Commons Sitting of 19 June 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

MESSAGES FROM THE QUEEN
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Antigua) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Cyprus) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Dominica) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief
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(Taxes on Income) (Sierra Leone) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Zambia) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that on the ratification by Portugal of the Convention set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (Portugal) Order, 1968, a draft of which was laid before your House, an Order may be made in the form of that draft.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Gambia) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (Malawi) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (St. Lucia) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.
INCOME TAX
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
I have received your address praying that the Double Taxation Relief (Taxes on Income) (St. Vincent) Order, 1968 be made in the form of the draft laid before your House.
I will comply with your request.

ORAL ANSWERS TO QUESTIONS
  ROADS

    Box Junctions
    Sir R. Russellasked the Minister of Transport if he will take steps to arrange for all junctions where two or more roads cross one another to be made box junctions.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Bob Brown): No, Sir. This marking is intended to relieve particular congested junctions. Wholesale provision would be expensive and unnecessary.
    Sir R. Russell: Would not the Minister agree that if box junctions were universal it would not be necessary to have warning notices, but only markings on the road, because everyone would know that these were box junctions? Would not that be a better way of relieving congestion at all junctions?
    Mr. Brown: No, Sir. These box junctions are primarily intended for those signal controlled or uncontrolled junctions where real difficulties arise from vehicles blocking the exits. The junctions are very costly to provide, and their maintenance is very costly, too.

    Al Road, South Mimms
    Sir R. Russellasked the Minister of Transport when the five-mile length of trunk road Al north of South Mimms will be brought up to dual carriageway standard.
    Mr. Bob Brown: We hope that work will start in the early 1970's, but cannot give a firm date because preparatory works, including the statutory processes, have still to be completed.
    Sir R. Russell: Is the hon. Gentleman aware that, according to an Answer given to me by the Minister of Transport himself a few weeks ago, there were 147 accidents involving personal injuries on this stretch of road in two years? Does he not think that this length of road deserves a much higher priority for dualling than 1971?
    Mr. Brown: We are well aware of the accident rate, but it is a question of national priorities. It has to be borne in mind that this 5½ miles of dual, three-lane carriageway will cost £6½ million.

    Road Pricing
    Mr. Galbraithasked the Minister of Transport what action he intends taking on road pricing in the light of the Road Research Laboratory's recent Report No. L.R.165.
    Mr. Bob Brown: The report is an exploratory theoretical study of the effects of changing the mode of travel of people working in central London from cars to buses of various types. It does not have any special relevance to road pricing and therefore does not call for special action from my right hon. Friend in that field.
    Mr. Galbraith: But it involves the possibility of road pricing. Will the Minister guarantee that if road pricing is introduced it will not be used as a method of fleecing the motorist further, but that any money gained from it will be used to improve roads?
    Mr. Brown: No, Sir. I am not prepared to give any such guarantee, because road pricing at the present time is simply a theoretical possibility. We do not even know yet whether it is technically feasible, and we certainly do not know

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    what such a system would cost and whether the benefits would be worth while in terms of cost.
    Mr. Campbellasked the Minister of Transport what are the alternatives to road pricing which the Road Research Laboratory are considering in their investigations into this matter.
    Mr. Bob Brown: More extensive parking control and the reservation of road space for buses at peak hours are techniques which could result in a better use of town roads. The Department, including the Road Research Laboratory, is undertaking general research and taking part in studies of particular areas which will help to define the scope for these techniques.
    Mr. Campbell: Is the Minister still prepared to consider all possible ways of minimising congestion, or has he now reached a conclusion in favour of one or more methods for further examination or trial?
    Mr. Brown: Studies of congestion in every respect are being continued and my right hon. Friend has not made up his mind on one final solution.

    D Ring Road
    Mr. Berryasked the Minister of Transport when work will start on the construction of the D ring road to the north of London; when he expects the work to be completed; and whether he will make a statement.
    The Minister of State, Ministry of Transport (Mr. Stephen Swingler): Construction of the section between the A.1 and the A.10 is planned to start in 1971. Works are expected to take about 2 years to complete.
    Mr. Berry: Is the hon. Gentleman aware that this is a welcome improvement on earlier answers about this very important matter? My constituents and others in the northern parts of London and the surrounding area will be pleased to hear the reply and would be even more pleased if the final date could be brought forward if possible.
    Mr. Swingler: We have very complicated statutory processes to go through on such a wide ranging scheme, but as soon as we get through these we shall start work as soon as we can.

    Road Safety Campaign
    Mr. W. H. K. Bakerasked the Minister of Transport what plans he has to assess the effects of the new Road Safety Campaign on a regular basis.
    Mr. Swingler: Market research consultants and the Road Research Laboratory are periodically investigating how much the publicity has been seen and how far it has produced changes in road users' knowledge and behaviour.
    Mr. Baker: Would not the hon. Gentleman agree that the frustration and thrombosis of traffic congestion are great factors in road safety? Will he bear them in mind in any future road safety campaign?
    Mr. Swingler: Certainly one of the factors which will be studied and tested will be the degree of frustration. Certain studies were made before my right hon. Friend's recent announcement about a stepping-up of the road safety campaign. After a certain period there will be further studies, and by this means we shall be able to test the efficacy of the campaign.

    "Give Way" Signs
    Mr. Onslowasked the Minister of Transport what estimate he has formed of the effect on road casualties that has resulted where "halt" signs have been replaced by "give way" signs.
    Mr. Bob Brown: It is still too early to judge, but results so far do not show any general effect either way.
    Mr. Onslow: Is not the Ministry conducting any systematic research into this problem? Is not the hon. Gentleman aware of the example in my constituency where there have been serious accidents and deaths at cross roads as a result of this change? Will he not recognise that, whatever the fine theories may be, the test of any such change will be found in practice and measured in human terms?
    Mr. Brown: We recognise the problem, but the accident rate at the Mault-way—Chobham Road junction, to which the hon. Gentleman referred, since the change of sign does not indicate any effect either way.

    Road Plans (Land)
    Mr. Wingfield Digbyasked the Minister of Transport how many lines for future roads are held by his Department in the preparation pool; and in how many cases the local planning authorities have been asked to protect the minimum amount of land for road junctions by refusal of planning permission for building.
    Mr. Swingler: The information is not readily available, but there are 171 trunk road schemes in the preparation pool including improvements to existing roads. The schemes are at various stages of planning, and the extent to which local planning authorities have been asked to protect them and junctions associated with them depends in each case on the stage of planning reached.
    Mr. Digby: Is the Minsiter of State aware that the indecision of his Ministry and the pressure which the Ministry exerts or. local authorities sterilise thousands of acres of land which are ripe for development in the meanwhile?
    Mr. Swingler: I realise that this nap-pens and I am afraid that it is bound to happen in some cases. The hon. Gentleman will know from correspondence which he has been having with my hon. Friend and which he is now having with me about another by-pass scheme that it all depends on the stage of planning. In many cases we are not consulted by the local planning authorities and we do not give them any direction until a late stage.

    Trunk Roads (Routes)
    Mr. Simon Wingfield Digbyasked the Minister of Transport if he will seek to amend the Highways Act, 1959, so as to speed up the statutory procedure laid down for planning the routes of trunk roads.
    Mr. Swingler: Possible ways of improving the statutory procedure laid down in the Highways Act, when Parliamentary time permits, are being considered now. The procedure for long-term planning of trunk roads will be improved by a new clause in the Town and Country Planning Bill now being considered in another place.
    Mr. Digby: Will the Minister of State try to "come cleaner" with the general public about the lines of by-passes, because there is so much uncertainty about the lines of future by-passers?
    Mr. Swingler: As the hon. Gentleman will realise, these projects have to be planned many years ahead, but not until detailed surveys have been made can the lines actually be fixed, and thus there is bound to be a period of uncertainty. I assure the hon. Gentleman and others that if they have particular cases in mind on which we can help by reducing the uncertainty, if they will let us have details, we shall investigate them.

    Plaistow Lane, Bromley (Pedestrian Crossing)
    Mr. Huntasked the Minister of Transport when he expects to reply to the application from the London Borough of Bromley, made to his Department in June 1967, for the installation of a pedestrian crossing in Plaistow Lane, Bromley.
    Mr. Swingler: A reply, refusing this application was sent on 28th May. The council have requested reconsideration and this is now in hand.
    Mr. Hunt: Is the Minister of State aware that that reply will be received with great disappointment in my constituency? Will he realise that, in the view of local residents, the need for this crossing has been clearly established? What makes him think that his judgment is superior to that of Bromley Council and my constituents?
    Mr. Swingler: It is not only the judgment of the Ministry of Transport; it is also that of the police and others who have to be consulted and who have discussed this matter on the site. I appreciate the present disappointment. At the crossing there was restricted visibility on the downhill grade coming from the East. This matter is now being investigated to see how that visibility may be improved in order to make the crossing viable. I will let the hon. Gentleman know the result of this reconsideration as soon as I can.

    Vehicles (Parking Lights)
    Mr. Howieasked the Minister of Transport whether he will take steps to amend the Road Vehicles Lighting

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    (Standing Vehicles) (Exemption) (General) Regulations, 1956, to permit the use of a hurricane lamp, placed on the ground, as a parking light.
    Mr. Bob Brown: No, Sir. We do not think that this would be as safe as the present requirements.
    Mr. Howie: I find that reply slightly disappointing but not unexpected. Is it not the case that hurricane lamps are so used in certain parts of London and, in any case, fairly widely used by contractors digging holes in the road and leaving various kinds of obstruction? Will my hon. Friend undertake to look into this matter again?
    Mr. Brown: It is true that some people are using hurricane lamps as parking lights in defiance of the law, but if road works are marked by hurricane lamps that is an entirely different thing, because no source of power is available.
    Mr. Webster: Is the hon. Gentleman aware that there is serious danger if hurricane lamps are used at skips used for collecting refuse and that when they are removed, the skips constitute a great danger to motorists? What is being done about that?
    Mr. Brown: That is another matter, but it is worth considering and I can assure the hon. Gentleman that we shall do so.

    Motorways (Access Roads)
    Mr. Barnettasked the Minister of Transport what is his policy with regard to the routing of major access roads to motorways through narrow residential streets.
    Mr. Swingler: No single policy can be laid down in circumstances which vary so much from place to place. Where non-trunk roads are concerned, the local highway authority is responsible for deciding in each case, in the light of the funds available, and having regard to the views of local residents, how best to meet traffic needs with the least detriment to the local environment.
    Mr. Barnett: Is the Minister aware of the serious danger existing in the Holling-worth Lake area of my constituency? This is a major beauty spot in Lancashire, and there is an access road through it to
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    the new Lancashire-Yorkshire motorway. This road goes through a residential district and, as there is an alternative road, would he consider a weight restriction for the road which runs through the residential district?
    Mr. Swingler: I appreciate my hon. Friend's concern, of which I have had notice, but he will realise that we have no power in this matter. It is a matter entirely for the Lancashire County Council. The decision is entirely for it to take, but we will bring the hon. Gentleman's views to its notice.

    A6 Road, Clapham
    Mr. Brian Parkynasked the Minister of Transport whether he will now reconsider the question of unilateral parking and pedestrian crossings on the A6 in Clapham, Bedfordshire.
    Mr. Bob Brown: The traffic situation still does not justify the restriction of waiting vehicles.
    I understand that the parish council has pressed that a pedestrian crossing should be provided and that the county council, which is the agent authority, has invited it to make specific proposals.
    Mr. Parkyn: Is my hon. Friend aware of the difficulty, on a Saturday morning in particular, of crossing that road, as most of the shops are on one side while people live on the other side?
    Mr. Brown: We are aware of the situation, but we are also acutely aware of the fact that if unilateral parking was introduced it would have to be on the side opposite the shopping parade, thereby creating much greater danger for pedestrians.

    M4 (Revised Proposals)
    Mr. Astorasked the Minister of Transport when he anticipates publishing revised proposals for the M4/A4 interchange and the diversion of trunk road A4 at Theale.
    Mr. Bob Brown: Revised proposals, replacing those published in mid-1967, were published at the end of May.
    Mr. Astor: May I say that I appreciate the need to give careful consideration to these objections and that, along with

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    many others, I appreciate too the careful consideration which has been given to these matters by the staff of the hon. Gentleman's Department. Can the hon. Gentleman assure us that he will press ahead with the alternative proposals as soon as possible?
    Mr. Brown: I can give that assurance.

    M4 (Tormarton-Winnersh Section)
    Mr. Astorasked the Minister of Transport when he anticipates that tenders will be invited for the construction of the M4 motorway between Tormarton and Winnersh; and what is the estimated date of completion.
    Mr. Swingler: We expect to invite tenders for two contracts, covering the 30 miles between Tormarton and Lidding-ton, in January, 1969, and three contracts for the remainder in the latter half of that year. We hope to complete the greater part of this 71-mile length of motorway by the end of 1971; however, preparatory work on the 16½ miles between Wickham and Theale in Berkshire has encountered unforeseen difficulties and this section is unlikely to be completed until the first half of 1972.
    Mr. Astor: Is the hon. Gentleman aware that the volume of traffic on the A4 is already excessive and contributing to danger and fatal accidents? Will he therefore press ahead as fast as he can with the M4 route?
    Mr. Swingler: We are well aware of the urgent need to go forward with this programme. Unfortunately, the incidence of foot-and-mouth disease, and the restrictions imposed then, delayed the soil survey for a considerable period and that is the reason for the delay, explained in the latter part of my reply. In every other respect we will go forward.
    Mr. Dobson: Would my hon Friend agree that there are sections of the A4 which are particularly hazardous and dangerous? Could he concentrate on getting work started on these sections?
    Mr. Swingler: As my hon. Friend knows, this is being constructed section by section, according to a definite plan based on the priorities. If there are any particular cases to which my hon. Friend
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    wants to draw attention, I should be pleased if he would let me have the details.

    Broad Street, Teddington (Pedestrian Crossing)
    Mr. Gresham Cookeasked the Minister of Transport when a pedestrian crossing will be provided in Broad Street, Teddington.
    Mr. Swingler: Census figures are being obtained and a decision will be made as soon as these have been considered.
    Mr. Gresham Cooke: Would the Minister of State take into account the fact that the people of Teddington have been waiting some time for this pedestrian crossing and that it is really needed?
    Mr. Swingler: I do not know whether the hon. Gentleman is aware that we did not get the application from the council until January this year. It is necessary to make traffic counts, pedestrian counts and so on. I assure him that the gathering of this information will go forward as rapidly as possible and that we will give a decision at an early date.

    X-way Crossing
    Mr. David Howellasked the Minister of Transport by what date he intends to complete his survey of the use and effectiveness of X-way crossings; and how long a delay this will entail before the X-way crossing authorised on 29th March for the A3 at Burpham, and now partially installed, may be completed and put into operation.
    Mr. Bob Brown: We have asked for some further information so that we can complete the survey. My right hon. Friend still hopes to announce his decision shortly.
    In the meantime, and pending that decision, we have decided to let the Burpham crossing come into operation.
    Mr. Howell: Is the hon. Gentleman aware that this is welcome but belated news? Although it has taken many months to reach this decision, many parents will be thankful for the fact that their children will be safer as a result of it.

  RAILWAYS

    Finance
    Mr. Galbraithasked the Minister of Transport what action he intends to take to reduce the increasing loss on British Railways.
    The Minister of Transport (Mr. Richard Marsh): The results so far this year do not suggest an increasing loss.
    Mr. Galbraith: No, but even if there will not be an increasing loss, does the Minister not intend to do anything to reduce the loss, which is almost as important as preventing it from going up?
    Mr. Marsh: If the hon. Gentleman is wrong in his basic assumptions, he really cannot switch the question. The point is that British Railways will not, on their results so far, show an increasing loss. The evidence is that the new arrangements for dealing with their finances will make British Railways a more viable proposition in future.
    Mr. Moyle: Is my right hon. Friend aware that the solution of the Southern Region commuting problem which has been pressed by hon. Members on both sides will be solved only if we have substantial public expenditure, and will he resist the blandishments of hon. Members opposite, in their own interests as much as ours?
    Mr. Marsh: I think that my hon. Friend misrepresents the views of hon. Members opposite. It is not so much that they are arguing against public expenditure on the railways, which is obviously essential, but merely that they are obsessed to take any opportunity, however unfounded, to denigrate nationalised industries.

    Transport Police
    Mr. Spriggsasked the Minister of Transport what will be the effect of the setting up of the new freight authority upon the transport police; what consultations on this matter have taken place between his Department and the Transport Police Federation; and if he will make a statement.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Neil Carmichael): The Transport Bill includes

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    power for the Railways Board to enter into an agreement with the National Freight Corporation for making available to that body the services of the British Transport Police Force. But, as my right hon. Friend's predecessor explained when she met representatives of the British Transport Police Federation, it will be for the N.F.C. to decide what police services they need to enable them to discharge their responsibilities. There will, of course, be an opportunity for the Federation to make whatever representations it wishes to the N.F.C. when it has been set up.
    Mr. Spriggs: Since the Transport Act could be the cause of the redundancy of about 500 police officers, why is it that no meetings or consultations have taken place since my right hon. Friend the Minister of Transport met the chief officers of the Transport Police Federation in September, 1967?
    Mr. Carmichael: The present position has been fully explained in correspondence that we have had with the Federation, and I can assure my hon. Friend that its views are fully understood and that it will be able to make representations later to the N.F.C. when it is set up.
    Mr. Peter Walker: Would the hon. Gentleman undertake that if the officers of the Federation want talks because they are concerned about this, he will immediately grant them an interview?
    Mr. Carmichael: There has, as I said, been considerable correspondence, and the position is understood between the Federation and the Department as a result of that correspondence. No precipitate action will be taken on the lines suggested by my hon. Friend. There will be no possibility of the break-up of the transport police unless there has been very full consultation.

    Fares
    Sir G. Nabarroasked the Minister of Transport, having regard to the requirements of the Government's prices and incomes policy, and the continuing trading losses of about £3 million per week on British Railways, what steps he is now taking to prevent rises in rail and travel fares.
    Mr. Carmichael: I would refer the hon. Member to the recent debates on the relevant parts of the Transport Bill, and the Report of the National Board for Prices and Incomes, which the Government have accepted.
    Sir G. Nabarro: Is the hon. Gentleman aware that those were quite inconclusive? Will he tell the House whether it is the policy of the Government to endorse the substantial increase in fares which the British Transport Commission and others are now seeking in order to make the railways more commercially viable, or whether the Government propose to adhere to a 3½ per cent. increase only for fares in conformity with the prices and incomes policy?
    Mr. Carmichael: The Prices and Incomes Board Report No. 72, of 30th May, which I have said the Government have accepted, makes it quite clear. The conclusion of the Report is that the Railways Board, in order to set up an overall increase across the board, should consider the market pricing question in regard to fares. I refer the hon. Gentleman to Report No. 72, which very fully explains the matter.
    Mr. Peter Walker: But surely the hon. Gentleman will agree that the increase will mean an average increase in fares very much higher than 3½ per cent?
    Mr. Carmichael: Not necessarily. With certain classes of fare this may very well be so. My right hon. Friend said on the Third Reading of the Transport Bill. that, in conformity with the principles laid down by the Prices and Incomes Board, first class fares would not be kept at the same ceiling as second class fares.

    London Transport (Fares)
    Sir G. Nabarroasked the Minister of Transport what conversations he has had with executive officers of London Transport to prevent increased fares for commuting passengers; and, having regard to a required increase of fares of 2s. 3d. in the £ sterling, or 11¼ per cent., to make good the anticipated loss of London Transport for 1968–69, what steps he proposes to take to restore solvency.
    Mr. Swingler: None, Sir. I would refer the hon. Member to the answer given
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    to him on 8th May. London Transport's proposals for fares increases are with the Transport Tribunal to determine as required by statute. Proposals for London Transport's future financial position will be set out shortly in a White Paper on the reorganisation of transport in London.—[Vol. 764, c. 394–5.]
    Sir G. Nabarro: But this, again, is an utterly inconclusive answer. Will the hon. Gentleman apply himself to the fact that there is a large deficit already and that there are further deficits pending on London Transport account? As the undertaking is required to pay its way, what increase in fares have the Government in mind? Is it to be 2s. 3d. in the £, and if so, will not that breach the prices and incomes policy finally?
    Mr. Swingler: Perhaps the hon. Gentleman will apply himself to the statutory position. If he does, he will discover that the Transport Tribunal is the authority with the power of decision in this matter. This is the position which we inherited in 1964. We are now awaiting the decision on the matter by the Transport Tribunal as the statutory authority.

    Shellfish Transport
    Mr. Alasdair Mackenzieasked the Minister of Transport if he will give a general direction to British Railways to provide improved facilities for the transport of shellfish from West Scotland to the South of England and the Continent.
    Mr. Carmichael: No, Sir. It would be quite wrong for my right hon. Friend to give a general direction to the Railways Board on a detailed matter of commercial management like this.
    Mr. Mackenzie: Is the hon. Gentleman aware that there is a keen demand on the Continent for winkles particularly? Is he further aware that Highland transport charges are preventing the rapid expansion of the market? Will he look at this again to see if he can do something to help?
    Mr. Carmichael: I am aware of the market for winkles on the Continent and of its great importance to the hon. Gentleman's constituency. But neither the Railways Board nor the Ministry of Agriculture has had any complaint for

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    a long time about any difficulties arising from transport charges for these commodities and it would appear that the charges suit most of the producers in the area of the hon. Gentleman's constituency.

    Chairman of British Railways (Salary)
    Mr. Peter Walkerasked the Minister of Transport if he will undertake an urgent review of the salary of the Chairman of British Railways.
    Mr. Marsh: This will be done when appropriate.
    Mr. Walker: Surely it is completely inappropriate that the Vice-Chairman of British Railways should be paid more than the Chairman, when the duties of the Chairman are greater than those of the Vice-Chairman? Is this not making an absolute nonsense of the management structure of British Railways? Will the Minister take further action in this matter?
    Hon. Members: Hear, hear.
    Mr. Marsh: It ill-becomes hon. Gentlemen to say "Hear, hear", because the problem we face is one of the failure of Governments to solve this problem over a very long period of time. Clearly the salaries will have to be reviewed in due course. At present there are problems in terms of prices and incomes policy, which I am sure the hon. Gentleman will understand.
    Mr. Barnett: Would the Minister conduct a survey in private industry to see how often this sort of thing happens there?
    Mr. Marsh: At the moment my time is adequately filled with the nationalised industries.

    Fleet Line
    Mr. Moyleasked the Minister of Transport whether he has yet received the proposal for the construction of the Fleet Line.
    Mr. Swingler: No, Sir, but we understand from London Transport that planning work is actively proceeding.
    Mr. Moyle: Would the Minister agree that it is becoming increasingly urgent

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    to increase the commuter capacity in South-East London, and would he therefore stimulate the earliest possible publication of these proposals so that action may be taken?
    Mr. Swingler: My hon. Friend will know that a number of consultations are going on about the best proposals to deal with the situation. We recognise that some very important decisions will have to be taken. British Railways and London Transport are going forward with these proposals, and I hope to hear from them in the near future.

    Hurst Green-Lewes Line (Proposed Closure)
    Sir T. Beamishasked the Minister of Transport what is the reason for the delay of more than a year in announcing his decision following the public inquiry into the proposal to close the Hurst Green-Tunbridge Wells-Lewes railway line; if he is aware of the delay that will be caused to the completion of stage one of the Lewes relief road if a decision is not now made with regard to the Lewes-Barcombe Mills section of this line; and if he will now announce his decision.
    Mr. Carmichael: The delay in reaching a decision on this proposal is due, as the hon. and gallant Member is well aware, to the particularly complex issues involved.
    We are fully conscious of the implications of the proposal for the timing of roadworks connected with stage I of the Lewes relief road. My right hon. Friend will announce a decision as soon as he is entirely satisfied that all the necessary investigations have been completed.
    Sir T. Beamish: Since it is 14 months since a public inquiry strongly and unanimously recommended that this railway line should be kept open, is it not high time that a decision was made? Is the hon. Gentleman aware that the failure to make a decision, unless one is made very soon, is almost certain to result in unnecessary waste of public expenditure on quite a large scale?
    Mr. Carmichael: I am aware of the long time this matter has taken. I would not agree with the results of delay suggested by the hon. Gentleman. It is an extremely complex question. The relief road and the railway line are involved.

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    It is right that my right hon. Friend should arrive at a correct decision rather than a quick decision.

    Diesel Locomotive Fuel (Inflammability)
    Mr. Goodhewasked the Minister of Transport what study he has made of the degrees of inflammability of varying grades of diesel fuel for trains; and if he will make a statement.
    Mr. Marsh: The selection of a suitable fuel for use on trains is a matter for the British Railways Board, but I am informed that the fuel oil in use on diesel locomotives and multiple-unit trains is to British Standard 2869/1957, Class A, which specifies a minimum flash point of 130°F.
    Mr. Goodhew: Is the right hon. Gentleman aware that the incidence of fire on diesel units is far too high and that the risk attaching to the existing grades of fuel is quite unacceptable to passengers who have to travel on these trains? What does he propose to do about this?
    Mr. Marsh: There have been serious problems, but I think that the hon. Gentleman would do well not to exaggerate them and cause unnecessary worry. These are the minimum flash points. The fuel involved in the accident at Sandridge on 18th August, 1965, had a flash point of 170°F. Comparing that with petroleum spirit or other light fuels, which have a flash point of about 73°, this is a pretty big margin.

  TRANSPORT

    Retread Tyres (Standards)
    Mr. Gwilym Robertsasked the Minister of Transport if he will introduce regulations laying down minimum standards for retread tyres for sale to the public.
    Mr. Marsh: A British Standard for retread tyres has been prepared and should lead to improvements in quality. I do not propose further action at present.
    Mr. Roberts: Would my right hon. Friend agree that, while we appreciate the tireless work already done by his Ministry in the tyre field, we should be very

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    happy if he gave his blessing to the British Standard when it appears, possibly this autumn?
    Mr. Marsh: Yes, Sir. I should expect to receive the revised Standard probably towards the end of this month, and it would be my intention to ensure that publicity is given to it. One will then have to see how best to deal with it, and whether the knowledge that particular types of tyre do not reach the published specification would not in itself be of great assistance in this field.

    Channel Tunnel
    Mr. Robert Howarthasked the Minister of Transport if he will commission an inquiry on the lines of the Third London Airport Inquiry to consider the full implications of the decision to proceed with the construction of a Channel Tunnel.
    Mr. Marsh: No, Sir. Before any final decision can be taken to begin construction of the Channel Tunnel, legislation will be presented to Parliament seeking the necessary enabling powers. This will provide ample opportunity for public consideration of all the issues involved.
    Mr. Howarth: As I understand that the decision has been taken in principle, would not my right hon. Friend wish to emulate the action of the President of the Board of Trade who very courageously and, I believe, wisely commissioned an inquiry into the Third London Airport? Surely the decision about building the Channel Tunnel is even more important. Can we be assured that the questions will be looked at?
    Mr. Marsh: To make the point clear, no decision has been taken about the building of the Channel Tunnel. It is a matter for Parliament to decide in the light of all the facts which will then be presented to Parliament. The big difference between Stansted and the Channel Tunnel is that Stansted did not require legislation whereas the Channel Tunnel does. I fully accept what my hon. Friend says with regard to consultation. Consultations are already in progress with local authorities and other affected interests, including the South-Eastern Economic Planning Council.
    Mr. Robert Howarthasked the Minister of Transport if he has considered the effect on the proposal to construct a Channel Tunnel of the ability of large, fast, economical hovercraft to operate from existing East and South Coast ports to most countries of Western Europe; and what conclusion he has reached.
    Mr. Marsh: In past Anglo-French decisions to pursue the Channel Tunnel project, full account was taken of the available information on hovercraft; but before any final commitment to construction of the Tunnel, there must be a further review of its viability and, for this review, new cost and revenue studies will be made. Hovercraft, as one of the methods of cross-Channel transport, will be among the factors in these studies.
    Mr. Howarth: Will my right hon. Friend accept that the potential for hovercraft to operate from the whole length of the East Coast and the South Coast to various ports in Europe must surely affect the proposal to build the Channel Tunnel based on probably the most inconvenient corner of the United Kingdom?
    Mr. Marsh: No, Sir. The preliminary evidence at this moment does not show that. Of course, British Rail is bringing into operation its first cross-Channel hovercraft ferry service this year, and this is one of the things on which we shall want to get some experience. All the previous economic appraisals have indicated that hovercraft will be faster but not necessarily cheaper than ships, that the Channel Tunnel will be cheaper and give better journey times than other methods, and that the Tunnel will avoid double handling on long journeys.
    Mr. G. Campbell: Will the right hon. Gentleman bear in mind the development that is going on with container ships and the effects that this may have on the question of the Channel Tunnel?
    Mr. Marsh: What I have said is that the Government will want to get the fullest and most up to date information on the alternative forms of transport in relation to the Tunnel. This evidence will be given to Parliament, and Parliament will have the opportunity of debating it fully. All the preliminary
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    work so far indicates that the Channel Tunnel is viable with or without hovercraft.

    Senior Management (Salaries Structure)
    Mr. Websterasked the Minister of Transport when he will now carry out a review of the salary structure of senior managements of the industries for which he is responsible.
    Mr. Marsh: Any decision to review the salary structures of their senior staff is a matter for the boards of the undertakings.
    Mr. Webster: As the Chairman of British Railways now gets £1,500 less than his own Vice-Chairman and considerably less than the Chairman of the Steel Board, will the right hon. Gentleman now carry out a complete review in order to get rid of the anomalies?
    Mr. Marsh: I think that the hon. Gentleman is on the wrong Question. There is a subsequent Question relating to the salaries of board members. This Question relates to senior managers; they are different people.

    Waterways (Transport Bill)
    Mr. Berryasked the Minister of Transport what recent representations he has received from the waterways community about the effects of the Transport Bill on their interests; and what reply he has sent.
    Mr. Carmichael: A large number of individuals and organisations concerned with transport, fishing, water supply, boating drainage and other uses of the waterways have commented on the Bill and it would be impracticable in an answer to a Parliamentary Question to summarise the replies that have been sent to them.
    Mr. Berry: Is the hon. Gentleman aware that Schedule 12 of the Transport Bill, which lists the cruising waterways amongst other matters, was not discussed either in Committee or on the Report stage because of the Guillotine and that it omits large sections of our waterways which those concerned feel should be part of the Bill? Will he look again at this and see whether at a later stage

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    these parts could not be added to the Schedule?
    Mr. Carmichael: This matter was discussed in principle on the Bill and the fact that we were not able to reach certain Clauses is not the responsibility of the Government. But the hon. Gentleman must be aware of the attitude of the Government to the inland waterways. We are anxious to get the maximum from them for recreational facilities for the nation and this is provided for in the Bill.

    Manufacturing Establishments (Survey of Transport)
    Mr. Campbellasked the Minister of Transport what is now delaying the publication of the Survey of Transport from manufacturing establishments commissioned by his Department.
    Mr. Swingler: It is expected that it will take some time for the full report to be printed, but a summarised version is being prepared for earlier publication and we hope this will appear in the late summer.
    Mr. Campbell: As the unnecessary and idiotic restrictions on road transport, sometimes known as quantity licensing, proposed by the Government in the Transport Bill were supposed to be based on this information, why it is taking so long for the report to be made public?
    Mr. Swingler: The hon. Gentleman has specialised in misleading himself. No such suggestion was ever made and we undertook the taking of the necessary decisions on the reform of the licensing system. Nevertheless, the information came from 720 manufacturing firms all over the country and will give us some information as to how successfully these proposals will work.

    Hit-and-Run Accident Victims (Compensation)
    Mr. Buchanan-Smithasked the Minister of Transport if he will now announce details of the new arrangements for the compensation of the victims of hit-and-run accidents.
    Mr. Bob Brown: Although the main shape of the new arrangements has been
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    settled, it has not yet been possible to settle all the details which must go into a formal document. We hope to be able to inform the House of the new arrangements before the Summer Recess.
    Mr. Buchanan-Smith: Why has there been this delay? Is the hon. Gentleman aware that negotiations have been going on for over two years and that four months ago the House was told that the new procedure would be brought into effect very shortly. Nothing seems to be happening.
    Mr. Brown: I must correct the hon. Gentleman. He says that the House was told that the new procedure would be brought in very shortly. On the contrary, my predecessor said that he hoped that this would be so. He did not say that it would be. The hon. Gentleman asks why these details have taken so long. They are proving very complex. The field for the necessary consultations is very large. It includes the whole of the insurance market and other Government Departments, especially, of course, the Law Departments, and all this necessarily takes time.

    London Buses (No-Standing Rule)
    Mr. Huntasked the Minister of Transport what steps he has taken in accordance with the Government's prices and incomes policy to ensure that the abolition of the no-standing rule for London's buses is part of the productivity agreement currently being negotiated between the London Transport Board and the Transport and General Workers' Union.
    Mr. Swingler: The London Transport Board is keeping us informed of the progress of its negotiations. It would not be helpful to the parties if we were to comment at this stage on matters under discussion, and the possible content of any productivity agreement.
    Mr. Hunt: Is the hon. Gentleman aware that Londoners bitterly resent the prospect of further fare increases while the many restrictive practices within London Transport, such as the idiotic no-standing rule and the failure to extend one-man bus operations, are allowed to continue? Cannot the Government give a positive lead to London Transport on this matter?
    Mr. Swingler: We have been giving a positive lead on this matter, which is why these discussions have been going on. It is only possible to make progress on the matter by careful negotiation between the management and the trade unions in London. I believe that we can get a successful productivity agreement, but it is best left to the parties to reach agreement.
    Mr. Heffer: Is my hon. Friend aware that many people who travel on the buses do not consider this rule as particularly idiotic and that we do not want to reach the position in this country in which, like the people of Paris and Rome, we are herded like cattle on the buses?
    Mr. Swingler: I shall make no comment on the relative idiocy or otherwise of any of these things. What we want and need is higher productivity and one-man operation. That is what the management and the trade unions are negotiating about, and we hope and trust that the negotiations will come to a successful conclusion.
    Sir G. Nabarro: How does the hon. Gentleman reconcile his statement a few moments ago that he is giving a lead to London Transport with his earlier reply to me that he has no statutory authority to deal with the fares charged by London Transport? The two statements are in contradiction.
    Mr. Swingler: The hon. Gentleman should try to abstain from misrepresenting what I say. I did not say that we had no statutory authority. I said that under the legislation brought in by his party the Transport Tribunal in London was set up as the final authority on questions of fares and that we are awaiting its decision. The hon. Gentleman must also bear in mind that for over two years the Government have kept down fares in London.
    Mr. Spriggs: Will my hon. Friend also consider the safety aspect of this proposal as well as productivity?
    Mr. Swingler: Of course. That is precisely why all these matters must be carefully negotiated between the management and the trade unions.

    Driving Test
    Mr. Buchanan-Smithasked the Minister of Transport what plans he has to extend the scope of the driving test,
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    with particular reference to vehicle control in adverse road conditions, driving on motorways and night driving.
    Mr. Bob Brown: None, Sir. We do not consider it either necessary or practicable to extend the scope of the driving test in the particular ways suggested.
    Mr. Buchanan-Smith: Would not the hon. Gentleman agree that, after passing his driving test, a new driver still needs much more experience before becoming fully qualified? Is there not a case for a probation period after the test in the general interest of road safety?
    Mr. Brown: That is a different question. One certainly agrees, however, that, following qualification in the driving test, it is experience which really makes a good driver.
    Dr. Dunwoody: Does not my hon. Friend agree that it is illogical that we should repeatedly test old motor vehicles while the passing of one test entitles a driver to drive for the rest of his life? Will he look at the possibility of a repeated test after a licence has been held for a number of years?
    Mr. Brown: That also is another question. If my hon. Friend puts it on the Order Paper, we will endeavour to answer it.

    Motor Drivers (Behaviour)
    Mr. Rankinasked the Minister of Transport if he is aware that a recent study by Mr. Meyer H. Parry, a copy of which has been sent to him, shows that motor drivers exhibit an overt aggressive behaviour on too many occasions to other drivers often with serious results to themselves and other road users; and what steps he intends taking to improve behaviour while driving on the roads.
    Mr. Bob Brown: The steps we are taking to improve driver behaviour were outlined in the Government's White Paper—" Road Safety—A Fresh Approach " [Command 3339]. We have already inaugurated the publicity programme and action to implement the other proposals outlined in the White Paper is well advanced. Research by the Road Research Laboratory into the problem of driver behaviour is also continuing.
    Mr. Rankin: I agree with what is being done, but does my hon. Friend agree with me that the social misbehaviour reported by Mr. Parry, added to driving misdemeanours, results in a toll of death and injury to Britons which is a disgrace to the country? Does he not agree that more traffic wardens, both mobile and stationary, would be of immense help in reducing this burden?
    Mr. Brown: While I do not want to comment on Mr. Parry's book, I agree generally with what my hon. Friend has said, and I am sure that my right hon. Friend will consider his proposition.

    East Coast Ports (Road and Rail Links)
    Mr. Gwilym Robertsasked the Minister of Transport what steps he is taking to improve the road and rail links between the industrial areas of the Midlands and South-East and the high-capacity sea container freight service centres such as Harwich with their connections to Europe.
    Mr. Carmichael: The trunk road programme and preparation pool contain a large number of schemes designed to improve road communications between the Midlands and South-East and the ports of Harwich, Felixstowe and Tilbury. It is for the British Railways Board to plan rail links and to seek my right hon. Friends approval should major expenditure be involved in any project they may have in mind.
    Mr. Roberts: Is my hon. Friend certain that these improvements go far enough? Is he aware that the roads and railways from East Anglia lead to London? Does he not agree that it is virtually impossible to carry freight efficiently from industrial areas like the Midlands and South Bedfordshire to Harwich and the other East Anglian ports?
    Mr. Carmichael: It is recognised that there are difficulties in the London conurbation and that railway lines and roads tend to lead to London, but British Railways has forward planning schemes which, we believe, will adequately cater for the expected traffic in containerised freight by sea, and in the roads programme priority is being given to roads serving the docks, particularly the container ports.
    Mr. Lane: Will the hon. Gentleman also keep in mind that, in the absence of by-passes, traffic congestion is yearly getting worse in places such as Cambridge? Will he consider putting an East Anglian highway higher up his batting order of desirable trunk improvements?
    Mr. Carmichael: As traffic increases, some of our older towns are obviously bound to become more congested, but there are plans for special roads, not by any means to motorway standards, but to good adequate standards, for these ports and we hope that to some extent they will alleviate the present congestion in towns.
    Dr. Gray: In view of the introduction of the " roll-on roll-off" service from Great Yarmouth to Scheveningen and the possible introduction of passenger services from Great Yarmouth to Holland, will my hon. Friend look at the whole question of the road network leading to the Midlands the North and the North-East from Great Yarmouth and other East Anglian ports? Is he aware that these are very insufficient for the development foreseen?
    Mr. Carmichael: I can assure my hon. Friend that because of the explosion in container traffic and the "roll-on roll-off " service the whole question of the roads to ports is continually being looked at. My hon. Friend can rest assured that the questions he has raised will not be overlooked.

    Quantity Licensing System
    Mr. Peter Walkerasked the Minister of Transport what consideration he has given to alternatives to the quantity licensing system as envisaged in the Transport Bill.
    Mr. Marsh: I have considered various alternatives, but none of them is likely to be as effective as the limited form of quantity licensing proposed in the Transport Bill.
    Mr. Walker: Will the Minister give further consideration to the suggestion put to him by the industry of a system whereby British Railways are informed of the rates charged and can put forward their quotation, thus eliminating all the system of tribunals that would otherwise have to be set up?
    Mr. Marsh: The present position under the Transport Bill saves a great deal of bureaucracy, in that it releases something like 100,000 vehicles from licensing. The difference between us is that the Dutch system, which is basically what is being proposed here, would present information but in the last resort the consignor could still stick to road transport in the face of all the evidence that rail was just as good.

  PORTS

    Public Ownership
    Mr. Roy Hughesasked the Minister of Transport (1) if it is still his intention that the ports will be taken into public ownership by 1970; and if he will make a statement;
    (2) to what extent his plans for ports reorganisation include the taking into public ownership of privately-owned ports, stevedoring and lighterage companies.
    Mr. R. C. Mitchellasked the Minister of Transport when he proposes to introduce legislation to take the ports into public ownership.
    Mr. Marsh: I am not yet able to make a statement on this subject, but will do so as soon as possible.
    Mr. Hughes: Will the Minister bear in mind the assurance given by his predecessor on 22nd February last year, that she hoped to take the ports into public ownership by 1970? Will he appreciate that any attempt to back-slide on an election pledge, freely given, will cause further dismay to Labour supporters throughout the country?
    Mr. Marsh: The answer I have given is that I will make a statement on this subject as soon as possible. There is no reason for my hon. Friend to believe that people are back-sliding on election pledges.
    Mr. Mitchell: Will the Minister give an assurance that a Bill to bring the ports into public ownership will be introduced in the next Session?
    Mr. Marsh: As I have already said, I am not able to make a statement on this subject at present.
    Sir G. Nabarro: As the Government have back-slid on every election promise, surely it will not matter at all if they abandon the nationalisation of the ports —it being manifestly in the public interest so to abandon it—or ask the Lords to throw it out, which would be better still.
    Mr. Marsh: I do not know what is causing all this heat in the Chamber this afternoon. There is no proposal to withdraw from the decision, which the Government believed was a right one, that there is a need for an extension of public ownership in the British ports system.
    Mr. Heffer: First would my right hon. Friend ignore the Buffoonery we have had from the hon. Member for Worcestershire, South (Sir G. Nabarro)? Would he take into consideration the very serious nature of the Question of my hon. Friend? This is a pledge given to the electorate, it was in the election programme, and any back-sliding will certainly be resisted by the entire Labour movement. Is my right hon. Friend aware that we want to see nationalisation of the docks at the earliest possible moment, including the stevedoring companies as well?
    Mr. Marsh: On the first point, one never does take any notice of the hon. Member for Worcestershire, South (Sir G. Nabarro). As to the second point, all I have said is that in due course, as soon as I can, I shall make a statement on the whole issue.

  AGRICULTURE, FISHERIES AND FOOD

    Agricultural Land (Planning Applications)
    Sir T. Beamishasked the Minister of Agriculture, Fisheries and Food whether he is now in a position to state his Department's policy towards planning applications involving land used for agricultural and horticultural purposes following the Minister of Housing and Local Government's consultations with the local authority associations.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): Yes, Sir. In future it will be our policy to provide

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    local planning authorities with a technical appraisal of the agricultural factors relevant to each application. The aim will be to show the degree of need for the development and the agricultural consequences of disallowing it, so as to assist the planning authority in weighing these factors with the other material considerations.
    We propose also to arrange that where a public inquiry is held into an appeal against the refusal of planning permission, a witness from my Department will be able to give evidence in support of the Department's technical appraisal.
    My right hon. Friends the Minister of Housing and Local Government and the Secretary of State for Wales will be issuing a Circular to local planning authorities bringing these arrangements into force as soon as possible.
    Sir T. Beamish: Is that very welcome announcement likely to result in less good agricultural land being lost than has been the case all too often in the past?
    Mr. Mackie: What will happen is a matter of opinion.
    Mr. Scott-Hopkins: Is it not time that the hon. Gentleman has a survey made of all agricultural land and grading done from it and excluded the best agricultural land from planning permission for dwellings, motorways and things like that?
    Mr. Mackie: I must put the hon. Gentleman right. This matter is to do with agricultural dwellings. It has nothing to do with motorways, and so on.
    Mr. Bryant Godman Irvine: Is the hon. Gentleman aware that the complaint in the past has been that his Ministry has not expressed any view in this matter? Does this change mean that positive action will be taken?
    Mr. Mackie: We had to give an opinion on the long-term benefit to the land of any development of this nature. Now we are simply prepared to give an opinion in order to help the planning authority on the benefit to agriculture in general and not simply on the long-term benefit for the land.

    Northumberland Committee (Report)
    Mr. Hastingsasked the Minister of Agriculture, Fisheries and Food when he expects the Northumberland Committee to report.
    Mr. John Mackie: My right hon. Friend hopes that the Committee will make an announcement about its plans very soon.
    Mr. Hastings: What does "very soon" mean? Is the hon. Gentleman aware that farmers are no less apprehensive as time goes on of the danger that they are in? Does he not think that to suspend all consideration of measures which may be taken against infected meat imports while awaiting the results of the Committee's deliberations is not good enough? Is the hon. Gentleman and the Committee seized of the urgency of the matter?
    Mr. Mackie: The Committee was appointed on 28th February and it had its first meeting on 14th March. Perhaps the hon. Gentleman will think back to the Gowers Committee and of the enormous job which it had to do. I do not think that we can rush the Northumberland Committee's deliberations. The Duke of Northumberland fully appreciates the worry of farmers on the subject, and I do not think that it would do any good to rush the Committee. As I say, it is up to the Committee to decide whether it should make an interim report. We have given it a job to do, and we should allow it to do it in its own way, because it is a Committee of experts.

    Foreign Dairy Products (Dumping)
    Mr. Hastingsasked the Minister of Agriculture, Fisheries and Food whether he will now limit the present dumping of foreign dairy products on the British market.
    Mr. John Mackie: I would refer the hon. Member to the replies given to the hon. Members for Torrington (Mr. Peter Mills) and for North Angus and Mearns (Mr. Buchanan-Smith) on 15th May last. We are actively considering the representations that have been received but I cannot say anything further at present. —[Vol. 764, c. 1199 and 245–6.]
    Mr. Hastings: Is the hon. Gentleman aware that, apart from the subsidised imports of butter, the imports of milk products and cheese are at such a level that, without exaggeration, they are threatening the complete collapse of the dairy products market? The time has arrived when something must be done about this.
    Mr. Mackie: We appreciate the situation. Although the figures for this month are greater than they have been, the overall percentages of imports against our own production have been roughly the same year in and year out. We have the situation very much in mind. It has arisen just recently. We would rather take the right action than hasty action.
    Mr. Maxwell-Hyslop: Is the hon. Gentleman aware that the E.E.C. is paying a subsidy of about 600 per cent. on butter? If this is not dumping, what on earth is?
    Mr. Mackie: Anti-dumping legislation is the concern of the Board of Trade. If the hon. Gentleman puts down a Question to the Board of Trade, it will deal with it.

  SCOTLAND

    Prescription Charges
    Mr. Rankinasked the Secretary of State for Scotland if he will exempt women in Scotland who are retired from work at 60 years of age from the payment of prescription charges.
    The Under-Secretary of State for Scotland (Mr. Norman Buchan): No, Sir.
    Mr. Rankin: Is it not the case that many women are being compelled by their terms of employment to retire at 60? Men get the benefit of the Health Service at their retirement age. Should not that apply equally to women?
    Mr. Buchan: This matter was debated quite recently. The criteria are based on need. If there is need, the necessary exemptions will be given.
    Mr. G. Campbell:Is the hon. Gentleman still examining the general question of exemptions, because there appear to be considerable anomalies? For example, is he satisfied about the situation concerning people suffering from serious mental illnesses who have to take expensive drugs but who, without the drugs, would still be in hospital?
    Mr. Buchan: The hon. Gentleman will have to see how the matter works out. We are looking at all possibilities. As he knows, we keep all the medical services under review.
    Mr. Rankin: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall endeavour to raise the matter on the Adjournment.

SOUTHERN RHODESIA ORDER (HOUSE OF LORDS DECISION)
Mr. William Hamiltonasked the Lord Privy Seal when he will make a statement on the implications of the decision made by the House of Lords yesterday on the Order relating to United Nations mandatory sanctions against Rhodesia.
The Lord Privy Seal and Leader of the House of Commons (Mr. Fred Peart): The existing Order remains in force until early July. The Government will bring a new Order before both Houses as soon as possible.
My right hon. Friend the Prime Minister hopes to make a further statement in the House tomorrow on the constitutional issues involved.
Mr. Hamilton: In view of what was said in the other place yesterday, can my right hon. Friend say whether it will be possible for the Government to introduce the identical Order again?
Secondly, in view of the obvious intention of Her Majesty's Opposition to use the House of Lords as a ready-made instrument for bare-knuckle party politics, will my right hon. Friend give an assurance that he will take up the challenge and, as a first step, at least suspend forthwith the all-party talks on House of Lords reform?
Mr. Peart: In reply to my hon. Friend's first question, my right hon. Friend, and, indeed, the Commonwealth Secretary, are taking legal advice. I understand that there may have to be changes of a technical nature, but I do not think that the preparation of a new Order will present any new difficulty.
In reply to the second matter raised by my hon. Friend, he should await the statement tomorrow by my right hon. Friend the Prime Minister.
Mr. Thorpe: May I ask the Leader of the House two questions? First, in view of the fact that Monday's vote in this House sought to repeal certain existing Statutory Instruments in favour of the new one, will the Prime Minister be mentioning the legal consequences or can we have a statement from the Attorney-General?
Secondly, as the vote last night sought to dishonour obligations which this country has entered into with the United Nations, and as of the 194 votes against the Order 119 were from Peers who sit in the other House on an hereditary basis, does not this prove beyond per-adventure the necessity of abolishing for all time the hereditary principle of the House of Lords?
Mr. Peart: In reply to the second point raised by the Leader of the Liberal Party, I hope that he will await the statement of my right hon. Friend tomorrow. I take note of what has been said.
In reply to the first point, the Order is still in force.
Mr. Park: Will my right hon. Friend convey to the Prime Minister the views of many of us on this side that this deliberate flouting of the will of the elected Chamber by a non-representative and archaic Upper House creates an overwhelming case not only for the abolition of the hereditary element in the other place, but for the total abrogation of its delaying powers as well?
Mr. Peart: I note what my hon. Friend has said, but he should await the statement by my right hon. Friend tomorrow.
Sir Knox Cunningham: Might not the best way of ascertaining the wishes of the people concerning the position of the House of Lords be by consulting them at a General Election and not by paying attention to the views of hon. Members who are supporting an utterly unrepresentative and discredited Government?
Mr. Peart: I am never surprised at the asinine remarks of the hon. and learned Member.
Sir Knox Cunningham: The Leader of the House does well himself.
Mr. Peart: I believe that the hon. and learned Member does no credit even to
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his own party. I will only say that he should await my right hon. Friend's statement.
Mr. Emrys Hughes: Between now and tomorrow, will my right hon. Friend advise the Prime Minister to reread what the late Sir Winston Churchill "said at the time of one of the last constitutional crises, when he referred to the House of Lords as a Punch and Judy show? If that is the case, and the House of Lords is living up to its reputation, is it not time to abolish that Punch and Judy show?
Mr. Peart: I know the views of my hon. Friend, but I pay tribute to Peers who supported the Government in the Lords.
Mr. Ronald Bell: Can the Leader of the House say whether the House of Lords works on a system of dog licences, like the Government side of this House?
Mr. John Hynd: In making his statement tomorrow, will the Prime Minister make a statement on the constitutional implications of the fact that the majority in the House of Lords were clearly carrying out a direct mandate given to them by a Government who are in rebellion against the Crown?
Mr. Peart: I will convey that view to my right hon. Friend, although he is well aware of it.
Mr. Hastings: Will the right hon. Gentleman recognise that yesterday's decision by the House of Lords was consistent, courageous and correct, and that for the Government, operating as they are without any mandate whatever from the British people, to start tampering with the constitution at this time would be most dangerous?
Mr. Peart: I think that yesterday's action was extremely dangerous. Therefore, my right hon. Friend will make a statement tomorrow on the constitutional issues involved.
Mr. Shinwell: Equally, when my right hon. Friend the Prime Minister makes his statement tomorrow, will he have regard to the inescapable, well-known fact that according to the Press—all reputable organs of the Press particularly— the hereditary section of the House of Lords was instructed by the Leader of

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the Opposition to take the right hon. Gentleman's view?
Mr. Peart: My right hon. Friend is well aware of that.
Mr. Gresham Cooke: With regard to the constitutional position of the House of Lords, will the Leader of the House advise the Prime Minister, before making his statement tomorrow, that the House of Lords performs a valuable function by registering a vote which is exactly in conformity with what the man in the street thinks on the topics of today?
Mr. Peart: I cannot accept the reasoning of the hon. Member, but I will always give sound advice, which may not be the advice that the hon. Member would give.
Mr. Winnick: Is it not the fact that the Tory Peers who voted against the Rhodesian Order did so at the express wish of two parties: first, as has already been mentioned, the Front Bench opposite, but, secondly, Ian Smith, who sent a special message to the Peers through the Evening Standard last night? Is the Leader of the House aware that regardless of the Tory Peers who voted against the Order, many of them with substantial business interests in Rhodesia, their action, far from changing our minds—
Mr. Speaker: Order. Questions even from the hon. Member must be brief.
Mr. Winnick: —far from changing our minds, we will fight all the more effectively against the illegal Rhodesian Front régime in Salisbury?
Mr. Peart: I am well aware of that. My right hon. Friend is, also.
Mr. Brooks: Will my right hon. Friend recall that it was once said on, I think, good authority that a majority of one vote was enough? Would he not agree that a majority of nine votes is more than enough to concentrate our minds on the future of the situation when unwholesome instructions can be carried out by an unrepresentative assembly in support of an alien and thoroughly undemocratic régime?
Mr. Peart: I am well aware of those views and I will, of course, take note of them.
Mr. Cronin: Is it not time that the influence of heraldic monsters should be eliminated from the political scene and that if a Second Chamber proves to be necessary it should be established on modern lines, compatible with the good opinion of people in this country and in countries abroad?
Mr. Peart: This is a very wide issue, on which my right hon. Friend will be making his statement tomorrow.
Mr. Whitaker: Is my right hon. Friend aware that four million Rhodesian Africans who have grown out of the system of tribal chiefs will be watching with interest tomorrow to see whether we grow out of our tribal hereditary system?
Mr. Peart: My hon. Friend has raised a very interesting point, and I will bear it in mind.
Sir Knox Cunningham: On a point of order. Owing to the unsatisfactory nature of the Leader of the House, I will raise the matter again.

NUCLEAR WEAPONS (NON-PROLIFERATION TREATY)
The Minister of State for Foreign Affairs (Mr. Frederick Mulley): With your permission, Mr. Speaker, and that of the House, I wish to make a statement on the non-proliferation of nuclear weapons.
As the House will know, the General Assembly of the United Nations passed by an overwhelming majority on 12th June a resolution commending the draft Treaty on the non-proliferation of nuclear weapons which had been prepared by the Eighteen Nations Disarmament Committee, and requesting that it be opened for signature and ratification at the earliest possible date. I hope that the Treaty will be opened for signature very soon.
The Treaty contains provisions aimed at preventing the spread of nuclear weapons to those States which do not now possess them, for safeguards to ensure that nuclear material provided for peaceful purposes is not diverted to nuclear weapons or other nuclear explosive devices, and for the potential benefits of any peaceful applications of nuclear explosives to be made available

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to non-nuclear-weapon States party to the Treaty. Finally, parties to the Treaty undertake to pursue negotiations in good faith on further measures of disarmament.
The Treaty in its present form is the fruit of long and arduous negotiations, in which the United Kingdom was able to play a major part. Her Majesty's Government believe that the Treaty is the most important and substantial measure of disarmament and arms control that has yet been achieved, and that it is the first essential step in achieving the end of the nuclear arms race and significant progress on the road to general and complete disarmament, under strict and effective international control.
A connected question is that of security assurances to meet the concern of some non-nuclear-weapon States about their security if they renounce the option of acquiring nuclear weapons under the Treaty. The three nuclear Powers who have taken part in these negotiations, the United States, the Soviet Union and ourselves, have, therefore, jointly put forward proposals for security assurances, in the form of a draft Security Council resolution to be supported by individual declarations.
These proposals, which envisage immediate Security Council action in the event of a nuclear threat or nuclear aggression against a non-nuclear State, are at present being considered by the Security Council.
Mr. Wood: While thanking the right hon. Gentleman for his statement, and welcoming any effective step which will arrest the spread of nuclear weapons, may we have the right hon. Gentleman's assurance that we shall be given an opportunity to debate both the implications of the Treaty and the implications of the security assurances which he mentioned towards the end of his statement?
Secondly, will he publish in the OFFICIAL REPORT the names of those nations which did not support the resolution?
Lastly, can he say anything about the attitude to the Treaty of France and China?
Mr. Mulley: I am grateful for the right hon. Gentleman's observations. The question of the time for a debate is not
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for me, but I should welcome a debate. I know that my right hon. Friend is sympathetic to the possibility of a debate, but there are other pressing demands on time.
We shall be laying before the House the final copy of the Treaty as soon as this is cleared in New York. As no doubt the right hon. Gentleman understands, it is to be published in five languages, and that involves final adjustments on the text.
The countries which voted against it were Albania, Cuba, Tanzania and Zambia. There were 21 other countries which abstained.
France made clear, both in the General Assembly and yesterday in the Security Council, that she would abstain on the vote and would not sign the Treaty, but that she would behave exactly as if she had signed the Treaty, and gave an assurance that she had no intention whatever of proliferating nuclear weapons. Rather as one expected, the Chinese Government denounced the whole exercise of a non-proliferation Treaty as being, to put it in a shorthand form, a United States/Soviet Union conspiracy.
Mr. Heath: Can the Minister give the House any more information about the security assurances? The Government seem to have embarked upon a worldwide commitment for the use of our nuclear power, apparently on an automatic basis, for the defence of any country which is attacked by nuclear weapons. Is this so?
Will the Minister publish the proposals which are now being made? Will these assurances come into effect automatically? Will the veto on the Security Council still apply while discussions on use are going on in the Security Council? For a matter of such immense importance, ought not the matter to be debated by the House before the Government enter into these undertakings?
Finally, will the proposals be published as a Treaty which the House will then be able to discuss and decide upon in the usual way for treaties?
Mr. Mulley: The form of the Security Council resolution was published at the conclusion of the Geneva deliberations at the end of March, and was placed in the Library at that time. It is included in

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the booklet "Path to Peace", which we published some days ago. I have answered Questions in the House on a number of occasions about the security assurances, and no question of a debate about them then arose.
There will not be an automatic commitment, because that, as I explained in my speech in New York, can arise only from a defence agreement. The intention of the security assurance is that the three nuclear Powers would make it an issue immediately in the Security Council, to enable the Security Council to act in the event of a threat of nuclear attack to a non-nuclear country. Also, in our declarations we reserve the rights of Article 51 to act if, for whatever reason, there were undue delay within the Security Council.
This does not involve the automatic commitment that the right hon. Gentleman mentioned. In fact, in the debates in the General Assembly, many countries expressed the view that they did not go far enough because we were not able to give that kind of automatic assurance, which the right hon. Gentleman will realise is only possible, and then not always possible, within a defence agreement.
Mr. Mendelson: Will my right hon. Friend accept that there will be widespread satisfaction and support for this major achievement in foreign and disarmament policy? Will he take note that the addition of the security guarantee is a considerable improvement of the original proposal and will bring further support from nations which were hesitant at the beginning of these discussions? Will he reject suggestions that have recently appeared in newspapers and by some spokesmen of the Federal Government in Bonn that we should not proceed with the Treaty because there are international difficulties on other subjects? This is a major success and the Government ought to be congratulated.
Mr. Mulley: I am most obliged to my hon. Friend. I would recall to the House that President Johnson described this as the most important international agreement in the field of disarmament since the nuclear age began, and I see no reason to disagree with his remarks. Certainly, it is our intention and, I am well
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aware, also the intention of the United States and the Soviet Union, to press on as fast as possible, not only in getting the Treaty brought into force but in carrying on further measures of disarmament thereafter.
Dr. David Owen: I congratulate my right hon. Friend on a very real and significant advance. Would he bear in mind that many hon. Members would like to have a debate on this issue? Would he answer two questions? First, what is the position of the Indian Government, particularly in view of the security assurances that he has indicated? Secondly, can he assure us that there will be no difficulty in making the partial enrichment plant at Capenhurst available for our European partners?
Mr. Mulley: India abstained in the vote and made it clear in the debates that she was not, at present at any rate, prepared to sign the Treaty. As for her attitude to the security assurances, she indicated that she saw value in them because she argued that they should not be confined, as they will be, to countries which signed the Treaty but should be made generally available.
I see no reason why the Treaty should affect in any way the operation of our own establishments, although, as I explained to the House as long ago as last December, we have voluntarily undertaken, as have the United States Government, to place our nuclear installations under the same form of inspection as will be worked out for the non-nuclear countries.
Mr. Lubbock: While congratulating the right hon. Gentleman on the part he has played in this Treaty, what further steps do the Government envisage towards disarmament? In particular, do the Government intend to put any proposals to the United Nations for a treaty on chemical and biological warfare, in view of the great public anxiety which has arisen in the last few months on this question?
Mr. Mulley: I am grateful to the hon. Gentleman, and I am happy to say that we were able to play some part in the strengthening of the Treaty as to its commitment for future measures of disarmament. It will be my intention to propose at Geneva that work is urgently

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done on further measures of nuclear disarmament—and I have particularly in mind the comprehensive test ban treaty, the cut-off on the use of nuclear material for military purposes and, if we can, progress on the freezing of the number of nuclear delivery vehicles—and also that Geneva should concern itself with conventional disarmament problems.
In that connection, priority should be given to seeing what can be done in the chemical and bacteriological fields. But I would say that we have a protocol. Although it may not be entirely as we would have wished 40 years after it was propounded, the 1925 Geneva Protocol prohibits the use of poisonous gases and biological and bacteriological means of warfare.
Mr. Philip Noel-Baker: While congratulating my right hon. Friend on his efforts and welcoming warmly his promise to press on with the consideration not only of collaterals but also with disarmament, including conventional disarmament, may I ask whether he will give us a White Paper containing the text of the Treaty, with all the abstensions, votes, and so on, and an account of the negotiations? Will he also press on his right hon. Friend that the House must have a debate on this vitally important matter before we rise for the Summer Recess?
Mr. Mulley: My right hon. Friend the Lord Privy Seal has been listening to the demands for a debate. As I have said, I would welcome a debate, and I hope that it may be possible for one to be arranged.
It is the Government's intention to publish the final text. The text as it was until a fortnight ago has already been published. The text on which we voted in New York has been placed in the Library. As soon as we get an agreed text from New York, we will present a White Paper to the House.
I will consider a White Paper on the negotiations, but, since they have been carried on over a period of six years, I am not sure whether there is any need for a lengthy report supplementary to the very long White Papers on the disarmament negotiations which are laid before the House annually. However, I will consider that and I will take into account my right lion. Friend's opinions on that, but he knows that the full proceedings
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are laid before the House every year, and that practice will be continued.
Mr. Marten: While I recognise that a nuclear Power will not give a nuclear weapon to a non-nuclear Power, can a nuclear Power give a weapon to another nuclear Power? If not, can it assist in the manufacture of nuclear weapons for another nuclear Power?
Mr. Mulley: The terms of the Treaty make it clear that the nuclear Powers will not transfer nuclear weapons to anyone at all.
Mr. John Hynd: Will my right hon. Friend explain a little further one point on which I am far from clear? It is the operation of the assurance given by the Security Council. I gather from his earlier answer that the three members of the Security Council have undertaken to bring to the notice of the Council any threat to a non-nuclear State. Does that mean that action can then be taken, or does the veto still exist? If the latter, is it to be expected that the nuclear Powers can act in unison?
Mr. Mulley: In our declarations, we specifically reserve to ourselves the right to act under Article 51, so that action would not necessarily be held up by a veto or other undue delay in the Security Council.
Sir Harmar Nicholls: Replying to my right hon. Friend, the Minister of State said that he did not think that we were automatically committed to certain actions. That is rather hazy phraseology. Has he had conversations with the Law Officers? Can he be more precise about whether or not we are automatically committed?
Mr. Mulley: I am sorry if I did not make myself clear. I said that there was no automatic commitment, and that no commitment of that character could be given to any country outside strictly defined defence agreements.
Mr. W. Baxter: In view of the considerable feeling in Scotland about the stockpiling of nuclear bombs, and so on, a matter of 20 or 30 miles from the centre of Glasgow, will my right hon. Friend take immediate action to see that this terrible menace to the people of that nation is removed at the earliest possible moment?
Mr. Mulley: This does not fall within the bounds of my responsibility. However, I have no reason to suppose that there is danger to the people of Glasgow from the circumstances that my hon. Friend has indicated.

BILLS PRESENTED
INTERNATIONAL MONETARY FUND
Bill to enable effect to be given to certain amendments of the Articles of Agreement of the International Monetary Fund, and for purposes connected therewith, presented by the Chancellor of the Exchequer; supported by Mr. John Diamond and Mr. Harold Lever; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 179.]
SWAZILAND INDEPENDENCE
Bill to make provision for, and in connection with, the attainment by Swaziland of fully responsible status within the Commonwealth, presented by Mr. George Thomson; supported by Mr. Fred Peart, the Attorney-General, and Mr. William Whitlock; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 178.]

FINANCE [Recommitted] BILL
[2ND ALLOTTED DAY]
Considered in Committee.
[Mr. SYDNEY IRVING in the Chair]

Clause 11
CHARGE OF INCOME TAX FOR 1968–69
Amendment proposed: No. 5, in page 8, line 36, leave out " 8s. 3d. " and insert "7s. 6d. "—[Sir G. Nabarro.]
Question again proposed, That the Amendment be made.
Sir Harmar Nicholls: On a point of order, Mr. Irving. I am wondering why an Amendment which I tabled and which appeared on one Notice Paper amending Clause 13 does not appear on the current Notice Paper. I would have thought that it should have had preference over Amendment No. 7. In addition, I would have thought that Amendment No. 75 ought to have been included on the Notice Paper. It is a matter which was not discussed in Standing Committee, and it has a real bearing on the terms flowing from the Finance Bill. I think that some explanation as to why it has not been accepted is due to the Committee.
The Deputy Chairman (Mr. Sydney Irving): Order. There has been a change in what I must point out is the provisional selection. Amendment No. 7 has been omitted, and Amendment No. 8 has been put in its place. But I cannot discuss questions on the Chairman's selection.
Sir Harmar Nicholls: With respect, that is not my point. I can understand the Chair not calling Amendment No. 7 and thinking that Amendment No. 8 would fill the bill. The Amendment to which I referred, in my name and supported by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), was a separate one and does not appear on the Amendment Paper. It proposed that there should not be any increase in the Corporation Tax for that part of any business which was export.
The Deputy Chairman: It would be helpful if the hon. Gentleman indicated to which Amendment he is referring.
Sir Harmar Nicholls: That is my complaint. It is not on the Notice Paper at all and does not have a number. It appeared in preliminary issues of the Notice Paper, but now it does not appear, and I wondered why.
4.0 p.m.
Sir Gerald Nabarro: Further to that point of order, Mr. Irving. Could we have an explanation of what has gone on in the last 24 hours on this extraordinary Recommittal stage? Certain selections were made yesterday and posted up in the Division Lobbies, as is customary. The selections comprised about 14 different debates. Yesterday, we covered about seven debates. There were about seven items not reached by the time the Committee rose at shortly after eleven o'clock last evening Some of those items which were not taken yesterday, because they were not reached, do not appear on the list of selections today. For example, the Corporation Tax Amendment which appeared yesterday does not appear today, although it was not reached.
I am now in a state of great confusion about how this selection—it is no good the Financial Secretary to the Treasury giggling. We are very concerned about this. Hon. Gentlemen opposite must not treat the matter with levity. I am inquiring how it is that we have got into this muddle. Items which were not reached yesterday, but which were definitely selected, do not appear today on the list of selections. May we have an explanation for our guidance, Mr. Irving?
The Deputy Chairman: I can only reiterate what I said to the hon. Member for Peterborough (Sir Harmar Nicholls). The list that was published yesterday was a provisional selection. It is open, as always, for the Chairman to alter the selection, and that he has done.
Concerning the original point of order, I am not clear what has happened, but I will look into the matter. If it was an Amendment that appeared earlier and we have now passed that stage, the question is already determined. However, I will look into the matter.
Sir Hairmar Nicholls: May I reserve my rights on that, Mr. Irving? If it is found that the Amendment has not been

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printed because of an understandable mistake on the part of those responsible, and we have passed Clause 13, can we come back to it, because I think that it is a point that the Chair and the Committee would wish to have discussed?
The Deputy Chairman: I should like to help the hon. Member. I cannot give any commitment. It is extremely unlikely, according to the rules of order, that we could return to an Amendment. The matter would have to be determined, first, by the selection by the Chairman. I will certainly look into that matter.
Sir Harmar Nicholls: I am sorry to pursue this, but that gives me no satisfaction. If, because of the rules of order, we cannot have it discussed because of somebody else's ommission, then a point that I consider to be of vital importance will not have been considered on this Recommittal stage. May I tell the Committee the point of the Amendment, because I think that it would be within the power of the Chair to accept it?
The Deputy Chairman: Order. Pro-cedurally, I can only inquire into this matter. I have to point out that the hon. Member cannot enter into a debate on this selection anyway. It is clear that if the Amendment was previous to the stage we are at now, it would be precluded from discussion even if the Chairman had been disposed to select it at the time. But the matter of selection is in the hands of the Chairman.
Sir Harmar Nicholls: I understand that, and I want to help. We have not yet passed Clause 13, and my Amendment was prior to Amendment No. 7 if it had appeared on the Notice Paper. My concern is that if by the time investigations have discovered whether or not it ought to have been on the Notice Paper, and by then we have passed Clause 13, I have lost my chance of submitting a powerful argument which, I am sure would have impressed the Committee and, indeed, the Government.
The Deputy Chairman: I can only say that I will pursue my inquiries with expedition. If they are not concluded in time, I am afraid that the hon. Member will have lost his opportunity.
Mr. John Hall: This Ruling is a very understandable one,

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but it places the Committee in difficulty. It may well be that this Amendment has been omitted by mistake. Of course, if the Chairman has deliberately struck it off on reconsideration, this is another matter. However, if it has been omitted by mistake, and the debate proceeds before the mistake is rectified, this could mean, as my hon. Friend for Peterborough (Sir Harmar Nicholls) says, that the opportunity for debating an Amendment previously selected has gone. Is it not possible, within the next few minutes, to ascertain whether the Amendment has been deleted deliberately or by accident?
The Deputy Chairman: I will, as I have said, have the matter inquired into straight away to find out what has happened. Before we know that I cannot say anything further.
Sir G. Nabarro: Mr. Irving, I am not sure that you have yet comprehended the gravamen of the complaint—[HON. MEMBERS: "Oh."] I will not stand for the cacophony of jeers from hon. Gentlemen opposite. These are two related matters. Perhaps I may go forward in words of two syllables, so that everybody understands the issue.
On yesterday's published list of selections appeared an Amendment then numbered 7. It may have been provisional, but it was numbered 7 and it appeared on the list of selections in the Lobby. It dealt with Corporation Tax. It was not reached yesterday. The Amendment to which my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) is referring—numbered 77, I believe—is also concerned with Clause 13, Corporation Tax. My hon. Friend's Amendment—his name was on it first and my name was on it second— dealt with the abatement of Corporation Tax in respect of exports. My provisionally selected Amendment, No. 7, dealt with reduction of Corporation Tax.
The two Amendments hung together and they were put on the Notice Paper for that purpose. Due to the fact that hon. Members in all parts of the Committee have no access to the Chairman of Ways and Means, we could not explain our mental machinations to him about the relationship between these very difficult matters, though they both related to Clause 13.

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We hoped that the Chairman and his advisers would perceive that both Amendments dealt with Clause 13—my own with the reduction of Corporation Tax and my hon. Friend's with the abatement of Corporation Tax in respect of export performance—and we further hoped that they would be taken together. One was shown as selected. The other was not shown at all.
That was yesterday. Today, we have the extraordinary situation that the one selected yesterday has disappeared without trace and is not on the list of selections, though it was not reached yesterday, whereas my hon. Friend's Amendment has disappeared from the Notice Paper though we did not reach Clause 13 yesterday. So everybody is now in a muddle. That is really what the points of order are about.
The Deputy Chairman: I am grateful to the hon. Member for Worcestershire, South (Sir G. Nabarro). I think that I understood the point of order when it was first made. It is clear that this is a deliberate act of the Chairman in making a selection and changing what was the provisional selection.
On the point of order raised by the hon. Member for Peterborough (Sir Harmar Nicholls), we do not know how this matter has arisen. The Public Bill Office will inquire into it immediately and I will give some explanation, if possible, to the Committee. If the Committee will allow the debate to proceed, I think that would help everyone.
Dame Irene Ward: On a point of order. Everybody seems to be getting in a muddle. I should like to know whether we have to discuss some of these Amendments time and time again. Can I, as a back bencher, move the Closure, or has it to be done by the Government? There are masses of Amendments on the Notice Paper which I want to see discussed. I do not see how they will ever be discussed if we do not get on more quickly.
The Deputy Chairman: I cannot discuss selection—
Dame Irene Ward: I am not discussing selection.
The Deputy Chairman: —or the business of the Business Committee. The hon.

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Member for Tynemouth (Dame Irene Ward) can move the Closure, but the Chair, under the Standing Order, has to decide whether to accept it. If the Committee will allow the debate to go on, I think that we will make progress.
Dame Irene Ward: Further to that point of order. I am sorry, but I do not quite understand. I am not criticising the selection. What I am criticising is the time available for discussing certain Amendments which have been selected. Having regard to the extraordinary behaviour on the Finance Bill upstairs, I want to know whether back benchers have the right to move Amendments which hey could not move before because they were not on the Standing Committee. Now that the Bill has come back to the Floor of the House, will we be able to move such Amendments?
The Deputy Chairman: I should like to help the hon. Lady, but the matter has been decided by the House and I cannot give an)' further assistance.
Mr. Stanley Henig: We now resume the debate on Amendment No. 5. I confess that at 11.15 p.m. yesterday I was all agog listening to the points which followed those-made by the hon. Member for Worcestershire, South (Sir G. Nabarro), but after this long interval it is a little difficult to pick up the threads of the debate.
We were discussing the proposal put forward by the hon. Member for Worcestershire, South, on what he no doubt though was sound economic sense, to reduce the standard rate of Income Tax by 9d. for this financial year. Although the hon. Gentleman seems to have founded some of his arguments on the economic aspects of the situation, I could not help feeling a slight suspicion that perhaps he was not unaware that it might appear outside the House to be rather popular for a person with no responsibility for the economic well-being of the country to suggest that this form of taxation should be reduced.
The central reason given by the hon. Gentleman for his proposal was that his party had pledged that if it happened ever again to be in a position of power it would move from direct to indirect taxation. That left me baffled, because barely an hour earlier the hon. Gentleman had proposed that the level of in-

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direct taxation should be reduced. It seemed that what the hon. Gentleman was saying was somewhat strange log rolling.
The hon. Gentleman said that the real trouble about excessive levels of direct taxation was that they were an impediment to incentive. He quoted a whole range of workers who might have their incentives removed, including people with an income of £92,500 a year. Some of us found his argument rather far-fetched.
Sir G. Nabarro: I appreciate that the hon. Gentleman does not have a copy of HANSARD to guide him. I do not trust his memory. Those of my hon. Friends who were here last evening know that I did not raise the matter of a gentleman being paid £91,300 a year. The hon. Member for Orpington (Mr. Lubbock) interpolated in my speech, "A person earning £100,000 per annum". I corrected him and said, "£91,300 per annum". I named the gentleman concerned as Mr. Aisher, Chairman of Mar-ley Tiles, and I dealt with his tax position. I then concluded that passage by saying that nobody in Britain was worth £91,300 per annum. I hope that the hon. Gentleman will at once withdraw the preposterous allegation that I advocated incentives for people earning £100,000 a year. As always, the hon. Gentleman's memory is utterly faulty.
Mr. Henig: If I attributed to the hon. Gentleman something that he did not say naturally I withdraw my remarks, and I look forward to receiving his support in due course for proposals for raising still further the level of Surtax, but I doubt whether I shall be lucky enough to get it.
It seems preposterous to argue the level of taxation is a disincentive to people earning salaries in excess of £5,000 to £6,000. If it is argued that someone with managerial responsibility will take one decision if taxation is at a certain level, and another decision if it is at a different level, we want to know more about that. I am not concerned with this small minority of people, or at any rate not nearly as concerned with them as I am with the much greater number of people who do not earn anything like that figure, but receive about £20 a week, which is what many of my constituents earn.

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It is, of course, correct to say that people object to paying tax. There is nothing surprising about that. It is also true to say that people wish to receive the services which the Government provide out of the money received from taxes. People would like it both ways, but usually they are sophisticated enough to realise that that is not possible. It is not true that the present level of taxation is a disincentive to the extent that a man will say, "I shall not work any more because if I do 30 per cent. of my income will go in taxation".
If that were the case one would expect people to refuse to work overtime. Instead, there is a tremendous demand for the opportunity to work overtime. Discontent is magnified not because of the level of taxation, but because, on occasion, there is no opportunity for overtime to be worked. The facts of the situation run counter to the arguments advanced last night from the benches opposite.
Mr. Raymond Gower: Has the hon. Gentleman no experience of working in factories? Has he no experience of the bitter complaints about the impact of taxation on overtime earnings? In some cases people are reluctant to undertake weekend work because of the impact of taxation.
4.15 p.m.
Mr. Henig: I am not disputing that people complain about taxation. What I am disputing is the contention of hon. Gentlemen opposite that the present level of taxation makes people less willing to work. Generally speaking, income levels are so low that people seize every possible opportunity to do more work. Far from the level of taxation reducing their desire to work more, it often acts the other way. If a man wishes to earn £20 a week net, and he works 10 or 11 hours' overtime to do so, and he then finds that the level of taxation is such that he receives only £19, he works for another couple of hours to earn what he thinks is necessary. That shows that any argument about the level of Income Tax being a disincentive is based on an erroneous assumption, and that we know nothing like enough about what constitutes an incentive.
I support the plea made last night by my hon. Friend the Member for

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Ashton-under-Lyne (Mr. Sheldon) for an inquiry, perhaps by the Treasury, into the exact effects of different levels of taxation on incentive. If that is done it will be possible for us to have a thorough discussion based on fact. At the moment, we have no idea of the facts about incentives. All that we have to go on are statements that complaints have been received about the adverse effect of taxation. It is not possible to make a scientific assessment on that kind of evidence.
Mr. Ted Leadbitter: It must be understood that all taxes are bad, but that most are necessary. My hon. Friend must have no illusions about the matter. Many people quite rightly moan about the taxes they have to pay in so far as they affect their incentive to work overtime.
Mr. Henig: I am not denying that people complain about the level of taxation. I have had complaints on this score, as have other hon. Members, and I have no doubt that from time to time the Chancellor of the Exchequer receives complaints about the level of taxation. What I am saying is that one cannot, at this stage, on the basis of the knowledge that we have sustain the argument that the present levels of taxation are a disincentive, with the related implication that if we reduce the rate of Income Tax people will work harder. The facts are not complete, and until they are it is not possible to make a case on the incentive argument for a particular level of tax. We must consider other factors, too. I should not dream of suggesting that Income Tax is popular.
Mr. F. A. Burden: Does the hon. Gentleman dispute that the more tax people have to pay the harder they have to work to obtain the same income?
Mr. Henig: I do not take that view. For the last time—otherwise, I am sure that you will accuse me of tedious repetition, Mr. Irving—I shall make my position clear. I say that tax levels can affect incentives in a variety of contradictory ways. At this stage of economic knowledge nobody knows the exact effect of any level of Income Tax, including the present level.

1125
On this basis, therefore, it is quite impossible to say that people will work harder if taxation is reduced by 9d. Perhaps they will be happier. I do not dispute that. Perhaps they will have more money in their pockets at the end. That seems obvious. But there is no direct evidence that the result of reducing the taxation level in accordance with the terms of the Amendment will cause people to work harder. That was the specific point, and I have answered it.
I now move to another point made by the hon. Gentleman and supported by his hon. Friend, concerning the so-called brain drain, the implication being that talented and trained people were leaving this country because of the level of taxation. We do not know enough about this, although there has been a report on it. More needs to be known. But in comparing this country with the United States the level of taxation, even marginal taxation, is not the main factor; the level of salaries is the factor to be taken into account. A young person with a university degree, trained in a special field, will, in gross, net, or any other terms, earn a great deal more in the United States than in this country. Even if taxation levels were the same that would still be the case. No change proposed in this Bill can get round that point.
In putting forward his Amendment it seems to me that the hon. Gentleman must have been moved by one of two considerations; either somewhere along the line he will suggest to the Chancellor that the necessary money should be raised in other ways, or that less money is needed. No speaker has yet disputed the fact that a considerable amount of money needed to be raised this year. That makes nonsense of the actions of hon. Members opposite who, every time we discuss a financial provision for raising more revenue, put forward proposals not to raise revenue in the way suggested. Somewhere along the line they must put forward alternatives.
If the Financial Secretary were thinking of reducing the level of taxation to 7s. 6d., I would suggest to him that a much higher priority ought to be given to thinking in terms of whether we can bring about a state of affairs in which people who are now liable to Income Tax but perhaps pay only about £5 a year or £6 a year ought to be exempt altogether. This
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would save a tremendous amount of money. It would reduce hardship to some extent, and provide a much more sensible change, in the context of what can be achieved, than the course advocated in the Amendment.
I turn, finally, to the argument about savings. It is true that money raised in taxation, and especially direct taxation, must reduce the amount of money left over for people's consumption and, therefore, for saving. To that extent we are not increasing overall saving in the public and private sectors. None the less, we cannot sustain the argument that if £100 million is raised in taxation all of that sum must, of necessity, come from the section which would otherwise provide savings. It is not enough to look at one sector of savings—National Savings Certificates, or piggy banks under the bed; we must look at the whole sector.
We must also consider the effect of this kind of increase in taxation. It may not increase overall saving by an amount close to the amount of the increase in taxation, but there must, nevertheless, be an increase in the overall amount of money saved by public and private sources, and to that extent it cannot be attacked on the ground chosen by the hon. Gentleman.
This Bill aims at raising a considerable amount of money because of our economic circumstances and nobody has disputed that about the right amount is being raised in total. That being so, it follows that to accept the Amendment and so reduce the amount of revenue raised by £170 million, would create a position in which the Chancellor, or somebody, would have to put forward alternative proposals for raising the £170 million or, alternatively, for making the appropriate cuts in expenditure. If the future course of this Committee's proceedings are to be taken up with a series of suggestions by hon. Members opposite for reducing taxation we should like to hear some mention of what the alternatives are.
They must either tell us where the extra revenue is to come from or state precisely in what respect expenditure is to be cut. Unless they do this we can only conclude that this Amendment and others like it have been put down for purely political reasons, so that hon. Members opposite may go back to their constituencies and

1127
preen themselves on having been in favour of reducing certain taxes although the truth of the matter is that they have put down their Amendments simply to have a good time, and without any serious thought—and probably praying that the Government would do the right thing by them and reject them out of hand.
4.30 p.m.
Captain Walter Elliot: I thought that last night both sides of the Committee had reached some agreement that it would be useful to consider the disincentive effect of high taxation. I do not dispute the importance of the contribution made by anybody working in industry, at whatever level, but this country relies for its prosperity to a tremendous extent on a comparatively small number of clever, industrious and courageous men. I am convinced that even those men have to weigh the risk they take against the gain that they are likely to make. I am also convinced that levels of high taxation are a great disincentive to risk taking, and that the nation loses as a result.
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) made a sustained and powerful speech in support of the Amendment, and I am glad to be able to support what he said. It is generally agreed that the Budget is designed not only to raise cash to pay the bills but also to regulate the economy. At the time of devaluation all Government pronouncements gave weight to the belief that the financial sacrifices which we were warned we would have to shoulder were designed to regulate the economy.
We were told that we must cut consumption so as to make room for exports. In his Budget speech the Chancellor pointed out that in comparison with other countries home consumption formed too high a proportion of our gross national product, and that we ought to change it. In the Budget, to my astonishment and that of many other people, I find that Government expenditure is rising by about £1,000 million—rather more than the increased burden of taxation that is being placed on the nation.
Therefore, in spite of what the Government said at the time of devaluation, the increase in taxation was not to regulate

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the economy but to raise cash for these additional bills. The Chancellor confirmed this in his Budget speech, when, referring to Income Tax, he said:
"In the context of this year's Budget needs, a reduction will of course be out of the question."
He added:
"It has required great effort to avoid an increase."—[OFFICIAL REPORT, 19th March, 1968, Vol. 761, c. 296.]
Shortly before the Budget, we had Supplementary Estimates of over £500 million, and, with the vast Budget increase of £1,000 million, the impression was given that Government expenditure was out of control. At the time of devaluation and the Budget, the country was ready to accept financial austerity, even hardship, if at last we were getting out of our difficulties. They might even have accepted Income Tax at 8s. 3d. But it is unacceptable if this impression is given.
The argument has been advanced that it is unrealistic to reduce taxation now. The Chancellor said that in his Budget speech. It is always difficult, within our procedure, to consider these as a whole and we must always argue on comparatively small points related to particular Amendments. But I do not accept that reducing Income Tax, in particular, is out of the question. One of the main criticisms which has grown up since the Budget is that it completely neglected positive and dynamic methods of raising savings. I have made a speech recently about this.
My hon. Friend the Member for Worcestershire, South pointed out yesterday to the hon. Member for Lancaster (Mr. Henig) that the more savings we had, the less we had to be taxed. The Chancellor said in his Budget, referring to the great effort needed to avoid an increase in Income Tax:
"… for reasons I gave in the passage introducing my measures I believe this effort to be worth while. No earned income … will therefore be subject to higher direct taxation. This I believe to be justified on the ground of incentive."
I do not know if this was what he was referring to, but in his introductory remarks he had said:
"But our direct taxation on earned incomes is comparatively high. It may, indeed, be too high…."—[OFFICIAL REPORT, 19th March, 1968; Vol. 761, c. 296, 276.]

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I appreciate the dilemma of the hon. Member for Loughborough (Mr. Cronin) yesterday in saying that it harmed the Socialist Party to be labelled the party of high taxation. It reminded me of a useful survey published in one of last Sunday's newspapers, showing that 95 per cent. of those who had been tattooed wished that they had not been, but that they had it for the rest of their lives. In the same way, with Socialism, high taxation is unavoidable—
Mr. John Cronin: Am I following the hon. Gentleman's argument? If one is tattooed, it is possible to have it excised, and it is possible that the Labour Party will be converted to my ideas of lower direct taxation.
Captain Elliot: If that did happen, Socialism as we know it would be dead.
Income Tax is not comparatively high: it is far too high. If the Chancellor had made determined efforts to stimulate savings by methods like high pressure advertising and making it worthwhile, a reduction of taxation would have been possible. That is why I support the Amendment.
Mr. Laurence Pavitt: The hon. Member for Carshalton (Captain W. Elliot) fairly picked up the point of my hon. Friend the Member for Lancaster (Mr. Henig) that, if taxation is reduced, something must be substituted for it, and said that, if public expenditure, which is being increased by £1,000 million, were reduced, taxation could be reduced. I refute his argument, because public expenditure is not an end in itself. It is necessary because we are seeking to do things in common which, individually, we are not powerful enough to do. I should like to increase public expenditure because there are many things which I want done and what cannot be done otherwise.
There are primary schools in my constituency which were built in Queen Victoria's time and should have been pulled down 30 years ago. Some were bombed in the war but others remain; I want more expenditure on schools. Some classes are too large and there is a wide immigration problem. Because of language problems, more money is needed for teachers for more teachers mean smaller classes. I would like to increase the pay of nurses, who are grossly under-
1130
paid. The recent Mental Health Week, in which many of us took part, showed that, unless there is more expenditure on mental health, our claim to be civilised will be challenged simply because we are not doing our duty by those who, in the stresses of modern civilisation, are unfortunate enough to need some care from the Health Service for mental illness or subnormality.
Therefore, I oppose the Amendment because I refute the argument that one could decrease public expenditure to compensate for lower taxation. Precisely the reverse is the truth if one wants a community to be more effective. Even in the recent cuts, we still made some increases over the areas of social welfare which are so important; where there were cuts they were only in the level of increase and not directly a reduction in the expenditure on the Health Service or education.
The basic question in the debate on the Bill and particularly this Amendment is the constant feeling which has grown up in the last two years, aided by the Press and public debate, that direct taxation is bad, and indirect taxation is good. It has been implied that we have reached such a point in our direct taxation arrangements that when the Government seek to raise such sums as the £923 million contained in the Finance Bill they must choose goods and services to bear additional tax.
Whatever views hon. Gentlemen opposite hold, my hon. Friends and I have always believed that we should tax people according to their ability to pay. If the Amendment were accepted, and a decrease in the standard rate of Income Tax occurred—this is the next argument, because I have rejected the solution of reducing Government expenditure on worthy social services—the result would be an increase in indirect taxation.
Although increases in indirect taxation may appear minute in terms of many goods and services, old-age pensioners, members of the lower income groups and people on small fixed pensions must pay precisely the same for their goods and services as the millionaire. I have, therefore, always rejected the idea of high indirect taxation to replace the standard rate. One should pay according to one's means, spread right across the board, so that the less well off are not penalised.

1131
The indirect taxation argument has gained ground in the Committee and elsewhere mainly because increases in that form of taxation are not so noticeable. Compared with the system that operated before the war, P.A.Y.E. is not as simple, but it demonstrates to the taxpayer precisely what deductions are being made each week from his wages. He can observe the amounts that are deducted from his pay packet for various items, he is conscious of what he is paying and, as hon. Gentlemen opposite have said, often he resents having to pay.
At the same time, of course, he is being taxed to a greater extent on a wider number of articles and commodities; and now, with S.E.T. extending to an even wider range of services, it seems that what one does not observe is not necessarily bad if the Government can get away with it. This is bordering on dishonesty. We are raising taxation in a hidden and subtle fashion by placing a little extra here and there so that people do not notice what they are paying.
Because of the tremendous campaign conducted by the C.B.I. and others— they have done their stuff in articles in learned newspapers, on the radio and on television—people have become brainwashed into thinking that indirect taxation is the best way to solve this problem. We are saying to the Chancellor, in effect, "If you must raise money, please raise it as painlessly as possible and, if possible, arrange things so that we do not notice the increase".
This approach may be acceptable to hon. Gentlemen opposite—remembering that their opinions are different from ours and that there is a wide gulf between the two sides of the Committee about how the economy should be run—but is it all right for the people in general? My hon. Friends should not be too ready to fall in with this general consensus about indirect taxation.
Mr. Gower: Does the hon. Gentleman appreciate that there is another computation, in the sense that the wage earner whose tax is deducted from his pay has no selection since, whatever he may think, Income Tax is deducted from his earnings in any event? Selection is available in relation to indirect taxation,

1132
since if one does not wish to smoke or drink alcoholic beverages one need not pay the tax that is levied on those items.
4.45 p.m.
Mr. Pavitt: That is a current argument. It is easy to say that if one has half a crown in one's pocket one can elect how to spend it. I agree that one need not drink or smoke, but can one avoid buying clothes? So many commodities are taxed nowadays that when the Chancellor finds it necessary to raise more revenue he must spread his taxes as widely as possible. As this tendency has been increasing over the years—it has been part of the exercise during the last two or three years—the area of selection is reduced.
I do not smoke and I can avoid indirect taxation by not smoking. The same can be said of the luxury items covered by the first few Clauses of the Bill, but when one considers the articles covered by Clauses 46 and 47 one sees that there is little selection or option, along with the fact that S.E.T. must be taken into account, which means that everybody is paying for that together with the other new taxes.
The need for financial incentives is another theme which always runs through Finance Bill debates. All too often hon. Members argue that if only workers can be shown that they will receive more money for more work, all our problems will be over. Things do not work out this way in a complex society like ours. One need only consider the way in which the pay packet of the average American trade unionist is arranged to see that the "more money for more work" argument is not the best one. The trade union movement in America has organised things in such a way, particularly for automobile workers, that the general standard of living of workers has tended to increase in the last 15 years or so. The unions there are concerned more with fringe benefits than with financial rewards to ensure that workers have a good life.
The same applies to the nationalised industries in France, which, I am pleased to see, are returning to normal working after their enforced holiday. The worker's pay packet in, for example, the nationalised Renault factory is only a part of his remuneration, the company

1133
gives holidays for workers' children and many other fringe benefits. The same can be said of most Common Market countries, in which there is a wide range of rewards in addition to wages. If productivity is to be increased, fringe benefits are often more important than money incentives.
My hon. Friends should be thinking more seriously about the road along which the Finance Bill is leading us. I urge them not to entirely accept the blandishments of hon. Gentlemen opposite or the amusing way in which the hon. Member for Worcestershire, South (Sir G. Natoirro) is able to adduce his arguments. Nor should they accept the blandishments of the C.B.I. and those who write learned articles in the Economist and other publications. "According to one's ability to pay" is an excellent maxim. The standard rate of Income Tax is based on this principle; I hope that it will remain and that the Amendment will be rejected.
Mr. Geoffrey Hirst: We have just listened to an interesting speech from the hon. Member for Willesden, West (Mr. Pavitt), whom I can only call one of the high priests of Government expenditure. I urge him to accept that if the Government are to argue against the Amendment intelligently they must get their priorities right. The economic difficulties in which we find ourselves are due largely to the demand which the Government have made on the economy by way of public expenditure. They have squeezed the productive end of industry to maintain their case, although they have been arguing on a false premise.
I have no doubt that all hon. Members could quote instances of desirable public expenditure. For example, there is a school in my constituency which needs to be replaced. It should be given as much priority as any other school, but I would not think of pressing for it to be given priority if I thought that it would injure the economy. We must get our priorities right.
There is nothing particularly political about the Amendment except that we are all politicians. If this has not occurred very much in earlier years it is substantially because, under the Tory Party, taxation was continuously reduced. There were a few exceptions, but

1134
the trend was towards reduced taxation, just as under the Labour Party the trend has been towards increased taxation.
Mr. Burden: Would my hon. Friend agree that in 13 years the Conservatives reduced taxation by £2,000 million, whilst the Socialists have increased it by that sum?
Mr. Hirst: The Labour Government have increased the rates of taxation so substantially that those are the mathematical sums involved. If, in the one or two years when they had the opportunity, they were not wise enough to seek reductions of taxation of this character, it is because they do not like hearing it. Incidentally, the Financial Secretary does not like hearing it. The Labour Party is a high tax party. It likes high taxes because they are synonymous with the Labour Government's excessive demands on the economy—
The Financial Secretary to the Treasury (Mr. Harold Lever): I hesitate to interrupt the hon. Gentleman, but I am not sure what it is he said that I do not like to hear.
Mr. Hirst: The Financial Secretary does not like to hear it said that the Labour Party is a high tax party. If he wishes, I can refer him to what he has said on the subject, but he may remember it. When I say this, I am not making a dig at the hon. Gentleman. I said it because he was sitting there, and I happened to recall what he had said earlier.
The Conservative Party is not being unrealistic in once more putting forward, as it has done in each of the last two years, an Amendment of this kind. Last night, the hon. Gentleman the Member for Loughborough (Mr. Cronin), in an interesting speech, with the latter part of which I found myself in some agreement, made the point, as no doubt will the Financial Secretary, that this Amendment is unrealistic in the present state of the economy. It is the present Government that have raised taxation to its present heights, which may account for the present state of the economy, but what I ask is whether, given the need for collection, we would have adopted the same method. The answer, quite clearly, is that we would not. We believe that high rates of taxation are

1135
bad for the economy, for the industrial health of the nation and for the incentive to the individual, and they add very much to costs.
Mr. Cronin: I take the hon. Gentleman's point that during the 13 years of Conservative Government there was some substantial reductions in taxation but, in fairness, he should bear in mind that as the result of the continuous inflation that took place during that time, more people paid Income Tax than ever before, and more people paid more Income Tax than ever before.
Mr. Hirst: The hon. Gentleman must really think things out before he starts to speak. Does anybody who goes about the country dispute the fact that people were then, in terms of spending and wages, infinitely better off under a Conservative Government than they are now? The whole point is that we kept ahead of the situation, and we were, in fact, expanding the situation. High rates of taxation always make for a stagnant economy, and that we have. We have to free the situation, and give the economy a chance to grow. That is not done by putting on all sorts of taxes, repressions, and interferences, and calling for all sorts of reports and surveys, but by giving people the chance to use their initiative.
We shall no doubt have the usual reply from the Financial Secretary—I can nearly work out the answer beforehand. I do not blame the hon. Gentleman in the slightest. Every Treasury brief has always been marked in the same way, " This will cost so much." That is not an answer, because it assumes that we accept the situation into which the present Government have got the country. It is their job to get us out of the difficulty and it is our job to jog them on. This Amendment is put forward as one means of doing that. Whether or not the figure is right is not all that important. My hon. Friend the Member for Worcestershire, South would not argue particularly about a specific figure. Anyone can always start knocking figures about. But the principle behind the Amendment is right.
We have just been told by the hon. Member for Willesden, West (Mr. Pavitt), as we were told last night, and as we were told by the Financial Secretary on

1136
20th June, 1966, when he and I took part in a similar debate from our respective back bench places—we are always being told—that the broader backs must bear the burden. We have been told that about half a dozen times, and it bores me stiff because no one doubts it. But if the burden on the broader backs is too great we get a disincentive which not only affects the broader back of the person who is burdened, and lowers his interest and enthusiasm for his job but this goes right through industry. It is some of the top earners—to get to the Surtax aspect—who have the necessary courage and experience, and an ability acquired by the great majority of them, from working their way up through industry. We know that, and the Government acknowledge it by trying to get some of those men to run the nationalised industries. They have had extreme difficulty in persuading them to do so, though some have agreed at great financial loss. Those are the people to get the economy cracking. They have the know-how to bring in the business—
Mr. Henig Mr. Henig rose—
Mr. Hirst: No, I do not want another professorial effusion. The hon. Member will do better to give it to his Fabian colleagues.
The people to whom I refer are the very essence of the economy. Right at the other end of the scale there is the worker, whose incentive is disadvantaged all the time by taxation.
I do not necessarily consider that every time a downward adjustment is made to taxation it must follow on all the way through to every single grade of lower rates. Basically, I agree that that principle is right, but when the crying need is to get the economy going—and there certainly now is a greatly growing need —one has to adjust one's arguments a little. Present taxation is such that many workers, and particularly the skilled workers, working overtime run into considerable liability of taxation at the standard rate. We have to say that that rate may have to be altered this year but that the compensating alterations all down the scale must come later.
I know that one of the factors in the argument against the Amendment will be the cost of the follow-through to the lower rates of tax.

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5.0 p.m.
I remind the Committee and the Financial Secretary of the interesting conclusion to the speech of the hon. Gentleman on 20th June, 1966, to which I have referred. He ended:
"I have never quite overcome my childhood experience in relation to the Income Tax some 40 years ago when my father first informed me that there existed such a tax. I learned of this fact with some horror, a horror which was not at all mitigated by the further fact that my father informed me that the gentlemen who collected it were the only licensed burglars permitted by the Government. I have only partially recovered from that instruction, but never wholly."—[Official Report, 20th June, 1966; Vol. 730, c. 69.]
This Bill publishes the name of the Financial Secretary as the deputy chief licensed burglar.
Several Hon. Members rose—
The Temporary Chairman (Mr. Grant-Ferris): Mr. Harold Lever.
Mr. Eric Lubbock: On a point of order, Mr. Grant-Ferris. There were five hon. Members standing up on this side of the Chamber and about three on the other side. Surely the Financial Secretary has risen too soon.
The Temporary Chairman: I think that the hon. Member knows the custom of the House of Commons well. If a Minister rises, he is entitled to be called.
Mr. Lubbock: Yes, Mr. Grant-Ferris, but I wonder whether the Financial Secretary would like to hear me before he makes his reply.
Mr. Gower: On a point of order, Mr. Grant-Ferris. Surely a new principle has now been enunciated. It has never been a principle of the House of Commons that if a Minister rises he is automatically called.
The Temporary Chairman: I did not say that it was a principle of the House of Commons. I said that it was a general custom of the Chair that when a Minister rises he is entitled to be called.
Sir G. Nabarro: Further to that point of order, Mr. Grant-Ferris. The prerogative is entirely yours as Chairman as to the moment at which you accept the Closure to the debate. As we are debating matters which influence the collection of taxation in the current year of £4,651 million, may we have your

1138
assurance that you will not accept the Closure until any hon. Member of this Committee who was disfranchised from sitting on the Standing Committee has been heard?
The Temporary Chairman: Again, I think that the hon. Gentleman knows very well that I have no power to accept a Motion for the Closure. Only the Chairman of Ways and Means or his deputy can accept it. In that case, I cannot see that there is any substance in the hon. Gentleman's point.
Mr. Lever: It is not my wish, particularly in the circumstances of this debate, which is intended to give the maximum ventilation to the views of back benchers, to act contrary to the manifest desires of the Committee. I was not in any way seeking to wind up the debate. That is not in my power, and it is not my wish to do so. But it seemed to me that this was a moment when I might usefully put forward the Government's point of view.
However, if hon. Members prefer, as appears to be the general wish, that I should defer doing so for a moment, I shall be perfectly happy to do so. I should just like to make it plain that in rising at any point I have neither the wish nor the power to wind up the debate. Since it appears to be the general wish that other hon. Members should address the Committee further before hearing the Government point of view, I shall yield to that wish.
The Temporary Chairman: Mr.Lubbock.
Mr. Lubbock: I think that we should congratulate the Financial Secretary on his reasonable attitude. It is obviously for the convenience of the Committee. About eight speeches remain to be made, and there may be fresh points which the hon. Gentleman may wish to answer in his reply.
Sir Douglas Glover: On a point of order, Mr. Grant-Ferris. To be fair to the Committee, I think that I should point out to you that I feel that as the Financial Secretary to the Treasury intervened and then sat down the Labour Party has lost a speaker.
The Temporary Chairman: Again, that is entirely in the prerogative of the

1139
Chair. The Chairman will call hon. Members as he thinks best. I (have called Mr. Lubbock.
Mr. Lubbock: I think that the Financial Secretary has enabled the Committee to save some time. If he had later had to listen to the other eight speeches and fresh points were raised, it would have meant that he would have had to rise again to answer them. So he is to be congratulated on his sensible attitude.
I take up an extraordinary point made by the hon. Member for Willesden, West (Mr. Pavitt) in arguing whether Income Tax should be replaced by some other taxation which one does not notice. He gave a most bizarre example, mentioning Selective Employment Tax. I always thought he was a staunch Co-operator, and my understanding is that the Cooperative Party does not like the Selective Employment Tax much. It has sent memoranda to hon. Members opposite protesting vigourously against it. It does not like it as an alternative to direct taxation.
Mr. Pavitt: The hon. Gentleman must have misheard me. What he is saying is contrary to what I said. I voted against the Selective Employment Tax in Committee.
Mr. Lubbock: I thought the hon. Gentleman said that people do not notice the Selective Employment Tax. If that was his proposition, it cannot be pretended, because everybody notices it. If one notices that prices in a shop have gone up and asks why, the shopkeeper will say that one of the main reasons is the Selective Employment Tax. If the suggestion were that the Selective Employment Tax was an alternative to direct taxation, I should rebut it immediately.
The hon. Member referred to this as part of his general argument that we should transfer some of the burden from direct taxation to indirect taxation. He produced all the usual arguments about the regressive effect of direct taxation, and said that if the taxes on commodities were increased the people who suffered were those with the least ability to pay because they have not the wide choice that some may say applies in respect of alcohol and tobacco.

1140
Thus, if one broadens the base of taxation, such people cannot help paying. That was the sense of the hon. Gentleman's proposition, and he argued as a result that one should not have any increases in direct taxation to enable one to reduce the standard rate of Income Tax. If that argument were carried to the extreme, we should not have any direct taxation at all. One might say that Purchase Tax is regressive, but that one should increase it to raise the revenue which we are raising at present by indirect means.
Mr. Pavitt: I was arguing the precise opposite to what the hon. Gentleman is saying, in favour of direct taxation and against indirect taxation. He seems to be putting words into my mouth that I never uttered.
Mr. Lubbock: I think that I understood this part of the hon. Gentleman's speech even if I misunderstood him about the Selective Employment Tax. He is arguing against indirect taxation because he says it is regressive. I merely say that if one accepts that as a general principle one goes much further than we have done even under the Labour Government in increasing direct taxation—Income Tax, in particular—so that one can sweep away Purchase Tax and other indirect taxes.
I suggest that one can then go further. For instance, old-age pensioners and other people on fixed incomes use trains and buses, electricity or gas, and pay rates. It might be suggested that we should freeze all these costs and say that if those who impose them incur any losses—for example, if the gas or the electricity industry has a substantial deficit—all the cost must be financed out of increases in direct taxation because it would be wrong to make people pay any more for gas or electricity. I am not saying that I approve the increases that have been imposed, because there are other arguments, but I am drawing attention to the alternatives which there might be in respect of the question of how much direct taxation we should have.
Much argument has been advanced about the disincentive effects of direct taxation. I do not think anyone has the answer to it. The most sensible contribution yesterday was made by the hon.

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Member for Ashton-under-Lyne (Mr. Sheldon), who proposed that we should carry out some research into the disincentive effects on particular classes of the population. The hon. Member for Worcestershire, South (Sir G. Nabarro) has drawn attention, in particular, to the plight of the higher executives who are receiving what we would consider astronomical salaries, but I do not think that this is the crux of the problem.
But perhaps we could find out whether these people are not doing their jobs properly because of the crippling effects of Income Tax. If that is so, let us know about it by making suitable inquiries through the universities or some other means of research. It is incredible to me that, after Income Tax has been going for so long, no one really knows the answer to this question. Perhaps it was not so important when the rates were at much lower levels, but surely someone should have been interested enough in the Treasury to find out what is the effect. on a person's ability and willingness to work of a given level of taxation.
Sir Harmar Nicholls: The hon. Gentleman asks for some research into the effect of high taxation. I would have thought that he would have known, as the Treasury does, that the effort spent on tax avoidance and on how to get the best out of the present horrible system wastes so much time and brain power that it retards the forward movement of the country.
Mr. Lubbock: I agree that it is a qualitative argument that the fact that people spend so much time, effort and money on finding means of avoiding tax shows that direct taxation is highly obnoxious to the vast majority of the population, but as we have to have tax at some level the question is at what point taxation becomes self-defeating in its objective, which is to raise revenue with the least possible disruption to the economic life of the community. I do not suppose that, if we were to decrease Income Tax as suggested in the Amendment, people would suddenly stop trying to find ways of avoiding paying tax. They might not put so much effort into it, however. But we want to know what is the effect of a given level of taxation quantitatively as well as qualitatively.
We do not just want to know whether Mr. Aisher finds it a great burden—I
1142
quote his name only because it was mentioned last night—but does it cause him to work less hard than he would effectively do to pay less tax than he does? Does it cause the hon. Member for Worcestershire, South to contribute less to the community because he has to pay 18s. 3d. in the £ on every £ he earns—or is it on the final £ he earns? I do not think that it does in the hon. Gentleman's case, because I am a great admirer of his work and I think that he puts in a tremendous amount of time in the House and no doubt gives equally effective attention to the affairs of his business.
But the hon. Member may not be typical. There may be others in this category who say, "What the hell ! If the Government are to take all this money from me, I shall spend the maximum amount of time I can in the South of France, or at Ascot, and shall not give the proper attention to the affairs of my business as I should."
Sir G. Nabarro: Would the hon. Gentleman depart from the £91,300 per annum involved in Mr. Aisher's case and also from my case and apply himself to what I emphasised last night—the case of the salaried executives and skilled technologists and craftsmen earning between £1,200 and £4,000 per annum? I said that, over £1,200 and up to £4,000 per annum, there was a plateau. Over £1,200, they suddenly start paying one-third of the extra £ they earn in direct taxation. This is disastrous to increasing national prosperity. Leave me and Mr. Aisher out of it. I am the most untypical character in the world.
Mr. Lubbock: I do not intend to pursue the question of high-salary earnings. I made these remarks only to show how little we know about the situation and to reinforce the plea of the hon. Member for Ashton-under-Lyne that the Treasury should do research on this. But I agree with the hon. Member for Worcestershire, South that the vast majority of people who might be affected adversely by the standard rate of Income Tax are not those in the £91,000 category, of whom there are very few. If there are disincentive effects of taxation the harm that is done is where the hon. Gentleman mentions it as being—between £1,200 and £4,000 per annum, where the vast majority of standard rate of Income Tax payers are concentrated.

1143
They include also many skilled workers as well as executives, and we must consider whether the standard rate is a disincentive to them. Such people as skilled engineers are probably earning over £1,200, and if they get a rise or do a certain amount of overtime they know that Income Tax will be deducted from it at the standard rate.
5.15 p.m.
My hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) raised a point in Committee to which I ask the Financial Secretary to give further attention. Have we not got a psychological defect in our tax structure when we speak of the standard rate of 8s. 3d. in the £? The people whose income is wholly earned never pay such a rate, since they qualify for two-ninths earned income relief, so that the effective marginal rate is 6s. 5d. in the £.
My hon. Friend suggested that, to make the estimate much simplier, one should call it 6s. in the £, and he proposed an effective reduction of 5d. in the standard rate so that everyone would know that, if they earned another £, 6s. of it would be taken by the Chancellor. The present system is a complicated piece of arithmetic for most people, who still imagine that they are paying 8s. 3d. in the £.
When people come into my advice bureau and say, "I earned X amount last week in overtime and I pay 8s. 3d. in the £", I point out to them that, while I agree that tax rates are too high, they pay 6s. 5d., taking into account the two-ninths earned income relief.
We should think about the way we present these taxes so that the standard rate would apply to earned incomes, but then we could have a supplement or something to bring it back to the existing level of earned incomes rather than the other way round. We should add on for unearned incomes rather than earned incomes.
Mrs. Freda Corbet: I hear workers say that they would actually lose at least half of the extra money they would be earning. Does not that confirm what the hon. Gentleman is saying about the need to inform people properly of what they lose?
Mr. Lubbock: I agree that one of the anomalies may be that, if one moves
1144
into a higher tax bracket by doing a certain amount of overtime, one finds in any particular week that the amount taken is far higher than 6s. 5d. I have mentioned this as a detailed point which the Treasury might have a look at in its construction of the tax tables.
But I want to return now to the general position of those most affected by the Amendment—those earning between £1,200 and £4,000 a year—and to the question whether we should try and discover their motivations and whether the present level of direct taxation is a disincentive. There is evidence on both sides and I do not know the answer.
It may be argued that because people are willing to do the immense amount of overtime which has been done in this country for many years, taxation does not have any direct disincentive effect and that although the Englishman grumbles, which is his traditional right, he will go on working overtime and demand it, and in some industries, such as building, accept a job only if overtime is provided. I suppose that those who disagree with us will say that it proves that there is no disincentive effect when in the building industry the working week was 56 hours when I last looked up the figures.
Conversely, there are people who do not do overtime, and certainly it is the case that whenever employers have presented trade unions with agreements by which overtime could be reduced or almost eliminated, such agreements have proved broadly acceptable. For example, such arrangements have been made in the electricity supply industry. I do not think that workers want to do an enormous amount of overtime. They would prefer a basic working week, with an adequate salary for it, not having to go on for 56 hours a week as some of them do.
Last night, the hon. Member for Worcestershire, South mentioned the Jones Report. I want to refer to it, because it gives at least some evidence of the effect of Income Tax rates on the decision of those who consciously decide whether to go abroad, especially to the United States. Dr. Jones says that Income Tax does not play quite such a dominant part in the decision to emigrate as might be imagined. He says that it is the difference between the salary structures of this country and the United States which causes people to emigrate.

1145
Whereas people in this country start at a level which is only a third or a quarter of their final salary, in the United States they might get as much as half their final salary on first leaving university or technical college, so that the differential is much more marked in the age range of 25 to 35, when people are still reasonably free to move around, when they do not have family ties, when their children are still not at school, and so on, whereas later they have settled down and struck roots in their home country. This is a more important factor than the level of taxation in persuading people to emigrate.
But Dr. Jones went on to say that once people had taken the plunge and gone to the United States and one was trying to persuade them to return, as the Government have from time to time—Government agencies, the Atomic Energy Authority, for instance, have sent teams to the United States to try to persuade British graduates to return and take up employment in the United Kingdom— people started to look at tax rates in the United Kingdom, and taxation was then one of the factors which caused them to say that they preferred to remain in the United States.
Sir Harmar Nicholls: So it is a factor.
Mr. Lubbock: It is a factor in that direction, but not in the decision whether to emigrate. I mention this because it reinforces my plea for much further research, and the Treasury is probably the only body which can undertake it. The Jones survey was extremely welcome, but it covered only one element in the problem which has to be tackled.
Finally, I want to introduce a slight note of controversy. While it is perfectly legitimate for me to argue for reductions in taxation, it is hypocritical of the Tories to do so, because of the vast increase in spending which they have demanded in other debates.
Mr. David Webster: Did not the hon. Gentleman lead the Liberal Party into the Lobby last week in support of the Government giving an extra £1,200 million to the Gas Council?
Mr. Lubbock: As the hon. Gentleman knows, that was not an expenditure which would have to be met in the current financial year. It would be out of
1146
order to pursue that matter in any detail, but the £1,200 million capital expenditure required by the Gas Council will be immensely beneficial to the country and will result not only in profits for the Gas Council, which will result in a benefit to the Treasury through dividends, but a substantial decrease in the cost of gas to the consumer. The hon. Gentleman is wrong if he suggests that this expenditure is not fully justified and has not been fully justified by the figures which Sir Henry Jones has submitted.
I was saying that I could not see how the Tories could argue for substantial reductions in direct taxation when, especially in defence debates, they have been calling for enormous escalations in cost. I have some examples and I hope that I shall not bore the Committee by mentioning a couple. For example, the Leader of the Opposition said about the deployment of our forces in the Far East:
"What I have always said is that I believe we ought to maintain a presence in Malaysia and Singapore and the Gulf and that we are capable of doing this".—[OFFICIAL REPORT, 5th March, 1968; Vol. 760, c. 257.]
That would represent about £300 million per annum.
Mr. Angus Maude: That would not be an extra expenditure in the current year, or even next year. It would be carrying on current expenditure beyond 1971, which is very different.
Mr. Lubbock: That is a very specious argument. The hon. Gentleman knows perfectly well that it is expenditure which would still have to be met if the Government had not decided to withdraw our forces east of Suez and it would have had to have been paid out of the taxes of the people. I know that this is unpalatable to the hon. Gentleman and that he does not like to hear it, but he will have to listen to it for a few minutes more.
The hon. Member for Hendon, North (Sir Ian Orr-Ewing) said:
"Like my right hon. Friend the Member for Wolverhampton, South West, I still believe that the carrier fleet should have been carried on well into the 'seventies …"
That would have meant building new carriers at a cost of £100 million apiece, maintaining them and having vast dockyard facilities to do so and buying the

1147
aircraft to fly from them and paying the wages and salaries of the crews and maintenance staff.
The right hon. Member for Wolver-hampton, South-West (Mr. Powell), who was then the Opposition spokesman on defence, said of nuclear submarines:
"It seems no exaggeration to say that the nuclear-powered submarine has worked a revolution in maritime warfare comparable with the supersession of sail by steam."— [OFFICIAL REPORT, 11th March, 1968; Vol. 760, c. 1002–23.]
He was arguing for more nuclear submarines which, if we were to have a fleet equivalent to that of the Soviet Union or the United States, would cost, according to the Secretary of State for Defence, £800 million to £1,000 million.
The right hon. Member for Mitch am (Mr. R. Carr) said:
"What cannot be denied is that on the testimony of the Government the Services are now doomed in the 1970s to be without items of equipment which only a month or two ago the Government said were absolutely vital to their needs. Two of the most outstanding examples in the Royal Air Force are the F.111 … and the A.F.V.G."—[OFFICIAL REPORT, 5th March, 1968; Vol. 760, c. 346.]
Right hon. Gentlemen opposite have also asked for the Type 82 destroyer and more maritime reconnaissance aircraft and more VTOL aircraft.
Outside defence, the hon. Member for Isle of Ely (Sir H. Legge-Bourke) wanted this country to go into the 300 GEV nuclear accelerator and C.E.R.N. at a total of £370 million, and the Tories voted against the Government for postponing the school leaving age which, of course, we all regret on educational grounds.
It is indefensible and hypocritical of the Tory Party to argue for substantial reductions in direct taxation when the Tories are not only not prepared to agree to cuts in Government spending, but in every other debate have consistently advocated increases. I wish that hon. Members would try to be honest about matters of taxation. I know that it is very difficult to put together a debate on one subject, about which one might feel strongly, and one's views on taxation. I agree with what has been said about mental health and I should not like there to be any reduction in spending on mental health, but we could pay for the

1148
whole of mental health research and treatment in this country out of the cost of one or two nuclear submarines.
What hon. Gentlemen on this side of the Committee are asking for is immensely expensive, and would place a burden upon the economy from which it would never recover. I hope that next time we talk about reductions in Income Tax they will be a little more modest in their demands and try to reconcile them with those made in the defence debate.
5.30 p.m.
Mr. Leadbitter: I am glad that the hon. Member for Orpington (Mr. Lubbock) ended his carefully prepared speech in the way he did, because it has been clear for many months now that hon. and right hon. Members opposite have taken each debate in isolation, purely to produce arguments against the whole philosophy of taxation. There have been repeated demands from them for expenditure on defence and cries about the public expenditure undertaken by the Government on the social services. This is a contradiction from which they must extract themselves.
All taxation is bad; most of it is necessary. Its purpose is to provide revenue to meet the commitments of a Government. No taxation is liked by those who have to pay it—it is necessary but unpopular. It is never liked by the party in opposition. I am on record as having said that the Selective Employment Tax was a half-baked, ill-thought-out measure which could have taken another year of discussion with commerce and industry before taking legislative form. This is not to say that S.E.T. is unacceptable as a principle.
What is important is that it is not as selective as we would have liked. It could have done a better job, but to dispose of it as hon. Members opposite have said they intend to do, to reduce indirect taxation, as the hon. Member for Worcestershire, South (Sir G. Nabarro) said he wanted to do yesterday evening— [Interruption.]—is not better. The hon. Member put on an excellent theatrical performance last night and argued for a reduction in one of the bands of indirect taxation. He talked in terms of a 33⅓ per cent. tax being reduced to 25 per cent. and of a reduction in the 50 per cent. tax.
Sir G. Nabarro: I must correct the hon. Gentleman who no doubt was not here throughout my speech. I was pleading for uniformity in the application of Purchase Tax, without prejudice to aggregation of yield. That is not a reduction of indirect taxation. As usual the hon. Gentleman does not understand the simplest fiscal argument.
Mr. Leadbitter: And as usual the hon. Member was not as observant as he might have been in performing to a captive audience last night. I was here during the whole of his speech. He said in effect that there should be a reduction in one of the indirect taxation bands. He was complaining about the upper band of 50 per cent. Perhaps he wishes to qualify that and talk in terms of aggregate of taxation, but he was careful not to make that clear.
Sir G. Nabarro: The hon. Gentleman is now adding to his earlier mistakes by lack of observation of Parliamentary procedure. I had to correct Lancaster yesterday for telling me that it is out of order during the Committee stage of the Finance Bill to seek to increase any rate of tax. The only way I could make progress towards the uniformity, which I have described, was to take one Amendment as a paving Amendment. It was the paving Amendment selected out of the 15 Amendments following in my name. Had they all been put together they would have led to uniformity in Purchase Tax.
Mr. Alfred Morris: On a point of order. Is it in order for the hon. Gentleman to refer to my hon. Friend the Member for Lancaster (Mr. Henig) as "Lancaster", as if he were some humble hereditary peer?
The Temporary Chairman: That is not a point of order for me.
Mr. Leadbitter: I do not think it would be wise to allow the hon. Gentleman to deflect me from my argument. If he wishes to exercise himself in lectures on Parliamentary procedure, that is for him to decide. I will stick to the subject of the debate. The hon. Member for Orpington pointed out the fallacy in the arguments of hon. and right hon. Members opposite. It is quite impossible, and unacceptable to the people that a res-

1150
ponsible party should make out a case for a reduction in taxation, direct or indirect or in any other form, while at the same time failing to attend to questions of public expenditure.
It is right that we should ask hon. Members opposite, if they are sincere in what they ask, why they do not put before the Committee the manner in which their requests would be put into practice. What is the area of public expenditure which they would select to make this reduction in revenue? Would it be housing, the hospital programme, the Health Services, or important capital projects of local authorities? Where in public expenditure are they prepared to declare that they will make reductions without at the same time harming social requirements and services?
Mr. Lubbock: Since no Tory Member is prepared to answer this question, could I help the hon. Gentleman? As was pointed out to me in an intervention, the Tories voted against the Gas and Electricity Bill which would enable the Gas Council to introduce natural gas, with very great benefit to our people. They did not want the Gas Council to spend that money.
Mr. Leadbitter: For many months we have talked of the great benefits which will accrue from the exploitation of North Sea gas. It was odd to find that the Opposition were making out a case for refusing the Gas Council the means to exploit this as early as possible. This is something vital to our fuel policy.
Sir Harmar Nicholls: The record ought to be put right over the intervention of the hon. Member for Orpington (Mr. Lubbock). This side of the House did not vote against the borrowing powers Bill. What it suggested was that the amount of the Vote should be reduced so that the Government should come back next year to justify a further amount.
Sir D. Glover: On a point of order. May we be informed of what the Gas Council has to do with reductions in the direct rate of Income Tax?
The Temporary Chairman: I have no doubt that that will become apparent as we go along. So far, what the hon. Member for The Hartlepools (Mr. Leadbitter) has said has been in order.
Mr. Leadbitter: I was answering an intervention made, quite rightly, by the hon. Member for Orpington (Mr. Lub-bock). To follow the theme that an argument about taxation must carry with it a declaration of what one means—
Mr. Gower: The hon. Gentleman will appreciate that a party in opposition cannot easily formulate what it would do concerning taxation if it were in office. If a vehicle is running downhill, one does not stop it straight away. However, it was possible for Conservative Governments over the years to effect substantial reductions in taxation.
Mr. Leadbitter: When, during that period, there was apparently some reduction in taxation, there were also reductions in many other things. For example, in 1962 or 1963, the right hon. and learned Member for St. Marylebone (Mr. Hogg) visited the North and, as a consequence, made an appeal for an increase in house building from 18,000 to 25,000. One was an admission of a poor house building record; the other was an expression of hope. Having produced his report, the right hon. and learned Gentleman did not give us the financial means to implement it. Today, more house building is going on in the North than ever before. During the period when taxation was reduced by hon. Members opposite, only 33⅓ per cent. of houses being built were of Parker Morris standards whereas today the figure is 84 per cent.
I repeat that if hon. Members feel that tax reductions are necessary they must say in what sectors of public expenditure they would make reductions. The question which must then be asked is what harm would result to the social infrastructure. Members on the Government side may feel that they have to make out a case that taxation is good and is justified at a particular level. Members on the Opposition side may feel that they have to criticise it. It is desirable that taxation should be kept at a sensible level compatible with the needs of the country, or reduced. Men and women are concerned about taxation and the way in which it affects their overtime. Any Government or party in opposition which blinks its eyes to this fact does not understand the realities of the situation.

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5.45 p.m.
Let me put a simple question to my hon. Friend the Member for Lancaster (Mr. Henig); it does not follow that he need answer it. A man may work overtime in order to earn sufficient to meet normal domestic commitments. The breadwinner or earner complains bitterly, saying, "Why should I have to do this when men who do not want to work and who are drawing social security allowances are as well off as I am?". That is the kind of philosophy which exists.
Sir G. Nabarro: Tell Lancaster.
Mr. Leadbitter: I should point out that I am talking about the psychological effect, not on the man who is out of work but wants a job and is willing to take a job, but on the man who is working and who wants to work but whose earnings, even with overtime, do not take him much beyond what a man gets simply by reporting at the dole office.
Mr. Henig: I have not argued and I am never likely to argue that taxation is popular. I accept my hon. Friend's point that people grumble, often bitterly, about taxation. I was saying that no evidence of a concrete and definite nature had been adduced to suggest that the existing level of taxation was proving a disincentive to people working.
Mr. Leadbitter: My hon. Friend must not be unhappy if I disagree entirely with him. If we adopt an academic approach to this problem, we will never get the answer to it. [Interruption.] I am not trying to make the hon. Member for Worcestershire, South happy. All he has to do is to get his wind for the next leg. I hope he will allow me to get on with my speech.
One does not have to indulge in an academic exercise to discover that poverty and discontent result from the relationship of one's net income with social security allowances paid to those who do not want to work. One has only to listen to the men in the pubs and clubs and to the women with their shopping baskets in the shops to know that, because far more common sense comes out of the mouths of these people than from academics.
Sir G. Nabarro: That puts the professor in his place.
Mr. Leadbitter: It is not right for one hon. Member to say to another hon. Member, as happened earlier, that the Amendment is purely a political exercise. We are in the House to make political points, and to argue politically across the Floor. We are here to ensure that the philosophies of both parties are seen for what they are in the cut and thrust of debate so that the public may know about them. Therefore, it is proper to recognise that it is right to make a political point. The interesting thing, however, is that once one makes a political point, one is exposed. The party opposite are not justified in putting down an Amendment which they could not put into practice.
The party opposite are not in order in terms of assessing the value of this kind of discussion on tax unless they have the courage to say, on the other side of the balance sheet, how they would make up for the loss of revenue involved by the measure which they propose. It is in that sense, having made the political point, that the party opposite have exposed themselves and shown their inevitable weakness.
Finally, I want to say a word about S.E.T., because it affects—
Sir D. Glover: On a point of order. I have already raised this point, Mr. Grant-Ferris, when an hon. Member referred to S.E.T. I cannot see how S.E.T. can be brought into an argument about the standard rate of Income Tax.
The Temporary Chairman: So far, the hon. Member has only threatened to speak about it. As soon as he speaks about it, I shall call him to order, because he would not be in order in doing so on the Amendment.
Mr. Leadbitter: I shall make a valiant attempt to keep in order. I am sure that if I fail to do so, you will quickly pull me up, Mr. Grant-Ferris, and you can be certain that I will respond quickly.
I take the view that the standard rate of tax, which would be affected by the Amendment, could be, and possibly would be, altered in one direction or another. I am not prepared to talk about the upward direction because the hon. Member for Worcestershire, South has told us about the Parliamentary procedures in that respect. Nevertheless, I submit that

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without S.E.T. the level of tax would be different. It is because it would be different and because it is an indirect tax that I submit that I might be in order in making one or two comments about it in that sense, provided that I am brief and that I refer to it, as it were, only in passing.
I suggest to the Government that the standard rate of tax, in this sense a direct tax, is a far better instrument to deal with the country's fiscal policy than would be an overweighting of the tax system by placing upon indirect taxation a new form of tax such as S.E.T., which, in effect, is causing great harm throughout the country.
As my hon. Friend the Member for Willesden, West (Mr. Pavitt) said earlier, and as an hon. Member opposite said before him, the co-operative societies, for example, have to pass on to the housewife the full consequences of this measure of indirect taxation in terms of increased prices.
I hope that when we talk in terms of taxation to-day, the Government will listen to their friends behind them and that they will use the months ahead to provide the modifications which are necessary in this tax to remove the harm so that it can be selective and effective in the manner in which, I am sure, it was first envisaged.
With that final request on a matter which must concern most hon. Members, on both sides, with the proviso that we on this side seek modifications whereas hon. Members opposite seek to abolish the tax, although they do not tell us what they would put in its place, I hope that the Committee will not divide on the Amendment. I have regarded this as a suitable opportunity for a constructive debate and, therefore, not an excuse for dividing flippantly without the party opposite first saying what they would do concerning public expenditure should their Amendment be carried.
Mr. Michael Shaw: We should be grateful to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) for this important series of Amendments. Were he successful in having them carried, the effective rate of tax paid on incomes over £17,000 would be a maximum of 15s. in the £ instead of the present 18s. 3d. Clearly, underlying that reasoning is not only an incentive to everyone who earns

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or is in receipt of income from savings, but a benefit to everyone, irrespective of his level of taxation, with an income of over £1,200. The arguments which have been put forward are telling. We as a party support them and will do our best to work along those lines when we get back into power.
It has been said that it is not proved whether people seek to emigrate, particularly to the United States, because of the different levels of taxation. It has been said that, possibly, the difference in the level of salary in the early years in the United States has a bearing on attracting people, although that argument was qualified by the hon. Member for Orpington (Mr. Lubbock). It was said in defence that later in life those who had emigrated would find that the differences between their salary levels in America and what they would have been in this country would not be as great as the differences in the earlier years of their careers. That does not invalidate the argument because as one moves up the salary scale, both in this country and in America, one has to look at the net salary and not the gross salary.
The significant aspect is that in America, as one moves up the salary scale, the level of tax moves up less dramatically than it does in this country, because in America a married man is allowed either to have his tax assessed separately for husband and wife or to make a return of the total income of himself and his wife, to halve the total salary, to work out the tax on that half and to pay that amount of tax twice over. One sees immediately that that results in a much lower rate of tax being paid by a man and his wife in America than in this country. Therefore, in talking about remuneration, one must look at the net, and not the gross, remuneration when considering the question of incentives and disincentives.
6.0 p.m.
My experience is that there is a real disincentive. Those people who are engaged in small family businesses and close companies are very much restricted in the amount of expansion they can achieve by the high level of taxation of their firms and themselves. The close company legislation insists that a great

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deal of the income goes to the proprietors, many of whom are working proprietors, and therefore they are very much concerned with the tax that they themselves have to pay when they are considering the well-being of their company. Such companies, and the people who own, control and work in them have been restrained by increasing frustration ever since the Government came into power.
There has been the lack of growth in the economy which has been apparent ever since the Government came into power, certainly since 1965. There has been an almost continuous credit squeeze, which inevitably hits the small expanding company harder than the established one. There is the further factor of the crippling and stifling burden of taxation. The result is that people are not putting their hearts and souls into building up their businesses, working out new processes and ideas and taking chances. Instead, they work out what will be the profit if they are successful and what will be the effect if they fail. If things go wrong, they cannot offset the loss against other ventures. If a man who puts everything into the venture succeeds, he has to pay out in one form or another a great deal of the money achieved by his success. If he loses, he loses the lot. As soon as a successful businessman reaches the age of approximately 50, instead of working out how much more he can expand his business, he works out how he can pass on his enterprise to his children or other relatives.
Sir D. Glover: Or he retires.
Mr. Shaw: He realises that, no matter how much more he earns, there is a virtual cut-off in the amount of money he receives, as a result of our taxation system.
Sir Harmar Nicholls: Since my hon. Friend is dealing with the excessive rate of taxation, and since the Chancellor has made one of his rare appearances on the Treasury Bench, could my hon. Friend ask the Chancellor why we have to pay £923 million in taxation today? Before the Budget, no economist thought that we needed to go beyond £700 million to meet our commitment to international financiers and to maintain our position in the world. Why do we have this extra £200 million? The savings produced by

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the Amendments for which my hon. Friend is arguing would be just about £200 million. This question should be put to the Chancellor before he runs away again.
Mr. Shaw: I have no doubt that the right hon. Gentleman has heard the words of my hon. Friend.
Bound up with the high level of personal taxation is the increasing Government expenditure. Before the Government came into power, we were assured that this country would enjoy a period of rapid expansion and, with no increase in taxation, we would be able to enjoy additional social benefits. Exactly the opposite has happened. We have had stagnation and continual bursts of Government expenditure before we have been able to earn the money to pay for it. The British people perhaps do not understand this but feel most strongly in their bones, and with an unerring instinct, that this is the indictment against the Government. The level of personal taxation must be lowered and, at the same time, there must be discipline over Government expenditure. I fully support and welcome the initiative of my hon. Friend in putting forward these Amendments.
Mr. Harold Lever: I feel that a reply from the Treasury is expected at this point in the debate. I have said before, and I repeat, that it is not for me to decide the allocation of time in the debate; it is for hon. Members to decide. I am not presuming to wind up, nor to stop any hon. Member from speaking; that is a matter for hon. Members and not for me.
The hon. Member for Worcestershire, South (Sir G. Nabarro), in good voice, stamped upon the well-trampled ground of taxation and high incentive. Nevertheless, in spite of his ebullient manner, the hon. Gentleman has clearly done his homework and given a great deal of systematic thought to the expressions of opinion which, however dogmatic and unqualified, represent firm views that ought to be considered. He has done the Committee a service in initiating what I think he called a wide-ranging debate— sometimes ranging more widely than one would have supposed was possible. However, the Committee has had the benefit of the debate, on a very important sub-

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ject, and no one can complain about that.
The question which has always troubled hon. Members is the taxation of income. I will deal first with the Surtax Amendments, which affect higher ranges of income, and then deal briefly with Income Tax.
In dealing with high earned income, or with any high income, it would be conceded on both sides of the House that there is reasonableness in a general egalitarian tendency which seeks to exact from those in the best position to pay money which can be used to the advantage of those less well circumstanced. There is another aspect, that sometimes this egalitarian principle might seem to be merely one sided, in that it reduces very high level incomes without producing the advantage to the less well circumstanced.
My hon. Friend the Member for Willesden, West (Mr. Pavitt) made clear what he had in mind in demanding high taxation of large incomes. It cannot be said that in our society we have no need for more welfare services, mental health services, and so on, which he sought to finance in large part by maintaining high levels of direct taxation. Nobody has argued that we should impose high levels of tax on high incomes simply because we resent those high incomes. We have to see on which side the rate of tax now applying to high earned income falls. Does it fall on the side of reasonable egalitarian propensity, or does it fall into the negative category of a rate of tax which, on balance, defeats the purpose by not yielding enough to justify the effect that it has on the taxpayer? In relation to tax on high earned incomes, which reaches above the rate of 90 per cent., the reduction to 75 per cent., as has been pointed out by the hon. Member for Worcestershire, South, could be accomplished at a cost of something under £5 million, and it is for consideration on which side of the line that falls.
Many hon. Members have mentioned the disincentive effect of tax. I may be over-simplifying the matter, but the disincentive effect of tax, if there is one, is, quite simply, the effect of reducing the material reward for labour. I do

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not think that there is any special disincentive or less incentive in withdrawing money from a man's wages or earnings by the tax system or by any other means.
If we start from the proposition that there are two incentives driving people along—the psychological and even spiritual incentive and the material incentive —it cannot be denied that, taking away part of a man's wages or salary results in some diminution of the material incentive. However, the relevant effect of that will depend upon whether he is a university professor or politician, where the rewards, the satisfying character of the work and the status that goes with it may be sufficient to overcome the interference with the material incentive, or whether he is running a chain of hire-purchase shops in Wolverhampton where the status and psychological factors may not play so large a part.
I think that we ought to consider the quantity and quality of the effort which is affected by the rate of tax. It is not merely a question of the amount of effeort that a man will put in, but the quality of the effort and the atmosphere in which he is likely to do his work.
My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) was anxious that we should have a sociological or social survey investigation to determine the effect of different rates of tax in terms of incentive—
Mr. Robert Sheldon: No.
Mr. Lever: I thought that that was what my hon. Friend wanted.
Mr. Sheldon: I was more concerned with the whole subject of incentives. We had long discussions as to the incentive and disincentive effects of tax. I wanted the Government Social Survey to do an investigation here.
Mr. Lever: I thought that my hon. Friend was addressing himself to the Amendment, because the Amendment deals with the disincentive effect of taxation. That is what I understood him to say. If I did not reproduce it fairly, I regret it.
The only difficulty that I see is that, although this may be an interesting subject, tax and its effects upon incentive
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make up a subject which has been with us and with other countries for a long time. In no country has there been a dispassionate scientific analysis of the effects. I fear that, in the end, one of two things will happen. We will merely get an expression of opinion rather than the ascertainment of fact, or we will get the kind of elaborate sociological investigation of the type that was conducted in the medical world into the effect of mother love on children. In that case, after several years of intensive research, those conducting it burst upon the world with the assertion that it is scientifically proved that children benefit from mother love. I dare say that after a period of scientific and detailed investigation in this case, someone would come up with a number of opinions as to the effect of taking part of a man's wages from him by taxation or other means.
Mr. Joel Barnett: I would have thought that my hon. Friend would have seen the 1954 Report of the Royal Commission on Taxation in which there were some objective surveys referred to. In addition, when I raised the matter last year, it became clear that the right hon. Member for Enfield, West (Mr. Iain Macleod) had taken the trouble to look at the Report of the Canadian Royal Commission, which came out last year. Both had some dispassionate review of the incentive and disincentive effects of taxation.
Mr. Lever: I have read the 1954 Royal Commission Report more than once. All that it did was to record a number of opinions on the matter, rather than ascertaining scientifically the effect of tax incentives. I doubt whether we shall get a final answer guiding us as to what rates of tax should be on incomes by a detailed scientific investigation.
6.15 p.m.
Mr. Lubbock: If the hon. Gentleman is not willing to commit himself to a full-scale study, will he at least think in terms of a feasibility or pilot study which might attempt to set out the terms of reference for a full-scale exercise and discover to what extent one could ask valid questions about the effect of taxation on human behaviour?
Mr. Lever: We live in a world which is fortunate enough to have a number of

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philanthropic institutions amply endowed with funds and as well able to undertake this kind of research as the Treasury. However, it appears that these university and other institutions have not thought fit to pursue this line of inquiry. If as a result of our debate one of them thinks that it would be a useful line of inquiry to undertake, I am sure that hon. Members will be gratified. I cannot commit the Treasury to undertake either a pilot or detailed study of it.
Mr. Sheldon: Government Departments are making use of the Government Social Survey in undertaking sociological investigations, and many people will deplore the attitude of the Treasury in finding special excuses not to undertake the same kind of investigation, when it is raising large sums of money and not making use of the methods being used so successfully by other Departments.
Mr. Lever: My hon. Friend is entitled to his own opinion that we should repair the omission which has become apparent here and in other countries by an investigation of this kind. I fear that, in the end, the result will be a series of opinions on well-established facts. The facts are pretty well known. One has to form a wise judgment upon them. In forming that judgment, regard must be had to international comparability of tax systems. One cannot ignore what happens in other countries, because one's employees do not ignore it. Regard must be had to the general atmosphere in which the tax bites, how it affects the spirit of constructive emulation, and the like.
I can see attractions in offering a few glittering prizes to those whose achievements, efforts and talents cause them to make outstanding contributions to the community. But these are all matters of opinion, and they will not be improved or made worse by scientific investigation.
It is sometimes said that there are few high earning gentlemen affected by high taxation rates, and, indeed, that there are fewer pools winners, but that if fewer prizes were available in pools, it would have a disincentive effect on those taking part in them. One has to have regard not only to those who win glittering prizes but to the many other people who are concerned to make their best efforts in the hope that they may achieve those prizes.
Sir G. Nabarro: I do not want to interrupt the hon. Gentleman, because I hope to reply to his speech later, but it is a singularly unfortunate analogy to compare the nation's top brains, who are the men taxed at 18s. 3d. in the £ on their earned income, with the winners of football pools, who do not contribute one jot or tittle to the national treasure save only the tax which is collected.
Mr. Lever: The hon. Gentleman is being less than his brightest self in not following my argument. I was not comparing these people with football pool winners. I was trying to explain that, since we have a few glittering prizes in industry, the argument is that there are only a few really high earning people, anyway. By my analogy, I am not comparing the effort of the winner of a football pool with that of the top man in industry. I am saying that a few glittering prizes inspire many people to make an effort or sacrifice, as is evidenced in the case of a football pool, where there is only a handful of glittering prizes. Society restricts itself to only a few glittering prizes of that sort, and it allows talent and effort in industry similar glittering prizes in similar circumstances to the extent that other factors from the taxation point of view permit.
I am not opposed to glittering prizes for talent and effort, nor do I equate them with football pools winners. The existence of a relatively few glittering prizes can have a much wider industrial, economic and sociological effect in stimulating others to constructive emulation and improving the atmosphere of effort and talent. One must not have regard to these matters merely by the few people occupying these top jobs at present. One has to have regard also to the possibility of replacing them and attracting others who will put up their best efforts to win the highest industrial jobs in this country.
I detect some evidence in this country that the highest jobs in industry, and in nationalised industry, are not sought after as keenly as they might be because the rates of tax bearing upon the salaries that they carry are such as to make no material difference to incentive. I am sorry that this can be no substitute for a scientific investigation, but I conclude that high tax rates on earnings affect the

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material incentive involved. Material incentive is not the only incentive. At both low and high levels there is a psychological and, indeed, a spiritual incentive which also operates. To the extent that one takes away a man's earnings one weakens the material part of the incentive. Therefore, we should consider this matter.
If we were to pursue the matter further, two points arise for consideration. First, who is to meet the cost of making this concession to the Surtax payers? I could not conceivably support the notion that the cost should be borne by the general fund of lower earning taxpayers. If we do look at it again, as I think that we should—I will come to whether we can look at it again this year in a moment—it should be in terms of some rearrangement of the burden between different classes of wealthy people. I do not think it right that we should look to the relief of high earning surtax to low earning work people. We should look to other sources which exist —property ownership, Corporation Tax, and other forms of taxation on wealth— to bring in the relatively modest sums which would be required to reduce, if thought desirable, the high rate of tax on earned income. My right hon. Friend, in his Budget speech, made it clear that these matters were to be considered in the course of the coming year. He was not at all unsympathetic to an open-minded review of the matter, even though it would not necessarily be done by a sociological survey.
The proposals on Surtax put forward by the hon. Member for Worcestershire, South would cost about £25 million. The cost of reducing the highest rate of Surtax from about 90 per cent. to 75 per cent. would be under £5 million, but the Amendment would cost in the region of £25 million.
The hon. Gentleman's proposal relating to Income Tax would cost £427 million in a full year—[Interruption.] I am giving the information. I am not saying that hon. Gentlemen opposite should not throw away the odd £400 million if they are so minded. I have not said a word against the hon. Gentleman's Amendment on Income Tax yet, but 9d. off the standard rate would cost £211 million in a full year.
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Is the standard rate of Income Tax too high? All this is—
Sir G. Nabarro: Will the Financial Secretary enlighten us on the difference between £211 million and £427 million?
Mr. Lever: These are the consequential and unintended effects of the hon. Gentleman's Amendment.
Sir G. Nabarro: That will not do.
Mr. Lever: I have given the hon. Gentleman the figures and they are correct. The hon. Gentleman can please himself whether he wants his full undiluted Amendment costing £427 million in a full year or 9d. off the standard rate, which, for convenience, will cost £211 million in a full year.
There have been complaints about the way in which our Income Tax is graded. The hon. Member for Stratford-upon-Avon (Mr. Maude) and my hon. Friend the Member for Lancaster (Mr. Henig) made this complaint. I have a good deal of sympathy with it. Our Income Tax tends to go in jumps instead of being graded smoothly. When we get to £5,000 a year earned income and move into the Surtax rate, another kind of jumping occurs. I would welcome another look at the whole system of graded rates of tax to simplify and to unify them. But the Committee must be left in no doubt that this is an immense administrative change which no Government have so far felt able to undertake. I hope that this will not be ruled out for all time, but it cannot be undertaken at present.
The hon. Member for Orpington (Mr. Lubbock) complained about the presentation of our tax papers. I will look into that point. It is not the first time that it has been raised. Everybody has complained, but nobody has yet found the remedy for presenting these tax papers more clearly and effectively to the taxpayer showing the effect of his earned income relief.
A reduction in the standard rate of tax must be ruled out in the context of the Budget. We could not make a reduction in the standard rate of tax of 9d. or anything of that order to reduce the tax rate to £211 million. That must also apply to the reconsideration of Surtax. This is not a year in which we should seek to add complications to the tax machine. To deal with Surtax along

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the lines that I have suggested, namely, that we cannot expect readjustments in the rate on high earnings to be borne by extra tax on people of low earnings which is what it would mean, we shall have to wait for a more favourable context.
I repeat, the Chancellor has been very understanding about the weight of tax borne by all Income Tax-payers and all Surtax-payers, both high and low. I am not sure that the worst victims of high rates of tax are not the lower rate Income Tax-payers. I am sure that there are some right hon. and hon. Members who feel that at the earliest date circumstances permit we should seek to take out from the direct Income Tax system as many of the low paid taxpayers as possible. But all these things must wait for a more favourable context. In the meantime, my right hon. Friend has been at considerable pains to ensure that no additional tax burden was placed upon earned income, which effectively refutes any argument that there is any lack of understanding on his part, even if only in terms of affecting the atmosphere of energy and effort, on the possible disincentive effects of direct tax on income. Nothing better could have been hoped for in present circumstances. We will always be prepared, in the more favourable years ahead when the nation has met the task set before it by the Chancellor in his Budget, to look, on the lines that I have indicated, at various improvements in our direct system of taxation.
Mr. Patrick Jenkin: In the course of a short but attractive speech the Financial Secretary has said so many things with which I felt I could agree that I felt I almost need not say anything at all. But there is an immense gap, as he will be the first to appreciate, between all the desirable goodies which he trailed before our eyes and the reality of the Budget that we are debating in the context of the Amendment moved by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro).
I agree with three things. I agree that this has been a wide-ranging debate, and I do not intend to take unduly long in making my contribution. I agree with what the hon. Gentleman said about the possibility of a survey to try to ascertain the disincentive effects of taxation. I have been surprised by the extent to
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which right hon. and hon. Members on both sides have concentrated their attention on the effect that tax will have whether a man will work any harder, will do a bit of overtime, will be prepared to spend time in the office, and so on. This is important, but I emphasise that it is not the only aspect of disincentives, and I dare say it is perhaps not the most important aspect of disincentives affecting someone paying a high rate of tax. I thought that my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) put his finger on it when he said that the high rate of taxation operates principally as a disincentive to take risks, as a disincentive to the entrepreneur to be enterprising. How on earth can a survey be expected to produce any meaningful result on the question?
6.30 p.m.
Mr. Cronin: Surely the entrepreneur can take his reward from capital profits, on which there is a low percentage of taxation?
Mr. Jenkin: I was interested in what the hon. Gentleman said in his speech, to which I shall return in a moment, but he must appreciate that Capital Gains Tax, and the new form of Corporation Tax are massive disincentives to the results which he hopes to achieve.
In replying to the hon. Member for Orpington (Mr. Lubbock) about the confusion which arises because of the effective rate of tax on earned income the Financial Secretary said that nobody had ever found a method of making this clear, of surmounting the confusion. In recent years my mind has been drawn more and more to the conclusion that what we really must examine is the outdated differential between unearned and earned income. At a time when earned income was infinitely more precarious than unearned income there may have been some social justification for a difference, but I question how much longer that position will obtain.
The Minister said that one of the things which he hopes to aim for is the removal from the lowest end of the tax-paying scale a large number of taxpayers who now pay small sums of tax. That falls strangely from the lips of a Financial Secretary who is a member of this Government who, in this Finance

1167
Bill, have brought no fewer than 300,000 additional taxpayers into the tax-paying net because of the change in the rate of child allowance.
However, it is on this question of disincentives that a great deal of the debate has turned, and on which most hon. Members have made their views known. It is interesting to recognise that the Financial Secretary, perhaps in common with his right hon. Friend the Chancellor of the Exchequer, now recognises, and is prepared to say, that high rates of tax can act as a material disincentive to greater effort and risk taking.
My hon. Friend the Member for Worcestershire, South was absolutely right when he drew attention to the difference in attitude on this topic between the present Chancellor and his predecessor. The present Chancellor showed his attitude, not so much in his Budget speech, as when he broadcast to the nation on the same night as he introduced his Budget. After saying that one of the choices open to him to raise this additional tax was to raise the rate of Income Tax, he said that he decided to reject this suggestion.
"I decided this "—
he said—
"because I was determined not to impair incentives …".
Not to increase taxation in order not to impair incentives is the other side of the coin to reducing taxation to increase incentives, which is what we aim to do, and what we succeeded in doing.
One must, however, contrast that with the attitude displayed in Committee by the Chief Secretary to the Treasury when he said:
"I want to make it clear—I know that this is a view which I hold perhaps more strongly than do some of my colleagues—that in my view there is no reliable evidence whatsoever that a high standard rate of tax is a deterrent to earning incomes."—[OFFICIAL REPORT, Standing Committee A, 13th May, 1968; c. 767.]
There is the dichotomy which we see ever increasing on the Government benches. This is the split between the traditional attitude that high direct taxation is not harmful, and the attitude which we now have from a number of hon. Gentlemen that there is something in the argument which we have always
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advanced that it can be a disincentive. More and more hon. Gentlemen are at last coming to see the light on this important aspect of financial policy.
I was much attracted by an interview which the hon. Member for Birmingham, Northfield (Mr. Chapman) gave to Mr. Ian Trethowan, and which was reported in The Times last March. I have given the hon. Gentleman notice that I was proposing to quote him. He said:
"We are all taxpayers now. This is an important truth about Income Tax nowadays, and the Labour Party must face up to it."
The article went on to say:
"… by 1970 he"—
that is the hon. Member for Northfield—
"thinks Mr. Jenkins should aim to cut at least a shilling off the Income Tax. ' People', he says, ' want the real incentive and spur of the money left in their pockets to spend as they like'."
I look forward to the hon. Member for Northfield joining us on this side of the Committee—
Sir G. Nabarro: And the hon. Member for Loughborough (Mr. Cronin).
Mr. Jenkin: —and, as my hon. Friend says, the hon. Member for Loughborough too, because he made a most interesting speech last night during one of his rare appearances, which we welcomed very much. It comes somewhat oddly from the hon. Gentleman that he should tax —and I use that word in its non-fiscal sense—this side of the Committee, when we move Amendments to reduce taxation, of doing so only out of interest for our banker friends, but when he makes the same plea to the Financial Secretary that is something laudable.
The hon. Gentleman called for lower direct taxation. I am quoting from the un-corrected HANSARD Report in the Library because his speech has not yet appeared in print, and if I am misquoting the hon. Gentleman no doubt he will correct me. He said:
"… the most important thing is the actual disincentive effect of high rates of direct taxation on the desire to work, as opposed to the desire to have leisure".
The hon. Gentleman is right. He went on to say:
"It does not require any investigation to come to this conclusion. It obviously must reduce the incentive to do overtime and extra work."

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The hon. Gentleman went on to commit himself to what I should have thought was the self-evident truth which some hon. Gentlemen, including the hon. Member for The Hartlepools (Mr. Lead-bitter), are beginning to realise, that the Labour Party being tarred with the brush of high taxation is bound to make it unpopular. I can understand the rising dismay on the part of many hon. Gentlemen opposite when they see their Government inexorably year by year increasing: taxation. That is their reputation, and with excellent reason.
It was very well summed up in an article by Mr. Martin Jacomb who for 10 years was the taxation correspondent of the Financial Times. When he severed his connection with that paper recently he was invited by the editor to write a farewell article commenting on the period of his service. He surveyed the period since 1951 and perhaps I might give the House three short quotations because they put pithily what I believe to be true. He said:
"The period falls into two distinct parts: the Conservative era until 1964, and the Labour Government's, tenure of office since.
The Conservatives had a sound record of reducing taxes both direct and indirect. The standard rate of Income Tax went down from 9s. 6d. in 1951–52 to 7s. 9d. in 1959–60, the only sustained reduction since World War II. … The post-1964 era has a different complexion. Increases in the rates of tax and numbers of taxes have been the order of the day … The stage is being reached where taxpayers are encouraged to save their earnings but penalised when they do so."
I remind the House of the figures which I gave during the Budget debate. During the 13 years of what many are now coming to regard as the golden years of Tory Government—and one has only to look at the recent election results to realise that—taxes were cut by £2,000 million a year, but in a short space of 3½ years since hon. Gentlemen came to office they have put up taxes by £2,000 million a year. Indeed, if we exclude the temporary taxes—the temporary charge on imports, the 10 per cent. charge on Surtax and now the special levy—it comes to £2,312 million. This is indeed a calamitous record and it is entirely right that the party opposite should be stigmatised as the party of high taxation.
They seek to explain this away by saying that this was essential to ensure
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recovery and economic solvency—but they failed to save the £. High rates of taxation were explained as being necessary as an alternative to unemployment, but we have had the highest rate of unemployment since 1940. They said at one stage that this was necessary to prevent wages becoming the subject of intolerable legal restrictions, but we now have prices and incomes legislation of unparalleled severity. They said that it was necessary to put the balance of payments right. Yesterday's figures are no cause for joy in that connection.
The truth is that we not only have all these evils but also have these very high rates of taxation. The Budget—and Income Tax and Surtax are very much a part of it—is two and a half times as large as any Budget before. Hon. Members opposite must now be beginning to have a glimmer of awareness that their economic failure may have some connection with the high and rising rate of taxation which they have imposed on the country. They may begin to suspect that there is a link between the sluggish response—which they have all too often criticised—of the industrial and commercial world and the disincentives which they have slapped upon its shoulders.
The suggestion made by the hon. Member for Ashton-under-Lyne (Mr. Sheldon) that personal taxation should be left as it is but that Corporation Tax should be increased, after which we should seek to restore incentives by increasing grants and subsidies, seems to be a recipe for utter disaster. There would not be any real incentive, and it would further destroy the operation of the market economy.
Mr. Sheldon: That is not what I said. I said that there should be a move from direct, personal taxation to Corporation Tax and other taxation. That is something which many hon. Members agree with.
Mr. Jenkin: I am content to let the Committee judge what the hon. Member said by his intervention just now.
Then, not surprisingly from him, the hon. Member for Orpington criticised the Opposition for moving tax reductions without saying where the cuts in expenditure should come from, and he accused us of demanding increased expenditure.
Mr. Lubbock: Hear, hear.
Mr. Jenkin: The hon. Member approaches these matters with great sophistication. He must have noticed the difference between the records of the two parties, in terms of growth achieved. There was the triumph of the Tory years, when we managed to achieve not only a rising standard of living of the people and rising public expenditure but, at the same time, falling rates of taxation. If we get an adequate rate of growth of the economy we can achieve this. The failure of the Government is that they have maintained their rising levels of public expenditure—indeed, public expenditure this year is ahead of the targets in the National Plan—but there has been no growth out of which to pay for it. That is why the Government now have to demand a cut in the standard of living of the people. It is in no way inconsistent for us to insist that the public sector should be able to fulfil its requirements and, at the same time, to call for taxation reductions.
My party's position has been made clear over and over again. When we are next in office we aim at what we were able to achieve when we were last in office, namely, progressively to cut taxation, progressively to switch the burden from direct to indirect taxes, to do far more to encourage saving, to restore incentives to work and to save and to take risks. In the last resort the success of this country depends on the enterprise, drive and initiative of people—ordinary men and women who are subject to the normal motivations of human beings, with a laudable desire for self-improvement, and a desire to improve the quality of their lives and hand on better lives to their children. If they are stiffled by crippling taxation an atmosphere of "couldn't care less" will be created, and the whole nation will suffer.
6.45 p.m.
This year the Chancellor is having to take a great deal of money out of the economy to make devaluation stick. Can it be agued that we can have a tax reduction of the size that my hon. Friend has proposed—£211 million off Income Tax and £25 million off Surtax? We agree that after devaluation—and that should never have been necessary—there was a need for a sharp deflation. Mv right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), when discussing an Amendment to reduce Income Tax by
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3d., in Committee, said that it would be entirely right that we should make some token reduction in Income Tax even this year in order that there should be some light at the end of the tunnel.
But it would be irresponsible for us to insist on a larger reduction than that which we moved in Committee upstairs. We pressed our Amendment to a Division then. This was in line with our general strategy of cutting the increased rates of indirect taxation by half and making token reductions in direct taxation.
My hon. Friend's Amendment goes very much further. It proposes to take 9d. off the standard rate and also to make a cut in Surtax. It could even be interpreted as making cuts in the reduced rates. My hon. Friend has performed a signal service in giving us an opportunity to debate these important matters on the Floor of the House, reiterating our emphasis on the damaging effects of high taxation.
I am sure that he will recognise that it would be wrong to commit our party at this stage to a cut in direct taxation of this magnitude. [Interruption.] I do not know why the hon. Member for Lancaster (Mr. Henig)—who made a singularly undistinguished contribution to our debate—should choose to jeer when the Opposition show themselves as responsible. It would be the easiest thing in the world for me to ask my hon. and right hon. Friends to divide, but it would be a highly irresponsible thing to do, and I do not propose to do it. A cut of this magnitude would prejudice the response of the economy to the needs of the moment and the stimulus offered by devaluation. I hope, therefore, that my hon. Friend will feel it right not to press his Amendment to a Division—although I see no reason why he should withdraw it.
Mr. Alfred Morris: I hesitate to interrupt the interesting hostilities which are taking place on the other side of the Committee. The hon. Member for Orpington (Mr. Lubbock) launched an extremely bitter attack on Conservative Members. He used a word to which they are extremely sensitive. He accused them of hypocrisy, and of course, they have never liked the word since Disraeli described the whole Conservative Party as organised hypocrisy. The hon. Member

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for Orpington made an important contribution to the debate, in that he documented inconsistencies on the part of those who have argued for a reduction in direct taxation without offering to tell us how they would raise the money.
This has been a long, discursive and important debate, to which my hon. Friend the Member for Willesden, West (Mr. Pavitt) made a notable contribution. Those who argue against indirect taxation have prehaps allowed their case to go somewhat by default. My hon. Friend argued that indirect taxation has been increasing, is increasing and should be brought under much stricter control. Because certain forms of indirect taxation are taxation of needs and not of means, I can well understand the liking of the Confederation of British Industry for reducing direct taxation and increasing indirect. But what I find difficult to understand is the apparent preference of many Socialists for taxing needs in preference to means.
Over recent years, we have heard a good deal about working people preferring to hear the jingle of half crowns in their pockets through paying less of their earnings in direct taxation. Some very rich people have sought to instruct us in the changed attitudes of the working-class taxpayer. Of course working people like the jingle of half crowns, but only until they and their wives find that the value of their money has been depreciated by rising prices. I remember the argument about mending the hole in the housewife's purse when I first stood for Parliament in the General Election of 1951. It was repeatedly used by Mr. Victor Raikes, my opponent in the Garston Division of Liverpool. But members of all parties now seem to feel that they must place an increased burden on the housewife.
As my hon. Friend said, there are those who argue that indirect taxation is good and direct taxation is bad, but I cannot subscribe to that argument. While it may be good for the C.B.I., I cannot agree that what is good for the C.B.I, is necessarily good for Britain.
Trying to discover one important reason for this increasing preference for indirect taxation, I have been studying speeches like that made at Perth recently by the right hon. Member for Enfield, West (Mr. Iain Macleod), when he made
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it clear that we should have to accept more indirect taxation from a Conservative Government. He and many of his hon. Friends are saying that we shall have to condition ourselves to this. As some hon. Members are aware, I am no great enthusiast for the way things are ordered in some West European countries. But the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) and many of his hon. Friends argue that we must rapidly adjust ourselves to the ways of the E.E.C. In particular, they want to see a tax on value added. Were we members of the E.E.C, we should have to introduce and operate such a tax by 1st January, 1970. This would be required under directives already approved by the Common Market authorities. But this is classically a tax on consumption, which could, in my view, have many regrettable—including seriously inflationary—consequences.
As I have emphasised, the argument against taxing consumption more and reducing direct taxation has been allowed to go seriously by default. The hon. Member for Worcestershire, South (Sir G. Nabarro) did us a service in tabling this Amendment. He often tries to be fair, according to his lights, but I hope that he will at least try to indicate where the money would come from. We heard from his hon. Friend the Member for Wanstead and Woodford that he could not support his hon. Friend's Amendment in today's circumstances.
Nevertheless, he prefers less direct taxation and it is remarkable for a party which wants drastically to increase public expenditure to talk about reducing the standard rate of Income Tax. [Interruption.] The right hon. Member for Enfield, West, looks puzzled at my suggestion that his party want to increase public expenditure. All I can say is that he has not read the articles by " C " in The Times, and he may even have been the author— [An HON. MEMBER: "HOW do we know? "] We know he was not the author because he would not look so puzzled at my suggestion. There was a most penetrating comment in one of those articles on the inconsistencies and indeed non-credibility of the alternative Government, who would increase defence expenditure by hundreds of millions of £s while also getting rid of the £500 million raised by the Selective Employment Tax, and at the same time reduce Income Tax.

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But where will the money come from? I am slightly helped in this by the right hon. Member for Grantham (Mr. Godber), who has not joined this debate. He gave one indication when he said, as reported in The Times of 4th June, that his party was now committed
"… to switch the greater part of the cost of agricultural support from the taxpayer to the consumer… by the imposition of levies on food imports",
and he reckoned that this would add five or six per cent. to the cost of food. I hope that his absence means that he is now working for the Conservative candidate in Nelson and Colne. I hope that he is explaining to the mill workers there that his party would not merely increase defence expenditure and public expenditure in other ways, but would, if now in office, immediately increase food prices by 6 per cent. [An HON. MEMBER: "Rubbish."]
The Chairman: Order. We are discussing the rate of Income Tax.
7.0 p.m.
Mr. Morris: Those who wish to reduce direct taxation are in favour of large increases in indirect taxation. If not, the hon. Member for Worcestershire, South must say how the loss of revenue would be made up. And I hope that he will not be too harsh on his right hon. Friend the Member for Grantham, who at least had the decency to say that the Tories would save money by scrapping the system of agricultural support and increasing food prices to the housewife. If he is not already there, I challenge the right hon. Gentleman to go to Nelson and Colne and defend his statement that there would be an increase of 5-6 per cent. in food prices. I also—
The Chairman: Order. The hon. Gentleman must relate his remarks to the question of the rate of Income Tax.
Mr. Morris: I regret having strayed from the path of order, Sir Eric, and perhaps I have said enough to make my point. Hon. Members will be aware that I have taken a keen interest in agricultural matters over the years. If I had time and it were in order, I could demonstrate that, from the point of view of that agricultural subsidies can very much affect the argument about the balance between direct and indirect taxation.
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In its 1966 General Election manifesto, the Labour Party said, on the subject of taxation:
"In an age when taxation is bound to be substantial, it is essential that the tax system should be fair and intelligible. This has not been true of Britain for many years. Among the worst injustices has been the heavy weight of taxation on the average citizen and the very light burden which, as a result of tax avoidance and other devices is borne by those best able to shoulder it."
The average citizen will not be helped if less emphasis is placed on ability to pay and more is placed on taxing needs. Some people are so fanatically committed to our joining the E.E.C. that they believe we should adjust our institutions now, even while we are excluded from membership. My right hon. Friend the Chief Secretary gave in Committee upstairs a comparison of the marginal rates of income tax here and in France. He was referring to salaries of £5,000 a year. My right hon. Friend said:
"Whereas our marginal rate … is 36·7 per cent., in France it is 21·6 per cent.…"— [OFFICIAL REPORT, Standing Committee A, 13th May, 1968; c. 766.]
I concede to the C.B.I, and hon. Gentlemen opposite that direct taxation is much lower in France. The reason is because even the Archangel Gabriel could not collect all the direct taxes that should be collected in France. It has always proved difficult for French Governments to collect direct taxes. Englishmen, on the other hand, are prepared to pay direct taxes and I advise hon. Members to take a long, cool look at the balance between direct and indirect taxes in France and the comparative stability of the two countries. I am sure that, having done that, they will agree that it is time that we started talking about limiting rather than increasing indirect taxation.
Sir G. Nabarro: Faced with the calamity of my personal exclusion from the Committee upstairs—thus my dis-franchisement from discussing detailed matters of direct and indirect taxation— I pondered six weeks ago precisely what my strategy would be to attract the greatest possible attention to my fiscal philosophy. When I learned of the facilities available to hon. Members for a Recommittal stage, I thought that I would demonstrate at once the crass fatuity—HANSARD reported me yesterday as referring to " crass fortuity"—of the

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Recommittal process because it entails largely a. repetition of arguments adduced when discussing Amendments in Committee upstairs.
I decided, when pondering these matters six weeks ago, that irrespective of anything which my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), the Shadow Chancellor, and his competent team decided to do upstairs, I would set down a large number of Amendments on Recommittal; and I could not have believed that you would be so kind, Sir Eric, as to select all my major Amendments. I refer to my major proposals on motor spirit, on Purchase Tax, my Amendments ranging over a wide area to encompass the whole ambit of indirect taxes, and now this critically important Amendment, the discussion of which I am winding up, seeking a reduction in the standard rate of Income Tax and a reorientation and reduction of the various levels of Surtax. I made representations to you, Sir Eric, in the hope that my two Amendments on this subject —covering Income Tax and Surtax— would be taken together, and I am glad that you complied with my request.
My objective has been to cause on recommittal a wide discussion to take place of indirect taxation—that occurred on my Purchase Tax Amendment yesterday—and a wide discussion of direct taxation, and this has occurred late last evening and today. There is a fundamental cleavage between the two parties on these matters, and I hope that that cleavage will be aggravated and accentuated in the short remaining period between now and the next General Election.
I support a lessening of direct taxation and the broadening of the base of indirect taxation, in direct contradiction to everything said by the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris). I understand his arguments well. They have always been Socialist arguments. For this reason they have always been fallacious [Interruption.] I am waiting for the hon. Member for Ebbw Vale (Mr. Michael Foot) to erupt. I have always embraced pure Tory philosophy in these matters: incentives to work harder and longer, to create successful enterprise, to enlarge businesses and to sell more at higher and better profits. This is the pure milk of capital-
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ism which I espouse, in which I believe and which I support. I love profits better than all else—[Interruption.]—in business. And why not? It is a noble cause, when approximately 70 per cent. of all business profits go back to the Treasury in taxation. I am fortifying the Financial Secretary's revenue in a devious fashion. But, these are the deep cleavages on taxation policies between the two major parties.
I wind up this debate very shortly by saying that I am delighted that my right hon. and hon. Friends and myself have reached a broad measure of agreement in these debates on the Finance Bill, 1968, as to three principal policy matters. The first is that personal direct taxation in Britain is worse than in any other country of comparable stature; is much too high, and should be reduced. The second is that the basis of indirect taxation is insufficiently broad—it was to that that I directed my speech yesterday on Purchase Tax. The third is that in these debates we have not dealt with the agregation of married women's incomes, which is intolerable, especially in the matter gi Surtax—
Mr. Michael Foot: Will the hon. Gentleman give way?
Sir G. Nabarro: I always give way to the hon. Member for Ebbw Vale with pleasure.
Mr. Foot: Can the hon. Gentleman tell us whether he made the same speech about profits to the No-Nail shareholders?
Sir G. Nabarro: I should not speak here of individual companies, other than to say that after earning millions of pounds of profits in that company since I created it, I should not have thought that the shareholders of the company would have anything to grumble about. As I was myself a shareholder in the company, I found myself substantially fortified. The trouble with the hon. Member for Ebbw Vale, as I told him in 1962, is that his knowledge of industry could be accommodated on the back of a fourpenny stamp.
My concepts in relation to taxation are not new. They have not been evolved during the last 48 hours for the purposes of this Amendment, with which we have been dealing last night and today. As

1179
part of the strategy to which I have alluded I went into print nearly three weeks ago in a national newspaper with a circulation of about 1½ million—namely, the Weekend Telegraph. I wrote these words on 31st May, in the leading feature contribution, "Opinion" and entitled "Attack Tax". Under the heading "Personal (Direct Taxation)", I said that I would
"… replace Income Tax, Surtax, Capital Gains, Duty, Estate Duties, Betterment Levies…"
by a single system of direct taxation:
"The top rate for both earned and unearned income would be 13s. 4d. in the £. Income of spouses and children would be Non-aggregated."
I proceeded:
"Sumptuary (Indirect Tax): An Added-Value Tax, as evolved in France and West Germany, totally rebated on exports. It should be spread on a broad base, replacing all present Customs and Excise duties, Selective Employment Tax, Purchase Tax, Betting Duties and Road Fund Licences. It would be a flat rate tax and un-cognisant of so-called luxury. It would raise more than present indirect taxes, which would allow a reduction of direct Personal Taxation. Lower income groups not paying direct taxes would be compensated through social welfare benefits and pensions, for any increased living costs caused by the Added-Value Tax."
I claim that those sentiments are unexceptionable and are in the interests of the broad mass of the working population of the country.
7.15 p.m.
Generally I agree with the hon. Gentleman the Member for The Hartlepools, (Mr. Leadbitter) in almost nothing. But I found myself applauding him today as a horny-handed son of toil, a true Labour man—he might almost wear a cloth cap coming to and from the House —castigating the professorial type from Lancaster, who impressed his academics on the House yesterday—and the fact that he had no working knowledge whatever of what causes men and women in industry, trade and commerce to produce the nation's wealth.
I cannot, of course, take this Amendment to a Division tonight. Of course I cannot. In order to get it selected at all I had to seek a different reduction from that in the Amendment moved by my right hon. Friend the Member for Enfield, West in the Standing Committee—a Com-

1180
mittee from which I was excluded —[Interruption.]—the Chancellor of the Exchequer excluded me—not my right hon. Friend. The Chancellor of the Exchequer does not like me—
Mr. Harold Lever: I wish that the hon. Member had said that before. The Chancellor of the Exchequer had nothing whatever to do with his exclusion. The hon. Member must attribute that elsewhere—presumably to his right hon. Friend. I do not, of course, criticise his right hon. Friend.
Mr. John Pardoe: The hon. Member for Worcestershire, South (Sir G. Nabarro) should beware of being picked next time, because in The Times newspaper his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) has said that next time he will pick a weaker team.
Sir G. Nabarro: On the contrary, my right hon. Friend was very kind in what he wrote in that newspaper. He did not mention a single Tory backbencher, save only myself. What did my right hon. Friend say in his splendid article in The Times entitled "Failure of the Finance Bill Experiment"? He wrote:
"The voice may be the voice of Jacob but the hand is the hand of Esau and, to revert to my original metaphor, I think that although we will have doughty assistance from Sir Gerald Nabarro and a few others who were not on the Committee the Players will be called upon to bat."
The fact is that I was not selected as a member of the Standing Committee.
But I want to make the following point in all seriousness. We know very well the rules in connection with the Finance Bill. This year we embarked on a new procedure. This Recommital stage I regard as a failure. For the reasons I have already endeavoured to demonstrate, I hope that it will never be repeated. But in the Standing Committee my right hon. Friend gave effect to the views of the Tory Party on matters of direct taxation. He took to the vote an Amendment to reduce the standard rate of Income Tax from 8s. 3d. to 8s. in the £. Subsequently, he took to the vote an Amendment to reduce the Surtax rates by 10 per cent. These were votes on principle, but there was not much publicity associated with these debates, for they were hidden in that Committee upstairs from

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which the general public, for reasons of accommodation and ventilation and other factors, were largely excluded. [HON. MEMBERS: "Oh."] So moved was I by the conditions in the Standing Committee that I set a Motion on the Order Paper of the House, signed by hon. Members of all parties, to draw attention to the situation. As the two Motions that I have mentioned did not receive much publicity, I have brought the matter to the Floor of the House to achieve much greater publicity.
We have now had a very wide-ranging debate on this critically important matter. Had I not put this Amendment on the Order Paper in terms different from that of the Amendment in the Standing Committee, we should have been denied this debate. Does any hon. Member seriously believe that we ought to have neglected to apply ourselves to the biggest single tranche of revenue that the Chancellor is claiming this year— £4,651 million from Income Tax and Surtax in 1968–69? I have sought to reduce it by nominal sums and have precipitated a long debate in which a large number of hon. Members have taken part. I believe that we should have been lacking in our duties as Members of Parliament, irrespective of party, if this far-reaching debate had not been allowed to take place. I am glad to see a Parliamentary Private Secretary sitting behind the Government Front Bench nodding assent.
Mr. F. P. Crowder: My right hon. Friend—
Sir G. Nabarro: Not "right honourable".
Mr. Crowder: Well, very soon perhaps.
Sir G. Nabarro: I hope so.
Mr. Crowder: I wonder whether my hon. Friend, having mentioned these gigantic figures, has taken into consideration a rather more sinister aspect of the situation, the business of fraudulent prospectus. At the Old Bailey recently we have had the cases of Savundra, de Courcy and Grunwald. What about these cases? What were the shareholders told by the Prime Minister on 15th September, 1964? My hon. Friend will remember that the Prime Minister was

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asked on television just before the election whether Labour's proposals would involve increased taxation. The Prime Minister's reply was:
"No. Over a period of a Parliament I believe we can do it, certainly without any general increase in taxation. We are going to be responsible about this, and we shall tell the nation frankly what we think is required."
My hon. Friend will remember—
The Chairman: Order. There must be some limit to interruptions. This interruption has gone beyond the limits.
Mr. Crowder: It is my complaint that there is no limit on the other side.
Sir G. Nabarro: My hon. and learned Friend—I am most grateful to him for drawing that quotation to my attention —has largely made the peroration of my short speech for me.
I mentioned the aggregation of revenue of £4,651 million from Income Tax and Surtax during 1968–9. That figure shows a net increase of £602 million in those two forms of taxation comparing 1968–9 with 1967–8—£584 million increase in Income Tax and £18 million increase in Surtax. So, though the Chancellor has not increased the rates of Income Tax and Surtax, he will be collecting from the hard-pressed, overburdened taxpayers £602 million more in Income Tax and Surtax this year than he did last year.
My hon. and learned Friend could not have been more apposite in his intervention or in his choice of words. There was a false prospectus in 1964 which beguiled and bewitched the unthinking section of the electorate and caused just sufficient misguided men and women to vote Labour. That was what the Labour Government's precarious majority in October, 1964, rested on. The Labour Party will not put that confidence trick a third time, I promise the Financial Secretary.
Amendment negatived.
Question, That the Clause stand part of the Bill, put forthwith pursuant to Order [11th June], and agreed to.

Clause 14
ALTERATIONS IN PERSONAL RELIEFS
Mr. R. H. Turton: I beg to move Amendment No. 8, in page 9, line 8, leave out '£415' and insert '£450'.

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I understand, Sir Eric, that we may discuss at the same time Amendment No. 9, in line 8, leave out '£665' and insert '£750'.
The Chairman: Yes.
Mr. Turton: Here we deal with tax relief for those over 65 years old with small incomes. I believe that the burden of Income Tax on the elderly during a time of inflation is one of the greatest social evils. No party succeeded in tackling this until 1957, when the Conservative Chancellor of the Exchequer, the present Lord Thorneycroft, introduced a Clause which exempted from Income Tax persons over 65 years of age who had, in addition to their standard National Insurance pension, no more than one and a half times the amount of the pension as additional income. That additional income is usually the increments to the National Insurance pension and other pensions, such as Service pensions or occupational pensions, or the savings that the persons concerned have made during their lifetime.
Since 1957 no Government have adjusted the relief to the proportionate scale that Lord Thorneycroft did in that year. It has been adjusted six times— not seven, as the Minister of State said in Committee. Three times it was adjusted by Conservative Governments. An attempt was made on two occasions out of three to make the adjustment to take account of the additional income apart from National Insurance pensions. This was their decision in 1962 and in 1964, but in 1963 there was the unfortunate error of not making that allowance, and I took part in the debate at the time protesting that more should be given. I remember my hon. Friend the Member for Tynemouth (Dame Irene Ward) making the same point.
7.30 p.m.
Since the present Government came to power, on the three occasions when they have adjusted the limit they have made no allowance for additional income and, therefore, there has been a rapidly deteriorating position for the elderly under this tax relief and, as the Minister of State admitted upstairs, this Clause is so drafted that the amount of relief is in-

1184
creased in two successive stages by £25 whereas the increase of pension is £26.
So we have got to the degree of meanness that, far from making any adjustment for additional income, not even the rise in pension is included in the increase. Under this provision, both for the single and the married, relief now is afforded up to the amount of the pension and, in addition, three-quarters of the amount of the pension instead of being 1½ times the pension in addition to the pension. This means that more old people are paying tax more heavily than in 1957, and we must bear in mind that the purchasing power of the £ has dropped since then from 20s. to 15s., which has increased the burden on the old.
If we were to put the scale back to what Lord Thorneycroft introduced in 1957, the maximum figure for a single person should be £495 and for a married couple £943, but in these Amendments I suggest the more modest figures of £450 and £750 because I believe that at the present time the situation should be corrected by stages, and this, I think, would be a reasonable stage, which was the line the Conservative Government took in 1962 and 1964.
I beg the Committee to realise that this is a grave and growing problem. I see it continually in my constituency. For example, an agricultural worker who was not in the tax scale on P.A.Y.E. when at work and who takes on an occasional odd job in his retirement which brings him in £5 or £6 a week, finds himself having to pay about 25 per cent. of his additional earnings in tax. I think that it is a wicked sin in the present state of the country that a man whose total income is no more than £10 a week should have that small amount whittled away by tax because no Government have approached this matter in the way it was approached in 1957 and tried to get the correct relationship of tax to pension and additional income.
This can be seen more clearly when one looks at what is happening to the elderly and at their sufferings. Under the system of taxing elderly people very heavily on their pensions, more and more are having to exhaust their savings and more and more are going on to supplementary benefit. I ask the Government to look very seriously at the reports of

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the National Assistance Board for 1965 and the current report of the Ministry, of Social Security. The Board's report—I cannot use a later one because the Min-istry for some odd reason has not given us these figures—showed that, of the old people in the age group 65 to 69, some 16 per cent. were drawing National Assistance benefits, as they were then called, whereas in the age group of those over 80 about 33 per cent. were drawing National Assistance benefits.
This shows what is happening to the old under the present tax system. They were independent when they were in the age group 65–69 but, as time has gone on and the burden of taxation has reduced their savings, more and more of them have been driven to National Assistance. This is highlighted even more by the report of the Ministry of Social Security. It comes out with the extraordinarily high figure of over ¼ million old people over 65 having to draw supplementary benefit for the first time in the current year. This means, therefore, that the process is rapidly increasing. The increase is 270,000 in a year, with 101,000 of them being people over 75 who had managed, until last year, to exist on their pensions and savings but who last year, owing to the rising cost of living and the burden of taxation, were driven on to supplementary benefit. This is a fairly high increase for the year of 4·5 per cent. of the age group, and we should bear in mind that already in the previous year 27 per cent. of those over 75 and 33 per cent. of those over 80 were already receiving supplementary benefit. The barbarity of the present system can be appreciated.
I put forward these Amendments as a solution to this barbarous system of taxation of the elderly. I am certain that no one on either side of the Committee can tolerate this very mean increase, which is actually less than the increase in the pension and therefore is going to condemn more and more of the elderly to be taxpayers. It will be said that this concession would cost £6 million, but we have just heard my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) say that this year the Government are going to get an extra £606 million fom Income Tax payers. Surely the Government will not claim that they must have this £6 million out of the old people, most of whom are

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living on £8 to £10 a week. We have the situation in which, while average earnings are £20 a week, elderly people, even if they are getting under £10 a week, are having to pay Income Tax. I do not believe that anybody could support that. I ask the Committee to accept the Amendment, but I ask the Government also to review the whole taxation of elderly people. The figures which I have given show that there is need for an inquiry. I say that not from any party point of view, but because we have to consider how direct taxation is whittling away the savings of old people.
There is a weakness in the present system of age reliefs. Age reliefs start at 65, but they do not become greater as the old people get older. There ought to be a scale of age relief so that it is given to those over 65 on one scale and on a much higher scale to those over 70, those who have passed the time when they could get additional work. The hardship is not so great between 65 and 69 as it is at 70 and over. All the figures from the National Assistance Board and the Ministry of Social Security demonstrate that. The incidence of people seeking supplementary benefit becomes greater as old people get older.
If the Government cannot adopt my suggestion now or on Report, I hope that in the next Budget the Chancellor will introduce a higher rate of relief for those over 70, so that the limits are £12 a week for a single person and £20 a week for a married couple. Nobody would begrudge that to those over 70. It would mean that they could retain their savings and their independence and live their lives at that modest income without paying tax.
I hope that the Minister of State will be more forthcoming than he was in Standing Committee on a similar Amendment. The proposals in the Bill are the meanest proposals for old people put forward by any Government, with a possible exception of the Conservative Government of 1963, which made a mistake which was rectified in 1964 after we had pointed it out. We should not allow the Bill to go forward with such a mean provision which contains no adjustment for other earnings and which does not allow old people even to recoup the extra taxation on the 10s. a week increase in pension.
Mr. Julian Ridsdale: I apologise for coming to the debate slightly late, but I am glad to be here to support my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). I probably have more elderly and retired people on low incomes in my constituency than there are in any other constituency. In the last three years it has been tragic to see how the value of money has gradually deteriorated and how the Government have broken the promises which they made when they first came to power and said that they believed in a strong £, when they deluded many of these old people into supporting them at the General Election. The old people believed the promises of the Labour Government not to devalue the £.
The Temporary Chairman (Mr. William Baxter): Order. The hon. Member ought not to go into the realms of devaluation. He ought to devote his attention to the Amendment.
7.45 p.m.
Mr. Ridsdale: I welcome this proposal to help these old people. It is not only those who are 65 who are being hit. Those in their 70s and even in their 80s need the help which the Amendment would give them. I have asked for help for them several times. I had an Adjournment debate the other day when I was three times interrupted by Mr. Speaker who said that in an Adjournment debate I could not deal with legislation. I want to express the strong feelings of the elderly and to say how much they look to those like my right hon. Friend and my hon. Friend the Member for Tynemouth (Dame Irene Ward), who has fought so valiantly for those on small fixed incomes.
I hope that the Government will show some sympathy for some of the elderly. They should be allowed a tax-free income of £12 a week for a single person and £20 a week for a couple. Without that kind of income they have to draw on savings. I have had many pathetic letters telling me how people have had to draw on their savings because they have had no help from the Government. I cannot speak too strongly of their tragedy, which has come about because of the iniquities and failure of the Government and because of the state into which the Government have got the

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economy. That is why I want help to go to those who genuinely need it.
In one town in my constituency, Clacton, 19 per cent. of householders are drawing rate relief, which means that they have an income of about £500 a year. I know how much they are hit by the rising cost of living. I may not use the strong words which I ought to use to express their feelings. They look to us in the House of Commons to do something for them, and I have no hesitation in wholeheartedly supporting the Amendment so ably moved by my right hon. Friend.
Dame Irene Ward: I am glad that my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) moved his Amendment so clearly and in such detail. It is very difficult to raise in the House of Commons the issue of people living on small fixed incomes, and the people covered by my right hon. Friend's Amendment can be truly so described. I am particularly pleased that he mentioned the Finance Bill of 1957, because I well remember the then Chancellor, now Lord Thorneycroft, specially including a Clause dealing with this section of the community. I was pleased because, looking back, this was the first and only time in my life that a Chancellor had done something in response to action which I had taken, together with a small committee of Conservative Members.
I am always delighted to take part in debates of this kind, particularly in view of the circumstances outlined by my right hon. Friend. I notice with great grief and regret that, having spent a while discussing general matters relating to Income Tax, most Members have left the Chamber, leaving only the hard core who are concerned with those on small fixed incomes to argue their case. I listened carefully to what the Financial Secretary said when he turned down the proposals of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). He was then dealing with very large incomes and, on the whole, very prosperous people who do a great deal to maintain the economy.
I notice that the Financial Secretary, in turning down the proposals of my hon. Friend, said that he was more interested in doing something to help the lower

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income groups. He did not even discuss people on small fixed incomes. This is an opportunity to test the sincerity of the Government. The Financial Secretary always makes very charming and understanding speeches which get nowhere.
I know that Treasury Ministers are briefed only on the subject about which they are to speak, and do not look at the overall need for co-ordination. They never understand that if one turns down an Amendment on the grounds that it is unfair to a section of the community, say, those on lower incomes, it is important that the implicit claim in the speech for those with lower incomes is taken up later by the Treasury bench.
The Financial Secretary, having made his speech, ups and away. Have the Treasury Ministers a co-ordinated plan, so that their reasons for turning down one Amendment will be put forward as reasons for accepting another? It is intolerable for those on small fixed incomes that they should suffer in this way. It is no good closing one's eyes to this. My right hon. Friend said that if the Amendments could not be accepted now perhaps they might be embodied in the Bill on Report. I would accept that with gratitude and appreciation. He also said that they could perhaps, be incorporated in the next Budget. The Treasury must realise that these people do not have unlimited time and that they have great anxiety about their future. This is almost as important as the actual money proposals.
Mr. Turton: What I was saying about the next Budget was to do with the review of the taxation of the elderly and a special provision for relief for those over 70.
Dame Irene Ward: I do not want the Treasury Ministers to ride off by saying that they will wait until the next Budget. I am sick of waiting. These people wait and wait. It is not just the money, but the frightful anxiety which is caused. They see their savings slowly melting away. I hope that we will get a little generosity, honesty, understanding and humanity from the Treasury bench. It is no good anyone drawing attention to supplementary benefits. They have been very helpful and welcome, but at the same time people who are paying taxation are

1190
doing so because of their savings, accumulated while they were working. What encouragement is there for people now working to save when they see the plight of these people? They have been treated most shabbily, unfairly and inhumanly.
I look forward to seeing to what extent the reason of the Financial Secretary for turning down the last Amendment has been appreciated and understood, and, if it has been appreciated and understood, that this very small amount of £6 million will be forthcoming. It would be the best expenditure of money one could imagine.
We have spent hours discussing other rates of taxation and we heard speeches from the benches on this side of the Committee, with which we all agree, but which could well have been made in a few minutes, on Amendments which we knew perfectly well were not acceptable to the Government. I cannot help saying that this Recommittal stage is an absolute twist and a monstrosity of fairness and justice.
The Temporary Chairman: Order. We must not debate the merits and demerits of the Recommittal stage. We must devote our attention to the Amendments.
8.0 p.m.
Dame Irene Ward: I understand that, Mr. Baxter. But we are discussing these Amendments on Recommittal.
The Temporary Chairman: The Committee is aware that this is the Recommittal stage. But an Amendment has been moved, and I must ask the hon. Lady to devote her attention to it.
Dame Irene Ward: Hon. Members opposite know that by taking so long over the last Amendments they have denied the people of this country the right to have their grievances discussed on recommittal. I am determined to say what I have to say so that it shall be on the record. Do you want to get up again, Mr. Baxter?
The Temporary Chairman: The hon. Lady must contain herself. The Chairman has a duty to act according to the rules laid down by the House of Commons. He must guide the Committee to the best of his ability. That is what I am attempting to do. I hope that the hon. Lady will pay heed to my Ruling.
Dame Irene Ward: I shall be delighted to do so, Mr. Baxter. I hoped that the Government would pay attention to the desire of the Committee and would not twist the Committee.
The Temporary Chairman: Order. My Ruling has nothing to do with what the Government might say or do. I am carrying out the rules, irrespective of party. The first duty of a Chairman is to conduct the affairs of the Committee as impartially as possible. I hope that the hon. Lady will not again make remarks such as those which she has made about the position of the Chair.
Dame Irene Ward: I will not do so, Mr. Baxter. I am glad that what I have said will be on the record.
I support the Amendments of my right hon. Friend the Member for Thirsk and Malton. I am glad that, having sat here for hours, he has been able to put them before the Committee. I look forward with great interest to listening to the speech of the Treasury spokesman and to his accepting the Amendments. I hope that the Committee will not be called upon to vote against the Government but that there will be agreement to what is embodied in the Amendment— some real hope for those who are finding the heat and burden of today more than they can bear.
Mr. John Nott: I congratulate my hon. Friend the Member for Tynemouth (Dame Irene Ward) on her moving speech. For many years she has fought for the cause of elderly people living on small fixed incomes.
I should also like to say how delighted I am that my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) has moved the Amendment, which gives us a short opportunity to discuss the plight of those living on fixed incomes at the present time.
I am sure that, like myself, many hon. Members have received over the last few weeks, since the Budget and since devaluation, a large amount of correspondence from elderly people setting out their great concern about the future. I recognise that the Chancellor of the Exchequer, in the Budget, raised the elderly exemption limit from £390 to £415 for single people and from £625 to £665 for married couples. I have also read the

1192
speech which the Minister of State made in Committee. It seems to me from his words that his gesture was not so much a recognition of the difficulties of elderly people living on small fixed incomes but a routine matter to bring the exemption limit into line with the recent increase in National Insurance pensions.
Mr. James Dempsey: What was the allowance when the Labour Party came to power in 1964?
Mr. Nott: I said that the Chancellor of the Exchequer had raised the exemption limit in the Budget.
Mr. Dempsey: What was it before?
Mr. Nott: I am not here to act as a Parliamentary reference book for the hon. Gentleman.
Mr. Dempsey: The hon. Member is making a speech.
Mr. Nott: This is not relevant to my speech. I said that the Chancellor had raised the limit, and I am glad that he has done so. But he has done it—and this was a reason enunciated by the Minister of State in Committee—to bring it into line with the recent increase in National Insurance pensions.
For this reason there is a burden on the supporters of the Amendment to answer some of the points made by the Minister of State in Committee. It is for us to justify an increase in the allowance to the level suggested by my right hon. Friend the Member for Thirsk and Malton because—and this was one of the points made by the Minister of State— it would take the allowance for an elderly married couple considerably beyond the tax allowance for a married couple with a young child.
In Committee, the Minister of State made the point that a married couple with a young child begins paying tax at £585 whereas an elderly married couple begins paying tax at £625. He also pointed out that a young married couple who may be living in considerable poverty at these levels has to contribute to National Insurance and other funds to which elderly couples are not subject. There is, therefore, a burden on those who speak to the Amendment to show why an elderly married couple should be entitled to a greater tax allowance

1193
than a young married couple with a child.
The reason, I think, is this—and perhaps here I am anticipating the Minister's reply. The young have their life before them and they can make or mar it by the way in which they conduct themselves over later years. Although young married couples are subject to the frustrations and increasing pressures of modern life, they can, within reason, move their place of work and residence; they are relatively mobile. If they do not like the bungling interference of a Socialist state and the lack of incentive which always go with it, they are even free to emigrate, which is what they are doing in increasing numbers.
But that option is not equally open to the elderly. The elderly and retired are essentially, or frequently, the prisoners of their environment. They are not mobile to the same extent as young married couples. They are, to a greater degree than young married couples, the captive customers: of the nationalised industries— of increasing electricity prices, postal charges and bus fares. They do not have quite the equal opportunity of young married couples to make a choice of car or bus. The elderly cannot, very often, because some of them are disabled, work off their frustrations at a football match or in a pub in the way that most young married couples can. All that these elderly people ask—and it is not asking a lot—is that the last years of their life can be spent in contented retirement reasonably immune from the pressure to which they have been subjected throughout their working life.
I dwelt on that point at length because the Minister of State made it his principal objection in Committee to the granting of an additional relief to the elderly. Quoting, I think, his right hon. Friend the Member for Sowerby (Mr. Houghton), he said that it would unbalance the tax structure if elderly people were given a much bigger tax allowance than young married people. That was one of the principal reasons why he turned down the Amendment in Committee.
As my right hon. Friend the Member for Thirsk and Malton has said, the present Amendment would cost only about £6 million to £10 million. Let us say that it would be £10 million. I do not

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deny that it is a substantial sum. I believe, however, that whereas in most cases of taxation, if one were to put the matter to the country, people would throw up their hands in horror and say, "We have had enough", if the case were put for the raising of a tax allowance on people over the age of 65 earning a very small income the country would be more than happy to find an extra £6 million to raise the tax exemption by the small amount proposed.
One is tempted to go into a long recital about the way in which the cost of living is likely to rise over the current year. I shall not do that, because it has been debated on many previous occasions and many of my hon. Friends wish to speak. Let us say, however, that the cost of living this year will rise by between 5 and 7 per cent. The relevant point is that if the cost of living rises 5 per cent. this year the essential requisites of the elderly over the age of 65—in particular, food, heat and light—will show a greater rise as a proportion of their budget during the current year, mainly as a result of the Chancellor's Budget proposals and devaluation, than would be the case with the budget of a younger person.
I know that hon. Members are fully aware of the plight of elderly people. They must be aware of it because I am sure that, like myself, they have seen it and have received a growing volume of correspondence on the subject. My plea is only that, for once, we should have some practical recognition of this problem from the Treasury Bench and that the Chancellor should not simply make a gesture, as he has done in the Bill, by bringing these allowances in line with the increase in National Insurance pensions, but should recognise the principle for which my right hon. Friend was fighting in moving his Amendment, namely, that the tax allowances for elderly people should be considerably greater than that for the younger sections of the population. I hope sincerely that he will recognise this and accept the Amendments.
Mr. Pardoe: I am glad to follow the hon. Member for St. Ives (Mr. Nott). I do not entirely agree with the Utopian picture which he has sketched of freedom of environment enjoyed by young

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married couples. It is a splendid debating point but I am not quite sure that it exists.
I wholeheartedly support the two Amendments and I believe that the right hon. Member for Thirsk and Malton (Mr. Turton) has made his case for them. Certainly, so far as he related them to pension increases, I believe his case to be unanswerable. He has, however,—and the same would be true of all of us who partake in this debate—said very little about the real needs of the elderly. The reason for that is that we simply do not know very much about a financial requirement of those who are growing older. Do we accept, for instance, that their financial needs steadily increase? The whole principle enshrined in this exemption, which was introduced some years ago, is that a person on a given income requires a greater amount after tax after the age of 65 than he or she required before.
8.15 p.m.
I am one of those who find it extremely difficult to work out my own tax, but, as far as I can calculate the difference, if we take the exemption limits in the various years, the difference between a middle-aged couple on the limit and an old couple over the age of 65 would have amounted in 1964, when the limit was £575, to about £36 10s. a year. The Minister of State will be able to correct me if my figures are wrong. In 1967, assuming that a middle-aged couple before the age of 65 had an income of £643, the difference on that limit would have been £50 18s. Under the proposal in this year's Finance Bill, it is £57 10s. That is an increase in the differential between those who have not yet retired and those who have retired at the given level of income.
Do we know, however, on what that differential has been based? Have we done the necessary research to ascertain exactly the financial requirements of growing older? I maintain that the necessary research has not been done. Do we assume, for example, that people of the age of 70 require a greater exemption than those of 65, and so on, so that the needs of people increase as they become older? I do not find this to have been proved. I suspect that it is true

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but I have no basic research, and nor have the Government, to prove it.
Therefore, even if the Government feel unable—but I hope they will not—to accept the Amendments, I hope that the Minister will say that at least they will undertake a thorough study into the financial requirements of the elderly, particularly as to their needs increasing as they become older.
There is also the point, which is relevant to the Amendments, that there is a growing body of opinion, to which I subscribe, in favour of the need for gradual retirement and that, therefore, we should arrange our taxation incentives for retirement as well as pensions to make retirement gradual instead of sudden. Nevertheless, I support the Amendments not basically on statistical grounds, because we have few statistics to guide us, but because I know the hardship of many people living on small fixed incomes in my constituency, which is very much an area where people come to retire. They need this help.
There are other forms of help which might be given. I have suggested on previous occasions that the Government should consider giving these people advice on investments. When, for example, they apply to the Supplementary Benefits Commission and it transpires that their capital is above the eligibility limit for supplementary benefits, it is sometimes found that their money is invested at extremely low rates of interest, often in the Post Office, I am sorry to say. Advice might be given to those people.
The Minister might consider, for instance, the possibility of setting up an annuity fund whereby the Government would acquire small houses under £5,000 and provide an annuity in exchange. In the Amendment, however, we are discussing a specific measure of help which could be given and which would not cost a great deal when measured beside other priorities in Government expenditure. I emphasise again my hope that the Government will undertake the general kind of review that I have indicated.
My final point is that we should think carefully about the effect which Amendments of this nature and the type of exemptions which we are discussing have on savings generally.

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The Treasury is being bombarded with advice from all quarters on how to encourage savings, which, of course, we want to encourage. It may be—and this again calls for full investigation—that the exemption advocated in the Amendment would substantially increase the incentive to small savers. I am not talking about people who save £50,000; I am talking about people who save fairly small amounts. We might then consider whether all small savings should be exempted, certainly those at a small income level, from Income Tax. On those grounds I support the Amendments, which I believe will go some way to alleviating the hardship which I know exists in my own constituency.
Mr. Cronin: The hon. Member for Cornwall, North (Mr. Pardoe) has put forward an attractive suggestion that the Government should institute a social survey into the needs of old people. There is a tendency for the Treasury in its fiscal policy rôle to operate in terms of rule-of-thumb so far as human beings are concerned. They have economists who no doubt give them immense help on the broad movements of the economy, but the actual needs and hardships of individual groups of people from the point of view of social science do not get sufficient attention from the Treasury.
Most hon. Members on the Committee do not need a social survey to teach them what are the needs of old people. With a few exceptions, we know from our constituencies beyond all doubt that it is a bad thing to be old. Old people are usually poor, usually unwell, usually neglected, and anything that can be done by the Committee to help old people must receive careful consideration by the Treasury. For this reason I would like to compliment the right hon. Member for Thirsk and Malton (Mr. Turton) on having introduced the Amendment. I thought he and the hon. Member for Tynemouth (Dame Irene Ward) were a little harsh towards the Chancellor in referring to meanness on his part. After all, he has done something, he has raised the limits from £401 to £415 and from £643 to £665, which is something, but it is not enough. Perhaps the Minister of State when he winds up will tell us the cost of implementing the Amendment. It is an Amendment on which the Government might reasonably make a conces-
1198
sion, infrequent as it is for Governments to make concessions in the course of Finance Bills, whichever Government it is.
The reasons for the Amendment are two. There is an economic reason and a compassionate reason. The Amendment applies to two groups of people over the age of 65. It applies to the man who, on reaching the age of 65, is compulsorily retired from his firm and suffers an immense drop in his income. He may be a person who was earning £20 a week, and when his income drops to about one-third of that he is plunged into relative poverty and considerable distress. If that man is in good physical condition he can do some additional useful work of great economic value to the country. A woman can do babysitting, helping with the children; a man can do numerous part-time jobs.
Mr. F. A. Burden: What the hon. Gentleman is suggesting is very desirable, but the incidence of S.E.T. makes it more and more difficult for such people to be employed.
Mr. Cronin: I will not go into the matter of S.E.T., although I should be happy to do so, because you, Mr. Baxter, would rapidly call me to order. No doubt on a later occasion the hon. Gentleman will put his own views about this.
The Amendment has an excellent economic effect by giving an incentive to healthy retired people to make a positive contribution to the economy and to their own wellbeing. On pure economic grounds the Amendment is to be recommended for its incentive effect of inducing retired people to do some useful work.
The second group of persons over the age of 65 are those unfortunate people whose health will not permit them to continue to work. One of the tragedies of this century is that, although there have been tremendous advances in surgery and antibiotics, with the result that the expectation of life has been increased, there has been little or no advance in those degenerative diseases which make the lives of many elderly people a burden by causing failing mental health, failing hearts, failing circulations. The inability to continue

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to earn an income and to keep themselves in reasonable comfort prevents them from making a contribution to the community, which is so important for their mental wellbeing. These people should have our particular sympathy. I agree with the hon. Lady that we should not think too much about supplementary benefits. Too many supplementary benefits are not claimed.
A change in the Clause relevant to Income Tax allowances would be well worth considering. It would be a gesture of compassion which would be greatly appreciated. We have all seen in our constituencies elderly people who are living in squalor and discomfort as the result of financial hardship. Here is an opportunity for the Government to alleviate this financial hardship, and this is an opportunity which should be taken.
Mr. Michael Shaw: I am grateful that my right hon. Friend has seen fit to bring forward the Amendment which I support. Although it was discussed in Committee, we had not at that stage the advantage of his great experience and that of the hon. Member for Tynemouth (Dame Irene Ward). This shows the value of the whole House sitting as a Committee.
My right hon. Friend is right to draw attention to the plight of old people. I have many in my own constituency. Until one talks to them privately, one does not realise what a drop in living standards they have had to endure. They may appear to be comfortably off, wearing good clothes, and their attitude in life may seem to represent comfort. It is only when one goes behind the scenes and talks to them privately that one realises that they have had their clothes for many years. Their circumstances may have altered by the death of their husbands, and their incomes are fixed incomes. Usually, they are in Government stock bought at 100 and now worth considerably less. Prices are rising all the time, but their incomes are not. Therefore, all elderly people in this category whose incomes are small deserve the special treatment that has been given to them since 1957, and we should make sure that, wherever we can, we help in this matter and continue to give appropriate increases.

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8.30 p.m.
That leads me on to the topic of the debate in Standing Committee. It is fair to point out that the Minister of State gave a rather different reason for granting these rises from those given by my right hon. Friend. The hon. and learned Gentleman said:
"It was raised on this occasion, as on almost every other occasion in the past, to prevent those who have a pension increase from having to come into the taxable category. That is the reason for our proposals, and it is totally at variance with separate proposals now being made."—[OFFICIAL REPORT, Standing Committee A, 13th May, 1968; c. 185.]
I understand from my right hon. Friend that, except for one occasion, it has been the practice in the past to raise it rather more than that to take into account the other factors which he enumerated. I believe that the hon. and learned Gentleman owes an explanation to the Committee about the difference between his earlier answer and the explanation given today so eloquently by my right hon. Friend.
In an intervention in the hon. and learned Gentleman's speech, I claimed that, in reviewing this matter, it was fair to look at the expected rise in the cost of living. I still believe that. On that occasion, I asked him what was the Government expectation of the rise in the cost of living this year and if it was the same as was anticipated at the time of the Budget.
On 26th March, the Financial Secretary dealt with the forecast of the increase in the cost of living, and said:
'It is not customary to disclose detailed forecasts of prices. However, I see no reason to modify the Government's earlier estimate that devaluation will raise the retail prices index by about 3 per cent. I estimate that the tax measures in my right hon. Friend's Budget will add about 1½ per cent. to the index by the end of this year".—[OFFICIAL REPORT, 26th March, 1968; Vol. 761, c. 238.]
That means a rise of about 4½ per cent. by the end of this year.
In today's Daily Telegraph, there is an article by its City Editor headed, " Budget assumptions overturned ". Among other things, it says:
"The Budget was also based on the proposition that there would have to be a cut in consumer's real income. This has already happened."
Do not the consumers know it! It goes on:
"Retail prices have now risen more (by over 4 per cent.) since the pre-devaluation month

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of October than basic hourly wage rates (up by about 3½ per cent.)."
Already we have an increase of about 4½ per cent., and, looking ahead, clearly the figure will be well over the expected 4½ per cent. by the end of the year.
In reviewing what should be done to help people on small fixed incomes, it is clear that account should be taken of the fact that the cost of living will go up much more than was thought when the Bill was published in March. Surely this is the moment to take account of that fact, before it is too late. Now is our chance to put the matter right, and I hope that hon. Members will support my right hon. Friend's Amendment and see if we cannot bring justice to bear on this matter.
The Minister of State, Treasury (Mr. Dick Taverne): Hon. Members on both sides have made very persuasive speeches in favour of this Amendment. Many hon. Members, who have persistently championed this cause, have made deeply sincere speeches. One cannot listen to such speeches without sympathy for the viewpoint put forward. It may be that certain aspects require more information, though I agree with my hon. Friend the Member for Loughborough (Mr. Cronin) that the plight of the elderly is serious.
There is a tendency for hon. Members on both sides to say that there must be the most elaborate social studies of a kind which, while in general desirable, should not necessarily be conclusive of the way in which tax problems should be approached.
I should like to consider the suggestions made by the hon. Member for Cornwall, North (Mr. Pardoe). For example, the question of advice on investment seems a good suggestion, though it is not for me in my Department to pursue it.
The main question was whether one should increase the present amount of tax relief for the benefit of the elderly as a special category of taxpayers. The issue to be faced on this point was faced only by the hon. Member for St. Ives (Mr. Nott). I do not think that one can look at this matter in isolation and argue that one category of taxpayers must have special exemption without considering the whole picture.

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The hon. Member for Tynemouth (Dame Irene Ward) complained that different Treasury Ministers looked only at different sections of the Finance Bill and never co-ordinated their efforts. One can make the criticism of those who move Amendments that one must look at the whole picture. One must look at different meritorious cases in trying to ascertain the priorities.
Looking at the picture in general, apart from the special taxation position which exists under this Bill, one cannot neglect the fact that there is already tax discrimination in favour of old people. This is defensible. There is something in the argument put forward by the hon. Member for St. Ives that young people still have their lives ahead of them. While they may not be as free as birds, as he seemed to suggest, I share the view of the hon. Member for Cornwall, North—
Mr. Nott Mr. Nott rose—
Mr. Taverne: While many of them may have little choice, nevertheless there is clearly a difference to be drawn between young people with their lives ahead of them and old people who are settled and have come to the end of their lives. But how far should one take this difference? Already the discrimination between the two groups is considerable. I gave one example in Standing Committee to which I must go back, because the hon. Member for St. Ives referred to it. A young couple have much greater responsibilities than old people. A young couple with a child to support, National Insurance contributions to pay, meals at work and fares, start paying tax on an income of £585, whereas an old couple, with none of these burdens, start paying tax on an income, with the extra relief granted under the Bill, of £665. That is a considerable discrimination in favour of the older couple, and I do not think one can disregard the fact that it exists. We must, therefore, ask whether it is really desirable to increase this differential still further?
Mr. Nott: The hon. and learned Gentleman says that a young couple have to pay for travelling to work, they have to pay National Insurance contributions, and so on, but he did not mention that they receive family allowances and certain other items which the elderly do not. To get a proper balance the

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hon. and learned Gentleman should refer also to those items which a young married couple receive but which an elderly couple do not.
Mr. Arthur Lewis: My hon. and learned Friend could add that aged people have a number of commitments which young people do not have to meet. When people get old they need more coal, they are more prone to illness, and they need such things as extra milk and special foods. Elderly people have a number of commitments which do not apply to young people.
Mr. Taverne: To some extent the case has been overstated, because if a young couple have a child to support, the burdens are considerable. That young child needs milk and special food, and because there is only one child no allowance is paid. I am not denying that there is a case for giving older pensioners special treatment, but I am saying that many younger couples have to bear additional burdens, and one cannot carry the discrimination too far. We must look at the picture as a whole. We must take into account the number of pensioners who are not within the range of being taxed at all. If one looks at the position as a whole, one does not necessarily reach the conclusion that pensioners should be the top priority for relief from taxation.
My second and main point relates to the special position which arises under the Bill and in the present economic situation. It may not have escaped the notice of hon. Members that this Budget is not notable for the amount of additional tax relief that it gives.
Mr. Frederic Harris: That is the understatement of the year.
Mr. Taverne: Indeed, it could not be. One cannot disregard the economic situation, and the cost of any concession. It is not possible to ignore the fact that the cost of this concession would be £6 million this year, and £10 million in a full year. One cannot merely say that that is a small sum which can be ignored. The cost is the major reason why, although this and many other Amendments have merit, I cannot ask the Committee to accept them.

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As I explained in Committee, the object of raising the application of the tax range in respect of the elderly is not to deal specifically with their plight. What has been done is broadly in line with the previous rises in the exemption limits for the aged. I have the figures for the rises in previous years. I cannot give the exact amount of the pensions increases in each of those years, but I am assured that while there may have been a slight marginal excess of the rise in exemption over the increase in the pension, in all the previous rises, with the exception of that in 1964, the difference broadly reflected the increase in the pension. I understand that the exception was 1962, when the rise was delayed from a pension increase in the previous year.
Mr. Turton: I am sure that the hon. and learned Gentleman does not want to mislead the Committee so grossly as that. What he really means is that in the one year which I mentioned, 1963, it was related to the rise in the pension. On every other occasion when a Conservative Government increased the limit it was more than the rise in the pension. Every time the Socialist Government have increased the limit it has been less than the rise in the pension.
8.45 p.m.
Mr. Taverne: I cannot argue in detail with the right hon. Gentleman about 1963, but I am told that broadly—with perhaps a marginal difference—the increase in the exemption was related to the increase in the pension. The basic purpose was exactly the same as in the case of this increase. It is a reasonable purpose, namely, that if a certain category of old-age pensioner who is just below the tax exemption limit—and therefore who has another sort of income—receives an increase in the basic State pension which would bring him within taxable range, it would be unjust if part of his increase in pension were taken away through the incidence of taxation.
The difference between the increase and the exemption rate increase is very small—£25 in the case of a single man or woman compared with £26. We cannot say that a major part of the pension will be taken away through taxation. In the case of a married couple the increase is £40 compared with an increase of £41 12s.
Dame Irene Ward: The hon. and learned Gentleman is talking now about quite new arrangements and new ways of assessing this problem. Whatever he says, when he leaves the seat on which he is now sitting I suggest that he reads the report of the debate in 1957 and discovers the reason why the then Chancellor—now Lord Thorneycroft—inserted this provision in the Finance Bill. It was to help the elderly people and had nothing to do with all this mixture about the business of pensions. It was straight help to elderly people living on small fixed incomes. If the hon. and learned Gentleman would like me to do so I can look up the report of the speech and send it to him, with a charming note.
Mr. Taverne: The hon. Lady's notes, like her speeches, are always charming and courteous. I look forward enormously to the charming correspondence which will no doubt ensue.
When the original exemption was made it was not related to a pension increase. That was when the whole thing started. At that lime the difference between the non-pensioner and the pensioner in terms of the tax discrimination in favour of the pensioner was very much less than it is today. But the basic reason for the majority of pension increases since then —and certainly the reason for this one— is to prevent a rise in pension leading to new categories of taxpayers.
The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) asked whether the reason for the increase in the pension was to compensate for the rise in the cost of living. Whether or not the cost of living is exactly in accordance with the Budget forecast is not immediately material to the reason for the rise in exemption. I cannot give the hon. Member the detailed cost of living estimates, and what he said rather suggested that no fixed forecasts of this kind are ever made. But that is not the reason for the Government's raising the exemption limit, and it would not be a reason for altering it, since, as it is related to the pension increase, it is the pension increase which is the determining factor.
Mr. Michael Shaw: At least the hon. and learned Gentleman will now admit that the forecasts will not be borne out by the events.
Mr. Taverne: I do not think that this is correct, but one cannot answer unless carefully prepared, so I cannot tell the hon. Gentleman whether it is within a half a per cent. of so of the original forecast. But nothing has happened which puts it out of line with what was envisaged when the Budget was decided on.
The right hon. Gentleman said that no account was taken, in the rise in exemption, of additional income. He is not correct, because the pensioner who has only his State pension pays no tax and the increase of the exemption rate is for the benefit of those with some additional income. It is also true that it is not only those immediately within the categories of the exemption rise who are benefitted: there is also some marginal relief benefiting some additional pensioners.
The basic issues here are simple. Should we treat this as something unrelated to the pension increase and generally designed to help old-age pensioners in a limited category, at the middle and not the bottom of the scale, and can we afford this at the moment, or is it related to the pension increase, which is how the Government have approached it and how the rise is justified? I understand the feelings behind the Amendment. Of course a great deal of sympathy has been aroused by the plight of those on whose behalf speeches have been made, but the two major reasons for not accepting the Amendments are the cost of £10 million in a full year and £6 million in this year, and the approach to this matter, which is to relate it to the pension increase.
Mr. Charles Fletcher-Cooke: My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) moved his Amendment in model fashion. He has much to teach the House about making a short speech, absolutely comprehensive and fair, with all the necessary information. It is not necessary to repeat his figures. Where there is a dispute between him and the Government on figures, his great expertise in this matter is to be preferred.
The value of this relief, as of all reliefs, is dwindling, but it is no argument to say that because the value of other reliefs is dwindling nothing shall be done to stabilise the value of this one. When

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we discussed this matter in Committee, the hon. Member for Heywood and Royton (Mr. Barnett) expressed himself most dissatisfied with the Government's attitude, and he and his inseparable companion, the hon. Member for Ashton-under-Lyne (Mr. Sheldon), abstained in the Division. Tonight, we do not have the benefit of their presence. We cannot complain of that. Having been members of the repertory company upstairs, it is perhaps too much to expect them to join the No. 1 touring company now.
Instead, we have the hon. Member for Loughborough (Mr. Cronin) and his neighbour, the hon. Member for West Ham, North (Mr. Arthur Lewis), who both expressed themselves dissatisfied with the Government. We hope that they will imitate the brave example of the two inseparable twins in Committee and abstain—because vote we shall and must on this Amendment.
The Minister of State was perfectly clear and frank, saying that the purpose of this tiny raising of the exemption limits was not to take account of the inflation which is rampant or the fall in the value of money. It was simply to prevent a number of persons from being brought into the tax bracket who might otherwise be brought in because of the raising of the retirement pension, and for no other purpose. On that basis, his figures cannot be faulted, tiny though they are.
But since we are raising these reliefs, we should raise them more for the purpose which he eschews; namely, of doing something to restore the value of this relief in real terms. It would be monstrous at this time not to do that. I am amazed at the moderation of the proposal of my right hon. Friend the Member for Thirsk and Malton, who has deliberately rejected the temptation of trying to restore its full value. Instead, he wishes to restore half its value, since to restore it to its full value would mean putting up the figure to £495 for a single person and a corresponding increase for a married couple. My right hon. Friend has shown that he accepts the need for sacrifices all round, and he is therefore seeking only a moderate increase in the relief, to somewhat restore the position which these people had 10 years ago.
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The Minister of State objects to this. He says, first, that it would discriminate against the young couple. I will not go into that again, except to say that the feeling on both sides has been against him in this argument. My hon. Friend the Member for St. Ives (Mr. Nott) demonstrated clearly that old people do not have the same options open to them. The old are captives and, if there is to be any preference, it should be shown to them. They are the first who should have any money that is going.
The Minister's second argument is that of cost—that this would cost £6 million this year and £10 million in a full year. When the Chancellor presented his Budget he increased taxation by over £900 million. All commentators were amazed at the degree of that increase and most of them had thought that it would be about £700 million. One assumed that the right hon. Gentleman had increased taxation by such a large amount so that he would have some leeway to provide himself with a cushion by which to make the sort of concessions that Chancellors make when Finance Bills are being discussed.
What concessions have we had? Virtually none. We have had none of the concessions one normally expects from a Chancellor. In the global figure of the increase of over £900 million one would have thought that a concession of £6 million to £10 million was not asking too much, yet even a pittance is reiected. As my hon. Friend the Member for Tyne-mouth (Dame Irene Ward) said, it is a shame that these people should wait and wait and get nothing. For these, among other, reasons I hope that my hon. Friends will take the matter to a Division.
Mr. Turton: I have listened to six debates on this issue in different Parliaments, but never in my experience have I heard such a mean speech as the one which came from the Minister of State. I give him full marks for his advocate's skill in presenting what I believe to be a false case. I give him no marks for his knowledge of the subject. He did not even know what the National Insurance benefits were for the relevant years. I will supply him with the information.
9.0 p.m.
In 1963, the Conservative Government increased the limit to £5 over the rise in

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the National Insurance benefit. In the next year—they made an error as I said earlier—they increased it only by the amount of the National Insurance benefit rise. In 1964, after long debates in Committee and on Report, my hon. Friend the Member for Tynemouth (Dame Irene Ward), the right hon. Member for Sowerby (Mr. Houghton) and I persuaded the Government to raise the limit by £35 over what was then a pension not increased. That is the gravamen of our charge.
The hon. and learned Gentleman has said that it is all related to the National Insurance pension. In saying that, he destroys; his own argument, because if it were only the National Insurance Pension there would be no tax. But the tax is there, because these elderly people have their own other small pensions—pensions from serving their country, Service pensions, Civil Service pensions, the pittances in the form of railway workers' pensions. That is all taken into account. As there was a lowering in the value of money, so Conservative Governments sought to increase this margin.
The other argument used by the Minister of State was: "What about the young people?" That difference between these elderly people and the young is that the young have the opportunity to earn more. These elderly people cannot earn any more, so that every £ of tax which the Minister of State meanly takes from them means that they have a lower standard of living: they are thrown increasingly, under this Government, on the supplementary benefit provided by the Ministry of Social Security.
The hon. Member for Coatbridge and Airdrie (Mr. Dempsey) asked from a sitting posture: "What is the difference for these old people between the time when the Socialist came into power and today?". The answer is that when the Socialists came into power this exemption relief amounted to twice the value of
the pension and a little over. Today, under the Minister of State's directive, after this Division, it will remain at only one and three-quarters the size of the pension—
Mr. Dempsey: The second biggest increase.
Mr. Turton: It is no good the hon. Member talking about the increase in the pension. As money drops in value it is these old people who suffer from the loss in their pension. Year by year under this Government the lot of these old people has got worse. If the Government refuse our request I hope that the Committee will vote for the Amendment. Until we get a change of Government, the lot of these old people living on fixed incomes will not be improved.
Mr. Arthur Lewis: The Minister of State told the Committee that this Amendment would cost £6 million in this year and £10 million in a subsequent year. This may seem a large amount, but is this his major reason—he mentioned others—for opposing the Amendment? I ask because I have been reading reports that the Government intend to find about £2 million per year to give to some other old-age pensioners in another place, plus a tax free allowance of 4½ guineas a day. If I vote against the Amendment, I want my hon. and learned Friend's definite assurance that he will not give those people £2 million per year while precluding these ordinary pensioners from getting £6 million in this year. If he can give me that assurance, I will go with him.
Mr. Taverne: My hon. Friend is, I know, very interested in the reform of another place, but he knows perfectly well that I can give him no assurance about what will or will not be done.
Question put, That the Amendment be made: —
The Committee divided: Ayes 129, Noes 179.

Division No. 221.]

AYES

[9.5 p.m.

Astor, John

Bossom, Sir Clive

Craddock, Sir Beresford (Spelthorne)

Atkins, Humphrey (M't'n & M'd'n)

Boyle, Rt. Hn. Sir Edward

Crosthwaite-Eyre, Sir Oliver

Baker, Kenneth (Acton)

Brinton, Sir Tatton

Crowder, F. P.

Baker, W. H. K. (Banff)

Bruce-Gardyne, J.

Currie, C. B. H.

Beamish, Col. Sir Tufton

Buchanan-Smith, Alick (Angus, N&M)

Oalkeith, Earl of

Bell, Ronald

Bullus, Sir Eric

Dean, Paul (Somerset, N.)

Biffen, John

Burden, F. A.

Eden, Sir John

Birch, Rt. Hn. Nigel

Campbell, B. (Oldham, W.)

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

Black, Sir Cyril

Campbell, Gordon (Moray & Nairn)

Errington, sir Eric

Blaker, Peter

Clegg, Walter

Farr, John

Boardman, Tom (Leicester, S. W.)

Cordle, John

Fisher, Nigel

Fletcher-Cooke, Charles

Mackenzie, Alasdair (Ross & Crom'ty)

Royle, Anthony

Galbraith, Hn. T. G.

Maclean, Sir Fitzroy

Russell, Sir Ronald

Gilmour, Ian (Norfolk, C.)

Macleod, Rt. Hn. lain

Scott-Hopkins, James

Gilmour, Sir John (Fife, E.)

McMaster, Stanley

Sharples, Richard

Goodhart, Philip

Maddan, Martin

Shaw, Michael (Sc'b'gh & Whitby)

Gower, Raymond

Maude, Angus

Sinclair, Sir George

Grant, Anthony

Mawby, Ray

Smith, Dudley (W'wick & L'mington)

Harris, Frederic (Croydon, N. W.)

Maxwell-Hyslop, R. J.

Smith, John (London & W'minster)

Harrison, Brian (Maldon)

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

Stainton, Keith

Harrison, Col. Sir Harwood (Eye)

Mills, Stratton (Belfast, N.)

Stoddart-Scott, Col. Sir M. (Ripon)

Heald, Rt. Hn. Sir Lionel

Miscampbell, Norman

Summers, Sir Spencer

Heath, Rt. Hn. Edward

Monro, Hector

Tapsell, Peter

Heseltine, Michael

Montgomery, Fergus

Taylor, Frank (Moss Side)

Higgins, Terence L.

Morgan, Geraint (Denbigh)

Temple, John M.

Hiley, Joseph

Munro-Lucas-Tooth, Sir Hugh

Thatcher, Mrs. Margaret

Holland, Philip

Nabarro, Sir Gerald

Tilney, John

Hornby, Richard

Nicholls, Sir Harmar

Turton, Rt. Hn. R. H.

Hunt, John

Nott, John

van Straubenzee, W. R.

Hutchison, Michael Clark

Onslow, Cranley

Vickers, Dame Joan

Iremonger, T. L.

Osborn, John (Hallam)

Wainwright, Richard (Colne Valley)

Jenkin, Patrick (Woodford)

Page, Graham (Crosby)

Walters, Dennis

Johnston, Russell (Inverness)

Page, John (Harrow, W.)

Ward, Dame Irene

Jones, Arthur (Northants, S.)

Pardoe, John

Webster, David

Jopling, Michael

Peel, John

Whitelaw, Rt. Hn. William

Joseph, Rt. Hn. Sir Keith

Percival, Ian

Williams, Donald (Dudley)

Kershaw, Anthony

Pink, R. Bonner

Wills, Sir Gerald (Bridgwater)

King, Evelyn (Dorset, S.)

Pounder, Rafton

Wilson, Geoffrey (Truro)

Kirk, Peter

Powell, Rt. Hn. J. Enoch

Winstanley, Dr. M. P.

Knight, Mrs. Jill

Pym, Francis

Wylie, N. R.

Lancaster, Col. C. G.

Quennell Miss J. M.

Younger, Hn. George

Lane, David

Renton, Rt. Hn. Sir David

Lubbock, Eric

Rodgers, Sir John (Sevenoaks)

TELLERS FOR THE AYES:

MacArthur, Ian

Rossi, Hugh (Hornsey)

Mr. Jasper More and

Mr. Reginald Eyre.

NOES

Abse, Leo

Ensor, David

Leadbitter, Ted

Albu, Austen

Evans, loan L. (Birm'h'm, Yardley)

Lee, Rt. Hn. Frederick (Newton)

Anderson, Donald

Faulds, Andrew

Lestor, Miss Joan

Archer, Peter

Fletcher, Ted (Darlington)

Lewis, Arthur (W. Ham, N.)

Armstrong, Ernest

Foley, Maurice

Lewis, Ron (Carlisle)

Atkins, Ronald (Preston, N.)

Foot, Michael (Ebbw Vale)

Loughlin, Charles

Bacon, Rt. Hn. Alice

Ford, Ben

Lyon, Alexander W. (York)

Beaney, Alan

Forrester, John

Lyons, Edward (Bradford, E.)

Bence, Cyril

Freeson, Reginald

McBride, Neil

Benn, Rt. Hn. Anthony Wedgwood

Galpern, Sir Myer

McCann, John

Bennett, James (G'gow, Bridgeton)

Garrett, W. E.

MacDermot, Niall

Bishop, E. S.

Gordon Walker, Rt. Hn. P. C.

Macdonald, A. H.

Blackburn, F.

Cray, Dr. Hugh (Yarmouth)

McGuire, Michael

Boardman, H. (Leigh)

Greenwood, Rt. Hn. Anthony

Mackintosh, John P

Booth, Albert

Gregory, Arnold

Maclennan, Robert

Braddock, Mrs. E. M.

Grey, Charles (Durham)

McMillan, Tom (Glasgow, C.)

Brooks, Edwin

Griffiths, David (Rother Valley)

McNamara, J. Kevin

Brown, Bob (N'c'tle-upon-Tyne, W.)

Griffiths, Eddie

MacPherson, Malcolm

Buchanan, Richard (G'gow, Sp'burn)

Griffiths, Rt. Hn. James (Llanelly)

Mahon, Peter (Preston, S.)

Cant, R. B.

Griffiths, Will (Exchange)

Manuel, Archie

Carter-Jones, Lewis

Hamilton, James (Bothwell)

Mason Rt. Hn. Roy

Coe, Denis

Hamling, William

Mendelson, J. J.

Coleman, Donald

Harman, William

Millan, Bruce

Concannon, J. D.

Harrison, Walter (Wakefield)

Milne, Edward (Blyth)

Conlan, Bernard

Haseldine, Norman

Mitchell, R. C. (S'th'pton, Test)

Corbet, Mrs. Freda

Hazell, Bert

Morgan,' Elystan (Cardiganshire)

Cronin, John

Heffer, Eric S.

Morris, Charles R. (Openshaw)

Cullen, Mrs. Alice

Herbison, Rt. Hn. Margaret

Moyle, Roland

Dalyell, Tarn

Homer, John

Neal, Harold

Davies, G. Elfed (Rhondda, E.)

Houghton, Rt. Hn. Douglas

Newens, Stan

Davies, Ifor (Gower)

Howarth, Harry (Wellingborough)

Norwood, Christopher

Delargy, Hugh

Howarth, Robert (Bolton, E.)

Oakes, Gordon

Dell, Edmund

Howie, W.

O'Maley, Brian

Dempsey, James

Huckfield, Leslie

Orme, Stanley

Dewar, Donald

Hughes, Roy (Newport)

Oswald, Thomas

Diamond, Rt Hn. John

Hunter, Adam

Owen, Dr. David (Plymouth, S'tn)

Dickens, James

Hynd, John

Owen, Will (Morpeth)

Dobson, Ray

Irvine, Sir Arthur (Edge Hill)

Page, Derek (King's Lynn)

Doig, Peter

Jackson, Colin (B'h'se & Spenb'gh)

Palmer, Arthur

Driberg, Tom

Jackson, Peter M. (High Peak)

Pannell, Rt. Hn. Charles

Dunn, James A.

Jenkins, Rt. Hn. Rov (Stechford)

Park, Trevor

Dunnett, Jack

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

Parker, John (Dagenham)

Dunwoody, Mrs. Gwyneth (Exeter)

Jones, J. Idwal (Wrexham)

Parkyn, Brian (Bedford)

Eadie, Alex

Judd, Frank

Pavitt, Laurence

Edwards, Robert (Bilston)

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

Pearson, Arthur (Pontypridd)

Ellis, John

Kerr, Russell (Feltham)

Peart, Rt. Hn. Fred

English, Michael

Lawson, George

Pentland, Norman

1212

1213

Price, William (Rugby)

Spriggs, Leslie

Whitlock, William

Probert, Arthur

Symonds, J. B.

Wilkins, W. A.

Randall, Harry

Taverne, Dick

Willey, Rt. Hn. Frederick

Rankin, John

Tinn, James

Williams, Alan Lee (Hornchurch)

Rees, Merlyn

Tomney, Frank

Williams, W. T. (Warrington)

Roberts, Albert (Normanton)

Urwin, T. W.

Willis, Rt. Hn. George

Robertton, John (Paisley)

Varley, Eric G.

Wilson, William (Coventry, S.)

Ross, Rt. Hn. William

Wainwright, Edwin (Dearne Valley)

Woodbum, Rt. Hn. A.

Sheldon, Robert

Walker, Harold (Doncaster)

Woof, Robert

Shore, Rt. Hn. Peter (Stepney)

Wallace, George

Yates, Victor

Silkin, Rt. Hn. John (Deptford)

Watkins, Tudor (Brecon & Radnor)

Silverman, Julius

Wells, William (Walsall, N.)

TELLERS FOR THE NOES:

Small, William

Whitaker, Ben

Mr. Harry Gourlay and

Snow, Julian

White, Mrs. Eirene

Mr. Alan Fitch

Question, That the Clause stand part of the Bill, put forthwith pursuant to Order [11th June], and agreed to.

Clause 15
AGGREGATION WITH INCOME OF PARENTS OF INVESTMENT ETC. INCOME OF UNMARRIED INFANTS NOT REGULARLY WORKING
9.15 p.m.
Sir Hugh Lucas-Tooth: I beg to move Amendment No. 10, in page 10, line 35, after second ' income ', insert:
'or any income paid bv one party to a marriage under a settlement as defined in section 411 of the Income Tax Act 1952 made after or in contemplation of the dissolution of the marriage or after or in contemplation of a separation or under an order of the Court if such settlement or order was made before the 19th day of March 1968'.
The Deputy Chairman (Mr. Sydney Irving): With this Amendment we are to take the following:
Amendment No. 11, in page 10, line 35, after second ' income', insert:
'or income derived from any sum paid under an order of the Court or under a settlement made in consequence of an order of the Court in circumstances where a parent of the infant has been killed or disabled'.
Amendment No. 13, in page 11, line 17, at end insert:
(4) Tax shall not be charged by virtue of this section in respect of—

(a) any infant's income if such infant's income does not exceed five hundred pounds and in the case of income which exceeds that amount shall be charged only in respect of the excess; and

(b) any infant's income so far as the same is income arising under a settlement in relation to which some person other than a relative of the infant's parent is or was a settlor (' settlement' and ' settlor' here having the same meaning as in Chapter III of Part XVIII of the Income Tax Act 1952, and relative including a husband or
1214
wife, parent or remoter forebear, child or remoter issue, brother or sister).

Amendment No. 43, in Schedule 8, page 61, line 42, at end insert:
4. Paragraph 1 above shall not apply to treat any income as the income of anv parent who shows that such income was not available to be spent by him or on his behalf.
Sir H. Lucas-Tooth: Broadly speaking, Clause 15 proposes to aggregate the so-called unearned income of children under 21 with the income of the parents from whatever source the children's income may come. I have had many complaints from my constituents about the effect of the Clause, particularly about the Clause as a whole. I was not a member of the Standing Committee and I was therefore unable to voice my constituents' complaints when I should have liked to have done so. These Amendments are necessarily of rather narrow scope and I ought to say that I would have voted against the Clause as a whole in Standing Committee. It is in that spirit that I move the Amendment.
In Standing Committee the Chief Secretary defended the Clause against all the Amendments proposed to it by asserting two principles. He said of the philosophy of the Clause:
"The philosophy is that of regarding the family unit as one."
The other principle I can state fairly by quoting what he said a little later. Put shortly, he said that the present law was unfair. He said:
"It seems to me simple justice, and nothing more than that, that one should put an end to a system under which like families with like circumstances pay totally different burdens of tax just because in one case it has been possible to take advantage of this system which applies in one court but does not apply, except with the rarest of exceptions, in another court."
One court was the High Court and the other was the magistrates' court.
I do not think that that principle means anything, but if it does, it is no more

1215
than a statement of a vague kind of egali-tarianism and nothing more. It suggests that people who can afford to use the High Court ought not to be able to take advantage of the decisions of that court. If so, that principle makes mere nonsense.
After hearing my hon. Friends, the Chief Secretary felt obliged to promise one concession. He said:
"One hon. Member referred to a thalidomide baby as being distinguished quite clearly from all others, in the sense that in this one case, and in this one case alone, compensation is paid for damages to the child itself. I recognise that there is a distinction to be drawn between that and the other cases of aggregation of income with the parents' or damages resulting from an accident to the parent. Where it is an accident to the child, damage to the child and deformity of the child, one recognises a vast distinction in principle which we should, if possible, like to meet."—[OFFICIAL REPORT, Standing Committee A, 15th May, 1968; c. 890–5.]
He went on to promise to have the Bill amended so as to make that distinction. I do not congratulate the right hon. Gentleman on making that concession, because it would have been an outrage if he had failed to do so. In making that concession, he completely destroyed the validity of the two principles on which he defended the Bill against all the Amendments.
A thalidomide baby is a member of a family unit as much as anybody else. If the principle of treating the whole family as a unit is right, why should the thalidomide baby be excluded? If another member of the family receives damages or compensation in his or her own right, they are not excluded. If the mother of the family receives damages in her own right, the income derived from them is aggregated in the father's income for Income Tax purposes.
Mr. Barnett: Before this Clause, the investment income of the mother and father would have been aggregated anyway.
Sir H. Lucas-Tooth: That is as may be. But the right hon. Gentleman said that one should not aggregate the income of a particular child which has been paid to it in its own right because of some accident; that would be wrong. If that is a sound argument, why does it not apply equally to any other member of the unit if the principle of the family
1216
unit being the taxable unit is followed? Damages received by an injured child or compensation payable before damages are recovered are received because of payment ordered, in every case, by the High Court and not through the magistrates' court. This illustrates the absolute nonsense of the position concerning the two courts.
The Clause is illogical, unjust and inexpedient. All that I can do is to propose Amendments designed to remove its worse elements.
Amendment No. 10 proposes to exclude from aggregation the income of a child with that of its parents when the child's income is derived from a trust or court order made because of the parents' divorce and if, and only if, the divorce took place before the Budget date. It is, therefore, of extremely limited effect and refers only to existing cases. There is a special reason for the Amendment. Such trusts as are included in it, or such court orders as are referred to, were made on the basis of the law existing at the time that they were made. It is difficult, if not impossible, to vary these trusts—difficult in all cases, both trusts and orders, and impossible in the case of most trusts.
The effect of the Clause on such income of the child is, in every case, to make the child suffer. The parent who has made the provision—normally it will be the father—will escape unscathed as a result of the Clause. He will have nothing more to pay. In the great majority of cases this tax burden will fall upon the mother in whose custody the child or children may be. In many such cases the mother is not well off, and one knows of many instances where a mother has to work extremely hard to maintain the children with which she is left. As a result of this aggregation this tax will fall upon that mother's income and that seems wrong. Where do the Chief Secretary's principles apply in these cases? By definition the family unit has already been broken up and it is the poorer element left that is affected by the Clause. I hope that the Chief Secretary will accept this Amendment or the principle contained in it.
Amendment No. 11 proposes to exclude from aggregation a child's income derived from compensation paid to the child for loss of a parent, by death or disablement.

1217
Compensation for disablement would be extremely rare, and the ordinary case is of compensation paid to a child because of the death of the father. Why should this case not be treated as being on all fours with the case to which I have referred, and which the Chief Secretary has said he is prepared to accept?
I hope that when he replies to the debate he will say that he is prepared to include this in his Amendment. I cannot believe that he will say that the loss of a parent is not a loss to the child, even within the definition he has made. It is not a physical loss but the loss of care, security, educational and other opportunities is as great, possibly greater, in certain circumstances. The only reason that I can see why he can draw a distinction is that the kind of loss that the child will suffer in the circumstances of this Amendment will be as a member of a better-off family.
If that is the principle the Chief Secretary should say so clearly, because it ought to be seen and understood by everyone that he deliberately intends to prevent, by the taxation imposed in the Bill, the opportunity that a child may have because it happened to be born into a slightly better-off family.
Amendment No. 43, amending the Schedule, deals with the case where parents do not receive and cannot control, the income belonging to their child. For example, a relative or even a stranger might make a settlement to educate or otherwise provide for a child on a scale out of proportion to the rest of the family, or might arrange for the money to accumulate for the child at 21. I appreciate that this Amendment might create a loophole. A grandparent might make a settlement with what I will rudely call "stooge" trustees.
We do not pretend to be draftsmen in Opposition. We make our Amendments say what we intend in principle, and I am certain that if the Government accept the principle, they can cure any difficulties. What does the Chief Secretary contemplate will be done in this sort of case? A parent disapproves of a young man whom his daughter is marrying; he is a well-to-do parent and the daughter is marrying someone without great resources, to whom he objects for that reason. A child is born. A grandparent
1218
of the child makes a settlement on the child for the child's benefit, giving the money to trustees and directing them to spend it on the child for the child's benefit.
9.30 p.m.
In that case, as the Bill is drafted, the effect of that will be that the son-in-law, to whom objection was taken, may have a substantial increase made in his relatively small income so that the child may be maintained in a way which is totally disproportionate to the income of himself, his wife and, possibly, other members of the family.
That is an intolerable situation. Provision must be made to deal with it. I do not say that the Amendment is perfect, but something must be done to deal with that kind of situation. I suggest a method in the Amendment. If it is not acceptable, let the Government say what they are prepared to do. I think that I have said enough to indicate that the Clause as a whole is objectionable, but it certainly has such features that it must be amended before it can be accepted by the House.
Dame Joan Vickers: I support Amendment No. 10 moved by my hon. Friend the Member for Hen-don, South (Sir H. Lucas-Tooth) in regard to another aspect, and that is maintenance orders. It is fantastic how the Government always try to hit the poorest sections of the population. If my hon. Friend's Amendment or one on similar lines is not accepted, many more women will be forced to resort to social security.
Many women receive only maintenance for their children and, therefore, they go go out to work to supplement their income. It is essential for them to do so because the money given by the father for the children does not support the entire family. This means that the mother either has to claim supplementary benefit or take a job. If she claims the former, she lives merely at subsistence level. Most women wish to go out to support their children, and it is admirable that they should, otherwise they must apply for social security assistance for clothes and holidays for the children. If they can work, it is very much better.
At present, only the actual money which the mother earns is taxed, and this makes working feasible or possible, but

1219
if the maintenance money for the children were to be taxed this would practically double the mother's taxation and, therefore, it would not be worth her while to go out to work. It would be a great pity to drive a number of women on to supplementary benefit. It is well known that when a woman has been deserted, it is beneficial for her to mix with the world, to take a job and earn her living. These woman have a great deal of pride and that is what they wish to do.
One-parent families are in constant danger of legislation of this nature. Not only would the difficulties which I have outlined be bad for the family, bad for the woman and also bad for the child, because of the mother's lower income, but the cost would be expensive for the State. I therefore suggest that the Chief Secretary should consider this point, because it is not only a social asset that these women should go out to work. It is beneficial for the economy and for the woman and the Government would be saved money in the long run.
Mr. Richard Wainwright: I wish to speak to the Liberal Amendment, Amendment 13, and only to that, since it appeared in Committee that the degree of opposition to the Clause from the Conservatives, on the one hand, and the Liberal Party on the other, was quite different. It may well be, although I hope not, that with their usual clumsiness the Government will drive the two Opposition parties into each other's reluctant arms. Whereas the right hon. Member for Enfield, West (Mr. Iain Macleod) was quite explicit in saying that if he were in power he would not merely seek to amend this Clause drastically but would repeal it entirely, the Liberal view which, in face of the Government's astonishingly stubborn record on the whole of the Bill, we cling to with very slender hope, is that the Government should so amend the Clause that it becomes a reasonable and useful weapon against deliberate tax avoidance of a prevalent kind, which is entirely legitimate and honourable, but not helpful to the revenue and not conducive to a state of equity.
The trouble with the Clause as it stands is that, contrary to the belief of many people, it will affect a large section of the tax-paying population. The
1220
idea is about that the Clause is aimed simply at wealthy families. Not a bit of it. In the course of one of his many, if I may say so, distinguished and independent contributions to the Committee debate, the hon. Member for Birmingham, All Saints (Mr. Walden) from the opposite side of the Committee, said that his guess was that the Clause will apply to hundreds of thousands of taxpayers. This was not contradicted by the Chief Secretary who, to my surprise, ignored the speech of the hon. Member for All Saints. It is a great pity that the Clause should have been so widely drawn as to catch a very large number of modest and perfectly legitimate cases of small investment income of young people up to the advanced age of 21.
The Liberal Amendment seeks to make two modifications to the operation of the Clause. Under the Amendment the only forms of investment income which will be caught are those which reach the child through a relative of one of its parents. One of the most common forms of tax avoidance is for the family to get together and, because previous legislation prevents the parents from settling anything on the child with a tax advantage, to settle something on the child. This is what we seek to outlaw, but we do not seek to outlaw investment income which reaches the child in an entirely independent way, perhaps on the child's own merits, without any apparent motive of deliberate tax avoidance, or if somebody quite outside the family, possibly the High Court itself, secures a settlement upon the child. It is monstrous that income which accrues to a child in that way should be aggregated with that of the parents.
Secondly, we seek to remove from the scope of the Clause investment income up to a figure of £500 a year. As a child grows up and reaches, say, school-leaving age, there is everything to be said for him learning to dispose of property and, if he is lucky enough, having resources at his own disposal, so long as they do not reach a figure at which there is every indication of substantial tax avoidance. We are a little optimistic in making this suggestion, because there is still almost a year before the Government commit themselves to the precise form of this legislation.

1221
Here I would make the point which I have often tried to make in previous debates, and that is to urge upon the Government the importance of engaging in much more detailed and thorough consultations with those professions which will bear the main burden of implementing this kind of legislation—
Mr. A. Woodburn: Would the hon. Gentleman say to how many children in any one family he would extend this £500 extension, and how he would justify giving these exemptions, when any number of people working and earning £500 a year have to pay Income Tax on it?
Mr. Wainwright: I would not dream of suggesting that the £500 should be free of Income Tax. The £500 of investment income will pay substantially more tax than £500 earned by a young person. What we say is that it should not be aggregated with the parents' income. Dealing with the right hon. Gentleman's first point, the Liberal Party would have nothing to do with a proposal to limit the number of children in a family who might benefit from exemption of this kind. I say, the more, the merrier.
I was talking about the accountancy profession. I hope that all hon. Members attach importance to the need for more consultation with the experts—those who will have to carry the heat and burden of the day after any enactment—before complicated new concepts are introduced into our tax law.
The accountancy bodies now approach the Chancellor as a united group. The four major recognised bodies of the United Kingdom act together in these matters. The Government cannot excuse themselves by suggesting that they are faced with a bewildering multitude of counsel. The accountants have said to the Chancellor that they are concerned
"… at the number of possible anomalies which may arise under this Clause and, since it will not come into effect until 1969–70, submit that it should be the subject of further detailed study. They would welcome the opportunity of joint consultation with the Inland Revenue."
In view of their dismal experience in the past with Governments of both parties, I take that to mean that they want meaningful and prolonged consultation in real depth.

1222
The old, hoary, dusty argument that consultation with people outside the Government exposes the Revenue to the risk of forestalling is too old-fashioned to be repeated from the Government Front Bench today. Any forestalling which might take place as the result of a leakage of the Government's intentions would be a deterrent which, if anything, would be of value to the Inland Revenue. In fact, I am surprised that the Treasury does not use the threat of future legislation to greater effect. If the taxpayer had foreknowledge that legislation was coming, he would abstain from making covenants, dispositions and tax avoidance arrangements of this kind, and it would only be for the good of the Revenue.
Mr. Patrick Jenkin: Surely the hon. Gentleman would have the expectation of being able to point to the fact that practically no one now will set up an accumulation trust, because legislation against such arrangements is expected by everyone.
Mr. Wainwright: Yes, and I give the Government full marks for announcing that deterrent in advance. I think that it will be of some good to the Revenue, but I wish that there was more consultation and that the Treasury realised that the risk of a leakage is likely to do more good than harm, except possibly in relation to commodities liable to Excise Duty.
Sir Harmar Nicholls: Perhaps one can-not object too much to that as a special selective point, but I cannot agree with the hon. Gentleman or my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) if it is urged upon the Government to rule by intimidation. We had too much of that, for example, from the Ministry of Public Building and Works about 18 months ago. Let us be ruled by Statute, properly enacted, not by intimidation.
9.45 p.m.
Mr. Wainwright: I join with the hon. Member for Peterborough (Sir Harmar Nicholls) in hoping that the Government will not be there much longer to intimidate people. Granted we have the misfortune of having them there, I am all for them announcing their intentions, however dire and stupid, in good time so that the experts can at least whittle them into some kind of shape.

1223
So long as the Government insist on dressing up this aggregation Clause in the absurd garments, now completely tattered and threadbare after discussion in Standing Committee, of the so-called common spending unit, a concept at least 50 years too late, a concept which might have done some kind of justice in Edwardian times but which now is a most ironic concept to introduce just when the family has par excellence ceased to be a common spending unit owing to the habits of young people, is really too ridiculous. If they would take the Clause back and put it into the form of an effective tax avoidance Clause, which would do a great deal of good to the Revenue—something which Conservative Governments ought to have attended to a long time ago—we should then be happy to support the Clause.
Mr. Barnett: I am tempted to speak in the debate briefly, because I fear that anybody listening might have assumed that the Clause was brought about by some wicked idea of the Government.
One heard from the hon. Member for Hendon, South (Sir H. Lucas-Tooth) of the case of a grandfather leaving something to a grandchild, probably from very fine motives. However, it should be known—and the hon. Member for Colne Valley (Mr. Richard Wainwright) certainly knows this to be true—that in the majority of cases income is allocated by trust to grandchildren to avoid taxation on the donor.
I do not go along with the Inland Revenue in its campaign to plug every conceivable loophole against tax avoidance. I think it frequently goes so far as to make the lives of people in the accountancy profession intolerable. The loophole with which the Clause attempts to deal is clearly not a minor one, as anybody who knows anything about it will be aware. The purpose of the Clause is to stop a major loophole provided for large Surtax payers, enabling them to reduce their income for tax and surtax purposes by obtaining the personal allowances of an infant. If anyone doubts that I would be delighted to hear, but that is the general purpose.
When we hear of these heart-rending cases from hon. Gentlemen opposite, we should bear in mind that the major pur-
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pose of the Clause is to stop a glaring loophole in the tax system. That does not mean that there are not anomalies to be found when one brings in a Clause of this description. There certainly are —for example, the one concerning the thalidomide children. We should do something to deal with those anomalies. We have heard some hon. Members joke about the family being a common spending unit, and so on. These comments are all very humorous. In Standing Committee we grew to expect sneering and sarcastic comments from some hon. Members. But it is completely misleading to suggest that this Clause is doing other than dealing with a major piece of tax avoidance which was quite legitimately carried out previously. It is now being plugged. In the process some anomalies have been brought to light, and I hope that my right hon. Friend will make certain concessions in respect of some of them, but to suggest that the whole purpose of the Clause is wicked is to present an utterly false situation.
Sir H. Lucas-Tooth: I agree with the hon. Gentleman that it is right and proper to stop the practice of allowing parents to make settlements on their children, but does not he agree that it is desirable that grandparents should provide a good education for their grandchildren? Does he regard that as something objectionable?
Mr. Barnett: There is nothing objectionable about it. A grandparent is entitled to leave something to his grandchild.
Sir H. Lucas-Tooth: I am not talking about him leaving something to his grandchild.
Mr. Barnett: Very well, give something to his grandchild, but why should he do it at the expense of the Inland Revenue, and thereby other tax payers?
Mr. Philip Goodhart: As the father of seven children I am naturally interested in, and equally naturally opposed to, any Clause which seeks to aggregate for tax purposes any income of any child with that of the parents. Apart from my personal interest in the Clause, it is of great interest and concern to many of my constituents.

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I should have liked to have taken part in the discussions upstairs about the main purpose of the Clause, but I approve of what my right hon. and hon. Friends said, that the Clause is based on envy, that it is an attack on savings, and particularly on the savings of the middle income group, and that it is indirectly an attack on the independent schools.
My hon. Friends, some hon. Gentlemen opposite, and this evening the hon. Member for Colne Valley (Mr. Richard Wainwright), have pointed out that the philosophy behind the Clause is directly contrary to all progressive sociological and educational thought in the trend of looking on young people as responsible and independent individuals. Indeed, the provisions of the Clause are diametrically opposed to the suggestions of the Latey Committee whose Report has just been accepted by the Government.
As the Chief Secretary revealed in Committee upstairs, the Clause has a peculiar parentage. It is based on the minority report of the 1954 Royal Commission, the author of which was none other than Professor Kaldor. Indeed, the Clause has the stamp—
The Chief Secretary to the Treasury (Mr. John Diamond): The hon. Gentleman said that the author of the minority report was none other than one individual. There were several individuals who signed that report.
Mr. Goodhart: There were four signatories to it, but I do not think anybody would dissent from the view that Professor Kaldor was its principal author. When the Chief Secretary referred to the matter in Committee he could not remember the names of two of the signatories. I think that he will, therefore, accept that Professor Kaldor was the principal author. It bears the brand of Kaldor on it, because it will create muddle, confusion and hardship.
My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) pointed out that the only parallel example that he could find in taxation systems in other parts of the world for the philosophy behind the Clause was in the ancient Indian taxation code that referred to the Hindu undivided family. There seems to be an element of poetic justice here, because we sent Professor Kaldor
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out to India to advise the Indians on their taxation system, with somewhat unfortunate results for that country. It would seem that, as Professor Kaldor no doubt noted, this idea of taxing the family as one unit this is India's revenge on us for having sent Professor Kaldor out there.
Amendment 10 deals directly with the problem of settlements already made on children of broken homes. In Committee the Chief Secretary talked of the family as a common spending unit. We are trying to help the family where the common spending unit has already been broken by desertion or divorce. As we know from our Parliamentary work, or from our personal acquaintance with the subject, the children normally remain with the mother, and only too often she is the person who suffers most, financially, from the break-up of the family. The Amendment therefore seeks to lift the additional financial burden from those parents who have already received settlement in the court.
The Chief Secretary cannot argue that national solvency is involved in imposing additional burdens on this comparatively small group of hard-pressed people. He cannot argue that the Government need to balance their books by extracting this small extra amount of money from this hard-pressed group. I do not think that he can even argue that this imposing of extra burdens on a small section of the community is part of Socialist theory. Not even the hon. Member for Heywood and Royton (Mr. Barnett), in looking at the broader sweep of the whole Clause, can argue that this is a real tax loophole. I therefore hope that the Chief Secretary will give close consideration to the Amendment.
The second Amendment in the name of my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) deals with incomes derived from money paid to a child as damages when a parent has been killed or injured. As in the previous Amendment, the collective spending unit concept of the family has been broken by the death or incapacitation of the parent. In Committee, the Chief Secretary expressed sympathy for the case of "thalidomide children", but if the courts can accept that the death or injury of a parent is just as much damage to a child

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as the loss of fingers or a limb, I do not see why the Treasury cannot accept it as well.
10.0 p.m.
I know from long acquaintance with him that the Chief Secretary is an honourable and generous man, and he admitted in Committee that the Government had not thought about the impact of the Clause on the independent schools. They cannot have thought, either, of its likely impact on those children who have lost a parent through death or injury and received damages from the court. I earnestly ask him to look at this again.
The final Amendment deals with income which will not go to the parent but can be used only for the child. My hon. Friend cited theoretical examples of families being severely jeopardised, but I know an actual constituency case, of a man who has spent a long career and earned a reasonable income. He has a number of children on whom settlement has been made by his father-in-law, and he cannot touch that money. He now faces financial ruin if the Clause is not amended, because the children's income will be aggregated with his and he will have no extra money to meet this greatly increased tax bill. He talked to me in desperation in terms of trying to persuade his wife to divorce him, since otherwise the family would suffer disastrous financial hardship.
The whole Clause is undesirable, but the Amendments will at least mitigate the inevitable hardship.
Sir Harmar Nicholls: I want to draw the right hon. Gentleman's attention to something which he has probably already marked. The expert in his part on these matters, the hon. Member for Heywood and Royton (Mr. Barnett), scraped the bottom of the barrel to find some lucid argument to justify the Clause, but even he, trying hard to be loyal to the Government, concluded that, although the Clause might settle major things, it had many anomalies. His final appeal to the Chief Secretary—
Mr. Barnett: The hon. Member should not make appeals for me to my right hon. Friend. If I want to make them, I know how to do it and I will do it.
Sir Harmar Nicholls: The hon. Gentleman wrapped up his message in
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so much cotton wool that it may not have got through to his right hon. Friend. The only part of his speech that was relevant to the discussion was the part in which he said that the Clause was riddled with anomalies. That, coming from the expert on the benches opposite —indeed, from the only backbencher opposite to take part in this discussion —coupled with the appeal made by the Liberal spokesman and the speeches of my hon. Friends shows that these anomalies must be ironed out before the Bill proceeds.
Mr. Diamond: I sense from the length of the speeches that hon. Members are well aware of the principles behind the Clause and would not wish me to go over the ground which was covered fully in Committee upstairs. It is also clear from the references made to speeches in Committee that hon. Members have read the OFFICIAL REPORT of our earlier discussion and are aware of the background to and purpose of the Clause. We can, therefore, concentrate more narrowly on the Amendment.
I hope that I will not do what the hon. Member for Colne Valley (Mr. Richard Wainwright) asked me to avoid—driving him into the unreceptive arms of the Conservative Party. It would be a difficult act for me to do since the Conservative Party is opposed to the principle of the Clause whereas the hon. Gentleman accepts the principle, certainly from the point of view of anti-avoidance.
It was obvious from an official Opposition Amendment in Committee upstairs that Conservative hon. Members think that income from parents should not be aggregated, whereas the hon. Member for Colne Valley considers that it should be aggregated. [HON. MEMBERS: "No."] I think I am right in saying that the official Opposition Amendment moved in Committee upstairs referred to parents— [HON. MEMBERS: "No."]—or grandparents— [HON. MEMBERS: "No."]—or relatives— [HON. MEMBERS: " No."]—close relatives —[HON. MEMBERS: "NO."] Official Opposition Amendment No. 249, I think it was, referred to close relatives. [HON. MEMBERS: "No."] That is my recollection of the matter and I am sure that grandparents were included. In any event, the Conservative Party is completely opposed to the principle of the Clause and it is difficult to see on what grounds

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the Conservative and Liberal Parties could join in supporting the Amendment.
From the remarks of the hon. Member for Hendon, South (Sir H. Lucas-Tooth), it seems that I did not make the principle of the Clause clear. He said that there was no principle involved in the distinction between the two courts. I must, therefore, make the principle clear by using words which are broader than I would otherwise use if I were not invited to make the principle clear. I move on the principle, in rejecting the Amendment, that there should not be one law for the rich and one for the poor. That is expressing it in very simple terms indeed.
By one law for the rich I mean the possibility open to those whose income is such that their maintenance payments and matters arising under divorce proceedings are dealt with in the High Court. It is possible for them, on the advice of their advisers, so to arrange matters that the maintenance is made in favour of the child, that it becomes the child's income and that it therefore becomes eligible for an Income Tax repayment claim. The result in a typical case is that the mother would have both the income provided by the father and the repayment claim provided by the general body of taxpayers
The other law is for those of modest means who are dealt with in the magistrates' court. In the generality of cases this method of arranging the maintenance payment is not available, so those people do not have any opportunity of getting both the income from the maintenance payments and the benefit of a repayment claim.
We have been over this ground many times in Committee. I want to make it clear that whereas with the humbler settlement, the more modest amendments —and these are the vast majority of cases —there is no opportunity for such a tax arrangement to be made; where much larger sums are involved there is an opportunity, which is frequently taken, of a tax arrangement whereby the payment is made in favour of the child and ranks as the child's income.
That was difficult to achieve. It was sought after for many years, but failed. Finally, about 15 years ago, a method was discovered whereby the income became the income of the child and was subject to a tax repayment—
Sir H. Lucas-Tooth: The right hon. Gentleman's arugment can only be on the basis that he believes that the poor are divorced in the magistrates' court. That is the only possible sense of his argument.
Mr. Diamond: I do not believe that. I believe that the smaller cases go to the magistrates' court, and the larger cases— [Interruption.] The smaller cases of maintenance payments we are talking about, arising under divorce, go through the magistrates' court—[Interruption.]— I speak of the smaller cases, of which there are very many more than those involving larger sums. The cases referred to many times in Committee as the humbler cases—everyone knows this to be so—involve smaller payments, and it is not open to the mother of the child so to arrange her affairs that the income is the child's income and she gets the additional repayment benefit I have mentioned. On the other hand, under the High Court procedure it is possible for that argument to be made, and this has been done.
The Committee knows quite well the basis on which we are proceeding, and it has been described again this evening. These Amendments do not dispute the principle of the Clause: what is in dispute is whether there should be further deductions in the generality of the cases. What the hon. Baronet the Member for Hendon, South seeks is an allowance where the parent has been killed or disabled. I do not follow the point about the parent being disabled, but it is a minor point. In the case of disablement the parent is still alive and would be entitled to the income.
The essential point is where the parent has been killed. I promised in Standing Committee that I would give further consideration to this question, and undertook that on Report I would table an Amendment dealing with the case of children who have suffered injury by loss to themselves in the sense of losing an arm, or physical loss of that kind—a typical case being the thalidomide baby. One is very concerned to give the most sympathetic and careful consideration to this. One is concerned to find cases— because a tax machine has to be administered—which would represent a justifiable distinction between those who

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are exempt and those who are not exempt from aggregation.
10.15 p.m.
I have heard precisely the same argument tonight as I did in Committee. The argument is that if one goes as far as to exempt the income of the thalidomide baby from aggregation one is logically compelled to go further. The argument tonight was in exactly the same direction.
A further argument with which I have considerable sympathy is that the logic behind exempting the income of the thalidomide baby is not great. That was the point made by the hon. Baronet the Member for Hendon, South. Of course it is not great. But I undertook to bring forward an Amendment at all events going that far but no further. Having considered the matter most carefully and sympathetically, I am unable to find, as I was unable to find then, any principle by which one could possibly distinguish any further categories. Once one goes beyond the individual case of a personal loss in the sense of the loss of an arm or some other physical loss to the child itself, one cannot draw a line anywhere. Indeed, it was very difficult to go this far logically. One is going this far partly on logic but more particularly on compassion. Let us recognise that that is not a good basis on which to legislate, but it is a basis on which one can just make a distinction. However, I regret to say that we cannot go any further.
Therefore, I must tell the hon. Baronet that in respect of his Amendment dealing with fatal accident cases and the loss to the parent, I am unable to recognise a distinguishing line, and, therefore, I am unable to recommend the Committee to accept the Amendment.
I think that the hon. Member for Plymouth, Devonport (Dame Joan Vickers) was under a misapprehension in the case that she put forward. She said that the Clause would hit the poorest section of the community, and that, as a result of the tax being paid as a result of aggregation, the mother would be forced to go out to work.
Dame Joan Vickers: It was the other way round—that she will not be able to afford it if she has to bear the tax and that it would be better for her to go to social security.
Mr. Diamond: I do not quite follow that argument. But the case that the hon. Lady was making that this is an attempt to hit the poorest section of the community is a complete misunderstanding of the application of the Clause. The present position, as I explained on an earlier Amendment, is that by far the majority of maintenance payments are in favour of the mother, and the payment is treated as the mother's income. It is only in an extremely small minority of cases that the payments are in favour of the child in such a way as to be affected by the new provision for aggregation. Therefore, I should have thought that the hon. Lady's vote would have been on our side if we went to a vote. It is because the present proposals do not hit the poorest sections of the community that we are bringing them forward.
The hon. Member for Colne Valley wanted to retain the Clause on tax avoidance grounds, and I welcome that. He made a most interesting comment about the deterrent effect of advance warning of legislation. I should be interested to hear him pursue the philosophy of that because it is a matter of great interest to those who are concerned with tax avoidance. I did not know how far he was carrying his principle.
The hon. Gentleman's Amendment seeks to do two things. First, to exclude infants' income where it is no more than £500 a year and, secondly, to exclude from aggregation income under settlements made by persons who are not relatives. As far as the £500 a year is concerned, I remind him that there were two reasons for bringing in these proposals. One of them was to produce income and the income we are likely to produce by these proposals is £25 million. His proposal would eliminate £20 million of that, so he recognises that his Amendment would wreck our proposals almost completely by the size of the exclusions. For that reason alone, we could not accept such an Amendment, which is really a wrecking one.
Mr. Richard Wainwright: The hon. Gentleman acknowledged a few minutes ago the very point I was at pains to make about the deterrent effect. Does not he consider that, although the Clause in the form that we would like would bring in only £5 million, it would still

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have a severe deterrent effect on the spread of this avoidance procedure by taxpayers?
Mr. Diamond: But it would have the the same effect as it stands. The Clause as drafted has the additional advantage that it will collect £25 million in the first full year, whereas the hon. Gentleman's proposal would reduce this to £5 million. Presumably, the arrangement he proposes of allowing up to £500 a year would go on permanently and therefore the avoidance that he seeks to deter is on the provision of incomes of more than £500 a year, which are pretty substantial.
Mr. Goodhart: But does not the fact that the Clause as drafted would raise £25 million a year underline the case that it is the smaller people and not the very rich who are going to be hit?
Mr. Diamond: Of course it is not the small people who are going to be hit by this. In their case, the average circumstance is that the child has either no income of its own or a negligible income of its own. I do not know what the hon. Gentleman means. These arrangements only arise either deliberately to avoid tax, as has been made clear, or as part of a process of provision by well-to-do people of gifts, legacies, etc., which produce income to the child. The second category clearly cannot be solely the case, nor, indeed, can the first. The hon. Gentleman's experience must be totally different from mine.
In the second part of the hon. Gentleman's Amendment he proposes that there should be excluded from aggregation in-

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come under settlements made by persons who are not relatives. I understand his logic, particularly as his proposal is based on his belief that the purpose of the Clause is merely to deter tax avoidance. But that is not so. If it were, there would be merit in his argument. The purpose is to deal with a principle which we think exists, namely the family spending unit. There is no reason why income deriving from one source should be treated differently from income derived from another source once one accepts that principle. It is only on the basis of that principle that a sensible arrangement could be made.
None of these Amendments—I note that none of them is sponsored by the Front Bench opposite—cover ground which we did not cover fully upstairs and which provide any opportunity for improving the Bill. The only matter on which, I repeat, one is anxious, if possible, to meet the views of the Opposition and many others, is perhaps to go a little further in the way of the fatal accident case and to recognise that there is something other than physical damage to the child for which a right is created when a parent is lost and the child has a right to damages from the loss. I am only sorry to say that I cannot distinguish between this case and a whole host of other categories which would follow on, and I am afraid that we have to leave the matter as it is and as the Bill is drawn, coupled with the undertaking that I have given about producing an Amendment on Report to deal with physical loss to the child itself.
Mr. Fletcher-Cooke: In spite of the opening words of the Chief Secretary, I thought that he would not be able to resist an appeal to the principle of the common, or family, spending unit before he sat down. Therefore, rather against my will, I shall be obliged once more to show it up for what it is so worth, because it was an appeal to that principle and that principle alone which made him resist the heart-rending appeal which is formulated by Amendment No. 11, that is to say, to insist that when the breadwinner is killed and compensation is paid by the persons responsible for the death to, or for the benefit of, the child, that should nevertheless be aggregated.
That can be justified only by an appeal to the extraordinary idol which the Chief Secretary has erected and which he has borrowed from Professor Kaldor in the Minority Report of the Royal Commission on the Taxation of Profits and Income, borrowing all the details and anomalies. It is a self-confessed hypocrisy by the fact that the common spending unit, for some inscrutable reason, takes no account of earned income although earned income is spent just as much in common as or just as little in common as unearned income, and nor does it take account of such matters as unemployment benefit, which, again, is spent just as much in common, or just as little in common, as unearned income, because the right hon. Gentleman knows that if he did that, there would be a riot. So much for the common spending unit.
The purposes of these Amendments are somewhat detailed. Owing to the procedure under which we are operating, they are obliged to be. As this is the last chance which we shall have—because Report stage of the Finance Bill is no chance—I want to begin by asking the Chief Secretary to give his attention to an anomaly in Schedule 8 which was pointed out to me only today. It occurs in paragraph 4(2). The Committee may know that if either the child is resident abroad, or the parent is resident abroad, aggregation does not take place. But, owing to the wording of paragraph 4(2), there may be a casus omissus, that is to say, if both are resident abroad, but nevertheless both have investment income coming from the United Kingdom, the two types of withholding tax, that upon
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the resident abroad infant and that upon the resident abroad parent, may be aggregated. That would be a complete anomaly and I ask the Chief Secretary whether his advisers can see whether that interpretation of the words is correct and, if so, whether he will put it right on Report, because it is obviously an oversight.
The first Amendment deals with a very narrow point, namely, provisions which have been made as a result of a broken marriage before the Budget. The Chief Secretary took the opportunity to make one of his "class war in the courts" speeches, which we have heard before, and which has no relevance to these provisions. If he will make speeches about how there is one law for the rich and one for the poor, and how divorced persons who are poor go to the magistrate's court, which is quite wrong, we must repeat for the third or fourth time, our criticism that there has been no Law Officer present during the debate.
10.30 p.m.
This is probably the first time that this has happened during consideration of a Finance Bill in living memory. It may have been difficult for them to attend Committee, because there were so many Committees meeting, but since tonight we are dealing purely with the difficulties which we think the courts will have, then we ought to have had the advantage of the presence of a Law Officer. I do not wish to be insulting to the Chief Secretary but he will recognise that it is only from a Law Officer that the Committee can expect such authority.
The purpose of Amendment No. 10 is to prevent the courts being flooded by the re-applications, which there are liable to be. For many years now the High Court and to some extent the lower courts have been in the habit, and have had the duty in many cases, so to make their arrangements and awards that the various parties benefiting paid the least amount of tax. There is nothing wrong with that. The courts have been encouraged to do so, and have certainly done so, with the great advantage that the amount of maintenance or alimony or compensation, or whatever, is reduced.
We all know that in matrimonial cases the amount of money available from the

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former husband is strictly limited. This is one of the troubles. I see the hon. Member for Pontypool (Mr. Abse) listening. He knows, from his recent experiences upstairs, that this is the great trouble in broken marriages. For that reason, the courts have been very astute so to arrange affairs that the person who has to pay pays in such a way that he is not crippled, but that those who receive the money get enough to keep them afloat.
The proposed aggregation provisions will alter the amounts that have to be awarded—which will need to be increased —so much so that there will be many cases in which, if there is more than one child, it will be in the interests of the children, financially, that their custody should be split, so that there is less aggregation. I can imagine no worse reason for dealing with a family than that. That may happen in many cases. The Amendment has the confined purpose of ensuring that arrangements already made should not be upset.
My hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) said that it is difficult to vary trust or court orders. With respect, it is easier to do so now than in the days when he was in practice, in the sense that we have the Variation of Trusts Act, and we also have the more firmly established principle that for parties to a former matrimonial dispute there is never an end to the matter, and they can always return to the court if circumstances change and ask for a new order. Circumstances will be changed very much by this aggregation provision and there will be floods of cases going back, asking for a variation to be made to the court order in matrimonial disputes. There will also be a very large wave of variation of trust applications in the Chancery courts.
It is for these reasons that we say that a line should be drawn on Budget day and that all the arrangements that were made in this field before Budget day should not need to be upset, because the only result is that an immense amount of money will be spent in applications to the courts and immense heartburning will be caused to those who at present receive the payments, because they
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know that there is not very much money left from the source from which it comes and that they will never be able to get back to the position which they are in now and that the best they can hope for is some modification.
We think, therefore, that it is only common sense, as well as common justice, that the aggregation provisions should not apply to court orders and the like made before Budget day. The Chief Secretary did not deal with that point. I make it again. All that I ask him, if he would care to give the reason why it is, for some reason, unobtainable or objectionable, is not once again simply to say that it will not do the poor any good and that we will not have the class war of the courts fought over again.
What the right hon. Gentleman said on Amendment No. 11 is a bitter disappointment to us. As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said upstairs, the loss of the breadwinner is in many cases more serious to a child than the loss of a limb. Since an admitted exception has been made by the Chief Secretary to the common spending unit rule in one case, we cannot see why it should not be made in the other case.
Although I do not think that it is worth spending the time, I could explain the reason for the word "disabled". Once again, the right hon. Gentleman may not know that since Gourlay's case the courts have done their best in awarding damages in the case of the disabled breadwinner to say that the child has a direct damage caused by the disablement of the breadwinner and have, therefore, awarded the damages to the child as well as to the disabled person and have split it in that way, with an eye to the non-aggregation of tax under the old dispensation.
Amendment No. 43, which the Chief Secretary did not mention, seeks to relieve aggregation in the case where the parent has no control whatever over the income of the child. The common case is where the child has left the home and has set up its own home. If it marries, it is free of aggregation, If, however, it has not married when it is 17, 18, 19 or 20 and has gone off, it can do so in such a way that the law as proposed is not merely unjust, but simply unworkable,

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because in many cases the parent simply cannot find out what the child is getting.
As we instanced upstairs, in many cases where the home is, perhaps, an undesirable one, where one of the parents is a bad influence on the child, either a grandparent or a stranger may make a settlement on the child on condition that he lives away from home. That is not at all an uncommon state of affairs. The parent is, nevertheless, to have his income aggregated with such income even though the child has left the common spending unit for two or three years.
This is quite unworkable apart from being unjust. Nevertheless, the Chief Secretary is so wedded to his unit—as one of my hon. Friends has been good enough to remind me, the unit is similar to the Hindu undivided family, which is the only comparable taxation unit known, I believe, in the modern world—that even in cases like that, where the parent has no means of knowing and no control over the income, there is to be this ludicrous aggregation. I am not surprised that the Chief Secretary did not mention it, because there is no defence.
Finally, I will try to deal with the suggestion that, somehow, this is merely an anti-rich device aimed at the rich. Upstairs in Committee, we moved an Amendment to exempt from aggregation the first £115 of any income that someone under the age of 21 might have. That is a fairly modest figure. I should have thought it fairly widespread, not throughout the whole population, but in a substantial part of the population, that someone of 19 or 20 may have £115 a year of his or her own. We asked what that would cost and the Chief Secretary said:
"This Amendment would reduce the revenue which would come from aggregation by about half."—[OFFICIAL REPORT, Standing Committee A, 20th May, 1968; c. 1046.]
In other words, of the £25 million, £12,500,000 is coming from infants under 21 who have something like £115 a year. Today we have had another similar example.
The hon. Member for Colne Valley (Mr. Richard Wainwright) moved an Amendment to relieve a much larger sum, £500, and it was said that that would cost £20 million or £25 million. If one analyses these figures, and considers the idea that this is something which will hit
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the very rich, this is nonsense. It is going deeper into the population, much deeper than we realised and much deeper than the Government let on.
This has been a miserable Clause. Apart from the thalidomide baby case, the Government have not given an inch. We are bitterly disappointed, and I suggest to my hon. Friend the Member for Hendon, South that he should press this Amendment to a Division.
Sir H. Lucas-Tooth: In moving this Amendment I said that varying trusts and orders was difficult. I am obliged to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) for reminding me that nowadays it is easier, but I think he will agree that it is still a very expensive business and these Amendments all relate almost entirely to relatively poor people affected by this provision. They affect poor families who are obliged to make payments under orders or arrangements made at a time of divorce. A great many such orders are made in many relatively humble families. The attitude of the Chief Secretary has been one of complete negation. He has somehow simultaneously adopted the parts of Scrooge, Bill Sikes, and Dracula—an almost impossible performance, but he has achieved it. In the circumstances we can only show our extreme protest by voting.
Mr. Iain Macleod: I think it right to ask the Chief Secretary to say a few sentences at least about Amendment No. 43 which he ignored entirely. He knows very well that we on this side, as we showed upstairs, regard Clause 15 and Schedule 8 as bitterly offensive. We have made clear that we will have no part in it. I do not argue that point now. We have put three Amendments before the Committee on this Recommittal stage and they have been excellently explained and supported by my hon. Friends. On Amendment No. 10 we believe that it is wrong to overturn the orders of the courts made before Budget day. We know that the Chief Secretary has had representations from the judges against the Clause, and we think that he is making a grave mistake, but at least he answered that point.
10.45 p.m.
On Amendment No. 11 I am appalled that the Chief Secretary could not go any

1241
distance towards meeting the tragedy that falls upon a family when the breadwinner is killed. I repeat what I said upstairs. The loss of the breadwinner is a greater hardship to the family, and indeed to the child, than the loss of a limb to that child. It is almost inconceivable that, where the breadwinner is killed, and compensation, if there can be compensation for that tragedy, is awarded by the court, or under a settlement to the child, we should meanly scrape away some of the benefit towards the Treasury. It is appalling that he has not been able to go further, but at least he answered that.
He made no reference to Amendment No. 43, and I ask him, as a matter of courtesy to the Committee—he is always most courteous, and I have always acknowledged this—to give some sort of answer on Amendment No. 43.
Let me put the point very briefly. Amendment No. 43 to Schedule 8 says, in effect, that whatever may be the merits of this concept of the common spending unit, if the money be not available then it should not be aggregated. It seems to me to be a proposition absolutely incontestable both in logic and in law. It is not difficult to think of illustrations in which this can happen. The most obvious one is of a grandparent who for some reason is disappointed in his son or his daughter and who leaves all the money he has one generation down to a grandchild, in the hope that that boy or girl will prove worthy of his life savings. There must be any number of cases like this.
As my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) says, if that child leaves the family home at 19, not being married and not in a full-time occupation, in other words falling under the Clause, the Clause and the Schedule say that that money shall be aggregated with that of the parent. It is not in any conceivable way available to the parent to spend, and it cannot be treated as the income of the family or, if the Chief Secretary prefers it, of the spending unit. It may be a family by courtesy only, in the sense that I have given. It is in no sense a common spending unit.
I ask the Chief Secretary, if he would, very briefly to refer to Amendment No. 43. We will vote on this, but it is a
1242
matter to which we attach such importance that I must ask him to give us the benefit of his views why Amendment No. 43 should also be rejected.
Mr. Diamond: I am grateful to the right hon. Gentleman for giving me an opportunity to say another word on Amendment No. 43 which I acknowledge I omitted to deal in answer to the hon. Member for Beckenham (Mr. Goodhart). One does not know on what grounds an Amendment is moved until one hears what is said. The hon. Member for Beckenham adduced arguments which were not valid, and I regret to say that, instead of controverting the arguments, it slipped my mind.
The right hon. Gentleman referred to the difficulty where trust income is tied up in such a way that it is not immediately available to the parent, and yet it is income of the child for Income Tax purposes, and therefore would be aggregated with the parent's income, the parent being called upon to pay tax on the basis of aggregation, although the parent is not able to handle and to receive the trust income money. In those circumstances, the remedy is for the parent to recover the additional tax payable from the trustees.
It was because the case was moved on that basis that I thought that that was the point, and, as I have explained, it is not a valid basis—
Sir H. Lucas-Tooth: The right hon. Gentleman said that the father will be able to recover the additional tax payable. Does that mean the whole of the additional tax payable—in other words, the top slice—or only a proportion? I think that the position is that the father might have to pay a very substantial amount out of his own pocket, because it would put up his rate as well.
Mr. Diamond: If the hon. Gentleman refers to the Schedule, he will see the words used there and that, in effect, what I have said is accurate.
Sir H. Lucas-Tooth: But which is it?
Mr. Diamond: It is no use the hon. Gentleman saying " Which is it? " as if one can define the answer in one word on all the possible cases coming before the Inland Revenue. I have referred the hon. Gentleman to the Schedule. The

1243
purpose of the Amendment, as it makes clear, is to provide that there shall not be aggregation where the income was not available to be spent by the parent or on the parent's behalf. I have explained that the remedy is that the additional tax payable can be claimed from the trustees. If the hon. Gentleman considers the matter carefully, I think that he will realise that there is no problem which need cause him anxiety.
The hon. Member for Beckenham and the right hon. Member for Enfield, West
have now drawn my attention to a different set of circumstances. It must be extremely rare that there is a cessation of the family unit because the family unit has, in effect, split up into two units. I say at once to the right hon. Gentleman that I had not considered that situation, and I will be glad to consider it immediately.
Question put, That the Amendment be made:—
The Committee divided: Ayes 122, Noes 169.

Division No. 222.]

AYES

[10.53 p.m.

Allson, Michael (Barkston Ash)

Hiley, Joseph

Percival, Ian

Astor, John

Holland, Philip

Pink, R. Bonner

Baker, Kenneth (Acton)

Hornby, Richard

Pounder, Rafton

Baker, W. H. K. (Banff)

Hunt, John

Powell, Rt. Hn. J. Enoch

Beamish, Col. Sir Tufton

Hutchison, Michael Clark

Pym, Francis

Bell, Ronald

Iremonger, T. L.

Renton, Rt. Hn. Sir David

Bennett, Sir Frederic (Torquay)

Jenkin, Patrick (Woodford)

Rhys Williams, Sir Brandon

Berry, Hn. Anthony

Jones, Arthur (Northants, S.)

Rodgers, Sir John (Sevenoaks)

Biffen, John

Jopling, Michael

Rossi, Hugh (Hornsey)

Birch, Rt. Hn. Nigel

Joseph, Rt. Hn. Sir Keith

Royle, Anthony

Black, Sir Cyril

Kershaw, Anthony

Russell, Sir Ronald

Blaker, Peter

King, Evelyn (Dorset, S.)

Scott-Hopkins, James

Boardman, Tom (Leicester, S.W.)

Kirk, Peter

Sharples, Richard

Bossom, Sir Clive

Knight, Mrs, Jill

Shaw, Michael (Sc'b'gh & Whitby)

Boyle, Rt. Hn. Sir Edward

Lancaster, Col. C. C.

Sinclair, Sir George

Brinton, Sir Tatton

Lane, David

Smith, Dudley (W'wick & L'mington)

Bruce-Cardyne, J.

Lubbock, Eric

Smith, John (London & W'minster)

Buchanan-Smith,Alick(Angus,N&M)

MacArthur, Ian

Stainton, Keith

Burden F A.

Mackenzie,Alasdair (Ross&Cron'ty)

Stoddart-Scott, Col. Sir M. (Ripon)

Campbell, B. (Oldham, W.)

Maclean, Sir Fitzroy

Summers, Sir Spencer

Campbell, Gordon (Moray & Nairn)

Macleod, Rt. Hn. lain

Taylor, Frank (Moss Side)

Clegg, Walter

McMaster, Stanley

Temple, John M.

Crosthwaite-Eyre, Sir Oliver

Maddan, Martin

Thatcher, Mrs. Margaret

Crowder, F. P.

Maude, Angus

Tilney, John

Dalkith, Earl of

Maxwell-Hyslop, R. J.

Turton, Rt. Hn. R. H.

Dean, Paul (Somerset, N.)

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

van Straubenzee, W. R.

Eden, Sir John

Mills Stratton (Belfast, N.)

Vickers, Dame Joan

Errington, Sir Eric

Miscampbell, Norman

Wainwright, Richard (Colne Valley)

Eyre, Reginald

Montgomery, Fergus

Walker, Peter (Worcester)

Farr, John

More, Jasper

Walters, Dennis

Fisher, Nigel

Morgan, Geraint (Denbigh)

Ward, Dame Irene

Fletcher-Cooke, Charles

Munro-Lucas-Tooth, Sir Hugh

Webster, David

Gilmour, Ian (Norfolk, C.)

Nabarro, Sir Gerald

Whitelaw, Rt. Hn. William

Gilmour, Sir John (Fife, E.)

Nicholls, Sir Harmar

Williams, Donald (Dudley)

Cower, Raymond

Noble, Rt. Hn. Michael

Wilson, Geoffrey (Truro)

Grant, Anthony

Nott, John

Winstanley, Dr. M. P.

Grimond, Rt. Hn. J.

Onslow, Cranley

Wylie, N. R.

Harrison, Col. Sir Harwood (Eye)

Osborn, John (Hallam)

Younger, Hn. George

Hawkins, Paul

Page, Graham (Crosby)

Heald, Rt. Hn. Sir Lionel

Page, John (Harrow, W.)

TELLERS FOR THE AYES:

Heseltine, Michael

Pardoe, John

Mr. Hector Monro and

Higgins, Terence L.

Peel, John

Mr. Humphrey Atkins.

NOES

Abse, Leo

Bishop, E. S.

Dalyell, Tarn

Albu, Austen

Blackburn, F.

Davies, G. Elfed (Rhondda, E.)

Allaun, Frank (Salford, E.)

Boardman, H. (Leigh)

Davies, Ifor (Gower)

Alldritt, Walter

Booth, Albert

Dell, Edmund

Anderson, Donald

Braddock, Mrs. E. M.

Dempsey, James

Archer, Peter

Brooks, Edwin

Dewar, Donald

Armstrong, Ernest

Brown, Bob(N'c'tle-upon-Tyne, W.)

Diamond, Rt. Hn. Jonn

Atkins, Ronald (Preston, N.)

Buchanan, Richard (G'gow, Sp'bum)

Dickens, James

Atkinson, Norman (Tottenham)

Cant, R. B.

Dobson, Ray

Bacon, Rt. Hn. Alice

Carter-Jones, Lewis

Doig, Peter

Barnett, Joel

Coe, Denis

Driberg, Tom

Beaney, Alan

Coleman, Donald

Dunn, James A.

Bence, Cyril

Concannon, J. D.

Dunnett, Jack

Benn, Rt. Hn. Anthony Wedgwood

Conlan, Bernard

Dunwoody, Mrs. Gwyneth (Exeter)

Bennett, James (G'gow, Bridgeton)

Cullen, Mrs. Alice

Eadie, Alex

Edwards, William (Merioneth)

Jones, J. Idwal (Wrexham)

Park, Trevor

Ellis, John

Judd, FranK

Parker, John (Dagenham)

English, Michael

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

Parkyn, Brian (Bedford)

Ensor, David

Kerr, Russell (Feitham)

Pavitt, Laurence

Evans, loan L. (Birm'h'm, Yardley)

Lawson, George

Peart, Rt. Hn. Fred

Faulds, Andrew

Leadbitter, Ted

Pentland, Norman

Fitch, Alan (Wigan)

Lector, Mist Joan

Perry, Ernest G. (Battersea, S.)

Fletcher, Ted (Darlington)

Lewis, Arthur (W. Ham, N.)

Price, William (Rugby)

Foley, Maurice

Lewis, Ron (Carlisle)

Probert, Arthur

Foot, Michael (Ebbw Vale)

Loughtin, Charles

Rankin, John

Ford, Ben

Lyon, Alexander W. (York)

Reet, Merlyn

Forrester, John

Lyons, Edward (Bradford, E.)

Roberts, Albert (Normanton)

Freeson, Reginald

McCann, John

Ross, Rt. Hn. William

Galpern, Sir Myer

MacDermot, Niall

Sheldon, Robert

Garrett, W. E.

Macdonald, A. H.

Silkin, Rt. Hn. John (Deptford)

Cordon Walker, Rt. Hn. P. C.

McGuire, Michael

SiIverman, Julius

Gourlay, Harry

Mackintosh, John P.

Small, WiIIiam

Gray, Dr. Hugh (Yarmouth)

Maclennan, Robert

Snow, Julian

Gregory, Arnold

McMillan, Tom (Glasgow, C.)

Spriggs, Leslie

Grey, Charles (Durham)

McNamara, J. Kevin

Taverne, Dick

Griffiths, Eddie

MacPherson, Malcolm

Tinn, James

Griffiths, Will (Exchange)

Mahon, Peter (Preston, S.)

Urwin, T. W.

Hamilton, James (Bothwell)

Manuel, Archie

Varley, Eric G.

Hamling, William

Maxwell, Robert

Wain Wright, Edwin (Dearne Valley)

Hannan, William

Mendelson, J. J.

Walker, Harold (Doncaster)

Harrison, Walter (Wakefield)

Milan, Bruce

Wallace, George

Haseldine, Norman

Milne, Edward (Blyth)

Watkins, Tudor (Brecon & Radnor)

Hazell, Bert

Mitchell, R. C. (S'th'pton, Test)

Wells, William (Walsall, N.)

Heffer, Eric S.

Morgan, Elystan (Cardiganshire)

Whitaker, Ben

Herbison, Rt. Hn. Margaret

Morris, Charles R. (Openshaw)

White, Mrs. Eirene

Homer, John

Moyle, Roland

Wilkins, W. A.

Houghton, Rt. Hn. Douglas

Neal, Harold

Williams, Alan Lee (Hornchurch)

Howarth, Robert (Bolton, E.)

Newens, Stan

Williams, W. T. (Warrington)

Howie, W.

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

Willis, Rt. Hn. George

Huckfield, Leslie

Oakes, Gordon

Wilson, William (Coventry, S.)

Hughes, Roy (Newport)

O'Malley, Brian

Woodburn, Rt. Hn. A.

Hunter, Adam

Orme, Stanley

Woof Robert

Hynd, John

Oswald. Thomas

Yates, Victor

Irvine, Sir Arthur (Edge Hill)

Owen, Dr. David (Plymouth, S'tn)

Jackson, Colin (B'h'se & Spenb'gh)

Owen, Will (Morpeth)

TELLERS FOR THE NOES:

Jackson, Peter M. (High Peak)

Page, Derek (King's Lynn)

Mr. Joseph Harper and

Jenkins, Rt. Hn. Roy (Stechford)

Palmer, Arthur

Mr. Neil McBride.

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

Pannell, Rt. Hn. Charles

Mr. Diamond: I beg to move,
That the Chairman do report Progress and ask leave to sit again.
Mr. J. Grimond: On a point of order. I understand that it was agreed by the Chair that there could be a Division on Amendment No. 13. I take it that if the Motion is agreed to that Amendment will be voted on as the first business at the next Sitting?
The Chairman: The right hon. Member is correct. The appropriate time for a Division on Amendment No. 13 will be after we have disposed of Amendments Nos. 14, 15 and 16.
Question put and agreed to.
Committee report Progress; to sit again Tomorrow.

INDUSTRIAL DEVELOPMENT CERTIFICATE, TOTTENHAM
Motion made, and Question proposed, That this House do now adjourn.— [Mr. McBride.]
11.5 p.m.
Mr. Arthur Lewis: I want to raise a question concerning the failure on the part of the Government— and, through the Government, the Board of Trade—to grant an industrial development certificate to a certain firm. When an hon. Member speaks of a matter in which he has a personal interest it is customary for him to declare that interest, which I do from the commencement.
Mr. Deputy Speaker, you will have seen in today's Press reports to the effect that, unfortunately, our balance of payments is still not right—our imports are still rising and our exports falling. In those circumstances one would have thought that the Government would do everything possible to help exports. I have been trying to do that in my small way in the company with which I have a connection, which I can say without boasting makes some of the finest whitewood furniture

1247
in the country. The firm decided that as it had made a big inroad into the home market it should try to develop an export market.
Whitewood furniture is relatively cheap, and if it is exported in the ordinary way in packing cases it can easily be damaged if the cases are dropped. Sometimes the packing cases may cost more than the furniture they contain. We therefore decided that the furniture should be broken down, so that it could be more safely carried in packing cases. From our personal examination of the possibilities it seemed that there was the prospect of about £1 million worth of exports a year.
We found, however, that with our large home trade it was not possible to develop this type of merchandise for export and store it in the limited space that we have at our main factory at Leyton. We therefore looked around and obtained permission from the Leyton—now Waltham Forest—Council to take over a site which would have enabled us to have coordinated production and storage instead of having to carry the furniture all the way from Tottenham through the back streets, causing congestion and difficulties with other transport, both industrial and private.
We thought that we had found the ideal solution, which would enable us to store the finished product and get on with the job of increasing output and so develop exports. Then the Board of Trade said, " No. Although the local council is willing to grant you the land and although you are able to do this, we cannot grant you an I.D.C." The Board of Trade was most helpful. It said, " If you could get a place which you used only for storage, so as not to contravene the Government's plans for avoiding a build-up of labour in the South-East, with too much production in a so-called over-productive area, we might look favourably on the project."
They did suggest that we should go to the North or the North-East where there is under-employment, but of course it was explained to the Board of Trade— though they did not seem to appreciate this—that to try to build furniture of this type, which has taken a long time to develop, and to cart it all up North and then bring it all the way down again,
1248
would not be satisfactory, and that to shift the whole factory from London up to the North was not a practicable proposition.
So eventually we found a place where we could store the finished products in warehouses, where we could build up stocks for export, await the actual orders, and then put them on to the boats and get them out into the countries of the world where we could earn the dollars and the hard currency.
We then applied for an I.D.C. for warehousing in which to put the finished products in Tottenham, but believe it or believe it not, Mr. Deputy Speaker, the I.D.C. was again refused by the Board of Trade. I was told the reason for this —and this is really amazing. It was that this warehouse might be used for production.
You know, Mr. Deputy Speaker, that pigs might fly if they had wings, but the facts are that pigs have not got wings and so they cannot fly. What a stupid approach the Board of Trade takes towards this. Here we have underemployment and unemployment in the known furniture manufacturing areas of London; we have factories closing down in Tottenham; we have unemployment in Tottenham; we have unemployment in Leyton; we have short time in Enfield; we have just had the cooperative factory shut down in Enfield.
We have furniture workers and carpenters looking for work, we have unemployment, and here is an opportunity to absorb these unemployed and to get them into production. We have an opportunity of building up an export trade, and we therefore have the opportunity of helping the workers, the company and the country. But the Board of Trade say " No—we are going to stick rigidly to our policy of not granting an I.D.C. even if there will not be any question of this actual warehouse being used for production purposes."
I confess there will be a few extra workers taken on. There will be some extra workers needed to watch the warehouse, and there will be a need for the packing and stacking of these export articles when they are produced. But these are only limited in number because in fact if, as is the case, we can get the full run-on of this commodity and can increase our production, we could then

1249
make space for the increased production that would come from the goods coming out of our new warehouse, and very little in the way of extra staff would be needed.
Again, the Board of Trade say " No." Therefore, I thought the best plan was to raise this matter here this evening and try to get the Board of Trade to look at this on the basis of realising that all good rules are sometimes broken, and that sometimes there is a necessity to stretch these rigid rules which the Board of Trade and their advisers tell Ministers have got to be enforced.
I represent an area in West Ham where we have under-employment. I represent an area where there are a number of workers who have for years been engaged in the furniture industry. They travel to Leyton, now called Waltham Forest, to Tottenham, and as far as Enfield, but, whether the Board of Trade likes it or not, they will not travel to the North-East. It is not practicable to train workers for a new exporting factory in the North-East when all the facilities are available in this area. Therefore, I hope that the Board of Trade will be sensible, in view of this prospect of millions of pounds worth of export orders. We have even made inquiries of American stores, which have been promising, although I would not have thought that a possibility.
How can one expect people to travel to and from the North-East making white softwood kitchen cabinets, when the plant and equipment and run off from home production is available here? We make millions of pounds' worth of this type of commodity for home consumption, and the existing facilities would help to cover export production. The Board of Trade puts every difficulty in the way of our entering the export market. If they do not want us to, we will carry on making enough money by production for the home market. One of my fellow directors told me that if he wanted to be awkward, he could say, " I have made enough money and could retire and spend the rest of my days on the golf course or touring the world. Instead, I worry about building up an export trade—yet all I get is difficulties put in my way by this Government, who claim to be all for exports."
Every time we try to get support from the Board of Trade, they put difficulties
1250
in our way, and they trot out the hoary old excuse that they do not want this development in the South. Yet they allow it in some places in the South. If we wanted to build a big office block there would be no difficulties—
The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody)The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody) indicated dissent.
Mr. Lewis: My hon. Friend shakes her head, but I could show her three big blocks of offices in my constituency which were built three years ago and are still empty. The Greater London Council had to take over part of one, a big white elephant in Stratford Broadway, because it had been empty for three years, and the other two are within a stone's throw of it. I can show her blocks on the way to London Airport— one is a Turriff development, I think— which have been empty for four years. Either her Department granted licences for them, or they were built without licences. That is not helping the export trade.
I am presenting the Board of Trade with an opportunity to see that something positive is done. This project would not mean a great deal of labour being tied up. Naturally the firm would need packers, watchmen and similar staff, but that is all. We would have an opportunity of breaking into new markets. Does the Minister appreciate that we are speaking of virgin soil in trade terms? Many under-developed Commonwealth countries want this furniture because it is cheap and good. It would help them, since it is suited to their climates, to develop a better standard of living and it would help our balance of payments.
I am tempted to say that I hope that, even at this late stage, my hon. Friend will be forthcoming on this issue, but I feel that I would be optimistic if I used the phrase, " I hope." Frankly, considering how Ministers of even the Labour Government listen to the advice of their civil servants, I cannot hope for too much. But perhaps the publicity that may be given to this debate will result in something positive being done, with Ministers sometimes making their own decisions, rather than always taking the advice of their advisers.
11.21 p.m.
The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody): I thank my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) for raising this subject. We are very conscious indeed of the need to do everything possible to facilitate the expansion of exports. We also attach the greatest importance to the objectives of the Government's distribution of industry policy. It is useful, therefore, to have the opportunity to discuss the problems which arise in pursuing these ends.
I know that my hon. Friend, who is a life-long Socialist, supports the basic aims of the Government's distribution of industry policy, which are, on the one hand, to encourage the development of industry in the less prosperous areas of the United Kingdom and, on the other, to contain the pressures on labour and other resources in the South-East and Midlands. I have no need to emphasise the overwhelming needs of the development areas for new jobs in manufacturing industry. In spite of all that has been done, their rates of unemployment are, in general, still well above the national average and some of their basic industries are still contracting.
As exports increase, the economy will move into an expansionary phase. We know only too well that unless we succeed in achieving a better regional economic balance, there will be signs of overheating in some parts of the country while there are resources still being under-used elsewhere. The Government's regional policies are designed to secure this better balance between different parts of the country and avoid the social and economic waste which lack of regional balance involves.
We have two main methods by which we seek to achieve these objectives. First, large financial and other inducements are available to industrialists setting up in development areas, and we are currently spending over £250 million a year on the development areas. This is because they need these sums to be expended on them. The need to obtain an industrial development certificate before new industrial building can be erected is the second instrument in the implementation of this policy; and if we are to achieve our aim, we must look critically at applications for major new
1252
projects or expansions in the most congested areas, which include, of course, London.
It must not be assumed from this, however, that we are completely rigid in our treatment of applications for industrial development certificates. On the contrary, each case is looked at most carefully to see whether the ties which the project may have with the area in question are strong enough to outweigh the advantages which a move of all or part of the production to an area where resources are under-employed would have for the economy. In deciding where the balance of advantage lies, all the relevant factors are taken into account, including exports.
A firm may claim that its exports will suffer unless it can develop where it chooses. This is a frequent line of argument. Particularly where a firm is already making a major contribution to the export trade, this is a factor to which we give full weight. But it must be remembered that today most firms, especially the more dynamic ones which are expanding, have an interest in exports. We cannot, therefore, always regard export considerations as overriding. Nor should we assume too readily that only in one particular location can the expansion of exports be achieved. I do not pretend that decisions on applications are alway easy, since there are often conflicting considerations to be taken into account, but I can say, and very forcibly, that each case is considered very carefully on its own individual merits.
My hon. Friend referred to the refusal of an application by Liden Products for a large extension to its factory at Tottenham. I am sure that the House will understand the reasons why we do not enter into detailed public discussion of individual applications, which would entail the disclosure of information given to the Board of Trade in confidence, but since this application has been raised I will try to be as helpful as I can.
This firm began production in North-East London in a small way after the war, and has since expanded rapidly to become a leading producer of whitewood furniture. Premises at Leyton and Tottenham have been acquired, mainly without the need to obtain an I.D.C., although when a comparatively small

1253
I.D.C. for an extension at Leyton was issued in 1960 the firm was told about the objections to further expansion in the London area, and it was emphasised that it should not rely on the approval of any further extensions.
The reasons why we have felt that this firm should be able to undertake any further major expansions away from the London area have been explained to it by my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) when he was Minister of State, Board of Trade, and by my hon. Friend the Member for Birkenhead (Mr. Dell), the present Minister of State, Board of Trade. The firm now wants to add a larger extension to its Tottenham factory, where it has already acquired certain additions, in order to release space for the expansion of production.
Like the rest of London, which has an unemployment rate of 1·5 per cent. compared with the national average of 2·4 per cent., this is an area where there are already adequate employment opportunities. Whatever may be the immediate demand for labour as a result of the expansion, I must say to my hon. Friend with the greatest possible respect that vacancies in Tottenham exceed the vacancies in the furniture trade generally. This is not an area where we are anxious to see major development with potential employment demands, particularly at a time when other parts of the country are in serious need of more employment.
It is true that the firm has argued that one of the advantages of having the additional space is that it would enable it to enter the export market with kits for local assembly, but I cannot conclude that this possibility of future exports, which the firm has had under consideration for some time, is in itself enough to justify allowing this further development involving new industrial building in London.
As I have said, I am very grateful to my hon. Friend for raising this matter, although I cannot agree that in the case of Liden Products there is sufficient justification for the issue of the I.D.C. I may say that this is a Ministerial decision—and I emphasise that—following
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very specific Government policy. If we are ever to do anything about the imbalance in our employment situation we shall have to drive most of the expansion which would go on in the London area to the less congested areas.
Mr. Arthur Lewis: The Minister must know, or ought to know, that since the original expansion, in West Ham, Leyton, Tottenham and Enfield, there has been a continuing shortfall in employment in the furniture industry. I could mention names of places along Westbury Road— big furniture factories. The place we have just taken is a former furniture factory. The hon. Lady speaks of 1·5 per cent. and 24 per cent of unemployment when my constituency is becoming a semi-derelict area because industry is going away from it. I agree that there is that percentage difference, but that does not mean much to the people there who are unemployed.
Mrs. Dunwoody: My hon. Friend will also realise that to say to a man where there is 8 or 9 per cent. unemployment in a development area that we are allowing expansion in an area where there are already more jobs available than people to fill them in this trade would be a negation of a balanced policy for the future of this country.
But I end on a more positive note for my hon. Friend. I remind him of the considerably increased incentives the Government offer to firms prepared to move production to or expand production in development areas. There is an opportunity for firms to help both themselves and the country and I hope that this firm will seriously consider the opportunities for expansion in the development areas. The Board of Trade will give every form of help it can if the firm is willing to consider a development area location and I am sure that, in the final analysis, this would not only lead to a successful development of the firm's business but would certainly do a great deal towards assisting a balanced programme of employment.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes to Twelve o'clock.

Second Reading Committee
Wednesday, 19th June, 1968
[MR. ARTHUR PROBERT in the Chair]

The Committee consisted of the following Members:

Mr. Arthur Probert (Chairman)

Binns, Mr. John (Keighley)

McKay, Mrs. Margaret (Clapham)

Blenkinsop, Mr. Arthur (South Shields)

Marten, Mr. Neil (Banbury)

Booth, Mr. Albert (Barrow-in-Furness)

Maydon, Lieut.-Commander S. L. C. (Wells)

Davies, Dr. Ernest A. (Stretford)

Dodds-Parker, Mr. Douglas (Cheltenham)

Norwood, Mr. Christopher (Norwich. South)

Evans, Mr. loan L. (Birmingham, Yardley)

Park, Mr. Trevor (Derbyshire, South-East)

Hamilton, Lord (Fermanagh and South Tyrone)

Rodgers, Mr. William (Under-Secretary of State for Foreign Affairs)

Jenkins, Mr. Hugh (Putney)

Judd, Mr. Frank (Portsmouth, West)

Wall, Mr. Patrick (Haltemprice)

Lambton, Viscount (Berwick-upon- Tweed)

Walters, Mr. Dennis (Westbury)

Luard, Mr. Evan (Oxford)

Wood, Mr. Richard (Bridlington)

Mr. G. S. Ecclestone, Committee Clerk.

INTERNATIONAL ORGANISATIONS BILL [Lords]
10.30 a.m.
The Under-Secretary of State for Foreign Affairs (Mr. William Rodgers): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the International Organisations Bill [Lords] ought to be read a Second time.
This Bill is designed to improve and bring up to date the legislation under which international organisations function in the United Kingdom. Its objects fall under three broad headings: first, to remedy technical defects in existing legislation; second, to make more adequate legislative provision for the implementation of our international obligations; and, third, to make it possible to bring United Kingdom practice nearer
to the practice of our fellow members of international organisations. It is a practical and unspectacular Measure but one which recognises the developing rôle of international organisations in world affairs and the wish, I am sure, of all of us to play a full part in them.
May I underline the basic philosophy behind the Bill before we get lost in detail or sidetracked by certain aspects of it looked at in isolation? At least since 1945, it has been the consistent policy of Governments of both main parties to support the creation and maintenance of international organisations to carry out inter-governmental functions. The United Nations with all its agencies is the outstanding example. We all believe in

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collective and co-ordinated activity in the economic, social, technical and political fields, and the area of it is increasing. But if we in Britain welcome the growth of international co-operation we must provide the means to make it effective and keep in step with the approach and practices of other countries. That is the purpose against which this Bill must be judged.
There; is also the question of encouraging international organisations to set up their headquarters or permanent establishments in this country. If we are genuine in our enthusiasm for international co-operation, we should be ready—perhaps even eager—to welcome organisations here. To be more hard-headed, the financial and political and perhaps commercial advantages are obvious. But if we want to act as hosts, we must treat international organisations properly and offer conditions comparable with those which other countries are prepared to offer. This Bill is designed to enable as to do just that.
The Chairman: Order. I regret to inform the hon. Member for Rhondda, East (Mr. G. Elfed Davies) that he is not a member of this Committee. I must ask him, please, to withdraw.
Mr. G. Elfed Davies: All I can say, Mr. Probert, is that I have had a notification to be here.
The Chairman: In the circumstances, perhaps the hon. Member will kindly withdraw for the moment. I will have it checked, but he is certainly not on my list.
Mr. Rodgers: I hope that international organisations which we may welcome here will order their affairs more clearly than we appear to have done.
There is one further important point, which, I think, is the heart of this Bill, and that is that it is an enabling Bill. In this it follows the basic structure of the International Organisations (Immunities and Privileges) Act of 1950. The principal Clauses—Clauses 1 to 5—contain powers enabling Orders in Council to be made to give effect to agreements relating to particular organisations and their staff. These will require an Affirmative Resolution of the House. Thus Parliament will exercise direct control over each agreement. Only Clause 6, which
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contains similar provisions relating to conferences, which are obviously in a different category, requires an Order subject to the negative procedure.
I have mentioned " immunities and privileges " and will do so again. It is a phrase which I know from experience tends to make the hackles rise. It conjures up for some a vision not unlike that of a wartime profiteer—sleek and well-heeled, a cut above ordinary men, living on cheap petrol and cheap gin. But immunities and privileges applied to diplomats or consular staff or the staff of international organisations are much more prosaic in their origin and rational in their intentions and reflect the mutual needs of the Governments or organisations concerned. They are designed to provide the appropriate degree of independence for organisations so that they can perform their duties effectively and in the interest of all their members.
Even the hoary old issue of wines and spirits free of Customs duty derives directly from the sound rule that the host Government should not tax other Governments through their representatives. In the case of international organisations, it is surely right that the host Government should not seek to gain a fiscal benefit from the presence in its territory of the staff of an international organisation financed by many Governments.
There is, in fact, a vital principle involved in the functional independence of international organisations. There are three main aspects of that. First, an international organisation needs a status which protects it against interference by any one government in the discharge of its responsibilities to all its member Governments. There is, first, that need for protection. Secondly, no one Government should derive undue financial advantage by levying taxes or charges which are borne ultimately by collective funds. Again that is a wholly defensible principle. Thirdly, an international organisation should be accorded immunities and facilities for the conduct of its official business, which represents and reflects the sovereign character of its individual member States.
May I emphasise today, as I did on the Consular Relations Bill some time ago, the obvious element of reciprocity? This is not a one-way traffic in which we give and gain no advantage. The United

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Kingdom benefits from the practical application by other Governments of the principle of the functional independence of international organisations, since it is in the United Kingdom's interest that the organisations should be effective and should give good value for the money contributed by members. We, too, must play our part by providing suitable conditions for the operations of international organisations in the United Kingdom.
This is a matter of practical need and not, as is sometimes argued, a mere matter of enhancing the personal status of the individuals who work for international organisations. Their status is not for their own enjoyment but for the benefit of the organisation to whose service they are pledged, that is to say, ultimately for the benefit of all the members, which, of course, would include the United Kingdom.
International organisations and their officials are relative latecomers to the world scene, but the immunities and privileges, as I must call them, of diplomatic missions—although established generally in international law for two centuries—have been codified only as recently as 1961 by the Vienna Convention on Diplomatic Relations, which I know is familiar to some members of this Committee. It is not surprising, therefore, that so far there has been no comparable codification in respect of international organisations.
This is one of the subjects on the Agenda of the International Law Commission of the United Nations, and, on a United Kingdom initiative, a study of the subject is also going on in the Council of Europe. Eventually these studies may lead to the conclusion of a general international Convention laying down the guidelines for the grant of immunities and privileges to international organisations and persons connected with them. I hope so. Meanwhile, we need legislative power to give effect by Order in Council to the separate Agreements with international organisations which we have at present or may wish to conclude.
The basic structure of the International Organisations (Immunities and Privileges) Act, 1950 has been retained in this Bill. The most important innovations are to be found in Clauses 2 and 3.
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The purpose of Clause 2 is to give power to reduce the existing discrepancy between the treatment which we give in the United Kingdom to senior staff working at the headquarters of a Specialised Agency of the United Nations and the treatment which their colleagues of the same rank in the Headquarters of other Specialised Agencies enjoy in other countries, for example, Italy, France, Switzerland or Canada. Under bilateral headquarters agreements between other Specialised Agencies and their host States, senior staff are given an entitlement to virtually all the privileges and immunities of diplomats.
We are not able to follow suit as, under the International Organisations (Immunities and Privileges) Act, 1950, we have no power to make any distinction of treatment between the senior professional staff of the headquarters of a Specialised Agency and their secretaries or their clerks. The only distinction of treatment possible under the 1950 Act is that between a "high officer"— that is, an officer in one of the top posts —who is equated for this purpose to the head of a diplomatic mission—for example, an ambassador—and all the rest of the staff. We cannot at the moment make any greater distinctions than that.
The proposals in Clause 2 deal only with privileges. As I have said, they do not change the position whereby staff members other than high officers are immune from the jurisdiction of our courts only in respect of their official acts—and I emphasise that.
By introducing into the existing arrangements an improved régime for senior professional staff, a structure of privileges would be created for the headquarters staff of a Specialised Agency which would be not unlike that which is applied to diplomatic missions under the Diplomatic Privileges Act, 1964. With diplomatic missions, the scale of privileges is reduced progressively from that applied to the head of the mission, the Ambassador, via the scales for the diplomatic staff—whose privileges are rather less than those of the head of the mission —and the technical and administrative staff right down to the domestic service staff.

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Clause 2 proposes no change in the privileges of the high officer or officers, or of the technical, administrative or service staff. The domestic service staff of international organisations have in most cases no entitlement whatever to immunities or privileges. But it would interpose a new scale of privileges for officials whose duties and responsibilities are comparable with those of diplomats. Again I would emphasise that there is comparability between international organisations and missions of one country in another. It would give power to accord to these officials the same qualified exemption as is given to diplomats in respect of the taxation of income or capital gains arising overseas, and in respect of rates, and the same customs privileges as are given to diplomats.
We regard this proposal to bring the United Kingdom practice nearer to the practice of other member States of the United Nations as a necessary and obvious improvement for a country which is most concerned to prosper international co-operation and to support the Agencies of the United Nations. Only one Specialised Agency of the United Nations, the Inter-Governmental Maritime Consultative Organisation— I.M.C.O.—has established its headquarters in this country. That organisation does valuable work mainly in maritime safety. It is the organisation dealing principally with the problems which have arisen internationally as a result of the Torrey Canyon incident. We are concerned to provide the members of its senior staff with something nearer the "diplomatic" standard of treatment which they could expect to enjoy if the headquarters of the organisation were situated in another country.
May I emphasise that those who now work for this organisation, from which we, as a member State, gain many benefits, would be substantially better off if its headquarters were situated elsewhere. That is one of the principal anomalies which we think should be cleared up by this Bill. Equally, we think that those who work for an organisation of that importance should have standards more nearly approaching those of diplomats serving on behalf of foreign countries in the United Kingdom.

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We wish to follow the established practice of other host States to Specialised Agencies of the United Nations by concluding a bilateral headquarters agreement between Her Majesty's Government and I.M.C.O. A resolution was adopted by the Assembly of I.M.C.O. in 1963 approving the principle of a supplemental Agreement based on accepted principles governing the United Nations Specialised Agencies, to be concluded between the organisation and the United Kingdom. I am glad to say that the resolution also mentioned the co-operative spirit of the United Kingdom during the organisation's formative years—a cooperative spirit to which we are hoping to give continuing effect in this Biill.
As a result of this resolution, there have been talks, followed by negotiations, which both Her Majesty's Government and I.M.C.O. are concerned to bring to a conclusion in the near future. A draft of the proposed Headquarters Agreement has been drawn up and has recently been approved by the Council of I.M.C.O.; but it cannot be signed unless power is given in this Bill to make the privileges of senior staff comparable to those of their colleagues in the headquarters of other Specialised Agencies in other countries. If the Bill reaches the Statute Book, we intend to lay before Parliament a draft Order in Council applying the provisions of Clause 2 to I.M.C.O. so that the headquarters agreement may be concluded.
Clause 3 replaces and amends the European Coal and Steel Community Act 1955. The High Authority of the European Coal and Steel Community has been subsumed in the new Commission of the European Communities, which is the joint executive organ of the European Economic Community, the European Atomic Energy Community and the European Coal and Steel Community—a change with which all Members are familiar. The references in the 1955 Act to the Chief Representative of the High Authority of the European Coal and Steel Community are no longer appropriate. The Delegation has remained in London representing the Commission of the European Communities, and our law should reflect this new situation.
Clause 3 would also give power to accord to the senior professional staff of the Delegation of the Commission of the

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European Communities certain privileges additional to those provided by the European Coal and Steel Community Act, 1955, to which I have just referred. We need this authority to empower us to give staff of the Delegation whose duties and responsibilities are equivalent to those of diplomatic agents—I return once again to this important point-parity of treatment with the treatment which the members of the United Kingdom Delegation to the European Communities enjoy in Brussels by courtesy of the Belgian Government. Again, we have the important principle of reciprocity. We benefit, and we ought to offer to others the benefits which we expect for ourselves.
If the Bill becomes law, we intend to lay before Parliament a draft Order in Council regulating the status of the Delegation in the United Kingdom of the Commission of the European Communities.
There are five further points about the Bill which I think it would be helpful for me to speak briefly at this stage so that there will be no question of my not having put the picture as fully to the Committee as I can in the time which it is reasonable to take.
Section 3 of the 1950 Act gives power to confer immunities and privileges on judges, suitors, counsel and so on, but only in regard to the International Court of Justice. Clause 5 of the Bill extends this provision to cover comprehensively persons participating in proceedings before any person or body exercising judicial, arbitral, fact-finding or conciliatory functions under the terms of an international agreement. This would enable the United Kingdom to become a party to a proposed Council of Europe Agreement, which I know that my hon. Friend the Member for South Shields (Mr. Blenkinsop) and others will approve, and it will relate to persons participating in the proceedings of the European Commission and Court of Human Rights.
The 1950 Act provides for the inviolability of premises only when these are occupied as offices. International agreements do not in general contain a comparable limitation. As more international organisations are established for scientific and technical purposes, difficulties could arise in relation to premises used

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as laboratories or workshops. Paragraph 2 in Schedule 1 of the Bill would remove the limitation, and enable the United Kingdom to meet its international obligations in respect of premises. We would do everything, of course, to ensure that any organisation which set up an establishment in the United Kingdom was placed under an express obligation, so that the needs of safety and public health as well as of law and order are safeguarded. I give that undertaking.
In 1963 the Government of the day acknowledged that the United Kingdom was in breach of its international obligations in not according a qualified rating relief to the high officers of certain international organisations and undertook to introduce legislation to confer that relief. Statutory cover is now, so many years later, proposed in paragraph 9 of Schedule 1 of the Bill.
The opportunity of the Bill is being taken to propose, in paragraph 13 of Schedule 1, that international organisations be exempted from United Kingdom social security obligations in respect of foreign staff. This exemption is accorded to diplomatic missions by virtue of Article 33 of the First Schedule of the Diplomatic Privileges Act, 1964. That Act is very largely concerned to remove or at least modify existing anomalies. It is an anomaly that international organisations and their foreign staffs have remained liable to pay National Insurance contributions.
My final point is about the terminology used. The references in the Schedule of the 1950 Act to
"an envoy of a foreign sovereign power"
and
"the retinue of such an envoy"
are delightfully old-worldly but out-of-date. In the Schedule of the Bill hon. Members will find the terms used in the Diplomatic Privileges Act, 1964 and now established in international usage—"head of a diplomatic mission" "diplomatic agent" by which we mean "agent" as we understand it, and "technical and administrative staff ". We hope that the use of these terms will make it clear that clarification, when needed, is to be found in the Diplomatic Privileges Act.
To sum up, in broad terms the Bill is designed to enable us to treat certain international organisations and their staff

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as well as they are treated in other countries and in circumstances similar to those prevailing for the missions of other countries and their diplomats. Our immediate intention is to carry out our obligations to the one United Nations Specialised Agency in the United Kingdom, I.M.C.O., and to regularise our relationship with the London Delegation of the Commission of the European Communities.
I have tried to make my introductory remarks short, but I shall be glad to discuss points of detail either in replying this morning, or, perhaps more appropriately, at the Committee stage. I hope that hon. Members feel that this is a useful Bill and one entirely in keeping with our support for international organisations as one means, however small, of achieving ordered co-operation in a disordered world.
10.55 a.m.
Mr. Richard Wood: As this is the first time on which I, and no doubt other hon. Members, have sat in a Committee of this kind, I hope, Mr. Probert, that you will be gentle with any lapses that we may make from the established procedure.
When the noble Lord, Lord Shepherd, introduced this Bill in another place he described it as a complicated Bill and I think that all of us are grateful for the Under-Secretary's lucidity which has certainly dispelled a certain amount of the confusion which existed in my mind.
During the debates in another place, the spokesman for the Opposition, the noble Lord, Lord Bessborough, put a number of questions to the Government spokesman. Almost all of them, I am glad to say, were answered to the complete satisfaction of my noble Friend and myself. Therefore I can promise the Committee that my speech on this occasion will be unusually short.
Recently, in this room, we discussed the Consular Relations Bill, as the hon. Gentleman reminded us, which in itself was the natural companion of the Diplomatic Relations Bill which came earlier. The Opposition clearly have no objection in principle to the bringing up-to-date of the International Organisations (Immunities and Privileges) Act 1950, in order to provide, as I understand it, this modern tripod with the third leg which it needs.

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In order to justify the Measure, the noble Lord, Lord Shepherd, used these words:
"… we should do what we can to attract these international organisations to this country since we receive a certain amount of ' spin-off '."—[OFFICIAL REPORT, House of Lords, 29th April, 1968; Vol. 291, c. 932.]
The Under-Secretary has used slightly different words today, but he has spoken in the same sense. I understand the noble Lord was using that metaphor in the sense other than that in which it is generally understood in cricketing circles. In the cricketing sense we have recently had evidence that "spin-off" can be extremely uncomfortable.
Most of us, however, would agree with the noble Lord, and the hon. Gentleman, that it is very much to our advantage to act as hosts to international organisations and to be willing to pay a modest price in privileges and immunities for doing so. But I believe that there are two reasons why we should be a little cautious. The first has been mentioned by the hon. Gentleman—the rapid multiplication of such international organisations during the last two decades, and, as far as any of us can see, their likely similar growth in the future.
As ease of travel continues to contract the world, and as it becomes more and more plain to most of us that it is only by surrendering a greater degree of national sovereignty that nations as we at present know them can survive, we have before us the prospect of an almost infinite expansion of international organisations in which Great Britain will be expected to play her part. Therefore, we may, in the years to come, be making by this Bill a very significant addition to the total of immunities which we at present accord to those international organisations which exist at present, on top, of course, of the immunities that we accord through the other two Acts which I have mentioned. This is not to argue against making any such additions, but it is, in my opinion, a reason for doing so with caution and with a full awareness of what we are doing.
The second reason for caution is, I believe, more important. It is clearly impossible in the case of these immunities —and I think the hon. Gentleman, although he put it in a slightly different way would probably agree—unlike the

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privileges we accord to diplomats and consuls, to insist on exact reciprocity. We can hope that organisations in other countries in which we are represented will be treated in the same way, but this is not the exact reciprocity which we can insist on in the case of diplomats and consuls. But before making Orders in Council under the various Clauses of this Bill, I assume, and would like reassurance on this at the end from the hon. Gentleman—I think he has already gone a good deal of the way to giving it—that the Government intend to satisfy themselves that the foreign sovereign powers who will benefit from the immunities under the Bill are prepared, or would be prepared, to accord the same privileges to our nationals in comparable circumstances.
I am not quite clear about the distinction which is made, at the very heart of the Bill, in Clause l(1)(a). between an organisation of which the United Kingdom is a member and an organisation of which Her Majesty's Government in the United Kingdom is a member. Presumably, and I understood the hon. Gentleman's speech in this sense, the organisations with which this Bill is concerned are governmental or quasi-governmental, because there are a whole host of other organisations of which the United Kingdom is a member. It is a vast range, which deals with sport and the arts and special interests, which, I presume, would not qualify for the protection provided by the Bill.
I have acquired a long list of these organisations, some of which presumably have their main headquarters in this country. I assume that it is not the intention of the Bill, however worthy the confederation may be, to accord these privileges to the International Confederation of Accordionists, which I see is represented in this country, or indeed, the War Resisters' International or the World Peace Brigade, which I see have their office at the same address. Then there is the English Speaking Union, which is a very estimable body, but one which I would think would hardly qualify for inclusion here, and the International Council Against Bullfighting, which some of us may or may not support, but which I doubt would qualify under this Bill. Lastly, I want to mention, out of this

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long list, the British Empire and Commonwealth Weight-lifting Council, which has its headquarters at Oxford.
Will the hon. Gentleman, when he replies, make quite clear whether the only organisations to which the Bill refers are the governmental or quasi-governmental organisations. Perhaps, in doing so, he would also explain the apparent distinction which is made in Clause 1(1)(a) between the United Kingdom and Her Majesty's Government in the United Kingdom.
Next, the hon. Gentleman told us about the new arrangements for the specialised agencies of the United Nations. I have been trying to find out which specialised agencies have their headquarters here. So far I have not been able to do so. Are there any at the moment in this country, and what are the prospects of other agencies coming here?
Lastly, on this point, Clause 4 is headed:
"Other organisations of which United Kingdom is not a member."
Can the hon. Gentleman give us a little information about what privileges we are giving to organisations in which we are apparently not represented?
I do not think he went into detail about it, but I appreciate the explanation given by the noble Lord, Lord Shepherd, of the different arrangements proposed for Orders in Council, under Clauses 1 to 5 on the one hand, and Clause 6 on the other. In the debate in another place, the noble Lord explained that most of these latter Orders in Clause 6:
"… will be in regard to conferences which are for a very short period, and therefore it would be cumbersome if such Orders were required to go through both Houses."— [OFFICIAL REPORT, House of Lords, 29th April, 1968; Vol. 291, c. 936.]
I understand and appreciate that point but, for the Orders under Clause 6, I notice that the privileges and immunities to be accorded under Part II of Schedule 1 can be conferred only on the nationals of a foreign power if that foreign power has attained its sovereignty.
Would the hon. Gentleman tell us what has been in the past, and what is to be in the future, the position of those taking part, for instance, in a conference which is concerned with the constitutional future of a non-sovereign territory? I

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understand that Clause 6 deals in the main with conferences which are going to set up organisations, but does it apply to all international conferences? If so, does it apply to conferences with nations that have not yet attained their sovereignty? If such nationals are not protected, is there not a case for affording them the protection which is afforded to other temporary bodies under Clause 6?
I return to a point which I made earlier about the need for caution. Is the hon. Gentleman completely satisfied that all foreign nations, for the benefit of whose nationals we may be prepared to afford some or all privileges and immunities listed in Schedule 1, have the power to grant similar privileges and immunities in comparable circumstances for international organisations in their own countries?
While agreeing with the principle of the Bill and its necessity, my hon. Friends and I were concerned when we considered the Consular Relations Bill that, as far as possible, there must be a quid pro quo and that we should not be willing to extend—I think that the hon. Gentleman will give us complete satisfaction on this—the widening field of immunities unless it is clearly in the interests of this country to do so.
11.7 a.m.
Mr. Douglas Dodds-Parker: I intervene briefly because, in the past few years, I have participated on both sides of the fence in this issue. Hon. Members are particularly jealous on this question of privilege and immunity and we must be careful on this occasion that we do not remove from the House itself, or certain Members of the House—I do not regard this as a matter of party dispute—what some of them may regard as a fundamental matter of Parliamentary importance.
This is the first time that my right hon. Friend the Member for Bridlington (Mr. Wood) and I have sat in Committee under these new rules. It may well be useful to carry out the procedure in this way, but we must safeguard this point which I know from past experience is one on which a large number of hon. Members on both sides of the House of Commons feel very strongly.
Except sometimes for those given to ourselves, Parliament, for a long

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time, has been very jealous of giving privileges and immunities. It has been particularly jealous of giving them to people who come from overseas. I do not think that this arose before the war in any substantial way, but since 1945 there has been a considerable growth in the number of international organisations and of individuals who are not, in the proper sense of the word, diplomats.
I think that it is quite clear to the public outside, if they ever have this matter brought to their attention, that this Bill does not extend in any way the privileges and immunities of diplomats as such. There is a strong feeling, which I share with my right hon. Friend the Member for Stafford and Stone (Mr. Hugh Fraser) that certain diplomats have taken undue advantage on occasions in the past of their privileges and immunities. The Bill is designed to encourage international organisations to make their headquarters in this country by giving them the solemn rights and privileges which are enjoyed by international organisations in other centres. If there is any disadvantage and there is the occasional shortcoming by individuals, I feel very strongly on balance that it is well worth while having international organisations here.
I hope that the Under-Secretary's remarks about wartime profiteering will not be ascribed to any existing international organisation or to any particular diplomatic establishment. Not having met any wartime profiteers, I am no judge of exactly what is meant by that term. I have noticed over the years that few categories, if any, of honourable and less honourable Members of the House of Commons or the public have held back from enjoying the benefits of tax-free wines. I have noticed too, if I am not out of order in saying so, that very often those who advocate stronger action —both private individuals and businesses —about having a certain amount of hospitality available for others are those individuals who most enjoy the hospitality which is offered to them from time to time by international organisations.
If there are shortcomings on occasions on the part of some international organisations, these are well offset, in my opinion, by the advantages of having

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them with us. It is not just some relatively small, material advantage of having them spend a certain amount of money in our country; it is the great value of having international organisations here with which we as individuals, and other organisations in our country, can co-operate, discuss things in private and work out joint projects together. This is not an advantage only for Members of Parliament or officials. It is an advantage also for private citizens, business people, and so on.
The United Nations Specialised Agencies are covered by the Bill. As far as I know there is none already established. I wish there were. My right hon. Friend the Member for Bridlington spoke about a quid pro quo. My own experience is that foreign countries have been very forthcoming in giving diplomatic privileges and immunities to international organisations, and that is why those organisations find it better to go to other places than to come here.
When the Under-Secretary replies to the point raised by my right hon. Friend on the phrase "representatives of a foreign sovereign Power" in Clause 6(2), will he say whether I am right in assuming that that would include any member of a Commonwealth country who recognises the Queen as Head of the Commonwealth and that such members are not precluded, if they take service in an international organisation, from enjoying these privileges?
Recognising the correct jealousy of Parliament about extending diplomatic privileges and immunities, I regard the Bill as desirable. I regret that few organisations have hitherto established themselves in this country, and I am delighted that I.M.C.O. has come to rest here. I believe that our failure be as forthcoming as other countries in giving them certain benefits has discouraged international organisations from coming here. I hope that in future the Bill will cause a number of international organisations to come here. I believe that it will be to their benefit, and certainly to ours.
11.14 a.m.
Mr. Frank Judd: I welcome this significant Bill. It is significant not only in terms of the practical measures which it is putting forward but also because it

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gives some substance to our claim that it is our intention increasingly to work through international agencies in our foreign policy. The events of recent months have indicated very clearly that, although the pressures on Britain are no less great than they have ever been in our history and in some ways are far greater, we are no longer in the traditional position which was ours in history to police and look after our interests alone.
As a country, not just from an idealistic standpoint but from a very practical standpoint in foreign policy, increasingly we shall have to work through international agencies to further our own enlightened self-interest. From this standpoint, it is tremendously important that Measures such as this Bill should be speedily implemented so that we can demonstrate our good faith.
In support of those who have already raised this issue, I hope that the responsible Ministers will never miss an opportunity to discuss with the Secretary-General of the United Nations and others the possibility of introducing into London the work of some of the Specialised Agencies.
11.16 a.m.
Lieut.-Commander S. L. C. Maydon: I am sure that the Bill is worthy of a Second Reading, but there are two points upon which I wish to be reassured by the Under-Secretary.
We note that both Houses of Parliament will have direct control, through the Order in Council procedure, over the agreements with individual organisations. No sensible person objects to the immunities and privileges so authorised, but we want to make sure that everybody plays the game according to the same rules.
Unfortunately, in the past there has been considerable evidence that this is not so. For example, Ethiopia, a country which I have never had an opportunity to visit, is often mentioned in the Press and elsewhere as an undercover base, under diplomatic immunity, for all sorts of Iron Curtain and Bamboo Curtain organisations with undesirable activities in Africa. I do not know whether that is so, but it is certainly well known that many diplomatic and other missions in

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Ethiopia have on their staffs large numbers of persons, quite out of proportion to their requirements. That is a situation against which we in Britain have to protect ourselves. Would it be possible in each of these individual agreements to specify the number of persons authorised to be covered by them?
Secondly, when it is evident that the agreement is being abused for undercover subversion or used as an excuse for outrageous behaviour—I instance recent incidents in London concerned with Chinese so-called diplomats—what sanctions can we bring to bear to discourage and prevent such abuses?
One detail arises out of what the Undersecretary said concerning Clause 2(2)(a). It reads:
"… exemption or relief from income tax, capital gains tax and rates …"
When referring to capital gains, I thought that the hon. Member said, "arising overseas". If that is so, I am well satisfied, but I want to be sure that people covered by these future agreements do not indulge in speculation in property or in industrial equities in this country. For them to do so would be quite wrong, and it must he excluded. If I have an assurance on that point, too, I shall be well satisfied.
11.18 a.m.
Mr. Arthur Blenkinsop: I intervene only to ask a question before the Under-Secretary of State replies to this short debate. Like my hon. Friends, I am pleased that the Government are at last bringing forward this Measure. We have had to wait a long time for it in view of promises which were made a long time ago.
In this connection, what timetable have the Government in mind in relation to the Orders, which are the important point, in a sense, arising from the Bill? We shall be interested to see those Orders when they are laid and interested to see the bodies to which the provisions of the Bill will apply. Are the Orders more or less ready now? Will they be brought before the House immediately after the passing of the Bill?
11.20 a.m.
Mr. Rodgers: May I have leave to reply? I shall try to reply to some of the points made, but I hope that the
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Committee will forgive me for the fact that in this new procedure it is not easy, at the end of a Second Reading debate, to deal in detail with all the issues raised, certainly not without engaging the Committee for longer than, I am sure, it would like.
I am most grateful for the welcome which has been given to the Bill from both sides of the Committee and for the clear appreciation of its purpose. I can certainly give the assurance requested by the right hon. Member for Bridlington (Mr. Wood) about being cautious and vigilant in introducing Orders. The fact that we intend to have Orders which would require the affirmative procedure gives the House an important safeguard. In addition, we shall take every care to make sure that when we introduce the Orders they satisfy the proper concern of the House about immunities and privileges and about the behaviour of those who come here.
Further, in answer to the hon. and gallant Member for Wells (Lieut.-Commander Maydon), I would say that our final safeguard is the good sense of the international organisations. He mentioned an unhappy example last summer, but that concerned not an international organisation but the mission of a country with whom our relations are far from normal. We may, therefore, assume that if all international organisations here are conducted as they have been conducted in the past, here and elsewhere, there is no danger of the abuse against which he properly warned us and which might cause offence to many people.
In passing, I can also give him the assurance which he required—he was quite right—that the question of capital gains arises on investments in other countries and not on investments in the United Kingdom.
Lieut-Commander Maydon: Is it possible to specify the numbers in each case?
Mr. Rodgers: I do not think so. If an international organisation, of which we were a member, were functioning in another country, the important point is that it should be free to function as under the aegis of all member States and free to make its own decisions about the

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level of its staff. It would be difficult, in the first place, to set out numbers, because we should not know how many staff would be required in changing circumstances. More important, it would be a restriction which might have unsatisfactory consequences if international organisations were situated not in the United Kingdom but in other countries which were less responsible or perhaps less scrupulous. It might be a method by which they could affect the numbers of staff for their own purposes by placing this restriction on them. I do not think that it would be desirable to set out numbers, and I could not give an undertaking in that respect. At the end of the day we must rely mainly on their good sense.
But I can give the right hon. Member for Bridlington an undertaking that the privileges and immunities in the Bill will not apply to bull fighting, draft resisting or weight lifting. A distinction is made between States and Governments, but that has no practical significance. It is a formula which merely follows that already used, which varies from time to time in Agreements reached between States.
My hon. Friend the Member for Portsmouth, West (Mr. Judd), in welcoming the Bill, said that he hoped that we should not miss an opportunity to attract other organisations here. In my speech I said that the only one of the Specialised Agencies of the United Nations at present in London is I.M.C.O. If we found it possible—and it may prove easier under this Bill—to attract other Specialised Agencies to London to establish their headquarters here—we should certainly seek to do so.
There are some international organisations of which we are not eligible to be members. They are often organisations of a regional character. For example, there is an inter-African coffee organisation which, for very good reasons—and it might be in our commercial interests that it should do so—might want to establish a headquarters or a mission of some kind here. But as the Committee has seen, in the Bill the privileges and immunities for such an organisation would be of a very restrictive kind, and at present none is given to any organisation.
The right hon. Gentleman made some points about Clause 6 and conferences

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which I will consider further. However, the answer to him is that any people attending these conferences, wherever they may come from, will be protected under the Bill, although the Bill does not apply to the Commonwealth, which has its own arrangements, and we can see that new international organisations for Commonwealth co-operation are encompassed by the Commonwealth Secretariat which is dealt with in separate legislation.
I am afraid that I cannot at the moment give the right hon. Gentleman Chapter and verse about how far other countries have the power to grant the facilities envisaged by this Bill. But, as I said, if we consider the present Specialised Agencies of the United Nations—for example, F.O.A. in Rome; U.N.E.S.C.O. in Paris; I.L.O. in Switzerland; and the International Aviation Authority of Canada—we see that in all these cases they receive privileges and immunities which are at least comparable with those which are set out in this legislation.
We shall, of course, seek to introduce the Orders as soon as possible. I am sorry that at the moment I cannot give a date for them. But I will try to help my hon. Friend the Member for South Shields (Mr. Blenkinsop) at the Committee stage. It is sometimes wise in the conduct of Parliamentary business, even with non-controversial Bills, to consider getting the Bills through first before being hard and fast about the likely time-table. If I can help my hon. Friend I will certainly do so when we reach the next stage of the Bill.
I am grateful for the attention which has been given to this Measure this morning. It has been grasped that the object is to equate the immunities and privileges of international organisations— which have, as I said, rational foundation—more nearly with those available to the organisations elsewhere and with those available to diplomats in this country.
As my hon. Friend the Member for Portsmouth, West said, the Bill gives some substance to our claim that we wish to use the Specialised Agencies of the United Nations as far as possible and to give them our full support. I hope

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that the Bill will now receive the Committee's approval.
Question put and agreed to.
Ordered,
That the Chairman do now report to the House that the Committee recommend that the International Organisations Bill [Lords] ought to be read a Second time.
Mr. Rodgers: Under the procedure which we follow, I have a privilege which would be denied me on Second Reading on the Floor of the House—the privilege of thanking you, Mr. Probert, for your patience in presiding over our proceedings this morning and for enabling us to

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Probert, Mr. (Chairman)

Luard, Mr.

Binns, Mr.

McKay, Mrs.

Blenkinsop, Mr.

Marten, Mr.

Booth, Mr.

Maydon, Lieutenant-Commander

Davies, Dr. Ernest A.

Park, Mr.

Dodds-Parker, Mr.

Rodgers, Mr. William

Evans, Mr. loan L.

Wall, Mr.

Hamilton, Lord

Walters, Mr.

Judd, Mr.

Wood. Mr.

get through the business in such a temperate way at such an early hour.
Mr. Wood: I hope that I may be forgiven for speaking a second time in order to second that expression of thanks. May I thank you very much, Mr. Probert, for presiding over the Committee and express regret that the only executive action which you were called upon to perform was the removal of an hon. Member who, in fact, was not a member of the Committee. As the Under-Secretary said, I hope that we shall examine very carefully our own immunities and privileges.
Committee rose at twenty-nine minutes past Eleven o'clock.