Commons Sitting of 26 May 1965

Preamble
The House met at half-past Ten o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORDERS OF THE DAY

  MURDER (ABOLITION OF DEATH PENALTY) BILL
  Considered in Committee [Progress 19th May].
  [Dr. HORACE KING in the Chair]

  MURDER (ABOLITION OF DEATH PENALTY) BILL

    Clause 2.—(SHORT TITLE, REPEAL, EXTENT AND COMMENCEMENT.)
    Question put, That the Clause stand part of the Bill.
    Notice taken that 40 Members were not present;
    Committee counted, and, 40 Members being present—
    Question agreed to.
    Clause ordered to stand part of the Bill.

    New Clause.—(DURATION.)
    This Act shall continue in force until the thirty-first day of July nineteen hundred and seventy, and shall then expire unless Parliament by affirmative resolutions of both Houses otherwise determines: and upon the expiration of this Act the law existing immediately prior to the passing of this Act shall, so far as it is repealed or amended by this Act, again operate as though this Act had not been passed, and the said repeals and amendments had not been enacted.—[Mr. H. Brooke.]
    Brought up, and read the First time.
    10.38 a.m.
    Mr. Henry Brooke: I beg to move, That the Clause be read a Second time.
    The purpose of the new Clause is to ensure that after five years' trial—whatever Government are in power at the time and whoever may be the Home Secretary—the practical working of the Measure now before us will automatically
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    come up for review by Parliament. I propose, in the Clause, that the operation of the Bill shall run until July, 1970, but that it should be capable of being prolonged beyond that date if both Houses by affirmative Resolution then think fit.
    This is not a wrecking Amendment. I would rather call it a fulfilling Amendment, because it is designed to fulfil the belief of very large numbers of people that we should experiment with the abolition of the death penalty—approach it as an experiment—and then decide, in the light of practical experience of its working, whether we should make it permanent. I say at once that I personally hope that it can be made permanent. However, I am sure that it will lessen the fears which a great many people have about the Measure if we embody the new Clause so that its experimental character becomes an integral part of the Bill and is obvious on the face of it. I see no objection to taking this course.
    No, I see one objection from those who take the extremist view about all this—the view which, I think, the Home Secretary takes; and in saying that I mean no disrespect to him. I refer to the extremist view that death as a penalty for murder is too bestial and barbarous for it ever to be allowed again. That is the extremist view; I feel sure that most of those who voted for the Second Reading of the Bill, on 21st December last, did so because they believe, as I believe, that there can be equally effective methods of deterring people from committing murder; that the decision, the awful decision, that a man should be put to death—the decision which I alone now in the House of Commons have had to take—is something which, in this modern world, we should not retain unless it is absolutely necessary for us to do so.
    On Second Reading, I gave my reasons—they were reasons and not just speculation or wishful thinking—for believing that the death penalty is not that uniquely, powerful deterrent that it is commonly thought to be. If we can effectively protect the lives of possible victims of future possible murderers by some other means, then most people would, I hope, agree that we should do that. But no one can prove it either way. Only experience

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    can prove which is right—which of those who take opposite sides in relation to this Bill. Only experience can prove it, and here and now we do not have that experience.
    It is no argument to say that the working of the Homicide Act since 1957 has already proved these things, because that Act does not cover certain types of murder. The types of murder it does not cover are those which have been thought of as the greatest threat against law and order in the community; the greatest threat against the peace of the realm.
    We cannot yet know what results complete abolition of the death penalty as proposed in the Bill will have. Surely, we ought not to seem to be legislating now for all time on the basis of what must he a priori arguments which only experience can test—
    Sir Stephen McAdden: On a point of order, Dr. King. I hope that you will not think that I am raising this point out of a wish to delay our proceedings, but is it in order for us to continue the debate on this important Bill when not one sponsor of the Bill is present?
    The Chairman: That is not a point of order. Perhaps, as a matter of courtesy, I might mention that I had hoped that the first hon. Member who replied from the Government benches would call attention to the fact. The sponsor of the Bill informed me two days ago that he has a long-standing engagement to speak on this very long topic in Canada to representatives of the Canadian Parliament and, as I say, I would have expected the first intervention from the Government benches when it comes to convey the hon. Member's apologies.
    Sir David Renton: Further to what you have said, Dr. King, may I point out that quite apart from the principal sponsor of the Bill—the hon. Member for Nelson and Colne (Mr. Sydney Silverman), for whose absence I understand there is a reason—there are at least 10 other sponsors of the Bill, whose names are on the back of the Bill, and not one of them is present, as far as I can see.
    The Chairman: The right hon. and learned Gentleman is now an experienced parliamentarian. He knows that that is not a point of order.
    Mr. Brooke: I should like to put it on record that the hon. Member for Nelson and Colne (Mr. Sydney Silver. man), who moved the Second Reading of the Bill, has personally apologised to me for his inability to be present, and I certainly hope that no hon. Member will hold it against him that he is not here, in the circumstances. Of the other sponsors of the Bill, of course, I cannot speak.
    I was about to say that both sides of the Committee and all those who take opposing views on the merits of the Bill—because we are not exactly divided by the position of the benches on which we sit—are anxious to save life. That is our purpose in taking the view that we take, for the Bill concerns both the lives of the victims and the lives of murderers. But the correctness of the different views that are being so sincerely and cogently expressed during the course of our proceedings on this Measure can only be decided by experiment and experience. That is my thesis this morning.
    I know that it is argued that Parliament can always legislate afresh in the light of experience, and that, therefore, a Clause such as this is not really needed. I believe that argument is theoretical—let us look at the realities of it. A Government—whatever Government are in power—may not wish, or may not be able to find time for legislation. That certainly seems to have been the situation in this Session, because it was a private Member who brought forward this Bill. So the only review in the light of five years' experience might have to be through the introduction of another Private Member's Bill. A Private Member's Bill has many hazards to overcome—I think that the experience of this Bill in the last few months is sufficient evidence of that. Indeed, a Private Member's Bill may not get debated at all unless the Government, by deliberate act, afford time for it.
    10.45 a.m.
    This new Clause is designed to guarantee that Parliament will have time, and will carefully consider five years' hence whether five years' experience has endorsed the judgment of the supporters

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    of this Bill or that of its opponents. This House of Commons is the traditional guardian of liberty. Liberty is a precious thing, but a still higher responsibility on all of us is to preserve life. What I am asking is that Parliament shall be required, after five years, to review the working of the Bill, and the working of the Bill will be literally a matter of life or death. I believe that all of us will be helped if we can look at this intensely difficult question—this is one of the occasions when "vital" is the fully justified word to use—this vital question in the light of five years' experience, and illuminated by it.
    In most of our constituencies—we all know this by now—there is genuine, legitimate anxiety in the minds of a great many of the people who elected us about the possible working of the Bill—
    Mr. Joseph Hiley: The majority.
    Mr. Brooke: It will diminish that anxiety, and our constituents will respect Parliament the more—and I believe that it will lead to greater unity of sympathy towards what Parliament is seeking to do in considering the Bill—if we adopt this new clause, and write in that the Measure is an experiment, a crucial experiment, which, in the first five years of its operation, deserves and requires Parliament's close and continuing watch.
    Sir Rolf Dudley Williams: On a point of order. The point of my rising, Dr. King, is to ask whether you would be prepared to accept a Motion to report Progress and ask leave to sit again. My reason is that since 10.30 yesterday morning 200 Members—I believe a number in excess of that figure—have been in the House of Commons on Standing Committees upstairs and since 2.30 yesterday afternoon the whole House was here and rose only at 6.39 this morning. It is obvious that vast numbers of Members have gone home to get changed, to have meals, and so on, and that many of them, no doubt, have not had time to return yet to the House.
    It makes a nonsense of the Chamber if the Government are to allow the House of Commons to sit these enormously long hours as a punishment for the House deciding, for instance, that this Bill should
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    be committed to a Committee of the whole House. I ask you, with great respect, Dr. King, whether you would be prepared to accept a Motion of this nature, and put it to the vote, so that we can see whether it would find favour amongst the whole Committee.
    The Chairman: As the hon. Gentleman knows, I am quite interested from a personal point of view in the facts which he has stated, but I am not prepared to accept such a Motion.
    Sir William Anstruther-Gray: The Committee will have listened to my right hon. Friend the Member for Hampstead (Mr. Brooke) with great interest. Indeed, I cannot but join in the regret which has been expressed that none of the sponsors of the Bill have come here to do my right hon. Friend the courtesy of hearing what he had to say, because, as he so truly said, he is, in fact, among us all the one man who has had the awful responsibility of deciding the life or death of a convicted murderer.
    I am in favour of the new Clause, because I want the House of Commons and the country in general to be given an opportunity of looking at the matter again in the light of experience. I am anxious that the Government of the day should be compelled to have this opportunity. My right hon. Friend described the difficulties confronting a private Member. I am sure that the only way to ensure that the Government will grasp the nettle, for nettle it is, is to make it compulsory that at the future date re-examination of this question should take place. My only regret is that we have under the Clause to wait for five years for that opportunity, because every week brings me fresh reason for wishing that we had not accorded the Bill a Second Reading.
    The Home Secretary, who, no doubt, is to reply to the debate will know his responsibilities for the police. I do not think that he will resent my quoting to him views expressed at the Police Federation conference last week. I quote from The Times:
    "The Police Federation conference today"—
    that was 20th May—
    "unanimously voted against the abolition of the death penalty for the murder of a police officer while in the execution of his duty."

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    There was no qualification there. That was unanimous. The Home Secretary is responsible for keeping the police in good heart. He knows how they feel.
    Let me go on:
    "The 1,100 delegates also rejected the view of Sir Frank Soskice, Home Secretary, who addressed them on Tuesday, that the stringent penalties contained in the Firearms Bill will provide an adequate alternative deterrent to hanging."
    The Home Secretary has argued that before the Committee, but it seems that the police are by no means satisfied that it will be an adequate deterrent. For that reason, the sooner the House gets an opportunity of reconsidering the matter the better. The new Clause promises us that opportunity only in five years' time, that is, a bridge towards getting some sort of agreement between those who are prepared to take the irrevocable step of abolishing hanging for all these remaining crimes and those who want, in the light of experience—experience is not a bad thing—to decide whether it should be final.
    The Report went on to say that
    "the conference felt very strongly that Parliament is flying in the teeth of public opinion."
    I myself think that that is so. I frequently discuss this matter and mention it in public speeches in my constituency, and my experience is that my view that we should not accept complete abolition meets with the approval of the majority of people in every walk of life. I think that that makes it all the more desirable that during these five years the country should appreciate that our tolerance to murderers is under trial and the country should take the opportunity at leisure of making up its mind how it will decide when in five years' time, if the Clause is accepted, that decision can be taken.
    I appreciate the anxieties of the police. At the Police Federation conference the special worrying effect it has on the wives of policemen was referred to.
    I take now a glaring headline from a newspaper from which I do not often quote. It is the Scottish Daily Express last month. Here it is:
    "Potential Killers—says approved school head of … Teenage boys. Six boys stood in the dock of a Scottish court yesterday as the headmaster of an approved school said 'There are at least three potential murderers here today, and I feel they will endanger the public in future'."
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    To make my point of the connection with the police with this five-year trial period, may I take a less emotional paper and describe to the Committee shortly what happened. I do not think that I will mention names, but I will certainly hand my documents to the Home Secretary. If any hon. Member would like to see the names, they are all written down. I do not think that too much publicity is desirable. I quote:
    "'There are at least three potential murderers here today,'"
    said the headmaster—
    "'and they will endanger the public in future' … One of the youths was also charged with assaulting a police constable."
    The sheriff ordered that their names could be disclosed, but I personally do not propose to disclose them. What happened was that on the roadway leading to the railway station a 14-year old boy—his confederates were 15—assaulted a police constable and did strike him on the body and hands with a knife and did wound with intent to inflict grievous bodily harm.
    What happened next? The youths, handcuffed in pairs and guarded by three police officers, joked and laughed while the Procurator Fiscal gave details of the charges. The constable had gone to the railway station in the morning and apprehended the boy, and while he was doing that the boy lunged at the constable with an open penknife but luckily only managed to penetrate the constable's tunic. This is the point of what I am saying—at the same time the boy shouted out:
    "You—. You will not take me. I will kill you. You cannot hang me now."
    I cannot emphasise too strongly that it is not only policemen and their families who are concerned. There are others covered by the Bill. There are old ladies who do not want to be murdered by somebody who wants to steal money from them. While the country in general is aware that there are such youths and that these youths have "tumbled" to it that after the Bill has become law, if law it does become, they will not run any risk of hanging—while that feeling is rampant throughout the country—I think that the Committee makes a great mistake if we throw away the opportunity which my right hon. Friend has given us in the new Clause of at any rate giving

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    a time for thought, a time to reverse a decision that may be proved to be foolish.
    For that reason, I support the new Clause.
    11.0 a.m.
    Sir D. Renton: I, too, support what my right hon. Friend the Member for Hampstead (Mr. Brooke) has said. This is the first speech I have made in the proceedings on the Bill and, therefore, I can claim that I have done nothing to impede its passage. I voted for it on Second Reading, not so much because I tend towards being an abolitionist—I am certainly not an outright abolitionist—but because I think that the law is unsatisfactory as it stands and that it is regrettable that the opportunity has not been taken by the promoters of the Bill to tidy up various provisions in it, apart from the abolition of capital punishment.
    I hope that it is appropriate to remind the Committee that in April, 1948, during the Report stage of the Criminal Justice Bill of that year, the hon. Member for Nelson and Colne (Mr. Sydney Silverman) moved a new Clause suspending the death penalty for five years. Subsection (3) of it read as follows:
    "This Section shall continue in force for a period of five years beginning with the passing of this and shall then expire …."
    In other words, it was a somewhat stronger measure than that proposed by my right hon. Friend, because his new Clause, by contrast, enables the Bill to be kept in force by affirmative resolutions of both Houses of Parliament at the end of five years. Otherwise, the two new Clauses are substantially the same. The same arguments can validly be used for or against both of them unless they have been altered by the passage of time, which does not seem to me to have happened.
    In 1948, in a Parliament in which the Labour Party outnumbered the Opposition by two to one, the new Clause of the hon. Member for Nelson and Colne was carried by 245 votes to 222, a majority of 23. It is rather interesting to note that those who supported it included, not only the hon. Member but the hon. and learned Member for Northampton (Mr. Paget) who closed the debate on that occasion, the present Leader of the House, the present Minister of State at the Home Office, the present Under-Secretary of State at the Home Office, the
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    present Attorney-General and other hon. Members who are still Members of Parliament, and, incidentally, myself.
    It is interesting to reflect that the question of limiting the suspension of capital punishment to five years was scarcely discussed on that occasion. It was not mentioned in either the opening speech or the closing speech. I think that it was assumed both by abolitionists and retentionists that if we were to abolish the death penalty it would be sensible to limit it to five years, which, I believe, it obviously is.
    I say that for two reasons. First, although what is called informed opinion has gone a long way towards being abolitionist, public opinion generally is still anxious about abolishing the death penalty. That anxiety would be considerably lessened if it were known for certain that Parliament would have to consider the matter again in the light of experience gained over a period of five years and that the matter would not be left to chance but that the Government of the day would have to find parliamentary time to take stock of the position which had arisen. That is my first reason, and I think that it is a very strong one.
    My second reason is this. Nearly all the arguments for and against abolition and retention have turned on the question whether or not capital punishment is a deterrent. To my mind, nobody knows, or can know, with complete confidence whether it is a deterrent to murder or not, but a five-year experiment would come very near to deciding the matter, if not for all time, at any rate for the rest of the time of those of us in the Committee today.
    For those two reasons, I say that my right hon. Friend's suggestion is reasonable. It is certainly put forward in a spirit of reasonableness. It is consistent with what the hon. Member for Nelson and Colne and others recommended in 1948. If any sponsor of the Bill were present in the Chamber—I still do not see one here—he would, I think, welcome my right hon. Friend's suggestion with open arms as an attempt partially to bridge the great gulf which divides abolitionists and retentionists. I hope that the Home Secretary, in so far as he is going to take any responsibility for

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    expressing a view on this matter, as I trust he will, will accept the force of these arguments and give his blessing to the new Clause.
    Mr. S. C. Silkin: I hope that I shall be permitted to begin by expressing, on behalf of the sponsors of the Bill, and particularly my hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman), their apologies to the Chair and to the Committee for their inability to be here this morning.
    Sir S. McAdden: I am sure that the Committee accepts the reason why the hon. Member for Nelson and Colne (Mr. Sydney Silverman) is not here, but is the hon. and learned Gentleman aware that, to my certain knowledge, three of the sponsors of the Bill have been within the precincts of the Chamber this morning and walked out again without listening to the argument?
    Mr. Silkin: If the hon. Gentleman would permit me, I was going on to say that the apology which I make, and for which I ask the Committee's acceptance, extends to my hon. and learned Friend the Member for Northampton (Mr. Paget), who is in a position similar to that of my hon. Friend the Member for Nelson and Colne in being unable to be present in the Committee for reasons of public importance.
    I am not deputed to speak on behalf of the other sponsors of the Bill, nor do I know where they are, although I have seen them in the Committee this morning. I hope that the Committee will accept me as a poor substitute, but, none the less, a substitute, deputed by my hon. Friend the Member for Nelson and Colne, to speak on behalf of the sponsors of the Bill on the new Clause. In particular, I hope that the right hon. Member for Hampstead (Mr. Brooke) will not regard it as in any way a discourtesy to him that those two sponsors, in particular, are unable to be present today.
    I want to begin what I have to say about the new Clause by emphasising that certainly neither the sponsors nor myself regard it as a wrecking proposal. We agree entirely with the right hon. Member for Hampstead that it would be folly to say that we were certain about these matters, however deeply we
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    might feel about them in our hearts. As the right hon. Gentleman said, we have to judge by experience, and we have to regard the Bill as an experiment, to a degree. All that I entirely accept.
    Where I find myself parting company with the right hon. Gentleman is on the manner in which he proposes that this postponement should be carried out, both as to time and to the method of returning to the present law in the event of either House of Parliament, in five years' time, deciding not to pass the resolution referred to in the proposed Clause.
    I believe that the time suggested is a great deal too short in an experiment of this kind for a future House of Commons to be sure that it is doing the right thing when it reconsiders the matter. As the right hon. Gentleman said, we are considering, and a future House of Commons will have to consider, whether the deterrent of capital punishment is unique, or whether there are others which are equally forceful and whether it is necessary, therefore, to go to the extreme of taking human life. I believe that a decision of this kind cannot properly or usefully be taken after a period of experiment as short as that proposed in the new Clause.
    The range of figures of murder, whether murder in general or capital murder, varies very considerably from year to year. On Second Reading, my right hon. and learned Friend the Home Secretary gave certain percentage figures. He told the House that the percentage of capital murders in 1956 was 19·9, in 1960 it was 18·7, and in 1955 only 11·3. The Royal Commission on Capital Punishment surveyed the whole range of figures throughout the world over a period of time—in many cases at least 50 years and in others for far longer than that—in order to form its opinions.
    I will mention one set of figures which emerged and which are to be found in the appendix to the Report of the Royal Commission. These figures related to the 10 years 1940–49 immediately before the Royal Commission met for the first time. We find that, in England, the number of murders in that period on average per million of population was 3·92, yet the lowest year, 1940, had a percentage of 2·94 and the highest, 1945, had a percentage of 5·11.

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    In Scotland, the difference is even more striking, with an average of 2.72 per cent. murders per million. The lowest year, 1943, had 1·55 per cent. and the highest, 1945, had 4·66 per cent.—more than twice as many.
    This shows that the variation from year to year is considerable, for it is dictated by all kinds of factors quite apart from the factor of what the deterrent of the day happens to be, and that to form a judgment from as short a period as five years can be extremely dangerous.
    11.15 a.m.
    Professor Sellin, who is one of the greatest authorities on matters relating to penology and punishment, gave his views to the Royal Commission on these matters. The Report of the Commission, on page 374, states that
    "… the main reason for the restoration of capital punishment in his view was always the same; something happened which aroused popular feeling, probably quite irrationally, and the Legislature rushed into imposing the death penalty."
    The effect of recent events at any particular time inevitably creates prejudice, a prejudice which is enhanced by the way the Press may play up particular events. If, for example, on the one hand, we have a Ruth Ellis case, or a Timothy Evans case, that creates popular opinion in one direction; on the other, if we get a mail train robbery or a series of particularly brutal murders, that creates public pressure and opinion on the other side.
    One point which the Royal Commission particularly made was that, after abolition, there is very often a tendency for the murder rate to rise for a short period, after which it usually settles down again. Indeed, in the view of the Royal Commission it virtually inevitably settles down again. I understand that the short time involved may be a few years, but that it varies from one area to another.
    In addition to these matters, there is a very important factor which distinguishes the present time from the generality. A year or so ago the right hon. Member for Hampstead, as Home Secretary, appointed to membership of the Royal Commission on the Penal Policy a number of very distinguished people charged with the task of surveying that system, the concepts and purpose
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    of punishment and of making recommendations which, no doubt, he hoped would have lasting effect upon our approach to the whole question of crime and punishment.
    I very much applaud the right hon. Gentleman's wisdom in having set up that Royal Commission. Perhaps I should add, on a personal note, that I have been given the great privilege of being recently appointed to membership of the Commission and, although it would be quite wrong for me to anticipate any proposals that it may ultimately make, of one thing I am certain—that the Commission has thrown itself into the work of considering the whole of our penal system. It is taking a mass of advice and meeting a large number of people of every possible kind and I shall be most disappointed if it does not turn out that its recommendations provide the basis for whichever Government there may be at the time to make a radical reappraisal of our whole penal system.
    The report of that Royal Commission will certainly be made within the period of five years laid down in the proposed Clause and I suggest that, in advance of such reappraisal and rethinking, it would be utterly wrong for this Committee to insert into the Bill provisions which may prejudge and prejudice the whole of that rethinking which a future House of Commons may be invited to undertake.
    Sir Richard Glyn: Would the hon. and learned Gentleman explain to the Committee why he thinks that issues would be prejudged if this new Clause were introduced before this important Royal Commission on penology has reported, when he thinks that it is quite in order for the Bill to be introduced to abolish capital punishment before the Commission has reported?
    Mr. Silkin: Because the effect of the new Clause is to put the clock back to the Homicide Act, 1957; in other words, to return to the present system of capital punishment for certain murders—for one or two murders a year in practice over the last few years—and thereby to accept a concept which may he totally alien to the concepts and the purposes of the penal system which that Royal Commission may ultimately recommend.
    I am certainly not alone in my view that the period of time is far too short.

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    The Committee will recall that the Royal Commission on Capital Punishment sat under the distinguished chairmanship of Sir Ernest Gowers, who began as a retentionist but, after five years, completed his work on the Commission as an abolitionist. In that extremely cogent and well written little book of his, "A Life For A Life", Sir Ernest had this to say after dealing with the whole question of the effect of deterrents and the capital penalty:
    "However much opinions may differ about the inferences to be drawn from the facts and arguments summarised in this chapter, there is one that seems almost beyond dispute. That is that we should not be able to form any reliable opinion about the usefulness of the death penalty as a deterrent by abolishing it experimentally for a period of five years, as was proposed in 1930, 1948 and 1955. On the contrary, we might be grievously misled. If the murder rate fell during that period, it would be unsafe to conclude that capital punishment had been of no special value as a deterrent; it would be even more unsafe to infer from a rise in the rate that a valuable deterrent had been removed. The murder rate depends on too many other factors. And if Archbishop Temple and Lord Buckmaster were right in believing that 'psychologically the effect of the State so respecting life as to refuse to take it would undoubtedly be greater than the effect of its so condemning murder as to take the life of the murderer', the time is much too short. Temple thought that this would take a generation or so".
    I commend to the Committee that view of a very distinguished chairman of a Royal Commission who had considered this matter, not as we have done during the passage of the Bill for a matter of months, but for five years.
    Secondly, the method of carrying out the right hon. Gentleman's intentions is the wrong method, because what the new Clause seeks to do is to return to the position under the Homicide Act if the necessary Resolutions are not passed, that is to say, to return to the position when we have degrees of murder which the Royal Commission regarded as a chimerical quest for satisfactory degrees of murder.
    On Second Reading, the right hon. Gentleman himself in the most forceful and persuasive language expressed the objections to such a situation. I accept that he never liked the Homicide Act, even before he became Home Secretary. He went to the Home Office in 1962. On Second Reading he said:
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    "I … immediately asked for a report on the working of the Homicide Act, because one was aware of criticism; one was aware of anomalies in its working, and I was anxious to know whether it would be possible to improve the Act by any form of amendment that might be generally acceptable. …
    It produces anomalies at the sentencing stage. There can be no doubt of that. However sound the principles of the Act when they are set against the criterion of motive, nevertheless it results in the most heinous murders not being capable of attracting the death sentence whereas the law requires that the death sentence should be passed on others who have committed what is defined as capital murder, even though it would be almost universally felt that they had, in fact, been offences of a less grave kind."—[OFFICIAL REPORT, 21st December, 1964; Vol. 704, c. 906.]
    The right hon. Gentleman's criticism of that Act was a devastating criticism with which, I have no doubt, the great majority of the House agreed. Certainly his right hon. Friend for Birmingham, Handsworth (Sir E. Boyle), in his contribution to that debate, expressly said how strongly he agreed with that criticism.
    Mr. Brooke: I do not withdraw anything I said on Second Reading about the Homicide Act. However, the hon. and learned Member will appreciate that there must be some provision, such as in this new Clause, to show what would happen if it were decided not to renew the Bill five years hence. We could not have a vacuum with no penalty; and, personally, I would rather go back to the Homicide Act than take the only other alternative, which would be to go back to death being the penalty for all murders. That is the reason why my new Clause is drafted as it is, and not because I wanted the Homicide Act for its own sake.
    Mr. Silkin: I accept the dilemma that exists. That is precisely the difficulty of trying to incorporate into the Bill a proposal that something should happen if an affirmative Resolution of the House of Commons and the House of Lords is not passed in five years' time, at a time when we do not know what public opinion may be and do not know what people may be thinking in the light of such comparatively little additional experience as they will have had, and in the light of the report and recommendations of the Royal Commission on the penal system.
    This is the only thing the right hon. Gentleman can do at this stage and that

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    is his dilemma and that is the whole reason why I regard it as wrong to do it at this stage. He is forced by his dilemma into putting forward the new Clause which inevitably, if Parliament decides in its wisdom or lack of wisdom not to go on with the abolition of the death penalty, would result in having to return to the situation which the right hon. Gentleman himself deplores and regards as wrong.
    Surely it is better, in those circumstances, that Parliament should have a completely free hand and that it should have regard to everything which will have happened in the meantime, in five or 10 years, or whatever the right time is to approach these matters again, not being tied and avoiding the dilemma of either having to return to that which the majority of hon. Members regard as anomalous or continuing with no capital punishment at all.
    11.30 a.m.
    Sir Kenneth Pickthorn: Why does the hon. and learned Gentleman think that Parliament's hands would be tied? Parliament would be as free as it is now to legislate, if that is what it wanted to do. It is not possible for one Parliament to tie the hands of another, and to rest an argument upon the assumption that this would tie the hands of a later Parliament is really to mislead the Committee.
    Mr. Silkin: That is precisely what the new Clause would do, tie the hands of a Parliament in five years. [HON. MEMBERS: "No."] Of course, it is open to Parliament, in five years, to bring in a completely fresh Bill which might wipe out the effect of the Homicide Act or which might, if Parliament thought fit, provide that there could be the death penalty for a wholly different class of murders from that contained in the Homicide Act. Parliament could do that whether this new Clause is adopted or not.
    What I am saying is that the whole purpose of the new Clause is, as the right Gentleman said in opening the debate, so to tie Parliament's hand that it will be bound, in five years, to look at the matter again, but look at it, by virtue of the new Clause, within the straightjacket of either abolition, on the one side, or the Homicide Act, on the other.
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    In his recent intervention, the right hon. Gentleman very eloquently made clear that that is his dilemma. It is a dilemma from which there is no escape. If it is said that Parliament ought to reconsider the whole matter in five years, then, subject to the question of time on which I do not agree with the right hon. Gentleman by all means let Parliament reconsider the whole matter when the time is right, and let it review it in the light of experience of however many years be appropriate. But let its hands not be tied when it does so.
    I agree entirely that there must be perpetual vigilance, that one must constantly be looking to see whether Parliament, in 1965, took the right course on this matter. None the less, I do not agree that, in doing that, it ought to proceed in such a way as to give to the public the impression that Parliament has doubts about the wisdom of what it has done. The House, by a majority of more than two to one, decided to abolish the death penalty. It did so in the knowledge that public opnion may well not have gone as far forward as to support that step. I believe that it was right to do so, none the less, because it is right that Parliament should be in advance of public opinion in matters of this kind, on which Parliament has the opportunity to give close consideration to matters which may often become the subject of prejudice in the popular Press and among the public generally.
    In my view, if the impression were given to the public that, in passing this Measure, we were acting in a half-hearted way, constantly looking over our shoulders, not being quite sure whether it was the right thing or not, that would be the wrong impression with which to begin what the right hon. Gentleman has rightly described as a period of experiment. The House ought not to give that sort of impression to the public. It ought to give the impression that it is acting in the wholehearted way which the majority expressed on Second Reading.
    For all those reasons, I invite the Committee not to accept the new Clause.
    Mr. W. F. Deedes: It is intended as no disparagement of the speech which the hon. and learned Member for Dulwich (Mr. S. C. Silkin) has just made if I begin by echoing the regrets

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    already expressed on this side at the absence of the sponsors of the Bill today. While fully accepting the reasons which have been advanced by the hon. Member for Nelson and Colne (Mr. Sydney Silverman), I must say that it does expose the deplorable dichotomy on the Government side in the passage of this Bill. It puts the Home Secretary in an intolerable position. The right hon. and learned Gentleman has done the Committee the courtesy of attending, I think, all our discussions, certainly since the Bill came to the Floor of the House, and at least some hon. Members on this side appreciate his attitude.
    The Secretary of State for the Home Department (Sir Frank Soskice): May I intervene at this point, first, to thank the right hon. Gentleman for what he has just said and, second, to add that I must offer my apologies to the Committee because I shall have to go at 12 o'clock for another public engagement.
    Mr. Deedes: That is very charming of the right hon. and learned Gentleman, and we acknowledge his courtesy.
    I readily understand and appreciate the motives of my right hon. Friend the Member for Hampstead (Mr. H. Brooke) in moving this new Clause, and I regard the arguments in favour of it put by my three right hon. Friends as exceedingly persuasive. I recognise its attractions for many hon. Members, but I have serious reservations about it, and I feel bound to state them before we end our discussion.
    Although I am a retentionist, I take the view that the House of Commons ought now to make up its mind finally one way or the other. This argument has gone on for a long time, and, without going all the way with the hon. and learned Member for Dulwich in his concluding remarks about the doubts which society might cast on whether Parliament knew its own mind, which I do not share, I consider that society has a right now to know exactly where it stands on this matter, and we should put it beyond doubt.
    Second, I cannot resist the feeling—I hope that it is without foundation—that this proposal might be seen not so much to offer safeguards as to mollify such opinion as remained hostile to abolition.
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    being designed, as it were, to soften the blow. This is quite legitimate provided that it means what we think it means and provided that it means what people outside who are deeply exercised in mind about it think it means.
    My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) referred to the back history of the Bill, but I suggest that we might go a little further than that. The history of this proposal, not the Bill, goes back at least 30 years. It was the main recommendation of the ill-starred Select Committee which was appointed by the Government of 1929–30. I have read most of the proceedings of that Select Committee, and I cannot regard them as a very good precedent or, so to speak, a reliable witness for this proposal. The Select Committee made conditional recommendations, conditional upon Parliament deciding to retain the death penalty, and then itself recommended that the death penalty should be suspended for five years.
    In this, it appeared to have been weighed very much by the experience of the American states at that time, a number of which had reimposed the death penalty after it had been removed. The American example has been referred to in our earlier proceedings and I shall not cite it again now, but, in terms of history, it is right to say that the Select Committee which made this proposal was hopelessly divided. The six Conservative Members walked out before the end of the proceedings and took no part in the recommendations. The Government of the day, a Labour Government, I believe, declined to give further consideration to the Select Committee's conclusions, and the Report remained a dead letter. This, therefore, was the not very distinguished background to this particular proposal.
    The question we must ask ourselves is: what chances do we feel there are of Parliament using the opportunity afforded by the new Clause to restore hanging? Many hon. Members must know in their hearts that the chances of restoring the death penalty in five years' time are not strong.
    We ought not to let people outside mislead themselves into thinking otherwise. Certainly Parliament would not

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    do so if there were a marginal increase in capital murders—only if there were—which I hope there is not—a serious and dramatic increase. Yet this could occur at any time in the five-year period. It is possible that the proposal would mean that the necessary course of action would not be taken, because it might be said that Parliament was anticipating a decision which it would have to take in 1970. There would be a tendency to pre-commit the Executive both ways—to commit it to consider this again in 1970 and at the same time to inhibit it from taking action before that date. I doubt whether the Executive ought to he inhibited in that way.
    Without the Clause there would be nothing to prevent Parliament from introducing the death penalty if the need arose. I will not contest what my right hon. Friend said about five years being a suitable period, but in the light of the 1957 Act and what has happened since then, do we feel that even since 1957 we have learned a great deal from what has occurred in those eight years? But I will not pursue the point.
    Finally—my last point—we must recognise that even if we pass the Clause, to a great many abolitionists, and for very good reasons from their point of view, it would be regarded as a dead letter. Many abolitionists on both sides of the Committee—and they are on record as having said this—regard hanging as an abhorrent bestial penalty which society ought to do without. My right hon. Friend the Member for Hampstead mentions it as an extremist view. To people like myself it is an extremist view, but I do not think that it is a minority view; it is very widely shared. From my experience among people to whom I have spoken, those who most want to abolish the death penalty are those who feel that it is a bestial way of punishing people. It cannot be any less bestial to them in five years' time than it is today. My right hon. Friend has been quite consistent in this; he spoke on Second Reading of the desirability of a trial of this kind, and we know where his mind is, but that is not the view of the majority of abolitionists.
    We cannot play Hamlet over this; we must make up our minds. Parliament has not enhanced its reputation by the way in which this Measure has been
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    handled and I do not think that the Clause—this device as it will be seen by some—at the conclusion of our proceedings will restore its dignity.
    11.45 a.m.
    Sir F. Soskice: May I intervene shortly? I have intimated by way of apology to the Committee that I have to attend another public engagement. I agree entirely with the speech of the right hon. Member for Ashford (Mr. Deedes) and with that of my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) who, I think, put the matter so comprehensively that I have very little to add. Supposing, unhappily, it should turn out that it was a mistake to abolish the death sentence and that that became apparent in two years. Parliament ought then to be in a position to re-enact it. It might not become apparent until 10 years have passed. If Parliament, however, thought it necessary to change the law, to change the result which would be produced if the present Bill became law, one would immediately be face to face with the dilemma to which my hon. and learned Friend referred. It is a dilemma squarely faced by the right hon. Member for Hampstead (Mr. H. Brooke).
    Simply to go back to the 1957 Act would surely be the worst of all worlds. Should it turn out to be necessary, as experience showed in the coming years, to change the law which had resulted from the enactment of the Bill, we should have to approach the problem on a far more comprehensive basis. There has been universal condemnation of the 1957 Act. It would be quite unreasonable to take an arbitrary period of trial and to say that if the arbitrary period of trial suggested that we were wrong in doing what I hope we shall do, then we should go back to a situation which has been condemned by common consent from all parts of the House.
    Mr. F. V. Corfield: One of the reasons which inspires many of us is that the Amendment would ensure that the Government of the day would positively have to reconsider the matter. This is underlined by the extraordinary way in which the Bill is being handled. It is a Private Member's Bill with Government time given to it on Wednesday mornings. Throughout this

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    morning's discussion hon. Members on the Government Front Bench have greatly outnumbered those on the back benches opposite except for a few minutes.
    Sir F. Soskice: The hon. Member said that the Government would have to reconsider the matter. It would have to do one of two things—either to leave the death penalty abolished or to go back to a situation which everybody condemns and which everybody regards as foolish—the 1957 Act. The right hon. Gentleman has admitted that, and the terms of the Amendment admit it. I reads.
    "and upon the expiration of this Act the law existing immediately prior to the passing of this Act shall, so far as it is repealed or amended by this Act, again operate as though this Act had not been passed and the said repeals and amendments had not been enacted."
    The hon. Member said today that one situation which he would not care to go back to is the complete restoration of the death penalty for all murders. He said that again today, and he was bound to say it. If Parliament thought that a mistake had been made, there would have to be a very far-reaching reconsideration of the whole question of the death penalty. It would be unwise to commit ourselves to what is a wholly unsatisfactory state of the law supposing that it becomes necessary to make a change.
    Parliament is free to legislate at any time. Should it appear that we were wrong, we can always change it. I hope and believe that it will not appear that we are wrong. I am quite convinced that we are right. But if we are wrong Parliament can change the situation when necessary, and not necessarily in five years or ten years or two years or one year. It can do so when it is in the public interest to do so.
    I hope that the Committee agrees that we ought to be able to make up our minds. This is not a new problem; it has been constantly on the consciousness of the nation and it has been advocated most keenly for years and years, not only in this century but in the last century. The problem is at least a hundred years old. We have had the advantage of the Royal Commission, which made a most extensive study. If the Royal Commission, taking all the evidence, could not come to a satisfactory and clear conclusion, then it is unlikely that we
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    should be unable to come to a better conclusion at the end of five years from now. At the end of 25 years, perhaps at the end of 40 years, perhaps; but at the end of five years, as my hon. and learned Friend pointed out, we should be in just the same state of uncertainty as we are at the moment in so far as we are in a state of uncertainty.
    In paragraphs 65 to 68 the Royal Commission—perhaps hon. Members will be kind enough to glance at them when they have time—says that certainly over a period of time we may get a temporary increase. As my hon. and learned Friend said, what is that period of time going to be? The Royal Commission said, I think, that it might be a few years. That would carry one part of the way over this experimental period, and our minds will be just as much unmade up then as they are now on the efficacy of capital punishment as a really effective deterrent.
    Mr. Ian Percival: Before the Home Secretary develops this argument—I refrained from interrupting till I felt satisfied that he had dealt with the point I wanted to ask him a question about—and before he goes any further, may I put this to him? He puts as his argument against this new Clause that, if it were passed, the Government in five years' time would have only two alternatives; they would either have to keep the new law or abolish that law and go back to the Act of 1957. If he really means that, and if he agrees with the argument of his hon. and learned Friend that no Parliament can tie the hands of another, can he then tell the Committee what there would he to prevent the House from adopting a third alternative in substituting a new and better punishment?
    Sir F. Soskice: Nothing in the wide world. There is nothing in the wide world to stop the House from adopting a third alternative if we do not accept this new Clause. The House is completely free, whether we accept it or not, and therefore there is not the slightest point in the new Clause and that argument. It will still leave the House free and unfettered discretion to do what is necessary as circumstances develop. We think that this new Clause ought not to be accepted, because we think it is a useless proceeding. The House will have absolute power to try to present what

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    alternative may be needed if a change is necessary. The alternative which the new Clause puts before the Committee is either to leave the situation as it is in five years or to go back to the 1957 Act. Why present it with that alternative when the House in any event has the completest and most absolute freedom to do what it thinks in five—or ten—years' time may be necessary to meet whatever the problem may be, and the form in which at that time it may present itself? I hope the Committee may feel—
    Mr. Hiley: I thank the right hon. and learned Gentleman for giving way. He has just referred to the Royal Commission, as did his hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin), as saying that after the passing of this Bill there would be an increase in murders.
    Sir K. Pickthorn: Temporary.
    Mr. Hiley: A temporary increase. However, the point is, does the Home Secretary propose to take any steps to protect the public during that period after the Bill is passed?
    Sir F. Soskice: I should be grateful if hon. Members would look at the actual words which the Royal Commission used:
    "There is some evidence that abolition may be followed for a short time by an increase in homicides and crimes of violence, and a fortiori it might be thought likely that a temporary increase of this kind would occur if capital punishment were abolished in a country where it was not previously in abeyance but was regularly applied in practice; but it would appear that, as soon as a country has become accustomed to the new form of the extreme penalty, abolition will not in the long run lead to an increase in crime."
    Those are the words which the Royal Commission used in paragraph 65. All that it says is that it might happen. It might not happen. If it does happen it will distort the advantage which may be derived in increasing our experience and knowledge by allowing this five-year period to elapse—
    Mr. Hiley rose—
    Sir F. Soskice: I am sorry but I cannot give way, because I have to go. I am very sorry that I do.
    Mr. Hiley: Cold comfort for the relatives of those who are murdered.
    Sir F. Soskice: Having listened to the arguments used in the last two speeches I really think we must make up our minds, and if it turns out that we are wrong we can always re-enact a new Measure when the time comes. Therefore, I very much hope that the Committee will decide not to accept this new Clause.
    Sir Richard Glyn: I shall not detain the Committee long, but I feel that we are in very great difficulty here. We who are supporting this new Clause so well moved by my right hon. Friend the Member for Hampstead (Mr. Brooke) are uncertain to whom we should address our arguments, because the debate this morning has been conducted for a considerable time not by those responsible for the Bill but by the hon. and learned Member for Dulwich (Mr. S. C. Silkin) on their behalf. Of course, he was entitled to do so, but at first we thought that he was also entitled to accept the new Clause if our arguments proved conclusive.
    Then we thought that perhaps the Home Secretary would he able to act on behalf of the sponsors, but we now understand that he has to go—though we quite understand why he has to go. Since then one of the actual sponsors of the Bill came into the Committee, the hon. Member for Lancaster (Mr. Berkeley), but he has gone again. Is he authorised or is the hon. and learned Member for Dulwich authorised to accept the new Clause if our arguments prove conclusive? We are entitled to an answer to this question. Who is authorised to accept our new Clause if our arguments prove conclusive? Are we to understand that the Socialist party meeting upstairs have already decided and that they will come down and—
    Mr. Norman St. John-Stevas: The hon. Member for Ebbw Vale (Mr. Michael Foot) came in, and he is about.
    Sir Richard Glyn: He came in; he went out. What happens if he does not come back? Who is authorised to act for him? When the hon. Member comes back perhaps he will tell us. The

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    sponsors have not actually been assisting in the Committee. It is an extraordinary position that, when we are debating, as we are this morning, the most important and indeed a crucial Amendment, there is nobody here to accept it on behalf of the sponsors of the Bill. Now we have not even the Home Secretary. There is an Under-Secretary here. Perhaps she will tell us.
    Mr. S. C. Silkin: Reference was made by the right hon. Member for Hampstead (Mr. Brooke) to a letter sent to him by my hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman) setting out the position. In that letter my hon. Friend the Member for Nelson and Colne made it clear, as, I think, the right hon. Member agreed, that he had asked me to take charge of the Bill in his absence. When, therefore, the question arises which the hon. Member for Dorset, North (Sir Richard Glyn) is putting, I hope that the Committee will allow me to make a decision and to advise it one way or the other. So far, however, the hypothesis upon which the question was founded has not arisen.
    Sir Richard Glyn: I really cannot accept this. We do not deny for one moment, and no one would fail to accept, the word of the hon. and learned Member for Dulwich, but we have now two sponsors of the Bill here. They have just come into the Committee. We are in a most unusual and unsatisfactory position.
    One argument which I feel bound to stress and which has already arisen to some extent from what the hon. and learned Member for Dulwich has said, speaking on behalf of the chief sponsor of this Bill, is that apparently he was sent here to speak against the new Clause and told, I understand, not to accept it, however powerfully argued, and this despite the fact that we know that the chief sponsor, the hon. Member for Nelson and Colne (Mr. Sydney Silverman), himself proposed an almost identical Amendment to the Measure of 1948, and got it carried. I think that is worthy of comment.
    Mr. S. C. Silkin rose—
    Sir Richard Glyn: I cannot give way; time is getting on.
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    We believe that the public shares our anxiety in this, and believes that up to now the fact that the Executive have had power to execute people—very few have been executed lately—that we have had the ability, the power, to order execution in an extreme case, has kept the number of murders down. This is accepted by the hon. and learned Member for Dulwich and by the Home Secretary. I understand that they agree that if the Bill goes through there is likely to be an increase in the number of murders.
    12 noon
    We feel it is right, whether or not there be an increase, that Parliament should have a look at this again in five years' time. That is all this Clause says—have another look. It could be sooner; it could be later. We are not tying Parliament's hands in any way. We are simply saying that, in view of the tremendous public anxiety and the open admission from the hon. and learned Member who is authorised to speak on behalf of the sponsor, there might be an increase in the number of murders. In fact, HANSARD shows that he said rather more than that.
    All we ask is that Parliament should look at this again in five years' time. There is no one present who is authorised to accept this Clause. We all know there is a powerful socialist group upstairs waiting for the division to vote against this Amendment. They have not heard our arguments. This position could not have been more unsatisfactory and the discourtesy of the sponsors of this important Measure to this Committee passes anything within my Parliamentary recollection.
    Mr. John Biggs-Davison: On a point of order. Is it proper and correct that an hon. and learned Member of the House should take over the sponsorship of a Private Member's Bill when he is not a sponsor and when sponsors of the Bill are present in the Committee.
    The Chairman: Nothing has happened that is out of order.
    Mr. St. John-Stevas: I have listened with great interest to the arguments on this Clause. I must apologise to my right hon. Friend the Member for Hampstead (Mr. Brooke) for not having been here to

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    hear him move the Clause. As he will appreciate, I am a constituent of his and he will know what traffic conditions are like from here to Hampstead this morning. However, I did hear the argument by my right hon. and learned Friend the Member for Huntingdonshire (Mr. Renton).
    Like him, this is the first intervention I have made in this debate, although I have voted in all the Divisions. While I came with a reasonably open mind on the question, I must say that the arguments I have heard have not convinced me in favour of this Clause. I was very impressed with the argument put forward by the right hon. Gentleman the Member for Ashford (Mr. Deedes). Although he is a retentionist, and I am an abolitionist, I agree that the time has come for a final making up of our mind.
    I differ from my right hon. Friend the Member for Hampstead, with great diffidence, because of his unrivalled experience in this subject and because of the great contributions he has made to our discussion of this Bill. I cannot accept the assumption that all abolitionists on this side of the Committee agree with the Clause. Certainly, my opinion was never sought on that and I never expressed agreement with it.
    The right hon. Member for Berwick and East Lothian (Sir W. AnstrutherGray) gave as one reason why we should have a review of this in five years that public opinion was extremely anxious over this issue. Of course it is, but is it the function of this House to follow public opinion or to attempt to lead and shape public opinion? If we had been guided in the past by public opinion very few law reforms of any kind would ever have been enacted.
    The second reason for a review put forward by my right hon. Friend was the great anxiety felt by the police on this occasion. I am glad to have an opportunity to pay a tribute to the police since everyone in the country owes the police a great debt and not the least in this House. From time to time disgraceful attacks are made upon the police, such as the recent attack by a female journalist, which I am delighted to have the opportunity to repudiate. It is true that the police feel that capital punishment is a protection. The fact that they
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    feel this does not make it a protection. We have to look not so much at the feelings of people, but the rational arguments for or against capital punishment. One argument—
    Mr. Godfrey Lagden:I can understand the hon. Member's disregard for public opinion. Many of his utterances, which we are used to, lead us to that understanding. But would he not accept, with regard to the police, that there are many members of the public who have a very considered opinion of them and have a great opportunity to approach this subject with even more authority than a great many Members in this House?
    Mr. St. John-Stevas: I would certainly not disagree with the importance which my hon. Friend attaches to public opinion. I thought I had given due weight to that and had gone out of my way to be as studiously moderate as possible. I do not think that what I have said merited the personal asperity which I seem to detect in the tone of the hon. Member. Of course, I pay the greatest attention to public opinion and, of course, I have consulted my constituents on this matter. But, in the last resort, having paid proper attention to public opinion and to those who are in positions of authority such as the police, ultimately it is the duty of a Member of Parliament to make up his own mind on the issue before him.
    Mr. Lagden: I thank my hon. Friend for giving way a second time. It would be of great interest to the Committee if he could tell us what proportion of his constituents' opinion came after he had consulted them?
    Mr. St. John-Stevas: I do not quite understand the question. Would the hon. Member elucidate?
    Mr. Lagden: The hon. Gentleman was telling us he had consulted his constituents on this matter and obtained their opinion. What I am asking is after that consultation was there a large percentage one way or the other, and does he know what it was?
    Mr. St. John-Stevas: I did not make a statistical analysis of the replies as such, but there were differences of opinion amongst my constituents on this and they

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    were certainly not all in favour of retention. Abolitionist opinions were expressed. I would agree with the hon. Gentleman that if one took a poll in the country I suppose that one would find a majority in favour.
    The Chairman: Order. This discussion is getting rather wide. The hon. Gentleman must link all this with the new Clause in front of him.
    Mr. St. John-Stevas: I am sorry, Dr. King. I was deflected from my argument. I was attracted by one argument put forward by the hon. and learned Gentleman the Member for Dulwich (Mr. S. C. Silkin), though not by his constitutional arguments, because I quite agree with the Member for Carlton (Sir K. Pick-thorn) that it is an accepted doctrine of our constitution that no Parliament can bind a successor; nor, indeed, can it bind itself. I was impressed by the hon. and learned Gentleman's argument that the period of five years is too short. The murder rate is, fortunately, very low, but it may be uneven in different years and within a five-year period it would be possible for a freak rise in the murder rate to give a totally misleading impression to public opinion, with the constant danger that public opinion, and perhaps this Committee also, would reach the wrong conclusion.
    Mr. A. P. Costain: Would not my hon. Friend agree that the Parliamentary programme is so crowded that when Parliament is bound to make a decision that the Measure will be brought before Parliament, but if there are reasons for deferring it, it would be deferred, and is not this the sort of matter which should be deferred?
    Mr. St. John-Stevas: The procedural point is not an impressive one one way or the other. I think that one can marshal arguments for and against it, and that they more or less cancel each other out. What is important is that after this long delay—and I was extremely impressed by the argument put forward by my right hon. Friend the Member for Ashford—it is desirable that a final solution should be reached. Certainty is desirable on this point. After all, the House has discussed the matter, both upstairs and on the Floor, extremely carefully. For 100 years this debate has
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    been going on in different parts of the country, and surely the time has now arrived to reach a final decision.
    Sir S. McAdden: rose—
    Hon. Members: Divide.
    Sir S. McAdden: My hon. Friends call "Divide" as soon as I get to my feet, when I have been here since half-past ten, when most of them were not here. I am glad to see that they are joined in jocularity by hon. Members of the Liberal Party, none of whom was here at the beginning of our proceedings.
    I want to get back to the discussion of the new Clause. I support it for a reason which has not been put forward by anybody else, and which, I hope, will find favour with my hon. Friends. If the Clause is adopted, the House will have to reconsider this legislation in five years' time. That will be a change, because we have not considered it very much so far.
    If the Clause is accepted, it will ensure that five years from now a responsible House of Commons will get down to serious consideration of this important matter, which will be a very good thing even if it is five years too late. It will be a good thing if it is reconsidered especially if, as a result of passing this ill-considered Measure, there should tend to be an increase in the number of murders committed in the country.
    I want to add my voice to those who have protested about the contemptuous manner in which the sponsors of the Bill have sought to treat the Committee. I accept the excuse for the absence of the hon. Member for Nelson and Colne (Mr. Sydney Silverman). I accept the excuse, which has not been particularised, but which I am sure is genuine, for the absence of the hon. and learned Member for Northampton (Mr. Paget). But the hon. Member for Ebbw Vale (Mr. Michael Foot) was here at half-past ten. The right hon. Member for Easington (Mr. Shinwell) was here at half-past ten. The other sponsors of the Bill, whom I have noticed round the House, came into the Chamber when a Count was called, but have since disappeared. They wander back round about noon, knowing that, sooner or later, someone will move the Closure which, it is hoped, will be accepted by the Chair.

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    Without any serious discussion, or any serious argument, the hon. and learned Member for Dulwich (Mr. S. C. Silkin) has been put up as long-stop. He spoke for nearly half an hour without dealing with the serious arguments advanced in support of the new Clause. I think that the Committee has been treated in a disgraceful way by the sponsors of the Bill, and, if for no other reason, I hope that those who feel strongly about the need for a serious and earnest consideration of this Measure will support the new Clause, not necessarily because it is good in itself.
    I agree with my right hon. Friend the Member for Ashford that a lot could be said in criticism of it. There is a good deal to be said for the argument that we should make up our minds now, but we should not have closed our minds before the Bill came before the Committee, and I resent the way in which the hon. Member for Ebbw Vale, my hon. Friend the Member for Lancaster (Mr. Berkeley), and the right hon. Member for Easington, have seen fit to treat this matter, and the way in which the whole Committee stage proceedings have been bulldozed through the House on Wednesday mornings.
    Mr. Humphry Berkeley: My hon. Friend has accused me of contemptuous behaviour. He seemed to imply that I was in some measure responsible for bull-dozing the Bill through on Wednesday mornings on the Floor of the House. My hon. Friend ought to be aware that I spoke and voted against the Bill being taken on the Floor of the House on Wednesday mornings. I think that he ought to leave me out of his strictures.
    Sir S. McAdden: With respect to my hon. Friend, I do not leave him out of my strictures at all. I was not referring to his attitude in bulldozing the Measure through the Committee stage. I was referring to the fact that his name appears as a sponsor of the Bill, but he has not heard the argument, except during the last 15 minutes. The same comment applies to the hon. Member for Ebbw Vale.
    I urge on my hon. Friends the importance of supporting the Clause, for the reason which I advanced, and I am sorry that the hon. Member for Ebbw Vale was not listening. If the new Clause were accepted, it would ensure that in five years' time a Parliament—I
    562
    hope one with a greater sense of responsibility than the present one—would have an opportunity of looking at this Measure again. The Committee stage of the Bill has in some sense been bulldozed through by meeting on Wednesday mornings. We know that Wednesday morning was selected because that happened to be the day on which it was reasonably certain that the majority of the party opposite would be here. That is the only reason why we have met on Wednesday mornings. Nobody suggested that we should meet on Monday mornings. That would have been very convenient for me, but not for others. Wednesday was a convenient day.
    12.15 p.m.
    The Chairman: Order. This is getting a little wide of the new Clause.
    Sir S. McAdden: I am sorry, Dr. King. I am desperately anxious to keep within order, but surely I am right in drawing attention to the relevance of reviewing this matter in five years' time by saying that it has not been properly considered so far, and, in so far as I attempt to relate it to that, I would have thought that I was within the narrow limits of order. I would not, of course, wish to defy your Ruling.
    The Chairman: If the hon. Gentleman studies my Ruling tomorrow, he will see the exact moment when he went out of order.
    Sir S. McAdden: I was provoked, Dr. King. I shall seek to keep myself in order.
    The arrangements for the Bill to be discussed in Committee have been such as to ensure that the Measure has not been fully discussed. We have had a handful of Members seriously attempting to consider it. The remaining Members have not attended the Committee, and have not heard the arguments, but, like the sponsors of the Bill, they have come in when a Division has been called, and have exercised their right to vote without having heard a word of the arguments in favour of the Amendments.
    It is because the Amendments have not been properly considered, and because the new Clause has not had any serious consideration by this Committee, that I urge my hon. Friends to go into the

    563
    Lobby to vote for it, because its acceptance will ensure that a Parliament in five years' time will have a chance to behave more responsibly than the one which we have at the present time.
    Mr. Peter Bessell: I think that this is perhaps the most important of all the proposals which have been put before the Committee, and I shall not delay the Committee for long, because there is only one specific point to which I wish to address my remarks.
    The purpose of the new Clause is to make certain that this matter is considered again five years from now, by which time there will have been one, if not more than one, General Election. I believe that this is the crux of the issue, because we know that the Bill, which was introduced as a Private Member's Bill at the beginning of this Parliament, was brought in with the support of the Government. But the fact remains that the Government as a party, electioneering during the General Election, did not make the abolition of capital punishment a point of their policy or election programme. Nor, for that matter, did the Liberal Party.
    It has, therefore, come as a real shock to many people, who may be quite wrong in their judgment, but who are, nevertheless, very disturbed, that so soon after taking office the Government have given time to a Private Member's Bill on this issue of which the electorate had no fair and just warning. This being the case, it would be an act of common honesty and courage on the part of the Government if they were to accept the Clause, in the knowledge that all three parties would be compelled to confront the electorate at the next General Election with the issue of capital punishment as a live issue, and we should have to declare our position unequivocally before the voters. That is not an unreasonable request for the electorate to make.
    It is for that reason that I believe that this is such an important Clause. I hope that instead of the prejudiced attitude which we have seen so often throughout the long series of debates in Committee, from both absolute abolitionists and absolute retentionists, we may for once see a meeting of the ways, so that common sense in this matter will prevail. Not only would that ease the minds of the general
    564
    public; not only would it fulfil the demands of the Police Federation and others; it would show a new honesty in our political approach which would be refreshing—but an honesty which the country is entitled to receive.
    Mr. Berkeley: I had not intended to speak, but I was the victim of such an intemperate assault a few moments ago that I feel obliged to say a few words. First, I want to make it quite clear that I have spent some time in the Chamber this morning. I have heard a number of speeches—none of them more deplorable than that of my hon. Friend the Member for Southend, East (Sir S. McAdden).
    It was a deplorable speech for one reason, if for no other. He assumed that I had come here with my mind made up in order to bulldoze the Committee. In fact, I came here undecided. In many ways I found the terms of the new Clause appealing and—although my hon. Friend may not have noticed it—I have spent some time listening to the arguments and genuinely trying to assess what should be the correct attitude of somebody who is an abolitionist, as I am.
    Having heard speeches from both sides of the Committee I recognise that I am pulled in both directions. I have decided to support the Clause, because although I believe that the case for abolition is an overwhelming one and that the next five years will show that there has been no perceptible increase in the murder rate, I also believe that Parliament should have an opportunity of considering, in five years' time, what has been the effect of this Measure.
    I would tell my hon. Friend the Member for Southend, East that before he makes speeches which are more suitable for Hyde Park he should try to ascertain in advance what are the views of those whom he chooses to attack.
    Sir S. McAdden: I would point out that what I attempted to do in my speech was not to accuse my hon. Friend of attempting to bulldoze the Bill through. I said that he was a sponsor of the Bill, and that as a sponsor he should be here. If he objects to that, and regards it as intemperate, I am sorry. He will learn as he grows up.
    Question put, That the Clause be read a Second time:—

    Division No. 134.]

    AYES

    [12.24 p.m.

    Alison, Michael (Barkston Ash)

    Galbraith, Hn. T. G. D.

    Nicholls, Sir Harmar

    Allan, Robert (Paddington, S.)

    Gammans, Lady

    Noble, Rt. Hn. Michael

    Amery, Rt. Hn. Julian

    Gibson-Watt, David

    Nugent, Rt. Hn. Sir Richard

    Anstruther-Gray, Rt. Hn. Sir W.

    Gilmour, Sir John (East Fife)

    Orr, Capt. L. P. S.

    Astor, John

    Glover, Sir Douglas

    Orr-Ewing, Sir lan

    Awdry, Daniel

    Godber, Rt. Hn. J. B.

    Osborn, John (Hallam)

    Baker, W. H. K.

    Goodhew, Victor

    Page, John (Harrow, W.)

    Batsford, Brian

    Gower, Raymond

    Pearson, Sir Frank (Clitheroe)

    Bennett, Sir Frederic (Torquay)

    Grant, Anthony

    Peyton, John

    Bennett, Dr. Reginald (Gos & Fhm)

    Griffiths, Eldon (Bury St. Edmunds)

    Pickthorn, Rt. Hn. Sir Kenneth

    Berkeley, Humphry

    Hall, John (Wycombe)

    Pike, Miss Mervyn

    Berry, Hn. Anthony

    Hamilton, Marquess of (Fermanagh)

    Pitt, Dame Edith

    Bessell, Peter

    Harris, Frederic (Croydon, N.W.)

    Price, David (Eastleigh)

    Biffen, John

    Harris, Reader (Heston)

    Prior, J. M. L.

    Biggs-Davison, John

    Harrison, Col. Sir Harwood (Eye)

    Pym, Francis

    Blaker, Peter

    Harvey, Sir Arthur Vere (Macclesf'd)

    Ramsden, Rt. Hn. James

    Bossom, Hn. Clive

    Harvey, John (Walthamstow, E.)

    Redmayne, Rt. Hn. Sir Martin

    Box, Donald

    Harvie Anderson, Miss

    Ridley, Hn. Nicholas

    Boyd-Carpenter, Rt. Hn. J.

    Hawkins, Paul

    Ridsdale, Julian

    Braine, Bernard

    Hay, John

    Robson Brown, Sir William

    Brawis, John

    Heath, Rt. Hn. Edward

    Scott-Hopkins, James

    Brinton, Sir Tatton

    Hendry, Forbes

    Sharples, Richard

    Bromley-Davenport.Lt.-Col.SirWalter

    Hiley, Joseph

    Shepherd, William

    Brooke, Rt. Hn. Henry

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

    Sinclair, Sir George

    Brown, Sir Edward (Bath)

    Hirst, Geoffrey

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

    Bruce-Gardyne, J.

    Hogg, Rt. Hn. Quintin

    Smyth, Rt. Hn. Brig. Sir John

    Buchanan-Smith, Alick

    Hopkins, Alan

    Spearman, sir Alexander

    Buck, Antony

    Hordern, Peter

    Stainton, Keith

    Bullus, Sir Eric

    Hornby, Richard

    Stodart, Anthony

    Buxton, Ronald

    Hutchison, Michael Clark

    Stoddart-Scott, Col. Sir Maloolm

    Campbell, Gordon

    Irvine, Bryant Godman (Rye)

    Studholme, Sir Henry

    Carlisle, Mark

    Jennings, J. C.

    Summers, Sir Spencer

    Chichester-Clark, R.

    Johnson Smith, G. (East Grinstead)

    Taylor, Sir Charles (Eastbourne)

    Clark, Henry (Antrim, N.)

    Jopling, Michael

    Taylor, Edward M. (G'gow,Cathcart)

    Clark, William (Nottingham, S.)

    Kaberry, Sir Donald

    Taylor, Frank (Moss Side)

    Clarke, Brig. Terence (Portsmth, W.)

    Kershaw, Anthony

    Temple, John M.

    Cooke, Robert

    Kilfedder, James A.

    Thomas, Sir Leslie (Canterbury)

    Cooper, A. E.

    Kimball, Marcus

    Thompson, Sir Richard (Croydon,S.)

    Cooper-Key, Sir Neill

    Lagden, Godfrey

    Thomeycroft, Rt. Hn. Peter

    Corfield, F. V.

    Lancaster, Col. C. G.

    Tiley, Arthur (Bradford, W.)

    Costain, A. P.

    Legge-Bourke, Sir Harry

    Tilney, John (Wavertree)

    Courtney, Cdr. Anthony

    Lloyd, Rt. Hn. selwyn (Wirral)

    Turton, Rt. Hn. R. H.

    Crawley, Aidan

    Longden, Gilbert

    Tweedsmuir, Lady

    Cunningham, Sir Knox

    Loveys, Walter H.

    Vaughan-Morgan, Rt. Hn. Sir John

    Curran, Charles

    Lucas, Sir Jocelyn

    Walder, David (High Peak)

    Dalkeith, Earl of

    McAdden, Sir Stephen

    Walker, Peter (Worcester)

    Dance, James

    MacArthur, Ian

    Ward, Dame Irene

    Davies, Dr. Wyndham (Perry Barr)

    Mackenzie, Alasdair (Ross&Crom'ty)

    Weatherill, Bernard

    Dean, Paul

    McLaren, Martin

    Webster, David

    Digby, Simon Wingfield

    Maginnis, John E.

    Whitelaw, William

    Dodds-Parker, Douglas

    Marten, Neil

    Williams, Sir Rolf Dudley (Exeter)

    Douglas-Home, Rt. Hn. Sir Alec

    Mathew, Robert

    Wills, Sir Gerald (Bridgwater)

    Elliot, Capt. Walter (Carshalton)

    Maude, Angus

    Wilson, Geoffrey (Truro)

    Elliott, R. W. (N'c'tle-upon-Tyne,N.)

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

    Wolrige-Gordon, Patrick

    Eyre, Reginald

    Mis ampbell, Norman

    Woodhouse, Hn. Christopher

    Farr, John

    Mitchell, David

    Yates, William (The Wrekin)

    Fisher, Nigel

    Monro, Hector

    Fietcher-Cooke, Charles (Darwen)

    More, Jasper

    TELLERS FOR THE AYES:

    Foster, Sir John

    Morrison, Charles (Devizes)

    Sir David Renton and

    Faser, Ian (Plymouth, Sutton)

    Mott-Radclyffe, Sir Charles

    Mr. Ian Percival.

    NOES

    Albu, Austen

    Carmichael, Nell

    Edwards, Robert (Bilston)

    Allaun, Frank (Salford, E.)

    Castle, Rt. Hn. Barbara

    Evans, Albert (Islington, S.W.)

    Allen, Scholefield (Crewe)

    Crossman, Rt. Hn. R. H. S.

    Fietcher, Ted (Darlington)

    Armstrong, Ernest

    Cullen, Mrs. Alica

    Floud, Bernard

    Atkinson, Norman

    Darling, George

    Foot, Sir Dingle (Ipswich)

    Bacon, Miss Alice

    Davies, Harold (Leek)

    Foot, Michael (Ebbw Vale)

    Barnett, Joel

    Davies, Ifor (Gower)

    Freeson, Reginald

    Bence, Cyril

    de Freitas, Sir Geoffrey

    Galpern, Sir Myer

    Benn, Rt. Hn. Anthony Wedgwood

    Diamond, John

    Gourlay, Harry

    Blenkinsop, Arthur

    Dodds, Norman

    Gregory, Arnold

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

    Driberg, Tom

    Griffiths, David (Rother Valley)

    Bray, Dr. Jeremy

    Duffy, Dr. A. E. P.

    Grimond, Rt. Hn. J.

    Brown, R. W. (Shoreditch & Fbury)

    Dunn, James A.

    Hamilton, William (West Fife)

    The Committee divided: Ayes 176, Noes 128.

    Hamling, William (Woolwich, W.)

    Mackenzie, Gregor (Rutherglen)

    Silkin, John (Deptford)

    Hannan, William

    Mackie, George Y. (C'ness & S'land)

    Silkin, S. C. (Camberwell, Dulwich)

    Harper, Joseph

    Mackie, John (Enfield, E.)

    Skeffington, Arthur

    Hart, Mrs. Judith

    MacMillan, Malcolm

    Slater, Mrs. Harriet (Stoke, N.)

    Hazell, Bert

    Mahon, Simon (Bootle)

    Small, William

    Heffer, Eric S.

    Manuel, Archie

    Snow, Julian

    Henderson, Rt. Hn. Arthur

    Mapp, Charles

    Steel, David (Roxburgh)

    Herblson, Rt. Hn. Margaret

    Mikardo, Ian

    Stones, William

    Hobden, Dennis (Brighton, K'town)

    Milne, Edward (Blyth)

    Swingler, Stephen

    Houghton, Rt. Hn. Douglas

    Monslow, Walter

    Taverne, Dick

    Hoy, James

    Morris, John (Aberavon)

    Taylor, Bernard (Mansfield)

    Hughes, Emrys (S. Ayrshire)

    Mulley,Rt.Hn.Frederick(Sh<ob/>ldPk)

    Thomas, George (Cardiff, W.)

    Hunter, Adam (Dunfermline)

    O'Malley, Brian

    Thomas, lorwerth (Rhondda, W.)

    Hynd, H. (Accrington)

    Orme, Stanley

    Thornton, Ernest

    Hynd, John (Attercliffe)

    Owen, Will

    Thorpe, Jeremy

    Irvine, A. J. (Edge Hill)

    Pargiter, G. A.

    Tinn, James

    Irving, Sydney (Dartford)

    Parkin, B. T.

    Urwin, T. W.

    Jackson, Colin

    Peart, Rt. Hn. Fred

    White, Mrs. Eirene

    Jay, Rt. Hn. Douglas

    Popplewell, Ernest

    Whitlock, William

    Jenkins, Rt. Hn. Roy (Stechford)

    Pursey, Cmdr. Harry

    Willey, Rt. Hn. Frederick

    Johnson,James (K'ston-on-Hull, W.)

    Randall, Harry

    Williams, Albert (Abertillery)

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Rankin, John

    Williams, Mrs. Shirley (Hitchin)

    Jones, J. Idwal (Wrexham)

    Redhead, Edward

    Willis, George (Edinburgh,E.)

    Jones, T. W. (Merion th)

    Reynolds, G. W.

    Wilson, Rt. Hn. Harold (Huyton)

    Lawton, George

    Roberta, Albert (Normanton)

    Wilson, William (Coventry, S.)

    Lewis, Ron (Carlisle)

    Rogers, George (Kensington, N.)

    Woodburn, Rt. Hn. A.

    Lipton, Marcus

    Rowland, Christopher

    Zilliacus, K.

    Lubbock, Eric

    St. John-Stevas, Norman

    Mab on, Dr. J. Dickson

    Shinwell, Rt. Hn. E.

    TELLERS FOR THE NOES:

    McBride, Neil

    Shore, Peter (Stepney)

    Mr. Richard Crawshaw and

    MacColl, James

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Mr. Thomas Swain.

    Clause added to the Bill.

  Schedule.—(ENACTMENTS REPEALED.)
  Question proposed, That this Schedule be the Schedule to the Bill.
  Sir Rolf Dudley Williams: On a point of order, Dr. King. Are we not to talk about Clause 2?
  The Chairman: Clause 2 was taken earlier, apparently, in the absence of the hon. Gentleman.
  Sir Rolf Dudley Williams: I am sorry Dr. King. I am so tired.
  Mr. Percival: I should like to raise a point of principle on this Schedule while keeping in order and I invite your assistance, Dr. King, on this aspect of the matter—[Interruption.]
  The Chairman: Order. Will hon. Members leave the Chamber quietly.
  Mr. Percival: As I took my ticket at the Underground station to come here this morning the gentleman in the queue behind me asked for two tickets for the Tower. I am bound to say that I felt

  Division No. 135.]

  AYES

  [12.37 p.m.

  Allaun, Frank (Salford, E.)

  Benn, Rt. Hn. Anthony Wedgwood

  Carlisle, Mark

  Allen, Scholefield (Crewe)

  Berkeley, Humphry

  Carmichael, Neil

  Armstrong, Ernest

  Biffen, John

  Castle, Rt. Hn. Barbara

  Atkinson, Norman

  Blenkinsop, Arthur

  Craddock, George (Bradford, S.)

  Bacon, Miss Alice

  Bowden, Rt. Hn. H. W. (Lei cs S.W.)

  Cullen, Mrs. Alice

  Barnett, Joel

  Bray, Dr. Jeremy

  Darling, George

  Bence, Cyril

  Brown, R. W. (Sho reditch & Fbury)

  Davies, Harold (Leek)

  inclined to change places with him even though he was going towards the dungeons. The reason for that feeling was the realisation that, after a mere four hours of sleep, I must now endeavour to make a contribution on the technical subject of this Schedule. Having been fortunate in catching your eye, Dr. King, I must now endeavour to keep in order to ensure that I do not end up in the Tower.
  It has been said that even Schedules have principles and it is to the principle of this Bill that I wish to invite attention. I ask that someone should look at the Schedule again to make sure that the contents, the enactments repealed, are right. I invite someone—I do not know to whom to address my question, whether it should be to the Home Office or not—to look at the Schedule again between now and the Report stage to make sure that what is set out in it is necessary and accurate.
  Question put, That this Schedule be the Schedule to the Bill:—
  The Committee divided: Ayes 128, Noes 117.

  Davies, Ifor (Gower)

  Irving, Sydney (Dartford)

  Rankin, John

  de Frei tas, Sir Geoffrey

  Jackson, Colin

  Redhead, Edward

  Dodds, Norman

  Jay, Rt. Hn. Douglas

  Reynolds, G. W.

  Driberg, Tom

  Jenkins, Rt. Hn. Roy (Stechford)

  Rogers, George (Kensington, N.)

  Duffy, Dr. A. E. P.

  Johnson Smlth, G. (East Grinstead)

  St. John-Stevas, Norman

  Dunn, James A.

  Johnston, Russell (Inverness)

  Shinwell, Rt. Hn. E.

  Edwards, Robert (Bilston)

  Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

  Shore, Peter (Stepney)

  Evans, Albert (Islington, S.W.)

  Jones, J. Idwal (Wrexham)

  Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

  Fletcher, Ted (Darlington)

  Jones, T. W. (Merloneth)

  Silkin, John (Deptford)

  Floud, Bernard

  Kirk, Peter

  Silkin, S. C. (Camberwell, Dulwich)

  Foot, Sir Dingle (Ipswich)

  Lawson, George

  Skeffington, Arthur

  Foot, Michael (Ebbw Vale)

  Lewis, Ron (Carlisle)

  Slater, Mrs. Harriet (Stoke, N.)

  Foster, Sir John

  Lipton, Marcus

  Small, William

  Freeson, Reginald

  Lubbock, Eric

  Steel, David (Roxburgh)

  Galpern, Sir Myer

  Mabon, Dr. J. Dickson

  Stones, William

  Garrow, A.

  McBridge, Neil

  Swain, Thomas

  Gourlay, Harry

  Mackenzie, Gregor (Rutherglen)

  Swingler, Stephen

  Gregory, Arnold

  Mackie, John (Enfield, E.)

  Taverne, Dick

  Griffiths, David (Rother Valley)

  MacMillan, Malcolm

  Taylor, Bernard (Mansfield)

  Grimond, Rt. Hn. J.

  Mahon, Simon (Bootle)

  Thomas, George (Cardl ff, W.)

  Hamilton, William (West Fife)

  Manuel, Archie

  Thomas, lorwerth (Rhondda, W.)

  Hamling, William (Woolwich, W.)

  Mapp, Charles

  Thornton, Ernest

  Hannan, William

  Mikardo, lan

  Tinn, James

  Harper, Joseph

  Milne, Edward (Blyth)

  Urwin, T. W.

  Hart, Mrs. Judith

  Miscampbell, Norman

  White, Mrs. Eirene

  Hazell, Bert

  Monslow, Walter

  Whitlock, William

  Heffer, Eric S.

  Mulley, Rt.Hn. Frederick(SheffieldPk)

  Willey, Rt. Hn. Frederick

  Henderson, Rt. Hn. Arthur

  O'Malley, Brian

  Williams, Albert (Abertillery)

  Herbison, Rt. Hn. Margaret

  Oswald, Thomas

  Williams, Mrs. Shirley (Hitchin)

  Hobden, Dennis (Brighton, K'town.)

  Owen, Will

  Willis, George (Edinburgh, E.)

  Houghton, Rt. Hn. Douglas

  Pargiter, G. A.

  Wilson, William (Coventry, S.)

  Hoy, James

  Parkin, B. T.

  Woodburn, Rt. Hn. A.

  Hughes, Emrys (S. Ayrshire)

  Peart, Rt. Hn. Fred

  Zilliacus, K.

  Hunter, Adam (Dunfermline)

  Pentland, Norman

  Hynd, H. (Accrington)

  Popplewell, Ernest

  TELLERS FOR THE AYES:

  Hynd, John (Attercliffe)

  Pursey, Cmdr. Harry

  Mr. Richard Crawshaw and

  Irvine, A. J. (Edge Hill)

  Randall, Harry

  Mr. Stanley Orme.

  NOES

  Anstruther-Gray, Rt. Hn. Sir W.

  Goodhew, Victor

  Nicholls, Sir Harmar

  Batsford, Brian

  Gower, Raymond

  Noble, Rt. Hn. Michael

  Bennett, Sir Frederic (Torquay)

  Grant, Anthony

  Orr-Ewing, Sir lan

  Bennett, Dr. Reginald (Gos & Fhm)

  Griffiths, Eldon (Bury St. Edmunds)

  Osborn, John (Hallam)

  Berry, Hn. Anthony

  Hamilton, Marquess of (Fermanagh)

  Pickthorn, Rt. Hn. Sir Kenneth

  Bessell, Peter

  Harris, Frederic (Croydon, N.W.)

  Pitt, Dame Edith

  Blaker, Peter

  Harris, Reader (Heston)

  Pym, Francis

  Bossom, Hn. Clive

  Harvey, Sir Arthur Vere (Macclesf 'd)

  Redmayne, Rt. Hn. Sir Martin

  Boyd-Carpenter, Rt. Hn. J.

  Harvey, John (Walthamstow, E.)

  Robson Brown, Sir William

  Braine, Bernard

  Harvie Anderson, Miss

  Scott-Hopkine, James

  Brinton, Sir Tatton

  Hawkins, Paul

  Sharples, Richard

  Bromley-Davenport.Lt.-Col.SirWalter

  Hay, John

  Sinclair, Sir George

  Brown, Sir Edward (Bath)

  Heath, Rt. Hn. Edward

  Smith, Dudley (Br'ntf'd & Ch iswick)

  Bryan, Paul

  Hendry, Forbes

  Smyth, Rt. Hn. Brig. Sir John

  Buck, Antony

  Hiley, Joseph

  Stodart, Anthony

  Buxton, Ronald

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

  Stoddart-Scott, Col. Sir Malcolm

  Chichester-Clark, R.

  Hirst, Geoffrey

  Studholme, Sir Henry

  Clark, William (Nottingham, S.)

  Hopkins, Alan

  Summers, Sir Spencer

  Clarke, Brig. Terence (Portamth, W.)

  Irvine, Bryant Godman (Rye)

  Taylor, Sir Charles (Eastbourne)

  Cooke, Robert

  Jennings, J. C.

  Taylor, Edward M. (G'gow, Cathcart)

  Cooper, A. E.

  Kaberry, Sir Donald

  Taylor, Frank (Moss Side)

  Costain, A. P.

  Kershaw, Anthony

  Temple, John M.

  Courtney, Cdr. Anthony

  Kilfedder, James A.

  Thompson, Sir Richard (Croydon, S.)

  Cunningham, Sir Knox

  Kimball, Marcus

  Thorneycroft, Rt. Hn. Peter

  Curran, Charles

  Lagden, Godfrey

  Turton, Rt. Hn. R, H.

  Dance, James

  Lancaster, Col. C. G.

  Tweedsmuir, Lady

  Davies, Dr. Wyndham (Perry Barr)

  Legge-Bourke, Sir Harry

  Vaughan-Morgan, Rt. Hn. Sir John

  Dean, Paul

  Longden, Gilbert

  Walker, Peter (Worcester)

  Deedes, Rt. Hn. W. F.

  Lucas, Sir Jocelyn

  Ward, Dame Irene

  Dlgby, Simon Wingfield

  McAdden, Sir Stephen

  Weatherill, Bernard

  Dodds-Parker, Douglas

  MacArthur, Ian

  Webster, David

  Elliot, Capt. Walter (Carshalton)

  Mackenzie, Alasdair (Ross&Crom'ty)

  Whitelaw, William

  Elliott, R. W.(N'c'tle-upon-Tyne,N.)

  McNair-Wilson, Patrick

  Wills, Sir Gerald (Bridgwater)

  Farr, John

  Maginn ls, John E.

  Wllson, Geoffrey (Truro)

  Fell, Anthony

  Marten, Neil

  Wolrige-Gordon, Patrick

  Fraser, Ian (Plymouth, Sutton)

  Maude, Angus

  Wood, Rt. Hn. Richard

  Gibson-Watt, David

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

  Younger, Hn. George

  Gilmour, Sir John (East Fife)

  Mitchell, David

  Glover, Sir Douglas

  Monro, Hector

  TELLERS FOR THE NOES:

  Godber, Rt. Hn. J. B.

  Mott-Radclyffe, Sir Charles

  Mr. Ian Percival and

  Sir Rolf Dudley Williams.

  Schedule agreed to.
  The Chairman: The Question is, That do report the Bill, as amended—
  Sir Harmar Nicholls: On a point of order, Dr. King. Is it possible to save you the distasteful task of reporting the Bill to the House? Is it possible for the Committee to say that you should not report it? If that is possible, I should like to say, "No" to your Question.
  The Chairman: The hon. Member for Peterborough (Sir Harmar Nicholls) was interrupting me in the process of putting the Question—
  Sir K. Pickthorn: On a point of order. I do not know whether you are in a deprecatory mood this morning, Dr. King, but I believe that it is not out of order to discuss this Question, although I believe that the Chair sometimes deprecates such discussion. I should dislike to be deprecated by the Chair, but—
  The Chairman: I will interrupt the right hon. Member for Carlton (Sir K. Pickthorn) to assure him that the Chair is in a very deprecatory mood. The right hon. Gentleman was putting an observation to the Chair; I am answering it at the moment. The position is that the right hon. Gentleman is quite right. It is possible to debate this Question, but if he turns up Erskine May he will find that it rules that this Motion is now taken formally and that the Chair is in the habit of deprecating any debate on it. As I said, I therefore deprecate any attempt to debate it.
  Sir K. Pickthorn: With respect, I do not believe that you have the words quite exact, Dr. King, but I do not rest myself on that. Of course, you are correct in effect, but I want to submit to you that surely what we are now doing is something which has never been done before. The House has never reported a Bill in the condition in which this Bill is and after the procedure which this Bill has been through. It has never happened before—a Bill that is neither Private Member's nor Government's, but both; no responsible sponsor present nor a Minister present on a Bill which had ceased to be a Bill but had been made into a nonsense.
  This is the first time that there has been a Private Member's Bill debated and the
  572
  Committee stage taken at a time when it is known that Government supporters will all be present, Whips on. [HON. MEMBERS: "No."] I will listen to the word "No" and I hope to have nothing else to listen to from any hon. Gentleman who voted as against the desire of those who manage his party.
  12.45 p.m.
  Mr. Thomas Swain: If my memory serves me right, the Government won the election with a majority of four out of 640 hon. Members. Only 128 went through the Lobby of the Government supporters this morning. How can the right hon. Gentleman claim that all the Government supporters are here on a Wednesday morning?
  Sir K. Pickthorn: I deprecate that argument. I do not want to say any more—
  Mr. Eric Lubbock: On a point of order. Is the right hon. Member for Carlton (Sir K. Pickthorn) speaking to the Question that you report the Bill, or is he still on the point of order?
  The Chairman: The hon. Member for Orpington (Mr. Lubbock) asked me what the position was. I was putting the Question, That I do report the Bill, as amended, to the House. I pointed out that I deprecate any discussion on this. In spite of that, the right hon. Member for Carlton is discussing it. This is the factual position.
  Sir K. Pickthorn: I have on all earlier occasions—
  Dr. Jeremy Bray: On a point of order, Dr. King. Did you, in fact, complete the process of putting the Question to the Committee, or were you interrupted in the course of so doing?
  The Chairman: My recollection is clear that I was putting the Question to the Committee and that the hon. Member for Carlton (Sir K. Pickthorn) is in the process of doing something which the Chair deprecates.
  Sir K. Pickthorn: I am very sorry to do something which the Chair deprecates. I have always avoided doing so before. This is an unique occasion. I wish to make quite clear that never before has a Committee reported progress on a Bill in the conditions and after the procedure which we have now arrived at.
  The Chairman: The Question is, That I do report the Bill—
  Sir Rolf Dudley Williams: I am sorry—
  The Parliamentary Secretary to the Treasury (Mr. Edward Short)The Parliamentary Secretary to the Treasury (Mr. Edward Short) rose in his

  Division No. 136.]

  AYES

  [12.51 p.m.

  Albu Austen

  Hamling, William (Woolwich, W.)

  O'Malley, Brian

  Alison, Michael (Barkston Ash)

  Hannan, William

  Oswald, Thomas

  Allaun, Frank (Salford, E.)

  Harper, Joseph

  Owen, Will

  Allen, Scholefield (Crewe)

  Hart, Mrs. Judith

  Pargiter, G. A.

  Armstrong, Ernest

  Hazell, Bert

  Parkin, B. T.

  Atkinson, Norman

  Heffer, Eric S.

  Peart, Rt. Hn. Fred

  Bacon, Miss Alice

  Henderson, Rt. Hn. Arthur

  Pentland, Norman

  Barnett, Joel

  Herbison, Rt. Hn. Margaret

  Popplewell, Ernest

  Bence, Cyril

  Hobden, Dennis (Brighton, K'town.)

  Probert, Arthur

  Benn, Rt. Hn. Anthony Wedgwood

  Houghton, Rt. Hn. Douglas

  Pursey, Cmdr. Harry

  Berkeley, Humphry

  Hoy, James

  Randall, Harry

  Blenkinsop, Arthur

  Hughes, Emrys (S. Ayrshire)

  Rankin, John

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

  Hunter, Adam (Dunfermline)

  Reynolds, G. W.

  Bray, Dr. Jeremy

  Hynd, H. (Accrington)

  Rogers, George (Kensington, N.)

  Brown, R. W. (Shoreditch & Fbury)

  Hynd, John (Attercliffe)

  St. John-Stevas, Norman

  Carlisle, Mark

  Irvine, A. J. (Edge Hill)

  Shinwell, Rt. Hn. E.

  Carmichael, Neil

  Irving, Sydney (Dartford)

  Shore, Peter (Stepney)

  Castle, Rt. Hn. Barbara

  Jackson, Colin

  Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

  Craddock, George (Bradford, S.)

  Jay, Rt. Hn. Douglas

  Silkin, John (Deptford)

  Cullen, Mrs. Alice

  Jenkins, Rt. Hn. Roy (Stechford)

  Silkin, S. C. (Camberwell, Dulwich)

  Darling, George

  Johnston, Russell (Inverness)

  Skeffington, Arthur

  Davies, Harold (Leek)

  Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

  Slater, Mrs. Harriet (Stoke, N.)

  Davies, Ifor (Gower)

  Jones, J. Idwal (Wrexham)

  Steel, David (Roxburgh)

  de Freitas, Sir Geoffrey

  Jopling, Michael

  Swain, Thomas

  Diamond, John

  Kenyon, Clifford

  Swingler, Stephen

  Dodds, Norman

  Kirk, Peter

  Taverne, Dick

  Driberg, Tom

  Lawson, George

  Taylor, Bernard (Mansfield)

  Duffy, Dr. A. E. P.

  Lewis, Ron (Carlisle)

  Thomas, George (Cardiff, W.)

  Dunn, James A.

  Lipton, Marcus

  Thornton, Ernest

  Edwards, Robert (Bilston)

  Lubbock, Eric

  Tinn, James

  Evans, Albert (Islington, S.W.)

  Mabon, Dr. J. Dickson

  Urwin, T. W.

  Fletcher, Ted (Darlington)

  McBride, Neil

  White, Mrs. Eirene

  Floud, Bernard

  Mackenzie, Gregor (Rutherglen)

  Whitlock, William

  Foot, Sir Dingle (Ipswich)

  Mackie, John (Enfield, E.)

  Willey, Rt. Hn. Frederick

  Foot, Michael (Ebbw Vale)

  MacMillan, Malcolm

  Williams, Albert (Abertillery)

  Freeson, Reginald

  Mahon, Simon (Bootle)

  Williams, Mrs. Shirley (Htchin)

  Galpern, Sir Myer

  Mapp, Charles

  Willis, George (Edinburgh, E.)

  Garrow, A.

  Milne, Edward (Blyth)

  Wilson, William (Coventry, S.)

  Gourlay, Harry

  Miscampbell, Norman

  Woodburn, Rt. Hn. A.

  Gregory, Arnold

  Molloy, William

  Zilliacus, K,

  Grimond, Rt. Hn. J.

  Monslow, Walter

  Hamilton, William (West Fife)

  Mulley,Rt.Hn.Frederick(SheffieldPk)

  TELLERS FOR THE AYES.

  Mr. Richard Crawshaw and

  Mr. Stanley Orme.

  NOES

  Allan, Robert (Paddington, S.)

  Corfield, F. V.

  Harvie Anderson, Miss

  Anstruther-Gray, Rt. Hn. Sir W.

  Costain, A. P.

  Hawkins, Paul

  Barlow, Sir John

  Courtney, Cdr. Anthony

  Hay, John

  Bennett, Sir Frederic (Torquay)

  Cunningham, Sir Knox

  Hendry, Forbes

  Bennett, Dr. Reginald (Gos & Fhm)

  Curran, Charles

  Hiley, Joseph

  Berry, Hn. Anthony

  Davies, Dr. Wyndham (Perry Barr)

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

  Bessell, Peter

  Dean, Paul

  Hordern, Peter

  Biggs-Davison, John

  Digby, Simon Wingfield

  Hutchison, Michael Clark

  Blaker, Peter

  Elliot, Capt. Walter (Carshalton)

  Jennings, J. C.

  Bossom, Hn. Clive

  Farr, John

  Kaberry, Sir Donald

  Boyd-Carpenter, Rt. Hn. J.

  Fell, Anthony

  Kershaw, Anthony

  Braine, Bernard

  Foster, Sir John

  Kilfedder, James A.

  Brlnton, Sir Tatton

  Gibson-Watt, David

  Kimball, Marcus

  Bromley-Davenport, Lt.-Col.Sir Walter

  Gilmour, Sir John (East Fife)

  Lagden, Godfrey

  Brooke, Rt. Hn. Henry

  Glover, Sir Douglas

  Legge-Bourke, Sir Harry

  Brown, Sir Edward (Bath)

  Godber, Rt. Hn. J. B.

  Longden, Gilbert

  Bruce-Gardyne, J.

  Goodhew, Victor

  Loveys, Walter H.

  Bryan, Paul

  Gower, Raymond

  McAdden, Sir Stephen

  Buck, Antony

  Griffiths, Eldon (Bury St. Edmunds)

  Mackenzie, Alasdair (Ross&Crom'ty)

  Chichester-Clark, R.

  Hall, John (Wycombe)

  McLaren, Martin

  Clark, William (Nottingham, S.)

  Harris, Frederic (Croydon, N.W.)

  McNair-Wilson, Patrick

  Clarke, Brig. Terence (Portsmth, W.)

  Harris, Reader (Heston)

  Maginnis, John E.

  Cooke, Robert

  Harrison, Brian (Maldon)

  Marten, Neil

  Cooper. A. E.

  Harvey, Sir Arthur Vere (Macclesf'd)

  Maude, Angus

  place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—
  The Committee divided: Ayes 124, Noes 107.

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

  Stoddart-Scott, Col. Sir Malcolm

  Walder, David (High Peak)

  Mitchell, David

  Studholme, Sir Spencer

  Ward, Dame Irene

  Monro, Hector

  Summers, Sir Spencer

  Weatherill, Bernard

  Nicholls, Sir Harmar

  Taylor, Sir Charles (Eastbourne)

  Webster, David

  Noble, Rt. Hn. Michael

  Taylor, Edward M. (G'gow,Cathcart)

  Wills, Sir Gerald (Bridgwater)

  Nugent, Rt. Hn. Sir Richard

  Temple, John M.

  Wilson, Geoffrey (Truro)

  Orr-Ewing, Sir Ian

  Thatcher, Mrs. Margaret

  Wolrige-Gordon, Patrick

  Osborn, John (Hallam)

  Thompson, Sir Richard (Croydon,S.)

  Woodhouse, Hon. Christopher

  Pickthorn, Rt. Hn. Sir Kenneth

  Thorneycroft, Rt. Hn. Peter

  Yates, William (The Wrekin)

  Pitt, Dame Edith

  Tiley, Arthur (Bradford, W.)

  Scott-Hopkins, James

  Tilney, John (Wavertree)

  TELLERS FOR THE NOES:

  Smyth, Rt. Hn. Brig. Sir John

  Tweedsmuir, Lady

  Mr. Ian Percival and

  Stodart, Anthony

  van Straubenzee, W. R.

  Sir Rolf Dudley Williams.

  Question put accordingly, That the Chairman do report the Bill, as amended, to the House:—

  Division No. 137.]

  AYES

  [12.59 p.m.

  Albu, Austen

  Hamling, William (Woolwich, W.)

  Oswald, Thomas

  Alison, Michael (Barkston Ash)

  Hannan, William

  Owen, Will

  Allaun, Frank (Salford, E.)

  Harper, Joseph

  Pargiter, G. A.

  Allen, Scholefield (Crewe)

  Hart, Mrs. Judith

  Parkin, B. T.

  Armstrong, Ernest

  Hazell, Bert

  Peart, Rt. Hn. Fred

  Atkinson, Norman

  Heffer, Eric S.

  Pentland, Norman

  Bacon, Miss Alice

  Henderson, Rt. Hn. Arthur

  Popplewell, Ernest

  Barnett, Joel

  Herbison, Rt. Hn. Margaret

  Probert, Arthur

  Benee, Cyril

  Hobden, Dennis (Brighton, K'town.)

  Pursey, Cmdr. Harry

  Benn, Rt. Hn. Anthony Wedgwood

  Houghton, Rt. Hn. Douglas

  Randall, Harry

  Berkeley, Humphry

  Hoy, James

  Rankin, John

  Biffen, John

  Hughes, Emrys (S. Ayrshire)

  Reynolds, G. W.

  Binns, John

  Hunter, Adam (Dunfermline)

  Rogers, George (Kensington, N.)

  Blenkl nsop, Arthur

  Hynd, H. (Accrington)

  St. John-Stevas, Norman

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

  Hynd, John (Attercliffe)

  Shinwell, Rt. Hn. E.

  Bray, Dr. Jeremy

  Irvine, A. J. (Edge Hill)

  Shore, Peter (Stepney)

  Brown, R. W. (Shoreditch & Fbury)

  Irving, Sydney (Dartford)

  Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

  Carlisle, Mark

  Jackson, Colin

  Silkin, John (Deptford)

  Carmichael, Neil

  Jay, Rt. Hn. Douglas

  Silkin, S. C. (Camberwell, Dulwich)

  Castle, Rt. Hn. Barbara

  Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

  Skeffington, Arthur

  Craddock, George (Bradford, S.)

  Jenkins, Rt. Hn. Roy (Stechford)

  Slater, Mrs. Harriet (Stoke, N.)

  Cullen, Mrs. Alice

  Johnston, Russell (Inverness)

  Small, William

  Dalkeith, Ear of

  Jones.Rt.Hn.Sir Elwyn(W.Ham,S.)

  Steel, David (Roxburgh)

  Darling, George

  Jones, J. Idwal (Wrexham)

  Swain, Thomas

  Davies, Harold (Leek)

  Jopling, Michael

  Swingler, Stephen

  Davies, Ifor (Gower)

  Kenyon, Clifford

  Taverne, Dick

  de Freitas, Sir Geoffrey

  Kirk, Peter

  Taylor, Bernard (Mansfield)

  Diamond, John

  Lawson, George

  Thomas, George (Cardiff, W.)

  Dodds, Norman

  Lewis, Ron (Carlisle)

  Thomas, lorwerth (Rhondda, W.)

  Driberg, Tom

  Lipton, Marcus

  Thornton, Ernest

  Duffy, Dr. A. E. P.

  Loveys, Walter H.

  Thorpe, Jeremy

  Dunn, James A.

  Lubbock, Eric

  Tinn, James

  Edwards, Robert (Bilston)

  Mabon, Dr. J. Dickson

  Urwin, T. W.

  Evans, Albert (Islington, S.W.)

  McBride, Neil

  Walder, David (High Peak)

  Fletcher, Sir Eric (Islington, E.)

  McKay, Mrs. Margaret

  White, Mrs. Eirene

  Fletcher, Ted (Darlington)

  Mackenzie, Gregor (Rutherglen)

  Whitlock, William

  Floud, Bernard

  Mackie, George Y. (C'ness & S'land)

  Willey, Rt. Hn. Frederick

  Foley, Maurice

  Mackie, John (Enfield, E.)

  Williams, Albert (Abertillery)

  Foot, Sir Dingle (Ipswich)

  MacMillan, Malcolm

  Williams, Mrs. Shirley (Hitchin)

  Foot, Michael (Ebbw Vale)

  Mahon, Simon (Bootle)

  Willis, George (Edinburgh,E.)

  Foster, Sir John

  Manuel, Archie

  Wilson, William (Coventry, S.)

  Freeson, Reginald

  Mapp, Charles

  Woodburn, Rt. Hn. A.

  Galpern, Sir Myer

  Milne, Edward (Blyth)

  Zilliacus, K.

  Garrow, A.

  Miscampbell, Norman

  Gourlay, Harry

  Molloy, William

  TELLERS FOR THE AYES:

  Gregory, Arnold

  Monslow, Walter

  Mr. Richard Crawshaw and

  Grimond, Rt. Hn. J.

  Mulley,Rt.Hn.Frederick(SheffieldPk)

  Mr. Stanley Orme.

  Hamilton, William (West Fife)

  O'Malley, Brian

  NOES

  Allan, Robert (Paddington, S.)

  Boyd-Carpenter, Rt. Hn. J.

  Cooke, Robert

  Barlow, Sir John

  Braine, Bernard

  Cordle, John

  Bennett, Sir Frederic (Torquay)

  Brewis, John

  Costain, A. P.

  Bennett, Dr. Reginald (Gos & Fhm)

  Brinton, Sir Tatton

  Courtney, Cdr. Anthony

  Berry, Hn. Anthony

  Bromley-Davenport.Lt.-Col.SirWalter

  Cunningham, Sir Knox

  Bessell, Peter

  Brown, Sir Edward (Bath)

  Curran, Charles

  Blaker, Peter

  Buck, Antony

  Davies, Dr. Wyndham (Perry Barr)

  Bossom, Hn. Clive

  Buxton, Ronald

  Dean, Paul

  Box, Donald

  Clark, William (Nottingham, S.)

  Digby, Simon Wingfield

  The Committee divided: Ayes 139, Noes 90.

  Elliot, Capt. Walter (Carshalton)

  Longden, Gilbert

  Stodart, Anthony

  Farr, John

  McAdden, Sir Stephen

  Stoddart-Scott, Col. Sir Malcolm

  Fell, Anthony

  Mackenzie, Alasdair (Ross&Crom'ty)

  Studholme, Sir Henry

  Gammans, Lady

  McNair-Wilson, Patrick

  Summers, Sir Spencer

  Gibson-Watt, David

  Maginnis, John E.

  Taylor, Sir Charles (Eastbourne)

  Gilmour, Sir John (East Fife)

  Maude, Angus

  Taylor, Edward M. (G'gow,Cathcart)

  Glover, Sir Douglas

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

  Temple, John M.

  Godber, Rt. Hn. J. B.

  Mitchell, David

  Thatcher, Mrs. Margaret

  Goodhew, Victor

  Monro, Hector

  Thompson, Sir Richard (Croydon,S.)

  Gower, Raymond

  Nicholls, Sir Harmar

  Thorneycroft, Rt. Hn. Peter

  Harris, Frederic (Croydon, N.W.)

  Noble, Rt. Hn. Michael

  Tweedsmuir, Lady

  Harris, Reader (Heston)

  Orr-Ewing, Sir lan

  van Straubenzee, W. R.

  Harvey, Sir Arthur Vere (Macclesf'd)

  Osborn, John (Hallam)

  Ward, Dame Irene

  Harvie Anderson, Miss

  Osborne, Sir Cyril (Louth)

  Weatherill, Bernard

  Hendry, For bes

  Page, John (Harrow, W.)

  Webster, David

  Hiley, Joseph

  Pearson, Sir Frank (Clitheroe)

  Wills, Sir Gerald (Bridgwater)

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

  Pickthorn, Rt. Hn. Sir Kenneth

  Wilson, Geoffrey (Truro)

  Jennings, J. C.

  Ridley, Hn. Nicholas

  Wolrige-Gordon, Patrick

  Kilfedder, James A.

  Robson Brown, Sir William

  Yates, William (The Wrekin)

  Kimball, Marcus

  Scott-Hopkins, James

  Lagden, Godfrey

  Sinclair, Sir George

  TELLERS FOR THE NOES:

  Legge-Bourke, Sir Harry

  Smyth, Rt. Hn. Brig. Sir John

  Mr. Ian Percival and

  Sir Rolf Dudley Williams

  Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 154.]

  Sitting suspended.

  Sitting resumed at 2.30 p.m.

PRIVATE BUSINESS

  ROCHDALE CANAL BILL [Lords]
  (By Order)
  Second Reading deferred till Tuesday next.

  COATBRIDGE BURGH EXTENSION ORDER CONFIRMATION BILL
  Read the Third time and passed.
  WRITERS TO THE SIGNET WIDOWS' FUND ORDER CONFIRMATION
  Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to the Writers to the Signet Widows' Fund, presented by Mr. Ross (under Section 7 of the Act); and ordered to be considered upon Tuesday next and to be printed. [Bill 151.]
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    New Towns (Houses)
    Mr. William Hamiltonasked the Secretary of State for Scotland how many houses were completed in the new towns in 1964; how many were started; and what are the comparable figures for the first quarter of 1965.
    The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): In 1964, 2,609 houses were completed in the Scottish new towns and 3,435 were started. Figures for the first quarter of 1965 are 855 completions and 357 starts, and these compare with 696 completions and 783 starts in the first quarter of 1964.
    Mr. Hamilton: Do the Government intend substantially to increase the number of starts this year compared with last year, and are the new town development corporations pioneering in the development of industrialised building?
    Dr. Mabon: Last year Cumbernauld and East Kilbride completed more than 1,000 new houses and we hope that this
    580
    year that performance will be matched by Glenrothes. The new towns are certainly taking a strong lead in the use of industrialised house building techniques and I am hopeful that output in 1965 will be greater than in 1964.
    Mr. Noble: Would the hon. Gentleman confirm that the apparently somewhat disappointing number of starts this year does not in any way reflect the number of new projects going to the new towns?
    Dr. Mabon: That is right. The number of houses under construction at the end of March was 4,000 compared with 3,800 a year earlier.

    Sports Grounds and Clubs (Rates)
    Mr. Monroasked the Secretary of State for Scotland whether he will take steps to encourage local authorities to make a 50 per cent. reduction in rates upon sports grounds and buildings occupied by amateur sports clubs.
    Dr. Dickson Mabon: My right hon. Friend has no reason to think that there is any need for a general approach, but he hopes that local authorities will use their discretionary power to reduce or remit rates in appropriate cases.
    Mr. Monro: My Question asked the Secretary of State to encourage local authorities in this matter. Is the Under-Secretary aware that many amateur sports clubs—and I am thinking particularly of the Border rugby clubs—must pay over £200 a year in rates and that some encouragement given to them by the Scottish office might help clubs which are in dire need of financial assistance?
    Dr. Mabon: This is very much a local matter on which my right hon. Friend has not asked local authorities for a return. Very few complaints have been received since the power to reduce rates was given to local authorities in the Local Government (Financial Provisions) (Scotland) Act, 1962. While I am not suggesting that this applies in the instance which the hon. Gentleman cited, I think that if he reflects on the matter he will see that in some cases a number of sports clubs are reasonably well off, that not all of them have been willing to open their doors freely and that local authorities have no doubt taken that into account.

    Carlisle Road, Airdrie
    Mr. Dempseyasked the Secretary of State for Scotland if he will agree to hold consultations with Airdrie Town Council, with a view to approving their road widening scheme for that part of the Carlisle Road, which lies immediately south of the Old Car terminus, and which is substandard.
    Dr. Dickson Mabon: My right hon. Friend has recently approved the Council's proposals to provide a footpath along the western side of the Carlisle Road from South Biggar Road to Brownsburn Road and to widen the carriageway there. On 13th May the Council submitted a much larger scheme for 1968–69, and this will be considered.
    Mr. Dempsey: Would my hon. Friend give an assurance that the matter will be considered expeditiously since this is the main North-South road which is heavily congested with traffic and which is very much below the normal standard for roads of this sort?
    Dr. Mabon: I accept my hon. Friend's criticisms. The Council has put no cost on the present proposal and there is a possibility of a bridge having to be built at considerable cost over the River Calder. We would, therefore, like to consider the matter closely before making a statement.

    Police and the Public (Co-operation)
    Mr. Dempseyasked the Secretary of State for Scotland if, in view of the growing number of unsolved crimes, he will initiate a publicity campaign throughout Scotland with a view to enabling the police to obtain more effective cooperation from the general public.
    The Secretary of State for Scotland (Mr. William Ross): I am reviewing this matter urgently in consultation with my right hon. and learned Friend the Home Secretary.
    Mr. Dempsey: Is my right hon. Friend aware that his Answer will be of considerable interest to many people? Does he realise that the great problem today is that of winning the co-operation of the general public? Does he further realise that the activities of some smart
    582
    Alec lawyers—who from time to time try to demonstrate their abilities in the courts, often resulting in the public having to suffer—make no sensible contribution towards assisting the police and gaining the co-operation of the public? Will my right hon. Friend try to tackle the problem of crime in Scotland?
    Mr. Ross: I appreciate and share my hon. Friend's concern about the growing number of crimes, including unsolved crimes. The public suffer more from the criminal than from anyone else. When we are dealing with the co-operation of the public in respect of simple acts which could lead to the prevention of crime and the detection of criminals we are speaking about something which is of benefit to all concerned, particularly the public in general. I hope that we will have the support of my hon. Friend in anything that we are able to do in this sphere.
    Mr. MacArthur: Will the Secretary of State give more thought to the concern of the police and the need for the protection of the public by further considering the objections which have been made by police forces in Scotland to the terms of the Private Member's Bill which was introduced by his hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman)?
    Mr. Ross: That is an entirely different matter. The hon. Gentleman will be aware that I discussed this with the Police Federation, in delegation and at its annual meeting. We are dealing here mainly with the question of house breaking and theft. There have been great increases in the number of these crimes and I suggest that if we can do something along the lines suggested by my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) in respect of publicity as a means of obtaining cooperation we will be doing something worth while.
    Mr. Hiley: Would the Secretary of State take into account, even before the Murder (Abolition of Capital Punishment) Bill reaches the Statute Book, that the present Home Secretary is already granting reprieves indiscriminately and that the public should be immediately warned of the added dangers?

    Hydro-Electric Development
    Mr. Russell Johnstonasked the Secretary of State for Scotland whether he will now make a statement on the policy of the Government towards the extension of hydro-electric development in Scotland.
    Mr. Alasdair Mackenzieasked the Secretary of State for Scotland if he will now make a recommendation on the Fada Fionn hydro-electric scheme; and if he will publish the Report.
    Dr. Dickson Mabon: My right hon. Friend shares the anxiety of the hon. Gentlemen to have this matter settled, but he is not yet able to make a statement.
    Mr. Johnston: Is the Minister aware that that is a very unsatisfactory Answer? Does not his right hon. Friend remember the many times he fiercely criticised the former Administration for delaying tactics of this nature? Will he now tell me whether the basic problem is really technical, or is it by any chance financial?
    Dr. Mabon: If the hon. Gentleman considers the history of this matter he will see that during the short time we have been in office a great deal of work has had to be done to remedy the errors of the past. I hope that his will become apparent when a statement is made at a later date. To answer the hon. Gentleman's specific point, it is both.
    Mr. Mackenzie: As the inquiry into the Fada Fionn scheme was completed in March, 1964, is it not time that a decision was now taken? Will the hon. Gentleman bear in mind the fact that in the area a scheme will be coming to an end fairly soon, which will result in a great deal of labour becoming redundant? In view of the special considerations involved in this matter, will the hon. Gen-man apply urgency to the taking of a decision about this scheme?
    Dr. Mabon: I assure the hon. Gentleman that my right hon. Friend is very anxious about this matter and has been most concerned about it since he became Secretary of State. When we have considered the results of the inquiry to which the hon. Gentleman referred, I think that it will be seen that the report is lengthy and involved and that the question is not
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    easy to resolve. I assure the hon. Gentleman that urgency is very much in our minds on this issue.
    Mr. Emrys Hughes: Would not the financial problem, about which the Minister complained, be worse if we did not have the money, and is my hon. Friend aware that yesterday the Liberal Party voted to reduce the money available by £20 million?
    Dr. Mabon: It is perfectly true that sometimes our allies are not very reliable.

    Local Authority Housing (Subsidies)
    Mr. Galbraithasked the Secretary of State for Scotland what is the average subsidy both from Exchequer and rates per house per week paid in respect of local authority housing.
    Dr. Dickson Mabon: During 1963–64 the average weekly subsidies for each local authority house were 11s. 9d. from the Exchequer, including 2s. from Exchequer equalisation grant, and 8s. 9d. from local rates.
    Mr. Galbraith: Does the Under-Secretary of State think it a very satisfactory state of affairs when the Exchequer subsidy is 11s. 9d., the local rate subsidy is 8s. 9d., and the rent paid by the tenant is around 14s.? Is there not a waste of public money and ratepayers' money when the rent is so low, and will he ask his right hon. Friend to look into this situation?
    Dr. Mabon: The hon. Gentleman will be aware that this was a year when members of his own party were the stewards, so that if any strictures are to be passed they must be passed on them. I am sorry that the figures for 1964–65 are not available. Perhaps they would show, from the hon. Gentleman's point of view, a less disappointing position. It is certainly my right hon. Friend's intention to remind local authorities of their statutory obligations—these obligations, I might say, not having been changed by the party opposite when in power.
    Mr. G. Campbell: Within these figures is there not a considerable disparity between different areas? While many local authorities have responsible rent policies, is the Secretary of State urging certain others—mainly where there are Labour

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    Party majorities—to adopt policies that would reduce the rate subsidy? Is not this a further case where some of the right hon. Gentleman's allies are not very reliable?
    Dr. Mabon: I regret to say that the hon. Gentleman does not know the facts when he reflects on the nature of the majorities in the towns where rents are low and, consequently, the rate subsidy appears to be high. If he looks more closely at the rent returns for Scotland, lie will see that what he has just said is not true.
    Mr. Edward M. Taylor: Would not the Minister of State agree that the facts are quite clearly shown in the rating review, which is published annually? Would he indicate the steps he proposes to take against local authorities which refuse to take any action to bring about a just situation? He may try to encourage them, but what steps has he in mind to take if they refuse to take any action whatsoever?
    Dr. Mabon: It is not the case that my right hon. Friend is completely oblivious to any problems that exist in Scotland in this regard. He has certain obligations, under Statute, which were imposed on right hon. Gentlemen opposite when they were in power, and he will try to exercise them, I hope, a little more effectively than they did.

    Transport Advisory Council
    Mr. Galbraithasked the Secretary of State for Scotland if he is satisfied that the responsibility for roads in Scotland is adequately represented on the Transport Advisory Council; and if he will make a statement.
    Dr. Dickson Mabon: As my right hon. Friend the Minister of Transport said in his statement on 8th February, he has appointed the Transport Advisory Council to assist him on transport policy matters generally. In any matter concerning the Secretary of State's responsibility for roads in Scotland he will naturally be consulted.
    Mr. Galbraith: Is not this a thoroughly unsatisfactory position? I have the list of the people who compose the Minister of Transport's Advisory Council, and there is not one Scottish person on it
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    that I can see, yet this body has been set up to co-ordinate transport. Could not the right hon. Gentleman the Secretary of State have seen that there was at least one Scotsman on this body?
    Dr. Mabon: It is true that this is so. Nevertheless, though the advisers are, perhaps, non-Scottish, the three Ministers concerned are all Celts—two are Scots, and one is a Welshman. It is perhaps a point of grievance for English hon. Members that this is so, but I would imagine that it is better to be in the executive posts than to be advisers. On balance, I do not think that the hon. Gentleman has a point of nationalistic substance.
    Sir W. Anstruther-Gray: Arising out of that reply, may we take it that this matter is under Ministerial responsibility, and that the south-east of Scotland and its transport problems will not be forgotten?
    Dr. Mabon: I want to assure the right hon. Gentleman that this is a matter of great concern to my right hon. Friend and myself. I intend very shortly, on my right hon. Friend's behalf, to visit parts of the South of Scotland to review many of the problems brought to my mind by the right hon. Gentleman and several of my hon. Friends.

    Crofters' Common Grazings (Forestry)
    Mr. Brewisasked the Secretary of State for Scotland what action he is taking to encourage forestry on the common grazings of crofting townships.
    Mr. Ross: The possibilities of increased forestry on crofters' common grazings have been studied by the Crofters Commission in consultation with my Department and the Forestry Commission, particularly relating to suggestions made by the Lochaber Crofters' Union and the Skye Crofters' Union. Arising from the latter, a forestry development in Skye is being discussed.

    Kyleakin Fishermen's Pier
    Mr. Russell Johnstonasked the Secretary of State for Scotland whether he will take action to ensure that the construction of the Kyleakin Fishermen's Pier is proceeded with at the earliest opportunity.
    Mr. Ross: As the hon. Member has been informed, the County Council of Inverness is considering modifications to the plans for the pier, and until these have been settled it is not possible to issue a statutory authorisation for the works proposed.
    Mr. Johnston: Would not the Secretary of State agree that it is quite wrong that the British Transport Commission should be able to hold up a scheme like this by legalistic quibbling over a small sum of money for such a very long time? While it is true that authorisation is pending, is it not the fact that the initiative for the delay comes from the Department and not from the county council? Will the right hon. Gentleman assure me that the Department will do everything in its power to bring the matter to a speedy conclusion?
    Mr. Ross: The hon. Gentleman should not ask me to do anything very improper here, because the person who has to adjudicate in respect of, and take into account, objections, is myself, and it would be quite wrong for me to prejudice that objectivity for which I am fairly well known throughout Scotland by a statement of the kind he invites me to make.

    Aberdeen Fishing Harbour (Berthing Arrangements)
    Mr. Bruce-Gardyneasked the Secretary of State for Scotland what representations he has made or intends to make to the Aberdeen Harbour Board regarding the new berthing arrangements recently introduced at Aberdeen fishing harbour.
    Mr. Ross: None, Sir. I am sorry that differences of opinion have emerged between the fishing interests using Aberdeen as a port of landing, but the conduct of the harbour is a matter for the duly constituted Harbour Board.
    Mr. Bruce-Gardyne: Is the right hon. Gentleman aware that owing to the boycott now imposed on Aberdeen Harbour by the seine fishermen a very serious situation has arisen in northeast Scotland over the marketing of fish? Will he see whether his Department cannot in some way use its good offices to bring the different parties together, or, conceivably, urge the White Fish
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    Authority to use its good offices to solve this very worrying dispute?
    Mr. Ross: We have, of course, had some discussions with some of the people concerned, as the hon. Gentleman probably knows, and the White Fish Authority has itself offered to make its services available in this matter. However, this is basically a local dispute and I think it has to be settled locally. We do not want interference from the centre, further confusing the issue.
    Mr. Wolrige-Gordon: I appreciate that point, but will the Secretary of State at least ensure that the Herring Industry Board and the White Fish Authority use their good offices to see that the marketing of fish is as efficient as possible at the smaller ports, which will have a greatly increased amount of landings at them while the present position obtains?
    Mr. Ross: We have already been looking at this matter, and I assure the hon. Gentleman that the facilities for the berthing of fishing vessels and the offshore unloading of catches are broadly adequate throughout Scotland as a whole.

    Private Woodlands
    Mr. Manuelasked the Secretary of State for Scotland if he will indicate the services provided free by his Department to private woodland owners and the cost of these services in each of the last five years.
    Mr. Ross: The Forestry Commission gives technical advice on schemes proposed by owners for systematic woodland management. A small amount of advice on general forestry matters and on questions such as tree diseases is also given. The cost in each of the last three years was £4,600, £6,700, and £5,500 respectively. Separate figures are not readily available for earlier years.
    Mr. Manuel: Does not my right hon. Friend agree that there are many thousands of acres. of land in private ownership that are suitable for forestry planting but which are not being developed? Where the Forestry Commission is running short of land for a staged programme over the years ahead, will he do all he can to help it to acquire land now lying useless?
    Mr. Ross: I think that we want to encourage both the Forestry Commission and private planting in respect of our needs, and this is a valuable and inexpensive service, and one worthy of continuation.
    The Earl of Dalkeith: Can the Secretary of State give any indication of the immense value that the Forestry Commission has derived from the private sector of the industry in the form of experience, knowledge, trial plantations and experimental plantings over very many years?
    Mr. Ross: There is a very considerable amount of co-operation and exchange of information between all people interested in forestry, and I hope that it will continue.
    Mr. George Y. Mackie: Is the right hon. Gentleman aware that we need to look at the development of forestry as something that should be integrated with agriculture; and that this requires taking a whole district, regardless of estate boundaries, in order to plan the planting of trees to fit in with agriculture, sport, and everything else?
    Mr. Ross: That is a bit beyond the original Question, but I am happy to agree with the hon. Gentleman.
    Mr. Bruce-Gardyne: Is the right hon. Gentleman aware that the Capital Gains Tax provisions in the Budget will have a very serious effect on private forestry development? Will he urge the Chancellor of the Exchequer to look at this again with this point in mind?
    Mr. Speaker: Order. This Question is about free services being provided, which I think is a different question from that which the hon. Member asks.

    Feu Duties
    Mr. Benceasked the Secretary of State for Scotland if he will undertake a survey into the present level of feu duties on domestic property in Scotland.
    Mr. Ross: The level of feu duties is an important aspect of the feudal system of land tenure and will be taken into account in the further consideration which I promised the hon. Member for Glasgow, Central (Mr. McInnes) on 19th May.
    Mr. Bence: I thank my right hon. Friend for that Answer. Is he aware that, as a result of the callous indifference of the four previous Administrations, owner-occupiers and local authorities in Scotland are paying feus to landowners of from £40 to £50 for 30 ft. by 60 ft. sq. and this is a shocking burden for owner-occupiers to bear? Will he do something to relieve those unfortunate people of this heavy burden caused by what they pay to Scottish landowners?
    Mr. Ross: I think my hon. Friend will appreciate that the feu which is fixed reflects the cost of the land. This is an indication of a much more general problem, which is not limited to Scotland, in that land prices have raced away from what we thought was the limit a few years ago.
    Mr. William Hamilton: Will my right hon. Friend give an assurance that increased land prices as a result of the Highland Development (Scotland) Bill being put on the Statute Book will be recouped for the public rather than the private purse? Does he agree that probably the only logical answer to the feu duty is nationalisation of land?
    Mr. Ross: I can assure my hon. Friend that the last place I heard that suggested was by farmers in the Perth and Kinross by-election. This suggestion comes from strange quarters, but it is a measure of the concern in Scotland (a) about the cost of land and (b) how people are exploiting public development. What my hon. Friend said is true about the price of land around the pulp mill. Every service requiring land there is paying through the nose to people who have done nothing towards that development.
    Mr. George Y. Mackie: Is the Secretary of State aware that one of the worst features is the variation of the use of a feu and that people constantly find themselves with the smallest variation of a feu or addition in respect of land on which they thought they had a feu, faced with a demand for £2,000 or other large capital sum for such variations in feu duty?
    Mr. Ross: This is a fundamental aspect and one which I hope we shall be able to go into following the Report of the Halliday Committee. This aspect is where the land superior demands an

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    exorbitant price for something about which he has done nothing.
    Mr. Buchan: Does my right hon. Friend agree that this is a case where many have to pay for the sins of the few?

    Community Centres
    Mr. Benceasked the Secretary of State for Scotland what steps he is taking to promote the construction of community centres in new towns, and in burghs expanding as a result of overspill agreements.
    The Under-Secretary of State for Scotland (Mrs. Judith Hart): New town corporations have been asked to discuss with local authorities the provision of a balanced programme of amenity facilities including community centres, and have been authorised to make grants to secure the necessary facilities at the right time. Similar provision in other developing areas can be made by education, housing or other authorities.
    Mr. Bence: I thank my hon. Friend for that Answer. Is she aware that the new town of Cumbernauld has been very successful with youth activities and youth organisations in general, but that it lacks playing facilities and cultural amenities? Will she see that the standard of cultural activities and sporting amenities are maintained by ensuring that adequate resources are created for the growth of houses?
    Mrs. Hart: Yes, we are very concerned that this should be so. The Standing Consultative Council on Youth and Community Service is looking at this problem. With that, the assistance given to the arts and to sport and the existing arrangements to allow a development corporation to give £4 per head of the population of a new town, it should be possible to find a solution of the right kind and I agree that it is most important that this should be so.

    Industrial Derating
    Mr. Manuelasked the Secretary of State for Scotland what is the average rates subsidy paid per house tenant per year consequent upon the present derating provisions.
    Dr. Dickson Mabon: I assume that my hon. Friend refers to industrial de-
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    rating. If industry in Scotland were not derated, the average householder would have paid about £3 13s. less in rates in the year1964–65.
    Mr. Manuel: Is my hon. Friend aware that many highly successful business enterprises are paying less than their fair share of rates at the expense of lower-paid ratepayers in the poorer section of ratepayers who, before they can get relief for rates, have to prove poverty? Could not the same rule apply to businesses?
    Dr. Mabon: Without derating, the rates on a factory in Scotland would be about 50 per cent. more than on a similar factory in England or Wales. Derating comes to an end in 1966 unless my right hon. Friend makes provision to continue it. He could not make such an order unless he first say an estimate that changes in rateable values for all types of property were such as to justify it. When he gets the report of the revaluation in 1966, perhaps he will take the point.
    Mr. Noble: Will the hon. Gentleman confirm that, in his thinking ahead for the future, he realises that unless we are able to offer competitive terms to industry houses will not be built in any case?
    Dr. Mabon: Yes, that is a very important point.
    Mr. Edward M. Taylor: Does the hon. Gentleman agree that if derating is abolished in 1966 without any adjustment it could have a crippling effect on heavy industry and shipyards in particular? Is he aware that several heavy industries in Scotland have taken out comparisons which show even on the present basis that the rating burden is about the same as that on competitors in England, and in some cases more.
    Dr. Mabon: Industry is not slow—and quite rightly—in making representations to my right hon. Friend on this matter, and I hope it will continue to do so on certain points. We have certainly not a closed mind on the matter.

    House Building
    Mr. Clark Hutchisonasked the Secretary of State for Scotland how many houses he expects will be built in Scotland this year.
    Dr. Dickson Mabon: At the end of 1964 43,400 houses were under construction. My right hon. Friend hopes that more than 37,000 of them will be completed during 1965.
    Mr. Clark Hutchison: I wish the hon. Gentleman well in trying to reach the target, but can he take steps to see that the houses are properly built and made to last? Does he realise that some houses—there is a group in my constituency at Southhouse—are extremely badly built? What is the possibility of strengthening the supervising staff when houses are being erected?
    Dr. Mabon: The Scottish Development Department has been criticised for being perhaps over-zealous in these matters. Perhaps there is a conflict between trying to build too many houses and ensuring that they are built well. Nevertheless, the Department will do its best to see that its rôle in the matter is carried out properly. We are satisfied that most local authorities and most contractors take pains to see that houses are of good quality and built to last.
    Mr. G. Campbell: Does this mean that the hon. Gentleman does not expect more houses to be built in 1965 than in 1964, considering that 37,000 were built that year?
    Dr. Mabon: Thirty-seven thousand one hundred were built in 1964. It is the earnest hope that we shall build more. but it can be only marginally in 1965, because it takes 15 months to prepare for building a house. The really record targets will be in 1966 and 1967, when we hope to knock the pants off hon. Members opposite.
    Dr. Miller: Will my hon. Friend indicate how many of these houses will be for letting and what percentage will be erected by private speculators? Would he agree that since most people in Scotland wish to have a house for letting, private speculative enterprise has contributed little or nothing and will contribute little or nothing to a solution of Scotland's housing problem?
    Dr. Mabon: Offhand, I believe that about 7,000 of the 37,000 houses were built by private enterprise last year. It is the genuine desire of my right hon. Friend that the proportion of private enterprise
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    building in Scotland should increase because we wish to see a diversity sufficient to attract the different kinds of business and technical personnel which we must have in Scotland if we are to become a thriving industrial community, as we should be.
    Sir Rolf Dudley Williams: Is the hon. Gentleman aware that there is no likelihood of an increase in the number of privately-owned houses until the Government get down to running their financial policies properly so that people can get mortgages?
    Dr. Mabon: That is not the case in Scotland. On the whole, it is not the lack of availability of finance which holds back the development of private building, but the inability of contractors to build at prices lower than in parts of England, with the exception of the South-East. We hope to help the contracting industry in some way to meet this situation.

    Agricultural Lime Scheme
    Mr. Monroasked the Secretary of State for Scotland whether he has completed his review of the Lime Subsidies (Scotland) Scheme; and if he will make a statement.
    Mr. Ross: Yes, Sir. Officials of the Agricultural Departments, in consultation with representatives of users, producers and distributors of lime, have conducted a comprehensive review of the Agricultural Lime Scheme, 1964, which is applicable throughout the United Kingdom. A draft amending Order is now in course of preparation and will be laid before Parliament as soon as possible.
    Mr. Monro: I thank the Secretary of State for that Answer. Will he ensure that this Order is laid as soon as possible, because in my constituency a lime quarry has had to close, causing unemployment? Speed is of great importance.
    Mr. Ross: Yes. We hope that it will be laid before the Summer Recess. I hope that the hon. Gentleman will appreciate that the Order is related to agriculture and the first thing is to consider the needs of agriculture. We have not overlooked the needs of the other interests, of the producers in all areas, including the hon. Gentleman's.

    Hospital Beds, Renfrewshire
    Mr. Buchanasked the Secretary of State for Scotland how many hospital beds are available for confinements in Renfrewshire; and what percentage of first and second confinements have taken place in hospital during the last 12 months in Renfrewshire.
    Mrs. Hart: Some of the population of Renfrewshire looks to Glasgow hospitals for maternity services: 161 beds are available within the county.
    Seventy-four per cent. of all births to Renfrewshire mothers in 1964 took place in hospitals and nursing homes. The figures for first and second confinements are not returned separately.
    Mr. Buchan: I thank my hon. Friend for her reply. Would she keep in mind that at least one part of the constituency, the area of Johnstone and Linwood, is a growth area taking in the Glasgow overspill problem? Would not there be a case for giving exceptional attention to this area and trying to increase the maternity facilities there?
    Mrs. Hart: The regional board already has plans for an increase in the number of maternity beds in the county in order to accommodate the number needed to reach the Montgomery standard of 75 per cent. hospital confinements. Work is planned to start in 1967 on a new 100 bed maternity unit at Paisley. Other steps are being taken to increase the number of beds in the county.

    Teachers (Recruitment Campaign)
    Mr. Buchanasked the Secretary of State for Scotland what has been the response to the campaign on the special recruitment scheme for teachers.
    Mrs. Hart: Since the campaign was launched on 12th April the encouraging total of 5,743 applications for information about the scheme has been received.
    Mr. Buchan: I thank the Minister for her reply. Has she any idea what the relevant proportions have been in the past between those applying for admission and those who have passed the course? Secondly, she deserves congratulation for the very big response there has been.
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    [HON. MEMBERS: "Reading."] I am not reading. I am looking at the figures. Thirdly, would she try to bring what pressure she can on the universities so that adult students entering adult education at universities do not first have to go through an unnecessary period of adolescent education?
    Mrs. Hart: I thank my hon. Friend for his reception of these figures. We do not have figures relating precisely to actual applications in the past. But I have received today a preliminary set of figures from Jordanhill College of Education indicating that of the first 35 applicants who have already been interviewed and who have come in under the new campaign only one has had to be rejected. Eleven have been accepted. Nine are to be further considered. Twelve have to acquire preliminary qualifications, but it is thought that they can go ahead and do that. Two come into special categories. This is encouraging. If the number of actual applications follow this pattern, the scheme should yield good results. We have discussed with the various bodies concerned the need for the right kind of advice to be given to adult students who require perhaps one further pass on the higher grade before entering a college of education. The kind of advice which is given to them will be realistic and helpful. I hope this will improve the quality of the scheme.
    Mr. Buchan: Is there any opportunity of persuading the universities that, when there is a shortage of places on a course, priority should be given to the adult students under this scheme?
    Mrs. Hart: We must wait to see what the extent of the actual applications is under the new campaign. If we find that we are running into difficulty—I do not expect this to happen, but if we should run into difficulty about shortage of places—we shall have to consider the problems involved and discuss them with the universities. That is all that can be said at this moment until we see what the final results are.

    Hovercraft and Hydrofoils
    Mr. Grimondasked the Secretary of State for Scotland if any further experiments are to be carried out with hovercraft or hydrofoils in Scotland.
    Mr. Ross: I have no plans for experiments at present, but the right hon. Gentleman will be aware that a company has plans to introduce hovercraft services on the Clyde.
    Mr. Grimond: I am very glad to hear that. Would the Secretary of State agree that the development of these craft could be very fruitful for British industry and that we are badly in need of new methods of serving the Islands in Scotland? Though the experiments in my constituency ran into some mechanical trouble, in certain respects they were promising and it would be a pity to let them die completely.
    Mr. Ross: Yes, that is true. The question of the nature of the waters being flown over enters into this and one sometimes makes irrelevant comparisons between the functions of this type of unorthodox craft in different types of water. I am perfectly certain that MacBraynes and other operators who function there will be watching the trials which are going on and will be prepared, as is the Highland Transport Board, to get in touch with me if it is thought there is any desirable introduction of such a scheme elsewhere.

    Highland Development Board
    Mr. Grimondasked the Secretary of State for Scotland what salaries are proposed for the chairman and members of the Highland Development Board.
    Mr. Ross: I cannot at this stage quote specific figures, but the remuneration of the Chairman and other members will be commensurate with their duties and responsibilities and with the qualities and qualifications for which we are looking.
    Mr. Grimond: Is the Secretary of State aware that, if that Answer means what I hope it means, I am grateful for it? Is he aware also that this is a very important job? When he is arguing with the Treasury, as he no doubt has to do, will he draw the Treasury's attention to the fact that, if we can afford to pay the Chairman of the National Incomes Commission £15,000 a year, which I do not begrudge him, we shall have to offer a very good salary to attract the right type of man for this immensely important job?
    Mr. Ross: I am grateful for the right hon. Gentleman's gratitude. I assure him that we mean what we say. What counts here is the job and the man. That is one of the reasons why we have not put any figure into the Bill, because we want to have some room for manoeuvre in respect of the quality of the man we want.
    Mr. Noble: It is difficult to decide a salary until one has decided about the job. As we have heard nothing about the job, we appreciate that the Secretary of State cannot decide on the salary.
    Mr. Ross: All that I can deduce from that is that the right hon. Gentleman has not been listening to the debates in the Standing Committee.
    Mr. William Hamilton: Would my right hon. Friend indicate to the House, so as to give us some idea of the salary he has in mind, whether he would regard the Chairman of the Highland Development Board as four times more valuable than the Leader of the Opposition?

    Admiralty Flyover—Forth Road Bridge (Road)
    Mr. Adam Hunterasked the Secretary of State for Scotland if, as a result of his consideration of the volume of traffic and the pattern of traffic movements since the Forth Road Bridge was opened, he will designate the length of road from the Admiralty Flyover to the Forth Road Bridge as a trunk road.
    Dr. Dickson Mabon: No, Sir. It would be contrary to the intention of the Trunk Roads Acts to trunk the immediate approaches without trunking the bridge. This would require legislation.
    Mr. Hunter: Does not my hon. Friend agree that this length of road is to all intents and purposes and from all appearances a trunk road and is not a classified one? Would he not agree, further, that, since the time of the correspondence which took place between us, there has been ample time for him to consider a favourable decision on this question?
    Dr. Mabon: As I tried to indicate to my hon. Friend, the definition is laid down clearly and it would be inconsistent to have a short spur of trunk road

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    terminating at the north end of the bridge. It would require a change in the law to meet the point he is making, even if one were to accept it completely.
    The Earl of Dalkeith: Would the hon. Gentleman look at this matter again and at the same time take into account the situation on the south side of the bridge, in particular relation to some of the roads running through Edinburgh which join up with the present approach roads?
    Dr. Mabon: I am perfectly willing to look at the matter again within the context of the Answer I have given. We shall have the results of the national traffic census to consider, which we hope in August of this year will furnish us with more information which will entitle us to look at the general pattern of roads in the area. I hope that will satisfy my hon. Friend as well.

    Seed Potatoes
    Mr. Alasdair Mackenzieasked the Secretary of State for Scotland whether he has received a memorandum on the export of seed potatoes from potato growers in the north of Scotland; and what action he is taking.
    Mr. Ross: I have received a memorandum from three potato growers outlining their ideas as to the possible development of overseas markets for Scottish seed potatoes. My Department has made a preliminary study of the matter and is arranging to discuss it further with the growers.
    Mr. Mackenzie: May I thank the Secretary of State for that reply? Will he bear in mind the importance of the potato crop to the economy of this part of the country and the urgency of doing something to expedite matters in future?
    Mr. Ross: Yes, Sir. We recognise the importance of the crop. I am glad to say that some gloomy forecasts about its future are not justified by our figures but we think that this matter is worth considering. We shall discuss it further, and until we have those discussions it would be unwise for me to say any more about it at present.
    Mr. Stodart: Is the right hon. Gentleman fully seized of the potential in future from Scottish seed potatoes? In view of
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    the fact that it seems a great pity that Holland is now beginning to supply not only other European countries with seed but this country as well, cannot the right hon. Gentleman stimulate interest and activity in promoting the export of Scottish seed?
    Mr. Ross: Let us get this matter into perspective. In recent years the crop has ranged between 10,000 and 18,000 tons, and I am glad to find that translation from this side of the House to the other has filled the hon. Gentleman with strange new enthusiasms which we never knew about.
    Mr. Buchanan-Smith: Will not the right hon. Gentleman take account of the experience of the Seed Potato Board in Ulster which in recent years has developed a tremendous seed potato trade with Mediterranean countries? Will the right hon.Gentleman study that in making up his mind about the export trade of Scotland?
    Mr. Ross: It was because of our recognition of the importance and value of encouraging this trade that we decided to go further.
    Mr. Bruce-Gardyne: As the right hon. Gentleman has expressed his interest in the importance of the seed potato trade, may I ask whether he will try to take steps to see that the Potato Marketing Board is not prevented in future from entering the market to stabilise prices as it was earlier this year by the Government.
    Mr. Ross: I have crossed swords with the hon. Gentleman about this at Question Time on previous occasions and I still disagree with him. We think that it was right to authorise the Potato Marketing Board to enter when it did.
    Mr. Bruce-Gardyneasked the Secretary of State for Scotland whether he will now extend the system of sampling and sealing to all consignments of Scottish certified seed potatoes.
    Mr. Ross: I am not convinced that the benefits of extending the system of sampling and sealing to all consignments of Scottish certified seed potatoes would justify the additional cost which would fall on growers. My Department is, however, studying how best to step up the rate of check inspections.
    Mr. Bruce-Gardyne: Is the right hon. Gentleman aware that the cost is not very great, as he told me on a previous occasion? Is he further aware that any steps which would strengthen the control would be in the interest of growers and their customers in England? Would he look at this matter carefully?
    Mr. Ross: We have looked at it carefully. It would represent a considerable increase in the cost to the growers. It would cost about £50,000. I am certainly not convinced at the moment that the circumstances justify 100 per cent. inspection. We have had remarkably few complaints about quality.
    Mr. G. Campbell: Is the right hon. Gentleman examining the situation which was recently drawn to the attention of his Department in which a consignment can be passed and sealed by inspectors in Scotland and then condemned on arrival in England? Does not he agree that if two standards for Scotland and England emerge in this way this will produce great difficulties for the Scottish growers?
    Mr. Ross: If we find that these difficulties are being caused because of double standards we will certainly take action.

    Regional Studies (Publication)
    Mr. David Steelasked the Secretary of State for Scotland whether the regional study of the Borders will be made available to the public.
    Mr. Brewisasked the Secretary of State for Scotland when he intends to publish the South-West of Scotland Development Plan.
    Mr. Ross: Publication of these studies in their present form would not, I think, be helpful.
    Mr. Steel: Is the right hon. Gentleman aware that there will be considerable concern at that Answer? Does not the right hon. Gentleman realise that any realistic regional policy must carry with it the feelings of the people in this area? Does he appreciate that it is absolutely vital that these studies should be open for discussion by the local authorities and other people concerned in the development of their own region and that the present situation is quite intolerable?
    Mr. Ross: I do not know whether the hon. Member knows it in his belated appearance on the Parliamentary scene, but I can assure him that the Economic Planning Board has had discussions with the people in the area. Therefore, this fact does not altogether coincide with what he has suggested. This matter is at present before the Economic Planning Council and that Council has formed itself into a special committee for the consideration in depth of these regional matters. It would be most misleading to publish what are really preliminary working papers rather than something that is the outcome of full study and upon which future policy will be based. This is what we want. If the hon. Member had been in the House when a certain survey was published in the last Parliament he would have appreciated how much concern there was that this matter was considered in isolation.
    Mr. Brewis: Why did not the right hon. Gentleman publish this plan in the same form as the last Government under the last Secretary of State for Scotland published the surveys?
    Mr. Ross: This is exactly the point. The hon. Member will recollect that they were not plans, and if he reads them he will find that the word "plan" does not appear in them. They were a programme for public building.
    Sir W. Anstruther-Gray: Is the right hon. Gentleman aware that his reply will cause disappointment, because the people in the area are most anxious to know all the information as soon as it comes to hand?
    Mr. Ross: I assure the right hon. Gentleman that as soon as we set out to do the job we did what we set out to do, which was to draw up a plan for Scotland in which there were plans for various areas. This will be published. This is what the people of Scotland want. They have had plenty of surveys on which no plans have been based. What we want are plans on which future action will be based.
    Mr. Noble: Would not the right hon. Gentleman agree that whether or not he is publishing plans exactly as they are received is comparatively irrelevant and that the people of Scotland will not tolerate a delay of perhaps several years

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    while the economic people are discussing how to deal with the plans? Is he aware that what the people of Scotland want, at least in the early days, is a clear analysis of the problem, as was given in the White Paper last year?
    Mr. Ross: This is what we shall have—a proper analysis of the problem for the whole of Scotland and the action that will come out of it. [An HON. MEMBER: "When?"] The hon. Member knows that after 13 years of Tory Government there is not a single action that can be taken there, because the Local Employment Act which could help does not apply to the question of the depopulation of the Borders and his party did nothing about it.
    Mr. Brewis: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity?

    Scottish Planning Council (The Borders)
    Mr. David Steelasked the Secretary of State for Scotland why the April meeting of the Scottish Planning Council did not have placed before it the study of the Borders.
    Mr. Ross: Because this would have been premature. As the hon. Member may be aware, the Council had both this study and the corresponding study of South-West Scotland before them at its meeting on 14th May.
    Mr. Steel: Does the right hon. Gentleman recall that at a public meeting in my constituency in the course of the by-election he gave a pledge, which had considerable publicity in the newspapers, that this study would be placed before the next meeting of the Council?
    Mr. Ross: I expressed that hope, but it was not realised. [HON. MEMBERS: "Oh."] It was premature because it was far better to take the two together rather than this one in isolation, but I am perfectly sure that the hon. Member appreciates exactly how this kind of thing can arise.
    Mr. Manuel: Is my right hon. Friend aware that some of us on this side of the House, at any rate, fully support the line which he is taking in this matter? Is he aware that if there were early publica-
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    tion of studies it could create great disappointment in the Borders and that it far better that this matter should go before the Economic Development Council where definite decisions can be taken about industrial development in that area?
    Mr. Ross: I think that my hon. Friend is quite right. What hon. Members opposite cannot get away from is the parochial and inconsistent isolation of constituency problems so that they might look at Scotland as a whole and get coherent policies.
    Mr. Noble: But will not the right hon. Gentleman agree that what people on this side of the House and in Scotland are increasingly wondering about is what the right hon. Gentleman is doing, apart from what he is saying?
    Mr. Ross: I draw the right hon. Gentleman's attention to the fact that unemployment figures are lower than they have ever been for this time of the year. If he and his Government had come back, we should have had the same experience as we had after previous victorious Tory election campaigns, a credit squeeze leading immediately to a rise in unemployment in Scotland. The expansion in Scotland is still going ahead.
    Mr. Noble: Does not the Secretary of State realise that the only reason why employment continues to rise in Scotland, in spite of, probably, the worst credit squeeze ever, and in spite of a 7 per cent. Bank Rate, is the action we took? What has he done?
    Mr. Ross: The right hon. Gentleman has not been long in the House. I ask him to look at what happened under Tory policies after previous elections. The place that suffered most was Scotland, and, after the 1959 election, we even reached the peak of 136,000 unemployed.
    Several Hon. Members rose—
    Mr. Speaker: Order. We are bordering on the Borders.

    Farmers (Annual Review Award)
    Mr. Stodartasked the Secretary of State for Scotland how much of the 1965 Price Review award of between £10 million and £11 million he estimates will go to farmers in Scotland.
    Mr. Ross: The Annual Review award is related to United Kingdom agriculture as a whole and it is not possible to say precisely how particular parts of the United Kingdom may eventually benefit.
    Mr. Stodart: As this information is published by his own Department in one or its publications every year, is it not extraordinary that the Secretary of State is unable to anticipate it? At least, he should tell the House how much of the award—I am sure that he knows this—was attributable to the increased hill sheep subsidy?
    Mr. Ross: The hill sheep subsidy taken this time within the Price Review for the whole of the United Kingdom was about £2 million, and of that—this is calculable—about £1 million is, I think, in respect of Scotland.
    Mr. Emrys Hughes: Is my right hon. Friend aware that the Chancellor's problem is to get money for these subsidies, and the farmers I represent are anxious to know where the money is to come from if the Opposition refuse to vote it?
    Mr. Ross: It is not unusual for this Opposition to applaud the purpose and then vote against the money.
    Mr. George Y. Mackie: Is the Secretary of State aware that one cannot get milk from a dead cow, and we ought to nourish the goose which lays the golden eggs?
    Mr. Ross: All I could hear of that was something about milk from dead cows and then something about golden eggs. After that mixture of metaphors, I think we could even bring in, "tak' the breeks aff a Hielanman".
    Mr. Stodart: Is not the Secretary of State rather distressed at having made himself party to the rather squalid subterfuge of including the hill sheep subsidy in the agricultural Price Review in order to try to put a polish on a rather drab award?
    Mr. Ross: The hon. Gentleman should have polished that sentence a bit before he tried to say it. The award is respectable, it is adequate, and it was related to the needs of the industry and to the circumstances of the country.

    Milk
    Mr. Stodartasked the Secretary of State for Scotland what price in pence per gallon was guaranteed to milk producers in Scotland as a result of the Price Reviews in 1965 and 1954, respectively.
    Mr. Ross: For the area of the Scottish Milk Marketing Board, which covers the major part of the country, the figures are 41·91d. and 37·33d. respectively. The latter figure includes a restrospective award given at the time of the 1955 Review.
    Mr. Stodart: This is a difference over the 12-year period of 4½d. Can the Secretary of State explain why he and his hon. Friend the Minister of State have repeatedly used the calculation of 2d. over a different 12-year period but during which the net difference was only id., and, therefore, the proper answer should be not 2d. but 3¾d.?
    Mr. Ross: I hope that the hon. Gentleman will concentrate on making his own speeches and not on making mine for me. If he will refer to the recent speech I made on the Price Review and the one by my hon. Friend in the Adjournment debate, he will see that there was no contradiction between what we said and the actual facts. We said that in the 12 years of Tory administration prior to last year's Review, the price went up by about 2d. In fact, it was 2½d. [HON.MEMBERS: "No."] Yes, prior to the last Review. I said this at the time when we were considering the 1965 Review, so obviously we were talking about the last Tory Review. If the hon. Gentleman wants any more figures, let him take the two years 1965 and 1954 which are here mentioned. In 1954 the Tories reduced the guarantee on milk by 1d. In 1965 we increased it by 1d.
    Mr. MacArthur: Do not these replies from the right hon. Gentleman show that he and his right hon. and hon. Friends have been making most slippery use of arithmetic in their presentation of the Price Review figures? Is not he aware that the figures put before the House do not represent the comparative picture as he and his right hon. Friends suggested they did, and is not an explanation called for?
    Mr. Ross: All the hon. Gentleman has to do is to put a Question down to me asking for the changes made in each particular year, and then even he will be able to see that the figures are accurate and the comparisons valid.

    Beef Bulls (Infertility)
    Sir J. Gilmourasked the Secretary of State for Scotland how many reports he has received in each of the last three years with regard to infertility in beef bulls which have been licensed by officials of his agricultural department.
    Mr. Ross: None, Sir. The provision of such information does not form part of the licensing procedure.
    Sir J. Gilmour: I may have a slightly biased point of view, having recently been both buyer and seller of a bull which was infertile, but does not the right hon. Gentleman agree that it is necessary for his Department to follow the bulls which have been licensed to make certain that they do the work for which they have been licensed?
    Mr. Ross: The hon. Gentleman is not being fair. This is not the purpose of licensing. It has a very limited aim in relation to eliminating bulls which fall below certain minimum standards of conformation. If a breeder himself wants to go beyond that, it is up to him to do the follow up. It is not within the licence procedure to do this, which can be done only by the veterinary officer himself.

    North-East Area (Development Group's Report)
    Mr. Bakerasked the Secretary of State for Scotland when he now expects to receive the Scottish Development Group's Report on the North-East area; if he will publish the report; and on what estimated date.
    Mr. Ross: The preliminary report on the North-East will be submitted very soon to the Planning Council. As to the second part of his Question, I would refer the hon. Member to the Answer I gave to the hon. Member for Perth and East Perthshire (Mr. MacArthur) on 15th March.

    Banff Bridge
    Mr. Bakerasked the Secretary of State for Scotland if he is satisfied with the progress made with the strengthening
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    of the Banff Bridge on the A.98; and when he expects the work to be completed.
    Dr. Dickson Mabon: Yes, Sir. My right hon. Friend expects the works to be completed in the middle of July.
    Mr. Baker: Is the hon. Gentleman aware of the great deal of inconvenience caused to local traffic by this work? If the labour force had been doubled, would not the work have been carried out a great deal more quickly? Further, is he aware that on one day last month the local sheriff had to fine no fewer than 40 people for contravention of the traffic signals in the area?
    Dr. Mabon: I am not aware of the last circumstance which the hon. Gentleman mentions, but I quite accept what he says about delay because of the one-way traffic. This is unavoidable, I am told, because, by the nature of the site and the work, the number of men is limited and the amount of mechanical plant which the contractor can use is limited. Because of these natural limitations, there has been delay. I hope that the hon. Gentleman will agree that, by continuing work up to the middle of July, we shall get over the biggest part of the inconvenience.

    Local Authority House Rents (Exchequer Equalisation Grant)
    The Earl of Dalkeithasked the Secretary of State for Scotland how many local authorities will forfeit a proportion of their Exchequer equalisation grant during the current financial year on account of an insufficient rent income; and what is the total amount involved.
    Dr. Dickson Mabon: No firm estimate can be given for the financial year just beginning, as rent levels may change. For 1964–65, deductions totalling about £530,000 have been or will be made from 60 local authorities.
    The Earl of Dalkeith: On the indications which are available at present, would not the hon. Gentleman agree that existing Government measures to encourage local authorities to charge more realistic and appropriate rents have had only limited success? Is he satisfied that the present legislation gives him sufficient power to take the necessary

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    action to relieve home owners of the intolerable burden of subsidising the occupants of local authority houses?
    Dr. Mabon: The answer to the second part of the hon. Gentleman's supplementary question is "Yes". But, in regard to the first part, I make it clear that the intention of the last Government, in the 1963 Act, to which my Answer is relevant, was not in relation to deductions of grant to force local councils to raise rents. The clear purpose of the last Government was to restrict the calls on the Exchequer. What the hon. Gentleman now suggests may have been the other interpretation, but then we can only take the professed aims of the previous Government in trying to find out what they meant by the 1963 Act.

SITTINGS OF THE HOUSE
Sir Rolf Dudley Williams: On a point of order, Mr. Speaker. May I draw your attention to a subject that I raised this morning during discussion of the Committee stage of the Murder (Abolition of Death Penalty) Bill? I think that the point is relevant now, since the Leader of the House is here; indeed, we had the Prime Minister here as well—and I suppose that he carries some responsibility inasmuch as the Leader of the House tells him anything.
We were in some difficulty over the Bill. One of my hon. Friends was so disgusted by the paucity of the attendance at the beginning that he drew attention to the fact that there were not 40 Members present and we had great difficulty in getting the necessary quorum so that we could proceed.
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We were in that position because yesterday morning there were six or seven Standing Committees and about 200 hon. Members had to be in attendance so that business could proceed from 10.30 a.m. onwards. Then we had a very late sitting on the Finance Bill, owing to the mess that the Chancellor of the Exchequer—
Mr. Speaker: Order. If the hon. Gentleman has a point of order—I say, if—will he be good enough to state it and not make criticisms of others?
Sir Rolf Dudley Williams: I accept your advice, Mr. Speaker, and will reserve my criticism for another time.
As a result of hon. Members being so exhausted this morning, especially on the Government side, we did not at first have a quorum to proceed with our business. I suggest to the Leader of the House that, since he is grossly overworking the House—
Mr. Speaker: Order. If, in the hon. Member's opinion, what he is saying is not a criticism of someone else, then it certainly is in mine.
Sir Roll Dudley Williams: What I would ask you, Mr. Speaker, is whether we on this side of the House have any redress against the strain that is being put upon the House—[Interruption.]
Mr. Speaker: Order. Let there be silence. The hon. Member will appreciate that no point of order arises now. If he wishes to table a Motion bearing upon the matter, and if it is securely in order, no doubt that would be the appropriate method of proceeding.

HOMOSEXUAL REFORM
3.35 p.m.
Mr. Leo Abse: I beg to move,
That leave be given to bring in a Bill to amend the law relating to homosexuality.
The Bill I am asking the House for leave to introduce is one that would ensure that the penalty for a homosexual offence against a boy under 16 would have, as now, as the maximum penalty, life imprisonment. It is a Bill that would ensure that an indecent assault upon a boy would attract a penalty of 10 years' imprisonment. It would make a public act of indecency liable, as now, to a penalty of two years' imprisonment.
The Bill would increase the present penalty of two years' imprisonment for an act of gross indecency committed against a youth between 16 and 21 years to one of five years' imprisonment. It would protect military discipline by leaving untouched Section 66 of the Army Act, which provides punishment for disgraceful conduct of an unnatural kind. Further, the Bill, in accordance with the recommendations of the Wolfenden Committee, would make premises used for homosexual practices a brothel, attracting the same penalties as fall now upon premises used for heterosexual lewdness.
It cannot possibly be in the minds of any except those who wilfully refuse to know our proceedings that the Bill would in any way mean that this House approves or condones homosexual practices, or will countenance any act of indecency against youngsters or any public display of homosexual conduct. No one suggests that this House approves of fornication, of adultery or lesbianism because we have not made these criminal offences. Nor would such tolerance be extended to homosexual activities by the Bill because, in so many particular circumstances, homosexuality would remain a crime attracting severe penalties.
But the Bill would mean that the stigma and burden of criminality would no longer be attached to acts committed in private between adults. No one knows how many in this country have the sad fate of being homosexuals. The most cautious estimate suggests that there are as many as there are people
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in the City of Leeds—[HON. MEMBERS: "Why Leeds?"] Because it has a suitable size of population. Perhaps I might assuage the feeling of the House by saying that the estimated total is a quarter of the population of Wales.
For any person who suffers this misfortune, there are, clearly, grievous burdens. Certainly, for most of them, it means that they are permanently denied the blessings of family life, the rearing of children and the gift of a mature love with a woman. As the law treats them as criminals, their alienation is intensified and, increasingly estranged, they retreat into a ghetto cut off from involvement in the community, and, feeling the hostility of society, too often understandably react by succumbing to anti-social attitudes.
Informed by compassion with their lot, it is not surprising that the Church Assembly, the Church of England Moral Welfare Council, the Roman Catholic Advisory Committee set up by the late Cardinal Griffin, the Methodist Conference and the Unitarians, with all the clinical experience that comes to them from their pastoral care, have all called for the Wolfenden Report to be implemented.
I suggest that it is time that the Churches' call was heeded. In Belgium, Holland, Sweden, Denmark and France the law is substantially the same as that recommended by the Wolfenden Committee and none of the dire consequences threatened by the opponents of change have resulted there.
The present law is unjust. Its retention leads to 100 men each year being convicted for private acts. Yet millions of such acts are taking place. By its nature, the law is random in its application. It is bad law, because it is unenforceable. It prescribes penalties that are senseless, for everyone knows that to send a homosexual to an overcrowded, hermetically sealed male prison is as useless as sending a rapist to Holloway Women's Prison.
It is a blackmailer's charter which no sympathetic administrative action can or has prevented. It is an invitation to hoodlums, as too many recent documented cases reveal, to steal from the homes of homosexuals with impunity. It is a law which the Lord Chancellor has rightly

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said does more harm to the public than good. Yet, in my view, by far the worst feature of the law is that the preoccupation with the punitive proceedings leads the community to avoid searching for the genesis of the homosexual condition and, by so doing, failing to take the preventive action which may save a little boy from the terrible fate of growing up to be a homosexual.
We know perhaps little enough of the actiology of homosexuality and how far it arises from endowment at birth. But what all the most recent research reveals is that the incidence is higher among those who are fatherless children—fatherless through death, through desertion, or, in effect, because of a shadowy, vague father shirking or unable to assume parental responsibility. I see my little son of eight years of age stretching out in search of his grown-up male identity. As is typical of all other boys, I suppose, I find him strutting round in my shoes and sometimes—heaven help him—putting on my hats.
But is it surprising that the boy without a father, lacking a male figure with whom he can identify, sometimes is left with the curse of a male body encasing a feminine soul? When research points to such causes as precipitating the ambiguity in the sexual rôle, who with compassion can demand that one disability in childhood must have added to it the stigma of criminality in adult life?
The view has been put forward by some who are convinced that the time for change has come that as matters stand and in the present state of the law far more is being said about homosexuality than need be. A prominent supporter of the Wolfenden Report, Earl Attlee, has said this vigorously, and it surely must be so. When the bishops declare that the present law is evil, and the Lord Chancellor and the overwhelming majority in another place vote for change, it is now quite inevitable that all those who consider that reform is needed must continue campaigning. The point of no return has come with the decision in the other House.
A criminal code which is opposed by so much informed opinion cannot be indefinitely sustained. Those of us who are possessed of the normality which
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makes us look with revulsion at homosexual conduct must surely want an end to this continuing public discussion, and we want an end to it as soon as possible. I hope that today the House will help to bring that about by showing no less wisdom and intelligent reforming zeal than that which was shown earlier this week in the House of Lords.
3.44 p.m.
Sir Cyril Osborne:I am utterly opposed to the Motion and I hope that the House will reject it. It is said that silence gives consent. In this case it would be the consent of guilt and a cowardly silence. It is because I refuse to give consent to such a Bill that I cannot remain silent.
I regard this as a moral issue, and if I may say to my hon. Friends opposite—[HON. MEMBERS: "No."]—to the whole House—
Mr. E. Shinwell: Speak for yourself.
Sir C. Osborne: I will speak for myself. I believe that this proposal would offend the non-conformist conscience of this country. [HON. MEMBERS: "Nonsense."] I am stating my case, which I believe is not as dead as some hon. Members opposite hope. I intend to divide the House and to have every Member counted, whether he votes for or against the Motion.
The basic question is this: do we want to encourage sodomy? It is as simple as that.
Mr. Anthony Fell rose—
Sir C. Osborne: No.
Mr. Speaker: By our practice, no intervention is allowed in our proceedings under this Standing Order.
Mr. Shinwell: Is this speech necessary?
Sir C. Osborne: This is not the Reichstag yet.
I am convinced that public opinion is completely against this proposal and that the vast majority of our people consider, rightly or wrongly, that sodomy is wrong, unnatural, degrading and disgusting; and I agree with them. [An HON. MEMBER: "Adultery."] We are not dealing with adultery. We are dealing with one thing at a time.

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I put it to hon. Members on both sides that those who vote for this proposal ought, in fairness to their constituents, to say clearly in their election address when they next appeal to their constituents that this is what they advocate and agree with. I think that many hon. Members would get a shock as a result of that.
The hon. Member for Pontypool (Mr. Abse)—and I know that he has many authorities behind him—says that the sodomites cannot help themselves, that sodomy is something for which they are not responsible and that they are the victims of heredity. I do not accept that. I do not believe that there is such a thing as the inevitability of wickedness. If that were so, this excuse of inevitability could be used to justify the Oxford students who are drug addicts, and those who are kleptomaniacs and habitual drunken thugs. The inevitability of wickedness could be used to excuse every crime in the calendar, and I do not accept it.
During recent years we have been shocked by cases involving security and affecting the nation. In most cases, like that of Burgess and Maclean, the men who have been traitors and spies to our country have been "homos", ready and ripe for blackmail. To increase this by making homosexuality public, by making it legal—[Interruption.] I wish that hon. Members would at least give me a hearing.
Mr. Speaker: Order. There must be less noise. Hon. Members should remember the great privilege of being here and, therefore, allowed to listen to arguments with which they do not agree.
Sir C. Osborne: We listened patiently to the other view of the matter.
I feel that this horrible revolting practice is a great security risk, as experience has shown, and that, therefore, to legalise it would be against the public interest and public security.
The hon. Gentleman said that the Armed Forces would still reject this as disgraceful conduct under Section 66 of the Army Act and that this habit would not be condoned. It has been said by an authority:
"I do not think we ought to allow it to be suggested that these practices could possibly be condoned in the Services."
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In what groups would it be condoned—among police officers, doctors or teachers, or among Members of Parliament? Of course not. If it is not condoned in those groups, where should it be condoned?
The hon. Gentleman said that the Wolfenden Report had the support of the bishops and clergy. All that I would say is that over the years Royal Commissions have often made unwise suggestions and that the bishops, over the centuries, have been guilty of being tragically wrong on more than one occasion.
This is an age of lawlessness, violence and crime. What we need is sterner discipline and not more licence. In recent years, sexual offences in this country have risen from 5,018 in 1938 to 20,518 at present. Crimes of violence against the person have risen from 2,721 to 20,083. This is a time when we want more discipline and not less. I am convinced that it would be wrong for the House to accept the Bill.
The gravest harm that the Bill could do to the country would be to send out from this House a message to our friends and allies abroad that somehow the character of the English people was going wrong. [HON. MEMBERS: "Really."] I am stating what I believe. That would not be true.
Since hon. Members will not listen to the reasons that I wish to give, may I quote what Lord Denning said seven or eight years ago, in the other place? If hon. Members will not listen to me, I beg them at least to listen to what the Master of the Rolls said:
"What is the proper function of the criminal law? What acts should be punished by the State? It is, indeed, upon the answers to those questions that the Committee make it clear that their solution to the problem depends."
Then he dealt with the question that the Liberal Party wanted to raise, and he continued:
"It is said that adultery and fornication are not criminal offences, so why should homosexuality be?"
This was the Master of the Rolls putting the question in the other House.
"The law answers that natural sin is different from unnatural vice. Natural sin is, of course, deplorable, but unnatural vice is worse; because, as the law says, it strikes at the integrity of the human race".

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Then he asked the question:
"May I ask the question with which I started: Is this conduct so wrongful and so harmful that, in the opinion of Parliament, it should be publicly condemned and, in proper canes, punished?"
The Master of the Rolls gave his judgment and said:
"I would say that the answer is, Yes; the law should condemn this evil for the evil it is."—[OFFICIAL REPORT, House of Lords. 4th December 1957; Vol. 206, cc. 806–811.]
On that, I beg the House to reject the Motion. Let those who are for it to go into the "Aye" Lobby and those who are against it to come with me into the "No" Lobby.
3.53 p.m.
Mr. William Hamilton: What I want to say, Mr. Speaker, implies no criticism whatever of you as Speaker of the House. In a debate of this kind, it is well known that only one hon. Member can speak in opposition to such a Motion. I sought to catch your eye and I make no complaint that I did not catch it. It is entirely within your discretion to choose whomsoever you wish.

Division No. 138.]

AYES

3.55 p.m.

Abse, Leo

Dunnett, Jack

Jopling, Michael

Agnew, Commander Sir Peter

Edwards, Robert (Bilston)

Joseph, Rt. Hn. Sir Keith

Albu. Austen

English, Michael

Kerr, Sir Hamilton (Cambridge)

Allaun, Frank (Salford, E.)

Ennals, David

Kirk, Peter

Allen, Scholefield (Crewe)

Ensor, David

Lee, Miss Jennie (Canno ck)

Astor, John

Fletcher, Sir Eric (Islington, E.)

Lever, Harold (Cheetham)

Atkinson, Norman

Fletcher, Ted (Darlington)

Lipton, Marcus

Bacon, Miss Alice

Fletcher-Cooke, Charles (Darwen)

Lloyd, Ian (P'tsm'th, Langstone)

Balniel, Lord

Floud, Bernard

Longden, Gilbert

Barnett, Joe l

Foot, Sir Dingle (Ipswich)

Loughlin, Charles

Beamish, Col. Sir Tufton

Foot, Michael (Ebbw Vale)

Loveys, Walter H.

Benn, Rt. Hn. Anthony Wedgwood

Fraser, Rt. Hn. Tom (Hamilton)

Lubbock, Eric

Berkeley, Humphry

Freeson, Reginald

Mabon, Dr. J. Dickson

Bessell, Peter

Gilmour, Ian (Norfolk, Central)

MacColl, James

Blaker, Peter

Ginsburg, David

MacDermot, Niall

Blenkinsop, Arthur

McKay, Mrs. Margaret

Bottomley, Rt. Hn. Arthur

Greenwood, Rt. Hn. Anthony.

Mackie, George V. (C'ness & S'land)

Boyle, Rt. Hn. Sir Edward

Gresham Cooke, R

Mackie, John (Enfield, E.)

Bray, Dr. Jeremy

Grimond, Rt. Hn. J.

McLaren, Martin

Brinton, Sir Tatton

Hamling, William (Woolwich, W.)

McNair-Wilson, Patrick

Brown, Hugh D. (Glasgow, Provan)

Hart, Mrs. Judith

Maxwell-Hyslop, R. J.

Bruce-Gardyne, J.

Hattersley, Roy

Mayhew, Christopher

Buchan, Norman (Renfrewshire, W.)

Healey, Rt. Hn. Denis

Mellish, Robert

Carlisle, Mark

Heffer, Eric S.

Meyer, Sir Anthony

Carmichael, Neil

Higgins, Terence L.

Mikardo, Ian

Castle, Rt. Hn. Barbara

Hobden, Dennis (Brighton, K'town.)

Miller, Dr. M. S.

Chataway, Christopher

Holman, Percy

Mitchell, David

Conlan, Bernard

Houghton, Rt. Hn. Douglas

Molloy, William

Crosland, Anthony

Howell, Denis (Small Heath)

Morrison, Charles (Devizes)

Crossman, Rt. Hn. R. H. S.

Hughes, Emrys (S. Ayrshire)

Murray, Albert

Cullen, Mrs. Alice

Hunt, John (Bromley)

Newens, Stan

Dalyell, Tam

Irving, Sydney (Dartford)

Noel-Baker, Francis (Swindon)

Davies, Harold (Leek)

Jackson, Colin

Ogden, Eric

d'Avigdor-Goldsmid, Sir Henry

Jay, Rt. Hn. Douglas

Oram, Albert E. (E. Ham, S.)

Delargy, Hugh

Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

Orme, Stanley

Dell, Edmund

Jenkins, Hugh (Putney)

Page, John (Harrow, W.)

Doig, Peter

Jenkins, Rt. Hn. Roy (Stechford)

Palmer, Arthur

Driberg, Tom

Johnston, Russell (Inverness)

Park, Trevor (Derbyshire, S.E.)

Duffy, Dr. A. E. P.

Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

Parkin, B. T.

May I, however, have a ruling for the sake of future guidance? May we have your assurance that you do not presume to choose the opposition speaker on the basis of the timing of letters which you receive in advance that certain hon. Members wish to oppose the introduction of a Bill?
Mr. Speaker: The Standing Order provides that I may allow a short statement from an hon. Member who opposes any such Motion. What hon. Member I choose, I take it, is entirely a matter for the Chair. The reasons for the selection are never given. I do not think that it would be to the advantage of the House if they were. In the circumstances, without discourtesy, I decline to state any principle except the discretion of the Chair.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committee at commencement of Public Business):—
The House divided: Ayes 159, Noes 178.

Pavitt, Laurence

Short, Mrs. Renée (W'hampton.N.E.)

Thomas, George (Cardiff, W.)

Powell, Rt. Hn. J. Enoch

Silkin, John (Deptford)

Thomson, George (Dundee, E.)

Prentice, R. E.

Silkin, S. C. (Camberwell, Dulwich)

Thornton, Ernest

Prior, J. M. L.

Silverman, Julius (Aston)

Thorpe, Jeremy

Probert, Arthur

Skeffington, Arthur

Tilney, John (Wavertree)

Redhead, Edward

Slater, Mrs. Harriet (Stoke, N.)

Walden, Brian (All Saints)

Rees, Merlyn

Snow, Julian

Walters, Dennis

Reynolds, G. W.

Speir, Sir Rupert

Wigg, Rt. Hn. George

Richard, Ivor

Steel, David (Roxburgh)

Williams, Mrs. Shirley (Hitchin)

Ridley, Hn. Nicholas

Wilson, William (Coventry, S.)

Robinson, Rt. Hn.K.(St. Pancras, N.)

Stones, William

Wood, Rt. Hn. Richard

Rodgers, William (Stockton)

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

Yates, Victor (Ladywood)

Rogers, George (Kensington, N.)

Studholme, Sir Henry

Rose, Paul B.

Summerskill, Hn. Dr. Shirley

TELLERS FOR THE AYES:

Rowland, Christopher

Swingler, Stephen

Dr. David Kerr and

Shore, Peter (Stepney)

Taverne, Dick

Mr. Norman St. John-Stevas.

NOES

Alison, Michael (Barkston Ash)

Hamilton, M. (Salisbury)

Nugent, Rt. Hn. Sir Richard

Allason, James (Hemel Hempstead)

Harper, Joseph

O'Malley, Brian

Anstruther-Gray, Rt. Hn. Sir W.

Harris, Frederic (Croydon, N.W.)

Onslow, Cranley

Baker, W. H. K.

Harris, Reader (Heston)

Orr-Ewing, Sir lan

Barlow, Sir John

Harrison, Col. Sir Harwood (Eye)

Oswald, Thomas

Baxter, William

Harvey, Sir Arthur Vere (Macclesf'd)

Pearson, Arthur (Pontypridd)

Bellenger, Rt. Hn. F. J.

Harvle Anderson, Miss

Peart, Rt. Hn. Fred

Bence, Cyril

Heald, Rt. Hn. Sir Lionel

Pentland, Norman

Bennett, Sir Frederic (Torquay)

Heath, Rt. Hn. Edward

Percival, Ian

Bennett, Dr. Reginald (Gos & Fhm)

Henderson, Rt. Hn. Arthur

Pickthorn, Rt. Hn. Sir Kenneth

Berry, Hn. Anthony

Hendry, For bes

Pitt, Dame Edith

Binns, John

Hiley, Joseph

Price, J. T. (Westhoughton)

Black, Sir Cyril

Hill, J. (Midlothian)

Pym, Francis

Bossom, Hn. Clive

Hopkins, Alan

Randall, Harry

Box, Donald

Hordern, Peter

Redmayne, Rt. Hn. Sir Martin

Boyd-Carpenter, Rt. Hn. J.

Hoy, James

Ridsdale, Julian

Brewis, John

Hunter, Adam (Dunfermline)

Robertson, John (Palsley)

Bromley-Davenport,Lt.-Col.SirWalter

Hutchison, Michael Clark

Robson Brown, Sir William

Brown, Sir Edward (Bath)

Hynd, H. (Accrington)

Ross, Rt. Hn. William

Buchanan, Richard

Hynd, John (Attercliffe)

Russell, Sir Ronald

Bullus, Sir Eric

Iremonger, T. L.

Scott-Hopkins, James

Chichester-Clark, R.

Irvine, Bryant Godman (Rye)

Shinwell, Rt. Hn. E.

Clark, William (Nottingham, S.)

Jennings, J. C.

Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

Clarke, Brig. Terence (Portsmth,W.)

Johnson, James(K'ston-on-Hull,W.)

Sinclair, Sir George

Cooke, Robert

Kaberry, Sir Donald

Slater, Joseph (Sedgefield)

Cooper, A. E.

Kelley, Richard

Small, William

Cooper-Key, Sir Neill

Kenyon, Clifford

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

Cordle, John

Kerby, Capt. Henry

Smyth, Rt. Hn. Brig. Sir John

Costain, A. P.

Kershaw, Anthony

Stainton, Keith

Courtney, Cdr. Anthony

Kimball, Marcus

Stanley, Hn. Richard

Craddock, Sir Beresford (Spelthorne)

Kitson, Timothy

Stodart, Anthony

Curran, Charles

Lagden, Godfrey

Summers, Sir Spencer

Dalkeith, Earl of

Lawson, George

Taylor, Edward M. (G'gow,Cathcart)

Dance, James

Leadbitter, Ted

Taylor, Frank (Moss Side)

Darling, George

Legge-Bourke, Sir Harry

Temple, John M.

Davies, S. O. (Merthyr)

Lewis, Arthur (West Ham, H.)

Thomas, Sir Leslie (Canterbury)

Davies, Dr. Wyndham (Perry Barr)

Lewis, Kenneth (Rutland)

Thompson, Sir Richard (Croydon,S.)

Dempsey, James

Lewis, Ron (Carlisle)

Tinn, James

Digby, Simon Wingfield

Lucas, Sir Jocelyn

Turton, Rt. Hn. R. H.

Dodds-Parker, Douglas

McAdden, Sir Stephen

Tweedsmuir, Lady

Doughty, Charles

MacArthur, Ian

Urwin, T. W.

Drayton, G. B.

McBride, Neil

Walder, David (High Peak)

Elliot, Capt. Walter (Carshalton)

Mackenzie, Alasdair (Ross&Crom'ty)

Walker, Peter (Worcester)

Elliott, R. W. (N'c'tle-upon-Tyne,N.)

McMaster, Stanley

Ward, Dame Irene

Errington, Sir Erie

MacMillan, Malcolm

Weatherill, Bernard

Eyre, Reginald

Maginnis, John E.

Webster, David

Farr, John

Mahon, Simon (Bootle)

Wilkins, W. A.

Foster, Sir John

Manuel, Archie

Williams, Sir Rolf Dudley (Exeter)

Fraser, Ian (Plymouth, Sutton)

Mapp, Charles

Willis, George (Edinburgh, E.)

Galpern, Sir Myer

Marten, Neil

Wills, Sir Gerald (Bridgwater)

Gammans, Lady

Mathew, Robert

Wilson, Geoffrey (Truro)

Gilmour, Sir John (East Fife)

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

Wolrige-Gordon, Patrick

Glover, Sir Douglas

Mills, Peter (Torrington)

Woodburn, Rt. Hn. A.

Godber, Rt. Hn. J. B.

Mills, Stratton (Belfast, N.)

Woof, Robert

Goodhew, Victor

Milne, Edward (Blyth)

Yates, William (The Wrekin)

Gourlay, Harry

Monro, Hector

Younger, Hn. George

Gower, Raymond

Morris, John (Aberavon)

Grant-Ferris, R.

Murton, Oscar

TELLERS FOR THE NOES:

Griffiths, Peter (Smethwick)

Neal, Harold

Sir Charles Taylor and

Gurden, Harold

Nicholson, Sir Godfrey

Sir Cyril Osborne.

Hamilton, Marquess of (Fermanagh)

Noble, Rt. Hn. Michael

ORDERS OF THE DAY

  FINANCE (No. 2) BILL
  Considered in Committee [Progress, 25th May].
  [Dr. HORACE KING in the Chair]
  3.57 p.m.
  Mr. R. J. Maxwell-Hyslop: On a point of order, Dr. King. Would it be possible, do you think, for a supply of the list of Amendments selected, with the list of those which are to be discussed with them, and which appears to be duplicated anyway, to be available each day at the Vote Office for the convenience of Members, to avoid the necessity of copying down each day a very large number of Amendment numbers?
  The Chairman: This point has already been raised with the Chair and I have explained my reasons which make that, I think, impossible and impracticable.

  FINANCE (No. 2) BILL

    Clause 23.—(DEATH.)
    Amendments made: In page 22, line 16, after "any", insert "allowable".
    In line 26, after first "subsection", insert "allowable".
    In line 31, at beginning insert "allowable".—[Mr. MacDermot.]
    Mr. Peter Walker: I beg to move Amendment No. 260, in page 22, line 37, at the end to insert:
    (6) The provisions of subsection (5) shall likewise apply where a loss is sustained as a result of a disposal by the deceased's personal representative of any asset which but for that disposal would have been acquired by the legatee.
    This is the first of a number of Amendments to this Clause and to Clauses 24 and 25 which have regard particularly to the Capital Gains Tax to be applied at the time of death. On examination of the Clauses we have discovered what we consider to be a number of very important matters which do not follow logically from the general attitude of the Government to this question. This Amendment is to call the attention of the Committee to the fact that property which sustains a capital gain during the period that it is in the hands of the deceased's personal representative is
    622
    taxed for a gain while no allowance is given for a loss.
    Let me give two examples of this in operation. I think that hon. Members on both sides of the Committee will consider the effect to be obviously unfair. Take the case of a security which, at the time of the decease, is valued at £2,000 compared with its original value of £1,500. There will be Capital Gains Tax paid on the £500 worth of gain. If, during the period it is being supervised by the personal representative he has to sell the security for £1,500, a loss will have been sustained, but no loss will be allowable as against the gains in the previous two years. Or take the case of a security handed over at a cost of £2,000. During the period the personal representative is in charge of the security its value rises to £2,500: the personal representative will have to pay Capital Gains Tax.
    So the present position is that if during the period the personal representative is in charge the total gains during that period of his administration are in excess of the losses the Capital Gains Tax will be paid on those gains, whereas if, during that period, the losses are more than the gains those losses will not be allowed to be set against the previous year's gains of the deceased, as is normally allowed under another subsection of the Bill. This is an obvious case of an injustice that would be done and I hope that the Government will be able to accept the Amendment.
    The Financial Secretary to the Treasury (Mr. Niall MacDermot): From a purely personal point of view I find something fitting that the first Clause that we should be discussing today is entitled "Death". I hope that it is a Clause that we can dispatch in a speedy and painless fashion and not in a slow, lingering fashion. I can assist with this Amendment, and possibly others.
    The hon. Member for Worcester (Mr. Peter Walker) has referred to a small but important point for those concerned. The Bill, as it now stands, provides, as he said, that where a loss is incurred between the period of the death and the disposal of an asset by a personal representative that loss can be set off against any gain in the same period which may have been realised. Equally, it could have been carried forward if the asset is distributed to a legatee because that does

    623
    not count as a disposal and therefore the relief for the loss is available to the legatee.
    However, if a situation arises where the asset is disposed of, say by sale of the personal representatives in order to realise funds, and there is no other asset against which they can set it, as matters stand they will not be able to set off against gains in a previous year or if necessary previous two years. I think that it will commend itself to the Committee as being right and fair that we should extend this provision for carry back and setting off losses against previous years and should extend it to this particular type of loss.
    Mr. Peter Walker: I am grateful to the Financial Secretary, but I want to make the point that this is not a small affair—
    Mr. MacDermot: I had better finish off. I have forgotten one of the points. This is on the form of the Amendment. In view of my assurance, I invite the hon. Gentleman to withdraw his Amendment because there are certain drafting difficulties which we would like to put right on Report.
    Mr. Peter Walker: I will make the point that this is not a small matter by any means. On the occasion of death, as we know from the current penal level of death duties which applies, there is a very considerable liquidation of assets that has to take place on the part of the personal representative of the deceased. This is an Amendment which, if it had not been put on the Notice Paper by this side of the Committee, would have resulted in very substantial capital gains losses not having the benefit of the other part of the Bill relating to the gains made in the last two years.
    It is surprising that seeing that there is so much realisation of assets taxable on the part of personal representatives, the Government did not cover this point in the original Bill. This is indicative of many parts of the Bill where an amendment is needed and has been spotted on this side of the Committee and is probably due to the hurried way in which the Bill has been brought to the Committee. There will be many things after the Bill is passed that will need major amendment of this kind.
    624
    We are grateful to the Financial Secretary for agreeing that the original Bill was badly drafted and in view of his remarks I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. MacDermot: I beg to move Amendment No. 292, in page 23, line 14, at the end to insert:
    (9) For the purposes of this section in its application to Scotland, where the deceased person was an heir of entail in possession of an entailed estate, whether sui iuris or not, or a proper liferenter of an estate, he shall be deemed to have been a person competent to dispose of such estate.
    This Amendment provides for the application of the charge on death in this Clause to two special Scottish cases, namely, the heir of entail in possession of an entailed estate and the proper liferenter of an estate. In respect of these two Scottish cases which do not fall within the definition in subsection 8 of Clause 23 of the property of which a deceased person was competent to dispose, they are valuable interests which pass on death and ought to be within the scope of the charge. This Amendment is designed to see that they do so.
    Amendment agreed to.
    4.15 p.m.
    Mr. Peter Walker: I beg to move Amendment No. 244, in page 23, line 23, at the end to add:
    (10) Where the gains mentioned in subsection (2) of this section do not in the aggregate exceed five thousand pounds those gains and the following gains (hereinafter in this subsection called "trust gains") namely—

    (a) gains accruing to a trustee on the disposal of settled property to a person who as against the trustee becomes absolutely entitled to the property on the death of the deceased, and

    (b) gains accruing to a trustee on a disposal deemed to be effected in accordance with section 24(4) of this Act on the death of the deceased

    shall be aggregated and only so much of the aggregate as exceeds five thousand pounds shall constitute chargeable gains of the trustee.
    Where the trust gains accrue to more than one trustee or set of trustees or accrue in respect of property which is not all held upon the same trusts immediately after the death the reduction in the amount of the trust gains which are to be treated as chargeable gains shall be apportioned as may be just.
    This, once again, is an important matter of principle because, as the Committee will be aware, under Clause 23,

    625
    as far as the Capital Gains Tax is applied at the time of death, the Bill provides that the first £5,000 of such gains shall not be charged for the purposes of the tax. This is an important concession, but we do not consider that it is big enough. We are opposed to Capital Gains Tax being applied at all at the time of death, but this concession does apply upon the death of an individual, but does not apply as far as settled property is concerned.
    This Amendment seeks to ensure that in the case of the death of a person which results in the disposal of the settled property the £5,000 concession shall be provided and goes on to provide that in the case of a life interest under a settlement that the £5,000 concession should be provided there. There can surely be no valid argument why property existing under a settlement should not obtain at the time of death exactly the same conditions as a property which is not under a settlement.
    This is probably another case where the Government have failed to be logical in their approach to the Bill and I hope that now this side of the Committee has pointed out this important injustice that the Financial Secretary will be able to see his way to accepting this Amendment.
    Mr. MacDermot: In view of the somewhat tart remarks made by the hon. Gentleman the Member for Worcester (Mr. Peter Walker) at the end of the discussion of our last Amendment, perhaps I should explain that our position in this matter was not a matter of oversight. There is a balance of consideration and a balance of argument. I will explain this briefly.
    The £5,000 death exemption is really designed to serve two purposes. First, to meet the arguments that because an individual's assets are deemed to be disposed of on his death on their transfer to other persons, an unusually large amount of gains may accrue on the death with the result that for the person of moderate means the alternative basis of charge which we were discussing yesterday, which is available in the case of a disposal during a lifetime, is not valuable for disposal on death. This point applies to free property, but does not
    626
    apply to settled property. The settled property on all occasions is subject to tax at the flat rate of 30 per cent. From that point of view there is a logical basis for distinguishing between the free and the settled property.
    I think that the case made by the hon. Gentleman on the second point is stronger. The reason for the exemption is to provide, as far as one can, in what is known to be a somewhat rough and ready way, relief for the hardship which may sometimes arise in the case of a deceased person's widow or other dependants where they are of moderate means. Obviously, this is the basis of the Estate Duty exemptions and the second of those reasons, in a broad sense, is, I think, equally valid in relation to gains which are deemed to accrue to trustees on the death of an individual.
    It does not follow that it will be a widow who will necessarily be deriving the benefit of the passing of the interest on death under a settlement. More often than not, if there is a widow, it will be, but, clearly, the considerations which are valid here for the free estate are valid also for the trust estate. So, on balance, and on reconsideration, we are prepared, if that is the wish of the Committee, to meet the Amendment and to allow any unused portion, as it were, of the £5,000 exemption on the free estate to spill over to the trust property. We would like to look at the precise wording of the Amendment, but if the hon. Gentleman is content to accept my assurance, I undertake to bring forward an Amendment on Report to give effect to what he wishes.
    Mr. Peter Walker: Nobody gives concessions more reluctantly than the Financial Secretary. It is very difficult to discover, until almost his last sentence, whether he is giving a concession or turning down a request. He is so reluctant to give this one that I am almost afraid to leave him with the drafting of the revised Amendment, lest all the arguments that he posed against the Amendment come to bear during the intervening period, and he finally does not agree to it.
    But, knowing that if that happened we could have a fierce debate on Report, and knowing that the successful debates that we have had so far are at last beginning

    627
    to have their effect on the Government and they are beginning to realise, if too late, that it is wise to accept our Amendments, and in view of the hon. and learned Gentleman's last few reluctant phrases, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Question proposed, That the Clause, as amended, stand part of the Bill.
    Mr. Geoffrey Lloyd: I am very much alarmed at the effect of this Clause on the family business, and particularly the small business, and I should like the Financial Secretary to explain whether the effect is as serious as I believe it to be.
    I speak in this matter very much with a Midland background. Birmingham and the Midland area generally are, in a way, par excellence the home of the small business. It has always been said in Birmingham, and it still is, that a man on the shop floor has a better chance of setting up his own business and ending up a rich man, and in some cases a millionaire, than in any other city in the country. I know several men who started on the shop floor and who are now rich, controlling important businesses which contribute particularly to the motor industry.
    Lest it be thought that this is a passing problem in the days of very big companies, let me say that in Birmingham we do not believe that the day of the small man in industry is over; and I can give one very good reason why. It is that the very big companies which are engaged in massive assembly work still need the skill of the small man. This arises particularly with regard to parts which are too small for the big organisations to be troubled with. For example, one big motor firm in Birmingham gives out subcontracts of about £300 million a year to various smaller and medium-sized firms in the area.
    In a small firm, and particularly a family firm, when death takes place there is a shock to the development of the business in any case, and this was recognised by a Conservative Government, who some years ago gave some concessions to help small firms. It is the effect of the Clause on the shock, which is in any case inevitable up to a point, in the development of
    628
    small businesses about which I want to ask the Financial Secretary today.
    Our Estate Duty has been considered to be fairly high, but it seems that because of this Clause the transfusion, the blood-letting, of money from a small business will be very much greater, and I should like to ask the Financial Secretary whether I am right in a particular case on which I have worked. Nobody at this stage of this Bill, with all its complications, can be sure that he is right in his figures, unless he has all the resources of the certificated and incorporated accountants of the United Kingdom working for him. We must, therefore, put forward our cases with some degree of diffidence, and I am really asking for assistance.
    I want to examine the effect of the Clause on a small business. I am supposing that a small man started a business with £1,000, and when he died the business was worth £20,000. I have taken fairly easy figures. My calculation is that on the present basis of Estate Duty there would be 12½ per cent. to pay on the business and on the estate, which would come to £2,400.
    Let us examine the position that would arise under the Clause. I take it that there is a capital gain in the first place of £19,000. He would be excused £5,000, and, therefore, the effective chargeable capital gain would be on £14,000. If he paid, as I imagine he would, at 30 per cent., that would be a charge of £4,200. He would then pay Estate Duty at 12 per cent. on the remainder. That would come to £504, and thus the total tax, if I am correct; and this is what I want to ask the hon. and learned Gentleman about—would be £4,704.
    If that is so—and in a way I can hardly believe that my figures are correct—is it really the intention of the Government that an extra charge of well over £2,000—the difference between £2,400 and £4,700—should be levied on a small business of this character?
    Mr. William Baxter: As I understand, on the £18,000 that would be due for tax under the Clause the rate would be 30 per cent., which would be £6,000. If there were an exemption of £5,000 the individual estate would be liable for only £1,000. I do not think that that is unreasonable.
    Mr. Lloyd: I thank the hon. Gentleman for his intervention, which proves that the Committee would like to know from the Financial Secretary what really would be the amount of tax which a business of this kind would have to pay.
    4.30 p.m.
    Sir Henry d'Avigdor-Goldsmid: Unlike my hon. Friend the Member for Worcester (Mr. Peter Walker), I think that a night's rest has done the Financial Secretary no end of good. He has come here in a much more benevolent mood than yesterday. I hope that he will have another good night's sleep tonight, and that he will be in an even better mood tomorrow.
    I have a particular point to raise on this Clause. In the first place, speaking generally, the Clause adds fresh terrors to death. As has been said, in many respects it may multiply the extent of death duty. As to the actual machinery, with which, of course, the Financial Secretary is greatly concerned, presumably the Capital Gains Tax will be paid by the estate before probate is granted. How are we to arrive at the appropriate capital gain to be taxed? It is only the very rare bird who keeps such infinitely careful records of capital transactions that the actual dates of the purchase of securities are registered.
    There may be many cases where last in first out applies and so the actual figure on which Capital Gains Tax is charged is something not immediately ascertainable by applying to the bank for a list of securities. When it is necessary to get all this information, which, in many cases, may be very complicated, before it is possible to apply for probate, the hon. and learned Gentleman, from his experience at the Bar, will recognise that it puts a severe charge on the estate which is charged interest on the Estate Duty from the time of death. Whether that interest is paid to the revenue or the bank from which the money is borrowed, it still remains a charge on the estate. My first point relates to the particular difficulty of calculating the exact Capital Gains Tax to be levied while interest is running at such a penal rate against the estate as a whole.
    My next point applies particularly to subsection (9) of the Clause. This is the machinery of relief in respect of a family
    630
    rearrangement which may take place within 12 months of death. From knowledge derived from his experience at the bar I am wondering whether the Financial Secretary thinks it practicable to achieve such a family rearrangement within 12 months, taking into account that the actual amount of gain is not known, for the reasons which I have given, and the tax has not been accurately calculated; and also bearing in mind that there may be minority interests and that these things take a great deal of time to resolve. I feel that there should be power for the commissioners to extend the period of 12 months for a further 12 months, or to a convenient period, because as it stands now, that concession ends up by being valueless.
    I began by saying that the Financial Secretary appeared to be refreshed by his night's sleep. I hope that he will admit that these are valid points which need consideration and that perhaps an instruction to the commissioners might help to meet the last point which I have raised.
    Mr. Aidan Crawley: I wish to support what has been said by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd). This Clause contains provisions for a backhanded method of increasing death duty. It may be said that the £5,000 limit of exemption protects the small man, but the people who will be hardest hit are the medium men. I am thinking particularly of farmers and members of professional firms.
    In the discussions which we have had on farming a good many people have assumed that the expenditure on buildings, and so on—which might be written off against a Capital Gains Tax—are the things which increase the value of a farm most. This is not so. The increase in the value of a small or medium farm is created by the skill of the farmer. I am sure that hon. Members can think of as many instances as I can of a bad farm having been taken over by a young man who, for 20 years, may have worked himself into the ground to convert it into a highly productive unit.
    It is a question of good husbandry, cropping, proper rotation, herd management, and so on. Such a farmer would be the sort of man who, to reseed, would work half-way through the night by the

    631
    light of tractor head lamps. At the end of 20 years the farmer may have doubled or trebled the value of his farm, having spent only a very small sum of money on buildings or anything of that kind which could be set off against this tax.
    Why has he worked so hard? He may have hoped to retire, although there are Clauses in the Bill which make it much more difficult for him to do so, and probably he will hang on for longer than he should. He may be lucky enough to have a son farming with him who wishes to take over when he dies. It is possible that at the time of the farmer's death the capital gain, resulting from the causes I have mentioned, cauld be very much like the sum of £20,000 mentioned by my right hon. Friend the Member for Sutton Coldfield. The son would take over, no doubt having ideas of his own about expansion. It is at the critical time when he is taking over the farm that he is faced with the need to find £2,000, £3,000 or £4,000 in cash because of the way in which the provisions in this Clause, in effect, add to death duties.
    The same is true in relation to a professional firm. I have talked with accountants and others who have partnerships in small firms. They contribute their work and their contacts to the firm, without any capital expenditure, in the hope that if they live long enough they may be able to retire in some comfort, or when they die, and have a son in the business, he may take over.
    This Clause is a deliberate attack on the family business, as one of my hon. Friends has already said. It is a damaging attack on small and medium businesses run by individuals. From the point of view of hon. Members opposite the family business is anti-social. The family itself is anti-Socialist because it is a natural unit and independent of State control. I suppose that in the view of hon. Members opposite a family business is a form of social injustice because it gives a group of people independence from State control and because it allows that group of people to employ others to help with their ideas.
    We are constantly hearing from hon. Members opposite that they attack the institution of private property in the interests of social justice. I make only
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    one comment. There are far greater social injustices than come from any possession of property. Far the worst and most horrible forms of social injustice, particularly during this century, have come from the concentration of too much power into the hands of small groups of people who think that they have all the answers to the problems of society. That is what we are fighting in our opposition to the Bill, and the Government.
    Mass murder on an unprecedented scale has been perpetrated during this century, and quite recently, in the name of the equality and social justice. I can only say that inequalities in property-owning is a very small price to pay for the liberty that a man can retain to oppose the concentration of power into the hands of small groups, which, inevitably, will misuse it because of the corruption which power exercises. I oppose the whole of the Clause and the whole idea of a backhanded increase in death duties. For the same reason I oppose the whole of the Bill.
    Mr. W. Baxter: I do not wish to follow the sentiments expressed by the hon. Member for Derbyshire, West (Mr. Crawley). His past can well answer what he has said at present. It ill becomes us to look at what we have done in the past in order to try to justify our present actions.
    This is a serious question and I think that the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) put his finger on a very interesting point. I would declare my interest, as I am one who has come from a shop floor and established a reasonably small business. Naturally, I am not opposed to other people following in my wake. I am very much concerned about the fact that taxation—of this nature or in the form of straight death duties—could, and has in the past, sometimes put businesses out of operation. It should not be the endeavour of any Government, irrespective of complexion, to frame taxation in such a way that it would, on the death of the principal of the business, cause that business to be liquidated. It that were so, it would dry up a terrific source of potential future wealth.
    I am happy to see the concessions which have been made by my hon. and

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    learned Friend on the last two Amendments. I took the opportunity of interrupting the right hon. Member for Sutton Coldfield. If my suggestion were accepted I think that it would be a more reasonable method of approaching this problem. I should have thought that taxation of a capital gain of £18,000 on a business of £20,000—after death duties—would make it prohibitive to keep that business going. I do not think that it would be unreasonable if that tax were based on 30 per cent. of the remainder of the business, the £18,000. A relief of 5 per cent. on that 30 per cent. would bring it down to a tax of roughly £1,000. Even at that—
    Mr. Edward Heath: I am following the hon. Member's argument carefully, because it is interesting and important. I do not see how he reaches the figure of the tax paid of £1,000. If one takes 25 per cent. of £18,000, as he is suggesting, surely it is far larger than the figure which he reached.
    Mr. Baxter: The right hon. Member for Sutton Coldfield stated a hypothetical case of a man who started a business from the shop floor with £1,000 of capital. That man expanded his business until he died. When he died it was valued at £20,000. In the right hon. Member's calculations of death duties of 12½ per cent., that leaves a total of roughly £18,000, which would be liable for Capital Gains Tax. If I have misunderstood the right hon. Member, I shall give way. I think he said that that would give that man a capital liable for Capital Gains Tax, based upon his interpretation of this Clause, of £18,000. He would be asked to pay Capital Gains Tax on that—
    Mr. Geoffrey Lloyd: It was actually £19,000, as the man started with £1,000 and finished with £20,000, as a result of a lifetime of work.
    4.45 p.m.
    Mr. Baxter: He left £18,000, on which Capital Gains Tax would have to be paid. I have taken off £1,000, which leaves that man with £18,000 of capital gains—[Interruption.] Not at all. He has paid a certain amount in death duties. This is the case put forward by the right hon. Member, and, assuming that his facts and figures are correct, he has argued that the man will be paying Capital Gains Tax on £18,000. I have
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    suggested that if that were so, that would be a wrong method of taxation, but that if the tax were 30 per cent. of the £18,000 on which he had to pay tax, that would be £6,000. If he is relieved, by the Amendment which has been agreed, of £5,000 of the total amount, he would be liable to pay £1,000 in Capital Gains Tax.
    Mr. Peter Walker: I am sorry to interrupt the hon. Member in a complicated mathematical calculation, but the £5,000 is not a reduction from the tax; it is a reduction from the amount of the gain upon which the tax is charged. I agree with him that this excellent proposal makes a difference.
    Mr. Baxter: I agree that, on a strict interpretation of the Clause, it can mean what one wants it to mean, but I understood that we had a concession from the Financial Secretary to redraft the hon. Member's Amendments. In the course of the redrafting of those Amendments, my hon. and learned Friend might satisfy the requirements of my argument. He needs only to say what the Capital Gains Tax would be or what the Capital Gains Tax—
    The Chairman: So long as the hon. Member was explaining what he thought the tax meant, he was in order. He is not in order now in translating his argument into an Amendment to the Clause as it exists.
    Mr. Baxter: I agree, Dr. King. I was, in passing, about to suggest that, at least, if this were redrafted, a little more rethinking could go into the whole question.
    No Government should operate a system of taxation which would put out of operation businesses of national importance. I appeal to my hon. and learned Friend that, in the course of redrafting, he should give a little more consideration to the point which I have mentioned. Many of us have come into contact with people who, at the time of death, were small businessmen, and whose relatives have great difficulty in raising the funds to pay the death duties. At that time, a widow has great difficulty in getting a business to move in the proper way. She sometimes has to encourage very heavy expenditure—I have practical knowledge

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    of this—by having to get some experienced person in to try to take up where the husband has left off. That can be extremely difficult.
    While one has agreed that proper methods of taxation must be put into operation, we must have regard to the consequences of our action in undermining, in some way, the position of a very important member of our community, the small business person.
    Mr. Peter Walker: This debate is of tremendous importance. I cannot emphasise enough the points made by my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) and by my hon. Friend the Member for Derbyshire, West (Mr. Crawley) about the effects of the Clause upon small businesses. The remarks made by the hon. Member for West Stirlingshire (Mr. W. Baxter) show, I think, that he was genuinely shocked when he discovered that this was the position.
    The hypothetical case mentioned by my right hon. Friend the Member for Sutton Coldfield was that of a person who starts a business into which he has put £1,000 of capital or even less. As the hon. Member for West Stirlingshire said, this is the common position of the person who starts a business absolutely from scratch and leaves his previous occupation to do so—the genuine, small businessman. I must declare an interest in this, in the sense that I started my business with no capital, and therefore, whatever its value now, would, if it had taken place after 5th April, be almost completely subject to Capital Gains Tax and to death duties.
    This is the position of the majority of small businesses in this country. Many start off with very little money and the capital gain is almost 100 per cent. In the example of a man who has spent most of his life building up a business from a capital of £1,000 to £20,000, we are talking in the future. The position on 5th April applies to a person starting today with £1,000 and who, over the next 15 or 20 years, builds it up to £20,000. If the level of death duties remains as at present, he will pay 12 per cent. or £2,400 in death duty. This in itself is quite a heavy load.
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    Under the Clause, £19,000 of gains will have deducted from it before the tax is charged the sum of £5,000, and, therefore, the tax will be applied to the balance of £14,000 and he will pay a Capital Gains Tax of £4,200. That tax will be deducted from the total value of the business for the purpose of payment of death duties. For payment of death duties, therefore, his estate will be £15,800, on which he will pay 10 per cent. or £1,580, making a total payment of death duties and Capital Gains Tax of £5,780 as opposed to the present £2,400.
    If these figures are not correct, I hope that the Financial Secretary will say so. If they are correct, this is the result of the Bill upon a person who has built up a business in his lifetime; and in his case the major factor of capital gains is the goodwill of the business which he has built up. On that relatively small business this man's Estate Duty will have been trebled by the application of the Clause. I do not think that the country are aware how heavily this Clause will affect the small family business, the farmer and others of a similar character.
    I ask the Financial Secretary to recognise that on the smaller estates he has made a penal increase in Estate Duty. It is less so on the bigger estates, because they are already paying a rate of death duty well above the 30 per cent. level. In proportion, therefore, the increase is not as heavy on the bigger estates. But on the smaller estates, where there is a large factor of gain over the lifetime of the person concerned, there is an enormous increase in the level of Estate Duty. In the example which I have given, Estate Duty has been trebled as a result of the application of the Clause.
    There are other disadvantages connected with this imposition of the Capital Gains Tax at the time of death. There is the argument advanced by the hon. Member for Manchester, Cheetham (Mr. Harold Lever) that this is a tax which should be imposed on people who can bear the burden of the tax; he would prefer a wealth tax to this proposition. In Estate Duty we have the type of tax which the hon. Member for Cheetham admires levied on the total wealth of the person. But it is proposed to distort this tax by adding to it a charge which

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    can be of considerable proportions, depending upon whether the assets have been static in value during his life-time or whether through his work during his life-time he has added to them and has attracted Capital Gains Tax in this way. If a person were left £20,000 of assets, added nothing during his lifetime and left £20,000 on death, he would be charged £2,400. If a person had worked hard during his lifetime and had built up an estate of £20,000, he would be taxed £5,780 at the time of death.
    I suggest that this is one of the most disgraceful elements in the Bill. The Government have added to death duties an element whereby a man who has enhanced his fortune during his life-time pays a heavier level of tax than the man who has not enhanced his fortune during his lifetime. This is an incredibly bad principle to work. It adds further to the general incidence of death duties in this country.
    Continually throughout the discussions my right hon. Friend the Member for Bexley (Mr. Heath) has emphasised the important aspect of international comparisons in a world where trade is international and where the young executive and the man of enterprise travel extensively. Comparisons are important. Our levels of death duty are very much higher already than in such countries as the United States, and very much higher on people with small estates. To add this not inconsiderable burden of increased taxation at the time of death will make the young entrepeneur who wishes to establish a business and build it up for his family consider very carefully where he should establish that business.
    There are persons who would not normally pay Estate Duty at all because of the size of their estate. If a person has an estate of £5,000 at the time of death, no payment of death duty will be made at all. But if that £5,000 contains a substantial element of gain during that person's lifetime, tax will be charged at 30 per cent. on part of whatever he leaves at death. This is a wrong imposition upon people with smaller estates. I ask the Government to recognise that this is a fundamentally wrong Clause. If they want to apply a Capital Gains Tax, certainly apply it at the time of realisation or spending by the individual, but to apply it at the time of death when the
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    person is leaving the estate to his widow or his son, and to apply it at the penal levels outlined here to the man building up a small business, will attract the very fierce disapproval of the country.
    Mr. Harold Lever: I must, first, declare an interest in that, contrary to the suppositions of the Whips' Department, I believe myself to be mortal, and hence I imagine that the provisions of the Clause could come into operation against myself. Being anxious to accept the invitation of my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) to speak with candour, I think that I should declare that interest.
    The Financial Secretary will be relieved to know that I propose to express strong support for him. It is true that it will take the form of inviting the Government to drop the whole proposition of making Capital Gains Tax payable on death. But I think that, on reflection, they will come to the conclusion that there is a good deal to their advantage in the invitation, which they may well accept, to be big about this and not merely to content themselves with a useful Amendment, but to throw out the whole miserable idea of bringing Capital Gains Tax to bear on death. That is my view unless I am persuaded otherwise—and I, at any rate, regard myself as an open-minded person.
    I have spoken to many persons of all shades of political opinion and all parties about death duties, and I have yet to meet anybody who does not regard the present level of duty on estates of all sizes, big and small, as being already at a rate so penal that they could not conceivably with equity be increased.
    I therefore want to know why it should be thought desirable, on the death of any person, who automatically thereby brings his assets within the grip of the most ruthless, penal and progressive rates of Estate Duty, at that point of time to inflict Capital Gains Tax before assessing Estate Duty. It seems to me that some explanation is owed to the Committee on this point, and I invite the Minister to give it. Does he agree that an estate which comes within the grip of our present level of Estate Duty is already bound to pay the present progressive rate of tax, a rate as steep as

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    anybody would consider reasonable and bearable?
    5.0 p.m.
    The objection to the present level of Estate Duty is the fact that very few people pay it. But, ex hypothesi, the Clause will bear on those people who do pay it. The people who avoid and evade it will not bear the Capital Gains Tax on their estates. I am, therefore, not talking about them because the Clause will not apply to them. The Clause will apply only to those whose estates fall within the grip of what is already recognised by all shades of political opinion to be an exceedingly penal rate of tax. I therefore beg the Government to look at the matter again with an open mind because I believe that to do so would be in their interest.
    All intelligent people would agree that it is easy to come to a wrong conclusion on a matter of this sort. That is why I urge the Government to reconsider the matter. One sees that the Government were minded to introduce this proposal to deal with possible avoidance devices of Capital Gains Tax and the like. They should realise that the only people who will be affected by the Clause are those whose whole estates come within the grip of the already penal level of Estate Duty. It is, therefore, difficult to support the case for putting a Capital Gains Tax on top of this Estate Duty.
    I wish that hon. Gentlemen opposite would not impute to the Government stupid, juvenile, malicious and spiteful motives. It does not add to the mature level of debate for us to have to listen to talk of that kind. Hon. Gentlemen often complain that my views and arguments are not always followed by my voting in a similar direction. I will dispose of that rather juvenile and immature argument in advance on this occasion by saying that an hon. Member who believes in what the Government are doing must want to keep them in office.
    Mr. Danied Awdry: Is the hon. Gentleman implying that if the Government lost a Division on an Amendment of this sort they would have to leave office?
    Mr. Lever: I did not say that. In deciding how to cast his vote an hon.
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    Member must decide whether or not he has general support for the Government. While I may not regard the Government as a compost of all the perfections possible in Government, considering the alternative Government displayed to me I have no hestitation in wishing to sustain the present one in office. On the other hand, criticism is free. A supporter of the Government must, when considering how he will vote, bear in mind all the matters relating to his Government and not base his thoughts on the merits of a single Amendment, Clause or even Bill.
    Mr. Heath: If the hon. Gentleman maintains that we should not be allowed to use such words as "stupid", "spiteful" and "immature" can he suggest any reason why the Government have introduced this proposal?
    Mr. Lever: I would not presume to curtail the arguments of hon. Gentlemen opposite. It is up to them to say what they wish to say. That is a matter for them to decide in relation to what it is proper, reasonable and fair to say. However, if they want my opinion as to how this proposal came into being, I suggest that it came about because of extreme pressure on the Government as a result of the disgraceful inactivities on the part of the former Administration, who left the present Government with a huge deficit of matters to be attended to, particularly in the sphere of taxation.
    The Government had to undertake rapid action to put things right, including a comprehensive fiscal programme. They were concerned that their proposals should take effect and not be avoided or evaded too readily. Thus, they came forward with this Measure, which is open to correction, addition, subtraction and comment. I believe that the Government came to this conclusion because they were troubled about the possibility of tax avoidance.
    I hope that, on reflection, my right hon. Friend the Chancellor will come to the conclusion that since Estate Duty already takes care of all these matters, including deferment, and also because of the severity of the proposal, the matter should be set at rest and the Amendment accepted. It should not be said that because the Government are prepared to accept an Amendment that

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    implies that the original Clause was spiteful or malicious. It has often been known for previous Governments to accept Amendments without it being inferred that they had been stupid, dishonest or motivated by base intentions.
    It has been said that the Government are motivated by passionate, fanatic egalitarianism and that that is the sort of passion for equality which caused mass murder in the past. That sort of thing comes ill from hon. Gentlemen opposite, most of whose arguments have proceeded on the basis that they are spokesmen for a small investor farming marginal land, missing one leg and encumbered by innumerable sick dependants. Every part of the Bill has been subjected to a supposition of that kind. I have not made my plea for small estates, marginal hill farmers, and so on. I have referred to all those who are subjected to the present high levels of Estate Duty.
    The Financial Secretary's history is of a rather selective kind. A great many of the millions of people who have been murdered in the past and who entered mass graves did so because of racialist and other differences between man and man and not because of any passion for equality. One chastening word, because I do not wish to preach; we might hear a little less xenophatic wisecracking from hon. Gentlemen opposite. That might help matters a lot.
    Sir John Foster: When my hon. Friend the Member for Worcester (Mr. Peter Walker) referred to the figure of £5,000, I thought that he had in mind—
    Mr. Peter Walker: Before my hon. and learned Friend goes any further, it might help if I point out that I made a mistake when I mentioned the figure of £5,000. Of course the exemption figure will apply.
    Sir J. Foster: I rise merely to ask the Financial Secretary to explain the meaning of subsection (8), which deals with
    "… references to assets of which a deceased person was competent to dispose are references to assets of the deceased which (otherwise in right of a power of appointment or of the testamentary power conferred by statute to dispose of entailed interests) he could … have disposed of by his will, assuming that all the assets were situated in England and if
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    he was not domiciled in the United Kingdom, that he was domiciled in England".
    I do not understand the last part of that subsection and I wonder why it was not drafted simply to read that if he was not domiciled in the United Kingdom it was assumed that he was not so domiciled. Obviously if he was domiciled in England he would obviously be domiciled in the United Kingdom, so I do not see the necessity for the present drafting.
    The Minister without Portfolio (Sir Eric Fletcher): There is also Scotland.
    Sir J. Foster: That is so, in which case it could have referred to Great Britain and Northern Ireland. It is assumed that he is domiciled in the United Kingdom—and Scotland is in the United Kingdom—and therefore I do not see why the subsection should proceed on the assumption that because he was domiciled in the United Kingdom, remembering that that covers Scotland as well, we could not simply say, "It must be assumed that if he was not domiciled in the United Kingdom he was not domiciled in England". If one is domiciled in England one is obviously domiciled in the United Kingdom, so I do not see why we have the phrase:
    "… if he was not domiciled in the United Kingdom, that he was domiciled in England".
    The Clause applies upon the death of an individual and one must assume that the individual would have been subject to the Capital Gains Tax anyway. Therefore, such an individual would be ordinarily resident in the United Kingdom; and this bears on Clause 19(7), which refers to
    "… individuals resident or ordinarily resident but not domiciled in the United Kingdom …".
    Am I right in thinking that during their lifetime people resident and ordinarily resident in the United Kingdom but not domiciled in the United Kingdom pay Capital Gains Tax only on the disposal of assets situated outside the United Kingdom? If they received the gain inside the United Kingdom—and I think this is common ground—does not the subsection have the effect of bringing in those people's capital gains on death whether or not received in the United Kingdom? If so, it is a very big change, because the process of argument is as follows.

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    The Clause applies to an individual who dies. The individuals must be those classes of people subject to capital gains. There are two classes—those ordinarily resident in the United Kingdom and domiciled there, and those ordinarily resident but not domiciled there. Therefore the wording covers both classes of those people subject to Capital Gains Tax. The difference between them is that the people resident and ordinarily resident in the United Kingdom and domiciled there have to pay Capital Gains Tax on all their assets. The people resident and ordinarily resident there but not domiciled in the United Kingdom only pay on capital gains remitted to this country.
    We then see that Clause 23 deals with the death of an individual, so I have assumed that the death of the individual applies to this class of people. We then have to ask what assets we cover. By Clause 23, on the death of the individual, we cover all the assets of which he was competent to dispose. Turning to subsection (8), we find that the assets which the deceased was competent to dispose are all his assets, on the assumption that they are all situated in England and that the deceased was domiciled in England.
    Let us take, as an example, Mr.X, who lives in Australia, who is domiciled in Australia and resident and ordinarily resident in England during his lifetime. He sells his small business in Australia. This is not the big sheep farm of which the hon. Gentleman makes a debating point. He speaks of the big sheep farm and every hon. Member behind him says, "How dreadful". Therefore, let us take the small business, which the man sells during his lifetime. He does not remit the proceeds to England. All his assets are deemed to be in England, he is deemed to be domiciled in England, and I think that he pays capital gains on the sale of the small business although he has not remitted the proceeds to the United Kingdom.
    Mr. MacDermot: The hon. and learned Member for Northwich (Sir John Foster) has asked me some specific technical points, so let me try to answer them while they are fresh in my mind. I say at once that I have such respect for the hon. and learned Member's knowledge of this
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    branch of the law that if he says that the subsection is not clear to him it makes me at once want to look again at the drafting, because I then wonder to whom it would be clear, if not to him.
    The intention of the provision relating to England is that, in order that the extent of the liability on death should not vary with variations in the law of other countries about the deceased person's right to dispose of immoveable property, the subsection provides that the assets of which he is competent to dispose should be, as it were, on the footing that the assets were in England and he was domiciled in England. That is the purpose of the provision, and the reason for it—
    Sir J. Foster: I was asking why the Clause was not drafted that he was not "so domiciled", because if he is domiciled in England he is domiciled in the United Kingdom.
    Mr. MacDermot: This is a drafting point. I am telling the hon. and learned Gentleman what the intention was, but I shall certainly be glad to have the drafting looked at to see whether—if the hon. and learned Gentleman agrees that it is a proper and right intention to attain—we can achieve it by a less ambiguous form of words, if the present form is ambiguous.
    5.15 p.m.
    The hon. and learned Gentleman also expressed concern lest the effect of this provision would be that a person resident but not domiciled here would, under the provisions of the Bill, only be liable to Capital Gains Tax on gains outside the United Kingdom in so far as they were brought here and remitted to this country. He was afraid lest this wording should result in all gains, as it were, being deemed to be remitted to this country. That is not the intention. It is intended that the provision shall govern only the method of assessment and not the liability to charge. But, again, I assure the hon. and learned Gentleman that I will have the wording looked at in order to see whether we can improve its form, and put these matters beyond doubt.
    I turn now to the main subject of debate, which is whether or not this Clause should stand part of the Bill. Perhaps I could remind the Committee

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    that this is what we are discussing. We are discussing whether or not death shall be an occasion of charge to Capital Gains Tax. Perhaps in a moment I could deal with certain specific questions, particularly those in relation to small businesses, but let us be careful, whilst attaching importance to the particular, not to argue from the particular to the general. We are here concerned with the general.
    I believe it to be general common ground in the Committee that it is desirable to introduce a long-term Capital Gains Tax. In any event, the Committee did not divide on Clause 18, which decided that matter. I do not know whether we are agreed upon what the objectives of the long-term tax are and what purpose it is intended to serve. We have formulated our reasons for introducing it and the objects we are seeking to achieve, and we would be interested to know to what extent right hon. and hon. Members opposite share those objectives with us.
    Having stated our objectives—I will not weary the Committee by repeating them; we have stated them many times—the general pattern that we have thought it right to develop for this tax is, broadly speaking, that the occasions of charge should be the occasions of transfer of capital assets from one person to another. That can occur in many ways; not only by sale but also, and essentially for the effective working of the tax, by gift and upon death. Because we are now discussing transfer on death, hon. Members end to compare it with, and perhaps even think of it as, something similar to Estate Duty. That is a misconception that I should like to try to clear away at the outset. The two are entirely different things, serving an entirely different purpose and levied upon different things. The Capital Gains Tax on death is levied on capital gains, and levied only upon capital gains which are realised on the death, and in the normal case will constitute only a relatively small part of the total estate. The total estate passing on death will not constitute net capital gains to a large extent—
    Sir Douglas Glover: How does the hon. and learned Gentleman differentiate? They will all be capital gains.
    Mr. MacDermot: Tens of thousands of people in terms of the number of people
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    who die in the community are small numbers compared with the total. I am coming to the question of the small business, but cannot hon. Gentlemen manage for a moment to take a rather broader view and look at the effect of this tax in order to compare it with Estate Duty as this generally falls to be levied? I know there are special cases, and hon. Members have been arguing about a special case which I shall come to, but in the ordinary way on an ordinary estate when one adds up the amount of the estate it is surely incontrovertible that in the majority of cases the amount of capital gains in the estate will certainly not be anything like the figures we heard in the example put before the Committee this afternoon.
    The Capital Gains Tax is a tax on those capital gains realised at this time and disposed of, in the legal wording. Estate Duty is something quite different. It is a duty on the total value of the wealth of the deceased person passing at the time of the death. There is no comparison between the two and no relation between the two, except in so far as Capital Gains Tax which is to be levied on the occasion of the death falls to be paid out of the estate. It naturally therefore comes into the reduction of the net estate for the purpose of assessing Estate Duty.
    If we were to omit death altogether as an occasion of charge, as hon. Members opposite suggest, we would be driving a very large hole and making a very large gap in the whole system of the tax. They do so in the United States. It is known for this reason as "the death gap", and that is what it is, a major gap in the whole taxation system. If the object is to see that on grounds of equity capital gains should be subject to tax at whatever is thought to be the fair rate, if we allow a gap of this kind it would mean that a very large amount of capital gains would escape tax, not merely temporarily. It would not be a matter of being deferred, but it would escape completely.
    Mr. Harold Lever: My hon. and learned Friend is not suggesting that tax avoidance would be sought in this manner if he gave way on this suggestion?
    Mr. MacDermot: What I am seeking to convince my hon. Friend of is that the proper way to levy this tax and

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    bring it into existence is not to bring it in with a large built-in gap of this kind which would result in a very large avoidance of the duty.
    There are, of course, many kinds of property which, if they were not subject to Capital Gains Tax at death, would in effect escape the tax completely because they do not get transferred by means of sale. An obvious example is a controlling shareholding in a family company which can pass on death to members of the family and would never be subject to tax at all. This does not happen only in relation to small businesses. This can happen in relation to very large concerns indeed. If hon. Members think it right that those people should be privileged and able to go on accumulating and building up capital gains without ever being subject to Capital Gains Tax, well and good, let them say so, but this would be the effect of exclusion of charge on death.
    Mr. Raymond Gower: How can the hon. and learned Gentleman say that it is a great privilege when, as his hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) has pointed out, when a person dies a very heavy death duty has to be paid? Does he regard that as sufficient?
    Mr. MacDermot: I told the Committee yesterday that my experience is that the more I give way the more is the length of my argument. If hon. Members will be patient I assure them that I intend to meet this point.
    Let us come to the special argument put forward and the pleading made on behalf of the small man. I was asked by the right hon. Member for Sutton Cold-field (Mr. Geoffrey Lloyd) whether I accepted the arithmetic of an example he gave. I think he has been corrected by his hon. Friend the Member for Worcester (Mr. Peter Walker), who put forward the correct figures on the supposition which was made. Let us get clear what the supposition is. I am not saying that it is a case which does not occur. It does and can occur many times, but it is a rather special case.
    It is the case of a man who builds a business starting with a very small amount of capital indeed. The example given
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    was that of a capital of £1,000 and presumably over a large part of the man's working life the business was built up to a point at which it was worth £20,000. The assumption is that he has not put anything more into the business in the meantime. He has not ploughed back profits into the business or acquired fresh capital; it has been entirely built up by his own exertions, and the greater part would be the result of his goodwill and in that sense quite clearly the result of his own personal efforts.
    In that special case of course I accept on the figures which have been established that this would result in a very substantial difference in the position on death, or at least it would do so when the Capital Gains Tax reaches its full effect, which will not be for another 15 years. The immediate effect of the incidence of Capital Gains Tax will be only on gains since Budget Day. So to start with the incidence will be minor.
    Mr. Peter Walker: Surely what the hon. and learned Gentleman said, which will go on the record of this Committee, is not so. He has given the impression that this would not apply until the end of 15 years. If one started a business today and it increased in value in the next five years from £1,000 to £20,000 and then the person died, this would apply.
    Mr. MacDermot: The hon. Member is quite right. I was assuming that the man had built up the business over a lifetime of work. I quite agree that if it was built up over five years the full effect would be felt within five years.
    In the case of a business built up by the more normal process where there is a ploughing back of assets and other moneys are put in, there would of course be considerable allowable expenditure for the purpose of assessing Capital Gains Tax. One would arrive at a very different figure for the amount for which the man with the estate would be liable for Capital Gains Tax and the amount liable for the purposes of Estate Duty. This serves to emphasise what tends to be lost sight of, especially when one talks of a case of this kind, that these are different taxes levied on different things.
    Mr. Geoffrey Lloyd: Would it be possible for the Financial Secretary to tell us what would be the effect on a business

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    if it were ploughing back the 40 per cent. allowed under the closed company provisions later in the Bill? Is that too much to ask now?
    Mr. MacDermot: It would be too much for me; I am not an accountant. I do not know whether anyone else will be able to come to the assistance of the right hon. Member, but I shall try to get examples of that kind.
    Mr. W. Baxter rose—
    Mr. MacDermot: I should appreciate it if hon. Members would allow me to finish with this point. I shall gladly give way when I have completed the argument as a whole. On the whole I find that tends to enable me to be quicker.
    We come to the special case of the man who has built up a business on his own account. I indicated to the Committee yesterday that we wanted to look at and discuss this special case with the Committee in relation to an Amendment which is on the Notice Paper for discussion later. That deals with the case where he does not hold on to the business until death and then pass it on to his son, but where on retirement he sells the business in order to realise in effect what is the fruit of his life's work, perhaps to provide for the retirement of himself and his wife.
    5.30 p.m.
    I have indicated that we think that this is a case that deserves further consideration by the Committee. It would not be in order to discuss that now. All I can say is that I am very impressed personally by the arguments I have heard today about the not incomparable case of the man who has built up a business by his own work but who does not sell it in those circumstances but, instead, bequeaths it to his son. I do not want it to be thought that I am giving any kind of assurances or undertakings. I personally would like to consider these two matters together. We have heard the same argument raised in relation to farmers. The hon. Member for Derbyshire, West (Mr. Crawley) raised it today. It was raised by another hon. Member yesterday. Again, we will have an opportunity, hope later today, to discuss that case on another Amendment.
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    All I would say to the Committee is that the way my mind is moving is to think that these are special cases that we ought to look at and see what is the right and fair way to deal with them; but I personally would resist very strongly any argument that, because of that, one should throw out the baby with the bath water, as it were, and sweep away death as an occasion of charge altogether.
    I come to the argument advanced by my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). I got the impression that he did not object so much to the idea of death being an occasion of charge to Capital Gains Tax. He was concerned with what would be the effect of the inter-action of this with Estate Duty. My hon. Friend is obviously very critical of the operation of Estate Duty and thinks that this is something to which my right hon. Friend's reforming zeal should be turned. I will certainly draw my hon. Friend's remarks to the attention of my right hon. Friend the Chancellor of the Exchequer. I am sure that the Committee will feel after the exertions of the past few days that my right hon. Friend has bitten off quite a sufficient area of our taxation system to seek to reform at this time.
    As I pointed out, it is not as though the full impact of the Capital Gains Tax and the full impact of the Estate Duty law will immediately be felt together or come into collision, or whatever is the right word, because the introduction and operation of Capital Gains Tax will be fairly slow and gradual as a consequence of its taking effect upon gains only since Budget Day.
    I hope that, for these reasons, the Committee can proceed to agree to the Clause or, if the Committee is not agreed, can at least come to a decision on the main general question whether death should be an occasion of charge and then pursue at a later stage the special cases to which hon. Members have referred.
    Mr. Charles Fletcher-Cooke: The Financial Secretary has referred to the two examples, one given by my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) and the other by my hon. Friend the Member for

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    Derbyshire, West (Mr. Crawley), as in some sense exceptional. The hon. and learned Gentleman would be deluding himself if he thought that he can deal with them by some exceptional treatment. They are in fact absolutely typical cases of what happens if it is sought to charge Capital Gains Tax on an involuntary occasion.
    The Clause offends against what should be an absolute principle, namely, that Capital Gains Tax should not be charged, except on the beneficiary; not on a company or on a trust or anything like that, but only upon a beneficiary, upon a human being. Secondly, it should be charged only when that human being voluntarily disposes of an asset. After all, what is the object of the Capital Gains Tax? The Financial Secretary asked us to answer that question. I think that its object was put very well by the hon. Member for Colne Valley (Mr. Duffy) yesterday. He said that the object of the Capital Gains Tax was to satisfy the wage earner and the salary earner that those who have capital are not disposing of their capital and making an untaxed profit which they spend on loose living, or whatever it may be, whereas he, the worthy wage or salary earner with no capital, is taxed by P.A.Y.E., often at very high rates. That is a rough way of putting it, but it is a very good way. I accept that.
    If that is so, the only occasion when the Capital Gains Tax ought to attach is upon an individual when he voluntarily disposes of an asset. The Clause offends against both those propositions. When somebody is forced to dispose of his asset—there is nothing more forcible than death—the wage earner or the salary earner does not think that that should be an occasion when he should be mulcted. He is mulcted quite enough in Estate Duty, if he is a moderately rich or a rich man, as it is. Why should he be mulcted again? That is the simple question. The Financial Secretary says that they are different taxes and raised on different principles, but they hit the same man at the same time. They hit not only the man. They hit even more his widow and his children.
    Nothing that the Financial Secretary has said shows the need for this tax.
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    It is not shown that it fulfils the objects of this tax when it is on the occasion of an involuntary disposal. If the Financial Secretary and his hon. Friends were to cling to these two principles—that it should attach only to an individual, only to a man who can spend the money in the way that is so objected to, and only when he realises assets—they would find that the rest of the Bill concerned with Capital Gains Tax would go through much more easily, because there we agree with the hon. and learned Gentleman. It is on the question of this being in the interests of administrative efficiency or in the interests of what I regard as some bogus theory of equalisation or equality that the Government run into these difficulties. The Financial Secretary has run into them already. He will run into them again. If he were to cling hard to the two principles I have just enunciated, a very few hours would pass before we disposed of the whole of this part of the Bill.
    Mr. Joel Barnett: I, too, would like to declare an interest, though perhaps not the same sort of interest as was declared by my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), although death comes to us all. I hope that for the sake of my wife and family, the chief whip, and not least for myself, my demise and, therefore, the application of this Clause will be long delayed. The type of example my hon. Friend gave referred particularly to myself. I should therefore declare an interest in it. I have been able to build up a moderately successful professional practice and the Clause would apply to me, although, as I say, not, I hope, for a long time.
    I wish to disassociate myself from many of the words used by hon. Members opposite on the Clause. To describe my hon. Friends as anti-social and to use such words as "corruption" is madly to over-state a case. The case has also been overstated, at least to this degree. In the capital growth of this type of business or of other businesses which have been referred to there is the retained profit element. Then there is the goodwill element. This is why I was particularly pleased to hear that my hon. and learned Friend the Financial Secretary is prepared to look again and to think again about this latter element. I

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    am not opposed to the idea of taxing capital gain as such when there is a growth of retained profit, but I am certainly not happy at the idea of having a tax on this type of goodwill, particularly to a moderate degree. I feel that this will come very hard in the case of many comparatively small and medium-sized professional firms.
    I feel that present death duties are to a large extent evaded and avoided because of the enormous tax. If they were applied at a slightly less steeply progressive rate there might be less evasion and avoidance and the Government might very well receive more in revenue. As I said yesterday, evasion and avoidance and the incidence of tax are to my own knowledge closely correlated. I should like therefore to see a lower rate being applied. I hope that when my hon. and learned Friend considers this matter, even though he cannot go all the way with me, he will look favourably on it, particularly in relation to professional and similar types of business.
    Finally, may I say that whilst I have discussed with people the matter of avoidance of tax I have never suggested yet to a client that the best thing he can do to avoid tax is to drop dead. My hon. Friend the Member for Manchester, Cheetham referred to this Clause having been included in the Bill to prevent avoidance. I have never considered death to be the sort of method one could recommend for this purpose. Certainly it is hardly likely to be taken seriously by the recipient of such advice. However, I would once again express the hope that my hon. and learned Friend will at least consider seriously the possibility of excluding the type of goodwill I have described from this tax.
    Sir D. Glover: Most of the arguments have been stated, but I ask the Financial Secretary to realise that he is not talking about exceptional cases. He is talking about the greater part of family businesses, individual businesses and businesses established for anything up to 25 years. If this pattern continues, these will be exactly the sort of people who will be affected by Capital Gains Tax at death. The hon. and learned Gentleman said that Capital Gains Tax and death duties have nothing to do with
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    each other. This is rather like saying that when Sonny Liston had a left and a right from Cassius Clay they had nothing to do with each other, but they had an effect on Liston.
    The family firm to which reference has been made was having to find nearly £6,000 in taxation and would inevitably have to liquidate. It would not be able to borrow the money. It probably already has an overdraft in the bank to carry out ordinary business transactions. The family will not want to sell the business. Even the party opposite is surely not trying to do away with this sort of business, but if the Financial Secretary cannot put forward a worth while Amendment that is exactly what the Government will do in this Clause. I hope that it will be made quite clear by my right hon. Friends that if the Clause is not satisfactory then we shall amend it when we come to power.
    5.45 p.m.
    Mr. Gower: I must emphasise to the Financial Secretary that some of us are astonished at his attitude to this matter. Apparently he will have many occasions of nightmare when he will be worrying about the tiniest gaps in this capital gains structure. He has had ample evidence in the debate that the Clause is objectionable, and if he does not accept our evidence he must have noticed the very apposite objections of the hon. Member for Manchester, Cheetham (Mr. Harold Lever) and the hon. Member for Heywood and Royton (Mr. Barnett).
    My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) made a most valid statement about the position of small firms particularly in the Midlands, but I would remind him that this is not limited to the Midlands. He is probably aware that there are many feeder firms throughout the country. We have in South Wales small firms which feed the big motor car industries and other industries. I am sure that there are similar firms in Scotland where the people would like to see many more, and the same applies in East Anglia, Lancashire and particularly Merseyside. These are the kind of firms par excellence which are suited in size and type for the implementation of the development area policy about which the Financial Secretary and the Government have said so much.

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    In many parts of the country which have suffered in recent years from above average unemployment the available labour force is not sufficiently large to accommodate a great major industry, but it can accommodate and provide the labour for the sort of small company which is particularly threatened by this Clause. The Clause runs completely at variance with the development policy to which the party opposite has given so much support.
    We were told many years ago that the concept of a Welfare State was a policy of social welfare from the cradle to the grave. I begin to wonder whether the new vision which the party opposite has is of excessively heavy taxation from the cradle to the grave. Indeed, the Financial Secretary is disturbed and horrified at the thought that the slightest gap may exist in this great structure of capital gains legislation. Hon. Members opposite have accused us on this side of the Committee of being extravagant in our description of the effects of the tax and of the fears in the minds of many people, I can assure Ministers, and the Financial Secretary in particular, that those to whom I have spoken about the tax, and they are not necessarily keen supporters of my party, feel that this is almost a Labour declaration of war against the smaller and medium-sized companies.
    They are alarmed at the tendency displayed in the Clause and in the Bill. They are most despondent about the future prospects of their kind of smaller family undertaking. This is not limited to the smaller industrialist, but extend, as we have been reminded by my hon. Friend the Member for Derbyshire, West (Mr. Crawley), to the person who has a small or medium-sized firm and to those who are engaged in the practice of accountancy or the law. They are concerned because the person who builds up a small business or a practice of that kind has generally spent a lifetime not only in the work of building it up but in paying heavy taxation to the State all that time. At the end of such a career, he is to be mulcted in death duties and in this pernicious addition of the Capital Gains Tax as well.
    The Financial Secretary asked us what kind of Capital Gains Tax we had in mind when we discussed and assented
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    to the concept some years ago. We had in mind a tax which would do for capital in the hands of the entrepreneur or the ordinary person what the Income Tax does for the person earning income. We did not have in mind a tax operating on an involuntary and tragic happening such as death. We could not conceive of that as part of the tax.
    I hope that the hon. and learned Gentleman will realise that we object to the basis of the Clause. We object to it in principle. We accept the broad idea of a Capital Gains Tax, but we do not accept that it should apply on death. It ought not to be employed as a back door method of supplementing or increasing death duties. I hope, therefore, that the Committee will emphatically reject the Clause, or, if not, that we on this side will take an early opportunity to revoke it.
    Mr. J. Grimond: I am glad that the Financial Secretary has said not only that he will give the concessions which he mentioned earlier, but that he will look again at the very powerful case made about the man who builds up a small company to, say, the value of £20,000 and then finds himself badly caught by the Clause.
    I hope that the hon. and learned Gentleman will review the whole impact of the Clause. He said that the Capital Gains Tax was quite different from death duties, which is true, but he added that they were levied on different things. Admittedly, the tax will not be levied on all the assets which come under charge for death duties, but it is certainly true that everything that comes under charge for capital gains will come under charge for death duties, so to that extent they will be levied on the same assets.
    The hon. and learned Gentleman suggested that his hon. Friend the Member for Manchester Cheetham (Mr. Harold Lever) really wanted a reduction of the death duties. The hon. Gentleman certainly said that he thought that death duties were high, but I did not understand him to say that they ought to be reduced. His argument was that, as they were so high—it would be out of order on this Clause to suggest that they should be lower—it was wrong to impose on the same asset a further tax in respect of

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    capital gains. That seems to be eminently sensible and compelling.
    As the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) said, the whole principle of the Capital Gains Tax is that, when a person realises the asset which has gained in value, he comes under charge for tax. From now on in the Bill, this principle will be departed from more and more. In this and subsequent Clauses, we have to consider not a Capital Gains Tax but a wealth tax. There may be something to be said for a wealth tax, but it is a quite different matter and should not be imported in this way.
    As has been said, many people nowadays, foreseeing death duties, dispose of their assets long before death, and the person who will be caught by the full impact of both the Capital Gains Tax and death duties will be the man who is run over or who is quite fortuitously killed, leaving his family in extremely awkward circumstances, with no provision against his death. Whether he is a small business man or not, whether he is a rich man or a poor man, Parliament ought not to bring in legislation which will almost certainly have this effect in addition to the other effects.
    This is a total departure from the principle of the Capital Gains Tax. No one has hitherto suggested that, at a moment when the level of Stock Exchange quotations is very high, people should be compelled to realise their profits and assets. The amount payable in death duties is notoriously arbitrary, according to the value of the assets at the moment of death, and the value of capital gains will be extremely arbitrary, too. I do not suggest that this is a new difficulty, but it is certainly an additional one in this context.
    The hon. and learned Gentleman distinguished the practice in America, and he said that there is there what is called the "death gap".
    Mr. MacDermot: I pointed out that, so much is it recognised as a gap, it has been nicknamed the "death gap".
    Mr. Grimond: My impression is that the rate of death duties in America is very much lower than it is here, and, if there is a gap, there will not be the
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    same sort of gap in this country because people will be caught through death duties.
    The major and more serious point which the hon. and learned Gentleman made was that there could be evasions through transfer of controlling shares in private companies. I am not quite clear how this is relevant to the Capital Gains Tax, but let us assume that it is. In other parts of the Bill there are very stringent measures against the operation of private companies, for instance, in the distribution of their income, and people will not be able to salt away large capital gains in private companies nearly so easily as they might have done a year or two ago. It is important to look at the whole effect of the Bill on private companies, not simply picking out particular parts.
    We are grateful to the hon. and learned Gentleman for looking at various points again, but the principle of the Clause is suspect on the very arguments which the Government themself have used. They have insisted that the Capital Gains Tax is a matter of principle, founded upon principle, and not a wealth tax. If that is so, it is a serious departure from principle to treat involuntary transfer on death as the same as a deliberate realisation of gains.
    Mr. Marcus Kimball: I want the Financial Secretary to look at this matter not just in the context of the small farm and small estate about which my hon. Friend the Member for Derbyshire, West (Mr. Crawley) spoke. If it is unfair to add Capital Gains Tax to death duties for the small business and small estate, it is even more unfair to do it for larger businesses and larger estates.
    It is important that the Financial Secretary should realise that this iniquitous addition to death duties does not apply in the United States of America. People are not made to pay Capital Gains Tax in addition to death duties there. Moreover, rates of death duties in the United States are a great deal lower than they are here. On 250,000 dollars 32 per cent. is paid, and in this country 32 per cent. is paid on a total estate of £45,000. Now, there will be the additional burden of the Capital Gains Tax iniquitously put on top.

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    The Financial Secretary said that he would look at the case again. I hope that he will not look at it just below the bogey of £20,000 which has been talked about today. If it is unfair below that bogey, it is equally unfair above it.
    6.0 p.m.
    Sir Harmar Nicholls: The theory of the Committee stage is that we pool our experience in order to help legislation, having settled the point of principle. I wish to make a small contribution arising out of what the Financial Secretary said. It was clear that he wanted to be helpful. He said that he was apprised of the point and had full authority to say that the Government would look at it.
    What worries me about his statement and what caused me to feel that my experience, added to the experience of others, should be brought into the Committee was his allusion to exceptions. The example that was produced by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), of a person building up a small business from nothing, which does not have new capital put into it but which reaches a value of £15,000 to £20,000 over, say, 20 years, is not an exception.
    The exception is the bigger concern which has capital injected into it and goes through the paraphernalia of being organised as a big company. I assure the hon. and learned Gentleman that, while the whole tenor of his remarks gave the impression that this matter concerns the minority, it is, on the contrary, the majority. If the hon. and learned Gentleman goes to any town or city or district he will see, for very established firms of some considerable size, two or three concerns built up on the lines described by my right hon. Friend—the small wholesaler dealing with retail outlets and the sub-contractors who service the bigger firms, for instance.
    These concerns are an important part of our engineering strength. If he tours the Midlands, visiting perhaps Wolverhampton and Birmingham and my new City of Peterborough, which is developing into a precision engineering centre, he will see in every little area firms of this description. If it is that the hon. and learned Gentleman has in mind making an amendment to omit what he calls the
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    exceptions, I suggest that he is going the wrong way round. It would be better if he made the main framework of the Bill capable of taking this into account and making the exceptions those who do inject their capital and could come under a different sort of rule from the one he has described.
    The hon. and learned Gentleman's words hold out hope and if it is that they were based upon real understanding of the position I would feel that we would perhaps get some satisfaction out of it, but as long as he and the Government approach this matter with the idea that the sort of case quoted by my right hon. Friend is an exception, they are bound to give the wrong answer.
    If we can approach it from the point of view that we are not talking about exceptions—even in large numbers—but about the norm, and if it is that legislation irritates them and mitigates against them, then it is mitigating against the majority of business. I believe that it would be better for the main framework of the Bill to take into account the fact that it is the others which are the exceptions. If that is done, it will prove a better way of getting out of this dilemma.
    Mr. Geoffrey Lloyd: I started this debate by putting to the Financial Secretary a hypothetical case. I ventured to put forward calculations of the effect of the Clause as compared with what such a business would pay under existing law. I did so with some diffidence because, as I said, it is difficult for the average citizen and for the average Member of Parliament, even with advice, to be sure that he will get his calculations right under the Bill.
    In his reply, for which I thank the hon. and learned Gentleman, he confirmed the fact that I had underestimated the increased charge that will be payable by £1,000. My hon. Friend the Member for Worcester (Mr. Peter Walker) had already corrected me, but the fact is—and it is just as well to bring it out towards the end of the debate on the Clause—that, instead of paying £2,400 as under existing law, such a man would pay £5,780. That is obviously a very considerable added burden.
    It is quite clear from the debate that many hon. Members on both sides feel that something wrong is being done by

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    the Clause as it stands and that we would be making a charge upon a small business passing at death, which goes against the instincts of this Committee and the country because they know that it will do harm.
    I found it difficult to follow the hon. and learned Gentleman when he tried to argue that there was no relevance—that on the one hand, we were dealing with estate duty and, on the other, dealing with a quite different tax, the Capital Gains Tax. It is extraordinary to me that, as a Member of Parliament if not as Financial Secretary, he could not understand that the amount of money that has to be found by the family at the point of death is the thing that matters to the ordinary citizen.
    I find myself in some difficulty. I would like to thank the hon. and learned Gentleman for the fact that he has made a half-concession, without going very far, in saying that he will look at the Clause again. But I find it difficult to do so although I would like to on purely personal basis because he charms us with his efficiency and the way in which he tries to help. But we are entitled to say to all the small businessmen, and to all those men working on the shop floor and in other circumstances who are looking forward to setting up on their own, that, if it had not been for the alertness of hon. Members on this side of the Committee, this injustice would have gone straight through the Committee stage.
    This is one further example of the fact that this is a most ill-considered Bill to which not nearly enough time has been given to the Revenue to consider these proposals so that they shall not bear hardly on the citizens.
    Mr. Awdry: I understand that the Financial Secretary has not even given a half-concession. He said that he had listened to the arguments, that there was a case in them that he personally would support, but that he could give no assurance. Flow can one possibly make law like that? We are here dealing with new law that will be in effect for many years.
    In a debate of this kind, one hopes to see a great many hon. Members on
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    both sides of the Committee making their contributions. However, on the benches opposite below the Gangway, there are about six hon. Members present, although we have had three excellent speeches from them. The hon. Member for Manchester, Cheetham (Mr. Harold Lever) says that when the time comes he cannot vote for us on this because, otherwise, the Government may be put in difficulty. But the Government will not fall if one single Clause of this frightful Bill is improved.
    Surely, if we can show in argument the strength of our case and he admits its strength, he should support us. He says that we might impute motives. I do not impute any motives to the Chancellor or to the Financial Secretary, but this is a very important Clause and it is no use saying that there is a subtle difference between an estate duty and a capital gains tax. What is the use of saying to a widow who is writing out a cheque for duty, "Do not worry. Half is for Estate Duty and half is for Capital Gains Tax"? This is a scarcely thought out tax with great injustice and I hope that the hon. Member for Cheetham will support us.
    Mr. Victor Goodhew (St. Albans): I warn the Financial Secretary that, if he turns down the Amendment and accepts the Clause as it stands—
    Mr. MacDermot: To which Amendment is the hon. Gentleman referring? We are now debating the Question, That the Clause stand part of the Bill.
    Mr. Goodhew: I beg the hon. and learned Gentleman's pardon. If the Clause is accepted as it is, the Government will be admitting that, in their anxiety to stop up any loopholes, they are prepared to indulge in double taxation. This is not the first occasion in the Bill when we have come across double taxation. Although the hon. and learned Gentleman looks wearied by my argument, I hope that he will accept from me that people do not like paying tax twice on one item. Is the Estate Duty which is assessed on the death of a person assessed at the point after Capital Gains Tax has been paid or before? This could have a big bearing on the value of the estate for Estate Duty purposes.
    Mr. MacDermot: It is a pity that the hon. Gentleman was not here at an earlier stage of the discussion when this point was made clear. Liability to Capital Gains Tax falls on the estate. Therefore, when calculating the net estate for purposes of levying Estate Duty, naturally a deduction is made for the sum paid by way of Capital Gains Tax.
    Mr. Goodhew: I am grateful to the hon. and learned Gentleman. I hope that he is not castigating me for not being here during the whole of the Committee stage. We have all done our best to attend and to take a keen interest. I hope that he will think very carefully about this principle of double taxation, which seems to be cropping up again and again on this Bill.
    Mr. Harold Lever: I wish to deal briefly with the point made by the hon. Member for Chippenham (Mr. Awdry) and then very briefly with what my hon. Friend the Financial Secretary said.
    The hon. Member for Chippenham must bear in mind that hon. Members on this side are at least as much concerned about people who are in difficulties upon death as hon. Members opposite. I am prepared to accept their sincerity in this matter. They must accept the sincerity of hon. Members on this side who will vote for the Clause, even though a little sadly, because we hope that later it will disappear from the Bill.
    As I have said before, we are faced with a choice of evils. Nobody can compare the small evil which will be perpetrated if the Clause remains in being with the evil of almost immeasureable magnitude which would occur if the Government were to fall and were replaced by the Conservative Party. We simply cannot do anything which might risk the prospect of having another what are already known classically as 13 wasted years. I beseech hon. Members—
    Mr. Anthony Berry: The hon. Gentleman says that the Clause will disappear. Would it not be right for him to disappear while the vote is taking place?
    Mr. Lever: There are certain disadvantages which might result from
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    accepting the hon. Gentleman's impartial guidance.
    I have every sympathy with the Financial Secretary when he says that what should have been reformed in relation to small business long ago—in the 13 wasted years—was the penal rate of Estate Duty which bears on the owners of small businesses. It is only right to say that my complaint arises from the piling of Pelion on Ossa, but Ossa was the responsibility of Members opposite.
    I am grateful to my hon. Friend the Financial Secretary for the unfailing courtesy and resilience which he shows when criticised on these matters. I assure him that I did not trouble the Committee on this point without realising that Estate Duty was one thing and Capital Gains Tax quite another. The point which he makes is that if the two together bear harshly and oppressively on the citizens of this country, the thing to do is to reform Estate Duty. With great respect, we are dealing with Capital Gains Tax, and he has not given me an answer to my question, and I should like him to do so, if only metaphorically with his hand on his heart. Does he think that the present rates of Estate Duty are such that on estates, big and small, and without having regard to Capital Gains Tax, the amount paid by the beneficiaries of the estate is already high enough?
    Secondly, I know that avoidance is the origin of the Clause, but it is as well to remind the Treasury that these Bills are drafted for human beings and not for lemmings.
    6.15 p.m.
    Mr. Heath: As befits this Clause, this has been a very sober-minded debate. It has been one of the most impressive debates we have had during the Committee stage of this long Bill. I do not think that any of the Treasury Ministers or the Minister without Portfolio can be under any misapprehension about the immense strength of feeling on both sides of the Committee about this Clause. Apart from the speeches of my hon. Friends, we have had speeches from three hon. Members opposite—one an accountant, one a lawyer, and one a Member who has built up his own business from nothing. No one could be better experienced than those three Members to express a view on this Clause. Every one

    665
    of them was hostile to the Government and expressed criticism of the Clause.
    What I propose to do is to give the same sort of wholehearted support to the Financial Secretary as the hon. Member for Manchester, Cheetham (Mr. Harold Lever) did, which is to advise him to drop the Clause. We shall, in any case, divide the Committee against it. We all understand the position of the hon. Member for Cheetham. He must not mind if we point out that his vote differs from his voice. We understand the reason for it. If it is a question of either having his vote with the Government and hearing his voice or not having the latter, I must say that we would rather have both. We should prefer to see him vote with the Government and express his views frankly, because they are very valuable and serious and entirely on our side.
    The hon. Gentleman asked for an assurance from the Financial Secretary. He said that the present rates of Estate Duty are high enough, and, therefore, the deduction which I make—[Interruption.] The hon. Gentleman's phrase was "high enough". Therefore, he was implying that if we pile Capital Gains Tax on top of Estate Duty, we should reduce the Estate Duty. The Financial Secretary cannot possibly give such an assurance because it would undermine the whole of his intellectual argument in supporting the Clause. The intellectual argument is that these are two entirely different and separate things. The fact that it wrecks one's firm, breaks up one's trust or ruins one's family is nothing to do with it because in the mind of the Financial Secretary and his colleagues they are two entirely separate and different matters. That is why the Financial Secretary could not give the undertaking for which the hon. Gentleman rightly asked. On his present basis, he could never give such an undertaking.
    We have two objections to the Clause. There is, first, the objection of principle and, secondly, there is the objection of practice. Both have been discussed in the Committee. I can deal with the objection of principle quite briefly. It is that after deduction of the £5,000 allowance and of the amount of the Capital Gains Tax, there is double taxation on the estate. Hon.
    666
    Members opposite are prepared to accept this. For our part, we strongly object to it. The introduction of double taxation is most objectionable. This is the argument of principle and I do not believe that it can be denied, although I accept that perhaps even the hon. Member for Cheetham is not greatly concerned with the argument of principle. He is, however, concerned with the argument of practice.
    Mr. Harold Lever: I shook my head because this is no double taxation which I ventured to define the other day, namely, where the same tax is applied to the same corpus. Here two different taxes apply to the same corpus. It is not double taxation any more than to put a tax on beer is double taxation when the money used to buy it has already borne Income Tax.
    Mr. Heath: One is an expense and one an Income Tax. The hon. Gentleman is falling for the same fallacy as the Financial Secretary.
    The Financial Secretary made a great deal of the alleged death gap in the United States. We are beginning to think that he views any death gap as being one between the estate and what the Treasury gets from the estate. That is the death gap to which he objects. In the United States there is one tax in life and one tax in death. There are the normal taxes in life and there is Estate Duty on death. In life there are the Capital Gains Tax and Income Tax. What we are getting now is one lot of taxes in life and then both lots in death. It is this to which we object and to which the hon. Member for Cheetham has objected. So we are agreed on this point.
    The Financial Secretary has tried to diminish the point of this by saying that it will be a slow and gradual process. This is the reverse of the hon. and learned Gentleman's argument last night. When asked to give figures for the cost of the tax, he promptly said £45 million, with the implication that it would happen straight away. This, however, is to be slow and gradual. We are beginning to be impressed by the fact that the Government have introduced the Bill in the frame of mind that it will take a long time to come into effect and that they will not get it anywhere near right to begin with, so that they will slap it on and, as the Chancellor has said, they

    667
    can go on amending it year after year until they get it right.
    That is not the frame of mind in which to introduce a major item of taxation such as this. It is even less justifiable for Corporation Tax, which is to come into effect straight away and many of the results of which can be catastrophic. I cannot accept that because this will take effect over a period—although, as my hon. Friend the Member for Worcester (Mr. Peter Walker) said, it can be a comparatively short one in the case of building up a business and a man's sudden and unexpected death—this is any justification for the hon. and learned Gentleman's attitude.
    Now, we come to the arguments in practice. These have been put by my hon. Friends and by hon. Members opposite in great detail. The Financial Secretary to the Treasury indicated rather that the small man was a special case. Even when giving the figure of 10,000, he said that that was very small compared with the number of people who die each year. The fact that 10,000 is a small figure compared with those who die each year does not, however, alter the fact that from the viewpoint of firms, family businesses, the impact on industry and, above all, the impact upon those who should be building up for the future, it is an item of major importance.
    The hon. Member for Heywood and Royton (Mr. Barnett) emphasised from a professional point of view the importance of goodwill in this matter. I entirely agree; this is an important element. We also have the practical example from the hon. Member for West Stirlingshire (Mr. W. Baxter) of an entirely different type of business which will be affected in exactly the same way. There are a very large number of these small businesses. My family was concerned with a small one of this kind. I have no interest in it myself, but it is a good example of exactly how these businesses will be hit.
    The way in which this tax has been introduced, in addition to the present Estate Duty, means that for the first part it has become a regressive tax. It will hit the small man and the medium man very hard indeed where there is an element of capital gains of any consequence. However much one criticises the present level
    668
    of Estate Duty—and I would not differ in doing that—one can at least say that it is a progression, although it may be very steep. The effect of combining these two taxes, however, is to produce, particularly in the sort of level which we have been discussing, the £20,000, £30,000 or £40,000 business, a vicious regression. This is something to which we object.
    The Financial Secretary has today accepted two Amendments to the Clause, he has introduced one of his own which the Committee has accepted and he has offered an undertaking to look at the question of the reaction of this tax on the small business. The hon. and learned Gentleman said that he was impressed with the argument. What must strike the Committee is the number of times that we raise these specific cases when the Government suddenly say, "Of course, we now realise that there is a point here." It indicates the other thing underlying the Government's attitude.
    I am prepared to accept the view of the hon. Member for Cheetham concerning the sincerity of the Government's motives, but they are obsessed with dealing with the large estates. That is the trouble. They have a neurosis about it. It goes right back into the history of the party opposite, way back to 1931. They are obsessed with high estates and duchesses. They thought that it was duchesses who brought them down and they are always afraid of the same thing happening. Now, they are afraid of large estates. The result is that they do not take time to look at the consequence for the small or middle man.
    However much the Government are obsessed with great estates, the numbers of small and middle men are infinitely greater, and in industry and in the economy they are infinitely more important. This is the great weakness of the present Administration in their approach to policy and in their formulation of legislation. That, I believe, is the real explanation.
    I also find difficult to understand the Financial Secretary's point about the controlling interest in the company, because that is liable for Estate Duty just as much as anything else, unless he tries to imply that there is value in the element of control as apart from the sharing interest. This becomes a complicated

    669
    matter, as we all know. I cannot see that the hon. and learned Gentleman has any justification for saying that this would be a case of evasion. I am prepared to accept the word of the hon. Member for Cheetham, who is an expert on evasion as used by other people—I give him full marks for that.
    I take the hon. Member's word upon it that those who make other arrangements, who are usually those with considerable wealth, will not be affected by this proposal. It is the middle and smaller people, who, because of the level of wealth, cannot make prior arrangements, who will be particularly affected by the combination of the Capital Gains Tax and Estate Duty.
    I have one other point to put to the Financial Secretary. Under the Married Women's Property Act one can settle so that an estate is split up between the wife and the children and the rate is then charged at a lower rate. Again, on capital gains one cannot do this. Therefore, this again will bear particularly hardly in these circumstances.
    Finally, I come to the high level of this tax and its consequences when combined with Estate Duty. In the United States, in the case about which we were talking, the equivalent of £20,000 is free of Estate Duty. I realise that the Financial Secretary's argument will be that according to "MacDermot's law" this is a strong argument for having a much higher level of Capital Gains Tax. A we have our Estate Duty starting at a much lower level, we are really highly sinned against. This is altogether rather undesirable but, nevertheless, as we have it, we also must have a much higher Capital Gains Tax to go with it. That was the essence of the hon. and learned Gentleman's argument last night. I believe that this in itself is part of what is becoming penal taxation and, on the small man, almost confiscatory in its consequences.
    The Financial Secretary's argument was that these were two different taxes and that, therefore, we must look at them separately. I believe that the hon. and learned gentleman has become the prisoner of a logical system, and his colleagues with him. We see this on the Corporation Tax, also. They have
    670
    become the prisoners of a so-called intellectual logical system. What we are having to do all the time is to point out to hon. Members opposite as forcibly as we can the practical consequences of this. We are being helped by hon. Members on the other side. Each time, the Financial Secretary says that he will make a special arrangement and all these things point to the fact that the system itself is unsatisfactory. This is fundamentally what is wrong in this case.
    Because of the arguments of principle and of the consequences in practice, we are opposed to the imposition of capital gains in the case of death. I accept that the Financial Secretary will look at the case of the small business and, of course, I accept his good motives. It comes back to my mind, however, that on Second Reading of the Finance Bill I pointed out the effect that the 10-year review would have on trusts and on small businesses. I said that
    "where they exist for a family company"—
    they could—
    "be damaging and lead to the break-up of family companies on death."
    HANSARD then reports the Chief Secretary to the Treasury as saying
    "And about time."
    In fairness to the hon. Gentleman, it was not the Chief Secretary, but the Joint Under-Secretary of State, the Department of Economic Affairs, who interjected "And about time". That indicated the Government's approach to the small business. It indicated clearly that it would be damaged and broken up.
    I went on to say that
    "what the Labour Party want to do is to damage and break up family companies even where they are efficient and growing."—[OFFICIAL REPORT, 10th May, 1965; Vol. 712, c. 72.]
    I should have said:
    "particularly where they are efficient and growing".
    because this is the consequence of the combination of these two taxes. When we have that voluntary explosion from that Front Bench—saying, "It is about time" that companies were broken up—one asks oneself: can we have any confidence in the Government's undertaking to see these small business men are fairly dealt with?

    671
    6.30 p.m.
    For these reasons, of both principle and of practice, we object strongly to the Capital Gains Tax being combined with Estate Duty. We do not believe that it ought to be applied in these circumstances. The Financial Secretary has been asked to review this. I believe that he

    Division No. 139.]

    AYES

    [6.31 p.m.

    Abse, Leo

    Hamilton, William (West Fife)

    Park, Trevor (Derbyshire, S.E.)

    Albu Austen

    Hart, Mrs. Judith

    Parker, John

    Allaun, Frank (Salford, E.)

    Hattersley, Roy

    Parkin, B. T.

    Allen, Scholefield (Crewe)

    Hazell, Bert

    Pavitt, Laurence

    Armstrong, Ernest

    Healey, Rt. Hn. Denis

    Pearson, Arthur (Pontypridd)

    Atkinson, Norman

    Heffer, Eric S.

    Pentland, Norman

    Bacon, Miss Alice

    Henderson, Rt. Hn. Arthur

    Prentice, R. E.

    Barnett, Joel

    Herbison, Rt. Hn. Margaret

    Price, J. T. (Westhoughton)

    Baxter, William

    Hill, J. (Midlothian)

    Pursey, Cmdr. Harry

    Bellenger, Rt. Hn. F. J.

    Hobden, Dennis (Brighton, K'town.)

    Randall, Harry

    Benn, Rt. Hn. Anthony Wedgwood

    Holman, Percy

    Rankin, John

    Bennett, J. (Glasgow, Bridgeton)

    Houghton, Rt. Hn. Douglas

    Redhead, Edward

    Binns, John

    Howell, Denis (Small Heath)

    Rees, Merlyn

    Blackburn, F.

    Hoy, James

    Reynolds, G. W.

    Blenkinsop, Arthur

    Hughes, Emrys (S. Ayrshire)

    Roberts, Albert (Normanton)

    Boardman, H.

    Hunter, Adam (Dunfer line)

    Robertson, John (Paisley)

    Boston, T. G.

    Hunter, A. E. (Feltham)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Bottomley, Rt. Hn. Arthur

    Hynd, H. (Accrington)

    Rogers, George (Kensington, N.)

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

    Hynd, John (Attercliffe)

    Rose, Paul B.

    Boyden, James

    Irving, Sydney (Dartford)

    Ross, Rt. Hn. William

    Braddock, Mrs. E. M.

    Jackson, Colin

    Rowland, Christopher

    Brown, Hugh D. (Glasgow, Provan)

    Janner, Sir Barnett

    Shinwell, Rt. Hn. E.

    Brown, R. W. (Shoreditch & Fbury)

    Jay, Rt. Hn. Douglas

    Shore, Peter (Stepney)

    Buchanan, Richard

    Jeger, George (Goole)

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Butler, Herbert (Hackney, C.)

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Short, Mrs. Renée (W'hampton.N.E.)

    Butler, Mrs. Joyce (Wood Green)

    Jenkins, Hugh (Putney)

    Silkin, John (Deptford)

    Callaghan, Rt. Hn. James

    Jones, Dan (Burnley)

    Silkin, S. C. (Camberwell, Dulwich)

    Castle, Rt. Hn. Barbara

    Jones, J. Idwal (Wrexham)

    Silverman, Julius (Aston)

    Coleman, Donald

    Jones, T. W. (Merioneth)

    Slater, Mrs. Harriet (Stoke, N.)

    Conlan, Bernard

    Kelley, Richard

    Slater, Joseph (Sedgefield)

    Corbet, Mrs. Freda

    Kenyon, Clifford

    Solomons, Henry

    Craddock, George (Bradford, S.)

    Kerr, Dr. David (W'worth, Central)

    Soskice, Rt. Hn. Sir Frank

    Cronin, John

    Lawson, George

    Stones, William

    Crossman, Rt. Hn. R. H. S.

    Lee, Rt. Hn. Frederick (Newton)

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

    Cullen, Mrs. Alice

    Lever, Harold (Cheetham)

    Swain, Thomas

    Dalyell, Tam

    Lewis, Arthur (West Ham, N.)

    Darling, George

    Lewis, Ron (Carlisle)

    Swingler, Stephen

    Davies, I for (Gower)

    Lipton, Marcus

    Taverne, Dick

    Davies, S. O. (Merthyr)

    Lomas, Kenneth

    Thomas, George (Cardiff, W.)

    Delargy, Hugh

    Loughlin, Charles

    Thomson, George (Dundee, E.)

    Dempsey, James

    Mabon, Dr. J. Dickson

    Thornton, Ernest

    Diamond, John

    MacColl, James

    Tinn, James

    Dodds, Norman

    MacDermot, Niall

    Tuck, Raphael

    Doig, Peter

    McKay, Mrs. Margaret

    Urwin, T. W.

    Driberg, Tom

    Mackenzie, Gregor (Rutherglen)

    Varley, Eric G.

    Dunn, James A.

    Mackie, John (Enfield, E.)

    Wainwright, Edwin

    Dunnett, Jack

    Mahon, Simon (Bootle)

    Walden, Brian (All Saints)

    Edwards, Rt. Hn. Ness (Caerphilly)

    Manuel, Archie

    Walker, Harold (Doncaster)

    English, Michael

    Mapp, Charles

    Wallace, George

    Ennals, David

    Mellish, Robert

    Wells, William (Walsall N.)

    Ensor, David

    Mikardo, Ian

    Whitlock, William

    Evans, Albert (Islington, S.W.)

    Miller, Dr. M. S.

    Wigg, Rt. Hn. George

    Fernyhough, E.

    Molloy, William

    Wilkins, W. A.

    Finch, Harold (Bedwellty)

    Monslow, Walter

    Williams, Alan (Swansea, W.)

    Fletcher, Sir Eric (Islington, E.)

    Morris, Charles (Openshaw)

    Williams, Albert (Abertillery)

    Floud, Bernard

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Williams, Mrs. Shirley (Hitchin)

    Foot, Sir Dingle (Ipswich)

    Murray, Albert

    Willis, George (Edinburgh, E.)

    Foot, Michael (Ebbw Vale)

    Neal, Harold

    Wilson, Rt. Hn. Harold (Huyton)

    Fraser, Rt. Hn. Tom (Hamilton)

    Newens, Stan

    Wilson, William (Coventry, S.)

    Freeson, Reginald

    Noel-Baker, Francis (Swindon)

    Woodburn, Rt. Hn. A.

    George, Lady Megan Lloyd

    Noel-Baker,Rt.Hn.Phillp(Derby,S.)

    Woof, Robert

    Ginsburg, David

    Ogden, Erlo

    Wyatt, Woodrow

    Gourlay, Harry

    O'Malley, Brian

    Yates, Victor (Ladywood)

    Greenwood, Rt. Hn. Anthony

    Owen, Will

    Gregory, Arnold

    Padley, Walter

    TELLERS FOR THE AYES:

    Griffiths, David (Rother Valley)

    Page, Derek (King's Lynn)

    Mr. Joseph Harper and

    Gunter, Rt. Hn. R. J.

    Palmer, Arthur

    Mr. William Howie.

    Parg ter, G. A.

    should do more than review it. He should get rid of this Clause. We shall do our utmost to help him to do so now, by dividing the Committee against it.
    Question put, That the Clause, as amended, stand part of the Bill:
    The Committee divided: Ayes 197, Noes 193.

    NOES

    Alison, Michael (Barkston Ash)

    Gilmour, Ian (Norfolk, Central)

    Meyer, Sir Anthony

    Allason, James (Hemel Hempstead)

    Gilmour, Sir John (East Fife)

    Mills, Peter (Torrington)

    Amery, Rt. Hn. Julian

    Glover, Sir Douglas

    Mills, Stratton (Belfast, N.)

    Anstruther-Gray, Rt. Hn. Sir W.

    Godber, Rt. Hn. J. B.

    Mitchell, David

    Astor, John

    Goodhew, victor

    Monro, Hector

    Atkins, Humphrey

    Gower, Raymond

    Morrison, Charles (Devizes)

    Awdry, Daniel

    Grant, Anthony

    Mott-Radclyffe, Sir Charles

    Baker, W. H. K.

    Grant-Ferris, R.

    Munro-Lucas-Tooth, Sir Hugh

    Balniel, Lord

    Gresham Cooke, R.

    Murton, Oscar

    Barlow, Sir John

    Griffiths, Peter (Smethwick)

    Nicholls, Sir Harmar

    Batsford, Brian

    Grimond, Rt. Hn. J.

    Nugent, Rt. Hn. Sir Richard

    Beamish, Col. Sir Tufton

    Hall, John (Wycombe)

    Orr, Capt. L. P. S.

    Bennett, Sir Frederic (Torquay)

    Harris, Frederic (Croydon, N.W.)

    Orr-Ewing, Sir lan

    Berry, Hn. Anthony

    Harris, Reader (Heston)

    Page, John (Harrow, W.)

    Bessell, Peter

    Harrison, Brian (Ma ldon)

    Pearson, Sir Frank (Clitheroe)

    Biggs-Davison, John

    Harvey, Sir Arthur Vere (Macclesf'd)

    Peyton, John

    Birch, Rt. Hn. Nigel

    Harvey, John (Walthamstow, E.)

    Pickthorn, Rt. Hn. Sir Kenneth

    Black, Sir Cyril

    Hawkins, Paul

    Pitt, Dame Edith

    Blaker, Peter

    Heald, Rt. Hn. Sir Lionel

    Price, David (Eastleigh)

    Box, Donald

    Heath, Rt. Hn. Edward

    Prior, J. M. L.

    Boyd-Carpenter, Rt. Hn. J.

    Hendry, Forbes

    Ramsden, Rt. Hn. James

    Boyle, Rt. Hn. Sir Edward

    Higgins, Terence L.

    Redmayne, Rt. Hn. Sir Martin

    Brewis, John

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

    Ridley, Hn. Nicholas

    Brinton, sir Tatton

    Hirst, Geoffrey

    Robson Brown, Sir William

    Bromley-Davenport,Lt.-Col.SirWalter

    Hobson, Rt. Hn. Sir John

    Russell, Sir Ronald

    Brooke, Rt. Hn. Henry

    Hogg, Rt. Hn. Quintin

    Sharples, Richard

    Bruce-Cardyne, J.

    Hooson, H. E.

    Shepherd, William

    Bryan, Paul

    Hopkins, Alan

    Sinclair, Sir George

    Buchanan-Smith, Alick

    Hordern, Peter

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

    Bullus, Sir Eric

    Hornsby-Smlth, Rt. Hn. Dame P.

    Smyth, Rt. Hn. Brig. Sir John

    Buxton, Ronald

    Hunt, John (Bromley)

    Spearman, Sir Alexander

    Campbell, Gordon

    Iremonger, T. L.

    Stanley, Hn. Richard

    Carlisle, Mark

    Irvine, Bryant Godman (Rye)

    Steel, David (Roxburgh)

    Chichester-Clark, R.

    Johnson Smith, G. (East Grinstead)

    Stoddart-Scott, Col. Sir Malcolm

    Clark, William (Nottingham, S.)

    Johnston, Russell (Inverness)

    Studholme, Sir Henry

    Cole, Norman

    Jopling, Michael

    Summers, Sir Spencer

    Cooke, Robert

    Kaberry, Sir Donald

    Taylor, Edward M. (G'gow.Cathcart)

    Cooper, A. E.

    Kerby, Capt. Henry

    Taylor, Frank (Moss Side)

    Cooper-Key, Sir Neill

    Kilfedder, James A.

    Teeling, Sir William

    Cordle, John

    Kimball, Marcus

    Temple, John M.

    Costain, A. P.

    King, Evelyn (Dorset, S.)

    Thatcher, Mre. Margaret

    Cruddock, Sir Beresford (Spelthorne)

    Kitson, Timothy

    Thompson, Sir Richard (Croydon,S.)

    Crawley, Aldan

    Lagden, Godfrey

    Thorpe, Jeremy

    Crowder, F. P.

    Langford-Holt, Sir John

    Tiley, Arthur (Bradford, W.)

    Curran, Charles

    Legge-Bourke, Sir Harry

    Tilney, John (Wavertree)

    Currie, G. B. H.

    Lewis, Kenneth (Rutland)

    Tweedsmuir, Lady

    Dalkeith, Earl of

    Litchfieid, Capt. John

    van Straubenzee, W. R.

    Davies, Dr. Wyndham (Perry Barr)

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

    Walder, David (High Peak)

    d'Avigdor-Goldsmid, Sir Henry

    Lloyd, Ian (P'tsm'th, Langstone)

    Walker, Peter (Worcester)

    Deedes, Rt. Hn. W. F.

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Walters, Dennis

    Digby, Simon Wingfield

    Longden, Gilbert

    Ward, Dame Irene

    Dodds-Parker, Douglas

    Loveys, Walter H.

    Weatherill, Bernard

    Douglas-Home, Rt. Hn. Sir Alec

    Lubbock, Eric

    Webster, David

    Elliot, Capt. Walter (Carshalton)

    McAdden, Sir Stephen

    Whitelaw, William

    Elliott, R. W. (N'c'tle-upon-Tyne.N.)

    MacArthur, Ian

    Williams, Sir Rolf Dudley (Exeter)

    Errington, Sir Eric

    Mackenzie, Alasdair (Ross&Crom'ty)

    Wills, Sir Gerald (Br dgwater)

    Eyre, Reginald

    Mackie, George Y. (C'ness & S'land)

    Wilson, Geoffrey (Truro)

    Farr, John

    McLaren, Martin

    Wolrige-Gordon, Patrick

    Fell, Anthony

    McMaster, Stanley

    Woodnutt, Mark

    Fletcher-Cooke, Charles (Darwen)

    McNair-Wilson, Patrick

    Yates, William (The Wrekin)

    Fletcher-Cooke, Sir John (S'pton)

    Maginnis, John E.

    Younger, Hn. George

    Foster, Sir John

    Marples, Rt. Hn. Ernest

    Fraser, Ian (Plymouth, Sutton)

    Mathew, Robert

    Galbraith, Hn. T. G. D.

    Maude, Angus

    TELLERS FOR THE NOES:

    Gammans, Lady

    Maxwell-Hyslop, R. J.

    Mr. Francis Pym and Mr. Jasper More

    Gibson-Watt, David

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

    Clause 24.—(SETTLED PROPERTY.)
    The Solicitor-General (Sir Dingle Foot): I beg to move Amendment No. 136, in page 24, line 1, to leave out subsection (3) and to insert:
    (3) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee all the assets forming part of the settled property to which he becomes
    674
    so entitled shall be deemed to have been disposed of by the trustee, and immediately re-acquired by him in his capacity as a trustee within section 21(5) of this Act, for a consideration equal to their market value.
    This Amendment looks formidable on the face of it, but it is purely of a drafting character. There is no change in the intention behind it. It might be supposed on the face of it that there was some

    675
    contradiction between Clause 21(5) and Clause 24(3), but the scheme of the Bill is that at the point of time a person becomes absolutely entitled to a trust a Capital Gains Tax becomes chargeable. That is the moment of disposal or of notional disposal.
    But suppose that the trustee does not actually hand over the property at that moment of time. Suppose the actual hand-over takes place later than the notional disposal. For example, a beneficiary may be abroad and does not, in the physical sense, actually take up possession of the property until he returns. Therefore, the property remains in the hands of the trustee, but under the operation of the earlier Section he is now a mere nominee. After the notional disposal applies and the trustee becomes a mere nominee it is desired to avoid any possibility of the tax becoming chargeable a second time.
    This Amendment takes the place of the earlier subsection and provides, in the first place, for the disposal by the trustee of the settlement to himself as trustee for the beneficiary. Secondly, it provides for the disposal to be regarded as taking place at the market value of the assets in question. This is a very technical point and I am trying to make it as clear as I can, but I am sure that the Committee will find it does not involve any new departure at all. We are simply trying to spell this out a little more clearly than was done in the original Clause.
    Mr. Peter Walker: I thank the Solicitor-General for his explanation of the Clause. As far as we gather, this is to make the position clear and it is a departure in the sense that for the first time during our debates there has been an attempt on the part of the Government to avoid double taxation. Therefore, we welcome the Clause.
    Amendment agreed to.
    6.45 p.m.
    Mr. Peter Walker: I beg to move Amendment No. 251, in page 24, line 5, leave out subsection (4).
    The Deputy-Chairman (Sir Samuel Storey): With this Amendment we can take Amendment No. 424, in line 11, at end insert:
    676
    Provided that the liability to pay tax on the notional gains arising may at the option of the trustees be postponed until such time as such assets or securities are disposed of and meanwhile the amount outstanding under the provisions of this section shall accrue interest at the rate of 2 per cent. per annum.
    Amendment No. 252, in line 12, leave out subsection (5).
    Amendment No. 426, in line 15, leave out "ten" and insert "twenty-one".
    Amendment No. 427, in line 17, leave out "ten" and insert "twenty-one".
    Amendment No. 253, in line 21, leave out subsection (6).
    Amendment No. 334, in line 22, leave out "ten" and insert "twenty-five".
    Amendment No. 335, in line 24, leave out first "ten" and insert "twenty-five".
    And Amendment No. 336, in line 24, leave out second "ten" and insert twenty-five".
    If it is so wished Amendment No. 424 can be moved formally for a Division, later.
    Mr. Walker: This particular Amendment is almost identical in principle to the debates we have just had on the Question, That the Clause, as amended, stand part of the Bill and I do not intend to repeat the arguments which took place then except to say that one presumes that the hasty disappearance of the Prime Minister and the Chancellor of the Exchequer after the last Division is an indication of their anxiety over the fact that had the three hon. Members opposite who expressed their views against the Clause voted in the same way as they spoke the Government would have been defeated by a majority of two.
    Mr. Neil McBride: On a point of order, Sir Samuel. I have promoted a film show in the Committee Room in Westminster Hall and on the occasion of the last Division no bell rang to intimate there was a Division.
    The Deputy-Chairman: I will have inquiries made.
    Mr. Walker: On this particular principle the position of the Government was that they would have been defeated if hon. Members had voted in accordance with their speeches and we hope that it will be recognised by the Government that there are very widespread anxieties

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    over this principle of applied Capital Gains Tax at the time of death. I appeal to my hon. Friends to press this Amendment to a Division, in complete accordance with the views expressed in the previous debate and I hope that after a little reflection those hon. Members opposite who so obviously agree with us on this principle may join us in the next Division.
    It has been agreed that several other Amendments may be discussed with this Amendment and I would like to refer to those Amendments applying to the revaluation, over 10 years, of property in the form of settlement. This is a principle which can result in a very considerable amount of difficulty and problems, particularly in the case of family businesses or of farms that are subject of being such a settlement. It means that every 10 years there will be a possibility of a Capital Gains Tax assessment being made on a gain that has not been realised. This will result in the trust concerned having to dispose of part of that business or part of that fund and this is something which must obviously cause considerable concern on both sides of the Committee.
    I would have thought it difficult to argue in logic that where a particular property is subject for a settlement it should be taxed in a very different way to the taxation if the property is held by an individual. If one holds a business or a property as an individual one does not have to have it valued every 10 years and one does not have to pay Capital Gains Tax on it every 10 years. One pays Capital Gains Tax at the point of realisation. The principle of subsections (5) and (6) of this Clause are, in fact, collectively to apply a 10-year valuation.
    The Government must have received many representations on this issue. I think that it is probably true to say that the technical, financial, and accountancy Press has been unanimous in saying that this period of 10 years is unreasonable. I recognise the argument that unless something is done to see that Capital Gains Tax is paid under such settlements, settlements could go on for ever and there would never be a point of paying any tax. If the Government pursue their policy towards double taxation, in logic, at the point of death, they should con-
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    tinue to include subsection (4), but what they cannot argue is that if a gain has not been realised within the settlement, and if there is no capital benefit to the people who benefit from the settlement, it is reasonable, every 10 years, to impose a Capital Gains Tax of this type.
    There is an Amendment in the name of the right hon. Member for Orkney and Shetland (Mr. Grimond) which reflects one of the difficulties involved in not being able to pay Capital Gains Tax at the time that such an assessment is involved. This is a thoroughly bad way of dealing with this settlement. It will result, as the previous Clause will result, in the breaking up of many important family businesses and farms. It imposes a level of taxation different from, and more than, that imposed on the individual, and for this reason I hope that the Committee will have no objection to dividing on the Amendment, and in so doing indicate its disapproval of the whole system outlined in the Clause.
    Mr. Grimond: I, too, appreciate the difficulty of the Government. Unless some provision is made, it will be possible to have a trust that runs on indefinitely and never becomes chargeable for Capital Gains Tax. But unless whoever replies to the debate can make a very much better case for the particular method of meeting this difficulty than has so far been made in the Bill, I hope that the Government will think about it again.
    We are continuing an argument about involuntarily or notional transfers or disposals of assets. My first point is that this will not only impose injustice on the beneficiaries, but will create difficulties for the trustees. Under the 10-year rule it may well be that the assets, for a purely temporary reason, are highly valued at that moment. If that was the case, the trustee might feel bound to dispose of them, because if they were to fall heavily in value after paying 30 per cent. in tax, it would be a great injustice on the beneficiaries. But there are many trusts which hold assets which cannot be disposed of as easily as all that, and it would be wrong to do so.
    Our Amendment is designed to meet a part of that difficulty, by giving the trustee some latitude in the disposal of assets for the payment of the tax, but I am

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    arguing that not only will he have to dispose of assets to pay the tax, but he will be in difficulty if the assets are valued fortuitously at the moment when they are unnaturally high, at a level which will not be maintained. It is possible that, having paid 30 per cent. in tax, at the end of the period of the trust it could be less in value than it was when it was founded, and, as far as I can understand, no credit will be given for this. There is no allowance for losses.
    Further, there are particular sorts of trusts which would seem to be very harshly treated under this provision, and treated in quite a different fashion from what they have been up to now. For instance, it is a common practice to give a widow a surviving life interest in her husband's estate. As I understand, this has involved no second payment of Estate Duty when she dies, but under this Clause it will involve the notional sale of assets, and they will come under the capital gains charge. I would have thought that the same argument applied in the case of Capital Gains Tax as in the case of Estate Duty, and if it is considered proper to relieve the trust of a second charge to Estate Duty it seems proper to relieve it of Capital Gains Tax.
    Again, it is common form, and there is no objection to it, to form trusts for infants under 21 so that they may accumulate funds which they do not require at the time. These are relieved from any charge to Estate Duty if the infant should die, but they are apparently to be valued under the notional provision in 10-yearly periods, and I would have thought that this would be unjust to beneficiaries and create difficulties for the trustees.
    It is also common practice to encourage people under 21 who have been left, or have been given, large sums of money, to put that money into trust. This has no tax advantage. It means that the person concerned cannot fritter it away, and if the money belongs to a girl, she cannot run away with an unsuitable man who may be after her purely for her money. Most solicitors will be unwilling to recommend putting money into trust, because if they do the assets will come under Capital Gains Tax, and at a wholly unknown time when it may be most inconvenient to
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    realise them, and when their value may be greatly inflated.
    I think that we are, in fact, debating a wealth charge. We have moved from the Capital Gains Tax. What the Government are saying is that wealth should be taxed periodically. There is a case for this, but there is no case for it at 30 per cent. Yet we are to levy a rate which some think is high for a capital gains charge merely on wealth. I ask the Government to look at this again, because it may act most unfairly. It will stop desirable forms of protection for young people. It may well be a lawyers' and accountants' paradise, and I would not have thought that we would want to encourage still further these lucrative professions to take on further business when they are overworked already and are not complaining about having no further work to do.
    I hope that the Solicitor-General will look at these objections, which, I think, are reasonable, and which have been made not for political reasons, but by people dealing with human beings, and not with theory. They have been made by people who are trying to catch up with the mass of legislation and make sense of it, and by people who are not attempting to evade taxation, but are trying to enable their clients to make the best use of funds available, and to protect young persons and widows whom I cannot believe it is the Government's intention to soak in the interests of some national incomes policy.
    The Government greatly overestimate the jealousy and cupidity of the average man. I do not believe that he goes round saying that someone else has got something which he has not. I agree that large loopholes in tax avoidance should be stopped, but I think that the Government have been taken in by the sort of view that people say, "He is avoiding a little tax which I am not. You had better get after him". One of the troubles with our general legislation on taxation is that we hit everybody in sight, on the off chance of hitting someone who deserves to be hit.
    We very often cut off our nose to spite our face. When I say "our face", I do not mean the Solicitor-General's face, or my face. I mean the national face. We inflict a considerable amount of harm

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    for the sake of catching a few people whose total mischief may not amount to much. I am not talking about big evasions. I am talking about stopping up small holes in the net. In so doing we are causing a lot of harm to perfectly legitimate businesses.
    7.0 p.m.
    Mr. Harold Lever: I feel it my duty to say a few words from this side of the Committee without going into the technical details. The tax which we are discussing is not really a Capital Gains Tax, but a capital gains realisation tax. The general application of the tax is a Capital Gains Tax, and the general intention is that realised capital gains shall be taxed. By the last Clause we stopped the loophole of suicide as a means of evading or avoiding this tax. Now we are invited to stop up any avoidance loophole by means of trusts.
    I may as well begin by saying what, inevitably, I have had to say at the conclusion of each speech which I make on this Bill. I shall vote with the Government. Hon. Members opposite always imagine that I am sincere in criticising the Measures introduced by the Government. For that, they accept my sincerity, but they think that I am insincere when I say that nothing would persuade me to do anything which might bring back a Conservative Government. It requires an extra special sensory perception on the part of hon. Members opposite to appreciate my sincerity with regard to the technical details, but not my sincerity in wishing to do everything to prevent another 13 years, or even 12 months, of Tory rule.
    Therefore, let me disappoint any expectations on the part of hon. Members opposite by telling them in advance that I propose to support the Government.
    Sir D. Glover: I am sure that it would cut out a lot of tedious repetition on the part of the hon. Member, if I said, on behalf of hon. Members on this side of the Committee, that we accept implicitly what he has said, so that in every other speech he makes he need not refer to it again.
    Mr. Lever: That will save a great deal of the time of the Committee and prevent any false hopes being raised among the more naïve occupants of the benches
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    opposite. It will save them from wasting their time and from giving me the kind of advice which they may well believe to be of enduring benefit to me.
    We are asked to accept, in general, the application of the concept of a Capital Gains Tax—a realised capital gains tax—not because it is not well understood that such a form of tax on capital is fraught with many anomalies. Non-realised gains—even when they are on a vast scale may escape, and small realised gains may immediately attract, the attention of the tax gatherer. I may make £2 million of unrealised capital gain on my investments and, reassured by this, I may spend some of my liquid resources in order to live exceedingly well, in the sure knowledge that I have £2 million of aggregate wealth not bearing tax, being of a capital nature. Everyone realises this anomaly, which is inherent in a realised Capital Gains Tax. I have already expressed the hope that this will prove to be only a temporary way of dealing with the question and I hope that the Government will replace it with a more realistic wealth tax, or capital accretion tax, in the more immediate future.
    When I say I want a wealth tax I do not want—as was pointed out by the Leader of the Liberal Party—a wealth tax at a rate of 30 per cent. or 40 per cent.; and this is a wealth tax applying at 30 per cent. I do not know what worries the Government in relation to this argument about trusts. If, temporarily as I hope—I am reassured by nods of agreement from very informed quarters—the anomalies of a realised capital gains tax are accepted, it is on the basis that we can accumulate, without realisation, capital gains till the day we die—not afterwards, of course—without paying a penny piece.
    The ground for this is that if we do not realise our capital gains, we cannot spend them and, therefore, cannot taunt, tantalise or torment the P.A.Y.E. earner in the manner which is supposed by official Treasury thought to occur when people spend capital gains. I agree with the Leader of the Liberal Party that there is too much preoccupation with that thought.
    Though the tax gatherer may be universally popular, in the view of both political parties, that view is not generally adhered to. It is assumed by many hon.

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    Members that their obsession is shared by their fellows who want nothing more than to pay the maximum rates of tax. This is not an opinion held outside this Committee, though I am ready to take at its face value the idea that it is a view which is popular in the Committee. At all events, the rationale of this realised Capital Gains Tax is that if people do not realise capital gains they cannot indulge in the kind of opulent living which provokes the workers into making demands for wage increases and the like. I will not expatiate on the difficulties which will arise if this tax is enforced. It seems to me that the Government, inevitably, will want to accept a measure of amendment to protect the taxpayers from the manifest evils which will result.
    I wish only to say a few words more on the question of trusts. At the back of my mind I have the feeling that the Treasury is seeking to deal with discretionary trusts the beneficiaries of which are not certain and which are in law unknown and cannot be reached. If the Treasury does not like discretionary trusts let it deal with them in a direct and open manner. Let the Treasury come to the Committee, where the majority of hon. Members have done their best so to arrange their affairs as to pay the maximum amount of tax—and evince deep resentment if anyone else does not share their passion—and no doubt the Committee will, rightly, deal brutally and fully with all discretionary trusts and such-like devices. But please do not ask us to deal a blanket-covering blow at all trusts in a manner which has been outlined already and, I have no doubt, will be exemplified still further by following speakers.
    Mr. Kimball: I should like to express agreement with the hon. Member for Manchester, Cheetham (Mr. Harold Lever) that this Clause is a sly way adopted by the Treasury of getting at the whole principle of the discretionary trust. I find that subsection (4), like so much of this Bill, appears to have been inadequately thought out. As I understand it, the charge for capital gain arises at the termination of a life interest in all or in part of a settled property. There is a little concession tacked on to the end of the Clause, that if any life interest terminates within ten years the charge is
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    postponed for another ten years. Capital Gains Tax is paid only once every ten years.
    This is not a concession. The more one looks at it the more one realises that it may cause great hardship and difficulty in the working of the tax. Take a simple example. A grandfather made a considerable settlement on his six grandchildren with the proviso that they all took their share at the age of 25. The first grandchild is about to come up to the age of 25 and definitely the charge for capital gains will arise as soon as he takes his share. During the period of the next seven years the next four grandchildren come up to the age of 25 and take their shares.
    As I understand it, and as I am advised, there will be no charge arising from capital gain because it will be within the 10-year period. It so happens that on the 10th anniversary of the first child becoming 25 there is only a one-sixth share left in the trust, the share of the youngest grandchild. In the typical manner in which the party opposite legislate, the whole balance of the capital gain charge which would have fallen on all the other five-sixths shares, has to be paid by the youngest member of the family.
    I hope that the Government will look seriously at this case, as it is typical of the many hardship cases which may crop up on the Finance Bill. I hope that we shall get a firm assurance from the Minister that he will look very carefully at this.
    Mr. George Younger: I am most surprised that the Chancellor allowed this Clause to be put into the Bill, because it differs materially from what I recall were the Chancellor's first words in the House about the Capital Gains Tax. Most of us were listening very carefully to this, and we were very interested to hear him make it very clear then that the whole point of a Capital Gains Tax was that it would be payable when the asset was realised. I remember his using very nearly those words. He has allowed himself to be drawn away from this. That is why he is getting into trouble on this Clause. This is another case where this tax will be levied on assets which will not necessarily be realised. This raises the most immense difficulties.

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    I hope that the Chancellor or the Minister without Portfolio will realise that a Capital Gains Tax on realised assets is one thing and that this is not part of it. These assets are not being realised, yet they are to be taxed.
    It has been pointed out what immense trouble this will cause people who, quite fortuitously, have their assets valued on a given and unchosen day and told that they will have to produce the necessary tax as if there had been a capital gain at that moment. If the Minister thinks a little outside the sphere in which we are all talking and thinks about his ordinary life and things outside, he will perhaps remember that when one thinks out what one owns in life and, if one has a few securities, calculates what they are worth, it is desperately misleading to say, "I am worth £5,000, because these shares are today, according to the paper, worth £5,000". It does not necessarily follow that one can sell them immediately and get £5,000. Yet the people who will be affected by this Clause will have to realise them on a completely notional basis.
    The position of trustees and beneficiaries has been referred to. This provision could be awkward for both these parties, against whom we should feel no antagonism and whom we should treat as worthy of consideration. The trustee is a fine person who does his job voluntarily and not for financial gain. The position of the beneficiary is not only voluntary, but he is often quite unskilled in these matters, and unable, without advice, to look after his own interests. These people will have to find sums of money. I think that, if this is put through, the beneficiary, who is very often a daughter, a son, or a young person, not well-skilled, will be told by his trustees, "The ten-year period is up. We are liable to find X hundred £s or X thousand £s now to pay Capital Gains Tax. We cannot realise the assets."
    7.15 p.m.
    There are many reasons that this may not be possible at a particular time and many more reasons that it might be possible, but most disadvantageous. The beneficiary will be told by his trustees, "We have to find this money and I have no means of getting it, or of realising it. The only thing to do to get the trust going and the settlement solvent and going properly is for
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    you, the beneficiary, to find the money to pay back the capital gain." I have no doubt that the trustee would make it as easy as he could and say, "This is once in ten years, and perhaps by the end of the next ten years, the law may be altered"—
    Sir Arthur Vere Harvey: Or a new Government.
    Mr. Younger: Or a new Government, as my hon. Friend says. These will be totally innocent parties, who have no control over when this will happen or over the circumstances in which it will happen; they will be in an intolerable position.
    I beg the Government not to imagine that they are bringing in a high-sounding Clause which will catch a small number of incredibly rich people who can easily afford to pay. This may be so, in a few cases, but this will hit most hardly the people who can least easily bear it. The Government would be very well advised to cast aside the idea which they seem to have that hon. Members on this side of the Committee are making these points for political advantage. They should realise that there are genuine and definite difficulties over this Clause. I hope they will alter it.
    Mr. Woodrow Wyatt: I am glad to support some of the remarks made by my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). I cannot believe that the Government intend some of the effects which might flow from the Clause. Do they seriously propose that every trust should be valued every ten years? This is a most awkward and difficult thing to do in most cases, and probably could not be done adequately. It would lead to an enormous increase in the number of valuers which we should have to employ. Do not the Government realise that they are encouraging the trustees to put their money into businesses and organisations which are stagnant rather than those which are industrious and dynamic and which multiply and fructify, because of the fear that, if the business does well, they will be forced to pay Capital Gains Tax every ten years out of money which, perhaps, they do not have?
    For example, a trust may have a minority of the shares in a private company, and that may be all that the trust

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    owns. The company may be doing well and doing all the things which the Government hope that industry will do. At the end of the ten-year period, the value of those shares may have gone up considerably, but they have no other assets than the shares which they have as minority shareholders in this company. What will happen? Do the Government propose that the trustee should be made bankrupt? Obviously, the majority shareholders will not dispose of the assets, in order that the minority shareholder, which is the trust, can pay its Capital Gains Tax. It would not be possible. This, in many cases, is the only way in which the money could be raised in order to pay the Capital Gains Tax.
    I think that there is a fallacy in the Government's thinking, in assuming that all trusts consist of a variety of interests. They do not. It is true that many trusts have wide portfolios and publicly quoted shares. But there are many trusts which have interests only in private companies, or in land, and have only a minority interest in those concerns. If they have only a minority interest and no other assets, the only conclusion which we can draw from this Clause is that the Government propose that, every ten years, the trustees of any such trusts will be made bankrupt. There is no other way of raising the money. I hope that they look at this again, because the only other course which the trustee can take is to ensure that the property does so badly that there is no capital appreciation but capital diminution, so that they will pay no Capital Gains Tax.
    I am sure that this cannot be the Government's intention. I appeal to the Government to look at this again. They are trying to catch the wrong people with the Clause. I can see what they have in mind. They are looking for the discretionary trust which, I think, is an undesirable form of trust in any case, and is clearly designed to avoid paying tax, whereas there are many genuine trusts, the trustees of which will be made bankrupt if the Clause goes through.
    Mr. Fletcher-Cooke: I assumed that by now the Minister would have risen to say that this was one of the concessions
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    which the Chancellor of the Exchequer promised us about 48 hours ago, because this is clearly not only the strongest anomaly in the whole principle of the tax but it is the clearest injustice. The anomaly has been pointed out by my hon. Friend the Member for Ayr (Mr. Younger), who explained that some time ago the Chancellor pinned his flag to this mast namely that it was only on realisation that this tax would be levied. Here we have an important breach in that principle of a very serious kind concentrated not on companies or other forms of holding, but on trusts and trusts alone, as if they were particularly wicked.
    I am waiting to hear what defence there can be, because once the tax is applied to trusts it will gradually spread its taint into other forms of holding. How monstrous it is becomes apparent when one realises that this was just the form of thing which mediaeval kings of England did when they found that people were not turning over their money quickly. The statutes of mortmain were designed to prevent estates from getting into hands which held them for too long and thus prevented the mediaeval kings from levying a tax at the point of marriage, death and other times when it was easy to get the money. If the money went into the monasteries, of course the monasteries never married and never died and, therefore, the kings could not get the money.
    This is exactly the same attitude. It can be the only defence. We abolished the rule of mortmain, but this Government have a passion for mediaeval things, and they have brought it back. This is what they say, "If money gets into the hands of people who do not switch quickly enough we should catch them as if they had switched". That is the only possible motive of the Clause. The Government are afraid that trustees will cling on to the money in the sense that they will not change the investment fast enough. Since trusts are perhaps likely to last longer than any particular life, they will not get to the point of payment as fast as if the money were held in other ways. That is a very sinister principle.
    I want to ask the Minister without Portfolio a question about possible double taxation which, I think, is very important

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    here. I take not the case of a trust with life interest, but the case of trust with three beneficiaries, three children, which has been formed with £2,000. As I understand, the trustees pay tax when thy switch their investments. That is the general principle of the Bill. Except in the case of a nominal trust where there is one beneficiary of full age who can put an end to the trust at any time that he wants to do so, it is the trustees who pay the Capital Gains Tax when they change the trust's investment.
    Suppose they have £2,000 in securities and in the forth year of the trust those securities have appreciated to £2,500 and as prudent trustees they decide to realise these investments and to reinvest. With the sale of the original investment, they make a capital gain of £500 after four years. I assume that they have to pay Capital Gains Tax on that £500. Four years later the second lot of securities has made another capital gain, say of £200, and they decide to take that profit. As prudent investors looking after the beneficiaries, they decide that the securities may fall in value and that it is best to take the profit. But they have to pay another Capital Gains Tax of £200, so that they have paid on £500 and £200.
    They then invest the capital in some other securities. At the end of 10 years they find that the holding is worth £2,700 or possibly £3,000. Let us say that the third lot of securities has not appreciated after the eighth year, because that makes the sum easier. It means that at the end of ten years the trust is worth £2,700. It is then valued and another Capital Gains Tax has to be paid on this £700, although each time the trustees switched they had to pay a Capital Gains Tax at the end, say, of the fourth year and at the end of the seventh or eighth year.
    I do not believe that this is right. It is so incredibly unfair that I cannot believe that it is right, and I hope that the Minister without Portfolio will rise immediately and tell me that I am wrong in my understanding of the provision. But nothing in my reading of this great book persuades me that I am wrong, and if I am not wrong it means that this is the most montrous piece of double taxation even in the true and pure and "Cheetham" sense of the word of double
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    taxation. I think that hon. Members will agree.
    The truth, as the hon. Member for Manchester, Cheetham (Mr. Harold Lever) said, is that the Government have been aiming at the discretionary trust and they have hit everyone with one big swipe. This is not good enough. It is an anomaly which will work very unfairly through double taxation and which will cause the most immense amount of anguish and pain to trustees, many of whom do all these things quite voluntarily and who are belaboured quite enough by the law as it exists without any further belabouring.
    Of all the provisions of the Bill this 10 year rule seems to me the most improper, outrageous, anomalous and wholly bad, and I am glad to see the hon. Member for Cheetham indicating that he agrees with every word that I have said.
    Sir Charles Mott-Radclyffe: The Government have got themselves into a grave dilemma. They are on the hook and somehow must get off it. I am sure that when the Clause was drafted, the hon. Gentleman and his colleagues in the Treasury and the Law Officers did not realise the implications of Clause 24. I am not sure that they understand them now.
    I hope that the Minister without Portfolio will listen very seriously to the arguments which have been put forward from this side of the Committee and also by hon. Members behind him. The hon. Members for Cheetham (Mr. Harold Lever) and Bosworth (Mr. Wyatt) both put forward arguments against the Clause which cannot be brushed off lightly.
    If the two hon. Members will forgive me for saying so, when I saw them sitting below the Gangway, with the hon. Member for Buckingham (Mr. Maxwell) further down, I wondered whether the bench below the Gangway ought to be called "Millionaires Row". Perhaps now that the hon. Member for South Ayrshire (Mr. Emrys Hughes) has returned to the Front Bench below the Gangway, there has been a change of address but no letters will be forwarded.
    Mr. Emrys Hughes: Is the hon. Member referring to me?
    Sir C. Mott-Radclyffe: The reference was to the hon. Member for Buckingham.
    The Government decided to bring in a Capital Gains Tax on the basis of making all hardship universal. They decided that they had to catch all trusts whether they were discretionary or otherwise. This, I am sure, is how the logic worked. They decided that as certain discretionary trusts could build up, they should have a guillotine falling every 10 years.
    But suppose there is a trust the only asset of which is agricultural land, for example, an agricultural holding or an agricultural estate. The only asset which the trustees hold is in land. What happens if, every 10 years, the Capital Gains Tax is to bite on the purely notional value? It is bad enough to have a Capital Gains Tax anyway, but to have one on an asset which has not been realised at all seems grossly unfair. Nevertheless, the Government have done it.
    If an agricultural estate or agricultural holding which is held in trust is to bear tax every 10 years I must say straight away to the Minister without Portfolio that at the end of perhaps 30 years, when the tax has been paid three times, there will be no assets left. The only asset which the trustees can dispose of to pay for the incidence of the Capital Gains Tax is the land.
    7.30 p.m.
    Suppose the Capital Gains Tax should fall three times in 30 years, but that those three periods should follow on the death of the original owner, so that the estate paid Estate Duty and by the will of the late owner when the trust was set up. The asset would have borne Estate Duty and three lots of Capital Gains Tax in 40 years. Is this what the party opposite calls social justice? I cannot believe, whether it be in terms of agriculture or anything else, that the Government really consider that this is in the interest of the nation. Or is it that they are so incompetent that they do not understand what the Clause means? Would the Minister without Portfolio explain what he is trying to do, what he is not trying to do, who he is trying to catch and who he is not trying to catch?
    My hon. Friends and I have tabled an Amendment designed to meet the Government. On this question of a dis-
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    cretionary trust, if it were to go on building up one might say, "We cannot have a trust that never bears any tax". We have, therefore, tabled what we regard as a fair compromise for the benefit of the Chancellor. Instead of the 10-year period we suggest 25 years, which might be normally regarded as a life interest. I hope that the Minister will look with favour on the Amendment, which any reasonable person would regard as a good compromise.
    Mr. Eric Lubbock: I agree with the hon. Members for Manchester, Cheetham (Mr. Harold Lever) and for Bosworth (Mr. Wyatt) that the Clause is designed to cover discretionary trusts and that the Government, intentionally or otherwise, have dealt a severe blow at all trusts. Judging from the rest of the Bill, I suggest that they have done this intentionally; that they had every desire to get at all trusts, irrespective of their nature. They have certainly succeeded in doing that because trusts are being treated more harshly than private investors.
    Whereas the private individual can obtain relief from the 30 per cent. Capital Gains Tax rate provided that his marginal rate of tax is not in the Surtax bracket, he may have a trust the beneficiaries of which are children who have no income or whose income is well down the bracket; say, £400 or £500. Despite this, they will have to pay the Capital Gains Tax at the standard rate of 30 per cent. and obtain no relief whatever.
    Amendment No. 424, standing in the names of my hon. Friends and myself, is a moderate and reasonable proposal. It deals with the difficulty of how trusts will find the money to pay the tax. I commend that Amendment to the hon. Members for Cheetham and for Bosworth, because while they feel that it would be dangerous to support Amendment No. 251—lest that should result in the return of a Tory Government—I do not think that any such danger would arise if they were prepared to favourably consider Amendment No. 424.
    The difficulty of trustees having to find this money every 10 years to pay the tax that is liable has been pointed out. Our suggestion merely states that the trustees could, in effect, continue to owe

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    such taxation to the Inland Revenue and pay interest of 2 per cent. on the amounts outstanding until such time as the assets have been disposed of. This would not decrease by a penny the amount of revenue which the Government would receive from this type of tax, but it would make it a little easier for trustees to overcome this difficulty.
    Consider, also, trustees who hold shares in private companies. Such shares are not readily saleable. I doubt whether anyone who owns shares in private companies will make many capital gains once the Bill goes through and once they are compelled to distribute 60 per cent. of their earnings if they happen to be close companies. In certain circumstances the only answer for trustees in the difficulties we have been discussing would be to go into liquidation. Therefore, the effect of the Clause may be that a large number of private companies will have to go into liquidation to meet their tax liabilities. Even hon. Gentlemen opposite must realise that that would dislocate the economy and be to the benefit of nobody except monopolies, and we have been given to understand that the Government are against monopolies. It would concentrate industrial power in the hands of the big companies and force the liquidation of small private companies.
    The position of minority shareholders in private companies is even worse, because there is not a market for their shares. Hon. Gentlemen opposite may know that in many private companies the articles contained what is known as preemption rights which provide that a shareholder who wishes to sell can sell only to other shareholders in the company. Such other shareholders may be limited in number and perhaps they are not prepared, if it is a forced sale, to offer what the shares are really worth. One can imagine the situation at the end of the 10-year period. If the other shareholders are not well disposed towards the trustees they may consider it a good opportunity to acquire shares for much less than they would normally have to pay.
    Suppose the assets happen to be in the form of a farm. The hon. Member for Windsor (Sir C. Mott-Radclyffe) spoke of land. How are these things to be valued? Would the farm be valued as if there was a sitting tenant, or with vacant
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    possession? Will the trustees still have the livestock and what will happen to the land? I have talked with a number of farmers about this and they have expressed anxiety about the way in which trustees in such circumstances will go about finding the money to pay the tax.
    I draw the attention of the Committee to an article which appeared in the Financial Times last Monday. It stated:
    "… the rule will operate harshly in cases where the whole of a family's resources are tied up in the business and there are no liquid assets with which to pay the tax."
    Those are the circumstances which I have described. It went on:
    "If the whole of the gain was a real profit, this would be hard but not unendurable; as it is, however, a large element of the gain taxed each 10 years will be purely inflationary. In other words there will be gains tax payable on 'a non-gain' on the occasion of a hypothetical sale".
    That sums up extremely well the effect which the Clause will have.
    I have given but a few examples of the injustices that will be created as a result of this provision. It will mean the diminution and ultimately the complete elimination of the funds about which we are speaking and it will in many cases work to the detriment of people who hon. Gentlemen opposite so often defend—widows, orphans and old people.
    Mr. Robert Maxwell: I support the Government for several reasons. We all agree that one of the practices of the Budget is to prevent people from retaining funds to distribute them at a later date as capital gains. The Budget seeks to achieve—and this is surely in the national interest and in the interest of every business enterprise—a situation in which funds are used for positive purposes for gainful investment. It would have been intolerable if the Government had not introduced legislation to make it impossible for funds to be salted away, in the hope of paying them out one day as capital gains.
    True, in this proposed legislation there are anomalies that may even be termed harsh and a little unfair, but let the Committee remember that this legislation as it stands will require this gain to be paid over 10 years. There will be ample time for the Government, in one of their next Budgets, to deal with any anomalies. It is certainly quite impossible to do so today.

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    Were they to agree to any Amendment of any kind on this issue, we would end up by having a mushrooming of such trusts set up overnight. It would be a haven for lawyers and accountants. It would be quite intolerable, and make a nonsense of the entire purpose of the Budget.
    It would undermine the purpose of making sure that funds are not retained in order to be paid out later as capital gains, but are mobilised for gainful investment—
    Mr. Terence L. Higgins: I think that the hon. Gentleman is basing his argument on a misconception. He argues that funds invested are immobilised, but in reality what is important is not whether the funds are immobilised, but who has control of the economic assets which the funds represent. The fact that people may have given up control over economic assets to others does not mean that the economic assets are immobilised. This is a purely financial transaction, a mirror on the surface of the sea.
    Mr. Maxwell: I take the point, and I think that it is fair, but everyone knows of many thousands of trusts where the trustees are just sitting on assets and not investing them properly, because they are just letting them accumulate—
    Mr. Harold Lever: I am interested in this argument, because trustees who sit on funds and leave them unused, unproductive and neglected will not be in the smallest degree inconvenienced or at all affected by this Clause. Otherwise, my hon. Friend's argument is overwhelming.
    Mr. Maxwell: Nevertheless, the point still stands that the Government could not possibly allow these trusts just to go scot-free at the moment. Any correction required can be made in a later Budget.
    To come back to the point made by my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), the psychological effect on trustees who will show that they will be required to pay out 30 per cent. of capital appreciation on their assets will be a jolly good inducement for them to see that the funds are managed properly and more effectively—[Interruption.] If I cannot persuade hon. Members opposite of the justness of this cause, I must leave it at that.
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    Many hon. Members have said that the tax as it stands will lead to people who have invested in private companies not making any capital gains; that the 30 per cent. Capital Gains Tax is a terrible tax. That is utter nonsense. As far as one can see in the United States, where this tax has prevailed for years, the number of millionaires has increased very rapidly—
    Mr. Emrys Hughes: And in Great Britain.
    Mr. Maxwell: And in Great Britain, too. I expect that this tax will in no way diminish the opportunity for people to become millionaires. There is absolutely no justification whatsoever why capital gains should escape the rightful—
    Mr. Heath: For reasons that we know and understand, the hon. Member for Buckingham (Mr. Maxwell) has not been able to attend any sittings of the Committee so far, but have we to go over all the ground we have already covered when we are trying to make rapid progress in order to please his right hon. Friends?
    Mr. Maxwell: The fact remains that of all the arguments I have been able to listen to for the rejection of this Amendment on trusts, I certainly have not heard anything to show why the Government should yield on the point. I hope that they will not, because there is no justification for that at all. Any anomalies can be ironed out in a later Budget.
    7.45 p.m.
    Sir Hugh Lucas-Tooth: Apparently, it is only the realm of high finance that is prepared to support the Government—on this Clause, at any rate. I want to ask one rather technical question and make one rather simple point. My question is concerned with subsection (4), which states:
    "On the termination at any time after 6th April 1965 of a life interest in all or any part of settled property, all the assets forming part of the settled property, except any"—
    and here I insert the words of the Amendment that I assume will be made, as it is a Government Amendment—
    "which at that time cease to be settled property shall be deemed for the purposes of this Part of this Act …"
    to be disposed of, and therefore subject to the tax.

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    How do the Government think the words "or any part" will operate? Very often, in the case particularly of small settlements, it is most desirable to make an advance for the benefit of children. A typical case is that of an advance of a few hundred £s to enable a son to be apprenticed, or make his way through university, or start him in life in some way. As I understand it, if any such advance is now made there will be a termination of part of the settlement, with the result that the whole of the funds will immediately have to be valued and be subject to tax. If that is correct, all such advances will stop at once. That seems to be wholly undesirable from everyone's point of view.
    The point I wish to make is on the generality of these Amendments which impose the need to value trust funds once every ten years and to subject them to tax at that valuation. I am not certain whether there has not been some misunderstanding on the part of hon. Members. I do not think there is duplication here. I think that what happens is merely that the tax will become payable somewhat earlier than it otherwise would be in pieces instead of one lump on the disposal of the assets in the ordinary way. Various hon. Members, and particularly the hon. Member for Bosworth (Mr. Wyatt), argued that this would produce great hardship for trusts comprising nothing but shares in private companies. I agree with the hon. Gentleman, but, on the whole, that is a relatively rare case.
    There are much more common cases where greater hardship would be produced. One of the commonest cases is where a man dies, leaving a farm to his widow for life, and then to one or more of his children. If the widow lives for ten years or more after the man, I understand that the farm will immediately have to be revalued and be subject to tax on any increase in its value that may have taken place meanwhile. If so, I want to know where the Government think the widow will find that money? It may be, of course, that the present Government's policy in regard to farming is such that there is no chance of such improvement in farm property at all.
    One of the commonest cases is where a man during his life has saved some
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    money and invested it in two or three houses. On his death he leaves those houses to his widow for her life and then to one or more children. All of us have many such cases in our constituencies. We know of a widow living in a house whose income is provided by means of letting another house. In North London the value of house property has risen something like three- or four-fold in the last 20 years. It will certainly continue to rise under the present Administration, and, I fear, in almost any circumstances.
    As I understand it, under this Clause in that type of case every 10 years the house or houses held in trust to provide an income for a widow during her widowhood will have to be valued and any increase in the value of the house will immediately attract tax. Where is that tax to come from? How is the necessary capital to be raised to pay it? Is it to be raised by means of a mortgage at present rates? What is to happen? This is a question to which the Government should make an absolutely plain answer at this stage, because there will be a tremendous injustice for many thousands of people with relatively small means. The Clause is unjust and wholly improper. Whatever one's views about Capital Gains Tax, this Clause should be struck out.
    The Minister without Portfolio (Sir Eric Fletcher): Many questions have been put to me by hon. Members on both sides of the Committee in support of the series of Amendments we are discussing. I hope I shall be able satisfactorily to answer the various points raised.
    First, may I put the basic reason why this Clause is an essential part of the structure of a Capital Gains Tax. The Committee has agreed to the introduction of a Capital Gains Tax. It has also agreed that charge to tax will arise on the death of an individual. Assets will become chargeable to Capital Gains Tax when they are in the hands of an individual when he disposes of them, or when he dies. It is manifestly not only reasonable but just that some similar provision should be made for attracting a Capital Gains Tax on assets in the hands of trustees.
    Mr. Wyatt: But people do not die every ten years.
    Sir Eric Fletcher: Obviously some arrangements must be made—once it is conceded that it would be quite impracticable to allow assets in the hands of trustees to remain forever without attracting charge to Capital Gains Tax—for deciding the time at which assets in the hands of trustees, whether realised or not, become subject to charge. In the case of trusts where there are life interests, obviously the sensible arrangement to make as the moment when the charge arises is on the termination of a life interest. That is what is provided in subsections (3) and (4) of the Clause. Arrangements are also made whereby if there are a number of life interests and a succession of deaths of life tenants there is a minimum period before the assets become subject to charge again, and the period provided is 10 years.
    Then there is the case of discretionary trusts where there are no life interests and where quite obviously some other arrangements have to be made to ensure that at some time the accretion in the value of the assets of the trust is valued in order, to preserve equity with all other taxpayers, that Capital Gains Tax becomes chargeable on those assets. It follows that the liability for Capital Gains Tax must be a liability falling on the trustees, that is to say, falling on the capital corpus of the trust and not on the income.
    I have been asked a number of questions of detail. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) asked what would be the position where trustees switched investments during the course of time. I should have thought it was obvious that if trustees changed their investments then, like any individual, liability to Capital Gains Tax arises on the disposal of the asset. An equally common case will be that in which the assets are not changed. I shall come to the various instances which have been given to the Committee of the kind of inconvenience and, I am perfectly prepared to admit, hardship, which in some cases will arise where the trust assets consist, for example, of a holding of agricultural land which it is difficult to sell, or shares in a family concern or a private company which are difficult if not impossible to sell.
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    The hon. and learned Member for Darwen put the case of a switching of investments followed by the arrival of the 10-year period and he wondered what would be the position then. The answer is that each 10 years, or whatever other period the Committee decides, a trust will pay tax on the gains in the assets in the trust and those gains will be calculated on the difference between the market value of the assets at that date and the market value 10 years earlier if the assets have been in the hands of the trustees for 10 years, or if they have been in the hands of trustees for a shorter period the cost of acquisition at the time of acquisition. In that respect the liability of the trustees for Capital Gains Tax will be precisely the same as that of an individual.
    Sir H. Lucas-Tooth: The hon. Gentleman has referred to this, but he has not said how it is to be done.
    Sir Eric Fletcher: I am coming in a moment to the questions put to me by the hon. Member for Hendon, South (Sir H. Lucas-Tooth). The hon. Member for Windsor (Sir C. Mott-Radclyffe) has an Amendment in his name suggesting that the period of 10 years is too short. The suggestion of that Amendment is that the period should be extended in the case of trustees under a discretionary settlement falling under subsection (6) from 10 to 25 years. There is also an Amendment in the name of the hon. Member for Orpington (Mr. Lubbock) and others suggesting that in the case of settlements falling under subsection (5) the period of 10 years should be extended to 21 years.
    8.0 p.m.
    The hon. Member for Orpington also pointed out the difficulty which will arise, and wanted the Government to admit it, for trustees where a liability to Capital Gains Tax arises and where the only assets of the trust are of a nature which are not readily realisable. The Committee will appreciate that, however inconvenient that may be, that is nothing different in nature from the situation which frequently arises where a person dies and Estate Duty becomes payable in respect of an estate which is not readily or quickly realisable. That is one of the unfortunate incidents of having to pay Estate Duty.
    Mr. Stratton Mills rose—
    Sir Eric Fletcher: I had better finish this, because, as my hon. and learned Friend the Financial Secretary said, it tends to prolong a debate if a Minister does not finish dealing with the points to which he has been asked to address his mind. I was saying that the Government are not unsympathetic to the difficulties which from time to time arise when, as a result of a death, personal representatives have to find or provide or raise cash to meet Estate Duty liabilities. Once the Committee has decided that it is a reasonable part of our fiscal law that there should be a Capital Gains Tax, there is no new departure in the fact that problems will from time to time arise, particularly in the case of trustees who have to pay Capital Gains Tax and who find that cash has in one form or another to be raised for that purpose.
    The suggestion of the hon. Member for Orpington is that in those circumstances there should be an extension of time at the option of trustees for meeting their liabilities, with, as his Amendment suggests, a rate of interest calculated from the date when the liability arises until payment is made. There are difficulties about accepting any such solution.
    Mr. Lubbock: Why?
    Sir Eric Fletcher: I will explain why. It would be an inconvenience and an undesirable provision to write into our fiscal arrangements. The Committee will know perfectly well that the Inland Revenue has plenty of experience in this kind of matter in dealing with Estate Duty claims. Anyone who has had any experience of dealing with the Inland Revenue will know that it always approaches such problems with the greatest sympathy and leniency. [HON. MEMBERS: "Oh."] Yes. That is my experience. I am sure that it is the experience of other hon. Members. It has not been necessary to legislate precisely for that purpose in the sphere of Estate Duty, nor will it be necessary or desirable to do so in connection with Capital Gains Tax. The same attitude will arise.
    The hon. Baronet the Member for Hendon, South asked me a question the substance of which, as I understood it, was whether, in the case of a particular
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    trust, it would still be possible to make advances, if advances were permitted under the terms of the trust. Obviously it is impossible for me to advise or give the Committee any guidance on the provisions of any particular trust. They vary to an infinite degree. The hon. Baronet can take it from me that there is nothing whatever in the imposition of a liability to Capital Gains Tax which will fetter the ordinary discretion and rights of trustees, with regard, for example, to the advancement of capital for education or any other purpose.
    Sir H. Lucas-Tooth: Does the hon. Gentleman mean this, although he has not in fact said it? I would like to know if I am right in my understanding. I ask the Committee to consider the case of a shop owner who dies fairly young, having made a trust leaving £2,000 or £3,000 to his widow and two children. I ask the Committee to assume that it is thought desirable to raise, say, £100 for the benefit of one of the children. Will that act immediately import the provisions of subsection (4) and require the whole of the property to be valued and any tax to be paid immediately? Am I right about that?
    Sir Eric Fletcher: The hon. Baronet is wrong about that. No such liability would arise. I am advised that, if in the case supposed the trustees make an advance of a capital sum, that does not give rise to any charge for a Capital Gains Tax. The only circumstances in which a liability for Capital Gains Tax arises is on the death of a tenant for life or some extended period.
    I am anxious, as I am sure the Committee is, to bring this matter to a conclusion. I want, finally, to turn to the Amendments which suggest that the period of 10 years might be extended to either 21 years or 25 years. The Committee will agree that, if it is desirable to make any extension of the period of ten years, it should operate equally, both in respect of settlements where there is a series of life interests and also in the case of settlements of a discretionary trust character under subsection (6). My right hon. Friend has given very careful thought to this and is aware of the representations which have been made on this subject and is aware of the inconvenience that will arise to trustees out of this new tax.

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    My right hon. Friend proposes—I hope that this will meet the wishes of the Committee and will go a great way to removing any kind of injustice that is felt on this subject by trustees—to say that, if these Amendments are withdrawn, the Government themselves will, between now and Report, table Amendments extending the period of 10 years provided in subsections (5) and (6) to a period of 15 years. I hope that, with that concession, we shall be able to conclude our discussions on this question.
    Mr. Peter Walker: The replies coming from the Government Front Bench are getting worse and worse. It is rather incredible how, in debate after debate, the valid points made from this side of the Committee are left unanswered. They are treated almost with contempt. All the human and practical problems involved are swept aside because of the insistence on keeping to the logical principles of a fairly bad Bill.
    The points made by the Leader of the Liberal Party and by the hon. Member for Orpington (Mr. Lubbock) about the difficulties involved for trustees and the fact that this would be a perpetual rate of tax were completely unmet by the Minister concerned. The point about double taxation made by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) was not even mentioned in the reply of the Minister. It was a fundamental point, a point completely against all the principles of British taxation. Yet the Minister, in replying, cast it aside and did not even mention the fact that, obviously, wherever Capital Gains Tax has been paid, already there will be double taxation at the point of valuation.
    None of the difficulties mentioned by my hon. Friend the Member for Ayr (Mr. Younger) as to what happens if one cannot sell an asset at the time that Capital Gains Tax is assessed and the point about the difficulty of selling under the market value price of assessment was met by the Minister without Portfolio in reply. In this debate the Minister had the disadvantage of being attacked by several of my hon. Friends with cogent and pungent points. The hon. Members for Manchester, Chetham (Mr. Harold Lever) and Bosworth (Mr. Wyatt) both attacked him and both pointed out a difficulty.
    Mr. Harold Lever: I wish the hon. Gentleman would not say that I attacked the Minister. I criticised the Bill and the Clause. I did not attack the Minister.
    Mr. Walker: The hon. Member thoroughly attacked the Bill, and the only Member who came to his support was the hon. Member for Buckingham (Mr. Maxwell); and that proved to be his biggest disadvantage because it indicated quite clearly that the only person who would support his attitude on the Amendment was somebody who had not read it or the Clause.
    Mr. Maxwell: May I ask one simple question? Although I have not had the privilege or pleasure of being here throughout the debate, for reasons which are known, will the hon. Member please tell the Committee what is wrong with the Chancellor and his colleagues sticking to the logical principles of the Budget?
    Sir Richard Thompson: Inhuman and unworkable.
    Mr. Walker: If the hon. Member for Buckingham had heard of all the human difficulties and problems involved in logical sticking to a thoroughly bad principle he would not have put that question. This is the attitude of the Government in not recognising real problems where they exist.
    To give an example, under the Clause one can have a situation where in 1966 a trust can be taxed for Capital Gains Tax for increases which have taken place in the value of the trust over the past decade. One realises therefore, that this is a thoroughly bad Clause, and the Amendments in the names of my hon. and right hon. Friends and of the Liberal Party all express these very real problems. None of these have been answered and the concession offered by the Minister was an insult after the debate. It has been obvious throughout the debate that the Government are unwilling to listen to realistic arguments and that it is a waste of time for us to argue against them.
    I therefore strongly urge my hon. and right hon. Friends to divide the Committee.
    Mr. Emrys Hughes: I detect a note of unrighteous prefabricated indignation in speeches from the benches opposite. The

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    hon. Member for Windsor, (Sir C. MottRadclyffe) referred to this bench below the Gangway as "Millionaires' Row". I have spoken in this debate as an ex-bank chairman looking after my small investors in a municipal bank which is more interested in the investors than in wealthy shareholders. Now that the personnel is slightly changed the average income of this "Millionaires' Row" has decreased.
    A large number of people in this country are not impressed by the argument which seems to have been produced in the mood of an annual meeting of a Landowners Association family trust. I have consulted my hon. Friend the Member for Derbyshire, North-East (Mr. Swain), who sits next to me. I asked him whether he had formed a private company. [An HON. MEMBER: "What did he say?"] I will translate what he said into appropriate Parliamentary language which would not be out of order. My hon. Friend has given a great deal of his life to the service of the community. He has worked in the coal mines for 34 years and the only land that he has acquired is the coal that still sticks to the inside of his lungs. He has not formed a family trust. The great majority of people who are affected by the Budget are people who are not worried about the complexities and difficulties which hon. Members opposite have been voicing today.
    I am amazed at the simplicity and innocence of the hon. Member for Orpington (Mr. Lubbock). If he consults his hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), who is sitting next to him, he will be told that the land of Scotland is not divided into small parcels owned by small farmers who have formed themselves into small limited companies and are worrying about this problem. I have with me the facts about a small private company which owns some of the land in the constituency of the hon. Member for Roxburgh, Selkirk and Peebles, and who no doubt will be able to confirm what I say.
    Mr. Lubbock: When I talked about farms I was not referring to farms owned by private companies. The example which I gave was of trustees who owned the farm directly in trust.
    8.15 p.m.
    Mr. Hughes: The whole atmosphere of this debate has been one from the point of view that farms are in the hands of trustees who will be ruined if this Capital Gains Tax is put into operation. I assure the hon. Member for Orpington that some of these small private companies, though small in numbers, own a large acreage. I believe that these people who have gained substantially from recent increases in the value of land should pay up and contribute their fair share towards the cost of running the country. The farmers whom I represent perpetually call attention to the fact that under the 1957 Act they have lost security of tenure, and when the farmer dies the farm is held to ransom and enormous capital gains are made.
    I can give an example to the Committee from the Daily Express of 8th September, 1964, of a small company which is interested in capital gains. The paper said that the gentlemen concerned
    "auctioned off two Lanarkshire farms yesterday, bringing in £97,750 for 2,128 acres."
    I see no reason why the capital gains of this landowner should not be taxed so that a contribution should be made to the revenue of the country when it is in a difficult situation. The paper said that the sale did not make too serious an inroad into the acreage of the land owned by this company.
    The Temporary Chairman (Sir Leslie Thomas): The hon. Member must assure the Committee that the example which he has given is of shares in a settled property, in a settlement.
    Mr. Hughes: Certainly, I am prepared to have the fullest possible examination made of this company.
    The Temporary Chairman: Order. The hon. Member must satisfy the Committee how the example which he has given comes within the terms of the Amendment.
    Mr. Hughes: I am satisfied that I am giving the Committee very relevant evidence why this capital gains Clause should be passed as quickly as possible.
    On a recent estimate the estates of this particular small company run by these trustees included 56 large farms in

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    Lanarkshire alone. I hear my hon. Friend the Member for Derbyshire, North-East asking who this person is. Since I am pressed, I will tell the Committee that the leading shareholder in this private company is the present Leader of the Opposition.
    I have given the figures for only two farms in Lanarkshire. If the hon. Member for Roxburgh, Selkirk and Peebles, before his radicalism expires, wishes to pursue his investigations, he will be able to find out about other farms in his constituency to which I have not referred. I shall look forward with interest to finding out what are the values involved and what are the difficulties of these companies in the Borders.
    I am using these facts to put the whole question of poor private companies owning land in its proper perspective. It is the same sort of argument as we have heard about poor small investors, behind whom are the big tycoons. We hear about the difficulties of small trustees with their investments in land, and all these arguments are trotted out to hide the fact that under this Bill for the first time the big landowners will be expected to hand back to the community some of the money they have made out of the farmers.
    When I hear that two farms were sold for £97,750, I want to see some of that increase come back to the community. Why not? I am presenting the real picture of land owning in Scotland, and it is complete misrepresentation to suggest that there is here a conspiracy on the part of a wicked Socialist Government to victimise small farmers.
    I urge the Government not to make any concessions at all. I do not want concessions to be given to the Leader of the Opposition so that, in 10 years, the value of his land will go up and up. I want to tax these big estates to extinction. [HON. MEMBERS: "Ah."] Certainly. I want to ensure that one man or one small group of private companies is not able to exploit the labour of the farmers I represent. How do 2,128 acres come to have the value of £97,750? By the work of the landlord? Not at all. A lot of it comes from the fact that sheep are subsidised by the Government so that, when the farmer bought this land after its
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    valuation, he knew that he was getting the value of the subsidies from the nation.
    Mr. Maxwell: Is my hon. Friend aware that, when land is acquired by the community for community purposes, the landowner receives vast capital gain appreciation, but the tenant farmer receives only two years' rent or two years' profits, which is absolutely iniquitous?
    Mr. Hughes: Yes, and I know from experience in my own constituency the grievances felt by the farmers who do the work, not the landlords who exploit the farmers.
    We have heard hon. Members opposite speak in these debates whose only interest is in holding on to the vested interests of big vested landlords, sheltering behind all the hocus-pocus and make-believe about the poor small farmer and small investor. It reminds me of the story told in the First World War that the Germans drove women and children to the front in order that the heavy battalions could shelter behind them. In all these tiresome debates, there is always the pretence, the mockery and the falsehood of the Opposition representing the small investor, the small man and the small farmer.
    Mr. Heath: Does the hon. Gentleman realise that he is gravely insulting his hon. Friend the Member for West Stirlingshire (Mr. W. Baxter), who explained from his own practical experience as a small man who has built up a business from nothing the way that this will affect him?
    Mr. Hughes: I know my hon. Friend the Member for West Stirlingshire better than the right hon. Gentleman does, and I am quite sure that, if he were here, he would support every word I am saying.
    Mr. Heath: He did not.
    Mr. Hughes: I know my hon. Friend. If he has made any money, he has made it by the sweat of his brow, which is more than many hon. Members on that side of the Committee have done.
    I hope that the Government will not make any concession at all. I want them to realise that the country is on their side and that they should proceed with the proposals in the Bill in the knowledge that the people will back them overwhelmingly when the issues are explained as clearly as I have just explained them.
    Questions put, That the words proposed to be left out, to the word "in" in line 6, stand part of the Clause:—

    Division No. 140.]

    AYES

    [8.27 p.m.

    Abse, Leo

    Griffiths, David (Rother Valley)

    Padley, Walter

    Albu, Austen

    Gunter, Rt. Hn. R. J.

    Page, Derek (King's Lynn)

    Allaun, Frank (Salford, E.)

    Hamilton, William (West Fife)

    Palmer, Arthur

    Allen, Scholefield (Crewe)

    Hart, Mrs. Judith

    Pargiter, G. A.

    Armstrong, Ernest

    Hattersley, Roy

    Park, Trevor (Derbyshire, S.E.)

    Atkinson, Norman

    Hazell, Bert

    Parker, John

    Bacon, Miss Alice

    Healey, Rt. Hn. Denis

    Parkin, B. T.

    Barnett, Joel

    Herbison, Rt. Hn. Margaret

    Pavitt, Laurence

    Benn, Rt. Hn. Anthony Wedgwood

    Hill, J. (Midlothian)

    Pearson, Arthur (Pontypridd)

    Bennett, J. (Glasgow, Bridgeton)

    Holman, Percy

    Prentice, R. E.

    Binns, John

    Houghton, Rt. Hn. Douglas

    Price, J. T. (Westhoughton)

    Blackburn, F.

    Howell, Denis (Small Heath)

    Pursey, Cmdr. Harry

    Boardman, H.

    Howie, W.

    Rankin, John

    Boston, T. G.

    Hoy, James

    Redhead, Edward

    Bottomley, Rt. Hn. Arthur

    Hughes, Emrys (S. Ayrshire)

    Rees, Merlyn

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

    Hunter, Adam (Dunfermline)

    Reynolds, G. W.

    Boyden, James

    Hunter, A. E. (Feltham)

    Robertson, John (Paisley)

    Braddock, Mrs. E. M.

    Hynd, H. (Accrington)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Brown, R. W. (Shoreditch & Fbury)

    Hynd, John (Attercliffe)

    Rogers, George (Kensington, N.)

    Buchanan, Richard

    Irving, Sydney (Dartford)

    Ross, Rt. Hn. William

    Butler, Herbert (Hackney, C.)

    Jackson, Colin

    Rowland, Christopher

    Butler, Mrs Joyce (Wood Green)

    Janner, Sir Barnett

    Shinwell, Rt. Hn. E.

    Callaghan, Rt. Hn. James

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Shore, Peter (Stepney)

    Castle, Rt. Hn. Barbara

    Jenkins, Hugh (Putney)

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Coleman, Donald

    Jones, Dan (Burnley)

    Silkin, John (Deptford)

    Conlan, Bernard

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Silkin, S. C. (Camberwell, Dulwich)

    Corbet, Mrs. Freda

    Jones, J. Idwal (Wrexham)

    Slater, Joseph (Sedgefield)

    Cronin, John

    Kelley, Richard

    Solomons, Henry

    Crossman, Rt. Hn. R. H. S.

    Kenyon, Clifford

    Soskice, Rt. Hn. Sir Frank

    Cullen, Mrs. Alice

    Kerr, Dr. David (W'worth, Central)

    Stones, William

    Dalyell, Tarn

    Lawson, George

    Swain, Thomas

    Darling, George

    Leadbitter, Ted

    Swingler, Stephen

    Davies, I for (Gower)

    Lee, Rt. Hn. Frederick (Newton)

    Taverne, Dick

    Davies, S. O. (Merthyr)

    Lever, Harold (Cheetham)

    Thomson, George (Dundee, E.)

    Delargy, Hugh

    Lewis, Ron (Carlisle)

    Dempsey, James

    Lomas, Kenneth

    Thornton, Ernest

    Diamond, John

    Loughlin, Charles

    Tinn, James

    Dodds, Norman

    Mabon, Dr. J. Dickson

    Tuck, Raphael

    Doig, Peter

    McBride, Neil

    Urwin, T. W.

    Driberg, Tom

    MacColl, James

    Varley, Eric G.

    Dunn, James A.

    MacDermot, Niall

    Wainwright, Edwin

    Dunnett Jack

    McKay, Mrs. Margaret

    Walden, Brian (All Saints)

    Edwards, Rt. Hn. Ness (Caerphilly)

    Mackenzie, Gregor (Rutherglen)

    Walker, Harold (Doncaster)

    English, Michael

    Mackie, John (Enfield, E.)

    Wallace, George

    Ensor, David

    Mahon, Slmon (Bootle)

    Wells, William (Walsall N.)

    Evans, Albert (Islington, S.W.)

    Manuel, Archie

    Whitlock, William

    Fernyhough, E.

    Mapp, Charles

    Wigg, Rt. Hn. George

    Mellish, Robert

    Wilkins, W. A.

    Finch, Harold (Bedwellty)

    Mikardo, lan

    Williams, Albert (Abertillery)

    Fletcher, Sir Eric (Islington, E.)

    Molloy, William

    Williams, Mrs. Shirley (Hitchin)

    Floud, Bernard

    Monslow, Walter

    Wilson, Rt. Hn. Harold (Huyton)

    Foot, Sir Dingle (Ipswich)

    Morris, Charles (Openshaw)

    Wilson, William (Coventry, S.)

    Foot, Michael (Ebbw Vale)

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Woodburn, Rt. Hn. A.

    Fraser, Rt. Hn. Tom (Hamilton)

    Murray, Albert

    Wyatt, Woodrow

    Freeson, Reginald

    Neal, Harold

    Yates, Victor (Ladywood)

    George, Lady Megan Lloyd

    Newens, Stan

    Ginsburg, David

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    TELLERS FOR THE AYES:

    Gourlay, Harry

    Oakes, Gordon

    Mr. Joseph Harper and

    Greenwood, Rt. Hn. Anthony

    Ogden, Eric

    Mrs. Harriet Slater.

    Gregory, Arnold

    O'Malley, Brian

    NOES

    Alison, Michael (Barkston Ash)

    Bessell, Peter

    Buxton, Ronald

    Allan, Robert (Paddington, S.)

    Birch, Rt. Hn. Nigel

    Chichester-Clark, R.

    Amery, Rt. Hn. Julian

    Black, Sir Cyril

    Clark, William (Nottingham, S.)

    Anstruther-Gray, Rt. Hn. Sir W.

    Box, Donald

    Cole, Norman

    Astor, John

    Boyd-Carpenter, Rt. Hn. J.

    Cooper, A. E.

    Atkins, Humphrey

    Boyle, Rt. Hn. Sir Edward

    Cooper-Key, Sir Neill

    Awdry, Daniel

    Brewis, John

    Costain, A. P.

    Baker, W. H. K.

    Brinton, Sir Tatton

    Craddock, Sir Beresford (Spelthorne)

    Barlow, Sir John

    Bromley-Davenport,Lt.-Col.SirWalter

    Crowder, F. P.

    Batsford, Brian

    Brooke, Rt. Hn. Henry

    Curran, Charles

    Beamish, Col. Sir Tufton

    Bryan, Paul

    Currie, G. B. H.

    Bennett, Sir Frederic (Torquay)

    Buchanan-Smith, Alick

    Dalkeith, Earl of

    Berry, Hn. Anthony

    Buck, Antony

    Davies, Dr. Wyndham (Perry Barr)

    The Committee divided: Ayes, 173, Noes 171.

    d'Avigdor-Goldsmid, Sir Henry

    Johnston, Russell (Inverness)

    Pickthorn, Rt. Hn. Sir Kenneth

    Deedes, Rt. Hn. W. F.

    Jopling, Michael

    Pitt, Dame Edith

    Dodds-Parker, Douglas

    Kaberry, Sir Donald

    Price, David (Eastlel gh)

    Errington, Sir Eric

    Kerby, Capt. Henry

    Prior, J. M. L.

    Eyre, Reginald

    Kilfedder, James A.

    Pym, Francis

    Fell, Anthony

    Kimball, Marcus

    Ramsden, Rt. Hn. James

    Fletcher-Cooke, Charles (Darwen)

    King, Evelyn (Dorset, S.)

    Redmayne, Rt. Hn. Sir Martin

    Fletcher-Cooke, Sir John (S'pton)

    Kitson, Timothy

    Rees-Davies, W. R.

    Foster, Sir John

    Langford-Holt, Sir John

    Russell, Sir Ronald

    Fraser.Rt.Hn.Hugh(St'fford & Stone)

    Legge-Bourke, Sir Harry

    Sharples, Richard

    Galbraith, Hn. T. G. D.

    Lewis, Kenneth (Rutland)

    Shepherd, William

    Gilmour, Sir John (East Fife)

    Litchfield, Capt. John

    Sinclair, Sir George

    Glover, Sir Douglas

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

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

    Godber, Rt. Hn. J. B.

    Lloyd, Ian (P'tsm'th. Langstone)

    Spearman, Sir Alexander

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Stanley, Hn. Richard

    Goodhew, Victor

    Longden, Gilbert

    Steel, David (Roxburgh)

    Gower, Raymond

    Loveys, Walter H.

    Stoddart-Scott, Col. Sir Malcolm

    Grant, Anthony

    Lubbock, Eric

    Studholme, Sir Henry

    Grant-Ferris, R.

    MacArthur, Ian

    Talbot, John E.

    Gresham Cooke, R.

    Mackenzie, Alasdair (Ross&Crom'ty)

    Griffiths, Peter (Smethwick)

    Mackie, George V. (C'ness & S'land)

    Taylor, Sir Charles (Eastbourne)

    Grimond, Rt. Hn. J.

    McLaren, Martin

    Taylor, Edward M. (G'gow.Cathcart)

    Hall, John (Wycombe)

    McMaster, Stanley

    Taylor, Frank (Most Side)

    Harris, Frederic (Croydon, N.W.)

    MeNalr-Wilson, Patrick

    Teeling, Sir William

    Harrison, Brian (Maldon)

    Maginnis, John E.

    Temple. John M.

    Harvey, Sir Arthur Vere (Macclesf'd)

    Mathew, Robert

    Thatcher, Mrs. Margaret

    Harvey, John (Walthamstow, E.)

    Maude, Angus

    Thompson, Sir Richard (Croydon,S.)

    Harvie Anderson, Miss

    Maxwell-Hyslop, R. J.

    Thorpe, Jeremy

    Hawkins, Paul

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

    Tiley, Arthur (Bradford, W.)

    Heald, Rt. Hn. Sir Lionel

    Meyer, Sir Anthony

    Tweedsmuir, Lady

    Heath, Rt. Hn. Edward

    Mills, Peter (Torrington)

    van Straubenzee, W, R.

    Hendry, Forbes

    Mills, Stratum (Belfast, N.)

    Walder, David (High Peak)

    Higgins, Terence L.

    Miscampbell, Norman

    Walker, Peter (Worcester)

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

    Mitchell, David

    Walters, Dennis

    Hirst, Geoffrey

    Morrison, Charles (Devizes)

    Ward, Dame Irene

    Hobson, Rt. Hn. Sir John

    Mott-Radclyffe, Sir Charles

    Weatherill, Bernard

    Hogg, Rt. Hn. Quintin

    Munro-Lucas-Tooth, Sir Hugh

    Webster, David

    Hooson, H. E.

    Murton, Oscar

    Whitelaw, William

    Hopkins, Alan

    Neave, Airey

    Wills, Sir Gerald (Bridgwater)

    Hordern, Peter

    Nicholls, Sir Harmar

    Wilson, Geoffrey (Truro)

    Hornsby-Smith, Rt. Hn. Dame P.

    Nugent, Rt. Hn. Sir Richard

    Wolrige-Gordon, Patrick

    Howe, Geoffrey (Bebington)

    Orr, Capt. L. P. S.

    Woodnutt, Mark

    Hunt, John (Bromley)

    Page, John (Harrow, W.)

    Younger, Hn. George

    Iremonger, T. L.

    Page, R. Graham (Crosby)

    Irvine, Bryant Godman (Rye)

    Pearson, Sir Frank (Clitheroe)

    TELLERS FOR THE NOES:

    Johnson Smith, G. (East Grinstead)

    Peyton, John

    Mr. Ian Fraser and

    Mr. Jasper More.

    Mr. Lubbock: Is it possible to have a Division on Amendment No. 424?
    The Temporary Chairman: We shall have a decision on that when we reach it. In the meantime, I am taking the Amendments in order.
    The Solicitor-General: I beg to move Amendment No. 137, in page 24, line 6, after "interest" to insert "in possession"
    This is purely a drafting Amendment. The distinction is between interests in possession and reversionary or contingent interests. There is a reference in each of the following subsections to interests in possession, and it does not—[Interruption.]
    The Temporary Chairman: Order. It would be for the convenience of the Committee if hon. Members could hear what the Solicitor-General is saying.
    The Solicitor-General: The Amendment makes no difference to the sense of the Clause or to what it intended. I therefore invite the Committee to accept it.
    Amendment agreed to.
    The Solicitor-General: I beg to move Amendment No. 138, in page 24, line 7, to leave out from "any" to "shall" in line 9 and insert:
    "which at that time cease to be settled property".
    This, too, is a drafting Amendment. It follows directly from the first Amendment to this Clause which the Committee accepted.
    Amendment agreed to.
    Amendment proposed: In page 24, line 11, at end insert:
    Provided that the liability to pay tax on the notional gains arising may at the option of the trustees be postponed until such time as such

    713
    assets or securities are disposed of and meanwhile the amount outstanding under the provisions of this section shall accrue interest at the rate of 2 per cent, per annum—[Mr. Lubbock.]

    Division No. 141.]

    AYES

    [8.41 p.m.

    Alison, Michael (Barkston Ash)

    Griffiths, Peter (Smethwick)

    More, Jasper

    Allan, Robert (Paddington, S.)

    Grimond, Rt. Hn. J.

    Morrison, Charles (Devizes)

    Amery, Rt. Hn. Julian

    Hall, John (Wycombe)

    Mott-Radclyffe, Sir Charles

    Anstruther-Gray, Rt. Hn. Sir W.

    Harris, Frederic (Croydon, N.W.)

    Munro-Lucas-Tooth, Sir Hugh

    Astor, John

    Harrison, Brian (Maldon)

    Murton, Oscar

    Atkins, Humphrey

    Harvey, Sir Arthur Vere (Macclesf'd)

    Neave, Ai rey

    Awdry, Daniel

    Harvey, John (Walthamstow, E.)

    Nicholls, Sir Harmar

    Baker, W. H. K.

    Harvie Anderson, Miss

    Nugent, Rt. Hn. Sir Richard

    Barlow, Sir John

    Hawkins, Paul

    Orr, Capt. L. P. S.

    Batsford, Brian

    Heald, Rt. Hn. Sir Lionel

    Page, John (Harrow, W.)

    Beamish, Col. Sir Tufton

    Heath, Rt. Hn. Edward

    Page, R. Graham (Crosby)

    Bennett, Sir Frederic (Torquay)

    Hendry, Forbes

    Pearson, Sir Frank (Clitheroe)

    Berry, Hn. Anthony

    Higgins, Terence L.

    Peyton, John

    Bessell, Peter

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

    Pickthorn, Rt. Hn. Sir Kenneth

    Birch, Rt. Hn. Nigel

    Hirst, Geoffrey

    Pitt, Dame Edith

    Black, Sir Cyril

    Hobson, Rt. Hn. Sir John

    Price, David (Eastleigh)

    Box, Donald

    Hogg, Rt. Hn. Quintin

    Prior, J. M. L.

    Boyd-Carpenter, Rt. Hn. J.

    Hooson, H. E.

    Pym, Francis

    Boyle, Rt. Hn. Sir Edward

    Hopkins, Alan

    Ramsden, Rt. Hn. James

    Brewis, John

    Hordern, Peter

    Redmayne, Rt. Hn. Sir Martin

    Brinton, Sir Tatton

    Hornsby-Smith, Rt. Hn. Dame P.

    Rees-Davies, W. R.

    Bromley-Davenport,Lt.-Col.SirWalter

    Howe, Geoffrey (Bebington)

    Russell, Sir Ronald

    Brooke, Rt. Hn. Henry

    Hunt, John (Bromley)

    Sharples, Richard

    Bryan, Paul

    Iremonger, T. L.

    Shepherd, William

    Buchanan-Smith, Alick

    Irvine, Bryant Godman (Rye)

    Sinclair, Sir George

    Buck, Antony

    Johnson Smith, G. (East Grinstead)

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

    Buxton, Ronald

    Johnston, Russell (Inverness)

    Spearman, Sir Alexander

    Chichester-Clark, R.

    Jopling, Michael

    Stanley, Hn. Richard

    Clark, William (Nottingham, S.)

    Kaberry, Sir Donald

    Stoddart-Scott, Col. Sir Malco lm

    Cole, Norman

    Kerby, Capt. Henry

    Studholme, Sir Henry

    Cooper, A. E.

    Kilfedder, James A.

    Talbot, John E.

    Cooper-Key, Sir Neill

    Kimball, Marcus

    Taylor, Sir Charles (Eastbourne)

    Costain, A. P.

    King, Evelyn (Dorset, S.)

    Taylor, Edward M. (G'gow.Cathcart)

    Craddock, Sir Beresford (Spelthorne)

    Kitson, Timothy

    Taylor, Frank (Moss Side)

    Crowder, F. P.

    Langford-Holt, Sir John

    Teeling, Sir William

    Curran, Charles

    Legge-Bourke, Sir Harry

    Temple, John M.

    Currie, G. B. H.

    Lewis, Kenneth (Rutland)

    Thatcher, Mrs. Margaret

    Dalkeith, Earl of

    Litchfield, Capt. John

    Thompson, Sir Richard (Croydon,S.)

    Davies, Dr. Wyndham (Perry Barr)

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

    Thorpe, Jeremy

    d'Avigdor-Goldsmid, Sir Henry

    Lloyd, Ian (P'tsm'th, Langstone)

    Tiley, Arthur (Bradford, W.)

    Deedes, Rt. Hn. W. F.

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Tweedsmuir, Lady

    Dodds-Parker, Douglas

    Longden, Gilbert

    van Straubenzee, W. R.

    Errington, Sir Eric

    Loveys, Walter H.

    Walder, David (High Peak)

    Eyre, Reginald

    MacArthur, Ian

    Walker, Peter (Worcester)

    Fell, Anthony

    Mackenzie, Alasdair (Ross&Crom'ty)

    Walters, Dennis

    Fletcher-Cooke, Charles (Darwen)

    Mackie, George Y. (C'ness & S'land)

    Ward, Dame Irene

    Fletcher-Cooke, Sir John (S'pton)

    McLaren, Martin

    Weatherill, Bernard

    Foster, Sir John

    McMaster, Stanley

    Webster, David

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    McNair-Wilson, Patrick

    Whitelaw, William

    Fraser, Ian (Plymouth, Sutton)

    Magi nnis, John E.

    Wills, Sir Gerald (Bridgwater)

    Galbraith, Hn. T. G. D.

    Mathew, Robert

    Wilson, Geoffrey (Truro)

    Gilmour, Sir John (East Fife)

    Maude, Angus

    Wolrige-Gordon, Patrick

    Glover, Sir Douglas

    Maxwell-Hyslop, R. J.

    Woodnutt, Mark

    Godber, Rt. Hn. J. B.

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

    Younger, Hn. George

    Goodhew, Victor

    Meyer, Sir Anthony

    Gower, Raymond

    Mills, Peter (Torrington)

    TELLERS FOR THE AYES:

    Grant, Anthony

    Mills, Stratton (Belfast, N.)

    Mr. Eric Lubbock and

    Grant-Ferris, R.

    Miscampbell, Norman

    Mr. David Steel.

    Gresham Cooke, R.

    Mitchell, David

    NOES

    Abse, Leo

    Bennett, J. (Glasgow, Bridgeton)

    Broughton, Dr. A. D. D.

    Albu, Austen

    Binns, John

    Brown, R. W. (Shoreditch & Fbury)

    Allaun, Frank (Salford, E.)

    Blackburn, F.

    Buchanan, Richard

    Allen, Scholefield (Crewe)

    Boardman, H.

    Butler, Herbert (Hackney, C.)

    Armstrong, Ernest

    Boston, T. G.

    Butler, Mrs. Joyce (Wood Green)

    Atkinson, Norman

    Bottomley, Rt. Hn. Arthur

    Callaghan, Rt. Hn. James

    Bacon, Mist Alice

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

    Castle, Rt. Hn. Barbara

    Barnett, Joel

    Boyden, James

    Coleman, Donald

    Benn, Rt. Hn. Anthony Wedgwood

    Braddock, Mrs. E. M.

    Conlan, Bernard

    Question put, That those words be there inserted:—
    The Committee divided: Ayes 172, Noes 175.

    Corbet, Mrs. Freda

    Hynd, H. (Accrington)

    Pearson, Arthur (Pontypridd)

    Cronin, John

    Hynd, John (Attercliffe)

    Prentice, R. E.

    Crossman, Rt. Hn. R. H. S.

    Irving, Sydney (Dartford)

    Price, J. T. (Westhoughton)

    Cullen, Mrs. Alice

    Jackson, Colin

    Pursey, Cmdr. Harry

    Dalyell, Tam

    Janner, Sir Barnett

    Rankin, John

    Darling, George

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Redhead, Edward

    Davies, Ifor (Gower)

    Jenkins, Hugh (Putney)

    Rees, Merlyn

    Davies, S. O. (Merthyr)

    Jones, Dan (Burnley)

    Reynolds, G. W.

    Delargy, Hugh

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Robertson, John (Paisley)

    Dempsey, James

    Jones, J. Idwal (Wrexham)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Diamond, John

    Kelley, Richard

    Rogers, George (Kensington, N.)

    Dodds, Norman

    Kenyon, Clifford

    Ross, Rt. Hn. William

    Kerr, Dr. David (W'worth, Central)

    Rowland, Christopher

    Doig, Peter

    Lawson, George

    Shinwell, Rt. Hn. E.

    Driberg, Tom.

    Leadbitter, Ted

    Shore, Peter (Stepney)

    Dunn, James A

    Lee, Rt. Hn. Frederick (Newton)

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Dunnett, Jack

    Lever, Harold (Cheetham)

    Silkin, John (Deptford)

    Edwards, Rt. Hn. Ness (Caerphilly)

    Lewis, Ron (Carlisle)

    Silkin, S. C. (Camberwell, Dulwich)

    English, Michael

    Lomas, Kenneth

    Slater, Joseph (Sedgefield)

    Ensor, David

    Loughlin, Charles

    Solomons, Henry

    Evans, Albert (Islington, S.W.)

    Mabon, Dr. J. Dickson

    Soskice, Rt. Hn. Sir Frank

    Fernyhough, E.

    McBride, Neil

    Stones, William

    Finch, Harold (Bedwellty)

    MacColl, James

    Fletcher, Sir Eric (Islington, E.)

    MacDermot, Niall

    Swain, Thomas

    Floud, Bernard

    McKay, Mrs. Margaret

    Swingler, Stephen

    Foot, Sir Dingle (Ipswich)

    Mackenzie, Gregor (Rutherglen)

    Taverne, Dick

    Foot, Michael (Ebbw Vale)

    Mackie, John (Enfield, E.)

    Thomson, George (Dundee, E.)

    Fraser, Rt. Hn. Tom (Hamilton)

    Mahon, Simon (Bootle)

    Thornton, Ernest

    Freeson, Reginald

    Manuel, Archie

    Tinn, James

    George, Lady Megan Lloyd

    Mapp, Charles

    Tuck, Raphae

    Ginsburg, David

    Mellish, Robert

    Urwin, T. W.

    Gourlay, Harry

    Mikardo, Ian

    Varley, Eric C.

    Molloy, William

    Wainwright, Edwin

    Greenwood, Rt. Hn. Anthony

    Monslow, Walter

    Walden, Brian (All Saints)

    Gregory, Arnold

    Morris, Charles (Openshaw)

    Walker, Harold (Doncaster)

    Griffiths, David (Rother Valley)

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Wallace, George

    Gunter, Rt. Hn. R. J.

    Murray, Albert

    Wells, William (Walsall N.)

    Hamilton, William (West Fife)

    Neal, Harold

    Whitlock, William

    Hart, Mrs. Judith

    Newens, Stan

    Wigg, Rt. Hn. George

    Hattersley, Roy

    Noel-Baker, Francis (Swindon)

    Wilkins, W. A.

    Hazell, Bert

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Williams, Albert (Abertillery)

    Healey, Rt. Hn. Denis

    Oakes, Gordon

    Williams, Mrs. Shirley (Hitchin)

    Herbison, Rt. Hn. Margaret

    Ogden, Eric

    Wilson, Rt. Hn. Harold (Huyton)

    Hill, J. (Midlothian)

    O'Malley, Brian

    Wilson, William (Coventry, S.)

    Holman, Percy

    Padley, Walter

    Woodburn, Rt. Hn. A.

    Houghton, Rt. Hn. Douglas

    Page, Derek (King's Lynn)

    Wyatt, Woodrow

    Howell, Denis (Small Heath)

    Palmer, Arthur

    Yates, Victor (Ladywood)

    Howie, W.

    Pargiter, G. A.

    Hoy, James

    Park, Trevor (Derbyshire, S.E.

    TELLERS FOR THE NOES;

    Hughes, Emrys (S. Ayrshire)

    Parker, John

    Mrs. Harriet Slater and

    Hunter, Adam (Dunfermline)

    Parkin, B. T.

    Mr. Joseph Harper.

    Hunter, A. E. (Feltham)

    Pavitt, Laurence

    A mendment proposed: In page 24, line 27, at end insert:
    "except in cases where the trustees have no funds, in which event liability shall remain as a charge deferred until the trustees have acquired realised funds".—[Mr. Chichester-Clark.]

    Division No. 142.]

    AYES

    [8.52 p.m.

    Alison, Michael (Barkston Ash)

    Boyd-Carpenter, Rt. Hn. J.

    Curran, Charles

    Allan, Robert (Paddington, S.)

    Boyle, Rt. Hn. Sir Edward

    Currie, G. B. H.

    Amery, Rt. Hn. Jullan

    Brewis, John

    Dalkeith, Earl of

    Anstruther-Gray, Rt. Hn. Sir W.

    Brinton, Sir Tatton

    Davies, Dr. Wyndham (Perry Barr)

    Astor, John

    Bromley-Davenport, Lt. -Col. SirWalter

    d'Avigdor-Goldsmid, Sir Henry

    Atkins, Humphrey

    Brooke, Rt. Hn. Henry

    Deedes, Rt. Hn. W. F.

    Awdry, Daniel

    Bryan, Paul

    Dodds-Parker, Douglas

    Baker, W. H. K.

    Buchanan-Smith, Alick

    Errington, Sir Eric

    Barlow, Sir John

    Buck, Antony

    Eyre, Reginald

    Batsford, Brian

    Buxton, Ronald

    Fell, Anthony

    Beamish, Col. Sir Tufton

    Chichester-Clark, R.

    Fletcher-Cooke, Charles (Darwen)

    Bennett, Sir Frederic (Torquay)

    Clark, William (Nottingham, S.)

    Berry, Hn. Anthony

    Cole, Norman

    Fletcher-Cooke, Sir John (S'pton)

    Bessell, Peter

    Cooper, A. E.

    Foster, Sir John

    Birch, Rt. Hn. Nigel

    Cooper-Key, Sir Neill

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    Black, Sir Cyril

    Costain, A. P.

    Galbraith, Hn. T. G. D.

    Blaker, Peter

    Craddock, Sir Beresford (Spelthorne)

    Gilmour, Sir John (East Fife)

    Box, Donald

    Crowder, F. P.

    Glover, Sir Douglas

    Question put, That those words be there inserted:—
    The Committee divided: Ayes 173, Noes 177.

    Godber, Rt. Hn. J. B.

    Legge-Bourke, Sir Harry

    Ramsden, Rt. Hn. James

    Goodhew, Victor

    Lewis, Kenneth (Rutland)

    Redmayne, Rt. Hn. Sir Martin

    Gower, Raymond

    Litchfield, Capt. John

    Rees-Davies, W. R.

    Grant, Anthony

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

    Russell, Sir Ronald

    Grant-Ferris, R.

    Lloyd, lan (P'tsm'th, Langstone)

    Sharples, Richard

    Gresham Cooke, R.

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Shepherd, William

    Griffiths, Peter (Smethwick)

    Longden, Gilbert

    Sinclair, Sir George

    Grimond, Rt. Hn. J.

    Loveys, Walter H.

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

    Hall, John (Wycombe)

    Lubbock, Eric

    Spearman, Sir Alexander

    Mackenzie, Gregor (Rutherglen)

    Stanley, Hn. Richard

    Harris, Frederic (Croydon, N.W.)

    Mackie, George Y. (C'ness & S'land)

    Steel, David (Roxburgh)

    Harrison, Brian (Maldon)

    McLaren, Martin

    Stoddart-Scott, Col. Sir Malcolm

    Harvey, Sir Arthur Vere (Macclesf'd)

    McMaster, Stanley

    Studholme, Sir Henry

    Harvey, John (Walthamstow, E.)

    McNair-Wilson, Patrick

    Harvie Anderson, Miss

    Maginnis, John E.

    Talbot, John E.

    Hawkins, Paul

    Mathew, Robert

    Taylor, Sir Charles (Eastbourne)

    Heald, Rt. Hn. Sir Lionel

    Maude, Angus

    Taylor, Edward M. (G'gow.Cathcart)

    Heath, Rt. Hn. Edward

    Maxwell-Hyslop, R. J.

    Taylor, Frank (Moss Side)

    He ndry, Forbes

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

    Teeling, Sir William

    Higgins, Terence L.

    Meyer, Sir Anthony

    Temple, John M.

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

    Mills, Peter (Torrington)

    Thatcher, Mrs. Margaret

    Hirst, Geoffrey

    Mills, Stratton (Belfast, N.)

    Thompson, Sir Richard (Croydon,S.)

    Hobson, Rt. Hn. Sir John

    Miscampbell, Norman

    Thorpe, Jeremy

    Hogg, Rt. Hn. Quintin

    Mitchell, David

    Tiley, Arthur (Bradford, W.)

    Hooson, H. E.

    More, Jasper

    Tweedsmuir, Lady

    Hopkins, Alan

    Morrison, Charles (Devizes)

    van Straubenzee, W. R.

    Hordern, Peter

    Mott-Radclyffe, Sir Charles

    Walder, David (High Peak)

    Hornsby-Smith, Rt. Hn. Dame P.

    Munro-Lucas-Tooth, Sir Hugh

    Walker, Peter (Worcester)

    Howe, Geoffrey (Bebington)

    Murton, Oscar

    Walters, Dennis

    Hunt, John (Bromley)

    Neave, Airey

    Ward, Dame Irene

    Iremonger, T. L.

    Nicholls, Sir Harmar

    Weatherill, Bernard

    Irvine, Bryant Godman (Rye)

    Nugent, Rt. Hn. Sir Richard

    Webster, David

    Johnson Smith, G. (East Grinstead)

    Orr, Capt. L. P. S.

    Whitelaw, William

    Johnston, Russell (Inverness)

    Page, John (Harrow, W.)

    Wills, Sir Gerald (Bridgwater)

    Jopling, Michael

    Page, R. Graham (Crosby)

    Wilson, Geoffrey (Truro)

    Kaberry, Sir Donald

    Pearson, Sir Frank (Clitheroe)

    Wolrige-Gordon, Patrick

    Kerby, Capt. Henry

    Peyton, John

    Woodnutt, Mark

    Kilfedder, James A.

    Pickthorn, Rt. Hn. Sir Kenneth

    Younger, Hn. George

    Kimball, Marcus

    Pitt, Dame Edith

    King, Evelyn (Dorset, S.)

    Price, David (Eastleigh)

    TELLERS FOR THE AYES:

    Kitson, Timothy

    Prior, J. M. L.

    Mr. Ian MacArthur and

    Langford-Holt, Sir John

    Pym, Francis

    Mr. Ian Fraser.

    NOES

    Abse, Leo

    Dodds, Norman

    Hughes, Emrys (S. Ayrshire)

    Albu, Austen

    Doig, Peter

    Hunter, Adam (Dunfermline)

    Allaun, Frank (Salford, E.)

    Driberg, Tom

    Hunter, A. E. (Feltham)

    Allen, Scholefield (Crewe)

    Dunn, James A.

    Hynd, H. (Accrington)

    Armstrong, Ernest

    Dunnett, Jack

    Hynd, John (Attercliffe)

    Atkinson, Norman

    Edwards, Rt. Hn. Ness (Caerphilly)

    Irving, Sydney (Dartford)

    Bacon, Miss Alice

    English, Michael

    Jackson, Colin

    Barnett, Joel

    Ensor, David

    Janner, Sir Barnett

    Benn, Rt. Hn. Anthony Wedgwood

    Evans, Albert (Islington, S.W.)

    Jeger,Mrs.Lena(H'bin&St.P'cras,S.)

    Bennett, J. (Glasgow, Bridgeton)

    Fernyhough, E.

    Jenkins, Hugh (Putney)

    Binns, John

    Finch, Harold (Bedwellty)

    Jones, Dan (Burnley)

    Blackburn, F.

    Fletcher, Sir Eric (Islington, E.)

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Boardman, H.

    Floud, Bernard

    Jones, J. Idwal (Wrexham)

    Boston, T. G.

    Foot, Sir Dingle (Ipswich)

    Kelley, Richard

    Bottomley, Rt. Hn. Arthur

    Kenyon, Clifford

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

    Foot, Michael (Ebbw Vale)

    Kerr, Dr. David (W'worth, Central)

    Boyden, James

    Fraser, Rt. Hn. Tom (Hamilton)

    Lawson, George

    Braddock, Mrs. E. M.

    Freeson, Reginald

    Leadbitter, Ted

    Broughton, Dr. A. D. D.

    George, Lady Megan Lloyd

    Lee, Rt. Hn. Frederick (Newton)

    Brown, R. W. (Shoreditch & Fbury)

    Ginsburg, David

    Lever, Harold (Cheetham)

    Buchanan, Richard

    Gourlay, Harry

    Lewis, Ron (Carlisle)

    Butler, Herbert (Hackney, C.)

    Greenwood, Rt. Hn. Anthony

    Lomas, Kenneth

    Butler, Mrs. Joyce (Wood Green)

    Gregory, Arnold

    Loughlin, Charles

    Callaghan, Rt. Hn. James

    Griffiths, David (Rother Valley)

    Mabon, Dr. J. Dickson

    Castle, Rt. Hn. Barbara

    Gunter, Rt. Hn. R. J.

    McBride, Neil

    Coleman, Donald

    Hamilton, William (West Fife)

    MacColl, James

    Conlan, Bernard

    Hart, Mrs. Judith

    MacDermot, Niall

    Corbet, Mrs. Freda

    Hattersley, Roy

    McKay, Mrs. Margaret

    Cronin, John

    Hazell, Bert

    Mackenzie, Gregor (Rutherglen)

    Crossman, Rt. Hn. R. H. S.

    Healey, Rt. Hn. Denis

    Mackie, John (Enfield, E.)

    Cullen, Mrs. Alice

    Herbison, Rt. Hn. Margaret

    Mahon, Simon (Bootle)

    Dalyell, Tam

    Hill, J. (Midlothian)

    Manuel, Archie

    Darling, George

    Hobden, Dennis (Brighton, K'town.)

    Mapp, Charles

    Davies, Ifor (Gower)

    Holman, Percy

    Mellish, Robert

    Davies, S. O. (Merthyr)

    Houghton, Rt. Hn. Douglas

    Mikardo, Ian

    Delargy, Hugh

    Howell, Denis (Small Heath)

    Molloy, William

    Dempsey, James

    Howie, W.

    Monslow, Walter

    Diamond, John

    Hoy, James

    Morris, Charles (Openshaw)

    718

    719

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Redhead, Edward

    Tinn, James

    Murray, Albert

    Rees, Merlyn

    Tuck, Raphael

    Neal, Harold

    Reynolds, G. W.

    Urwin, T. W.

    Newens Stan

    Robertson, John (Paisley)

    Varley, Eric G.

    Noel-Baker, Francis (Swindon)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Wainwright, Edwin

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Rogers, George (Kensington, N.)

    Walden, Brian (All Saints)

    Oakes, Gordon

    Ross, Rt. Hn. William

    Walker, Harold (Doncaster)

    Ogden, Eric

    Rowland, Christopher

    Wallace, George

    O'Malley, Brian

    Shinwell, Rt. Hn. E.

    Wells, William (Walsall N.)

    Oram, Albert E. (E. Ham, S.)

    Shore, Peter (Stepney)

    Whitlock, William

    Padley, Walter

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Wigg, Rt. Hn. George

    Page, Derek (King's Lynn)

    Silkin, John (Deptford)

    Wilkins, W. A.

    Palmer, Arthur

    Silkin, S. C. (Camberwell, Dulwich)

    Williams, Albert (Abertillery)

    Pargiter, G. A.

    Slater, Joseph (Sedgefield)

    Williams, Mrs. Shirley (Hitchin)

    Park, Trevor (Derbyshire, S.E.)

    Solomons, Henry

    Wilson, Rt. Hn. Harold (Huyton)

    Parker, John

    Soskice, Rt. Hn. Sir Frank

    Wilson, William (Coventry, S.)

    Parkin, B. T.

    Stones, William

    Woodburn, Rt. Hn. A.

    Pavitt, Laurence

    Wyatt, Woodrow

    Pearson, Arthur (Pontypridd)

    Swain, Thomas

    Yates, Victor (Ladywood)

    Prentice, R. E.

    Swingler, Stephen

    Price, J. T. (Westhoughton)

    Taverne, Dick

    TELLERS FOR THE NOES:

    Pursey, Cmdr. Harry

    Thomson, George (Dundee, E.)

    Mrs. Harriet Slater and

    Rankin, John

    Thornton, Ernest

    Mr. Joseph Harper.

    9.0 p.m.
    Mr. Jasper More: I beg to move Amendment No. 337, in page 24, line 35, at the end to insert:
    "and for the purposes of this section a life interest in settled property held by a minor (or a person who under the terms of the settlement shall become absolutely entitled to the settled property on attaining a specified age) shall be counted a life interest in possession".
    This exploratory Amendment is designed to obtain clarification regarding a settlement on a person under age. Clause 24, as now amended by Amendment No. 137, makes clear the position about life tenancies in possession. The object of this Amendment is to make clear what settlements are affected by subsection (6) where the 10-year rule applies. As drafted, the Amendment suggests two different cases affecting persons under age.
    There could be the case of a settlement specifically on a person for life who when he comes in possession is under age. There could be another case of a settlement with power to apply the income to benefit a person under age; they might apply part or all of the income. A third case would be where the income is not specifically dealt with but the capital might be provided to come to an infant contingent on attaining the age of 21. In such a case either all or part of the income might be applied for the infant until attaining the age of 21.
    The object of the Amendment is to ask the Government to make clear where the dividing line is to be drawn between cases where the charge is imposed on death and where it is imposed under the 10-year rule.
    The Solicitor-General: This is a very small point and I can meet the hon. Member for Ludlow (Mr. More). We must draw a distinction when dealing with minors between cases where a minor has an interest in possession, as he has even if his actual drawings may depend on trustees, and cases where he has a contingent interest. I should say that the first case is certainly covered by subsection (9,a). I do not wish to take up time going into this. We are as anxious as the hon. Gentleman to protect the position of minors. We think that the purpose of this Amendment is already covered by the words of the Clause. We want to be certain about it—we are in the realm of extreme technicalities—and if it would meet the hon. Gentleman, we are prepared to look at the matter again to make sure that the position of minors is fully covered.
    Mr. More: I thank the Solicitor-General for what he has said and, on that understanding, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    The Solicitor-General: I beg to move Amendment No. 139 in page 24, line 36, to leave out subsection (7) and to insert:
    (7) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, any allowable loss which has accrued to the trustee in respect of property which is, or is represented by, the property to which that person so becomes entitled (including any allowable loss carried forward to the year of assessment in which that occasion falls), being a loss which cannot be deducted from chargeable gains accruing to the trustee in that year, but before that occasion, shall be treated as if it were an

    721
    allowable loss accruing at that time to the person becoming so entitled, instead of to the trustee.
    This Amendment is consequential on the first Amendment to this Clause, which the Committee accepted earlier. Therefore, without argument, I would ask the Committee to accept this, also.
    Question put, That the words proposed to be left out stand part of the Clause.
    Sir M. Redmayne: On a point of order. We ought to have some guidance from the Government.
    The Temporary Chairman: I shall put the Question again.
    Question, That the words proposed to be left out stand part of the Clause, put and negatived.
    Sir D. Glover: On a point of order. I distinctly heard the Government Whip, the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) say, "Aye". What is the application of the rules of the Committee in this case? Does this not mean that the words stand part of the Clause?
    The Temporary Chairman: I distinctly heard the hon. Lady say, "Aye", but immediately correct herself to say "No".
    Sir Harmar Nicholls: Is it not wrong that, when we are dealing with obvious technicalities, we should have no clear guidance from the Government? They are leading the Committee very badly astray if we have to pass Amendments without any noises, either "Aye" or "No", being made, because we lack the guidance which the Government ought to give.
    Proposed words there inserted.
    Sir Henry d'Avigdor-Goldsmid: I beg to move Amendment No. 206, in page 25. line 43, to leave out subsection (12).
    The Temporary Chairman: Hon. Members should appreciate that we are, at the same time, discussing Amendment No. 317, in page 25, line 44, to leave out from "as" to the end of line 7 on page 26 and to insert:
    "if the settlement had been created on 5th April 1965".
    Sir H. d'Avigdor-Goldsmid: These Amendments deal with a point arising out of subsection (12) of this Clause. We have here an extraordinarily complicated
    722
    method of arriving at the time when the discretionary trusts are valued for Capital Gains Tax. We have what is a rather absurd position under this subsection, that where a trust is created after 6th April, 1965, it will fall to be caught by the revaluation for Capital Gains Tax on the tenth anniversary of that settlement.
    The date 6th April has the consequence that if a trust had been formed by 5th April, 1965, it would not be caught for Capital Gains Tax assessment until the 10th anniversary of 5th April, 1965, which would be 5th April, 1975. If it is unfortunate enough to be made on 5th May, it is caught by the assessment a few days after Budget day.
    We know that the longer right hon. Gentlemen opposite stay in office the less chance there is of any capital gain of any sort accruing because of their depressing effect on the state of the market and the economy. It is absurd that we should have this ridiculous anomaly, that the trusts set up within a month or an hour should fall for revaluation at a distance of 10 years. The Financial Secretary shakes his head, so I hope that he will explain to me what he feels the position to be.
    If a trust is set up on 5th April in any given year it will not fall for revaluation until ten years after that date, whereas if it were made on 15th April, and the active years were 1925, 1935, 1945 and 1955, a trust set up on 15th April, 1955, would be caught by this tax as at 15th April this year. If it were made on 5th April, 1955, it would escape this Measure until 5th April, 1965. This seems to be adding inconvenience to impracticability.
    Having brought in this entirely new principle of taxing discretionary trusts as if there had been a disposal after 10 years, a principle which does not exist in any law that I have heard of previously, and which has been brought in to make sure that no person escapes this net, the simplest thing to do would be to take the line which I have suggested in my Amendment, which is to give the existing trust 10 years and to tax it at the end of 10 years.
    Instead, everyone must look up the date on which the trust was made. We do not all live in lawyers' offices. There are many trusts in this country which have been made and put away. The bank

    723
    holds the securities. The trustees do not know the date of the trust, and everything has to be looked up. This is making for enormous and quite unnecessary inconvenience.
    A simple solution is in the Amendment of my right hon. and hon. Friends to leave out the subsection altogether or in my own suggestion—I hope that the Financial Secretary will give it consideration—to treat all trusts as if they had been created the day before the Budget was introduced, to give them 10 years, at the end of which an assessment could be made. One advantage is that the people chiefly concerned know what were the prices of shares on 5th April, 1965, which makes it much easier.
    I know that a point will be taken against me that this is the only basis on which a tax could be levied, but I emphasise that my proposal is a simplification. Goodness knows, we have been moving deeper and deeper into complications over the six days we have spent on the Measure, and no doubt we shall do so during the next 30 days which we shall devote to it. We feel that it would be easy for the Government to accept this simplification, which does not transgress the principles of the tax, with which we by no means agree, in any case.
    9.15 p.m.
    The Solicitor-General: I am afraid that I must invite the Committee to reject both Amendments. They raise somewhat different issues. Amendment No. 206 proposes to delete the whole of subsection (12). That subsection is really just a machinery Clause which is necessary to carry out the purposes of subsection (6). If subsection (6) is to remain part of the Bill we must have some machinery to bring it into operation. It is difficult to see how the first occasion of charge could be fixed except by reference to Budget day—that is, 6th April, 1965—and, therefore, it would make the Bill unworkable if we accepted Amendment No. 206.
    On Amendment No. 317 the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) suggested that we should start from 5th April, 1965, and that every assessment should be made at the end of a 10-year period. I see the force of the argument, but, administratively, it would be impossible to work. It would
    724
    mean that on certain dates each 10 years—on 5th April, 1975, 5th April, 1985, 5th April, 1995, and so on—an assessment would have to be made on gains accumulated in the previous 10 years in respect of the portfolios of all trusts which had no life tenants in possession. That would involve work which would have to be bunched, so to speak, in the 10 yearly peaks, which would be an extremely inconvenient thing to do. Indeed, it would be almost impossible for those who must administer the Measure and it would cause great difficulties for the trustees themselves. I must, therefore, advise the Committee that the proposal made in Amendment No. 317 would be impossible in operation.
    On one point I think that the hon. Member for Walsall, South may be under a misapprehension. There is no element of retrospection here. Suppose that one has a trust which had come into existence some years before 1965 but which had only two years to go after 5th April, 1965, for the purpose of the possible application of the tax. We are here concerned with those two years. I do not wish to pursue this unduly because we are now very much in the realm of extreme technicalities, but, for the reasons I have given, we cannot accept either Amendment.
    Mr. Peter Walker: I appreciate the reasons which the Solicitor-General gave for not wishing to accept the two Amendments. As he said, Amendment No. 206 would delete the machinery by which the Clause will work. My hon. Friends and I tabled that Amendment basically to raise the point mentioned by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) about the injustice of having a situation in which one trust which was started a day before another will be assessed for Capital Gains Tax on a differential of more than 10 years ago.
    There are several aspects to which I hope the Solicitor-General will give consideration, perhaps before Report. The first concerns administrative convenience. It is agreed between the two sides of the Committee that there will be a considerable administrative burden placed on the Inland Revenue in the coming months and years in putting these two taxes into operation. This means

    725
    that one is merely adding to that administrative inconvenience if one now starts to tax immediately the trusts for valuation in 1965–66. Indeed, one is creating a situation in which all trusts reaching their anniversary dates today or in a week's time must go through this process of valuation under the Clause. That will continue during the next 10 years as they fall due for this process. Therefore, the solution on the administrative argument would be to take the anniversary dates for the year 1975 rather than for the year 1965.
    Another problem is that the Government are bringing into being valuations in the years 1966–67, which is in the very near future, for these trusts. I agree that that will apply to those which have been established since 5th April this year hut, in certain circumstances, we will be considering assets which have gone up during that period and, in this situation, trustees will have had very little time in which to get into a liquid position to meet the Capital Gains Tax which will fall due. I think that the fair way to handle this would be to say that trusts formed from now on will be valued on their tenth anniversary, while those trusts previously formed will be valued on their tenth anniversary after the next ten years. However, all I ask is that the Solicitor-General should consider this suggestion between now and Report.
    Mr. MacDermot: We shall certainly consider what the hon. Gentleman says, and carefully read his words in print. At one moment I understood him to suggest that the provisions of the Bill as they stand would require that every trust, for example, whose tenth anniversary fell within, say, a week after the Bill came into force would have to be assessed during that week. That is not so. They only have to be assessed when an occasion for charge arises; if there is a termination of a life interest. This is a protective period for a trust, so that if a life interest falls in more rapidly than that there cannot be another charge except within a ten-year period—and it has been suggested that the period should be extended to 15 years. People talk as though this provision means that, automatically, there will be a charge every ten years, but that is not the case. If a
    726
    life interest does not fall in there may not be a charge for 20 or 30 years.
    Sir H. d'Avigdor-Goldsmid: Trustees are honourable people, and are usually professional men. They will be under an obligation to revalue their trust on the anniversary date, and if that anniversary date takes place on, say, 10th May, they must then get a valuation. We are not concerned only with stocks and shares but with land. This is a complicated business—why go in for it?
    Mr. MacDermot: No, the trustees will not automatically have to revalue every ten years. That is the misunderstanding I seek to clear up. It is only if a life interest has fallen in that the situation arises and there has to be a valuation, but the 10-year provision limits the minimum period within which there must be a revaluation.
    Sir H. d'Avigdor-Goldsmid: We must be at cross-purposes here. We are dealing now with discretionary trusts—trusts which, by their very nature, do not change hands on a life interest. This is the particular point with which we are dealing. We have this 10-year anniversary—
    Mr. MacDermot rose—
    Sir H. d'Avigdor-Goldsmid: The hon. and learned Gentleman speaks a great deal and I speak very little, and he should do me the politeness to listen to me. The whole point is that I am dealing with discretionary trusts, where it is not a question of a life or a death. These discretionary trusts are caught by this ten-year revaluation. The point of the Amendment is that it is manifestly inconvenient that the trustees should have to go through the whole business of revaluation, as they will have to do, to ascertain what, if any, capital gain has been achieved between the Budget date and whatever the anniversary of the trust is. That is why we suggested a ten-year truce, at the end of which time the valuation would fall into place, as my hon. Friend the Member for Worcester (Mr. Peter Walker) has suggested. Questions of life and death do not come into it at all.
    Mr. MacDermot: The hon. Baronet is quite right, and I apologise. It is perfectly correct that, in terms of discretionary trusts, the revaluation is automatic after whatever period we determine. I will gladly look into the point that he and his hon. Friend have raised as to what should be the effective starting point in such cases.
    Mr. Peter Walker: In view of the Financial Secretary's undertaking to review the position between now and Report, I beg to ask leave to withdraw the Amendment.
    The Temporary Chairman: It is for the hon. Member who moved the Amend-

    Division No. 143.]

    AYES

    [9.25 p.m.

    Abse, Leo

    Gourlay, Harry

    Morris, Charles (Openshaw)

    Albu, Austen

    Greenwood, Rt. Hn. Anthony

    Mulley,Rt.Hn.Frederlck(SheffieldPk)

    Allaun, Frank (Salford, E.)

    Gregory, Arnold

    Murray, Albert

    Allen, Scholefield (Crewe)

    Griffiths, David (Rother Valley)

    Neal, Harold

    Armstrong, Ernest

    Gunter, Rt. Hn. R. J.

    Newens, Stan

    Atkinson, Norman

    Hamilton, William (West Fife)

    Noel-Baker, Francis (Swindon)

    Bacon, Miss Alice

    Harper, Joseph

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Barnett, Joel

    Hart, Mrs. Judith

    Oakes, Gordon

    Benn, Rt. Hn. Anthony Wedgwood

    Hattersley, Roy

    Ogden, Eric

    Bennett, J. (Glasgow, Bridgeton)

    Hazell, Bert

    O'Malley, Brian

    Binns, John

    Healey, Rt. Hn. Denis

    Oram, Albert E. (E. Ham, S.)

    Blackburn, F.

    Herbiton, Rt. Hn. Margaret

    Owen, Will

    Boardman, H.

    Hill, J. (Midlothian)

    Padley, Walter

    Boston, T. G.

    Hobden, Dennis (Brighton, K'town.)

    Page, Derek (King's Lynn)

    Bottomley, Rt. Hn. Arthur

    Holman, Percy

    Palmer, Arthur

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

    Houghton, Rt. Hn. Douglas

    Pargiter, G. A.

    Boyden, James

    Howell, Denis (Small Heath)

    Park, Trevor (Derbyshire, S.E.)

    Braddock, Mrs. E. M.

    Hoy, James

    Parker, John

    Brown, R. W. (Shoreditch & Fbury)

    Hughes, Emrys (S. Ayrshire)

    Parkin, B. T.

    Buchanan, Richard

    Hunter, Adam (Dunfermline)

    Pavitt, Laurence

    Butler, Herbert (Hackney, C.)

    Hunter, A. E. (Feltham)

    Pearson, Arthur (Pontypridd)

    Butler, Mrs. Joyce (Wood Green)

    Hynd, H. (Accrington)

    Prentice, R. E.

    Callaghan, Rt. Hn. James

    Hynd, John (Attercliffe)

    Price, J. T. (Westhoughton)

    Castle, Rt. Hn. Barbara

    Irving, Sydney (Dartford)

    Pursey, Cmdr. Harry

    Coleman, Donald

    Jackson, Colin

    Rankin, John

    Conlan, Bernard

    Janner, Sir Barnett

    Redhead, Edward

    Corbet, Mrs. Freda

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Rees, Merlyn

    Cronin, John

    Jenkins, Hugh (Putney)

    Reynolds, G. W.

    Crossman, Rt. Hn. R. H. S.

    Jones, Dan (Burnley)

    Robertson, John (Paisley)

    Cullen, Mrs. Alice

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Robinson,Rt.Hn.K.(St.Pancras,N.)

    Dalyell, Tam

    Jones, J. Idwal (Wrexham)

    Rogers, George (Kensington, N.)

    Darling, George

    Kelley, Richard

    Ross, Rt. Hn. William

    Davies, Ifor (Gower)

    Kenyon, Clifford

    Rowland, Christopher

    Davies, S. O. (Merthyr)

    Kerr, Dr. David (W'worth, Central)

    Shinwell, Rt. Hn. E.

    Delargy, Hugh

    Lawson, George

    Shore, Peter (Stepney)

    Dempsey, James

    Leadbitter, Ted

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Diamond, John

    Lee, Rt. Hn. Frederick (Newton)

    Silkin, John (Deptford)

    Dodds, Norman

    Lever, Harold (Cheetham)

    Silkin, S. C. (Camberwell, Dulwich)

    Doig, Peter

    Lewis, Ron (Carlisle)

    Slater, Joseph (Sedgefield)

    Driberg, Tom

    Lomas, Kenneth

    So omons, Henry

    Dunn, James A.

    Loughlin, Charles

    Soskice, Rt. Hn. Sir Frank

    Dunnett, Jack

    Mabon, Dr. J. Dickson

    Stones, William

    Edwards, Rt. Hn. Ness (Caerphilly)

    McBride, Neil

    Swain, Thomas

    English, Michael

    MacColl, James

    Swingler, Stephen

    Entor, David

    MacDermot, Niall

    Taverne, Dick

    Evans, Albert (Islington, S.W.)

    McKay, Mrs. Margaret

    Thomson, George (Dundee, E.)

    Fernyhough, E.

    Mackenzie, Gregor (Rutherglen)

    Tinn, James

    Finch, Harold (Bedwellty)

    Mackie, John (Enfield, E.)

    Tuck, Raphael

    Fletcher, Sir Eric (Islington, E.)

    Mahon, Simon (Bootle)

    Urwin, T. W.

    Floud, Bernard

    Manuel, Archie

    Varley, Eric G.

    Foot, Sir Dingle (Ipswich)

    Mapp, Charles

    Wainwright, Edwin

    Foot, Michael (Ebbw Vale)

    Mason, Roy

    Walden, Brian (All Saints)

    Fraser, Rt. Hn. Tom (Hamilton)

    Mellish, Robert

    Walker, Harold (Doncaster)

    Freeson, Reginald

    Mikardo, Ian

    Wallace, George

    George, Lady Megan Lloyd

    Molloy, William

    Wells, William (Walsall N.)

    Ginsburg, David

    Monslow, Walter

    Whitlock, William

    ment to seek the leave of the Committee to withdraw it.
    Sir H. d'Avigdor-Goldsmid: In that case, I can do no better than follow the example of my hon. Friend the Member for Worcester (Mr. Peter Walker) and beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Question put, That the Clause, as amended, stand part of the Bill:—
    The Committee divided: Ayes 177, Noes 165.

    Wigg, Rt. Hn. George

    Wilson, William (Coventry S.)

    Wilkins, W. A.

    Woodburn, Rt. Hn. A.

    TELLERS FOR THE AYES:

    Williams, Albert (Abertillery)

    Wyatt, Woodrow

    Mr. William Howie and

    Williams, Mrs. Shirley (Hitchin)

    Yates, Victor (Ladywood)

    Mrs. Harriet Slater.

    Wilson, Rt. Hn. Harold (Huyton)

    NOES

    Alison, Michael (Barkston Ash)

    Gresham Cooke, R.

    Miscampbell, Norman

    Allan, Robert (Paddington, S.)

    Griffiths, Peter (Smethwick)

    Mitchell, David

    Amery, Rt. Hn. Jullan

    Grimond, Rt. Hn. J.

    More, Jasper

    Anstruther-Gray, Rt. Hn. Sir W.

    Hall, John (Wycombe)

    Morrison, Charles (Devizes)

    Astor, John

    Harris, Frederic (Croydon, N.W.)

    Mott-Radclyffe, Sir Charles

    Atkins, Humphrey

    Harrison, Brian (Maldon)

    Munro-Lucas-Tooth, Sir Hugh

    Awdry, Daniel

    Harvey, Sir Arthur Vere (Macclesf'd)

    Murton, Oscar

    Baker, W. H. K.

    Harvey, John (Walthamstow, E.)

    Neave, Airey

    Barlow, Sir John

    Harvle Anderson, Miss

    Nicholls, Sir Harmar

    Batsford, Brian

    Hawkins, Paul

    Nugent, Rt. Hn. Sir Richard

    Bennett, Sir Frederic (Torquay)

    Heald, Rt. Hn. Sir Lionel

    Orr, Capt. L. P. S.

    Berry, Hn. Anthony

    Heath, Rt. Hn. Edward

    Page, John (Harrow, W.)

    Bessell, Peter

    Hendry, Forbes

    Page, R. Graham (Crosby)

    Birch, Rt. Hn. Nigel

    Higgins, Terence L.

    Pearson, Sir Frank (Clitheroe)

    Black, Sir Cyril

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

    Peyton, John

    Blaker, Peter

    Hirst, Geoffrey

    Pickthorn, Rt. Hn. Sir Kenneth

    Box, Donald

    Hobson, Rt. Hn. Sir John

    Pitt, Dame Edith

    Boyd-Carpenter, Rt. Hn. J.

    Hogg, Rt. Hn. Quintin

    Price, David (Eastleigh)

    Brewis, John

    Hooson, H. E.

    Prior, J. M. L.

    Brinton, Sir Tatton

    Hopkins, Alan

    Pym, Francis

    Bromley-Davenport,Lt.-Col.SirWalter

    Hordern, Peter

    Ramsden, Rt. Hn. James

    Brooke, Rt. Hn. Henry

    Hornsby-Smith, Rt. Hn. Dame P.

    Redmayne, Rt. Hn. Sir Martin

    Bryan, Paul

    Howe, Geoffrey (Bebington)

    Rees-Davies, W. R.

    Buchanan-Smith, Aliek

    Hunt, John (Bromley)

    Russell, Sir Ronald

    Buck, Antony

    Iremonger, T. L.

    Sharples, Richard

    Buxton, Ronald

    Irvine, Bryant Godman (Rye)

    Sinclair, Sir George

    Chichester-Clark, R.

    Johnston, Russell (Inverness)

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

    Clark, William (Nottingham, S.)

    Jopling, Michael

    Spearman, Sir Alexander

    Cole, Norman

    Kaberry, Sir Donald

    Stanley, Hn. Richard

    Cooper, A. E.

    Kerby, Capt. Henry

    Stoddart-Scott, Col. Sir Malcolm

    Costain, A. P.

    Kilfedder, James A.

    Studholme, Sir Henry

    Craddock, Sir Beresford (Spelthorne)

    Kimball, Marcus

    Talbot, John E.

    Crowder, F. P.

    King, Evelyn (Dorset, S.)

    Taylor, Sir Charles (Eastbourne)

    Curran, Charles

    Kitson, Timothy

    Taylor, Edward M. (G'gow.Cathcart)

    Currie, G. B. H.

    Langford-Holt, Sir John

    Taylor, Frank (Moss Side)

    Dalkeith, Earl of

    Legge-Bourke, Sir Harry

    Teeling, Sir William

    Davies, Dr. Wyndham (Perry Barr)

    Lewis, Kenneth (Rutland)

    Temple, John M.

    d'Avigdor-Goldsmid, Sir Henry

    Litchfield, Capt. John

    Thatcher, Mrs. Margaret

    Deedes, Rt. Hn. W. F.

    Lloyd.Rt.Hn.Geoffrey (Sut'nC'dfleld)

    Thompson, Sir Richard (Croydon,S.)

    Dodds-Parker, Douglas

    Lloyd, Ian (P'tsm'th, Langstone)

    Tiley, Arthur (Bradford, W.)

    Errington, Sir Eric

    Lloyd, Rt. Hn. Selwyn (Wirral)

    van Straubenzee, W. R.

    Eyre, Reginald

    Longden, Gilbert

    Walder, David (High Peak)

    Fell, Anthony

    Loveys, Walter H.

    Walker, Peter (Worcester)

    Fletcher-Cooke, Charles (Darwen)

    Lubbock, Eric

    Walters, Dennie

    Fletcher-Cooke, Sir John (S'pton)

    Mackenzie, Alasdair (Ross&Crom'ty)

    Ward, Dame Irene

    Foster, Sir John

    Mackie, George Y. (C'ness & S'land)

    Weatherill, Bernard

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    McLaren, Martin

    Webster, David

    Fraser, Ian (Plymouth, Sutton)

    McMaster, Stanley

    Whitelaw, William

    Galbraith, Hn. T. G. D.

    McNair-Wilson, Patrick

    Wills, Sir Gerald (Bridgwater)

    Gilmour, Sir John (East Fife)

    Maginnis, John E.

    Wilson, Geoffrey (Truro)

    Glover, Sir Douglas

    Maude, Angus

    Wolrige-Gordon, Patrick

    Godber, Rt. Hn. J. B.

    Maxwell-Hyslop, R. J.

    Woodnutt, Mark

    Goodhew, Victor

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

    Younger, Hn. George

    Gower, Raymond

    Meyer, Sir Anthony

    Grant, Anthony

    Mills, Peter (Torrington)

    TELLERS FOR THE NOES:

    Grant-Ferris, R.

    Mills, Stratton (Belfast, N.)

    Mr Ian MacArthur and

    Mr Geoffrey Johnson Smith.

    Clause, as amended, ordered to Stand part of the Bill.

    Clause 25.—(ESTATE DUTY.)
    Mr. Peter Walker: I beg to move Amendment No. 344, in page 26, line 8, to leave out subsections(1) and (2) and to insert:

    (1) In determining the amount of estate duty payable on a death allowance shall be made for any capital gains tax chargeable in consequence of the death and in determining
    730
    the value of the estate for the purposes of estate duty an allowance shall be made for any capital gains tax owed by the deceased.

    (2) In determining the amount of estate duty payable by reference to settled property passing on a death whether it continues to be settled property or not, an allowance shall be made for any capital gains tax chargeable in consequence of the death in respect of the settled property, so far as that tax falls to be paid out of the property so passing or to be borne by any person to whom the property so passes for any beneficial interest in possession.

    The Chairman: I have a note that I might suggest to the Committee that with this Amendment we might also take Amendment No. 387, in page 26, line 10, leave out "in consequence of the death" and insert:
    "on chargeable gains accruing on the death in consequence of the provisions of section 23(1)".
    But I do not press this.
    Mr. Walker: The principle involved in the Amendment is an attempt to reduce the adverse effects which have been brought into operation by the previous Clause. I do not want to delay the Committee by repeating the many arguments which have been put forward by both sides of the Committee on the subject of bringing in a form of double taxation at death of both the Capital Gains Tax and death duties. The object of the Amendment is to see that both in the case of the individual and of the settlement the amount of Capital Gains Tax is deducted from the amount of duty to be paid under the Estate Duty provisions rather than out of the size of the estate.
    To put on this double form of taxation would particularly adversely affect the individual who had built up his own business. The Committee heard previously this afternoon of the case of the person who, at present, would be responsible for paying £2,400 of duty on a business valued at £20,000 which he had built during his lifetime. As a result of the provisions of the Bill that amount of duty payable on death would be increased to £5,800.
    This was considered, quite rightly, by several hon. Members opposite to be an unreasonable position, and both sides of the Committee agreed that death duties are already very high. In the United States there is, rightly, a system under which, during the lifetime of the person, there is a capital gains tax and on death a separate estate duty tax. This Government wish to impose both Capital Gains Tax and Estate Duty at the time of death. This is thoroughly wrong. We failed to have it removed by previous Amendments and we are now endeavouring, by this Amendment, to reduce at least the total impact of both these taxes.
    The Chairman: Perhaps the hon. Gentleman would wish to comment on my suggestion that we take the two Amendments together, but if there is any doubt about it we will ignore it.
    Sir Eric Fletcher: I can agree with the hon. Member for Worcester (Mr. Peter Walker) on one point—that it is quite unnecessary to repeat all the arguments that we had on this subject on Clause 23. In dealing with the Clause, my hon. and learned Friend the Financial Secretary argued fully why it was quite impossible to accept any of the Amendments proposed by the Opposition for removing or eliminating the charge of Capital Gains Tax on the occasion of death. The hon. Member said that this Amendment would reduce the liability thus arising, but, in fact, it would eliminate it completely. If the Amendment were carried the effect would be to render completely nugatory the charge arising on death of Capital Gains Tax. Therefore, it is quite unacceptable to the Government.
    The effect of the Amendment is that the whole amount paid under Capital Gains Tax would be allowed as relief against the claim for Estate Duty, and in a great many cases the result would be to eliminate liability for Capital Gains Tax altogether. In substance, therefore, the Amendment is the same as some of the Amendments proposed to Clause 23 which were decisively rejected by the Committee. I hope that the Committee will repeat on this Amendment the decision to which it came on those.
    Sir D. Glover: The Minister without Portfolio said that he could agree with my hon. Friend the Member for Worcester (Mr. Peter Walker) that we need not have tedious repetition of previous arguments, but the Financial Secretary, on the Amendment we have just disposed of, took exactly the opposite view and, after we on this side had repeated our arguments, he accepted them. There seems to be something to be said for hammering home common sense into the Government.
    The Chairman: I think that the Chair comes in here. There is a case against tedious repetition of arguments which we have had previously.
    Sir D. Glover: Of course, Dr. King, I listen to your Ruling, but I am sure that

    733
    even your Ruling must be influenced by what you saw happen on the previous Amendment. The arguments had to be put twice before the Government understood them, and they then accepted them. I do riot want to enter upon long and tedious repetition of previous arguments, but I want to feel sure that the Government understand the point which we are making now.
    The Minister without Portfolio said that the Amendment was completely unacceptable. In the previous debate, in reply to a very pungent speech from the hon. Member for Manchester, Cheetham (Mr. Harold Lever), the Financial Secretary said that he saw some point in it and he would look at the matter again between now and Report. This is contrary to what the Minister without Portfolio is now saying.
    Sir Eric Fletcher Sir Eric Fletcher indicated dissent.
    Sir D. Glover: The Minister shakes his head, and so does the Financial Secretary. Of course he did not say give us carte blanche and accept all our arguments, but he said that we had made a sufficient case, and a sufficient case has been made by his hon. Friend the Member for Cheetham, that he was prepared seriously to look into it. There must be some meeting of minds on this. There is a difficulty, of course, with two different Ministers speaking from the Government Front Bench, but at the moment we really have a bit of a nonsense.
    Which story is right? My right hon. and hon. Friends might, with the partial accommodation given by the Financial Secretary, decide not to divide on this Amendment. But, if we are to take the view put by the Minister without Portfolio, that the Amendment is completely unacceptable, we shall, of course, divide the Committee. We return to the fact that, in a case like this, it is right and just—and I do not want to reiterate the arguments—
    9.45 p.m.
    Mr. MacDermot: I am sure that the hon. Gentleman does not wish to waste time by reiterating the arguments. I want to make it clear that what I undertook to look at was a specific problem in relation to the small businessman. This Amendment is in very wide terms and would apply throughout the whole field.
    734
    The point my hon. Friend the Minister without Portfolio made was that the effect of the Amendment would, in substance, be the same as the issue we decided following our debate on Clause 24. If, therefore, we are to argue this issue we shall be back on the main argument. This in no way detracts from what I said earlier.
    Sir D. Glover: Perhaps I might be complimentary to the hon. and learned Gentleman. In the early hours of the day I did not think that he would see the day through, but he seems to have taken a "purple heart" or something, because he is doing extraordinarily well. He is full of vigour. It shows that a night out of bed seems to suit him down to the ground.
    The division between the two sides of the Committee, if the hon. and learned Gentleman seriously meant what he said in our previous debate about going into the problem, concerns whether or not we are talking about a narrow field when we cite the case of a man with £1,000 who has opened a business. I am certain that, if he goes into the problem in depth, he will discover that, far from being an exception, such a case is far more the rule. My hon. Friend the Member for Peterborough (Sir Harmar Nicholls) said that such a case is the norm and not the exception, while the case which the hon. and learned Gentleman looks upon as the norm is actually the exception.
    I am certain that, on any reassessment of the problem, the hon. and learned Gentleman will find—if he can stop being ideologically arrogant and thinking that I am trying to make a special case—that this is a far wider range than he believes at the moment. It applies right across commerce, distribution and manufacturing and also to such businesses as solicitors'. Nearly all such firms, if they have been successful in business, will be hit severely by the tax. I hope that, despite our debate on Clause 24, my right hon. and hon. Friends will vote for the Amendment.
    Mr. Harold Lever: I shall be neither tedious nor repetitive. All I seek is a little clarity. I should like some sort of assurance that the Treasury is now satisfied that when people die they do not do so in order to avoid Capital Gains Tax. Perhaps, however, I am venturing a rash prediction. The Clause is not yet in force

    735
    and I am making an assumption that it is unlikely to be.
    I ask these questions to clear my mind, in which there is further confusion, or perhaps it is really confusion in the Treasury's mind. As I understand it, the Treasury takes the view that if one is unwise and unkind enough to die without having conferred the inestimable benefit of a donation to the Treasury by realising one's capital gains, something has to be done about this form of avoidance, and that this is equally so if one sets up a trust which keeps the property in question unrealised.
    I am a little confused about this, because it seems to me that when a person dies without realising his capital gains, or sets up a trust to ensure that the gains are not realised, what is happening is not that he is avoiding tax but that he is staying outside the intended application of the tax. Since the raison d'etre of the tax is that we wish to bring into account as revenue a tax on the gains which have been realised and no other, it is not an avoidance any more than when I gave up cigarette smoking I did not avoid the tobacco tax.
    If the same process of reasoning applied in the Clause were applied by analogy to the moment when I gave up cigarette smoking, one of the following consequences would be likely to follow: either I would be forcibly fed with cigarettes to ensure that there was no depletion of the Revenue, or on death, I should be deemed to have smoked 60 cigarettes a day when I made the decision to abstain until the unfortunate day, which, if it ever happens, which I have been told to assume it will, I perish. I dare say that it would cause relief in some quarters even though my heir would have to bear a ghastly rate of tax. This process of reasoning, if it be the process of reasoning in the Revenue, is fallacious, or I am confused.
    I should like an assurance from the Financial Secretary, who is always so courteous, lucid and careful in these matters, that the Treasury does not feel that it is a form of Capital Gains Tax avoidance when a man dies with an unrealised gain.
    Secondly, I hope that the reasons advanced for resisting Amendments to this Clause and previous Clauses will bear
    736
    further examination because we have been told that the hon. Member for Cheetham and others are right in saying that grave hardship will follow if the Clauses are not amended. The answer to this is, "The Government have often inflicted hardship on citizens so that there is not any reason why they should not inflict another." I say—and it may be a prejudiced mind operating—that if the Government inflicted a number of hardships in the past, it is a good idea to suggest their avoidance in the future. If it is recognised that Estate Duty causes hardship in many cases, one may well hesitate before applying Capital Gains Tax at the point of death in addition.
    Mr. Grimond: I have totally misunderstood the Government's case, because "MacDermot's law" is that if the Government have inflicted hardship they must inflict greater hardship.
    Mr. Lever: The Leader of the Liberal Party, being brought up to believe that the non-conformist conscience is not dead and therefore that the non-conformist memory is not dead, has reminded me of the words of the ancient biblical king who said that his predecessor had chastised his people with whips and that he intended to chastise them with scorpions. I did not understand the argument in that way—or perhaps I just did not understand the argument. At all events, it is not altogether persuasive—and I should be grateful if the Treasury would look at the argument again—to say in answering a case about hardship that other hardships are caused by other legislation and other circumstances.
    Does my hon. Friend the Financial Secretary feel that the rejection of the Amendment and the adoption of the Clause unmutilated will provide another opportunity for the compassionate exercise of the Revenue's discretion. I am not anxious to proliferate Clauses which bring into play the well known extensive compassion of the Inland Revenue to those who owe them large sums of money. I do not want to be critical of the Inland Revenue the members of which carry out what to them must be a distasteful and unrewarding job with a great deal of compassion, intelligence and flexibility. I do not feel that it is right that we should pass legislation imposing unjust

    737
    taxation, if we think it unjust and liable to cause hardship, and lay the flattering unction to our souls that the tax gatherers will repair their callousness by their overflowing abundance of human Icindnes3. In those circumstances, my right hon. and hon. Friends should be careful in their legislation and should have another look at it from this point of view.
    My final point, which does not relate directly to the Amendment but is a general and brief observation, concerns the attitude which I shall adopt in the Division. What I am doing is weeding is the Government's legislative garden. There, there are glorious plants which I revere, respect and cherish, but here and there a weed which I am helping to remove. The idea of returning to the Tory wilderness, however, daunts me, and I shall avoid it at all costs.
    Sir Lionel Heald: If the hon. Member will not vote with us, will he not at least come and sit on this side?
    Mr. Peter Walker: While not wanting to add to the cogent arguments of the hon. Member for Manchester, Cheetham (Mr. Harold Lever), I know that the Minister without Portfolio will be preparing his reply to his hon. Friend. I am sorry that the hon. Member decided yet again to give his declaration of voting

    Division No. 144.]

    AYES

    [9.58 p.m.

    Abse, Leo

    Darling, George

    Harper, Joseph

    Albu, Austen

    Davies, S. O. (Merthyr)

    Hart, Mrs. Judith

    Allaun, Frank (Salford, E.)

    Delargy, Hugh

    Hattersley, Roy

    Allen, Scholefield (Crewe)

    Dempsey, James

    Hazell, Bert

    Armstrong, Ernest

    Diamond, John

    Healey, Rt. Hn. Denis

    Atkinson, Norman

    Dodds, Norman

    Herbison, Rt. Hn. Margaret

    Bacon, Miss Alice

    Doig, Peter

    Hill, J. (Midlothian)

    Barnett, Joel

    Driberg, Tom

    Hobden, Dennis (Brighton, K'town.)

    Benn, Rt. Hn. Anthony Wedgwood

    Dunn, James A.

    Holman, Percy

    Bennett, J. (Glasgow, Bridgeton)

    Dunnett, Jack

    Houghton, Rt. Hn. Douglas

    Binns, John

    Edwards, Rt. Hn. Ness (Caerphilly)

    Howell, Denis (Small Heath)

    Blackburn, F.

    English, Michael

    Howie, W.

    Boardman, H.

    Ensor, David

    Hoy, James

    Boston, T. G.

    Evans, Albert (Islington, S.W.)

    Hughes, Emrys (S. Ayrshire)

    Bottomley, Rt. Hn. Arthur

    Fernyhough, E.

    Hunter, Adam (Dunfermline)

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

    Finch, Harold (Bedwelity)

    Hunter, A. E. (Feltham)

    Boyden, James

    Fletcher, Sir Eric (Islington, E.)

    Hynd, H. (Accrington)

    Braddock, Mrs. E. M.

    Floud, Bernard

    Hynd, John (Attercliffe)

    Brown, R. W. (Shoreditch & Fbury)

    Foot, Sir Dingle (Ipswich)

    Irving, Sydney (Dartford)

    Buchanan, Richard

    Foot, Michael (Ebbw Vale)

    Jackson, Colin

    Butler, Herbert (Hackney, C.)

    Fraser, Rt. Hn. Tom (Hamilton)

    Janner, Sir Barnett

    Butler, Mrs. Joyce (Wood Green)

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Callaghan, Rt. Hn. James

    Freeson, Reginald

    Jenkins, Hugh (Putney)

    Castle, Rt. Hn. Barbara

    George, Lady Megan Lloyd

    Jones, Dan (Burnley)

    Coleman, Donald

    Ginsburg, David

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Conlan, Bernard

    Gourlay, Harry

    Jones, . Idwal (Wrexham)

    Corbet, Mrs. Freda

    Greenwood, Rt. Hn. Anthony

    Kelley, Richard

    Cronin, John

    Gregory, Arnold

    Kenyon, Clifford

    Crossman, Rt. Hn. R. H. S.

    Griffiths, David (Rother Valley)

    Kerr, Dr. David (W'worth, Central)

    Cullen, Mrs. Alice

    Gunter, Rt. Hn. R. J.

    Lawson, George

    Dalyell, Tam

    Hamilton, William (West Fife)

    Leadbitter, Ted

    intention. This is, I think, the tenth time today. We said that we would accept it in future to save the time of the Committee and I am sure that the Whips will not be too ruthless and nasty with the hon. Member if he does not repeat it every time.
    The hon. Member suggested that the result of the Amendment would be completely to do away with the Capital Gains Tax. That simply is not the case. For example, the illustration has been quoted throughout the day of the heavy penal taxation which is put upon a person with a large goodwill factor in his business. In that example, the death duty amounted to £2,400, but the Capital Gains Tax amounted to £4,200. In that case, therefore, there would still be a heavy imposition of the Capital Gains Tax.
    I am also sorry that the hon. Member did not take advantage of the Amendment to answer the point made earlier by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) about the appalling double taxation Capital Gains Tax that takes place within a settlement.
    Question put, That the words proposed to be left out, to the word "in" in line 10, stand part of the Clause:—
    The Committee divided: Ayes 179, Noes 172.

    Lee, Rt. Hn. Frederick (Newton)

    O'Malley, Brian

    Soskice, Rt. Hn. Sir Frank

    Lever, Harold (Cheetham)

    Oram, Albert E. (E. Ham, S)

    Stones, William

    Lewis, Arthur (West Ham, N.)

    Owen, Will

    Summerskill, Hn. Dr. Shirley

    Lewis, Ron (Carlisle)

    Padley, Walter

    Swain, Thomas

    Lomas, Kenneth

    Page, Derek (King's Lynn)

    Swingler, Stephen

    Loughlin, Charles

    Palmer, Arthur

    Taverne, Dick

    Mabon, Dr. J. Dickson

    Pargiter, G. A.

    Thomson, George (Dundee, E.)

    McBride, Neil

    Park, Trevor (Derbyshire, S.E.)

    Thornton, Ernest

    MacColl, James

    Parker, John

    Tinn, James

    MacDermot, Niall

    Parkin, B. T.

    Tuck, Raphael

    McKay, Mrs. Margaret

    Pavitt, Laurence

    Urwin, T. W.

    Mackenzie, Gregor (Rutherglen)

    Pearson, Arthur (Pontypridd)

    Varley, Eric G.

    Mackie, John (Enfield, E.)

    Prentice, R. E.

    Wainwright, Edwin

    Mahon, Simon (Bootle)

    Price, J. T. (Westhoughton)

    Walden, Brian (All Saints)

    Manuel, Archie

    Pursey, Cmdr. Harry

    Walker, Harold (Doncaster)

    Mapp, Charles

    Rankin, John

    Wallace, George

    Mason, Roy

    Redhead, Edward

    Wells, William (Walsall N.)

    Mellish, Robert

    Rees, Merlyn

    Whitlock, William

    Mikardo, Ian

    Reynolds, G. W.

    Wigg, Rt. Hn. George

    Molloy, William

    Robertson, John (Paisley)

    Wilkins, W. A.

    Monslow, Walter

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Williams, Albert (Abertillery)

    Morris, Charles (Openshaw)

    Ross, Rt. Hn. William

    Williams, Mrs. Shirley (Hitchin)

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Rowland, Christopher

    Wilson, Rt. Hn. Harold (Huyton)

    Murray, Albert

    Shore, Peter (Stepney)

    Wilson, William (Coventry, S.)

    Neal, Harold

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Woodburn, Rt. Hn. A.

    Newens, Stan

    Silkin, John (Deptford)

    Wyatt, Woodrow

    Noel-Baker, Francis (Swindon)

    Silkin, S. C. (Camberwell, Dulwich)

    Yates, Victor (Ladywood)

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Slater, Mrs. Harriet (Stoke, N.)

    Oakes, Gordon

    Slater, Joseph (Sedgefield)

    TELLERS FOR THE AYES:

    Ogden, Eric

    Solomons, Henry

    Mr. George Rogers and

    Mr. Ifor Davies.

    NOES

    Alison, Michael (Barkston Ash)

    Foster, Sir John

    Litchfield, Capt. John

    Allan, Robert (Paddington, S.)

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

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

    Amery, Rt. Hn. Julian

    Fraser, Ian (Plymouth, Sutton)

    Lloyd, Ian (P'tsm'th, Langstone)

    Anstruther-Gray, Rt. Hn. Sir W.

    Galbraith, Hn. T. G. D.

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Astor, John

    Gammans, Lady

    Longden, Gilbert

    Atkins, Humphrey

    Gilmour, Sir John (East Fife)

    Loveys, Walter H.

    Awdry, Daniel

    Glover, Sir Douglas

    Lubbock, Eric

    Baker, W. H. K.

    Godber, Rt. Hn. J. B.

    MacArthur, Ian

    Barlow, Sir John

    Goodhew, Victor

    Mackenzie, Alasdair (Ross&Crom'ty)

    Batsford, Brian

    Gower, Raymond

    Mackie, George Y. (C'ness & S'land)

    Beamish, Col. Sir Tufton

    McLaren, Martin

    Bennett, Sir Frederic (Torquay)

    Grant, Anthony

    McMaster, Stanley

    Berry, Hn. Anthony

    Gresham Cooke, R.

    McNair-Wilson, Patrick

    Bessell, Peter

    Griffiths, Peter (Smethwick)

    Maginnis, John E.

    Birch, Rt. Hn. Nigel

    Grimond, Rt. Hn. J.

    Mathew, Robert

    Black, Sir Cyril

    Hall, John (Wycombe)

    Maude, Angus

    Blaker, Peter

    Harrison, Brian (Maldon)

    Maxwell-Hyslop, R. J.

    Box, Donald

    Harvey, Sir Arthur Vere (Macclesf'd)

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

    Boyd-Carpenter, Rt. Hn. J.

    Harvey, John (Walthamstow, E.)

    Meyer, Sir Anthony

    Boyle, Rt. Hn. Sir Edward

    Harvie Anderson, Miss

    Mills, Peter (Torrington)

    Brewis, John

    Hawkins, Paul

    Mills, Stratton (Belfast, N.)

    Brinton, Sir Tatton

    Heald, Rt. Hn. Sir Lionel

    Miscampbell, Norman

    Bromley-Davenport.Lt.-Col.SirWalter

    Heath, Rt. Hn. Edward

    Mitchell, David

    Brooke, Rt. Hn. Henry

    Hendry, Forbes

    Morrison, Charles (Devizes)

    Bryan, Paul

    Higgins, Terence L.

    Mott-Radclyffe, Sir Charles

    Buchanan-Smith, Alick

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

    Munro-Lucas-Tooth, Sir Hugh

    Buck, Antony

    Hirst, Geoffrey

    Murton, Oscar

    Buxton, Ronald

    Hobson, Rt. Hn. Sir John

    Neave, Airey

    Chichester-Clark, R.

    Hogg, Rt. Hn. Quintin

    Nicholls, Sir Harmar

    Clark, William (Nottingham, S.)

    Hooson, H. E.

    Nugent, Rt. Hn. Sir Richard

    Cole, Norman

    Hopkins, Alan

    Orr, Capt. L. P. S.

    Cooper, A. E.

    Hordern, Peter

    Osborn, John (Hallam)

    Costain, A. P.

    Hornsby-Smith, Rt. Hn. Dame P.

    Page, John (Harrow, W.)

    Craddock, Sir Beresford (Spelthorne)

    Howe, Geoffrey (Bebington)

    Page, R. Graham (Crosby)

    Crowder, F. P.

    Hunt, John (Bromley)

    Pearson, Sir Frank (Clitheroe)

    Curran, Charles

    Iremonger, T. L.

    Peyton, John

    Currie, G. B. H.

    Irvine, Bryant Godman (Rye)

    Pickthorn, Rt. Hn. Sir Kenneth

    Dalkeith, Earl of

    Johnston, Russell (Inverness)

    Pitt, Dame Edith

    Davies, Dr. Wyndham (Perry Barr)

    Jopling, Michael

    Price, David (Eastleig)

    d'Avigdor-Goldsmid, Sir Henry

    Kaberry, Sir Donald

    Prior, J. M. L.

    Deedes, Rt. Hn. W. F.

    Kerby, Capt. Henry

    Pym, Francis

    Dodds-Parker, Douglas

    Kilfedder, James A.

    Ramsden, Rt. Hn. James

    Doughty, Charles

    Kimball, Marcus

    Redmayne, Rt. Hn. Sir Martin

    Errington, Sir Eric

    King, Evelyn (Dorset, S.)

    Rees-Dav'es, W. R.

    Eyre, Reginald

    Kitson, Timothy

    Russell, Sir Ronald

    Fell, Anthony

    Langford-Holt, Sir John

    Sharples, Richard

    Fletcher-Cooke, Charles (Darwen)

    Legge-Bourke, Sir Harry

    Shepherd, William

    Flet her-Cooke, Sir John (S'pton)

    Lewis, Kenneth (Rutland)

    Sinclair St. George

    740

    741

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

    Thatcher, Mrs. Margaret

    Whitelaw, William

    Spearman, Sir Alexander

    Thompson, Sir Richard (Croydon,S.)

    Wills, Sir Gerald (Bridgwater)

    Stanley, Hn. Richard

    Tiley, Arthur (Bradford, W.)

    Wilson, Geoffrey (Truro)

    Stoddart-Scott, Col. Sir Malcolm

    Tweedsmuir, Lady

    Wolrige-Gordon, Patrick

    Studholme, Sir Henry

    van Straubenzee, W. R.

    Woodnutt, Mark

    Tal bot, John E.

    Walder, David (High Peak)

    Yates, William (The Wrekin)

    Taylor, Sir Charles (Eastbourne)

    Walker, Peter (Worcester)

    Younger, Hn. George

    Taylor, Edward M. (G'gow.Cathcart)

    Walters, Dennis

    Taylor, Frank (Moss Side)

    Ward, Dame Irene

    TELLERS FOR THE NOES:

    Teeling, Sir William

    Weatherill, Bernard

    Mr. Jasper More and

    Temple, John M.

    Webster, David

    Mr. Geoffrey Johnson Smith.

    Amendment made: In page 26, line 10, leave out
    "in consequence of the death" and insert "on chargeable gains accruing on the death in consequence of the provisions of section 23(1)".— [Sir Eric Fletcher.]
    Mr. Peter Walker: I beg to move, Amendment No. 290, in page 26, line 11, at the end to insert:
    "and as well as for any amount of capital gains tax chargeable on the whole or such proportion of a gift inter vivos by the deceased as fell to be included in the deceased's estate for the calculation of estate duty."
    The Chairman: With this Amendment we can discuss Amendment No. 408, in Clause 23, page 22, line 4, at end insert:
    "but the total amount of capital gains tax and estate duty paid on the assets shall not exceed he amount of the estate duty which would have been paid off if the provisions of this Act did not apply".
    Mr. Walker: This Amendment is designed to put right what seems to be an unwarranted discrepancy in the position of somebody giving a gift. At present, as the Committee will be aware, the amount of a Capital Gains Tax is deducted from the estate prior to the imposition of the death duties. Under this Amendment we endeavour to cater for the position where somebody is giving a gift and has paid a Capital Gains Tax at the time of giving that gift and then the gift, as a result of it perhaps only just being recently given and not given within the five-year period, is added to the estate for the purpose of death duty but the Capital Gains Tax already paid is not deducted.
    I think that this is a reasonable and logical point and I hope that it will be accepted by the other side of the Committee.
    Mr. MacDermot: Owing to the wording of the Amendment, we were a little mystified about the point which the hon. Gentleman had in mind by putting it down. I have listened to what he has
    742
    said. I do not wish to try to answer this "off the cuff". I should like time to consider it, if he will permit me to do so, because we had not grasped the point by looking at the Amendment. The hon. Gentleman obviously has a point. I undertake to consider it before the Report stage.
    Mr. Peter Walker: I am grateful to the hon. and learned Gentleman. I am sure that this is a point which the Government will want to take into consideration, as it is a just one. In view of the hon. and learned Gentleman's undertaking, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Amendments made: In page 27, line 26, leave out "and" and insert "or".
    In page 27, leave out lines 28 and 29 and insert:
    "deemed to be effected in accordance with section 24(3) of this Act".
    In line 37, leave out "and" and insert "or".
    In line14, leave out "(1)" and insert "(2)".—[Sir Eric Fletcher.]
    Question proposed, That the Clause, as amended, stand part of the Bill.
    Mr. Maxwell-Hyslop: I think that we need to make a few more inquiries about what the Clause means before we decide whether or not to assent to it being part of the Bill. I am sorry to have to do this when the Financial Secretary is so sleepy, but it is perhaps better that he should yawn than that the taxpayer should groan.
    In line 23 we see the expression
    "if sold in the open market",
    and it is that on which I seek advice. One would think that we knew what was meant by the open market, but during the course of the last year it has become clear—and a number of hon. Members have raised the point in the House—that auction sales which may appear to constitute an open market sale

    743
    have been something rather less than open. I should like the Financial Secretary, or the Minister without Portfolio, to give us an explanation of what does or does not constitute valuation for sale in the open market.
    Incidentally, is the value of something when sold in the open market inclusive or exclusive of the auctioneer's commission and stamp duty? This is relevant because it increases by a significant percentage, or alternatively decreases by a significant percentage, the actual valuation on which any Capital Gains Tax will hypothetically have to be paid. Because of the imperfections of the market, I think that we ought to have clearly defined what is meant by the words,
    "if sold in the open market".

    Division No. 145.]

    AYES

    [10.15 p.m.

    Abse, Leo

    George, Lady Megan Lloyd

    Molloy, William

    Albu, Austen

    Ginsburg, David

    Monslow, Walter

    Allaun, Frank (Salford, E.)

    Gourlay, Harry

    Morris, Charles (Openshaw)

    Allen, Scholefield (Crewe)

    Greenwood, Rt. Hn. Anthony

    Mulley, Rt. Hn. Frederick(SheffieldPk)

    Armstrong, Ernest

    Gregory, Arnold

    Murray, Albert

    Atkinson, Norman

    Griffiths, David (Rother Valley)

    Neal, Harold

    Bacon, Miss Alice

    Hamilton, William (West Fife)

    Newens, Stan

    Baxter, William

    Hannan, William

    Noel-Baker, Francis (Swindon)

    Benn, Rt. Hn. Anthony Wedgwood

    Harper, Joseph

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Bennett, J. (Glasgow, Bridgeton)

    Hart, Mrs. Judith

    Oakes, Gordon

    Binns, John

    Hattersley, Roy

    Ogden, Eric

    Blackburn, F.

    Hazell, Bert

    O'Malley, Brian

    Boston, T. G.

    Healey, Rt. Hn. Denis

    Oram, Albert E. (E. Ham, S.)

    Bottomley, Rt. Hn. Arthur

    Herbison, Rt. Hn. Margaret

    Owen, Will

    Braddock, Mrs. E. M.

    Hill, J. (Midlothian)

    Padley, Walter

    Brown, R. W. (Shoreditch & Fbury)

    Hobden, Dennis (Brighton, K'town.)

    Page, Derek (King's Lynn)

    Buchanan, Richard

    Holman, Percy

    Palmer, Arthur

    Butler, Herbert (Hackney, C.)

    Houghton, Rt. Hn. Douglas

    Pargiter, G. A.

    Butler, Mrs. Joyce (Wood Green)

    Howell, Denis (Small Heath)

    Park, Trevor (Derbyshire, S.E.)

    Callaghan, Rt. Hn. James

    Hoy, James

    Parker, John

    Cattle, Rt. Hn. Barbara

    Hughes, Emrys (S. Ayrshire)

    Parkin, B. T.

    Coleman, Donald

    Hunter, Adam (Dunfermline)

    Pavitt, Laurence

    Conlan, Bernard

    Hynd, H. (Accrington)

    Pearson, Arthur (Pontypridd)

    Corbet, Mrs. Freda

    Irving, Sydney (Dartford)

    Prentice, R. E.

    Cronin, John

    Jackson, Colin

    Pursey, Cmdr. Harry

    Crossman, Rt. Hn. R. H. S.

    Janner, Sir Barnett

    Rankin, John

    Cullen, Mrs. Alice

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Redhead, Edward

    Dalyell, Tam

    Jenkins, Hugh (Putney)

    Rees, Merlyn

    Darling, George

    Jones.Rt.Hn.Sir Elwyn(W.Ham,S.)

    Reynolds, G. W.

    Davies, Ifor (Gower)

    Kelley, Richard

    Robertson, John (Paisley)

    Davies, S. O. (Merthyr)

    Kenyon, Clifford

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Delargy, Hugh

    Kerr, Dr. David (W'worth, Central)

    Rose, Paul B.

    Diamond, John

    Lawson, George

    Ross, Rt. Hn. William

    Dodds, Norman

    Leadb ltter, Ted

    Rowland, Christopher

    Doig, Peter

    Lever, Harold (Cheetham)

    Shore, Peter (Stepney)

    Driberg, Tom

    Lewis, Ron (Carlisle)

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Dunn, James A.

    Loughlin, Charles

    Silkin, John (Deptford)

    Dunnett, Jack

    Mabon, Dr. J. Dickson

    Silkin, S. C. (Camberwell, Dulwich)

    Edwards, Rt. Hn. Ness (Caerphilly)

    McBride, Neil

    Silverman, Julius (Aston)

    English, Michael

    MacColl, James

    Slater, Mrs. Harriet (Stoke, N.)

    Ensor, David

    MacDermot, Niall

    Slater, Joseph (Sedgefield)

    Evans, Albert (Islington, S.W.)

    McKay, Mrs. Margaret

    Solomons, Henry

    Fernyhough, E.

    Mackenzie, Gregor (Ruthergien)

    Soskice, Rt. Hn. Sir Frank

    Finch, Harold (Bedwellty)

    Mackie, John (Enfield, E.)

    Stones, William

    Fletcher, Sir Eric (Islington, E.)

    Mahon, Simon (Bootle)

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

    Floud, Bernard

    Manuel, Archie

    Summerskill, Hn. Dr. Shirley

    Foot, Sir Dingle (Ipswich)

    Mapp, Charles

    Swain, Thomas

    Foot, Michael (Ebbw Vale)

    Mason, Roy

    Swingler, Stephen

    Fraser, Rt. Hn. Tom (Hamilton)

    Mellish, Robert

    Taverne, Dick

    Freeson, Reginald

    Mikardo, Ian

    Thomson, George (Dundee, E.)

    Mr. MacDermot: The reference to the open market is a well understood term among valuers. It appears in a great body of legislation in one form and another. The test is that of a sale between a willing buyer and a willing seller, and is not influenced by considerations of commission.
    Mr. Maxwell-Hyslop: But is it inclusive or exclusive of selling costs?
    10.15 p.m.
    Mr. MacDermot: Perhaps the hon. Gentleman did not hear my closing words. It is not influenced by considerations of commission.
    Question put, That the Clause, as amended, stand part of the Bill:
    The Committee divided: Ayes 167, Noes 160.

    Thornton, Ernest

    Wells, William (Walsall N.)

    Wilson, William (Coventry, S.)

    Tuck, Raphael

    Whitlock, William

    Wyatt, Woodrow

    Urwin, T. W.

    Wigg, Rt. Hn. George

    Yates, Victor (Ladywood)

    Varley, Eric G.

    Wilkins, W. A.

    Walden, Brian (All Saints)

    Williams, Albert (Abertillery)

    TELLERS FOR THE AYES:

    Walker, Harold (Doncaster)

    Williams, Mrs. Shirley (Hitchin)

    Mr. George Rogers and

    Wallace, George

    Wilson, Rt. Hn. Harold (Huyton)

    Mr. William Howie

    NOES

    Alison, Michael (Barkston Ash)

    Grimond, Rt. Hn. J.

    Mott-Radclyffe, Sir Charles

    Allan, Robert (Paddington, S.)

    Hall, John (Wycombe)

    Munro-Lucas-Tooth, Sir Hugh

    Amery, Rt. Hn. Julian

    Harris, Reader (Heston)

    Murton, Oscar

    Anstruther-Gray, Rt. Hn. Sir W.

    Harrison, Brian (Maldon)

    Nicholls, Sir Harmar

    Atkins, Humphrey

    Harvey, John (Walthamstow, E.)

    Nugent, Rt. Hn. Sir Richard

    Awdry, Daniel

    Harvie Anderson, Miss

    Orr, Capt. L. P. S.

    Baker, W. H. K.

    Hawkins, Paul

    Osborn, John (Hallam)

    Barlow, Sir John

    Heald, Rt. Hn. Sir Lionel

    Page, R. Graham (Crosby)

    Batsford, Brian

    Heath, Rt. Hn. Edward

    Pearson, Sir Frank (Clitheroe)

    Beamish, Col. Sir Tufton

    Hendry, Forbes

    Peyton, John

    Bennett, Sir Frederic (Torquay)

    Higgins, Terence L.

    Pickthorn, Rt. Hn. Sir Kenneth

    Berry, Hn. Anthony

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

    Pitt, Dame Edith

    Bessell, Peter

    Hirst, Geoffrey

    Price, David (Eastleigh)

    Birch, Rt. Hn. Nigel

    Hobson, Rt. Hn. Sir John

    Prior, J. M. L.

    Black, Sir Cyril

    Hogg, Rt. Hn. Quintin

    Pym, Francis

    Blaker, Peter

    Hooson, H. E.

    Ramsden, Rt. Hn. James

    Box, Donald

    Hordern, Peter

    Redmayne, Rt. Hn. Sir Martin

    Boyd-Carpenter, Rt. Hn. J.

    Hornsby-Smith, Rt. Hn. Dame P.

    Rees-Davies, W. R.

    Boyle, Rt. Hn. Sir Edward

    Howe, Geoffrey (Bebington)

    Russell, Sir Ronald

    Brewis, John

    Iremonger, T. L.

    Sharples, Richard

    Brinton, Sir Tatton

    Irvine, Bryant Godman (Rye)

    Shepherd, William

    Brooke, Rt. Hn. Henry

    Jenkin, Patrick (Woodford)

    Sinclair, Sir George

    Bryan, Paul

    Johnston, Russell (Inverness)

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

    Buchanan-Smith, Alick

    Kaberry, Sir Donald

    Spearman, Sir Alexander

    Buck, Antony

    Kerby, Capt. Henry

    Stanley, Hn. Richard

    Buxton, Ronald

    Kilfedder, James A.

    Stoddart-Scott, Col. Sir Malcolm

    Carlisle, Mark

    Kimball, Marcus

    Studho lme, Sir Henry

    Clark, William (Nottingham, S.)

    King, Evelyn (Dorset, S.)

    Talbot, John E.

    Cooper, A. E.

    Kitson, Timothy

    Taylor, Sir Charles (Eastbourne)

    Costain, A. P.

    Langford-Holt, Sir John

    Taylor, Edward M. (G'gow,Cathcart)

    Crowder, F. P.

    Legge-Bourke, Sir Harry

    Taylor, Frank (Moss Side)

    Curran, Charles

    Lewis, Kenneth (Rutland)

    Teeling, Sir William

    Currie, G. B. H.

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

    Temple, John M.

    Dalkeith, Earl of

    Lloyd, lan (P'tsm'th, Langstone)

    Thatcher, Mrs. Margaret

    Davies, Dr. Wyndham (Perry Barr)

    Longden, Gilbert

    Thompson, Sir Richard (Croydon,S.)

    d'Avigdor-Goldsmid, Sir Henry

    Loveys, Walter H.

    Tiley, Arthur (Bradford, W.)

    Deedes, Rt. Hn. W. F.

    Lubbock, Eric

    Tweedsmuir, Lady

    Dodds-Parker, Douglas

    Mackenzie, Alasdair (Ross&Crom'ty)

    van Straubenzee, W. R.

    Doughty, Charles

    Mackie, George Y. (C'ness & S'land)

    Walder, David (High Peak)

    Errington, Sir Eric

    McLaren, Martin

    Walker, Peter (Worcester)

    Eyre, Reginald

    McMaster, Stanley

    Walters, Dennis

    Fell, Anthony

    McNair-Wilson, Patrick

    Ward, Dame Irene

    Fletcher-Cooke, Charles (Darwen)

    Maginnis, John E.

    Weatherill, Bernard

    Fletcher-Cooke, Sir John (S'pton)

    Marp es, Rt. Hn. Ernest

    Webster, David

    Foster, Sir John

    Mathew, Robert

    Whitelaw, William

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    Maude, Angus

    Wills, Sir Gerald (Bridgwater)

    Fraser, lan (Plymouth, Sutton)

    Maxwell-Hyslop, R. J.

    Wilson, Geoffrey (Truro)

    Gammans, Lady

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

    Woodnutt, Mark

    Gilmour, Sir John (East Fife)

    Meyer, Sir Anthony

    Yates, William (The Wrekin)

    Glover, Sir Douglas

    Mills, Peter (Torrington)

    Younger, Hn. George

    Godber, Rt. Hn. J. B.

    Mills, Stratton (Belfast, N.)

    Goodhew, Victor

    Miscampbell, Norman

    TELLERS FOR THE NOES:

    Gower, Raymond

    Mitchell, David

    Mr. Ian MacArthur and

    Gresham Cooke, R.

    More, Jasper

    Mr. Geoffrey Johnson Smith

    Griffiths, Peter (Smethwick)

    Morrison, Charles (Devizes)

    Clause 26.—(MISCELLANEOUS EXEMP- TIONS FOR CERTAIN KINDS OF PROPERTY.)
    Captain L. P. S. Orr: I beg to move Amendment No. 95, in page 28, line 13, to leave out "one" and to insert "five".
    The Chairman: With this Amendment we are discussing Amendment No. 96, in page 28, line 16, to leave out "one" and to insert "five".
    Captain Orr: In the absence of my hon. Friend the Member for Belfast, South (Mr. Pounder), whose name heads the list of names to the Amendment, I shall move it formally. I understand that the next Amendment which we are to take is of very great importance to the whole nation. In view of the state of the gilt-edged market today, I should have thought that the Chancellor might have something to say on the next Amendment.

    747
    Accordingly, I simply ask why the figure "one hundred" was chosen in the Clause. It seems extraordinarily low—pitifully low, in view of the inflation which is going on at present and which we may expect if the present Government lasts any longer than tonight. Will the Financial Secretary tell us why £100 was chosen?
    The Chairman: The hon. and gallant Member has moved his Amendment briefly rather than formally.
    Mr. MacDermot: I respond to the hon. and gallant Genlteman's invitation to deal with the matter briefly. We discussed whether £100 was a suitable limit, or whether there should be a higher limit when considering the Clause dealing with short-term tax. There is no magic about any particular figure which one chooses. The object was to choose a figure which would cover the normal personal and perhaps family gift of a modest nature which

    Division No. 146.]

    AYES

    [10.29 p.m.

    Abse, Leo

    Fernyhough, E.

    Lever, Harold (Cheetham)

    Albu, Austen

    Finch, Harold (Bedwellty)

    Lewis, Arthur (West Ham, N.)

    Allaun, Frank (Salford, E.)

    Fletcher, Sir Eric (Islington, E.)

    Lewis, Ron (Carlisle)

    Allen, Scholefleld (Crewe)

    Floud, Bernard

    Loughlin, Charles

    Armstrong, Ernest

    Foot, Sir Dingle (Ipswich)

    Mabon, Dr. J. Dickson

    Atkinson, Norman

    Foot, Michael (Ebbw Vale)

    McBride, Neil

    Bacon, Miss Alice

    Fraser, Rt. Hn. Tom (Hamilton)

    MacColl, James

    Baxter, William

    Freeson, Reginald

    MacDermot, Niall

    Benn, Rt. Hn. Anthony Wedgwood

    George, Lady Megan Lloyd

    McKay, Mrs. Margaret

    Bennett, J. (Glasgow, Bridgeton)

    Ginsburg, David

    Mackenzie, Gregor (Rutherglen)

    Binns, John

    Gourlay, Harry

    Mackie, John (Enfield, E.)

    Blackburn, F.

    Greenwood, Rt. Hn. Anthony

    Mahon, Simon (Bootle)

    Boston, T. G.

    Gregory, Arnold

    Manuel, Archie

    Bottomley, Rt. Hn. Arthur

    Mapp, Charles

    Braddock, Mrs. E. M.

    Griffiths, David (Rother Valley)

    Mason, Roy

    Brown, R. W. (Shoreditch & Fbury)

    Hamilton, William (West Fife)

    Mellish, Robert

    Buchanan, Richard

    Hannan, William

    Mikardo, Ian

    Butler, Herbert (Hackney, C.)

    Harper, Joseph

    Molloy, William

    Butler, Mrs. Joyce (Wood Green)

    Hart, Mrs. Judith

    Monslow, Walter

    Callaghan, Rt. Hn. James

    Hattersley, Roy

    Morris, Charles (Openshaw)

    Castle, Rt. Hn. Barbara

    Hazell, Bert

    Mulley,Rt.Hn.Frederick(SheffieldPk)

    Coleman, Donald

    Healey, Rt. Hn. Denis

    Murray, Albert

    Conlan, Bernard

    Heffer, Eric S.

    Neal, Harold

    Corbet, Mrs. Freda

    Herbison, Rt. Hn. Margaret

    Newens, Stan

    Cronin, John

    Hobden, Dennis (Brighton, K'town.)

    Noel-Baker, Francis (Swindon)

    Crossman, Rt. Hn. R, H. S.

    Houghton, Rt. Hn. Douglas

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Cullen, Mrs. Alice

    Howell, Denis (Small Heath)

    Oakes, Gordon

    Oalyell, Tam

    Hoy, James

    Ogden, Eric

    Darling, George

    Hughes, Emrys (S. Ayrshire)

    O'Malley, Brian

    Davies, lfor (Gower)

    Hunter, Adam (Dunfermline)

    Oram, Albert E. (E. Ham, S.)

    Delargy, Hugh

    Hynd, H. (Accrington)

    Owen, Will

    Diamond, John

    Irving, Sydney (Dartlord)

    Padley, Walter

    Dodds, Norman

    Jackson, Colin

    Page, Derek (King's Lynn)

    Doig, Peter

    Janner, Sir Barnett

    Palmer, Arthur

    Driberg, Tom

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Pargiter, G. A.

    Dunn, James A.

    Jenkins, Hugh (Putney)

    Park, Trevor (Derbyshire, S.E.)

    Dunnett, Jack

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Parker, John

    Edwards, Rt. Hn. Ness (Caerphilly)

    Kelley, Richard

    Parkin, B. T.

    English, Michael

    Kenyon, Clifford

    Pavitt, Laurence

    Ennals, David

    Kerr, Dr. David (W'worth, Central)

    Pearson, Arthur (Pontypridd)

    Ensor, David

    Lawson, George

    Prentice, R. E.

    Evans, Albert (Islington, S.W.)

    Leadbitter, Ted

    Pursey, Cmdr. Harry

    might be made and which would not be open to abuse as a means of wholesale evasion of the tax.
    It does not impose any kind of limit on people's generosity in making presents to members of their family. They are open to make gifts up to any amount they like on objects which are not subject to charge. They can make gifts of chattels up to £1,000 which are not subject to charge. They can make the gift of a motor car up to any value which is not subject to charge. But if we were to allow a great freedom to dispose of chargeable assets by way of gifts it would be possible by means of gifts within and amongst members of a family—only quite a few members of the family—to achieve a very considerable evasion of the tax. That is the reason that we arrived at that figure.
    Question put, That "one" stand part of the Clause:—
    The Committee divided: Ayes 167, Noes 161.

    Rankin, John

    Slater, Joseph (Sedgefield)

    Walker, Harold (Doncaster)

    Redhead, Edward

    Solomons, Henry

    Wallace, George

    Rees, Merlyn

    Soskice, Rt. Hn. Sir Frank

    Wells, William (Walsall N.)

    Reynolds, G. W.

    Stones, William

    Whitlock, William

    Robertson, John (Paisley)

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

    Wigg, Rt. Hn. George

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Summerskill, Hn. Dr. Shirley

    Wilkins, W. A.

    Rose, Paul B.

    Swain, Thomas

    Williams, Albert (Abertillery)

    Ross, Rt. Hn. William

    Swingler, Stephen

    Williams, Mrs. Shirley (Hitchin)

    Rowland, Christopher

    Taverne, Dick

    Wilson, Rt. Hn. Harold (Huyton)

    Shore, Peter (Stepney)

    Thomson, George (Dundee, E.)

    Wilson, William (Coventry, S.)

    Short, Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Thornton, Ernest

    Wyatt, Woodrow

    Silkin, John (Deptford)

    Tuck, Raphael

    Yates, Victor (Ladywood)

    Silkin, S. C. (Camberwell, Dulwich)

    Urwin, T. W.

    Silverman, Julius (Aston)

    Varley, Eric G.

    TELLERS FOR THE AYES:

    Slater, Mrs. Harriet (Stoke, N.)

    Walden, Brian (All Saints)

    Mr. George Rogers and

    Mr. William Howie.

    NOES

    Alison, Michael (Barkston Ash)

    Grimond, Rt. Hn. J.

    Morrison, Charles (Devizes)

    Allan, Robert (Paddington, S.)

    Hall, John (Wycombe)

    Mott-Radclyffe, Sir Charles

    Amery, Rt. Hn. Julian

    Harris, Reader (Heston)

    Munro-Lucas-Tooth, Sir Hugh

    Anstruther-Gray, Rt. Hn, Sir W.

    Harrison, Brian (Maldon)

    Murton, Oscar

    Atkins, Humphrey

    Harvey, John (Walthamstow, E.)

    Nicholls, Sir Harmar

    Awdry, Daniel

    Harvie Anderson, Miss

    Nugent, Rt. Hn. Sir Richard

    Baker, W. H. K.

    Hawkins, Paul

    Orr, Capt. L. P. S.

    Barlow, Sir John

    Heald, Rt. Hn. Sir Lionel

    Osborn, John (Hallam)

    Batsford, Brian

    Heath, Rt. Hn. Edward

    Page, R. Graham (Crosby)

    Beamish, Col. Sir Tufton

    Hendry, Forbes

    Pearson, Sir Frank (Clitheroe)

    Bennett, Sir Frederic (Torquay)

    Higgins, Terence L.

    Peyton, John

    Berry, Hn. Anthony

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

    Pickthorn, Rt. Hn. Sir Kenneth

    Bessell, Peter

    Hirst, Geoffrey

    Pitt, Dame Edith

    Biggs-Davison, John

    Hobson, Rt. Hn. Sir John

    Price, David (Eastleigh)

    Birch, Rt. Hn. Nigel

    Hogg, Rt. Hn. Quintin

    Prior, J. M. L.

    Blaker, Peter

    Hooson, H. E.

    Pym, Francis

    Box, Donald

    Hordern, Peter

    Ramsden, Rt. Hn. James

    Boyd-Carpenter, Rt. Hn. J.

    Hornsby-Smith, Rt. Hn. Dame P.

    Redmayne, Rt. Hn. Sir Martin

    Boyle, Rt. Hn. Sir Edward

    Howe, Geoffrey (Bebington)

    Rees-Davies, W. R.

    Brewis, John

    Iremonger, T. L.

    Russell, Sir Ronald

    Brinton, Sir Tatton

    Irvine, Bryant Godman (Rye)

    Sharples, Richard

    Brooke, Rt. Hn. Henry

    Jenkin, Patrick (Woodford)

    Shepherd, William

    Bryan, Paul

    Johnson Smith, G. (East Grinstead)

    Sinclair, Sir George

    Buck, Antony

    Johnston, Russell (Inverness)

    Spearman, Sir Alexander

    Buxton, Ronald

    Kaberry, Sir Donald

    Stanley, Hn. Richard

    Carlisle, Mark

    Kerby, Capt. Henry

    Stoddart-Scott, Col. Sir Malcolm

    Clark, William (Nottingham, S.)

    Kilfedder, James A.

    Studholme, Sir Henry

    Cooper, A. E.

    Kimball, Marcus

    Talbot, John E.

    Cooper-Key, Sir Neill

    King, Evelyn (Dorset, S.)

    Taylor, Sir Charles (Eastbourne)

    Custain, A. P.

    Kitson, Timothy

    Taylor, Edward M. (G'gow.Cathcart)

    Crowder, F. P.

    Langford-Holt, Sir John

    Taylor, Frank (Moss Side)

    Curran, Charles

    Legge-Bourke, Sir Harry

    Teeling, Sir William

    Currie, G. B. H.

    Lewis, Kenneth (Rutland)

    Temple, John M.

    Dalkeith, Earl of

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

    Thatcher, Mrs. Margaret

    Davies, Dr. Wyndham (Perry Barr)

    Lloyd, Ian (P'tsm'th, Langstone)

    Thompson, Sir Richard (Croydon,S.)

    d'Avigdor-Goldsmid, Sir Henry

    Longden, Gilbert

    Tiley, Arthur (Bradford, W.)

    Deedes, Rt. Hn. W. F.

    Loveys, Walter H.

    Tilney, John (Wavertre)

    Dodds-Parker, Douglas

    Lubbock, Eric

    Tweedsmuir, Lady

    Doughty, Charles

    Mackenzie, Alasdair (Ross&Crom'ty)

    van Straubenzee, W. R.

    Errington, Sir Eric

    Mackie, George Y. (C'ness & S'land)

    Walder, David (High Peak)

    Eyre, Reginald

    McLaren, Martin

    Walker, Peter (Worcester)

    Fell, Anthony

    McMaster, Stanley

    Walters, Dennis

    Fletcher-Cooke, Charles (Darwen)

    McNair-Wilson, Patrick

    Ward, Dame Irene

    Fletcher-Cooke, Sir John (S'pton)

    Maginnis, John E.

    Weatherill, Bernard

    Foster, Sir John

    Marples, Rt. Hn. Ernest

    Webster, David

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    Mathew, Robert

    Whitelaw, William

    Fraser, lan (Plymouth, Sutton)

    Maude, Angus

    Wills, Sir Gerald (Bridgwater)

    Gammans, Lady

    Maxwell-Hyslop, R. J.

    Wilson, Geoffrey (Truro)

    Gilmour, Sir John (East Fife)

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

    Woodnutt, Mark

    Glover, Sir Douglas

    Meyer, Sir Anthony

    Yates, William (The Wrekin)

    Godber, Rt. Hn. J. B.

    Mills, Peter (Torrington)

    Younger, Hn. George

    Goodhew, Victor

    Mills, Stratton (Belfast, N.)

    Gower, Raymond

    Miscampbell, Norman

    TELLERS FOR THE NOES:

    Gresham Cooke, R.

    Mitchell, David

    Mr. Ian MacArthur and

    Griffiths, Peter (Smethwick)

    More, Jasper

    Mr. Dudley Smith.

    Mr. Nigel Birch: I beg to move Amendment No. 312, in page 28, line 20, at the end to insert:
    (4) British Government Securities shall not be chargeable assets.
    The Chairman: We can discuss, at the same time, Amendment No. 313, in page 28, line 20, at end insert:
    (4) Securities issued by Lal Government bodies shall not be chargeable assets.
    Amendment No. 314, in page 28, line 20, at end insert:
    (4) Dominion and Commwonealth Government Securities shall not be chargeable assets.
    and Amendment No. 229, in page 28, line 21, at end insert:
    (4) Four per cent. Victory Bonds when credited at par against the estate duty due on the deceased's estate shall not be chargeable assets.
    Mr. Birch: These Amendments intend that Government, local government, and Commonwealth securities should be excluded from the operations of the Capital Gains Tax. This Amendment does not deal with the special point of switching which comes in Amendment 481—in Schedule 7, page 147, line 50, at end insert:
    (iv) the disposal of a fixed interest Government, local authority or Dominion bond or stock where the proceeds of a sale are reinvested in a fixed interest Government, local authority or Dominion bond or stock.
    That is a very important issue, but it is subsidiary to the main question. This question is of great importance and involves not only the honour but the interests of our country.
    Over the last 20 years I have frequently had the privilege of addressing the Committee on the market in Government securities. I do not believe that it is possible to run a sophisticated economy like ours without a healthy bond market. The market has not been healthy for years—not since the great Daltonian disaster of 2½ per cent. stock. But the Government, during recent months, have dealt the gilt-edged markets a series of hammer blows. The first is a very rapid rise in prices. The Chancellor of the Exchequer very justly conceded, when speaking on the regulator the other day, that that price rise has hardly started.
    The gilt-edged market is also affected by certain provisions in the Corporation
    752
    Tax. The first effect is that dividends on gilt-edged securities will not be franked income under these provisions, which make their relative attractions, particularly to insurance companies (much less than they were before. Another important effect of the Corporation Tax is that it will be difficult and expensive for companies to raise money by shares or rights issues. They will, therefore, be forced to issue more debentures. The flood of debenture issues has not yet started, but if the Bill goes through as proposed by the Government there will be a flood of debenture issues, forcing up the rate of interest and competing directly with the gilt-edged market.
    So much for the background. Now to the main point about honour. The reason why so many people have invested their savings in gilt-edged securities is that they have believed that the letter and spirit of the bond will be kept and that there can be no question whatever of the terms being varied. Once that faith is broken it will be very difficult indeed to get back that confidence again, and it will have a permanently damaging effect on Government credit and on the gilt-edged market.
    I should like to deploy this argument with some care. Surely there is no analogy whatever between a capital gain on an equity share and a capital gain resulting from the redemption of gilt-edged securities. If one invests one's money in risk securities one may or may not win—for example, if one invests in Mr. Kaldor's "Investment in Foreign Growth Stocks" one loses.
    This is an entirely different question from investing in Government securities redeemable at par or premium at some fixed date. The whole point there is that there is no risk involved. This is a question of a contract which must be fulfilled. No one would have bought any of those securities at the prices they did if they had known that a Capital Gains Tax would be put on the capital element in the ultimate profit when the security was redeemed, because they would not have been worth the price at that time if this tax was to be put on the profit.
    It is no answer to say, as the Financial Secretary and the Chancellor have said, that to take this line would mean that a

    753
    Government could never change taxation—they could, of course, change both Income Tax and Surtax. They have no relevance to this. It would be honourable to say that future securities sold at a discount would be subject to Capital Gains Tax, and once that was said one would not be able to sell them at anything like the prices in the past.
    The whole concept is that this tax involves retrospection in the most odious terms. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will be speaking, no doubt, on an Amendment on Victory Bonds, but there the case is crystal clear. After the First World War, Victory Bonds were issued at between 80 and 85, and one of the considerations that induced people to buy them was that they were tender-able for death duties at 100. Therefore, obviously, they were made much more attractive by this provision.
    10.45 p.m.
    As I understand, under the Bill they would still be tenderable at par, but would be liable for Capital Gains Tax. This, again, is retrospection in its most odious form. It is analogous to a foreign Government taking over a British enterprise, agreeing on the price and then passing a Bid to tax that compensation. If any foreign Government did that, we should say—indeed, we have said in the past when it has been done—that their conduct was dishonourable and fraudulent and must be put right. But here the Government are doing the same.
    I cannot help feeling that the Government themselves must feel some guilt here, because they have exempted from this provision Government securities issued under the National Savings scheme. They have exempted Premium Bonds. There, of course, one gets a tax free gain if one is lucky enough to draw a number. I do not want to argue that, however, although the Government's addiction to gambling is well known and anyone who gambles gets a tax free profit.
    The really important issues are National Defence Bonds and National Development Bonds. There are five issues still outstanding of National Defence Bonds and National Development Bonds and these bonds are redeemable at premiums of 2, 3 and 5 per cent.
    754
    A tax-free capital profit is offered to the holders.
    It is no good arguing that this is a question of de minimis, because, after all, anyone who makes a profit on a share has to return it in his tax returns however small. Many of these bonds are held by Surtax payers, to whom they are attractive. That is why maximum holdings are limited. In the case of the current issue of National Development Bonds, the maximum holding is £2,500, but it is possible for someone to have a bond himself and for his wife and each of two children to have a bond each. Thus, on a holding of £10,000, the capital profit would be anything between £200 and £500.
    That is to be tax free. Why? I want to ask the Government this question. Why is it that this capital profit, which may be very substantial, is tax free whereas capital profits on other Government securities are not? Could it be possible that the Government think that there are a lot of votes in it? I do not know. It might be so. The Government might feel that the fraud was too obvious to too many people. But if they think that, they should realise that it is not by any means a few people who are affected by the tax that they are paying on other Government securities.
    The number of holders is very large indeed. I understand that there are 34 issues still outstanding which were issued at a discount and that the total amount of stock they represent is just about £10,000 million. There are many thousands of private holders. These stocks were issued at prices between 80 and 99½, but, in fact, the nominal issue price of a bond does not necessarily reflect the actual price at which it was issued to the public.
    For example, Funding 3½ per cent. 1999–2004 was issued at 80, but sold by the Government broker down to 63. If a tax-free capital gain had not been held out as an inducement, he would not have been able to sell them at that price. Enormous numbers of people have acquired these bonds at discount, very often substantial, in consideration of the fact that, by giving up some current income, they would be

    755
    building up capital when the Government bonds either matured or got near maturity.
    There is another point which is very material. Let us take the case of a holder of Treasury 2½, known as "Daltons". These went to a discount getting on to 40 points during the life of the post-war Labour Government. A great many people holding them or other irredeemable securities, or securities redeemable at Government option, have tried to get back their capital losses by buying redeemable securities. So, over a period of years, they would at any rate get some part of the money back which they had lost.
    Having seen the purchase power of their money decline, having had to give up income, they are now to be mulcted by Capital Gains Tax. If one treats people like that, one cannot expect them to be very keen investors in Government securities. I cannot see that the future of the market is at all bright. So much for the moral side of it—what I believe profoundly to be a fraud.
    What about interest? This year, there the Government maturities of £1,700 million. An overall Budget deficit of £743 million was estimated. It is notoriously difficult to forecast how a Budget deficit will turn out, but I would not be very surprised if that were exceeded. As all have noticed, since the Budget there has been a flood of increases in wages in the public sector. I would guess that practically all the increase in indirect taxation has already been swallowed up. This week B.O.A.C. crews got a backdated increase of 18 per cent. That sort of thing is going on the whole time.
    Therefore, it may be necessary to raise in new Government loans this year anything up to £2,500 million. Suppose that by their measures—Corporation Tax, Capital Gains Tax and the increase in the cost of living—the Government make it certain, as I think is very likely, that they will have to pay ½ per cent. more for their money than if they had not taken all these measures, it will cost the Exchequer another £125 million more than it would otherwise have done. We do not know what the Capital Gains Tax will bring in, but I should be very surprised if it brought in anything like £125 million.
    756
    Therefore, the Government have played with the devil for nothing.
    There are one or two other material points on the damage done to the market. It has been one of the strengths of our market that we have been able to issue a lot of long-dated Government securities. I think that, in 1964, 46 per cent. of the non-official holdings of Government securities had a life of 15 years or more. One of the effects of this is that the Government may be forced back into issuing nothing but short-dated bonds. They may find it impossible to issue long-dated bonds. If that happens—given our always precarious banking position—we are at very grave risk.
    Hon. Members will have noticed that. owing to the most regrettable habit of the local government authorities of borrowing short at seven days' notice to build their sewers, they have recently been forced to pay up to 9⅜ per cent. for weekly money, and they are still paying 7 per cent and over for it. If the great weight of the Government debt is to be very short-term, at any time that we run into difficulties the management of the market from the Government's point of view may be next to impossible, and it will be a grave additional burden on the country just at a time when we are in our greatest difficulty.
    I have two last points on management. I want to talk about switching. The effect is to lock the life offices, because it means that the ordinary exchanges of stock do not take place and the flexibility of the market goes. A more important point is the means by which Government loans are redeemed and the market is managed. When one sees in the newspapers an advertisement for the issue of £1,000 million worth of Government stock and reads that the offer closed at one minute past ten o'clock, the simpler types may think that people have subscribed £1,000 million in a minute. But they have not. It is possible that they have not subscribed anything.
    The way the market is managed is that any maturing issue is gradually paid off in the last year or so of its life, but against that the Government have other stocks, generally described as tap stocks, which they think they are most likely to be able to sell and which they peddle out gradually over the months. We are

    757
    not faced with a sudden shock of £1,000 million being suddenly thrown on to the market or taken out. It can be managed gradually.
    The pernicious effect of this tax comes if someone sells a maturing bond to the Government. The Government always want them to do so, and for the ordinary public a short bond is quite unsuitable. If he does that he is mulcted from Capital Gains Tax, whereas if he holds for conversion he is not mulcted for the tax. The temptation will be for everyone to hang on to see if they can get a decent conversion, but they cannot know what that conversion stock will be and it may be highly unsuitable. We shall, therefore, be faced with the danger of sudden masses of stock being thrown on the market because there is nothing suitable for those people who hold a maturing debt. This is a technical point, but one of very great importance which is worrying the gilt-edged market very much indeed.
    What has been done is, I believe, morally wrong. I believe that it is intensely damaging to the credit of the country. I believe that the Government, instead of getting money out of it, will lose money. They will make the whole of their management of the debt more difficult and much increase the danger to our banking position.
    The Chancellor of the Exchequer (Mr. James Callaghan): I apologise for having a relaxed throat, but I trust that the Committee will be able to hear me.
    I agree entirely with what the right hon. Member for Flint, West (Mr. Birch) said about the need for a healthy gilt-edged market. I think that he was historically accurate when he said that it has not been healthy for some years. All of us would like to see it healthier. I most certainly would; and I think that anyone who has anything to do with the management of the Government debt wishes to see the gilt-edged market, in so far as it is possible, flourishing as a reflection of the economic policies of the country. It may be over-emphasised by some who do not recognise the full degree of management which takes place.
    However, we are faced with a market—and I shall not stir passions now—which, I felt, was not very healthy at
    758
    the time when I became responsible for these affairs. It would not be a sensible policy unduly to damage it, or indeed to damage it at all. One should try to build it up. The right hon. Member, no doubt because of compression, failed to give anything like a complete picture of the range of holdings that are affected in the gilt-edged market. One would assume that every operator in the gilt-edged market was to be subject to Capital Gains Tax. The right hon. Member will know better than most—because from the review that he gave us obviously he is a keen student of these matters—that this is not true.
    A great many institutions which operate in the gilt-edged market at the long end, with which he was particularly concerned, are and have long been exempt from Profits Tax and Income Tax and will be exempt from Capital Gains Tax. I refer to the charities and other institutions. At the other end of the spectrum—I am giving a complete picture—there are those institutions such as the banks who have always been assessed on their so-called capital gains because they partake of the nature of income.
    11.0 p.m.
    Therefore, there are operating in the gilt-edged market today two very large groups accounting for a substantial percentage of the gross figure which the right hon. Gentleman gave, which are at the moment unaffected completely by the changes that are proposed in the Bill. To that extent, therefore, in so far as this is a question of the fluidity of the market, these institutions will have no less and no greater incentive than they have had hitherto to switch or to make any other changes that they desire in their investments.
    There is the third band, on which the right hon. Gentleman concentrated exclusively, where undoubtedly there will be an effect, because under the Bill these institutions will pay Capital Gains Tax, which they have not so far paid. It is upon that third category that the right hon. Gentleman concentrated. I invite the Committee, however, to remember my preliminary words: that there is a large number of holders who are completely unaffected by this tax.
    The Amendment would amount to giving almost complete exemption from tax

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    on gilt-edged securities to the major operators in this market. Under some of the schemes of which I have read in the Press, tax would be payable on final disinvestment from the market. Some have suggested that this would be a good thing to do. Many of the major operators, however, never disinvest. They will always remain there as far as the human eye can see. The proposal in the Amendment does not even provide for taxing the gain accruing up till final disinvestment. This might not be the intention of the right hon. Gentleman the Member for Flint, West.
    I will address my remarks to the general proposition that some of the gains in gilt-edged transactions should be exempt from tax. That proposition is open to the basic objection that to exempt one large class of gains would drive a coach and horses through the tax. I do not think that the exemption could stop—and the right hon. Gentleman recognised this, I think, in one phrase he used—at the Government-issued and Government-guaranteed stocks. The claims of Commonwealth and Colonial stocks would be pressed as well as those of local authorities. There are even advocates of exemption for gains realised on all fixed-interest securities.
    These are some of the considerations that must have weighed with the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who faced a similar agitation when he imposed a short-term Capital Gains Tax. He resisted the agitation. Woe was prophesied. Disaster was forecast. It has not happened. It cannot be denied that the right hon. and learned Member met a storm of criticism from those operating in the market when he attempted to introduce, and succeeded in introducing, a short-term Capital Gains Tax.
    I quite agree that the present suggestion is not wholly analogous, but the criticism is the same. The prophecies of woe are the same, the forecasts of disaster are the same and there is sometimes a great temptation to shout rather loudly; and then, in the event, one finds that the result is nothing like what was forecast. Certainly, in the case of the right hon. and learned Member for Wirral, who had
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    all the abuse in the world hurled at him, much worse than I am getting, the prophecies of woe have not come true. Everybody knows that.
    I have said that a number of institutions remain unaffected for one reason or another. Life insurance companies will have to pay the tax, but they could hardly be made exempt without reopening the whole question of the general exemption of life policies, which I am recommending to the Committee in the next Clause. I am recommending that to avoid the argument of double taxation. I do not see how one could—unless, of of course, the suggestion is made to exempt a very large segment of income of one sort or another from Capital Gains Tax with all the repercussions which would result—I do not see how one could exempt life assurance companies from tax on their capital gains once we have decided, as I trust we shall, to exempt policy holders. I do not think that I want to argue the case at great length tonight, because I have made my position clear in my Budget statement.
    But I want to make an announcement now, because I said at the outset of our consideration of the Bill—and this was one of the matters I had in mind—that I would be willing to listen to representations and amend its terms whenever I thought a case was made out for doing so. The right hon. Gentleman said that a major part of his case was based on honour. I acknowledge that many people feel that in the case of dated stocks issued before Budget day the difference between the price of issue of a Government or Government-guaranteed stock and its redemption price should not be subject to Capital Gains Tax.
    The view is held, and I acknowledge that it is held very strongly, that an implicit pledge was given by Her Majesty's Government on the issue of these stocks that any appreciation in their value should not be taxable, as the rate of interest which was originally fixed took account of the issue price. I shall not argue the contrary case again tonight. I must, however, leave it on record that where matters of honour are concerned we have different conceptions, and that I am not wholly convinced by this argument in the light of the position then. But I shall not argue it. What I am

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    anxious about, especially in view of the state of the gilt-edged market which has persisted over a long period for a number of reasons is this. I am anxious that no one should be left with a sense of grievance about this.
    I have, therefore, come to the conclusion that it would be reasonable to concede this point. The concession, therefore, that I propose to recommend to the Committee will apply to past issues made at a price below par of British Government or Government-guaranteed dated stocks. It would not extend to issues after Budget day.
    What I propose is that gains arising from price movements between the price of issue and the redemption price of such stocks should not be taken into account for the purpose of calculating capital gains. It follows, of course, that movements in this same price zone would not give rise to claims for losses either. Accordingly, in all transactions where both buying and selling prices fall between the price of issue and the redemption price—that is, in what may be called the neutral zone—there would be neither gain nor loss for the purposes of the tax. These arrangements will apply to all disposals after Budget day.
    If the buying price is below the neutral zone and the selling price falls within that zone the taxable gain would be the difference between the buying price and the price of issue. If the buying price is within the neutral zone and the selling price is above that zone the taxable gain would be the difference between the redemption price and the selling price. Similarly, that part of any loss which falls outside the neutral zone would be allowable for this purpose.
    Where a stock has been issued in two or more tranches at different prices I propose to make a further concession here, with the agreement of the Committee, that the price of issue for the purposes of the relief would be taken to be the lowest issue price of the individual tranches. Where conversion issues are concerned the price of issue will be adjusted by the amount of any cash payment on conversion.
    I will give examples in a moment. I propose, on Report, to put down an Amendment to the Bill to give effect to
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    these proposals. I am arranging for a number of examples of the way this will operate to be available. I hope that they are in the Vote Office. A list of issue prices as calculated for the purposes of the relief will also be available. I will give a few examples. To take the price of issue—
    Mr. Heath: I am grateful to the Chancellor for this announcement. Could he give his examples at a slightly slower speed, as this is a complicated matter?
    Mr. Callaghan: I will take a basic stock issue at 96 points and redeemed at 100. If one buys that stock at 96 and redeems it at 100, the gain, for Capital Gains Tax purposes, is nil. I think that that is clear—that if one buys at the issue instead of at the issue price, the increase of four points is disregarded. If one buys the stock issued at 96 at 93 and sells it at 100, for the purposes of the Capital Gains Tax, the gain would be three points, between 93 and 96—
    Hon. Members: Why?
    Mr. Callaghan: Because that is not within the neutral zone.
    If one bought a stock issued at 96 at 93 and sold it at 97, the gain, again, is three points, the difference between 93 and 96. If one bought stock at 100 and sold it at 96, the loss is nil for this purpose, because it is within the neutral zone, the zone within which the price of issue and redemption price is nil. If one bought stock at 97 and sold it at 93, the loss would be three points, the difference between 96 and 93. If one bought it at 102 and sold it at 97, the difference would be two points, the difference between 100 and 102.
    If one bought it at 102—this is the most complicated example of all—and sold it at 93, the loss for this purpose would be five points, that is to say, the difference between 100 and 102, and the difference between 93 and 96. This is a very substantial concession—
    Sir Charles Taylor: It is not.
    Mr. Callaghan: The hon. Member does not like the word "concession", so I will not use it. May I use the word "relief"? Will he accept that?—He will not accept anything.

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    This is a very substantial change, which will be very welcome. It meets completely the point made by the right hon. Member for Flint, West about honour, the honour of the Government which is involved in this. It meets completely the point of honour on which he rested his case. No one can say that if someone buys a stock art 96 and it is redeemed at 100 and he is charged no Capital Gains Tax on it there is any dishonour on the part of the Government. No pledge has been broken. Somebody who buys stock at 96 and holds it through to maturity does not suffer Capital Gains Tax on the depreciation of the stock.
    It is very important that this should be understood. No one who buys a stock issued at a discount, at, say, 96, and holds it through to maturity will be charged Capital Gains Tax. This must completely meet the point about honour. It has been said that he has bought these stocks at a discount, intending to hold them through, and has found that what he thought was a capital gain will not be taxed. I think that this relief will meet the major case on this issue—
    Mr. Harold Lever rose—
    Mr. Callaghan: I will finish this point, if I may.
    The future of the gilt-edged market will depend on the movement of interest rates, and the general health of the economy. No one is more keen than I am to see that one goes down and the other improves. I think that we shall all have to bend our efforts to ensuring this, because this is what the long-term health of the gilt-edged market will depend on. I shall try to follow those policies which will make this possible. If it were thought necessary to give additional support to the bond market, that will have to take place in entirely different circumstances and at an entirely different time to what we are talking about now.
    I think that I can claim wholly, fully and completely to have met the case of those who felt that the Government bad broken a pledge on taxing capital gains in this way.
    11.15 p.m.
    Mr. Birch: The whole of this plan, as far as I can see, is hitched to the issue of bonds, but very small amounts of these bonds—the right hon. Gentleman
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    will find, change hands at the issue price. Vast quantities have been sold by the Government Broker much below the issue price and he would not have been able to sell these unless the buyers thought that the capital gain was tax free. I can instance a funding of 3½ at 99, dated 2004, issue price 80 which the Government Broker sold down at 63. These are paid down at 63, yet the whole price between 63 and 80 is completely disregarded and the buyers of these think that they have a complete grievance which has not been met.
    Mr. Callaghan: I have no doubt, that if he holds it he would like relief from the Capital Gains Tax. This is not the case made up to this moment. That case, which I am meeting completely, is that of the stock which is issued at a certain price.—[HON. MEMBERS: "No.".]—Hon. Members opposite may shout about it, but this is the case which has been made and which I am meeting—that where stock has been issued at a price on the assumption that it is to be redeemed on a date at a higher price. I am meeting completely, wholly and faithfully that point and nothing hon. Members can say disturbs that.
    Mr. Harold Lever: Before my right hon. Friend sits down can he help me define what he considers—
    Mr. Grimond: I think that the Committee will need some time to consider what the Chancellor has said. I am grateful for the concession and am glad that he has at any rate recognised the case for some different treatment of gilt-edged stock.
    The ordinary investor, let alone the operators in the bond market—and I do not pretend to speak for them—when he invests in gilt-edged stock, never considers the issue price. I have never heard of anyone saying that he would buy certain stock because of the issue price. People are concerned with the price they pay and the redemption price.
    I do not want to be dogmatic, but it is a somewhat theoretical and remote attitude to say that if there is a case for exempting gilt-edged stocks this is met by setting up a neutral zone between the issue price and the redemption price. If there is a case at all it is surely that people who acquire gilt-edged stock,

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    whether they acquire it at the issue or the buying price, believe that it is to be redeemed in full on a certain date at a certain price.
    Having to some extent given way to the principle. I think, quite frankly, that the Chancellor will have difficulty standing on the ground which he has chosen. This is a moot point. There will be people who will have bought debentures, and so forth, who were also under the impression that they were to get the full redemption price. The Chancellor, having given way on the principle of Government stock, I am puzzled about why he should attach so much importance to the issue price. I am sure that the ordinary investor will feel that this has not met the point at all.
    The right hon. Gentleman has not told us how far this concession will improve the bond market. If it will, that would be good reason for it. I am grateful for any concession, but I think that the ordinary investor will find this difficult to understand.
    Many people will have held Government stock, gilt-edged stock, on 6th April, or whatever the date is, and will become liable to the tax on the difference between the value of the stock on 6th April and the redemption date, or the date on which it is sold. As I understand, if on the relevant date, 6th April, it is in the neutral zone, it will pay no Capital Gains Tax. Similary, if it is acquired at any date before the Budget at a higher price, it will be free from Capital Gains Tax, because the Chancellor has said that he will have a retrospective element in favour of the investor to the extent that he will not be charged capital gains if he bought it above the price on Budget day, even though it may have appreciated afterwards.
    However, if an investor finds himself in the position of having bought these stocks very much lower down, possibly 63, I believe that the right hon. Member for Flint, West (Mr. Birch) spoke of the Government Broker peddling them out at 63, he will be liable for the whole of the capital gains between that and the issue price in the 80s.
    Mr. Maxwell: What is wrong with that?
    Mr. Grimond: That is a question from a sitting position. This is a difficult enough argument to make standing up without having to deal with questions from a supine position.
    Mr. Maxwell rose—
    Mr. Grimond: I appreciate that the Chancellor has made a concession, and I do not want to appear to be hostile, but people will want to be clear about where they stand. I understand that the previous concession for people who bought lower down will still stand, but that they will have to pay the full capital gain between anything below the neutral zone and the neutral zone itself.
    I believe that many people will be puzzled about why so much importance is attached to the issue price. I should very much like the Chancellor to tell the Committee something of what he expects the practical effect to be. I am not an expert in these matters, but if the right hon. Member for Flint, West is right, and the bond market is in a bad condition and lacking confidence, will confidence be restored by this concession? If so, that would seem to be the main argument for the concession.
    May I again make a comment with which, I hope, the Chancellor will be sympathetic? I say again that I find it totally anomalous that in a society which is trying to encourage genuine savings for investment a Capital Gains Tax should be imposed on those savings and not on winnings on the pools. That would be unpopular and I have no doubt that that is the real reason for not doing so. But it is no good talking of changing to a serious society which is anxious to invest in industry and to save money and to put it to useful purposes, and then exempt gambling winnings; and if this is a hot one I am not ashamed to say it.
    Sir H. d'Avigdor-Goldsmid: If the statement by the Chancellor of the Exchequer has come as an enormous surprise, I must frankly say that that is because of its ineptitude. We had great confidence in the competence of the right hon. Gentleman. We felt that, on the whole, he was on top of what he was trying to do. We did not agree with what he was trying to do, but we felt that he understood it. I now want to ask him a few questions based on this list.

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    There are two stocks—British Gas 4 per cent. Guaranteed Stock, 1962–72, issued at 98, and British Transport 3 per cent. Stock, 1968–73, issued at 73½. The prices of these stocks, due to their relatively early redemption dates, are very near to each other. But the holder of the British Gas stock will have to pay Capital Gains Tax on any redemption he receives, while the holder of British Transport Stock has his holding free of Capital Gains Tax. Where is the equity in that?
    As the right hon. Gentleman the Leader of the Liberal Party pointed out, one of the things which one does not inquire into when buying stock is its historic price. The price of a stock is governed by its dividend and its redemption date. Its historic price has never been a concept. What really happened was that the Chancellor saw the force of the Amendment which we were moving, and particularly I thank him for the Amendment on Victory Bonds concerning which he has met the point that I sought to make. Therefore, that Amendment is covered, but I am quite sure, too, that the Treasury said, "It is much too expensive to give way on everything," and so we come to this ridiculous and anomalous conclusion.
    The list does not include 2½ per cent. Savings Bonds. Those bonds, which are redeemable in 1967, are a very well-known stock which stands a long distance below par. My suspicion is that the experts whom the right hon. Gentleman consulted said, "Well, if you give the redemption profit on 2½ per cent. Savings Bonds free of tax this will really play into the hands of the people who use them as an investment to secure short or medium-term gains".
    As those bonds were issued at about par it does not arise, because they will be caught for Capital Gains Tax. It seems wrong that at this hour of the night we should be arguing on the merit of one or other British Government stock. The whole strength of the market in British Government stocks is that each one is as good as its word. Now the Chancellor has imported an entirely new concept into the market and that at 11 o'clock at night. I am glad that the Stock Exchange is closed, but I have no doubt that the result of the right hon. Gentleman's action will be apparent at 9.30 tomorrow morning, when a large
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    number of stocks will appreciate and a lot will fall as a result of this arbitrary decision.
    Frankly. I would have had much more confidence in the Chancellor if he had turned us down flat rather than give this partial and, to my mind, artificial concession.
    Mr. Harold Lever: As I understand the Chancellor, he has said that he is to concede a case—which is an open case—that honour requires that the Government should treat as free of Capital Gains Tax any difference between the price of stocks that have been issued and the redemption price promised. I rather agree with the Leader of the Liberal Party that this is rather a difficult and moot point. I have come to the conclusion, for what little value it has, and offer it with considerable diffidence, that, on balance, the wise thing is to concede this case. Having decided to do that, then it has to be fully conceded. I want the Chancellor to reflect on this. He has conceded it and he cannot half-concede it, having once said that honour requires it.
    My right hon. Friend has conceded that the difference between the price at which the Government issue stock and the redemption price should be free of Capital Gains Tax, so everything turns on the interpretation of the word "issue". It is not a magic word when it comes to gilt-edged stock, or any stock. The issuing of stock when one comes to deal with the Government amounts to saying, "Sell the stock." So the interpretation which occurs to me immediately is that what must, on the Chancellor's concession, be tax-free is the difference between the price at which the Government have sold the stock at one time or another and the redemption price.
    I have very great sympathy for the Chancellor in a very difficult decision, but I am bound to say that, otherwise, what is intended as a concession turns out to be a mere play on words. The Chancellor is an open-minded and reasonable man. He has listened to the arguments and has made a greater concession on the point than he might have made. He was entitled to take as obdurate and as unsympathetic a stand as the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) took upon

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    his ill-famed and rather bogus short-term Capital Gains Tax. But my right hon. Friend has not taken that position. My right hon. Friend has conceded that the difference between price of issue and price of redemption is to be free of Capital Gains Tax. The position can never be the same again after my right hon. Friend's express concession of that point.
    11.30 p.m.
    I ask my right hon. Friend to think, and not to make a hurried decision about, whether he ought not to regard the term "issue" as covering every sale made by the Government. I only want to put my point briefly now so that my right hon. Friend may consider it. When the Government issue stock, it is true that often enormous tranches in the stock are issued, in the sense that they are moved from one pocket of the Government to another pocket of the Government. They are only truly issued later on, very often, in small parcels to the public by the Government, at prices very much below the official issued price. The official issued price is a mere convenience for getting the stock into a marketable condition. It is moved from the left-hand pocket of the Government to the right-hand pocket of the Government so that it can be fed out in penny parcels to the requirements of the Government.
    I ask the Chancellor not to commit himself upon this. He has promised us that he will listen to all the arguments on this very difficult and complex matter. So far, he has been persuaded into a declaration of principle. I now ask him to reflect very carefully as to what he has, in fact, committed himself to by that declaration of principle. I shall not press him any further tonight. I hope that he will reflect upon the interpretation and not commit himself further tonight upon the meaning of "issued price".
    Sir Alexander Spearman: I support what the hon. Member for Manchester, Cheetham (Mr. Harold Lever) has said. The Chancellor has assumed that there are only two ways of acquiring Government stock—one by a public issue, for which one applies, and the other by buying in the market at the current market price. In fact, there is a third
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    way, which is a very usual way indeed. That is that the Government Broker has on tap a stock which he wants to sell at a price which may be entirely different from the price of original issue. That is the price at which the public buys it, on the assumption that they will get par for it on redemption date. The Chancellor has entirely overlooked that third way.
    The Chancellor has not dealt at all with the other issue put so powerfully by my right hon. Friend the Member for Flint, West (Mr. Birch). That is the need to support the gilt-edged market. Perhaps, as I have a City connection, I should declare an interest. I believe that free switching of Government stocks is enormously important. This is so, first, because it contributes to making London the freest financial centre in the world, which is a great asset to this country. It is so, secondly, because it is of enormous value to the Government when they have stocks to place on tap in the way I have described, and the Government Broker peddles out stocks. I believe that switching is very important indeed for that. I do not believe that the Chancellor's concession, as he describes it, will go far towards meeting that difficulty. though I would naturally like to think over what the right hon. Gentleman said and examine it in the morning.
    I was amazed when the Financial Secretary said this two days ago:
    "a capital gains tax should have no effect on the volume of switching."—[OFFICIAL REPORT, 25th May, 1964; Vol. 713, c. 321.]
    It has no effect on the value of switching by pension funds, because they do not pay tax. It has no effect on the volume of switching—or very little—by the composite insurance companies, because they pay the tax anyway but they never did the switching. The enormous amount of switching was done by the life assurance companies. I can assure the Financial Secretary that they are not doing that today.
    I will give two examples to show what folly it would be if they did do it. Suppose that an institution has a stock which has five years to go, that it had bought at 90, that it was originally issued at 100 and that it could sell it at 100 and switch into a more attractive stock, which would have the advantages to the Chancellor and the country which I have been describing. It would then have to

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    pay Capital Gains Tax on that 10 points now, in spite of the Chancellor's Amendment, whereas if it did not do the switch it would not have had to pay it for five years; and it might hope that there would be a very different Chancellor by then.
    Take an institution which had bought a stock at 100 and could now sell it at 90 and switch it into a more attractive stock. If it keeps its present stock until maturity, it pays no tax. But if it switches it into a more attractive stock, it pays a tax on redemption.
    These are not exceptional cases. It is for those reasons that switching in the gilt-edged market has declined very sharply. I do not blame the Financial Secretary personally that he did not know this when he made his statement, but it is very disturbing that Treasury Ministers should be so out of touch with affairs.
    Take an institution which had bought a stock at 100 and could now sell it at 90 and switch it into a more attractive stock. If it keeps its present stock until maturity, it pays no tax. But if it switches it to more attractive stock, it pays tax on redemption. These are not exceptional cases.
    It is for those reasons that switching in the gilt-edged market has declined very sharply. I do not blame the Financial Secretary personally that he did not know this when he made his statement, but it is very disturbing that Treasury Ministers should be so out of touch with affairs.
    Mr. Maxwell: The hypocrisy of the Liberal Party throughout the Bill and during the debate on the Budget has reached its height tonight. The Leader of the Liberal Party, the right hon. Member for Orkney and Shetland (Mr. Grimond), made out a case to show why the Government should allow capital gains free on gilt-edged stock when for years his party has been preaching to the country that it is in favour of a Capital Gains Tax.
    The fact that my right hon. Friend has ironed out the anomaly about the issue price will be welcomed very warmly by the gilt-edged market tomorrow. If the Conservative Party or the Liberal Party believe in the fairness and necessity of a Capital Gains Tax, how can they demand that this Committee should allow capital gains free for people who deal in gilt-
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    edged stocks? If the Chancellor were to allow this, it would be a racket and would nullify the principle of introducing fairness into the Capital Gains Tax. If the Liberal Party is serious about its determination to see fairness in the tax system, it should have the decency of supporting the Government in their view that Capital Gains Tax should apply to gilt-edged stock.
    Sir Harmar Nicholls: I do not think that the sort of extremism displayed by the hon. Member for Buckingham (Mr. Maxwell) helps.
    The Chancellor of the Exchequer intended and wanted to help. What he has done is to make a psychological miscalculation. My hon. Friends have suggested that the Chancellor's statement is the result of the Amendments on the Notice Paper and because of the arguments adduced during our discussions. I do not think that they have anything to do with it. I believed that the right hon. Gentleman made the statement because he is truly disturbed about the state of the gilt-edged market and that he properly wants to take action, as he said, to keep it in a healthy condition because it is vital for the financial stability of the country that that should be so.
    I believe that, psychologically, it was a great mistake to give this impression of being gruding in the concession—as the right hon. Gentleman called it—that he has made. I am certain that if he had based his statement tonight on the price paid and not on the price of issue it would have shown a realisation of the disturbing mood in the market. If I am right on the psychological point, I forecast that the Chancellor's statement will not have the effect which he wishes it to have and which it is desirable it should have. The right hon. Gentleman may well have to come to the House of Commons next week and give this extra to try and get confidence back in the market.
    This is why I deplore the rabid extremism of the hon. Member for Buckingham (Mr. Maxwell). I ask the Chancellor to face the mood of the market. It is the creation of a feeling that there is a lack of generosity in it that will prevent his statement from ensuring the objective which the Chancellor wants. We should thank the right hon. Gentleman for making the statement, because it shows that he recognises the problem

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    that is hitting the market at the moment, but we can ask him to face the psychological effect and to be more generous in the terms. If he does that he will achieve what he should achieve and what the Committee wishes him to achieve.
    Mr. A. E. P. Duffy: The right hon. Member for Flint, West (Mr. Birch) loosely bandied about ethical concepts like honour, faith and moral wrong, none of which bore any relationship to the matter under discussion. The issue of gilt-edged stock has never been associated with any assurance whatsoever about the future level of taxation. The ordinary salary and wage earner receives no guarantee about the future level of taxation. Newly-weds receive no guarantee whatsoever about future interest rates, and old-age pensioners have received no guarantee in recent months about the future purchasing power of money. Yet hon. and right hon. Members opposite seem to think that gilt-edged stockholders should receive guarantees about all these things, that is to say, they should run no risk whatsoever of adverse changes in taxation or interest rates or the value of money.
    All that the gilt-edged stockholder is guaranteed, and nothing more or less, is a fixed money income and a fixed sum at redemption. As the Chancellor said, the right hon. Member for Flint, West did not make out his case. Nevertheless, my right hon. Friend has made a statement that amounted to a concession. I am not at all sure at this stage that my right hon. Friend has not gone too far. It certainly is a concession. In so far as any obligation is involved—and I am not sure yet that there is any obligation on my right hon. Friend—it is with reference to the issue price, and nothing else.
    I wish to deal briefly with another matter on which the right hon. Member for Flint, West touched. It is something in the gilt-edged market to which no one can be indifferent. I would not ask my right hon. Friend to persist in past attitudes, or to hold my view that stocks may not have to be offered in future at slightly more favourable terms, but this could be balanced by the yield from the new tax as reduced tax avoidance.
    11.45 p.m.
    The right hon. Member for Flint, West said that the cost in a full year could be
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    about £125 million. Presumably, he has borne in mind what the Chancellor pointed out—that a considerable section of the gilt-edged market is exempted, not merely pension funds and other gross funds but banks as well. But the people who are not exempt and who presumably the Chancellor has in mind, just as the right hon. Member had them in mind, will not be exempted, and they are the individuals at high levels of taxation who, buying low coupon, short-dated Government bonds as Surtax payers in the past, have obtained considerable yields. Moreover, they have financed them very often by borrowing in ways that have been tenable and in this way they have done so at the expense of the Inland Revenue.
    These are the people whom the Amendment seeks to protect and whom hon. Members on this side will want to see exposed to the full blast of the Capital Gains Tax. On the other hand, I am not indifferent to the state of the gilt-edged market and I would have thought that the Chancellor would have looked more in the direction of switching by way of shoring up the market rather than making pure concessions that are not even appreciated by hon. Members opposite even though they are not offered on grounds of equity.
    Mr. Heath: I would like at this stage to offer some comments on the Chancellor's statement and then, if I may, put a proposal to the Chancellor and to the Committee. The Chancellor has made a very important statement. He has shown that he recognises that this matter concerns very many individuals, but, also, is of the greatest importance for the nation as a whole, particularly at this juncture in our history, for reasons which he knows full well.
    The right hon. Gentleman has, therefore, attached great importance to his statement, and quite rightly. We are in some difficulty in discussing it on this occasion, because, as the right hon. Member for Orkney and Shetland (Mr. Grimond) pointed out, it is complicated and I do not think that the Committee is entirely responsible for this. The Chancellor could, if he had wished, put this down in the form of an Amendment—the Government have so far put down just over 120 Amendments—and then we

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    would have been able to study it before debating it. On the other hand, there are probably strong reasons why he was not able to do that beforehand and for doing it in this form, and that we can all appreciate.
    The right hon. Gentleman has shown, I think, that he still has some personal reservations on the points ably and lucidly put by my right hon. Friend the Member for Flint, West (Mr. Birch) about the honourable obligations of the Government to their own stock. He has, nevertheless, accepted the principle and he has said so very clearly. He has also shown us the way in which he thinks he can best carry out this principle.
    This has already met with some doubts from hon. Members on both sides as to whether this is the way to meet the honourable obligations, in particular, the point first raised by my right hon. Friend but also pursued by the hon. Member for Manchester, Cheetham (Mr. Harold Lever) as to the relevance of the issue price or the price at which people bought from the Government Broker, determined in the light of their expectations. I believe that that is, as hon. Gentleman on both sides have emphasised, a fundamental point.
    The second point which concerns us is the extent to which the solution to which the Chancellor has come meets the situation in the market at the moment and—what I think is particularly in our minds—the problem of future Government borrowing and the management of the Government debt. These two points—the question of the issue price and the question of the future management of the market—are really the crux of the statement with which we are dealing.
    On the first point, there immediately arises the matter: if, in honour, it was right to take the price at which the Government Broker sold rather than the issue price, is it practicable now to handle the matter on this basis? This, I think, is where the Committee is in very great difficulty. My view, and, I think, the view of some of my right hon. and hon. Friends, would be that it is very difficult now to handle it on that price. I notice the Chief Secretary nodding in agreement. That was one of the reasons why we were led to table the Amendment to exempt the stocks altogether—because of
    776
    the difficulties of dealing with this problem. The Chancellor has come to the other solution, which some hon. Members have indicated they find lacking. Probably our general feeling on this side would be that it is lacking to an extent, though I recognise that the Chancellor has gone beyond his own personal inclinations in trying to meet the Committee on this point.
    It seems to me that in this situation which is of very great importance not only for individuals but for the country as a whole, the Committee—if I may suggest it—would not be wise to continue this discussion at this moment, that it would meet the needs of the Chancellor best—I hope that the right hon. Gentleman will agree with this—if we were now to report Progress at this point without the Committee attempting to come to a conclusion on this—because there is an Amendment before the Committee—if we were given time to reflect, consider it and discuss among ourselves and with those most intimately concerned with it, so that we could tomorrow afternoon resume the Committee stage in the light of our reflection and then be able to offer our views to the Chancellor so that he could consider the matter further.
    For this reason, I should like to move to report Progress at this stage. I ask the Chancellor to consider this seriously as a genuine indication of our desire to examine with the utmost care the proposal which he has put before us. I remind him that the Committee sat until after six o'clock this morning, and that we have been sitting today since half-past three and it is now nearly midnight. [Interruption.] A large number of hon. Members were sitting here until six o'clock in the morning, including hon. Gentlemen on the other side of the Committee.
    I suggest that in these circumstances we shall not serve the Chancellor's interests best by continuing the debate, particularly in the vein in which it was just beginning to develop in the speech by the hon. Member for Colne Valley (Mr. Duffy), if he does not mind my saying so. I have no wish to be controversial, but I accept that this is a controversial matter in many respects. We would, I think, best serve the Chancellor's interests and the interests of the Committee if we were to report Progress and reflect on

    777
    the matter and return to it at the beginning of our sitting tomorrow.
    I beg to move,
    That the Chairman do report Progress and ask leave to sit again.
    Mr. Grimond: I, too, believe that it would be a great mistake for the Committee to vote on this matter, at any rate at this stage. I speak as one who has genuine doubts about whether Government stocks are in a different position from, say, local authority loans, which, equally, are issued with a redemption date and a figure for the redemption of them.
    The Chancellor has been good enough to come here and he has circulated—which I think is unusual, and we are very grateful for it—particulars of what he has to say about this matter. I feel that it would be a courtesy to the Chancellor himself if we took rather longer to study the proposals which he has set out in some detail.
    I see the Chancellor's difficulty. He may want to make progress on the Bill. But I think that this is an unusual situation. As the right hon. Member for Bexley (Mr. Heath) said, there were reasons, clearly, against tabling an Amendment, but they are not the fault of the Committee, on either side. If we were now to be forced to take a decision on these concessions—I grant that they are concessions—I think that it would not be in accordance with the desire of the Committee. I do not think that it would be a desirable way of carrying on with the Bill. I support the suggestion that we report Progress.
    Mr. Callaghan: I acknowledge the manner in which the proposition was put that we should report Progress, but I must point out both to the right hon. Member for Bexley (Mr. Heath) and the Leader of the Liberal Party, the right hon. Member for Orkney and Shetland (Mr. Grimond), that we are not voting on my proposals tonight. What we are voting on is an Amendment which would exclude British Government securities as chargeable assets for the purposes of capital gains. It is very important that a conclusion should be reached on this. One of the reasons why we cannot put down Amendments in advance is, I am
    778
    sure the right hon. Gentleman will appreciate on reflection—
    Mr. John M. Temple: I wished to ask the right hon. Gentleman whether he was aware that his proposals were not in the hands of all hon. Members of the Committee at this time.
    Mr. Callaghan: That only reinforces the point I am making. They certainly are in the hands of all hon. Members who were here to listen to me [HON. MEMBERS: "No."] They have listened and heard and if they cannot understand, that is not my fault. [HON. MEMBERS: "Oh."] There are limits even to my patience and tolerance on this subject. I have done my best to meet the convenience of the Committee by making a full statement. I am not bad tempered; I am good tempered, on the whole. I have done my best to meet the convenience of the Committee by circulating a statement. If not every hon. Member has a copy, I am sorry, but we are not voting on it. It was circulated as a matter of convenience, but what we are discussing is an Amendment to exclude British Government securities.
    It is very important that we should reach a conclusion on this. [HON. MEMBERS: "Why?"] For the sake of some certainty so that those operating in this market should know where the Government stand on this matter. It is important that I should make clear at once without any wish, as it were—let me see how I put this, I do not want to convey to right hon. Gentlemen opposite that my mind is closed, but I am afraid that it must be in these circumstances. I cannot go any further. The Committee, the country and the market must know what are the Government's intentions and they must be clear about them. I must make clear the Government's intention, whatever may be the dulcet tones of my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) or the logical reasoning of the right hon. Member for Bexley. The Government's intention is to move an Amendment on Report along the lines I have brought to the Committee and which, for convenience' sake, I have outlined.
    That is where the Government stand and must stand. On no other basis would anyone be able to conduct business. I

    779
    must be absolutely clear and firm about this. This is what we intend to do. In passing—and I do not intend to continue this discussion too long—I think that the basis for the Government's case which made the right hon. Member for Flint, West write his initial letter to The Times, which I studied, was that the Government's honour was involved. The Government Broker buys and sell stocks every day in the market place. This is what he was recommended to do by the Radcliffe Committee and he has been doing it a great deal, but the contract between the Government and the purchaser is to issue at a certain price and redeem at a certain price. [HON. MEMBERS: "No."] That is my interpretation of the responsibility of the Government and for the moment I am afraid that it is my interpretation which will have to stand the test of time.
    Many people are concerned. They will say that this is a genuine attempt to deal with this particular allegation. In so far as the right hon. Member for Orkney and Shetland asks whether this will restore the position in the gilt-edged market, I can only say to him, in the words of the right hon. Member for Flint, West (Mr. Birch), that if they thought that the Government were breaking faith he thought—and I am inclined to agree—that this would be a deterrent to investing in the gilt-edged market. No one can say that from now on. All that people can say is that the Government are not exempting gilt-edged stocks from the Capital Gains Tax. This is an entirely different matter from whether this segment should or should not be exempted.
    12 m.
    Mr. Donald Box: Will the Chancellor assure us that the scheme which he is proposing has the full approval of the Government Broker?
    Mr. Callaghan: No, I do not have to assure the Committee on that. The Government take their own responsibility for this. We have not put the job into commission yet. It was some hundreds of years ago. This is my responsibility. [Interruption.] I have been accused on occasion of listening to too many experts. I am not indicating whether the Government Broker is in agreement. That has nothing to do with this situation.
    780
    Although I should have liked to accept it, I must resist the proposal to report Progress. I should like to ask the Committee to reach a conclusion on the Clause—at least, on the Amendment, to vote on it so that we know where we are. We can proceed from there, and then the Government will put down an Amendment on Report on the lines I have indicated tonight.
    Mr. Hirst: Before the Chancellor sits down, may I ask him—
    Hon. Members: He has already sat down.
    Mr. John Peyton: The Chancellor of the Exchequer has taken an extraordinary course to resist the Motion of my right hon. Friend the Member for Bexley (Mr. Heath). I do not claim to be expert in the activities of the Government Broker, but the Chancellor is saying something strange when he suggests that the only thing with which the Government are concerned is the issue price and the redemption price. He is leaving out one quite important person, namely, the purchaser who has brought from the Government Broker, who is the agent of the Government and is able to pledge the Government's credit. We are discussing the creditworthiness of the Government, and the right hon. Gentleman—
    Mr. Arthur Lewis: On a point of order. Are we not discussing whether to report Progress, Sir Samuel?
    The Deputy-Chairman: We certainly are. I was waiting for the hon. Member to relate his remarks to that Motion.
    Mr. Peyton: It is entirely my intention to do that, Sir Samuel.
    My right hon. Friend the Member for Bexley has suggested, in view of the important announcement made by the Chancellor, that you should report Progress, Sir Samuel, and ask leave to sit again. In view of the importance of the fundamental issue, I cannot see that the Chancellor is justified, on the basis of what he has said tonight, to ask the Committee to continue sitting through the night—which we will certainly do if he

    781
    wishes—without being much more convincing that he has been.
    When you suggest, Sir Samuel, that I I am not talking to the Motion, I hope that you will recall what the Chancellor has been talking about. In answering my right hon. Friend, the Chancellor adduced these very arguments. I am only saying that his answer to my right hon. Friend is wholly unworthy of a Chancellor of the Exchequer. It is not worthy of the attention of the Committee. It is a bogus and wholly inadequate ground for resisting a very reasonable proposition. I hope very much that the Committee will give it the short shrift and scant attention that it deserves.
    Mr. Hugh Fraser: We are inadequately supplied with papers tonight by the Chancellor. This is an important point about whether to report Progress—
    Mr. Walter Monslow: On a point of order. This is the first occasion, as I remember, when a circular has ever been issued by the Chancellor of the Exchequer for the convenience of the Committee. Is this the way my right hon. Friend is to be treated for the courtesy he has extended?
    The Deputy-Chairman: That is not a point of order.
    Mr. Fraser: It is very relevant to the paper which has been issued by the Chancellor this evening to show what precisely the prices of these various stocks were at the close of the market tonight. This is a very important point which must be discussed by the Committee, because, as so many of my hon. Friends have said, there is brought in a totally new element for the valuation of gilt-edged stock. The late Lord Bracken once said that the Labour Government had turned the gilt-edge market into a gilt-edged casino. They are turning it more into a casino than ever. Without actual Stock Exchange prices, it is almost impossible to compute whether any justice is really being done. Therefore, I feel that we should report Progress now and sit again when all these facts and papers are available.
    Mr. Heath: I should like to put two points to the Chancellor of the Exchequer. The first is that we are about to
    782
    take, or will in due course take, a decision on the Amendment moved by my right hon. Friend and not, of course, on what the Chancellor has put before the Committee. I think he will agree that he has issued the circular to the Committee because of the complexity of the statement he made and the difficulty of following it as he was making it. But, of course, the Committee takes a decision on the Amendment in the light of what the Government spokesman has said, and it would be only normal to expect us to take a decision on our Amendment in the light of what the right hon. Gentleman has said. It is for that reason—
    Mr. Arthur Lewis: On a point of order. Did not the right hon. Gentleman the Member for Bexley (Mr. Heath) move the Motion to report Progress? Is he allowed to speak twice on the Motion?
    The Deputy-Chairman: Yes. We are in Committee.
    Mr. Heath: It was for that reason I moved to report Progress, so that the Committee would have an opportunity of deciding, in the light of the statement the Chancellor has made, what action it should take upon the Amendment. I believe this to be a perfectly reasonable proposition.
    The point which the Chancellor made with considerable emphasis was that he wished to have a degree of certainty. Surely he must realise that there can be no certainty about these matters till this Bill has passed through all its stages here? There can be no certainty, because the Chancellor has yet to put his own Amendment down, which cannot be done till Report. The House then, and this Committee now, will continue, I have no doubt, to argue these matters, and will be influenced by argument, and perhaps take upon them different decisions from any now deemed likely. Therefore, I cannot accept the argument of the Chancellor that if we were to resume our discussion of this matter tomorrow afternoon there would be left a degree of uncertainty which he cannot possibly accept.
    Therefore, I urge upon the right hon. Gentleman these two considerations which I believe are both relevant to the Motion which I have moved, but I must tell him that if he is going to insist on this attitude,

    783
    which, I suggest, is not the best to meet his own needs on the matter, we on this side of course must take the necessary decisions.
    The Deputy-Chairman: The Question is, That I do report Progress and ask leave to sit again.
    Sir J. Foster: On a point of order. I wish to speak on this Motion, Sir Samuel. The Committee, when it debates a Motion to report Progress, very often only considers the wishes of the Members of the Committee. There is a very important point here—that the effect on the staff is going to be very serious. It is, perhaps, not realised by the Treasury Bench—
    The Deputy-Chairman: Is the hon. and learned Member addressing me on a point of order, or is he continuing the debate?
    Sir J. Foster: It is on a point of order that I wish to speak.
    The Deputy-Chairman: The Question is—
    Hon. Members: No.
    Mr. Hirst: My right hon. and learned Friend was addressing the Committee on the Motion to Report progress. He was only attracting your attention to speak on it, Sir Samuel, whilst you were trying to close the debate while he was still speaking.
    The Deputy-Chairman: The hon. and learned Gentleman said that he was raising a point of order because he wished to speak. That is not a point of order. The Question is—
    Sir J. Foster: On a point of order. Is it not in order on a Motion to Report progress that any hon. Member who wishes to speak has a right to speak?
    The Deputy-Chairman: The hon. and learned Gentleman has the right to speak, but he said that he was raising a point of order, which he did not. If the hon. and learned Gentleman wishes to speak, he may do so.
    Sir J. Foster: I dare say it was my phrase, but when I said that I wished to speak I meant that I wished to speak. [Interruption.]
    The Deputy-Chairman: I hope that right hon. Gentlemen on the Government Front Bench will let me hear what is being said by the hon. and learned Gentleman in possession of the Floor.
    Mr. Monslow: On a point of order. Did I understand you to put the Question or not, Sir Samuel?
    The Chairman: The Question is not put until all the voices have been heard. It is still open to an hon. Member to speak.
    Sir J. Foster: I might perhaps reinforce the point which my right hon. Friend has made by suggesting to the Committee that there is no certainty. If my right hon. Friend's Motion is carried, we still do not have any certainty about the proposals of the Chancellor of the Exchequer. The Chancellor's argument for certainty, therefore, does not hold water at all. If the Amendment is defeated, all that he will have advanced is that the Amendment is defeated. There is still the consideration of the Committee as to whether his proposals will or will not obtain.
    I was seeking to draw your attention to the fact that the staff of the House of Commons—I am thinking particularly of the doorkeepers—have been without sleep since eight o'clock yesterday morning. The doorkeepers came on duty yesterday at eight o'clock. The Committee rose at 6.15, and it was then possible for the doorkeepers to have about an hour in which to make a cup of tea. They did not even have time to change their clothes before they were on duty again. If the Committee sits all through the night, these gentlemen, upon whom the whole administration of the House depends, will have been in those uncomfortable clothes from 8 a.m. yesterday until four, five or six o'clock this morning—
    Mr. Monslow: Sheer humbug.
    Hon. Members: Oh.
    Mr. Monslow: I will not withdraw it, either.
    Mr. Michael English rose—
    Sir J. Foster: The hon. Member for Barrow-in-Furness (Mr. Monslow) has just said that this is humbug—
    Mr. Monslow: The hon. and learned Member is the humbug.
    Hon. Members: Oh.
    The Deputy-Chairman: I think I heard the hon. Member for Barrow-in-Furness call the hon. and learned Member for Northwich (Sir J. Foster) a humbug. If he did so, he must withdraw it.
    Mr. Monslow: I made the reference to the subject matter which we are now dilating. The hon. and learned Member for Northwich was speaking at 5 o'clock this morning. I say that it is humbug to make the reference which he is making to the staff. However, I withdraw.
    The Deputy-Chairman: The hon. Member described the hon. and learned Gentleman as a humbug. He must withdraw that.
    Mr. Monslow: I will bow to your Ruling, Sir Samuel, and retain my feeling. [An HON. MEMBER: "The hon. Member said that he would not withdraw."]
    Sir J. Foster: In spite of the hon. Member having withdrawn that remark, I think that I must deal with him, because he says that he still retains his feeling. This afternoon I was very much exercised by the prospect of the Chancellor not being willing—
    Mr. Maxwell: On a point of order. Would it be in order for an hon. Gentleman to call all right hon. and hon. Members opposite humbugs?
    The Deputy-Chairman: That is not a point of order.
    Sir J. Foster: In order to refute the hon. Member, who says that he still retains his feelings, I would like to say to the Committee that this afternoon I was exercised by the effect of these prolonged sittings on the Committee and the organisation and the staff on whom we depend so much.
    12.15 a.m.
    There is no doubt that the long sittings affect the doorkeepers more than others. The police and many others are affected, but the doorkeepers came on duty at eight o'clock in the morning and they have to remain here all through the night.
    786
    I made inquiries about whether they had had any rest. It is a reflection on our humanity that if we decide to sit throughout the night—[Interruption.] Are hon. Members suggesting that the sitting of the Committee should be continued without considering the fatigue of the doorkeepers? I seriously suggest that because we have a tradition in this country of being humane employers. [HON. MEMBERS: "Oh."] The attitude of hon. Members opposite, who are the worst employers, is curious. I do not know how they reconcile their consciences with wanting to keep the Committee sitting at the expense of the fatigue of the doorkeepers.
    Mr. English: Is the hon. and learned Gentleman aware that many of the staff, such as the librarians, hope that the Committee will go on until 2 a.m., as they will then get a day off tomorrow?
    Sir J. Foster: That reinforces my case. Unfortunately, the doorkeepers and some other staff will not get a day off tomorrow. I was not referring specifically to the staff of the House, but to others as well. They have to be here as long as the Committee goes on. The job of the doorkeepers is not only sedentary. One attached a pedometer to his foot and found that he walked 15 miles in a day. They do not have to be only in the Chamber. They also attend Standing Committees and deliver messages and form a connection between hon. Members and the Press Gallery. They are the nerve centre of the administration of the House of Commons in the sense that Members depend on them for the services which they render. These men cannot complain and cannot suddenly go on strike and have to be here all through the night for the second night running.
    Mr. Monslow: Will the hon. and learned Gentleman kindly inform the Committee what time Boodles and White's Clubs close?
    Sir J. Foster: In conclusion, I appeal to the good sense and humanity of the Committee not to decide to sit through the night and so jeopardise the health of these loyal servants, not all of them young.
    Question put:—

    Division No. 147.]

    AYES

    [12.21 a.m.

    Alison, Michael (Barkston Ash)

    Griffiths, Peter (Smethwick)

    Morrison, Charles (Devizes)

    Allan, Robert (Paddington, S.)

    Grimond, Rt. Hn. J.

    Mott-Radclyffe, Sir Charles

    Amery, Rt. Hn. Julian

    Hall, John (Wycombe)

    Munro-Lucas-Tooth, Sir Hugh

    Anstruther-Gray, Rt. Hn. Sir W.

    Harris, Reader (Heston)

    Murton, Oscar

    Atkins, Humphrey

    Harvey, John (Walthamstow, E.)

    Nicholls, Sir Harmar

    Awdry, Daniel

    Hawkins, Paul

    Orr, Capt. L. P. S.

    Baker, W. H. K.

    Heald, Rt. Hn. Sir Lionel

    Osborn, John (Hallam)

    Batsford, Brian

    Heath, Rt. Hn. Edward

    Page, R. Graham (Crosby)

    Beamish, Col. Sir Tufton

    Hendry, Forbes

    Pearson, Sir Frank (Clitheroe)

    Bennett, Sir Frederic (Torquay)

    Higgins, Terence L.

    Peyton, John

    Berry, Hn. Anthony

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

    Price, David (Eastl el gn)

    Bessell, Peter

    Hirst, Geoffrey

    Prior, J. M. L.

    Biggs-Davison, John

    Hogg, Rt. Hn. Quintin

    Pym, Francis

    Birch, Rt. Hn. Nigel

    Hooson, H. E.

    Ramsden, Rt. Hn. James

    Box, Donald

    Hordern, Peter

    Redmayne, Rt. Hn. Sir Martin

    Boyd-Carpenter, Rt. Hn. J.

    Hornsby-Smith, Rt. Hn. Dame P.

    Rees-Davies, W. R.

    Boyle, Rt. Hn. Sir Edward

    Howe, Geoffrey (Bebington)

    Sharples, Richard

    Brewis, John

    Iremonger, T. L.

    Shepherd, William

    Brinton, Sir Tatton

    Irvine, Bryant Godman (Rye)

    Sinclair, Sir George

    Brooke, Rt. Hn. Henry

    Jenkin, Patrick (Woodford)

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

    Bryan, Paul

    Johnson Smith, G. (East Grinstead)

    Spearman, Sir Alexander

    Buck, Antony

    Johnston, Russell (Inverness)

    Steel, David (Roxburgh)

    Buxton, Ronald

    Kaberry, Sir Donald

    Studholme, Sir Henry

    Carlisle, Mark

    Kerby, Capt. Henry

    Talbot, John E.

    Clark, William (Nottingham, S.)

    Kilfedder, James A.

    Taylor, Sir Charles (Eastbourne)

    Cooper, A. E.

    Kimball, Marcus

    Taylor, Edward M. (G'gow.Cathcart)

    Cooper-Key, Sir Neill

    King, Evelyn (Dorset, S.)

    Taylor, Frank (Moss Side)

    Costain, A. P.

    Kitson, Timothy

    Teeling, Sir William

    Crawley, Aldan

    Langford-Holt, Sir John

    Temple, John M.

    Crowder, F. P.

    Legge-Bourke, Sir Harry

    Thatcher, Mrs. Margaret

    Curran, Charles

    Lewis, Kenneth (Rutland)

    Thompson, Sir Richard (Croydon.S.)

    Currie, G. B. H.

    Lloyd, lan (P'tsm'th, Langstone)

    Thorpe, Jeremy

    Dalkeith, Earl of

    Longbottom, Charles

    Tiley, Arthur (Bradford, W.)

    Davies, Dr. Wyndham (Perry Barr)

    Longden, Gilbert

    Tilney, John (Wavertree)

    d'Avigdor-Goldsmid, Sir Henry

    Loveys, Walter H.

    Tweedsmuir, Lady

    Deedes, Rt. Hn. W. F.

    Lubbock, Eric

    Vickers, Dame Joan

    Dodds-Parker, Douglas

    MacArthur, lan

    Walder, David (High Peak)

    Doughty, Charles

    Mackenzie, Alasdair (Ross&Crom'ty)

    Walker, Peter (Worcester)

    Errington, Sir Eric

    Mackie, George Y. (C'ness & S'land)

    Walters, Dennis

    Eyre, Reginald

    McMaster, Stanley

    Ward, Dame Irene

    Fell, Anthony

    McNair-Wilson, Patrick

    Weatherill, Bernard

    Fletcher-Cooke, Charles (Darwen)

    Maginnis, John E.

    Webster, David

    Fletcher-Cooke, Sir John (S'pton)

    Marples, Rt. Hn. Ernest

    Whitelaw, William

    Foster, Sir John

    Mathew, Robert

    Wills, Sir Gerald (Bridgwater)

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    Maude, Angus

    Wilson, Geoffrey (Truro)

    Fraser, lan (Plymouth, Sutton)

    Maxwell-Hyslop, R. J.

    Woodnutt, Mark

    Gammans, Lady

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

    Yates, William (The Wrekin)

    Younger, Hn. George

    Gilmour, Sir John (East Fife)

    Meyer, Sir Anthony

    Glover, Sir Douglas

    Mills, Peter (Torrington)

    TELLERS FOR THE AYES:

    Godber, Rt. Hn. J. B.

    Mills, Stratton (Belfast, N.)

    Mr. Martin McLaren and

    Goodhew, Victor.

    Miscampbell, Norman

    Mr. Jasper More.

    Gresham Cooke, R

    Mitchell, David

    NOES

    Abse, Leo

    Crossman, Rt. Hn. R. H. S.

    Foot, Sir Dingle (Ipswich)

    Albu, Austen

    Cullen, Mrs. Alice

    Foot, Michael (Ebbw Vale)

    Allaun, Frank (Salford, E.)

    Dalyell, Tam

    Freeson, Reginald

    Allen, Scholefield (Crewe)

    Davies, Ifor (Gower)

    George, Lady Megan Lloyd

    Armstrong, Ernest

    Delargy, Hugh

    Ginsburg, David

    Atkinson, Norman

    Diamond, John

    Gourlay, Harry

    Bacon, Miss Alice

    Dodds, Norman

    Greenwood, Rt. Hn. Anthony

    Baxter, William

    Doig, Peter

    Gregory, Arnold

    Benn, Rt. Hn. Anthony Wedgwood

    Driberg, Tom

    Griffiths, David (Rother Valley)

    Bennett, J. (Glasgow, Bridgeton)

    Dunn, James A.

    Hamilton, William (West Fife)

    Binns, John

    Dunnett, Jack

    Hannan, William

    Blackburn, F.

    Edwards, Rt. Hn. Ness (Caerphilly)

    Harper, Joseph

    Bottomley, Rt. Hn. Arthur

    English, Michael

    Hart, Mrs. Judith

    Brown, R. W. (Shoreditch & Fbury)

    Ennals, David

    Hattersley, Roy

    Buchanan, Richard

    Butler, Mrs. Joyce (Wood Green)

    Ensor, David

    Hazell, Bert

    Callaghan, Rt. Hn. James

    Evans, Albert (Islington, S.W.)

    Heaiey, Rt. Hn. Denis

    Coleman, Donald

    Fernyhough, E

    Heffer, Eric S.

    Conlan, Bernard

    Finch, Harold (Bedwellty).

    Herbison, Rt. Hn. Margaret

    Corbet, Mrs. Freda

    Fletcher, Sir Eric (Islington, E.)

    Howell, Denis (Small Heath)

    Cronin, John

    Floud, Bernard

    Howie, W.

    The Committee divided: Ayes 152, Noes. 153.

    Hoy, James

    Morris, Charles (Openshaw)

    Short,Rt.Hn.E.(N'c'tle-on-Tyne.C.)

    Hughes, Emrys (S. Ayrshire)

    Mulley, Rt.Hn. Frederick(SheffieldPk)

    Silkin, John (Deptford)

    Hunter, Adam (Dunfermline)

    Murray, Albert

    Silkin, S. C. (Camberwell, Dulwich)

    Hynd, H. (Accrington)

    Newens, Stan

    Silverman, Julius (Aston)

    Irving, Sydney (Dartford)

    Noel-Baker, Francis (Swindon)

    Slater, Mrs. Harriet (Stoke, N.)

    Jackson, Colin

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Slater, Joseph (Sedgefield)

    Janner, Sir Barnett

    Oakes, Gordon

    Solomons, Henry

    Jay, Rt. Hn. Douglas

    Ogden, Eric

    Soskice, Rt. Hn. Sir Frank

    Jeger,Mrs Lena(H'b'n&St.P'cras.S.)

    Oram, Albert E. (E. Ham, S.)

    Stones, William

    Jenkins, Hugh (Putney)

    Owen, Will

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

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Padley, Walter

    Summerskill, Hn. Dr. Shirley

    Kelley, Richard

    Page, Derek (King's Lynn)

    Swain, Thomas

    Kenyon, Clifford

    Palmer, Arthur

    Taverne, Dick

    Kerr, Dr. David (W'worth, Central)

    Pargiter, G. A.

    Thomson, George (Dundee, E.)

    Leadbitter, Ted

    Park, Trevor (Derbyshire, S.E.)

    Thornton, Ernest

    Lee, Miss Jennie (Cannock)

    Parker, John

    Tuck, Raphael

    Lever, Harold (Cheetham)

    Parkin, B. T.

    Urwin, T. W.

    Lewis, Arthur (West Ham, N.)

    Pavitt, Laurence

    Varley, Eric G.

    Lewis, Ron (Carlisle)

    Pearson, Arthur (Pontypridd)

    Walden, Brian (All Saints)

    Loughlin, Charles

    Prentice, R. E.

    Walker, Harold (Doncaster)

    Mabon, Dr. J. Dickson

    Pursey, Cmdr. Harry

    Wallace, George

    McBride, Neil

    Rankin, John

    Whitlock, William

    MacColl, James

    Redhead, Edward

    Wigg, Rt. Hn. George

    MacDermot, Niall

    Rees, Merlyn

    Wilkins, W. A.

    McKay, Mrs. Margaret

    Reynolds, G. W.

    Williams, Mrs. Shirley (Hitchin)

    Mackenzie, Gregor (Rutherglen)

    Robertson, John (Paisley)

    Wilson, William (Coventry, S.)

    Mahon, Simon (Bootle)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Wyatt, Woodrow

    Manuel, Archie

    Rogers, George (Kensington, N.)

    Yates, Victor (Ladywood)

    Mason, Roy

    Rose, Paul B.

    Mikardo, lan

    Ross, Rt. Hn. William

    TELLERS FOR THE NOES:

    Molloy, William

    Rowland, Christopher

    Mr. George Lawson and

    Monslow, Walter

    Shore, Peter (Stepney)

    Mr. Brian O'Malley.

    12.30 a.m.
    Mr. Heath: The Government are now obviously in the shakiest position they have been in on the whole Bill. The Chancellor—[Interruption.]
    The Deputy-Chairman: Order. Mr. Heath.
    Sir D. Glover: On a point of order. Es it in order for the Government Chief Whip to make speeches from his seat?
    The Deputy-Chairman: I did not hear him making a speech. I merely saw him waving a piece of paper.
    Mr. Heath: The Chancellor has said that he wants to have a decision on the Amendment. He is, therefore, forcing the issue and challenging the Committee to express its view upon the Amendment which we have placed before it. We now propose to do so. I want to place it on record that, from the examination we have been able to give to the Chancellor's statement and from the explanation he has given us when he circulated it, we find that it is unsatisfactory and does not meet the case we have made. We do not believe that it meets the point which was emphasised both by my right

    Division No. 148.]

    AYES

    [12. 34 a.m.

    Alison, Michael (Barkston Ash)

    Anstruther-Gray, Rt. Hn. Sir W.

    Baker, W. H. K.

    Allan, Robert (Paddington, S.)

    Atkins, Humphrey

    Batsford, Brian

    Amery, Rt. Hn. Julian

    Awdry, Daniel

    Beamish, Col. Sir Tufton

    hon. Friend the Member for Flint, West (Mr. Birch) and by the hon. Member for Manchester, Cheetham (Mr. Harold Lever) in relation to the requirements of what the Chancellor described as the honourable obligations of the Government of the day. We do not believe from our consideration of it that it will meet the requirements of the money market at the moment from the Chancellor's point of view, nor enable there to be satisfactory management of the Government debt and Government issues in the future.
    For these reasons, I believe that we should strongly support our own Amendment. I advise my right hon. and hon. Friends to divide the Committee immediately upon this point and to support the Amendment, in order to indicate to the Chancellor that we believe that the proposition in the Amendment is the only way of meeting the present situation and of urging him to reconsider his own proposal before he brings it forward to us again on Report.
    Original Question put, That those words be there inserted:—
    The Committee divided: Ayes 152, Noes 153.

    Bennett, Sir Frederic (Torquay)

    Heald, Rt. Hn. Sir Lionel

    Murton, Oscar

    Berry, Hn. Anthony

    Heath, Rt. Hn. Edward

    Nicholls, Sir Harmar

    Bessell, Peter

    Hendry, Forbes

    Orr, Capt. L. P. S.

    Biggs-Davison, John

    Higgins, Terence L.

    Osborn, John (Hallam)

    Birch, Rt. Hn. Nigel

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

    Page, R. Graham (Crosby)

    Box, Donald

    Hirst, Geoffrey

    Pearson, Sir Frank (Clitheroe)

    Boyd-Carpenter, Rt. Hn. J.

    Hogg, Rt. Hn. Qulntin

    Peyton, John

    Boyle, Rt. Hn. Sir Edward

    Hooson, H. E.

    Price, David (Eastleigh)

    Brewis, John

    Hordern, Peter

    Prior, J. M. L.

    Brinton, Sir Tatton

    Hornsby-Smith, Rt. Hn. Dame P.

    Pym, Francis

    Brooke, Rt. Hn. Henry

    Howe, Geoffrey (Bebington)

    Ramsden, Rt. Hn. James

    Bryan, Paul

    Iremonger, T. L.

    Redmayne, Rt. Hn. Sir Martin

    Buck, Anton y

    Irvine, Bryant Godman (Rye)

    Rees-Davies, W. R.

    Buxton, R. C.

    Jenkin, Patrick (Woodford)

    Sharples, Richard

    Carlisle, Mark

    Johnson Smith, G. (East Grinstead)

    Shepherd, William

    Clark, William (Nottingham, S.)

    Johnston, Russell (Inverness)

    Sinclair, Sir George

    Cooper, A. E.

    Kaberry, Sir Donald

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

    Cooper-Key, Sir Neill

    Kerby, Capt. Henry

    Spearman, Sir Alexander

    Costain, A. P.

    Kilf edder, James A.

    Steel, David (Roxburgh)

    Crawley, Aldan

    Kimball, Marcus

    Studhelme, Sir Henry

    Crowder, F. P.

    King, Evelyn (Dorset, S.)

    Talbot, John E.

    Curran, Charles

    Kitson, Timothy

    Taylor, Sir Charles (Eastbourne)

    Currie, G. B. H.

    Langford-Holt, Sir John

    Taylor, Edward M. (G'gow.Cathcart)

    Dalkeith, Earl of

    Legge-Bourke, Sir Harry

    Taylor, Frank (Moss Side)

    Davies, Dr. Wyndham (Perry Barr)

    Lewis, Kenneth (Rutland)

    Teeling, Sir William

    d'Avigdor-Gold smid, Sir Henry

    Lloyd, Ian (P'tsm'th, Langstone)

    Temple, John M.

    Deedes, Rt. Hn. W. F.

    Longbottom, Charles

    Thatcher, Mrs. Margaret

    Dodds-Parker, Douglas

    Longden, Gilbert

    Thompson, Sir Richard (Croydon.S.)

    Doughty, Charles

    Loveys, Walter H.

    Thorpe, Jeremy

    Errington, Sir Eric

    Lubbock, Eric

    Tiley, Arthur (Bradford, W.)

    Eyre, Reginald

    MacArthur, Ian

    Tilney, John (Wavertree)

    Fell, Anthony

    Mackenzie, Alasdair(Ross&Crom'ty)

    Tweedsmuir, Lady

    Fletcher-Cooke, Charles (Darwen)

    Mackie, George Y. (C'ness & S'land)

    Vickers, Dame Joan

    Fletcher-Cooke, Sir John (S'pton)

    McMaster, Stanley

    Walder, David (High Peak)

    Foster, Sir John

    McNair-Wilson, Patrick

    Walker, Peter (Worcester)

    Fraser,Rt.Hn.Hugh(St'fford & Stone)

    Maginnis, John E.

    Walters, Dennis

    Fraser, Ian (Plymouth, Sutton)

    Marples, Rt. Hn. Ernest

    Ward, Dame Irene

    Gammans, Lady

    Mathew, Robert

    Weatherill, Bernard

    Gilmour, Sir John (East Fife)

    Maude, Angus

    Webster, David

    Glover, Sir Douglas

    Maxwell-Hyslop, R. J.

    Whitelaw, William

    Godber, Rt. Hn. J. B.

    Ma ydon. Lt.-Cmdr. S. L. C.

    Wills, Sir Gerald (Bridgwater)

    Goodhew, Victor

    Meyer, Sir Anthony

    Wilson, Geoffrey (Truro)

    Gresham Cooke, R.

    Mills, Peter (Torrington).

    Woodnutt, Mark

    Griffiths, Peter (Smethwick)

    Mills, Stratton (Belfast, N.)

    Yates, William (The Wrekin)

    Grimond, Rt. Hn. J.

    Miscampbell, Norman

    Younger, Hn. George

    Hall, John (Wycombe)

    Mitchell, David

    Harris, Reader (Heston)

    Morrison, Charles (Devizes)

    TELLERS FOR THE AYES:

    Harvey, John (Walthamstow, E.)

    Mott-Radclyffe, Sir Charles

    Mr. Martin McLaren and

    Hawkins, Paul

    Munro-Lucas-Tooth, Sir Hugh

    Mr. Jasper More.

    NOES

    Abse, Leo

    Dunn, James A.

    Howell, Denis (Small Heath)

    Albu, Austen

    Dunnett, Jack

    Howle, W.

    Allaun, Frank (Salford, E.)

    Edwards, Rt. Hn. Ness (Caerphilly)

    Hoy, James

    Allen, Scholef eld (Crewe)

    English, Michael

    Hughes, Emrys (S. Ayrshire)

    Armstrong, Ernest

    Ennals, David

    Hunter, Adam (Dunfermline)

    Atkinson, Norman

    Ensor, David

    Hynd, H. (Accrington)

    Bacon, Miss Alice

    Evans, Albert (Islington, S.W.)

    Irving, Sydney (Dartford)

    Baxter, William

    Fernyhough, E.

    Jackson, Colin

    Benn, Rt. Hn. Anthony Wedgwood

    Finch, Harold (Bedwellty)

    Janner, Sir Barnett

    Bennett, J. (Glasgow, Bridgeton)

    Fletcher, Sir Eric (Islington, E.)

    Jay, Rt. Hn. Doug las

    Binns, John

    Floud, Bernard

    Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

    Blackburn, F.

    Foot, Sir Dingle (Ipswich)

    Jenkins, Hugh (Putney)

    Bottomley, Rt. Hn. Arthur

    Foot, Michael (Ebbw Vale)

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Brown, R. W. (Shoreditch & Fbury)

    Freeson, Reginald

    Kelley, Richard

    Buchanan, Richard

    George, Lady Megan Lloyd

    Kenyon, Clifford

    Butler, Mrs. Joyce (Wood Green)

    Kerr, Dr. David (W'worth, Central)

    Callaghan, Rt. Hn. James

    Ginsburg, David

    Leadbitter, Ted

    Coleman, Donald

    Gourlay, Harry

    Lee, Miss Jennie (Cannock)

    Conlan, Bernard

    Greenwood, Rt. Hn. Anthony

    Lever, Harold (Cheetham)

    Corbet, Mrs. Freda

    Gregory, Arnold

    Lewis, Arthur (West Ham, N.)

    Cronin, John

    Griffiths, David (Rother Valley)

    Lewis, Ron (Carlisle)

    Crossman, Rt. Hn. R. H. S.

    Hamilton, William (West Fife)

    Loughlin, Charles

    Cullen, Mrs. Alice

    Hannan, William

    Mabon, Dr. J. Dickson

    Dalyell, Tam

    Harper, Joseph

    McBride, Neil

    Davies, Ifor (Gower)

    Hart, Mrs. Judith

    MacColl, James

    Delargy, Hugh

    Hattersley, Roy

    MacDermot, Niall

    Diamond, John

    Hazell, Bert

    McKay, Mrs. Margaret

    Dodds, Norman

    Healey, Rt. Hn. Denis

    Mackenzie, Gregor (Rutherg en)

    Doig, Peter

    Heffer, Eric S.

    Mahon, Simon (Bootle)

    Driberg, Tom

    Herbison, Rt. Hn. Margaret

    Manuel, Archie

    792

    793

    Mason, Roy

    Pearson, Arthur (Pontypridd)

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

    Mikardo, lan

    Prentice, R. E.

    Summerskill, Hn. Dr. Shirley

    Molloy, William

    Pursey, Cmdr. Harry

    Swain, Thomas

    Monslow, Walter

    Rankin, John

    Taverne, Dick

    Morris, Charles (Openshaw)

    Redhead, Edward

    Thomson, George (Dundee, E.)

    Mulley,Rt.Hn.Frederick(SheffieldPK)

    Rees, Merlyn

    Thornton, Ernest

    Murray, Albert

    Reynolds, G. W.

    Tuck, Raphael

    Newens, Stan

    Robertson, John (Paisley)

    Urwin, T. W.

    Noel-Baker, Francis (Swindon)

    Robinson, Rt. Hn.K.(St. Pancras, N.)

    Varley, Eric G.

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Rogers, George (Kensington, N.)

    Walden, Brian (All Saints)

    Oakes, Gordon

    Rose, Paul B.

    Walker, Harold (Doncaster)

    Ogden, Eric

    Ross, Rt. Hn. William

    Wallace, George

    O'Malley, Brian

    Rowland, Christopher

    Wigg, Rt. Hn. George

    Oram, Albert E. (E. Ham, S.)

    Shore, Peter (Stepney)

    Wilkins, W. A.

    Owen, Will

    Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

    Williams, Mrs. Shirley (Hitchin)

    Padley, Walter

    Silkin, John (Deptford)

    Wilson, William (Coventry, S.)

    Page, Derek (King's Lynn)

    Silkin, S. C. (Camberwell, Dulwich)

    Wyatt, Woodrow

    Palmer, Arthur

    Silverman, Julius (Aston)

    Yates, Victor (Ladywood)

    Pargiter, G. A.

    Slater, Mrs. Harriet (Stoke, N.)

    Park, Trevor (Derbyshire, S.E.)

    Slater, Joseph (Sedgefield)

    TELLERS FOR THE NOES:

    Parker, John

    Solomom, Henry

    Mr. George Lawson and

    Parkin, B. T.

    Soskice, Rt. Hn. Sir Frank

    Mr. William Whitlock.

    Pavitt, Laurence

    Stones, William

    Mr. Callaghan: I beg to move,
    That the Chairman to report Progress and ask leave to sit again.
    I imagine that after the previous vote I shall have the unanimous support of the Committee. We have done what I hoped we would do, and I am much obliged to the right hon. Member for Bexley (Mr. Heath), who is leading the Opposition at the moment, for getting the debate in the way which seemed appropriate. Having got that, it would not be appropriate now to ask the Committee to continue to sit further. Therefore, in view of the earlier vote, which was narrowly won, we can now translate that into the unanimous view of the whole Committee.
    12.45 a.m.
    Mr. Heath: Having demonstrated for the second time tonight that the Government's life hangs by a thread, and although the conduct of the Government over the past three hours may appear to the Committee to be completely incomprehensible, nevertheless we can now understand very clearly why at this moment the Chancellor has moved to report Progress. To enable the Committee to bring its deliberations to a close for tonight in order that it may be able later today to resume with the next Amendment on this Clause. I support the Motion.
    Question put and agreed to.
    Committee report Progress; to sit again this day.

HOUSING (AMENDMENT) (SCOTLAND) BILL
Order for Second Reading Read.
Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to the Scottish Standing Committee.—[Mr. Ross.]
12.47 a.m.
Mr. Forbes Hendry: On a point of Order, Mr. Deputy-Speaker. The House was given notice today on the Order Paper of this Motion, but that was the first intimation. According to Standing Order No. 62, it is competent for any six Members to give notice of an Amendment to the Motion, but because the Notice of Motion was only given on the Order Paper today it was impossible to give notice on the Order Paper of the Amendment. An Amendment was duly handed to the Clerk but cannot be in Order because notice of it has not been given on the Order Paper.
It seems to me and my hon. Friends that the Government have been in contempt of this House in giving inadequate notice of their Motion. I refer you to Erskine May, which states clearly that no particular period of notice is laid down but that, where the business is likely to be controversial, it is customary to give notice on the day before the Motion is to be made. In this case it was within the bounds of possibility that there would be an Amendment to the Motion. In the circumstances, such an Amendment has been made impossible.
I therefore suggest to the Secretary of State that he has treated the House with

795
contempt and that he should take the Motion away and bring it back on another occasion after proper notice has been given and an opportunity afforded to hon. Members to move an Amendment.
Mr. Deputy-Speaker (Dr. Horace King): I am glad that the hon. Member has made the point at some length. Frankly, I have some sympathy with it. I am, however, bound by the rules of the House and by Standing Orders. This Motion is not debatable. It would have been debatable had it been possible for the hon. Member and his hon. Friends to achieve what apparently was impossible today, and that is to put an Amendment on the Order Paper. I would recommend to him that he take up this matter with the Ministers concerned.
Mr. Henry: Further to that point of order, Mr. Deputy-Speaker. I ask you, as representing Mr. Speaker, to give consideration to this point and consider how the interests of hon. Members might be protected in similar circumstances in future.
Mr. Deputy-Speaker: I am afraid that this is a point of argument between the hon. Gentleman and the Ministers concerned rather than with the Chair. The Chair is bound to preserve the Rules of the House.
Question agreed to.
Bill (deemed to have been read a Second time) committed to the Scottish Standing Committee.

HOUSING (AMENDMENT) (SCOTLAND) [MONEY]
[Queen's Recommendation signified]
Considered in Committee under Standing Order No. 88 (Money Committees).
[Dr. HORACE KING in the Chair]
Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to increase the limit of the aggregate amount of advances which may be made to the Scottish Special Housing Association under proviso (i) to section 18(1) of the Housing (Scotland) Act 1962, it is expedient to authorise such increases in the sums which may be issued out of the Consolidated Fund, raised by borrowing, or paid or repaid into the Exchequer, or in any sums payable under
796
section 1 or 19 of the said Act of 1962 out of moneys provided by Parliament, as may result from increasing to one hundred and twenty million pounds the limit imposed by the said proviso.—[Mr. Ross.]
12.54 a.m.
Mr. Forbes Hendry: I hope that I am in order in asking certain questions about the Resolution. After all, although the Bill and its possible financial implications were discussed in the Standing Committee, a great many hon. Members had no opportunity to raise questions at that time. I hope that the Secretary of State will be prepared to answer questions.
It seems to me that there are two sides to the Money Resolution. It is not very clear from it what is involved, but there appears to be a matter of some £10 million which the Government are asking the Committee to vote for the purposes of the Scottish Special Housing Association. It may well be that from some points of view £10 million is a comparatively small sum, but in the Kingdom of Scotland it is a very great sum, representing no less than £2 per head of the population—man, woman and child.
Obviously, it is the duty of any Scottish hon. Member to raise questions about the expenditure of a sum of money of this sort. I had great difficulty in finding on what it is intended to spend this money. The reason for my difficulty was that although the Scottish Grand Committee met yesterday the OFFICIAL REPORT of the proceedings of that Committee was not available in the Vote Office until 4.25 this afternoon. In view of the very important debates in this Chamber since then, it has been impossible for hon. Members to give the report of the proceedings of the Scottish Grand Committee the attention it deserves. It is a very long report. Other hon. Members associated with me in raising these questions were unable to attend the debate in the Scottish Grand Committee. Although I am a member of that Committee, I was unable to attend because I was attending in another Standing Committee at that time. In view of that, I hope that I may be forgiven even at this late hour for raising certain questions.
There is the proposal to spend £10 million on what I should consider capital projects, but over and above that, there

797
is a proposal to spend a somewhat indefinite amount of money on what I might call the running expenses of the Scottish Special Housing Association. We have had a great deal of difficulty in connection with this because the Bill to which the Money Resolution relates has been issued twice. In the Explanatory Memorandum to the first issue of the Bill, it was stated that the annual cost consequent on the Bill covered by this Money Resolution would be £50,000. On the second publication of the Bill we were told in the Explanatory Memorandum that that was a mistake and the actual expenditure which might be expected annually under the Bill was very much nearer £500,000. There is a great difference between £50,000 and £500,000.
I think the Secretary of State has to offer some explanation on this point about how much money he expects will be expended under the Bill. He may have given an explanation in another place, but various hon. Members in this Committee have had no such explanation.
Mr. David Steel: Do I understand the hon. Member for Aberdeenshire, West (Mr. Hendry) to suggest that because he personally finds it inconvenient to attend a Committee Ministers and other hon. Members should stay up at this late hour to hear what he has to say?
Mr. Hendry: When the hon. Member has been in the House a little longer, he will discover that on occasion hon. Members have a plurality of duties.
The Chairman: Order. I hope that on discussion of this Resolution we shall not pursue the habits of hon. Members in attending or not attending Committees.
Mr. Hendry: I am obliged to you, Dr. King, but I hope that the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) will not interrupt.
The Chairman: The rebuke was addressed to both hon. Members, the interrupter and the hon. Member who has the Floor.
Mr. Hendry: I am obliged, Dr. King. I revert to the question of the actual expenditure anticipated under the Bill. The majority of hon. Members had no opportunity of hearing an explanation, and I
798
think that we are entitled to have one, of the discrepancy between the two issues of the Bill. The larger of the two sums mentioned is a very large sum, but some of us are doubtful whether it is the correct sum for this particular purpose. Some hon. Members who know about these things think it is inadequate. The right hon. Gentleman should tell us exactly how he arrived at the sum of £10 million. I have been unable to find any explanation of how it is made up. Presumably, it is for the purpose of enabling the Association to provide houses, but we have had no explanation in the House of how many houses it is intended to provide from this sum of £10 million and where they are to be—
1.0 a.m.
The Chairman: Order. I intervene delicately—I hesitate to intervene in matters concerning Scotland—but the Bill has just been referred to the Scottish Grand Committee, which, I understand, will be dealing with the points that the hon. Member is seeking to raise. I may be wrong.
Mr. Hendry: We have before us, Dr. King, a Resolution to authorise the payment out of the Treasury of a sum which, to all intents and purposes, is £10 million, because the authorised expenditure is being increased from £110 million to £120 million. My question to the Secretary of State is whether the figure of £10 million is the correct one and, if not, what the correct figure is. That is a financial point upon which we should get explanation at this stage, when this Committee of the House of Commons is authorising the expenditure out of the Treasury of such a vast sum of money.
I defer to your wishes, Dr. King—I do not want to go further in that matter—but we must see that we are getting value for this money as well as seeing that the sum is correct. I should like to know how the Secretary of State arrives at this figure. How much of this money for which he is asking is attributable to the increased costs in building houses in the last six months? That seems to me to be very relevant, too.
The Chairman: Order. I intervene very hesitantly. Is not the appropriate place for the hon. Member to raise this query the Scottish Standing Committee,

799
to which we have just referred the Bill whicn has had its Second Reading in the Scottish Grand Committee.
Mr. Hendry: I stand corrected, Dr. King. This Committee tonight, however, is being asked to authorise a large expenditure of money, and it is the duty of this Committee to examine the proposal and find out whether that money is the correct amount and whether it is being correctly spent.
There has been difficulty in connection with the two issues of the Bill about the amount of money which is required for annual expenditure. We have had no explanation whatever whether that is a correct amount, how the sum of £50,000 or £500,000 was spent, how much is due to interest charges, how much to administration and all that sort of thing. However, I defer to you in what you have said, Dr. King, and your delicate reproof to me. I do not want at this late hour to weary the Committee unnecessarily, but the Committee is entitled to an answer to the various questions which I have put.
The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): If I may do so briefly out of courtesy to him, I will reply to the hon. Member for Aberdeenshire, West (Mr. Hendry). If he looks at the proceedings of the Committee, which I too, read at 4.30 today, he will see at col. 6 and col. 53 a complete explanation of the points which he has raised.
The two points made by the hon. Member—the first, that the money may be inadequate, and the second, that a lot of money is involved—answer themselves. The simple explanation which my right hon. Friend the Secretary of State attempted to give in Committee—which I, too, could not attend but which, I thought, was adequate for anyone reading the proceedings of the Committee—shows that at the present rate, actual advances will reach the limit of £110 million towards the end of 1966.
If that were the simple problem facing the Government, the Bill would be unnecessary, but because of the Public Accounts Committee and its views it was felt that we had to introduce the Bill to meet the suggestion that in giving
800
approvals we would be able to go only as far as the end of 1965. In order not to impede the progress of the Scottish Special Housing Association, which every Member of the Committee applauds for its fine work, and the work which it was intended to do, the Bill has been brought in with, I thought, the agreement of all concerned.
As to an explanation of the £½ million referred to in the Explanatory and Financial Memorandum, I can only say that when the Bill was first printed, it was printed as "£500,00," with the last "0" missing from the sum.
Mr. William Yates: On a point of order. These figures are very important, and I do not think there is a sufficient number of Members present here to form a quorum to consider them.
The Chairman: I would be grateful if the hon. Member would speak up.
Mr. Yates: I was saying that—
The Chairman: Order. I do not address the reproach to the hon. Member in particular, but I have noticed that it is becoming a habit of many hon. Members not to speak up. It is important that the Chair, and, indeed, other hon. Members, should be able to hear an hon. Member when he is speaking.
Mr. Yates: I was pointing out, in view of the importance of the Money Resolution, that I did not think there were sufficient Members present. I understand now that there are. Therefore, I shall not pursue the point of order I was putting to the Chair. I regret that I intervened at that moment, and I should like to apologise to the Chair and to the Committee.
The Chairman: I am grateful to the hon. Member for not proceeding with the point.
Dr. Mabon: As I was saying, when the Bill was reprinted, because there was a printers' error in the Explanatory and Financial Memorandum, that error was corrected, and the figure properly set out, £500,000. The figure itself is an estimate made by the Government of what would be the ultimate addition to the annual housing Vote, when this £10 million capital authorisation is translated into houses and into rented houses

801
and becomes a charge on the annual housing Vote. It is the fairest calculation which can be made in the circumstances.
Question put and agreed to.
Resolved,
That, for the purposes of any Act of the present Session to increase the limit of the aggregate amount of advances which may be made to the Scottish Special Housing Association under proviso (i) to section 18(1) of the Housing (Scotland) Act 1962, it is expedient to authorise such increases in the sums which may be issued out of the Consolidated Fund, raised by borrowing, or paid or repaid into the Exchequer, or in any sums payable under section 1 or 19 of the said Act of 1962 out of moneys provided by Parliament, as may result from increasing to one hundred and twenty million pounds the limit imposed by the said proviso.
Resolution to be reported.
Report to be received this day.

SHIPBUILDING
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ifor Davies.]
1.8 a.m.
Mr. Stanley R. McMaster: I should like, first, to thank the Minister of State for coming along after a very busy day—I know that he has had a busy day at Southampton—and waiting until a late hour tonight to reply to me in this debate. Our time is very limited. Therefore, I should like to deal briefly and in order with two topics, shipping and shipbuilding.
With respect to shipping, the Government have a long history of assistance to the British shipping industry. This goes back to the First World War, following which we had the Trade Facilities and Irish Loan Guarantee Acts and other Acts of Parliament to give special assistance to the British shipping industry. Money was made available both by way of guarantee and loan for the British shipping industry, and this was followed by the scrap and build policy which lasted about two years, but this policy was not a great success in the inter-war period, and under the British Shipping Industry Act many ways to avoid the provisions were sought, such as purchase of old ships and scrapping those and replacing them with new ones, which, some claimed, led
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to surplus shipping tonnage and depressed freight rates.
The British shipping industry is today facing very severe troubles. The rate of profit has been cut to such a degree that the industry can hardly make any profit at all. I would suggest, therefore, that there is a strong case for some further aid to the industry. Not only are profit margins ridiculously low, but many of Britain's competitors enjoy special favour. Some are flying flags of convenience and enjoy exemption from tax; others enjoy special forms of subsidy and assistance.
In addition, many overseas countries assist their shipbuilding industry, either direct or indirectly. It has been suggested that the steel which goes into ships in Japan is subsidised because of the export element in the building. The Common Market countries are at present considering a direct subsidy of 10 per cent. for their shipbuilding industry.
Both these industries are of vital importance to this country. Not only do our shipowners earn about £80 million to £90 million, which assists our balance of trade, each year, but if the British shipping industry cannot survive against the competition which it is facing today, it has been estimated that we should have to spend about £250 million in carrying vital freights to and from these islands.
These are the considerations which I should like the Minister to bear in mind when he considers the suggestions which I should like now to make for the assistance of the industry. First of all, I would ask him to make as strong representations as he can to the Chancellor of the Exchequer, while the Finance Bill is being discussed, to see whether some concession could not be incorporated into those provisions which particularly affect the industry. The Corporation Tax and Capital Gains Tax are particularly heavy on shipowners. Secondly—again of great importance to our shipowners—I should like the Minister to consider whether the credit facilities at present available to British shipowners when they buy ships abroad cannot be extended to those shipowners when they buy them in this country.
The present state of trade is such that if a foreign shipowner buys his

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ship in Britain, he can get special assistance from E.C.G.D. and special assisted credit. This is not available to a British shipowner who buys a ship in Britain. We have seen some important orders—including the large Shell tankers—going abroad, and I would suggest that the Minister looks into this problem. He might also consider whether some form of special investment allowance were possible to encourage British shipowners to build in Britain. In 1964, 84 per cent. of the orders which came into British yards came from British shipowners. Our fleet is still the largest shipping fleet in the world, though it has been increasing at a much slower rate than the fleets of many foreign countries.
I should like the Minister to look into certain practices, such as flag discrimination, to consider whether strong countermeasures cannot be taken against countries adopting these practices, for example, Uruguay and others.
Finally, under this heading, I would like the Minister to give all the assistance he can to the British Shipping Research Association, which has done very good work in the past and which has lust developed, in co-operation with the British shipbuilders, a new type of bulk carrier.
It has been said that the Japanese, who are one of our strongest competitors, have designed and are designing better vessels than Britain is. I would like the Minister to encourage anything that will change this situation.
I feel that the Government can give further assistance to the shipbuilding industry, in addition to the measures which I have mentioned. These measures indirectly help the British shipbuilding industry. British shipping is one of our shipbuilding industry's biggest customers and the building industry is helped if the shipping industry is helped. Is it possible to give further aid to our shipbuilders so that they can face the competition from abroad and so remain in business?
The type of aid which I have mentioned includes not only direct help to the British ship owners but assistance under the Local Government Acts in areas such as Northern Ireland and Scotland, both of which the Minister recently visited. The money could be
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used in these areas to modernise the yards. Since the war many of our main competitors have been able to build fine new yards, whereas in Britain we have had a much slower modernisation programme and we have had to build on old foundations which are often not suitable for modern shipbuilding. More money should be invested in the shipbuilding industry to carry out further modernisation and to install new cranes which are necessary for modern methods of fabrication.
In addition, the Minister could help by providing assistance for the building of dry docks and other facilities which would enable British builders to compete for the very large orders which are being placed abroad, particularly in Japan.
I was glad that the Minister recently visited Harland and Wolff, which is in my constituency and in which I am particularly interested. This yard is of vital importance to the economy of Northern Ireland and employs some 12,000 men in Belfast. The yard has been modernised in the most ambitious manner over the past five years and, as a result, it has been most successful in getting new orders. The whole House will welcome the recent announcement that the order for a tanker for Sigval Bergesen, of 167,000 tons, the largest in the world, has been placed at Harland Wolff.
This reinforces my point that in Britain we have a shipbuilding industry which is second to none. The industry can build both specialist boats and passenger liners, vessels which require individual construction and the large bulk carriers and tankers in respect of which we are facing such strong competition from the Far East.
If we are able to build competitively a boat like that being built for Norway, is it not a pity that similar orders cannot be placed by British owners such as Shell? The suggestion is now being considered that the new dry dock to be built at Belfast should be enlarged. This may be the last chance to build in Belfast a dry dock large enough to take not only the tankers at this moment being built, and not only the new one for Norway, but the 200,000-tonners which, I believe, will be built in the near future and which will perhaps become the standard tankers of the future.

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It is now proposed that the dock should be 1,000 ft. long and 150 ft. wide. It is to be built on the last available site in Belfast for such a dry dock. I ask the Minister not be pound foolish and penny wise, but to take the opportunity to build a dry dock wide enough to take the biggest boats being built here and, if necessary, to leave the length—once built, a dry dock can always be lengthened, but it is very difficult to widen it—so that no matter how wide the boats become, the dock will be big enough to take them.
I ask the Minister to consider the various comments I have made and also to consider the difficult question of trade union relationships. There are many different unions in the shipyards—more than 20—with which the management has to deal. Although we have a great deal of skill at building boats in this country, we are sometimes hampered by demarcation and other arguments among the various unions. Perhaps the management is not as up to date and as modern as it could be. Nothing is ever perfect in this world and there is nothing that cannot be improved. I hope that the Geddes Committee will pay particular attention to this aspect of the problems facing our shipbuilders so that our yards can compete with those in the Far East.
Mr. James A. Kilfedder: Would not my hon. Friend agree that part of the difficulty which the shipyards face—and I am thinking particularly of the Belfast yard—is a sort of holier than thou attitude of the managements which makes them want to criticise the men they employ, but which at the same time prevents them from seeing their own defects? Although modernisation of the yards is very important, does not my hon. Friend agree that it has not been matched in the relationship between the men and the management, which too often puts the blame on the trade unions?
Mr. McMaster: I agree that the problems of trade union relations and public relations are among the most difficult we have to face. We have an unfortunate history, particularly of unemployment in our shipyards, but it would be a mistake to exaggerate the problems. We are the finest shipbuilders in the world and we will do damage to
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the yards if we get this difficulty out of proportion. There is scope for improvement on both sides, but we must keep the problem in proportion.
Mr. R. Chichester-Clark: I do not want to intervene for more than a moment. I want only to ask the Minister whether he has yet received tenders for the dry dock and to reinforce what has been said about the size of the dry dock which my hon. Friend the Member for Belfast, East (Mr. McMaster), who works so hard for the area with which he is concerned, mentioned in connection with the 167,000 ton tanker. Does that order in any way call into question the size, length and breadth, of the proposed dry dock?
1.25 a.m.
The Minister of State, Board of Trade (Mr. Roy Mason): This is an opportune moment for a debate on shipping and shipbuilding. I am sorry that it is only an Adjournment debate because there is so much to say at this moment of time. I received no evidence whatsoever of shipbuilding in Japan being directly subsidised. The hon. Member for Belfast, East (Mr. McMaster) referred to Shell tankers being ordered in Japan. I hope that he and the House will remember that the order was won on sheer competition. The German and British tenders were up to £¾ million more expensive than the Japanese were working to.
On the question of European subsidies for shipbuilding and the possibility that they may subsidise by 10 per cent.—it is only a suggestion which has been made so far; even if it were accepted, it would not be operative till 1967—I am not eager to see a subsidy race. This is not the answer to the future of British shipbuilding. The real answer is, as it was with the question of the Shell tankers, an increase in productivity in British yards. That is what I am eager to see done as quickly as possible.
The hon. Gentleman referred to various changes in taxation which he would like to see introduced to assist the British shipping industry. No doubt my right hon. Friend the Chancellor of the Exchequer will take careful note of the points the hon. Gentleman raised. The topics are almost sub judice because we are going through many of these questions

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on the Finance Bill. However, I can give the hon. Gentleman an assurance that these matters are subject to close scrutiny in the light of the Finance Bill's implications of all that is happening in shipping at present.
The hon. Gentleman expressed concern at the effects of flag discrimination on our shipping industry and, as a consequence, on our balance of payments. No doubt he had in mind the discrimination which has been exercised by Uruguay. This is the most recent discriminatory practice. The Government view with real concern the growing pressures towards flag discrimination. This may not yet be a worldwide problem, but in particular trades its effects can be serious. This is particularly true of Uruguay. Flag discrimination distorts the economics of shipping and impedes the free flow of trade. Goods are delayed while they await ships of particular flags. Storage and other costs are increased. Shipping costs rise because load factors are reduced and the quality of service suffers as a result.
So far on this question I think the hon. Gentleman and I are in agreement. We would both like to contain and, if possible, reduce the amount of flag discrimination that goes on. The problem is how to do it. Hitherto we have generally opposed flag discrimination by diplomatic protests and in negotiations on aid or finance, and we have had a number of successes. Wherever possible, we act in conjunction with the Governments of like-minded maritime nations, since we think that joint action of this sort will carry much more weight than individual protests.
The Uruguayan Government have been left in no doubt about the concern with which the Governments of the United Kingdom and other maritime countries view their discriminatory measures, both present and proposed. Indeed, as recently as 31st March a collective note of protest was delivered in Montevideo on behalf of the United Kingdom, eight other European Governments and Japan. At the moment we must await their reply. In the light of their reply, we shall consider with the other countries concerned what action we should take.
Gloomy predictions are often made about the prospects for our shipbuilding industry in general and that in Northern
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Ireland in particular, but I cannot accept that they accord with the facts. Indeed, it is a disservice to the industry to imply that it has not a great deal to be proud of, not only in the past but also in the present.
What are the facts about the current position of British shipbuilding? Briefly, our industry is second to none in the quality and variety of its products. In recent months it has been winning, in the face of fierce competition, a most encouraging flow of orders from both home and overseas purchasers. During the first four months of 1965 new orders totalled 528,000 gross tons, as against 309,000 gross tons in the comparable period of 1964. Since the end of April orders for some 185,000 gross tons have been reported—all for export—including the order which Harland and Wolff has secured from Norway for the largest tanker ordered to date. More important, new orders exceeded completions by a considerable margin, even though the latter have been running at an unusually high level.
As a result, by the end of March the industry's total order book had risen to 2½ million gross tons, the highest since 1961, when the last of the post-Suez backlog was still being worked off. The marked upswing of our fortunes in the world export market is especially gratifying. Since the beginning of this year 17 firm export orders totalling 392,000 gross tons have been announced. This represents a substantial and encouraging improvement in the export performance of British shipyards in comparison with earlier years. Indeed, the industry has already, in less than five months, booked more than three times the volume of total export orders secured in the whole of 1964. Furthermore, export orders so far this year are well over the 1963 total, itself the best year for export orders since 1957.
There can be no doubt—and the industry itself has readily acknowledged the fact—that the Government's measures to help exports made a substantial contribution towards this splendid achievement. Of especial benefit to the shipbuilding industry have been the arrangements to provide export finance for capital goods, including ships, at a fixed rate of interest. Extension of the bank guarantee facilities has also helped.

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The Government's measures have enabled British shipbuilders to offer their overseas customers credit terms which compare favourably with those available from other shipbuilding countries, and this, in particular, has paid divdends.
Since the introduction of the new arrangements in January, export orders totalling nearly 400,000 gross tons and worth over £30 million have been booked, while shipyards report that the volume of new inquiries from abroad has doubled. Moreover, E.C.G.D. currently has around 80 inquiries in respect of business worth about £120 million in various stages of negotiation.
It is particularly pleasing to note in addition to all that the recent interest of the Norwegians once again in British shipbuilding. They are old traditonal customers of British shipyards and they are starting to order afresh here. The old ties with the Scandinavian market will, I believe. have been strengthened by the sales campaign mounted by the industry with the Board of Trade's support at the recent International Shipping Exhibition in Oslo. Twenty-nine British shipyards were represented at the Exhibition, and I was most impressed to see during my visit to Oslo the effort they were making. I have every hope that their efforts there will lead to a new increase in export orders for ships from Norway.
I make no apology to hon. Members for dwelling at length on this question of shipbuilding exports. The balance of payments difficulties which the Government have had to sort out can only be solved by a sustained improvement in exports. The shipbuilding industry is to be congratulated on its contribution. As a result, shipyard activty is now at a very high level and this is likely to continue for some time to come. Many yards are acutely short of skilled workers, both in the steelwork and fitting out trades. The problem for some yards is to keep to their launching and delivery schedules. I know that the industry appreciates the importance of this and I trust that both sides of the industry will co-operate to see that these dates are kept, for in present conditions delivery can be as important as price in so highly competitive a market. Moreover, failure to meet agreed delivery dates, particularly in the case of foreign customers, can
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not only tarnish the image of British shipbuilding, but also prejudice our exports of capital goods generally.
Before I leave the story of the industry's recent achievements, I must say a special word about the industry in Northern Ireland. Harland and Wolff, as the hon. Gentleman has mentioned, has just secured an order worth nearly £5 million for a 167,000 deadweight tons tanker for a Norwegian shipowner. This will be the largest tanker on order anywhere in the world and by far the biggest to date built in the United Kingdom. Harland and Wolff deserves the warmest congratulations on its spectacular achievement. In addition to making a substantial contribution to our balance of payments, the order is further evidence of the confident challenge presented by the United Kingdom shipbuilding industry in world markets. I have seen the yard. I have seen its reorganisation. I particularly visited the Musgrave yard. I say to Harland and Wolff on its effort in capturing this order: well done indeed.
The order will also have a major impact on the Belfast yard's prospects and will have been good news to all engaged on shipbuilding in Northern Ireland. When added to the existing order book which, in addition to naval vessels, totals nearly a quarter of a million gross tons of merchant ships, the latest order will do much to ensure the jobs of shipyard workers for some time to come. This is indeed welcome news. because although unemployment among shipyard workers is at the lowest level for several years, shipbuilding as a major source of employment is of special importance in the economy of Northern Ireland. I shall be meeting hon. Members representing Northern Ireland constituencies later this morning and we will be able to discuss the position of shipbuilding in Belfast in more detail. The dry dock tenders have not vet been received and I cannot add anything more on the subject. It is still under discussion and nothing yet has been finalised.
I ought to say something more about the industry, especially now that we have set up the Geddes Committee. It may seem strange, against this background, that the Government should have set up the Shipbuilding Inquiry Committee under

811
the chairmanship of Mr. Reay Geddes. There are certain factors in the present situation which neither those engaged in the industry nor the Government can afford to neglect. The past pattern of this industry has been one of large fluctuations in the order book and the level of activity in the yards. At one time the industry has been prosperous and at another it has seen hard times.
At present, although the orders and level of activity are high, the industry has not reached that level of prosperity for which it hoped. Neither the return on investment nor the return to the workers as a result of the efforts made to get orders and to produce the good ships for which the industry is noted has reached a satisfactory level. World shipbuilding capacity is growing fast, probably faster than demand, and the problem is to ensure that while so many yards have more work on hand than they have had for some time the industry can organise itself to meet the challenge of world competition.
What the industry must seek, and what the Government want to help it to seek, is security, not the security of the feather-
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bed but the security which comes of confidence in its ability to compete. I want to get rid of the casual time that attaches to the industry. That is one of my major aims. I hope that the Committee will be able to make its recommendations for action by employers, workers and the Government early next year. I understand that it is making good progress and that it has already stressed to the industry its hope that its establishment will not impose a pause on the industry. It is certainly the Government's wish that the industry should redouble its efforts to prepare for the future as a matter of urgency. The Committee's Report will be of much more value if the industry has already faced the problems ahead and started on the road to their solution. Among the needs of the industry in securing its future prosperity—
The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-two minutes to Two o'clock.