ANNUAL REPORT ON THE OPERATION OF CAPITAL ALLOWANCES

HC Deb 05 July 1971 vol 820 cc958-87

The Board shall publish an annual report on the operation of the system of allowances and charges in respect of machinery and plant set out in sections 30 to 44 of this Act.—[Mr. Dell.]

Brought up, and read the First time.

Mr. Edmund Dell (Birkenhead)

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

Perhaps I may first point out that in the reprinted Finance Bill the relevant Sections mentioned in the Clause are now 37 to 47. I should also make it clear that the annual report for which the Clause asks is, of course, a report additional to that which in any case is published annually by the Commissioners of Inland Revenue.

I want to put before the House a simple proposition which I hope will gain universal acceptance. It is that where in order to achieve certain objectives large sums of public money are spent, or allowed against taxation, there should be regular examination of and report on how far the objectives are being achieved, and on the administration and economy of the scheme.

I say that I hope that such a simple proposition will gain general acceptance because when I had responsibility at the Board of Trade for administering the investment grant system a similar proposition was put to me from the then Opposition, and I accepted it. Not merely did I accept it, but I launched an inquiry, which I announced to the House on 4th February, 1969, into the operation of the investment grant system. Therefore, this idea having come in the first place from the then Opposition and it having been accepted by the then Government, I hope for universal assent that similar considerations apply to the new scheme of investment incentive now introduced.

After all, where Departments expend large sums of public money they in many cases report annually to the House; the Department of Defence does, and so does the Department of Education and Science. The Treasury must now face the fact that arising out of the change in the system of investment incentives it is once more a large spending Department in the area of aid to industry. These allowances are not intended simply to reduce the taxation paid by companies. They are defined, described and intended to be investment incentives, and it is as investment incentives that they should be judged.

When the Department of Defence or of Education and Science puts up its estimates, no doubt these are thoroughly examined by the Treasury, but here we have the Treasury as a large spending Department, and we should enable the House to give careful consideration to the expenditure estimates of the Treasury and to the effectiveness of the expenditure in achieving the objects it has in mind, as we do in the case of these other Departments.

I quite understand that there is a limit on the practicability of assessing the effectiveness of investment incentives. I will not go into great detail on this topic, because I explained the difficulties in full on 4th February, 1969, in a speech of which I am sure all hon. Members are aware, when I announced the intention of the then Government to launch an inquiry into the effectiveness of investment grants.

In summary, the difficulties arise from the fact that there are many influences on investment, and it is very difficult to single out and assess the influence of investment incentives. Nevertheless, this should be done. I said that we were having that inquiry into investment grants. There were also annual reports and, presumably, during the continuation of the investment grant system, residually, there will continue to be annual reports on the operation of that system.

Those reports contain a great deal of information which, unfortunately, under the new system looks as though it will be lost. Those reports do not meet the specification, which I intend to outline to the House, for the reports for which I now call, but they might well have been improved and developed as a result of the inquiry that was launched by the Board of Trade into investment grants.

In addition to the difficulties inherent in this problem of assessing the effectiveness of investment incentives there is another considerable difficulty, and that is that there has been as a result of the introduction of the new system a loss of information; a reduction in the information that will be available about the operation of investment incentives. Compared with the investment grant system, we will have less information, less current information and little regional information.

This is a subject on which I have been in correspondence with the Financial Secretary, and I am grateful to him for the assistance which he has given. I now understand that the Minister of State, Treasury, is to reply to this debate, but no doubt in view of the new Clause he has carefully studied the letter of 24th May which his hon. Friend the Financial Secretary wrote to me. In that letter the hon. Gentleman stated what we had lost by way of information from the change of system, and as this may be regarded as an impartial account of what we have lost, I will read it: With the cessation of investment grants we lose, of course, that statistical data derived from the administration of the system, some of the most important of which were the industrial and regional analyses of capital expenditure on plant and immobile machinery. That is what we have lost: what do we have instead? The Financial Secretary tells me that instead we have the existing information about capital formation, which is of little regional assistance, and we will have the new annual censuses of production, but as the first has been taken this year in respect of 1970 this information will be somewhat in arrears, and we have yet to see it. Turning to capital allowances, where information about capital allowances is up to date it is too highly aggregated, and where it is not too highly aggregated it is hopelessly out of date.

Much of the latest information now available relates to 1968. The Financial Secretary recommended to me certain tables in the 1971 Inland Revenue statistics, the latest year for which is 1967 when the investment grant system was just coming into operation. On this basis we will have to wait a considerable time before we have information about the capital allowances system which is in any way relevant to an assessment of its efficiency. There is no regional information about capital allowances.

Therefore, it has to be accepted—as, I believe, the Financial Secretary did accept—that the information, at any rate in regional terms, is grossly deficient. What the hon. Gentleman said was that the figures in respect of capital formation and capital allowances … provide most of what could reasonably be required, apart from a regional analysis. I must tell the Financial Secretary that I do not think that they do contain most of what could reasonably be required, and the qualifying clause, "apart from a regional analysis", is of some importance.

Regional policy is one of the main objects of having investment incentives at all. If one does not have information on effectiveness in that area what is the use of the information that is available? We therefore need to improve the quality of the information which will be available about the operation of the scheme, and particularly do we need to improve it as regards regional information. Regional objectives are the main objectives of investment incentives, and we must see that they are being fulfilled. So we need a report. The report should state the available information. It should comment on the policy and administrative aspects of the operation of the capital allowances scheme. I suggest that the report should be regularly considered and reported upon to the House of Commons as to policy possibly by the Trade and Industry Sub-Committee of the Expenditure Committee and as to administration by the Public Accounts Committee.

5.0 p.m.

I will now outline some of the matters which I think should be dealt with in such a report. First, administration. There is a danger of thinking that tight administration of allowances is less important than tight administration of grants. I emphasise that these allowances are as much public expenditure as the grants ever were and should be treated accordingly.

There are certain possible sources of over-allowance against taxation within the scheme. The most obvious is the movement of plant and machinery out of development areas or, in development areas, between manufacturing industries, on the one hand, and service and distribution industries, on the other.

Under the investment grant scheme there was a system of inspection to check on what was being done. This point was raised in Committee by my hon. and learned Friend the Member for Lincoln (Mr. Taverne). In response to the reply from the Chief Secretary he said that he was not convinced. He had good reason not to be convinced. The Chief Secretary said: In the tax case, the issue would be of less overall significance—merely a bringing forward to an earlier year of the tax allowances on 40 per cent. or less depending on when the transfer took place. That is an interesting comment. It is about these important differentials which are alleged to inspire industrialists to invest in development areas. When dealing with administration apparently these differences are of little importance; nobody is likely to try to benefit from them. So, when the Government think that they have to persuade us that they have a significant regional policy, these differentials are important; but when dealing with the administrative aspect they say that they are not significant.

The Chief Secretary, in an attempt to console the Opposition about his refusal to accept my hon. and learned Friend's comment about the need for tight administration, said: Not least among the factors enabling the Revenue offices to detect such matters is their general familiarity with taxpayers' business activities. Their continuing contact enables them to identify those cases where there could be a special risk of diverting assets to premises outside a development area, and to make appropriate inquiries."—[OFFICIAL REPORT, 14th June, 1971, Standing Committee H; c. 607.] The one kind of information which the Inland Revenue certainly does not get in all cases is the regional distribution of a company's investment. The Financial Secretary, in his letter of 24th May, told me specifically that that was the reason that regional information could not be provided. So, on the one hand, we are told that regional information cannot be provided because it is not necessarily included in the return, and on the other, that tax inspectors can check merely looking at a piece of paper representing the tax return of a company. I do not believe it. I think and fear that there is grave danger of slackness in administration in this sphere. The Public Accounts Committee will have to watch this as keenly as it watched similar aspects and problems with the investment grant system.

In Committee the Opposition also raised the problem about ships and claims for free depreciation on ships operating in a way which might be a cost on the balance of payments. I do not propose to go into this in any detail, because the Chief Secretary in Committee, at c. 600, admitted that it was a severe problem, and made it clear that it was being watched. I know that it is a different problem from that which existed with the investment grant. I accept that, when in Government, we did not make free depreciation for ships conditional on a balance of payments test. In logic I think that we should have done. Nevertheless, I am not satisfied with the present position. I hope that the Government will watch it carefully. Meanwhile, I simply ask one question: will the Treasury or the Inland Revenue make a balance of payments test where there is a claim for free depreciation on a ship built outside the United Kingdom? If not, why not?

The next set of problems I want to indicate as the subject matter for discussion in the report proposed in the new Clause involve certain policy matters relating to the effectiveness of the new capital allowance system. First, what is the real value, as an investment incentive, of a 60 per cent. tax allowance, particularly for distribution and services? The Government have introduced this 60 per cent. tax allowance for distribution and services. We discriminated against them. The initial effect of the introduction of this great benefit on distribution and services has been a fall in investment intention in that area. On 16th June the Department of Trade and Industry forecast a fall of 5 per cent. in investment intention in 1971 compared with 1970, but that 1972 would be the same as 1971. So the first effect of introducing an incentive, which was not there before, is a fall in investment intention.

What is the Government's view? This is the kind of matter on which I should like them to comment. Do they suggest that the fall would have been greater but for the introduction of this investment incentive? Incidentally, the Financial Times today, in its assessment of investment prospects, does not seem any more hopeful than the Department's assessment of 16th June. This again shows that perhaps the new system is not working as effectively as the Government hoped.

The second area which might be discussed in the report proposed in the new Clause is the effect of the new system on important industries of low profitability, such as shipbuilding, for example. Will they become profitable, or will they become even less competitive through failure to invest? Similar considerations might apply to certain sections of the motor car industry, which is one of our most important exporting industries.

What will happen under this system to important industries where there is a long period of gestation before profit arises? I instance large chemical works or deep mining. We had a discussion in the House a short time ago on mining problems concerning one particular company. I believe that the C.B.I., in making its representations against the investment grant system, at any rate seemed to believe that this was one area in which there should be a grant system. However, the Government have made no provision to meet the C.B.I, on that point. I recall the hon. Member for Bedford (Mr. Skeet) saying that he was against the investment grant system in nine cases out of 10, but that in this tenth case grants were needed. However, grants are not provided.

Let us have some information from the Government and regular reports about the effect of the introduction of the capital allowance system on important import-saving activities of this kind.

Above all, we want an assessment of the effect of the new system on development areas. We believe that the change has so far had a marked adverse effect on development areas. The kind of information which might be provided and discussed in the report which I am describing is what the actual differential has turned out to be. The Government have said that the differential is unchanged following the introduction of the new system as compared with what it was on 26th October, 1970. I have said in the House many times that I believe that statement to be misleading, and indeed meaningless, but the Government obviously believe that it means something and, therefore, will be able to justify it in due course, I hope.

Let the Government in due course provide the information which shows that the differential has been maintained. I fear that the Minister of State will say, "The Financial Secretary told you in his letter that we cannot do it". So they make claims to the effect that the differential is being maintained, sustained by the knowledge that there will be no test of the accuracy of their claims at any time in the future.

It is not good enough. If the Government make claims of this sort, they must be able to justify them. What, again, is the actual flow of aid to development areas? What will it turn out to be? In Committee on the Floor of the House I quoted the remarks of the Prime Minister in 1965 to the effect that it was not simply the differential that was important but the actual flow of aid to the development areas. I am glad that the Minister of State is here so that I can remind him of those wise words of the Prime Minister in 1965, because the Minister of State has been telling the House for some time that the only thing that matters is the differential. This is a point on which he is in severe disagreement with what the Prime Minister said in 1965. I believe that the Prime Minister was right in what he said in 1965 and that on this point the Minister of State has been talking nonsense.

However, what will be the actual flow of aid to the development areas? Again, I fear that the Minister of State will refer to the Financial Secretary's letter and say, "We cannot tell you". It is important that we should know. What do the Government intend to do about it, and how will they report to the House?

What will be the effect on inward investment of the reduction in the level of assistance? This is another subject which could be the subject of information and comment in a report such as I am suggesting.

There is a competitive element as between countries and an increasing proportion of American investment has been going to E.E.C. countries. If we joined the E.E.C. this might continue to be the case unless there were adequate incentives to investment from abroad in Britain. Therefore, it is important that there should be a regular assessment of what is happening.

Another area which should be commented on is the effect on investment in development areas of the failure to provide for the possibility of transitional arrangements if, for example, development areas are downgraded. As a result of a failure to provide for transitional arrangements there will be great, and I believe damaging, uncertainty regarding the reliability and duration of the new scheme. People who are proposing to invest will be uncertain to what extent and for how long they can rely on it, and their doubts on that score will be reinforced by the Government's failure to make any provision for transitional arrangements in respect of projects in process on 26th October and their decision to limit their transitional arrangements to contracts that had actually been signed.

I have some experience of these matters, because again and again during my period at the Board of Trade potential investors came to see me and asked what guarantees could be given about the duration of the investment grant system. I could give no guarantees. I could only point out the fact that the then Opposition did not like the investment grant system. However, I said, and I think that I was entitled to say, that in the past there had been provision for transitional arrangements.

Indeed, had I been talking to those potential investors in the period of the General Election I would have been able to point to the fact that the Conservative Party was suggesting that there would be transitional arrangements. In fact, there are no transitional arrangements. This will have an adverse effect on people's confidence in the existing scheme in development areas.

In short, a report of this type would provide the opportunity for an annual review of development area policy. This year, to take an example, it would help Parliament, the public, and particularly the Government, to understand why, after the large reductions in taxation upon which the Chancellor of the Exchequer prides himself and the introduction of free depreciation in development areas, there is nevertheless higher unemployment and a severely reduced number of inquiries by industrialists regarding investment in assisted areas.

There is need for a report, because there is here a large body of public expenditure. It is necessary to test its efficacy. The United Kingdom has a special problem of slow growth. Our main hope of faster growth is to stimulate investment. Lacking faster growth we need special and effective aids to investment. There is a need to stimulate, and indeed to distort, the market forces to achieve a higher rate of investment. Therefore, there is a need to assess regularly the effectiveness of the aids that are provided. The evidence so far is against the new system. At any rate let us have a regular opportunity to assess it which might lead the Government to a realisation of the need to change it.

5.15 p.m.

Mr. Douglas

My right hon. Friend the Member for Birkenhead (Mr. Dell) made an excellent speech in proposing the Clause. The additional points I shall raise relate to information which we might seek to have embodied in this type of annual report relating to company balance sheets.

I vividly recall reading the extract of a speech by the Secretary of State for Trade and Industry in Dusseldorf when he made some very poignant remarks about the adequacy of accountancy in contemporary circumstances of high inflation and where companies' asset structure and their balance sheet valuations did not reflect the cost of replacement either at current valuations or at possible future valuations.

If we are to be troubled about the adequacy of the accountancy profession—this is particularly important in a regional context—and if companies are to be squeezed from the point of view of liquidity and are to hold up investment, we must carefully examine whether tax-based incentives are suitable to enhance investment opportunities in a period of high inflationary pressure. It would be appropriate in the context of a report to ensure that in any consideration of investment opportunities questions such as the degree of inflation prevailing and the adequacy of investment incentives offered by the Government were taken into consideration.

I agree wholeheartedly with my right hon. Friend that the Treasury has an equal—perhaps a greater—responsibility to examine the method of approach by companies in their use of the investment incentives now proposed by the Government. In the past the Department of Trade and Industry, or the Ministry of Technology as it then was, built up a considerable body of expertise to examine whether the assets for which capital allowances were given were deployed for the purposes and in the areas for which the allowances had been claimed. The Treasury should have transferred to it this body of expertise, either in terms of Civil Service personnel or the files and details of the companies which in the past have used capital allowances, including details of the regional impact of such allowances.

My right hon. Friend has made a number of valid comments about the regional aspects of capital allowances.

The Minister of State, Treasury (Mr. Terence Higgins)

The hon. Gentleman keeps referring to "allowances". Does he mean grants or allowances?

Mr. Douglas

I mean grants—the grants which the Labour Government deployed.

We have gathered a great deal of information as to the regional impacts of these grants. The Select Committee on Scottish Affairs paid particular attention to the use to which these allowances were put in Scotland. Unfortunately, because of lack of detailed information then, no distinct conclusion could be reached visà-vis tax allowances in this situation. However, this information is decidedly appropriate in determining the effectiveness of regional policy. If we are to enter the European Economic Community, the effectiveness of our types of regional incentives must be weighed against others.

To digress here, it is noteworthy that the Northern Ireland Government, in their proposals, will have some opportunity to give incentives in the form of grants. I assume that they will have some measurement of the effectiveness of grants in Northern Ireland to ascertain their usefulness in creating employment opportunities there. Unless we have that type of measurement, we shall not have an opportunity to assess the effectiveness of our system of investment incentives in enhancing employment opportunities within our regions.

If we were to argue about the effectiveness of the phasing out and ending of the regional employment premium in 1974, we should have to see how effective is the harmonisation of tax-based incentives in marrying up with the creation of the right type of employment opportunities in the regions. Right hon. and hon. Gentlemen opposite have always argued that grants created a capital-intensive structure in the regions. That may or may not be true. One of the criticisms which we might have made about grants was that we did not get the necessary spin-offs from them that we might otherwise have expected in terms of enhancing employment overall. If we remove the grants, as we are about to do, and introduce tax-based incentives, we shall be unable, in regional economic terms, to look at how these new incentives will relate to the build-up of either foreign-based industries or indigenous companies within the regions.

In regional impact, it is essential to have some assessment of the effectiveness of the new policies. The Government may claim, "It is early days yet. We are only now getting the opportunity of increasing company liquidity and, therefore, we cannot see at present how tax-based incentives will operate." That may be an excuse which the Government could proffer, or it may be offered as a reason.

I cannot find any company of any magnitude in Scotland that has confidence in the future in terms of the new investment incentives. I can find no company willing to say, "We are convinced that the new tax-based incentives are desirable in the regional context." I hope that the type of report for which my right hon. Friend has asked will be produced by the Government—not because we ask for it in narrow, partisan terms but because we want to see in concrete terms the effectiveness of regional policy on different dimensions and attitudes.

Mr. John Horam (Gateshead, West)

As my right hon. Friend the Member for Birkenhead (Mr. Dell) so rightly said, investment allowances are a major element in any regional policy. We know the problems of regional policies; at least, we see the conditions which are produced by regional imbalance in this country. We who come from and represent development areas see these problems every time we visit our constituencies, and they colour our whole approach to politics and to issues of this kind.

Equally, we know, in theoretical terms, the kind of solutions that we would want. We want solutions which would deploy public money effectively and which would be, in the fashionable phrase, cost-effective. But we also want solutions which are effective and which are seen to do what they are m[...]ant to do, which is to reduce the regional imbalance.

Part of the link between the problems and the solutions is provided by information. We must have good information if we are to plan properly and sort out the most effective solutions. I accept that there can be debate on even a non-political basis about the kinds of solution that there may be to our regional problems. Yet it is generally agreed by probably all hon. Members that the regional statistics and information that we have at present are extremely inadequate. This was first revealed when we had the strategic document produced by the Planning Council set up by the previous Labour Government. One of the big criticisms of that Council, excellent though its analysis was, varying from region to region, was the self-evident paucity of statistics and information on which it relied. It relied mainly on employment statistics, which were produced widely and well, for obvious reasons. But there was little else of a critical kind to rely on to diagnose the fundamental problems, which the Council attempted to do.

Equally, the Annual Abstract of Regional Statistics contains a great deal, but very little of it is related to some of the crucial equations which we have to look at, some of the fundamental factors we need to know far more about in the economic, social and industrial health of a region. Far too few of the statistics are related to the important things. If one looks at that Abstract, one sees that in the whole area of statistics on regional matters, only one page is about investment by private industry. That is a page summarising the effect of investment grants. That page will no longer be present in future years. Presumably we shall have no information directly related to the regional consequences and effects of investment grants, allowances, or whatever system is used.

Equally, comparing that with the sort of information available in other countries, under the French planning system the regional equation is built in at the beginning of the public expenditure and taxation operation. They know not only on what programmes the public expenditure is being made, but also exactly where the money is spent. They break it down regionally, that is to say, vertically as well as horizontally, so that they know not only what is being spent on schools throughout the country, but they can see even in a very small area what is being spent on schools, roads, grants to industry and so on. That is the kind of view which we need to have of our policies before we can make them effective. We need that kind of insight into the situation.

5.30 p.m.

Yet, given this paucity of information—as compared with the excellent information achieved by various methods in other countries—this Government will reduce the amount of information coming forward. Furthermore, they do not intend to try to make it better than what it is. They do not care very much about the situation. I want to quote the reply given to my right hon. Friend the Member for Birkenhead at an earlier stage, when he referred to the question of information resulting from the new system.

The Chief Secretary said: The right hon. Gentleman asked about the provision of information and statistics under the new system. The Revenue is not able to publish statistics about tax allowances given in the development areas because many firms operate in both development areas and elsewhere. In preparing their accounts for tax purposes they are not required to separate out the allowances which arise in different localities. I suppose that we could consider forcing people to provide this information, but I am against adding to the administrative burdens on industry. However, statistics relating to tax allowances generally are published in the National Income Blue Book and Inland Revenue statistics."—[OFFICIAL REPORT, 18th May, 1971; Vol. 817, c. 1221.] There are certain inconsistences underlying the lordly idea that we must not trouble industry, and that it is too much bother for industry to produce the information required. First, industry is getting a certain amount of money in respect of these allowances from the State and, ultimately, from the taxpayer. To that extent Parliament has a right to know where this money is going and how it may be spent, and it should be given the maximum information.

Not only has Parliament the right to know; industry itself does a great deal of digging for information of just this kind for its own planning purposes. I happen to know something about this matter. Before I became a Member of Parliament I was an economic consultant, and I can tell hon. Members that a whole business is devoted to the task of research for the benefit of industry—searching for the information that industry needs, sometimes at inconvenience to ordinary members of the public.

It is a curious argument that industry which is receiving money from the State should not be troubled by being asked to give further information because it will complicate the tax forms that have to be filled in. That same information is needed by industry for good planning. Industry is finding out as much as it can about the general problems in order to get its own planning right.

Mr. Higgins

Can the hon. Member show us how the information that he has indicated would be of relevance to a firm's capital budgeting proposals?

Mr. Horam

I do not quite follow the Minister's point. I thought that my right hon. Friend the Member for Birkenhead explained how further information on capital allowances would help our understanding of its effectiveness.

Mr. Higgins

I understood the hon. Member to be relating it to the capital budgeting decision of individual firms.

Mr. Horam

No—not at all. I was making the point that it is a little absurd to argue that we should not trouble industry for further information about its activities, or about money that the State gives it, when industry itself takes a lot of trouble to discover first such information from its customers and clients, and from ordinary members of the public.

At one stage I worked for Rowntrees for six months, in London. I questioned surburban housewives, trying to discover whether they wanted the covering of Kit-Kat bars to be thick or thin, and made of milk or plain chocolate; what they wanted the wrapper to look like, and whether they were satisfied with the price. The price, incidentally, is now very much higher than it was then.

That is the sort of information that industry desperately requires and goes to a great deal of trouble and inconvenience to acquire. The Government, similarly, go through a great deal of trouble to acquire information for planning purposes. It is said that industry should not be bothered; that it has already too many forms to fill in. But this information is essential for planning purposes. We must have it if we are properly to plan the facilities and services that the State provides.

I want to know what the Chief Secretary meant when he said that firms need not send in the information about the distinction between development areas and non-development areas. I should have thought that the whole point was that there are differential allowances for development areas and non-development areas. I find it difficult to believe that such information should not be sent in some way to tax inspectors, since there is a differential grant and a differential allowance. I accept the Minister's greater wisdom—I know that he reads his briefs well—but I am surprised that that should be the case. I should have thought that a firm would send in this information. It would certainly need it itself, and it would not be involved in much trouble if it had to pass it to the taxation authorities.

We are concerned not only with the Government's reluctance to ask for the provision of information of this sort, on grounds that we must beneficently call laziness; we are also a little suspicious about the attitude underlying it. Since the Government are committed to reducing public expenditure—or, at least, reducing the rate of increase in public expenditure—and made pronouncements about regional policy even before the General Election which indicated that they believed in some form of regional policy, we find it difficult to know how they square the circle. We suspect that they do so by occasionally announcing little lump sums for ad hoc programmes which, when analysed in the way that my right hon. Friend the Member for Birkenhead has analysed them, add up to a programme far less satisfying and less effective than the one operated by the last Government, or that we should be entitled to hope for at this point in our history.

The proposals under the Local Employment Act were shown eventually to indicate a rate of increase lower than the rate of increase achieved by the last Government. Secondly, there was help to the special development areas, which, once the Prime Minister got his facts right—he over-estimated the position in the first place by 150 per cent., and even then it will be only £10 million in five years' time—are shown to amount to nothing very quickly. More recently there was a statement from the Secretary of State for the Environment on policy in the housing areas. That seemed to show a quaint mixture between regional policy and housing policy. We are all aware that housing is as bad in London as in any development area. Hon. Members who represent development areas would concede that. This is a strange mix-up in inter-departmental co-ordination. If that is what the Secretary of State's policy will lead to, he had better start on a different tack.

Finally, there was the inspired leak—perhaps the word "inspired" is a little odd in this context—of a £100 million public works programme for the winter. The word "inspired" is a little too ambitious for something that the Labour Government have already done four times, in the winter, and which is no more than a topping up of a well-known programme. Not only that; it was used by the Labour Government for anti-seasonal purposes to counteract the seasonal drop in the work of the construction industry.

This Government seem to be using it to cope with the whole problem of unemployment, and in that respect it is more unsatisfactory now than it was in the first place. This policy of announcing with great fanfares that lumps of money are going to be available in five years' time, to be put into regional economies, seems to require more careful inspection—the sort that would arise if we had an annual review linked to the capital allowances programme, as an essential part of regional planning. In order to bring about more effective programmes, with good planning, we must have more information coming forward on regional matters which will allow people to make more effective judgments of the effect of our programmes. That would clear away the vast cloud of suspicion that hangs over the Government's efforts so far.

Mr. Dalyell

It struck me, when some of my hon. Friends were speaking, that there was an uncharacteristically petulant reaction from the Minister of State at the Treasury when he intervened merely to ask why we wanted all these statistics anyway. I may have misinterpreted him, but that was the impression created in my mind.

The first reason, of course, was given admirably by my right hon. Friend the Member for Birkenhead (Mr. Dell). How can we operate a regional policy without this kind of information? But there is, in my view, a second reason, namely, that there are a great many people who want to know where substantial sums of taxpayers' money have gone. Here is an example. With the recent closure of Plessey in Alexandria, there are a great many of our fellow-countrymen, as my hon. Friend the Member for East Stirlingshire (Mr. Douglas) knows, who simply want to know how it can happen that so much money goes into creating jobs and then—lo and behold—one Friday afternoon we are told that the whole operation is coming to an end. In a democracy, this sort of legitimate curiosity should be satisfied, and this is a good reason, apart from all the other points raised by my right hon. Friend, for having a report of the kind proposed.

I realise that time is short, and I shall briefly state three separate issues. First, there is the question of the low-profit industry. It must be remembered that in development areas it is precisely the low-profit industries which provide many of the male jobs, if not of the female jobs. On this count alone, therefore, they are entitled to some help. But the low-profit industries now, unfortunately, include some of the key growth industries. I think, in particular, of electronics and machine tools. When one is told by Mr. De Barr of the Machine Tool Research Association that orders are now running at under 40 per cent. of what they were 18 months ago, one sees the seriousness of the situation.

How are the Government's new benefits, so called, helping the current low-profit industries such as machine tools or—dare I say—the electronics industry, which is in considerable crisis at the moment, not just in the West of Scotland, as evidenced by the Plessey problem, but far more generally? How does the Minister of State think that the new system will help the likes of the electronics industry in Scotland? Why should we not have a fairly full analysis in the kind of report which we have proposed of what the Government are doing in respect of these job-creating industries?

The second issue is that of the long-gestation industry. I have shipbuilding particularly in mind here. The sub-contractors of the Upper Clyde, or, for that matter, in this case, of the Lower Clyde, are anxious people now. They are dependent on the shipbuilding industry far more than even the sub-contractors of Rolls-Royce are dependent on Rolls-Royce.

Mr. Douglas

I hope that it was just a slip of the tongue. With respect, I should not have thought that the situation of Lower Clyde sub-contractors was in any way on a par with the situation on the Upper Clyde.

Mr. Dalyell

I accept that at once. The point I am attempting to make is that shipbuilding sub-contractors as a whole are more dependent on shipbuilding than even the Rolls-Royce sub-contractors are on Rolls-Royce.

Here again, among all the other causes of recent trouble, the effect of the Government's own measures should be looked at candidly. This is all the more reason for a serious and candid report such as is called for in the new Clause.

The third issue relates to the multinational company. Whereas, by the time the scheme had reached some maturity—it was not altogether satisfactory at the beginning—it was comparatively easy to identify the effects of grants under the old system in relation to multi-national companies, I suspect that it is now, under a system of tax allowances, fairly easy for the multi-national companies semi-legitimately to manoeuvre their profits and returns between factories in development areas and factories in non-development areas so that great confusion can be created.

It is all the more important, therefore, as we become more dependent on multinational companies, to try to identify precisely what the effects are of granting taxpayers' money under the new system. I make no bones about my view that the system lends itself to abuse by certain multi-national companies, were they so minded, the like of which we did not have under the Labour Government's system.

I realise that time is short, so, having made my three points, I leave the matter there.

5.45 p.m.

Mr. Higgins

The right hon. Gentleman the Member for Birkenhead (Mr. Dell) moved the new Clause in characteristically constructive frame of mind, and I shall do my best to reply to the various points which he and his hon. Friends have raised. As the right hon. Gentleman said, the number of Clauses has changed since the Committee stage, so that the reference now, I think, should be to Clauses 37 to 51.

The right hon. Gentleman began by stressing that what he had in mind was an additional report, that is, as I understand it, a report in addition to that which is at present published by the Board of Inland Revenue, but it became clear during the debate that many of the analyses for which he is asking, and for which his hon. Friends the Members for East Stirlingshire (Mr. Douglas) and for Gateshead, West (Mr. Horam) are asking, are not of a kind which could reasonably be carried out by the Board of Inland Revenue, since they are, in effect, broad economic analyses either of the effect of grants as against allowances on individual firms or of the effect of allowances on the economy as a whole.

Therefore, the terms of the new Clause do not seem to meet the argument which the right hon. Gentleman began to advance once he left his introductory remarks. The right hon. Gentleman compared the report required in the new Clause with the Department of Trade and Industry's reports on investment grants. But these reports were self-contained in a separate part of the administration of the responsible Department. The report which the right hon. Gentleman is asking the Inland Revenue to produce on an annual basis is a report on the system of allowances and charges on plant and machinery only in so far as it has been altered in this Finance Bill.

I do not suggest that one should necessarily read the Clause literally, but it would, as it stands, require a report on capital allowances for expenditure incurred on plant and machinery before 5th November, 1962, and after 26th October, 1970, but not for expenditure incurred between. Also, it would cover the new free depreciation allowances in respect of plant and machinery in development areas, but not in respect of mining works.

Therefore, although I do not make much of the point, I take it that the right hon. Gentleman does not intend us to read his new Clause literally in that sense. However, even if we do not read it literally, the point remains that the new allowances in the Bill are only one part of the system of capital allowances covering the use in trading of a wide variety of depreciable assets, such as industrial and agricultural buildings, patents, know-how and the rest, and this system in turn is only one part of the system of rules for computing taxable profits. So the kind of report which the Clause seeks to introduce seems rather inconsistent with the idea that it is to be a broad survey of the entire regional development scene.

The Inland Revenue already publishes an Annual Report which is presented to Parliament as a Command Paper and is supplemented by a volume of statistics. Of course the Board will put in the Report anything of special interest with regard to capital allowances which it considers relevant in that context. But it does not seem that the kind of instrument which the right hon. Gentleman proposes is one which would carry out the objectives he and his hon. Friends seem to have in mind.

The right hon. Gentleman also made a number of points about the provision of information on capital allowances and so on. He said that he had been in correspondence with my hon. Friend the Financial Secretary on the subject. The House will not wish me to repeat in detail the elaborate summary of all the data that happens to be available, but one point in particular should be taken up on the new census of production which will be produced annually, beginning this year with a survey covering 1970. This will be a source of information which I think will prove on a regional basis to be of relevance to the kind of problems the right hon. Gentleman mentioned.

Mr. Douglas

May we have an assurance that the Report is comprehensive? My recollection is that it is a sample survey and will not necessarily give the information asked for.

Mr. Higgins

It will give figures on a regional basis. I shall come to the relevance of figures from such surveys. The hon. Gentleman said that the figures are too aggregated or too out of date. That is a good debating point, but in making decisions on most such matters the question of how out of date they are is not the most crucial thing, provided they are not very out of date. We want figures on which we can appraise the policy concerned. In that context, it is important to distinguish between the effects of measures on the individual firm and their effects on general economic policy. That was why I intervened in the speech of the hon. Member for Gateshead, West. I certainly was not seeking, as the hon. Member for West Lothian (Mr. Dalyell) suggested, to intervene unfairly but was seeking to distinguish which of those two objectives he was talking about. The right hon. Gentleman and the hon. Member for Gateshead, West with with their experience in industry—and I have had some slight experience in industry on capital proposals—will agree that to try to appraise the impact of incentives on the individual firm on the basis of the kind of figures which the right hon. Gentleman talked about would be very difficult. As he himself rightly pointed out in a speech back in 1969, many different variables may affect the investment intentions of individual firms.

I found it extraordinary that the hon. Member for West Lothian should suggest that the scope for abuse is rather greater under the system of allowances than under the system of grants. Opposition spokesmen on the subject—particu larly the hon. and learned Member for Lincoln (Mr. Taverne) in Committee, as reported in column 608 of the OFFICIAL REPORT of the Committee proceedings—have not fully appreciated that it is a great deal more difficult for abuses to occur under a system of allowances than it was under a system of grants.

The right hon. Member for Birkenhead, referring to the remarks of my hon. Friend the Chief Secretary in Committee, asked whether inspectors really could look at the proposals and decide whether abuses were taking place. As I and my hon. Friend have tried to show, the inspectors of taxes look very closely at the position of the individual firm. If, for example, the inspector knows that about 40 per cent. of a firm's trade is being done in a development area, and 100 per cent. allowances are being claimed, he might well look at the matter rather seriously. The inspectors are naturally more in touch with the individual firms.

The situation with regard to investment grants was very different. The Board of Trade Report on investment grants for 1968–69 said: Since this system of physical inspections of plant and machinery started in the autumn of 1967, 21,000 establishments have been visited and this has resulted in prosecutions of two cases of irregularity. That might suggest to the hon. Member for Gateshead, West, who stressed the importance of not putting too heavy a burden upon individual firms, that we can perhaps carry the proposals for tight administration to too great lengths. Our view is that the system of allowances which we have introduced is likely to be very carefully scrutinised by the individual tax inspectors who are responsible. We believe that we have a soundly-conceived system of incentives, and that the system of administering it through the 700 local tax offices will enable us to overcome the kind of difficulty which the hon. Gentleman raised.

A number of remarks were made about the effectiveness of the change of system. This has been a major issue of political dispute between the two parties over the years. It is not our view that an annual report of the kind suggested by the right hon. Gentleman this evening would be either comprehensive, for the reasons I have given, or effective in enabling us to appraise the basis of the allowances. While we shall certainly take into account what has been said, and the Inland Revenue will carefully consider what further information can be produced, we do not believe that the House should accept a proposal for an annual review of the kind suggested in the Clause. I therefore hope that the House will reject it.

Mr. Dalyell

The issue was raised of the low-profit company which gives jobs in development areas, particularly male jobs. Can the hon. Gentleman say something about an analysis of the effect of the system on that form of company?

Mr. Higgins

A number of points were raised, and I naturally listened to them with interest. Many of them are matters of controversy between the two parties. I cannot see how an annual report of the kind sought would necessarily give the data which would meet the problem the hon. Gentleman has raised. Clearly, we could not break down the allowances received by individual firms so that they could be identified.

6.0 p.m.

Mr. Dick Taverne (Lincoln)

This is a serious Amendment which was carefully argued by my right hon. and hon. Friends. The Minister of State has not come within a mile of answering the case for more information. He said that the kind of information asked for could not be supplied by the Inland Revenue because it would require broader economic inquiries which the Inland Revenue would not be in the best position to undertake. There would be no objection from us if inquiries of this kind were carried out by the Treasury, which would be in the right position to do so. But since this is related to capital allowances, presumably it is a subject which the Board of Inland Revenue could publish. The hon. Gentleman said that the Board's Annual Report will mention any special features, but the burden of our case is that the kind of information now supplied is not sufficient to deal with this major question.

It is true that the new census of production will help in some respects, but it will not show the capital allowances side and the influence which capital allowances have on the development of production and the relationship between this and regional development. The system proposed in new Clause 2 would cover most of the questions which have been raised. It would also cover questions of the mining industry and others concerned with first-year allowances. The hon. Gentleman said that although some of the information which is supplied is out of date, that does not necessarily matter. What we will want and need to know is how the position has changed and how it is changing. We need this to be able to form a judgment on how it is working.

This concerns expenditure involving hundreds of millions of pounds and, as has been pointed out, to talk as if any extra expenditure on doing elaborate surveys was a minor matter on which one should not waste civil servants' or company time, is totally to underrate the kind of issue at stake, because we are faced with enormously important questions affecting the expenditure of hundreds of millions of pounds.

The fact that this is a form of tax allowance is neither here nor there. We have persistently argued in Committee and elsewhere that there is no difference in principle between positive expenditure and negative expenditure—the area which is regarded for some matters by Government spokesmen as primarily the jurisdiction of the Chancellor and not as Government policy as a whole. There is no basic difference between one form of Government investment incentive and another in desirability and effect. For example, there is no basic difference in principle between housing subsidies and tax reliefs on mortgages. So the fact that it is a form of tax allowance should not lessen the degree of information provided or the degree of scrutiny which the House exercises.

We need to know the information which the Government have brushed aside in the past. It is clear that any change from the system of grants to the system of allowances which the Government undertake needs major research, and that the Government did not make inquiries into the effects there would be and the way they would be achieved. It is clear, from an answer by the Secretary of State for Trade and Industry, that the kind of information which should be obtained would be of enormous value. This was the detailed Written Answer given by the Secretary of State to my right hon. Friend the Member for Birkenhead (Mr. Dell) on 14th December. The Secretary of State was asked … if he will now publish the results of the survey of the effectiveness of investment incentives. Some details were given about the pilot survey which showed that … it is difficult to establish how far companies' decisions may have been influenced by investment incentives … rather than other factors. The right hon. Gentleman said: Despite the size of sample and response rate, the survey produced much information of value on the factors entering into a company's investment decisions, and on the methods of investment appraisal used. Yet this is precisely the kind of area which we need to be covered in the Annual Report. The right hon. Gentleman stated, for example, About 30 per cent. of the investment may not be appraised at all, perhaps a third of this because some firms do not use any formal methods of appraisal, and the remainder because many firms do not appraise small projects or replacements. Much of the remaining 70 per cent. of investment is appraised by more than one method of calculating returns on investment. Is this picture changing? Are more careful D.C.E. calculations being done? This is a matter of great importance in judging the effectiveness of these allowances. The right hon. Gentleman said: A large part, perhaps three-quarters, of investment may be done by companies in which managerial factors constrain investment to some extent. Such factors include a lack of satisfactory proposals or of adequate staff to manage projects … How are decisions arrived at? How far are the consequences of those decisions, which have a considerable impact on the negative expenditure of the Government, determined by rational considerations in the first place?

Again, the right hon. Gentleman said: So far as the evidence of the pilot survey goes, firms doing more than half of all investment may have increased their investment in the development areas as a result of the regional differential; the size of the increase cannot be

estimated, but generally appears to have been small."—[OFFICIAL REPORT, 14th December, 1970; Vol. 808, c. 238–40.]

So there is some evidence that the regional differentials are of importance but it is not yet known exactly how far they are of importance. But all this is absolutely vital because, if the Government get this kind of decision wrong, if the relationship between the two is wrong, disastrous consequences may follow.

Again, one would wish to know how far there was an effect which was caused by the delayed impact of tax allowances as compared with investment grants, because the allowance would not be received until tax became payable, which is a delay of nine months after the end of the accountable period. There may be, therefore, up to 21 months' delay between expenditure and the effect on the company's finances compared with the delay of about six months in the case of grants. How far does this extra delay affect the change? How far is this the effect of the change? I am advised that, from a prudent accounting standpoint where the true rate of wear and tear is less than the tax rate, as would clearly be the case under the new system an adjustment will be necessary in the tax equalisation reserve account in order that part of the profit should be allocated to cover tax on the latent balancing charge which arises on the accelerated rate of write-down for tax purposes. If that happens, profits cannot be available for company development.

There are a host of such questions which are vital in deciding whether the system is effective and how it is working out in practice. This is an important Amendment. I do not think that the information given is sufficient to judge the effective expenditure of hundreds of millions of pounds of Government money and, in the circumstances, I advise my right hon. and hon. Friends to vote for the Second Reading of new Clause 2.

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

The House divided: Ayes 169, Noes 190.

Division No. 406.]	AYES	[6.10 p.m.
Abse, Leo	Ashton, Joe	Blenkinsop, Arthur
Allaun, Frank (Salford, E.)	Barnes, Michael	Boardman, H. (Leigh)
Allen, Scholefield	Barnett, Joel	Booth, Albert
Archer, Peter (Rowley Regis)	Bishop, E. S.	Bradley, Tom
Brown, Ronald (Shoreditch & F'bury)	Howell, Denis (Small Heath)	Pendry, Tom
Buchan, Norman	Hughes, Mark (Durham)	Pentland, Norman
Callaghan, Rt. Hn. James	Hughes, Robert (Aberdeen, N.)	Perry, Ernest G.
Campbell, I. (Dunbartonshire, W.)	Jay, Rt. Hn. Douglas	Price, J. T. (Westhoughton)
Carmichael, Neil	Jenkins, Hugh (Putney)	Price, William (Rugby)
Castle, Rt. Hn. Barbara	Jenkins, Rt. Hn. Roy (Stechford)	Reed, D. (Sedgefield)
Clark, David (Colne Valley)	John, Brynmor	Roberts, Rt. Hn. Goronwy (Caernarvon)
Cocks, Michael (Bristol, S.)	Johnson, Carol (Lewisham, S.)	Robertson, John (Paisley)
Concannon, J. D.	Johnson, James (K'ston-on-Hull, W.)	Roderick, Caerwyn E.(Br'c'n&R'dnor)
Cox, Thomas (Wandsworth, C.)	Johnson, Walter (Derby, S.)	Rodgers, William (Stockton-on-Tees)
Crosland, Rt. Hn. Anthony	Jones, Barry (Flint, E.)	Roper, John
Cunningham, G. (Islington, S. W.)	Jones, Dan (Burnley)	Roes, Rt. Hn. William (Kilmarnock)
Cunningham, Dr. J. A. (Whitehaven)	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Shore, Rt. Hn. Peter (Stepney)
Dalyell, Tam	Jones, Gwynoro (Carmarthen)	Short, Mrs. Renée (W'hampton, N. E.)
Davies, Denzil (Llanelfy)	Judd, Frank	Sillars, James
Davis, Terry (Bromsgrove)	Kaufman, Gerald	Silverman, Julius
Deakins, Eric	Kelley, Richard	Skinner, Dennis
Defargy, H. J.	Kerr, Russell	Small, William
Dell, Rt. Hn. Edmund	Lambie, David	Smith, John (Lanarkshire, N.)
Dempsey, James	Latham, Arthur	Spearing, Nigel
Doig, Peter	Lawson, George	Spriggs, Leslie
Dormand, J. D.	Lee, Rt. Hn. Frederick	Steel, David
Douglas, Dick (Stirlingshire, E.)	Lewis, Arthur (W. Ham N.)	Stoddart, David (Swindon)
Douglas-Mann, Bruce	Lipton, Marcus	Strang, Gavin
Driberg, Tom	Loughlin, Charles	Summerskill, Hn. Dr. Shirley
Dunn, James A.	Lyon, Alexander W. (York)	Swain, Thomas
Eadie, Alex	McBride, Neil	Taverne, Dick
Edwards, Robert (Bilston)	Mackenzie, Gregor	Thomas, Jeffrey (Abertillery)
Ellis, Tom	Mackie, John	Thomson, Rt. Hn. G. (Dundee, E.)
Evans, Fred	Mallalieu, J. P. W. (Huddersfield, E.)	Thorpe, Rt. Hn. Jeremy
Fernyhough, Rt. Hn. E.	Marks, Kenneth	Tinn, James
Fisher, Mrs. Doris (B'ham, Lady wood)	Marquantd, David	Tomney, Frank
Fletcher, Ted (Darlington)	Marshall, Dr. Edmund	Torney, Tom
Ford, Ben	Mayhew, Christopher	Tuck, Raphael
Fraser, John (Norwood)	Meacher, Michael	Urwin, T. W.
Freeson, Reginald	Mellish, Rt. Hn. Robert	Walker, Harold (Doncaster)
	Mendelson, John
Galpern, Sir Myer	Millan, Bruce	Wallace, George
Garrett, W. E.	Miller, Dr. M. S.	Watkins, David
Gilbert, Dr. John	Morris, Alfred (Wythenshawe)	Weitzman, David
Ginsburg, David	Morris, Charles R. (Openshaw)	Wellbeloved, James
Golding, John	Morris, Rt. Hn. John (Aberavon)	Wells, William (Walsall, N.)
Grant, George (Morpeth)	Ogden, Eric	White, James (Glasgow, Pollok)
Grant, John D. (Islington, E.)	O'Halloran, Michael	Whitehead, Phillip
Griffiths, Will (Exchange)	O'Malley, Brian	Whitlock, William
Grimond, Rt. Hn. J.	Orme, Stanley	Willey, Rt. Hn. Frederick
Hamilton, James (Bothwell)	Oswald, Thomas	Williams, Alan (Swansea, W.)
Hamilton, William (Fife, W.)	Paget, R. T.	Williams, W. T. (Warrington)
Harrison, Walter (Wakefield)	Palmer, Arthur	Wilson, Rt. Hn. Harold (Huyton)
Hart, Rt. Hn. Judith	Pannell, Rt. Hn. Charles	Woof, Robert
Hattersley, Roy	Parker, John (Dagenham)
Heffer, Eric S.	Parry, Robert (Liverpool, Exchange)	TELLERS FOR THE AYES:
Hooson, Emlyn	Pavitt, Laurie	Mr. Ernest Armstrong and
Horam, John	Peart, Rt. Hn. Fred	Mr. Donald Coleman.
Houghton, Rt. Hn. Douglas
NOES
Adley, Robert	Chichester-Clark, R.	Fletcher-Cooke, Charles
Alison, Michael (Barkston Ash)	Churchill, W. S.	Fookes, Miss Janet
Allason, James (Hemel Hempstead)	Clark, William (Surrey, E.)	Foster, Sir John
Barber, Rt. Hn. Anthony	Clegg, Walter	Fowler, Norman
Batsford, Brian	Cockeram, Eric	Fraser, Rt. Hn. Hugh (St'fford & Stone)
Bell, Ronald	Cooke, Robert	Gibson-Watt, David
Benyon, W.	Cooper, A. E.	Goodhart, Philip
Berry, Hn. Anthony	Corfield, Rt. Hn. Frederick	Goodhew, Victor
Biggs-Davison, John	Cormack, Patrick	Gorst, John
Blaker, Peter	Critchley, Julian	Cower, Raymond
Boscawen, Robert	Crouch, David	Grant, Anthony (Harrow, C.)
Bossom, Sir Clive	Crowder, F. P.	Gray, Hamish
Bowden, Andrew	Davies, Rt. Hn. John (Knutsford)	Green, Alan
Boyd-Carpenter, Rt. Hn. John	d'Avigdor-Goldsmid, Sir Henry	Gummer, Selwyn
Bray, Ronald	d'Avigdor-Coldsmid, Maj.-Gen. James	Gulden, Harold
Brewis, John	Dean, Paul	Hall, Miss Joan (Keighley)
Brocklefcank-Fowler, Christopher	Deedes, Rt. Hn. W. F.	Hall, John (Wycombe)
Brown, Sir Edward (Bath)	Dixon, Piers	Hall-Davis, A. G. F.
Bryan, Paul	Dodds-Parker, Douglas	Harrison, Col. Sir Harwood (Eye)
Buck, Antony	Dykes, Hugh	Hawkins, Paul
Bullus, Sir Eric	Edwards, Nicholas (Pembroke)	Hay, John
Butler, Adam (Bosworth)	Elliot, Capt. Walter (Carshalton)	Hayhoe, Barney
Carlisle, Mark	Eyre, Reginald	Hicks, Robert
Charmon, Paul	Farr, John	Higgins, Terence L.
Chapman, Sydney	Fell, Anthony	Hiley, Joseph
Chataway, Rt. Hn. Christopher	Fenner, Mrs. Peggy	Hill, James (Southampton, Test)
Hordern, Peter	Monro, Hector	Sproat, lain
Hornby, Richard	More, Jasper	Stainton, Keith
Hornsby-Smith, Rt. Hn. Dame Patricia	Morgan-Giles, Rear-Adm.	Stanbrook, Ivor
Howell, David	Morrison, Charles (Devizes)	Stewart-Smith, D. G. (Belper)
Howel, Ralph (Norfolk, N.)	Mudd, David	Stokes, John
Hunt, John	Murton, Oscar	Stuttaford, Dr. Tom
Hutchison, Michael Clark	Neave, Airey	Tapsell, Peter
Irvine, Bryant Godman (Rye)	Noble, Rt. Hn. Michael	Taylor, Sir Charlese (Eastbourne)
Jenkin, Patrick (Woodford)	Normanton, Tom	Taylor, Edward M.(G'gow, Cathcart)
Jessel, Toby	Onslow, Cranley	Tebbit, Norman
Jopling, Michael	Oppenheim, Mrs. Sally	Temple, John M.
Kellett-Bowman, Mrs. Elaine	Owen, Idris (Stockport, N.)	Thatcher, Rt. Hn. Mrs. Margaret
Kilfedder, James	Page, Graham (Crosby)	Thomas, John Stradling (Monmouth)
King, Evelyn (Dorset, S.)	Parkinson, Cecil (Enfield, W.)	Trafford, Dr. Anthony
King, Tom (Bridgwater)	Peel, John	Trew, Peter
Kinsey, J. R.	Percival, Ian	Tugendhat, Christopher
Knight, Mrs. Jill	Peyton, Rt. Hn. John	Turton, Rt. Hn. Sir Robin
Le Marchant, Spencer	Pink, R. Bonner	Vaughan, Dr. Gerard
Lewis, Kenneth (Rutland)	Powell, Rt. Hn. J. Enoch	Waddington, David
Longden, Gilbert	Price, David (Eastleigh)	Walder, David (Clitheroe)
Loveridge, John	Pym, Rt. Hn. Francis	Walker-Smith, Rt. Hn. Sir Derek
Luce, R. N.	Rawlinson, Rt. Hn. Sir Pete	Wall, Patrick
McAdden, Sir Stephen	Redmond, Robert	Walters, Dennis
McCrindle, R. A.	Reed, Laurance (Bolton, E.)	Ward, Dame Irene
McLaren, Martin	Rees, Peter (Dover)	Warren, Kenneth
Maclean, Sir Fitzroy	Rees-Davies, W. R.	Weatherill, Bernard
Macmilan, Maurice (Farnham)	Renton, Rt. Hn. Sir David	Wells, John (Maidstone)
McNair-Wilson, Michael	Rodgers, Sir John (Sevenoaks)	Whitelaw, Rt. Hn. William
Maddan, Martin	Rost, Peter	Wiggin, Jerry
Madel, David	Russell, Sir Ronald	Wilkinson, John
Marten, Neil	Scott, Nicholas	Wolrige-Gordon, Patrick
Mather, Carol	Scott-Hopkins, James	Wood, Rt. Hn. Richard
Maude, Angus	Shelton, William (Clapham)	Woodhouse, Hn. Christopher
Maxwell-Hyslop, R. J.	Simeons, Charles	Worsley, Marcus
Meyer, Sir Anthony	Sinclair, Sir George
Mills, Peter (Torrington)	Smith, Dudley (W'wick & L'mington)	TELLERS FOR THE NOES:
Mitchell, Lt. Col. C.(Aberdeenshire, W)	Soref, Harold	Mr. Tim Fortescue and
Mitchell, David (Basingstoke)	Speed, Keith	Mr. Hugh Rossi.
Moate, Roger	Spence, John