Sitting of 1 July 1935

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

PRIVATE BUSINESS.
London County Council (Money) Bill,
As amended, considered; to be read the Third time.
Birmingham Corporation Bill [Lords],
Weymouth and Melcombe Regis Corporation Bill [Lords],
Read a Second time, and committed.
Milford Docks Bill [Lords] (by Order),
Read a Second time, and committed.

ORAL ANSWERS TO QUESTIONS.

  PROPOSED WESTERN AIR PACT.
  Mr. COCKSasked the Secretary of State for Foreign Affairs whether it is the view of His Majesty's Government that a Western air pact should only be definitely concluded as a part of the general agreement laid down in the declaration of 3rd February?
  The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Samuel Hoare): I have nothing to add to the statement made by my predecessor on this subject in the course of the Debate in the House on the 31st May.
  Mr. COCKS: Has the right hon. Gentleman received any intimation from any foreign Government to the effect that a Western air pact should not be concluded except as part of a general agreement, and is he aware that the effect of such an action would be to safeguard Germany in the west in the event of war in the east and south?
  Sir S. HOARE: The hon. Member had better put that question down; it does not arise out of this answer.

  GERMANY AND RUSSIA.
  Mr. COCKSasked the Secretary of State for Foreign Affairs whether he has ascertained from the German Government whether Herr Hitler, in stating that the German Government was prepared, in principle, to conclude pacts of non-aggression with each of its neighbours with the exception of Lithuania, included Soviet Russia in the definition of a neighbour?
  Sir S. HOARE: His Majesty's Government have always assumed that Herr Hitler's offer included Soviet Russia.

  NAVAL ARMAMENTS (ANGLO- GERMAN AGREEMENT).
  Mr. COCKSasked the Secretary of State for Foreign Affairs whether, in view of the fact that Part V of the Treaty of Versailles has not been abrogated, he can state what is the juridical position of the Anglo-German Naval Agreement; and whether it is a document that can be registered with the League of Nations?
  Sir S. HOARE: The juridical position of the Anglo-German Naval Agreement is that it is an agreement in force between the United Kingdom and Germany which in no way affects the rights, whether arising from Part V of the Treaty of Versailles or otherwise, of any country not a party to the Agreement, and which in no way affects the rights of the United Kingdom arising under Part V in respect of any matter not directly covered by the Agreement. The Agreement will be registered with the League of Nations in due course.
  Mr. COCKS: In view of the fact that this agreement condones the breach of the Versailles Treaty, will the Government give the House an opportunity of expressing its view upon the agreement, which is regarded outside Germany as an act of bad faith?
  Sir S. HOARE: The hon. Gentleman has put a great deal of controversial matter into his supplementary question, and I do not agree with any of it. No doubt there will be an opportunity to discuss the question, and I think I can prove to the hon. Gentleman that he is not justified in the statements he has made.
  Mr. MORGAN JONES: Is it not the view of the Government that there should be no unilateral action in this matter?

  ITALY AND ABYSSINIA.
  Mr. MORGAN JONESasked the Secretary of State for Foreign Affairs whether he can state what progress has been made in the conciliation proceedings between Italy and Abyssinia; whether they are now meeting; and whether His Majesty's Government has or will have an observer at the meetings of the Commission?
  Sir S. HOARE: I understand that the Italo-Ethiopian Conciliation Commission held meetings at Scheveningen, in the Netherlands, on 25th, 26th and 28th June, when only preliminary and formal business was transacted, but that arrangements were made for hearing the parties as soon as possible. The next plenary session is expected to be on Tuesday, 2nd July. As regards the last part of the question, no British observer is attending the Commission's meetings. The Commission has been set up under the terms of the Treaty of Friendship signed at Addis Ababa on 2nd August, 1928, to which Italy and Abyssinia alone are parties, and His Majesty's Government are not therefore entitled to be represented in any way.

  CHINA.

    SITUATION.
    Mr. MOREINGasked the Secretary of State for Foreign Affairs when he hopes to be in a position to make a statement about the situation in the Far East?
    Sir S. HOARE: At present I have nothing to add to the statement on the general situation in China which I made on 17th June, in reply to my hon. Friend the Member for Lincoln (Mr. Liddall) and to the various answers which I have given lately in the House in reply to question on recent events in North China.

    BRITISH INTERESTS.
    Mr. MOREINGasked the Secretary of State for Foreign Affairs, whether, with a view to the safeguarding of British interests in North China, he will request One Governments of China and Japan to
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    inform him of any agreement that may be reached between them as the result of recent events?
    Sir S. HOARE: The Governments concerned have kept His Majesty's representatives informed of the developments in North China. While, therefore, I have constantly in mind the question of the safeguarding of British interests in that region, I do not consider that it is necessary for me to make a request of the nature referred to by my hon. Friend.
    5. Mr. MOREING (for Mr. CHORLTON)asked the Secretary of State for Foreign Affairs whether, having regard to the interests of British bondholders in Chinese railways, the Japanese Government are required to make payment for the transport of Japanese troops on Chinese railways?
    Sir S. HOARE: I have no detailed information on this subject. Payment, however, is normally made for the transport of foreign troops on Chinese railways, and I have no reason to suppose that in this respect the Japanese Government adopt a procedure different from that of other Powers who maintain troops in China.
    Mr. MOREING (for Mr. CHORLTON)asked the Secretary of State for Foreign Affairs whether he can make an estimate of the amount of capital interests owned by British subjects and British corporations in China north of the Yellow River?
    Sir S. HOARE: It is difficult to make any estimate, but according to the most recent and reliable authority the amount involved represents but a small proportion of the total British investment in China.

  MONGOLIA.
  Mr. MOREINGasked the Secretary of State for Foreign Affairs whether he is aware that the Japanese military authorities have demanded a wireless station, an aerodrome, and military headquarters in Inner Mongolia; and what steps he proposes to take in the matter, in view of the terms of the Nine Power Treaty?
  Sir S. HOARE: A report recently reached me to the effect that suggestions had been made for a Japanese Military Mission and wireless station in Inner

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  Mongolia. On the information at my disposal I do not consider that any action by His Majesty's Government is called for.
  Major-General Sir ALFRED KNOXasked the Secretary of State for Foreign Affairs whether he has received any recent information from His Majesty's Ambassador to China as to the political situation in Inner and Outer Mongolia, respectively; and, in particular, whether the tribal leaders in these areas are inclined to look for support either to Russia or to Japan?
  Sir S. HOARE: According to the latest reports received, the situation in Inner Mongolia is generally normal. Certain changes in the administration of Chahar province and in the disposition of the Chinese troops there have recently formed a subject of discussion between the Japanese and Chinese military authorities in North China; and it is believed that a settlement of these questions is in sight. I have no recent information regarding the present political situation in Outer Mongolia. As regards the last part of the question, my hon. and gallant Friend will be aware that conditions in Inner Mongolia are quite distinct from those which prevail in Outer Mongolia, and that the former area is, to a much greater extent than the latter, under the influence of the Nanking Government. There are divergences of opinion among the leaders in both areas, and I should prefer not to draw any general inference of the nature indicated by my hon. and gallant Friend.
  Sir A. KNOX: In view of the rumours that there is a revival of nationalist feeling in Mongolia and that there is a chance of Inner and Outer Mongolia coming together, is it not vitally important to find out what the tendency is and with which neighbour they will join up, Japan or Russia? Will the right hon. Gentleman ask for a report from His Majesty's Ambassador in Pekin?
  Sir S. HOARE: I will consider my hon. and gallant Friend's suggestion, but for the moment I have given the information at my disposal.

  AGRICULTURE (POTATO PRICES).
  Mr. T. WILLIAMSasked the Minister of Agriculture whether, in view
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  of the excessive prices being charged for Jersey potatoes, any action is being taken to safeguard the interests of the consumers?
  Lieut.-Colonel Sir A. LAMBERT WARD (Vice-Chamberlain of the Household): I have been asked to reply. Prices of Jersey potatoes last week fell substantially. There was a rise at the end of the week, but prices are still below those ruling during the week ended 19th June. The market situation, which is affected by the delayed maturity of the crop due to adverse weather conditions in this and other countries, is being closely watched by the Market Supply Committee.
  Mr. T. WILLIAMS: Can the hon. and gallant Gentleman give the House any explanation why the price of Jersey potatoes increased from £13 per ton in 1933 and £14 in 1934 to £25 in 1935?
  Sir A. LAMBERT WARD: I will ask my right hon. Friend to communicate with the hon. Gentleman.
  Mr. CHARLES WILLIAMS: Is my hon. and gallant Friend aware that Cornish potatoes are much better value for money every time?
  Mr. H. WILLIAMS (for Commander BOWER)asked the Minister of Agriculture whether he is aware that the price of potatoes in the Tees-side area rose to £8 per ton on 1st June, 1935; and whether he will state the reason given by the Tees-side Wholesale Potato Merchants' Board for fixing the price at this high level?
  Sir A. LAMBERT WARD: My right hon. Friend has no knowledge of sales of old crop potatoes at the price referred to in the question. Reports, however, indicate that owing to the severe frosts in the third week in May the new potato crop in this country was delayed by some three to four weeks, and this was reflected in the demand for old crop potatoes, wholesale prices for which to retailers in the Tees-side area at the beginning of June varied from £6 10s. to £7 10s. per ton, and have since fallen. My right hon. Friend has no information which would enable him to answer the second part of the question.
  Mr. T. WILLIAMS: Will the right hon. Gentleman ascertain what portion of the increased price will be secured by the actual producer?
  Sir A. LAMBERT WARD: I will certainly convey that question to my right hon. Friend.

  POST OFFICE.

    TELEPHONE INSTRUMENTS.
    Mr. HALL-CAINEasked the Postmaster-General whether be can state what is the present remaining stock of pedestal telephones; and by what date he anticipates it will be possible, when new telephones are installed, for up-to-date hand-microphone instruments to be supplied without extra charge?
    The POSTMASTER-GENERAL (Major Tryon): The number of pedestal telephones in stock is over 200,000; and in addition there are about 1,000,000 of these instruments now in use by subscribers. I cannot say at present when it will be possible to arrange for the hand-microphone instrument to be supplied to subscribers without extra charge.

    STAMP SALES (SUNDAY FACILITIES).
    Mr. HALL-CAINEasked the Postmaster-General whether arrangements have been made to increase the facilities available to the public for obtaining stamps on Sundays; and whether, in view of the considerable volume of private correspondence which is despatched on this day of the week, he will endeavour to arrange for an early improvement of the position in this respect?
    Major TRYON: Inquiry made recently throughout the country indicated that complaints of difficulty in obtaining stamps on Sunday are few, and that it is usually possible to meet them by providing a stamp selling machine or issuing a stamp licence. I am not convinced that any general increase in facilities is warranted.
    Mr. RHYS DAVIES: Will the right hon. and gallant Gentleman take note, on the other hand, of the fact that there is strong feeling against the growing tendency to do business on Sunday and that shop keepers and shop assistants are opposed to the idea of working seven days a week?
    Major TRYON: I realise the point of the hon. Gentleman, and it would be an advantage if the public bought their stamps on Saturday instead of Sunday.
    Mr. HERBERT WILLIAMS: May I ask how many assistants are employed inside stamp machines?
    Mr. SANDYS: Could the right hon. and gallant Gentleman look into the possibility of increasing the supply of stamps in these machines, as my own experience is that towards the evening the stamps run out?
    Major TRYON: There are 8,000 stamp machines in use, but they suffer from the difficulty that sometimes the stamps get damaged and sometimes the kind of coins put by the public into the machines disagrees with them.

    TELEGRAPH SERVICE.
    Mr. HALL-CAINEasked the Postmaster-General the approximate increase in the number of telegrams despatched daily since the reduction of the charge from 1s. to 6d.; to what the increase will have to amount before the telegraph service is on a self-supporting basis; and whether the engagement of increased staff has been necessary?
    Major TRYON: From the information at present available it appears that the average increase in the number of inland telegrams despatched daily since the recent reduction in charges is rather more than 20 per cent. As my predecessor stated on the 29th April last, in reply to a question by the right hon. Member for Limehouse (Mr. Attlee), the reduction in charges is likely, at any rate for some further period, to increase the loss which has been sustained on the telegraph account for many years, but it was felt that it would be in the best interests of the community that telegraph charges should be reduced to a level comparable with those of other Post Office services. The increase in telegraph traffic has necessitated the engagement of some additional staff; but detailed information is not yet available.

    HALFPENNY MATTER.
    Mr. LIDDALLasked the Postmaster-General whether he is aware that a Weymouth firm is indiscriminately sending out by halfpenny postage circulars describing and illustrating goods of an intimate nature to the annoyance and disgust of many parents; and will he take steps to make the circulation of this type of literature through the post illegal?
    Major TRYON: I am aware that circulars of the nature described are being sent; but I am advised that, unless the language used is indecent or obscene, I have no power to prohibit the transmission of such circulars by post.
    Mr. MACQUISTEN: Does my right hon. and gallant Friend know that every time notices of birth appear in newspapers parents are subject to a deluge of disgusting correspondence of this kind?

  REGENT'S PARK.
  Mr. BURNETTasked the First Commissioner of Works whether he is aware that during the present hot weather the general public are again denied quiet enjoyment of the Queen Mary Garden in Regent's Park; whether it is his intention to use this retreat annually during the hot weather as a fun fair, with booths on the lawns as at present, or whether he will arrange that these disturbances for collecting funds shall take place in future in a more appropriate part of Regent's Park, or on Primrose Hill or Hampstead Heath, or in another public park under his jurisdiction?
  The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): Queen Mary's Garden was used for the Theatrical Garden Party and for the Post Office Orphanage fête for many years before the administration of the Garden came into the charge of my Department. For this reason I have not thought it desirable to disturb this long standing arrangement, and I do not think there is any more appropriate place for them in any other park under my jurisdiction. I have already given an undertaking not to extend the use of the garden for similar purposes to any other bodies.
  Mr. OSWALD LEWISasked the First Commissioner of Works when the existing lease of St. John's Lodge, Regent's Park, is due to expire; and whether any agreement for a further lease has been or is about to be granted?
  Mr. ORMSBY-GORE: St. John's Lodge is at present unoccupied and is not subject to any lease, but the Commissioners of Crown Lands have agreed to the grant of a lease to the London University for the purposes of a Museum of Archaeology.
  Mr. LEWIS: Will my right hon. Friend see that a condition is inserted in the lease that the public shall have access to the museum at specified times and for a specified fee?
  Mr. ORMSBY-GORE: I believe that condition is already in the lease. Certainly it is contemplated that when the museum is not in actual use for the purposes of instruction the public shall have access to it.

  HOLDING COMPANIES (SHARE MANIPULATION).
  Mr. LIDDALLasked the President of the Board of Trade whether he will follow any share manipulations by the holding companies who are now the owners of the equities of the statutory companies purchased some years ago by an American group of financiers with a view to seeing that adequate liquid resources and reserves are maintained?
  The PRESIDENT of the BOARD of TRADE (Mr. Runciman): I am not clear what possibilities my hon. Friend has in mind. Perhaps he will be good enough to let me have particulars.
  Mr. LIDDALL: Is it possible for the right hon. Gentleman to furnish the House with particulars of any such transaction?

  COTTON SPINNING INDUSTRY BILL.
  Mr. HAMMERSLEYasked the President of the Board of Trade whether he can now give a date for the introduction of the Cotton Spinning Redundancy Bill?
  Mr. RUNCIMAN: The Bill will be introduced to-day.
  Mr. HAMMERSLEY: Can the right hon. Gentleman give us any indication of when the Second Reading of the Bill will take place?
  Mr. RUNCIMAN: No, Sir, I am afraid I cannot say at present, but I hope the text of the Bill will be available in the Vote Office in a day or two.
  Mr. REMER: Is my right hon. Friend aware that there is considerable opposition to this Bill in the County of Lancashire and will he take into consideration the very large minority view before he finally presses this Bill on the House?
  Mr. RUNCIMAN: I am quite well aware of what the feeling is in Lancashire, and would point out that there is a very large body of opinion in favour of the Bill which has been very much disturbed at the delays which have occurred.
  Mr. MORGAN JONES: Are we to take it that some persons have already seen a copy of this Bill before it has been seen by this House?
  Mr. RUNCIMAN: There are many people who have seen it. A draft Bill is often the subject of discussion.

  NATIONAL HEALTH INSURANCE.
  Mr. LUNNasked the Minister of Health whether he will give the reason for the delay in not setting down for appeal to the High Court the case of Mrs. K. Slaughter, of 112, Brentwood Road, Romford, Essex, against the decision of the referee appointed under Section 90 of the National Health Insurance Act, 1924?
  The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): The referee appointed under Section 90 of the National Health Insurance Act, 1924, acceded to the request of Mrs. Slaughter to state a case for the decision of the High Court on a question of law. There has been some unavoidable delay but my right hon. Friend is informed that the terms of the case have now been settled and signed by the referee and forwarded to Mrs. Slaughter's solicitors, who are, therefore, now in a position to set down the case for hearing.

  INDUSTRIAL DISEASES (SILICOSIS).
  Mr. DUCKWORTHasked the Secretary for Mines whether his attention has been drawn to the frequent occurrence of lung trouble among barytes miners and quarrymen in the Minsterley and Pontesbury district of Shropshire, and in particular to the death from silicosis of John Richards, of 9, Top Road, Pontesbury Hill, on 21st May; whether His Majesty's inspectors of mines have inspected and reported upon the conditions under which work is
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  carried on; and whether he is satisfied that every possible precaution is being taken to safeguard the workers from this danger?
  The SECRETARY for MINES (Captain Crookshank): I have received no information of cases of industrial pulmonary disease in this district except at one barytes mine; and at this mine proper precautions are being taken following a thorough inspection of the conditions by His Majesty's Inspectors of Mines. The case of John Richards has not previously been brought to my notice, and I am having it investigated.
  Mr. T. SMITH: Can the hon. Gentleman say whether the silicosis regulations apply to this case?
  Captain CROOKSHANK: I could not say that without notice, but the inspectors have been there to make every possible arrangement to avoid risk.

  COAL INDUSTRY.

    MINES INSPECTION.
    Mr. TINKERasked the Secretary for Mines how many visits the mines inspectors have made on the afternoon and night shifts during the last three months; and what percentage they represent of the total number of visits made?
    Captain CROOKSHANK: During the three months ending on 22nd June the inspectors of mines made 568 such inspections underground, 189 on the afternoon shift and 379 on the night shift, these representing over 14 per cent. of the total number of underground inspections made during that period.
    Mr. TINKER: While appreciating that reply, which I think is a very good one, may I ask the hon. and gallant Gentleman to keep on with these inspections and also ask his inspectors to make a separate report of what they find on the afternoon and night shifts?
    Captain CROOKSHANK: I will consider the latter part of the hon. Member's question. As to the first part, he may take it for granted that we shall do everything we can to see that there is adequate inspection.

    WAGES.
    Mr. TINKERasked the Secretary for Mines whether he is aware that the Miners' Federation are making an application for an increase of wages for all their members; and what steps his Department are taking to get the Mining Association to meet the Miners' Federation to discuss the position?
    Captain CROOKSHANK: The answer to the first part of the question is, Yes. With regard to the second part, there is no change in the Mining Association's attitude, since they are specifically precluded by their conditions of association from dealing with wage matters. In these circumstances I regret that I cannot see what further steps my Department can take in the direction the hon. Member suggests.
    Mr. TINKER: Is the hon. and gallant Member aware of the great agitation in the mining world on the question of an advance of wages, and that we do not want things to go on without the Government being fully aware of what has happened? I hope the Government will not allow time to pass without making some further effort to arrange a meeting.
    Mr. T. WILLIAMS: Is the hon. and gallant Gentleman aware that the concessions asked for by the mine workers, unless conceded for the Federation as a whole, would create hardships for those coal owners who granted an increase?

  BURNLEY BUILDING SOCIETY.
  Mr. REMERasked the Secretary of State for the Home Department whether his attention has been called to the treatment meted out to their clients by the Burnley Building Society; what action the Registrar of Friendly Societies proposes to take in the numerous cases to which his attention has been called; and, if the registrar has no adequate powers to deal with these cases whether he will introduce legislation to protect the interests of borrowers under building society schemes?
  The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Captain Euan Wallace): If my hon. Friend will send me particulars of the cases he has in mind, I shall be pleased to consult the registrar about them.

  INDUSTRIAL ACCIDENT, SNOD LAND, KENT.
  Mr. THORNEasked the Home Secretary whether he has received a report from his factory inspector in connection with an accident to a workman who was crushed to death in a lift at the paper mills of Messrs. Townsend, Hook, and Company, of Snodland, Kent; and whether the factory inspector has referred in his report to the recommendation of the jury and the cause of the accident?
  Captain WALLACE: Yes, Sir, and further precautions are under consideration as recommended by the jury.

  BETTING AND LOTTERIES ACT (TRACK LICENCES).
  Mr. H. WILLIAMSasked the Home Secretary how many licences under Part I of the Betting and Lotteries Act have been granted to tracks which were existing tracks within the meaning of the Act; how many to new tracks and how many have been refused; and whether he can furnish information as to the purposes for which the licences have been granted?
  Captain WALLACE: Licences are granted by county councils and county borough councils, subject to the powers of delegation conferred by Section 5 of the Act. These authorities do not report their decisions on applications for licences to the Home Office, and the only way in which the information could be obtained would be to ask for a special return from each local authority. This would involve the expenditure of time and money which does not seem justified.
  Mr. T. WILLIAMS: Does not the hon. and gallant Gentleman think that this business is of such importance that we ought to be informed exactly how many tracks have been licensed?
  Captain WALLACE: If a case were made out to show that it was important we should consider whether it was worth while.
  Mr. T. WILLIAMS: Can the hon. and gallant Gentleman provide us with an opportunity of justifying our contention that the information should be made available?
  Captain WALLACE: If the hon. Member will write me a letter and put forward

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  some good reasons, I will draw the attention of my right hon. Friend to it.

  SOCIAL SERVICES (COST).
  Mr. WESTasked the Chancellor of the Exchequer what were the total contributions made to national funds by the various beneficiaries of social services during the last year for which figures are available?
  The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper)I would refer the hon. Member to the Return of Public Social Services (Command Paper 4749 of 1934) which, in columns 19 and 27 on pages 8 and 9, gives the figures of receipts from contributions, fees, interest, rents, etc., for 1932 or the latest available year. As regards the first three items in these columns (Unemployment Insurance, Health Insurance and Contributory Pensions) approximately 50 per cent., or £46,000,000, is derived from employés' contributions. As regards the remaining items, I would refer the hon. Member to paragraph 2 of the Prefatory Note to the Return.
  Mr. WEST: In view of those figures, does not the hon. Gentleman think that to quote £500,000,000 as the cost of the social services is very misleading when the actual cost is less than £400,000,000?
  Mr. COOPER: I do not consider it misleading.

  TRANSPORT (WATERLOO BRIDGE).
  Lieut.-Colonel POWELLasked the Minister of Transport whether he has any information for how long the single line of traffic will be the only means of transport over the Waterloo Bridge?
  The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Captain Austin Hudson): Between the hours of 8 p.m. and 6 a.m. traffic is permitted to proceed in both directions over the temporary bridge, and during the remaining hours of the day, when general traffic is allowed to proceed only from north to south, there is an omnibus service from south to north. These arrangements, which are made under requirements of the Commissioner of Police of the Metropolis, are, I understand, likely to be regarded as necessary until the new Waterloo Bridge is opened to
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  traffic, but the position will be reviewed from time to time.
  Lieut.-Colonel POWELL: Can the hon. and gallant Gentleman tell me for how long this unsatisfactory state of affairs is going to exist?
  Captain HUDSONI understand that it will be five years before the new bridge is completed.
  Lieut.-Colonel POWELL: Is there any chance of erecting another temporary bridge west of Waterloo Bridge to allow for two permanent lines of traffic, as the present situation causes a great deal of inconvenience?
  Captain HUDSON: I think the last sentence of the answer: "The position will be reviewed from time to time," is all the information I can give my hon. and gallant Friend.

  CABINET MINISTERS (SALARIES).
  Mr. TINKERasked the Prime Minister whether he is in a position to say what the salaries of the Cabinet Ministers, known as Ministers without Portfolio, will be; and can he say the length of time he intends to keep on with these extra Cabinet positions?
  The PRIME MINISTER (Mr. Baldwin): The salaries of the Ministers without Portfolio will be £3,000. These appointments will continue so long as the work of the Government requires them.
  Mr. TINKER: Is the right hon. Gentleman not of opinion that a matter of this kind should have been discussed with the House first of all, because when an under-secretary is appointed to one of the Ministers without Portfolio a Bill has to be introduced, I understand, and surely if that has to be done in the lesser case the bigger appointment ought to be made in the same way?
  Mr. H. WILLIAMS: Is it not the case that an Act of Parliament passed about 1919, or two or three years before, authorised the appointment of three Ministers without Portfolio?
  The PRIME MINISTER: What my hon. Friend has said is right. With regard to the hon. Member for Leigh (Mr. Tinker), what he said in respect of the appointment of under-secretaries is right. The appointment of Ministers without Portfolio requires no Act.
  Mr. LOGAN: Could not these posts have been filled from the Employment Exchanges?
  Mr. TINKER: Does the Prime Minister not think that future appointments of this kind might be considered by the House as a whole before they are made?

  ZANZIBAR (CLOVE INDUSTRY).
  Mr. HARCOURT JOHNSTONE (for Sir ROBERT HAMILTON)asked the Under-Secretary of State for India whether he is now in a position to state the result of the representations made by the India Office to the Colonial Office regarding the recent legislation affecting the clove industry in Zanzibar?
  The UNDER-SECRETARY of STATE for INDIA (Mr. Butler): This is a matter which is now engaging the attention of my Noble Friend, and I am not at present in a position to make any statement.

  CINEMATOGRAPH FILMS ACT.
  Captain ARTHUR EVANSasked the President of the Board of Trade whether he has now received the report of the Cinematograph Films Advisory Committee on the question of the quality of British films produced under the operation of the Cinematograph Films Act?
  Mr. RUNCIMAN: No, Sir.
  Captain EVANS: In view of the urgency of the matter, will the right hon. Gentleman represent to the hon. Member for Hitchin (Sir A. Wilson) the desirability of submitting a report to the Board of Trade at the earlest possible moment?
  Mr. RUNCIMAN: I will consider that.

  ROME AND PARIS (MINISTER'S VISITS).

    STATEMENT BY MR. EDEN.
    Mr. LANSBURY(by Private Notice) asked the Secretary of State for Foreign Affairs whether he is in a position to make any statement in regard to the visit of the Minister for League of Nations Affairs to Rome and Paris?
    The MINISTER for LEAGUE of NATIONS AFFAIRS (Mr. Eden): I have been asked to reply. The object of the visit which, on the instructions of His Majesty's Government, I recently made to Paris was two-fold. His Majesty's Government wished, in the first place, to take the earliest opportunity of giving the French Government a full and frank explanation on the subject of the Anglo-German Naval Agreement. They also wished to consider, in consultation with the French Government, the ways and means of making progress as quickly as possible with the negotiation of all the matters enumerated in the London Communiqué of the 3rd February.
    As regards the Anglo-German Naval Agreement, I gave the French Prime Minister an account of the contents of the Agreement itself, and described to him the circumstances in which it was negotiated and the reasons which had led His Majesty's Government to conclude it.
    Monsieur Laval explained with equal frankness the view which the French Government took of this Agreement. He also explained his view of its bearing upon the various European problems in the solution of which the two Governments are engaged.
    It was recognised in the course of this conversation that for the settlement of these questions, such, for example, as the Air Pact and Air limitation, the Eastern Pact, the Central European Pact, and agreement on land armaments, close collaboration between France and Great Britain was necessary. These are, however, questions which do not interest France and Great Britain alone. We are, therefore, at present seeking, in conjunction with the French Government, the form of collaboration best designed to secure the fulfilment as quickly and completely as possible by all countries of the programme of the London Communiqué of the 3rd February.
    At the close of the discussions upon these same subjects which I held subsequently with Signor Mussolini in Rome, we were happy to be able to record agreement as to the possibility of continuing to work for European appeasement in accordance with the guiding principles laid down in the London Communiqué of the 3rd February and the Stresa Resolution.

    1521
    There is now, therefore, reason to hope that the best line of negotiation may shortly be found. Moreover, I cannot doubt that, although the three Governments may not attach the same importance or ascribe the same urgency to all the various items of the programme, it should be possible to agree upon a method whereby, in free and equal negotiation with other Governments, they may unite to contribute to the solution of these problems.
    I now turn to the dispute between Italy and Abyssinia, in regard to which I had conversations with Signor Mussolini on the 24th and 25th June.
    I expressed to Signor Mussolini the grave concern of His Majesty's Government at the turn which events were taking between Italy and Abyssinia. Our motives were neither egoistic nor dictated by our interests in Africa, but by our membership of the League of Nations. I said that British foreign policy was founded upon the League. His Majesty's Government could not, therefore, remain indifferent to events which might profoundly affect the League's future. Upon this issue public opinion in this country felt very strongly. It was only through collective security that in our judgment peace could be preserved, and only through the League that Great Britain could play her full part in Europe. It was for this reason that His Majesty's Government had been anxiously studying whether there was any constructive contribution which they could make in order to promote a solution.
    I then described to Signor Mussolini the kind of contribution which His Majesty's Government had in mind and which I was authorised to make to him as a tentative suggestion. This suggestion was broadly speaking as follows:
    To obtain a final settlement of the dispute between Italy and Abyssinia, His Majesty's Government would be prepared to offer to Abyssinia a strip of territory in British Somaliland giving Abyssinia access to the sea. This proposal was intended to facilitate such territorial and economic concessions by Abyssinia to Italy as might have been involved in an agreed settlement. His Majesty's Government would ask for no concession in return for this arrangement save grazing rights for their tribes in such territory as might be ceded to Italy.
    1522
    This suggestion was not lightly made, and only the gravity of the situation could justify the cession of British territory without equivalent return.
    I much regret that this suggestion did not commend itself to Signor Mussolini, who was unable to accept it as the basis for a solution of the dispute.
    On my return to Paris, I gave M. Laval an account of what had passed with Signor Mussolini.
    Mr. LANSBURY: Obviously, it is impossible for myself or the House, until we have read the right hon. Gentleman's statement, thoroughly to comprehend all that is involved in it, but I should like to ask either the right hon. Gentleman or the Prime Minister when we shall be in a position to discuss those matters which were discussed with M. Laval; and also I should like to ask whichever Minister can answer the question when it is likely that we may know from the Government what other steps they propose to take in order to bring such pressure as public opinion in Europe may be able to bring upon the Italian Government in respect of the dispute with Abyssinia. My reason for asking that question is that most of us in the House—I should think all in the House—have in mind the long period of drift which ended, in the Far East, in the present partial conquest of China by Japan in defiance both of Europe and of her own signature to the Nine Power Pact and the other pacts against aggression.
    Sir S. HOARE: I fully realise the extreme urgency of these questions. At the same time I regret that to-day I cannot give the right hon. Gentleman any specific answer as to when we shall be able to give the House fuller details. As soon as we are at liberty to give the House fuller details, we will give the House fuller details. If the right hon. Gentleman would leave it at that to-day, I would undertake to keep him informed as to when we shall be in a position to give the House fuller information. In the meanwhile, I imagine that he will be asking for the Foreign Office Vote some time at an early date in the future. While I cannot give a pledge, I should hope that I shall be able to give some further information than we have been able to give to-day, but I assure the right hon. Gentleman that we regard the issues at stake as very urgent, and

    1523
    they are under our special and constant consideration. It is not that I wish to withhold any information from the House to-day, but L feel that if I were to go further I might be prejudicing the course we should all like to see pursued.
    Mr. LANSBURY: I think I ought to say this with regard to the right hon. Gentleman's statement—it is a mere repetition of something that, on behalf of my friends, I said two years or more ago, when the Japanese situation was acute. The Government must take responsibility, and we must leave to a very large extent the responsibility with them for the moment. But ultimately the British Parliament is responsible, and what we are anxious to safeguard ourselves against is another accomplished fact in regard to Abyssinia without this House or the League of Nations or anyone else being heard. With regard to a future date, we should like very much fuller particulars and details of these conversations to be embodied in a White Paper whenever we have the opportunity to discuss them. But I press very strongly for an early date for the discussion of the European situation, and especially for the discussion of the Abyssinia-Italian situation.
    Mr. TINKER: May I ask the Minister without Portfolio whether Signor Mussolini said what his terms were and what he wanted; or is the time not opportune to disclose that to the House?
    Mr. EDEN: I have given the House a full statement so far as I can of a conversation which was essentially confidential. I feel sure the House will appreciate that at this stage I could not go further than I have gone to-day.
    Mr. DICKIE: The Leader of the Opposition has referred to something in the nature of a fait accompli. I should like to ask the Foreign Minister whether there is not another fait accompli, and whether the House cannot have an assurance that, before any British territory is ceded to Abyssinia, or any Power, the House of Commons will be consulted?
    Sir S. HOARE: The House must trust the Executive Government in these matters. If they are not prepared to trust the Government, the whole basis of government is destroyed.
    Mr. THORNE: Is it not a fact that, when the Minister without Portfolio was in Geneva some little time ago, a Committee was set up for the purpose of dealing with the Abyssinian trouble; and is that Committee operating now?
    Mr. EDEN: The conciliation procedure is certainly continuing. These conversations, however, dealt with something other than the conciliation procedure.
    Mr. ANEURIN BEVAN: Can some intimation be given to the House as to when the Foreign Office Vote will be put down for discussion?
    Mr. DICKIE: Surely, in a matter of vital principle such as this, the last word in regard to the cession of British territory and the handing over of British subjects to an alien Government must rest with the House of Commons?
    Sir S. HOARE: My hon. Friend has not followed the answer given by my right hon. Friend. The proposal was described as a tentative one, as part of a general effort to arrive at a settlement of a very critical situation which might have disastrous reactions all round if not properly handled. There is no question whatever of going behind the back of the House, but there was the urgent necessity for the Government to take what steps they thought fit to arrive at a satisfactory settlement of a very dangerous situation.
    Mr. DICKIE: I am quite prepared to trust the Government in this matter. All that I ask for is something to which I think the House is entitled, namely, an assurance that, before anything definite in this matter is done, the House will be consulted.
    Mr. SANDYS: May I ask whether the offer mentioned in the statement is still open, and whether it will still be discussed; or whether the matter has been turned down and is regarded as closed?
    Sir S. HOARE: The tentative suggestion that was made was not acceptable, and I assume, therefore, that the suggestion is at an end.
    Sir A. KNOX: If Signor Mussolini had accepted that offer, what would have been our position then?

  COTTON SPINNING INDUSTRY BILL,
  "to provide for the elimination of redundant spinning machinery in cotton mills in Great Britain by means of a Board having power to acquire property and to borrow and levy money; for the making of certain payments to the said Board out of the Consolidated Fund or moneys provided by Parliament, and the making of certain payments by the said Board to the Exchequer; for regulating the use of cotton-spinning machinery; and for purposes connected with the matters aforesaid," presented by Mr. Runciman; supported by Mr. Ernest
  Brown, Mr. Duff Cooper, and Dr. Burgin; to be read a Second time To-morrow, and to be printed. [Bill 88.]

BUSINESS OF THE HOUSE.
Motion made, and Question put,
"That the Proceedings on the London Passenger Transport (Agreement) Bill and on the Defence (Barracks) Bill [Lords] be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]
The House divided: Ayes, 186; Noes, 28.

Division No. 252.]

AYES.

[3.30 p.m.

Acland-Troyte, Lieut.-Colonel

Hacking, Rt. Hon. Douglas H.

Moss, Captain H. J.

Agnew, Lieut.-Com. P. G.

Hales, Harold K.

Nation, Brigadier-General J. J. H.

Allen, William (Stoke-on-Trent)

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

Nicholson, Godfrey (Morpeth)

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

Hammersley, Samuel S.

Nicholson, Rt. Hn. W. G. (Petersf'ld)

Assheton, Ralph

Hanbury, Sir Cecil

Norle-Miller, Francis

Astbury, Lieut.-Com. Frederick Wolfe

Hannon, Patrick Joseph Henry

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

Baldwin, Rt. Hon. Stanley

Harris, Sir Percy

Orr Ewing, I. L.

Barclay-Harvey, C. M.

Hartington, Marquess of

Patrick, Colin M.

Benn, Sir Arthur Shirley

Harvey, Major Sir Samuel (Totnes)

Percy, Lord Eustace

Blindell, James

Haslam, Sir John (Bolton)

Petherick, M.

Bossom, A. C.

Headlam, Lieut.-Col. Sir Cuthbert

Pickthorn, K. W. M.

Boulton, W. W.

Heilgers, Captain F. F. A.

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

Bowater, Col. Sir T. Vansittart

Heneage, Lieut.-Colonel Arthur P.

Power, Sir John Cecil

Bowyer, Capt. Sir George E. W.

Herbert, Major J. A. (Monmouth)

Procter, Major Henry Adam

Briscoe, Capt. Richard George

Herbert, Capt. S. (Abbey Division)

Raikes, Henry V. A. M.

Broadbent, Colonel John

Hills, Major Rt. Hon. John Waller

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

Brocklebank, C. E. R.

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

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

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

Horobin, Ian M.

Rea, Sir Walter

Bullock, Captain Malcolm

Howitt, Dr. Alfred B.

Reed, Arthur C. (Exeter)

Burgin, Dr. Edward Leslie

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

Remer, John R.

Burnett, John George

Hume, Sir George Hopwood

Rickards, George William

Butler, Richard Austen

Jackson, J. C. (Heywood & Radcliffe)

Ropner, Colonel L.

Caine, G. R. Hall-

Janner, Barnett

Ross Taylor, Walter (Woodbridge)

Campbell, Sir Edward Taswell (Brmly)

Johnstone, Harcourt (S. Shields)

Runciman, Rt. Hon. Walter

Campbell, Vice-Admiral G. (Burnley)

Kirkpatrick, William M.

Runge, Norah Cecil

Campbell-Johnston, Malcolm

Knox, Sir Alfred

Rutherford, Sir John Hugo (Liverp'l)

Caporn, Arthur Cecil

Lamb, Sir Joseph Quinton

Salmon, Sir Isidore

Cazalet, Thelma (Islington, E.)

Leech, Dr. J. W.

Salt, Edward W.

Cazalet, Capt. V. A. (Chippenham)

Lees-Jones, John

Samuel, M. R. A. (W'ds'wth, Putney)

Chamberlain, Rt. Hon. N. (Edgbaston)

Leighton, Major B. E. P.

Sanderson, Sir Frank Barnard

Clayton, Sir Christopher

Lewis, Oswald

Sandys, Duncan

Cobb, Sir Cyril

Liddall, Walter S.

Savery, Servington

Cochrane, Commander Hon. A. D.

Lindsay, Kenneth (Kilmarnock)

Shakespeare, Geoffrey H.

Conant, R. J. E.

Llewellin, Major John J.

Simon, Rt. Hon. Sir John

Cook, Thomas A.

Lloyd, Geoffrey

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

Cooke, Douglas

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

Skelton, Archibald Noel

Cooper, A. Duff

Lockwood, John C. (Hackney, C.)

Smith, Sir Robert (Ab'd'n & K'dine, C.)

Cranborne, Viscount

Lumley, Captain Lawrence R.

Somervell, Sir Donald

Crooke, J. Smedley

Mabane, William

Somerville, Annesley A. (Windsor)

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

MacAndrew, Major J. O. (Ayr)

Sotheron-Estcourt, Captain T. E.

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

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

Spears, Brigadier-General Edward L.

Denman, Hon. R. D.

MacDonald, Rt. Hon. M. (Bassetlaw)

Stanley, Rt. Hon. Lord (Fylde)

Denville, Alfred

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

Strickland, Captain W. F.

Dickie, John P.

McEwen, Captain J. H. F.

Stuart, Hon. J. (Moray and Nairn)

Duckworth, George A. V.

McLean, Major Sir Alan

Sugden, Sir Wilfrid Hart

Duggan, Hubert John

McLean, Dr. W. H. (Tradeston)

Sutcliffe, Harold

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

Macquisten, Frederick Alexander

Taylor, C. S. (Eastbourne)

Eden, Rt. Hon. Anthony

Makins, Brigadier-General Ernest

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

Emmott, Charles E. G. G.

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

Thomas, James P. L. (Hereford)

Emrys-Evans, P. V.

Marsden, Commander Arthur

Touche, Gordon Cosmo

Evans, Capt. Arthur (Cardiff, S.)

Mason, David M. (Edinburgh, E.)

Tryon, Rt. Hon. George Clement

Fielden, Edward Brocklehurst

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

Tufnell, Lieut.-Commander R. L.

Goff, Sir Park

Mayhew, Lieut.-Colonel John

Wallace, Captain D. E. (Hornsey)

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

Meller, Sir Richard James (Mitcham)

Wallace, Sir John (Dunfermline)

Granville, Edgar

Mellor, Sir J. S. P.

Ward, Irene Mary Bewick (Wallsend)

Grattan, Doyle, Sir Nicholas

Mills, Sir Frederick (Leyton, E.)

Wardlaw-Milne, Sir John S.

Graves, Marjorie

Mitchell, Sir W. Lane (Streatham)

Warrender, Sir Victor A. G.

Gretton, Colonel Rt. Hon. John

Moreing, Adrian C.

Waterhouse, Captain Charles

Grimston, R. V.

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

Wayland, Sir William A.

Gunston, Captain D. W.

Morrison, G. A. (Scottish Univer'ties)

Wedderburn, Henry James Scrymgeour

Williams, Charles (Devon, Torquay)

Wise, Alfred H.

TELLERS FOR THE AYES—

Williams, Herbert G. (Croydon, S.)

Wood, Rt. Hon. Sir H. Kingsley

Sir George Penny and Lieut.-

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

Colonel Sir A. Lambert Ward.

NOES.

Adams, D. M. (Poplar, South)

Dobbie, William

Macdonald, Gordon (Ince)

Attlee, Rt. Hon. Clement R.

Edwards, Sir Charles

McGovern, John

Bevan, Aneurin (Ebbw Vale)

Gardner, Benjamin Walter

Maxton, James.

Cleary, J. J.

Griffiths, George A. (Yorks, W. Riding)

Thorne, William James

Cocks, Frederick Seymour

Grundy, Thomas W.

Tinker, John Joseph

Cove, William G.

Hall, George H. (Merthyr Tydvil)

West, F. R.

Cripps, Sir Stafford

Jones, Morgan (Caerphilly)

Williams, Edward John (Ogmore)

Daggar, George

Lansbury, Rt. Hon. George

Williams, Thomas (York, Don Valley)

Davies, David L. (Pontypridd)

Logan, David Gilbert

Davies, Rhys John (Westhoughton)

Lunn, William

TELLERS FOR THE NOES.—

Mr. T. Smith and Mr. Groves.

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

SELECTION (STANDING COMMITTEES).

  STANDING COMMITTEE A.
  Mr. William Nicholson reported from the Committee of Selection; That they had discharged the following Members from Standing Committee A: Captain Cunningham-Reid, Commander Marsden, Lieut.-Colonel Mayhew, and Mrs. Ward; and had appointed in substitution: Lieut.-Colonel Acland-Troyte, Mr. Horobin, Sir John Power, and Captain Waterhouse.
  Report to lie upon the Table.

GLOUCESTER CORPORATION BILL [Lords].
Reported, with Amendments; Report to lie upon the Table, and to be printed.
Bill, as amended, to lie upon the Table.

MESSAGE FROM THE LORDS.
That they have agreed to—
London and North Eastern Railway Bill, without Amendment.
Southern Railway Bill,
South Essex Waterworks Bill, with Amendments.
That they have passed a Bill, intituled, "An Act to authorise the Camborne Water Company to construct new waterworks and to raise further capital; to confer additional powers upon the Company; and for other purposes." [Camborne Water Bill [Lords.]
Also a Bill, intituled, "An Act to enable the Governors of Saint Bartholomew's Hospital in the City of London to make and accept charges for the accom-
1528
modation and treatment of certain patients and to provide acommodation in connection therewith; and for other purposes." [St. Bartholomew's Hospital Bill [Lords.]
Also a Bill, intituled, "An Act to authorise the Mayor Aldermen and Burgesses of the Borough of Bridgwater to construct additional waterworks and sewage works; and for other purposes." [Bridgwater Corporation Bill [Lords.]
Also a Bill, intituled, "An Act to extend the limits of supply of the Company of Proprietors of the Weymouth Waterworks; to authorise the construction of new waterworks; to enlarge the capital and borrowing powers of the Company; to confer further powers upon the Company; and for other purposes." [Weymouth Waterworks Bill [Lords.]
And also a Bill intituled, "An Act to make better provision with respect to road transport services in the borough of Poole; and for other purposes." [Poole Road Transport Bill [Lords.]
CAMBORNE WATER BILL [Lords].
ST. BARTHOLOMEW'S HOSPITAL BILL [Lords].
BRIDGWATER CORPORATION BILL [Lords].
WEYMOUTH WATERWORKS BILL [Lords].
POOLE ROAD TRANSPORT BILL [Lords].
Read the First time; and referred to the Examiners of Petitions for Private Bills.

VOLUNTARY HOSPITALS (PAYING PATIENTS) BILL [Lords].
Read the First time; to be read a Second time upon Tuesday, 9th July, and to be printed. [Bill 89.]
ORDERS OF THE DAY.
  FINANCE BILL.
  As amended, considered.
  FINANCE BILL.

    NEW CLAUSE.—(Summary proceedings in revenue cases in Northern Ireland).
    (1) The Summary Jurisdiction Acts (Northern Ireland) shall, notwithstanding any special provisions to the contrary contained in any enactment relating to His Majesty's revenue under the control of the Commissioners of Inland Revenue or the Commissioners of Customs and Excise, apply to all informations, complaints, and other summary proceedings in Northern Ireland under or by virtue of any such enactment:
    Provided that nothing in this sub-section shall affect the provisions of section two hundred and fifty-seven of the Customs Consolidation Act, 1876 (which relates to the time within which proceedings may be brought).
    (2) A resident magistrate in Northern Ireland shall have power to reduce the amount of any pecuniary penalty which be has power to impose for an offence against any such enactment as aforesaid, notwithstanding that the amount of the penalty is prescribed by that enactment.
    (3) Where any person arrested in Northern Ireland without a warrant for an offence against any enactment relating to the Customs is brought before a resident magistrate, or before a justice of the peace sitting out of petty sessions, the magistrate or justice may from time to time remand him in custody for such period (not exceeding eight clear days) as the magistrate or justice thinks fit, or may discharge him upon his entering into a recognizance, with or without sureties, to appear at the time and place named in the recognizance.
    (4) In this section the expression "Summary Jurisdiction Acts (Northern Ireland)" means the Summary Jurisdiction (Ireland) Acts and any Act of the Parliament of Northern Ireland, whether passed before or after the date on which this section comes into operation, amending those Acts.
    (5) The enactments set out in Part I of the Second Schedule to this Act are hereby repealed to the extent mentioned in the third column of that schedule.
    (6) The foregoing provisions of this section shall come into operation on such date as the Treasury may by order appoint.—[Mr. Chamberlain.]
    Brought up, and read the First time.
    3.40 p.m.
    The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): I beg to move, "That the Clause be read a Second time."
    1540
    This Clause arises out of a Bill which is at present passing through the Northern Irish Parliament. It amends the summary jurisdiction law of Northern Ireland and provides that one resident magistrate, sitting alone, shall constitute a court of summary jurisdiction. The Bill has obtained its Third Reading in the Senate of Northern Ireland and is now being referred back to the Commons for consideration of some minor Amendments. When it has become law, it will be possible to apply to Northern Ireland a principle which has been applied in England since 1879 and in Scotland since 1908, namely, that the general summary jurisdiction code shall apply to revenue offences, and the purpose of this Clause is to enable that to be done. The first Subsection makes that provision. I should say that the Clause has been put forward in consultation with the Government of Northern Ireland. It will be seen that the sixth Sub-section provides that it is not to come into operation until such date as may be appointed by order of the Treasury, the purpose of that being that it shall not come into operation until this Bill actually has been through the Northern Ireland Parliament and has become law. When it has been passed we shall have similar legislation in this country and in Northern Ireland, and I think that the result will be beneficial to both sides.
    The first Sub-section gives the power which brings the summary jurisdiction code into operation in dealing with revenue offences. There is a proviso to it which is considered necessary to make it quite plain that Section 257 of the Customs Consolidation Act, 1876, will override another Section of the Petty Sessions (Ireland) Act, 1851, which provides that proceedings under the Summary Jurisdiction Acts (Northern Ireland) have to be brought within six months. Section 257 of the Customs Consolidation Act, 1876, provides that proceedings for offences can be brought at any time within three years, so that the proviso is in order to keep that in force now.
    The second Sub-section is not really consequential upon the first. It deals with a somewhat different matter, but, under the Summary Jurisdiction Acts of Northern Ireland, a magistrate has no general power of mitigating the size of penalties as he has under English and

    1541
    Scottish Acts. The Excise Acts confer a power of mitigating Excise penalties, but there is no similar provision in respect of Customs, and so the purpose of this provision is to do the same with regard to Customs as is already the law with regard to Excise. As a matter of fact, at the present time, the Commissioners of Customs and Excise here have the power to mitigate the penalty, and they have been frequently called upon to exercise that power in Northern Ireland, but it is thought that it would be very much better that the responsibility should rest in Northern Ireland primarily with the magistrate who tries the case, and so we have taken the opportunity while bringing in this Clause to include that Sub-section.
    The third Sub-section again is not really consequential upon the main purpose of the Clause. A doubt has been raised as to whether magistrates in Northern Ireland have power to remand offenders in certain classes of Customs case. It is thought desirable to remove doubt on the subject, and accordingly it is proposed to confer this power upon not only a resident magistrate but also a justice of the peace sitting out of petty sessions, and the reason for that is that it might be that there would be some difficulty in obtaining the services of the resident magistrate without a considerable period of delay. But there is no abnormality in conferring this power of remand on justices of the peace, since they will, in some cases, have this power under the Bill which is now before the Northern Ireland Parliament.
    The fourth Sub-section defines the expression "Summary Jurisdiction Acts (Northern Ireland)" so that it will include the Bill which I have already mentioned which is now before the Irish Parliament, and finally Sub-section (5) repeals certain enactments relating to revenue proceedings in Northern Ireland which would conflict with the provisions of the Clause or else would become redundant after the Clause becomes law.
    Sir STAFFORD CRIPPS: We on these benches offer no objection at all to this Clause. It obviously seems to be desirable that the procedure in Scotland and England should be the same as that in Northern Ireland, and this Clause merely approximates that procedure to
    1542
    our own, and we therefore think it wise that it should be passed.
    3.45 p.m.
    Mr. HERBERT WILLIAMS: I wish to raise one rather curious point as a result of an experience which I had 18 months ago, when I spent the whole of Christmas Eve trying to get a man out of prison who had been remanded in custody by the magistrates for a week. The period happened to include Christmas Eve and was in respect of an offence which, though regrettable, was not a grave criminal offence, and my experience, after spending the Sunday evening before the Vacation Judge, was that there was no power to grant bail if a man had been remanded in custody by the magistrates. I am only raising this question of the freedom of the subject because of this curious experience. The result was that after consultation with the then Lord Chancellor, Viscount Sankey, the matter was cleared up, and there was no doubt that, under our procedure, any judge in fact had power to grant bail even though the magistrates had refused it. I want to be sure, though this only happens to affect Northern Ireland, that we are not, by the words in Sub-section (3), giving away something which, in fact, though in some doubt 18 months ago, has been our legal protection for many years past.
    3.46 p.m.
    The SOLICITOR - GENERAL (Sir Donald Somervell): I am not quite sure that the matter is exactly as my hon. Friend the Member for South Croydon (Mr. H. Williams) put it. I understand that there is always power to go to a judge on a plaint concerning bail. As far as Northern Ireland is concerned, I understand that there would be a right of appeal in the ordinary case against an order of this kind, but my hon. Friend has raised this point, and no doubt note will be taken of it, but the House can be assured that, as far as this matter is concerned, it is really applying to Ireland the procedure which at present exists in England and Scotland. My hon. Friend the Member for South Croydon has raised a point which ought to be looked into as far as England, Scotland and Northern Ireland are concerned, but as far as the House is concerned at present we are applying the procedure which exists here.
    Mr. H. WILLIAMS: On that particular occasion when we appeared before the Vacation Judge on the Sunday evening, he said that as far as he knew he had not the power of granting the application. Therefore, there was some doubt at the time, and that is why I raise the point now.
    Clause added to the Bill.

    NEW CLAUSE.—(Power to charge reduced duty in lieu of general ad valorem duty in exceptional cases.)
    (1) If, as respects goods of any class or description which are chargeable or which it is apprehended will shortly become Chargeable with the general ad valorem duty, it appears to the Import Duties Advisory Committee that, having regard to any exceptional circumstances, the said duty ought to be reduced, the Committee may recommend to the Treasury that, in lieu of being charged with the said duty, the said goods ought to be charged—

    (a) with a duty equal to such percentage less than 10 per cent. of the value of the goods as may be specified in the recommendation; or

    (b) with whichever is the lower of the following two duties, namely—

    (i) a duty chargeable by reference to weight or other measure of quantity at such rate as may be specified in the recommendation; or

    (ii) a duty equal to such percentage not exceeding 10 per cent. of the value of the goods as may be so specified.

    (2) The Treasury, after receiving a recommendation under the last foregoing sub-section, may, after consultation with the appropriate Department, by order direct that such duty of customs as is specified in the recommendation shall be charged under this section, in lieu of the general ad valorem duty, on the importation into the United Kingdom of goods of the class or description so specified, and references in any enactment to the general ad valorem duty or to duty chargeable under the Import Duties Act, 1932, or under Part I thereof shall, unless the context otherwise requires, be deemed to include, in relation to such goods, a reference to the duty chargeable under this section:
    Provided that no order made under this section as respects goods which are not chargeable with the general ad valorem duty at the date when the order is made shall have effect until the date on which that duty would otherwise have become chargeable thereon.
    (3) Sub-sections (1), (3), (4), and (5) of section nineteen of the Import Duties Act, 1932, shall apply to any order made under this section as if it were an order made by the Treasury under the said Act other
    1544
    than an order imposing a duty of customs, and in this section the expression "appropriate Department" has the same meaning as in that Act."—[Mr. Chamberlain.]
    Brought up, and read the First time.
    3.48 p.m.
    Mr. CHAMBERLAIN: I beg to move, "That the Clause be read a Second time."
    This is a rather long Clause, the purpose of which I will explain to the House. Under the Import Duties Act there is a general scheme of duties to provide for a revenue tariff of 10 per cent., and it is also provided that the Import Duties Advisory Committee can recommend additions to this 10 per cent. The Treasury are empowered to make an Order carrying out those recommendations, but there has never been any power to reduce the duty of 10 per cent. to something less than 10 per cent. Goods can be put on the free list or they can be subject to a duty of 10 per cent. and to additions to the 10 per cent., but they cannot be subject to 8 per cent. or anything between nothing and 10 per cent. Until quite recently there has been no difficulty arising in respect of that omission, and perhaps there would not have been had not certain circumstances arisen connected with one of the subjects which formed part of our discussions at Ottawa. At Ottawa we had a discussion about the importation of lead and zinc into this country. The producers of lead and zinc in the Empire were anxious to have the preference, and in order to give that preference, of course it would be necessary to put a duty on the foreign imports of these two metals, but we were anxious lest in doing that we might hamper the users of these metals, which are the raw material for a number of industries in this country. Then the producers offered to give us an undertaking that they would not, in consequence of the duty, raise the price of these two metals above the world price.
    After a long discussion how an undertaking of that kind was to be put into words, a formula was ultimately discovered and formed part of the Ottawa Agreement. The formula in practice has given rise to a great number of difficulties and complaints. It may be remembered that the President of the Board of Trade accordingly invited the Import Duties Advisory Committee to go into the whole question and see what was the best thing

    1545
    to be done. They have been considering what was the cause of the difficulties and how they might be overcome and have been in discussion with the various interests concerned. Although they have not yet presented their final report, they have intimated to us that in all probability they will be able to find a solution on the basis of a duty of less than 10 per cent., in which case it will be no longer necessary to limit the prices of Empire supplies to the world prices, as there is great difficulty in determining what the world price is. In considering a solution of this kind, the Committee have come up against the difficulty that there is no statutory power which would enable them to make recommendations to that effect. They have, therefore, drawn our attention to the difficulty in which they find themselves, and this new Clause has been drafted in order to overcome it. If the Committee's inquiry had been concluded a little earlier we should no doubt have had the Clause at an earlier stage.
    Although I have spoken of lead and zinc, those two metals are not mentioned in the Clause. The Clause is drawn in general terms. Having come up against the difficulty in the case of these two metals it was thought better not to put them in specifically but to employ general terms as we do not want to come again to the House if a case should arise in regard to other goods. Accordingly, it is provided that where it appears to the Committee that having regard to any exceptional circumstances—those words are put in to indicate that the power will be used sparingly—the duty ought to be reduced, the Committee will be able to recommend that instead of being charged with the said duty the goods shall be charged otherwise. There are two alternatives. The first alternative is a percentage less than 10 per cent. on the value of the goods and the second alternative is a duty chargeable by reference to weight or other measure of quantity at such rate as may be specified in the recommendation, or a duty equal to such percentage not exceeding 10 per cent. of the value of the goods as may be so specified. That will enable the Committee, for example, to recommend that there shall be either a duty of 5 per cent. ad valorem or a duty of 10s. per ton whichever is the lower of the two.
    1546
    Sub-section (2) recites the ordinary procedure under which the Treasury is entitled to make an order on the recommendation of the Committee and provides that references in any enactment to the general ad valorem duty or to duty chargeable under the Import Duties Act, 1932, shall be deemed to relate to goods under this Clause. Sub-section (3) provides that Section 19 of the Import Duties Act, 1932, shall apply to any Order made under this Section. A recommendation for reducing a duty does not require approval by a resolution of the House of Commons and here the procedure will be the same. But, of course, where prior to the application of the provisions of this Clause, in order that goods may be removed from the Free List, a resolution will still be required in accordance with Section 7 (3) of the Finance Act, 1932.
    3.55 p.m.
    Mr. MORGAN JONES: We are obliged to the right hon. Gentleman for his explanation, but I gather that the explanation does not justify the optimism that I had entertained. I had hoped that this new Clause indicated that at long last and in good time before the Election some sort of conscience had overtaken the Government and that they were going to take some steps to reduce the prices of commodities rather than keep on increasing them. That apparently is not the case. My understanding of the position as it was before this new Clause was drafted was that if a commodity were removed from the Free List to the non-Free List it became immediately subject to 10 per cent. duty.
    Mr. CHAMBERLAIN Mr. CHAMBERLAIN indicated assent.
    Mr. JONES: It could not be subject to anything less than 10 per cent. The effect of the new Clause will be that if a commodity were so removed it would not necessarily come under the 10 per cent. provision, but it could be subject to 5 per cent. or some other figure.
    Mr. CHAMBERLAIN Mr. CHAMBERLAIN indicated assent.
    Mr. JONES: That is all to the good as far as it goes. I take it that as the Clause is drawn in general terms it can apply to any single commodity. Although the Chancellor of the Exchequer specifically mentioned lead and zinc, I take it that it can be applied to a whole series of commodities in the list. There is a phrase in the Clause of which I should like an explanation. It is the phrase:

    1547
    "having regard to any exceptional circumstances."
    We do not know what circumstances were in the mind of the Exchequer that would in their view be deemed to be exceptional. I have another difficulty, and that is in respect of the phrase:
    "which it is apprehended will shortly become chargeable."
    Does that mean that the Import Duties Advisory Committee might impose the duty of 5 per cent. or whatever it might be simply on the ground that they apprehended that it would shortly become chargeable, and that simply on that belief they could automatically apply 5 per cent. or any other duty, or am I to understand that before anything of that kind could happen there must be a resolution passed by this House?
    Mr. CHAMBERLAIN: It is intended to cover goods which are now on the free list; where it is desired to remove them from that list and apply a duty lower than 10 per cent. The first thing to do is to remove them from the free list, and that is a thing which the Committee have power to do now. It is that to which reference is made when it is said that there may be articles which it is apprehended may shortly be chargeable. That is the first process. After that they make a recommendation for a lower duty than 10 per cent.
    Mr. JONES: I understand now the intention of the paragraph. The Import Duties Advisory Committee has been operating since 1932, and it is rather astonishing that, while we have been in the process of putting on duties of 10 per cent. on this, that and other goods, we have suddenly come up against the realisation that the Committee have no power to reduce a duty. In the last few years we have been so busy adding duties that we have never had to contemplate the possibility of commodities being overtaxed or being over subjected to duty. Therefore, in this sudden realisation, they ask us at this stage to pass this new Clause. As far as I am concerned, I have no objection. The more you reduce the duties, the better it will be for the consumers, and the better it is for the consumers the better I, myself, am pleased. Therefore I have no intention to divide against the Clause.
    4.1 p.m.
    Colonel GRETTON: Those of us who have been anxious that help should be given to industries in this country, and have tried to fight that question for a number of years, are apprehensive of the procedure which the Chancellor of the Exchequer has described. Of course, a duty of 10 per cent., in the majority of cases, would have no protective effect. I am not objecting to the special reasons for this Clause. Because of the difficulties which have arisen in the case of lead and zinc, it is desirable that the duty should be reduced below 10 per cent. in order to facilitate the Ottawa Agreement. I do not suppose anyone in the House will raise any objection to that, but the Chancellor of the Exchequer has gone further in proposing a general power, and it is that which raises some doubt in the minds of some of us. I do not want to be meticulous or over-critical, but my right hon. Friend has not given any example of a revenue duty which is desirable at less than 10 per cent. involving the setting aside of a general enactment. Parliament may not be informed. It is done by bureaucratic action, that is to say, official action which will not come before this House. There, I think, there is a strong objection.
    In so far as the Clause deals with the two commodities, I raise no objection whatever; it is perfectly right. But the general application that in future duties are to be set up by the action of the Treasury, on the recommendation of the Import Duties Advisory Committee, of something less than 10 per cent., and that those duties may be imposed without the knowledge or confirmation of Parliament. It is opening a wide door to set aside the general provision which has been made by this House, and which vast numbers of people in this country value as being a substantial measure of protection to the industries of this country.
    4.4 p.m.
    Sir PERCY HARRIS: So far as I understand it, the procedure in putting commodities on the Free List is not being altered. We have had at times a number of orders, made in the light of experience, when this procedure has been followed. A number of articles have been put on the Free List from time to time, and, needless to say, I have never

    1549
    offered any objection. In fact, a very strong case has to be made out under our present regime for any article to be put on the Free List. I take it that when an article is to be recommended to be taxed at any rate below 10 per cent., the procedure to be followed will be that the order has to be confirmed by this House after the statutory lapse of period; in other words, there is no change in the procedure to be followed. I see no objection to the same procedure being followed in taxing an article less than 10 per cent. as to taxing it at 10 per cent. or over, and, therefore, I see no objection to this proposal.
    4.6 p.m.
    Mr. H. WILLIAMS: The point raised by the hon. Baronet seems of some interest, because the first Sub-section says, "the said duty ought to be reduced." It seems to me that if an article is now on the Free List, and a case is made out for imposing a duty of 5 per cent. An order will be made, and that order will call for an affirmative resolution by this House. When that order has been made, there will be subsequently a further order reducing it from 10 to 5 per cent. That, according to my reading of the new Clause, is how it will work out. While I have a considerable measure of sympathy with the apprehension of my right hon. and gallant Friend the Member for Burton (Colonel Gretton), nevertheless, on the whole, I am glad that the Chancellor is proposing this change. He has given us specific reasons, namely, the difficulties which have arisen with regard to lead and zinc. I remember hearing a good deal about them at the time of the Ottawa Agreements Bill when many people were perturbed about these articles. Up to that time the world prices meant the prices on the London Metal Exchange, but that ceased to have any meaning once that Exchange came inside the tariff wall. In the case of copper, however, the duties on which have never come into operation at all—at least I do not recollect their having done so—I. wonder if the Chancellor will tell us whether it is intended now to give effect to the copper agreement on a reduced basis. When I saw the announcement in the Press of what was proposed at Ottawa with regard to copper, I thought it was an extraordinary proposal, because it then worked out at 40 per cent. ad valorem, which I thought was much too
    1550
    high, and I was not surprised that difficulties arose. It may be that under this Clause it will be possible to give some effect to that arrangement.
    With regard to the point raised by the hon. Member for Caerphilly (Mr. Morgan Jones) as to the meaning of the words "it is apprehended," I imagine that when next year the key industry duties lapse, as they will under the provisions of the Finance Act, 1926, it will then be open for the Import Duties Advisory Committee to make an order—in fact the duties will automatically come under the Import Duties Act. It may be necessary to re-arrange some of those duties, because some were on a specific basis, and that seems to be one of the cases where the Committee may apprehend that something is going to happen, because an existing Statute is lapsing. With regard to "exceptional circumstances," that safeguards the position to which the right hon. and gallant Member for Burton referred, because only in exceptional circumstances can this be done. But the words "exceptional circumstances" are a two-edged weapon, because there may be cases where it is desirable, on general economic grounds, to make this change, but where no ex-ceptional circumstances of the kind are contemplated, because there is an aspect of this Clause which so far has not been discussed. Sub-section (1, b) says that the duty at its reduced rate may be either specific or ad valorem.
    I remember that on both the Committee stage and the Report stage of the Import Duties Bill my right hon. Friend the Member for Sparkbrook (Mr. Amery) and I pleaded, to the best of our ability, that there should be complete freedom to the Import Duties Advisory Committee in respect of the conversion of duties from an ad valorem to a specific basis, but I always thought that the position was unsatisfactory so far as the ad valorem duty was concerned, and I am a little disturbed about the basis on which it is being adopted here, whether if the duty, is only specific in these cases where its incidence would be lower than if ad valorem, it would place a check on what is called dumping. We are not worrying about the precise definition now—many things are sometimes called dumping. The best check is very often a, specific duty, but in this case, where we have a low rate of duty, nevertheless

    1551
    where it is made specific the person who dumps ought not to be able to avoid this specific duty owing to the fact that when he quotes sufficiently low prices he automatically comes under the ad valorem duty. I should have been very glad indeed if Sub-section (1, b) had provided that when a specific duty was fixed it should be generally equivalent to the ad valorem duty, and then, having been fixed, instead of the word "lower" being inserted, we had inserted the word "higher." Until we alter many of our duties from their present ad valorem basis, and put them on a specific or mixed ad valorem and specific basis, we shall not deal with the most undesirable forms of competition which occur from time to time. I hope the Chancellor of the Exchequer will once again consider this problem of giving greater elasticity for the conversion of duties from an ad valorem basis to a specific basis.
    4.13 p.m.
    Sir S. CRIPPS: As a matter of machinery, apart altogether from the merits of the case, is it necessary to make a provision, as I understand Sub-section (1) does, to require two orders in respect of anything removed from the Free List which it is desired to tax at less than 10 per cent.? As I read it, if it is apprehended that you are taking something off the Free List, or it is going auomatically on the ad valorem list, if:
    "it appears to the Import Duties Advisory Committee that, having regard to any exceptional circumstances, the said duty ought to be reduced."
    that can only apply where there is already a 10 per cent. duty. Would it not have been better if it had provided that where it appears to the Committee that a duty lower than 10 per cent. ought to be imposed, or that the ad valorem duty ought to be reduced, then they could go straight to the 5 per cent. or reduce from the 10 per cent. ad valorem? It is essential that these things should, for a certain period of time, be subject to ad valorem duty, or else the question of reduction could not arise. I suggest that where these exceptional circumstances, which have got to be inquired into, arise, you have got to have an ad valorem duty, because the exceptional circumstances have to show that the duty ought to be reduced. Until you have got the 10 per cent. you cannot have the exceptional circumstances.
    1552
    Therefore, it is necessary to have some period during which the goods are subject to an ad valorem duty in order to arrive at the conclusion that it is too high, and ought to be lower. I am not attempting to make any difficulty, but it seems that you have here an unnecessarily complicated machine, and simply by inserting the words "duty lower than 10 per cent." you can have a single order made, and go straight on to the 5 per cent.
    4.14 p.m.
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): The House will have gathered from the explanation which has followed the moving of this new Clause that we find ourselves in this position. The Import Duties Act, 1932, and the Finance Act, 1932, gave the Import Duties Advisory Committee power to make recommendations, a free list power in certain circumstances, power to recommend removal from the free list, a general duty of 10 per cent. and a power to recommend an increase of duty, making 10 per cent. plus. In reply to the point put by the hon. Member for South Croydon (Mr. H. Williams), there have been tremendous fluctuations in prices, and there is a class of case—it is very small—in which the difficulty of arranging something that is satisfactory to producer and importer and also give Empire preference may be overcome, not by dealing with the matter on the Free List or on the 10 per cent. basis, but by finding something between 0 and 10 per cent. The new Clause provides that there shall be power to fix an ad valorem duty of any rate between 0 and 10 per cent. or, as experience has shown, a specific duty, which is often easier to calculate and is preferred by consumers. If it is a specific duty, then that specific duty, in order that the consumer may be protected, must as its upper limit have 10 per cent.; it must not be above that amount. The legislation provides that you may have an ad valorem duty of 10 per cent. or a specific duty, whichever is the lower. That is the object of the new Clause.
    The hon. Member for Caerphilly (Mr. Morgan Jones) asked what are "exceptional circumstances." The intention is that the new Clause shall be used sparingly. The only two instances at the present time in contemplation are lead and zinc, two special raw materials where

    1553
    difficulty has arisen in implementing in practice the Ottawa provisions. These are the only two cases which are at present in contemplation. They are the exceptional circumstances, and I give the House an assurance that the Clause is intended to be used sparingly. In regard to the point made by the right hon. and gallant Member for Burton (Colonel Gretton), that the 10 per cent. is necessarily a revenue duty and that anything coming below that would obviously not be protected, we must remember that in all the operations of the new Clause the Treasury will be guided by the recommendation of the Import Duties Advisory Committee, and that recommendation will only be made after a case has been submitted by the industry. In the particular industry to which the Clause will apply the industry and the consumers will have agreed. I hope that the House now appreciates that this machinery involves the approval of the Import Duties Advisory Committee and that this safeguard gives protection to the industry concerned. As to the point put by the hon. and learned Member for Bristol, East (Sir S. Cripps), I think that under Section 7 of the Finance Act of 1932 it is necessary to go through the procedure of these double orders—
    Sir S. CRIPPS: Yes.
    Dr. BURGIN: Is not that the answer, therefore, to his practical point to there being possibly some interval of time. It is to provide for the administrative task of the Treasury in dealing with a recommendation only when the other arrangements have been safeguarded. That is the answer to his particular point. It is the way in which in practice it can best be done.
    Mr. H. WILLIAMS: What about copper?
    Dr. BURGIN: I do not think that copper arises at the moment.
    Clause added to the Bill.

    NEW CLAUSE.—(Relief from duty on heavy hydrocarbon oils to be extended to vessels on canals and inland waterways.)
    Section seven of the Finance Act, 1933 (which provides relief from duty on heavy hydrocarbon oils used as fuel for vessels in home waters), shall be extended to apply to such oils used as fuel for the machinery of a
    1554
    vessel engaged on a voyage on any canal or inland waterway.—[Mr. T. Smith.]
    Brought up, and read the First time.
    4.22 p.m.
    Mr. T. SMITH: I beg to move, "That the Clause be read a Second time."
    The Finance Act of 1933 excluded from the duty on heavy hydrocarbon oils certain vessels engaged in the coastwise trade and certain vessels travelling through the Manchester ship canal. That concession was given to these vessels, because they are engaged in a trade which is subject to foreign competition, and I think that when it was given it was worth about £100,000 a year to the particular companies concerned. We on this side of the House do not oppose such a concession; we think it is necessary. But when this relief from the duty was given it was made perfectly clear that it did not extend to canals and other forms of inland water transport. Last year we had a discussion on this question. I am pleased that the Chancellor of the Exchequer is present to-day, because when I moved a similar proposal 12 months ago it was supported by hon. Members in all parts of the House. There was evidently a desire to accept the new Clause. The Chancellor of the Exchequer was not present and the then Financial Secretary to the Treasury was in something of a dilemma.
    Canal transport is one of the oldest and cheapest forms of transport in the country and for a long period has been suffering from severe competition, first from the railways and secondly from the development of road transport. That competition has hit many canal carriers, who, however, have been trying to meet it as best they can. They recognise that they must improve the speed of their barges and have taken away from the canal banks the old horse which we used to see and have put in motor power. The motor power which they find best is a type of engine which uses heavy hydrocarbon oil and, therefore, they are a little concerned with regard to the cost and the way in which it is limiting their activities. The new Clause would only cost about £5,000 a year. I am not arguing it, however, merely on the small cost it would entail, but mainly because of the encouragement it would give to canal carriers still further to improve their barges and inland water transport.

    1555
    At the present time there is a tremendous amount of merchandise going by road which used to be carried by canal boats. In my view, there is still scope for stimulating activity in our canal systems.
    The Chancellor of the Exchequer knows as much about inland Water transport as anybody. He was the chairman of the departmental committee which dealt with this kind of transport and made a number of excellent suggestions. He is not ignorant of the difficulties in the way of canal transport, and I hope he will see his way to accept the new Clause. If he cannot, perhaps he will tell us what reply he gave to the letter sent to him by the National Association of Canal Carriers. Last year I quoted a letter sent by them to the right hon. Gentleman, but we failed to elicit from the Financial Secretary what had transpired or the reply that had been made. This year the National Association sent a letter to the Chancellor of the Exchequer on the 25th March in which they made out a most excellent case. They pointed out their difficulties and what they were trying to do; how they were organised and speaking as a national association. They pointed out also that they had an understanding with the railway companies and that they would be able to make still further progress. They asked whether they could submit their views to the Chancellor of the Exchequer for consideration. If the right hon. Gentleman cannot accept the new Clause, I hope he will tell us the objections against it. Last year we were told that those engaged in coastwise traffic were in competition with foreign-owned boats and that canal transport was not in competition with foreign-owned boats, but, in fact, was competing against the other two forms of transport in this country, namely, the roads and the railways. Still, I think some differentiation can be made in the case of the canals; they are in an exceptional position, and if the new Clause were accepted it would encourage them to make still further improvements in their particular form of transport.
    Mr. TINKER: I beg to second the Motion.
    4.27 p.m.
    Mr. HANNON: I cannot allow the new Clause to be dealt with by the Chancellor of the Exchequer without saying
    1556
    a word in its support. I recognise the difficulty of the Treasury in making arrangements for a readjustment of the duty, but nobody knows better than the Chancellor of the Exchequer the difficulties with which canal transport in this country is confronted, and he realises the extent to which the State itself is now interested in canal transport. There is a very great scheme of improvement now in progress on the Grand Union Canal to which the State has given a substantial financial guarantee. I have the privilege of travelling over the canal each year in a tour of inspection of the works which are being carried out, and during the last five or six years there has been a complete transformation in the developments which have taken place. I hope that my right hon. Friend, therefore, in the interests of the State itself and industry generally, will consider whether he cannot do something to promote the improvement of canal transport, perhaps in more generous measure than has been the case up to the present. The carrying capacity of the Grand Union Canal will be increased by more than 50 per cent. in the course of the next year or two, and it is a great pity that such a concession as is contemplated by the new Clause is not available for the benefit of this rapid development. While it is not a matter for the Treasury itself, I think there should be some arrangement to provide for a distribution of the traffic of the country between the three systems which are now in operation. Of course it would help considerably if some concession on this line were accepted by the Chancellor. I know my right hon. Friend's difficulties and his sympathies in this matter, and I feel that the House must leave it to him to take such action as he sees fit.
    4.30 p.m.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): I think the hon. Member who moved the Second Reading of this new Clause stated the position correctly with regard to the reasons why a similar proposal brought forward two years ago was rejected. He said that the reason was that canal carriers were not subject to foreign competition in the same way as coastwise trading vessels were. Upon reflection, I think he will probably agree that, important as was the reason for the refusal then, it is if anything rather stronger

    1557
    now. These vessels make use of heavy oil. As the House is aware, the duty on heavy oil for road transport this year has been increased from a penny to 8d. In so far as road vehicles are the principal competitors with the inland trading vessels, a great advantage has been given to those vessels this year by the additional duty that has been imposed upon one of their principal competitors.
    The hon. Member who seconded the new Clause, seconded an Amendment some days ago on the Estate Duties and then, after hearing my argument said that so far from the duty in question being reduced it ought to be increased in order to teach hon. Members not to introduce Amendments of this character. A similar plea might be put forward here. I am not at all sure that such a fear was entirely absent from the canal interests. When they learned that the duty was being put up on road transport were they not afraid that it might be put up on water transport also? In fact, their fears have not been realised. They are really beneficiaries under this Finance Bill in so far as any duty has been laid upon one of their principal competitors.
    Nor can it be contended that this traffic is under any undue weight of taxation at the present time. The National Association of Canal Carriers a year ago estimated the expense of the heavy Oil Duty on their whole membership at £5,000 a year, and they admitted that it was not a crushing burden. So short a time ago as last March the Chairman of the Grand Union Canal Company stated that the tonnage carried by their canals in 1934 increased by 52,000 tons over 1933, and he added:
    "With regard to the future I cannot feel anything but very optimistic. We have really been deluged with inquiries from all directions, but owing to a shortage of canal boats for long-distance traffic we have had to turn down trade."
    It was stated that the company had placed orders for nearly 100 new boats, and proposed to order immediately another 50. No one can contend that this branch of industry is suffering from high duties. My hon. Friend the Member for Moseley (Mr. Hannon) argued that when industries begin to prosper it is a good time to give them a pat on the back and to help them forward; but if the Treasury are to be asked to support all those industries which are not doing well, and at the same time to support all the other
    1558
    industries that are doing well in order to encourage them to do better, there would be no end to the expenditure that the country would incur.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Import Duties Act, 1932, not to apply to foodstuffs.)
    As from the first day of July, nineteen hundred and thirty-five, the provisions of the Import Duties Act, 1932, shall be deemed not to authorise the imposition of customs duties upon foodstuffs imported for human consumption, and the customs duties chargeable on such articles under that Act shall cease to be chargeable.—[Mr. Gardner.]
    Brought up, and read the First time.
    4.35 p.m.
    Mr. GARDNER: I beg to move, "That the Clause be read a Second time."
    This Clause arises out of the Labour party's dislike of food taxation and what we call yes or no legislation. Recommendations under the Import Duties Act of 1932 are literally showered on us at all times, and in all cases the supporters of the Government become an aggregation of votes equal to one rubber stamp, for there is no discussion. When the taxation of human food is proposed it should be subject to the freest discussion and should not depend only on a recommendation from the Import Duties Advisory Committee. There are many things we can do without, but we cannot do without food. The great objection to food taxation is that the burden falls on and hurts the poorest. Men on unemployment benefit and those who receive public assistance have to pay when food is taxed, and in their cases, unlike the case of Income Tax, there can be no evasion of payment. In every case of food taxation there should be the fullest and freest discussion on the Floor of the House.
    4.37 p.m.
    Mr. TINKER: I beg to second the Motion.
    Though this may appear to be an unimportant Clause and there are not many Members in the House, the underlying principle of the Clause is a very big one. On the Labour benches we are always arguing against the imposition of taxation on food. That is our chief complaint. If taxation has to be imposed according to the view of the Government we want the whole matter to be discussed on the

    1559
    Floor of the House. I trust that the House will give the fullest attention to the new Clause. We do not expect at this stage that the Government will accept it, but for all that we raise the point, and we shall raise it every time that we get an opportunity, in order to show that we do not believe in the imposition of taxes on foodstuffs, and that if taxes are to be put on the fullest inquiry ought to be made by the House before the imposition of the taxes.
    4.39 p.m.
    Mr. COOPER: The hon. Member who moved this new Clause explained that he did so rather as a gesture than with the hope of acceptance of his proposal. He and his friends are opposed on general principle, to all import duties, and particularly to duties on food, and, therefore, they think it right on every occasion to emphasise their opinion in case the House should forget it. I have no objection. I apprehend that they will have no great disappointment if the Clause is not added to the Bill. If it were added, it would not produce exactly the effect that they desire. It would apply only to such duties as are recommended by the Import Duties Advisory Committee. Those duties are never imposed without opportunities being given to the House to discuss them. Full discussion is available on every occasion when new duties are introduced.
    The new Clause would not apply to many articles of food. For instance, tea, sugar, cocoa, coffee and alcoholic beverages are subject to revenue duties and have been subject to those duties as long as most of us can remember. They would not be affected by the change that is suggested. Other foods are dutiable under the Ottawa Agreements, and they equally would not be affected—wheat, butter, cheese, eggs in shell, milk, rice and many other forms of food. If the Clause were carried, the principal classes of food stuffs affected would be merely cereal products, poultry, eggs not in shell, most vegetables and certain fruits. These duties are imposed to protect British producers who are still in real need of that form of protection.
    No one can live without food. Equally man cannot live by food alone, and so far as the standard of living of the poorer classes is concerned food is not one of
    1560
    the items that has increased or that now stands too high. The reverse is the case. At the end of March the Ministry of Labour cost-of-living index showed a rise of 39 per cent. over July, 1914, and in comparison with that 39 per cent. the increase in the price of food was only 19 per cent. Therefore, it cannot be contended that the price of food to-day is too high, from the point of view of the standard of living in general, and I do not think that this new Clause would do anything materially to reduce it.
    4.42 p.m.
    Sir P. HARRIS: If some of us do not keep the House long on this new Clause it must not be thought that there is any weakening in our support of the principle contained in it. On the contrary, most of us are quite unrepentant for in the interest of the State we think it is most inadvisable to tax food. It is the very last thing from which revenue should be sought, and the last thing on which any kind of experiment in protection should be initiated. But we know that the policy of the Government has been fixed and that a decision of the House has been taken, and it is no use going over and over the same ground seeing that we are not likely to affect the policy of the Government. But I am sure that the principle of the new Clause is right and that it expresses the feeling of the nation as a whole. One thing that people are very sensitive about, one thing which they resent, is any attempt either to get revenue or to give protection to essential foodstuffs. For these reasons I support the Clause, and if there are not more speeches on it it is because we feel that the policy has now been fixed, at any rate for this Parliament, though we hope that the new Parliament will change it.
    4.44 p.m.
    Mr. MORGAN JONES: The last speaker has invited the Financial Secretary not to take it that because he is pleased to call my hon. Friend's speech a sort of gesture, therefore it is not an important gesture on our part. In fact it expresses the great resentment which is felt all over the country, not perhaps against the increase of the price of any particular item of food, but that the area of taxable commodities is extending under these Import Duties. While it is possible for the hon. Gentleman to argue that the percentage increase in the cost

    1561
    of food, compared with pre-War, is only 19 per cent., it is also true that were it not for the Import Duties food would be cheaper than it is now. That proposition is not arguable. It is in the interest of the nation at large that food should be as cheap as possible. The hon. Gentleman said, quite rightly, that this Clause would not cover the whole area of food taxation and that a large number of commodities are covered by the Ottawa Agreement. But even taking those which, he says, are covered by this Clause we find that he has cited such articles as cereal products, vegetables and fruit. If we examine his list of commodities we notice that it covers an increasingly important element in the diet of the people of this country. In recent years fruit has become an increasingly substantial item in the dietary of the average working-class family. That is all to the good. Medical men tell us that there are vitamins in fruit which are not present to the same extent in other articles of diet.
    Plainly, we ought not to continue to acquiesce in the imposition of duties on articles of diet which are becoming increasingly important in the working-class home. In regard to vegetables alone, there are, as we know, in this country people who regard with disfavour the consumption of meat, and who are vegetarians in their diet. They have as good a claim to be considered in connection with these matters as any other subjects of the King. The list of commodities which the hon. Gentleman has given to us, indicates by its very nature that vegetarians have to bear a proportionately heavier burden of taxation than other people who follow other courses of diet. I have tried in previous discussions on the Finance Bill to express the objection which we entertain to the increasing amount of indirect as compared with direct taxation. That objection we feel more strongly than ever. We feel that indirect taxation has become a favourite method of putting taxation burdens on people which they do not perhaps notice or which they do not regard as taxation in that sense. We consider that it is a method of securing a maladjustment of taxation as between one class of the community and another, and in order to emphasise our views on the subject we
    1562
    propose to carry the Motion to a Division.
    4.47 p.m.
    Mr. T. SMITH: We make no apology for submitting a Clause of this kind, and I think the Financial Secretary expressed our views aright when he said that we intended to take every opportunity of protesting against the taxation of certain essential foodstuffs. I was interested to hear him say that these Import Duties Orders or recommendations were fully discussed before they became operative. Surely he does not expect us to agree that the present method of doing that kind of business is satisfactory. These Orders are usually taken after eleven o'clock at night. We are not allowed to amend the terms of an Order; we have to take it or leave it, and in a House composed as this House is, there is no earthly chance of a recommendation by the Committee being defeated.
    With regard to the figures quoted by the hon. Gentleman showing that, as far as food is concerned, the cost of living is only 19 per cent. above the 1914 level, I agree with him, to this extent, that those are the official figures. But for the life of me I have never been able to understand how the responsible Department arrives at those figures. I have examined the White Paper issued by the Ministry of Labour showing how the index figure is compiled, but I challenge the hon. Gentleman to convince the ordinary housewife in this country that food alone is at present only 19 per cent. above the pre-War figure. As to the cost of living in other respects, I would only mention the case of clothing. Will anybody tell me that the cost of a suit of clothes to-day is only 42 per cent. or 43 per cent. higher than the pre-War price? Perhaps the hon. Gentleman never had to buy the quality of clothing that we had to buy in pre-War days when we were earning, on the average, about £2 a week. Then, it was possible to get a decent suit for 37s. 6d. but it is impossible to get a suit of the same quality to-day for less than four guineas. In reference to what the hon. Gentleman said about food taxation, I would remind him that in 1931 certain candidates pleaded for votes for the National Government and said quite definitely—some of them in their election addresses—that under no consideration would they agree to taxation upon

    1563
    essential foodstuffs. They will probably hear about it later, when another Election occurs.
    Apparently the Conservative party are interested in the political education of the people. If they want to educate the ordinary electors, let them issue posters showing exactly how each household commodity is taxed to-day. I have heard hon. Members opposite argue in favour of all kinds of devices to distinguish foreign from home-grown produce. I have heard them even suggest that the legs of foreign turkeys should be chopped off so that the purchaser should be able readily to distinguish the foreign turkey from the British turkey. We have also heard a great deal about the application of the Merchandise Marks Act. But would it not be good propaganda also to make it illegal to expose commodities for sale without cards or tabs showing what is being paid in taxation on each article? The brewers did that when they wanted a penny or 2d. taken off the pint of beer. They displayed cards in clubs and public-houses showing the amount of taxation on beer and whisky. Why should not the ordinary housewife be told, for instance, what she is paying in taxation on each pound of tea or on each packet of rice? What an outcry there would be? There would be disturbance, even at some of the garden parties which right hon. Gentlemen opposite attend at week-ends, but they would be doing something practical towards the political education of the people. We do not apologise for submitting this new Clause, and I sincerely hope that it will be pressed to a Division.
    4.55 p.m.
    Mr. T. WILLIAMS: Perhaps the Chancellor of the Exchequer will offer some observations in reply to the arguments which have been advanced by my hon. Friends. I know that the Financial Secretary has already made a reply, but I am informed that his reply was based on excuses and not upon reasons, though I cannot either justify or deny that statement. I am told that he informed the House that the Import Duties Advisory Committee had only power to deal with certain foodstuffs, including vegetables, fruit, and things of that kind. He may, possibly, remember that certain questions were put to the Minister of Agriculture to-day in regard to potatoes. Potatoes have been dealt with by the Advisory
    1564
    Committee on more than one occasion, and we were informed to-day that whereas Jersey potatoes were being sold in June, 1933, for about £13 a ton and in June, 1934, for slightly over £14 a ton, in June, 1935, they were being sold for £25 per ton. The right hon. Gentleman, if he replies, may tell us that the Advisory Committee are not responsible for such precipitate increases or decreases in commodity prices, but that committee has determined in the past the rate of duty to be imposed on potatoes for certain period of the year. The actual sum varies month by month, according to the date of imports and that sort of thing. I agree with my hon. Friend the Member for Normanton (Mr. T. Smith) as to the manner in which these Orders are brought before the House. They usually come on after 11 o'clock, when no Member has much desire to debate a question of this kind, particularly when he knows that 550 Members out of 615 are willing to support duties upon anything.
    As regards other articles which have been mentioned it may be argued that oats do not constitute a human foodstuff but oats are, I understand, very important in Scotland, and are regarded as important also in certain parts of England at certain periods of the year. The Import Duties Advisory Committee have dealt with oats, and whether we take potatoes or oats or vegetables we find that, leaving out of consideration for the moment luxury articles about which we are not greatly concerned, this Committee have power to deal with articles of every day household consumption. In such cases, it is the plain duty of the Government to come to the House of Commons in the ordinary Parliamentary fashion and ask that duties shall be placed on those commodities, if they can show that the facts justify such a demand.
    During the past few years the Minister of Agriculture has from time to time appealed for subsidies for this commodity and that, in order to support agriculture. These subsidies now amount to a considerable sum. If any Socialist Government had dared to concede to one industry what has been conceded to agriculture, I wonder what support it would have received when it went to the electors to ask for a renewal of their confidence. It is bad enough that these constant

    1565
    appeals should be made to us for subsidies without any accompanying information as to the efficiency of the particular branches of the industry concerned, but it is infinitely worse and it is bad Parliamentary practice, that an Advisory Committee with no responsibility to this House, should be permitted to deal with foodstuffs for human consumption in this way without adequate discussion in the House. When these Orders are submitted we know in advance that the discussion must necessarily be inadequate. If they were submitted to the House at 3.45 instead of 11 o'clock; if the Government gave ample time for discussion, then, although in this Parliament the result would be a foregone conclusion there would be an opportunity of discussion. As it is the country and the housewife have no knowledge of what they are actually paying—
    Mr. HOWARD: There has been no increase in prices.
    Mr. WILLIAMS: If there has been no increase in price, it only goes to prove that the Government have failed in their efforts for the past four years. In 1932 when they returned from Ottawa I remember the Chancellor oo the Exchequer quoting the figures of the imports of meat and other commodities and the prices for different periods, and arguing, quite logically from his point of view, that it was the duty of the Government so to direct their measures that there would be an upward tendency in the prices of agricultural commodities.
    Mr. HOWARD: Not to the housewife.
    Mr. WILLIAMS: The hon. Gentleman must not behave like that. This is the House of Commons, not Hyde Park. The Chancellor of the Exchequer and the Government set out, probably because they felt that that was the only way to restore industrial prosperity, not only in this country, but in the Dominions and in foreign countries as well, to increase the price of food and other commodities. How can the hon. Gentleman say there has not been any increase—I do not deny the statement—and that they have not failed in their policy? If the cost of living as expressed in terms of food prices is lower to-day than it was in 1932, it only goes to prove that it is not because of any virtue on the part of the Government or the hon. Member; it merely
    1566
    indicates that all their policies have failed. If prices have not increased, it is not because the Government have not tried to increase them.
    Mr. HOWARD: I think the hon. Gentleman will find that it was the declared intention of the Government to try to increase the wholesale prices of commodities and to make up some of the gap between wholesale and retail prices thereby, and to-day he will find that wholesale prices have been raised but that retail prices remain the same. Therefore, the Government have succeeded in the very object with which they started out.
    Mr. WILLIAMS: If the hon. Gentleman could explain to us what machinery they set up to see that the retailer never took advantage of any action on the part of the Government, and that the Government followed the price fixing from the producer, through the wholesaler, down to the retailer, and ultimately to the consumer, there would be something to be said for the hon. Gentleman's argument, but can be point to any machinery that was established to control retail prices?
    Mr. HOWARD: Yes, I can, and—
    Mr. WILLIAMS: If the hon. Gentleman will be good enough to make his own speech, we shall gladly listen to him, just as the House is courteous enough from time to time to listen to those of us who venture to speak from this side of the House. If the hon. Gentleman has a really good point, I hope he will give the House the benefit of it, and I am sure the Chancellor and the Financial Secretary will welcome pearls of wisdom even from their own back benches. It is so rare that they have them, that one here or there may help them. Our point is a very substantial one. If the Government can make out a case for imposing a duty upon any article of daily consumption in ordinary homes, particularly food-stuffs, then they ought to come to this House in the ordinary way and ask for power to impose a duty, not to leave the Import Duties Advisory Committee to recommend orders, which are always brought on in the most inconvenient part of the day, when they rarely get that consideration to which they are entitled.
    It is not a question of arguing that either this commodity or that commodity

    1567
    has been abused in price or that duties have been wholly excessive. It may happen that as a result of the imposition of some of the duties recommended by the Advisory Committee, the producer will get 100 per cent. advantage of the efforts of the Government, but as is the case at this moment with potatoes, wholesalers or merchants exact the last farthing from the producer and concede nothing to the consumer. It is not so much a question of singling out a single commodity as it is a question of the principle of the thing. Food duties are peculiar. They ought to be regarded as such, and when the Government feel that they are entitled to ask, for power to impose a duty, either upon potatoes or upon other foodstuffs, I think it is their duty to come and seek that power in the ordinary way. They have the numbers, and they know they can always succeed. The Chancellor of the Exchequer ought to justify his opposition to this very reasonable Clause, which we think ought to form part of the Bill.
    5.6 p.m.
    Mr. CHARLES WILLIAMS: I do not wish to be controversial, but I think I might be allowed to remove one or two misconceptions which have arisen. The hon. Member for the Don Valley (Mr. T. Williams) is always complaining that these import duty orders come on at an inconvenient time. I have never found any time inconvenient. It is only inconvenient
    to those who do not really believe a duty to be bad. If you believed it was bad you would fight it out sooner or later. That is the only point in the hon. Gentleman's speech I really wished to take up, except some side issues about prices and whether someone wanted them to rise or not. I would recommend him to read more thoroughly some of the bygone speeches of his hon. and learned Friend the Member for East Bristol (Sir S. Cripps), particularly those in connection with the crisis of 1929. With regard to the high price of a particular kind of potatoes, that is not a fair illustration of the effects of a duty. It is an accidental price, because of an entirely artificial season, due to the frost, for a very short time, a matter rather of days than of weeks, and to try to base a case on this one particular accident of the season is no argument against the position in which we find ourselves. I think the public as a whole should realise that the prices of Jersey potatoes for a certain time were entirely due to the accident of the season and had nothing whatever to do with the general basis of the tariff. It did not matter what the commodity was at that time; the price would have been up. It is only fair to the growers that that should be known, that they have not prospered by a high artificial tariff.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 36; Noes, 192.

    Division No. 253.]

    AYES.

    [5.8 p.m.

    Adams, D. M. (Poplar, South)

    Grenfell, David Rees (Glamorgan)

    Mason, David M. (Edinburgh, E.)

    Banfield, John William

    Griffiths, George A. (Yorks, W. Riding)

    Parkinson, John Allen

    Bevan, Aneurin (Ebbw Vale)

    Grundy, Thomas W.

    Rea, Sir Walter

    Cleary, J. J.

    Hall, George H. (Merthyr Tydvll)

    Roberts, Aled (Wrexham)

    Cocks, Frederick Seymour

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

    Thorne, William James

    Cove, William G.

    Harris, Sir Percy

    Tinker, John Joseph

    Daggar, George

    Holdsworth, Herbert

    West, F. R.

    Davies, David L. (Pontypridd)

    Jones, Morgan (Caerphilly)

    Williams, Edward John (Ogmore)

    Davies, Rhys John (Westhoughton)

    Lawson, John James

    Williams, Dr. John H. (Llanelly)

    Dobbie, William

    Logan, David Gilbert

    Williams, Thomas (York, Don Valley)

    Edwards, Sir Charles

    Lunn, William

    Evans, Capt. Ernest (Welsh Univ.)

    Macdonald, Gordon (Ince)

    TELLERS FOR THE AYES.—

    Gardner, Benjamin Walter

    McEntee, Valentine L.

    Mr. T. Smith and Mr. Groves.

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Benn, Sir Arthur Shirley

    Brocklebank, C. E. R.

    Agnew, Lieut.-Com. P. G.

    Bernays, Robert

    Brown, Rt. Hon. Ernest (Leith)

    Albery, Irving James

    Blindell, James

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

    Allen, William (Stoke-on-Trent)

    Bossom, A. C.

    Burgin, Dr. Edward Leslie

    Aske, Sir Robert William

    Boulton, W. W.

    Burnett, John George

    Assheton, Ralph

    Bowater, Col. Sir T. Vanslttart

    Butler, Richard Austen

    Bailey, Eric Alfred George

    Bowyer, Capt. Sir George E. W.

    Campbell, Sir Edward Taswell (Brmly)

    Baldwin, Rt. Hon. Stanley

    Bracken, Brendan

    Campbell, Vice-Admiral G. (Burnley)

    Balfour, Capt. Harold (I. of Thanet)

    Brass, Captain Sir William

    Campbell-Johnston, Malcolm

    Barclay-Harvey, C. M.

    Briscoe, Capt. Richard George

    Caporn, Arthur Cecil

    Barrie, Sir Charles Coupar

    Broadbent, Colonel John

    Castlereagh, Viscount

    Cazalet, Thelma (Islington, E.)

    Jackson, J. C. (Heywood & Radcliffe)

    Reid, William Allan (Derby)

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Jones, Lewis (Swansea, West)

    Remer, John R.

    Chapman, Sir Samuel (Edinburgh, S.)

    Ker, J. Campbell

    Rhys, Hon. Charles Arthur U.

    Chorlton, Alan Ernest Leofric

    Kerr, Hamilton W.

    Rickards, George William

    Clayton, Sir Christopher

    Kirkpatrick, William M.

    Ropner, Colonel L.

    Cochrane, Commander Hon. A. D.

    Lamb, Sir Joseph Quinton

    Ross, Ronald D.

    Conant, R. J. E.

    Leech, Dr. J. W.

    Ross Taylor, Walter (Woodbridge)

    Cook, Thomas A.

    Lees-Jones, John

    Runciman, Rt. Hon. Walter

    Cooke, Douglas

    Leighton, Major B. E. P.

    Russell, R. J. (Eddisbury)

    Cooper, A. Duff

    Lennox-Boyd, A. T.

    Rutherford, Sir John Hugo (Liverp'l)

    Courthope, Colonel Sir George L.

    Lewis, Oswald

    Salmon, Sir Isidore

    Cranborne, Viscount

    Liddall, Walter S.

    Salt, Edward W.

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

    Lindsay, Kenneth (Kilmarnock)

    Samuel, M. R. A. (W'ds'wth, Putney).

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

    Lloyd, Geoffrey

    Savery, Servington

    Davison, Sir William Henry

    Locker, Lampson, Com. O. (H'ndsw'th)

    Selley, Harry R.

    Dawson, Sir Philip

    Lockwood, John C. (Hackney, C.)

    Shakespeare, Geoffrey H.

    Denman, Hon. R. D.

    MacAndrew, Major J. O. (Ayr)

    Simon, Rt. Hon. Sir John

    Dickie, John P.

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

    Smiles, Lieut.-Col. Sir Walter D.

    Dixon, Captain Rt. Hon. Herbert

    McLean, Major Sir Alan

    Smith, Sir Robert (Ab'd'n & K'dlne, C.)

    Donner, P. W.

    McLean, Dr. W. H. (Tradeston)

    Smithers, Sir Waldron

    Drewe, Cedric

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

    Somervell, Sir Donald

    Duckworth, George A. V.

    Marsden, Commander Arthur

    Somerville, Annesley A. (Windsor)

    Dugdale, Captain Thomas Lionel

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

    Sotheron-Estcourt, Captain T. E.

    Duggan, Hubert John

    Mayhew, Lieut.-Colonel John

    Spencer, Captain Richard A.

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

    Mellor, Sir Richard James (Mitcham)

    Storey, Samuel

    Ellis, Sir R. Geoffrey

    Mellor, Sir J. S. P.

    Stourton, Hon. John J.

    Elliston, Captain George Sampson

    Mills, Major J. D. (New Forest)

    Strauss, Edward A.

    Elmley, Viscount

    Mitchell, Sir W. Lane (Streatham)

    Stuart, Hon. J. (Moray and Nairn)

    Emrys-Evans, P. V.

    Mitcheson, G. G.

    Sueter, Rear-Admiral Sir Murray F.

    Evans, Capt. Arthur (Cardiff, S.)

    Molson, A. Hugh Elsdale

    Sugden, Sir Wilfrid Hart

    Fleldon, Edward Brocklehurst

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

    Sutcliffe, Harold

    Fox, Sir Gilford

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

    Taylor, C. S. (Eastbourne)

    Galbraith, James Francis Wallace

    Moreing, Adrian C.

    Thomas, James P. L. (Hereford)

    Goff, Sir Park

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

    Thorp, Linton Theodore

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

    Morrison, G. A. (Scottish Univer'ties)

    Touche, Gordon Cosmo

    Grattan-Doyle, Sir Nicholas

    Nation, Brigadier-General J. J. H.

    Tree, Ronald

    Gretton, Colonel Rt. Hon. John

    Nicholson, Godfrey (Morpeth)

    Tufnell, Lieut.-Commander R. L.

    Grimston, R. V.

    Nicholson, Rt. Hn. W. G. (Petersf'ld)

    Wallace, Sir John (Dunfermilne)

    Gunston, Captain D. W.

    O'Neill, Rt. Hon. Sir Hugh

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

    Hacking, Rt. Hon. Douglas H.

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

    Ward, Irene Mary Bewick (Wallsend)

    Hales, Harold K.

    Penny, Sir George

    Wardlaw-Milne, Sir John S.

    Hamilton, Sir George (Ilford)

    Percy, Lord Eustace

    Warrender, Sir Victor A. G.

    Hammersley, Samuel S.

    Perkins, Walter R. D.

    Waterhouse, Captain Charles

    Hanbury, Sir Cecil

    Petherick, M.

    Wayland, Sir William A.

    Hannon, Patrick Joseph Henry

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

    Wedderburn, Henry James Scrymgeour-

    Harvey, George (Lambeth, Kenningt'n)

    Pickthorn, K. W. M.

    Williams, Charles (Devon, Torquay)

    Harvey, Major Sir Samuel (Totnes)

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

    Williams, Herbert G. (Croydon, S.)

    Haslam, Sir John (Bolton)

    Power, Sir John Cecil

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

    Herbert, Major J. A. (Monmouth)

    Pownall, Sir Assheton

    Wise, Alfred R.

    Hills, Major Rt. Hon. John Waller

    Radford, E. A.

    Withers, Sir John James

    Horobin, Ian M.

    Raikes, Henry V. A. M.

    Womersley, Sir Walter

    Howard, Tom Forrest

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

    Howitt, Dr. Alfred B.

    Ramsay T. B. W. (Western Isles)

    TELLERS FOR THE NOES.—

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

    Reed, Arthur C. (Exeter)

    Captain Hope and Lieut.-Colonel

    Llewellin.

    NEW CLAUSE.—(As to Treasury approval of grants from the Road Fund.)
    From the date of the transfer by this Act authorised to the Exchequer from the Road Fund of the sum of four million four hundred and seventy thousand pounds or any part of that sum section eight of the Development and Road Improvement Funds Act, 1909, which, as amended by the Roads Act, 1920, authorises the Minister of Transport to make advances to highway authorities shall have effect as if the words "with the approval of the Treasury" were omitted from the said section eight and section three of the Roads Act, 1920, which authorises the Minister of Transport to apply the moneys standing to the credit of the Road Fund for the purposes of Part II of the Development and Road Improvement Funds Act, 1909, shall be read and have effect accordingly.—[Lieut.-Colonel Moore-Brabazon.]
    Brought up, and read the First time.
    5.17 p.m.
    Lieut.-Colonel MOORE-BRABAZON: I beg to move, "That the Clause be read a Second time."
    I do not ask hon. Members to read this proposed new Clause, because it is entirely unintelligible. That is no reason why the Treasury should not accept it, for it is in the best traditions of Treasury Clauses. I think, however, that a word of explanation is required. I am not asking the Treasury to impose a new charge, for that obviously would be out of order. I am not proposing a diminution in revenue. I am asking in this new Clause that there shall be a re-organisation of departmental procedure. The question involved is the administration of the Road Fund, and I think that it is as well to point out to the House how the

    1571
    new Clause affects past legislation, which is extremely complicated because one Bill harks back to and amends another, and it is difficult to follow them. The Road Fund was set up under the 1909 Act, and there was created a certain Road Board which was controlled by commissioners. It was obvious then that the commissioners of the Road Board, not being Ministers, could not spend any of this money without Treasury consent. Section 8 of the Development and Road Improvement Funds Act says that
    "the Road Board shall have power with the approval of the Treasury"
    to do this and to do that. Later on came the Roads Act of 1920, which set up a new Ministry with a Minister of Transport in charge. Section 3 of that Act starts:
    "There shall be established for the purposes of the Act, in accordance with regulations to be made by the Treasury for the purposes, a fund to be called the Road Fund, and, subject to such regulations as may be made by the Treasury with respect to accounts and investments, the Road Fund shall be subject to the control and management of the Minister."
    It is my contention that what was passed by Parliament in the Roads Act of 1920, in which the actual administration of the Road Fund was vested in the Minister, over-rides the original Development and Road Improvement Funds Act, 1909, which says that the board shall have power only with the approval of the Treasury. I am not one of those who would be so revolutionary as to take away for a moment from the Treasury the broad control of finance in every Department, including that of the Road Fund. What I am pleading for now is that when the Government have decided, on looking at a particular question, what money shall be administered by the Minister of Transport, the Minister shall have full power to administer it, instead of having to go to the Treasury every time he wants, for instance to cut down a hedge and to spend £5. That is what is happening now by virtue of those two Acts overlapping each other. It is a small point, but it would be of convenience in the administration of the Road Fund that this new Clause should be accepted. It is not, of course, for me to ask what Minister should reply, but I see the Parliamentary Secretary to the Ministry of Transport here, and, rather than have a
    1572
    reply from the Treasury, I would very much like to hear what he has to say.
    5.23 p.m.
    Mr. H. WILLIAMS: I beg to second the Motion.
    I am not one of those who criticised the right hon. Gentleman the Member for Epping (Mr. Churchill) when he conducted the first raid on the Road Fund, because I have never thought that the amount to be spent on the roads should necessarily be associated with the produce of a particular tax. I consider that each year we ought to allot to the roads such sums as we can afford. It is obvious that there is ahead of us a great continuing expenditure for many years, and when money from the fund has been handed over to the Ministry they ought to be free to allocate it in the way that they think best from the point of view of the purposes for which it is allotted. It is absurd that the Ministry's actions should be checked, possibly by an official of the Treasury, who, however competent he may be, cannot be engaged continually in thinking out the problem of making our roads adequate and safe for the traffic. The Treasury may also check the amount to be spent on the roads because they may desire that such expenditure should not be carried out primarily with the view to improving the roads, but primarily with a view to dealing with the unemployment situation. Such sums, however, as Parliament, on the advice of the Treasury, may place at the disposal of the Ministry of Transport, should be dealt with by the Ministry in the way which seems to them to be best.
    5.25 p.m.
    Mr. PARKINSON: I have very much sympathy with the new Clause, and I agree that we do not want to take away entirely the authority of the Treasury. That authority ought to be maintained where large sums are concerned, but in the smaller items which are immediately necessary greater power and latitude ought to be given to the Minister of Transport. We must not forget that a large portion of the money paid into the Road Fund is taken over by the Treasury for general revenue purposes, and we are going too far in that direction. Money put into the Road Fund ought to be handed over quickly when it is required. If the expenditure has to be subject to the closest scrutiny of the Treasury, it is

    1573
    generally a rather prolonged investigation. There are many parts of the country where a quick alteration of a road is required owing to its danger, and the Minister ought to have power in such cases to get a grant and get the work done immediately instead of it being held up by the Treasury. The powers of the Ministry of Transport are rather too circumscribed. They ought to be widened, and the Minister ought to have greater power to carry out without delay any work that requires to be done. The approval of the Treasury ought to apply to the expenditure of all departments, but I would not have much objection if that approval applied only to large sums. The power to spend smaller amounts, however, ought to be given to the Minister of Transport so that he can get on with any work that is immediately necessary.
    5.27 p.m.
    Mr. CHAMBERLAIN: My hon. and gallant Friend, in moving his new Clause, made no attempt whatever to justify the Clause itself. In fact, he rather deprecated any attempt on the part of hon. Members to read it on the ground that it was unintelligible. I cannot help thinking that he was rather under-estimating the intelligence of hon. Members, because his new Clause is quite intelligible, and it does not mean what he said was his object in putting it on the Paper. My hon. and gallant Friend went a little further than that. He said that he did not desire to do what the Clause said. He did not desire that the necessity for Treasury approval of the expenditure of the Ministry of Transport should be abolished. He said that all Departments which spent money should submit to the examination of the Treasury. But he then went on to say that what he really objected to was the meticulous control by the Treasury of every act and deed of the Minister of Transport, so that when, for the sake of the safety of the people who use the roads, he wanted to make a slight alteration, cut down a hedge, or make a widening here or there, he was liable to be held up by some official at the Treasury. That vivid picture so much impressed my hon. Friend the Member for South Croydon (Mr. H. Williams) that he was induced to support the proposed Clause, and the hon. Member for Wigan
    1574
    (Mr. Parkinson) also thought that the proposed method would lead to swiftness and even efficiency. I am inclined to agree with them, for this is not what happens at all. My hon. and gallant Friend is entirely mistaken there, and, as I know he has some personal experience of the Ministry of Transport, I am not going to contradict him by saying that that did not happen when he was there, but now he is not there we do not find it necessary.
    We confine ourselves to those larger questions of policy which he recognises as proper for the exercise of Treasury advice, examination and control. My hon. Friend the Member for South Croydon thinks all we ought to do is to decide upon the amount of money to be spent by the Minister of Transport, hand it over to him and have no further say in the matter. That is going a good deal further, as I am sure he will agree if he considers the position. Really big schemes, I think he will agree, ought to be submitted to the Treasury for their approval. Again, rates of grant on the different classes of roads must surely come under the purview of the Treasury, because, if the Minister of Transport were to depart from the general rule and give a larger grant than had been the custom in respect of any particular road, every other local authority which was making a similar road would, of course, ask for a similar increase in the rate of grant, and we might very soon get a very considerable increase in the responsibilities of the Exchequer in relieving local authorities, if the Treasury were not there to call attention at least to any implications that might be expected to follow from a decision in a particular case. But I would assure the House that, whatever may have been the case when my hon. and gallant Friend was at the Ministry of Transport, it is not the case now that every little detail of road expenditure comes before the Treasury officials. We direct our attention to the broader questions, the big questions of policy, the question of the classification of road grants, and larger schemes; and as my hon. and gallant Friend does not really wish to take away our responsibilities in that respect, I submit that there is no case for his Clause.
    5.33 p.m.
    Mr. MORGAN JONES: Like the hon. Members who have already spoken, I

    1575
    desire to make it clear that we on this side do not argue that the Road Fund should necessarily be mortgaged solely for roads. At the same time I think we ought to take the view that so long as there is a case for extension of roads in the country there remains a claim upon the Road Fund—that they have a claim upon the Road Fund which comes before any claim of the Chancellor. But as to the merits of this Clause I cannot quite agree with the Chancellor of the Exchequer. I should regard it as a sound general proposition that it is the business of a Ministry to determine its plan of work for the year ahead. I think he will agree that we should derive considerable advantage from a much greater application of the principle of planning in Government Departments than is even now the case. The Chancellor of the Exchequer, as I understood him, seemed to go further than I gather is implied by the Clause of the hon. and gallant Gentleman. The right hon. Gentleman not only says that, broadly, it is the business of the Treasury to grant x sum of money for a purpose of the Ministry of Transport but seems to suggest that the Treasury ought to keep an eye, and a very watchful eye, upon the commitments of the Ministry of Transport in respect of various schemes. He says, for example, there is the question of the rates of grant. Of course, if the rates of grant to various schemes vary substantially it would naturally follow that Treasury interests would be involved, by reason of the consequent problem of the degree of relief the Treasury must make in respect of local authorities.
    I venture to put the opposing proposition. I should say that it is the prime duty of the Minister of Transport, or any other Minister, for that matter, to be answerable to this House for his work and his activities. Before the Ministry of Transport embarks upon work it presents to this House its Estimates and it seems to me that, within the limit of those Estimates, the Ministry ought to have very general freedom of action. I am sure that if there were a rather greater measure of freedom of action allowed to a Minister we should get benefit rather than otherwise from that procedure. Surely the respective claims of Grade A and Grade B roads are not
    1576
    a Treasury problem but a Ministry of Transport problem. I cannot conceive that it is primarily, or even finally, a Treasury problem. It is the business of the Minister of Transport to determine what are the claims of an area in relation to Grade A or Grade B or Grade C type of roads, and so long as the Minister operates within the ambit of the amount of money which he has succeeded in getting Parliament to agree to I do not see why there should be this constant—to use the phrase of the hon. and gallant Member opposite—this meticulous inspection by the Treasury. Of course, within the limits of that general proposition it is right that the Treasury should see that each Department is properly, but not unduly, fed financially. My hon. Friends and I on this side of the House have rejoiced in the indications of some measure of relaxation by the Treasury in relation to Post Office development. I think experience has shown that the scheme evolved by the Chancellor of the Exchequer and the then Postmaster-General was a good scheme. It has enabled the Post Office to go ahead with its developments in the knowledge that it had a certain amount of money, and that within the ambit of that sum it was free to take action.
    Mr. CHAMBERLAIN: The Postmaster-General is not free to spend even his own surplus without the approval of the Treasury.
    Mr. JONES: I speak subject to correction, but I am under the impression that the Postmaster-General is much freer than before the new scheme came into operation, by reason of a certain surplus being more available to him than was previously the case. That is the desirable line of development in relation to the Ministry of Transport, and all these developmental, if I may use that word, services of the State. Therefore, we tend to be in accord with the principle embodied in the Clause of the hon. and gallant Member opposite, and if he proposes to take it to a Division we shall support him, in order to assert our recognition of the principle.
    Lieut.-Colonel MOORE-BRABAZON: In view of the amelioration in personnel at the Treasury, if not at the Ministry of Transport, since my day, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Amendment as to residuary legacies to charitable institutions.)
    Sub-section (1) of section thirty of the Finance Act, 1922, shall have effect as if for the words after the word "testator" where it first occurs to the end of the sub-section there were substituted the words "there shall be treated as being the income of the charity for the purpose of the Income Tax Acts such portion of the income, if any, which accrued to the estate in respect of the period between the death of the testator and the date or dates on which the residue or part of the residue was paid to the charity as would have accrued to the charity if the residue or the said part of the residue had been paid to the charity on the day of the death of the testator."—[Mr. H. Williams.]
    Brought up, and read the First time.
    5.40 p.m.
    Mr. H. WILLIAMS: I beg to move, "That the Clause be read a Second time."
    This matter was first raised two years ago by my hon. Friend the Member for West Nottingham (Mr. Caporn) and again last week on the Committee stage. Our Amendment on that occasion was not as well drafted as it might have been, because we overlooked certain governing words at the beginning of Section 30 of the Finance Act, 1922. When it was reached in Committee, at, I think, half-an-hour after midnight the Financial Secretary used certain words which were interpreted by the Deputy-Chairman as carrying the meaning of the Amendment to a point where it imposed a charge on the revenue. I do not think that was the intention of my hon. Friend the Financial Secretary, but the words happened to be ambiguous. However, as a result the debate came to a premature end, from my point of view, although probably the rest of the Committee were glad, in view of the late hour. I have retabled that Amendment in its present form, which will carry out the purpose I had in mind, and I am grateful to you, Mr. Deputy-Speaker, for giving me the opportunity of raising the matter again. In the Act of 1922 a provision was made that where the residue of an estate went to a charity and where the estate was not wound up for more than a year after the death of the testator, Income Tax should not be payable on any income accruing in respect of the part of the estate that was ultimately to go to the charity from one year after the death until the money was handed over. That was an advance.
    1578
    I am raising this matter at the request of an accountant in my constituency who saw a charity defrauded, as he regarded it, of a substantial sum owing to the fact that for the 12 months this money, which ultimately was going to the charity, was subject to pay Income Tax on the ground that it was still lying in the estate. I think that if someone dies and leaves money to a charity—I am dealing only with cases where it is the residue that goes to the charity—the money ought to be deemed to belong to the charity from the very day on which the person dies, and the Treasury should not collect Income Tax from what is, in effect, the income of a charity. I think this new Clause would give effect to that view. I have not been able to work out an estimate of what this new Clause would cost. Obviously it would be a fluctuating amount, because in some years the sums left to charity which would come under the terms of this Clause would be larger than in other years, and I do not think there are any published statistics which would enable an outsider to formulate a precise estimate.
    I shall not be very much surprised if the Financial Secretary says that he cannot accept the Clause, because on the Report stage of a Finance Bill a new Clause which would cost a substantial amount is generally resisted. But there is still sitting a Departmental Committee, I think, on the Income Tax law, and some day or another they will report. They have had seven years to consider their problems, and it is said that the first seven years are always the worst in the life of a Departmental Committee. I have no doubt they are approaching the end of their task, and when they have done so I hope that the Treasury, in formulating any legislation on their report, will give consideration to the point which I have put forward. It may be that when the time for consideration comes things will be more prosperous, and it may then be easier for the Treasury to make this concession, but on broad general grounds I see no reason why a charity should pay Income Tax on any part of what is, in fact, its income.
    5.44 p.m.
    Mr. CAPORN: I beg to second the Motion.
    If this Clause were accepted, I understand that it would bring us back, as far

    1579
    as the law is concerned, to the position in which charities were prior to the decision given in connection with Dr. Barnardo's Homes. As the result of that decision, it was pointed out that technically the residue of an estate, until it is actually handed over, belongs to the executors and not to the charity. Belonging technically to the executors, it did not come within the exemption from Income Tax that had been granted to charity.
    Following that decision, the Amendment was made which we are now seeking to amend. It provided that as from the end of what is commonly called the executor's year, in which he has the right to retain it for the purpose of collecting and dealing with debts, the money should be free from Income Tax. We are now seeking that the money should be free from Income Tax as from the date of the death of the testator. My hon. Friend the Member for South Croydon has said that he is unable to ascertain what this concession would cost, and I would not venture to make a prophesy where he is unwilling to do so. I should hope that it would not cost any great amount in an average year, and that the Chancellor may see his way to accept this small Amendment and thereby bring the law into some relation with the facts, the facts of course being that the money belongs to the charity from the death of the testator, and that it is only a technical interpretation of the law which places the ownership in the executor.
    When, two years ago, I had the privilege of moving a similar Amendment, the then Financial Secretary to the Treasury pointed out that this was only one of the many anomalies in the administration of the law in relation to taxation and the prolonged administration of an estate. He held out the hope that, if and when the Chancellor of the Exchequer were in a position to reconsider the law, the Amendment which had been moved would be borne in mind. Two years have passed; not a very long time in the life of a committee dealing with the amendment of Income Tax law. The committee have been sitting for seven years, and many people, knowing more about that branch of the law than I, believe that when eventually the report of the committee is issued to the world it will be time for a new committee to be appointed
    1580
    to consider the anomalies that have arisen since the present committee started to consider the question. I hope the Chancellor will see his way to make this small alteration which would do much to encourage people to leave the residue of their estates or some part of their residue to charitable institutions. It will not cost him any grave anxiety in the administration of the public purse.
    5.49 p.m.
    Mr. RHYS DAVIES: It is very seldom that I find myself able to agree in debate with the hon. Gentleman the Member for South Croydon (Mr. H. Williams), but on this occasion I feel inclined to inform him that, if his Clause be not accepted by the Chancellor of the Exchequer and he should take it to a Division, we will endeavour to rally our forces behind him. The Clause appears to me to be a very reasonable request. Before I heard the speech of the Seconder, I was so unfamiliar with Income Tax law that I did not know that what he stated was the case. It seems to me that the Chancellor of the Exchequer might give way on this occasion. It would be interesting if he could tell us what amount is annually left to charity in this country. I have never seen the figures stated. I am sure that it would also interest us all if we could know whether the amount left to charity be increasing each year. This is not a party matter, and I hope that the Chancellor of the Exchequer will be able to give way upon it.
    5.50 p.m.
    Mr. COOPER: I am sorry if any words of mine on the last occasion should have led to this Clause being drafted.
    Mr. CAPORN: They were not the words of the present but of the late Financial Secretary to the Treasury, the present Minister of Agriculture.
    Mr. COOPER: I was referring to the occasion when it came up in the Committee this year, and not to two years ago. My hon. Friend who seconded the new Clause said that it would bring the law into relation with the facts, but I think he is mistaken, because it is not the fact that the moment a testator dies his residuary legatee becomes the real owner of his property. It is, on the contrary, a general principle of law that a residuary legatee has no interest in any of the property of the testator until the residue has been ascertained, his

    1581
    right being merely to have the estate properly administered and applied to his benefit when the administration is complete. That is a recognised principle of law and has many important results, among them the result that the estate comes to the legatee as capital and not as income, and surtax is not charged on it for that reason. I am sure that my hon. Friend would be reluctant to consider any change in the law in one respect to deal with the issue that has been raised by the hon. Member for South Croydon (Mr. H. Williams) until the whole question of the prolonged administration of estates has been considered. It is, as has been rightly stated, being considered at the present time, and it would be a great mistake to deal with such a matter piecemeal.
    An important exception to this general principle of law was made in 1922 on behalf of charitable bequests. The charities are considered to be the owners of the property of the testator one year after the death of the testator, however long it may take for the estate to be wound up. After that year, they are not liable to income tax. That was granted as a result of the appeal from the hospitals, through a committee of the voluntary hospitals, who put it forward in that shape, and they have been very grateful because they have benefited considerably by the concession. The present appeal does not come from them, but from my hon. Friend the Member for South Croydon and from a chartered accountant, I think, who is a constituent of his and who wound up an estate which had been left to charity, and as the result of the prolonged administration of the estate my hon. Friend went so far as to say that the charity had been defrauded of a large sum. I think "defrauded" was a rather strong word to use.
    A Motion of this kind is always certain of a favourable reception in all parts of the House. It is a great pleasure for everybody to be charitable, and it is a greater pleasure when we are being charitable with other people's money and not with our own. This is an appeal for us to amend the law in such a way as to make a compulsory contribution to charity from the ordinary taxes. The State would lose. I am not in a position to say, because it is very difficult to ascertain, what the annual loss would be, but the State
    1582
    would lose. The taxpayer would be compelled to pay more in a direction in which he has already made a considerable concession, and in which, so far as I am aware, there is no very widespread demand from the charities concerned in favour of the plea. I do not deny that we should be very glad if this concession could be made, and no doubt there are cases such as that brought to the notice of my hon. Friend the Member for South Croydon in which a certain amount of hardship has been caused. But we do not think a case has been sufficiently made out for a concession to be made to-day, and therefore we cannot agree to add this Clause to the Bill.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Annual account of exchange equalisation account.)
    Section twenty-four of the Finance Act, 1932 (which deals with the establishment of an exchange equalisation account) shall be read as if after Sub-section (7) there were inserted the following Sub-section:
    (8) As soon as may be after the end of each financial year the Treasury shall prepare an abstract of the transactions covered by the said account during the preceding year and shall cause the same, together with a report thereon by the Comptroller and Auditor-General, to be laid upon the Table of the House of Commons.—[Mr. D. Mason.]
    Brought up, and read the First time.
    5.55 p.m.
    Mr. DAVID MASON: I beg to move, "That the Clause be read a Second time."
    The Clause involves a proposal which will appeal to all sections of the House. Some reference has been made to certain questions not being party questions; this is essentially a non-party Clause, because it advocates control by the House of Commons of its own finances. In 1932, the House voted £150,000,000, to which was added in the subsequent year £200,000,000, making in all £350,000,000 that has been placed to the credit of the Exchange Equalisation Fund. It was agreed at the time not to insist upon an account, although some of us protested against there being no provision for an abstract of the account to be submitted to the House. I hope I do not misrepresent the situation, but many Members felt misgivings. It is extraordinary that the House of Commons should vote £350,000,000 and not insist upon an abstract at the end of

    1583
    the financial year. It was argued that the operations of the Fund could not be carried on if they were made public.
    I am asking for an abstract at the end of the financial year, and I appeal to all hon. Members, irrespective of Party, not to allow this occasion to go by without raising their voice against the establishment of a principle which would enable this or any other Government to spend continuously without submitting an abstract of the expenditure to the House. I have protested about this over and over again. We cannot tell what Government may succeed this Government. It is an unsound principle to lay down. I am asking for an abstract of the transactions of the Exchange Equalisation Account. The exchanges are indicators of the trade that has been conducted in this country. They are the best friends of the trader, because they are the only indicators to him of the trade of the country. One of the occasions on which we have an adverse exchange is when we have what is called an adverse balance of payments, and I have often argued that there is seldom if ever an adverse balance of payments in this country, because we are a creditor country. The Board of Trade issue from time to time estimates of what they call this adverse balance, but we have no means of checking it. The Exchange Equalisation Account, of which we get no abstract, is a machinery for interfering with the exchanges, and the exchanges are the only indicators by which a trader can gauge what the condition of the trade of the country is.
    It is almost as though I were to offer to the Chancellor of the Exchequer some mechanism by which the weather-glass was always kept at "Set Fair." If I were to offer him such a mechanism, that would not necessarily mean that we should always have good weather. The same thing applies to the Exchange Equalisation Account, which uses the credit of this country to the tune of £350,000,000 for interfering with the movement of the exchanges, that is to say, with the only known means by which the trader can find out whether there is over-trading or an excess of speculation, or whether an artificial or unsound state of affairs exists in the City of London or throughout the country. When we had
    1584
    freedom of the exchanges, what happened? When there was excessive trading or over-importation or speculation, the exchange became adverse, and there was an efflux of gold from the Bank of England. When the gold reserve fell to a certain point, the Directors of the Bank of England put up the rate of discount. That tended to stop the over-importation and correct the exchange so that gold again flowed back to this country, and we went on with our trade as before. That, however, has been destroyed, and not only has it been destroyed by this most unsound system, but the National Government, which is suppose to have all the talents, comes to this House and has the audacity to ask it to give practically a blank cheque, without even asking for an abstract, and is able to get away with £350,000,000 for the purpose of interfering with the exchanges. Hon. Members above the Gangway appear to think that that is a matter for humour, but it is a very serious and grave situation.
    We are told that the Government have boasted of the fact that they have perpetually given us cheap money, which is, of course, the result of this Fund, which has stopped the correction of the excessive cheapness of money. Under the old system, when there was excessive trading—as there may be now for all that we know; we have no means of checking it—there was an outflow of bullion, and, as I have explained, a rise in the Bank Rate acted as a corrective. That corrective has now been destroyed. My object is, as a result of publicity, to bring us nearer to the day which is provided for in Section 24 of the Act itself, where Sub-section (2) states that the Account may be wound up. The Chancellor of the Exchequer has always been susceptible to argument, and I hope that arguments on this matter will be addressed to him from all parts of the House, because this is not a party matter. I am sure the right hon. Gentleman will appreciate that I am putting the case, moderately as I hope, with no desire to score any party point, but only as a sincere seeker after truth.
    Our foreign trade can only be restored through a restoration of the exchanges, which again depends upon stabilisation, but that is destroyed by this Equalisation Account. Apparently it is not necessary

    1585
    to have stability of exchanges, or stabilisation. All that you have to do is to vote further millions, and these gentlemen will then be able to regulate our exchanges. As I have said, however, it is not necessary to regulate our exchanges. They are regulated by our trade, and, if the regulator is destroyed, we shall not get a sound state of finance or a sound state of trade. When the right hon. Gentleman boasts about being able to do everything as a result of cheap money, does he suggest that we are to have cheap money for all time? Does he think he can go beyond the laws of the Creator and provide a new economic world in which there will always be cheap money? Where did he find this wonderful brain that can guarantee to this country, and possibly to the world, that there is no need for an abstract such as I am pleading for, or for abolishing control of the exchanges? Words fail me to do justice to the matter, because I feel so strongly about it. Sub-section (2) of Section 24 of the original Act says:
    "The Treasury may, if at any time they think it expedient to do so, cause the Exchange Equalisation Account … to be wound up forthwith, and the Account shall in any event be wound up not later than six months after the date on which the Commons House of Parliament resolve that the Account is no longer required for the purpose for which it was established."
    The responsibility is ours, and we cannot absolve ourselves from responsibility by blaming the Government. It is true that they are supposed to lead us, but we cannot go away and say we have no responsibility; each one of us has an individual responsibility. The Act throws the responsibility upon us. There is no precedent for this Account in the history of any nation in the world. We were the first to establish it, though it is true that the Americans followed suit. But have we got rid of our 2,000,000 unemployed? Has our foreign trade been restored? How can traders go into big adventures, as they used to do, when this machinery has destroyed the one indicator of the character of our trade which showed them whether they ought to engage in these large ventures?
    Mr. HANNON: Surely the hon. Member will agree that a substantial increase in our foreign trade has taken place in the last five or six months?
    Mr. MASON: It is true that we have not altogether stood still, but does the hon. Member himself subscribe to this most artificial interference, in view of the knowledge which I have no doubt he has of entering into large transactions involving huge trade relations with the rest of the world and involving large capital expenditure, when no abstract is provided of the transactions of this Account which pledges the credit of this country to the amount of £350,000,000 for the purpose of interfering with the only guide that he can get as to how he should conduct his trade? You might as well appoint a Minister to control the winds and say when we should or should not have rain. It is impossible. The Chancellor of the Exchequer told us that the object of this fund was due to "iron out" the exchanges without interfering with the general trend, but, as I ventured to point out, the general trend of exchange has been steadily downwards; the pound is now at a discount of about 42 per cent.
    Sir WALDRON SMITHERS: Against what?
    Mr. MASON: Against gold. All that this system has done is to facilitate this facilis descensus Averni, this descent into hell, this use of our own credit for the purpose of depreciating our own sterling pound. It sounds incredible, but it is true. If any hon. Member can offer a defence of it, I am sure the House will be glad to hear it. I have tried—and I have said time and again that we are here for no other purpose—to pursue a consistent, straightforward and honest course, and, while hon. Members do not agree with my views, I hope they will agree that I always try to be honest and sincere in laying my opinions before the House. I do not set myself up as a supreme authority on these matters. Although I have given a lifetime to the study of these problems, I am willing to learn; I am still a student; but none of the great authorities—Ricardo, Adam Smith, Robbins, Gregory, Cannan—
    Mr. HANNON: Can the hon. Member quote a single leader in industry, or a single leader of finance, or a single economist of his own school, in this country who would support the views that he is expressing?
    Mr. MASON: Certainly; I have just been doing so. Professor Robbins and

    1587
    Dr. Gregory are economists of to-day, and Professor Cannan, whose lamented death occurred only recently, was perhaps one of our most distinguished economists. There are many others. I hope that other Members of the House will have something to say in protest against the continuation of this, as I think, unsound system of carrying on our finances. The right hon. Gentleman on one occasion came down to the House in a very complacent frame of mind and told us that the Account showed a profit. I ventured to point out that that was very interesting, but that, after all, it was not a question whether the Account showed a profit, but whether it realised a profit. The real test of whether there is a profit or not is in its final condition. While I do not doubt that the Account may, for all I know, show a profit, it is monstrous that we should vote measures for the amelioration and extension of our trade and subscribe to a system operated by the Treasury which interferes with the only known indicator which will show us how that trade is progressing. I hope I have said enough to recommend the Clause to the consideration of the House. I believe it raises a question of the most supreme importance. If there is any fault in my argument, I shall be glad to have it pointed out. I have no desire to score over the right hon. Gentleman. If the House will have the courage to protest against these rights being infringed, I have every confidence that the Clause will be carried.
    6.16 p.m.
    Dr. ADDISON: I intervene not to discuss the wisdom or unwisdom of establishing this Fund. That is not dealt with in the Clause. It recognises the existence of a colossal fund and suggests that, as it has been provided at the expense and risk of the taxpayers, we are entitled to an account. It seems to me that that is a very elementary request. I was not a Member of the House when it was overcome by the platitudes or the conjuring, or whatever it may be, of the right hon. Gentleman, but I have been surprised ever since, and am no less surprised now that Parliament gave to the Treasury, with its collaborators in the City, credit to the extent of £350,000,000 for an unspecified purpose, except within broad limits, without Parliament being provided
    1588
    at any time with an account of their stewardship until such time as the Treasury informs the House that there is no longer any use for the Fund, and it may be wound up. I hope the House has seen what the Auditor-General has said about the Fund in his Annual Report. He gives it a perfunctory acknowledgement in three lines, and that is all.
    I ask myself what would be the attitude of the right hon. Gentleman and the distinguished business men that I see before me if a Government of which I was a Member asked for £350,000,000 and no account to be rendered? I do not wonder that the right hon. Gentleman laughs. He sees it now, for once, as I see it. He thinks it would be an outrageous proposal. I agree with him. It is. But a power that is vested in this Government may be vested in any other Government. It is a precedent of an extraordinarily dangerous kind and, although the right hon. Gentleman and others may feel that if a Socialist Government were to make a proposal of this kind it would be a subject for derision, yet I can quite see that it may easily happen that a Socialist Government may come along and say, "We have had this example set up by the apostles of high finance and sound business principles—by the National Government—and we may as well set about imitating them and gambling with the nation's millions without rendering any account of our stewardship," because that it is what is happening.
    While I have no doubt that the gentlemen who are operating this fund do their best, I have not that reverence for their wisdom and sagacity which some people seem to have. I do not think that the reputation for discretion of some of those who are operating this fund is so high within recent history that we ought to give them a blank cheque and not expect an account. They are the same men who advised the right hon. Gentleman the Member for Epping (Mr. Churchill), when he was Chancellor of the Exchequer, that we ought to restore the Gold Standard.
    They gave that advice with the most disastrous consequences to the trade of the country. It is all very well for the Chancellor to be scornful and to laugh, but that is a true statement. These men committed one of the biggest blunders that have been made for a long time, and here they are operating this fund. It was only four or five years ago that

    1589
    they told us that, if this country went off the Gold Standard, it would be an indescribable disaster, and I believe they believed it. They did not know any better. That was the tragic part of it. They told us a few weeks afterwards that if we could obtain a foreign loan, it would save us going off the Gold Standard. On their advice we obtained the loan and in six weeks we were off the Gold Standard all the same. They were wrong both times. It is clear that as long as you have a fund of this kind, those in charge of it must be able to operate it as funds of this sort can only be operated, but it is constitutionally wrong that we should vote immense sums of this kind and be content that Parliament should be provided with no sort of account. Moreover, those who are in charge of it are not justified in being allowed to play about with this vast amount of British credit. For these reasons it is necessary and right that in some appropriate form an account of the operations of the fund should be provided. How it is being operated, to what extent it is responsible for what the mover thought it might be, I do not know. No one knows.
    Mr. HANNON: There is one fact that is known to all of us. Our credit abroad is higher than that of any other country in the world.
    Dr. ADDISON: I have no quarrel with that. I am glad to hear it. But, if that is so, it will be to the advantage of everyone that the House should have some information as to how these desirable results are obtained. At all events, it does not obviate the desirability and necessity of the House being provided with some account. The hon. Member said that the Chancellor got away with £350,000,000. So he has. He is the most modest man in British history who ever hoisted the Jolly Roger. It is a dangerous principle, and it is wrong. We only ask that a summary account should be provided at the appropriate time. That is an entirely reasonable request, and I hope that hon. Members will support the Clause.
    6.27 p.m.
    Mr. DENMAN: I rise only to call attention to the odd nature of the speech to which we have just listened. It really is remarkable the way the Front Bench
    1590
    rejects every opportunity that is afforded to it of any kind of enjoyment, and insists upon dwelling in a gloom of its own creation. One might have expected that, when the National Government adopted Socialist principles by withdrawing transactions in the exchange market from the operations of private profit and subjected them to Government control, the front Opposition Bench would derive some satisfaction from the process. On the contrary, they have got so accustomed to condemning everything that they cannot recognise when their principles are fruitfully adopted.
    I wish to ask the right hon. Gentleman a question about this fund. We have several times discussed this matter of publicity of the accounts and the House has on every occasion come to what I believe to be the inevitable conclusion, that publicity is impossible. But there is one point on which, perhaps, the Chancellor might give us information, and that is whether the fund is contributing to the expense of its own finance. Apparently we lend the fund £350,000,000, and I am wholly unable to discover from the public accounts any payment in respect of the money that the fund is using. I should have thought that it would not be unreasonable if, say, 2½ or 3 per cent. was paid for the money advanced, and, if that was utilised in the revenue of the year, it would be extremely useful to the Chancellor. It is conceivable that some of this appears in miscellaneous receipts, and that we are told nothing about it, but I have been so far quite unable to discover any trace of payment by the fund for its own finance. The Chancellor might tell us whether any payment is, in fact, being made. I am sure the House will reject the Clause as it stands. There can be no question of revealing to the public the operations of the fund, and I am sure the whole House is very well content to leave in the hands of the Chancellor the operations of a fund which has been so beneficial to the exchange, and to the trade of the country.
    6.30 p.m.
    Mr. MORGAN JONES: I hope that the House will forgive me for saying a few words upon the matter from an angle which is not precisely the same as that of my right hon. Friend the Member for Swindon (Dr. Addison), but from a personal

    1591
    point of view. As many Members of the House know, I have the honour of being the Chairman of the Public Accounts Committee of this House, and they will also, no doubt, remember that some three years or so ago we had a very lively discussion upon the creation of this Fund, and later upon the extension of the Fund. It was in connection with the extension of the Fund that we brought some pressure to bear upon the right hon. Gentleman the Chancellor of the Exchequer with a view to extending to some degree the measure of information which might be made available to the Public Accounts Committee of this House. We have had something like two years' experience of that system. I am not committing any of my colleagues on the Public Accounts Committee with regard to what I have to say; I am merely giving my own view as a Member of the Committee and not committing anyone else to my judgment on the matter. To the best of my knowledge and belief, the Comptroller and Auditor-General has only limited power imposed by the law in relation to taking the Public Accounts Committee into his confidence. My right hon. Friend used the phrase "perfunctory review," and I am sure we all appreciate that he used the word "perfunctory" in the sense of being a somewhat abbreviated review, and was not in any way making a disparaging reference to the work of the Auditor-General.
    It has been my privilege for two years to sit upon this matter as Chairman of the Public Accounts Committee and to cross-examine the chief accounting officer of each Department. In the course of my occupancy of the chair we have spent a little amount of time in inquiring how a given sum of money has been spent, or, on occasion, have even inquired how it seemed to us to have been misspent. It may have been a small sum of money, but the Committee regarded it as their duty to inquire into the application of money voted by this House. That is the point. The Public Accounts Committee are there for that purpose; that is their function. They have to see to it that money voted by this House is properly applied. A sum of £350,000,000 has been voted by this House to make up this Fund. I do not complain of that in the least, but this, in general terms, is what happens. An hon. Member of the Committee
    1592
    inquires of the Accountant-General whether he can show the state of the Fund. He may tell us what the state of the Fund is. But when? He gives us the state of the Fund at the end of the year of account. The year of account which we are now reviewing is not the year ended 31st March, 1935, but the year ended 31st March, 1934.
    Mr. HANNON: On a point of Order. How far is it proper in this House to reveal the proceedings of the Public Accounts Committee, upon matters discussed in the Committee which are not the subject of a public report issued by the Committee?
    Mr. JONES: I have not revealed a single thing of this year's proceedings.
    Mr. HANNON: I asked Mr. Speaker for a Ruling.
    Mr. JONES: Before you give a Ruling, Mr. Speaker, may I say that all I have disclosed so far is what is known to everybody in the published accounts of the Public Accounts Committee for last year?
    Mr. SPEAKER: There is really nothing upon which to give a Ruling. I understood the hon. Member for Caerphilly (Mr. Morgan Jones) was giving a general review of the procedure of the Public Accounts Committee, but not of what was disclosed before that Committee.
    Mr. JONES: I will confine my remarks to the point I wish to make. We thought that we were getting a very substantial concession from the Chancellor of the Exchequer when he made the particular concession to which I have referred, and I have no doubt that he did it in good faith in order to meet the demand of the House at that time that there would be some sort of report, however short or formal, so as to satisfy the high standard of rectitude entertained by this House. We have had the experience of a year or two of the system, and, frankly, I am bound to confess that I am a little disappointed in it. It is a terrible thing that a big sum such as this can be operated, even for 12 months, without the House of Commons being assured with greater particularity and detail than is now the case as to how precisely the fund has been operated. I know—and I concede it readily—that there are arguments against undue publicity. But

    1593
    what, in fact, happens? To begin with, the Chancellor of the Exchequer himself must know. There must be certain officials at the Treasury who know, and there must be the Auditor-General who knows later, and so in the aggregate, however much you limit it, there would be a certain number of people anyway who would necessarily know the state of the account. I do not ask even for the same measure of detailed knowledge which is usually given to the Public Accounts Committee, but I submit with great respect that the Public Accounts Committee have to examine all sorts of private accounts in the course of their year's work. There are accounts which are not available to the public. For instance, there are certain dockyard and Admiralty accounts and various other accounts with which Members of the Committee become acquainted, and, as far as I know, not one word of suspicion has ever been uttered concerning any Member of the Public Accounts Committee. If it is proper and necessary in the public interest that permanent officials—and I repeat that I do not complain of this—should know in detail the state of the funds, should not the Public Accounts Committee of this House, even in confidence, know rather more than they now know as to the state of the fund?
    I hope that I have spoken with as much restraint as possible. I appreciate that one must preserve some sense of responsibility in this matter. I have tried not to exaggerate, but to give my experience as an individual member of the Public Accounts Committee of this House. I am bound to say that it is not an experience of which I feel particularly proud in the sense that it is not satisfactory to anyone to say, "I know that on such and such a date the sum was so much and nothing more." It gives you no information upon which you can give any judgment whatever, and from that point of view, without making reference to, or a reflection upon, anybody whatever, I feel that it is not treating quite fairly the Committee appointed by this House for the purpose of reviewing those financial concerns. I repeat that I admit the necessity for secrecy as to day-to-day transactions.
    Lieut.-Colonel CHARLES KERR: I suggest to the hon. Gentleman that that does not seem to be the point of the proposed new Clause. It says that an annual account should
    "be laid upon the Table of the House of Commons,"
    which it quite a different thing from that about which he is speaking.
    Mr. JONES: I know, but the hon. and gallant Gentleman must know that it is possible for you to present a statement in a general form to be placed upon the Table of the House, and when it is presented to the House in that form and it comes to the Public Accounts Committee, you can, within the ambit of the statement presented, cross-examine the person who is authorised to answer in respect of it. If such an examination took place there would not be—and my experience justifies my saying this—any danger whatever of the disclosure of any information given to the Committee under a pledge of secrecy and confidence. I have tried not to speak as a party man upon this matter, but simply and solely as an hon. Member who, Along with others, is called upon to have regard to it from a House of Commons' point of view, and I hope that the House will acquit me, therefore, of desiring to make any point upon it beyond a proper and legitimate House of Commons' point.
    6.43 p.m.
    Mr. CHAMBERLAIN: I am not surprised that from time to time the question of the conduct of the Exchange Equalisation Account should be brought up for discussion in the House. It really is a tremendous demonstration of confidence—I will not say confidence in the Government, but confidence in the way that our system is administered—that this House should be willing to entrust this vast sum of money through the operation of a number of persons whose names even are not known to them, and that they should be willing to abstain from the receipt of information as to what is exactly happening to that amount which they have granted. As I have said on previous occasions when we have discussed the matter, I do not think that it is possible to find any justification for such a remarkable action on the part of the House, except the one I put forward before, and which I put forward again,

    1595
    namely, that it is only under such conditions that the purpose of the fund can be effected at all.
    What is the purpose of the Fund? The hon. Member who moved the Clause told us that he had made a lifelong study of finance. I am afraid that he must have stopped his study some years ago, and that he has failed to acquaint himself with the alteration in conditions which has arisen during recent years, because if he had not so failed, and if he had not shut his eyes, or at least ceased to watch what was going on, he would never have said that the exchange rates of today were the indicators, and the only indicators, of the operations of trade. Surely, no one with any acquaintance, however indirect, with trade conditions to-day can fail to realise that there has come into operation a new factor of overwhelming importance, and that is the enormous supply of loose and unanchored capital, which is free to move about rapidly from one capital to another, from one exchange to another, and which can be, and is, used by speculators to alter the rates of exchange, and therefore, utterly to destroy their value as an index of the state of trade. It is because exchange rates can be altered for the purpose of speculation by people who see that they can make money by using their knowledge and by using this loose and rapidly moving capital, and because the exchanges began to fluctuate rapidly and the operation of trade was hampered by the violent fluctuations of the exchange that the Exchange Equalisation Account was brought into existence.
    It was made clear to the House at the time that the Fund was founded, that if the House wanted the Fund to be used for that purpose, it must be employed in secrecy, because if it is to defeat the operations of speculators it is essential that they should not know how it is being operated, and that they should not have before them information which would enable them to say that on such-and-such a date, when the exchange moved in this direction or that, the Fund was or was not operating. If they once got that information they could, of course, defeat the operations of the Fund. They could come in or not as they found it desirable. It is because it is not the slightest use to have a Fund of this kind
    1596
    unless you can work it in secrecy that we have been obliged to say to the House that they must either have no Fund at all or trust us to make the best use of it.
    Mr. MASON: Does the right hon. Gentleman suggest that this Fund is the sole means of correcting the exchanges? There are of course, various causes for exchange fluctuations. Surely, the right hon. Gentleman does not seriously suggest that the Exchange Equalisation Fund can correct the exchanges?
    Mr. CHAMBERLAIN: No, Sir, and the hon. Member has heard me say so dozens of times. He even stated in his speech that I had said dozens of times that we never attempt to correct the natural trend of the exchanges, because we know that our resources would not enable us to do that. The hon. Member himself has stated that there has been a definite move of the pound in relation to gold, although not in relation to commodities. He said that there has been a move. Therefore, he himself does not believe that the Exchange Equalisation Account is used for the purpose of trying to peg the exchange. It is not.
    Mr. MASON: No.
    Mr. CHAMBERLAIN: The hon. Member is in agreement with me, and yet he wants to alter the procedure. The fund did not begin with anything like so large a sum as the amount at present in the fund. It began with £150,000,000, and now it is £350,000,000. The House was induced to grant double the amount of money which it was ready to put in the fund at the beginning after a year's experience of the working of the fund. One could hardly have a greater tribute to their satisfaction at the way in which the fund had been worked than that they were ready to do that. [Interruption.] At any rate, the House were so satisfied with the results that without having been told how those results had been achieved they were willing to make the fund much larger than it was at the beginning. The hon. Member for the Moseley Division of Birmingham (Mr. Hannon) was correct in saying that one could not find any representative of industry, commerce or finance who holds any responsible position who would criticise the working of the fund, or who would not say that the fund has been of inestimable value to business since it was established.

    1597
    The hon. Member for Central Leeds (Mr. Denman) asked me a specific question about the interest on the fund. This matter has been raised on a previous occasion. It never has been intended that interest should be paid to the Exchequer upon the amount of capital in the fund. If the hon. Member considers how the fund may be used in theory, he will see that a good deal of the fund cannot be earning interest. Some part of the fund may be earning interest, but it never has been contemplated that interest should be paid. On the other hand, if at the end of the life of the fund, when that great day happens to which the hon. Member for East Edinburgh (Mr. Mason) looks forward, and the fund is wound up, if there is a profit on the transactions, that profit will inure to the benefit of the State.
    Now let me come to the speech of the hon. Member for Caerphilly (Mr. Morgan Jones), the Chairman of the Public Accounts Committee. I am grateful to him for explaining to the House that the Comptroller and Auditor-General does not carry out a perfunctory review of the transactions of the Fund. His audit is a complete one. I believe that he audits every transaction that has taken place although he has not a great deal to say about it because he is not required by the Act to do so. The Act says:
    "The Account shall in every year until it is wound up be examined by the Comptroller and Auditor-General"—
    whose function is to certify to the Commons House of Parliament, whether—
    "having regard to the result of his examination, the operations on and the transactions in connection with the Account have or have not been in accordance with the provisions of this Part of this Act."
    Therefore, he has to report whether the transactions have been in accordance with the provisions of the Act. As the hon. Member reminded us we had a discussion on this matter two years ago and there was a good deal of feeling then that if it were possible to give the Public Accounts Committee some further information without danger to the purpose of the Fund, that should be done. I had a conversation with the hon. Member at the time and with others who were interested in the subject and as a result a new arrangement was made. The amount of gold and foreign devisen held by the Account on the last day of each
    1598
    month was taken out and the average of the monthly figures for the year was given to the Public Accounts Committee by the Treasury Accounting Officer. That has been done. It is true that the monthly average which is given is, so to speak, out of date by the time the Public Accounts Committee get it, and the hon. Member now feels some disappointment about that, and asks whether they cannot have more up-to-date information without any risk to the operations of the Fund. Will the House consider the point? What would be the purpose of that information? Is it to find out, as the hon. Member said, and as the hon. Member for East Edinburgh said, whether the account was showing a profit at the moment or not? I have said that there was a profit at a certain time, but I recognise that that is not a realisable profit. There cannot be any realisable profit or loss until the Account is finally wound up. That will be the time when we shall know whether there has been a profit or a loss. In the meantime it is purely academic.
    It is really of no particular importance unless there were going to be some interference with the operations of the account. If those who are operating the fund were to be told, "You are showing a loss and you must change your methods in order that you may make a profit," then I should say that that would be completely to destroy the usefulness of the fund. The fund is not there to make a profit or a loss. It is there to iron out the fluctuations of the exchange brought about by speculation or seasonal causes, and if all the time we have to consider whether we shall show a profit or a loss at a particular moment we cannot carry out the operations. Naturally, in conducting the operations it is not absent from the minds of those who are responsible that they must not do anything which might involve a terrific loss, and if they consider that by going too far in a particular direction they may be acting with undue risk, naturally that is taken into account. As to the competence of the persons who are engaged in this work, the right hon. Gentleman opposite does not know who they are and his remarks about their blunders in past days are beside the point. However, I will not pursue that matter. I can assure the House that they could not

    1599
    find any more competent body of men to deal with this technical matter than those whom we have at our disposal.
    The hon. Member has asked for an abstract of the transactions. That would mean making available to the House of Commons and to the whole world, because it would not be confined to the House of Commons, the actual transactions which have taken place. The hon. Member for Central Edinburgh hates the fund and would like to see it wound up, and he is going about to destroy it. Therefore one can scarcely complain when he puts forward a proposal which would destroy the fund. That would be the result.
    Mr. MASON: That is my object.
    Mr. CHAMBERLAIN: That is the hon. Member's object. But that is not the object of the hon. Member for Caerphilly. He is desirous of being able to discharge his responsibility to the House as Chairman of the Public Accounts Committee. Even if an abstract of the accounts were given to him, if an account of the transaction was rendered and even if we gave him that account lip to quite a recent date, so that he could know what had been happening the last week, it would not really be any help to him. He could not make it public to the House, he would not be able to say whether the operations had been conducted wisely or not. While I have complete confidence in the members of the Public Accounts Committee and in their ability to keep secrets, I would point out that these transactions are not like other transactions such as those that have been mentioned, and which are dealt with by the Public Accounts Committee, because these are transactions which, if made known, would give opportunities to make or unmake fortunes. If anything did leak out—not given away by the Members of the Committee at all, but if it were thought that information of this kind had leaked out and advantage were taken of that information by speculators to make profits at the expense of the public, I feel that Members of the Public Accounts Committee would be put in a most invidious and disagreeable position, and one in which they ought not to be placed.
    Mr. MORGAN JONES: In practice we should never be in that position, and I
    1600
    rather fear that the right hon. Gentleman is unaware of the actual position. Let us take the year 1935. The financial year 1934–35 ended on 31st March. The Public Accounts Committee which will review the work of 1934–35 will not begin operations until February, 1936—at least nine months later. Consequently I cannot understand what is the objection to giving to the Public Accounts Committee, if you like, in confidence, an account of what happened up to the end of the financial year which closed nine months before the Committee began its operation and, in practice, actually 12 months before it begins to review the actual financial accounts.
    Mr. CHAMBERLAIN: I can only repeat what I said. Is that information to be made public or is it not? If it is to be made public, then you are giving away the very information you want to conceal. If it is not to be made public, I cannot conceive what use it can be to the Public Accounts Committee.
    Mr. JONES: I do not see why there should be any difference drawn between this private, secret and confidential account and a private, secret and confidential account dealing with Admiralty accounts or anything of that sort, and we have discussed these and safeguarded the information as closely as possible.
    Mr. CHAMBERLAIN: Surely the hon. Gentleman must see that there is all the difference in the world between transactions of this kind, for this purpose, and the expenditure of money by the Admiralty in accordance with the votes of the House. Expenditure of money by the Admiralty has to be for purposes definitely and specifically approved by the House. The Estimates of the Admiralty are voted in detail by the House. The House knows exactly for what it has voted the money; but in this case it has not voted the money to be used in a way which has been specified beforehand. It has to trust to the special knowledge and the competence of a few people. Examination of details of an account of this kind is totally different from the examination of the ordinary expenditure of a Government Department. I cannot add anything to that. I feel just as much as any Member of this House that it is an altogether exceptional, abnormal, and, in ordinary circumstances, most undesirable thing that the House should part

    1601
    with its control over great sums of money. It is only the complete conviction I have that you cannot use a fund of this kind unless it is kept entirely secret, which induces me to resist the hon. Member's Clause and to ask the House to continue the confidence which it has given us in the past.
    7.7 p.m.
    Mr. DAVID GRENFELL: The House must regret the reticence of the right hon. Gentleman in this matter. He has certainly failed to give information which would satisfy us on this side of the House, and, I feel sure, a good many on the other side of the House. The Chancellor of the Exchequer said there were very good reasons why this Fund should be retained under secret control, and we are not to be told who are the people responsible, or the kind of operations they pursue. No information is vouchsafed to the House three years after the Fund came into operation. We are indebted to the hon. Member for East Edinburgh (Mr. Mason) for putting this matter down, and for the interesting speech he made. The hon. Member desires information, and is sceptical as to the value of this Fund. So are many Members of this House, and, for myself, I doubt the value of this Fund of £350,000,000, which is placed under the control of some body of people, yet unnamed, for a purpose not yet fully defined, and is to be retained simply on the bare word of the Chancellor of the Exchequer when he appears, all too infrequently, on this subject before the House.
    The hon. Member for East Edinburgh thanked God that this country was in a position of prosperity compared with other countries. I think he should have transferred his thanks to the Government, because whoever is responsible it is certainly the Government that controls this Fund. If this Fund and the financial policy of the Government are at all responsible for the more fortunate position which the hon. Member holds we are in compared with other countries, then it is blasphemy to thank the Being he thanked in the presence of the right hon. Gentleman. He should transfer his thanks to the unknown gods, the unknown persons who preside over our financial destinies, who are unnamed and in whose presence we should stand trembling and with humility. I do not think there is
    1602
    any body of unknown people to whom we should render that homage.
    It is unsafe, and contrary to constitutional practice, to allow any important function of the State to be carried on year after year in this way. It is a derogation of the dignity of the House, and of the constitutional respect in which this House is held. It is a very dangerous practice indeed. It is a form of dictatorship, not with the internal destinies of the people, but a form of dangerous interference with world affairs which expresses itself to-day in one form and tomorrow in another. I do not assess the value of this Fund year after year as the right hon. Gentleman would have us assess it by the amount of profit or the increase in the capital value, but by the effect of the Fund and the manipulation of this £350,000,000, or whatever proportion of that large sum of money is being used, in purchase and sales here and there. The value of the Fund must be judged by the effect on world trade and its interference with world currency. We are not content to retain the exchange value of our own country; we extend our buying and selling power beyond our own immediate circle to foreign exchanges and even foreign currencies for the purpose of trying to maintain a financial exchange equilibrium. This vitally affects the trading capacity of all countries in the world, whether they trade with us or not. This is a terrific power to be wielded by any nation. It is a very dangerous innovation in financial practice and it is not justified, especially without the knowledge of this House. The Chancellor of the Exchequer said that there would come the day of winding-up. When is that winding-up day to be? Will it be when our national loss has been so extreme that the effect on world trade will be damaging? When the day of reckoning comes, it will not, perhaps, be this Government but some other who will be responsible, but the damage by that time may be irretrievable. If this Government succeeds in deluding the electors of this country again, as it did a few years ago and brought into this House hon. Gentlemen who would never have been here but for that delusion—if that is repeated and a further term of five years is vouchsafed to the Government and the Exchange Equalisation Fund goes on in secret, nobody knows where or

    1603
    when it will end. If the year immediately following is too soon, why cannot we be told the year after? Why cannot responsibility be shared by us on this Bide of the House and by back benchers opposite, instead of resting on one right hon. Gentleman? No answer has been given to this Clause, and I think we shall be justified in voting for it, in view of the failure of the Chancellor of the Exchequer and those who support him
    to give any information when this question is brought up, as it has been brought up time and again in past years. We shall be justified in voting to-night and on other occasions until this right has been given to the House.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 53; Noes, 207.

    Division No. 254.]

    AYES.

    [7.12 p.m.

    Acland, Rt. Hon. Sir Francis Dyke

    Grenfell, David Rees (Glamorgan)

    Owen, Major Goronwy

    Adams, D. M. (Poplar, South)

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

    Parkinson, John Allen

    Addison, Rt. Hon. Dr. Christopher

    Griffiths, George A. (Yorks, W. Riding)

    Rathbone, Eleanor

    Attlee, Rt. Hon. Clement R.

    Griffiths, T. (Monmouth, Pontypool)

    Rea, Sir Walter

    Banfield, John William

    Grundy, Thomas W.

    Roberts, Aled (Wrexham)

    Cleary, J. J.

    Hall, George H. (Merthyr Tydvil)

    Salter, Dr. Alfred

    Cripps, Sir Stafford

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

    Strauss, G. R. (Lambeth, North)

    Curry, A. C.

    Harris, Sir Percy

    Thorne, William James

    Daggar, George

    Jones, Henry Haydn (Merioneth)

    Tinker, John Joseph

    Davies, David L. (Pontypridd)

    Jones, Morgan (Caerphilly)

    West, F. R.

    Davies, Rhys John (Westhoughton)

    Lansbury, Rt. Hon. George

    Williams, Edward John (Ogmore)

    Dobbie, William

    Lawson, John James

    Williams, Dr. John H. (Llanelly)

    Edwards, Sir Charles

    Leonard, William

    Williams, Thomas (York., Don Valley)

    Evans, David Owen (Cardigan)

    Logan, David Gilbert

    Wilmot, John

    Evans, R. T. (Carmarthen)

    Lunn, William

    Wood, Sir Murdoch McKenzie (Banff)

    Foot, Isaac (Cornwall, Bodmin)

    Macdonald, Gordon (Ince)

    Gardner, Benjamin Waite

    McEntee, Valentine L.

    TELLERS FOR THE AYES.—

    George, Major G. Lloyd (Pembroke)

    Maclean, Neil (Glasgow, Govan)

    Mr. Groves and Mr. T. Smith.

    Greenwood, Rt. Hon. Arthur

    Mason, David M. (Edinburgh, E.)

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Cranborne, Viscount

    Hills, Major Rt. Hon. John Waller

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

    Craven-Ellis, William

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

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

    Croft, Brigadier-General Sir H.

    Horobin, Ian M.

    Aske, Sir Robert William

    Crooke, J. Smedley

    Howard, Tom Forrest

    Astbury, Lieut.-Com. Frederick Wolfe

    Crookshank, Col. C. de Windt (Bootle)

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

    Balley, Eric Alfred George

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

    Hume, Sir George Hopwood

    Baldwin, Rt. Hon. Stanley

    Croom-Johnson, R. P.

    Jamieson, Rt. Hon. Douglas

    Balfour, George (Hampstead)

    Dalkeith, Earl of

    Joel, Dudley J. Barnato

    Barclay-Harvey, C. M.

    Davidson, Rt. Hon. Sir John

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

    Beauchamp, Sir Brograve Campbell

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

    Jones, Lewis (Swansea, West)

    Benn, Sir Arthur Shirley

    Denman, Hon. R. D.

    Ker, J. Campbell

    Boulton, W. W.

    Dickie, John P.

    Kerr, Lieut.-Col. Charles (Montrose)

    Bower, Commander Robert Tatton

    Dixon, Captain Rt. Hon. Herbert

    Kerr, Hamilton W.

    Bowyer, Capt. Sir George E. W.

    Drewe, Cedric

    Kirkpatrick, William M.

    Braithwaite, Maj. A. N. (Yorks, E. R.)

    Duckworth, George A. V.

    Knox, Sir Alfred

    Brass, Captain Sir William

    Dugdale, Captain Thomas Lionel

    Lamb, Sir Joseph Quinton

    Briscoe, Capt. Richard George

    Ellis, Sir R. Geoffrey

    Lambert, Rt. Hon. George

    Broadbent, Colonel John

    Elliston, Captain George Sampson

    Leckie, J. A.

    Brocklebank, C. E. R.

    Elmley, Viscount

    Leech, Dr. J. W.

    Brown, Rt. Hon. Ernest (Leith)

    Emmott, Charles E. G. C.

    Lees-Jones, John

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

    Emrys-Evans, P. V.

    Leighton, Major B. E. P.

    Burghley, Lord

    Entwistle, Cyril Fullard

    Lewis, Oswald

    Burgin, Dr. Edward Leslie

    Evans, Capt. Arthur (Cardiff, S.)

    Liddall, Walter S.

    Burnett, John George

    Everard, W. Lindsay

    Little, Graham-, Sir Ernest

    Burton, Colonel Henry Walter

    Fielden, Edward Brocklehurst

    Lockwood, John C. (Hackney, C.)

    Butt, Sir Alfred

    Ford, Sir Patrick J.

    Mabane, William

    Campbell, Sir Edward Taswell (Brmly)

    Fox, Sir Gifford

    MacAndrew, Major J. O. (Ayr)

    Campbell, Vice-Admiral G. (Burnley)

    Ganzoni, Sir John

    McCorquodale, M. S.

    Campbell-Johnston, Malcolm

    Goff, Sir Park

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

    Caporn, Arthur Cecil

    Goodman, Colonel Albert W.

    MacDonald, Rt. Hon. M. (Bassetlaw)

    Cayzer, Sir Charles (Chester, City)

    Gower, Sir Robert

    Macdonald, Sir Murdoch (Inverness)

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Grattan-Doyle, Sir Nicholas

    McEwen, Captain J. H. F.

    Chapman, Sir Samuel (Edinburgh, S.)

    Gretton, Colonel Rt. Hon. John

    McLean, Major Sir Alan

    Chorlton, Alan Ernest Leofric

    Grimston, R. V.

    McLean, Dr. W. H. (Tradeston)

    Clarke, Frank

    Gunston, Captain D. W.

    Macmillan, Maurice Harold

    Clarry, Reginald George

    Hacking, Rt. Hon. Douglas H.

    Macquisten, Frederick Alexander

    Clayton, Sir Christopher

    Hales, Harold K.

    Magnay, Thomas

    Cobb, Sir Cyril

    Hamilton, Sir George (Ilford)

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

    Cochrane, Commander Hon. A. D.

    Hannon, Patrick Joseph Henry

    Marsden, Commander Arthur

    Conant, R. J. E.

    Harvey, George (Lambeth, Kenningt'n)

    Mayhew, Lieut.-Colonel John

    Cook, Thomas A.

    Haslam, Sir John (Bolton)

    Meller, Sir Richard James (Mitcham)

    Cooper, A. Duff

    Heligers, Captain F. F. A.

    Mellor, Sir J. S. P.

    Courthope, Colonel Sir George L.

    Heneage, Lieut.-Colonel Arthur P.

    Mills, Major J. D. (New Forest)

    Craddock, Sir Reginald Henry

    Herbert, Major J. A. (Monmouth)

    Mitchell, Sir W. Lane (Streatham)

    Mitcheson, G. G.

    Ropner, Colonel L.

    Strauss, Edward A.

    Moreing, Adrian C.

    Rosbotham, Sir Thomas

    Sugden, Sir Wilfrid Hart

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

    Ross Taylor, Walter (Woodbridge)

    Sutcliffe, Harold

    Morrison, G. A. (Scottish Univer'ties)

    Runciman, Rt. Hon. Walter

    Thompson, Sir Luke

    Morrison, William Shepherd

    Russell, R. J. (Eddisbury)

    Thorp, Linton Theodore

    Moss, Captain H. J.

    Rutherford, Sir John Hugo (Liverp'l)

    Touche, Gordon Cosmo

    Muirhead, Lieut.-Colonel A. J.

    Salmon, Sir Isidore

    Wallace, Captain D. E. (Hornsey)

    North, Edward T.

    Salt, Edward W.

    Wallace, Sir John (Dunfermline)

    O'Neill, Rt. Hon. Sir Hugh

    Samuel, M. R. A. (W'ds'wth, Putney).

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

    Patrick, Colin M.

    Sandys, Duncan

    Ward, Irene Mary Bewick (Wallsend)

    Penny, Sir George

    Selley, Harry R.

    Wardlaw-Milne, Sir John S.

    Percy, Lord Eustace

    Shakespeare, Geoffrey H.

    Warrender, Sir Victor A. G.

    Perkins, Walter R. D.

    Shaw, Helen B. (Lanark, Bothwell)

    Wayland, Sir William A.

    Petherick, M.

    Shaw, Captain William T. (Forfar)

    Wedderburn, Henry James Scrymgeour

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

    Simon, Rt. Hon. Sir John

    Williams, Charles (Devon, Torquay)

    Pickthorn, K. W. M.

    Smiles, Lieut.-Col. Sir Walter D.

    Williams, Herbert G. (Croydon, S.)

    Power, Sir John Cecil

    Smith, Sir Robert (Ab'd'n & K'dine, C.)

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

    Radford, E. A.

    Smithers, Sir Waldron

    Winterton, Rt. Hon. Earl

    Raikes, Henry V. A. M.

    Somerville, Annesley A. (Windsor)

    Wise, Alfred R.

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

    Southby, Commander Archibald R. J.

    Withers, Sir John James

    Ramsbotham, Herwald

    Spears, Brigadier-General Edward L.

    Welmer, Rt. Hon. Viscount

    Reed, Arthur C. (Exeter)

    Spender-Clay, Rt. Hon. Herbert H.

    Womersley, Sir Walter

    Reid, William Allan (Derby)

    Spens, William Patrick

    Wood, Rt. Hon. Sir H. Kingsley

    Remer, John R.

    Stones, James

    Rickards, George William

    Storey, Samuel

    TELLERS FOR THE NOES.—

    Robinson, John Roland

    Stourton, Hon. John J.

    Mr. Blindell and Lieut.-Colonel

    Llewellin.

    Question, "That the words proposed to be left out stand part of the Bill," put, and agreed to.

    NEW CLAUSE.—(Reduced duties and draw backs on certain descriptions of beer.)
    (1) Section one of the Finance Act, 1933, which imposes duties of excise and provides for drawbacks on certain descriptions of beer, shall have effect as if the paragraphs set out in Parts I, II, III, and IV of the Schedule (Duties and Drawbacks on Beer) to this Act were respectively substituted for Parts I, II, III, and IV of the First Schedule to the Finance Act, 1933.—[Sir W. Wayland.]
    Brought up, and read the First time.
    7.21 p.m.
    Sir WILLIAM WAYLAND: I beg to move, "That the Clause be read a Second time."
    It may appear to be rather a complicated Clause, but, in reality, it represents a reduction of 1d. per pint on the present tax on beer. After the answer which the Chancellor of the Exchequer gave to the Mover of a reduction of the tax on whisky, I have no great hopes that he will accept my Clause, but, nevertheless, it is my duty to point out to the House that at the present beer is taxed ten times what it was pre-war. Beer and whisky are twin sisters in distress. They are subject to what I may term penal punishment. They represent the Cinderellas of the Budget, and have done so for some years past. I admit that the Chancellor granted a reduction of 1d. per pint in 1933, but that was very much overdue, and was given because the revenue was rapidly falling. All Chancellors of the Exchequer usually take a very narrow view of anything in the shape of futures; they try to go on "certs." In regard to the beer tax, I have heard it said that if
    1606
    it were reduced by such a sum as would enable the working men of the country to buy a pint of good beer for 3d., the Chancellor would recoup himself within a period of two years. He may say that he may not be here two years hence. I believe he will, and for many years after that—we know his value, except on the beer question.
    Last week I listened to the eloquent speech of the hon. Member for Westhoughton (Mr. Rhys Davies) in opposing a reduction of the whisky tax. He opposed it on what he calls moral grounds. There is no morality in Budgets; the position of the Chancellor of the Exchequer is to obtain as much money as he can and to treat all taxpayers as fairly as possible. I maintain that he has bled the indirect taxpayer very unfairly. They claim that beer should be put on the same footing as cocoa and tea. When the hon. Member for Westhoughton put his own point of view so eloquently, he reminded me of the words which were used by one great statesman of another great statesman in the Victorian era, that he was "drunk with the exuberance of his own verbosity." I do not say that disrespectfully but simply that if he is going to use the same arguments to-day he is not fair. He speaks from an absolutely temperance point of view. I should like to ask him and the Chancellor this question. Suppose we were turned into a teetotal country to-morrow and drank neither whisky, beer nor wine, what would be the position of the Budget? At the present time the Chancellor of the Exchequer obtains £100,000,000 per annum from the

    1607
    excessive duties on alcoholic liquors. Surely that £100,000,000 cries out for fair treatment, which it does not receive at present. Beer alone contributes £55,000,000 per annum and the agricultural labourer for whom I speak, and whom I represent, as well as the hop growers, cries out that he cannot afford to buy beer in moderate quantities at the present price.
    7.26 p.m.
    Mr. HANNON: I beg to second the Motion.
    I do so without any great feeling that the Chancellor of the Exchequer will give a warm response to the proposal. But there are times when a continuous attachment to a principle must be made manifest. On occasions other hon. Members of this House are prepared to prove their continuous attachment to the old gospel of not taxing foodstuffs, and we who feel that the beer trade of this country has been continuously excessively taxed desire from year to year to indicate our feelings that the tax is out of all proportion to other taxes in the Budget. In this country beer is an article of food. The hon. Member for Westhoughton (Mr. Rhys Davies) knows that perfectly well. He knows that the most attractive, sensible and helpful people in his constituency are the drinkers of beer; the moderate beer drinker is the most wholesome citizen we have. The right hon. Gentleman the Leader of the Opposition does not appear to agree with that statement, but as he does not drink beer he cannot understand the genial feelings of the man who does. At all events beer is the largest contributor, except Income Tax, to the revenue, and, in my view, it has been excessively taxed for a long series of years. It is an essential part of the food of the wage-earning classes, and in all fairness the tax should bear some proportion to the tax on tea and cocoa and other drinks.
    It may be that the Chancellor of the Exchequer cannot afford to sacrifice £7,000,000 or £8,000,000 and he may say to-night, as he did the other day, that although he cannot remit the tax, he agrees that it is overdue, and that at some time in the future, when circumstances are more favourable and the prosperity of the country is still advancing, he may see his way to make a further advance to the beer drinkers of
    1608
    this country and remit another 1d. on the pint.
    7.29 p.m.
    Major BRAITHWAITE: I desire to associate myself in the request to the Chancellor of the Exchequer to reconsider this matter of the Beer Duty, particularly from the point of view of the agricultural labourer, who finds it extremely difficult in these hard times to buy his normal quantity of beer. I believe that if the Chancellor of the Exchequer will look into this matter again he will find that he will not lose the amount of revenue which may be apparent on paper if the new Clause were accepted. But if the Chancellor does not consider this matter favourably I ask him again to call together the brewers, and to see what they are going to do towards helping with the price of malting barley. The last time there was a reduction in the Beer Duty the brewers made a gentlemen's agreement with the Chancellor on the matter of malting barley. The brewers certainly have taken more barley from the farmers of our country, but they have taken it at such a low figure that no further advantage has been given to the farmers, and the position in my own constituency, which relies very largely on the production of beer and on the price of malting barley, has been seriously affected.
    I do not know whether I shall be in order in asking the Chancellor to tell us whether he considers that since he made the last concession in this matter the brewers have done everything they should have done in their responsibility to the farmers. Personally I feel that they have not done as well as they might have done. Before he makes any concessions my right hon. Friend would be well advised, in the interests of the agricultural industry, to make a strong representation to the brewers that any further advantage they may get by relief of taxation should be passed on to the farmers. It is a most important matter and one which is having the anxious consideration of every branch of agriculture, because barley is a balancing crop, and if you have these disproportionate prices they are entirely unremunerative. Last year in my constituency the brewers bought malting barley at feeding-stock prices, quite contrary to the arrangement that the Chancellor made with them.

    1609
    Much as I would like to see this concession made, I hope that my right hon. Friend will take the opportunity which a remission of this sort will give to him of providing that a proper price be paid for malting barley.
    7.33 p.m.
    Mr. CHAMBERLAIN: My hon. Friend the Member for Canterbury (Sir W. Wayland) said that his proposal was equivalent to reducing the cost of beer by a penny a pint. It is not quite correct to say that, because you get to that reduction only when you arrive at beer of 1055 degrees, and as a matter of fact that means only the heavier beers—the beers that are said to be good for you—and it does not apply to a very considerable range of beers consumed now. I have ascertained that my hon. Friend's proposal would do nothing at all for beers of a gravity of 1027 degrees and below, and that between 1035 and 1045 degrees, representing two-fifths of the consumption of the country, the average would be a halfpenny and not a penny. The first question is, what would that cost? If it resulted in a rise of 5 per cent. in consumption it would cost about £11,000,000 or £12,000,000 for a full year. If the rise in consumption were 10 per cent. the cost would fall to about £9,000,000 or £10,000,000. My hon. Friend will see that in either case the cost would be sufficient to upset the Budget. He may say, perhaps, that the Chancellor underrates the increase in consumption which would follow this reduction of duty, and that it would be more than 10 per cent.; but I would remind him that the last time I reduced the duty the actual loss of revenue was about £15,000,000, and I think he will see from the figures I have given already on various occasions that I am really not in a position to risk another loss of revenue of the order of that which I have mentioned.
    The hon. Member for Canterbury and my hon. Friend the Member for Moseley (Mr. Hannon) really were rather disarming, because they made it clear that they were not expecting me to accept this Clause and they put it forward as a sort of gesture. We have had a good many gestures this afternoon. There were the gestures of those who said that we ought to remit taxation to the industries that were doing well in order to encourage them to do better; the gesture of those
    1610
    who want taxation remitted to industries that are not doing well in order that they may be saved from destruction; the gesture of those who want taxation remitted on foodstuffs; and now the gesture of those who are interested in drink stuffs. I do not know where the Chancellor is to look for any sources of revenue on these occasions. I would remind the House again that I have been guided by certain principles in considering how any surplus may be distributed. One principle was that the extra impositions of taxation in 1931 should come under review before I went further afield. The remission in the duty on beer two years ago was in fact a little bit more than the restoration of the position before 1931, from the point of view of my hon. Friend, who now wants me to make a further remission. If I did so I should of course be flying absolutely in the face of the principle that I myself have laid down.
    When I consider that, and consider the cost involved, and consider the other claims upon me, particularly the claims of people who are continually calling attention to the enormous taxation of spirits, I feel I cannot go further. I fear that the support of the brewers by my hon. and gallant Friend the Member for Buckrose (Major Braithwaite) will not be entirely agreeable to them. They will wish to be saved from such friends. My hon. and gallant Friend endeavoured to attack them for not having carried out the arrangement that they made with me, but I would remind him that I never asked the brewers to guarantee that when they bought more British barley they would buy at any particular price. They must, of course, buy at the market price, whatever it is. While I sympathise with my hon. and gallant Friend's constituents, who find that the price they receive is not remunerative to them, still I dare say they will prefer that price than that no malting barley should be bought at all. If more barley was bought by the arrangement with the brewers that was as far as I could ask the brewers to go at the time.
    Sir W. WAYLAND: I do not want to force a Division this year, but I hope to do so next year. My feelings remain just the same. I now ask permission to withdraw the new Clause.
    Motion, and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Relief in respect of Indian Land Tax.)
    If any person who has paid, by deduction or otherwise, or is liable to pay United Kingdom Income Tax for any year of assessment on any part of his income proves to the satisfaction of the Special Commissioners that he has paid Indian Land Revenue Tax for that year in respect of the same part of his income, he shall be entitled to such relief from United Kingdom Income Tax paid or payable by him on that part of his income as he would have been entitled to under Section twenty-seven of the Finance Act, 1920, had that part of his income been subject to Indian Income Tax instead of to Indian Land Revenue Tax.—[Mr. Oswald Lewis.]
    Brought up, and read the First time.
    7.39 p.m.
    Mr. OSWALD LEWIS: I beg to move, "That the Clause be read a Second time."
    The object of this Clause is to ensure that where a man is domiciled in this country and owns a source of income in India and is subject to Indian Land Revenue Tax, he shall be entitled to a similar relief from United Kingdom Income Tax to which he would have been entitled had that source of income been subject to Indian Income Tax instead of Indian Land Revenue Tax. The need for such a Clause may be stated briefly. Indian Land Revenue Tax arises out of the ancient history of land tenure in India, with the details of which I need not trouble the House. It is a tax which is levied on the gross proceeds of agricultural land, and for that purpose the land is periodically assessed. Indian Income Tax, which is a much later tax, was introduced in due course. When it was introduced, it was decided, I think quite properly, that it could not in fairness be levied on a source of income which was already the subject of Indian Land Revenue Tax, and such sources of income were accordingly expressly exempted from the operation of Indian Income Tax.
    Therefore, so far as the landowner who is domiciled in India is concerned, the position is simple. He holds a sort of income which is subject to Indian Land Revenue Tax. He does not pay Indian Income Tax upon it, no matter how wealthy he may be. I want to draw attention to the position of such a landowner if he be domiciled in this country. Section 27 of the Finance Act of 1920 provides a certain relief from United Kingdom Income Tax in the case of
    1612
    sources of income which are subject to Dominion Income Tax. In that Act the term "Dominion Income Tax" is defined as follows:
    "Any Income Tax or Super-tax charged under any law in force in any Dominion, if that tax appears to the Special Commissioners to correspond with United Kingdom Income Tax."
    The Board of Inland Revenue have taken the view that, whereas Indian Income Tax does correspond with United Kingdom Income Tax, in other words is a form of Dominion Income Tax for the purpose of that Act, the Indian Land Revenue Tax does not so correspond, and therefore is not Indian Income Tax for the purpose of that Act. I do not know whether the Board of Inland Revenue in coming to that decision have consulted the Special Commissioners or not. For the purpose of my argument it does not matter whether they have done so or not, because I am willing to assume that the Board of Inland Revenue have correctly interpreted the law. I do not quarrel with them on that ground. But I suggest that while they have interpreted the letter of the Act they have not followed the spirit of the Act, and in order that that may be followed I am moving this new Clause.
    I hope that the Chancellor will not rely, in the event of his opposing this Clause, on any suggestion that any one aggrieved could appeal to the Special Commissioners, because, with great respect, it seems to me that that would hardly be a seemly point to take. It would be tantamount to saying to the House that the Board of Inland Revenue have acted illegally or may quite conceivably have acted illegally. I am prepared to assume that they have acted legally, and that is an assumption which, in the circumstances and having regard to his relations to the Board of Inland Revenue, the Chancellor is bound to take. Therefore, it would be a mistake to suggest that anybody who was aggrieved by the action of the Board of Inland Revenue should appeal to the Special Commissioners.
    I want to point out how unfairly this distinction operates. It operates unfairly in two ways. If a landlord is domiciled in India and owns land which is subject to Indian Land Revenue Tax he escapes Income Tax. If he is domiciled in this country, he still has to pay Indian Land

    1613
    Revenue Tax and he gets the full weight of United Kingdom tax. On the other hand, take the case of two men, one of whom shall we say has rice fields in India which are subject to Indian Land Revenue Tax while the other is interested in tea plantations in India which are not subject to Indian Land Revenue Tax but are subject to Indian Income Tax. These two men are treated quite differently as regards United Kingdom Income Tax. The owner of the rice fields who pays Indian Land Revenue Tax, is mulcted in the full amount of United Kingdom tax. The owner of the tea estate, because he pays Indian Income Tax, gets a rebate in respect of his United Kingdom Income Tax, the only reason being that the latter form of industry has been brought within the Indian Income Tax Act. I submit that neither of those two cases could be fairly argued to be just, as between the two persons concerned.
    It may be said that there are very few persons in this country in the position of holding land in India which is subject to Indian Land Revenue Tax. It should hardly be necessary in this House of Commons to stress the point that whether the persons affected be few or many, does not affect the justice of a case. Indeed, should the number affected be few it rather strengthens my hopes because it takes away from the Chancellor that argument which we so often hear that he cannot afford the remission. I am not asking for special treatment for British owners of Indian land. I am only asking that they shall be placed, in respect of double taxation, in the same position as Indian owners of Land, that is to say that if they pay Indian Land Revenue Tax that shall be treated, for Income Tax purposes, as a form of Income Tax. I hope the Chancellor of the Exchequer will see his way to regard sympathetically this effort of mine which may be described as an effort to remedy an accidental injustice arising out of the interpretation of Section 27 of the Finance Act of 1920.
    Mr. HANNON: I beg formally to second the Motion.
    7.49 p.m.
    Mr. CHAMBERLAIN: The first point which arises under the proposed new Clause is whether in this case the charge to which my hon. Friend refers as the Indian land revenue tax—though in fact
    1614
    it is not called by that name—can strictly be regarded as corresponding to United Kingdom Income Tax. When I tell the House that this charge for Indian land revenue was in some cases fixed in perpetuity over 150 years ago and in other cases is revised from time to time at intervals of 30 or 40 years and that when it is revised the method of assessment varies, not only from Province to Province but even occasionally from holding to holding, I think they will see that there is very little correspondence between a charge of that character and United Kingdom Income Tax. But my hon. Friend says that that does not matter to his argument. In fact, by his own Clause he admits that this Indian land revenue charge is not a charge which can be compared with our United Kingdom tax, and he bases his argument upon another consideration, namely, that those who are subject to Indian land revenue in India are not also subject to Indian Income Tax.
    I must admit that that does put the position of my hon. Friend on rather firmer ground than would any suggestion that we have here a charge which can properly be compared with our own Income Tax. But I had to ask myself whether my hon. Friend's argument would stop at Indian land revenue. Is that the only case of a tax in the Dominions which is in lieu of a tax on profits although it may not correspond to United Kingdom Income Tax? I do not know whether he is aware that it does not stand alone. I should find a difficulty in conceding the Clause which he has put down, without at once having to go further and give similar concessions in other cases in the Dominions where charges on capital instead of on property are taken in lieu of a tax on profits but are not admitted for relief from double Income Tax for the same reason that this particular charge is not admitted. There are other cases again where royalties are paid in lieu of Income Tax which are not now considered as coming within the purview of Section 27 of the Finance Act of 1920. Therefore, I could not accept my hon. Friend's proposals without going a good deal further—further no doubt than he intends, because his mind has been fixed on this particular case alone.
    I must say to him that the provisions for relief from double Income Tax in the British Empire have placed upon the taxpayer

    1615
    of this country a burden which in my opinion is altogether unfair. It has not worked out as has been anticipated. It is a matter, as I have repeatedly informed the Dominions, which I considered we ought to discuss afresh with them. We have not yet found an opportunity when it was possible to do that, but I hope that before the next Imperial Conference takes place we may get some preliminary discussion with a view to finding something which will be more equitable in its workings than the present arrangement has been. When that time comes then will be the opportunity to consider all questions of this kind and what further adjustment ought to be made. Until that opportunity comes I do not think I can do anything further than I have done or make any further change which would add to the burden on the British taxpayer.
    Question, "That the Clause be read a Second time," put, and negatived.

    CLAUSE 8.—(Customs duty on rice in the husk.)
    7.55 p.m.
    Sir WALDRON SMITHERS: I beg to move, to leave out the Clause.
    I am sorry to trouble the House again with this question of the import of paddy, that is rice in the husk, but, after many hours of investigation and of conference with the interests concerned, I have come to the conclusion that our case against the imposition of this duty of two-thirds of a penny per pound remains as strong as it was when we began our opposition to this Clause. There is one Parliamentary difficulty in connection with this Clause which ought to be mentioned. The House will observe that the Chancellor of the Exchequer is now about to leave, presumably for dinner, and I think he deserves it. This Clause, although it is in the Finance Bill is not a Treasury Clause. I am informed that it is a Board of Trade Clause—that the Board of Trade is responsible for it, that the Board of Trade representatives must defend it and that, if I want the Clause withdrawn, I must persuade the Board of Trade first and the Treasury will then reconsider the matter. But when I approach the Board of Trade on the matter they tell me, in effect, "We cannot argue the Clause on its merits. The Government of India have asked to put on this duty and we feel
    1616
    bound to comply with their request because it is implementing the Ottawa Agreement."
    I wish, shortly, to give the history of the Clause. Apparently, the Government of India asked the Board of Trade for this duty. The Board of Trade in turn asked the Treasury who at their request included this Clause in the Finance Bill. I have made prolonged and deep inquiries but I find it difficult to fix the responsibility for the Clause, and I am most grateful to the President of the Board of Trade for being in his place to-night. Without wishing to disparage the status of the Parliamentary Secretary, he is not a Cabinet Minister and cannot decide matters of policy. I think the President of the Board of Trade now that he is here will agree that the case which I am putting forward is unanswerable. The Parliamentary Secretary in his speech on the Budget Resolution referred to the importation of paddy as "undermining preference" and as "threatening preference," and as "frustrating preference," and used other terms to that effect. I have here figures which are not disputed and which do not bear out the hon. Gentleman's statement.
    As a consequence of the Ottawa Agreements, a duty of one penny per pound was put on clean white foreign rice imported into this country. There are two kinds of rice and here may I say that I do not wish to be caught up on any small points. I know all the details but I am trying to put the case broadly before the House. Of these two kinds of rice one is called foreign rice or the Japan type of rice, which is produced in foreign countries. For the purposes of this Debate I may refer to it simply as foreign rice. The other kind is Empire rice which is produced in the Empire, a great proportion of it coming from India and Burma. These two kinds of rice are distinct products. The foreign rice commands approximately double the price of the Empire rice. The Empire does not and cannot yet produce this kind of more expensive rice. In the report issued by the Government of India dated Simla, 27th June, 1934, on the working of the scheme of preference, the following statement is made:
    "The factors militating against a greater increase of imports into the United Kingdom may be briefly explained. The most important factor is the present inability

    1617
    of India and Burma to provide in a sufficiently increasing measure the quality of rice required by the consumers in the United Kingdom. The point has to be clearly noted that even the most expensive rice is relatively a very cheap article when compared with other foods. In consequence, the price element does not wholly determine the purchases of the consumer. It is the flavour and the easier cooking properties, as well as the finish and polish, that determine the choice of variety of rice by the consumer in the United Kingdom. As Burma rice is inferior to foreign rices in some of these respects, its consumption suffers."
    So, in their own report, the Government of India acknowledge in broad outline that foreign rices are of a superior quality to anything that the Empire can produce. The demand of India to have this two-thirds of a penny on imported paddy, which is rice in the husk, before it is milled and converted into clean rice, has no foundation whatever. As someone put it to me, rather vulgarly, shall I say, "India has got the wind up for no reason whatever." The Ottawa Agreements are working according to plan. I know it is very difficult, in a Debate of this kind, to follow figures, but I am compelled to give certain figures which show that, because of the Ottawa Agreements, the importation into this country of Empire rice has enormously and increasingly increased, and the importation of foreign rice into this country has enormously and increasingly decreased.
    I will take the four complete years 1931 to 1934. The importation of Empire rice in 1931 was 31 per cent.—I leave out the decimal points—and in 1934 it was 60 per cent. That is to say, in the four years the importation of Empire rice had doubled. Now we happen to have the figures for the first five months of this year. I know that the figures for five months cannot be taken as confidently as those for a whole year, but these figures show that that definite trend to increased Empire imports persists. For the first five months of this year the percentage has gone up from 31 per cent. in 1931, and from 60 per cent. in 1934, to 80 per cent. To take the imports of foreign rice, in 1931 they were 68 per cent. of the total; they went down to 39 per cent. in 1934, and for the first five months of this year they were down to 19 per cent. I contend that those figures dispose completely and absolutely of the case that India is trying to make, that the Ottawa Agreements are not working and that her rice trade in this country is being threatened.
    1618
    I want to be brief, and I cannot do better than quote a few lines spoken on the Committee stage by my hon. Friend the Member for Colchester (Mr. Oswald Lewis), who, if I may say so with respect, did not know much about this Clause till he came into the House, but who, having followed the Debate intelligently, made this remark:
    "The Parliamentary Secretary has sought to convince the Committee that this importation undermines, or threatens to undermine, the agreements made at Ottawa. It seems to me that to support that contention, he must be able to produce certain figures showing that the importation of foreign paddy constitutes an addition to the total importation of foreign rice of all kinds. As I understand the case put by many Members on both sides, it is that the importation of this paddy is merely a substitution for foreign cleaned rice and not an addition to the total importation of foreign rice of all kinds. Seeing that the figures of the total importation of foreign rice of all kinds are still falling, it would at first sight seem as if the argument rests with those who are opposing the Clause rather than with the Parliamentary Secretary."—[OFFICIAL REPORT, 18th June, 1935; col. 269, Vol. 303.]
    I could quote other hon. Members who listened to the Debate or who read the OFFICIAL REPORT of the Debate, and who said to me afterwards, "You completely made out your case." Out of the 10 or 11 speeches made during the Committee stage Debate, the only speech, with the exception of a short intervention by the hon. and gallant Member for Bournemouth (Sir H. Croft) in favour of the Clause was that of the Parliamentary Secretary himself. The truth is that on the merits of the case there is no answer to the arguments which I have ventured to put forward.
    There is another point that I want to make. This foreign rice cannot be sold in competition with Empire rice. Between 35 and 40 per cent. of the rice consumed in this country comes from foreign sources, and from the figures that I have given it will be seen that, owing to the Ottawa Agreements, the trade has swung tremendously in favour of the Empire, and, Burma and India being by far the greatest producers in the Empire, they have benefited proportionately. We seem to have come to the point where the British public say, "We want this luxury, this higher priced type of rice, and we are willing to pay for it; we are willing to pay double the price for it."

    1619
    It comes into this country over the 1d. per lb. duty which is imposed on foreign clean rice, and the demand still persists for 35 to 40 per cent. of the consumption of this country. It is true that the Empire, little by little, is learning to produce this higher grade rice. I understand that it takes from eight to ten years to hybridise, cultivate, and produce this higher type of rice. The buyers in this country, the millers, tell me that they have bought every bag that has been offered of the type of rice which can in any way compete with what I call the foreign higher priced rice, but even that amount is by no means equal to the higher priced rice that comes in, principally from Spain, but also from Italy and other countries.
    There is, however, a bigger point at issue here. The Government, by accepting the request of the Indian Government, are setting up a precedent, and I should like to ask the President of the Board of Trade if he is going to accept every request from any Dominion without proper examination, and without vetting the reasons that prompt that Dominion to ask for that concession. I will quote a few words from the speech of the Parliamentary Secretary in the Debate on the 18th June, and I call attention to this because I think a very dangerous precedent is being set up. When speaking about this demand of the Indian Government, the Parliamentary Secretary said:
    "I am not arguing the reasons which the Government of India had for coming to that conclusion, but I am telling the Committee as a fact that the Government of India have come to the conclusion"—
    I ask the House to mark those words"—
    "on what appear to them to be good evidence and satisfactory grounds, that this sudden growth of an unlooked-for import, not taken into account at Ottawa, has, in their judgment"—
    not in the judgment of His Majesty's Government—
    "constituted a new factor which in their mind seriously threatens the preference of a penny a pound which it was the contractual obligation of the United Kingdom to give them as a result of the Ottawa Agreement."
    The figures I have just given, which show how the importation of rice from foreign countries has fallen from 68 to 19 per cent., and how the importation of Empire
    1620
    rice has risen from 31 to 80 per cent., prove that the Government of India have no justification whatever to complain that the importation of this foreign paddy is in any way a menace to the Ottawa Agreements. The Parliamentary Secretary also said on the 18th June, when he was referring to the importation of paddy:
    "The 2 cwt. in 1932 became 20,000 cwt. in the following year, became 333,000 cwt. in 1934, and in the first five months of this year has increased to the rate of 500,000 cwt. in the course of a year."—[OFFICIAL REPORT, 18th June, 1935; cols. 261–2, vol. 303.]
    I agree. It is because a penny a pound duty was put on imported clean foreign rice, and it is because only 10 per cent. duty was placed on the importation of the raw material, that the millers of this country were able to start a business and make a very small profit of approximately a farthing a pound. Instead of importing clean foreign rice, they were able to import the rice in the husk, the raw material, and mill it in this country, and, because paddy is double the weight, double the bulk, of clean rice, it gives double the work, not only in milling, but in transport, in port dues, harbour dues, market dues, and all the other subsidiary interests that are involved. The Parliamentary Secretary to the Board of Trade said, in his speech on the Budget Resolution, that this Clause had been introduced in the spirit of Ottawa. I ask the House to ask themselves what could be more against the spirit of Ottawa than to introduce a Clause which, as I submit, I have conclusively proved will not in any way help India. The only effect will be that it will stop the milling of paddy in this country, put out of work those who are engaged in the industry, and do away with at least one-third of the business of the millers. I will not develop the arguments further because we had a good Debate on this question on the Committee stage, but I want to ask the Parliamentary Secretary what he has done during the past 10 days to implement the pledge which he gave on the Committee stage. He said:
    "Of course, I give the Committee the assurance that everything that has been said will be most carefully taken into consideration between now and Report."
    He also said:
    "But between now and Report stage I will examine with the officials and with

    1621
    everybody else concerned the speeches and arguments which have been put forward."—[OFFICIAL REPORT, 18th June, 1935; cols. 271–2, Vol. 303.]
    Neither I nor the millers for whom I am speaking have received one word from the Parliamentary Secretary. We waited until almost the end of last week, and in desperation I went to see the President of the Board of Trade, and I was received most kindly by him. I asked four specific questions during the Committee stage. The first question was how this demand arose in India and what is the demand from the Rangoon millers. The point I wished to make was that the Rangoon millers are, so to speak, farmers and do not understand the market conditions in Great Britain or what the public demands in Great Britain. I asked, again, whether the Government would consider the withdrawal of this Clause for one year in order to see whether the figures I gave continue in their trend and whether it was indeed true that India's fears were unjustified. My third question was whether the Government would agree to some statutory or gentleman's agreement to limit the importation of paddy. The last question was whether, if the Government wanted to be logical, they would prohibit altogether the importation of foreign rice and let the Empire have the home market, and, if they were not prepared to prohibit the total importation of foreign rice and paddy in whatever form, they would allow the foreign rice to come into this country to be milled there. It cannot matter to India in what form the rice comes into this country.
    I have been to see the Trade Commissioner for India, and he does not dispute my figures, which show a continual decrease in foreign rice imports and a continual increase in Empire rice imports. All I am asking the Government is that, so long as they allow foreign rice to come into this country, they should allow it to be milled here. If this Clause is passed, it will kill the milling of foreign paddy in this country, but it will not stop the importation of foreign clean rice. The only effect will be to make a present of the milling operations to the foreign miller. I know that the Parliamentary Secretary has a big majority behind him. Those who heard my arguments on the Committee stage told me that, if only those Members who went into the Division Lobby for the Government had heard the
    1622
    Debate, I should have won my case. I am faced with the same difficulty tonight, but I am convinced that the case I have put forward cannot be assailed at any point on its merits. It may be said that we are in a difficult position with India at the moment, and that, if we do not pass this Clause India may retaliate in some other way, but on the merits of the case there is no controverting the arguments which I have put forward. I ask the Government to own up to the fact that there has been a misapprehension in putting this Clause into the Bill, and I ask them earnestly to post-date the operation of the Clause for one more year in order to see if the trend of the imports of foreign rice which are going down, and of the imports of Empire rice which are going up, persist.
    8.19 p.m.
    Mr. OSWALD LEWIS: I beg to second the Amendment.
    I do so because it seems to me that the case put forward on behalf of the Board of Trade on the Committee stage amounted in substance to this: The Indian Government have asked for this further duty, and we are bound under the Ottawa Agreements to give them the duty if they ask for it. That is a most extraordinary argument to put forward. The Parliamentary Secretary who used it admitted that the question of the importation of paddy was not present to the minds of either the representatives of the Government of India or of the negotiators on behalf of this country at Ottawa. If it was not present to the minds of either negotiators, how can we be said to be bound to put on the duty at the mere request of the Government of India without ourselves considering whether it is or is not a proper thing for us to do? I submit that there are really only two questions which we have to ask ourselves on this matter. The first is, have we imposed the duty which we undertook to impose at Ottawa? The answer to that question is, yes, a specific duty was mentioned, and that duty has been imposed. The second question is, has the duty that we have imposed had the effect that it was hoped it would have? The answer again is, yes.
    The Parliamentary Secretary to the Board of Trade admitted frankly that since that duty has been imposed the importation into this country of Indian

    1623
    rice has continuously gone up and that the importation of foreign rice has continuously gone down. If we have imposed the duty which we said we would impose, and if it has had the effect which we all hoped it would have, why should the Government ask us to impose a further duty, which, it can be shown, will be in some respects a harmful duty? There is a trade—it is true that it may be a small trade—which has grown up, admittedly by chance, out of the operation of the duty which we imposed. Representatives of the Board of Trade come to the House and ask us to help them to kill that trade because of a request on behalf of the Government of India. The Parliamentary Secretary categorically said on the Committee stage that he was not examining the arguments on which the Government of India came to that conclusion; it was sufficient for him that they had, as a fact, come to that conclusion. Since when has the Government of India been the taxing authority for this country? I am one of those who think that when the Parliamentary Secretary to the Board of Trade has a good case he makes the very best of it. Having listened carefully to his two speeches on the Committee stage, I think that, unless he was gravely out of form on that occasion, the weakness of the case which he put before us must have been due to his own consciousness that it was a case that could not be sustained in argument. He has had time for consultation and reflection. I hope that if he is not now going to give way he will, in justice to the House, produce some better arguments than he did on the last occasion.
    8.24 p.m.
    Sir JOHN WARDLAW-MILNE: I was very impressed by the tremendous earnestness of my hon. Friend the Member for Chislehurst (Sir W. Smithers) who moved this Amendment and by the amount of labour and trouble he has taken to ascertain the facts which led him to move it. Although I am, no more than he is, an expert in the production or the marketing of rice, I have perhaps some slightly greater knowledge of its production abroad, and I have, as he has, been in touch with those who are interested in this question. It is not quite such a one-sided matter as my hon. Friend who moved the Amendment would have the House believe. I agree with what the
    1624
    hon. Member for Colchester (Mr. Oswald Lewis) said, that this is not a very great matter, that it does not affect any very large part of the United Kingdom trade, but that does not alter the fact that if I were convinced either that we were doing a grave injustice to the millers in this country or doing something we should not otherwise do merely because the Government of India had asked us to do it, I should entirely agree with the views put forward by both my hon. Friends. But I am afraid the matter goes a little deeper than that.
    I have taken some trouble to ascertain the position as I see it and as it was put in the statements made by my hon. Friend who moved the Amendment both to-night and in his previous speech on the Committee stage. I heard most of that Debate in Committee, and I remember that my hon. Friend made it a special point that the imposition of this duty would confer no benefit at all upon India. I think it would be advisable for us to take the views of those most interested, and if we refer to what India herself said, long before this discussion arose, I think we shall be satisfied that she feels quite definitely that she will be benefited by the imposition of this duty. It is probably known to the House that considerable efforts have been made for the production of better qualities of rice in Burma and other parts of the Empire, but I want to put to the House, as an illustration of the view which India herself holds, an extract from the report of the Advisory Board of the Imperial Council of Agricultural Research which is dated from Simla, September, 1934:
    "In view of the fact that the grants received from the Empire Marketing Board for rice research schemes in Bengal and Burma were expressly given for the production of rites equal to the highest quality required in the United Kingdom market, and the fact that the omission of foreign paddy from the specific duty gravely reduces the value of the Ottawa preference on Empire rice, the Council desires to endorse the opinion expressed by the recent Indian Crop Planning Conference that His Majesty's Government should be required at an early date to impose a specific duty of three-farthings per lb. on all foreign paddy imported into the United Kingdom."
    That, at any rate, does not look as though India were indifferent as to whether the duty is imposed or not. Again, a subcommittee of the Legislative Assembly in Simla, on the 24th August, 1934, stated:

    1625
    "We would invite the attention of Government to the necessity of ensuring that the effectiveness of the preference is not diminished by the invasion of the United Kingdom market by foreign paddy which is subject to a duty of 10 per cent. ad valorem as compared with a specific duty of one penny per lb. on cleaned rice."
    I quote those extracts because I think we ought to get away from the idea that India has not taken the trouble to ascertain what is in her own interest. She has very definitely put forward the view that the imposition of this duty is very much in her own interest. Then I come to the point, which appealed to me very much as made by my hon. Friend, that if this duty is imposed it will put British millers out of business altogether.
    Sir W. SMITHERS: That is true.
    Sir J. WARDLAW-MILNE: I think I am right in saying—I am informed that it is true, though I have no actual knowledge—that practically all the luxury rice which is imported or could be imported from India requires a process of reconditioning and remilling which takes practically the same amount of labour as is required in the case of paddy. In fact, information given to me is to the effect that most of the extra labour in paddy milling is purely mechanical and that, roughly, two men per mill represent the only difference in the amount of labour required in the working of imported paddy and of rice which requires reconditioning.
    Sir W. SMITHERS: I tried to point out in my speech that paddy is double the bulk, double the weight and required a great deal more work put into it than is the case in the finishing operations on imported rice, and I am informed that it is undoubtedly a fact that if this Clause goes through the milling of paddy in this country will be completely finished.
    Sir J. WARDLAW-MILNE: What may finish is the milling of imported foreign paddy, but that work would be replaced very largely by the reconditioning of Empire and Indian rice. My hon. Friend says that his information is that imported paddy calls for much more labour. My information is that it is a very small amount more. Neither of us is an expert in this matter, and I can only give the information which has been given to me; but it seems to me clear
    1626
    that British millers could, if they liked, substitute for imported foreign paddy the raw material which they could get from Empire sources. Another point which my hon. Friend made and which he dealt with at considerable length was that this luxury rice could not be produced in the Empire. There, again, I think the statement goes too far. I will give him such information as I have from official sources on that subject also. At the meeting to which I have referred of the Imperial Council of Agricultural Research at Simla the director of agriculture in Burma made it abundantly clear that Burma can and does produce the most expensive grade of rice. I do not want to go into long quotations, and I will give the House what was said as shortly as I can. He said that two or three years ago the Empire Marketing Board and the Imperial Council of Agricultural Research made large grants for rice research. So far as Burma was concerned they had largely succeeded, as even before they got a grant from the council they were engaged in producing types of rice which would some day capture the European market. He took the opportunity to contradict several misstatements which had appeared in the Press from, time to time that Burma and Bengal could not produce types of rice suitable for the market in the United Kingdom. Lastly, I want to point out to the hon. Member that his statement that rice coming from India is almost all—all, I think he said—sold at the lower price for what he called Empire rice as against foreign rice is, again, not quite correct, because the best types of Burma rice have been sold in the United Kingdom continuously since early 1933 at from 22s. 6d. to 24s. per cwt.
    Sir W. SMITHERS: Will the hon. Member tell the House the quantities of that higher quality rice from Burma which have been sold? I am informed that it is true that a few hundred tons of this higher quality rice have been sent, but that only proves that the Empire is beginning to grow the higher quality rice. The only request I make is that as long as foreign rice comes into the country from Spain and elsewhere it should be milled in this country.
    Sir J. WARDLAW-MILNE: I know that my hon. Friend is convinced that rice of the kind of which he is speaking cannot

    1627
    be produced except outside the Empire, but it is quite evident to me that information goes to show that a great deal more can be produced within the Empire, but it will not be produced so long as we allow the foreign grower to get his paddy into this country without the extra duty. The moment you put the duty on you give a tremendous impetus, if my information is correct, to the importation of luxury rice from Burma where it can, I believe, be grown at the present time.
    It is very difficult for any one who is not an absolute expert to speak with certainty on this matter. I speak with considerable diffidence because I know what a lot of trouble my hon. Friend has taken over this matter. If he would go a little further, he might find that India is firmly convinced that she will not get the trade in luxury rice until this duty is on to prevent the foreigner sending his paddy here. Taking what the hon. Member said in his interruption as the lowest basis, it shows the steady growth in production of the luxury class of rice in the Empire. It should be clear that, as soon as the duty is put on, the miller will be able to buy Empire rice, and that that growth will continue to an increasing extent. There is a great deal of evidence that the duty would be of much advantage to India. I am not convinced that the millers of this country would suffer seriously, if at all, by the adoption of this Clause.
    8.37 p.m.
    Sir REGINALD CRADDOCK: I want to emphasise the enormous importance to Burma of the rice crop. The economic slump which took place there was simply due to the entire falling away of her market for rice. That market enabled her to spend on imports, be it in the way of cloth or manufactured articles from this country, the sum which was available when she had a prosperous market for her rice. I was in Burma during the last year of the War and a year or two afterwards. We had to control rice in Burma partly in the interests of this country and partly in the interests of the non-rice-producing inhabitants in Burma itself. In the course of that control, prices rose so high that in other countries, not only in Asia but in Europe, wherever the climate admitted, there was a large push forward in the production of
    1628
    rice for home consumption and for export if they could. In that way Burma lost her market. There were large increases in rice cultivation in other countries in Asia; for example, in Siam, in French Indo-China, to some extent, I believe, even in Java and to a large extent to Korea.
    I am speaking mainly of Burma because her export is very much larger in proportion to her production than is the case with India, where large quantities of rice of low varieties occupy the ground for the short time and are chiefly consumed in that country. India exports a small quantity of fine rice and imports simultaneously from Burma a large proportion for her own consumption. It is a great mistake to talk about Indian or Burman rice as a special or peculiar kind of rice, because their rice ranges over a number of varieties. You can always have a cheap rice, or a really fine rice which occupies the ground for a long time and which requires much constant and careful irrigation. To the best of my recollection the export of paddy to this country was infinitesimal and no doubt for that reason the necessity for putting a duty on paddy was overlooked in the case of Burma. The rice which was sent to Europe went very largely to Germany at one time in the form of husked rice—not rice in the husk—cleaned to various degrees. There are several processes of cleaning, until you arrive at the very highly polished rice.
    I do not think the export of rice in the husk existed, because you had to carry away a large weight in pure husk and pay freight, and the husk was of no value when you had husked the rice. At the same time it was much more bulky. Consequently, no one from Burma would export paddy to this country if they could send cleaned rice, which could be reconditioned by milling in this country. Maybe the processes were not so fine in Burma, or in the course of the voyage over the tropical seas the rice got out of condition and had to be reconditioned in this country. Nobody heard of Spanish or Italian rice being sent in the form of husked rice until the accident was discovered that if you brought the paddy in for the lower rate of duty and husked it in this country you could cut out cleaned rice from other countries, and you had the benefit of the cheap paddy. A small industry has sprung up recently

    1629
    in the milling of paddy as distinct from the reconditioning and polishing of milled rice. I do not think that small advance should stand in the way of our doing what undoubtedly would be a good turn to Burma. It is all-important for prosperity in Burma. She exports a much larger proportion of rice than India, and she has a vital interest in maintaining her market for paddy throughout the world. It would be a rather scurvy trick against Burma if we cut her out in respect of the small contribution that she sends to this country. For the reason that I have given I hope the Government will not accept the Amendment.
    8.44 p.m.
    Dr. BURGIN: We have had a number of Debates on paddy and the House will have noted the tenacity with which the hon. Member for Chislehurst (Sir W. Smithers) has taken up an eager opposition to the Clause. As a lawyer, I know that those cases are the most dangerous to which you never see that there is any possible answer. The hon. Member for Chislehurst said time and time again on the Committee stage that he thought his arguments were incontrovertible, that he had made out a case that could not be answered, that nobody could ever discuss it on its merits, and a number of similar phrases. I am afraid it is precisely when that type of expression is used that the mind is not always open to a very obvious answer. I would like the House to assume that this matter has been looked into on its merits—that it is not merely a question of the Government of India asking and ourselves obeying, although I would point out that, when we speak of the Government of India, we always mean His Majesty's Government in India, and are not referring to a foreign Government.
    When this matter was discussed in Committee there were a number of speeches against the Clause. Some of those speeches, I think, in fairness to the hon. Members who made them, were probably made extempore, without any very deep study of the matters underlying the points discussed. I gave, at the end of the Committee stage, a very full assurance that all the arguments used would be examined by the Government, and every relevant consideration taken into account. The hon. Member for Chislehurst says, "How have you spent the last 10 days? How have you implemented
    1630
    that assurance? What have you done?" I have done exactly what I said I would do. Every argument used, every figure put forward, every suggestion made, has been tested properly and effectively by the officials, and the hon. Member for Chislehurst himself has been received by the President of the Board of Trade and has put his case very fully to my right hon. Friend. The hon. Member for Chislehurst appeared to be in some doubt as to whether India really required this duty, and himself interviewed, as he said to-day, the Trade Commissioner for India, from whom, I have no doubt, he received a very direct assurance on the point on which he consulted him. Having had an opportunity of making this examination and of weighing all these considerations, I can only say to the House that it is the intention and desire of His Majesty's Government that this duty should be imposed.
    Sir W. SMITHERS: I have not a copy of the OFFICIAL REPORT at hand, but the burden of what the Parliamentary Secretary said in Committee was that he would communicate with, or see, or consult all the parties concerned. The people vitally concerned are the millers, but it was not until the end of the week that we felt we could wait no longer, and the President of the Board of Trade kindly saw me on Friday and was most helpful.
    Dr. BURGIN: I cannot believe that the millers previously received by me in deputation would have wished to add anything to the very, full and elaborate statement which they made to me. Had they made such a request, they would have been instantly received. I cannot believe that anyone speaking for the millers would suggest that there has not been the fullest opportunity for consultation in their case. The interview with the leading millers was a very exhaustive one, and I cannot believe that there is any other point that could have been added. Certainly, the hon. Member himself, in his speeches at his interview with the President of the Board of Trade, at his deputation, and here to-day, has not put forward any fact that has not been present to the minds of the officials who have re-examined this matter.
    Let me now, for the benefit of those Members of the House who are listening to this Debate and who want to deal fairly between the parties, try very

    1631
    briefly to explain the matter. I would address myself particularly to the hon. Member for Colchester (Mr. Oswald Lewis), who said that there are only two questions—have we put on the import duty that we undertook at Ottawa to put on, and has that duty had the effect anticipated? If that is the case, he says, our contractual obligation is at an end, and were those the facts I should, of course, agree with him. Let me explain, however, that India is a great producer and exporter of rice, and one of the matters on which at Ottawa she asked for special treatment was her rice trade. The form of special treatment for which she asked was a preference of 1d. per lb. as against foreign rice. Rice can be imported into this country either cleaned or in the form of paddy. Foreign rice coming into Great Britain cleaned is subject to a duty of 1d. per lb., and to that extent India has her preference, because her rice comes in free. But paddy, from which a proportion—the hon. Member for Chislehurst says it is one-half—
    Sir W. SMITHERS: Fifty-five per cent.
    Dr. BURGIN: —from which 55 per cent. of foreign rice can be obtained by husking in the United Kingdom, is subject to a duty of only one-tenth of 1d. per lb. The whole rice, therefore, which comes in from foreign countries in the form of paddy and which is husked in this country, represents, so far as India is concerned, cleaned rice on which a duty of one-fifth of 1d. per lb., if it be regarded as consisting of one-half of the unhusked paddy, is paid. At Ottawa we gave India the undertaking to give her a preference as against foreign rice of 1d. per lb., and we have done that in the case of the cleaned rice, but not in the case of the paddy. We did not do it in the case of the paddy for the simple reason that no one ever thought that anyone was going to import paddy for the purpose of husking it in order to obtain foreign rice from it. That trade has grown up since 1932—I do not complain of it—in circumstances which amount to an evasion of the preference we granted to India. Starting from nothing, it first reached 20,000 cwt., then grew to 300,000 cwt., and this year, at the rate of 500,000 cwt., is obviously eating into India's preference of 1d. per
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    lb. which we undertook contractually to give her.
    The hon. Member for Chislehurst says that it cannot be having any effect on India because the Indian exports of rice are going up and the imports of foreign rice are going down; but that is not the end of the argument. How do we know that, if there were this duty on foreign paddy, the exports from India would not go up and the imports of foreign rice would not go down much more quickly? It is not an answer to say that India has already had a substantial benefit under the Ottawa undertaking, and therefore we need not implement the remainder. We are all delighted that India has had such a substantial benefit, and we want that benefit to continue. This House has said time and again, either in connection with the import duties or with the Ottawa Agreements duties, that, if you put a duty on, and then find some practice growing up which evades that duty, the House would desire, if it be within its power, to prevent that evasion.
    Let us look at the matter again. A duty is intentionally put on foreign rice of 1d. per lb., and all the rice that comes in cleaned from Spain would be subject to that duty of 1d. per lb., which gives a preference in favour of India. The result is an expanding Indian export rice trade. Then comes, first a trickle, next greater quantities, and finally enormous quantities of rice from Spain, not in the form of cleaned rice paying 1d. per lb., but in the form of paddy, from which the rice has to be extracted, and which pays a duty, not of 1d., but of about one-tenth of 1d. per lb. That gives just the margin by which the miller is enabled to import this paddy, extract the rice from it, and, in view of the duty of only one-tenth of 1d. per lb., can manage to hold his own. India says that this very substantial ballooning up, if I may use the Minister of Agriculture's not very picturesque but informative expression, is "biting into someone," and India takes the view—and there is evidence to support it—that it is "biting into" her possible exports of cleaned rice. The result is that, on a certain quantity of rice imported into the United Kingdom, the duty guaranteed at Ottawa is not being charged. India asks us to implement our undertaking to make the charge of a penny a pound effective.
    Sir W. SMITHERS: Is the hon. Gentleman aware that, when it is put through the various operations of milling and cleaning, the two-thirds of a penny a pound is equal to twopence a pound on cleaned rice?
    Dr. BURGIN: No, I am not aware of that fact and my experts came to a different conclusion. We are at difference as to the amount of the duty. I am advised that the two-thirds of a penny proposed by this Clause is the approximate mathematical equivalent of a penny a pound on cleaned rice, and it is so calculated. There is a good deal of argument which shows that the calculation is exact. I can state three cardinal facts. Firstly, the expansion of the Indian rice trade which has already occurred shows that there is room for a great increase in the consumption of rice from India; secondly, that the expansion has very largely been due to the difference in favour of Indian as against foreign rice, and, thirdly, that India, recognising Great Britain's preference for certain types of special rice, has paid a good deal of attention to the growing of those particular kinds.
    The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) is entirely right in the information that has been given to him that not only are all those different grants that he refers to made by the Indian Legislature, but there were grants actually made by the Empire Marketing Board. We actually sanctioned public money being utilised by the Empire Marketing Board for the express cultivation of the very rices that we are discussing. The export of those kinds is increasing, but, of course, unless there is an increase of the duty on paddy, the increase of these better kinds of rice is not likely to be so considerable and in the view of the Government of India the increase of the growing of the rices for which Great Britain has a preference will be hindered. The Indian Government have set aside money for research. The Burma Government have done the same. All these attempts to produce the type of rice which the British consumer requires are evidence of the interest that India takes in the expansion of her rice trades. In the interests then of the Ottawa Agreement, to prevent what is plainly an evasion of the spirit of the agreement, the Government must insist on this Clause being maintained and, as
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    I have said, the two-thirds of a penny is the equivalent of a penny a pound on cleaned rice.

    CLAUSE 20.—(Deduction in respect of children.)
    8.59 p.m.
    Mr. TINKER: I beg to move, in page 16, line 34, at the end, to insert:
    "(2) The said Section twenty-one shall have effect as if the references in Sub-sections (1) and (2) thereof to a child receiving full-time instruction at an educational establishment included references to a child undergoing training by any person (hereafter referred to as "the employer") for any trade, profession, or vocation in such cicumstances that—

    (a) a child is required to devote the whole of his time to the training for a period of not less than two years; and

    (b) the emoluments, if any, receivable by, or payable by the employer in respect of the child while undergoing the training, do not exceed thirteen pounds a year, exclusive of any emoluments receivable or payable by way of return of any premium paid in respect of the training;

    For the purpose of paragraph (b) of this Sub-section all emoluments at any time receivable by, or payable by the employer in respect of a child in respect of whose training a premium has been paid, shall be deemed to be receivable or payable by way of return of the premium, unless and except to the extent that the amount thereof exceeds in the aggregate the amount of the premium.
    (3) In this section the expression "emoluments" means any salary, fees, wages, perquisites, or profits or gains whatsoever, and includes the value of free board, lodging, or clothing.
    (4) For the purpose of a claim in respect of a child undergoing training, the surveyor may require the employer to furnish particulars with respect to the training and the emoluments of the child in such form as may be prescribed by the Commissioners of Inland Revenue."
    This Amendment arises out of an Amendment moved from these benches on 19th June. There was a lot of discussion on it, and every one agreed to it in principle. There were eight speakers apart from the Chancellor of the Exchequer, and everyone, including the Leader of the Opposition and the Leader of the Liberal party in opposition, spoke in favour of it. The Chancellor of the Exchequer recognised that there was something in it though he would not

    1635
    accept it. He stated that in 1920 an attempt was made to get a similar Amendment. His objection was that it did not come within the term "general education" and that it might lead to a very far-reaching thing. I cannot hold with the Chancellor on that, because education takes various forms. Education embraces more than going to a college or university. We argue that, if a child is being trained for a trade, receiving no payment, he is entitled to the same benefit as was given under the Act of 1920 to those receiving instruction at an educational establishment.
    The Chancellor gave us no definite promise, but he gave us an understanding that we might meet officials of the Treasury and ask for their help in drafting our Amendment in another form. We have met them, and we got a lot of help from them. We now bring forward a form of words which we think might be acceptable to the House. The Chancellor's objection was that payment might be made, and another point that he made was as to the length of the term of apprenticeship. On that point we say that the child is required to devote the whole of his time to the training for a period of not less than two years. That means that a casual job or a casual apprenticeship will not come within the purview of what we desire. In our discussion with the Treasury officials, it was pointed out that there might be some kind of payment, perhaps 1s. or 2s. a week for pocket money. We realise that there must be a line drawn, so we agreed that, if the apprentice got no more than 5s. a week, or £13 a year, that should not be called payment of wages. It might be taken as being a kind of grant which did not prevent the parent from getting the exemption. It was said, what about premiums that are paid? It is known that premiums are paid in respect of apprenticeship which are sometimes paid back to the parent or to the apprentice during the time the service goes on. In some cases £100 is put down, or it may be £200, on the understanding that if the apprentice proves fairly efficient, or shows an aptitude to follow the training, the employer, if satisfied, may hand back during the period of apprenticeship at least some of the premium which has been paid. We have said that that cannot be called wages.
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    If during the time of apprenticeship the money paid as premium is paid back to the child, it should not be termed wages. We arrive at this point, that if the apprentice does not get more than 5s. as pocket money, and, in addition, does not get more than the whole of the premium money paid in respect of him, there should be entitlement to exemption just as if the apprentice had instead been attending a university or college.
    We have tried as far as possible to meet the objections which were put forward by the Chancellor of the Exchequer. I do not think that that would mean a big loss to the Exchequer. I have had one or two cases brought to my notice where in the same town or neighbourhood one child has gone to college or to a training centre, and another child has been put to apprenticeship, and one has got the exemption and the other has not. On the terms of equity, we ask the House to recognise the fairness of the plea which we are putting forward. We have tried to meet all objections. I do not know whether the Amendment has been made watertight or not, and I do not know whether the Chancellor of the Exchequer is prepared to accept it, but I can assure him that I and those with whom I have been associated, the leader of the Liberal party the right hon. Gentleman the Member for Darwen (Sir H. Samuel) and my hon. Friend the Member for Caerphilly (Mr. Morgan Jones), have done all we can to make it possible in the hope that we may secure from the Chancellor of the Exchequer a small concession in a Budget in which he has given very little.
    9.8 p.m.
    Mr. CLEARY: I beg to second the Amendment.
    My hon. Friend the Member for Leigh (Mr. Tinker) has, I think, proved that the difficulties outlined by the Chancellor of the Exchequer on a recent occasion have now been cleared up, due to the new wording placed before the House this evening. The difficulties advanced by the Chancellor of the Exchequer were not of a financial character. He did not attempt to place any argument before this House in opposition to our case on grounds of principle; rather did he say in all fairness that he considered that the Amendment was not practicable, and was unworkable in its state at that time. We have been able, due largely to his very good offices, to place before the House

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    the Amendment which I think, clears away all the difficulties envisaged by the Chancellor of the Exchequer, and we therefore anticipate that some concession will be made in respect of a claim, which now that these difficulties are no longer with us, is all the stronger. We know that the case of the Treasury bench is not on financial grounds, and that they are not opposed to our argument in principle. The Chancellor rather admitted that on grounds of principle he agreed that the child enjoying full-time instruction as an apprentice should be in the same category as the child at a secondary school or college from the point of view of Income Tax allowance. Therefore, now that all those difficulties have gone, we believe that we can put a stronger argument before the House.
    Full-time apprenticeship in trade or profession is merely another form of education and should bring the child apprenticed, or articled in regard to a profession, into exactly the same category as the child at school, college or university. The parents of these two sets of children should enjoy exactly the same relief and concessions. The education, technical though it be, in a particular trade is just as valuable to the recipient and to society in general as in the other case. The training received by the apprentice to fit him for a certain trade or profession confers as much benefit upon him or her and society in general as the benefits derived from a general education in the secondary school, or college. Therefore, it is a question of one category, and that is our main case. In addition, in the case of children sent to learn a trade or articled to a profession the sacrifice made by the parent in many cases is the greater, and because of that the claim for this concession in order to bring them into the same class as the children enjoying full-time education is all the more justifiable. Differentiation is unfair, it savours of class legislation because of the arguments that we have been able to advance, and we think, that the difficulties of mere wording having gone, and the Chancellor of the Exchequer having admitted that he is not prepared to state a case against us on the ground of finance or principle, we have proved our case. It is difficult in these circumstances to anticipate or to visualise any argument
    1638
    being made against this simple plea for ordinary elementary justice, and we suggest that the simple Amendment before the House to-night is an easy way of adjusting something that calls for adjustment.
    9.14 p.m.
    Sir P. HARRIS: In the absence of my right hon. Friend the Member for Darwen (Sir H. Samuel), I have been asked by him to express his great appreciation of the facilities given by the right hon. Gentleman the Chancellor of the Exchequer for the drafting of this Amendment. If it is a token of his good will, I am perfectly satisfied that the right hon. Gentleman is in sympathy with the purposes of the Amendment, and if he has to resist it, I assume that it can be only because of financial considerations. One of the most serious factors at the present time in modern industry is the decline in apprenticeship. In many industries it is going out of fashion. It is difficult to persuade many parents to make the considerable financial sacrifice, on the one hand, of having to pay a premium, and, on the other hand, to forego the wage. Taking the long view, it is not only in the interests of the child that apprenticeship should be encouraged, but it is equally in the interests of our whole industrial system. I do not suggest that education is not a substitute in many cases for apprenticeship or that education is in certain cases not a better way of arriving at results, but some industries do not lend themselves for equipping a child by educational means for industrial life.
    There is another aspect which makes the case for the Amendment even stronger. In most important industries where apprenticeship still survives, part of the condition of apprenticeship is attendance at a part-time course of education. That applies particularly to the printing trade, and also to engineering. One of the industries that in recent years has made the most remarkable progress is the printing trade, where an elaborate system of apprenticeship is combined almost universally with compulsory attendance, usually a part-time course, at a printing school. The great printing schools of London have, in co-operation with the industry and with employers and employed, revolutionised the character and standard of the printing industry.

    1639
    No one is going to suggest that a small concession like this will make a vast difference, but it is the recognition by the State of the value of the sacrifice made by the parents on behalf of the child, by finding the money for apprenticeship and foregoing the money wages that would be forthcoming if the child went into other occupations, that would be appreciated. One of the real troubles of our industrial system, particularly in a place like London, is that the boy or girl likes to go into certain trades and immediately to earn good wages, but in two or three years time they are thrown on the scrap-heap, without any technical training and without any real, valuable industrial organisation behind them. There are tens of thousands of that class of labour in London and other great cities who in a few years time have to join the vast army of unskilled labour. Although this small Amendment would not revolutionise that state of affairs it would be a recognition by the Chancellor of the Exchequer and a gesture to encourage parents to go through the slow and expensive system of apprenticeship in the interests of their children and industry.
    9.19 p.m.
    Sir THOMAS ROSBOTHAM: A very sound principle is involved in the Amendment, and I need not take up much time in supporting it, because the case for its acceptance has been so well put by the Mover and Seonder of the Amendment and the hon. Baronet. There is no doubt that apprenticeship should be encouraged. We are in danger these days of losing our craftsmanship. Changes have taken place. We have more machinery, and science has advanced, but there is really more need for craftsmanship. I was very much impressed when I read a speech of my right hon. Friend the Chancellor of the Exchequer a few days ago in which he said that we were going to be short of craftsmen. I entirely agree with him. If he cannot accept this Amendment to-night I trust that he will bear it in mind for another Budget. I do not know how far the principle involved in the Amendment would upset the financial side of the Budget, but I agree that in these days when there is encouragement given to the youth of the country, we ought to accept principles such as are contained in the Amendment.
    9.20 p.m.
    Mr. BANFIELD: I hope that the Chancellor of the Exchequer will not defer coming to a decision on this matter, but will agree to the Amendment in the present Budget. This question of giving encouragement to parents who are willing to apprentice their children is one of vital importance, and ought to be dealt with as soon as possible. It may be that the Chancellor of the Exchequer will say: "I do not know that this will be of any particular encouragement." He may say that there are comparatively few apprentices, but I believe that a gesture from the Chancellor of the Exchequer, a recognition by this House of the importance of craftsmen and apprenticeship, and the importance of doing something to prevent children from going into blind-alley occupations, would be received with almost universal satisfaction throughout the country.
    As one who claims as a trade union leader to speak for the people in his own calling, there is no one who is more anxious than myself to encourage parents definitely to give their children some trade or calling. One of the reasons why apprenticeship has fallen into disrepute is that parents are inclined, for economic reasons very often, to allow their children to undertake a job where comparatively big money is paid at an early age, and on the other hand there has been a disposition on the part of employers generally to believe that the machine can take the place of craftsmanship and workmanship. Out of my experience I declare that, good as the machine is and great as is the potentiality of the machine, craftsmanship and workmanship are just as much required to-day as in days gone by. If the Chancellor of the Exchequer will look upon this matter not from the point of view of its immediate effect, but because it will focus attention upon this matter, I shall be glad. I want him to remember those people of the lower middle class who go to great sacrifice in putting their children into professions. I hope that such people will reap the benefit of this Amendment. Anything that we can do to encourage parents to take the long view and not the short view, is well worth the consideration of the House. I sincerely trust that the Chancellor of the

    1641
    Exchequer will be able to tell us that he can see his way to accept the Amendment.
    9.24 p.m.
    Mr. CHAMBERLAIN: When the hon. Member for Leigh (Mr. Tinker) moved an Amendment on this subject in the Committee stage, I pointed out certain practical difficulties in the way which seemed to me to render it quite impossible to consider the Amendment in the form in which it then stood. I suggested that he and his friends had better go and have another try and see if they could not find something more practical. On that, the Leader of the Opposition pleaded that they had not got a staff who were competent and experienced in matters of drafting and that it was hardly a fair thing to ask them to draft Amendments which would stand the examination of experts without the sort of assistance which we on this side are able to command. I was very ready to offer the assistance of the Treasury officials in drafting an Amendment to help in overcoming the particular difficulties which I had pointed out, and the hon. Member and his friends have taken advantage of that offer and have now presented an Amendment which I think is not open to the particular objections which I adduced in respect of the Amendment originally put forward. I take it then that the proposal which is now in front of us cannot be criticised on the ground that it is impracticable or unworkable. On the contrary, I think that the difficulties which I saw about the definition of an apprentice or the distinction between those apprentices who were unpaid altogether and those who were receiving a nominal amount have been got over.
    The hon. Member for Leigh was very fair in saying that I had completely safeguarded my own position and that in offering the assistance of the Treasury in drafting an Amendment I had not committed myself in any way to accepting an Amendment even if the perfect Amendment were framed. I have now been endeavouring to give my mind to the Amendment as it appears on the paper and to trying to weigh up the advantages and disadvantages of a proposal of this kind. In the speeches to which we have listened the matter has not been treated in a party spirit. It has been discussed very fairly from the general point of
    1642
    view of the advantages to the country of the encouragement of apprenticeship. It is impossible for anybody who has had any personal acquaintance with business not to feel a good deal of sympathy with that point of view. But the questions which I have had to ask myself were: In the first place, is this really going to help to get apprenticed children who would not otherwise be apprenticed, and, in the second place, is this, when removing an anomaly, going to put an end to the question of anomalies here or is it going to raise a fresh series of anomalies? The difficulty in so many of these cases is that one goes from step to step. A concession is asked for, and a case is made out, a moderate case, a persuasive case. It is perhaps shown clearly that there is an inconsistency in the law as it exists, and the Chancellor of the Exchequer is persuaded to give way, and he grants a concession. Immediately he is confronted with a fresh demand because what he has given in one case has created a fresh injustice in another. I think that it was considerations of that kind which influenced the Royal Commission on Income Tax when they were considering a number of suggestions which had been made to them and when in the course of their report they made these observations:
    "We have been asked to recommend allowances for expenses arising out of illness or disability, such as the travelling expenses of attendants of disabled persons; or to give compassionate rebate to persons who are compelled to maintain and pay personal attendants; or special relief to disabled persons in view of their decreased earning capacity. These claims, while differing in degree, all arise out of the personal or domestic circumstances of the taxpayer, and, although we are conscious that in particular cases the operation of the general rule may result in individual hardship, we feel that we cannot advise any general relaxation of the principles on which the tax is levied."
    That is the sort of classic passage which one continually has to bear in mind when considering proposals of this character, even though they naturally stir sympathies in our minds. If I may go back again for a moment to the first question I proposed, is it to be expected that a concession of this kind would effect the purpose which hon. Members really had in view. I gathered from what the hon. Member for Wednesbury (Mr. Banfield) said that he had not a great deal of hope that it would. He said

    1643
    rather that it would give an indication that apprenticeship is viewed with favour by the Government and that at any rate it will focus attention on the subject. Although hon. Members have spoken about apprenticeship, I have very grave doubts as to whether apprenticeship is going to be affected at all by proposals of this kind. The hon. Member for the Scotland Division (Mr. Logan) said that he did not think there were many unpaid apprentices in many districts. I think he is right. The cases of which the hon. Member for Leigh spoke are not really apprenticeship as we know it. They are cases rather of the young professional man who is articled to a solicitor or another professional man. These are really the cases, I think, which would be affected by this Amendment if it were to be accepted rather than the general case of apprentices in industry.
    If it be a fact—I rather think that it is—that this would not touch the question of apprenticeship in general, but would only give some relief to parents who are in a position to apprentice their children to a professional man, that is really a very much weaker case, because I am inclined to think that parents who are in a position to do that are not likely to be influenced very much by a contribution in the shape of an extra allowance on Income Tax. The hon. Member for Wavertree (Mr. Cleary) spoke of this as an ordinary act of justice and an instance of class legislation. I do not think that that is quite a fair description of the present position. But if it is class legislation which he has in mind the Amendment might fairly be described as class legislation, because it gives a greater advantage to the richer man than it does to the poorer man; the advantage is Income Tax on £50. If a man is well enough off to be paying the full 4s. 6d. on the £50 he is going to get a great deal more than a poorer man, who is only going to get the advantage of 1s. 6d. on his £50. So that I think that between the richer and poorer recipient of this benefit it favours just in the wrong direction; it gives the greater favour to the people who have the least need of it.
    Are we going to put anything right if we accept the Amendment? Would it not be clearly inconsistent to say that an allowance shall be given to a parent
    1644
    who is going to put his child to a vocational training and at the same time deny it to a man who is apprenticing his child to a trade? The boy who is articled has got a career in front of him; he has his foot on the lowest rung of the ladder. What about the boy who would like to have that but cannot find the position; the boy whose parents would be very glad to pay a premium if they could get someone to take him. Are you not going to set up fresh injustices and anomalies if you give this allowance in the case of one who has his foot on the ladder and deny it to the one who cannot get his foot on any ladder at all. If you were to grant this concession, would you not have a claim to extend the provision to the parent of an unemployed boy? I do not think that I am stretching my imagination when I suggest that that would be the next thing to be asked, because it has been put forward by the hon. Member for Ebbw Vale (Mr. Bevan) in an Amendment he has put down to that effect, which has not been discussed.
    Suppose the concession were given would it stop there? Can you distinguish between the parents of a child who is unable to find employment and the parents of a child who does not want to find employment, whose parents prefer him to stay at home? Shall we not presently come to a position where all unemployed juveniles, whatever be the reasons for their unemployment, would be the subject of a claim on behalf of their parents for the allowance? If you get to that position, then it would be extremely difficult to resist the further claim that the allowance for a dependent relative, which is £25, should be raised to £50. That, again, is the subject of another Amendment.
    I give these cases as an illustration of the way in which one is almost inevitably led from one concession to another and the way in which each concession raises a fresh set of anomalies and difficulties, which would really make the position of the Chancellor of the Exchequer almost impossible. I do not say that these difficulties, although serious, would have prevented my listening with a favourable ear to the Amendment of hon. Members couched in the form in which it is put if I were satisfied that it would achieve anything

    1645
    really substantial and valuable. For the reasons I have given, I have not been able to make up my mind that it will really affect the general question of apprenticeship. I think its application would be very difficult and would only occur in those cases where there is the least need for it. On the whole, I have come to the conclusion that I must, although with some regret I confess, resist the Amendment.
    9.40 p.m.
    Mr. MORGAN JONES: I am sorry to hear the reply of the Chancellor of the Exchequer. In the first place, I desire to associate myself with the thanks of the hon. Member for Leigh (Mr. Tinker) and the hon. Member for South-West Bethnal Green (Sir P. Harris), and to say, on behalf of the Labour party, that we were treated with the utmost cordiality by the Treasury officials, who did their best to focus in a few words what they considered to be the point which we desired to place before the House. We fully appreciate the fact that neither they nor the Chancellor of the Exchequer were committed to the substance of the Amendment, although it appears on the Order Paper in the way in which it was drafted by them. The Chancellor of the Exchequer seemed to be attempting to answer two questions. The first was whether the proposal in the Amendment would help and, secondly, if it would help, would it give finality? The Chancellor of the Exchequer has done his level best to scratch up every possible argument he could use against the proposal. If he had spent another fortnight he could not have found any more. He has been extremely diligent in finding objections to it. Take the question of finality. It may be that the Amendment, if it were accepted, would not achieve finality; I am prepared to grant that point. But that is not our fault. The difficulty in this matter did not begin to-night but when this principle was adopted by this House, whenever that was. The moment this House set out to make a concession in respect of education, it thereby laid itself open to the charge that if it gave a narrow interpretation of the word "education" it was creating inequality.
    The Chancellor of the Exchequer has not contested the justice or the substance of our case. He implies that there is inequality in so far as we do
    1646
    remit Income Tax in respect of those who undergo a formal kind of education and resist it in respect of those who go in for the type of education referred to in the Amendment. If there is no finality, the fault lies at the door of a previous House of Commons when it first gave expression to this principle. May I say that as far as I am concerned I regard it as the duty of this House to keep on dealing with these inequalities so long as they exist. That is an elementary principle of taxation. We are not entitled to tax one lot of people in relation to the same subject differently from other people, who make a similar claim on other grounds. It is the business of the Chancellor of the Exchequer to remove inequalities wherever they may show themselves. He cited one or two possible developments of the principle. He talked about the young person who may have his foot on the bottom rung of the ladder, who is entering upon a career. That is true; but, as a matter of fact, this remission of Income Tax is now given in respect of boys and girls who may never have a career at all, who may enjoy education up to 20, 25 and 30 years of age. There is no limit to the number of years in respect of which it may be given. At the end of that time, though the State may have granted this exemption in respect of Income Tax, they may not do one single day's work for the good of the State; and yet people who are equipped by reason of training of a more practical kind and who do enter into some form of industry or profession and do serve the State, are deprived entirely of the advantage of this remission.
    It seems to me that the Chancellor of the Exchequer has raised an issue which remains where it is in cases where that injustice is allowed to remain without attention. The right hon. Gentleman asked whether it would help. I do not wish to cover the same ground as others have covered, but I will develop one point briefly. Everybody who has studied our educational system is aware of the fact that the development of our secondary school education tends to overfill certain types of calling. We have so over-developed the less vocational form of education, the academic form, that we have over-supplied the market with that type of person and under-supplied the market with the type of person who is

    1647
    endowed with a more vocational training. I am sure that if the Chancellor would give this small concession it would help. Possibly the number of people who would get benefit would be very limited indeed, but I am sure it is worth while for the Government of the day to make a gesture in favour of vocational training, so as to encourage people to believe that from the standpoint of the State vocational training and education are just as important and significant as the more academic sort.
    If the right hon. Gentleman will take that long view, as I will call it, I think he will feel that he is answering his first question in the affirmative—would it
    help? I am sure that it would help very substantially in the years to come. The right hon. Gentleman contends that the number of people who would benefit immediately would be very limited. That is probably true. In that case the cost would not be very great. But the benefits that would accrue would be two-fold. First, there would be social consequences of considerable value; and, secondly, we should have taken one more step in the direction of removing an obvious injustice and inequality.
    Question put, "That those words be there inserted in the Bill."
    The House divided: Ayes, 49; Noes, 184.

    Division No. 255.]

    AYES.

    [9.50 p.m.

    Adams, D. M. (Poplar, South)

    Grenfell, David Rees (Glamorgan)

    Maclean, Neil (Glasgow, Govan)

    Addison, Rt. Hon. Dr. Christopher

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

    Mason, David M. (Edinburgh, E.)

    Attlee, Rt. Hon. Clement R.

    Griffiths, George A. (Yorks, W. Riding)

    Milner, Major James

    Banfield, John William

    Griffiths, T. (Monmouth, Pontypool)

    Morrison, G. A. (Scottish Univer'ties)

    Cleary, J. J.

    Grundy, Thomas W.

    Owen, Major Goronwy

    Cocks, Frederick Seymour

    Hall, George H. (Merthyr Tydvil)

    Parkinson, John Allen

    Cripps, Sir Stafford

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

    Rathbone, Eleanor

    Curry, A. C.

    Harris, Sir Percy

    Rea, Sir Walter

    Daggar, George

    Jones, Henry Haydn (Merioneth)

    Roberts, Aled (Wrexham)

    Davies, David L. (Pontypridd)

    Jones, Morgan (Caerphilly)

    Strauss, G. R. (Lambeth, North)

    Davies, Rhys John (Westhoughton)

    Lansbury, Rt. Hon. George

    Tinker, John Joseph

    Dobbie, William

    Lawson, John James

    West, F. R.

    Edwards, Sir Charles

    Leonard, William

    Williams, Edward John (Ogmore)

    Evans, R. T. (Carmarthen)

    Logan, David Gilbert

    Williams, Thomas (York, Don Valley)

    Gardner, Benjamin Walter

    Lunn, William

    Wilmot, John

    George, Major G. Lloyd (Pembroke)

    Macdonald, Gordon (Ince)

    Greenwood, Rt. Hon. Arthur

    McEntee, Valentine L.

    TELLERS FOR THE AYES.—

    Mr. Groves and Mr. T. Smith.

    NOES.

    Acland Troyte, Lieut.-Colonel

    Crookshank, Col. C. de Windt (Bootle)

    Heneage, Lieut.-Colonel Arthur P.

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

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

    Herbert, Major J. A. (Monmouth)

    Aske, Sir Robert William

    Croom-Johnson, R. P.

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

    Atholl, Duchess of

    Denman, Hon. R. D.

    Hore-Belisha, Rt. Hon. Leslie

    Baldwin, Rt. Hon. Stanley

    Dickie, John P.

    Horobin, Ian M.

    Baldwin-Webb, Colonel J.

    Drewe, Cedric

    Howitt, Dr. Alfred B.

    Barrie, Sir Charles Coupar

    Duckworth, George A. V.

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

    Beauchamp, Sir Brograve Campbell

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

    Hume, Sir George Hopwood

    Benn, Sir Arthur Shirley

    Eastwood, John Francis

    Iveagh, Countess of

    Blindell, James

    Ellis, Sir R. Geoffrey

    Jamieson, Rt. Hon. Douglas

    Boulton, W. W.

    Elliston, Captain George Sampson

    Jesson, Major Thomas E.

    Bower, Commander Robert Tatton

    Emmott, Charles E. G. C.

    Joel, Dudley J. Barnato

    Bowyer, Capt. Sir George E. W.

    Emrys-Evans, P. V.

    Jones, Lewis (Swansea, West)

    Braithwaite, J. G. (Hillsborough)

    Entwistle, Cyril Fullard

    Ker, J. Campbell

    Briscoe, Capt. Richard George

    Evans, Capt. Arthur (Cardiff, S.)

    Kerr, Lieut.-Col. Charles (Montrose)

    Broadbent, Colonel John

    Evans, David Owen (Cardigan)

    Kerr, Hamilton W.

    Brocklebank, C. E. R.

    Everard, W. Lindsay

    Kimball, Lawrence

    Brown, Rt. Hon. Ernest (Leith)

    Fielden, Edward Brocklehurst

    Kirkpatrick, William M.

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

    Fraser, Captain Sir Ian

    Lamb, Sir Joseph Quinton

    Burghley, Lord

    Fremantle, Sir Francis

    Law, Richard K. (Hull, S. W.)

    Burgin, Dr. Edward Leslie

    Ganzoni, Sir John

    Leech, Dr. J. W.

    Burnett, John George

    Gluckstein, Louis Halle

    Lees-Jones, John

    Campbell, Sir Edward Taswell (Brmly)

    Goff, Sir Park

    Leighton, Major B. E. P.

    Campbell, Vice-Admiral G. (Burnley)

    Goodman, Colonel Albert W.

    Lennox-Boyd, A. T.

    Caporn, Arthur Cecil

    Gower, Sir Robert

    Lewis, Oswald

    Carver, Major William H.

    Greene, William P. C.

    Liddall, Walter S.

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Grimston, R. V.

    Lister, Rt. Hon. Sir Philip Cunliffe-

    Clarry, Reginald George

    Gunston, Captain D. W.

    Llewellin, Major John J.

    Cochrane, Commander Hon. A. D.

    Hales, Harold K.

    Lockwood, John C. (Hackney, C.)

    Conant, R. J. E.

    Hamilton, Sir George (Ilford)

    Loder, Captain J. de Vere

    Cook, Thomas A.

    Hanbury, Sir Cecil

    Mabane, William

    Cooper, A. Duff

    Hannon, Patrick Joseph Henry

    MacAndrew, Lieut.-Col. Sir Charles

    Courthope, Colonel Sir George L.

    Harvey, Major Sir Samuel (Totnes)

    MacAndrew, Major J. O. (Ayr)

    Craven-Ellis, William

    Haslam, Sir John (Bolton)

    McCorquodale, M. S.

    Crooke, J. Smedley

    Hellgers, Captain F. F. A.

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

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

    Raikes, Henry V. A. M.

    Spears, Brigadier-General Edward L.

    McEwen, Captain J. H. F.

    Ramsay T. B. W. (Western Isles)

    Spender-Clay, Rt. Hon. Herbert H.

    McLean, Major Sir Alan

    Ramsbotham, Herwald

    Spens, William Patrick

    McLean, Dr. W. H. (Tradeston)

    Ramsden, Sir Eugene

    Stones, James

    Makins, Brigadier-General Ernest

    Rankin, Robert

    Storey, Samuel

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

    Reed, Arthur C. (Exeter)

    Stourton, Hon. John J.

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

    Reid, Capt. A. Cunningham-

    Strauss, Edward A.

    Mayhew, Lieut.-Colonel John

    Reid, William Allan (Derby)

    Strickland, Captain W. F.

    Mellor, Sir J. S. P.

    Rickards, George William

    Sugden, Sir Wilfrid Hart

    Mills, Major J. D. (New Forest)

    Robinson, John Roland

    Sutcliffe, Harold

    Milne, Charles

    Ropner, Colonel L.

    Taylor, C. S. (Eastbourne)

    Mitchell, Sir W. Lane (Streatham)

    Rosbotham, Sir Thomas

    Thompson, Sir Luke

    Moreing, Adrian C.

    Ross, Ronald D.

    Train, John

    Morris, John Patrick (Salford, N.)

    Ross Taylor, Walter (Woodbridge)

    Tree, Ronald

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

    Ruggles-Brise, Colonel Sir Edward

    Tufnell, Lieut.-Commander R. L.

    Muirhead, Lieut.-Colonel A. J.

    Rutherford, Sir John Hugo (Liverp'l)

    Wallace, Captain D. E. (Hornsey)

    Norle-Miller, Francis

    Salmon, Sir Isidore

    Wallace, Sir John (Dunfermline)

    North, Edward T.

    Salt, Edward W.

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

    O'Donovan, Dr. William James

    Samuel, M. R. A. (W'ds'wth, Putney).

    Ward, Irene Mary Bewick (Wallsend)

    Orr Ewing, I. L.

    Sanderson, Sir Frank Barnard

    Wardlaw-Milne, Sir John S.

    Palmer, Francis Noel

    Selley, Harry R.

    Williams, Herbert G. (Croydon, S.)

    Patrick, Colin M.

    Shakespeare, Geoffrey H.

    Willoughby de Eresby, Lord

    Penny, Sir George

    Shaw, Helen B. (Lanark, Bothwell)

    Windsor-Clive, Lieut.-Colonel George

    Perkins, Walter R. D.

    Shaw, Captain William T. (Forfar)

    Petherick, M.

    Smiles, Lieut.-Col. Sir Walter D.

    TELLERS FOR THE NOES.—

    Pickthorn, K. W. M.

    Smith, Sir Robert (Ab'd'n & K'dlne, C.)

    Sir Walter Womersley and Major

    Power, Sir John Cecil

    Somerville, Annesley A. (Windsor)

    George Davies.

    Radford, E. A.

    Southby, Commander Archibald R. J.

    CLAUSE 24.—(Deduction from profits of contributions paid to rationalise industry.)
    9.58 p.m.
    Mr. RHYS DAVIES: I beg to move, in page 18, line 7, to leave out from "is" to the end of line 8, and to insert:
    "calculated to increase the production of the national wealth."
    It is not my intention to dwell at length on this Amendment, but I wish to make its purpose as clear as I can. This Clause is, as far as I know, the first of its kind ever inserted in a Finance Bill, and if I am not mistaken the marginal note introduces for the first time in a legal formula the word "rationalise." It seems to me that this word, having crept into the marginal note to this Clause, will ultimately find its way into the legal vocabulary of our country. It is a comparatively new word but I do not think it is necessary for me on this occasion to attempt to explain its meaning. Frankly we have fastened upon the words proposed in our Amendment, as the result of a debate which took place during the Committee stage of the Bill. The Financial Secretary has told us more than once of the intention of the Clause, and I am interested in it because it appears to me that the first industry which will be dealt with under its provisions will be the textile industry of Lancashire. To-day notice was given by the President of the Board of Trade of the introduction of a Bill on these lines in relation to the textile industry. The Financial Secretary during the debate on this Clause on the Committee stage used these words:
    1650
    "These people"—
    that is to say, any group of people who apply to the Board of Trade for this remission of taxation consequent upon a scheme of rationalisation—
    "have to persuade the Board of Trade on a great many points, and above all they have to persuade the Board of Trade that the scheme is in the national interest and in the interest of the industry as a whole. That is the fundamental point. Any scheme that is in the interest of the industry as a whole must be in the interest of the work-people engaged in that industry."—[OFFICIAL REPORT, 19th June, 1935; col. 466, Vol. 303.]
    Speaking as a trade union official of 29 years standing I suggest that a proposal which is in favour of an industry as a whole, need not of necessity be in the interest of the workpeople engaged in that industry. I have seen some schemes which did not work out in that way. The wording of our Amendment is, in part, a tribute to the language used by the hon. Gentleman on that occasion. We are not satisfied that the qualification for remission of taxation set forth in the Clause covers the purpose which we think the Government ought to have in mind, and that is serving the national interest. The textile industry of Lancashire gives a practical example of what we aim at in this Amendment. Here we have an industry which is obviously suffering from depression. It is suffering, in the main, because of international competition. It has no competition worth talking about in the home market, because the quotas, duties and tariffs set up against similar commodities from foreign countries have

    1651
    rendered that industry practically immune from competition in the home market.
    I ask the House to remember that the industries of this country have already been relieved, in a great measure, of payment of rates by the de-rating Act. It is now proposed to offer them an inducement to rationalisation by remitting a part of the taxation which they have hitherto paid. That remission is offered an an inducement to rationalise and to remove redundant machinery in order to secure efficiency, but although that proposal may be good for the industries concerned, it is not of necessity, in the national interest. It does not follow, because you encourage an industry in this way that such encouragement will, of itself, make for the production of national welfare.
    It seems to me that nothing is inserted in this Clause to take into account this important fact—and this would apply to any other industry such as shipping, for instance. We have an objection to this proposal of rationalisation, because it does not say that the rationalisation of industry shall do away merely with inefficient machinery. All it says is that the machinery shall be deemed to be redundant. What does redundancy mean? Take Lancashire. I have been called to order by some Lancashire Members for saying what I am going to repeat now. I want the Government to bear in mind that redundancy in Lancashire may mean, not the scrapping of second-hand machinery, machinery that has been used, but new machinery. We have sent second-hand machinery to Eastern countries, where it is now competing with our own machinery at home. Indeed, apart from partisan politics, it is a problem for a Government of this country to consider very carefully, whether it is wise to induce the Lancashire textile industry to do away with redundant machinery and witness that very machinery exported to the East to manufacture the same commodities that the same machinery used to produce in Lancashire. I say, therefore, that there is a point in the Amendment, because we say that the scheme of rationalisation ought to be
    "calculated to increase the production of the national wealth."
    Hon. gentlemen who spoke on this issue on the last occasion went into the merits of the collective system of society versus
    1652
    capitalism. This Clause will have no meaning at all to the several collective schemes of industry in this country. Take the municipal water supplies, tramway, gas and electricity undertakings. I cannot conceive of any scheme of rationalisation coming from a municipal undertaking to take advantage of this Clause. It seems to me, therefore, that the Clause is deliberately designed to prop up the capitalist form of society. Hon. Members opposite smile at that remark, but surely that is the object of this Clause. The Government will probobly reply to me by saying that they were returned to Parliament for that purpose. Finally, I would say that we are very much concerned indeed that no group of people, no group of capitalists, shall be entitled to take advantage of the provisions of this Clause for their own aggrandisement without any regard for the national welfare. That, I think, is a case that ought to be supported by Members of all parties.
    10.9 p.m.
    Mr. WEST: The Clause as it stands, with the words:
    "that the scheme is in the national interest and in the interest of the said industry as a whole"
    reads very well and sounds very well. It seals to me, though, that it all depends on the interpretation of those terms. I can imagine a certain policy being good for a certain industry and yet being very bad from the point of view of the country as a whole. It may be a good thing for the coal industry to close down pits in Yorkshire or Lancashire, but although it may be good in certain areas from that industry's point of view, it may be shockingly bad from the point of view of the miners employed, who would thereby become redundant. Perhaps some hon. Members think the words, "the scheme is in the national interest," safeguard the position, but again it depends on what you mean by the national interest. On different sides of this House we have different ideas of what the national interest means. A famous Conservative statesman a long time ago wrote a book in which he discussed the true national interest, and I can imagine to-day that if we were to ask Members opposite and Members of my own party what they conceived to be the national interest, we should have almost opposite and conflicting ideals.

    1653
    For example, 10 years ago or so members of the Conservative party generally believed, I think sincerely, that it was in the national interest to go back to the gold standard, but although it may have been in the interest of certain sections of this country, it proved to be very much against the interest of the vast masses of the people of this country. A certain policy may be a very good thing for doctors and a shockingly bad thing for patients. A policy that is very good for undertakers may not thereby be a good thing for the general public. If I were to advocate a certain policy that would be supported enthusiastically by Boots, the chemists, and the undertakers, I can imagine many Members here not being too keen about the same policy. I shall be surprised if I do not find supporters of the Government very keen about this Amendment, which uses the words:
    "calculated to increase the production of the national wealth."
    If there be one thing more than any other about which I should expect Conservative Members to be keen, it would be that phrase about increasing the production of national wealth. I know there have been all kinds of remedies put forward by Conservative Members since the War to cure our industrial evils, but perhaps some hon. Members will remember that about 10 years ago the most popular remedy was more production. We were told on every platform, at every street corner, and by every Conservative journal that the way to make this country happy and wealthy and to make the working people really prosperous was to produce more. It was more important than lowering wages or lengthening hours of labour. It was going to cure all our troubles and miseries. I can remember going to lectures by professors of economics, who said that if only the people would put their backs into their work, if only they would work harder and produce more wealth, there would be a big national cake, and that as there was a bigger national cake, everybody could have a bigger piece of it. But unfortunately, when they produced that bigger national cake, the same old people had the cutting up of that cake, and the poor workers discovered that, no matter whether they produced a big or a small national cake, they were only given a very small slice
    1654
    of it. It made no difference to them how hard they worked or how much they produced.
    I have no doubt that most hon. Members on the other side, seeing this Labour Amendment to increase the production of national wealth, will feel rather keen about it and give us their support. I look upon anything that discourages production as wrong until we have reached satiation point from the consumption point of view. It may be good in the industrial interest to close down 20 coal mines, but I believe that there is an enormous home demand for coal, as for cotton, if only the people of this country had the power to demand it. Millions of homes have to go without coal fires or with very poor fires, not because they do not want more coal, but because they have not the wherewithal to buy it. I agree, therefore, that to discourage the production of wealth as this Clause does, by giving an allowance to those people who close down works or sell redundant machinery, is going against national interest. I believe that this Clause is a back door and petty method of tackling great industrial evils, and I hope that hon. Members opposite will support the Amendment.
    10.16 p.m.
    Commander COCHRANE: I have some difficulty in understanding the purpose of this Amendment, because the hon. Member for Westhoughton (Mr. Rhys Davies) concentrated on the question of the increase of national wealth, whereas the hon. Member for North Hammersmith (Mr. West) related all his remarks to the subject of production. I cannot help thinking that the Amendment would have more truly represented the views of the mover had the words "the production of" been left out, and had it referred only to those proposals calculated to increase the national wealth, because in the concluding sentence of his speech the hon. Member for West-houghton dropped the word "wealth" and used the wider term "well-being." He said that what he wanted was that this Clause should be in the national well-being. I hope that my right hon. Friend will reply to that aspect of the Amendment, because there is no doubt that considerable apprehension exists as to whether this Clause is likely to be for the national well-being or not. I do

    1655
    not propose to follow the hon. Member for North Hammersmith into his speech on the question of production, because I do not think that that enters into this Amendment. The hon. Member for Westhoughton gave a much wider and truer interpretation of the Amendment when he asked that the Clause ought to be regarded as in the national well-being. I hope that it is so, and that the Government will be able to assure the House that the Clause either with or without the Amendment, will be interpreted, and can only be interpreted, in such a way as to carry out the national well-being and to increase the national wealth, using that word in the broadest sense.
    10.19 p.m.
    Mr. GURNEY BRAITHWAITE: The House will be agreed that the words which it is proposed to insert in the Clause are in themselves extremely attractive. In fact, were it not that it is a proposed Amendment to Clause 24, it seems to me that the Amendment is so drawn that the House could have one of those debates, which seem to be so enjoyable, covering the whole controversy between capitalism and socialism. I came in particularly to listen to the supporters of the Amendment in the hope of hearing some definition of their interpretation of national wealth. It seems to me, listening to the hon. Gentleman who moved the Amendment and to the seconder, that there is a certain amount of confusion of talk, even between them, on the matter. We had from the hon. Member for Westhoughton (Mr. Rhys Davies) an admirable dissertation on the necessity of schemes of this kind benefiting not only the employer but the work-people, but that was followed by a rather curious speech from the hon. Member for North Hammersmith (Mr. West) which, if it meant anything at all, was a condemnation of the Coal Mines Act passed by the late Government which was expressly designed for the purpose of restricting the output of coal and was known at the time as the "Dear Coal Bill." I am bound to say that the purpose behind it was a humane one, an endeavour to prevent a reduction of the wages of coalminers, and as such I do not think we can condemn it.
    But the "increased production of national wealth." I can imagine the
    1656
    adherents of Major Douglas—I do not think there are any in the House—saeading themselves upon those words; I can imagine many of those who follow strange economic gods giving their own definition of the term "national wealth," but I think those who sit on this side of the House, I cannot speak for hon. Members opposite, see in this Clause an attempt to give some assistance to those industries which are prepared to help themselves in these difficult times. It may be said and I think there would be a good deal in the theory, that this ought not to be a Clause inserted in a Finance Bill, that the matter is so important and so wide that it deserves legislation of its own. But if the Opposition mean by these words that such benefits as may be derived from the passing of this Clause should result, not only in the rehabilitation of industry and increased dividends, but also be reflected in the pay envelope and in terms of employment, I think the House will agree that it is an objective we should all have in mind.
    It has been a great satisfaction to some of us to see the building up, behind a tariff, of better conditions in the steel industry as the result of the opportunities given there for reorganisation, to have seen some of the big steel firms restoring wage cuts. I only wish the co-operative societies would do something of the kind. If what the hon. Member for West-houghton has in mind is that this Clause would be acceptable if it were reflected not only in the dividend but in the pay envelope, then I feel the words bear an interpretation of which none of us can complain. I think we shall be told from the Treasury Bench that this is what the Government have in mind, that they are anxious to give assistance to those who are prepared to assist themselves, and that being so, whatever may be the theory about this Clause appearing in a Finance Bill, I believe it to be a step forward along the path of sane planning for which the country is ripe and which we shall support.
    10.24 p.m.
    Mr. COOPER: I feel that the speech of the hon. Member for the Hillsborough Division (Mr. G. Braithwaite) is rather a warning as to how far we may be led if this discussion continues along the lines he has suggested. He says that it might raise the whole question of Socialism. He himself wandered sufficiently far from

    1657
    the Amendment to suggest that this was a Clause which should not be included in a Finance Bill, which showed that he must have forgotten that this is a Clause dealing with Income Tax.
    Mr. G. BRAITHWAITE: I said it might be said so.
    Mr. COOPER: In what kind of Bill a Clause dealing with Income Tax could be included if not in the Finance Bill I cannot imagine. We are led into this danger by the fact that we are arguing about the meaning of words, and as we all place different interpretations on the words about which we are talking, there really might be no end to this discussion. The first word which the hon. Member who moved the Amendment objected to was the ward "rationalise." I am as good a Conservative as he; I am not fond of new words, and I deplore their production. Here I think is a word which we can understand, and which we can define very simply as the reform of industry in a reasonable way. There is not an easier or a quicker word to explain that than the word "rationalise." What we mean by a reasonable way may be a matter upon which we should part company, and if we were to discuss what is the more reasonable way to reform industry, we should remain here until the small hours of the morning.
    The hon. Member for Westhoughton said that he was not so well versed as some of his colleagues in theories of Socialism and Capitalism, but in defending their position they usually put forward the point that, under the present system, there is a great deal of wasteful competition of which they are anxious to get rid. Let us admit that there is something in that argument. We are prepared to do our best to get rid of wasteful competition, and that is one of the kinds of reform which are included in rationalisation. The hon. Member also said that we were attempting to prop up the capitalist system, but I do not think I need be ashamed of that charge any more than he would be ashamed of the charge of attempting to smash it. I cannot think that the words in the Amendment are any better than those which are already in the Clause. In his speech the hon. Member hardly mentioned the words "the production of the national wealth," which are in the Amendment. He continued to use the
    1658
    words which actually stand in the Clause "in the national interest." The best judge which you could have of the national interest in the matter of trade is neither he nor I, but the Board of Trade. He suggested that a matter might be good for industry as a whole, but not in the national interest. There I must differ from him profoundly, because I cannot imagine any reform which would be to the advantage of British industry as a whole, improving it and making it more efficient, which was not also in the interests of the country as a whole.
    When the hon. Member says "production of the national wealth" he does not mean, any more than I do, that the national wealth is increased by the production of any amount of goods. Goods are of no value unless you can sell them, unless there is a market for them; national wealth is of no use unless there is a market for it. The Amendment would merely limit the powers which the Clause is proposing to give to the Board of Trade. Suppose an occasion arose—everybody recognises that it might easily arise—in an industry when the immediate effect of a reform was to reduce production. The hon. Member might argue that this was not an increase of production of the national wealth, and therefore did not come under the Clause. The best words which could be found stand in the Clause:
    "in the national interest and in the interest of the said industry as a whole."
    Even if it were possible to be in the interest of an industry and not of the nation, it would be covered by the Clause, because the words inserted cover both the national interest and the interest of industry as a whole. There is nothing to suggest that the wording which the hon. Member proposes would accomplish the object which he desires any better than the words which now stand in the Clause.
    10.30 p.m.
    Sir S. CRIPPS: The hon. Member for Hillsborough (Mr. G. Braithwaite) raised some very interesting points, which, if pursued, would extend the discussion into the small hours of to-morrow morning. I do not propose to yield to that temptation, but I should like to point out that the Financial Secretary has at last admitted that the function of this Government is to try to prop up the capitalist system. That, of course, admits that it is

    1659
    falling down, which is what we have been saying for a long time, and now it is admitted by a Minister on the Front Bench to be true. We do not believe, however, that, even for the purpose of propping up the capitalist system, very good words have been chosen here. This is apparently an attempt to make what the Chancellor of the Exchequer called in another association a contribution by way of allowance to certain industries provided that they have a scheme the primary object of which is to eliminate redundant works, machinery or plant from use in an industry in the United Kingdom. That is the well known method of scarcity planning, based on the belief that you can, by reducing the volume of production in an industry, so increase prices that you may increase the profit. That method is certainly not calculated to increase the production of national wealth.
    We wanted, therefore, to put into this Clause a reservation that the national wealth, which consists of commodities and not of money, should be regarded as one of the primary considerations when such schemes are under review, and that, unless it can be proved that the scheme,

    Division No. 256.]

    AYES.

    [10.35 p.m.

    Acland-Troyte, Lieut.-Colonel

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

    Harvey, Major Sir Samuel (Totnes)

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

    Croom-Johnson, R. P.

    Haslam, Sir John (Bolton)

    Aske, Sir Robert William

    Curry, A. C.

    Heligers, Captain F. F. A.

    Atholl, Duchess of

    Davidson, Rt. Hon. Sir John

    Heneage, Lieut.-Colonel Arthur P.

    Balley, Eric Alfred George

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

    Herbert, Major J. A. (Monmouth)

    Baldwin, Rt. Hon. Stanley

    Denman, Hon. R. D.

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

    Baldwin-Webb, Colonel J.

    Dickie, John P.

    Hore-Belisha, Rt. Hon. Leslie

    Barrie, Sir Charles Coupar

    Drewe, Cedric

    Howitt, Dr. Alfred B.

    Benn, Sir Arthur Shirley

    Duckworth, George A. V.

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

    Blindell, James

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

    Hume, Sir George Hopwood

    Boulton, W. W.

    Eastwood, John Francis

    Iveagh, Countess of

    Bower, Commander Robert Tatton

    Ellis, Sir R. Geoffrey

    Jamieson, Rt. Hon. Douglas

    Bowyer, Capt. Sir George E. W.

    Elliston, Captain George Sampson

    Jesson, Major Thomas E.

    Braithwaite, J. G. (Hillsborough)

    Emrys-Evans, P. V.

    Joel, Dudley J. Barnato

    Briscoe, Capt. Richard George

    Entwistle, Cyril Fullard

    Jones, Henry Haydn (Merioneth)

    Broadbent, Colonel John

    Evans, Capt. Arthur (Cardiff, S.)

    Jones, Lewis (Swansea, West)

    Brocklebank, C. E. R.

    Evans, David Owen (Cardigan)

    Ker, J. Campbell

    Brown, Rt. Hon. Ernest (Leith)

    Evans, R. T. (Carmarthen)

    Kerr, Lieut.-Col. Charles (Montrose)

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

    Everard, W. Lindsay

    Kerr, Hamilton W.

    Burghley, Lord

    Fielden, Edward Brocklehurst

    Kimball, Lawrence

    Burnett, John George

    Ford, Sir Patrick J.

    Lamb, Sir Joseph Quinton

    Campbell, Sir Edward Taswell (Brmly)

    Fraser, Captain Sir Ian

    Law, Richard K. (Hull, S. W.)

    Campbell, Vice-Admiral G. (Burnley)

    Fremantle, Sir Francis

    Leckle, J. A.

    Campbell-Johnston, Malcolm

    Ganzoni, Sir John

    Leech, Dr. J. W.

    Caporn, Arthur Cecil

    Gluckstein, Louis Halle

    Lees-Jones, John

    Carver, Major William H.

    Goff, Sir Park

    Leighton, Major B. E. P.

    Castlereagh, Viscount

    Goodman, Colonel Albert W.

    Lennox-Boyd, A. T.

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Gower, Sir Robert

    Liddall, Walter S.

    Cochrane, Commander Hon. A. D.

    Graves, Mariorle

    Lindsay, Kenneth (Kilmarnock)

    Colman, N. C. D.

    Greene, William P. C.

    Lister, Rt. Hon. Sir Philip Cunliffe-

    Conant, R. J. E.

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

    Llewellin, Major John J.

    Cook, Thomas A.

    Grimston, R. V.

    Lockwood, John C. (Hackney, C.)

    Cooper, A. Duff

    Gunston, Captain D. W.

    Loder, Captain J. de Vere

    Craven-Ellis, William

    Hales, Harold K.

    MacAndrew, Lieut.-Col. Sir Charles

    Critchley, Brig.-General A. C.

    Hammersley, Samuel S.

    MacAndrew, Major J. O. (Ayr)

    Crooke, J. Smedley

    Hanbury, Sir Cecil

    McCorquodale, M. S.

    Crookshank, Col. C. de Windt (Bootle)

    Hannon, Patrick Joseph Henry

    Macdonald, Sir Murdoch (Inverness)

    in some other industry or in some other way—say by offering re-employment in another useful occupation to the men engaged in the industry—will lead to an increase in the production of the country, the scheme should not obtain the assistance of the Government through this contribution by way of extra allowance. It is clear in our view that the Clause as it stands is but another device to attempt to bolster up the profit fund in capitalist industry, and that that is what will be regarded as the national interest, as it always has been under other schemes put forward by the National Government; while those matters which we believe to be really matters of national interest, such as the planning of some method by which the abundant supplies of material now available can be distributed widely among the nation, will be put on one side, and a much narrower, more dangerous, and, we believe, more vicious conception of the national interest will be adopted. That is why we have moved this Amendment.
    Question put, "That the words proposed to be left out stand part of the Bill."
    The House divided: Ayes, 94; Noes, 35.

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

    Raikes, Henry V. A. M.

    Smith, Sir Robert (Ab'd'n & K'dlne, C.)

    McLean, Major Sir Alan

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

    Somerville, Annesley A. (Windsor)

    Magnay, Thomas

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

    Southby, Commander Archibald R. J.

    Makins, Brigadier-General Ernest

    Ramsbotham, Herwald

    Spears, Brigadier-General Edward L.

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

    Ramsden, Sir Eugene

    Spens, William Patrick

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

    Rankin, Robert

    Stones, James

    Marsden, Commander Arthur

    Rea, Sir Walter

    Storey, Samuel

    Mason, David M. (Edinburgh, E.)

    Reed, Arthur C. (Exeter)

    Stourton, Hon. John J.

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

    Reid, Capt. A. Cunningham-

    Strauss, Edward A.

    Mayhew, Lieut.-Colonel John

    Reid, William Allan (Derby)

    Strickland, Captain W. F.

    Mellor, Sir J. S. P.

    Rickards, George William

    Stuart, Hon. J. (Moray and Nairn)

    Mills, Major J. D. (New Forest)

    Roberts, Aled (Wrexham)

    Sugden, Sir Wilfrid Hart

    Milne, Charles

    Robinson, John Roland

    Sutcliffe, Harold

    Moreing, Adrian C.

    Ropner, Colonel L.

    Taylor, C. S. (Eastbourne)

    Morris, John Patrick (Salford, N.)

    Rosbotham, Sir Thomas

    Thompson, Sir Luke

    Muirhead, Lieut.-Colonel A. J.

    Ross, Ronald D.

    Tree, Ronald

    Nail, Sir Joseph

    Ross Taylor, Walter (Woodbridge)

    Tufnell, Lieut.-Commander R. L.

    Norle-Miller, Francis

    Ruggles-Brise, Colonel Sir Edward

    Wallace, Captain D. E. (Hornsey)

    North, Edward T.

    Rutherford, Sir John Hugo (Liverp'l)

    Wallace, Sir John (Dunfermline)

    O'Donovan, Dr. William James

    Salt, Edward W.

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

    Orr Ewing, I. L.

    Samuel, M. R. A. (W'ds'wth, Putney)

    Ward, Irene Mary Bewick (Wallsend)

    Patrick, Colin M.

    Sanderson, Sir Frank Barnard

    Williams, Herbert G. (Croydon, S.)

    Penny, Sir George

    Sandys, Duncan

    Willoughby de Eresby, Lord

    Petherick, M.

    Selley, Harry R.

    Windsor-Clive, Lieut.-Colonel George

    Pickering, Ernest H.

    Shakespeare, Geoffrey H.

    Wise, Alfred R.

    Pickthorn, K. W. M.

    Shaw, Helen B. (Lanark, Bothwell)

    Power, Sir John Cecil

    Shaw, Captain William T. (Forfar)

    TELLERS FOR THE AYES.—

    Procter, Major Henry Adam

    Simon, Rt. Hon. Sir John

    Sir Walter Womersley and Dr.

    Radford, E. A.

    Smiles, Lieut.-Col. Sir Walter D.

    Morris-Jones.

    NOES.

    Adams, D. M. (Poplar, South)

    Greenwood, Rt. Hon. Arthur

    Maclean, Neil (Glasgow, Govan)

    Addison, Rt. Hon. Dr. Christopher

    Grenfell, David Rees (Glamorgan)

    Parkinson, John Allen

    Attlee, Rt. Hon. Clement R.

    Griffiths, George A. (Yorks, W. Riding)

    Strauss, G. R. (Lambeth, North)

    Banfield, John William

    Grundy, Thomas W.

    Tinker, John Joseph

    Cleary, J. J.

    Hall, George H. (Merthyr Tydvil)

    West, F. R.

    Cocks, Frederick Seymour

    Jones, Morgan (Caerphilly)

    Williams, David (Swansea, East)

    Cripps, Sir Stafford

    Lansbury, Rt. Hon. George

    Williams, Edward John (Ogmore)

    Daggar, George

    Lawson, John James

    Williams, Thomas (York, Don Valley)

    Davies, David L. (Pontypridd)

    Leonard, William

    Wilmot, John

    Davies, Rhys John (Westhoughton)

    Logan, David Gilbert

    Dobbie, William

    Lunn, William

    TELLERS FOR THE NOES.—

    Edwards, Sir Charles

    Macdonald, Gordon (Ince)

    Mr. Groves and Mr. T. Smith.

    Gardner, Benjamin Walter

    McEntee, Valentine L.

    10.43 p.m.
    Colonel ROPNER: I beg to move, in page 18, line 15, at the end, to insert:
    "References in this Sub-section to an industry in the United Kingdom shall include references to the business carried on by owners of ships or of a particular class of ships, wherever the business is carried on, and in relation to that business references in this Sub-section to works or machinery or plant shall include references to ships."
    Sub-section (2) reads:
    "The Board of Trade shall certify a scheme under this Section if they are satisfied—
    (a) that the primary object of the scheme is the elmination of redundant works or machinery or plant from use in an industry in the United Kingdom."
    I understand that the Parliamentary Committee of the Chamber of Shipping caused inquiry to be made at the Treasury whether the shipping industry came within the definition that I have just read out, namely, "an industry in the United Kingdom." It was thought that perhaps a shipping firm owning a single vessel, which vessel
    1662
    had traded for many years, say, in the Pacific Ocean, might not qualify for the relief which this Clause gives. I understand that the Treasury advised the Chamber of Shipping that the Clause was meant to cover shipping, and, in fact, did so, but since the Committee stage some doubt has arisen. The Amendment is meant to clarify the intention of the Government. I know that hon. and right hon. Gentlemen opposite have not supported this Clause, but I hope that they will not think that one industry should be penalised by reason only of this peculiar characteristic. I hope that the Chancellor of the Exchequer will either give me an assurance that the Clause as it stands will cover the shipping industry, or else that he will be able to accept the Amendment which I have moved.
    10.45 p.m.
    Captain PETER MACDONALD: I beg to second the Amendment, and I hope that it will be accepted, because I cannot think that it was ever the intention of

    1663
    the Government to exclude so essential an industry as the shipping industry from the benefits of this remission of taxation. The shipping industry of necessity has ramifications all over the world. It extends its tentacles to every part of the globe, but its home is in this country. That is why we are the leading mercantile power. Seeing that the Government have been trying in various ways to help and to recussitate this depressed industry I cannot believe that they would exclude it from the benefits of this remission of taxation. I sincerely hope that if Members of the Labour party have been think of opposing the new Clause they will consider the matter carefully, because its non acceptance would seriously affect people in the industry in whom they claim to be interested. I hope the Chancellor of the Exchequer will see his way to accept the new Clause and include it in the Finance Bill.
    10.46 p.m.
    Mr. CHAMBERLAIN: My hon. and gallant Friend has discovered a real and unintentional flaw in the wording of the Clause in the Bill. It is clear that, as drawn, the limitation of the operation of the Clause to industries in the United Kingdom would exclude shipping or, at any rate, a certain part of the shipping industry, and that was not the intention of the Government. The Amendment will rectify that omission, and I ask the House to accept it.
    10.47 p.m.
    Sir S. CRIPPS: Is the right hon. Gentleman sure that he is not accepting an Amendment which will include ships of all nationalities, the owners of which may be paying Income Tax in this country although they are of foreign nationality? There is no limitation in the Amendment as regards the nationality of the ships. It refers to the
    "owners of ships, or of a particular class of ships, wherever the business is carried on"
    That would include an American or French shipowner or anyone else who was prepared to come into some international scheme. I presume that this scheme will be limited to people who are British nationals.
    Captain P. MACDONALD: May I suggest that the intention of the new Clause is to benefit companies that are registered in this country and the British Empire?
    Mr. CHAMBERLAIN: I am obliged to the hon. and gallant Member for calling attention to the point, I will certainly look into it.
    Amendment agreed to.

    CLAUSE 27.—(Power to issue new securities in lieu of Local Loans stock.)
    10.49 p.m.
    Mr. D. MASON: I beg to move, in page 21, line 33, at the end, to insert,
    "always provided that no statutory sinking fund shall be attached to the issue of such securities."
    I had this Amendment on the Order Paper for the Committee stage, and it was suggested that I might postpone it to the Report stage in order that hon. Members might go home. Precisely the same position has arisen to-night. I cannot postpone the Amendment any further, but I will endeavour to be as brief as possible in explaining it. The Amendment relates to Clause 27 which provides for the conversion, if deemed advisable, of Local Loans stock, and I suggest that the words of my Amendment should be added. My object in asking the Chancellor if he will accept these words—or alternatively if he will give an undertaking that this will be borne in mind if the question of funding the Local Loans stock arises—is that because unless one makes a protest now it is useless to make a protest when the prospectus of the loan is issued. I suggest to the House that these statutory sinking funds are useless, costly and futile. That opinion is borne out by the Report of the Colwyn Committee.
    Perhaps the most flagrant case of a sinking fund was the Depreciation Fund attached to the 5 per cent. War Loan. That provided for a sinking fund of one-eighth of 1 per cent. per month being set aside—say £3,000,000 per annum—and it was provided that should the Loan go below the issue price of the stock this Depreciation Fund should be brought into play, and should be used for the support of the Loan. I remember that at the time I protested. Mr. Bonar Law was Chancellor of the Exchequer then, and I asked him why he had put this Clause into the prospectus. He informed me that it was with the object of inducing people to subscribe. It is very questionable whether by doing that the inducement is

    1665
    not offered under false pretences, because the Sinking Fund has no effect on the price of the Loan, and it has led precisely to the sort of thing which, I submit to the House, we do not want to see repeated. When the Loan went to a discount of 90 or 91 we had the spectacle of the Government of the day borrowing at a higher rate to pay off debt bearing a lower rate of interest. I will suggest to the Chancellor of the Exchequer that if he proposes again to restore the New Sinking Fund—and I should like to see a reasonable reduction of the National Debt—that this should be done through a free sinking fund. The only real sinking fund is where you have a surplus of revenue over expenditure out of which public debt can be discharged. If you are to have a statutory sinking fund you may be placed in the position to which I referred. The Colwyn Committee, on page 72 of their report, say:
    "We are of opinion that in the disturbed circumstances under which the loans had to be raised during and immediately after the war period, the attachment of specific Sinking Funds (including the Depreciation Fund) in certain cases proved to be of distinct advantage in securing the success of the loans …"
    That was during the War, when there might have been some advantage in having these specific sinking funds, but they go on to say:
    "we are however inclined to think that definite attachment to particular loans tends to be disadvantageous. Nor can it be foreseen with any certainty that the stock to which a sinking fund is attached will prove to be that which over a long period it is most desirable to support. The ends in view can be equally secured by a judicious use of a free sinking fund. On the whole we do not therefore favour any extension of the earmarking of the sinking fund to particular securities."
    With that authority—perhaps one of the most distinguished of authorities—against this pernicious practice, I think that I might ask the right hon. Gentleman to bear this point in mind. Again, on page 67 of the Colwyn Report, it is stated:
    "The record of the earliest efforts to establish a fund for the redemption of debt in this country shows one long series of failures. It was not until after the enunciation by Dr. Hamilton in 1814 of the principle that the excess of revenue over expenditure is the only real sinking fund
    1666
    by which public debt can be discharged, and the endorsement of this principle by a Select Committee of the House of Commons in 1828 that any real attempt was made to place the sinking fund upon a sound basis."
    I hope that has made an impression on the Chancellor of the Exchequer and that he will give us an undertaking that this most costly, futile and wasteful habit will not be persisted in; and that, if he is fortunate enough to be able to convert these local loans, he will not include in his prospectus a statutory sinking fund.
    Mr. CURRY: I beg to second the Amendment.
    After the very able and exhaustive speech of my hon. Friend I am sure that no words of mine are needed to commend it to the House.
    10.53 p.m.
    Mr. CHAMBERLAIN: I regret that in spite of the powerful advocacy of the hon. Member I cannot accept the Amendment. I do not question the authority of the Colwyn Committee or dispute the value of the general proposition which they advance, but in this case I do not think it is desirable that the Treasury should be fettered in any way in the exercise of their discretion in the future. The Committee themselves admitted that the hypothecation of a special sinking fund to a particular loan is a stronger guarantee to the creditor than the operation of a general sinking fund fixed by Statute but variable by Parliament, and it cannot be denied that it is conceivable that the Treasury may get better terms where a specific sinking fund is attached than without. The hon. Member will understand I am not suggesting that it is the policy of the Treasury to attach a specific sinking fund; it may never wish to do so. Yet I cannot accept a limitation which makes it impossible for them, if they wished at some future date, to do so, if they thought it was in the best interests of the country.
    Amendment negatived.

    CLAUSE 32.—(Further relief of small annuities from, estate duty.)
    10.54 p.m.
    Mr. HANNON: I beg to move, in page 24, line 26, at the end, to insert:
    "(2) An annuity of less than one hundred and four pounds which would, but for the

    1667
    fact that it exceeds fifty-two pounds, be exempted from estate duty under the provisions of the said sub-section as amended by this section, shall be chargeable with estate duty as if it were an annuity of twice the amount by which it exceeds fifty-two pounds and as if the said provisions were not in force."
    In the Finance Act, 1894, Section 15 (1), provision was made that estate duty should not be paid in respect of a single annuity not exceeding £25 paid by the deceased or by himself or in concert with some other person. The present Bill makes a distinct advance on that and provides, in this Clause, that the limit of exemption shall be extended to £52. This raises a serious situation. I ask the Chancellor to take into consideration the serious nature of the jump that would be made in the case of an annuity which was £53, or slightly in excess of the exemption which the Clause provides.
    I am asking that in the case of annuities in excess of £52 but not exceeding £104, the amount to be assessed should be twice the figure in excess of the £52 and under £104; that is to say that an annuity becoming liable to Estate Duty under this Clause would, say in the case of an amount of £60, be liable to assessment for Estate Duty on the difference between £52 and £60, that is twice £8, or £16, and so on as the amount increases, until the limit of £104 is reached. The concession made in the Clause will, I am sure, appeal to the Whole House. It shows generous consideration for a class of people who become entitled to these small annuities, and I think the House in all quarters will appreciate the action of the Chancellor. But it would certainly add immensely to the feelings of satisfaction if the Chancellor could see his way to accept the Amendment. I have had an opportunity of discussing the matter with my right hon. Friend, and I venture to hope that with his usual appreciation of reasonable propositions he will be prepared to accept my proposal. It would give very great satisfaction to a large class of people who otherwise might have to suffer serious inconvenience in the payment of Estate Duties if there were a sudden jump from £52 to £65, whereas by graduation of the assessment in the way I suggest by the time the £104 was reached no sense of injustice could arise.
    11.4 p.m.
    Sir ARTHUR SHIRLEY BENN: I beg to second the Amendment.
    I do so with pleasure. My right hon. Friend the Chancellor of the Exchequer said a good deal this afternoon about gestures. I hope that this Amendment is one which will appeal to him and be outside gestures. The fact that this Clause is in the Bill shows that the Chancellor fully realises the difficulty of people who have small means and who are inheriting something that may be of value. On the other hand, I do not think there is any one who would resent more the lack of fair play which may occur unless such an Amendment as this were carried.
    11.5 p.m.
    Mr. CHAMBERLAIN: When I inserted this Clause in the Bill, I recognised that there might be some hardship in making a sudden jump from total exemption at £52 to the full duty at £53. I thought, however, that though some people might be affected, the actual amounts in question were not important enough to make it necessary to put in what is technically known as a "jump" provision. This matter was touched upon by the hon. Member for Rothwell (Mr. Lunn) in moving an Amendment during the Committee stage and I also received letters from the Association of Superannuation and Pension Funds and the National Federation of Insurance Workers, who represented that a "jump" provision ought to be added to the Bill. I think the Amendment brought forward by my hon. Friend will meet the case, and I shall be very happy to accept it.
    Amendment agreed to.

    CLAUSE 33.—(Short title, construction, extent and repeals.)
    Mr. CHAMBERLAIN: I beg to move, in page 25, line 11, after "in," to insert "Part II of."
    This Amendment is consequential upon the first new Clause which I moved this afternoon.
    Amendment agreed to.

    SECOND SCHEDULE.—(Enactments repealed.)
    Amendment made: In page 27, line 2, at the end, insert:

    1669

    Part I.

    Enactments relating to Revenue Proceedings before Courts of Summary Jurisdiction in Northern Ireland.

    Session and Chapter.

    Short Title.

    Extent of Repeal.

    14 & 15 Vict., c. 93

    The Petty Sessions (Ireland) Act, 1851

    Section forty-two.

    13 & 14 Geo. 5, c. 14

    The Finance Act, 1923

    Sub-section (4) of section thirteen.

    18 & 19 Geo. 5, c. 17

    The Finance Act, 1928

    Section twenty-two.

    20 & 21 Geo. 5, c. 28

    The Finance Act, 1930

    In sub-section (2) of section twenty-five the words from "and it is hereby declared" to the end of the sub-section.

    21 & 25 Geo. 5, c. 32

    The Finance Act, 1934

    Section fifteen.

    Part II.

    Miscellaneous Enactments.—[Mr. Chamberlain.]

    Bill to be read the Third time Tomorrow, and to be printed. [Bill 90.]

  LONDON PASSENGER TRANSPORT (AGREEMENT) BILL.
  Considered in Committee.
  [Captain BOURNE in the Chair.]

  LONDON PASSENGER TRANSPORT (AGREEMENT) BILL.

    CLAUSE 1.—(Power of Treasury to guarantee securities.)
    11.8 p.m.
    Mr. JOHN WILMOT: I beg to move, in page 2, line 28, at the end, to add:
    "and no guarantee shall be given under this Act after the date of such further agreement or certificate until such further agreement or certificate has been approved by resolution passed by both Houses of Parliament."
    Very few words will suffice to explain this Amendment. The Bill is entirely concerned with the agreement which is set out in the Schedule. Clause 1, Subsection (5) provides that if this agreement be amended either by a further agreement, or by a certificate of the Minister of Transport, the Treasury is to lay a copy of the agreement or certificate before both House of Parliament. The Amendment proposes to add that no guarantee shall be given under the Act, after such Amendment has been made until that Amendment has been approved by Resolutions of both Houses of Parliament. That I think is a necessary condition of the Clause and was probably intended when the Bill was drafted. Parliament is extending public credit to guarantee moneys raised for the purposes set out in this agreement. If those
    1670
    purposes are amended that Amendment must be laid before Parliament. It is equally necessary that no guarantee should be applied until such Amendment has been approved by Parliament. It would obviously be useless for the Bill to carry Sub-section (5) as it is, because notwithstanding that the Amendment had been laid before the House, the guarantee might easily have commenced to apply. It is necessary that the House, by accepting this Amendment, should safeguard the public credit by seeing to it that it is not applied to anything which is not in the Schedule to the Bill until after the House has approved the alteration.
    11.11 p.m.
    Mr. COOPER: I am sure that on reflection the hon. Member will not think the Amendment is really necessary to the Bill, which I know he wishes to see passed. I do not think he need be under any alarm as to the object of the proviso which this Amendment would limit. The object of that proviso is not that there should be or is likely to be any drastic, fundamental, or really important change in the terms of the agreement, which have been already et out and are contained in this Bill, but that if there are any modifications which prove to be necessary or desirable as the various schemes are worked out, they may be effected within the scope of the agreement. The hon. Member can easily imagine the kind of adaptations and additions that may prove necessary as the schemes are worked out, which are not actually contained in the words of the agreement as they now stand. The effect of his Amendment, if passed, while

    1671
    I do not think it would do much harm, might do this amount of harm, that, supposing the whole sum had not been raised and supposing certain modifications took place during a period when the House was not sitting and it became necessary to raise the remainder or a further portion of the guaranteed amount during that period, the whole work might be held up because it would be impossible to obtain the approval of the House of Commons for the alteration.
    I think the safeguards as they are are really sufficient. Any such modifications are bound to receive the approval of the Minister of Transport and subsequently to be laid before the House of Commons, and I would remind the hon. Member that the whole of this long agreement was concluded without the approval of the House of Commons. It was laid before the House afterwards and, I think, obtained their complete approval, and I hope any such subsequent Amendments as may be found desirable in the working out of the schemes are equally likely to obtain that approval. I would, finally, remind the hon. Member that the real safeguard is the fact that no more money can possibly be raised than is already provided for in the terms of the Bill, namely, a total of £40,000,000. Although I do not think the hon. Member's Amendment would do any harm, I feel confident that it is not necessary and could not do any good or make the Bill more efficient than it is to carry out the purposes which have received the approval of almost all parts of the House.
    11.14 p.m.
    Mr. G. R. STRAUSS: I appreciate the argument put forward by the Financial Secretary, that if there were some sort of modification of the agreement which in practice was found desirable, it would be a waste of time to have to bring the matter for approval before the House before the guarantee could be applied. That is reasonable, but under the Clause as it stands it might be possible to bring about a drastic alteration of the agreement, and that is a far more serious matter. It might be possible to alter the agreement almost completely and not come before the House of Commons for formal approval. If we could be given some
    1672
    assurance that this is only meant to apply to small modifications within the framework of the agreement as set out in the Schedule, I think probably my hon. Friend and those who sit here would be satisfied. If we were definitely given to understand that, should there be any really important change in the agreement as set out in the Schedule, it would be brought before the House for formal approval, I think we should be satisfied.
    11.15 p.m.
    Mr. COOPER: It is difficult on the spur of the moment to give the assurance for which the hon. Member asks, but I can assure him that there is no intention whatever, and no expectation of any drastic change being introduced into the agreement. This proviso is merely put in as a precaution in case, as schemes are worked out, certain modifications, improvements and changes prove necessary.
    11.16 p.m.
    Mr. LANSBURY: There is another side to this question. It might be found, after a few months, that the fears of the manager of the London and North Eastern Railway, who has discussed these things in public, are valid, and he might not want to go on with the scheme in its entirety as it is before the Committee now. We have no guarantee that one of the companies might not drop out because of the difficulties of carrying through the proposed arrangements. It may be said that we have the agreement, but conditions might arise to prevent it being carried out. Before any new agreement or real modification is made, we want the House to have an opportunity of approving it. The hon. Gentleman said it was difficult to give an assurance on the spur of the moment, but if there is no Amendment there will be no Report stage. Therefore, we shall have no other chance of getting this point settled unless it can be done in another place.
    11.18 p.m.
    Mr. COOPER: The right hon. Gentleman will have another chance and full opportunities of raising points like this because the three undertakings have to proceed by Private Bills in order to get the powers which they have undertaken in the agreement with the Government. In order that they may carry out their share of the agreement they have to get powers from Parliament, and any

    1673
    details as to the exact nature of the agreements will be more suitably discussed on these Private Bills. All that this Bill does is to ratify from the point of view of the Government the agreement which the Minister of Transport entered into on general lines with the three undertakings.
    11.19 p.m.
    Mr. LANSBURY: The Private Bills will not meet the point that we have raised, because they will deal with individual companies. One company—the North-Eastern, for instance—might bring up a Bill which, in the view of the House, was unsatisfactory. There would be no opportunity of carrying out this agreement after we have rejected their Bill or tried to amend it against their will, or tried to impose conditions on them that they felt they could not carry out. I am sorry that the hon. Gentleman cannot meet us because we will have to divide on this, not because we want to divide this hot night, but because we do not want to be told later that we acquiesced in what is being done.
    Mr. COOPER: I gather the right hon. Gentleman is afraid that the undertakers may not implement their side of the agreement. They have to come before Parliament with a Bill, and when that Bill has been passed they will be under a legal obligation to do it.
    Mr. LANSBURY: But they may not do it, for if the manager of the London and North-Eastern Railway Company persuades his company that they are not able to carry out this obligation—and he really has said some very serious things about it—then the Bill will never appear.
    11.21 p.m.
    Mr. WILMOT: I really am rather surprised that the hon. Member should not have accepted this Amendment. Here is a vast and complicated scheme which, before it can be implemented, requires a series of private Bills which are bound to take a considerable time. What we are asking is surely not only reasonable but in the best interests of proper financial control by the House of Commons. If there is an undertaking to give a guarantee, based upon an agreement, and if there are modifications of that agreement, the guarantee should not apply until the modifications had been approved by the same body that approved
    1674
    the agreement. That, surely, is common form, and is a reasonable request such as the House has a right to make and one which ought to have been granted without question.
    The only argument advanced by the hon. Gentleman seems to be the rather fragile one that it might hold up the work; but the chance of that is minute. There will be a vast job going on here, there and in many places, and the idea that this work is going to be held up because the House of Commons has asked to see any Amendments in this vastly important agreement seems an insufficient reason why the House should be asked to forgo these proper powers of financial control. Neither is it quite right to say that the private Bills will provide the opportunity of doing what this Amendment seeks to do. The private Bills will be concerned with the work to be done by each separate undertaking. There might easily be modifications in principle in almost every one of the paragraphs of this agreement which the House of Commons ought to know about and to approve, before the public credit is pledged.
    Let me take one example: There are provisions in the agreement that if Parliament should withhold powers which are sought by the undertakers by Private Bill, the undertakers are automatically let out of their undertakings in the agreement—which is quite regular. The hon. Member says that these Private Bills provide us with our opportunity in this matter, but our only opportunity is to withhold powers. In order to evade its obligations, a company, say, the London and North Eastern Railway Company, might easily go to the Ministry and say that if they wanted to get anything done at all, the best thing would be for the Minister to agree to an alteration of the agreement, and since the alteration would not have to come before the House the guarantee would apply to a scheme which was quite different from the scheme which the House had sanctioned. I again appeal to the Government, in the interests of proper financial control, to accept this Amendment, and I feel sure that the Members of the Government, if they were not sitting on the Treasury Bench, would hold this view with even greater vehemence than I do.
    Question put, "That those words be there added."
    Question, "That the Clause stand part of the Bill," put, and agreed to.
    Clauses 2 and 3 ordered to stand part of the Bill.
    Schedule agreed to.
    Preamble agreed to.
    Bill reported, without Amendment; to be read the Third time To-morrow.

  DEFENCE (BARRACKS) BILL [Lords].
  Considered in Committee, and reported, without Amendment; read the
  The Committee divided: Ayes, 27; Noes, 140.
  Third time, and passed, without Amendment.

  BRITISH SUGAR [SUBSIDY].
  Resolution reported,
  "That it is expedient—
  (a) to authorise the payment by the Minister of Agriculture and Fisheries, out of moneys provided by Parliament, in respect of sugar manufactured in Great Britain during the period of twelve months beginning on the first day of September, nineteen hundred and thirty-five from beet grown in Great Britain,

  1677
  of a subsidy at the following rates and subject to the following conditions, that is to say—
  (i) in respect of sugar manufactured while the market price of imported sugar, as determined by the Minister, is four shillings and six pence per hundredweight, the rate to be—

  Per cwt.

  for sugar of a polarisation exceeding 98 degrees

  5s. 0d.

  exceeeding 76 degrees and not exceeding 77 degrees

  2s 5·7d.

  exceeding 77 degrees and not exceeding 98 degrees

  Intermediate rates varying between 4s. 7·2d. and 2s. 6·7d.

  (ii) in respect of sugar manufactured while such market price is more or less than four shillings and six pence per hundredweight, the rate to be the above rate decreased or increased, as the case may be, by one-sixtieth for every penny or part of a penny by which such market price exceeds or falls short of four shillings and six pence;
  (iii) The subsidy to be payable subject to the conditions subject to which subsidy would have been payable under the British Sugar (Subsidy) Act, 1925, in respect of that sugar if it had been manufactured during the month of
  1678
  August, nineteen hundred and thirty-five;
  (b) to make such incidental provisions as are necessary or expedient in relation to the matters aforesaid."
  Resolution agreed to.
  Bill ordered to be brought in upon the said Resolution by the Chancellor of the Exchequer, Sir Godfrey Collins, Mr. Elliot, and Mr. Duff Cooper.

  BRITISH SUGAR [SUBSIDY] BILL,
  "to extend by twelve months the period in respect of which subsidy in respect of sugar is payable under the British Sugar (Subsidy) Act, 1925, and to make further provision as to the rate of such subsidy payable under the said Act as so amended," presented accordingly, and read the First time; to be read a Second time To-morrow, and to be printed. [Bill 91.]
  The remaining Orders were read, and postponed.
  It being after Half-past Eleven of the Clock, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at Twenty-one Minutes before Twelve o'Clock.

  PALESTINE, TRANSJORDAN AND CYPRUS (IMMIGRATION, JEWS).
  PALESTINE, TRANSJORDAN AND CYPRUS (IMMIGRATION, JEWS).
  MALAYA (PUBLIC SERVICE OFFICERS' SALARIES).
  MALAYA (PUBLIC SERVICE OFFICERS' SALARIES).
  GARAGE ACCOMMODATION.
  GARAGE ACCOMMODATION.
  INCOME TAX.
  INCOME TAX.
  NATIONAL HEALTH INSURANCE AND CONTRIBUTORY PENSIONS BILL.
  NATIONAL HEALTH INSURANCE AND CONTRIBUTORY PENSIONS BILL.
  SIXPENNY TELEGRAMS.
  SIXPENNY TELEGRAMS.
  BUILDING TRADE (ACCIDENTS).
  BUILDING TRADE (ACCIDENTS).
  PAINT SPRAYING (WORKERS, INFECTION).
  PAINT SPRAYING (WORKERS, INFECTION).
  ADOPTION OF CHILDREN ACT.
  ADOPTION OF CHILDREN ACT.
  ELECTRICAL APPARATUS (ACC IDENTS, DOMESTIC PREMISES).
  ELECTRICAL APPARATUS (ACC IDENTS, DOMESTIC PREMISES).
  INDIA (FAMINE RELIEF FUND).
  INDIA (FAMINE RELIEF FUND).
AGRICULTURE.
  SUGAR-BEET (ACREAGE).
  SUGAR-BEET (ACREAGE).
  MILK MARKETING (CHEESEMAKING).
  MILK MARKETING (CHEESEMAKING).
  ORDNANCE SURVEY MAP (KENT).
  ORDNANCE SURVEY MAP (KENT).
UNEMPLOYMENT.
  ASSISTANCE (LINCOLN).
  ASSISTANCE (LINCOLN).
  STATISTICS
  STATISTICS
  AYRSHIRE.
  AYRSHIRE.