CIVIL LIST BILL

HC Deb 04 December 1975 vol 901 cc1980-2017

Order for Second Reading read.

5.45 p.m.

The Prime Minister (Mr. Harold Wilson)

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

The House will recall that in February this year I made a statement on the Civil List which was principally concerned with expenditure on the Civil List in 1975. In that statement I was able to foreshadow a change in the machinery by which future increases in the Civil List and associated payments might be provided. I indicated that the Government proposed to introduce legislation to change the system for providing for those increases. The Bill now before the House fulfils that promise.

The system introduced in 1972 by the provisions of the Civil List Act 1972 followed the Report of a Select Committee on the Civil List. The Civil List Act 1972 provided for the payment of £980,000 a year from the Consolidated Fund for the Civil List. That sum exceeded the annual expenditure at that time.

The Act provided for surpluses to be accumulated by the Royal Trustees and those surpluses were to be applied to meet deficits of subsequent years. At the time when Parliament was considering the 1972 Act, it was expected that the provisions in the Act would suffice to cover expenditure for a period of some five years.

The provisions in the 1972 Act were designed at a time when experience of and expectations of inflation were much less than they have become in the intervening three years. Among those provisions was a statutory requirement on the Royal Trustees to report to the House, and for any necessary action then to be taken, when it appeared that the Civil List expenditure for the next calendar year would exceed the sums available under the Act to meet that expenditure. The Civil List Act 1972 was not, however, intended to create a system of annual reviews of the Civil List payments, nor is the procedure that it created—the formal reports by Royal Trustees—suitable for the purpose. That is the basic reason for the legislation which is now before the House.

It is a cause for regret, but nevertheless an unavoidable fact, that inflation has affected the costs of running the Royal Household in very much the same way as it has affected everyone else. Perhaps the best analogy to the Royal Household is with other labour-intensive organisations, if I may use that phrase in this context. It is a fact which is familiar to us all that labour costs have been the chief element in the cost increases suffered by labour-intensive industries and organisations.

About three-quarters of the expenditure covered by the Civil List is on wages and salaries, mainly on staff engaged in manual and clerical work. Increases which are granted to these staff reflect increases in comparable Civil Service rates negotiated with the relevant unions. Such increases are, of course, in this current period entirely in line with the Government's own counter-inflation policy. There has been no question of any breach of that policy having been made in respect of anyone whose pay depends on the Civil List, and I can assure the House that this will continue to be the case.

The Government, as the House full knows, are determined to deal with inflation and place the highest priority on succeeding in doing so. We all agree on that. But it would be grossly irresponsible to expect, in considering the arrangements for the Civil List in the foreseeable future, that it will be possible to revert to a system which was based on fixing a basic sum with the expectation that it would not have to be changed for five years. It is therefore desirable to establish a new system which recognises in particular the demands on the Civil List which are created by the labour-intensive nature of the Royal Household. As I told the House on 12th February, the Government had decided to recommend the House to agree to legislation providing that any further increases in provision for the Civil List should be subject to normal House of Commons Supply procedures.

The House has always recognised that Civil List payments were made by Parliament on behalf of the nation to the Queen and the Royal Household in order to enable the Queen and the Household to carry out the very wide range of official duties which the nation has come to expect of them. That is why, taken together with the degree of inflation recently experienced, the Government propose that additional Civil List payments should be made in a way which is similar to that in which other moneys for other official purposes are provided.

There is a further point that the House will be ready to understand. Although the Queen has widened the scope of her activities far beyond those of any previous Sovereign, the number of people employed in her Household has been reduced by 44 during her reign. This is the more remarkable since the Queen is Sovereign of 12 countries and travels regularly throughout the world in addition to carrying out an extensive programme in this country.

The Bill now before the House therefore provides that the Treasury may make payments out of Votes for the purpose of supplementing all or any of the sums to which Section 6(1) of the Civil List Act 1972 applies. These sums, which are payable out of the Consolidated Fund, are for the Queen's Civil List, for annuities to certain members of the Royal Family, for contributions to the official expenses of certain members of the Royal Family and for Civil List pensions.

The payments to be made to the Royal Trustees under Clause 1(1) of the Bill will be subject to the normal House of Commons Supply procedure in the same way as other expenditure. Payments by the Royal Trustees will be audited by the Auditor of the Civil List, and a statement of those payments will be appended to the Appropriation Account at the end of the year. I am sure that it is right to meet this expenditure in the same way as other voted expenditure and to give it no special treatment, whether more or less than is applied to other voted expenditure. Clearly, the expenditure will be on a cash limits basis.

The second and only other major provision of the Bill repeals the subsection of the 1972 Act which requires the Royal Trustees to report if at any time they think that the Civil List expenditure for the next year will exceed the sums available for meeting that expenditure. This provision, which, as I have said, was intended to be an exceptional provision, would, at a time of inflation, certainly become an annual requirement should the terms of the Act remain unchanged. This was not the intention of Parliament when the 1972 Act was passed. Some of us here were members of the 1971 Select Committee.

I hope the House will agree that it is undesirable that the Royal Trustees should be required to report annually. However, it seems right that the Royal Trustees should be required to report at longer intervals in order to review the working of the system generally—this was, after all, the purpose behind the 1972 Act. The Bill does not, therefore, remove the duty on the Royal Trustees to report at least once every 10 years.

The House will realise that this legislation is concerned only with the machinery for providing increases in Civil List payments. It does not raise the question of the amounts which should be provided using that machinery. The House had the opportunity this year—in February—to discuss the Order providing for increases in payments for the Civil List in 1975. Estimates for increases in 1976 will, when this legislation is enacted, be presented in the usual way and the House will have the same opportunity to discuss and decide those increases as it has to discuss any other voted money.

However, the House will not expect me to restrict my remarks solely to matters of machinery. I know that some Members are concerned about various aspects of Civil List expenditure. They raised a number of these in the discussions in the House in February of this year. I do not think that many of those points are strictly relevant to the changes in machinery which have been proposed in this Bill. It is, I repeat, a machinery Bill, and only a machinery Bill.

But there is a wider point that the Government acknowledge. I do not need to describe to the House the extremely difficult economic situation which the country has faced and continues to face and the effect which this has had on the living standards of everyone. Any increases in the Civil List which are provided under the new arrangements will, as I have already suggested, be almost entirely devoted to paying the employees of the Royal Household the going union rate for the job, within the Government's counter-inflation policy. Any cut in the increase concerned, were we by inadequate provision to involve any cut in those pay rates, would lead to those workers being paid less than people doing the same kind of job elsewhere and thus infringe agreements with the trade unions. I am sure that the House would reject any such course.

Nevertheless, if it is at all possible to defray public expenditure in order to reduce it in any way at this very difficult time, I am sure the whole House will join with me in welcoming this.

In my statement on 12th February, I was able to tell the House that Her Majesty had offered to contribute £150,000 towards the expenses of the Civil List for 1975. The Government accepted that offer, and I believe that the House warmly welcomed it. That contribution by Her Majesty in support of the Civil List was for one year only, and carried with it no obligation or understanding that the Queen would continue to contribute to expenses for which Parliament provides and has traditionally provided. Her Majesty has nevertheless authorised me to say that for the time being she now wishes to offer a regular annual contribution towards the expenses of the Civil List.

I am authorised to tell the House that Her Majesty has offered to pay to the Consolidated Fund as from next year a sum which is equivalent to the provision made, under present arrangements, under Section 3 of the Civil List Act 1972 under which payments are made to certain individual members of the Royal Family—the Duke of Kent, Princess Alexandra, the Duke of Gloucester, and Princess Alice, Countess of Athlone. Provision for these payments is now £85,000. The value of the Queen's contribution will inevitably rise year by year with the cost of living, so it is not possible to put a firm figure on it. The sum which the Queen will pay in 1976 will depend on the level of the official expenses incurred, because each of these members of the Royal Family has expenses, and the increase in the payments to be made under Section 3 of the 1972 Act. The figure is currently estimated to be of the order of £120,000. This represents a big change over the situation which existed when the House last debated these matters in November.

The Civil List will, on this basis, now be providing only for the Sovereign, the Consort of a Sovereign and for the children of a Sovereign and the widows of those children. I am sure that the House will warmly welcome Her Majesty's offer to make this continuing contribution, which is being accepted by the Government.

I strongly commend this measure to the House. It introduces no major innovations into the general arrangements by which the nation provides the financial support necessary for the Queen and the Royal Household to fulfil their official functions. Nor in itself does it affect the extent of that support: no changes or additions to public expenditure arise from the Bill itself nor any changes or additions to public sector manpower. It provides for a useful amendment to the means of providing for increases in expenditure when these increases arise in the light of changed circumstances since the original main legislation was enacted, while keeping any moneys voted fully within the control of the House.

Her Majesty's very generous offer will, I am sure, be appreciated by the House. But the legislation which is now before the House stands and is fully justified independently of Her Majesty's willingness to make a continuing contribution towards the expenses of the Civil List.

It is right that this legislation should be introduced, in accordance with the pledge I gave in February, which was substantiated in the House by my right hon. Friend the Chancellor of the Exchequer. I hope that the House will give its warm acceptance to these proposals.

Mr. Speaker

Before I call the right hon. Lady the Leader of the Opposition, I should tell the House that I have not selected either of the amendments.

6.2 p.m.

Mrs. Margaret Thatcher (Finchley)

I should like to make it quite clear that we on the Opposition Benches support the Prime Minister in introducing this measure at the present time. As he said, it is a brief Bill and one with a limited objective. It is virtually a single-clause Bill, in which the Explanatory and Financial Memorandum is longer than the substantive provisions of the clauses.

The Bill's limited purpose is to vary the procedure by which we make full and proper provision for the expenses of a constitutional monarchy in the performance of its public duties. We are very fortunate in having the institution of a constitutional monarchy. It has brought this country a stability and sense of continuity that are lacking in some other countries. We are also fortunate, if I may say so without being presumptuous, in the Monarch who wears the crown and the family who help to discharge the heavy round of duties. As well as being founded on tradition, the monarchy now has a strong bond with the people, in that it has the admiration and affection of the people.

I also believe that we are fortunate to have in this country the person who is the Monarch of 11 other countries as well; although it is something of a general knowledge exercise to try to enumerate the 12 countries mentioned by the Prime Minister. Fortunately, his office was kind enough to let me have a list of them.

There have been changes in the way in which we make provision. It is no longer possible to provide for a whole reign, or even for a few years at a time. It is interesting to look back to the rate of inflation when we last made provision by Act, which was in 1972. Inflation then rose at about 8 per cent. in the year. For the last calendar year the rate was about 20 per cent., and we do not quite know what it will be over the whole of this year. Whereas we started out to make provision for a whole reign, and then graduated to making provision for a few years, it is no longer possible even to forecast the required expenditure for a few years ahead, as the Prime Minister said. That is why it is necessary to move to an annual statement.

I understand from the Prime Minister's statement on 12th February that the change to an annual Vote has the full agreement of the Royal Household. I also understand from the Bill that it is still possible to revert to the old procedure under which provision was made by Order. We can do this if we get inflation completely under control and go once again to a stable price level. To some extent, therefore, this Bill presents an alternative procedure which we can use while we have need to do so. If we can ever revert to making Orders, they will derive from agreement between the Treasury and the Royal Household and then be brought before the House in the usual way. It is extremely useful to have these two alternative methods at our disposal.

The Prime Minister mentioned some of the annuities referred to in Clause 1 and spoke of the contributions to expenses of certain members of the Royal Family not in receipt of annuities, saying that these will now be borne not by the Consolidated Fund but by the Queen. We should say how grateful we are that when these matters have come before the House and the Civil List has been revised we have always been met with maximum co-operation from the Royal Household. The Royal Household has always made a very positive contribution to try to reduce the expenses of carrying out the duties of the monarchy.

First, in 1972 I believe, the payment to the Privy Purse was forgone, and then last year there was the special contribution to which the Prime Minister referred. This year we have a separate and new measure under which the Queen herself will meet the cost of annuities to members of the Royal Family not covered by the Civil List. Those members of the Royal Family carry out quite heavy duties. They are welcomed by the people as a whole, and it is right that all their expenses should be reimbursed. We warmly welcome the gesture by the Queen that in future she will reimburse them herself, particularly at a time of inflation, when the size of the commitment cannot be quantified.

The Prime Minister also referred to the £6 pay limit and the fact that the Royal Household has always made maximum economies, in particular in reducing the numbers of staff employed to carry out the duties, although those duties have been increased. I understand that almost all members of the Royal Household have salary scales linked directly or indirectly to the Civil Service scales. It seems to follow that any increases must automatically be within the pay limits settled by the Prime Minister in the attack on inflation.

As the Prime Minister said, this is a very limited Bill, mainly a machinery or procedure Bill. I think it right that we should make good provision for the Monarch to carry out the duties of the monarchy in the best possible way. I hope that we shall do it expeditiously.

6.9 p.m.

Mr. J. Enoch Powell (Down, South)

Those matters which in part we describe today as the Civil List have been among the oldest subjects of debate in this House. In fact, it might be argued that before the private or personal expenditure and the public expenditure of the Crown were gradually distinguished, our debates upon that subject constituted the germ and foundation of the control of the House over Government and over legislation. Even after the separation had been quite clearly made, this provision for the expenses of the Monarch and the Royal Family has been a recurring—and not the happiest or most successful—form of debate in the House.

However, a method was adopted for limiting the problem and restricting the occasions on which this House had to approach the fearsome task of allocating and defining the financial resources available to the Monarch and the Royal Family. That method was provision out of the Consolidated Fund, initially a provision made once or on very few occasions in the course of a reign.

In this Bill we are brought face to face much more severely than in the 1972 Act with one of the many destructive consequences of inflation. There seems to be no end to the achievements of inflation as the great destroyer—destroyer of institutions, of human relationships, of societies and of economies. A few years ago its ravages were milder than they are today, but the House was then already finding itself obliged, in pursuance of a Select Committee's Report, to contemplate the possibility—indeed the likelihood—of an annual debate upon an Order placed before this House to supplement the provision in the principal Act.

In this Bill, despite what the Prime Minister said, it seems that a very great shift is being made. The Prime Minister said that there was "no major innovation" imported by the Bill. I would respectfully dissent from that and dissent from it on the basis of something else which he said. The Prime Minister said that as a consequence of this Bill, if it passes into law, there will be "no special treatment" of the moneys which pass from the Consolidated Fund to the maintenance of the Civil List. That is, indeed, a major innovation. Hitherto the principle has been the vesting of this expenditure directly upon the Consolidated Fund, as the salaries, for instance, of Her Majesty's judges are vested and with a similar but even more important intention—namely, that there should indeed be special treatment of that expenditure, that it should not pass over the hurdles which, very properly, all other expenditure authorised by this House to be made out of the Consolidated Fund has to pass.

The reason why the Consolidated Fund method, if I may so describe it, is adopted for Her Majesty's judges and a few other persons appears to apply with very much greater force to the expenditure concerned in this Bill. Although the amendment in the name of the hon. Member for Somerset, North (Mr. Dean) has not been called, I hope I may say that I am wholly of the view expressed in that amendment, which seems admirably to take and make the point.

I have heard comment in the past few days that it is ironical for this House at this time of economic crisis to be spending a half day debating a Civil List Bill. I believe on the contrary that in this debate we are indeed debating the economic plight of this nation; but we are penetrating below the superficial economic phenomena to the psychological and moral causes of our plight.

Britain is often called—and we have a national habit of gladly repeating the sneering phrases which others use about us—the sick man of Europe. I do not believe we have any organic sickness. It would be more accurate to describe us as the nation which suffered a nervous breakdown and to say that our economic performance—and, even more, the manner in which we conceive our economic performance as it is presented to us—is the symptom of a profound loss of self-confidence and of national pride. I do not believe that the recovery so often heralded, which has as often eluded us, will come until that pride and self-confidence is regained—until we recover from the nervous breakdown which seems to have snapped and broken all of the characteristic reactions of this nation to a challenge.

When we speak of the pride and self-confidence of our nation, the Crown—the Monarchy—is absolutely central; nor do I know how better one would gauge the state of this nation's psychological health, of its national morale, than by its attitude towards its greatest, its unique, institution. I fear that this Bill—and I make no criticism of the manner in which it was placed before the House by the Prime Minister—by the very fact that it is brought forward and that it is entertained by this House, betokens how much the due relationship between nation and monarchy is impaired.

Of all the sources of true and proper pride to a British person none is greater than the common possession of the Crown. I use the word "possession" advisedly, in its full and most literal sense. Because our Crown is the product of the history of this nation, because it grows like an oak in the soil of these islands, it is therefore the personal possession of every citizen and subject, however humble, however poor. It is a total misconception, a misconception which permeates the words of the amendment tabled by the hon. Member for Fife, Central (Mr. Hamilton)—who breathes upon nothing that he does not reduce to his own level—to suppose that there is anything of class, anything which is restrictive or destricted, about the Crown. Whatever may be said of any other institution, the Crown is the common, precious and hereditary jewel of all British subjects and of all the people of this country.

To approach that common possession, that symbol and personification, with the attitude, "How ungenerous can we be? How little can we contrive to spend upon it? How much can we clip?"—not of its magnificence, for it has ever been the pride of English greatness not to be magnificent through lavishness, but in more fundamental ways—" How much can we restrict the outward signs and manifestations of what the Crown is to this country? "is a sign that we are still divorced from the pride and self-confidence without which a nation cannot face the world and without which this nation cannot learn to face the world again.

There is more to it today than even that historic personification, symbolism and treasury of the Crown itself. In these last years we have learned—some of us to our astonishment and incredulity—that our nation could relinquish—what we never imagined it was possible for it to relinquish—its own independence and sovereignty, and that this House could give up its proud, exclusive, all-embracing powers of control over all matters whatsoever within this realm. Here at this juncture, where we are contemplating that which a few years ago would have been inconceivable to us, the Crown appears in a new light.

It may seem a paradox, yet it is true to say, that the unique quality of this House and indeed of parliamentary government as this country has taught it to the world is based upon the monarchy and would be impossible without a hereditary monarchy of historical, prescriptive origin. I say that for a specific reason. The fundamental principle of the power of this House and the power of Parliament, namely, that no Parliament can bind its successor, that every Parliament can undo what any other Parliament has done—at any rate, until the beginning of 1973—the principle that within this realm whatever Parliament enacts cannot be called in question in any other place or forum whatsoever, does not derive from anything which we have done or could have done in this place. It derives from the nature of that sovereignty which is exercised upon the advice of those who in the last resort are responsible in this House.

Today we are perhaps the only nation in the world which has a true monarchy. I doubt whether there is any other monarchy now existing which is not itself the creature of a contract, of a constitution, of a settlement. A monarchy which is the creature of a settlement begets a legislature which is the creature of a settlement. Look elsewhere—across the Channel maybe—and one finds that the legislature is not sovereign. If ever from this country representatives are directly elected to go to what is called a European Parliament, they will find that that so-called Parliament can never be what this Parliament was. Above it there will always be a sovereign, and that sovereign will be a written contract, a treaty, a text, interpretable not by that Assembly, amendable not by that Assembly—as we amend and change the law—but interpretable by a separate and independent judicial body.

The nature of parliamentary democracy as it has grown up in this House, and our pride in the greatness of this House, are inseparable from our monarchy. They are in a sense the gift of our monarchy. Therefore there is in these years something even more movingly apposite, more movingly testing than ever before about the attitude of this House and those whom we represent towards our unique possession.

Today I fear that we shall fail the test. I was disappointed that the Conservative Party—which used to be the Tory Party—could not find words to interpret the change, and the significance of the change, which is being made by the Bill. "No, no", we were told, "it is only a matter of machinery. In the period of inflation it will be more convenient; so let us do it". That is a symptom and a sign that we are still far indeed from recovering the defiant self-confidence by which alone our nation can raise itself again. I am against the Bill.

6.25 p.m.

Mr. William Hamilton (Fife, Central)

The right hon. Member for Down, South (Mr. Powell) has subjected the House to a torrent of what I can only describe as romantic rubbish. I wonder whether he will do what he did in 1968 when the Prime Minister sought to introduce a Bill to reform the other hereditary element in our constitution. Will he enter into an unholy alliance with the Secretary of State for Employment and vote against the Bill? Will he join me in the Lobby tonight and vote against the Bill, although we may be in the same Lobby for different reasons?

Much of what the right hon. Gentleman said, in my view—and, I suspect, in the view of many of the few hon. Members present—was irrelevant in the context of a Second Reading debate. I agree with him that the principle behind the Bill is a major innovation. The Government cannot pretend that it is a small machinery Bill that will have no effect. On the contrary, it will have a major effect in the sense that every year the Royal expenditure will have to go through the parliamentary hoops of scrutiny and criticism. That is the price which the monarchy will have to pay for protection against inflation, which is the purpose of the Bill.

The right hon. Gentleman said that the debate on the Bill was in a sense a debate on the economic plight of the nation. Indeed it is, but not in the sense he suggested. There is evidence of a loss of self- confidence and national pride in Britain, which has a monarchy, but not in Ger many without a monarchy, or in Japan—

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

With a monarchy.

Mr. Hamilton

Yes, but with a difference.

Mr. Fairbairn

It is hereditary.

Mr. Hamilton

No, the monarchy in Japan has undergone a far more drastic change than has ours. The attitude of the Japanese people to their Monarch has gone through a much greater degree of change than has the attitude of the British people to ours. Those nations and others which are republics in Europe and elsewhere are forging ahead of the United Kingdom in every way—in social provision, economic growth and standard of living. Few Common Market countries owe their economic progress in the last 20 years to the fact that they have a monarchy. On the contrary.

The Explanatory Memorandum makes clear that the Bill is on the lines announced by the Prime Minister on 12th February this year. Presumably, therefore, it was unnecessary to spell out the provisions in the Queen's Speech. I wonder why that was not done? Had it been done, some of us might have had an opportunity to put down an amendment to the Gracious Speech, which would have given us an additional opportunity to put forward arguments in the debate on the Queen's Speech which I, and, I suspect, one or two of my hon. Friends, will put tonight.

The long statement by the Prime Minister in February was couched in the appropriate terms of nauseating genuflexion to which we have become almost reconciled. I cannot bring myself to read it all into the record again, but I have one or two quotes from it. The Prime Minister said: It will be necessary to seek parliamentary authority for a further increase in the Civil List provisions next year. He meant 1976. He went on: Indeed, it is evident that, in a time of rapidly rising costs and prices, the traditional system of settling the Civil List by legislation at relatively infrequent intervals becomes unworkable. Of course it does. The Prime Minister added: The Government therefore propose, with the Queen's agreement, to seek the authority of Parliament to finance future increases in the provision for the Civil List and in the other payments authorised by Civil List Acts from 1976 onwards by means of a grant-in-aid made to the Royal Trustees by the Treasury out of moneys provided by Parliament. And so it went on.

The Leader of the Opposition had some relatively friendly exchanges with the Prime Minister on the matter. They were in complete agreement with the provisions which are foreseen in the Bill. The right hon. Member for Down, South made no attempt at that time to intervene. I do not know whether he was in his seat then, but the hon. Member for Somerset, North (Mr. Dean) was there and he made an intervention. He made no attack on the proposals as then envisaged and which are now before the House. He spoke about the Crown surrendering various rights in exchange for the Civil List. In fact, he talked all kinds of nonsense like that, including the statement that the State made a handsome profit out of the Royal Family. But he did not make the point which he makes in the amendment which has not been selected.

I point out to the Prime Minister that there were other voices in that exchange on 12th February. My Left-wing, radical Friend the right hon. Member for Fulham (Mr. Stewart) referred to the effects of Royal immunity from taxation, and we got an astonishing reply to his question from the Prime Minister. This is what the Prime Minister said: I know my right hon. Friend's feelings on this matter. Indeed, he has spoken to me about it. It is true that the Select Commitee did not receive certain information on this matter…". Indeed it did not, except that every one of the annuitants—the Queen Mother, Prince Philip, Princess Margaret, Princess Anne and all the others—was 100 per cent. tax-free except for Prince Philip, who happened to be 80 per cent. tax-free. All their annuities are completely free of tax.

The Prime Minister went on to say: I think that most hon. Members were able to make a fairly clear assumption about these things. The Select Committee considered the question of tax liabilities. Indeed it did. In the Prime Minister's absence we had 48 votes, but he did vote once, and that was when the Labour Party officially voted in the House to establish a Crown Department like any other Department of State, such as the Ministry of Agriculture, the Department of Education and Science and the rest.

The Prime Minister added: As I have said today, without any question of tax there is a voluntary contribution from the Crown—from the Queen's own resources…."—[Official Report, 12th February 1975; Vol. 886, c. 375, 379.] Of course there is. But where does she get it from?

We get this repeated alibi all the time that the Queen gets no salary. But we know the cost of the enormous tax privilege which the Royal Family gets and with which it has built up fabulous wealth. That is why the Queen can delude the House and the country about her generous offer to sustain these institutions out of her own money. The Royal Family is getting that money because of the completely tax-free position that its members enjoy. They have no death duties, no surtax, no income tax. Nothing at all accrues from the Royal wealth to the State. On 12th February the Prime Minister got more cheers from the Opposition than he got from this side of the House, as he is doing today. It is an interesting exercise.

I hope the Crown takes note of the interest that there is in it by the attendance in the House on both sides. The Tory Party, I understand, has issued a three-line Whip on the Bill. The sternest disciplinary action will be taken against those Tory MPs who dare not to support the Labour Government on the Civil List Bill. We have talked about the impossibility of a coalition Government. We have got it tonight, and there is no need for a three-line Whip to support it.

On the Labour side we do not have a three-line Whip because the Government know that they will get support from the Opposition. They will not get my support. My own Chief Whip pleaded with me, as the Prime Minister pleaded this afternoon, that it is only a machinery Bill. Not long ago we had the Ministers of the Crown Act, which was also a machinery Bill. I raised the matter at a party meeting, and what I then said would happen did happen. What is going to happen in this case is quite clear—there will be protections for every member of the Royal Household against inflation. That is the purpose of the exercise and the Crown is willing to pay the price in the form of annual parliamentary scrutiny. That is the deal that the Government have made with the Royal Family, and it is as well for us to understand what is happening. It is true that this is a machinery Bill, in the sense that it is designed to protect all within the monarchical institutions from the effects of inflation. All-round increases will be payable under Clause 1(1). Clause 1(2) repeals Section 5(2)(b) of the 1972 Act, and it is important to understand what that means. Section 5(2)(a) says that the Royal Trustees "may" make a report to the Treasury at any time when the Monarch is in financial distress. That remains unaffected by this Bill. It is the permissive aspect. But Section 5(2)(b) puts an obligation on the Royal Trustees to report if the Civil List expenditure for the next calendar year is likely to exceed the sums currently available. The Bill, by removing that obligatory part of the 1972 Act, is bound to raise certain suspicions in the minds of people like myself.

I want to remind the House of the annuities currently payable. We are paying £95,000 a year tax-free to the Queen Mother. We are paying £65,000 a year virtually tax-free—it was 80 per cent. and I do not know whether it is now 100 per cent.—to Prince Philip. We are paying £45,000 a year tax-free to the Gloucesters, £35,000 a year tax-free to Princess Anne, and £35,000 a year tax-free to Princess Margaret. All those sums can be raised annually—and presumably will be—under the terms of the Bill, and I want to put some questions on these very points.

In his statement in February, the Prime Minister made a fair point—he has made it again tonight—about the need to treat the wage-earners and salary-earners with in the Royal Household—

The Prime Minister

Before my hon. Friend passes on to the question of wage-earners, may I say that he will have heard what I said tonight, which was that in respect of some of those he has listed I had the authority from Her Majesty to tell the House tonight that she herself will henceforth bear those financial responsibilities. It would have been only fair and generous of my hon. Friend to concede that in what he has just said.

Mr. Hamilton

It would be fair and generous of my right hon. Friend if he said that he was going to treat these people taxwise in the same way as the miners, the steel workers and the rest of the workers of this country.

The Prime Minister

My hon. Friend is on a different point, and it is a point that he has made repeatedly. I do not think I have ever heard him speak without making it. He was referring a few minutes ago to the fact that under this Bill money would go to certain named members of the Royal Family. He knows perfectly well from what I have said that that will not be so. He might have had the generosity to concede that the generosity of the gesture makes what he has said untrue.

Mr. Hamilton

There is no generosity in this. I repudiate the Prime Minister's claim that there is any generosity anywhere at all in this. What he calls generosity derives—I repeat this and I shall go on repeating it—from the enormous tax concessions that the present Government, and successive Governments that he has led, have refused to tackle, despite the fact that the Labour members of the Select Committee made proposals to this effect. They proposed that these persons ought to be taxed, and very strong arguments were put in the House on this matter when the Bill was in Committee. We were then in Opposition and we did not get the support at that time of the ex-Cabinet Ministers, including the Prime Minister, when we wanted to put the Royal Family on the same tax basis as everybody else.

Mr. Norman St. John-Stevas (Chelmsford)

I am sure that the hon. Member wishes to be fair on this matter. Is it not a fact that, apart from the revenue of Her Majesty and part of the revenue of the Duchy of Cornwall, the incomes of all the other members of the Royal Family are subject to tax? If they cannot justify expenses in the same way as any other citizen, the revenue they receive from this House is taxed as well, so that it is not accurate to say that if is tax-free.

Mr. Hamilton

The hon. Member for Chelmsford (Mr. St. John-Stevas) served on the Select Committee with me and he knows very well that for the first time in our history the facts were put on record, and that every one of those annuities is 100 per cent. tax-free, apart from Prince Philip's, which was 80 per cent. tax-free. What Prince Philip's position is today I do not know. The facts are there on the record.

I want to ask the Prime Minister some questions. There is provision in the 1972 Act of £60,000 a year for the widow of Prince Charles, who is not yet married. That was increased from £30,000 a year provided in the 1952 Act: When Prince Charles was four we made provision for his widow of £30,000 a year, and we increased that to £60,000 20 years later when he was still unmarried. Are we to go through the nonsensical process of increasing it again under the provisions of the Bill?

I hope that the Prime Minister has given an assurance that in no circum stances will anybody covered by the terms of the Bill get an increase of more than £6 a week while the present Pay Code applies. Will he give that assurance now? Is there anything to stop a private deal being made within the Palace to make sure that some of these annuitants get more than £6 a week? Of course, there cannot be. The Prime Minister cannot give that assurance, and it makes it that much more difficult for us to sell—

Mr. F. A. Burden (Gillingham)

I find it very difficult to follow that argument. If Her Majesty is to be allowed only £6 a week, how will she be able to pay that same amount to the whole of the Palace staff if they are entitled to a comparable amount?

Mr. Hamilton

The Prime Minister said, as I understand it, that any increase in the annuities will be payable by the Queen out of her own generosity and that, therefore, there will be no additional charge on the Consolidated Fund. I think that was what the Prime Minister said. But, of course, there is nothing as far as I know to stop Her Majesty from giving to those annuitants far in excess of £6 a week. The Prime Minister is one of the Royal Trustees. Presumably he will know whether or not that is the intention. He will know, as a Trustee, whether that would be infringing the Pay Code.

What representations will the Prime Minister be making in the appropriate quarters to ensure that in no circumstances must anyone within the Royal Household get more than £6 a week? We are asking all the other workers in the country to accept £6 as a maximum. If the Prime Minister cannot give that assurance, it makes it that much more difficult for us to ask our own workers to accept the pay policy.

I want to ask the Prime Minister some further questions. First, I presume that there will be a Minister answerable in the House for Questions on these matters. Which Minister will it be? How soon shall I be able to table Questions on these matters? Will that Minister be in the rota? It is a very important point. If this is to be brought into the parliamentary arena, I want to be in it.

Shall I be able to ascertain, by question and answer, by Adjournment debate or by any other method, exactly what increases have been given to the Princesses, the Queen Mother or Prince Philip? I knew that Prince Philip's figure went up from £40,000 to £65,000 in 1972. Will it be possible for me to table a Question relating to any or all of these individuals to ascertain what increases they had in 1976, 1977 or whenever it might be, so that I can be sure that the increases are within the Pay Code, or whatever arrangement there might be at the relevant time?

My next—and most important—question is this. When will the Government tackle the question of tax liabilities? The right hon. Member for Down, South talked about the unifying force of the monarchy. He says that it gives a great moral lead to the nation. Let it give a moral lead by saying that it is prepared to accept the same sacrifices in terms of taxation responsibility as the rest of the nation.

The Government ought to do something about that. In particular, they ought to do something about the revenues from the Duchies. The hon. Member for Chelmsford has referred to the Duchies. As he knows, the income from them is completely tax-free. The Prime Minister spoke about the Queen's generosity. Quite apart from any provision in the Civil List, the Queen takes from the Duchy of Lancaster not less, and probably more, than £200,000 a year completely tax-free. Prince Charles gets a completely tax-free income of £150,000 from the Duchy of Cornwall.

Mr. Ian Lloyd (Havant and Waterloo)

The hon. Gentleman does not expect the House to follow him in his egalitarian prurience, but he does expect the House to follow what he described as his logic. Leaving aside whether he approves of a constitutional monarchy, when he admits that such a monarchy must require real resources to maintain it is he suggesting that it would be preferable for the country to pay the monarchy a gross income and that out of that tax should be paid at 98 per cent., leaving real resources of 2 per cent.?

Mr. Hamilton

The hon. Gentleman is following me exceptionally well. That is precisely what I mean, because the real cost of the monarchy is being hidden by these tax concessions. I accept that the Establishment is in no danger so long as we have the present Government in office, but the Government ought to tell the people openly and frankly the real gross cost of the institution of the monarchy and then say that those involved shall be subject to the same tax code as the rest of us. There might then be a better response in the nation to the institution than there is today.

I know that I am in a minority, though quite a substantial minority in the country shares the views that I hold on this matter.

Mr. Fairbairn

rose—

Mr. Hamilton

No. I have had enough of the hon. and learned Gentleman.

I should like an undertaking from the Government that they will look seriously at the tax position of the monarchy and everybody associated with it, and that as early as possible they will take the advice of a former Chancellor of the Exchequer, our right hon. Friend the Member for Birmingham, Stechford (Mr. Jenkins), and prominent Ministers then at the Treasury, who made the point to the Civil List Committee that all members of the Royal Family should be taxed in the same way as everybody else. [HON. MEMBERS: "They are."] They are not. It is no good Opposition Members saying that they are, because I have quoted figures and facts that are available to anybody who reads the 1971 Report of the Civil List Committee. Members of the Royal Family are treated in a special way. I need not repeat the facts, because they are available for everybody to read, and I want my right hon. Friend to give the House some assurances on these matters.

Even if nobody comes with me, I intend to vote against the Bill. I hope that the right hon. Member for Down, South will be a Teller with me. If, for different reasons from mine, the right hon. Gentleman does not like the Bill—and clearly he does not—and as I do not like it either, let us join forces and have a showdown.

Mr. Powell

Will the hon. Gentleman get Tellers?

Mr. Hamilton

The right hon. Gentleman has a lot of courage. Let him show it by joining me as a Teller. We shall make history. If the right hon. Gentleman has the courage of his convictions he will do as I suggest, and if he does he will be surprised at the support that we get. He will be even more surprised at the support that the Government get from their supporters. He will be surprised at the paucity of it, and there is an indication of that here tonight.

6.55 p.m.

Mr. Paul Dean (Somerset, North)

The hon. Member for Fife, Central (Mr. Hamilton) is well known for the personal vendetta that he conducts against the Queen and the Royal Family. It is usually cheap, nasty and ill-informed, but on this occasion he has done a service to the House and to the Royal Family because he has expressed in words far more effective than those that I shall utter the real dangers that lurk behind the Bill.

I regret the introduction of the Bill, and I put down a motion declining to give it a Second Reading. The Prime Minister described it as a machinery Bill. The changes proposed may be small in themselves but the implications are great, and in my judgment they cast long shadows into the future.

I agree with the right hon. Member for Down, South (Mr. Powell) that the Bill involves major changes of principle. It means the annual involvement of Parliament, contrary to past practice. It opens up the possibility of an annual wrangle over the Queen's expenses, and only a moment ago the hon. Member for Fife, Central told us about the way in which he hopes to achieve just that if the Bill reaches the statute book. This measure risks getting the Queen and the Royal Family involved in a party political dogfight. In my view this is the thin end of a dangerous wedge. I know that that is not the intention of the Government, or of my right hon. Friends, but I fear that that may be the result.

We need to find the best way of ensuring that the Civil List meets the rising costs incurred by the Queen and the Royal Family in carrying out their constitutional duties. As my right hon. Friend the Leader of the Opposition said, they are hit by inflation in the same way as anybody else. Their expenses go up, and have to be met.

We are not talking about pay, which is what the hon. Member for Fife, Central persists in doing. We are talking about the cost of fulfilling a duty, and how that cost can be met, and if we do not meet it either the staff will suffer or there will have to be a reduction in the style and scale of the Royal occasions and appearances, and both those alternatives would represent a policy of despair. It would be bad for Britain, bad for the Commonwealth, and bad for Britain's position in the world, because most of us would accept that the Queen and the Royal Family are the best ambassadors that Britain can conceivably have. Indeed, the Civil List is a small investment on which we get a real and enduring return.

We know that there is strict control over expenditure. The Royal Trustees said, in their last report in February 1975, that they were satisfied that every effort had been made to secure economies, and two of those Royal Trustees are, of course, the Prime Minister and the Chancellor of the Exchequer.

We know, too, that the Queen has made substantial contributions from her own resources towards keeping down the cost of the Civil List in present economic circumstances, and this afternoon the Prime Minister announced further steps in that direction. The Queen intends to make a regular annual contribution to keep down the cost of the performance of her public duties.

It is, then, a question of how best we can cater for inflation and still enable the Queen to continue her constitutional duties both at home and abroad.

I want briefly to explain the arguments, as I see them, against the Bill.

The first is that it involves a major change of principle, namely, the annual involvement of Parliament. That is contrary to the recommendations of the Select Committee on the Civil List in 1971–72 and, indeed, all past practice regarding the Civil List.

The Select Committee considered the proposition now in the Bill that any increases needed should be met from an annual Vote and came down firmly against it. The Select Committee, in paragraph 24 of its Report, laid down what it described as the major objectives to be achieved. The third major objective is, to avoid annual involvement of Parliament while providing a periodical opportunity for Parliament to review the arrangements to ensure that they were achieving the intended objective. The Select Committee went on to consider in some detail the proposal that either the whole of the Civil List expenditure or the increase should be put on the annual Vote. Its comment was absolutely clear and against that proposal. The Committee, in paragraph 27, said: The aim of all previous Civil List settlements has been to make provision for Royal Household expenditure for the whole of a reign, and Your Committee attach great importance, as did their predecessors without exception, to maintaining this position. They feel that it would be quite wrong to allow the inflationary developments of the last 19 years, for which Her Majesty has no responsibility, to result in changes in the provision for the Civil List which undermine the basic principle on which, on all previous occasions, Civil List provision has been made. That was the clear recommendation of the Select Committee, of which the Prime Minister was a Member. I suggest that the Bill departs completely from that recommendation. If the Government were thinking of proposing a change of this kind, they should at least have suggested another Select Committee. It is wrong for the Government to bring forward a major change of this kind when, hitherto, these matters have always first been considered by a Select Committee.

I believe that this annual involvement is contrary to developments in recent years regarding remuneration, allowances and expenses generally. Parliament has often found itself at a disadvantage in trying to deal with these matters in detail. Doctors' pay and allowances, and those of senior civil servants, Ministers and Members of Parliament, are good examples. In recent years, in all these cases we have tended to set up special impartial bodies which can consider the details in a calm atmosphere. The Review Body on Doctors' and Dentists' Pay is one example. The Boyle Committee on Senior Officials is another. Indeed, we now have a Boyle Committee taking the first hesitant steps towards taking MPs' salaries, allowances and secretarial allowances out of the realm of party political controversy.

I suggest that in all these areas we have seen the disadvantage of Parliament being directly involved in detailed matters and have therefore tended to give them to special bodies. In this Bill we are moving in precisely the opposite direction, with the Civil List. That would seem to be another substantial reason against these proposals.

I suggest that there is a better way of dealing with the problem. Three-quarters of the Civil List expenditure is represented by wages and salaries of staff of the Royal Household. Over the years, the rates of wages and salaries have been increasingly linked with the rates paid for comparable grades in the Civil Service. The same goes for pensions. In most cases there is now either a direct or an indirect link, and increases for the Royal Household follow the same pattern as Civil Service increases. Therefore, they are subject, indirectly, to the same Government and parliamentary control, the same discipline, the same pay policy and the same constraints, due to economic circumstances, as are Civil Service salaries. I suggest that we could provide automatically for these increases. There would be effective control by the Government and Parliament.

In addition, the Royal Household itself exercises strict control over staff numbers and expenditure. It is significant that there has been no increase in the staff of the Royal Household since 1972 and that the rise in expenditure has been considerably less than the rise in the retail price index.

I realise that the Select Committee also considered and decided against index linking. The Select Committee considered the matter in 1971 in a very different context from that of today. I believe that there have been considerable changes, which may justify a different conclusion from that reached by the Select Committee in 1971.

The first change is the one that I have already mentioned, namely, that there is now a more direct linking between Royal Household staff pay and allowances and the Civil Service than there was in 1971. The concept of index linking, inflation-gearing and inflation-proofing, which we had hardly begun in 1971, is now a recognised factor in many aspects of our national life. It is much more common now than in 1971.

I believe that this approach to three-quarters of the expenditure would not only be more effective, but would deprive the hon. Member for Fife, Central of the opportunities that he is longing to try to exercise if we allow the Bill to go on to the statute book.

I beg the Government to reconsider the matter. The Prime Minister made it clear that there was no urgency for this measure. Additional provision was made for the Civil List earlier this year, so there is no rush. I beg the Prime Minister to consider the speech made by his hon. Friend the Member for Fife, Central. The hon. Gentleman asked some good questions, which need answers. I seriously suggest that it would be far better for another Select Committee to look at the matter and consider the points that have been made in the debate, rather than rush into something which may appear convenient to deal with the present inflationary situation but which, I fear, will set us on a road that will be dangerous and embarrassing, not only for the monarchy but for Parliament.

7.7 p.m.

Mr. John Stokes (Halesowen and Stourbridge)

I apologise to the Prime Minister for having missed the first five minutes of his speech, due to the debate starting somewhat earlier than was expected.

When I read the Order Paper this morning and saw the amendment in the name of my hon. Friend the Member for Somerset, North (Mr. Dean), I am afraid that in my innocence I imagined that it would be supported by the official Tory Opposition Front Bench. I am bitterly disappointed that that is not so.

I have always believed the saying, by King Charles I: A Subject and a Sovereign are clean different things. There is still something of a mystery about the ancient English monarchy, and it is right that that should be so. It is, after the Papacy, the oldest institution in Europe, and, as my right hon. Friend the Leader of the Opposition said in February, "our most precious asset." That is why it would be wholly wrong, as proposed in the Bill, for us to treat the affairs of the Queen and the Royal Family as if they were just another Department of State or, for instance, a branch of the Department of Trade or Industry, or as being connected in some way with the social services or with tourism.

I treat with contempt the criticisms of the Queen and the Royal Family that we have so often heard from the hon. Member for Fife, Central (Mr. Hamilton). He must be completely out of touch with public opinion if he really believes that our monarchy is not greatly revered and respected by countless people of all shades of opinion in this country.

Mr. Alexander Wilson (Hamilton)rose—

Mr. Stokes

I shall give way in a moment. It is only right and proper that the dignity of the Throne should be properly maintained in all its splendour and pageantry, and it is more than ever necessary, in these evil and unsettled times, that the monarchy should stand for tradition and for our long and glorious history. It provides an element of continuity in our political and social life, as do the hereditary peers. The monarchy is the focus of loyalty for the Armed Services and for all those who serve in public life. It provides that element of stability which is the envy of many republican nations. The fact that the monarchy is far cheaper than a presidential form of government should not mean that we should have it on the cheap, or deal with it as if it is merely a matter for some minor department. Its servants must be properly paid.

Mr. Alexander Wilson

The hon. Gentleman criticised my hon. Friend the Member for Fife, Central (Mr. Hamilton), saying that he is selfish in his attitude. Will the hon. Gentleman explain why he used the term "English monarchy" instead of "British monarchy"?

Mr. Stokes

The monarchy is, of course, the ancient English monarchy, dating back to the year 1000 or earlier. It has absorbed other principalities.

Above all, it would be unseemly for this House, whose Members obtain their own allowances to cover necessary expenses without any audit whatever, to pry into the necessary expenses that the monarchy needs in order to fulfil its public duties. The Queen, the Royal Family and their Household are not civil servants. It would be unthinkable and appalling to treat them as such. People can sometimes be mean and silly about the royal finances, as they sometimes are about our finances, but it should never be forgotten by critics—least of all by ignorant critics—that the Crown estates are surrendered to the Exchequer at the start of each reign and that the Queen has been far more efficient—in modern jargon, cost-effective—in the administration of her servants than have central Government or many local authorities.

There has been not an increase in staff but a decrease. Nor have there been any extravagant projects. Furthermore, the Queen, the Duke of Edinburgh, the Prince of Wales, the Queen Mother, and so on, set us all a matchless example of the highest devotion to duty.

I consider the Bill to be a miserable piece of unimaginative legislation, typical of the soulless and bureaucratic times in which we live. I hope that others of my hon. Friends—members of the old, traditional, loyal party of this country—will support me by not voting for the Second Reading of the Bill.

7.14 p.m.

Sir Geoffrey Howe (Surrey, East)

In view of the brevity of the debate that we have had, I rise not to make a long intervention but to reaffirm and to explain to all hon. Members, and in particular to my hon. Friends the Members for Hales-owen and Stourbridge (Mr. Stokes) and Somerset, North (Mr. Dean), the basis upon which my right hon. Friend the Member for Finchley (Mrs. Thatcher) invites the House to support the Bill.

In answer to the hon. Member for Fife, Central (Mr. Hamilton), I wish to make it absolutely clear beyond peradventure that in so far as I invite the Conservative Party to vote tonight, I do not do so upon the basis that I am inviting it to vote in support of the Labour Government. This is an issue of quite a different kind. It is a vote that we invite Conservative Members to make, if it comes to a Division, in support of the constitutional monarchy, which is the foundation of our way of life and of our pattern of government.

The hon. Member for Fife, Central in a speech as characteristic as any I have heard him make, and of the meanness and misrepresentation, that he normally brings to this issue, sought to deride those who would vote against him by referring to them as a "coalition". It is not a coalition; it is intended to be a demonstration of the widespread unity, extending through almost every part of this House and throughout the country, in support of the constitutional Monarch and her family, of her importance in this country's constitution, and of our respect for the way in which the monarchy has undertaken its difficult tasks. The hon. Member for Fife, Central said that there was no generosity in this. I regret his failure to acknowledge not just the value of the services of the Monarch and her family but also that to which the Prime Minister referred, namely, the generosity of Her Majesty in agreeing to meet the expenses of those members of the Royal Family who were mentioned by him.

I turn to the issue upon which my hon. Friends have expressed anxieties. I entirely understand the concern not just of my hon. Friends but of the right hon. Member for Down, South (Mr. Powell) at the change that will take place—and undoubtedly it is a change—as a result of the Bill. I share the concern, because it is a consequence of inflation. Indeed, the procedures proposed by the Select Committee were a consequence of inflation.

Previously, and throughout this century, the provision of the Civil List has been considered only once at the commencement of each reign. The Select Committee intended to secure a situation in which there was one review per decade, and it was on that basis that it made the recommendation which my hon. Friend the Member for Somerset, North commended as being wise. Indeed, in that context it was wise. It was made in the context of inflation running at 8 per cent. per annum. However, what do we have now? We have a situation in which inflation is running at a much higher rate than anyone could then have forecast—a situation which, therefore, gives rise to the prospect, unless we accept the legislation now before the House, of an annual report from the Royal Trustees, an annual consideration by Parliament of that report, and an annual consideration by Parliament of an Order made in consequence of that report.

It is against that background that I invite my hon. Friends to consider that this is a more acceptable machinery. In the circumstances of high inflation that we now face, it is more likely to meet their objectives, which I entirely share, than the procedure that was recommended by the Select Committee.

The right hon. Member for Down, South explained his concern at the transfer of this part of the royal finances—because many other parts have already been on Supply Votes for many years—from the traditional Consolidated Fund basis. However, I invite him also to recognise that the basic objectives of maintaining the monarchy and the ways in which we support it—which are immune from party controversy—are better fulfilled by this method than by any other. I emphasise that the method now proposed is not one which is intended, as I understand the Prime Minister, to replace that originally recommended by the Select Committee. It is put forward as an alternative—one that may be used while we continue to exist under such severe and desperate inflationary circumstances. When inflation is under control, we shall be able to revert to the procedure recommended by the Select Committee. Until that situation arises, I invite my hon. Friends to conclude that the wrangling that they wish to avoid is less likely to arise under the procedure now suggested than under that for which they have been arguing. In other words, in the present circumstances the Bill is the best practicable alternative, and it will be on the statute book only as an alternative to that originally recommended by the Select Committee.

My hon. Friend the Member for Somerset, North suggested that the right method might be to adopt indexation—a recommendation that was also considered by the Select Committee. He will recollect that in paragraph 26 of its Report the Select Committee rejected that, for reasons to which he has referred: that indexation, linked, as it were, to the needs of the Royal Household, would be difficult to devise; that indexation would, perhaps, be too substantial a recognition and adoption of the inevitability of inflation, in this context as in any other; and, incidentally, indexation would be incompatible with the cash limits approach that the Prime Minister commended in his speech. I invite my hon. Friend to conclude that as the Select Committee rejected indexation with those arguments, those arguments should still, on balance, carry the day.

But when the Committee then rejected the procedure now before the House, it was talking in terms of 8 per cent. inflation and not inflation at a rate three times as high as that. That change having taken place, and bearing in mind the important point made by the Prime Minister—that the present Bill has the support of Her Majesty and of the Royal Household—I believe that we must recognise the Bill as a disagreeable necessity in present circumstances, but better than what is threatening to become the procedure of annual reports and debates on Civil List Orders.

We must recognise, also, that it is always open to us—and we hope that very soon it will be a practical reality—to revert to the old procedure recommended by the Select Committee.

Mr. Powell

I think the right hon. and learned Gentleman may have used an expression that he did not intend. He said that the Prime Minister had said that the Bill had the support of Her Majesty. I do not think that the Prime Minister said that, nor would it have been proper for the Prime Minister to say that. I understood the Prime Minister to say that the Bill had her consent, which is a very different constitutional position.

Sir G. Howe

The Prime Minister will no doubt recollect it. Indeed, his reference to this matter was on 12th February 1975. What the Prime Minister then said was, The Government therefore propose, with the Queen's agreement…"—[Official Report. 12th February 1975; Vol. 886, c. 375.]

Mr. Powell

Ah!

Sir G. Howe

It is between the phrase that I used and that of the right hon. Gentleman.

The Prime Minister

There may have been a misunderstanding because of what I said earlier tonight. I said that I had the Queen's authority—that was the specific point—to announce that she had graciously been pleased to agree that certain payments previously carried on the Civil List should be carried on her herself. That was my reference at the time.

Sir G. Howe

I am much obliged to the right hon. Gentleman. I do not wish to adopt anything other than the phrase used by the Prime Minister on 12th February—that these matters are before the House with the Queen's agreement.

I turn to the point upon which I wish to comment briefly. It is that to which the hon. Member for Fife, Central continues to return with a total disregard for the facts as set out in the evidence given to the Select Committee and as they actually exist. The hon. Gentleman shakes his head, but I should like to re-emphasise the point.

As regards the tax position of the monarchy, the Sovereign herself pays no tax. The Duchy of Cornwall, as the estate of His Royal Highness the Prince of Wales, is exempt from tax, but in fact 50 per cent. of the revenue of that estate is assigned by the Prince of Wales to the Consolidated Fund.

The sums that the remaining members of the Royal Household receive, whether by specific annuity or specific contributions to expenses, are taxable. [Interruption.] The hon. Gentleman must cease interrupting in a sotto voce way. On page 109 of the Report of the Select Committee, the position is stated as follows: His Royal Highness the Duke of Edinburgh. The Duke is not liable to tax in respect of his wife's income. That clearly follows. Otherwise he is taxable like any other subject in respect of his income and his property. Under a Treasury order part of his Civil List annuity is treated for tax purposes as properly attributable to expenses of his public duties and that part is therefore not taxable. In the next paragraph, about other members of the Royal Family, the following words appear: There are no special tax exemptions, so they are taxable like any other subject on their income and property. Treasury orders are currently in force attributing each of the existing Civil List annuities wholly or partly to admissible expenses, and to that extent not taxable. Those words are plain, clear and explicit. They make it plain to the House, I hope, beyond peradventure, that, with the exception of the Monarch and the Duchy of Cornwall, members of the Royal Family are taxed in the ordinary way and that in so far as they pay no tax on any of the sums receivable by them either from the Civil List or from the Monarch—in so far as any of that is exempt from taxation—it is on the same basis as that of any other subjects in respect of expenses attributable to the performance of their duties. That fact needs to be rammed home until it is accepted by the hon. Member for Fife, Central.

Mr. William Hamilton

Would the right hon. and learned Gentleman try to foresee what the Inland Revenue's response would be to me if I said that my only income was my parliamentary salary, and that I spent all of it on expenses?

Sir G. Howe

That is not the position.

Mr. William Hamilton

It is, exactly.

Sir G. Howe

The position of the hon. Gentleman is as follows: he gets a parliamentary salary; he is entitled to get, and no doubt does get, a contribution towards expenses that he actually incurs; in so far as he pays, beyond that, towards the expenses of his position, he is not taxable in respect of that additional expenditure. In his case, and in the case of millions of people, this is decided by the Inland Revenue by reference to the actual expenditure incurred.

The Select Committee, of which the hon. Gentleman was a member, recorded nowhere any dissent from the proposition that I have read out—I am sure that the Prime Minister will be able to confirm this—that the only parts of the sums received by the Duke of Edinburgh and the other members of the Royal Family which are not taxable are those parts attributable to the expenses of their offices.

Surely the House will accept that position. Perhaps one day the hon. Gentleman will accept it.

I do not wish to say anything beyond that, except to call upon my right hon. and hon. Friends, in particular those who have spoken in the debate, to accept the analysis that I have given.

This is not a measure which anyone in the House welcomes with enthusiasm. It is a regrettable necessity, in view of the pace at which inflation has been running in recent years. The sooner we are able to revert to a situation that rests upon the basis recommended by the Select Committee, the better. The sooner we are able to revert to a situation that has sufficed in every other reign in this century except the present, under which one review per reign is sufficient, the better still. However, until that time comes, I invite my hon. Friends to support the Bill.

7.28 p.m.

The Prime Minister

With the leave of the House, I should like very briefly to reply to the debate.

The right hon. Lady the Leader of the Opposition set out the position of her party. I very much welcome her support and, indeed, the way in which she expressed it. I agree with a great deal that she said, and I think that the whole House will agree.

The right hon. Member for Down, South (Mr. Powell) dealt with the question in its historical setting. I think the right hon. Gentleman knows that I always enjoy hearing his speeches, and his was most beautifully put tonight. I did not, of course, agree with much of his speech, and I think that he knows that and would not want me to do so. However, after what was an extremely eloquent speech he said that a great shift was being made by the Bill and that there was no special treatment for the moneys voted. What I said was that the moneys voted, if the Bill becomes law, are neither more favourably nor less favourably treated than any other moneys voted by the House; no more scrutiny, no less scrutiny.

I shall come to my hon. Friend the Member for Fife, Central (Mr. Hamilton) shortly.

The hon. Member for Somerset, North (Mr. Dean) expressed his objections to the Bill. He had obviously thought very deeply about it, and he deployed some of the evidence from the Select Committee. He objected to the Bill because it makes possible an annual debate. That was one of his main points, which is perfectly fair. But we are already in the danger that, under the existing legislation, the 1972 procedure could lead each year to a report by the Royal Trustees. This would lead perhaps to the need for legislation to provide the money.

I concede that what is being proposed in the Bill is a departure from the recommendations of the Select Committee, but the House has been given the reasons for this. I agree that there is a certain logic in the proposal for a further Select Committee since we are now departing from the specific recommendations of the Select Committee. In fact, we had a very full inquiry under that Select Committee. What has made it out of date is not its conclusions or its deductions or the facts surveyed but the fact of inflation.

I submit that there is no other change in circumstances since the Select Committee last met—and a large number of hon. Members here were members of that Select Committee—except inflation. I very much doubt whether the members of that Committee, if they were called together tomorrow for a meeting, would feel that the Bill was wrong, on the ground that the big change is inflation and that what was then proposed and legislated has been changed to that extent. I doubt whether, even if we had a Select Committee sitting for several months, anything new would be elucidated which is not already within the information available to the House.

I think that the hon. Member for Halesowen and Stourbridge (Mr. Stokes) was very much on the same point, and I appeal to hon. Members not to press this matter to a Division.

I now come to my hon. Friend the Member for Fife, Central, who is completely consistent, assiduous and regular in intervening in these debates. He will forgive me, I hope, if I do not respond to the courtesies which he addressed in my direction in the spirit in which he addressed them. His speech tonight, as always, was well researched, frequently urged, as strongly as in the past—I have not spoken so often on this subject as my hon. Friend has—and well worn. Nothing that I might say in reply would in the remotest degree alter his views or affect his vote in this matter.

Mr. William Hamilton

That is right.

The Prime Minister

My hon. Friend agrees with me. This is burned into his soul. He must have had it at birth. It was in his mother's milk. [Interruption.] I am not responsible for his mother's milk. All I am saying is that this is a matter about which my hon. Friend feels very deeply. The whole House recognises it. We respect his right to feel this way. As he said, he represents a sizeable proportion of the population, but no more than sizeable—measurable, let us say, and certainly not a majority attitude. But he has the right to take that view and to express it in this House. Therefore, I shall not occupy the time of the House trying to convert him because it might lead to a rather late sitting, and at the end of it I might not succeed.

In view of the kind remarks my hon. Friend made about me, as he always does in these matters, I shall make one further reference to him. He referred to "hangers-on" of the Royal Family. I doubt whether there is anyone better rewarded or who is a greater beneficiary from the existence of the monarchy—I would not wish to be so offensive as to refer to a "hanger-on"—through his writings than my hon. Friend.

Question put, That the Bill be now read a Second time—

The House divided: Ayes 247, Noes 16.

Division No. 9.]	AYES	[7.35 p m
Abse, Leo	Budgen, Nick	Doig, Peter
Aitken, Jonathan	Bulmer, Esmond	Drayson, Burnaby
Alison, Michael	Burden, F. A.	du Cann, Rt Hon Edward
Atkins, Rt Hon H. (Spelthorne)	Butler, Adam (Bosworth)	Dunn, James A
Atkins, Ronald (Preston N)	Carlisle, Mark	Durant, Tony
Awdry, Daniel	Carmichael, Neil	Eadie, Alex
Baker, Kenneth	Cartwright, John	Edwards, Nicholas (Pembroke)
Banks, Robert	Chalker, Mrs Lynda	Elliott, Sir William
Bell, Ronald	Churchill, W. S.	Ellis, John (Brigg & Scun)
Berry, Hon Anthony	Clark, William (Croydon S)	Emery, Peter
Biffen, John	Clarke, Kenneth (Rushcliffe)	English, Michael
Biggs-Davison, John	Clegg, Walter	Ewing, Harry (Stirling)
Bishop, E. S.	Cockcroft, John	Eyre, Reginald
Body, Richard	Cocks, Michael (Bristol S)	Fairbairn, Nicholas
Booth, Albert	Coleman, Donald	Fairgrieve, Russell
Boothroyd, Miss Betty	Cooke, Robert (Bristol W)	Fell, Anthony
Boscawen, Hon Robert	Cope, John	Fisher, Sir Nigel
Bottomley, Rt Hon Arthur	Corrie, John	Fowler, Norman (Sutton C'f'd)
Bottomley, Peter	Costain, A. P.	Fraser, Rt Hon H. (Stafford & St)
Bowden, A. (Brighton, Kemptown)	Craigen, J. M. (Maryhill)	Fry, Peter
Boyson, Dr Rhodes (Brent)	Crouch, David	Gardiner, George (Reigate)
Bradley, Tom	Crowder, F. P.	Garrett, W. E. (Wailsend)
Braine, Sir Bernard	Cunningham, G. (Islington S)	Gilmour, Rt Hon Ian (Chesham)
Brittan, Leon	Davidson, Arthur	Gilmour, Sir John (East Fife)
Brown, Sir Edward (Bath)	Davies, Denzil (Llanelli)	Golding, John
Brown, Hugh D. (Provan)	Dean, Joseph (Leeds West)	Goodhew, Victor
Brown, Robert C. (Newcastle W)	Dell, Rt Hon Edmund	Gould, Bryan
Buchaan-Smith, Alick	Dodsworth Geoffrey	Gourlay, Harry
Gow, Ian (Eastbourne)	Mabon, Dr J. Dickson	Rodgers, William (Stockton)
Gower, Sir Raymond (Barry)	McAdden, Sir Stephen	Ross, Stephen (Isle of Wight)
Graham, Ted	MacCormick, lain	Sainsbury, Tim
Grant, Anthony (Harrow, C)	McElhone, Frank	St. John-Stevas, Norman
Grant, George (Morpeth)	Macfarlane, Neil	Shaw, Giles (Pudsey)
Gray, Hamish	MacFarquhar, Roderick	Shepherd, Colin
Griffiths, Eldon	MacGregor, John	Shore, Rt Hon Peter
Grist, Ian	McGuire, Michael (Ince)	Silkin, Rt Hon John (Deptford)
Hall, Sir John	Mackintosh, John P.	silkin, Rt Hon S. C. (Dulwich)
Hall-Davis, A. G. F.	McMillan, Tom (Glasgow C)	Sims, Roger
Hamilton, James (Bothwell)	McNair-Wilson, P. (New Forest)	Sinclair, Sir George
Hamilton, Michael (Salisbury)	Madel, David	Spearing, Nigel
Hannam, John	Marks, Kenneth	Spence, John
Harper, Joseph	Marshall, Dr Edmund (Goole)	Spriggs, Leslie
Harrison, Walter (Wakefield)	Marten, Neil	Stainton, Keith
Hastings, Stephen	Mason, Rt Hon Roy	Stanley, John
Havers, Sir Michael	Mates, Michael	Steen, Anthony (Wavertree)
Hawkins, Paul	Mather, Carol	Stewart, Donald (Western lsles)
Hayhoe, Barney	Mawby, Ray	Stewart, Ian (Hitchin)
Heath, Rt Hon Edward	Maxwell-Hyslop, Robin	Stoddart, David
Heseltine. Michael	Mayhew, Patrick	Stradilng Thomas J.
Hicks, Robert	Mellish, Rt Hon Robert	Tebbit, Norman
Howe, Rt Hon Sir Geoffrey	Mendelson, John	Temple-Morris, Peter
Howell, David (Guildford)	Meyer, Sir Anthony	Thatcher, Rt Hon Margaret
Howell, Ralph (North Norfolk)	Millan, Bruce	Thomas, Rt Hon P. (Hendon S)
Huckfield, Les	Moate, Roger	Thompson, George
Hughes, Rt Hon C. (Anglesey)	Monro, Hector	Tinn, James
Hughes, Mark (Durham)	Montgomery, Fergus	Tomlinson, John
Hunter, Adam	More, Jasper (Ludlow)	Trotter, Neville
Hurd, Douglas	Morris, Michael (Northampton S)	Tuck, Raphael
Jackson, Miss Margaret (Lincoln)	Morrison, Charles (Devizes)	Vaughan, Dr Gerard
James, David	Morrison, Hon Peter (Chester)	Wakeham, John
Jenkins, Hugh (Putney)	Murray, Rt Hon Ronald King	Walker, Harold (Doncaster)
Jessel, Toby	Neave, Airey	Walker, Rt Hon P. (Worcester)
Jones, Alec (Rhondda)	Neubert, Michael	Walker, Terry (Kingswood)
Jones, Arthur (Daventry)	Normanton, Tom	Walker-Smith, Rt Hon Sir Derek
Jones, Dan (Burnley)	Nott, John	Wall, Patrick
Jopling, Michael	Ogden, Eric	Walters, Dennis
Kaberry, Sir Donald	Oppenhelm, Mrs Sally	Watkinson, John
King, Evelyn (South Dorset)	Page, Rt Hon R. Graham (Crosby)	Watt, Hamish
Kitson, Sir Timothy	Park, George	Wells, John
Knight, Mrs Jill	Parker, John	Whitelaw, Rt Hon William
Knox, David	Parkinson, Cecil	Whitlock, William
Lamborn, Harry	Pattle, Geoffrey	Wiggin, Jerry
Lane, David	Peart, Rt Hon Fred	Williams, W. T. (Warrington)
Latham, Michael (Melton)	Perry, Ernest	Wilson, Rt Hon H. (Huyton)
Lawrence, lvan	Prior, Rt Hon James	Wilson, William (Coventry SE)
Lawson, Nigel	Pym, Rt Hon Francis	Winterton, Nicholas
Leadbitter, Ted	Raison, Timothy	Wood, Rt Hon Richard
Le Marchant, Spencer	Rathbone, Tim	Woodall, Alec
Lestor, Jim (Beeston)	Rees, Peter (Dover & Deal)	Young, Sir G. (Ealing, Acton)
Lipton, Marcus	Rees-Davies, W. R.
Lloyd, Ian	Renton, Tim (Mid-Sussex)	TELLERS FOR THE AYES:
Luce, Richard	Rldsdale, Julian	Mr. Thomas Cox and
Lyon, Alexander (York)	Roberts, Michael (Cardiff NW)	Mr. Peter Snape.
Lyons, Edward (Bradford W)	Roberts, Wyn (Conway)
	NOES
Cryer, Bob	Newens, Stanley	Thomas, Ron (Bristol NW)
Dunwoody, Mrs Gwyneth	Noble, Mike	Wise, Mrs Audrey
Edge, Geoff	Powell, Rt Hon J. Enoch
Hoyle, Doug (Nelson)	Richardson, Miss Jo	TELLERS FOR THE NOES:
Latham, Arthur (Paddington)	Rodgers, George (Chorley)	Mr. William Hamilton and
Madden, Max	Skinner, Dennis	Mr. Dennis Canavan.
Mikardo, Ian	Taylor, Mrs Ann (Bolton W)

Question accordingly agreed to.

Bill read a Second time.

Bill committed to Committee of the whole House—[Mr. Harper.]

Committee tomorrow.