RATES AT WHICH CORPORATION TAX MAY BE CHARGED

HC Deb 03 June 1965 vol 713 cc1978-2027

Corporation tax shall be charged, in respect of those portions of the profits of a company shown in Column 1 of the undermentioned table, at rates not exceeding such percentages of the standard rate of corporation tax as are respectively shown in column 2 of the said table.

1	2
Portion of profits	Maximum rate of corporation tax
The first £2,000	Nil.
The second £2,000 or part thereof.	15 per cent, of standard rate of corporation tax.
The third £2,000 or part thereof.	30 per cent, of standard rate of corporation tax.
The fourth £2,000 or part thereof.	45 per cent, of standard rate of corporation tax.
The fifth £2,000 or part thereof.	60 per cent, of standard rate of corporation tax.
The first £5,000 or part thereof above £10,000.	80 per cent, of standard rate of corporation tax.
Every further £5,000 or part thereof.	100 per cent, of standard rate of corporation tax.

Sir C. Black

I think that it would be in accordance with what you have indicated to the Committee, Dr. King, if, at the same time, I moved Amendments Nos. 60 and 85.

The Chairman

It is not in order to move more than one Amendment.

4.30 p.m.

Sir C. Black

That being the case, I will refrain from so doing.

I hope that Amendments Nos. 58, 60 and 85 may be regarded as both moderate and reasonable. Certainly, it is my intention to commend them to the Committee in a speech that I hope will be moderate and reasonable. I would like, as far as I am able, to discharge this task with a maximum of light and a minimum of heat. I believe that they are so necessary and so reasonable that the Government must be willing to accept them.

What we are debating may appear to be a somewhat prosaic and technical matter of taxation, but it is of vital importance. Indeed, I am not overstating the case in saying that it is of such importance as to be literally a matter of life and death for thousands of small businesses and companies throughout the country.

I need not remind the Committee that the Corporation Tax is the successor to, and takes the place of, the Profits Tax. It will also be within the recollection of the Committee that the Profits Tax of 15 per cent. contained an exemption for the first £2,000, that there was then a graduated scale, from £2,000 to £12,000, and that the full rate of tax became payable only in the case of a company with a profit of £12,000 or more a year.

Not only the Profits Tax, but most taxes on both income and capital follow the principle of exemption and lower rates on small incomes and small capital sums. For example, this principle applies to Income Tax, Surtax and Estate Duty and it is general over practically the whole field of taxation.

The purpose of my Amendment, stated in its simplest terms, is to apply this principle to the Corporation Tax. The schedule which I give of the proposed rates would exempt the first £2,000 of profits from the Corporation Tax, and then there would be a graduated scale in respect of profits from £2,000 to £15,000, the rate of tax payable increasing as one goes up the scale. I have deliberately adopted £15,000 as the figure at which the full rate of tax would become payable, instead of £12,000 as under the existing Profits Tax, because allowing for the depreciation of the value of money in real terms, £15,000 today is probably approximately equivalent to £12,000 when the exemption was fixed in respect of Profits Tax.

I suggest that it is quite impossible to leave things as they are under the Bill as drafted. To do so would lead to a really farcical result. The result would be that the smaller the company and the smaller the profit, the larger would be the percentage increase in the tax burden to be borne. And, conversely, the larger the company and the larger the profit, the smaller the percentage increase in the burden of taxation. I am sure that hon. Gentlemen opposite must agree, at any rate on this, that this would be a strange application of Socialist doctrine.

Without wishing to detain the Committee, I will briefly give a few examples, at various profit figures, comparing the tax liability prior to the advent of the present Government, and the tax liability under the proposals of the Finance Bill. I am assuming in this that we are looking at the burden of tax on the basis of a 15 per cent. Profits Tax, with its exemptions, and a 7s. 9d. rate of Income Tax. I will compare the position now, as it will be if the provisions we are discussing become law, with a 40 per cent. Corporation Tax and an 8s. 3d. rate of Income Tax.

I am assuming for the purpose of these figures a distribution of all the profits by way of dividend. If we assume that, we get these results. At a company profit of £2,000 the pre-Budget liability for tax would be £775 and the post-Budget liability £1,295, an increase of 67 per cent. At £5,000 the figures are £2,477 and £3,237, a 31 per cent. increase. At £10,000 the figures are £5,315 and £6,475, a 22 per cent. increase. At £50,000 the figures are £26,875 and £32,375, an increase of 20 per cent. So at the lowest profit figures one begins with an increased tax burden of 67 per cent., diminishing as one goes up the scale so that at a profit figure of £50,000 one gets an increase of 20 per cent.

It would be unusual for a company to distribute by way of dividend all its profit. I have, therefore, made an estimate of what the position would be assuming a normal case of distribution of 60 per cent. After all, for close companies—and most of the companies with which the Amendment would deal would be close ones, except in special circumstances—the distribution must be not less than 60 per cent. In this case, with a £2,000 profit figure, the increase in the tax burden is 41 per cent.; at £5,000 profit it is 10 per cent.; at £10,000 profit it is 3 per cent.; and at £50,000 profit it is 2 per cent. Again, the same pattern of a 41 per cent. increase in the tax burden at a profit of £2,000 and an increase of only 2 per cent. in the burden at a profit of £50,000.

Mr. Harold Lever (Manchester, Cheetham)

The hon. Gentleman has given the figures for the consequences of the change, assuming full distribution. Would he say what the advantage would be to a company earning £2,000 a year, compared with the previous situation, if we adopted his Amendment? In other words, how much would the Revenue lose in respect of such a company? Would he, further, give the effect of what he is proposing on the small company which does not make a distribution?

Sir C. Black

I do not have those figures worked out. As I understand the hon. Gentleman's question, taking the case of full distribution of profits by way of dividend, he is asking what the difference would be between the tax figures in the case of a £2,000 profit. The difference between a post-Budget tax bill of £1,295 and a pre-Budget figure of £775 is £520.

Mr. Harold Lever

The hon. Gentleman has given the effect of his Amendment on a company's taxation liability at £2,000 if the Budget proposals are carried. Will he now give the effect on a company's taxpaying obligation if his proposals were carried? I am asking him to give the figures based on a company's profit of £2,000 a year and no dividend—such a company's tax obligation if the Committee accepts his proposals, and how much reduction there would be from the Treasury point of view?

Mr. Eric Lubbock (Orpington)

Before the hon. Gentleman replies to that question, would he inform the hon. Member for Manchester, Cheetham (Mr. Harold Lever) that most of these companies are close companies and that, therefore, if they do not distribute anything at all the directors and shareholders are assessed at Surtax rates on the 60 per cent. shortfall?

Sir C. Black

I am grateful to the hon. Member for Orpington (Mr. Lubbock) for making that point. The answer to the hon. Member for Manchester, Cheetham (Mr. Harold Lever) is that, taking the £2,000 company and assuming that no Corporation Tax is payable but that there is full distribution of dividend, the tax will be 8s. 3d. in the £ on £2,000—£825—against a pre-Budget liability of £775—

Mr. Harold Lever

If there is no dividend, how much tax will be paid?

Sir C. Black

I shall not assume something which, in the nature of the case, seems to be impossible. If I can be allowed to develop my argument a little further, I may be able to get at what the hon. Gentleman is interested in.

I want to anticipate two arguments that may be advanced to try to justify what I consider to be the essentially iniquitous proposal which is embodied here, and to which I object. It may be said, first, that the small company—and it is small companies with which we are dealing—can get over the difficulty by all the profit being taken out in director's fees. That point has been made to me, to some extent it is valid, and it should be dealt with.

That method might, to some extent, be a solution of the difficulty in cases where the directors and the shareholders are the same people, but in the very many cases where the directors and the shareholders are different people, the directors are entitled to be properly remunerated for their services as such, and the investors are equally entitled to be properly remunerated for the use of their capital as such. Therefore, this device—which, in any case, I suggest is bad in principle—of paying out all the profits in directors' fees, can have relevance only where the directors and the shareholders are the same individuals. That must be clear.

It is common knowledge that many young enterprising men who have the "know-how" to start and to run businesses, but have no capital, ask relatives and friends to provide them with the capital with which to start a small company. It would be fatal to the economy of the country for a situation to result—as it will, if my Amendment is not accepted—in which such shareholders were precluded from getting any adequate return on their money. Obviously, if there is no prospect of an adequate return, no one will invest. There must be a reasonable return in the case of small companies with unquoted shares, because the risks of loss of marketability are very serious factors and there must, therefore, be an attractive prospect of a good dividend.

It may be urged against my Amendment that if dividends are not paid—and this is the point that the hon. Member for Cheetham was making just now—the consequences that I have mentioned in regard to the heavy tax burden will not occur. That is correct. It is a valid point, up to a point, but one has to recognise that if no dividends are to be paid it is unlikely that the capital can be raised, and a large number of enterprising young men who, under the present system of taxation, can get people to put up capital and start them in business in small companies, will not in future be able to do so, because the attraction of the dividend will not be there. So that is not a sufficient answer to what I seek to do.

The only way to deal with the matter is to accept the general principle of exemption and graduated scale in the case of small profits—a principle that operates generally over the whole field of taxation.

4.45 p.m.

Mr. Lubbock

I join the hon. Member for Wimbledon (Sir C. Black) in wishing to see some relief given to companies that have profits of less than £12,000 per annum, but I would not go quite so far as he has, as I shall explain. The hon. Gentleman has chosen a different figure from that which obtained in relation to the old Profits Tax, and has given substantially greater relief at the lower end of the profits figures.

I should like to compare his proposals with mine for companies earning profits up to £12,000 per annum. We agree in wanting to give complete relief on profits up to £2,000. For a company earning £4,000, his proposal would produce a tax of £120, and ours, one of £960; on profits of £6,000, his proposal would mean a tax of £360, ours, a tax of £1,920; on £8,000—his, £720, ours, £2,880; on £12,000—his, £1,680, ours, £4,800. As so many companies are in this profits range, the Revenue would lose a substantial sum if the hon. Gentleman's proposals were accepted. In any case, the Minister without Portfolio may be able to indicate the relative costs of the two proposals.

The Minister will realise that the rules we have put into our Amendment are exactly the same as those used in the old Profits Tax case. As far as I can see, there is only one argument against that and it was touched on in his intervention by the hon. Member for Manchester, Cheetham (Mr. Harold Lever). He says that if companies at the lower end of the scale do not distribute at all, they will be very much better off. A company earning £2,000 per annum before, had to pay Income Tax of £825—at 8s. 3d. in the £—and Profits Tax of £300. That is a total of £1,125, which leaves the company after tax with a net figure of £875 available for retention or distribution—

Sir C. Black

With respect, I think that the figure of £300 must be wrong, because under Profits Tax there is exemption—

Mr. Lubbock

The hon. Gentleman is quite right, and I am grateful to him for his correction. This company would, in fact, pay only £825. That, however, does not alter the point made by the hon. Member for Cheetham that if the entire profits were retained, then, under either of our schemes, the company would not pay any tax at all. But, as I pointed out, one has to bear in mind that nearly every company in this profits range will be covered by the close company provisions and be compelled to distribute 60 per cent. of earnings—

Mr. Harold Lever indicated dissent.

Mr. Lubbock

Perhaps the hon. Gentle.; men will give figures when he addresses the Committee, as I am sure he will, but that is my impression and, I think, that of most members of the Committee. We therefore get a very different situation.

I should like hon. Members to bear in mind a second point in relation to close companies. They cannot deduct interest on loans from their profits for the purposes of tax calculation. There is no means of knowing what difference this will make to the smaller company, but I have been sent figures from a number of companies which show that it will absolutely cripple them. In many cases, where they have been making reasonable profits hitherto, the fact that they are not able to deduct interest on loans will put them well into the "red". Unless some of the Chancellor's promised Amendments deal with this point, there is no means whatsoever of them escaping the consequences of those provisions.

In most of these companies the shareholders are not rich men. They cannot suddenly replace the loan money with equity capital provided out of their own pockets. I doubt whether in the present credit squeeze situation a bank would look kindly on a director or a shareholder who said, "This will be very expensive for me if I have to pay interest on loan money. I should like to redeem the loan and replace it with equity capital out of my own pocket". I do not think that the Chancellor would encourage the banks to lend money for that purpose, not only because he wishes to keep total borrowings down, but also because this would make a substantial hole in the amount of revenue received from the new tax on close companies.

The Chancellor should do something for these smaller companies. After all, if he is prepared to do it in the Profits Tax case, where the level of taxation is only 15 per cent., how much more should it be done in the case of the new Corporation Tax at 35 per cent. or 40 per cent.? I shall not be dogmatic about it. My scheme, or the scheme of the hon. Member for Wimbledon, may not be the ideal way of doing it, but I should like the Minister without Portfolio to give us some crumb of comfort and say that he will recognise the position of the smaller companies and that, if he is not prepared to accept either of these schemes, he will come forward with one of his own to give them some help.

Mr. Harold Lever

There can be few ears in the House of Commons more receptive by reflex action to pleas for a reduction in tax than my own. Although I welcome the spirit with which the Amendment was moved and supported, I cannot agree that either the drafting or the strict purpose can be acceptable to the Chancellor of the Exchequer. It is asked that small companies shall, if they can justify no dividend payment, be totally exempted from tax. As I understand it, that is the purport of the Amendment.

It is all right saying that there are many cases where small companies would feel obliged to pay a dividend or would be compelled to pay a dividend by reason of the Clause 72 machinery. However, there are other cases where, for one reason or another, companies could not be compelled and would not feel inclined to pay a dividend and would hence earn their profits free of tax as to the first £2,000 and with little or no tax to pay on the higher areas of earnings that are dealt with in the Schedules, which, I regret to say, I have not studied with the detail which I perhaps should have devoted to them.

I think that I have the general tenor of it. We would be creating a little Jersey in our midst, where people in small companies would be paying no tax at all on the first £2,000, in many cases, and in other cases would be paying far less than normal. In these circumstances, we cannot possibly risk such a consequence occurring. I do not think that the hon. Member for Wimbledon (Sir C. Black) or his supporter intended any such consequence. [Interruption.] I gather that the hon. Member for Orpington (Mr. Lubbock) was not supporting the Amendment, except in principle. He was supporting his own Amendment. However, I do not think that either hon. Gentleman is in favour of the strict words of his own intentions as evidenced on the Notice Paper.

There is another objection. I want to get it in before the Treasury get it in, because the Treasury is very obsessed with this question. There is a real danger of tax avoidance arising if great care is not taken. The concession made under the old Profits Tax provisions was not used in the spirit in which it was granted by Parliament. What happened was that profits up to £2,000 in a company were exempted from Profits Tax and a number of people had a great number of little companies, where that was feasible, which traded without paying Profits Tax at all. This is not the intention of either the hon. Member for Wimbledon or the hon. Member for Orpington. I hope that the Chancellor will not use this as an objection to doing something for small companies, because it only needs a little drafting skill to ensure that the benefit of this provision is obtained only once.

The Minister without Portfolio (Sir Eric Fletcher) indicated dissent.

Mr. Harold Lever

I see that my hon. Friend shakes his head. I do not like dusty answers on the basis of technical objections. If my hon. Friend says to the Committee, "There is a technical objection, but my heart is with you and, if we can overcome the technical objection, we will", that is one thing. However, my hon. Friend must not say that, because there is a technical objection he will not consider the matter further. I am sure that it is not a light task to overcome the technical difficulty, but I should like to hear my hon. Friend say that in spirit he would like to do something for the little man who has his small company and who has always had a concession.

It is not valid for hon. Members to argue about the deduction of interest, because the right place to complain about hardship resulting from that is when we discuss whether those Clauses shall stand as they now are. It may well be that the Chancellor will invite us and lead us by the hand into abandoning those Clauses or modifying them in a manner which may meet with warm response from both sides of the Committee. I live in expectations of such a happy eventuality. At all events, now is not the time to seek to remedy that difficulty.

The point which should be considered by the Government is this. Small people often trade as companies as an alternative to trading in their own names. It is widely recognised that corporate status for some of the smaller companies is socially desirable because, if they get into financial difficulties, it is not in the social interest that they should be personally made bankrupt and their personal possessions and homes be subject to the misfortune of their little business. On balance, it has been recognised in modern times that it is desirable to have corporate status for small traders. After all, nobody is obliged to give them credit if they do not want to. They know that they are trading with a company. We should not be too ready to discourage the use of corporate status by small companies.

The suggestion and the plea is that the spirit of the Amendment should be accepted, not the word or anything like the cost to the Revenue which is envisaged. If the spirit is not accepted, namely, that a man trading in a small way in a small company shall get some of the tax reliefs which would accrue if he traded personally, it will be impossible for many small people to trade with corporate status and the social result will be disadvantageous and retrograde. I ask my hon. Friend the Minister without Portfolio to come with us in spirit first. Let us deal, first, with the spirit. Then, if he tells us that there are difficulties, we will all put our heads together and see if we cannot solve them.

Mr. Frederic Harris (Croydon, North-West)

As I understood what the hon. Member for Manchester, Cheetham (Mr. Harold Lever) said, he is obviously with us in spirit in the Amendment which has been so ably moved by my hon. Friend the Member for Wimbledon (Sir C. Black). It seems to be a great loss to the Government and to the Committee that we do not get the direct benefit of the real all-out experience of the hon. Member for Cheetham. Is not this a first class opportunity for the Minister without Portfolio, if he finds any difficulty, to suggest to the hon. Member for Cheetham that he might put forward a proposition himself to meet the difficulty? If such a proposition were taken up, it would surely have the full support of the hon. Member for Cheetham himself and all of us would be delighted to go into the Lobby in support of it.

I am very pleased to be directly associated with what I believe many hon. Members will think is a very reasonable and moderate Amendment. I am the first to recognise the difficulty to which the hon. Member for Cheetham referred, of the possibility of tax avoidance, because we all appreciate that this has occurred in the past, although it was not intended to be so. But, as he himself says, if it were done on the basis of a once-for-all company, one could with careful drafting find an answer to protect something which none of us would like to see abused.

5.0 p.m.

Like most hon. Members, I am very pro the small businessman. We all appreciate that small businessmen are vital to our country's economic life. Like many hon. Members, I have been appealed to in my own constituency, and in Croydon generally, by small businessmen who feel great concern about their tax burdens as they appear to arise from the Bill generally and the Corporation Tax in particular.

My hon. Friend the Member for Wimbledon presented the Amendments with such excellent detail that I trust we shall have a clear answer from the Minister. Either my hon. Friend is right or he is wrong. If the Minister says that he is wrong, will he please tell us in what way? My impression, and the impression of most people, is that the small businessman will, unless the Government's proposals are amended, definitely pay relatively—I stress the word "relatively"—a higher percentage of tax than the larger business. Obviously, it is not right, and it must, be put right.

It is the duty of the Committee to do its utmost to protect small businessmen. They cannot easily protect themselves, and they are not in the same favourable position as large business houses which can take steps to ensure that they are not put in difficulties. But the small businessman turns to Members of Parliament to help him in these matters, and this is art ideal occasion for the Committee to respond and persuade the Government that there is something here to be put right.

I trust that the Minister will accept what we propose. If our Amendments are not drafted as he wishes, or if there is something technically wrong with them, as the hon. Member for Cheetham has pointed out, we ought, nevertheless, to have an assurance that the purpose behind them will be met by the Government. If the principle we are trying to establish is accepted, that there should be a certain amount of exemption or relief, or even a variation in the scales proposed, as the hon. Member for Orpington (Mr. Lubbock) has suggested, it becomes a question of degree and a matter which could be readily dealt with, the Government bringing forward their own proposals to meet it. We want to ensure that the small businessman has a chance to get on with the excellent job which he does today. Here is an opportunity for the Committee to respond and say quite clearly that it is not the intention to make things impossible for him.

Mr. Geoffrey Hirst (Shipley)

I support the Amendments which we are discussing. The meat is really in Amendment No. 85, the new Schedule, which proposes relief under £2,000 and a tapering off. The principle which has emerged in our discussions is vital. The smaller the company the greater is the weight of taxation under the Chancellor's new proposals, and this is quite insufferable. As we all must have done, I have received representations in my own constituency and from a much wider source, and it is plain that there is strong feeling of injustice here, which is recognised on both sides of the Committee. It is not just a feeling of injustice; clearly, injustice is done by the Bill and it must be put right.

As has been said, we do not expect to tie the Government to any specific Amendment on this matter, but the Minister will get into considerable trouble unless at this time, after the considerable notice he has been given my hon. Friend the Member for Wimbledon (Sir C. Black) has been particularly good in putting his Amendments down a long time beforehand—he has an answer to satisfy us that the Government really understand that there is injustice to smaller business people and that they intend to give a satisfactory reply. There must be a satisfactory reply. The position is intolerable.

Although the Government are not very friendly to free enterprise, I cannot believe that they gratuitously sat down to try to see how they could smack smaller businesses with the biggest bump of all. This must be something which arises out of the obviously extremely hasty, inexpert and most inaccurate Finance Bill that we have ever had. Here is a chance for the Government to "come clean" and show that they are not out to work a grave injustice on a large number of small business people.

Mr. Emlyn Hooson (Montgomery)

There is considerable point in the observations of the hon. Member for Manchester, Cheetham (Mr. Harold Lever) that there are certain technical and drafting difficulties in meeting the case which has been made for relief, although such relief is widely desired. Nevertheless, those difficulties should not blind the Government to the fact that reliefs of the kind proposed by the hon. Member for Wimbledon (Sir C. Black) and by my hon. Friend the Member for Orpington (Mr. Lubbock) are very much in the interest of the country as a whole. The small man needs to be encouraged, and what we propose is a kind of small man's charter within the Bill.

It is difficult today for a young man to set up a creative business and build capital for himself. I often think that established capital is much better looked after than creative capital even by a Socialist Government, and it is becoming more and more difficult for the young entrepreneur to set up in business. The small business of today, in a land of opportunity, is potentially the large business of tomorrow. This country has always depended in the end on the initiative, the brains and the hard work of young men of creative ability, and we should be very foolish not to encourage them to the utmost.

As the hon. Member for Cheetham said, it is socially desirable in many ways that small businesses should operate in the form of limited liability companies, and they should not be discouraged. Where would a Nuffield of today be with the restrictions which would be put on such a potential enterpreneur in modern society? This is not a partisan point at all. The Government ought to be anxious, even if they are not, to give all possible encouragement to the small businessman and to give him reliefs which are not available to the larger established businesses.

As we have heard, it would be possible to manipulate small companies in order to avoid tax, but these problems can be met if the Clauses are drafted carefully and if proper advice is taken. But even if one or two might slip through the net, that is no reason for making things very difficult for small businesses.

Mr. Percy Holman (Bethnal Green)

hesitate to intervene on this occasion, and I must declare a personal interest in that I am associated with a close business and with an open one. In examining the position, as far as I can understand it, under the terms of the Finance Bill, I find that the open business will not be seriously affected but the close business will be unless it changes its whole policy.

About three weeks ago, I wrote to my hon. Friend the Chief Secretary and gave him a simplified case, dealing purely with a profit of £1,000, to make the point of my question clear. He replied that I was correct on a theoretical basis, but he said: the practical position for the vast majority of small companies will be very different. The reason is that, as I expect you know, companies making profits at this level are normally small family businesses with nearly all their shares held by the people actively engaged in running them, either as directors or as employees. Generally speaking, their remuneration as working directors and as employees will provide them with all the personal income which they expect to receive from the business, and it would be unusual with profits of that order for dividends to be paid as well. In general, therefore, these small companies will pay corporation tax on their profits and nothing more. In other words, what is not distributed as salaries, that is, the small remainder, will pay 8s. in the £ as against 8s. 3d., perhaps, and that means that out of the £100 or £200 which might be left in the business to accumulate as reserve—the firm would save a matter of £1 10s. or £2.

The Temporary Chairman (Sir Harry Legge-Bourke)

I am sorry to have to interrupt the hon. Gentleman, but the Amendments now being discussed by the Committee all concern only the actual rate at which the tax should be levied and possible variations in the rate rather than the principle of whether the tax should be levied at all.

Mr. Holman

I was really coming to that point, Sir Harry, after my illustration—

Sir Douglas Glover (Ormskirk)

On a point of order, Sir Harry. The Amendment would provide that the first £2,000 should be exempt from taxation. As the hon. Gentleman is citing a case below £2,000, is that not in order?

The Temporary Chairman

I agree that that point could be made, but, as I heard it, that was not the point which the hon. Gentleman was making.

Mr. Holman

I was, perhaps, giving a rather full description of a company—it might be said to be somewhat hypothetical—and I took a round figure below £2,000 as an illustration of the point which I was about to make.

What is the effect of the proposals in the Amendments as compared with the effect of the Bill's provisions on a company of this description? In the last financial year, Income Tax at 7s. 9d. in the £ would amount to £388 10s. Under the proposals in the Bill as it stands, with Corporation Tax at 40 per cent., the charge would be £647 10s. If the proposals in these Amendments were adopted, the corresponding figure would be only £412 10s., that is to say, taking in the 6d. increase in Income Tax, with no Corporation Tax affecting it at all.

I gather that my hon. Friends the Member for Manchester, Cheetham (Mr. Harold Lever) and the Chief Secretary think that the bulk of companies of this character will not be affected. In my own trade association, I have made various inquiries, and I find that a large proportion of such firms—95 per cent., I would say make less than £12,000 a year profit, and a great many of them extend well beyond immediate family, relations and friends.

Mr. Harold Lever

I must have made myself badly misunderstood if my hon. Friend thought that I said that these companies were not affected. I expressed sympathy with the purpose of the Amendments, but I thought that its terms were too wide precisely because there are many companies which would be affected by these provisions.

Mr. Holman

Perhaps I use rather too strong an expression, but I understood my hon. Friend to say that he thought that small concerns would be affected to only a minor extent.

Many of these companies will find it very difficult to abolish their policy of paying dividends, which they would almost certainly have to do under the Bill unless it is amended in accordance with this series of Amendments. There is the need to pay some dividends to friends and others in these small private companies. In many cases, however, they could save on the present basis of taxation by distributing the whole of their profits as salaries to their members, thus getting the advantage of the earned income allowance.

So the Revenue could, in certain circumstances, lose through driving many businesses to adopt that method. It would apply to all those companies. I would strongly favour a progressive, graduated Corporation Tax on smaller companies.

5.15 p.m.

Mr. Raymond Gower (Barry)

The Minister has heard a series of very effective pleas for a concession along the lines of the Amendment of my hon. Friend the Member for Wimbledon (Sir C. Black) and the hon. Member for Orpington (Mr. Lubbock). The Minister has no portfolio, but he has today an assignment and an opportunity. He has an opportunity to remove the fears from the minds of a very large number of small businessmen and the directors of small or modest-size companies. It may be that those fears have been exaggerated; it may be that some of them have little or no basis; but I can assure the hon. Gentleman those those fears are fairly widespread.

Typical of those fears was a remark of a constituent of mine who is by no means a supporter of the party on this side of the Committee. He asked me whether I thought that the Government had any real future in mind for the small company. He was beginning to think that the Government had no place in their economy for companies of this size.

There is also the uneasy suspicion, which is fairly widely disseminated, that the Government are using this tax to the definite disadvantage of some of the smaller companies. The principle which has been asked has already been in practice in the application of Profits Tax. Indeed, I should have thought that the principle of a large company benefitting, and a smaller company paying, in effect, more, is the complete antithesis of Socialism. I should have thought that those on that side of the Committee who have always said that the broadest shoulders should bear the greatest weight would not have been putting forward a system under which the exact reverse is the case. Surely they should eagerly grasp this opportunity of enabling the larger companies to fare not so well and the smaller companies to derive maximum benefit.

I do not think that my hon. Friend the Member for Wimbledon, who stated his case with such clarity and benefit, is committed to the exact details of this Amendment. Likewise, the hon. Member for Orpington said he was not committed to the exact wording of his. I really think that my hon. Friend was in one respect too kind when he posed his case. Of the basis of the present wording I think that he used the word "infamous".

Mr. Harold Lever

"Iniquitous".

Mr. Gower

Yes, he used the word "iniquitous", but it is also infamous, and I hope that the iniquitous part will be removed, by the acceptance by the Minister without Portfolio of the broad principle. He could easily, as has been already suggested, find a form of words in due course to close any gap.

The suggestion has been made that smaller companies can overcome this difficulty by the profits being largely distributed to directors. I should have thought that most undesirable, absolutely undesirable for the effectiveness of those businesses, and, of course, it is the exact opposite of the proposal for some of the very large companies. The very good example which my hon. Friend posed will, I hope, be considered by the Minister. I hope that he will consider in how many cases those smaller companies pay through allotting shares to some members of the family or relations who have invested a small amount of money.

I have not the slightest doubt that we on this side will support the principle of these Amendments. We hope that the Minister will accept the principle, even if he cannot accept the details.

Sir Eric Fletcher

Perhaps it will be of assistance to the Committee if I intervene at this stage to reply to the very large number of speeches we have already had. The hon. Member for Wimbledon (Sir C. Black) began by saying that he would move his Amendment in a moderate, reasonable, brief speech, which he did and most other hon. Members have followed his example, and I shall try to emulate them.

I should like to begin by assuring my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) and others who have spoken that the Government are by no means unsympathetic to the problems and the claims of the small man and the small trader. We are very conscious of their problems and their difficulties, and anxious to hold the balance fairly between them and all other sections of the community. I can assure my hon. Friend that it would not be for any technical reason that the Government feel obliged to comment adversely on the proposals now before the Committee.

It is, of course, perfectly true, as my hon. Friend the Member for Cheetham knows, that there has been a certain amount of tax avoidance under the Profits Tax. A number of people conducting large businesses have found it convenient, instead of conducting their own business in one company, to form a large number of small companies so that each small company could obtain the benefits of the relief under the Profits Tax. It is not on that ground that I must, for reasons I shall give, invite the Committee to resist this Amendment.

The hon. Member for Wimbledon gave a number of figures and I will give only two, in answer to the hon. Member for Orpington (Mr. Lubbock). The hon. Member for Wimbledon's case was that small companies will be worse off under this Bill because they will lose the relief which they formerly had from Profits Tax. Then he proceeded to give a large number of figures. What he omitted to give was the comparable figures showing how much better off they will be if the proposals in his Amendment were accepted. I think that he must realise that his proposals would give small companies far more generous and favourable treatment than ever they had under the Profits Tax. Therefore, I would suggest that comparison with the difference under Profits Tax should be completely ignored. There is no comparison. We are abolishing Profits Tax and substituting an entirely new tax.

In support of that point it is relevant to remind the Committee that when the Royal Commission considered this precise question of the reliefs and exemption for small companies under Profits Tax it recommended in the Majority Report—the Memorandum of Dissent shared the same view—that there was no justification for maintaining the excessive exemption and relief for small companies. That was recommended in paragraphs 556–7, and the Commission said in terms: We therefore recommend that these provisions "— for exemption and abatement for small companies— should be omitted when the profits tax is recast. This is the view which the Government take.

I was asked by the hon. Member for Orpington what would be the cost to the Exchequer of these Amendments. I think this figure is at least as relevant as all the other figures we have had showing how individual small companies would be affected. I am giving the figure to the hon. Member for Orpington. The cost to the Exchequer, if his Amendment were accepted, would be about £40 million a year. He recognised that his proposal was more modest than the proposal of the hon. Member for Wimbledon, but it may shock the Committee, particularly the hon. Member for Barry (Mr. Gower), to learn that if the hon. Member for Wimbledon's Amendment were accepted the cost to the Exchequer would be £130 million a year, if Corporation Tax is fixed at the rate of 35 per cent., and £150 million a year if Corporation Tax is fixed at 40 per cent.

Mr. Kenneth Lewis (Rutland and Stamford)

The Minister gives a figure of £40 million. Taking that figure of £40 million, could he tell us how much of that £40 million has been a plus which has been put on the small man through the Budget?

Sir Eric Fletcher

I am not sure one can give a precise comparison, but I must insist that the answer is really nothing at all.

I think that I shall convince the Committee that there is no hardship whatever to the small trader under the proposals now before the Committee. Any fears that they may have had are, I think, grossly exaggerated. Relief from Profits Tax was a concession for which, as the Royal Commission pointed out, there was no justification either in logic or in equity, or in fiscal policy.

The Royal Commission also pointed out, as some hon. Members have indicated, that small companies are, on the whole, treated very generously by the Revenue in the fiscal arrangements. Directors are allowed to draw substantial salaries and are enabled to claim income relief on them. As many hon. Members in the Committee will know, there are a large number of small trading companies, and growing companies, of the kind we want to encourage, which operate quite legitimately in such a way that the bulk of the profits are drawn out by the directors, and very often there is little, if any, distribution by way of dividend, and profits over and above those required for paying salaries and directors' fees are ploughed back.

Another factor is this. Whereas, therefore, I am convinced that there is no hardship on the small company under the scheme as it stands, I think that the Committee should realise that injustice would be caused to the individual trader who traded without forming a company, if this very expensive concession were granted. One must consider the comparable position of the person who forms a company to conduct his small business and gets the benefit of drawing director's fees and getting earned income relief and paying only at 40 per cent. as compared with the individual—of whom, I suppose, there are at least as many as those who form and operate small companies—who chooses not to form a company, but operates as a private trader, or perhaps as a partnership, and who, under the law as it stands and will continue, is liable to pay Income Tax and Surtax at the full rate on all his profits without any provision for retention or otherwise.

5.30 p.m.

Therefore, I do not entirely agree with the observation of my hon. Friend the Member for Cheetham. He said that the formation of companies to enable traders to operate as companies was socially desirable. I do not dissent from that. But no one is obliged to form a company, and a lot of people prefer to carry on a small business without forming a company. If an individual chooses to operate as a company and to get the very substantial advantages of company law, it would not be unreasonable if he were subject to the same rules about Corporation Tax as other companies. But, in my view, it would certainly be unfair for him to claim fiscal advantages over his neighbour and competitor who did not form a company.

While I appreciate the spirit in which the Amendment has been moved and supported by Members on both sides of the Committee, for the reasons which I have given I must ask hon. Gentlemen to reject it.

Mr. Hirst

I am not trying to compare strictly our Amendment with the Profits Tax exemption and relief. On the other hand, in judging the hon. Gentleman's argument, it would be useful if he could discover for the Committee the approximate value of the former exemption and relief from Profits Tax on such companies. While the debate is going on, could the hon. Gentleman ascertain the figure, which I am sure is readily available?

Mr. Harold Lever

Would my hon. Friend deal with the point which I made, but made very clumsily, obviously. I am in sympathy with the object of helping the small man, but nobody could possibly support the terms of the Amendment. I thought that I made that clear. Is there any objection to formulating a concession which would put the small man running a company in no better, but no worse position than if he traded on his own account and in his own name?

Mr. William Clark (Nottingham, South)

We have had a very good debate, and I am delighted that my hon. Friends and hon. Members opposite have kept their remarks brief and have expressed their view with such clarity.

My hon. Friend the Member for Wimbledon (Sir C. Black) was very restrained. I know that he feels very passionately on this subject. What we have to do is to consider the present arrangement about Profits Tax in respect of which there is an exemption of £2,000 with a sliding scale of abatement up to £12,000. My hon. Friend is trying to introduce the same sort of abatement from £2,000 to £15,000 in respect of Corporation Tax.

Even the hon. Member for Manchester, Cheetham (Mr. Harold Lever), with his usual habit of agreeing with Members on both sides of the Committee at the same time, agrees that there is something in the principle which my hon. Friend advocates. The examples which my hon. Friend gave—and the Minister did not really answer them—showed clearly that the small company, when it comes into the Corporation Tax range, suffers a tremendously steep rise in taxation, whereas the rise which a large company suffers is very gradual. We are not wedded to this particular formula. The Minister has given figures of £40 million and £130 million. This is obviously a matter which must be looked into, but I cannot understand the inflexible attitude of the Government.

The hon. Member for Cheetham, in one of his interventions, argued the question of distribution. I must remind the Committee that in the figures which my hon. Friend the Member for Wimbledon gave the profit is after directors remuneration has been taken into account. This is exactly the same principle as we have in Profits Tax. There are certain restrictions and limitations on directors salaries and it is only after they have been charged that, in the computation of Profits Tax, one starts paying the 15 per cent. The bogus point that the hon. Member for Cheetham made can be dismissed as easily as that.

The hon. Gentleman referred to the situation in which no dividends are paid. As has been pointed out, most small companies are close companies under the Bill, and they are duty bound to distribute at least 60 per cent. My hon. Friend the Member for Wimbledon gave the effect of the distribution of 60 per cent. He proved conclusively that with a distribution of 60 per cent., a £2,000 profit would have a 41 per cent. increase and a £50,000 profit would have a 2 per cent. increase.

Mr. Harold Lever

What about no distribution?

Mr. Clark

The hon. Gentleman keeps on saying, "What about no distribution?" What he does not realise is that subsequently in the Bill there are stringent provisions—more stringent than any provisions we have ever had in our fiscal system—concerning close companies. It is all very well wearing blinkers and saying that we are discussing only Clause 42 and that Clause 69 comes 27 Clauses later. Surely we should anticipate later Clauses in seeing what the effect of this Clause will be.

Partnerships have been mentioned, but they are not subjected to the same stringent regulations as there are in Clause 69 concerning close companies, the payment of interest, and so on. It would be out of order to develop that point, but I think that it is as well to mention that as reference has been made to partnerships.

The hon. Member for Orpington (Mr. Lubbock) said that he agreed with the principle. I am sure that all his colleagues in the Liberal Party and many hon. Members opposite agree with the principle. He said, quite rightly, that the formula is far too expensive and not sufficiently sophisticated but that the principle is right. I was delighted to hear the hon. Member for Cheetham give his right hon. and hon. Friends on the Front Bench notice that he would do something about the payment of interest by close companies.

I assure him that my right hon. and hon. Friends will support him in that when we reach that part of the Bill. I hope that when we reach the question of interest payments he will support his own conviction, which would be a change in this Committee. We on this side of the Committee would welcome it very much.

Mr. Lubbock

In fact, the hon. Member for Manchester, Cheetham (Mr. Harold Lever) could save himself the trouble merely by putting his name to the Amendment which we have tabled dealing with this point.

Mr. Clark

No doubt the hon. Member for Cheetham has taken note of that, and I am sure that he will be in the Table Office as soon as possible to add his name to that of other hon. Members who have signed that Amendment.

As my hon. Friend the Member for Barry (Mr. Gower) said, businessmen throughout the country, irrespective of politics, are extremely worried about the implications of the Bill, particularly as they apply to close companies. After all, there are the small businessmen. They think that they will be penalised. If the Bill goes through as it is drafted, the small man is bound to be hit very severely because of the fiscal method which the Government have adopted.

The Government are obsessed with tax avoidance. Whenever they run out of arguments, they always come back to the same point. They say that there is tax avcidance and that the Bill will close a

loophole. I cannot understand why a Corporation Tax of this magnitude and complication should be introduced to deal with tax avoidance. It is the same as the Government saying, "We know that one of these 1,000 men is dishonest. Therefore, let us put them all in goal." This is their philosophy. It is about time they stopped talking about tax avoidance.

Too often in the Bill we hear the death knell for small businessmen. It is all very well for hon. Members opposite to smirk about this, but it is a fact. The Government must be more flexible.

The Minister quoted the Royal Commission's Report. We can all quote that when it suits us. We have passed many other things in the Bill which were voted against by the Royal Commission. The Government cannot have it both ways.

The Minister, in his very courteous reply, paid lip service to the small businessman, but the small businessman wants more than lip-service from the Government.

It will be agreed on both sides that my hon. Friend's point of view has been put in a restrained and reasonable manner. The Government are being extremely unreasonable and inflexible in not saying that they will look at the question again. We are not arguing about the figures. Of course, the formula needs to be sophisticated. One would not dream of putting in something that would cost £130 million. What we do not want to do, however, is to put the small businessman in any worse position than he is before the implications of the Bill take effect.

Because the Government will not be flexible about this matter, and because they will not give an assurance at least to look at it again, I ask my right hon. and hon. Friends to divide in support of the Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 268, Noes 288.

Division No. 163.]	AYES	[5.41 p.m.
Agnew, Commander Sir Peter	Awdry, Daniel	Bennett, Sir Frederic (Torquay)
Alison, Michael (Barkston Ash)	Baker, W. H. K.	Bennett, Dr. Reginald (Gos & Fhm)
Allan, Robert (Paddington, S.)	Balniel, Lord	Berry, Hn. Anthony
Allason, James (Hemel Hempstead)	Barber, Rt. Hn. Anthony	Biffen, John
Anstruther-Gray, Rt. Hn. Sir W.	Barlow, Sir John	Biggs-Davison, John
Astor, John	Batsford, Brian	Bingham, R. M.
Birch, Rt. Hn. Nigel	Griffiths, Eldon (Bury St. Edmunds)	Murton, Oscar
Black, Sir Cyril	Griffiths, Peter (Smethwick)	Neave, Airey
Blaker, Peter	Gurden, Harold	Nicholis, Sir Harmar
Bossom, Hn. Clive	Hall, John (Wycombe)	Nicholson, Sir Godfrey
Box, Donald	Hall-Davis, A. G. F.	Noble, Rt. Hn. Michael
Boyd-Carpenter, Rt. Hn. J.	Hamilton, Marquess of (Fermanagh)	Nugent, Rt. Hn. Sir Richard
Boyle, Rt. Hn. Sir Edward	Hamilton, M. (Salisbury)	Onslow, Cranley
Braine, Bernard	Harris, Frederic (Croydon, N.W.)	Orr, Capt. L. P. S.
Brewis, John	Harris, Reader (Heston)	Orr-Ewing, Sir Ian
Brinton, Sir Tatton	Harrison, Brian (Maldon)	Osborn, John (Hallam)
Bromley-Davenport,Lt.-Col.SirWalter	Harrison, Col. Sir Harwood (Eye)	Osborne, Sir Cyril (Louth)
Brooke, Rt. Hn. Henry	Harvey, Sir Arthur Vere (Macclesf'd)	Page, John (Harrow, W.)
Brown, Sir Edward (Bath)	Harvey, John (Walthamstow, E.)	Page, R. Graham (Crosby)
Bruce-Gardyne, J.	Harvie Anderson, Miss	Pearson, Sir Frank (Clitheroe)
Bryan, Paul	Hastings, Stephen	Percival, Ian
Buchanan-Smith, Alick	Hawkins, Paul	Peyton, John
Buck, Antony	Hay, John	Pickthorn, Rt. Hn. Sir Kenneth
Bullus, Sir Eric	Heald, Rt. Hn. Sir Lionel	Pike, Miss Mervyn
Burden, F. A.	Heath, Rt. Hn. Edward	Pitt, Dame Edith
Butcher, Sir Herbert	Hendry, Forbes	Powell, Rt. Hn. J. Enoch
Buxton, Ronald	Higgins, Terence L.	Price, David (Eastleigh)
Campbell, Gordon	Hiley, Joseph	Prior, J. M. L.
Carlisle, Mark	Hill, J. E. B. (S. Norfolk)	Quennell, Miss J. M.
Carr, Rt. Hn. Robert	Hirst, Geoffrey	Ramsden, Rt. Hn. James
Cary, Sir Robert	Hobson, Rt. Hn. Sir John	Redmayne, Rt. Hn. Sir Martin
Chataway, Christopher	Hogg, Rt. Hn. Quintin	Rees-Davis, W. R.
Chichester-Clark, R.	Hopkins, Alan	Renton, Rt. Hn. Sir David
Clark, Henry (Antrim, N.)	Hordern, Peter	Ridsdale, Julian
Clark, William (Nottingham, S.)	Hornby, Richard	Roberts, Sir Peter (Heeley)
Clarke, Brig. Terence (Portsmth, W.)	Howard, Hn. G. R. (St. Ives)	Robson Brown, Sir William
Cole, Norman	Howe, Geoffrey (Bebington)	Rodgers, Sir John (Sevenoaks)
Cooke, Robert	Hunt, John (Bromley)	Roots, William
Cooper, A. E.	Hutchison, Michael Clark	Royle, Anthony
Cooper-Key, Sir Neill	Iremonger, T. L.	Russell, Sir Ronald
Cordle, John	Irvine, Bryant Godman (Rye)	St. John-Stevas, Norman
Corfield, F. V.	Jenkin, Patrick (Woodford)	Scott-Hopkins, James
Costain, A. P.	Jennings, J. C.	Sharples, Richard
Courtney, Cdr. Anthony	Jones, Arthur (Northants, S.)	Shepherd, William
Craddock, Sir Beresford (Speithorne)	Jopling, Michael	Smyth, Rt. Hn. Brig. Sir John
Crawley, Aidan	Joseph, Rt. Hn. Sir Keith	Spearman, Sir Alexander
Crosthwaite-Eyre, Col. Sir Oliver	Kaberry, Sir Donald	Speir, Sir Rupert
Crowder, F. P.	Kerby, Capt. Henry	Stainton, Keith
Cunningham, Sir Knox	Kerr, Sir Hamilton (Cambridge)	Stanley, Hn. Richard
Curran, Charles	Kilfedder, James A.	Stodart, Anthony
Currie, C. B. H.	Kimball, Marcus	Stoddart-Scott, Col. Sir Malcolm
Dalkeith, Earl of	King, Evelyn (Dorset, S.)	Studholme, Sir Henry
Dance, James	Kirk, Peter	Talbot, John E.
Davies, Dr. Wyndham (Perry Barr)	Lagden, Godfrey	Taylor, Sir Charles (Eastbourne)
d'Avigdor-Goldsmid, Sir Henry	Lambton, viscount	Taylor, Edward M. (G'gow,Cathcart)
Dean, Paul	Lancaster, Col. C. G.	Taylor, Frank (Moss Side)
Deedes, Rt. Hn. W. F.	Langford-Holt, Sir John	Teeling, Sir William
Digby, Simon Wingfield	Lewis, Kenneth (Rutland)	Temple, John M.
Doughty, Charles	Litchfield, Capt. John	Thatcher, Mrs. Margaret
Douglas-Home, Rt. Hn. Sir Alec	Lloyd,Rt.Hn.Geoffrey (Sut'nC'dfield)	Thomas, Sir Leslie (Canterbury)
Drayson, G. B.	Lloyd, Ian (P'tsm'th, Langstone)	Thomas, Rt. Hn. Peter (Conway)
du Cann, Rt. Hn. Edward	Longbottom, Charles	Thompson, Sir Richard (Croydon, S.)
Eden, Sir John	Longden, Gilbert	Thorneycroft, Rt. Hn. Peter
Elliot, Capt. Walter (Carshalton)	Loveys, Walter H.	Tiley, Arthur (Bradford, W.)
Elliott, R. W.(N'c'tle-upon-Tyne,N.)	Lucas, Sir Jocelyn	Tilney, John (Wavertree)
Eyre, Reginald	McAdden, Sir Stephen	Turton, Rt. Hn. R. H.
Farr, John	MacArthur, Ian	Tweedsmuir, Lady
Fell, Anthony	McLaren, Martin	van Straubenzee, W. R.
Fisher, Nigel	Maclean, Sir Fitzroy	Vaughan-Morgan, Rt. Hn. Sir John
Fletcher-Cooke, Charles (Darwen)	McMaster, Stanley	Vickers, Dame Joan
Fletcher-Cooke, Sir John (S'pton)	McNair-Wllson, Patrick	Walder, David (High Peak)
Foster, Sir John	Maginnis, John E.	Walker, Peter (Worcester)
Fraser,Rt.Hn.Hugh(St'fford & Stone)	Maitland, Sir John	Walker-Smith, Rt. Hn. Sir Derek
Fraser, Ian (Plymouth, Sutton)	Marples, Rt. Hn. Ernest	Walters, Dennis
Galbraith, Hn. T. G. D.	Marten, Neil	Ward, Dame Irene
Gammans, Lady	Maude, Angus	Weatherill, Bernard
Gardner, Edward	Mawby, Ray	Wells, John (Maidstone)
Gibson-Watt, David	Maxwell-Hyslop, R. J.	Whitelaw, William
Giles, Rear-Admiral Morgan	Maydon, Lt.-Cmdr. S. L. C.	Williams, Sir Rolf Dudley (Exeter)
Gilmour, Ian (Norfolk, Central)	Meyer, Sir Anthony	Wills, Sir Gerald (Bridgwater)
Gilmour, Sir John (East Fife)	Mills, Peter (Torrington)	Wilson, Geoffrey (Truro)
Glover, Sir Douglas	Mills, Stratton (Belfast, N.)	Wise, A. R.
Glyn, Sir Richard	Miscampbell, Norman	Wolrige-Gordon, Patrick
Goodhart, Philip	Mitchell, David	Wood, Rt. Hn. Richard
Goodhew, Victor	Monro, Hector	Woodhouse, Hn. Christopher
Gower, Raymond	More, Jasper	Woodnutt, Mark
Grant, Anthony	Morgan, W. G.	Wylie, N. R.
Grant-Ferris, R.	Morrison, Charles (Devizes)	Younger, Hn. George
Gresham Cooke, R.	Mott-Radclyffe, Sir Charles
Grieve, Percy	Munro-Lucas-Tooth, Sir Hugh	TELLERS FOR THE AYES:
		Mr. Pym and Mr. Dudley Smith.

NOES
Abse, Leo	Galpern, Sir Myer	Mahon, Peter (Preston, S.)
Albu, Austen	Garrett, W. E.	Mahon, Simon (Bootle)
Allaun, Frank (Salford, E.)	Garrow, A.	Mallalieu, E. L. (Brigg)
Alldritt, Walter	Ginsburg, David	Mallalieu,J.P.W.(Huddersfield,E.)
Allen, Scholefield (Crewe)	Gourlay, Harry	Mapp, Charles
Armstrong, Ernest	Greenwood, Rt. Hn. Anthony	Mason, Roy
Atkinson, Norman	Gregory, Arnold	Mayhew, Christopher
Bacon, Miss Alice	Griffiths, David (Rother Valley)	Mellish, Robert
Bagier, Gordon A. T.	Griffiths, Rt. Hn. James (Llanelly)	Mendelson, J. J.
Barnett, Joel	Griffiths, Will (M'chester, Exchange)	Mikardo, Ian
Baxter, William	Grimond, Rt. Hn. J.	Millan, Bruce
Beaney, Alan	Gunter, Rt. Hn. R. J.	Miller, Dr. M. S.
Bence, Cyril	Hale, Leslie	Milne, Edward (Blyth)
Benn, Rt. Hn. Anthony Wedgwood	Hamilton, James (Bothwell)	Molloy, William
Bennett, J. (Glasgow, Bridgeton)	Hamilton, William (West Fife)	Monslow, Walter
Binns, John	Hamling, William (Woolwich, W.)	Morris, Alfred (Wythenshawe)
Bishop, E. S.	Harper, Joseph	Morris, Charles (Openshaw)
Blackburn, F.	Harrison, Walter (Wakefield)	Morris, John (Aberavon)
Blenkinsop, Arthur	Hart, Mrs. Judith	Mulley,Rt.Hn.Frederick(SheffieldPk)
Boardman, H.	Hattersley, Roy	Murray, Albert
Boston, T. G.	Hazell, Bert	Neal, Harold
Bottomley, Rt. Hn. Arthur	Healey, Rt. Hn. Denis	Newens, Stan
Bowden, Rt. Hn. H. W. (Leics S. W.)	Henderson, Rt. Hn. Arthur	Noel-Baker, Francis (Swindon)
Bowen, Roderic (Cardigan)	Herbison, Rt. Hn. Margaret	Noel-Baker,Rt.Hn.Philip(Derby,S.)
Boyden, James	Hill, J. (Midlothian)	Norwood, Christopher
Braddock, Mrs. E. M.	Hobden, Dennis (Brighton, K'town)	Oakes, Gordon
Bradley, Tom	Holman, Percy	Ogden, Eric
Bray, Dr. Jeremy	Hooson, H. E.	O'Malley, Brian
Broughton, Dr. A. D. D.	Horner, John	Oram, Albert E. (E. Ham, S.)
Brown, Hugh D. (Glasgow, Provan)	Houghton, Rt. Hn. Douglas	Orbach, Maurice
Buchan, Norman (Renfrewshire) W.)	Howarth, Harry (Wellingborough)	Orme, Stanley
Buchanan, Richard	Howarth, Robert L. (Bolton, E.)	Oswald, Thomas
Butler, Herbert (Hackney, C.)	Howell, Denis (Small Heath)	Owen, Will
Butler, Mrs. Joyce (Wood Green)	Howie, W.	Padley, Walter
Callaghan, Rt. Hn. James	Hoy, James	Page, Derek (King's Lynn)
Carmichael, Neil	Hughes, Cledwyn (Anglesey)	Paget, R. T.
Carter-Jones, Lewis	Hughes, Emrys (S. Ayrshire)	Palmer, Arthur
Castle, Rt. Hn. Barbara	Hughes, Hector (Aberdeen, N.)	Pannell, Rt. Hn. Charles
Chapman, Donald	Hunter, Adam (Dunfermline)	Pargiter, G. A.
Coleman, Donald	Hunter, A. E. (Feltham)	Park, Trevor (Derbyshire, S.E.)
Conlan, Bernard	Hynd, H. (Accrington)	Parker, John
Corbet, Mrs. Freda	Irving, Sydney (Dartford)	Parkin, B. T.
Cousins, Rt. Hn. Frank	Jackson, Colin	Pavitt, Laurence
Craddock, George (Bradford, S.)	Jay, Rt. Hn. Douglas	Pearson, Arthur (Pontypridd)
Crawshaw, Richard	Jeger, George (Goole)	Peart, Rt. Hn. Fred
Cronin, John	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Pentland, Norman
Crosland, Rt. Hn. Anthony	Jenkins, Hugh (Putney)	Perry, Ernest G.
Cullen, Mrs. Alice	Jenkins, Rt. Hn. Roy (Stechford)	Popplewell, Ernest
Dalyell, Tam	Johnson, Carol (Lewisham, S.)	Prentice, R. E.
Darling, George	Johnson,James(K'ston-on-Hull,W.)	Price, J. T. (Westhoughton)
Davies, G. Elfed (Rhondda, E.)	Johnston, Russell (Inverness)	Probert, Arthur
Davies, Harold (Leek)	Jones, Dan (Burnley)	Pursey, Cmdr. Harry
Davies, Ifor (Gower)	Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)	Randall, Harry
Delargy, Hugh	Jones, J. Idwal (Wrexham)	Rankin, John
Dell, Edmund	Jones, T. W. (Merioneth)	Redhead, Edward
Dempsey, James	Kelley, Richard	Rees, Merlyn
Diamond, John	Kenyon, Clifford	Reynolds, G. W.
Dodds, Norman	Kerr, Mrs. Anne (R'ter & Chatham)	Rhodes, Geoffrey
Doig, Peter	Kerr, Dr. David (W'worth, Central)	Richard, Ivor
Donnelly, Desmond	Lawson, George	Roberts, Albert (Normanton)
Driberg, Tom	Leadbitter, Ted	Roberts, Goronwy (Caernarvon)
Duffy, Dr. A. E. P.	Ledger, Ron	Robertson, John (Paisley)
Dunn, James A.	Lee, Rt. Hn. Frederick (Newton)	Rodgers, William (Stockton)
Dunnett, Jack	Lee, Miss Jennie (Cannock)	Rogers, George (Kensington, N.)
Edwards, Rt. Hn. Ness (Caerphilly)	Lever, Harold (Cheetham)	Rose, Paul B.
English, Michael	Lewis, Arthur (West Ham, N.)	Ross, Rt. Hn. William
Ennals, David	Lewis, Ron (Carlisle)	Rowland, Christopher
Ensor, David	Lipton, Marcus	Sheldon, Robert
Evans, Albert (Islington, S.W.)	Lomas, Kenneth	Shinwell, Rt. Hn. E.
Evans, loan (Birmingham, Yardley)	Loughlin, Charles	Shore, Peter (Stepney)
Fernyhough, E.	Lubbock, Eric	Short,Rt.Hn.E(N'c'tle-on-Tyne,C.)
Finch, Harold (Bedwellty)	Mabon, Dr. J. Dickson	Silkin, John (Deptford)
Fitch, Alan (Wigan)	McCann, J.	Silken, S. C. (Camberwell, Dulwich)
Fletcher, Sir Eric (Islington, E.)	MacColl, James	Silverman, Julius (Aston)
Fletcher, Ted (Darlington)	MacDermot, Niall	Skeffington, Arthur
Fletcher, Raymond (Ilkeston)	McGuire, Michael	Slater, Joseph (Sedgefield)
Floud, Bernard	Mclnnes, James	Small, William
Foley, Maurice	McKay, Mrs. Margaret	Smith, Ellis (Stoke, S.)
Foot, Sir Dingle (Ipswich)	Mackenzie, Alasdair (Ross&Crom'ty)	Solomons, Henry
Foot, Michael (Ebbw Vale)	Mackenzie, Gregor (Rutherglen)	Soskice, Rt. Hn. Sir Frank
Ford, Ben	Mackie, John (Enfield, E.)	Steel, David (Roxburgh)
Fraser, Rt. Hn. Tom (Hamilton)	McLeavy, Frank	Stonehouse, John
Freeson, Reginald	MacPherson, Malcolm	Stones, William

Strauss, Rt. Hn. G. R. (Vauxhall)	Varley, Eric G.	Williams, Alan (Swansea, W.)
Summerskill, Hn. Dr. Shirley	Wainwright, Edwin	Williams, Clifford (Abertillery)
Swain, Thomas	Walden, Brian (All Saints)	Williams, Mrs. Shirley (Hitchin)
Swingler, Stephen	Walker, Harold (Doncaster)	Williams, W. T. (Warrington)
Symonds, J. B.	Wallace, George	Willis, George (Edinburgh, E.)
Taylor, Bernard (Mansfield)	Warbey, William	Wilson, Rt. Hn. Harold (Huyton)
Thomas, George (Cardiff, W.)	Watkins, Tudor	Wilson, William (Coventry, S.)
Thomson, George (Dundee, E.)	Weitzman, David	Winterbottom, R. E.
Thornton, Ernest	Wells, William (Walsall, N.)	Woodburn, Rt. Hn. A.
Thorpe, Jeremy	White, Mrs. Eirene	Woof, Robert
Tinn, James	Whitlock, William	Wyatt, Woodrow
Tomney, Frank	Wigg, Rt. Hn. George
Tuck, Raphael	Wilkins, W. A.	TELLERS FOR THE NOES:
Urwin, T. W.	Willey, Rt. Hn. Frederick	Mrs. Slater and Mr. Grey.

The Temporary Chairman

Before calling the next Amendment—No. 549, in the name of the Chancellor of the Exchequer—I think that it would be for the convenience of the Committee to discuss, at the same time, Amendment No. 561, in Clause 62, page 78, line 29, at end insert "and capital gains tax".

The Chief Secretary to the Treasury (Mr. John Diamond)

Did I hear you suggest that we should take also Amendment No. 561, Sir Harry? Was that intended to be Amendment No. 651, in page 50, line 27 after "association" to insert "except a nationalised industry"?

The Temporary Chairman

According to my advice, it is Amendment No. 561, on page 2826 of the Notice Paper.

Mr. Anthony Barber (Altrincham and Sale)

That is also the advice which received earlier today, Sir Harry.

Mr. Diamond

I beg to move Amendment No. 549, in page 50, line 22, at the end, to insert: (4) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax or would be so chargeable but for an exemption from corporation tax. This is a purely clarificatory Amendment. It does not affect the substance. It makes it clear that chargeable gains cannot be taxed twice. It was clear under an earlier Clause, but to make sureness doubly sure it is being repeated.

Mr. Barber

I hope that the Chief Secretary will give an explanation of the second Amendment, No. 561, which we are also discussing. Although it concerns a small point, it is an important one concerning the tax liability of local authorities. If the two Amendments are being discussed together, we shall not have a further opportunity of discussing the second when we come to it.

If the Chief Secretary is hesitant, perhaps it will help our proceedings if I say a brief word on Amendment No. 549. The purpose, I understand, is to avoid double taxation in respect of chargeable gains. The whole Committee will be pleased that the Chief Secretary has at last come round to our point of view, and we accept the proposal with gratitude and magnanimity.

The second Amendment which we are also discussing raises the whole question of taxation of local authorities. There may well be certain questions about this which we shall wish to raise, particularly concerning local authorities which engage in pure trading activities in competition with other traders who are liable to Income Tax and Capital Gains Tax or to Corporation Tax.

Mr. Diamond

On a point of order. The reason why I asked you earlier, Sir Harry, the number of the Amendment to which you were referring was that I had in mind Amendment No. 651, which refers to the present Clause. I now gather that you propose that we should take Amendment No. 561, which refers to Clause 62. If I gathered that you were asking the Committee whether it would be convenient for that one to be taken at the same time as No. 549, I should not have thought that it was for the convenience of the Committee so to do.

The Temporary Chairman

Amendment No. 651 has been selected for separate debate. The Chair is seeking only to act for the convenience of the Committee. If the Committee does not wish to discuss the two Amendments together, there is no obligation to do so. It must be for the Committee to decide whether it wishes to couple the two together. If so, the Chair is ready to agree.

Mr. Barber

I was prepared to do so, Sir Harry, but if it would be for the convenience of the Chief Secretary to defer discussion of Amendment No. 561 until we reach it in the normal course of events, I gladly accede to that suggestion.

The Temporary Chairman

That would be agreeable and in order if it is the wish of the Committee. So be it.

Amendment agreed to.

6.0 p.m.

Mr. Lubbock

I beg to move Amendment No. 651, in page 50, line 27, after "association", to insert "except a nationalised industry".

This is quite a simple matter and I hope that we can dispose of it quickly. The position is that at the moment nationalised industries are subject to both Income Tax and Profits Tax. I put it to the Chief Secretary that the calculations which are imposed upon them because of that liability are pointless, because the charge of Income Tax and Profits Tax does not arise because of their capital investment programme. Therefore, there are many people working out the tax liability when not a penny is to accrue to the Chancellor of the Exchequer. It would be interesting to know how many people there are in the various nationalised industries who are engaged in this sterile work of calculating tax when no tax is the result. It is time that we rectified that situation and relieved the nationalised industries from their liability to the new Corporation Tax.

The local authorities are specifically exempt from Corporation Tax under Clause 62 and I believe that they were not exempt from Income Tax under previous legislation. A new advantage is now to be given to them. There is an analogy between the position of the local authorities and that of the nationalised industries in that both are for public purposes. There is no question of any profit accruing to any private individual and the whole of the capital of nationalised industries is in the hands of the State, apart from some loan money which is left over from the nationalisation provisions and which will disappear from the balance sheets over a number of years.

The replacement of Income Tax and Profits Tax may result in a tax liability for the nationalised industries which they have not had to pay in the past, because the value of their investment allowances has been considerably reduced by the new tax. Although this has not happened so far, the last Annual Report of the Electricity Council says that the Council pays tax on behalf of the C.E.G.B. and the electricity boards and it says that the electricity supply industry will continue to be subject to assessment for Income Tax and Profits Tax in the same way as industry generally, but that, in view of the heavy programme of new investment, the Council did not expect a tax liability to emerge for many years. I am paraphrasing paragraph 46 of that Report.

With the advent of the Corporation Tax and the extremely heavy capital investment programmes of the nationalised industries, in the region of £370 million for the Central Electricity Generating Board alone, there might be a liability in future years. It would not be public policy to require the nationalised industries to pay such taxes. For all those reasons I hope that the Chief Secretary will give favourable consideration to the Amendment.

Mr. Diamond

I will, of course, give very careful consideration to what the hon. Member for Orpington (Mr. Lubbock) has said, but I am bound to say that I am not convinced by his arguments. The philosophy of the Government is not different from that of the previous Government—I do not want to put words into their mouths—and is that, by and large, nationalised industries should be treated as commercial concerns, should have certain commercial targets and should, while recognising their other responsibilities, take full account of their commercial responsibilities and, as every other commercial undertaking is subject to Corporation Tax, so should the nationalised industries be so subject.

Mr. Barber

Broadly speaking, I agree with what the Chief Secretary has just said. I sympathise with the hon. Member for Orpington (Mr. Lubbock), who pointed out the disparity of treatment between nationalised industries and local authorities. I shall not pursue that now, because we shall be able to return to this matter when we reach the Clause dealing with local authorities, but it is a little odd that a local authority carrying on a trade in direct competition with a private trader, who is liable to Income Tax and Capital Gains Tax and Corporation Tax, should be exempt from all those taxes. Nevertheless, leaving that out of account for the moment, I agree with the Chief Secretary's approach to the nationalised industries.

Mr. William Shepherd (Cheadle)

I have no sympathy whatever with the Amendment and I do not even share the view of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) that it is in any way justified by the position of local authorities. It is true that local authorities have a marginal trading activity and there is some reason for saying that they should not benefit in the manner in which the Government are proposing, but to say that nationalised industries, which are subject to all the tendencies to inertia inevitable in monopoly, should be freed from even this remote stimulus of the need to meet a tax liability is odd coming from the so-called Liberals. This Amendment is a disgrace to the Liberal Party.

Mr. Lubbock

Would the hon. Gentleman explain how it can possibly come as a stimulus to a nationalised industry when it has not paid the tax?

Mr. Shepherd

If the hon. Gentleman had been following my words closely he would have heard that I said however remote the stimulus was. If he projects his mind forward a little, he may realise that the time may come when the capital expenditure of the nationalised industries in relation to their revenue will be very much lower than it is now. It is certainly true of electricity, for example. It is quite proper that we should actively urge on the nationalised industries the best sort of commercial basis on which to operate, but to say that they should be free of a responsibility which is that of every other trading organisation is an absurd piece of distorted Liberal reasoning.

Mr. Lubbock

That was the sort of speech which I would have expected from the hon. Member for Cheadle (Mr. Shepherd), who has obviously not given the matter any thought. He makes the sort of party political speeches which are completely out of place on a matter of this kind. I wish that we could approach these issues on a non-doctrinaire basis and consider what we are doing when we impose these taxes on the nationalised industries.

I was deeply disappointed with the Chief Secretary's reply. He knows a great deal better than that. He did not condescend to say anything about how many people are employed on these calculations in the Electricity Council, the National Coal Board and the other bodies concerned. What conceivable benefit can it be to the economy, or to the nationalised industries themselves, that people should solemnly sit down to do complicated calculations of tax liability when, in fact, according to the passage from the Annual Report which I quoted, these industries do not pay a single penny in tax?

The hon. Gentleman completely ignored what I said about the effect of the Corporation Tax on the liability of the nationalised industries in future years. Their expenditure programmes are so large that their investment allowances have wholly swallowed up their tax liability in the past, but this will not be the case in future. This additional liability will be placed on these industries.

Mr. Harold Lever

Would the hon. Gentleman say in which respect this is so? In what way are the Government depreciating the value of the investment allowances to the nationalised industries? He is absolutely wrong and he should give some argument in support of such an extraordinary proposition.

Mr. Charles Fletcher-Cooke (Darwen)

If the Amendment is passed, they will still be subject to Income Tax. The Amendment merely relieves them of Corporation Tax. Does the hon. Member for Orpington (Mr. Lubbock) want to subject them to Income Tax, which is the effect of defining "company" by excluding the nationalised industries?

Mr. Lubbock

The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will appreciate that a company will pay Income Tax only by reason of withholding tax on its distributions. I hope that the hon. Gentleman is not suggesting that nationalised industries will pay ordinary dividends after the Bill becomes law.

I would be out of order if I pursued this argument, but there might be something to be said for reorganising the financial structure of the nationalised industries so that some of the capital held by the Government was in the form of equities at fixed interest, which would meet the argument of the hon. Member for Cheadle that they should adhere to the most competitive conditions obtaining in outside industry and be required to make distributions according to their profits.

But that is not what we are talking about. We are talking about whether they should be subject to Corporation Tax. I have suggested three good reasons for making the Amendment and the Chief Secretary completely ignored them. I do not think that during the whole of our debates on the Bill so far I have heard him make a shorter speech or one with so little content. Unless the hon. Gentleman can give a better answer than he has done so far, I shall have to advise my hon. Friends to press this matter to a Division.

Mr. Diamond

I respond only to assure the hon. Gentleman that there is no question of discourtesy. I spoke briefly, following the general pattern set by hon. Members on both sides of the Committee of making short speeches, but I thought that I had dealt with the essence of the matter. If the hon. Gentleman wants me to deal with the matter more fully, perhaps I might do so in a few short sentences.

First, the Amendment is faulty in definition. There is no such definition as a nationalised industry, but I think that I know what the hon. Gentleman means. Secondly, the hon. Gentleman is wrong in fact in saying that the nationalised industries do not pay tax. Thirdly, it is not true to say that there is a complication in working out the tax liability, and, therefore, there is no real wasted time to be compensated for there. Fourthly, the essential point is that having given the nationalised industries full recognition as commercial organisations in competition with other commercial organisations, it would be wrong to treat them differently.

I do not know whether it is sufficiently realised how widespread this competition is with non-nationalised and privately-owned firms, in a variety of fields. Almost every nationalised industry is in some form of competition, either directly or indirectly.

Surely, in those circumstances, it would not be right to say that a privately- owned firm should bear the responsibility of paying Corporation Tax which would deplete its reserves, prevent it from ploughing back, and prevent it from growing as fast as a nationalised industry? How can it be right to say that a private firm should bear this tax, but that a nationalised industry with which it is in direct competition, should not?

One has to give full weight—and I repeat this for the third time lest I should be misunderstood—to the social and other responibilities, but I think that it is right to continue the present pattern under which, as trading organisations, the nationalised industries bear a like responsibility. Only in that way will we know that there is no maldistribution of resources, having regard to the work of the nationalised industries.

Mr. Gower

Without using the strong language used by my hon. Friend the Member for Cheadle (Mr. Shepherd), may I say that the hon. Member for Orpington (Mr. Lubbock) has, I think, put forward a most illiberal suggestion. If we were ever to join the European Community, there might be serious objections to the principle which he has enunciated, because I cannot see how a British nationalised airways corporation, having a different basis of taxation from all other companies here, could fit into the terms of the European Community.

Mr. Patrick Jenkin (Wanstead and Woodford)

I am the only Member of the House who has ever had to argue this question before the Court of Appeal, and it may comfort the hon. Member for Orpington (Mr. Lubbock) to know that on that occasion he had the support of one of Her Majesty's learned Lord Justices who said that the National Coal Board was just another Government Department, and asked me why I wanted leave to appeal to the House of Lords. I had to argue that the Board was subject to tax by Act of Parliament, and quite rightly so, and in the end we were given leave to appeal to the House of Lords.

I support what has been said by my hon. Friends. Of course the nationalised industries must be subject to tax, otherwise competition between them will be hideously distorted and grossly unfair to private companies.

Question put, That those words be there inserted:—

The Committee divided: Ayes 7, Noes 280.

Division No. 164.]	AYES	[6.14 p.m.
Bessell, Peter	Mackenzie, Alasdair (Ross&Crom'ty)	TELLERS FOR THE AYES:
Bowen, Roderic (Cardigan)	Steel, David (Roxburgh)	Mr. Lubbock and
Grimond, Rt. Hn. J.	Thorpe, Jeremy	Mr. Russell Johnston.
Hooton, H. E.
NOES
Abse, Leo	Fitch, Alan (Wigan)	Lee, Rt. Hn. Frederick (Newton)
Albu, Austen	Fletcher, Sir Eric (Islington, E.)	Lee, Miss Jennie (Cannock)
Allaun, Frank (Salford, E.)	Fletcher, Ted (Darlington)	Lever, Harold (Cheetham)
Alldritt, Walter	Fletcher, Raymond (Ilkeston)	Lewis, Arthur (West Ham, N.)
Allen, Scholefield (Crews)	Floud, Bernard	Lewis, Ron (Carlisle)
Armstrong, Ernest	Foley, Maurice	Lipton, Marcus
Atkinson, Norman	Foot, Sir Dingle (Ipswich)	Lomas, Kenneth
Bacon, Miss Alice	Foot, Michael (Ebbw Vale)	Loughlin, Charles
Bagier, Gordon A. T.	Ford, Ben	Mabon, Dr. J. Dickson
Barnett, Joel	Fraser, Rt. Hn. Tom (Hamilton)	McCann, J.
Baxter, William	Freeson, Reginald	MacColl, James
Beaney, Alan	Calpern, Sir Myer	MacDermot, Niall
Bence, Cyril	Garrett, W. E.	McGuire, Michael
Benn, Rt. Hn. Anthony Wedgwood	Garrow, A.	Mclnnes, James
Bennett, J. (Glasgow, Bridgeton)	Ginsburg, David	McKay, Mrs. Margaret
Binns, John	Gourlay, Harry	Mackenzie, Gregor (Rutherglen)
Bishop, E. S.	Greenwood, Rt. Hn. Anthony	Mackie, John (Enfield, E.)
Blackburn, F.	Gregory, Arnold	McLeavy, Frank
Blenkinsop, Arthur	Griffit[...]hs, David (Rother Valley)	MacPherson, Malcolm
Boardman, H.	Griffiths, Rt. Hn. James (Llanelly)	Mahon, Peter (Preston, S.)
Boston, T. G.	Griffiths, Will (M'chester, Exchange)	Mahon, Simon (Bootle)
Bottomley, Rt. Hn. Arthur	Cunter, Rt. Hn. R. J.	Mallalieu, E. L. (Brigg)
Bowden, Rt. Hn. H. W. (Leics S.W.)	Hale, Leslie	Mallalieu,J.P.W.(Huddersfield,E.)
Boyden, James	Hamilton, James (Bothwell)	Mapp, Charles
Braddock, Mrs. E. M.	Hamilton, William (West Fife)	Mason, Roy
Bradley, Tom	Hamling, William (Woolwich, W.)	Mayhew, Christopher
Bray, Dr. Jeremy	Harper, Joseph	Mellish, Robert
Broughton, Dr. A. D. D.	Harris, Reader (Heston)	Mendelson, J. J.
Brown, Hugh D. (Glasgow, Provan)	Harrison, Walter (Wakefield)	Mikardo, Ian
Buchan, Norman (Renfrewshire, W.)	Hart, Mrs. Judith	Millan, Bruce
Buchanan, Richard	Hattersley, Roy	Miller, Dr. M. S.
Butler, Herbert (Hackney, C.)	Hazell, Bert	Milne, Edward (Blyth)
Butler, Mrs. Joyce (Wood Green)	Healey, Rt. Hn. Denis	Molloy, William
Callaghan, Rt. Hn. James	Henderson, Rt. Hn. Arthur	Monslow, Walter
Carmichael, Neil	Herbison, Rt. Hn. Margaret	Morris, Alfred (Wythenshawe)
Carter-Jones, Lewis	Hill, J. (Midlothian)	Morris, Charles (Openshaw)
Castle, Rt. Hn. Barbara	Hobden, Dennis (Brighton, K'town)	Morris, John (Aberavon)
Chapman, Donald	Holman, Percy	Mulley,Rt.Hn.Frederick(SheffieldPk)
Coleman, Donald	Horner, John	Murray, Albert
Conlan, Bernard	Houghton, Rt. Hn. Douglas	Neal, Harold
Corbet, Mrs. Freda	Howarth, Harry (Wellingborough)	Newens, Stan
Cousins, Rt. Hn. Frank	Howarth, Robert L. (Bolton, E.)	Noel-Baker, Francis (Swindon)
Craddock, George (Bradford, S.)	Howell, Denis (Small Heath)	Noel-Baker, Rt.Hn.Philip(Derby,S.)
Crawshaw, Richard	Howie, W.	Norwood, Christopher
Cronin, John	Hoy, James	Oakes, Gordon
Crosland, Rt. Hn. Anthony	Hughes, Cledwyn (Anglesey)	Ogden, Eric
Cullen, Mrs. Alice	Hughes, Emrys (S. Ayrshire)	O'Malley, Brian
Dalyell, Tam	Hughes, Hector (Aberdeen, N.)	Oram, Albert E. (E. Ham, S.)
Darling, George	Hunter, Adam (Dunfermline)	Orbach, Maurice
Davies, G. Elfed (Rhondda, E.)	Hunter, A. E. (Feltham)	Orme, Stanley
Davies, Harold (Leek)	Hynd, H. (Accrington)	Owen, Will
Davies, Ifor (Gower)	Irving, Sydney (Dartford)	Padley, Walter
Delargy, Hugh	Jackson, Colin	Page, Derek (King's Lynn)
Dell, Edmund	Jay, Rt. Hn. Douglas	Paget, R. T.
Dempsey, James	Jeger, George (Goole)	Palmer, Arthur
Diamond, John	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Pannell, Rt. Hn. Charles
Dodds, Norman	Jenkins, Hugh (Putney)	Pargiter, G. A.
Doig, Peter	Jenkins, Rt. Hn. Roy (Stechford)	Park, Trevor (Derbyshire, S.E.)
Donnelly, Desmond	Johnson, Carol (Lewisham, S.)	Parker, John
Driberg, Tom	Johnson,James(K'ston-on-Hull,W.)	Parkin, B. T.
Duffy, Dr. A. E. P.	Jones, Dan (Burnley)	Pavitt, Laurence
Dunn, James A.	Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)	Pearson, Arthur (Pontypridd)
Dunnett, Jack	Jones, J. Idwal (Wrexham)	Peart, Rt. Hn. Fred
Edwards, Rt. Hn. Ness (Caerphilly)	Jones, T. W. (Merioneth)	Pentland, Norman
English, Michael	Kelley, Richard	Perry, Ernest G.
Ennals, David	Kenyon, Clifford	Popplewell, Ernest
Ensor, David	Kerr, Mrs. Anne (R'ter & Chatham)	Prentice, R. E.
Evans, Albert (Islington, S.W.)	Kerr, Dr. David (W'worth, Central)	Price, J. T. (Westhoughton)
Evans, Ioan (Birmingham, Yardley)	Lawson, George	Probert, Arthur
Fernyhough, E.	Leadbitter, Ted	Pursey, Cmdr. Harry
Finch, Harold (Bedwellty)	Ledger, Ron	Randall, Harry
Rankin, John	Small, William	Wallace, George
Redhead, Edward	Smith, Ellis (Stoke, S.)	Warbey, William
Rees, Merlyn	Solomons, Henry	Watkins, Tudor
Reynolds, G. W.	Sotkice, Rt. Hn. Sir Frank	Weitzman, David
Rhodes, Geoffrey	Stonehouse, John	Wells, William (Walsall, N.)
Richard, Ivor	Stones, William	White, Mrs. Eirene
Roberts, Albert (Normanton)	Strauss, Rt. Hn. G. R. (Vauxhall)	Whitlock, William
Roberts, Goronwy (Caernarvon)	Summerskill, Hn. Dr. Shirley	Wigg, Rt. Hn. George
Robertson, John (Paisley)	Swain, Thomas	Wilkins, W. A.
Rodgers, William (Stockton)	Swingler, Stephen	Willey, Rt. Hn. Frederick
Rogers, George (Kensington, N.)	Symonds, J. B.	Williams, Alan (Swansea, W.)
Rose, Paul B.	Taylor, Bernard (Mansfield)	Williams, Clifford (Abertillery)
Ross, Rt. Hn. William	Thomas, George (Cardiff, W.)	Williams, Mrs. Shirley (Hitchin)
Rowland, Christopher	Thomson, George (Dundee, E.)	Williams, W. T. (Warrington)
Sheldon, Robert	Thornton, Ernest	Willis, George (Edinburgh, E.)
Shinwell Rt. Hn. E.	Tinn, James	Wilson, Rt. Hn. Harold (Huyton)
Shore, Peter (Stepney)	Tomney, Frank	Wilson, William (Coventry, S.)
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)	Tuck, Raphael	Winterbottom, R. E.
Silkin, John (Deptford)	Urwin, T. W.	Woodburn, Rt. Hn. A.
Silkin, S. C. (Camberwell, Dulwich)	Varley, Eric G.	Woof, Robert
Silverman, Julius (Aston)	Walnwright, Edwin	Wyatt, Woodrow
Skeffington, Arthur	Walden, Brian (All Saints)
Slater, Joseph (Sedgefield)	Walker, Harold (Doncaster)	TELLERS FOR THE NOES:
		Mrs. Slater and Mr. Grey.

Mr. Barber

I beg to move Amendment No. 284, in page 50, line 28, to leave out from "income" to the end of line 30.

The purpose of the Amendment is to exclude chargeable gains from the computation of profits for the purposes of Corporation Tax. The reason is that which has been given by my right hon. and hon. Friends in the past—to avoid v% hat we consider to be the double taxation which is inherent in the Chancellor's proposals. We have already given considerable attention to this point in the previous part of the Bill, and I have no doubt that some of my hon. and right

hon. Friends will wish to return to it when we discuss Clause 51, which is concerned solely with the computation of chargeable gains.

In those circumstances, I hope that at this stage the Committee will think it reasonable that those on this side should express formally their objection to what is proposed, and return to the matter when Clause 51 is reached.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 279, Noes 274.

Division No. 165.]	AYES	[6.26 p.m.
Abuse, Leo	Cailaghan, Rt. Hn. James	Enaor, David
Albu, Austen	Carmichael, Neil	Evans, Albert (Islington, S.W.)
Allaun, Frank (Salford, E.)	Carter-Jones, Lewis	Evans, Ioan (Birmingham, Yardley)
Alldritt, Walter	Castle, Rt. Hn. Barbara	Fernyhough, E.
Allen, Scholefield (Crewe)	Chapman, Donald	Finch, Harold (Bedwellty)
Armstrong, Ernest	Coleman, Donald	Fitch, Alan (Wigan)
Atkinson, Norman	Conlan, Bernard	Fletcher, Sir Eric (Islington, E.)
Bacon, Miss Alice	Corbet, Mrs. Freda	Fletcher, Ted (Darlington)
Bagier, Gordon A. T.	Cousins, Rt. Hn. Frank	Fletcher, Raymond (Ilkeston)
Barnett, Joel	Craddock, George (Bradford, S.)	Floud, Bernard
Baxter, William	Crawshaw, Richard	Foley, Maurice
Beaney, Alan	Cronin, John	Foot, Sir Dingle (Ipswich)
Bence, Cyril	Crosland, Rt. Hn. Anthony	Foot, Michael (Ebbw Vale)
Benn, Rt. Hn. Anthony Wedgwood	Cullen, Mrs. Alice	Ford, Ben
Bennett, J. (Glasgow, Bridgeton)	Dalyell, Tam	Fraser, Rt. Hn. Tom (Hamilton)
Binns, John	Darling, George	Freeson, Reginald
Bishop, E. S.	Davies, G. Elfed (Rhondda, E.)	Galpern, Sir Myer
Blackburn, F.	Davies, Harold (Leek)	Garrett, W. E.
Blenkinsop, Arthur	Davies, Ifor (Gower)	Garrow, A.
Boardman, H.	Delargy, Hugh	Ginsburg, David
Boston, T. G.	Dell, Edmund	Gourlay, Harry
Bottomley, Rt. Hn. Arthur	Dempsey, James J	Greenwood, Rt, Hn. Anthony
Bowden, Rt. Hn. H. W. (Leics S.W.)	Diamond, John	Gregory, Arnold
Boyden, James	Dodds, Norman	Grey, Charles
Braddock, Mrs. E. M.	Doig, Peter	Griffiths, David (Rother Valley)
Bradley, Tom	Donnelly, Desmond	Griffiths, Rt. Hn. James (Llanelly)
Bray, Dr. Jeremy	Driberg, Tom	Griffiths, Will (M'chester, Exchange)
Broughton, Dr. A. D. D.	Duffy, Dr. A. E. P.	Gunter, Rt. Hn. R. J.
Brown, Hugh D. (Glasgow, Provan)	Dunn, James A.	Hale, Leslie
Buchan, Norman (Renfrewshire, W.)	Dunnett, Jack	Hamilton, James (Bothwell)
Buchanan, Richard	Edwards, Rt. Hn. Ness (Caerphilly)	Hamilton, William (West Fife)
Butler, Herbert (Hackney, C.)	English, Michael	Hamling, William (Woolwich, W.)
Butler, Mrs. Joyce (Wood Green)	Ennals, David	Harrison, Walter (Wakefield)
Hart, Mrs. Judith	Mahon, Peter (Preston, S.)	Rodgers, William (Stockton)
Hattersley, Roy	Mahon, Simon (Bootle)	Rogers, George (Kensington, N.)
Hazell, Bert	Mallalieu, E. L. (Brigg)	Rose, Paul B.
Healey, Rt. Hn. Denis	Mallalieu,J.P.W.(Huddersfield,E.)	Ross, Rt. Hn. William
Henderson, Rt. Hn. Arthur	Mapp, Charles	Rowland, Christopher
Herbison, Rt. Hn. Margaret	Mason, Roy	Sheldon, Robert
Hill, J. (Midlothian)	Mayhew, Christopher	Shinwell, Rt. Hn. E.
Hobden, Dennis (Brighton, K'town)	Mellish, Robert	Shore, Peter (Stepney)
Holman, Percy	Mendelson, J. J.	Short,Rt.Hn.E.(N'c'tie-on-Tyne,C.)
Horner, John	Mikardo, Ian	Silkin, John (Deptford)
Houghton, Rt. Hn. Douglas	Millan, Bruce	Silkin, S. C. (Camberwell, Duiwich)
Howarth, Harry (Wellingborough)	Miller, Dr. M. S.	Silverman, Julius (Aston)
Howarth, Robert L. (Bolton, E.)	Milne, Edward (Blyth)	Skeffington, Arthur
Howell, Denis (Small Heath)	Molloy, William	Slater, Joseph (Sedgefield)
Howie, W.	Monslow, Walter	Small, William
Hoy, James	Morris, Alfred (Wythenshawe)	Smith, Ellis (Stoke, S.)
Hughes, Cledwyn (Anglesey)	Morris, Charles (Openshaw)	Solomons, Henry
Hughes, Emrys (S. Ayrshire)	Morris, John (Aberavon)	So[...]kic[...], Rt. Hn. Sir Frank
Hughes, Hector (Aberdeen, N.)	Mulley,Rt.Hn.Frederick(SheffieldPk)	Stonehouse, John
Hunter, Adam (Dunfermline)	Murray, Albert	Stone[...]s, William
Hunter, A. E. (Feltham)	Neal, Harold	Strauss, Rt. Hn. G. R. (Vauxhall)
Hynd, H. (Accrington)	Newens, Stan	Summerskill, Hn. Dr. Shirley
Irving, Sydney (Dartford)	Noel-Baker, Francis (Swindon)	Swain, Thomas
Jackson, Colin	Noel-Baker,Rt.Hn.Philip(Derby,S.)	Swingler, Stephen
Jay, Rt. Hn. Douglas	Norwood, Christopher	Symonds, J. B.
Jeger, George (Goole)	Oakes, Cordon	Taylor, Bernard (Mansfield)
Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Ogden, Eric	Thomas, George (Cardiff, w.)
Jenkins, Hugh (Putney)	O'Malley, Brian	Thomson, George (Dundee, E.)
Jenkins, Rt. Hn. Roy (Stechford)	Oram, Albert E. (E. Ham, S.)	Thomson, Ernest
Johnson, Carol (Lewisham, S.)	Orbach, Maurice	Tinn, James
Johnson,James(K'ston-on-Hull,W.)	Orme, Stanley	Tomney, Frank
Jones, Dan (Burnley)	Owen, will	Tuck, Raphael
Jones,Bt.Hn.Sir Elwyn(W.Ham,S.)	Padley, Walter	Urwin, T. W.
Jones, J. Idwal (Wrexham)	Page, Derek (King's Lynn)	Varley, Eric G.
Jones, T. w. (Merioneth)	Paget, R. T.	Wainwright, Edwin
Kelley, Richard	Palmer, Arthur	Walden, Brian (All Saints)
Kenyon, Clifford	Pannell, Rt. Hn. Charles	Walker, Harold (Doncaster)
Kerr, Mrs. Anne (R'ter & Chatham)	Pargiter, G. A.	Wallace, George
Kerr, Dr. David (W'worth, Central)	Park, Trevor (Derbyshire, S.E.)	Warbey, William
Lawson, George	Parker, John	Watkins, Tudor
Leadbitter, Ted	Parkin, B. T.	Weitzman, David
Ledger, Ron	Pavitt, Laurence	Wells, William (Walsall, N.)
Lee, Rt. Hn. Frederick (Newton)	Pearson, Arthur (Pontypridd)	White, Mrs. Eirene
Lee, Miss Jennie (Cannock)	Peart, Rt. Hn. Fred	Whitlock, William
Lever, Harold (Cheetham)	Pentland, Norman	Wigg, Rt. Hn. George
Lewis, Arthur (West Ham, N.)	Perry, Ernest G.	Wilkins, W. A.
Lewis, Ron (Carlisle)	Popplewell, Ernest	Willey, Rt. Hn. Frederick
Lipton, Marcus	Prentice, R. E.	Williams, Alan (Swansea, W.)
Lomas, Kenneth	Price, J. T. (Westhoughton)	Williams, Clifford (Abertillery)
Loughlin, Charles	Probert, Arthur	Williams, Mrs. Shirley (Hitchin)
Mabon, Dr. J. Dickson	Pursey, Cmdr. Harry	Williams, W. T. (Warrington)
McCann, J.	Randall, Harry	Willis, George (Edinburgh, E.)
MacColl, James	Rankin, John	Wilson, Rt. Hn. Harold (Huyton)
MacDermot, Niall	Redhead, Edward	Wilson, William (Coventry, S.)
McGuire, Michael	Rees, Merlyn	Winterbottom, R. E.
Mclnnes, James	Reynolds, G. W.	Woodburn, Rt. Hn. A.
McKay, Mrs. Margaret	Rhodes, Geoffrey	Woof, Robert
Mackenzie, Gregor (Rutherglen)	Richard, Ivor	Wyatt, Woodrow
Mackie, John (Enfield, E.)	Roberts, Albert (Normanton)
McLeavy, Frank	Roberts, Goronwy (Caernarvon)	TELLERS FOR THE AYES:
MacPherson, Malcolm	Robertson, John (Paisley)	Mrs. Slater and Mr. Harper.
NOES
Agnew, Commander Sir Peter	Black, Sir Cyril	Button, Ronald
Alison, Michael (Barkston Ash)	Blaker, Peter	Campbell, Gordon
Allan, Robert (Paddington, S.)	Bossom, Hn. Clive	Carlisle, Mark
Allason, James (Hemel Hempstead)	Bowen, Roderic (Cardigan)	Carr, Rt. Hi). Robert
Anstruther-Gray, Rt. Hn. Sir W.	Box, Donald	Cary, Sir Robert
Astor, John	Boyd-Carpenter, Rt. Hn. J.	Chataway, Christopher
Awdry, Daniel	Boyle, Rt. Hn. Sir Edward	Chichester-Clark, R.
Baker, W. H. K.	Braine, Bernard	Clark, Henry (Antrim, N.)
Balniel, Lord	Brewis, John	Clark, William (Nottingham, S.)
Barber, Rt. Hn. Anthony	Brinton, Sir Tatton	Clarke, Brig. Terence (Portsmth, W.)
Barlow, Sir John	Bromley-Davenport,Lt.-Col.SirWalter	Cole, Norman
Batsford, Brian	Brooke, Rt. Hn. Henry	Cooke, Robert
Bennett, Sir Frederic (Torquay)	Brown, Sir Edward (Bath)	Cooper, A. E.
Bennett, Dr. Reginald (Got & Fhm)	Bruce-Gardyne, J.	Cooper-Key, Sir Neill
Berry, Hn. Anthony	Bryan, Paul	Cordle, John
Bessell, Peter	Buchanan-Smith, Alick	Corfield, F. V.
Biffen, John	Buck, Antony	Costain, A. P.
Biggs-Daviton, John	Bullus, Sir Eric	Courtney, Cdr. Anthony
Bingham, R. M.	Burden, F. A.	Craddock, Sir Beresford (Spelthorne)
Birch, Rt. Hn. Nigel	Butcher, Sir Herbert	Crawley, Aidan

Crosthwaita.Eyre, Col. Sir Oliver	Hornby, Richard	Peyton, John
Crowder, F. P.	Howard, Hn. G. R. (St. Ives)	Pickthorn, Rt. Hn. Sir Kenneth
Cunningham, Sir Knox	Howe, Geoffrey (Bebington)	Pike, Miss Mervyn
Curran, Charles	Iremonger, T. L.	Pitt, Dame Edith
Currie, G. B. H.	Irvine, Bryant Godman (Rye)	Powell, Rt. Hn. J. Enoch
Dalkeith, Earl of	Jenkin, Patrick (Woodford)	Price, David (Eastleigh)
Dance, Jamas	Jennings, J. C.	Prior, J. M. L.
Davies, Dr. Wyndham (Perry Barr)	Johnston, Russell (Inverness)	Quennell, Miss J. M.
d'Avigdor-Goldsmid, Sir Henry	Jones, Arthur (Northants, S.)	Ramsden, Rt. Hn. James
Dean, Paul	Jopling, Michael	Redmayne, Rt. Hn. Sir Martin
Deedes, Rt. Hn. W. F.	Joseph, Rt. Hn. Sir Keith	Rees-Davies, W. R.
Digby, Simon Wingfield	Kaborry, sir Donald	Renton, Rt. Hn. Sir David
Doughty, Charles	Kerby, Capt. Henry	Ridsdale, Julian
Douglas-Home, Rt. Hn. Sir Alec	Kerr, Sir Hamilton (Cambridge)	Roberts, Sir Peter (Heeley)
Drayson, G. B.	Kilfedder, James A.	Robson Brown, Sir William
du Cann, Rt. Hn. Edward	Kimball, Marcus	Rodgers, Sir John (Sevenoaks)
Eden, Sir John	King, Evelyn (Dorset, S)	Roots, William
Elliot, Capt. Walter (Carshalton)	Kirk, Peter	Royle, Anthony
Eyre, Reginald	Lagden, Godfrey	Russell, Sir Ronald
Farr, John	Lambton, viscount	St. John-Stevas, Norman
Fell, Anthony	Lancaster, Col. C. G.	Scott-Hopkins, James
Fisher, Nigel	Langford-Holt, Cir John	Sharpies, Richard
Fletcher-Cooke, Charles (Darwen)	Lewis, Kenneth (Rutland)	Shepherd, William
Fletcher-Cooke, Sir John (S'pton)	Litchfield, Capt. John	Smith, Dudley (Br'ntf'd & Chiswick)
Foster, Sir John	Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)	Smyth, Rt. Hn. Brig. Sir John
Fraser,Rt.Hn.Hugh(St'fford & Stone)	Lloyd, Ian (P'tsm'th, Langstone)	Spearman, Sir Alexander
Fraser, Ian (Plymouth, Sutton)	Longbottom, Charles	Speir, Sir Rupert
Gammans, Lady	Longden, Gilbert	Stainton, Keith
Gardner, Edward	Loveys, Walter H.	Stanley, Hn. Richard
Gibson-Watt, David	Lubbock, Eric	Steel, David (Roxburgh)
Giles, Rear-Admiral Morgan	Lucas, Sir Jocelyn	Stodart, Anthony
Gilmour, Ian (Norfolk, Central)	McAdden, Sir Stephen	Stoddart-Scott, Col. Sir Malcolm
Cilmour, Sir John (East Fife)	MacArthur, Ian	Studholme, Sir Henry
Glover, Sir Douglas	Maclenzie, Alasdair (Ross&Crom'ty)	Talbot, John E.
Glyn, Sir Richard	McLaren, Martin	Taylor, Sir Charles (Eastbourne)
Goodhart, Philip	Maclean, Sir Fitzroy	Taylor, Edward M. (G'gow,Cathcart)
Goodhew, Victor	McMaster, Stanley	Taylor, Frank (Moss Side)
Cower, Raymond	McNair-Wilson, Patrick	Teeling, Sir William
Grant, Anthony	Maginnis, John E.	Temple, John M.
Grant-Ferris, R.	Maitland, Sir John	Thatcher, Mrs. Margaret
Gresham Cooke, R.	Marples, Rt. Hn. Ernest	Thomas, Sir Leslie (Canterbury)
Grieve, Percy	Marten, Neil	Thomas, Rt. Hn. Peter (Conway)
Griffiths, Eldon (Bury St. Edmunds)	Maude, Angus	Thompson, Sir Richard (Croydon, S.)
Criffiths, Peter (Smethwick)	Mawby, Ray	Thorneycroft, Rt. Hn. Peter
Crimond, Rt. Hn. J.	Maxwell-Hyslop, R. J.	Thorpe, Jeremy
Gurden, Harold	Maydon, Lt.-Cmdr. S. L. C.	Tiley, Arthur (Bradford, W.)
Hall, John (Wycombe)	Meyer, Sir Anthony	Tilney, John (Wavertree)
Hall-Davis, A. G. F.	Mills, Peter (Torrington)	Turton, Rt. Hn. R. H.
Hamilton, Marquess of (Fermanagh)	Mills, Stratton (Belfast, N.)	Tweedsmuir, Lady
Hamilton, M. (Salisbury)	Miscampbell, Norman	van Straubenzee, W. R.
Harris, Frederic (Croydon, N.W.)	Mitchell, David	Vaughan-Morgan, Rt. Hn. Sir John
Harris, Reader (Heston)	Monro, Hector	Vickers, Dame Joan
Harrison, Brian (Maldon)	More, Jasper	Walder, David (High Peak)
Harrison, Col. Sir Harwood (Eye)	Morgan, W. G.	Walker, Peter (Worcester)
Harvey, Sir Arthur Vere (Macclesf'd)	Morrison, Charles (Devizes)	Walker-Smith, Rt. Hn. Sir Derek
Harvey, John (Walthamstow, E.)	Mott-Radclyffe, Sir Charles	Walters, Dennis
Harvie Anderson, Miss	Munro-Lucas-Tooth, Sir Hugh	Ward, Dame Irene
Hastings, Stephen	Murton, Oscar	Weatherill, Bernard
Hawkins, Paul	Neave, Airey	Wells, John (Maidstone)
Hay, John	Nicholls, Sir Harmar	Whitelaw, William
Heald, Rt. Hn. Sir Lionel	Nicholson, Sir Godfrey	Williams, Sir Rolf Dudley (Exeter)
Heath, Rt. Hn. Edward	Noble, Rt. Hn. Michael	Wills, Sir Gerald (Bridgwater)
Hendry, Forbes	Nugent, Rt. Hn. Sir Richard	Wilson, Geoffrey (Truro)
Higgins, Terence L.	Onslow, Cranley	Wise, A. R.
Hiley, Joseph	Orr, Capt. L. P. S.	Wolrige-Cordon, Patrick
Hill, J. E. B. (S. Norfolk)	Orr-Ewing, Sir Ian	Wood, Rt. Hn. Richard
Hirst, Geoffrey	Osborn, John (Hallam)	Woodhouse, Hn. Christopher
Hobson, Rt. Hn. Sir John	Osborne, Sir Cyril (Louth)	Woodnutt, Mark
Hogg, Rt. Hn. Quintin	Page, John (Harrow, W.)	Wylie, N. R.
Hooson, H. E.	Page, R. Graham (Crosby)	Younger, Hn. George
Hopkins, Alan	Pearson, Sir Frank (Clitheroe)
Hordern, Peter	Percival, Ian	TELLERS FOR THE NOES:
		Mr. Pym and Mr. R. W. Elliott.

The Deputy-Chairman

As I am of the opinion that the principle of the Clause and any matters arising therefrom have been adequately discussed in the debate on the Amendments, I shall therefore, under Standing Order No. 47, forthwith put the Question, That the Clause, as amended, stand part of the Bill.

Question put, That the Clause, as amended, stand part of the Bill:—

The Committee divided: Ayes 276, Noes 271.

Division No. 166.]	AYES	[6.39 p.m.
Abse, Leo	Freeson, Reginald	MacPherson, Malcolm
Albu, Austen	Galpern, Sir Myer	Mahon, Peter (Preston, S.)
Allaun, Frank (Salford, E.)	Garrett, W. E.	Mahon, Simon (Bootle)
Alldritt, Walter	Garrow, A.	Mallalieu, E. L. (Brigg)
Allen, Scholefield (Crewe)	Ginsburg, David	Mallalieu,J.P.W.(Huddersfield,E.)
Armstrong, Ernest	Gourlay, Harry	Mapp, Charles
Atkinson, Norman	Greenwood, Rt. Hn. Anthony	Mason, Roy
Bacon, Miss Alice	Gregory, Arnold	Mayhew, Christopher
Bagier, Gordon A. T.	Grey, Charles	Mellish, Robert
Barnett, Joel	Griffiths, David (Rother Valley)	Mendelson, J. J.
Baxter, William	Griffiths, Rt. Hn. James (Llanelly)	Mikardo, Ian
Beaney, Alan	Griffiths, Will (M'chester, Exchange)	Millan, Bruce
Bence, Cyril	Gunter, Rt. Hn. R. J.	Miller, Dr. M. S.
Benn, Rt. Hn. Anthony Wedgwood	Hale, Leslie	Milne, Edward (Blyth)
Bennett, J. (Glasgow, Bridgeton)	Hamilton, James (Bothwell)	Molloy, William
Binns, John	Hamilton, William (West Fife)	Monslow, Walter
Bishop, E. S.	Hamling, William (Woolwich, W.)	Morris, Alfred (Wythenshawe)
Blackburn, F.	Harrison, Walter (Wakefield)	Morris, Charles (Openshaw)
Blenkinsop, Arthur	Hart, Mrs. Judith	Morris, John (Aberavon)
Boardman, H.	Hattersley, Roy	Mulley,Rt.Hn.Frederick(SheffieldPk)
Boston, T. G.	Hazell, Bert	Murray, Albert
Bottomley, Rt. Hn. Arthur	Healey, Rt. Hn. Denis	Neal, Harold
Bowden, Rt. Hn. H. W. (Leics S.W.)	Henderson, Rt. Hn. Arthur	Newens, Stan
Boyden, James	Herbison, Rt. Hn. Margaret	Noel-Baker, Francis (Swindon)
Braddock, Mrs. E. M.	Hill, J. (Midlothian)	Noel-Baker,Rt.Hn.Philip(Derby,S.)
Bradley, Tom	Hobden, Dennis (Brighton, K'town)	Norwood, Christopher
Bray, Dr. Jeremy	Holman, Percy	Oakes, Gordon
Broughton, Dr. A. D. D.	Horner, John	Ogden, Eric
Brown, Hugh D. (Glasgow, Provan)	Houghton, Rt. Hn. Douglas	O'Malley, Brian
Buchanan, Richard	Howarth, Harry (Wellingborough)	Oram, Albert E. (E. Ham, S.)
Butler, Herbert (Hackney, C.)	Howarth, Robert L. (Bolton, E.)	Orbach, Maurice
Butler, Mrs. Joyce (Wood Green)	Howell, Denis (Small Heath)	Orme, Stanley
Carmichael, Neil	Howie, W.	Owen, Will
Carter-Jones, Lewis	Hoy, James	Padley, Walter
Castle, Rt. Hn. Barbara	Hughes, Cledwyn (Anglesey)	Page, Derek (King's Lynn)
Chapman, Donald	Hughes, Emrys (S. Ayrshire)	Paget, R. T.
Coleman, Donald	Hughes, Hector (Aberdeen, N.)	Palmer, Arthur
Conlan, Bernard	Hunter, Adam (Dunfermline)	Pannell, Rt. Hn. Charles
Corbet, Mrs. Freda	Hunter, A. E. (Feltham)	Pargiter, G. A.
Cousins, Rt. Hn. Frank	Hynd, H. (Accrington)	Park, Trevor (Derbyshire, S.E.)
Craddock, George (Bradford, S.)	Irving, Sydney (Dartford)	Parker, John
Crawshaw, Richard	Jackson, Colin	Parkin, B. T.
Cronin, John	Jay, Rt. Hn. Douglas	Pavitt, Laurence
Crosland, Rt. Hn. Anthony	Jeger, George (Goole)	Pearson, Arthur (Pontypridd)
Cullen, Mrs. Alice	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Peart, Rt. Hn. Fred
Dalyell, Tam	Jenkins, Hugh (Putney)	Pentland, Norman
Darling, George	Jenkins, Rt. Hn. Roy (Stechford)	Perry, Ernest G.
Davies, G. Elfed (Rhondda, E.)	Johnson, Carol (Lewisham, S.)	Popplewell, Ernest
Davies, Harold (Leek)	Johnson,James(K'ston-on-Hull,W.)	Prentice, R. E.
Davies, Ifor (Gower)	Jones, Dan (Burnley)	Price, J. T. (Westhoughton)
Delargy, Hugh	Jones.Rt.Hn.Sir Elwyn(W.Ham,S.)	Probert, Arthur
Dell, Edmund	Jones, J. Idwal (Wrexham)	Pursey, Cmdr. Harry
Dempsey, James	Jones, T. w. (Merioneth)	Randall, Harry
Diamond, John	Kelley, Richard	Rankin, John
Dodds, Norman	Kenyon, Clifford	Redhead, Edward
Doig, Peter	Kerr, Mrs. Anne (R'ter & Chatham)	Rees, Merlyn
Donnelly, Desmond	Kerr, Dr. David (W'worth, Central)	Reynolds, G. W.
Driberg, Tom	Lawson, George	Rhodes, Geoffrey
Duffy, Dr. A. E. P.	Leadbitter, Ted	Richard, Ivor
Dunn, James A.	Ledger, Ron	Roberts, Albert (Normanton)
Dunnett, Jack	Lee, Rt. Hn. Frederick (Newton)	Roberts, Goronwy (Caernarvon)
Edwards, Rt. Hn. Ness (Caerphilly)	Lee, Miss Jennie (Cannock)	Robertson, John (Paisley)
English, Michael	Lever, Harold (Cheetham)	Rodgers, William (Stockton)
Ennals, David	Lewis, Arthur (West Ham, N.)	Rogers, George (Kensington, N.)
Ensor, David	Lewis, Ron (Carlisle)	Rose, Paul B.
Evans, Albert (Islington, S.W.)	Lipton, Marcus	Ross, Rt. Hn. William
Evans, Ioan (Birmingham, Yardley)	Lomas, Kenneth	Rowland, Christopher
Fernyhough, E.	Loughlin, Charles	Sheldon, Robert
Finch, Harold (Bedwellty)	Mabon, Dr. J. Dickson	Shinwell, Rt. Hn. E.
Fitch, Alan (Wigan)	McCann, J.	Shore, Peter (Stepney)
Fletcher, Sir Eric (Islington, E.)	MacColl, James	Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)
Fletcher, Ted (Darlington)	MacDermot, Niall	Silkin, John (Deptford)
Fletcher, Raymond (Ilkeston)	McGuire, Michael	Silkin, S. C. (Camberwell, Dulwich)
Floud, Bernard	McInnes, James	Silverman, Julius (Aston)
Foley, Maurice	McKay, Mrs. Margaret	Skeffington, Arthur
Foot, Michael (Ebbw Vale)	Mackenzie, Gregor (Rutherglen)	Slater, Joseph (Sedgefield)
Ford, Ben	Mackie, John (Enfield, E.)	Small, William
Fraser, Rt. Hn. Tom (Hamilton)	McLeavy, Frank	Smith, Ellis (Stoke, S.)
Solomons, Henry	Tuck, Raphael	Willey, Rt. Hn. Frederick
Soskice, Rt. Hn. Sir Frank	Urwin, T. W.	Williams, Alan (Swansea, W.)
Stonehouse, John	Varley, Eric G.	Williams, Clifford (Abertillery)
Stones, William	Wainwright, Edwin	Williams, Mrs. Shirley (Hitchin)
Strauss, Rt. Hn. G. R. (Vauxhall)	Walden, Brian (All Saints)	Williams, W. T. (Warrington)
Summerskill, Hn. Dr. Shirley	walker, Harold (Doncaster)	Willis, George (Edinburgh, E.)
Swain, Thomas	Wallace, George	Wilson, Rt. Hn. Harold (Huyton)
Swingler, Stephen	Warbey, William	Wilson, William (Coventry, S.)
Symonds, J. B.	Watkins, Tudor	Winterbottom, R. E.
Taylor, Bernard (Mansfield)	Weitzman, David	Woodburn, Rt. Hn. A.
Thomas, George (Cardiff, W.)	wells, William (Walsall, N.)	Woof, Robert
Thomson, George (Dundee)	White, Mrs. Eirene	Wyatt, Woodrow
Thornton, Ernest	Whitlock, William
Tinn, James	Wigg, Rt. Hn. George	TELLERS FOR THE AYES:
Tornney, Frank	Wilkins, W. A.	Mr. Harper and Mrs. Slater.
NOES
Agnew, Commander Sir Peter	Davies, Dr. Wyndham (Perry Barr)	Howard, Hn. G. R. (St. Ives)
Alison, Michael (Barkston Ash)	d'Avigdor-Goldsmid, Sir Henry	Howe, Geoffrey (Bebington)
Allan, Robert (Paddington, S.)	Dean, Paul	Iremonger, T. L.
Allason, James (Hemel Hempstead)	Deedes, Rt. Hn. W. F.	Irvine, Bryant Godman (Rye)
Anstruther-Gray, Rt. Hn. Sir W.	Digby, Simon Wingfield	Jenkin, Patrick (Woodford)
Astor, John	Doughty, Charles	Jennings, J. C.
Awdry, Daniel	Douglas-Home, Rt. Hn. Sir Alec	Johnston, Russell (Inverness)
Baker, W. H. K.	Drayson, G. B.	Jones, Arthur (Northants, S.)
Balniel, Lord	du Cann, Rt. Hn. Edward	Jopling, Michael
Barber, Rt. Hn. Anthony	Eden, Sir John	Joseph, Rt. Hn. Sir Keith
Barlow, Sir John	Elliot, Capt. Walter (Carshalton)	Kaberry, Sir Donald
Batsford, Brian	Eyre, Reginald	Kerby, Capt. Henry
Bennett, Sir Frederic (Torquay)	Farr, John	Kerr, Sir Hamilton (Cambridge)
Bennett, Dr. Reginald (Gos & Fhm)	Fell, Anthony	Kilfedder, James A.
Berry, Hn. Anthony	Fisher, Nigel	Kimball, Marcus
Bessell, Peter	Fletcher-Cooke, Charles (Darwen)	King, Evelyn (Dorset, S.)
Biffen, John	Fletcher-Cooke, Sir John (S'pton)	Kirk, Peter
Biggs-Davison, John	Foster, Sir John	Lagden, Godfrey
Bingham, R. M.	Fraser,Rt.Hn.Hugh(St'fford & Stone)	Lambton, Viscount
Birch, Rt. Hn. Nigel	Galbraith, Hn. T. G. D.	Lancaster, Col. C. G.
Black, Sir Cyril	Gammans, Lady	Langford-Holt, Sir John
Blaker, Peter	Gardner, Edward	Lewis, Kenneth (Rutland)
Bossom, Hn. Clive	Gibson-Watt, David	Litchfield, Capt. John
Bowen, Roderic (Cardigan)	Giles, Rear-Admiral Morgan	Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)
Box, Donald	Gilmour, Ian (Norfolk, Central)	Lloyd, Ian (P'tsm'th, Langstone)
Boyd-Carpenter, Rt. Hn. J.	Gilmour, Sir John (East Fife)	Longbottom, Charles
Boyle, Rt. Hn. Sir Edward	Glover, Sir Douglas	Longden, Gilbert
Braine, Bernard	Glyn, Sir Richard	Loveys, Walter H.
Brewis, John	Goodhart, Philip	Lubbock, Eric
Brinton, Sir Tatton	Goodhew, Victor	Lucas, Sir Jocelyn
Bromley-Davenport,Lt.-Col.SirWalter	Gower, Raymond	McAdden, sir Stephen
Brooke, Rt. Hn. Henry	Grant, Anthony	MacArthur, Ian
Brown, Sir Edward (Bath)	Grant-Ferris, R.	Mackenzie, Alasdair (Ross&Crom'ty)
Bryan, Paul	Gresham Cooke, R.	Maclean, Sir Fitzroy
Buchanan-Smith, Alick	Grieve, Percy	McMaster, Stanley
Buck, Antony	Griffiths, Eldon (Bury St. Edmunds)	McNair-Wilson, Patrick
Bullus, Sir Eric	Griffiths, Peter (Smethwick)	Maglnnis, John E.
Burden, F. A.	Grimond, Rt. Hn. J.	Maitland, Sir John
Butcher, Sir Herbert	Gurden, Harold	Marples, Rt. Hn. Ernest
Buxton, Ronald	Hall, John (Wycombe)	Marten, Neil
Campbell, Gordon	Hall-Davis, A. G. F.	Maude, Angus
Carlisle, Mark	Hamilton, Marquess of (Fermanagh)	Mawby, Ray
Carr, Rt. Hn. Robert	Hamilton, M. (Salisbury)	Maxwell-Hyslop, R. J.
Cary, Sir Robert	Harris, Frederic (Croydon, N.W.)	Maydon, Lt.-Cmdr. S. L. C.
Chataway, Christopher	Harris, Reader (Heston)	Meyer, Sir Anthony
Chichester-Clark, R.	Harrison, Brian (Maldon)	Mills, Peter (Torrington)
Clark, Henry (Antrim, N.)	Harrison, Col. Sir Harwood (Eye)	Mills, Stratton (Belfast, N.)
Clark, William (Nottingham, S.)	Harvey, Sir Arthur Vere (Macclesf'd)	Miscampbell, Norman
Clarke, Brig. Terence (Portsmth, W.)	Harvey, John (Walthamstow, E.)	Mitchell, David
Cole, Norman	Harvie Anderson, Miss	Monro, Hector
Cooke, Robert	Hastings, Stephen	More, Jasper
Cooper, A. E.	Hawkins, Paul	Morgan, W. G.
Cooper-Key, Sir Neill	Hay, John	Morrison, Charles (Devizes)
Cordle, John	Heald, Rt. Hn, Sir Lionel	Mott-Radclyffe, Sir Charles
Corfield, F. V.	Heath, Rt. Hn. Edward	Monro-Lucas-Tooth, Sir Hugh
Costain, A. P.	Hendry, Forbes	Murton, Oscar
Courtney, Cdr. Anthony	Higgins, Terence L.	Neave, Airey
Craddock, Sir Beresford (Spelthorne)	Hiley, Joseph	Nicholls, Sir Harmar
Crawley, Aidan	Hill, J. E. B. (S. Norfolk)	Nicholson, Sir Godfrey
Crosthwaite-Eyre, Col. Sir Oliver	Hirst, Geoffrey	Noble, Rt. Hn. Michael
Crowder, F. P.	Hobson, Rt. Hn. Sir John	Nugent, Rt. Hn. Sir Richard
Cunningham, Sir Knox	Hogg, Rt. Hn. Quintin	Onslow, Cranley
Curran, Charles	Hooson, H. E.	Orr, Capt. L. P. S.
Currie, G. B. H.	Hopkins, Alan	Orr-Ewing, Sir Ian
Dalkeith, Earl of	Hordern, Peter	Osborne, Sir Cyril (Louth)
Dance, James	Hornby, Richard	Page, John (Harrow, W.)

Page, R. Graham (Crosby)	Shepherd, William	van Straubenzee, W. R.
Pearson, Sir Frank (Clitheroe)	Smith, Dudley (Br'ntf'd & Chiswick)	Vaughan-Morgan, Rt. Hn. Sir John
Percival, Ian	Smyth, Rt. Hn. Brig. Sir John	Vickers, Dame Joan
Peyton, John	Spearman, Sir Alexander	Walder, David (High Peak)
Pickthorn, Rt. Hn. Sir Kenneth	Speir, Sir Rupert	Walker, Peter (Worcester)
Pike, Miss Mervyn	Stainton, Keith	Walker-Smith, Rt. Hn. Sir Derek
Pitt, Dame Edith	Stanley, Hn. Richard	Walters, Dennis
Powell, Rt. Hn. J. Enoch	Stodart, Anthony	Ward, Dame Irene
Price, David (Eastleigh)	Stoddart-Scott, Col. Sir Malcolm	Weatherill, Bernard
Prior, J. M. L.	Studholme, Sir Henry	Wells, John (Maidstone)
Pym, Francis	Talbot, John E.	Whitelaw, William
Quennell, Miss J. M.	Taylor, Sir Charles (Eastbourne)	Williams, Sir Rolf Dudley (Exeter)
Ramsden, Rt. Hn. James	Taylor, Edward M. (G'gow,Cathcart)	Wills, Sir Gerald (Bridgwater)
Redmayne, Rt. Hn. Sir Martin	Taylor, Frank (Moss Side)	Wilson, Geoffrey (Truro)
Rees-Davies, W. R.	Teeling, Sir William	Wise, A. R.
Renton, Rt. Hn. Sir David	Temple, John M.	Wolrige-Gordon, Patrick
Ridsdale, Julian	Thatcher, Mrs. Margaret	Wood, Rt. Hn. Richard
Roberts, Sir Peter (Heeley)	Thomas, Sir Leslie (Canterbury)	Woodhouse, Hn. Christopher
Robson Brown, Sir William	Thomas, Rt. Hn. Peter (Conway)	Woodnutt, Mark
Rodgers, Sir John (Sevenoaks)	Thompson, Sir Richard (Croydon,S.)	Wylie, N. R.
Roots, William	Thorneycroft, Rt. Hn. Peter	Younger, Hn. George
Royle, Anthony	Thorpe, Jeremy
Russell, Sir Ronald	Tiley, Arthur (Bradford, W.)	TELLERS FOR THE NOES:
St. John-stevas, Norman	Tilney, John (Wavertree)	Mr. McLaren and
Scott-Hopkins, James	Turton, Rt. Hn. R. H.	Mr. R. W. Elliott.
Sharpies, Richard	Tweedsmuir, Lady