Sitting of 21 June 1926

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
London Electric and Metropolitan District Railway Companies Bill (King's Consent signified),
Bill read the Third time, and passed.
Dover Harbour Bill,
As amended, cosidered; a Clause added; an Amendment made; Bill to be read the Third time.
Halifax Corporation Bill [Lords,]
As amended, considered; Amendments made; Bill to be read the Third time.
Swindon Corporation Bill
As amended, considered; to be read the Third time.
Marriages Provisional Order (No. 2) Bill,
Pier and Harbour Provisional Order Bill,
Read the Third time, and passed.
Edinburgh Corporation (General powers) Order Confirmation Bill,
Considered; to be read the Third time To-morrow.

CHORLEY CORPORATION BILL [Lords].
Read a Second time, and committed.
The following Notice of Motion stood on the Order Paper in the name of Sir WAITER DE FRECE:
"That it be an Instruction to the Committee on the Bill that they shall have regard to the provisions of the Public Health Act, 1925, so far as Clauses 138 to 144 are concerned."
Sir W. de FRECE: I do not move this Instruction.

POSTAL FACILITIES, HARTLEPOOLS.
Sir WILFRID SUGDEN: I desire to present a petition from the ancient boroughs of the Hartlepools, comprising 21,000 inhabitants, who have had postal facilities taken away from them by His Majesty's Postmaster-General, and they as loyal subjects of the Crown desire to present their respectful solicitations that the said postal facilities may be restored.
ORAL ANSWERS TO QUESTIONS.
  INDIA.

    DEPUTATION TO FIJI (REPORT).
    Mr. OLIVERasked the Under-Secretary of State for India whether the Government of India has published the Report of the deputation sent to Fiji five years ago; and, if not, whether the Government of India intends to publish it, and when?
    Captain Lord STANLEY (Lord of the Treasury): As my Noble Friend the Under-Secretary (Earl Winterton) is engaged in answering questions in another place, I have been asked to reply. The question of the publication of the Report has not yet been finally decided.
    Mr. OLIVER: Is not five years sufficient time in which to make a report?

    FACTORY INSPECTION.
    Mr. THURTLEasked the Under-Secretary of State for India whether any factories in India, coming under the Factories Act, have remained uninspected during the last five years; and, if so, whether he can inform the House of the number uninspected each year?
    Lord STANLEY: The number of factories that were uninspeeted during each of the five years from 1920–1924 (the latter being the last year for which a Report has been received) was 1.098, 1,195, 1,194, 1,154, and 1,057 respectively. The, reports do not show whether any factory remained uninspected during the whole period of five years.

    COLOUR BAR BILL (SOUTH AFRICA).
    Mr. THURTLEasked the Under-Secretary of State for India whether any representations have been made by the Secretary of State for India or the Government of India to the Government of the Union of South Africa with regard to the effect of the enactment of the Colour Bar Bill in the South African Parliament upon the settlement of the questions to be discussed at the conference arranged between the two Governments on the subject of anti-Asiatic legislation in the Union?
    Lord STANLEY:My Noble Friend entrusted to the Government of India
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    the negotiations touching the conference with the Government of the Union of South Africa to which the hon. Member refers. No doubt the Government of India have made every representation which they consider relevant, but my Noble Friend thinks that it would he more appropriate that any public statement on the subject should be made in the first instance by them or by the South African Government.

    RIOTS.
    Brigadier - General BROOKEasked the Under-Secretary of State for India the casualties which have resulted from rioting in India in each of the last 18 months, mentioning the fatalities in each period?
    Lord STANLEY: Statistics prepared in this country would. I fear, be incomplete; but if the hon. and gallant Member desires, inquiry will he made from India.
    Mr. WARDLAW-MILNEasked the Under-Secretary of State for India the latest information in his possession regarding the riots in Rawalpindi and neighbourhood; what number of persons have been killed and injured; and whether there have been any communal outbreaks in other places such as Lucknow and Delhi?
    Lord STANLEY: The official reports received add little to the press messages, but I will circulate in the OFFICIAL REPORT a summary of the telegrams from the Government of India. In Rawalpindi 14 deaths occurred and 46 wounded persons were treated in the hospitals. No outbreaks have been reported from Lucknow or Delhi or other cities.
    Following is the summary promised:
    On the 13th June a large procession of Sikhs, estimated to number 15,000 persons, paraded the streets of Rawalpindi, accompanied by a band. On reaching the vicinity of the Jama Masjid they were met by a deputation of Mohammedans, who asked that the band might stop playing. This request was not acceded to; on the contrary, it was followed by increased activity on the part of the Sikhs, who surged towards the mosque and were only restrained with difficulty by their leaders. The procession then continued on its way,

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    the Sikhs apparently considering that by passing the mosque they had achieved a victory over the Mohammedans.
    On the following night, that of the 14th-15th June, the Mohammedans came out in large numbers, and proceeded to set fire to buildings in different parts of the city and to loot their contents. Owing to the wide area involved it was found necessary to call upon a detachment of the King's Royal Rifles to supplement the police. Rioting continued throughout the night, and was characterised by sporadic attacks upon individuals rather than by collisions between large organised bodies. Control was established before sunrise, neither the military nor the police being compelled to open fire on the rioters. By the evening of the 15th the city was outwardly quiet, but most of the shops were closed and the military and police were still in command. The casualties during the rioting amounted to 14 killed, of whom 11 were Mohammedans, two Sikhs, and one a Hindu, and 46 wounded, of whom 27 were Mohammedans, seven Sikhs, and 12 Hindus. The amount of material damage has not yet been ascertained, but, so far as is known, no religions property was damaged. No casualties are reported amongst the military or police.
    Following upon these events in the city itself, on the night of the 16th-17th June Saidpur village, nine miles north of Rawalpindi, was looted by a large gang from the Hazara district. About 60 houses were burnt and two of the villagers, both Hindus, were killed and three wounded. Information of this outrage reached Rawalpindi early in the morning, and police were immediately drafted into the village. By the 17th June both Rawalpindi and Saidpur were reported to be quiet.

    PUNJAB (DEATHS FROM PLAGUE).
    Colonel DAYasked the Under-Secretary of State for India the number of deaths that occurred in the Punjab during the recent plague; and what measures of relief were afforded by the Government?
    Lord STANLE: The number of deaths between 1st March and 15th May was about 54,000. My Noble Friend has received no report of the steps taken by
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    Government in relation to the present outbreak, but he has no doubt that recourse has been had as usual to vigorous measures of inoculation and disinfection.
    Colonel DAY: Will the Noble Lord inquire, whether the Government of India are taking steps to destroy the rats, which are responsible for this plague?
    Sir HENRY CRAIK: Are we to have a constant repetition of the infringement of the rule, which has been laid down so often, that the Government of India must be allowed to do its own duty?
    Brigadier-General CLIFTON BROWN: Are these the deaths of Europeans or natives?
    Lord STANLE: I think that they are all natives.

    BENGAL LEGISLATIVE COUNCIL (LABOUR REPRESENTATIVES)
    Mr. SCURRasked the Under-Secretary of State for India whether, seeing that. in December, 1925, the Bengal Legislative Council passed a resolution in favour of the appointment of the Labour representatives on the Council by election, instead of by nomination, it is proposed to give early effect to this resolution, in view of the forthcoming election in Bengal?
    Lord STANLEY: As I informed the hon. Member for Bow and Bromley on 15th June, my Noble Friend has not yet arrived at a decision on this question.

  KENYA.

    LABOUR SUPPLY.
    Lieut.-Commander KENWORTHYasked the Secretary of State for the Colonies whether the Governor of Kenya Colony has arranged for another inquiry into the problem of a labour supply for the settlers of the Colony; by whom this inquiry will be conducted; whether the inquiry will be conducted in secret; and, if so, why?
    The SECRETARY of STATE for the COLONIES (Mr. Amery: I have no information as to the inquiry beyond what has appeared in the local Press, from which I gather that the scope of the inquiry is to include net only the supply of

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    labour but its economical use and the labour demands of various industries. It is stated that the Chairman is the Chief Native Commissioner.
    Lieut.-Commander KENWORTHY: Has the right hon. Gentleman any information as to whether this inquiry is secret or not?
    Mr. AMERY: No, Sir; I have given the hon. and gallant Member all the information I have.
    Lieut. - Commander KENWORTHY: Will the right hon. Gentleman give an assurance that the inquiry will not be secret, but that the fullest possible publicity will be given to it?
    Mr. AMERY: I have no doubt I shall hear from the Governor-General. I do not know whether the inquiry necessitates publication, but I will inquire.
    Sir ROBERT HAMILTON: Does not the right hon. Gentleman realise the importance of having the fullest possible inquiry into this matter, and cannot he lend his assistance to ensuring that it is a full inquiry
    Mr. AMERY: I am sure that everything which is desirable will be done.

    GAMBIA (CATTLE DISEASE).
    Mr. H. WILLIAMSasked the Secretary of State for the Colonies whether there is now a veterinary officer in the Colony of Gambia; and, if not, whether one will be appointed with a view to dealing with the repeated epidemics of pleuro-pneumonia amongst the cattle in the Colony?
    Mr. AMERY: The answer to the first part of the question is in the negative. Recent reports from the travelling Commissioners from the various provinces in the Colony show that, while a few outbreaks of cattle disease occurred during the past year, the chiefs and headmen were alive to the necessity of taking all possible precautions. The Governor may be relied upon to recommend the appointment of a veterinary officer if he considers it necessary, and should he do so his request would be complied with.
    Mr. WILLIAM: Is the right hon. Gentleman aware that in 1917, 80 per cent. of the cattle were destroyed by an outbreak. There was an outbreak in 1522, and in 1923 80 per cent. of the cattle in the north of the province were destroyed. In these circumstances can he take steps for the appointment of a veterinary officer?
    Mr. AMERY: I am sure the Governor is well aware of the facts, and, if he makes any recommendation, I shall be only too anxious to comply with it.

    MAURITIUS (CIVIL SERVICE).
    Mr. R. MORRISONasked the Secretary of State for the Colonies whether he has yet received a collective memorial against the discrimination shown against Mauritian members of certain sections of the Civil Service, signed by the civil servants of Mauritius and handed to the secretary for transmission to him; and whether he intends to take any action in the matter?
    Mr. J. HUDSONasked the Secretary of State for the Colonies whether the protest, signed by all the civil servants of Mauritius, and handed to the Colonial Secretary of Mauritius for transmission to himself, has now been received; and, if not, whether lie will take steps to inquire what has become of this protest against certain appointments in the Civil Service?
    Mr. AMERY: I have no knowledge of the documents which the hon. Member mentions, but I have no doubt that the Governor will transmit to me in due course, with his observations, in accordance with the Regulations, any document addressed to me.

    FIJI (SCHOOL ACCOMMODATION).
    Mr. OLIVERasked the Secretary of State for the Colonies how many Government lower-primary schools there are in Fiji; how many children can be accommodated in these; how many Indian children there are in Fiji; and how much is spent annually on their education?
    Mr. AMERY: During 1925 there were 66 Government and assisted schools in Fiji, with an attendance of 5,182 pupils.

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    inquiry of the Colonial Government would be necessary to ascertain whether it would have been practicable to provide for a larger number of pupils in these schools. According to the 1921 Census returns the number of Indian children between the ages of five and 15 then in the colony was 13,116. It would be a matter of difficulty to separate expenditure on Indian education from other expenditure on education. The total expenditure on education was £26,151 in 1921, £28,956 in 1922, £25,322 in 1923, £27,103 in 1924, and £30,039 in 1925.
    Mr. OLIVER: Is it. not a fact that there is only one Government lower primary school in Fiji; that there are 24,000 Indian children there, and that only something like £400 has been spent annually for their education?
    Mr. AMERY: I cannot answer a definite question on that point, but my impression is that the suggestion contained in the question is wrong. There are not more than 13,000 school children, and I think the school facilities are considerably in excess of what the hon. Member states.

  IRAQ.

    MILITARY COMMITMENTS.
    Lieut.-Commander KENWORTHYasked the Secretary of State for the Colonies what reduction in our military commitments in Iraq he anticipates as a result of the signing of the agreement with Turkey on the Mosul question; and NV hat saving in expenditure he expects
    Mr. AMERY: The matter is under consideration, and I am not yet in a position to give details.
    Captain WEDGWOOD BENN: Can the right hon. Gentleman say whether any application for membership of the League will be put forward by Iraq?
    Mr. AMERY: I am not aware of any such intention.
    Lieut. - Commander KENWORTHY: When will the right, hon. Gentleman be in a position to answer the question with regard to the savings? That is the most important part of the question.
    Mr. AMERY: I have answered that. It is a matter which we are considering seriously at this moment.

    OIL ROYALTIES.
    Sir FREDRIC WISEasked the Secretary of State for the Colonies whether the British Government is interested in any way in the £500,000 paid by Iraq to Turkey for the royalties from the Turkish Petroleum Company?
    Mr. AMERY: So far as His Majesty's Government are aware, no decision has been reached by the Turkish Government to exercise their option under the recent exchange of Notes to capitalise their share of the Iraq Government's oil royalties for a sum of £500,000. Should the Turkish Government decide to adopt this course, no charge will fall upon the Imperial Exchequer.
    Sir F. WISE: Will the right hon. Gentleman be consulted if such an option be exercised?
    Mr. AMERY: I imagine the Iraq Government would consult us upon that matter.
    Lieut.-Commander KENWORTHY: If there is no money coming from the Treasury, where will the money come from, in view of the fact that this question arises in connection with the administrative cost of Iraq?
    Mr. AMERY: I have no doubt ways and means will be found of raising the money?

    MOSUL BOUNDARY TREATY (RATIFICATION).
    Mr. RAMSAY MacDONALD(by Private Notice) asked the Secretary of State for Foreign Affairs when he proposes to lay on the Table the Treaty with Turkey regarding Mosul and when he intends to have it ratified?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Austen Chamberlain): The White Paper, containing the terms of the Treaty recently signed at Angora, together with certain annexes thereto, was laid, in dummy, on the Table of the House on the 18th June, and it is hoped that copies will be in the hands of hon. Members to-day.
    Both the Turkish National Assembly and the Iraq Parliament have authorised the ratification of the Treaty forthwith; it is eminently desirable that the British ratification should be given at the earliest possible moment. Unless, therefore, the right hon. Gentleman desires a discussion on the Treaty in this House, His Majesty will be advised to ratify in a few days.

    MALTA PARLIAMENT.
    Sir GERALD STRICKLANDasked the Secretary of State for the Colonies whether he is aware that two seats in the Malta Parliament set aside for the trades union council have been kept vacant for two years in view of the proposal of legislation annulling this provision of the constitution by a Bill passed by casting vote; that the Imperial Law Officers declared this Bill never to have become an Act in default of a two-thirds majority required to alter the constitution; the dates on which the Law Officers' opinion was communicated to the Governor of Malta and by him to both Houses; if he is aware of the reasons for which those two seats have continued to be kept vacant notwithstanding the upholding by the Crown of the constitution; and will he ask the opinion of the Law Officers as to whether the proceedings of the Malta Parliament have been valid during the interference with the constitution on the plea of its amendment and in defiance of the Imperial Government since the decision, that a bare casting vote was not a two-thirds majority?
    Mr. AMERY: I am aware that under the Malta Constitution Letters Patent provision was made for two seats in the Senate to be filled by members representative of and elected by the Trade Union Council, and that there is as yet no Trade Union Council competent to elect them. A Bill to constitute such a council was passed by the Malta Legislature, but reserved for the Royal Assent, which the Law Officers have advised me cannot be given, as the Bill, not being passed by the requisite two-thirds majority, is invalid. The Law Officers' opinion to this effect was communicated to the Governor on the 9th January, but there has been further correspondence since, and I do not know at what date he communicated it to the Legislature. A final decision was not sent until the 2nd of this month. Pending the provision of legal means for filling these seats, they are still vacant. I do not propose to ask the Law Officers' opinion as suggested in the last part of the question, in view of Section 10 of the Letters Patent, which provides that the Senate shall not be disqualified from the transaction of business on account of any vacancies among the members thereof.

    FALKLAND ISLAND'S (WHALE FISHERIES).
    Sir G. STRICKLANDasked the Secretary of State for the Colonies how much revenue is estimated to be derived this year from the whale fisheries around the Falklands; whether, in view of the precedent set by the Straits Settlements in presenting the battleship "Malaya," steps will be taken to suggest that a destroyer may be provided from such portion of that revenue as is not required for local needs; and Will inquiries be made as to what other Crown Colonies have resources that might reasonably be devoted towards the maintenance of the Navy?
    Mr. AMERY: The revenue to be derived from whaling operations in or near the Dependencies of the Falkland Islands is estimated for the current year at £96,200. The surplus available after providing for the needs of local administration as credited, under the local law, to the Dependencies Research and Development Fund, from which is met all expenditure incurred on behalf of the "Discovery" Committee, in connection with the expedition at present being conducted by the Royal Research Ship "Discovery" and her auxiliary vessel the "William Scoresby." The fund stands at a figure not in excess of what may be required for this purpose, and I am not prepared to agree to the diversion of any portion of it to other uses. As regards the last part of the question. I think it would be preferable to leave the initiative in this matter to any Colony which may be able and willing to follow the precedent given by the Federated Malay States in the case of the "Malaya."

    RICE (EMPIRE PRODUCTION).
    Mr. RAMSDENasked the Secretary of State for the Colonies what is the quantity of rice produced in the Dominions, Crown Colonies, and Protectorates during the years. 1913 to 1925, respectively?
    Mr. AMERY: A return giving the particulars required by my hon. Friend is now in course of preparation. I hope to arrange for its publication in the OFFICIAL REPORT during the present week.

  BRITISH EMPIRE EXHIBITION.

    GUARANTEES.
    Mr. COUPERasked the Parliamentary Secretary to the Overseas Trade Department what was the total amount of guarantees for the British Empire Exhibition, and if all the guarantors have paid their guarantees?
    Mr. A. M. SAMUEL (Secretary, Overseas Trade Department): The total amount of the guarantees to the British Empire Exhibition was £2,108,556 8s. A call of 15s. in the pound has already been made, and I am informed by the liquidators that less than 1 per cent, of the amount called up remains to be collected.

    SALE.
    Colonel DAYasked the Parliamentary Secretary to the Overseas Trade Department the amount realised by the sale of the. British Empire Exhibition?
    Mr. DUNNICOasked the Parliamentary Secretary to the Overseas Trade Department whether he is able to inform the House of the price paid for the Wembley site; and whether he has satisfied himself as to the bona fides of the purchasers?
    Mr. SAMUEL: I am informed by the liquidators that immediately after the auction on the 15th June, an offer was made for the property which they decided to accept. A contract is now being prepared, and as soon as the contracts have been exchanged, the name of the purchasers and the amount of the purchase money will be given. I am confident that the liquidators will have taken all necessary steps to satisfy themselves as to the bona fides of the purchasers.
    Colonel DAY: Can the hon. Gentleman say when this contract will be signed?
    Mr. SAMUEL: If the hon. Gentleman will allow me, I would prefer to say nothing more at present.
    Mr. MACQUISTEN: Has the usual 10 per cent. deposit been paid?
    Mr. SAMUEL: I have not the slightest doubt that the gentlemen who are acting as liquidators will use every possible precaution to see that everything is done in the usual and proper way.
    Colonel DAY: If I put down this question on this day week, will the hon. Gentleman then be able to give a reply?
    Mr. SAMUEL: I cannot tell what may happen between now and this day week, and I am anxious not to interfere or to do anything which might impede a settlement.
    Mr. PENNY: Is it not the practice that no money passes until the contract has actually been signed and exchanged?
    Mr. SAMUEL: I think it is usual that one does not pay any money until one has signed the contract.

  AGRICULTURE.

    FOOD SUPPLY (HOME-GROWN STOCK).
    Mr. LOOKERasked the Minister of Agriculture what proportions of the beef, mutton, and pork requisite for the food supply of the country are supplied from stock reared in this country?
    The MINISTER of AGRICULTURE (Mr. Guinness): It is estimated that about 31 per cent. of the beef and veal, 36 per cent. of the mutton and lamb and 36 per cent. of the pig-meat consumed in Great Britain is supplied by home-bred animals.
    Mr. LOOKER: Is the right born Gentleman aware that if those who rear home-grown stock were assured of continuity of policy, as regards restrictions on importation of foreign meat, they would be encouraged to extend their activities and more fully meet the home demand?
    Mr. SPEAKER: That is rather a subject for Debate.

    SUGAR-BEET FACTORIES(SUBSIDY).
    Mr. A. V. ALEXANDERasked the Minister of Agriculture the aggregate number of hundredweights of refined sugar produced during the past year by the British sugar-beet factories and the actual amount of subsidy paid to them during this period on such sugar?
    Mr. GUINNESS: During the 1925–26 manufacturing season the quantity of white granulated sugar for direct consumption produced at the beet sugar factories was 897,892 cwts. In addition

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    128,513 cwts. of beet sugar were produced at the factories for further refining. The total subsidy paid to date in respect of last season's output of beet sugar is £1,002,382.
    Mr. ALEXANDER: Is the last figure given by the right hon. Gentleman exclusive of the subsidy they get from the preferential rate of Excise
    Mr. GUINNESS: That is the subsidy.

    RESEARCH INSTITUTES.
    Brigadier-General BROWN: asked the Minister of Agriculture whether it is the policy of the Ministry to encourage county councils to contribute to agricultural research institutes; and, if so, whether the Ministry is prepared to reimburse county councils to the extent of two-thirds of their contributions to approved agricultural research institutions as part of their agricultural education expenditure?
    Mr. GUINNESS: Ten local authorities already made grants in aid of the work carried out at certain research institutes, and my Department welcomes these contributions. The answer to the last part of the question is in the affirmative.
    Brigadier-General BROWN: asked the Minister of Agriculture what steps are being taken, through county agricultural committees or other agencies, to disseminate to farmers and smallholders the knowledge of crop cultivation gained by research institutes at Rothamsted and other places, and the knowledge of milk and dairying researches at Shinfield, Reading; and whether the facilities given to various bodies of agriculturists from time to time to visit these institutes for instructional purposes are being increasingly taken advantage of or not?
    Mr. GUINNESS: The results of the work of agricultural research institutes are brought before farmers and smallholders through the agency of the staffs of the county councils and agricultural colleges by means of lectures, visits to research stations, and publications. A full description of the system and the agencies employed will be found in the Report of the Intelligence Department of the Ministry for 1921–24, and in particular on pages 13 and 14. The
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    numbers of farmers and others who visit research stations have very greatly increased in recent years.

    DRAINAGE GRANTS.
    Mr. NOEL BUXTONasked the Minister of Agriculture the number and total amount of the grants made to drainage authorities under the drainage grants scheme of 1926?
    Mr. GUINNES: Up to the present four schemes have been formally sanctioned for a total grant of £3,480, while four other schemes have been provisionally approved for grants amounting in all to £2,216. Applications for grants in the case of 22 further schemes to be carried out at a total estimated cost of approximately £62,000 are under consideration, and other schemes are known to be in preparation.
    Mr. BUXTONCan the right hon. Gentleman say roughly what is the area affected by these grants?
    Mr. GUINNES: Perhaps the right hon. Gentleman will put down an unstarred question.

    SMALL HOLDINGS.
    Mr. BUXTONasked the Minister of Agriculture the number of small holdings and the total area held by civilians and ex-service men, respectively, under county councils in England and Wales?
    Mr. GUINNES: As the reply is rather long, and contains a number of figures, I propose, with the right hon. Gentleman's permission, to circulate it in the OFFICIAL REPORT.
    Following is the reply :
    The latest returns in the Ministry's possession indicate that in July, 1925, there were on small holdings provided by county councils and councils of county boroughs in England and Wales under the land settlement scheme: 14,365 ex-service men occupying 217,271 acres; 1,845 civilians occupying 24,044 acres. In addition, there. were 13,270 men occupying 189,045 acres provided by councils during the period 1908 to 1918, but I have no information as to how many of these holdings are occupied by ex-service men. Of the pre-War holdings that have been relet since 1918, 1,983 with an acreage of 28,203 acres have been let

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    to ex-service men, and 492 with an acreage of 7,999 acres to civilians. More recent returns are at present being tabulated, but they are not likely to show any considerable variation from the figures I have quoted.

    FISHERIES (BROADCAST LECTURES).
    Mr. HARRISON: asked the Minister of Agriculture the number of lectures on fish he has arranged to be broadcast; the dates on which the lectures will take place; and the subject matter of such lectures?
    Mr. GUINNESS: A lecture on "Life in the Sea at Midsummer" was given on the 18th instant. Provisional arrangements have been made with regard to a lecture on shell-fish, and others are under discussion. I am not yet able to announce the dates of these lectures.
    Mr. HARRISON: Will the right hon. Gentleman consider having one of these lectures given which will describe the life of the fishermen, the dangers of their calling, and the fact that there is a higher percentage death-rate among them than even in the mining industry?
    Lieut. - Commander KENWORTHY: And they cannot get any coal at present.

    SALE OF HOUSES, IRLAM.
    35. Mr. J. HUDSONasked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, the price at which the houses at Irlam, near Manchester, which were originally erected by the Munitions Department, and afterwards transferred to His Majesty's Office of Works, were sold; and whether any Clause was inserted in the agreement to sell restricting the rents to be charged in respect of these houses?
    Captain HACKING (for The FIRST COMMISSIONER of WORKS): The sale price cannot be exactly stated, as the estate was one of a number sold at the same time as one transaction. The approximate price may be put at £40,500. The answer to the second part of the question is in the negative.

    CHINA (VIOLATION OF INTER-NATIONAL AGREEMENTS).
    Mr. FOOT MITCHELLasked the Secretary of State for Foreign Affairs whether, in view of the violation of international agreements, such as the raiding of the Salt Tax, the murders of British subjects, the serious position of British shareholders who have invested their savings in the railways in China, and the ineffectiveness of diplomatic remonstrances, the Government will consider the desirability of taking further action, international or otherwise, to enforce the observance by China of her obligations and undertakings?
    Sir AUSTEN CHAMBERLAIN: For the general attitude of His Majesty's Government at the present juncture, I would refer the hon. Member to an answer I returned to the hon. Member for South-East Essex (Mr. Looker) on the 14th of June, I am still in close consultation with His Majesty's Minister, Peking, as to measures to meet the attack on the salt administration at Tientsin, and every effort is being made to investigate the circumstances of the two recent murders of British' subjects, in order that the responsibility for them may be fixed.
    Mr. MITCHELL: Will the right hon. Gentleman suspend the tariff and other negotiations with the so-called Chinese authority until such time as existing Treaty rights are respected?
    Sir A. CHAMBERLAIN: The tariff negotiations are being conducted by several Powers besides this country, and it is very desirable, if possible, that the Powers should act in harmony.

    IRON AND STEEL INDUSTRY.
    Sir WILFRID SUGDENasked the Minister of Labour what action he proposes to take in respect to the iron rollers, engineers and blast furnace workers in Durham who have been compelled to cease work owing to the coal shortage?
    The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Betterton: In so far as the stoppage is due to coal shortage and not to voluntary

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    withdrawal of labour or a trade dispute, unemployment benefit would normally be payable.
    Sir W. SUGDEN: Will the hon. Gentleman ascertain if it is not possible to offer the same generous terms as have been offered to the miners, so that men of the type of David Holmes, men who have led in the engineering movement as trade union leaders, may have an opportunity of earning their bread?
    Sir W. SUGDEN: asked the Prime Minister if, in view of the fact that engineers, shipworkers and blast furnace men are being put into unemployment by reason of the shortage of coal, and in view of assistance given to the coal workers from abroad, he will consider the possibility of taking reparation payments in coal for the purpose of getting the shipbuilding, engineering and iron rolling industries in operation again?
    The PRIME MINISTER (Mr. Baldwin): This country is receiving its full share of reparation in sterling through the Reparation Recovery Act procedure. This is, I consider, a much more expeditious method than to negotiate reparation payments in kind.
    Sir W. SUGDEN: Is not my suggestion more facile and acceptable? Considering that the shipbuilding industry is a key industry, and that we have only three weeks' supply of food in this country, would not the coal be worth more than the money at the present time?
    The PRIME MINISTER: Perhaps my hon. Friend does not realise that any change in the form of reparation would be a matter of negotiations with the German Government, that that in itself would take some time, and that it would he late in the autumn before any of these receipts could arrive in England.

  GENERAL STRIKE.

    RAILWAY CLEARING HOUSE.
    Colonel APPLINasked the Minister of Labour whether he is aware that the men employed in the Railway Clearing House, Seymour Street, who came out on the general strike, but returned to work shortly afterwards, have now been placed on a three-day week to make room for
    20
    strikers who remained out all the time and who have now been reinstated on a three-day week and whether he will take steps to ask the railway companies concerned to carry out the pledge given by the Prime Minister that no man who voluntarily returned to duty before the end of the strike should be victimized?
    Mr. BETTERTON: With regard to the first part of the question, I would refer to the reply given to the hon. and learned Member for West Leyton (Mr. Cassels) on 18th June. With regard to the second part, I do not think the arrangements are such as to justify intervention on the ground suggested.
    Colonel APPLIN: Is the hon. Gentleman aware that many of these clerks left their work for only a few hours, and when they found that the strike was illegal returned at once to duty?
    Mr. BETTERTON: That suggestion was substantially that contained in the question put the other day, and my right hon. Friend's answer was that he had no authority to intervene.
    Mr. MACQUISTEN: Are these-railway directors who have let down their friends not more dangerous enemies to industrial Peace than the Communists actually are?

    MR. G. H. TAYLOR, HUDDERSFIELD (INJURY).
    Mr. J. HUDSONasked the Home Secretary whether he is aware that on the evening of 10th May Mr. G. H. Taylor, of Rashcliffe, Huddersfield, was seriously injured in an attack made on him by a special constable, though Mr. Taylor was guilty of no offence, as his subsequent release after examination by the police indicated; and whether he will consider making to Mr. Taylor any compensatory or compassionate grant for the loss and injury he received?
    The SECRETARY OF STATE for the HOME DEPARTMENT (Sir William Joynson-Hicks: I have had a full report on this ease from which it appears that on 10th May a large and disorderly crowd was making a hostile demonstration against the volunteer omnibus drivers. Taylor was a member of the crowd and received injuries—not of a serious nature—in the course of a struggle in which a special constable was forcibly thrown to the ground and kicked. Taylor was not prosecuted as the chief constable thought his case would be met

    21
    by a caution. Taylor's claim has been considered by the Huddersfield Police Authority, who have repudiated liability. I tan find no ground for action on my part.
    Mr. HUDSON: Is the right hon. Gentleman aware that this man Taylor was not a member of the crowd at all? He was struck by the special constable in his effort to get out of the crowd?
    Sir W. JOYNSON-HICKS: If he was not a member of the crowd, I do not see how on earth he could have been assaulted. He must have been there.
    Mr. HUDSON: My point is this: Is the right hon. Gentleman aware that he was not with the crowd at the time the attack was first made on them by the special constables? He was merely a passer-by in the street?
    Sir W. JOYNSON-HICK: I cannot say that he was there at the first moment, but that he was in the crowd when the special constable was knocked down and kicked is certain. If he had actually knocked the special constable down or kicked him, he would no doubt have been prosecuted. I do not suggest it; I suggest he was a member of the crowd.
    Mr. HUDSON: Does the right hon. Gentleman insist that there is some evidence in being that this man had any part in the attack on the special constable?
    Sir W. JOYNSON-HICKS: No doubt had he actually knocked the special constable down he would have been prosecuted. In the general melee, after the special constable had been knocked down and kicked, this man was hit presumably with a truncheon.
    Mr. HUDSON: What ground was there for issuing a caution to this man?
    Sir W. JOYNSON-HICKS: I think he was arrested, and it was a question whether the Chief Constable should prosecute him or not. He came to the conclusion that it would be sufficient if he cautioned him.
    Commander WILLIAMS: Was the special constable hurt badly.
    Sir W. JOYNSON-HICKS: He was hurt, but not seriously.
    Mr. DUNCAN: Is it not a fact that this particular man was there by appointment to meet another man? [Laughter.] I am serious, Mr. Speaker, in putting this question, because I think it is important. Is it not a fact that this man had an appointment with another man at this particular period, and that the crowd came to where this man was?
    Mr. SPEAKER: I do not see how the Home Secretary can possibly know whether or not the man had an appointment.
    Mr. DUNCAN: But, Mr. Speaker, this particular man—[HON. MEMBERS: "Order!"]

    CIVIL SERVANTS,
    Sir CHARLES OMANasked the Financial Secretary to the Treasury whether he will consider the refraining of the Regulations under which the Whitley Councils of the Civil Service are constituted by providing that only persons actually in the service of the Crown should be eligible to represent their colleagues on the council, in view of the action of non-service members of the staff side of the Whitley Council during the general strike?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Ronald McNeill: I regret that at the moment I am not in a position to add anything to the replies given to previous questions on this subject. The whole matter is receiving close attention.
    Mr. W. THORNE: Can the hon. Gentleman say how many civil servants withheld their labour during the nine days' stoppage?
    Mr. McNEIL: I could not say that without notice.

    THAMES BRIDGES (ROYAL COMMISSION).
    Colonel DAYasked the Prime Minister if he will consider the appointment of a Commission to consider the whole matter of Thames bridges?
    The PRIME MINISTER: I would refer the hon. and gallant Member to the answer which I gave on Wednesday last in reply to a question by my hon. Friend the Member for South Kensington (Sir W. Davison).

    INDUSTRIAL DISPUTES (COMPULSORY ARBITRATION).
    Mr. DIXEY: asked the Prime Minister whether he will consider the question of introducing legislation to provide for preliminary compulsory arbitration in all industrial disputes?
    The PRIME MINISTER: I should be prepared to consider favourably any proposals designed to avoid stoppages of work, but there is no reason to believe that compulsory arbitration would be found practicable in this country.

    MINISTRY OF DEFENCE.
    Rear-Admiral SUETER: asked the Prime Minister whether he can arrange to give a day for a Debate on the question of creating a Ministry of Defence for the better co-ordination and more economical administration of the three fighting services?
    The PRIME MINISTER: I would refer my hon. and gallant Friend to what I said on this subject on the 15th April, arising out of the statement on Business, and also to the Debate on the Report stage of the Air Estimates on the 8th March. The matter can be raised on the appropriate Vote on an allotted Supply day.

    LEAGUE OF NATIONS (WITHDRAWAL OF BRAZIL).
    Lieut.-Commander KENWORTHYasked the Secretary of State for Foreign Affairs whether he has any statement to make on the withdrawal, or the contemplated withdrawal, of certain Powers from the League of Nations?
    Sir A. CHAMBERLAIN: I have now received formal notification of Brazil's withdrawal from the League. I can only express my sincere regret that the Brazilian Government should contemplate resignation, and my hope that they may yet re-consider their intention to cut themselves adrift from this great and increasingly powerful international organisation to the success of which they have made a large contribution in the past and in which their influence would be equally assured in the future.
    Lieut. -Commander KENWORTHY: Has the right hon. Gentleman any official
    24
    information as regards the Spanish position-on the League
    Sir A. CHAMBERLAIN: No. I have no official notification, but I am afraid that the Spanish Government intend to take a similar step, and my regret is at least equal.
    Colonel DAY: Will the right hon. Gentleman make a statement to the House as soon as he hears anything definite with regard to Spain?
    Sir A. CHAMBERLAIN: I imagine that whenever a definite notification is made, it will become a matter of public information at once, but definite, formal notification has not yet reached us.
    Mr. W. THORNE: Can the right hon. Gentleman say why Brazil left the League?
    Sir A. CHAMBERLAIN: Brazil leaves because she not assured of a permanent seat upon the Council.
    Colonel DAY: Does that apply also to Spain?
    Sir A. CHAMBERLAIN: Spain has not yet taken the step of officially notifying the Secretariat of the League that she withdraws.

  RUSSIA

    DISARMAMENT.
    Lieut-Colonel HENEAGE: asked the Secretary of State for Foreign Affairs if he has any statement to make as to the reasons for the Russian Soviet Government's refusal to join in a general conference on disarmament?
    Sir A. CHAMBERLAIN: The conference on disarmament, has not yet been summoned, and I presume the hon. and gallant Member refers to the Preparatory Committee on Disarmament at Geneva. The reason given by the Soviet Government for not accepting the invitation of the League to take part in the work of this committee was the difference which had arisen between the Soviet Government and the Government of the Swiss Confederation.
    Mr. RENNIE SMITH: Does the right hon. Gentleman propose to make any further effort to induce them to join in further negotiations?
    Sir A. CHAMBERLAIN: If I thought that any action I might take was likely to cause the Soviet Government to reconsider their decision, I should be glad to make representations to them, but I do not think they would be likely to listen to my counsels on that point, and the terms of their reply to the League's invitation were not encouraging.
    Mr. SMITH: In view of the objections taken by Russia to a. Conference in Geneva, will not the right hon. Gentleman take steps to suggest the calling of this Conference in another place?
    Sir A. CHAMBERLAIN: No, I cannot agree to that. The seat of the League is at Geneva, and if, whenever any Government has cause of disagreement with the Government of the Swiss Confederation, the meetings of the League are, at the behest of that Government, to be held elsewhere, I do not suppose that the Swiss Confederation or any other nation would be able to give the League a home, for the League would become an instrument in the diplomacy of every foreign Power which might happen to have a controversy with the Government of the country in which it was sitting.
    Captain BENN: In view of the fact that the complaint of the Russian Government is that one of their emissaries was murdered in Switzerland, will not the right hon. Gentleman consider the advisability, in the interests of the Disarmament Conference, of suggesting another venue, which has often been done in the case of other Commissions?
    Sir A. CHAMBERLAIN: No. I do not know whether the hon. and gallant Gentleman has in mind the correspondence which passed between the League of Nations and the Soviet Government, and with the Swiss Government, in which they guaranteed to the Soviet. Government, as to all Governments which came there, the measure of protection which they accord to any one. It is quite impossible, I think, that I should suggest to the League that, because a particular Government has a dispute with the Swiss Government, therefore we should move to another place.
    Several HON. MEMBERS
    Mr. SPEAKER: This is becoming a Debate.
    Lieut.-Colonel HENEAGE: On a point of Order. May I not ask a supplementary question, Mr. Speaker, in view of the fact that it was my question which was on the Paper, and that I have risen several times to ask a supplementary question?
    Mr. SPEAKER: Lieut - Colonel Heneage.
    Lieut.-Colonel HENEAGE: I want to ask if the right hon. Gentleman has any reason to suppose that the Russian Government have any intention whatsoever of disarming.
    Mr. SPEAKER: The Minister cannot answer for other Governments.

    ARCOS TRADING COMPANY.
    Commander OLIVER LOCKER-LAMPSONasked the Secretary of State for Foreign Affairs how many members or representatives of Arcos and its subsidiary companies are now entitled to the right of entry without examination; and what trading organisations of any other foreign country enjoys similar privileges in the United Kingdom?
    Sir A. CHAMBERLAIN: No members or representatives of Arcos, or of any company subsidiary to or connected with it, have any such right. The same is true of all other foreign trading organisations.
    Sir WILLIAM DAVISON: Can the right hon. Gentleman say how many representatives of Russia are now employed in this country by. Arcos, approximately?
    Sir A. CHAMBERLAIN: I do not know, but I think that I could get the information if notice were given. My head is sufficiently packed with more important information.
    Mr. A. V. ALEXANDER: Can the right hon. Gentleman at the same time give the number of British subjects employed by Arcos?
    Mr. THURTLE: On a point of Order. In order to avoid breaches of the Rules, will you, Mr. Speaker, indicate to Members that they ought not to make a practice of putting questions on the Order Paper, or suggestions in questions, which have no basis in fact?
    Mr. SPEAKER: I wish I could ensure that, but I must rely on all hon. Members using their best efforts to verify their statements.
    Commander O. LOCKER -LAMPSONasked the Home Secretary how many persons employed by Arcos in England are of Russian nationality?
    Sir W. JOYNSON-HICK: I am informed that the number on 1st January was 178, and since then visas have been authorised for six more.

    DEBATE.
    Mr. DIXEY: asked the Prime Minister whether, in connection with the Debate on the question of Russian money coming into this country and other questions with regard to Russia, he will allow a free. vote of the House to be taken?
    The PRIME MINISTER: No, Sir.

    REGISTRATION IN GREAT BRITAIN.
    Sir P. RICHARDSON (for Sir H. BRITTAIN): asked the Home Secretary whether he can give the House the number of registered Russian aliens in this country; and whether the number has increased or decreased during the past 12 months?
    Sir W. JOYNSON-HICKS: The number of aliens registered as Russians at the end of March last was 86,824; approximately 2,000 less than on the same date in 1925.
    Mr. THURTLE: Can the right hon. Gentleman say how many of these Russians are emissaries of the late Tsarist règime?
    Sir W. JOYNSON-HICKS: It is quite impossible for me to give that information.

    COMMUNIST DOCUMENTS.
    Mr. DIXEY: asked the Home Secretary whether, prior to the Debate on Russia, he will publish all the documents secured at the raid of various Communist offices during the past few months by the police, so that Members can have the benefit of these documents for debate?
    Sir W. JOYNSON - HICKS: Every effort will he made to publish the collection of documents, which has been prepared, in time for the Debate on Friday.
    Colonel GRETTON: Is there any hope or expectation as to when they will be finally issued?
    Sir W. JOYNSON-HICKS: Yes: the list has been sanctioned by all the Departments. They are in proof, and have gone to the Stationery Office. It has been pressed upon them to do the utmost in their power to get them out.

    WEST HAM BOARD OF GUARDIANS.
    50. Mr. W. THORNE: asked the Minister of Health if he is aware that the West Ham Board of Guardians a few weeks ago applied for a further grant of £434,000 and that, before his Department was willing to grant that amount, the Department insisted upon the board cutting down the relief and adopting the scale in operation by the Greenwich Board of Guardians; that that scale allows 24s. for man and wife, 4s. each child up to the age of six years, with a maximum of 49s. for a family of seven, plus an allowance of ls. 6d. for coal; that the West Ham Board of Guardians on Thursday rejected the proposals; if he can state whether he has received any communication from the West Ham Board of Guardians since their decision on Thursday, 17th June; and if he can now state what he intends doing about the matter?
    The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood): My right hon. Friend is aware of the application for a loan mentioned in the first part of the question, and it is the fact that he has thought it necessary to require a substantial reduction in the rate of the guardians' expenditure. He understands that the scale adopted by the Greenwich Board of Guardians was suggested by a West Ham guardian in substitution for their present scale and is informed that that scale is correctly described in the question. The West Ham Guardians have written to my right hon. Friend again declining to make any substantial reduction in their expenditure, and he has informed them that unless this decision is reconsidered in the course of the present week he will have to apply to Parliament for further powers to deal with the situation which will arise.
    Mr. THORNE: Is the hon. Gentleman aware that the Greenwich Board of Guardians have rescinded their previous decision and have refused to operate such a scale, which they regard as inhuman?
    Sir K. WOOD: I have seen some such decision mentioned in the papers if it lie so, the Greenwich Board of Guardians have broken their undertaking and word to the Minister.
    Commander WILLIAMS: Is the hon. Gentleman aware that the rates in this district, owing to bad and unfair administration, are very inhuman indeed on the ratepayers?
    An HON. MEMBER: Do you live there?

    ROYAL NAVY (ESTABLISHED CHARGEMEN, PENSIONS).
    Major Sir BERTRAM FALLEasked the Parliamentary Secretary to the Admiralty if he is aware that, despite A.M.O. of 5th February, 1926, relative to the emoluments of established charge-men, the pension as assessed has not yet been given to those established charge-men who have taken their discharge since January, 1926: and if he will inquire into the matter?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Mr. Davidson): I regret that it has not yet been practicable to grant their full pensions to all the employ és referred to by the hon. Member. Of a total of approximately 40 cases concerned, however rather more than half have received revised awards based on emoluments including charge pay, and I hope that it will shortly he possible to issue full awards in the remaining cases. The men concerned have, of course, had the pensions due in respect of their substantive pay—it is the comparatively small additional pension in respect of their charge pay that is outstanding.
    Sir B. FALLE: What does my hon. Friend think is the reason for this delay —is it clerical?
    Mr. DAVIDSON: Yes, it is clerical, and also we are in correspondence with the Treasury.

    POST OFFICE (LETTERS LOST IN TRANSIT).
    Sir WALTER de FRECEasked the Postmaster-General if his Department has any record which shows the number of letters lost in postal transit during the last three months?
    The ASSISTANT POSTMASTER-GENERAL (Viscount Wolmer: The answer is in the negative.

    TEACHERS TRAINING COLLEGE COURSE.
    Mr. HARRISasked the President of the Board of Education whether he is aware that the Departmental Committee on the Training of Teachers recommended that, except for graduates or teachers already certificated, the training college course should extend over not less than two years, and that the new Regulations for the training of teachers, 1926, reduce the two years to one in the case of students who have passed a second school examination only; whether these Regulations will permit students of 19 years of age passing from training colleges to teach in schools, whereas the existing Regulations require that the age should be 20; and whether the purpose of these new Regulations is to reduce cost?
    The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Duchess of Atholl): I am aware of the recommendation in question. As regards the regulation I would point out that it is permissive in character, and does not preclude a student from taking a two-year course. The suggestion made in the second part of the question may be applicable in exceptional cases, but normally, I think, the age at which a student begins work as a teacher will be found to be about 20 or 21, and the first year of service will be probationary. The educational arguments for the change are discussed in the Report of the Committee and in the Memorandum of Dissent. They appeared to the Board to be strong enough to justify the admission of this alternative to the existing practice. The financial effect is doubtful; it was certainly not the reason for the Board's decision.
    Mr. HARRIS: Does not the Noble Lady realise that the result of this will be to discourage the students taking a longer course, and that the effect upon the schools will be that the teachers will be less trained? If there is no economy, what advantage can it be to the State for the students to take the lesser course?
    DUCHESS of ATHOLL: The hon. Gentleman forgets that no inducement is offered the students to take the shorter course. It is entirely permissive. The hon. Member will remember that it was recommended in the Memorandum of Dissent, which was signed by several persons of considerable experience, and that one of the arguments put forward in its favour was that it would encourage students to take a full course at a Secondary School.

    POOR PERSONS (LEGAL AID).
    Mr. VIANT: asked the Secretary of State for the Home Department whether it is his intention to introduce legislation based on the first Report of Mr. Justice Finlay's Committee on Legal Aid for the Poor, or whether it is proposed to wait until the issue of the second Report?
    Sir W. JOYNSON-HICKS: I propose to await the issue of the second Report, when the matter, so far as legislation is required, can be dealt with as a whole. Effect can be given without legislation to some of the recommendations of the Committee in their first Report, and these are now under consideration.

    WITHDRAWN CHARGE (MR. TAYLOR, CARDIFF).
    Mr. A. V. ALEXANDER: asked the Home Secretary whether, in view of the fact that the Director of Public Prosecutions has decided to withdraw the charge against Mr. Taylor, of 44, Albany Road, Roath Park, Cardiff, the secretary of Homekeepers' Federation, Limited, he is aware that this man has been remanded for over four months; and whether he proposes to take steps to prevent such delays in the administration of justice?
    Sir W. JOYNSON-HICKS: Mr. Taylor, of the Homekeepers' Federation, was arrested on 4th February, was released on
    32
    bail on 5th February, and remained on bail until 11th instant. The justices referred the matter to the Director of Public Prosecutions on 19th April; the extensive inquiries involved could not be completed before 28th May. On that date, the justices were informed, through their clerk, of the Director's decision, which was announced on 11th instant. The exceptional circumstances of the case do not afford grounds for general action.
    Mr. ALEXANDER: Is the right hon. Gentleman aware that this unworthy charge was kept hanging over this man's head for over four months, and then withdrawn, and that his counsel was not allowed to make any statement on his behalf before the Court?
    Sir W. JOYNSON-HICKS: I was not aware of the last statement, but I think it has been made quite clear to the.hon. Gentleman that, so far as I am concerned, we have done all we can. The Justices referred to the question to the Public Prosecutor and as soon as he went into it he cleared this man's character, and it was directed that the charge should be entered "withdrawn."
    Mr. ALEXANDER: Do the Government propose to indemnify him?
    Sir W. JOYNSON-HICKS: I am afraid that is not possible.

    REFORMATORY AND BORSTAL INSTITUTIONS.
    Mr. SHEPHERDasked the Home Secretary the number of boys and girls, respectively, in the reformatory and industrial schools of the country on 31st March of 1921, 1922, 1923, 1924, 1925, and 1926: and similar figures in respect of Borstal institutions?
    Sir W. JOYNSON-HICKS: I will circulate in the OFFICAL REPORT the information asked for by the hon. Member.

    EXCESS PROFITS DUTY.
    Colonel Sir ARTHUR HOLBROOK: asked the Chancellor of the Exchequer whether he will consider the desirability of establishing the principle that, so long as excess profits duty is collected, taxpayers shall be entitled to recover duty

    33
    paid in error, and also to put forward applications for reduction in outstanding claims where such claims can be shown to be excessive?
    Mr. R. McNEILL: As my hon. and gallant Friend is aware, the Finance Bill of this year contains a provision for terminating the right both of the taxpayer and the revenue authority to reopen computations of Excess Profits Duty liability. I am unable to accept the suggestion now made which, while operating solely for the benefit of the taxpayer, would delay for an indefinite period the closing down of the duty.
    Sir A. HOLBROOK: Should not the right of appeal be extended so long as the tax was being collected?
    Mr. McNEILL: That would not follow at all. After the question of liability is settled, it may take some time to make the collection.

    INTER-ALLIED DEBTS.
    Sir W. SUGDENasked the Chancellor of the Exchequer what sums have been paid to the Treasury during the year 1925–26 by France, Italy and Belgium, capital and interest, of the sums owing to Great Britain, and what interest is charged to each country upon such debt?
    Mr. McNEILL: No cash payment from France was received by the Treasury during 1925–26 in respect of the War Debt of France to this country; interest at Bank of England rate (now 5 per cent.) is being added to the debt as it accrues. Italy's War Debt has been funded on the terms set forth in the Agreement of 27th January, 1926 (Command Paper 2580); the sum of £2,000,000 was paid to the Treasury under this Agreement during 1925–26. The War Debt of Belgium was transferred to Germany by the Treaty of Versailles, and approximately £1,000,000 was received by the Treasury in 1925–20 out of the Dawes annuities in respect of this debt. The Reconstruction Debt of Belgium was funded as from 1st January, 1926, and will be repaid in 30 years with interest at 5 per cent. The sum of £344,575 was received during 1925–26.
    Sir W. SUGDEN: May I ask whether representations have been made to these national creditors that they should pay in kind, sending us, for example, coal, to enable our industries to proceed?
    Mr. McNEILL: I must have notice of that question.
    Mr. SNOWDEN: Did the right hon. Gentleman say in his reply that this cash came from France last year?
    Mr. McNEIL: No cash payment was received from France during 1925–26 in respect of the War Debt.
    66. Sir F. WISEasked the Chancellor of the Exchequer the amount of the June payment of interest and capital on account of the external debt to the United States?
    Mr. McNEIL: The sum of $67,950,000 was paid.to the United States Government in respect of interest on 15th June. No payment in respect of capital was due on that date.

    TRADE FACILITIES ACT (GUARANTEES).
    Sir F. WISEasked the Chancellor of the Exchequer if, in view of the amount guaranteed under the Trade Facilities Act, he will say how much of the guarantee is a first charge on the properties and how much is a second charge?
    Mr. McNEILL: The total amount guaranteed is £66,883,780. Cases in which there is any charge ranking ahead of the Government security account for about £15,750,000 or less than a quarter of the total. Of this figure of £15,750,000, £12,500,000, or 80 per cent., represents guarantees given in respect of debenture stocks of the London Electric Railway, City and South London Railway and the Central London Railway.
    Sir F. WISE: Did I understand the hon. Gentleman to say that three-quarters of the amount are first charges on the security?
    Mr. McNEILL: I said so.

    ENEMY ACTION CLAIMS.
    Mr. HORE-BELISHA: asked the Financial Secretary to the Treasury how many claims for compensation to civilian war sufferers have been settled; the amount of money that has been paid; and its proportion to the sum which

    35
    Germany has paid to Britain as reparation for the damage suffered by civilians during the War?
    Mr. McNEIL: Up to the present date £4,889,560 has been paid in respect of 70,100 claims for compensation in respect of war damage. The total reparation receipts of the United Kingdom to date amount to about £30,000,000. The claims of individuals represent about 1 per cent. of the total claims of the United Kingdom, the balance representing Government claims in respect of war pensions, separation allowances, etc. Accordingly the compensation paid in respect of these individual claims (£4,900,000) is more than 16 times the appropriate proportion of reparation receipts, which would be about £300,000.

  TRANSPORT.

    ROAD FUND.
    Mr. HARRISONasked the Minister of Transport whether the total number of commitments upon the Road Fund for the year 1925–26 is greater than those of the year 1924–25; and, if so, by how much?
    The MINISTER of TRANSPORT (Colonel Ashley): The number of grants made would afford a misleading comparison, but the provision for purposes other than schemes expedited for the relief of unemployment was approximately £12,000,000 in 1924–25, as compared with £14,000,000 in 1925–26.

    PRIVATELY-OWNED OMNIBUSES.
    Colonel APPLINasked the Minister of Transport whether, in view of the Prime Minister's promise with regard to those who came forward to assist the country during the general strike, and his own undertaking with regard to privately-owned omnibuses which kept running, he will issue instructions that privately-owned omnibuses that replaced regular London General Omnibus Company's omnibuses on certain routes during the strike shall not be penalised now by being relegated to 'inferior and non-paying routes?
    Colonel ASHLEY: I am afraid I do not know to what undertaking with regard to privately-owned omnibuses which kept running during the general strike my hon.
    36
    and gallant Friend refers. The position of all omnibus operators during the strike was the same, and their vehicles were operated on routes where there was the least likelihood of interference. After the strike all operators returned to the routes which they had been previously working, and I see no reason for making any alteration in the arrangements.
    Colonel APPLIN: Is the right hon. Gentleman aware that in the Debate on this subject he himself made the statement that these people would not be penalised in any way, and that privately-owned omnibuses would not be driven off the streets when the strike ended?
    Colonel ASHLEY: I said I was investigating the whole matter. What I am now doing is to see that the arrangements which existed just previous to the strike should continue.
    Mr. MACQUISTEN: Could not these voluntary men keep the routes they established their rights to by running on during the strike? May I have an answer to that question?
    Colonel ASHLEY: During the strike all omnibuses, whether owned by the General Omnibus Company, the independent owners, or others, were put on the routes which they were most fitted to run on and where there was the least interference. After the strike they went back to the routes on which they ran before the strike.
    Mr. MACQUISTEN: I wish to know why they are not allowed to keep the routes that they were on during the strike?

  TRADE AND COMMERCE.

    BRITISH MOTOR CARS (EMPIRE EXPORTS).
    Brigadier - General CHARTERIS (for Mr. RAMSDEN: asked the Parliamentary Secretary to the Overseas Trade Department the number and value of British-made motor cars and chassis exported to the Dominions, Crown Colonies and Protectorates for the first five months of the years 1925 and 1926, respectively?
    Mr. SAMUEL: The answer consists of a table of figures, and my hon. Friend will, perhaps, agree to its being circulated in the OFFICIAL REPORT.
    Following is the table:

    STATEMENT showing the NUMBER and VALUE of MOTOR CARS and CHASSIS (UNITED KINGDOM MANUFACTURE) EXPORTED during the PERIODS SPECIFIED and REGISTERED as CONSIGNED to BRITISH COUNTRIES OVERSEAS (including the IRISH FREE STATE)

    Description

    January-May, 1925.

    January-May, 1926.

    Number.

    Value.

    Number.

    Value.

    Motor Cars—complete.

    £

    £

    (a) Touring cars (including cabs).

    6,050

    1,428,721

    5,575

    1,192,152

    (b) Commercial vehicles (including motor omnibuses, motor fire engines and motor ambulances).

    636

    334,928

    359

    162,436

    Chassis for Motor Cars.

    (c) Net weight below 28 cwts.

    1,587

    253,026

    4,676

    605,706

    (d) Net weight 28 cwts. or over.

    825

    426,248

    822

    414,571

    LEIPZIG INTERNATIONAL INDUSTRIES FAIR.
    Sir PHILIP RICHARDSON (for Sir H. BRITTAIN): asked the Parliamentary Secretary to the Overseas Trade Department (1) whether, seeing that inquiries for British goods are constantly being received at the Leipzig International Industries Fair, his Department will consider the official recognition of a representative British section, following the example already set by Italy, Switzerland, Hungary, Czechslovakia, the United States of America, and other countries;
    (2) if he will consider the establishing of an official inquiry bureau at the Leipzig International Industries Fair similar to that already formed by the United States Government?
    Mr. SAMUEL: I will answer these questions together. I am not sure what the hon. Member has precisely in mind, but, generally speaking, I think it is desirable that His Majesty's Government should concentrate on strengthening and developing the British Industries Fair rather than on promoting a British Section at the Leipzig Fair. I will he glad to examine the desirability of instituting an official inquiry bureau at the Leipzig Fair, but it will also be necessary to take into account the question of the expense involved.

    POOR LAW RELIEF (THURNSCOE AND GOLDTHORPE).
    Mr. G. HURSTasked the Minister of Health if he is aware that the Doncaster Board of Guardians are insisting upon all applicants for relief from Thurnscoc and Goldthorpe walking to Doncaster every week for payment, and that this decision compels many applicants to walk long distances, some of them up to 15 miles; and, seeing that premises have been offered free of charge in the outlying districts, which are much nearer, will he cause such arrangements to be made as will obviate this hardship?
    Sir K. WOOD: My right hint. Friend has received a report upon this matter, and he understands that the arrangements are being revised.

    INTERNATIONAL TRADE UNION DELEGATES.

      LANDING PERMITS REFUSED.
      Mr. ARTHUR HENDERSON(by Private Notice) asked the Home Secretary whether he will state the reason for refusing admission to this country to Mr. J. Oudegeest and Mr. E. Fimmen, who are desirous of attending the International Labour Congress on Migration now sitting in London; whether he is aware that Mr. Oudegeest is the Secretary of the International Federation of Trade Unions, is a member of the

      39
      governing body of the International Labour Office at Geneva, and a member of several Commissions under the League of Nations, and that Mr. Fimmen was formerly the Secretary of the International Federation of Trades Unions, and is now Secretary of the International Transport Workers Federation; and whether, in view of the representative character of these two gentlemen and the purpose of their proposed visit to this country, he will reconsider his decision to prevent their attendance at the Congress in question.
      Sir W. JOYNSON-HICKS: My objection is not based on the character of the Congress now being held, or on the positions held by the two gentlemen in question: but information which reached me during the recent illegal strike satisfied me that both of them were trying to interfere with British trade and to arrange for our ships to be held up in foreign ports. I decided that it would not be in the interests of this country to allow them to come here, and so give them increased facilities for concerting any other plans of a similar character.
      Mr. HENDERSON: Are we to understand that this is a new form of reprisal, to be put into operation against bona fide trade unionists who are carrying out their duties in their own country?
      Sir W. JOYNSON-HICKS: The right hon. Gentleman must not understand anything more than I have said. I omitted to answer one question about Mr. Fimmen's connection with the International Federation of Trade Unions. A vote of censure was passed upon him by that federation, and he was dismissed two years ago as being too extreme. My information is quite clear that both these gentlemen took part, in conjunction with the Transport Workers' Union here, in causing British ships to be stopped from unloading on the Continent at a time of grave necessity, and I came to the conclusion that it was not desirable that those who have been acting as enemies of this country should receive the hospitality of this country.
      Mr. HENDERSON: The Home Secretary has stated the position with regard to Mr. Fimmen, but is he not aware that Mr. Oudegeest, who is the secretary of
      40
      the International Federation of Trade Unions, is regarded as one of the most moderate trade unionists in the international movement?
      Sir W. JOYNSON-HICK: I never like to be obstinate, but if the right hon. Gentleman cares to give me any information on the subject, I am always open to receive it. My information is quite definite that Mr. Oudegeest took part in the action I have mentioned, and unless the right hon. Gentleman has any information to the contrary, I must adhere to my decision.
      At the end of Questions—
      Mr. A. HENDERSON: I beg to ask leave to move the adjournment of the House in order to call attention to a definite matter of urgent public importance, namely, the action of the Home Secretary in curtailing the freedom of discussion of international questions, by refusing to permit the entry into this country of certain bona fide trade unionist representatives, for the purpose of attending an International Labour Congress on migration now sitting in London.
      Mr. SPEAKER: I am afraid this is not a Motion which I can put to the House. In the first place, it imports an argument into the Motion, which is quite irregular. Secondly, I find by the Statute that the Home Secretary is given a duty with regard to the Aliens Restriction Act, and it would be quite impossible, whatever the particular position of the two gentlemen concerned may be, to allow their importance to be differentiated from all other persons who come under this Act. The proper occasion to discuss the methods of the Home Secretary is in Committee of Supply.
      Mr. RAMSAY MacDONALD: With reference to your first, ruling, Mr. Speaker, surely I am right in assuming that your ruling involves us in this position that this House would never be able to raise, as a matter of urgency, the administration of the law by the Home Secretary, because that is the point that we wish to bring before you, the contention being that this matter is urgent because the Conference is meeting to-day, begins to-day, and therefore it is important for the reasons assigned. We wish to raise a question as to whether the Home Secre-

      41
      tary, in coming to the decision he has arrived at, is administering the law in a way which this House cannot overlook.
      Sir JOHN SIMON: On that point of Order, Mr. Speaker, may I respectfully ask you whether in accordance with your Ruling it is not possible to raise a question, if it be a matter of urgent public importance, even although it calls in review the exercise of a discretion such as the arrest of an individual or the deporting of an individual from one part of the country to another?
      Mr. SPEAKER: I must not be taken as going further than what I actually said. If there be some new departure, certainly the House has a right to challenge it, but I have looked up the Act, and find that this is under the ordinary procedure of the Act. What I have said is that, if I were to grant a Motion for the Adjournment of the House with regard to these two gentlemen, it seems to me that I should have to do the same in every case. It is impossible for me to differentiate between different individuals.
      Mr. MacDONALD: With great respect, may I ask whether that would quite be so?. If we should have to draw your attention, or if some section of the House, should have to draw your attention to any particular case which they considered to be maladministered by the Home Secretary, are we not entitled, and is it not our right in this. House, to get the matter raised in the House when we bring cases which specifically, and in relation to the circumstances in which they come here, are in the nature of cases of mal-administration, as we allege, and, I think, prove?
      Mr. SPEAKER: I think that that is distinctly a matter far the Committee of Supply. I gave a similar ruling last year, if I remember aright, with regard to the case of a Russian violinist, which it was claimed had some special features, and I can see that, if I once granted a Motion of this kind, I should have no standing ground for refusing it in a succession of other cases.
      Mr. MacDONALD: Will you pardon me, Sir, if I put another question to you, namely, whether, in the case of the Russian violinist, there was really no urgency at all? [Interruption.] It will be within your recollection, Mr. Speaker,
      42
      that that was not the ground upon which the decision was given. But, in the case of this conference, which is of international importance, a conference on emigration, attended by representatives of practically every European country, and, I think, America—I am not very sure about America—and the Dominions, meeting to-day and terminating this week, does not that establish an urgency which cannot be dealt with on the Home Office Vote, but must be dealt with only by a Motion for the Adjournment of the House?
      Mr. SPEAKER: On that point it is not for me to dispute the right hon. Gentle-man's view of urgency, but I have to look at the position of the Chair. It would involve a decision on my part as to the importance of a particular meeting, and there, again, I fear I should be involved in an impossible succession of questions.

BUSINESS OF THE HOUSE.

  GOVERNMENT BILLS.
  Mr. MacDONALD: May 1 put a question to the Prime Minister? I notice on the Order Paper to-day that under Notices of Presentations of Bills, priority is given to the Bill which I suppose will be known as the Reconstruction Bill, and that only second place is given to the Coal Mines (Eight Hours) Bill. May I ask whether the Government mean to proceed with these two Bills in that order, and whether on reconsideration the right hon. Gentleman would not feel that it would be the better way of proceeding with those Bills.
  The PRIME MINISTER: The reason why the original announcement was made was that the Coal Mines Bill was a very short one, and therefore could be got into type much more quickly than the Mining Industry Bill, which is known as the Reconstruction Bill. The latter Measure is a large and detailed Bill, although it is quite clear what are the points which it wishes to encompass. Having regard to the fact that the only clay this week we can spare for this particular Debate is Wednesday, and that the Opposition have asked for a longer time than one day for the Coal Mines Bill, I do not think it would greatly prejudice the progress of either of these Bills if we took the Mining Industry Bill first, and if that

  43
  Bill were put down for Wednesday, I should hope the Second Reading might be given to it on Wednesday. That would leave Monday and Tuesday free on which to take the Coal Mines Bill. I am anxious to get the Second Reading of both Bills by Tuesday night next week.
  Mr. MacDONALD: It is rather difficult for me to express an opinion, not having seen either of these Bills. I think, however, that our idea as to the second Bill will be found to be pretty accurate. As far as the first Bill is concerned, I have not seen it, and I think it will be necessary that we should see a copy of the Bill, before we decide upon the order of the business.
  The PRIME MINISTER: I quite agree with that, but I suggest that we take the Mining Industry Bill—that is the Reconstruction Bill—on Wednesday and, as soon as the Bill is printed, perhaps through the usual channels we can agree to the allocation of the time in which to complete the Second Reading of the two Bills.
  Mr. MacDONALD: May I repeat my question to-morrow, after negotiation through the usual channels?
  The PRIME MINISTER: Yes, certainly.

BILLS PRESENTED.
  MINING INDUSTRY BILL.
  "to make provision for facilitating the working of minerals and the better organisation of the coal-mining industry, and with respect to the welfare of persons employed therein; and for other purposes connected with that industry," presented by Colonel LANE Fox; supported by Secretary Sir Laming Worthington-Evans, Sir Arthur Steel-Maitland, and Mr. Solicitor-General; to be read a Second time upon Wednesday, and to be printed. [Bill 128.]

  COAL MINES BILL,
  "to amend temporarily the Coal Mines Acts, 1887 to 1919, with respect to the hours of employment below ground," presented by Colonel LANE Fox; supported by Secretary Sir Laming Worthington-Evans, Sir Arthur Steel-Maitland, and Mr. Solicitor-General; to
  44
  be read a Second time upon Wednesday, and to be printed. [Bill 129.]

  GAS LIGHT AND COKE COMPANY BILL.
  Reported, with Amendments; Report to lie upon the Table.

  LAND DRAINAGE BILL [Lords].
  Reported, with Amendments, from Standing Committee D.
  Report to lie upon the Table, and to be printed. [No. 95.]
  Minutes of the Proceedings of the Standing Committee to be printed. [No. 95.]
  Bill, as amended (in the Standing Committee), to be taken into consideration To-morrow, and to be printed. [Bill 130.]

  MARKETS AND FAIRS (WEIGHING OF CATTLE) BILL [Lords].
  Reported, without Amendment., from Standing Committee D.
  Report to lie upon the Table, and to be printed. [No 96.]
  Minutes of the Proceedings of the Standing Committee to be printed. [No. 96.]
  Bill, not amended (in the Standing Committee), to be taken into consideration To-morrow.

SELECTION (STANDING COMMITTEES).

  STANDING COMMITTEE D.
  Mr. WILLIAM NICHOLSON reported from the Committee of Selection; That they had discharged the following Member from Standing Committee D: Major the Marquess of Titchfield; and had appointed in substitution: Sir Douglas Newton.
  Mr. WILLIAM NICHOLSON further reported from the Committee; That they had added the following Member to Standing Committee D (in respect of the Local Government (County Boroughs and Adjustments) Bill [Lords]: Mr. Mitchell Banks.
  Reports to lie upon the Table.

ORDERS OF THE DAY.

  FINANCE BILL.
  Further considered in Committee. [Progress, 16th June.]
  [Mr. JAMES HOPE in the Chair.]

  FINANCE BILL.

    NEW CLAUSE.—(Repeal of Sugar Duties.)
    As from the thirty-first day of August, nineteen hundred and twenty-six, the duties chargeable upon sugar, molasses, glucose, and saccharin, imposed by Sections four and five of the Finance Act, 1924, and the First Schedule to that Act, shall cease.—[Mr. Stephen.]
    Brought up, and read the First time.
    Mr. STEPHEN: I beg to move, "That the Clause be read a Second time.
    My reason for moving this Clause is because of our opposition on these benches to these taxes which fall upon the food of the people of this country. When this Clause was moved on a previous occasion, the present Chancellor of the Exchequer said that he did not think the hon. Member who moved the Clause was very sanguine or optimistic about its being accepted. I myself would possibly have been somewhat in the frame of mind of the hon. Member who then moved the Clause, and would have been somewhat pessimistic about its acceptance, but, during the week-end, the Chancellor of the Exchequer disturbed so much gall and wormwood in the speech that he made, that in this House to-day we may, perhaps, expect a little sweetness from him, since he has evidently got rid of so much of his grouse at the week-end. I want to point out, in connection with this Clause, that the Labour Government, when they were in office, made, through their Chancellor of the Exchequer, a reduction in this duty from 25s. 8d. to lls. 8d., that is to say, a reduction from 3¾d. to l¼d. per lb. I also want to point out that the Sugar Duty in 1923 was 14 times what it was in 1913. I am, therefore, moving this Clause to-day in the hope that the Chancellor of the Exchequer, having got rid of his bile at the week-end, may now be in a somewhat sweeter temper, and may be willing to give something that would be of advantage to the large number of people upon whom this tax falls very
    58
    heavily in this country—the poorest people in the country. It falls upon old arid young. I do not know what the passage of this Clause would cost the Chancellor of the Exchequer, but I am quite confident, that, while it might cost the revenue a certain amount, it would be to the advantage of the Chancellor of the Exchequer and other people in the community, and that, if he himself got a little more sugar, he would not be guilty of such an indiscretion as that of which lie was guilty at the week-end. Therefore, in the interest of the Chancellor of the Exchequer, in the interest of old and young, and especially of the poorer sections of the community, I have very great pleasure in moving this Clause.
    4.0 P.M
    The CHANCELLOR of the EXCHEQUER (Mr. Churchill): The cost of the proposal which the hon. Member has made to the Committee would be £11,750,000 in the present year, and £19,250,000 in a furl year. I am certainly not in a position to sacrifice any such part of the revenue; indeed, the tendencies of the times all point in an opposite direction and it is getting more and more likely that I shall be forced to ask for a further strengthening of the revenue. I do not, know if, at the present time, one had a large overflowing surplus out of which reductions could be made, and if one were selecting some subject of taxation for remission, that the Sugar Duties are those which would seem to have a prior claim. These duties were not only the subject of a very large reduction only two years ago by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden); but the circumstances in the world's market have led not merely to that reduction reaching the consumers as a whole but to more than corresponding diminutions in price. Sugar is extremely cheap at the present time; and, as I pointed out when opening the Budget, the consumption of sugar has responded to the diminution in price. Last year, for the first time since the War, we consumed per head of population a larger quantity of sugar than in the pre-war days.
    Mr. RUNCIMAN: How many pounds of sugar per head are now consumed?
    Mr. CHURCHILL: I could not say offhand. I stated the exact figure during

    59
    the opening of the Budget, and I know that this year we are budgeting for a slight improvement even upon that figure. I could not at the moment give my right hon. Friend the exact figure. I know that sugar is not only an article of food and comfort, but is also a raw material of manufacture, and from that point of view any relief would be beneficial; but the finances of the country do not enable me to entertain any such possibility, and, even if they were in such a position, I do not know that this is the direction in which I should first allow the remission to become effective. There are other remissions by which greater relief could be given to the consuming population as a whole. After all, this duty was recently cut by practically half—more than half—and the price has been greatly reduced by the working of general causes. I am afraid, therefore, I cannot accept the Amendment.
    Mr. A. V. ALEXANDER: I am sure the Committee will not have been impressed with the lament in the Chancellor's speech or with the power of his arguments. I suppose he thought that because my hon. Friend the Member for Camlachie (Mr. Stephen) had not taken a very great deal of time in moving this important Clause, it therefore did not require much answer. The fact, however, is that we do attach a very great deal of importance to the Clause. The Chancellor of the Exchequer, in the course of his reply, pointed to the cost to the revenue if this Clause were accepted. That is one of the reasons why we are moving the Clause. The fact that so much more is being raised for the revenue from the working-classes as compared with pre-War and with what ought to be the case, is the very reason for moving this Clause. Let us look at the figures for a moment or two. After my right hon. Friend the Member for Colne Valley (Mr. Snowden) had taken somewhere about 14s. per cwt. off the duty in 1924, the yield for 1924–25 from the duty was £20,530,000. The pre-War yield of the duty, in 1913–14, was £3,329,000. I do not think it wants a great stretch of imagination to see that, compared with the present rate of Income Tax, which is 4s. in the £ as compared with about ls. before the War, there has been a much heavier increase in the duty upon sugar even after allowing for the very heavy remission made by my right
    60
    hon. Friend in 1924. Therefore, the very point which the right hon. Gentleman makes as to the cost to the revenue is an additional argument in favour of this relief to the working-class consumers of the community.
    The next point which the Chancellor of the Exchequer made was that, even if he had the money to make this remission, he did not think that sugar would have a prior claim. I should like to know—we waited to hear from his lips but the wisdom did not come—what article, in his judgment, was more urgent in its claim for a reduction of duty than sugar; but he did not tell us. I cast my mind round all the dutiable articles used in the main by the working classes, and I cannot find a single commodity which has so large a claim upon the generosity of the Chancellor when he has money to disburse as sugar. It is not only an important foodstuff, but it is a raw material of quite a number of important and, when sugar is cheap, thriving industries, and I am certainly disappointed to hear that the Chancellor of the Exchequer is steeling his heart against such a just claim as we are making to-day.
    The third and only remaining point that the Chancellor of the Exchequer made was that the price of sugar had declined and that therefore there was not so urgent a need to make it cheap. I am very glad to hear an admission from the benches opposite that remissions of taxes do, at least in some instances, reach the consumer. Here is a case put by the Chancellor of the Exchequer himself this afternoon that, in spite of the heavy remission of duty in 1924, the consumer is not only getting the full benefit of the whole of the remission but is moreover getting sugar at a cheaper rate without reference to the duty than was the case when the duty was remitted in 1924. I think that destroys once and for all the kind of argument that is put up on other occasions. I remember, when speaking with regard to the duty on tea, that the frequent answer from the opposite benches has been, "Well, when you have any remission of duty upon tea, the full effect of it is not given to the consumer." Here is a commodity in regard to which the Chancellor of the Exchequer can exercise his generosity without any qualms of conscience as to whether the

    61
    full effect of his generosity will reach the consumer. I hope, therefore, that he will keep that fact in mind when we renew our importunities.
    He said that the use of sugar was increasing, and that is true. I have not got the figures of consumption per head, but I have the total tonnage consumed in this country. In 1923, it was 1,530,000 tons, and in 1925 it was 1,686,000 tons, an increase of about 156,000 tons. But that means it is also yielding a greater revenue, and there is in that way a heavier burden of taxation upon the consumer, which is an additional reason why the Chancellor of the Exchequer should be willing to repeal the duty. I had hoped, when he was speaking on the Tea Duty a few weeks ago, that he was beginning to make progress in the right direction, which, by the way, in his case is a backward direction to his better days in 1906, because the other day he said:
    "Our policy is not to increase, but wherever possible to decrease and ultimately to abolish altogether, taxes on articles of food."
    I had hoped that he was making the right kind of progress in that direction, and I was strengthened in that hope by a declaration from the Prime Minister at the General Election, though, judging by the way some of his declarations have been kept, perhaps I was unwise in placing too much hope upon it. The Prime Minister said:
    "Our urgent needs, in the meantime are more work and cheaper food. I like to say,"
    said the Prime Minister,
    "what I feel and what I believe."
    Here is a test of the sincerity of the party opposite as to whether they really want cheaper food. There is not any doubt at all in view of the present world position of the production and distribution of sugar that a remission of the duty upon sugar would mean a cheaper article to the consumer. The Chancellor of the Exchequer has admitted that in this case the full benefits of the remission reach the consumer, and here is an opportunity for the Prime Minister to secure cheaper food for the community.
    I also want to draw the attention of the Committee to the very great importance of getting cheaper sugar by the remission of the duty for the reason that it is used as a raw material. I am sure
    62
    the Committee will pardon me using a trade illustration with: which I am familiar, namely, the use of sugar in our own co-operative factories. As soon as the Chancellor of the Exchequer in the Labour Government, in 1924, took 14s. a cwt. off sugar, we got an increased demand—an increased use—and in consequence increased employment.
    Sir FREDRIC WISE: The crop was better.
    Mr. ALEXANDER: Yes, the crop was better, but sugar was cheaper by the whole 14s. duty per cwt. remitted. There is no doubt about that. We found such an increased demand by reason of the immediate cheapening of the produce that our employment in the jam factories—and we have a large output of jam—was better in 1924 as compared with 1923 by over 20 per cent. The same thing applies to production. You can apply that illustration to a large number of industries in which sugar is a very important raw material. We desire for that reason also to press the case we are putting this afternoon.
    There was one point to which the Chancellor of the Exchequer did not refer on this occasion, but to which I feel I must refer. In commenting, I think last year, upon the Sugar Duty, the Chancellor of the Exchequer referred to the action of my right hon. Friend the Member for Colne Valley as giving away large sums belonging to the Revenue. At the same time, he said that the reduction of the Sugar Duty in 1924 without any compensating change in the preference had resulted in Empire sugar declining. He stated in the Budget speech that the imports of sugar from the West Indies had in consequence fallen. I was very interested in that statement, and I took it upon myself to make some inquiries in the matter. In case hon. Members opposite are inclined to take the Chancellor's point of view and to desire to keep this tax upon food simply because of the preferential position it gives to Empire sugar, I should like them to know the true facts, not such as the Chancellor of the Exchequer gave to us, but such as are given to us in the official report of the Department of Overseas Trade. This is what the report says:
    "Since the heavy fall in values in 1921 the sugar industry of these Colonies has

    63
    experienced difficult conditions, and in many cases the position has been aggravated by the over-capitalisation of many of the estates about the year 1919. During the close of the year 1923 and the first two months of 1924 a decided improvement was experienced, but in March, just as planters were beginning to feel that their position was more stable, a severe drop in values took place adversely affecting the estates, which were left with a large quantity of sugar unsold."
    That was the real reason for the decline in exports of sugar from the West Indies, although the Chancellor of the Exchequer was anxious for us to be assured that it was the action of my right hon. Friend in reducing the duties. The real fact is that if you take into consideration, when proposing to keep on this tax upon sugar, the position of the colonists who are sending the sugar, it is home attention they need and not Empire preference. They need to give their attention to the production per acre and not to getting an artificial subsidy such as the Sugar Duty gives them. Compare, for example, the production per acre in the West Indies, which is about 1·46 tons, with that in Java, which is 4·35 tons. As far as I know, there is no earthly reason why, with proper efficiency and care, there should not be the same development in the West Indies as there is in the Dutch Settlements. Obviously, therefore, the argument that was used last year by The Chancellor of the Exchequer about Preference as part of his reasons for not giving us what we wanted in remission of Sugar Duty does not bear investigation. But in any case the percentage of Empire sugar for use in this country is a very small proportion of the total world production of cane sugar. I think the total production in 1924–5 was 14,500,000 tons, and the total production in the Empire was round about 1,000,000 tons.
    I should like to see the Sugar Duty repealed altogether because I am not in love at all with the position created by the duty in regard to the home sugar industry. We are at present giving a subsidy of 19s. 6d. per cwt. together, as I gathered from a reply from the Minister of Agriculture to a question of mine to-day, with the difference between 9s. 8½d. Excise duty and 11s. 8d. Import duty. That is the amount that is
    64
    allowed as Imperial Preference, so that they are getting as a matter of fact somewhere about 22s. per cwt. in subsidy and preference. I should be very glad to see the Sugar Duty repealed if only to do away with some of the anomalies now existing in regard to home-grown sugar. Even though the Chancellor is not prepared to give us a complete remission I hope he will pay some attention to the way in which the Excise duty at any rate is administered and a subsidy given in connection with it. I find, for example, that in ordinary molasses there is no extractable sugar remaining, and under the subsidy 4s. 3d. per hundredweight is paid upon such molasses. By leaving only 2 per cent. of extractable sugar in the molasses the factory owner can set 5s. 11d. per cwt. I hope the Chancellor is going to have a look at that because if he is going to keep the duty on he might as well get it administered in a fair and impartial manner. What in effect happens there is that by wasting 2 per cent. of sugar the people concerned are able to get a benefit of something like 4s. 8d. per hundredweight on their molasses.
    Another reason I would draw the right hon. Gentleman's attention to is that not only is he giving, under the operation of the Sugar Duty, a very great preference to the British producer of beet sugar but he is by the operation of the subsidy at the same time bolstering up in an artificial way an industry which cannot possibly be estimated ultimately to stand upon its own legs. I can understand giving a subsidy, by way of part remission of the duty or by direct subsidy, to a new and growing industry which had a reasonable chance of becoming self-supporting and giving more employment within a very short period, but when I examine the position of the British beet-sugar industry and its prospects in comparison with the world position of sugar, I am forced to conclude that it will not be very long before either the beet-sugar industry has to come to an untimely end or else the Financial Secretary and the Chancellor will be asked either for an extension of the subsidy or for a larger remission of the duty that is now operating. I find that whereas in 1913–14 the total world production of sugar was estimated at 18,400,000 tons, for 1925–26 the esti-

    65
    mated production is 24,868,000 tons. That is an increase of something like 33⅓ per cent. in the world production of sugar since pre-War times, and it is in circumstances like these that we are making a grant of public money, by way of part remission of the duty and also by direct subsidy, of something like £1,300,000 a year in order to stimulate artificially the production of 50,000 tons of sugar a year in this country. It seems to me that such a policy is perfectly stupid financially and on general economic grounds.
    Mr. CHURCHILL: Does the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) agree?
    Mr. ALEXANDER: I have never varied from stating this particular opinion on any occasion when the matter has been raised. This is not any news at all to the right hon. Gentleman, who is always tolerant to any advancement of sound economic argument. I am persuaded that, whilst it may be true that Chancellors sometimes have to do things for expediency, on sound economic grounds he would be very largely in accord with what I have said on the matter. There is always something very attractive about the possible immediate employment of a few men here and there by the granting of a subsidy, but in this case it is plain that granting £1,300,000 a year out of public money and by remission of this duty to an industry which does not produce even 3 per cent. of the nation's consumption of sugar, and with the world production of sugar increasing every year, is a policy which cannot in the long run be considered to be sound and in the best interests of the nation. It is a very great pity that men like the right hon. Gentleman, with long and brilliant political careers, should stray so far from their early days of virtue as to be in a position of resisting so logical a case for the remission of a tax which is burdensome alike upon industry and upon the working-class consumer.
    Mr. RUNCIMAN: The hon. Member who has spoken with a very full knowledge of the sugar industry has made one point in his own close connection with the co-operative movement which cannot be overlooked in this Committee. It is very easy to discuss the Sugar
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    Duty and think of nothing but sugar that is consumed in households. He has made the point, and a thoroughly sound point, that so long as sugar remained expensive there were many manufacturing trades that suffered from its high price, and as the price dropped those industries themselves were benefited and the markets regained to some extent their prosperity. He gave instances from the co-operative manufacturing organisations of the drop in the price of sugar having augmented at once not only the volume of their output, but the number of people who were employed in the manufacture. If we were to examine this duty only in terms of employment a strong case could be made out against it such as to quite overbalance any argument which had ever been produced on behalf of the new beet-sugar subsidy for an increase of employment in agricultural areas or elsewhere. As far as we have been able to ascertain, the whole of the subsidies for the manufacture of beet sugar have at the outside found employment, for some four or five months in the year, for about 6.000 persons. I have no hesitation in saying a drop in the price of sugar by as much as 14s. a cwt. would provide work for far more than 6,000 persons during the whole year in the manufacturing industries of which this is now the basis.
    Let me take two instances. If you look at the exports from this country each year under the heading of food, which is, after all, the smallest category of our exports, it is a remarkable fact that biscuits and jams are the two most important items. The export trade in biscuits and in jams has gone up to enormous figures. These products are sent to every country in the world. We know from experience that they are the best of their kind, and they provide employment throughout the year. The jam trade, it is true, is at its height during the season when the fruit is being reaped, but the sugar industry goes on steadily throughout the whole year without any fluctuation in employment. Whenever there is a drop in the price of the imported raw materials in the manufacture of biscuits it enables these trades to compete successfully in the foreign market, to increase their volume, and to increase the number of people employed. Therefore, if you add this duty in the

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    export trade, its effect, undoubtedly, is to diminish employment, whereas its repeal would tend to increase employment. That is true, not in the same degree but to a very large extent, for a good part of the year in the jam trade. There are very few things actually grown in this country which are used in the manufacture of jam. The jam trade in this country is now one of the most important and it has an almost unrivalled position in the world.
    There are no foreign jams as good as those made here, and anything that tends to reduce the price of the finished article must also tend to increase the demand for the fruit that is grown. One of the best services the right hon. Gentleman could do to the agricultural industry, particularly in the fruit areas, would be to reduce the cost of this principal article in the raw materials and by that means increase the demand for the fruit to be grown and so absorb more and more of the labour which is necessary in these fruit-growing areas. The Financial Secretary represents one of the most important fruit areas in the Kingdom. I am sure he will bear me out that there is no branch of agriculture that employs a larger number of workers during the season when picking is taking place than the fruit industry. Hops also are grown in that area, but sugar plays an important part in the use that hops are put to. It is certain that if you reduce the price of the raw material in this industry you tend to increase the volume of trade and the number of people employed in it and the amount we get for that very important export trade, and thus do something to help to some extent the economic problems which are pressing very hardly upon us at present.
    Mr. CHURCHILL: The right hon Gentleman is no doubt aware that there is a rebate in respect of sugar contents of manufactured goods exported.
    Mr. RUNCIMAN: I am well aware of that, but anyone connected with the trade knows that if there is no duty at all, you are in a far better position than when a duty is imposed and you have to get a rebate or a drawback. That process is very complicated, difficult and troublesome, and adds to the friction in trade, instead of facilitating trade. For
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    at least 20 years the right hon. Gentleman has heard Debates on the Sugar Duty in this House, at all sorts of time and under all sorts of Governments, and I am sure that he has never overlooked the fact that there is no one single item in our long list of duties that could confer more benefit upon the consumer by its abolition than this duty. Every household consumes large amounts of sugar. I was amazed at the figures which the right hon. Gentleman kindly passed across the Floor of the House to me, which show that we consume 85 lbs. of sugar per head in a year. It is a most amazing amount, giving an average of over 1½ lbs. per week per head.
    Mr. ALEXANDER: That is not as much as the pre-War figure.
    Mr. RUNCIMAN: The figures were 83 lbs. per head in 1913 and 85 lbs. in 1925. We are the largest sugar consuming people in the world. Of every 18 lbs. of sugar consumed in the world, 1 lb. is consumed here we head the list. We consume more sugar than America, where under the Prohibition Laws they have almost a bonus upon the consumption of sweet drinks and sweet articles. A lowering of the Duty would confer a benefit upon every household in proportion to their consumption of sugar, and it could confer a great benefit upon a large number of important industries, and not only food industries. My hon. Friend who introduced the Amendment might have made reference to the paper trade. That trade is to receive a certain amount of Protection under the new Safeguarding proposals. Those branches of the paper trade which use sugar in their manufacture would be far gladder to receive their raw material without this Duty imposed upon it than to receive the paltry benefits that they will get under the sporadic Protection of the Safeguarding of Industries Act. The Chancellor of the Exchequer could through his Budget proposals, this year or next year or as long as he has any control, tend to reduce the cost of living, and there is nothing which would have a more soothing effect upon the people as a whole, and nothing which would contribute more to ease our economic problems, than a reduction in the cost of living. Here he has a good chance to do that. The cost would not be too great. The right hon. Gentleman

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    has gambled with much larger sums than this in his time. I do recommend him to wipe out the Sugar Duty, because I feel that he could do nothing better.
    Lieut.-Commander KENWORTHY: I have always supported the abolition of the duty on sugar and have nearly always spoken on the subject. In addition to the industries already mentioned, there is another very important industry affected by this duty, an industry which is in a prosperous condition at the present time, although it will be affected by the Wrapping Paper Duty which has been introduced in this Finance Bill. I refer to the manufacture of chocolates and sweets. That trade is flourishing and does a considerable export trade. It would be a great help to that trade, which gives a great deal of employment, if the Sugar Duty was either removed or lowered. I am particularly interested, because there are prosperous factories in my constituency which give a great deal of employment at good wages and under healthy conditions.
    When we move for a reduction or the abolition of the Tea Duty, hon. Members opposite tell us that tea is unwholesome, that it is bad for the nerves and that it is responsible for as much crime as whisky. That argument cannot be made in regard to sugar. I have never heard of anyone committing a crime through eating sugar, and I have never heard of homes being ruined because people eat sugar. On the other hand, sugar is a necessity, especially for children. At the present time there are millions of children, and the numbers are increasing, who, owing to bad trade, are suffering from malnutrition. As unemployment increases, the number of children who are
    not getting enough to eat increases. The abolition of the Sugar Duty or a substantial reduction of the duty would do more than any other single step to assist the health of the rising generation. That point of view ought to appeal to hon. Members opposite, who take the Imperialistic view. We must have a healthy rising generation, a healthy child population, to come along to take up the burdens of Empire, to which hon. Members opposite are always ready to add.
    We were told that the development of sugar beet would lead to a great deal of employment in the sugar-beet factories. We were told that this was to be a new rural industry, but we find that the very people who ought to benefit by getting employment in the sugar-beet factories are precluded by the action of the Minister of Labour. The agricultural labourers in the worst-paid counties in England are not allowed to take employment in the sugar-beet factories. Men are encouraged to come from the towns. That is a very scandalous thing, and the party opposite ought to have that fact brought home to them in the rural constituencies. They always pose as the friends of the agricultural labourer. They said that this new industry would help the agricultural labourer by giving him employment in the sugar-beet factory; but we find that the doors are closed against him by the Government, through the Ministry of Labour. For these reasons I propose to vote for the Amendment.
    Question put, "That the Clause be read a Second time."
    The Committee divided : Ayes, 105; Noes, 258.

    NEW CLAUSE.—(Exemption in certain cases for income applied to educational purposes.)
    Any university and any college or hall in any university of the United Kingdom, and any public school and any educational institution receiving a Government grant, shall he exempt from Income Tax in respect of any profit or gains forming part of the income of such university, college, hall, public school, or educational institution which are applicable to educational purposes only so far as the same are applied to educational purposes only.—[Mr. Withers.]
    Brought up, and read the First time.
    Mr. WITHERS: I beg to move "That the Clause be read a Second time."
    I move this important Clause with great deference as a very junior Member of the Committee, and I ask the indulgence of
    hon. Members on account of my in experience. First I
    should like to say a few words as to the nature of the institution mentioned in this proposed Clause. The first mentioned are the universities. I do not think I need to say much about the universities, nor about the colleges or halls in the universities. But with regard to the public school, I should like to say something quite definite. It does not mean in this connection one of great public schools as usually talked about, but a public, school within the meaning attached to it by the Income Tax Acts. Under those Acts the expression "public school" is interpreted as follows : It must fulfil the following conditions—it must have a perpetual foundation; a proportion of the income must come from charity; it must be managed by public bodies; no private person shall have any interest in the school, and no profit shall be in contemplation by the founders or managers, and the object shall be to benefit a large
    class of persons. Therefore, in general, a public school is a public endowed school. An educational institution in
    receipt of a Government grant. It must be recognised as efficient, and in the public interest and not carried on for profit, as, for example, the technical schools and training colleges.
    5.0 P.M.
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    The reason for this Amendment arises from the decision of the House of Lords in the case of Brighton College v. Marriott. It arises in this way. Brighton College is a public school within the meaning of the Act, and it is also a charitable institution. It put by year by year certain surpluses, which were gained principally by charging rather higher fees to the parents of boys than it actually cost to teach them, and subsequently each year there arose a small surplus which was put aside and used only for the charity itself, no person having any benefit from the surpluses except the charity. When the case came before Mr. Justice Rowlatt, it was decided that it could not he said to carry on trading apart from the charity, and the case was decided against the Crown. The Court of Appeal and subsequently the House of Lords decided, notwithstanding that these surpluses were arrived at by carrying on the charity itself, that Brighton College was carrying on trading and that the profits must be taxed as such. It was a test case, and it was felt to be a very serious one. The position hitherto as regards educational charities, by which name I shall refer to all I have enumerated, is that they have special statutory exemption in respect of rents, buildings, interest., annual payments, the cost of public buildings and repairs, and the lands they occupy. There is a further curious exemption, which is in respect of profits and trades carried on by the beneficiaries of the charity. The annual income which a charity can have which is not exempted is the surplus which arises year by year from the carrying on of the charity itself. I suggest that it has never been the intention of Parliament to tax those surpluses or they would certainly have been taxed. I think myself that they have been simply overlooked and are now brought into notice owing to the financial stringency of the country and the anxiety of the Inland Revenue to get as much income as they can.
    Let us now consider how these surpluses arise in respect of schools and the effect of taxing them. These surpluses are made by the individual efforts of the managers. They are utilised in keeping the schools up-to-date. For example, when a public school has not enough funds to buy a cricket ground, or to put in electricity, or to

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    build a new wing to the school, it tries by the efforts of its managers to accumulate a certain amount in hand in each year and these surpluses are applied towards the extension of the school. The managers have no necessity whatever to do this. It would be quite easy for them to say, "Our job is to balance the accounts and let the future take care of itself," That is a very short-sighted policy and the result of it would be that the schools all over the country would get out of date, and the further result would be that in a few years they would be coming to the Government for a huge subsidy. In the case of schools it shows that the taxation of these surpluses is a short-sighted policy, because the Government benefit by the schools being self-supporting and not asking for grants of public money. If they do get into a bad state, they are entitled to ask the Government for money. Generally speaking, the same arguments apply with regard to the colleges and universities. The college makes a profit on its kitchen. It makes surpluses with which the managers repair the colleges, do necessary sanitary improvements, and build new extensions. They need not do that; they can let the colleges go to rack and ruin. Exactly the same argument applies to the Universities, and especially to Oxford and Cambridge. It is hoped that they will be creating some surpluses, but if those surpluses are to he claimed in this way they will be affected. The Government are giving Universities grants at this moment. It seems to me an absurdity to be giving the Universities grants with one hand and taking these surpluses with the other, as these surpluses are accumulated to avoid the grants. With regard to educational institutions, my suggestion is that the mere carrying on of the charity within four walls cannot be a trade. Unfortunately, it has been decided that that is not so, and therefore I put forward this Clause. No person gets any profit from these sulpluses. If they do they pay tax.
    Let me draw attention to what I think are the arguments against this Clause. The first is that this is not new, that this has always been the contention of the Inland Revenue. That. may be so. They are a very astute body of men and everybody is proud of their astuteness. They, no doubt, have had this in their mind for
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    a long time and have undoubtedly sporadically made these claims. When it was found that they were doing so generally, it was challenged with the result of this case, Brighton College v. Marriott. The second argument is that the Government do not like hidden subsidies. That can hardly be held to be a good argument at present, because the subsidies are extremely large already and, as a matter of principle, if once admitted, the only question is really whether this should really be included. Another good argument against the Government is that by the same judgment that Mr. Justice Rowlatt decided that the surpluses made by Brighton College did not make Brighton College a trade, he decided that the Royal Agricultural Society should pay Income Tax on the profits of the Royal Show. A special Clause was put in the Act of 1924 exempting the Royal Agricultural Shows from paying taxes. I feel that the education of human beings is at least as important as the fattening up of prize cattle and the growing of large turnips. Friendly societies and industrial societies have exemptions, and it can hardly be suggested that the University of Cambridge or some big school could register as a friendly society or an industrial society. Possibly they could not. Those are the answers I make to these arguments. I certainly hope the Chancellor of the Exchequer will favourably consider this appeal. It is not made in any factious spirit nor with any desire to score off him, but merely in the interests of these very deserving institutions. I beg him not to tax funds which are raised for the very purpose of avoiding Government grants. The loss to the Government will be small and temporary and the gain large and permanent if this exemption be granted.
    Mr. CHURCHILL: I think it is clear that some of the observations I made when the last Amendment was under discussion are relevant here. After all, we are, in exactly the same way, being asked to extend the limits of the charity exemption to Income Tax, which already costs at a rate of 4s. in the pound upwards of £10,000,000 a year, and which were considered to be on the overindulgent side by the Royal Commission on Income Tax which reported during the time of the Coalition Government. Where should we be able to stop? That

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    is one of the serious arguments which I am bound to face at the outset. Already we have had the hon. and gallant Member who moved the last Amendment asking for an exemption in favour of the Royal Asylums in Scotland. There is an Amendment on the Paper proposing to extend the exemption to Income Tax to the British School of Dramatic Art. Another Amendment is coming on this evening asking for exemption in the case of athletic clubs, and the right hon. Gentleman the Member for Hillhead (Sir Robert Horne) has kindly favoured me with another Amendment which is to enable the same Society of Dramatic Art to participate in the exemption now proposed. If I yielded to the instinct of natural goodwill, which the Committee, without exception, feel in regard to the present proposal, we should be drawn from the present arbitrary and anomalous—rough-and-ready, if you like to apply that epithet—limits and boundaries which govern and restrict the exemption of charities from Income Tax, we should be driven from those, boundaries, and we should move steadily clown an inclined plane, urged onwards at every step and stage by advocates of numbers of hard cases and border-line eases, all of which would acquire new force and impetus with every step we took. That is a serious objection which I feel.
    Moreover this is not a good time for exemptions and concessions in taxation. We are not in a position to make remissions of taxation. As I have said, with every week that passes under the present conditions the possibility of the revenue having to be strengthened grows nearer, and I have to refuse all sorts of well-founded proposals for a remission of taxation. Moreover we must remember that the Economy Act, which has now passed into comparative twilight but which at one time was so much talked about in this House before, the late strikes and lockouts began, collected small sums of money from every conceivable quarter, and in spite of the criticisms and outcries involved the House supported the Government in retaining these sums of money large and small, although in every one of these cases we would gladly have let matters rest as they were but for our necessities.
    Whether you look at this problem from the point of view of the breaking down
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    of the present restrictions to which we confine the exemption or from the point of view of revenue, the state of our finances, and the kind of sacrifices we are asking from the general public, not much hope will be found on either count to encourage the Committee to agree with what is now asked. It is not as though we were proposing any new departure. The law is not being changed in any way. The case raised by the Brighton College was a challenge by them of the existing practice, and both the Court of Appeal and the House of Lords upheld the revenue authorities and dismissed the claim of the Brighton College. I am told that in a great many cases these institutions have been paying Income Tax on what is now sought to be exempted quite regularly for 15 or 20 years.
    Then there is the argument about giving a subsidy, which has been expressed in some newspaper articles which I have read with a good deal more vigour and acerbity than I should care to import into this discussion. Of course we cannot be blind to the fact that exemption from Income Tax is in effect a subsidy. It has that effect, and then would arise the question whether if this exemption was given the subsidy would go exactly in those directions where it was most desirable it should afford its relief. On all these grounds I am bound at the present moment to express my inability with great regret to accept the Amendment proposed, and in that I include the Amendment of the right hon. Gentleman the Member for Hillhead. But I must recognise the essential hardship which exists in the present case. I am not attempting to go into the general principles which are raised by some of the Amendments on the Paper. Where a school is richly endowed, has large investments, it is not under the necessity of accumulating from profits or from fees the means by which it can be maintained or improved or extended, whereas a new institution, a new school, which has no large endowments and is not in the fortunate circumstances of having property descending to it from long past, anew school, greatly needed by the movements of the population and changes in the character of our life, or by the new classes which are pressing forward to gain higher and improved education, such a new school, such a new foundation, will have to make profits in order to acquire

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    the proper outfit, plant and buildings, which are necessary for a great institution and establishment, and that they will have to do out of their profits all of which will be under the present law amenable to Income Tax. It is not the case that these fortunate, wealthy and prosperous schools are the schools which need relief or will get it, but it is much more the case that the new foundations which will be called into being will undoubtedly have this burden resting upon them.
    Then there is the other argument. It is quite true that the law has not been changed. In a great many cases this tax has been collected for a number of years, but the Brighton College case undoubtedly throws into stronger and clearer relief and light the law on this subject. It does not alter it, but it places clearly before every one of the Income Tax inspectors the application which the Courts hold is perfectly legal and proper, and, in consequence, it is likely that some institutions, which in previous years have not been called upon to pay, may from time to time in the course of the year, as case after case is considered on its merits, be brought into the ambit of taxation for the first time; there may be certain extensions of the application of the law owing to the clarity with which its application has now been prescribed. I have tried to set the arguments on both sides in this matter, as far as I see them. I cannot underrate the difficulties of making such a departure now, nor would I be justified in holding out any expectation of a serious kind that I should be able before the Report stage to make any proposal. I am afraid that any proposals it would be in my power to make would only he quite general in their character and would throw open a very wide field to exemption on charitable grounds.
    But I cannot feel entirely satisfied with the present state of the law. I cannot feel that the kind of discrimination which was referred to in the last Amendment and is referred to here is completely satisfactory. I cannot feel that these restrictions, though necessary and all we have at the present moment, are the last words that should be said in defining what is a charity deserving of exemption from
    Income Tax and what is not, and I will undertake, though I cannot suppose it
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    will satisfy those who are interested in this matter, between now and next year to examine very carefully whether the frontier of charitable exemptions cannot be defined not less strictly, not less precisely, but with a somewhat nearer approximation to what we feel is right and just, and whether some better definition cannot be introduced. I will not go further than that, and I recognise that it is not going as far as those who have moved this Amendment would wish, nor indeed so far as to entitle me to ask them in any way to mitigate whatever Parliamentary action they may think it right and proper to take. But I will give the undertaking, that the matter shall be considered in principle and on general grounds, and with every hope and desire to, see if a better definition cannot be framed and embodied in legislation during the course of the present Parliament.
    Mr. WILLIAM GRAHAM: The suggested new Clause on the Paper raises one of the most difficult problems in Income Tax administration. I should like, from one or two rather different standpoints, to support the case which has been made by the Chancellor of the Exchequer. The hon. Member who moved the adoption of this new Clause referred to proceedings which had taken place in one of the Law Courts, and to the proceedings on appeal which followed. I agree it appears rather curious that there should be any attempt to compare, for the purposes of Income Tax, the kind of surplus which emerges in the conduct of educational institutions from year to year, and a profit in the ordinary trading sense of the term. No one can read the discussion which has surrounded a large part of this controversy without being forced to the conclusion that, for all practical purposes, the surplus which emerged in the Brighton College case was regarded as analogous to an ordinary trade profit, and was taxed accordingly. I agree, if we left the case at that, there would seem to be a very wide difference, and it would be practically impossible for the House of Commons to agree to taxation on that very narrow basis, but there is much more in it than that.
    I have always felt, so far as I have been able to understand these matters, that we have to measure income in this country by some test other than the

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    narrow test of monetary gain or profit, or as some kind of profit which can be measured in the ordinary way. There are other incomings or benefits which flow to people in this country, from year to year, and which are embodied collectively and individually in the kind of surplus now under discussion, and if the House of Commons is going to protect the Revenue at all, it must hesitate a long time before it takes outside the scope of taxable material incomings of that kind. Of course, education and philanthropy and benevolence of every description make, at all times, the strongest appeal to members of this Chamber, but the Chancellor of the Exchequer is on perfectly sound ground in pointing out that there is practically no limit to the possible extension of exemptions of this character, once the House of Commons embarks upon that course. I think as a matter of ordinary practice, and for reasons which I hope to show before I conclude there should be the greatest hesitation before relieving any incomings of any kind from the ordinary taxation under Income Tax administration.
    If the Committee agree with that preliminary principle, in Income Tax matters, we pass immediately to another and important consideration which has been advanced by the hon. Member who moved the adoption of the new Clause. Part of his argument turned on this point; that here a surplus was being devoted to the education of the people by this particular institution, that it was not a question of private property, but was enuring to the general benefit of the students one way and another in the future. That is the old and familiar argument. of the destination or use of a surplus or profit, and I invite the Committee to answer this question: Is it not very dangerous, in the nature of Revenue practice in this country, to admit an argument of that kind? The very same argument has been advanced with great force in industrial matters within recent times, for the purpose of certain large scale exemptions from taxation, and every Chancellor of the Exchequer—whether the present Chancellor or the Chancellor in the spacious clays of 1924—has been obliged to resist an argument of that kind. If we begin to admit it in connection with this kind of surplus or income, it can
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    be applied more immediately, more acutely, and with greater force in a dozen different directions at the present time, and we shall then be right in the field of destination or use of profits, a field from which we must keep clear, if we are going to do our duty in protecting the Revenue.
    Reference has also been made to the fact that we give in our university and other grants, certain allowances to educational institutions, and it is suggested that it is illogical that we should give these grants from the State on the one side, and then proceed to tax these and kindred surpluses on the other. That does appear contradictory on the face of it, but after all, the two things are perfectly distinct. If we want to help educational institutions, by all means let us do so by increasing the volume of our university grants, or the provision which we are making under the percentage grant system for elementary and other education. That is the proper way to do it. The wrong way to do it is so to alter the law in a particular class of case as to give what the Chancellor of the Exchequer has rightly described as a form of subsidy, and create all kinds of anomalies in Income Tax administration in the process. The more we examined this claim for concessions at the Royal Commission on Income Tax in 1919, the more we were forced to the conclusion that for every concession which you give you are creating a dozen anomalies in directions which you can hardly see, or even forecast at the time. From that point of view the suggestion of the proposed new Clause would appear to he inappropriate, if not entirely wrong.
    In conclusion the Chancellor of the Exchequer has made a definite proposal to the Committee. I am prepared to concede—if I may venture a personal word—as a member of the Royal Commission on Income Tax in 1919, that the particular chapter in our Report dealing with charities might have been much more definite and precise in its terms. But as will he remembered that Royal Commission had to work very hard against time in order to permit of its immediate recommendations being available for the Budget statement of the following year. Accordingly many large problems which deserved far more consideration than they were able to get at, our hands, only received one chapter each, and that

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    chapter of a somewhat general character. Out of the short and general chapter in the Royal Commission's Report on this matter, however, these central facts emerged; that there was very great doubt as to what was meant by charity, that the term charity, in this country, for Income Tax purposes was covering a wide variety of considerations; that there was some contradiction in the existing practice, involving concealed subsidy and bonus of one kind or another, and that the proper course was for the Treasury and the House of Commons to sit down quietly and do some sound constructive work in framing a scheme for charities under which charity would be accurately defined. Thus you would get rid of anomalies and doubts and these recurring Amendments which give every Chancellor of the Exchequer great trouble from year to year. On this occasion—I think almost the first occasion in my life —I am in agreement with the Chancellor of the Exchequer. From the point of view of sound Income Tax administration I think this proposed new Clause ought to be resisted and the detailed investigation which the Chancellor of the Exchequer has recommended, carried out on the lines of the Royal Commission's Report.
    Lord HUGH CECIL: I should like to say a few words to the Committee in support of the Clause, and to press upon my right hon. Friend the Chancellor of the Exchequer the necessity of considering before the Report stage, or if that is not possible, before next year, the principle on which these matters can be defended, and the very strong case that can be put up in favour of this proposal. It has been said by the Chancellor of the Exchequer that the law has not been changed. If I may say so, that is a well-known fallacy. As very great authorities show, a decision of doubtful law is equivalent to a change of the law. That is what has really taken place in this instance. Until the case of the Brighton College, the law on the matter was doubtful, and no one, neither the Inland Revenue nor the taxpayer, knew exactly whether these particular moneys were liable to taxation or not. I do not think it unreasonable to conjecture that that doubt influenced the administration of the Inland Revenue. Not feeling quite sure how the law stood, they did not, as
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    the phrase goes, "press unreasonably" a claim which they thought all the time they might perhaps make in respect of these moneys. Therefore, the situation is really changed by the decision of doubtful law, as it always is. The great Roman jurists who advised Justinian in respect of the codification of the law, Sir Henry Maine and many other authorities have laid it down that the supreme judicial authority does change the law, because it determines doubtful law, and so erects new propositions of assured law on which further discussion arises, and of which perhaps further modification takes place.
    While I assent to the proposition that it is not desirable to change the law, certainly not to change it unfavourably to the Revenue at the present time, I suggest, as the law has in reality been changed, we have to consider the change made by the House of Lords—in obedience, of course, to the obligation of giving a. strict technical interpretation of the letter of the law, as they stated. We have to consider whether we think it wise, and in accordance with the general policy of our law, to continue the definition of the law made by the House of Lords—a technical definition—or to modify it, as I suggest we ought to modify it, more in conformity with the policy we have already adopted. Therefore, while, as I say, I assent to the proposition that we ought not to change the law, by that I mean we ought not to change the policy of the law; we ought to adhere to the general principles of the law, or at all events not modify them unfavourably to the Revenue. What is the general policy and principle of the law in respect of these educational authorities? The law has adopted the proposition that money devoted to educational purposes should be exempt from taxation. I do not argue whether that is wise or not. I assume that is the policy of the Government., and of the Chancellor of the Exchequer, and of the right hon. Gentleman who spoke from the Front Opposition Bench. Is there any distinction, in any principle or general consideration, between the surplus profits made by the thrifty administration of an educational' institution and the benefactions out of which that educational institution, and others like it, draw their original revenue? I am quite unable to see that any distinction can be drawn.

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    The benefaction is exempt. Why Presumably because of its purposes and motives. It is exempt because the motive that induces it is zeal for education and, perhaps, also because education is thought to be a useful purpose, and the money is going to be devoted to that
    useful purpose. All people whose exertions contribute to make these surplus profits, either the people who pay fees, or the thrifty managers by whose judicious arrangement fees are allowed to accumulate into a surplus—all these persons are animated by the same motive of doing good for education. No doubt the people who pay the fees have in mind the education which they want to get for themselves or their children. They have in view educational advantage or what is necessary for it, but it is all educational money. It is all money which comes from educational motives, and is given for educational purposes. If the original benefaction is to be exempt, why in the world should we not exempt these profits which arise out of the management of institutions for which the benefactors gave the money, and which are swollen by contributions, made by persons who, even if it is only to promote their own or their chldrens' education, are just as zealous for education as the original benefactor?
    The true distinction surely is as regards money which is either going to be spent for private objects, or has been accumulated by the operation of private motives—motives of private advantage. To say that the original benefaction, for example, the rent of a piece of land, is not to be liable to Income Tax if that rent is to be devoted to educational purposes, and that the surplus made by economies of management and by fees paid to an educational institution are not to be exempt, seems to me inconsistent with any rational thought. I cannot conceive that any human being, whether at the Board of Inland Revenue or not, can think rationally and think those two propositions. The real, true explanation of it is that when the Inland Revenue gave the original exemption, it had plenty of money, I suppose, at any rate, it was animated by a rare moment of generosity, and now it wants to save money and, therefore, it takes a different view; but no one can logically and rationally maintain that the original benefaction ought to be exempt and that
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    the surplus profits made, though just as educational in every sense of the word, ought to be taxed. The two things cannot be maintained. We are told that this would open a very serious extension, but surely not. The right hon. Gentleman, of course, knows much more about the ultimate consequences of these propositions than I do, but why should it open a very serious extension if you strictly confine your concession to treating surplus profits on the same level as original benefactions? They must in any case be small sums of money, much smaller sums of money than the original benefactions which you have already exempted, and if you limit your concession strictly to giving exemption only to surplus profits in an institution where you already exempt the original income, you will not spend very much money, and you certainly will not allow a principle which is in any degree an extension of the existing principle, because you cannot distinguish between the two, as I have pointed out.
    The right hon. Gentleman the Chancellor of the Exchequer repeated to us again—and it was echoed from the front Opposition Bench—that astonishing statement that an exemption from taxation is the same thing as a subsidy. I think that of all the aphorisms which spring from muddle-headedness, that is the best example. It ignores the fact that there is any right in respect of the money or property concerned in the person who owns it before the tax is levied; it altogether ignores the truth that until you take the money levied by tax away from a person it belongs to that person; and how can you say that that is the same thing as not giving him something which does not belong to him? As I pointed out to the right hon. Gentleman when I went on a deputation to him, at that rate you would say that almsgiving is the same as not picking pockets, arid that a person might go about saying; "How generous I am, how rich in the grace of almsgiving; think of all the people whom I have not robbed!" That really is a proposition not at all more absurd than to say that an exemption from taxation is the same thing as a subsidy. When you take money away from a man, it, was his, and it is yours; but when you give it to him it was yours, and it is his.

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    Therefore, I deny that altogether, and I differ from the right hon. Member for Central Edinburgh (Mr. W. Graham) when he says that if you are to help educational institutions, it is better done by an increase of grant than by giving this exemption. Surely that is a very unsound proposition from the point of view of national economy. If you give this exemption, you encourage economy of management, and it is worth the while of the managers of these educational institutions to save all they can, to make the best use of their money, and to work the institutions as efficiently and economically as possible, in order to have a surplus profit which in due course they may spend on the improvement of the educational institutions.
    Mr. CHURCHILL: Four-fifths of it is still left.
    Lord H. CECIL: That is true, that, pestilent though the Inland Revenue are, they do not destroy the whole of life. There still remains a great deal, but surely that is much better done than by giving them fresh money out of the apparently inexhaustible funds of the Exchequer, because that encourages extravagance of management. Of the two ways of helping educational institutions, it is surely much better to help them in a way which encourages economy of management than in a way which encourages extravagance. But let me say that the very fact that the Government give educational grants to these institutions shows how unfair it is to treat these surplus profits as really at all in the same position as private profits, because the Government would not for a moment give money for the benefit of a private person. If you recognise so emphatically in your policy of giving grants that these educational institutions are really public servants, doing public work—and on no other ground can you justify giving them grants—why should you niggle over the fact that they have saved a little out of their various benefactions and propose to use them for the very same purpose for which you are
    going to give them public grants? I think, therefore, the case is really a very strong one. I do not at all dissent from the reasonableness of the right hon. Gentleman's proposition that there should be a general inquiry into the whole
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    matter, and that an effort should be made to draw a line so that people should understand why some things are taxed and others are not, but I suggest that in this particular case the argument is so clear and so unanswerable in favour of treating surplus profits made in the course of the working of an educational institution on the same footing as the benefactions under which a large part of the income of the institution originally arises, and the impossibility is so strong of drawing a distinction between these two that this Clause ought to be accepted.
    There remains the question whether, if the Government oppose the Clause, my hon. Friends who support it would be wise in pressing it to a Division. I am not, of course, entitled to advise them, but after what the Chancellor of the Exchequer has said, I suspect that we should be wise on this occasion not to divide the Committee. I think that until the Inland Revenue have come to a final decision, and the whole matter has been thoroughly looked into and their policy is finally laid down, we ought not to press the matter unduly or in a manner which might seem to be irresponsive to the conciliatory tone which the Chancellor of the Exchequer's speech adopted. But if hon. Members do not press the Clause to a Division on this occasion, I hope the Treasury will clearly understand that we do intend to press it by all proper, constitutional means to the utmost of the influence—and it is not an inconsiderable influence—which these various educational institutions possess. We believe that our claim is entirely just and reasonable, and, therefore, we intend to press it to the utmost of our power.
    Sir ROBERT HORNE: I do not desire to add more than a sentence or two to the cogent and sparkling argument which has been put before the Committee by the Noble Lord, the Member for Oxford University (Lord H. Cecil), who has just sat down. In fact, I feel some diffidence in speaking on a matter of this kind at all. I am, like the apostle, "in a strait betwixt two." The spirit of the Exchequer is somewhat difficult to exorcise, as has been shown by the right hon. Member for Central Edinburgh (Mr. W. Graham), and, as one who has been a gamekeeper, I find it difficult to turn

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    so rapidly into a poacher. But my conscience is entirely salved by a consideration which I would venture to put to my right hon. Friend the Chancellor of the Exchequer, in the hope that be may take it into consideration along with those other arguments which have been put to him this afternoon. I am not quite certain that the Treasury are going to save any money by the course which they are proposing to follow. It must be kept in mind, with regard to the great educational institutions of this country, that if they are not enabled to raise sufficient money to develop their organisations and to add to their equipment, they have a claim against the educational grants which I do not think the Treasury would be in a position to dispute, and, accordingly, what seems to-day to be a matter of economy may turn out to be a form of extravagance which the Chancellor of the Exchequer never anticipated. I would venture to say to him, accordingly, that there are many people to-day who are spending money on these schools which otherwise, if it were expended in other ways or were not extracted from the parents of children who are being educated, would have to be found by the Exchequer, and I think that that is a consideration which even the author of the Economy Bill ought to take into account in dealing with this question.
    There is another point, which indeed was adverted to by the Chancellor of the Exchequer himself. He pointed out that the course which he was pursuing would not in the main hurt the great and well-endowed educational institutions of this country, whose revenue was untaxed, but it would be a serious burden upon the newer institutions which had to find the money for their future development. It was one of the astute methods which my right hon. Friend took in dealing with this proposition that he stated the argument, but never answered it, and indeed, as it seems to me, the argument is unanswerable. It is an impossible position to place the less well-endowed educational institutions of this country in a position in which they are to be affected by burdens from which those more affluent schools are to be free. My right hon. Friend the Member for Central Edinburgh stated, with that lucidity to which we are accustomed from him, two
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    arguments which seemed to me to have already been dissipated by our previous practice. His argument went so far as to say that all the revenue of these schools ought to be taxed in the ordinary way, but, if that be true, why should not the Treasury put an impost on the annuities which those schools are enjoying? My right hon. Friend the Noble Lord opposite, with his irresistible logic, as it seems to me, blew that kind of argument into the air.
    The other point which the right hon. Member for Central Edinburgh made was that we must not look—indeed, that it was very bad policy from an economic point of view to look—at the services to which money was being applied. If that be so, why are educational institutions exempt at all at the present time? I think it is impossible, as the Noble Lord said, to hold these two propositions at the same time, but I think perhaps he was somewhat optimistic in supposing that it would be possible at any time to get any rational theory out of the Finance Statutes, or to find a rational argument sustained in any two consecutive paragraphs that you could find in a Finance Statute. I do not propose to detain the Committee further. I only seek to reinforce the arguments which have been put before the Committee, and to add that if, as I hope, this Clause will in due time be accepted, then I should propose to have it amended to the effect of including educational institutions of dramatic art.
    Mr. TREVELYAN: I should like to say just a few words about this Clause, because I want it to be clear that, after all, this is not a party question, and that there are a good many on this side of the
    House who do not altogether agree with my right hon. Friend who has just sat down. I would draw attention to the fact that my right hon. Friend the Member for Seaham (Mr. Webb) and the hon. Member for Southwark North (Mr. Haden Guest) propose a little later to insert words which, I think, would meet the point of the light hon. Gentleman the Member for Hillhead in regard to the Academy of Dramatic Art in which he is interested. I think the words "any educational institution receiving a Government grant" would cover the point. As a grant of £500 a year is now
    6.0 P.M.

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    given to the Academy of Dramatic Art, these words would cover the institution in which the right hon. Gentleman is interested.
    I am bound to say that I indulged the hope that the Government would not turn a deaf ear to this proposal, but would consider favourably so respectable a requisition. Practically all the University representation have their names to the Amendment. One would think that their specialist advice could not very well be disregarded, and that on such a question as this, if on no other, they ought to be allowed to guide the House. The House ought to care more for education than for Income Tax logicality. Hitherto it has been understood that there should be general exemption for education. Particularly, it is not at all obvious why there should be, any difference in financial policy between income derived from fees and income derived from endowments. That is the real question. The Chancellor of the Exchequer speaks about the hardship that the new legal decision has imposed. That is quite true, but the change in the situation is this: Since the War there are a very large number of schools and educational institutions that have had to depend more upon fees and income of that kind than before the War. Therefore, the need of the educational institutions has become very much greater. There are a very much larger number of these hit by a provision of this sort than before. That is what makes it important and imperative that the House of Commons should deal with this matter, and deal with it at once.
    May I say one last thing with regard to something said by the right hon. Gentleman. He did realise that the schools which depended upon endowments are not affected by this Clause and by the present state of the law, but that the schools which were affected were those dependent upon fees. It is, however, not by any means only new schools that are so dependent. No doubt it is the case that most of them are new.
    My right hon. Friend and his Financial Secretary, with myself, enjoy the inestimable advantage of having been educated at Harrow. The advantage of belonging to a school such as Eton, which is in the possession of so many endow-
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    ments, is that the fees are a matter of lesser importance. In the case of Harrow, which has to depend upon fees and subscriptions, this proposal will make, or perpetuate the grievance. I am bound to say that it is a matter of regret to myself that the Chancellor should deal this rather unfilial blow at the great institution which moulded his intellect and matured his budding genius.
    Mr. SOMERVILLE: The case which the hon. Mover of the Amendment has put so fully and clearly has made some impression on the Chancellor of the Exchequer. I could wish that the impression were wider and deeper. The Chancellor of the Exchequer has spoken of the possibility of discriminating in favour of the newer and the smaller schools. I would ask him also to add to these the older grammar schools and other secondary schools outside the State system up and down the country, without which our educational system would be much poorer. There is, for instance, the Carlisle Grammar School, founded by St. Cuthbert in the Seventh Century and refounded by William Rufus. There is the King's School at Canterbury, which dates back to the time of St. Augustine and was refounded by Henry the Eighth. A large number of these schools all through the country are doing very good work. They are outside the State system, lint work side by side with it. The older schools, perhaps, lay more stress upon character and tradition. The newer secondary schools think more of vigour and progress. The schools with the older traditions try to teach standards of life. The newer schools teach how to get on in life. But they are both helping one another, and if this Income Tax is levied on the older secondary schools they will undoubtedly be enfeebled, and our educational system will suffer
    We have been told by the Chancellor of the Exchequer that this is not a new tax, but Mr. Justice Rowlatt did not agree with him. Unfortunately the House of Lords did agree with him, in the recent judgment on the Brighton College case. Undoubtedly it is a new tax as far as these old schools are concerned, for it has not yet been levied on them. When, therefore, we are speaking of this matter we are not speaking of a possible loss to

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    the Exchequer but of a possible gain. I would ask the right hon. Gentleman to remember that the Burnham scale and the Superannuation Act of last year have imposed additional burdens upon these schools. They have to pay their masters salaries at least equal to those outside. They have also to provide funds to meet the demands of the Superannuation Act of last year. In order to do this, they have gradually to build up a surplus by a small increase in the fees. The Treasury now are going to take away one-fifth of this surplus. I would ask the right hon. Gentleman to regard these surpluses as capital waiting to be invested in the improvement of buildings or in the improvement of salaries, and I would ask him also to remember that if the masters' salaries are improved then the masters themselves have to pay more in Income Tax, and so he will get something back in that way. The Chancellor of the Exchequer has told us he will inquire into the matter. May we hope that this inquiry will take place before the Report stage and that that Report will be favourable? Might I venture to remind him that at Leeds in January he expressed the strong hope that, before this Government went out of office, it might be able to do something substantial for the benefit of education. I would venture to ask him to do something now to fulfil those words, and to treat this proposed new Claude as favourably as possible.
    Sir ELLIS HUME-WILLIAMS: Might I make a suggestion to the Chancellor of the Exchequer that during the interval in which he is going to consider this matter, and any concession he finds it possible to make, he will also take into consideration this particular point: It does seem to me that the taxation we are now considering is financially distinguished from the other taxation with which we are dealing for this reason, that, in nine cases out of 10, if not in all, the removal of the burden of taxation is the removal from institutions which are now obtaining the State grant. Hence you have a financial justification for giving the exemption asked for that perhaps no other exemption can claim it is very obvious that the legitimate desire of the Treasury must be to escape giving grants in larger sums than are absolutely necessary. But it is equally obvious that if you wish to escape making
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    grants you encourage the institutions to realise surpluses which they are obliged to return and spend on up-keep so as to become independent.
    It has been held by the Court that this taxation must be imposed upon charitable institutions because they are in fact carrying on trade. I thought it was always desirable to encourage those who carried on trade to put back some of the profits into trade. There is, however, this distinction in this case to be thought of, that while the charitable institutions, by their charters, are compelled
    to put back their profits into these institutions, while they are doing it solely for the benefit of the institution, it cannot be denied that the employer who is equally legitimately and properly putting back what he earns at the end of the year in the further development of his business, is doing it in the hope ultimately of increasing the profits to himself. That is the big consideration which differentiates the taxation of the profits derived from trading which being put back into the business will ultimately increase the trade and the present case where the surplus is likely to relieve the Treasury from the grants they are snaking.
    I would say one word on behalf of the school, The Royal Academy of Dramatic Art, because it does seem to me that that institution affords a very excellent example of what would be gained by granting the exemption which the new Clause contemplates. The Chancellor of the Exchequer spoke of Mr. Tree's College of Dancing, or School of Dancing. What he means by that I have not the least idea. I do not suppose he can really mean The Royal Academy of Dramatic Art, because that is an institution recognised by the London University, who take the training there in consideration in the diplomas they grant; the County Council grant scholarships at this institution; and the Government recognise the good work that it does.
    The case of this institution presents a golden opportunity to the Chancellor of the Exchequer. I think England is the only country in the world where the opera and State theatres do not receive some kind of subvention. In France, in Germany and other countries dramatic art is looked upon as of such educational importance that State theatres receive a State subvention, and such assistance is

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    accorded to the opera as well. In England there is nothing of the kind. If the Chancellor of the Exchequer would grant this little exemption to this school, this academy of dramatic art, which is entirely self-supporting, which owes its success entirely to the voluntary efforts of some of our most distinguished dramatic authors and actors, it would be some sort of step in the right direction and a palpable encouragement to dramatic art. This taxation is coming to the Chancellor of the Exchequer in the shape of a godsend. A few unfortunate institutions may have been paying, but certainly the great part of them have not, and therefore I do hope that he will think this case over, giving it that attention which it deserves, and will come to the conclusion that this very small State contribution towards the support of dramatic art in the country is long overdue. I have great pleasure in supporting the Clause, and like the Noble Lord the Member for Oxford University (Lord H. Cecil), I hope that, after the promise he has made, the Chancellor of the Exchequer may see fit to grant this remission.
    Sir MARTIN CONWAY: We have heard this afternoon a good deal about the objectionable nature of hidden subsidies. The Chancellor of the Exchequer has told us that the sum given in hidden subsidies to charitable institutions amount to £10,000,000, so that, if it be a bad system, at any rate it is very rife throughout the country. He has said there is a kind of vague margin to the list of those who have been regarded as qualifying for these hidden subsidies, these remissions of taxation, and that in his view it requires very close consideration—his words were
    "comprehensive and general consideration"—to decide whether a remission of taxation ought to be given or not in any particular case. All we ask is that money devoted to education should not be taxed. That is the "comprehensive and general consideration" that we put forward. A certain sum of money is spent every year on education. As far as the country is concerned, it matters nothing whether it comes out of the pockets of the Chancellor of the Exchequer, or from endowments, or from fees, or how it comes, for that sum of money is paid by the country for education, and the tendency is not to diminish the amount
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    but to increase it. In these circumstances, any money taken from education by our system of taxation must be given back again in some other fashion. We cannot diminish the amount we are annually spending on education, and if the Government take away with one hand any sum already being spent on education they will have to give it back with the other hand and with this disadvantage as compared with the remission of taxation. The remission of taxation costs nothing; but it always costs money to collect a tax. If the amount is only £200,000 that sum cannot be collected from the schools of England without the expenditure of a considerable fraction of it on the actual cost of collection, and that fraction is wasted; but if we grant a remission of taxation that waste does not arise.
    I speak mainly on behalf of the younger Universities, which are specially hard hit by this kind of taxation. It is all very well to say it is not a new system of taxation. As far as the younger Universities are concerned, it is, because they have not been accustomed to pay 'this tax, and it is perfectly certain that in years to come, after the attention of the inspectors of taxes has been called to it, that all the younger Universities will find themselves mulcted in more or less appropriate payments on this account. It takes a very long time to build up a University. Generous donors begin by giving a considerable sum of money, buildings are put up, and thus are laid the foundations of the University. You give it the name of University, but it is only by gathering moneys together —by economies in administration, by surpluses from fees and in one way and another, year after year and generation after generation—that perhaps, after a hundred years, you have a really efficient. University. It is very large built up, must be built up, out of the surplus from fees every year. If we cut away one-fifth of that amount we hit the younger Universities very hard.
    I have had letters from schools over the country which are looking forward with, I was going to say, horror, but at all events with a very strong objection, to what is proposed. Our big schools have normally been equipped in this way. A capital sum of money has been borrowed on the security of the school fund and spent on buildings and other equipments

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    for the school, and the school fund annually pays off a certain amount of that indebtedness until, finally, the debt is cleared away. The credit of the school depends upon the amount of the school fund, arid, practically, upon that margin which is provided by the surplus at the end of the year. That is really the sum of money on which the credit of the school depends, and its buildings, its equipment and its power of bringing itself up to a proper level of efficiency for its work depend, in the main, on its credit and its power of borrowing money. If the Chancellor of the Exchequer takes away one-fifth of the credit of every school in the country by this system of taxation, what good does that do to education? It does no good. It brings very little to the Treasury, and it is leading us farther and farther away from that efficiency which we are all desirous of obtaining.
    We have looked to this Government as likely to take broad views on education and to help education, especially university and higher education. What have they done? Last year, under the Tithes Bill, they practically mulcted the old universities of some £300,000 capital. Now we have this new imposition, because it practically is a new imposition, of taxation on public schools. I ask the Chancellor of the Exchequer to consider this matter very carefully. I do not think he realises how strong is the feeling against his proposal throughout the whole body of schools, colleges and universities in the country. I hope that between now and the Report stage, and, if not then, between now and next year, he will reconsider this matter and will give us a much better answer.
    Mr. GILLETT: I think the hon. Member who has just addressed the Committee must by now begin to share in the disappointment that many of us have felt as to this being a Government to which we can look for large educational reforms of any kind. I hesitate somewhat to speak on this subject, because after my right hon. Friend the Member for Central Edinburgh (Mr. W. Graham) has spoken on Income Tax I always feel that he has shown himself such an expert that it is dangerous for anyone who does not know the subject so well as he does to attempt to follow him, especially if speaking on opposite lines from those he has taken. I
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    think the fate that has befallen him at the hands of the Noble Lord the Member for Oxford University (Lord H. Cecil) should be a warning to him not to keep company with the Chancellor of the Exchequer. I think he did say that this was the first time, and I can only give him the advice that I hope it will be the last. There are two points in the speech of the Chancellor of the Exchequer to which I wish to refer. In the first place, he tried to belittle the change that is taking place. According to my information, colleges and schools which in the past were exempt from this form of taxation have during the past three years, and as a result of a legal decision, been asked to pay tax. The Noble Lord has admitted that to some extent he is satisfied with what the Chancellor of the Exchequer has said. Speaking from a more impartial position, perhaps, than is occupied by one who is, at any rate nominally, a follower of the Chancellor of the Exchequer, I may say that I do not think very much of the promise of the Chancellor of the Exchequer. It seemed to me an exceedingly easy way of getting rid of a rather awkward subject.
    Lord H. CECIL: I did not say I was satisfied.
    Mr. GILLETT: I understood the Noble Lord intimated that he was not going to press the Clause to a Division, and that was what I meant by being satisfied, because it seems to me that the Chancellor of the Exchequer has simply shelved the question. A year hence the present Chancellor of the Exchequer may not be in a position to come to any decision on the question. The point which especially appeals to me, and which I would like to urge upon the Chancellor of the Exchequer or the Financial Secretary, is the supreme importance of education to this country at this time. Anything that can be done for education of any kind, whether it be for colleges or schools, if it is intended for the education of every section of society, is' a most important thing; and it is undoubtedly the most important thing to do to help the country through the difficult times with which we are now faced. I appeal to the Government seriously to consider this question, and not to add fresh burdens to institutions which are now grappling with this great problem.

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    We have been told that many of these schools and colleges in order to improve their education and make their schools better equipped have raised money on loan, and that at the present time the only way in which the loans can be paid off is by means of donations or gifts, which have been made by the wealthy supporters of those institutions, or by means of the fees which are now liable to taxation. The sooner we can free educational institutions of this kind from taxation of this kind the better it will be for everybody concerned. Personally, I am very much disappointed with the reply made by the Chancellor of the Exchequer. If what we have heard in this Debate is any indication of what may be hoped for in the future then those who are supporting this Motion are in a most unfortunate position. I hope the Committee will make it quite plain to the Government that they should really do something in regard to this matter, and, if the Noble Lord and his friends can see their way to press this proposal to a Division, I shall be only too glad to support them.
    Commander WILLIAMS: On this question, I find myself in a rather difficult position. I agree that it is very easy to make out a really good case for this particular form of exemption. It is always very easy to come here and get a lot of sympathy for any good cause, and they are all good causes when it is a question of getting people exempt from taxation. I have not heard a single instance where one could not make out a good case from comparatively little material for the exemption of some particular section of the community. There can be very little doubt that, as far as these particular schools and various educational institutions are concerned, they are doing some of the finest educational work in this country that has ever been performed throughout the whole world. That is acknowledged on all hands, and no one is more willing to pay a tribute to it than I am and the Members of my party. I wish to point out, however, that it is a very difficult position when once you ask the Chancellor of the Exchequer to make exemptions, even if it is only just a little one here and one which seems good in its way and would undoubtedly be an enor-
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    mous help. Directly you make one exemption you have someone else coming along on this side and the other side asking for more and more exemptions all along the line. That seems to me to be the whole trouble at the present time.
    You have no Liberal party now because it is dormant or dead, and therefore there is no one to stick up for the general taxpayer of the country. Directly you give exemptions in one case it means that the rest of the taxpayers have to make up that deficiency. Therefore, it is absolutely essential, no matter how much sympathy may be expressed in one direction or another, that some Members of the Conservative party should emphasise the fact that, however kind your hearts may be, or however much you wish to help our oldest educational institutions which have done so much for the country, there is a time when some of us ought to support the Chancellor of The Exchequer and not be perpetually, as so many sections of this House are always doing, asking for some relief of taxation for some particular cause, although it could not be devoted to a better cause than this one. I would remind the Committee that every time you give relief somebody has to find the money, and you are simply placing more hardships on those who are bearing very heavy burdens at the present time.
    Sir ALFRED HOPKINSON: I should not have intervened in this Debate but for the fact that I have spent a large part of my life in educational administration, and I know something about the great difficulties in which the Universities are placed, having for over 16 years been connected with one of those Universities. I have also noticed as the governor of various schools how badly they are in need of support, and the great difficulty they experience in keeping themselves up to date. Of course, we cannot ignore the legal position of this matter, and that has been very clearly stated by the Chancellor of the Exchequer. We are all aware that what the House of Lords decides is law, and we must take their decision as being a declaration of the existing law. Nevertheless, it is unfortunate that these schools and educational institutions have been working under a state of the law which they relied upon, and which was different from the decision given by the House of Lords,

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    because one of the Judges who has given most attention to these matters, Mr. Justice Rowlatt, decided that the authorities were right in thinking they were not liable to pay this tax, and really it comes as a sudden blow to a large number of schools who are struggling to make both ends meet and to keep themselves up to date.
    I ask hon. Members to put themselves in the position of those who are so badly hit by this tax and by the decision of the House of Lords. On this matter, I would like to say a word or two from the point of view of the taxpayers and the ratepayers. I say it would be good business from the point of view of the public purse to make this exemption, because I feel quite certain in the long run that, if you do not give this exemption for income on these fees, you will have to give grants in the near future either out of the rates or in the form of taxation, which will be far more than the amount of the tax which would be lost by this Amendment. I think on this subject I am the latest recruit on this side of the House, and I happen to know that there is a feeling going about that the Government are not very keen about educational matters and that in the past we used to show more sympathy for education. Let us look for a moment at the position of the schools. Take one which depends largely on fees and which wishes to keep itself up to date. As a rule, we find it has little or no endowments, or, if it has any, they are generally earmarked for certain purposes.
    Such a school is mainly run by the fees paid by the parents. These schools have to make sure of an annual income in order to pay the masters' salaries, but, in addition to this, they must, from time to time, carry out various improvements if their work is to be properly carried on. A new lavatory may be required or sundry repairs or other improvements, and these things are absolutely essential. What fund have they got for this purpose? They have no funds at all, and are you going to say that these schools should not be allowed to carry on their good work? The only fund they have is that formed by the fees accumulated from year to year. You are practically saying to these schools, "You shall not take the cost of that equipment which is absolutely necessary out of the fund provided by
    106
    your fees from the parents who send their children to those schools." I could mention one or two cases where such work has had to be done. You must have provision for supplying trained teachers.
    I think the proposal we are discussing would be good business from the point of view of the taxpayers, and it is absolutely essential that we should have some relief for these schools and colleges. This is a question of calling upon these people to pay Income Tax when as a matter of fact a great many of them never dreamt that they would have to pay Income Tax under these circumstances. This kind of work has to be encouraged, and it is recognised on all hands that such educational work is done in the cheapest and best way by schools of this kind. Some hopes in this direction have been held out by the Chancellor of the Exchequer, but I trust that between now and the Report stage he will carefully consider whether something cannot be done to prevent this great hardship and this great blow which will be inflicted by this tax if these schools find themselves called upon to pay an Income Tax which will seriously cripple their work in the future.
    Mr. DENNIS HERBERT: I wish to deal with a point which has not been dealt with by previous speakers, and it is one to which I wish to call the attention of the Financial Secretary. Parliament never intended that this particular source of income should be taxed, anti if the House of Commons had had any idea that such a decision would have been given by the House of Lords they would never have drawn up the Act in that particular way. It is a form of taxation which I think I can show is utterly inequitable. The reason why I say that is this. It is proposed to tax certain moneys as profits which, if the concern were a commercial concern, would not be taxed. These concerns are being taxed on a certain surplus of receipts over expenditure. Those receipts are only obtained by reason of the fact that the institution has, in some form or other, very large capital, perhaps in the shape only of school buildings. The receipts are earned by that capital, but, in considering what are called the taxable profits, no allowance whatever is made for the capital expenditure or capital borrowing which would be necessary in the case of a commercial venture. For that reason I

    107
    venture to suggest that this tax is absolutely inequitable and indefensible, and never could have been intended by Parliament. One of my hon. Friends on these benches has made an appeal to those Members of the House who are anxious to support economy, to which, in theory at any rate, I should have been inclined to make a very strong response; but I would like to point out that this is very different from the ordinary demands which are made, because, as has been pointed out over and over again, and I think conclusively, this is to all intents and purposes, in practice, the imposition of a new tax. My hon. Friend must at any rate admit that, however long it may have been the law, the law has not been enforced in any substantial sum of pounds, shillings and pence ever since it existed, but it is now proposed to enforce it to the utmost. Therefore, the Committee have really to consider the imposition of a new tax which I venture to suggest is, as I have already said, inequitable, and which Parliament would never intentionally sanction or pass.
    There is another point of a somewhat similar nature. The Noble Lord the Member for Oxford University (Lord H. Cecil) has thoroughly exploded the suggestion that a remission of tax is equal to a subsidy, but, whatever it may be called—whether it be called a hidden subsidy or whether it be called something else—I want to point out one peculiarity which it has in this case. These moneys which it is proposed now to tax are used mainly for keeping up to date and effective, and sometimes for extending, those ancient gifts and endowments which have been given for educational purposes in the past. If these moneys are to be taxed by which is kept up to date that educational apparatus which has been voluntarily provided in the past, it will be placing a tax upon, it will be placing an obstacle in the way of, those who would be inclined in future to endow public schools and colleges and provide money for that purpose. That is one way, at any rate, in which this money differs very much from a subsidy. I hope the Chancellor of the Exchequer will remember that, as has already been pointed out to him from the benches opposite, many of these institutions, which are most deserving according to his own idea, are not
    108
    necessarily new institutions at all; they are very old ones. There are old educational institutions, with valuable buildings and valuable educational apparatus—if I may use that as the best phrase for the purpose—which, by reason of their ancient charitable endowments, are enabled to carry on now a very great work. They can only continue to carry on that great work effectively if they can keep their educational apparatus up to date, and no apparatus in recent years has required more expenditure to bring it up to date than this educational apparatus.
    Therefore, while thanking the Chancellor of the Exchequer for the obvious sympathy that he has for this proposal, I venture to press the Government very earnestly to consider this matter, not before next year, but before the Report stage of this There is really nothing in the argument as to this being the beginning of a slippery slope or anything of that sort. The Clause which is now proposed is perfectly clearly defined, is absolutely limited in regard to the money that is to be affected, and is absolutely limited in regard to the institutions which are to he affected. I personally cannot see any really good reason why the Chancellor of the Exchequer should not accept the Clause as it stands, except in one possible respect, which he himself mentioned, and that is the case of some of these old educational establishments—they must be very few—which have such a large income arising from their property and endowments—which are quite different from their actual buildings—that they can keep up their educational apparatus without making a surplus on the fees that they charge. I venture to suggest to the Chancellor of the Exchequer that the Movers and supporters of this proposed new Clause will he quite prepared to consider the addition to it of words to except institutions which are so wealthy that they do not need the benefit of it. With that addition, this Clause ought to be accepted, and T venture to express the earnest hope that the Chancellor of the Exchequer will try and see if he cannot find at least some amended form which he will be prepared to accept on the Report stage.
    Mr. WELLS: I desire to plead with the Chancellor of the Exchequer for some of the older endowed schools. In Bedford

    109
    we have a very large endowment fund for schools. There are four schools, with some 2,300 pupils. In pre-War days we managed, by our surplus, to build up those schools during several generations, but to-day, owing to the increased cost of education, there is very little surplus. It would be interesting to know what is going to be the surplus. The accounts of these schools have never been sent to the Inspector of Taxes, but they will now be invited to send their accounts to the Inspector of Taxes, and he will challenge a good many items. For instance, I have here an item of expenditure of £2,500 for plant and apparatus, and there is also another of £1,500 for improvements and repairs. I venture to think that, when the Inspector of Taxes gets these figures, he will say that a certain proportion of it may be charged to income, but that the rest will be capital expenditure, on which tax will have to be paid. I think that that will interfere to a very great extent with the carrying out by the management of these educational schemes, while at the same time I think it will bring hardly any benefit to the Chancellor of the Exchequer. In fact, I think he is doing a very great deal of harm by instituting in this case what I call a new tax.
    Mr. SKELTON: I only intervene to add one observation to the very full Debate which has taken place on this topic. I do not think the Treasury can possibly doubt that the request made by the proposal of this Clause for exemption from Income Tax of all the funds of educational bodies is a logical and sound proposal. There is only one case in which their profits are not at present exempt. I will not go into it, but their lands and investments are exempted as a matter of course. When, however, by good management, a certain surplus on their fees arises, that alone amongst all their financial assets is to be taxed. I venture to urge upon the Financial Secretary that this anomaly, for it is an anomaly, should be removed. It was interesting to hear the Chancellor of the Exchequer say that a full examination is going to be made into the legal meaning of the term "charity," but, whatever legal meaning is attached to it, surely, educational endowments and educational work must, fall within the definition of a charity. I am sure the
    110
    Committee will agree that, even if the term charity were to be limited to the very narrowest scope, educational institutions must be regarded as charities, and, if that be so, there is, surely, no real reason for postponing the operation of this proposed new Clause. By all means let the investigation into the question what is a charity he undertaken with the greatest care, and let all the time necessary he spent upon it, but, while that investigation is going on, let us have the exemption of charitable institutions from Income Tax made complete.
    I would urge the Financial Secretary to try and see his way to accept this new Clause on the Report stage this year, and not postpone it to a future year. No one would wish him to introduce into Ms Finance Act of this year a Clause which would have to be repealed next year. That would be foolish legislation. But there is no risk of that. I do not think that either the Committee or the House in future years would ever say that educational institutions are for the future not to be deemed to he charities. Therefore, I venture to urge the Financial Secretary, to accept this new Clause now, or give us a promise that it will he accepted on Report, for surely it is of national importance that educational institutions should know where they stand, and should have now the full benefit of the position which they occupy of being charitable institutions in the truest sense of the word.
    Sir JOHN MARRIOTT: I only want in one sentence to make a further appeal to the Financial Secretary to accept, at any rate in substance, this proposed new Clause. It is not asking for a concession; it is not asking for a subvention; it is not asking for a remission of taxation; it is merely asking that a new tax shall not be imposed on institutions which are doing valuable work for the country. I venture, therefore to join in the appeal which has been so relevantly made by hon. Members around me.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Ronald McNeill): My two hon. Friends, the Member for Perth (Mr. Skelton) and the Member for York (Sir J. Marriott) have made a personal appeal to me to give an assurance of the acceptance of this proposed

    111
    new Clause when we come to the Report Stage of this Bill. In the circumstances, I am bold enough to say that I do not think that that is a very reasonable request to make to me at the present moment. After all, how does the matter stand? We have had a very interesting and important Debate, which has brought out a very strong feeling on the question of this Clause, but there really has been very little difference of opinion. The strongest note of opposition to the Clause came, I think, from the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham), and with a great deal of what he said I personally find myself in agreement. Although he spoke strongly against the Clause, he, of course, showed that with the object in view he has the fullest possible sympathy.
    7.0 P.M.
    No one showed that sympathy more strongly than my right hon. Friend the Chancellor of the Exchequer. [Interruption] Of course, hon. Members may like to make an attack upon my right hon. Friend's sincerity. At all events, that is not the attitude of my hon. Friend who made the appeal, and seeing my Noble Friend the Member for Oxford University (Lord H. Cecil) had already, in his usual convincing way, put before the Committee the strongest possible case that could be made for the Clause and seeing that after hearing that speech my right hon. Friend expressed his warm approval of the object which we all have in view, but intimated to the Committee the technical difficulties which were known to him from the taxing point of view, and told the Committee that he intended to take the whole of the subject matter of which this Clause is only one part into consideration in the near future with a view to seeing whether the whole of this branch of Income Tax law could not be put on a more satisfactory basis, I think it is a little unusual to expect that I should get up here, after my right hon. Friend, and go considerably further than he felt able to do and give a definite pledge with regard to the Report stage. I cannot do that. I can only repeat, for my own part, my strongest possible sympathy, as my right hon. Friend has done, with the object which this Clause has in view and express the earnest desire that my right hon.
    112
    Friend will find it possible to deal in a satisfactory way with this matter.
    Lord H. CECIL: Everyone must feel it would be difficult for the right hon. Gentleman who has just spoken to change what the Chancellor has said, in an earlier speech, but I do think that my hon. Friends will be justified, and in fact bound, to put down the Clause afresh on the Report stage in order that we may have put before us a little more convincingly the case for the Treasury against the Clause, unless they are prepared then to accept it. Either let them accept it on Report after reflection or let them put down some simple form of it themselves, or let them really give us rather a better case than, if I may so respectfully, we have heard to-day. I think the Financial Secretary to the Treasury must have been impressed by the great concurrence of opinion among hon. Members of different ways of thinking, and the great preponderance of argument on behalf of the Clause to which, indeed, he has himself borne witness. In these circumstances, I think we are entitled to something more convincing and satisfactory by way of reply from the Government on the Report stage, and I earnestly hope that that satisfaction will take the form of some substantial concession. At any rate, I think the Clause should be put down afresh on Report in order that it may he again discussed.
    Mr. McNEILL: With reference to what has just fallen from my Noble Friend, I would remind him that so far from there being any possible objection to that course, the Chancellor of the Exchequer expressly said that he did not wish anything he said to he taken by hon. Members who are supporting the Clause as a deterrent from any Parliamentary action they wish to take, but he wanted to safeguard himself against the suggestion that he was going any further than he was in the direction of a pledge of that sort. If the Clause were put down again on Report, we should have the subject discussed again.
    As regards what my Noble Friend has said as to the character of the Debate, it is quite true that there has been a great preponderance of opinion expressed in sympathy with the object of the Clause. I do not suppose anybody will differ from

    113
    that, but there are two quite separate aspects. We can all desire to do all we possibly can for education in the widest sense of the word. You may be desirous of doing everything you possibly can, legitimately and fairly, to endow schools or to safeguard their endowments, but very few hon. Members have approached the subject at all from the rather narrow and perhaps technical standpoint of the taxing machinery of the country.
    Hon. Members have never really addressed themselves at all to the question which the Chancellor of the Exchequer must look at as to the reaction which it will cause on the wider field of taxation. The right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) is very much alive to that, but one or two hon. Members seemed rather to brush it aside as if it did not exist, and one hon. Member, in his appeal to me to accept this Clause as it stands, even said there could be no possible objection to accepting it, and that there could be no reaction. I can only assure him that there is no one who has had any experience of the Treasury who will take that view. They are perfectly alive to the fact that it may be difficult—and will be extremely difficult—to accept this Clause, or to frame another Clause which would have this effect, without opening a very large door to exemption of taxation. Whether it would be necessary or desirable to do that is another question, but it would have that effect, and therefore, there is a larger aspect which has nothing to do with education or with one's sympathies with education, but which we have to keep account of. I only mention that, because so far as it is a reply to the statement of my Noble Friend, the Debate has been entirely one-sided in the sense I have indicated, and I hope the Committee will not lose sight of the other side.
    Mr. WITHERS: In view of the sympathy shown by the Chancellor of the Exchequer and his statement that he will hold an.inquiry into the matter, I and my hon. Friends have decided that the right course is to withdraw this Clause at this stage, but we hope the inquiry will not he delayed very long and that something definite may he said one way or
    114
    another by the Report stage. In that ease, we should feel no difficulty in putting down the Clause again.
    Captain WEDGWOOD BENN: I think somebody—
    The DEPUTY-CHAIRMAN (Captain FitzRoy): I would point out that if the Debate is to be continued the Clause cannot he withdrawn.
    Captain BENN: If I may say so, that is a matter of indifference to me. I did not wish to continue the Debate, hut it seemed to me a great pity that no one should draw attention to the fact that the supporters of the Government who have made an excellent ease for the Clause are giving way to the Government in agreeing to withdraw it. The hon. Member for Cambridge University (Mr. Withers), with a meekness which does him great credit, has explained that in view of the sympathetic utterance of the Government he proposes to withdraw it. I do not think anybody could have gone further in the way of determined resistance to the clause than the right hon. Gentleman who is sitting on the Front Bench at this moment. He explained that the sympathy of the Government for education was well known—I think it is—and he went on to say that the difficulty was that they had not the necessary experts to devise a machine for exempting a special class of ease with which he felt cordial sympathy. He went further and warned the hon. Gentleman who is now proposing to put down the Clause on Report stage that it would receive no more consideration on Report than it has done now in Committee. I can put that, in a final sentence, to a very conclusive test. Will the Financial Secretary undertake that if this Clause is put down on Report and if a case is made out for it as good as has been made to-day, he will advise the Patronage Secretary to withdraw the Whips and have what is popularly called a free vote?
    Mr. McNEILL: The hon. and gallant Member knows perfectly well that that is not a question to put to me.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes. 116; Noes, 244.

    Division No. 296.]

    AYES

    [4.40 p.m.

    Alexander, A. V. (Sheffield, Hillsbro')

    Cowan, D. M. (Scottish Universities)

    Harney, E. A.

    Ammon, Charles George

    Dalton, Hugh

    Harris, Percy A.

    Attlee, Clement Richard

    Davies, Ellis (Denbigh, Denbigh)

    Hartshorn, Rt. Hon. Verne,

    Baker,.J. (Wolverhampton, Bilston)

    Day, Colonel Harry

    Hayes, John Henry

    Barker, G. (Monmouth, Abertillery)

    Dennison, R.

    Henderson. Rt. Hon. A. (Burnley)

    Barr, J.

    Duncan. C.

    Hirst, G. H.

    Batey, Joseph

    Evans, Capt. Ernest (Welsh Univer.)

    Hirst, W. (Bradford, South)

    Beckett, John (Gateshead)

    Fenby, T. D.

    Hore-Belisha, Leslie

    Benn Captain Wedgwood (Leith)

    Garro-Jones, captain G. M.

    Hudson, J. H. {Huddersfield)

    Bowerman, Rt. Hon. Charles W.

    Gardner, J. P.

    John, William (Rhondda, West)

    Broad, F. A.

    Gillett, George M.

    Kelly, W. T.

    Buchanan, G.

    Graham, Rt. Hon. Wm. (Edin., Cent.)

    Kenworthy, Lt.-Com. Hon. Joseph M.

    Buxton, Rt. Hon. Noel

    Greenwood, A. (Nelson and Coins)

    Kenyon, Barnet

    Cape, Thomas

    Grenfell, D. R. (Glimorgan)

    Lawrence, Susan

    Charieton, H. C.

    Groves, T.

    Livingstone, A. M.

    Cluse, W. S.

    Grundy, T. W.

    Lunn, William

    Clynes, Rt. Hon. John R.

    Hall, F. (York, W. R., Normanton)

    MacDonald, Rt. Hon. J,R.(Aberavo)

    Compton, Joseph

    Hall, G. H. (Merthyr Tydvil)

    Mackinder, W.

    Connolly, M.

    Hamilton, Sir R. (Orkney a Shetland)

    March, S.

    Cove, W. G.

    Hardie, George D.

    Montague, Frederick

    Morris, R. H

    Sinclair, Major Sir A. (Caithness)

    Wellhead, Richard C.

    Morrison, R C. (Tottenham, N.)

    Smith, Ben (Bermondsey, Rotherhithe)

    Walsh, Rt. Hon. Stephen

    Murnin, H.

    Smith, H. B. Lees (Keighley)

    Westwood, J.

    Naylor, T. E.

    Smith, Rennie (Penistone)

    Whiteley, W.

    Oliver, George Harold

    Snell, Harry

    Wiggins, William Martin

    Paling, W.

    Snowden, Rt. Hon. Philip

    Wilkinson, Ellen C.

    Pethick-Lawrence, F. W

    Stamford, T. W.

    Williams, David (Swansea, East)

    Ponsonby, Arthur

    Stephen, Campbell

    Williams, Dr. J. H. (Llanelly)

    Potts, John S.

    Stewart, J. (St. Rollox)

    Wilson, C. H. (Sheffield, Attercliffe)

    Richardson, R. (Houghton-le-Spring)

    Thomas, Rt. Hon. James H. (Derby)

    Wilson, R. J. (Jarrow)

    Riley, Ben

    Thorne, W. (West Ham, Plaistow)

    Windsor, Walter

    Runciman, Rt. Hon. Walter

    Thurtle, E.

    Wright, W.

    Salter, Dr. Alfred

    Tinker, John Joseph

    Young, Robert (Lancaster, Newton)

    Scrymgeour. E.

    Townend, A. E.

    Scurr, John

    Trevelyan, Rt. Hon. C. P.

    TELLERS FOR THE AYES.—

    Shepherd, Arthur Lewis

    Viant, S. P.

    Mr. T. Kennedy and Mr. A. Barnes.

    NOES.

    Acland-Troyte, Lieut,-Colonel

    Edmondson, Major A..J.

    Hudson, R. S. (Cumb'l'nd, Whiteh'n)

    Agg Gardner, Rt. Hon. Sir James T.

    Elliot, Major Walter E.

    Hume, Sir G. H.

    Albery, Irving James

    Ellis, R. G.

    Hume-Williams, Sir W. Ellis

    Alexander E. E. (Leyton)

    Elveden, Viscount

    Huntingfleld, Lord

    Apsley, Lord

    Erskine, Lord (Somerset, Weston-s.-M.)

    Hurd, Percy A.

    Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

    Erskine, James Malcolm Monteith

    Hutchison, G.A. Clark (Midl'n & P'bl's)

    Atholl, Duchess of

    Evans, Captain A. (Cardiff, South)

    Inskip, Sir Thomas Walker H.

    Baldwin, Rt. Hon. Stanley

    Everard, W. Lindsay

    Jackson, Sir H. (Wandsworth, Cen'll)

    Balfour, George (Hampstead)

    Fairfax, Captain.J. G.

    James, Lieut.-Colonel Hon. Cuthbert

    Balniel, Lord

    Falle, Sir Bertram G.

    Kennedy A. R. (Preston)

    Banks, Reginald Mitchell

    Falls, Sir Charles F.

    Kindersley, Major Guy M.

    Barclay-Harvey, C. M.

    Fanshawe, Commander G. D.

    King, Captain Henry Douglas

    Barnett, Major Sir Richard

    Fermoy, Lord

    Kinloch-Cooke, Sir Clement

    Barnston, Major Sir Harry

    Fielden, E. B.

    Lane Fox, Col. Rt. Hon. George R.

    Beckett, Sir Gervase (Leeds, N.)

    Ford, Sir P. J.

    Locker-Lampson, G. (Wood Green)

    Bellairs, Commander Carlyon W.

    Forestier-Walker, Sir L.

    Locker Lampson, Com. O. (Handsw'th)

    Betterton, Henry B.

    Forrest, W.

    Loder, J. de V.

    Bird, E. R. (Yorks, W. R., Skipton)

    Foster, Sir Harry S.

    Looker, Herbert William

    Blades. Sir George Rowland

    Fraser, Captain Ian

    Lord, Walter Greaves

    Boothby, R. J. G.

    Frece, Sir Waiter de

    Lowe, Sir Francis William

    Bourne, Captain Robert Croft

    Ganzoni, Sir John

    Lucas-Tooth, Sir Hugh Vere

    Bowyer, Capt. G. E. W.

    Gates, Percy

    Luce, Maj.-Gen. Sir Richard Harman

    Braithwaite, A. N.

    Gault, Lieut Col. Andrew Hamilton

    Lumley, L. R.

    Brass, Captain W.

    Gibbs, Col. Rt. Hon. George Abraham

    MacAndrew, Major Charles Glen

    Brassey, Sir Leonard

    Gilmour, Lt.-Col. Rt. Hon. Sir John

    Macdonald, Sir Murdoch (Inverness)

    Briscoe, Richard George

    Glyn, Major R. G. C.

    Macdonald. Capt. P. D. (I. of W.)

    Brocklebank, C, E. R.

    Goff, Sir Park

    Macdonald, R. (Glasgow, Cathcart)

    Brooke, Brigadier-General C. R. I.

    Grant, J. A.

    McDonnell, Colonel Hon. Angus

    Brown, Col. D. C. (N'th'I'd., Hexham)

    Greene, W. P. Crawford

    MacIntyre, Ian

    Brown, Brig.-Gen.H.C.(Berks, Newb'y)

    Gretton, Colonel John

    McLean, Major A.

    Buckingham, Sir H.

    Grotrian, H. Brent

    Macmillan, Captain H.

    Bull, Rt. Hon. Sir William James

    Guinness, Rt. Hon. Walter E.

    McNeill, Rt. Hon. Ronald John

    Burgoyne, Lieut.-Colonel Sir Alan

    Gunston, Captain D. W.

    Macquisten, F. A.

    Burton, Colonel H. W.

    Hacking, Captain Douglas H.

    MacRobert, Alexander M.

    Butler, Sir Geoffrey

    Hail, Lieut.-Col. Sir F. (Dulwich)

    Makins, Brigadier-General E.

    Cadogan, Major Hon. Edward

    Hail, Capt. W. D'A. (Brecon & Rad.)

    Malone, Major P. B.

    Campbell, E. T.

    Hammersley, S. S.

    Manningham-Buller, Sir Mervyn

    Cautley, Sir Henry S.

    Hanbury, C.

    Margesson, Captain D.

    Cecil, Rt. Hon. Sir Evelyn (Aston)

    Hannon, Patrick Joseph Henry

    Marriott, Sir J. A. R.

    Cecil, Rt. Hon. Lord H. (Ox. Univ.)

    Harmsworth, Hon. E. C. (Kent)

    Mason, Lieut.-Col. Glyn K.

    Chadwick, Sir Robert Button

    Harrison, G. J. C.

    Meyer, Sir Frank

    Chamberlain, Rt. Hon. N.(Ladywood)

    Hartington, Marquess of

    Milne,.J. S. Wardlaw

    Charteris, Brigadier-General J.

    Harvey, G. (Lambeth, Kennington)

    Mitchell, S. (Lanark, Lanark)

    Christle, J. A.

    Harvey, Major S. E. (Devon, Totnes)

    Mitchell, W. Foot (Saffron Walden)

    Churchill, Rt. Hon. Winston Spencer

    Haslam, Henry C.

    Mitchell, Sir W. Lane (Streatham)

    Churchman, Sir Arthur C.

    Hawke, John Anthony

    Monsell, Eyres, Corn. Rt. Hon. B. M.

    Clarry, Reginald George

    Headlam, Lieut.-Colonel C. M.

    Moore, Limit-Colonel T. C. R. (Ayr)

    Clayton, G. C.

    Henderson,Capt.R.R.(Oxford, Henley)

    Moore-Brabazon, Lieut.-Col. J. T. C.

    Cobb, Sir Cyril

    Henderson, Lieut.-Col. V. L. (Bootle)

    Morrison, H. (Wilts, Salisbury)

    Cochrane, Commander Hon. A. D.

    Heneage, Lieut.-Col. Arthur P.

    Morrison-Bell, Slr Arthur Clive

    Cockerill, Brigadier-General G. K.

    Herbert, Dennis (Hertford, Watford)

    Nall, Lieut.-Colonel Sir Joseph

    Cohen, Major J. Brunel

    Herbert, S. (York, N. R., Scar. & Wh'by)

    Nelson, Sir Frank

    Conway, Sir W. Martin

    Hills, Major John Waller

    Newman, Sir R. H. S. D. L. (Exeter)

    Cooper, A. Duff

    Hoare, Lt.-Col. Hon. Sir S. J. G.

    Newton. Sir D. G. C. (Cambridge)

    Cope, Major William

    Hogg, Rt. Hon. Sir O.(St. Marylebone)

    Nicholson, Col. Rt.Hn W.G,(Ptrsf'ld)

    Craik, Rt. Hon. Sir Henry

    Hohler, Sir Gerald Fitzroy

    Nuttall, Ellis

    Crookshank, Cpt.H.(Lindsey,Gainsbro)

    Holbrook, Sir Arthur Richard

    Oakley, T.

    Dalkeith. Earl of

    Holt. Capt. H. P.

    O'Neill, Major Rt. Hon. Hugh

    Datzlel, Sir Davison

    Hope, Sir Harry (Fortar)

    Oman, Sir Charles William C.

    Davies, Dr. Vernon

    Hopkins, J. W. W.

    Ormsby-Gore, Hon. Willliam

    Davies, Maj. Geo.F.(Somerset,Yeovil)

    Hopkinson, Sir A. (Eng. Universities)

    Penny, Frederick George

    Davison, Sir W. H. (Kensington, S.)

    Horlick, Lieut.-Colonel J. N.

    Perkins, Colonel E. K.

    Dawson, Sir Philip

    Howard, Captain Hon. Donald

    Peto, Basil E. (Devon, Barnstaple)

    Eden, Captain Anthony

    Hudson, Capt. A. U. M. (Hackney,N.)

    Peto, G. (Somerset, Frome)

    72

    73

    Pilcher, G.

    Sinclair, Col. T. (Queen's Univ., Belist)

    Waterhouse, Captain Charles

    Preston, William

    Skelton, A. N.

    Watson, Rt. Hon. W. (Carlisle)

    Price, Major C. W. M.

    Smith, R. W. (Aberd'n & Kine'dine, C.)

    Wells, S. R.

    Radford, E. A.

    Smithers, Waldron

    Whaler, Major Sir Granville C. H.

    Ramsden, E.

    Somerville, A. A. (Windsor)

    White, Lieut.-Colonel G. Dalrymple

    Rewson, Sir Alfred Cooper

    Sprot, Sir Alexander

    Williams, A. M. (Cornwall, Northern)

    Reid, D. D. (County Down)

    Stanley, Col. Hon. G. F. (Will'sden, E)

    Williams, Herbert G. (Reading)

    Remer, J. R.

    Stanley, Lord (Fylde)

    Wilson, R. R. (Stafford, Lichfield)

    Remnant, Sir James

    Steel, Major Samuel Strang

    Windsor-Clive, Lieut.-Colonel George

    Phys, Hon. C. A. U.

    Strickland, Sir Gerald

    Winterton, Rt. Hon. Earl

    Rice, Sir Frederick

    Stuart, Crichton-, Lord C.

    Wise, Sir Fredric

    Richardson, Sir P. W. (Sur'y, Ch'ts'y)

    Styles, Captain H. Walter

    Withers, John James

    Ropner, Major L.

    Sueter, Rear-Admiral Murray Fraser

    Wolmer, Viscount

    Ruggles-Brise, Major E. A.

    Sugden, Sir Wilfrid

    Womersley, W. J.

    Russell, Alexander West (Tynemouth)

    Templeton, W. P.

    Wood, E. (Chest'r, Stalyb'ge & Hyde)

    Rye. F. G.

    Thompson, Luke (Sunderland)

    Wood, Sir Kingsley (Woolwich, W.)

    Salmon, Major I.

    Thomson, Rt. Hon. Sir W. Mitchell-

    Wood, Sir S. Hill- (High Peak)

    Samuel, A. M. (Surrey, Farnham)

    Tinne,.J. A.

    Woodcock, Colonel H. C.

    Sandeman, A. Stewart

    Titchfield, Major the Marquess of

    Worthington-Evans, Rt, Hon. Sir L.

    Sanders, Sir Robert A.

    Wallace, Captain D. E.

    Yerburqh, Major Robert D. T.

    Sandon, Lord

    Ward, Lt.-Col.A. L. (Kingston-on-Hull)

    Shaw, Lt.-Col.A. D. Mcl. (Renfrew, W)

    Warner, Brigadier-General W. W.

    TELLERS FOR THE NOES.—

    Shaw, Capt. W. W. (Wilts, Westb'y)

    Warrender, Sir Victor

    Major Hennessy and Mr. F. C. Thomson.

    Division No. 297.]

    AYES.

    [7.12 p.m.

    Agg Gardner, Rt. Hon. Sir James T.

    Grenfell, D. R. (Glamorgan)

    Purcell, A. A.

    Alexander, A. V. (Sheffield, Hillsbro')

    Gretton, Colonel John

    Richardson, R. (Houghton-le-Spring)

    Attlee, Clement Richard

    Griffiths, T. (Monmouth, Pontypool)

    Riley, Ben

    Barker. G. (Monmouth, Abertillery)

    Grundy T. W.

    Runciman, Rt. Hon. Walter

    Barnes, A.

    Hall, F. (York, W. R., Normanton)

    Salter, Dr. Alfred

    Barr, J.

    Hamilton, Sir R. (Orkney & Shetland)

    Scrymgeour, E.

    Batey, Joseph

    Hardle, George D.

    Scurr, John

    Been, Captain Wedgwood (Leith)

    Hartshorn, Rt. Hon. Vernon

    Shaw, Rt. Hon. Thomas (Preston)

    Bird, E. R. (Yorks, W. R., Skipton)

    Hayday, Arthur

    Short, Alfred (Wednesbury)

    Bourne, Captain Robert Croft

    Hayes, John Henry

    Sinclair, Major Sir A. (Caithness)

    Bowerman, Rt. Hon. Charles W.

    Henderson, Rt. Hon. A. (Burnley)

    Smith, Ben (Bermondsey, Rotherhithe)

    Broad, F. A.

    Hirst, G. H.

    Smith, Rennie (Penistone)

    Bromfield, William

    Hirst, W. (Bradford, South)

    Snell, Harry

    Bromley, J.

    Hopkinson, Sir A. (Eng. Universities)

    Spencer, G. A. (Broxtowe)

    Buchanan, G.

    Hore-Belisha, Leslie

    Stamford, T. W.

    Butler, Sir Geoffrey

    Hudson, J. H. (Huddersfield)

    Stephen, Campbell

    Buxton, Rt. Hon. Noel

    Hutchison, Sir Robert (Montrose)

    Stewart, J. (St. Roliox)

    Cape, Thomas

    John, William (Rhondda, West)

    Sutton, J. E.

    Cecil, Rt. Hon. Lord H. (Ox. Univ.)

    Jones, Henry Haydn (Merioneth)

    Thorne, W. (West Ham, Plaistow)

    Charleton, H. C.

    Jones, Morgan (Caerphilly)

    Thurtle, E.

    Close, W. S.

    Kelly, W. T.

    Townend, A. E.

    Clynes, Rt. Hon. John R.

    Kenyon, Barnet

    Trevelyan, Rt. Hon. C. P.

    Collins, Sir Godfrey (Greenock)

    Lawrence, Susan

    Viant, S. P.

    Compton, Joseph

    Little, Dr. E. Graham

    Walsh. Rt. Hon. Stephen

    Connolly, M.

    Livingstone, A. M

    Watts-Morgan, Lt.-Col. D. (Rhondda)

    Cowan, D. M. (Scottish Universities)

    Lowth. T.

    Webb, Rt. Hon. Sidney

    Crawfurd, H. E.

    Lunn, William

    Westwood, J.

    Dalton, Hugh

    MacDonald, Rt. Hon. J.R. (Aberavon)

    Whiteley, W.

    Davies, Maj. Geo.F.(Somerset,Yeovll)

    Mackinder, W.

    Wiggins, William Martin

    Davies, Ellis (Denbigh, Denbigh)

    March, S.

    Wilkinson, Ellen C.

    Davison, Sir W. H. (Kensington, S.)

    Montague, Frederick

    Williams, David (Swansea, E.)

    Day, Colonel Harry

    Morrison, R. C. (Tottenham, N.)

    Williams, Dr J. H (Lianelly)

    Duncan, C.

    Murnin, H.

    Wilson, R. J. (Jarrow)

    Edwards, C. (Monmouth, Bedwellty)

    Newton. Sir D. G. C. (Cambridge)

    Windsor, Walter

    Ellis, R. G.

    Oliver, George Harold

    Wright, W.

    Gardner, J. P.

    Palin, John Henry

    Young, Robert (Lancaster, Newton)

    George, Rt. Hon. David Lloyd

    Paling, W.

    Gillett, George M.

    Pethick-Lawrence, F. W.

    TELLERS FOR THE AYES.—

    Gosling, Harry

    Ponsonby. Arthur

    Mr. Withers and Sir Martin Conway.

    Greenall. T.

    Potts, John S.

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Cayzer,Maj.Sir Herbt. R. (Prtsmth, S.)

    Foster, Sir Harry S.

    Alexander, E. E. (Leyton)

    Cazalet, Captain Victor A.

    Foxcroft, Captain C. T.

    Amery, Rt. Hon. Leopold C. M. S.

    Chamberlain, Rt. Hon. N. (Ladywood)

    Fraser, Captain Ian

    Applin, Colonel R. V. K.

    Charteris, Brigadier-General J.

    Frece, Sir Walter de

    Apsley, Lord

    Christie, J. A.

    Ganzoni, Sir John

    Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

    Churchill, Rt. Hon. Winston Spencer

    Gibbs, Col. Rt. Hon. George Abraham

    Atholl, Duchess of

    Churchman, Sir Arthur C.

    Gilmour, Lt -Col. Rt. Hon. Sir John

    Baldwin, Rt. Hon. Stanley

    Clarry, Reginald George

    Goff, Sir Park

    Balfour, George (Hampstead)

    Clayton, G. C.

    Graham, Rt. Hon. Wm. (Edin., Cent.)

    Bainlel. Lord

    Cochrane, Commander Hon. A. D.

    Grant, J. A.

    Barclay-Harvey, C. M.

    Cohen, Major J. Brunel

    Greene, W. P. Crawford

    Barnett, Major Sir Richard

    Colfox, Major Wm, Phillips

    Grotrian. H. Brent

    Barnston, Major Sir Harry

    Cooper, A. Duff

    Guest,Capt. Rt. Hon. F. E,(Bristol,N.)

    Beckett, Sir Gervase (Leeds, N.)

    Cooper, J. B.

    Guinness, Rt. Hon. Walter E.

    Bennett, A. J.

    Cowan, Sir Wm. Henry (Islington, N.)

    Gunston, Captain D. W.

    Bentinck, Lord Henry Cavendish

    Craik, Rt. Hon. Sir Henry

    Hacking, Captain Douglas H.

    Betterton, Henry B.

    Croft, Brigadier-General Sir H.

    Hall, Lieut.-Col. Sir F. (Dulwich)

    Birchall, Major J. Dearman

    Crookshank, Col. C. de W. (Berwick)

    Hanbury, C.

    Blades, Sir George Rowland

    Crookshank,Cpt.H.(Lindsey,Galnsbro)

    Harland, A.

    Bowyer, Capt. G. E. W.

    Curzon, Captain Viscount

    Harrison, G. J. C.

    Braithwaite, A. N.

    Dalziel, Sir Davison

    Hartington, Marquess of

    Brass, Captain W.

    Davies, Dr. Vernon

    Harvey, G. (Lambeth, Kennington)

    Bridgeman, Rt. Hon. William Clive

    Dawson, Sir Philip

    Harvey, Major S. E. (Devon, Totnes)

    Briscoe, Richard George

    Edmondson, Major A. J.

    Haslam, Henry C.

    Brittain, Sir Harry

    Edwards, J. Hugh (Accrington)

    Hawke, John Anthony

    Brocklebank, C. E. R.

    Elliot, Major Walter E.

    Henderson, Capt. R. R. (Oxf'd, Henley)

    Brooke, Brigadier-General C. R. I.

    Elveden, Viscount

    Henderson, Lieut.-Col. V. L. (Bootle)

    Broun-Lindsay, Major H.

    Erskine, Lord (Somerset, Weston.s.-M.)

    Heneage. Lleut.-Colonel Arthur P.

    Brown, Maj. D. C.(N'th'I'd., Hexham)

    Erskine, James Malcolm Monteith

    Henn. Sir Sydney H

    Brown, Brig.-Gen.H.C.(Berks, Newb'y)

    Everard, W. Lindsay

    Hennessy, Major J. R. G.

    Buckingham, Sir H.

    Fairfax, Captain J. G.

    Herbert, S. (York, N. R. Scar. & Wh'by)

    Burney, Lieut.-Com. Charles D.

    Falle, Sir Bertram G.

    Hills, Major John Waller

    Burton, Colonel H. W.

    Falls, Sir Charles F.

    Hilton, Cecil

    Cadogan, Major Hon. Edward

    Fanshawe, Commander G. D.

    Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.

    Campbell, E. T.

    Fermoy, Lord

    Hogg, Rt. Hon. Sir D.(St. Marylebone)

    Cassels, J. D.

    Ford, Sir P. J.

    Hohler, Sir Gerald Fitzroy

    Cautley, Sir Henry S.

    Forestier-Walker, Sir L.

    Holbrook, Sir Arthur Richard

    Cayzer, Sir C. (Chester, City)

    Forrest, W.

    Holland, Sir Arthur

    116

    117

    Holt, Capt. H. P.

    Morden, Col. W. Grant

    Stanley, Got. Hon.G.F. (Will'sden, E.)

    Hope, Capt. A. O. J. (Warw'k, Nun.)

    Moreing, Captain A. H.

    Steel, Major Samuel Strang

    Hopkins, J. W. W.

    Morrison, H. (Wilts, Salisbury)

    Storry-Deans, R.

    Hudson, Capt. A. U. M.(Hackney,N.)

    Morrison-Bell, Sir Arthur Clive

    Strickland, Sir Gerald

    Hume, Sir G. H.

    Nall, Lieut.-Colonel Sir Joseph

    Stuart, Crichton-, Lord C.

    Hunter-Weston, Lt.-Gen. Sir Aylmer

    Nelson, Sir Frank

    Stuart, Hon. J. (Moray and Nairn)

    Hurst, Gerald B.

    Nicholson, Col. Rt.Hn.W.G.(Ptrsf'Id.)

    Styles, Captain H. Walter

    Hutchison, G. A. Clark (Midl'n & P'bl's)

    Oakley, T.

    Sueter, Rear-Admiral Murray Fraser

    Inskip, Sir Thomas Walker H.

    O'Neill. Major Rt. Hon. Hugh

    Sugden, Sir Wilfrid

    Jackson, Lieut.-Col. Rt. Hon. F. S.

    Ormsby-Gore, Hon. William

    Sykes, Major-Gen. Sir Frederick H.

    Jackson, Sir H. (Wandsworth, Cen'l)

    Penny, Frederick George

    Tasker, Major R. Inlgo

    James, Lieut.-Colonel Hon. Cuthbert

    Perkins, Colonel E. K.

    Templeton, W. P.

    Jephcott, A. R.

    Perring, Sir William George

    Thomson, F. C. (Aberdeen, S.)

    Joynson-Hicks, Rt. Hon. Sir William

    Peto, Basil E. (Devon, Barnstaple)

    Thomson, Rt. Hon. Sir W. Mitchell-

    Kennedy, A. R. (Preston)

    Pete, G. (Somerset, Frome)

    Tinker, John Joseph

    Kennedy, T.

    Pilcher, G.

    Tinne, J. A.

    Kindersley, Major Guy M.

    Preston, William

    Tryon, Rt. Hon. George Clement

    King, Captain Henry Douglas

    Price, Major C. W. M.

    Vaughan-Morgan, Col. K. P.

    Kinloch-Cooke, Sir Clement

    Radford, E. A.

    Wallace, Captain D. E.

    Lane Fox, Col. Rt. Hon. George R.

    Raine, W.

    Ward, Lt.-Col.A. L. (Kingston-on-Hull)

    Lister, Cunliffe-, Rt. Hon. Sir Philip

    Ramsden, E.

    Warner, Brigadier-General W. W.

    Locker-Lampson, G. (Wood Green)

    Reid, D. D. (County Down)

    Waterhouse, Captain Charles

    Lord, Walter Greaves,

    Ramer, J. R.

    Watson, Rt. Hon. W. (Carlisle)

    Lowe, Sir Francis William

    Remnant, Sir James

    Watts, Dr. T.

    Lucas-Tooth, Sir Hugh Vere

    Rhys, Hon. C. A. U.

    Wheler, Major Sir Granville C. H.

    Luce, Maj.-Gen. Sir Richard Harman

    Rice, Sir Frederick

    White, Lieut.-Colonel G. Dairymple

    Lumley, L. R.

    Richardson, Sir P. W. (Sur'y, Ch'ts'y)

    Williams, A. M. (Cornwall, Northern)

    MacAndrew, Major Charles Glen

    Ropner, Major L.

    Williams, Com. C. (Devon, Torquay)

    Macdonald, Capt. P. D. (I. of W.)

    Ruggles-Brise, Major E A.

    Williams, C. P. (Denbigh, Wrexham)

    Macdonald, R. (Glasgow, Cathcart)

    Russell, Alexander West (Tynemouth)

    Williams, Herbert G. (Reading)

    McLean, Major A.

    Rye, F. G.

    Wilson. R. R. (Stafford, Lichfield)

    McNeill, Rt. Hon. Ronald John

    Salmon, Major I.

    Winterton, Rt. Hon. Earl

    Macquisten, F. A.

    Samuel, A. M. (Surrey, Farnham)

    Wise, Sir Fredric

    MacRobert, Alexander M.

    Samuel, Samuel (W'dswortn, Putney)

    Wolmer, Viscount

    Maitland, Sir Arthur D. Steel

    Sandeman, A. Stewart

    Womersley, W. J.

    Makins, Brigadier-General E.

    Sanders, Sir Robert A.

    Wood, E. (Chest'r, Stalyb'dge & Hyde)

    Manningham-Buller, Sir Mervyn

    Sanderson, Sir Frank

    Wood, Sir Kingsley (Woolwich, W.)

    Margesson, Capt. D.

    Sassoon, Sir Philip Albert Gustave D.

    Wood, Sir S. Hill- (High Peak)

    Mason, Lieut.-Col. Glyn K.

    Savory, S. S.

    Woodcock, Colonel H. C.

    Meyer, Sir Frank

    Shaw, Capt. W. W. (Wilts, Westb'y)

    Worthington-Evans, Rt. Hon. Sir L.

    Milne,.J. S. Wardlaw.

    Smith, R. W. (Aberd'n & Kinc'dine, C.)

    Wragg, Herbert

    Mitchell, S. (Lanark, Lanark)

    Smithers, Waldron

    Yerburgh, Major Robert D. T.

    Mansell, Eyres Com. Rt. Hon. B. M.

    Spender-Clay, Colonel H.

    TELLERS FOR THE NOES.—

    Moore, Lieut.-Colonel T. C. R. (Ayr)

    Sprot, Sir Alexander

    Major Cope and Lord Stanley.

    NEW CLAUSE.—(Exemption from Income Tax for Royal asylums.)
    (1) Exemption shall be granted—

    (a) from Income Tax under Schedule A in respect of lands, tenements, hereditaments, and heritages owned and occupied by a royal asylum for lunatics and mental patients, not being such lands, tenements, hereditaments, or heritages as are mentioned in No. VI. of Schedule A:

    (b) from Income Tax under Schedule B in respect of lands occupied by a royal asylum for lunatics and mental patients;

    (c) from Income Tax under Schedule D in respect of any profits derived by a royal asylum for lunatics and mental patients.

    (2) The exemption granted by paragraphs (a) and (b) of Sub-section (1) of this Section shall not extend to tax in respect of any rent payable or other annual payment to be made by a royal asylum for lunatics and mental patients in respect of lands, tenements, hereditaments, or heritages which are in the use and enjoyment of a person whose total annual income from all sources, estimated in accordance with the provisions of the Income Tax Acts, amount to not less than one hundred and fifty pounds.

    (3) Exemption shall not be granted under this Section to a royal asylum if the receipts from private patients are in excess of the receipts from pauper patients.— [Sir Robert Hutchison.]

    Brought up, and read the First time.
    Sir ROBERT HUTCHISON: I beg to move "That the Clause be read a Second time."
    This Clause deals with the exemption from Income Tax of the royal asylums, institutions which exist in Scotland. I think it is well that the House should know that those asylums have been sub-
    74
    scribed to by the public. They are run for no profit and the funds have been administered by individuals who have given their time for no remuneration whatsoever. These royal asylums have in many cases saved the parish councils large capital expenditure in that they accept at a very low rate and cater for patients sent to them by those parishes. In later years the administration of those asylums has been added to by a large number of cases from the parish councils, so that these asylums are not only doing the charitable work which they were originally intended to do, but they are also doing a public work in taking those patients from the various parish councils. Any surplus which their fiends may show at the end of a year is devoted entirely to reducing the rates which are charged to the various patients, as well as to the maintenance of the buildings and to generally developing these very good institutions. There are also one or two smaller institutions—they are not really Royal Hospitals, but they are, district asylums—which to-day are exempt from the very tax from which I am trying to induce the Chancellor of the Exchequer to exempt these Royal Asylums. At the present moment these district asylums are only exempt under Schedule D, and it seems very hard that these Royal Asylums should not be so treated. Under a Royal Charter in 1913 they were given the duty of looking after the patients coming forward from public authorities, and for that reason I think they are entitled to be exempt from many of the duties on which they are now assessed. They take patients who otherwise would cost a very large sum of money and,

    75
    further than that, they go the length from a charitable point of view to subscribing towards paying part of what otherwise would be charged to poor patients; to those necessitous cases, those mental cases, who are sent there and cannot afford to pay a nominal rate. Those cases are taken by the Royal Asylums at a special low rate, below the actual cost, in order to help them. This shows that these asylums are within the category of charitable institutions. I think that the chief reason why some of them are at present charged Income Tax is because they accept private patients. They undoubtedly do accept private patients, and it is for that reason that they are charged Income Tax, but the whole of the profit that comes from the those private patients goes towards reducing the rates charged to other people; it helps the unfortunate patients who cannot pay any rates at all, and it assists in reducing the rates charged to the parish councils. There are also run in connection with these institutions farms, and the farms have produced a surplus, but those farms are part of the cure of the mental cases, and they also produce the necessary food which is required by those Royal Asylums. I see no reason why, because those farms are run and there possibly is a profit on them, that the asylums ought thereby to be charged Income Tax. Those profits go to the institutions, and they do not go to any shareholder, nor do they go towards remunerating any director or manager. The general running of these institutions comes well within the definite word "hospital," within the meaning of the Act. I hope, therefore, that the Chancellor of the Exchequer will see his way to give some relief to these very excellent institutions, which are doing charitable and public work, and which I think deserve great help from the Government and also from the community.
    Mr. CHURCHILL: I regret I am not in a position to accept the proposal put forward by my hon. Friend, much as I should like to do so and readily as I admit the many substantial arguments which he has adduced in support of his new Clause. But at the present time we give a very wide exemption to charity, much wider than the Royal Commission on Income Tax recommended that we should give. We give, in fact, an
    76
    immense exemption, which costs the Revenue over £10,000,000 a year. Of course, the question arises in all these matters, "Where are you going to draw the line?" and, for my part, I find great difficulty in widening the scope of the exemptions now granted to charities. In order to restrict them within some bounds agreeable to the Revenue, in order not to make very serious inroads on the Revenue, certain conditions have been insisted on. They are not the conditions which the Royal Commission thought ought to have been insisted upon, but they are the only bulwark which the Revenue has against an altogether indefinite variety of arguments for the extension of these exemptions. The Courts have laid down that in the case of a hospital or charity, exemption only applies to institutions maintained to a great extent by charitable endowments or subscriptions. It is not sufficient to say that they are not working for a profit, but they must be maintained to a great extent by charitable endowment. There are several of these Royal asylums in Scotland, but there are only two of them which are covered by the proposed Clause, so I am advised—they are Montrose and Aberdeen. I think, for the sake of meeting the difficulties of these two hospitals, it would be a very serious thing for us to throw over the whole of the existing basis of the exemptions from Income Tax.
    My hon. Friend has spoken about the district asylums, but they differ from these two Royal asylums, in that they depend to a substantial extent on money from charitable sources. I am afraid in all these circumstances it is impossible for me to meet the proposal of my hon. and gallant Friend. The whole question of charitable relief, notwithstanding the somewhat adverse recommendation of the Royal Commission, might well be a subject of future. reflection. There is no doubt that even trying to draw the lines where they have to be drawn—and some lines must be drawn—a number of hard cases, borderland cases, must arise. If at any time it were possible to take a more liberal view of those borderland cases, that ought to be done, not on a variety of special exemptions such as figure. on the Order Paper, but it ought to be done as a result of a comprehensive and general consideration of the question and as the result of a successful

    77
    attempt to lay down more harmonious limiting principles which would prevent the indefinite exemptions which are now the law.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Amendment of Rule 8 applicable to Cases 1 and 2 of Schedule D, Income Tax Act, 1918.)
    "The following new rule shall be added to Rule 8 (1) and (2) applicable to Cases 1 and 2 of Schedule D, included in the Income Tax Act, 1918, and shall be known as Rule 8 (3):
    Where a person charged or chargeable with tax in respect of any trade, profession, or vocation, which has been set up or commenced within a period of seven years, proves to the satisfaction of the Commissioners by whom the assessments have been or can he made, that the actual profits or gains arising from the trade, profession, or vocation during the period of the first six completed years fall short of the profits or gains as computed in accordance with this Act, he shall he entitled to be charged on the actual amount of the profits or gains so arising, instead of the amount of the profits or gains so computed, and if ho has paid. the full amount of the tax on the profits or gains so computed he shall be entitled to repayment of the amount overpaid."—[Sir V. Bowater.]
    Brought up, and read the First time.
    Sir VANSITTART BOWATER: I beg to move, "That the Clause be read a Second time."
    I hope this may have a better result than the last Clause, with which I was in heartfelt sympathy. This is to remove what at present is a very great injustice to some taxpayers. Everyone sympathises with the Chancellor of the Exchequer. He is anxious, and we are anxious that he should get all the grist to his mill that he can, but I am sure he would wish to get it in a thoroughly constitutional way and without causing any injustice. This Clause simply protects the new trader. I will give a concrete instance, which I know to be a fact, where a man started business in the boom yeas, 1920, and was fortunate to make a net profit of £5,000, and not having been in business before, he was charged Income Tax on that £5,000. The next year he made £3,000, and had to pay the full rate of Income Tax on that amount. The next year he made only 21,000 and still paid the full amount, but, unfortunately for him, in the fourth year he

    119
    made a loss of some £200 or £300. He received an assessment based on his trading for the three years and was debited with a third of the proceeds of the, three years' trading. It may be argued that in the next few years he will get that back again, but it is not easy. In the next year and the following year he may make a hundred or two, but he can never be reimbursed for the tax he had to pay in the year during which he actually made a loss. If the right hon. Gentleman will only look at it from that point of view I think he will see the fairness of the Clause. I understand there are not many of these cases. I am told if this man had gone out of business in the fourth he would not have had to pay Income Tax, but goodness knows we do not want to send people out of business. We want to encourage them to go in business and earn money to help the Chancellor of the Exchequer.
    I understand even the Revenue officials realise the hardship and think, in their own minds, that it should be remedied. I understand it can be done very easily, and it will cost the Treasury very little. If the right hon. Gentleman can only see his way to accept this, he will be taking away what he must realise is a great injustice to the new trader. The Clause speaks for itself. I am sure the Chancellor would not like anyone to have to pay an unjust tax on a business which has absolutely made a loss and be charged on the three years' average when he has only been in business three years. This is to help the new trader and we ought to give him all the encouragement we can.
    Mr. CHURCHILL: It is quite beyond my power to meet my hon. Friend. There are a great many reasons, from which I will only select a few, which make it impossible and undesirable to accept this new Clause. First of all, it runs counter in several respects to the procedure and machinery for the transition from the basis of the three years' average to the basis of the previous year, and it runs counter to these in such a way as to impose on the Exchequer a loss which I am creditably informed will not be less than £500,000. When I proposed to make this transference from the three years average to the previous year basis, it was by no means
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    certain that the coal stoppage would occur, and there were good hopes that it would be averted. Therefore I might have looked forward to making the change next year without having to bear any exceptionally heavy strain or burden through loss of Revenue. But owing to the fact that we have already had a stoppage of a large portion of the industry of the country for eight weeks, which may go on for several weeks more, I must look forward next year to a heavy shrinkage in the income earned by businesses during the present year. Whereas on the three years' system it would have been averaged with two good years, and I should only have had one-third of the short-fall next year, I shall now get the whole of that short-fall concentrated upon that year under the transition to the previous year basis.
    I have quite clearly to consider the position. It is true that the relief the Income Tax payer will get is relief which will only go to that very class of taxpayers who will be suffering most by this stoppage and the losses which have resulted from it. It will be giving a measure of relief in the very direction where that measure of relief is most needed. They will not have to pay on the high profits of the earlier years shortly after a year when they have had bad trade. But the very fact that we are making this change and that the taxpayer will get an easement and the Revenue a loss—the fact that it is working out in this way—makes it all the more essential that we should strictly adhere to the safeguards that are provided and not go beyond the recommendations which the Royal Commission approved in regard to the allowances to be made for hard cases in the transition period. My hon. Friend asks us to go beyond the arrangements proposed for their relief by the Royal Commission, and he has asked us to go beyond them in an entirely one-sided way. An option is to be given to the taxpayer to reopen his liability if it suits him, but no corresponding option is given to the Revenue to reopen the liability if it suits them. A one-sided option of this kind is always exercised to the detriment of the State, whereas no countervailing reclaim is obtained by the State in cases which are extremely fortunate for the taxpayer and detrimental to it.

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    Then my hon. Friend's proposal is based entirely upon Rule 8. In that case it only operates during the current year 1926–7. Rule 8 is repealed by the present Bill, and its repeal is a definite part of the process of transferring the tax from the three years to the previous year basis. So he is hanging his proposal on a peg which it is the object and the effect of the Bill to cut away. If my hon. Friend only intends it as a temporary measure to meet cases of harship which may arise owing to the proposed change of basis I must say I cannot accept any proposal which goes beyond the definite suggestion of the Royal Commission. They considered this very carefully and they make provisions which are incorporated in the Bill to meet hard cases, and an option is given in certain circumstances to enable the taxpayer who is very hard hit, and feels himself invidiously affected by the change, to continue being assessed upon the three years' average for 1927–8 and 1928–9 provided he likes to accept that for the two years put together. The circumstances of our national life at the present time have made this transition much more favourable to the taxpayer than I had any reason to expect at the time when I introduced it, and I cannot go beyond the provision approved by the Royal Commission in that respect. If the hon. Member intends to make it a permanent provision to cover future years and to substitute this system for the proposed system, it is a method which will not answer, because Rule 8 will have passed away. Whether he proposes it as a permanency or merely to meet the transition period of this single year I cannot, for the reasons which I have stated, entertain it, nor can I face the loss of revenue of £500,000 which would be incurred, in addition to the undoubted disadvantage which the revenue will suffer, to the benefit of the taxpayer, in the next year, consequent upon the change we are making.
    Sir FRANK MEYER: In spite of the refusal of the Chancellor of the Exchequer to accept the Amendment, I should like to say a few words in its favour, because the Amendment has been very carefully thought out by people of experience in these matters. In spite of the hilarity with which it was received by hon. and right hon. Members opposite, I would impress upon the Committee the
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    fact that this is a very serious question and one which involves great hardship on certain individuals. Whatever may be the principle of taxation in this country—there are very different views on that subject—the Committee will, I think, agree that there is one definite principle that should be established in all eases of Income Tax, and that is, that a man shall not over a period of years pay taxation on a greater amount than the total profits he has made over that period of years. Whatever may be the system under which Income Tax is administered, whether on the three years' average or on individual years, I do not think any hon. Member will dispute that no one should pay taxation on a greater amount than the profits he has earned over a period of years.
    May I give a few figures to show clearly why this Amendment has been moved and what is the hardship that is involved in the present system At the present time when a new business is started the owner of the business has the option for the first three years of paying on the profits of the individual year or on the average of the preceding years. He pays at the end of the first year on the first year's profits, and at the end of the second year he can pay on the profits of the second year or on the average of the first and second years. At the end of the third year he can pay on the profits of the third year or on the average of the first, second and third years. After that, his option ceases, and at the end of the fourth year he has to pay on the average of the first, second and third years. I will give the figures supplied from an actual ease. I will give round figures, because they are simpler to deal with. A new business is started. In the first year it earns £1,000. The owner of the business pays tax on the £1,000 at the end of the first year. In the second year, the business made £800, and, naturally, the owner exercised the option of paying the tax on the £800 and not on the average of the first and second years, which would have been on the average of £1,800. In the third year the profits were £500, and he paid on £500; but in the fourth year he only earned £300 and he had to pay on the average of the first three years, which meant that he had to pay on £766. In the fifth year he only earned £200, and

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    he had to pay on the average of the previous three years, which meant that he had to pay taxation on £533. In the sixth year he earned £100 and he paid, on the three years' average taxation, on a sum of £333. In the aggregate, in six years his profits had been £2,900 and he is paying taxation on £3,900. Is that equitable? All we are asking for, and the whole pith of this Amendment is in one sentence, is that in such cases the taxpayer shall be entitled to be charged on the actual amount of profits.
    The Chancellor of the Exchequer tells us that he is altering the law during the current year, that in future the average is to be done away with and people are to pay on individual years. My answer is that in future this hardship will not arise, but that does not alter the fact that the hardship has arisen during the last three or four years, and especially during the last period. New businesses made large profits in 1919–20 and possibly up to 1921, but a great many of them have been on a continually diminishing scale since then, and as a result there are many cases—a big case has been referred to by the hon. Member for the City of London (Sir Vansittart Bowater) with which case I am familiar, and there are many small cases—of small businesses set up by ex-service men and ex-officers with a capital of £500 or £600 which have been very hardly hit. All we ask is that they shall not pay more taxation than on the total profits which they have earned. We ask that this Amendment shall be accepted by the Government in order that that state of affairs shall be remedied, pending the coming into force of the new system, on which they will pay on the profits of each individual year. The new system will not help the people who during the last three or four years have had these diminishing profits.
    Where there has been a diminishing scale, if there comes a sharp rise in the scale of profits, they would pay less if the three-years' average continued, than they will have to do in future by paying on the profits of an individual year. Therefore, from that point of view the doing away with the three-years' average will be no remedy for them at all. It will mean that they have been kicked in the past and that they will be kicked in the future. All we ask is that they should
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    have what seems to me very elementary justice, and I am sorry that the Chancellor of the Exchequer has not seen fit to accept the proposal. I am not very convinced by the arguments he has put forward. Of course, it is only a temporary measure and is not intended to interfere in any way with the change over from the old system of average to the new system. I am not an expert on the legal side of this question, but the Amendment seems to me to be one which might have been accepted and fitted in with the change proposed to take place this year. For these reasons, I am a strong supporter of the Amendment and I very much regret that the Chancellor of the Exchequer has not seen his way to consider it favourably
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Amendment of 10 and 11 Geo. 5, c. 18, s. 3 (2).)
    Section three, Sub-section (2), of the Finance Act, 1920, shall have effect as if for the words "nineteen hundred and twenty," in line three, "nineteen hundred and twenty-six" were substituted, and as if for the words
    "three pounds twelve shillings and sixpence," in lines six and seven, "two pounds" were subsituted.—[Mr. Macquisten.
    Brought up, and read the First time.
    Mr. MACQUISTEN: I beg to move, That the Clause be read a Second time.
    The object of the Clause is to reduce the duty on whisky from 72s. 6d. to £2. The present duty is grotesque and prohibitive. I am advised that when a man asks for a glass of whisky he receives one pennyworth of whisky and pays about ls. 4d. or ls. 5d. duty. That is grotesque and prohibitive. It is a very unfair duty and is something in the nature of class taxation. I am as much opposed to class taxation as I am to class legislation. The last gigantic increase in this class of taxation was imposed during the War. There has been a tremendous falling off in consumption as the result of this taxation. It has dropped to about one-third of its former dimensions. That fact has caused a great deal of annoyance to certain classes of the community, including people of small means, temperate people who were in the habit of taking a little of this product of Scotland. It has not affected the distilling interests, because their great trade profits are made

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    on their export trade to the United States and various parts of the British Empire. People of comparatively small means find this taxation prohibitive.
    Prohibition is one thing, and it is straightforward; we all know what it means, but prohibition by taxation is not a very honest thing. If I believed that the Chancellor of the Exchequer would lose money by the adoption of my suggestion, I would not propose it, because money is needed, but I do not think he will lose any money. There has been a progressive falling off in the consumption of alcohol clue to high taxation, and this particular taxation has brought about au enormous decrease. That is what generally comes from high taxation of
    this kind. When prohibitive taxation was put upon champagne and cigars in the time of the Coalition Government, the consumption fell so enormously that the Chancellor of the Exchequer at that time had no hesitation in saying that the tax had defeated its purpose. There was such a falling off in revenue that the taxation was at once reduced in order to restore the income of the Government. Precisely the same result might be expected here. The Chancellor of the Exchequer is not here in the position of
    a moralist. It is his duty to collect revenue, and I decline to accept the view that was put before the House on behalf of the Treasury when I made this proposal last year, that it would result in a loss of revenue, which was grotesquely put at £9,000,000. I am satisfied from what l know, and vast numbers of people are of the same opinion, that this lowering of the Duty would result in greater consumption being restored, and in the natural increase of revenue to the Exchequer.
    The danger of this high taxation is that it is leading to evil courses. In certain towns there is a great consumption of methylated spirits and other noxious compounds. In some districts there is a demand for a concoction called Spanish Red Wine, on which the duty is 10s. per proof gallon of alcohol, as compared with a taxation of 72s. 6d. on whisky made in our own country. A habit is growing up of buying large quantities of this Spanish Red Wine and mixing it with methylated spirits, with a result very damaging to those who consume it. If this penal and grostesque taxation, which only hits those who have
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    not an adequate supply of wordly goods, is to continue, there can be no doubt that the same results will accrue as accrued in the United States. There will be an immense increase of illicit distillation. That is already going on, not for sale, but for personal consumption. In the United States there are hundreds and thousands of small stills. I am assured, by those who are experts, that there is no simpler operation than manufacturing some form of alcohol. With a little yeast, some sugar, a kettle, a short pipe and a sink, anyone can make alcohol. That is already being done, and the result of this high taxation will be that it will increase.
    There is nothing better calculated to bring about this illicit manufacture than the present penal system of taxation. People do not need to make alcohol out of barley or anything of that kind. It can be made simply of sugar, and it will be so made in the future in increasing quantities with a deterioration of the Revenue, and a deterioration of the compound. It is a hardship that this penal taxation should continue to be inflicted. It is a hardship on those who want to use this in moderation. And, after all, 10,000 people in this country to one do use it in moderation, and always have. It is a hardship on them, and causes a great deal of discontent. It is a form of class taxation which causes a great deal of feeling. It is a hardship on the farmer who grows the grain, and it is a hardship on those districts where a considerable portion of the population are employed in this particular industry. It is not fair that one part of the community which uses this commodity should be taxed to a very high extent, while others who, for various reasons, use none of this should escape all taxation. Those who make use of this commodity are bearing an undue burden. This commodity does them no harm, but the present system of taxation is at too high a figure, and it is unjust and will mean a loss of revenue. But if whisky were reduced from 12s. 6d. to 7s. 6d. a bottle, then I contend that the Chancellor of the Exchequer would lose no money, but he would give a great deal of contentment to people of moderate tastes.
    Mr. CHURCHILL: No one would dispute the fact that the taxation of whisky and spirits generally is at a very high level indeed. I can see the effects of this by merely looking at the returns

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    of consumption. In 1913 we consumed 31,844,000 gallons of ruin, brandy and other imported spirits, and home-made spirits. The figures for 1925 (excluding the Irish Free State) fell to 14,381,000 gallons. To-day, although on the whole it may be said that the consuming power of the country has not diminished in general since the pre-war period, the consumption of spirits has fallen to one-half. There are also other statistics which could be found at the proper time and place to show that there have been very notable reductions in crimes of drunkenness and disease arising out of drunkenness. No doubt there have been increases in the consumption of sugar and in other directions which have occupied the spending of the people. High as is the taxation of spirits at the present time, I am not in a position to meet my hon. Friend. Of course I must admit that in some respects there are disadvantages apart from the disadvantages to the Revenue. There is the growth in the consumption of heavy wines. There is, however, a certain case which can be made out undoubtedly on behalf of our famous national British product, whisky, as against some of these imported substitutes, the intoxicating effect of which is probably greater, having regard to the fact, I am informed, that, whisky is frequently or commonly used in a diluted state.
    My hon. Friend is asking me to face a loss of revenue of about £13,000,000 in the present year, and £13,500,000 in a full year on the basis of an increase of 20 per cent. in consumption following the reduction of the tax. Even allowing for a 20 per cent. increase in consumption there is a loss to Revenue of £13,000,000 this year and £13,500,000 next year. If we extended this to the whole of the spirit group, and to imported spirits as well as home-made, even if I were to allow for a 25 per cent. increase of consumption over this large area, the loss of revenue would approximate to £15,000,000 per year. My hon. Friend comes forward and says that if we give to this highly-taxed class of His Majesty's subjects the reduction, it will be found that in their gratitude for the relief, they will consume on a scale so much larger that the Revenue will suffer in no respect. That, I under-
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    stand, was the crux of his argument. Has my hon. Friend made any calculation of the extent to which the gratitude of the whisky drinkers would have to be expressed in the form of increased consumption to enable me to secure the revenue on which I am counting this year? No less than a 70 per cent. increase would be required in the consumption of whisky and of spirits generally to enable the same revenue to be reached as we are now counting on, on the basis of the Amendment of my hon. Friend. I feel quite sure that if I were to accept this Amendment, I should be embarking upon a very questionable course which would lead me into serious embarrassments in many directions. I believe there is no part of that course which would be more certain than that, if I accepted this Amendment, there would be a very heavy loss to the Revenue, and one which I am not in a position at the present time to contemplate or risk.
    Mr. TEMPLETON: It is never easy for an ordinary plain Scot—perhaps a Chancellor of the Exchequer would say a whisky-drinking Scot—to speak in this House at any time and in any circumstances, but it becomes very much more difficult when such a man is called upon to follow the Chancellor of the Exchequer and to reply.to those arguments which he has put with his customary skill and ability. In putting forward this Amendment I do not think there was in the minds of my hon. and learned Friend the Member for Argyll (Mr. Macquisten) and myself a feeling that those who in Scotland live the natural, normal life of a Scottish man, would, out of sheer gratitude to the Chancellor of the Exchequer, proceed to drink more whisky than was good for them in order that the Exchequer might not suffer. But this I will say, that in the old days before the War, when there was a better quality whisky, and when people were not thinking that horrible stuff called methylated spirits, because it is cheaper than whisky, in those halcyon days before the War, when the ordinary working man on his small wages could go out on a Saturday afternoon to a football match, have a glass of whisky with his friend and go to a show at night, and do it all within two half crowns, to-clay if he goes out, he finds that the cost

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    of a little pleasure of that kind is not only doubled, but it has gone up by seven or eight times as much. The effect of this tax has not assisted any reduction in the cost of living; on the contrary, the cost of living to the ordinary man in our country has been tremendously enhanced. We who support this Amendment do not do so because we are peculiarly or personally interested in the licensed trade, but we represent in this House an industry that has shown itself, wherever it exists, certainly in the North and West of Scotland, to consist of law-abiding and ordinary decent people who have given much less trouble to the authorities than people in many other industries which are regarded as more reputable and respectable than the whisky trade.
    These people need the protection which this House can give them. The Chancellor of the Exchequer put forward the argument that this great fall in the consumption of spirits marked a rise in the moral tone of the people by making it more difficult to obtain that which so many people want. I contend that such a rise in the moral tone of the people can only be obtained honestly by measures other than those which impose upon that section of the people a far heavier burden of Empire than the rest of the community is called upon to bear. It is a dishonest method of bringing forward piecemeal prohibition by endeavouring to force upon the ordinary people of the country a higher price for citizenship in Great Britain than is paid by those who belong to that section of the community who do not drink. I number among my very valued personal acquaintances and dear friends a great many teetotallers, and I would just like to say to them that they have lost a great deal of the light of life, and I have never been carried home, nor have I ever appeared before the bar of a police court. I am living, as millions of my fellow countrymen are living, the life of an ordinary citizen, and we take that which gives us pleasure and which gladdens the heart of man. I have tried it both ways. You never know a man while he remains a strict teetotaller. You never know where you are with him, and yet here comes the Chancellor of the Exchequer year after year piling these heavy burdens upon true men. What says our national bard about this glorious beverage of ours? He says:
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    "There's naething like the honest nappie,
    Whar'll ye e'er see men sae happy,
    Or women sonsy, saft, an' sappy
    'Tween morn and morn,
    As them wha like to tak the drippy
    In glass or horn I"
    I think if so e of our Scottish friends would translate that to our English friends they would find that there is nothing like whisky for making us happy and contented. Let me add that there was nothing like red revolution in Russia until vodka was abolished, although it may be true that there have been fewer trials and convictions for drunkenness since the glorious raising of more revenue and lessening of drinking since the taxation came. This is a subject which, I know, is not often given much time in this House. One single other clinching verse from the bard who really made whisky the subject of many of his lays:
    8.0 P.M.
    "Scotland, my auld, respected Mither!
    Tho' whyles ye moistify your leather,
    Till whare ye sit, on craps o'heather,
    Ye tine your dam;
    Freedom and whisky gang thegither!
    Tak' aff your dram!"
    I have much pleasure in supporting the Clause.
    Mr. J. HUDSON: It is something of a hold enterprise to take part in a Debate after so happy a contribution as the one we have just listened to. The hon. Member for Banff (Mr. Templeton) and his colleague the hon. and learned Member for Argyll (Mr. Macquisten) quite frankly confessed that they were concerned for the distillers.
    Mr. MACQUISTEN: There is a great number of distilleries in my own constituency and in that of my hon. Friend the Member for Banff (Mr. Templeton), but I have, personally, no interest in whisky—except as a consumer.
    Mr. HUDSON: The hon. and learned Member was quite frankly speaking in the interests of the distilling trade. In their efforts to make out a case for the reduction of the tax on whisky they had to resort to the customary arguments, which I believe will be found, if carefully examined, to cancel out one another. For example, we were assured by the hon. and learned Member for Argyll that if the heavy tax remains it is bound to lead, as he tells us it is leading, to illicit distillation in the slum tenements of Glasgow and in other

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    Scottish slums. If it is possible, owing to the construction of the drains and so on, to get round the law in that way, why, in the world, do people buy that terrible stuff, methylated spirits, even with the new poison material put into it? I suggest that you cannot have it both ways. If it is possible to create comparatively good whisky through the sink, why is the other method employed? I suggest that all these stories about illicit distilleries and the extent to which people are drinking methylated spirits are very much exaggerated. The story has again been repeated about America having a great increase of illicit distillation since the prohibition laws came into effect. It is well known that in America before the prohibition laws came in illicit distillation was carried on to a very great extent, and there has been no very considerable modification as the result of the introduction of these laws.
    My main complaint against the case of the hon. Gentlemen is that they have argued that there is a hardship inflicted on certain elements of the community by the continuance of this heavy tax. The hon. and learned Member for Argyll referred to the farmers, who he said would be growing more barley or potatoes or whatever they make their whisky from. That may be so, but there will be an increase in other sorts of activities besides agricultural if there is much of an increase in whisky drinking. If there is an increase of 70 per cent., which the Chancellor of the Exchequer confessed was necessary in order to give a revenue as large as obtaining now, I suggest that there will be more work in the Law Courts, the lunatic asylums, and in local administration generally if this increase goes forward to the extent that they suggest. It is because we have seen a decrease in the general consumption of liquor that there has been a general improvement in the public morale and a falling off of cases in the police courts and the building up of the better types of the community, and we feel that any decrease in the revenue will be more than made up by the results of decent conditions of life adopted throughout the country. I hope, therefore, that we shall continue to lay the heavy tax on liquors of this kind. Taxation has not only the purpose of bringing revenue for public ends; it has many other purposes.
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    Through taxation public habits have been very largely changed, and changed for the better. It will be the general admission of hon. Members in this House who come from Scotland, and do not feel themselves so much concerned about the distilling trade, that any change that has taken place in the direction of less whisky drinking in Scotland has led to a general improvement.
    Mr. BARR: I do not propose to go at length into detail to answer what fell from the hon. Members opposite who have made themselves responsible for this Clause. I shall just refer to one or two statements. In regard to the multiplication of illicit distilleries, I have examined, State by State in the United States of America the prosecutions and the offences for illicit distilling, and it is in the wet States that we find these offences of illicit distilling, and the States that have long continued wet are the feeders of the illicit trade. In Glasgow the prosecutions for illicit distilling are, without exception, in those districts most fed with public houses and where public houses most abound. In regard to methylated spirits, certainly it is a great evil, but the hon. and learned Member for Argyll (Mr. Macquisten) will admit that the deaths that result from methylated spirits are infinitesimal—one or two here and there—as compared with the thousands and tens of thousands of deaths that are due to liquor. Dr. Norman Kerr set out to prove that it was a great exaggeration to say that over 60,000 people a year died from drink, but when he had finished his investigations, after having set out to prove that 60,000 was an exaggeration, he said that it was an under-estimate and that the figure should be over 120,000. I readily grant that there has been a great improvement in Scotland, and in England too, and that the numbers might be revised to-day, but I think it will be admitted in that regard that there is no comparison and nothing to be alarmed about at the suggestion of an increase in illicit distillation or indulgence in methylated spirits compared with the vast harm that would come from an increase in drinking. My main object in rising however is to redeem the name of our Scottish bard, the national bard of Scotland. People quote freely from Robert Burns as if
    "Freedom and whisky gang thegither"
    was about all he wrote. I wish they would study the letters of Robert. Burns.

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    I will give a reference to the teaching
    of Robert Burns in this regard. Three times over in his letters he condemns what he calls
    "the savage hospitality of his country that deals so freely in intoxicating liquor"—
    the savage hospitality that in our no-licence movement in Scotland we are seeking to curtail. Burns in one of his letters to Robert Ainslie calls himself
    "a poor wretch who has been guilty of the sin of drunkenness."
    When he had taken to excess he insulted Mrs Riddell of Woodley Park, and next day wrote to her his most humble apology:
    "Madam, my errors, though great, were involuntary. An intoxicated man is the vilest of beasts."
    In an entry in his "Common Place Book" he warns every young man from what lie calls
    "a devil's dear-bought experience."
    He warns
    "every young man whose eyes shall ever light in after-time on Ids pages to shun his example in this regard, and for that end to keep up 0 warm regular intercourse with the Deity."
    I think these quotations do something to redeem the honour of the national poet of Scotland, and to show how slight and superficial is the acquaintance of the hon. Members opposite with the works of the national poet of their country.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Deduction in respect of royalties payable to persons not resident in the United Kingdom.)
    Notwithstanding anything contained in Rule 3 to the Rules applicable to Cases 1 and II of Schedule D, where any royalty or other suns is paid to a person not resident in the United Kingdom in respect of the user of a patent outside the United Kingdom, the amount of such royalty or other sum shall be allowed as a deduction in computing the balance of profits or gains of the trade of the person paying the said royalty or other sum in respect of such user of the patent, and the provisions of Rule 21 (1) and (2) of the General Rides applicable to Schedules A, B, C, D, and E, shall not apply to the payment of any such royalty or other sum so paid in respect of such user of the patent.—[Mr. Forrest.]
    Brought up, and read the First time.
    Mr. FORREST: I beg to move, "That the Clause be read a Second time."
    I do so feeling with confidence that it is one which the Chancellor of the Excise-
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    quer will accept. It is devised to rectify
    what under the existing law is a great
    hardship. The present position of the law is that a person who pays a royalty under a patent cannot put it down as an expense. He cannot include it in any of his returns for Income Tax purposes, but that is remedied so far as the royalty owner resident in this country is concerned by his being able to deduct the tax in paying his royalties. That is the compensation which the present law intends to give, and the reasons for this Amendment is that it is non-effective against a
    foreign royalty owner. It may be that he can deduct it from the foreign royalty owner, hut the foreign royalty owner has a remedy in his own country and Law Courts whereby he can claim the full royalty charge from the user in this
    country. The result is that the British taxpayer has to pay the royalty charge here. He can deduct it if the owner is a British subject, but he is unable to reclaim if the owner is a foreigner.
    May I give the Committee an example as to how this works. Assume that the receipts from the manufacture of a royalty article come out at £12,000, and that the cost of manufacturing the article, including materials, labour costs and all the other charges which he is able to put against Income Tax in his return, amount to £10,000. That leaves a balance of £2,000. Assuming the royalty payable is £2,000, it means that his actual profits are nil. As a matter of fact he has to pay Income Tax on £2,000, and if the royalty owner is not subject to the laws of this country he has no remedy. He has to pay Income Tax on £2,000 whereas he has made no profit whatever. I do not want to emphasise this point further because I think it will appeal to the good sense of the Committee as fair and equitable to put the royalty user in exactly the same position whether he happens to be resident and subject to the laws of this country or whether he happens to be a subject of the laws of a foreign country.
    The ATTORNEY - GENERAL (Sir Douglas Hogg): The Government are not able to accept this new Clause, and I should at once make it clear why. So far from this being a hardship which has inadvertently crept into the law and is, therefore, to be corrected, the present system was deliberately introduced into the law as long ago as 1907, pursuant to

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    the express recommendation of a Departmental Committee which sat in 1905. The law as it stands seeks, as far as possible, that royalties and other profits shall be taxed at the source. That is desirable, because it ensures that the taxpayer shall pay out of his profits and, secondly, and most important from the Revenue point of view, it ensures that the tax shall be collected. The hon. Member has said that this creates a hardship because, if a person owning a royalty lives abroad, it may not be possible to recover from him; and he gave an instance of a business which made £12,000 receipts, with £10,000 expenses, leaving a profit of £2,000, the whole of which was paid to the owner of the royalty, leaving nothing for the unfortunate manufacturer. I do not suppose he would carry on the business very long on those terms. But, in fact, if a business is carried on in this country, and is controlled in this country, the fact that the profits are paid to someone abroad does not exempt it in the Inland Revenue
    view from taxation.What the hon. Member proposes is that where the profits go to somebody resident abroad, no tax should be payable at all. That obviously is not a proposition which we can accept on behalf of the Government. The hon. Member said that he desired to put the royalty owner in the same position, whether he was resident in England or abroad, but the Amendment, so far from effecting that, destroys the present position. At present whether a royalty owner lives at home or abroad, any royalty on any business controlled in this country has to pay tax.
    The Amendment proposes that whereas the royalty owner resident in this country shall pay the tax, the royalty owner resident abroad shall get off scot free. That is putting a premium on our inventors leaving the country for the other side of the Channel, and it is not a proposal which the Government would desire to foster or encourage. We take the view that all royalties ought to pay the tax, wherever the owner may happen to reside, as long as the business is carried on and controlled in this country, and the only effective way of ensuring that the tax shall be paid is by deducting it at the source. Although the royalty cannot be deducted from the profits the payer of the royalty is entitled under the
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    Income Tax Rules to deduct from the royalty the amount of the taxes and account for that amount to the revenue. In making bargains the user of a royalty should have regard to the residence of the particular person and take account of the taxation which he will necessarily incur by using a patent in this country. The Government adhere to the view reached in 1905, embodied in our legislation as long ago as 1907, and we are not able to differentiate in favour of the foreigner as against the British resident in the way proposed.
    Question, "That the Clause be read a Second time," put, and negatived.

  NEW CLAUSSE.—(Amemdment of Income Tax Act, 1918.)
  "Schedule A, No. VIII of the Income Tax Act, 1918, shall he amended by the insertion therein after Rule 2 of the following Rule:
  2a. The landlord or persons receiving the rent shall be entitled to production of the receipt for the tax before allowing any reduction."—[Mr. D. Reid.]
  Brought up, and read the First time.
  Mr. D. REID: I beg to move, "That the Clause be read a Second time."
  This Amendment differs, I think, from the Amendments which have been moved hitherto in so far as it does not ask for any concession by the Government. It merely deals with a small point in machinery. The Committee know that the occupier of a dwelling house is liable to pay the Income Tax, but he has the advantage of deducting the amount from his rent and the landlord is bound to make the allowance. These Rules are contained in the Schedule to the Income Tax Act of 1918. It was the general view up to about the year 1918 that a landlord, when asked to allow for file deduction, was entitled to see the receipt for the tax, but in that year a case was decided which held that when a tenant has paid the landlord's property tax the landlord was bound to allow the same in deduction or discharge of the rent, although the tenant did not produce the receipt. That leaves the landlord, or the agent who has to collect rents, in the unfortunate position that a tenant may claim to make a deduction on his rent in respect of the tax and the landlord or the agent has no means whatever of finding out whether the tax has been paid or not Rule 7 provides that

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  "A tenant occupier for the time being of any lands, tenements, or hereditaments, who has been required to pay, and has paid, any sums charged in respect thereof under this Schedule which, under the provisions of this Act, ought to have been or ought to be paid by a former tenant or occupier, may deduct and retain, out of any subsequent payment of rent to his landlord, the sum, or any part thereof, which ought to have been or ought to be so paid."
  That puts the landlord or agent in an unfortunate position. He may have had a tenant in the earlier part of the year who has made a deduction from rent on account of tax but has not paid the tax. A new tenant comes in, and is called upon to pay tax, and he is then entitled to make a deduction from the rent payable by him, leaving the unfortunate landlord or agent in the position of having two deductions made for the same amount of tax. It does not benefit the Government or anybody else except a rogue. Our submission is that in these circumstances some alteration should be made in the law. The alteration for which we ask is very slight. We only ask that when the tenant does pay the tax and claims a deduction from the rent, the landlord should be entitled to see the receipt. That ought to meet with the approval of the Financial Secretary to the Treasury because I think it is a safeguard to the Treasury. The tax is more likely to be paid in such circumstances than it is under the present system. I would also point out that the ordinary receipt for Income Tax has, on the face of it, a statement that the receipt should be produced when an allowance is claimed. Therefore, we only ask the right hon. Gentleman to implement his own Department's suggestion and to say that the landlord shall be entitled to see the receipt.
  Mr. McNEILL: The point which my hon. Friend has brought forward is one which we recognise as reasonable. Apparently at present there is no means of compelling the production of this receipt, and as the payment of the money is a necessary preliminary to making the allowance, it is obviously right that the law should be amended so that in cases where any doubt arises or may arise, it should be possible to compel the production of the receipt. The form suggested by my hon. Friend is not, however, as I am advised, quite the best form in which the alteration should
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  appear in the Finance Bill, but my right hon. Friend the Chancellor of the Exchequer authorises me to say that if my hon. Friend will withdraw the proposed New Clause now, we will bring up a Clause on the Report stage which will deal with this point in the proper way.
  Motion and Clause, by leave, withdrawn.
  The CHAIRMAN: The proposed New Clause standing in the name of the hon. Member for Windsor (Mr. Somerville) —(Easter Offerings voluntarily paid to ministers of religion to be exempt)—I shall not call, because I think the point can be more conveniently dealt with on a subsequent proposed New Clause in the name of the Noble Lord the Member for Oxford University (Lord Hugh Cecil) which covers a wider scope.
  Mr. RADFORD: I am sorry, Sir, that I was not in my place when my name was called, but I was not aware that the preceding new Clause on the Paper would not be moved. May I proceed to move the new Clause standing in my name after the next Amendment has been disposed of?
  The CHAIRMAN: I have called on the hon. Member. I understood the hon. Member was in the doorway when his name was called. He can proceed.
  Mr. RADFORD: I am sorry, Sir, I have left my notes elsewhere.
  The CHAIRMAN: It would be against precedent to allow the hon. Member to leave the Chamber to look for his papers. Is he prepared to move?

  NEW CLAUSE.—(Amendment of 12 and13 Geo. 5, c. 17, s. 21.)
  "Section twenty-one of the Finance Act, 1922, is hereby repealed."—[Mr. Radford.]
  Brought up, and read the First time.
  Mr. RADFORD: I beg to move, "That the Clause be read a Second time."
  On the Second Reading of this Bill I drew attention to weaknesses in the law relating to Super-tax, which resulted in great inequalities and in large amounts properly liable to Super-tax escaping taxation. In the course of my remarks I asked the Government to consider seriously the introduction of legislation strengthening the provisions of

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  Section 21 of the Finance Act, 1922, upon which the legislature principally relied for preventing the avoidance of Super-tax payment. The Financial Secretary was good enough to suggest that on the Committee stage of the Bill I might possibly put forward any proposals which I had to make for the consideration of the Government. Accordingly, my hon. Friends who are associated with me in this proposed new Clause and I put down this and the succeeding Amendment on the Paper. This Clause proposes to repeal Section 21 of the Finance Act, 1922, and our second proposal is that there should be substituted for it a fresh Clause, free from the objectionable features of the Section which we desire to repeal. I understand, however, that our second proposed new Clause, which is consequential on the first, is out of order.
  The CHAIRMAN: Yes, it is out of order, as it would increase the charge.
  Mr. RADFORD: Despite that fact, my hon. Friends, and I still desire to move our first New Clause because we feel that if we carry the repeal of this Section, the Government may, on the Report stage of the Bill, adopt the New Clause which we are now debarred from moving, or some other Clause having an equal effect. I go back to the period when Super-tax was first imposed in the Budget of 1909–1910. From that moment there was a distinct inequality between the treatment meted out to incomes derived from dividends of limited liability companies, and the treatment of incomes of persons who are either sole proprietors of or partners in private businesses, professional men, salaried officials, or owners of land and buildings. The dice were loaded in favour of those whose incomes were derived from limited liability companies. This was unintentional, no doubt, but at the very outset, before any action had been taken by any person or persons to avoid Super-tax, they were a privileged class as compared with others whose incomes reached the Super-tax figure, which was then £5,000 a year. Those whose incomes were derived from dividends from limited liability companies paid Super-tax on the cash dividends actually received by them while those in the second category paid on the whole of their share of the profits or gains of the private business or profession in which
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  they were interested, and in the case of owners of land and buildings, they had to pay on the net Schedule A value thereof, which was frequently far in excess of the actual income which the owners derived therefrom.
  I would like to give one clear example of the incidence of the tax as regards two wealthy, and equally wealthy, men. A was the proprietor of a prosperous and old-established business making an annual profit of £20,000. [An HON. MEMBER: "Oh!"] There are such evil men who, many of them, are possessed of old businesses, built up in the last 50 or 100 years, which have been of incalculable benefit to the working classes as well as to themselves. This man A, in addition, had an income of £5,000 a year from the accumulated savings of his family and himself in outside investments. That made his income clearly £25,000 a year B was the owner of an identical business, but instead of owning it himself, he owned all the shares, save one, of a private limited company owning the Businesses. This company was making £20,000 a year profit, the same as A, and this man B also had £5,000 from other sources. It was perfectly plain that A and B were equally wealthy men, as regards both capital and income. Each of them, because they came probably of thrifty forebears, whose thrift in the past had enabled these big businesses to be built up, limited his annual expenditure to the £5,000 which he derived from his outside investments. A allowed his-profit in this old business to accumulate, enabling the business to be extended as and when required, and B similarly allowed the profit of the limited company of which he was the proprietor to accumulate in the hands of the limited company.
  They were obviously equally wealthy, but for Super-tax purposes the income of A was returnable as £25,000, namely, £20,000, profits of a business of which he was proprietor, and £5,000, income derived from outside investments. B only had to return as his income for Super-tax purposes £5,000, namely, the income that he received from his outside investments; he received no cash dividends from the company of which he was the proprietor and, therefore, was not liable to include them. There was no dishonesty or blame for evasion on the part of B. The only

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  blame was upon the way in which the Super-tax law was drawn, and I submit that if a man is the proprietor of the whole of the shares of a limited company, he is saving money equally if the company is allowed to accumulate it as if it was accumulating in his own hands and in his own name. I have taken that extreme ease to make the inequality the more clear. It was naturally not long before business men and others, for example, those owning investments and landed estates, began to appreciate the saving hey could effect in their Super-tax by forming limited liability companies to take over their businesses or their investments or their estates, and, in common with those already owning limited companies, to abstain from the declaration of cash dividends, or at any rate to limit the same strictly to an amount absolutely needed by the proprietor for his current needs.
  It was decided that the capitalisation of undistributed profits by way of bonus shares did not make the recipient of those shares liable to Super-tax, and the Legislature has gone even further, as in February this year a decision of the House of Lords, in the case of the Commissioners of Inland Revenue versus the Executors of the Right Reverend G. C. Fisher, decided that the receipt of bonus debentures did not make the recipient, thereof liable to Super-tax. It is argued by those who consider the law at present satisfactory that the issue of bonus shares, or even of bonus debentures, is not income, but seeing that bonus shares and debentures can easily be converted into cash, I do not think the argument holds water. It is held that bonus shares are generally those of private companies, which are not readily saleable, but there is another method by which the recipients of bonus shares in a private limited company, who are anxious that outsiders should not become shareholders, and who, therefore, do not care to sell, can turn them into cash. As the bonus shares are issued to wipe out the profits available for distribution, the cash in hand of the company accumulates, and in due course the company can pass resolutions declaring that its capital is greater than its current needs. By passing the necessary resolutions for a reduction of capital and a repayment of a certain amount of shares to the shareholders, when confirmed by the Court, it is possible to
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  redeem, say, 10s. in the £ of the original and bonus shares, reducing the shares from £1 shares fully-paid to 10s. shares
  fully-paid.The 10s. then goes in the
  form of cash into the hands of the shareholders, but it is exempt from any liability for Super-tax thereon.
  So the game went on till the Budget of 1922 when the right hon. Member for
  Hillhead (Sir R. Horne) was Chancellor of the Exchequer, and he introduced into his Budget a Clause to deal with these legal abuses, a Clause which, in emasculated form, ultimately became Section 21 of the Finance Act, 1922, the Section whose repeal I am now moving. In intro-clueing his Budget and explaining this Clause to the House, the right, hon. Gentleman said:
  "I wish also to direct the attention of the Committee to certain instances of legal avoidance of Income Tax and Super-tax, which have recently become so prevalent as to produce, until they are corrected, startling inequalities in the incidence of taxation as between different taxpayers."—[OFFICIAL REPORT, 1st May, 3922; col. 1033, Vol. 153.]
  In the course of the Debate, he said:
  "We do not presume to say what is the amount which actually should be put to reserve. It is only the extreme cases that are being struck at, and we do not wish to strike at any case where there may be varying opinions as to how much should be put to reserve. It is only the case, which are perfectly apparent on the face of them, the class of ease which leaps to the eye, which will be inquired into. We should not presume to sit as authorities on the precise amount which any company shall put to reserve, but what we propose to do in the egregious cases is to say You really have acted in bad faith in this matter, and accordingly your penalty shall be that yon shall pay tax as a private firm.'"
  Those last words are rather noteworthy, showing that the right lion. Gentleman at that date recognised the absolute inequality of the law as between a private firm and a limited company. This Section 21 of the Finance Act, 1922, which reached the Statute Book considerably weakened as compared with the Clause introduced by the right hon. Gentleman in his Budget, commences as follows:
  "With a view to preventing the avoidance of the payment of Super-tax through the withholding from distribution of income of a company which would otherwise be distributed, it is hereby enacted as follows:
  (1) Where it appears to the Special Commissioners that any company to which this Section applies has not, within a reasonable time after the end of any year or other period ending on any date subsequent to the fifth day of April, nineteen hundred

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  and twenty-two, for which accounts have been made up, distributed to its members in such manner as to render the amount distributed liable to be included in the statements to be made by the members of the company of their total income for the purposes of Super-tax, a reasonable part of its actual income from all sources for the said year or other period, the Commissioners may, by notice in writing to the company, direct that for purposes of assessment to Super-tax, the said income of the company shall, for the year or other period specified in the notice, be deemed to be the income of the members, and the amount thereof shall be apportioned among the members."
  So far so good. But the weakness of this Section is that, having started off so well—remembering, I would remind the
  Committee these words at the beginning of this Section
  "Any company to which this Section applies."
  That is to say, Sub-section (6) of that Section actually, in fact, takes away with the other hand that which was given by the first hand.
  (6) "This Section shall apply to any company—

  (a) which has, since the 5th of April, 1914, been registered under the Companies Acts, 1908 to 1917; and

  (b) in which the number of shareholders computed as hereinafter provided is not more than 50; and

  (c) which has not issued any of shares as a result of a public invitation to subscribe for shares; and

  (d) which is under the control of not more than five persons."

  I would first draw the attention ofthe Committee to the fact that the word "and" is inserted between each of these four provisos.
  Therefore, to enable the company to be clear of the operation of this Section all that is necessary is that it should not comply with one out of the four. Even if the company complies with the other three, if they can manage to keep clear of Number 4 they can keep out of the provisions of the Section. In the Amendment. which my hon. Friends and I have put down on the Paper, and which we are debarred from moving, and to which I should be out of order, no doubt, in drawing the attention of the Committee, we have practically, at least Mr. Hope—it was our intention had we been permitted—
  The CHAIRMAN: The hon. Gentleman can point out that he desires to apply a remedy but is debarred from doing so.
  Mr. RADFORD: My hon. Friends and I had hoped we might apply a remedy, but unfortunately we have been debarred. I want to point out to the Government the practical objections, not theoretical ones, to any one, at any rate of the first three of these four provisos being in such a Section. The first one is that it only applies to a company registered since 5th of April, 1914. I would like to ask what equity is there in allowing those people who happen to have had either their businesses or their estates formed into companies prior to the 5th April 1914 to be differentially treated from those who happened to be registered on the 6th of April? People are too enterprising and energetic in these days to be absolutely debarred under this first proviso if they wish to form their company at the present time. They are not to he debarred by a email matter like this. I have here an advertisement inserted in January, 1926, in the "Accountant," which is the leading paper of the profession. It runs to this effect:
  "Advertiser is desirous of purchasing the registration of a company formed before 5th of April, 1914. Must have wide powers of holding and dealing in real and personal estate. Apply Box 565, Gee and Co., Publishers, Ltd., London, E.C."
  This is not a solitary, not an orphan advertisement. I have seen others. Assuming that any person is unable to secure a derelict company such as this advertiser requires, there is no difficulty whatever in evading the provisions of Sub-section (6) of Section 21. Let me read the second proviso:
  "In which the number of shareholders computed as hereinafter provided is not more than 50."
  It is true that a wealthy man forming a company to take over his investments, his landed estate or business, does not wish to have outsiders holding the shares which rank with his own, but it is perfectly easy, in addition to the ordinary shares which will be held by him and his family, to have a preference issue with no rights of voting or attending meetings, with preference dividends limited to 5 per cent. I am quite sure that, equally, there would be no difficulty in such a man finding the 50 people who will be willing to have, at any rate, some of these fully paid-up shares. For the purposes of this Section they must be beneficial owners of the snares, the mere holding as nominees for the principal shareholder

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  is not sufficient. But they are still beneficial shareholders if they have been presented as a free gift, and thus enable the company to get outside the provisions of this Section. I put it to hon. Members that some men, quite honourable men, who own businesses, may say: "I am anxious to have a few outside shareholders in my company and I propose to give So-and-So or his children five or 10 fully paid preference shares of £1 each." There will be no difficulty, so far as I know my countrymen, in getting 50 shareholders on these terms, and the donor knows that the giving away of £500 worth of shares will save him thousands a year in Super-tax. The next point is the third proviso. The company must also be one
  "which has not issued any of its shares as a result of a public invitation to subscribe for shares."
  Only a few months ago I saw the details of the registration of a limited company with a capital of something like £1,000,000 in ordinary shares issued to a large landowner. He and his son were having all the ordinary shares and becoming governing directors for life. Simultaneously they made an offer to the public of the comparatively paltry number of 5,000 preference shares. It was perfectly obvious that this public issue of 5,000 preference shares was riot made for what I might call a legitimate purpose taking into account the expense of advertising, etc., connected therewith. The preference shareholders' rights were strictly limited as regards dividends, absence of voting power, etc. Read in conjunction with the provisions of this Section, I think it is perfectly plain what the motive was in making that small issue with the circumstances connected with it. I do submit that with all these provisoes necessary, and every one of them necessary to make any company come within the operation of this Section, the Section is absolutely useless. It is just about as effective for achieving its purpose as a sieve would be effective as a container of liquid.
  My hon. Friends and myself are moving the repeal of this Section, when we know that we are not to be allowed to move a new Clause to take its place, because we are convinced that so long as this Section remains on the Statute Book so long will not only the Committee, but the Government themselves, delude themselves that all that can reasonably be done to prevent
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  evasion of the Super-tax has been done. This is not in any way a party question. Nevertheless let me remind the Committee what was said by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) on the Second Reading of the Finance Bill, referring to the speech I had made on the subject:
  "This question has often been raised in the House of Commons, and the House of Commons— know what I am talking about—"
  with that impressive wave of the hand that he adopts on these particular occasions—
  "and the reason why successive Governments have not proposed to the House of Commons more drastic means of cleating with tax evasion, has been because of the opposition with which even moderate proposals of that character have always been made by the party opposite."—[OFFICIAL REPORT, 20th May, 1926; col. 473, Vol. 196.]
  When I heard the right hon. Gentleman say that, as I had made up my mind to put something down in the nature of these Amendments, I went to the trouble of looking to see what attempt he had made to deal with the matter when he was Chancellor of the Exchequer. To my surprise I found he did not make the least reference to it, either in his Budget speech—I am glad the right hon. Gentleman has now come in—or in the subsequent Debates on the various stages of the Finance Bill. If the right hon. Gentleman was sincere in what he said, that this question had often been raised in the House, that it was, obviously, present to the minds of all financial experts, like himself, and that, the reason why successive Governments had not proposed more drastic means was because they were afraid of Conservative opposition, I am astounded that he, who always has the courage of his convictions, should have been deterred from bringing in proposals by the knowledge that they would meet with opposition. Possibly, that was what deterred him. I have looked up last year's Budget Debates to see what he said about it then, as it was so present in his mind, but I find he made no reference to it whatever; and if his motive in not referring to it in his own Budget speech was, shall I say, a weak one, not a worthy one, no doubt in last year's Budget Debate he was actuated by the much more worthy motive of not desiring to embarrass the Government, in view of the opposition

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  which he knew would come from Members on this side.
  I have kept the Committee much longer than I had intended to do, but, in conclusion, I would like to remind them, with reference to limited liability companies, that the expression
  "limited liability" was intended to refer to a limit of the liability of individual shareholders up to the amount of the shares they hold; I do not think that by any extraordinary power of divination or foresight it was intended to indicate a limited liability to Super-tax. We are all agreed about the old principle that the broadest backs should bear the heaviest burdens, and equity demands that equally broad backs should bear equally heavy loads. The great majority of people with incomes of more than £2,000 a year loyally and honourably bear the burden of Super-tax to which they are subject, and it is for the purpose of insuring that the minority who are at present not doing so shall be compelled to bear their rightful share of taxation that I have introduced this Amendment.
  Mr. McNEILL: I think my hon. Friend was conscious of the difficulty in which he finds himself with these two Amendments, but he did not explicitly state what the effect would be if the Amendment which lie has now moved were accepted by the Committee. He has told us how Super-tax is or may be, and, according to his experience, has been, evaded in spite of the Act passed
  in 1922.That Act was passed for the very purpose of stopping holes allowing of evasion of Super-tax. My hon. Friend, following up the very interesting and able speech which he made on the Second Reading of the Finance Bill, has pointed out that the Section of the Act of 1922 which was intended to stop this evasion has been ineffective for the purpose, and he has indicated where, he thinks, the weakness of the Section lies. But, unfortunately for him, the second Amendment standing in his name is out of Order, and if he were to succeed in inducing the Committee to accept this Amendment, then instead of strengthening the law for stopping evasion he would destroy the only legislation for that purpose which is in existence. I agree that it is my hon. Friend's misfortune
  9.0 P.M.
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  that that should be so, but that being the state of affairs I think I may take it that it is not really his intention to ask the Committee to accept the present Amendment, and that he has served his purpose by stating the case as to the evasion of Super-tax.
  Mr. RADFORD: I am aware that if the Committee accepted this Amendment the position would be that certain persons —not those who are in any way setting out to evade the Super-tax, but those who have from perfectly bona fide motives formed themselves into limited liability companies—would evade the Supertax which they incur even under this weak Section the repeal of which I moved. But I do feel that as long as this weak Section remains on the Statute Book, so long will a complacent air be adopted by the Government—I am not talking of this Government alone, for, in the words of the right hon. Gentleman the Member for Colne Valley (Mr. Snowden), successive Governments have been alive to this difficulty—and the Inland Revenue authorities will think that all is well. To repeal Section 21 of the Act of 1922 will, if I may use the expression, bring the thing to an issue, and force the Government and the Inland Revenue authorities to take steps to stop these leakages. Everyone of these successful evasions of liability throws a heavier load on the shoulders of other people, and I submit that it will be better to rid the Statute Book of a Section which is differentiating between classes of taxpayers and penalising those who are not seeking to evade it.
  Mr. McNEILL: I think I have given my hon. Friend the opportunity of making a second speech, but I do not want to complain. I cannot agree with the attitude he has taken up, because although I agree that the existing Section is not as strong for its intended purpose as it ought to be, and as I should like to see it made, I think he is exaggerating when he says it has been entirely useless. That is not my information. It may quite well be that a certain number of evasive fishes have managed to get through a too-wide mesh, but it does not follow that some have not been caught.
  Mr. RADFORD: The biggest fish get through.
  Mr. McNElLL: I think the Section has not been so completely useless as my hon. Friend suggests, and it would be a great misfortune if we were to cut it out of the Statute Book altogether, for the mere sake of a demonstration without putting anything in its place.
  I am precluded, of course, from going into the merits of the other Amendment which my hon. Friend put down, but, having looked at it, I am able to say that if the Committee were to strike out the existing Section they would not find it so easy and simple a matter as my hon. Friend thinks to construct a satisfactory Clause to put in its place. As I am quite satisfied that my hon. Friend, who has a great grasp of this subject, has in his Amendment gone perhaps as near as most people are likely to get to a satisfactory substitute, I feel that is the best proof of the very great difficulty with which anyone is confronted who would draw up such a Clause. This is not merely conjecture. My hon. Friend is quite mistaken if he thinks that hitherto there has been no attempt to strengthen this Clause. I am quite conscious of the fact that the Section he has attacked is not by any means perfect, and I quite agree that the limitations in it require strengthening, if we could do it in a satisfactory manner. The point received consideration long before I had any responsibility in connection with the matter, for the Inland Revenue Authorities and the Treasury are continually trying to strengthen existing legislation if experience shows that it is not proving completely satisfactory for its purpose. So with this particular Clause. I am not able for that very reason to give a definite pledge as to what we will do.
  I would like to refer for a moment to what was said about the speech of the right hon. Gentleman the Member for Colne Valley. I do not know upon what grounds the right hon. Gentleman was making that statement, but so far as my researches go I cannot find the smallest foundation for the right hon. Gentleman's statement that this reform had been consistently opposed by members of the party on this side of the House. So far as I know, we are all anxious to have a thoroughly efficient taxing machine and to prevent evasion. For the reasons I have given I cannot give any definite pledge as to whether
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  in the next Finance Bill we shall be able to find a satisfactory substitute for this Section, because I really do not know. We shall, however, continue to do our best to find a way of preventing evasion without at the same time doing something which may have quite an unintended effect in other directions, and which might inflict a very great injury on commerce and trade. Those are the considerations which we have in view, and which we shall continue to have in view. For these reasons I cannot accept the Amendment as it stands, because it would get rid of the only safeguard we have and which, however imperfect, is better than none at all.
  Mr. W. GRAHAM: On this side of the Committee we are in full sympathy with the efforts of the hon. Member opposite in putting forward this most drastic proposal to prevent evasion of taxation in this country. In point of fact so far from not having taken an interest in this matter, we on these benches, in nearly every Finance Bill since 1918, have urged the importance of this question. Very great emphasis has been laid upon the campaign which followed the publication of the Report of the Royal Commission in 1919. The hon. Member who moved this Amendment. referred to a speech made in a previous Debate by the ex-Chancellor of the Exchequer. I think the Committee will agree with me that my right hon. Friend the Member for Colne Valley (Mr. Snowden) does not require any defence at my hands but that part of his speech referred to opposition raised in this House at the time to the proposals of the Revenue Bill. Certain suggestions put forward by the Royal Commission were in the Revenue Bill, and the object of that Bill was partly to deal with a problem of this kind by altering the whole structure of the Income Tax in
  this country. Unfortunately, those
  objects were lost sight of in the
  campaign against the bureaucracy in the Civil Service and Inland Revenue Departments, which was warmly supported by numerous hon. Members opposite, and very largely owing to that opposition the Revenue Bill was withdrawn.
  Mr. McNEILL: The right hon. Gentleman knows very well that the opposition to the Revenue Bill of that year had

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  nothing whatever to do with the evasion of the tax.
  Mr. GRAHAM: Not directly, but the opposition was offered to the extra powers being given to the Inland Revenue authorities. Until you get the drastic powers recommended by the Royal Commission, you cannot deal effectively with the evasion of the Income Tax, the Super-tax, or anything else. You must, therefore, have those powers to which the strongest opposition was shown during the lifetime of the Coalition Government. That was what we had in mind when the words of the passage in the speech quoted by the hon. Member opposite were uttered. Therefore, that part of the complaint of the hon. Member who moved this Amendment completely disappears.
  One word about the actual merits of this Clause. The Financial Secretary was perfectly correct in saying that, if the proposal of the hon. Member were adopted, you would merely wipe out the Section of the Act, and the hon. Member cannot move his New Clause because he cannot increase the charge; and, therefore, we should be led into a position infinitely weaker than that in which we are now placed. I think that was a very thin argument to come from a Government which has power to deal with almost any question. They have had four years experience of the operation of this Section and we are in complete agreement with the hon. Member that the restrictions and conditions imposed in 1922 are such that they can only have a very limited effect in regard to the evasion of Super-tax at the present time. Therefore, I think we are entitled to have a more definite reply than that from the Financial Secretary. Here is a Government, with a large majority which can give effect to anything the Government likes to propose. Millions are lost every year by tax evasion, and a fair amount of that sum is attributable to the kind of conditions described by the hon. Member opposite. We are sorry that the hon. Member opposite will not have an opportunity of moving his new Clause, and while we are taking an objection to a certain part of his speech we are at one with him in the end he seeks.
  Mr. McNEILL: I want to make two observations on the speech to which we
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  have just listened. I should like to say with how much satisfaction I heard the elaborate explanation of the, speech made by the ex-Chancellor of the Exchequer, because it is quite evident that we were under the gravest misapprehension as to what he had intended to say. I should not accuse the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) of habitual obscurity, but I understood him to say and the OFFICIAL REPORT confirms my view, that on a question of the evasion of a tax, the sort of question which my ho:, Friends raised in the Second Reading Debate, the right hon. Gentleman had found himself confronted with habitual opposition from this side of the House.
  That was the impression that his speech gave. We now know that he meant something quite different. The Revenue Bill was not in any sense the responsibility of hon. Gentlemen on this side of the House at all. It was not a Conservative Bill, but a Coalition Bill. No doubt a great many individual Conservatives were involved in it, and there were also Labour men and Liberals involved. [HON. MEMBERS: "No!") Anyhow, it was not a Conservative Bill. The second point was that, except very indirectly, it had nothing whatever to do with tax evasion, which was the subject that was discussed on the Second Reading. The opposition to that Bill arose mainly on account of the suggested change in regard to the position of the Commissioners of Income Tax, to which the right hon. Gentleman referred as a question of bureaucracy. Of course, it would be out of order to go into the merits of these questions; it is sufficient for my purpose to recall that that Bill, for which we had no responsibility, had nothing whatever to do with tax evasion. I am very glad to find that the fulminations of the right hon. Gentleman were as harmless as they now turn out to be.
  The second observation that I want to make is in regard to what the right hon. Gentleman said to the effect that, although it would be out of order for my hon. Friend the Member for South Salford (Mr. Radford) to move the Clause which stands in his name later on the. Paper, the Government could propose it if they liked, and, consequently, that it was a very feeble reply that I gave when I referred to the fact that we could not move it. The right hon. Gentleman said

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  that he was entirely at one with my hon. Friend the Member for South Salford. The right hon. Gentleman occupies a position of responsibility, and, therefore, I suppose I may take it from that that the Clause in question, which it would be out of order to refer to in particular, is endorsed by him. He has been at the Treasury, and he is sitting beside the ex-Chancellor of the Exchequer. I take it, therefore, that it is a natural inference from his speech, he having stated that he thinks that this Clause would be the proper way of dealing with the question—
  The CHAIRMAN: The right hon. Gentleman seems now to be on the verge of discussing the Clause himself.
  Mr. McNEILL: I am, very nearly. I do not wish to go any nearer to it than that. The fact that I cannot go nearer than that only shows how little justification there was for the right hon. Gentleman's attack upon me for not having gone further. The Government, of course, can make proposals, not necessarily on the lines of those of my hon. Friend, for dealing with the general question of tax evasion, and I have intimated that the Government, the moment they see two things—first, that evasion is certainly going on to a substantial extent, and, secondly, that there is any practicable method of dealing with that evasion—will not be slow to take action. That time, however, has not yet arrived, and, therefore, for me to go at any length into the case which my hon. Friend has made, and with which I am in entire agreement, would appear to me to be entirely out of place in the circumstances.
  Mr. DUNCAN: This Debate has certainly opened up a very extraordinary position. The Financial Secretary suggested that, if the Government could be satisfied that there was evasion, and that they could find a Clause which would meet the case, they would no doubt he prepared to deal with it. The astounding thing to me is that there should be the slightest doubt in the mind of the Financial Secretary that a very considerable amount of evasion is going on—that the amount is really an enormous one, considering the days in which we are living, the scarcity of money, and the various ways in which the Chancellor of the Exchequer has to
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  raise that money. The worst thing of all, however, to my mind, is that, in such necessitous times, when the Government, as the Financial Secretary has admitted, know that evasion is going on, they arc actually unable to find a set of words that will enable them in their legislation to meet the particular and specific case which is here raised. That is a
  wonderful admission to make. Some people say that the Conservative party is the stupid party. I do not know whether the right hon. Gentleman is desirous of giving us an illustration of that stupidity, but certainly it is a very great admission to make in this House. I would not have thought so much about it but for the fact that the whole matter is being raised by a member of the Conservative party, from their own benches, to whose speech I listened with very real interest. Personally, I think he has made an excellent ease, and I think the answer that, has been given to it is about the weakest I have ever heard during the 16 years I have been in this House. I certainly think the. Government ought to give a little mare consideration to an important matter like this, and ought not to depend upon their docile majority to carry anything through the House of Commons. Surely, £10,000,000 of evasion is something that is worth the attention of the Chancellor of the Exchequer.
  Question, "That the Clause be read a Second time," put, and negatived.

  NEW CLAUSE.—(Raduction of duty on certain liquor licences.)
  The duties chargeable on the Following Excise liquor licences, that is to say, retailers' on-licences for spirits, beer, or wine, retailers' off-licences for spirits, beer, or wine, so far as regards licensed premises situate in a parish or district with less than two thousand inhabitants shall be reduced by fifty per cent.—[Colonel Sir Arthur Holbrook.]
  Brought up, and read the First time.
  Colonel Sir ARTHUR HOLBROOK: I beg to move, "That the Clause be read a Second time."
  I moved this Clause last year, and the Chancellor of the Exchequer promised that he would give the proposal favourable consideration. Small wayside inns, which depend almost entirely for their trade upon the passing Traffic, are now closed throughout the hours when that traffic is passing, so that they are

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  deprived of the main source of their income, which I submit is manifestly unfair. I would point out that most of these houses are occupied by ex-service men, who have invested their whole savings in the purchase of the business, and it is very hard upon many of these men. In my own division there are many instances of this hardship, and I hope the Chancellor of the Exchequer will redeem the promise he made to me last year, and give favourable consideration to the proposal.
  Mr. McNEILL: It is quite true that, when my hon. and gallant Friend referred to this matter last year, the Chancellor of the Exchequer gave an undertaking that before this Budget he would look carefully into the case which my hon. Friend made. He has done so, but we have not been able to find any really valid reason for making the variation which my hon. and gallant Friend proposes. After all, no one is more anxious to do everything that is reasonably possible for ex-service men than I am, and I am sure every Member in this House is anxious to do so, but it does seem rather pushing to an extreme the advocacy of consideration for ex-service men when the House of Commons is asked, in special areas, to reduce the licence duty for public houses on the ground that an unspecified proportion of those licensed premises are occupied by ex-service men. I really do not think my hon. and gallant Friend can expect the Government to make an alteration in the licensing laws on grounds of that sort. He has not really given any reason for making the alteration that he proposes. I am not in a position to say quite what the cost would be to the Treasury, but I do not put it upon that ground. I think the Committee will agree that, in dealing with such a matter as the licensing laws and the cost of licences in the case of the public houses of the country, which is now placed on a regular and carefully thought out scale set out in the Schedule to one of the recent Acts, that scale should not be disturbed unless very much more cogent reasons have been given than my hon. and gallant Friend has been able to bring forward. In these circumstances, I hope he will not press his proposal.
  Sir A. HOLBROOK: I should like to point out that on the previous occasion I gave full reasons for my case. I did not repeat myself to-day. I do not base my claim entirely on the grounds that these houses are occupied largely by ex-service men. I take the case of a small village, with less than 2,(!00 inhabitants, where the proprietor had now come back to that village for his support, and I urge that the principle which was applied during the War, when the licence duty was reduced by a seventh because the public-houses were closed on Sunday, should be applied in such a case. These houses are now closed for a half of the time, and these men in little villages are getting none of the casual trade that was their main support in the past. I mentioned the question of ex-service men, but it was not the main argument on which I was basing my case. I know the Chancellor of the Exchequer told me two years ago that in large houses and in large towns the men were not suffering from running half-time because they got the full extent of their trade. That is not the case of the wayside inn. It is a great hardship to these men that they should have to pay the full amount of their licence when half their trade is taken from them.
  Mr. R. RICHARDSON: The licence is not what is the matter with the village inn; it is the brewer. Everyone must know who has read the reports of these companies how well the brewers are doing. The reduction in the licence duty will not help these men. It is the brewer who can help them if he cares to do so and there is sufficient money in all the breweries in this country to help these people.
  Question, "That the Clause be read a Second time," put, and negatived.

  NEW CLAUSE.—(Exemption of agricultural shows from Entertainments Duty in certain cases.)
  The Entertainments Duty imposed by the Finance (New Duties) Act, 1916, as amended by any subsequent enactment, shall not, after the first clay of July, nineteen hundred and twenty-six, be charged on payments for admission to any agricultural show the whole of the profits of which are devoted to agricultural or educational purposes, notwithstanding that admission to the show may include admission to entertainments in regard to which, but for the provisions of this Section, Entertainments Duty would be payable.—[Major Sir Archibald Sinclair.]
  Brought up, and read the First time.
  Major Sir ARCHIBALD SINCLAIR: I beg to move, "That the Clause be read a Second time."
  This Amendment is extremely simple, palpably just and inherently sound. Everybody who is acquainted with agricultural life, both in England and in Scotland, knows that these local shows perform a real and almost indispensable service to agriculture.They are very
  difficult to organise, especially in scattered districts such as are to be found in the constituency which I have the honour to represent. Committees of hardworking men go round whipping up their people to organise the various competitions. This tax is a tremendous hardship to them. It clogs their efforts enormously if they have to pay Entertainments Duty merely because they allow some little competition, such as foot racing, and give a prize for it. If they merely give a prize for a foot Dace, it puts them at once within the grasp of the Inland 'Revenue. This question was
  discussed last year. Everybody realised, even the then Financial Secretary to the Treasury, the difficulties under which these hard working committees of these local shows labour. The expenses nearly always exceed the receipts and the gap has to he met by voluntary contributions. The only way in which there shows can be put upon a prosperous basis is by enlisting the help, enthusiasm and interest of all sections of the community. We want them all to come to these shows, not only the people who are engaged in agriculture, but the women and children, in order that they may help to swell the gate money and make the shows financially independent. Unless they can have little things like sporting competitions and unless they are permitted to give prizes for these competitions it makes it extremely difficult.
  The Financial Secretary to the Treasury last year, who is now the Minister of Agriculture, said that it was had that an. Entertainments Duty should fall upon what are not entertainments but shows, where the entertainments are not the prime object. That, I think, defines what we have in mind. It is the fact that in these cases entertainment is not the prime object. It is just the means of attracting people to take an interest in these shows. It is a hardship that they are not allowed to have these
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  entertainments, or that if they do the whole of the receipts are subject to Entertainments Duty. If there is anything wrong in the drafting of this Amendment and the right hon. Gentleman will consider it before Report stage, I will willingly withdraw it and accept anything he suggests which will carry out the object which was defined by his predecessor of relieving cases which are not entertainments but shows from this duty. Lastly, one great merit of this Amendment is that it will cost the right hon. Gentleman nothing. These shows are not paying the tax now. All he is doing is to blanket a certain amount of activity and energy by threatening these people that if they do organise little sports competitions and give prizes for them to attract the crowd then the Treasury will descend on them. They cannot afford to do that, with the result that they have to suffer in this way. If the right hon. Gentleman will accept this Amendment, or suggest something on the same lines, he would bring substantial relief to poor and struggling societies in the rural districts of this country, particularly where population is sparse and the spirit of the farmers and smallholders is progressive and they want to rally to their support all sections of the community of both sexes, and also those not directly engaged in agriculture, whose support would be of immense value in carrying on these shows for the benefit of the industry.
  Mr. McNEILL: This proposal of the hon. Baronet is another example, though perhaps not quite so strong an example, of what we had an hour or two ago with reference to schools and colleges. We have a proposal to relieve from taxation some body with which we were all in sympathy, and we, who are responsible for the taxation of the country for the moment., are confronted with this sort of case presented to us, "Are you not in sympathy with this? Are you not in sympathy with education? Are you not in sympathy with
  amateur sport? Are you not in sympathy with agriculture? Are you going to penalise a bona fide agricultural show merely because inside its gates you happen to have a foot race for boys? Is that the sort of thing you are going to do? Cannot you relieve us from this vexatious taxation?" It is very easy to say that. But this matter,

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  after all, has been very carefully considered by Parliament. In 1921, 1923, and then in 1924, the whole matter of this application of the tax to agricultural shows was carefully considered.
  May I remind the Committee what the present conditions for exemption are? It is not only agricultural shows. The hon. Baronet must not be under any misapprehension. It would be quite impossible to do for agricultural shows what we are not equally prepared to do for industrial shows, and therefore he is not quite correct when he says in such an airy way that it would cost nothing. We have to consider not merely what the hon. Baronet has in his own mind, but what the actual effect would be if his proposal were accepted. As regards agricultural, industrial, art and craft, health exhibitions and so forth there are two conditions by which, if they are fulfilled, they can escape taxation. The first is that the show is provided by a society which is not conducted or established for profit, and the second that it consists entirely, apart from hand music or exhibition work or displays of skill, of products of the industry, material, machinery or appliances used in their production or displays of skill by workers in the industry. If those conditions are observed the tax is not payable. The hon. Baronet, in the case of agricultural shows alone, wants to remove both those conditions. May I point out, as a mere matter of drafting, one effect this Clause would have? All the profits must be devoted to agricultural or educational purposes. But there are a good many agricultural shows—I know some within my own knowledge—where the proceeds are given to local charities, local hospitals and matters of that sort. Why should a show of that sort be deprived of the benevolence of the hon. Baronet when others, which are devoted entirely to educational purposes, for example, are to be exempted from taxation?
  Then there is another consideration which he appears to have left out of account. An agricultural show is not to be disqualified for exemption by having foot races or any such shows, and he takes an extreme case at one end of the scale. He pictured to us a bona fide agricultural show for the benefit of the agriculture of the district and he laughed
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  at the idea of the exemption being lost because there is a little boy's race inside the grounds. Let me take a case at the other end of the scale. According to the hon. Baronet's proposal you may have a great fete with sports, horse racing, foot racing, merry-go-rounds, punch and judy, ice cream, all the luxuries of the season gathered there and all you have to do is to bring in a few mangold wurzels and call it an agricultural show, and the hon. Baronet and his Clause step in and say "There is no entertainment here. This is merely an agricultural show."
  Sir A. SINCLAIR: The right hon. Gentleman will admit that the proprietors of the punch and judy show, the ice cream establishments, merry-go-rounds and so forth would have to be prepared to give the whole of their profits to agricultural purposes.
  Mr. McNEILL: The organisers of a well-conducted school treat might very well manage something of that sort. If the hon. Baronet uses his imagination to construct a case which makes the imposition of taxation look ridiculous it is quite as easy under the Clause he proposes to suggest conditions under which it would be really absurd that the Entertainments Duty should not be levied. We may amuse ourselves by taking imaginary cases but they are useful in this way, that they illustrate the great difficulty of drafting a Clause to put into an Act of Parliament which shall do one specific thing and nothing more. I entirely sympathise with the hon. Baronet's object if we could really get an exemption which will apply to a bona fide agricultural show, but I really do not see how it is possible to draft a Clause which will do that without doing a great deal more than he intends or than the Government could accept, and it is because I do not see how that could be done, and having regard to the great care with which all these matters were no doubt considered on the three previous occasions when it was reviewed by Parliament, I am afraid I cannot accede to the request to accept the Clause now.
  Colonel GRETTON: If by some effort of ingenuity or expert knowledge a suitable Clause can be drafted on the Report stage, will the right hon. Gentleman give it his benevolent consideration?
  Mr. McNEILL: If the hon. Baronet or my hon. and gallant Friend chooses to put the Clause in an amended form down on Report, of course we will again give
  it consideration, but I cannot give any pledge as to how we shall treat it.
  Sir WALTER de FRECE: I have no objection to the Clause as far as it relates
  to agricultural shows, but I agree that
  the concluding lines give an enormous scope of opposition to entertainments in towns which are paying Entertainments Duty, rates, taxes, etc. It would be possible to give a circus or a music hall or theatrical show calling it an agricultural show. If it were possible to draft
  a Clause whereby agriculture could be helped and the people who have vested interests in the towns in providing amusement were not interfered with I should have no objection, but as the Clause stands it would be impossible and it would be opposed greatly by the entertainment industry.
  Question, "That the Clause be read a Second time," put, and negatived.

  NEW CLAUSE.—(Deduction, in respect of undistributed profits.)
  (1) If in any year a productive company does not distribute among its shareholders the whole balance of its profits and gains (whether in cash or shares) there shall be deducted from the next payment of tax payable by such company a sum equal to a quarter of the standard rate of tax payable upon an amount equal to the sum undistributed; provided that if at any time such profits or any part thereof are distributed, whether in cash or shares, Income Tax shall forthwith become payable upon the amount so distributed at the same rate as that upon which the deduction aforesaid was calculated.

  (2) The expression "productive company" shall, for the purpose of this Section, mean a company registered under the Companies Act, 1908, and engaged in productive industry, and the expression "productive industry" shall mean manufacture, engineering construction, mining, and shipping.

  (3) Where such company as aforesaid is engaged in trade or in any industry other than the said industries the deduction of tax granted by this Section shall he allowed only in respect of profits earned in that branch of the company's business which is limited to productive industry.

  (4) The provisions of the Income Tax Act, 1918 governing procedure and appeals in relation to exemptions, abatements, or relief shall apply to relief under this Section. —[Sir Leslie Scott.]

  Brought up, and read the First time.
  Sir LESLIE SCOTT: I beg to move, "That the Clause be read a Second time."
  This is in the same words as the Clause that stood in my name last year, and is very similar in purport to a Clause that was moved in the preceding year, or the year before that, by the present Minister of Health. The object of the proposal deserves very careful and sympathetic consideration. Quite candidly, I recognise that it is a concession which the difficulties of the country at the present time will not permit of being accepted this year, but I want particularly to know the view of the Chancellor of the Exchequer on it to-day.
  The proposal is that where productive companies, that is, industrial companies, engaged in production and employing labour, set aside out of their annual profits sums to be used in the replacement of plant and machinery so as to bring the plant and machinery up to date, it is in the interests of the country and in the interests of labour that those reserves should pay a lower rate of tax than the profits distributed amongst the shareholders. It is a practice which, more or less, is followed in certain other countries, and one which would greatly assist by acting as a stimulus to boards of directors in this country to keep the plant and machinery of industrial establishments up to date. It is a principle which has been recognised by a great many Members of this House as a very valuable principle, and it was recognised by the present Minister Of Health as a very valuable principle. If any concession can at any time be made in regard to Income Tax, this is one which, in my humble submission, is almost the first concession which should be made in favour of industry. Last year, when I moved this new Clause, the answer given on behalf of the Chancellor of the Exchequer was that very careful consideration would be given to the matter. If I may read one sentence from the OFFICIAL REPORT of the speech of the Financial Secretary to the Treasury on that occasion, the Committee will appreciate the view then expressed:
  "The Chancellor of the Exchequer authorises me to say that he is going to consider this matter and to explore it in all its bearings to see whether there is any method by which it could be dealt with on a safe and satisfactory basis."—[OFFICIAL REPORT, 22nd June, 1925; col. 1158, Vol. 185.)

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  I do not expect the Chancellor of the Exchequer this year to say that this is a proposal which can possibly be put into practice, having regard to the state of our finances to-day, but I should like to have an assurance that during the ensuing months before the next Budget the matter will be given serious consideration.
  Mr. W. GRAHAM: In a few sentences I should like to put our attitude on this proposal, mainly because of what appears to be the sympathetic reply which was given last year. That was a reply sympathetic from the point of view that inquiry would be made into the proposition. On the surface, this proposal has something to recommend it, but it is only on the surface, because quite clearly what the hon. and learned Member means is that relief to the extent of one-fourth of the standard rate of tax should be given on amounts put to reserve by undertakings which he describes as productive in character. There is a kind of loose definition of the term
  "productive in character," although the Clause states that the expression "productive industry" shall mean manufacture, engineering construction, mining and shipping. I suggest to the Chancellor of the Exchequer and to the Financial Secretary to the Treasury that a definition of that kind is an unworkable proposition in the Income Tax system of this country, because if any scheme of the kind were adopted it would mean a remission of taxation to these particular undertakings, and presumably no concession at all to the vast mass of other savings of the community which might he deposited temporarily in all kinds of ways, but are, none the less, savings which will be devoted to productive purposes.
  The broad effect of a concession of this kind would be to heap the burden of taxation on other undertakings equally productive in character in the last resort, and to lead to hopeless anomaly within our Income Tax system, apart altogether from the fact that, as all investigation into this problem has shown, it could not be adopted without a sacrifice of many millions annually to the Exchequer of Great Britain. I am certain that is a sacrifice which the present Chancellor of the Exchequer and the Financial
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  Secretary to the Treasury are not in a position to make. We on this side wish to make it perfectly clear that we shall resist any device of this kind, but I hope we are not lacking in constructive proposals. This is quite impossible as an Income Tax proposition. Hon. Members will recollect that when the Royal Commission investigated many problems of industry as they were related to Income Tax, they tried to show that it would be wise for this country to work out a proper scheme dealing with wasting assets, obsolescence and depreciation. Since 1919, for a variety of reasons, we have not worked out a true and accurate scheme of that description. If we are to give relief to industry at all, it is only along that line that it can be given, because then we should be providing for plant and machinery which disappears in the ordinary process of use or obsolescence, and for the undeniable burdens upon industry from day to day. The proposal made by the hon. and learned Member would be false to any true economic analysis of production in this country, and, quite apart from that, it would be rank bad administration of our Income Tax system.
  Colonel GRETTON: I fail to understand the argument of the right hon. Member for Central Edinburgh (Mr. W. Graham), except that he does recognise that there is a case for wasting assets, obsolescence, etc., in regard to plant and machinery. The rest of his statement consisted of a series of phrases which we usually hear from the Treasury officials, to the effect that the Government cannot afford to make a concession or to deal with the case. That is the sort of argument we get. There is a case to be dealt with. In any sound system of taxation it is to the advantage of the State to encourage the development of industry and the investment of capital in an effort to secure increased production and increased revenue, in connection with which the State in its turn becomes prosperous and benefits by the taxation which it derives from the resultant income. In our system of taxation it is an extraordinary anomaly that the money set aside to reserve for investment and development of business is taxed as capital. A business out of its earnings which puts by money for the purpose of development is actually taxed in the process. The right hon. Member

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  for Central Edinburgh approves of taxation under that process. I submit that that is not sound finance and that it is not ultimately for the benefit of the State. This question has not been met either by the speech made by the right hon. Member for Central Edinburgh or by the speeches which were made a year ago. It is a question which requires the serious attention of the Government as a. matter of principle. I recognise that the Chancellor of the Exchequer is in great difficulty this year, but there is a case to be met, and ultimately if it is met justly and on sound lines the result will be that the yield of taxation will he increased.
  Mr. CHURCHILL: I cannot face the loss of £7,500,000 which would be involved in the acceptance of this Amendment. Of this £7,500,000, the loss of which would fall on the Exchequer, only £2,500,000 would reach the particular class of industries which claim the sympathy of my hon. and learned Friend who moved the new Clause. But I do not regard the matter as disposed of purely by reciting the regular principles of Income Tax Clauses. There are answers which can always be given on these grounds. At the same time, we must not be blind to the real difficulty, which is coming
  more and more plainly before us. A large part of the wealth of this country is in active and healthy operation, but there is one particular class of business which lags increasingly behind, namely, the important industries which have to employ large numbers of workpeople, and which also have to operate through very large rateable properties; and when those two adverse factors unite upon an export trade—not a sheltered trade, but one which is in full contact with foreign competition—there is no doubt whatever that the enterprise and industry of the capitalists concerned are definitely weakening under the combined pressure. Whatever views we may have or on whatever side of the House we may sit, it would be affectation to pretend that that is not the case. An industry which provides for great masses of British labour, which organises business so that it will ensure them the standards of living which they desire, which at the same time bears the heaviest part of the rates, and which is confronted with the keenest of foreign competition, constitutes a problem that hitherto has not been sur-
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  mounted and which is being faced with less and less success, so far as I can see by any figures that have been brought before me, in the last few years since the War.
  It is an important thing to diagnose the evil, but, unless the malady be recognised, it is idle to attempt to seek the remedy. I am not going further to-night than to point very clearly to where this weak point in our production has led us. One has only to look at the Income Tax returns to see the classes of business which are able to maintain themselves, out of which the revenue of the country is obtained, and by which it is increased year by year, and also to see those great basis industries, employing hundreds of thousands of workmen and occupying hundreds of thousands of acres, which have fallen steadily behind in the general march of the prosperity of the country.
  I do not suppose that we can continue entirely to be governed by the principles of taxation and rating that were applicable to a condition of affairs when the basic industries were not falling behind, but were fully participating in the great upward thrust of the prosperity of the nation. I can only say that this problem, if it is to be faced at all, must be approached, not in an incidental fashion such as is contained in this Amendment, but that it deserves continuous attention before it can reach the stage at which it can receive the essential consideration of the. Government and become a matter of high policy. There is relief asked from Income Tax on money in reserve, and on wasting assets, and in various other ways, but the question we have to face is one which we cannot face to-night. I cannot accept the Amendment, nor can I make any definite promise or engagement for the future other than the statement I have made, namely, that we shall undoubtedly have to face the situation of whether the undue weight of the burdens which rest upon the great basic industries under our present systems of taxation and rating will receive the attention which it increasingly deserves.
  10.0 P.M.
  Motion and Clause, by leave, withdrawn.

  NEW CLAUSE.—(Exemption of Income Tax for amateur sport.
  The profits of any amateur club or association promoted for the encouragement

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  of amateur sport and other outdoor exercises shall not be chargeable under Case 1, Schedule D, Income Tax Act, 1918, in respect of any profits or gains of such club or association Dot exceeding fifty pounds which cannot be distributed and are, in the opinion of the General and Special Commissioners, wholly devoted to the development of amateur athletics in the interests of the health and well-being of the coramunity.—[Sir William Davison.]
  Brought up, and read the First time.
  Sir WILLIAM DAVISON: I beg to move, "That the Clause be read a Second time."
  The purpose of this Amendment is clearly set out, and I imagine that few words of mine will be required to commend it to the common sense of the Committee, and I hope induce the Government to accept it, especially as the amount involved is very small. The Clause is the result of a unanimous resolution passed at a meeting held some little time ago, and it embodies the views of the National Cyclists' Union, the Amateur Boxing Association, the Amateur Athletic Association, the Amateur Swimming Association, the National Amateur
  Wrestling Association and other bodies. They are all amateur associations engaged upon various kinds of sport, and I have put in the words "not exceeding fifty pounds." to show that it is intended mainly for the benefit of the poorer classes and to help to give facilities for athletic exercise and out-of-door sport to the younger people, and especially to those who are not largely blessed with this world's goods. The Financial Secretary to the Treasury referred incidentally to this new Clause when replying to the Clause with regard to agricultural shows, and he said that the Treasury had to close their ears to many things with which they would otherwise sympathise in the interests of the taxpayers. He largely nullified the appeal in classifying my proposed New Clause with that moved by the hon. Baronet the Member for Caithness (Sir A. Sinclair) by pointing out to him that agricultural and industrial shows were exempted from all taxation if they were not provided by a society carrying on for profit. I should be entirely satisfied if such an exemption
  was given to the athletic societies for which I am appealing. There is no suggestion of any profit being made. In
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  fact, only recently where any small profit was made the Income Tax authorities did not pay any attention to it at all. It is only recently, due no doubt to the financial stringency of the nation, that the authorities have taken any notice of these shows throughout the country.
  These societies, in order to raise funds, have gala entertainments, and if the day is a fine one and things go well, they make a profit which they desire to use, in the case of a rowing club, for buying sculls and other things, and in the case of a cricket club for getting bats and other 'things that might be needed. But now the Income Tax authorities say that any profit they make in a gala of that kind, after they have paid their expenses, must be subject to taxation. This damps down unquestionably those people who are, many of them, busy men engaged in work and give their time to organising these galas in the interest of sport. None of us can have read without a certain amount of emotion the leading article in last Saturday's "Times"—"Nowhere to play"—which was written because of a ease in the Police Court the previous week, in which two Paddington lads were brought to the Court for playing in the streets. The magistrate, very properly, only bound them over. I do not suggest that this Clause would meet that difficulty, but it would certainly go some way towards doing so. It was pointed out in that article that there was only one playing field for every 29,500 of the population. This Clause will help the people to help themselves in the matter of playing fields. Nothing is a better remedy for hooliganism than to provide fields for games as a fitting outlet for high spirits. This Clause will be taxably negligible, and I hope it will receive sympathetic consideration. In order to take away any doubt there might be in the mind of the Chancellor of the Exchequer I have Limited the profit to £50.
  Mr. CHURCHILL: I am afraid, however desirous I might be of acceding to the hon. Member's appeal, the Government have had such lessons this year in respect of the proposed playing grounds for civil servants—a matter of some controversy, that now seems a long time ago—that I should never venture to trespass on the extremely dangerous ground of this Clause. Everyone would

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  like to encourage sport, and there are a great many other things everyone would like to encourage; but when it takes the form of a favoured remission of taxation I am unable to follow further along the lines advanced. There is no doubt whatever that an enormous and almost innumerable variety of occupations in this country deserve support and encouragement, but I am afraid it cannot take the form of exemption from Income Tax. I am well aware of the efforts of these amateur clubs. They hold entertainments and functions by public advertisement, inviting subscriptions and entrance fees from the public, just in the same way as other institutions. I think it would be opening a line of march which I certainly would be ill-advised to follow if we were to give this special favour.
  The hon. Member for South Kensington (Sir W. Davison) has spoken of the encouragement it would be to them if they were free from Income Tax. All I can say is that they are still in the enjoyment of four-fifths of that encouragement. Four-fifths of the money is still left to them. In the historic words of the right hon. Gentleman opposite, we have to regard not so much what is taken away but what is left. We can see all around us, by evidence of our eyes, that there is no discouragement imposed on these clubs and organisations which at all restricts and prevents their onward development. Therefore, I regret to say that my answer must be in the negative. I have had to return this answer a good many times today, and I cannot make an exception in this case. Learning has been denied, lunatic asylums have been denied, and even the dramatic and art classes of the right hon. Member for Hillhead (Sir It. Horne). The others must bear their common share.
  Question, "That the Clause be read a Second time," put, and negatived.

  NEW CLAUSE.—(Death Duties.)
  The scale set out in the Fourth Schedule of the Finance Act, 1925, with relation to Death Duties shall he subject to discount of five per cent, on all payments made during lifetime.—[Viscount Sandon.]
  Brought up, and read the First time.
  Viscount SANDON: I beg to move, "That the Clause be read a Second time."
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  I am quite sure, as the Chancellor of the Exchequer has been so apologetic for saying
  "No," that there is an admirable opportunity for departing on another line. I do not want to urge this Clause on account of the persons involved. It involves the State. As things are at present, it is well known that when these duties arise, the obligations cannot be met out of income. They have to be met out of capital assets. These assets in the interests of the country should not be realised. It must be to the loss of the country in that respect. Every one has to do the same thing, and many are doing it at the same time; consequently the markets are flooded, prices lower, and so money has to be realized to raise the duty. A great amount has to be sent out of the country, and this lowers the amount available to be handed in to the Treasury. If an estate is valued at the present moment for £200,000, the Treasury, taking its estate duty, will get £46,000, but if that estate is broken up as it would have to be in another generation, and is sold in 10 lots of £20,000, then the duty would only amount to £16,000 and the Treasury would be £30,000 down. I hope that consideration will appeal to the purely practical and cold mind of the Exchequer. And similar losses are suffered in respect of Super-tax and Income Tax, in the case of an estate of that size, varying between
  £4 and £1,500. The duty has all the objections we used to apply to the Capital Levy, and hon. Members opposite who have such enormous enthusiasm for the Capital Levy will no doubt be in favour of the existing system.
  The Chancellor of the Exchequer knows quite well that in all these cases it is the land which is hit the most because land is the least easily convertible. Although we cannot remedy that, there is an alternative which can, to a certain extent, mitigate the evil. There are moments in the lives of all of us when money comes easier to our hands; there are also times when we cannot easily obtain money, when it is harder to obtain. Under the proposals in the Amendment we shall pay in our easiest moments out of income, en bloc or in instalments and as we all have to make some sacrifice we should then make the sacrifice at a moment when it is more convenient to us and better for the Exchequer, certainly under the present

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  system it is the most awkward time in spite of the eight years respite. I suggest to the Treasury that it will be worth their while, as they might be paid twenty years in advance. I have put down 5 per cent., but I quite realise that that is an arbitrary figure and the exact figure will have to be the subject of consideration—I do not attach any great importance to the particular figure. I quite realise that as a matter of public policy people who own these assets must be fleeced in the public interest, but at least, some consideration should be had for the victims, for whom it is a domestic issue, as to what is their convenience as far as possible, and especially is that so when the Treasury does not stand to lose by it. It may be when the time comes that there will be a difference in the amount paid and the actual amount of the duty, and that we shall have to adjust the amounts paid in advance with the actual duty, as they may not tally, but I hope the Chancellor of the Exchequer, whose voice must be tired saying "No," will think this is an occasion on which he can do some service to the Treasury and at the same time stop the dispatch of tangible assets to America.
  Mr. CHURCHILL: The object of this Clause, as the Noble Lord has indicated, is to enable any person during his lifetime to make payments in anticipation of Estate Duty payable on his death, and such payments to be subject to a discount of 5 per cent. The discount of 5 per cent., as implied in the new Clause, would mean that any payment made by a man in advance of his death on account of Death Duties would have 5 per cent. deducted from it. For instance, on £100 of Death Duties he would pay ક now, and when he died that £95 would have extinguished £100 worth of Death Duties. I do not know fi that is the proposal of my Noble Friend.
  Viscount SANDON: Yes, broadly, subject to the fact that I am open-minded, and as to the 5 per cent., I have no objection to it being on a sliding scale, as found to be suitable by the Exchequer, on the basis of the interval between payment and death.
  Mr. CHURCHILL: I am relieved to know that my Noble Friend does not
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  intend by his proposed new Clause, to suggest that it should be 5 per cent. annually which would be much more attractive to the taxpayer and much more expensive to the Revenue. For instance, if a man who expected to die five years hence paid £75, thereby extinguishing £100 by five instalments of 5 per cent., he would have a very great advantage given to him as to tae character of the investment he would make. Coming to the much more limited proposal of my Noble Friend, it is evident that the option which he proposes to give to the taxpayer would always be exercised to the detriment of the State, in so far as the taxpayer was capable of foreseeing the future. No one is able to forecast the exact moment of his death. That is a mystery which is hidden from all of us. Still, as the years pass by, and as each of us in our turn, pass the summit of the way and descend slowly and gradually or rapidly as the case may be, the actuarial position of each taxpayer is definitely and effectively altered. This proposal would be of advantage to persons who, according to the actuarial calculation, bad a reasonable expectation of dying in the course of the ensuing few years. It would not be at all an attractive investment to those who might, according to the actuarial calculation, look forward to 10 years or 15 years or a longer span of human life. They would find much better opportunities of investing their 5 per cent. discount in other ways.
  What would happen is that in so far as this proposal would be used at all, it would be used only by those who had reason to believe that their estates would benefit and their heirs would benefit by the exercise of the option, whereas, in every case where the State might gain an advantage from it, the propensity of the taxpayer would be to keep his money in his own pocket and not to worry too much about death until, apparently, it came a little nearer. Very few people would care to ensure a mere 5 per cent. discount by the immediate disbursement of heavy sums of money in their own lifetime. As far as the Exchequer is concerned, we can find no sort of enthusiasm for the suggestion of my Noble Friend. Therefore, I trust he will not press this matter further, but will allow it to stand in the long category of proposals which have been considered to-day without it having

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  been found possible to make any effective advance in regard to them.
  Motion and Clause, by leave, withdrawn.

  NEW CLAUSE.—(Free gifts.)
  No gift made at the absolute discretion of the donor to give or to withhold such gift shall be deemed for the purpose of levying Income Tax to be part of the income of the recipient of the gift, notwithstanding that the donor may have made a similar gift to the recipient about the same date in previous years, nor that the motive of the gift may he reasonably believed to be the approbation of the donor for the exertions of the recipient in religious teaching or ministration.—[Lord H. Ceci1.]
  Brought up and read the First time.
  Lord H. CECIL: I beg to move, "That the Clause be read a Second time."
  This Clause will, I hope, clear up one of the obscurities or fancied obscurities, which stand in the way of our discussions when the Finance Bill comes up every year. We have had other difficulties in the course of this Debate. We found it difficult, earlier in the evening, to decide what were the limits of the exemption of charities. In this case, I desire to lay down what I conceive to be already the law, if properly interpreted, or, at any rate, already the law in principle, in respect to free gifts as distinguished from incomes recoverable according to law. If I understand the law now, if one person gives to another a free, voluntary gift, absolutely at his discretion, that is not income liable to Income Tax. Income Tax is not levied upon it. It does not seem to me that it makes any difference if it is the habit of a person to make such a present once a year, or at a particular period. I believe that is already recognised in almost every case, and Income Tax is not levied on any such free gift. I propose, at any rate, to make the matter quite clear by declaring that and, therefore, removing all ambiguity about it, but in the last words of my Clause I deal with a particular case which arises in respect to ministers of religion, who do receive presents from time to time, of all sorts, some of them periodical, some of them occasional, some of there, apparently, liable to tax, and some of them, apparently, exempt from tax.
  I want to lay down a general principle covering all such cases, which will clear them all up and make the whole matter
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  perfectly plain. One difficulty has, I believe, already been under discussion, when I was, unfortunately, absent, not anticipating that that particular Amendment would then be reached, in respect to Easter offerings. That, of course, is only one case, but that is a case which is believed to be the subject of taxation because it has been held by the Courts to be a profit accruing in respect to an office. I do not dispute that if the thing were really a profit in respect to an office, it would be liable to taxation according to the existing policy of the law. What I am anxious to do is to save gifts which are truly gifts, and if I ventured to criticise the House of Lords' decision, it would not be on the point on which the Noble Lords gave their decision, at considerable length, that is to say, on the question whether or not an Easter offering accrued in respect to the office. That may readily be conceded. The real doubt which occurs to anyone who has studied the question is: Was it really a profit or a gift? And that is the point, amongst others, which I want to raise by my Amendment.
  I want to safeguard all gifts to ministers of religion which are truly gifts and not profits. A gift, as I conceive it, is a thing absolutely in the discretion of the donor, and that ought to be exempt from taxation. It is not income in any real sense of the word. A man cannot count on it, it may be given one year and withheld another, the giver may die or change his mind, and in one way or another it may be lost. It is an absolutely uncertain thing. It is not in any respect a profit which accrues in respect to the exertions of the person. A profit is given by somebody else because of those exertions, and because it depends upon the exertions and results from them. That is the real distinction of which the House of Lords' decision takes no account. The man who earns a profit in business by his exertions in business counts upon it in consequence of those exertions. That is what they are made
  for. He can depend upon them. Similarly, in case of investment, a man counts upon the interest which is coming to him because he knows that money can always command interest when it is properly invested. In all these cases the profit is earned and depends upon the person's exertion for prudence.

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  A gift is just opposite. It depends upon the goodwill of some other person. It is not income at all; it has come from outside. It comes or may not come. At any rate, the recipient has no control whatever over it. It is not a thing upon which he can count. A man can count upon profits because he knows that by such and such exertions profits to a certain amount accrue, but this is a gift which is dependent upon the goodwill and the generosity of the person who gives it. I note that the Attorney-General is in his place, and I believe that what I say is the true policy of the law as it stands now. I do not believe that my words in the proposed Amendment really change what is the policy of the law. They do change the application of the House of Lords decision, but that only suggests that the House of Lords has made a mistake. Parliament has power to correct errors in the case. There are many precedents for the Courts intervening to correct the errors which Parliament have
  made. I suggest that here is an opportunity to clear up the whole matter. If my words are not the right words, by all means let them be amended and let us have a true definition of what is the distinction between a gift which is not liable as income, because everybody agrees that there are gifts which are not liable. Let that be laid down as a general proposition. If it be laid down as a general proposition I think that, if laid down in language which is lucid, it will be found quite impossible to maintain that a minister of religion who receives gifts in respect of his ministerial teaching should be taxable. The Inland Revenue are in this matter suffering from confusion of thought—as they so often are. In all these discussions the Board of Inland Revenue do not wish to say anything clearly. "We cannot do it," they say; "if we did we feel quite sure it would come out expensive." What we want is a clear law of taxing in which whatever principle Parliament may adopt should be logically stated and logically applied. This is a step in that direction. It was as an attempt to make a beginning with respect to these free gifts that this Clause was put down. It does not, in my mind, alter the policy of the law in any degree whatever. I cannot
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  imagine any material loss of revenue from it, and I hope it will be accepted.
  Mr. CHURCHILL: I am advised, and in a matter of this kind I must add the reserve that I am speaking in the presence of the Attorney-General, that there is not in fact that need for a new and clear and precise definition of the law in respect of free gifts and their liability to Income Tax as would appear from the speech of my Noble Friend. A mere present from one person to another, not being a sum in respect of service accruing to the recipient by virtue of his office, would not under the existing law normally be assessable to Income Tax.
  Lord H. CECIL: What is "accruing by reason of his office"? Is it a, profit—a thing upon which he can depend by his own exertions?
  Mr. CHURCHILL: It is a sum of money; and these sums of money are very accurately related to particular persons and their services in many cases. A gentleman who assisted me in this matter opened "Crockford's Clerical Directory" for the year 1925, out of which the two following cases immediately arose. The income of one living, X, was shown at £190, including £1 from Easter offerings. On the very next page there was another living, Y, with an income of £432, which includes £50 from Easter offerings. Can it be seriously contended that the Income Tax should not take into consideration these real, regular and recognised aggregates of these respective incomes, and that a differentiation should be introduced into the tax of these two reverend gentlemen which would give relief in respect . £50 to the one who had the larger income and a relief of only £1 in respect of the smaller? The old test which my Noble Friend has been asking for has very frequently been explained. It is not whether a payment is voluntary or compulsory, but whether the payment is in the nature of an emolument accruing from the exercise of an office or employment. No doubt, of course, there is a border line, as there is to all these matters, but here again I think the law has arrived by its practice and experience at very clear and plain judgment. The Lord Chancellor, giving judgment in the case of "Cooper versus Blakiston," in 1909, said:
  "The only question is whether or not the sum given by the parishioners to the vicar

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  at Easter is assessable to Income Tax as a profit accruing to him by reason of such office. In my opinion, where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind, such as a testimonial or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present. In this case, however, there was a continuity of annual payments apart from any special occasion or purpose, and the ground of the call for subscriptions was one common to all clergymen with insufficient. stipends, urged by the bishop on behalf of all alike. What you chose to call it matters little. The point is, what was it in reality? It is natural and in no way wrong that all concerned should make this gift appear as like a mere present as they could. But they acted straightforwardly as one would expect, and the real character of what was done appears clearly enough from the papers in which contributions were solicited."
  This passage from that judgment shows the Committee how lucidly and reasonably the law on this subject, which is admittedly a difficult subject, has been threshed out. My Noble Friend, in his Amendment, goes far beyond the scope of Easter offerings, and seeks to lay it down that any gift made at the absolute discretion of the donor to give or withhold it shall be deemed, for the purpose of Income Tax, not to be a part of the income of the recipient. It seems to me if that were laid down that a very largo number of transactions of an annual and continuous character -might come to he regulated by a system which would still rest in the absolute discretion of the donor to confer or withhold, but which, nevertheless, would be so far taken into consideration by the recipient that he would be willing to discharge his duties with customary regularity, this very arrangement might be very detrimental to the revenue. I am advised that the Amendment of my Noble Friend would cover voluntary payments by employers to employed, Christmas bonuses voluntarily paid to employés, payments for services and emoluments in the case of Roman Catholic priests and Nonconformist ministers. I do not know whether that is in my Noble Friend's mind. After a clear and impartial consideration of the matter I am forced to adopt an attitude of general intolerance, and I cannot consent to broaden and
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  extend in this way a principle in regard to which, although there are many anomalies and difficulties, the Income Tax is being collected in a manner which has the sanction of custom and the highest authority of the land.
  Sir H. SLESSER: I wish to explain that what I am going to say in regard to this Amendment I say on my own responsibility, because this happens to be one of the few occasions on which my views are not quite in accord with those of my hon. Friends. I feel, however, that I am entitled to say a few words more particularly in regard to the case of Cooper v. Blakiston, in which there is great confusion of thought. In the very judgment which the Lord Chancellor gave, he starts by speaking of the offering as a profit, and at the end of the judgment he winds up by saying:
  "It was natural and in no way wrong that all concerned should make this gift appear as like a mere present as they could."
  So that he is using both the word "gift" and the word "profit." The fact that this grievance is brought up year after year shows that many people both in this House and outside feel very strongly that the law with regard to Easter offerings and gifts for religious ministrations is in a very unsatisfactory position. It may be that a gift is given to a person who would not receive it were it not that he held a particular office. The person who pays the money has often paid Income Tax, and he makes it as a gift just as if it were given to a relation or a friend every year at the same time as a gift. In that case the mere annual repetition of the gift to the same person would not make it liable to tax. It is only by straining the construction of this word "office" and applying it in a way that it should not be applied, that persons have been made liable to this taxation.
  Last year we had the argument that the gift was mentioned in Crockford, and this fact was brought out again this evening by the right hon. Gentleman. I cannot understand why the mere fact of its being mentioned in a directory can affect the law in this matter. It is true that persons do receive these gifts annually, and the amount they receive has been stated from time to time in this clerical directory, but that settles- nothing. Moreover, I would say that, whether Blakiston v. Cooper be right or not, when

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  people make gifts to the poorer clergy, even though they make them to a special clergyman at a special time, it is inexpedient on public grounds that that assistance, to a man who, in most cases, is very poor and much in need of money, should be taxed, I would go further, and say it is very desirable that we should encourage these ministrations and teachings, and that they are not a fit subject-matter for taxation at all. I would put them in the same category as we do insurance. We exempt from taxation insurance premiums on the ground that it is wise to encourage people to insure, and they escape taxation accordingly. As a matter of principle, apart from the question that this is in fact a gift, we ought to treat these gifts to the clergy as we treat contributions for the purpose of insurance. [HON. MEMBERS: "Five!"] No, it is spiritual life insurance, or insurance of spiritual life. At any rate, I think the Committee will see the analogy between insurance and gifts of this particular kind. There are other cases. An hon. Member has just been urging the claims of athletic clubs to exemption from certain taxation.
  Surely, if it is right to encourage
  athletics,it is also expedient to encourage the ministrations of the clergy.
  Mr. CHURCHILL: I rejected that proposal.
  Sir H. SLESSER: This Government, who have already despoiled the clergy in their tithe legislation, should be the first to wish to do something to redress the balance by giving at least the very small exemption which this proposed new Clause would give.
  Mr. BARR: I rise to oppose the Second Reading of this Clause, and it is a peculiar pleasure to me to support the Chancellor of the Exchequer against one of my Front Bench leaders. I take this action on the ground of religious equality, which to me means not only that all citizens are equal in matters of religion before the law, but also that there should be equality as between Church and Church in this matter. It is well known to students of history that in Scotland we long resisted the observance of Christmas and Easter Day, and a good deal of the persecution that we suffered was because
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  we took that attitude. I am glad to say that that stern attitude has passed away, but Easter is not yet universally observed in Scotland, and certainly the ministers there do not receive any Easter gifts. The Noble Lord the Member for Oxford University (Lord H. Cecil) pointed to the uncertainty of these gifts. It was something, he said, that you could not count upon; you could not depend upon it. I think that that is applicable to the wages of a great many of the working people of this country, many of whom are called upon to pay Income Tax.
  I would apply it still further. The Noble Lord, last year, when he was speaking on this subject, took the instance of an incumbent who was not acceptable. His gifts would go down and his salary would go down, if he were not as successful a preacher as the man before him had been. He would be paid according to output, and, consequently, his emoluments would go down. The Noble Lord showed again to-night, in the same sense, that it was quite uncertain, that it could be given or withheld. I would take the case of not a few Nonconformist ministers in this country, who are entirely dependent upon what happens to be put into the collecting box Sabbath by Sabbath. They have no contract nor any fixed sum and are entirely dependent on free-will offerings, the gifts of the people. I take my own case. In one of my charges the office bearers were under no obligation at all, but at the end of the year, according to what might be in the fund, I might receive an additional £50. If my conscience had been so easily fixed as is suggested here, I might say, "This is a gift," but any man, who intended to be strict and straight with the Exchequer and the Government, would count that as being an addition to his salary and pay the Income Tax upon it. That is how I always felt. It is because a man is in that office that he receives the particular gift. Reference has been made to hardships. and my right hon. Friend has referred to the Tithes Bill. At least in the Tithes Bill the payment of rates became general in a sense it had not been and contrary to the Act of 1836, which put the payment of rates on the clergy.
  I say it without any offence, but it is the Church, which is already receiving the greatest benefits from the State and has

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  the recognition and endowments of the State, that is to reap the greatest benefit from this Clause. With regard to the hardships to the clergy, no one sympathises with them more than I do in regard to the very insufficient salaries that they are paid, but at the same time they gain the benefit that all citizens gain if they do not reach the Income Tax limit. Last of all, I oppose the Clause because it lends itself to evasions very readily, not only in regard to Easter offerings but to all offerings. I can conceive schemes under which ministers would get salaries in the form of offerings arid not under any form of contract. I would like to congratulate the Noble Lord on his apt quotation of scripture, but I have a verse that I should like to quote to him. It comes from the Gospel of St. Mark, 7th hapter, 11th verse:—
  "But ye say, If a man shall say to his father or mother, It is Corban, that is to say, a gift, by whatsoever thou mightest be profited by me"—
  so that the Noble Lord's distinction between a gift and a profit falls—
  "he shall be free."
  That verse prophetically calls attention to the very Clause the Noble Lord is moving here to-night, and it goes on to pass the severest of condemnations on those who put it in the name of a gift and seek to escape their obligation to the State and to the home. This verse is prophetic, and bears directly upon this very occasion, this very Clause which is before us. The Noble Lord said that it would not be any material loss, that it was a small thing; but small things deter-mine very great questions. I believe that Ship Money in the case of Hampden was £1 11s. 6d., not a very material loss to the Revenue at all, but involving a considerable question. If there is one institution in the country that should have a conscience against evasion, it is the Christian Church. If there is one set of people that should not seek to get off their obligations to the State by phrases about gifts, Easter offerings and others, in order to get round the law, but should set an example to the people if this country, it is the clergy of this country and the Churches.
  Lord H. CECIL: The hon. Gentleman who has just spoken began by saying he was in a peculiar position because he was
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  about to express disagreement with something that had fallen from a Member of his own Front Bench. If by "peculiar" he meant "exceptional," I really think he is mistaken, because I have observed a good many Members of the Labour party on the back benches express disagreement with those who sit on the Front Bench, and indeed I think the intoxicating lust of contradicting the Front Bench so far misled the hon. Member that he thought he was speaking about an Amendment he was not speaking about but a different Amendment, and he entirely misapprehended the character of the Amendment actually under discussion. We are not discussing an Amendment specifically relating to Easter offerings.
  Mr. BARR: I think it was indicated from the Chair that that Clause was withdrawn as this would cover the particular question.
  Lord H. CECIL: This covers a much wider question. It covers all the income of Nonconformist Ministers and Roman Catholics, and the Chancellor quoted as an atrocious consequence of the Measure that it would relieve the Roman Catholic clergy, one of the things he apparently regarded as a thing conclusive against any such Amendment. Then the hon. Member went on to quote Scripture and lamentably failed to complete the quotation or he would have found that a reference is made to the Commandment, "Honour thy father and thy mother." I do not think it is suggested that any of us should honour the Board of Inland Revenue. Unless we apply the doctrine that we owe everything to the Inland Revenue that we owe to our parents the quotation breaks down.
  I do not desire to press the matter very much further, but the right hon. Gentleman and the House of Lords decision both pass over the true distinction between a gift and a profit. Nothing is said in the House of Lords judgment about profit. A great deal is said about what accrues in respect of a particular office, but the true distinction which really ought to be the basis of the exemption of taxation is whether the gain made depends on the man's own action or what he can do, or whether it comes to him from outside and is therefore the uncertain act of goodwill of some other person. That is the really

  183
  important distinction, because if a thing is a mere gift coming from outside—a present—the man cannot reckon on it. It is not income in any sense whatever. He does not know from year to year what the money he will have to spend will be. All that enormously diminishes the amenity and value of whatever he receives.
  It is reasonable, therefore, that taxation should not be levied on what is so precarious and what gives him so little of the assurance and tranquility of mind that an assured income gives. The House of Lords judgment said nothing about that. They assume that profit covers a gift. I do not know who were the learned counsel arguing before them, but I should have thought that was the very first point to take exception to. A profit is quite a different thing from a gift. A profit is a thing which is earned and dependent on the action of the person himself; a gift is something that comes to him from outside. I am sure that is the true, logical and reasonable distinction, a distinction which justifies the freedom given to presents which come from time to time and yet secures a true payment of income which cannot be evaded.
  The case which the right hon. Gentleman put of the employer and the employé using this by way of evasion is an unreal case, because it would at once be pointed out that the employer could not fail to make an annual gift or he would lose the services of the employé; that it was not a true voluntary action, and that he was really under the requirement of making a payment or he would lose the services of the employé. Therefore, it is a salary and not a gift, and it is only a colourable gift. It is quite clearly shown that the decision in respect of Easter offerings really depends upon a false principle, and we ought to persist year after year in raising this question until we can prevail upon the Treasury to put the matter in a logical form, laying down by some Clause what is the principle that governs this matter, instead of going on from year to year in this dreadfully slipshod fashion, no answer being given to the, argument relying upon the vote given, without much intelligent apprehension of the question involved, being in support of the Treasury.
  11.0. p.m.
  Question, "That the Clause be read a Second time," put, and negatived

  NEW CLAUSE.—(Amendment of 10 and 11 Geo. V., c. 32, s. 32.)
  Section thirty-two of the Finance Act, 1921 (which provides for exemption of superannuation funds from Income Tax), shall have effect as though at the end of paragraph (b) in Sub-section (3) of that Section there were added the words "and /or in case of death, for their widows, children, and/or other persons entitled to benefit."—[Sir Clement Kinloch-Cooke.]
  Brought up, and read the First time.
  Sir C. KINLOCH-COOKE: I beg to move, "That the Clause he read a Second time."
  This Clause was brought to the notice of the Chancellor of the Exchequer last year, and he made a very sympathetic reply and told us that between then and the present time he would give consideration to it. I hope that he will now be in a position to grant the concession. I think the right hon. Gentleman and the Committee will agree that the organisation of widows' and orphans' funds, in principle, is similar to that of a superannuation fund. The Royal Commission on Income Tax, when considering the position of superannuation funds, recommended that, income arising from the investment of these funds shall be exempted from tax.
  That recommendation was adopted, and on the motion of my hon. and learned Friend the Member for the Exchange Division of Liverpool (Sir L. Scott) was incorporated in the Finance Act of 1921. What we are asking is that similar treatment be given to widows' and orphans' funds. To a certain extent recognition has already been given to these funds. For instance, an employer's payments to widows' funds are reckoned as an expense in assessment for Income Tax. What we want to see is that that position should be legalised, and we also want to obtain relief from tax on the interest on the investments of widows' and orphans' funds. In the memorandum of the Royal Commission which was submitted on the part of the Inland Revenue, a superannuation fund is described as a mere channel, and for these reasons; a superannuation fund exists for the sole purpose of paying pensions and not for making profits or accumulating unnecessary funds; secondly, pensioners

  185
  are for the most part exempt from tax, but where they are not exempt, pensioners arc taxable on their pensions when they receive them. These considerations apply with equal force to pensions funds for orphans and widows.
  Two objections were raised last year by the Chancellor of the Exchequer against the grant of this concession. The first point he made was that similar requests would be received from other institutions, and that there would be difficulty in limiting the concession to widows' and orphans' funds. Let us see whether this contention is sound. The Clause I am moving practically limits exemption from Income Tax to one kind of fund—namely, funds for widows and orphans, and the safeguards provided by the Finance Act, 1921, remain intact. The safeguards are, first, that the funds must be properly established littler trust; second, that the sole purpose of the fund must be the relief of widows and orphans; third, that the employer has to contribute to the fund, and that the fund has to be recognised by the employés as well as employers. So long as the funds are surrounded by these safeguards, there cannot be any danger of any evasion.
  The second objection is the cost of the concession. In this matter we have gone a little further in our inquiries since last year. While we find that the number of widows' and orphans' funds is somewhat in excess of what we estimated, there is no indication that the cost of the concession will exceed £31,500. Assuming there are 60 widows' and orphans' funds, the loss to the Exchequer would be £50,000 per annum, but in view of the fact that widows' funds are of more recent date than superannuation funds, and probably of smaller dimensions, I venture to say that £31,500 would be ample to meet the,case. I would, therefore, urge upon the Financial Secretary, that upon the ground of expenditure, there can be no serious objection to placing these funds in the same position as the superannuation funds under the Finance Act, 1921. I have not gone into the Annuity Funds of Life Insurance Offices, which, almost without exception, enjoy the privilege we are now seeking to secure for Widows' and Orphans' funds, but, I think, I have said enough to justify my plea that
  186
  these funds should receive the relief we ask, and that the new Clause for which my friends and myself are responsible should be included in the Finance Bill now before the House.
  Mr. McNEILL: The Motion which my hon. Friend has moved is one of a great many examples of proposals made in the course of this Bill where the reasons put forward in favour of the concessions asked for have really no stronger ground than that one's natural sympathies go out to the particular object in view. It is not really enough to say that a certain institution or a certain organisation is in every possible way deserving of encouragement. That is not enough as a ground for relieving them from taxation. It must surely rest upon some different principle altogether than mere sentimental agreement with the objects that the institution has in view. It is quite true in cases of this sort that it is impossible to draw a clear dividing line between one set of funds entitled to exemption and another set of funds closely allied and not separable by any great dividing principle, and say that one should be left on one side of the line and the other on the other side.
  This is just an example of what follows very often from making a concession which is net fairly and logically inseparable from some other. We are constantly being told, in connection with a proposal on these grounds that this is not a real bona fide ground of rejection and that you should not, when it is a fair one on its merits, refuse it because you might consider logically that you are compelled to go further. That is really what the, hon. Member for East Cardiff (Sir C. Kinloch-Cooke) is suggesting. Some time ago, for no particular principle, exemption was given to these superannuation funds. If that step had never been taken, the hon. Member would never have had any ground for his argument at all. The only strength of his position is that, having got off the jumping-off ground of 1921, he says, "how are you going to distinguish from what you gave then and what I am asking for now?" I agree that it cannot be done on any real ground of principle. It only shows how dangerous it is, from the point of view of the Revenue, to take these steps one after another. If we were to accept this proposal—which I am not in a position

  187
  to do—it would, in its turn, become something more.
  The hon. Member referred to various thrift societies. I understood him to say that he differentiates between the widows' and orphans' funds and the thrift funds. There may be some distinction between the funds, but I do not think anyone can doubt that the moment concessions were made to the widows' and orphans' funds demands would very quickly follow from the others. There is one clear, firm ground on which we can take our stand, although I do not think it is logical. It is the recommendation of the Royal Commission. They were a body of experts with great experience and knowledge of these subjects who were able to take an amount of evidence on all these points utterly impossible, of course, for this House to go through, and whose opinion on matters of this sort is entitled to the utmost possible respect. The Royal Commission, in dealing with this subject, did recommend that exemption for taxation should be given to superannuation funds, but they expressly refused to make the same recommendation as regards provident funds. Although I freely admit that there is no logical distinction or difference in principle, I think we are entitled to say that we cannot go from one jumping-off ground to another, but that we are on safe ground when we take our stand on the particular point on which the Royal Commission decided, which is the safest ground, and for that reason, as well as for others with which I will not weary the Committee, I cannot accept the Amendment.
  Sir C. KINLOCH-COOKE: After what the Financial Secretary to the Treasury has said, I ask leave to withdraw the Clause.
  Motion and Clause, by leave, withdrawn.

  NEW CLAUSE,—(Rate of Entertainments Duty.)
  As from the fifth day of July, nineteen hundred and twenty-six, entertainments duty within the meaning of The Finance (New Duties) Act, 1926, shall be charged at the rate set out in the First Schedule to this Act.—[Colonel Day.]
  Brought up, and read the First time.
  Colonel DAY: I beg to move, "That the Clause be read a Second time."
  188
  The duties we propose are set out in full in the Schedule on the Order Paper and I do not propose to read them. The only modifications suggested are with regard to the price of admission up to 5s. 6d., no change is suggested over the price of admission of 5s. 6d. As far as I am concerned I would prefer to move the total abolition of these duties and it would be more in accord with the views of the present Chancellor of the Exchequer as stated nineteen months ago. Then he gave his considered opinion as follows:
  "I am strongly in favour of the abolition of this duty, and I think it has a high claim on the Exchequer surplus."
  When the Chancellor of the Exchequer expressed those views he did not expect that so shortly afterwards he would occupy the high office he now holds, but considering his expressed views I hope we shall not only have his sympathy but his support as well. Every Chancellor of the Exchequer since its introduction has been opposed to it. This Entertainments Duty was introduced as a War-time duty, and consequently was a bad tax. It was clearly intended by the right hon. Gentleman who proposed it that when the War came to an end, or not later than two years after the Armistice, it would be abolished. The late Chancellor of the Exchequer, the right hon. Gentleman the Member for Colne Valley (Mr. Snowden), when he made minor remissions, expressly stated that he never liked the duty, and what he did was to he taken merely as an instalment, and it was his earnest intention later on, bad he remained in office, to have made some further remissions in the duty. The present Chancellor has expressed himself in favour of the total abolition of this vexatious duty. This duty has been called a "luxury tax," but it is far from that. It is a vicious tax. This country accepts the principle that the wealthier people should pay the larger proportion of all taxes, but in this case the poorer people pay the heavier proportion. I will give the Committee a few examples of how this oppressive tax falls more heavily on the poor than the rich. Those who pay 8d. for admission pay 2d. tax or 25 per cent.; those who pay 9d. for admission pay 2d. tax, or 22½ per cent.; those who pay is. 4d. admission pay 4d. tax, or 25 per cent,; and those who pay ls. 6d. admission pay 4d, tax, or 22½ per cent.

  189
  Now look at percentages paid by those who patronise the higher-priced seats. Those who pay 5s. admission pay 9d. tax, or 14 per cent.; those who pay 7s. 6d. admission pay ls. tax, or 14 per cent.; those who pay 30s. for boxes pay 3s. 6d. tax, or 11'6 per cent.
  Further, proprietors and managers of music halls and theatres have to employ clerks to prepare the necessary returns and accountants to check and vouch the returns, and have to enter into guarantee bonds with insurance societies approved by the Government and pay their own insurance and, as a matter of fact, they do the work of the ordinary tax collectors. When the duty was introduced it was full of anomalies, some of which have been removed once, but we now find the ridiculous position that the programmes presented at theatres and music halls where the duty is paid, can also be presented at night clubs and hotel cabarets where no duty is payable. Music hall and theatrical artists wearing the same dresses, singing the same songs, in practically the same scenery, do actually appear at night clubs and cabaret performances in hotels. The right hon. Gentleman who introduced the duty said it was a device on his part to compel people who otherwise would not contribute to the revenue of the country, which he was raising from all classes, to do so. Wealthy visitors from the Continent and America, patronise the night clubs and cabarets. I have no objection to that, but I object to the fact that our citizens should have to pay a duty for seeing these performances in the music hall or threatre, while the other people see them in the cabarets without paying any duty. Apart from that, it is severe opposition to the music hall and theatre industry.
  There is a further factor that was not contemplated when the duty was introduced. That is broadcasting. You have hundreds and thousands of people in this country who have the privilege of listening in to entertainments given at music halls or theatres, and the people who patronize the theatres and music halls have to pay a tax for those entertainments. But those who have the benefit of listening in sets or broadcasting sets get those performances for nothing. In view of the pledges given by previous Chancellors of the Exchequer, and of the opinions that have been expressed by the
  190
  present occupant at that office, I hope he will see his way clear to accept this Amendment.
  This tax is not like ordinary taxation. It is not a tax on profits, and it is not a. tax on income, but it is a tax, as far as many theatrical managers and proprietors are concerned, on losses. It is not only a vicious tax, it is a repressive tax, and many of these people are being driven into bankruptcy by it. The Government have in the past introduced many measures to assist other industries. Is it not possible in the goodness of the Chancellor of the Exchequer's heart, to remove this intolerable burden and give the entertain-merit industry a chance to progress?
  We have heard a lot about bogus managers, and I want to tell the Committee that this Entertainments Duty has had a lot to do with these bogus managers, because where bogus managers are created, it is mostly from touring managers, who are touring the provinces with companies, and when you take into consideration the fact that practically 25 per cent. of their takings is taken away in tax, these people do not have sufficient money at the end of the week to pay their salaries, the consequence being that the weakest as a rule suffer, and that is as a rule the chorus ladies. It is through the infliction of this tax on the managers mostly that some of these girls at the weekend have not sufficient money to pay their board and lodging and have to resort to other means of getting the money before they can leave the town.
  Lieut.-Colonel DALRYMPLE WHITE: Were there no bogus managers before the Entertainments Duty?
  Colonel DAY: Very few. [Laughter.] That may bring laughter from some hon. Members opposite, who do not understand the entertainment business, but there were very few bogus managers prior to 1915 and 1916. There were occasionally; you always find black sheep in every fold, but they have been greatly increased since the Entertainments Duty has been on, simply because 25 per cent. of the takings is taken away from their share each week-end. Let us see how ridiculous this tax is. If you go to the opera house to see opera, you have to pay Entertainments Duty. If you want to see Shakespeare or drama or the Russian ballet, you have to pay tax, but

  191
  if you want to see a ballet or hear singing in a night club or at a hotel cabaret, there is no tax to pay. That position is absolutely fantastic.
  This tax violates all the fundamental principles of public finance. When we take into consideration the theatrical managers' expenditure, we find that they have restricted every possible avenue of expenditure. They have reduced their staffs and their artistes, and they have cut down wages to a minimum. They have reduced their lighting expenditure, and everything more or less now, especially with the smaller managers, has been reduced to an irreducible minimum. If you take this £3,000,000 or £4,000,000, which is not a great deal of money to the Chancellor of the Exchequer, in the reduction of this taxation, you are placing it in the hands of the working classes and giving them more money to spend. By doing that, you are creating employment in other industries. Thereby you would be helping to solve a great portion of the unemployment problem. That is very vital. I am sure it is just as vital to hon. Members opposite as to those on this side of the House. Especially what I should like to ask some hon. Members is this: Are they forgetting the pledges they made to many of their constituents when they agreed that they would support the abolition of the Entertainments Duty? I can remember the short time I have been in Parliament of meetings being held upstairs, attended by many hon. Members from all quarters of the House, unanimously agreeing to support the abolition of the duty. When it comes to the House of Commons I should like to know whether hon. Members are going honourably to fulfil their pledges and give a negative vote, or support the duty, or not vote at all.
  When the Labour Government was in power a great deal of pressure was brought to bear upon them by hon. Members on the other side of the House to get the Chancellor of the Exchequer to reduce or entirely to abolish the Entertainments Duty. There was also a great deal of pressure brought to bear upon the last Conservative Government by hon. Members opposite. A lot of criticism was meted out because certain remissions only were made. Perhaps hon. Members
  192
  who then criticised will now support the proposed new Clause. Perhaps they will, in any event, assist us with their support? Some people have said that the remissions made by the ex-Chancellor were not handed on to the public. I have yet to find any responsible manager who has not in the kingdom handed on to the public the remissions that were made in the duty by the late Chancellor. I hope the right hon. Gentlemen opposite will follow the good example of his predecessor and accept this Clause. The change will not only do a great deal for the industry but for the working classes as a whole.
  Mr. CHURCHILL: I share the prejudice of a great many hon. Members against the duty. Such as it is, however, it has come down to us from my predecessor, who modified it in those directions, and to that extent, that he thought right and proper. His remissions all took the form of relief to the cheaper kinds of entertainments, and the persons attending those entertainment, and they involved considerable sacrifice of revenue.
  The hon. and gallant Gentleman, on this New Clause, seeks to carry still further the process on which the late Chancellor of the Exchequer embarked. In consequence, he would emphasise the character of the relief to the cheaper seats and the cheaper entertainments. I do not myself feel, if this tax is to be dealt with at all, that that is exactly the direction in which we should need to go. I believe the character and the quality of the stage and the drama are, to a very large extent, maintained out of the very high prices which are charged for the higher class of seats—[Interruption]
  —that is my view—and if we were to continue a process which would, in effect, cast greater burdens on them while relieving all the other seats in the house, we should promote a continual movement towards the cheaper seats, and rob the drama of one of the main sources of the supplies which enable it to maintain its artistic and powerful position as a factor in the life of the country. Therefore, if I were inclined to alter the tax it would be, I think, rather in the direction of extending the relief which the late Chancellor of the Exchequer gave to cover all the forms and qualities of

  193
  theatrical entertainment. But I must not excite hopes in one quarter or fears in another by suggestions that it is in my power to take any action. It is not in my power to give any relief. The schedule proposed by the hon. Gentle- man would cost £1,350, in a full year and about £.1,000,000 in the current financial year, and I have not got that amount, and do not know where to find it; we have searched high and searched low, and there is no means of supplying the deficiency which would be croft d a sacrifice of £1,000,000 in the present year. I do not know whether the hon. Gentleman expected any fruitful result from his Amendment, but I hope he will acquit me of any want of sympathy with the theatrical profession when I tell him that it is not in my power to assist him further with any remission.
  Lieut.-Commander KENWORTHY: I did not notice in the Chancellor's speech such a tone of gratitude as I expected to hear in view of the new source of revenue which has been pointed out to him by the hon. and gallant Member for Central Suthwark (Colonel Day). I do not think the right hon. Gentleman took in all that was being said. Did he observe that there is a new source of revenue in the cabaret shows, the restaurants, the clubs and hotels referred to by the hon. and gallant Member? I beg him to look at the OFFICIAL REPORT to Members if he did not quite seize the point. We have heard a speech from an acknowledged expert on these matters. I was not quite sure whether he was speaking all the time from the point of view of theatrical proprietors or from the point of view of the poorer public., but he is a man of wide sympathies, and perhaps he was speaking for both. We have it on his authority that the same artists, in the same dresses, singing the same songs, as appear at theatres and music-halls, give entertainments at the so-called cabarets—I suppose entertainment is the proper word to use, hut they take place so late at night that I think the pleasure must be forced; and that whereas these cabaret performances
  escape the tax, it is levied at those music-halls and theatres which are attended by-those good citizens who take their pleasures before 11 o'clock at night. This is unfair to the legitimate entertainers, to the regular professional theatrical proprietors and music-hall proprietors, and these poachers, these restaurant keepers, these cabaret proprietors, and night club proprietors and bogus night club proprietors are being let off scot free.
  I hope the right hon. Gentleman will join forces with the Home Secretary and myself in looking into the question of the taxation of bogus night clubs who give entertainments at all hours of the night. We have had many Debates in this House upon the Entertainments Duty, and the main argument used to be that it was a war-time measure. What has been the result of this tax?
  The DEPUTY-CHAIRMAN (Captain FitzRoy): The Amendment is to reduce the tax, not to do away with it.
  Lieut. - Commander KENWORTHY: With regard to the British film industry, as a result of this taxation how many films does the Chancellor of the Exchequer think are being produced in this country? Only four are being produced. Only those who have a large market can afford to produce the films the public wish to see. What is the sort of theatrical performances that pay Simply those which the Home Secretary-himself deplores because of their undoubted effect on public morals. Those are the plays that pay, and the real good drama can hardly be made to pay at all. I do not want to advertise the plays that have a long run and fill the theatres but one cause of the result I have referred to is due to the degradation following the Great War and which has always followed after any great wars. [Hon. MEMBERS: "Time!"] I claim to have adduced some fresh reasons which this tax should be still further reduced.
  Question put, "That the Clause be read a Second time."
  The Committee divided: Ayes, 60; Noes, 185.

  Division No. 298.]

  AYES

  11.45 p.m.

  Alexander, A. V. (Sheffield, Hillsbro')

  Buchanan, G.

  Day, Colonel Harry

  Ammon, Charles George

  Cape, Thomas

  Dunnico, H.

  Barr, J.

  Charleton, H. C.

  Gardner, J P.

  Ercad, F. A.

  Compton, Joseph

  Greenall, T.

  Bromfield, William

  Crawford, H. E.

  Grundy, T. W.

  Bromley, J.

  Delton, Hugh

  Hall. F. (York, W.Ft,, Normanton)

  Hall, G. H. (Merthyr Tydvil)

  Lawson, John James

  Sullivan, J.

  Hartshorn, Rt. Hon. Vernon

  Lee, F.

  Sutton, J. E.

  Hayday, Arthur

  Lunn, William

  Tinker, John Joseph

  Hayes, John Henry

  Paling, W.

  Townend, A. E.

  Henderson, Right Hon. A. (Burnley)

  Pethick-Lawrence, F. W.

  Walsh, Rt. Hon. Stephen

  Henderson, T. (Glasgow)

  Potts, John S.

  Watson, W. M. (Dunfermline)

  Hirst, G. H.

  Purcell, A. A.

  Watts-Morgan, Lt.-Col. D. (Rhondda)

  Hirst, W. (Bradford, South)

  Richardson, R. (Houghton-le-Spring)

  Westwood. J.

  Hudson, J. H. (Huddersfield)

  Rose, Frank H.

  Wilkinson, Ellen C.

  John, William (Rhondda, West)

  Shaw, Rt. Hon. Thomas (Preston)

  Williams, David (Swansea, East)

  Johnston, Thomas (Dundee)

  Sitch, Charles H.

  Williams, Dr. J. H. (Lianelly)

  Jones, T. I. Mardy (Pontypridd)

  Slesser, Sir Henry H.

  Kelly, W. T.

  Smith, Ben (Bermondsey, Rotherhithe)

  TELLERS FOR THE AYES.—

  Kennedy, T.

  Spencer, G. A. (Broxtowe)

  Mr. Charles Edwards and Mr. Barnes.

  Kenworthy, Lt.-Com. Hon. Joseph M.

  Stephen, Campbell

  Lawrence, Susan

  NOES.

  Acland-Troyte, Lieul.-Colonel

  Goff, Sir Park

  Newman, Sir R. H. S. D. L. (Exeter)

  Agg-Gardner, Rt. Hon. Sir James T.

  Grant, J. A.

  Nuttall, Ellis

  Amery, Irving James

  Greene, W. P. Crawford

  Oakley, T.

  Applin, Colonel R. V. K.

  Guinness, Rt. Hon. Walter E.

  Oman, Slr Charles William C.

  Ansley, Lord

  Gunston, Captain D. W.

  Perkins, Colonel E. K.

  Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

  Hall, Lieut.-Col. Sir F. (Dulwich)

  Perring, Sir William George

  Balniel, Lord

  Hammersley, S. S.

  Peto, Basil E. (Devon, Barnstaple)

  Barnett, Major Sir Richard

  Hanbury, C.

  Peto, G. (Somerset, Frome)

  Betterton, Henry B.

  Hannon, Patrick Joseph Henry

  Preston, William

  Bird, E. R. (Yorks, W. R., Skipton)

  Harland, A.

  Radford, E. A.

  Boothby, R. J. G.

  Harvey, G. (Lambeth, Kennington)

  Raine, W.

  Bourne, Captain Robert Croft

  Harvey, Major S. E. (Devon, Totnes)

  Remer, J. R.

  Bowyer, Capt. G. E. W.

  Haslam, Henry C.

  Rhys, Hon. C. A. U.

  Braithwaite, A. N

  Hawke, John Anthony

  Richardson, Sir P. W. (Sur'y, Chls'y)

  Brass, Captain W.

  Henderson, Capt. R. R. (Oxf'd,,Henley)

  Ropner, Major L.

  Brassey, Sir Leonard

  Henn, Sir Sydney H.

  Ruggles-Brise, Major E. A.

  Bridgeman, Rt. Hon. William Clive

  Hennessy, Major J. R. G.

  Russell, Alexander West (Tynemouth)

  Briscoe, Richard George

  Herbert. S. (York, N. R., Scar. & Wh'by)

  Salmon, Major I.

  Brocklebank, C. E. R.

  Hills, Major John Waller

  Samuel, Samuel (W'dsworth, Putney)

  Brooke, Brigadier-General C. R. I.

  Hilton, Cecil

  Sandeman, A. Stewart

  Broun-Lindsay, Major H.

  Holland, Sir Arthur

  Sanderson, Sir Frank

  Brown, Maj. D. C. (N'th'I'd., Hexham)

  Holt, Capt. H. P.

  Sandon, Lord

  Buckingham, Sir H.

  Hope, Capt. A. O. J. (Warw'k, Nun.)

  Sassoon, Sir Philip Albert Gustave D.

  Burton, Colonel H. W.

  Hopkins, J. W. W.

  Savory, S. S.

  Cadogan, Major Hon. Edward

  Horlick, Lieut.-Colonel J. N.

  Shaw, Lt.-Col. A. D. Mcl.(Renfrew,W.)

  Campbell, E. T.

  Hudson, Capt. A. U. M. (Hackney, N.)

  Shaw, R. G. (Yorks, W.R., Sowerby)

  Cazalet, Captain Victor A.

  Huntingfield, Lord

  Shepperson, E. W.

  Chadwick, Sir Robert Burton

  Inskip, Sir Thomas Walker H.

  Skelton. A. N.

  Charteris, Brigadier-General J.

  Jephcott, A. R.

  Smith, R. (Aberd'n & Kinc'dine, C.)

  Christle, J. A.

  Kennedy, A. R. (Preston).

  Somerville, A. A. (Windsor)

  Churchill, Rt. Hon. Winston Spencer

  Kidd, J. (Linlithgow)

  Spender-Clay, Colonel H.

  Clayton, G. C.

  Kindersley, Major Guy M.

  Sprot, Sir Alexander

  Cobb, Sir Cyril

  King, Captain Henry Douglas

  Stanley, Lord (Fylde)

  Cochrane, Commander Hon. A. D.

  Kinloch-Cooke, Sir Clement

  Steel, Major Samuel Strang

  Cope, Major William

  Knox, Sir Alfred

  Streatfeiid, Captain S. R.

  Couper, J. B.

  Lamb, J. Q.

  Strickland, Sir Gerald

  Courthape, Lieut.-Col. Sir George L.

  Lane Fox, Col. Rt. Hon. George R.

  Styles, Captain'H. Walter

  Croft, Brigadier-General Sir H.

  Little, Dr. E. Graham

  Sugden, Sir Wilfrid

  Crookshank, Col. C. de W. (Berwick)

  Loder, J. de V.

  Templeton, W. P.

  Crookshank, Cpt.H.(Lindsey, Gainsbro)

  Lord, Walter Greaves-

  Thompson, Luke (Sunderland)

  Curzon, Captain Viscount

  Lougher, L.

  Thomson, Rt. Hon. Sir W. Mitchell.

  Davidson,J.(Hertf'd, Hemel Hempst'd)

  Lucas-Tooth, Sir Hugh Vere

  Tinne, J, A.

  Davies, Maj. Geo. F. (Somerset, Yeovil)

  Luce, Major-Gen. Sir Richard Harman

  Tryon, Rt. Hon. George Clement

  Dawson, Sir Philip

  Lumley, L. R.

  Warner, Brigadier-General W. W.

  Duckworth, John

  MacAndrew, Major Charles Glen

  Warrender, Sir Victor

  Edmondson, Major A. J.

  Macdonald, Capt. P. D. (I. of W.)

  Watson, Rt. Hon. W. (Carlisle)

  Edwards. J. Hugh (Accrington)

  MacIntyre, I.

  Watts, Dr. T.

  England, Colonel A.

  McLean, Major A.

  Wells, S. R.

  Evans, Captain A. (Cardiff, South)

  Macmillan, Captain H.

  White, Lieut.-Colonel G. Dalrymple

  Everard, W. Lindsay

  McNeill, Rt. Hon. Ronald John

  Williams, A. M. (Cornwall, Northern)

  Fairfax, Captain J. G.

  Macquisten, F. A.

  Williams, Com. C. (Devon, Torquay)

  Falle, Sir Bertram G.

  MacRobert, Alexander M.

  Williams, Herbert G. (Reading)

  Falls, Sir Charles F.

  Makins, Brigadier-General E.

  Wilson, M J. (York, N. R., Richm'd)

  Fermoy, Lord

  Manningham-Buller, Sir Mervyn

  Wise, Sir Fredric

  Fielden, E. B.

  Margesson, Capt. D.

  Womersley, W. J.

  Ford, Sir P. J.

  Mason, Lieut.-Col. Glyn K.

  Wood. E. (Chest'r, Stalyb'ge & Hyde)

  Foster, Sir Harry S.

  Mitchell, S. (Lanark Lanark)

  Wood, Sir Kingsley (Woolwich, W.)

  Foxcroft, Captain C. T.

  Monsell, Eyres, Com. Rt. Hon. B. M.

  Wragg, Herbert

  Gadle, Lieut.-Col. Anthony

  Moore-Brabazon, Lieut.-Col. J. T. C.

  Yerburgh, Major Robert D. T.

  Ganzonl, Sir John

  Moreing, Captain A. H.

  Gibbs, Col. Rt. Hon. George Abraham

  Morrison H. (Wilts, Salisbury)

  TELLERS FOR THE NOES.—

  Gilmour, Lt.-Col. Rt. Hon. Sir John

  Morrison-Bell, Sir Arthur Clive

  Sir Harry Barnston and Mr. Frederick Thomson.

  Glyn, Major R. G. C.

  Nall, Lieut.-Colonel Sir Joseph

  The DEPUTY-CHAIRMAN: The New Clause—(Amendment of Schedule A, No. III Rule 2) —standing in the name of the hon. Member for Norwood (Mr. Greaves Lord) is not in Order, because it might very likely increase the charge.
  Mr. GREAVES-LORD: On a point of Order. May I submit that this Amendment would in no circumstances increase the charge, because it can only come into operation provided the profits were increasing, and it would only then come into operation to substitute for the higher year as the basis of taxation the lower year. Under these circumstances it must decrease the charge and not increase it.
  The DEPUTY-CHAIRMAN: As I understand the hon. Member's Amendment he proposes to ante-date the change from the five years' average to the preceding year. It would operate in 1926–27, and the profits of the preceding year taken that year might very easily be larger than the profits of the average of the five preceding years, thus increasing the charge.

  NEW CLAUSE.—(Relief granted for errors made in returns.)
  After the date of the passing of this Act any applications made for the purposes of section twenty-four, sub-section (1), of the Finance Act of 1923 shall take effect as though the words "six years" were substituted for the words "three years."—[Sir Henry Buckingham.]
  Brought up, and read the First time.
  Sir HENRY BUCKINGHAM: I beg to move, "That the Clause be read a Second time."
  It would be fitting perhaps, that the last new Clause to be proposed for this Finance Bill of 1926 should be an effort to acquire a simple act of justice which would cost the Exchequer nothing at all except the satisfaction of granting it. In the Finance Bill for 1923 the then Chancellor of the Exchequer gave a concession under which the taxpayer who had made a genuine mistake in submitting his return for Income Tax was given power to make application to the Commissioners of Inland Revenue for relief within three years after the year of assessment. I need not trouble the Committee with an account of how this concession was gained, but I think the Committee may rest satisfied that the
  198
  Chancellor of the Exchequer of that time was satisfied with the obvious argument that the State has no right to extort taxation from any subject which is not due or is in excess.
  I am asking the Chancellor of the Exchequer to extend the time of application to six years. I do not see why any limit should be placed upon the time for rectifying a mistake of this kind, but I have in my proposed new Clause fixed six years as the limit of my request, for certain definite reasons. The first is that, by another Section of the Act of 1923, the period of application for relief, which formerly had been three years, was extended to six years. This relief applied to adjustments arising out of successions, discontinuance of business, Dominion Income Tax, and so on, and it had been applied to cases of mistakes made under Schedule D. It seems to me illogical that mistakes which are made tinder one Schedule should be more generously, treated than mistakes made under another Schedule. My second reason is that, also in the Act of 1923, the State took power to make amended increased assessments for a period of six years after an assessment had been made on the taxpayer. I am only asking now that the taxpayer should have the same right as the State to rectify mistakes over the same period of time. There is still another reason, and that is that six years is the period within which a claim for the recovery of money paid by mistake can be made by an ordinary commercial firm.
  I have tried to show that six years is a period to which there is justification for asking the Committee to agree. These mistakes are by no means uncommon, and we can all sympathise with them in view of the involved condition of our Income Tax law. Unfortunately, when these mistakes are made, they do not end simply with the payment by the taxpayer of an excessive amount of Income Tax, for there is another result which appears almost incredible. When once an assessment for Income Tax has become effective, that is to say, if no appeal has been made against it, in the following year the Super-tax assessment is bound to follow the Income Tax assessment for the previous year; so that in the result the taxpayer who has unfortunately made a mistake in his return not only pays an excessive amount of Income Tax, but on the top of that pays Super-tax as well.

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  Therefore, I think I am not asking too much, and I hope the Committee will agree with me when I invite the Chancellor of the Exchequer to extend this privilege for a period of six years.
  Mr. CHURCHILL: I am prepared to accept the principle that the period during which an error may be corrected shall be extended from three to six years, but I can only do so on the basis that we start square, and that it is not retrospective. Should any errors be committed—which we trust may not be the case—they will be rectifiable within a period of six years. If that will meet my hon. Friend's view, I will take steps to have an Amendment put down for inclusion during the Report stage.
  Mr. SPENCER: Suppose an error has been made two years ago, and there is still a year's grace to run and the error is found out in two year's time instead of one, will the person who made the error be entitled to the concession in respect of six years?
  12.0 m.
  Mr. CHURCHILL: We are not altering anything in the past. The past is gone, and no change will be made in regard to it. It is only from the time the Bill passes that the six years period will run.
  Sir H. BUCKINGHAM: I am very much obliged to the Chancellor of the Exchequer. Will the Clause, when drafted, apply also to mistakes made under Schedule E?
  Mr. SPENCER: It seems to me that we are introducing an anomaly.
  Mr. CHURCHILL: The hon. Member for Broxtowe (Mr. Spencer) will see when we put the Clause down, after all the mature consideration that the draftsmen can give to it, that his point will have been fully safeguarded. The hon. Member for Guildford (Sir H. Buckingham) asks whether the six years principle will apply to mistakes under Schedule "E." There is no necessity for that, because there is already on the Statute Book a provision with which he is, no doubt, familiar—Section 18, Sub-section (5), of the Finance Act, 1922—which enables the taxpayer within the usual time limit of six years to obtain an
  200
  adjustment of excessive assessment under Schedule "E."
  Sir H. BUCKINGHAM: I beg to ask leave to withdraw the Amendment.
  Motion and Clause, by leave, withdrawn.
  Sir H. BUCKINGHAM: The next New Clause which stands in my name—(Relief grouted for error made in returns to be extended to Schedule E)—is consequential. In view of what has been said by the Chancellor of the Exchequer, I do not propose to move the Amendment.

  FIRST SCHEDULE.—(Amended rates of Duties on certain mechanically-propelled vehicles.)
  Mr. MACQUISTEN: I beg to move, in page 35 line 11, at the end, to insert the words "in the Metropolitan Police area."
  In a preceding Finance Act a differentiation was made between the Metropolitan police area and other districts, but in the present Finance Bill the differentiation is to be abolished. I submit that the differentiation should be continued, in the first place because it was recommended in the report of the Departmental Committee of the Ministry of Transport on the taxation of road vehicles, and also because in the metropolitan police area the average number of miles per vehicle per annum is over 38,000, while in the outside areas it is only 29,000. Therefore the outside mileage is 25 per cent. less than in the Metropolitan police area. I suggest that the Duty should be 25 per cent. less in the outside areas, because the wear and tear of the roads is less. In a further Amendment to the Schedule I propose a a scale in districts other than the Metropolitan police area, for vehicles with a seating capacity up to 32 persons, varying from.£12 to £00 and that there should be an additional 30s. for each person in excess of 32.
  THE MINISTER OF TRANSPORT (Colonel Ashley): This Amendment to the Finance Act, 1920, is not one that ought to surprise the Committee, because in the Act of 1920 specific power is given to the Minister of Transport to extend.the existing scale in the Metropolitan area to the areas outside and therefore we are only here in this Schedule carry-

  201
  ing out what was obviously contemplated by the Act of 1920. My hon. Friend has shown commendable restraint in refraining from pointing out the very serious financial loss which this Amendment would entail. If this Amendment were carried, it would cost the Exchequer at least £400,000 in a financial year and consequently on that ground alone it is quite obvious that. the Government cannot accept it. Then I cannot, accept the figures given by my hon. and learned Friend as to the distance run by these omnibuses and chars-a-bane outside the Metropolitan area. Vehicles in cities outside the Metropolitan area do as much mileage as those within, and even in the country districts the mileage is very considerable.
  Mr. MACQUISTEN: Is it not a fact that practically every country vehicle is run on pneumatic tyres, whereas in London they arc run on solid tyres.
  Colonel ASHLEY: That may be so, but the existence of these heavy vehicles does cause considerable damage to the roads. Local Authorities are reconstructing their roads, and they would not have had to do this had it not been for these vehicles. It is necessary for us to have money in the Road Fund so that we can have money available to repair these roads. I regret that I cannot accept the new Clause.
  Question, "That those words be there inserted," put, and negatived.
  Sir A. HOLBROOK: I beg to move ill page 35, line 31, after the word "tractors," to insert the words "timber tractors."
  The Amendment I have put down is to bring timber tractors, used as forestry vehicles, on to the same basis as agricultural vehicles. There is very little distinction between agricultural and forestry tractors so far as transport is concerned, but there is this difference, that while field crops are harvested annually, timber crops are harvested once only in 30 or 50 years. Like agriculture, the timber industry is a struggling industry, and for that reason I hope the Minister of Transport will see his way to accept this amendment. This Industry can supply only a comparatively small extent of the home needs, and hence it has to meet over-
  whelming foreign competition. It can
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  fairly lay claim to special treatment such as agriculture has been given by successive Governments. The amendment is strongly approved by the Forestry Commission, which is carrying on an extensive planting system throughout the country. Unless the industry is maintained in a healthy state it is difficult to see how the Government will be able to market their timber when it matures. Although woodlands pay rates and taxes for so many years, the timber merchant receives claims for what is
  known as ''extraordinary traffic when the timber is hauled. Would it not be possible for some fund to be created gradually so as to repair the road damage done by these vehicles.
  In this Bill it is proposed to increase the licence on tractors and engines to what is about 100 per cent. This is particularly hard on the merchants in timber. In addition to that, the Ministry Transport is to-day requiring that all these engines shall be rubber-tyred. or have rubber strakes to prevent damage to the tarred roads. To fit a single engine to rubber tyres would cost £300 to £400. It is threatened that if this is not done voluntarily, legislative powers will be sought. Rubber tyres would render these engines useless and they would not tie able to get on the fields. The industry only admits of very small profits and the heavy increase in licenses and the cost of tyres in one year would be disastrous t o many of the traders. There are only about 700 merchants in the whole of England and Wales, many of them in a Small way of business and financially weak. It is a purely British industry and employs many hundreds of men in the rural districts. I hope we shall receive the same consideration as was shown by the Chancellor of the Exchequer to the last Amendment to the Bill.
  Colonel ASHLEY: I entirely agree with all the pleas on behalf of forestry put forward by the hon. and gallant Member for Basingstoke (Sir A. W. Holbrook), and I agree that it should be encouraged. The industry has been encouraged by successive Governments by setting up Forestry Commissions and doing what they can in reason to assist the industry. Therefore it is not from want of sympathy that I must resist. this Amendment. The Way
  to support the industry is by assist-

  203
  ing it in some other direction. After all, what I have to think of is the damage done to the roads. That is, the sole angle to-night from which we have got to approach this question. The hon. and gallant Member asks why, if we have done this for agriculture, should we not do it for forestry? There is a differentiation between agriculture and forestry. In agriculture the tractor is used almost exclusively on the land and not on the roads. The damage done to the roads is very small. But in dragging huge trees up and down the roads the damage is very large indeed. Therefore the hon. Member must not think that I have no sympathy with forestry. I have, first of all, to look at the damage done to the roads, and there is no doubt that these tractors do great damage to the roads.
  Sir A. HOLBROOK: Has not the right hon. Gentleman lost sight of the fact that the agricultural engines are on the roads every week all the year round, and that these timber engines are on the road only once in 30 years at least?
  Major RUGGLES-BRISE: I must say that I am surprised at the reply we have just had from the Minister. He is straining the point when he says that a concession granted to agriculture should not be given
  to forestry. After all forestry and agriculture are very much on a par. Whether you grow a blade of wheat or a tree the only difference is that a tree is the longest of all the processes of production. A tree has no value where it stands. It may be an ornament to the countryside, but it has no commercial value where it stands. It must be felled, and even then it has no commercial value until it has been hauled to the timber yard. If you increase the cost of hauling you will decrease the price of tree and that, I submit, is a retrograde movement and entirey opposed to the interests of forestry which is encouraged by another department of the Government. I deplore the decision of the Government and hope they will take an opportunity of reviewing it.
  Mr. REMER: I claim to be one of the few Members of this House with some practical knowledge of felling and transporting timber, and for that reason I
  204
  deplore the speech of the Minister of Transport. In my own experience I know of some estates which have paid duties in the form of rates and Income Tax over a period of 80 to 100 years, and at the end of that period have been charged on account of extraordinary traffic on the roads. That is the crux of the situation If those people pay taxes on their woodlands, for what are they paying? They are paying for one purpose only—that at the end of the period when the trees have grown they will have the right to use the roads for transporting that timber. You can bring timber 2,000 miles across the Atlantic and 500 miles in the interior of the United States at a lower price than you can transport it 100 miles in this country. The reason is plain. In this country we have no big rivers which we
  can use for transport. There is the Mississippi, on which I have worked, the Vistula and the Dwina, great rivers like these make a big difference in the cost of transportation.
  For these reasons I ask the Minister of Transport to consider the question afresh before the Benoit stage and to weigh the points which have been raised in this discussion, because I believe the subject is one of vital interest to the country.
  Colonel Sir GEORGE COURTHOPE: I am sorry to disagree with my three hon. Friends who have spoken on this Amendment. Although I cannot claim to have the knowledge of timber of my hon. Friend who has just spoken, I have been handling timber with great regularity for a number of years, using tractors and steam engines as well as horses. It would be a mistake to extend this relief to the traction engines used for hauling timber. They are in a position altogether different from the position of the agricultural tractor. I think I am right in saying that the agricultural tractor, if used for road haulage, requires a road licence and pays on the higher scale, and I know from personal experience that the traction engine, if kept off the roads and used merely for winding up timber, does not pay the road licence, but only the lower rate charged on the ordinary agricultural tractor not used for road purposes. I keep a heavy engine with winding gear, which does not go on the roads and does not pay a

  205
  heavy licence. Having used both steam engines and horses for hauling timber, I have no hesitation in saying that horse haulage is, generally speaking, the more economical method A well-equipped estate, handling timber, or a well equipped timber merchant, would not feel the additional burden of this tax, if using the most economical method which is horse haulage and I hope the Government will not give way.
  Amendment, by leave, withdrawn.
  Lieut.-Commander KENWORTHY: I beg to move, in page 36, line 10, after the first word "engines" to insert the words
  "or locomotives or motor vehicles used solely by travelling showmen in the pursuit of their calling."
  On Clause 13 we had a discussion with reference to the particular case of showmen's vehicles, and I understand the Government have since had the matter nnder consideration. We do not wish to press the Government on the matter, but I move the Amendment formally in order that the Minister of Transport may inform us, if possible now, as to the Government's intentions.
  Colonel ASHLEY: The hon. and gallant Member is quite correct. When we were discussing Clause 13, the Chancellor of the Exchequer said the Government would consider this matter between the Committee stage and the Report stage of the Bill. The Government will do so and I shall let the hon. and gallant Member know their decision as soon as possible.
  Amendment, by leave, withdrawn.
  Captain CROOKSHANK: I beg to move, in page 36, line 38, after the word "used," to insert the word "solely."
  The subhead of this Schedule contains a form of words quite different from that of the Finance Act., 1920, which is the present law. I am advised that the wording proposed in this Bill is so wide that it could easily be interpreted as covering every single kind of motor because there are only a very few which could not be said to be "adapted for the conveyance of goods for trade or otherwise." I am advised that this particular form of words will mean that the conveyance of luggage by an ordinary touring car, will
  206
  bring it into the category of a commercial vehicle, provided that luggage comes under that description of "goods." A motor-car used for station work, bringing up various articles coming through the parcels post or rail, could, I am told, be similarly described as a. commercial car because it has a luggage grid; and as in the case of an alternative description being applicable, a car must pay the higher scales of duty, mane roaring cars may now, I imagine, against the intentions of the Government, have to pay higher rates. The object of this Amendment is merely to restore the form of words which existed in the Finance Act, 1920. I hope the right hon. Gentleman will find time to consider what the object of the change is, and let us know on the Report Stage.
  Colonel ASHLEY: I am advised that none of the vehicles which the hon. and gallant Member has outlined could possibly come under this paragraph of the Schedule. Luggage loaded from the station could not bring a ear under this scale. Therefore his fears are groundless, because the words are specific. These are
  "constructed or adapted for use and used for the conveyance of goods or burden of any description, whether in the course of trade or otherwise."
  However, a legal matter is always a matter of opinion, and if it will meet my hon. Friend's point I will take further legal advice between now and the Report Stage and let him know what the advice may be.
  Amendment, by leave, withdrawn.
  Mr. WOMERSLEY: I beg to move, in page 36, line 40, at the end, to insert the words
  "other than vehicles kept by a local authority, and used in the performance of their duties relating to the removal of refuse and the cleansing, watering, and repairing of streets."
  I will be as brief as possible in moving this Amendment. It is an important matter. This Bill does amend the Act of 1920 in regard to vehicles. I think it has been done inadvertently, but evidently it is in this category of heavy vehicles, which now include those used by local authorities for sanitary purposes. This Bill, we are advised, proposes to amend the old Act to include vehicles used for the conveyance of goods or

  207
  burden of any description, whether in the course of trade or otherwise, and imposes the duty in all cases where vehicles exceed 25 cwt. in weight unladen. Paragraph 5 will no longer be limited to vehicles in the course of trade. The effect will be that the duty on vehicles vied for sanitary purposes will be largely increased, particularly in respect of mechanically-propelled vehicles. Consider what the effect will be on small Corporations. We find that in one small Corporation the Duties that are now payable to the extent of £192 will, under this new Bill, amount to £1,636. In the case of the Birmingham City Corporation, their Duties at the present. time are £747, and according to the Schedule they will have
  to pay £4,311 under the new Bill. We contend, on behalf of the Corporations of the country, that these vehicles are only used in their own areas where the ratepayers have to pay the biggest part of the money required for the upkeep of the roads: they are of low horse-power in most cases: they proceed at a very slow speed, and therefore they ought to receive special consideration, as they did in the 1920 Act. As regards water-carts, in our usual English summer they do not use the roads about two months in the whole year, and we feel we have a fair case for special consideration of the Corporations as regards these vehicles.
  Colonel ASHLEY: I do not think I can accept—althria I am sure he has put them forward believing that it is so—the figures of the increase suggested by my hon. Friend in regard to Birmingham and Sheffield.
  Mr. WOMERSLEY: I did not mention the other.
  Colonel ASHLEY: I would point out that steam rollers are exempt under the 1920 Act, and that really what the Government has to consider in dealing with Amendments of this Schedule is the road user and road vehicles. I cannot see why a vehicle which is used by a local authority for sanitary purposes should have any preferential treatment over the vehicles used by anybody else—by the private individual. After all, damage knows no owner, and damage done by the Corporation of Birmingham may be just as bad as damage done by myself if I owned one of these vehicles. I would
  208
  ask the Committee to bear clearly in mind the damage done to the road: and why should one employer be selected for preferential treatment more than another? A corporation has a vehicle or vehicles used for carting materials about in the course of their works. That, under the new Amendment as I read it, would receive a louver rate of taxation, whereas, if they put out their work to contract, the contractor would have to pay the higher rate because he is a private individual. I do not think that is fair and I do not think it commends itself to the Committee. But I would point out, further, that Corporations are, I am glad to say, tsing more and more, every month electrically propelled vehicles, and I believe in the case of the two Corporations which my hon. Friend mentioned, they have a very considerable number of these vehicles. We have already indicated on discussion of Clause 13 that we. propose to give a very substantial concession to these electrically propelled vehicles, some 2,500 in number, which I think are used exclusively by Corporations, by reducing by 50 per cent, the taxation which is outlined in the present Finance Bill. That means we are prepared to review it on deport, because these vehicles ought to be considered and they do a smaller amount of damage than vehicles propelled by petrol. Further than that we cannot differentiate between one owner and another where road damage is concerned.
  Mr. A. V. ALEXANDER: I am very much disappointed with the reply the Minister has made. I un perfectly convinced he has not yet given full consideration to the very strong case which the corporation has in this matter. He has suggested that the (inures put forward by my hon. Friend, the Member for Grimsby (Mr. Womersley) were not probably good representations of the expenses of corporations in this matter. Let me give him the Sheffield figures They show that under the proposals of the Government what is at present a charge upon the non-trading vehicles of £2,214 a year will be increased by this Pill to C8,888. That is even a bigger proportion than the figures quoted by my hon. Friend, who moved the Amendment. The Minister says that there ought to be no consideration in this matter, because he says there should be no discrimination between corporations as employers and users and other people. He forgets, I am sure, that the local

  209
  authorities who are engaged in these non-profit making health services, are themselves very heavy contributors to the upkeep of the roads. They have very heavy duties to perform and great costs to incur at the expense of the ratepayers, and when he talks about sanitary and health vehicles using the roads to which the Government contributes, does the right hon. Gentleman realise how many miles of the roads the great ei corporations use at all with the health vehicles. The great city corporations use very little indeed of the ig country roads on which so much of the first-class road expenditure is incurred. A very great proportion of their work in this connection is upon roads in respect of which they get either a very small grant or else maintain the whole wit of the roads out of the local rates. It seems, therefore, that the whole argument used by the Minister of Transport in refusing to grant the concession asked for falls to the ground. I am certain the municipal corporations will not be satisfied for one moment with the reply that he has made, and while at this hour of the morning, it is not convenient for the Members of the Committee to debate at length, I do think we ought to say at once that the matter cannot be allowed to rest where the Minister has left it by his reply: and we ask him and the Chancellor of the Exchequer to reconsider the matter so that we may put it clown again on Report stage and get a more favourable answer.
  Captain A. EVANS: In his reply the Minister referred to a concession he kindly said he was going to make concerning vehicles propelled by electric batteries. I would like to ask him if that concession is going to be made solely to vehicles owned by local and municipal authorities, or is it to extend to all vehicles propelled in that way?
  Colonel ASHLEY: All vehicles, whoever the owner.
  Mr. J. HUDSON: The right hon. Gentleman continually reminded the Committee that we ought to take into account the damage clone to the roads, but surely a vehicle that is specially engaged in improving the roads, in brushing and watering the roads and removing refuse from the roads, does not come at all under the same head as these other
  210
  vehicles he referred to. One would imagine a vehicle of this sort would be
  included under that definition. The Minister put it forward as a rule according to which we should snake a judgment on the inquiry as to whether
  a tax should be charged or not. It is most unsatisfactory, and parti larly with regard to vehicles of this sort which are actually engaged in improving the roads—vehicles, indeed, that air hearing the burden that the central authority Ought to bear out of the mole that will now be taken away as a result of the decision made in connection with the Road Fund. It is entirely an unfair burden that is going to be laid on the local authorities.
  Sir JOSEPH NALL: I think the Minister's decision is perfectly sound. This complaint arises, as I understand it, solely in relation to particular electrically propelled vehicles [HON. MEMBERS: "No!"] Oh, yes! The complaint arising from corporations originally related to electrical vehicles. I must confess that, from what I have heard of the complaints, it. would be difficult to discriminate between the different owners, but to try to stretch this complaint into a general pleading that all electrically driven lorries used by municipalities should benefit, is really unfair to the Committee.
  Mr. PETHICK-LAWRENCE: The Minister in his reply said this Amendment would enable all in municipalities to do work which would otherwise be done by contractors who compete unfairly owing to the fact that they get a lower duty.
  Colonel ASHLEY: Let me make myself clear. The anomaly would be that the extra taxation would be paid by the contractors and the lower taxation would be paid by the corporation. I see no reason to differentiate between the one and the other.
  Mr. PETHICK-LAWRENCE: The point I want to make is that this is for specific municipal purposes. It does not apply to all vehicles, but to vehicles for the removal of refuse and the carrying of water for the cleansing of streets. These come, I think, within a different class than the vehicles used by contractors.
  Question put, "That those words be there inserted."
  Major CRAWFURD: I beg to move, in page 37, line 5, to leave out. "12 cwt." and to insert instead thereof "15 cwt."
  The object of the Amendment is to extend up to vehicles of 15 cwt. the class of those which will pay the lowest rate of duty, that is £10. The hour is late but it has been worth my while to stay up to this hour because the right hon. Gentleman, in all the speeches he has made, has already foreshadowed his acceptance of this Amendment. Twice already in regard to other Amendments
  The Committee divided: Ayes, 27; Noes, 131.

  Division No. 299.]

  AYES.

  [12.43 a.m.

  Alexander, A. V. (Sheffield, Hillsbro')

  Hayday, Arthur

  Potts. John S.

  Charleton, H. C.

  Hayes, John Henry

  Preston, William

  Compton, Joseph

  Henderson, Right Hon. A. (Burnley)

  Purcell, A. A.

  Crawford, H. E.

  Henderson, T. (Glasgow)

  Smith, Ben (Bermondsey, Rotherhithe)

  Dalton, Hugh

  Hirst, W. (Bradford, South)

  Watts-Morgin, Lt.-Col. D. (Rhondda)

  Day, Colonel Harry

  John, William (Rhondda, West)

  Westwood, J.

  Edwards, C. (Monmouth, Bedwellty)

  Jones, T. I. Mardy (Pontypridd)

  Wilkinson, Ellen C.

  Hannon, Patrick Joseph Henry

  Kelly, W. T.

  Harland, A.

  Kennedy, T,

  TELLERS FOR THE AYES.—

  Hartshorn, Rt. Hon. Vernon

  Pethick-Lawrence, F. W.

  Mr. Womersley and Mr. James Hudson.

  NOES.

  Acland-Troyte, Lieut.-Colonel

  Goff, Sir Park

  Moreing, Captain A. H.

  Albery, Irving James

  Grant, J. A.

  Morrison, H. (Wilts, Salisbury)

  Applin, Colonel R. V. K.

  Greene, W. P. Crawford

  Morrison—Bell, Sir Arthur Clive

  Apsley, Lord

  Gunston, Captain D. W.

  Nall, Lieut.-Colonel Sir Joseph

  Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

  Hall, Lieut.-Col. Sir F. (Dulwich)

  Newman, Sir R. H. S. D. L. (Exeter)

  Balniel, Lord

  Hanbury, C.

  Nuttall, Ellis

  Barnett, Major Sir Richard

  Harvey, G. (Lambeth, Kennington)

  Oakley, T.

  Barnston, Major Sir Harry

  Harvey, Major S. E. (Devon, Totnes)

  Perkins, Colonel E. K.

  Betterton, Henry B.

  Haslam, Henry C.

  Peto, G. (Somerset, Frome)

  Boothby, R. J. G.

  Hawke, John Anthony

  Radford, E. A.

  Bourne, Captain Robert Croft

  Henderson, Capt. R. R. (Oxford,Henley)

  Raine, W.

  Bowyer, Capt. G. E. W.

  Hennessy, Major J. R. G.

  Remer, J. R.

  Braithwaite, A. N.

  Hills, Major John Waller

  Richardson, Sir P. W. (Sur'y, Ch'ts'y)

  Brassey, Sir Leonard

  Holt, Captain H. P.

  Ruggles-Brise, Major E. A.

  Brocklebank, C. E. R.

  Hope, Capt. A. O. J. (Warw'k, Nun.)

  Russell, Alexander West (Tynemouth)

  Brooke, Brigadier-General C. R. I.

  Hopkins, J. W. W.

  Salmon, Major I.

  Brown, Col. D. C. (N'th'I'd, Hexham)

  Horlick, Lieut.-Colonel J. N.

  Samuel, Samuel (W'dsworth, Putney)

  Burton, Colonel H. W.

  Hudson, Capt. A. U. M. (Hackney, N.)

  Sandman, A. Stewart

  Campbell, E. T.

  Huntingfield, Lord

  Sanderson, Sir Frank

  Cazalet, Captain Victor A.

  Inskip, Sir Thomas Walker H.

  Savery, S. S.

  Chadwick, Sir Robert Burton

  Kennedy, A. R. (Preston)

  Shaw, R. G. (Yorks, W.R., Sowerby)

  Christie,.J A.

  Kidd, J. (Linlithgow)

  Shepperson, E. W.

  Churchill, Rt. Hon. Winston Spencer

  Kindersley, Major G. M.

  Skelton, A. N.

  Cobb, Sir Cyril

  King, Captain Henry Douglas

  Smith, R. W.(Aberd'n & Kinc'dine,C.)

  Cochrane, Commander Hon. A. D.

  Kinloch-Cooke, Sir Clement

  Sprat, Sir Alexander

  Cope, Major William

  Knox, Sir Alfred

  Steel, Major Samuel Strang

  Couper, J. B.

  Lamb,.J. O.

  Strickland, Sir Gerald

  Courthope, Lieut.-Col. Sir George L.

  Little, Dr. E. Graham

  Styles, Captain H. Walter

  Crookshank, Col. C. de W. (Berwick)

  Loder, J. de V.

  Templeton, W. P.

  Crookshank, Cpt.H.(Lindsey,Gainsbro)

  Lord, Walter Greaves-

  Thompson, Luke (Sunderland)

  Curzon, Captain Viscount

  Laugher, L.

  Tinne, J. A.

  Davidson,J.(Hertf'd, Hemel Hempst'd)

  Lucas-Tooth, Sir Hugh Vere

  Warner, Brigadier-General W. W.

  Davies, Maj. Geo.F.(Somerset,Yeovll)

  Lumley, L. R.

  Watson, Rt. Hon. W. (Carlisle)

  Dawson, Sir Philip

  Macdonald, Capt. P. D. (I. of W.)

  Wells, S. R.

  Edmondson, Major A. J.

  Mac Intyre, I.

  Williams, A. M. (Cornwall, Northern)

  England, Colonel A.

  McLean, Major A.

  Williams, Com. C. (Devon, Torquay)

  Evans, Captain A. (Cardiff, South)

  Macmillan, Captain H.

  Williams, Herbert G. (Reading)

  Fairfax, Captain J. G.

  McNeill, Rt. Hon. Ronald John

  Wilson. M. J. (York, N. R., Richm'd)

  Falls, Sir Charles F.

  MacRobert, Alexander M.

  Wise, Sir Fredric

  Fermoy, Lord

  Makins, Brigadier-General E.

  Wragg, Herbert

  Ford, Sir P. J.

  Manningham-Buller, Sir Mervyn

  Yerburgh, Major Robert D. T.

  Gadie, Lieut.-Col. Anthony

  Margesson, Captain D.

  Ganzonl, Sir John

  Mitchell, S. (Lanark, Lanark)

  TELLERS FOR THE NOES —

  Gibbs, Cot. Rt. Hon. George Abraham

  Monsell, Eyres, Com. Rt. Hon. B. M.

  Mr. Frederick Thomson and Lord Stanley.

  Gilmour, Lt.-Col, Rt. Hon. Sir John

  Moore-Brabazon, Lieut.-Col. J. T. C.

  the right hon. Gentleman has said that the sole angle front which the Government viewed these proposals is that of damage to roads.
  Colonel ASHLEY: And the amount of money going to the Road Fund.
  Major CRAWFURD: I am within the recollection of the Committee that he used the words "sole angle." If he wishes to withdraw that, and make it two angles, he can do so. But I think I may be able to satisfy him in a very few

  213
  sentences on the point. The effect of the Amendment if accepted would be to do two very necessary things. It would encourage the use of second-hand chassis of old motor vehicles for commercial uses and it would also encourage the extended use of new vehicles for uses of this nature. At present the light car pays £11 or £12 tax. If converted from pleasure uses to commercial uses it will be compelled to pay a tax of £16 because it comes in the class over 12 cwt. The Chancellor of the Exchequer I think originally proposed these changes in the licence duties in order to carry out the intentions which his colleague has expressed this evening to make them in accordance with the usage of the road. In the case of the pleasure motor car by the arbitrary distinction he has made by which two-thirds is levied for road users and one-third levied for what he calls the pleasure aspect of the car—if he carries out that intention he must also make the concession to the lighter commercial vehicle and that is what I am asking the Government to do. If the Government will give this concession, they will certainly do one thing and that is they will encourage traders to use light commercial vehicles by giving to them a wider choice of a vehicle at a tax of£ Thus the Government would undoubtedly stimulate the motor car in a direction where at the moment it is perhaps weakest in this country. I also want to put this point to the right hon. Gentleman that very likely if he will accept this Amendment and make this change it would not mean less revenue. But the Amendment would unoubtedly lead to two things It. would encourage second-hand chassis of pleasure vehicles being put to commercial uses and stimulate the motor trade in making light commercial vehicles.
  Colonel ASHLEY: The Committee will notice that in the new Schedule contained in this Bill the Government does not propose to increase the tax on vehicles under one ton and therefore there is no question of increasing the tax. There are reasons why I cannot accept the Amendment. If it were carried, vehicles between 12 cwt. and 15 cwt. would pay less than they do under the present scale of 1920 and when we are increasing the taxation on these vehicles—very substantially indeed—it is illogical and wrong to select one small
  214
  class and say that they and all others shall not even be included.
  Major CRAWFURD: It merely is illogical if it can be shown that such a change would be no loss of revenue.
  Colonel ASHLEY: The and gallant Member does not convince me that that would be the effect. The concession would cost some £60,000 or £70,000, which we cannot possibly afford.
  Amendment negatived.
  Mr. A. V. ALEXANDER: I beg to move, in page 37, line 7, after the word "unladen" to insert the words
  "such weight not to include the weight of apparatus used in the vehicle for a specific trade and not supplied with the vehicle by the manufacturers thereof."
  1.0 A.M.
  This matter is of some importance to people who are using motor vehicles in specific trades and arising from a test case which is on in Scotland at the present time. The case in question is where the local taxation officer has asked a firm to submit their motor vehicles in which they deliver bread for re-examination and weighed, whereas vans of that character have been weighed without the furniture which is used for carrying hread—shelves and so on. Now it was said they must have the van weighed with all the shelves and boards for fixing the tax with the result that before you came to the increase in the present Finance Bill on these vehicles for delivering bread and similar food commodities they will have an increased charge of £6 per annum. That is a serious charge on the food distributing trades of the country. In this particular case I want to point out that the boards and shelves used in these vans are used so that they help very materially to keep the bread clean and in condition. If, on the other hand, bakers went back to the old-fashioned methods and used heavy baskets, which are not to be weighed for the purpose of-assessment to motor duty, you get unclean bread. I think that is an anomaly which the Government might well remove, and that, anticipating the detrimental effect of the decision which is about to be taken in a test case, I suggest that the Government should make the necessary alterations in the Bill. I am well

  215
  aware that it is difficult to draw an Amendment in words which would be suitable, and if the Minister is unable to accept the particular form of words I have on the Paper I should be very happy to withdraw them if he could assure me he will give the matter further consideration between now and [he Report stage.
  Colonel ASHLEY: I think this can be answered simply. There are always hard cases; there must always be hard cases where the weight of a vehicle comes near the higher scale and just goes over. Therefore you can always make a case for some concession so that the particular vehicle shall remain in the lower class. Really the answer to the hon. Gentleman is this: that Section 7 (6) of the Roads Act, 1920, provides that for the purposes of all
  "enactments relating to the use of vehicles on roads, the weight unladen of any vehicle
  shall be taken to be the weight of the & vehicle inclusive of the body and all parts. … which are necessary to or ordinarily used with the vehicle when working on a road, but exclusive of the weight of water, fuel or accumulators (other than boilers) used for the purpose of propulsion, and of loose tools or loose equipment."
  That seems to be a very sound provision. If the ease put forward by the hon. Gentleman comes within that Section of the Act of 1920, I consider that they ought to pay the extra taxation. If they do not, they would obviously get relieved of the taxation.
  Mr. ALEXANDER: If that is the attitude, I shall not be prepared to withdraw the Amendment.
  Question put, "That those words be there inserted."
  The Committee divided: Ayes, 17: Noes, 136.

  Division No. 300.]

  AYES.

  1.5. a.m.

  Alexander, A. V. (Sheffield, Hillsbro')

  Hirst, W. (Bradford, South)

  Smith, Pen (Bermondsey, Rotherinthe)

  Charlelon, H. C.

  Hudson. J. H. (Huddersfield)

  Watts-Morgan, Lt.-Col. D. (Rhondda)

  Compton, Joseph

  John, William (Rhondda, West)

  Wilkinson, Ellen C.

  Dalton, Hugh

  Jones, T. I. Mardy (Pontypridd)

  Day, Colonel Harry

  Kelly, W. T.

  TELLERS FOR THE AYES.—

  Hayday, Arthur

  Kennedy, T.

  Mr. Charles Edwards and Mr. Hayes.

  Henderson, Rt. Hon. A. (Burnley)

  Potts, John S.

  NOES.

  Acland-Troyte, Lieut.-Colonel

  Evans, Captain A. (Cardiff, South)

  Knox, Sir Alfred

  Albery, Irving James

  Fairfax, Captain J. G.

  Lamb, J. O.

  Applin, Colonel R. V. K.

  Falls, Sir Charles F.

  Little, Dr. E. Graham

  Apsley, Lord

  Fermoy, Lord

  Loder, J. de V.

  Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

  Ford, Sir P. J.

  Lord, Wager Greases-

  Balniel, Lord

  Gadie, Lieut.-Col. Anthony

  Laugher, L..

  Barnett, Major Sir Richard

  Ganzonl Sir John

  Lucas-Tenth, Sir Hugh Vere

  Barnston, Major Sir Harry

  Gibbs, Col. Rt. Hon. George Abraham

  Luce, Maj.-Gen. Sir Richard Harman

  Betterton, Henry B.

  Gilmour, Lt.-Col. Rt. Hon. Sir John

  Lumley, L. R.

  Boothby, R. J. G.

  Goff, Sir Park

  Macdonald, Capt. P. D. (I. of W.)

  Bourne, Captain Robert Croft

  Grant, J. A.

  Maclntyre, I.

  Braithwaite, A. N.

  Greene, W. P. Crawford

  McLean, Major A.

  Brocklebank, C. E. R.

  Gunston, Captain D. W.

  Macmillan, Captain H.

  Brooke, Brigadier-General C. R. I.

  Hall, Lieut.-Col. Sir F. (Dulwich)

  McNeill, Pt. Hon. Ronald John

  Brown, Maj. D. C. (N'th'l'd., Hexham)

  Hanbury, C.

  MacRobert, Alexander M.

  Burton, Colonel H. W.

  Hannon, Patrick Joseph Henry

  Makins, Prigadier-General E.

  Campbell, E. T.

  Harland, A.

  Manningham-Buller, Sir Mervyn

  Cazalet, Captain Victor A.

  Harvey, G. (Lambeth, Kennington)

  Margesson, Captain D.

  Chadwick, Sir Robert Burton

  Harvey, Major S. E. (Devon, Totnes)

  Mitchell, S. (Lanark, Lanark)

  Christie, J. A.

  Hawke, John Anthony

  Monsen, Eyres, Com. Rt. Hon. B. M.

  Churchill, Rt. Hon. Winston Spencer

  Henderson, Capt. R, R. (Oxf'd, Henley)

  Moore-Brabazon, Lieut.-Col, J. T. C.

  Cobb, Sir Cyril

  Hennessy, Major J. R. G.

  Moreing, Captain A. H.

  Cochrane, Commander Hon. A, D.

  Hills, Major John Waller

  Morrison, H. (Wilts, Salisbury)

  Cope, Major William

  Holland, Sir Arthur

  Morison-Bell, Sir Arthur Clive

  Cooper, J. B.

  Holt, Captain H. P.

  Nail, Lieut.-Colonel Sir Joseph

  Courthope, Lieut.-Col. Sir George L.

  Hope, Capt. A. O..J. (Warw'k, Nun.)

  Newman, Sir R. H. S. D. L. (Exeter)

  Crookshank, Col. C. de W. (Berwick)

  Hopkins, J. W. W.

  Nuttall, Ellis

  Crookshank, Cpt. H.(Lindsey,Gainsbro)

  Honlick, Lieut.-Colonel J. N.

  Oakley, T.

  Curzon, Captain Viscount

  Hudson, Capt. A. U. M.(Hackney,N.)

  Perkins, Colonel E. K.

  Davidson,J.(Hertf'd,Hemel Hempst'd)

  Huntingfield, Lord

  Peto, G. (Somerset, Frome}

  Davies, Maj. Geo. F. (Somerset,Yeovil)

  Inskip, Sir Thomas Walker H.

  Preston, William

  Dawson, Sir Philip

  Kennedy, A. R. (Preston)

  Radford, E. A.

  Dixey, A. C.

  Kidd, J. (Linlithgow)

  Raine, W.

  Edmondson, Major A. J.

  Kindersley, Major Guy M.

  Remer, J. R.

  England, Colonel A.

  King, Captain Henry Douglas

  Richardson. Sir P. W. (Sur'y, Ch'ts'y)

  Ruggles-Brise, Major E. A.

  Stanley, Lord (Fylde)

  Williams, Com. C. (Devon, Torquay)

  Russell, Alexander West (Tynemouth)

  Steel, Major Samuel Strang

  Williams, Herbert G. (Reading)

  Salmon, Major I.

  Strickland, Sir Gerald

  Wilson, M. J. (York, N. R., Richm'd)

  Samuel, Samuel (W'dsworth, Putney)

  Styles, Captain H. Walter

  Wise, Sir Fredric

  Sandeman, A. Stewart

  Templeton, W. P.

  Womersley, W. J.

  Sanderson, Sir Frank

  Thompson, Luke (Sunderland)

  Wragg, Herbert

  Savery, S. S.

  Tinne, J. A.

  Yerburgh, Major Robert D. T.

  Shaw, R. G. (Yorks, W.R., Sowerby

  Warner, Brigadier-General W. W.

  Shepperson, E. W.

  Watson, Rt. Hon. W, (Carlisle)

  TELLERS FOR THE NOES —

  Skelton, A. N.

  Wells, S. R.

  Mr. Frederick Thomson and Captain Bowyer.

  Smith, R. W.(Aberd'n & Kinc'dine, C.)

  White, Lieut.-Colonel G. Dairymple

  Sprot, Sir Alexander

  Williams, A. M. (Cornwall, Northern)

  Lieut.-Colonel HORLICK: I beg to move, in page 37, line 18, to leave out the words "of £10," and to insert instead thereof the words
  "being a trailer not exceeding 2 tons in weight unladen—£2.
  being a trailer exceeding 2 tons in weight unladen—4"
  The object of this Amendment is to reduce the proposed tax on trailers drawn by motor vehicles. The present tax is £10, which seems to me to be excessive. The effect of this Amendment would be to reduce the tax to £2 in the case of light vehicles and to £4, or double the existing tax, in the case of heavy vehicles. The Minister of Transport, speaking on Clause 13, admitted that £10 was somewhat excessive and said he was going to propose to reduce it to £6; hut I suggest he should reduce it still further in accordance with the Amendment in my name.
  Colonel ASHLEY: I do not know which to admire most, the briefness of my hon. and gallant Friend's speech or the reasonableness of his statement. He said truly that the Government were giving certain concessions in respect of these trailers. In the first place, I would point out that the duty is not levied on the trailer as a trailer. but on the tractor which draws the trailer. If you once start differentiating by putting a duty on the trailer and not on the tractor, you will have bad administration. The Government cannot go any further in this matter than was outlined. The Committee will remember that in the Irish Free State they raised their duty to £12. We propose to go only up to £6 which, I think, shows great moderation.
  Amendment, by leave, withdrawn.
  Captain A. EVANS: I beg to move, in page 37, line 18, at the end, to insert the words:
  "Vehicles propelled by electricity stored in and conveyed by the vehicle and exceed-
  218
  ing twenty-five hundredweight ill weight unladen to be charged at 50 per cent. only of the before-mentioned rates of duty for the appropriate weight."
  In view of the fact that I have already dealt with this matter, I will move the Amendment formally.
  Colonel ASHLEY: I have already accepted the esssence of this Amendment. I cannot accept the wording of the Amendment on the Paper, but I promise the hon. and gallant Member that on the Report stage an Amendment embodying his proposal shall he put down.
  Amendment, by leave, withdrawn.
  Schedule ordered to stand part of the Bill.
  Remaining Schedules ordered to stand part of the Bill.
  Bill reported: as amended, to be considered upon Monday next, and to be
  printed. [Bill 131.]

  GAS REGULATION ACT, 1920.
  Resolved,
  "That the draft of a Special Order propos to be made by the Board of Trade under Section 10 of The Gas Regulation Act 1920. on the application of the Leatherhead Gas anti Lighting Company, which was presented on the 20th April and published. be approved."
  Resolved,
  "That the draft of a. Special Order proposed to be made by the Board of Trade under Section 10 of The Gas Regulation Act. 1920, on the application of the Chapel Whaley and District Gas Company, which was presented on the 29th April and published, be approved."—[Sir Burton Chadwick.]
  Resolved,
  " That the draft of a Special Order proposed to be made by the Board of Trade under Section 10 of The Gas Regulation Act, 1920, on the application of the Chapel Whaley and District Gas Company, which was presented on the 29th April and published, be approved."—[Sir Burton Chadwick.]

  VINEGAR BILL.
  Order for consideration of the Bill, as amended (in the Standing Committee) read.
  HON. MEMBERS: Object:
  Mr. GREENE: May I make an appeal? This Bill has been before the House for many years and at last I have been able to satisfy most of the opponents. I have agreed to accept two of the Amendments on the Paper and I think it has really come to a stage to night which might give me an opportunity of advancing it.
  HON. MEMBERS: Object!
  Consideration of the Bill as amended (in the Standing Committee) deferred till To-morrow.
  The remaining Orders were read, and postponed.
  It being Half-past Eleven of the Clock upon Monday evening, Mr. DEPUTY SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
  Adjourned at Twenty-one Minutes alter One o Clock.

BRITISH ARMY.
  TROOPS IN CHINA.
  TROOPS IN CHINA.
  TROOPS FOR THE SOUDAN (TRANSPORT).
  TROOPS FOR THE SOUDAN (TRANSPORT).
  HOSPITAL PATIENTS (PAY).
  HOSPITAL PATIENTS (PAY).
  CHILDREN'S ALLOWANCES.
  CHILDREN'S ALLOWANCES.
  RANGE-MARKER'S DEATH, PIRBRIGHT
  RANGE-MARKER'S DEATH, PIRBRIGHT
  NAVY, ARMY AND AIR FORCE INSTITUTES.
  NAVY, ARMY AND AIR FORCE INSTITUTES.
  JUTE MILLS, SALONICA.
  JUTE MILLS, SALONICA.
GENERAL STRIKE.
  THOMSON-LENG PRESS, DUNDEE.
  THOMSON-LENG PRESS, DUNDEE.
  MESSRS. JOHN DICKINSON AND COMPANY.
  MESSRS. JOHN DICKINSON AND COMPANY.
  PROSECUTIONS.
  PROSECUTIONS.
  ROYAL AIR FORCE (CAIRO TO CAPE TOWN FLIGHT).
  ROYAL AIR FORCE (CAIRO TO CAPE TOWN FLIGHT).
INDIA.
  MR. ANIL BARAN ROY.
  MR. ANIL BARAN ROY.
  BRITISH GARRISON (CHAPLAINS).
  BRITISH GARRISON (CHAPLAINS).
  PADDISON COMMITTEE.
  PADDISON COMMITTEE.
  INTERNATIONAL LABOUR OFFICE (NATIVE LABOUR).
  INTERNATIONAL LABOUR OFFICE (NATIVE LABOUR).
  TATYASAHEB HOLKER.
  TATYASAHEB HOLKER.
  MOTOR TRAFFIC (PARKING-PLACES, LONDON).
  MOTOR TRAFFIC (PARKING-PLACES, LONDON).
  ALIEN PASSENGERS (PASSPORTS).
  ALIEN PASSENGERS (PASSPORTS).
  PUBLIC HEALTH ACTS AMENDMENT ACT.
  PUBLIC HEALTH ACTS AMENDMENT ACT.
  DUTCH SHIPYARDS.
  DUTCH SHIPYARDS.
POOR LAW.
  RELIEF.
  RELIEF.
  EDUCATION (TEACHERS' PENSIONS).
  EDUCATION (TEACHERS' PENSIONS).
  INSPECTORS OF MINES (PENSIONS).
  INSPECTORS OF MINES (PENSIONS).
  POOR LAW INSTITUTIONS (DEATHS).
  POOR LAW INSTITUTIONS (DEATHS).
  MEDICAL OFFICERS AND OTHERS (SALARIES).
  MEDICAL OFFICERS AND OTHERS (SALARIES).
  MEDICAL SCHOOLS (ANATOMICAL EXAMINATIONS).
  MEDICAL SCHOOLS (ANATOMICAL EXAMINATIONS).
  MENTAL HOSPITALS (EXPENDITURE).
  MENTAL HOSPITALS (EXPENDITURE).
  IMPORTED MEAT (RESTRICTIONS).
  IMPORTED MEAT (RESTRICTIONS).
  LONDON BUILDING TRADE (OVERTIME).
  LONDON BUILDING TRADE (OVERTIME).
  TURKEY (BRITISH CLAIMS).
  TURKEY (BRITISH CLAIMS).
  CATTLE (IMPORTS).
  CATTLE (IMPORTS).