HL Deb 24 January 1962 vol 236 cc915-9

2.42 p.m.

LORD KILLEARN

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether there has been any result since the Minister without Portfolio undertook on November 29 last (see Lords Hansard, Vol. 235, No. 15) to put before the Chancellor of the Exchequer the suggestion of this House to waive the tax on the £27½ million held by the Foreign Claims Commission on behalf of the Suez victims.]

THE MINISTER WITHOUT PORTFOLIO (LORD MILLS)

My Lords, in view of the form in which the Question appears on the Paper, I would remind noble Lords that the £27½ million held by the Foreign Compensation Commission in the Egyptian Fund does not itself attract income tax; the tax referred to is tax chargeable only upon the interest earned by the investment from time to time of any sum standing to the credit of the Fund and not required for immediate distribution. I drew the attention of my right honourable friend the Chancellor of the Exchequer to the views expressed by noble Lords when this matter was last before your Lordships' House on November 29. He has assured me that he has taken careful note of all the suggestions that were made, but I cannot hold out any hope that the tax on the interest can be waived.

LORD KILLEARN

My Lords, I obviously thank the noble Lord for his Answer, which carries, I am afraid, no satisfaction at all. I do not know whether the noble Lord has the OFFICIAL REPORT of November 29 in his hand. A variety of suggestions were then made by various noble Lords. I should like to ask him, as a supplementary, whether those suggestions, each of them, were actually put to the Chancellor of the Exchequer, and, if so, with what result. Perhaps he says they were turned down. That is the first point. My second supplementary would be whether there is not in fact precedent for the waiving of tax on such a fund in the past. If there is a precedent it must be on record in the archives.

LORD MILLS

My Lords, the answer to the first supplementary is, Yes, all the points made in our debate in this House were brought to the notice of the Chancellor of the Exchequer, and he has informed me that he has taken careful note of them. With regard to the second supplementary question, the answer is that I am not aware of any precedent. If the noble Lord knows of any I should be very glad if he will inform me.

LORD KILLEARN

My Lords, may I just ask for clarification? Is "careful note" equivalent to a negative?

LORD MILLS

No, my Lords; it is equivalent to exactly what it says. The Chancellor of the Exchequer has taken careful note of everything that was said in your Lordships' House on that occasion.

LORD KILLEARN

My Lords, may I follow with a final point? Presumably the Treasury is the guardian of the public purse, which is a very important function which they fulfil with great ability, but presumably the final authority in this matter is the Government. Is that so?

LORD MILLS

Yes, I think I would not disagree with that suggestion.

LORD HENDERSON

My Lords, in view of the legal and other difficulties involved in this matter, would not the Government be prepared to consider making ex-gratia payment to the fund to compensate for the deductions that have been made under the law of the land?

LORD MILLS

My Lords, it is too early yet for me to make any pronouncement on that matter. The whole of the claims have not yet been received, and until my right honourable friend, the Chancellor of the Exchequer, can see what is involved I am unable to say on his behalf what would be his view.

LORD SALTER

My Lords, may I welcome the form which the noble Lord's last reply took? I would not for a moment press the question of a legal waiver of what is due under income tax law. The suggestion which I should like the noble Lord to consider is this. Supposing that in looking at the whole situation on the basis of justice and equity, and not legal technicality, the Government come to the conclusion that really there is no moral right for them to receive this amount of income tax now in question, or, indeed, that it is not reasonable that the victims should be deprived of it, would they consider, not waiving the tax but making a grant approximately equivalent to the tax that they have unintentionally received?

LORD MILLS

My Lords, in reply to my noble friend, I have already indicated that the process of tax assessment must, I think, take its normal course. I need hardly assure my noble friend that there is a great deal, and I hope the necessary amount, of sympathy in regard to these cases. But what we are discussing is really the question of any deficiency there may be in the Fund compared with the claims upon the Fund. It is in that connection that my right honourable friend has taken note of everything that your Lordships had to say on the subject.

LORD BALFOUR OF INCHRYE

My Lords, I do not think it is quite correct to say that we are discussing a deficiency. We are discussing in fact the justice of charging income tax on the interest on these funds. The Chancellor of the Exchequer has had the benefit of the views of your Lordships in all quarters of the House. The Minister has told us that. Could we have the benefit of a rather fuller answer as to the reasons which motivated the Chancellor to turn this down? If another Question is put down, could we have a more detailed answer as to the arguments which have swayed the Chancellor to this decision, having regard to the fact that, if my memory serves me aright, there have been remissions of income tax in respect of certain monetary awards for gallantry? So there is a precedent for remission. If another Question is put down, can we have a fuller answer than just a "No"?

LORD MILLS

My Lords, I should be most grateful if another Question were put down, but I should not like to hold out any hope that the view would be taken that this is a practical way of dealing with this problem.

LORD DOUGLAS OF BARLOCH

My Lords, could the noble Lord say in what investments this Fund stands?

LORD MILLS

No, my Lords. I need notice of that question.

LORD SALTOUN

The noble Lord, Lord Killearn, asked in a supplementary question, whether there was any precedent for a remission of the charge on income tax on money of this kind. The noble Lord the Minister replied to him that he did not know, and wanted the noble Lord, Lord Killearn, to produce one if he could. Is it not wrong to ask private people to produce evidence from records which must be in the Government's own possession? And, to supplement what the noble Lord has asked by a further question, may I ask Her Majesty's Government whether they will look back in the records to find out whether there is any precedent for the waiving of such a charge?

LORD MILLS

My Lords, I am quite willing to look at the question.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, may I just put this to the noble Lord? Would it not be better in this matter, because we all have sympathy with those who have suffered injustice, that it should be dealt with entirely on the basis of what further help can be given if no further concessions are agreed to by the people who ought to make them? I should hesitate long to move an amendment of a law which might lead to an unusual deepen- ing and strengthening of the kind of demand that might be made on the public purse for a great variety of causes

LORD MILLS

My Lords, I quite agree with the noble Viscount the Leader of the Opposition, but I am just not in a position to make a statement as to what can be done in this matter.

LORD KILLEARN

My Lords, I do not wish to abuse your Lordships' patience, but it is just a possibility that the noble Lord may have the reply to another point at his finger ends. Can he tell the House what is the amount of tax involved in this question? I have here what it stood at on November 29. In his answer of November 29 the noble Lord gave it as £534,368. Probably it has increased since then. If the figure is available, it might interest the House to know what is the amount of tax involved.

LORD MILLS

My Lords, I regret that I do not have it at my finger tips, but I shall be glad to inform the noble Lord and any other noble Lord who may be interested.