Sitting of 19 May 1933

Preamble
The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Colne Corporation Bill [Lords] (by Order),
Second Reading deferred till Monday next.
Victoria Infirmary of Glasgow Act, 1888 (Amendment), Order Confirmation Bill.
Read the Third time, and passed.
Marriages Provisional Orders Bill.
Read a Second time, and committed.

CHURCH OF SCOTLAND (PROPERTY AND ENDOWMENTS) AMENDMENT BILL [Lords.]
Read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 108.]
GOVERNMENT OF INDIA (AMENDMENT) BILL [Lords.]
Read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 109.]
ORDERS OF THE DAY.

  COTTON INDUSTRY BILL.
  Not amended (in the Standing Committee,) considered.
  11.5 a.m.
  Mr. RHYS DAVIES: I beg to move, "That the Bill be now read the Third time."
  The hon. and learned Member for Moss Side (Sir G. Hurst) who has had charge of this Bill up to the present is compelled to be in the Law Courts this morning, and has asked me to undertake the task of moving the Third Reading of the Bill. It is a very easy task; for the Bill does not require much explanation. In Committee upstairs it passed without any Amendment, and I notice that there is no opposition to it on the Order Paper to-day. It is backed by such a good and ardent Conservative as the hon. and learned Member for Moss Side, by the right hon. Member for Darwen (Sir H. Samuel) and myself; and if hon. Members will take the trouble to trace our pedigrees they will find that the roots of all three hon. Members are deep down in the good soil of Lancashire. We are entitled, as Members representing constituencies in that county, to put forward the Bill and ask that it shall receive an unanimous Third Reading. It is a non-party Measure. In the case of most Bills there is acute differences between the Opposition and the Government; the Opposition representing the working people and the Government representing the Capitalist class. This Bill, however, is supported, not only by employers and employed, by merchants, traders and manufacturers, but by the textile trade unions as well. There is therefore no difference of opinion on the Measure.
  In Committee I asked whether anything had happened Since the Second Reading of the Bill to warrant any comments upon the Measure, and I was told that nothing at all had transpired. Since then, however, a very severe attack, I will not use the word malicious, has been made on the cotton industry by the hon. Member for North Salford (Mr. J. P. Morris), and I gave him notice yesterday that I intended to deal with his remarks this morning. I presume he is not in London to-day, otherwise he would have been in the
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  House. The Bill, in fact, is a complete denial of every word which the hon. Member said about the cotton industry.
  The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): Hear, hear.
  Mr. DAVIES: The Board of Trade seems to be applauding everything I say this morning. That is all to the good, but I am a little suspicious of my own point of view when the Government support me. I am afraid my own constituents would not re-elect me if they thought that any Member of this Government supported my point of view. I can only retain my seat by being definitely against all the policies of the Government; but as this Bill has been taken clean out of party rancour, contest and debate, I am on safe ground. On the Second Reading the hon. and learned Member for the Moss Side Division took it for granted that hon. Members knew what the Bill was about, but I am afraid that there are many hon. Members who have not the remotest idea as to what the Lancashire cotton industry is like. There are a few hon. Members like the hon. Members for Leigh (Mr. Tinker) and Ince (Mr. G. Macdonald) and myself, who represent divisions where there are textile mills, and who are elected by textile operatives, are familiar with the cotton industry. I want the Parliamentary Secretary to say a good word this morning for the splendid work done by the Empire Cotton Growing Corporation and for the cotton industry as a whole. The hon. Member for North Salford on May 10th said:
  "The cotton trade ought to remember that the Anglo-Danish Agreement affords very distinct advantages to certain specific basic industries in this country, and that, as a result of those advantages, by the increased number of people who are found employment and the increased purchasing power of the people in those industries, the cotton industry will benefit indirectly from the better conditions obtaining."
  Then he makes the statement about which complaint is made—
  "It ill becomes any industry to make allegations against the Government, when that industry ought to put its own house in order."—[OFFICIAL REPORT, 10th May, 1933; col. 1581, Vol. 277.]
  That is a most serious charge to make against any industry in this country, and particularly against the cotton industry.
  Mr. PIKE: You have been making that allegation all your life.
  Mr. DAVIES: Whatever allegations I have made I have never fouled my own nest by making remarks of that kind. Comments have been made outside this House as to what this Bill actually means and what it does, and on the Second Reading very little was said as to the provisions of the Measure. May I quote an explanation of the nature of the Bill.
  "The Cotton Industry Act, 1928, under which the Corporation receives the proceeds of the Spinners' Levy expires in July next. It will be remembered that this Act provides for the rate of the levy to be 3d. per 500 lbs. of cotton purchased, or such less rate as the Corporation, with the approval of the Board of Trade, may fix in respect of any year."
  Will the Parliamentary Secretary to the Board of Trade tell us what has been the total income from the levy for the last few years, and whether the trade has been charged the full three pence per bale, which they were allowed origiNaily by the Act. I was under the impression that the Bill was introduced because the 3d. has not been levied in full, that only 1d. has been levied, because of the depression in the cotton trade. It is only right that the House should know whether the full three pence has been charged under the present Act, which comes to an end in July of this year, and, if not, what is the actual amount per bale that has been levied? I should also like to know the annual revenue of the Empire Cotton Growing Corporation from a levy of a 1d., 2d., or 3d. as the case may be.
  I hope that the hon. Gentleman in charge of the Bill on behalf of the Government will be able to say something about the use of this levy by the Corporation. It ought to be made known that this Corporation owns a very remarkable laboratory in Didsbury, Manchester, where a great deal of research is carried on not only in analysing the properties of raw cotton and in the manufacture of cotton goods, but in respect to planting operations within the Empire. I take it that the money which will be provided under this Bill is for that purpose. Is it true that it is the intention of the Board of Trade, through the Corporation, to keep outside of this country absolutely all cotton that is not grown within the Empire? Is it intended that
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  all the raw cotton required in Lancashire shall be grown within the Empire, and that the cotton industry shall be able to subsist in future without turning to America for its raw cotton?
  I notice that there is a list issued on occasions to tell us where Empire cotton growing operations are carried on. I have been amazed at the operations of this great Corporation abroad. As a Lancashire member I, unlike the hon. Member for North Salford, would therefore pay my tribute to the remarkable achievements of this Corporation. Where we can pay tribute to intelligence, to research, to education and to initiative, in connection with any industry, I think we ought to do so. I shall not be entitled to spread my arguments unduly outside the scope of the Bill, but I think I am entitled to ask how long this Bill is intended to operate, whether, when the Bill is passed, it is the intention of the Board of Trade to say to the Empire Cotton Growing Corporation, "Now you have achieved your object; you are growing a vast proportion of our raw cotton requirements within the Empire, and consequently the levy must come to an end at some future date." I do not know how long the Bill will last. I am not told it is for five years. But this five years' business in Acts of Parliament rather irritates me. The other day we were dealing with the Rent Restrictions (Amendment) Bill, and there was a five years' plan there. Are we to take it that the Government of this country is adopting the Russian psychology of a five years' plan? Is this Bill part of a five years' plan? As stated, I trust the Bill will be supported unanimously.
  11.20 a.m.
  Dr. BURGIN: This Bill is, of course, not a Government Measure. It is a private Member's Bill, and the Government intervene merely to give the Bill their blessing. The Bill has so far passed its Second Reading unanimously, and it passed through Committee without Amendment. As the hon. Gentleman has said, it is a Bill which commands a very large measure of unanimity both in and out of this House. The hon. Member made a number of references to the speech of the hon. Member for North Salford (Mr. Morris). I cannot help thinking that the hon. Member for North

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  Salford must have had in mind, when he made that speech, something very different from this Bill. As I understood the remarks which have been quoted from the OFFICIAL REPORT of 10th May, the hon. Member for North Salford expressed the view that the cotton industry was one of those which could profitably go in for some measure of reorganisation inside its own limits.
  Mr. RHYS DAVIES: Is this really not the best example of organisation in the whole of the industries of the country? The whole of the cotton industry of Lancashire contributes to one fund, and no one declines to make the contribution.
  Dr. BURGIN: It is quite true that this is a very fine instance of an industry realising the value of research, and putting no obstacles in the way of the creation of a fund out of which that research can be facilitated, but of course it is within the knowledge of Members that there is much to be done in the way of reorganisation inside the cotton industry, and that Lancashire is the first to recognise the need for that on rather a large scale if the industry is to succeed in a competitive world. I mention the matter all the more keenly because I have been approached by Lancashire Members to know whether it is possible in any way to give encouragement to schemes of reorganisation that are even now under consideration. However, the remarks of the hon. Member for North Salford in my view did not apply in any way to this Bill.
  Certain questions have been put to me, and I would like to give an answer. I wish also to take the opportunity of saying a word or two about the British Cotton Growing Corporation and the most valuable work which that Corporation has done in the advancement of the study of cotton growing, and in fact in applying the research which this fund makes possible to the practical needs of the Empire. I was asked what rate of levy had in fact been charged. The House will recollect that in 1923, on the occasion of the first Cotton Industry Act, the levy was 6d. per 500 lbs. of raw cotton. When that Act, which was a five years' Act, came up for renewal in 1928, the 6d. was halved and the rate became three pence for every 500 lbs. gross rate or portion thereof, "or such less weight as the Corporation may, with the approval
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  of the Board of Trade, determine in respect of any year." That is why I am here to-day; it is because the administration of this levy fund is by Parliament specifically placed under the control of the Board of Trade.
  When the question of the renewal of the Act was considered in 1928 it was the Board of Trade who suggested that the figure be reduced to 3d. A ballot of the trade was taken, and 80 per cent. of the entire trade were in favour of the levy being continued but of the rate being reduced. Since 1928 Lancashire has bad an unhappy experience. Markets have shrunk, prices have fallen, and great distress has prevailed, and the Board of Trade, watching these matters, felt that the levy of 3d. per bale was unduly oppressive. So in 1930, mainly on account of the depression in the industry, the levy was reduced from 3d. to a penny, and authorisation has been given for the continuance of that penny rate until 17th July of this year, when the present Act expires unless, as I very much hope, the House gives a Third Reading to this Bill to-day. So the present Bill follows exactly the language in the earlier Acts and makes the contribution one penny for a period of five years.
  The hon. Gentleman asked me what that penny yields. I will see whether that figure can be obtained. I have not got it before me at the moment. Since the Empire Cotton Growing Corporation was formed in 1921 the cotton crops of the Empire have increased in a most remarkable way. The Corporation does not operate in India, but in 1922 the total crop of Empire cotton, excluding the Indian crop, was 112,000 bales. In 1932, in a period of ten years, it had risen by 400 per cent., and it is now 470,000 bales and I am informed that a very large part of that improvement is directly due to the work of the Empire Cotton Growing Corporation.
  Mr. RHYS DAVIES: What proportion does that figure of 470,000 bales bear to the total number of bales brought into this country?
  Dr. BURGIN: That is an arithmetical proportion which I think I shall be able to ascertain for the hon. Gentleman with a little inquiry, but I have not got it before me at the moment. India is excluded because India has a cotton com-mittee of her own. Obviously in

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  research work of this description there must not be overlapping and the House will understand that if the Empire Cotton Growing Corporation do not operate in India it is merely because there is an Indian committee, but the closest contact is maintained by them with the Indian Committee. Among the countries where the results of research have been striking is Uganda, where there has been a record crop due to the work of the Corporation. A large number of men are employed under the Agricultural Departments of the Union of South Africa and the Anglo-Egyptian Sudan in connection with this work and a large number of men are also trained on the Corporation's own staff. The principal centre for the experimental work is Barberton in the Transvaal and there is also a research station in the West Indies. A great and valuable work has-been done by this Corporation, and I take this opportunity of paying a tribute to it. The House will appreciate that the type of Bill in which a levy is asked for by an industry, in order that research work in connection with that industry may be encouraged, is a type of Bill which is obviously destined to come very frequently before this House until such time as it is possible to have a general enabling powers Bill to permit industrial research of this kind to be undertaken wherever it is found necessary.
  11.29 a.m.
  Mr. GORDON MACDONALD: It is not my intention to detain the House for long especially as I thought I detected some uneasiness on your part, Mr. Speaker, during an earlier speech and I realise the difficulty of keeping inside the scope of a Bill which deals as this Bill does with the cotton trade in Lancashire. I am grateful to the Parliamentary Secretary for having put before us in his usual clear and lucid manner the arguments in favour of the Bill. I appreciate those arguments but I think that what we all deplore is the need for the Bill. I should have preferred to hear that the industry was so flourishing that this work could be continued on the former basis, but the industry is in such a state that that is not possible. Recognising that fact, I think it will be agreed that if any industry deserves consideration
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  from this Government it is the cotton industry. I have been consulting "Dod 's Parliamentary Companion" and I observe that there has been a marvellous change in the representation of the cotton constituencies of Lancashire. In the last Parliament this party had 30 Members in this House representing that area. At present we have five. It would seem that the cotton workers thought that this Government would do more for them than the Labour Government had done. They are beginning to find that they made a mistake.
  The hon. Member for Westhoughton (Mr. Rhys Davies) said that he had been given the task of moving the Third Reading. I do not think it was a task to him. I have never known it to so a task to him to speak from that Box, Indeed I think nobody enjoys doing it as much as he does. Those Members who are here from Lancashire find it necessary on this occasion to emphasise the deplorable condition of the industry which is indicated by the reduction of this levy by fivepence to one penny. Research in cotton is vital and it is deplorable that the industry cannot maintain the former levy. We have another industry in Lancashire about which very much the same thing might be said. The situation in regard to welfare work in the mining industry has to be considered because of the deplorable condition of that industry. There we have the two staple industries of Lancashire in such a state that they have found it necessary to protect their activities in such vital matters as these. I support the Third Reading whilst deploring the need for such a Bill.
  11.33 a.m.
  Mr. LAWSON: I think the House must be grateful to my hon. Friend the Member for Westhoughton (Mr. R. Davies) for having given the Parliamentary Secretary an opportunity of making the explanation on this Bill to which we have just listened. In my experience it very often happens that the really important debates in this House arise quite accidentally. The pre-arranged "big debate" never comes off, and it is quite by accident that the most important subjects come before this House and receive its serious attention. It would have been a great pity had a Bill of this, description received a merely formal

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  Third Reading. We are dealing with an industry which used to be regarded as the very heart of individualism. Some years ago this industry set about doing things which other industries to-day are only talking about, which they only regard as a kind of far-off dream in a sort of Utopia.
  The cotton industry long go had an eye to the possibilities, to impending changes and to the need for applying science to its investigations. The results have been so valuable that they have continued this levy even though at a reduced rate, a levy imposed upon themselves for the purposes of research. That fact indicates a realisation of the value of the industry to the country and to the great mass of people whom it employs. When this Bill was being explained just now there came before me a vision of the hundreds of thousands of people and their families who depend upon this industry for their very lives and whose whole fibre is bound up with it. I think to this extent the employers in the industry have realised their obligations and are entitled to the approval of the House from that point of view. We have had commission upon commission, dealing with one industry and another, and we have had review upon review of the country's industrial and economic resources—we have had a multiplication of blue books and reports, but that is about all that we have got out of them. The cotton industry, however, almost without any investigations or commissions, has set itself to look forward, in order to take hold of any particular scientific advantage that there may be which touches it. I wish that some other industries would do the same thing, because there are industries which have an infinitely greater need in that direction, and—
  Mr. SPEAKER: I am afraid I have been unwise to allow the Debate to wander as far as it has. I am sure we ought not to review the whole of the cotton industry and then go on to review others as well.
  Mr. LAWSON: I very much appreciate having been allowed to say what I have. I only wish we had an opportunity to point the narrow way that leads to life for other industries, but I am sure we shall have a further opportunity of doing that.
  11.36 a.m.
  Mr. BURGIN: Perhaps it would be convenient that I should give the figures for which I was asked just now. The consumption of cotton in this country has tended to fall. In 1929 the figure was approximately 3,000,000 bales, and the Empire production, excluding the Indian production, was roughly one-seventh of this figure; in 1930 the figure was slightly over 2,500,000 bales, and the Empire figure one-sixth.; and in 1931 the figure was only just over 2,000,000 bales, and the Empire figure approximately one-fifth. It will therefore be seen that the total consumption is decreasing and the Empire proportion increasing. So much for the total imports and the percentage of Empire grown. With regard to what the levy of a penny produces, obviously that is a multiplication of the total number of bales handled. On a basis of 3,000,000 bales, the figure is £12,500 a year; on the basis of 2,000,000 bales, it is a little over £8,000 a year.
  Mr. RHYS DAVIES: That is very interesting. Can the hon. Gentleman tell us whether there is a good balance in the hands of this corporation? I think we are entitled to know, when we are passing this Bill for the First time—
  Mr. SPEAKER: I thought the hon. Member moved the Third Reading of the Bill.
  11.37 a.m.
  Colonel WEDGWOOD: I prefer to speak from this position at the end of the Bench rather than from the Box on this occasion, as my viewpoint may not be in complete agreement with that of the hon. Member whom I should face across the Box. I view this Bill with the greatest possible suspicion. I came here thinking that perhaps it might be desirable to utter a word of caution about a Bill such as this, but Since listening to the speech of the hon. Member opposite, I feel that if there is in this House any recognition of the danger in which Measures such as this involve the country, we ought to divide against this Bill and register our protest in the Lobby. This is an example of Socialism of which I cannot approve. It is worse; it is an example of the thin end of that dangerous wedge, the building-up of a corporate State a la Mussolini and Hitler. We have heard the hon. Gentleman opposite anti-

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  cipate in glowing colours the development in every industry of a similar compulsory levy, used by those people who happen to have charge of the machine to look after the interests of their particular industry. Well, all that I can say is that I am not interested in the cotton industry except as a wearer of cotton goods, and I do not see that the wearer of cotton goods will get any reasonable representation on this body.
  I think we ought to realise that, although this Bill is apparently popular with 90 per cent. of the cotton industry, you are going to tax 100 per cent. of the industry for the funds. All these schemes and, may I add, all the hundred and one schemes which are put before Members of Parliament for effecting much good in the world—societies for the propagation of proportional representation or for the propagation of any of the hundred and one vital interests to some, but fads to others which afflict Members of this House —are all supported on the same ground, that they are in the interests of the whole. Whether or not we should make it compulsory for all to join these schemes, all of them have exactly the same result—they provide an adequate and sufficient remuneration for a secretary, who lives on the fund for ever after. I know that in these days of increasing unemployment it is highly desirable that we should find useful occupation for gentlemen who have a genius as very few of us have not, for what is called organisation. They all get the secretarial job. Here you are providing a comfortable endowment of £12,000 a year in order that one of them may study the interests of the cotton industry and secure sufficient publicity for all that he is doing in that direction.
  I recommend to the attention of my hon. and right hon. colleagues on these Benches a better method of looking after their industries than this departmentalising of each industry and Boistering it up by these compulsory powers to wage fierce war against all rivals. The fuel research people in the mining industry, who inquire into the distillation of coal and so on, do not rely upon a compulsory levy on the collieries of this country. They rely upon the State giving its assistance in the interests of all, controlled by this House in the interests of all; and
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  that is likely to prove a far more satisfactory method of preserving the corporate state of each of these industries than any action such as that which is proposed for the cotton industry. Why do we take over the cotton industry and foreshadow for all the others this narrow control by compulsory power over the direction in which they shall develop? Because we want to get away from the control of the public. You are giving them the right to tax, but you are keeping over that taxation no public control I say that when money is raised by public taxation, by the use of powers conferred by this House, the use of that money should likewise be controlled by the public and by the Government, and I would far sooner see work of this sort done by a general levy on all taxpayers, even though I was one myself, than that it should be imposed upon a narrow industry by a special levy, whether the people like to pay it or not, and the use of that money controlled, as it always will be in the long run, by the endowed secretary of the institution. I said at the beginning that I did not feel very strongly about this Bill. The more I think about it the more angry I am to think that a National Government, with the backing of colleagues of my own who ought to know better, should foist this Bill on the House on a Friday morning before an insignificant attendance when everybody is anxious to get rid of it in order to save the restaurants of the country; and that our minds should be fuddled by arguments for a bastard Socialism which ought never to find a place on the Statute Book.
  11.46 a.m.
  Mr. LANSBURY: I have risen because my right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) has taken up a little time on this Bill. It looks a very harmless Bill, but I am doubtful whether all Members in the House understand its full implications. It is one of those little Bills which refer to something else that has happened. It is legislation by reference, which we are very often told, when a Labour Government is in power, is the very worst kind of legislation. Clause 1 of this Bill says:
  "Subsection (1) of section two of the Cotton Industry Act, 1923, as amended by subsection (2) of section one of the Cotton

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  Industry Act, 1928, shall, as from the eighteenth day of July, nineteen hundred and thirty-three, have effect as if for the words 'a contribution at the rate of three pence' there were substituted the words 'a contribution at the rate of one penny'."
  I sent for the 1923 Act so that we might be sure what we were dealing with. Section 2 of that Act is very long, and I will not trouble the House by reading every word of it. [HON MEMBERS: "Why not?"] I have mercy on my colleagues, and I am more reasonable than most people who desire to do what I am doing. Sub-section (1) of Clause 2 says:
  "Subject to the provisions of this Act, there shall so paid to the Corporation by every cotton spinner in respect of every purchase of cotton made by him a contribution at the rate of sixpence for every five hundred pounds gross weight or portion thereof of the cotton so purchased. The amount of the said contribution may be treated by the cotton spinner as an addition to the cost of the cotton and shall be recoverable by the Corporation from the cotton spinner as if the same were a contract debt due by the cotton spinner to the Corporation and payable on the date on which payment. becomes due for the cotton in respect of which the contribution is payable."
  As I understand it, this bastard Socialism, as the right hon. and gallant Gentleman described it, was for the purpose of aiding the growth of cotton in British Dominions. That was apparently so successful that in 1928 we passed another Act. Sub-section (2) of Section 1 of that Act reads as follows:
  "Section two of the said Act, as so continued, shall have effect as if for the words 'a contribution at the rate of sixpence for every five hundred pounds gross weight or portion thereof of the cotton so purchased' there were substituted the words 'a contribution at the rate of three pence for every five hundred pounds gross weight or portion thereof'."
  Now it is proposed in this Bill to reduce that to one penny. We would like to know from the Parliamentary Secretary how much money remains. This smaller contribution will, of course, mean a considerable reduction of the amount necessary for reseach, which I understand is mainly the object for which the money was to be raised. How much is there in hand? I had the figures showing the increase in the growth of cotton within the British Dominions, and I would like to know what evidence there is that this penny will provide the sum necessary to continue the work, and if there is any
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  evidence that there cannot be a great extension of Empire grown cotton.
  Dr. BURGIN: The right hon. Gentleman means without a levy at all?
  Mr. LANSBURY: No, I am not opposing the levy. I disagree with my right hon. and gallant Friend. I am sure that if this money were being spent to develop some raw material on behalf of china—I do not mean geographical China—but chinaware, the right hon. and gallant Gentleman would not be so eager to denounce it by the nasty word which he applied to Socialism. I well remember the two Debates on Empire cotton growing when these Measures were introduced. Mr. Saklatvala made a speech in the House of about one-and-a-half hour's length very late one night or early in the morning, which we all thoroughly enjoyed, and he proved conclusively that this was a thing we ought to do. Apparently Mr. Saklatvala was right. OccasioNaily even a Communist is right. All the evidence goes to show how successful the levy has been. In the Sudan, in. 1921–22, the production was 24,074 bales and that is increased to nearly 235,000. The gross total for the whole of the Dominions was 112,000 in 1921–2, and that has gone up to 480,727. This House ought to be convInced that this penny will really continue to do the work.
  We have not yet been told what money there is in hand, and whether we have reached the end of research. I think the word research indicates something that never ends but will go on for all time, and it seems a pity to bring in a Bill to reduce the amount. My right hon. and gallant Friend treated the Bill as though it concerned private industry alone. I do not very much complain about that, because it is more true to-day than it was when Sir William Harcourt or, I think, the late Lord Salisbury said it some years ago, that we are all Socialists now. Anyhow, we are all socialistic now, and every trade and in dustry comes to the State, even the china ware or pottery industry. Only the other night I heard the right hon. and gallant Gentleman appealing to the Chancellor of the Exchequer in order that that in dustry might be saved.
  Colonel WEDGWOOD: I was appealing for justice.
  Mr. LANSBURY: Staunch individualist as he is, he is bound to come cap in hand to the State for assistance, and everybody else is in the same boat. Everybody wants to get something to aid and abet them in the nefarious task of getting profits—and rent, as I would remark to the right hon. and gallant Gentleman— out of the community. The interest of our party in this proposal is two-fold. We certainly want the cotton industry to be assisted in every possibly way. It needs it, God knows. I suppose there is no industry, short of the coal industry, that is in so bad a plight as the cotton industry. The other reason, strange as it may sound in the ears of right hon. and hon. Members opposite, is that we are interested in the Dominions—[HON. MEMBERS: "Oh !"]—Yes, certainly we are. We think that long ago there ought to have been much more co-operation not merely with the Dependencies but with the British Dominions, and that we ought to have done much more in developing the wide open spaces that are under the British flag and are crying out for development.
  If we could grow all our cotton within the Empire we should be very glad indeed, especially if larger numbers of our own people could find employment in one way or another in connection with that work. I believe that we granted a loan, or guaranteed a loan, of a very considerable amount in order to develop cotton growing in the Sudan. We are all in favour of that, because we think that instead of allowing our people to eat their hearts out at home with no employment we should have developed these countries which are under the flag. This is not any theoretical view. It is a view which I have held persoNaily for a very long time, and I believe all my colleagues would support me when I say that any money we can spend on developing our own resources in our own country and developing the resources of the countries which are undeveloped under the British flag would be well spent. If we spent very much more money on research, not only in the cotton industry, but other industries, it would be of great advantage not only to ourselves but to the world. It is not to the disadvantage of the world that any country should open up new avenues of production, and for that reason, I would have supported the continuation of the levy of 3d.
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  I think that possibly we are reducing the figure too low. Only a few years ago it was 6d., then it was reduced to 3d., now it is to be only 1d. The cotton trade and the House would have been well advised to leave the charge at 3d. It is well worth the while of Lancashire to have a continuous supply of cotton from these sources, because the people who grow the cotton may buy the cotton cloth when it is manufactured—and they may even take some pottery, too. We think this little piece of Socialistic legisation—not Socialism, but Socialistic legislation—that is, the State helping an industry to get its raw material in the best possible way, ought to be supported, and that it is a pity—at least, I think it is a pity—tfhat the amount of the levy is being reduced. I cannot vote against the Bill—to do that would be to cancel the whole thing out, I suppose—but I wish the hon. Gentleman would tell us—if the Speaker will allow him to address us again—what amount there is in hand and why it is that 1d. levy will do all that is necessary.
  12.3 p.m.
  Mr. MAINWARING: I share the point of view of my right hon. and gallant Friend when he referred to this Bill as a piece of "bastard Socialism," because the hon. Gentleman opposite, in giving figures just now referring to the alleged increase in that portion of our cotton supplies which comes from the Dominions, explained it rather by the decline of importations from other areas. It simply means a relative decrease in a given period of time, and I suggest that progress of that kind might well end in the disappearance of the industry altogether in this country. It is a form of increase which I cannot assume will give any real satisfaction to the House or to the industry. I am further dissatisfied because I regard such legislation as this as another example of the trading policy which the Government seems bent upon pursuing in almost every direction. The time has arrived when we ought to ask the Government what their trading policy really is, because the recent Trade Agreements all bear the same imprint that there is on this one. In effect, the Government say, "We are satisfied if we can get a limited development of any industry in this country."

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  They say to Norway or Sweden or Germany or the Argentine, "We are prepared to limit industry in this country to give you a chance in yours." Surely that is not the point of view the Government would put forward in any electoral campaign. They would urge that they were out to develop every industry in this country to the exclusion of that same industry in any other country. Yet in the legislation introduced into this House the Government tacitly agree that they will do all in their power to keep, for example, the mining industry at a low level of production, or the fishery industry at a low level of output. They will keep the cotton industry—
  Mr. SPEAKER: Does the substitution of the penny for three pence really include all these things?
  Mr. MAINWARING: I submit that this is in order in this case, because the Bill reduces the ability of those industries to pursue research and development. If the same policy is pursued in the mining or any other industry, we can see how it will affect those industries. The policy of the Government is that of agreeing to limit the development of any one of our industries and of doing everything they can to encourage the development of similar industries in foreign countries. I agree with one of my hon. Friends who says that in this sense it is bastard Socialism. It means that we are prepared to give every possible advantage to other countries at our own expense. If the National Government believe in their own theories, and if they are serious, I am not concerned how far they pursue this policy. The further they go in their folly, the better pleased I shall be. I am only pointing out how far they are negativing their published statements and how they are gulling the people of the country. If they want a flourishing industry in this country and in the Empire they ought, instead of reducing the amount from 3d. to 1d., to be intensifying efforts in research and in the development of those industries.
  12.7 p.m.
  Dr. BURGIN: It is only with the consent of the House that I can make any further observations, but I gather that there were one or two inquiries to which it is desirous that I should give a response. I understood that the hon. Gentleman who has just sat down did not
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  speak for the cotton industry. He made two Capttal errors; one in thinking that this is a Government Bill, and the second in his rather fanciful description of the Government's trade policy. The Leader of the Opposition asked me one or two questions, to which I will endeavour to reply. He told the House that he was not here during the earlier portion of the Debate, and, consequently, he did not hear that the reduction from 3d. to 1d. took place as long ago as 1930, and that it took place at the request of the industry by arrangement with the Board of Trade, because of the depression. It was felt that the charge of 3d. was too heavy and that it should be reduced. The right hon. Gentleman was quite right when he said that we should not reduce the fund below a certain minimum. He asked: "Are you quite sure that your penny will do what you want?" It is to that portion of his argument that I desire to address my remarks.
  The House will recall that when the Empire Cotton Growing Corporation was established by Royal Charter in 1921, there was a large Government grant of nearly £1,000,000 sterling, in fact, £978,715. Consequently, by far the larger part of the income of the Empire Cotton Growing Corporation is not from the levy, but from investments. There is no particular reason why the work of the Empire Cotton Growing Corporation should necessarily be done entirely out of the annual levy. There is no reason why some of the Capttal found when the Corporation was formed by Royal Charter should not be used for the purpose for which it was incorporated. The Corporation's expenditure over the period covered by the two years, 1931 and 1932, was roughly about £150,000 and included £90,000 odd, which was expended abroad, studentships which took up £6,000 odd, and research which took over £30,000; there is a review published dealing with cotton growing all through the world, and that cost a little over £2,000 in the two years, and then there are headquarter charges. That accounted for the £150,000 expended. The penny levy produces something between £8,000 and £12,000 a year, according to the total number of bales spun,
  The actual revenue for the year ended 31st March, 1933, from the penny levy was £10,554. The right hon. Gentleman asks

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  if we have no money in the till, and whether there is anything left. We have the investment interest of just over £60,000 a year, and consequently there must be a large Capttal sum to produce such a figure. The answer therefore is that there are adequate funds for the present.
  The right hon. Gentleman asked whether this will cut down research. I have, a letter in front of me from the Empire Cotton Growing Corporation showing what this penny levy means. The House will be interested to know that an ordinary good sized Lancashire mill of 100,000 spindles makes a contribution, under this penny levy, of about £30 in the year. Consequently it is not, at its present figure, a heavy burden. Thirty pounds in the whole year for a mill of 100,000 spindles cannot be said to be extravagant. We cannot reduce below 1d. because that would entail extremely difficult calculation and collection. I am assured by the Cotton Growing Corporation that the penny will be adequate. Requests are being put forward from new places like Tanganyika which will increase our expenditure. It will be a hard fight to save this fund from disintegration unless the levy is continued. The levy has the support of both masters and men, and no voice, apart from those in this House, has been raised against it.
  Question put, and agreed to.
  Bill read the Third time, and passed.

MUNICIPAL CORPORATIONS AUDIT BILL.
As amended (in the Standing Committee,) considered.
12.12 p.m.
Mr. LUKE THOMPSON: On a point of Order. May I ask for your direction, Mr. Speaker? I handed in a manuscript Amendment this morning, but I understand that it is out of Order. May I ask for your direction as to where the mistake arose? The manuscript Amendment suggested that three lines at the foot of page 1 of the Bill should be eliminated. In the previous paragraph the Bill would enable municipalities to take unto them-selves the power of the 1879 Act and I want to ask your direction as to whether
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it is not in order that I should raise a point relative to the Act of 1875.
Mr. SPEAKER: I understand that if the hon. Gentleman's Amendment were adopted it would, by leaving out the last two lines of paragraph (b) of Clause 1, conflict with the provisions of the previous paragraph, and in consequence it would not be in Order.
Mr. THOMPSON: Yes, Sir. That is just the point upon which I wanted your guidance as to how it conflicts. I maintain that under private Bills, Orders are in operation at the present moment under the Acts of 1879 and 1875, and, therefore, I suggest that the Amendment is in Order.
Mr. SPEAKER: I have said that the hon. Member's Amendment, in the place in which he proposes to move it, would conflict with what is in the previous paragraph. The effect of his Amendment being adopted would make nonsense of the Bill.
Mr. THOMPSON: Thank you, Sir. I will raise the point on the Third Reading.

MUNICIPAL CORPORATIONS AUDIT BILL.

  CLAUSE 1.—(Power of borough council to vary existing provisions as to audit.)
  The following Amendments stood upon the Order Paper:
  In page 2, line 11, after the word "appointed," to insert the words:
  "Provided nevertheless that where a person, being a member of a registered society of accountants, is, at the date of the passing of this Act, holding the office of elective auditor, he shall be deemed to be qualified for appointment if the council of the borough thinks fit."—[Sir J. Ganzoni.]
  In line 39, leave out the words "burgess in," and insert instead thereof the words:
  "local government elector for."—[Mr. Petherick.]
  In Schedule, page 3, line 16, leave out from the word "he," to the end of line 24, and insert instead thereof the words:
  "being a member of an incorporated body of accountants, is at the date of appointment publicly and efficiently carrying on the business of an accountant."—[Mr. Hartland.]
  Leave out from the word "of," to the end of line 24, and insert instead thereof the words:
  "a body of accountants established by charter or under the provisions of an Act of Parliament."—[Mr. Lyons.]
  In line 23, after the word "of," to insert the word:
  "Certified."—[Mr. Petherick.]
  In line 24, at the end to insert the words:
  "The British Association of Accountants and Auditors, Limited."—[Sir G. Hurst.]
  In line 24, at the end, to insert the words:
  "The Institution of Certified Public Accountants."—[Sir J. Ganzoni.]
  12.15 p.m.
  Sir JOHN GANZONI: I beg to move, in page 2, line 11, after the word "appointed," to insert the words:
  "Provided nevertheless that where a person, being a member of a registered society of accountants, is, at the date of the passing of this Act, holding the office of elective auditor, he shall be deemed to be qualified for appointment if the council of the borough thinks fit."
  Before I make my speech, which will be brief, may I ask you, Mr. Speaker, whether, in moving this Amendment, I may also address myself to my other more or less alternative Amendment to the Schedule, and whether the discussion may cover the Amendments in the names of other hon. Members?
  Mr. SPEAKER: I do not know whether it will be for the convenience of the House, but it appears to me that all the Amendments on the Order Paper, with the exception of the second one— in page 2, line 39, to leave out the words, "burgess in," and to insert instead thereof the words "local government elector for"—deal more or less with the general subject and enlarge the scope of the Schedule. Therefore, I think that if we have a general discussion on the hon. Member's Amendment, hon. Members can move subsequent Amendments and divide on them without further discussion if they wish to do so.
  Sir J. GANZONI: The Amendment I am moving is designed to save the occupation and the livelihood of a certain number of professional men throughout the country who are properly qualified by examination, and who have been carrying out their job for some years past to the complete satisfaction of their employers, who elect them in the first instance and re-elect them. As I am the first to have the privilege of saying anything on the Bill in this House, apart from the Committee upstairs, perhaps I
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  may be permitted, in a sentence or two, to say what the Bill does. It is a permissive Bill in that borough councils may adopt it or refrain from doing so, but it is not permissive in its effect, because if they do adopt it, it lays down two alternative ways in which they shall —not "may"—in future fill the post of borough auditor. The first Sub-section, with which I am not concerned in my Amendment, says that borough councils in future, if this Bill becomes an Act, instead of having their accounts and the accounts of their officers audited by borough auditors, in accordance with the Municipal Corporations Act, 1882, which means what we call an elective auditor, shall have them audited by a district auditor, who is appointed officially, and is not their own official, or solely their own official. Subsection (2), to which I am moving an Amendment, gives the alternative way. It says:
  "the accounts of the corporation and the accounts of the borough treasurer and other officers of the corporation shall, instead of being audited by borough auditors as aforesaid, be audited by one or more auditors appointed in accordance with the schedule to this Act, and the provisions of that schedule shall have effect with respect to the qualifications, powers and duties of any auditor so appointed."
  I propose, by this Amendment, to add a proviso:
  "Provided nevertheless that where a person, being a member of a registered society of accountants, is, at the date of the passing of this Act, holding the office of elective auditor, he shall be deemed to be qualified for appointment if the council of the borough thinks fit."
  As far as this Bill has been designed by the hon. Member for Penryn and Falmouth (Mr. Petherick) to enable borough councils, who may, in some cases, have, or had at some time, elective auditors with no qualifications of any sort or kind—it may be a tinker, tailor, or anybody else elected for reasons good or bad, and where perhaps, those corporations have become more intelligent or awakened to the fact that there is some suspicion of malpractice, or perhaps not that vigilance of audit there should be, and they wish to get rid of such an auditor—I think that, as far as that is concerned, it is an excellent Bill. But this House wants to preserve its reputation for not working an injustice when trying to do good. The Schedule to the Bill, to which I have

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  an Amendment later, enumerates some seven societies who are made sacred by being brought within the purview of the Bill. As a matter of fact, there were only four prior to the Committee stage. Unlike the ten little nigger boys, they have not diminished but increased in numbers from four to seven.
  It is rather extraordinary that among the increased number are the Society of Accountants in Edinburgh, the Institute of Accountants and Actuaries in Glasgow and the Society of Accountants in Aberdeen. Yet this Bill in Clause 3 says that the Act shall not extend to Scotland,. It is said that hard cases make bad law, but surely every Member of this House, even the promoter and the Parliamentary Secretary to the Ministry, will regard as a little extraordinary that the hard case I am going to cite as an example, because I happen to know all about it. I do not suggest that the law should be altered because of one hard case, but here is a gentleman who is to be debarred in future from being chosen by his own council in the town where he lives, having done his job satisfactorily for 16 years, and is doing it to-day. He has been elected to other local appointments, and also to audit the Road Fund licences under the Ministry of Transport. He is to be regarded, if this Bill passes unamended, as being unfit for his job, and yet professional gentlemen, whose qualifications come from Aberdeen, Edinburgh and Glasgow, are put into this Bill as men who may be quite properly appointed in future.
  To show the kind of hard case that may occur, I may say that the man of whom I am thinking is not without qualifications. He is not a cobbler, or anything like that, or even an intelligent, experienced tradesman in the town. He is an accountant, a member of a society which has been established for 30 years, but is not included in the sacred list in the Schedule. It is now the third senior society in the country. Entry is by examination. It has a good number of examiners, and a high standard of examination and only about 50 per cent. pass it. A large percentage of its members hold public appointments of this kind. Furthermore, it has a higher percentage than at least one of the societies now admitted to the Schedule.
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  I believe that hon. Members are really taking some notice of the injustice that may be worked by a part of this Bill. It has always been the practice of this House to try to preserve the interest and the livelihood of a man actually in occupation of an appointment. Going back before my time, although I am no chicken, it will be recalled that a man was allowed to act as chief engineer on a ship at sea, although uncertificated. The most recent example is that of the dental mechanics under a recent Bill, who, if they had been doing their work for a certain specified number of years were allowed to practise dentistry, and are doing so. Those particular individuals were allowed to go on for the rest of their working life. It is a practice recognised, I think, by any body of Englishmen and Englishwomen as being only fair, right and proper, and that is all I am asking the House to try to preserve on this occasion. I think that my first Amendment is the most fair and reasonable way of doing what is wanted, but, alternatively, I seek to include in the Schedule the society of which I have already spoken.
  The first two societies mentioned in the Schedule are well known to everyone, and then we have the three Scottish societies, which are doubtless excellent societies, but which, I suppose, are included because a professional gentleman qualified by membership of one of these Scottish societies may happen to be a partner in an English firm. Then there are two decidedly smaller societies, which have recently succeeded in getting themselves recognised by Committees of this House. I submit that it is just, either to allow a man like the one I have described to continue to be elected by the body which has elected him so far, or, if not, to include in the Schedule a perfectly proper, decent, recognised public society whose members are only admitted by examination. There is no risk of creating any vested interest by so doing.
  12.26 p.m.
  Mr. HERBERT WILLIAMS: I beg to second the Amendment.
  In Committee, at the request of my hon. Friend, I moved an Amendment in the same form as his present Amendment to the Schedule. I did so because he had no opportunity of doing it himself, and I

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  read to the Committee a letter as an example of the injustice that might conceivably arise. I appreciate the difficulty of the promoters of the Bill and of the Ministry. They want to be assured that people who are not really satisfactory are not included in the Schedule, and it may be—I do not know—that some societies, while they have at present a high standard, may include among their members a number of people admitted in the past who are not of the requisite standard. As a result of my action in the Committee, a representative of the body which has been referred to came to see me, and I think that subsequently some communication was addressed to the Ministry of Health. Whatever may happen to-day, I must say that this society took a very sporting attitude. They said that, if the pressing of this Amendment would imperil the Bill, they did not want it pressed. I said that in any event the fact that they had taken that attitude ought to be stated in the House, and accordingly I now mention it. I do not think I need add anything to what has been said by my hon. Friend, who has explained the position admirably.
  12.28 p.m.
  Mr. HARTLAND: In rising to move the Amendment which stands in the names of two of my hon. Friends and myself, I count myself rather fortunate to have been preceded by the hon. Member for Ipswich (Sir J. Ganzoni)—
  Mr. SPEAKER: The hon. Member cannot move his Amendment now. My suggestion was that those hon. Members who had Amendments on the Paper to this effect should speak on the first Amendment. The hon. Member's Amendment cannot be moved until this one has been disposed of.
  Mr. HARTLAND: I take it that I can speak to my Amendment, and include some of my own observations, in supporting the Amendment of my hon. Friend?
  Mr. SPEAKER: Yes.
  Mr. HARTLAND: On behalf of those for whom I am speaking, I would emphasize the fact that no one—not even the promoter of the Bill—is more keen than they are in the desire that some Measure of this kind should be enacted, that the net should be drawn as tightly as possible,
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  and that any audit under the Bill should be as nearly perfect as possible. On the other hand, however, they feel that the promoter of the Bill has, perhaps, taken the easiest line of approach by specifying in the Schedule the names of certain incorporated bodies, which are undoubtedly in the main above suspicion, but I suggest that, as has been already mentioned by the Mover of this Amendment and by the hon. Member for South Croydon (Mr. H. Williams), there are other bodies who are equally deserving of consideration in such a case, and their omission from the Schedule, while it may not exactly deprive them of a livelihood or put them to pecuniary disadvantage, will be prejudicial to their business.
  Our Amendment does not tend to loosen or widen the meshes of the net. It stipulates, in the first place, that a person, to be eligible under the Act, must be a member of an incorporated body of accountants. Most of these incorporated bodies of accountants, whether they are admitted to incorporation as a result of examination or not, have certain specified rules, and there is no doubt that often their rules are more stringent than those of the bigger bodies. Moreover, they are not satisfied that every present member of the Institute of Chartered Accountants, for instance, has entered by examination. There may be very few who have not, but there are some, and a still greater number of the Incorporated Society of Accountants are there without examination. Therefore, the essence of the claim is a claim to respectability and ability.
  It is contended that the rules of certain other societies are just as good from that point of view as those of the larger societies; and it is considered that, in taking the line of easiest approach, as the promoter has done, supported, I am afraid, by my colleague from Norwich, the Parliamentary Secretary to the Ministry of Health, they are inflicting, possibly, grave injustice on hundreds, and perhaps thousands, of men who at present are earning a very respectable and decent livelihood and employing other people as practising firms of accountants. Many of these firms have been founded by men who before the War intended to enter the profession of accountancy. They went to the War,

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  and, coming back older, the prospect of five years' articles, and also a certain expenditure of money, was beyond them. They had a certain gratuity from the Army, they started business on their own account, and many of them to-day have built up firms which are known in their own areas to be above reproach and to be perfectly competent accountants of integrity.
  Our Amendment also stipulates that they must be at the time of appointment publicly and efficiently carrying on the business of an accountant. That stipulation is of considerable importance. We know that there are many chartered and incorporated accountants, and members of the other societies mentioned in the Schedule, who are not practising as accountants at all; indeed, possibly, a Majority of the members of these larger societies are not practising as accountants to-day. Some of them are employed as accountants in offices, many of them are managing cinemas and music halls, and some may even be managing greyhound tracks, but certainly they are not practising accountants, and are far less eligible for enrolment in the Schedule than are the members of these incorporated bodies for whom we speak, who must be, at the time of appointment, actually publicly and efficiently carrying on the business of an accountant in the town or borough where they are known and where their ability to take the position of a public auditor should be, and probably would be, unquestioned.
  I am afraid the Bill will go through as it is. At first I thought it was a private Member's Bill, but when the forces of the National Government are, as I suspect, behind it we feel that we have not much chance of doing other than make a request which may or may not be granted and, in the latter event, of registering our protest. I would, therefore, request whoever is really going to be responsible for the final shape of the Measure, if they cannot or will not accept our Amendment, to remove all possible injustice by allowing any such firms as those I have mentioned, who wish to qualify for the position, to appear before the Local Legislation Committee and, if passed by that body, to be added to this list or, failing that, remembering that there is shortly to come before the House
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  a comprehensive Measure in connection with local government, in which presumably this question will form a small part, could we have an assurance that, when that time comes, these people for whom we speak will get a fair chance with others of having every facility that is open to their profession and that nothing that is enacted in this Bill will prejudice their case when they make such a request to the House. I ask the Parliamentary Secretary and the promoter of the Bill at least to give this last alternative sympathetic consideration. You will not be widening the net and you will not be allowing any trespass upon the provisions which you wish to embody in the Bill. You will be removing an injustice and laying down a prospect of legislation which, while doing justice, will ensure a perfect audit.
  12.37 p.m.
  Mr. LYONS: My hon. Friend who introduced the Bill indicated that he was trying to provide a useful, if modest, Measure of reform. I think all of us who support it realise that it is going to be a real reform in local administration. The system that prevails in the manner in which these officers are chosen and the work that is given them to do in reference to local authorities has become really nonsensical and the time is long overdue when the alteration indicated by the Bill should be brought into force to make really effective the checking of the finances which are now so heavy in large local authorities.
  It is our intention to ask the Government and those responsible for the Bill to take away a limitation in the Schedule. The object of the Amendment in my name would have been to delete each one of the very worthy institutions mentioned in the Schedule and to allow the appointment of any member of a body of accountants established by charter or under the provisions of an Act of Parliament. For the first time in history, as I understand the Schedule, it seeks to limit the work and the functions of an accountant. It will have the effect of making a close corporation for all those persons who might otherwise be eligible for this special work. May I call attention to difficulties which have been found by representative bodies in the past in dealing with accountants and in considering whether there should be any

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  limitations imposed upon those who desire to become accountants. In 1930 a Departmental Committee was appointed by the Board of Trade to consider the question of the registration of accountants. In one of their recommendations they said:
  "Reference has been made in paragraph 10 to the definition of 'accountant' under the Income Tax Act, 1918, and other enactments relating to taxation. This definition is very wide in terms, but it has not given rise to any difficulty so far as Income Tax authorities are concerned."
  I have looked carefully at that definition, which is worthy of consideration in considering how far this Schedule, important as the Bill is, may come into conflict with ordinary accepted definitions. The definition given by Section 137 (2,c) of the Income Tax Act is as follows:
  "In this sub-section 'accountant' means a person who has been admitted a member of an incorporated society of accountants."
  That is a well accepted definition, and I have drawn my Amendment to allow any person who is a member of such an association to be an accountant acceptable for this purpose.
  Another paragraph of the report of the Departmental Committee, which was established in February, 1930, refers the House to Section 32.
  "One of the practical difficulties in the way of establishing a register is to define 'accountancy.' A number of definitions have been placed before the Committee none of which satisfactorily covers the whole field."
  The difficulties which that Committee found and so unhesitatingly expressed, after a great deal of material and evidence had been brought before them, are present just as much to them, and cannot be met by the promoters of the Bill nearly as well as they can be met by that Committee.
  Mr. LOGAN: As the hon. and learned Gentleman is anxious, according to what he is bringing forward, to maintain the status of his definition of accountancy as the one which should operate, may I assume also that the accountant who comes under his designation will only be able to employ those who have the same status?
  Mr. CAPORN: Can my hon. and learned Friend say what body of accountants, in addition to those set out in the Schedule, would be included as a result of his Amendment?
  Mr. LYONS: In reply to what was said by the hon. Gentleman as to whether, if my Amendment were accepted, an accountant would have to employ somebody of equal status as himself, as far as I know there is no restriction upon a chartered accountant in regard to the qualification of the person he employs and which he, as a chartered accountant, with all his authority, would certify. In his own interest, and realising the weight which is paid to any certificate which he gives under his signature, he could generally, I think, be relied upon to employ competent, straightforward and efficient persons to do such clerical work as would have to be done, so that he could inspect their work with such check as he thought necessary in order to give the certificate which he would have to give as a chartered accountant.
  Mr. RHYS DAVIES: Is it not the practice in business and in municipalities that the qualified man—the chartered accountant—takes responsibility for all the work done, that it is his duty to employ efficient clerks to do the detailed work under his charge, and that, as far as the accounts ultimately are concerned, he is responsible for everything which is done by his agents?
  Mr. LYONS: I am obliged to my hon. Friend for his interruption, as it states accurately the established practice. Chartered accountants, or any of the established accountants who sign a certificate, have to take complete legal responsibility for the certificate they give. If in any way they have been lax or inefficient in allowing bad workmen to produce material which they themselves sign as correct, it is their responsibility, and the authority which has been aggrieved may look to them for redress. I think that that covers the point made by my hon. Friend, because it means that anybody who was given the same power under the Act as a chartered accountant will have under the Schedule as it stands, the whole of the legal effects and the whole of the legal constitution placed upon him, as would a chartered accountant were a chartered accountant responsible.
  I desire to draw the attention of the House to the following point. It is essential—and neither of the previous speakers have attempted to controvert it—that the local authority, the funds

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  of the local authority, and the ratepayers who contribute those funds should be adequately safeguarded. There can be no doubt about that. One realises and appreciates the point of my hon. Friend the Member for Westhoughton (Mr. Rhys Davies). He and I did not see eye to eye on this principle in reference to another Bill some time ago, but the present Bill, at any rate, adopts that principle. The local authority may adopt it or not as they choose, and, if they do so it is only right in the interests of the ratepayers who have to provide the funds of the local authority, that they should have men of ability, efficiency and character employed as accountants to keep a check on those funds. I hope that it will not be taken that I am trying to cast any reflection at all upon the members of the respective bodies named in the Schedule of the Bill. Their standing and responsibility are above any question But I say that there are other people who could do the work just as well, efficiently and effectively in the interests I have indicated as the persons belonging to the societies mentioned in the Schedule. If the Schedule is accepted as it stands, it is bound to have the effect of causing injustice to somebody here and there, and I am sure that those who are responsible for the Bill do not wish to cause injustice. In view of the report which has been made, and the difficulties obviously expressed to those charged with the special duty, if possible, of overcoming them, I invite the House, and the Parliamentary Secretary to the Ministry of Health to say that they accept the position as they find it and will not seek to make the limitation which they find so difficult to do.
  The Minister of Health has before him now all kinds of material and evidence of the way local authorities have their audits made. The people who are carrying on business as accountants to-day and are dealing with those matters for local authorities without complaint will find themselves excluded from doing the work which they are now doing if the Bill becomes law without any alteration to the Schedule. I hope that those persons who are doing their work so well will not automatically be excluded under the Bill. A gentleman living in Edinburgh and a gentleman living in Aberdeen may be
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  very capable accountants, but they will be no better fitted to investigate or check the accounts of a local authority, say, in an industrial city in England, than many persons who have lived in the district for years and have spent the whole of their business careers in the locality, and not in Scotland, in dealing with the matters which come under the purview of the local authority from day to day, and who are members of one of the other societies. There will be a complete check, if the Amendment which I have indicated is accepted, because the only person who will then be qualified will be the person who is a member of a body of accountants established by Charter, or within the provisions of an Act of Parliament. The Act of Parliament which creates such a body will provide for the qualifications, respectability, straightforwardness and experience of an accountant before a man is admitted to membership. I have gone very carefully into the particulars of the requirements of some of these societies now outside the Schedule, and I have found that they impose a very strict inquiry before a man is allowed to be admitted.
  Mr. RHYS DAVIES: The Amendment which the hon. and learned Gentleman is to move is very important. Will he be good enough, therefore, to tell the House how many of the societies mentioned in the Schedule would be included if his Amendment were carried?
  Mr. PEAT: When the hon. Gentleman speaks of accountants under the provisions of an Act of Parliament, does he include any body of accountants who may register themselves as a limited company under the Companies Act?
  Mr. LYONS: I have gone into the matter with some little care. The institutions mentioned in the Schedule as it stands will, I think, all be included in the scope of my Amendment. There would not be one of them excluded, as I understand it. In reply to the question put by the hon. Member for Darlington (Mr. Peat) there are four others that are at the present time under the purview of my Amendments, but before the hon. Member accepts that statement as being conclusive perhaps he will confer with me over the books which will give the reference with more particularity.

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  They would be within the scope of my Amendment. In each of those four institutions there has to be a qualification by experience, by examination and by character.
  Mr. PEAT: That was not exactly the question I asked. My question was more general. Would a body of accountants who registered themselves as a limited company under the Companies Acts be able to come in under the Amendment? There would be no definite limit in the number of people who could do it.
  Mr. LYONS: I find a little difficulty, without notice, in dealing with that question, but the risk that the hon. Member suggests is one that might be easily guarded against. It would be easy to prevent any organisation of mushroom growth coming in. The point might be dealt with in this way, by allowing the Schedule to extend to all those already in existence and giving the particular safeguard that my hon. Friend thinks is necessary to prevent any organisation springing up over-night. There are many estimable members of the two organisations set out in the Bill, the Institute of Chartered Accountants and the Society of Incorporated Accountants and Auditors who are performing their work with very great skill, and who themselves came in without the examination and restrictions which exist to-day in those two bodies. Although those two bodies have closed their doors, they have allowed in the so-called unqualified people whom the Schedule would shut out, notwithstanding the excellent work they have done and are doing. That point was emphasised by the hon. Baronet when he asked the House to remember what happened in the case of the Dentists' Act two or three years ago. In that case there was no attempt to drive out of business those who were then in business. They had to satisfy the authority set up by this House as to their qualification, experience and character, and after satisfying the authority on those three points they were allowed into the society, and the door against others was closed.
  I would ask the House to take the view I have indicated and to impress upon the Minister of Health that the injustice to which I have referred was never intended when the Bill was framed. Those who have already spoken join with me in
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  giving the Bill the strongest support. We see in it a reform which is long overdue. Those of us who have seen gross mismanagement in connection with local authorities realise the need for the Bill in the interests of ratepayers all over the country, and we welcome it; but we do hope that in doing the good which this Bill aims to do on behalf of the com-munty, which I am sure the Bill will accomplish, they will take such action as to remove an injustice which I am sure, through no intention on the part of the promo tors of the Bill, and through no intention on the part of the Government, will be entailed if the Bill passes into law as it now stands, without the alteration in the Schedule which I have indicated.
  Some doubt has been expressed whether this has ceased to be a private Member's Bill and has become a Government Measure. If it has become a Government Measure I assume that the Department concerned will take what steps it can, either here or shortly afterwards, to see that the injustice referred to does not occur. On behalf of many persons who are now performing work with great satisfaction I invite the House to accept the view that I have indicated, and not only to safeguard the local authorities and the ratepayers but to safeguard the persons in question against the possibility of unfair discrimination. Therefore I hope that the Amendment which stands in my name will be accepted. So far as I can trace the Statutes, the Income Tax Act of 1918 is the most involved and most expressive of all Acts of Parliament dealing with matters of national finance, and the Government of that day I have no doubt considered this matter with that same care and that same precision which was exercised by the Committeee to which I have referred, when they looked into the question of the closed door as regards accountants. There is a definition in that Act of an accountant, and as far as I can discover from research there has been no alteration of that definition at any time Since then. There is no other Act of Parliament which I can find dealing with this topic which has Since altered the status or definition of an accountant which was so clearly established in the Income Tax Act of 1918. It would be wrong in an

  691
  Act of Parliament not primarily interfering with the position of accountants but seeking to abolish an anomaly in the present system of public audit to come into conflict with established authority and to inflict an injustice on many persons whilst bringing about a great reform which we all welcome.
  1.3 p.m.
  Mr. LANSBURY: The Amendment of the hon. and learned Member is one which I think we ought to support, and when it goes to a Division I hope the House will agree to it. I have risen mainly to say that I do not take the view that is probably taken by most hon. Members that the audit of accounts is merely a matter of the figures in the accounts. An auditor has many other duties in these days than merely seeing that the figures are added up properly or that a particular expenditure is as set out. The district auditors of the Ministry of Health to a very large extent control policy, and there is just as much argument that an auditor should be a member of the legal profession as there is that he should be one trained in figures. The fact has been established, and I believe established beyond any doubt, so far as the Metropolis is concerned, that the district auditors have never of their own volition brought any case of corruption either to the notice of the ratepayers or of the Minister of Health. They have brought cases of over-expenditure in the matter of the relief of individuals, but on the question of pure and simple corruption the cases of which I have any cognisance during the very long period that I have been in local government have always been brought to the notice of the auditor by some body of ratepayers, or some individual ratepayer, or by the authority itself. I ask the House not to draw too tight the circle from which auditors may be drawn. We should not allow ourselves to be swayed too much by the sort of professional attitude of mind which the Bill rather enshrines.
  We are to-day living in different conditions to any that have previously obtained. Local authorities have to carry out no end of administrative work which affects the lives of people in many ways, and a man who takes a broad-minded view of life is able to carry out this work as well as anybody. Here am I, if I was
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  dealt with according to the law I should have been in prison the whole of my life. We built a school and tar-paved the ground to save the children carrying the mud into the homes. We put, tiles on the walls in order to save whitewashing and painting. Our local opponents went to the auditor and said, "What extravagance," and we were surcharged about £150,000, which, of course, we still owe, and shall go on owing. Does anyone suggest that you want a chartered accountant to arrive at such a decision. The gentleman who came to that decision was an auditor, not only a chartered accountant but a lawyer into the bargain. The fact that you have a professioNaily trained mind on the subject is not a guarantee that you will not have professioNaily trained nonsense. I hope we shall put in the Amendment of the hon. and learned Member. I am aware that chartered accountants are wonderful jugglers of figures, but when it comes to deciding whether tiles are better than painted walls I think I am as capable of judging that as the most learned chartered accountant in the world.
  As to corruption, I repeat that there never has been a case in the Metropolis where an auditor has discovered of his own volition that someone was doing the ratepayers. All the cases which have come before the courts during the recent years have been cases in which some body of ratepayers has called attention to a particular expenditure, or cases in which the authority itself has called attention or some individual member of the authorities. I want to emphasise the point that it is not so much a question of a person having a trained mind for dealing with figures, but that you want a person with a broad comprehensive knowledge of what local government really means. Let him be a person who can add up figures, but also a person who has some acquaintance with the lives of people generally. For these reasons I shall support the rather wider proposals which have been brought forward.
  1.9 p.m.
  Mr. PEAT: Before dealing with the Amendment which has been submitted to the House I should like to thank the right hon. Member for Bow and Bromley (Mr. Lansbury) for his complimentary remarks in regard to chartered accountants in general. He says that if a man

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  knows something about bricks and mortar he can probably safeguard the interests of local authorities, although he may not know much about finance.
  Mr. LANSBURY: I did not say that.
  Mr. PEAT: That was the inference.
  Mr. LANSBURY: I hope the hon. Member will not judge me on inferences.
  Mr. PEAT: I do not want to misinterpret the right hon. Gentleman, he is obviously too Sincere for that. I was trying to make this point that, in the higher branches of accountancy the House may rest assured that we do not pride ourselves on being purely what I may describe as first-class tickers. We go through our examinations and through a long and testing experience, getting a very definite understanding of commercial law, and from the nature of their work accountants have a fair knowledge of industries in which their clients may be engaged. Hon. Members who have supported the Amendment have said that the particular societies they had in mind were very anxious that the qualifications of those engaged in the audit of municipal corporations should be kept to the highest possible standard. We of course accept that, but the Amendment in the name of the hon. Member for Ipswich (Sir J. Ganzoni) seems to me to be rather unnecessary. Municipal corporations who now have an elective auditor whom they respect and upon whom they can rely, can under the Bill continue to engage him in his present capacity. They are not forced to give him up and take on a professional auditor. They are at liberty to continue to employ this estimable gentleman and, therefore, I cannot see why the first Amendment has been moved. All we say in the Bill is, that if they make up their minds to give up the elective auditor and not to have a district auditor they can take on a professional man.
  Sir J. GANZONI: Does it not occur to the hon. Member that an enlightened borough must in practice adopt the provisions of this Bill. As trustees of the public money they must take steps not to incur any unnecessary expenses in the matter of elections; no matter what has been the case in the past.
  Mr. PEAT: If they are enlightened boroughs then the Bill is going to give
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  them further enlightenment. If they have been enlightened in the past they can go on being what they consider to be enlightened boroughs in the future. Dealing with the third Amendment, I find that that Amendment, together with the Amendment of the hon. and learned Member for Leicester East (Mr. Lyons), is dangerous in so far as it is very vague. In both Amendments the term "incorporated" is used. What is an incorporated body of accountants? It seems to me that that would refer to any body of accountants who incorporated themselves. Two or three of my hon. Friends and myself could go out of this House and we could form ourselves into a limited company, and then come back, and under the terms of this Amendment we should be eligible to carry out the professional audit of a large corporation like that of Birmingham or Manchester. It is inconceivable that the House can accept an Amendment which is so broad.
  Mr. MAGNAY: In the absence of the hon. and learned Member for Leicester East (Mr. Lyons) I would mention that he said that the present tense should apply, and no one could go outside to form such an incorporated society as the hon. Member suggests. The hon. Member, being the competent man he is, would never think of doing that sort of thing.
  Mr. PEAT: I do not want to speak at length, but I must deal with the point mentioned by the hon. Member, which is not in accordance with what the hon. Member for Leicester East said in answer to my question. He said that the Amendment certainly would apply to anyone who went outside and joined others to be incorporated under one of the Companies Acts, but that he could not conceive of any circumstance—mark the vagueness— which would make it possible for incompetent people to get together and to form themselves into such a society or body and get a job of this kind. But we have to accept the Amendment as it is in all its vagueness'. The last two Amendments on the Paper deal with specific" societies which wish to have their names added to the Schedule. As the House knows, the societies whose names are mentioned, except in so far as they come from Scotland, are those societies which have proved themselves before the Local Legislation Committee. That

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  Committee is in charge of Bills of this kind brought forward by local authorities, and the Committee has had a long line of very competent chairmen. Let me quote the remarks of the present Chairman. He said:
  "He could not accept the qualification of a body which had not proved itself, after due inquiry, to have sufficient qualifications to audit the accounts of a local authority."
  If the societies which are mentioned in the Schedule are the only ones which have proved themselves, before this very important Committee, to be fitted by their qualifications to audit the accounts of a local authority, we may very safely leave the matter where it is. Reference has been made to the Income Tax Acts and the attempt made in those Acts to define what an accountant is. As the definition stands it is apparently competent for anyone to certify Income Tax accounts for an Inspector of Taxes. I do not think that the House for a moment could confuse the type of work necessary to put together a statement of accounts for the local shopkeeper, the butcher, baker or candlestick maker, for the purpose of submission to an Inspector of Taxes (who is in a position to ask as many questions as he likes and usually does ask them) and carrying out the most intricate audit of one of the great municipal corporations. I submit that that was not a fair argument to use. What we have to do is to try to select to the best of our ability, to draw a line—and the drawing of lines is always difficult. The Schedule attached to the Bill gives us a sound criterion to go on. We want to find out who are really competent. It is not a matter of being snobbish or attempting to draw a ring round a certain number of associations. It is a matter of common sense and of accepting some form of well-known classification.
  I would like to meet the point which was made against some of the older members of the oldest societies, that is to say, the Chartered Society and the Incorporated Society. If I remember rightly, it was said that some of the members of these societies had obtained their positions without passing any examination. That is true in a number of cases. If I may be personal, I would say that my father became a member of the Institute of Chartered Accountants without passing an examination. But he is 81 now and
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  when he got in it was at the commencement. Many others of similar age at the same time got into these old societies because they were the pioneers. They could not very well set examinations for themselves. But the point w as made that these gentlemen, having become members of their Societies, took unto themselves other undesirables. Of course that is strictly against the facts of the case, because no chartered accountant, no member of the Institute, is allowed to practise as a chartered accountant with anyone who is not a chartered accountant. At the present moment I do not think there are one per cent., or a half per cent., or even a half of one-half per cent. of members of the Institute who have not passed their examinations, and those examinations are not a matter to be taken lightly.
  One hon. Member said to-day that this Bill is supported by the Government. I understand that if one mentions the fact that a Bill brought forward on a Friday has Government support, nearly everyone immediately votes against it. I hope that that will not be the case to-day. I appeal to the House very Sincerely to give the Bill support, whether the; Government support it or not. I think it is an excellent Bill, and that if left in its present form it will perform a very useful function.
  1.24 p.m.
  Mr. RHYS DAVIES: I must confess that I am in a quandary as to what I shall do if this Amendment; is forced to a division. I wish that the hon. Gentleman who moved the Amendment were in his place, because I want; to put some questions to him. I notice that there are in the House a number of gentlemen who know very much more about auditing and accountancy than I do. I ought, however, to have prefaced that remark by saying that it is too commonly assumed that because we are Labour Members we do not know anything about finance and accountancy. Some of us are not quite as ignorant as that. I do not quite understand the meaning of the Amendment:
  "a body of accountants established by charter or under the provisions of an Act of Parliament."
  I interrupted the hon. Member in whose name this Amendment stands as to whether, if the Amendment were carried, the societies in this list would still be

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  included. The hon. Member for Darlington (Mr. Peat) shakes his head. We ought to know definitely before we vote what are the societies that are "established by charter or under the provisions of an Act of Parliament." Do I take it that the Institute of Chartered Accountants in England and Wales is included?
  Mr. MAGNAY: Yes.
  Mr. DAVIES: The hon. Gentleman the Member for Gateshead (Mr. Magnay) I understand knows something about accountancy and his view is that they would be included if the Amendment were carried, but perhaps the promoter of the Bill will be able to enlighten us more definitely on these points. Then there is the Society of Incorporated Accountants and Auditors. I have the impression that the Institute of Chartered Accountants was the first society of its kind in the country and, if I may say so as a layman, it has always given me the impression of being the superior organisation of the lot. There are hon. Members I know who will challenge that statement but I do not think they are entitled to challenge me when I say that that is the impression which I have gained. We have to ask ourselves, first, are these two organisations to be included if this Amendment is carried? I think probably those two would be included.
  1.28 p.m.
  Mr. MAITLAND: May I intervene to say that I hope the hon. Gentleman will be able to persuade his friends upon this matter. I understand that his Leader has expressed a determination to vote for one of these Amendments, and I believe that if the Amendment of the hon. And "learned Member for East Leicester (Mr. Lyons) is carried in its present form, the Society of Incorporated Accountants and Auditors would automatically be excluded. I believe the same remark would apply to the Society of Accountants in Edinburgh. I am not sure as to the Institute of Accountants and Actuaries in Glasgow but I rather think they would come into the same category and also the Society of Accountants in Aberdeen. My hon. Friend always stands up for his own nationality and surely he will forgive me for saying that if not a Parliamentary representative of Aberdeen I come from
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  an Aberdeenshire family and as such would not willingly desire that result.
  1.29.p.m.
  The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): Perhaps it will be for the convenience of the House if I state just what the position is in regard to the3e Amendments. My hon. Friend is quite right in saying that if this Amendment means the present tense and does not apply to the future at all, the Society of Incorporated Accountants and Auditors would be excluded. If this comprehensive Amendment is passed in its present form it means that any number of persons in the future could incorporate themselves and register themselves under the Companies Act and that would bring them under the provisions of the Measure. Then of course anyone could do that—my hon. Friend and I could do it—whereas if it is limited, these important bodies are excluded.
  Mr. MAGNAY rose—
  Mr. DEPUTY-SPEAKER (Captain Bourne): I must remind hon. Members that we are not now sitting in Committee, and we cannot carry on a Debate with these constant interruptions.
  1.30.p.m.
  Mr. RHYS DAVIES: I am glad of your protection, Captain Bourne, but the Parliamentary Secretary has cleared the atmosphere a great deal by his statement. In principle, I want the auditors who are to operate under this Measure to be efficient and competent men but I would not like to vote for an Amendment which would exclude competent men simply because they had not yet been admitted to the right type of society. I am glad to see that the hon. Member for East Leicester (Mr. Lyons) is now in his place. When he began his speech I was inclined to vote for his Amendment but if I am correctly informed that it is an excluding Amendment, then I shall be compelled to vote against it.
  Mr. LYONS: I should like to know by whom my hon. Friend has been informed that my Amendment is an excluding Amendment?
  Mr. DAVIES: I have been so informed on the best authority namely that of the Parliamentary Secretary to the Ministry

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  of Health. He has informed us definitely that the Society of Incorporated Accountants and Auditors would be excluded if the hon. Member's Amendment were carried.
  Mr. LYONS rose—
  Mr. DEPUTY-SPEAKER: We cannot have these constant interruptions.
  Mr. DAVIES: No, the hon. and learned Member must not irritate me in that way.
  Mr. LYONS: On a point of Order. May I be allowed to say that I entirely dissent from what has been suggested?
  Mr. DAVIES: The fact that the hon. and learned Member dissents does not make his point of view correct and I must on this occasion adhere to what the National Government say on the subject. I do not believe all they say, but I think they are correct on this point. The Parliamentary Secretary suggested that if the hon. Member's Amendment were carried he and I—I want the House to note that—could set up a company of auditors and accountants without any qualification whatever and that we could be elected as auditors to a great municipality. That is about the most monstrous suggestion I have ever heard. I was beginning to wonder whether the hon. Gentleman's suggestion that he and I could do such a thing was a sort of indication that we should form a company. I understand the Parliamentary Secretary is quite competent to audit the policy of any municipality. If the Leader of the Opposition were here now I believe I should be compelled to cross swords with him on this Bill. After all this is a private Member's Bill, and every Member is entitled to express his own view upon it, and I am giving my own personal opinions.
  The right hon. Gentleman the Leader of the Opposition made the statement that because Government auditors are entitled to determine policy, he hardly thought qualifications and competency for auditing and accountancy mattered very much, but however competent a man may be in auditing the policy of a municipality, he would be a very poor auditor indeed unless, to start with, he know something about accountancy. I am afraid that a goodly number of per-
  700
  sons in this country have never yet understood the importance of accountancy. If the accounts of firms and individuals in this country had teen properly kept and audited, we should not have had the tragedies in the law courts that have been reported in the Press during the last few years. The other day we actually passed a Bill compelling every solicitor to keep separate banking accounts for himself and for his clients. That meant, in fact, that Parliament had come to the conclusion that the solicitors of this country, although learned in the law, had not the remotest conception of how to keep their own accounts properly. I say, therefore, that I am not going to vote for an Amendment which means that people who are competent to audit will be excluded.
  Mr. LYONS indicated dissent.
  Mr. DAVIES: The hon. Member for East Leicester shakes his head, but I must point out to him that there are hon. Members here, such as the hon. Members for Eccles (Mr. Potter) and Faversham (Mr. Maitland) who are, I believe, well versed in accountancy and know as much about it as the hon. Member knows about the law; and I pay my tribute to him by saying that that is a great deal. They say—and they ought to know—that the Amendment proposed by the hon. Member is an excluding Amendment.
  We have dealt with this Bill before, and we have included societies of reputation. We have brought in the society from Aberdeen, and that is saying a lot. I have only one objection to bringing Scotsmen into this Bill. I am sure that, proportionately, there are more Scotsmen in good posts as accountants and auditors in England than there are Englishman in Scotland. I have therefore some hesitation in voting for the inclusion of the Aberdeen and Glasgow societies. I ought to add, of course, that that is nothing new, because, proportionately, there are more Welsh politicians in England than there are English politicians in Wales. That is because of the quality of the goods,, and the English people know a good thing when they see it.
  To come back to the doubts that I entertain as to what we on this side should do, I am rather inclined to advise

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  my hon. Friends—they do not take my advice on issues like this very often—to vote against the Amendment and to let us have the list as already stipulated. There is one thing in favour of this list, after all, as against the Amendment. Every member of every one of these societies will know exactly where he stands, whereas if you put in the words of the Amendment, and say
  "a body of accountants established by charter or under the provisions of an Act of Parliament,"
  there is not one of them who will know whether the society of which he is a member falls within that category. I appeal to the House to vote against the Amendment.
  1.39 p.m.
  Colonel ROBERT CHAPMAN: The Leader of the Opposition said he would support the Amendment, although it was somewhat wide. It is just because it is so wide that I hope the House will not accept it. As the Parliamentary Secretary to the Ministry of Health has pointed out, if it were passed, one of the oldest societies in the Kingdom would be ruled out. But it is because of those who would be included that I think the House should turn down the Amendment. It would be perfectly competent, as has been pointed out, for any body of people to form themselves into a limited company and enrol anyone whom they wished as a member; and may I point out that one of those bodies which, in a later Amendment, is suggested for inclusion is only a small body, a company limited by guarantee, with some 300 or 400 members? I believe there are many members in that company who are well qualified to do the work, but might I also point out that the qualifications for membership in that company are very slight? In order to be an associate, a man need have been serving as an accountant for only six years, and although the executive council may require him to pass an examination, on the other hand it may not. If that company wishes to grow, which presumably it does, would this not be an excellent opportunity for it to enrol in its ranks everyone who wished to call himself an accountant and to become eligible as a borough auditor under this Bill? You would have all the artisans, miners, and
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  others who are at present elective auditors at once applying for enrolment in that company, and I think it would be quite natural for the company to say, "We want to grow; we want to be a big body. Come along. You have been in some degree practising as an accountant."
  The hon. Member for Ipswich (Sir J. Ganzoni) referred to the case of a man who had been a borough auditor for 15 years, and he said that that man, out of sympathy, should be allowed to continue; but if there should be sympathy for that man, why should there not be sympathy for others who are also exercising the functions of borough auditor? In my own town we have a miner. Would anyone say that a miner is a person fitted to be the auditor of complicated accounts? We have a town council which is just on the verge as to whether it shall go Socialist or continue moderate. Would not sympathy be extended to that accountant, so that he could continue? The same argument would obtain in many other parts of the country, I am sure.
  This Bill is put forward in order that we may get men who are well trained in the profession of auditing and accountancy to do this very responsible work. The list is quite a long one. One of them is a limited company, but it has been in existence for some 25 years and has a large membership, and there is no doubt that it is more exacting in its requirements as to examinations than some companies which have been more recently formed. The prospect of the enrolment of anyone as an accountant is extremely dangerous, and I trust the House will turn down all these Amendments the object of which is to extend the Schedule which is attached to the Bill.
  1.40 p.m.
  Mr. MAGNAY: I rise to support the Amendment, and also to say something with regard to the Amendment on the Paper in the name of the hon. and learned Member for Moss Side (Sir G. Hurst) and myself, to include in the Schedule the British Association of Accountants and Auditors, Limited. I have to apologise for his absence to-day. He expected to be here and would, of course, have done a great deal better than I can hope to do, but he is engaged at the Privy Council and cannot be here. It is some weeks Since I put down my Amendment, and as I feel very strongly

  703
  on the matter, I was not proposing to speak on this Bill at all, because it affects my bread and butter and a little marmalade as well, and my very living. I do not think that it is nice of any Member of Parliament to speak regarding the business or profession which he follows and by which he makes his living. I have, however, the example of friends of mine, who are chartered accountants, who have spoken to-day, so that I can speak with a good face looking everyone straight in the eye and without any apology. By the Amendment which is down in the name of the hon. and learned Member for Moss Side and myself we have sought to include the British Association of Accountants and Auditors, Limited. This Association was formed ten years ago for precisely the same reasons as bodies which are named in the Schedule. It has been said in the discussion to-day that the various institutes and incorporated societies were started in the same way as the society for which I am speaking was formed at Manchester. It has 179 fellows and associates who are in public practice, and 111 who are practising accountants as managing clerks, chief clerks and senior audit clerks and audit clerks. It has altogether 406 members engaged in the profession of accountancy.
  I can compare those figures with the membership of the London Association of Accountants Limited, which is one of the bodies mentioned in the Schedule. It has been said that such bodies as the one for which I am speaking are not eligible to be included in the Schedule, and one is compelled by sheer self-defence to say certain things which must be said to justify my Amendment. In the evidence before the Board of Trade Committee, which sat under the presidency of Viscount Goschen, statistics were given showing that in 1929 the membership of the London Association numbered 2,894, and that 60 per cent. of them had passed the examination. Therefore, 1,057 had not passed the examination. It is not therefore in their mouths to complain about other bodies and to profess that they are competent to come within the four corners of this Bill when they have such a large number of their members in precisely the same position as members in our Association. I have here the year book of the Association of
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  Accountants, which sets out its objects and aims. These are, shortly, to promote, or to join any other bodies of accountants in promoting, any Act of Parliament in the interest of the accountancy profession; to provide for a better definition and protection of the profession and for the supply of thoroughly qualified accountants; to protect and promote the mutual interests of members. Every care has been taken to see that these objects have not been abused. We have had a 1,000 applications and have refused 600.
  Another reason for the Association is the existence of Section 137 of the Income Tax Act of 1918, which states that no person shall be qualified to be appointed unless he has been admitted a member of an incorporated society of accountants. One of the conditions of membership of our Association is that a man must have been a senior clerk or in practice for ten years, and character and ability are taken into consideration. It was in order to come within that Section of the Income Tax Act that, out of sheer self-defence, we had to incorporate the Association. The object was not to countenance any ill-practices or to make ourselves a body that could not be justified; it was formed out of sheer self-defence. I was sent for to give evidence before the Board of Trade Committee, and I sat for an hour to be questioned. For an hour I had to give reasons for the faith that was in me, and it was no easy job. The report of the Committee was decisive. After ten days hEarlng of all sorts and conditions of accountants, chartered accountants and others, Chambers of Commerce, and members of corporations, the Committee came to a unanimous decision, namely:
  "We can only conclude on the evidence before us that for the most part the general public is not influenced or misled by the fact that an individual describes himself as an accountant but bases its selection of an accountant principally on personal knowledge or local reputation."
  It has been said more than once this morning that any three or four people might form themselves into a society and come within the four corners of the Amendment proposed by the hon. and learned Member for East Leicester (Mr. Lyons), and one would think that, having formed it, that is all that one would require to do to get the business. Surely we must give credit to the corporations to have some common sense and some

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  choice in the matter. All other things being equal, who is likely to get the job of auditor of a corporation? Would he be a chartered accountant, or a member of the Incorporated Society, or a member of one of the smaller bodies like the one about which I am speaking. In almost every case the chartered accountant or the incorporated accountant will get it. It is not my purpose to disparage the prestige of those old societies. No one can do that but the members of the societies themselves. They have had unfortunate happenings within their membership, and some of the most ghastly cases we have had have been connected with members of these old bodies.
  The fact that a man is a member of one of these old bodies does not certify that he is first cousin to the Archangel Gabriel. It does not mean that he is a man of absolute probity. Any man can slip from grace, and there have been unfortunate cases of friends of mine who have slipped from probity and been expelled with ignominy from their public positions and from membership of these societies. Membership of any society is not a guarantee of probity. We say that it is not within the provInce of this House to inflict hardship upon members of any profession who for years have carried on to public satisfaction the work which they have undertaken to do. The Report says further:
  "If the practice of the profession of accountancy is restricted to those who comply with that high standard, considerable hardship will ensue in more than one direction. On the evidence before us we are unanimously of the opinion that it is not desirable to restrict the practice of the profession of accountancy to persons whose names would be inscribed in a register by law."
  That is what this Bill does—restricts those who are making their livelihood now in the way they have done for years past. I am sorry to say that grave hardship has been inflicted upon many members of our association. I have a letter from a man who has been in the accountancy profession for 20 odd years. His partner was a chartered accountant. Two or three years ago his chartered accountant partner died. This man had been doing work for a municipal corporation for 20 years, boy and man, quite competently, and after his partner's death his certificate was accepted by the corporation. They could do nothing else.
  706
  They knew no one else. They never saw anyone else doing the work. Yet this man, because he was not a chartered accountant had ipso facto to retire from the position of auditor to that corporation. The vacancy was advertised, and someone else was put in (his place, although the council knew that for 20 years he had been quite competent to do the job and could continue to do it. That is a hardship which we say to the House—and I could not appeal to a fairer jury than the Members of this House— ought not to fall upon any honourable member of a profession, such as that man had shown himself to be.
  There is another point which I am compelled to make though I did not intend to put it forward. Some members, I suppose in their ignorance of the profession of accountancy, have said things derogatory of the small associations. In this House this morning I have met two men, members of my association, who have chartered accountants and members of the Incorporated Society working for them. I myself have had chartered accountants come to me for employment— smart, brilliant young chaps. I would be a chartered accountant if I could be. I have taken care that my son is one. It was not possible for me to become a chartered accountant 44 years ago, when I went to work at five bob a week as the eldest son of four of a family of a working man. It has been a long hard row to harrow: a very stiff, hard climb. I appreciate the status and the prestige of chartered accountants, but if it is possible for a newspaper reporter to become Solicitor-General and to sit on that Front Bench, if it is possible for a newspaper reporter to become Judge of the High Court, the head of the justices of this land at the present moment, it ought to be possible to have post-graduate courses in this profession, so that a man who was competent and adaptable in his profession should have all the possibilities open to him.
  Many of the men for whom I am speaking have 20 or 30 years' experience, and yet we are proposing to make this work a monopoly. I know who is behind this. The Treasury. Who are the Treasury? They are my servants. I am the predominant partner. [An HON. MEMBER: "Hitler"]. The Members of this House determine the policy of this nation, and

  707
  I will never agree to anyone sitting in any office in Whitehall dictating to me or to the other Members of this House what policy we shall follow. The Treasury must come to heel. We will determine the policy. I will prove my case quite conclusively from this very Bill. In Clause 1 it says:
  "The accounts of the corporation and the accounts of the borough treasurer and other officers of the corporation shall instead of being audited by borough auditors in accordance with the Municipal Corporations Act, 1882, be audited by district auditors."
  Now who are district auditors? Are they chartered accountants? Not they. Members of any body scheduled to this Bill? Not they. But is there a more competent body than these district auditors? Does anyone with any experience of municipal life know of a better class of men, more highly trained, more competent, more sound in finance than these district auditors.? Not one of them, so far as I know, and I have verified this from the Treasury officials under the gallery, is required to be a chartered accountant or a member of any of these bodies. They are competent to do the work, however, because they are men who are trained in the work and have gained their knowledge by hard experience and by evening class studies, as mine was—by that and by getting the confidence of companies. I have had better men than myself working for me. I have a chartered accountant and two incorporated accountants working for me, far smarter men than I am in figures, but the people want to see me. It is a case of personality, it is a question of trust, of the word of the man, of the character of the man. That comes first—character; then ability, and-then there is the grace which completes the whole structure.
  I suggest that the very fact that district auditors are not expected to be chartered accountants or members of any of these other bodies has dished the whole case against the Amendment so excellently put forward by the hon. Member for East Leicester (Mr. Lyons). I dare the Front Bench to leave this question to the free vote of the House, as they ought to do. We have had far too much of private Members' Bills being supported on the quiet by the Govern-
  708
  ment Whips. If it is a private Member's Bill, let it be a private Member's Bill, and let the Treasury Bench do what they ought to do—keep the ring and see fair play. That is all that; they are entitled to do. Let the free vote of the free Members judge of the facts with that sense of fair play which is always dominant in this House. Let them say what they are going to do, and with that free vote I will, on behalf of my friends, be quite content.
  2.5 p.m.
  Mr. PETHERICK: The hon. Member who has just sat down has been banging with extreme ferocity against an open door. He should know that this is a private Member's Bill and that the Government Whips have nothing to do with it. The private Member has to organise support in favour of his own Bill. The hon. Member need not feel worried on that score. The discussion has ranged over a very wide field this afternoon, and we have had many speeches, both in support of and against the Amendment. The enthusiasm in favour of certain of the Amendments was rather lukewarm, but I do not think that hon. Members who have spoken in favour of the Amendment which is before the House have in any way proved their case. It is obvious that it is impossible to pass a Bill through Parliament without unless someone somewhere in the country is occasioned some small hardship. I defy anybody to think of some Measure that does not cause some small hardship. It is possible for an hon. Member to say that if the Houses of Parliament passed an Act bringing about the millennium that would not cause hardship, but I rather think, in that case, that the gentleman who writes "What the Stars Foretell" in the "Sunday Express" would be out of a job, because there would be nothing to foretell. I think the same applies to this Bill.
  I should like to discuss these Amendments one by one. The first was moved by the hon Baronet the Member for Ipswich (Sir J. Ganzoni). It is perfectly clear what that Amendment means. It is designed to allow the existing elective auditors, if a borough adopts a professional audit, to remain auditors for their borough. I should like to remind the hon. Baronet and the House that there is

  709
  nothing to prevent that borough from remaining on the elective audit system, and re-electing accountants who have given good service for a very long time. If those accountants have worked for that borough for a very considerable period and given complete satisfaction, presumably the council of the borough will con-tinue to employ them, and will simply remain under the elective system of audit. That seems quite obvious. On the other hand, if they are not satisfied, or if they wish for a change, they will either adopt the district audit system, or the system of professional audit as provided for in this Bill.
  Surely it is only right to leave it to the boroughs to decide whether they do or do not wish to adopt the professional audit. Under this Bill, which is purely permissive, the boroughs can continue to go on with the elective system as before, they can adopt the district audit, or they can adopt the professional audit. The Amendment to which the hon. Baronet has put his name reads:
  "Provided nevertheless that where a person, being a member of a registered society of accountants, is, at the date of the passing of this Act, holding the office of elective auditor."
  I do not know quite what the hon. Baronet means by the word "registered," because there is no register of societies of chartered accountants. Some of them have been incorporated under the Companies Act and one of them has received a Royal Charter. Suppose that this sort of thing were to happen. Suppose the hon. Member for Ipswich and myself had been acting as elective auditors in a borough for some years, and that we had been warned that this Bill was likely to be passed into law. We might between ourselves, as has been pointed out this afternoon, decide to form a society, and if we complied with company law we should be incorporated, and we should become a society within the meaning of this Clause.
  What is the next step? We immediately say to the borough: "You can have a professional audit now, if you like. We have no objection. We are your elective auditors, and you can appoint us, the newly incorporated society, as your auditors, and we shall be professional." Naturally, being a society consisting of two or three people,
  710
  we should take a very high-sounding title like the Incorporated Association of Certified Audit Accountants. "What happens then? We are professional auditors, and we have achieved sanction from a certain borough whose accounts we audit. Then we could immediately go to the Registrar of Friendly Societies and say to him:" The important borough of Hitlerbury, or whatever it may be, has adopted us as professional accountants. Surely there is no reason whatever to prevent you also giving us a job as professional accountants to the building societies, or provident societies of various kinds. "My hon. Friend and myself, apart from natural acumen, business ability and charm of manner, have nothing particular to recommend us as qualified chartered accountants.
  We should then, if this Amendment were adopted, be in the happy position of being able to be qualified. Nobody could say us nay, we being borough auditors of an important borough, and we should be perfectly qualified to be the auditors for building societies. We could go to the Colonial Office when there was a question of an appointment of a district auditor for the district of Borrio Boola Gha. We could apply for that very onerous position, on the grounds again that we had been recognised as accountants for a very important English borough. That is the kind of thing that may happen if this Amendment goes through. I admit that I have put an extreme case, but it is a possibility.
  The hon. Member for Norwich (Mr. Hartland) has an Amendment which is of a similar nature. He is asking that the elective auditors who are at present in the employment of a borough as elective auditors, whatever their qualifications may be, provided that they are Members of some sort of society and, are publicly and efficiently carrying on the business of accountants, may be considered adequate professional auditors. I would like, with the leave of the House, to read part of that Amendment in the name of the hon. Member for Norwich:
  "a member of an incorporated body of accountants, is at the date of appointment publicly and efficiently carrying on the business of an accountant."
  I do not know what the expression "publicly" means. In the words of the Road and Rail Traffic Bill, it would mean that the gentleman in question was plying for

  711
  hire or reward. In that case I should imagine, if it were a lorry, that he would get an "A" licence. As it is, I suppose that the expression "publicly is simply intended to mean that he is known to be publicly carrying on the work. It is an extremely wide term. You have only to put up a brass plate, and you are publicly carrying on business. You may have only the job of auditing the accounts of one borough, and you are publicly carrying on business. Then as to the word "efficiently" who is to decide whether a man is carrying on the business of accountancy efficiently or not? An Amendment of that kind so widely phrased cannot possibly be accepted. The same remark applies to that Amendment as to some of the other Amendments, that it has the very unfortunate effect of very much widening the scope of the Bill.
  My hon. Friend the Member for Norwich said, would it not be possible for a society such he mentioned to make out its case before the Local Legislation Committee in the future as in the past? Of course the functions of the Local Legislation Committee as regards audit, if this Bill becomes law, will cease to exist, and consequently you could not put a case to them. Another point my hon. Friend made was this: Could not the Government—of course, I cannot say anything about that—when introducing a Bill for the codification of local government law, give some guarantee that the position of those societies which are now excluded from this Bill would be safeguarded, or, at any rate, not prejudiced? It seems to me that the Government could not possibly give such a guarantee. No doubt the Parliamentary Secretary will have something to say about that. It is obvious that they could not give a guarantee, because many Members on the Committee might take different views, and when the Bill becomes law, what will be the outcome of it, as Mr. Pepys used to say, "God knows!"
  There are one or two other Amendments which are somewhat more specific, but before coming to the specific cases, I should like to mention the Amendment so ably put forward by my hon. and learned Friend the Member for East Leicester (Mr. Lyons). If I may say so with all respect, though
  712
  I had very little time to examine the Amendment, because I think it was only handed in last night, I am rather inclined to think that my hon. Friend has not had very much more time to make it out than I have had to examine it. It is really very remarkable. He wishes to make the audit of boroughs available to
  "a body of accountants established by charter or under" the provisions of an Act of Parliament."
  Unless I am very much mistaken, the only body of accountants who would be allowed to audit the accounts of any borough if that Amendment were accepted, would be the first society I have mentioned in the Bill, which is the Institute of Chartered Accountants in England and Wales. I dare say he has good grounds for banning the other societies, but I entirely fail to see how he can make out his case. Perhaps after the Debate is over he will explain to me how he came to these very remarkable conclusions.
  The attitude of Parliament on the question of including or excluding certain societies has been very clear for many years. It has always taken up the line that you must be extremely strict as to what societies you allow to audit the accounts of local authorities, and it has been the practice to put such eases for consideration by the Local Legislation Committee. There was a case not so very long ago, in 1914, and another case quite recently, in which the Chairman of the Local Legislation Committee, on the question of a Corporation Bill, said that the Committee would not be prepared to give absolutely unlimited power to any corporation which has an audit by any person they selected, that there must be a standard of some sort, and in that case the Committee did not see their way to accede to the request of the petitioners.
  The two societies at the head of the list in the Schedule were selected for the auditing of public accounts as long ago as 1889, and afterwards, in the course of years, various other societies petitioned, and in all cases they were refused admission until the year 1930, when the London Association of Accountants was admitted, and later the Corporation of Accountants. In each case they had to make out their case with extraordinary care, and prove that their

  713
  qualifications were of a very high standard. There was another case brought forward by the hon. Member for Ipswich who wished to include the Institution of Certified Public Accountants, and I gave a promise to my hon. Friend the hon. Member for South Croydon (Mr. H. Williams) that I would look into the case. Again, the Central Association was considered by the Local Legislation Committee in 1928, and in summing up the evidence which had been produced before the Committee on the Gloucester Corporation Bill, the then Chairman, Sir Lynden Macassey, K.C., said it was obvious that the society was not a fit and proper society for the purpose in question.
  Sir J. GANZONI: Did I understand the hon. Gentleman to say that that was the then Chairman.
  Mr. PETHERICK: The claims of the Central Association were very carefully considered by the Local Legislation Com-mitte in 1928, and rejected, and Sir Lynden Macassey. K.C., summed up as I have said. I am not quite sure whether he was the Chairman.
  Sir J. GANZONI: The point I wanted to make was that he was, of course, a distinguished leader of the Parliamentary Bar.
  Mr. PETHERICK: I was rather under the impression that he was Chairman. If I was mistaken, I withdraw. Anyhow, the case, after it had been heard and summed up, was turned down by the Local Legislation Committee.
  In conclusion, I would point out that all these Amendments tend to the same end, namely, to weaken the Bill. In my opinion, the Bill as it stands is very strong, and it ought to be strong. If boroughs are to be given the option of a professional audit, every care should be taken that that professional audit is the soundest possible, and that only the very best societies are admitted. Those societies which are on the Schedule have already made out their case before the Local Legislation Committee of the House of Commons, which I think we shall all admit is a very respectable and careful body. The other societies which it is proposed to admit have not made out such a case. I am sorry that I
  714
  cannot accept the Amendments which have been put down by various hon. Members. That is not through obstinacy: it is not because, as has been suggested, I am told not to do so by the Ministry of Health; I have really carefully examined the situation inside out for two or three months, and have come to the conclusion that if loopholes are allowed for the admission to the Schedule of societies which have not the very highest qualifications, and have made out no case before the Local Legislation Committee, it would undoubtedly weaken a Bill which I think is, in the opinion of most Members of the House, an extremely useful measure of reform.
  2.27 p.m.
  Mr. LECKIE: The House is much indebted to the hon. Member for Penryn and Falmouth (Mr. Petherick) for the very illuminating speech which he has just delivered, and in which he has cleared up many points which required clEarlng up. In view of his exhaustive observations, I do not propose to say very much, but I want to refer to one or two points. The Amendment of the hon. Member for Ipswich (Sir J. Ganzoni) is only of a temporary character, in order to 'safeguard the position of those who hold the office of elective auditors at the time of the passing of the Act. I do not know what the position of an elective auditor is in other parts of the country, but in the borough of Walsall, which I have the honour to represent, we have, under the Municipal Corporations Act, two elective auditors. In accordance with a decision of the Council many years ago, they do not receive any salary, and for many years it has been very difficult indeed to fill these positions. The Corporation has had to press into its service for this purpose men who were not qualified in any way for auditing, but simply did it in order to oblige the Corporation. They went through the accounts in a rough way, put their names to them, and that was the end of it. I am bound to say that in the last year or two there has been a slight difference, but the men appointed are not by any means qualified for auditing, and, therefore, it seems to me rather extraordinary that we should be asked to consider this Amendment. I hope the House will take the advice of the hon. Member for Penryn and Falmouth, and will reject the Amendment.

  715
  With regard to the Amendment of the hon. Member for Norwich (Mr. Hartland), I do not like the qualification:
  "being a member of an incorporated body of accountants, is at the date of appointment publicly and efficiently carrying on the business of an accountant."
  We have heard a great deal about the desire to open the door as much as possible, but this Amendment shuts the door, because it compels a man who is appointed to be actually working as an accountant. I think that that is a mistake. There are many men fully qualified for this work who may not at the moment be practising as accountants, although they have all the qualifications of an accountant, and, therefore, I think that this Amendment also should be negatived. I cannot say anything about the other Amendments. I am all in favour of widening the Clause consistently with the inclusion of only competent men who really know their job and can be relied upon to carry out the work. I hope the House will take the advice that has been given on this matter by the hon. Member for Penryn and Falmouth.
  2.31 p.m.
  Mr. SHAKESPEARE: Several questions have been put about the attitude of the Government to this Bill, and perhaps the House will allow me to say shortly what that attitude is. This is a private Member's Bill, and the House is, of course, at liberty to amend or reject it as it likes, but it affects, not only my own Department, but also the Treasury and the Board of Trade, and, before the House takes any vote, I hope I shall be allowed on behalf of my Department to say that, if the Bill is altered in certain directions, any interest that we may have in it will be entirely changed. Of course, as I have said, the House can amend or reject the Bill as it likes, but everyone who votes should know that the alteration of the Bill on the lines suggested by some of my hon. Friends will, in our view, change the Bill from a very useful little Measure into one that has elements of danger in it.
  The object of the Bill, as was stated by the hon. Member for Penryn and Falmouth (Mr. Petherick), is to improve the whole status of municipal accounting, and I should like to congratulate him on the way in which he has sponsored the Bill.
  716
  He has been very reasonable. He accepted several Amendments in Committee, but I hope he will not. accept any more. After all, everyone here is agreed that the object of the Bill is a good one. I think everyone agrees that the elective method of auditing is a bad method, and the Bill simply says that, if any borough is dissatisfied with the present system of audit, it can either adopt district audit or go in for a professional audit, but, if it takes a professional audit, it should be quite sure that its auditors are appointed from some society that has been recognised by long tradition and examination, and whose status is beyond question.
  Parliament has always taken the line, I think wisely, that questions of status must be left to the Local Legislation Committee. We cannot, in this debating Chamber, hear counsel arguing this way and that. The only body that has been able to do that is the Local Legislation Committee, who have, as my hon. Friend has pointed out, been able to hear these societies, and, if it has been satisfied that their examinations were of a sufficiently high standard, to admit them. That does not mean that a society which is not on the list is a disreputable society. We all know that there are men of considerable ability outside the societies in the Schedule. It does mean, however, that the status of all the societies in the Schedule has been very carefully weighed, examined and approved, and, as far as the Ministry of Health is concerned, we can recommend any local authority to appoint as professional auditor anyone belonging to any of the bodies whose names appear in the Schedule.
  Mr. L. THOMPSON: Does that mean that if a society has not been examined by the Local Legislation Committee there would be no power whatever to extend the Schedule by adding its name? I rather think, from what has been said, that the Schedule cannot be extended.
  Mr. SHAKESPEARE: It has been extended from time to time. I have here the programme of the International Congress on Accounting, at which I see Lord Plender is President. The sponsors of the Congress, curiously enough, or perhaps not curiously enough, are the bodies mentioned in the Schedule. Therefore, I think the hon. Member has chosen

  717
  rightly. There is only one addition, an Irish Society, and the Bill does not apply to Ireland.
  Mr. LANSBURY: Does that mean that in the view of the Ministry of Health no one who is not a member of one of these bodies is fit to be accepted as an auditor?
  Mr. SHAKESPEARE: We take the view of the Local Legislation Committee, who have examined the status of the examining body—
  Mr. LANSBURY: It is not a question of status. I am not asking whether these people are all that you say they are, but whether there is no one outside the members of these bodies fit to do the job.
  Mr. SHAKESPEARE: That may be, but anyone can form a mushroom society. All those who have, in fact, been approved are good enough to audit the accounts of local authorities. The hon. Member for Ipswich (Sir J. Ganzoni), not for the first time, has ably pleaded the case of a constituent of his, but I am very much afraid that, if this Amend-were accepted, it would amount to this, that on the one hand Parliament says the present system of audit is inefficient and must be changed, and on the other hand, the hon. Gentleman says that if you change it you must still keep a man who is elected. You cannot have it both ways. Perhaps I shall satisfy my hon. Friend in this way. If Ipswich is satisfied with its present system of audit, obviously if they have a good man they will stick to him; I imagine that his tenure of office is perfectly safe, and one may assume that Ipswich will exercise an equitable jurisdiction in the matter. But, if you admit the principle that you can, in fact, appoint a man because he has been elected an auditor before, irrespective of his qualifications, you will bring back the dismissed rate collector, and so on, and you will be tEarlng up the whole Bill.
  It is really not fair to the members of these societies if you are going to add to the schedule ad nauseam. I do not say a word about the other bodies outside, which may be very reputable bodies, but I honestly do not think it is a reasonable line to take, when people give up years of their life, pass examinations, join one of the old societies which have satisfied the Local Legislation Committee that they can audit these very compli-
  718
  cated accounts, to let any man join any society without examination and then say he can audit the accounts of a local authority. That is not, as I say, a reasonable line to take and I hope the House will not take it. It does not follow that a man who is competent to look after my Income Tax is competent to audit the very complicated accounts of a local authority.
  The Amendment of my hon. and learned Friend the Member for Leicester (Mr. Lyons) would rule out three societies that are mentioned in the Schedule, including the second senior society in the land while on the other hand, it would mean that he and I and the Leader of the Opposition could be practising accountants and enabled to undertake professional audit for a local authority. It really undermines the whole basis of the Bill. You must take a stand on the strongest ground that you can, and my hon. Friends have chosen a fair ground to stand on. The Bill is an honest attempt to improve auditing in the boroughs, where it needs improvement, and I hope that, in the attempt to improve it, my hon. Friend will not accept Amendments which will defeat the very object with which he has introduced the Bill.
  Mr. MAGNAY: How do you differentiate between the requirements of an auditor in Clause 1 and in Clause 2? In Clause 1 a district auditor need not be within these bodies. How comes it that under Clause 1 a district auditor is quite competent, though not a member of any of these bodies, to do the work and under Clause 2 he is not?
  Mr. SHAKESPEARE: A man does not become a district auditor without practice. Under the Bill, if an authority does not like the district auditor, it can have a professional auditor.
  Mr. LANSBURY: Will the hon. Gentleman give an answer to the question? Is it not a fact that the district auditor need not be a member of any of those bodies, and that most of them are not?
  Mr. SHAKESPEARE: That is so, but he has to have other qualifications.
  Question put, "That those words be there inserted in the Bill."
  The House divided: Ayes, 43; Noes, 109.

  Division No. 183.]

  AYES.

  [2.57 p.m.

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

  Fuller, Captain A. G.

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

  Agnew, Lieut.-Corn. P. G.

  Grattan- Doyle, Sir Nicholas

  Pickering, Ernest H.

  Anstruther-Gray, W. J.

  Grimston, R. V.

  Potter, John

  Aske, Sir Robert William

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

  Raikes, Henry V. A. M.

  Astor, Viscountess (Plymouth, Sutton)

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

  Ramsay, T. B W. (Western Isles) '

  Balfour, George (Hampstead)

  Hanley, Dennis A.

  Rankin, Robert

  Banks, Sir Reginald Mitchell

  Hannon, Patrick Joseph Henry

  Ratcliffe, Arthur

  Barclay-Harvey, C. M.

  Haslam, Henry (Horncastle)

  Rathbone, Eleanor

  Beauchamp, Sir Brograve Campbell

  Hornby, Frank

  Held, William Allan (Derby)

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

  Howitt, Dr. Alfred B.

  Remer, John R.

  Belt, Sir Alfred L.

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

  Robinson, John Roland

  Bevan, Stuart James (Holborn)

  Hume, Sir George Hopwood

  Runge, Norah Cecil

  Bird, Sir Robert B.(Wolverh'pton W.)

  Hurd, Sir Percy

  Russell, R. J. (Eddlsbury)

  Borodale, Viscount

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

  Rutherford, John (Edmonton)

  Briant, Frank

  Ker, J. Campbell

  Rutherford, Sir John Hugo (Liverp'l)

  Brocklebank, C. E. R.

  Leckie, J. A.

  Salmon, Sir Isidore

  Brown, Ernest (Leith)

  Leech, Dr. J. W.

  Salter, Dr. Altreo

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

  Lovat-Fraser, James Alexander

  Shakespeare, Geoffrey H.

  Buchan-Hepburn, P. G. T.

  MacAndrew, Capt. J. O. (Ayr)

  Smith, Bracewell (Dulwich)

  Caporn, Arthur Cecil

  McCorquodale, M. S.

  Somerville, Annesley A. (Windsor)

  Castlereagh, Viscount

  McEwen, Captain J. H. F.

  Soper, Richard

  Cazalet, Capt. v. A. (Chippenham)

  McKie, John Hamilton

  Southby, Commander Archibald R. J.

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

  McLean, Major Sir Alan

  Spencer, Captain Richard A.

  Clarry, Reginald George

  Macpherson, Rt. Hon. Sir Ian

  Stewart, William J. (Belfast, S.)

  Conant, R. J. E.

  Macquisten, Frederick Alexander

  Storey, Samuel

  Cooke, Douglas

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

  Stuart, Lord C. Crichton-

  Copeland, Ida

  Martin, Thomas B.

  Sugden, Sir Wilfrid Hart

  Craddock, Sir Reginald Henry

  Mayhew, Lieut.-Colonel John

  Summersby, Charles H.

  Denville, Alfred

  Merriman, Sir F. Boyd

  Thomson, Sir Frederick Charles

  Duckworth, George A. V.

  Mills, Sir Frederick (Leyton, E.)

  Touche, Gordon Cosmo

  Dugdale, Captain Thomas Lionel

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

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

  Duggan, Hubert John

  Murray-Phillpeon, Hylton Raiph

  Whiteside, Borras Noel H.

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

  Nail-Cain, Hon. Ronald

  Whyte, Jardine Bell

  Emmott, Charles E. G. C.

  Nation, Brigadier-General J. J. H.

  Winterton, Rt. Hon. Earl

  Emrys-Evans, P. V.

  Nicholson, Godfrey (Morpeth)

  Womersley, Walter James

  Erskine, Lord (Weston-super-Mare)

  Nunn. William

  Wood, Sir Murdoch McKenzie (Banff)

  Evans, Capt. Ernest (Welsh Univ.)

  Palmer, Francis Noel

  Foot, Isaac (Cornwall, Bodmin)

  Peat, Charles U.

  TELLERS FOR THE AYES.—

  Fremantle, Sir Francis

  Penny, sir George

  Mr. M. Beaumont and Mr. Hartland.

  NOES.

  Attlee, Clement Richard

  Joel, Dudley J. Barnato

  Remer, John R.

  Batey, Joseph

  John, William

  Ross, Ronald D.

  Broadbent, Colonel John

  Jones, Morgan (Caerphilly)

  Rothschild, James A. de

  Cove, William G.

  Lansbury, Rt. Hon. George

  Sandeman, Sir A. N. Stewart

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

  Lawson, John James

  Smith, Tom (Normanton)

  Daggar, George

  Lunn, William

  Tinker, John Joseph

  Davies, Rhys John (Westhoughton)

  Lyons, Abraham Montagu

  Turton, Robert Hugh

  Edwards, Charles

  Macdonald, Gordon (Ince)

  Wallhead, Richard C.

  Ganzoni, Sir John

  McEntee, Valentine L.

  Williams, Edward John (Ogmore)

  Grenfell, David Rees (Glamorgan)

  Mainwaring, William Henry

  Williams, Herbert G. (Croydon, S.)

  Groves, Thomas E.

  Parkinson, John Allen

  Williams, Dr. John H. (Llanelly)

  Hall, George H. (Merthyr Tydvil)

  Price, Gabriel

  Hicks, Ernest George

  Procter, Major Henry Adam

  TELLERS FOR THE NOES.—

  Mr. Magnay and Mr. Wise.

  CLAUSE 2.—(Inspection and copies of reports.)
  2.54 p.m.
  Mr. PETHERICK: I beg to move, in page 2, line 39, to leave out the words "burgess in," and to insert instead thereof the words, "local government elector for."
  The object of the Amendment is simply to fall in with the modern practice of describing such electors as local government electors.
  Amendment agreed to.

  SCHEDULE.—(Alternative Provisions which may be adopted as to auditors.)
  Mr. HARTLAND: I beg to move, in page 3, line 16, to leave out from the word "he" so the end of line 24, and to insert instead thereof the words:
  "being a member of an incorporated body of accountants, is at the date of appointment publicly and efficiently carrying on the business of an accountant."
  Mr. MAGNAY: I beg to second the Amendment.
  Question put, "That the words proposed to be left out, to the word one in line 16, stand part of the Bill."
  Mr. LYONS: I beg to move, in page 3, line 16, to leave out from the word "of" to the end of line 24, and to insert instead thereof the words:
  "a body of accountants established by charter or under the provisions of an Act of Parliament."
  The House divided: Ayes, 115; Noes, 39.
  Mr. MAGNAY: I beg to second the Amendment.
  Question put, "That the words proposed to be left out stand part of the Bill."
  The House divided: Ayes, 109; Noes, 50.

  Division No. 184.]

  AYES.

  [3.6 p.m.

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

  Banks, Sir Reginald Mitchell

  Bevan, Stuart James (Holborn)

  Anstruther-Gray, W. J.

  Barclay-Harvey, C. M.

  Bird, Ernest Roy (Yorks., Skipton)

  Aske, Sir Robert William

  Beauchamp, Sir Brograve Campbell

  Borodale, Viscount

  Astor, Viscountess (Plymouth, Sutton)

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

  Briant, Frank

  Atholl, Duchess of

  Belt, Sir Alfred L.

  Brocklebank, C. E. R.

  Brown, Ernest (Leith)

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

  Robinson, John Roland

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

  Ker, J. Campbell

  Runge, Norah Cecil

  Buchan-Hepburn, P. G. T.

  Leckie, J. A.

  Russell, R. J. (Eddisbury)

  Bullock, Captain Malcolm

  Leech, Dr. J. W.

  Rutherford, John (Edmonton)

  Caporn, Arthur Cecil

  Lovat-Fraser, James Alexander

  Rutherford, Sir John Hugo (Liverp'l)

  Castlereagh, Viscount

  MacAndrew, Capt. J. O. (Ayr)

  Salmon, Sir Isidore

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

  McCorquodale, M. S.

  Salter, Dr. Alfred

  Conant, R. J. E.

  McEwen, Captain J. H. F.

  Shakespeare, Geoffrey H.

  Cooke, Douglas

  McKie, John Hamilton

  Smith, Bracewell (Dulwich)

  Copeland, Ida

  McLean, Major Sir Alan

  Somerville, Annesley A. (Windsor)

  Craddock, Sir Reginald Henry

  Macmillan, Maurice Harold

  Soper, Richard

  Davison, Sir William Henry

  Macpherson, Rt. Hon. Sir Ian

  Southby, Commander Archibald R. J.

  Danville, Alfred

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

  Spencer, Captain Richard A.

  Duckworth, George A. V.

  Martin, Thomas B.

  Stewart, William J. (Belfast, S.)

  Duggan, Hubert John

  Mayhew, Lieut.-Colonel John

  Storey, Samuel

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

  Merriman, Sir F. Boyd

  Stuart, Lord C. Crichton-

  Emmott, Charles E. G. C.

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

  Sugden, Sir Wilfrid Hart

  Emrys-Evans, p. V,

  Murray-Phillpson, Hylton Raiph

  Summersby, Charles H.

  Erskine, Lord (Weston-super-Mare)

  Nail-Cain, Hon. Ronald

  Thomson, Sir Frederick Charles

  Foot, Isaac (Cornwall, Bodmin)

  Nation, Brigadier-General J. J. H.

  Touche, Gordon Cosmo

  Fremantle, Sir Francis

  Nunn, William

  Vaughan-Morgan, Sir Kenyon

  Fuller, Captain A. G.

  O'Donovan, Dr. William James

  Ward. Lt.-Col. Sir A. L. (Hall)

  Grattan-Doyle, Sir Nicholas

  Palmer, Francis Noel

  Whiteside, Borras Noel H.

  Grimston, R. V.

  Peat, Charles U.

  Whyte, Jardine Bell

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

  Penny, Sir George

  Winterton, Rt. Hon. Earl

  Hamilton, Sir B.w.(Orkney & Zetl'nd)

  Petherick, M.

  Wise, Alfred R.

  Hanley, Dennis A.

  Pickford, Hon. Mary Ada

  Womersley, Walter James

  Hannon, Patrick Joseph Henry

  Potter, John

  Wood, Sir Murdoch McKenzie (Banil)

  Hornby, Frank

  Raikes, Henry V. A. M.

  Howitt, Dr. Alfred B.

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

  TELLERS FOR THE AYES.—

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

  Rankin, Robert

  Mr. M. Beaumont and Mr. Godfrey

  Hume, Sir George Hop wood

  Rathbone, Eleanor

  Nicholson.

  Hurd, Sir Percy

  Ray, Sir William

  NOES.

  Attlee, Clement Richard

  Haslam, Henry (Horncastle)

  Reid, William Allan (Derby)

  Batey, Joseph

  Hicks, Ernest George

  Remer, John R.

  Bevan, Aneurin (Ebbw Vale)

  Joel, Dudley J. Barnato

  Ross, Ronald n.

  Bird, Sir Robert B.(Wolverh'pton W.)

  John, William

  Rothschild, James A. de

  Broadbent, Colonel John

  Jones, Morgan (Caerphilly)

  Sandeman, Sir A. N. Stewart

  Clarry, Reginald George

  Lansbury, Rt. Hon. George

  Smith, Tom (Normanton)

  Cocks, Frederick Seymour

  Lawson, John James

  Thompson, Luke

  Cove, William G.

  Lunn, William

  Tinker, John Joseph

  Crooke, J. Smedley

  Macdonald, Gordon (Ince)

  Turton, Robert Hugh

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

  McEntee, Valentine L.

  Wallhead, Richard C.

  Daggar, George

  Magnay, Thomas

  Wedgwood, Rt. Hon. Josiah

  Doran, Edward

  Mainwaring, William Henry

  Williams, Edward John (Ogmore)

  Edwards, Charles

  Mills, Sir Frederick (Leyton, E.)

  Williams, Herbert G. (Croydon, S.)

  Evans, Capt. Ernest (Welsh Univ.)

  Parkinson, John Allen

  Williams, Dr. John H. (Llanelly)

  Grenfell, David Rees (Glamorgan)

  Pickering, Ernest H.

  Groves, Thomas E.

  Price, Gabriel

  TELLERS FOR THE NOES.-

  Hall, George H. (Merthyr Tydvil)

  Procter, Major Henry Adam

  Sir John Ganzoni and Mr. Lyons.

  Hartland, George A.

  Ratcliffe, Arthur

  Question, "That the Bill be now read the Third time," put, and agreed to.

  Mr. PETHERICK: I beg to move, in page 3, line 23, after the word "of", to insert the word "Certified."
  This is a purely formal Amendment again. One of the societies named' in the Schedule, acting on a strange urge, thought it would like to be certified, and in deference to that wish, which can only have some Freudian explanation, I have agreed to insert that word, if the House will permit.
  Amendment agreed to.
  The following Amendments stood on the Order Paper:
  In page 3, line 24, at the end to insert the words "The British Association of Accountants and Auditors, Limited."— [Mr. Magnay.]
  In page 3, line 24, at the end, to insert the words "The Institution of Certified Public Accountants."—[Sir J. Ganzoni.]
  Mr. MAGNAY: I think I can judge the time when the House thinks it has had enough. The decisions which have been given show that it is not likely that my Amendment would be carried, and so I do not move it.
  Sir J. GANZONI: For the reasons which have been given, I do not move my Amendment.
  Motion made, and Question proposed, "That the Bill be now read the Third time."
  3.15 p.m.
  Mr. L. THOMPSON: Before we pass from these very interesting discussions I

  725
  may be permitted to say a few words on the Third Reading of the Bill. When the promoter of the Bill introduced it, he described it as a modest Measure of reform. I think Members in all parts of the House will agree that it has proved to be a very important Measure. The Parliamentary Secretary to the Ministry of Health is not in his place at the moment but perhaps the promoter of the Bill will deal with the point to which I wish to direct attention. As a Member, who, for several years has had to devote considerable time to local legislation committees, I am much impressed with the necessity that the auditing of public accounts should be as efficient as possible, and if I have to utter one word of regret regarding this Bill it is that, while it gives powers to boroughs to use the form of audit here indicated, sufficient safeguards are not attached to that power. Under the District Auditors Act of 1879 it is possible for auditors to make surcharges on accounts which they dispute. Under this Bill we are handing over to corporations the appointment of auditors under the alternative provisions laid down in the Schedule and my opinion is that the Bill does not afford sufficient safeguards in that respect.
  The main reason, however, why I rise to address the House is to put a question. We recognise that at present there are four means of auditing public accounts— through the District Auditors Act, 1879, through the Municipal Corporations Act, 1882, through the Public Health Act of 1875 and, latterly, through direct powers which have been sought for by and given to municipalities in local legislation. Under Clause 1, Subsection (1) (a) of the Bill the opportunity is given to any borough in which the provisions of the Sub-section are adopted, to seek powers in regard to auditing. Under the existing provisions what is happening to-day is this. These accounts are made up and are audited for county purposes, and for borough purposes as well, under a dual system, that is, under the District Auditors Act of 1879 and also under the Public Health Act of 1875.
  The Clause says:
  "The accounts of the corporation and the accounts of the borough treasurer and other officers of the corporation shall, instead of being audited by borough auditors in accordance with the Municipal Corporations Act, 1882, be audited by district auditors."
  726
  It is clear to me that the Act of 1882 should cease to operate, but I want to know why Section 246 of the Public Health Act, 1876, has also to cease. That Section reads as follows:
  "Where an urban authority are the council of a borough the accounts of the receipts and expenditure under this Act of such authority shall be audited and examined by the auditors of the borough, and shall be published in like manner, and at the same time as the municipal accounts, and the auditors shall proceed in the audit after like notice and in like manner, shall have like powers and authorities, and perform like duties, as in the case of auditing the municipal accounts."
  That is what obtains to-day. Does this imply that if a borough undertakes to use this Section, it will absolutely wipe out the assistance of any professional auditors altogether? Does it mean that this work would be handed over to the district auditors without let or hindrance? I think that is a very important point and one that has never been raised during the discussions on this Bill. I hope some kind of explanation will be forthcoming for the help of the local authorities concerned.
  Viscountess ASTOR: Did the hon. Member say "help" or "health"?
  Mr. THOMPSON: I said "help." I Want the local authorities to be quite clear on the point.
  3.24 p.m.
  Mr. RHYS DAVIES: I think every Member of every party in the House will be delighted to see this Bill on the Statute Book, and we ought to congratulate the hon. Member who has piloted the Measure so far. I am sure that his name will go down to history as that of the Member who has introduced a Bill to provide, once for all, for the abolition of a ridiculous system whereby a man who knows nothing at all about accounts shall be elected as an auditor for a municipality. In spite of all that may be said to the contrary, it is a very important thing that we have done to-day.
  Viscountess ASTOR: Hear, hear!
  Mr. DAVIES: I do not mean what the Noble Lady means either. I rise because I want to put one or two points to the Parliamentary Secretary to the Ministry of Health. I should like to know whether he can tell us if the Ministry will issue a circular to the local authorities point-

  727
  ing out what they are entitled to do if this Bill becomes law, because I imagine that there will be some local authorities who will not be alive to what is done in this House affecting their affairs. We have been dealing to-day with the qualifications and capacity of auditors and accountants who will be appointed to these responsible posts of looking into the accounts of local authorities. But we ought to point out to the Government that the qualifications and competency of their own district auditors may be inferior to the qualifications and competency of the men who are to be appointed to audit the accounts of municipalities. I have raised this point before, and it comes within the scope of the Bill because it mentions the district auditor. Hon. Members who have not served on local authorities will be interested to know that where the Government makes a grant towards any service in a municipality they appoint an auditor called the district auditor. If, however, a large municipality owns and controls a transport system, a water supply, electricity, or gas undertaking, where the Government do not make any contribution, the municipality is entitled to appoint its own auditor. It could elect auditors. But once it adopts the provisions of this Bill, it will appoint efficient auditors.
  I ask the Parliamentary Secretary to be good enough to inform the Treasury that a large number of Members of the House are not satisfied with the way that their own auditors, who go into the districts to audit the accounts of local authorities, are appointed. No young man in this country can become qualified as a chartered accountant and belong to the oldest institution unless he is articled for five years without any wages and passes a final examination when he is 21. The Treasury will not admit a young man with these qualifications into the Civil Service at all, with the result that the qualifications for auditing the accounts in outside businesses is of a much higher standard than the qualifications and efficiency of men who audit on behalf of the Government. I do not think that that is a very good position for the country. The Government departments are wrong in their assumption. They say, when we raise this issue, that
  728
  the accounts of Government departments differ fundamentally from the accounts of private businesses, but surely, when a young man learns the intricacies of accounts, profit and loss, balances, debits and credits, and the rest of it, and when he has learned all the principles of accountancy and the law relating to accounts, he ought to be able to walk into a manufacturing firm, a wholesale or retail business, the Ministry of Health, the Admiralty, the War Office or the Air Ministry, and audit the accounts on the principles of accountancy laid down in the lessons that have been taught to him.
  I want to say, therefore, without offending the Civil Service, that there is a selfishness in the Civil Service in this connection in that they are unwilling to take these young men inside: their profession if they can help it. What is the attitude of the Ministry concerned? Some years ago a prominent Member of our party who was attending a Commission on this subject was told:
  "The qualification for district auditors, is, as explained by the Ministry, based on experience tempered by efficiency,"
  with, I believe a little patronage added thereto. If we are laying it down in this Bill that only persons with special qualifications, members of the societies mentioned, shall be permitted to audit the accounts of municipalities, then we ought to lay it down that the same high standard of qualifications ought to be possessed by those who audit on behalf of the State. The standard required of these auditors ought not to be higher than the standard set for those employed by the State I am sure I have not detained the House too long [HON. MEMBERS: "Go on."] I am not influenced in the least by the urgings from behind me to speak. As a matter of fact I do not know that I require any urging to speak on this important Measure. I hope the hon. Member for East Leicester (Mr. Lyons) will not be offended when I say that I am glad his Amendment was defeated. I am absolutely certain that we took the right course there, in spite of what my honourable leader said. I think he was falling into a trap. This is what would have appeared in the Bill if that Amendment had been carried—
  Mr. SPEAKER: But that Amendment is not in the Bill.
  Mr. DAVIES: I ought to have known better, with my long experience of this House; but I am delighted to know that as the Bill now stands every person who is qualified to audit the accounts of municipalities will know which societies come within the law. To have said, as some Members suggested, that the members of any organisation which had a charter by Act of Parliament should be qualified to act as auditors would have widened the scope of things too far. I am pleased to see that all these well-known societies are included in the Bill— the Institute of Chartered Accountants in England and Wales, the Society of Incorporated Accountants and Auditors, the Society of Accountants in Edinburgh, the Institute of Accountants and Actuaries in Glasgow, the Society of Accountants in Aberdeen;* the London Association of Accountants Limited and the Corporation of Accountants Limited. I think those cover the vast Majority of persons in this country who are qualified to audit the accounts of municipalities.
  I hope the leader of the Opposition does not mind the spectacle of a very humble follower criticising his remarks, but I cannot agree with his idea that provided a man is capable of determining the policy of a local authority and its expenditure it does not much matter whether he can add two and two and make them four. I do not think that is a very good interpretation of the qualifications for the great profession of accountancy, because it is a very great profession; sometimes it is well paid and sometimes it is not. I disagree, also, with some of the observations made by hon. Members of the legal profession who rather inclined to the view that it did not matter very much about the skill of an accountant, that anyone could be an accountant or auditor. Let a layman try to enter the precincts of the law and see what happens to him. He must have passed all the examinations, he must have dined, he must have lunched in LinColn's Inn—I am not so sure about wining. We all have a way of whining. [Interruption.] I do not mean in the same way as hon. Members.
  Having made these few remarks about this very important Bill, the House will now, I feel sure, have the privilege of instituting a great clean-up in the audit practice of the municipalities of this
  730
  country. I am very pleased to join, for the second time to-day, in a chorus of unanimous approval of a Bill, as I did in respect of the first Bill that was before us. It is a high comment on our work in the House that private Member's days, in spite of what might be said to the contrary outside, certainly do provide for this sort of Measure to be brought forward. [Interruption.] I do not understand why hon. Members should belittle the efforts of their own colleagues. This is the second Bill today that has received unanimous support. I am very sorry that the right hon. and gallant Gentleman the Member for New-castle-under-Lyme (Colonel Wedgwood) is not here in order that he might make his comments on this Bill. He called the first Bill by an awful word which I thought was almost unparliamentary. We are very happy to be supporting the Bill, and we congratulate the hon. Member upon what he has done to get it passed into law.
  3.37 p.m.
  Mr. ISAAC FOOT: I have nothing to say whatever about the merits of the Bill, but I cannot allow the occasion to pass without congratulating its promoter, because he is associated with the county that I have the honour to represent and his constituency adjoins mine. He is associated with one of the best known families of that county, and it must be a matter of congratulation to his constituents that so soon after he became a Member of this House he has been fortunate in the ballot and that he has used his ballot to such effect. Many of us have been in this House a long time and have never succeeded in any ballot. When he introduced his Bill upon the Second Reading he said that he was going to make the choice of an uncontroversial Measure—a very wise choice for a private Member to make in relation to his Bill.
  I have listened to the later stages of this Debate to-day, and it must be a gratifying matter to him and to his constituents that the Bill will find its way on to the Statute Book very shortly, and that he will have had an advantage which cannot be claimed by any other Member of the House. As one much older than himself, who has seen a good deal of

  731
  political warfare, I take the opportunity of congratulating a Member who is associated with the same county as myself.
  3.39 p.m.
  Mr. PETHERICK: I thank the hon. Member for Bodmin (Mr. Isaac Foot) for the extremely gracious remarks that he has made to a political opponent. I take it particularly kindly, coming as it does from him, and I am most grateful to him for his very kind remarks. I am also grateful to the hon. Member for West-houghton (Mr. Rhys Davies) who has been a ardent supporter of the Bill. I am sure that hon. Members in almost every part of the House are anxious to get on to the later business so that I do not propose to make a speech on the Third (Reading. I should, however, like to put one suggestion to the Parliamentary Secretary to the Ministry of Health.
  On the District Auditor's staff there is a certain lack of wide knowledge of commercial practice in the auditing of commercial companies' accounts, because members of those staffs have never been in the habit of auditing such accounts. Similarly, in many firms of professional accountants which are engaged in local government work, there is apt to be nobody who has real experience of the practice of auditing local government accounts. My suggestion, which I make with all respect to the Minister of Health, whom I see is now here, is that some arrangement might be made by which junior members of a district auditor's staff might go to selected firms or professional accountants for training in company auditing, and that, in exchange, members of the staffs of the professional auditors might also be received into the district auditor's staffs for a period of temporary instruction.
  I should like to thank the Parliamentary Secretary for the help he has given me during the passage of this Bill through its various stages. Obviously, a private Member who has been fortunate enough to draw a Bill in the Ballot is not in the happy position of a junior Minister who has access to all the official documents, but I would like to thank the Parliamentary Secretary for the great help that his Department has given me during the course of this Measure in giving advice when I required it.
  3.42 p.m.
  Mr. LANSBURY: My hon. Friend asked a definite and quite important question—I raised the question years ago in this House—as to the status of the auditors that you are asking local government bodies to employ. There is a Schedule in the Bill of people they must employ if they do not take the district auditor. The whole point of the Debate which, in spite of other reasons, has been perfectly serious, has been that you should have duly qualified persons. The hon. Member, if I may also be allowed to congratulate him on getting his Bill, as he will get it, has asked the hon. Gentleman's Department to arrange that the assistant of the district auditors may get experience in the City, and so on. Why did not the hon. Member ask that the district auditors themselves should get that experience? My hon. Friend was a little wrong when he said that it was the-Civil Service which stood in the way of the appointment of accountants as district auditors. It is no such thing. When the Poor Law Commission was sitting, I was intensely interested in this question of auditors, and I asked the then Chief Inspector, "What is the qualification for an auditor?," and he said, "Experience, tempered by patronage." He gave me that answer because I pointed out to him that the auditor for London, of whom all of us complained, was the nephew of a very distinguished soldier, and would never have been heard of as an auditor if he had not been the nephew of that distinguished soldier.
  The local authorities are now to be tied down to properly qualified accountants who must belong to these societies. I want to ask why councils who choose district auditors should be denied the advantage of having as auditors men who-have been passed by these societies. If the Ministry do not apply to their own men, who are doing exactly the same work, the same test which they are compelling local authorities to apply, it must mean that the Ministry want to retain in their hands this sort of patronage, which, from my point of view, is very bad indeed.
  Earl WINTERTON: On a point of Order. I understood that we could only discuss on Third Reading what is in the Bill—
  Mr. LANSBURY: It is in the Bill.
  Earl WINTERTON: The right hon. Gentleman is asking that something should be put into the Bill which is not in the Bill.
  Mr. SPEAKER: I think the right hon. Gentleman was referring to something which is near enough in the Bill to be in order.
  Mr. LANSBURY: I do not want to be out of Order, but the noble Lord may have heard me long ago—
  Earl WINTERTON: I only raised the question from the point of view of interest in the procedure of the House. I always understood that it was not in Order to discuss on Third Reading something which is not in the Bill. I was asking for information.
  Mr. LANSBURY: Perhaps the noble Lord is partly right and I am partly right. I think, Mr. Speaker, that you rather ruled that way. The words to which I am calling attention are:
  "The accounts of the corporation and the accounts of the borough treasurer and other officers of the corporation shall, instead of being audited by borough auditors in accordance with the Municipal Corporations Act, 1882, be audited by district auditors in like manner as accounts of an urban district council."
  Later on they are given the choice of selecting persons other than the district auditor, and then the Bill lays it down that, if the Council chooses anyone who is not a district auditor, he must be a member of one of the bodies set out in the Schedule. I am asking why, if the local authorities are to be restricted to persons who must be members of these organisations, the Minister will not see to it that these district auditors shall also be members of such societies. I want to point out the gross inconsistency of compelling local authorities to take a district auditor who has not these qualifications, or, if they do not do that—
  Earl WINTERTON: How can the right hon. Gentleman, on the Third Reading, ask the Minister to make an alteration which requires an alteration in the Bill? It is impossible.
  Mr. LANSBURY: I think the Noble Lord is wrong this time. It is quite within the competency of the Minister to
  734
  do this without any legislation. He can issue an Order. Or rather, I think it is the Treasury who appoint these auditors. They can make it a condition that, instead of being appointed on the basis of efficiency tempered by patronage, it shall be efficiency according to membership of these various bodies. That is the point that I am making, and I think it is a very important point. I have suffered at the hands of auditors, though it has been the sort of suffering that does one good from the popular point of view. I might not have been here if it had not been for the attention of auditors. I propose not to vote against the Bill. I think it is a good Bill in parts, but it would be a better Bill if the Minister and the Treasury followed out the same lines that they are laying down for local authorities.
  3.50 p.m.
  Mr. SHAKESPEARE: The Leader of the Opposition has addressed one point to me: Why are not the qualifications of District Auditors the same as those laid down in the Bill for professional auditors? The answer surely is that the powers and functions are rather different; a professional auditor has for example no power to surcharge. A district auditor must be a man who knows local government inside out and nowadays a man is not appointed as a rule to that post unless he has been on district audit work for years after coming into the Civil Service and has passed an examination in accounts, audit and local government law. District auditors though they are appointed by us are an independent body and they cherish their independence and many Members have spoken highly of their qualifications. The qualifications, functions and powers of a professional auditor are rather different from those of a district auditor.
  Mr. PETHERICK Mr. PETHERICK rose in his place, and claimed to move, "That the Question be now put," but Mr. SPEAKER withheld his assent, as he thought the Souse was prepared to come to a decision without that Motion.
  Bill accordingly read the Third time, and passed.

HOTELS AND RESTAURANTS BILL.
As amended (in the Standing Committee), considered.
HOTELS AND RESTAURANTS BILL.

  NEW CLAUSE.—(Application to Carlisle State Management District.)
  (1) If the Secretary of State is satisfied that any premises in the Carlisle State Management District in which he is carrying on, or is about to carry on, any business involving the sale or supply of intoxicating liquor fulfil the special qualifications for an hotel licence or a restaurant licence, he may by order direct that the provisions of subsections (1) and (3) of section four of this Act shall apply to the premises as if an hotel licence or a restaurant licence were in force in respect thereof.
  In this section the expression "the special qualifications for an hotel licence or a restaurant licence" means the special qualifications specified in subsections (2) to (4) of section one of this Act as set out with adaptations in the Schedule to this Act, and in relation to any premises in respect to which an order under this section is in force the reference in sub-section (3) of section four of this Act to the holder of the licence shall be construed as a reference to the person appointed by the Secretary of State to conduct the business carried on in the premises.
  (2)If the Secretary of State is satisfied that any premises in which he carries on, or is about to carry on, business as afore said fulfil all the special qualifications for an hotel licence or a restaurant licence, except those specified in paragraph (c) of subsection (2), or, as the case may be, in paragraph (c) of sub-section (3) of the said section one as set out as aforesaid, he may by order direct that both sub-section (1) of section four of this Act, except paragraph (a) thereof, and sub-section (3) of that section shall apply to the premises as if an hotel licence or a restaurant licence were in force in respect thereof.
  (3) An order under this section shall have effect for one year from the making thereof or such less period as may be specified in the order.
  (4) Before deciding that any premises in which he is carrying on business fulfil the special qualifications specified in paragraph (c) of sub-section (2) or, as the case may be, paragraph (c) of sub-section (3) of the said section one as set out as aforesaid, the Secretary of State shall consult the Commissioners of Customs and Excise.— [The Solicitor-General.]
  Brought up, and read the First time.
  3.52 p.m.
  The SOLICITOR GENERAL (Sir Boyd Merriman): I beg to move, "That the Clause be read a Second time."
  The object of this new Clause is to extend the privileges of this Bill to houses that are included in the Carlisle State
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  management scheme. The test for the inclusion among hotels which are entitled to hotel or restaurant endorsement is that the percentage of takings from drink does not exceed a certain proportion, a half in the case of hotels and three-fifths in the case of restaurants. The whole idea is to encourage those hotels and restaurants which go in for catering rather than for the mere sale of drink. The Carlisle State management scheme was also conceived with that very object. It was in order to get rid of certain difficuties which had arisen through the number of munition workers who were concentrated in a small district during the War, and out of that there has grown what may be called an experiment designed to show that hotels and restaurants can nourish on the lines which it is the object of this Bill to promote. Therefore, it would be manifestly absurd to exclude from the privileges of the Bill houses owned by the Secretary of State. It is necessary to have an Amendment for the purpose. This and the Amendment to the Schedule look very formidable, but in substance they are merely applying, in slightly different words, with the necessary adaptation, the wording of the Bill to the particular circumstances of the case.
  Dr. SALTER: What at present is the ratio of takings in respect of food and non-intoxicating refreshments to the total takings in these places to which the Amendment is to apply?
  The SOLICITOR-GENERAL: It would be impossible to answer that question with regard to all the hotels in Carlisle. All that the new Clause is designed to effect is that, if there is an hotel in the Carlisle district, it should be able to obtain the same privileges as hotels outside the Carlisle district provided that it can pass the test for an individual hotel. I cannot manifestly give any general figure for the whole of the Carlisle area, nor is it intended that this privilege should apply indiscriminately to all hotels in the Carlisle area. It is merely intended to apply to those hotels and restaurants—I understand about 20 out of some hundreds —which would be likely to qualify. It is necessary to have this Clause because under the State Management Scheme the Secretary of State is himself the licensing authority. The Bill only applies to on-licences obtained from justices. The

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  hotels, restaurants and public houses in the Carlisle district do not have to go to the justices for their licences. They are not under the control of the licensing justices. Therefore, it is necessary to make provision for the cases which are not covered by the operative words of the Bill and to enable the Secretary of State, where he is satisfied that a particular house comes within the qualification which the Bill lays down, to apply to that house the privileges given by the Bill.
  3.56.p.m.
  Mr. ISAAC FOOT: I want to ask the learned Solicitor-General whether the proposals which are contained in the new Clause now put before the House are in consequence of the passing of the new Clause 5 in the Committee upstairs. There was a new Clause passed to include what I understand is called the wayside inn. Is it in consequence of the passing of that Clause that these provisions are now brought forward, because, if they apply generally to the Bill, why was not the subject brought forward upstairs? Was there any consideration of this matter by the Committee? Can the learned Solicitor-General give some guidance upon that question.
  3.57.p.m.
  The SOLICITOR-GENERAL: The answer to the question of the hon. Gentleman is that this Clause is not brought in only in consequence of the Clause to which he referred having been incorporated in the Bill in Committee. It is brought in because it was found that the provisions of the Bill as they passed the Committee would not have applied to the State managed hotels and restaurants in the Carlisle district because of the fact that licences in that district are not obtained from the justices. It is true that that particular Clause having been put into the Bill, the privileges of it are also enacted in the Clause which I am now moving. The Clause which I am moving has general application so that to those houses will attach the same privileges, whatever they may be, if their competitors in other parts of the country obtain them.
  Mr. MORGAN JONES: I notice from the words on the Order Paper that the Clause is to apply to the Carlisle State management district. The Solicitor-
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  General knows that there are two other districts beside the Carlisle area included in the control of State management. Does the Clause apply to those other areas?
  The SOLICITOR-GENERAL: The hon. Member is referring to two districts in Scotland. The Bill does not apply to Scotland, and, therefore, it is not necessary to apply the provisions of the proposed Clause to those districts.
  3.58 p.m.
  Mr. FOOT: I thank the Solicitor-General for the explanation he has given. I had assumed, as the subject was not discussed upstairs, and as the matter was only brought forward, first of all, after the conclusion of the Committee stage, that it was really consequential upon the passing of Clause 5 towards the end of the Debate in Committee. I recognise that, if the proposals of the Bill are right and they should be accepted by this House, the same provision must be made for the Carlisle district. That scheme has been established for a good many years, and, whatever privilege may be enjoyed by the ordinary licensed house, ought to be enjoyed by the licensed houses in the Carlisle district. I—and I speak for those who like myself are very much, interested in this Measure— should not seek to raise any objection to the Clause being adopted. What I (had intended to do if we had been able to reach the Measure earlier in the day was to move the Adjournment of the Debate. That is not now necessary. I can only express my satisfaction that we have now a fuller opportunity of considering the Measure. The Measure is one which deals with a most important matter—
  It being Four of the Clock, the Debate stood adjourned.
  Debate to be resumed upon Monday next.
  The remaining Orders were read, and postponed.
  Whereupon Mr. SPEAKER adjourned the House without Question put, pursuant to Standing Order No. 3.
  Adjourned at Two Minutes after Four o'Clock until Monday next, 22nd May.

  LEAGUE OF NATIONS (CONTRIBUTIONS).
  LEAGUE OF NATIONS (CONTRIBUTIONS).