HC Deb 13 May 1970 vol 801 cc1341-89

(1) Where, in accordance with the provisions of this section, a special banking account (hereinafter referred to as an Employee's Saving Account ') is opened on behalf of an individual, he shall be entitled, on making a claim in that behalf, to such relief from income tax as is provided in this section.

(2) An Employee's Saving Account shall be an account deposited with a joint-stock bank or with a trustee savings bank or such other institution as the Commissioners of Inland Revenue may on application approve, and the Commissioners shall on application approve an institution which is in their opinion capable of handling such an account, bearing in mind the conditions hereinafter provided, the interests of persons on whose behalf accounts are opened and the need to protect Her Majesty's revenue.

(3) An Employee's Saving Account shall be operated subject to the following conditions—

  1. (a) it may be opened by an employer on behalf of his employee;
  2. (b) sums of money, stocks and shares or other securities may be placed in an account by an employer on behalf of the holder of the account;
  1. (c) the total value of any moneys or shares or securities so deposited in an account shall not exceed in any year of assessment the sum of two hundred pounds;
  2. (d) without prejudice to paragraph (f) below, no other money may be paid into an Employee's Saving Account, nor any other shares or other securities deposited there;
  3. (e) any moneys or shares or other securities deposited in an account shall thereby become the sole property of the individual on whose behalf they have been deposited and this shall not in any way be affected by any subsequent change of his employment;
  4. (f) any individual on whose behalf an account has been opened may at any time at his own discretion sell shares or other securities held in this account, may withdraw or leave in the account the money raised by such sale, may purchase new shares or securities with funds standing to his credit in the account, or withdraw any money standing to his credit in the account;
  5. (g) any joint-stock bank or other approved institution may offer and pay interest on moneys deposited in an account; and
  6. (h) no person may have more than one Employee's Saving Account opened on his behalf.

(4) Where the total income of an individual for the year of assessment includes, or would but for this section include, any sum deposited in an Employee's Saving Account by his employer on his behalf, or any sum equal to the value of shares or other securities so deposited, such sum shall be disregarded for all the purposes of the Income Tax Acts other than the furnishing of information:

Provided that in the event of any individual withdrawing any money or securities from his account an amount shall be chargeable to Schedule E income tax upon him for the year in which the withdrawal takes place equal to the amount of the money withdrawn from the account or, in the case of shares or other securities, their original value at the time at which they were so deposited.—[Mr. Richard Wainwright.]

Brought up, and read the First time.

Mr. Richard Wainwright

I beg to move, That the Clause be read a Second time.

The Deputy Chairman

I think that it would be convenient to discuss at the same time new Clause 3, Contractual investment schemes.

Mr. Wainwright

This Clause is based on an approach which has inspired a number of Amendments and new Clauses on Finance Bills moved from this Bench since 1956. Each time there has been both support and opposition from hon. Members of both other parties. Most of the opposition has been confined to matters of relative, although often important, detail, and in successive years, in drafting further new Clauses, we have tried to take account of the criticisms made— not that we claim, as a band of purely amateur draftsmen, to have achieved anything like perfection in the drafting of the present new Clause.

The Clause would provide only one form of incentive for forms of new saving and personal investment compared with the twin and, in our view, expensive incentives required, for instance, by the S.A.Y.E. scheme, which offers a very high rate of interest to those who suffer a standard rate of income tax— 12 per cent. merely on the five year period of savings and a higher rate on the longer term— and almost astronomical rates of interest for surtax payers. That is why so much of the scheme consists of savings which must undoubtedly have been switched, or would at any rate inevitably have been saved, even without S.A.Y.E.

The Clause offers only one form of incentive, namely, the tax incentive. It offers incentive in the following ways. First, it offers relief from income tax at the time of saving. My right hon. and hon. Friends and I regard this as of great importance. We believe that an incen- tive at the time that the saving is made will attract at any rate a large number of people who are not prepared to wait for what they may regard, perhaps wrongly, as pie in the sky. The claw-back in our case, which is very real, comes if and when the item is spent by the owner of the employee's saving account which we propose. I stress that, at any rate during the lifetime of the owner, we propose what can be in certian tax circumstances a very severe claw-back as a penalty for spending.

The second branch of our incentive is exemption from any capital gains which may accrue while an invested item is in the custody of an employee's saving account. We regard this as a proper incentive, but, given expert draftsmanship, we would have wished to include in the new Clause some safeguards against abuse of the scheme by those who were using it over a very short time simply to avoid capital gains tax. This, simply owing to lack of drafting skill, is an omission from our new Clause.

These twin tax reliefs are all within a strict upper limit of savings per year through the employee's saving account. For the purpose of the new Clause we have pitched the limit at £200 in any one year, but clearly—we deliberately intend this—the maximum is entirely flexible. If and when a scheme based on these lines is adopted, we would expect the upper limit to be varied over the years.

At times, which it is difficult to envisage at the moment but which are certainly within the memory of certain hon. Members present now, when it would be important to release spending power, the upper limit could be appropriately raised.

8.30 p.m.

An employee's saving account as provided for in the Clause would be operated by the employer. He would be responsible to the Inland Revenue, rather in the same way as he is under the P.A.Y.E. regulations, for the proper ordering of the scheme, and such banking institutions as are approved by the Inland Revenue would be the responsible custodians. In that connection, I am glad to see that one of our largest clearing banks has in the last few days introduced its own savings scheme which is deliberately intended to attract a very large number of small depositors who hitherto have not been catered for by the large clearing banks. I think that it is safe to say that at any rate the more progressive of our great banks at last realise in one way or another they have to offer a service to the relatively small saver. I hope, although I have no warrant for saying this, that they will co-operate in operating a scheme of this kind.

It will be apparent to the Committee that the sort of savings that we provide for in the Clause are not limited to cash. We provide for these employee's saving accounts to operate with securities of almost any kind. Chattels, naturally, are excluded.

Perhaps the most important consideration guiding our minds is that the scheme is an employment-based scheme, being factory, mill, office and shop-based. I shall return to the reasons for this shortly.

For tax purposes, the scheme distinguishes between the different uses to which income is put. It relieves temporarily from tax income which is definitely saved. To that extent, it is discriminating against income in the hands of another tax payer who might otherwise be in similar circumstances. I refer, of course, to income which is spent.

There is nothing new in this. The life assurance reliefs for income tax are almost as old as the tax itself. But such discrimination seems to be contrary to the views reached by the most recent of the Royal Commissions on taxation. In the third chapter of the majority report, it seems to advocate that as far as possible in future the development of the tax system should be on neutral lines. It comes down specifically against discrimination in favour of saving.

Since the publication of the Royal Commission's Report, I am glad to say that its purist ideas seem to have been repudiated by tax thinkers of almost every political colour, and they now look distinctly old-fashioned. That is partly due to the great success of tax-exempted investment schemes amongst our principal industrial competitors, notably the United States and West Germany. Admittedly in America there are limits which I regard as excessively generous. But the abandonment of a purist approach to income tax and the linking together of tax incentive and investment is paying off handsomely in national economic terms by giving a real boost to the small wage-earner investor for the first time.

I said that one of the main features of the Liberal scheme is that it is employment-based, and we have two distinct reasons for introducing it. First, the new, fresh, genuinely additional savings reason. We believe, after consultation with colleagues and advisers in various industrial centres, that new savings are to be found from people with money to save whose whole habits of life do not lead them anywhere near banks, Post Office Savings Bank counters, or other traditional places where other thrifty people have been used to invest. We believe that the success of works savings schemes of the traditional kind point the way to the advantages of having a realistic savings scheme based on the place of work, so that the terms and conditions, for instance, can be discussed in the canteen, the company's sports pavilion, the drawing office, and in various ways associated with the employment where often the natural leaders of men, the natural wiseacres, the natural sages. are listened to and could stimulate a great interest in modern methods of saving. We believe that the opportunities at the place of work have been seriously neglected by savings agencies.

The second and distinct reason why we want to see an employment based scheme is that at the moment the way is heavily blocked for ordinary, considerate, thoughtful, perhaps rather cautious, employers to give their employees an opportunity of becoming shareholders either in the concern where they work or in other industrial concerns. Even today, despite all the tax obstacles, an ebullient employer full of confidence and perhaps abnormally bold is, of course, quite free to recommend to his work people shares in his or some allied company, but on condition that they are sold at full market value if the employees wish to avoid a tax assessment. We believe that the number of employers and company directors who really would feel confidence in trying to influence their employees to buy shares in the company at full market value is strictly limited, because most of them are only too well aware of the hazards of the market and of the possibility that, within a short time of selling the shares to their employees at full market value, they might feel unable to look them in the eye because those shares might have slumped to a mere fraction of the figure at which they had been sold.

We want to see an opportunity provided for employers to offer shares to work people at some kind of discount or asex gratiabonuses, so that no question of paying full market value shall arise. It is only under those kind of conditions, as experience in other countries has shown, that we can look for a desirable, widespread increase in employee shareholding.

This is not simply some Liberal notion which the new Clause seeks to propagate. I could quote many authorities miles away from the Liberal Party in their origin. But I content myself on this occasion with the Third General Report of the National Board for Prices and Incomes issued in July, 1968, Command 3715. In the course of that report, after outlining the difficulties of trying to control wage levels, the National Board for Prices and Incomes specifically asked the Government to explore schemes for giving workers a share in the capital growth of industry. Here is a body, set up by this Government, under very distinguished leadership, which specifically asked the Government to explore schemes of employee share ownership. Although it is not strictly within the Chief Secretary's Departmental responsibility, I hope that he may be able to give us some indication tonight of what the Government have been doing since July, 1968, in response to that clear and specific request.

The Clause would go a long way to answering the board's request because it would make it far easier for conscientious employers to offer employee shareholding to their employees. This is not a matter which, if left alone, will quietly go away. My colleagues and I—and I think that our experience is shared by other hon. Members—have found in recent weeks, when talking to people in our constituencies about the election, that the one thing about which shrewd voters have already made up their minds is that whichever Government are returned they will quickly impose some kind of clamp-down on wage increases. This has been said to me several times in my constituency by people of various political attitudes, and I think that it is a realistic prospect to face.

One question which should be in our minds tonight as we consider this and the other new Clause is whether, if there is to be another clamp-down on wages, maybe in the interests of social justice, possibly in the interests of Socialism itself, we are to go through that whole difficult business without a few new weapons in our armoury? What sticks in the throat of the wage earner when he is told that wage increases must be strictly controlled is the total injustice of the amount saved by paying lower wages simply augmenting company reserves.

If there is to be any justice in some future wage control system, some answer must be provided to this obvious injustice. At the moment it is the long-term shareholder, the shareholder who is interested in reserves, who benefits from the restraint, compulsory or voluntary, of the wage earner, because the money goes into company reserves. Let us hope that it goes into plant, or research, but, wherever it goes, on the other side of the balance sheet the workers' restraint is reflected in higher shareholders' reserves.

To our mind the only overall way to deal with this inequity is to foster employee shareholding, not necessarily in the company for which a man works, but over the broad face of industry, whereby the worker would also be the person interested in company reserves.

Before I conclude I should like to say something about the wider share ownership Clause which is being debated with the Liberal Clause. In our view there is nothing inconsistent in the two Clauses and, as I have said before, we on this bench give a warm welcome to that Clause, not least because it is in no way limited to operations by the National Savings Movement. The scheme very shrewdly devised and set forth in new Clause 3 would be available to anybody willing to satisfy the Board of Trade about certain necessary conditions, and, as it provides a free-for-all, under proper safeguards, we are particularly glad to welcome it.

One final point occurs to me as an objection which may be raised by some hon. Members. It is a common experience among members of the Liberal Party when we hold forth about the importance of more and more wage earners becoming shareholders and having a stake in industry to be told that this is quite possible at the moment, that to become a shareholder the worker has only to see a stockbroker and give him a cheque, and why he should have any kind of concessions to induce him to do so.

8.45 p.m.

At present acquiring a small parcel of shares through the Stock Exchange, or in any other conventional way, is a relatively expensive process. The only way to cheapen share transactions for the small man is to create conditions in which a mass market can develop. It is absurd that the small wage earner should depend on the sheer altruism of certain stockbrokers, who are willing to do a number of small transactions at a loss, to get his transaction through at a reasonable cost. So long as we have antiquated stamp duties with clerical and administrative costs, including S.E.T., to put up the Bill to the small investor—and I fear that his bill may increase further as costs go up in the coming months— it is humbug to talk airily about wanting to encourage the small investor. The cost of making small investments in the present system is a powerful argument for the tax system to be relaxed so that a mass market can be created and the stock market can have conditions in which it would be able to reduce costs.

These two Clauses taken together, the one providing for employees and the other relating to the Wider Share Ownership Council, remove the serious barriers which at present obstruct a growing tide. This is not a do-good proposal which has been thought up to impose upon people. It is made in response to a growing demand by people of all sorts and all political attitudes, by those who want to be modern, up-to-date investors starting in a small way.

What is the purpose of educating not merely future business graduates but a large section of our young people in economics, which is now taught in schools in comparatively low forms, if at the end of the day we can only offer as a receptacle for their spare cash—and young, unmarried people often have a bit of spare cash—an outworn and limited choice in what are called national savings?

[Mrs. LENA JEGERin the Chair]

Mr. Patrick Jenkin

I am grateful for the opportunity to follow the hon. Member for Colne Valley (Mr. Richard Wainwright) since his new Clause is coupled with our new Clause 3, which stands in the names of both Liberal and Conservative hon. Members. We welcome the fact that in this matter their name is coupled with ours.

I should like to comment on what the hon. Gentleman said in moving the Second Reading of his new Clause. I agree with what he said about difficulties in the way of members of the public with limited means who wish to invest directly in the stock market. There is no doubt that the whole stockbroking system has grown up and developed for substantial investors—on the whole, it serves them very well—and that it is totally unsuited to the needs of the small investor. For this reason the unit trust movement and other avenues for small investors have flourished mightily in the last decade and a half.

Stamp duty is undoubtedly a disincentive. It is the oldest tax in the book. It was the first tax, apart from import duties, to be relied on over the years by Governments and it has become an anachronism. On another provision which we will be considering in Committee upstairs, a start is being made to get rid of this inhibition to normal financial transactions.

I agree with the hon. Member for Colne Valley that there is no inconsistency between the two alternative forms of encouraging savings; the scheme in new Clause I promoted by the Liberal Party and that in new Clause 3. They are different and they approach the problem from different angles. They have many features which differ from each other, but they have in common a genuine desire to increase the savings ratio by providing new and attractive opportunities to savers to put aside, rather than spend, a part of their income.

A feature I particularly like about the Liberal scheme is that it would give tax relief when the saving was made. Hon. Members will be aware that my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) had argued for years for a save-as-you-earn scheme. This name was taken last year by the Government, with the blessings of my hon. Friends.

Mr. Diamond

And with acknowledgements from the Government.

Mr. Jenkin

With acknowledgements from the Treasury Bench which we greatly appreciated. Under the S.A.Y.E. scheme tax relief, such as it is, accrues at the end of the contractual period and not when savings are made. The same would apply under new Clause 3.

Another feature I like about the Liberal scheme is that it would link the machinery of saving with the saver's place of work, and I agree with what the hon. Member for Colne Valley said about this being one of the points of contact between the individual and the possibility of his saving, a point which has, perhaps, not been fully tapped in the past.

I was somewhat less enthusiastic about the idea of employees' savings accounts being a principal vehicle by which employees could become shareholders in the concerns for which they work. I have always felt that there are considerable risks in this. One appreciates the desire to achieve a unity of interest between shareholders and employees—the share option scheme has a great part to play, but unfortunately it was severely hampered by legislation passed by the Government three years ago—but there are risks in asking people of limited means to tie up substantial parts of their savings by investing in the companies on which they rely for their employment. It means, for example, that if a company gets into serious difficulties and workers face redundancy, they could also face the loss of their savings.

One must approach with great caution the argument that employee shareholdings can be a way of improving industrial relations. Considerable weight must be given to the experience of many firms and bodies which have advised on this matter. Experience shows that if one is to have what used to be called coownership—co-partnership or employee shareholdings—these must primarily be a reflection of good relations that already exist rather than a means of trying to improve relations which are at present strained.

The hon. Member for Colne Valley foresaw the reluctance of employers to seek to sell shares to their employees because of animosities which might arise if the shares did not perform as anticipated. I always think of the story of an employer, no doubt great-hearted and benevolent, who was able to persuade his employees to buy shares in his company. Within six months the shares had depreciated very considerably in value. They came to him and demanded that the directors should buy back the shares at the price originally paid. The employer, being great-hearted and benevolent, finally agreed to do this. Six months later the shares had doubled above the value at which they had been orginally purchased. Then the employees came back and said, " We always thought you were a rogue; now we know you are." That is the sort of danger one could get into.

I turn to new Clause 3, to which I wish to devote the greater part of my speech. Before dealing with the details, I shall say a word or two about savings in general. I regret very much the unavoidable absence of my hon. Friend the Member for Harrow, Central (Mr. Grant). As an active and enthusiastic member of the Wider Share Ownership Council he has done more than most hon. Members to promote saving by small savers. He had the support of my hon. Friend the Member for Farnham (Mr. Maurice Macmillan), who will wind up in this debate for the Opposition, as well as the hon. Member for Colne Valley, the right hon. Member for Sowerby (Mr. Houghton) and other hon. and right hon. Members who have served as members of the Wider Share Ownership Council. He is unfortunately unable to be with us this evening. He asked me to tender his apology to the Committee and to the Government because he would like to have participated in this debate.

Mr. Eric Lubbock (Orpington)


Mr. Jenkin

On the contrary, he is attending the annual dinner of his contituency association.

Few people would disagree that many of the problems of our economy would be a great deal nearer to solution if we could persuade more fellow citizens to save more and spend less. I think there was a tendency in the first years of the present Government to recognise that the high level of private consumption was one of the weaker aspects of our economy, but they saw the remedy rather in the form of increasing public consumption and shifting the balance from private to public consumption. Therefore, taxes were increased and public spending increased but private consumption, of course, continued very much as before. There has been little evidence of a turndown in it, and savings have taken the brunt.

It is nothing other than the simple truth that the percentage of after-tax incomes which have been saved has fallen since 1964– 65. If one goes back to the years since the war, one finds that in 1951 the percentage of after-tax income saved was 1. 5 per cent., by 1959 it had risen to 5.1 per cent., by 1965 to 8.5 per cent. and there was a steady increase in the proportion of incomes saved. Since then it has fallen back steadily and is now only 7.7 per cent. Had savings in those first years after the 1964 election stayed at the level that was achieved in 1964–65, this year personal savings would be £300 million higher than they are. Had they continued to rise at the rate achieved in 1951, they would have been many hundreds of millions higher.

9.0 p.m.

In such a happy event the taxation which the Labour Government would have had to levy would have been much less and we should have been in that virtuous circle to which my right hon. Friend the Member for Enfield, West referred yesterday of lower taxation, leading to higher savings, in turn leading to still lower taxes. The Tories achieved this. Under the Socialists the circle as it were tailed off within a matter of months. This is no accident. Yesterday my right hon. Friend the Member for Enfield, West referred also to the work done by Mr. Brian Reading and Mr. David Lomax—

The Temporary Chairman

Order. I appreciate that the hon. Gentleman is giving the background to his argument, but it would be for the convenience of the Committee if he could come a little nearer to the new Clause and give the Committee some more information about the contractual investment schemes which are the subject of the new Clause.

Mr. Jenkin

I apologise if I have strayed out of order, Mrs. Jeger, but I thought that it was desirable to develop the argument as to why it is necessary at this stage to give a new thrust. It is difficult to argue this unless one has set the context. I will try to deal with this as briefly as possible.

Yesterday my right hon. Friend dealt with the Reading and Lomax thesis which shows that changes in savings can offset up to a half of the change in the real disposable income level relative to its long-term trend. In other words, Chancellors who can achieve entry into the virtuous orbit can confidently expect that, over a period of years, tax reductions will turn into increased savings to a very substantial extent. On the other hand, Chancellors who fail to achieve re-entry will continue to orbit in perpetuity in a disastrous spiral of rising taxes and falling savings. It is an undeniable fact that Tory Chancellors have achieved the happy state with monotonous regularity. No Socialist Chancellor in Great Britain has ever succeeded in doing so.

I come to the new Clause. We need an initial thrust to break out of the present vicious circle into the virtuous one. As major tax reductions are ruled out by this Government—we have had debates now for nearly two days on this subject—we must start at the savings end. If all savings could be made more attractive by hacking away at the disincentives to savings, that would be fine. It would be fine if we could do something about the higher rate of tax on savings income, if we could do something about the capital gains tax, one of the highest rates of capital gains tax in the world, and if we could do something about estate duty, which has virtually doubled in effect in the last 20 years. But we cannot do that. The Government have ruled ail this out.

Therefore, we turn to new ways of attracting new savings—not just a switch from existing media, but genuine new savings. What we propose in new Clause 3 is a modification of S.A.Y.E. to give it, as it were, an equity link.

Most new schemes have been aimed at infusing new life into the National Savings movement. The premium bonds have perhaps been the most outstanding and successful example of this, and now £700 million or £800 million remain invested in premium bonds. The recently announced 9 per cent. development bonds are also going well.

However, it is undeniable that the National Savings Movement is at the moment very much in the doldrums. 1969–70 saw a net fall in National Savings of £129.4 million and, excluding net accrued interest of £136.8 million, the total fall was £266.2 million. The truth of the matter is that, in a year of accelerating inflation, there is little attraction for small savers.

Indeed, one of the ironies of the National Savings Movement's efforts is that its educational programme, to which it attaches great importance, may actually be turning savers to other media—to building societies, life assurance, unit trusts, and others. I could quote figures; but, Mrs. Jeger, in view of your anxiety that we should concentrate on the Clause, I will forbear from doing that.

It is true, as I am sure that the Chief Secretary will agree, that National Savings are uniquely valuable to Chancellors of the Exchequer. In that case, a £1 saved is £1 less in taxes. When we think of the need to finance nationalised industries the importance of this cannot be over-rated. We want to link our scheme with lending to the Government and the device which has been adopted by the Wider Share Ownership Council is to have a 50–50 split of the sums invested by savers, broadly on the lines of the Trustee Investments Act, 1961. Part will go into fixed interest and half into a selected range of equities. We go further. Because we want to make sure that the Government derive considerable benefit from our new equity-linked S.A.Y.E., the 50 per cent. that is to go into fixed interest is to be confined to the Government stocks, the same ones which are exempt from capital gains tax and are set out in the Schedule to last year's Finance Act.

The other half would go into the wider range securities as defined in the Trustee Investments Act. The contractual saver would then save on exactly the same terms as apply to S.A.Y.E. at present. We would not have the seven-year term but would confine it to five years. The saver has to agree to save a certain amount each month for a minimum period of five years. The money saved would then go into the fund and would be divided into the two halves, fixed interest and the wider category fund. Income would be accumulated and the saver would become entitled to the units allocated to him on the monthly subscription basis precisely in accordance with the normal unit trust practice.

At the end of five years he would be entitled to withdraw. The limits are the same for S.A.Y.E. There would be a maximum of £10 a month although lesser amounts could be contracted. Like S.A.Y.E., the main attraction is that—

Mr. Diamond

The hon. Gentleman said that the limits would be the same as for S.A.Y.E. and instanced £10 a month. The limits under the S.A.Y.E. scheme are £10 a month, to both of the two schemes only. Would the hon. Gentleman tell me how he proposes to deal with that?

Mr. Jenkin

This may not be fully spelled out in the new Clause but we would envisage this as being additional to the two. A person may have only one of the equity-linked schemes at a time when the existing S.A.Y.E. and the building society S.A.Y.E We see no difficulty in policing that There is no more difficulty than the Government already face in policing the difference between the building society scheme and the National Savings scheme. Presumably there is a spot check. There is no other way. We see this as additional to the other two.

I was about to come to the tax advantages of the equity-linked S.A.Y.E. scheme. In the first place the Government stock fund would be charged to tax not at the standard rate but the life insurance rate of 37.5 per cent. This would put it on the same basis as investments in life funds. Secondly, there would be no Schedule F tax on income from investments in the Government Stock Fund, but Schedule F would inevitably be deducted from dividends paid to the equity fund and there would be no way of avoiding that. There would be no capital gains tax charged on the fund on gains or losses, either in the Government stock fund or the wider range fund. We regard this as one of the most important of the tax advantages. Similarly, there would be no capital gains tax or income tax charged on the investor in the disposal of the units after the five-year period had elapsed.

It is interesting to see how one parallels this, although it is from a different approach. Like the Liberal scheme, we have to impose quite a severe disincentive on withdrawals before the five years are up, or of course, to prevent the fund going into breach of the terms approved by the Board of Trade. If the saver chooses to withdraw his units in those circumstances, all he will be entitled to is his money back, plus 2½ per cent. interest, exactly like S.A.Y.E., or the value of his units as they stand at the date of withdrawal if that is less. tie cannot get more than his money back plus 2½ per cent., but if the investments have fallen so that his money would be worth less, that is all he gets—the actual value.

This seems a necessary precaution, just as the S.A.Y.E. scheme has to have a precaution to ensure that savers adhere to the principal purpose of the scheme, which is to save by contract over a period of years. We have tried to make this scheme as nearly similar to S.A.Y.E. as we can, while at the same time importing the equity element.

We envisage that the scheme would be run by a variety of bodies. The hon. Member for Colne Valley suggested that it could be run by the National Savings movement, but I am not sure that that movement would wish to become involved in as big a departure as this from its normal activities. From discussions which I have had, I am satisfied that that movement would be perfectly happy that schemes should be run by such bodies as unit trust managers, trustee savings banks, and perhaps the public trustee could be persuaded to set up a scheme for this kind of saving.

Anyone who was going to run this would, of course, require the approval of the Board of Trade and any charges and expenses—this is spelled out in the Clause—which the managers of the scheme would want to make would have themselves to be borne as approved by the Board of Trade.

The Wider Share Ownership Council believes—I very much endorse its view—that a contractual investment scheme on these lines would have a powerful attraction for the modern saver, the saver who is perhaps a little more sophisticated than he was a generation ago, who wants the tax advantages of S.A.Y.E., is not prepared to go into a fixed interest situation, but feels that, in the current state of the economy, as it is likely to be for the foreseeable future, he wants a hedge against inflation.

Certainly, some extra spur is needed and some new stimulus has to be provided. No one can be satisfied with the level of savings. S.A.Y.E. has attracted only about £6 million in 1969–70, although by the time that it has built up on the basis of existing contracts, represents a commitment of just under £100 million. But no one would disagree that this is only a modest and unexciting start. The simple truth seems to be that a contractual obligation plus a fixed interest return does not tempt savers, whatever the tax advantages. I believe that a contractual obligation, plus an equity element, could well do the trick and attract substantial additional savings which are not being found at present.

Anyway, we are encouraged to try and we think that the Government should try. I hope that Treasury Ministers will look favourably upon what I might describe as this " tuppence coloured " version of their own " penny plain " scheme last year.

Mr. Wallace Lawler (Birmingham, Ladywood)

It is obvious that the place of employment is the best and most effective venue for the promotion of any new savings. I can speak on this aspect of the Amendment with some authority, because for about 30 years I have been closely connected with the shop floor in one of our largest industrial areas. I could give an example of the way in which savings can be encouraged by industry and I go a long way to support my hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) in saying, rightly, that the ordinary employee, certainly in the Midlands, is not too familiar with the joint stock banks. He has a hesitation about having a cheque book for the most part. This was shown by the considerable resistance and suspicion that accompanied the proposal for the payment generally of wages by cheque in the Midlands. Similarly, many workers shun the Post Office, perhaps for reasons not altogether connected with what we are talking about, until they reach the age when they go to a post office with their books to draw the basic pension.

9.15 p.m.

The shop floor and industry generally is, then the right place. My hon. Friend the Member for Colne Valley spoke about the atmosphere of the canteen that exists in about 95 per cent. of industry—the place where men and women can talk together and which, indeed, is the only communal place where they can talk about interest in group savings.

A memory of 30 years ago was brought back to me rather painfully this week. In Birmingham, a small firm which started with about 80 employees grew to have over 1,000 through a mutual savings scheme operated by the employer and very happily enjoyed by the employees. The scheme was centred on the purchase of a canteen by the company on behalf of the employees and a share in the canteen and its profits was put into a savings account for each employee every month. That scheme stopped a few years ago when the firm was taken over by a large public company. Only this week the closure of the firm was announced. It is important to be prepared to recognise that if we want to see a substantial increase in new savings industry and the shop floor for the most part are the best place to start.

The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) reminded us of something that might have applied to the mentality of 20 or 30 years ago on the subject of the issue of shares to employees. There are rises and falls in the share market all the time which must be taken into general consideration, but again I was reminded only this week, and the Committee should be reminded, that where there is no contact at board room or share-owning level between employer and employees one can often reach a stage, which an important company in Wolverhampton reached this week, when closure was announced overnight and every employee faced the loss of his job within a few days by the sudden appointment of an official receiver.

Of course there should be a move towards co-ownership and every possible support for any sensible move that helps to give the employee a limited and active participation in the ownership of the company for which he works. Firms are quite accustomed to savings schemes. It is interesting to remember that practically every firm has to operate one unofficially at the moment. In order to pay its holiday credit each year each week it has to go through the administrative process of putting aside one-fiftieth of the employee's earnings in order to enable the employee quite rightly to have the money to enjoy his holiday. We would therefore not be asking for any great new administrative task in suggesting that the employer could play an important part—and some would do so happily—in the promotion of employee savings accounts. I hope that the Committee will not too readily dismiss some of the strong arguments in justification of the Amendment.

Sir Brandon Rhys Williams (Kensington, South)

I am grateful to you, Mrs. Jeger, for giving me the opportunity of intervening, I hope at not too great length, before the Chief Secretary allows us to hear his observations. It so happens that new Clause 1, which I read only this afternoon, seems to run with thoughts which have been developing in my mind for a considerable time. I am only too happy to give my support to the ideas contained in new Clause 1, and particularly to congratulate the hon. Member for Colne Valley (Mr. Richard Wainwright) on moving it so ably and convincingly.

For a long time I have felt that the most dramatic need hanging over the economy was an increased propensity to save in the private sector. The Government have solved the shortage of savings to some extent through a method which is entirely unacceptable to the Opposition, that is to say by raising taxation and achieving a form of compulsory saving—it might be known as the nationalisation of savings. New Clauses 1 and 3 are an atempt to show that the private sector is not finished where savings are concerned; but it needs encouragement from the Government.

A very good principle is involved in the slogan, " Save now, pay tax later " or, considering the terms of new Clause 3, " Pay less tax later ", or even, " Save now, pay no tax later ". But before the Government consider giving concessions to the private sector to encourage savings, it would be useful to do an exercise, as a businessman might, and decide what is the target, what are the roles of the various parties involved, and to set the plan in the context of the economy as we see it today.

First, what is the target? How much savings are we trying to obtain by means of the sort of concessions which we are now considering? It would not be unrealistic or too ambitious to say that what we ought to be saving in this country is about 20 per cent. of the national product, but I am told that the actual figure is now between 5 per cent. and 7 per cent. That is plainly not enough; it is probably not enough simply to replace the existing stock of capital and certainly not enough to enable us to compete with, for instance, the Japanese in the 1970s and the 1980s. My view is that the target for saving in the private sector should be about 20 per cent. I do not know, but I am inclined to doubt whether either New Clause 1 or New Clause 3, if adopted precisely as they stand, would achieve as much as 20 per cent. saving within a measurable time.

If one is to think of this type of saving as arising automatically from employment, it may not be out of place to consider some slogan such as, " Ten minutes in the hour ". There are 60 minutes in the hour and one might allow oneself, say, 50 minutes for current consumption and 10 minutes for the future, 10 minutes against 50 gives 20 per cent., which seems probably the minimum at which we should aim.

Of course, a great deal of saving is now going on in the private sector and one must particularly take into account contractual savings and savings in occupational pension schemes. What exactly is the employers' rôle? In New Clause 1 it is clearly intended that these schemes should be adopted at the instigation of employers. Suppose that the employer and employee are equally responsible for putting money aside for the future. The employer should therefore aim to reach 10 per cent. out of the 20 per cent. The National Superannuation and Social Insurance Bill makes it incumbent on employers to put about only4¾ per cent. towards the provisions of pensions, and that only on a band of earnings up to £1,900 a year.

I was extremely surprised and disappointed to find that under that Bill the percentage which employers were expected to put into savings schemes was under 5 per cent. But one cannot load too many burdens on to employers all at once; they are staggering under the weight of the burdens which they are carrying now. One perhaps might hope that employers should have it made incumbent on them that over a span of years—perhaps five or six years— their contribution to employees' savings funds should rise progressively from, say, 5 per cent. in the first year to 10 per cent. after the passage of time.

That may seem to some people a wild or excessive suggestion. But all good employers are already doing at least that through their occupational pension schemes. A generous occupational fund aimed to give a pension of, say, two-thirds of final earnings on retirement is likely to require 15 per cent., or thereabouts, in current contributions as time goes by.

Neither of the proposed schemes places sufficient emphasis on the obligation of the employer to contribute to some savings device; but if the best employers are already paying 10, 15 and, in some cases, 20 per cent. per annum into savings schemes on behalf of their employees, I do not see why over a period the State should not make it part of the contract of employment that all employers should do so. At present the best employers are putting themselves voluntarily at a disadvantage in competition with employers who do not honour this aspect of the contract of employment.

So much for the employers' rôle which, I am not ashamed to suggest, should gradually become obligatory. What about the rôle of the employees? Do we feel that the national emergency demanding a transfer of resources from current consumption to savings and investment is so dire that we must make it obligatory on employees to give, say, 10 per cent. from their earnings from employment to some kind of savings fund? It can be argued that the need for saving and investment in the private sector is indeed so great that we should envisage it, but I would not wish to do so. If we are on the way to a property-owning democracy—and that is not a slogan which one hears only on this side of the Committee —it must be one in which a man has arrived at a state of ownership of savings by his own endeavours and not by compulsion.

In passing, may I deliver myself of a sentiment about occupational schemes which contain a compulsory element of contribution from employees? I know that there are arguments in favour of employers obliging employees to set money aside in this way. It is, not universal, but very common to find compulsory contributions to savings of 4 and 5 per cent. in well managed and reputable occupational schemes. Nevertheless, we should stick to the voluntary principle. I hope that in due course there will be a phasing out of the contributory occupational pension scheme, although in general my heart is in favour of encouraging to the maximum employees to put something aside out of their earnings for personal saving. I am not attracted by the theory that the employer has the right to compel an employee to dispose of his earnings in any specific way, and there are particular objections to employers obliging their employees to put their savings into occupational schemes which are final-salary related. A final-salary related scheme means that the value of the man's savings are ultimately determined not by himself or the market but by the employer's estimate of the man's earning capacity in his last few years. This introduces an arbitrary factor which is not appropriate in any compulsory savings scheme.

Under the new principle embodied in new Clause 1 and new Clause 3, how are we to induce the new savings at the rate we want? We should aim to give tax concessions of the most seductive kind, to make savings so attractive and so interesting that the savings habit will rapidly become universal. It is not easy to pick upon a form of taxation concession which is likely to achieve the desired result all at once. New Clause 1 suggests the simple principle of the tax not becoming payable until the money is eventually drawn out of the fund. New Clause 3 suggests that there should be no tax at all provided the man is willing to tie up his money for at least five years. This is similar to the principle of the Government's Save-as-you-earn scheme. Neither of those proposals says the last word on tax concessions. Will the Chief Secretary tell us how the Government's thinking is developing? He too must be aware of the need to stimulate saving in the private sector.

Apart from tax concessions, one needs freedom to invest in equities or property or in an asset in which people still have confidence after years of inflation. The equity market at present may not give people too much confidence that their assets will retain their value in face of depreciation of the currency; yet over a period of years the equity market has given a considerable degree of protection, and more than protection, against changes in the value of money. The relative lack of success of the Government's save-as-you-earn scheme shows that if money has to be invested in a fixed interest security the scheme will not catch the attention of the public. I therefore commend the intention of new Clause 1 to allow any class of security to be deposited in, and presumably to be purchased by, this type of scheme.

If, however, the money is allowed to go into equity investment, it must be admitted that the money will go into speculative investment. It would be disastrous for timid people who are embarking for the first time on accumulating new savings, especially through a Government induced scheme, to find that their savings, either through misadventure or, in an extreme case, misappropriation, were being lost. I therefore do not accept what appears to be the intention of new Clause 1, that any class of fund would automatically attract the approval of the Inland Revenue for the purpose. We should go much nearer the type of restriction that the 1956 Act placed on occupational savings for self-employed persons and have a tightly drawn-up list of approved funds to which public savings could go under this type of tax concession.

There is a vexed problem in the withdrawal of savings from these schemes. The 1956 Act has not succeeded in creating a large flow of savings from self-employed people. It gives the attraction of total freedom from income tax and from capital gains, but it has apparently a fatal flaw in the fact that money once subscribed under the 1956 Act cannot be withdrawn. People setting money aside for retirement are often afraid that business fluctuations, or some accident in the home, or problems of an unforeseeable nature, will place upon them the urgent need to mobilise their savings and all the assets they can lay hands on. The relative failure of the 1956 Act is not so much due to the upper limit that is built into it, but due to the problem that if a man requires to withdraw his savings unexpectedly, he is stuck. He is either penalised or he finds that the rules do not permit it.

I am not too happy with new Clause 1 in this respect, because the incidence of tax on savings might be variable. If a man were to accumulate a fund of £5,000 or £10,000 with the passage of time and was then to draw it all out in one year, it seems to me that the clause would make him liable for income tax on that sum and surtax, too. This would be an insuperable obstacle to people accumulating large sums in these funds because they would recognise the danger of the whole amount disappearing in surtax all at one time.

In occupational schemes in the private sector there has been a great deal of dispute over a number of years over what happens to a man's own contributions if he chooses to change his job and draws out his own contribution. I support what the Government have done in sticking to the existing freedom of an employee to withdraw his savings from occupational schemes when he changes his employment. But we need to have a longer look at the tax concession, which I feel is too generous in regard to schemes under section 379.

One possibility is that one might apply to sums withdrawn from tax-concession saving schemes of all kinds the composite rate of tax used for Building Societies. I understand that this annually-negotiated composite rate is an attempt to arrive at the average true rate of income tax paid by the average person. I know that this is one of the most technical fields of tax, but the standard rate of tax appears to be inappropriate and if a man's own circumstances made him liable for surtax at the time when he withdrew his savings, that would not be appropriate either.

There is an alternative which might commend itself to the Chief Secretary. In occupational schemes we are working our way towards the idea of a lump sum which would be more or less automatic. Nobody is more enthusiastic about that idea than I am. The entitlement to a lump sum at the end of a career is one of the great attractions of the Civil Service occupational scheme. If it becomes normal in all occupational saving schemes for superannuation purposes that a 25 per cent. lump sum should be permitted, the concept will grow in the mind of the public that within each fund is a lump sum element building up as well as an entitlement ultimately to an annuity. It will be assumed that the fund is split between lump sum provision and money accumulating for the purpose of an annuity. If the lump sum is available on the attainment of the age of 65, it would not be inappropriate to consider allowing people to take out this lump sum at any time, particularly in the event of an emergency.

The tax considerations are rather knotty and I realise that the British public contains people who are ingenious in devising ways round their tax obligations. People might soon learn to take their 25 per cent. lump sum every three or five years in order to evade tax. Some sort of tax no doubt would have to be paid on the 25 per cent. lump sum. But the more generous the tax concessions given in a scheme of the kind suggested in new Clause 1 or new Clause 3, the more necessary it will be for the Government to give serious attention to the circumstances applying when, for one reason or another, the owner of the savings decides that he wishes to withdraw a part of them.

There are a couple of other considerations which are relevant. For example, what about an upper limit on the amount which people can put into these schemes every year? I suggested just now that our slogan should be, " Ten Minutes in the Hour ". I stand by that. But if " Ten Minutes in the Hour " is good, some people may say that " Twenty Minutes in the Hour " is even better. People like authors or actors with highly fluctuating earnings might try to take advantage of such a scheme to hide large parts of their incomes from the clutches of the Revenue.

New Clause 1 is especially ungenerous here, so much so that it is likely to make the scheme of little value in that it suggests an upper limit of only £200 in any year. One of the criticisms of the 1956 Act is that its upper limit is set too low at £750. The proposed £200 seems to make this altogether too tentative a beginning, and I would not agree to it in the long run, though that does not alter my support for the Clause in general.

I would prefer the upper limit to be not an absolute sum but a percentage of the relevant year's income in total. Possibly it might be advisable to spread it over an average of two, three or five years and calculate the upper limit as a percentage moving over a period. However, that is a matter which would need to be given further study.

I come finally to the question of when a reform of this kind should be introduced. I do not think that the Chief Secretary will recommend tonight the acceptance of new Clause 1. However, I urge him to accept that this idea is not just a kite or an interesting way of speculating in the course of an evening. It is a serious contribution, and so is new Clause 3, to a solution of the national emergency now arising through the shortage of savings. The time to introduce an imaginative scheme to stimulate the interest of the public in saving is now.

The solution to our inflation problems is to invest our way out of inflation. The old classic description of inflation is, " Too much money chasing too few goods ". The Government have tried to reduce the amount of money, but they have done it in a way which has reduced the supply of goods as well. They have, at any rate, acted in a very unfriendly way towards investment both by raising interest rates to astronomical heights and by placing curbs on bank advances for investment purposes.

A Government initiative to encourage private savings on a very large scale should have two principal objectives. The first is to reduce demand for the current supply of goods and services. The second is to increase the supply of a large number of goods and services in the long run by making available very much larger volumes of money for the capital market. Let the surplus of money which is troubling the economy at the moment be converted into a superfluity of goods in the future.

9.45 p.m.

Mr. Diamond

I do not want to limit the debate, Mrs. Jeger. If any hon. Member is anxious to speak I will sit down after I have said the one thing that I am most anxious to say. I think that I can say, on behalf of the whole Committee, that we feel extremely privileged that we are the first to have the enjoyment of seeing you occupying the Chair with such grace and charm.

Having said that, I will give way.

Mr. Kenneth Baker (Acton)

Such gallantry.

I was rising only to express rather less enthusiasm for new Clauses 1 and 3 than some of my colleagues. None the less, these two new Clauses are being moved in the context of a declining level of National Savings both in the public and private sectors. I do not think that hon. Members on either side, even in election year, can take any joy from the fact that National Savings last year declined by about £125 million.

We are also faced in the private sector with a considerable degree of disinvestment to the unit trust movement and also, to some extent, to the investment trust movement. This is a depressing and discouraging trend, because the economic growth that we all want—better factories, better machines and expansion—will only come from the small savings of relatively modest people. These savings are not being invested as they should be, constructively and effectively, in industry. Our savings ratio is one of the lowest in the developed countries. It is between 6 and 7 per cent. at the moment. Hon. Members have quoted repeatedly in the debate that in Japan it is over 20 per cent., and it is much higher in many Western European countries than the rate we are achieving. This is the context in which the new Clauses are being discussed.

I believe that the only effective way to stimulate savings is for a Government, over a period of years, to do something to stop the rate of inflation. When the underlying value and purchasing power of money is being eroded at the present rate, why bother to save? When inflation is increasing this year at, I estimate, about 8 per cent.—I doubt whether the Chief Secretary will deny that figure—it is ridiculous to invest, for example, in gilt-edged securities, which yield only 9 per cent., because one is worse off at the end of the year.

Mr. Sheldon

In calculating the figure that the hon. Gentleman gives for inflation, we must deduct from the increase in costs through wages the actual increase in productivity. Assuming that wages may increase by as much as 10 per cent., a 3½ per cent. increase in productivity would mean a price increase of 6½ per cent. We are seeing figures of that kind on the Continent.

Mr. Baker

That is a most interesting point. Taking the basic figures of the hon. Member for Ashton-under-Lyne (Mr. Sheldon), one gets 6½ per cent. But I suspect that the real wage inflation, allowing for wage drift towards the middle and latter part of the year, will probably exceed 10 per cent. I suggest that it is likely to be about 12½ per cent. If we achieve an increase in productivity of 3½ per cent., which would be a record for the six years of Labour Government, having started with 12½ per cent., it would be 9 per cent. Perhaps the Chief Secretary in winding up will give his view on what it will be this year.

The Prime Minister was repeatedly asked at Question Time on 7th May by my right hon. Friend the Member for Barnet (Mr. Maudling) for his estimate on inflation this year. The Prime Minister refused to answer that question on three sperate occasions, referring my right hon. Friend to the Budget Statement. But there is nothing in the Budget Statement which specifically states what the rate of inflation will be this year. I have hazarded a guess of 8 per cent. The hon. Member for Ashton-under-Lyne thinks that it may be a maximum of 6½ per cent.

Mr. Sheldon

I was not giving my view of the rate of inflation. I was saying that, given the hon. Gentleman's most pessimistic figures, it would be 6½ per cent. I think that it will be considerably less than that.

Mr. Baker

I hope that when the Chief Secretary replies to the debate he will give us his view, because it is awaited with interest. Until my view is refuted I maintain that it forms the basis for argument. When inflation is as high as that, ordinary people are discouraged from saving, and rightly so. The most important thing is to get the climate right for saving and to persuade people that it is worth-while saving, because when money is being eroded someone might as well spend it on almost anything, preferably on something which will retain its value, but which is not very productive. Old pictures, old furniture, and things like that are almost certain to go up in value, but money spent on those items will not increase productivity by any per cent. at all.

I have some reservations about the two new Clauses, because I think that they are rather gimmicky. Both would set up funds which would have special investment positions. They would be exempt from capital gains tax, and to some extent exempt from corporation tax and Schedule F. When it is necessary to produce gimmicks of that sort to stimulate savings, it reinforces my earlier argument that people have lost the saving habit, and it is only from savings that our growth can come.

New Clause 3 contains one of the most unattractive features of any fund— a split fund between Government stock and equity shares. The House of Commons Members' Pension Fund is invested in this way, and its rate of growth is a disgrace. It would be much better if the trustees of the fund had decided to invest in the equity market and not in gilt-edged at all. We would all be better off in our old age if this decision were made as quickly as possible.

Mr. Lubbock

Would it not be better if we had the money to invest ourselves instead of having somebody else to do it for us?

Mr. Baker

I could not disagree with that at all. I do not want to go far beyond the point, but I think that our fund needs a great deal of looking into and investing in a more attractive way.

I draw the Chief Secretary's attention to the rather interesting scheme written about in the Economistonly a fortnight ago to try to stimulate small investors to invest in Government stock. Basically, small investors do not invest in Government stock, but if a Government stock could be issued with an interest rate which grew as the gross national product grew we would get a degree of growth into that stock. It was an attractive scheme, but I see some bugs in it. Nevertheless, it contained an interesting germ, and perhaps the Chief Secretary could talk about the germ when he replies to the debate.

I do not believe that any effective increase in savings will ever be achieved unless the Government are prepared, over a series of years, to commit themselves wholeheartedly to checking runaway inflation. During the last six years we have had a Government who have encouraged inflation at double the rate when we were in power. This leads me to the almost irrefutable conclusion that there will be no real rise in the savings ratio as long as the Labour Government are in power.

Mr. Diamond

I am sure that there is no need for me to say that what does not divide the Committee is the desire to see savings increased and the savings habit being formed and encouraged. First of all, therefore, as evidence of the earnestness which the Government apply to this, I should like to say something about the Government's' savings scheme, Save-As-You-Earn, the success which it has achieved so far and the thinking which went into it. This may have some relevance to what I would then say about the two schemes before us.

The total amount committed to date over the five years to the Government scheme under the three bodies under which it can arise—the Trustee Savings Bank, National Savings and building societies—is about £178 million. The hon. Member for Wanstead and Wood-ford (Mr. Patrick Jenkin) was good enough to say that it has gone up. It has gone up, and it is going up, and I very much hope that it will continue to go up. It is going up very satisfactorily. That is based on contracts received in the first five months and it is a very encouraging start.

As to our thinking behind the scheme, first was the desire not only to encourage savings but to encourage new saving, to find a system which was not only a switch of savings but would encourage a new savings habit. Two things seemed absolutely essential for that purpose. The first was that, in order to encourage the habit, there had to be some kind of contractual savings scheme, under which there were contributions by the saver over a period.

The second thing which seemed to me at all events to be essential was that not only should the saver have the right to withdraw at any time if he needed to but that under no circumstances could he make a loss. The kind of saver whom we are looking to, the small saver, the new saver, not the switcher, has not got anywhere near the stage at which he can contemplate and understand the reason for a loss and not be wholly deterred from future saving if, after saving a given amount over a given period, he had to take it out, perhaps because of a misfortune in the family, and could recognise a loss.

So those are the two essentials to building up a savings habit of the kind which we are all seeking to establish and encourage. I have not said in that a word about income tax, because the incentive was not intended to be a tax incentive. It was a contractual savings scheme with a very good guarantee in return, particularly if the seven-year period was awaited. But, as one was looking to small savers, to those to whom a tax benefit would be of no immediate benefit because they were not standard rate taxpayers necessarily, one did not want to burden them with the need to make an income tax return which they would not otherwise have to make in respect of the income or other benefits derived from the scheme.

Therefore, it was right, mainly for administrative reasons and only incidentally by way of incentive reasons, to have a scheme under which there was freedom from taxes of all kinds. That is the way in which we approached it. It has started very recently and it is going well. We all wish it well and none of us, therefore, wishes to put too much of a competitor against it until it well established. It is against that background that I now wish to consider the two proposals which we are discussing.

10.0 p.m.

There is no contractual element in the scheme proposed by the hon. Member for Colne Valley (Mr. Richard Wainwright). That is a lack of merit, if I may come to the one point where I think that there is a lack of merit. I do not think that the savings habit can be encouraged by a once-for-all or voluntary arrangement of that kind.

There are one or two other difficulties. They have been discussed before, because the scheme has been discussed before, but one strikes me as particularly important. It is that the ability to save in a scheme like this would depend on the co-operation of the employer. Therefore, there would be some who would save in this beneficial way, particularly beneficial to them, and others who would' not have the same facility. This would be haphazard and perhaps a little unjust. What I am saying is that our scheme of Save-As-You-Earn is to be preferred, for the reasons I have given. For the time being, at all events, one should not look towards another scheme which is less attractive, but which would be intended to compete and which would inevitably involve a good deal more switching than does the Save-As-You-Earn scheme.

I cannot tell hon. Members how much switching goes on with the Save-As-You-Earn scheme. It is not possible to make any analysis and give a precise indication. The likelihood is that the switching is considerably less than the likely switching under the Liberals' scheme, but I am not saying anything more than that. I am certainly not closing my mind to savings schemes in general. I am considering what are the best at the moment and how much one can take on at the moment.

I come now to the Conservative scheme. One of the difficulties is that it does not have safeguards against loss. To indicate my anxiety about this, I go back five years. The amount by which theFinancial Timesall-share index has varied over the last five years up to today or yesterday is, for all practical purposes, nil. Whatever the cause may be, the fact is that it is nil. Therefore, anybody investing would have as the benefit of the investment in equities, assuming them to correspond with the Financial Times index, nil. I understand that dividends are to be ploughed back, but there would be nil benefit on capital accumulation, and that is one of the main incentives of the scheme.

Mr. Kenneth Baker

It is nothing to be proud of.

Mr. Diamond

We are all considering how we may best promote further sav- ings. The hon. Member may feel proud and may invite me not to feel proud, but that is not what is at issue. The issue is how best we can get together to promote savings schemes. The hon. Member is interested in doing that and I am. The Committee is asking me to consider savings schemes and the hon. Gentleman and his party have put forward a scheme. I am jobbing backwards to see what would have happened if the House of Commons had had the benefit of the hon. Members' membership five years ago and we had entered into a scheme then when his party was in power.

TheFinancial Timesindex this time last year was 428 as against 358 yesterday. Anyone who entered the scheme a year ago and had need to draw out his investment after a year would find himself making a substantial loss. I do not think that we have reached a stage where a savings scheme which had the possibility of a saver making a loss would commend itself to the Committee. Certainly it would not commend itself to the Government at present. I do not want to close the door to any kind of scheme such as that put forward by the Wider Share Ownership Council, but we have to encourage new savings. We have to encourage the saving habit and we shall discourage it if we subject a possible saver to a possible consequence of that kind. So I do not propose to the Committee that we should at present consider expanding our savings scheme. We have a very good scheme which has got off to a good start. Let us encourage it on the right road. I am grateful for what has been said by every hon. Member who has spoken in this debate. I think that what we are doing is the maximum that we can reasonably do at present.

[Mr. GOURLAYin the Chair]

Mr. Maurice Macmillan (Farnham)

The Committee has become so accustomed to the degree of specialisation from this bench almost matching that of the Front Bench opposite that I should perhaps apologise for this intrusion of health into finance. However, I do so as in some sense representing the efforts since it was founded 12 years ago of the Wider Share Ownership Council to which my hon. Friend the Member for Wansted and Woodford (Mr. Patrick Jenkin) so kindly referred. A great deal has been achieved to encourage both spending and investment, particularly equity investment in those years. The growth of the unit trust movement among other things shows clearly the change of view and of heart among many people apparently not served tonight at any rate by the Chief Secretary.

From various sources and with the work and help of hon. Members on the Liberal benches and also on the Labour benches we put forward from time to time to successive Governments ideas very much on the pattern of these two Clauses. One was the forerunner of the Save-As-You-Earn scheme, which was turned down with very much the same arguments that the Chief Secretary has put forward today. I was absolutely fascinated by the line of argument he took from the Financial Times share index. It appeared to me to indicate that all these wicked capitalists who have to be treated with capital gains tax and concentration of wealth in the hands of fewer and fewer people which we on this side of the Committee are seeking tonight to alter is an illusion and that owners of equity shares have not made any profit or capital gains at all. I find this extremely hard to believe.

I do not think the Committee will pay—I hope it will not—too much attention to the somewhat narrow, technical and selective arguments put forward from the Treasury Bench tonight. They reflected arguments which have been put forward in the past which happily slowly and inevitably have been overcome. The schemes put forward in these two Clauses are the last of a larger package including such suggestions as started in the Post Office Savings Bank, the equivalent of the special investment department of the trustee savings bank and others, all of which were opposed by the Government of the day—I am not blaming the right hon. Gentleman's Government specifically on this—and they have now eventually been brought into being.

What I am blaming the right hon. Gentleman for is the fact that the change of heart and attitude which many members of his party have had, an attitude which has been shown by both Liberal and Tory speakers tonight, does not seem to have penetrated the Treasury Bench. The small saver is still constrained. The tax system encourages him to lend mainly to the Government at fixed interest. It is still difficult for him to invest in equities. He is in some ways thereby unfairly disbarred from the hedge against inflation which one at least of these Clauses would provide for him.

Both of these Clauses seek to remedy just this situation. In doing so, they are not alternatives, as the hon. Member for Colne Valley (Mr. Richard Wainwright) pointed out; nor, still less, are they mutually exclusive. They are, rather, complementary.

In the same way, in the matter of saving and investing his savings in the growth of industry and of production, the small saver is at a disadvantage. He is virtually forced to be a lender and all but prevented by our present system from becoming an owner. These Clauses go a little, and only a very little, way to putting this right. We must all be very disappointed that the Chief Secretary cannot go with us this very little way, especially as I believe—this was hinted at from the Treasury Bench, as well as by other hon. Members—that part of the difficulty that the Government in particular have in getting new savings is that new savings do, as the Chief Secretary admitted, require new media with new attractions and new concepts more in line with the needs of the modern world.

But the right hon. Gentleman did not admit that part of the attractions and part of the new need is a guard against inflation, which seems to be endemic in the whole world and in the United Kingdom under this Government to have reached chronic and alarmingly high proportions. Because for most people, without some such chance of guarding their savings against erosion by inflation, goods are far more valuable than money. To most people spending can well be a great deal more advantageous than saving, particularly spending on durable consumers. I think that the pattern of recent years shows this extremely well. This is the situation which we, in putting forward our Clause, are trying to safeguard by bringing an equity element into contractual saving and investment.

Most important of all are the political and social implications underlying both these Clauses. There is the need for the small investor, the small saver, the new investor, to be able to invest directly in industry, with some safeguards, which we have provided.

The Secretary of State for Social Services once said that private investment was irrelevant. However, as the hon. Member for Colne Valley reminded us, the National Board for Prices and Incomes did not agree with that Secretary of State and was anxious, as long ago as two years, that the ordinary worker on the shop floor should be able to share in the capital growth of industry and thereby become a long-term shareholder, for his profit, his benefit and his security; but also, I suggest, for a sense of participation that only a share in the benefits of industry can bring—participation in the growing wealth of the country. For surely, without such participation, increasing affluence means simply an increase in materialism and might well lead to the charge of a candy-floss society.

10.15 p.m.

Unless more people can share in the benefits and responsibilities of ownership thereby safeguarding their freedom, pride and independence, this will happen. We need growth, yes, but surely towards a responsible society. The increasing attribution of the growth in real wealth to machines and their work requires a spread of share ownership which is slightly helped by these Clauses so that everyone can have a share in the rising income as well as the capital growth of industry. I am sorry that the Chief Secretary appears to reject these arguments. I wish that in putting forward technical and perhaps professional objections to these new Clauses he had had something to say about the principles underlying them.

I know that he must feel a need to protect his new system. I have heard that argument time and again inside and outside the Treasury and have never yet been totally convinced that a new scheme such as is put forward in these new Clauses will damage the S.A.Y.E. plan unless he is not confident that the plan gives a good bargain to those subscribing to it. If he is frightened of fair competition then let him look to the details of the scheme or take ours in its place. We are confident that there is room for all three.

In what he did not say rather than what he did say the Chief Secretary im- plied a willingness to accept a form of society where the share in rising income and capital growth of an expanding industry is available to most people only through the Government control of investment and wages, savings and pensions, the product of investment. It is for this reason that we on these benches will be happy to support the Liberals although it is only fair to make it clear that we are not seeking a separate Division, not because we do not wish to support our own Clause but because it is easier for the Committee if we say now that we are voting for new Clause 3.

Mr. Lubbock

I am extremely grateful to the hon. Member for Farnham (Mr. Macmillan) for his kind remarks about the new Clause tabled by my hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) and for the arguments he put forward in support of it. In recommending my hon. Friends and his colleagues to vote in favour of our new Clause we are in no way derogating from the force of the arguments that he has put forward in favour of that tabled by the Wider Share Ownership Council.

I agree with everything that he has said. I understand his point when he says that the arguments we have deployed this evening have been put forward on numerous occasions in the past. When the Chief Secretary and his colleagues have disputed with us the merits of this new Clause they have used arguments based on the conventional wisdom of the Treasury and those who support financial orthodoxy rather than those who are concerned, as we are, to support new kinds of savings which will benefit the economy as a whole.

The hon. Member rightly pointed out that our tax system at the moment encourages savers to lend to the Government at a fixed interest. We must make a distinction in the incentives we give to savers between the person who is a member and the person who is an owner of the enterprise in which he invests. That is one of the most important elements of new Clause 1.

The other, which again has been emphasised by the hon. Member for Farnham, is that we need to provide, in any mechanism of savings, some kind of ledge against inflation, which is uppermost in the minds of most people who are considering putting some money aside. Of course any new scheme is bound to affect those moneys which are deployed in existing savings, but I will try to produce a counter argument of some importance in a moment.

The Chief Secretary made a perfunctory speech. He rightly said that what does not divide the Committee is the need to increase savings. He spoke in unwarrantedly flattering terms of the results so far of the S.A.Y.E. scheme, saying that £178 million had been committed over the next five years, as though this were something of an achievement. But if one looks at the amounts actually invested in the six months that the scheme has been in existence—we have figures only up to the end of April—one finds that the total amount of payments comes to £6 million and not to the £178 million he quoted, which may be committed over the next five years if all those who have invested so far continue to put their money into the scheme over the whole period.

The right hon. Gentleman said that the point of the S.A.Y.E. scheme was that, under no circumstances—[Interruption.] It is rather difficult to make a speech against the background of conversation which is going on opposite. [Interruption.]

The Deputy Chairman

Order. Perhaps the Committee meeting at the end of the Chamber would remove itself.

Mr. Lubbock

It is rather difficult to deploy this type of argument when hon. Members at the end of the Chamber are discussing something quite different.

The right hon. Gentleman said that an important element of the S.A.Y.E. scheme was that no one could make a loss and that that was to be commended. But people can make a loss in other forms of investment, such as bingo and football pools, and I do not suppose that the Chief Secretary is saying that no one should put money into bingo or football pools. This is a matter of free individual choice. Although there is an incentive in S.A.Y.E., in an extremely good and guaranteed rate of return that is not necessarily what the saver is looking for. As we know from the Premium Bond scheme, he is also interested in a large capital return which is free of income tax and provides a great incentive to investors.

The Chief Secretary also said that our proposals depend on the co-operation of the employer, as though that were a disadvantage. As my hon. Friend said, when this was last debated, the trade unions are not powerless. If these proposals have any value, then of course the representatives of the workpeople can demand of the bosses that they should co-operate in such a proposal.

My hon. Friend pointed out that, as soon as the thing had caught on, many other people would wish to join and it would be very difficult for any sizeable employer to stand out against a demand from his workpeople to provide these facilities.

Then the right hon. Gentleman rather suggested that S.A.Y.E. should not have any kind of competitor. I think that is a defeatist attitude. I am coming to the S.A.Y.E. scheme, but I must say that if he has as little confidence in it as that I am disappointed with him. I would have thought that after rather less than a year of operation—it did not come into force immediately after the Finance Act, 1969—he would have been slightly more optimistic about its future than he appears to be.

Finally, the right hon. Gentleman pointed out that theFinancial Timesindex has dropped in the last year and that if employees had been induced to join such a scheme as we propose they might have become disillusioned with it because they would have lost part of their money. In any such scheme there must be a fixed interest element. We are not suggesting, as I am sure he realises, that the whole of the money invested on behalf of the employees should go into equity stocks, although if one looks at the situation over a period of years the employees would have benefited if the entire amount of their subscriptions had been thus invested. If he is taking the last year as an example, it is not particularly illustrative of the trend over a period of years.

The hon. Member for Acton (Mr. Kenneth Baker) pointed out that our savings ratio has been one of the lowest of any industrialised country, quoting the case of Japan where, he said, 20 per cent. of the gross national product has gone into fixed investment. He said that this was an example we might try to emulate. But why should any saver bother to put money aside when inflation is galloping at the rate of about 8 per cent. a year? He said that perhaps during the current year wage inflation might reach as much as 12 per cent. whereas productivity would only improve by as much as 3 per cent. Although he had some argument with the right hon. Gentleman about the precise details, I think that most of us would agree that the value of money is likely to decrease by something like 7 to 8 per cent. during the current year. That is not an unrealistic figure, although the right hon. Gentleman may dispute it.

We must look at this aspect when we consider the sort of returns offered by S.A.Y.E. and equivalent schemes. If the right hon. Gentleman says that he does not agree with these figures, what is his explanation of the dis-saving which has occurred in recent years and the reluctance of potential savers to join even such apparently attractive schemes as S.A.Y.E.?

I turn now to the question of savings in general. Why is it in the doldrums? On 11th April, The Economist commented on the Report of the National Savings Movement for the last financial year: National savings had such a rum time in 1969–70 that even Sir Miles Thomas, chairman of the National Savings Committee, described it as a ' very difficult year '. The movement has not been notable for dynamic growth since the mid-1960's, but last year even undistributed interest—which in 1968– 69 tipped the scales for a small net gain—could not save it from a £60 million net disinvestment. The Chancellor and the Chief Secretary may claim that the S.A.Y.E. scheme has not had time to produce its full effect.

10.30 p.m.

I daresay that the right hon. Gentleman, who did not adduce this argument, was being modest and would have done so if he had thought that it would carry weight with hon. Members, but at least he came part of the way along the road with us in having a scheme for contractual savings of any kind, even though it could not be claimed that the S.A.Y.E. scheme is likely to make a significant contribution to the total volume of savings.

I return to the statistics which I quoted from the Monthly Bulletin of Statistics and Economic Information. This shows that during the first six months we have received only £6 million from this source compared with the £178 million which the Chief Secretary quoted.The Timesof 2nd February, 1970, said: It seems that it will take more than S.A.Y.E. to reverse this trend. That was the trend towards dis-saving which was discussed in the remainder of that leader, especially the non-realisation of the ideal mentioned by the Chancellor in his 1969 Budget—that direct taxation and, for that matter, indirect taxation, might be reduced to the extent that the private saver could be encouraged to put more money aside.

Yet, unless we can reverse this decline in personal saving, the scope for tax reductions, as the Chancellor anticipated in 1969, is that much more limited. When a Liberal new Clause dealing with much the same principle was debated in 1967, the hon. and learned Member for Derby, North (Mr. MacDermot), then Financial Secretary, adduced several arguments against it. Some have been rehearsed again this evening, but it is interesting to see which have been left out.

First, the hon. and learned Member mentioned the difficulty, which is common to all schemes for the encouragement of savings by way of tax relief, that no one has yet succeeded in making sure that the benefit goes to the new saver. We accept at once that if a new form of savings is more attractive than others already on offer, a great deal of the money flowing into that new scheme must come from withdrawals from other methods of saving.

Mr. Diamond

indicated assent.

Mr. Lubbock

I see the Chief Secretary agreeing. But it is important to bear in mind that the relative permanence of the investment in different types of schemes may be very different. For instance, if money is withdrawn from the Post Office Savings Bank in order to cover contributions which an employee may make under our new Clause, it is likely that that money will be retained as an investment for many years. The withdrawals from the Save-As-You-Earn scheme, and this is one of its advantages which I give to the Chief Secretary, it he wants to use it, have been negligible in the first six months of its operation.

The same would be the case for savings invested under the Liberal new Clause.

There is the argument used by the Royal Commission on Taxation, that tax relief on savings is inequitable as between one taxpayer and another, although it was said that it was reasonable to have the exceptions for life assurance already provided. But the S.A.Y.E. scheme is a fresh departure from the principle and, having made the breach, we can no longer pretend that this principle is of major importance in our taxation system.

Thirdly, the hon. and learned Gentleman who replied to the debate pointed out that if savings are withdrawn in large lump sums and taxed in the year of withdrawal, the saver would find himself in a higher tax bracket and might even be elevated into the surtax bracket. I am interested that the Chief Secretary did not advance this argument tonight, and there are two very obvious answers to the question which must have occurred to the Government since that date. The first is that if the reasoning of the hon. and learned Gentleman were correct it would deter savers from making large withdrawals so as to avoid suffering the penalty of these very large tax deductions and thus there would be an increase in the total amount saved because of this deterrent. The other argument is

that one cannot say in the same breath, as the hon. and learned Gentleman did, that the cost of the scheme would be disproportionate to the volume of savings if at the same time one is claiming that this disincentive exists.

Finally, the criticism was made that the Clause favoured only one of many different kinds of savers. In our view, this is the essential merit of the proposal, because Liberals want to spread the ownership of shares as widely as possible, as does the hon. Member for Farnham. We are eager to use fiscal means of encouraging this kind of saving. If in doing so it is necessary to have discrimination as between one kind of taxpayer and another, we are happy to accept that. This is a very important principle which fits in with the Liberal idea of spreading ownership of industry among as wide a section of the population as possible.

In view of the Chief Secretary's discouraging reply to our proposal and that sponsored by the Wider Share Ownership Council, we recommend our hon. and right hon. Friends to carry the new Clause in the Division Lobby.

Question put,That the Clause be read a Second time:—

The Committee divided: Ayes 152, Noes 221.

Division No. 128.] AYES [10.37 p.m.
Alison, Michael (Barkston Ash) Deedes, Rt. Hn. W. F. (Ashford) Hordern, Peter
Allason, James (Hemel Hempstead) Dodds-Parker, Douglas Hornby, Richard
Amery, Rt. Hn. Julian Eden, Sir John Howell, David (Guildford)
Archer, Jeffrey (Louth) Elliot, Capt. Walter (Carshalton) Hunt, John
Astor, John Elliott, R. W. (N'c'tle-upon-Tyne, N.) Iremonger, T. L.
Atkins, Humphrey (M't'n & M'd'n) Errington, Sir Eric Jenkin, Patrick (Woodford)
Awdry, Daniel Eyre, Reginald Johnson Smith, G. (E. Grinstead)
Baker, Kenneth (Acton) Farr, John Kaberry, Sir Donald
Batsford, Brian Fisher, Nigel Kershaw, Anthony
Bennett, Dr. Reginald (Gos. & Fhm) Fletcher-Cooke, Charles Kimball, Marcus
Biffen, John Foster, Sir John King, Evelyn (Dorset, S.)
Biggs-Davison, John Fry, Peter King, Tom
Birch, Rt. Hn. Nigel Gibson-Watt, David Kirk, Peter
Blaker, Peter Gilmour, Sir John (Fife, E.) Kitson, Timothy
Boyle, Rt. Hn. Sir Edward Glover, Sir Douglas Knight, Mrs. Jill
Bryan, Paul GorJber, Rt. Hn. J. B. Lancaster, Col. C. G.
Buck, Antony (Colchester) Goodhart, Philip Lane, David
Burden, F. A. Gower, Raymond Langford-Holt, Sir John
Campbell, B. (Oldham, W.) Grant-Ferris, Sir Robert Lawler, Wallace
Carlisle, Mark Grieve, Percy Legge-Bourke, Sir Harry
Chataway, Christopher Griffiths, Eldon (Bury St. Edmunds) Longden, Gilbert
Chichester-Clark, R. Hall, John (Wycombe) MacArthur, Ian
Clark, Henry Hail-Davis, A. G. F. Maclean, Sir Fitzroy
Clegg, Walter Hamilton, Michael (Salisbury) Macleod, Rt. Hn. Iain
Cordle, John Harrison, Col. Sir Harwood (Eye) McMaster, Stanley
Crouch, David Hawkins, Paul Macmillan, Maurice (Farnham)
Crowder, F. P. Heart, Rt. Hn. Sir Lionel McNair-wilson, Patrick (NewForest)
Cunningham, Sir Knox Heseltine, Michael Maginnis, John E.
Davidson, James(Aberdeenshire, W.) Higgins, Terence L. Marples, Rt. Hn. Ernest
Dean, Paul Holland, Philip Maude, Angus
Maxwell-Hyslop, R. J. Pym, Francis Tilney, John
Maydon, Lt.-Cmdr. S. L. C. Ramsden, Rt. Hn. James Turton, Rt. Hn. R. H.
Mills, Stratton (Belfast, N.) Renton, Rt. Hn. Sir David van Straubenzee, W. R.
Miscampbell, Norman Rhys Williams, Sir Brandon Vaughan-Morgan, Rt. Hn. Sir John
Mitchell, David (Basingstoke) Ridley, Hn. Nicholas Waddington, David
Monro, Hector Ridsdale, Julian Wainwright, Richard (Colne Valley)
Montgomery, Fergus Scott-Hopkins, James Walker, Peter (Worcester)
More, Jasper Sharpies, Richard Walker-Smith, Rt. Hn. Sir Derek
Morrison, Charles (Devizes) Shaw, Michael (Sc'b'gh & Whitby) Ward, Christopher (Swindon)
Mott-Radclyffe, Sir Charles Sinclair, Sir George Weatherill, Bernard
Munro-Lucas-Tooth, Sir Hugh Smith, Dudley (W'wick & L'mington) Wells, John (Maidstone)
Murton, Oscar Smith, John (London & W'minster) Whitelaw, Rt. Hn. William
Nabarro, Sir Gerald Speed, Keith Wiggin, Jerry
Neave, Airey Stainton, Keith Williams, Donald (Dudley)
Noble, Rt. Hn. Michael Steel, David (Roxburgh) Winstanley, Or. M. P.
Nott, John Stoddart-Scott, Col. Sir M. Wolrige-Gordon, Patrick
Page, John (Harrow, W.) Summers, Sir Spencer Wood, Rt. Hn. 'Richard
Peel, John Tapsell, Peter Worsley, Marcus
Percival, Ian Taylor, Edward M.(G'gow, Cathcart)
Peyton, John Taylor, Frank (Moss Side) TELLERS FOR THE AYES:
Pike, Miss Mervyn Temple, John M. Mr. Eric Lubbock
Prior, J. M. L. Thorpe, Rt. Hn. Jeremy and Mr. Peter Bessell.
Abse, Leo Edwards, William (Merioneth) Lewis, Ron (Carlisle)
Albu, Austen Ellis, John Lomas, Kenneth
Allaun, Frank (Salford, E.) English, Michael Loughlin, Charles
Alldritt, Walter Ennals, David Lyon, Alexander W. (York)
Allen, Scholefield Evans, Fred (Caerphilly) Lyons, Edward (Bradford, E.)
Anderson, Donald Evans, loan L. (Birm'h'm, Yardley) McBride, Nell
Archer, Peter (R'wley Regis A Tipt'n) Femyhough, E. McCann, John
Armstrong, Ernest Finch, Harold MacDermot, Niall
Ashley, Jack Fletcher, Raymond (Llkeston) Macdonald, A. H.
Ashton, Joe (Bassetlaw) Fletcher, Ted (Darlington) McElhone, Frank
Atkins, Ronald (Preston, N.) Foot, Rt. Hn. Sir Dingle (Ipswich) Mackenzie, Gregor (Rutherglen)
Atkinson, Norman (Tottenham) Ford, Ben Mackie, John
Bagier, Gordon A, T. Forrester, John Maclennan, Robert
Barnes, Michael Fowler, Gerry McNamara, J. Kevin
Barnett, Joel Fraser, John (Norwood) MacPherson, Malcolm
Baxter, William Freeson, Reginald Mahon, Peter (Preston, S.)
Beaney, Alan Galpern, Sir Myer Mahon, Simon (Bootle)
Bence, Cyril Gardner, Tony Mallalieu, J. P. W.(Huddersfield,E.)
Bennett, James (G'gow, Bridgeton) Ginsburg, David Marks, Kenneth
Bid well, Sydney Golding, John Marquand, David
Binns, John Gray, Dr. Hugh (Yarmouth) Marsh, Rt. Hn. Richard
Bishop, E. S. Greenwood, Rt. Hn. Anthony Mellish, Rt. Hn. Robert
Blackburn, F. Grey, Charles (Durham) Mendelson, John
Blenkinsop, Arthur Griffiths, Eddie (Brightside) Millan, Bruce
Boston, Terence Hamilton, William (Fife, W.) Miller, Dr. M. S.
Bottomley, Rt. Hn. Arthur Hamling, William Mitchell, R. C. (S'th'pton, Test)
Bray, Dr. Jeremy Hannan, William Molloy, William
Brooks, Edwin Harper, Joseph Morgan, Elystan (Cardiganshire)
Brown, Rt. Hn. George (Belper) Harrison, Walter (Wakefield) Morris Alfred (Wythenshawe)
Buchan, Norman Haseldine, Norman Morris, Charles R. (Openshaw)
Buchanan, Richard (G'gow, Sp'burn) Hattersley, Roy Morris John (Aberavon)
Butler, Mrs. Joyce (Wood Green) Henig, Stanley Mulley, Rt. Hn. Frederick
Callaghan, Rt. Hn. James Hilton, W. S.
Cant, R B. Hooley, Frank Murray, Albert
Castle, Rt. Hn. Barbara Howarth, Robert (Bolton, E.) Neal, Harold
Coe, Denis Huckfield, Leslie Newens, Stan
Coleman, Donald Hynd, John Norwood, Christopher
Concannon, J. D. Irvine, Rt. Hn. Sir Arthur Oakes, Gordon
Craddock, George (Bradford, S.) Jackson, Colin (B'h'se A Spenb'gh) Ogden, Eric
Crawshaw, Richard Jackson, Peter M. (High Peak) O'Halloran, Michael
Crossman, Rt. Hn. Richard Janner, Sir Barnett Orme, Stanley
Dalyell, Tam Jay, Rt. Hn. Douglas Oswald, Thomas
Davidson, Arthur (Accrington) Jenkins, Hugh (Putney) Owen, Dr. David(Plymouth, S'tn)
Davies, Dr. Ernest (Stretford) Johnson, James (K'ston-on-Hull, W.) Palmer, Arthur
Davies, S. O. (Merthyr) Jones, Dan (Burnley) Panned, Rt. Hn. Charles
de Freitas, Rt. Hn. Sir Geoffrey Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Parker, John (Dagenham)
Dempsey, James Jones, J. Idwal (Wrexham) Parkyn, Brian (Bedford)
Dewar, Donald Jones, T. Alec (Rttondda, West) Pavitt, Laurence
Diamond, Rt. Hn. John Kelley, Richard Pearson, Arthur (Pontypridd)
Dickens, James Kenyon, Clifford Pentland, Norman
Doig, Peter Kerr, Mrs. Anne (R'ter & Chatham) Perry, Ernest C. (Battersea, S.)
Driberg, Tom Kerr, Russell (Feltham) Perry, George H. (Nottingham, S.)
Dunn, James A. Latham, Arthur Prentice, Rt. Hn. Reg.
Dunnett, Jack Lawson, George Price, Christopher (Perry Barr)
Dunwoody, Mrs. Gwyneth (Exeter) Leadbitter, Ted Price, Thomas (Westhoughton)
Eadie, Alex Lee, Rt. Hn. Frederick (Newton) Price, William (Rugby)
Edelman, Maurice Lee, John (Reading) Probert, Arthur
Edwards, Robert (Bilston) Lewis, Arthur (W. Ham, N.) Randall, Harry
Rees, Merlyn Slater, Joseph Wellbeloved, James
Rhodes, Geoffrey Small, William Wells, William (Walsall, N.)
Roberts, Albert (Normanton) Spriggs, Leslie White, Mrs. Eirene
Roberts, Rt. Hn. Goronwy Steele, Thomas (Dunbartonshire, W.) Whitlock, William
Robertson, John (Paisley) Strauss, Rt. Hn. John wilkins, W. A.
Robinson, Rt. Hn. Kenneth(St.P'c'as) Swain, Thomas Willey, Rt. Hn. Frederick
Rodgers, William (Stockton) Taverns, Dick Williams, Alan (Swansea, W.)
Roebuck, Roy Thomas, Rt. Hn. George Williams, Alan Lee (Hornchurch)
Rogers, George (Kensington, N.) Tinn, James Williams, Clifford (Abertillery)
Rowlands, E. Tuck, Raphael Willis, Rt. Hn. George
Shaw, Arnold (Llford, S.) Urwin, T. W. Wilson, William (Coventry, S.)
Sheldon, Robert Walden, Brian (All Saints) Woof, Robert
Shore, Rt. Hn. Peter (Stepney) Walker, Harold (Doncaster) Wyatt, Woodrow
Short, Rt. Hn. Edward(N'c'tle-u-Tyne) Wallace, George
Short, Mrs. Renée(W'hampton, N.E.) Watkins, David (Consett) TELLERS FOR THE NOES:
Silkin, Rt. Hn. John (Deptford) Watkins, Tudor (Brecon & Radnor) Mr. Alan Fitch
Silkin, Hn. S. C. (Dulwich) Weitzman, David and Mr. R. F. H. Dobson
Sillars, J.
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