HC Deb 16 June 1965 vol 714 cc715-43

Question proposed, That the Clause stand part of the Bill.

Sir Lionel Heald (Chertsey)

This Clause sets out the machinery for carrying into effect Clause 34. A number of Amendments to it were put down but, no doubt for excellent reasons, they have not been called. I desire, however—and I have the support of a number of my hon. Friends—to object to the Clause unless and until we have certain assurances or explanations or undertakings from the Chief Secretary.

I will indicate, first, the grounds upon which I object to the Clause. I can put them under three headings. First, the machinery itself is quite unsound and unsatisfactory and illogical because it relates to two entirely different things. The idea is that the application of the Capital Gains Tax to both the company in the case of an investment company and the shareholders is to be mitigated in fairness by means of a system under which a certificate is given to the shareholder which he can use to assist him by way of deduction when he has to pay his own Capital Gains Tax.

So far as the company is concerned, that figure will be arrived at, as we understand it, by considering the notional capital gain made by the company during a certain accounting period which would, presumably, be at the end of the previous year. The shareholder's capital gains on which he will be taxed will be the profit on selling the shares, and the value of the shares will have nothing to do with the capital gains that the company has made during the previous year. It will depend upon the opinion of the market as to the value of the holdings of the company. One is, therefore, relating two entirely different things. It is an artificial and unsound arrangenment from beginning to end.

4.45 a.m.

The next point is that this machinery makes possible and necessary an arrangement which is entirely unfair because it ensures that the individual shareholder in the investment trust company is not able to take advantage of the alternative of assessment on an Income Tax basis. If he himself were suffering tax he would be able to claim that he should be assessed on the Income Tax basis, which would be 27½ per cent. in the case of an ordinary standard rate taxpayer, 22½ per cent. in the case of someone with, I think, £900 a year, and so on, down to nothing at all. The arrangement found enshrined in Clause 63 and worked in combination with Clause 34 prevents that happening and insists that in so far as there are capital gains realised by the company those will be taxed at 35 per cent. or 40 per cent. We consider that to be a thoroughly unfair and unsatisfactory arrangement, involving discrimination against the method of collective investment, and we say it is entirely contrary to the public interest.

The third reason is that we do not at this time know to what state of affairs Clause 63 will be applied, because when Clause 34 was dealt with the matter was left in complete uncertainty as to what Clause 34 was eventually going to be. I have a serious complaint to make against the Chief Secretary, and I hope it will be found that what happened during the debate on that Clause was a matter of error. I would be perfectly prepared to find that the Chief Secretary was able to explain to us how it came about that the matter was left in such complete confusion. It is a serious matter, and I asked the Chief Secretary about it in a letter I wrote to him ten days ago, but I have not had the courtesy of an acknowledgment. Arguments against the principle of the application to investment trusts and unit trusts of the Capital Gains Tax were put up, but there was no answer from the Chief Secretary at all. Instead, he adopted a rather old Treasury trick of producing from up his sleeve a so-called concession which we had had no previous opportunity of considering. The Committee knew nothing of it until it came out, and, of course, we were in the dark about it. It is very difficult, even for those who understand these things, to take it in in a few minutes.

But worse than that, he led the Committee to believe something which was just simply not true, and I am going to prove this in a moment by reference to the OFFICIAL REPORT. He led the Committee to believe that the so-called concession was agreeable—using his own language—to all the associations concerned, that is to say, the Investment Trusts Association as well as the Unit Trusts Association. He went further and said that it had in fact been put forward by them—in the plural. That is to be found in the OFFICIAL REPORT for 31st May, at columns 1288–9.

Alas, as we now know, that simply was not true. It was not true. At the time it came as a great shock to me. I am not connected with any of the trusts, unit trusts or investment trusts, but I had understood from Lord Tangley, who is a leading figure in the field of investment trusts, that the A.I.T., the Association of Investment Trusts, far from being promised any concession, had been turned down flat by the Chancellor of the Exchequer. But alas again, the Committee was not told; and, of course, that took the ground completely from under the feet of people like myself who did not know anything about the background. We found in fact—again I say there may be an explanation for this—that the Chief Secretary had sold us a dummy. Then my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) asked the Chief Secretary point blank, "Does the concession you are proposing to give apply to the investment trusts as well as the unit trusts?" And the answer was, "Yes, definitely." That can be found in column 1297. Later, as reported in column 1308, my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) was unhappy about it—very unhappy. He returned to the charge, and he expressed doubt as to whether the concession which had been described could ever be of any value at all to the investment trusts, and there was no reply from the Chief Secretary. He said no single word about it during the rest of the debate.

In the result, my right hon. Friend the Member for Bexley (Mr. Heath) withdrew the Amendment. He said he was very dissatisfied; it was very uncertain in his view what, if anything, investment trusts had got; and he thought the only thing to do was to wait and see what eventually happened. And we were rather in the same position we were in just now on the last Clause: we allowed a Clause to go through without really knowing what it was going to mean. My right hon. Friend the Member for Bexley, of course, reserved the right to raise the matter again, as would be the natural effect of withdrawing an Amendment, if it should become necessary. This is a serious matter on which we must have a full explanation from the Chief Secretary.

The next morning one of my constituents who is an investor in one of these trusts rang me up and gave me his very best thanks. He understood that we had gained a splendid concession for them, and he wanted me to tell him what it was. Shortly afterwards another of my constituents, who is an expert on investment trusts, rang me up. He was in a different frame of mind. He wanted to know how we could have allowed ourselves to be led down the garden by such a swindle, as he put it. He said that it was ridiculous to suggest that investment trusts were going to get anything at all. I got on to Lord Tangley, and I was told that that was right. He said that a concession of the kind that had been indicated meant nothing at all to them. Further, he said that there had never been any agreement with the Chancellor about it.

As a result of all that, I thought it necessary to write a letter, which was published by The Times on 2nd June, saying that there was the utmost confusion on this matter and that it was surely right that the Chancellor should take steps to dispel the confusion and uncertainty. On Thursday, 3rd June, I wrote to the Chief Secretary pointing out to him that there was some confusion and asking that the matter should be dealt with. I have received no acknowledgment or answer of any kind, sort or description, and until some proper explanation is made I shall object to this Clause, and I hope that my right hon. and hon. Friends will support me.

Mr. Gresham Cooke

This very complicated, costly and cumbersome Clause, which sets out the way in which the Corporation Tax or the Capital Gains Tax on unit trusts and investment trusts should be apportioned, would not have been necessary at all if the Chancellor had taken the advice which my right hon. Friends and I have consistently given him and the Chief Secretary, namely, that the Capital Gains Tax should be put not on unit trusts or on investment trusts, but on the individual, as is done in America. In that event the individual can be assessed and he can pay the Capital Gains Tax according to the rate that is appropriate to him.

Instead of that, it is put on the unit trust, and, as my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) has said, that leads to a form of double taxation. The whole of the Finance Bill is double taxation. There is double taxation of shareholders through Corporation Tax. There is double taxation of overseas companies, and now we have double taxation of unit trusts and investments trusts and their shareholders.

The result is that the poor man—and I mean poor in the monetary sense—who comes along and puts his hard-earned savings in investment or unit trusts will pay more tax than the rich man who is able to invest directly in his own portfolio of shares. Whereas the rich man will pay 30 per cent. at most, or perhaps 27½ per cent., in Capital Gains Tax, the poor man will have to pay at the rate at which the unit trust is assessed, namely, Corporation Tax at 35 per cent. or 40 per cent. That is why the whole of this arrangement as embodied in the Clause is so wrong.

5.0 a.m.

I could list many other ways in which the shareholder is hit, but that would be going outside the Clause. I think that the Chief Secretary admitted during the discussions that we had on 31st May that investors in these particular trusts were going to be hit. He said: All we know is that there is an extra rate to pay—there is, and no one says there is not. One does not attempt to reduce or extinguish that gap. There are advantages to be obtained from corporate investment as opposed to individual investment. If people want to do that, they must assess the advantages and disadvantages, and there is no difficulty about that."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1288.] He admitted that the man who invests by means of this corporate method will be at a disadvantage as compared with the richer investor.

Not only that; a unit investment trust has to follow an extremely complicated method in sending out certificates at the end of the year showing how much tax each individual has had to pay—or, rather, has had to earn. It will be impossible to send these out with the final dividend, as is envisaged in subsection (5), because, as subsection (6) provides, the leave of the inspector of taxes has to be obtained before the final dividend and apportionment can be sent out. All that will take time, and I do not think that the apportionment can go out at the same time as the final dividend. There will be extra work and an extra complication.

To whom are the certificates of this Capital Gains Tax to be sent? Will they be sent to the actual holders? A holder may have just come into the unit trust. The capital gains earned during the course of the year may not have been earned in respect of the holder who has just come in. Will the certificate be sent to the actual holder at the end of the year, or to the previous ones? That is the sort of question we want cleared up.

As one of the investment trust managers said to me, "What will be sent to the holders will be certificates to the effect that they have earned 4d. Capital Gains Tax during the course of the year". The debate on Clause 34 was spoilt by the mistakes made by the Chief Secretary, and the miserable concession he gave. He gave the impression that it was a good concession, but it was a negative one. I understand that five possible concessions were put forward by the unit trust movement and associations to the Treasury. The Treasury chose the most niggardly one.

The Chairman

I hope the Committee will assist the Chair. We cannot completely repeat the debate we had on Clause 34. The hon. Member will remember that when we debated Clause 34 we discussed both aspects of the unit trust. I hope that the hon. Member will not repeat the whole debate now.

Mr. Gresham Cooke

I will not do that, but I must refer to what took place in the debate, because it leads on to this Clause. In the debate I specifically asked whether this concession applied to investment trusts as well as unit trusts and I was told that it did. I will admit that later in the debate the Minister rather lamely excused himself by saying that he thought that there had been a mistake or misunderstanding, and that it did not apply to investment trusts. But many hon. Members, having heard the concession, went out of the Chamber and the debate came to an end.

The concession applies only to a contracting unit trust, as the liquid assets re set off against the realisation of securities, and it is not of much value to an expanding company. They are of no value to an investment trust and of no value to an expanding unit trust. My view, as I have always said, of the way in whie this Clause should be dealt with is by exempting the unit and investment trusts from tax on gains made on their fixed assets. After all, these gains are fixed assets within the meaning of the Companies Act, 1948. Learned counsel has given the opinion that the investments of these trusts are fixed assets just a s any industrial companies have fixed assets, the benefits of which are exempt from Capital Gains Tax under Clause 31.

I think that the Chancellor has let himself in for a highly complicated procedure, and it will not work. As set out in this Clause, it will be expensive. The poor man who goes in for this kind of investment will be worse treated than the rich man. It is extremely unsatisfactory. I want the Chief Secretary to give some of the answers on this point: I feel very strongly opposed to the Clause as it stands.

Mr. Anthony Grant (Harrow, Central)

This Clause is the Corporation Tax "tail" which links up with the Capital Gains Tax arguments which we had over Clause 34. The basic argument which tie unit and investment trust movements advanced in objection to the whole basis of taxation which is envisaged—is the argument on principle, which is that it is quite absurd that people who invest—and they are usually, inevitably, small savers—in unit and investment trusts should be penalised and charged a higher rate of tax than if they invested direct. I think it is important to remember, as was said in previous debates, that the average holding in a unit trust is only about £334, spread over many thousands, even millions, of investors. Sensible suggestions were made as to how this could be alleviated, and I see that there is an Amendment on the Paper indicating how this Clause can be dealt with.

The second argument is the administrative one, and this is the one with which the Clause is almost exclusively concerned. Although it was the lesser of the two complaints of the movements, the administrative argument showed that there would be enormous complexity in computing the liability to tax of unit trusts in particular. I expect that this applies also to investment trusts. The argument was that the complexities in computing the annual certificate in this connection would be quite remarkable. Something which hon. Members would surely wish to encourage is that many of the unit trusts have a scheme whereby people can contribute £1 a week or a month—small sums—and if a person engages in this wholly desirable method of investing it encourages the spread of wealth and the spread of ownership.

Over a period of ten years, with 520 subscriptions, there would be 520 different base dates from which to calculate this tax liability. It would require a computer, considerably more staff and arithmetical effort on the part of the unit trusts to calculate this tax liability. Of course, they have professional staffs who may well be able to provide this sort of service, but there can be no doubt that it will add considerably to the expenses of management, and therefore to the expenses of shareholders. The small savers, who are desirable members of the community whom we want to encourage, will undoubtedly be penalised in that respect also.

In the previous debate, the Chief Secretary rejected out of hand all the arguments which were put forward by the investment and unit trusts on the astonishingly feeble grounds that, by reason of the argument of deferment, holders in a unit trust and/or an investment trust would be better off if the holders instead of the trusts were liable to tax on realisation. Nobody on the Treasury Bench has explained why under the Bill as now drawn these investors should be worse off. Every excuse is made for not making them better off, but we are not given any reason for making them worse off. The reason is that the Treasury Bench is quite obsessed with the argument that no unfair advantage must be given. That is what we always hear—

The Chairman

Order. I hope that the hon. Gentleman will help me. It seems to me that at the moment he is repeating the debate I heard when we discussed the Amendments under this Clause together with the Amendments to Clause 34. The hon. Gentleman must link what he now has to say to the Clause in front of us.

Mr. Grant

I appreciate that, Dr. King, so I will come to the position as it is at present. In that debate we had a concession by the Chief Secretary, but as my hon. Friend the Member for Twickenham has said, it was no concession at all. The right hon. Gentleman said that it was a meeting half way between the members of the unit trust movement and the Treasury, but he did not really budge an inch. All that happened as a result of that concession was that the unit trust movement was allowed to continue its operations. Without that concession, the unit trust movement would have folded up completely.

What should be made quite clear is that not one penny of concession by way of relief from tax is given to the shareholders in unit trusts. They are still faced with the enormous administrative difficulty—

Mr. Harold Lever

I should like the hon. Member to clear up one point for me. His right hon. and learned Friend the Member for Chertsey (Sir L. Heald) quoted my right hon. Friend the Chief Secretary, who said: Nevertheless, this is a reasonable half-way house, and I am glad to say that it is being put forward by the associations themselves…—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1289.] Is the hon. Gentleman saying that the suggestion was not, in fact, put forward by the associations?

Mr. Grant

No, that is not my understanding. I understand that the members of the unit trust movement were called before the Treasury by the good offices of my right hon. Friend the Member for Taunton (Mr. du Cann)—who informs me that he did no more than link the movement with the Treasury—and were then asked what sort of concession they required. They put forward four suggestions and were then asked, "If none of these is acceptable, what would you say?" Possibly naively, they produced the last suggestion, on which the Chief Secretary seized. That is what the right hon. Gentleman put forward as a halfway house, but I think I am right in saying that far from meeting them halfway he hardly budged an inch.

Mr. Harold Lever

On this narrow point about the Chief Secretary's supposed misleading, my right hon. Friend apparently correctly informed the House that this suggestion was put forward by the Association of Unit Trusts. He says that the concession amounts to nothing, but can he explain why these experienced gentlemen, who look after a good deal of public money with great skill and zeal, put forward suggestions for a concession which was not worth a penny to them? I am a little puzzled.

The Chairman

Order. I hope that the hon. Member for Harrow, Central (Mr. Grant) will not answer that question. This debate is getting very much like the second debate on the Question that Clause 34 stand part. I hope that hon. Members will help the Chair.

5.15 a.m.

Mr. Grant

I accept what you say, Dr. King, but it was trust in the singular and not plural.

The situation they now find themselves in as a result of that is that they are only just able to carry out their operations. The administrative difficulties are quite enormous for the unit trust and investment trust movements.

If I do not strain the rules of order, I would like to mention one other body in an identical situation. I am referring to the difficulties of the investment club movement. Investment clubs are in a similar situation to unit trusts. It is remarkable the growth that has taken place in the investment club movement. In 1958 there were no more than about a dozen of them. Today there are over 2,000, I am told, and they invest something like £2½ million per annum. But they are mostly in very small groups and mostly are very small savers.

They are often small groups of men on the factory floor, in the pub or club. All the same, they are performing a useful service, and this is a growth that is to be encouraged, because it is wholly desirable. These people are practising thrift, acquiring economic and financial knowledge of our system, and also providing vital investment.

The Chairman

I do not think they come under the Clause at all.

Mr. Grant

I accept your Ruling, Dr. King. But these investment clubs do have the same administrative difficulties which I described when referring to unit trusts, without having skilled managements to deal with them.

The Government have got into a considerable muddle over this Clause and over the position of the unit trusts and investment trusts as a whole. I do not for one moment believe that it is deliberate. I accept the Chief Secretary at face value when he dealt with the subject and said that his attitude towards savings was that the Government must encourage them by every possible method. What is being done is by accident rather than by design, but savings are being seriously damaged by the Bill and the particular Clause.

Mr. Diamond

I agree, in view of the comments that have been made, that this is almost a repetition of the debate we had previously. The right hon. and learned Member for Chertsey (Sir L. Heald) has made some extraordinary allegations, without notice, alleging that I deliberately misled the Committee; that I, a Treasury Minister, deliberately led the Committee down the garden and engineered it so that this Committee would be passing this into effect on a misunderstanding.

I hoped I would not ever have to answer a charge of that kind. But I will do so. The right hon. and learned Gentleman said that he had sent me a letter. If he did, I accept his word. But no letter has been received by me. I can only say that I regret it. As far as my Department is concerned, I am well served with an excellent staff and it is their almost universal habit to send an acknowledgment immediately a letter has been received, even although the letter does not reach my desk immediately that day.

If no acknowledgment has been sent to the right hon. and learned Gentleman, it is conceivable that the letter has never reached the Treasury at all. All I can say is that if the right hon. and learned Gentleman says that he sent it, he has obviously sent it, and if I say that I have not seen it, obviously I have not seen it. That is the explanation about the letter.

Sir L. Heald rose—

Mr. Diamond

I think that it would be convenient to clear the allegation first. I listened very carefully while the right hon. and learned Gentleman was accusing me of conducting this Committee down the path and deliberately misleading it.

Sir L. Heald

I did not say that.

Mr. Diamond

The right hon. and learned Gentleman misquoted the OFFICIAL. REPORT. I will answer him first, and then I will give way. Dr. King, I hope that I shall have your generosity in allowing me to reply to the attack that has been made on my integrity by referring to the debate which took place on Clause 34 on 31st May. Had I been warned about it, I should have been able to collect the material much more shortly. I said in column 1288: There have been many discussions relating to administrative convenience. That was the matter which was at issue, not whether there was any tax to pay. There is no double taxation. That was made clear by the Chancellor in his Budget speech. It is just the question of whether the tax is collected from the trust or from the unit holder. I went on: Quite shortly, the difficulties were between the convenience, on the one hand, of the unit trust managers—I do not think that the investment trusts come into this very much"— The right hon. and learned Gentleman said that I deliberately misled the Committee into believing that the investment trusts were offered a concession which was wholly erroneous. —and of the Inland Revenue, on the other. Both must he considered. I am happy to say that as a result of very full discussions—and I want to acknowledge the very great help the Government have had from the associations representing all these bodies, and particularly the right hon. Gentleman the Member for Taunton (Mr. du Cann)"— who, incidentally, was gracious enough to drop me a note of appreciation— —who has taken his proper place in these discussions, and we are very grateful to him—we have reached broad agreement, and I do not want to tie down anyone who has not yet seen any particular Amendments, which will result in Amendments being put down on Report which, I hope, by the time they have been read and carefully considered by all interests, will be found to have met the difficulty. Shortly, the method proposed is that unit trusts will pay Capital Gains Tax on changes of investment on the assumption that their units remain constant in number, but if the units are falling—that is to say, if individuals had been paid back—that amount will be deducted from the figure on which the Capital Gains Tax is assessed and so on. I now refer the Committee to column 1301.

Sir L. Heald

What about column 1397?

Mr. Diamond

I will refer to anything to which the right hon. and learned Gentleman directs my attention, but I will refer to column 1301 first because the right hon. and learned Gentleman did not feel it right to refer to it. I said: I intervene for the second time for only a moment because I might have misunderstood what was said by the hon. Member for Twickenham (Mr. Gresham Cooke), and the last thing that I would want to do is to mislead the Committee in any way. I agree with the hon. Member for Croydon, South (Sir R. Thompson) that it is only when the Amendment is put down and it can be carefully studied that we can give it the consideration which we would all want to afford to it. I hope that I made it clear in my original speech, when referring to the concession which had been arranged, that I was talking about taxing switching, but not taxing the reduction in the number of units. As is well known, an investment trust does not operate in this way. I do not say a run, but if there are a number of unit holders who want to be paid out the only thing the unit trust can do is to sell its investments to pay them out. There would be a net contraction at the end of the year. It is those holders who would be taxed directly, and not the trust itself—I hope that I have made it clear to the hon. Member for Twickenham that this is not a problem with which the investment trusts are faced."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1288–9, 1301–2.] In view of all that, for the life of me I really do not know—

Hon. Members

Read on.

Mr. Diamond

—why the right hon. and learned Gentleman, with his great experience of justice and courtesy, should choose to say that I deliberately misled the Committee into voting—

Sir L. Heald

I did not.

Mr. Diamond

—into accepting the Clause on the assumption that I was talking about investment trusts. Nor do I understand why the hon. Member for Twickenham (Mr. Gresham Cooke) was so mean—untypically mean—as to say that I may have said something afterwards but by that time everybody had left the Chamber. I made the position perfectly clear.

Let me add this. It is possible—and I apologise for this immediately—that in an exchange I misunderstood what the hon. Member for Twickenham was saying and did at that time use words which might have misled him. I tried my best at the earliest possible opportunity, as soon as I realised that I might have misunderstood—and I have never seen the HANSARD report till this minute—to make it absolutely clear what the position was, and in those circumstances I do not think that hon. Members have the slightest justification for this unwarranted attack.

Sir L. Heald

I did not use the word "deliberate". When the OFFICIAL REPORT IS read tomorrow morning it will be found that I did not suggest that it was deliberate, and that I was perfectly prepared to accept the explanation when I got it. That will be on record in HANSARD. I quite understand the right hon. Gentleman's strong feeling, but he has represented me as having made an accusation which I did not make. My hon. Friends will bear me out. I took the greatest care over it, and it is quite wrong, as the right hon. Gentleman will find when he sees HANSARD, to suggest that I made this accusation.

Mr. Diamond

Perhaps we can get on with the Clause now that the right hon. and learned Gentleman has made it clear that notwithstanding the phrase about "leading the Committee down the garden path", which I recollect clearly, or "selling a dummy", he did not mean that I was in any sense lacking in integrity.

Mr. Gresham Cooke

As I have been drawn into this discussion, may I refer to column 1297? I said: I listened carefully to the concession made by the Chief Secretary, but, as far as I can see, it does not apply to the investment trust. Mr. Diamond: The concession applies equally to the unit trust and to the investment trust. I pointed out that there is an administrative problem in relation to unit trusts which applies less or is non-existent in relation to investment trusts, but the concession affects both equally. I said: I am glad to hear that. The hon. Gentleman emphasised the unit trust so much in explaining the concession that I thought that it did not apply to investment trusts."—[OFFICIAL REPORT. 31st May, 1965; Vol. 713, c. 1297–8.] As far as I was concerned, the steam went out of the debate when I heard that. I shortened my speech considerably and, to me, that was the end of the matter.

Mr. Diamond

I do not think we can leave it at that. I want to repeat without any reservation whatsoever my apology for having said apparently, according to HANSARD at column 1297, The concession applies equally to the unit trust and to the investment trust. "Equally" would not be right. I clearly misunderstood the hon. Member for Twickenham. It is not difficult to do so when there are the usual exchanges going on in Committee. I made the position clear within two columns, and the hon. Member for Twickenham was present and heard me say: I hope that I have made it clear to the hon. Member for Twickenham that this is not a problem with which the investment trusts are faced", because he immediately got up and said: I am obliged to the hon. Gentleman for saying that, because I thought that the concesswn applied only to unit trusts. I am glad that he cleared up the point, because that was the impression I had."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713. c. 1302.] 5.30 a.m.

I am sorry to have detained the Committee at this hour, but when a member of the Government is attacked it is right, on behalf of the Government, apart from any individual feelings which may have been extremely hurt, that a full reply should be made.

There is little that I can add on the Clause because little has been added in the debate. Perhaps I can say in reply to the arguments that the rate is unfair that we are now back on the 35 per cent. rate as against the 30 per cent. rate which the individual would pay, or a smaller rate which the individual would pay. The position simply is that there is no question of double taxation whatsoever. My right hon. Friend has fully recognised that unit trusts or investment trusts are of the nature of trusts, as their titles indicate, and that there is, therefore, no question of double taxation.

The only question which arises is: which should pay the tax, the unit trust or the unit holder? An arrangement has been made for unit trusts, where the difficulty arises—there is no such difficulty about investment trusts—which, when hon. Members have the opportunity of reading the Amendment which is not yet down on the Notice Paper and, therefore, for the second time I repeat that I hope that they will not reach a conclusion until they have read it carefully, will, as far as may be, be a reasonable halfway house between the desire of the unit trusts to be saved the maximum of inconvenience and the desire of the Inland Revenue to be saved the maximum of inconvenience. That is an arrangement which, I think, should be satisfactory to both sides.

We cannot pursue the Amendment to which I have just referred in any detail because it is not down on the Notice Paper, and I am not asking—

Mr. Grant

lit will not save a penny of tax.

Mr. Diamond

Nobody is saying that. We are talking about administrative convenience. That is the only question which arises.

On tax, I can only repeat what has been said many times. The Government take the view that a corporation pays Corporation Tax on its profits, from wherever they are derived. Whether they are derived from capital gains or income makes not the slightest difference. This has advantages and disadvantages. The only thing which the Committee has noted so far is the disadvantage in the sense that an individual is called upon to pay 35 per cent. who might otherwise pay at a lower rate—either 30 per cent. or an even lower rate. What has not been pointed out is that equally an individual might have to pay at a much higher rate. If these gains are made by an individual in a year, he will be paying the full standard rate plus Surtax. He might be paying at 12s. or 15s. in the £ instead of the flat 35 per cent. which applies here.

The philosophy is simple. In terms of equity, it is reasonable. Sometimes it is more to the advantage of the individual, sometimes it is less. The philosophy is clear: here is a corporation; it pays Corporation Tax.

Mr. Geoffrey Lloyd

I am sorry that I cannot accept the Chief Secretary's arguments, and I must say that, as an investment trust director, I consider that the Clause contains a thoroughly bad scheme for dealing with the problem with which it attempts to deal and I should like to examine it from the point of view of the various subsections and the way in which it will affect both the investment trusts themselves and their shareholders.

I am glad that my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) brought up this matter, because, although there has never been any question of imputing bad faith on the Chief Secretary's part, there has been very considerable misunderstanding in the investment trust movement.

Mr. Harold Lever

Before the right hon. Gentleman commits himself to any further statements, I suggest that he consults the OFFICIAL REPORT for 31st May. In the same debate in which the Chief Secretary is said to have misled the Committee, the right hon. Gentleman is recorded as having said: Earlier the Chief Secretary gave the impression—I may be mistaken—that investment trusts were included in the concession which he had arranged with the unit trusts. I think that recently the hon. Gentleman has corrected that impression". In other words, the right hon. Gentleman was perfectly well aware that any misunderstanding had been cleared up.

Mr. Lloyd

I suggest that the Committee considers the rest of the passage from which the hon. Gentleman quoted. It continues: I think that recently the hon. Gentleman has corrected that impression. I have consulted the Association of Investment Trusts since his speech and find that it has not been consulted about any such arrangement. It would be useless to investment trusts, because their problem is different. The Chief Secretary seemed to imply that they had no administrative problem, but we do not think that is so".—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1303–4.] The hon. Member for Manchester, Cheetham (Mr. Harold Lever) will realise that in the statement which I made then there was no imputation of any deliberate misleading on the part of the Chief Secretary. The point was that owing to the undoubted impression in the Committee that an important concession had been given to the unit trusts, there was an impression also in the Committee, at any rate at a certain stage, that something important had also been done for investment trusts. The debate collapsed in a way in which we did not expect, and, as a result, there was considerable indignation in the investment trust movement because we had not pressed our case far more strongly. I hope that we can leave the matter there because I wish to address my remarks to the badness of the scheme as set out in the Clause. Subsection (3) states: After carrying out an apportionment under subsection (2) of this section the unit trust shall … issue a notice in regard to the total net gains. It states that the gains must he set out separately for each accounting period. Subsection (5) goes on to lay down that A notice under subsection (3) … may be combined with the statement in writing required to be given under section 199 of the Income Tax Act 1952 … which, I think, is the statement which details the amount of tax paid in regard to dividends. Like my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), I would like to know whether this arrangement is practicable. Subsection (6) states: Before the notices … are sent out, particulars of the apportionments shall be submitted to the inspector … which means that he must give his approval to these notices before they can be sent out, yet it is suggested that they should go out with the dividend warrants.

I want to examine this from a practical point of view because, generally speaking, these warrants go out about 12 weeks after the end of the financial year. If we make allowance of about three weeks—which, the Financial Secretary will agree, is a reasonable time, considering the time involved in giving notice of the meeting and so on—then that leaves only eight weeks for the inspector to give his approval on a matter which is not necessarily going to be all that easy for him to decide. Bearing in mind that this work w 11 fall almost certainly on the relatively few inspectors in particular districts in the City of London, there is a considerable doubt as to whether this scheme will be administratively easy to carry out. This is a point of importance for the Committee because we are laying down a procedure, and it would be most unfortunate if we laid down one which could not be administered efficiently.

The Clause gives a statutory right in respect of an accounting period, and we must decide exactly to whom this right belongs and when the notice will be issued. This is not dealt with in the Clause. Should it be issued to those on the share register at the date when the accounting period closes, or should it go to the man who is entitled to receive the final dividend? It will be important to clear this matter up, because otherwise there may be questions of legal recourse by shareholders against the investment trust itself.

Subsection (2) relates all this to what are described as total net gains, and the shareholder will, in effect, be taxed at the Corporation Tax rate instead of at his much lower individual rate. I shall not dwell on that point, but it is a matter of considerable importance, adding weight to the view of the investment trust movement that this is a thoroughly bad scheme set out in the Clause. We are here dealing with one of the greatest and most historic saving movements in the country and dealing essentially with people who, generally speaking, are engaged in long-term investment. This is another reason why the terms of the Clause are peculiarly inappropriate.

It is by no means uncommon for someone to invest in an investment trust for 25 years. Under the Clause, he will have to keep 25 pieces of paper during all that period before he will be able to know, when he may have to realise part of his investment, what his Capital Gains Tax position is. Most investment trust shareholders are not highly organised people with accountants to do their work. It is one of the advantages of the investment trust movement that people have been able to feel that all this kind of work has been done for them and everything has been simplified. The pieces of paper to be used under this Clause are quite different from the dividend warrants with which it is suggested they be associated. The dividend warrant has an immediate effect and is discharged at once—it is cash—quite different from these elaborate certificates which have to be kept for a long time.

I fear that, unless the Government revise the scheme, they will injure the investment trust movement and cause a great sense of injustice in the minds of hundreds and thousands of investment trust shareholders.

Mr. Harold Lever

I shall not repeat the arguments I used in the previous debate when I made plain that I dislike the Clause and I am not satisfied with the treatment accorded to unit trusts, but I wish to emphasise that, in my recollection, which is very clear on the point, no one was misled in any way whatever by the Chief Secretary's statement. I spoke after my right hon. Friend had finished, and I thought so little of the concession to my point of view that I did not mention it in my argument and ask for further concessions. I certainly was not misled. It is quite clear that the hon. Member for Twickenham (Mr. Gresham Cooke) was not misled, because he said: I am obliged to the lion. Gentleman for saying that, because I thought that the concession applied only to unit trusts. I am glad that he cleared up the point, because that was the impression I had. Later on the right hon. Gentleman the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) said: Earlier the Chief Secretary gave the impression—I may be mistaken—that investment trusts were included in the concession which he had arranged with the unit trusts. I think that recently the hon. Gentleman has corrected that impression. I have consulted the Association of Investment Trusts since his speech and find that it has not been consulted about any such arrangement. It would be useless to investment trusts, because their problem is different."—[OFFICIAL REPORT, 31st May 1965; Vol. 713, c. 1302–3.] I suggest that my right hon. Friend persuaded that Committee that investment trusts were not included. The hon. Member for Twickenham and the right hon. Member for Sutton Coldfield were well aware long before the Amendment was withdrawn that my right hon. Friend was making no concession to investment trusts at all.

Mr. Gresham Cooke

One of the difficulties about this is that in the Press the next day there were large headlines "concessions for unit and investment trusts", so undoubtedly the Press got that impression.

5.45 a.m.

Mr. Lever

If the right hon. and learned Member for Chertsey (Sir L. Heald) had said that the Press had misled his telephoning communicants that would have been a different matter. I am sure that the hon. Member does not wish to be unjust to my right hon. Friend, and we should be absolutely clear that nobody was misled and everybody knew perfectly well what they were doing.

Sir L. Heald

It is true to say that there was undoubtedly a view held in the Committee generally that there had been a concession offered to investment trusts and, therefore, the matter was to be left in abeyance. There was no doubt about it. It was there and I talked to a number of people, and that was the impression they had.

Mr. Lever

I would conclude by saying that this is not so. I have quoted the two main protagonists, and now I will quote the right hon. Member for Bexley (Mr. Heath). He was not misled, he is far too intelligent. He said: The Chief Secretary said that he has discussed this with the Association of Unit Trust Managers, and that he proposes to put down an Amendment with that aim. Note that he said "unit trust managers". I think that he will agree that both investment and unit trusts wish to be exempt from the Capital Gains Tax and want to fall on the holder of the shares or units. That was their first position, which they put to him and his colleagues. Having failed to secure the first position in their discussions, they have moved on to other schemes, one of which the Chief Secretary will follow in his Amendment. My first reaction is that this does nothing to help the investment trusts, though it helps the unit trust from the point of view of the withdrawal of units."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1306.] The right hon. Gentleman made it clear that his impression was that nothing was done to help the investment trusts and he went on to say, reasonably and fairly, that he was going to withdraw the Amendment because he had been informed that there was a concession of some kind, it was right that he should not press it to a Division and that he and his hon. Friends should give fair and proper consideration to the undertaking.

The Chairman

I think we should now get away from the debate on Clause 34.

Mr. Lever

It is perfectly false to say that the Committee was misled. I was not misled; the hon. Member for Twickenham was not misled; the right Member for Sutton Coldfield was not misled, and the right hon. Member for Bexley did not press his Amendment and so was not misled. I am sure that the Committee could not have been misled by anything that my right hon. Friend said.

Mr. Grimond

You will be glad to hear, Dr. King, and so, I hope, will the hon. Member for Manchester, Cheetham (Mr. Harold Lever), that I was not misled either. The Chief Secretary made a mistake and corrected it in the course of the debate later.

It has been suggested by people well versed in tax law that, in this instance, where the Commissioners are being asked to determine a new type of case, the appeal should lie with Special and not General Commissioners. Again, as has been pointed out by the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd), many investors in investment trusts and unit trusts—and I am concerned particularly at the moment with the former—are small investors with no great knowledge either of investment or of accountancy. Could the Chief Secretary therefore tell us something about these notices?

I take it that they are simply an entitlement to a reclaim. Or are they a settlement? As I understand subsection (6), the final examination may not be made in the accounting period in which the notice is issued. The closing words are: … the inspector may give his approval notwithstanding that any amounts are not finally ascertained on the footing that any adjustment is effected in the apportionment for the following accounting period. By the following accounting period, people may have disposed of their shares. Perhaps the right hon. Gentleman will spell out the position of these notices in the hands of the investors. Should not art investor be warned that, although he gets such a notice, it is liable to amendment? Presumably he has to be notified that final apportionment has not been made. It should be put on record that the investor should be careful and not assume that final adjustment has been made if there is any indication on the notice that the matter is still before either the inspector or the Commissioners.

Mr. Peter Hordern (Horsham)

This Clause is utterly impracticable in relation to investment trusts and unit trusts, but I am particularly concerned with the former. Under subsection (6) the notices would not be sent out without the approval of the Commissioners. Investment trusts, when making a declaration of final dividends on the Stock Exchange, use a procedure whereby shares are quoted c am final dividend for the period and later the net dividend is subtracted from the price of the shares. This is the procedure to be followed when the Capital Gains Tax certificate is issued by the investment trust because necessarily the two documents cannot be sent out at the same time. In addition, of course, there will be the physical difficulties of sending out thousands of extra documents on quite a different date, together with the extra expense.

These are just two practical points of difficulty in the Clause. I cannot help but feel impressed by the complete prejudice shown once again by the Chief Secretary in using the same kind of defence for the Capital Gains Tax on investment trusts. The only reason the Government have ever produced is that this is a way of catching the rich man who is trying to get away with it. That is a most ludicrous argument. Any one who knows anything about investment trusts knows that it is naive to think that a rich man is prepared to put his money into investment trusts in order to try to avoid Capital Gains Tax. It is a ludicrous suggestion. I do not even like talking about it in the presence of the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who must be deeply embarrassed.

In any case the rich man has a perfectly good alternative. He can invest in British Transport. The whole point about this Finance Bill is that so far as the rich man is concerned the Bill has been blown wide open. Why not admit that so far as investment trusts are concerned and stop trying to mess around with the interests of thousands of small investors and a growing movement which is making a valuable contribution to the savings of the country and to the country's prosperity? I ask the Chief Secretary to look at this again.

Mr. William Clark

I am sure we all enjoyed the Second Reading verbatim debate of the debate we had on the 31st May. I do not think that in the whole of this debate there has been any suggestion that people in unit or investment trusts should be entirely exempted from Capital Gains Tax. I am sure the Chief Secretary will accept this. It is merely a question of how and when this tax is raised.

I would like to prove to the Chief Secretary that when he says there is no double taxation he is really using the wrong arithmetic. I do not know if his attention has been drawn to an excellent article in the Investors' Chronicle of the 11th June, which is headed "For Richer, For Poorer". This analysis shows there is extra taxation by taxing the company and the individual, whether it is an investment trust or a unit trust.

I would earnestly ask the Chief Secretary to look at this article. He will see there that while he maintains, as he did at that Box a few moments ago, that there is no double taxation, the examples in this article show that if one has direct taxation for direct investment the Capital Gains Tax suffered will be £15. If one has the same sort of investment through a unit or investment trust the amount of tax paid will be £17.2. The Chief Secretary may say that through a unit or investment trust the price of the units fall consequently and relief may be obtained through this method. Even taking the fall in the price of the unit or the investment trust one will still be paying £16 for the same investment. There is the £15 if it is direct investment, £17.2 if it is wholly through a unit or investment trust, and if account is taken of the fall in the value of the unit trust that has suffered this capital gain it is still £16.

Mr. Lubbock rose—

Mr. Clark

Whilst the Chief Secretary keeps saying this is not double taxation I hope he will accept the fact that it is more taxation. This extra taxation is not going to hit the rich man, the tycoon. This is the point which has been well-rehearsed and convassed. I would ask the Chief Secretary to look at the question of this form of saving, because I know, with his great experience aid interest in these matters that he has always been keen on savings and has supported me when I was sitting on the back benches over there and looking for his support when moving new Clauses. The real differences between the two sides of the Committee are the differential rates of 40 per cent. for Corporation Tax and the individual tax rate of 30 per cent.

6.0 a.m.

If the Chief Secretary still agrees about that, as he used to when he was in Opposition and used to support Amendments moved in the interests of small savers by my hon. Friends and myself from that side of the Committee, why is he now taking action to hit the small savers? Of course, nobody wants to allow the tycoon, or the very rich man, to get away with it. Nobody wants that. It is quite wrong for anybody in this Committee or elsewhere to think that we on this side are merely interested in the rich man. We on this side have done more for the small man's savings in the last 13 years than any other Government in our history. I know, Dr. King, that if I were to go on in that strain you would no doubt be drawing my attention to the fact that we are debating the Question, That the Clause stand part of the Bill.

But I take up the point which my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) raised, which is a very valuable point, that here we have in the Clause a very cumbersome method. With the greatest respect to the Chief Secretary—I am in the same profession he is—he knows, as I do, that it is an absolute administrative impossibility to carry out. I do ask the Chief Secretary, not necessarily in his capacity as Chief Secretary but in his professional capacity, or his ex-professional capacity, would he like to be the accountant telling a unit trust or whoever it may be what it should put on the certificate? I can assure him that I would not like to be the accountant who had to work it out. It is quite impossible. He knows, everybody else in the Committee knows, what will be put on these certificates, these bits of paper, as my hon. Friend called them, which, as he said, are going to be tossed about, given to people most of whom will never use them.

After all, most of the people who receive these bits of paper, these certificates, will not ever have to pay Capital Gains Tax. This is really the point we have to remember. It has been pointed out during this debate and in previous debates that the people who invest in these sorts of things are small people. The only big people who invest in investment trusts are insurance companies, pensions funds, charities. Insurance funds are comprised by millions and millions of policy holders—small people; charities are in any case exempt from the Capital Gains Tax; pensions funds also. So we are back in the position that we are going to have bits of paper flying backwards and forwards and given to people who, in 90 per cent. of the cases, will never be able to use them. Surely, this is not what the Chief Secretary wants? Even administratively, it is a difficulty.

We have just debated local authorities, and one of the arguments put up was that because local authorities found it so difficult to produce accounts of their trading activities and there was administrative hardship, we should exempt them from taxation. I cannot understand the logic of the Government in this. Surely, to put the responsibility on unit trusts to push out these certificates knowing that they are going to people who in 90 per cent. of the cases will not be using them is administratively a formidable task? I am sure the Chief Secretary would agree with me—personally agree with me—in saying that, frankly, this, as an administrative exercise, would be practically impossible.

We have had in the debate talk on the rate which is likely, the rate of Capital Gains Tax for these unit trusts and investment trusts. There is this division in the Committee. It is accepted that these two forms of saving methods, or instruments of saving, unit trusts and investment trusts, are mainly comprised of small people. Then, in logic there is no reason why we should give the benefit to the rich man who can get his own portfolio investment, his own direct portfolio investment, and pays 30 per cent. It is no use the Chief Secretary saying, "If he sells within a year it will be added to his income."

The right hon. Gentleman knows, just as the hon. Member for Manchester, Cheethan (Mr. Harold Lever) knows, that rich men do not sell within the year. They know the law. They know that they can hold on and pay only 30 per cent. If they sell within the year, they are caught for Income Tax and Surtax. Transport Stock, to which my hon. Friend the Member for Horsham (Mr. Hordern) referred, may be sold but the holders will not pay the 30 per cent. Capital Gains Tax on the profits from them. They will get a capital gain free of tax.

On the other hand, small people who are not liable to pay any Capital Gains Tax will pay tax, not at 30 per cent., but at 35 per cent. or 40 per cent. We have not been able to discover

whether it is to be 35 per cent. or 40 per cent. Most of us work out our examples on the 40 per cent. basis because it is easier than working on a 35 per cent. basis. This is one of the things that we should get clear. We should know whether to work on the 40 per cent. basis, or the 35 per cent. basis.

We think that the Government have made a mistake in the rate. They have made a further mistake by adopting this cumbersome method of giving this so-called concession. They have genuinely tried to help unit trusts, but the attempt has mis-fired. For these two very good reasons, and because the differential between the Corporation Tax at 40 per cent. or 35 per cent. and the Capital Gains Tax at 30 per cent. will hit the small saver, I hope that my right hon. and hon. Friends will divide against the Clause.

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

The Committee divided: Ayes 144; Noes 131.

Division No. 182.] AYES [6.6 a.m.
Allaun, Frank (Salford, E.) Fletcher, Sir Eric (Islington, E.) McGuire, Michael
Alldritt, Walter Fletcher, Raymond (Ilkeston) McInnes, James
Allen, Scholefield (Crewe) Floud, Bernard Mackenzie, Gregor (Rutherglen)
Armstrong, Ernest Foley, Maurice Mackie, John (Enfield, E.)
Atkinson, Norman Foot, Michael (Ebbw Vale) MacMillan, Malcolm
Baxter, William Freeson, Reginald Mahon, Peter (Preston, S.)
Bence, Cyril Garrett, W. E. Mahon, Simon (Bootle)
Benn, Rt. Hn. Anthony Wedgwood Garrow, A. Manuel, Archie
Bennett, J. (Glasgow, Bridgeton) George, Lady Megan Lloyd Mapp, Charles
Binns, John Gourlay, Harry Mason, Roy
Bishop, E. S. Gregory, Arnold Maxwell, Robert
Blenkinsop, Arthur Grey, Charles Mayhew, Christopher
Boston, T. G. Griffiths, Will (M'chester, Exchange) Mellish, Robert
Bradley, Tom Hamilton, James (Bothwell) Mendelson, J. J.
Bray, Dr. Jeremy Hamilton, William (West Fife) Miller, Dr. M. S.
Brown, Hugh D. (Glasgow, Provan) Hamling, William (Woolwich, W.) Morris, Alfred (Wythenshawe)
Brown, R. W. (Shoreditch & Fbury) Hannan, William Mulley, Rt. Hn. Frederick (SheffieldPk)
Buchanan, Richard Hattersley, Roy Murray, Albert
Butler, Herbert (Hackney, C.) Hazell, Bert Norwood, Christopher
Butler, Mrs. Joyce (Wood Green) Heffer, Eric S. O'Malley, Brian
Callaghan, Rt. Hn. James Herbison, Rt. Hn. Margaret Oram, Albert E. (E. Ham, S.)
Coleman, Donald Hobden, Dennis (Brighton, K'town) Orbach, Maurice
Conlan, Bernard Horner, John Palmer, Arthur
Corbet, Mrs. Freda Hughes, Emrys (S. Ayrshire) Pannell, Rt. Hn. Charles
Crawshaw, Richard Irving, Sydney (Dartford) Parkin, B. T.
Crosland, Rt. Hn. Anthony Jeger, Mrs. Lena (H'b'rn &St. P'cras, S.) Pentland, Norman
Cullen, Mrs. Alice Jenkins, Hugh (Putney) Prentice, R. E.
Dalyell, Tam Johnson, Carol (Lewisham, S.) Pursey, Cmdr. Harry
Davies, G. Elfed (Rhondda, E.) Johnson, James(K'ston-on-Hull, W.) Rees, Merlyn
Davies, Ifor (Gower) Jones, J. Idwal (Wrexham) Reynolds, G. W.
Dell, Edmund Jones, T. W. (Merioneth) Richard, Ivor
Diamond, John Kelley, Richard Robertson, John (Paisley)
Dodds, Norman Kerr, Mrs. Anne (R'ter & Chatham) Sheldon, Robert
Doig, Peter Lawson, George Shore, Peter (Stepney)
Driberg, Tom Ledger, Ron Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Duffy, Dr. A. E. P. Lee, Rt. Hn. Frederick (Newton) Silkin, John (Deptford)
Dunn, James A. Lever, Harold (Cheetham) Silverman, Julius (Aston)
Dunnett, Jack Lipton, Marcus Skeffington, Arthur
Edelman, Maurice Loughlin, Charles Slater, Mrs. Harriet (Stoke, N.)
Edwards, Robert (Bilston) Mabon, Dr. J. Dickson Small, William
English, Michael McBride, Neil Snow, Julian
Evans, Albert (Islington, S. W.) McCann, J. Steele, Thomas (Dunbartonshire, W.)
Fitch, Alan (Wigan) MacDermot, Niall Strauss, Rt. Hn. G. R. (Vauxhall)
Thomson, George (Dundee, E.) Watkins, Tudor Wyatt, Woodrow
Tuck, Raphael Whitlock, William Yates, Victor (Ladywood)
Varley, Erie G. Wilkins, W. A. Zilliacus, K.
Wainwright, Edwin Williams, Mrs. Shirley (Hitchin)
Walden, Brian (All Saints) Woodburn, Rt. Hn. A. TELLERS FOR THE NOES:
Wallace, George Woof, Robert Mr. Joseph Harper and
Mr. William Howie.
NOES
Agnew, Commander Sir Peter Glover, Sir Douglas Monro, Hector
Alison, Michael (Barkston Ash) Glyn, Sir Richard More, Jasper
Allan, Robert (Paddington, S.) Goodhew, Victor Morrison, Charles (Devizes)
Allason, James (Hemel Hempstead) Grant, Anthony Munro-Lucas-Tooth, Sir Hugh
Anstruther-Gray, Rt. Hn. Sir W. Gresham Cooke, R. Murton, Oscar
Awdry, Daniel Grieve, Percy Neave, Airey
Baker, W. H. K. Griffiths, Peter (Smethwick) Noble, Rt. Hn. Michael
Barber, Rt. Hn. Anthony Grimond, Rt. Hn. J. Onslow, Cranley
Barlow, Sir John Hall, John (Wycombe) Osborn, John (Hallam)
Batsford, Brian Hall-Davis, A. G. F. Page, R. Graham (Crosby)
Berry, Hn. Anthony Hamilton, Marquess of (Fermanagh) Peel, John
Bessell, Peter Hastings, Stephen Percival, Ian
Bingham, R. M. Hawkins, Paul Peyton, John
Blaker, Peter Heald, Rt. Hn. Sir Lionel Pounder, Rafton
Box, Donald Heath, Rt. Hn. Edward Powell, Rt. Hn. J. E[...]noch
Boyle, Rt. Hn. Sir Edward Hendry, Forbes Price, David (Eastleign)
Brinton, Sir Tatton Higgine, Terence L. Prior, J. M. L.
Brown, Sir Edward (Bath) Hirst, Geoffrey Pym, Francis
Bruce-Gardyne, J. Hobson, Rt. Hn. Sir John Redmayne, Rt. Hn. Sir Martin
Buck, Antony Hordern, Peter Ridley, Hn. Nicholas
Buxton, Ronald Hornby, Richard Ridsdale, Julian
Carlisle, Mark Hunt, John (Bromley) Roots, William
Carr, Rt. Hn. Robert Jenkin, Patrick (Woodford) Scott-Hopkins, James
Channon, H. P. G. Johnston, Russell (Inverness) Sharples, Richard
Chataway, Christopher Kerr, Sir Hamilton (Cambridge) Shepherd, William
Chichester-Clark, R. Kershaw, Anthony Sinclair, Sir George
Clark, William (Nottingham, S.) King, Evelyn (Dorset, S.) Studholme, Sir Henry
Cordle, John Kirk, Peter Summers, Sir Spencer
Corfield, F. V. Langford-Holt, Sir John Taylor, Edward M. (G'gow, Cathcart)
Crawley, Aidan Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Taylor, Frank (Moss Side)
Curran, Charles Longbottom, Charles Turton, Rt. Hn. R. H.
Dalkeith, Earl of Longden, Gilbert van Straubenzee, W. R.
Davies, Dr. Wyndham (Perry Barr) Lubbock, Eric Walder, David (High Peak)
Dean, Paul MacArthur, Ian Walker, Peter (Worcester)
Deedes, Rt. Hn. W. F. Mackie, George Y. (C'ness & S'land) Ward, Dame Irene
Eden, Sir John McLaren, Martin Webster, David
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Maclean, Sir Fitzroy Whitelaw, William
Emery, Peter Macleod, Rt. Hn. Iain Wilson, Geoffrey (Truro)
Errington, Sir Eric Marples, Rt. Hn. Ernest Wise, A. R.
Eyre, Reginald Mathew, Robert Yates, William (The Wrekin)
Fell, Anthony Maude, Angus Younger, Hn. George
Fletcher-Cooke, Charles (Darwen) Mawby, Ray
Fraser, Rt. Hn. Hugh (St'fford & Stone) Maxwell-Hyslop, R. J. TELLERS FOR THE NOES:
Gilmour, Ian (Norfolk, Central) Maydon, Lt.-Cmdr. S. L. C. Mr. Dudley Smith and
Gilmour, Sir John (East Fife) Mitchell, David Mr. Ian Fraser.