the fact that the concession would cost £150 million a year, I must say, speaking for myself, that I really cannot ask my hon. Friends to divide the Committee on the issue at this stage. However, I hope that the views put forward will be very carefully considered by the Minister of Transport. I think that they are relevant not only in respect of this new Clause but also in the wider aspects put forward by my hon. Friend the Member for Ashford and the hon. Member for Cardiff, South-East (Mr. Callaghan).
    In these circumstances and in the hope that consideration will be given to the matter, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    12.45 a.m.
    Mr. Selwyn Lloyd: I beg to move,
    That the Chairman do report progress and ask leave to sit again.
    I am sorry that we have had to keep the Committee here so late this evening, but I think that it was necessary for us to make a certain amount of progress with the new Clauses and reach a certain point in our consideration of them. I think that we have now reached a point at which we might postpone our further consideration to another day.
    Mr. Callaghan: I find myself often in agreement at this time of night with the Chancellor, and this is no exception. I feel that I should support his Motion on several grounds. We have got through about half of the new Clauses left to us. It is late. I think that I should, on the whole, like to prevent civil war from breaking out among

    1547
    the Government's supporters. This seems to be a very desirable objective. [HON. MEMBERS: "Why?"] I will tell the Chancellor why. I rather agree with Lenin here. I support the Government now rather as the rope supports the hanging man. The longer the Government stay in office, the more sick and tired the electors will become of them. Therefore, I hope that they will stay there for a bit longer yet, and, in the interests of achieving that and of preventing civil war which might destroy the Government, I am happy to support the Motion.
    Question put and agreed to.
    Committee report Progress; to sit again this day.

LENNONS SUPERMARKET LTD., ST. HELENS
Motion made, and Question proposed,That this House do now adjourn.—[Mr. G. Campbell.]
12.46 a.m.
Mr. Leslie Spriggs: This Adjournment debate is necessary because the Restrictive Trade Practices Act, 1956, has been contravened. I shall show the House why. Section 24 of the Act makes it illegal to make agreements for collective enforcement of conditions as to resale prices. I shall quote from two letters sent to Mr. Lennon dated 20th and 24th October, 1960, from the Brands (Wines and Spirits) Protection Association. This Association marks its letters "Private and Confidential", but what it has to conceal is a matter for us to consider.
My constituent was challenging the right of the Brands (Wines and Spirits) Protection Association to decide resale prices on behalf of its members. The letter of 20th October, 1960, says:
"I note your remarks and I feel that it would be desirable to explain to you the exact position of this association in regard to the enforcement of resale prices. This association, as stated in your letter, has never assumed the responsibility of fixing prices. Indeed, since the passing of the Restrictive Trade Practices Act, 1956, this would be an offence. All the association does is to act on behalf of individual producers and distributors who prescribe resale prices for their products. The various members of this association then circulate these prices for the guidance of those traders handling these products.
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"In the circumstances, I think you will agree that no useful purpose would be served in getting the individual firms to communicate with you direct on the matter. This association is authorised to act on their behalf and I would respectfully suggest that the matter could be well covered by an assurance from you that you will in future conform to the prices laid down by our individual members, such prices being set out in our list of protected brands."
The letter of the 24th October acknowledged my constituent's letter of 21st October and said it had been noted
"…that you are not prepared to give us a general undertaking to conform to the retail prices laid down by the members of this association in respect to their own brands."
It went on:
"I made this suggestion merely to obviate unnecessary correspondence in this connection. However, my committee are meeting shortly and I will put the matter before them for their attention and no doubt I shall be instructed to communicate with you further on the subject."
Hon. Members, and particularly the Parliamentary Secretary, should note that the third paragraph of the letter of 20th October means, in effect "You either do as we say or you have had it. You will not get your supplies."
Mr. Deputy-Speaker (Sir Robert Grimston): Order. I hope that the hon. Gentleman is going to show how there is Ministerial responsibility in the matter he is raising.
Mr. Spriggs: It is not difficult for me to do so, Mr. Deputy-Speaker. I have here the Restrictive Trade Practices Act, 1956. Sections 24 (1, a), (4) and (7) makes it illegal for any organisation to join in agreements for the collective enforcement of conditions as to re-sale prices. I think that you will follow me more closely when I say that not only has the Distillers Company, Ltd., through the Brandy (Wines and Spirits) Protection Association, taken action against my constituent, who is a well known and successful businessman in St. Helens. I also have a letter dated 19th March. This is where the law has been broken. It is to Mr. Lennon—
Mr. Deputy-Speaker: I am sorry, but the fact that an offence may have been committed is not necessarily a matter for the Minister. It may be a matter for the courts, but it is not necessarily for him. I hope the hon. Member will show how the Minister is responsible.
Mr. Spriggs: I am asking the Board of Trade to take the Distillers Company, Ltd. to the Restrictive Trade Practices Court, and I shall also ask it to submit this case to the Monopolies Commission as well because of the evidence I have in hand, which goes to show that the Company produces over 50 per cent. of gin and spirits produced and distributed in this country.
This firm is guilty of contravening the 1956 Act, because W. and A. Gilbey, while not a part of the Distillers Company, Ltd., has decided that it will not execute an order for 50 cases of gin because it belongs to an association which protects retail prices of wines and spirits. It has done this even though my constituent has not sold its brands below the listed prices. In effect, the firm had been under pressure to refuse to execute an order and to play its part in enforcing resale price maintenance. This is a clear case upon which the Board of Trade could take action. The firm took this action not to enforce its own listed prices, but to enforce resale price maintenance which did not directly affect it.
Another example concerns Seager Evans from whom my constituent was buying Long John whisky and Seager's gin and selling them at reduced prices. The firm had never protested about the reduced prices, and, in fact, had aided and abetted them. It wrote to my constituent that previously it had had no objection to the reduced prices, but was now sorry to have to tell him that it was being told to "toe the line." If it did not, it said, it would lose much larger orders from the brewers.
I submit that these firms, particularly in one case, are infringing the provisions of the 1956 Act. Hon. Members expect the laws which we make to be observed and respected, but here we have a clear case of breaking the law. These messages were given to Mr. Lennon not by the Brands (Wines and Spirits) Protection Association but by Gilbey's and Seager's own representatives.
I knew that whether the case could be presented to the Monopolies Commission might be dependent on the quantities produced by the Distillers Company. I quote from the Stock Exchange Gazette of 2nd March, 1962,
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and both the firms mentioned are subsidiaries of the Distillers Company Limited:
"Recent estimates suggested that Gordon's still accounts for half the gin market with Booth's a close second."
There is a report about Scotch whisky saying:
"At least half the Scotch whisky produced, and a much larger proportion of gin, is made by Distillers—a giant with extensive and important interests outside spirits."
In view of the action towards my constituent and the pressure which has been brought to bear on other firms outside this company, I submit that this is a case for careful investigation by the Monopolies Commission.
My investigations reveal that 94 firms are controlled by the D.C.L., and that quite a large percentage of these firms are distillers. It has its fingers in many trades. The D.C.L. has asked my constituent to sign a certain document. If he signs it, it will mean that he will promise to sell the goods of the D.C.L. at the listed price, and in addition he will be tied to certain firms which are listed in the Schedule to the proposed agreement. These are as follows. White Horse Distillers Limited—White Horse; John Haig and Company Limited—Gold Label, Dimple Scots; James Buchanan and Company Limited—Black & White, Buchanan's De Luxe; Wm. Sanderson and Son Limited—Vat 69; The Distillers Agency Limited—King George IV, Highland Nectar; John Dewar and Sons Limited—White Label, Ancestor; John Walker and Sons Limited—Red Label, Black Label; A. and A. Crawford Limited—Three Star Special Reserve, Five Star and many others.
That gives the House some idea of what my client is up against. There is no doubt that pressure is being brought to bear against him by the D.C.L., and I submit that under Section 24 of the Act to which I have referred there is a suitable case for investigation by the Monopolies Commission. I believe that if the Crown took proceedings against those who have conspired together to enforce these agreements not only my constituent but the whole country would be grateful. Retail price maintenance is holding back the most dynamic elements in the retail trade, and these

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illegal acts are causing great concern throughout the land.
Action must be taken before irreparable damage is done, and I shall eagerly await the Parliamentary Secretary's reply. The information is available for the taking, and if the will is there to take action, I assure him of success and of massive support from the nation.
1.4 a.m.
The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): We are under two handicaps tonight, and I am under a third, namely, shortness of time. First, the lateness of the hour. Secondly, that we are dealing with matters which are primarily legal, and neither of us is a lawyer.
The hon. Member for St. Helens (Mr. Spriggs) was good enough to let me have copies of correspondence, and he handed me copies of the letters dated 20th and 24th October from Brands (Wines & Spirits) Protection Association tonight. Perhaps I might go over the facts as they are brought out in these letters, and as the hon. Gentleman has been good enough to bring them to my notice.
This firm of Lennons Supermarkets Ltd. of St. Helens operates a supermarket. They are reasonably anxious to pass on to the consumers economies resulting from the efficiency with which they run their business. They are able to do so by reducing prices of goods which are not bought with a condition attached that they are to be resold to the consumer at a price fixed by the manufacturers. Their complaint, I understand, arises from their finding that they cannot do so on some goods which are sold only subject to such a condition.
The complaint is twofold. First, they say that after the Chancellor had added the 10 per cent. surcharge to excise duties last July they continued to sell at the same prices. It appears that firms in the Distillers Company group declined to do business with Mr. Lennon again unless he sold at the prices they fixed for their products. It seems that he raised his prices as required, but proceeded to give away sample drinks with each bottle sold. The Distillers Company took the view that in doing so he was in breach of the conditions of sale to him and declined to supply him.
Whether he was in breach of the condition or not is a matter of law which
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would have to be settled by the courts. What is certain is that as the law now stands, and has stood for a very long time, a supplier is perfectly entitled to prescribe the prices at which a purchaser shall resell the goods he supplies to him and to sue for breach of contract where the purchaser fails to observe the prices fixed. Further, under Section 25 of the Restrictive Trade Practices Act, 1956, a supplier may enforce the prices he fixes against third parties who later acquire the goods, that is against those who were not parties to the original transaction of sale, provided that they have notice, that is that they are made aware that the original supplier had made observance of the fixed ultimate selling price a condition of sale.
There is no doubt, therefore, that the Distillers Company would be entirely within its rights in declining to supply to a retailer who refused to give an assurance that he would observe this particular condition on which the Distillers Company sells. I cannot express any opinion on any particular case. As I say, it is a matter for the courts to decide the rights of the parties in the particular circumstances if either of them took the matter to the courts. The hon. Member suggested that the fact that the Distillers Company controls a substantial part of the trade in spirits makes a difference in that it enables the company to exercise a greater pressure on the retailer since he cannot readily turn to other suppliers who do not insist on the same condition. He asked therefore that my right hon. Friend should refer the supply of spirits to the Monopolies Commission for investigation.
That hardly seems an appropriate reason for a reference to the Commission. All the group seeks to do is to exercise its legal right to maintain resale prices for its goods. The hon. Member may feel that it should not have such a right. As he knows, however, it would require legislation to deprive the company of it and I apprehend that it would not be in order to debate the merits of such legislation now. He also knows that my right hon. Friend is at present considering the whole question of resale price maintenance. Quite plainly it would not be sensible to refer the supply of spirits to the Monopolies Commission on these grounds.

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The hon. Member also complained that the brewers used their position of strength to force a supplier, Messrs. Seager Evans, to stop Mr. Lennon's supplies. This surely was not a question of the brewers using a position of strength, but simply of availing themselves of the rights the law confers on them. If what was done in this case was simply that the brewers fixed their resale selling price and that the wholesaler stopped Mr. Lennon's supplies because he did not observe, or said he would not observe, the resale price condition, both the brewers and the wholesalers are perfectly entitled as the law stands to protect their interests in that way. The law does not compel anyone to do business with a person with whom he does not choose to do business. Under Section 25 of the Restrictive Trade Practices Act, a supplier can enforce his rights against a third party, but, of course, he can enforce them in particular against the party with whom he is directly dealing under the ordinary laws of contract.
I turn to the second part of the complaint, and that is that Messrs. Gilbey's have refused to supply wines and spirits to Mr. Lennon unless he agrees to observe their resale price conditions. He has declined to give an undertaking, so Gilbey's have refused to supply. If I may say so, it is very much to Mr. Lennon's credit that he has refused to give an undertaking which he did not mean to observe.
The hon. Member suggests that Gilbey's refusal results from an agreement or arrangement between suppliers of wines and spirits to enforce resale prices collectively by withholding supplies. He tells us that Brands (Wines & Spirits) Protection Association notified Lennon's of the prices fixed by the various suppliers of a number of brands, and that it was the Association that asked for the assurance that Lennon's would not sell below the prices fixed. He says that it was in consequence of the refusal he gave to the Association that Gilbey's withheld supplies.
Under Section 24 of the 1956 Act, agreements or arrangements for the collective enforcement of resale prices are prohibited. But the mere fact that several suppliers use the same agency to enforce prices does not necessarily imply
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that they have agreed together to enforce prices collectively. An agreement among suppliers that each will individually seek to maintain his own resale prices is not prohibited by the Act although, under the Act, such an agreement would be registrable with the Registrar as a restrictive trade agreement. Nor are individual members of a trade association prohibited from making use individually of that association to help them to maintain their resale prices. They can, for example, make use of a common information and advice service provided for members by the association, so that breaches of individual arrangements may be pursued by the individual member concerned.
That, on the face of it, is what appears to have been done in this case; that is to say, a number of members—or, perhaps, all the members, for all I know—of Brands (Wines & Spirits) Protection Association each arranged with the Association to pass their prices to would-be customers, and to ask on their behalf for an assurance that those prices would be observed. As far as I can see, that, as far as it goes, is perfectly legal. It is, of course, arguable that such arrangements, economical as they may be, could lead to abuses. But, again, to alter them would require an alteration in the law, and that we cannot discuss tonight.
I invited the hon. Gentleman to produce evidence that there was an agreement in existence for the collective enforcement of resale price conditions in this case. If he does so, I shall most willingly consider it. If the evidence were sufficient, the Board of Trade could seek an injunction under Section 24 of the 1956 Act. If, on the other hand, there were evidence that the members of the Brands Protection Association had agreed together to enforce their resale prices individually, I would pass it on to the Registrar of Restrictive Trade Agreements.
This is the evidence we would require, but I am advised that the evidence submitted so far by the hon. Gentleman would not enable us to do either of those things. I shall certainly consider the further letter he has made available to me and any further evidence he is able to give us. But we can only act within

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the law as it now stands and, as I have said, we are also considering the wider aspect of resale maintenance as a whole. My right hon. Friend hopes to make an announcement before long to the House.
I cannot now go further than that. I hope that following what I have said, when the hon. Gentleman has had time to study it in the OFFICIAL REPORT, he will be able to take further advice and see exactly how the law stands on this matter and, of course, I would be glad to receive any further evidence from him.
Mr. Spriggs: I had hoped that the hon. Member would have understood from what I said about Messrs. W. & A. Gilbey that that firm took unilateral action in this matter. That firm's lists were not affected. Its goods were being sold at their listed prices. Surely that firm's action was taken on behalf of the
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other people who were complaining about my constituent's action in selling below the listed prices?
Mr. Macpherson: If I understood the position correctly, as Messrs. W. & A. Gilbey is also a member of the Brands Protection Association, it would, of course, be given the information that this firm was not prepared to sell at the listed prices. No doubt it invited this firm to do so and then wished to find out whether or not it would before withholding supplies. Certainly we shall consider the further information the hon. Gentleman has given us, but—
The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at sixteen minutes past One o'clock.