MITIGATION OF CORPORATION TAX LIABILITY OF SMALL COMPANIES

HC Deb 16 July 1974 vol 877 cc302-29

"For any financial year after 1972 for references to the amount of £15,000 and £25,000 in section 95(3)(a) of the Finance Act 1972 there shall be substituted the amounts of £25,000 and £40,000 and for reference to the amounts of £15,000 and £25,000 in section 95(3)(b) of the same Act there shall be substituted the amounts of £25,000 and of £40,000".

Brought up, and read the First time.

Mr. David Mitchell

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

Mr. Deputy Speaker

With this new clause we may also discuss new clauses 17 to 23, all of which are headed: Mitigation of corporation tax liability of small businesses".

Mr. Mitchell

I shall explain why so many clauses having a similar purpose appear on the Order Paper. The purpose is to raise the narrow limit of companies entitled to small business relief from corporation tax. Before going further, may I declare an interest? Before I came into the House I was engaged full-time in the work of a small business and its management. I have a continuing interest there, and this enables me to bring to the House some experience of the troubles which affect this field of the business community.

On this occasion, however, we are not dealing with the question of very small companies; we shall be debating their problems later this evening or tomorrow. Here we are dealing with companies whose annual profits are £15,000 or more. In this context I should explain the word "profit", because so many people seem to think that this is cash left over in the kitty at the end of the company's financial year and available for dishing round to directors for Rolls-Royces, yachts in the South of France, and so on, whereas the reality is that in most companies this money will be tied up in stock, work in progress and partly manufactured goods which may be going to export. Tied up in this, too, is money owed by customers to the company. It is not what so many people imagine profit to be, cash available; it shows itself in a whole series of ways in which it is incorporated into the working capital of the business.

I pray in aid of the case that I am about to make to the Committee what was said by the hon. Member for Heywood and Royton (Mr. Barnett)—now Chief Secretary to the Treasury—during the course of the Committee stage of the Finance Bill in 1972, of a similar amendment which I tabled at that time. The hon. Member said: I entirely endorse all that the hon. Gentleman said about the difficulties which will be created for close companies of the better type, those who seek to reinvest and plough back their profits but who will now be faced with a 25 per cent. increase in their tax bill."—[OFFICIAL REPORT, Standing Committee E, 26th June 1972; c. 1492.] The hon. Gentleman will know, as I unfold the argument to him this afternoon, that I am talking about those very companies which he and I agreed at that time—although I was not then successful in persuading some of my hon. Friends—should have a rather different form of tax treatment. These are companies which are big enough to make a useful contribution to production in the national economy, and, particularly, they are suppliers to other industries of parts which are required in assembly work and things of that kind. These companies are not big enough to be quoted on the Stock Exchange, or somewhere of that kind, and are therefore companies which are financed principally out of retained profits.

The Bolton Committee, in its examination of the problems of small businesses, indicated almost as a criterion that they were businesses which financed themselves and their expansion and growth out of their own cash flow. Some people may say, "Yes, and also from bank overdrafts," but there is a severe limit on the availability of bank finance for fast growing companies, because a bank will say, "Yes, we are very ready to lend money to the small business sector, provided it is credit-worthy." That sounds very good, simple and straightforward, until one plunges into the reality of what a bank means by "credit-worthy". It means a company that will be able to repay the borrowed money in cash within about three years. The kind of credit-worthy company that a bank is interested in is the one that has to stock up with material for a busy season of the year—perhaps the Christmas or summer trade—and which, when it has sold those goods, have the cash back in its pocket and be able to repay the bank overdraft.

What a bank is not interested in is long-term risk capital—the kind of situation where, if a bank manager asks in three years' time, "I would like the money back", he has to be told, "We are sorry but it is tied up in machinery, equipment or work in progress, and there is no cash available." The irony of it is that those companies which are the fastest growing and have the greatest contribution to make to the national economy are just those which, in the eyes of the banking community, are not credit-worthy in this context.

There is a direct link between retained profits amongst these businesses and the means of expanding their businesses, resources for export orders or business of that kind, and—I am sure that here I shall have the support of the Chief Secretary—the very important employment aspect of the problem, as the country moves towards a period in which all the forecasters say there may be a threat of rising unemployment, remembering that one-third of all persons employed outside the public sector are engaged in the small business field.

I had an example today of the kind of case I have been trying to make. I was talking to the general manager of a company which makes advanced electronic equipment. He told me that although he has the opportunity of acquiring substantial export orders he cannot accept more orders because he cannot finance the work in progress and the stock which would be required to fulfil those orders. This manufacturer is a supplier of specialised advanced electronic equipment which goes into much bigger export orders and production units. Therefore, a much larger field than the opportunities of expansion for this business on its own are placed in jeopardy.

Here we have a sector of the business world which is being starved of adequate expansion finance. It is not big enough to go to the market, because it would be clobbered at 52 per cent.—the rate for corporation tax. I shall have the support of the hon. Member for Heywood and Royton in this respect because it is part of the problem which arose from the introduction of the imputation system of corporation tax. I do not quarrel with that system in principle, but it is designed to ensure that businesses which have surplus money distribute it, and shareholders then reinvest the money through the Stock Exchange, so that there is a reallocation from what has been described as the fat to the dynamic.

There is a re-allocation of national resources to the companies which are growing and most need those resources. I do not dispute the logic of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber), who introduced the imputation tax system. I do not disagree with the logic which I have no doubt my hon. Friend on the Front Bench will use tonight. It is right that there should be such a system for quoted companies which use the market. But it breaks down when it is used for companies which do not acquire their finance through the market. We have to ask where the cut-off should be. When my right hon. Friend was Chancellor he introduced small business relief up to £15,000, graded off to £25,000.

That may take care of the tiddlers—the smallest of companies—but what is to happen to those in the gap between them and the company that is big enough to go to the Stock Exchange to raise its finance? This question has not been satisfactorily answered. This is where the shoe pinches. This is where the trouble is today. These are the companies which will contribute so much more if they are allowed to retain more of their profits as working capital. I have therefore tabled a series of clauses. I hope that the Chancellor will consider the logic of taking this provision right up to the size at which a company can be quoted on the Stock Exchange. That is the logical point.

If logic cannot prevail in these matters and there are financial restrictions and restraints, there is a series of clauses from which the Government can choose. I should explain why there is a series of clauses. It is simply that, eight days ago, I tabled a Written Question to the Treasury asking for the figures showing the cost of raising small business relief to a series of levels.

It has taken the Treasury until lunchtime today to produce the answer. The Question was down for answer on Thursday of last week. I was grateful to the Treasury for its co-operation in telling me that it was not able to provide the figures by then. It is an interesting sidelight on the interest of the Government in the problems of small businesses that these figures were not immediately at hand and had not been thoroughly thumbed over by the Chancellor when he was preparing his Budget measures earlier this year.

New Clause 14 raises the limits from £15,000 to £25,000, graded off to £40,000. It would cost £15 million in a full year. New Clause 17 would cost £40 million; new Clause 18 only £10 million; new Clause 19, £15 million; new Clause 20, £20 million taking it up to £30 million, graded off to £40,000. New Clause 21 would cost £30 million. I have no doubt that the Chancellor has the answer to the other clauses.

I would have preferred to see a figure with an increase from £15,000 to £30,000, graded off to £50,000, which would cost £25 million. It so happens that, in putting forward this spread of alternatives, when I got the answer from the Treasury today this was almost the only figure in the spread which was not actually tabled as a separate amendment. For those reasons I hope that the Chief Secretary will accept one of these clauses, preferably the most generous one in view of the advantage which the economy would derive from giving the opportunity to expand to the smaller traders of this country who are now restricted by a lack of working capital.

6.45 p.m.

Mr. Robert Redmond (Bolton, West)

It will not have escaped the notice of my hon. Friends that we are debating small businesses, again with much the usual sort of attendance on the Labour benches. I have been very glad to hear my hon. Friend the Member for Basingstoke (Mr. Mitchell) feeling so confident that the Government are bound to accept one of these clauses. I agree it is obvious that they must. There are one or two additional points not made by my hon. Friend which are relevant.

In the past month or two we have heard a great deal about the amount of money the Government are paying industry. If that is so—I do not accept the argument—it would be agreed that by and large the State aid goes to big business. It is the small businesses which are finding the money. This clause goes some way towards redressing the balance. There is an additional purpose behind this clause, certainly one that I had in mind when I put my name to it. It has to do with the fact that father, if I may call him that—the proprietor of the business—is often locked into it.

It makes it extremely difficult for future expansion to take place, because as father grows older the steam goes out of the concern. There are fewer new designs coming on to the market and there is not such an active search for new markets. Possibly the business becomes ossified. In the end the only thing left is a take-over by one of the public companies. I shall relate my bitter experience in that direction in a few moments.

As a result of the proposals in this Bill and those which will no doubt appear in yet another Finance Bill, to be brought forward by the Government if they survive until the autumn, things are made worse instead of better. For a long time estate duty has been the death knell of the small business. Now the gifts tax makes it much worse. This tax will go on and there is no hope of getting over it by using the inter vivos rule which has been an escape route for some small businesses for a long time.

In their proposals in this Bill, and in the threats they make about the next one, the Government are making it more difficult for the father to hand over to his son, or for the proprietor to hand over to new management. The least the Government can do if they believe in small firms is to accept one of these clauses. If they are serious about wanting to provide employment they should look after the prosperity of the small businesses who employ the majority of employed people in the country.

In many cases the profits of small firms as expressed in terms of a percentage of turnover are much better than those of very big companies. I am glad that my hon. Friend the Member for Basingstoke told us what profits are. There is a great misconception about them. During the General Election we had a fearful hoo-hah about the obscene profits of some companies which were declaring their figures in February. I agree with the word "obscene". I come from the world of small businesses. If I had turned in to my shareholders in a small company profit figures expressed as a percentage of turnover, the sort of thing ICI was doing, I would have been rather ashamed of myself. Those profits were nothing like enough to finance future investments.

As the managing director some years ago, of a small company in the engineering industry, employing about 120 people, I moved from a loss to a profit and then proceeded, over four years, to double the profit every year. The profits went up rather more than twice as much each year. As a result of that success all that I had at the end of the day was a vastly increased overdraft. Profits are not cash in the bank. Corporation tax is an addition, but the overdraft is a severe strain on liquidity for a small company trying to survive and increase its prosperity and increase the number of jobs it is able to offer in the market.

I hope we can get it across that profits are not cash at the bank which can be milked by the Treasury. Profits are often an important factor in the survival of a business, either because they are passed on to the people who are running the business, to enable them to make up the cash so that the transfer can take place, or merely used to finance the business. The only source of finance for the small company lies in its own profits.

I hope my hon. Friend the Member for Basingstoke is right in his confidence that the Chief Secretary will accept at least one of these clauses.

Mr. Peter Rost (Derbyshire, South-East)

Supporting my hon. Friend the Member for Basingstoke (Mr. Mitchell) and the hon. Member for Bolton, West (Mr. Redmond), I express a hope that the Chief Secretary will seriously take on board the points being made by hon. Members on this side. It is unfortunate that the Chief Secretary has no guidance from his own back benchers because quite clearly they are not interested in small businesses any more than they are interested in the prosperity of the economy as a whole.

I hope the Chief Secretary will accept new Clause 14. He has a particularly onerous responsibility on the Treasury Bench of being virtually the only voice left on that bench attempting to salvage what is left of confidence in the British industry.

Having made some very acceptable and generous concessions at the Committee stage of the Finance Bill, which will assist the prosperity of the country, he will now surely accept that the responsibility on his shoulders to see reason is very heavy. Although he understands these matters, it is clear that many of his colleagues not only do not understand what makes this country tick, and what our prosperity depends upon, but are doing their very best to sabotage what is left of confidence in this country. Therefore, I hope the Chief Secretary will accept this responsibility because he understands these matters. He knows the importance of small businesses in this country. He must also know, when small companies are in their vital growth stage, and are very delicate flowers which need fertiliser and not weed-killer of the type proposed by Members opposite, of the vast advantages that can accrue to the economy as a whole from allowing that moderate and reasonable tax concession.

My hon. Friend the Member for Bolton, West has already quoted an example of the way in which profits rise as a small business is successful. The profits of smaller companies rise at a much faster rate through growth than those of the large groups and companies. As a result, eventually, within perhaps a few years, the corporation tax and other taxes paid by that company rise astronomically from nothing to quite useful amounts. Therefore, the argument should be that by making some concessions in the early stages of a small business, and allowing it to grow faster as a result and to flourish, the eventual benefit to the community, to the economy and to the taxpayer is not only more secure but also more substantial. Without that fertiliser or encouragement given by the Treasury in the early years the final "take" would be very much less, assuming the company survived.

Second, small companies are being squeezed by several factors not yet mentioned in this debate. Those companies are being squeezed because they are small, because they are dependent upon larger suppliers for their raw materials and their services, who can put on the squeeze by delaying payment to the small companies. Small companies are also squeezed by their large customers. The problems of a small company in financing its workload are very much more substantial than those of a larger company with stronger bargaining power.

I hope the Chief Secretary does take on board the effect of this on a small company which is squeezed between a large supplier and a large customer, where the supplier presses for payment but where the customer delays paying for the services or product received.

There is a further reason why smaller companies are being squeezed in a way which does not apply so much to the larger groups. The directors running small companies already have their personal cash heavily involved in these companies. The directors are already fully involved in their businesses. The future of such directors and of their families is tied up in their companies and their prosperity. In many cases the directors even have to give bank guarantees personally to help provide extra loans for small businesses. In other cases the directors have to "throw in" their house mortgages in order to secure extra bank loans. Those are additional burdens and risks which small businesses have to take in order to raise the working capital they need. That is a valid additional reason why this very moderate tax concession should be granted to those small businesses on whom the prosperity of this country so much depends.

Mr. Cecil Parkinson (Hertfordshire, South)

I support the new clauses and the amendments which my hon. Friend the Member for Basingstoke (Mr. Mitchell) introduced so well this afternoon. I supported my right hon. Friend the then Chancellor in introducing the imputation system and opting for it, but I also agreed at that time with the very good speeches made by the Chief Secretary to the Treasury pointing out that this would have the effect of substantially increasing the tax liability of a number of close companies. My right hon. Friend recognised the problem and introduced the idea of small business relief, recognising that there is a band of companies which relies very much on retained profits to finance expansion. He recognised that those companies perform a service and deserve special help.

It was pointless to force out of those companies and into the hands of shareholders dividends which would then be surtaxed. The shareholder would be left to pile back into the business what was left of the surtaxed income. For that reason my hon. Friend introduced the idea of small business relief at the levels of £15,000 and £25,000.

The Chief Secretary to the Treasury, with his immense practical experience, recognised the problems of the small business and argued at that time that close companies would be damaged by the imputation system, and, by implication, lent his support to the idea of small business relief. Unlike many of us, he is now in the happy situation of being in a position to make the rules and not just to have to interpret and live with them. I urge him to take his pick from the large range of options which my hon. Friend has placed at his disposal.

I do not go the whole way with my hon. Friend in saying that we should allow this relief to companies up to the stage where they go public that would be going too far. Once the company reaches a certain size and attains a certain profitability, it does not have to look to the market for its money. In fact very few companies do that, very wisely so. I think it is wrong to go to the market too soon.

I hope that the Minister will now accept this opportunity, which my hon. Friend has temptingly provided, for an increase in the level at which small business relief becomes available. In so doing he will be achieving two things. He will be putting his money where his mouth is and, in addition, he will be gaining the support of a group of people who do not always look on his party with favour but who provide this country with a source of growth and employment which is valuable to it. I hope that at the end of the debate the hon. Gentleman will not miss this golden and exciting chance.

7.0 p.m.

Mr. Maurice Macmillan (Farnham)

In supporting the new clause, I must declare a partial interest. In so far as my family business does not, I think, come within the range of any of the new clauses that we are discussing, I have no personal interest, but in so far as it is an unquoted company, I do. I think, therefore, that the only point I would add to the argument is to urge the Chief Secretary to remember that the whole of our industrial society depends, not upon wages or prices or profits, but upon the capacity of British industry to create new wealth and to go on creating it.

We have not got the sources of overseas wealth which we once had and which, in effect, provided the nation with a very large unearned income. We now have to rely wholly on what we produce and manufacture in goods and services and sell overseas, and on what we can invest and create for that purpose at home. I urge the hon. Gentleman to think of these new clauses in such terms and to pick the one which gives the highest relief possible.

This is perhaps particularly important at present, for it is virtually impossible for any company to get a new quotation. I believe that there has only been one new quotation this year, and that was an internal affair. So a larger number of companies than usual depend on their retained profits not only to expand but actually to exist.

In an inflationary situation, the turnover can increase, in money terms, without any new real wealth being produced at all. Yet that increase in turnover, albeit in itself expressed only in money terms, requires extra capital to finance it, and in the companies we are talking about that extra capital can only come from retained profits. It just is not possible for them to use the banks to finance expansion and an increasing real turnover.

If, for example, a firm has an unexpected success in exporting, it is liable to find itself having to finance a longer credit with greater stocks and more work in progress, and therefore its very success may lead it to risk financial problems or, alternatively, to refuse valuable export orders. That is not the way to create new wealth. It is not a way to get innovation. I hope that the hon. Gentleman will remember the size and scope of these companies, and the effect they have collectively, on employment and the economy as a whole.

About 9,000 companies have shares which are quoted on the Stock Exchange. Leaving aside institutions like finance companies, and so on, there are about 300,000 active unquoted companies. There are about 50,000 unquoted companies with a turnover of £500,000 a year or more; so this is a not inconsiderable proportion of our manufacturing and service industries. Again, leaving aside those employed by the State—in the broadest sense—of the employees in the private sector, 51 per cent. are employed by unquoted companies—including small businesses—and 49 per cent. by quoted companies. It is the capacity of small businesses to grow which must greatly affect employment prospects for the future.

Finally, records since the war show that most of the technical innovations of British industry started—I do not say that they necessarily continued—in small companies in the unquoted sector—very often for the very good reason that the innovation required a risk to be taken by those who made it—a risk which they could not properly have taken as directors of a public company with other people's money but which they were willing to take with their own, backing their own knowledge, expertise and work, having faith in themselves and believing that they could build up their innovation as part of our industrial heritage for the future. It is that spirit which over the years has built up our industry and it is that process that we seek to foster for the future.

Mr. Andrew Bowden (Brighton, Kemptown)

I must declare an interest. I am and have been associated with companies which have had profit figures in the ranges mentioned in some of the new clauses. I do not intend to bore the House by repeating the effective arguments which have been made by my right hon. and hon. Friends; I merely make an appeal to the Chief Secretary to the Treasury. I think the House knows that he understands the problems rather better than many of the right hon. and hon. Friends, and I remind him now of the many effective speeches he has made in the past on this subject and ask him to search his heart, not his conscience, very carefully and see whether he can find a way of accommodating the House and the small businesses.

It is natural that any Government should look for areas for increased taxation, but let these companies produce their small golden eggs with a minimum amount of tax, because those golden eggs will turn into bigger golden eggs and then, when they reach that size, the Government will find it much easier to take a substantial share. But if the Government kill the chicken too soon, even the small golden eggs will disappear. If the Government want money, let them give the small companies a chance to produce it.

Sir Harmar Nicholls (Peterborough)

Of necessity, when one is supporting the point of view set out in these new clauses a certain amount of reiteration has to go on. I do not suppose that, after the speeches we have heard already in the debate, there are many new points left. But what can and ought to be done, particularly to an accountant Minister, is to produce a little practical evidence to support some of the points made.

I was particularly impressed by the reminder of my right hon. Friend the Member for Farnham (Mr. Macmillan) that large and important companies have developed from small owner-managed companies of only a few years ago. I come from the Midlands—the part of England that really matters. For example, there is the great Guest Keen and Nettle-fold organisation, which so impresses the world today. Its ingredients were Cottrell's factory, in Station Street, Darlaston, and Garringtons, of The Green, Darlaston. We have seen all these small factories eventually merge into something of world-wide significance. I agree that if, in those early days, they had had to withstand all the bureaucracy, taxation and interference that we have today, they could not have grown to this kind of importance.

Many new industries are developing, upon which the Great Britain of the future will depend. One knows from one's contacts that the bureaucracy and the stranglehold of the regulations and taxation that they have to face will make it almost impossible for these people to make the contribution for which they have the potential.

I also support the new clauses from the philosophical point of view. One of our problems is that industry is pretty well controlled by what is called the managerial-technological society. We have managers with great power at the head of great organisations, who are important as long as they are there but who become of no significance once they retire. Their stake in the future—their desire to leave behind a viable firm—is not as great as that of the old owner-employers, who were concerned with passing on their assets. One of the inducements to people to work hard and develop things is the desire to leave something to their children.

Unless we keep an important segment of owner-employers who are prepared to work harder than many managerial dictators, the general structure and balance of our industrial society will not be so good. The Chief Secretary laughs; we have lots of laughs outside, but I am now making a serious point. The hon. Gentleman's Government are opposed to the profit system, but the minute the profit incentive is removed from this country we shall remove our chance of remaining a worth-while industrial power.

One cannot make a profit by producing something that people do not want; instead, one goes bankrupt. Nor can one make a profit by producing what people want, but at too high a price; that, too, leads to bankruptcy. One makes a profit only by producing something that people want at a price they can pay. It is from that profit that good wages come and reasonable taxation can be paid to maintain our general social structure and look after the disabled and the weak.

If one accepts that philosophy, which has stood the test of a century and more, one must acknowledge the strength of the new clauses. I hope that the Chief Secretary will not simply smile—although he smiles delightfully—and pass them off as an ideological and dogmatic approach by the Conservative Party. He should recognise them as an important part of our industrial structure and look at them with sympathy. Then, one of the new clauses may be accepted.

Mr. Nicholas Winterton (Macclesfield)

I support the new clauses. I must declare that I am associated with one small company. The clauses have been debated fully, and I endorse the comments of my right hon. Friend the Member for Farnham (Mr. Macmillan) and my hon. Friend the Member for Basingstoke (Mr. Mitchell).

My party can take some of the blame for the situation facing small business today. Successive Governments have failed to appreciate the value of small commercial undertakings, which have been penally taxed. I hope that the Chief Secretary, for whom I have considerable respect and who knows a great deal about small business, will be sympathetic. It is easy for a member of the Government to answer comments one by one, without any intention of seriously considering any concessions. I hope that he will, instead, deal with the points raised sympathetically and fully and not just make the party points that perhaps, traditionally, he is expected to make.

7.15 p.m.

Small business can make an increasing contribution, and these clauses will help. Many of the Chief Secretary's hon. Friends have talked about the amount of taxpayers' money which is given to industry. As many of my right hon. Friends have said, the amount given to industry is only £1 for every £5 that they contribute to this country and the Exchequer. Small industry takes very little money from the Exchequer but provides a considerable amount in taxation.

Small businesses are in need of help. They were when my party was in Government, and unfortunately they received an unsympathetic hearing. The present Government have an opportunity to put some of this right and I hope that their party dogma will not overrule their under standing of the realities of the situation. These are reasonable clauses. For every £ 1 that the Minister gives, he will be rewarded tenfold if he sees his way clear to helping small business.

Mr. Joel Barnett

I am overwhelmed by the flattering way in which I have been described. Since hon. Members feel that I understand these matters so well, I hope that they will be able to accept my arguments.

I have long declared an interest in close companies, both before I became a Minister and since. The only way in which I have ever allowed that to influence me is that what I have learned has led me to realise the problems of different types of corporation tax and of measures which may hurt them. I do not retract one word that I have uttered in debates that we have had over many years.

There are eight new clauses before us and I am asked to perm one from them. The first seeks to lift the profits ceiling from £15,000 to £25,000 for entitlement to the 42 per cent. small companies rate of corporation tax under Section 95 of the Finance Act 1972. It would also increase the profits limit for marginal relief from £25,000 to £40,000.

The new clause would cost £15 million and the others would cost varying amounts. But I do not rest my case on the cost alone. The new clauses are also technically inadequate, because there is something wrong with the tapering basis, but as I am not resting my case on technical inadequacies, I will not weary the House with the details. I am sure that by the time I have finished I shall have convinced the House that it should not agree to these clauses.

Mr. David Mitchell

There is a suggested alteration in the tapering basis to make it rather longer than under the original provisions, simply in order to ensure that there is less discouragement to a company, once it is into the transitional period, from increasing its profits within that period. If it is too short, the company will be paying tax on its additional profits at a higher rate than 52 per cent.

Mr. Barnett

The hon. Gentleman understands the point exactly. But because of the way that he has the marginal relief in the new clauses, the proposed limits would mean a marginal rate of tax of 68.67 per cent. on profits between £25,000 and £40,000, whereas the present marginal relief is 67 per cent. Therefore, he wants to increase it. I mentioned that only because it may be of interest to the House. It is a piece of information that is very important to some people. It is as well that it be known.

At it stands at present, the effect of the Section 95 relief, if the amendment to Section 95 were carried, would be to leave only a small minority of companies—perhaps 4 per cent. or so—paying the full rate of corporation tax. I always like to give the House as much information as possible. I thought that these titbits of information might be useful to hon. Members. They should know that if these new clauses are passed they will be taking some 96 per cent. of companies outside of the highest rate of corporation tax under the imputation system.

I do not dispute a number of the arguments which have been made about the difficulties of running the small company. I am only too well aware of them. But when I heard the hon. Member for Derbyshire, South-East (Mr. Rost) telling me that I needed to fertilise delicate flowers, I wondered where I was. When I heard the hon. Member for Brighton, Kemptown (Mr. Bowden) telling me that we were talking about golden eggs, I wondered whether they were the same sort of close companies that I used to deal with. But let us be quite clear. Many hon. Members have said that they want to help close companies which are unable to be quoted and floated on the Stock Exchange, which made it, therefore, less easy for them to obtain funds, and that we should enable them to plough back more of their profits and pay less in tax. But these new clauses would not apply merely to what is known as close companies. They would apply equally to quoted companies and to non-quoted companies, and to investment companies as well as to trading companies.

The hon. Member for Basingstoke (Mr. Mitchell) is always very fair. We have debated this matter at great length on many occasions. Indeed, this is the third time that we have debated the matter on this Bill. The hon. Gentleman quoted me as saying in Committee on the Finance Bill in 1972: It is a fact that small companies of this kind that plough back their profits for growth and rarely, if ever, make a distribution will find their tax liability increased by 25 per cent. That is absolutely true. But the hon. Gentleman should have gone on to read what I said after that. Perhaps it will help the House if I repeat what I said then: Having said that, I am not myself prepared to assist those companies with an amendment which at the same time assists what I consider to be the wrong type of company."—[OFFICIAL REPORT, Standing Committee E, 26th June 1972; c. 1492.] I was referring to the type of companies that I do not particularly want to help, that is, those companies which do not plough back their profits, and those companies such as small investment companies, which these clauses would help. This was the advantage of the old, classical type of corporation tax.

Mr. David Mitchell

I would not wish the hon. Gentleman to think that I had, either intentionally or unintentionally, quoted only part of his remarks on that occasion and that by failing to complete the sentences I had left the House with an erroneous impression. If the hon. Gentleman will look at column 1492, he will find that the words that I quoted were at the end of his speech and that he was then followed immediately by my right hon. Friend the Member for Wan-stead and Woodford (Mr. Jenkin). Therefore, while the hon. Gentleman is quoting no doubt from his speech on that day or some other day near it, it is not the quotation that I used. Therefore, I would not want him to think that I had failed to give full weight to his words on that occasion.

Mr. Barnett

I do not want to make too much of this matter. I do not wish to accuse the hon. Gentleman of being unfair. However, I have with me a copy of the OFFICIAL REPORT Of Standing Committee E, and I was reading from column 1492.

As I have said, the case that I have constantly made in the House and in Committee has been that the type of corporation tax that I personally prefer is not the imputation system. Indeed, judging from the great strength of feeling and the arguments put forward by the hon. Member for Peterborough (Sir Harmar Nicholls), the hon. Member for Macclesfield (Mr. Winterton) and many others, saying how strongly they feel about close companies—I am delighted that that is so—I am a little surprised that they did not express those views about the imputation system when it was being introduced.

Mr. Winterton

I did.

Mr. Barnett

I absolve the hon. Gentleman. The fact is, however, that it is the imputation system that makes life very difficult for small companies. I do not dispute that, nor does the hon. Member for Basingstoke. The trouble is that hon. Members are trying to have it both ways. I do not blame them for that. It is an understandable desire. But it is very difficult in the corporation tax system because one cannot have both the imputation system and the classical system at the same time. That is the best way to help close companies, but one cannot do it.

However, that is not the purpose of these new clauses. The reason that it is not the purpose is that I assume that certainly hon. Members on the Opposition Front Bench and the former Chief Secretary, the right hon. Member for Farnham, will know very well that it is not possible to have an imputation system for 4 per cent. of companies and a classical system for 96 per cent. That is the reason and the real cause of the trouble. So I fear that hon. Members are complaining about the wrong things.

In an excellent speech about close companies the hon. Member for Basingstoke said that we ought to have a corporation tax system for small companies which encourages plough-back. I agree with him, but that is not what the House has now got. The previous Government chose a different form of corporation tax. Hon. Members are now trying to change it for close companies—not in the new clauses, but from their speeches it would seem that that is what they want to do, otherwise we should not have heard the enormously powerful speeches from the hon. Member for Peterborough and others who feel so strongly about close companies.

Incidentally I would not want to accuse the hon. Member for Peterborough of not having read the eight new clauses. If he read them diligently, as I am sure he always reads such things, he would have realised that what he is seeking to do is not precisely what hon. Members have in mind. They will certainly give some assistance to companies with small profits, but that is not the same thing as assisting small companies. Hon. Members wish, therefore, to give assistance under these clauses to quoted companies and to investment companies—the companies which were not referred to by them. They were talking about trading companies and the need to help the great trading companies of this nation which they desperately want to make larger profits. Why did we not hear this sort of speech from the hon. Member for Peter borough—

Sir Harmar Nicholls

rose—

Mr. Barnett

I love to hear the hon. Gentleman, but not now. All right I will give way to him.

Sir Harmar Nicholls

I am glad that the time has not yet come when the hon. Gentleman decides when I shall speak or remain silent.

I never agreed with the imputation system. All that I want to get into the Committee is the recognition that small companies need help. If it is that they are to be told to fertilise their companies front their own profits and if the hon. Gentleman has that in his head, let him put that point of view in some form. I do not care whether it be in these new clauses or in amendments from him, provided that the net result will help small companies which need help. If in the process of helping the many we help one or two investment companies, which the hon. Gentleman hates, or finance companies, which he dislikes, I do not mind that. If it is to the general good to strengthen the base of small companies, it is the right price to pay.

7.30 p.m.

Mr. Barnett

If the hon. Gentleman is now telling me that he is not too happy about the eight clauses but would like something else I would be happy to look into that on another occasion, but at the moment we are discussing the eight clauses. I am taking a tally of all Members of the Opposition who do not like the imputation system, and I will note it.

What the clauses are seeking to do is not what hon. Members have in mind. The proposals would not help family businesses—

Mr. Redmond

As the Chief Secretary is taking note of who does and who does not like the imputation system, may I go on record for the imputation system for the publicly owned enterprise but not for the small company? However, this does not alter what we are arguing about on the clauses.

Mr. Barnett

The hon. Gentleman shows how impossible it is to have an imputation system for 4 per cent. of companies and the classical system for the remaining 96 per cent.—

Mr. Maurice Macmillan

The Chief Secretary has failed completely to deal with the imporant part of the argument. Much as I agree with the imputation system and relief for small companies—which we gave—the difficulty for small companies is greatly increased by the fact that the borrowing rate is now 15 per cent. That and the present inflation rate makes it extremely difficulty to finance expanding turnover. The Chief Secretary has ignored that part of the argument.

Mr. Barnett

That was an ingenious intervention, but it did not deal with the point I was making that it is impossible to have the imputation system for 4 per cent. of the companies and the classical system for the other 96 per cent. The right hon. Gentleman is on a wholly different point. He is on a point on which he is now prepared to move a little further than he and his right hon. Friends did under Section 95 and increase the amount for small companies.

I resist what is being proposed because of what it would give to a large number of companies. I do not hate these companies. It would be absurd to suggest that I do. We are talking about what type of companies should pay a higher rate and what type should pay a lower rate. It was the right hon. Gentleman who introduced the system, not we. I am surprised that he does not like it—[Interruption.] It seems he does like it. I am glad that he likes the system we have. We are left with the situation in which companies with small profits will suffer, close companies amongst them. Hon. Members opposite have said how much they appreciate the knowledge which I bring to these matters and I naturally expect them to withdraw the eight clauses and to allow us to move on.

Mr. David Howell

The whole House will be deeply disappointed by that uncharacteristically lightweight contribution from the Chief Secretary. I was wondering, although a little despondently, which argument he would dodge behind this time. In Committee we discussed small companies, although in a different context, which related to payments in addition to advance corporation tax. The Chief Secretary then tried to turn the argument by saying that small companies which were expanding would not be able to pay dividends and would be hurt by payments in addition to ACT. I looked forward to hearing the Chief Secretary's excuse this time. He has dodged behind another tree. This time his feeble argument is that he cannot do anything about the situation because he does not like the imputation system.

That is the sole basis on which he is rejecting the arguments we put forward, not just as a criticism of the present tax system, but, as my right hon. Friend the Member for Farnham (Mr. Macmillan) emphasised, in a new situation. There is a problem here which we must get over to hon. Gentlemen on the Government side. In Committee the Government opposed the idea that there is a new tax situation in which they must act urgently to save us from greater disasters. We have had no success in establishing this in the minds of those on the Treasury Bench.

My hon. Friends have raised their arguments with great restraint. I was pleased to hear them give explanations to hon. Gentlemen on the Government side who clearly do not understand the nature and role of profits. It is important to understand that profits are the engine of advance. If there are no profits there are no jobs. I know that it is difficult for hon. Members on the Government side to grasp this because they have been taught different ways over the years, but I am dealing here with hard economic facts, which must be faced, particularly in relation to the sector of small unquoted companies.

The Chief Secretary has been a little sensitive about his past contributions in debates on this subject. In days gone by some of his hon. Friends, such as the hon. Member for Ashton-under-Lyne (Mr. Sheldon), as well as the Chief Secretary himself, played an important rôle in bringing to the House some sanity, intelligence and understanding in Opposition. Now things have changed substan-

tially, and all we have is a feeble argument which does not begin to meet the points put from this side.

New Clause 14 is a modest proposal, perhaps too modest. We have learnt from a parliamentary answer that the cost which it would involve would be about £15 million. I would have thought this a cheap way for the Government to do something they desperately need to do, and which they are even beginning to admit they need to do, that is, to try to restore business confidence, particularly among smaller companies. We can all think of better ways of restoring business confidence. For instance, we could silence the Secretary of State for Industry, who must cost the country at least £15 million a day, not a year. That would be a much better way to deal with business confidence.

It seems incredible to me, and, I am sure, to my lion. Friends, that while many companies—I do not know how many extra companies would be involved in this, certainly tens of thousands—are trapped by higher corporation tax, by the consequences of the investment income surcharge, high interest rates and a rapidly deteriorating situation, the Chief Secretary can sit there and say that action cannot be taken because he does not like the imputation system. That is a feeble reaction in the face of a difficult situation which my right hon. and hon. Friends have described. I advise my right hon. and hon. Friends to press this matter in the Lobby.

Question put:—

The House divided: Ayes 292, Noes 267.

Divison No. 83.]	AYES	17.40 p.m.
Adley, Robert	Bowden, Andrew (Brighton, Kemptown)	Clarke, Kenneth (Rushcliffe)
Aitken, Jonathan	Boyson, Dr. Rhodes (Brent, N.)	Clegg, Walter
Alison, Michael (Barkston Ash)	Braine, Sir Bernard	Cockcroft, John
Allason, James (Hemel Hempstead)	Bray, Ronald	Cooke, Robert (Bristol, W.)
Amery, Rt. Hn. Julian	Brittan, Leon	Cope, John
Ancram, M.	Brocklebank-Fowler, Christopher	Cordle, John
Archer, Jeffrey	Brown, Sir Edward (Bath)	Cormack, Patrick
Atkins, Rt. Hn. Humphrey (Spelthorne)	Bruce-Gardyne, J.	Corrie, John
Awdry, Daniel	Bryan, Sir Paul	Costain, A. P.
Banks, Robert	Buchanan-Smith, Alick	Craig, Rt. Hn. William (Belfast, W.)
Beith, A. J.	Buck, Antony	Critchley, Julian
Bell, Ronald	Budgen, Nick	Crouch, David
Bennett, Sir Frederic (Torbay)	Bulmer, Esmond	Crowder, F. P.
Bennett, Dr. Reginald (Fareham)	Burden, F. A.	Davies, Rt. Hn. John (Knutsford)
Benyon, W.	Butler, Adam (Bosworth)	d'Avigdor-Goldsmid, Maj.-Gen. James
Berry, Hon. Anthony	Carr, Rt. Hn. Robert	Dean, Paul (Somerset, N.)
Biffen, John	Chalker, Mrs. Lynda	Dixon, Piers
Biggs-Davison, John	Channon, Paul	Dodds-Parker, Sir Douglas
Blaker, Peter	Chataway, Rt. Hn. Christopher	Dodsworth, Geoffrey
Boardman, Tom (Leicester, S.)	Churchill, W. S.	Douglas-Home, Rt. Hn Sir Alec
Body, Richard	Clark, A. K. M. (Plymouth, Sutton)	Drayson, Bu[...]aby
Boscawen, Hon. Robert	Clark, William (Croydon, S.)	du Cann, Rt. Hn. Edward
Durant, Tony	Joseph, Rt. Hn. Sir Keith	Rawlinson, Rt. Hn. Sir Peter
Eden, Rt. Hn. Sir John	Kaberry, Sir Donald	Redmond, Robert
Edwards, Nicholas (Pembroke)	Kellett-Bowman, Mrs. Elaine	Rees, Peter (Dover & Deal)
Elliott, Sir William	Kershaw, Anthony	Rees-Davies, W. R.
Emery, Peter	Kilfedder, James A.	Reid, George
Ewing, Mrs. Winifred (Moray & Nairn)	Kimball, Marcus	Renton, Rt. Hn. Sir David (H't' gd 'ns' re)
Eyre, Reginald	King, Evelyn (Dorset, S.)	Renton, R. T. (Mid-Sussex)
Fairgrieve, Russell	King, Tom (Bridgwater)	Rhys Williams, Sir Brandon
Farr, John	Kitson, Sir Timothy	Ridley, Hn. Nicholas
Fell, Anthony	Knight, Mrs. Jill	Ridsdale, Julian
Fenner, Mrs. Peggy	Knox, David	Rifkind, Malcolm
Fidler, Michael	Lamont, Norman	Rippon, Rt. Hn. Geoffrey
Finsberg, Geoffrey	Lane, David	Roberts, Wyn (Conway)
Fisher, Sir Nigel	Langford-Holt, Sir John	Rodgers, Sir John (Sevenoaks)
Fletcher-Cooke, Charles	Latham, Michael (Melton)	Ross, Stephen (Isle of Wight)
Fookes, Miss Janet	Lawrence, Ivan	Rossi, Hugh (Hornsey)
Fowler, Norman (Sutton C'field)	Lawson, Nigel (Blaby)	Rost, Peter (Derbyshire, S.-E.)
Fox, Marcus	Lester, Jim (Beeston)	Royle, Sir Anthony
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Lewis, Kenneth (Rtland & Simford)	Scott-Hopkins, James
Freud, Clement	Lloyd, Ian (Havant & Waterloo)	Shaw, Giles (Pudsey)
Fry, Peter	Luce, Richard	Shaw, Michael (Scarborough)
Galbraith, Hn. T. G. D.	McAdden, Sir Stephen	Shelton, William (L'mb'th, Streath'm)
Gardiner, George (Reigate & Banstead)	MacArthur, Ian	Shersby, Michael
Gardner, Edward (S. Fylde)	MacCormack, Iain	Silvester, Fred
Gibson-Watt, Rt. Hn. David	McCrindle, R. A.	Sims, Roger
Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'm)	McCusker, H.	Skeet, T. H. H.
Gilmour, Sir John (Fife, E.)	Macfarlane, Neil	Smith, Cyril (Rochdale)
Glyn, Dr. Alan	MacGregor, John	Smith, Dudley (W'wick & L'm'ngton)
Goodhew, Victor	McLaren, Martin	Spence, John
Goodlad, A.	Macmillan, Rt. Hn. M. (Farnham)	Spicer, Jim (Dorset, W.)
Gorst John	McNair-Wilson, Michael (Newbury)	Spicer, Michael (Worcestershire, S.)
Gow, Ian (Eastbourne)	McNair-Wilson, Patrick (New Forest)	Sproat, Iain
Gower, Sir Raymond (Barry)	Madel, David	Stainton, Keith
Grant, Anthony (Harrow, C.)	Marshall, Michael (Arundel)	Stanbrook, Ivor
Gray, Hamish	Marten, Neil	Stanley, John
Grieve, Percy	Maude, Angus	Steel, David
Griffiths, Eldon (Bury St. Edmunds)	Maudling, Rt. Hn. Reginald	Steen, Anthony (L'pool, Wavertree)
Grimond, Rt. Hn. J	Mawby, Ray	Stewart, Donald (Western Isles)
Grist, Ian	Maxwell-Hyslop, R. J.	Stewart, Ian (Hitchin)
Grylls, Michael	Mayhew, Christopher (G'wh, W'wch, E)	Stodart, Rt. Hn. A. (Edinburgh, W.)
Gurden, Harold	Mayhew, Patrick (Royal T'bridge Wells)	Stokes, John
Hall, Sir John	Meyer, Sir Anthony	Stradling Thomas, John
Hall-Davis, A. G. F.	Miller, Hal (B'grove & R'ditch)	Taylor, Edward M. (Glgow, C'cart)
Hamilton, Michael (Salisbury)	Mills, Peter	Taylor, Robert (Croydon, N.W.)
Hampson, Dr. Keith	Miscampbell, Norman	Tebbit, Norman
Hannam, John	Mitchell, David (Basingstoke)	Temple-Morris, Peter
Harrison, Col. Sir Harwood (Eye)	Moate, Roger	Thatcher, Rt. Hn. Margaret
Harvie Anderson, Rt. Hn. Miss	Molyneaux, James	Thomas, D. E. (Merioneth)
Hastings, Stephen	Money, Ernle	Thorpe, Rt, Hn. Jeremy
Havers, Sir Michael	Monro, Hector	Townsend, C. D.
Hawkins, Paul	Moore, J. E. M. (Croydon, C.)	Trotter, Neville
Hayhoe, Barney	Morgan-Giles, Rear-Adm.	Tugendhat, Christopher
Heath, Rt. Hn. Edward	Morris, Michael (Northampton, S.)	Tyler, Paul
Henderson, Douglas (Ab 'rd' nsh 're, E)	Morrison, Charles (Devizes)	van Straubenzee, W. R.
Henderson, J.S.B.(Dunbartonshire, E.)	Morrison Peter (City of Chester)	Vaughan, Dr. Gerard
Heseltine, Michael	Mudd, David	Viggers, Peter
Higgins, Terence	Neave, Airey	Waddington, David
Hill, James A.	Neubert, Michael	Wainwright, Richard (Colne Valley)
Holland, Philip	Newton, Tony (Braintree)	Wakeham, John
Hooson, Emlyn	Nicholls, Sir Harmar	Walder, David (Clitheroe)
Hordern, Peter	Normanton, Tom	Walker-Smith, Rt. Hn. Sir Derek
Howe, Rt. Hn. Sir Geoffrey (Surrey, E.)	Nott, John	Wall, Patrick
Howell, David (Guildford)	Onslow, Cranley	Warren, Kenneth
Howell, Ralph (Norfolk, North)	Oppenheim, Mrs. Sally	Wells, John
Howells. Geraint (Cardigan)	Orr, Capt. L. P. S.	Wiggin, Jerry
Hunt, John	Osborn, John	Wigley, Dafydd (Caernarvon)
Hurd, Douglas	Page, Rt. Hn. Graham (Crosby)	Wilson, Gordon (Dundee, E.)
Hutchison, Michael Clark	Page, John (Harrow, W.)	Winstanley, Dr. Michael
Iremonger, T. L.	Pardoe, John	Winterton, Nicholas
Irvine, Bryant Godman (Rye)	Parkinson, Cecil (Hertfordshire, S.)	Wood, Rt. Hn. Richard
James, David	Pattie, Geoffrey	Worsley, Sir Marcus
Jenkin, Rt. Hn. P. (R'dge W'std & W'fd)	Percival, Ian	Young, Sir George (Ealing, Acton)
Jessel, Toby	Pink, R. Bonner
Johnson Smith, G. (E. Grinstead)	Price, David (Eastleigh)	TELLERS FOR THE AYES:
Johnston, Russell (Inverness)	Prior, Rt. Hn. James	Mr. Spencer Le Marchant and
Jones, Arthur (Daventry)	Raison, Timothy	Mr. Michael Roberts
Jopling, Michael	Rathbone, Tim
NOES
Abse, Leo	Atkins, Ronald	Baxter, William
Allaun, Frank	Atkinson, Norman	Bennett, Andrew F. (Stockport, N)
Archer, Peter	Bagier, Gordon A. T.	Bidwell, Sydney
Armstrong, Ernest	Barnett, Guy (Greenwich)	Bishop, E. S.
Ashley, Jack	Barnett, Joel (Heywood & Royton)	Blenkinsop, Arthur
Ashton, Joe	Bates Alf	Boardman, H.
Booth, Albert	Golding, John	Moyle, Roland
Boothroyd, Miss Betty	Gourlay, Harry	Murray, Ronald King
Bottomley, Rt. Hn. Arthur	Graham, Ted	Newens, Stanley (Harlow)
Boyden, James (Bishop Auckland)	Grant, George (Morpeth)	Oakes, Gordon
Bradley, Tom	Grant, John (Islington, C.)	Ogden, Eric
Broughton, Sir Alfred	Griffiths, Eddie (Sheffield, Brightside)	O'Halloran, Michael
Brown, Bob (Newcastle upon Tyne, W.)	Hamilton, William (Fife, C.)	O'Malley, Brian
Brown, Hugh D. (Glasgow, Provan)	Hamling, William	Orbach, Maurice
Brown, Ronald (H'kney, S. & Sh'ditch)	Hardy, Peter	Ovenden, John
Buchan, Norman	Harper, Joseph	Owen, Dr. David
Butler, Mrs. Joyce (H'gey, WoodGreen)	Harrison, Walter (Wakefield)	Padley, Walter
Callaghan, Jim (M'dd'ton & Pr'wich)	Hatton, Frank	Palmer, Arthur
Campbell, Ian	Healey, Rt. Hn. Denis	Park, George (Coventry, N.E.)
Cant, R. B.	Heffer, Eric S.	Parker, John (Dagenham)
Carmichael, Neil	Hooley, Frank	Parry, Robert
Carter, Ray	Horam, John	Pendry, Tom
Carter-Jones, Lewis	Huckfield, Leslie	Phipps, Dr. Colin
Castle, Rt. Hn. Barbara	Hughes, Rt. Hn. Cledwyn (Anglesey)	Prescott, John
Clemitson, Ivor	Hughes, Mark (Durham)	Price, Christopher (Lewisham, W.)
Cocks, Michael	Hughes, Robert (Aberdeen, North)	Price, William (Rugby)
Cohen, Stanley	Hughes, Roy (Newport)	Radice, Giles
Coleman, Donald	Hunter, Adam	Richardson, Miss Jo
Colquhoun, Mrs. M. N.	Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)	Roberts, Albert (Normanton)
Conlan, Bernard	Irving, Rt. Hn. Sydney (Dartford)	Roberts, Gwilym (Cannock)
Cook, Robert F. (Edinburgh, C.)	Jackson, Colin	Robertson, John (Paisley)
Cox, Thomas	Janner, Greville	Roderick, Caerwyn E.
Craigen, J. M. (G'gow, Maryhill)	Jay, Rt. Hn. Douglas	Rodgers, George (Chorley)
Cronin, John	Jeger, Mrs. Lena	Rodgers, William (Teesside, St'ckton)
Crosland, Rt. Hn. Anthony	Jenkins, Hugh (W'worth, Putney)	Rooker, J. W.
Cryer, G. R.	Jenkins, Rt. Hn. Roy (B'ham, St' fd)	Roper, John
Cunningham, G. (Isl 'ngt' n, S & F'sb'ry)	John, Brynmor	Rose, Paul B.
Cunningham, Dr. John A. (Whiteh'v'n)	Johnson, James (K'ston upon Hull, W)	Ross, Rt. Hn. William (Kilmarnock)
Dalyell, Tam	Jones, Alec (Rhondda)	Rowlands, Edward
Davidson, Arthur	Jones, Barry (Flint, E.)	Sandelson, Neville
Davies, Bryan (Enfield, N.)	Jones, Dan (Burnley)	Sedgemere, Bryan
Davies, Denzil (Llanelli)	Jones, Gwynoro (Carmarthen)	Selby, Harry
Davies, Ifor (Gower)	Judd, Frank	Shaw, Arnold (Redbridge, Ilford, S.)
Davis, Clinton (Hackney, C.)	Kaufman, Gerald	Sheldon, Robert (Ashton-under-Lyne)
Deakins, Eric	Kelley, Richard	Shore, Rt. Hn. Peter (S'pney & P'plar)
Dean, Joseph (Leeds, W.)	Kilroy-Silk, Robert	Short, Mrs. Renée (W'hamp'n, N.E.)
de Freitas, Rt. Hn. Sir Geoffrey	Kinnock, Neil	Silkin, Rt. Hn. John (L'sham, D'ford)
Delargy, Hugh	Lambie, David	Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)
Dell, Rt. Hn. Edmund	Lamborn, Harry	Sillars, James
Dempsey, James	Lamond, James	Silverman, Julius
Doig, Peter	Latham, Arthur (City of W' minster P'ton)	Skinner, Dennis
Dormand, J. D.	Lawson, George (Motherwell & Wishaw)	Small, William
Douglas-Mann, Bruce	Leadbitter, Ted	Smith, John (Lanarkshire, N.)
Dunn, James A.	Lee, John	Snape, Peter
Dunnett, Jack	Lewis, Arthur (Newham, N.)	Spearing, Nigel
Dunwoody, Mrs. Gwyneth	Lewis, Ron (Carlisle)	Spriggs, Leslie
Eadie, Alex	Loughlin, Charles	Stallard, A. W.
Edelman, Maurice	Loyden, Eddie	Stewart, Rt. Hn. M. (H'sth, Fulh'm)
Edge, Geoff	Lyons, Edward (Bradford, W.)	Stoddart, David (Swindon)
Edwards, Robert (W'hampton, S.E.)	Mahon, Dr. J. Dickson	Stonehouse, Rt. Hn. John
Ellis, John (Brigg & Scunthorpe)	McCartney, Hugh	Stott, Roger
Ellis, Tom (Wrexham)	McElhone, Frank	Strang, Gavin
English, Michael	MacFarquhar, Roderick	Strauss, Rt. Hn. G. R.
Evans, Fred (Caerphilly)	McGuire, Michael	Summerskill, Hn. Dr. Shirley
Evans, Ioan (Aberdare)	Mackenzie, Gregor	Swain, Thomas
Evans, John (Newton)	McMillan, Tom (Glasgow, C.)	Thomas, Jeffrey (Abertillery)
Ewing, Harry (Stling, F'kirk & G'm'th)	Madden, M. O. F.	Tierney, Sydney
Faulds, Andrew	Magee, Bryan	Tinn, James
Fernyhough, Rt. Hn. E.	Mahon, Simon	Tomlinson, John
Fitch, Alan (Wigan)	Mallalieu, J. P. W.	Tomney, Frank
Fitt, Gerard (Belfast, W.)	Marks, Kenneth	Torney, Tom
Flannery, Martin	Marquand, David	Tuck, Raphael
Fletcher, Raymond (Ilkeston)	Marshall, Dr. Edmund (Goole)	Urwin, T. W.
Fletcher, Ted (Darlington)	Mason, Rt. Hn. Roy	Varley, Rt. Hn. Eric G.
Foot, Rt. Hn. Michael	Meacher, Michael	Wainwright, Edwin (Dearne Valley)
Ford, Ben	Mellish, Rt. Hn. Robert	Walden, Brian (B'm'ham, Ladywood)
Forrester, John	Mendelson, John	Walker, Harold (Doncaster)
Fowler, Gerry (The Wrekin)	Mikardo, Ian	Walker, Terry (Kingswood)
Fraser, John (Lambeth, Norwood)	Millan, Bruce	Watkins, David
Freeson, Reginald	Miller, Dr. M. S. (E. Kilbride)	Weitzman, David
Galpern, Sir Myer	Mitchell, R. C. (S'hampton, Itchen)	Wellbeloved, James
Garrett, John (Norwich, S.)	Molloy, William	White, James
George, Bruce	Moonman, Eric	Whitehead, Phillip
Gilbert, Dr. John	Morris, Alfred (Wythenshawe)	Whitlock, William
Ginsburg, David	Morris, Charles R. (Openshaw)	Willey, Rt. Hn. Frederick
	Morris, Rt. Hn. John (Aberavon)
Williams, Alan (Swansea, W.)	Wilson, William (Coventry, S.E.)	Young, David (Bolton, E.)
Williams, Alan Lee (Hvrng, Hchurch)	Wise, Mrs. Audrey	TELLERS FOR THE NOES:
Williams, Rt. Hn. Shirley (H'f'd & St'ge)	Woodall, Alec	Mr. Walter Johnson and
Williams, W. T. (Warrington)	Woof, Robert	Mr. Laurie Pavitt.
Wilson, Alexander (Hamilton)	Wrigglesworth, Ian

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.