§ 8.45 p.m.
§ Mrs. ThatcherI beg to move Amendment No. 194, in page 22, line 37, at the end to insert:
(2) If on an application made by any individual for the purpose, before 6th April 1967 in respect of the year 1965–66, the applicant proves to the satisfaction of the General Commissioners—When I spoke on Second Reading I referred to the possibility that we would put down an Amendment in these terms. The Amendment is designed to relieve those who but for extra dividends would have had relief under Section 211 of the Income Tax Act, which gives relief on unearned investment income where a taxpayer or his wife is over 65, or under Section 15(2) of the Finance Act, 1952, which gives similar relief for small incomes of under £450, or Section 13 of the 1957 Act, which gives age exemption relief for those of 65 and over when the income is £390 for a single person or £625 for a married couple. It is quite clear that if these people received a rather larger number of dividends before the turn of the year than was normal, the relief to which they would otherwise be entitled would be nullified by the extra dividends.the General Commissioners shall adjust his liability to income tax for that year and the following year so as to give such relief as may be just having regard to all the circumstances and in particular to the amount of any liability which would have arisen if
- (a) that as respects any assets, in consequence of the operation of the provisions of this Act which require that any income which is chargeable with income tax by way of deduction shall be deemed to be the income of the year in which it is receivable, the income from those assets as estimated for the purpose of income tax for that year represents more than the income which would be attributable to a period of one full year if the income were deemed to have accrued from day to day; and
- (b) that in consequence, his income is above the limits within which he could otherwise have obtained relief under one or more of the following provisions:—
- (i) section 211(2) or (3) of the Income Tax Act 1952 (which refers to earned income and old age reliefs) as amended,
- (ii) section 13 of the Finance Act 1957 (which refers to relief for persons over 65 with small incomes) as amended,
- (iii) section 15(2) of the Finance Act 1952 (which refers to relief for small incomes) as amended,
- (i) the income from such assets were deemed to have accrued from day to day and to have been apportioned accordingly and
151 - (ii) the income so deemed to have been apportioned had been treated as part of his total income for the purposes of income tax.
The Chief Secretary is aware that, apart from this year, apparently if a similar situation arose for a Surtax payer he would apply to have a kind of averaging made under Section 238 of the 1952 Act. Under that Section the effect would be that his income would be averaged over the two years. The Commissioners could give such relief to the Surtax payer as they deemed just. We are asking for a similar averaging over last year and this year to apply to those who otherwise would have got special relief either because they are old or their incomes are very small.
Perhaps this could be pleaded best in the terms of someone who otherwise would lose relief unless an Amendment of this kind is made. There was a letter in the Financial Times on 9th May, 1966. I hope that the fact it was written to the Financial Times will not damnify the writer in the eyes of the Chief Secretary. I am sure that he is a devoted reader of the Financial Times, albeit that that is not a newspaper to which those who are pleading poverty normally write.
§ Mr. Harold LeverThe editor of the Financial Times can hardly stand in need of the warning which the hon. Lady is giving to my right hon. Friend.
§ Mrs. ThatcherI hope the fact that the letter was written to the Financial Times and not to the Daily Mirror will support the case I am making. The paragraph, after giving an example, was as follows:
The retired person entitled to age relief on an income of £900 fares worse. Not only is his age relief nullified for 1965–66, but his income for 1966–67 will be reduced to about £540, and his repayment claim for 1966–67 will also be drastically reduced.I hope Mr. Callaghan will see some very good reason to avoid penalising the old folk of receiving the unsolicited extra dividends of 1965–66.The Chief Secretary can probably see what the effect of the Amendment would be. Without the Amendment, a person who went just over the limits for age relief would be denied relief this year. With the Amendment, he may get relief this year and also get relief next year. I hope that the right hon. Gentleman will be prepared to be as generous as possible to those who, through no fault of their own, may be put in a rather bad position as a result of the limits imposed by these Clauses.
§ Mr. DiamondI am invited to consider the bad position—so the hon. Lady says—of certain individuals who have received a greater income than they had expected to receive because they have had a greater distribution of dividends from certain companies in which they are shareholders. I do not know that we can necessarily call this a bad position. I am perfectly prepared to look sympathetically at any position, but first we should get our adjectives right.
All that is happening here is that the hon. Lady proposes that a new arrangement should apply for one particular year, in relation to three income limits, which has never applied before and which she does not propose should ever apply again. She proposes that it should apply just for this one particular year, although it has never been the case that in arriving at these reliefs one has done other than take account of the total income.
The total income can vary for a whole host of reasons. One takes account of the total income. The total dividend income can vary -for a whole host of reasons. It can vary in the next year and in the year after that. It has never been the practice under Tory Governments or under this Government to take 153 account of variations in income when dealing with the calculation of these reliefs.
Therefore, I am afraid that, for the good reasons I have already indicated, I cannot recommend to the Committee that we should depart from what has been the established practice. I do not know whether the hon. Lady wants me to deal with the Clause as a whole. Perhaps I can deal with it on the Question "That the Clause stand part of the Bill". On the proposal she makes, there is no reason to treat the matter as involving any special hardship. All that is happening is that people with small incomes have incomes which are slightly less small than they expected them to be and they are in no worse position but in a rather better position than they had expected to be in. All that is proposed in the Clause is that the law as it has always applied over the years should continue to apply.
§ Mrs. ThatcherThe Chief Secretary seems a little perturbed that the Amendment extends only to dividends declared this last year. If it will make the right hon. Gentleman any happier, I will extend the Amendment indefinitely. If that would lead him to grant my request, I should be only too happy to do so. I thought that the chances of getting the Amendment accepted would be greater if I confined it to the special circumstances of last year.
The right hon. Gentleman knows that this last year has been a special year. Indeed, he spent a long time last year laying down precise circumstances in which dividends should be allowed. I hope that he will not deny that this immediate past year has been a special year. It is true that some of these people may have a higher gross income, but because they were on the margins of relief and because relief is therefore withdrawn they might have a lower net income. So there is the ridiculous position that they have more dividends but if they are just above the marginal relief limit they might have a lower net income. Taking the two-year period, that may well be so. They could in fact over the two-year period have a lower net income taking one year with another.
154 I therefore hope that the Chief Secretary will consider their position sympathetically. There are special circumstances this year. A number of his professional colleagues have pointed out that no relief is to be given to those who hitherto have been on the margins for age relief. I hope that the Chief Secretary will further consider the Amendment.
§ Mr. Harold LeverI should like to intervene in the hope of persuading the hon. Lady the Member for Finchley (Mrs. Thatcher) that she is wrong.
The Clause says that certain reliefs normally available to Surtax payers for averaging income shall be taken away this year because their dividend income was inflated to the advantage of the companies in which they are shareholders by very substantial concessions which were given by the Chancellor. Whether or not the Chancellor is right, whether because they got these advantages they should not have the advantage of the Surtax averaging normally available, we shall consider in a moment. He may be wrong. There may be no case for withdrawing the privilege from the Surtax payer, but there is certainly no case for giving an advantage to the particular sections of taxpayer whom the hon. Lady has in mind.
The income that is given this year is partly to their advantage, but in every year they are denied the averaging provisions of the Surtax arrangements. In this particular year the reliefs which are granted, and granted only because their income is below a certain level, cannot apply simply because their income has gone above the level to which those reliefs apply. The fact that they did so by reason of the advantageous dividend encouraged by reliefs given by the Chancellor last year is surely no reason for giving them special treatment this year.
I hope the hon. Lady will abandon the Amendment and turn to the more substantial point, which is whether the Chancellor is justified in withdrawing a relief from the Surtax payer, which is an interesting point, but it cannot be a case for giving special relief dependent upon a person's income in respect of dividends which are very much to his advantage in this year.
§ Question put, That those words be there inserted: —
156§ The Committee divided: Ayes 125, Noes, 225.
157| Division No. 29.] | AYES | [8.58 p.m |
| Alison, Michael (Barkston Ash) | Glover, Sir Douglas | Miscampbell, Norman |
| Astor, John | Goodhew, Victor | Monro, Hector |
| Awdry, Daniel | Gower, Raymond | Munro-Lucas-Tooth, Sir Hugh |
| Barber, Rt. Hn. Anthony | Grant, Anthony | Nabarro, Sir Gerald |
| Batsford, Brian | Griffiths, Eldon (Bury St. Edmunds) | Neave, Airey |
| Bell, Ronald | Gurden, Harold | Noble, Rt. Hn. Michael |
| Bennett, Dr. Reginald (Cos. & Fhm) | Hall-Davis, A. G. F. | Nott, John |
| Berry, Hn. Anthony | Harris, Frederic (Croydon, N.W.) | Onslow, Cranley |
| Biffen, John | Hawkins, Paul | Osborn, John (Hallam) |
| Black, Sir Cyril | Heald, Rt. Hn. Sir Lionel | Page, Graham (Crosby) |
| Blaker, Peter | Heath, Rt. Hn. Edward | Page, John (Harrow, W.) |
| Body, Richard | Heseltine, Michael | Peel, John |
| Boyd-Carpenter, Rt. Hn. John | Higgins, Terence L. | Pounder, Rafton |
| Boyle, Rt. Hn. Sir Edward | Hill, J. E. B. | Powell, Rt. Hn. J. Enoch |
| Brinton, Sir Tatton | Hirst, Geoffrey | Price, David (Eastleigh) |
| Brown, Sir Edward (Bath) | Hooson, Rt. Hn. Sir John | Prior, J. M. L. |
| Buchanan-Smith, Alick (Angus, N&M) | Hogg, Rt. Hn. Quintin | Pym, Francis |
| Buck, Antony (Colchester) | Holland, Philip | Ramsden, Rt. Hn. James |
| Bullus, Sir Eric | Hordern, Peter | Renton, Rt. Hn. Sir David |
| Burden, F. A. | Hornby, Richard | Roots, William |
| Campbell, Gordon | Howell, David (Guildford) | Rossi, Hugh (Hornsey) |
| Carlisle, Mark | Hutchison, Michael Clark | Scott, Nicholas |
| Chichester-Clark, R. | Jenkin, Patrick (Woodford) | Sinclair, Sir George |
| Clegg, Walter | Jopling, Michael | Stainton, Keith |
| Cooke, Robert | Kimball, Marcus | Talbot, John E. |
| Cooper-Key, Sir Neill | Langford-Holt, Sir John | Taylor, Edward M. (G'gow,Cathcart) |
| Corfield, F. V. | Legge-Bourke, Sir Harry | Teeling, Sir William |
| Craddock, Sir Beresford (Spelthorne) | Lewis, Kenneth (Rutland) | Temple, John M. |
| Crouch, David | Lloyd, Ian (P'tsm'th, Langstone) | Thatcher, Mrs. Margaret |
| Crowder, F. P. | Longden, Gilbert | Turton, Rt. Hn. R. H. |
| Dalkeith, Earl of | Loveys, W. H. | Van Straubenzee, W. R. |
| Dean, Paul (Somerset, N.) | MacArthur, Ian | Ward, Dame Irene |
| Deedes, Rt. Hn. w. F. (Ashford) | Maclean, Sir Fitzroy | Weatherill, Bernard |
| Dodds-Parker, Douglas | Macleod, Rt. Hn. lain | Webster, David |
| Doughty, Charles | McMaster, Stanley | Wells, John (Maidstone) |
| Eden, Sir John | Maddan, Martin | Whitelaw, William |
| Elliot, Capt. Walter (Carshalton) | Marten, Neil | Wills, Sir Gerald (Bridgwater) |
| Elliott, R.W.(N'c'tle-upon-Tyne,N.) | Mathew, Robert | Wilson, Geoffrey (Truro) |
| Errington, Sir Eric | Maude, Angus | Wolrige-Gordon, Patrick |
| Eyre, Reginald | Maxwell-Hyslop, R. J. | |
| Farr, John | Maydon, Lt.-Cmdr, S. L. C. | TELLERS FOR THE AYES |
| Fletcher-Cooke, Charles | Mills, Peter (Terrington) | Mr. Jasper More and |
| Fortescue, Tim | Mills, Stratton (Belfast, N.) | Mr. George Younger. |
| NOES | ||
| Allaun, Frank (Salford, E.) | Coe, Denis | Fletcher, Raymond (Ilkeston) |
| Alldritt, Walter | Coleman, Donald | Fletcher, Ted (Darlington) |
| Allen, Scholefield | Corbet, Mrs. Freda | Floud, Bernard |
| Archer, Peter | Craddock, George (Bradford, S.) | Foley, Maurice |
| Armstrong, Ernest | Cronin, John | Forrester, John |
| Ashley, Jack | Crossman, Rt. Hn. Richard | Fowler, Gerry |
| Atkins, Ronald (Preston, N.) | Cullen, Mrs. Alice | Fraser, John (Norwood) |
| Barnett, Joel | Dalyell, Tarn | Fraser, Rt. Hn. Tom (Hamilton) |
| Baxter, William | Davidson, James (Aberdeenshire, W.) | Galpern, Sir Myer |
| Benn, Rt. Hn. Anthony Wedgwood | Davies, Dr. Ernest (Stretford) | Gardner, A. J. |
| Bennett, James (G'gow, Bridgeton) | Davies, Harold (Leek) | Garrow, Alex |
| Bessell, Peter | Davies, Robert (Cambridge) | Ginsburg, David |
| Bidwell, Sydney | Dell, Edmund | Gordon Walker, Rt. Hn. P. C. |
| Blackburn, F. | Dempsey, James | Gourlay, Harry |
| Blenkinsop, Arthur | Dewar, Donald | Gray, Dr. Hugh |
| Boardman, H. | Diamond, Rt. Hn. John | Griffiths, Rt. Hn. James (Llanelly) |
| Booth, Albert | Dickens, James | Grimond, Rt. Hn. J. |
| Braddock, Mrs. E. M. | Dobson, Ray | Hamilton, James (Bothwell) |
| Broughton, Dr. A. D. D. | Doig, Peter | Hamilton, William (Fife, W.) |
| Brown, Rt. Hn. George (Belper) | Dunnett, Jack | Hamling, William |
| Brown,Bob(N'c'tle-upon-Tyne,W) | Dunwoody, Mrs. Gwyneth (Exeter) | Hannan, William |
| Brown, R. W. (Shoreditch & F'bury) | Eadie, Alex | Harper, Joseph |
| Buchan, Norman | Edwards, Robert (Bilston) | Hazell, Bert |
| Buchanan, Richard (G'gow, Sp'burn) | Edwards, William (Merioneth) | Henig, Stanley |
| Butler, Herbert (Hackney, C.) | Ellis, John | Herbison, Rt. Hn. Margaret |
| Butler, Mrs. Joyce (Wood Green) | English, Michael | Hilton, W. S. |
| Cant, R. B. | Ennals, David | Hobden, Dennis (Brighton, K'town) |
| Carmichael, Neil | Evans, Albert (Islington, S.W.) | Hooley, Frank |
| Carter-Jones, Lewis | Evans, loan L. (Birm'h'm, Yardley) | Hooson, Emlyn |
| Castle, Rt. Hn. Barbara | Faulds, Andrew | Horner, John |
| Chapman, Donald | Femyhough, E. | Howarth, Harry (Wellingborough) |
| Howarth, Robert (Bolton, E.) | MacPherson, Malcolm | Roberts, Albert (Normanton) |
| Howie, W. | Mahon, Peter (Preston, S.) | Roberts, Goronwy (Caernarvon) |
| Hoy, James | Mahon, Simon (Bootle) | Robinson, W. O. J. (Walth'stow, E.) |
| Hughes, Rt, Hn. Cledwyn (Anglesey) | Manuel, Archie | Ross, Rt. Hn. William |
| Hughes, Emrys (Ayrshire, S.) | Mapp, Charles | Rowland, Christopher (Meriden) |
| Hughes, Roy (Newport) | Marquand, David | Rowlands, E. (Cardiff, N.) |
| Hunter, Adam | Marsh, Rt. Hn. Richard | Ryan, John |
| Hynd, John | Mason, Roy | Shaw, Arnold (Ilford, S.) |
| Irvine, A. J. (Edge Hill) | Mellish, Robert | Sheldon, Robert |
| Jackson, Colin (B'h'se & Spenb'gh) | Mrllan, Bruce | Short, Rt. Hn. Edward (N'c' tle-u-Tyne) |
| Jackson, Peter M. (High Peak) | Miller, Dr. M. S. | Silkin, John (Deptford) |
| Janner, Sir Barnett | Mitchell, R. C. (S'th'pton, Test) | Silkin, S. C. (Dulwich) |
| Jeger, George (Goole) | Morgan, Elystan (Cardiganshire) | Silverman, Julius (Aston) |
| Jeger,Mrs.Lena(H'b'n&St.P'cras,S.) | Morris, Charles R. (Openshaw) | Slater, Joseph |
| Jenkins, Rt. Hn, Roy (Stechford) | Moyle, Roland | Small, William |
| Johnson, Carol (Lewisham, S.) | Mulley, Rt. Hn. Frederick | Spriggs, Leslie |
| Jonhson, James (K'ston-on-Hull, W.) | Neal, Harold | Steel, David (Roxburgh) |
| Johnston, Russell (Inverness) | Newens, Stan | Steele, Thomas (Dunbartonshire, W.) |
| Jones, Dan (Burnley) | Noel-Baker, Francis (Swindon) | Swain, Thomas |
| Jones, Rt.Hn.Sir Elwyn(W.Ham,S.) | Noel-Baker, Rt. Hn.Philip(Derby,S.) | Symonds, J. B. |
| Jones, J. Idwal (Wrexham) | Oakes, Gordon | Thorpe, Jeremy |
| Judd, Frank | Ogden, Eric | Tinn, James |
| Kenyon, Clifford | O'Malley, Brian | Tomney, Frank |
| Kerr, Mrs. Anne (R'ter & Chatham) | Orbach, Maurice | Tuck, Raphael |
| Kerr, Dr. David (W'worth, Central) | Oswald, Thomas | Urwin, T. W. |
| Kerr, Russell (Feltham) | Owen, Or. David (Plymouth, S'tn) | Varley, Eric G. |
| Lawson, George | Padley, Walter | Wainwright, Richard (Colne Valley) |
| Lee, John (Reading) | Page, Derek (King's Lynn) | Walden, Brian (All Saints) |
| Lever, Harold (Cheetham) | Pardoe, J. | Walker, Harold (Doncaster) |
| Lewis, Ron (Carlisle) | Parker, John (Dagenham) | Wallace, George |
| Lomas, Kenneth | Parkyn, Brian (Bedford) | Watkins, David (Consett) |
| Luard, Evan | Pavitt, Laurence | Wellbeloved, James |
| Lubbock, Eric | Pearson, Arthur (Pontypridd) | Wells, William (Walsall, N.) |
| Lyon, Alexander W. (York) | Peart, Rt. Hn. Fred | Williams, Alan (Swansea, W.) |
| Lyons, Edward (Bradford, E.) | Pentland, Norman | Williams, Alan Lee (Hornchurch) |
| Mahon, Dr. J. Dickson | Perry, George H. (Nottingham, S.) | Willis, George (Edinburgh, E.) |
| McBride, Neil | Prentice, Rt. Hn. R. E. | Wilson, William (Coventry, S.) |
| McCann, John | Price, Christopher (Perry Barr) | Winnick, David |
| MacDermot, Niall | Price, Thomas (Westhoughton) | Winterbottom, R. E. |
| Macdonald, A. H. | Price, William (Rugby) | Woodburn, Rt. Hn. A. |
| Mackenzie, Alasdair(Ross&Crom'ty) | Randall, Harry | Woof, Robert |
| Mackenzie, Gregor (Rutherglen) | Rankin, John | Yates, Victor |
| Mackintosh, John P. | Redhead, Edward | |
| Maclennan, Robert | Rees, Merlyn | TELLERS FOR THE NOES: |
| McMillan, Tom (Glasgow, C.) | Rhodes, Geoffrey | Mr. Alan Fitch and |
| Mr. Edward Bishop. |
§ Question proposed, That the Clause stand part of the Bill.
§ Mrs. ThatcherWe now come to the question of Surtax. Many small points arise on this, and I want to refer to one before coming to the main principle that lies behind the Clause. It acknowledges that ordinary preference dividends are outside its scope, but it makes no reference to participating preference dividends. A tricky logical position therefore arises. Although preference dividends are outside the scope of the Clause, participating preference dividends upon which no more than the basic amount of dividend has been paid are caught.
This will obviously be seriously to the disadvantage of many people, among whom are those who have had participating preference shares for many years but have had no dividends from them for several years, when suddenly the company concerned found itself in a position to pay the arrears of dividends and paid the full arrears of the basic amount of 158 dividend last year. The whole amount is then caught by the Clause.
The Chief Secretary recognises that ordinary preference dividends are outside the scope of the Clause, and I submit that participating preference dividends should be caught to the extent, and no more than to the extent, that the basic rate of dividend has been paid. Had the Amendment covering this point been selected I would have hoped that it would have been accepted, which would have made for a happy atmosphere for the rest of our debate on the Clause and, possibly, on the whole Bill.
I turn now to the main features of the Clause itself. As the right hon. Gentleman knows, it is tied up with Section 83 of the Finance Act, 1965, which was the anti-forestalling provision to prevent companies from avoiding Schedule F by declaring more than a standard amount of dividend. For that purpose, the standard and the excess were minutely defined, and on 15 occasions the Treasury itself sought to amend its provisions.
159 The ordinary taxpayer, therefore, assumed that, in the end, the Section was right and that the consequences of declaring dividends would be in accordance with the law which Parliament so carefully laid down.
The dividends to which the Clause applies were either within the limits laid down by Section 83 of the Finance Act so that there could be no possible justification for penalising the shareholder because Parliament said that those limits were all right, or, alternatively, if they were not within the limits, they became excess dividends and were deemed to be declared on the first day of the financial year this year and in consequence they have suffered, or will suffer, Schedule F tax. Thus, the Chancellor has got his pound of flesh if they were excess dividends. The position is, therefore, this: either the dividends were all right according to the law laid down by Parliament last year, or they were excess dividends, in which case they have been subject to the extra slice of tax under Schedule F.
When Section 83 was going through Parliament, at no time that I can remember or can trace did the Chancellor, who is never short of warnings, threaten to suspend Section 238. Now we find that non-Surtax paying shareholders will benefit from these dividends. Examples are pension funds, trade union funds and the like. If someone draws a pension from a former employment, that is all right. If, on the other hand, he is self-employed, has to accumulate his own assets, and now has an annual income only twice as high as the average industrial earnings in manufacturing industry, he is made to suffer. It is only the Surtax payers who are being made to suffer through the increased dividends covered by this Clause. It seems that the Chancellor is using the fiscal system in this case against a certain class of taxpayer regardless of whether that taxpayer had any influence over the declaration of the dividend and regardless of whether that dividend was either the standard or the excess under Section 83.
One of the principal objectionable features of the Clause is that it is retrospective in action though not in form. This is the first occasion on this Finance Bill when we have to discuss retrospection, although it will come up several 160 times because there are several retrospective Clauses in it.
As the Chief Secretary knows, there are certain fundamental rules in our system of taxation. One is that there should be no taxation unless the liability is clearly imposed by Statute. This tenet was honoured for many years, but, as taxes became higher and the system more complicated, people within the scope of a tax managed to put themselves outside its strict legislative provisions. In the following year's Finance Bill, therefore, those people were brought within the scope by a new strictly defined provision, but always the new provision to close the loophole was strictly defined and usually it was not retrospective in effect. Usually, it did not need to be retrospective because, as we have Finance Bills every year, most of the cards are stacked high in the hands of the Treasury.
Sometimes, the new provision did not succeed in closing the loophole completely. Once again an Amendment had to be made in the succeeding year. But then a new feature came. An attempt was made at what I shall call legislation by warning—the warning that if the new provision did not close the loophole, retrospective provision would be made. But even in those cases—and I dislike legislation by warning intensely—a clear warning was always given, and that warning related to precise circumstances.
9.15 p.m.
From my viewpoint, I should have preferred no retrospection even following a warning. It would have been far better if the House of Commons had arranged it so that if money was escaping through a certain tax loophole, we could have had either a small Finance Bill or some other way of getting at that escape straight away without having to wait for another Finance Bill. Then there would have been no need whatever for retrospection.
However, all these fundamental rules, such as the rule about strict liability or strict warning, have been part of our system of taxation, and upon them respect for fiscal law has been founded. It is because we have been so careful to adhere to these principles that, on the whole, our taxpayer has respect for the law, a respect which is not always present in countries on the Continent. People have paid their taxes with comparatively 161 few grumbles believing that they were levied absolutely honestly and also believing that their liabilities could be calculated at any given moment.
Now we have a completely new factor in retrospective legislation in this Clause. The best thing I can do is to quote from the British Tax Review of April, 1966 which says on page 74:
The suspension is clearly retrospective legislation, and means visiting the sins, if they can be so described, of companies on their Surtax-paying members. Hitherto, retrospective legislation has been reserved for cases where some adequate warning has been given; it is new for it to be imposed on actions which Parliament clearly authorised one year previously.I use the words of someone still practising at law rather than my own, because I no longer practise, hoping that the Chief Secretary will take them very seriously, indeed.
§ Mr, DiamondThere are no other words which the hon. Lady could use which are half as persuasive as her own.
§ Mrs. ThatcherI hope, then, that the Chief Secretary will be more forthcoming in his sympathy on this Clause than he was on certain past Amendments.
That was a very serious accusation, and it arises from very serious action taken by the Chancellor. I repeat that last sentence:
it is new for it to be imposed on actions which Parliament clearly authorised one year previously.If the Clause goes through, it will mean that no one can rely ever again on what we say this year, for it may well be disavowed retrospectively next year. This would introduce into our taxation system a completely new and bad element.
§ Mr. Harold LeverBefore the hon. Lady enlarges on that point, would she assist me to understand why she says that the Clause penalises only a certain class of dividends authorised by Parliament? Does it not have the same effect on all dividends, whatever their origin?
§ Mrs. ThatcherYes. I am sorry. If I said that, I misled the hon. Gentleman. I believe that I said that it penalises only those in receipt of dividends who are Surtax payers.
§ Mr. LeverThe hon. Lady said that it penalised dividends which were specifically 162 authorised by the previous Finance Bill. I cannot read anything in the Clause which justifies that assertion.
§ Mrs. ThatcherIt penalises dividends more than those authorised in the last Finance Bill. The reasons which the Chancellor gave in his Budget speech, as I understood it, were directed particularly to dividends which had arisen through Section 83 of the last Finance Act. Last month, referring to this provision in relation to Corporation Tax, the Chancellor said:
Many companies paid extra dividends last year for tax reasons, and I see no reason to give the recipients Surtax relief as well."— [OFFICIAL REPORT, 3rd May, 1966; Vol 727, c. 1434.]The Chancellor had previously related this proposal as one which arose out of Corporation Tax. It was, therefore, reasonable to assume that it was the extra dividends declared under Section 83 of the Finance Act, 1965, which gave rise to putting this Clause into the Bill. However, in so far as that is correct, then my argument is clearly also correct—that dividends clearly authorised one year previously in a section on which companies were entitled to rely are now being taxed to an extra extent in the hands of Surtax payer through this Clause. Many companies would have taken the law as it was at the time—which hitherto has been a reasonable thing to do—and so, if they were declaring extra dividends, then some of their shareholders would be entitled to rely on Section 238 of the Income Tax Act, 1952.One goes on to another particular point. This Clause will go far wider than the dividends declared under Section 83 of the Finance Act, 1965. It will catch dividends which were declared before the beginning of the year or agreed to before the beginning of last year but happened to be paid last year and had nothing to do with tax avoidance or were not declared for tax reasons at all. In so far as that goes, it seems to me that there is no case for these dividends being caught by the Clause. They should never be within it.
Furthermore, in so far as dividends are given a clearance for tax purposes under Section 83(11) of the Finance Act, 1965, they clearly were not declared for tax reasons and should not be caught by the Clause. The Clause is retrospective 163 and very widely drawn because it catches dividends which were never declared for tax reasons and may have been declared even before the beginning of the year. In this way, the Government are destroying an excellent tax system which enables the Chancellor of the Exchequer to collect, as my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) said earlier, some £10,000 million a year without a good deal of trouble to taxpayers— and destroying that system for the sake of £3 million and a good deal of personal prejudice.
The Clause should not be in the Bill. We should vote it out, first, because it is retrospective and, secondly, because it goes far wider than the dividends which were declared in order to reduce the tax liability of the particular company. I hope that the Chief Secretary will give this serious consideration.
§ Mr. DiamondWe give most careful consideration to what the Opposition, and the hon. Lady on their behalf, say. The hon. Lady asked detailed points about fixed preference dividends, then challenged the justification of the Clause as a whole on merit and, finally, was most anxious about retrospective effect.
First, I will deal with the dividends which are caught and which are not caught. As she rightly said, one is concerned here with ordinary dividends and dividends of that same category—that is to say, participating preference dividends. What are not caught are dividends which are not of that category—fixed preference dividends and, by the same logic, interest on debentures.
The participating preference dividend, the hon. Lady goes on to argue, is a combination of a first slice of fixed dividend plus an additional slice of participating dividend. I cannot accept the hon. Lady's desired slicing, because the Statute itself, Section 238 of the Income Tax Act, 1952, refers to "the income" from those assets and not to part of the income from those assets. One has to take the whole of the income arising from a particular asset and there is therefore no question of attempting to divide the income from this asset in the notional sense of a fixed slice plus a participating slice.
The hon. Lady talked about Surtax payers being "made to suffer". Let 164 us see the extent to that which they are being made to suffer. It is true that what the Clause proposes to do is to withdraw for one year the spreading relief of the dividends received in 1965–66. I repeat that what one is withdrawing is only the spreading relief in respect of the income from ordinary and participating preference dividends. One is dealing with 1965–66, because after that year companies are required to pay Schedule F Income Tax in respect of dividends being declared. So, for any dividend which might have been paid after the date but which in fact perfectly legally was paid before the date, the company is saved 8s. 3d. in the £.
A company is owned by its shareholders jointly and the shareholders jointly therefore enjoy the benefit in the form of 8s. 3d. in the £ for every £'s worth of dividend which was declared in the year 1965–66 as opposed to the following year. In those cases where as a result of the additional dividend the marginal rate of Surtax goes up by 6d. or 1s.—and it may go up by 6d. and it may go up by 1s. and it is almost inconceivable that it could go up by more than that and the probability is that in the majority of cases it will be 6d. and in a number of cases it will be 1s.—in respect of action taken by the shareholders' company to save the company and its shareholders 8s. 3d. in the £, it is hardly correctly describing that to say that the Surtax payers are being "made to suffer", the hon. Lady's term.
The shareholders of this company are benefiting to the extent of 8s. 3d. in the £ and the Chancellor sees no good reason why in addition they should get Surtax relief which, by the process which has been previously described, would reduce the top marginal rate of the figure which it will now be to a figure 6d. or 1s. in the £ less. They will still be left with a benefit, split between themselves and their company, of either 7s. 3d. or 7s. 9d. in the £ benefit as against the Exchequer —perfectly properly and nobody is complaining; we are not dealing with the aspect of whether the dividends declared were in excess of the provisions of the Act. We are assuming that the dividends declared were within the provisions of the Act, but, nevertheless, we are saying —not out of pique or anything else, but as a matter of equitable tax treatment 165 and, incidentally, as a matter of avoiding excessive administrative difficulties from a whole host of tiny claims arising—that there is no need both to agree to the benefits of 8s. 3d. in the £ and also to agree to the spreading of the benefit of perhaps another 6d. or another 1s.
The Chancellor proposes to deal with the matter in this way for this one year, which is the only relevant year under consideration. I hope that the Committee will agree that this is reasonable and fair and not in any sense dictated by pique or any of the adjectives which have been used.
§ Mr. Stratton Mills (Belfast, North)Surely the basic flaw in the argument is that the benefit, if such it be, is owed to the company and all its shareholders, while this discriminatory provision applies only to certain shareholders who are in this range of tax.
§ 9.30 p.m.
§ Mr. DiamondI repeat, the company gets the benefit of 8s. 3d. in the £ for every £1 worth of dividend declared. The company is getting that benefit and every shareholder who shares in the reserves of the company is sharing in that benefit in a corporate sense.
The only question is whether certain shareholders should, in addition, get the benefit of the spread. The Chancellor does not see why they should have it both ways. The extra dividend was declared by the company in the interests of the shareholders. They got their dividend, they have had the additional money, they have benefited. If they had all been asked to a shareholders' meeting and it was put to them whether they would rather have a larger dividend or a smaller dividend, one can conjecture that the answer would be that they would prefer the larger dividend. There is therefore, no question of anybody being prejudiced or damaged. The 6d. or the 1s., as the case may be, is something that the Chancellor does not think that they should get in addition.
Perhaps I may now deal with the argument about retrospection. I hope that I may be forgiven for reverting to the last Clause for the sake only of illustrating the argument of what is and what is not retrospective legislation. As the hon. Lady the Member for Finchley 166 (Mrs. Thatcher) was good enough to point out, we have just repealed a Section in the Finance Act, 1965, and replaced it with another Section. Because we have repealed a Section of the 1965 Act in a relieving sense, we have—the Committee has just passed it—decided that the benefit should have retrospective effect to April, 1965. The benefit is a Surtax benefit in connection with covenanted payments. Within the last quarter of an hour, therefore, we have decided, as was appropriate, that there should be a Surtax benefit going back to 1965–66. Nobody commented on it. No person in the Committee, not even the hon. Lady, thought that this was being unjustly or excessively fair.
§ Mrs. ThatcherThe right hon. Gentleman is putting an extremely facile and false argument. To say that because we confer a benefit retrospectively we are justified in conferring a retrospective liability is nonsense. I think the less of the right hon. Gentleman for putting that to me from his exalted position at the Dispatch Box.
§ Mr. DiamondPerhaps the hon. Lady will be good enough to listen to the argument which I was about to propose. [Interruption.] If the hon. Lady does not want to listen, she is not compelled to do so, but perhaps she will do me the justice of listening to the argument before criticising it. Once again, she has put into my mouth words that I was not proposing to use. Last time, it was words which I had not used. Now, perhaps, we can get down to what I was going on to say.
I was drawing the attention of the Committee to the fact that we had altered a Surtax provision back to 1965–66. The reason for this is that 1965–66 Surtax is payable on 1st January, 1967. The relevant consideration is when the tax is payable. I am not making any kind of argument of the sort of which the hon. Lady thought I was making.
We are looking forward—we are not looking back—to 1st January, 1967, when certain Surtax is payable. We have agreed to this within the last 20 minutes.
§ Mr. Harold LeverBy his words "looking forward", my right hon. Friend is probably exaggerating in describing the feeling of those who are to pay.
§ Mr. DiamondMy hon. Friend will forgive me: I was looking forward from the point of view of a Treasury Minister. Perhaps I ought instead to say "having in mind a future date" when the payment would become due. That is exactly what is happening in this case under the Clause. We are affecting the 1965–66 Surtax which becomes payable on 1st January, 1967. The Budget is the normal opportunity for fixing the Surtax rate for the year, and that has always been the case. Until this year's Budget, no Surtax payer could have anticipated with any reliable degree of accuracy what his or her Surtax liability would be on 1st January, 1967. We are in exactly the same position. There is no argument of retrospection to answer.
§ Mr. Harold LeverI venture to add a word to what my right hon. Friend has said. On the retrospection point, despite any learned comments to the contrary and despite the fact that I have ceased to practise at the Bar, I must say that I agree with my right hon. Friend. When the hon. Member for Finchley (Mrs. Thatcher) reflects on it, she will agree that the point which she thought he was making, which was, as she rightly believed, a bad point, he was not making at all; otherwise he would have stood corrected.
There are other points of some importance which are worth discussing, apart from retrospection. It is asking a little too much of the Treasury, in the heat of battle of the kinds of debates that we had last year, to have foreseen in miscro-scopic detail all the possible consequences of Amendments favourable to the taxpayer. Though I suppose it would be a counsel of perfection that the Clause might have been incorporated in last year's Finance Bill, in my opinion it is dangerous folly to incite the taxpayer with the belief that he is the victim of retrospection. I venture to say, too, that we depend on a degree of co-operation from the taxpayer, and it is wrong that there should be put out from the Committee false notions of the reasons for our legislation.
The idea that this arose from the Chancellor's personal prejudice is completely misconceived. It was not the Opposition who forced upon him an Amendment which he was unable to 168 resist. It was his own sense of fair play and justice to shareholders that made him make the concession in the first instance which has caused these dividends to be free of Income Tax.
I want to say a word about the language which has been used when we have talked about penalising the people who have received the dividends. First of all, although the hon. Lady might think that I am being pedantic, she was wrong in the language which she used in saying that a particular dividend was penalised.
It is no use praying in aid what the Chancellor said. Whatever their origin or motivation, all divdends are treated alike by the Clause. Whether they were paid by the concession given in the last Finance Bill or in the ordinary course of events, all dividends get exactly the same treatment. Whatever else is said, the dividends are not penalised. They are all treated alike.
The hon. Lady is probably quite right that the motivation for the change in the law may be because of the concession made in the last Finance Bill, but that is different from saying that the dividends resulting from it are being penalised. They are not.
Is the Chancellor justified in being motivated by the concession contained in the last Finance Bill to withdraw the Surtax relief? After careful consideration, I am convinced that he is. To show my reason, I will point out the bad argument that was made from the Opposition benches either by the hon. Lady or by the right hon. Member for Enfield, West (Mr. Iain Macleod) at some stage of the Finance Bill.
The relief was contained in Section 238, which is being repealed. That is a Section which gives to the taxpayer the right to go before Special Commissioners and have such relief as they think just. It is a relief which depends upon the examination of the individual circumstances of the taxpayer. It is not a blanket relief.
Either the right hon. Member for Enfield, West or the hon. Lady used the argument that this was the reason for not withdrawing this relief, but, as I hope to persuade the Committee, I hope not unfairly, this is the reason why the relief has to be withdrawn, because it is a 169 relief which depends on the individual examination of each case.
In former days the number of cases which had to be individually examined was relatively few and could be reasonably coped with by the tax machine, but, as a result of the substantial concession made in last year's Finance Bill, the number of cases could probably be multiplied literally by 100 or 200 compared with the number of cases which occur in normal times.
§ Mr. Stratton MillsThis is a very interesting argument, but if the hon. Gentleman examines the Chancellor's speech he will find that this was not the argument used by the right hon. Gentleman who has invoked a form of penalty approach to get at the companies which forestalled the Budget.
§ Mr. LeverIt is unfair when the Chancellor is on his feet in a general debate on the Finance Bill to take one passing reference to this matter as comprehending all the arguments which could be used to justify the action that he has taken. Secondly, even if those words were what the Chancellor wanted to say in his defence, and even if that was the only reason why he brought it in, which I do not believe because the amount it would cost the Revenue to make the concession is a trifle, but even if I were persuaded that that was the reason, I would say that he has done the right thing, even if for the wrong reason.
Where relief depends on the individual examination of each case where it is to be granted by the Commissioners, I think that it would be unreasonable to perpetuate it in circumstances wholly dilferent from those when the relief was given. It would cast a burden on the tax machine which would be intolerable at the present time.
I am rarely to be heard singing the praises of the Inland Revenue in the Committee.
§ Mr. DiamondNever.
§ Mr. LeverMy right hon. Friend says "never". I would not have that belief widely held, especially if it were to reach the ears of my Income Tax inspector. The Revenue in this country in its operation of our tax laws is meticulously fair and stands favourable comparison with 170 any Revenue machine in the world. I often think—I know that this is heresy at the moment—that the talents, ability and integrity which the officials display, and the responsibility which they undertake, make them the most underpaid section of the community. I hope that this will not reach too many inspectors outside.
I think that at this point to throw on a machine which by common knowledge is heavily overloaded with work the impossible task of assessing the innumerable cases which would fall to be discussed in this year would be wrong. This is not to say that next year, or the year after, when we get back to a normal number of such cases, these could not be adequately dealt with by the Revenue machine. I know that it sounds well on a soapbox to say let justice be done even if it brings the Revenue machine to a standstill. No man is entitled to strict and meticulous accuracy in his examination of the tax obligation where it would involve a hopelessly disproportionate amount of administrative time. I know that this is not an attractive argument to use, but it is a realistic one, and I beg hon. Gentlemen opposite not to go about propagating the notion that the Clause is being introduced out of some kind of spite, lack of sympathy, or a desire to penalise. That just is not so.
The truth of the matter is that the Clause is forced on the Chancellor. He is obliged to bring it in, and he is right in saying that in seeing and assessing its effect on the people who have been the beneficiaries of the considerable relief outlined by my right hon. Friend, the fair and reasonable justice of the matter is, for this year at any rate, to withdraw a relief which would be so disproportionately expensive to continue.
§ Mr. Fletcher-CookeThe hon. Member for Manchester, Cheetham (Mr. Harold Lever) has put the case in a very frank way. He said that the reason for this is that the machine is likely to be so clogged that something must be done to prevent it breaking down, and that something must be at the expense of what is, after all, an acquired right.
§ Mr. LeverI hope that the hon. and learned Gentleman is not seriously attributing that argument to me. What I suggested was that the very nature of 171 the relief was such that it could be given only in a year in which the number of applicants for that relief was relatively limited. This is a totaly different argument.
§ 9.45 p.m.
§ Mr. Fletcher-CookeI am prepared to accept that description of the motive, which seems to me identical to the one which I was giving. At any rate, I concede the words which the hon. Member has used and on that basis I think that we ought to consider whether that is a proper justification.
The hon. Member was less than his usual convincing self when he supported his right hon. Friend in saying that this is not retrospective. In reality, of course, it is. In the sense that the events which could give rise to liability are past and cannot now be altered by a taxpayer wishing to rearrange his business, it is true, of course, that the actual tax does not become payable until a future date, but that is not in the least interesting. The only interesting question when one is assessing whether or not this is retrospective is whether, when all the effects giving rise to the liability have already taken place, are past and are unalterable, the law is subsequently changed, so that those who have control of the facts are no longer in a position to alter them, although they might otherwise have done so.
Of course, in substance, it is retrospective, though in form it is not——
§ Mr. Harold LeverIs not the hon. and learned Gentleman aware that this is a common place of taxation? Where Income Tax rates are fixed for a fiscal year, they apply in that year, and even if the liability is computed by reference to unalterable past events such as the previous year's profits, that does not make the slightest difference. No one suggests that that is retrospective, because the year in question was the year governed by the Income Tax rate, even though irreversible facts are taken into account in computing that liability.
§ Mr. Fletcher-CookeThe rate is retrospective but the incidence of the liability is not made retrospective where a certain profit is chargeable to tax or where a certain escape clause is allowed 172 to apply. The hon. Member does not treat the Committee with his usual seriousness when he tries to pretend that this is not an alteration of acquired rights, retrospectively and subsequently. If it is not that, I do not know why he needs to go into all the justification which he did. If it is not retrospective, there is no need to do what he did—very well— which was to explain why, in this year, it is necessary to do what the Chancellor would otherwise be most loth to do.
I think that the hon. Member gives away the point. Otherwise, he protests too much. I think that he is right. I believe that the reason why this is done is not out of spite but simply because the right that the Surtax payer has to apply for this relief would clog a machine which is already on the point of collapse. It does not seem to me that this is a good reason why we should support a state of affairs so lamentable as that. I hope that my hon. Friend will advise us to divide.
§ Mr. John Biffen (Oswestry)I was intrigued by the arguments of the hon. Member for Manchester, Cheetham (Mr. Harold Lever), and I am very reluctant to enter into this controversy under his penetrating and perceptive eye, but if his concern is for the administrative convenience—I agree that that is a not inconsiderable point—I hope that at some future stage in our proceedings we may hear his views on the virtue of continuing the Capital Gains Tax with its consequent complications in the administration of our tax system.
One thing which has emerged from the debate is the anxiety, particularly as exemplified by the hon. Member for Cheetham, to assure us that what we all thought the Chancellor meant when he referred in his Budget to the fact that Surtax payers should not be the beneficiaries of companies having taken certain action following last year's Finance Bill, was not what he meant at all. In other words, those few sentences of the Budget speech, which not only my hon. Friends but a great many commentators outside have seen as the author of this Clause, were misconceived.
The least we should have from the Government Front Bench is some explanation of what the Chancellor did mean when he made those remarks. Speaking very much as a layman, it 173 looked to me as though last year's Finance Bill contained certain prosions which led to permissible forestalling which resulted in certain dividend payments, and these gave rise to this Clause. It is wholly unfair that the beneficiaries of those company decisions should suffer, most of all as a great deal of the philosophy behind the Corporation Tax provision was that of dividing the company from its shareholders for tax treatment. It may be said that the figure is only £3 million, but it could equally be said that £3 million will fall very heavily indeed on a limited number of people. The hon. Member for Cheetham says that this could lead to a large number of claims. That may be so, but it is relative to what would ordinarily be the number of claims, and my final request is for some idea from the Government of the number of people who will be affected.
§ Mr. Stratton MillsThe Treasury Bench has not succeeded in convincing the Committee that the Clause should be accepted. The hon. Member for Manchester, Cheetham (Mr. Harold Lever) based his argument on the claim that the detailed burden which this would place on the Revenue would be so colossal that it would be impracticable to give this relief in the year 1965–66. As I pointed out— he partly answered my point in respect of the Chancellor—this was not the basis of the Government's argument. The Chief Secretary had an opportunity of giving this reason in his fairly detailed speech this evening, but he made no reference to this argument, for the reason, I suspect, given by my hon. Friend the Member for Oswestry (Mr. Biffen) that it could have been used against him on the Capital Gains Tax.
§ Mr. Harold LeverI was not trying to withdraw what the Chancellor said. I was giving the commonsense meaning of what he said. He was saying, "I have to take away a small relief from the Surtax payer because I gave him a big relief by way of Income Tax".
§ Mr. MillsThat argument will not square with any of the arguments put forward by any of the Ministers who have spoken on the Clause. I looked up the figures for a number of investment trusts to seen the amount of money 174 which had been paid in addition, and it appeared that an extra 10 per cent, of dividend income had been received by these trusts as a result of payments in advance. In those cases the chairmen of the companies went on to stress that the dividend income in the year 1966–67 would be reduced by a comparable amount. The Government would have been much fairer if they had said that the words in the 1952 Income Tax Act "such relief as may be just" should be viewed in the light of the two years together—1965–66 and 1966–67. The arguments marshalled from the Government Front Bench this evening have been singularly unconvincing. The Chief Secretary completely failed to answer the arguments of my hon. Friend the Member for Finchley (Mrs. Thatcher) and I hope that we shall vote against the Clause.
§ Mrs. ThatcherThe Chief Secretary's argument proceeded on an entirely different basis from that adduced by his hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). The Chief Secretary proceeded on the basis that dividends paid out before the beginning of this financial year had saved on them 8s. 3d. in respect of each £. That is not necessarily true. If that is the right hon. Gentleman's argument, he must exclude from the operation of the Clause those dividends which will have Schedule F payable on them, although I saw no such willingness on his part in his reply.
It is one thing to fix the rate of a tax in respect of a previous year. It is quite another—and the hon. Member for Manchester, Cheetham knows this—to change the rules by which the corpus which is liable to the tax are to be calculated, because the events which could be altered have already taken place; in other words, in certain companies dividends would perhaps not have been declared had they known at the time that this provision was to be withdrawn.
The hon. Member for Cheetham proceeded on the basis of trying to make an honest man of the Chancellor in respect of the Clause. The hon. Gentleman attempted the impossible. He cited the difficulties of administration. Such difficulties have never prevented the present Government from imposing taxes on the subject. It is quite wrong, therefore, 175 that they should be cited for withdrawing a relief from the subject. I hope, therefore, that my hon. Friends will firmly vote against the Motion.
§ Question put, That the Clause stand part of the Bill: —
§ The Committee divided: Ayes, 218, Noes 144.
177| Division No. 30.] | AYES | [9.58 p.m. |
| Allaun, Frank (Salford, E.) | Ginsburg, David | Morgan, Elystan (Cardiganshire) |
| Alldritt, Waiter | Gordon Walker, Rt. Hn. P. C. | Morris, Charles R. (Openshaw) |
| Allen, Scholefield | Gouriay, Harry | Moyle, Roland |
| Archer, Peter | Gray, Dr. Hugh | Mulley, Rt. Hn. Frederick |
| Armstrong, Ernest | Gregory, Arnold | Neal, Harold |
| Ashley, Jack | Griffiths, David (Rother Valley) | Newens, Stan |
| Atkins, Ronald (Preston, N.) | Hamilton, James (Bothwell) | Noel-Baker, Francis (Swindon) |
| Barnett, Joel | Hamilton, William (Fife, W.) | Noel-Baker,Rt.Hn.Philip(Derby,S.) |
| Baxter, William | Hamling, William | Oakes, Gordon |
| Benn, Rt. Hn. Anthony Wedgwood | Hannan, William | Ogden, Eric |
| Bennett, James (G'gow, Bridgeton) | Harper, Joseph | O'Malley, Brian |
| Bidwell, Sydney | Hazell, Bert | Orbach, Maurice |
| Blackburn, F. | Henig, Stanley | Orme, Stanley |
| Blenkinsop, Arthur | Hilton, W. S. | Oswald, Thomas |
| Boardman, H. | Hobden, Dennis (Brighton, K'town) | Owen, Dr. David (Plymouth, S'tn) |
| Booth, Albert | Hooley, Frank | Padley, Walter |
| Braddock, Mrs. E. M. | Horner, John | Page, Derek (King's Lynn) |
| Brooks, Edwin | Howarth, Harry (Wellingborough) | Park, Trevor |
| Broughton, Dr. A. D. D. | Howarth, Robert (Bolton, E.) | Parker, John (Dagenham) |
| Brown, Rt. Hn. George (Belper) | Howell, Denis (Small Heath) | Parkyn, Brian (Bedford) |
| Brown, Bob(N'c'tle-upon-Tyne,W.) | Howie, W. | Pavitt, Laurence |
| Brown, R. W. (Shoreditch & F'bury) | Hoy, James | Pearson, Arthur (Pontypridd) |
| Buchan, Norman | Hughes, Rt. Hn. Cledwyn (Anglesey) | Perry, George H. (Nottingham, S.) |
| Buchanan, Richard (G'gow, Sp'burn) | Hughes, Emrys (Ayrshire, S.) | Prentice, Rt. Hn. R. E. |
| Butler, Herbert (Hackney, C.) | Hughes, Roy (Newport) | Price, Christopher (Perry Barr) |
| Butler, Mrs. Joyce (Wood Green) | Hunter, Adam | Price, Thomas (Westhoughton) |
| Cant, R. B. | Hynd, John | Price, William (Rugby) |
| Carmichael, Neil | Irvine, A. J. (Edge Hill) | Randall, Harry |
| Carter-Jones, Lewis | Jackson, Colin (B'h'se & Spenb'gh) | Rankin, John |
| Chapman, Donald | Jackson, Peter M. (High Peak) | Redhead, Edward |
| Coe, Denis | Janner, Sir Barnett | Rees, Merlyn |
| Coleman, Donald | Jeger, George (Goole) | Rhodes, Geoffrey |
| Corbet, Mrs. Freda | Jeger, Mrs. Lena(H'b'n&St.P'cras,S.) | Roberts, Albert (Nomanton) |
| Craddock, George (Bradford, S.) | Johnson, Carol (Lewisham, S.) | Roberts, Goronwy (Caernarvon) |
| Cronin, John | Johnson, James (K'ston-on-Hull, W.) | Robinson, W. O. J. (Walth'stow, E.) |
| Grossman, Rt. Hn. Richard | Jones, Dan (Burnley) | Ross, Rt. Hn. William |
| Cullen, Mrs. Alice | Jones,Rt.Hn.Sir Elwyn(W.Ham,S.) | Rowland, Christopher (Meriden) |
| Dalyell, Tam | Jones, J. Idwal (Wrexham) | Rowlands, E. (Cardiff, N.) |
| Davies, Dr. Ernest (Stretford) | Judd, Frank | Ryan, John |
| Davies, Harold (Leek) | Kelley, Richard | Shaw, Arnold (Ilford, S.) |
| Davies, Robert (Cambridge) | Kenyon, Clifford | Sheldon, Robert |
| Dell, Edmund | Kerr, Mrs. Anne (R'ter & Chatham) | Short, Rt. Hn.Edward(N'c'tle-u-Tyne) |
| Dempsey, James | Kerr, Dr. David (W'worth, Central) | Short, Mrs. Renée (W'hampton,N.E. |
| Dewar, Donald | Kerr, Russell (Feltham) | Silkin, John (Deptford) |
| Diamond, Rt. Hn. John | Lawson, George | Silkin, S. C. (Dulwich) |
| Dickens, James | Lee, John (Reading) | Silverman, Julius (Aston) |
| Dobson, Ray | Lever, Harold (Cheetham) | Spriggs, Leslie |
| Doig, Peter | Lewis, Arthur (W. Ham, N.) | Steele, Thomas (Dunbartonshire, W.) |
| Dunn, James A. | Lewis, Ron (Carlisle) | Symonds, J. B. |
| Dunnett, Jack | Lomas, Kenneth | Tinn, James |
| Dunwoody, Mrs. Gwyneth (Exeter) | Luard, Evan | Tuck, Raphael |
| Eadie, Alex | Lyon, Alexander W. (York) | Urwin, T. W. |
| Edwards, Robert (Bilston) | Lyons, Edward (Bradford, E.) | Varley, Eric G. |
| Edwards, Wil |
Mahon, Dr. J. Dickson | Walden, Brian (All Saints) |
| Ellis, John | McBride, Neil | Walker, Harold (Doncaster) |
| English, Michael | McCann, John | Wallace, George |
| Ennale, David | MacDermot, Niall | Watkins, David (Consett) |
| Ensor, David | Macdonald, A. H. | Wellbeloved, James |
| Evans, Albert (Islington, S.W.) | Mackenzie, Gregor (Rutherglen) | Wells, William (Walsall, N.) |
| Evans, loan L. (Birm'h'm, Yardley) | Mackintosh, John P. | White, Mrs. Eirene |
| Faulds, Andrew | Maclennan, Robert | Whitlock, William |
| Fernyhough, E. | McMillan, Tom (Glasgow, C.) | Williams, Alan (Swansea, W.) |
| Fletcher, Raymond (Ilkeston) | MacPherson, Malcolm | Williams, Alan Lee (Hornchurch) |
| Fletcher, Ted (Darlington) | Mahon, Peter (Preston, S.) | Willis, George (Edinburgh, E.) |
| Floud, Bernard | Mahon, Simon (Bootle) | Wilson, William (Coventry, S.) |
| Foley, Maurice | Manuel, Archie | Winnick, David |
| Ford, Ben | Mapp, Charles | Winterbottom, R. E. |
| Forrester, John | Marquand, David | Woodburn, Rt. Hn. A. |
| Fowler, Gerry | Marsh, Rt. Hn. Richard | Woof, Robert |
| Fraser, John (Norwood) | Mason, Roy | Yates, Victor |
| Fraser, Rt. Hn. Tom (Hamilton) | Mellish, Robert | |
| Galpern, Sir Myer | Millan, Bruce | TELLERS FOR THE AYES |
| Gardner, A. J. | Miller, Dr. M. S. | Mr. Alan Fitch and |
| Garrow, Alex | Mitchell, R. C. (S'th'pton, Test) | Mr. Edward Bishop |
| NOES | ||
| Alison, Michael (Barkston Ash) | Fortescue, Tim | Munro-Lucas-Tooth, Sir Hugh |
| Astor, John | Gilmour, Ian (Norfolk, C.) | Nabarro, Sir Gerald |
| Awdry, Daniel | Glover, Sir Douglas | Neave, Airey |
| Batsford, Brian | Grant, Anthony | Nicholls, Sir Harmar |
| Beamish, Col. Sir Tufton | Griffiths, Eldon (Bury St. Edmunds) | Noble, Rt. Hn. Michael |
| Bell, Ronald | Grimond, Rt. Hn. J. | Nott, John |
| Bennett, Dt. Reginald (Cos & Fhm) | Curden, Harold | Onslow, Cranley |
| Berry, Hn. Anthony | Hall-Davis, A. G. F. | Osborn, John (Hallam) |
| Biffen, John | Harris, Frederic (Croydon, N.W.) | Page, Graham (Crosby) |
| Biggs-Davison, John | Hawkins, Paul | Page, John (Harrow, W.) |
| Birch, Rt. Hn. Nigel | Heald, Rt. Hn. Sir Lionel | Pardoe, J. |
| Black, Sir Cyril | Heath, Rt. Hn. Edward | Peel, John |
| Blaker, Peter | Heseltine, Michael | Pounder, Rafton |
| Body, Richard | Higgins, Terence L, | Powell, Rt. Hn. J. Enoch |
| Boyd-Carpenter, Rt. Hn. John | Hill, i. E. B. | Prics, David (Eastleigh) |
| Boyle, Rt. Hn. Sir Edward | Hirst, Geoffrey | Prior, J. M. L. |
| Brewis, John | Hobton, Rt. Hn. Sir John | Ramsden, Rt. Hn. James |
| Brinton, Sir Tatton | Holland, Philip | Renton, Rt. Hn. Sir David |
| Brown, Sir Edward (Bath) | Hooson, Emlyn | Roots, William |
| Buchanan-Smith, Alick (Angus, N&M) | Hordern, Peter | Rossi, Hugh (Hornsey) |
| Buck, Anthony (Colchester) | Hornby, Richard | Scott, Nicholas |
| Bullus, Sir Eric | Howell, David (Guildford) | Sinclair, Sir George |
| Burden, F. A. | Hutchison, Michael Clark | Stainton, Keith |
| Campbell, Gordon | Jenkin, Patrick (Woodford) | Steel, David (Roxburgh) |
| Carlisle, Mark | Johnston, Russell (Inverness) | Talbot, John E. |
| Carr, Rt. Hn. Robert | Jopling, Michael | Taylor, Sir Charles (Eastbourne) |
| Chichester-Clark, R. | Kimball, Marcus | Taylor,Edward M.(G'gow,Cathcart) |
| Clegg, Walter | Langford-Holt, Sir John | Taylor, Frank (Moss Side) |
| Cooke, Robert | Legge-Bourke, Sir Harry | Teeling, Sir William |
| Corfield, F. V. | Lloyd, Ian (P'tsm'th, Langstone) | Temple, John M. |
| Craddock, Sir Beresford (Spelthorne) | Longden, Gilbert | Thatcher, Mrs. Margaret |
| Crosthwaite-Eyre, Sir Oliver | Loveys, W. H. | Thorpe, Jeremy |
| Crouch, David | Lubbock, Eric | Turton, Rt. Hn. R. H. |
| Crowder, F. P. | MacArthur, Ian | Van Straubenzee, W. R. |
| Cunningham, Sir Knox | Mackenzie, Alasdair(Ross&Crom'ty) | Wainwright, Richard (Colne Valley) |
| Dalkeith, Earl of | Maclean, Sir Fitzroy | Walker, Peter (Worcester) |
| Davidson,James(Aberdeenshire, W.) | Macleod, Rt. Hn. lain | Ward, Dame Irene |
| Dean, Paul (Somerset, N.) | McMaster, Stanley | Weatherill, Bernard |
| Deedes, Rt. Hn. W. F. (Ashford) | Maddan, Martin | Webster, David |
| Dodds-Parker, Douglas | Marten, Neil | Wells, John (Maidstone) |
| Doughty, Charles | Mathew, Robert | Whitelaw, William |
| Eden, Sir John | Maude, Angus | Wills, Sir Gerald (Bridgwater) |
| Elliot, Capt. Walter (Carshalton) | Maxwett-Hyslop, R. J. | Wilson, Geoffrey (Truro) |
| Elliott, R.W.(N'c'tle-upon-Tyne, N.) | Maydon, Lt.-Cmdr. S. L. C. | Winstanley, Dr. M. P. |
| Errington, Sir Eric | Mills, Peter (Torrington) | Wolrige-Gordon, Patrick |
| Eyre, Reginald | Mills, Stratton (Belfast, N.) | Wood, Rt. Hn. Richard |
| Farr, John | Miscampbell Norman | |
| Fisher, Nigel | Monro, Hector | TELLERS FOR THE NOES: |
| Fletcher-Cooke, Charles | More, Jasper | Mr. Francis Pym and |
| Mr. George Younger. |
§ Clause ordered to stand part of the Bill.
§ It being after Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
§ Committee report Progress.