HC Deb 21 June 1965 vol 714 cc1328-46

10.0 p.m.

Mr. Patrick Jenkin

I beg to move Amendment No. 631, in page 96, line 28, at the end to add: (2) A company may in respect of any financial year during the whole of which it is a close company elect by notice in writing to the Inspector within two years of the end of such financial year that it shall be assessed to income tax as though it were a partnership consisting of its participators and directors and that it shall be exempt from corporation tax for that financial year and in such circumstances the company's income shall be deemed to accrue to its participators and directors as partners in such shares as may be just having due regard to their rights to participate in the income of the company or to remuneration from the company. I should like to begin by thanking you, Dr. King, for having decided to select this Amendment. I feel certain that, when you have heard the arguments in its favour, you will appreciate that this is a point of considerable substance. I hope that the Treasury Bench will give the argument on this Amendment the same very close consideration to which we have by now become accustomed in relation to other Amendments with which we have been dealing.

The purpose of the Amendment is to give close companies the option to be assessed as partnerships. That is to say, where it would pay them to do it, close companies should not be liable for Corporation Tax but should be liable to Income Tax and Surtax on the whole of the income of the business, with no provision for retentions, The purpose which underlies the Amendment is to avoid the very severe tax penalty which the mere fact of incorporation will now impose on the smaller companies. I am sure that the Committee by now realises—even if the Chancellor does not—that the tax changes which the Bill introduces for separating companies from their shareholders and imposing compulsory distributions on certain companies can impose very heavy burdens on very small companies.

This can be done to the point—as was said in an earlier debate—at which the owners of the company could be substantially worse off by trading as a company rather than by trading as a one-man company alone or trading in partnership. The pattern of this is not difficult to comprehend, and, I hope, not too difficult to explain. The point is that, as soon as the profits of a very small company exceed the amount which can be paid as directors' remuneration, Corporation Tax becomes payable. At that point, of course, more tax is paid by the business than would be paid if the man were trading as an unincorporated trader, if he were trading on his own, because he is paying Corporation Tax and, of course, personal Income Tax on his director's remuneration.

As the profits rise, so does the disparity increase, until the point is reached at which the profits are so high that Surtax would be payable in the case of a one-man trader at the highest rates and would, therefore, equal or more than equal the Corporation Tax which would be paid if he were trading as a company. Thereafter, the disadvantage begins to decline, until so much Surtax would be paid that it would be cheaper to incorporate and trade as a company.

At the risk of wearying the Committee, I should like to mention one or two figures on this, because they are striking. For these figures I shall assume a 40 per cent. Corporation Tax and 60 per cent. distributions. I entirely take the point that, if the distribution is less, the disparity may well be less. I take the case of a sole shareholder for the sake of simplicity. I am assuming a married man with two children under 11 with no other income and no other allowances.

In this case, the maximum allowable director's remuneration is £3,500, the Government having refused an Amendment which would have increased this. The 15 per cent. provision does not apply, because these are very small companies, in relation to which what the Chief Secretary referred to as the minimum figure comes in.

If the profits of the business are no more than £3,500, and the director pays the whole of the profits to himself as remuneration, the profits assessable to Corporation Tax are nil and, therefore, there would be no difference whether it is a company or he is trading alone. If, however, the profits rise to £5,000, as a company the combined tax of the company and the individual would be £1,444, compared with the tax on a sole trader of £1,371. We must, however, also take into account the potential Capital Gains Tax liability because of the retentions, amounting to another £207, leaving a adverse balance in the case of the company of £343.

If the profit goes up to £10,000, the combined tax of the company and the individual is £4,495, whereas with a sole trader it is only £4,027. If we add to that the potential Capital Gains Tax liability on the retentions, which comes to another £652, the disparity is over £1,000, or £1,120 to be exact. Thereafter the figure begins to decline again. For the moment, I am talking of one-man businesses.

With profits of £15,000, the tax would be £7,796 for an incorporated company but £7,294 for a sole trader unincorporated. To that must be added the potential Capital Gains Tax on the retentions, amounting to £906, which still leaves an adverse balance for an incorporated company of £778.

The picture is fairly clear of two rising curves which cross over as soon as Corporation Tax begins to be paid by the business and which then diverge, the gap getting wider and wider and then becoming narrower again until the two lines once more cross over. In the case of the one-man business this occurs probably between £15,000 and £20,000 or at a correspondingly higher figure when there are more participators in the business.

At these levels, therefore, which on the whole are the levels of the smaller close companies, there is a distinct and major disadvantage in being incorporated. In short, incorporation is a luxury which these businessmen would be unable to afford. It must, however, be borne in mind that the limited liability company has been what might be called the springboard from which a great deal of the country's enterprise has come. The limited liability company was itself a product of the nation's genius for organisation. We led the world in the organisation of commercial enterprise with the development of the principle of the limited liability company. I maintain that this substantial tax disadvantage should not be regarded as a price to pay for the benefits of incorporation. After all, these companies pay capital duty when they are formed; they have to comply with the stringent provisions of the Companies Acts, filing their annual returns, preparing their accounts in the appropriate way, and so on. Why should this apply only to the smaller companies? Why should they be the only ones which have to pay this price for incorporation?

There are many benefits of incorporation which are of real value. The most important of these is the benefit of limited liability which can ensure that a businessman who wants to exploit an idea or who wants to get into a trade in which he can expand or afford to take risks can keep his own private house and fortune safe from the risks of being attacked by creditors. If he tries his hand as a limited company, only what he puts into the business is available to satisfy his creditors. This method provides a springboard for enterprise which is of immense value.

This method has administrative advantages. It provides for continuity of the business in case of change of ownership; the shares can be sold and the business can continue. It allows for flexibility and great simplicity of administration. I maintain that this is intensely precious and that we must consider it extremely closely when imposing substantial additional tax penalties on small businesses.

My Amendment is designed to give these businesses the option of being treated as partnerships and to be taxed as such, with the partners paying full Income Tax and Surtax on the partnership income if they so wish. This is not a novel suggestion. A provision of this sort applies in other countries which have or have had the same sort of pattern of taxation as the Chancellor is introducing.

We have heard a lot about how the Americans have had a corporation tax along these lines, but they have had this partnership provision, or something like it, for years. Thus, Her Majesty's Government cannot continue to justify introducing a tax system on these lines, based on American experience, unless they import the American reliefs. It has been said from this side of the Committee that the rates between the two countries are quite different, particularly of the Capital Gains Tax.

The Amendment represents an essential provision to protect small businesses from undue tax penalties. Such protection is to be found in the American system and we should adopt and import it into the new scheme of things here. The American provisions relate to small businesses or corporations with 10 or fewer shareholders who are all United States residents. They are to be found in the Internal Revenue Code, Sections 137(1) to 137(7).

We have been told that France had a corporation tax on the same pattern, although they have had the good sense to move away from it. The French, too, had a similar provision relating to small businesses, particularly family concerns. Families could elect to be treated as individual unincorporated businesses. Conversely, the French had an interesting provision whereby partnerships could elect to be treated as companies.

I suggest, therefore, that in the absence of a provision such as that contained in the Amendment, well advised companies may contemplate disbanding their companies—and there is an Amendment down later on this point—and turning themselves into partnerships. I would indeed regard that as a retrograde step. It would be a strange result of a Bill which seems to be so preoccupied with the problem of tax avoidance if it drove many small businesses, in self-defence, to taking that sort of avoidance action, particularly after the Chancellor has spent so much time decrying the activities of those who are engaged in this sort of tax planning.

This is a fair, reasonable and necessary Amendment. I concede that it may not be cast in the precise form in which the Government might like to see it in the Bill. If they are prepared to accept the principle and undertake to introduce a suitable Amendment on Report, I will willingly withdraw it. If not, thousands of small, and not so small, businesses will, I fear, take themselves out of the Companies Act and become partnerships, with all the risks, inconvenience and difficulties that that will undoubtedly entail.

I am sure that the Minister will find this an eminently acceptable Amendment, if not in terms of the words it contains then in terms of the principle involved.

10.15 p.m.

Sir Eric Fletcher

The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) generally makes a reasonable and rational speech, but on this occasion I cannot congratulate him—[HON. MEMBERS: "Oh."] I am sure that a few minutes' reflection will show that his Amendment cannot possibly be justified either on principle or in practice. It is based on a number of fallacies. It asks in terms that a close company can be treated as a close company or a partnership. Obviously, it cannot have it both ways.

The hon. Member then says that there are various benefits of incorporation. Incorporation is, of course, a privilege. It confers advantages. It limits the liabilities of those who incorporate themselves. And it cannot be said that it is always to the public interest that one man should carry on his trade as a company. Nor is it always to the public interest that two people trading together should incorporate themselves rather than carry on their trade in partnership. A great many persons still prefer to trade in partnership rather than as an incorporation. The hon. Member for Wokingham (Mr. van Straubenzee), who is a member of my profession, is familiar with those of us who are compelled by law to carry on our profession in partnership, whether or not we would wish to be incorporated.

As it is, any person carrying on any trade has the option of deciding whether it is to his advantage to trade as an individual or as a company. Two persons trading together have the option of deciding whether it is to their advantage to trade as a partnership or to incorporate themselves. It is perfectly true that in the past a great many persons have formed themselves into companies because of tax advantages in doing so. It may well be the case that with the transfer of Profits Tax and Income Tax to the Corporation Tax structure it does not become equally advantageous for a trader to incorporate himself into a company until the range of profits has reached a different level, but it cannot be argued that persons who have the choice of trading either in partnership or as an incorporated company should also have the opportunity of deciding whether it suits them better to be taxed on a part- nership or a company basis. One cannot possibly claim for individuals the right to choose to be taxed on a basis of, "heads I win and tails you lose".

I am not concerned here with what is done in America or France—[HON. MEMBERS: "Oh."] I am concerned here to say that, on principle, it does not seem to us to be right or equitable that a taxpayer should have that privilege. Nor does it seem sensible that he should have the option of making a decision every year. Apart from the objections on principle, I am sure that the Committee will realise that the administrative inconvenience that would result would be excessive in the extreme.

One has only to imagine the difficulties that would arise if a company, having been taxed on a Corporation Tax basis, after an interval of two years, said that it wanted to be taxed as if it were a partnership. The result would be that the computations would have to be reopened. The liabilities of both the company and the participators would have to be reopened. The company would be entitled to the repayment of Corporation Tax, and there would be further tax due from the participators on the basis of the company's income as spread among them in appropriate shares. There would be enormous complications of liability. It would postpone the date on which there was any finality on the tax liability of the concern. It would give the inspectors of taxes—who, in the circumstances, will have enough to do—a very considerable increase in work.

For those reasons, I must advise the Committee to reject the Amendment.

Mr. Stratton Mills (Belfast, North)

The Minister without Portfolio has given three main reasons why he cannot accept this Amendment. First, he said that the trader "can't have it both ways". My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) admitted that it would not be realistic to expect companies to job backwards and forwards from one category to another each year. I am certain that my hon. Friend would be very flexible if the Government were to try to draft an Amendment to meet such an eventuality. This proposal would help largely the small trader. My hon. Friend's figures showed the extremely arbitrary way in which the graph affects tax liability.

The second point which the Minister mentioned was the argument about the privilege of being incorporated. If the United States is able to make this kind of provision in its company taxation law, I cannot understand why the proposal should be so difficult here. In the United States this partnership often exists for the "small business corporation" where there are not more than 10 shareholders all of whom are resident individuals.

These corporations are exempt from corporation tax but the whole of the undistributed profit is deemed to be distributed to shareholders and there are corresponding arrangements for loss. The corporation tax in the United States of America is imposed at only 26 per cent. on the first 25,000 dollars of profits and 48 per cent. on the excess. The hon. Gentleman has not answered the point, if in the United States of America it is possible to do this, why is it impossible in Britain?

Mr. Lubbock

I am not familiar with the American tax legislation and I should be grateful if the hon. Member would clarify a point. He mentioned that small business corporations were companies in which there were fewer than 10 participators and that their profits were exempt from tax when they were resident individuals. Is he not, therefore, saying that in the United States a small business is taxed as a close company anyway?

Mr. Stratton Mills

I understand that there is the option and that the company is entitled to have the option of whatever method it thinks the most attractive form.

The third point which the Minister made great play with was that the administrative inconvenience would be immense if this system were used. I come back to the point that if it can be done by the United States of America, why cannot it be done by the Inland Revenue here? An equally important point is that, of course, it would create problems for the trading community which would suffer from delays if it were to job continually backwards and forwards from one system to another. It would have to be approached from a responsible attitude.

I hope that the hon. Gentleman will think again on these three arguments, which struck me as considerably unconvincing.

Mr. van Straubenzee

I do not think the Committee has had the convincing arguments from the Minister without Portfolio to which we have been very glad to become accustomed for some time. Like my hon. Friends, I am absolutely certain that the argument he regarded as conclusive was the one that he produced at the end of his speech, administrative convenience—the last hide-out and resting place of a Minister driven from position to position and briefed by officials who wince when they consider what might be convenient if a provision like this were incorporated in the Bill. I can understand that the provision is in a simple form.

My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) was at pains to make it clear that, after reconsideration, the Government may well feel that the option date would need to be irrevocable for a period of time. There is a roughly analogous provision in the German law. The election is irrevocable for a period of five years. I do not try to draw the exact parallel, but the Minister without Portfolio will know that the German law works on the basis of encouraging the distribution of profits and then the company concerned goes to the capital market for the moneys needed for expansion. Private companies 76 per cent. owned by individuals with a certain limit, which is approximately £500,000 in our currency, are subject to special treatment. They are subject to special treatment on the ground that they must necessarily grow by retentions, which is a principle which I had hoped that we should have seen more of here.

My hon. Friend the Member for Wanstead and Woodford referred to the provisions of the French law. I will not got into them again. In preparing ourselves to present this argument to the Committee, we looked with care at the provisions of the law of other countries. If we put it in shorthand to the Minister tonight, it is only because we do not want to delay the discussion unreasonably.

In return, we are entitled to a properly argued rebuttal and not merely refuge in the splendid phrase, "administrative convenience". The case made by my hon. Friends the Members for Wanstead and Woodford and Belfast, North (Mr. Stratton Mills) was very strong. At minimum, the Minister without Portfolio can reasonably be asked to reply that he understands that the provisions of the Bill, so far as we have discussed it, make very sharp tax discrimination against those who trade in this form and that he recognises that a reasonable case has been made for some kind of option by election over a reasonable time. I do not think that we have had the type of answer to which the Committee is reasonably entitled.

Sir D. Glover

I think that the Minister without Portfolio has made a most unconvincing answer to this argument. I shall not reiterate the arguments which have already been advanced, because I believe that they are beyond challenge. I want to put the case the other way round. The Chancellor and his colleagues have said all through the debates that the whole basis of the Bill is to increase efficiency and competition. Everybody in the Committee who has any knowledge of small businesses will know that a partnership, or an individual running a business where he has his own home at risk, his insurance policy at risk, and everything he possesses at risk, once he rises beyond a certain point becomes very much more cautious. At that point of time he likes to form himself into a limited company. If the business is owned by two partners, they both do, because they probably have ideas of expansion, but they do not want to put all their property at risk by so doing.

So, before entering on their expansion campaign—I am dealing now with small companies—having consulted their suppliers and everybody else they form themselves into a limited liability company, because then the risk is limited. Although they are to expand, although they are to take what would normally be regarded as a normal trading risk, they have moved out of the orbit of their own private homes the one thing that protects their wives and children.

Because of the Bill, they will not take that step of incorporation. They will not take that step of expansion, because they realise that probably for the next five years it will not be to their advantage. I hope that the Chancellor appreciates this point. If for the next five years it will not be to their advantage—either a one-man business or a two-man business—to change over to an incorporated company—

Mr. Barnett

The hon. Gentleman is talking about a small close company which wants to expand.

10.30 p.m.

Sir D. Glover

No, I am not.

Mr. Barnett

The hon. Gentleman is talking about a small close company which is growing—

Sir D. Glover rose—

The Chairman

Order. If the hon. Gentleman gave way for an intervention he must let the intervention be made.

Sir D. Glover

I had heard sufficient of the intervention to know that the hon. Member did not know what the argument was about.

Mr. Barnett rose—

Sir D. Glover

No, I will not give way. The hon. Member must sit down. I am not talking about a company which is incorporated. I am talking about two or three people who are trading in an unincorporated position. The point arises as to whether they should expand and, if they are going to expand, whether they should form themselves into a limited liability company. Under the provisions of this Bill their accountant may say, "I cannot advise you to do this immediately because if you do over the next three or four years you will pay more tax by incorporating yourselves than you would pay if you did not incorporate yourselves".

Mr. Barnett rose—

Sir D. Glover

I am not going to give way again. If the hon. Gentleman wishes to make a speech he can do so afterwards. If my arguments are right, there is an advantage in not being incorporated at a certain size of the company—

Mr. Barnett

Would the hon. Gentleman allow me?

Sir D. Glover

No, the hon. Gentleman can make his speech later.

The Temporary Chairman (Mr. Grant-Ferris)

Order. Unless the hon. Member for Ormskirk (Sir D. Glover) gives way, the hon. Member for Heywood and Royton (Mr. Barnett) must remain seated.

Sir D. Glover

with respect to you, Mr. Grant-Ferris, if the hon. Member wants to make a speech, he can do so afterwards. All he wants to do is to break down my argument.

If it is to the advantage of individual traders to go on trading in partnership or as individuals rather than forming themselves into a limited liability company, they will postpone the formation of themselves into a limited liability company probably for four or five years longer than would be the case if this Bill did not become law. That is the point of time in the existence of so many companies when a big expansion in the size of the company takes place. Two young men form themselves into a business. They take three or four years to learn the job and in getting the feeling that they are on top of the job. Then they realise that there is a great future in their activities. They are able to undercut a lot of their competitors. They see a great future in expansion. But if they expand, they will increase their liability to tax if they become a limited liability company, so that they decide not to undertake incorporation but to continue jollying along in a smaller form.

The Chancellor may say that this is a very good thing, that it reduces the drain and demand on the resources of the company. But I understood that in the long term the Chancellor wanted to provide a dynamic society whereby a young firm could grow as fast as it was able. Under this Clause the Chancellor is making it much more likely that the small firms will go on jollying along. Human beings being what they are, when it comes to incomes they are very shortsighted. Somebody seeing that his income will be £500 more in the next five years—I know the attitude of mind of that segment of the population—would say, "I would sooner have the £500 than risk the change that would come about by incorporation."

Mr. Lubbock

If the expansion of the business which the hon. Member has mentioned was such that the shareholders or proprietors needed to plough back more than half their profits they would be better off under the Corporation Tax scheme than they were hitherto.

Sir D. Glover

I entirely agree with the hon. Member's intervention at a certain point of size, but we are dealing here with a lot of very small companies. These are people who are between the jobbing joiner and the man who makes furniture, or between the jobbing plumber and the man who puts in new fittings on a new housing estate. We are dealing with a small margin of companies which have the knowledge and can grow, and it is at that point that, in a dynamic society, they should become limited liability companies. The Chancellor now makes that much more unlikely.

I ask the Chancellor to look at this matter before Report. I am sure that the arguments of my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) on the side of the amount of taxation and giving people the right to be assessed either as a partnership or as a limited liability company are valid. But far more important is the point that many people who should become limited liability companies will remain partnerships and will not grow as a result of this Clause.

Mr. William Clark

I hesitated to rise because I thought that the Minister without Portfolio would speak and I wanted to know whether he could improve on his previous answer. The real question asked by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) was one of equity. All he said was that a small company just because it is a limited liability company should not be penalised any more than a small trader or traders in partnership. My hon. Friend gave effective figures to show that limited liability companies even now hold a penalty for the proprietor. He gave examples, starting from £3,500, and I was surprised that the Minister without Portfolio did not pull him up sharply and say that it would not be a 60 per cent. distribution. But if it is worked out at a 40 per cent. distribution, up to about £15,000 profit, the limited liability trader will be more heavily taxed than the private individual.

As some of my hon. Friends have said, this is not a question of creating a system whereby people go jobbing backwards and forwards. My hon. Friend the Member for Wanstead and Woodford is not committed to the wording. There will be, of course, administrative difficulties if it is possible for a company to say, "We are a company today. We shall not be a company tomorrow but we will be the day after". I should have thought that it was not beyond the wit of the Inland Revenue or the Treasury to devise a scheme whereby if people said that although they were a limited liability company they wanted to be assessed as a partnership that election could last for three or four years.

I am appalled that although throughout the debate the Government have said lime and again that it is not their intention to hit the small man, here are valid figures proving that, probably unwittingly, the Government are hitting the small man. The Minister without Portfolio said, "Of course, people have the advantage of limited liability", and the only advantage he mentioned was limited liability. But, nowadays, most companies would be just as well off, or as badly off, under a partnership structure because they do not go under. The advantage of limited liability is very marginal.

The Minister said that, of course, there would be tax advantages, but, as far as I can see, there will be a tax penalty. This is the point of the figures given by my hon. Friend the Member for Wanstead and Woodford. We are not asking for an advantage. We are not asking that the company should be put into a better position than the sole trader. All we are saying is that small companies—it could be restricted to so much profit—should not be put in any worse position than the sole trader. I hope that the Minister will speak again and tell us that he will look at the matter between now and Report.

Of course, the wording of the Amendment may go too wide. There would be administrative difficulties. We accept that. But we must insist on the principle. If we are introducing a Corporation Tax into our system, we must not, for the sake of dogmatism or obstinacy—I say that in the kindest sense—penalise the small man. If the Minister will only say that he is prepared to look at this, my hon. Friend the Member for Wanstead and Woodford will, I am sure, be ready to ask leave to withdraw his Amendment.

There have been references to what happens in the United States and what happened in France until a little while ago. The Minister said that he did not mind what happened in the United States. This is all very well. We can all play this game. Sometimes, the Government do not mind what is in the Report of the Royal Commission, unless it suits their argument. If we are recasting our tax system in this way, it is important to consider what is being done, and done very effectively, in the United States to protect the small trader. We should not mind if there was a limit of profit so that above a certain amount there was not parity between the small trader and small companies.

In view of the Minister's disappointing reply and his lack of forthcomingness, unless he has something better to tell us, I shall advise my hon. Friends to divide the Committee.

Sir Eric Fletcher

I must correct the hon. Gentleman on one point. I did not say that I did not mind what happened in the United States. I said that what happened in the United States was not necessarily a precedent for what we should do in this country.

My right hon. Friend has listened very carefully to what has been said in the debate. It would be wrong for me to give the Opposition any encouragement to think that the Government would be willing to reconsider their attitude on this matter between now and Report. We are not resisting this Amendment merely on grounds of administrative inconvenience. We are resisting it on grounds of principle. We consider that a trader is entitled to decide for himself whether to trade as an individual or in partnership or whether he should incorporate himself into a company. In many cases, persons have incorporated themselves for the express purpose of getting a tax advantage.

Perhaps in future, in some cases, they will not get the same amount of tax advantage; but they will still have the opportunity to decide whether to trade as a partnership or as a company, and, having made that decision, they must abide by the tax consequences. We do not think that it would be fair or just to accept the Amendment and give taxpayers the option to trade in one form and be taxed in another.

Mr. William Clark

Have the Government made any assessment of the number of small companies which, because of the rejection of this Amendment, will now turn themselves back into partnerships? This is an important point, and

the Minister has not addressed himself to it. It is probable that many small companies, because of the tax penalty now on them as compared with sole traders, will become sole traders.

Question put, That those words be there added:—

The Committee divided: Ayes 144, Noes 169.

Division No. 192.] AYES [10.44 p.m.
Agnew, Commander Sir Peter Griffiths, Peter (Smethwick) Osborn, John (Hallam)
Alison, Michael (Barkston Ash) Gurden, Harold Page, R. Graham (Crosby)
Allason, James (Hemel Hempstead) Hall-Davis, A. G. F. Pearson, Sir Frank (Clitheroe)
Anstruther-Gray, Rt. Hn. Sir W. Harris, Frederic (Croydon, N.W.) Peel, John
Astor, John Harvey, John (Walthamstow, E.) Percival, Ian
Awdry, Daniel Harvie Anderson, Miss Peyton, John
Barber, Rt. Hn. Anthony Hawkins, Paul Pickthorn, Rt. Hn. Sir Kenneth
Barlow, Sir John Heald, Rt. Hn. Sir Lionel Pike, Miss Mervyn
Batsford, Brian Heath, Rt. Hn. Edward Pitt, Dame Edith
Birch, Rt. Hn. Nigel Higgins, Terence L. Powell, Rt. Hn. J. Enoch
Black, Sir Cyril Hill, J. E. B. (S. Norfolk) Prior, J. M. L.
Bossom, Hn. Clive Hobson, Rt. Hn. Sir John Ramsden, Rt. Hn. James
Box, Donald Hornsby-Smith, Rt. Hn. Dame P. Rawlinson, Rt. Hn. Sir Peter
Boyd-Carpenter, Rt. Hn. J. Howard, Hn. G. R. (St. Ives) Renton, Rt. Hn. Sir David
Boyle, Rt. Hn. Sir Edward Hunt, John (Bromley) Ridley, Hn. Nicholas
Brewis, John Hutchison, Michael Clark Roberts, Sir Peter (Heeley)
Brinton, Sir Tatton Jenkin, Patrick (Woodford) Rodgers, Sir John (Sevenoaks)
Brown, Sir Edward (Bath) Jennings, J. C. Roots, William
Bruce-Gardyne, J. Kaberry, Sir Donald Scott-Hopkins, James
Bullus, Sir Eric Kerr, Sir Hamilton (Cambridge) Sinclair, Sir George
Chataway, Christopher Kershaw, Anthony Smith, Dudley (Br'ntf'd & Chiswick)
Chichester-Clark, R. King, Evelyn (Dorset, S.) Spearman, Sir Alexander
Clark, William (Nottingham, S.) Kirk, Peter Stanley, Hn. Richard
Cole, Norman Legge-Bourke, Sir Harry Stodart, Anthony
Cooke, Robert Lewis, Kenneth (Rutland) Stoddart-Scott, Col. Sir Malcolm
Cooper-Key, Sir Neill Litchfield, Capt. John Studholme, Sir Henry
Crosthwaite-Eyre, Col. Sir Oliver Lloyd, Ian (P'tsm'th, Langstone) Talbot, John E.
Curran, Charles Longden, Gilbert Taylor, Edward M. (G'gow, Cathcart)
Dalkeith, Earl of MacArthur, Ian Taylor, Frank (Moss Side)
Davies, Dr. Wyndham (Perry Barr) McLaren, Martin Teeling, Sir William
d'Avigdor-Goldsmid, Sir Henry McMaster, Stanley Temple, John M.
Dean, Paul McNair-Wilson, Patrick Thomas, Rt. Hn. Peter (Conway)
Digby, Simon Wingfield Maitland, Sir John Turton, Rt. Hn. R. H.
Dodds-Parker, Douglas Mathew, Robert van Straubenzee, W. R.
Elliott, R. W.(N'c'tle-upon-Tyne, N.) Maude, Angus Walder, David (High Peak)
Emery, Peter Maudling, Rt. Hn. Reginald Walker, Peter (Worcester)
Errington, Sir Eric Maxwell-Hyslop, R. J. Walker-Smith, Rt. Hn. Sir Derek
Eyre, Reginald Maydon, Lt.-Cmdr. S. L. C. Wall, Patrick
Farr, John Meyer, Sir Anthony Ward, Dame Irene
Fisher, Nigel Mills, Peter (Torrington) Weatherill, Bernard
Fletcher-Cooke, Sir John (S'pton) Mills, Stratton (Belfast, N.) Webster, David
Foster, Sir John Mitchell, David Whitelaw, William
Fraser, Ian (Plymouth, Sutton) Monro, Hector Wills, Sir Gerald (Bridgwater)
Gammans, Lady More, Jasper Wilson, Geoffrey (Truro)
Gibson-Watt, David Morrison, Charles (Devizes) Yates, William (The Wrekin)
Giles, Rear-Admiral Morgan Munro-Lucas-Tooth, Sir Hugh Younger, Hn. George
Glover, Sir Douglas Murton, Oscar
Gower, Raymond Noble, Rt. Hn. Michael TELLERS FOR THE NOES:
Grieve, Percy Nugent, Rt. Hn. Sir Richard Mr. Francis Pym and
Mr. Geoffrey Johnson Smith.
NOES
Abse, Leo Bishop, E. S. Carmichael, Neil
Allaun, Frank (Salford, E.) Blackburn, F. Coleman, Donald
Alldritt, Walter Blenkinsop, Arthur Conlan, Bernard
Allen, Scholefield (Crewe) Boardman, H. Corbet, Mrs. Freda
Armstrong, Ernest Bowden, Rt. Hn. H. W. (Leics, S.W.) Craddock, George (Bradford, S.)
Atkinson, Norman Bowen, Roderic (Cardigan) Crossman, Rt. Hn. R. H. S.
Bacon, Miss Alice Boyden, James Cullen, Mrs. Alice
Bagier, Gordon A. T. Braddock, Mrs. E. M. Dalyell, Tam
Barnett, Joel Bray, Dr. Jeremy Davies, G. Elfed (Rhondda, E.)
Beaney, Alan Broughton, Dr. A. D. D. Davies, Ifor (Gower)
Benn, Rt. Hn. Anthony Wedgwood Buchan, Norman (Renfrewshire, W.) Davies, S. O. (Merthyr)
Bennett, J. (Glasgow, Bridgeton) Buchanan, Richard Diamond, John
Bessell, Peter Callaghan, Rt. Hn. James Doig, Peter
Donnelly, Desmond Lawson, George Rees, Merlyn
Duffy, Dr. A. E. P. Lee, Rt. Hn. Frederick (Newton) Rhodes, Geoffrey
Dunn, James A. Lever, L. M. (Ardwick) Richard, Ivor
Edwards, Rt. Hn. Ness (Caerphilly) Lewis, Ron (Carlisle) Roberts, Albert (Normanton)
Ensor, David Lomas, Kenneth Robertson, John (Paisley)
Fernyhough, E. Lubbock, Eric Rodgers, William (Stockton)
Fitch, Alan (Wigan) McBride, Neil Rogers, George (Kensington, N.)
Fletcher, Sir Eric (Islington, E.) McCann, J. Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Fletcher, Ted (Darlington) MacDermot, Niall Silkin, John (Deptford)
Floud, Bernard McGuire, Michael Slater, Mrs. Harriet (Stoke, N.)
Foley, Maurice McInnes, James Slater, Joseph (Sedgefield)
Fraser, Rt. Hn. Tom (Hamilton) McKay, Mrs. Margaret Small, William
Freeson, Reginald Mackenzie, Alasdair (Ross & Crom'ty) Smith, Ellis (Stoke, S.)
Galpern, Sir Myer Mackenzie, Gregor (Rutherglen) Soskice, Rt. Hn. Sir Frank
Garrett, W. E. Mackie, John (Enfield, E.) Steel, David (Roxburgh)
George, Lady Megan Lloyd MacMillan, Malcolm Steele, Thomas (Dunbartonshire, W.)
Ginsburg, David Mahon, Simon (Bootle) Stewart, Rt. Hn. Michael
Gourlay, Harry Manuel, Archie Stones, William
Gregory, Arnold Mapp, Charles Summerskill, Hn. Dr. Shirley
Griffiths, David (Rother Valley) Marsh, Richard Swingler, Stephen
Griffiths, Rt. Hn. James (Llanelly) Mason, Roy Taylor, Bernard (Mansfield)
Grimond, Rt. Hn. J. Maxwell, Robert Thomas, Iorwerth (Rhondda, W.)
Hale, Leslie Mendelson, J. J. Thomson, George (Dundee, E.)
Hamilton, James (Bothwell) Millan, Bruce Thornton, Ernest
Hamilton, William (West Fife) Miller, Dr. M. S. Thorpe, Jeremy
Hannan, William Milne, Edward (Blyth) Tinn, James
Harrison, Walter (Wakefield) Molloy, William Tomney, Frank
Hart, Mrs. Judith Morris, John (Aberavon) Urwin, T. W.
Hattersley, Roy Murray, Albert Wainwright, Edwin
Herbison, Rt. Hn. Margaret Neal, Harold Walden, Brian (All Saints)
Hobden, Dennis (Brighton, K'town.) Oakes, Gordon Walker, Harold (Doncaster)
Holman, Percy Ogden, Eric Wallace, George
Hooson, H. E. Orme, Stanley White, Mrs. Eirene
Houghton, Rt. Hn. Douglas Oswald, Thomas Whitlock, William
Howie, W. Padley, Walter Wigg, Rt. Hn. George
Hoy, James Park, Trevor (Derbyshire, S.E.) Willey, Rt. Hn. Frederick
Hughes, Emrys (S. Ayrshire) Pearson, Arthur (Pontypridd) Williams, Clifford (Abertillery)
Hunter, Adam (Dunfermline) Peart, Rt. Hn. Fred Willis, George (Edinburgh, E.)
Irving, Sydney (Dartford) Pentland, Norman Winterbottom, R. E.
Jackson, Colin Perry, Ernest G. Yates, Victor (Ladywood)
Jay, Rt. Hn. Douglas Popplewell, Ernest
Johnston, Russell (Inverness) Price, J. T. (Westhoughton) TELLERS FOR THE NOES:
Jones, Dan (Burnley) Probert, Arthur Mr. Joseph Harper and
Kelley, Richard Pursey, Cmdr. Harry Mr. Brian O'Malley.
Kenyon, Clifford Rankin, John
The Temporary Chairman

Before proposing the Question, That the Clause stand part of the Bill, I ask the indulgence of the Committee in asking hon. Members to keep the discussion as short as possible. I have no intention of invoking Standing Order No. 47, but there will be many opportunities to raise issues on the Schedules and I hope that the Committee will feel content to keep the discussion now as short as possible.

Clause ordered to stand part of the Bill.