Sitting of 19 June 1933

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
ORAL ANSWERS TO QUESTIONS.
  INDIA.

    COASTAL TRADE (JAPANESE COMPETITION).
    Mr. DAVID GRENFELLasked the Secretary of State for India whether the Government of India have under consideration, with regard to the Japanese menace to Indian coastal shipping, the carrying into effect of the recommendation of the Mercantile Marine Committee (India) for the reservation of the Indian coastal trade for ships the ownership and controlling interests in which are predominantly Indian?
    The SECRETARY of STATE for INDIA (Sir Samuel Hoare): The question of Japanese competition in the coastal trade is receiving the consideration of the Government of India, but no such proposal as that mentioned in the question is under contemplation.
    Mr. GRENFELL: Have the Government any definite suggestions to make with regard to this matter; have they laid down any proposals for consideration?
    Sir S. HOARE: Yes, we are seriously considering the whole problem of Japanese competition.

    ADEN (TRANSFER OF ADMINISTRATION).
    Mr. D. GRENFELLasked the Secretary of State for India whether any decision has been reached with regard to the future administration of Aden; and what action the Government of India propose to take with a view to implementing their pledges to consult the Legislative Assembly before the matter is decided?
    Sir S. HOARE: I must apologise for the length of this answer. His Majesty's Government have recently received representations from different communities
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    among the inhabitants of Aden as well as from certain quarters in India, expressing their various views in regard to the transfer of the administration of Aden from the control of the Government of India to His Majesty's Government. The matter is one which is now receiving the consideration of His Majesty's Government and of the Government of India in connection with the impending constitutional changes. Full opportunity will be given for discussion in the Indian Legislative Chambers at their next session and for all the interests concerned to state their views. Meanwhile, His Majesty's Government think that it would be convenient that the considerations which suggest the desirability of a transfer of the administration and the conditions that would be entailed by such a transfer should be made known so that the problem can be discussed with a full knowledge of the facts.
    The reasons which suggest that Aden should not remain linked with India under the new constitution are, that it is an-area geographically remote from India; that it would not naturally fit into the new federation; that it is already to some extent under Imperial control, and that it is inseparable in practice from the Aden Protectorate, which has already passed wholly out of Indian control. If it should be decided that the administration of Aden should be separated from that of India, His Majesty's Government contemplate that the following conditions would be established:

    (1) India would be relieved of the annual contribution of approximately £150,000 sterling, or Rs.20 lakhs, at present payable towards the military and political administration.

    (2) The right of appeal in judicial cases to the Bombay High Court would be maintained.

    (3) His Majesty's Government would maintain the existing policy of making Aden a free port unless some radical change in the present economic situation should take place. From their own point of view the abandonment of this policy would clearly in existing, economic conditions be financially unsound, since the prosperity of Aden depends largely on its transit trade.

    (4) His Majesty's Government would do their utmost to maintain the present standard of administration and would

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    not impose any additional taxation unless such a course became, in their opinion, absolutely necessary.

    (5) A proportion of Indian service administrative personnel would be retained in Aden service for some years after transfer took place.

    (6) No racial legislation or segregation would be permitted by His Majesty's Government.

    CONGRESS (ARRESTS).
    Wing-Commander JAMESasked the Secretary of State for India whether he has now considered fully the statement by the Government of Bengal and the Government of India regarding the accusations brought against the Calcutta police of unnecessary violence on the -occasion of the recent abortive meeting of Congress; and whether he has any further statement to make on the subject?
    Sir S. HOARE: I have placed in the Library a copy of the communique issued in regard to this matter. From this it will be seen that the Government of India and the Government of Bengal consider the accusations false and to have been issued for the purpose of discrediting the work of the Calcutta police to whose efforts was mainly due the complete failure of the attempt to hold the session of the Indian National Congress. I entirely agree with this conclusion.
    Mr. T. WILLIAMS: Will the right hon. Gentleman state why, if these accusations against the authorities are false, no steps have been taken to prosecute those who made the false statements?
    Sir S. HOARE: The hon. Gentleman has more than once asked that question, and more than once I have given him an answer.
    Mr. WILLIAMS: But does the right hon. Gentleman feel satisfied that the general public will accept that statement since those charged with making false statements have had no opportunity of justifying them or otherwise?
    Sir S. HOARE: I am satisfied that the general public will accept it.

    CEYLON (TRADE).
    Mr. D. GRENFELL(for Mr. JOHN) asked the Secretary of State for India
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    whether the Government of India have been made aware of the boycott of Indian traders in the southern district of Ceylon; and, if so, what action they propose to take in the matter?
    Major DAVIES (Lord of the Treasury): I have been asked to reply. My right hon. Friend has no information, but he has no doubt that the Government of India are aware of what is taking place.

    JUDICIARY (PROVINCES).
    Mr. D. GRENFELL(for Mr. JOHN) asked the Secretary of State for India what action it is proposed to take with regard to the representations received by His Majesty's Government from judicial service associations in India that the Joint Select Committee should consider the desirability of the subordinate judiciary of the several provinces being appointed, regulated and controlled by the High Court and the Chief Court alone?
    Major DAVIES: My right hon. Friend has not yet seen any such representations, but the matter could not at this stage be one for action by His Majesty's Government until the Joint Select Committee have considered it.

  PIRACY, CHINA (CAPTURED BRITISH SUBJECTS).
  Mr. ANSTRUTHER-GRAYasked the Secretary of State for Foreign Affairs if he can make a statement regarding the release of the British officers of the steamer "Nanchang?"
  The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Eden): According to the latest reports, negotiations with the bandits for the release of the captives, which had previously broken down, were resumed on the 11th of this month. These negotiations are now proceeding. His Majesty's Representatives concerned have been untiring in their efforts and are maintaining constant touch with the local authorities.

  AGRICULTURE.

    FAT LAMBS (PRICES).
    Mr. PERKINSasked the Minister of Agriculture whether he will state the average price of fat lambs at the present time and at this time last year?
    The MINISTER of AGRICULTURE (Major Elliot): The average price of fat lambs at markets where prices are collected by the Ministry was 10½d. per lb.—estimated dressed carcase weight—during the week ended 14th June last. During the corresponding week of 1932 the price was 10⅞d. per lb.
    Mr. PERKINS: In view of the fact that there has been this reduction in price, cannot the right hon. and gallant Gentleman take more drastic steps to safeguard British agriculture?
    Major ELLIOT: Surely a reduction in the average price from 10⅞d. to 10½d. is not a very vigorous reduction.
    Mr. T. WILLIAMS: Is it not the case that during the last few months there has been a 50 per cent. increase in the price of mutton and Iamb?

    OATS AND BARLEY.
    Mr. HENDERSON STEWARTasked the Minister of Agriculture if he is yet in a position to make an announcement regarding the Government's Measures to assist growers of oats and barley?
    Major ELLIOT: As regards oats, there is nothing I can add to the reply given on 18th May by my right hon. Friend the Secretary of State for Scotland to a question by my hon. Friend the Member for East Aberdeen (Mr. Boothby). As regards barley, I would remind my hon. Friend of the undertaking given in the letter from the Brewers' Society quoted by my right hon. Friend the Chancellor of the Exchequer in his Budget speech.
    Mr. STEWART: In view of the feeling of uncertainty among farmers, will not the Minister consider making a full statement explaining the difficulties with which he is faced—a statement similar to that made recently by the Parliamentary Secretary?
    Major ELLIOT: I am not sure whether the hon. Gentleman refers to barley or oats.
    Mr. STEWART: Oats.
    Major ELLIOT: The position is very fully set out in the answer given by my right hon. Friend the Secretary of State for Scotland and in the letter from the Brewers' Society which the Chancellor
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    of the Exchequer gave on the Floor of the House in his Budget speech.
    Mr. STEWART: Does the right hon. and gallant Gentleman realise how strong the feeling is among Scottish farmers, and how much they feel that they are not being properly treated about this matter?
    Major ELLIOT: I am sure that my hon. Friend realises that no mere words on the Floor of the House will dispel any such feeling. It is only a question of a real alteration in price, and no information that I can give in the House can alter that. Only action will alter it.

    MEAT IMPORTS.
    Mr. HERBERT WILLIAMSasked the Minister of Agriculture whether his attention has been drawn to the fact that the weight of beef and mutton imported in May, 1933, was 10 per cent. greater than in May, 1932, and that the imports for the first five months of 1933 are greater than in the corresponding period of 1932; and, in these circumstances, what further steps he proposes to take to safeguard the British livestock industry?
    Major ELLIOT: I am aware that total imports of beef and of mutton and lamb last month were greater than in May, 1932. Larger supplies of frozen beef from Australia and New Zealand were chiefly responsible for the increase in total imports of beef. Imports of chilled and frozen beef from foreign countries showed a decline. In the case of mutton and lamb, the increase is largely attributable to supplies from Australia. Over the five months' period, January to May, the total imports of beef were less, but imports of mutton and lamb were greater than in the corresponding period of 1932. Imports of chilled beef, in particular, showed a decline of over 18,000 tons. In the case of mutton and lamb, much larger quantities were received from Australia. I would again ask my hon. Friend to bear in mind that the undertakings of Australia and New Zealand relate to the year 1933 as a whole.
    Mr. H. WILLIAMS: In view of the progressive increase in the imports month by month compared with last year, does not the situation indicate that we shall not be getting any meat at all in the last month of the year?
    Major ELLIOT: If that is so, no doubt the price of home produce will show a very beneficial rise.
    Brigadier-General CLIFTON BROWN: Is the Minister aware that the price of fat bullocks last week was £5 6s. less than a year ago, and £3 4s. less than last November, and, in view of his efforts, will he not do something to raise prices?
    Mr. T. WILLIAMS: Is not this question an indirect attack upon the Ottawa Agreements?
    Lieut.-Colonel ACLAND-TROYTE: Is the right hon. and gallant Gentleman aware that it does not make any difference to the British farmer whether his market is destroyed by Empire produce or foreign produce, and will he take some steps to improve prices to the home producer?
    Mr. D. GRENFELL: Is it not the case that unless these quantities of beef and mutton are allowed to come in, our Dominions will be unable to pay the debts that they owe to us?

    DAIRY PEODUCE (IMPORTS).
    Sir PERCY HURDasked the Minister of Agriculture the present position as the result of his conversations with representatives of the Dominions regarding the importation of dairy produce into the United Kingdom?
    Major ELLIOT: As regards imports of processed milks, the position is that the Dominions, whose representatives have been consulted, have indicated that, so far as they are concerned in the export of these products, they will do their best to co-operate in the steps that are now being taken to regulate imports into the United Kingdom. As regards other dairy products, my hon. Friend will be aware that the situation is engaging my attention, but I am not in a position to make a statement.
    Sir P. HURD: Will the right hon. and gallant Gentleman give a definition of what the Dominions mean by that phrase?
    Major ELLIOT: It is a little difficult to give a definition, but, as I say, they are going to do their best to co-operate, and I am satisfied from the correspondence I have had with them that it will enable us to continue tinning milk in this country at the full power of the factories.
    Mr. LAMBERTasked the Secretary of State for Dominion Affairs whether at Ottawa it was known that Australian exporters of butter were provided with an export bounty of 3d. per lb.; and whether any action is now to be taken to protect the British butter producers from such competition?
    The UNDER-SECRETARY of STATE for DOMINION AFFAIRS (Mr. Malcolm MacDonald): As regards the first part of the question, the facts as to the voluntary scheme to which I referred in the reply I gave to the hon. Member on 13th June, were within the knowledge of the United Kingdom Delegation at the Ottawa Conference. As regards the last part of the question, the hon. Member will be aware that the whole position as to the dairy produce situation in the United Kingdom has for some time been under review by the Minister of Agriculture and Fisheries.
    Mr. LAMBERT: Has the Dominions Secretary made any representations to the Australian Government with reference to this export bounty, plus depreciated currency, which gives them an unfair advantage in competition with our own farmers?
    Mr. MacDONALD: All the facts were borne in mind at the Ottawa Conference.
    Mr. RHYS DAVIES: Does the hon. Gentleman mean to say that he assents to the suggestion in the question that the Australian Government are paying a bounty of 3d. per lb. on butter coming into this country?
    Mr. MacDONALD: I do not think that that is the suggestion in the question, but in the answers I made it perfectly clear that it is a voluntary scheme.
    Brigadier-General BROWN: Is the hon. Gentleman aware that the fact that this matter is being reviewed does not help the dairy industry of this country?
    Sir HERBERT SAMUEL: Can the hon. Gentleman say whether the statement of the United Kingdom Delegation at the World Economic Conference that all export bounties should be discontinued would apply in this case?
    Mr. MacDONALD: A question like that had better be addressed to somebody else.

    LIGHT-HORSE BREEDING.
    Brigadier-General BROWN(for Major CARVER) asked the Minister of Agriculture to what extent his Department concerns itself with the maintenance and development of the British light-horse breeding industry; and what sums have been allocated by him for this purpose during the current financial year?
    Mr. WOMERSLEY (Lord of the Treasury): I have been asked to reply. My hon. and gallant Friend is probably aware that grants for the encouragement of light-horse breeding in this country were made by the War Office in recent years, but were discontinued last year on grounds of economy. Representations were then made to my right hon. and gallant Friend that provision for such grants should be made on the Vote of the Ministry, but after careful consideration he came to the conclusion that within the financial resources at his disposal it was not possible to make any such provision for the current financial year.
    Brigadier-General BROWN: Would it not be possible for grants to light-horse breeding societies to be made out of the totalisators?
    Mr. WOMERSLEY: The whole of this matter will have to be carefully considered, and my right hon. and gallant Friend is taking the whole matter into close consideration.

  POST OFFICE.

    AIR MAIL RATES (INDIA).
    Captain DOWERasked the Postmaster-General whether, with a view to promoting trade between this country and India, he will negotiate with the Government of India regarding the possibility of making a reduction in existing air-mail rates between there and England, especially in view of the profit which has accrued from the use of such mail during recent months?
    The POSTMASTER-GENERAL (Sir Kingsley Wood): The responsibility for fixing the air mail rates on letters originating in India rests entirely with the Indian Post Office. I understand however that an alteration in the present rates is being considered. The present air mail rates in respect of letters from
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    this country to India barely cover the cost of transport and handling.
    Captain DOWER: Does my right hon. Friend know when he is likely to be informed of the decision from India?
    Sir K. WOOD: No, but I will make inquiries and let my hon. and gallant Friend know.

  BROADCAST RECEPTION (INTERFERENCE).
  Mr. HOLFORD KNIGHTasked the Postmaster-General whether his attention has been called to the frequency of interference with wireless broadcast reception owing to electric tramway and trolley omnibus services; and what steps he proposes to take to safeguard the interests of listeners-in?
  Sir K. WOOD: It is common knowledge that electric tramways and trolley omnibus services can cause serious interference with the reception of wireless programmes and that the difficulty can only be cured economically at the source. The Post Office is always ready to assist in devising and demonstrating suitable remedies; and, in general, it finds that the owners of the traction services are willing, in the interests of their customers in the locality, to make such comparatively small modifications of their plant as may be necessary to meet requirements. It has, however, at present no statutory power of insisting on the application of remedial measures; and it may be necessary to seek such powers in future wireless legislation.
  Mr. KNIGHT: While thanking my right hon. Friend for his sympathetic reply, may I ask him whether it is not the case that some municipal authorities recognise the duty of correcting this interference caused by their electricity services; and, in view of the evasive propensities of some other local authorities, will he take whatever steps he can immediately to remedy these defects, or ask this House to give him further authority as speedily as possible?
  Sir K. WOOD: In a very large number of cases the corporations concerned do help in this matter, but I regret to say that in one or two instances—in one of which, I think, my hon. and learned Friend is interested—the corporations concerned have not yet seen their way

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  to help, though I am hopeful that they will recognise their public duty in this connection.
  Mr. KNIGHT: Would it not assist the case in Nottingham if the right hon. Gentleman supplied the corporation with half-a-dozen prevention devices instead of the one which he has offered?
  Sir K. WOOD: I am not quite aware of what my hon. and learned Friend has referred to, but in Nottingham it would entail only a very small expenditure by the corporation to meet the difficulty.
  Mr. KNIGHT: Will the right hon. Gentleman ascertain whether it is not the case that some time ago the town clerk of Nottingham offered to use half-a-dozen of these devices to test the matter if they were supplied?
  Sir K. WOOD: I will make inquiries.
  Mr. CAPORN: Is it a fact that the interference is caused solely where there has been a transfer from the ordinary electric tramways to trolley trams?
  Sir K. WOOD: I should not like to assent to that statement.

  HOUSING (RURAL AREAS).
  Sir P. HURDasked the Minister of Health what progress is being made in the better housing campaign in rural areas, especially as regards the fuller use of the reconditioning Act of 1926 and the Slum Clearance Act of 1930?
  The MINISTER of HEALTH (Sir Hilton Young): I have recently issued Circulars on the subject to all rural district councils in England and Wales, copies of which I am sending to my hon. Friend. It is, however, too early yet for any recently increased activity to have taken shape in the form of concrete proposals submitted to me.
  Sir P. HURD: Has the right hon. Gentleman in prospect anything like a conference with these local authorities or their London representatives with a view to speeding up the better housing campaign?
  Sir H. YOUNG: I think the purpose which might be served by a conference has been better served by the circular to which I have referred.
  Mr. T. WILLIAMS: Do we understand that housing activities in rural areas had completely ceased prior to the dispatch of this circular?
  Sir H. YOUNG: By no means.

  SCOTLAND (HERRING FISHING DISPUTE).
  Sir MURDOCH McKENZIE WOODasked the Secretary of State for Scotland if he can make a statement with regard to the dispute in the herring-fishing industry; and whether he has considered the advisability of his intervening to try to bring it to an end?
  The SECRETARY of STATE for SCOTLAND (Sir Godfrey Collins): I understand that meetings of the two associations interested are being held in Aberdeen to-day, and I hope that as a result of these meetings the difficulties which have arisen will be surmounted. As regards the second part of the question, I may say that the Fishery Board wrote on the 10th of June to both associations urging the setting-up of a joint committee for the discussion of the questions at issue between them, and on Friday last they telegraphed emphasising the necessity of the immediate appointment of a small negotiating body. The chairman of the Fishery Board is in Aberdeen to-day and is prepared to render any assistance possible. I would only add that I am always ready to give such help as I can in the interests of the industry.
  Sir M. WOOD: Will the right hon. Gentleman consider suggesting to the parties that they should pay the sum in dispute into a suspense account, leaving its ultimate destination to be decided later, and meantime allowing the fleet to proceed to sea?
  Sir G. COLLINS: The proposal mentioned by the hon. Gentleman is being considered to-day, and, in view of that fact, I think that any expression of opinion on my part might not be tactful.

  RACECOURSE BETTING CONTROL BOARD.
  Mr. ANSTRUTHER-GRAYasked the Secretary of State for the Home Department whether, in drawing up any

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  legislation in connection with the report of the Royal Commission on Lotteries and Betting, he will take into account the desirability of ensuring that the Racecourse Betting Control Board shall be able to operate under conditions which will ensure a surplus and the allocation from that surplus of funds for the benefit of horse breeding and horse racing?
  The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): The consideration to which my hon. Friend refers is one of the considerations which His Majesty's Government will no doubt take into account when studying the recommendations of the Royal Commission.
  Mr. ANSTRUTHER-GRAY: Can my right hon. Friend give an assurance that he will bear this in mind when examining the recommendations, particularly regarding the position of tote investors?
  Mr. RHYS DAVIES: Can the right hon. Gentleman state when the Government intend to bring before Parliament any legislation based upon some or the whole of the recommendations of this Royal Commission?
  Sir J. GILMOUR: The answer to the last supplementary question is, No, Sir, certainly not. As to the other supplementary question, all these matters will be taken carefully into consideration.

  IMPRISONMENT FOR DEBT (COMMITTEE).
  Mr. GRAHAM WHITEasked the Home Secretary if he is now in a position to make a statement with regard to the Committee on Imprisonment for Debt?
  Sir J. GILMOUR: I would refer to the reply given by my right hon. Friend the Parliamentary Under-Secretary to the hon. Member on Thursday last, to which I am not yet in a position to add anything.

  STOCK EXCHANGE RESTRICTIONS.
  Major HILLSasked the Chancellor of the Exchequer whether the Treasury embargo against the purchase in London of foreign-owned securities extends only to certain classes of such securities and only to large blocks of such securities, or
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  whether it extends to all foreign-owned securities of whatever kind or amount?
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): The terms of my right hon. Friend's request, published on the 17th May, related to the purchase of large blocks of foreign-owned securities of all kinds—whether of British concerns or otherwise—with a view to sale in this country. He did not attempt to define precisely what was meant by a large block of securities, and he requested that, in any cases of doubt, inquiries should be made of the Treasury. Since then he has had occasion to address to the Chairman of the Stock Exchange a letter intended to clear up certain misunderstandings, and I am causing a copy of that letter, which has already appeared in the Press, to be circulated in the OFFICIAL REPORT.
  Major HILLS: Does the letter to which the hon. Gentleman referred apply the embargo to purchasers of all amounts, or only to large blocks of securities?
  Mr. HORE-BELISHA: I would prefer to refer my right hon. and gallant Friend to the terms of the letter itself.
  Major HILLS: I have seen the letter already.
  Sir ARTHUR MICHAEL SAMUEL: Would it not be advantageous to strengthen the embargo, in order to protect the British public against losses such as they have recently suffered because of the default on contractual obligations by foreign borrowers?
  Following is the letter:
  Treasury Chambers,
  12th June, 1933.
  Dear Mr. Chairman,
  From the nature of the enquiries which have been addressed to the Treasury in the last fortnight it appears that the purpose underlying the request which I made it) the Press on the 17th May respecting the purchase of foreign owned securities is imperfectly understood by the Stock Exchange.
  The large inflow into London during this year of short term money from abroad may have obscured, but it certainly has not removed, the intrinsic weaknesses of our position, and this country is not in my judgment at present in a position to invest large sums at long term in foreign countries.
  Though from many points of view it would have been advantageous to do so, I have not thought it possible to make any

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  public request discouraging ordinary private investment abroad by individuals. I kept the notice of the 17th May within the ambit of my previous request by limiting it to the question of the purchase of large blocks of foreign owned securities (whether of British concerns or otherwise) with a view to resale here.
  Since this notice was issued I find instances in which brokers or others in this country have been asked by foreign owners to find a market in this country for large blocks of securities by distributing them among a considerable number of buyers without actually making an intermediate purchase. This, of course, equally conflicts with the general object which I have in view, and there may be other technical means for carrying through transactions of a similarly injurious kind. I trust that the members of the Stock Exchange will assist me by discouraging any such transactions by every means in their power.
  I shall be obliged if you will convey the sense of this letter to your members, on whose good will I am confident that I may rely. Perhaps you would at the same time explain to them that a similar request is being addressed on my behalf to the principal bankers and other firms outside the Stock Exchange who are accustomed to handle business in foreign securities.
  (Signed) N. CHAMBERLAIN.
  Sir Archibald Campbell,
  Chairman,
  Stock Exchange Committee.

  TRANSPORT.

    GUILDFORD AND GODALMING BY-PASS.
    Sir WILLIAM DAVISONasked the Minister of Transport what progress has been made in the Guildford and Godalming by-pass on the London and Portsmouth road, which was commenced in 1929; how much of the new road remains to be carried out; how many men are at present employed on the work; and when it is expected to be completed?
    The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Lieut.-Colonel Headlam): One and a quarter miles of the road within the boundaries of Guildford are open for traffic. Bridge construction and other works are proceeding throughout the remaining 7¼miles, but a number of embankments are not yet sufficiently consolidated to permit the construction of the concrete carriageway. At present, 419 men are employed on the scheme, and I hope the entire by-pass road will be completed in about a year's time.

    WESTERN AVENUE.
    Sir W. DAVISONasked the Minister of Transport what is the cause of the delay in the completion of Western Avenue; how much of the avenue has been completed and how much remains to be carried out; whether any work on this road is at present in progress; and what are the plans for its completion?
    Lieut.-Colonel HEADLAM: Approximately 6 miles of Western Avenue have been completed, leaving about 7 miles yet to be carried out. The construction of a 4½ mile length between Greenford and Hillingdon was postponed at the time of the financial crisis in 1931, but my hon. Friend has recently offered a grant towards the cost of this section, which is estimated at £260,000, and I understand that the first portion will shortly be put in hand.
    Sir W. DAVISON: May I ask that the hon. and gallant Gentleman will recognise the urgency of completing this road at as early a date as possible?
    Lieut.-Colonel HEADLAM: I recognise the urgency, as regards not only this road, but all roads.

  GOVERNMENT INDUSTRIAL ESTABLISHMENTS (FUNERAL LEAVE).
  Mr. LOGAN(for Mr. THORNE) asked the First Commissioner of Works whether he will reconsider the decision to stop the privilege of funeral leave granted to the industrial staff of his Department, in view of the fact that this concession has been granted for many years, and that, covering the 2,500 men affected, the saving will not amount to more than 30 days' pay a year on the average?
  The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): The decision was taken, in consultation with the Treasury, only after full consideration had been given to the representations of the Departmental Joint Industrial Council. The saving admittedly will be small, but the determining factors were that the concession did not operate either in any other Government industrial establishments or in outside industry generally. There are, in my opinion, no adequate grounds for according exceptional treatment to the staff of one Department, and I regret that I am unable to find myself justified in modifying the decision.
  Mr. LOGAN: Surely this is an innovation, and ought not, on grounds of economy, to be effected?
  Mr. ORMSBY-GORE: The decision was taken in order to bring one anomalous Department into line with all other Government Departments.
  Mr. T. WILLIAMS: Is it not the fact that many large employers outside concede to their employes a right to attend a funeral without a reduction of wages; and does the right hon. Gentleman not think that the anomaly could have been removed by conceding to other Government Departments this small privilege?
  Mr. ORMSBY-GORE: I have no power to do anything with regard to other Government Departments. In the Civil Service, all Departments must, obviously, be upon a fair and equal basis.
  Mr. LOGAN: Is it not possible for the Minister to stiffen his back in regard to this matter?
  Mr. ORMSBY-GORE: I have gone personally into the matter and I do not think, having regard to the general practice, that I should be justified in seeking to press the Treasury to apply to all other Government Departments the concession which has been granted in my Department.

  AUSTRIA AND GERMANY.
  Mr. LEONARD(for Mr. COCKS) asked the Secretary of State for Foreign Affairs whether he can make any statement respecting the position in Austria and the relations between the Governments of Austria and Germany?
  Mr. EDEN: His Majesty's Government are watching with interest and sympathy the efforts which the Austrian Chancellor is making not only to establish the finances of Austria on a sound basis but also to maintain the authority and independence of that State. Hon. Members will have read in the Press of the recent incidents which have, I regret to say, led to a deterioration in the relations between Germany and Austria. His Majesty's Government are observing the situation closely and trust that a speedy means may be found to remove the causes which have led to friction between the two countries.

  CHURCH ESTATES (PADDINGTON).
  Mr. LOGAN(for Mr. THORNE) asked the hon. Member for Central Leeds, as representing the Ecclesiastical Commissioners, the income drawn by the Commissioners from lands in Paddington for each of the last three years and the corresponding average annual income for the five years 1900 to 1905?
  Mr. DENMAN (Second Church Estates Commissioner): The income derived by the Ecclesiastical Commissioners from what is called the Clarendon Street Area, Paddington, leased to the Grand Junction Canal Company, is less than £200 per annum and has not varied for more than 100 years.
  The income derived by the Commissioners from other property in the Borough of Paddington, most of which is of a high-class residential character, has been, during the last three years: 1930, £62,700; 1931, £69,500; 1932, £70,000. The average income for the five years 1900 to 1905, was £25,550.

  METROPOLITAN POLICE (SUPERANNUATION FUND).
  Mr. LOGAN(for Mr. THORNE) asked the Home Secretary whether he is aware that the delay in issuing the necessary regulations for the administration of the Metropolitan Police (Staff Superannuation and Police Fund) Act, 1931, is causing hardship to certain retired officers; and whether he will issue the regulations forthwith, or, alternatively, sanction part payment in anticipation thereof?
  Sir J. GILMOUR: These regulations were made on 9th March last. If the hon. Member has any particular case in mind, I will have inquiries made, if he will give me particulars.

  GERMAN EXTERNAL LOAN, 1924.
  Mr. BERNAYS(for Sir PERCY HARRIS) asked the Chancellor of the Exchequer whether, in view of the condition appearing in the prospectus of the German External Loan of 1924, issued by the Bank of England, to the effect that for the purpose of providing the necessary foreign currencies for the service of the loan the German Government, the Reparation Commission, the Transfer

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  Committee, and the Agent-General for Reparation Payments agreed that funds required to be sent abroad for that purpose should have an absolute right of remittance, which right should have priority over the remittance of funds required to be remitted in discharge of reparation payments or other liabilities, he will protect the rights of the German External Loan 1924 bondholders and prevent the utilisation of any funds remitted from Germany for meeting subsequent liabilities, whether short-term loans or debts under the standstill agreement?
  Mr. HORE-BELISHA: I would refer the hon. Member to the official report in the Press of the meeting held on 16th June between the President of the Reichsbank and representatives of long-term creditors of Germany, which includes the following statement:
  "It was strongly advocated, and no objection was raised, that the service of the Dawes Loan should have absolute priority over other transfers."

ORDERS OF THE DAY.
  FINANCE BILL.
  As amended, considered.
  FINANCE BILL.

    NEW CLAUSE.—(Relief from duty on heavy hydrocarbon oils used as fuel for vessels in home waters.)
    (1) If, on an application made in the prescribed manner by the owner of a vessel specified in the application, not being a pleasure yacht, it is shown to the satisfaction of the Commissioners that at any time within the period of six months preceding the date of the application, or within such longer period preceding that date as the Commissioners may in any special case allow, any quantity of hydrocarbon oil, other than light oils, has been used as fuel for the machinery of the vessel while engaged on a voyage in home waters, and that no drawback was allowable on the shipment of the oil, the applicant shall be entitled to obtain from the Commissioners repayment of the amount of any duty which has been paid in respect of the quantity so used, unless that amount is less than five pounds.
    (2) Hydrocarbon oil in a bonded warehouse or a refinery, other than light oils, may, on an application made in the pre-scribed manner by the owner of a vessel specified in the application, not being a pleasure yacht, and on the prescribed security being given, be delivered out without payment of duty to the applicant for use as fuel for the machinery of the vessel while engaged on a voyage in home waters.
    Provided that at any time not later than twelve months after any oil has been so delivered the Commissioners may require the applicant to prove in the prescribed manner that the whole of the oil, or such part thereof as is not on board the vessel or has not been re-landed with the sanction of the proper officer of Customs and Excise, has been used as aforesaid, and if such proof is not furnished to the Commissioners' satisfaction, any duty which, but for the provisions of this Sub-section would have been payable on the delivery of the oil shall become payable by the applicant on demand made by the Commissioners in the prescribed manner.
    (3) If, where oil has been delivered out of a bonded warehouse or a refinery without payment of duty on an application under this Section, any person—

    (a) uses the oil or any part thereof otherise than as fuel for the machinery of the vessel specified in the application while engaged on a voyage in home waters; or

    (b) re-lands the whole or any part thereof in any place in the United Kingdom without the sanction of the proper officer of Customs and Excise;

    he shall be liable to a Customs penalty of treble the value of the whole of the oil so
    486
    delivered (including the duty payable thereon) or two hundred pounds, at the election of the Commissioners, and, in the case of an offence under paragraph (b) of this Sub-section, the oil re-landed shall be forfeited.
    (4) In this Section—

    (a) the expression "owner," in relation to an application, includes a charterer to whom the vessel specified in the application is demised, or, in a case where the application relates to oil used, or for use, on a vessel while undergoing trials for the purpose of testing her hull or machinery, the builder or other person conducting the trials;

    (b) the expression "prescribed" means prescribed by regulations made by the Commissioners;

    (c) the expression "voyage in home waters" in relation to a vessel means a voyage on which the vessel is at all times either at sea or within the limits of a port as defined for Customs purposes under any enactment.

    (5) This Section shall be deemed to have had effect as from the twelfth day of June, nineteen hundred and thirty-three.—[Mr. Hore-Belisha.]
    Brought up, and read the First time.
    3.20 p.m.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): I beg to move, "That the Clause be read a Second time.
    This Clause represents the fulfilment of the undertaking given by the Chancellor of the Exchequer during the Committee stage with regard to relief from the payment of Heavy Oil Duty on the fuel oil used by coastwise shipping, pilot cutters and ships on trials. My right hon. Friend, during the Committee stage, further promised to consider whether he could include estuarial and harbour craft within the terms of the concession, that is to say, whether tugs and lighters in, for example, the Port of London might also enjoy the exemption given to coastwise shipping. He has decided the matter in the affirmative, and, accordingly, these craft are also included, because, after all, they are really ancillary to shipping.
    The reasons given by my right hon. Friend for making this concession were, first, that the tax, if it were allowed to remain upon coastwise shipping and the other categories of shipping which I have mentioned, would affect that shipping detrimentally as compared with its foreign competitors; secondly, that shipping does not enjoy the protection which other in-

    487
    dustries enjoy; and, thirdly, that the cost of fuel is a heavier item in the case of shipping than, perhaps, in the case of any other industry. The Clause applies to all heavy oils used as fuel for the machinery—whether the propelling or the auxiliary machinery—of a vessel while engaged in a voyage in home waters. A voyage in home waters is defined in Subsection (4) of the Clause as a voyage on which the vessel is at all times either at sea or within the limits of a Customs port. Vessels clearing for foreign ports are, of course, already exempt. The term "Customs port" implies more than the ordinary use of the phrase "port." The whole coastline of the United Kingdom is included within the limits of one Customs port or another; where one ends another begins. Landwards a Customs port extends up rivers to the limits of navigation unless otherwise specifically defined. Therefore, the net result of the use of the term "Customs port" is that the exception will apply to any vessel other than a pleasure yacht proceeding from one port to another in the United Kingdom, going from and returning to the same port, and working within the limits of a port, but it would not include vessels employed on inland navigations.
    Mr. LOGAN: Would it not apply to canals as a means of going from one port to another?
    Mr. HORE-BELISHA: I have given the definition. It does not apply to inland navigations. For instance, it does not apply to the Thames above Teddington Lock, and it does not apply to inland canals. It does, however, apply to the Manchester Ship Canal, the Caledonian Canal, and the Clyde and Forth Canal, because the traffic on those canals mainly consists of sea-going vessels.
    Mr. GRAHAM WHITE:Might I ask the hon. Gentleman, for the sake of greater clarity, whether it would include vessels like tenders, which are ancillary to both coastal and foreign-going shipping? Although they may never leave the harbour, they are absolutely essential to both coastal shipping and foreign shipping.
    Mr, HORE-BELISHA: Certainly; it will include any shipping within the customs port, and I have defined what a customs port is. It does not matter
    488
    whether they are ordinary coasting vessels or ancillary vessels.
    Mr. MACQUISTEN: Would not my hon. Friend include the Crinan Canal, which is a short canal between one sea and another, being itself really a part of the sea?
    Mr. HORE-BELISHA: I cannot do that. It is a concession for coastwise shipping and all that can be brought within the ambit of that phrase. Every J kind of craft using a customs port, excluding only those on inland waterways, will receive the benefit of this concession.
    As to the machinery for exemption, the Clause provides two alternative methods of relief. By Sub-section (1), if the oil be supplied from duty-paid sources and if no drawback is payable, as it would be if the oil were being exported as merchandise or as ship's stores, the owner of the vessel will be entitled to claim repayment of the duty provided that the oil has been used as fuel in the manner described. No claim for less than £5 will be entertained. That means that, if there be a claim for less than £5, the owner will have to accumulate his claims until they exceed that figure. £5 is made the limit in order to avoid a multiplicity of small claims. The second method of relief is that the oil may be shipped from a duty-free bonded warehouse or installation, and this is the normal method.
    The cost to the Treasury of this concession is £100,000, as closely as it can be estimated. The relief covers the whole period since the 25th April, when the duty came into force on the passing of the Resolution. Arrangements are already in force under which oil fuel may be shipped free of duty on an undertaking to pay if the Clause should fail to pass. Where duty has been paid, repayment claims will be made when this Clause becomes law. The reason why the 12th June is mentioned in the Clause is that the arrangements for duty-free issue did not come into operation until after that date, but, nevertheless, the concession will begin retrospectively as from the 25th April. I trust that I have made the purport and details of the Clause plain to the House, and I have every reason to believe that it will be regarded as satisfactory.
    3.28 p.m.
    Mr. RHYS DAVIES: I think the House is indebted to the Financial Secretary

    489
    for the clear way in which he has put the case for the Clause. He skipped over, however, one point in it, and I am beginning to wonder whether the Government are not going to lose some friends, because I notice that the relief is not to be given to the owners of pleasure yachts. I think that the hon. Gentleman ought to explain that point a little further. I rose, however, to ask the hon. Gentleman a very simple question. He said that this relief would not apply to ships and boats plying on canals within this country. While it is obviously true that the vast majority of shipping going from the ports of Liverpool and the Manchester Ship Canal will be shipping that goes far away overseas, there are ships which will ply merely between Liverpool and Manchester, and which, consequently, will not go overseas at all. May I take it that these small ships plying between one port and another on a canal will secure relief in the same way as ships plying in home waters? [A ship coming from Aberdeen to London, for instance, would secure relief, and it would be unfair if that ship secured relief and a ship plying between Manchester and Liverpool, simply because it was plying on a canal, did not get the same kind of relief.] If the hon. Gentleman will be good enough to put that matter a little more clearly, I shall be very much obliged.
    Mr. HORE-BEL1SHA: The answer is "Yes."
    Question, "That the Clause be read a Second time," put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Exemption from Income Tax of widows' war pensions.)
    Income from a pension granted to a widow for the loss of her husband as a result of war service shall be exempt from Income Tax (including Super-tax) and shall not be reckoned in computing income for any of the purposes of the Income Tax Acts for the year 1933–34, or any succeeding year of assessment.—[Mr. T. Smith.]
    Brought up, and read the First time.
    Mr. TOM SMITH: I beg to move, "That the Clause be read a Second time."
    This is not the first time that this matter has been debated during the past eight or 10 years. In order to understand the proposal contained in the Clause, one has to bear in mind that Section 16 of
    490
    the Finance Act, 1919, clearly laid it down that pensions for wounds, disablement, or disability granted on account of military service, etc., and allowances in respect of children granted by the Minister of Pensions to widows of members of the naval, military or air forces are exempt and should be omitted from the returns for Income Tax purposes. But a pension paid to the widow of a man who was killed or died as the result of wounds received in the War has to be taken into account. There has not been a great deal of controversy with regard to this matter for the last year or two, but the fact of the personal allowance being reduced to £100 has brought many war widows into the position of paying Income Tax for the first time. I have here a letter from a war widow drawing a pension of £132 a year who has for the first time to pay Income Tax amounting to about 12s. 6d. She has brought up a son, who is now out of work, and whose application for transitional payment has been turned down because of the mother's pension. She is, therefore, more or less suffering under a double burden. It may be argued that widows of ex-service men ought not to be treated differently from other persons. I should be the first to admit that the difficulty would be removed if the Chancellor of the Exchequer had seen his way clear to raise the personal allowance above £100, but he has resisted any alteration of that amount. I submit that there is a difference between war widows and other people receiving similar incomes. Parliament has recognised for a number of years that an ex-service man himself is entitled to this extra consideration, but the moment he dies this has to be taken into account for the purposes of his widow's pension.
    3.35 p.m.
    Mr. T. WILLIAMS: I beg to second the Motion.
    I should like, first, to ask the Financial Secretary what approximately would he the cost of this concession. If he will tell the House that and the Lord President of the Council will allow a free vote, there is not a doubt as to the result of the vote if the hon. Gentleman should be stubborn, but I do not think from the smile on his face that he intends to be stubborn. While an injured husband still lives, his disability pension is not taxable, but the moment he dies the pension paid to the widow becomes

    491
    taxable. If that is not an anomaly, I should like to know what an anomaly is. I hope that, in replying, the Financial Secretary will bear in mind the implications of the next new Clause on the Paper. Imagine a war widow in receipt of a pension of £135, with a son falling out of employment. He exceeds the period of normal benefit and applies to the public assistance committee for transitional payment, but is disallowed because the mother is in receipt of a widow's pension. The sum allocated out of the pension for the maintenance of the unemployed son is taken into consideration for Income Tax purposes and no allowance is made. A married man with one child is made a £40 allowance in respect of the child, but no allowance at all is made to a widow with an unemployed son. Clearly the Treasury are getting it both ways. It would be much more honest to reduce the widow's pension than to give it with one hand and take it back with the other. In all the circumstances, this seems to me a fair and legitimate proposal, and, in view of the fact that these widows are and must continue to be a diminishing quantity—obviously, there are fewer war widows than there were a few years since—it is a concession that the hon. Gentleman could make without upsetting the balance of the Budget. It is merely granting a measure of fair play to women who, though perhaps not suffering physical disability, are certainly suffering from a disability in so far as they have lost their husbands.
    Mr. MACQUISTEN: The Mover and Seconder seem to have made out a good case, but the Clause contains the phrase "including Super-tax," which rather detracts from it.
    Mr. T. SMITH: We put in "Super-tax" deliberately. We did not want a charge to be levelled against us that we merely wished to get concessions for those in the lowest ranks. If there should be a widow in receipt of a pension for the loss of her husband paying Super-tax we have no objection to her having the advantages of the same concession.
    3.40 p.m.
    Mr. HORE-BELISHA: The hon. Gentleman who moved the Clause so persuasively said that he had no doubt that if the matter were left to a free
    492
    vote of the House the concession would be carried. That may or may not be the case. It is always possible to elicit sympathy on behalf of hardship. The House will observe that the hon. Gentleman, and the hon. Member for Don Valley (Mr. T. Williams) spoke in general terms. There are very few widows indeed dependent upon a pension who could possibly be affected by the Income Tax law? The poor widow living upon her pension has to have means in excess of £125 a year before she becomes assessable for tax. Only a small minority of the pensions granted to widows are in excess of that sum. The House will appreciate then that we are dealing with a very limited number of cases, and, as we are dealing only with a limited number of cases, I can answer the question of the hon. Gentleman as to the cost without shocking the feelings of the taxpayers, perhaps by telling him that the cost would be £80,000 a year.
    I have said that only a very small class of persons would benefit if the Clause were carried. I see no ground of principle why the Clause should be carried. The hon. Gentleman reminded the House that year after year the Clause has been put down, and that successive Chancellors of the Exchequer of whatever political complexion have rejected it. An exemption from Income Tax is given to pensioners drawing a pension in respect of war wounds, which is to compensate them for their actual physical suffering. This, however, is a pension, pure and simple, and must be treated the same as any other pension. What would be the grievance of an ordinary widow, not a war widow, who had lost her husband in distressing circumstances and who would be deprived of the advantages which the hon. Gentleman wishes to concede to war widows? The fact is that, whether a woman has lost her husband in war or as the result of an accident, she is indeed suffering hardship if she is poor, and I do not think that it would be just for the Legislature to differentiate between two widows in exactly the same unfortunate circumstances. Once concessions such as this are made no limit can be put to them. There are a multiplicity of grievances in the community. There are heavy burdens to be borne, and what the Exchequer must do is to observe, as far as possible, sound principles and canons of taxation. Once we allowed privileges such as that

    493
    which the hon. Gentleman suggests we should be deprived of any armour we might have to resist further concessions. Now that I have reminded the hon. Gentleman that successive Chancellors of the Exchequer of previous Governments have rejected the Clause, I trust he will not press it to a Division.
    3.44 p.m.
    Mr. RHYS DAVIES: The House will have noticed at once the difference in the attitude of the hon. Gentleman towards the proposed new Clause and his collapse under the pressure of his own party in connection with the previous Clause which he carried through the House a moment or two ago. If the pressure from his own party is strong enough at any time, the Treasury can make all manner of arrangements to carry through their Budget and balance it. The hon. Gentleman has given away the whole of his case. First of all, he said that we are asking for concessions that would cost £80,000 per annum. If it would only cost £80,000 per annum, how comes it that he resists the Clause when the Government gave £14,000,000 to the beer drinkers without any ado at all He talks about the canons of taxation and of the need of balancing the Budget, but if he resists a Clause involving a concession of £80,000 per annum when the Government have given away £14,000,000 so very easily, we cannot have very much regard for his suggestion about principles.
    He made one observation with which I must deal. He discussed the difference between the poor widow who had lost her husband outside war service, and the widow whose husband fell in the War. Surely, there is an acknowledged difference there to start with, and the State has always recognised it. If the State had regarded all widows alike, then the allowance paid by way of Workman's Compensation to the widow of the collier who went to his death in the pit ought to be the same as the pension payable to the widow of the man who fell in the War. He said that this must be regarded as an ordinary pension. There is a widow. She has not suffered injury herself, but she has suffered the loss of her husband. I do not want to criticise the hon. Gentleman unduly on that score, but this fact has to be considered in that connection. Not only has she lost her husband, upon whom there was an economic value, but she has suffered
    494
    something deeper than merely the loss of the earning power of her husband. What about the State granting her something by way of solace for pain suffered?
    The hon. Gentleman has not done himself justice in resisting this new Clause. He asked what other widows would say? The difference in the treatment by the State of widows is already sufficient to warrant another anomaly if that be necessary in order to carry the proposed new Clause. I do not think that any widow would in the least complain if the Clause were carried in order to help the widows of men who fell in the War. I know of no one. Consequently, when we have the hon. Gentleman and the Chancellor of the Exchequer so freely giving £14,000,000 per annum to the beer drinkers, and resisting a concession of £80,000 per annum, we are entitled to press the Clause very much further than we have done already. There is another fact to bear in mind. When the hon. Gentleman talks of anomalies, let me call attention to the 7s. 6d. disablement benefit under the National Health Insurance Scheme. When the means test was applied by local authorities and public assistance committees, they disregarded the 7s. 6d. entirely, because they came to the conclusion that there ought to be consideration not only for the fact that the poor recipient had been disabled, but also for the fact that he was suffering pain and distress consequent upon having been placed outside industry for good. There is therefore no point of principle at all in the hon. Gentleman declining to accept the Clause, which is a very reasonable one. The hon. Gentleman said that Chancellors of the Exchequer of every political colour in the past had declined a Clause of this kind, but I do not remember any Chancellor of the Exchequer at one and the same time giving £14,000,000 to the beer drinkers and resisting such a Clause. Consequently, we are entitled to press the Government to accept our proposal. The total revenue of the country is £750,000,000 per annum, and we are told by the hon. Gentleman that a paltry sum of £80,000 per annum would upset the equilibrium of the Budget. I cannot believe it for a single moment.
    3.49 p.m.
    Mr. McENTEE: I hope that the Financial Secretary to the Treasury will re-

    495
    consider his decision. I was somewhat amazed at the arguments he put forward' He told us that because certain widows of men who had lost their lives in other ways than in war do not obtain exemption from Income Tax, no War widow should have the exemption. May I remind him that two wrongs do not make one right. If he makes this one concession it will give some of us who believe that the other concession ought to be made an argument for gaining that other concession from the Chancellor of the Exchequer at another time or from some future Chancellor of the Exchequer.
    The fact that the hon. Member regards this hardship as one of a multitude of hardships proves that he considers that it is a hardship. He says that to redress this hardship it would cost £80,000. That is a very small sum compared with the amounts that the Government have given away. It is estimated by the Chancellor of the Exchequer that the concession just made in respect of heavy oils will cost £100,000, but the estimate of those who have had experience in the operation of this tax puts the figure at a much higher sum. The Financial Secretary also says that if he grants this concession he will be deprived of his armour in resisting efforts to redress other injustices. It is rather a poor argument that if one hardship can be redressed he will be deprived of his armour in resisting other hardships when an application is made that the burden of those other hardships should be eased.
    I hope he will take this matter back and consider whether some concession could not be made to the widows affected. May I remind him that the point he made with regard to two women losing their husbands, one being a war widow and the
    other a widow whose husband lost his life in other hard circumstances, can be multiplied over and over again. There are many such cases. The hon. Member would not put that sort of an argument forward when we were considering the position of an old age pensioner, who will get his 10s. a week, and the pension of a Cabinet Minister. I suppose the hon. Member himself hopes that some day he will retire on a very high pension. It is ridiculous to talk about these anomalies in the way the hon. Member did, and to argue that his armour will be weakened in resisting any attempts to redress other hardships, if he agrees to redress this particular hardship.
    Sir ASSHETON POWNALL: The hon. Member has suggested that Cabinet Ministers receive high pensions. Will he say how many ex-Cabinet Ministers are receiving pensions at this moment?
    Mr, McENTEE: I do not know any, but I know that they are entitled to receive pensions and I believe that many of them do. If I had the opportunity of making inquiries I might obtain definite information, but I believe there are now ex-Cabinet Ministers drawing pensions.
    Sir A. POWNALL: There is not a single ex-Cabinet Minister or Minister of any sort who is now drawing a pension. No such pension has been granted for many years.
    Mr. MACQUISTEN: Would it not have paid the country to have pensioned off all the Cabinet Ministers in the last Government?
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 19; Noes, 234.

    Division No. 225.]

    AYES.

    [3.56 p.m.

    Banfield, John William

    Grenfell, David Rees (Glamorgan)

    Smith, Tom (Normanton)

    Batty, Joseph

    Lansbury, Rt. Hon. George

    Tinker, John Joseph

    Brown, C. W. E. (Notts., Mansfield)

    Leonard, William

    Wallhead, Richard C.

    Daggar, George

    Logan, David Gilbert

    Williams, Dr. John H. (Llanelly)

    Davies, Rhys John (Westhoughton)

    Macdonald, Gordon (Ince)

    Williams, Thomas (York., Don Valley)

    Dobbie, William

    McEntee, Valentine L.

    Edwards, Charles

    Mainwaring, William Henry

    TELLERS FOR THE AYES—

    Mr. John and Mr. Groves.

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Applin, Lieut.-Col. Reginald V. K.

    Barclay-Harvey, C. M.

    Adams, Samuel Vyvyan T. (Leeds, W.)

    Apsley, Lord

    Barrle, Sir Charles Coupar

    Aitchison, Rt. Hon. Cralgie M.

    Astor, Maj. Hn. John J. (Kent, Dover)

    Beauchamp, Sir Brograve Campbell

    Albery, Irving James

    Baillie, Sir Adrlan W. M.

    Beaumont, M. W. (Bucks., Aylesbury)

    Allen, William (Stoke-on-Trent)

    Baldwin, Rt. Hon. Stanley

    Beaumont, Hon. R. E. B.(Portsm'th, C.)

    Anstruther-Gray, W. J.

    Balfour, Capt. Harold (I. of Thanet)

    Belt, Sir Alfred L.

    Benn, Sir Arthur Shirley

    Hacking, Rt. Hon. Douglas H.

    Ratcliffe, Arthur

    Bernays, Robert

    Hales, Harold K.

    Rea, Walter Russell

    Blaker, Sir Reginald

    Hall, Capt. W. D'Arcy (Brecon)

    Reid, David D. (County Down)

    Borodale, Viscount

    Hamilton, Sir George (Ilford)

    Remer, John R.

    Bossom, A. C.

    Hanley, Dennis A.

    Ropner, Colonel L.

    Bowater, Col. Sir T. Vansittart

    Hartington, Marquess of

    Rosbotham, Sir Samuel

    Bower, Lieut.-Com. Robert Tatton

    Harvey, George (Lambeth, Kenningt'n)

    Ross, Ronald D.

    Bowyer, Capt. Sir George E. W.

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

    Ross Taylor, Walter (Woodbridge)

    Boyce, H. Leslie

    Haslam, Henry (Horncastle)

    Ruggles-Brise, Colonel E. A.

    Boyd-Carpenter, Sir Archibald

    Haslam, Sir John (Bolton)

    Runge, Norah Cecil

    Broadbent, Colonel John

    Headlam, Lieut.-Col. Cuthbert M.

    Russell, Alexander West (Tynemouth)

    Brocklebank, C. E. R.

    Hellgers, Captain F. F. A.

    Russell, R. J. (Eddisbury)

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

    Henderson, Sir Vivian L. (Cheimsford)

    Rutherford, John (Edmonton)

    Buchan-Hepburn, P. G. T.

    Herbert, Capt. S. (Abbey Division)

    Rutherford, Sir John Hugo (Liverp'l)

    Burgin, Dr. Edward Leslie

    Hills, Major Rt. Hon. John Waller

    Salmon, Sir Isldore

    Burnett, John George

    Holdsworth, Herbert

    Samuel, Sir Arthur Michael (F'nham)

    Burton, Colonel Henry Walter

    Hore-Belisha, Leslie

    Samuel, Rt. Hon. Sir H. (Darwen)

    Campbell, Sir Edward Taswell (Brmly)

    Horobin, Ian M.

    Sanderson, Sir Frank Barnard

    Caporn, Arthur Cecil

    Howitt, Dr. Alfred B.

    Scone, Lord

    Castlereagh, Viscount

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

    Shaw, Helen B. (Lanark, Bothwell)

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

    Hudson, Robert Spear (Southport)

    Shuts, Colonel J. J.

    Charlton, Alan Ernest Leofric

    Hurd, Sir Percy

    Sinclair, Maj. Rt. Hn. Sir A.(C'thness)

    Clarke, Frank

    Hurst, Sir Gerald B.

    Smiles, Lieut.-Col. Sir Walter D.

    Clayton, Sir Christopher

    Hutchison, W. D. (Essex, Romf'd)

    Smith-Carington, Neville W.

    Cochrane, Commander Hon. A. D.

    Jackson, Sir Henry (Wandsworth, C.)

    Somerville, Annesley A. (Windsor)

    Collins, Rt. Hon. Sir Godfrey

    Ker, J. Campbell

    Soper, Richard

    Colville, Lieut.-Colonel J.

    Kerr, Hamilton W.

    Sotheron-Estcourt, Captain T. E.

    Conant, R. J. E.

    Kimball, Lawrence

    Southby, Commander Archibald R. J.

    Cook, Thomas A.

    Knox, Sir Alfred

    Spencer, Captain Richard A.

    Cooke, Douglas

    Lambert, Rt. Hon. George

    Spender-Clay, Rt. Hon. Herbert H.

    Cooper, A. Dull

    Leckle, J. A.

    Stanley, Lord (Lancaster, Fylde)

    Courthope, Colonel Sir George L.

    Lennox-Boyd, A. T.

    Stanley, Hon. O. F. G. (Westmorland)

    Cranborne, Viscount

    Locker-Lampson, Rt.Hn. G.(Wd. Gr'n)

    Steel-Maltland, Rt. Hon. Sir Arthur

    Crooke, J. Smedley

    Lovat-Fraser, James Alexander

    Stewart, J. H. (Fife, E.)

    Crookshank, Col. C. da Windt (Bootle)

    Lumley, Captain Lawrence R.

    Storey, Samuel

    Crookshank, Capt. H. C. (Gainsb'ro)

    Mabane, William

    Stourton, Hon. John J.

    Cross, R. H.

    Mac Andrew, Lt.-Col. C. G. (Partick)

    Strauss, Edward A.

    Dalkeith, Earl of

    MacAndrew, Capt. J. O. (Ayr)

    Strickland, Captain W. F.

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

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

    Sueter, Rear-Admirel Murray F.

    Davison, Sir William Henry

    McEwen, Captain J. H. F.

    Sugden, Sir Wilfrid Hart

    Dawson, Sir Philip

    McKie, John Hamilton

    Summersby, Charles H.

    Denville, Alfred

    Maclay, Hon. Joseph Paton

    Sutcliffe, Harold

    Doran, Edward

    Macquisten, Frederick Alexander

    Tate, Mavis Constance

    Dower, Captain A. V. G.

    Mallalieu, Edward Lancelot

    Thomson, Sir Frederick Charles

    Drewe, Cedric

    Manningham-Buller, Lt.-Col. Sir M.

    Todd, A. L. S. (Kingswinford)

    Duggan, Hubert John

    Margesson, Capt. Rt. Hon. H. D. R.

    Touche, Gordon Cosmo

    Duncan, James A. L. (Kensington, N.)

    Marsden, Commander Arthur

    Train, John

    Dunglass, Lord

    Martin, Thomas B.

    Tryon, Rt. Hon. George Clement

    Eden, Robert Anthony

    Mayhew, Lieut.-Colonel John

    Turton, Robert Hugh

    Elmley, Viscount

    Meller, Sir Richard James

    Vaughan-Morgan, Sir Kenyon

    Emmott, Charles E. G. C.

    Merrlman, Sir F. Boyd

    Wallace, Captain D. E. (Hornsey)

    Emrys-Evans, P. V.

    Mills, Sir Frederick (Leyton, E.)

    Wallace, John (Dunfermline)

    Entwistle, Cyril Fullard

    Mills, Major J. D. (New Forest)

    Ward, Irene Mary Bewick (Wallsend)

    Erskine, Lord (Weston-super-Mare)

    Mitchell, Sir W. Lane (Streatham)

    Wardlaw-Milne, Sir John S.

    Eraklne-Bolst, Capt. C. C. (Blackpool)

    Molson, A. Hugh Elsdale

    Warrender, Sir Victor A. G.

    Essenhigh, Reginald Clare

    Monsell, Rt. Hon. Sir B. Eyres

    Watt, Captain George Steven H.

    Flelden, Edward Brocklehurst

    Morris-Jones, Dr. J. H. (Denbigh)

    Wedderburn, Henry James Scrymgeour

    Fleming, Edward Lascelies

    Munro, Patrick

    Weymouth, Viscount

    Fox, Sir Glfford

    Murray-Philipson, Hylton Ralph

    White, Henry Graham

    Fuller, Captain A. G.

    Nation, Brigadier-General J. J. H.

    Whyte, Jardine Bell

    Ganzoni, Sir John

    Normand, Wilfrid Guild

    Williams, Charles (Devon, Torquay)

    Gillett, Sir George Masterman

    Nunn, William

    Williams, Herbert G. (Croydon, S.)

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

    Oman. Sir Charles William C.

    Wills, Wilfrid D.

    Goodman, Colonel Albert W.

    Ormsby-Gore, Rt. Hon. William G. A.

    Wilson, Lt.-Col. Sir Arnold (Hertf'd)

    Gower, Sir Robert

    Peake, Captain Osbert

    Windsor-Clive, Lieut.-Colonel George

    Graham, Sir F. Fergus (C'mb'rl'd, N.)

    Peat, Charles U.

    Withers, Sir John James

    Grattan-Doyle, Sir Nicholas

    Perkins, Walter R. D.

    Wolmer, Rt. Hon. Viscount

    Graves, Marjorie

    Pike, Cecil F.

    Womersley, Walter James

    Gretton, Colonel Rt. Hen. John

    Power, Sir John Cesil

    Wood, Rt. Hon. Sir H. Kingsley

    Griffith, F. Kingsley (Middlesbro', W.)

    Pownall, Sir Assheton

    Wood, Sir Murdoch McKenzle (Banff)

    Grimston, R. V.

    Ralkes, Henry V. A. M.

    Guinness, Thomas L. E. B.

    Ramsay, Capt. A. H. M. (Midlothian)

    TELLERS FOR THE NOES—

    Gunston, Captain D. W.

    Ramsay, T. B. W. (Western Isles)

    Sir George Penny and Mr.

    Blindell.

    NEW CLAUSE.—(Deduction in certain cases in respect of unemployed dependent relative.)
    If any person who is assessable to Income Tax proves to the satisfaction of the Commissioners of Inland Revenue that he has a relative living with him who has been denied, wholly or in part, transitional payment
    498
    under the Unemployment Insurance Acts, as amended by the National Economy Act, 1931, or any Order in Council made there under, on the ground that the relative is being maintained wholly or partly by him, he shall be entitled to a deduction of fifty pounds in respect of his assessment.—[Mr. Batey.]
    Brought up, and read the First time.
    4.4 p.m.
    Mr. BATEY: I beg to move, "That the Clause be read a Second time."
    A similar Clause brought forward last year was not successful, but I hope that it is going to have a better fate this year. The Financial Secretary to the Treasury, in dealing with the last Clause which we discussed, said that it was easy to mention hard cases. We are not basing this Clause merely on hard cases, but upon fairness and justice. We believe that the present practice is monstrously unfair. Under the means test the whole of the income of a household is taken into consideration, and we find, in many cases, after that has been done, some member of the household is called upon to pay Income Tax. We say that if the income of the household has been taken into account in order to reduce or refuse transitional payment, then to that extent a member of the household ought not to be called upon to pay Income Tax. After the Budget Debate last year, I had a case sent to me by a nephew. He had been receiving 23s. 2d. a week for himself and wife as transitional benefit. He had a son whose earnings were taken into consideration, with the result that his transitional benefit was reduced from 23s. 2d. to 5s. per week. Afterwards the son was served with an Income Tax notice. That nephew could not understand how, on the one hand, his transitional payment should be reduced by such a large amount, and then, because of the son's earnings, the son should be called upon to pay Income Tax.
    I submit to the Financial Secretary that the Treasury cannot have it both ways. They ought not to reduce transitional payment and then call upon some member of the household to pay Income Tax. I know that the hon. Gentleman may say that we are asking too much when we ask for an exemption of £50, but I would like to hear the hon. Gentleman argue that point. There is no question, however, that when transitional benefit has been reduced because of the earnings of a member of the household, some allowance ought to be made to that member when called upon to pay Income Tax. The chief argument of the hon. Gentleman on the last Clause was that successive Chancellors have rejected it, but he cannot argue in that way in regard to this proposed new Clause, because the only Chancellor of the Ex-
    500
    chequer since the means test has been the present Chancellor, who is responsible. Not merely on the ground of hardship, although we could argue on that ground, but on the grounds of fairness and justice, the Chancellor of the Exchequer ought to accept this Clause, and relieve from the payment of Income Tax a certain amount of income which has been taken into account to reduce transitional payments.
    4.9 p.m.
    Mr. TINKER: I beg to second the Motion.
    When this proposal was brought forward last time, I think it was argued that the new Unemployment Bill would soon be out, and naturally we hope that in that new Unemployment Bill the means test will have disappeared. But that is not so yet, and we are faced with this difficulty. My hon. Friend did not speak solely on the ground of hardship, but I am afraid that my contention will be on the sole ground of hardship. Many of our people are suffering unduly because they are suffering under two heads. They have to bear Income Tax and, if they have a dependent relative out of work, they have to contribute out of their earnings. Under the Income Tax law a sum up to £25 is allowed for the relief of a dependent relative, and the member of the family in a case such as this has the right to expect the same kind of treatment. I am expecting an answer from the Financial Secretary to the effect that it will be very difficult to assess this sort of case, as a man might not be out of work 12 months, and therefore the assessment of dependency could not be arrived at.
    I agree that there is something in that contention, but could we get from the hon. Gentleman a promise that if the relative is out of work, say, more than a half of the year—seven, eight or nine months—he will consider putting him under the category of dependent relative. If we can get some concession at all, some regard from the Treasury as to hardship in this case, we will be satisfied, but we do think that the Financial Secretary ought not to be able to ride off, as on other occasions, upon the difficulty with which he has to contend if he allows any loophole with regard to this matter. My hon. Friend also used the argument, which needs emphasising, that no other

    501
    Chancellor had any need to deal with this question, as the means test question belongs entirely to the present Government, and, in view of the position which they have created, something ought to be done for these people.
    I will mention some cases of hardship, because I know the House likes definite cases when a matter like this is brought forward. I know, from my own experience, many families where sons or daughters have cost a good deal of money to educate, and they have got teachers' salaries. They have to pay Income Tax out of those salaries, and also keep a dependent father who is out of work. I know some such cases in my own locality. I could mention three different cases where the father has been able to send a child to college, and did all he could in that direction. Then the son or daughter has got a teaching position, and the father, unfortunately, has got out of work and, because of the earnings of that son or daughter, has been knocked off transitional payment. There are many other such cases which should be treated as leniently as possible by the Treasury. I hope, therefore, we shall meet with some satisfaction from the Financial Secretary when he replies.
    4.14 p.m.
    Mr. WHITE: I wish to support the Clause, and, in doing so, I have very clearly in my mind the words spoken by the Financial Secretary when the matter was raised last year. The Financial Secretary was then quite sympathetic with the object which the Clause seeks to secure; in. fact, it would be impossible for anyone who understands the Clause to be unsympathetic towards what it seeks to achieve. But the Financial Secretary pointed out, as indeed he was bound to do, that in making these allowances for Income Tax the Commissioners were dealing with periods of 12 months. In this particular case the liability brought about by the means test may be for a fluctuating period. It may run for months, and in many cases for years. But the Financial Secretary last year said that they were watching this matter, and that, so far as the machinery of the Income Tax law would permit, they would do everything they could to meet the situation, and, if I remember rightly, he said that in the case of a family supported by an employed member of that
    502
    family, where there were younger children in the family, they might be regarded as adopted children, and allowance be made for them. I should like to hear what it has been possible to do, administratively, to deal with that matter.
    This is not merely a financial matter. Many important social problems arise from the administration of the means test as it exists to-day. Take the case of a printer who receives a weekly remuneration of between £4 and £5 per week. He has to maintain, under the operation of transitional payments, his father and mother, one older brother and two younger children; and he has been doing so for months. That is a very hard task. He cannot have any idea of marriage as long as he remains at home, his income is all absorbed in the maintenance of the family. To his consternation and dismay he receives a letter from the Income Tax people calling for the payment of an amount which is equivalent to about two weeks' remuneration. That is a situation which hon. Members will agree was not intended. In addition it is not good business from the point of view of the State. It is, of course, possible for him to contract out of the liability. He can leave home and, unfortunately, some of these people are being actually driven from home because the strain is too much. They can also contract out of it in another way. They can take their weekly wage and pay it over, and then present themselves to the public assistance authority and ask for relief.
    This is clearly a case in which the administrative arrangements of the State are at cross purposes. It is not a question of sympathy; it is a matter which should be put right, and it is for the Treasury to find some way out of the difficulty. It is a great hardship and is having an important social effect, as it is putting a great strain on family relations. I hope the Financial Secretary will indicate that something will be done in this matter. I do not know whether this particular Clause is the best way in which it can be effected but I have no doubt that hon. Members are willing to accept another and better form of words. Hon. Members on these benches have a proposal on the Paper which we think is rather better than this, but it is really a matter to which the Treasury should give careful and sympathetic consideration.
    4.19 p.m.
    Mr. BANFIELD: I desire to support the Clause which embodies a principle that has been well recognised in finance by successive Governments; the principle of making allowances for dependents. A person who has a dependent relative is allowed £25, and allowances are also made for children who are dependent. But in respect of those who are thrown on the income of one member of the family it is hard that the particular member who happens to be in employment and above the Income Tax limit should have a double burden imposed upon him. It is a burden which is not fair, because it is a special burden imposed upon a special section of the community. This burden can only fall upon certain individuals in the community, that is, those who have a comparatively small wage and who are called upon, because of the operation of the means test, to contribute towards the support of other members of the family. Persons who are in that position who are being compelled to support other members of the family under the means test should, at any rate, be given some recognition by the State; some little encouragement should be given to keep the family together and the home intact. Sons and daughters are anxious to help their parents, to keep them under the same roof, but if taxation is made too heavy, if the burden is too hard, they have an easy way out, they can leave home and allow the old people to become a burden upon the community as a whole.
    This is a new situation which has developed during the last two years; and no particular precedent would therefore be established. These people should not be subjected to too much hardship, and I appeal to the Financial Secretary to find some way of giving them assistance. He knows as well as I do that the people who are most concerned, that is, the old people, the parents, who are unemployed, are likely to be unemployed year after year. It is not like the old problem of a man being unemployed for a few months and then getting another job. It must also be borne in mind that many of these unfortunate people now on transitional payment have been good citizens, decent members of the community, and have made sacrifices in order to give their children a decent education and a better chance in life than they had themselves.
    504
    But things have turned out badly, and they are no longer wanted in the particular industry in which in days gone by they earned considerable salaries. Their children want to do something for their parents in return for the sacrifices they have made; and are willing to do so. Therefore, I think they have a special claim for consideration. I suggest that some rebate should be made in those cases where people have had to contribute towards the maintenance of a relative for 12 months. That would meet some of the hardest cases and be a great boon to many people.
    4.26 p.m.
    Mr. LOGAN: On the grounds of the charge which would fall on many of the poorer public assistance committees the Government should sympathetically consider this new Clause. At the present time, through sheer poverty, many young men, who are now the breadwinners, are being driven from home, and if any further burdens are imposed upon these breadwinners I am afraid it will mean that many more homes will be disbanded. We should endeavour to keep family life intact in this country. In industrial areas to-day many of the families are in extremis: it is deplorable to think that the breadwinner is being driven from home, bringing further demoralisation into our home life. He is bearing a burden which the State should at least attempt to alleviate. The Government should certainly make some concession. There have been numerous cases of men leaving home simply because they are not able to stand the strain. The concession would only be for a short time until things are better, I am an optimist; but until things do improve I think the concession asked for by the new Clause should be given. Is there anyone in this House who is not anxious to keep family life intact? This concession should be made from the point of view of equity, and from the point of view of keeping people from asking for assistance from the public assistance committee. Taking everything into consideration, I am convinced that it would prove beneficial, and, in addition, be an act of justice to the people concerned.
    4.28 p.m.
    Mr. HORE-BELISHA: It is always difficult to resist arguments addressed to pity, and everyone will have the greatest

    505
    sympathy with all that has been said by hon. Members who are supporting the Clause. But most of those who have spoken in its favour have realised that in its present form, it cannot possibly be accepted. It would let in many cases which are undeserving and exclude many of genuine hardship. Furthermore, it would create a whole series of anomalies. The ordinary allowance in respect of an incapacitated relative is £25, while the allowance proposed here is £50. If a man were keeping his aged father, he would only get £25 allowance, whereas, if he were keeping a young son he would, under the new Clause, get £50. It is impossible to justify an anomaly of that kind. There are other anomalies which would be created, but I will not deal with them, because it is clear that the Clause cannot be accepted in its present form; and no one really suggests it.
    This is really a matter concerning the administration of transitional payments by public assistance committees. The hon. Member for Leigh (Mr. Tinker) recognised that in his speech. It is not an Income Tax matter, although hon. Members in pursuance of their right on the Finance Bill have drawn attention once again to a grievance which they consider exists in relation to the administration of transitional payments by public assistance committees. The most I can do, so far as the Income Tax aspect of the matter is concerned, is to give the assurance for which I was asked by the hon. Member for East Birkenhead (Mr. White). He recalled that my predecessor in this office last year had referred to the possible leniency with which the Income Tax Acts might be operated in these cases. I can assure him that the Income Tax Acts are interpreted with the greatest possible generosity; I shall not use the word "elasticity," but I can say that they are interpreted with the greatest possible generosity. Where the parent is elderly and it can be shown that existing conditions in his trade effectively destroy his chance of employment on that account, it is possible to hold that he is incapacitated by old age within the meaning of the existing dependent relative provisions. Where the taxpayer's own brothers and sisters are being kept the Income Tax authorities treat them wherever possible as adopted children.
    506
    I think the House will agree that, although this is not directly an Income Tax matter, those charged with the administration of the tax have stretched the law to the utmost extent, and wherever they could grant the kind of concessions to which I have referred, within the ambit of the law, they do grant them. There is hardship in some of these cases and that hardship particularly arises in respect of unemployed persons. It arises not only in respect of those who are refused transitional benefit, but also in respect of persons who never qualify for transitional benefit. The benefit of this proposed new Clause would not be given at all in such cases nor in the case of other persons who have been above the Unemployment Insurance Act limit altogether and have been earning £5 per week. Such persons never qualify for transitional benefit.
    Mr. TINKER: Will the Financial Secretary deal further with the point of the elderly parent? The hon. Gentleman said that in some cases the elderly parent might be recognised, but his statement was rather indefinite. Could we not have something more concrete? Could these people apply for that concession? Would they have to be out of work for a long period or not?
    Mr. HORE-BELISHA: The words I used were these: "Where the parent is elderly and it can be shown that existing conditions in his trade effectively destroy his chance of employment on that account, it is possible to hold that he is incapacitated by old age within the meaning of the existing dependent relative provisions."
    Mr. TINKER: Have cases been dealt with on that basis?
    Mr. HORE-BELISHA: Certainly. I drafted this form of words BO as to be as exact as possible. As I said, many persons do not come under the Unemployment Insurance Act at all because their earnings have been above the limit. Therefore the new Clause would not really fulfil the purpose that its Mover has in view. That illustrates how difficult it is to draw Clauses which will include every case you want to include and exclude every case that you want to exclude. I must apologise to hon. Gentlemen that I have not been able to go further than the statement which I have made.
    4.35 p.m.
    Mr. RHYS DAVIES: We have listened to a number of remarkable statements from the Financial Secretary. The one that he has just made is the most amazing of all. He has practically told us that the Income Tax collector is evading the law in order to get over this difficulty. We must either have legislation to tell the gentlemen at the Treasury clearly what they have to do, or we shall land ourselves into very serious difficulties in connection with Income Tax. What the Financial Secretary has said really is that the means test is now applied by the tax collector when he is assessing the Income Tax that is to be paid in the case of a member of the family. If the hon. Gentleman will read his words to-morrow he will find that this is Income Tax plus a means test for the family. What he said was that the Income Tax collector was now taking into account the liability of the family in assessing the amount of Income Tax payable by a member of the family.
    It is indeed a very strange situation in which we have landed ourselves. If what he now tells us has been going on for the last 12 months, which I can well believe, it was the duty of the Treasury to take note of this new orientation in our social life and to bring forward an Amendment to this Finance Bill that would meet these new cases. The Treasury cannot get away with the argument that this is not an Income Tax matter. Every item is an Income Tax matter if the person assessed for Income Tax finds that his income is dissipated for purposes other than those to which it used to be applied. We have a new Income Tax situation since the imposition of the means test. Every hon. Member knows of cases very much like that mentioned by the hon. Member for East Birkenhead (Mr. G. White). I know of the case of a man in my division who is earning about £3 a week. He has three or four persons in the family dependent on him. Lo and behold we are told to-day that if this gentleman can make out a case before the tax collector he need not pay Income Tax on an income above the limit imposed under the law. Surely we have reached an extraordinary stage when we have to listen to arguments of that kind.
    But the most extraordinary argument of all was that the new Clause as worded
    508
    will not work. When the brewers come to the Government with any demand they can draft a Clause to suit them; the brewers can get a Clause drafted to suit themselves at any time when they can bring sufficient pressure to bear on the Government. Those who want to be relieved of the oil tax in connection with ships in home waters can also get an Amendment drafted that fits the case under the law. If the Treasury wanted to meet the case that we have put forward they could easily get over the difficulty and frame the appropriate words. They know better than we do what actual words are required.
    Apart from party politics altogether, the case is made out without a shadow of doubt for some relief for these people who have had a new burden placed upon them by the administration of the means test. I do not think any Member of any party will quarrel with that proposition. The Government ought to have done something beforehand to meet a case of this kind. I do not know whether it is too late for them to act now. They can always do things for their own friends here or in another place. If our words are not good enough the principle of the new Clause is good enough. In view of the fact that the Government are fully aware of what is happening in the home life of our people, I appeal to the Financial Secretary to consider the matter further. I am certain that disaster can come to family life in many cases because of the way in which the Income Tax law is now administered. We shall, therefore, have no hesitation in taking this matter to a division.
    4.40 p.m.
    Mr. T. WILLIAMS: Before going to a vote, I would put to the Financial Secretary a couple of specific questions relating to specific cases. The hon. Gentleman said that the new Clause will not have the effect desired by the Mover and the Seconder. Secondly, he said that he himself is fully convinced that a case has been made out, and he bubbled over almost with sympathy for the wretched victim of the means test. His legal experts could give effect to what is desired. He told us that the Income Tax collectors, understanding the difficulties of the means test and presumably understanding the difficulties of the legal fraternity of the Treasury, adopt a most sympathetic attitude towards the victims

    509
    of the means test, and to that extent confer certain benefits on individual Income Tax payers whose income is dissipated by the maintenance of dependent relatives. I ask him to reply regarding two cases in such a way that his reply will be an instruction to Income Tax supervisors as to what they must do.
    Take the case of a single man still resident at home and earning £180 per annum. The father is unemployed and the mother is alive. The father is not an aged person, beyond work, say 79 years of age. He may be only 53; physically fit and mentally alert, and capable of rendering good service if the opportunity presented itself. Because the son resides at home and the father is unemployed the father can receive no transitional payment because of the income of his son. The son, therefore, is responsible for the maintenance of father and mother. Under the existing law that person is chargeable as to £80 of the £180 income, less parent allowances and insurance and other odds and ends which may amount to £15 or £20. The remaining £60 is chargeable to Income Tax. Does the Financial Secretary mean that where the parent has been unemployed during any period and the son has been compelled to maintain the parents, the Income Tax surveyor must relieve that single son of Income Tax liability? Unless that question is replied to specifically it really means that the Income Tax surveyor may or may not make the concession. If he makes a concession he does an illegal thing. It may be that that is typically and characteristically British. I ask the Financial Secretary to give us a straightforward reply.
    Take another case of a married man still working. The father may be employed and receiving £200 per annum. He is subject to Income Tax for 50 per cent., apart from any earned allowance, insurance and odds and ends. He may have one or two sons at home, well beyond the allowance age, who have passed out of ordinary benefit and are entitled to transitional payment, assuming that the income of the home justifies that payment. Do we understand that when it can be shown that the father for a period was obliged to maintain the two unemployed sons, for whom no Income Tax allowance is made, the Income Tax surveyor can refrain from levying
    510
    Income Tax on the amount involved. If the hon. Gentleman tells us that there is to be an instruction on this point to surveyors of Income Tax we can accept his statement. Otherwise, I am afraid, a "hit or miss" situation will exist. The surveyor in Birmingham, for instance, may be a very humane person who will make concessions while the surveyor in Sheffield may be much more hardhearted, much closer to the Tory conception of individual and collective obligations than his Birmingham colleague, and may make no concessions.
    The hon. Gentleman considers that, if this Clause or a similar Clause were accepted, certain anomalies would crop up, but we submit that its effect would be to remove anomalies. Under this Clause, instead of the £25 allowance for an aged person fully dependent on the wage-earner, £50 would be allowed. If a father is called upon to maintain one or two sons and that maintenance costs in excess of £50, then his allowance ought to be in excess of £50. If a son is called upon to maintain his father for whom the nation refuses to provide work and wages, then the son ought to have the full benefit of any allowance that can be made. I think the House is entitled to know from the Financial Secretary whether the anomalous position which I have indicated is to remain. Are person afflicted by the means test to be dependent in this matter on whether an Income Tax surveyor happens to wake up in a pleasant mood after a good night, or whether he has a disturbed morning following a bad night? Surely that position is even more anomalous than the suggestion made previously by the Financial Secretary. I ask him therefore to give a definite reply on the two cases I have submitted. Where a parent maintains a son, or a son maintains a parent, over a certain period, will it be an instruction to Income Tax surveyors that the cost of that maintenance is to be allowed for in respect of Income Tax —if not in the present financial year, at any rate as a rebate to be made on subsequent application? If the Financial Secretary cannot accept the proposed new Clause, will he at least give us the consolation of knowing that Income Tax surveyors are instructed to make this concession as and when it is proved to their satisfaction that the parties concerned are entitled to it?
    4.50 p.m.
    Mr. McENTEE: Would it not be possible to add to the table of exemptions accompanying the forms sent out by the Income Tax authorities? The Financial Secretary admits that there is an injustice here, although he claims that this is not really an Income Tax matter. He says that in certain cases, where there is an aged person, not yet old enough to come within the ordinary Income Tax exemption, but not likely to obtain work in his own occupation because of age, and the conditions prevailing in the industry, the Income Tax surveyor may stretch a point to enable that man to be brought within the exemptions. Why not extend the table of exemptions to cover any person who can prove that he is called upon by a public assistance committee to maintain a relative over a reasonably long period of time? Such a person should be entitled to claim exemption from Income Tax in respect of that imposition.
    If as the hon. Gentleman suggests this is not really an Income Tax matter at all, can he then give us a guarantee that he will consult the head of the Department which is to some extent responsible—although its responsibility in that respect appears to be very limited—for the work of the public assistance committees with a view to getting those bodies to take into consideration Income Tax paid by a person whom they require to maintain a relative? The Government cannot reasonably have it both ways. They cannot claim that no exemption should be allowed to a man in respect of Income Tax by the public assistance authority, and on the other hand that no allowance is to be made by the Income Tax commissioners in his case. The public assistance committee ought to make some allowance in respect of Income Tax when assessing the income of a person who is being made responsible for the maintenance of relatives or the Income Tax authorities ought to make a concession. I appeal to the Financial Secretary to give us some assurance on this matter. He admits that there is an injustice and if this is not, as he claims, an Income Tax matter, will he promise at least to consult with the Department responsible for
    public assistance, so that if no allowance can be made from the point of view of Income Tax some allowance will be made from the point of view of public assistance.
    4.53 p.m.
    Mr. CHARLES WILLIAMS: It ought to be plain to the more intelligent Members of the House that public assistance committees are already bound to take into account the question of Income Tax in a case, say, where a man is earning £200 a year. [HON. MEMBERS: "No!"] It is the general opinion that they do take it into account.
    Mr. McENTEE: Definitely, they do not.
    Mr. WILLIAMS: I am told that they do. There is one serious flaw in this new Clause. It only applies to the cases of those affected by transitional payments but there are much worse cases of grievance. It is easy in these matters to make appeals for leniency and to point out this, that and the other hardship, of which we know already. But there are other people very much worse off than the people contemplated by the new Clause. For instance there is the agricultural labourer. Why not bring in a proper proposal dealing with the matter in a proper way? It is utterly impossible to deal with it in this way, taking up one grievance after another.
    Mr. RHYS DAVIES: Can the hon. Member give us any idea of how many agricultural labourers are paying Income Tax?
    Mr. WILLIAMS: I never said they were. Evidently I did not make my meaning plain to the hon. Gentleman, but what I did suggest was and what I think will be appreciated by the more intelligent section of the Socialist party was that an agricultural labourer might be a dependant in some of these cases. From that point of view only, I would say that the position of the Government on this question is strong and that it is not in the best interests of the finances of the country that we should deal with this matter in a piecemeal fashion.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 44; Noes, 238.

    Division No. 226.]

    AYES.

    [4.55 p.m.

    Banfield, John William

    Brown, C. W. E. (Notts., Mansfield)

    Cowan, D. M.

    Batey, Joseph

    Clarke, Frank

    Cripps, Sir Stafford

    Bernays. Robert

    Cocks, Frederick Seymour

    Daggar, George

    Davies, Rhys John (Westhoughton)

    Jones, Morgan (Caerphilly)

    Sinclair, Maj. Rt. Hn. Sir A. (C'thness)

    Dobbie, William

    Lansbury, Rt. Hon. George

    Smith, Tom (Normanton)

    Edwards, Charles

    Lawson, John James

    Tinker, John Joseph

    Evans, Capt. Ernest (Welsh Univ.)

    Leonard, William

    Wallhead, Richard C.

    Foot, Dingle (Dundee)

    Logan, David Gilbert

    Wedgwood, Rt. Hon. Joslah

    Foot, Isaac (Cornwall, Bodmin)

    McEntee, Valentine L.

    White, Henry Graham

    Grenfell, David Rees (Glamorgan)

    Mainwaring, William Henry

    Williams, Dr. John H. (Llanelly)

    Griffith, F. Kingsley (Middlesbro', W.)

    Mallalieu, Edward Lancelot

    Williams, Thomas (York, Don Valley)

    Hamilton, Sir R. W.(Orkney & Ztl'nd)

    Mason, David M. (Edinburgh, E.)

    Wood, Sir Murdoch McKenzie (Banff)

    Harris, Sir Percy

    Parkinson, John Allen

    Holdsworth, Herbert

    Rea, Walter Russell

    TELLERS FOR THE AYES—

    Janner, Barnett

    Salter, Dr. Alfred

    Mr. G. Macdonald and Mr. Groves.

    John, William

    Samuel, Rt. Hon. Sir H. (Darwen)

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Eden, Robert Anthony

    McCorquodale, M. S.

    Agnew, Lieut.-Com. P. G.

    Elmley, Viscount

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

    Allen, Sir J. Sandeman (Liverp'l, W.)

    Emmott, Charles E. G. C.

    McEwen, Captain J. H. F.

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

    Emrys-Evans, P. V.

    McKie, John Hamilton

    Anstruther-Gray, W. J.

    Entwistle, Cyril Fullard

    Macquisten, Frederick Alexander

    Apsley, Lord

    Erskine, Lord (Weston-super-Mare)

    Manningham-Buller, Lt.-Col. Sir M.

    Astor, Maj. Hn. John J. (Kent, Dover)

    Erskine-Bolst, Capt. C. C. (Blackpool)

    Margesson, Capt. Rt. Hon. H. D. R.

    Atholl, Duchess of

    Essenhigh, Reginald Clare

    Marsden, Commander Arthur

    Baillie, Sir Adrian W. M.

    Fielden, Edward Brockiehurst

    Martin, Thomas B.

    Baldwin, Rt. Hon. Stanley

    Fox, Sir Gifford

    Mayhew, Lieut.-Colonel John

    Balfour, Capt. Harold (I. of Thanet)

    Fuller, Captain A. G.

    Meller, Sir Richard James

    Banks, Sir Reginald Mitchell

    Ganzonl, Sir John

    Merriman, Sir F. Boyd

    Barclay-Harvey, C. M.

    Gillett, Sir George Masterman

    Mills, Sir Frederick (Leyton, E.)

    Barrie, Sir Charles Coupar

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

    Mills, Major J. D. (New Forest)

    Beauchamp, Sir Brograve Campbell

    Goff, Sir Park

    Mitchell, Sir W. Lane (Streatham)

    Beaumont, M. W. (Bucks., Aylesbury)

    Goodman, Colonel Albert W.

    Molson, A. Hugh Elsdale

    Beaumont, Hon. R.E.B. (Portsm'th.C.)

    Gower, Sir Robert

    Monsell, Rt. Hon. Sir B. Eyres

    Belt, Sir Alfred L.

    Graham, Sir F. Fergus (C'mb'rl'd, N.)

    Moore, Lt.-Col. Thomas C. R. (Ayr)

    Blaker, Sir Reginald

    Grattan-Doyle, Sir Nicholas

    Morris-Jones, Dr. J. H. (Denbigh)

    Bilndell, James

    Greene, William P. C.

    Munro, Patrick

    Boothby, Robert John Graham

    Gretton, Colonel Rt. Hon. John

    Murray-Philipson, Hylton Ralph

    Borodale, Viscount

    Grimston, R. V.

    Nation, Brigadier-General J. J. H.

    Boulton, W. W.

    Guinness, Thomas L. E. B.

    Normand, Wilfrid Guild

    Bowater, Col. Sir T. Vanslttart

    Gunston, Captain D. W.

    Nunn, William

    Bower, Lieut.-Com. Robert Tatton

    Hacking, Rt. Hon. Douglas H.

    Peake, Captain Osbert

    Bowyer, Capt. Sir George E. W.

    Hales, Harold K.

    Peat, Charles U.

    Boyce, H. Leslie

    Hamilton, Sir George (Ilford)

    Penny, Sir George

    Bracken, Brendan

    Hanley, Dennis A.

    Perkins, Walter R. D.

    Braithwaite, J. G. (Hillsborough)

    Hartington, Marquess of

    Petherick, M.

    Broadbent, Colonel John

    Hartland, George A.

    Peto, Sir Basil E. (Devon, Barnstaple)

    Brockiebank, C. E. R.

    Harvey, George (Lambeth,Kenningt'n)

    Peto, Geoffrey K.(W'verh'pt'n, Bliston)

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

    Haslam, Henry (Horncastle)

    Pike, Cecil F.

    Buchan-Hepburn, P. G. T.

    Haslam, Sir John (Bolton)

    Power, Sir John Cecil

    Burgin, Dr. Edward Leslie

    Headlam, Lieut.-Col. Cuthbert M.

    Pownall, Sir Assheton

    Burnett, John George

    Heilgers, Captain F. F. A.

    Raikes, Henry V. A. M.

    Campbell, Sir Edward Taswell (Brmly)

    Henderson, Sir Vivian L. (Chelmsford)

    Ramsay, Alexander (W. Bromwich)

    Caporn, Arthur Cecil

    Heneage, Lieut.-Colonel Arthur P.

    Ramsay, Capt. A. H. M. (Midlothian)

    Castlereagh, Viscount

    Herbert, Capt. S. (Abbey Division)

    Ramsay, T. B. W. (Western Isles)

    Cayzer, Sir Charles (Chester, City)

    Hope, Capt. Hon. A. O. J. (Aston)

    Ramsbotham, Herwald

    Cayzer, Maj. Sir H. R. (P'rtsm'th, S.)

    Hore-Bellsha, Leslie

    Ratcllffe, Arthur

    Chamberlain, Rt. Hon. Sir J. A. (Birm., W)

    Horobin, Ian M.

    Reid, Capt. A. Cunningham-

    Chapman, Col. R.(Houghton-le-Spring)

    Howard, Tom Forfeit

    Reid, David D. (County Down)

    Choriton, Alan Ernest Leofric

    Howitt, Dr. Alfred B.

    Remer, John R.

    Clayton, Sir Christopher

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

    Rentoul, Sir Gervals S.

    Cobb, Sir Cyril

    Hudson, Robert Spear (Southport)

    Ropner, Colonel L.

    Cochrane, Commander Hon. A, D,

    Hume, Sir George Hopwood

    Rosbotham, Sir Samuel

    Conant, R. J. E.

    Hurd, Sir Percy

    Ross, Ronald D.

    Cook, Thomas A.

    Hurst, Sir Gerald B.

    Rose Taylor, Walter (Woodbridge)

    Cooke, Douglas

    Hutchison, W. D. (Essex, Romf'd)

    Ruggles-Brise, Colonel E. A.

    Cooper, A. Duff

    Inskip, Rt. Hon. Sir Thomas W. H.

    Russell, Alexander West (Tynemouth)

    Copeland, Ida

    Jackson, Sir Henry (Wandsworth, C.)

    Russell, R. J. (Eddlsbury)

    Craddock, Sir Reginald Henry

    James, Wing-Com. A. W. H.

    Rutherford, Sir John Hugo (Liverp'l)

    Cranborne, Viscount

    Ker, J. Campbell

    Salmon, Sir Isidore

    Crooke, J. Smedley

    Kerr, Lieut.-Col. Charles (Montrose)

    Samuel, Sir Arthur Michael (F'nham)

    Crookshank, Col. C. do Windt (Bootle)

    Kerr, Hamilton W.

    Sanderson, Sir Frank Barnard

    Crookshank, Capt. H. C. (Gainsb'ro)

    Kimball, Lawrence

    Sassoon, Rt. Hon. Sir Philip A. G. D.

    Cross, R. H.

    Knox, Sir Alfred

    Shute, Colonel J. J.

    Dalkeith, Earl of

    Lambert, Rt. Hon. George

    Slmmonds, Oliver Edwin

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

    Lees-Jones, John

    Smiles, Lieut.-Col. Sir Walter D.

    Davison, Sir William Henry

    Leighton, Major B. E. P.

    Smith-Carington, Neville W.

    Dawson, Sir Philip

    Lindsay, Noel Ker

    Somerville, Annesley A. (Windsor)

    Denman, Hon. R. D.

    Locker-Lampson, Rt. Hn. G.(Wd, Gr'a)

    Soper, Richard

    Denville, Alfred

    Loder, Captain J. de Vere

    Sotheron-Estcourt, Captain T. E.

    Doran, Edward

    Lovat-Fraser, James Alexander

    Southby, Commander Archibald R. J.

    Drewe, Cedric

    Lumley, Captain Lawrence R.

    Spencer, Captain Richard A.

    Duggan, Hubert John

    Mabane, William

    Spender-Clay, Rt. Hon. Herbert H.

    Duncan, James A. L. (Kensington, N.)

    MacAndrew, Lt.-Col. C. G. (Partick)

    Spens, William Patrick

    Dunglase, Lord

    Mac Andrew, Capt. J. O. (Ayr)

    Stanley, Lord (Lancaster, Fylde)

    514

    515

    Stanley, Hon. O. F. G. (Westmorland)

    Todd, A. L. S. (Kingswinford)

    Williams, Charles (Devon, Torquay)

    Stewart, J. H. (Fife, E.)

    Touche, Gordon Cosmo

    Williams, Herbert G. (Croydon, S.)

    Storey, Samuel

    Train, John

    Wills, Wilfrid D.

    Stourton, Hon. John J.

    Tryon, Rt. Hon. George Clement

    Windsor-Clive, Lieut.-Colonel George

    Strauss, Edward A.

    Turton, Robert Hugh

    Winterton, Rt. Hon. Earl

    Strickland, Captain W. F.

    Vaughan-Morgan, Sir Kanyon

    Withers, Sir John James

    Stuart, Lord C. Crichton-

    Wallace, Captain D. E. (Hormey)

    Wood, Rt. Hon. Sir H. Kingsley

    Sueter, Rear-Admiral Murray F.

    Ward, Lt.-Col. Sir A. L. (Hull)

    Young, Rt. Hon. Sir Hilton (S'v'noaks)

    Sugden, Sir Wilfrid Hart

    Wardlaw-Milne, Sir John S.

    Summersby, Charles H.

    Watt, Captain George Steven H.

    TELLERS FOR THE NOES—

    Sutcliffe, Harold

    Wedderburn, Henry James Scrymgeour

    Sir Victor Warrender and Mr.

    Thomson, Sir Frederick Charles

    Weymouth, Viscount

    Womersley.

    Thorp, Linton Theodore

    Whyte, Jardine Bell

    Question, "That the Clause be read a Second time," put, and agreed to.

    5.4 p.m.
    Mr. CAPORN: With regard to the new Clause (Amendments as to residuary legacies to charitable institutions) standing on the Paper in my name and in the names of several of my hon. Friends, I wish to move it with the omission of the last paragraph.
    Mr. DEPUTY SPEAKER (Captain Bourne): I think the hon. Member has forgotten the fact that on the Report stage notice must be given of a proposed new Clause. If the hon. Member's Clause were to receive a Second Beading, he could then move to omit the portion of which he wishes to get rid, but he cannot move the Clause on the Report stage in an amended form.

    NEW CLAUSE.—(Amendments as to residuary legacies to charitable institutions.)
    Section thirty of the Finance Act, 1922 (which relates to residuary legacies to charitable institutions) shall have effect subject to the following amendments: —

    (a) For the words "the expiration of the said year," there shall be substituted "the date of the death of the testator";

    (b) There shall also be added the following words: Whereas certain charitable institutions have suffered hardship due to the deduction of Income Tax at the source from income derived from residuary estates, the Board of Inland Revenue may, on grounds being shown, authorise the commissioners to remit to such charitable institutions such Income Tax as may have been deducted at the source between the date of the death of the testator and the date of the actual payment of the income received by the trustees or executors of the will of the testator.—[Mr. Caporn.]

    Brought up, and read the First time.
    Mr. CAPORN: I beg to move, "That the Clause be read a Second time."
    No doubt my hon. Friend the Financial Secretary to the Treasury, in considering whether or not he can accept the Clause either now or at some future period, will consider whether he can accept it subject
    516
    to the necessary Amendment to omit the latter part of the Clause, which, we realise, goes further than the Treasury would probably be willing to go. It has long been the recognised practice to allow exemption from Income Tax in respect to incomes payable to, or held in trust for, a charity. In 1920, as a result of a decision in connection with a charitable bequest to Dr. Barnardo's Homes, it was decided that a residuary gift was not exempted from liability to Income Tax until the residue had been ascertained and was therefore available for transfer to the charity. As a result of that decision, an Amendment was made in the Finance Act of 1922, whereby the residuary gift was exempt as from one year after the date of the death of the testator. From one year after death until the date of distribution an exemption is in fact now allowed, but that leaves a residuary gift to a charity liable to Income Tax during the year following the death of the testator.
    The real object of our Clause is to permit the exemption to apply to that year equally as it applies to the period after that year. There is no difference in reality between the first year and the subsequent period, and I hope my hon. Friend will look with favour at any rate upon that part of the Clause which would give exemption for the year following the death. I appreciate that the latter part of the Clause would give a right to a return of Income Tax already paid, and I do not think that that would be a reasonable thing to ask. It was for that reason that I did not wish to include it.
    5.8 p.m.
    Mr. SUTCLIFFE: I beg to second the Motion.
    As one who is interested in our voluntary hospitals, I am pleased to be able to speak in favour of this new Clause. Its effect would be to allow our voluntary hospitals and other such institutions to be free of the levying of Income Tax in regard to residual

    517
    estates on any part of their income. If a man leaves a sum to a charity there is often a great delay—and there is bound to be, for no avoidable reason—in winding-up the estate, and because of that I see no reason why the hospital or charity should be penalised by not having the sum free of tax during the first year. Charities are hard hit, as we all know, and anything that we can do to enable them to carry on in a more efficient way than they are doing, ought to be done. In fact many are finding the very greatest difficulty in carrying on at all at the present time, and therefore I think this amendment of the law would be both fair and reasonable.
    The Inland Revenue may suggest that they cannot do without the money. That is a suggestion which is often made in respect to Amendments and new Clauses of one sort and another, but I suggest that in this case the Revenue would not be losing a large amount of money. It is a case where they could spare the small amount which they obtain by this means. In fact I go so far as to say that charitable bequests are to a certain extent dried up because the persons who are making the bequests are aware of this liability. I therefore appeal to my hon. Friend to view this in a broad and sympathetic way and to do his best for these great voluntary organisations.
    5.11 p.m.
    Mr. HORE-BELISHA: My hon. Friend the Member for West Nottingham (Mr. caporn), who moved this Clause, as far as I could follow him gave correctly the history of this matter. The general principle of the law, as he indicated, is that a residuary legatee has no interest in any of the property of the testator until the residue has been ascertained, his right being merely to have the estate properly administered and applied for his benefit when the administration is complete. The effect of this principle in connection with cases where the residuary legatee is a charity came before the House of Lords in a case concerning Dr. Barnardo's Homes. There the administration of the estate and the payment of residue were long delayed, and the House of Lords held that until the date when the residue was ascertained, the charity had no property in any specific investment forming part of the estate or any income there from, and it was not entitled to repay-
    518
    ment of the Income Tax which had been paid. This case came before the attention of the Voluntary Hospitals Committee in 1921, and they made this observation:
    "We think that the law applicable to such cases might well be amended so as to allow a hospital to claim repayment of the tax as from the expiration of the year from the testator's death."
    In accordance with that recommendation, representations were made to the Chancellor of the Exchequer at the time, and the result has been that the recommendation has been embodied in the existing law, in Section 30 of the Finance Act, 1922. Why was the period of one year selected? The period of one year is based on the general rule in administration under which an executor is normally allowed a minimum period of one year in which to pay funeral expenses, specific legacies, and costs of administration. That is why the period of one year was selected, and that is why the recommendation was that the period of one year should be selected. My hon. Friend who moved this new Clause wishes to do away with the period of one year and to allow the charity in question to enjoy the full benefit of the property as from the date of death.
    The second part of this Clause is retrospective. I quite understand that my hon. Friend did not wish to move it, but had to move it, having put it upon the Paper, and attaches no immediate importance to it. I should have made some criticisms upon it, but those I can forgo. I ask the House to observe that the law has carried out the recommendations of the committee. No more was asked for until my hon. Friend put his Clause upon the Paper, and if the law is now to be altered, it cannot be altered in a minor detail of this sort satisfactorily. The whole position of taxation in relation to the prolonged administration of estates would have to be investigated. That position reacts very adversely on the Treasury and therefore, while it is appreciated that my hon. Friend has drawn attention to a particular grievance that he thinks exists, I hope he will be satisfied with my assurance that, if and when the law upon this subject is reviewed by the Chancellor of the Exchequer, what he has said will be taken into account.
    Mr. ERNEST EVANS: Will the hon. Gentleman tell us what the acceptance of this new Clause would coat?
    Mr. HORE-BELISHA: I am afraid that I have no estimate of it, and I do not think that it would be easily possible to obtain an estimate. It would be a considerable sum in some years and a small sum in other years.
    Mr. CAPORN: In thanking my hon. Friend for the explanation that he has given and hoping that the Chancellor of the Exchequer will be able to review this matter and do what some of us think is fight, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Recovery of sur-tax due from beneficiary under discretionary trust.)
    (1) The provisions of this section shall have effect in relation to sur-tax due from any person (in this section referred to as the "beneficiary") to whom, or for whose benefit any income or any capital may in the discretion of some other person be paid or applied under a trust.
    (2) If any sur-tax charged in respect of the income of the beneficiary is not paid before the expiration of six months from the date when it became due and payable, the Special Commissioners may at any time thereafter, so long as the said sur-tax remains unpaid, cause to be served on the trustees of the trust a notice in writing that the said surtax remains unpaid.
    (3) Where such a notice as aforesaid is served in accordance with the provisions of this section on the trustees of the trust it shall be the duty of the trustees, as soon as may be, and, if necessary from time to time, to pay the Commissioners of Inland Revenue in or towards satisfaction of the said surtax from time to time remaining unpaid any income or capital which, by virtue of any exercise of the discretion under the trust, the beneficiary may become entitled to receive or to have applied for his benefit.
    (4) Any payments made out of income by trustees on account of sur-tax in respect of which a notice under this section has been served shall be deemed for all the purposes of the Income Tax Acts to represent income paid to the beneficiary.
    (5) Any sum which the trustees are liable to pay by virtue of the provisions of this section shall be recoverable from them as a debt due to the Crown.
    (6) Service of any notice under this section may be effected by sending it by post to the person on whom it is to be served by letter addressed to him at his usual or last known place of abode, and, where there are two or more trustees under the trust,
    520
    the notice shall be deemed to have been validly served upon the trustees if served upon any one of them, but nothing in this section shall render a trustee personally liable for anything done by him in good faith and in ignorance of the fact that such a notice has been served.—[Sir G. Hurst.]
    Brought up, and read the First time.
    5.18 p.m.
    Sir GERALD HURST: I beg to move, "That the Clause be read a Second time."
    This proposed new Clause raises the question of the beneficiary in whose case a discretionary trust has been exercised by trustees and who has no other considerable source of income than the income he derives from the discretionary trust, but who spends the whole of his income under that trust without making any provision for the payment of Surtax by himself. As the law stands at present, the Crown has no effective remedy for recovering Surtax from a beneficiary in those circumstances. The Crown cannot take judgment for a judgment would be fruitless if the beneficiary enjoys no other source of income. Nor has the Crown any remedy against the trustees, because they themselves are not liable for Surtax and they have no power to intercept income payable to a beneficiary in order to meet Surtax. An example of the abuse to which the existing state of the law gives rise came before the courts in April last year in the case of Sir Thomas Beecham. This gentleman enjoys a generous income of £18,000 a year, but, being a prodigal without principle, he allowed arrears of Surtax to accumulate to the extent of £71,000. A case of that sort is obviously against public policy. It is against public policy that a rich man who has no sense of public obligations should be utterly immune from Surtax while the great mass of his fellow citizens have to pay their share of the common burden.
    I therefore raised this question on the Finance Bill of last year. The Chancellor of the Exchequer demurred to the actual form of the proposed new Clause which we suggested then, but he promised to attend to the matter in the course of the following year. The proposed Clause now on the Paper provides what I think the House will regard as fair and sufficient machinery to meet this abuse and to put an end to it. No penalty is imposed on the beneficiary and

    521
    the discretion of the trustees is left unimpaired. If the trustees make payments to a beneficiary and the beneficiary allows arrears of Surtax to accumulate, and if the trustees in those circumstances decide to allocate further capital or further income for the benefit of that beneficiary, then, if notice has been served upon them by the Special Commissioners under this new Clause, it will be the duty of the trustees to intercept any future payments, whether capital or income, to the beneficiary and to meet the demands of the Special Commissioners. This new machinery has been carefully devised, and I feel confident that it will be acceptable to the House. It is a useful and fair Clause which will, I am sure, be appreciated by the country.
    5.20 p.m.
    Major MILLS: I beg to Second the Motion.
    This proposed new Clause is a revised Version of a new Clause with a similar object which my hon. and learned Friend moved a year ago, but which the Chancellor of the Exchequer was not able to accept as drafted. It is designed to make it the duty of trustees—not in an ordinary trust but in a discretionary trust—to withhold from the beneficiary money which they would otherwise decide to pay him if his Sur-tax is more than six months in arrear and if they have been served with a notice that this is the case. It is not right that a rich man should be able to escape payment of Surtax in this way. Ordinary taxpayers meet their obligations honestly and honourably and with great difficulty, and this is a leakage that ought to be stopped. I therefore hope that my hon. Friend the Financial Secretary will be able to accept the new Clause over which he has had a year to think.
    Mr. DAVID MASON: I hope that the Financial Secretary will accept this new Clause which seems to me to be a very fair proposal.
    5.22 p.m.
    Mr. HORE-BELISHA: I gathered from the cheers that greeted several of the remarks made by my two hon. Friends that this proposed Clause meets with the approval of the House. It is, as my hon. and learned Friend said, designed to meet the ease of an improvident person who is a beneficiary under a discretionary
    522
    trust and who spends all the money and fails to pay his Surtax. This new Clause will enable the Inland Revenue to recover that tax. It is an admirably drawn Clause. It is true, as the hon. and learned Gentleman said, that my right hon. Friend promised to consider the matter last year when a similar new Clause was not so well drafted. He has had a year in which to consider it, and it now meets with his approval. I am therefore authorised to thank my hon. Friends for having drawn public attention to this matter and for having made possible a change in the law which is so desirable.
    5.23.p.m.
    Mr. BOOTHBY: I entirely approve of this proposed Clause, and we are grateful to the Government for accepting it. It is a necessary and overdue provision. One gentleman, Sir Thomas Beecham, has been named, though not in a particularly hostile sense, by the hon. and learned Member who moved the Clause. He said that he was a man who was lacking in public spirit and I think that it would not be well for it to go out to the country that this House was of that opinion and that it singled out one British subject for special attention. Sir Thomas Beecham may not have been very provident in regard to taxation affairs, but his record shows that he is not entirely without public spirit.
    5.24.p.m.
    Mr. BRACKEN: I am so moved by the eloquent words of my hon. Friend that I feel bound to join with him in what he has said. Sir Thomas Beecham may not have been very provident, but he is certainly a person who has shown great public spirit, and, had a succession of Governments fulfilled their obligations to subsidise opera, he would no doubt have been able to pay the Inland Revenue anything he is alleged to owe them.
    Clause added to the Bill.

    NEW CLAUSE.—(Temporary remission of land tarn in respect of agricultural property.)
    (1) So much of the amount assessed in each of the five years ending on the twenty-fifth day of March, nineteen hundred and thirty-eight, in any land tax parish on account of the unredeemed quota of land

    523
    tax charged against that parish as is assessed upon agricultural property therein shall be remitted
    (2) Nothing in this section shall affect the terms of any contract for the redemption of land tax entered into under section thirty-two of the Finance Act, 1896, a amended by section sixty-four of the Finance Act. 1921.
    (3) In this section the expression "agricultural property" shall have the same meaning as is assigned thereto by section twenty-two (Definitions) of the Finance Act, 1896.
    (4) This section shall be deemed to have had effect as from the twenty-fifth day of March, nineteen hundred and thirty-three. —[Brigadier-General Clifton Brown.]
    Brought up, and read the First time.
    6.26 p.m.
    Brigadier-General CLIFTON BROWN: I beg to move, "That the Clause be read a Second time."
    If I had my way, I should like to see that Land Tax was compulsorily redeemed and agricultural land freed from that unfair burden. The tax is very unfair in its incidence. One of the reasons advanced why the Government should have five years to look into it is the extraordinary confusion that exists all over the country. That would be borne out by every valuer who tries to unearth the ramifications of little bits of land and the owners liability to Land Tax. It would be an advantage to have a moratorium for five years. My proposed Clause asks that only agricultural land should have that moratorium so that the Government can find out where this tax is levied on purely agricultural land. It would be a great advantage to agriculture if the burden were taken off. The total amount collected from Land Tax is £600,000 a year, but the amount on agricultural land is only about £200,000. It is not asking much to help the industry to that extent at the present moment. The tax is chargeable on the full annual value at a rate that must not be less than one penny or more than one shilling. The more a property is improved the heavier the tax becomes, so that it is a direct tax on development, and that is the last thing we want in times like these. It is payable out of rent received and to that extent reduces the powers of the owner to develop. There are many people who have redeemed their Land Tax, and I am glad to say that I am one of them, but that is no reason why those who have not redeemed it should not be fairly
    524
    treated. The argument may be put up that as so many people have redeemed the tax others should be able to do it, but in these days they cannot do it with the condition of agriculture what it is.
    5.29.p.m.
    Lieut.-Colonel ACLAND-TROYTE: I beg to second the Motion.
    I need hardly remind the Government of the serious state of agriculture and to assure them that a small concession of this sort would be very much welcomed by agriculturists generally. I do not say that it would restore agriculture to prosperity, but it would be a small help and would encourage landowners to develop their property.
    5.30.p.m.
    Lord APSLEY: I would like to support this new Clause and to ask the hon. Gentleman whether he really does not think it is time this tax was taken away altogether? It is a very antiquated impost, causes a lot of administrative trouble, and costs almost as much to collect as it brings in. It was originally imposed by King Alfred to keep out the Danes. The Government could do that just as well by putting a little more on bacon. I really think it is time that this small and tiresome tax, which has only been kept on owing to political differences between industrialists and landowners in the last century which no longer exist now was removed, a proceeding which would enable farmers to get on a little better.
    5.31.p.m.
    Mr. E. EVANS: I have no objection to the new Clause as far as I understand it, but I am wondering whether any Member would be good enough to give us a little information as to what really is the burden of this Land Tax. I notice that all the three hon. Members who have spoken in support of the Clause have referred to the heavy burden which Land Tax lays upon landowners. My impression is that the burden upon landowners is comparatively small. In order that I may be in a position to vote quite freely and independently upon the merits of the case I should be glad to have a little more information of the burden of which we have heard.
    5.32.p.m.
    Mr. C. WILLIAMS: I will enlighten the hon. Member as to the burden. The

    525
    burden is not so much the amount of the tax as that there are a certain number of small sums that have to be paid out. No one knows where he stands in this matter of the Land Tax, and the real burden arises from the charges of a lot of greedy second-rate lawyers, who make a good deal of money out of dealing with the claims. That is the real burden.
    Lord APSLEY: As the hon. Member has asked what the burden is and has addressed himself to me, among other Members, may I reply? In my own case with a small property with a gross rental of £800 a year the Land Tax is £24, and that £24 could be better spent in paying two men to repair a stone wall.
    5.33 p.m.
    Mr. HORE-BELISHA: We may as well get the beginnings of this matter right. The Land Tax is an old tax; it is not quite as old as my Noble Friend says, but it was made perpetual in 1798, and takes the form of a fixed quota payable by the parish as a unit. The tax is limited to Is. in the £, and is remitted entirely when the total income of the owner of the land does not exceed £160 per annum, and one-half of the tax is remitted when the owner's income, though exceeding £160, does not exceed £400. Therefore, it is not upon the poorest section of the community that this tax rests. The fixed quota payable by the parish may be reduced by redemption, when an owner exonerates his land by payment of a capital sum equivalent to 28 years' Land Tax assessed on his land. My hon. Friends propose in this Clause that the tax should be remitted in the case of agricultural properties in each of the next five years. But there are persons who have redeemed the tax, in accordance with the terms I have read out, and on the distinct understanding that the tax was to be perpetual. What would their position be in that case? They would have a distinct injustice, and be entitled to come to the Treasury to ask for their money back, having paid it under complete misapprehension of the facts. I think that on that practical ground alone my hon. Friends will see that their Clause cannot be accepted.
    Some delusion also exists in their minds as to the cost which would be involved by accepting this Clause. They are calmly inviting us to forgo no less than £2,500,000. Now that the hon. and
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    gallant Member for Newbury (Brigadier-General Brown) knows that he was wrong in thinking that the cost would be so small perhaps he will refrain from pressing the new Clause. Everybody appreciates the plight of agriculture, but, after all, agriculture has obtained certain reliefs, for instance, it is free from rates, and I do not think this would be the most practical form of giving further assistance to that great industry. If we desired to save £2,500,000 from the taxpayers' pockets in the course of the next five years I think we might find some more constructive means. I trust I have said enough to show my hon. Friends that while I have every sympathy with their general objective the actual proposal which they have made cannot be accepted.
    Mr. C, WILLIAMS: Does the hon. Gentleman really mean that agriculture bears a burden of £2,500,000 arising from this tax each year?
    Mr. HORE-BELISHA: No, my hon. Friend will notice that the Clause would remit the tax for the next five years, and the sum is £500,000 per annum.
    Brigadier-General BROWN: The whole income from the Land Tax is about £600,000 a year, and all that this new Clause seeks to do is to relieve agricultural property. Three-quarters of the Land; Tax comes from cottages and land which has been developed, and the sum involved in this new Clause would be only about £200,000 a year.
    Mr. HORE-BELISHA: Five-sixths of the tax is on agricultural land. I am advised that the figures are exactly as I gave them.
    Lord APSLEY: Has the hon. Gentleman any idea—
    Mr. DEPUTY-SPEAKER: Order! I would remind hon. Members that we are not in Committee.
    5.38 p.m.
    Mr. EASTWOOD: May I add my mite to this discussion? I appreciate that, as far as this year is concerned, it may be difficult for the Government to accept this new Clause. As far as I can gather, there would be difficulties in deciding how much of the money raised by the tax comes from agricultural land and how much does not. The object of this new

    527
    Clause is to draw attention to the present position. The Land Tax, which has been unaltered now for more than a hundred years, is really a burden on some people. It falls unevenly, it falls unjustly, and it is a matter which no Government up to now has been able to tackle. I do not want to go outside the bounds of order, but I wish to make a suggestion to the Government. The great difficulty in dealing with this question is that if Land Tax were abolished at once it would create an injustice for the large number of people who have redeemed their Land Tax during the last 25 years, originally at 30 years' purchase and now at 25 years' purchase. The Land Tax really brings in very little to the Government. The figures for last year show that it was something like £600,000, of which roughly £200,000 had to be remitted to people who did not come within the limit. There has to be a great deal of expense to produce little revenue.
    I make this suggestion humbly to the Government; if they would do something on these lines it would satisfy those who are proposing this new Clause. The suggestion is that from next year on every sale of land subject to Land Tax there should be compulsory redemption at 25 years' purchase. The following year let there be compulsory redemption at 24 years' purchase; the next year 23 years' purchase; and so on. In that way this uneven tax, which has been untouched for so long, which is hopelessly out-of-date, would automatically come to an end in 25 years without. any injustice on those who had redeemed their Land Tax during the past years. I would add this observation as an inducement to the Financial Secretary. At the present moment the* Land Tax brings about £600,000 a year, but with compulsory redemption on sale, which -would not hurt any vendor at all, we should within the next two or three years get probably something like £2,000,000 a year instead of £600,000. If the Financial Secretary will undertake to consider something on these lines my hon. Friends and I would be more than satisfied.
    5.42 p.m.
    Mr. MORGAN JONES: I should very much regret it if no words were spoken from this side in this controversy, and when we came to discuss this matter next
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    year that fact were cited against us. I want to make it clear that we on this side are very glad indeed that the Financial Secretary has stood firm and has not yielded to this clamant demand from his supporters. We are told that it is only the small sum of £600,000 a year which is involved. May I remind hon. Members opposite that this year they have taken £400,000 from secondary school children? Why should we have a claim for this remission of taxation at a time when everybody else is being mulcted in the heaviest possible burdens? The hon. and gallant Member who moved the new Clause said that the more that was spent upon property the more there had to be paid under this tax. That is quite probable; just as a ratepayer who spends money on his house finds that he has added to its rateable value. I do not see that that argument has any special bearing upon this particular tax, and certainly it is no adequate argument for its remission.
    Brigadier-General BROWN: In view of the fact that the Opposition have announced that they are going to support the Government, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Amendment of Rule 8 of No. V in Schedule A.)
    Rule 8 of No. V, in Schedule A, as amended by section twenty-five (Amendments of Rule 8 of No. V in Schedule A) of the Finance Act, 1924, shall have effect as if at the end of paragraph (2) thereof there were added the words:
    "Provided that the expression 'replacement' shall (in cases in which at the same time as such replacement as aforesaid is effected improvements or additions are also executed in respect of which an addition is made to the existing rent) include such proportion of the total expenditure incurred as is fairly attributable to the cost of the replacement of the accommodation previously provided."—[Sir G. Cowrthope.]
    Brought up, and read the First time.
    Colonel Sir GEORGE COURTHOPE: I beg to move, "That the Clause be read a Second time."
    I think a few sentences will serve to explain and justify this Clause. It does not ask for any remission of taxation, but seeks to secure uniformity of interpretation and practice in the administration of the law as it stands now. Briefly,

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    the position is this: when an owner of land is obliged to replace existing buildings in order to maintain his rent—without increasing it—he is entitled under the existing law to include that expense in (his maintenance claim, and it is treated as a statutory allowance for the purpose of arriving at Income Tax assessment; but if he puts up an improvement which gives rise to an increase in rental value, whether it is rent to a tenant or is the assessed annual value of the property in his own occupation, he cannot include that expenditure on improvements in his maintenance claim. I think that that is a fair statement of the existing position, and it has not been disputed.
    There are, in practice, a great number of works which fall partly within one category and partly within the other, and there is a great lack of uniformity in the method of treating them in the districts of His Majesty's inspectors of taxes. I can, perhaps, make clear what I am aiming at by giving a very common form of illustration. Upon a dairy farm the owner finds it necessary, in order to maintain his rental value, to rebuild and to replace an existing cowshed. It may be that the sanitary inspectors have said: "You really cannot go on producing milk for sale in this out-of-date building; you must replace it." That replacement, if it stood alone, would be included in the owner's maintenance claim for the purposes of Schedule A assessment for Income Tax; but his tenant says to him: "When you are doing this job I should like you to make a good job of it," asks him to put in a water supply and to add, we will say, a mixing-trough, where food for the cows can be mixed, at one end of the building, and, possibly, at the other end, a sterilising room in which to keep the churns and vessels clean. These are improvements, and cannot be included in the maintenance claim, but in some districts there is a division, which we seek there should always be, between the expenditure upon replacement and the expenditure upon improvement.
    In other districts, the practice is to hold that if there is any alteration, enlargement or improvement, when an existing building is replaced, that ceases to be replacement, and consequently the owner who incurs the expenditure is debarred from the right, which he admittedly has if he does nothing beyond
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    replace, of including the expenditure in his maintenance claim. By this Clause I ask that the practice which is common in many districts should be the correct and universal practice. That is the only purpose of the Clause.
    5.48 p.m.
    Brigadier-General CLIFTON BROWN: I beg to second the Motion.
    I want to emphasise the point that the object of the Clause is only to make clear what, I am quite sure, is really wanted by the officials, who are very sympathetic in regard to maintenance claims. It is rather difficult to interpret rules. You must allow the inspector on the spot to judge how much of the work that has been done to the cowshed is new work and how much is repair, in respect of which you ought to be allowed to make: a claim. The Amendment would just allow inspectors to use their judgment as to what was fair and what was not. We ask for nothing more and nothing less. The owner of an estate or cottages knows that there are many things which have to be done; for example, where a water-supply is wanted. At the begining of this year I had to replace about a quarter of a mile of pipe for water supply to cottages and there were two or three cottages outside that which were added on to that water supply. I do not anticipate any trouble with my inspectors in including a fair amount of that in my maintenance claim. There are cases where an inspector says: "I am not entitled, under the rule, to allow this. Therefore, you will have to pay the whole thing."
    5.50 p.m.
    Mr. HORE-BELISHA: I will tell the hon. and gallant Baronet who moved this Clause exactly what is the legal position. A landlord who replaces farmhouses or part of a farmhouse can include the expenditure thereon in his maintenance claim. If, in addition, he makes the expenditure upon additions or improvements, such additional expenditure cannot be included. He can, however, include in his maintenance claim the amount expended on replacement, that is, the proportionate part of his total outlay properly applicable thereto, irrespective of whether the rent is increased or not. That is the law.
    In moving this Clause, the hon. and gallant Baronet merely wishes to reiterate

    531
    what the law now says. The hon. and gallant Member for Newbury (Brigadier-General Brown) appreciated that the law is as this Clause endeavours to state it, and the Clause is therefore redundant. The complaint of the hon. and gallant Baronet was of a lack of uniformity throughout the country. I am not in possession of any information which would confirm that, and it is open to doubt whether there is a lack of uniformity. He is so well acquainted with all agricultural matters, and he evidently has something in mind; I should therefore be very grateful to him if he could supply me with concrete instances. I promise that everything possible shall be done to see that uniformity prevails. I suggest that he might withdraw the Clause which is, from a legal point of view, quite unnecessary.
    Sir G. COURTHOPE: The speech which the Financial Secretary has just made may possibly secure uniformity of practice. I will bring some instances of non-uniformity to the notice of the Treasury. I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Amendment of Rule 4 of No. VII in Schedule A.)
    Rule 4 in No. VII. in Schedule A to the Income Tax Act, 1918, shall have effect as if the words "or any land" were added after "house," in line 3, and the words "or the land" were added after "house," in line 7.—[Brigadier-General Brown.]
    Brought up, and read the First time.
    5.53 p.m.
    Brigadier-General BROWN: I beg to moved, "That the Clause be read a Second time."
    May I explain how the rule works? You get relief for an empty house, and we propose to add "or any land." Schedule A reads:
    "Tax under this Schedule shall be charged on all lands, tenements and hereditaments, whether occupied at the time of assessment or not, hut if any house is or becomes unoccupied for the year, etc."
    We desire to add, after the words "any house," the words "or any land." The object of the Amendment is to apply to derelict land the practice that is already in existence in regard to empty houses.
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    The agricultural situation makes the position very acute for many farm lands, and I have been asked to move this Clause owing to the difficulties that the Chairman of a Board of General Commissioners have found in trying to assess, when land has been left derelict, and when they have had to re-assess it before the quinquennial valuation came on, on appeal by the owner. They find that it is very difficult to give, perhaps in the second year, what is a fair assessment for the rest of the quinquennial period, not only from the point of view of the owner of the land, but from the point of view of whether it will bring in more money to the Government if the land is let in the meantime.
    When land is unlet, it is deemed by Income Tax authorities to be in the occupation of the owner, who is liable under Schedule A on the full assessment. Relief can only be given by reassessing under Schedule A for the rest of the quinquennial period. Various conditions are given. It is very common in the Eastern Counties to see grazing by the river for which one used to get a good rent, and which now has become unletable. The owner is assessed on the value of that land which does not let, and he appeals against the assessment. If the owner is a farmer, he puts two or three cattle on that land to occupy it, and then he can come under Schedule B, and, although the land is practically derelict he can get off altogether under claims for farm losses. If the owner is, as very often happens, a charitable institution or a widow, and cannot let the land, or cannot afford any stock, the owner will be liable to pay the whole of the assessment under Schedule A, and that is simply a dead loss. If land is letable at any time, under the proposed Amendment the Treasury would at once get the full assessment. The chairman of the Board of Commissioners points out that it is impossible for them to re-assess derelict land. I hope that the Financial Secretary to the Treasury will give us a chance and will have this point looked into. I think that he will find that it is advantageous to the Treasury, and that the Treasury will support him.
    Lieut.-Colonel ACLAND-TROYTE: I beg to second the Motion.
    5.59 p.m.
    Mr. T. WILLIAMS: Perhaps it would have been better if the Financial Secretary to the Treasury had replied upon this Clause, although we can anticipate what the reply would have been. The hon. Member for Caerphilly (Mr. M. Jones) suggested a short time ago that some of the proposed new Clauses were, in the circumstances and in some instances, rather impertinent on the part of the hon. Members who were moving them. I will not be quite so harsh, but I want to say that the hon. and gallant Member for Newbury (Brigadier-General Brown) is the finest example of class loyalty in this House. I have nothing but admiration for the marvellous activity that he always displays on behalf of the landlords. I am not sure, however, that the cases which he brings forward from time to time are quite legitimate. This is another example to which the Financial Secretary will not find it very difficult to reply, particularly if he bears in mind some of the previous cases which have been turned down. A landowner may have 20 or 30 farms, or he may have three or four farms, for which he charges an economic rent. He determines what is an economic rent—possibly £l, 30s. or 35s. per acre. He may lose one of his farmers, and the farm becomes available for a new tenant, but the owner of the land is the one person who can fix the rent. The would-be farmer can either take the land at the rent determined by the landowner or he can leave it—
    Brigadier-General BROWN: The landowner has to pay the tax until the land is let.
    Mr. WILLIAMS: The landowner may feel that, owing to the policy Of the Government with regard to subsidies, quotas, import restrictions, and Customs duties, agricultural produce is going to fetch a much higher price. It is true that that is an assumption, and the assumption also is that the poor, miserable consumer will have to pay the price. The hon. and gallant Gentleman is only concerned at the moment with the rent that the owner obtains, or hopes to obtain. If the owner is unable to find a farmer willing to pay, say, 35s. an acre for the land, he is prepared to leave it idle for a time, and therefore he does not receive the rent; and the hon. and gallant Gentleman feels that it is a hard-
    534
    ship on the owner that he should be called upon to pay Income Tax on rent which he does not receive. As compared with property in the middle of a town, it may be a hardship; it is one of those anomalies of which the Financial Secretary is constantly talking; but really it is no hardship at all. It merely means that, if this relief were given to the worst kind of landowner in a rural area—I exclude from my argument the best kind— he would simply hold up the land until he could find a farmer who would pay the rent he desired to exact, just as the property owner in the middle of a town would hold up land ripe for development until he could get the price that he desired. I think the Financial Secretary will agree that that would be a step back into the dark ages, and I am sure that his Liberalism would prevent him from making this concession even though he thought it was financially sound.
    I do not see how any Member of the House could encourage landowners, or anybody else, to keep land out of cultivation merely for the purpose of exacting a higher rent than the land is actually worth, and so compel the farmers to ask the Farmers' Union to press the Ministry of Agriculture to impose more duties upon imported foodstuffs, thereby increasing their price and making agriculture prosperous so that the landowner may exact the rent that he originally demanded. I hope that the Financial Secretary will tell the hon. and gallant Member that, although he is a loyal member of his particular class, his determination is not to be rewarded to-day, and that the hon. Gentleman will not only resist this Amendment, but will warn landowners that they have more than enough already, and that, until the unfortunate victims of the means test have been relieved of the burdens which have been inflicted upon them directly and indirectly during the last few years, the landowners are not to be further relieved.
    6.6 p.m.
    Mr. MICHAEL BEAUMONT: The hon. Member for Don Valley (Mr. T. Williams) has demonstrated, with his customary charm of manner, the feeling on matters rural and agricultural which persists on the other side of the House. There may be arguments against this proposed new Clause, but they are not the arguments

    535
    advanced by the hon. Member, because the case cited by him simply does not happen. Unfortunately, it is not the landlords who settle what the rent shall be; I wish it were; it is the economic condition of the country and the state of the markets that settles what the rent of land shall be. All over the country today farms are let at rents which not only the landlords but the tenants and all concerned know to be uneconomic. That is because those rents are the only ones which under the prevailing conditions farmers can afford to pay. When the hon. Member talks about landlords keeping farms idle in order to exact higher rents, he must know that he is talking the most complete nonsense. I say that without any desire to be offensive, but it really is a hypothetical case which has been produced from the agile brain of the hon. Member.
    The case of the rural landlord is utterly different from that of the town landlord. The town landlord may choose to hold up a plot of possible building land, and the land is not any the worse for building purposes even if it is unoccupied and unused for 10 years. But if a farm is left unfarmed for years, or even months, the situation is very different. The whole value of the farm will have disappeared, and, however much agriculture might boom, however much the beneficent policy of the Government is going to benefit the rural community—and I feel sure that the Government will take note with pleasure of the hon. Gentleman's optimistic outlook as to the result of their policy—a farm left unoccupied for any time would not command an increased rent which the landlord cannot get now. That policy simply would not pay any landlord in England, and there is no rural landlord in England who could afford to attempt to pursue it, even out of spite, so that the whole argument of the hon. Member falls to the ground.
    This is not necessarily a question of benefiting one class or another; the object is merely to try to see that the landowner, who has always been singled out by hon. Members opposite and below the Gangway for savage and differential attacks, is placed on a par with the ordinary average member of the community, and is not taxed on
    536
    income which he does not receive. Surely, even the Socialist party have not gone so far as to wish to tax people on money that they do not get. If the hon. Member wishes to put a tax on unoccupied land, that would be a site value tax, quite different from Income Tax, which, as its name implies, is supposed to deal with income. Our contention is that, if there is no income, there should be no tax. That is the beginning and the end of the proposed new Clause, and for that reason we commend it to the Government.
    6.11.p.m.
    Captain HEILGERS: I should like to ask the Financial Secretary to deal with the difference between the case of an unoccupied house and the case of unoccupied land. The unoccupied house escapes taxation, but derelict land has to pay. The house always has a potential value, but to my mind derelict land has none except in the fairy tales of the hon. Member for Don Valley (Mr. T. Williams).
    6.12.p.m.
    Mr. HERBERT WILLIAMS: I should not have taken part in this Debate among landowners but for the speech of the hon. Member for Don Valley (Mr. T. Williams). He desires that people shall be taxed on an income which they have not got in order to force them to let their land at an uneconomic rent. I wonder what line he would take if the coalminers whom he represents were engaged in a dispute, and it were seriously proposed to impose upon them an Income Tax in respect of the wages which they were not receiving, for the purpose of driving them back to work. That seems to me to be a complete analogy—
    Mr. T. WILLIAMS: The hon. Member ought to know, if he knows anything at all about these matters, that that is exactly what happens in every trade dispute.
    Mr. H. WILLIAMS: It never happens at all in any trade dispute. No person is assessed for Income Tax on an income that he has not had, and, therefore, if a coalminer is not at work, the wages that he has not had during that period are not included in the return which he makes to the local inspector of taxes.
    Mr. T. WILLIAMS: I wonder whether the hon. Member has ever heard of a lock-out, where mineowners, as well as other employers, have told workpeople, "Work is available for you at my price"?
    Mr. H. WILLIAMS: Even then they are not liable to Income Tax during the period for which they are locked out. We are now talking about Income Tax on income that has not been received, and the hon. Member is proposing that landowners—I am not one of them, except to the extent of the house in which I live—shall be taxed on income which they do not receive. What would the hon. Member think if, during a trade dispute, the people whom he represents were made liable to Income Tax on the wages which they would have earned if they had stayed at work, in order to coerce them to accept their employer's terms?
    6.14.p.m.
    Mr. C. WILLIAMS: I do not think that my hon. Friend the Member for Aylesbury (Mr. M. Beaumont) and my hon. Friend the Member for South Croydon (Mr. H. Williams) have been quite fair to the hon. Member for Don Valley (Mr. T. Williams). After all, the hon. Member for Don Valley is one of the expert authorities of the Socialist party on the matter of agriculture, and, having arrived at that position, how could he be expected to know, without his brief, that when a farm is unlet it cannot be farmed? He cannot possibly know these things. Had my hon. Friends watched the hon. Gentleman, they would have found that out, and would not have omitted to note that obviously Transport House has failed. It is very unfair to blame any front-bencher who speaks merely from briefs, and I would ask my hon. Friends to be a little kinder to the hon. Gentleman.
    6.15.p.m.
    Mr. HORE-BELISHA: The Clause which we have been discussing proposes to extend to unoccupied land the relief from Income Tax which is at present given in respect of unoccupied houses. My hon. and gallant Friend the Member for Bury St. Edmunds (Captain Heilgers) has asked me to deal with the difference between an unoccupied house and unoccupied land. Anybody can tell what is an unoccupied house. It is there for all to see. The word has a popular connotation, and there is no
    538
    difficulty whatever in determining the difference between a house that is occupied and a house that is not occupied. When you apply the same adjective, "unoccupied," to land, as my hon. Friends do by this Clause, you come up against an insoluble difficulty. What is unoccupied land? Is it land that is lying fallow? Obviously, that should not be exempt, because, in accordance with agricultural practice, it is left fallow at pertain seasons, or in certain years. Is land which is ripening for building purposes in order in due course to bring in a harvest to its owner to be exempt on the ground that it is unoccupied? Are the lands that are attached to a mansion for the purpose of amenities to escape taxation on the ground that they are unoccupied? I am sure my hon. Friends will see that it will be quite impossible to adopt this adjective in the ease of land. For that reason, the Clause could not be accepted.
    The fact, however, that it would not be possible to adopt the adjective should not make us any less conscious of the grievance which my hon. Friends have expressed. There may be a grievance where it is impossible to let a farm, and it may be practicable to meet that grievance within the terms of the existing law. I, therefore, invite my hon. Friends to meet the officials of the Inland Revenue and to discuss the matter with them. An injustice may here and there be done temporarily, especially in times of difficulty, and, if the grievance can be met within the existing law, it will be satisfactory to my hon. Friends. I agree with the hon. Member for Don Valley (Mr. T. Williams) that as long as the hon. and gallant Gentleman the Member for Newbury (Brigadier-General Brown) and those who are associated with him remain in the House the interests of the land will not be forgotten and no cause which they have had at heart will go undefended. They have put up a series of proposals all of which have had some substance in them, and I trust that they will be satisfied with the invitation that I have extended to them.
    Brigadier-General BROWN: I thank the hon. Gentleman very much for his invitation and beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE—(Deduction from Estate Duty in respect of improvements to agricultural property.)
    Where an estate in respect of which Estate Duty is payable on the death of a person dying after the commencement of this Act comprises or consists of agricultural property there shall be deducted from the value upon which Estate Duty is payable in respect of the agricultural property an amount equivalent to any increment in the value of such property which is attributable to improvements effected by the person deceased during the ten years previous to such person's death.—[Lord Apsley.]
    Brought up, and read the First time.
    6.18 p.m.
    Lord APSLEY: I beg to move, "That the Clause be read a Second time."
    I am not sure that the hon. Member for Don Valley (Mr. T. Williams) will like this Clause either, and, if the hon. Member for Caerphilly (Mr. Morgan Jones) was in his place, I am certain that he would not like it. The hon. Member for Don Valley is, after all, an agriculturist though not a farmer yet, and he may see the advantages that the Clause would bring not only to landlords but to tenants. The hon. Member for Caerphilly would, I am sure, say that this is purely an Amendment to benefit the landlord at the expense of the poor man who is out of work. The trouble is that he has not yet got out of the Whig mentality which has crippled some portions of the Labour party, as it has done the Liberal party for many years. But I believe a new movement is on foot and that this old Whig idea, which is so narrow and restricted, is being thrown overboard. Taxation of the rich is all very well up to a point, but, when you get beyond that point, you do not only soak the rich; you soak the poor. That was discovered as early as the days of Solon in Athens. Solon was supposed to be a very wise man, but in reality he was a Liberal. Consequently he has been well written up by the historians of the nineteenth century, who were Whigs. If you go into his measures, they were nothing more or less than like those brought forward by a series of Liberal statesmen, including the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and they had exactly the same effect on finance and unemployment in Athens as they have here to-day.
    540
    This Clause is one small contribution to try to reverse that policy and to get back to an honest and sound economic one. It is not meant merely to benefit the landlord. It is to benefit the good landlord at the expense of the bad one. I do not wish to press it to a full conclusion if the Financial Secretary will assure us that the whole question of maintenance claims will be seriously gone into by the Government with a view to giving the landlord fair play. No one can pretend that present measures give the landlord any chance of keeping an estate in anything like proper order, or keeping the right number of men in employment, or helping the tenant to do so. As the law is framed at present he is, first of all, given an arbitrary allowance which he can deduct from his Income and Surtax. The allowance is, I think, a quarter if the property is under £100 a year, then a fifth and then finally a sixth, and it stops there. If you spend more than that allowance, which almost every landlord has to do, you have to deduct it from what you spend, and then you have to take an average of five years—a measure which has been abandoned in ordinary business as being unworkable—and on that you pay your Income Tax and Surtax. The effect of that is that the only man who scores is the small owner of property under £100, who spends nothing in maintenance at all, and he can deduct £25 as his maintenance claim. That, of course, is a contributory reason for the growth of slums, because it is essentially the small man owning one or two cottages who does practically no repairs who is the most difficult proposition to deal with in the clearance of slums. The man who tries to keep his property, whether small or large, in proper order is not in any way getting a fair deal from the Government as far as maintenance claims go.
    The Clause is framed with the idea of giving a good landlord an incentive to make further improvements on his property, not only to keep it actually in repair, but to improve it and get it better year by year, thereby giving more and more employment. This is a case where the taxation of the rich is paid by the poor, because there are many agricultural labourers out of work for the sole reason that landlords as well as tenants cannot afford to keep them employed in keeping their estates up properly. If we

    541
    could get this Clause, or something in its nature, adopted this year, or even next, it would give a great incentive to the improving of agricultural estates all over the country. After all, when an owner dies and 50 per cent, is taken off the capital value and goes into the coffers of the Exchequer, the heirs have to get on as best they can after having paid Death Duties-. It is not fair that, when work has been done in improvements, maintenance cannot be claimed on what has been paid out for the preceding 10 years and that the expenditure should be deducted from Death Duties when they have to be paid.
    6.26 p.m.
    Lieut-Colonel SPENDER-CLAY: I beg to second the Motion.
    I believe this would be in the national interest, and I believe it would cost very little money. It would undoubtedly give increased employment, and it would improve the standard of equipment of agricultural holdings throughout the country. There is no doubt that at present agricultural land in many parts of the country is starved for capital, and the Clause would enable a great deal more money to be spent on improvements. There is a tendency now for even a good landlord, if he is fortunate enough to have any ready money, to hand it over to his heirs while he is still alive in order to reduce the incidence of Death Duties. If money spent on improvements in this way were allowed, I feel certain that every landowner who had the power to do it would feel am impulse to improve his estate in the interest of his tenants as well as his own. The adoption of the Clause would cost the Exchequer very little money and would give an impetus to employment and development and would be in the best interest of the country.
    6.29 p.m.
    Mr. HORE-BELISHA: If I understood my Noble Friend aright, he was not so anxious that the Clause should be accepted as that some revision should be made in the present practice of dealing with maintenance claims. He will recognise at once that I could not enter into any detail upon that matter on this Clause. The Clause, of course, is quite impracticable of acceptance. It is a. proposal to exclude from the capital value of agricultural land for Estate Duty purposes that part of it which is due to
    542
    improvements effected by the deceased during the 10 years preceding his death. My Noble Friend, in the phraseology that he uses, evokes all the horrors of the land value taxation proposals. How is one to determine what part of the additional value in the last 10 years is attributable to the landlord and how much to the community? It is really impracticable to make a comparison of the value of a piece-of land to-day with the value of it 10 years ago, and to say exactly what portion of that increased value is attributable to the landlord and what to other causes. My Noble Friend appreciates that at once.
    The Chancellor of the Exchequer in Committee, in dealing with the general matter of Estate Duty, made a most sympathetic speech. He said that if conditions were sufficiently propitious to permit any additional relief to be given in the future—and he did not deny his own desire to see it—it could be given in the most practicable way by a reduction in the rates of Estate Duty on agricultural land. That would be the safest way and rid us of any complexities, such as would be entailed in the acceptance of a Clause of this kind. My right hon. Friend is sympathetic, subject to the circumstances becoming favourable, and I trust that my Noble Friend will be satisfied if I represent to my right hon. Friend what he and the right hon. and gallant Gentleman who has supported him have said this afternoon.
    6.31.p.m.
    Mr. RHYS: The hon. Gentleman made a very sympathetic reply, but I think that he slightly confused the issue when he stated that my Noble Friend the Member for Central Bristol (Lord Apsley) was invoking all the horrors of the Land. Value proposals. It is simpler than that. The landlord must know exactly how much he has to spend. It is a questions of arriving at a conclusion whether to spend so much money or not that is the real point of the whole proposal.
    6.32.p.m.
    Mr. ATTLEE: I do not think that the hon. Gentleman the Member for Guildford (Mr. Rhys) has quite met the point. It is not a matter of how much to spend, but what the additional value is. If the landlord spends his money badly there may be no additional value at all. There are two other points I should like to

    543
    make. Everybody must realise that there is something to be said for the proposed Clause if one believes in a continuation of the system of landlord and tenant of agricultural land in this country, but we have had a series of speeches which have constituted really very grave attacks upon that altogether. We understand from the speakers that practically all landholders to-day are philanthropists and that they are making no money; that they are trying to put money into the land, but they have no money. In fact the whole system by which the landowner was supposed to finance agriculture has broken down in spite of a large number of doles. We have had rates practically taken entirely off land, and there have been contributions of one kind and another, subsidies for beet sugar and for wheat, and assistance with regard to horticultural products and a number of other things, but apparently none of those efforts—I am taking my facts entirely from the statements of hon. Members opposite—are sufficient to induce anyone to put money into the land in spite of the glowing prospects that agriculture is to be made to pay by this Government.
    What really beats me is the extraordinary self-denial of the landlords. I cannot think why they have not all joined us in a claim for land nationalisation, because they are not concerned with mere private interests; they are concerned with agriculture and the prosperity of agriculture in the interests of the nation as a whole. It is obvious that the Financial Secretary to the Treasury is not going to give them anything except sympathy, and sympathy does not go very far when put into land. If we really want to recreate agriculture it is obvious that we must have a very large capital expenditure, and, as has been pointed out, if that is done by private individuals the Estate Duties come along and remove the capital from the land. We want to keep the capital in the land in a more permanent form. Therefore, we must have something which is not subject to Death Duties. It is clear, therefore, that we want the national ownership of the land and national capital invested in the land so as to develop agriculture as a great national asset. I very much welcome those opinions which are spreading among hon. Members on the opposite benches, because they have all the facts and argu-
    544
    ments before them. They only require a little logic, and they will come along with us.
    6.36.p.m.
    Mr. E. EVANS: I hope that the Noble Lord and his Friends will not press the Clause, because I do not think that they have worked out the possible consequences of it. As the Financial Secretary to the Treasury has said, it involves very considerable changes which cannot be introduced at this stage of the Finance Bill. I do not think that the Clause will enable the Inland Revenue to make a proper differentiation between improvements as a result of money spent by landowners and improvements as the result of expenditure made by the tenant. That is a matter of detail which is of very great consequence and importance in regard to which there should be further inquiries before hon. Members press a Clause of this character upon us. When they introduce a Clause of this kind they should be a little more chary about their treatment of Land Valuation.
    6.37.p.m.
    Earl WINTERTON: I should not have risen but for the speech of the hon. Member for Limehouse (Mr. Attlee). I do not propose to answer his point—I do not think it can really properly arise on this Clause—about the advantages or disadvantages of public or private ownership, but the argument which he used should not go out to the world without any answer, because it is based upon an entirely false assumption. In the first place, the hon. Gentleman suggested that British agriculture was receiving help at the present time under a system of subsidies and doles which was quite unprecedented. It may be unprecedented in this country, but I assure him that it is infinitely less than the agriculture of any other country of Europe is obtaining at the present time. Whether it is France, Germany, Italy, or any other country he likes to mention, he will find that agriculture is receiving in each country, in open or hidden subsidies, at least 50 per cent. more than it is receiving in this country.
    Nor is it true that the money goes into the pockets of the landlords. In the matter of the remission of rates on agricultural land, it is notorious that the money does not go into the pocket of the

    545
    landlord, but in relief of the burdens of the tenants. I challenge the hon. Member, or any other hon. Member who is unfriendly to landlords in this House, to give an example in any country of the world where the raw material of agricultural, which is, after all, the land, bears such a heavy tax due to Death Duties as does the land of this country. The whole difficulty of replenishing agricultural capital in this country, as far as concerns land which is owned and let out to tenancies, is due to the terrific impost placed upon that raw material by successive Governments, and Conservative Governments, I honestly admit, are as bad as any other Government in that respect. I only rose because I did not think that at such a time, when there are many foreign delegates in London, it should go out from this House that the arguments used by the hon. Gentleman are based on facts, because they are not.
    6.39 p.m.
    Captain ARCHIBALD RAMSAY: I desire to associate myself with the remarks which have been made by the Noble Lord the Member for Horsham (Earl Winter-ton). There is a further point which might be drawn from the speech of the hon. Member for Limehouse (Mr. Attlee). What he really argued was that the land should be transferred to national ownership in order to escape Death Duties, but he did not, incidentally, explain how he proposed to transfer it to national ownership or raise the money with which. to buy it. We can, however, accept this reason for the transfer as a valid reason to impress upon my right hon. Friend the Chancellor of the Exchequer in support of the Clause. It is quite apparent that Death Duties fall with such heavy inequality upon land and landowners that it seems almost impossible to devise any plan to relieve them of a sufficient portion of a burden which is the most unjust perhaps of all other burdens of taxation. I think that we might assume that the hon. Member for Limehouse, in proposing the transfer of the land to the nation, realises that Death Duties fall with such inequality and unjust severity upon the land.
    Lord APSLEY: In view of the assurance of the Financial Secretary to the Treasury that he will go into the matter carefully with the right hon. Gentleman the Chancellor of the Exchequer with a
    546
    view to removing the burden, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Removal of certain restrictions on warehousing British compounded spirits.)
    (1) Notwithstanding anything in section ninety-five of the Spirits Act, 1880 British liqueurs and perfumed spirits may be ware housed in accordance with that section for home consumption, and accordingly the words "medicinal spirits or tinctures other than perfumed spirits" shall be substituted—

    (a) for the words "British liqueurs or tinctures or medicinal spirits" in subsection (1) of the said section ninety-five and in section seventy-four of the said Act; and

    (b) for the words "British liqueurs, tinctures, or medicinal spirits" in subsection (2) of the said section ninety-five.

    (2) Sub-section (4) of the said section ninety-five (which imposes a limit on the strength of British compounds warehoused for home consumption) shall cease to have effect.—[Mr. E. Williams.]
    Brought up, and read the First time.
    6.42 p.m.
    Mr. H. WILLIAMS: I beg to move, "That the Clause be read a Second time."
    The Clause is intended to give effect to an Amendment which I moved on the Committee stage, and to which the Chancellor of the Exchequer was very friendly but a little doubtful whether the words upon which I framed my Amendment were satisfactory. At the present time if certain classes of spirits commonly known as liqueurs are imported from abroad, they can be stored in bond until the importer has sold them. If such articles are produced in this country for home consumption, they may not be stored in bond, and accordingly duty has to be paid at the time of manufacture. In these circumstances, the British manufacturer is at a disadvantage as compared with the foreign competitor, and the sole purpose of the proposed new Clause is, not to protect him, but merely to place the British manufacturer in a situation as favourable as that of his foreign competitor. The Act which I am proposing to alter is the Spirits Act, 1880. I have not been able to discover why these somewhat unusual provisions were included in that Act. I hope that, in view of what the Chancellor

    547
    of the Exchequer said on the Committee stage, the words which I am now proposing will commend themselves to him and that the Financial Secretary, on his behalf, will now be able to accept the Clause.
    Mr. HARTLAND: I beg to second the Motion.
    6.44 p.m.
    Mr. HORE-BELISHA: My hon. Friend the Member for South Croydon (Mr. H. Williams) has stated with great lucidity what is generally considered to be a very complicated matter. He wishes to allow British liqueurs and British perfumed spirits to be deposited in bond without payment of duty, and to be subsequently withdrawn on payment of duty for home consumption. As my hon. Friend pointed out, the foreigner enjoys bonding facilities which are not open to his British competitor, and it is only reasonable that that differential treatment should be removed. My right hon. Friend told my hon. Friend on the Committee stage that if he could find a better form of words in which to remove the anomaly, he would be prepared to consider them. My right hon. Friend is satisfied with the suggested form of words, and I ask the House to accept the Clause.
    Clause added to the Bill.

    NEW CLAUSE.—(Power to carry forward expenses in respect of which relief map be given under 8 and 9 Geo. V, c. 40, s. 33.)
    Where, on a claim for relief under section thirty-three of the Income Tax Act, 1918, made by a company, society, or bank for any year of assessment after the year 1932–33 in respect of the sums disbursed by it as expenses of management (including commissions) for that year, relief is disallowed in respect of the whole or part of those sums by reason only of the provisions of proviso (a) to sub-section (1) of the said section, the amount in respect of which relief has been so disallowed may be carried forward and treated for the purpose of the said section as if it had been disbursed as aforesaid for any of the six years of assessment next following:
    Provided that relief in respect of an amount so carried forward shall be given for the first year of assessment next following, in so far as relief can be so given in accordance with the provisions of the said
    548
    section in respect of that amount as well as in respect of the sums actually disbursed as aforesaid for that year, and so far as it cannot be so given, then for the next year of assessment, and so.—[Mr. Boothby.]
    Brought up, and read the First time.
    6.46 p.m.
    Mr. BOOTHBY: I beg to move, "That the Clause be read a Second time."
    This matter is extremely complicated, and I would ask the House to bear with me while I point out that relief from Income Tax in respect of management expenses of investment trust companies was originally allowed under Section 14 of the Finance Act, 1915, and later under Section 33 of the Income Tax Act, 1918. There is a proviso to the effect that relief shall not be given so as to make the tax paid by the company less than the tax which would have been paid if the profits had been charged in accordance with the ordinary rules applicable under Schedule D. In practice, the Inland Revenue have been taking the gross income of the company for the preceding year and then deducting management expenses on that same preceding year, and calculated Income Tax on the difference between the two. They then have said that the amount of tax which can be repaid must not be more than the excess of the tax actually borne by the company in the year of claim over the tax on this purely notional assessment based on the figures of the previous year. What has arisen during the last few years has been that in the case, for example, of an investment trust company, if the profits of the investment trust company have gone down they have had no relief from taxation in respect of their management expenses, but if, on the other hand, the profits were to rise they would get the relief which they claimed.
    It was to consider this point that the Chancellor of the Exchequer invited me to discuss with the Treasury officials the possibility of putting the matter right, and the Clause which I am now moving is really the result of those discussions. What it attempts to do, and what I think it does, is to give companies, or societies or banks the right to carry forward for six years the amount of any expenses of management in respect of which it has failed, by reason of the official interpretation of proviso (a), to obtain repayment

    549
    of tax under the provisions of Section 33 of the Income Tax Act, 1918. I am sure that hon. Members will realise that this is very complicated, but, obviously, it is agreed that there has been an anomalous position which requires to be corrected. I hope that in the circumstances my hon. Friend the Financial Secretary will see his way to accept the Clause.
    Mr. JAMES STUART: I beg to second the Motion.
    6.48 p.m.
    Mr. HORE-BELISHA: My hon. Friend has moved an Amendment in connection with the Income Tax of an investment company, which was briefly discussed on the Committee stage of the Bill. An investment company's gross income is taxed in full. Its true income is its net income, that is to say, its gross income, less expenses. The company ought to pay on its net income. The law secures that it does pay on its net income, but it attaches the condition in the case to which my hon. Friend has referred that the company must not pay a tax on less than its net income for the preceding year. If, for example, the net income for the preceding year was £9,000 and this year it had fallen to £7,000 the company would be paying on a greater sum than one would clearly expect it to pay on. This Clause has not entirely removed that anomaly, but it enables the company in any year to carry forward, in the same way as a trading company, its losses to credit against future assessment. The relief can be carried forward from year to year in that way. That is the eminently just proposal of my hon. Friend, who has discussed the matter with the Treasury officials. My right hon. Friend tells me that he is able to accept the proposal. He made certain modifications in it, which my hon. Friend has made, and I am now ready to accept it.
    Mr. MORGAN JONES: Will the Financial Secretary say what the cost will be to the Treasury?
    Mr. HORE-BELISHA: It is not likely to be more than £80,000 anyhow. It is to relieve an anomaly.
    Clause added to the Bill.

    NEW CLAUSE.—(Exemption from customs duties of prizes, etc., awarded abroad.)
    No customs duties shall be charged on the importation of articles which are shown to the satisfaction of the Commissioners to have been awarded abroad to any person for distinction in art, literature, science, or sport, or for public service, or otherwise as a record of meritorious achievement or conduct, and to be imported by or on behalf of that person.—[Mrs. Tate.]
    Brought up, and read the First time.
    6.50 p.m.
    Mrs. TATE: I beg to move, "That the Clause be read a Second time."
    On the Committee stage of the Finance Bill I moved a Clause designed to exempt from Import Duty, trophies, cups and medals given in recognition of distinguished service by British subjects abroad, and imported by them or on their behalf into this country. The Financial Secretary was kind enough to tell me that it was the wish and intention of the Chancellor of the Exchequer to accede to my request and to grant such exemption, but that he could not accept the wording of my Clause as it was not sufficiently wide. The Clause has now been redrafted and fully covers the intention of my original Clause and covers also, I think, every Act under which such trophies might be taxed. I hope, therefore, that it will now meet the approval of the Chancellor of the Exchequer and the Financial Secretary.
    6.52 p.m.
    Mr. H. WILLIAMS: I beg to second the Motion.
    I supported the Clause in the Committee stage, and I did so because of an experience I had when I was at the Board of Trade. The captain and mate of an English ship had by great gallantry saved the lives of a number of American sailors. The headquarters were at Hong Kong. The American Government, in accordance with its custom, presented a gold chronometer to the captain and a pair of binoculars to the mate. These were sent to the Governor of the Colony, who presented the chronometer to the captain, but by that time the mate had left for England. Accordingly, the American binoculars were consigned by the Governor of the Colony to this mercantile marine officer, care of the Board of Trade. The binoculars were dutiable articles and

    551
    we witnessed the anomaly of a man who was receiving a gift from a foreign Government for an act of great gallantry being called upon to pay duty. Obviously, we could not ask him to pay the duty, but hon. Members will appreciate that the Board of Trade legally had no funds whereby to pay the duty. I am not going to explain in what way the difficulty was overcome. There was no particular generosity, but we conspired over the matter, and the man received the binoculars. I was so much impressed with that incident that I have the greatest possible pleasure in supporting this Clause, so that that kind of thing cannot happen in the future.
    6.55 p.m.
    Mr. HORE-BELISHA: The words of the Clause which the hon. Lady has now moved are wider than the original words. They cover articles liable to any Customs Duty and not merely to duty under the Import Duties Act. That is the first extension of my hon. Friend's Clause. Its terms are sufficiently wide to cover awards for acts of bravery, for physical or intellectual achievements or for public service. That is to say, the Clause will fully carry out all that the hon. Lady ever had in mind, and will make a case such as the hon. Member for South Croydon (Mr. H. Williams) has just narrated impossible in the future. Anyone in this country who- wins an award for some meritorious act abroad will be able to bring that award into this country without payment of Customs Duty. I congratulate the hon. Lady on having had the Clause accepted, and having rectified what she considers to be a great injustice.
    Clause added to the Bill.

    NEW CLAUSE.—(Rebate of licence duty on certain motor vehicles of which the engines are not less than five years old.)
    As from the first day of January, nineteen hundred and thirty-four, the Second Schedule to the Finance Act, 1920, shall be amended by the substitution in paragraph 6 thereof of the words—
    "In the case of any vehicle the engine of which was constructed not less than five years before the date of the issue of the licence the duty shall be seventy-five
    552
    per cent. of the duty otherwise chargeable under this paragraph"
    for the words-—
    "If any person proves to the satisfaction of the authority charged with levying the duty that he has paid in respect of any vehicle the duty chargeable under this paragraph, and that the engine of the vehicle was constructed before the first day of January, nineteen hundred and thirteen, he shall be entitled to repayment of twenty-five per cent. of the duty paid."—[Captain Strickland.]
    Brought up, and read the First time.
    6.56 p.m.
    Captain STRICKLAND: I beg to move, "That the Clause be read a Second time."
    There is a precedent for asking the House to grant this concession with regard to old cars, because in 1921, owing to the great change in engine design, it was found advisable to give such a rebate on cars or engines constructed before 1913. It is known to all motoring people, and particularly to manufacturers, that as you have your car in use its consumption of petrol grows with each year. There is another factor in the case which I would suggest the Minister might take into consideration, and that is that the existence in this country of cars of this age acts as a distinct brake on the trade of the country. There are many men to-day who buy an up-to-date car, and, having run it for a year or two, wish to dispose of it in the market, but they find they can get no market for it because the tax people would be called upon to pay on these five-year old cars would be just as heavy as the tax they would have to pay on a more recently constructed car. This condition is acting as one of the greatest brakes on the motor trade of this country, and I hope that it may be found possible to grant the concession.
    I do not ask for the concession because these cars can be regarded as no longer efficient. We know from experience that we see cars of recognised makes that must be at least 10 years old still capable of doing their work, and, another important point, they can get into the hands of smaller people who cannot afford a new car, but who can extract a tremendous lot of pleasure by the purchase of one of these older cars. They are, however, debarred from buying them, particularly the higher horse power cars because of the enormous tax they would have to pay on them. I daresay many

    553
    hon. Members have had the experience of having a car of 15 to 16 horse power and trying to sell it on the secondhand market, but they realise that although £50 or £60 might be obtained for the car, the purchaser would have to pay £15 or £16 a year tax on it. The Amendment is reasonable, and its acceptance would be a great help to the motor trade of the country. I do not think it would mean a great loss of revenue. If the secondhand market could be cleared in this way, it would lead to a very definite increase in the revenue, because many people would be buying up-to-date cars if they could dispose of their secondhand cars. I hope the reasonableness of the request will appeal to the Minister and the House.
    6.59 p.m.
    Mr. GEOFFREY PETO: I beg to second the Motion.
    We have to-day, I am glad to say, an efficient Minister of Transport. Unfortunately, in previous Governments the Ministers of Transport have not been efficient. [HON. MEMBERS: "Oh."] That applies to all parties. The result has been the fixing of a scale of taxation on heavy lorries which has existed for years, and which does not meet with the approval of the Minister of Transport to-day. Now, there has been a sudden drastic change made. People bought their lorries a few years ago in anticipation of doing a useful trade. They are small men, or mostly small men. They now find themselves faced with taxation they had no possible means of anticipating. Some compensation should be given them for the fact that previous Ministers of Transport did not foresee that lorries would be heavier, and that there would be so much competition on the roads. As some compensation for what has now been done, I would urge the Minister of Transport, who is taking a much broader view than previous Ministers of Transport with regard to transport in general, to make this small concession to help the industry.
    7.1 p.m.
    The MINISTER OF TRANSPORT (Mr. Oliver Stanley): The hon. Members who have moved and seconded this Clause have been so brief and reasonable, and, I might almost say, flattering, that they might well have moved a heart less moveable than mine. I much regret, in view
    554
    of their approach to this problem, that I have to refuse their request. It is not only a question of cost. The hon. and gallant Member who Moved the Amendment said it would cost very little. It would cost something in the nature of £1,000,000 a year. It is not only that consideration, but the question of principle, which makes me refuse to accept the Clause. The result of accepting it would be to put a premium on old cars. Any car over five years old would be allowed to travel on the roads cheaper than its more modern competitor. I do not think anyone wants to put a premium on the car which lacks modern features which tend to a greater condition of safety. I cannot see how it can be argued that putting a premium on the retention on the road of the older-fashioned cars would be to remove a drag on trade.
    The production of motor cars depends primarily, I would have thought, not on the sale of second-hand cars, but on the demand for new cars. I would have thought one could do no greater disservice to the demand for new cars than to make older cars more profitable to run. It is true there was a precedent, but that was a precedent due to the year fixed marking a complete revolution in the design of the internal combustion engine. It was a suitable year for a division between the taxation based on the new and the old. I am afraid it is impossible for me to accept the Clause.
    7.4 p.m.
    Captain STRICKLAND: I would not like to divide the House on this matter, in spite of the gibes at those who try to place motor cars in the hands of the workers of this country. In view of the blank refusal of the Minister of Transport to meet us in any form whatever, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Bates of duty on quarterly licences for mechanically-propelled goods vehicles.)
    Section twenty-two of the Finance Act, 1921, which provides for the issue of licences for mechanically-propelled vehicles for periods less than a year shall have effect in its application to a vehicle chargeable with duty under paragraph 5 of the Second Schedue to the Finance Act, 1920, as amended by subsequent enactments, so that the rate of duty for the period of one quarter of the year shall not exceed twenty-

    555
    five per cent. of the full annual rate of duty, and any order made or to be made by the Minister of Transport for the purposes of the said Section twenty-two shall be read and have effect accordingly.—[Mr. Peto.]
    Brought up, and read the First time.
    7.5 p.m.
    Mr. PETO: I beg to move, "That the Clause be read a Second time."
    This is a Clause to help the small owner of a lorry who cannot afford to pay the whole year's taxation on this enormously increased scale at the beginning of the year, and would prefer to pay in quarterly instalments. The Clause is a very reasonable proposition, considering the great increase in taxation which the Government are placing on these owners. I do think the Government might make this concession and enable such owners, instead of paying the whole year's taxation straight away, to pay quarter by quarter. I am very sorry the Minister of Transport tells us that he has got an immovable heart. I cannot help feeling that if the Chancellor of the Exchequer were here, his heart might be more movable. I would urge the Minister of Transport to remember that he is not only applying this tremendous burden of taxation to the motor transport industry, but that he is coupling it up with a Bill, now under discussion upstairs, which is putting a heavy burden on the motor industry. Solomon overtaxed his people and they turned to Rehoboam who said, "My father has chastised you with whips, but I will chastise you with scorpions." I would appeal to the immovable heart of the Minister and ask him, instead of trying to chastise this industry with scorpions, to give us this small concession.
    Captain STRICKLAND: I beg to second the Motion.
    I have little hope, after the reception of the last Clause, of securing any concession, but I do wish formally to Second this Motion.
    7.8 p.m.
    Mr. STANLEY: I will not follow the hon. Gentleman into his Biblical allusion, but I would point out that the basis of his Motion, if not his whole argument, was on the grounds that we are greatly increasing this taxation, and that we might give this Clause in return. I would
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    point out that the increase in taxation, which we are making in this Bill, is confined to goods vehicles, whereas the Clause would not only extend to them but to ordinary private motor cars subject to no increase of tax at all. Parliament has recognised that some provision should be made for the man who wishes to take out a licence for less than a year. It is possible now to take out a quarterly licence, provided a small surcharge, which has been reduced in recent years to 10 per cent., is paid. The result of the hon. Gentleman's Clause would be simply to abolish the surcharge, for which reason I am afraid I am bound to oppose the Clause, and thereby prove to the hon. and gallant Gentleman that he who hopes for little is not disappointed.
    The financial effect of the annual loss of surcharge would be a considerable amount—£350,000. I have also to take into account the effect which these quarterly licences, without any surcharge, might have upon the manner in which licences are taken out. If there were no advantage in taking out a yearly licence, there might be an effect upon the amount of the receipts in the first quarter of the year in which yearly licences are taken out. The amount might drop by as much as £3,000,000 in that quarter. That is the quarter which comes into this financial year, and there might thereby be a loss of £3,000,000 to the fund for this particular financial year. That would be a loss which it would be quite impossible for the fund to bear. A further loss, which cannot be calculated, might arise owing to the fact that the licence duties would be paid at a later date, and the fund would lose interest on them. Sympathetic as I may be with the hon. Gentleman's appeal, acceptance of the Clause would impose a large financial burden on the fund. In these circumstances, it is impossible to accept it.
    Mr. PETO: I beg to ask leave to withdraw the Clause. I do hope, now that the Chancellor of the Exchequer and the Minister are sitting together, they will consider this Clause and other Amendments with regard to road transport, and do something for the industry in the next Budget. They should try to reduce some of this heavy taxation by next year.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Sale of spirits in reputed pint bottles.)
    Notwithstanding anything in the First Schedule to the Finance (1909–10) Act, 1910, with respect to the minimum quantity of spirits which may in England be sold by a person holding the off-licence to be taken out by a retailer of spirits, a person holding such a licence, being a licence granted to him under the authority of a justices' licence, may sell a quantity of spirits equal to one reputed pint bottle, if it is sold in a single container.—[Lieut.-Colonel Applin.]
    Brought up, and read the First time.
    7.11 p.m.
    Lieut.-Colonel APPLIN: I beg to move, "That the Clause be read a Second time."
    This is a Clause which for nearly 20 years has been before the House in one form or another, with a view to removing an anomaly. The removal of that anomaly I venture to think, will be an enormous boon, particularly to poor people. This Clause would permit off-licence houses to sell a half-bottle of spirits. At present they are debarred by the Act of 1910 from selling anything less than a whole bottle. Obviously it would not be to the advantage of the off-licence holder to be able to sell half-bottles where he could sell whole bottles, but it is enormously to the advantage of the British public, particularly to those of us not blessed with much means, and to those who have sick people in their charge. It is a common thing to-day to find men and women suffering from heart diseases who are ordered to carry a small flask of brandy, which costs 15s. a bottle at least. That is a very large sum of money for a poor man or woman. By this Clause a poor person would be able to get a half-bottle of brandy. For that reason I trust the House will support this Clause. Such a Clause formerly has always been combined with another Clause to grant on-licence holders a remission of excise duty. That has been withdrawn by on-licence holders, and we are now in a position to ask for this particular boon.
    7.14 p.m.
    Sir ASSHETON POWNALL: I beg to second the Motion.
    The Clause has an extra advantage which, I hope, will commend itself to the Chancellor of the Exchequer. All new Clauses which have been asked for up to this time have involved certain
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    financial sacrifices. This Clause involves no financial sacrifice to the Exchequer, and it may so happen that there will be a small increase owing to these half-bottle which may bring a little extra revenue in the current year. My hon. and gallant Friend has spoken on the subject of price. We mention in the new Clause the Finance (1909–10) Act. At that time the best whisky was 4s. a bottle, and 2s. a half-bottle. Now the duty is so much higher that the bottle is 12s. 6d., and the half-bottle 6s. 3d. Even if this concession is granted, the cost will be greater than that of the whole bottle 20 years ago, when this arrangement was first made. I hope that the public, who have felt this keenly, especially those with smaller incomes and who cannot affaird 15s. for a bottle of whisky or brandy, will now receive this concession.
    7.15 p.m.
    The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The question dealt with in this new Clause has been before the House for a great number of years, and I think that in general public opinion has moved in the direction which the hon. and gallant Member for Enfield (Lieut.-Colonel Applin) advocates. What has stood in the way of removing this embargo on the sale of the half-bottle has been the fact that it has been coupled with the question of the licence, and licensed victuallers have expressed the view that if they are to forego the monopoly of selling half bottles they ought to have some corresponding reduction in the amount that they pay. As the hon. and gallant Member has said, he has now received a letter from the representative body, the National Consultative Council of the Retail Liquor Trade, in which they have put on record that they no longer object to the concession to off-licence holders, and, in these circumstances, it does not seem that there is any necessity for my considering that the two things are any longer bound up together. I am bound to say that I have received a letter from one of the constituent bodies of the national body, from which I understand that they do not share the view of the national body, but I must take the opinion as expressed by the national body as being the final and considered opinion of the trade as a whole, and in these circumstances I am prepared to accept the new Clause.
    7.17 p.m.
    Mr. ISAAC FOOT: There are certain other points which I should have thought the Chancellor of the Exchequer would have mentioned in dealing with this matter. This is not merely a question of revenue. It raises a number of questions which are occupying the attention of the Royal Commission. The Chancellor of the Exchequer will be aware that the Royal Commission have directed attention to this matter and have, in fact, considered evidence upon the point. The opinion is held by many people that it is not in the temperance interests that the sale of liquor should be made more readily available in this way. I do not want to deal with the evidence which was given, but it was considered of sufficient importance to receive the attention of a great number of witnesses before the Royal Commission. But the point is that there are other questions besides that of revenue concerned in this matter, and I should have thought that they would have received some attention from the Chancellor of the Exchequer as well as the purely revenue considerations. I am sorry that the Chancellor of the Exchequer has thought it necessary to make this concession.
    7.19 p.m.
    Mr. PIKE: The hon. Member for Bodmin (Mr. Isaac Foot) has introduced an entirely old but, nevertheless, irrelevant note into this matter. If this question is to be viewed from the temperance standpoint, I whole-heartedly support the Chancellor of the Exchequer in accepting this new Clause, because it will mean that in our industrial areas children who have to be sent out for small portions of alcohol will be able to get it at some off-licensed premises rather than have to go into the fully-licensed house and thus come into contact with those evils which are propounded from temperance platforms throughout the country.
    Mr. LOGAN: I do not wish to interrupt the hon. Member—
    Mr. PIKE: If you do not wish to interrupt, there is no reason to do so. I think that the action of the Chancellor of the Exchequer will be to direct to the off-licence premises much of the traffic that has been compelled previously to go to the fully-licensed house and, therefore, that many young minds will not be open
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    to the dangers of the drink traffic in public houses as in the past. For many other reasons, I am sure that all our industrial areas will thank the Chancellor of the Exchequer for this concession.
    7.21 p.m.
    Mr. LOGAN: I hope I may be pardoned for an Irishism in saying that I did not wish to interrupt the hon. Member. But he is very far astray in his statement in regard to young children getting alcoholic liquor from licensed houses. I do not know any part of the country where young children are served. Every hon. Member will know that no child will be served, or can be served, in a licensed house. I am not a fanatic on the temperance question and I had not intended to speak until the hon. Member for Attercliffe (Mr. Pike) rose, but to talk about poor people going about with half-pints of brandy in their pockets is foolish. If you see a Scotsman going about with half-a-pint of whisky in his pocket it is no indication that he is suffering from heart disease. [An HON. MEMBER: "What about an Irishman?"] An Irishman will have it inside him; he does not require to carry it about in his pocket. Nobody is anxious to create greater facilities for drinking for any class of people, and I should have thought that there are enough licensed houses already at various street corners without giving this further opportunity to off-licence houses to sell half-pints. You can get half-a-glass, or a glass any time you require in an ordinary house. [HON. MEMBERS: "No!"] You can get half-a-glass or a noggin any time you like. I do not see that it is going to be any benefit to allow a doctor to certify for a half-pint bottle; I should have thought a pint bottle would have been sufficient.
    Clause added to the Bill.

    CLAUSE 6.—(Amendments as to duty on hydrocarbon oils.)
    Mr. SPEAKER: I am aware that great interest is taken in the question of the taxation of hydrocarbon oils and, therefore, it may be convenient to allow a general discussion on the Amendment standing in the name of the hon. Member for Blaydon (Mr. Martin).
    7.24 p.m.
    Mr. MARTIN: I beg to move in page 5, line 22, at the end, to insert the words:
    "Provided however the tax actually levied on such oils shall in no case exceed ten per cent. ad valorem."
    I move this Amendment with some misgivings because I represent a constituency which is largely devoted to the mining of coal. Ever since the Chancellor of the Exchequer proposed this tax I have had some doubts as to how far the coal industry would benefit. I admit that at first sight I welcomed it as being a measure which would probably mean employment for a greater number of miners, hut on further reflection I began to have doubts whether many more miners would be employed, and, therefore, I decided to examine the subject very carefully and thoroughly. Perhaps it would be the best course to pursue if I give the House the process of my reasoning in coming to the conclusion that it would be wise to put down an Amendment to reduce the tax. To do that I propose to take the reasons which the Chancellor of the Exchequer has given for imposing the tax. There were two main reasons; one, that it is purely a question of revenue, and the other that it is a help to the coal industry. On the question of revenue, the Chancellor of the Exchequer made two main statements; one was that he wished to protect the petrol duty and the other that he wished to have an increase of income for the Budget. In considering the statement which deals with the petrol duty I immediately asked myself how far it could be evaded by those who wished to do so.
    I asked myself whether it would be possible in the ordinary way to get behind this tax and thereby defeat the aims and objects of the Chancellor of the Exchequer. I made inquiries, and I found that there is one way which has already achieved some prominence. Perhaps the Treasury officials and the Chancellor of the Exchequer have not sufficient technical knowledge to know of such a thing as a bi-fuel carburettor. I have discovered, I admit for the first time, that there is such a thing as a bi-fuel carburettor, and the point is that as regards this tax it Can be used on many vehicles which at present use petrol. This bi-fuel carburettor can be installed on many road engines using petrol, and then, when the
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    engine is warm after starting on petrol, they can turn to the second carburettor and use light fuel oil. The point I wish to put is this, that if the Chancellor of the Exchequer increases the duty on kerosene by one penny per gallon how is he going to prevent people using engines starting on petrol, thereby giving the Chancellor of the Exchequer his tax, and immediately afterwards, when the engine is warm, turning over to kerosene? It would be an enormous advantage to the consumer because the tax on kerosene would be only a penny per gallon. That is a point which, I think, has not been considered by the Treasury. The second part of that particular portion of Clause 6 was really designed to some extent to suppress the Diesel engine for road use. But surely a penny a gallon on the oil which the Diesel engine uses is not nearly sufficient to achieve the object. The margin in hand would be about 6d., and there would be need for a much greater tax if the Chancellor of the Exchequer were to achieve his object on that particular point.
    Now I come to the second part of the Chancellor's contention, namely, that he wished to aid the coal industry. Of course, the two things are connected, because if the right hon. Gentleman can persuade the users of engines on the road to return to the derivatives of coal ho will obviously help the coal industry. But does the Chancellor of the Exchequer really expect to get his revenue, or does he not? If he expects to get his revenue from the consumers of oil, obviously he cannot help coal, for in that event people using oil will continue to do so and will not turn to coal or its derivatives. One must assume that the Chancellor does not expect to get his revenue, or perhaps only a small part of it, and that nearly everyone now using oil will turn over to coal or its derivatives. I cannot reconcile the two. There may be some stage half-way that the Chancellor has chosen. Perhaps he is expecting to gain on the swings what he loses on the roundabouts.
    The second point with which I wish to deal, and perhaps the most important, is how far the consumers of oil can turn over to coal. I confess that it has given me great pleasure to find, as a result of all the controversy about this tax, that the scientists who are occupying themselves with the use of coal and its derivative have discovered or invented new

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    methods whereby coal derivatives can be presented to the consumer in a much more attractive form than formerly. I find that there are new devices, thermostatic control and so on, which make coal derivatives as effective as liquid fuel in many cases. Many people turned to liquid fuel in the past because they could control the heat much better than with solid fuel. Now it has been proved that there are excellent methods and very good apparatus for controlling the heat of the solid fuel and the derivatives of coal. Here I would mention a rather important consideration. The body which has been set up to help the coal industry to sell its products has issued various memoranda and pamphlets proving that coal can in all cases compete successfully with oil. If that contention is true it seems to me rather to support the argument that there is no necessity for this tax, for it is obvious that coal, being much cheaper, if it were equally effective would be used by the consumer rather than oil.
    I am loath to have to put that to the House, because I represent a constituency which very largely produces coal. But I am not willing to accept the statement of those who have drafted these memoranda. I am anxious that the case for coal should not be misrepresented. If the coal salesmen were as good as oil salesmen have been in the past, I have no doubt that a great many consumers of oil would definitely turn to coal or its derivatives in the next few weeks, if they have not already done so. During the Committee stage of the Bill I emphasised the view that if the coal salesman needs this particular form of tax in order to sell his products, it is a very poor argument for his products, because obviously the consumer cannot find it so efficient or so effective as the liquid fuel at the comparative prices. Therefore, I intend to turn rather to other arguments which will perhaps not antagonise those who may possibly use solid fuel or the derivatives of coal.
    On examining the problem as to how far coal derivatives were suitable to replace oil I found myself in a very difficult field. I found that in many cases oil is complementary to coal. For instance, in the metal trades 275,000 tons of oil and 9,000,000 tons of coal are used. The two forms of fuel are complementary.
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    These trades are highly competitive. They have found in these hard times that anything which tends to damage them will cause the loss of their markets, particularly abroad, and therefore any tax which puts 40 per cent. on the cost of their raw material, the oil, and adds very largely to their total costs, is obviously to some extent damaging our export trade, and certainly our home trade. In that particular trade the export section has been well established, and it would be in very grave danger of being lost entirely if this tax were put on to the extent that the Chancellor of the Exchequer proposes.
    There has been a great deal of discussion as to how far the users of oil can change over to coal or its derivatives. There is one outstanding point, and that is that in most oases they could change over to gas, which, of course, is a derivative of coal, but that in nearly all cases it would be very difficult indeed, as well as costly, for them to change over to solid fuel. In many cases it would be quite impossible. I do not propose to discuss in detail the pros and cons, and how many cases there are, but one thing that must be considered is, how far can gas displace oil? Oil has one great advantage over gas—it is much cheaper. Here I may be allowed to suggest to the Chancellor of the Exchequer that it might have been a far more proper course for him to have taken, before he brought in this tax, to have ensured that attention was turned to the anomaly of the legislation governing gas. If gas companies had been able to sell their product more cheaply to large consumers there is no doubt whatever that many of the consumers of oil would have turned over to gas, because there is not very much difference in the efficiency of the two fuels. As gas companies are prohibited from doing so, a preliminary step to the introduction of this oil tax would have been the removal of the restrictions against the gas companies.
    If gas is too expensive, what is the alternative? Consumers must continue to use oil, or they must reorganise all their plant. They must, at very great cost in many cases, take out their plant, perhaps reorganise their works, perhaps demolish buildings and build new ones for the use of solid fuel. I do not think that the Chancellor of the Exchequer when weighing up the pros and cons has given sufficient consideration to that

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    point. I find that in his speech during the Committee stage of this Bill, he said that, even if the worst came to the worst—
    "Even then I say you must remember that you have to set against that the increased employment which you expect to create in the industries of coal, gas, and electricity, and on the railway systems of the country, by the imposition of the tax."—[OFFICIAL REPORT, 24th May, 1933; col. 1201, Vol. 278.]
    I quite agree, but it seems to me that the Chancellor of the Exchequer has not by any means done justice to that point; he has not really put before the House detailed considerations which show how far he is going to increase employment in the coal industry. I would very much have liked to have heard him give us a rough estimate of how many men he thinks this tax will result in employing in the coal industry. I have tried to make some estimate, and the more I go into the matter the more I find that there will be loss in employment in other trades, or that the impossibility of turning over will in fact lead to the result that men will be thrown out of employment. I admit that the consumption of oil is such that one is rather tempted to suppose that if all the tons of oil were produced by miners there would be a great deal of employment, and that the oil brought into this country is definitely displacing coal.
    We have been told that oil has displaced miners enormously in the last 10 years. The coal industry itself, the gas and electricity industries, have been responsible for far more unemployment in the mining industry than the introduction of oil. If you examine the facts you find that the production of coal per man per shift per annum has increased enormously in the last few years. You find that improved methods of winning the coal, coal-cutters and so on, have meant that fewer miners have been employed as the technique has improved. But would one say that coal-cutters ought therefore to be highly taxed? That seems to follow somewhat logically on the argument of the Chancellor of the Exchequer. Gas and electricity are means whereby miners have been put out of employment. The more improvements are made in the electricity industry, the less coal is consumed. Similarly with gas. The displacement of miners by the use of oil is a very small
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    thing compared with the displacement caused by economy in electricity and gas consumption.
    Let me give one or two very good examples of what I mean when I speak of the impossibility of certain trades turning over from oil to solid fuel or its derivatives. I take the example of the enamel trade and I apologise for mentioning it again, because I referred to it in the Debate on the German Agreement when I discovered that the German Agreement reduced by 5 per cent. the benefit which had been given to that trade by the tariff. That was after the Chancellor of the Exchequer had announced his Oil Duty. Oil is a very large part of the raw material of the enamel trade. This trade has been making great strides in the last few years and has gained a good export market. It has given employment to miners because I find that the weight of coal employed in the black metal used in the enamel trade, is about twice the weight of oil used in the process of enamelling. If you are going to put a 40 per cent. tax on the oil, it means that that trade cannot continue to get the sales which it was getting before. Its output must lessen, in which case those miners will not be employed in producing that coal. Either the enamel trade will have to pay the tax, because they cannot use anything else, or it will have to go out of existence. I do not like to overstate a case and a phrase like that sounds like overstatement but if they cannot keep up their export trade then they must either lower wages or quietly go to the wall. If there were any other alternative I should welcome it.
    It seems to me that the gas industry has largely inspired this tax. They have put it to the Treasury that they are the people who can supply, better than any others, a form of fuel which can take the place of oil. If that be so, why cannot the gas industry begin by reducing their prices to heavy consumers and thereby attract those consumers to their proposition? If the gas salesmen and the coal salesmen were as good as the oil salesmen there would be far more gas and coal installations in the country. It has been said that there is a fashion for oil, but I do not think that contention can be seriously supported. Certain people say that hotels and other large concerns in London, such as hospitals and so forth,

    567
    like to burn oil because it is modern, because it is the thing to do, but I cannot conceive that any business organisation would use a form of fuel which is dearer than solid fuel if there were no advantages to compensate for the extra cost. I do not wish to argue the case for the hospitals which has already been very efficiently put, but I would remind the Financial Secretary that he will have to talk very seriously to the Minister of Transport if he forces big hotels and other institutions to turn to solid fuels from oil. There will be a very difficult traffic problem involved in carrying solid fuel in the amounts required to the centres in the Metropolis where these buildings are situated.
    I have been very interested in two passages in the speech of the Chancellor of the Exchequer on this subject. These passages seemed somewhat enigmatic and the right hon. Gentleman seems to have fallen into an error. When no one else challenged him at the time, I mistrusted my own technical knowledge, and did not do so. The first passage to which I refer is as follows:
    "Do not let us forget that in the first place the difficulties that have been suggested are based on the assumption that the whole of the cost is going to be added to the present cost of fuel."
    I do not know what was in the right hon. Gentleman's mind when he made that statement. He went on to say:
    "I take the general suggestion that we should make a difference between the heavier and the lighter oils and that we should exempt the heavier oils from the operation of the duty. Some one else might possibly suggest that if you did not exempt the heavy oils, at any rate you might give them a rather lower level of duty than the others. But that is going to leave the Diesel oil outside the duty. That is going to leave the competitor of petrol outside the duty."
    Of course, that is not the case. The very opposite is the case. Then the right hon. Gentleman went on to say on the subject of differentiation:
    "I have gone into this question of differentiation with some care to see whether that was an advisable and desirable method of varying the tax.…but the conclusion that I have come to after looking into the thing all round is that I have been unable to see any way of differentiation and of having different levels of taxation which would really meet the views of those who object to the tax."— [OFFICIAL REPORT, 24th May, 1933; cols. 1201 and 1202, Vol. 278.]
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    What is behind that statement and the statement that the right hon. Gentleman did not think that the whole of the tax would be passed on? Is it possible that he considered that the oil companies themselves would make a differentiation by merely changing the price? It is most important to know whether that consideration was in his mind and I am willing to give way to the Financial Secretary if he will now answer this question, which is vital to my Amendment: Did the Chancellor consider that the oil companies themselves could or would differentiate between different forms of oil by changing their prices so that for example, lubricating oil would be taxed at 2d. or 3d. or some similar figure and the heavy residual oils would be exempt? Apparently, the Financial Secretary is not able to answer that question now but it is a very important point and I beg him to give it consideration. It seems to me that if the right hon. Gentleman realised that that was not only possible but probable, all the talk about helping the coal industry was futile. If the oil companies could make the differentiation themselves then the object of the tax would be annulled and as one keenly interested in the prosperity of the coal trade, I should like to know whether the Chancellor had that consideration in mind and what his answer would be if the oil companies adopted that course and defeated the object of the tax.
    This tax strikes me as an unfortunate example of lack of co-ordination between Government departments and between objects of taxation. If the Chancellor had gone into every avenue and had mapped out a coordinated plan—and I confess that as a new Member I assumed that he had done so before imposing the tax—and if he had reached the logical conclusion on this matter, he would not have proposed the tax in its present form. If the right hon. Gentleman wants his revenue or part of his revenue from this duty he ought to accept my Amendment. I believe it is a proposal which the oil companies will seek to meet by changing the prices of oil and transferring the burden from one to another. I believe that under my proposal they would not nullify the tax because it would only be 10 per cent. on the heavy residual fuel oils. If however the right hon. Gentleman rejects the Amendment and

    569
    leaves the duty as it is, then quite probably his proposal will be nullified by the oil sellers themselves and the duty brought forward to help the coal industry will completely fail. I urge the Financial Secretary to tell us how he proposes to meet the objections which have been raised to this duty and how he proposes to co-ordinate the objects of this taxation with the welfare of the industries concerned.
    7.55 p.m.
    Mr. MALLALIEU: I beg to second the Amendment.
    Before urging some reasons why the House should accept the Amendment, may I say how refreshing it is to hear an hon. Member honestly speaking against the apparent interests of his constituency when he can see that in the long run the course which he is advocating is the right one for the nation and therefore for his constituency? I have not the knowledge of the coal industry which the hon. Member for Blaydon (Mr. Martin) has, but I would like to put to the Financial Secretary certain facts relating to one industry, because that industry is typical and because the facts which apply to it, apply to many others affected by this duty. I refer to the nut and bolt industry which, by the way, has recently had a tax of 33⅛ per cent. placed on its raw material. I believe that the full facts as to the condition of that industry cannot have been properly represented to the Treasury, otherwise I cannot believe that the Treasury would have allowed this proposal to go forward in its present form. This industry formerly did a considerable export trade but during the last few years no fewer than 20 firms of manufacturers of nuts and bolts have had to close down owing to competition. Curiously enough one was holding its sale at the very time when the Chancellor of the Exchequer was refusing, during the Committee stage of the Finance Bill, to make any concession.
    Very few of the companies engaged in this industry are making their depreciation. One firm in Yorkshire I know has entered into contracts, as far ahead as February, 1934—with fixed prices of course. The tax alone will cost that company £1,000 in that period, and it cannot be passed on because the prices are fixed. They will use 1,000 tons of
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    the oil which is to be taxed, and if the tax remains in its present form, it will cost that company no less than £1,000. Those contracts were entered into, as are so many contracts nowadays, not with a view to making a profit—the cost was the bare cost—but merely to keep the works going, in the hope that better times would return. Now this £1,000 additional burden is to be placed upon this company, and it is typical of what is happening in this industry and, I have no doubt, in many other industries too.
    I know of another firm, in the Black Country this time, which employs 1,000 workpeople on the making of bolts and nuts. Seven hundred of them are not directly employed in using oil, but 300 are. No fewer than 300 workpeople are employed in connection with the oil-burning furnaces, and the other 700 are dependent indirectly on this oil, because they too are dependent for their employment on the keeping up of the output from these very furnaces; and with that company the tax amounts to £3,500 a year, even in these depressed times, when there is so little output and in consequence when so little oil is being used. I know of another case, of a rivet works where this tax will account for no less than 6 per cent. of the price of the finished article, which must be a tremendous additional burden when considering foreign competition.
    I agree entirely with the remarks of the last speaker, the hon. Member for Blaydon, that it is not possible in most cases to turn back to coal when once one has gone to oil. After all, one has not spent one's money and taken the trouble to go over to oil just for the fun of the thing. It has only been done because of dire economic necessity, and I have been amazed at the glibness with which certain hon. and even right hon. Members of this House have implied that, just overnight, so to speak, a firm can turn back to coal when once it has gone to oil. The particular firm from which I was giving an example just now estimate that they would get only 40 per cent. of the output of these nuts and bolts if they were obliged to turn back to coal, and that can be expressed by saying that they would have to have 60 per cent. more plant; and the wages would have to be raised on piecework no less than 60 per cent. also, if a man were to be capable of earning in a

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    given period what he can now earn. In those circumstances, turning back to coal is a sheer impossibility, quite apart from the technical reasons, such as the control of temperature, which are absolutely paramount.
    I would like to point out the processes through which these nuts and bolts go just to show what great damage to the coal industry this tax would inflict. In the first place, we have a certain amount of coal and a certain amount of ore taken out of the pits and mines. This coal and ore have to travel, of course, upon railways, which use coal, and they both go to the steelworks, where pig iron is manufactured; and that pig iron cannot be manufactured except in furnaces that use a tremendous quantity of coal. All the time so far coal has been used, and no oil at all. The pig iron is converted into steel, and the steel goes through another process and goes into billets, with still no oil at all. It is only when the billets are sent up to the rolling mills to be made into bars that oil is used at all. All the way along so far coal has been used. In the highly exacting finishing process, however, of turning into nuts and bolts oil is used; and after that there is a certain amount of screwing and tapping to be done, where electricity, which comes from coal too, is used. If you dislocate that process at any one point, you will throw the whole out of gear, and at each of these stages at which coal or a derivative of coal is used, you will hit the coal industry or one of its derivatives.
    It is not so much that direct unemployment will be caused by this tax to the nut and bolt industry, but it is all the way along to the coal industry; yet one of the main reasons for this tax seems to have been to benefit the coal industry. The Chancellor of the Exchequer, very rightly, said that the tax was an exceedingly important consideration when dealing with unemployment, and he suggested that, if this tax were enforced, work might be given to something like 12,000 miners. He was not a bit sure of it, and he did not promise it; but obviously that was his suggestion. The position in 1932 was this, that approximately 2,900,000 tons of fuel oil were used, but of that amount, 1,460,000 tons were used in ways which would render it untaxable, according to the present scheme, in the Navy, in fishing boats, and in
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    foreign-going ships. But the Chancellor has himself added 200,000 tons to that, which leaves approximately 1,260,000 tons of taxable oil. I do not, however, think that anyone would suggest that the 150,000 tons of fuel oil which are used annually for agricultural purposes could possibly be turned over to coal, and I do not think anyone would suggest that the 200,000 tons of fuel oil used by gas undertakings themselves for the purpose of enriching their gas could be turned over to coal either, so that leaves you with 900,000 tons only of taxable oil, and of this, 375,000 tons are consumed by the metallurgical and glass industries.
    I am not an expert on either of those two trades, but, so far as I can see from the outside, it is incontrovertible that the processes used in them are such that it would be highly uneconomic, and therefore utterly bad for the nation, to attempt to force either of those two industries back to coal. Indeed, the mere use of the expression "Back to coal" is quite wrong in many of the metallurgical trades, because coal was never used in many of the newer processes, and never could be. I believe it is not an overstatement to say that some 90 per cent. of the fuel oil that is used in the metallurgical and glass trades is not fuel which could be replaced in any way by coal; so that you are left with 560,000 tons of fuel oil, which is used in the hotels, churches, hospitals, and offices for heating purposes, and most of it, I believe, in London, where, as the Eon. Member for Blaydon has pointed out, traffic and storage conditions are such that it would be almost impossible to turn back to coal, even if it were possible economically. Possibly you might get about half at the very outside; but if you did, the net gain to the miners would be something like 1,200, on the same basis that the Chancellor took when he estimated or suggested his 12,000; so that, although you might conceivably get that small addition to the miners direct, how very many more would you get put on the dole otherwise, in the indirect way that I have tried to point out?
    I should like to suggest to the House this thought about the proposals of the Government in general with regard to coal and fuel. We have had to discuss here various trade agreements recently, in which hon. Member after hon. Member has risen to say that his industry has been

    573
    sacrificed to coal. The same thing is happening here now. Industry is being sacrificed to coal, just as though industry existed in order to give men the pretext of spending miserable hours every day underground delving for this stuff. Surely coal is only delved for in this miserable manner in order to be a help to industry; but now the Government are turning the thing all topsy turvy, and industry is being penalised in order to serve coal, which should serve industry. The real reason for unemployment in the coal industry since the War has been the extraordinary increase in the efficiency of the manner of getting coal and of the manner of using it. Those two things have accounted for a great quantity of unemployment in the coal mining industry; but there have come into existence, largely owing to oil, many new industries, and much new employment has been created, which has kept in check to a certain extent the rise in the figures of unemployment.
    Surely the way to check unemployment is to encourage these new industries, and if it is necessary to turn one's back upon coal, though it may not be, surely the way to encourage people to employ more men now is to give them the cheapest fuel that they can get. Oil has stepped into the breach so far as employment is concerned, and has brought new industries into existence. My submission to the House is that the way to increase employment and efficiency in this country is to encourage that oil, at the same time as encouraging coal to be more efficient still and thereby perhaps to rehabilitate itself.
    8.15 p.m.
    Miss HORSBRUGH: I should like once more to put the case for the jute industry which I have often urged in this House. My hon. and gallant Friend the Member for Montrose (Lieut.-Colonel Kerr) and I are very anxious to learn from the Financial Secretary to-day what decision has been come to by the Government on the subject of this oil which is used for batching in the jute industry. That oil is entirely different from any other fuel oil and cannot in any way be dragged down into the controversy of coal versus oil or even into the controversy inspired by gas. Gil for batching is absolutely necessay in the jute industry and is a raw material of the trade. Wherever possible other
    574
    oils, such as white oil and emulsions, have been used, but a certain amount of mineral oil is a necessity. This tax will be a serious difficulty to be overcome by a trade in winch employment during the last year reached up to 50 per cent. and is only now beginning to recover to a smaller figure. I have had one or two rays of hope from the Chancellor of the Exchequer. On Second Reading he suggested that the matter should be discussed on the Committee stage, and on the Committee stage he said that individual hard cases could be discussed on the Report stage. I hope that that flicker of hope will not be extinguished by the Financial Secretary to-night. This particular case is entirely different from the other cases in which fuel oil is used, and I would plead with the Financial Secretary to consider some form of rebate for the oil used in batching.
    A tax on the oil used in the jute industry will be an extra tax upon it that cannot benefit any other industry in the country, but will make it harder for the jute trade to recover and to take advantage of what the Government have already done by the trade agreements to help it to employ the thousands of men and women who are now walking the streets of Dundee unemployed. I hope that this case will be considered on its merits. The proposal means putting a tax of £8,000 on to an industry that has to compete in the open market and cannot have the same form of protection as other industries. Its chief competitor is India, and enormous quantities of jute goods are still coming from that country where labour conditions and rates of pay are entirely different from those in the industry in Dundee. If the Government give this rebate to help the jute industry, it will not open the door to other rebates, for the fuel oil used in this industry is separate from that used in other industries. I do not mean that I do not hope that some consideration will be given to the whole subject of fuel oil, for this is a tax that will not help industry but in a good many cases will hinder it. I cannot see, however, how the taxation of fuel oil used for batching will help any other industry. It will, on the contrary, make it difficult for a struggling industry to recover its position in the world and to get the chance which this Government ought to give it.
    8.18 p.m.
    Mr. BANFIELD: I want to add my voice to those which are supporting this Amendment. I represent a constituency which is primarily engaged in the nut and bolt industry, and to a growing extent in the brass industry. I have received letters from or given interviews to nearly every employer in my constituency. I have consulted with the men, and I have gone into the business with them. I am confident that the effect of this tax will be to do tremendous damage to the nut and bolt industry. I am satisfied that for every miner which these proposals may put into work, two other persons will be displaced. Perhaps too much may be made of the point that this is a kind of battle between coal and oil. That is not the position at all. As a matter of fact, in the nut and bolt industry and in the brass industry coal is used to a very great extent.
    I would like to draw the Financial Secretary's attention to a typical case which was sent to me by one of the big manufacturers in my constituency. They say that the consumption of fuel in their works during the past 12 months was as follows. They bought 12,000 tons of coal of the value of £3,100. They used just over 1,000,000 cubic feet of Mond gas of the value of £l,970, and 980 tons of fuel oil of the value of £2,915. This firm would have to pay in tax, if the proposals of the Chancellor are carried, a sum of £980 a year. That will mean an increase of 11.3 per cent. on their total fuel cost. This will naturally put them out of the market so far as their products are in competition with foreign made articles. Foreign competition has become keener and keener during the last 18 months, in spite of all the tariffs and quotas, and this £980 placed upon this struggling industry and upon employers who have done their best to keep their works open and to give as much employment as they can during this difficult time, will, they say—and the figures seem to prove it—lead to the ultimate closing down of their works, the unemployment of their people, and above all the loss of thousands of tons of coal which is now used in the works.
    One of the arguments of the Chancellor of the Exchequer was that this tax would help the coal industry, but I suggest that, if the result is that an industry like the nut and bolt industry is obliged
    576
    to curtail its production, and if works are closed down, the only possible result can be that, instead of there being more employment in the coal-mining industry, there must be considerably less. In moving this tax, the Chancellor of the Exchequer said that he had to consider the injury which might be done to other industries. I want to point out to him that since the post-war days we have had a considerable number of new industries, particularly the aluminium industry. That industry is growing steadily; it is a new thing which has been introduced since the War, and for technical reasons it is impossible for it to use coal. It is obliged to use fuel oil. This industry is getting on its feet, and it has been able to compete not only in the home market but in the foreign market, and tremendous injury will be done to it if this tax is imposed.
    In the course of my investigations into this matter, I have found that the nut and bolt people in my constituency have entered into contracts extending in some cases over the next six or nine months. They entered into them without having any idea that this tax was likely to be imposed on them. They quoted certain prices, keen prices, and as they are tied down by their contracts, the result of imposing this tax will be that for the next six or nine months, instead or getting any profit, they will be in the position of losing money every week that they are engaged on those contracts. That is a. very serious matter for them and for the men whom they employ. This is an industry which has been very hardly hit indeed since post-war days. Even to-day only 33⅓ to 40 per cent. of the people normally engaged in it are employed. It is an industry which wants encouragement and help, but, instead, it is suddenly faced with this tax, which in the vast majority of cases will make all the difference between whether works can continue to struggle along or will have to "give up the ghost," as it were.
    It is an industry in which oil has been used for many years; oil has always been part and parcel of the process, and those who say that this industry can go back to coal and will find that coal is cheaper do not understand the technicalities of the case. It is impossible to go back to coal if the industry is to flourish at all, even if it is to continue in existence; it must use oil fuel alongside coal. If we could

    577
    get the output of the industry increased by 20 or 30 per cent. considerably more coal would be used. The mining industry has everything to gain and nothing to lose by encouraging the nut and bolt industry to increase its output from 60 per cent. of its capacity to 90 or 100 per cent., because then far more coal would be used —with, of course, a little more oil fuel. To attempt to play-off oil fuel against coal and to say that there is some antagonism between the two is altogether a wrong way of approaching the matter. Fuel oil and coal can be used side by side, and if we can make industries like the nut and bolt industry prosper more coal will be used and more employment will be found for miners.
    This Amendment strikes me as a happy attempt at a compromise. It says to the Chancellor: "If you feel that you must have some tax, this will provide a Way out." The tax will be quite bad enough even if it is only 10 per cent., but I am satisfied that the Amendment is an honest attempt on the part of everybody concerned to arrive at a compromise, because I am certain that, unwittingly, a very serious and grievous blow is being dealt to one of the old-established industries of the Black Country which has furnished stable employment for men for many years, and which is carrying on to-day in spite of all difficulties. Employers and men alike are endeavouring to keep up the output, and to increase it, and the Government ought seriously to consider the plea which the industry is making. Within an area of not more than 10 or 12 miles' radius this tax will take no less than between £50,000 and £60,000 a year out of the pockets of employers, and that will make just the difference between their being able to carry on and being compelled more or less to close down.
    When introducing this tax the Chancellor said he was prepared to consider the special case of industries which might be hit, and knowing that the Chancellor has local knowledge of this area and of what is going on there I am surprised that he should not have recognised that if there was one industry which was entitled to some consideration it was the nut and bolt industry of the Black Country. I hope, however, that the Financial Secretary will see his way tonight to accept the Amendment. Here is a surprising thing which I think is worth mentioning. The employers who have
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    been urging me very strongly to put the case which I have presented to-night are good and loyal supporters of the Conservative Government. They did their best to prevent me coming to this House at all. I have suggested to them that it is very hard indeed that they should be hit so badly by those whom they have always supported and have always looked upon as their friends. I suppose there is no gratitude in politics, otherwise the Chancellor might have thought about his loyal supporters among the employers in the Black Country. But so far as I am concerned it is not a matter of the political opinions of the people I represent. I represent the constituency as a whole, employers and workmen alike. People of all political opinions in the constituency, including the tradesmen who depend for their living upon the prosperity of the nut and bolt industry, are united in asking, in praying, almost, that consideration should be given to this tax on fuel oil so far as it affects the Black Country. I hope the appeal I have made may meet with some response. If not, then I am sadly afraid that, possibly without knowing it, and possibly feeling that the position is not so serious as has been represented, the Chancellor will have dealt a very heavy blow to an area which is struggling under very great difficulties to keep its works going and its people employed.
    8.33 p.m.
    Mr. MOLSON: The hon. Member for Wednesbury (Mr. Banfield) has been "chipping" the Conservative party because it is not entirely united on this matter. May I suggest to him that he should look over previous Division Lists, when he will find that a large number of Members of his own party, who are convinced that this tax is in the best interest of the mining areas, having a due regard to the safety of their own seats, abstained from voting against the Government on at least one occasion? I have no complaint against an hon. Member like the hon. Member for Colne Valley (Mr. Mallalieu), who is opposed to a tax of this kind, who stands firmly for Free Trade, who stands for laissez faire. I can understand that those who still abide by that doctrine would say that no attempt should be made to come to the assistance of any particular industry which is depressed, and that no attempt

    579
    should be made to encourage the industries of this country to consume British-produced rather than foreign-produced fuel. Those of us, whether Conservatives or Socialists, who are inclined to believe that in these days some sort of foresight and some kind of planning are necessary, find it less surprising that they should vote against it than that a number of hon. Members of my own party who sit for safe seats in the South of England, where there are no coal mines, and who for a long time have been carrying on a propaganda in favour of high duties for all other industries, should now oppose this tax which has been introduced, belatedly, by the National Government in order to come to the assistance of, perhaps, the most depressed of all the industries in this country.
    I think the argument against those of us who desire to encourage the use of coal has not been put with entire fairness by our opponents. They have constantly said that it is our purpose to penalise the use of a newer, more up-to-date and more efficient fuel, and to drive industry back to the use of solid fuel. That is not our purpose. We are perfectly willing to admit that, during the last 10 or 15 years, the coal industry may have been far behind the oil industry in the development of its selling organisation and in the technique of producing more scientific and up-to-date methods of consuming coal. During the last few years the coal industry has been making great strides in the production of oil and pulverised coal, and it is in that direction, as was said by the right hon. Gentleman the Member for Hillhead (Sir R. Horne), that we, who are concerned for the prosperity of coal fuels, are looking for the revival that we believe is to come.
    Already there is a turn in the tide. A short time ago oil was fashionable. A number of large hotels in London at that time installed oil-burning plant, for the purpose of. central heating, but you find that the latest hotels in London have returned to coal or to derivatives of coal. There are actual cases of a replacement of an oil-burning plant by coal, because coal, with mechanical stokers, has been found to be so much cheaper. As a purely business proposition, managers of hotels, local authorities, and schools have preferred to return to coal, believing it
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    to be the more economical and efficient method of heating. We, who welcome these taxes and who ask the Chancellor of the Exchequer to show his usual courage and to stand firm for the principles in which he believes take the view that this duty will have a most helpful and salutary effect in giving just that encouragement to the more scientific use of coal which is needed at the present time and in order to encourage reversion to coal.
    It is upon not only reversion to coal that we rely. There is still a tendency for coal to be replaced by oil, not, as I maintain, because in most cases oil is actually a more efficient fuel, but because it must be admitted that, for many purposes, it is more convenient. It requires more organisation and more thought to use coal than to use oil. I would draw the attention of the House to a most interesting scientific experiment which is being made, and which is a matter of grave concern to those of us who sit for coalmining constituencies. At least two railway companies are carrying out experiments with Diesel engines to replace steam locomotives. All my prejudices are against any attempt to interfere with the ordinary progress of industry, but I ask hon. Members from the purely practical point of view and to whatever party they may belong, whether, when nearly 300,000 miners are unemployed and probably permanently unemployed, this House could allow the railways of the country to change to Diesel engines and to cease consuming coal? No theoretical arguments about efficiency ought to weigh in a matter of that kind. It would be such a grave economic and social problem that I believe that some special encouragement would have to be given to the railways to continue to burn coal.
    Most of the speeches to which we have listened to-day have drawn attention to hard cases. There must inevitably be hard cases when you introduce a new tax. I believe, although I was not in this House, that disaster was foretold for all industries when the Petrol Duty was introduced. Those prophecies have not been fulfilled. If there are hard cases, it is because this taxation has come too late. Had it been introduced, as it might have been, years ago, far less dislocation would have been caused by it. There may be cases where hardship is caused, like the use of mineral oil for batching in

    581
    the jute industry, about which the hon. Lady the Member for Dundee (Miss Horsbrugh) so frequently speaks. There is the case of the glass industry. There is the case which I myself put before the Chancellor of the Exchequer, of one of the metallurgical industries, where, I am told, it is only possible to melt the scrap brass and to refine it simultaneously by the use of oil. Gas could be used, but it would be three times as expensive. One of the few matters in which I agree with the hon. Member for Blaydon (Mr. Martin) is in asking the Chancellor to give further consideration to the possibility of modifying the legislation which now governs the gas companies of the country.
    I recognise that there may be insuperable administrative difficulties in giving some rebate, in the case of those particular industries and processes where oil is the only suitable fuel. I trust that the Chancellor of the Exchequer has given sympathetic consideration to that matter, because obviously it would give general satisfaction, in those cases where oil is the only efficient and suitable fuel, if those industries could be spared the extra burden which, inevitably, this duty must impose. Upon general principles, I want to congratulate the Chancellor upon having, as soon as the National Government came into office, done for the mining industry what ought to have been done long ago, and I hope that he will not be weakened in the attitude that he has so far taken up.
    8.43 p.m.
    Colonel WEDGWOOD: The hon. Member for Doncaster (Mr. Molson) is somewhat illogical. In the first place, he urged that the duty should be imposed, and complained that it had not been imposed before and then he urged that some particular industry should be exempt, and that the grounds of exemption should be that gas could not be substituted for oil in that industry. I ask him to extend from the particular to the general, and to help us this afternoon in exempting all those industries where it is impossible to substitute for fuel oil the older fashion of coal.
    Mr. MOLSON: That is what I said.
    Colonel WEDGWOOD: The hon. Member urged the Government to encourage one industry, not realising that the
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    Government, by that very action, would be discouraging the general advance of industry.
    Mr. MOLSON: The right hon. and gallant Gentleman misrepresents me. I realise that his position is perfectly logical He is a Free Trader all through. At the present time, the coal-mining industry is almost the only one which has not derived a direct benefit from tariffs. I said that I would welcome it if the Chancellor of the Exchequer could give a rebate in cases where coal or derivatives of coal would not be an efficient substitute for oil. If that applies to the pottery industry, or to any other particular industry, I should claim that exemption to be made in those cases. I gravely doubt, however, whether there are many industries where derivatives of coal would not be equally efficient.
    Colonel WEDGWOOD: The argument is that, because the coal-mining industry is not making progress, it (might at least be saved from some of the charges upon it—
    Mr. MARTIN: It is getting benefit from the trade agreements.
    Colonel WEDGWOOD: We might save the coal industry from some of the drawbacks from which it suffers without penalising other industries in favour of coal. I would point out to the hon. Member that experiment is now being carried on, and is being encouraged by the Government, on the more economical use of coal—on economy in fuel consumption; and that is inevitably resulting in a pound of coal going farther than it did before. There is the use of gas, and the use of electricity. Would the hon. Member bar the railways from the use of electricity? All these things are derivatives from coal, and yet they represent a more economical use of the power derived from coal; they all reduce the need for the consumption of coal. Therefore, every stage forward in the Government's own research tends to reduce the production of coal, while increasing the number of heat units that can be produced from it.
    The general objections to this tax—I am not talking about any particular industry—are two-fold. In the first place it is stupid, and in the second place it is unjust. Let me take first the stupidity of it. This is, as is evidenced by the

    583
    hon. Member for Doncaster and by all the speeches we have had on the question from the Chancellor of the Exchequer, a desperate effort to save the coal industry, apparently regardless of the fact that the coal industry of this country depends for its prosperity upon the prosperity of all the other industries of the country. It is useless to expect coal to recover unless the industries which use coal recover, and those industries which use any form of fuel are potential customers for the coal industry. Worse than that, it is an attempt to stop the most economical use of coal. I noticed to-day that the ex-Kaiser of Germany has been giving an interview to an English journalist on what he would do to save the world. That is a subject upon which we have all been interviewed during the last five years, and there is no reason why the ex-Kaiser should not give his views too. I recommend his view to the Chancellor of the Exchequer. His view is that all the suffering in the world is due to this wretched machinery—that there is too much machinery, that people keep on inventing new labour-saving dodges so that there is nothing left for the worker to do, and presently the whole world will move automatically.
    Mr. CAPORN: That is the Labour party's view.
    Colonel WEDGWOOD: That point of view is a perfectly understandable one. That was why the Luddite rioters broke up machinery 100 years ago; that is why the Chancellor of the Exchequer would do anything to save the coal mining industry. Apparently people working underground are better than people working above ground. But I would call the attention of the House to the fact that the ex-Kaiser is wise enough to say that it should come about by international agreement—that any attempt to stop the use of machinery and substitute manual labour should at any rate be international. If it were felt by the bulk of opinion that it was desirable to stop the use of machinery and go back to using spades and so on, obviously the only sensible way of doing it would be by international agreement, and not by coming upon English industries alone and saying to them, "We will stop you from using machinery, we will stop you from using the latest and best methods
    584
    of producing goods or heat, and will let the other nations of the world go on doing it." If that were done, it certainly would not increase the opportunities for the employment of English labour; but that is what is being done here.
    Really, every hon. Member, in whatever quarter of the House he sits, knows what would be the result of any step to make production more expensive, to prevent the use of machinery, to tax machinery. We used to tax it, but we gave it up, because we said that a tax on machinery was a tax on progress, that it put our nation behind others in the struggle for competitive markets. What is this but another tax on machinery? It is in the interests of coal, or may be in the interests of coal, or is alleged to be in the interests of coal, but it is none the less a tax on machinery, and, therefore, it puts us at a disadvantage in the neutral markets of the world, and makes the recovery of British industry more difficult. The hon. Member for Doncaster protests about the Diesel engine, and says, if it were to come into use on the railways, where would the coalminer be? But the fact that this oil was not taxed has made the Diesel engine trade in this country. We have replaced Germany as the chief producers of Diesel engines in the world because this oil was taxed in Germany and it was free here. The hon. Member has not realised that the development of a new industry in this country by using the latest methods has helped production, not only in the case of the Diesel engine, but in countless other industries as well. The Diesel engine would not come unless it was wanted. The manufacturers themselves are the best judges of what is economical in production. This is putting back the clock.
    And yet I think the stupidity of this tax is not so clamant as its injustice. Its injustice is patent to everyone. The tragedy is that the Chancellor of the Exchequer has not the vaguest idea that it is his business to levy taxes justly. He sees only the change that he wants to make; he does not realise that it is the duty of the tax collector to be universal in his incidence, and to call on all citizens alike. When 2d. is put on or taken off beer, it is not the brewers who suffer or gain, it is the consumer. When Income Tax is put on, it falls upon all alike according to their income.

    585
    Super-tax, Death Duties, a tax on sugar, a tax on tea—all these are taxes which fall upon everybody, and there is no particular injustice. Nobody can treat the tax as a punishment; he treats the payment of the tax as a necessary evil, affecting A and B just as much as it affects him. I do not know of any other tax which can be regarded, as this one can, as a punishment for having done something wrong.
    Mr. HALES: Something right.
    Colonel WEDGWOOD: The punishment must be for something which the Chancellor of the Exchequer believes to be wrong. Why should isolated manufacturers here and there be forced to pay £1,000 a year when other people do not? That is the injustice of the tax. If this were an extra half-farthing in the £ on the Income Tax—which is about what it amounts to—it would fall on everybody alike.
    In every little town in the country there is someone who is being penalised because he has changed over to oil. Many of these people have entered into contracts a year ahead. They base their cut prices on the cost of production, taking it as what it was three months ago. Suddenly you turn a profit into a loss by imposing a fine on them. If it affected the whole of the machinery in the country, there would be something to be said for it on the ground of justice, but you cannot justify selecting isolated trades and putting a 40 per cent. tax on their raw material, in some cases adding 6 per cent. to the cost of production, on grounds of justice. You might justify it on grounds of necessity if you had to get the money at all costs and had exhausted every other avenue. If you found this £2,000,000 by an increase of Income Tax falling on those who made profits and not, as this tax does, falling on manufacturers who are making losses, it would be something in the nature of justice, but this system is unjust. I have a letter here from some asphalt manufacturers who say:
    "The very existence of our bitumen factory depends on your success. Heavy oil is the only known flux for bitumen and the tax gives our big American competitors roughly a halfpenny a gallon, on which they bring in their compounds as bitumen compounds and, therefore, escape tax, which is roughly 50 per cent. of the total."
    Mr. CLARRY: The bitumen that comes in is subject to a 10 per cent. tax.
    Colonel WEDGWOOD: Yes, and this gives them 50 per cent.
    Mr. CLARRY: In both cases they are foreign materials which can be replaced in this country by a British material.
    Colonel WEDGWOOD: Quite so, and that is why I ask for this Amendment to limit the tax to 10 per cent. That would leave our manufacturers competing on equal terms with their American rivals.
    Mr. CLARRY: There is no need for either the bitumen coming in in a finished state or the bitumen being produced in this country. There is a British commodity which will answer both purposes.
    Colonel WEDGWOOD: In that case, your complaint should be against the Chancellor of the Exchequer for not having put a higher tax on. There is at present a 10 per cent. tax on all bitumen and 40 per cent. on the raw material, which is half the cost of the bitumen produced in this country. That is so manifestly and obviously unjust that I cannot imagine anyone supporting the tax on the ground of justice. One of the first canons of taxation is that the citizen should feel that he is being justly taxed. This means a tax of 2 per cent. on the cost of production of glass. [HON. MEMBERS: "More."] I am taking a very moderate estimate. That is cheap glass turned out in this country in recent years against hot competition from abroad. It is not sold on this market but sold abroad. Are you really going to put those people out of business so far as their export trade is concerned? The nut and bolt people, the glass people, and the asphalt people are bad enough, but some of these metallurgical trades are worse hit than anyone else. They have gone in for the enamelling business, and they have cut out the Continent. They have got the foreign market by cutting prices and wages. A British industry once more finds its place in foreign markets, and you are putting a 40 per cent. tax on their raw material. That is an injustice. You are doing it with the best intentions.
    Every one of these people is being penalised by this tax, which amounts to far more than 5s. in the £ Income Tax.

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    Directly you do that, you arouse in the whole community impotent but none the less violent indignation against the Chancellor of the Exchequer who imposes the tax. He cannot want money as badly as that. He knows that there are better, ways of protecting the coal industry than by trying the Canute dodge of keeping back the tide of progress. He has made it far more unjust than it was before by omitting the most powerful industry using fuel oil. He previously took out the fishing industry and the overseas shipping industry because they had to meet strong competition. He has taken it off the coastwise shipping trade, nominally because they were subject to foreign competition. They are far less subject to foreign competition than the glass, nut and bolt and bitumen trades. These people who are competing in neutral markets know what foreign competition means. What competition have steamers running from Liverpool to Llandudno, and running round the islands of Scotland, to face? He has taken the tax off them, because they are powerful and have organised their opposition better. These metal and glass people are all small men, and they are made to suffer injustice. From the point of view of injustice, from the point of view of this stupid effort to reverse progress, to stop economical production, to get back to spades and ploughs, to stop machinery—for both these reasons I hope that in the interests of next year's Budget, when this matter must be reconsidered, hon. Members will go into the Lobby in support of an Amendment which leaves the tax there, but, at any rate, limits it to 10 per cent. instead of inflicting a 40 per cent. tax on the raw material of a lot of struggling industries.
    9.5 p.m.
    Sir ADRIAN BAILLIE: I believe that I am only the second Member this afternoon to rise in support of this tax and to resist the Amendment which is presently being discussed. The various Amendments on the Order Paper, and the speeches to which we have listened with great interest and considerable sympathy this afternoon, have all consisted of claims for the remission or modification of the tax. I am sure that the Chancellor of the Exchequer has carefully examined these claims and has given them due con-
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    sideration. I cannot help feeling that there can be no person in a better position than the Chancellor of the Exchequer and his Departmental officials, at the end of the day, to weigh in the balance all the claims of the various interests concerned. Allusion was made to the hardship which would result in certain trades, particularly to the nut and bolt industry. Admitting that the nut and bolt industry requires in its finishing processes the use of oil, I have it on fairly good authority that a firm in the business of low temperature coal carbonisation have represented to the industry in Birmingham that they are able to supply creosote oil from coal at a lower price than the imported oil presently used. Reference was made by the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) to the glass industry. I will not endeavour to pose as an authority upon that industry, but it is claimed that a survey will show that a combination of producer gas and town gas is rather more largely used than oil, and is considered by the firms who use the combination as being equally efficient.
    A great many of us received recently a memorandum from the National Union of Manufacturers. I read it with interest, and most of the speeches this afternoon bore a certain resemblance to it. The first point made in the memorandum—and it has been made and repeated in the speeches this afternoon—is that the displacement of employment in the coalmining industry is due more to the increased efficiency in the industry and the increased efficiency in the utilisation of coal than to the influx of imported foreign oil. The number given as having been displaced as a result of increased efficiency since 1922 is 200,000. I maintain that the statement is entirely misleading and erroneous. It is clear that in those years the displacement of at least 50 per cent. of those miners was due to our loss of export trade. As far as such statements are meant to convey that the diminution of the coal output or the displacement of miners from their jobs has nothing to do with the influx of oil and the extension of oil-using machinery in this country, they are palpably misleading, because it is also claimed by those who support the Amendment that, as a result of the extensive and expanding use

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    of fuel-oil-using appliances in this country new employment has been given and new industries have been created. New employment has no doubt been given to men not previously employed in those industries, but I suggest that that was nothing more than a diversion of employment from the coal mining industry, and, therefore, from the railways and from the the industries previously engaged in the manufacturing of coal-using appliances and so on.
    Colonel WEDGWOOD: Did the hon. Member say "diversion?"
    Sir A. BAILLIE: Yes and I am delighted at that intervention, because it is since this measure is supposed to be a diversion and a rediversion back to the utilisation of coal that I am pleased to support my right hon. Friend the Chancellor of the Exchequer. I suggest to the right hon. and gallant Gentleman that in the diversion, on balance, the further use of oil-using appliances has created more unemployment than it has created employment. It has been stated—and it certainly was stated in the memorandum—that the estimate of the Chancellor of the Exchequer that the 2,000,000 tons of foreign oil presently consumed in this country can be replaced by the coal equivalent of 3,000,000 tons and therefore provide employment for an extra 12,000 miners, was an erroneous estimate. It has been urged that in a very large number of cases it would be impossible to revert from oil to solid fuel. I have noticed in particular this afternoon the constant references to solid fuel, but I am quite sure that the belief of the Chancellor of the Exchequer that in the course of time the foreign fuel oil required in this country will be replaced by derivatives from British resources, was not based on the assumption that solid fuel would replace oil, but, on the contrary, that this replacement would be from the derivatives of coal, pulverised fuel, coloidal fuel, creosote oil, compressed gas and so on, and that ultimately it will be found commercially attractive to produce fuel oil from our great coal resources by one or other of the methods of carbonisation.
    It was suggested by an hon. Member who spoke from the opposite benches that in and around London it would be impossible for hotels, hospitals, churches
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    and so on to return to the use of solid fuel because of the transport problem it would create. I cannot believe that such an argument would have much weight with the Chancellor of the Exchequer. All the arguments to which we have listened this afternoon are in point of fact the very arguments which the cunning salesman of the brilliant oil barons in the past have used to persuade people to buy oil-using plant and appliances. I agree with the hon. Gentleman who brought that question forward that if the coal industry and the coal barons would use the same brilliance and cunning in their salesmanship they could use precisely similar arguments to induce industries in this country either to revert to, or at least take up, coal-using appliances and discard the use of oil-using appliances at this time. At this moment the various processes for the better utilisation of coal or the derivatives of coal are only awaiting an impetus, and they are only awaiting the impetus which this proposition will give them for these coal-using appliances to be widely used. I will mention only three to exemplify my point. It is only a matter of time before compressed gas can be widely used for heavy goods vehicles, and it is only a matter of time before producer gas can be used for light goods vehicles. It is only a matter of time before pulverised coal can be used for power-producing plant.
    Colonel WEDGWOOD: What about the price?
    Sir A. BAILLIE: The price will naturally depend upon the demand. The ultimate effect of the tax, and I am sure that that is the desire, is to foster and encourage the nascent industry in the production of oil from coal. Our coal markets abroad have gradually dwindled and have been taken away from us by tariffs, quotas and the like, and our home market is continually being eaten away by the extensive and expanding use and import of fuel oil. Coal is really our only great national resource, and those who realise that and wish to maintain the coal-mining industry and those employed in it cannot better encourage the industry than by resisting the Amendment and supporting the Chancellor of the Exchequer.
    9.17 p.m.
    Mr. MANDER: My hon. friend said that it was possible to substitute British fuel for the fuel imported from abroad. That statement is entirely disputed by the people who have to use the fuel. The manufacturers who use the fuel do not admit that it is available in assured quantities and of the right quality. Until that situation arises the manufacturers will in the meantime have to pay a very much higher price for the fuel under this tax.
    Sir A. BAILLIE: I can quote prices which are competitive. Naturally, the supply is limited to-day but the burden of my argument is that these fuel oils can to a large extent be replaced by derivatives from coal, such as gas.
    Mr. MANDER: That may well be so, but for the time being the unfortunate British manufacturer, who is struggling, will have to add a very large amount to his annual charges as the result of this tax. I suppose that it is too much to hope that the Chancellor of the Exchequer will make a departure from the decision already announced, but I am sure that if he had realised before he imposed the tax the hardship that was going to be involved he would not have brought forward this proposal. I hope that even now the Government will have the courage to realise that they have made a mistake and that they will withdraw the tax. If it had been intended to introduce it there should have been due notice to the manufacturers concerned. If they had been told that in a certain time, a year or so hence, a tax might be expected they could have put their house in order, or if the tax had been imposed at a lower rate at the beginning they would have had a fuller opportunity of meeting the new conditions. It is the suddenness of the tax that has filled them with great misgiving and with feelings of indignation which ill befit supporters of the National Government, as most of these manufacturers are.
    The Chancellor of the Exchequer seems to me to have used two entirely inconsistent arguments in connection with different parts of his Budget. When he was defending the concession in regard to the Beer Duty he said: "I am not concerned with the effect of it. I am not concerned with its social effects or
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    its effects on employment but I am simply thinking of revenue and nothing else." He uses an entirely inconsistent argument in defending the Fuel Tax. He says: "I am thinking of the indirect result of this. I am doing it partly to get revenue and partly to assist coal." I should like him to give the House some indication of the way he can reconcile the use of two entirely inconsistent arguments in the course of the same Budget. I am not going to go over the whole ground that has been dealt with in the Debate to-day, but on this occasion, as on every previous occasion when the matter has come before the House, I want to say something in defence of the manufacturers of the Black Country. The industries most hardly hit by the tax are chiefly to be found in the Midlands and the Black Country—the glass industry, the bolt and nut industry, the drop stamping industry, the aluminium casting industry, non-ferrous metals and tubes.
    To show how keen the competition is at the present time and how intensified the struggle is in the export trade, I would point out that recently a very large order for enamel goods was lost by British industry in the West African market by one-eighth of a penny per dozen. That fact makes it quite clear that by the imposition of this tax we shall undoubtedly lose a good many orders in our export trade and that further unemployment will be created to offset any employment that may come in the coal industry. The Chancellor of the Exchequer has exempted the coastwise shipping because it is an industry very hard hit. So are all the industries to which I have referred. They are having a terrible time in connection with foreign competition. If the Chancellor of the Exchequer has made a concession in regard to one industry I do not see why these other industries should not be justly treated in the same way. It has been pointed out that the nut and bolt industry will have to pay between £25,000 and £40,000 a year extra as a result of this tax. It can well be imagined how they regard a proposal of this kind. On behalf of the industries of the Black Country I protest very strongly against a wholly gratuitous imposition of this kind which is going to handicap some of the most progressive industries and manufacturers in. the country and make their struggles unnecessarily very much harder than it has been up to the present time
    9.24 p.m.
    Mr. T. WILLIAMS: Perhaps I may be forgiven for intervening in the Debate, because the hon. Member for Doncaster (Mr. Molson) claims to represent the mining industry and has seen fit to congratulate the Chancellor of the Exchequer on two or three occasions upon the magnificent benefit that he is about to confer on the mining industry. It so happens that I have at least twice or three times as many miners in my division as the hon. Member for Doncaster has in his division. I have not noticed any great bursting enthusiasm on the part of the coalowners for my support of this taxation, neither do I recall a single instance where a miner, a miners' lodge or any miner representatives have made a request for this special piece of taxation. On the other hand, I have probably one of the largest glass works in the country in my division. It employs up to 5,000 people. I have observed no activity on the part of the company in inviting me to oppose this taxation, and the Chancellor may draw a little comfort from that fact. I have also in my division one of the two big low temperature carbonisation plants, and no approach has been made to me as apparently they are unconcerned whether the tax is imposed or not. I can, therefore, claim to be in a strictly impartial position. I can support the duty and secure the encomiums of the mine workers, if I can make them believe this will help them. I can oppose the duty and secure the encomiums of the glass firms, if they can be made to believe that it will help them. I can also secure the encomiums of the low temperature carbonisation firms, if they can be made to believe that a duty on oil will be helpful to them.
    I deprecate the suggestion that has been made that the imposition of this duty upon heavy oil is going to be a magnificent help to the mining industry of this country. The mine workers should not be misled into the belief that something is going to happen which will provide work for many thousands of them. The Chancellor himself, in the most optimistic estimate he could possibly have given, assuming the whole of this oil was no longer used after the imposition of the duty, and that solid fuel was used instead, estimated that 12,000 mine workers would be affected. Since then the right hon. Gentleman has withdrawn the duty on
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    nearly 50 per cent. of the oil. Out of the 2,000,000 tons of oil which we used last year, and which is equivalent to 3,000,000 tons of coal, he has made concessions affecting approximately 750,000 tons of oil. His original estimate, therefore, of 12,000 mine workers has now been materially reduced, on that basis, to 7,500. Since then a very careful analysis has been made and the manufacturers' organisation, which circulated Amendments on Friday last, has by a very careful examination whittled down the possible employment of mine workers to 1,200. I submit that the only question before the House is whether it is worth while to impose a duty on a large number of new and growing industries when the net result to the mining industry is so small. After all, finding work for 1,200 miners out of 360,000 who are unemployed affects only one-third of 1 per cent. It would, of course, be worth while employing 1,200 men as long as they are not employed by putting 3,000 others out of employment.
    This is a very doubtful step which the Chancellor is taking. I commend him, however, for having expressed what he believed to be a real and practical solution for the mining industry. I wish I could see the same possibility that he saw when he decided upon the imposition of this duty. Even the mine owners are not too optimistic about its result. I could have understood the mine owners taking very definite steps in 1919 when the Peace Treaty was being negotiated, but they never said a word. When the Irish trouble was developing, with the result that we are losing a market of 1,000,000 tons, not a word came from the coal owners. We must also remember that, by superior efficiency on the part of the producers of gas and electricity, their consumption has been reduced between 1922 and 1931 to such an extent that 50,000 or 60,000 miners have been displaced as a result. In the same period the miner's output has increased from 217 tons to 353 tons per annum, an increase of 16.2 per cent., which has meant the displacement of 142,000 workers. If we are striving for efficiency in the mining industry and in the production of electricity and gas, it is hardly fair to condemn efficiency in some other industry. Moreover the Coal Utilisation Council is constantly advertising how the utilisation of coal can be carried out on a scientific

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    basis. Yet using less coal instead of more means fewer workers employed.
    The duty may have reactions in certain directions where coal is now being used. For instance, the use of coal in making steel for machinery may be less, and these reactions may be more than the direct effect upon employment. If the Chancellor wanted to encourage the use of coal instead of oil, it would perhaps have been best to have adopted the suggestion of the hon. Member for East Wolverhampton (Mr. Mander), namely, to relieve from duty those who have already changed from solid fuel to liquid fuel, and to impose a duty on any who make the change in future. That would have been a warning, and would not have been a burden on those persons who, being in charge of industries, felt that they should use the fuel which was cheapest for them. In the circumstances, the mining community, who have been led to believe that this duty will create vast opportunities for employment, will suffer disillusionment very rapidly, for little or no increased employment for miners will result from the duty. It is because of that fact that, from my very impartial position, I merely express doubt as to the wisdom of the Chancellor's action.
    9.35 p.m.
    Mr. OWEN EVANS: I desire to support the Amendment because I feel that it is better to have half a loaf than no bread at all. I, and many other Members of the House who are concerned in this matter from an industrial point of view, knowing the use to which oil has been put in recent years consider the tax unsound and thoroughly bad from the point of view of the industrial development of this country, and in view of the many speeches which have been made from all sides against it I cannot understand why the Chancellor of the Exchequer has remained so stubborn. It is unfortunate that the tax has been represented as having been put on for the purpose of helping some other industry, and I deprecate the contest which has been going on inside and outside the House between the industrial interests of the producers of fuel, other than fuel oil. The Chancellor of the Exchequer on a previous occasion specifically referred to the representations made to him on behalf of the
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    coal industry and other industries, such as electricity and gas. I do not want to speak from the point of view of a producer of fuel and I deprecate the House being asked to consider the question from that point of view.
    I am not concerned with oil interests at all. With the knowledge and experience I have had of the use of fuel in industry for industrial operations I am concerned that nothing should be done by the Government which will in any small degree retard the progress industry is making by using any fuel which is suitable for any particular industry. I want to impress this on the House. We do not want to contest the right of coal to its place in industry. Many of us are concerned with large industrial operations in which we use a far greater quantity of coal than any other fuel. I am myself concerned with one industry which uses a larger quantity of anthracite coal than any other single industry in the whole world. But we do not want to be told, after serious and careful consideration and investigation we have found that no other fuel but oil will do the work as efficiently and as economically, that we are to be penalised for using that particular fuel in order that we should turn back to coal. If the tax is intended for the purpose of helping the coal industry, if it is intended for the purpose of inducing, or compelling, people to go back to the use of coal, then the Chancellor of the Exchequer is embarking upon a hopeless task. Any person of experience will know that there are certain operations which cannot be carried out so efficiently and so well with any other fuel but fuel oil, except, of course, electricity or gas; but if we have to use electricity or gas it means that the cost of fuel will be increased two or three times.
    I ask the Chancellor of the Exchequer to give ear to the appeals made from all sides of the House. If he will go to his own area, the great city of Birmingham, where I have the honour to be associated with one of the best and well known industries, he will find there, and I will show him, processes which are able to compete with foreign competitors without the aid of Tariffs and if he will investigate for himself he will realise that their operations are dependent solely upon the use of oil fuel, and that no other fuel can compete with it to-day. If the tax

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    is kept on, or if even a small tax is put on, he is placing a considerable burden on British industry, a needless burden, without anything in return for it. The future of coal is unknown. We have heard some prophesies by distinguished Members of the House in regard to coal, but the right hon. Member for Hillhead (Sir R. Home) does not know what is the future of coal. Careful investigations are being made and we all hope there will be derived as one of the derivatives of coal some form of oil fuel which will be available and economical, but let me tell the coal industry that it is better for that development that those who are now accustomed to the use of oil fuel should have their furnaces and equipment ready for that day. It is a great disadvantage to coal itself if we are to be deprived of the opportunity of getting experience in the technique of oil fuel. All the arguments have been put and I do not think that anything more can be usefully said, but I want to impress upon the House this fact, that whatever the Coal Utilisation Society may say, I have read many of their pamphlets, it is untrue to say, it is an exaggerated claim to make, that coal in any form to-day and for years to come can take the place of oil fuel in many industries which are successful and prosperous, and which are competing with foreign producers. I ask that even at this late stage the Chancellor of the Exchequer will reconsider the matter and ask himself whether he is not dealing a hard blow to British industries by the unnecessary imposition of this tax.
    9.45 p.m.
    Mr. CHAMBERLAIN: The hon. Member who has just spoken expressed the view that all the arguments had now been employed and that nothing more could usefully be said in the Debate on this subject. The representative of the Government must, however, make some reply, and I therefore take this opportunity of intervening. I have listened to most of the speeches this evening on this subject, and it does not appear to me that the general character of the arguments has in any way developed since we discussed the same matter at an earlier stage of our proceedings. Once again we have had very different views expressed by different exponents, and we have been able to realise how very much our views on a subject of this kind are affected by
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    the nature of the interests of our respective constituents. There is no doubt that this is one of those cases in which there is a great deal that may fairly be said on both sides of the question. The particular Amendment which we are discussing would provide that a duty of 10 per cent. ad valorem be substituted for the specific duty which is in the Bill. As a matter of fact, the administrative difficulties in the way of an ad valorem duty upon imported oil are so great as to make it impracticable.
    Really the Debate has not turned upon the difference between the specific and the ad valorem duty; it has rather ranged over the whole question whether a duty is to be justified at all or not. I submit that in a matter in which a great many different industries are affected in different ways it is really impossible to take a final decision upon individual cases, and that the House must try to weigh up the general considerations, and see on which side the evidence brings them to place the most weight. In considering this matter we have to think first of all what is the purpose of the duty, and afterwards what may be the results. In an earlier speech on the same subject I pointed out that there were three purposes in view. First, there was the actual revenue which the duty might be expected to provide, amounting to some £2,000,000 in the present year. Secondly, I indicated that I was concerned to protect the duty which is now being derived from a competitor of heavy oils, namely, the Petrol Duty. Thirdly, I said I desired to consider very particularly the interests of the coal industry and the industries which were closely allied with it, including, of course, the gas industry and the electricity supply industry.
    The hon. Member for East Wolverhampton (Mr. Mander) confessed to finding serious inconsistency in my behaviour, because he said I used entirely different arguments when dealing with this duty from those which I used when dealing with the Beer Duty. Let me tell him that they are two entirely different things.
    Mr. MANDER: They are in the same Budget.
    Mr. CHAMBERLAIN: In the same Budget, but apparently the hon. Member's idea is that in the same Budget

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    you must always use the same arguments, whatever the duties may be. I could accuse the hon. Member of some inconsistency in his new-found enthusiasm for the industries of the Midlands. He protests to-day against the Oil Duty, but he did not support the imposition of duties on imported articles which compete with those industries. But I am not troubling myself about any accusations of inconsistency, because I say quite frankly that in the case of the Beer Duty the revenue consideration was obviously the paramount one. In that case we were dealing with a revenue of £60,000,000 to £70,000,000, and here we are dealing with a revenue of £2,000,000. The revenue cannot have the same importance in our consideration of the subject as when it constitutes a large proportion of the national income.
    Then we are told that the imposition of this duty is going to ruin a large number of industries, and that whatever benefits it may confer on the coal industry will be more than counteracted by the imposition placed upon the industries which now use oil fuel in one form or another. Of course if you get a new duty put on suddenly, and it must be put on suddenly—I cannot help thinking that it may have occurred to one or two people that there was a possibility of something of the kind happening—naturally those who are using the article which has hitherto been free and is now to be subject to a duty, will put forward every argument that they can think of against it, in the hope that they may get it removed. They do not set themselves to think, at this stage of the proceedings, "How can I evade, avoid the disagreeable results which may ensue from the placing of this duty upon the article which I am going to use?" They merely think, "What argument can I bring forward, how can I present my case to the House of Commons in such a way that it will seem the very height of injustice to proceed with this duty, the very height of stupidity indeed?" and they make the very worst case that they can put forward.
    There was the hon. Member for Don Valley (Mr. T. Williams). Figures never trouble him; he never troubles about their accuracy. He brings out figures with an air of confidence and assurance which does him credit. He did not trouble to look up the figures that he used a little
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    while ago, and the whole of the preceding Debate on this subject had gone out of his head. He said I had omitted the duty on half the amount of oil that I estimated would be consumed. He said I had put the oil consumption at 3,000,000 tons. He afterwards said that the amount I omitted was 750,000 tons. 750,000 tons is not 50 per cent. of 3,000,000 tons. Then he said the figure was 2,000,000 tons. 750,000 tons is not even 50 per cent. of 2,000,000 tons. In order to make the best of his case he multiplied the amount of oil to which I had given a concession by no less than 7½ times. That is one inaccuracy.
    Then take the speech of the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood). He gave us a very vehement, I might almost say a violent account of his feelings, and the feelings of indignation under which industries laboured—industries which, he said, were being handicapped, and in some cases would be ruined by the new duty. Among others I remembered there was the case of bitumen compounds. He said that people who liquefied bitumen with oil in this country would have to pay 40 per cent. on their raw material, and that they could not possibly stand up to the competition of the foreigner, whose bituminous compound came into this country free of tax. The right hon. Gentleman has not taken the trouble to investigate the facts. Bitumen compounds do not escape taxation when imported. If he means the bitumen which is liquefied by the use of oil it pays duty as a composite article. In other words it pays the Oil Duty on the oil content, and if that duty is not equivalent to 10 per cent. on the compound it pays in addition the extra amount to bring it up to 10 per cent. So that as a matter of fact those who are making bitumen in this country are not in any way injured and are not put in a position in which they are handicapped by the imposition of the new duty. Let us try, therefore, to see the case as it really is, and not as those would desire us to see it who are going to make every possible effort to avoid the duty, if it can be avoided. We must not, therefore, assume that these terrible things will occur which we are told are going to take place.
    I take another case. My hon. Friend the junior Member for Dundee (Miss Horsbrugh) has on various occasions

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    called attention to the use of oils in the process of batching in the manufacture of jute. She always puts her case so well that naturally the sympathies of the House are inclined to be with her in the arguments which she puts forward. But we must not exaggerate the danger of the ruin of the jute industry in this case, because I am informed that even on the assumption that the whole cost of the duty is to be added to the cost of this batching oil, it is only going to mean something like £6,000 a year and, as the output of jute is of the value of some £9,000,000 a year, I cannot think that this is going to ruin the jute industry in any short period of time. In the case of these industries I think one may take it fairly that a good many of them have not investigated, with any particularity, the possibilities of replacing oil fuel by fuel derived from coal in one form or another. Perhaps they have not had reason to do so. They have at some time in the past, when oil was free from duty, installed plant for using oil fuel. Naturally, they do not want now to be asked to replace or to modify that plant in favour of some other fuel. But it may be that when they are induced by the imposition of this duty to look into the matter again they will find that there are possibilities which had not occurred to them before.
    I may tell the House that even since the duty has been imposed it has been found in a number of cases that manufacturers who were thinking of installing oil furnaces have put in gas furnaces or furnaces which use coke, and that the production of the derivatives of coal has been already given considerable encouragement. For instance I have a letter from the manager of a very large municipal gas concern in the country, who says:
    "This department has recently installed gas heating furnaces in several industrial premises in this area, where, but for the tax, oil would have been adopted."
    He goes on to say:
    "The annual consumption represented by these installations would amount to no less than 40,000,000 cubic feet a year."
    There are a number of other cases, it is stated, where manufacturers are considering the replacement of oil furnaces by gas, and if the inquiries which have been received result in orders, as is confidently expected, it is anticipated that in this
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    area there will be an increased user of gas of approximately 150,000,000 cubic feet per annum, and an increased consumption of coal to the extent of 10,000 tons per annum.
    Mr. MARTIN: Has that company a statutory restriction on the price at which it sells gas to those consumers? Is it not the case that it cannot reduce the price whether it likes to do so or not?
    Mr. CHAMBERLAIN: It is not a company. I said it was a municipal enterprise, but I do not think that matter has any relevance. The point which I am endeavouring to illustrate to the House is that the imposition of the duty upon oil has already drawn the attention of manufacturers in this area to the possibility of using an alternative, which alternative is a derivative of coal, and that even in the short space of time which has elapsed since the duty was introduced, there have already been received orders or inquiries which it is anticipated in this one area will result in an additional consumption of coal amounting to 10,000 tons a year. I submit to the House that that is a very important illustration of the argument which I was endeavouring to put to them, namely, that it is only when a brake of this kind is put upon the consumption of oil that many manufacturers look into the possibility of using something else.
    Mr. ALEXANDER RAMSAY: My right hon. Friend has been telling the House that by this duty he has forced consumers from one kind of fuel to another, but he does not say a word about the respective costs of these fuels to the consumers.
    Mr. CHAMBERLAIN: No, I do not say a word about the respective costs because I do not know.
    Mr. RAMSAY: Surely that is the important point.
    Mr. CHAMBERLAIN: All I am saying is that that has been the actual result. I can give a further case. My informant states that not only have these orders and inquiries been received but that, in addition, coke and tar oils are also feeling the beneficial effect of the tax, and in this area alone, as a direct result of the Budget proposals, 5,000,000 gallons of creosote oil have been sold to manufacturers in substitution for imported fuel oil. That is another derivative of coal

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    which is being brought into use by the fact that this brake, as I have called it, has been put on the use of fuel oil. We have been addressed by various Members of the House on the subject of the encouragement of efficient processes and the efficient development of our industries. We are told that this tax is penalising progress. I submit that it does exactly the opposite. I submit that it is going to encourage progress in the use of the greatest of our British resources and that it is to the interest of the country as a whole that we should encourage the progress of science and the development of applied science in the use of our British resources as against imported resources which are not in our own hands; which, if we become too reliant upon them, we may find put up in price against us in the future, and which, on every account must I think yield to the claim upon our attention and our sympathy of what we can produce and what will give employment to our own people at home. Having heard the arguments repeated to-day which were addressed to me on this subject before, on both sides of the case, I cannot feel that there is any reason to suppose either that this tax
    is unjust or unfair, or that it is a penalising tax. Undoubtedly there may be hardships in particular cases, but I believe those hardships will be only temporary and in the long run I cannot doubt that the imposition of this tax will be beneficial to British industry and British interests as a whole.
    Mr. MARTIN: As I do not think the Chancellor of the Exchequer was in his place when I introduced the Amendment, perhaps he is not aware of one or two vital questions which I put to the Financial Secretary.
    Mr. SPEAKER: The hon. Member can only speak again by leave of the House.
    Mr. MARTIN: I wish merely to ask the right hon. Gentleman a question.
    HON. MEMBERS: Divide.
    Mr. SPEAKER: The hon. Member does not appear to have the leave of the House.
    Question put, "That those words be there inserted in the Bill."
    The House divided: Ayes, 58; Noes, 228.

    Division No. 227.]

    AYES.

    [10.5 p.m.

    Adams, D. M. (Poplar, South)

    Groves, Thomas E.

    Mason, David M. (Edinburgh, E.)

    Banfield, John William

    Hamilton, Sir R.W.(Orkney & Z'tl'nd)

    Milner, Major James

    Batey, Joseph

    Harris, Sir Percy

    O'Neill, Rt. Hon. Sir Hugh

    Bevan, Aneurin (Ebbw Vale)

    Henderson, Sir Vivian L. (Chelmsford)

    Owen, Major Goronwy

    Buchanan, George.

    Holdsworth, Herbert

    Parkinson, John Allen

    Cripps, Sir Stafford

    Janner, Barnett

    Ramsay, Alexander (W. Bromwich)

    Daggar, George

    John, William

    Rathbone, Eleanor

    Davies, Rhys John (Westhoughton)

    Johnstone, Harcourt (S. Shields)

    Rea, Walter Russell

    Edwards, Charles

    Jones, Henry Haydn (Merioneth)

    Salter, Dr. Alfred

    Evans, David Owen (Cardigan)

    Jones, Morgan (Caerphilly)

    Samuel, Rt. Hon. Sir H. (Darwen)

    Evans, Capt. Ernest (Welsh Univ.)

    Lackle, J. A.

    Spencer, Captain Richard A.

    Evans, R. T. (Carmarthen)

    Liddall, Walter S.

    Strickland, Captain W. F.

    Foot, Dingle (Dundee)

    Llewellyn-Jones, Frederick

    Sugden, Sir Wilfrid Hart

    Foot, Isaac (Cornwall, Bodmin)

    Logan, David Gilbert

    Tinker, John Joseph

    Ganzonl, Sir John

    Lovat-Fraser, James Alexander

    Wedgwood, Rt. Hon. Joslah

    George, Major G. Lloyd (Pembroke)

    Macdonald, Gordon (Ince)

    White, Henry Graham

    George, Megan A. Lloyd (Anglesea)

    McEntee, Valentine L.

    Williams. Thomas (York, Don Valley)

    Greenwood, Rt. Hon. Arthur

    Maclean, Nell (Glasgow, Govan)

    Wood, Sir Murdoch McKenzie (Banff)

    Grenfell, David Rets (Glamorgan)

    Mallalieu, Edward Lancelot

    Griffith, F. Kingsley (Middlesbro'.W)

    Mander, Geoffrey le M.

    TELLERS FOR THE AYES—

    Mr. Martin and Mr. Alan Todd.

    NOES.

    Acland-Troyte. Lieut.-Colonel

    Beaumont, Hon. R.E.B. (Portsm'th, C.)

    Buchan, John

    Adams, Samuel Vyvyan T. (Leeds, W.)

    Benn, Sir Arthur Shirley

    Buchan-Hepburn, P. G. T.

    Agnew, Lieut.-Com. P. G.

    Bevan, Stuart James (Holborn)

    Burghley, Lord

    Altchlson, Rt. Hon. Craigie M.

    Bird, Ernest Roy (Yorks., Skipton)

    Burgin, Dr. Edward Lesile

    Allen, Sir J. Sandeman (Liverp'l, W.)

    Blindell, James

    Butler, Richard Austen

    Aske, Sir Robert William

    Boothby, Robert John Graham

    Butt, Sir Alfred

    Bailey, Eric Alfred George

    Boulton, W. W.

    Campbell, Sir Edward Taswell (Brmly)

    Baillie, Sir Adrian W. M.

    Bowyer, Capt. Sir George E. W.

    Campbell, Vice-Admira: G. (Burnley)

    Baldwin, Rt. Hon. Stanley.

    Braithwaite, J. G. (Hillsborough)

    Caporn, Arthur Cecil

    Banks, Sir Reginald Mitchell

    Broadbent, Colonel John

    Carver, Major William H.

    Barclay-Harvey, C. M.

    Brocklebank, C. E. R.

    Castlereagh, Viscount

    Barrie, Sir Charles Coupar

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

    Cayzer, Sir Charles (Chester, City)

    Beauchamp, Sir Brograve Campbell

    Brown, Ernest (Leith)

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

    Beaumont, M. W. (Bucks., Aylesbury)

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

    Cazalet, Thelma (Islington, E.)

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Howard, Tom Forrest

    Rhys, Hon. Charles Arthur U.

    Clarry, Reginald George

    Howitt, Dr. Alfred B.

    Ropner, Colonel L.

    Clayton, Sir Christopher

    Hudson, Robert Spear (Southport)

    Rosbotham, Sir Samuel

    Cobb, Sir Cyril

    Hume, Sir George Hopwood

    Ross Taylor, Walter (Woodbridge)

    Cochrane, Commander Hon. A. D.

    Jackson, Sir Henry (Wandsworth, C.)

    Ruggles-Brise, Colonel E. A.

    Colman, N. C. D.

    James, Wing-Com. A. W. H.

    Runge, Norah Cecil

    Colville, Lieut.-Colonel J.

    Jamleson, Douglas

    Russell, Alexander West (Tynemouth)

    Conant, R. J. E.

    Jesson, Major Thomas E.

    Russell,Hamer Field (Sheffield, B'tside)

    Cooke, Douglas

    Joel, Dudley J, Barnato

    Russell, R. J. (Eddisbury)

    Copeland, Ida

    Jones, Sir G. W. H. (Stoke New'gton)

    Rutherford, Sir John Hugo (Liverp'l)

    Courtauld, Major John Sewell

    Jones, Lewis (Swansea, West)

    Sandeman, Sir A. N. Stewart

    Courthope, Colonel Sir George L.

    Ker, J. Campbell

    Sanderson, Sir Frank Barnard

    Cranborne, Viscount

    Kerr, Lieut.-Col. Charles (Montrose)

    Sassoon, Rt. Hon. Sir Philip A. G. D.

    Craven-Ellis, William

    Kerr, Hamilton W.

    Selley, Harry R.

    Croft, Brigadier-General Sir H.

    Kimball, Lawrence

    Shaw, Helen B. (Lanark, Bothwell)

    Crookshank, Capt. H. C. (Gainsb'ro)

    Lamb. Sir Joseph Quinton

    Shaw, Captain William T. (Forfar)

    Crose, R. H.

    Latham, Sir Herbert Paul

    Shute, Colonel J. J.

    Davison, Sir William Henry

    Law, Sir Alfred

    Simmonds, Oliver Edwin

    Dawson, Sir Philip

    Lelghton, Major B. E. P.

    Smith, Bracewell (Dulwich)

    Denman, Hon. R. D.

    Lennox-Boyd, A. T.

    Smith, Sir Jonah W. (Barrow-in-F.)

    Dixon, Rt. Hon. Herbert

    Levy, Thomas

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

    Donner, P. W,

    Lindsay, Noel Ker

    Smith-Carington, Neville W.

    Drewe, Cedric

    Lleweilln, Major John J.

    Somerville, Annesley A. (Windsor)

    Duckworth, George' A. V.

    Mabane, William

    Somerville, D. G. (Willesden, East)

    Duggan, Hubert John

    MacAndrew. Lt.-Col C. G. (Partick)

    Soper, Richard

    Duncan, James A. L. (Kensington, N.)

    MacAndrew, Capt. J. O. (Ayr)

    Sotheron-Estcourt, Captain T. E.

    Edmondson, Major A. J.

    McCorquodale, M. S.

    Southby, Commander Archibald R. J.

    Elmley, Viscount

    MacDonald, Malcolm (Bassetlaw)

    Spens, William Patrick

    Emmott, Charles E. G. C.

    Macdonald, Sir Murdoch (Inverness)

    Stanley, Lord (Lancaster, Fyldo)

    Emrys Evans, P. V.

    McEwen, Captain J. H. F.

    Stanley Hon. O. F. G. (Westmorland)

    Entwistle, Cyril Fullard

    McKle, John Hamilton

    Stones, James

    Erskine, Lord (Weston-super-Mare)

    Makins, Brigadier-General Ernest

    Strauss, Edward A.

    Erskine-Bolst, Capt. C. C. (Blk'pool)

    Manningham-Buller, Lt.-Col. Sir M.

    Sueter, Rear-Admiral Murray F.

    Essenhigh, Reginald Clare

    Margesson, Capt. Rt. Hon. H. D. R.

    Sutcliffe, Harold

    Fleming, Edward Lascelles

    Marsden, Commander Arthur

    Tate, Mavis Constance

    Ford, Sir Patrick J.

    Mason, Col. Glyn K. (Croydon, N.)

    Thomson, Sir Frederick Charles

    Fraser, Captain Ian

    Mayhew, Lieut.-Colonel John

    Thorp, Linton Theodore

    Gault, Lieut.-Col. A. Hamilton

    Merriman, Sir F. Boyd

    Tryon, Rt. Hon. George Clement

    Gillett, Sir George Masterman

    Morton, A. Hugh Elsdale

    Turton, Robert Hugh

    Gluckstein, Louis Halle

    Morris-Jones, Dr. J. H. (Denbigh)

    Vaughan-Morgan, Sir Kenyon

    Goff, Sir Park

    Muirhead, Major A. J,

    Wallace, Captain D. E. (Homsey)

    Goodman, Colonel Albert W.

    Munro, Patrick

    Wallace, John (Dunfermline)

    Gower, Sir Robert

    Murray-Phillpson, Hylton Ralph

    Ward, Lt.-Col. Sir A. L. (Hull)

    Grattan-Doyle, Sir Nicholas

    Nation, Brigadier-General J. J. H.

    Ward, Irene Mary Bewick (Wallsend)

    Greene, William P. C.

    Nicholson, Godfrey (Morpeth)

    Ward, Sarah Adelaide (Cannock)

    Gretton, Colonel Rt. Hon. John

    Normand, Wilfrid Guild

    Warrender, Sir Victor A. G.

    Grimston, R. V.

    Nunn, William

    Watt, Captain George Steven H.

    Gunston, Captain D. W.

    O'Donovan, Dr. William James

    Wedderburn, Henry James Scrymgeour.

    Hacking, Rt. Hon. Douglas H.

    Patrick, Colin M.

    Wells, Sydney Richard

    Hales, Harold K.

    Peaks, Captain Osbert

    Weymouth, Viscount

    Hall, Capt. W. D'Aray (Brecon)

    Pearson, William G.

    Whyte, Jardine Bell

    Hannon, Patrick Joseph Henry

    Peat, Charles U.

    Williams, Charles (Devon, Torquay)

    Hartland, George A.

    Penny, Sir George

    Williams, Herbert G. (Croydon, S.)

    Harvey, George (Lambeth,Kenningt'n)

    Petherick, M

    Wills, Wilfrid D.

    Haslam, Henry (Horncastle)

    Peto, Sir Basll E. (Devon, Barnstaple)

    Wilson, Clyde T. (West Toxteth)

    Haslam, Sir John (Bolton)

    Pickford, Hon. Mary Ada

    Windsor-Clive, Lieut.-Colonel George

    Headlam, Lieut.-Col. Cuthbert M.

    Pike, Cecil F.

    Womersley, Walter James

    Hellgers, Captain F. F. A.

    Powell, Lieut.-Col. Evelyn G. H.

    Worthington, Dr. John V.

    Herbert, Capt. S. (Abbey Division)

    Pownall, Sir Assheton

    Wragg, Herbert

    Hills, Major Rt. Hon. John Waller

    Raikes, Henry V. A. M.

    Young, Rt. Hon. Sir Hilton (S'v'noaks)

    Hore-Belisha, Leslie

    Ramsay, T. B. W. (Western Isles)

    Hornby, Frank

    Remer, John R.

    TELLERS FOR THE NOES.—

    Horsbrugh, Florence

    Rentoul, Sir Gervals S.

    Captain Austin Hudson and Major

    George Davies.

    Resolution agreed to.

    10.14 p.m.
    Captain FRASER: I beg to move, in page 5, line 22, at the end, to insert the words:
    "Provided that where any oil other than light oil is used as a fuel in any voluntary hospital for the sick poor equipped prior to the twenty-fifth day of April, nineteen hundred and thirty-three, with apparatus especially designed for the use of such oil, the rate of rebate shall continue to be eight pence per gallon."
    The object of this Amendment is to secure a rebate on the Oil Duty so far as it applies to voluntary hospitals for the
    606
    sick poor. It only asks that the rebate should be given in the case of voluntary hospitals, because it is only in their case that there is a very real difficulty in raising the money to pay the tax. I cannot believe that this Amendment can lead the Chancellor of the Exchequer into any difficulties from the point of view of precedent, because, as far as I can see, there are no other organisations which can make a similar claim, based upon the sentimental aspect of the case and upon the impracticability of securing the money to pay for the tax from any source

    607
    whatever. It is plainly true that if this tax goes on, a certain small number of voluntary hospitals would have to reduce the services which they render to their patrons, because everybody knows that there is less money available for voluntary hospitals than is required by the calls that are made upon them. In London there is a small number of hospitals using oil, and, were they to be compelled to pay the tax, it would cost them about £12,000 a year. In the provinces the figure would be about £8,000, so that the total cost of this concession would be about £20,000 a year. That is very little indeed to the Chancellor of the Exchequer, but it means much to these hospitals.
    Only about 55 hospitals have installed and are using this plant, and my plea is that the Chancellor should exempt them from the operation of this tax. He may say that it is difficult to exempt them without exempting all hospitals, but he is not asked to exempt all hospitals. I am speaking for the hospitals with the assent of all the hospitals and only on behalf of those that are using this oil-burning machinery. It is a hardship to them to have to change back, and they have no means of augmenting their income to pay this tax. They are not sheltered by a tariff and cannot very well make a larger appeal to the kindly public to increase their subscriptions knowing that the money is going to the Chancellor of the Exchequer, because, greatly though they respect him, they are not likely to make voluntary contributions in that way. There is no source from which hospitals can get the revenue.
    There is another aspect of the case which I will mention but will not stress, namely, that where hospitals have this apparatus they have found it beneficial to their patients because there is less noise and because it has made available for useful hospital purposes other parts of the building hitherto used for storage. I will not stress that, because I know that every argument that can be raised about using oil in hotels and blocks of flats can be used in favour of hospitals. Where they stand alone is that they cannot replace the revenue in any way; they are in a class by themselves, and a concession made to them need not spread into any awkward precedent with which the Chancellor might have to deal.
    608
    I have reason to believe that the concession can be worked and that it is administratively possible to operate it. There have been occasions upon which matters rather like this have been dealt with sympathetically. For example, the Lifeboat Institution secured a rebate for lifeboats in the matter of the Petrol Duty. This is, I think, an analogous kind of case. Then, again, alcohol when used for medicinal purposes is tax free. One would not have quoted that if one had not heard the Debate an hour or so ago in the House. Voluntary agencies and philanthropic bodies have also been recognised by the Legislature for special consideration, and because of the fact that they trade without profit they do not pay Income Tax. There are plenty of precedents for this concession; it can be worked, and I ask the Chancellor to take the view that the need of the hospitals is greater than his.
    10.19 p.m.
    Dr. O'DONOVAN: I beg to second the Amendment.
    I address the House without any great air of confidence, but perhaps my words may fall on the mind and heart of the Chancellor of the Exchequer and that he will be encouraged by his easy defeats of the various efforts to entice him to make concessions to grant a concession which most of us support. What has just been said in support of this Amendment must appeal, I think, to most Members of this House. I would only say that the Chancellor of the Exchequer is at present a very great friend to hospitals, inasmuch as he allows thousands of gallons of spirit which, if it were called rectified spirit would put us all out of action, to go to hospitals under the simple title of surgical spirit without any contribution to the Exchequer whatever. In other words, there is a precedent for special consideration for hospitals.
    I do not wish to say anything on the question of cost. Hospital managers will appeal to the public for more money for every new development in medical science and in surgical art, but I would like the Chancellor to exercise a little directive force in the development of hospital life. We can heat our hospitals with coal, but we who work in hospitals feel that better work can be done for us by the administrative side if they are not compelled to give so much time to the very

    609
    many administrative problems which are brought into being by the use of coal in the matter of storage, insurance, and manpower. If by encouraging hospitals to use oil fuel such administrative aid can be given to doctors and the sick it will be an advance in hospital practice. I am quite certain that the Chancellor has consulted with his advisers and the advisers of the Ministry of Health, and I await with some interest, and with some real hope, that this matter has not only had his consideration, but, as far as may be, his favourable consideration.
    10.23 p.m.
    Major HILLS: I agree with the last speaker that this is not entirely a matter of cost. It has been stated that it would cost one London voluntary hospital £2,400 a year. A newly-built hospital in my own constituency equipped with the latest plant would find £400 a year added to its expenses—a heavy charge for a country hospital. The real argument against this tax, however, is that oil is a much better fuel for use in a hospital. It is more convenient to transport, and it is easier to store; and, since hospitals are chiefly in busy centres, storage space is an important item. The service of the oil is easier than in the case of coal; no stoking is required, no ashes have to be removed, and there is no dirt or noise, with all their evil effects on patients. Space is saved and there is cleanliness, convenience and benefit to health. It would be a set back to the modern equipment of hospitals if this tax were imposed. It is recognised by the medical profession that by far the best fuel to use is oil fuel, and I do not think the Chancellor would like to force hospitals back to coal.
    10.25 p.m.
    Sir WILLIAM DAVISON: I desire to associate myself with the appeal made to the Chancellor to exempt voluntary hospitals from this tax. In these days of financial stringency hospitals are finding it more and more difficult to carry on. Suddenly, as a bolt from the blue, comes this heavy additional maintenance expenditure upon them. May I point out that, in the Amendment on the Paper, we ask only for this concession to be made to voluntary hospitals for the sick poor who were equipped prior to 26th April, 1933, that is to say hospitals which equipped themselves in this way before
    610
    there was any idea that such a duty would be imposed. Any hospital which may, in future, be inclined to instal plant for burning oil will do it with their eyes open. and will have to make provision for the additional expenditure.
    There are some 19 hospitals in London which are using fuel oil. As the hon. Member who proposed the Amendment said this tax will involve the hospitals in an additional cost of about £12,000 a year in London and about £8,000 or £9,000 in the country. The Cancer Hospital, in my constituency, would incur an additional charge of £900, and St. George's Hospital would have to meet an additional cost of £2,000. Sir Arthur Stanley stated in the "Times" this morning that it would cost St. Thomas's Hospital £2,400 a year, or a 50 per cent. addition to their present bill for oil fuel, which is £4,800 a year. As the right hon. and gallant Member for Ripon (Major Hills) has pointed out, oil is much more suitable than coal for use in a hospital. Take, as an example, St. Thomas's Hospital. It will mean, if they have coal, bringing in some 12 tons of coal a day, and carrying it through the hospital to a central bin where it can be stored, quite apart from an extra amount which must be stored for emergencies Then they have to remove the ashes from the boilers, creating dust and dirt in the hospital. Compare this with their present system. Oil is pumped from a lighter on the Thames, and taken to a reservoir where it can be stored, using very little room and causing no dust or dirt. This concession would cost the revenue very little, and it is desirable in the national interests that no additional burden should be thrown upon hospitals which they will find it difficult to bear.
    10.28 p.m.
    Major LLEWELLIN: in reply to the last Amendment, the Chancellor of the Exchequer said that the Oil Duty showed that people were very much alive to the interests of their respective constituencies. The incidence of the duty has been brought to my notice by a hospital in my constituency, the Cancer Hospital, which will have to pay an extra amount of £500 a year if this duty is levied upon oil, whether used in the institution or not. £500 may be a very small sum, and indeed is small to the Chancellor of the Ex-

    611
    chequer, but it is a large sum to a voluntary hospital, and it means that they can take in fewer cancer cases. They have not the capital available with which to alter the machinery which is already installed in that hospital.
    I notice the Chancellor said that there were three reasons which actuated him in upholding this duty. In the first place, the actual revenue is £2,000,000; secondly, he desires to protect the duty on petrol; and, thirdly, he desires to help the interests of the coal industry and of the industries allied to it. This small sum of £20,000 a year cannot do very much to impair his revenue, to impair the duty on petrol—in fact, nothing at all on that head—or to affect the interests of the coal industry, because it is obvious that the hospitals in which this plant has been installed cannot afford to alter their plant, and will merely have to go on using oil. Therefore, the only consideration is the £20,000 of revenue.
    I, probably in company with a large number of Members of the House, am a supporter of the voluntary system of hospitals in this country, and I do not wish to see anything done that will make it more difficult for these hospitals to carry out the task entrusted to them. Therefore, I very much hope that the Chancellor of the Exchequer will see his way to accept this small Amendment. It does not apply, of course, to any hospital that has not already installed oil fuel-burning plant. As my hon. Friend the Member for South Kensington (Sir W. Davison) has said, those who do it after this will do it with their eyes open, but a large number have already done it, for the purpose, perhaps, of having a cleaner fuel, or, at any rate, reducing their fuel costs in order that they may be able to take in more patients. I think that my right hon. Friend can trust the managers of these voluntary hospitals to see that this privilege, if it be granted, will be in no way abused by them; they are people whom he can trust not to make any attempt to get a rebate to which they are not entitled. I beg him to make this small concession to these bodies which, to the knowledge of us all, are doing such valuable work in our midst.
    10.33 p.m.
    Mr. CHAMBERLAIN: Everyone who has at any time represented the Treasury
    612
    knows how difficult it is to resist these insidious and rather dangerous arguments which are brought forward in support of a concession which is asked for on the ground that it is only a little one. The very precedents which have been adduced to-day show how dangerous it is to begin whittling away the foundations upon which one rests, and how one concession is immediately made the precedent in asking for another. Although my hon. and gallant Friend who moved this Amendment said that there was no danger of this being extended to any other body, that there could not be any other bodies in the position of these hospitals, I have already thought of asylums, sanitoria and convalescent homes, and I am sure that, if I had more time, I could think of many other institutions supported by voluntary contributions which might make an equally sound claim. But when, in addition to the argument that this is only a little concession, we are brought into contact with the idea of voluntary hospitals and the relief of the sick poor, then, indeed, the sympathies of everybody are naturally aroused, and it is perhaps easy for us all to be led away towards the course to which our inclinatiions would naturally turn us. If it were actually true that all these hospitals which are dependent upon voluntary contributions would, as my hon. Friends who have spoken on this Amendment have suggested, be obliged to find an additional £400, or £500, or £1,000, or £2,000 a year extra, then, indeed, it would be very difficult to maintain my position. But I think I have a very good reply to my hon. Friends. After all, although they have adduced the convenience of oil as a strong reason why the hospitals which have installed it should continue to use it, the fact that there are only 55 hospitals in the country which are concerned and which have actually installed oil shows that that is not a very powerful consideration.
    The real consideration is the comparative cost of the two kinds of apparatus. I am glad to say that I can offer my hon. Friends a very different view of this position. Not only will this concession not necessarily cost the hospitals a large sum per annum, but, if they follow the example of some very progressive and efficient hospitals which have made the most of the time that has elapsed since the Budget proposals

    613
    were introduced, they can actually save money. Here is a case of a hospital in London where conversion from oil to coke has actually taken place since the Oil Duty was first proposed. The total cost of conversion was £80, and the estimated annual saving due to the use of coke is £2,000, so that in two weeks the hospital will have paid off the extra cost of conversion and will be in receipt of an additional source of income which was never thought of before. Here is another case of a much larger hospital. The cost of conversion is no less than £680, but they are going to save £1,670. The relative improvement is not so great as in the first case, but the capital expenditure will be paid off in five months, and the hospital will have a new source of income which it had not before. Conditions vary in different cases, and a great deal depends upon such technical questions as whether a natural draught is sufficient or whether there will have to be a forced draught. With a natural draught the cost of conversion works out at £50 and thermostatic control, which is a desirable thing to have, can be supplied at a cost of £20.
    Mr. D. G. SOMERVILLE: Was that a saving made after the increased cost of the oil was paid or not?
    Mr. CHAMBERLAIN: I take it that it was. That is just the point. You can, by making this conversion, not only not spend more money than you were spending before, but you can actually save money. The company which gives me this information and which is responsible for the conversion in these cases will, no doubt, be ready to give information to my hon. and gallant Friend and to any other hon. Member who is interested in a particular hospital, and I hope, therefore, that, instead of shedding rears over the new Oil Duty, they will have found a new hope.
    10.39 p.m.
    Mr. M. BEAUMONT: I cannot but regret the nature of the reply that the Chancellor has thought fit to give to the Amendment. I speak as one of the managers of a hospital. Notwithstanding what my right hon. Friend has said, it is a very grave matter to a certain number of hospitals. I do not think that the managers who have to face the extra expenditure will share the view of the Chancellor of the Exchequer that it is
    614
    a matter out of which we can make money. On the contrary, those who have to face the position have found that it is a matter which will inflict considerable cost. Many of us regret that there was not a reduction of taxation in the Finance Bill, and that the reason was that the Government refused to curtail the social services. It becomes doubly grave when we find that in practice, though I admit that it is a small sum, £20,000 of the money which helps to maintain, as we believe, expensive and excessive social services, is to come from a direct tax upon the social service which we regard as every bit as valuable and important as those which the Government desire to maintain. I do not know what course the Amendment will take, but I cannot fail to express the very great regret which I am sure many hon. Members feel, notwithstanding the implications of the Patronage Secretary, that the Chancellor of the Exchequer has found it necessary not only to reject it, but to reject it in the particular manner in which he did.
    Captain FRASER: I propose, by leave of the House, to withdraw the Amendment, because it is not the wish of the voluntary hospitals to set themselves against any Government by making any demonstration such as a Division would obviously imply. The cases which the Chancellor of the Exchequer gave to the House were in the minds of Sir Arthur Stanley and those who advised me as to the manner and terms in. which it was desirable that I should move the Amendment. They have full knowledge of the fact that certain hospitals have been able to make appliances, but others cannot do so. I hope that the Chancellor of the Exchequer, between now and the time the Bill comes from another place, will see if he cannot reconsider it. I, therefore, beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.

    CLAUSE 21.—(Alteration of duties on licences for certain mechanically-propelled vehicles.)
    10.44 p.m.
    Major HILLS: I beg to move, in page 17, line. 10, at the end, to insert the words:
    "Provided that, as respects a vehicle used solely within the area of a local authority by that local authority, or by any person

    615
    acting in pursuance of a contract with that local authority for the purpose of cleansing or -watering roads, or cleansing gullies, the said Section 13 shall continue to nave effect as if this Section had not been enacted."
    The difference between the wording of the Amendment, and the Amendment which I first put upon the Paper, is that it confines the exemption to vehicles belonging to local authorities used for road cleansing or road watering and is not extended to vehicles used for the collection of refuse. The Salter Commission devised certain duties for road vehicles. The reason for the imposition of those duties was to equalise competition between road and rail, and the vehicles which I ask to be exempted are not such as come into competition with rail at all, for they are really used for sanitary purposes, for the cleansing or watering of roads or cleansing gullies. Consequently they do not wear out the roads and most of them move slowly on them. The payment of the tax would go into the Road Fund, and therefore would be available for repairing the roads, and it really would be a tax on these vehicles imposed upon the towns upon whom the bulk of these sanitary services fall. Already under the Act of 1920 fire engines kept by local authorities, ambulances and certain road vehicles are exempt, and it is only fair that that exemption should be extended to vehicles used for cleansing or watering the roads.
    Mr. LECKIE: I beg to second the Amendment which has been so ably put by my right hon. and gallant Friend. The case has also been put very cogently before the Minister of Transport by the Association of Municipal Corporations. Therefore, I hope that this very modest Amendment will be accepted by him. It is very extraordinary that while the taxes payable under the Road Fund go to the upkeep of the roads, these very vehicles instead of using or damaging the roads help to keep the roads in good order by cleansing them and watering them. This tax is a form of double taxation upon the vehicles, and we hope that a concession will be granted.
    Mr. STANLEY: In the Committee stage an Amendment was moved extending the privilege asked for in this Amendment to vehicles owned by local authorities. I resisted that Amendment and the Committee supported me on, the
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    ground that it went much too far and that the test of what tax should be paid was not the ownership of the vehicle but its user of the road and the damage it did to the road. The right hon. and gallant Member had earlier on the Order Paper an Amendment in more extended form than this, which I felt to be too wide as some of the vehicles included in it did make considerable user of the road. The Amendment in the form in which he moves it now is extremely limited in its application. The vehicles to which it applies are those which of necessity must be of special construction for this special purpose, and the mere fact of that construction as well as the fact of the purpose for which they are used necessarily limit the amount of user of the road. I have had the opportunity of meeting a deputation introduced by my right hon. and gallant Friend and I was convinced by them that the amount of road work which these vehicles do is extremely small and the amount of damage to the road, which must be met from the fund, is also small, and that there is a good case for relieving them of the extra taxation imposed in this Bill, which is imposed according to the amount of user of the road and the damage done. The amount which this concession will cost to my right hon. Friend although difficult to ascertain accurately, is small—something like £20,000. In these circumstances, I am in a position to accept the Amendment.
    Amendment agreed to.
    Ordered, "That further Consideration of the Bill, as amended, be now adjourned."
    Bill, as amended, to be further Considered to-morrow.

GOVERNMENT OF INDIA (AMENDMENT) BILL [Lords]
Considered in Committee, and reported, without Amendment; read the Third time, and passed, without Amendment.

UNEMPLOYMENT INSURANCE (EXPIRING ENACTMENTS) [MONEY].
Resolution reported:
"That, for the purpose of any Act of the present Session (hereinafter referred to as the said Act') to continue in force for a further period the Unemployment Insur-

617
ance Act, 1930, and Sections one and two of the Unemployment Insurance (No. 3) Act, 1931, it is expedient to provide that there shall be defrayed out of moneys provided by Parliament any increase resulting from the operation of the said Act in expenditure which is authorised to be so defrayed by virtue of the Unemployment Insurance Act, 1930 (as amended by subsequent enactments), or Section four of the Unemployment Insurance (No. 3) Act, 1931, or any other enactment the operation of which is limited by reference to the duration of the Unemployment Insurance Act, 1930."

SUNDAY ENTERTAINMENTS ACT, 1932.
Resolved,
"That the Order made by the Secretary of State under the Sunday Entertainments Act, 1932, for extending Section one of that Act to the urban district of Mitcham, which was presented on the 13th day of June, 1933, be approved."
Resolved,
"That the Order made by the Secretary of State under the Sunday Entertainments Act, 1932, for extending Section one of that Act to the urban district of Teddington, which was presented on the 13th day of June, 1933, be approved."—[Mr. Hacking.]

ELECTRICITY (SUPPLY) ACTS.
Resolved,
"That the Special Order made by the Electricity Commissioners under the Electricity (Supply) Acts, 1882 to 1928, and confirmed by the Minister of Transport under the Electricity (Supply) Act, 1919, in respect of the urban district of Glyncorrwg, in the county of Glamorgan, which was presented on the 11th day of May, 1933, be approved."
Resolved,
"That the Special Order made by the Electricity Commissioners under the Electricity (Supply) Acts, 1882 to 1928, and the Statutory Gas Companies (Electricity Supply Powers) Act, 1925, and confirmed by the Minister of Transport under the Electricity (Supply) Act, 1919, and the Public Works Facilities Act, 1930, in respect of part of the rural district of Cookham, in the county of Berks, which was presented on the 11th day of May, 1933, be approved."—[Lieut.-Colonel Headlam.]
The remaining Government Orders were read, and postponed.

ADJOURNMENT.
Resolved, "That this House do now adjourn."—[Captain Margesson.]
Adjourned accordingly at Four Minutes before Eleven o'Clock.

  SUDAN POLITICAL SERVICE.
  SUDAN POLITICAL SERVICE.
  BRAZIL (BRITISH SUBJECTS' INTERESTS).
  BRAZIL (BRITISH SUBJECTS' INTERESTS).
  EXCHEQUER GRANTS, WALES AND MONMOUTHSHIRE.
  EXCHEQUER GRANTS, WALES AND MONMOUTHSHIRE.
  BEER (WHOLESALE PRICE).
  BEER (WHOLESALE PRICE).
  AVIATION (AERODROME FACILITIES, LONDON).
  AVIATION (AERODROME FACILITIES, LONDON).
  INDIA (ADVISORY EDUCATIONAL BOARD).
  INDIA (ADVISORY EDUCATIONAL BOARD).
  POST OFFICE (NEW STAMPS).
  POST OFFICE (NEW STAMPS).
HOUSING.
  RADLETT.
  RADLETT.
  LIVERPOOL.
  LIVERPOOL.
ROYAL NAVY.
  FLEET ORDERS.
  FLEET ORDERS.
  CARTAGE CONTRACTS.
  CARTAGE CONTRACTS.
  DOCKYARD EMPLOYÉS' PAY.
  DOCKYARD EMPLOYÉS' PAY.
  ROAD SCHEME, HAVERFORDWEST (ANCIENT CRYPT).
  ROAD SCHEME, HAVERFORDWEST (ANCIENT CRYPT).