Finance Bill

HC Deb 14 July 1981 vol 8 cc1069-92

As amended (in the Committee and in the Standing Committee), again considered.

Question again proposed, That the clause be read a Second time.

Mr. Price

Does not the hon. Gentleman, who represents an important but comparatively modest segment of the House, think that, as Government after Government failed to plug the gap, he should pay due tribute to the media for having brought it to light?

Mr. Wainwright

I shall continue to make my own speech in my own way. The Sunday Times did no less than its duty. It is not my job to congratulate newspapers on doing the job for which they are highly paid. I have a son in that profession, and I know how highly paid they are. They should do their duty and not expect to receive compliments that are artificially contrived in the House.

I shall resume my speech at the point where I was so unprofitably interrupted. Having complimented the right hon. Member for Ashton-under-Lyne, I must say that I was disappointed that he trotted out that hoary old myth that it is simply the schedule D people who fiddle the Revenue and get uncovenanted benefits. Members of that segment of the Opposition never say anything about the quite unjustified privilege whereby the great mass of people on PAYE never have to make their returns for benefits—nor do their employers.

Mr. Robert Sheldon

Is not the hon. Gentleman aware that I mentioned the problem of benefit? If I am to respond to the hon. Gentleman—

Sir William Clark

Let us all take part. The right hon. Gentleman must not turn his back on hon. Members and the Dispatch Box.

Mr. Sheldon

If I am to respond to the hon. Gentleman, I shall have my back to you, Mr. Deputy Speaker, and that would not be in order. I am trying to keep my face towards you, which I think conforms with the rules of order, as the hon. Member for Croydon, South (Sir W. Clark), who has not been here all that long, will recall. That is only a joke. I was talking about evasion and saying that the levels of evasion were assumed to be something that could be corrected by reducing the rate of income tax.

Mr. Wainwright

The right hon. Gentleman has wholly mistaken my point. I was not talking about evasion. I was talking about the deplorable state of the law which his party has supported just as much as the other socialist party on the Government Benches, whereby the vast mass of people on PAYE, who are often represented as being the innocent martyrs of the tax system, are by law simply not investigated about their benefits. One sees little vans and lorries at the seaside every sunny weekend. Naturally, many of them are driven there perfectly legally by people who are below the P11 D limit, the declaration of benefits limit. It is humbug for hon. Members continually to say that people on PAYE are the martyrs of the tax system. I am sorry that the right hon. Gentleman ventilated the matter this evening.

Much of this tax avoidance and the enormous amount of skill that goes into the perfectly legal tax avoidance industry is due to the oppressive weight of taxation. If taxation were not so high, it would not pay people to retain enormously expensive legal and accountancy advisers to construct expensive schemes. It is not an easy job to avoid large demands of tax.

The most elaborate rituals have to be performed and the most elaborate arguments conducted with the Inland Revenue for which highly paid advisers charge elaborate fees. That is not a profitable occupation for people who want to do something with their lives. It would die down if the taxation rates were reasonable. It is, therefore, all the more regrettable that the Government's enormous promises two years ago to remove the oppressive weight of taxation, far from being honoured, have been put in reverse by aggravating the burden of taxation, which is now considerably higher than when the Government came to power.

Mr. Maxton

The House would be grateful if the hon. Member explained precisely what he means by "oppressive taxation". Is it a comparative phrase? Is he comparing Britain with other countries with the same industrial development, or something else? He should get the facts right and make clear exactly what he means.

Mr. Wainwright

If the hon. Gentleman had been listening, he would have understood that my point was that we must pitch taxation at a rate that will make it not worth while for taxpayers to go to the enormous expense of avoiding it. That can be done, as it is in some other civilised countries.

Much synthetic indignation has been expressed in the media about the Vestey case. Nobody is to blame but the House and the usual channels which have controlled, dominated and almost extinguished the value of the House in the past 50 years and during the span of the Vestey operation. The House could have legislated to make the Vestey scheme illegal. However, the House has been so preoccupied with the zigzag nonsense of confrontation politics—the type of event that disgraces the House every Tuesday and Thursday—that parliamentarians have not given their minds to legislating against the Vestey schemes. It rests with the House and nobody else.

Having condemned our absurd parliamentary procedures, I must say that in recent years, particularly under the present Government, bad legislation has led not only to tax avoidance but to bad management of the tax service. For instance, a great blot on the hitherto good record of our Revenue service is the appallingly expensive and humiliating fiasco of the William Press case. The judge made some acerbic comments on the pre-dawn raid by 150 Revenue men on William Press officials to try to construct evidence which the learned judge said that he was not prepared to have put to the jury. The William Press case came to a humiliating end because the judge said that the evidence was so poor that he was not prepared to submit it to the jury. We have never been told the expense of that extraordinarily ill-managed episode, but I believe that it was due to bad management in the Treasury of our Revenue service.

In the famous "Mickey Mouse" case, for years derisory returns were submitted by Fleet Street employees with nonsense names. I complain of the length of time during which that was tolerated. Eventually a concordat was arranged—a rather humiliating episode where people were allowed to get away with making a mockery of the Revenue. Some self-employed people challenged that in the courts. It was said, no doubt rightly, that it had gone on for so long and had reached such an enormous size that the industry would be imperilled if at that late stage, after such negligent delay, the law was rigorously applied. Such a lapse is offensive to other employers who have been pounced on severely for defects in their administration of pay-as-you-earn.

Mr. Peter Rees

I am sure that the hon. Member would not wish to mislead himself or the House, but he will realise that whatever occurred in the Fleet Street case occurred under the previous Administration.

Mr. Wainwright

My justice and my avenging fury are even-handed. It makes little difference whether Tweedledum or Tweedledee is sitting on the Government Benches.

In this high-minded desire to investigate evasion, it is the strong hope of Liberal Members that the enthusiasm to reduce evasion shall not continue to imperil the liberties of the subject. My contention is that, under the Government, we are getting the worst of both worlds. The liberties of the subject are being more and more eroded in the search for tax collection, yet evasion and the black economy mount. Therefore, the honest citizen is getting the worst of both worlds.

I should like to remind the House of the words of Lord Wilberforce in his judgment in the Rossminster case in 1980. I shall make certain quotations from different parts of his judgment. He said: The integrity and privacy of a man's home and of his place of business, an important human right, has, since the Second World War, been eroded by a number of statutes passed by Parliament". He went on to say: Examples of them are to be found in the Exchange Control Act 1947".— I was one of the first to welcome the repeal of that Act recently— the Finance Act 1972 (in relation to the Value Added Tax)". Finally, Lord Wilberforce said: A formidable number of officials now have powers to enter people's premises, and to take property away, and these powers are frequently exercised, sometimes on a large scale. Many people … think that this process has gone too far; that i1 is an issue to be debated in Parliament and in the Press. I am glad that it is being debated in the House tonight.

I should like to put on record the strong feeling among Liberal Members, which has been expressed before, that it was a profound mistake as a matter of expediency, when perhaps the Inland Revenue was overloaded, to put VAT in the hands of Customs and Excise. It does not have the same tradition of even-handed dealing with taxpayers and their advisers which has made the history of the Inland Revenue one of the most civilised parts of tax collecting in any part of the world. It is a proper grievance of VAT taxpayers that the records that they are required to keep for VAT are perversely not the same as the records which most of them properly keep for the Inland Revenue.

The VAT system is such that in many cases it is not possible for even the best tax officer completely to reconcile a taxpayer's VAT accounts and returns with his accounts prepared for the Inland Revenue. That is a blot on our system. It results in a great deal of hardship and over-anxiety on the part of the citizen, which hon. Members know has led to a number of suicides as well as a number of serious breakdowns and a great deal of misery. It is intolerable that we should have a VAT system which does not rely on the audited records, in the proper accountancy sense, of the taxpayer.

Under VAT, a rather unsavoury campaign has been going on in official quarters to suggest that many innocent mistakes and forgivable errors are classified as fraud or attempted fraud. The amount of sheer, deliberate and wilful VAT fraud is greatly exaggerated in official quarters in support of those oppressive powers which Lord Wilberforce has so magisterially condemned. The Liberal view is that the powers of search and entry conferred by section 37 of the Finance Act 1972—the Act which Lord Wilberforce singled out for criticism—are objectionable and should be seriously modified.

10.15 pm

In supporting the Labour segment of the Opposition in the proposal that there should be a thorough study of the whole problem, I urge that that should take account of the defects of legislation, for which the House is responsible, and that it should be even-handed in its inquiry and consider the serious invasion of individual human rights that is embodied in the powers unjustifiably given to Customs and Excise when the mistaken decision was taken to entrust VAT to its hands.

Mr. Foulkes

There is a great temptation to follow some of the more outrageous remarks of the hon. Member for Colne Valley (Mr. Wainwright) and to remind him of the period of the Lib-Lab pact when he had an opportunity to urge the Labour Government to close the Vestey loophole more tightly. I do not remember that being one of the things—

Mr. Richard Wainwright

Is the hon. Gentleman seriously suggesting that during the Lib-Lab pact any Liberal Member had access to any Government files or had the vestige of an opportunity to know what was taking place in the tax area?

Mr. Foulkes

That is an amazing revelation of ignorance. The hon. Gentleman and his colleagues did not say that closing the loophole was one of the main planks on which they bound together with the Labour Party. I am afraid that I am succumbing to the temptation that I was determined to resist. My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) will deal rather more decisively with the outrages perpetrated by the hon. Member for Colne Valley.

Sir William Clark

It is unfair to criticise the junior partner in the Lib-Lab pact and say that the Liberals did not do anything about tax avoidance. Why did not the hon. Gentleman's Government do something about it and tell their junior partner that that was happening?

Mr. Foulkes

I would have preferred that to happen. Had I been a member of the Government at that time, I might have done that. The hon. Member for Croydon, South (Sir W. Clark) will note that the hon. Member for Colne Valley livens up when in the Chamber. He was much quieter in Committee. When he had power within his grasp for a year or two, he had the opportunity to close the loophole, about which he feels so strongly.

I want to talk about the five amendments that are grouped with the new clause and which stand in my name. They relate to the Channel Islands and the Isle of Man. I was out of the Chamber for a short while during the previous debate. I detected, spreading around the corridors of the Palace of Westminster, the story that the Chief Secretary and his Minister were becoming a little shirty, a little ragged at the edges and a wee bit tetchy when dealing with comments from Opposition Members.

The question of tax evasion and tax avoidance is an issue on which the Opposition and the Government could unite. I should have thought that the Government, even more than the Opposition, would be anxious to ensure that they rake in the maximum amount of available revenue. After all, the Minister's war cry—I hope that the Salvation Army will excuse me for pinching that title—is "We need the money." There is nothing more appropriate for the Minister to support than the proposal that some study should be undertaken of the whole question of tax evasion and avoidance.

I thought that the Minister of State would be inclined to support, if not the specific amendments that I had tabled, at least their general drift. I hope that he will be able to indicate, if not approval of the exact proposals that I am advancing, at least approval of the general suggestions and recognition of my concern, which I hope he shares.

Amendment No. 205 deals with golden handshakes and suggests that there should be no increase in the sums set out in the relevant provisions for those who emigrate to the islands.

Amendments Nos. 201 and 202 suggest that there should be no concession on medical insurance if companies have 10 per cent. of their business on the offshore islands. Amendment No. 283 turns on the power of the Inland Revenue to get information on trust settlements. It would make it mandatory for such information to include details of any island's involvement. Finally, amendment No. 166 would prevent relief for small gifts for those who subsequently emigrate to the islands.

These are purely token amendments. In reality they mean very little. The rules of the House prevent me from tabling substantive and substantial amendments that if accepted would enable the House, the Government and the country substantially to tax United Kingdom companies which operate primarily in the United Kingdom but which are based on the Channel Islands and United Kingdom residents who go to live on the Channel Islands. Such amendments would refer directly to individuals and companies that go to the islands specifically for tax avoidance.

I have tabled these token amendments to show that there is some concern in the House. I hope that some of my hon. Friends will support me. I am concerned that a number of people and many companies are taking steps to avoid tax by basing themselves on the islands. I hope to obtain some specific information from the House. Last week I tabled a series of questions to the Chancellor of the Exchequer. I regret that the questions have not yet been answered. I received the usual holding reply to tell me that my questions would be answered in due course.

When that happened to me on an earlier occasion, I rather aggressively attacked the Minister of State in Committee. I said that I thought that he was witholding information so that it would not be before the Committee when the issue was discussed. He replied with a touch of annoyance and with some indignation in his voice that the Government could not be accused of doing such a thing and that he wanted only to answer my questions properly. In the event, my questions were not answered extensively. My suspicious nature leads me again to believe that ultimately I shall not recieve extensive and valuable answers to the questions that I tabled last week. Again, I am not getting the information that I asked for in time for the debate.

I wanted to know and to be able to tell the House how many individuals and companies have moved to the tax jurisdictions of the Channel Islands and the Isle of Man. I wanted information on comparative tax levels on the islands and in the United Kingdom. I wanted details of the outflow of funds following the ending of exchange control. I was especially interested to know how much money had gone to the Isle of Man and the Channel Islands. I wanted to know how many companies had registered on the Channel Islands and the Isle of Man that have trade in the United Kingdom and what proportion of them have 50 per cent. of their turnover in the United Kingdom and what proportion have 50 per cent. of their profits in the United Kingdom. I wanted information about the contribution to the common services and to the defence of the United Kingdom that we receive from the Isle of Man.

Lastly, I asked the Chancellor whether he would introduce legislation to make United Kingdom citizens who are living on the Isle of Man and Channel Islands liable to United Kingdom tax. I have had holding replies to all these questions. Surely the Chancellor of the Exchequer could have given an indication of the Government's intentions in answer to my final question. I hope that the hon. and learned Gentleman will do so tonight.

It may seem outrageous to suggest that the islands, which are under the British Crown but for which we do not have direct legislative responsibility, should be made subject to Westminster legislation to deal with the issues that cause me concern. I quote from no less an expert than the hon. Member for Tiverton (Mr. Maxwell-Hyslop) in The Financial Times on 6 July 1978: For Westminster to impose legislation, particularly tax legislation, or, persons who were normally domiciled in the UK, but who have taken up tax-residence hopefully in the Channel Islands, constitutes no novelty of principle and no constitutional outrage. A Conservative Member and an acknowledged constitutional expert says that there would be no constitutional outrage whatever.

I should make it clear that in making this suggestion I am in no way attacking or wishing to impugn or legislate for natural-born Manxmen or Channel Islanders; I am concerned only with people avoiding due contribution to United Kingdom tax and companies avoiding responsibility in this country by using the haven of the Channel Islands and the Isle of Man, and I am attacking the system which encourages these tax exiles.

Tax scroungers of this kind are far more damaging to the United Kingdom Exchequer and economy than alleged social security scroungers. It is about time the House took note of that. Those islands have been for some time and are becoming even more a paradise for the very rich. There are 150 millionaires in the 45 square miles of Jersey. The Channel Islands have no value added tax, no gift or wealth tax and very limited capital gains tax, on certain properties only.

If our Inland Revenue wishes to pursue companies or individuals on the Isle of Man, for example, it has no power to obtain information on Isle of Man bank records, as was apparent from a recent High Court case.

Ministers argued the case in Committee about getting information about bank records for tax purposes. When companies are registered on the Isle of Man, there is no power for the Inland Revenue to obtain information.

For individuals on the Channel Islands, earnings of £100,000 which under the United Kingdom tax system would be reduced to £20,000 are cut to only £80,000. That is a huge advantage for those individuals, many if not all of whom have made their money in the United Kingdom. Many of the companies are still making their money in the United Kingdom. Yet by going to live or by registering their companies in the Channel Islands or the Isle of Man, these people provide no return to the community from which they gained their money in the first place.

The many individuals include Tony Jacklin, the late Sir Billy Butlin, Alan Whicker and Jack Higgins, author of "The Eagle has Landed"—it was suggested to me that "The Bird has Flown" might be more appropriate—as well as Robert Sangster of Vernons Pools, who certainly makes his money from ordinary punters in the United Kingdom. Then there is Lord Brookes of GKN. All that money, including contributions to Conservative Party funds, derives from the United Kingdom.

Mr. Richard Wainwright

Does the hon. Gentleman agree that in the light of what has happened to GKN under the Conservative Government, its enormous contributions to the Conservative Party in the past must have been made out of sheer altruism?

Mr. Foulkes

Whether it was altruism or not, it was certainly misguided. However, I shall not pursue that, as it is not strictly relevant to the debate. Nevertheless, it is a very good point.

Finally, among these few examples of tax dodgers, who are far more disadvantageous to this country than any poor old widow who may get a little extra by mistake and then be persecuted as a result, the last of the catalogue is Kevin Keegan, who registered two companies on the Isle of Man to take care of the money he has made from our football system.

Tax avoidance is the main reason why companies register in the Channel Islands and Isle of Man. They also go there to avoid other United Kingdom legislation. We saw that only too tragically in the case of the divers who were killed on the offshore workings in the North Sea. They were employed not directly by the company registered in the United Kingdom as the operator but by an offshore company registered in one of those islands.

Many of these companies register in the Isle of Man and the Channel Islands not merely to avoid tax but to avoid some of the employment and health and safety at work legislation passed by this Parliament.

The number of overseas trading companies registered in Jersey rose by 150 per cent. between 1975 and 1979. A total of 15,000 companies are registered in Jersey, and I am sure that an answer from the Minister would reveal that most, if not all, operated in the United Kingdom.

10.30 pm

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does not the hon. Gentleman agree that one of the great problems faced by such people under the last Labour Government was that £92 out of every £100 they earned was confiscated? I do not believe that these people have run off merely for the sake of money. Does the hon. Gentleman not think it unfair of the State to take £92 out of every £100 that someone has earned?

Mr. Foulkes

The hon. Gentleman may well have advised people to avoid their dual responsibility to United Kingdom taxation, but these companies made the money in the United Kingdom and it would be patriotic if they gave it to the United Kingdom taxpayer so that it could be spent to build up our social and education services. I therefore believe that that is their patriotic duty and responsibility.

Mr. Beaumont-Dark

Utter rubbish.

Mr. Foulkes

Instead, these companies are avoiding their responsibility. They are scuttling off to the Isle of Man and the Channel Islands, which are taking advantage of it. They are encouraging it. Recently, the Isle of Man rushed through the Tynwald the Exempt Insurance Bill, which exempts the investment income of insurance companies from tax. That is designed to to make the Isle of Man the Mecca for insurance companies.

Guernsey already does that. Bermuda is the world leader, but the Isle of Man and the Channel Islands are setting themselves up as rivals to Bermuda and the Cayman Islands.

We are more concerned about these offshore islands of the United Kingdom setting themselves up as tax havens than we are about islands in the Caribbean. As well as paradise islands for the very rich, they are parasite islands because they live off the United Kingdom in other ways.

The Channel Islands make no contribution to the defence of the United Kingdom. The Isle of Man makes a voluntary contribution, which according to the figures I have been able to get is about £500,000. Yet in a written answer in 1979 it was estimated that, on the basis of the contribution per head of population, the Isle of Man's contribution should be £7.8 million. Therefore, these islands really get their defence on the cheap.

The islands also get political stability as part of the United Kingdom network, although they are not technically members. Residents there get United Kingdom passports and are able to travel the world as United Kingdom citizens and get all the benefit of United Kingdom citizenship. They receive all these benefits and many more without contributing substantially to the United Kingdom Revenue—indeed, at the same time as drawing off substantial sums from the United Kingdom Revenue.

It has been estimated that in 1979 the United Kingdom taxpayer lost £100 million as a result of the activities of the Isle of Man and the Channel Islands. That was a conservative estimate, and it must now be substantially more.

I hope that we shall have a clear and unequivocal statement that the Government, who are prepared to buy binoculars for social security spies to look for the poor lady or unemployed person who may be receiving a little too much in benefit, will be equally, if not more, vigilant in regard to those who go to offshore islands to avoid paying United Kingdom tax.

Mr. Maxton

It is difficult to follow the expertise and eloquence of my hon. Friend the Member for South Ayrshire (Mr. Foulkes), who has clealy done a great deal of research.

I feel sorry for the hon. Member for Colne Valley (Mr. Wainwright). Because of my hon. Friend's statement that I would respond to the hon. Gentleman's speech, he has felt obliged to stay here until I was called. I am sure that he is grateful to you, Mr. Deputy Speaker, for calling me before my hon. Friend the Member for Workington (Mr. Campbell-Savours).

The hon. Gentleman's speech was agreeable in a variety of ways. One of his new-found friends, with whom I am sure he will work closely for a long time—outside the House, of course—was Chancellor of the Exchequer in a Labour Government. He had an opportunity to do something about the Vestey scandal, and should have done.

The hon. Gentleman talked about oppressive taxation. I asked him to define it, and he made no attempt to do so. I have never been able to find any figures produced by a reputable organisation to show that the people of this country suffer an oppressive tax regime compared with that of equivalent industrialised nations. We know about the Cayman Islands, the Bahamas and even the Channel Islands and the Isle of Man, but compared with other Western industrial nations we are not overtaxed. It is time we destroyed that myth.

Mr. John Townend (Bridlington)

When we had a marginal rate of tax on investment income of 98 per cent., leaving 2p in the pound for the investor, was not that oppressive taxation?

Mr. Maxton

The implication always is that the person concerned was paying 98 per cent. on all his income, which is nonsense. He did not start paying it until he was in a high income bracket, and he paid normal tax on a large part of his income. Many people never see anything like the income on which he was paying 98p in the pound. Some of us might think that even 98 per cent. was not enough.

The hon. Member for Colne Valley paid a remarkable compliment to the Conservatives calling them Socialists. At one point the hon. Gentleman accused us of going in for confrontation politics. The Daily Telegraph recently described as the "black hole" in the Social Democrat-Liberal philosophy the fact that if one does not believe in confrontation politics one ultimately believes in single-party Government.

Only two minutes later the hon. Gentleman accused us of being Tweedledum and Tweedledee. He said that we were always in confrontation. However, the next minute he said tat we were Tweedledum and Tweedledee and that we were the same. He must make up his mind whether we are the same and carry out the same policies or whether we are in perpetual confrontation.

Mr. Richard Wainwright

I have been following the hon. Gentleman's argument with fascination. However, is he not aware that confrontation was the essence of Tweedledum and Tweedledee's joint existence?

Mr. Maxton

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The hon. Gentleman should be aware that we are discussing tax avoidance and evasion and not the speech made by the hon. Member for Colne Valley (Mr. Wainwright).

Mr. Maxton

I shall quickly return to my major point, before my hon. Friend the Member for Grimsby (Mr. Mitchell) passes me one of his usual notes about how long I have been speaking. In Committee, he had a habit of doing that.

The hon. Member for Colne Valley raised a serious point about the oppressive nature not only of taxation but of the investigations that the Inland Revenue can carry out into tax avoidance and evasion. I hope that the hon. Gentleman will intervene and make it clear that the oppressive inspectors who investigate social security fraud have greater powers than those who carry out investigations for the Inland Revenue. It gets up the nose of Labour Members and the public that the Government are willing to bend over backwards to give money to the well-off and wealthy. They will no doubt refuse to accept the new clause and to set up an inqury into tax avoidance and its extent. They will probably say that the new clause is unnecessary or that an inquiry will cost too much. However, the same Government have instituted a much more rigorous regime to investigate so-called social security frauds.

The hon. Member for Colne Valley pointed out that many of the so-called VAT frauds were honest mistakes. Many of the so-called social security frauds are also honest mistakes. Tax avoidance usually involves reasonably intelligent people who have had some education, but many of those apparently involved in social security frauds find it extremely difficult to understand the forms and the law. Many of them honestly do not know that they are committing fraud.

Recently, a woman declared her income for her husband's social security on her net, rather than her gross, earnings. That was a legitimate mistake. But for my intervention, the couple might have been brought before the court for fraud. That type of thing happens. The regime has been tightened up. We want the same strictness and harshness to apply to those who avoid taxation. Tax avoidance is an equal fraud and also takes money away from our people. All the figures show that it is a much greater problem than social security fraud and that much more money is lost. Some Conservative Members will say that paying money is is different from taking money out.

Mr. Beaumont-Dark

May I ask my hon. Friend a question? Why is it fraudulent for an author, artist or footballer to carry on his occupation in a country that has only moderate taxation? Why are you accusing them of being tax evaders when they do not wish to pay the United Kingdom's penal rates of tax because they can legally carry on their occupations elsewhere? Why are they to be pilloried by the likes of you, just because they do their work elsewhere?

10.45 pm

Mr. Maxton

I am sure that you would do nothing like that, Mr. Deputy Speaker. I want to point out to the hon. Gentleman that I am not his hon. Friend. I have not yet considered the speech of my hon. Friend the Member for South Ayrshire, although I shall come to it in a moment.

Those people that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is talking about make much of their money in this country and then take advantage of and benefit from different tax laws outside this country [Interruption.] Hon. Members may say "So what?", but they are the hon. Members who, during the winter of discontent or whenever a strike is called by a trade union, accuse the trade unions of destroying the country's economy, of unpatriotic gestures and so on. Those are the hon. Members who turn a blind eye to the fact that such people earn their income here but do not pay their taxes towards the upkeep of this country.

We think that is more unpatriotic than the behaviour of unions. Indeed, I do not consider trade unions to be unpatriotic. Conservative Members cannot have it both ways. They cannot accuse trade unions of being unpatriotic in their actions and condone wealthy people taking actions to avoid the payment of taxes, because that is just as unpatriotic. It means that the country cannot afford to keep up the structure, even in defence, that Conservative Members would like to see, because large numbers of people are not paying their taxes.

I fully support what my hon. Friend the Member for South Ayrshire said about tax avoidance. The Channel Islands and the Isle of Man in nearly all respects are treated as part of the United Kingdom. They expect to be defended by the United Kingdom. Their citizens expect, as my hon. Friend said , to carry British passports and that those benefits will be forthcoming. Countries that control their own destinies and have no connection with the United Kingdom are entitled to set up a tax haven. I should prefer to try to stop people from this country using them, but at the same time it is their independent right to do so. British offshore islands are being allowed to do that and it is time that the Government considered the matter seriously and tried to ensure that United Kingdom nationals do not use the islands as tax havens.

If the Minister is honest and wants to show that he is even-handed in his dealings not just with taxation but with the whole of our economy and welfare system, he should accept the new clause so that we can seriously consider the problem of tax avoidance.

Mr. Clive Soley (Hammersmith, North)

I welcome the new clause. It is long overdue. It is just over two years since the Conservative Party won the election, partly by an unscrupulous attack on the scroungers on the Department of Health and Social Security. Both my hon. Friends the Members for Glasgow, Cathcart (Mr. Maxton) and South Ayrshire (Mr. Foulkes) have pointed out that the amount involved is far less for the DHSS than for the Inland Revenue in income tax. It has been my misfortune in years past to have dealt with people who have been in prison both for tax evasion and for fraud on the DHSS. There are far fewer people in prison for tax evasion than fraud against the Department of Health and Social Security.

The wording of the clause is appropriate because it asks the Government to produce a White Paper to investigate the extent and nature of fraud. There is a case for sending people to prison for fraudulent claims or not making honest declarations of one sort or another, but there is no case for double standards. If the Conservative Party wants to get tough on law and order, it could start sending people to prison for tax evasion. That would at least make it consistent with the way in which people are treated for social security fraud.

I well remember—to the eternal shame of this country, it was not an unusual experience—seeing a woman sent to prison and her children taken into care for fraud against the Department of Health and Social Security. The sum involved in such cases seldom went above four figures and was usually about £200. But because the woman usually had three or four previous convictions, barely totalling more than a four figure sum, she ended up in prison.

In the few cases that I can remember of people coming out of prison following tax evasion sentences, they would usually say "What is wrong with it? Everybody does it. The only difference is that I was caught." There again we see the double standard that the Conservative Party is so fond of encouraging.

The problem of tax evasion is very serious. It is estimated that thousands of millions of pounds are not being collected by the Revenue as a result of avoidance and evasion. I fully acknowledge that there is a real difference between the two, and I shall say a little more about that in a minute or two.

The Conservative Party practises the politics of envy and the politics of greed. I do not know why the hon. Member for Yarmouth (Mr. Fell) is looking so surprised. If he is so angry about it, perhaps he would like to intervene. I shall gladly give way if he wishes to do so. The Conservatives then go on to wonder why, having flaunted privilege in the face of deprivation, having encouraged envy and greed in the way that I have talked about, and having encouraged double standards, people should accuse them of undermining the very law and order that they said at the time of the general election they would do so much to reinforce.

It is the quality and the fabric of society that we are talking about. The hon. Member for Yarmouth need not shake his head. He need only ask a few of his constituents for their opinion. Nothing is more offensive to an ordinary taxpayer on PAYE than to know that people who have millions of pounds are avoiding tax in a big way. That is what encourages the politics of envy and greed and does so much damage to the fabric of society.

It cannot be denied that the biggest discrepancy in our society is not so much in terms of income but of wealth. That wealth is usually inherited, and it is in regard to inherited wealth that the worst forms of avoidance—and to some extent evasion—take place. Here we have the contrast between privilege and deprivation, and it encourages the politics of envy and of greed.

If we feel that it is fair enough to practise avoidance, we then have another problem to consider. It is understandable that a person who wants to pay as little tax as possible should employ an accountant. Recently in Committee we spent a lot of time on clause 28, which provides that a benefit officer in the DHSS can state the amount of tax that a person will have to pay. If the person concerned does not object to that statement of the amount within 60 days—before we pressed our amendment on the Government the period was 30 days—he has no right of appeal. Here again, we see the double standard operating in regard to avoidance.

Anyone who is at the top end of the scale can employ, quite properly, an accountant to advise him, and I make no complaint about that. But why do we not set up centres at which people on low incomes—even people on supplementary benefit have now been drawn into the tax net—can be advised? As my hon. Friend the Member for Cathcart has already said, people get into trouble with the Department because they do not understand the rules and regulations, they fill in the forms incorrectly, sign them, and are then investigated to see whether they have deliberately made a false declaration. Some taxpayers do that but are not investigated, and that is the double standard. We have double standards on evasion and double standards on avoidance.

An investigation into avoidance and evasion is long overdue. The amount runs into thousands of millions of pounds. It is not the petty amount of which we talk in relation to the DHSS. All Opposition Members know that the Government will reject the new clause. They will do so precisely because they will continue to do what they did in Standing Committee. They will protect privilege and increase the burden on those at the lower end of the income scale. The net result of that, combined with the results of their economic policies, will be to continue to keep unemployment high, and probably push it higher; it will continue to keep inflation high; it will continue to keep the rate of income tax in Britain high. Conservative Members were so proud of the boast that the Government would bring it down, but it is still high. The Government will continue to go in for retrospective legislation when they think that it pays them. Above all, they will continue to undermine law and order by the double standards that they practise and preach.

Mr. Campbell-Savours

The whole House will have been disturbed by the intervention of the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). What he was telling us was unmistakable. He was saying—and what I am about to say will be endorsed by what we shall read in Hansard tomorrow—that he was advising people to leave the United Kingdom, to pay taxes outside the United Kingdom, so as to "avoid a Labour Government". I hope that I quote him correctly. That was a most unpatriotic suggestion. [Interruption.]The hon. Member has left the Chamber. He had been upset by his own Whips. I had hoped that he would remain.

What has arisen in this debate and in previous debates since I have been a Member is that a very clear difference exists between the two sides of the House about the way to deal with this special problem. We have the view expressed by Conservatives in the country and the view expressed by Lord Thorneycroft, who made it clear that he congratulated those who sought to use the kind of loopholes that the Vesteys have been able to use over a number of years. Then we have the views expressed by Opposition Members. They are representative of the anxieties, frustrations and irritation that exist in the British Labour movement about this matter—so much so that in 1978 the national executive committee sent two people to investigate this matter in the Channel Islands. If they were here to speak tonight—although one of them is still a Member of this House—they would probably wish to draw our attention to what they found. They may well have found that there was an overall benefit to the British Exchequer, but they found that there was plainly an injustice.

I should like to draw hon. Members attention to the reality of what is going on, certainly in relation to the Isle of Man. Hon. Members will be aware of a publication in the United Kingdom called Exchange and Mart. Every week, in its financial section, there are one, two or three advertisements which advertise the services that are available on the Isle of Man to those companies on the United Kingdom mainland which seek to register their operations there or whose directors would seek to become resident in that part of the world.

I quote the advertisement in the Exchange and Mart this week in the name of CLW Management Services Ltd. It says: Low tax area—20 per cent. No corporation tax. No capital gains tax. No capital transfer tax"— [Interruption.] An hon. Gentleman on the Government Front Bench, a member of the Government, cheers in support of these measures, which include no taxation for those who seek to take advantage of this advertisement. I am sure that all hon. Members would deplore such an attitude, as would a great number of people.

The advertisement ends by saying: And no need to worry. That is the service provided by that company.

Some months ago I took it upon myself to make contact, through an intermediary, with two of these companies on the Isle of Man. I draw the attention of the House to the correspondence that came from these company-promoting outfits on the Isle of Man, trying to attract British industrialists and British business men to set up operations there. In one of the letters, SGS Consultants Ltd. of St. George's Street, Douglas, stated: Whilst company formation is a fairly straightforward exercise, we would appreciate your reasons for such a company so that we can arrange the correct situation for you. Please be assured that all information is treated with utmost confidentiality. The same document states: The Isle of Man independently controls the assessment and collection of all taxes from individuals and companies resident on the island. Relations with the UK Inland Revenue are the same as relations with any other foreign tax authority. Apart from the double taxation relief system, no information passes beween the Manx and British tax authorities. 11 pm

These people are trying to attract those in the United Kingdom by advertising in our media that they should take advantage of tax concessions. The letter from SGS Consultants Ltd. continues: The tax saving in using an offshore company is quite considerable if used intelligently, especially in the following categories: non-residents of the United Kingdom, fee earning individuals such as entertainers, sportsmen and consultants, individuals or companies engaged in business not necessarily confined to one particular country, import or export companies, individuals or companies who are in receipt of royalties, commissions, copyright payments. These people are almost parasitically trying to draw on those who produce and generate wealth in the United Kingdom and allow them facilities for offsetting their tax liabilities in the Isle of Man. To show their eagerness, I refer to another letter from CLW Management Services Ltd. which says As you already know, tax avoidance is legal but also somewhat complex. If you care to telephone the undersigned, I will be pleased to enlighten you in any particular field. Ideally, if you could make a visit to the island, I will be pleased to meet you at the airport and can then discuss your personal requirements. That is the measure of the personal service being offered to our citizens on the mainland to attract them to the Isle of Man and so enable them to reduce their tax liabilities.

I should like to ask the Minister a question. Is he aware that in Lancashire, Cheshire, the North-West and the Northern region a large number of companies have offshoots or trading relationships with companies in the Isle of Man? Many of these companies are involved in the construction industry. These companies in the Isle of Man have direct links with residents in the United Kingdom. Many of the se residents freely live on the mainland of the United Kingdom, not in the Isle of Man, although they may have sought residence there. It appears that there is no control on the movement of people between the mainland and the Isle of Man.

Last year, when I went to the Isle of Man, I was not checked upon. It seems that if people seek to take up residence there, they can still live freely in the United Kingdom without restriction. That is happening in Lancashire, Cheshire and parts of the Northern region. There has been a demand by the Opposition for a White Paper to evaluate the measure of fraud—it is fraud and not tax avoidance—to cheat the British Exchequer of money that rightfully belongs to it. We are entitled to seek a White Paper and also a statement by the Government in the light of the fact that people allow their companies to coexist with companies set up in the Isle of Man specifically for the purpose of reducing tax liability.

Is it also true that some companies invoice their services to the Isle of Man in a transfer profit-making arrangement whereby their profits, in the main, concentrate in the hands of companies that exist in the Isle of Man which they still control, or indirectly control, and thereby reduce their tax liabilty and avoid paying justifiably higher levels of tax that should be paid on the mainland of the United Kingdom?

Mr. Peter Rees

We have had a far-ranging debate, not too closely related to the subject of the new clause. [HON. MEMBERS: "Nonsense."] I hope that I shall be allowed to develop my argument. The hon. Member for Glasgow, Cathcart (Mr. Maxton) was heard in almost total silence. I do not know whether that indicated the House's appreciation of his arguments or merely tedium. I suspect that it was the latter.

Serious consideration of the subject would have been easier if the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) had been a little more analytical of the problem in his opening remarks and set the tone more precisely, because evasion and avoidance present different problems which require different measures. We appreciate that the right hon. Gentleman, in initiating the debate on the new clause, wanted to find a pretext to draw a somewhat trite distinction between the difference in attitude of the two sides of the House. It is not for me to say whether he will persuade people outside this place.

The right hon. Gentleman misquoted certain remarks of mine in Committee about the moral aspects of the matter. I said in Committee and I repeat today that I prefer riot to moralise on these matters. Politicians are not particularly attractive when they moralise. However, the right hon. Gentleman must be guided by his own taste in these matters.

Several hon. Gentlemen sought to draw the distinction between the departmental handling of fraud in social security cases and in Revenue cases.

Finally, the right hon. Gentleman sought to distinguish between schedule D and schedule E taxpayers. That matter was adequately dealt with by the hon. Member for Colne Valley (Mr. Wainwright), who, with his experience in accountancy, has perhaps a greater grasp of these matters. When the Labour Government were concerned with these matters, I do not recall that they were entirely unexercised about certain facets of the schedule E system. They required much of the House's time to consider the matter of perquisites and emoluments, which suggested to me that they thought that there was a certain scope for avoidance, if not evasion, in schedule E.

It is at least possible to conclude that those who take part in the black economy may also hold jobs at other times in the day or week, in respect of which they are assessed under schedule E. There is no hard and fast distinction between schedule D and schedule E taxpayers, and it does not advance examination of the subject to attempt to divide the country crudely on that basis and to stir up animosity between two bodies which are not clearly separate.

Evasion is a matter that must exercise any Administration. Of its very nature, it is not susceptible of precise measurement. I fail to see what the right hon. Gentleman imagines would emerge from a White Paper on the subject. We had the evidence of a former chairman of the Board of Inland Revenue, a distinguished civil servant, who has now retired to the Public Accounts Committee. He said that he thought that the black economy was running at 7½ per cent. of the gross domestic product. That was after five years of Labour Government, which suggests that possibly the economic and social climate at that time was particularly favourable and stimulating to the black economy.

I do not attach too much significance to those figures, because I also recall—as does the right hon. Gentleman, who has clearly made a close study of these matters—that the Central Statistical Office and the Institute of Fiscal Studies have both put a lesser figure to that. No one can say with precision what the dimensions of the black economy are. Seriously to imagine that a White Paper produced after the most careful thought will advance our understanding of the problem is to misunderstand the nature of the problem.

Of course, no Government can condone evasion or avoidance. I shall list some of the measures which this Government have taken in relation to evasion. We have instituted a more in-depth examination of accounts. The Inland Revenue has intensified the audit of employers' PAYE. Sixth and seventh offices have been opened in Sheffield and Croydon. Fifty extra inspectors have been deployed on this work. Before right hon. and hon. Members are too cavalier about 50 extra inspectors, I remind the House that such trained manpower is scarce.

I remind the House, as a serious rather than a frivolous contribution, that the Government set up the Keith committee to investigate and consider the whole range of the Revenue's powers to see whether they are too excessive, rightly exercised and sufficient. That is a serious, practical and constructive contribution. We shall await with great interest the committee's report.

When I compare the previous Administration's handling of the Fleet Street case with what this Administration have done, I wonder whether Opposition Members have a serious approach to the problem. I should take the cries of anguish and moralising that we have heard in the past hour or two more seriously had I heard similar sentiments from Labour Members when the news of the Fleet Street case broke to the public. I do not recall any anguished cries then. That suggests that they must have been satisfied with the outcome. Right hon. and hon. Members are distinguished members of their party. They could have made their voices heard outside. I do not recall that they made a particular stand. I am, therefore, a little sceptical of their approach.

I turn to the question of avoidance. There is a fairly blatant streak of humbug in much of what we have heard. The right hon. Member for Ashton-under-Lyne had five years to clear his mind on the subject. He did not attempt to define what he means by avoidance and what aspects of it he finds particularly objectionable. He did not address himself to the point made by the hon. Member for Colne Valley, and pointedly by some of my hon. Friends, that avoidance is liable to flourish in a climate where the marginal rates on investment income are 98 per cent. and on earned income 83 per cent.

Human nature being what it is, that creates a climate in which people are prepared to devote a little more thought than they should to such activity rather than to more constructive pursuits. Part of this Government's policy is to try to create a tax system which is recognised to be fair so that people will not have to devote themselves to activities which are not constructive.

If right hon. and hon. Members are really concerned about the problems of avoidance and evasion, they might come out openly and tell us their considered party view on the higher rates of tax. They might also tell us whether part of their party's platform is to introduce a wealth tax.

I challenged the right hon. Member for Stepney and Poplar (Mr. Shore) on that during the Budget debate. Prudently he remained obstinately silent on that question. Does he believe in a wealth tax? If so, at what rates?

Mr. Austin Mitchell

Yes.

11.15 pm

Mr. Rees

The hon. Member for Grimsby (Mr. Mitchell) says that he does. He is an Opposition Whip. I do not know whether he is speaking with the full-hearted consent of his two right hon. Friends, who are more prudently casting their eyes down on their papers. I do not believe that they want to be drawn on this point. I believe that the country is entitled to know. If we are to have a serious debate on avoidance and evasion, we should know where the Labour Party stands on confiscatory taxation because its past record is not creditable. I shall move away from that sensitive area. I understand why the right hon. Gentleman—[Interruption.] I am willing to give way. If the right hon. Gentleman wishes to intervene, I shall be happy to give way.

Mr. Shore

In my own time.

Mr. Rees

I take it that the right hon. Gentleman is prudently keeping his own counsel. No doubt, in due course we shall have a statement from the Labour Party executive, fully endorsed by the right hon. Gentleman and his right hon. Friend the Member for Ashton-under-Lyne, which will tell the country exactly what it might expect if it were rash enough to return a Labour Administration next time.

As the right hon. Member for Ashton-under-Lyne knows, having studied these matters closely, the scene has been a little altered by two recent decisions of the House of Lords. I do not need to remind the House of the cases of Eilbeck and Rawling and of Ramsey and the Commissioners of the Inland Revenue. They make it likely that the sophisticated off-the-peg schemes which were perhaps prevalent under the last Administration will no longer achieve their intended result.

Let me also emphasise that the Government have been as quick as the previous Administration to block up the loopholes as they have been disclosed. In case the House is not prepared to accept that general assertion from me, I shall remind it of the Finance Act 1980, in which we disqualified back-to-back life insurance policies and dealt with the question of leasing.

Let me remind those who have not studied the Finance Bill as closely as my hon. Friends that we have dealt with the position disclosed by the Vestey case. The hon. Member for Colne Valley was right to remind the House that this is a problem which has been running for a considerable time. The right hon. Member for Ashton-under-Lyne, when he was Financial Secretary, must have known that the case was running because the earlier stages in the High Court and the Court of Appeal were heard under his Administration, as far as I can recall. If he felt that that was a serious problem, no doubt he would have laid contingency plans to deal with the matter. We do not have access to the previous Administration's papers, but I can only tell the House that there was no evidence that there had been any contingency plans.

Let me remind the House that we shall deal with free petrol and transport vouchers and that we have dealt in capital gains tax with the emigration of donees. That should warm the heart of the hon. Member for South Ayrshire (Mr. Foulkes), who is developing an obsessive and almost unhealthy interest in the status of the Channel Islands and the Isle of Man. I am deeply sorry that we have not been able to answer the questions which he has put down for my right hon. and learned Friend the Chancellor of the Exchequer. He will appreciate that, in so far as they properly lie in the area of my right hon. and learned Friend's responsibilities, they will demand a considerable amount of research. The hon. Member requires information about any company which may have done business here and which has now moved to the Isle of Man or the Channel Islands. I cannot promise that we shall be able to find that information.

The resources of the Inland Revenue, particularly at present with the Finance Bill running through, are a little limited. It may not be possible to find all the answers immediately, to the hon. Member's satisfaction. I must also emphasise that a number of the points which he and the hon. Member for Cathcart raised are matters of constitutional interest and the precise relationship of the Channel Islands and the Isle of Man to this country.

One recognises that in the past—and perhaps currently—there has been a degree of avoidance which is channelled through those islands. However, it is also open to residents of the United Kingdom to take their assets to countries far remote from the Isle of Man and the Channel Islands. Merely to penalise emigration to those islands would not solve that problem.

Mr. Maxton

If a person took his assets to any other country, he would normally have to go out of this country using his passport and would therefore be seen to be leaving this country and going to a foreign country. However, if he goes to the Channel Islands or the Isle of Man, which is the point my hon. Friend the Member for Workington (Mr. Campbell-Savours) made, he can travel freely with no one checking whether he is a resident of the Channel Islands.

Mr. Rees

If the hon. Gentleman is seriously suggesting that there should be close surveillance and cross-examination of every British resident leaving these shores about his fiscal motives, he is conjuring up a vision of a police State that would not find favour with the Conservative side of the House.

Mr. Richard Wainwright

The Minister mentioned the Government's action in the Finance Bill on employers' free petrol to employees. Is he really satisfied with the scale published yesterday by the Inland Revenue, which suggests that in many cases the tax will be on about one and a half gallons of petrol a week?

Mr. Rees

I willingly engage in debate with the hon. Gentleman. There are considerable practical problems—he. as an accountant, must recognise that—in dealing with that question. A solution eluded the Labour Adminstration, assuming that they applied their minds to the problem. If they did not, they were guilty of gross negligence. I recognise the imperfections in the solution. I respectfully suggest that we defer a debate on that until the actual scale is considered by the House.

No one can reasonably make the charge against the Government that they have been negligent in the perfomance of their duties in that area. The only solution from which we have shrunk, but from which the Labour Administration did not, was to introduce retrospective legislation. We could not do so without due warning and subject to certain rules that we evolved during 1978 and made public.

The right hon. Member for Ashton-under-Lyne said that the Opposition attempted to establish a bipartisan position. I distantly recall that there were delicate overtures to the Conservative Party, but there could be no meeting of minds on what 'we regarded as the considerable constitutional impropriety of retrospective legislation, even in this area, with any prior warning. For that reason no bipartisan position could be established.

Mr. Robert Sheldon

Will the Minister answer the most important question of all? If some of the schemes were to surface again under new arrangements that made them viable, would he consider retrospective legislation? Is so, does he realise that he would have the attention of the Opposition in considering those matters?

Mr. Rees

I suppose that it would be arrogant to assume that one could ever wholly engage the attention of the Opposition. However, I am grateful to the right hon. Gentleman for his offer. He may recall—if he does not, I refer him to the Hansard report of our debates in Committee Room 10 in the summer of 1978—the terms and the basis on which a Conservative Administration would contemplate retrospective legislation in the area of tax avoidance. I do not want to weary the House with the details now.

One of the essential elements was that there should be a public statement of the Government's intention and that the legislation would date back only to that date. It would be followed by various other things—for example, that it should be referred to the tax reform committee, that where possible draft clauses should be published and that there should be legislation at the first possible opportunity. If the right hon. Gentleman's memory fails him, I refer him to those debates when the position of the Conservative Party was clearly stated. It is still the Government's position. That is what divides us.

I hope that we have established a certain measure of common ground. I hope that I have reassured the whole House that—

Mr. Campbell-Savours

Will the Minister wholeheartedly condemn the activities of the companies in the Isle of Man that place advertisements in British journals inciting our taxpayers to take up residence or establish businesses there, thereby avoiding their taxation liabilities on the mainland? Will he condemn that from the Dispatch Box?

Mr. Rees

The hon. Gentleman is again tempting me to strike a moral attitude—even to win the temporary plaudits of Opposition Members. I am confident that the Inland Revenue is studying the advertisements. If it is not, I shall enjoin it to do so. I say to the hon. Gentleman, who perhaps has not applied his mind to this issue as thoroughly as has his right hon. Friend the Member for Ashton-under-Lyne, that there is a battery of legislative provisions that prevent transfer pricing. I recognise that current advertising does not read attractively. I shall study the hon. Gentleman's contribution in Hansard.

I shall not strike a glib attitude on this issue. To do so would not advance the debate. The subject has had a full airing. At the end of the day the new clause, although it has provided a pretext for Labour Members to sound off on the subject, strikes the Government as a shallow political exercise. It does nothing to advance understanding of the problem, which is not unique to the United Kingdom. I hope that the right hon. Gentleman will not feel obliged to press it to a Division. If he does, I hope that my right hon. and hon. Friends will reject it.

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

The House divided: Ayes 216, Noes 296.

Division No. 270]	[11.26 pm
AYES
Adams, Allen	Eastham, Ken
Anderson, Donald	Ellis, R. (NE D'bysh're)
Archer, Rt Hon Peter	Ellis, Tom (Wrexham)
Ashton, Joe	English, Michael
Atkinson, N.(H'gey,)	Ennals, Rt Hon David
Barnett, Guy (Greenwich)	Evans, Ioan (Aberdare)
Bennett, Andrew(St'kp't N)	Evans, John (Newton)
Bidwell, Sydney	Ewing, Harry
Booth, Rt Hon Albert	Faulds, Andrew
Boothroyd, Miss Betty	Field, Frank
Bray, Dr Jeremy	Fletcher, Ted (Darlington)
Brown, Hugh D. (Provan)	Ford, Ben
Brown, Ron (E'burgh, Leith)	Forrester, John
Brown, Ronald W. (H'ckn'y S)	Foster, Derek
Callaghan, Rt Hon J.	Foulkes, George
Callaghan, Jim (Midd't'n & P)	Fraser, J. (Lamb'th, N'w'd)
Campbell, Ian	Freeson, Rt Hon Reginald
Campbell-Savours, Dale	Freud, Clement
Canavan, Dennis	Garrett, John (Norwich S)
Cant, R. B.	George, Bruce
Carter-Jones, Lewis	Gilbert, Rt Hon Dr John
Clark, Dr David (S Shields)	Ginsburg, David
Cocks, Rt Hon M. (B'stol S)	Golding, John
Cohen, Stanley	Graham, Ted
Coleman, Donald	Grant, George (Morpeth)
Concannon, Rt Hon J. D.	Grant, John (Islington C)
Conlan, Bernard	Grimond, Rt Hon J.
Cook, Robin F.	Hardy, Peter
Cowans, Harry	Harrison, Rt Hon Walter
Cox, T. (W'dsw'th, Toot'g)	Hart, Rt Hon Dame Judith
Craigen, J. M.	Hattersley, Rt Hon Roy
Crowther, J. S.	Healey, Rt Hon Denis
Cryer, Bob	Heffer, Eric S.
Cunningham, G. (Islington S)	Hogg, N. (E Dunb't'nshire)
Cunningham, Dr J. (W'h'n)	Holland, S. (L'b'th, Vauxh'll)
Dalyell, Tam	Home Robertson, John
Davidson, Arthur	Homewood, William
Davies, Rt Hon Denzil (L'lli)	Hooley, Frank
Davies, Ifor (Gower)	Horam, John
Davis, Clinton (Hackney C)	Howell, Rt Hon D.
Davis, T. (B'ham, Stechf'd)	Howells, Geraint
Deakins, Eric	Huckfield, Les
Dean, Joseph (Leeds West)	Hughes, Robert (Aberdeen N)
Dempsey, James	Hughes, Roy (Newport)
Dewar, Donald	Janner, Hon Greville
Dixon, Donald	Jay, Rt Hon Douglas
Dobson, Frank	John, Brynmor
Dormand, Jack	Johnson, James (Hull West)
Douglas-Mann, Bruce	Johnson, Walter (Derby S)
Dubs, Alfred	Jones, Rt Hon Alec (Rh'dda)
Duffy, A. E. P.	Jones, Barry (East Flint)
Dunn, James A.	Jones, Dan (Burnley)
Dunwoody, Hon Mrs G.	Kaufman, Rt Hon Gerald
Eadie, Alex	Kilroy-Silk, Robert

Lambie, David	Roberts, Gwilym (Cannock)
Leadbitter, Ted	Robertson, George
Leighton, Ronald	Robinson, G. (Coventry NW)
Lestor, Miss Joan	Rooker, J. W.
Lewis, Arthur (N'ham NW)	Roper, John
Lewis, Ron (Carlisle)	Ross, Stephen (Isle of Wight)
Litherland, Robert	Rowlands, Ted
Lofthouse, Geoffrey	Ryman, John
Lyon, Alexander (York)	Sandelson, Neville
Lyons, Edward (Bradf'd W)	Sever, John
McCartney, Hugh	Sheldon, Rt Hon R.
McDonald, Dr Oonagh	Shore, Rt Hon Peter
McElhone, Frank	Silkin, Rt Hon J. (Deptford)
McKay, Alien (Penistone)	Silkin, Rt Hon S. C. (Dulwich)
McKelvey, William	Silverman, Julius
MacKenzie, Rt Hon Gregor	Skinner, Dennis
McNally, Thomas	Snape, Peter
McNamara, Kevin	Soley, Clive
McTaggart, Robert	Spearing, Nigel
Magee, Bryan	Spriggs, Leslie
Marshall, D(G'gow S'ton)	Stallard, A. W.
Marshall, Dr Edmund (Goole)	Stewart, Rt Hon D. (W Isles)
Marshall, Jim (Leicester S)	Stott, Roger
Martin, M(G'gow S'burn)	Strang, Gavin
Mason, Rt Hon Roy	Summerskill, Hon Dr Shirley
Maxton, John	Taylor, Mrs Ann (Bolton W)
Maynard, Miss Joan	Thomas, Jeffrey (Abertillery)
Meacher, Michael	Thomas, Dr R.(Carmarthen)
Mikardo, Ian	Tilley, John
Millan, Rt Hon Bruce	Tinn, James
Mitchell, Austin (Grimsby)	Torney, Tom
Mitchell, R. C. (Soton Itchen)	Urwin, Rt Hon Tom
Morris, Rt Hon A. (W'shawe)	Varley, Rt Hon Eric G.
Morris, Rt Hon C. (O'shaw)	Wainwright, E.(Dearne V)
Morris, Rt Hon J. (Aberavon)	Wainwright, R.(Colne V)
Morton, George	Walker, Rt Hon H.(D'caster)
Moyle, Rt Hon Roland	Watkins, David
Newens, Stanley	Weetch, Ken
Oakes, Rt Hon Gordon	Welsh, Michael
Ogden, Eric	White, Frank R.
O'Halloran, Michael	White, J. (G'gow Pollok)
O'Neill, Martin	Whitehead, Phillip
Orme, Rt Hon Stanley	Whitlock, William
Owen, Rt Hon Dr David	Wigley, Dafydd
Palmer, Arthur	Willey, Rt Hon Frederick
Parker, John	Williams, Rt Hon A.(S'sea W)
Pavitt, Laurie	Wilson, Gordon (Dundee E)
Pendry, Tom	Wilson, William (C'try SE)
Powell, Raymond (Ogmore)	Winnick, David
Prescott, John	Woodall, Alec
Price, C. (Lewisham W)	Woolmer, Kenneth
Radice, Giles	Young, David (Bolton E)
Rees, Rt Hon M (Leeds S)
Richardson, Jo	Tellers for the Ayes:
Roberts, Albert (Normanton)	Mr. James Hamilton and
Roberts, Ernest (Hackney N)	Mr. Frank Haynes

NOES
Adley, Robert	Blackburn, John
Aitken, Jonathan	Blaker, Peter
Alexander, Richard	Body, Richard
Amery, Rt Hon Julian	Bonsor, Sir Nicholas
Ancram, Michael	Boscawen, Hon Robert
Arnold, Tom	Bottomley, Peter (W'wich W)
Aspinwall, Jack	Bowden, Andrew
Atkins, Rt Hon H.(S'thorne)	Boyson, Dr Rhodes
Atkins, Robert(Preston N)	Braine, Sir Bernard
Atkinson, David (B'm'th.E)	Bright, Graham
Baker, Kenneth(St.M'bone)	Brinton, Tim
Baker, Nicholas (N Dorset)	Brittan, Leon
Banks, Robert	Brooke, Hon Peter
Beaumont-Dark, Anthony	Brotherton, Michael
Bendall, Vivian	Brown, Michael(Brigg & Sc'n)
Bennett, Sir Frederic (T'bay)	Browne, John (Winchester)
Benyon, Thomas (A'don)	Bruce-Gardyne, John
Benyon, W. (Buckingham)	Bryan, Sir Paul
Best, Keith	Buchanan-Smith, Alick
Bevan, David Gilroy	Buck, Antony
Biffen, Rt Hon John	Bulmer, Esmond
Biggs-Davison, John	Burden, Sir Frederick

Butcher, John	Howell, Rt Hon D. (G'ldf'd)
Butler, Hon Adam	Howell, Ralph (N Norfolk)
Cadbury, Jocelyn	Hunt, David (Wirral)
Carlisle, John (Luton West)	Hunt, John (Ravensbourne)
Carlisle, Kenneth (Lincoln)	Irving, Charles (Cheltenham)
Carlisle, Rt Hon M. (R'c'n)	Jenkin, Rt Hon Patrick
Chalker, Mrs. Lynda	Jessel, Toby
Chapman, Sydney	Johnson Smith, Geoffrey
Churchill, W. S.	Jopling, Rt Hon Michael
Clark, Hon A. (Plym'th, S'n)	Joseph, Rt Hon Sir Keith
Clark, Sir W. (Croydon S)	Kaberry, Sir Donald
Clarke, Kenreth (Rushcliffe)	Kellett-Bowman, Mrs Elaine
Clegg, Sir Walter	Kershaw, Anthony
Cockeram, Eric	Kimball, Marcus
Colvin, Michael	King, Rt Hon Tom
Cope, John	Kitson, Sir Timothy
Cormack, Patrick	Knight, Mrs Jill
Corrie, John	Knox, David
Cranborne, Viscount	Lamont, Norman
Crouch, David	Lang, Ian
Dean, Paul (North Somerset)	Langford-Holt, Sir John
Dickens, Geoffrey	Latham, Michael
Douglas-Hamilton, Lord J.	Lawrence, Ivan
du Cann, Rt Hon Edward	Lawson, Rt Hon Nigel
Dunn, Robert (Dartford)	Lee, John
Durant, Tony	Lennox-Boyd, Hon Mark
Dykes, Hugh	Lester, Jim (Beeston)
Eden, Rt Hon Sir John	Lewis, Kenneth (Rutland)
Edwards, Rt Hon N. (P'broke)	Lloyd, Ian (Havant & W'loo)
Eggar, Tim	Lloyd, Peter (Fareham)
Emery, Peter	Loveridge, John
Eyre, Reginald	Luce, Richard
Fairgrieve, Russell	Lyell, Nicholas
Faith, Mrs Sheila	Macfarlane, Neil
Farr, John	MacGregor, John
Fell, Anthony	MacKay, John (Argyll)
Fenner, Mrs Peggy	Macmillan, Rt Hon M.
Finsberg, Geoffrey	McNair-Wilson, M. (N'bury)
Fisher, Sir Nigel	McNair-Wilson, P. (New F'st)
Fletcher, A. (Ed'nb'gh N)	McQuarrie, Albert
Fletcher-Cooke, Sir Charles	Madel, David
Fookes, Miss Janet	Major, John
Forman, Nigel	Marland, Paul
Fowler, Rt Hon Norman	Marlow, Tony
Fox, Marcus	Marshall, Michael (Arundel)
Fraser, Peter (South Angus)	Marten, Neil (Banbury)
Gardiner, George (Reigate)	Mates, Michael
Gardner, Edward (S Fylde)	Mather, Carol
Garel-Jones, Tristan	Maude, Rt Hon Sir Angus
Glyn, Dr Alan	Mawby, Ray
Goodhart, Philip	Mawhinney, Dr Brian
Goodhew, Victor	Maxwell-Hyslop, Robin
Goodlad, Alastair	Mayhew, Patrick
Gorst, John	Mellor, David
Gow, Ian	Miller, Hal (B'grove)
Gower, Sir Raymond	Mills, Iain (Meriden)
Grant, Anthony (Harrow C)	Mills, Peter (West Devon)
Gray, Hamish	Moate, Roger
Greenway, Harry	Molyneaux, James
Grieve, Percy	Monro, Hector
Griffiths, Peter Portsm'th N)	Montgomery, Fergus
Grist, Ian	Moore, John
Grylls, Michael	Morgan, Geraint
Gummer, John Selwyn	Morris, M. (N'hampton S)
Hamilton, Hon A.	Morrison, Hon C. (Devizes)
Hamilton, Michael (Salisbury)	Morrison, Hon P. (Chester)
Hampson, Dr Keith	Mudd, David
Hannam, John	Murphy, Christopher
Haselhurst, Alan	Myles, David
Hastings, Stephen	Neale, Gerrard
Hayhoe, Barney	Needham, Richard
Heddle, John	Neubert, Michael
Henderson, Barry	Newton, Tony
Heseltine, Rt Hon Michael	Normanton, Tom
Hicks, Robert	Nott, Rt Hon John
Higgins, Rt Hon Terence L.	Onslow, Cranley
Hogg, Hon Douglas (Gr'th'm)	Oppenheim, Rt Hon Mrs S.
Holland, Philip (Carlton)	Page, John (Harrow, West)
Hooson, Tom	Page, Rt Hon Sir G. (Crosby)
Howe, Rt Hon Sir Geoffrey	Page, Richard (SW Herts)

Parkinson, Cecil	Stainton, Keith
Parris, Matthew	Stanbrook, Ivor
Patten, Christopher (Bath)	Stanley, John
Patten, John (Oxford)	Steen, Anthony
Pattie, Geoffrey	Stevens, Martin
Pawsey, James	Stewart, Ian (Hitchin)
Percival, Sir Ian	Stewart, A.(E Renfrewshire)
Pink, R. Bonner	Stokes, John
Pollock, Alexander	Stradling Thomas, J.
Powell, Rt Hon J.E. (S Down)	Tapsell, Peter
Prentice, Rt Hon Reg	Taylor, Teddy (S'end E)
Price, Sir David (Eastleigh)	Temple-Morris, Peter
Prior, Rt Hon James	Thatcher, Rt Hon Mrs M.
Proctor, K. Harvey	Thomas, Rt Hon Peter
Pym, Rt Hon Francis	Thompson, Donald
Raison, Timothy	Thorne, Neil (Ilford South)
Rathbone, Tim	Thornton, Malcolm
Rees, Peter (Dover and Deal)	Townend, John (Bridlington)
Rees-Davies, W. R.	Townsend, Cyril D, (B'heath)
Renton, Tim	Trippier, David
Rhodes James, Robert	Trotter, Neville
Rhys Williams, Sir Brandon	van Straubenzee, W. R.
Ridley, Hon Nicholas	Vaughan, Dr Gerard
Ridsdale, Sir Julian	Viggers, Peter
Rifkind, Malcolm	Waddington, David
Roberts, M. (Cardiff NW)	Wakeham, John
Roberts, Wyn (Conway)	Waldegrave, Hon William
Rossi, Hugh	Walker, B. (Perth)
Rost, Peter	Wall, Patrick
Royle, Sir Anthony	Walters, Dennis
Sainsbury, Hon Timothy	Ward, John
St. John-Stevas, Rt Hon N.	Warren, Kenneth
Scott, Nicholas	Watson, John
Shaw, Giles (Pudsey)	Wells, John (Maidstone)
Shelton, William (Streatham)	Wells, Bowen
Shepherd, Colin (Hereford)	Wheeler, John
Shepherd, Richard	Whitelaw, Rt Hon William
Shersby, Michael	Whitney, Raymond
Silvester, Fred	Wickenden, Keith
Sims, Roger	Williams, D.(Montgomery)
Skeet, T. H. H.	Winterton, Nicholas
Speed, Keith	Wolfson, Mark
Speller, Tony	Young, Sir George (Acton)
Spence, John	Younger, Rt Hon George
Spicer, Jim (West Dorset)
Spicer, Michael (S Worcs)	Tellers for the Noes:
Sproat, Iain	Mr. Spencer Le Marchant and
Squire, Robin	Mr. Anthony Berry.

Question accordingly negatived.