Sitting of 11 July 1938

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
NEW WRIT.
For the Borough of Willesden (East Division), in the room of Daniel Gerald Somerville, Esquire, deceased.—[Captain Margesson.]

PRIVATE BUSINESS.
Clacton Urban District Council Bill,
Order for Consideration of Lords Amendments read.
Motion made, and Question, "That the Lords Amendments be now considered," put, and agreed to.
Lords Amendments considered accordingly.
The Chairman of Ways and Means (Sir Dennis Herbert): The Lords Amendments to this Bill consist of a number of protective provisions in respect of public boards and railway companies, and the deletion of a Clause prohibiting the inflation of carcases, and a restriction on the administration of treatment in connection with electricity and radiant heat baths. The others are all purely drafting Amendments.
Lords Amendments agreed to.
Derwent Valley Water Board Bill,
Order for Consideration of Lords Amendment read.
Motion made, and Question, "That the Lords Amendment be now considered," put, and agreed to.
Lords Amendment considered accordingly.
The Chairman of Ways and Means: The Lords Amendment is a new Clause for the protection of the Postmaster-General.
Lords Amendment agreed to.
Surrey County Council Bill [Lords],
Read the Third time, and passed, without Amendment.
Tatton Estate Bill [Lords],
Read a Second time, and committed.
Bristol Corporation Bill [Lords],
Ordered, That the Report of the Committee on Unopposed Bills on the Bristol Corporation Bill [Lords] be now considered.—[The Chairman of Ways and Means.]
Report of the Committee considered accordingly.
Resolved, That this House doth agree with the Committee in their recommendation that a period of 80 years for the repayment of money to be borrowed by the promoters for the construction of certain works and the acquisition of certain lands for the purposes of their dock undertaking under powers sought by the Bill be allowed.—[The Chairman of Ways and Means].
Land Drainage Provisional Order (Louth Drainage District) Bill,
Read the Third time, and passed.

ORAL ANSWERS TO QUESTIONS.

  INDIA (VACCINATION REGULATIONS, BOMBAY).
  Mr. Leachasked the Under-Secretary of State for India the nature of the instructions or requests sent to the Bombay Government in regard to the vaccination of passengers by steamer from the port of Bombay to English ports?
  The Under-Secretary of State for India (Lieut.-Colonel Muirhead): The rules promulgated by the Bombay Government in June, 1936, of which I am sending the hon. Member a copy, were made on the responsibility of the authorities in India and were a result of their efforts to meet the reasonable wishes and requirements of others countries to prevent the spread of that disease from India.
  Mr. Leach: Would the hon. and gallant Gentleman put it to these authorities that there is no longer any real need for these regulations, because vaccination is now more dangerous than smallpox?
  Lieut.-Colonel Muirhead: I think the regulations are brought in for the convenience of persons leaving India who might be going to countries which have an import regulation against it. It is, therefore, convenient to have these regulations, and it is thought best to make them of general application.
  Mr. Leach: How can vaccination be a convenience to anybody?
  Lieut.-Colonel Muirhead: The regulations regarding persons going into other countries is not a question for us but a question for those countries.

  GERMAN AND AUSTRIAN REFUGEES.
  Mr. Rhys Daviesasked the Prime Minister the countries in Europe which have adopted the policy of admitting refugees from Germany and Austria and which have implemented that policy to any degree, and the countries which have not adopted that policy.
  The Under-Secretary of State for Foreign Affairs (Mr. Butler): As regards the policy of His Majesty's Government on this subject, I would refer the hon. Member to the statement made by my right hon. Friend the Home Secretary on 22nd March. I cannot answer for the policy of other Governments in the matter.
  Mr. Rhys Davies: In view of the fact that His Majesty's Government are represented at the Evian Conference on this issue, will it be competent for the hon. Gentleman to give me this information at the close of that conference?
  Mr. Butler: Any information that we can produce as a result of the conference and which is published, certainly will be placed at the disposal of the hon. Member.
  Miss Rathboneasked the Prime Minister how many applications for visas enabling them to enter this country have been made by Austrian subjects to His Majesty's representatives in Austria since the incorporation of Austria in the German Reich; and how many of these applications have been granted, refused, or are still under consideration.
  Mr. Butler: During the period in question the number of visas for the United
  890
  Kingdom granted in Austria was 2,740, while 420 were refused. Approximately 200 applications are at present under consideration by His Majesty's Government.

  DISARMAMENT CONFERENCE (AERIAL WARFARE).
  Mr. Arthur Hendersonasked the Prime Minister whether His Majesty's Government expect their survey of questions relating to the bombing of civilian populations to be completed before September next, with a view to making an attempt at the September meeting of the Bureau of the Disarmament Conference to secure by international agreement a measure of air disarmament and the limitation of the air bombing of civilian populations?
  The Prime Minister (Mr. Chamberlain): Every effort is being made by His Majesty's Government to complete their survey of this very complex question, but I am not at present in a position to add anything to my hon. Friend's reply to the hon. Member on 4th July.
  Mr. Henderson: Does the Prime Minister expect to be in a position to make a statement before the House rises for the summer vacation?
  The Prime Minister: I am doubtful about that.
  Miss Wilkinson: Would it not be better to make every effort to stop bombing instead of surveying the number of people who are murdered in this way?
  Sir Archibald Sinclair: Is it not very astonishing that the Government authorised the Secretary of State for Foreign Affairs to make that very definite statement about their intentions and that they are still, in July, unable to say what their policy is in regard to the survey of aerial bombardment?
  The Prime Minister: It is not a question of policy but of finding practical means of abolishing it.

  CHINA AND JAPAN.
  Mr. Morganasked the Prime Minister whether he will endeavour to obtain from the British missionaries in the outlying parts of China reports as to

  891
  the extent to which narcotics are at the present time being imported from Japan and forced upon the Chinese people?
  Mr. Butler: No, Sir. Official action of this sort, which it would not be proper for His Majesty's Government to take, would place these persons in an embarrassing and difficult position.
  Mr. Banfieldasked the Prime Minister whether he can give any statistics of the arrests made in China by the police forces of the International Settlement and the French Concession, for the last year, of traders in narcotics; and whether he can state the nationality of such traders?
  Mr. Butler: Yes, Sir. During 1937, 255 persons were arrested by the police force of the International Settlement at Shanghai for being concerned in the sale of opium and narcotic drugs. Of these, 144 were Chinese, 97 Koreans, 13 Japanese and one Latvian. I have no information as to arrests by the police force of the French Concession.
  Lieut.-Commander Fletcher: Has the hon. Gentleman called upon the consular authorities in China for a report on the sale of narcotics as mentioned in the question?
  Mr. Butler: I think we have done so.
  Mr. Moreingasked the Prime Minister on what grounds the Japanese Government justify the opening of Japanese factories in the occupied areas inside and outside the International Settlement in Shanghai while prohibiting the working of foreign-owned factories on the ground of military necessity?
  Mr. Butler: Although, so far as my Noble Friend is aware, the Japanese Government have made no official pronouncement on the subject, it is understood that they maintain that control can be exercised over Chinese workmen in Japanese factories, but they are not in all cases satisfied that control sufficient to prevent subversive activities can be exercised over Chinese workmen in foreign factories. The matter is still under discussion both at Shanghai and at Tokyo.
  Mr. Hannahasked the Prime Minister whether his attention has been drawn to the official announcement that the Japanese Government has presented basic
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  shares in the railways of North and Central China to Japanese charter companies to the value of 38,000,000 yen; and whether, as such shares would have priority over the British capital invested in these lines, he will protest against such action?
  Mr. Butler: The charter companies will not be formed until October and their prospectuses are still in draft. Draft articles of association, according to the Japanese Press, provide that the Japanese Government shall subscribe 175,000,000 yen, which is half of the total capitalisation of the North China Company, and 50,000,000 yen, which is half of the total capitalisation of the Central China Company, and that of these amounts 30,500,000 yen for the Central China Company shall, for example, be in the form of railway rolling stock.

  SPAIN.
  Lieut.-Commander Fletcherasked the Prime Minister whether he has received any information as to the bombing of the Spanish Government fleet at Cartagena by an Italian air squadron?
  Mr. Butler: My Noble Friend's attention has been drawn to a report which has appeared in the Press, but he has received no confirmation of it.
  Lieut.-Commander Fletcher: Have any reports been received from the naval authorities in Spanish waters on this subject?
  Mr. Butler: No, Sir.
  Lieut.-Commander Fletcher: Will the hon. Gentleman call for such reports?
  Mr. Butler: As we have no reason to believe that such attack took place, I do not think that it will be worth while calling for a report.
  Miss Wilkinsonasked the Prime Minister whether His Majesty's Government have asked the French Government to close the French frontier for the passage of recruits into Spanish Morocco territory?
  Mr. Butler: No, Sir.
  Miss Wilkinson: Is the hon. Gentleman aware that a considerable number of French Moroccan subjects have been taken captive recently in the fighting in North Aragon, and does he not think

  893
  that if the French frontiers are to be closed, it would be well to close those which are helping General Franco?
  Mr. Speaker rose—
  Miss Wilkinson: On a point of Order. May I have an answer to my supplementary question in view of the fact that the Minister was perfectly willing to answer?
  Mr. Speaker: The hon. Lady received an answer. She asked whether His Majesty's Government had asked the French Government to close the French frontier for the passage of recruits into Spanish Morocco territory, and he said "No." Is not that an answer?
  Miss Wilkinson: I was bringing to the notice of the Minister some information of which, apparently, he was unhappily unaware.
  Mr. Cocksasked the Prime Minister whether the Government have made any appeal or informal representation to the Spanish Government to refrain from bombing the Italian air base at Majorca?
  Mr. Butler: No, Sir.
  Mr. Cocks: Am I to understand that the Government have not expressed any views to the Spanish Government regarding the advisability of ceasing the bombing of the Majorca air base?
  Mr. Butler: Not on that subject.
  Miss Wilkinson: Is the Minister's attitude due to the fact that Signor Mussolini now claims Majorca as Italian territory?
  Mr. Butler: It is well known that Majorca is Spanish territory.
  Mr. W. Robertsasked the Prime Minister the approximate date upon which withdrawal of foreign combatants from Spain may be expected actually to take effect, provided that the arrangements approved by the Non-Intervention Committee are put in operation forthwith?
  Mr. Butler: The hon. Member will find details of the proposed time-table for the withdrawal of foreign volunteers in the text of the Non-Intervention Committee's Plan which is being published to-day. The date from which that time-table will operate depends principally on the time taken by the two Spanish parties to consider the plan now in their hands.

  RUSSIA (BRITISH SUBJECTS).
  Mr. McGovernasked the Prime Minister whether he is aware that a large number of Indians who were living in Moscow and Leningrad have been arrested on the charge of being Trotskyist agents of Fascism; and whether he will make enquiries with a view to protecting the lives of these individuals, who are British subjects, and see that they have a proper legal defence?
  Mr. Butler: No, Sir. But if the hon. Member will supply me with particulars of the cases which he has in mind, I will ask His Majesty's Ambassador at Moscow to enquire into them.
  Mr. Gallacher: Will the Minister take note of the fact that this converted revolutionary is now pleading with capitalism to protect criminals?
  Mr. McGovern: May I ask the hon. Gentleman whether it is a crime to ask for the defence of British subjects whose lives may be in danger in Moscow; and is the hon. Member for West Fife (Mr. Gallacher) so completely under the thumb of Moscow that he dare not stand up and defend them?

  S.S. "STANWOLD."
  Mr. Cocksasked the Prime Minister whether the Government have now obtained a report on the attack on the steamship "Stanwold" by an armed insurgent trawler in the Straits of Gibraltar; and whether he can make a statement on the matter?
  Mr. Butler: Yes, Sir. According to a report now received from the Naval authorities, the master of the steamship "Stanwold" stated that he was interrogated by an armed trawler in General Franco's service on 22nd June when approximately eight miles south-west of Europa Point. He signalled the ship's name but apparently did not reply to further questions, whereupon the trawler signalled to him to halt and fired one round of blank, without, however, attempting further to enforce compliance with this order or otherwise interfering with the steamship "Stanwold."
  Mr. Cocks: Is the hon. Member certain that the ship was fired on with blank ammunition?
  Mr. Butler: The information we have received from our naval authorities informs me that the ammunition was blank.
  Mr. G. Strauss: Are there not constant attempts by these armed trawlers in the Straits of Gibraltar to interfere with British ships going about their legitimate trade?
  Mr. Butler: No, Sir, that is not our information.

  GERMANY (TRADING CONCESSIONS, COLONIES).
  Mr. A. Hendersonasked the Prime Minister whether he will specify the British overseas territories in which the German Government have asked for trading concessions, and the nature of such concessions?
  The Secretary of State for the Colonies (Mr. Malcolm MacDonald): I have been asked to reply. I am not in a position to make a statement on this subject at present. The requests which have been put forward by the German Government are receiving a preliminary examination by His Majesty's Government.
  Mr. Henderson: Will the Government take the earliest opportunity of giving this information to the public?
  Mr. MacDonald: This particular piece of information is connected with the other matters raised in these discussions. I think, perhaps, an answer to the whole question of giving publicity to the German requests had better be addressed to the Prime Minister.
  Mr. Thorne: Can the hon. Member say why you can come to understandings on trade questions, but when it comes to political questions you are simply at daggers drawn?
  Mr. MacDonald: That raises a matter which cannot be dealt with in reply to a supplementary question.

  NAVAL AND MILITARY PENSIONS AND GRANTS.
  Mr. Kellyasked the Minister of Pensions the total paid in fees and/or expenses to members of the Special Grants Committee during the past year and the separate amounts paid to each member?
  The Minister of Pensions (Mr. Ramsbotham): No fees are paid to members of the Special Grants Committee, who are kind enough to give their services gratuitously. They are entitled to repayment, in accordance with a regulated scale, of expenses incurred in attendance at meetings, and payments have been made on this account to members who reside at a distance. With the hon. Member's permission I propose to circulate the detailed figures in the OFFICIAL REPORT.
  Following is the information desired:

  Name

  Address

  Amount paid

  £

  s.

  d.

  Miss M. Cozens-Hardy, M.B.E., J.P.

  Norwich

  55

  16

  9

  R. F. Gquld, Esq.

  Bath

  24

  6

  0

  Stamford Hutton, Esq., O.B.E., J.P.

  Gloucester

  19

  6

  3

  Sir Allan Hume Nicholl, C.B.E.

  Upper Norwood.

  16

  8

  Mrs. B. Ross-Smyth, O.B.E., J.P.

  Perth

  185

  16

  6

  Miss Eleanor Wilson

  Crediton

  6

  1

  6

  Total

  292

  3

  8

  Mr. Kellyasked the Minister of Pensions whether the new chairman of the Special Grants Committee will receive any payments for his services in that position?
  Mr. Ramsbotham: No, Sir. I am glad to have this opportunity of expressing the gratitude which is due to the new chairman of the Special Grants Committee, as to his predecessors, for giving his services without payment.

  CANADIAN NATIONAL EXHIBITION.
  Mr. A. Hendersonasked the Secretary to the Overseas Trade Department whether he is aware that the work on the United Kingdom Government pavilion, now being erected in Toronto, Canada, in connection with the forthcoming Canadian National Exhibition, is being carried out under working conditions which contravene the practice prevailing in Canada in connection with the placing of Federal and Provincial Government contracts; and whether he will take action to ensure that such work shall be carried out in accordance with such Canadian practice?
  The Parliamentary Secretary to the Board of Trade (Mr. Cross): I have been asked to reply. My right hon. Friend had already taken steps to ensure that in the performance of the contract for the work to which the hon. Gentleman refers the practice followed in the case of contracts placed by the Federal and Provincial Governments in Canada should be followed.
  Mr. Henderson: Is the hon. Member aware that the Toronto trade union movement are alleging that the Trade Commissioner has not followed the usual practice? If I send him the information I have received, will he inquire from the Trade Commissioner on the matter?
  Mr. Cross: My right hon. Friend will he glad to have the information.

  LONDON MUSICAL FESTIVAL, 1939.
  Mr. Liddallasked the Secretary to the Overseas Trade Department what the Travel Association is doing in organising, with other bodies, a London musical festival for next spring; and whether all or any of the organisers are making known here and overseas well in advance that such a festival will be held in London so that visitors may arrange suitable plans?
  Mr. Cross: I have been asked to reply. The co-operation of the Travel Association was asked for by the organisers of the London Music Festival, 1939, in order that, in making known the Festival overseas, advantage might be taken of their experience and of the experience of their members. The publicity committee (on which the Travel Association is represented) of the Festival Council, has in preparation an active campaign for publicity overseas, which will begin in a few weeks' time, as soon as the final details of the Festival are settled. Special arrangements are being made to enable visitors from far-off countries such as Australia, to make their bookings in good time.

  COME-TO-BRITAIN MOVEMENT.
  Mr. Liddallasked the Secretary to the Overseas Trade Department what the Travel Association is doing on its own initiative in relation to the Come-to-Britain Movement; and whether he is satisfied that its operations do not overlap
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  work done equally well by the Automobile Association, the Hotels Association, and the steamship and tourist companies?
  Mr. Cross: I have been asked to reply. The Travel Association is carrying out on a considerable scale publicity on behalf of the Come-to-Britain Movement. It in-includes distribution on a wide scale of booklets, participation in exhibitions abroad, broadcasting, films, and every known method of publicity. In reply to the second part of the question, the bodies mentioned are all members and supporters of the Travel Association, and there should, therefore, be no question of overlapping, as it is to their interest to see that there is no duplication.
  Mr. De la Bére: Does the hon. Member realise that the Travel Association is handicapped by lack of funds?
  Mr. Gallacher: Will the Travel Association issue its invitation "Come to Britain" to the thousands of Britishers who are unemployed and stranded in Canada and America?
  Mr. Rhys Davies: Is the Travel Association subsidised by the Government, and, if so, by how much?
  Mr. Cross: The hon. Member had better put the question down.

  AGRICULTURE.

    SHEEP PRICES.
    Mr. Lambertasked the Minister of Agriculture what action he has taktn, or proposes to take, to mitigate the losses of sheep producers caused through the severe fall in sheep prices?
    The Minister of Agriculture (Mr. W. S. Morrison): The consultations with regard to imports of mutton and lamb from the principal Dominion suppliers, to which I have referred in my replies to previous questions, are still proceeding, but, as I have explained in those replies, the fall in sheep prices is due to a variety of causes, including an appreciable decline in the world prices of wool and skins, over which the Government have no control.
    Mr. Lambert: Will my right hon. Friend answer the other part of the question—what action he proposes to take to mitigate the losses of sheep producers?
    Mr. Morrison: I have informed my right hon. Friend about the consultations which have taken place. As regards the larger question, it is hardly suitable for discussion at Question Time. Perhaps he will raise the question next Wednesday in the discussion.
    Mr. Lambert: Will the right hon. Gentleman be able to give me a definite answer on Wednesday?
    Mr. Morrison: I will give the best answer I can to any question my right hon. Friend may put to me.
    Mr. Paling: Is the object of these consultations to restrict the importation of foreign mutton and lamb and to raise the price here?
    Mr. Morrison: It is designed to ensure a regulated market for imported produce in this market.
    Mr. Paling: Is it designed to raise prices here?
    Mr. Morrison: It is intended to save the market from undue fluctuations.

    SKILLED WORKERS.
    Mr. De la Béreasked the Minister of Agriculture what steps the Government are now taking to ensure for 1939 a more adequate supply of skilled labour to work on the soil?
    Mr. W. S. Morrison: The maintenance of an adequate supply of skilled workers for agriculture must depend in the main on the general economic position of the industry, and the Government's policy is directed towards securing an improvement in that respect. My hon. Friend will be aware that important statutory provisions have recently been made for the improvement of the housing accommodation available for agricultural workers.
    Mr. De la Bére: Is the right hon. Gentleman aware of the imperative importance of maintaining skilled labour in order to increase the production of homegrown foodstuffs?
    Mr. Morrison: I am aware of the importance of that matter.

    HOME-GROWN FOODSTUFFS.
    Mr. De la Béreasked the Minister of Agriculture whether he will consider giving a year's trial to the emergency
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    plans already formulated by the Government to increase home-grown foodstuffs with a view to testing their practicability?
    Mr. W. S. Morrison: No, Sir. My hon. Friend's suggestion is not a practicable one.
    Mr. De la Bére: Is my right hon. Friend aware that increased home production is not a machine and you cannot press a button and that it takes "years to cultivate the soil and get a crop?"
    Mr. Morrison: My hon. Friend in his question suggests that the Government should now put into operation any plans they may have for the rapid expansion of production in time of war. I think he would find that that suggestion would not be received with any support by the farming community.
    Mr. De la Bére: Is my right hon. Friend aware that the scheme is utterly unworkable?
    Mr. Morrison: I do not think my hon. Friend knows what the scheme is.
    Mr. De la Bére: Is the right hon. Gentleman aware that at the present rate of progress the farmer's boy will become as extinct as the Dodo?

    MILK.
    Mr. Ridleyasked the Minister of Agriculture what was the average per capita consumption of liquid milk in Great Britain at the most recent date for which the information is available; and what was the average price per pint at the same date?
    Mr. W. S. Morrison: The average per capita consumption of liquid milk in Great Britain during the year ended 31st May, 1936, the latest period in respect of which adequate information is available, is estimated to have been two-fifths of a pint daily, the average retail price being approximately 3¼d. per pint during that year.
    Mr. Ridley: Is the right hon. Gentleman aware that average consumption of milk in this country is below that of European countries and that the average price is higher than in continental countries? Will he, therefore, take steps to increase the consumption and reduce the price of milk in this country?
    Mr. Morrison: The policy of the Milk Marketing Board is to increase the consumption of milk. As regards the comparison with other countries, the hon. Member must remember that we consume large quantities of milk produce in the form of butter and cheese, and that although the consumption of liquid milk may be below that of other countries, the consumption of butter is extremely high.
    Major Procterasked the Minister of Agriculture what are the proposals of the Milk Marketing Board for the formation of central milk distributing depots; whether he is aware of the considerable anxiety of dairymen with regard to these proposals; and whether he can make any statement with the object of allaying that anxiety?
    Mr. Morrison: I am not aware of any proposals of the kind referred to by my hon. and gallant Friend.
    Major Procter: Is the right hon. Gentleman aware that there is considerable anxiety among retail producers of milk that the Milk Marketing Board are going into the retail milk trade, and can he give the House an assurance that his is not the case?
    Mr. Morrison: I am not aware of any proposal of the kind referred to, but if the hon. and gallant Member has any particular proposal in mind, perhaps he will put down a specific question and I will give him a reply upon it.

    TUBERCULOSIS (CATTLE).
    Mr. Ridleyasked the Minister of Agriculture what Treasury payments have been made to cattle owners for the purpose of eradicating tuberculosis under Part IV of the Agriculture Act, 1937?
    Mr. W. S. Morrison: During the period of three months following the date on which Part IV of the Agriculture Act, 1937, came into operation, namely, 1st April, 1938, payments totalling £4,085 were made out of the Diseases of Animals Account to cattle owners in respect of assistance under the Tuberculosis (Attested Herds) Schemes towards the cost of tuberculin tests with a view to eradicating tuberculosis from the herds concerned. The milk bonus of one penny per gallon payable under the schemes to owners of attested herds is paid by the appropriate milk marketing board, which
    902
    subsequently recovers from the Ministry the amounts paid. No claims for the recovery of bonus paid in respect of the months of April, May and June have yet been made by the boards, but it is estimated that the amount to be claimed will be about £40,000.

    CONSUMERS' COMMITTEES.
    Mr. Dayasked the Minister of Agriculture how many consumers' committees appointed under Section 9 of the Agricultural Marketing Act, 1931, are still holding regular meetings; how many meetings have been held by these committees during the last two years; in what districts they generally held such meetings; by whom these committees were appointed; the length of their appointment; and how many, and what changes, have taken place in the composition of same during this period?
    Mr. W. S. Morrison: As the answer is a long one, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
    Mr. Day: Is the right hon. Gentleman satisfied that these committees are doing good work?
    Mr. Morrison: Yes, Sir.
    Following is the reply:
    In accordance with Section 9 of the Agricultural Marketing Act, 1931, three consumers' committees were appointed in December, 1933, namely, a committee appointed by the Minister of Agriculture and Fisheries and the Secretary of State for Scotland relating to agricultural marketing schemes applicable in Great Britain, a committee appointed by the Minister relating to schemes applicable in England, and a committee appointed by the Secretary of State relating to schemes applicable in Scotland. During the last two years the Great Britain committee and the English committee have each met on six occasions in London, and the Scottish committee twice in Edinburgh. In the same period two members have been added to the Great Britain committee and one member each to the English and Scottish committees; one member of the Great Britain committee has died and another has resigned, causing one vacancy each in the English and Scottish committees. Steps are being taken to fill the vacancies. The personnel of these committees is the same as that of the

    903
    Food Council and matters arising under agricultural marketing schemes which concern consumers are discussed at meetings of the council, so that there is no need to convene special meetings of the particular consumers' committee. The annual reports of the Food Council, to which I would refer the hon. Member, include matters that have come before the council in the capacity of consumers' committees.

    POULTRY INDUSTRY (GOVERNMENT PROPOSALS).
    Mr. Mathersasked the Minister of Agriculture whether he is in a position to make a statement with regard to the Government's policy for the poultry industry?
    Mr. W. S. Morrison: With the hon. Member's permission I will make a statement at the end of Questions.
    Later:
    Mr. Morrison: The Government have given very careful consideration to the position of the poultry industry in all its aspects. They have had before them the reports of the Reorganisation Commissions for Eggs and Poultry, the report of the Poultry Technical Committee and the provisional proposals drawn up by the leading producers' organisations for a marketing scheme under the Agricultural Marketing Acts. They have also taken into consideration the results of recent consultations with representatives of organisations of producers and distributors.
    Following a period of rapid expansion after the War, the industry has experienced an appreciable decline in the last three years. That decline appears to have been due to several factors, and the Government accept the view of the Poultry Technical Committee that one of the most vital factors affecting the prosperity of the industry in the whole of Great Britain at the present time is the high incidence of mortality in poultry flocks. The Government are impressed by the committee's views as to the very serious and urgent nature of the disease problem in the poultry industry, and they agree substantially with the recommendations of the committee as to the manner in which the problem should be tackled.
    The Government accordingly propose that a Poultry Commission for Great
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    Britain should be set up with power to control the distribution of breeding stock, hatching eggs and day-old chicks; and with the responsibility of conducting a stock improvement scheme on voluntary lines, assisted by premiums from the Exchequer on a diminishing scale. In addition, the Government are prepared to facilitate the establishment of a research station for the investigation of the major disease problems of the industry: to give sympathetic consideration to a scheme, which the Commission will be asked to prepare, for the establishment of a progeny-testing station with a view to the production of the highest quality foundation stock; and to co-operate in making increased provision for educational and advisory work among poultry producers. The proposal for a poultry research station is already under consideration by the Agricultural Research Council.
    The Government are of the opinion that another factor contributing to the present difficulties of the industry is the lack of organisation in the marketing of Home produced eggs and poultry. This problem was dealt with in the reports of the Reorganisation Commissions appointed under the Agricultural Marketing Acts in 1933, and has since been discussed at length by the leading organisations of producers. The proposals provisionally submitted by the English organisations in December last envisaged the promotion of a statutory marketing scheme, the main object of which would be the regulation of the marketing of eggs by the standardisation of grading and packing.
    There appears to be general agreement among the organisations representing both producers and distributors that some improvement in the present methods of marketing home-produced eggs is needed. Such a large proportion of individual poultry-keepers are in a small way of business, however, that the regulation of marketing under a producers' marketing scheme would present a very formidable task; moreover, it is doubtful whether a producers' marketing scheme would be the most effective, or indeed, the most appropriate, machinery for securing, for example, the standardisation of grades, since this is an object which necessarily involves the regulation of marketing practices in the wholesale and retail distributive trades. As an alternative to action by producers under the Agricultural Marketing Acts, therefore, the Government

    905
    propose that the Poultry Commission should be given power to regulate the marketing of eggs, and also of dead poultry, by the standardisation of grades, etc., up to the point of final sale to the consumer.
    In connection with this proposal for marketing reform, the Government are prepared to ask Parliament to provide a limited sum of money by way of loans to facilitate the establishment of producers' co-operative egg packing stations and by way of grants for the demonstration of efficient methods of packing dead poultry.
    Careful consideration has been given to the claims of the industry that the existing tariff protection against imports from foreign sources should be supplemented by direct financial assistance in the form of an Exchequer subsidy, whether to off-set the present high cost of feeding stuffs or to provide in effect a guaranteed minimum price for eggs in the flush season. The Government are satisfied, however, that a subsidy for egg production would not only involve very serious administrative difficulties but would not be likely in the long run to be to the advantage of the industry as a whole. The Government do not propose therefore to invite Parliament to make provision for the payment of a subsidy.
    On the other hand, the Government recognise that the quantitative regulation of imports of eggs and poultry may be necessary in certain circumstances. The Government are not prepared to restrict imports for the purpose of raising the normal levels of prices; only an increasingly drastic restriction of imports of eggs would effect and maintain (and then only for a limited period) any appreciable rise in prices. The Government feel, however, that if the task of establishing the poultry industry in Great Britain on a firm foundation is to be undertaken with energy and confidence, the industry should be safeguarded against possible dislocation of the market resulting from abnormal arrivals from overseas. They propose accordingly to seek power to regulate imports of eggs and other poultry products in the event of such a danger arising. Power will also be sought to, regulate imports, if necessary, in conjunction with, and in support of, any organised operations that may be undertaken by the industry, by storage during
    906
    the spring flush, with a view to modifying the extreme seasonal variations of supplies and prices.
    The Government commend these proposals as a policy which will materially assist the poultry industry by enabling effective steps to be taken to secure an all-round improvement in the quality of breeding stock and to reduce the heavy and increasing loss from disease, a loss which has been estimated at no less than £4,000,000 a year for adult laying-birds in England and Wales alone; and by facilitating reforms which should lead to greater efficiency and economy in the marketing field.
    Legislation to give effect to these proposals will be introduced as soon as possible.
    Mr. Mathers: I think we are entitled to thank the right hon. Gentleman, though much of his statement was what the Government are not going to do instead of what they are going to do. May I ask when we may expect this legislation; whether Scotland and England will be taken together under one general policy; and whether consideration will be given, as he has said it will be, to the position of the poultry farmer who is exclusively employed in raising poultry and eggs as contrasted with the general farmer with a mixed farm?
    Mr. Macquisten: How much dearer does the Minister expect eggs to become? Will they not become altogether outside the pockets of the working class, just as in the case of milk and other commodities other marketing schemes have made everything dearer for the democracy?
    Mr. Morrison: In reply to the hon. and learned Member for Argyll (Mr. Macquisten) this is not a marketing scheme at all, and I do not anticipate that any increase in the price of eggs will necessarily follow these proposals. It would be very inadvisable to check the consumption of eggs by any policy.
    Mr. Macquisten: Then who is going to pay for this huge body of officials?
    Mr. Morrison: In reply to the hon. Member for Linlithgow (Mr. Mathers), the answer to his first question is that legislation will be introduced as soon as possible, but the course of Parliamentary business is not a matter which I can confidently

    907
    predict. As to his second question, the legislation envisaged in this answer will be on a Great Britain basis. The answer to his third question is that consideration will be given to the different conditions which affect the specialist producer and the farmer who produces eggs as part of his ordinary business.
    Mr. Macquisten: Who is to pay for the officials? Will the hens have a vote like the cows?

    POTATO MARKETING SCHEME.
    Mr. Rostron Duckworthasked the Minister of Agriculture whether he can give an assurance that no steps will be taken to seek parliamentary approval for any of the proposed Amendments of the Potato Marketing Scheme until after the summer Recess?
    Mr. W. S. Morrison: The public inquiry into the proposed amendments of the Potato Marketing Scheme is being opened in London to-day, and will be adjourned to Edinburgh on Monday next. In the circumstances I do not think it would be possible to lay the Amendments before Parliament before the summer Recess.

    SLAG AND LIKE.
    Brigadier-General Clifton Brownasked the Minister of Agriclture whether in view of the impossibility of getting orders for slag or lime executed for the next six months, he will consider whether superphosphate cannot qualify temporarily for the subsidy so that a second cut of seeds and hay can be secured to make up for light crops owing to the drought?
    Mr. W. S. Morrison: The circumstances are not, in my opinion, such as to justify asking Parliament to consider legislation to give effect to this suggestion.
    Mr. Paling: Have not prices risen above the estimate which was given when the Bill was going through?
    Mr. Morrison: No, Sir; that is not the case. As a matter of fact, we have arranged for the purchase of slag at lower prices than in the preceding year.
    Brigadier-General Brown: Is the right hon. Gentleman aware that farmers are crying out for superphosphates in order to stimulate the production of a second crop?
    Mr. Morrison: The considerations on account of which we did not include superphosphates in the scheme were debated during the passage of the Bill, and the hon. and gallant Member is aware of them. As a matter of fact, I am advised that the supply of super-phosphates at the present time would not have the effect of stimulating the growth of seeds so as to secure a second crop.

    PIG OFFALS.
    Mr. Moreingasked the Minister of Agriculture whether he is aware that bacon curers in Northern Ireland are sending largely increased quantities of offals for sale into this country, and, as this will jeopardise the success of any factory rationalisation scheme under the Bacon Industry Act, what steps he proposes to take to stop this procedure; and whether he will approach the Government of Northern Ireland with a view to instituting a factory rationalisation scheme in Northern Ireland?
    Mr. W. S. Morrison: Such information as is available does not support the suggestion that curers in Northern Ireland are sending largely increased quantities of pig offals for sale in Great Britain and I have no reason to suppose that a factory rationalisation scheme under the Bacon Industry Bill is likely to be endangered by this trade.

  POST OFFICE.

    TELEPHONE SERVICE.
    Captain Cunningham-Reidasked the Postmaster-General what additional charge is made for the installation and rental of the special telephone apparatus for the use of deaf subscribers?
    The Assistant Postmaster-General (Sir Walter Womersley): Amplifiers for persons with defective hearing are provided at a rental of 10s, a quarter. There is no installation charge.
    Captain Cunningham-Reid: Is the Postmaster-General looking forward to the time when people so afflicted can be provided with this service free of charge?
    Sir W. Womersley: My right hon. Friend is always looking for improvements in the telephone service for those with good or bad hearing, and it is only a question of the financial effects of the hon. and gallant Member's suggestion.
    Mr. Anstruther-Grayasked the Postmaster-General whether his attention has been drawn to numerous complaints of the inefficient working of the telephone at and in the neighbourhood of Airdrie, Lanarkshire; and what progress has been made with the installation of an automatic exchange?
    Sir W. Womersley: The telephone exchange at Airdrie is already automatic and my information is that the service in the neighbourhood is satisfactory. There have been very few complaints of unsatisfactory working.
    Mr. Anstruther-Gray: Is my hon. Friend aware that one subscriber failed on three successive occasions to get a connection between London and Airdrie, and in view of that, is he satisfied that all the local complaints have in fact been reported to him?
    Sir W. Womersley: I am not aware of the circumstances of the case mentioned by my hon. Friend, but if he will let me have full particulars I will have an investigation made.
    Mr. Robert Gibsonasked the Postmaster-General how many public telephone kiosks providing a 24-hour daily service there are in each of the following islands of Scotland: Bute, Arran, Islay, Mull, Iona, Skye, and Lewis (including Harris); and whether he has any statement to make regarding the use of such telephone service over the last six years?
    Sir W. Womersley: The numbers of public telephone kiosks providing a 24-hour daily service in the islands concerned are as follow:

    Bute

    …

    15

    Islay

    …

    10

    Mull

    …

    11

    Iona

    …

    1

    Arran

    …

    13

    Skye

    …

    7

    Lewis and Harris

    …

    3

    In the short time available, I am not in a position to make any statement on the extent to which the facilities have been used by the public; but if the hon. Member so wishes, the information will be obtained and communicated to him.
    Mr. Gibson: I shall be very much obliged.

    TELEPHONISTS.
    Mr. Messerasked the Postmaster-General whether higher rates of wages are paid and if so, what rates, in cases where young telephone girls are sent by the Post Office telephones department to work temporarily in cities away from their homes?
    Sir W. Womersley: In certain circumstances a telephonist may receive higher age-pay or subsistence allowance. If the hon. Member will let me know the type of case he has in mind, I shall be glad to send him further particulars.

    ENGINEERING DEPARTMENT, LONDON DISTRICT.
    Mr. Viantasked the Postmaster-General the number of recruits that have entered the engineering department of the Post Office in the London district during the past six months?
    Sir W. Womersley: Three hundred and seventy-one during the six months ended 31st May last.
    Mr. Viantasked the Postmaster-General the amount of overtime worked by the Post Office engineers in the London district during the past six months, and the number of men involved?
    Sir W. Womersley: The number of hours of overtime worked by engineering workmen in London during the six months ended 31st May, 1938, was 636,844. The average number of workmen employed during the period referred to was about 12,000.

    WIRELESS TELEGRAPHY BILL.
    Captain Cunningham-Reidasked the Postmaster-General how many complaints approximately his Department receives annually of wireless interference caused by neon-sign installations; and whether any action is contemplated in this connection?
    Sir W. Womersley: Approximately 2,000 complaints are received annually regarding interference with wireless reception caused by neon-sign installations. In most of these cases the owners of the installations agree to fit interference suppression devices, although there is at present no legal power to compel them to do so. As I informed my hon. Friend the Member for Newcastle-upon-Tyne, North (Sir N. Grattan-Doyle) on 21st

    911
    June, the necessary inquiries regarding the possible scope and operation of a new Wireless Telegraphy Bill to deal inter alia with the question of electrical interference with wireless reception, are being actively pursued.

    WIRELESS LICENCES (HOSPITALS).
    Mr. Loganasked the Postmaster-General whether he is aware that, if he insists that each person using a receiving set must pay for a licence, he will debar thousands of sick persons in hospitals from this pleasure; and will he rescind this regulation for hospitals only?
    Sir W. Womersley: Under the present regulations a single wireless licence taken out by a hospital authority covers the installation of any number of receiving sets for use by patients in the hospital.
    Mr. Logan: Then, am I to take it that when it is a question of plugging into the wall it will not be taken into account in the case of a hospital?
    Sir W. Womersley: The regulations apply to hospitals, but where the buildings are separate a separate licence has to be taken out.

    EMPIRE MARKETING BOARD'S FILMS.
    Mr. Dayasked the Postmaster-General what bookings have been arranged by his Department for the film "One Family," and the other films which were taken over by his Department from the Empire Marketing Board on 1st October, 1933; and will he give the financial results of same, stating what arrangements have been made for the future presentation of these films?
    Sir W. Womersley: The position is still as described in my right hon. Friend's replies to the hon. Member on 18th February, 1937, and 21st March last.
    Mr. Day: Is it a fact that the sum of £I5,740, invested in this film by the Government, has been completely lost?
    Sir W. Womersley: No, Sir, not completely lost.
    Mr. Day: Can the hon. Member say, how much has been lost?
    Sir W. Womersley: The hon. Member had better put the question on the Order Paper.

    MINISTRY OF SUPPLY.
    Mr. Dayasked the Prime Minister whether, in view of the country's present requirements for the three Service Departments and in order to co-ordinate the supply demands of the several Departments for such purpose and avoid overlapping and competition between the Services, he will consider the appointment of a Minister of Supply so that proper priority will be observed?
    The Prime Minister: I dealt at length with the question of a Ministry of Supply in the statement which I made in the House in the course of the Debate on Air Defence on 25th May. I have at present nothing to add to that statement.
    Mr. Day: Do I understand that the Prime Minister considers that a Minister of Supply is unnecessary?
    The Prime Minister: The position is exactly the same as it was then.

    ANGLO-ITALIAN AGREEMENT.
    Lieut.-Commander Fletcherasked the Prime Minister whether he will give an assurance that the Anglo-Italian Agreement will not be ratified before this House has had an opportunity to debate and affirm that the condition of a settlement in Spain, which formed the basis upon which conversations with Italy were entered into, has been fulfilled?
    The Prime Minister: As I stated on 1st June in reply to a question by the right hon. Gentleman the Member for Gorton (Mr. Benn) the agreement is not made subject to ratification, but it is provided in the body of the Protocol that its annexed instruments shall be brought into force on such a date as the two Governments shall together determine. There will be an opportunity for further discussion by the House when that date has been determined.
    Lieut.-Commander Fletcher: May I ask the Prime Minister if it is not now clear that the only settlement in Spain which the head of the Italian Government will accept is a total victory for General Franco, and if that is so, how can this agreement ever be brought into force unless the Prime Minister is prepared to accept the same definition of a settlement in Spain?
    The Prime Minister: I do not think that is an accurate description of the position.
    Mr. A. Henderson: Is there any truth in the statement published in the "Times" that both the Italian and the British Governments at the time when they made this Agreement expected an early victory for Franco, and that that is why they agreed to this provision?
    Sir A. Sinclair: While I fully appreciate the Prime Minister's desire to get this agreement into operation at the earliest moment, will he give the House an assurance that it will not be brought into operation until Italian troops and airmen have left Spanish territory, and particularly the island of Majorca?
    The Prime Minister: I am not prepared to add anything to what I have said already.
    Mr. Montague:Does
    the original answer imply that agreement will not come into force Recess?
    The Prime Minister: I do not think it implies that.
    Miss Wilkinson: Would it not make for international understanding if the Prime Minister would issue some kind of statement as to what he had in mind when he spoke of some settlement of the Spanish question, since the thing is left so vague that no one really knows what the Prime Minister meant?
    The Prime Minister: I have nothing to add to my reply.

    DIVORCE AND NULLITY OF MARRIAGE (SCOTLAND) BILL.
    Mr. Erskine Hillasked the Prime Minister whether, in view of the progress already made with the Divorce and Nullity of Marriage (Scotland) Bill, he will consider the granting of some facilities to enable its remaining stages to be completed before the end of the present Session?
    The Prime Minister: In view of the substantial progress made with this Bill, I hope to be able to afford facilities for the consideration of its remaining stages. It may be possible to put the Bill down for consideration either to-morrow or on Thursday after Government Business.

    QUESTIONS TO MINISTERS.
    Mr. Kennedyasked the Prime Minister whether his attention has been drawn to the daily number of oral questions to Ministers by private Members that are unanswered; and whether he is prepared to consider moving to amend the Standing Orders either to extend the time allotted to oral questions or to limit the number of supplementary questions by Members who put questions on the Order Paper?
    The Prime Minister: Yes, Sir. I am aware of the position as stated by the right hon. Gentleman. In my view the remedy largely rests with hon. Members themselves, and I would draw the right hon. Gentleman's attention to Mr. Speaker's remarks only last Tuesday when he asked hon. Members to cooperate with him in getting through questions more expeditiously.

  SCOTLAND.

    HOUSING (GLASGOW).
    Mr. McGovernasked the Secretary of State for Scotland whether he can state, as a result of the inquiry into overcrowding in Glasgow, the number of single-apartment houses with 12, 11, 10, 9, 8, 7, 6, 5, 4, and 3 persons, respectively; the number of these houses with cases of tuberculosis; and how many have children over 16 years of age in the family?
    The Under-Secretary of State for Scotland (Mr. Wedderburn): As the answer to the first part of the question involves a number of figures, I propose with the hon. Member's permission, to circulate it in the OFFICIAL REPORT. With regard to the second part, I am informed that the only information available relates to a recent special investigation which showed that of the 257 cases of tuberculosis notified in one-apartment houses in 1937, 190 were in over-crowded houses. I regret that the information asked for in the last part of the question is not available.
    Mr. McGovern: Is the hon. Gentleman aware that there is a complete report in Glasgow from the dispensaries as to where the tuberculosis cases come from? Can he not persuade the local authorities at any rate to get that information, which is very important?
    Mr. Wedderburn: Certainly, I will do my best.
    Following is the statement:
    DEGREE OF OVERCROWDING in One-Apartment Houses in Glasgow, as shown by the report on the overcrowding survey carried out at the end of 1935.

    Number of Units* in Family and Number of One-Apartment Houses containing the number of Units shown in Column (l).

    (1)

    …

    …

    (2)

    2½

    …

    …

    6,617

    3

    …

    …

    6,694

    3½

    …

    …

    2,523

    4

    …

    …

    2,027

    4½

    …

    …

    868

    5

    …

    …

    791

    5½

    …

    …

    367

    6

    …

    …

    286

    6½

    …

    …

    129

    7

    …

    …

    92

    7½

    …

    …

    35

    8

    …

    …

    17

    8½

    …

    …

    13

    9

    …

    …

    10

    9½

    …

    …

    1

    10

    …

    …

    1

    More than 10

    …

    …

    1

    20,472

    * Section 2 of the Housing (Scotland) Act, 1935, which deals with the definition of overcrowding, provides that in computing the number of persons sleeping in a house, no account shall be taken of a child under one year old, and a child who has attained one year and is under 10 years old shall be reckoned as one-half of a unit.

    JUSTICES OF THE PEACE (APPOINTMENT).
    Mr. R. Gibsonasked the Prime Minister whether the Government will take the appropriate steps to transfer jurisdiction in the matter of the appointment of Justices of the Peace in Scotland from the Lord High Chancellor of England, so that in future such appointments be made by the Secretary of State for Scotland on the advice of the Lord Advocate for Scotland; and whether he has any statement to make on the subject of such appointments?
    The Prime Minister: Justices of the Peace in Scotland have been since 1707 appointed by the Crown by a special commission under the Great Seal of Great Britain, and the Royal Commission on the Selection of Justices of the Peace in their report of 1911 recommended that, as long as these appointments are made by the Crown, the Lord Chancellor as Keeper of the Great Seal is the most
    916
    suitable Minister to be entrusted with the responsibility of advising in the appointments to be made. In view of these considerations, I am not satisfied as at present advised, that a case has been made out for the change proposed by the hon. and learned Member.
    Mr. Gibson: Is the right hon. Gentleman aware that there is a great deal of dissatisfaction in Scotland with the present method of appointment, and has he had in view the fact that the functions of Justices of the Peace in Scotland differ from the corresponding functions in England?
    The Prime Minister: I think this is the first time this question has been raised, but I think all those considerations have already been taken into account.

    WATER SUPPLIES (RURAL DISTRICTS).
    Mr. Boothbyasked the Secretary of State for Scotland whether he is aware that the inadequacy of the water supply in many rural districts of Scotland will prevent full advantage being taken of the Housing (Rural Workers) Act; whether he is taking all possible steps to improve the supply of water in rural districts; and whether he proposes to introduce legislation to deal with this question?
    Mr. Wedderburn: Scottish county councils have represented that the inadequacy of water supplies in many rural districts has hampered the provision of new houses and the improvement of existing houses. My right hon. Friend's predecessor received in May a deputation from the Association of County Councils in Scotland when this question was discussed. It was agreed, in order to ascertain the real extent of the problem, that a small committee should be appointed to co-operate with the Department of Health. This committee is collecting information on the needs and rating resources of every county, and when this information is obtained the position generally will be carefully reviewed.
    Mr. Boothby: Does my hon. Friend appreciate that it is not much good passing a law to make it obligatory to have a fixed bath in all these rural cottages if there is no water supply? Does he intend to take any legislative action following the report on this matter?
    Mr. Wedderburn: In reply to the first part of the supplementary question, the obligation to put in a bath does not mean that a water supply must be put in if no water is available. In reply to the second part of the question, I cannot make any statement about prospective legislation.
    Mr. Day: Is it intended that they should store their vegetables in the bathroom?

    FAMILY ALLOWANCES.
    Mr. Caryasked the Prime Minister whether he will consider the advisability of appointing a committee to inquire into and report on proposals for a national policy of family allowances?
    The Prime Minister: I can add nothing to the replies which I gave to the question by my hon. Friend the Member for East Aberdeen (Mr. Boothby) on 29th June and to the supplementary questions arising therefrom.

  BRITISH BROADCASTING CORPORATION.

    GOVERNORS (MEMBERS OF PARLIAMENT).
    Mr. De la Béreasked the Postmaster-General under what authority a Member of Parliament, appointed a governor of the British Broadcasting Corporation, is unable to accept the post as long as he remains a Member of Parliament?
    Sir W. Womersley: I am advised that a governorship of the British Broadcasting Corporation is an office of profit held under the Crown, the holding or acceptance of which necessitates the vacation of his seat in Parliament by a Member of the House of Commons pursuant to Sections 24 and 25 of the Succession to Crown Act, 1707.
    Mr. De la Bére: Is my hon. Friend aware that it would not be possible for a Member of the House of Commons to be a governor unpaid, and will he give this matter his serious consideration?
    Sir W. Womersley: The only system at the present moment of appointing unpaid persons is on the advisory committees of the British Broadcasting Corporation. There is no regulation against a Member of Parliament being so appointed, but I
    918
    cannot hold out any hope that the hon. Member for Evesham (Mr. De la Bére) will be appointed.
    Mr. De la Bére: Is my hon. Friend aware that the hon. Member for Evesham is not seeking any appointment of that nature?

    DIRECTOR-GENERAL.
    Mr. Hulbertasked the Postmaster-General whether he is now in a position to announce the name of the new Director-General of the British Broadcasting Corporation?
    Sir W. Womersley: No, Sir. I understand that this matter is still under consideration by the governors of the corporation?
    Mr. Hulbert: In view of the importance of the appointment, can my hon. Friend say whether it will be made within three or four weeks?
    Sir W. Womersley: I am very pleased to be able to say that I cannot give any information whatever so that I cannot be held responsible for the statements that have appeared in the Press, but I am confident that the Governors are dealing with the matter as expeditiously as possible.
    Mr. De la Bére: Can my hon. Friend say what is arresting progress? Cannot they make up their own mind?

    GOVERNMENT CONTRACTS (EMPIRE MATERIALS).
    Mr. Messerasked the First Commissioner of Works whether it it a condition of Government contracts that all material used shall be Empire material except in cases where Empire material is not available?
    The First Commissioner of Works (Sir Philip Sassoon): Subject to considerations of price, in regard to which a substantial preference is given, and of suitability, it is the practice of my Department in placing contracts to ensure the use of Empire materials whenever possible.

    PALESTINE.
    Mr. Donnerasked the Secretary of State for the Colonies whether, in view of the renewed outbreak of murder and violence in Palestine, special measures

    919
    will be taken or have already been enforced to protect life and restore order and the authority of government?
    Lieut.-Commander Fletcherasked the Secretary of State for the Colonies whether he has any statement to make concerning the recent series of outrages reported from Palestine; and what action is being taken?
    Mr. M. MacDonald: In my reply on 8th July to the right hon. Member for Limehouse (Mr. Attlee), I referred to the recent outbreaks of violence in Palestine and to the despatch of reinforcements to assist the authorities in dealing with the situation. My latest message from the High Commissioner reports further incidents in Haifa and Jerusalem. In Jaffa and Tel Aviv no further incidents are reported, but tension persists and curfew is in force in all four cities and the boundary area. His Majesty's Ship "Repulse" relieved His Majesty's Ship "Emerald" at Haifa on 8th July. The First Battalion Irish Guards and the First Battalion Essex Regiment are expected to reach Palestine from Egypt to-day and to-morrow, respectively. The iith Hussars, an armoured-car regiment, will follow at an early date. I am in consultation with the High Commissioner on the question of increasing the strength of the police force.
    Mr. Donner: Has my right hon. Friend considered the desirability of having a house-to-house search for the purpose of confiscating all firearms in this territory?
    Mr. MacDonald: I am afraid that that would require very much larger military forces than there are in Palestine at the present time. I am satisfied that the authorities in Palestine are doing everything feasible to restore law and order in that country.
    Mr. Benjamin Smith: Would the right hon. Gentleman not consider implementing the Allenby Report?
    Lieut.-Commander Fletcher: May I ask the Prime Minister whether he will consider bringing the statement which the right hon. Gentleman has just made to the notice of the French Government with a view to their terminating the asylum which they grant to the Grand Mufti, and which enables him to direct the present outbreak of terrorism in Palestine?

    SUGAR INDUSTRY (JAMAICA).
    Captain Peter Macdonaldasked the Secretary of State for the Colonies when the revised estimates of the British Empire sugar consumption for the current year will be available; and whether any arrangements are to be made to assist Jamaica by the redistribution to that island of part of those quotas which other Colonies have been unable to fulfil?
    Mr. M. MacDonald: The whole matter is under the consideration of the International Sugar Council which stands adjourned until Wednesday next. I regret that I am unable to make any statement until the meeting has concluded.

    MALTA (CONSTITUTION).
    Mr. Beaumontasked the Secretary of State for the Colonies whether, in view of the fact that the appeal to the Privy Council in the recent Malta Constitution case has been allowed, he is in a position to make any statement regarding the constitutional future of Malta?
    Mr. M. MacDonald: Yes, Sir. As the House was informed in the Debate on the Second Reading of the Malta Letters Patent Bill in July, 1936, it was never the intention that the present constitution of Malta should be continued indefinitely. His Majesty's Government have come to the conclusion that the time has arrived when more liberal institutions can be granted. Proposals to this end have been under consideration for some time, and I hope to be in a position shortly to announce the main outlines of the new constitution, which will be contained in Letters Patent to be submitted to His Majesty, and which will come into force when those Letters Patent are approved and the necessary preparations in Malta completed.
    Mr. Mathers: Will that be before we rise for the Recess?
    Mr. MacDonald: I hope to be able to make a statement before we rise, but I cannot give a definite undertaking to that effect.

  ROYAL NAVY.

    DESTROYERS.
    Mr. Emmottasked the First Lord of the Admiralty whether the decision of

    921
    His Majesty's Government not to lay down any destroyers this year is subject to early revision?
    The Parliamentary Secretary to the Admiralty (Mr. Shakespeare): His Majesty's Government reached this decision after a careful review of existing requirements. Provided no important new consideration arises, there is no necessity for it to be reviewed.
    Mr. Emmott: Are His Majesty's Government satisfied that to abstain from laying down destroyers this year will not prejudice the maintenance of the proper balance between the different categories of ships?
    Mr. Shakespeare: Yes, that is, of course, one of the factors that has influenced the position. We have in recent years maintained a steady production of destroyers, but in this year's programme we are concentrating on the less advanced categories of battleships, aircraft carriers and cruisers which, incidentally, take much longer to build.
    Mr. Donner: Will the hon. Gentleman bear in mind the large number of submarines which are being built in many foreign countries at the present time?
    Mr. Shakespeare: Yes, Sir.

    MEDITERRANEAN FLEET (LEAVE).
    Miss Wilkinsonasked the First Lord of the Admiralty why British naval ratings are given shore-leave at Palma but are never allowed to land at any Spanish Government port?
    Mr. Shakespeare: I would refer the hon. Member to the reply given by my right hon. Friend the First Lord on 25th May to the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher).
    Miss Wilkinson: I have read that answer, and I wish to ask the Minister whether it is not a fact that that answer and the continued orders from the Admiralty show clearly that the present Government in Spain is not bombing civilians, and, therefore, whatever danger there is to members of His Majesty's Forces comes in those places which are liable to be bombed by Italian aeroplanes?

  UNEMPLOYMENT.

    BENEFIT DISALLOWED.
    Mr. Whiteleyasked the Minister of Labour whether he is aware that by a
    922
    ballot of the men at Betteshanger Colliery, Kent, the dispute was brought to an end on 25th June and that the chief insurance officer refuses to accept that the dispute is at an end, thus depriving 250 men of unemployment benefit; and whether he will have immediate inquiries made with a view to these men receiving their benefit?
    The Parliamentary Secretary to the Ministry of Labour (Mr. Lennox-Boyd): Section 26 of the Unemployment Insurance Act, 1935, provides that an insured contributor who has lost employment by reason of a stoppage of work which was due to a trade dispute at the factory, workshop or other premises at which he was employed shall be disqualified for receiving benefit so long as the stoppage of work continues. I understand that in this case the insurance officer has held that, although the trade dispute is over, the stoppage of work continues, and on this ground he has disallowed the claims of some men who have not yet been re-engaged. The court of referees has upheld this decision, and it is open to the men's association to appeal to the umpire against it.
    Mr. Whiteley: Is the Parliamentary Secretary aware that one of the reasons given is that there is a shortage of young labour and that during this dispute 100 men have joined the Army; and are those men who remain to be penalised?
    Mr. Lennox-Boyd: As I pointed out, it is open to the men's association to appeal to the umpire. In regard to the particular statement advanced by the hon. Member, it is true that one of the reasons for the difficulty of restarting these men in employment is a serious deficiency in the number of haulage boys.
    Mr. Whiteley: But is the Parliamentary Secretary aware that the court of referees has disallowed the appeal completely?
    Mr. Lennox-Boyd: The right of appeal to the umpire still remain with the men's association.
    Mr. Whiteley: Owing to the unsatisfactory nature of the answer, I intend to raise this matter, which is a matter of principle, on the Motion for the Adjournment.

    GOVERNMENT FACTORIES (LANCASHIRE).
    Mr. G. Macdonaldasked the Minister for the Co-ordination of Defence the number of Government factories in

    923
    connection with the rearmament programme established in Lancashire; the number of persons employed; and what percentage of those employed have been recruited locally?
    The Minister for the Co-ordination of Defence (Sir Thomas Inskip): Two Government factories are being established in Lancashire in connection with the rearmament programme. Both these factories are under construction and no persons are at present being employed except in the work of construction. The third part of the question does not, therefore, arise.
    Mr. Macdonald: Can the Minister say whether, as regards the work of construction, men are being brought in from outside the locality to do such work when there are unemployed men in the locality?
    Sir T. Inskip: In the larger undertaking every effort is being made to obtain as many men as possible through the local employment exchanges. I assure the hon. Member that full importance is being attached to the question of getting local labour.
    Mr. Macdonald: Is the right hon. Gentleman aware that, although there are scores of unemployed men in those areas, people from outside the areas, and even from outside this country, are being brought in to do the work?

    SPECIAL AREAS (NEW FACTORIES).
    Mr. James Griffithsasked the Financial Secretary to the Treasury, how many applications for financial assistance have been made to the Special Areas Reconstruction Association from its inception to the last available date; how many such applications have been given assistance and the amount of assistance given; and how many factories have thus been established and the number of persons given employment at those factories?
    The Financial Secretary to the Treasury (Captain Euan Wallace): In the two years between its incorporation and 18th June, 1938, the Special Areas Reconstruction Association, Limited, has received 606 applications for loans and has agreed to make 140 loans totalling £782,550; of these, 82 loans amounting to £536,900 are loans to new businesses, and the balance
    924
    of 58 loans amounting to £245,650 are loans for the extension of existing businesses. The amount of employment which has resulted from the work of the Association cannot be accurately estimated.

  EDUCATION.

    MILK IN SCHOOLS (LANCASHIRE).
    Mr. G. Macdonaldasked the Parliamentary Secretary to the Board of Education, the number of schools in the Lancashire County Council area where liquid milk is provided; and whether there are any schools where it is not being provided?
    Mr. Grimston (Vice-Chamberlain of the Household): I have been asked to reply. According to the returns for 31st March, 1938, liquid milk is being provided in 834 out of 878 public elementary school departments in the Lancashire County Council area. In 22 of the remaining 44 departments dried milk is provided. Many of the departments not providing liquid milk are very small and 97.6 per cent. of the public elementary school children in the area are in schools where such provision is made. Only 0.6 per cent. of the children are in schools where neither liquid nor dried milk is provided.

    LANGUAGE TRAINING.
    Mr. A. Jenkinsasked the Parliamentary Secretary to the Board of Education the number of education authorities that are this year sending secondary school pupils to foreign countries for language training; and whether the Board pays grant on the expenditure involved?
    Mr. Grimston: The Board have no information as to the number of local education authorities which propose to send secondary school pupils to foreign countries this year, but grant is payable on the expenditure involved where the Board are satisfied that the arrangements made are educationally desirable.

    AIR-RAID PRECAUTIONS.
    Brigadier-General Spearsasked the Secretary of State for War whether he will take steps to ensure that in the event of a sudden emergency it will be possible for the War Department to communicate

    925
    with anti-aircraft headquarters and for headquarters to get in touch with keymen in the units concerned?
    The Financial Secretary to the War Office (Sir Victor Warrender): Arrangements to ensure prompt communication in such an event already exist.
    Brigadier-General Spears: Is the Financial Secretary aware that on 21st May when a sudden emergency arose, it was impossible to communicate with the antiaircraft defence of London by telephone, and nobody was on duty?
    Sir V. Warrender: My hon. and gallant Friend and I have had some correspondence on that point and I thought I had satisfied him.
    Mr. J. J. Davidson: Is it not the case that there are so few anti-aircraft units in Scotland that it will not take five minutes to communicate with the lot of them?

    IRISH SWEEPSTAKE.
    Mr. McGovernasked the Secretary of State for the Home Department whether he intends to introduce legislation for the purpose of making the sale of Irish sweepstake tickets legal in view of the settlement of outstanding grievances between His Majesty's Government and the Government of Eire?
    The Secretary of State for the Home Department (Sir Samuel Hoare): No, Sir.
    Mr. McGovern: Was not this legislation introduced as part of the penal legislation against the Free State Government, and will the right hon. Gentleman now consider, in view of the changed relationships, passing legislation to make the sweepstake legal?
    Sir S. Hoare: The answer is still, No, Sir.
    Mr. McGovern: May I repeat the first part of my question, whether this legislation was not passed as part of the penal legislation at that time against the Free State?
    Sir S. Hoare: I am afraid that the answer is still, No, Sir.
    Mr. Thurtle: Does not the right hon. Gentleman think a better solution would be to introduce legislation to enable a British sweepstake to take place in aid of British hospitals?

    SILICOSIS.
    Mr. G. Macdonaldasked the Home Secretary the number of silicosis cases in Lancashire and Cheshire during each of the last five years; and whether the Medical Research Council are making any investigations regarding silicosis in this district?
    Sir S. Hoare: The statistics are not generally tabulated according to counties, but the Silicosis Medical Board granted eight certificates in 1937 to workmen last employed in coal mines in Lancashire and Cheshire; four in 1936, three in 1935, three in 1934 and four in 1933. As regards the last part of the question, I am informed that the inclusion of mines elsewhere than in South Wales is not contemplated as part of the investigation into lung conditions among coal miners at present being carried out by the Committee of the Medical Research Council, their method in this instance being to make an intensive study in a selected locality rather than a general survey. The value of the findings, however, will not, of course, be restricted to the sample area from which the evidence is drawn.
    Mr. Marshall: In view of the great difficulty of establishing claims under the silicosis regulations, especially in the grinding trades, will the right hon. Gentleman give the House an undertaking to bring in early legislation to remedy the grave defects?
    Sir S. Hoare: That is, obviously, a question which should be put down. It does not arise out of this question.
    Mr. David Grenfell: Will the right hon. Gentleman consider making a submission to the Medical Board for a revision of the diagnosis, because there is a failure to obtain awards in a large number of cases of people who die from this disease?
    Sir S. Hoare: That is also a more general question than the question on the Paper, but I will take account of what the hon. Gentleman says.

    HOSIERY FACTORIES (ALIENS).
    Mr. R. Gibsonasked the Home Secretary whether he is now in a position to reply to the representations made to him and/or the Home Office regarding the entry into the United Kingdom of persons to establish and operate hosiery

    927
    factories, particularly in Scotland; and whether he has any statement to make on the subject?
    Sir S. Hoare: As I have already stated, one foreign firm has been allowed to start a knitwear factory in one of the Special Areas. On the general question of allowing foreigners to come here for the purpose of starting factories, each case is subjected to careful examination, and attention is given to the various considerations which arise, including such matters as the location of the proposed factory, the prospect of increased employment for British workers and the question whether advantage is likely to accrue to this country from the diversion to this country of trade which would otherwise be done abroad. Moreover, in accordance with what I believe is the general desire of the House, special consideration is given to any such applicant who has been forced to leave his own country for racial or political reasons.
    Mr. Gibson: In considering these applications, will the right hon. Gentleman keep in mind that although there is a large number of women engaged in the merino mills in Greenock, there is still a large number of young women available there for such employment?
    Sir S. Hoare: That is one of the facts which, obviously, has to be taken into account.
    Mr. Mathers: In considering such applications, are wages standards also taken into account, because there is a belief that in the depressed areas certain industries are set up which undercut those in other parts of the country?
    Sir S. Hoare: There would be no foundation for a suspicion of that kind. Wages would, obviously, have to be taken into account.

    BUTE ESTATES, CARDIFF.
    Mr. J. Griffithsasked the Chancellor of the Exchequer whether he is aware of the sale of the Bute Estates, Cardiff, to a syndicate and that the value of the estate on reversion is estimated at £20,000,000; and whether, in view of the fact that this wealth has been created by the industrial community of South Wales, which has suffered so long from industrial depression, he will take
    928
    measures to make this wealth available for the rehabilitation of the area whose industry made it?
    Captain Wallace: My right hon. Friend has no official knowledge of the matters to which the hon. Member refers. The suggestion in the second half of the question is one which he cannot accept.
    Mr. Griffiths: Will the Chancellor of the Exchequer in preparing his new Budget give full consideration to the revelation made by this deal that here is a great amount of publicly-created wealth that ought to be secured for the public?
    Mr. Thorne: Does not the Minister's Department get cuttings from newspapers giving all the information they want?
    Captain Wallace: We cannot base our information on newspaper cuttings.

    MERSEY TUNNEL.
    Mr. Loganasked the Minister of Transport whether he is prepared to take over the Mersey Tunnel as a national highway; and, if not, will he alternatively increase the grant of 50 per cent. on the additional outlay of £2,750,000?
    The Minister of Transport (Mr. Burgin): The Mersey Tunnel is in the areas of the county boroughs of Liverpool and Birkenhead, and I have no power to take it over as part of the trunk roads system. I am not prepared to re-open the question of the grant from the Road Fund which was fixed at 50 per cent. of the approved cost or £2,500,000, whichever was the less.
    Mr. Logan: Is the right hon. Gentleman aware that the original estimate was wrong and that there was an agreement that 50 per cent. of the price would be granted? I am asking now whether, in view of the fact that this tunnel is a national highway, it is possible to take it over, together with the liability?
    Mr. Burgin: I am aware that the cost of the ventilation works was much more expensive than was anticipated. There have been two Acts of Parliament dealing with the tunnel passed since then, in 1927 and 1933.
    Mr. Logan: I am aware of that, but as the right hon. Gentleman is a new Minister, I thought that he might have more consideration.

PERSONAL EXPLANATION.
Sir Reginald Clarry: I desire, with your kind permission, Mr. Speaker, to make a personal statement in respect of certain observations made by the hon. Member for Rothwell (Mr. Lunn) in the course of his speech during the Debate on Thursday night on the West Yorkshire Gas Distribution Bill, and to ask your guidance for the future. The objectionable words by the hon. Member, although inaudible to the Deputy-Speaker, are recorded in the OFFICIAL REPORT, as
follow:
"I have listened to an amazing speech by the hon. Member for Newport (Sir R. Clarry). Flow in the world a man can forget his public duty, have no regard to the ratepayers or taxpayers, but simply think of his own pocket and vested interest, I cannot understand. I do not think that in a public body a man should be allowed to do that, and do it with impunity, as the hon. Member for Newport always does."
Further, in reply to my interruption, he said:
"I do not know whether the hon. Member considers they are implications or not. They are true."— [OFFICIAL REPORT, 7th July, 1938; col. 701, Vol. 338.]
I deny those imputations most emphatically. My public duty has never been forgotten on any occasion, and is well understood by my constituents, as evidenced by my re-election on five occasions. My activities in Parliament in connection with coal carbonisation and gas industry matters have nothing to do with my own pocket or vested interests, and I have no financial interest in the gas industry. For some years prior to entering Parliament I was general manager and engineer of the Swansea Gas Company, and although I left this appointment and the industry 18 years ago, I still retain the personal friendship of a number of old colleagues and associates. As the only Member, I believe, with administrative experience of the gas industry in this House, I have naturally taken an active part on occasions in these matters in Parliament. On the subject of the Debate in question, a week ago to-day I was approached here by Colonel Carr, the managing director of the company promoting the Yorkshire gas grid, who is a personal friend of many years standing. He laid the facts of their Bill, now in Parliament, before me. After going into the circumstances very thoroughly I readily offered to represent their case in the Debate on Thursday—
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an offer which was gladly accepted. In these circumstances the remarks of the hon. Member were quite clearly unjustified, and necessitated this statement arid my troubling the House to-day.
Mr. Lunn: I never had any intention or desire to contravene the rules of this House or the Rulings of the Chair, and this is my seventh Parliament. I am a most obedient Member. But on Thursday night last we were considering a Bill, the West Yorkshire Gas Bill, with conflicting evidence and statements regarding public and private interests. This is a very big Bill. It embraces 19 different companies. It is a gigantic monopoly which is being created. It affects not only the West Riding, but also the North and East Ridings, and during the Debate a good deal was said regarding some negotiations between the company and the North Riding County Council. When the hon. Member came to reply I thought he showed an unusual knowledge of the Bill, He started his speech by saying, "My instructions are," and then he went on to say further down:
"I have here the original document of the suggested draft clause for an agreement. I have all the coloured inks to which my hon. Friend referred, with the appropriate dates. That document was sent between solicitors, between legal people on both sides, with a view to coming to an agreement. The last one was green amendments from Ellis and Ellis, on 14th May, 1938. In response to that, the promoters' legal advisers promptly telephoned and said they could not agree to the green amendments. Therefore, no agreement was ever reached."
After a good deal of interruption the hon. Member went on to explain the Bill very fully. He said:
"The company, which is asking for certain statutory powers, is the first to link up a national gas grid in this area. There has been a gas grid in Sheffield which has worked very successfully. There are 19 undertakers with four coke ovens. The proposal is that the gas is to be put into this grid, and taken out and distributed by those statutory undertakers who have now powers to distribute. That is a point to which I wish to refer in a moment. Investigation which has taken place in that area shows that there is a large potential industrial demand which is estimated to be at least double the present demand for the area. The situation is that the supply of gas in detail will be carried on by the 19 undertakers who have that power, but their plant is equivalent only to a domestic supply. They did not and have not visualised the potential industrial developments, and the need for a cheap gas for industrial fuel—which is coal, our native fuel, conveyed in pipes.''—[OFFICIAL REPORT, 7th July, 1938; cols. 694–696, Vol. 338.]

931
After that speech, which I have not quoted in full, though it is all on the same lines, I want to say that I do not dispute making the statement which the hon. Member has mentioned to-day, but I want to add that I made the statement in good faith on the facts as I thought I knew them at the time. Only to-day a member of the company of which the hon. Gentleman was chairman up to a few months ago has been to see me to tell me that the hon. Member is not the chairman at this time. Of course I accept the statement of the hon. Member that he is not interested in the manner that I described; naturally I do that. I have no desire to be offensive to any Members of the House; it is not my nature. I wish to say that I would rather be good friends with each one of them, and with the hon. Member for Newport (Sir R. Clarry) than have their enmity. I repeat that the statement I made was made in perfect good faith at the time.
Hon. Members: Withdraw.
Sir R. Clarry: In view of the further remarks of the hon. Gentleman to-day I should like, with your permission, Mr. Speaker, to say one further sentence. The hon. Member referred to my being the chairman of a company. The only reference that I can think the hon. Member is making is to a non-trading association of which I was executive chairman until last summer, but that appointment had nothing whatever to do with Parliament or this House, and only remotely with the gas industry. As a matter of fact, I held that appointment for seven years, and I accepted it when I was not even a Member of this House, in June, 1930. It is quite irrelevant.
Mr. Lunn: It was a tar company, which has something to do with gas.
Hon. Members: Withdraw.

MESSAGE FROM THE LORDS.
That they have passed a Bill, intituled, "An Act to enable the Trustees of the British Museum to accept a certain bequest made to them by the late Lord Rothschild; and for purposes connected therewith." [British Museum Bill. [Lords.]
BRITISH MUSEUM BILL [Lords].
Read the First time; to be read a Second time upon Thursday, and to be printed. [Bill 214.]

ESTIMATES.
Report from the Select Committee, with Minutes of Evidence and Appendices, brought up, and read;
Report to lie upon the Table, and to be printed. [No. 158.]

ADMINISTRATION OF JUSTICE (MISCELLANEOUS PROVISIONS) BILL [Lords].
Reported, with Amendments, from Standing Committee C. [Title amended.]
Bill, as amended (in the Standing Committee), to be considered upon Thursday, and to be printed. [Bill 213.]
Minutes of Proceedings to be printed. [No. 157.]

AIR SERVICES (SUPPLEMENTARY ESTIMATES, 1938).
Estimate presented—of the additional Personnel and the further Sum required to be voted for Air Services for the year ending 31st March, 1939 [by Command]; Referred to the Committee of Supply, and to be printed. [No. 155.]

PRIVILEGES.
4.6 P.m.
The Prime Minister (Mr. Chamberlain): I beg to move,
"That this House doth agree with the Report of the Committee of Privileges."
Mr. Attlee: On a point of Order. I wish to ask you, Mr. Speaker, whether you can give us any guidance as to the scope of the Debate on the Motion of the Prime Minister?
Mr. Speaker: I have given a great deal of attention to this question and I have come to a definite decision as to what may be discussed on the Motion. The Question before the House is:
"That this House doth agree with the Report of the Commitee of Privileges;"
the finding of that Committee being that a breach of the Privileges of this House was, in fact, committed. The Committee finds that this breach of Privilege was committed by the summoning of a Member of this House to the Court of Inquiry, but they pass no reflection upon their action. The responsibility of the Secretary of State ceases, as regards this incident, after the Court had been set up. A Select Committee has been appointed by the House to inquire into, among other things, the action of Ministers concerned. Therefore, in discussing whether this House shall agree with the Report of the Committee of Privileges it would obviously be not only improper, owing to the fact that the Select Committee is now considering this very question, but out of order, to discuss the action of the Secretary of State in connection with something for which he has no responsibility and is not directly concerned. Any action of the Secretary of State with reference to this incident should be discussed on the appropriate Vote in Supply, or possibly on the Report of the Select Committee when it comes before this House.
4.9 p.m.
Mr. Atlee: May I submit to you, first of all, with regard to your Ruling as to the reponsibility of the Secretary of State for War for the Court of Inquiry, that we have no information at the moment before us in this House as to when that Court was set up, how that Court was set up, why that Court was set
950
up, or by whom it was set up. Are we not entitled to inquire into the matter of how that Court came to be set up and how it took action? I further submit that the incident which is the subject of a reference to the Committee of Privileges is quite distinct from that which has come before the Joint Select Committee, which is considering the action of Ministers in reference to the use of the Official Secrets Acts, but not in reference to the summoning of a Member of Parliament in his capacity as a Territorial officer, for action done, as he claims, in pursuance of his Parliamentary duties, before another Court than this House. I submit to you that this House can properly consider the Report of the Committee of Privileges, that it need not necessarily accept that Report, and that, therefore, in discussing that Report we are surely entitled to review the general position of Members of this House who are also members of the Territorial Army, their position with regard to Courts outside this House, and the rights of this House and its Members in respect of outside tribunals.
Mr. Speaker: With regard to the last question of the right hon. Gentleman, as to this House discussing now the position of Members of Parliament with regard to Courts outside this House, that is definitely what the Select Committee has been set up to inquire into. The terms of reference to the Select Committee are:
"To inquire into the substance of the statement made on 27th June in this House by the hon. Member for Norwood, and the action of the Ministers concerned, and generally into the question of the applicability of the Official Secrets Acts to Members of this House in the discharge of their Parliamentary duties."
All the questions which the right hon. Gentleman put to me in his question are contained in those terms of reference setting up the Select Committee.
Mr. Attlee: I submit that the terms of that Motion were set down before this incident arose, that they were taken over by the Prime Minister, that it is entirely concerned with the Official Secrets Acts, that it was not set up to consider the position of a Member of this House who is summoned before a Court of Inquiry or a military Court, that it is to inquire into the action of Ministers with reference to the proceedings under the Official Secrets Acts, but that that was under consideration by this House before this

951
incident arose. Therefore, that Motion had not this particular action of the Secretary of State for War and the Army Council and the Court of Inquiry in mind at the time.
Mr. Speaker: I do not think that is the case. The word "generally," as used in the terms of reference to the Select Committee, includes the general position of Members of this House, not with regard to this particular incident—the general position of Members of this House with reference to the Official Secrets Acts, not this particular incident.
Mr. Attlee: The terms of reference mentioned
"generally into the question of the applicability of the Official Secrets Acts,"
but this particular incident of the summoning of a Member of Parliament for a matter arising out of his Parliamentary duties before another court does not arise under the Official Secrets Acts. It might have arisen quite apart from those Acts.
Mr. Speaker: We are not dealing with that particular point. With regard to the other point that the right hon. Gentleman raises as to the Court of Inquiry, obviously the responsibility for committing a breach of Privileges rests entirely with the Court of Inquiry. No one else is responsible for that. The question we have to discuss on the Report of the Committee of Privileges is the finding they have made: that the blame rests with the Court of Inquiry and no one else.
4.13 p.m.
Mr. Arthur Greenwood: Do I gather that your view is that the responsibility of the Minister ended with the appointment of the Court of Inquiry? May I put this to you: The Court of Inquiry was presumably appointed on the authority of the Army Council, of which the Secretary of State for War was a member, and which is under his supreme authority. Is it not generally considered that action taken by authorities subordinate to him are actions for which he must take ultimate responsibility? I put it to you that the Secretary of State for War in this House did accept such responsibility. In those circumstances would it not be permitted, during the course of the Debate, to press for the times when the decisions were taken and the exact responsibility of the right hon. Gentleman the Secretary for
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War? I submit that in view of the right hon. Gentleman's own admission it is very difficult for us to conduct a Debate when he has accepted full responsibility, if you rule that we cannot take any part in a discussion raising his action.
Mr. Speaker: I have never disputed the fact that the Secretary of State had accepted full responsibility for the appointment of the Court of Inquiry. If the right hon. Gentleman does that, I think that any action of the Army Council is a matter for which he has direct responsibility to this House. But we are not discussing that at the moment; it did not come before the Committee of Privileges. The Committee of Privileges is concerned only with a breach of Privilege, that is to say, with the action of the Court of Inquiry set up with the direct responsibility of the Secretary of State for War. The Court of Inquiry could easily have been conducted without the hon. Member for Norwood being summoned. That is the responsibility of the Court of Inquiry.
Mr. Greenwood: The Secretary of State is the political head of this Department of State. It was within his knowledge that it was the intention of the House to undertake an inquiry. Surely, in the course of this Debate, Members are entitled to ask the right hon. Gentleman at what point the inquiry was determined upon, and whether, with his political knowledge and political responsibility to this House, it never struck him that the right thing to do was, under his supreme authority, to countermand any order which had been issued to a Member of this House to attend the Court of Inquiry.
Mr. Speaker: That question does not arise at all.
4.16 p.m.
Mr. Churchill: May I argue further on your Ruling? I take it that I am right in assuming that we are entitled to debate the report of the Committee of Privileges and everything contained in that report, and that the contrary opinion may be expressed and sustained from any quarter of the House. For instance, take this sentence:
"without making any reflection upon the Military Court."
I take it that the House will be entitled to debate that or any matter contained in this report?
Mr. Speaker: Obviously we must debate that sentence in the Report if we debate the Report. If some hon. Member considers that a reflection is cast on the Court of Inquiry he can certainly do so, but that does not alter the question of the responsibility of the Secretary of State. Further to the question put to me by the right hon. Gentleman the Member for Wakefield (Mr. Greenwood): I stated in my Ruling that any action of the Secretary of State in connection with this incident, or the appointing of a court of inquiry or the action of a court of inquiry, can be raised on the appropriate Vote of Supply. Equally it can be raised, and possibly might be raised—I do not know whether the Select Committee's Report will raise it—when the Report of the Select Committee comes to be debated on the question that this House do accept it, but not now.
Mr. Churchill: With great respect, and apologising for pressing this point, which is of some importance, I will ask you this: Might not the fact that the Committee of Privileges makes no reflection on the Military Court be due to the fact that the Secretary of State has accepted responsibility, and would it not be proper to state that in the Debate, as showing the reasons why the Select Committee did not make, or might be assumed not to have made, any reflection on the Military Court? Are not questions of reflection on the Military Court and matters connected with the reasons why they did not make a reflection, arguable matter, and germane to the discussion of the Report?
Mr. Speaker: I do not think that point arises. I cannot rule on that pint now, because I do not know what the right hon. Gentleman or any hon. Members may say upon it.
4.20 p.m.
Mr. Herbert Morrison: As one who is in some difficulty, wishing to speak on this matter but not seeing how one can, might I put two points to you? First of all, it may well be argued that as the Secretary of State knew that the case of the hon. Member for Norwood (Mr. Sandys) was actively under consideration, he ought not to have consented at all to the appointment of the Military Court of Inquiry. Apart from that, I submit that the Committee of Privileges was appointed separately from the Select
954
Committee to consider a specific aspect of this case, and that it will be a pity if the House cannot freely debate the Report of the Committee of Privileges. You have said, no doubt under advice, that the Secretary of State has no responsibility whatever for the proceedings or the decisions of the Military Court of Inquiry, and that once the Army Council had appointed that Inquiry responsibility of the Secretary of State ceased and the Army Council had full responsibility. On the point that the Secretary of State has no responsibility whatever, for the proceedings of the Military Court of Inquiry, I would draw your attention to the statement made by the Prime Minister in this House on 29th June, when we were discussing the complaint of the hon. Member for Norwood that he had been summoned to appear before the Court of Inquiry:
"In the meantime, my right hon. Friend"—
that is to say, the Secretary of State for War—
"has given me an assurance that he will at once ask the Army Council to suspend proceedings until the Committee of Privileges has met and reported.''—[OFFICIAL REPORT, 29th June, 1938; col. 1992, Vol. 337.]
It is clear from that that the Secretary of State did exercise the right to interfere with the work of the Military Court of Inquiry, and that if he did it on that point, he could have done it on the point which is the subject of the report.
Mr. Speaker: It is, no doubt, quite true that the Secretary of State takes full responsibility for the action of the Army Council in setting up a Court of Inquiry, but that is not the question before the House now. The question before us now is the report of the Committee of Privileges, which puts the blame on the Court of Inquiry, and that is quite a different question.
4.23 p.m.
Mr. Attlee: Surely it is open to this House to consider the report of the Committee of Privileges, and if you say that the report of that Committee puts the blame on the Court of Inquiry, is it not open to someone to urge in this House that the Committee puts the blame wrongly, and that it should have put it on the Secretary of State for War for setting up this Court of Inquiry, knowing that proceedings were taking place in this

955
House? Is not that point arguable by a Member on the report of the Committee of Privileges?
Mr. Speaker: It might be an argument for disagreeing with the report of the Committee of Privileges. Beyond that the right hon. Gentleman will not expect me to go.
Mr. Churchill: Did I understand you to say, and did I hear you aright in saying, that the report of the Committee of Privileges put the blame upon the Military Court of Inquiry? Because it appears to me to do the contrary. The report says:
"without making any reflection on the Military Court."
Mr. Speaker: The Committee of Privileges decided that a breach of Privilege had been committed, and its report goes on to say:
"… without making any reflection upon the Military Court, it appears to us that the summons to the hon. Member for Norwood might well appear to be an attempt to induce the hon. Member to give certain information at a time when the House was proposing to set up a Select Commitee to consider, among other things, the propriety of the hon. Member being asked to give such information."
It says that a breach of Privilege has been committed.
Hon. Members: By whom?
Mr. Speaker: By the Military Court.
Mr. Churchill: Without making any reflection on them.
Mr. Speaker: If hon. Gentlemen choose to make reflections upon the Military Court, it will be quite in order to do so.
Mr. Attlee: Are you not making an assumption that every Member might not necessarily make, that when once that Military Court was set up the Minister had no power to stop it, interfere with it or influence it? Is not that a question which can be discussed in this House? There is nothing in this report that lays down that when once the Court is set up the Secretary of State cannot interfere with it. We do not know whether he did interfere, but it is arguable that he might have interfered with it, and I am putting it to you that in discussing this report of the Committee of Privileges we are entitled to discuss it freely, and that there should not be any limitation by assuming
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that the Secretary of State or the Military Court did something which is not contained actually in this report.
Mr. Speaker: The right hon. Gentleman will, no doubt, agree that the responsibility of the Secretary of State ended after the Military Court was set up, and that the setting up of the Court was nothing to do with the Committee of Privileges. The question which can be raised in the House is, as I said, on the report of the Committee of Privileges, and the proper occasion on which to raise the other question is the Supply Vote or the report of the Select Committee when it comes before the House.
Mr. Attlee: Is it not an assumption to say that the Secretary of State's interference ended with the setting up of the Military Court? We have no evidence that he did or did not; we do not know.
Mr. Churchill: We know he did.
Mr. Attlee: We do know, as a matter of fact, that when the Committee of Privileges was set up the right hon. Gentleman took action to stop the Military Court sitting. You are assuming necessarily that because that Court was set up the Secretary of State's interference ended. I am asking you whether there is anything in this report to give grounds for that assumption?
Mr. Speaker: The ground for the assumption is that the Committee of Privileges put the blame upon the Court of Inquiry.
Mr. Attlee: With respect to you, Sir, it says just the contrary.
Mr. Speaker: It decided that there had been a breach of Privilege in the setting up of the Court of Inquiry and it puts the whole blame on the Military Court of Inquiry.
Mr. Denman: Are we entitled to go outside the subject matter of the complaint made by the hon. Member for Norwood, which was the order of a Military Court summoning him to appear? There was no complaint whatever of the setting up of the Military Court.
4.29 p.m.
Mr. Aneurin Bevan: If it is not in order for the House to consider in the course of this Debate the action of the Secretary of State for War because he had no responsibility for the action of the Mili-

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tary Court after the Army Council had set up that Court, how can the Select Committee inquire into that matter? The Secretary of State will have no more responsibility under the investigation of the Select Committee than he had under that of the Committee of Privileges and, therefore, according to your Ruling, the action of the Secretary of State cannot be discussed at all.
Mr. Speaker: The questions which the hon. Gentleman raises are for the Select Committee to discuss. It was specially appointed for the purpose of considering the action of the Ministers concerned.
Mr. Bevan: We understand from your Ruling that we are not competent to discuss the responsibility of the Secretary of State for War because he was not responsible for what the Military Court of Inquiry did. If that be the case, such a Ruling would apply equally to the Debate on the report of the Select Committee, and I submit that if your Ruling is sound on this occasion—[HON. MEMBERS: "Order"] well, that is my submission —and if that be your Ruling now, it is difficult to imagine how the Ruling could be different when the report of the Select Committee comes before us, because in that case also we shall not be able to discuss the actions of the Secretary of State for War.
Mr. Speaker: The Select Committee was set up in order to consider the action of Ministers with regard to this case, and obviously, for the purposes of their report, they will deal with the question set down in their terms of reference. When they submit their report, that will be the time to discuss the action of the Secretary of State for War.
4.31 p.m.
Mr. Greenwood: I gather—and this seems to me to be fundamental to any discussion which may take place—that your view is that the responsibility of the Secretary of State ended when he appointed the Court of Inquiry. As a matter of fact, however, after the appointment of the Court of Inquiry, the Secretary of State for War took two different actions. First, he withdrew, or caused to be withdrawn, the command to the hon. Member for Norwood to attend the inquiry; and, secondly, he, through the Prime Minister, gave an assurance to the House that the sittings of the Court of
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Inquiry should be suspended. He, after the Court of Inquiry had been set up, having on two different occasions taken definite action, I submit that it is very difficult for the House to rule that out, and it is difficult—I say so in all humility —to suggest that, therefore, that can be a good ground for not interrogating the Secretary of State for War to-day.
Mr. Speaker: As I understand it, the Secretary of State withdrew the summons to the hon. Member for Norwood after the question had been raised in the House; and I understood that he did that in the exercise of his proper function as President of the Army Council. The Committee of Privileges did not report as to that action.
4.33 p.m.
Mr. H. Morrison: May I put it to you, Mr. Speaker, that the point is established that the Secretary of State had, either directly with the Court of Inquiry or at any rate through the Army Council, a jurisdiction in relation to the proceedings of the military Court of Inquiry in relation to a Member of this House? May I put to you the further point that the question which, with great respect, we are discussing with you, is the question whether, if an hon. Member of this House is, so to speak, tampered with, possibly in the course of his Parliamentary duties, by any outside authority at all, is it not constitutionally essential that the Minister most concerned must be held responsible for the action of his subordinates, directly or indirectly? You have said, Sir, that the matter could probably be debated in Committee of Supply. May I submit that, if it could be debated in Committee of Supply, it must be debatable in the whole House on a Motion moved in relation to the matter by the Prime Minister himself?
Captain Sir William Brass: Is it not the case that, if the right hon. Gentleman's argument is brought to its logical conclusion, the Secretary of State for War would be responsible for all the witnesses that are called by this Court of Inquiry? Obviously, that cannot be so.
Mr. Speaker: The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) has raised the question of the responsibility of the Minister. If he wished to raise it in Committee of Supply or on Report of Supply, of course he could do so, and it could be dealt with.

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Any question of administration can be raised on the Army Vote of Supply. The Minister is responsible to Parliament, and the Committee of Supply can go into all these questions and report to Parliament upon them. But the definite subject which we are debating to-day is the report of the Committee of Privileges, which said that the Court of Inquiry was responsible for the breach of privilege. That was after the Court of Inquiry had been set up, and the Army Council or the Secretary of State has no responsibility for its acts.
Mr. Morrison: I venture to press the point that the Minister did in fact, on the statement of the Prime Minister, interfere with the proceedings of the Court of Inquiry. He delayed them because of the later question that had arisen in the House, and he interfered with them after the Court of Inquiry was set up. I venture to ask, Mr. Speaker, if he could do that in one respect, what is there to prevent him from doing it in some other respect?
Mr. Speaker: There was a definite demand from this House that something should be done with regard to the Court of Inquiry, after the Court of Inquiry had been set up. I assure hon. Members that I do not wish to stifle debate on the subject; I only want, not only on this occasion but on future occasions, to avoid the doing of something which would certainly not be in order.
4.37 p.m.
Sir Archibald Sinclair: May I ask you, Mr. Speaker, whether two things have not come perfectly clearly out of the Rulings which you have been good enough to give? The one is that we can debate any matter which is raised in the report of the Committee of Privileges; and the other is that, as the right hon. Gentleman the Member for Epping (Mr. Churchill) has pointed out, the Committee of Privileges found that an offence had been committed—a breach of the Privileges of this House—but they said that no reflection was cast upon the Court of Inquiry. In reply to the right hon. Gentleman, I understood you to say that it would be possible for hon. and right hon. Members to argue that, as the Committee said that no reflection was cast on the Court of Inquiry, the responsibility must be elsewhere, and I understood you
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to say that that matter could be raised in the course of debate. Would it not, therefore, be better for us to start the Debate, and rely on the assurance which you have been good enough to give to the House that you do not wish to stifle discussion?
Mr. Speaker: The suggestion of the right hon. Gentleman, namely, that there should be a discussion on the subject of the responsibility being elsewhere, would only be going contrary to my Ruling. The House can discuss the responsibility of the Court of Inquiry in issuing a summons to the hon. Member for Norwood, and, consequently, committing a breach of Privilege.
4.40 p.m.
The Prime Minister: It is, of course, a fact that the House may not choose to agree with the report of the Committee of Privileges, but, nevertheless, I am sanguine enough to hope that they will not take that course. The report of the committee was short; it dealt with only a single incident; and it was unanimous; and I have not seen or heard any criticism of the conclusion at which the committee arrived. It might, perhaps, be thought, from this general approval, that the committee had had an easy task, and that their conclusion was foregone. I would like to tell the House that the matter was not so simple as that. I do not know whether the Select Committee over which my right hon. Friend the Member for the Pollok Division of Glasgow (Sir J. Gilmour) is presiding will find themselves in a position to lay down any general principle as to the extent of, or as to the limitations upon, the privilege of Members of this House; but, whether they do or not, in the meantime it is the case, as is pointed out in the report, that there is no formal authoritative statement about privilege to which reference can be made and by reference to which judgment can easily be pronounced as to whether a certain action is or is not a breach of Privilege. That being so, the committee sought guidance from the pages of Erskine May, and also from the knowledge and experience of the Gentlemen at the Table. Erskine May is not very definite about the question of Privilege, but there is one passage which the committee had before them and which is important in this connection. It occurs on page 73, and I will read it to the House. It says:

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"But although either House may expound the law of Parliament, and vindicate its own privileges, it is agreed that no new privilege can be created. In 1704, the Lords communicated a resolution to the Commons at a conference, 'That neither House of Parliament have power, by any vote or declaration, to create to themselves new privileges, not warranted by the known laws and customs of Parliament'; which was assented to by the Commons."
The statement there laid down by Erskine May, that no new Privileges can be created, to that extent limited the work of the Committee. What, therefore, we had to find out was whether, in anything which had occurred in connection with the question which had been referred to us, there had been any breach of an existing Privilege. If we had been able to find any previous occurrence which formed an exact or a fairly exact precedent for the circumstances which we were considering, our task would have been very much simplified; but on inquiry we were assured that there was nothing which could be so described. In these circumstances, the Committee merely had to fall back upon common sense, and I want to submit to the House that the conclusion at which they arrived was in fact reasonable and sensible. What is the purpose of privilege? I take it that it is to ensure that hon. Members of this House shall not be prevented or hampered, in the functions which they fulfil in the service of the State, by pressure from outside the House. In this particular case an hon. Member had taken action which was alleged to be an offence under the Official Secrets Act. Presumably, however, the hon. Member took that action in what he conceived to be the interests of the State, and—
Mr. Dingle Foot: Who alleged that the hon. Member had been guilty of an offence under the Official Secrets Act?
The Prime Minister: I will say suggested—[HON. MEMBERS: "By whom?"] At any rate, it was a matter of question. I am not judging the question; I am trying to give an entirely objective account.
Sir A. Sinclair: This is very important, because we were told that the Attorney-General has not alleged anything of the kind. The House is entitled to know who alleged that the hon. Member for Norwood (Mr. Sandys) was guilty of an offence under the Official Secrets Act—[Interruption]—or suggested it.
The Prime Minister: I do not want to enter into a controversy. I withdraw the statement, so far as my hon. Friend is concerned. I would rather put it this way, that action had been taken with the result that it was alleged that a breach of the Official Secrets Act had been committed. My hon. Friend must be presumed to have taken his action in the interests—or what he conceived to be the interests—of the State. The House, having had information upon this matter, proceeded subsequently to set up a Committee to investigate the circumstances of the case. A military court had also been set up, and, although the purpose for which the court had been set up was a different one, although they were approaching the subject from a different angle and in regard to a different individual, yet the incident to which the proceedings had reference was the same as that which formed the subject of inquiry by the Select Committee. Before the Committee of Privileges had reached its conclusions the question of any clash between this military court and the House of Commons had ceased to be of any practical importance, because the proceedings of the Court of Inquiry had been adjourned until after the Report of the Select Committee had been made. Nevertheless, that did not seem to be any reason why the Committee should not make their recommendations in accordance with the terms of reference to them. The Committee reported, in the words which I am going to read again, because they are the important part of the Committee's Report:
"In these circumstances, without making any reflection on the military court, it appears to us that the summons to the hon. Member for Norwood might well appear to be an attempt to induce the hon. Member to give certain information at a time when the House was proposing to set up a Select Committee to consider among other things the propriety of the hon. Member being asked to give such information. Accordingly, your Committee find that, taking all the circumstances of the case into consideration, a breach of the privileges of the House was in fact committed. We do not, however, recommend that any further action should now be taken."
As the House knows, the Report was unanimous. It does not always follow that members of a Committee who sign a unanimous report all have come to the same conclusion for exactly the same reasons. It may well be that in the minds of the individual members of the Com-

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mittee various considerations have, in some cases more and in others less, influence. I do not propose to say now what was in my mind in coming to this conclusion or to suggest that there was a difference between myself and any other member of the Committee as to the reasons which led us to this conclusion. It is sufficient that the conclusion is there stated in plain words, and that it was unanimous.
I have only one more observation that I want to make. The Committee were dealing with an incident on which strong feelings had been aroused, but I think they did try to bear in mind in their report that, although they were dealing only with this incident, they might perhaps be, if not creating a new precedent, at any rate modifying or perhaps defining precedents already made. They also had to consider the terms of reference to the Select Committee, with which, naturally, they would not desire to overlap. Taking all the circumstances into consideration, I submit to the House that the Committee in coming to these conclusions, showed a due sense of their responsibility, both in respect of maintaining the conditions under which alone this House can fulfil its functions and also having regard to the interests and the safety of the State, which it is the duty of this House to preserve.
4.52 p.m.
Mr. H. Morrison: It will be appreciated that my task in any case would inevitably have been one of some delicacy, in view of the matters that are under consideration and the authorities that we thought were concerned. The House will, I am sure, have some sympathy with me in having suddenly to adapt myself to the circumstances in which the Debate is taking place, and obviously I must move with very great care and with very great respect to the Ruling which you, Mr. Speaker, have given as to the scope which the Debate can take on the Report of the Committee of Privileges, and we must assume for the purposes of this Debate that if there has been error in action it has been error by the military Court of Inquiry, and not by the Secretary of State, and not by the Army Council. At any rate, if we have views about that it would be out of order to express them in this Debate this afternoon.
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It will, however, be inevitable that I should make some reference to the statements of Ministers during the discussions that have taken place in the House on this matter, because their statements have a direct bearing on the work of the Military Court of Inquiry itself; and, in doing so, I wish to make no reference that would be more relevant to matters now before the Select Committee of the House, which is inquiring into the broad considerations of the issues raised by the actions of the Government originally in relation to the hon. Member for Norwood (Mr. Sandys). When the matter was first raised in the House on 27th June the Military Court of Inquiry had not yet come out into the light of day as a body that had been appointed or had the matter under consideration; but we all understood on that Monday, 27th June, that the Government had abandoned any intention of interrogating the hon. Member for Norwood under the Official Secrets Act. Indeed, it was said in a letter that the hon. Member sent to the Attorney-General that he had received assurances upon this point. While I admit that these assurances related entirely to police powers of interrogation, I think the House of Commons assumed that if it was not intended to interrogate the hon. Member under police powers no military court of inquiry would use other means of interrogating him, under more difficult circumstances than interrogation under police powers would involve. In a letter to the Attorney-General, quoted in the House on 27th June, the hon. Member for Norwood said:
"Thank you for your letter of 24th June confirming the assurance which you gave me yesterday, namely, that 'There is no question of seeking to exercise against me now or hereafter the police powers of interrogation under the Official Secrets Act.'
I am naturally relieved to know that no further pressure will be exerted upon me to reveal the sources from which I obtained the information which I communicated to the Secretary of State for War in my letter to him of 17th June."—[OFFICIAL REPORT, 27th June, 1938; col. 1536, Vol. 337.]
That assumption of the hon. Member for Norwood and that recital of the assurances he had received from the Attorney-General, were at no time, so far as I can see, dissented from by the Attorney-General or contradicted. Indeed, the Attorney-General, on the same day, in the statement he made to the House, said:

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"I decided—and this was my own decision, arrived at without consultation with or knowledge of anyone else—that this was not a case in which these police powers of interrogation should be exercised, and that my hon. Friend was entitled to be told that at the time. I told him so. He asked me if I would confirm it in writing. I said 'Certainly,' and did so.—[OFFICIAL REPORT, 27th June, 1938; col. 1538, Vol. 337.]
If it be the case that the Attorney-General informed the hon. Member for Norwood that police powers of interrogation under the Official Secrets Act would not be invoked by the Attorney-General against him, it is an extraordinary thing that it should be possible that a military Court of Inquiry should have done something which is really worse in degree and character than the action taken by the Attorney-General—for the Attorney-General is a Member of this House, he is a Member of the Government, he is a Minister of the Crown, and in his case at any rate, whatever he does as Attorney-General he could not for one minute dispute—nor, I am sure, would he wish to dispute—his responsibility to the House of Commons for his action. If it be the case that the Attorney-General had intimated that he would not invoke police powers of interrogation, it is infinitely more serious that a military court—and still more serious if it be the case that that military court has no responsibility, directly or indirectly, to the House of Commons—should take the military action of requiring the hon. Member for Norwood to attend and to go through interrogation, and to attend not in his civilian capacity as a Member of Parliament, but, arising from his action as a Member of Parliament, to attend in uniform as a member of the Territorial Army, and undergo interrogation from his military superiors, after the Attorney-General had assured him that he would not invoke these powers of police interrogation.
Sir Arnold Wilson: Is the right hon. Gentleman aware that no statement at a military Court of Inquiry can be used so as to incriminate the person who gives it?
Mr. Morrison: I confess I do not know that; but it seems entirely irrelevant to the issue before the House. The issue before the House is this: If it be the case that a court of military officers without authority presumably from this honour-
966
able House, and without authority from the Minister concerned, can call up a Member of the House of Commons in military uniform and interrogate him after the matter has been raised with the Minister and after it has been raised in this House—if it is possible in the year 1938 without effectual challenge, then I am bound to say that we have been living under very grave illusions as to the rights of Members of Parliament and as to Parliamentary authority in relation to the military power of the country. For we are now in a worse position than we were before the Debate began, because it is plain that Members of Parliament can be called up before military courts of inquiry on matters arising out of their Parliamentary duties and on matters arising out of questions before the House of Commons.
If that can be done, and done by officers of His Majesty's Army without authority of the Army Council or of the Secretary of State responsible to this House, if that be the serious position in which we are, that the rights and liberties of the Members of this House may be interfered with by military Courts of Inquiry, I want to say that His Majesty's Government have permitted to develop a state of affairs which they ought never to permit to develop, in the relationships between the military authorities and Parliament and the Government itself. It is the position, notwithstanding the statements, from which I have quoted, in the house on 27th June, it is the case notwithstanding the declaration of the Attorney-General that he had completely abandoned his police rights of interrogation, that people not responsible to the Minister nor responsible to Parliament, had exercised a right, more seriously of exercising powers of interrogation, than were contemplated by the Attorney-General himself.
It seems, therefore, that the action, not of the Secretary of State—I must not say that—but the action of a military Court of Inquiry was an attempt to evade the decision of the Attorney-General in this matter, and an attempt to evade Parliamentary understanding in this matter. It was a flagrant defiance of the authority of Parliament, and whatever may be said about the past responsibility of the Secretary of State, I say that the future responsibility of the Secretary of State is to pull up with very great

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severity the military gentlemen concerned with this affront to Parliament on matters which were before the House of Commons itself. The Court of Inquiry was set up, but we do not know who set it up. We have a vague impression that it was set up by the Army Council. We do not know which Minister, if any, was consulted before it was set up. We do not know who was president at the meeting of the Army Council which decided to set up this Court of Inquiry, and I want to suggest that in the particular circumstances that military Court of Inquiry ought not to have been set up at that point.
There was no terrific urgency, the matter was being dealt with by the Attorney-General and the Secretary of State. They had seen the hon. Member for Norwood, correspondence had passed, and if it be argued, as it was argued by the Secretary of State, that the decision to set up the military Court of Inquiry was reached before any Debate arose in this House—that is to say presumably on the Monday before the House had met—if that be argued it is in no way a defence, because in fact before the House met on Monday, 27th June, meetings had taken place between the hon. Member for Norwood and the Attorney-General, and correspondence had passed between him and the Under-Secretary of State. It was known that the Member of Parliament was going to raise the matter with you, Mr. Speaker, during the proceedings of the afternoon. Therefore, as to who is responsible for setting up the Court of Inquiry we take the view that in those particular circumstances the military Court of Inquiry ought not to have been set up at that point at all.
Mr. Denman: On a point of Order. This is precisely the point I raised with you in advance. The setting up of the Court of Inquiry is a matter which we are told is going before the Select Committee. It is not the subject of the complaint of the hon. Member for Norwood (Mr. Sandys). Are we in order in discussing it?
Mr. Speaker: It is not in order. The matter is being considered by the Select Committee.
Mr. Attlee: On a point of Order. May I submit to you that there were three
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statements by the hon. Member for Norwood (Mr. Sandys)? The first was on 27th June, which was a Monday, and the matters arising out of that are the matters that are referred to the Select Committee according to the Motion by the Prime Minister on the day when he set up the Select Committee. But subsequent to that there was on 29th June a further statement by the hon. Member for Norwood, in which he said that he had been summoned to appear before a military court of inquiry, and it was on that second statement that the Committee of Privileges was set up, and the matter referred to the Select Committee is the questions that were raised by the hon. Member for Norwood's statement on 27th June, which contained no reference at all to the military Court of Inquiry, because at that time he had not been summoned to attend before it and may not even have known that it was set up. I submit, therefore—and I wanted to catch your eye when you gave your previous Ruling —that this question of the military Court of Inquiry is not among the matters submitted to the Select Committee, because they are directed to inquire into the statement of 27th June, which contains no reference at all to the military Court of Inquiry.
Mr. Speaker: This matter has been sent to the committee for them to inquire into, and consequently all these questions are sub judice at the present moment.
Mr. H. Morrison: With great respect I have not the least desire to entrench upon the instructions before the Select Committee. Before, however, the Select Committee had been set up the Member for Norwood, being a Territorial officer, received a summons to appear before a military court of inquiry, and everything connected with that appears to be concerned with the discussion we are on this afternoon and the report of the Committee of Privileges, and part of my complaint in relation to the Committee of Privileges, and a prominent part of my complaint, is that having regard to the situation the matter had reached on the Monday, that military tribunal which has committed this offence and is referred to in the report of the committee ought not to have been set up. I suggest with great respect that this is directly material to the issue before the House this afternoon.
Mr. Speaker: The question which the right hon. Gentleman seeks to raise is no doubt an important one, but it has nothing to do with the question now before the House.
Mr. Morrison: On a point of Order. May I ask your view on this? I have read briefly the terms of reference to the Select Committee and there is no reference to the Court of Inquiry in any way.
Mr. Speaker: The setting up of the Court of Inquiry comes under the action of the Minister.
Mr. Morrison: The terms of reference to the Select Committee were substantially settled before the question arose, I submit, because the terms of reference to the Select Committee which were moved by the Prime Minister are almost word for word the same words as in the Motion of the hon. Member for Norwood; and in these circumstances, as the terms of reference were settled before the incident was ventilated in any way, may I suggest it must be relevant to the Committee of Privileges' report, which Committee of Privileges was set up after the main issue was before the House. May I be allowed to quote from the statement of the Secretary of State on 30th June? He said:
"I may say incidentally that that decision"—(to set up this Committee)—"was taken before any Debate had arisen in this House. The fullest information on these matters will be laid before the Select Committee."—[OFFICIAL REPORT, 30th June, 1938; col. 465, Vol. 337.]
It was therefore a matter obviously for the Select Committee to consider and not the Committee of Privileges.
Mr. Speaker: The Select Committee was set up with regard to this particular point that we are considering.
Mr. Attlee: I would like to submit that you have ruled that this matter of the setting up of the Court of Inquiry is one of those matters which will be inquired into by the Select Committee. It forms part of their reference. The Select Committee is appointed to inquire into the substance of a statement made on 27th June by the hon. Member for Norwood and the actions of the Ministers concerned. I take it the Ministers were concerned in the matter in that particular complaint and any subsequent complaint, and what I want to make sure of is that
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if we are ruled out from raising the matter in this House we shall not be subsequently ruled out on the Select Committee by a statement that the matter arose on something which took place after 27th June
Mr. Speaker: I cannot permit here a discussion on a matter which has been placed before a Committee of this House. I cannot do that, as I have said before. I safeguarded myself when I said that the question might possibly be discussed on the Report of the Committee of Inquiry or on the Army Vote.
Mr. Morrison: I can only conclude my speech under very great difficulties. There is no point in going on, when I have got in all the arguments that I can possibly get in within the narrow limits permitted. I want to say only this, that I have discussed, as I gathered I am permitted to discuss, the action of the military Court of Inquiry and that I have not discussed whether that committee ought to have been appointed or whether it ought not. In these circumstances it seems to me that it is impossible for me, with what little ingenuity I have got, to continue the speech, and I can only conclude by once more reaffirming my very emphatic protest against the military power apparently unbridled, apparently uncontrolled by the Minister and apparently irresponsible, to interfere with the reasonable rights and privileges of this House.
5.15 p.m.
Mr. Bevan: On a point of Order, Mr. Speaker. Before the Debate continues may we have your Ruling upon a matter, which, I am sure, is in every hon. Member's mind? If we are to forgo, under your Ruling, an opportunity of discussing the wider aspects of this matter to-day, what assurance have we that we shall have an opportunity of discussing them when the report of the Select Committee is before this House? Your Ruling, I understand, has taken two forms. One is that the matters to which hon. Members want to refer are those upon which the Select Committee will report, and the second point that has been made by you is, that the Minister has no responsibility for the action of the Court of Inquiry. That is the second reason why we cannot discuss this to-day. Will that second reason be invoked when the report of the Select Committee is be fore the House,
be-

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cause if it is, then neither on that nor on this occasion shall we have an opportunity of discussing the responsibility of the Secretary of State for War? [Interruption.] If the hon. Member's understanding were equal to his knowledge he would be the most important Member of this House. I submit, Mr. Speaker, that it is necessary to draw a distinction between those two points if the House is to be in a position of knowing exactly what its rights are. If the one point stands that we cannot discuss the responsibility of the Secretary of State for War for the conduct of the Court of Inquiry in sending for the hon. Member for Norwood (Mr. Sandys) we cannot discuss it on the report of the Select Committee. I submit, therefore, that it is necessary to draw a distinction between those two points.
Mr. Speaker: I am afraid that we must await the report of the Select Committee. As I have already said this is not the time to discuss that, and it ought to be discussed either on the report of the Select Committee on Official Secrets Acts or in Committee of Supply.
Mr. Bevan: May I submit with respect that, if the Ruling be that we cannot discuss the action of the Court of Inquiry in sending for the hon. Member for Norwood in relation to the Secretary of State for War because he is not responsible for the Court of Inquiry, we cannot discuss it when the report of the Select Committee is before the House. How can he be responsible then and not now?
Mr. Speaker: The whole question of the action of the Minister may arise on the report of the Select Committee.
Mr. Bellenger: You have ruled, Mr. Speaker, that the Select Committee is inquiring into the action of Ministers, and also that the action of Ministers will be open for discussion on the report of that Select Committee. Am I to take it that the action of Ministers refers not only to the first incident but to any incident in connection with this matter?
Mr. Speaker: I would remind the hon. Member that this is a very representative Committee set up by this House and the House ought to await its Report.
Mr. Marshall: In view of the fact that you, Mr. Speaker, ruled that the Minister
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had no responsibility for that Committee's actions, is not the whole question of Ministerial responsibility raised in this matter, and will it not be possible, if that Ruling stands, for certain things to take place in the Department of a Minister who can then come to this House and say, "I have no responsibility for it." Does not that raise a very wide question?
Mr. Speaker: I am afraid that that is not the issue.
Mr. J. J. Davidson: In view of the fact that hon. Members on the back benches may have an opportunity of intervening in this Debate, may I ask you, Mr. Speaker, as you have stated that we are not permitted to discuss the Minister's responsibility for setting up this inquiry, whether it will be in order to discuss the question as to whom the Court would report and who would be responsible for submitting the report to the House?
Mr. Speaker: That is the kind of question, no doubt, which ought to be raised in Committee of Supply on the appropriate Estimates.
Mr. Alan Herbert: I was unable to hear your last Ruling but five, Mr. Speaker, owing to an advertising aeroplane passing across the sky, and can you give orders that our proceedings shall not be disturbed in that manner?
5.23 p.m.
Mr. Foot: Whatever else may be the outcome of this Debate, in view of the remarks that fell from the Prime Minister, there is one thing that should be made perfectly clear. It is not alleged, and cannot be alleged on any facts that have so far been disclosed to the House on any occasion, that the hon. Gentleman the Member for Norwood (Mr. Sandys) has done anything to bring himself within the mischief of the Official Secrets Acts. I hope that that will be made perfectly clear by whoever winds up for the Government. So far as it goes, I suppose that all of us would support the actual Motion now before the House. The circumstances giving rise to that report are, as we shall all agree, somewhat unfortunate, but, nevertheless, it seems to us on these benches that it is a matter for congratulation that in times like these the Privilege of Parliament should be reasserted, and, what is more, successfully reasserted.

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This report is a document of considerable importance to this House. As the Prime Minister said, it has been recognised ever since the beginning of the eighteenth century that we cannot create any new Privilege. The committee here point out that there is no exact precedent that they can find for the circumstances of this case, but, in spite of that, they did feel able to apply the law of Privilege to these particular circumstances. As I understand it, the report means that the committee take the view that, although we cannot create new Privileges, we can interpret the existing law of Privilege and apply it to new circumstances as occasion arises. That appears to be a position of very great importance to the future of the House of Commons. In the Debate on the 30th of last month there seemed to be a tendency among one or two hon. Members opposite to treat Privilege as a kind of anachronistic survival with a logical foundation. I hope that this Debate will make it abundantly clear that that is not the view of the House of Commons. Parliamentary Privilege does not consist of any special favour or advantage claimed by Members of Parliament simply for their own convenience. It is something which is necessary, and which always has been necessary for the proper working of our Parliamentary institutions.
It arises in this way. All of us here are under a statutory duty to attend the service of the House. That duty has always been paramount, coming before any other calls upon the Members' time. In the past, all kinds of devices have been adopted in order to enforce that duty of attendance. We have had calls of the House on a great many occasions. We have had hon. Members who have failed to attend sent for, and there was one occasion when hon. Members were prosecuted for absenting themselves from the sittings of this House. We have not adopted for a very long time any of these devices. We prefer to leave it to the party Whips to ensure that the statutory duty of attendance is carried out, but it should be made clear that that duty is still a paramount duty and, as far as all Members are concerned, comes before any other employment or fulfilment of any offices whatever. Hon. Members in the Debate a few days ago spoke as if there might be a kind of conflict of loyalties or duties in the case where a Member of Parliament was also a member of the
974
Territorial Army. I do not think that at any time in its history the House would ever have recognised any such conflict. It has always been laid down that the first duty is the duty of attendance upon the service of the House. The Privilege of Members consists in this simply. A Member is given the necessary protection and exemption from other duties to enable him to discharge his first duty of attendance at this House.
The dates in this matter are of some importance. On 23rd June there was an interview between the Attorney-General and the hon. Member for Norwood. On 24th June it was known to the Attorney-General, and may have been to others, that the hon. Member intended raising this matter in the House. Even if it was not known to the War Office and to the members of the Tribunal on 24th or 25th June, it became public property on the afternoon of the 27th, when the hon. Member stood up in his place and drew the attention of the House to the interview he had had with the Attorney-General. It is almost inconceivable that the fact that this matter had been brought to the attention of this House, and was then not under the judgment of the Select Committee but under the judgment of the House of Commons itself, because the House of Commons made clear on the Monday its intention to go on and consider the matter further—it is almost inconceivable that that fact, which was known to everybody who had seen a newspaper on the evening of Monday or Tuesday morning, should not have been known to the Court of Inquiry. It may also have been known perfectly well to the Secretary of State and to the Army Council, which is something under Mr. Speaker's Ruling we are not permitted to discuss. Not only was the sending of the summons to the hon. Member for Norwood a breach of Privilege, but the action of the Tribunal in starting its sittings at all while this matter was under the consideration of the House of Commons and when it was proposed to set up the Select Committee, was a very doubtful proceeding.
Captain Arthur Evans: Does not the hon. Gentleman consider that, in spite of the machinery set up by this House, it was no doubt the duty of the War Office authorities to take whatever steps were necessary to find out if a leakage had

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taken place by one of their officers, how extensive was that leakage and what steps were necessary to see that a leakage did not occur again?
Mr. Foot: I am not saying it was not their duty. What I am discussing is the point of time that they started to discharge that duty, and I am saying that these matters were under the consideration of the House of Commons, that it was perfectly well known to everybody that the House of Commons was to consider this particular question on the Thursday, and, therefore, it seemed a very doubtful proceeding to begin the sittings of the tribunal on the Wednesday.
This tribunal was an inquiry into the alleged leakage of information to the hon. Member for Norwood. One would suppose that the hon. Member was an essential witness in any proceedings the tribunal might carry on. Even if he had not been summoned he would have been in the position of the very greatest difficulty, because he bad raised on the Monday a question affecting the rights and Privileges of a Member of Parliament. One of the questions which he had raised was whether he should be called upon to disclose the source of the information that he had received, and that was a question which it was decided should be inquired into by the Select Committee. Suppose the military inquiry had gone on and suppose the hon. Member had not been summoned there as a witness. It might very well have been that there might have been some miscarriage of justice in that inquiry, and yet if the hon. Member, seeing that difficulty, had volunteered to give evidence, he would have been on the other horn of a dilemma, because he would have been making futile the proceedings of this House and of the Select Committee which he had himself invoked.
Therefore, I say the Committee of Privileges might have gone a little further and might have said that not only was it a breach of Privilege to send a summons to the hon. Member, but that the court ought not to have commenced inquiring into these matters at all while they were before the House of Commons, or a Committee of this House. I will not delay the House further, because other hon. Members who may put these points with greater force than I can wish to speak, but I think we may congratulate ourselves that the tribunal or those in authority over
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it have bowed to the authority of this House, and that the Privilege of the House of Commons and its Members has been once more firmly re-established.
5.33 P.m.
Mr. Churchill: I came to the House this afternoon not at all expecting that any controversial matter would be introduced into our discussion. I am still disposed to make a very few observations, mainly of a laudatory character on our Ministers, our institutions and, generally, on the way in which this Privilege affair—I am keeping very strictly within the limits of the topics that we can discuss—has been conducted. Except in one respect, which I shall come to later on, which has newly dawned upon my conscience, I am in hearty accord with the Report of the Committee of Privileges, which I understand it is in order for us to debate. I feel that we owe a debt to our chairman, the Prime Minister, for having led us unanimously to this conclusion. The technical grounds of this breach of Privilege are clear. The hon. Member for Dundee (Mr. Foot) has pointed them out. A Member of this House while preoccupied with the duty to attend before a Select Committee, of which the Prime Minister had already given notice, was summoned to appear before an inferior court upon the same subject or upon matters cognate to that subject. He was, therefore, in a Parliamentary sense obstructed in the performance of his Parliamentary duties.
In the old precedents, resolutions and rulings on this subject which we have had the advantage of having had placed before us by the officers of the House, the word "molestation" occurs several times, and it seems to me that the word "molestation" is very relevant to the issues which have been raised. Obstruction and molestation are the technical grounds upon which this breach of Privilege has been claimed. The Committee of Privileges has declared that a breach has been committed, and if the House accept the Prime Minister's Motion, which I can hardly doubt—it would be a great misfortune if the House were to differ from it—this assertion of Privilege for which, as the Prime Minister said, no exact precedent can be found in the records of several hundreds of years, will become a milestone, or at least a furlong stone, in our Parliamentary history. It is the revival and

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the reassertion of a basis of custom which lay latent in the Privileges of this House, and which have now been brought out upon a modern instance into active and vigorous effect.
I readily agree, however, with those who think that these technical grounds ought not to have been invoked unless the circumstances of this particular case were both substantial and grievous. It is not every day that Parliament is called upon to take notice of everything that happens. Many things in the ordinary course may take place and Parliament may not take care to notice them, but it was the surrounding facts of this case that made it necessary to assert the technical position. It is not necessary to labour those surrounding facts, because we are agreed upon them; the Committee of Privileges were agreed upon them. There is no question that those facts made the technical breach one which required to be marked. It is enough to say that when the House of Commons has been asked by the Prime Minister to set up a Select Committee to inquire into a particular matter other parallel and simultaneous inquiries are inopportune and objectionable. When a Member of this House has to go before a Select Committee upon a question as to whether he should or should not answer a specific question, it cannot be tolerated that an inferior tribunal should hale him before them and ask him the same question upon the propriety of putting which the House is about to deliberate. I agree entirely with the Prime Minister that we are not laying down a general principle, but we are interpreting a principle lying in the general body of Privilege and interpreting it in relation to the actual facts of this case, which are obviously plain.
Now I come to the only point on which I feel some newly awakened doubts about this report, to which I have agreed. I refer particularly to the words, to which I agreed,
"without making any reflection upon the Military Court."
It may well be asked, ought we to have agreed to such a statement? Here is a breach of Privilege. Can a breach of Privilege be launched out without any objective upon which it can alight? Therefore, it seems to me that one may be asked, "Why did you agree to writing these words,"
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"without making any reflection upon the Military Court."
I can only say in reply to that question and as some justification that my first reason was that I did not think the Military Court were to blame. It seemed to me that it would be very hard to censure these officers and bring them to the Bar, or take any action against them, as officers of the court, because they were only doing their duty. They were only obeying orders. What a terrible position those officers were placed in. On the one hand they commit a breach of Privilege, on the other hand a breach of discipline. I certainly had no desire or intention to put blame upon the Military Court, and I was surprised to hear that that is the way in which the report was read. I was glad when it was proposed to add the words that we were not making any reflection upon the Military Court.
I have never in my experience, including several years at the War Office, supposed that these courts were responsible bodies in themselves, with no higher body behind. I never supposed that the War Office itself was an automatic machine, which rolled forward blindly, senselessly, without taking any notice of what was going on. I have never for a moment imagined that such a situation could arise that a court of this kind would go forth all on its own, pushing on remorselessly, without the slightest responsibility attaching to anybody else. I must say that some of the statements which have been made to-day do create a new situation in respect of military courts, a situation not at all foreseen and certainly a situation which very few people imagined existed up to the present time. One always expected that these courts, not of course in the opinions they express upon matters, but in the dates of their sitting, the times of their sitting, were controlled and regulated for the public interest and convenience and in accordance with decorum, by the military authorities, at the head of whom there ranks a politician to whom it is not in order to refer to-day. Later on, perhaps, we may have an opportunity of doing so.
I am bound to say that I feel great misgiving about throwing the blame, as we are now told we have thrown the blame, upon this Military Court. The Court had no choice. These military men are, in my opinion, the last people who would wish to show disrespect to the House.

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Ever since the days of Lord Wolseley and Sir Evelyn Wood, I have known, intimately high officers of the Army, and I have known officers of the class from whom the officers of this particular Court come, and I can assure the House that there is no set of men anywhere more respectful to Parliamentary authority and who would be less likely to set themselves up against the House of Commons, or wish to affront it in any way.
Mr. Thorne: What about the Curragh?
Mr. Churchill: That was not a case where officers set themselves against the authorities, they resigned their commissions, but I should be straying rather far from the narrow path along which I have to progress if I attempted to deal fully with that matter, although I am quite capable of discussing it in detail. But military questions, obviously of the highest consequence, are raised in view of the fact that it appears that this Court is alone responsible for its action and that there is not responsibility higher than this Court. I shall not press any further upon this subject, though I feel astonished that we have not had an appeal to the Chair by the Secretary of State for War to be allowed, almost as a personal matter, to stand between this subordinate Court and the censure which is now directed upon it. Every instinct would have prompted him to spring up and say not merely "I take the full responsibility" in the technical sense, but to say it precisely that these officers were obeying the orders of a higher authority in everything they did. The blame does not rest upon them but on those who have told us that they accept responsibility for their action. That is all I wish to say on this particular subject which I might, indeed, have illuminated a little further but for the conditions under which we are discussing the matter.
Although there has been some feeling expressed to-day I do not think that we have anything to regret that this incident has occurred, or that it has been raised, or that the matter has gone forward to the Committee of Privileges or that Mr. Speaker has ruled upon it as he has. There are some of the younger Members of this House, and some for whom youth is no longer an excuse, who seem altogether not fully to appreciate the dignity and Privilege which may in certain cir-
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cumstances envelop even the humblest of us. This dignity and these Privileges lie at the very foundation of our Parliamentary system. We have taught this system to a large part of the human race, and it flourishes and is cherished throughout the British Empire. We are trying to convince the rest of the world of its superiority over various forms of tyranny, personal, party or sectarian. I think this has been a highly educative episode to foreigners. I think this Report will be read with the greatest interest abroad, and admiring and envious eyes will be turned towards this country from many lands. The lessons of this Report should be proclaimed. Here we see that force does not rule, but law. Law rules largely in virtue of customs transmitted to us by our clear-sighted, resolute and faithful forbears. We see in this Report, going back as it does in its purview over the centuries, that all wisdom is not new wisdom, that continuity of national life is precious and exalting and adds to our safety as well as to our comfort. Mr. Disraeli, in one of his most famous sayings declared:
"Nations are ruled by force or by tradition."
There is no humiliation in bowing to tradition. It is especially becoming in the Prime Minister, with a large majority at his back, to do so. I congratulate the Prime Minister on having, as Leader of the House, which is a separate function he discharges, enforced the customs of Parliament to his own inconvenience and even to some extent in his own despite. We cannot too boldly proclaim the salutary principle that the Executive is the servant and not the master of Parliamentary institutions, and that good government and happy nations arise from the proper balance of forces and functions within a State rather than from the subordination of all to any of them.
5.51 p.m.
Sir Arnold Wilson: I join the right hon. Member for Epping (Mr. Churchill) in welcoming this report and also in his congratulations to the Prime Minister, though perhaps for another reason. I am glad that the Prime Minister made it clear that this House is claiming no new privilege. Under the law as it stands hon. Members are not immune from attendance at any courts of justice, nor from any

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criminal indictment, and if I thought that the Privilege here claimed might give rise to a miscarriage of justice I should disagree with much that is in the report. But a Court of Inquiry is not a court of justice. It can incriminate no one. There is no accused person before it and no charge against any person which has to be investigated. It is set up to investigate a given set of circumstances and anybody may appear before it without feeling that they are under a cloud or that they might incriminate themselves. Nothing said before a Court of Inquiry can be cited as evidence. It is true that in this case the hon. Member for Norwood (Mr. Sandys) was asked to attend; so for all we know to the contrary were dozens of other persons. There is nothing to suggest that he was in danger of molestation. I think that it is highly probable that he was asked when it would be convenient for him to attend and that he indicated a day and hour convenient for him.
I think it probable that he was not served with a summons except at his own invitation and at the time and hour which he had in fact indicated as convenient. He may on second thoughts have come to the conclusion that such a summons was a breach of Privilege, but it would be premature for us in anticipation of the report of the Select Committee to suppose that the summons came as a surprise or to doubt that every courtesy was shown to him as is invariably shown to hon. Members by military officials. Nor is it correct to suppose that a court of inquiry cannot be set up by any military authority without the approval of the Army Council. Courts of Inquiry under the Rules of Procedure can be set up by any Divisional General and in certain circumstances by an inferior military authority to inquire into matters which are relevant to their responsibilities, and that is doubtless what occurred in this case.
Mr. Bellenger: No.
Sir A. Wilson: In this case the Secretary of State for War has accepted formal responsibility, but we may perhaps forget that between him and the Divisional Generals stands, under the Order in Council, the Under-Secretary to the War Office, who is the member of the Army Council formally charged with the responsibility for all Territorial Force Associations. As it so happens he is a Member
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of the other House but the hon. Member for Norwood had he wished to avoid raising a question of Privilege might well have telephoned him and asked whether it would be convenient for him to defer or adjourn the court.
Mr. Ede: How does the hon. Member know that the Under-Secretary of State for War knew anything about this inquiry? When I asked the Secretary of State for War whether the Under-Secretary was present at the meeting which ordered the inquiry he declined to answer.
Sir A. Wilson: I am depending solely and exclusively upon the text of the Order in Council of 1904 as amended by an Order in Council of 1936, which lays down the composition of the Army Council and provides that the Under-Secretary of State shall be responsible to the Secretary of State for War on matters affecting Territorial Force Associations. If he had not direct personal knowledge it would have been constitutional and indeed courteous to have referred to him as the responsible Minister of the Government and asked him whether he was aware of the facts and if so to ask him to give them his consideration before an acute question should arise in this House, and I am sure it was the desire of the hon. Member for Norwood that no acute question should arise.
Mr. Sandys: As I am giving evidence at this moment before the Select Committee I do not wish to say anything in this Debate and, therefore, I ask the hon. Member not to accept my silence as indicating that I accept what he is saying.
Sir A. Wilson: I do not wish to take advantage of the voluntary and desirable silence which the hon. Member has imposed upon himself. I wish to point out that there are two sides to this question and that a Court of Inquiry is not a tribunal, it is not an inquisition, it is not a body which can pass any sentence, and that it has not hitherto been suggested that hon. Members are or should be immune under military law. All that I can find about Members of Parliament in the Manual of Military Law is a footnote to say that, if officers who are also Members of Parliament are arrested Mr. Speaker should be told. That is the extent of our immunity. The "News Chronicle" to-day says that Parliament if it wished could "punish the brass

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hats severely." It is well that we should remind ourselves that we have no power to punish anybody except ourselves. We can impose serious penalties upon ourselves, but officers who hold their commissions from the King cannot be punished by this House.
Mr. Thorne: They can be admonished by Mr. Speaker.
Sir A. Wilson: Admonition is not severe punishment and I know of no precedent for admonishing a servant of the Crown. For the rest the courts of justice are open and we have no right to interfere with the courts of justice. The Order in Council lays it down that the Secretary of State for War is responsible in all that pertains to the Army, to the King, and to Parliament, and the Army Council was not set up by this House but by Letters Patent. Let us be careful of our own Privileges but let us be equally careful of the privileges and status of the Armed Forces—not of Parliament, but of the Crown.
6.0 p.m.
Mr. Ede: I think that the speech to which we have just listened calls for a very strong reply from these benches. We have been told to-day that, not by Act of Parliament, but by a conference between the two Houses, it was decided, in 1704, that no new Privileges should be created; but if there are many Members of the mind of the hon. Member for Hitchin (Sir A. Wilson), we may very well lose many of the Privileges which at present exist. I dissent most heartily from practically everything which the hon. Member said. This House, on its own resolution, has sent a Lord Mayor of London and his Sheriffs to the Tower, and we have never renounced the right to do so. It is true that in more recent years we have thought that to call people to the Bar and to get Mr. Speaker to admonish them, was a sufficient punishment, but we have never adopted that as the only means which we have of asserting our will over people who have offended us or who have abused the Privileges of Members. In view of the turn which the Debate has taken, I want to say that if this Report is to be regarded as a censure on the men who composed the military Court of Inquiry, we are passing such a censure on very insufficient evidence It is a fundamental
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principle of English law that no man shall be declared to be guilty until he has been heard in his own defence, and neither the Committee of Privileges nor the House has heard the officers who posed the military Court of Inquiry.
Lieut.-Commander Agnew: Has the hon. Member read the Report? It states clearly
"without making any reflection upon the Military Court."
Mr. Ede: I take refuge in the eloquent phrase of the right hon. Gentleman the Member for Epping (Mr. Churchill). We cannot launch a censure for breach of Privilege without having some place on which it can alight.
Mr. Churchill: I was under the impression that, in signing this Report, I was casting no reflection on the Military Court, but I have heard from you, Sir, that the Report puts blame on the Military Court. That has altered my view about the Report, and the reasons which I gave.
Mr. Ede: That is precisely the point I am making. We have been told to-day that this is a vote of censure on the Military Court. We have it on the authority of Mr. Speaker, and the course of the Debate has been to that effect. As an ex-soldier, I object to the civilian sheltering himself behind soldiers who cannot reply. I do not care who the civilian is, or how highly he is placed. I am not allowed to identify him. I have sat on the bench of a very humble court when learned counsel has said, "Look round the court and see if you can identify the person about whom you are making a complaint." I understand that if I were asked that question to-day and were to attempt to reply to it, I should be told that I was out of order. Therefore, as an ex-soldier, I can only express my dissatisfaction at finding myself compelled to pass a vote of censure on men who have never been heard in their own defence, for there was only one witness, according to the report, who was called in front of the Committee of Privileges, the learned Clerk of the House. I had imagined that the phrase to which the right hon. Gentleman drew attention was meant to indicate that these officers were acting under such orders as absolved them from the censure of the House, and that phrase could really have no other meaning than that.
The Prime Minister: I must interrupt the hon. Member, as Chairman of the Committee, and say that that was not the meaning which I attached to it.
Mr. Ede: What meaning did the right hon. Gentleman attach to it?
The Prime Minister: Since the hon. Member puts that question to me, I am ready to answer it. The meaning I attached to it was that the Military Court had committed a technical offence, but that it was not considered that they had deliberately attempted to challenge the authority of the House.
Mr. Ede: In the course of the few minutes during which I shall address the House, I hope to deal with the question of the technicality of the offence, if, in fact, it was an offence, by the Court of Inquiry. We have been assured all along that the setting up of that Court of Inquiry was something that was purely automatic, and in so far as it was directed to discovering whether a leakage had occurred and the person who was responsible for that leakage, one must say that it ought to have been regarded as automatic. I share very strongly the view that it was the duty of the Army Council, as soon as they discovered there was a leakage, to endeavour to trace the leakage, but I do not think they had the right—and this is where, I think, the Committee of Privileges is involved—to go to a Member of the House, who, in the course of his duties as a Member of the House, was using the information, and endeavour to trace the leakage back from him to the point where it occurred. I believe that their proper duty was to conduct the inquiry from the other end entirely. I was very much perturbed by the speech of the Prime Minister this afternoon, because I gathered from him—and he will correct me if I am wrong—that his view was that if the Select Committee had not been set up, no breach of Privilege would have been committed.
The Prime Minister: I did not say so.
Mr. Ede: I know the right hon. Gentleman did not say so—
The Prime Minister: The hon. Gentleman has no right to attribute to me expressions which I did not use and which I am not prepared to accept.
Mr. Ede: I did not say that the right hon. Gentleman said so, but I said that was what I gathered from his statement.
The Prime Minister: The hon. Member said that I would correct him if he was wrong; I did so.
Mr. Ede: I hope the right hon. Gentleman will also be able to correct the general impression which his speech gave, because I hope the House will not take the view that the breach of Privilege occurred only because, simultaneously with the military Court of Inquiry a Select Committee was appointed by this House. I readily accept the statement of the Prime Minister that that was not the inference which he desired us to draw from his speech. My view is that the words used by the right hon. Gentleman the Member for Epping are essential to the consideration of this matter. The molestation of the hon. Member for Norwood (Mr. Sandys) consisted in his being called in front of a military court of inquiry to give evidence with regard to something with which his connection was known to the military Court of Inquiry only through the way in which he discharged his duties as a Member of the House. How they came to know of it, although the House was told a few days ago, I must not mention to-day, but a bird of the air whispered in their ears that the hon. Member had this information, and that he had been using it, not to inform the enemies of the country, but in an effort to bring the defences of the country up to the state in which he thought they ought to be. That is the only way, as far as I know, in which the Army Council or the Court of Inquiry can connect the hon. Member for Norwood with this matter. I assert that that in itself, whether we had set up a Select Committee or not, was a breach of the Privileges of this House and a matter of which we have a perfect right to take cognisance.
I wish to conclude by saying that I should regret it very much if it were thought outside that the Vote which we are about to give in this matter is to be regarded as a vote of censure on the high military officers who composed the Court of Inquiry and the officers who ordered the court to assemble. I believe that we should always look, in our dealings with the Army, for a civilian to be responsible to us for its action. I repudiate entirely

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the doctrine of the hon. Member for Hitchin with regard to our relations with the Army. Let us not forget that a standing Army in this country is still illegal. The Bill of Rights still remains; and but for our passing Vote A of the Army Estimates every year, there could not be a single man maintained in His Majesty's Army, and but for the passing of the Army Annual Act, if that force existed, there would be no military discipline exercisable over it. Therefore, to my mind, we ought to be very careful how far we, as a House, ever say that the military, in their relations to the House, can be brought within our cognisance except through one of the civilian heads of the Fighting Forces. Although I shall vote for the Motion this afternoon, I do not believe that the officers who composed the Court of Inquiry are the people on whom the conscience of the nation will place the responsibility for this gross breach of our Privileges.
6.12 p.m.
Captain A. Evans: My right hon. Friend the Member for Epping (Mr. Churchill), and indeed the hon. Member for South Shields (Mr. Ede), rather suggested that my right hon. Friend the Secretary of State for War was running away from his responsibilities and shielding himself behind those high military officers who hold positions of responsibility at the War Office.
Mr. Ede: As the hon, and gallant Member referred directly to me, may I say that I repudiate any such construction being placed on my speech? I dealt with the fact that we have been told this afternoon that this report is a censure on the Military Court, and that we may not discuss the action of the Secretary of State for War in connection with it.
Captain Evans: I am glad to have the assurance that the hon. Member was not making a charge of that nature against my right hon. Friend the Secretary of State for War. I think the House would be very happy if my right hon. Friend the Member for Epping found himself in the same position to deny such a charge.
Mr. Churchill: I shall not qualify in the slightest degree what I said.
Captain Evans: If I may say so, that is very unfair, and, with great respect to my right hon. Friend, a very unusual course
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for him to pursue. He knows as well as the House that my right hon. Friend the Secretary of State for War has told the House time and time again that he accepts full and unqualified responsibility for this action. For my part I am satisfied that when it is possible for him, within the terms of your Ruling, Mr. Speaker, to deal with this matter fully—as I imagine he will do when the report of the Select Committee comes to be debated on the Floor of this House—we shall find that he is the last man to desire to shelter behind either military officers or officials of the Civil Service. I am glad indeed that my right hon. Friend the Member for Epping for his part did not cast any reflection on the military court, or, I imagine, on the military authorities concerned with this particular action. My right hon. Friend has himself been Secretary of State for War. It is common knowledge that in that office he rendered very distinguished services to the country. I am satisfied that if, during that period of responsibility, it had come to his knowledge that military intelligence of the first importance, probably relating to a military operations order, had been divulged by a certain military source, irrespective of the quarter to which that information had been divulged, he would have considered it his first duty to put into operation any military machinery that was necessary to locate the source of that leakage.
As you, Mr. Speaker, have ruled that this is a matter for the military court, I think we are entitled to examine the responsibility which rests upon a military court when faced with a case of this kind. It is true that it came to the knowledge of the Secretary of State for War through the medium of my hon. Friend the Member for Norwood (Mr. Sandys) that a leakage had occurred. I do not wish to discuss the position of my hon. Friend in that respect, but to make my point clear I will just say this—that he did not feel himself free to divulge to the authorities at that time from whence the information came. The military authorities faced with that responsibility, at that particular time, had no knowledge of the extent of the leakage. Had it been divulged by a newspaper correspondent? Was it common knowledge within a narrow or a wide circle? They had no knowledge. The only knowledge which was in their possession was that a leakage had taken

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place, a leakage of first-class importance, and it was their prime and immediate duty to put into operation machinery which would find out how that leakage had occurred. If subsequently it was found that information had been divulged to a Member of Parliament, then that is an aspect of the case to which I am not allowed to refer at this point.
Mr. Bevan: That is the very matter upon which, in my submission, no hon. Member would like the House to be deprived of any illumination which can be given by the hon. and gallant Member.
Captain Evans: It would be ridiculous for the House to assume at this stage that information had not been divulged to a certain quarter. I am not in a position to say who divulged the information, or to whom it was divulged. That is the question which is at the moment under review by a Select Committee of this House. But I hope that when the Select Committee give us the benefit of their findings, we shall be able to discuss that aspect of the case in some detail. The point which I wish to put to the House is this—that the military authorities, having set up the machinery to find out exactly how this leakage occurred, acted strictly in accordance with practice and strictly in accordance with King's Regulations and the Manual of Military Law. My right hon. Friend the Member for Epping knows as well as I do that if a court of inquiry is set up, and it appears to the authorities that an officer, be he an officer of the Territorial Army or the Regular Army, might be involved in that inquiry they have no option but to summon him to give evidence before that court of inquiry, not only in the interests of the War Office, but, indeed, in the interests of the officer himself.
Mr. Churchill: Since the hon, and gallant Member has appealed to me to say what I think the practice should have been at that stage, I will say this. I should have thought that the Adjutant-General, in the ordinary course, would have said to the Secretary of State for War, "This matter is taking its course, but in view of what happened in the House of Commons yesterday, ought it not to be suspended?" If the Adjutant-General had not said that, then the Secretary of State himself ought to have said, "In view of what happened in the
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House of Commons yesterday, obviously this court must be delayed." That is what would have happened, according to my experience.
Captain Evans: That, I think, is the unfortunate part of this Debate—that we are restricted from dealing with certain aspects of the case which would, I think, enable my right hon. Friend the Secretary of State for War at least to clear up the point which has just been raised by my right hon. Friend the Member for Epping.
Mr. Bevan: On a point of Order. We are placed under a great disability. We cannot discuss the responsibility of the Secretary of State because you, Mr. Speaker, have ruled that the Secretary of State has no responsibility for the action of the Court of Inquiry in sending for the hon. Member for Norwood (Mr. Sandys). Now the hon, and gallant Gentleman suggests that if the Secretary of State for War were free to speak on the matter, he could exculpate himself of the charge which you, Sir, say cannot be levelled against him.
Mr. Speaker: The Ruling which I gave at the commencement of the Debate was that as the Select Committee is now considering the matter it would be out of order for us on this occasion to discuss the responsibility of the Secretary of State for War. That was all I said with regard to the point at issue.
Captain Evans: If the hon. Member for Ebbw Vale (Mr. Bevan) had not been so anxious to pose as an authority on the Rules of the House, he would have allowed me to finish what I was saying. I was about to say that if there was not, as in this case, an absence of any precedent—and that is a point which we have to bear in mind—and if the Rule was clear, then there would be no Select Committee of this House reviewing the matter at the present time. But there is a doubt in everybody's mind, and it is for that reason that the whole principle is being considered, under certain terms of reference which were in fact drawn up by my hon. Friend the Member for Norwood himself and approved by the Prime Minister. It is because of that doubt that the matter is under review.
It is clear that the military authorities had no option but to give my hon. Friend the Member for Norwood an opportunity

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of giving evidence before this military Court of Inquiry, in the absence of any precedents or rules. If the military authorities, in their discretion, had refused to give that right to my hon. Friend, the Members of the Opposition would have been the first people in this House to get up and say that the War Office were military dictators denying to my hon. Friend a right which he ought to enjoy. [Laughter.] It may appear humorous to hon. Gentlemen above the Gangway, but it is for the very purpose of clearing up this uncertainty and laying down, once and for all, the relationship which ought to exist between Members of Parliament who are also officers on the Active List of the Territorial Army and the military authorities, that this Select Committee is now sitting. I think it is clear that no reflection has been cast on the Military Court. As the Prime Minister pointed out in reply to the hon. Member for South Shields just now, it may well be that they have committed a technical offence. If they have, it is the fault, not of His Majesty's Government or of the Army authorities, but, indeed, of this House, because we have not sought an earlier opportunity of clearing up a point which must develop in importance as time goes on.
Sir A. Sinclair: My hon, and gallant Friend has been in great difficulties in that he wished to take a certain line which he was prevented from taking by your Ruling, Mr. Speaker. But here is a matter upon which he is able to give the House the full benefit of his mature reflections, and that is whether or not a breach of Privilege has been committed. The report which we are discussing contains a finding that a breach of Privilege has been committed. Now, the hon, and gallant Gentleman says it might have been committed but he is not sure whether it has been committed or not. But that is the subject which we are discussing, and if he does not think it is a breach of Privilege, then he ought to say so and oppose the adoption of this report.
Captain Evans: In spite of the right hon. Baronet's interruption I am under no delusion as to the question of a breach of Privilege having been committed. I have done myself the justice of reading through the findings, and it is clear that
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a breach of Privilege has been committed, but it is also clear that the Committee of Privileges, of which the right hon. Gentleman himself is a member, subscribed to the conclusion that they cast no reflection at all on the Military Court. That is the whole point, and it was with a view to developing that point that my right hon. Friend the Prime Minister, who is also a member of the Committee of Privileges, was asked by the hon. Member for South Shields to indicate to the House what was in his mind. My right hon. Friend said frankly that what was in his mind was that one branch of the military service had committed a technical breach of the Privileges of this House, but with no intent to upset the authority of Parliament. That is the point which I was making, and perhaps when the right hon. Baronet has an opportunity of addressing the House, he will tell us what was in his mind when he subscribed to the conclusion that the military court was in no way responsible.
I feel that I owe an apology to the House as a rather junior Member for attempting to address it on this question of Privilege, but I think it is clear that the House did a wise thing in setting up a Select Committee to deal with the point of principle which at the moment is in a most unsatisfactory state. It will mean that the Manual of Military Law, that King's Regulations, which are automatically put into operation by general officers commanding divisions, perhaps without reference at all to the Secretary of State, will have to be revised in relation to the findings of the Select Committee and the decision of Parliament.
6.29 p.m.
Mr. Bevan: There was one remark made by the hon, and gallant Member for South Cardiff (Captain Evans) in which, I think, he carried with him the whole House. That was when he said that the Committee of Privileges had decided that a breach of Privilege had been committed. As to the rest of the speech, I am sure the House would have been delighted to form some conclusion upon it if they had been able to understand it, but I am at my wits' end after listening to the hon. and gallant Member to discover what position he takes up on this question. He appears to be satisfied with this proposal because he does not want to disagree with the Prime Minister—for

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reasons into which I shall not enter at the moment. The hon, and gallant Gentleman has private anxieties which he could disclose to the House without a breach of Privileges, but I will not embarrass him further by referring to them. He has said that while there was obviously a breach of Privileges the position was so ambiguous, the relationship of a court of inquiry to the House of Commons was so uncertain, that no heavy censure should fall on Army officers for having acted as they did. That makes the situation worse. Let the hon, and gallant Gentleman and the House consider what he has suggested. It was that the relationship between the military authorities and the House of Commons was so uncertain and that the attitude of mind of the officers of the Army towards the House of Commons was such that they did not know whether it was a breach of Privileges to subpoena a Member of this House after the matter had been the subject of questions and answers, and after a Select Committee had been set up.
If that is the state of mind of the leaders of the Army, it is time they were educated. The hon, and gallant Gentleman has suggested that they were uncertain and that they did not know they had not the right to take hold of a Member of this House and haul him up before a Court of Inquiry. Is that the position? Is the hon, and gallant Gentleman attempting to suggest that the Army authorities' sense of subordination to the supremacy of the House of Commons is so insecure that they think they can seize hold of a Member of this House and haul him up before a Court of Inquiry without being quite certain it was a breach of Privileges?
Captain Evans: The hon. Gentleman must bear this point in mind. Is it not reasonable for the Army authorities to assume that a Member of this House who happens to be an officer on the Active List of the Territorial Army is just as anxious as the military authorities to attend before a Court of Inquiry to do what he can to assist the court in finding out how essential military information came to be divulged? It may well be, although I do not know, that the hon. Gentleman the Member for Norwood was, as has been supposed by the hon. Gentleman the Member for Hitchin (Sir A. Wilson), invited to attend the Court of
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Inquiry, but that is, no doubt, a matter which will appear in later discussions.
Mr. Bevan: It is clearly irrelevant whether the hon. Member was invited or ordered, because I have seen letters from employers to employés asking for their resignation which could not be distinguished from the "sack." The actual terms are of no importance. The fact is that the hon. Gentleman was asked to appear before the court in uniform. I can take the hon, and gallant Gentleman as my object lesson, because he is the only Welshman who has had the temerity to sustain a defence against the Government's position. He suggests that the Court of Inquiry was justified, because the hon. Member for Norwood was not only a Member of this House, but an officer of the Territorial Army. That seems to make the position worse because now we understand that the leaders of the Army, when they ask themselves what authority they regard as supreme, decide that it is the Army, and that if a man is an officer and at the same time a Member of this House, in the view of the leaders of the Army, his membership of the Army is superior to his membership of the House. Therefore, he can be asked to do in his capacity as an officer what he cannot be asked to do as a Member of the House.
The view that we take is clear—that if a man is at one and the same time a member of the armed forces of the Crown and a Member of this House, his position as a Member of this House must not be jeopardised because of the duties falling upon him as a member of the armed forces. The Privileges of Members who are not members of the Army would be put in jeopardy if a Member who was an officer had to obey orders which he would not have to obey as a Member of the House. The defence that is being put up in this matter shows the unfortunate state of mind into which some hon. Members with certain political leanings have allowed themselves to fall in recent years. It is time we asserted the principle that the civilian authority is supreme and that the Army must regard itself as the servant of the House of Commons, and in no sense as a State within the State.
That brings me, with every respect, to some considerations arising out of the Ruling that you, Mr. Speaker, were good

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enough to lay down this afternoon. We are forbidden to discuss the responsibility of the Secretary of State, and I am sure that it is a proscription under which the Secretary of State chafes as much as any Member. I am sure he would be only too delighted to make a defence for actions for which you, Mr. Speaker, say he was not responsible. Some opportunity will probably be given to him in future. We are forbidden to discuss the relationship of the Secretary of State to the conduct of the Court of Inquiry, because Mr. Speaker has said that he was not responsible for how that Court acted. That seems to me to place a military Court of Inquiry on an entirely superior status to that which it had before. I always assumed that the Army, the Navy and the Air Force are spheres of administration rather than spheres of jurisprudence, and that the immunity from criticism which belongs to the civilian courts does not belong to courts of inquiry that are set up under the Army Act and the King's Regulations. If courts of inquiry act in these matters automatically without instructions from any superior authority, they become self-acting and self-motivating tribunals If we are to permit this to continue the next thing that will happen is that if a court of inquiry is being held into the conduct of a member of the armed forces, we shall be estopped from putting Questions on the Order Paper because such an inquiry is being held.
Mr. Macquisten: If a court of inquiry were taking place, would it not be highly improper to ask questions about something which was sub judice?
Mr. Bevan: A court of inquiry has been an act of administration up to now. The Ruling which has been given to-day elevates that court of inquiry to a superior legal status.
Mr. Speaker: I did not say anything in that sense. All I said was that on the particular vote which we are asked to give on the Report of the Committee of Privileges the Secretary of State has no responsibility. The hon. Member must not say that I laid down that the responsibility of the Secretary of State for the administration of the Army cannot be debated, because on several occasions I have told the House when it can be debated.
Mr. Bevan: I was not quarrelling with your Ruling, Sir, but was pointing out the implications which might follow if certain conclusions were drawn from the Ruling such as hon. Members have drawn during the Debate. The hon, and gallant Member for South Cardiff has said that in his judgment the Court of Inquiry acted in this matter because it considered it proper to do so; not because it had received instructions from anyone, but because it was in this matter self-motivated. What has caused us anxiety is the impression that we gathered that the Secretary of State for War had no responsibility for what the Court of Inquiry did and that it is because of that we are stopped from discussing the matter. If he has no responsibility the conclusion is that the Court of Inquiry is the only authority responsible. If that is so, there is no one to answer to this House for the conduct of the Court of Inquiry, in which case the military tribunal is coming to occupy an unchallengeable position in the Constitution. That is a very serious position.
Mr. Speaker: The hon. Member must not interpret my Ruling in that way. On the proper occasion the Secretary of State can answer for the Court of Inquiry, but not on this occasion. It can be on the Supply Day or on the discussion of the Report of the Select Committee.
Mr. Bevan: I will leave that point, except to say that it is an unfortunate concatenation of circumstances that brings this House into conflict at this moment with the military authorities, and makes the Court of Inquiry and the Army scapegoats for actions for which other people are responsible. I want to raise another matter which seems to be germane. The Report of the Committee of Privileges says:
"Before, however, the Select Committee had actually been set up, the hon. Member for Norwood, being a Territorial Officer, received a summons to appear before a military Court of Inquiry into the circumstances…"
The circumstances were that the House of Commons had set up a Select Committee and after that was done the hon, and gallant Member for Norwood was sent for by the Court of Inquiry.
Lieut.-Commander Agnew: The hon. Member is wrong. The report says:
"Before, however, the Select Committee had actually been set up."
Mr. Bevan: The point I am making is that the Committee of Privileges said that a breach of Privileges had been committed because the hon. Member was sent for by an Army inquiry to investigate matters which were already the subjects of questions in the House of Commons and about which a Select Committee was to be set up. Let us suppose circumstances in which the House of Commons did not, in fact, set up a Select Committee. Suppose there were questions and answers in the House on the Monday and that the House took no further cognisance of the matter. We are then to assume that no breach of Privileges would have been committed against a Member of this House if the Army inquiry had sent for him in his uniform as a member of the Territorial Forces to give evidence to show where he had obtained the information which was disclosed by his discharging his duties as a Member of this House. In other words, there is a state of affairs which could never have occurred some few hundred years ago, when these Privileges were established, when the House met in private, when no official report was made. The purpose of secrecy was to enable Members to use information against the Executive, to criticise and curtail the Executive, which then was the Crown—the Crown itself having control of the armed Forces of the State—and to be in a position to criticise without having any penalties imposed upon them. Now, however, because circumstances have changed, because we have strangers here, and we publish our reports, that information which formerly was secret is common knowledge, and if the leaders of the Army get to know how a Member has behaved in his capacity as a Member it is assumed by this report that it is perfectly correct in asking that Member how he got the information.
Mr. Lewis: I would point out that in this case it was not a statement made in the House at all, but a statement made in a letter to the Secretary of State for War.
Mr. Bevan: That makes it worse, because in these circumstances the constitutional position now is that the Minister of the Crown, in the last analysis, rests upon his support in this House. We all know what is the background of this movement. The background of all this, of course, is that
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there has been going on what has been described in some circles as a Churchill espionage, and there have been attempts to trace those sources of the right hon. Member for Epping (Mr. Churchill)—
Mr. Speaker: The hon. Member is now really going into questions which must be raised in Committee of Supply.
Mr. Bevan: I was making only a passing reference to the point, and did not propose to follow it up. I propose to follow my main theme, which I have already unfolded, and it is that a breach of Privilege had been committed against the hon. Member for Norwood and against this House, irrespective of the fact that a Select Committee had been set up; that the leaders of the Army had come into possession of information which had been disclosed by a Member of this House in his capacity as a Member of this House; that the fact that their action had been taken at a time when they know what questions we put to Ministers in our capacity as Members of the House of Commons is an entirely irrelevant consideration; and that, in fact, the hon. Member for Norwood ought not to have been subpoenaed to attend the Court of Inquiry even if the House of Commons had not set up a Select Committee. I only wish to say this in conclusion, that if hon. Members think that this carries the Privileges of Members of the House of Commons farther than they ought to be carried—
Mr. Speaker: The Select Committee has been set up definitely to inquire into the statements of the hon. Member for Norwood, and in regard to the position of Members generally, and we cannot discuss that question because it is sub judice.
Mr. Bevan: I beg your pardon. In my submission I am discussing strictly the report of the Committee of Privileges, and indeed I am entitled to oppose it if I wish. I am entitled to say that the Committee should have gone further and called into account the matters which are before the Select Committee. This certainly does carry an interpretation of our rights. We must feel free to be able to apply our knowledge for the benefit of the country.
Mr. Speaker: Again the hon. Member is discussing the question of the position of

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this House in the matter of Privilege, a question which the Select Committee has been set up definitely to consider. He must not discuss that, because at the moment it is sub judice.
Mr. Bevan: I cannot see where my remarks are out of order, because I am not discussing any of the actions taken by any Minister of the Crown at all, but discussing strictly the terms of the report of this Committee of Privileges. They say:
"In these circumstances."
What are the circumstances? The circumstances described are that a Select Committee had been set up. It seems to me that they unduly restricted themselves in their recommendation. I am claiming that the Army authorities went far beyond their rights—and there, I admit, I am coming up against the Select Committee—in sending for the hon. Member for Norwood at all. We have to draw one of two conclusions: If the Army is solely responsible for its conduct, if the Court of Inquiry is responsible and no one else, I submit that that discloses a very unfortunate state of mind on the part of the leaders of the Army. It discloses a state of mind of latent hostility to the supremacy of the civilian Parliament. I submit that we must assert that the court of this House is superior to any court established by the Army authorities. If, on the other hand, that interpretation of the position be wrong, if it be that the Army has not acted in this way and has not got that state of mind, then that state of mind is possessed by other people, and if it is possessed by other people it is even more unfortunate, because their personal and public positions ought to have inoculated them against falling into such an attitude as that. I do not wish to make observations which would be out of order or discourteous, but I should have thought that in these days the Members of the Government, and particularly the heads of the Army in this House, ought to be particularly scrupulous to defend civilian rights against usurpations of authoritative power, and I hope that when we have an opportunity of discussing this matter in the future they will be able to set our fears at rest and show that they did not try to invade the Privilege of this House in order to conceal incompetence in their offices.
6.53 p.m.
Mr. Macquisten: I should like to support the hon. Member for South Shields (Mr. Ede) in saying that it would be very unfortunate if this tribunal should be blamed. Those who know history know that this country has never been ruled by the Army since the time of Cromwell, and that there is no body of men more loyal to the civilian power than His Majesty's Army and Navy. The hon. Member for Plaistow (Mr. Thorne) interjected, "What about the Curragh?" but he forgot that in that case His Majesty's Army refused to take part in a civil war, declining to attack the King's friends to oblige the King's enemies, although they were told to do so by a Cabinet of which the right hon. Member for Epping (Mr. Churchill) was one of the leading members.
Mr. Gallacher: What a get-out. You can do better than that.
Mr. Macquisten: Well, that is the history of it. They were entitled to resign their commissions, which they did, very patriotically. I do not blame this tribunal at all. They simply started proceedings and went on. If they had thought for a moment they would have said, "This fellow is a Member of Parliament and we had better walk delicately, like Agag," but they did not. I agree with the hon. Member for Ebbw Vale (Mr. Bevan) that it would have been a breach of Privilege even supposing the other matter had not arisen. Even if there had not been the statement in the House it would have been a breach of Privilege for anybody to use the Official Secrets Act against a Member of Parliament, whether as regards the Army, Navy or anything else, and that is what this Committee of Privileges has found the action to be. I am very glad that it has done so, because it will be an education to everybody in the country as to the position of a Member of Parliament. We do not get these Privileges for our own personal good. They are granted to enable us to do our duty without fear or reproach. The electors will be sufficiently intelligent to elect patriotic Members to Parliament; I think that in most cases they do—even those of them who are most subject to suspicion. I do not think there is a single Member of Parliament to whatever party he may belong who would betray his country.

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Though a slight mistake was made, though a little bureaucratic officiousness led to this unfortunate position, I believe the incident has not been without its value. It has been educative to everybody, including some Members of Parliament, and I think we should accept the Motion which the Government have moved. I am glad to say that the Committee of Privileges were sufficiently impressed to say that they did not blame this tribunal, which just started in the automatic way of these inquiries. "Their's not to reason why"—but to go on and do their duty. The view they took was that there had been a leakage somewhere and they wanted to find out where, and they would use any method to do so which was consistent with the ordinary procedure. With all respect to what the hon. Member for Ebbw Vale said, the tribunal is a court of a kind. I could imagine that if any questions were asked when a court of that kind was sitting the reply would be that the matter was sub judice.
Mr. Bevan: It might be not improper, though it might be injudicious for questions to be asked while the proceedings were going on, but it would not be sub judice.
Mr. Macquisten: It might not be sub judice but it would be sub commonsense.
Mr. Bevan: It has sometimes happened that superior officers have abused their position in the conduct of an inquiry, and justice has been obtained by a Member of this House putting down a question.
Mr. Macquisten: I think the invariable answer of the Minister has been in such cases that the matter is before a court of inquiry and that he is awaiting the result. I believe that this particular inquiry was very largely automatic, in the way that things are
done in the Army, and that no disrespect whatever was intended to the House of Commons, but I think it is a curious thing that the Select Committee was appointed after the first speech of the hon. Member for Norwood (Mr. Sandys) and before the citation from the Court of Inquiry had reached him. I am very glad that the Court of Inquiry had the good sense to adjourn their proceedings when the matter was brought to their notice, and I hope that when the time comes they will find out the definite source of the information, but
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they have no right to cross-examine Members of Parliament, because it savours too much of the inquisition, which is foreign to this country. Why should a journalist, even, who made a smart coup have to give away his authority? It is all wrong. I think that the developments in this case have cleared the air and have been an immense benefit and education to the country, letting people see what the position of Members of Parliament is, and that officers and heads of Departments of State have to leave us to do the best we can in the belief that we are all inspired by the most patriotic motives, doing what we are doing for the good of the country.
7.0 p.m.
Mr. Dalton: We are debating this afternoon, subject to your Ruling, Mr. Speaker, a narrow issue, namely, the Report of the Committee of Privileges. But I think I shall not be out of order if in one sentence I express the hope, encouraged by some observations which fell from you, Sir, at the beginning of the discussion on the scope of the Debate, that a number of wider issues, of which this is a narrow example, will be fully examined by the Select Committee. In particular this issue—how far a Member of the House of Commons, whether or not he be a Territorial officer, is liable to be called at any time before any court outside this House, whether a military or a civil court, in respect of anything which he may have said or done in performance of his Parliamentary duties. That is a wider question, not debatable indeed to-day, but it has been suggested to our minds by this particular case, which has made us feel somewhat less secure than many of us had imagined ourselves to be from interference by external bodies, external courts, whether military or civil, in the performance of what we judge, in the exercise of our reasonable individual discretion, to be our proper Parliamentary duties.
Now I have read with the close attention which it deserves the Report of the Committee of Privileges. I think the Chancellor of the Exchequer is going to say a word or two in a few moments, and he may be able to illuminate in some respects a document which I think is not at all points completely clear. We have already had conflicting interpretations by Members of the Committee themselves of the meaning of one simple phrase con-

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tained in the report. But before I come to that point I should like to dwell on the statement made in the Report of the Committee of Privileges that they could discover no precise precedent for this incident, and that may well be so. I have done my best, reading the relevant chapters of Erskine May, to find there some precise precedent, and I confess frankly that I have failed, as the Committee failed, to find one. But I have found words which go very near to it, as it seems to me. My hon. Friend the Member for South Shields (Mr. Ede) who has taken a most helpful part in these discussions, in which he displayed clarity, humour and knowledge—a combination not always found in speeches either here or elsewhere—drew attention to the Ninth Article of the Bill of Rights:
"The freedom of speech, of Debates and proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament."
It is clear than such courts or places include the Military Court of Inquiry which the right hon. Gentleman the Secretary of State for War has now ordered to desist from its labours. Erskine May, after having quoted this 9th Article of the Bill of Rights, chapter IV, page 107 of the 13th edition, says:
"But although by the ancient custom of Parliament as well as by the law, a Member may not he questioned out of Parliament, yet he is liable to censure and punishment by the House itself."
And I note that in that quotation it is laid down quite clearly by Erskine May that a Member may not be questioned out of Parliament respecting any act that he may perform in pursuance of his parliamentary duties. I should have thought, although the precise circumstances which have now arisen are unique in the sense that there is no precise precedent, that this passage which I have quoted from Erskine May, itself based upon many particular cases, came very near to supplying a formula governing this matter.
I think I shall be in Order—I am desirous, Mr. Speaker, of keeping your Ruling—in making one further comment on this point. The question has been raised whether the Privileges of the House—which in this case have been breached or broken (whichever is the correct word) cover the writing of a letter by an hon.
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Member to a Minister. The 9th Article of the Bill of Rights speaks of "freedom of speech, Debates and proceedings in Parliament." It is, I think, an interesting question for consideration whether, "proceedings in Parliament" are to be interpreted so as to include the writing of letters by Members of Parliament to Ministers. I hope that the words "proceedings in Parliament" are wide enough to cover that. In my judgment they should be. But, if not, then an unfortunate consequence will follow, because then, in order to claim Privilege, a Member must be quite clear that what he is doing comes within the formula "proceedings in Parliament," and if that phrase is to be construed narrowly, the hon. Gentleman the Member for Norwood (Mr. Sandys), in writing a letter to the Secretary of State for War—which, as the right hon. Gentleman complained the other day, was not marked "Secret" or "Confidential"—rather than publishing it in the Press, or using the facts contained therein in a speech in this House, or even putting a question on the Order Paper without consultation with the right hon. Gentleman, may have subjected himself to certain penalties to which he would not have subjected himself had he failed to observe the discretion which he did observe, and had he proceeded, without consultation with the right hon. Gentleman at all, to make a statement from his place in the House in the terms which he used in the letter.
Therefore, I hope the Chancellor of the Exchequer may be able to enlighten us upon this question of legal interpretation. I hope that in regard to these words "proceedings in Parliament," which are enshrined in the Ninth Article of the Bill of Rights and are frequently referred to in Erskine May, he will be able to assure us that they do cover not merely speeches and questions in this Chamber but also communications from Members of Parliament to Ministers. If not, it may indeed be that we shall have to look at the report of the Select Committee somewhat critically from this angle, in order to make sure that we are safeguarded in respect of our communications with Ministers under the seal, if not of a letter marked "Secret and confidential," nevertheless under the seal of ordinary privacy in correspondence.
It is admitted—let us be clear how far there is common ground, and how far

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there are doubts and ambiguities in this report—it is admitted that a breach of Privilege has taken place. Very naturally, the next question that one would ask is the question that has been asked to-day by many speakers—Who is to blame for this breach of Privilege? And it is here that I venture to repeat that this report uses certain words which mean different things to different Members of the Committee. You, Mr. Speaker, at the beginning of to-day's Debate, when giving us your guidance and laying down the limits within which Debate might properly proceed, said that, reading the report, you construed it to mean that the Members of the Military Court had been guilty of this breach of Privilege. At a later stage in the proceedings the right hon. Gentleman the Member for Epping (Mr. Churchill), who was a Member of the Committee, explained that to him the words "without making any reflection on the Military Court" mean that that reflection was to be made on another person unnamed in the report. The right hon. Gentleman the Leader of the Liberal party intimated, I thought, in reply to a question, that that was also his interpretation. The Prime Minister, on the other hand—these are all Members of the Committee; they all sat together and, having heard one another's views, concocted this form of words which they have presented to the House—the Prime Minister explained to us that to him it meant not what it meant to the right hon. Gentleman the Member for Epping, nor what it meant to the Leader of the Liberal party, but it meant that the members of the Military Court had indeed committed a breach of Privilege but it was only a little one.
The Prime Minister indicated dissent.
Mr. Dalton: I do not wish to misinterpret the right hon. Gentleman if he wishes to correct my statement.
The Prime Minister: Perhaps the hon. Gentleman will be kind enough to use the words that I used, not words that I did not use.
Mr. Dalton: Perhaps the right hon. Gentleman will be kind enough to repeat them.
The Prime Minister: I said that to my mind the meaning of the phrase was that they had committed a technical offence but that they had not deliberately intended to affront the House of Commons.
Mr. Dalton: A technical offence, that is to say only a small one. They did not seriously intend to affront the House of Commons—no; but the difference which has clearly revealed itself in the various interpretations of these simple words is that some members of the Committee do and others do not, hold the view that the Secretary of State for War was himself responsible by his acts of omission for this breach of Privilege. We have heard the various explanations, and we shall all vote for the report, and we shall each put upon it the interpretation that best fits our own view of the responsibilities.
So far as the soldiers are concerned, two different views have been put this afternoon. There are some who have said that soldiers are, naturally and properly, simple-minded men who ought not to be expected to know very much about Parliament, and therefore they very naturally fall into error, if not guided by persons of political sagacity placed temporarily in authority over them. On the other hand there are others who say that soldiers, as my hon. Friend the Member for Ebbw Vale (Mr. Bevan) argued, ought at any rate to have a modicum of political understanding to the extent of knowing that they cannot treat Members of Parliament as if they were perpetually junior officers on parade.
Between these two views perhaps the middle view is right, but certainly I do sympathise with the soldiers who have been involved in this matter, in that they have been allowed to drift, through lack of proper guidance, into a situation which has caused them, in the phrase of the Prime Minister, to commit a technical, though not a deliberate, breach of the Privilege of this House. I think it is very unfortunate that they should have been so allowed to drift. I have been reading again this week-end all the statements that have been made and quoted in this House in this matter, and the very first Minute from which all these proceedings arose, the Minute from the General Staff which was quoted in the House on Thursday, 30th June, incidentally observed that it was quite unnecessary to impart such information to a junior officer.
That is a most revealing phrase. I should have thought that there a sagacious politician would have seen the

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red light. "A junior officer"—that is how the hon. Gentleman the Member for Norwood appears to these brass-hatted persons. It is not too much to expect that soldiers will understand that a Member of Parliament who is also a Territorial officer has in this respect two quite distinct aspects. As a Territorial officer he may be only a second lieutenant, but in this House he wears a uniform, mystically speaking, as old as any soldier wears. He wears the same uniform that Hampden and Pym wore in the days when they defended our liberties against more portentous tyrants than those whom we contemplate to-day. And that uniform has been passed down to each of us. We wear it sometimes with breaks, according as our right to that uniform is challenged from time to time in our constituencies; but while we are here—whether or not we should be here, whether or not the electors have been wise or otherwise in sending us here —we are entitled to all the prestige that that uniform confers. Let it be remembered, as has been said already by one of my hon. Friends, that the most junior Member in this House ranks above the most senior General and is able to send him about his business at any time without much ceremony by withholding consent to the provision made under the Army Act for paying him or, under the Army and Air Force Annual Act, for permitting him to maintain discipline.
I do not greatly complain that military men, with their minds preoccupied with the sad neglect by the Government of the national Defences which they must all deplore, should not have much time to reflect upon these constitutional proprieties. For that reason I do not quarrel with the words used in the report:
"without making any reflection upon the Military Court,"
because I have put my own interpretation upon the phrase. When we have accepted, as I think we shall unanimously, this report, I hope that it will be clear, as I think it has been made clear by a number of speakers in this Debate, that the Report and its acceptance by the House this afternoon do not exculpate from responsibility, and grave responsibility—debatable, under your Ruling, upon another occasion—those politicians who should have given guidance to these simple soldiers, and who failed in their duty to do so.
7.17 p.m.
The Chancellor of the Exchequer (Sir John Simon): There is every indication that the House is prepared to accept unanimously the report of the Committee of Privileges and therefore to accept the Motion which the Prime Minister made from this Box some hours ago. The observant foreigner, if such there be in the Gallery, may conceivably ask himself why we should occupy three or four hours of time discussing a matter with which we are all agreed; but, as a matter of fact, we have been touching upon a corner of things which is of enormous value. Although a good deal of the time has been occupied necessarily in ascertaining at what point some speeches transgressed the limits set to the Debate, even within the limited sphere I agree with those who think that the matter is of great Parliamentary importance.
I do not intend to reopen subjects of controversy, but perhaps I might, for the purposes of record, make one or two observations in a few words. In the first place, when we talk about the business of the Court of Inquiry about which one or two speeches have been made, perhaps it is as well to remind hon. Members, and to put on record, that what is involved in a Court of Inquiry under the King's Regulations is a perfectly ordinary procedure, entirely necessary, which is adopted in a great number of cases when something has gone wrong for which the Army authorities are responsible. There is no accused before a Court of Inquiry and there is no indictment against anybody, and whatever transpires cannot be made the basis of an incriminating charge. In this case, the Court of Inquiry manifestly arose because of a matter which must be regarded as of importance, namely, that it appeared that military secrets, which we are told are of very great importance and extreme secrecy, had not been kept secret by those to whom they had been entrusted.
We ought to recognise that it was perfectly natural that there should be a Court of Inquiry, but different views have been expressed in the Debate as to whether in the circumstances it was right to hold the Court of Inquiry there and then. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) took the view that, circumstances being what they were because of things that

1009
arose here in the House, it would have been much better not to set up the Court of Inquiry until all that was finished. [Interruption.] Is that not right?
Mr. H. Morrison: I attempted to make that point clear, but the procedure laid down would not allow me to develop it.
Sir J. Simon: I do not think I misrepresented his views, but, at any rate, the hon. Member for South Shields (Mr. Ede) took the view to which I referred, namely, that the Army Council have a duty to inquire into the leakage. I should have thought that was natural. At any rate, they did.
Mr. Ede: The right hon. Gentleman will no doubt do me the honesty and the credit to remember that I said that they ought to have inquired into the other side of the leakage, and not that of the hon. Member for Norwood. I was very careful to limit it to that.
Sir J. Simon: Certainly, and I hope that nothing I have said fails to represent honestly and simply what was said by the hon. Gentleman. He took the view, and I share it, that, the leak having taken place—as we are told, a serious leak, although I know nothing about it myself—the Army Council said: "We cannot delay about this. We must inquire."
Sir A. Sinclair: On a point of Order. Is not that just the point which we have been debarred from discussing this afternoon, namely, whether it was the duty of the Army Council to order a Court of Inquiry? That was what we tried to discuss and have been prevented from discussing.
Mr. Speaker: If the Debate goes on, I shall continue to prevent it.
Sir J. Simon: I am very sorry if I appeared to traverse your Ruling. I think it is within the recollection of the House that I was merely calling attention, I hope non-controversially, to two points of view which have been expressed in the Debate.
Mr. H. Morrison: I only tried to remind the right hon. Gentleman—[Interruption.] If hon. Members want a first-class row we are quite ready for it—and to point out to him that, while he is quite entitled to refer to my statement, I was stopped from advancing into the territory as to whether the Court of Inquiry
1010
ought or ought not to have been appointed, and that it was a little difficult if my uncompleted argument were to be debated by the right hon. Gentleman.
Sir J. Simon: I am very sorry indeed—
Mr. Speaker: I did not stop the right hon. Gentleman because it was obvious that he was merely replying to some statements that had been made by other hon. Members.
Sir J. Simon: I am sure that I did not mean to go outside your Ruling. I thought that it was legitimate, and perhaps a little useful, for me to remind hon. Members of the nature of a Court of Inquiry. Really, I have not any deeplaid plot about what I was saying. The hon. Member for Ebbw Vale (Mr. Bevan) raised the question of whether this should not be called a judicial proceeding. It is not for me to say. I should have thought that it was very much in the same general category as the sort of inquiry which is set up by, say, the Minister of Health or other administrative bodies. I think it has been the common practise in this House that when an inquiry of this nature has been set up, say about Croydon, to treat it, until the inquiry is over, as something which should not be interfered with by administrative action.
Mr. Bevan: In that kind of case there is no prohibition from the Clerks at the Table upon hon. Members putting down questions on the Order Paper, arising out of what the committee is inquiring into, and the Minister merely says that as an inquiry is going on he does not propose to act. It is his alibi and not our prohibition.
Sir J. Simon: It does not really call for controversy. I was endeavouring to state what I believed to be the true position. I should have thought there was a distinction between that kind of inquiry and a court martial. I should have thought it a most unhappy practice if we affected the result of an inquiry, which ought to be conducted in a semi-judicial spirit by saying: "Whether there is an inquiry going on or not, we propose to interfere with and challenge it at any moment."
You have laid it down, Mr. Speaker, that we ought not to discuss at this pre-

1011
sent time whether a Court of Inquiry should have been set up, and further that we cannot in this Debate discuss the responsibility of the Secretary of State. I must say, Sir, that I think it very unfair on the Secretary of State if the implication be anywhere suggested that because he does not take part in this Debate we should treat him as endeavouring to shirk his responsibility. My right hon. Friend has one of those characters and records which no doubt attract criticism, but I should have thought that the last thing which could be said about him was that he was not prepared to show courage and to face the music. There is a perfectly good reason why he should not take part in the Debate to-day, the same reason which was put forward by my hon. Friend the Member for Norwood (Mr. Sandys) who interposed only in a sentence. He gave as his reason that the Debate was on a strictly limited point, which is the breach of Privilege which has been investigated by the Committee of Privileges and that as he—and this equally applies to my right hon. Friend the Secretary of State for War—was giving evidence before the Select Committee it would be improper for him to speak in to-day's Debate. Undoubtedly my right hon. Friend will have his part to take, and surely he will take it, when we discuss the Report of the Select Committee. With very great respect, I do protest, as a colleague, against such an imputation, taken in good part here but easily misunderstood outside, that the Secretary of State for War was sheltering himself, under the ruling of the Chair, behind his subordinates.
The report makes it exceedingly plain that the matters which the Committee of Privileges had to decide were very narrow ones. Every Committee of Privileges examines the complaint as that complaint is brought to the notice of the House of Commons. As a rule, it is the complainant who brings to the attention of the House the matter which he thinks is a breach of Privilege, and in dealing with it you, Sir, have to decide not that it is a breach of Privilege but to rule that at first sight, prima facie, a question of Privilege seems to arise. The hon. Member for Norwood was perfectly clear, and in what he regarded as the interests of fairness and justice he came forward here and said: "This is the question of
1012
Privilege which I suggest arises." He said, in the terms of the report, that a military Court of Inquiry had summoned him to attend. There can surely be no manner of doubt, when the Committee of Privileges reports that in its view there has been a breach of Privilege in this regard, that it was a breach of Privilege created by the giving of that order by that military Court of Inquiry. That is exactly the position as I understand it, in the works which the report of the Committee uses.
Mr. Burke: May I ask the right hon. Gentleman a question on that point? Did the breach of Privilege occur through the hon. Member for Norwood (Mr. Sandys) being summoned, as is indicated in this report, or, as is intimated at the end of the report, through his being summoned at the particular time? Is it a breach in respect of the time or simply in respect of the summoning of a Member of Parliament?
Sir J. Simon: That, again, I think, is clear from the language of the report. It is not for me to interpret the document, but the complaint was a complaint by my hon. Friend of an order by a military Court of Inquiry summoning him to appear before it, and my recollection is that when my hon. Friend told the House what had happened, he naturally connected it with the matter to which he had previously called attention. Be that as it may, the report of the Committee of Privileges is plain enough. It says:
"In these circumstances, without making any reflection upon the military court, it appears to us that the summons to the hon. Member for Norwood might well appear to be an attempt to induce the hon. Member to give certain information at a time when the House was proposing to set up a Select Committee to consider among other things the propriety of the hon. Member being asked to give such information."
For my own part, I cannot doubt that, when this particular Report of the Committee of Privileges, if it is adopted by the House, enters into our records, and the subject is referred to in subsequent editions of standard books on the subject, that paragraph will be the valid paragraph.
With regard to the phrase:
"without making reflection upon the military Court,"
the Prime Minister has twice stated his understanding of the matter. I was not

1013
a member of the Committee, but it certainly appears to me that the explanation which the Prime Minister gives is the one which would appeal to any thoughtful person who reads the report and gives it its fair value. It never would have occurred to me, and I say this with great respect to anyone who suggests the opposite, that any member of this Committee assenting to these words:
"without making any reflection upon the military court."
was really engaged in a covert slap at someone else who was not mentioned. If, indeed, that is what he meant to do, I venture to say that he ought to have secured some amendment of the report. I do not believe that the House of Commons would accept for a single moment an interpretation of these words which was understood to be in the nature of a censure upon any hon. Member of this House. That, however, is a matter for the future—
Mr. Churchill: That matter is not for the future. This Debate deals specifically with the Report of the Committee of Privileges; that is what we are discussing naw; and certainly I myself, when I heard that it was proposed to insert these words exonerating the military Court, naturally came to the conclusion that it remained open to the House in debate to search further for the person upon whom the breach of privilege censure alighted.
Sir J. Simon: I am convinced that my previous statement was right. I do not believe that the House of Commons as a whole would countenance putting forward words in a Committee Report of this sort exonerating the very body against which the complaint was made—[HON. MEMBERS: "No!"]—not exonerating, but saying that no reflection was made upon it—I do not believe that the House of Commons as a whole would willingly accept the interpretation that that was a covert slap at someone else who was not mentioned.
We shall have Debates on the wider aspect of this matter later on, and I feel very certain that all who desire it will have the opportunity of taking part in those Debates; but, so far as to-day is concerned, I am very glad that to this extent we have made more definite and precise one of the ancient privileges of this House, which is none the less ancient
1014
because an instance has not happened before. I agree with the very eloquent words of the right hon. Gentleman the Member for Epping (Mr. Churchill) at the end of his speech, when he said that this is a lesson to some other systems in that it shows that in this country we do understand how to preserve Parliamentary liberty.
Question put, and agreed to.
Resolved, nemine contradicente,
"That this House doth agree with the Report of the Committee of Privileges."

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

    NEW CLAUSE.—(Deduction in respect of children over sixteen undergoing training.)
    (1) Section twenty-one of the Finance Act, 1920 (which provides for a deduction in respect of children over the age of sixteen receiving full-time instruction at an educational establishment), shall have effect as if the references in Sub-sections (1) and (2) thereof to a child receiving such instruction included references to a child undergoing training by any person (hereafter referred to as "the employer") for any trade, profession or vocation in such circumstances that—

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

    (b) while the child is undergoing the train
    ing, the emoluments, if any, receivable by the child, or payable by the employer in respect of the child, 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, where a premium has been paid in respect of the training of a child, all emoluments at any time receivable by the child, or payable by the employer in respect of the child, 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.

    (2) 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.
    (3) 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.—[Sir J. Simon.]
    Brought up, and read the First time.
    7.36 p.m.
    Sir J. Simon: I beg to move, "That the Clause be read a Second time."
    This Clause provides for a deduction in respect of children over 16 who are undergoing training. I do not at the moment see the hon. Member for Leigh (Mr. Tinker) here, but some of his friends are here, and I know they will confirm me when I say that it was he who, during the Committee stage, raised this question, and, indeed, he has raised it before. There is already in our Finance Acts a provision by which a deduction can be allowed for children who are undergoing educational training—not only literary training, but also training in a technical school; but hitherto it has been thought to be impossible to extend that so as to cover those who are going through a system of apprenticeship. The hon. Member for Leigh and some other hon. Members on both sides of the House have urged for some time that this should be done. I looked into it both before and after the Committee stage, and came to the conclusion that it could be done, though it is very important that I should repeat that I cannot consider this as a starting point for all sorts of other concessions which might seem to be analogous. I believe that the words as they are now drawn—almost exactly the words proposed by the hon. Member for Leigh—will do what is wanted, and I am very glad indeed to have the opportunity of moving this Clause and at the same time of acknowledging the fact that he and other hon. Members in different parts of the House have been pressing for it for some time.
    7.38 p.m.
    Mr. T. Smith: It is true that my hon. Friend the Member for Leigh (Mr. Tinker) and others have for years been urging the acceptance of some such Clause as this, and during the Committee stage of the Bill the right hon. Gentleman undertook to see whether, between that stage and now, he could find suitable words to embody what my hon. Friend had in mind. A cursory glance at the language of the Clause suggests that the point has been met, and we thank the right hon. Gentleman for his action.
    7.39 p.m.
    Sir Percy Harris: I desire to join in congratulating the right hon. Gentleman on having made this concession. The
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    Clause as it now appears is complicated and involved, but that, of course, shows that it is designed really to achieve its purpose. It may come as a surprise to intelligent foreigners that, at a time of great financial pressure, when naturally the Chancellor is 10th to lose any revenue, however small, we can deal with a very real problem. One of our troubles at the present time is the decline in the practice of apprenticeship, owing to the temptation to parents. when money is short, taxes are high, and employment is irregular, to take the line of least resistance and put a boy or girl into an occupation which will bring money into the home. This Clause is more than the mere words; it is a message to parents. Not only are they to be encouraged to keep their children at school as long as possible, but, alternatively, to put the child into some occupation that will not only be for the child's ultimate good but for the advantage of the State—because it is an advantage to the State that we should have skilled labour. I understand that this will not involve a great loss of revenue, but it is a kind of concession that will be appreciated in thousands of homes, and I think the right hon. Gentleman should have every credit for making it.
    7.41 p.m.
    Sir Joseph Nall: I am sure that this concession will be very greatly appreciated. It will be welcomed in particular because it will do something to remove, if only in a small way, the invidious distinctions which so often exist between sedentary occupations and craftsmanship which requires some form of manual labour. There never was a time in our history when it was more necessary to encourage young people to accept training in craftsmanship and matters requiring manual skill, and, if only for that reason, the change is to be welcomed.
    7.42 p.m.
    Mr. A. Jenkins: I desire to join with other speakers in expressing satisfaction that the Chancellor has made this concession. We are all indebted to my hon. Friend the Member for Leigh (Mr. Tinker) and those who have joined with him in putting forward this proposal from year to year. It is true that it has taken a long time to get the concession, but this year we have go it, and we are grateful to the Chancellor for it. As has been

    1017
    said by the hon. Member for Hulme (Sir J. Nall), it will do away with the distinction between the different types of education that we have in this country. Hitherto the technical schools have been separated from the secondary schools, and this will have the effect of putting the different kinds of schools on a more equal basis and giving a higher status to the technical school than it has hitherto possessed. In addition, it will be to the advantage of the State, because more and more children will enter into some form of technical education and apprenticeship, which will be to the advantage of craftsmanship in this country. It will be of great advantage to the parents, the children, and the country as a whole.
    7.44 P.m.
    Mr. H. G. Williams: In connection with, I think, four Finance Bills, I have been associated with hon. Members on my own side in tabling a new Clause with the intention of this one, and I should like to join in the chorus of praise to the Chancellor of the Exchequer for having at last agreed to do something. As I read the Clause, he has done it well. Naturally, it will involve him in a certain amount of expenditure, but, in one sense, the more expenditure in which it involves him the better it will be in the long run for the nation. One of the problems with which this country is faced is a shortage of highly trained people for the specialised tasks of industry, and anything which encourages an increase in these higher forms of training is very desirable. I rejoice beyond measure that at last this concession has been made. It is an encouragement to those of us who from time to time put down new Clauses to solve various problems. We know that they are a form of propaganda the first time we do it, and we live in the hope each year that the Chancellor will pick out one or two of us for promotion. One question I would like to ask the Chancellor. There may be a simple answer to it, but it would be well to have it on record. The first word in line 25, is "surveyor." The surveyor, I take it, is the officer of the Inland Revenue known as the surveyor of taxes. That used to be the title of the gentlemen to whom we made our returns, but now I understand they are known as inspectors.
    7.46 p.m.
    Mr. G. A. Morrison: As one interested in education, I would like to join in the
    1018
    chorus of congratulation. I have always supported this proposal when it has been made from the other side by the hon. Member for Ince (Mr. G. Macdonald) or the hon. Member for Leigh (Mr. Tinker), because I never could see why one form of education should have preference over others. This concession will give to one of the many forms of education the prestige which we all think it should have.
    7.47 P.m.
    Sir J. Simon: With the leave of the House, may I just say, in reply to the question by my hon. Friend, that the word "surveyor" is really the right one. Section 27 of the Income Tax Act, 1918, designates this official as the "surveyor," although it is quite true that he is in ordinary parlance now known as the inspector of taxes. This proposal is not inexpensive. I am afraid that in a full year it is likely to cost £100,000.
    Question, "That the Clause be read a Second time," put, and agreed to.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Amendment as to appeals under Schedule B in the case of nurseries and gardens.)
    Where the profits arising from lands occupied as nurseries or gardens have, in pursuance of Rule 8 of the rules applicable to Schedule B, been estimated according to the provisions and rules applicable to Schedule D but assessed under Schedule B, an appeal against the assessment may be made to the Special Commissioners instead of to the General Commissioners under Section one hundred and forty-eight of the Income Tax Act, 1918; and accordingly Subsection (1) of that Section shall have effect as if the following paragraph were inserted immediately after paragraph (b) thereof:
    "(c) an assessment under Schedule B made in pursuance of Rule 8 of the rules applicable to that Schedule."—[Sir J. Simon.]
    Brought up, and read the First time.
    Sir J. Simon: I beg to move, "That the Clause be read a Second time."
    This is to deal with a defect, or, at any rate, an inconsistency, in the present Income Tax code, which I think, we should agree to remedy. Market gardeners are charged to Income Tax under a particular rule of Schedule B, according to the rules of Schedule D, that is to say, on their profits. In other cases, persons who are assessed for tax under Schedule D

    1019
    have the choice as to whether they shall appeal to the general commissioners or the special commissioners. At present, by a curious operation of the Section, market gardeners, although assessed according to the rules of Schedule D, have no such right of appeal to the special commissioners, but only to the general commissioners. One question that arises from time to time is as to whether certain people are market gardeners. It is very desirable that there should be uniformity in decisions on this question. If you simply compel them to appeal to local commissioners, you may get different interpretations in different parts of the country. On the other hand, if they may appeal to the special commissioners, you may get uniformity. I have reason to believe that this will be welcomed by market gardeners; in fact, I have had a communication pointing out that the law was very hard in this respect—and although it is a mere matter of machinery, and not of very great importance, I hope the House will agree to this Clause.
    7.50 p.m.
    Mr. Bellenger: I take it that if the House accepts this Amendment market gardeners will continue to be assessed under Schedule B, with the qualification that they might be assessed also under Schedule D, and that the only difference this will make is that they will have the right to appeal to the special commissioners.
    Sir J. Simon: That, I think, is right; but I must be entirely clear. These things, as the hon. Member knows, are sometimes very confusing. Really they are assessed under Rule 8 of the Rules applicable to Schedule B.
    7.51 p.m.
    Mr. Pethick-Lawrence: This is obviously a technical question, which had better be put right. Have these people the option as to which commissioners they may appeal to?
    Sir J. Simon: Yes, they have the option.
    Mr. Pethick-Lawrence: I have nothing further to say. It is a matter of small technical adjustment.
    Question, "That the Clause be read a Second time," put, and agreed to.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Limitation of the amount of investment income to be included in profits of certain assurance businesses.)
    (1) In the case of any assurance business to which this Section applies carried on by a body corporate, the amount of income arising from investments or other property to be included, by virtue of paragraph 7 of the Fourth Schedule to the Finance Act, 1937, in the profits of the business for any period for which the accounts of the business are made up shall not exceed such a sum as bears to the investment income the same proportion as one-and-a-half times the net premium revenue bears to the value of the investments.
    (2) In this Section, in relation to any such business and any such period—

    (a) the expression "investment income" means the aggregate amount of income arising from investments and other property which would, but for this Section, have been included in the profits of the business for that period by virtue of the said paragraph 7;

    (b) the expression "net premium revenue" means the aggregate amount of the premiums received, less any re-insurance premiums paid, for the purposes of the business in that period or, in a case where the period is less than twelve months, a sum which bears the same proportion to that amount as twelve months bears to the length of that period; and

    (c) the expression "value of the investments" means the average value over that period of all the investments and other property held in that period by the body corporate, other than investments and property held in connection with any assurance business to which this Section does not apply.

    (3) This Section applies to all assurance business, except life assurance business within the meaning of the Assurance Companies Act, 1909, and capital redemption business as defined in Sub-section (3) of Section twenty-five of this Act.
    (4) In relation to any such period beginning before the first day of April, nineteen hundred and thirty-eight, references in this Section to income arising from investments and other property shall be construed as not including income so arising before that date.—[Sir J. Simon.]
    Brought up, and read the First time.
    7.52 p.m.
    Sir J. Simon: I beg to move, "That the Clause be read a Second time."
    This Clause sets out, in what I think is the correct form, a change that I mentioned on the Committee stage. I am glad to see the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick Lawrence) opposite. He will recall the matter being raised in Committee. It is necessarily a little technical, although

    1021
    the principle involved is simple. National Defence Contribution is collected from the profits of business. It is not gathered from the profits on investments. To take an instance, the co-operative societies have investments, and very big ones, but nobody suggests that the Contribution shall be gathered from the interest on the investments. Manufacturing or distributing firms very often have, as everybody knows, quite substantial investments, and they bring the profits of those investments into their general accounts, but for the purposes of the National Defence Contribution they are excluded, because the principle is that the Contribution is levied on the profits from business. But there are certain kinds of business where the making of investments is the actual business. It is so in the case of the banks. It would be illogical to say, "The banks are liable to pay National Defence Contribution, but their investment income is excluded." In the same way, you have investment income of certain financial houses, to take another example, life insurance companies, none of which could carry on business at all except with investments.
    I have been considering whether it is entirely fair and logical to treat all insurance companies as being in the same position as life insurance companies. I have come to the conclusion that we ought to make a slight adjustment. At one time the advocates for the fire, accident and other non-life insurance companies went so far as to contend that their investment income had nothing to do with the matter. I have always resisted that claim. I do not think the House of Commons will accept the view that a fire insurance company or an accident insurance company would get on at all without investments. But it is true to say—and I have looked into this matter closely—that some of these insurance companies really have investments which are in excess of what are strictly to be regarded as falling within their ordinary business reserves. You cannot get the figure mathematically and reach a conclusion. You must take a practical point. I think the practical point which I submit that the House should be prepared to accept is that stated in this Clause.
    On the Committee stage my hon. and gallant Friend the Member for Clitheroe (Sir W. Brass) urged that so long as you took as much of their investments
    1022
    as was equal to 100 per cent. of their premium income you were taking as much as you should. I have looked into the matter and I do not think so. I am prepared to put the figure at 150 per cent. That will undoubtedly mean that all the old companies, which have very large investments, will get a certain relief.
    I regard this case, as I have said before, as falling rather betwixt and between the two classical cases which are easy to deal with. On the one hand, you have taxpayers paying the National Defence Contribution simply on the basis of the business profits, and investments do not come into it at all; and, on the other hand, you have purely investment concerns, like banks, where you must include the whole of their investments, whether they be much or little. These companies stand in rather a middle position, and I am prepared to make this concession, provided that 150 per cent. is the figure accepted. I well understand that these enterprises would like a bigger concession, but I am not prepared to give that. I hope that this will end the controversy.
    Mr. Bellenger: Has the Chancellor estimated the amount that he will lose in revenue by this concession?
    Sir J. Simon: Probably in a full year it may mean something like £150,000, remembering of course, that I get something back again, because I save the Income Tax on it.
    7.59 P.m.
    Mr. Pethick-Lawrence: I have never been particularly enamoured of the National Defence Contribution. It has seemed to me to be rather a hit-or-miss business. Certain people are exempt. Some of them, perhaps, on an equitable theory should be exempt. But very often a whole class is exempt, and some of that class are the very people who should be called upon to pay. On the other hand, there are sections of people who are brought under the scope of this contribution, and it may be that, taking the class as a whole, they are fairly dealt with, but others in that class, a small minority, are very unfairly dealt with. I have always taken the view that a small extra Income Tax would be much better than this large hit-or-miss hazard of the National Defence Contribution. But having said that, I can quite understand the appeal which has been brought

    1023
    to the Chancellor of the Exchequer to make the concession in this case, and I think there is some justice in that appeal. I think there are also a number of other cases where a concession ought to be made, and I hope the Chancellor of the Exchequer will accede to the one I am able to put before him. I do not think my right hon. Friend would like to make a case against this proposal, although it is making a very large concession to a section of society fully capable of looking after themselves if it can be defended as a just policy, and I will not vote against it. But it does not remove my general feeling that it is a very unsatisfactory method of taxation, and all that the Chancellor can hope to do is to try and make a rough equity between a number of people some of whom are particularly fortunate and might be expected to pay a heavy contribution, while others are very unfortunate and actually in some cases are being mulcted in this particular burden.
    Mr. Gordon Macdonald: I am rather sorry that the Leader of the Opposition has decided not to divide on the issue. For myself I should have much preferred to divide. I have only one thing to say, that this is a class of people who do not need any concessions from the Chancellor. They can well afford to pay what they are paying and are not suffering any injustice. But I will follow the Leader of the Opposition.
    Sir John Mellor: May I ask the Chancellor of the Exchequer if he will give some indication of the process of reasoning by which he arrives at 150 per cent. of the premium income as being the correct figure?
    8.4 p.m.
    Mr. MacLaren: I want to say that I do not think the Chancellor should have made any concession at all. We have information of what went on at Cardiff the other day, of the enormous investment in the rising land values of this country. The insurance companies have most of them their funds invested, and, indeed, they aid and abet by this form of investment the enormous speculation in the land values of this country. Surely if any people should be asked to pay to the full for the defence of the country, it is the people who are taking advantage of the
    1024
    growing value of the land which comes to them under the guise of investment? Really there are times when the Chancellor is adamant to all sorts of appeals, but this is one where he has been weak and has bent the knee too readily. I am asking whence do they derive their enormous investments, and I say that if the country wants more money for defence, I would go to the insurance companies and demand 100 per cent.
    8.6 p.m.
    Sir J. Simon: Frankly, I first of all considered the need of the case, and, secondly, I ascertained the figures connected with the income of the companies through my original correspondents. I found that the unexpired risks on the current premium could safely be taken at, say, 40 per cent. of the premiums, and the liabilities for claims notified but as yet unsettled, at 35 per cent., making 75 per cent., and I think provision must be made for exceptional cases and some catastrophic risks so that I thought it right to double the figure. I cannot make a precise calculation.
    Question, "That the Clause be read a Second time," put, and agreed to.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Extension of time for making certain claims for purposes of national defence contribution.)
    Paragraph 12 of the Fourth Schedule to the Finance Act, 1937 (which enables an individual to claim, within one month from the end of a chargeable accounting period, that he shall be treated as respects that period as if he were a company for certain purposes of the national defence contribution), shall have effect and shall be deemed always to have had effect as if the following sub-paragraph were substituted for sub-paragraph (2) thereof—
    "(2) Any claim under this paragraph shall be made by notice in writing to the Commissioners of Inland Revenue within six months from the end of the chargeable accounting period in question, or such longer time as the Commissioners may in any case allow."—[Captain Wallace.]
    Brought up, and read the First time.
    8.7 p.m.
    The Financial Secretary to the Treasury (Captain Euan Wallace): I beg to move, "That the Clause be read a Second time."
    This Clause extends the time limit within which a firm may claim, for the purpose of National Defence Contribution,

    1025
    to be treated as if it were a director-controlled company in order to obtain an allowance for "directors' remuneration." The present time limit of one month after the end of the chargeable accounting period is extended by this Clause to six months, or such longer time as the Commissioners of Inland Revenue may allow. This limit has been found to be unreasonable, and as a matter of fact it has not been enforced in practice. The Clause carries out a promise which my right hon. Friend the Chancellor of the Exchequer made earlier this year to a deputation of the Association of British Chambers of Commerce. They said that whilst they recognised that the provision was not being enforced by the Inland Revenue, they were anxious to have some statutory confirmation of the existing practice, and the Chancellor of the Exchequer agreed that this was not unreasonable.
    The House will appreciate that this option, like most options in this world, is double-sided; where either an individual or individuals in partnership avail themselves of the option referred to in this case, their firm becomes chargeable to National Defence Contribution as a body corporate instead of as a private business and therefore comes under the higher rate of 5 per cent. applicable to bodies corporate instead of the 4 per cent. applicable to private businesses. When the existing provision was put in last year's Finance Bill it was thought that it would be reasonable to ask firms to exercise this option at the end of one month from the conclusion of the accounting period, but the Commissioners of Inland Revenue, who are always anxious not to exact the uttermost farthing but to see that the taxpayer, large or small, gets a fair deal, realised that if the taxpayer had to make his decision at the end of such a short period he might not have time to make a proper choice; and it was therefore decided not to enforce the provision strictly. The present Clause makes the six months statutory, and indeed goes further than was suggested by the deputation by saying that the time limit may be even longer if in a particular case the Commissioners so decide.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Extension of relief in respect of Land Tax.)
    Section twelve of the Finance Act, 1898 (which, as amended by Section sixty-three of the Finance Act, 1920, and Section fifty-four of the Finance Act, 1927, provides that if, before land tax is paid, the owner of the land produces a certificate that his income does not exceed one hundred and sixty pounds or four hundred pounds, the
    whole or one-half of the tax, as the case may be, shall not be collected), shall be amended by inserting immediately after Subsection (1) thereof the following Sub-section:
    "(1A) Where any such owner, who has paid or borne land tax for any year for which that tax is assessed, produces any such certificate as aforesaid to the collector of land tax not later than the end of the twelve months next following the end of that year, he shall be entitled to be repaid such amount of the tax so paid or borne by him as would not have been collected if the certificate had been produced before the tax was paid."—[Captain Wallace.]
    Brought up, and read the First time.
    8.9 p.m.
    Captain Wallace: I beg to move, "That the Clause be read a Second time."
    This Clause is put down in accordance with a promise given in the course of the Committee stage Debate to my hon. Friend the Member for Twickenham (Mr. Keeling). Briefly the object is to amend the existing Land Tax law (which contains no provision for repayment) by allowing repayment to be claimed in one particular class of case, that is the case of the person who by reason of his total income not exceeding £400, or not exceeding £160, is entitled either to a partial or a complete exemption from the land tax. Under the existing law he must claim this exemption or relief before the land tax is paid, but this Clause will enable him to get repayment of the tax if he proves his title within 12 months of the land tax year of assessment in question. The House will appreciate that this Clause has very much the same purpose as the last new Clause which I moved on behalf of my right hon. Friend, and that is to see that we do not by means of unduly onerous administrative machinery deprive the taxpayer of some proper advantage which he might otherwise obtain.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Charge of national defence contribution not to apply to housing associations.)
    As from the first day of April, nineteen hundred and thirty-eight, Section nineteen of the Finance Act, 1937 (which relates to charge of national defence contribution), shall not apply to any society or company which is a housing association as defined in Section one hundred and eighty-eight of the Housing Act, 1936, and Section twenty-five of the Housing (Scotland) Act, 1935.—[Mr. Pethick-Lawrence.]
    Brought up, and read the First time.
    Mr. Pethick-Lawrence: I beg to move, "That the Clause be read a Second time."
    I propose to move two Clauses standing in my name and that of some of my colleagues relating to housing associations. Now housing associations are bodies that have achieved a great deal of public benefit during the period of their existence, and that public benefit has been recognised by several Members of the Government and in fact by a very large number of people who have studied this question up and down the country. The present Minister for Air, when he was Minister of Health, spoke as follows:
    "These associations are playing an increasing part in the national housing campaign, and their numbers, I am glad to see, are increasing. Their work is not to be measured solely or even mainly by their housing operations. They help to keep alive public interest in housing. They serve as a focus for voluntary effort, and being less restricted than local authorities they are able to undertake pioneer work and experiments."
    Viscount Gage, speaking for the Government on a recent occasion, said:
    "I should like to pay a tribute to the work of these associations and say we should regret it if their activities were curtailed."
    Finally, the present Chancellor of the Exchequer used these short but impressive words:
    "The good work done by these authorities is gladly recognised."
    The essence of the case that I have to put before the Chancellor of the Exchequer to-night relates to the special limitations which are imposed upon the dividends that these housing associations are entitled to distribute, and it is in connection with Section 188 of the Housing Act, 1936, so far as this country is concerned, and of Section 25 of the Housing (Scotland) Act, 1935, so far as Scotland is concerned, that a housing association means:
    1028
    "Any society or body of trustees or cornpany established for the purpose of, or amongst whose objects or powers are included those of, constructing, improving or managing, or facilitating or encouraging the construction or improvement of houses for the working classes,"—
    and these are the essential words—
    "being a society, company or body of trustees who do not trade for profit or whose constitution or rules prohibit the issue of any capital with interest or dividend exceeding the rate for the time being prescribed by the Treasury, whether with or without differentiation as between share and loan capital."
    The rate prescribed at the present time is five per cent. When we were discussing the recent Amendment I reminded the Chancellor of the Exchequer, and I thought he was rather inclined to agree, that the National Defence Contribution was something of a hit-and-miss procedure, and that what he had to do was to make it as reasonable and equitable as circumstances would permit. In pursuance of that general principle, the Chancellor of the Exchequer, when the proposal was originally put forward, decided to omit from the scope of its operation the public utility societies on the ground that there was a certain limitation imposed by the State upon the profits that they could make. The facts have been brought before the Chancellor of the Exchequer, and it was shown that perhaps the limitation are not quite so great as the Chancellor of the Exchequer at one time supposed.
    What seems to be peculiar is that these housing associations, whose profits are strictly limited—and the amount of 5 per cent. is the Treasury's own figure of limitation—and who contribute to the public welfare by providing better, more suitable and cheaper houses, are not included in the term of public utility society. So far as the National Defence Contribution is concerned, the housing association is mulcted to the full extent. The particular point is that many of these societies are distributing 5 per cent. at the present time, and any relief given to them would not therefore be given for the benefit of their shareholders, but would inure to the improvement of the houses, the cheapening of the rents, and to the general advantage of the community.
    I would not go as far as to say that there are no societies which may be failing to reach their maximum dividends with regard to which there might not be

    1029
    a benefit to the shareholders, but, in the main, the benefit of this remission, if the Chancellor of the Exchequer is able to give it, will inure to the benefit of the community as a whole. These being the broad facts, and as the Chancellor of the Exchequer told us with regard to the previous Amendment that he is anxious to do, as far as is possible within the rough-and-ready method of this particular tax, reasonable justice and to adopt an attitude that is consistent with general equity for the benefit of the community as a whole, I hope very much he will see his way to grant this concession.
    Mr. Deputy-Speaker (Sir Dennis Herbert): Before the right hon. Gentleman concludes his remarks, I ought to call his attention to his next new Clause on the Paper which deals with a similar point. Therefore, if the right hon. Gentleman proposes to ask me, in the event of this new Clause not being accepted by the House, to call the other one, I shall have to put it to the House merely for a decision without further remarks.
    Mr. Pethick-Lawrence: If that is your Ruling, I would say that, if the Chancellor of the Exchequer can see his way to meet me over the present proposed new Clause, I shall not feel it incumbent upon me to move the second Clause, which deals with another relief for the -same people. If it is your pleasure that I should say a few words on the second Clause I will proceed to do so. If the Chancellor of the Exchequer, as I hope may not be the case, is unwilling to make a concession on this Amendment, I should propose to move the second new Clause in my name and that of my hon. Friends. The only point with regard to that Clause that I have not already covered is that the proposal relates to Income Tax and not to National Defence Contribution. There should be a reduction of Income Tax on the amount that is put to reserve. That is really the part of the profits of the association which goes to the improvement and cheapening of houses for the working people. Therefore, it would be a concession not to shareholders, but one to the advantage of the housing of the people of this country.
    If the Chancellor of the Exchequer is unable to meet us over the National Defence Contribution, I hope that he will see his way to meet us over the second Clause relating to Income Tax. I will
    1030
    not make reference to Sub-section (2) of the second proposed new Clause. It is purely a technical matter, which, I am sure, the Chancellor of the Exchequer will understand, and I do not think that it would be of interest to the House to go into it at length. Broadly, the second Clause relates to the remission of Income Tax on that part of the profits on housing associations which do not inure to the benefit of the shareholders, but which would inure to a great extent, if the Chancellor of the Exchequer accepted the new Clause, to the housing amenities of the people of this country.
    8.22 p.m.
    Sir J. Simon: Perhaps, as the right hon. Gentleman at the end of his speech and at your invitation, Mr. Deputy-Speaker, said a word about the second or alternative proposal which he has down on the Paper, I may without being called to order say a word about that first. That is really a proposal that we should completely depart from one of the principles of Income Tax in the case of these housing associations. To exempt such proportion of the proceeds as are put to general reserve or sinking fund is a proposition horrifying to everybody who, like the right hon. Gentleman, has served in the Treasury, and would cut extremely deep into the principles of Income Tax law, and I am afraid that I cannot accept that.
    I turn to the main proposal, which is the one which would probably mean more to those very important and useful bodies on whose behalf he speaks. I know that the Chancellor of the Exchequer is suspected, and rightly suspected, if, first of all, he professes his sympathy and then does not agree with the concession. I feel a very close interest in these housing associations for various reasons, and I have a great deal of sympathy with what has been said, but I must put to the House the reasons why I am afraid I cannot accept this proposal. The societies for which the right hon. Gentleman is pleading are, as he said, bodies established for the purpose, among other purposes—I call the attention of the House to the words "among other purposes"of constructing, improving or managing or facilitating or encouraging the construction or improvement of houses for the working classes.

    1031
    All that is admirable, but they are not associations that do not make a profit. If they did not make a profit they would have nothing to fear as far as National Defence Contributions are concerned. The trouble is that they make a profit, and they work to a 5 per cent. profit, which, I agree, is a good deal less than profits made by public utility concerns in certain exceptional cases, but still it is a profit as things go, and a substantial one in the view of many people. The question is, can we say, as regards these housing societies, that they are to be exempt from National Defence Contribution? The first difficulty is that there are building societies which undoubtedly must be regarded as enterprises which would also have to be considered. Although it is true that there are special arrangements made in regard to building societies, they are not exempt from National Defence Contribution. Therefore, I should have a difficulty in that regard.
    I agree that these housing societies do a very useful work, but I do not think they can really be regarded as falling in the same category as those public utility enterprises for which we have made special exceptions. The ground on which a public utility company is given exemption is not that it does not work for profit or that its profit is limited, but the ground is that it is one of those enterprises supplying gas, water, transport, electricity and so on which render a public service which puts it in a special category. For the same reason we exempt these public utility enterprises when they are conducted by local authorities. I do not think the real test, therefore, in the case of enterprises providing these essential services is the question of what is the percentage of profit they earn, but what is the kind of work they are doing, and the kind of work which they are doing is not analogous with the work that is being done by building societies or these housing societies. I agree with the right hon. Gentleman that there are some instances in which these essential service enterprises are earning a higher rate of profit than I contemplated when we made the exception in their favour, and I should like if I could to devise a formula which would cover such a case, but I have not been able to do so.
    Lastly, in regard to these housing societies, I would point out that they
    1032
    have these housing purposes among other purposes, and my advisers are alarmed at the idea that there should be exemption in their favour, because it would be easy to have a housing association the object of which includes the provision of houses but also includes a lot of other purposes, with a view to supplementing the money that is available for the main object. I regret very much that, after looking at this matter with all the care and the sympathy that I can, I cannot advise the House to make this concession. The housing societies already enjoy certain privileges which are of very material assistance to them. They are already recognised as being entitled to receive from the local authorities assistance in connection with their housing work under the Housing Acts. The local authorities may pay such associations by way of annual grant an amount not less than the contribution made by the Exchequer. They have, therefore, in some respects a favoured position. I am sorry, but I do not see how I could make this concession without sacrificing revenue which I cannot afford to lose, and without opening claims on behalf of the building societies and other enterprises.
    8.29 p.m.
    Mr. Benson: I think the speech of the Chancellor of the Exchequer has thrown into clear relief the extraordinarily illogical basis of this taxation. He did not adduce one single logical argument against the Clause. He did not, because he could not. There are no logical arguments against it. The only thing that he can do is to argue the matter on the analogy that such and such a type of enterprise or industry is included in or excluded from the scope of the tax and that therefore the particular enterprise under discussion, or any enterprise of a more or less similar character, ought also to be included or excluded as the case may be. Public utility companies dealing in gas, water, electric light and so on are excluded because it is said that they are serving some public purpose. Surely, the housing society is serving a public purpose?
    Sir J. Simon: And the building society.
    Mr. Benson: Yes, and the building society. I admit it. Once you lay down any particular canon of the kind advanced by the Chancellor of the Exchequer you do not know where you are getting to.

    1033
    Some public utility companies are extraordinarily rapacious profit-making concerns. I can well understand concession being given to a public utility company where they are working on a low basis of profit, with the definite idea and with the prime object of giving public service, for instance the London Transport, but where the idea is to make as much profit as they can, as some of the electric companies do, I cannot understand why they should be excluded. The housing society, although it may have other objects under its articles than the provision of houses, undoubtedly does work, as the Chancellor of the Exchequer said, for profit, which is strictly limited to 5 per cent., and such a society is far more like what one normally thinks of as a public utility company than a gas company or an electricity company which is forcing every penny it can from the consumers.
    The Chancellor of the Exchequer has given no valid argument, because he has no logical basis to argue on, in refusing this concession. He has merely said that these societies do not fall into the particular category of a public utility company and that if he includes housing societies in the exemption he would be compelled to include building societies, and that if he includes building societies he would have to include other enterprises. I maintain that these housing societies should be excluded from the tax, just as certainly as the better type of public utility companies should be excluded. The fact that the Chancellor of the Exchequer refuses to grant this concession on such vague and indefinite grounds suggests that the National Defence Contribution is a tax which is unworthy of this House.
    8.33 p.m.
    Mr. McEntee: I am disappointed at the Chancellor of the Exchequer's statement. I was hopeful that he would have made some concession to the societies concerned. Although I am not personally interested in any of these societies now, I had an interest in them at one time and I still am interested because I know of the good work they have done and are doing. I am sorry that the right hon. Gentleman cannot see his way to make the concession. I remember appearing before a Chancellor of the Exchequer with a deputation and asking for a concession for societies similar to these we are
    1034
    discussing to-night. I was under the impression then that they ought to be considered as public utility societies, but I was reminded by the Chancellor of the Exchequer at the time of the actual definition of a public utility society, which still stands, and I am aware that these housing societies do not come under that definition.
    No one will argue that the provision of gas by a private company or the provision of electricity by a private company, which comes within the definition of a public utility society, is in fact more useful service to the public than the work of a housing society. The Chancellor said that they were doing other work, or that they had the power to do other things, but I am sure that if he desired the Chancellor of the Exchequer could very easily limit the concession to that part of their work which deals with houses. I hope he will pay little more attention to this matter and make a concession to their work so far as it deals with houses.
    There is another aspect which I think should be considered. These housing associations are running pretty near to the mark. They try to secure for their shareholders the 5 per cent. to which they are entitled, but above that they do not want to make a profit. As a matter of fact some of them are making a profit in excess of 5 per cent. and that profit at the moment is going to increase the amenities of the properties and thus make them more useful and better to live in. If the Chancellor of the Exchequer puts on this National Defence Contribution, the effect will be that in some cases this small margin of 5 per cent. will go and these amenities will no longer be available for tenants. Many of these amenities are almost necessities and their loss would be rather serious. I hope also that the Chancellor of the Exchequer will consider whether the definition of a public utility society ought not to he widened in order to include societies like housing associations, which are doing extremely useful work, in order that they get concessions which are at present given to public utility societies.
    I should like to say a good deal about building societies, but I am afraid that if I deal with that subject I could not agree entirely with all the good things which the Chancellor of the Exchequer

    1035
    has said in regard to them. Many harsh things could be said; indeed, they cannot be compared in any way with the associations with which it is intended to deal in this proposed new Clause.
    Question put "That the Clause be read a Second time."
    The House divided: Ayes 126; Noes, 191.

    Division No. 291.]

    AYES.

    [8.40 p.m.

    Adamson,W. M.

    Grenfell, D. R.

    Montague, F.

    Anderson, F. (Whitehaven)

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    Morrison, Rt. Hon. H. (Hackney, S.)

    Attlee, Rt. Hon. C. R.

    Griffiths, G. A. (Hemsworth)

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

    Banfield, J. W.

    Griffiths, J. (Llanelly)

    Muff, G.

    Barnes, A. J.

    Groves, T. E.

    Noel-Baker, P. J.

    Barr, J.

    Hall, J. H. (Whitechapel)

    Oliver, G. H.

    Batey, J.

    Hardie, Agnes

    Paling, W.

    Bellenger, F. J.

    Harris, Sir P. A.

    Parker, J.

    Benn, Rt. Hon. W. W.

    Harvey, T. E. (Eng. Univ's.)

    Parkinson, J. A.

    Benson, G.

    Henderson, A. (Kingswinford)

    Pethick-Lawrence, Rt. Hon. F. W.

    Bevan, A.

    Henderson, J. (Ardwiek)

    Poole, C. C.

    Broad, F. A.

    Henderson, T. (Tradeston)

    Quibell, D. J. K.

    Bromfield, W.

    Hioks, E. G.

    Ridley, G.

    Brown, Rt. Hon. J. (S. Ayrshire)

    Hills, A. (Pontefract)

    Riley, B.

    Buchanan, G.

    Hopkin, D.

    Ritson, J.

    Burke, W. A.

    Jagger, J.

    Robinson, W. A. (St. Helens)

    Cape, T.

    Jenkins, A. (Pontypool)

    Salter, Dr. A. (Bermondsey)

    Chater, D.

    Johnston, Rt. Hon. T.

    Seely, Sir H. M.

    Cluse, W. S.

    Jones, A. C. (Shipley)

    Sexton, T. M.

    Clynes, Rt. Hon. J. R.

    Jones, Sir H. Haydn (Merioneth)

    silkin, L.

    Cocks, F. S.

    Kelly, W. T.

    Silverman, S. S.

    Collindridge, F.

    Kennedy, Rt. Hon. T.

    Simpson, F. B.

    Cove, W. G.

    Kirby, B. V.

    Smith, E. (Stoke)

    Cripps, Hon. Sir Stafford

    Kirkwood, D.

    Smith, Rt. Hon. H. B. Lees- (K'ly)

    Daggar, G.

    Leach, W.

    Smith, T. (Normanton)

    Dalton, H.

    Lee, F.

    Sorensen, R. W.

    Davidson, J. J. (Maryhill)

    Leonard, W.

    Stephen, C.

    Davies, R. J. (Westhoughton)

    Lestie, J. R.

    Summerskill, Dr. Edith

    Day, H.

    Logan, D. G.

    Taylor, R. J. (Morpeth)

    Dobbie, W.

    Lunn, W.

    Thorne, W.

    Dunn, E. (Rother Valley)

    Macdonald, G. (Ince)

    Thurtle, E.

    Ede, J. C.

    McEntee, V. La T.

    Viant, S. P.

    Edwards, Sir C. (Bedwellty)

    McGhee, H. G.

    Walkden, A. G.

    Evans, D. O. (Cardigan)

    MoGovern, J.

    Walker, J.

    Fletcher, Lt.-Comdr. R. T. H.

    MacLaren, A.

    Watkins, F. C.

    Foot, D. M.

    Maclean, N.

    Watson, W. McL.

    Frankel, D.

    Mander, G. Ie M.

    Williams, T. (Don Valley)

    Gallacher, W.

    Marklew, E.

    Windsor, W. (Hull, C.)

    Gardner, B. W.

    Marshall, F.

    Woods, G. S. (Finsbury)

    George, Major G. Lloyd (Pembroke)

    Mathers, G.

    Young, Sir R. (Newton)

    George, Megan Lloyd (Anglesey)

    Maxton, J.

    Gibson, R. (Greenock)

    Messer, F.

    TELLERS FOR THE AYES.—

    Greenwood, Rt. Hon. A.

    Milner, Major J.

    Mr. Charleton and Mr. Whiteley.

    NOES.

    Acland-Troyte, Lt.-Col. G. J.

    Clarry, Sir Reginald

    Elmley, Viscount

    Adams, S. V. T. (Leeds, W.)

    Clydesdale, Marquess of

    Emmott, C. E. G. C.

    Agnew, Lieut.-Comdr. P. G.

    Conant, Captain R. J. E.

    Entwistle, Sir C. F.

    Albery, Sir Irving

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Erskine-Hill, A. G.

    Allen, Col. J. Sandeman (B'knhead)

    Cooke, J. D. (Hammersmith, S.)

    Findlay, Sir E.

    Apsley, Lord

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Fleming, E. L.

    Aske, Sir R. W.

    Craven-Ellis, W.

    Furness, S. N.

    Assheton, R.

    Crooke, Sir J. Smedley

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

    Balfour, Capt. H. H. (Isle of Thanet)

    Crookshank, Capt. H. F. C.

    Gledhill, G.

    Beit, Sir A. L.

    Cruddas, Col. B.

    Gluckstein, L. H.

    Bernays, R. H.

    Davidson, Viscountess

    Grant-Ferris, R

    Blair, Sir R.

    Davies, Major Sir G. F. (Yeovil)

    Gridley, Sir A. B.

    Bossom, A. C.

    De la Bére, R.

    Grigg, Sir E. W. M

    Boulton, W. W.

    Denman, Hon. R. D.

    Grimston, R. V.

    Bower, Comdr. R. T.

    Denville, Alfred

    Guest, Lieut.-Colonel H. (Drake)

    Braithwaite, Major A. N.

    Despencer-Robertson, Major J. A. F.

    Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)

    Brass, Sir W.

    Di Capt. Rt. Hon. H.

    Gunston, Capt. Sir D. W.

    Broadbridge, Sir G. T.

    Dodd, J. S.

    Hannah, I. C.

    Brown, Col. D. C. (Hexham)

    Doland, G. F.

    Hannon, Sir P. J. H.

    Bull B. B.

    Dower, Major A. V. G.

    Harbord, A.

    Burghley, Lord

    Duckworth, W. R. (Moss Side)

    Harvey, Sir G.

    Butcher, H. W.

    Dugdale, Captain T. L.

    Haslam, Henry (Horncastle)

    Campbell, Sir E. T.

    Duncan, J. A. L.

    Haslam, Sir J. (Bolton)

    Cary, R. A.

    Eastwood, J. F.

    Heilgers, Captain F. F. A.

    Cayzer, Sir C. W. (City of Chester)

    Elliot, Rt. Hon. W. E.

    Hely-Hutchinson, M. R.

    Clarke, Colonel R. S. (E. Grinstead)

    Ellis, Sir G.

    Heneage, Lieut.-Colonel A. P.

    Herbert, Major J. A. (Monmouth)

    Moreing, A. C.

    Shepperson, Sir E. W.

    Holmes, J. S.

    Morgan, R. H.

    Simon, Rt. Hon. Sir J. A.

    Hope, Captain Hon. A. O. J.

    Morris-Jones, Sir Henry

    Smith, Sir R. W. (Aberdeen)

    Hopkinson, A.

    Morrison, G. A. (Scottish Univ's.)

    Somervell, Rt. Hon. Sir Donald

    Hore-Belisha, Rt. Hon. L.

    Morrison, Rt. Hon. W. S. (Cirencester)

    Somerville, A. A. (Windsor)

    Horsbrugh, Florence

    Muirhead, Lt.-Col. A. J,

    Southby, Commander Sir A. R. J.

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

    Munro, P.

    Spens, W. P.

    Hulbert, N. J.

    Nall, Sir J.

    Strauss, E. A. (Southwark, N.)

    Hume, Sir G. H.

    O'Connor, Sir Terence J.

    Strauss, H. G. (Norwich)

    Hunter, T.

    Peake, O.

    Stuart, Hon. J. (Moray and Nairn)

    Hurd, Sir P. A.

    Peters, Dr. S. J.

    Tasker, Sir R. I.

    Hutchinson, G. C.

    Petherick, M.

    Tate, Mavis C.

    Joel, D. J. B.

    Pickthorn, K. W. M.

    Taylor, C. S. (Eastbourne)

    Jones, Sir G. W. H. (S'k N'w'gt'n)

    Pilkington, R.

    Thomas, J. P. L.

    Jones, L. (Swansea W.)

    Plugge, Capt. L. F.

    Thorneycroft, G. E. P.

    Kerr, J. Graham (Scottish Univs.)

    Ponsonby, Col. C. E.

    Touche, G. C.

    Kimball, L.

    Pownall, Lt.-Col. Sir Assheton

    Tufnell, Lieut.-Commander R. L.

    Lamb, Sir J. Q.

    Procter, Major H. A.

    Turton, R. H.

    Leech, Sir J. W.

    Radford, E. A.

    Walker-Smith, Sir J.

    Lees-Jones, J.

    Raikes, H. V. A. M.

    Wallace, Capt. Rt. Hon. Euan

    Levy, T.

    Ramsbotham, H.

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

    Lewis, O.

    Rathbone, J. R. (Bodmin)

    Warrender, Sir V.

    Lipson, D. L.

    Rayner, Major R. H.

    Wells, Sir Sydney

    Little, Sir E. Graham-

    Reed, A. C. (Exeter)

    Whiteley, Major J. P. (Buckingham)

    Llewellin, Colonel J. J.

    Reid, W. Allan (Derby)

    Wickham, Lt.-Col. E. T. R.

    Locker-Lampson, Comdr. O. S.

    Remer, J. R.

    Williams, H. G. (Croydon, S.)

    Loftus. P. C.

    Rickards, G. W. (Skipton)

    Willoughby de Eresby, Lord

    MacAndrew, Colonel Sir C. G.

    Ross Taylor, W. (Woodbridge)

    Wilson, Lt.-Col. Sir A. T. (Hitchin)

    MacDonald, Rt. Hon. M. (Ross)

    Rowlands, G.

    Windsor-Clive, Lieut.-Colonel G.

    Maitland, A.

    Royds, Admiral Sir P. M. R.

    Wise, A. R.

    Makins, Brigadier-General Sir Ernest

    Ruggles-Brise, Colonel Sir E. A.

    Withers, Sir J. J.

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

    Russell, Sir Alexander

    Womersley, Sir W. J.

    Markham, S. F.

    Russell, S. H. M. (Darwen)

    Wood, Hon. C. I. C.

    Maxwell, Hon. S. A.

    Salmon, Sir I.

    Wragg, H,

    Mayhew, Lt.-Col. J.

    Samuel, M. R. A.

    Wright, Wing-Commander J. A. C.

    Mellor, Sir J. S. P. (Tamworth)

    Sandeman, Sir N. S.

    Mills, Major J. D. (New Forest)

    Sanderson, Sir F. B.

    TELLERS FOR THE NOES.—

    Moore, Lieut.-Col. Sir T. C. R.

    Selley, H. R.

    Lieut.-Colonel Kerr and Major

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

    Shaw, Captain W. T. (Forfar)

    Harvie Watt.

    NEW CLAUSE.—(Allowance in respect of earned incomes.)
    Section fifteen of the Finance Act, 1925 (which, as amended by Section eight of the Finance (No. 2) Act, 1931, makes provision for an allowance in respect of earned incomes), shall have effect as if the word "one-fourth" were substituted for the word "one-fifth."— [Mr. Lees-Smith.]
    Brought up, and read the First time.
    8.48 p.m.
    Mr. Lees-Smith: I beg to move, "That the Clause be read a Second time."
    My object in moving this new Clause is to raise the question of the differentiation between earned and unearned income. As hon. Members know, at present those who pay Income Tax on earned income are allowed to make a deduction of one-fifth before they pay the tax. The object of the new Clause is to enable that deduction to be increased to one-fourth. In order to put the arguments for the Clause, I will work it out in an ordinary case. I think the best case to take is that of a doctor, who is earning, say, £600 a year. [Interruption.] Not a docker. He is allowed to make a deduction of one-fifth of his income before paying Income Tax, so that actually he pays
    the tax on £480 a year; that is to say, he pays the same tax as a man with an unearned income (who cannot make a deduction) of £480 a year.
    The new Clause lays it down that the position of those two taxpayers is not the same. A man having an unearned income of £480 a year derived from investments is, in our opinion, in a safer and more advantageous position than a man who is dependent on an earned income, year by year, of £600. The doctor's income is a precarious income. When he dies, the income ceases; when he goes on holiday, it ceases; if he falls ill, it ceases; some day it is bound to cease because he has to retire; and probably he must make a deduction from it for purposes of insurance. On the other hand, the man who is living on income from investments, say, War Loan, and who has £480 a year, is subject to none of those changes and chances of life. If he dies, the income goes on for his heirs; when he goes on holiday, it continues; he need not trouble about saving for his retirement, and he need not insure. He has the whole of his time in which to do as he wishes. Therefore, we say that there is no comparison between the two cases.
    It is very interesting to notice the difference in the capital value of these two incomes. A man who is living on an income of £480 a year derived from War Loan, if one assumes that he is living on a 3½ per cent. investment, has a capital of £14,000. What is the capital value of the practice of a doctor who is earning £600 a year? It is two years' purchase; that is to say, £1,200. The difference between £4,000 and £1,200 represents the difference calculated on the stability of the two incomes. I venture to say that in two or three years' time a great deal will be heard in this House about this sort of calculation of the difference in capital value, and I believe that this proposal will then be regarded by both sides of the House as being very moderate. For we are bound, some time or another, to balance the Budget, and when that time comes we shall be bound to get the money from somewhere. The difficulty which is always put to us is that an earned income is an income coming from the vital and the active factors in the production of wealth, and, of course, it is the case that one cannot push Income Tax on them beyond a certain limit without diminishing the production of wealth itself. There will be some limit. But in the case of earned income, the effect of an increased tax is far more distant and indirect. Nobody has yet calculated how far it can be pushed without influencing the production of wealth, although, of course, it influences the distribution of wealth.
    Therefore, within two or three years, when the House will be faced with the problem of raising fresh taxation from those sources from which it can be secured, the proposal I am now making will be regarded as very moderate. Indeed it is very moderate, if one looks at the recent story of this exemption. When I first began to pay Income Tax, I had a small income, and at that time the exemption on that small income was as much as one-third. I was able to deduct one-third from my income before paying Income Tax. A few years later, the House, in connection with another reform, without very much discussion, cut the fraction down to one-tenth, and a person paying Income Tax on earned income was allowed to deduct only one-tenth. Ever since then the House has been retracing its steps. The Coalition Government increased the amount to one-
    1040
    sixth,and the Labour administration increased it to one-fifth, at which it now is. I have no doubt that eventually it will go back to one-third, and as a step in that direction, I have moved that it shall go to one-fourth.
    8.54 p.m.
    Captain Wallace: I am afraid—
    Mr. Gallacher: You have plenty to be afraid of.
    Captain Wallace: I may have, but certainly not on this Clause. This proposal was put, as the right hon. Member for Keighley (Mr. Lees-Smith) always does, very sanely and without any exaggeration before the House, and the right hon. Member backed it up with all the good arguments which he and his friends could muster for it. But the proposal to increase, in this year of grace, the allowance for earned income from one-fifth to one-fourth is one for which there is no real case on merits. As the right hon. Gentleman said, the amount of the earned income allowance has been increased on two occasions since it was introduced in its present form in 1920. The figure of one-tenth then adopted was that recommended by the Royal Commission on Income Tax, and may therefore be said to represent, at any rate, the considered view of a very august body. That allowance of one-tenth was in operation until 1925, when it was increased to one-sixth, and in 1931, despite the economies which were necessary in other directions, it was yet found possible on this side of the House to increase it to one-fifth, thus abating in favour of the earned Income Tax payer the increase in liability arising from the 6d. increase in the standard rate of Income Tax and the cut in the personal allowances in that year. Although the standard rate is increased, under the present Budget, to 5s. 6d., the smaller earned income taxpayer is still better off than he was under the second Finance Act of 1931, because he has higher personal allowances and there is a smaller charge of tax upon the first slice of his taxable income.
    The right hon. Gentleman made some observations on the difference between earned and unearned income with which, in general, I agree. In fact, this particular form of relief, the earned income allowance, which has been enshrined

    1041
    in our Finance Acts for many years past purports to reflect the difference in taxable capacity as between earned income and investment income, arising, as the right hon. Gentleman very fairly said, from the fact that investment income has capital behind it and may be generally assumed to be secure—although the experiences of some people go to show that that is not always the case—whereas the man who derives the whole of his income from his labour or professional skill has not anything like that security. It was for that very purpose that the earned income allowance was introduced, and while I accept the need for differentiation my right hon. Friend is not prepared this year to agree that there is a case for increasing it any further than by the present allowance of one-fifth.
    The increase from one-fifth to one-fourth which the right hon. Gentleman proposes would cost £8,500,000 in a full year and
    about half that sum in the present financial year. I think the House will realise that for that reason if for no other it would not be possible to make this concession without serious risk of unbalancing the Budget. As I was obliged to say when dealing with an Amendment of a similar character during the Committee stage, the smaller Income Tax payers, that is to say about 2,000,000 out of the 3,500,000 who are liable for Income Tax, have this year been protected against any increase in actual taxation arising from the increase in the standard rate by the provision that the rate of tax chargeable on the first slice of taxable income is to remain at the same figure as last year. For those reasons, I must ask the House to reject the proposed new Clause.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 127; Noes, 201.

    Division No. 292.]

    AYES.

    [9.2 p.m.

    Adamson, W. M.

    Griffiths, J. (Llanelly)

    Montague, F.

    Anderson, F. (Whitehaven)

    Groves, T. E.

    Morrison, Rt. Hon. H. (Hackney, S.)

    Attlee, Rt. Hon. C. R.

    Hall, G. H. (Aberdare)

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

    Banfield, J. W.

    Hall, J. H. (Whitechapel)

    Muff, G.

    Barnes, A. J.

    Hardie, Agnes

    Noel-Baker, P. J.

    Barr, J.

    Harris, Sir P. A.

    Oliver, G. H.

    Batey, J.

    Harvey, T. E. (Eng. Univ's.)

    Paling, W.

    Bellenger, F. J.

    Henderson, A. (Kingswinford)

    Parker, J.

    Been, Rt. Hon. W. W.

    Henderson, J. (Ardwick)

    Parkinson, J. A.

    Benson, G.

    Henderson, T. (Tradeston)

    Pearson, A.

    Broad, F. A.

    Hicks, E G.

    Pethick-Lawrence, Rt. Hon. F. W.

    Bromfield, W.

    Hills, A. (Pontefract)

    Poole, C. C.

    Brown, Rt. Hon. J. (S. Ayrshire)

    Hopkin, D.

    Quibell, D. J. K.

    Burke, W. A.

    Jagger, J.

    Ridley, G.

    Cape, T.

    Jenkins, A. (Pontypool)

    Riley, B.

    Chater, D.

    Jenkins, Sir W. (Neath)

    Ritson, J.

    Cluse, W S.

    Johnston, Rt. Hon. T.

    Robinson, W. A. (St. Helens)

    Clynes, Rt. Hon. J. R.

    Jones, A. C. (Shipley)

    Salter, Dr. A. (Bermondsey)

    Cocks, F. S.

    Jones, Sir H. Haydn (Merioneth)

    Seely, Sir H. M.

    Collindridge, F.

    Kelly, W. T.

    Sexton, T. M.

    Cove, W. G.

    Kennedy, Rt. Hon. T.

    Silkin, L.

    Cripps, Hon. Sir Stafford

    Kirby, B. V.

    Silverman, S. S.

    Daggar, G.

    Kirkwood, D.

    Simpson, F. B.

    Dalton, H.

    Lathan, G.

    Smith, E. (Stoke)

    Davidson, J. J. (Maryhill)

    Leach, W.

    Smith, Rt. Hon. H. B. Lees- (K'ly)

    Davies, R. J. (Westhoughton)

    Lee,. F.

    Smith, T. (Normanton)

    Davies, S. O. (Merthyr)

    Leonard, W.

    Sorensen, R. W.

    Day, H.

    Leslie, J. R.

    Summerskill, Dr. Edith

    Dobbie, W.

    Logan, D. G.

    Taylor, R. J. (Morpeth)

    Dunn, E. (Rother Valley)

    Lunn, W.

    Thurtle, E.

    Ede, J. C.

    Macdonald, G. (Ince)

    Tomlinson, G.

    Edwards, Sir C. (Bedwellty)

    McEntee, V. La T.

    Viant, S. P.

    Evans, D. O. (Cardigan)

    McGhee, H. G.

    Walkden, A. G.

    Fletcher, Lt.-Comdr. R. T. H.

    McGovern, J.

    Walker, J.

    Frankel, D.

    MacLaren, A.

    Watkins, F. C.

    Gallacher, W.

    Maclean, N.

    Watson, W. MoL.

    Gardner, B. W.

    Mander, G. le M.

    White, H. Graham

    George, Megan Ltoyd (Anglesey)

    Marklew, E.

    Williams, T. (Don Valley)

    Gibson R. (Greenock)

    Marshall, F.

    Windsor, W. (Hull, C.)

    Greenwood, Rt. Hon. A.

    Mathers, G.

    Woods, G. S. (Finsbury)

    Grenfell, D. R.

    Maxton, J.

    Young, Sir R. (Newton)

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    Messer, F.

    Griffiths, G. A. (Hemsworth)

    Milner, Major J.

    TELLERS FOR THE AYES—

    Mr. Whiteley and Mr. John.

    NOES.

    Acland-Troyte,Lt.-Col. G. J.

    Greene, W. P, C. (Worcester)

    Peters, Dr. S. J.

    Adams, S. V. T. (Leeds, W.)

    Gretton, Col. Rt. Hon. J.

    Petherick, M.

    Agnew, Lieut.-Comdr. P. G.

    Gridley, Sir A. B.

    Pickthorn, K. W. M.

    Albery, Sir Irving

    Grigg, Sir E. W. M.

    Pilkington, R.

    Allen, Col. J. Sandeman (B'knhead)

    Grimston, R. V.

    Plugge, Capt. L. F.

    Anderson, Sir A. Garrett (C. of Ldn.)

    Guest, Lieut.-Colonel H. (Drake)

    Ponsonby, Col. C. E.

    Apsley, Lord

    Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)

    Pownall, Lt.-Col. Sir Assheton

    Aske, Sir R. W.

    Gunston, Capt. Sir D. W.

    Procter, Major H. A.

    Assheton, R.

    Hambro, A. V.

    Radford, E. A.

    Balfour, Capt. H. H. (Isle of Thanet)

    Hannah, I. C.

    Raikes, H. V. A. M.

    Beamish, Rear-Admiral T. P. H.

    Hannon, Sir P. J. H.

    Ramsbotham, H.

    Beit, Sir A. L.

    Harbord, A.

    Rathbone, J. R. (Bodmin)

    Bernays, R. H.

    Haslam, Henry (Horncastle)

    Rayner, Major R. H.

    Blair, Sir R.

    Haslam, Sir J. (Bolton)

    Reed, A. C. (Exeter)

    Bossom, A. C.

    Heilgers, Captain F. F. A.

    Reid, W. Allan (Derby)

    Boulton, W. W.

    Hely-Hutchinson, M. R.

    Rickards, G. W. (Skipton)

    Bower, Comdr. R. T.

    Heneage, Lieut.-Colonel A. P.

    Ross Taylor, W. (Woodbridge)

    Boyce, H. Leslie

    Herbert, Major J. A. (Monmouth)

    Rothschild, J. A. de

    Braithwaite, Major A. N.

    Holmes, J. S.

    Rowlands, G.

    Brass, Sir W.

    Hope, Captain Hon. A. O. J.

    Royds, Admiral Sir P. M. R.

    Broadbridge, Sir G. T.

    Hopkinson, A.

    Ruggles-Brise, Colonel Sir E. A.

    Brown, Col. D. C. (Hexham)

    Horsbrugh, Florence

    Russell, Sir Alexander

    Bull, B. B.

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

    Russell, S. H. M. (Darwen)

    Burghley, Lord

    Hulbert, N. J.

    Salmon, Sir I.

    Butcher, H. W.

    Hume, Sir G. H.

    Samuel, M. R. A.

    Campbell, Sir E. T.

    Hunter, T.

    Sanderson, Sir F. B.

    Cary, R. A.

    Hurd, Sir P. A.

    Selley, H. R.

    Cayzer, Sir C. W. (City of Chester)

    Hutchinson, G, C.

    Shaw, Major P. S. (Wavertree)

    Clarke, Colonel R. S. (E. Grinstead)

    Joel, D. J. B.

    Shaw, Captain W. T. (Forfar)

    Clarry, Sir Reginald

    Jones, Sir G. W. H. (S'k N'w'gt'n)

    Shepperson, Sir E. W.

    Clydesdale, Marquess of

    Jones, L. (Swansea W.)

    Simon, Rt. Hon. Sir J. A

    Conant, Captain R. J. E.

    Kerr, Colonel C. I. (Montrose)

    Smith, Bracewell (Dulwich)

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Kerr, J. Graham (Scottish Univs.)

    Smith, Sir R. W. (Aberdeen)

    Cooke, J. D. (Hammersmith, S.)

    Kimball, L.

    Somervell, Rt. Hon. Sir Donald

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Lamb, Sir J. Q.

    Somerville, A. A. (Windsor)

    Craven-Ellis, W.

    Leech, Sir J. W.

    Southby, Commander Sir A. R. J.

    Crooke, Sir J. Smedley

    Lees-Jones, J.

    Spens, W. P.

    Crookshank, Capt. H. F. C.

    Levy, T.

    Strauss, E. A. (Southwark, N.)

    Croom-Johnson, R. P.

    Lewis, O.

    Strauss, H. G. (Norwich)

    Cruddas, Col. B.

    Lipson, D. L.

    Stuart, Hon. J. (Moray and Nairn)

    Davies, Major Sir G. F. (Yeovil)

    Little, Sir E. Graham-

    Sueter, Rear-Admiral Sir M. F

    De la Bére, R.

    Llewellin, Colonel J. J.

    Tasker, Sir R. I.

    Denman, Hon. R. D.

    Locker-Lampson, Comdr. O. S.

    Tate, Mavis C.

    Denville, Alfred

    Loftus. P. C.

    Taylor, C. S. (Eastbourne)

    Despencer-Robertson, Major J. A. F.

    Mabane, W. (Huddersfield)

    Thomas, J. P. L.

    Dixon, Capt. Rt. Hon. H.

    MacAndrew, Colonel Sir C. G.

    Thorneycroft, G. E. P.

    Dodd, J. S.

    MacDonald, Rt. Hon. M. (Ross)

    Touche, G. C.

    Doland, G. F.

    Maitland, A.

    Tufnell, Lieut.-Commander R. L.

    Dower, Major A. V. G.

    Makins, Brigadier-General Sir Ernest

    Turton, R. H.

    Duckworth, Arthur (Shrewsbury)

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

    Walker-Smith, Sir J.

    Duckworth, W. R. (Moss Side)

    Marknam, S. F.

    Wallace, Capt. Rt. Hon. Euan

    Dugdale, Captain T. L.

    Maxwell, Hon. S. A.

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

    Duncan, J. A. L.

    Mayhew, Lt.-Col. J.

    Warrender, Sir V.

    Eastwood, J. F.

    Mellor, Sir J. S. P. (Tamworth)

    Wells, Sir Sydney

    Elliot, Rt. Hon. W. E.

    Mills, Major J. D. (New Forest)

    Whiteley, Major J. P. (Buckingham)

    Ellis, Sir G.

    Moore, Lieut.-Col. Sir T. C. R.

    Wickham, Lt.-Col. E. T. R.

    Elmley, Viscount

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

    Williams, H. G. (Croydon, S.)

    Emmott, C. E. G. C.

    Moreing, A. C.

    Willoughby de Eresby, Lord

    Entwistle, Sir C. F.

    Morgan, R. H.

    Wilson, Lt.-Col. Sir A. T. (Hitchin)

    Errington, E.

    Morris-Jones, Sir Henry

    Windsor-Clive, Lieut.-Colonel G.

    Erskine-Hill, A. G.

    Morrison, G. A. (Scottish Univ's.)

    Wise, A. R.

    Findlay, Sir E.

    Morrison, Rt. Hon. W. S. (Cirencester)

    Womersley, Sir W. J.

    Fleming, E. L.

    Muirhead, Lt.-Col. A. J.

    Wood, Hon. C. I. C.

    Fyfe, D. P. M.

    Munro, P.

    Wragg, H.

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

    Nall, Sir J.

    Wright, Wing-Commander J. A. C.

    Gledhill, G.

    Nicholson, G. (Farnham)

    Gluckstein, L. H.

    O'Connor, Sir Terence J.

    TELLERS FOR THE NOES.—

    Grant-Ferris, R.

    Peake, O.

    Mr. Furness and Major Harvie Watt.

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

    NEW CLAUSE.—(Deduction in certain cases in respect of dependent relative.)
    If any person who is assessable to Income Tax proves to the satisfaction of the Commissioners of Inland Revenue that during the year of assessment he had a relative living with him who had been denied, wholly or in part, unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by
    him, he shall, in respect of his assessment, be entitled to a deduction equal to the amount deemed to have been paid by him towards such maintenance.—[Mr. G. Griffiths.]
    Brought up, and read the First time.
    9.9 P.m.
    Mr. George Griffiths: I beg to move, "That the Clause be read a Second time."

    1045
    I am pleased that the Chancellor is back and I am sure that he will feel comfortable after his dinner. I am delighted with the way in which the right hon. Gentleman has given way on certain things, but we were disappointed that the Government did not give way on the new Clause just moved by the right hon. Member for Keighley (Mr. Lees-Smith). If the Chancellor had heard my right hon. Friend's explanation I am sure that he would not have allowed his second lieutenant to say "No." I have been looking at the concessions which the Chancellor has made on the Finance Bill. The hon. Gentleman the Member for Rusholme (Mr. Radford) pleaded about the tax on oil and the Chancellor said he would consider it.
    Sir J. Simon indicated dissent.
    Mr. Griffiths: The Chancellor will agree that when the hon. Member for Oxford University (Mr. A. Herbert) raised the question of the Entertainments Duty he agreed there was something in the hon. Member's case. I asked the hon. Member to support my new Clause with a speech but he told me that it took him a fortnight to get up his speech on the Entertainments Duty. The Chancellor said that he thought there was something in the lion. Member's case and that he was prepared next year to consider the tax because it affected three classes of people, the shareholders in the theatres, the managers of the theatres and the theatregoers. I hope that the Chancellor will look at my new Clause and see whom it affects. I was very pleased that he agreed to a deduction in respect of apprentices over 16. That was a very good concession and my friends on these benches congratulate the right hon. Gentleman upon it.
    I hope that I shall be able to congratulate the Chancellor on being able to accept my new Clause. It is not put down to wring out of the Treasury £8,500,000, which the Financial Secretary said would be the cost of the last new Clause which we discussed. I would like the Chancellor to tell us how much loss my new Clause would cause the Budget. It is not, however, the total mount that bothers me so much as the amount involved to the individual. The Chancellor early this evening granted relief to the land tax payers on condition that they produced a certificate. Our
    1046
    people who are asking for the relief for which my new Clause provides are prepared to produce certificates to show they have had so much knocked off their unemployment assistance because they are earning so much money. My Clause is quite understandable. I have worked out a scale, perhaps not as scientifically as the right hon. Member for Keighley. He worked his out on a doctor; I shall work mine out on a miner and a schoolteacher. Before I come to that, however, I would remind the House that some weeks a go the hon. Member for Ebbw Vale (Mr. Bevan) asked the Ministry of Labour how many people who are receiving unemployment assistance allowances have had any deductions made because of income coming into the homes, and was told by the Parliamentary Secretary to the Ministry that out of 580,000 families 120,000 were receiving reduced payments because somebody was bringing money into the home.
    I want to take the case of a young man, a miner who is working full time at a pit—though there are not many working full time to-day—and is earning £3 a week, or £156 a year. He lives at home with his father and mother. He is allowed to count 16s. for his own maintenance. It does not matter what it costs to keep him, he is only allowed to count 16s. for his maintenance. After that one-half of his income goes to himself for clothes, for football matches, for pictures and, if you like, for taking his young lady to a dance. The other half goes to help to maintain the home. I have worked it out in this way: The man earns £3 a week, is allowed 16s. and he contributes to his father and mother 26s. a week. His father and mother are on a scale of 24s. allowance—not 26s., because there is some income coming into the home. Instead of getting 24s. from the Treasury the father and mother get 2S., and the son contributes 22S. a week. Therefore, he saves the Treasury £56 4s. in the year.
    In the assessment of his income to Income Tax he gets a. deduction of one-fifth of the £156, which is £31 knocked off. He gets an exemption of £100 to begin with and this £31, a total exemption of £131. He is therefore taxed on £25, and the amount of the tax he pays is £2 1s. 8d. He has saved the Government £56 4s., because they have not paid his father his 24s. a week, and still the

    1047
    Government say, "We are going to tax him," although they have already taxed him in the household at the rate of 36·5 per cent. of his income. Then some Members talk about the Super-tax. This man has got a tax of 36½ per cent. and on top of that tax is taxed at 1s. 8d. in the £on the £25. Surely to Heaven the Financial Secretary will not harden his heart against a case like that.
    Then take the case of a school teacher. If he is the son of a miner or a docker or a factory worker his father has had to burn the candle at both ends to let him go to college so that he can become a school teacher. In the family they have had to scrap and scrape to get a bit of money together, and if they have not raised sufficient money in that way they have had to borrow from the county council—the West Riding County Council, the London County Council or the Lancashire County Council—up to a total of £60. That sum is a loan and not a grant. There used to be grants before 1931, but it is now exceptional for any one to get a grant to go to college, and the father has to sign an undertaking to pay off the loan at so much a year, perhaps £10 a year. The young man does not start to earn a penny until he is about 22 or 23 years of age. In London the starting salary is ordinarily £192, and in the West Riding it is £180; but I want to stop in the West Riding, because these cases do not occur so much in London as in the distressed and semi-distressed areas.
    We will suppose that on leaving college he starts in the West Riding on a salary of £180 a year, which is just about £3 10s. a week. He, too, is living at home, and perhaps cycling or going by train eight or 10 miles to his school. From that £3 10s. he is allowed 16s. for his keep, which leaves 54s. Out of that this young man contributes to his father and mother 27s. a week, but his father and mother are entitled only to 26s. or 24s., and so there is not a penny piece coming from the Unemployment Assistance Board. He has saved the Treasury £70 4s. When they come to assess his income for Income Tax he is allowed a deduction of one-fifth, which comes to£36 8s., gets the other deduction of £100, and has to pay tax on £45 12s. at is. 8d. in the£. That means that he pays £3 15s. 8d. in Income Tax, though
    1048
    he has saved the State £70 4s. Surely to Heaven the Chancellor of the Exchequer is not going to say "No," in face of a statement like that. Will he please say what the amount would be if these people who are saving the State so much had the actual amount that they paid. It is not a question of asking for an exemption of but the exact amount that they have paid to maintain their parents. I beg to move this new Clause, and I have the faith to believe that the Chancellor, now that he has heard my case, is prepared to get up and say "I will accept it."
    9.25 p.m.
    Mr. T. Smith: I beg to second the Motion. I want the Chancellor to appreciate what is behind this Clause. The examples given by the hon. Member for Hemsworth (Mr. G. Griffiths) were very telling and very true. The House must remember that Part II of the Insurance Act now lays down regulations which base the allowance upon a household Income Tax. In practice that stabilises poverty in the household, because the more money there comes in from a wage earner, the less there is paid for one who happens to be unemployed. I am not going to give detailed examples, but I am going to tell what the men themselves say about it. I know a man in a fairly decent job, a man getting on in years, earning a wage which makes him liable to Income Tax, and because he happens to be earning a fairly decent wage, his son who is out of work can get nothing from the Unemployment Assistance Board. He says, "I don't mind keeping the lad until he can get a job, but the mere fact that I have to keep him keeps the household in a more or less poverty-stricken state. But after all, when I have kept him I am faced with having to pay Income Tax. I am penalised twice, and it is all I can do to scrape the Income Tax together."
    That is a case from the angle of a father, but it comes with double strength from the other angle, namely, when the father is out of work and the son is working. We often hear from hon. Members opposite that it is wrong to take away the incentive to work. But what happens when a man is employed on piece-work? The more he earns the less his father gets from the Unemployment Assistance Board until, when he gets beyond a certain figure, the father gets

    1049
    nothing. He has to keep the father whether he likes it or not, he is assessed for Income Tax as a single man, he is debarred from saving what he would like to do against the time when he will get married. The effect in some cases is not only to cause dissention within the household, but to drive the young man away from home. And the very moment the young man goes away from home rather than see his parents suffer when he is doing the right thing, the Unemployment Assistance Board says, "This lad has no right to leave home. He has left home in order to dodge his responsibilities." What we are asking in this new Clause is that he shall have a definite sum allowed him, the amount stated in the Clause. I hope that whoever replies will face up to the idea behind this Clause. I hope it will not be said that it is financially impossible to accept it. I hope we shall be told that if it cannot be accepted in its present form it will be recognised that there is an evil here that has to be met. If the Government will do that they will do something which will be felt outside by the unfortunate people who are affected.
    9.29 p.m.
    Mr. Graham White: The hon. Member for Hemsworth (Mr. G. Griffiths) with his accustomed vigour and sincerity used such a wealth of detail that I am absolved from giving further illustrations. He rested his case upon the position of a schoolmaster and a miner, but all Members who represent industrial constituencies are familiar with this case. They know that it covers the vast number of manual workers who are sufficiently unfortunate to have in their houses unemployed people, and who come under the regime of the means test. We have always been sympathetic to such a Clause as this, in point of fact we have a new Clause down on the Paper to the same effect, though I frankly admit that this Clause is better drawn. We are all familiar with the concessions made to parents who have children at school. There does not seem to be any reason in logic why this concession should not also be made. The equity of it is in some measure recognised by the Board of Inland Revenue, because in recent years, perhaps as a result of the efforts made in this House, the Board of Inland Revenue have stretched the rule so far as they can in order to give relief in
    1050
    these cases. Nevertheless, here is a grievance under the means test. There are cases in which the rules are not sufficiently elastic to cover it. The hon. Gentleman who has just spoken referred to the fact that the means test, aggravated by this provision, leads to the breaking up of homes. Within the last few weeks only I have come across cases of that kind. I am sure this Clause commends itself to the sympathy of Members in all quarters of the House. There may be difficulties, but they are there to be overcome.
    9.33 P.m.
    Mr. R. J. Taylor: I want to support this new Clause The means test would still remain if it were accepted, and I know of nothing among the workers that is giving greater dissatisfaction and causing more irritation in families at what is considered to be a gross injustice than the means test. This would only be an alleviation, but it does seem to me that we shall have to wait until we on this side get a Government before we can get the means test abolished. It would be well for the Chancellor to remember that these cases are not confined to the distressed areas. In areas where there has been an improvement in trade, but where there is still a high percentage of unemployment, as the wages have increased the dependency of the unemployed man has been aggravated by that very increase which one of the members of his family has succeeded in obtaining.
    I therefore ask hon. Members on the other side to remember, when they talk about the increased wages which the workers have been getting, that the correct method of calculation of those wages is to take into consideration the unemployed people who are living in the same room as the worker, and to add to the wages which the workers receive that which is received from the Unemployment Assistance Board, and to divide that sum by the number of people in the home. That will give the real income in that home. I would emphasise that where there is a single man whose father is receiving unemployment assistance, if that single man is receiving 64s. per week, he is maintaining his father and mother.
    A further reason for my rising in this Debate is that a young man came to see me this week-end. He has suffered from miners' nystagmus. Seven years ago he

    1051
    was examined by the medical referee and certified clear of that ailment. He worked for some time after that, as a miner, but he lost that job and he has been trying repeatedly since then to get back into the pit. Although he was certified clear, he is asked at every colliery where he goes whether he has had miners' nystagmus, and when he says that he has had it at some time in his life the companies will not start him again. The result is that he is on unemployment assistance. He has a brother who is working and who has to keep him. That is an illustration of the incidence of miners' nystagrnus. In all justice and fairness, the Chancellor of the Exchequer might grant this one concession to a very deserving class of people who are pulling their weight and giving their best for their country. It seems hard also, after the man has had those deductions from his 64s. a week, to the extent of 24s. to keep his father and mother, that the Income Tax authorities should come along at the end of the year, and that he should have to pay Income Tax on the figure to which the hon. Member for Hemsworth (Mr. G. Griffiths) referred. For those reasons I support the proposed new Clause.
    9.39 P.m.
    Sir Robert Aske:I hope that the Chancellor of the Exchequer will accept this new Clause. I think no representative of an industrial constituency would not give his sincere support to it, particularly in the case of constituencies where there is a very large number of people still unemployed, particularly unskilled labour. Instances have been given of the harsh way in which this principle operates at the present time, and illustrations have been given of its operation as between parents and children. I would remind the right hon. Gentleman that the operation of Part II of the Unemployment Act has extended the net far more widely than between parents and children, I know a great number of single men who are living with unemployed married brothers or sisters. In such a case the single man is in employment and may be earning good wages, but he has to contribute very substantially towards the maintenance of his brother or sister.
    The operation of Part II of the Unemployment Act creates what is virtually a statutory charge on income. Wherever
    1052
    there is such a charge there ought to be no assessment to Income Tax in regard to the amount of that charge. The hon. Member who moved the proposed new Clause explained that notwithstanding that the person concerned was out of work, he has to contribute a substantial sum, and that this operates in a large number of cases to cause serious sacrifices of his own income in order that he might live with his relatives; or else it forces him to leave what he regards as his home and to live somewhere else. On the northeast coast, where family sentiment is strong, we regard anything that tends to break up homes as definitely bad. This proposal is a thoroughly just one and it has the great merit that it would cost the Exchequer very little. I hope the right hon. Gentleman can meet it.
    9.42 p.m.
    Mr. James Griffiths: The case has been so well put from all sides of the House that I would not detain the House for a moment were it not that a concrete case has recently been brought to my notice bringing out very clearly the kind of imposition which is put on the young people of this country. I will content myself very largely with reading the bare facts of this case, as sent to me by a constituent. It is the case of a young miner of 25 years of age, skilled, and working in a rather dangerous anthracite colliery. I know what will happen to him in the next 10 years. I know what will be his fate, and the fate of a large number of young men employed in these collieries. One of these days he will get silicosis and he will then go on until the end comes.
    He is getting very good wages. In the year which ended in the end of October, 1937, he earned £115 I2S. As a result, he received a demand for Income Tax of £2 17S. 6d. He lives at home with his father, mother, brothers and sister. That is a family. His father is unemployed and has had a nil determination. I hope hon. Members on the other side fully realise what is meant by that phrase. The father has been to the Employment Exchange and has received a paper stating that he has a nil determination, which means that although he is unemployed and the State cannot find him work, his value to this great British Empire is nil. There is another brother who is unemployed and whose determination is also nil. He receives no unemployment

    1053
    allowance. There are two other brothers, one of whom is working and whose income is below the Income Tax level. Therefore, he does not come into it. There is a sister who has been and still is under medical observation because they suspect that she has T.B. The son's wages are used to give his unemployed father and brother a nil determination. This young man of 25, a skilled miner, in the fullness of his strength, stays at home because he has a high sense of family responsibility, and wishes to help his father and brother and his sister who is ill; and for that he suffers a double taxation. The State taxes him to maintain his father and his brother—because that is what the means test amounts to, and it is a tax infinitely more bitter than any that the Surtax payer has to pay. He has to keep his father and brother, because the State, under the Unemployment Assistance Act and the regulations which have been passed by this House, says that that is his responsibility; and then, at the end of the six months, he gets this paper. It is adding insult to injury. He says:
    "I paid up in the end under threat of court proceedings."
    That is the story, and I leave it there. In most industrial areas this is becoming the greatest social problem of our age. Young men have every inducement to leave home, and no inducement to stay at home. In view of all the dangers that beset us, let me utter this word of warning to hon. Members in all parts of the House. If this is the way you treat your young men now, you may call upon them in vain one of these days. The Chancellor could very well make such a concession in his £1,000,000,000 Budget. Unless this small measure of elementary justice is done, I shall be ashamed of this House and of this country.
    9.48 p.m.
    Mr. Croom-Johnson: I do not think it is a bad thing that somebody should rise from the party which I represent in the House in order to say a word or two about this proposed new Clause. I do so the more readily because, unlike most—indeed, all—of those who have already spoken upon it, I do not represent a great industrial constituency, though in the rural areas we have our problems, and we have patches, sometimes not inconsiderable patches, of industrial population to whom these things matter extremely. A
    1054
    feeling is perhaps occasionally expressed that it is very easy for Members to ask my right hon. Friend the Chancellor to make concessions when the concessions are likely to be particularly advantageous to the constituencies which they happen to represent, but that will not be the case as regards my own part of the country. We have our cases, but they are nothing like as numerous, and probably nothing like as serious, as some of those which have been so movingly referred to by hon. Members opposite.
    I do not profess, having to attend to the problems of my own people, to have that intimate knowledge of the conditions of the unemployed household which so many Members in other parts of the House possess, but, with every desire to be of assistance to my right hon. Friend the Chancellor, I am bound to say, after having listened to the way in which this Clause was put, and to the evidence which has been produced in regard to it, I was satisfied quite early in the Debate that a case had been made out, first of all, for investigation with regard to this matter. I have had some slight experience, in the course of my daily work, of dealing with Income Tax allowances and matters of that sort, and I think that my hon. and learned Friend the Member for East Newcastle (Sir R. Aske) was right when he reminded us that usually under the Income Tax Acts charges upon income are taken into account for the purpose of seeing what the real assessable income for Income Tax purposes ought to be. While I confess that from the technical point of view I see some difficulties in regard to the actual way in which this Clause could be worked out, that seems to me to be no reason at all for saying that the principle behind the Clause is a bad principle. It seems to me that if it is right in dealing with the national money to treat one side of the account in such-andsuch a way, it must be right, on the other side of the account, to treat money which is paid out as being a charge upon income.
    Therefore, speaking from a rather different angle from those who have already spoken on the Clause, I suggest to my right hon. Friend the Chancellor that, if it is impossible, as it may be—I do not know—to let us have the Clause now, there is clearly a case for consideration, a case for examination, and a case on some of the examples that have been

    1055
    placed before us, for saying that both sides of the account ought to be dealt with in the same way. As far as I have been able to follow the discussion, it does not seem to me to be in consonance with our ordinary ideas of justice to say that a proportion of the single man's income should be treated as though it had been transferred of necessity into the pockets of his unemployed relatives in the household, and at the same time, from the point of view of the Income Tax Acts, to say that, when it comes to Income Tax, that money must be treated as being in the pocket of the man who earned it. The result is of course that it looks to be what lawyers call an "omitted case" from the situation under the Income Tax Acts.
    I see some difficulties of administration in regard to it, because I think hon. Members have assumed all through that you are dealing with a case in which the money which has been credited, so to speak, as the income of the unemployed father has remained credited week by week throughout the year. But whatever the charge there has been throughout the year, whether it has been for the whole 52 weeks, for 26 weeks, or for 13 weeks, the principle should be the same. One other thing that makes me think the question of administration has been rather overlooked is the word "deemed" in the last line of the Clause. But we do not want so much to discuss that this afternoon from the strictly legal or technical point of view; we want to discuss it first from the human point of view, then from the point of view which is implicit in the Clause; that is, the ordinary justice of treating each thing on the same side from the same point of view, not treating the individual's earnings for one moment as being transferred by him from his pocket to that of his unemployed father, and then, when you want to raise a little more money for taxation, treating it as though it is still in his pocket and he has not got an unemployed father at all.
    It is for these reasons, perhaps somewhat hastily expressed, that I hope my right hon. Friend will be able to say that he can offer some hope of putting right this particular matter, although it may be that the Clause will have to be altered or some arrangement made for putting the regulations under the Clause in such a form as to see that we do not go too far the other way. Nobody knows what
    1056
    it is going to cost. I think that, having regard to the human problem which is really behind this Clause, the House ought to be a little courageous. It is very easy, of course, to ask the House to be courageous, because the Chancellor has the responsibility for footing the Bill. But the House might say, "Here is something which looks like being an act of justice; we ought to take our courage in our hands and ask the Chancellor to deal with it, without being too particular about the sum that it is going to cost."
    10.0 p.m.
    Mr. Godfrey Nicholson: I am certain it would be easy for an able and experienced lawyer like my right hon. Friend the Chancellor to give many technical reasons why the Clause cannot be accepted. But he is renowned not only as a lawyer but for wide human sympathies, and I hope he realises the degree of bitterness that a small pinprick like this causes in industrial areas. It is a commonplace that the means test has caused great dissatisfaction. We on this side believe the means test is a necessity and we defend it, but I cannot see any way in which one can defend this form of double taxation. It seems to me that my hon. Friend the Member for Newcastle, East (Sir R. Aske) put his finger on the spot when he spoke of the obligation to support parents and other dependent relatives as a statutory charge. Technically, of course, the obligation to support parents is not a statutory charge, but it is in actual fact.
    I should like to compare the cases of this sort of obligation with the case of a married man. A man has no obligation to marry, but if he does marry he is allowed a deduction from Income Tax in order to keep his wife; whereas a young single man cannot get away from his obligation to support his parents. Members who represent industrial areas realise the great harm a pinprick like this causes. I am certain that the Chancellor does not need any persuading on the human side; I am certain he does not on the financial side, because the sum involved is not great; I am certain he does not on the side of equity; but I fear he may on the legal side. I want him to understand the strong feeling on this matter that exists on this side of the House.
    10.4 p.m.
    Sir J. Simon: I have listened to this discussion with a great deal of attention and sympathy. From all quarters of the House speeches have been made on this subject which have raised a very strong and natural feeling of sympathy. The point was put by the hon. Member for Hemsworth (Mr. G. Griffiths) with his usual humour and force, and he was supported by hon. Members on that side; and it was put with considerable strength on this side by my hon. Friend the Member for Newcastle, East (Sir R. Aske), my hon. and learned Friend the Member for Bridgwater (Mr. Croom-Johnson) and my hon. Friend the Member for Farnham (Mr. G. Nicholson). I should like to do what they ask, but it is not nearly so easy as it looks at first sight. It is not easy to find a form of words which would be suitable, because we are on the Report stage and we cannot say that we will do it at some later stage.
    First of all I would make this observation, that we are dealing here with the subject of family obligations arising through unemployment. That is the general nature of the problem. But that sort of thing is a thing that happens in many homes and not only in homes where the means test is in operation. Many a son and daughter who is finding a way of maintaining parents, and it may be on very modest means, does not come within the Unemployment Act and therefore is outside the proposal, and all of us who, I hope, try to be good sons, think it a good thing that one should strive within the limits of one's power to help the old person that needs it. But there is this to be said about the particular case that is put by the hon. Gentleman opposite. It is true, I think, as has been stated by an hon. gentleman behind me, that in a sense this is a double tax, at any rate the amount of the assumed contribution is fixed by law and regulation, which makes it perhaps not quite the same case as the case which undoubtedly arises all over the country where sons and daughters help their old people.
    Another consideration to be borne in mind is that we really do something which is very analogous to this already in our Income Tax laws in another case. I do not think the hon. Member mentioned that in Section 22 of the Finance Act, 1920, we already make a provision that
    1058
    if the claimant proves that he maintains at his own expense a dependent relative incapacitated by old age or infirmity, provided the amount is within certain limits, relief is allowed. Therefore, we do already allow in our Income Tax code for that sort of thing. But, of course, the case dealt with by this Amendment is not the case where the provision is made by reason of old age or incapacity, but by reason of unemployment, and that is really the point that has been so forcibly made.
    What I am prepared to do is a little risky, it is almost from hand to mouth putting a new Clause into the Finance Bill on the Report stage. But of course it will satisfy a number of people and therefore I am taking some risk in doing it now. If I am not using the words which, on reflection, ought to be used, I hope I shall not be blamed if I try to put it straight, but I do not like to say on a matter of this sort on the Report stage that I am very sympathetic and will think about it next year, if it is possible to do something now. There are two considerations to be adhered to. One is that what is involved here in any individual case is quite a small amount, so that I think the point that I am going to make as a safeguard will have very little practical application, if any. It is that the allowance must not exceed in any year £25. If it did it would run counter to the terms of the provision already made for the person incapacitated by old age or infirmity. But I do not think we need boggle over that.
    The other provision is this, that there must not be any duplication of relief. No one is intended by this method to get relief twice over. He must not get a duplication of the concession and the existing dependent relative allowance in respect of the same person. That, I think, is the intention of all of us and it certainly is mine, and I am prepared to move the necessary form of words. I am prepared, if the House agrees, to do it now and move an Amendment provided it is clearly understood that this is purely a concession for the means test cases, and will not be urged as a ground for further concessions under which the Chancellor of the Exchequer would lose revenue all the way round. I think when we have got the Unemployment Act and the Regulations

    1059
    of the Unemployment Assistance Board which quantify as it were the amount which is to be deemed to be paid away for the maintenance of the dependent, whoever it may be—I think that makes a special case, and therefore I am prepared if this is in order and if the hon. Gentleman the Member for Hemsworth (Mr. G. Griffiths) will withdraw his own Clause—I am told the proper way is not to ask for that Clause to be withdrawn, but to alter the Clause as we can do, I suppose, when it has been read a Second time. The Clause will be altered after the Clause is read a Second time, on the Question, "That the Clause be added to the Bill."
    Mr. Pethick-Lawrence: Would it be out of order for the right hon. Gentleman to read us his Clause in the amended form and then the technical way of including in the Bill might be left until afterwards?
    Sir J. Simon: What I desire to do if it can be done within the rules of order and the House will approve is to get a new Clause on these lines:
    "If any person proves that during any year of ssessment he has a relative living with him (a)Who in that year has been denied wholly or in part unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance on the ground that the relative was being maintained wholly or in part by him and (b) in respect of whom he is entitled to no deductions for that year under Section 22 of the Finance Act, 1920."
    That is the deduction for old age and infirmity—
    "he shall be entitled to a deduction from the amount of tax with which he is chargeable in that year equal to the tax at the standard rate on the amount deemed to be paid by him, such sum not to exceed £25."
    I believe that puts the point correctly. At any rate, the House can see my intention and if that is added to the Bill I shall be glad to give instructions for it to be applied benevolently. I think I ought to add this simple point, because I do not want to leave anything omitted from the statement now. I believe that at present, under the regulations of the Unemployment Assistance Board, where it is claimed that Income Tax paid by a wage earning member of the applicant's household should be deducted from the amount of wages taken into account, the amount so paid is allowed as a special expense just as I believe it is in the case of Health Insurance and other
    1060
    payments of that class. Of course this will be affected if there is no tax to be paid in respect of the amount which is agreed to have been provided by the relative. That is the proposal I make to the House and I hope that will be able to meet what is suggested.
    Mr. Speaker: The right hon. Gentleman suggested that the hon. Member should withdraw this Clause, but it will not be in order to withdraw the Clause and produce another without having given notice of a new Clause. I suggest to the right hon. Gentleman that he move his Amendment in the following form, that is to say, after the Clause has been read a Second time, to withdraw all the words after "person," in order to insert the alternative words. That is the proper way, and should be the form of the Amendment rather than withdraw the Clause and bring in another one.
    10.16 p.m.
    Mr. Pethick-Lawrence: I am quite sure that the whole House on every side is much indebted to the Chancellor of the Exchequer, not only for his courtesy in making a concession but in making it in rather difficult circumstances and in so short a time. Without in the slightest degree wishing to query, or quibble about, any point, I think that we are all agreed about the substance of what we want to do. I want to be quite clear that what the Chancellor of the Exchequer proposes will conform with the intentions of all of us. The Chancellor of the Exchequer in the Amendment which he is proposing to substitute for the Clause presently before us says:
    "any person… who has a relative living with him,"
    and that the maximum amount is to be £25. I understand that if any one relative is supported in this way the amount will be taken as £25 of income.
    Sir J. Simon: Not more than £25.
    Mr. Pethick-Lawrence: Not more than £25, but I am not quite sure whether that includes cases where a person supports two such relatives. I take it that it will mean £25 on account of each relative. I was not sure from the wording whether the maximum of £25 is to apply to each relative. I am sure that the Chancellor of the Exchequer intends that but I am not sure that it would have that effect.
    Sir J. Simon: I think it is very natural that that question should be raised. I have only been able to read the words and I apologise to you, Mr. Speaker, that you have not been provided with a copy.
    10.19 p.m.
    Sir J. Simon: I beg to move, in line I, to leave out from the word "person," to the end of the proposed Clause, and to add instead thereof:
    "proves that during any year of assessment he has a relative living with him

    (a) who in that year has been denied wholly or in part unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by him; and

    (b) in respect of whom he is entitled to no reduction for that year under Section 22 of the Finance Act, 1920,

    he shall be entitled to a deduction from the amount of tax with which he is chargeable for that year equal to tax at the standard rate on the amount deemed to have been paid by him in that year towards such maintenance but not exceeding tax on twenty-five pounds."
    In reply to the right hon. Gentleman opposite I appreciate his points because my draft speaks of "a relative," and you may have cases, and, indeed, probably the hardest cases, where a single man at work may be maintaining not "a relative" but more than one. The answer is that, in construing Acts of Parliament, the singular may include the plural. If there be two relatives they will be included. The limit of £25 is, of course, a maximum for each. I do not feel any doubt about that myself.
    Sir Irving Albery: I understood my right hon. Friend to say, "living with him," and I want to know whether that also meets the case of a man living with his parents? Does it cover in both ways?
    Sir J. Simon: Of course, this only arises where, as the hon. Gentleman opposite said, a home is maintained. It is a very unfortunate thing if the home is broken up because that is the way of
    avoiding the son's liability. It is better to keep the home together.
    10.22 p.m.
    Mr. G. Griffiths: I should like to thank the Chancellor of the Exchequer. I was satisfied that when the case was put and the Chancellor of the Exchequer had heard it, he would be prepared to give us a remedy. I want to thank him for what he has done.
    Amendment agreed to.
    Clause, as amended, ordered to stand part of the Bill.

    NEW CLAUSE.—(Relief in respect of certain profits of housing associations.)
    (1) Notwithstanding anything contained in the Income Tax Acts, any society or company which is a housing association as defined in Section one hundred and eighty-eight of the Housing Act, 1936, and Section twenty-five of the Housing (Scotland) Act, 1936, shall be entitled to have the amount of Income Tax which, but for any relief under this Sub-section, it would be liable to bear for any year of assessment, reduced by a sum representing tax on the amount of profits allocated in that year to reserve accounts or paid to any fund for the redemption of leases or of any charges on the society or company in respect of loans.

    (2) Relief under this Section shall be added to any reliefs applicable under Subsection (4) of Section thirty-two of the Finance Act, 1933, and in the event of any part of the combined reliefs remaining unsatisfied in respect of any year of assessment that part of the combined reliefs remaining unsatisfied shall be treated as provided in paragraph (b) of Sub-section (4) of Section thirty-two of the Finance Act, 1933:

    Provided that no reliefs under this Section shall be applicable in respect of any allocations or payments in respect of which a deduction or relief is allowable to the society or company otherwise than under this Section.— [Mr. Pethick-Lawrence.]
    Brought up, and read the First time.
    Motion made, and Question put, "That the Clause be read a Second time."—[Mr.
    Pethick-Lawrence.]
    The House divided: Ayes, 135; Noes, 229.

    Division No. 293.]

    AYES.

    [10.22 p.m.

    Adamson, W. M.

    Benson, G.

    Clynes, Rt. Hon. J. R.

    Anderson, F. (Whitehaven)

    Broad, F. A.

    Cocks, F. S.

    Attlee, Rt. Hon. C. R.

    Bromfield, W.

    Collindridge, F.

    Banfield, J. W.

    Brown, C. (Mansfield)

    Cove, W. G.

    Barnes. A. J.

    Brown, Rt. Hon. J. (S. Ayrshire)

    Cripps, Hon. Sir Stafford

    Barr, J.

    Burke, W. A.

    Daggar, G.

    Batey, J.

    Cape, T.

    Dalton, H.

    Bellenger, F. J.

    Charleton, H. C.

    Davidson, J. J. (Maryhill)

    Benn, Rt. Hon. W. W.

    Cluse, W. S.

    Davies, R. J. (Westhoughton)

    Davies, S. O. (Merthyr)

    Jones, Morgan (Caerphilly)

    Poole, C. C.

    Day, H.

    Kelly, W. T.

    Price, M. P.

    Dobbie, W.

    Kennedy, Rt. Hon. T.

    Quibell, D. J. K.

    Dunn, E. (Rother Valley)

    Kirby, B. V.

    Richards, R. (Wrexham)

    Ede, J. C.

    Kirkwood, D.

    Ridley, G.

    Edwards, Sir C. (Badwellty)

    Lathan, G.

    Riley, B.

    Evans, D. O. (Cardigan)

    Leach, W.

    Ritson, J.

    Frankel, D.

    Lee, F.

    Roberts, W. (Cumberland, N.)

    Gallacher, W.

    Leonard, W.

    Robinson, W. A. (St. Helens)

    Gardner, B. W.

    Leslie, J. R.

    Rothschild, J. A. de

    Garro Jones, G. M.

    Logan, D. G.

    Salter, Dr. A. (Bermondsey)

    George, Megan Lloyd (Anglesey)

    Lunn, W.

    Seely, Sir H. M.

    Gibson, R. (Greenock)

    Macdonald, G. (Ince)

    Sexton. T. M.

    Green, W. H. (Deptford)

    McEntee, V. La T.

    Silkin, L.

    Greenwood, Rt. Hon. A.

    McGhee, H. G.

    Silverman, S. S.

    Grenfell, D. R.

    McGovern, J.

    Simpson, F. B.

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    MacLaren, A.

    Smith, Ben (Rotherhithe)

    Griffiths, G. A. (Hemsworth)

    Maclean, N.

    Smith, E. (Stoke)

    Griffiths, J. (Llanelly)

    Mander, G. le M.

    Smith, Rt. Hon. H. B. Lees- (K'ly)

    Hall, G. H. (Aberdare)

    Marklew, E.

    Smith, T. (Normanton)

    Hall, J. H. (Whitechapel)

    Marshall, F.

    Sorensen, R. W.

    Hardie, Agnes

    Mathers, G.

    Summerskill, Dr. Edith

    Harris, Sir P. A.

    Maxton, J.

    Taylor, R. J. (Morpeth)

    Henderson, A. (Kingswinford)

    Messer, F.

    Thurtie, E.

    Henderson, J. (Ardwick)

    Milner, Major J.

    Tomlinson, G.

    Henderson, T. (Tradeston)

    Montague, F.

    Viant, S. P.

    Hicks, E. G.

    Morrison, Rt. Hon. H. (Hackney, S.)

    Walkden, A. G.

    Hills, A. (Pontefract)

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

    Watkins, F. C.

    Hollins, A.

    Muff, G.

    Watson, W. McL.

    Hopkin, D.

    Naylor, T. E.

    White, H. Graham

    Jagger, J.

    Noel-Baker, P. J.

    Williams, T. (Don Valley)

    Jenkins, A. (Pontypool)

    Oliver, G. H.

    Windsor, W. (Hull, C.)

    Jenkins, Sir W. (Neath)

    Paling, W.

    Woods, G. S. (Finsbury)

    John, W.

    Parker, J.

    Young, Sir R. (Newton)

    Johnston, Rt. Hon. T.

    Parkinson, J. A.

    Jones, A. C. (Shipley)

    Pearson, A.

    TELLERS FOR THE AYES.—

    Jones, Sir H. Haydn (Merioneth)

    Pethick-Lawrence, Rt. Hon. F. W.

    Mr. Whiteley and Mr. Groves.

    NOES.

    Acland-Troyte, Lt.-Cot. G. J.

    Crooke, Sir J. Smedley

    Guest, Maj. Hon.O. (C'mb'rw'll, N.W.)

    Adams, S. V. T. (Leeds, W)

    Crookshank, Capt. H. F. C.

    Gunston, Capt. Sir D. W.

    Agnew, Lieut.-Comdr. P. G.

    Croom-Johnson, R. P.

    Hambro, A. V.

    Albery, Sir Irving

    Cruddas, Col. B.

    Hannah, I. C.

    Allen, Col. J. Sandeman (B'knhead)

    Davidson, Viscountess

    Hannon, Sir P. J. H.

    Anderson, Sir A. Garrett (C, of Ldn.)

    Davies, Major Sir G. F. (Yeovil)

    Harbord, A.

    Anstruther-Gray, W. J.

    De la Bére, R.

    Harvey, T. E. (Eng. Univ's.)

    Apsley, Lord

    Denman, Hon. R. D.

    Haslam, Henry (Horncastle)

    Aske, Sir R. W.

    Denville, Alfred

    Haslam, Sir J. (Bolton)

    Assheton, R.

    Despencer-Robertson, Major J. A. F.

    Heilgers, Captain F. F. A.

    Astor, Major Hon. J. J. (Dover)

    Dixon, Capt. Rt. Hon. H.

    Hely-Hutchinson, M. R.

    Astor, Viscountess (Plymouth, Sutton)

    Dodd, J. S.

    Heneage, Lieut.-Colonel A. P.

    Balfour, Capt. H. H. (Isle of Thanet)

    Doland, G. F.

    Hepburn, P. G. T. Buchan-

    Beamish, Rear-Admiral T. P. H.

    Dower, Major A. V. G.

    Herbert, Major J. A. (Monmouth)

    Beit, Sir A. L.

    Duckworth, Arthur (Shrewsbury)

    Holdsworth, H.

    Bernays, R. H.

    Duckworth, W. R. (Moss Side)

    Holmes, J. S.

    Bossom, A. C.

    Dugdale, Captain T. L.

    Hopkinson, A.

    Boulton, W. W.

    Duggan, H. J.

    Horsbrugh, Florence

    Bower, Comdr. R. T.

    Duncan, J. A. L.

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

    Boyce, H. Leslie

    Eastwood, J. F.

    Hume, Sir G. H.

    Braithwaite, Major A. N.

    Elliot, Rt. Hon. W. E

    Hunloke, H. P.

    Brass, Sir W.

    Ellis, Sir G.

    Hunter, T.

    Broadbridge, Sir G. T.

    Elmley, Viscount

    Hurd, Sir P. A.

    Brown, Col. D. C. (Hexham)

    Emery, J. F.

    Hutchinson, G. C.

    Brown, Brig.-Gen. H. C, (Newbury)

    Emmott, C. E. G. C.

    Joel, D. J. B.

    Browne, A. C. (Belfast, W.)

    Emrys-Evans, P. V.

    Jones, Sir G. W. H. (S'k N'w'gt'n)

    Bull, B. B.

    Entwistle, Sir C. F.

    Janes, L. (Swansea W.)

    Burghley, Lord

    Errington, E.

    Kerr, Colonel C. I. (Montrose)

    Butcher, H. W.

    Erskine-Hill, A. G.

    Kerr, H. W. (Oldham)

    Campbell, Sir E. T.

    Findlay, Sir E.

    Kerr, J. Graham (Scottish Univs.)

    Carver, Major W. H.

    Fleming, E. L.

    Kimball, L.

    Cary, R. A.

    Furness, S. N.

    Lamb, Sir J. Q.

    Cayzer, Sir C. W. (City of Chester)

    Fyfe, D. P. M.

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

    Cazalet, Thelma (Islington, E.)

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

    Leech, Sir J. W.

    Clarke, Colonel R. S. (E. Grinstead)

    Gledhill, G.

    Lees-Jones, J.

    Clarry, Sir Reginald

    Gluckstein, L. H.

    Leighton, Major B. E. P.

    Clydesdale, Marquess of

    Goldie, N. B.

    Levy, T.

    Colman, N. C. D.

    Gower, Sir R. V.

    Lipson, D. L.

    Colville, Rt. Hon. John

    Grant-Ferris, R.

    Llewellin, Colonel J. J.

    Conant, Captain R. J. E.

    Greene, W. P. C. (Worcester)

    Locker-Lampson, Comdr. O. S.

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Gretton, Col. Rt. Hon. J.

    Loftus, P. C.

    Cooke, J. D. (Hammersmith, S.)

    Gridley, Sir A. B.

    Mabane, W. (Huddersfield)

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Grigg, Sir E. W. M.

    MacAndrew, Colonel Sir C. G.

    Courthope, Col. Rt. Hon. Sir G. L.

    Grimston, R. V.

    McCorquodale, M. S.

    Craven-Ellis, W.

    Guest, Lieut.-Colonel H. (Drake)

    McKie, J. H.

    1064

    1065

    Macnamara, Major J. R. L.

    Ramsay, Captain A. H. M.

    Sueter, Rear-Admiral Sir M. F.

    Maitland, A.

    Ramsbotham, H.

    Tasker, Sir R. I.

    Makins, Brigadier-General Sir Ernest

    Ramsden, Sir E.

    Taylor, C. S. (Eastbourne)

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

    Rathbone, J. R. (Bodmin)

    Thomas, J. P. L.

    Markham, S. F.

    Rayner, Major R. H.

    Thorneycroft, G. E. P.

    Marsden, Commander A.

    Reed, A. C. (Exeter)

    Touche, G. C.

    Maxwell, Hon. S. A.

    Reed, Sir H. S. (Aylesbury)

    Tufnell, Lieut.-Commander R. L.

    Mayhew, Lt.-Col. J.

    Reid, W. Allan (Derby)

    Turton, R. H.

    Mellor, Sir J. S. P. (Tamworth)

    Remer, J. R.

    Wakefield, W. W.

    Mills, Major J. D. (New Forest)

    Rickards, G. W. (Skipton)

    Walker-Smith, Sir J.

    Moore, Lieut.-Colonel Sir T. C. R.

    Ross Taylor, W. (Woodbridge)

    Wallace, Capt. Rt. Hon. Euan

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

    Rowlands, G.

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

    Moreing, A. C.

    Royds, Admiral Sir P. M. R.

    Ward, Irene M. B. (Wallsend)

    Morgan, R. H.

    Ruggles-Brise, Colonel Sir E. A.

    Warrender, Sir V.

    Morris-Jones, Sir Henry

    Russell, Sir Alexander

    Water-house, Captain C.

    Morrison, G. A. (Scottish Univ's.)

    Russell, S. H. M. (Darwen)

    Watt, Major G. S. Harvie

    Morrison, Rt. Hon. W. S. (Cirencester)

    Salmon, Sir I.

    Wells, Sir Sydney

    Muirhead, Lt.-Col. A. J.

    Samuel, M. R. A.

    Whiteley, Major J. P. (Buckingham)

    Munro, P.

    Sanderson, Sir F. B.

    Wickham, Lt.-Col. E. T. R.

    Nicholson, G. (Farnham)

    Scott, Lord William

    Williams, H. G. (Croydon, S.)

    Nicolson, Hon. H. G.

    Selley, H. R.

    Willoughby de Eresby, Lord

    O'Connor, Sir Terence J.

    Shaw, Major P. S. (Wavertree)

    Wilson, Lt.-Col. Sir A. T. (Hitchin)

    Patrick, C. M.

    Shaw, Captain W. T. (Forfar)

    Windsor-Clive, Lieut.-Colonel G.

    Peake, O.

    Shepperson, Sir E. W.

    Wise, A. R.

    Petherick, M.

    Simon, Rt. Hon. Sir J. A.

    Womerstey, Sir W. J.

    Pickthorn, K. W. M.

    Smith, Bracewell (Dulwich)

    Wood, Hon. C. I. C.

    Pilkington, R.

    Smith, Sir R. W. (Aberdeen)

    Wragg, H.

    Plugge, Capt. L. F.

    Somervell, Rt. Hon. Sir Donald

    Wright, Wing-Commander J. A. C.

    Ponsonby, Col. C. E.

    Someryille, A. A. (Windsor)

    Pownall, Lt.-Col. Sir Assheton

    Southby, Commander Sir A. R. J.

    TELLERS FOR THE NOES.—

    Procter, Major H. A.

    Spens, W. P.

    Captain Hope and Major Sir

    Radford, E. A.

    Strauss, H. G. (Norwich)

    James Edmondson.

    Raikes, H. V. A. M.

    Stuart, Hon. J. (Moray and Nairn)

    Question put, and agreed to.

    NEW CLAUSE.—(Amendment of s. I of c. 18 of 10 & II Geo. 5.)
    In section twenty-one of the Finance Act, 1920, after the words "educational establishment" there shall be inserted the words "or since the age of sixteen years has been prevented from working by disability however arising."—[Mr. H. G. Williams.]
    Brought up, and read the First time.
    10.31 p.m.
    Mr. H. G. Williams: I beg to move, "That the Clause be read a Second time."
    In moving this new Clause, I am not an optimist, because experience has taught me never to be an optimist on the first occasion one presents a new Clause in regard to an Income Tax allowance. Nevertheless, I hope that the problem I am presenting to the House will receive some consideration from the Treasury. At the present time, there is, in respect of the first child, an Income Tax allowance on assessment of £60. There is an allowance in respect of a dependent relative of £25. I am visualising the case of a child who never becomes a dependent relative in the ordinary sense. I know that there are not very many cases of the sort I have in mind, but there is a certain number. I put down this new Clause because of a hard case in my constituency, and as a result of putting it down, I learned of a certain number of other cases. I am
    1066
    visualising the case of a child who, up to the age at present stipulated, qualifies for the maximum child's allowance, but ho does not become capable of working, and in the ordinary sense never becomes an adult, by which I mean someone capable of earning for himself or herself. I am visualising the case of a child who, in fact, remains a child throughout life.
    I propose that until such a person reaches that state of health in which he can start earning, he should be regarded as a child; in other words, I am proposing an increase in the allowance for such a person from £25 a year to £60 a year. There is a moderate number of such persons, and they represent great hardship to those who are called upon to maintain them. Parents love their child, however disabled that child may be, and from whatever disabilities he or she may suffer; and if the circumstances are such that a child, born it may be with a congenital disability or having a disability arising from disease during childhood or from an accident, is never able to do what an ordinary child looks forward to doing, to get a job, such a person should continue to be regarded as a child throughout life, or at any rate until he or she recovers from the disability, and should receive the full child's allowance. I think the case for this new Clause is a clear one. My right hon. and gallant Friend the Financial Secretary may say

    1067
    that he is very much impressed by what I have said, but that he is sorry it cannot be afforded this year. That is a very common reply in the case of many of these new Clauses. If that be the reply, I hope he will add that the problem will be looked into, in the hope that next year or the year after the Treasury may be able to meet the case I have put forward.
    10.35 p.m.
    Sir John Mellor: I beg to second the Motion.
    I wish to commend this new Clause to the House, because it is a very simple provisions, and I suggest that the merits of it are obvious. The only objection which I anticipate is that of the cost to the revenue, an objection whiche we must always regard with the greatest respect. But I think that in this case the cost to the revenue will not be very severe, and I hope that my right hon. Friend will see his way to accept the proposal.
    10.36 p.m.
    Captain Wallace: I am afraid that the House will now have begun to think that when my right hon. Friend the Chancellor gets up, it means that there is some possibility of concession, but that when I intervene it means that there is "nothing doing." I am sorry to disappoint my hon. Friend the Member for South Croydon (Mr. H. G. Williams) who moved this new Clause with, if he will forgive me for saying so, unusual brevity, but I cannot hold out any hope to him that this point will be conceded. Like every proposal put forward by my hon. Friend, it has certain merits but there are some very strong arguments against it. Section 21 of the Finance Act, 1920, provides, as he said, for an allowance £60 in respect of any child who is either under the age of 16, or who, if over the age of 16, is receiving full-time instruction at any university, college, school or other educational establishment.
    Before 1919 no Income Tax allowance was given in respect of any child over 16. In that year the allowance was extended to cover the case of the child who, though over 16, was receiving full-time instruction at an educational establishment. The undoubted object of Parliament in giving this extended allowance was to recognise
    1068
    and encourage advanced education. It put on record the fact that Parliament did not mean that education should end at the age of 16. The new Clause seeks to incorporate in that provision a relief which has no essential connection, either with young children or with adolescent education. It would bring within that extended allowance all incapacitated sons and daughters of whatever age. As the hon. Member has admitted, there is already a provision in the Income Tax law to deal with dependent relatives. That is the allowance of £25 to the taxpayer who maintains at his own expense any relative of his or his wife's who is incapacitated by old age or infirmity. There is no age restriction in that relief where the ground is infirmity, and the class of persons for whom my hon. Friend is seeking to legislate get the £25 allowance. This new Clause proposes, in effect, to increase the dependent relative allowance from £25 to£60 in the case of a selected class of dependent relatives. I think the House will see that if we were to pass the Clause it would be impossible to maintain the distinction, and limit the concession to this particular selected class. There is no ground for differentiating between an incapacitated son or daughter and any other incapacitated relative—for example, an infirm mother or an invalid brother or sister. Therefore my right hon. Friend thinks, and I believe that the House on reflection will agree, that the acceptance of this proposal would at once give rise to claims, which would be practically irresistible, to increase the allowance from £25 to £60 for all dependent relatives.
    Mr. H. G. Williams: How does my right hon. and gallant Friend explain that? They must have been disabled from the age of 16.
    Captain Wallace: You might have an infirm mother or brother or sister—
    Mr. Williams: If she was a mother she could not have been disabled from the age of 16; otherwise she could never have become a mother.
    Captain Wallace: I do not think that necessarily follows. It is not possible to consider a concession of this kind this year. The actual amount involved in my hon. Friend's proposal is not perhaps as large as some of the proposals we have

    1069
    been dealing with, but if the concession were made, other concessions would have to follow, and we estimate that the cost to the Exchequer would be some £2,500,000 per annum. That is a sum which my right hon. Friend is not prepared to give up and I am sure that my hon. Friend does not expect that he should.
    Mr. H. G. Williams: May I ask how the Treasury have succeeded in discovering how many people in this country have been continuously disabled since the age of 16? As one who has studied statistics I am satisfied that no statistics are available to enable that calculation to be made.
    Captain Wallace: I do not think that my hon. Friend has been listening. I did not suggest that this particular concession would cost £2,500,000 or anything like it. I said that this was a concession which would be used by hon. Members in all parts of the House as a jumping-off point in order to secure other concessions, which, once this concession was made, could be so powerfully supported that no future Chancellor would be able to resist them. I must point out again that any increase this year of the allowances granted to Income Tax payers would be out of harmony with the general lines upon which this Budget is planned. My hon. Friend is thinking of the small Income Tax payers. Very few people seem to bother about the larger payers. In the case of the smaller taxpayers 2,000,000 people will not have to pay more tax owing to the increase in the standard rate, and if a concession of this kind were made it would mean giving a favour to a selected class of small Income Tax payers who would pay even less Income Tax this year than they paid last year. That is a situation which would not accord with the general situation of the country or with the principles upon which my right hon. Friend has framed his Budget, and in these circumstances I must regretfully ask the House to refuse the concession.
    Mr. H. G. Williams: In view of the somewhat confused explanations of the Minister, and realising the fact that I cannot get this new Clause and expressing a little surprise that he should have referred to the unusual brevity of my speech because I never speak at length,
    1070
    I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Deductions for expenses incurred during disability.)
    In computing the earned income of any person for the purposes of the Income Tax Acts there shall be deducted from the taxable income of any such person any increase of expenditure which he may have incurred during the year of assessment on account of any disability exceeding three weeks in duration: Provided that no such deduction shall exceed one-tenth of his taxable income.—[Mr. H. G. Williams.]
    Brought up, and read the First time.
    10.44 p.m.
    Mr. H. G. Williams: I beg to move, "That the Clause be read a Second time."
    I expect that this Clause will meet with a fate similar to that of the last. Nevertheless, I hope that I am blazing a trial for the time when there will be a little more money available and concessions can be made in respect of Income Tax allowances. The object of the new Clause is to deal with circumstances which arise when an Income Tax payer is subjected to heavy expenses owing to a prolonged illness which injures his capacity to earn. My hon. and learned Friend, in framing this Clause, took a moderate view, not wanting to bring in illnesses of short duration, but he did think that where there was prolonged illness there might be a case for the most exacting of all creditors to become less exacting. The man whom we have to pay whatever happens is the collector of taxes. Other people may be tolerant; the collector of taxes is not allowed to be tolerant; he cannot make any concessions. The landlord, much abused from the benches opposite—
    Mr. G. Griffiths: Only the bad landlords.
    Mr. Williams: The bulk of them are good and not bad.
    Mr. Griffiths: Yes, that is so.
    Mr. Williams: Thank you very much. I am the landlord only of the premises which I occupy, nobody pays me rent—oh yes, there is one person, and he pays promptly. The landlord, the tradesman, everybody, is considerate to the household in which there has been prolonged illness

    1071
    on the part of the wage earner or salary earner. The only one who is intolerant is that collective creditor the State. I am merely suggesting at this stage, again for the examination of the Treasury, and not with a hope that the concession will be granted to-night, that in cases of prolonged illness the cost of that illness might be regarded as a deductable expense. If there is wear and tear of industrial machinery the State takes that fact into account. I rejoice that this year the Chancellor of the Exchequer did increase the special allowance of 10 per cent. in rsepect of depreciation granted in 1931 by 20 per cent. Here I am merely suggesting that there should be some recognition of what I would call the depreciation of the human machine.
    It is difficult to estimate what this concession would cost. No doubt the Treasury will put forward some figure, and by bringing in a lot of other things which hon. Members have thought of they may multiply the £100,000 which I had in mind to £2,500,000. That is a convenient device. I do not blame my right hon. and gallant Friend for bringing into account a lot of other people's Amendments which they have not yet tabled and adding the cost of them to mine, because, after all, the Financial Secretary has to do the best he can when the Chancellor is having some refreshment. It is not proposed that there should be an unlimited allowance, because the Clause provides that the deduction shall not exceed one-tenth of the taxable income.
    As I have said, I do not expect to get this concession to-night. I am merely, on behalf of my hon. and learned Friend, submitting for consideration a real human problem, and I hope that in due course that human problem will receive the examination of the Treasury. In the days when I was a boy and the Income Tax was at 8d. all the greybeards were in distress because it was raised to 9d. The concession would not have mattered so much in those days, but things are different now that the standard rate of tax is 5s. 6d. in the £ The burden has become so oppressive to millions of people that these matters assume an importance which was never dreamed of in the days when I was a boy. It is because of the human tragedies which occur when a person who has been earning a fairly good
    1072
    income is suspended from earning, and may also have the great burden of an operation and a long period in a nursing home, that I honestly think that some part of the expense should be allowed as a deduction from income for the purposes of Income Tax. It is with a realisation of that kind of problem that I ask the House to give this Clause its sympathetic consideration.
    10.5o p.m.
    Mr. Spens: I beg to second the Motion.
    I very much doubt whether the people of this country realise what happens to a professional man at the present time when he has a really bad illness in the middle of the year. He is assessed to Income Tax on what he has earned during the previous year. He has his expenses to keep up, and though he may have saved something, he has to pay Income Tax out of what he has earned in the current year. If at the beginning of that year he goes down with a bad operation and a bad illness the situation he is put in in meeting Income Tax on a full year's income of the previous year, when he may be earning only a fifth of that income in the present year, is a very serious matter. The Revenue often meet these cases with the utmost consideration, but it is in the nature of a charity. I commend this new Clause, not, I agree, as one to be incorporated in this Finance Bill, but for the very serious consideration of the Chancellor in the future, on behalf of a class in the community on whom, I venture to think, the Income Tax falls more heavily than on any other class.
    10.53 p.m.
    Captain Wallace: I think everybody in the House will appreciate the human case which has been put by my two hon. Friends. I can assure them that the case with which this Clause seeks to deal is one which is always present to the mind of the Chancellor of the Exchequer in the early months of the year, when he is naturally looking out for any hard cases to see if he can meet them. But as far as this particular Clause is concerned I must say I am surprised that a Clause drafted in such terms shoud be sponsored by any hon. Gentlemen of the eminence of my two hon. Friends. It seeks to give an allowance for "any increase of expenditure" incurred on account of any disability, without indicating the level of

    1073
    expenditure against which the increase is to be measured, and without defining what is meant by "disability," a term which is capable of very wide interpretation. I am bound to assume that the object of the Clause is to obtain a deduction from earned income on account of all expenditure, such as doctors' bills, nursing costs, medicines, convalescence costs etc., arising out of an illness or accident which has resulted in an earner being absent from work for a period of not less than three weeks.
    However much one may sympathise with this case, it is quite impracticable to introduce into our system of Income Tax law and Income Tax relief an allowance for expenditure of this kind which cannot readily be checked. It would be difficult or impossible to tell whether the expense had been necessarily incurred. The form of expenditure is not uniform and must obviously vary according to the financial position of the person concerned. The amount of allowance for any given kind of disability would be greater for the man with a large income than for the man with a small income. The former would be able to employ more expensive doctors, and, with the io per cent. limitation, if he were earning £5,000 a year, he would be entitled to a deduction of the cost of his illness and a convalescent holiday of anything up to £450.
    It would be impossible to put in a Clause of this kind into Income Tax law. The system of personal allowances and reliefs has been carefully built up, and takes account of the most important changes and chances of the taxpayer by means of a flat rate, but to suggest that you might spend 10 per cent. or indeed any particular percentage of your taxable income upon any object, however good, and then get relief in respect of that expenditure, would make the administration of Income Tax law almost impossible. Perhaps I might quote what the Royal Commission said in 1920 on this question:
    "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 the 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
    1074
    general rule may result in individual hardship, we feel we cannot advise any general relaxation of the principles on which the tax is levied."
    In view of what my hon. Friends have said, they will probably be prepared to withdraw their proposal. I say perfectly frankly that, in view of the drafting of the Clause, it is impossible to make any estimate of the amount involved. I hope that at this time of night they may see fit to withdraw their Clause.
    Mr. H. G. Williams: I did not expect that this Clause would get any further. We have had quoted against us the Report of the Royal Commission on Income Tax. I would only ask my hon. and gallant Friend whether all the other recommendations of the Commission have been carried into effect. I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Relief in respect of Estate Duty on account of permanent im- provements.)
    (1) In any case in which the owner of an estate consisting of or comprising land or other agricultural property on which estate duty is payble on his death has satisfied the Minister of Agriculture and Fisheries, in conjunction with the Treasury, that he has expended, within the previous twelve months, any sum or sums on the permanent improvement of such land or agricultural property and that permanent improvement has been effected, the Treasury may, under regulations made under this Section, issue a certificate (hereinafter in this Section referred to as a permanent improvement certificate) to such person certifying that such sum or sums have been so expended.
    (2) On the death of such owner, his legal representative may surrender to the Treasury such permanent improvement certificate in satisfaction of the estate duty payble on the estate to the extent of the amount specified therein and, subject to the provisions of the next succeeding Sub-section, the estate duty shall be deemed to have been satisfied to that extent: Provided that in no case will the relief granted under this Section exceed half the total amount of the estate duty payble on the estate in respect of agricultural property.
    (3) (a) In order that the relief specified in the next preceding Sub-section may he obtained, it shall be necessary to prove to the satisfaction of the Minister of Agriculture and Fisheries that the improvement by reason of which the permanent improvement certificate was issued has been reasonably maintained.
    (b) If, prior to his death, the owner of the estate shall have sold or otherwise have ceased to be the owner of the whole or part of the estate on which such improvement

    1075
    has been made, any permanent improvement certificates issued to the owner shall, in so far as they were issued on account of permanent improvements to the property disposed of, be deemed to be cancelled.
    (4) In this Section the word "land" shall have the meaning assigned to it in Section one hundred and seventeen of the Settled Land Act, 1925, and the words "agricultural property" shall have the meaning assigned to them in Section two of the Finance Act, 1394.
    (5) The Minister of Agriculture and Fisheries, after consultation with the Treasury, may make regulations providing for the method of applying for permanent improvement certificates, the issue and registration thereof, and other matters incidental to the carrying out of the provisions of this Section.
    (6) Every regulation made under this Section shall be laid before each House of Parliament as soon as may be after it is made, and shall have effect as if enacted in this Act: Provided that if an address is presented to His Majesty by either House within the next subsequent twenty-one days on which that House has sat after the regulation is laid before it, praying that the regulation may be annulled, His Majesty may by Order in Council annul the regulation, but without prejudice to the validity of anything previously done thereunder.—[Sir I. Albery.]
    Brought up, and read the First time.
    10.59 p.m.
    Sir I. Albery: I beg to move, "That the Clause be read a Second time."
    This is a very long Clause and I dare say it will be found to have been by no means correctly drafted, although a good deal of trouble has been taken upon it. I hope that in considering it the House and the Chancellor will take account of the clear intention of the Clause rather than its actual drafting. The object of the Clause is not primarily to assist the taxpayer, but to assist the land and the agricultural industry. I do not believe that we shall ever have a successful and prosperous agricultural industry in this country unless it has adequate capital, and, in spite of all the efforts that are made in so many directions to assist agriculture, I do not see much prospect of their ever succeeding if, while all this help is being given, as it were, on the surface, that which is of all things the most necessary to agriculture is being drained away at the roots.
    I am not, and never have been, an expert agriculturist, and I have approached this matter merely from a business point of view. The Clause is so drafted that the benefit will accrue only
    1076
    to those who spend their money on improving the land in this country and in assisting agriculture. One part of the Clause provides that, if the property is sold, neither the seller, except in so far as he may get a better price, nor the purchaser, will reap any advantage on account of the permanent improvements which may have been made. The reason is that the main object of the Clause is to ensure that the land shall be improved, that permanent agricultural improvements, shall be made, and, the moment the land is sold, the incentive has to be started afresh in the new buyer to make the necessary improvements in order that he may get any benefit which may accrue under the Clause.
    I am aware that many minor concessions are made to agriculture in the matter of Estate Duties and the means of paying them, but I do not think that any of these are sufficient in themselves really to alleviate the serious position to which the land of this country is sinking. From a business point of view, I want the House to look at the position of those who are engaged in the agricultural industry as compared with that of the producers in other kinds of industry. Generally speaking, production in other forms of industry is carried on by limited companies, and, when a shareholder dies and his Death Duties are paid, not the slightest damage is done directly to the business in which he held his shares. With land the case is different. The land is largely hereditary. Even among farmers, one finds that most of them are the sons of farmers, and indeed, the only farmers that we are likely to get in future in this country are the sons of farmers. When a man dies, and the duties exacted by the State have to be paid, the money has to come out of the land; it has to come out of the business, which is thereby impoverished. Personally I do not believe that any of the thousand and one concessions which we are making to agriculture in so many directions will save it as long as we go on draining away that which it needs more than anything else, namely, the capital without which it cannot prosper.
    11.5 p.m.
    Sir Ernest Shepperson: I beg to second the Motion.
    I do so solely in the interests of agriculture. The agricultural industry embraces three classes: the agricultural

    1077
    labourer, the farmer, and the landowner. The labourer has performed his duties well; the farmer has also; but in many cases the landlord is not doing well, and he is unable to perform his share because of the taxation, the Death Duties that are imposed on land. It is to enable the agricultural landlord to carry out the improvement of agricultural land that I support this Clause.
    11. 6 p.m.
    The Solicitor-General (Sir Terence O'Connor): The proposal that has been so attractively put before the House is a variant of what we have come to regard as a hardy annual—a method of doing what many of us would wish to see done, and to give some form of assistance to agriculture. Shortly, what is proposed is this. Suppose a man spends in improving his property, say, £500. He is to receive a certificate that that expenditure has been made. I am not absolutely certain, but I think the Clause provides that he may collect certificates. He may collect any number of them, and those certificates, up to the value of half the Estate Duty, are to be accepted in payment of the Estate Duty on that person's death. There are several objections to a scheme of that kind. First, it benefits the wealthy landowner, who can afford to spend these sums on improvements, as some others unfortunately cannot. But there is a more fundamental objection. The principle is unsound, because what you are doing is accepting as a basis for the purposes of duty on an estate, not the market value but the amount of money that a person has chosen to spend on it for a certain period. That opens the door to grave abuse, because, by a suitable adjustment, a man might arrange to spend very heavy sums on the improvement of agricultural land, which would under this scheme escape the burden of Death Duties. You cannot, therefore, depart from the well-known principle of valuing according to market value and substitute the amount of expenditure. Sympathising, as everybody does, with the position of the agricultural landlord, it is true to say that if at any time Parliament did decide to give relief to the agricultural landlord, it ought to be done by some method which did not have the objections which I have been outlining.
    Sir l. Albery: If my hon. and learned Friend reads the Clause he will see that it gives complete powers to the Minister of
    1078
    Agriculture and the Treasury to make all necessary restrictions.
    The Solicitor-General: I am very much obliged. I had no intention to suggest that there was anything behind this Clause. That was not my suggestion at all, but it must be obvious to the House that every proposal has to be scrutinised to see whether it lends itself ultimately to use as a means of evading tax, and I think it is safer in these instances to say that it certainly affords an opportunity for people not to pay when they hope to get out of the net of Estate Duty and are approaching the end of their career, to put their money into improvements and in that way escape the provisions of Estate Duty. But if Parliament in its wisdom some day decides to deal with the question of Estate Duty on agricultural land, it would not be difficult to discover a method which would bear equally upon the wel-to-do and on the not so well-to-do landlord and which would riot violate the principles I have been referring to, of the assessment of market value for the purpose of Estate Duty. For this purpose I am afraid that my right hon. Friend could not accept this new Clause.
    11.12 p.m.
    Lord Ansley: I am not at all persuaded by the wisdom and logic of the Solicitor-General's arguments. The question about spending money on land appears to me to be easily settled by whether the money was spent for agricultural purposes, or luxury purposes, or anything of that kind. If it was spent for luxury purposes he would be quite right, but if it was spent for purely agricultural purposes not only would it not be evasion but it would be exactly what the agricultural community of this country are longing for, what they are begging the Government to do, and what is being dragged out of the Government by subsidies for this and that scheme. Therefore, I think the country would not be the loser by the spending of any sums of money lent for agricultural purposes, not, as the Solicitor-General says, for what he calls evasion of taxation.
    Finally I would suggest this point: The hon. Member himself lives in Oxfordshire, a county that is well qualified to show the distress that is caused in agriculture by this form of perpetual drain not only

    1079
    of Surtax but by Death Duties. The Chancellor of the Exchequer is, I believe, on the committee of one of the Oxford Colleges which manages an agricultural estate, so he is fully qualified to know the differences of managing an agricultural estate. He knows the expenses and difficulties, with a falling market, to keep an estate properly maintained, and I would ask the right hon. Gentleman, supposing he had to pay every 30 or 40 years the enormous capital sum demanded by Death Duties on the estate run by his college, would he maintain them all in the same way? I wonder if they would be maintained so well as they are to-day? I would apply one more test. There is a considerable acreage of land run by various Government Departments. The War Office, the Office of Works, the Forestry Commission, the Ministry of Agriculture all own a certain amount of land, and all in their estimates bring up to this House the accounts of those estates whether their work is accomplished or not. I would like the Chancellor of the Exchequer and the Treasury, when they are going through those accounts, as they must do every year, to deduct from them a figure comparable to Death Duties and Surtax, which those Government estates obviously evade—to deduct from those figures a sum comparable with the Death Duties and Surtax which should be paid by them, and then say whether those estates are being run at a profit or loss. They might get most instructive figures.
    I hope that this will not be the end of this matter. If this Clause—which to my simple mind seems to be very well drafted and probably meets the case, but which perhaps has not been sufficiently considered—does not meet the case, I hope that Parliament will, not next year or the year after, but now, do something, before agriculture has declined to such a state that it is no longer possible to get it back without a vast expenditure of money. I hope that the Government will find some means of avoiding the disaster which I am afraid will occur if this perpetual drain of taxation is allowed to continue.
    11.16 p.m.
    Sir R. Smith: I am disappointed at the attitude which the Government have taken up towards this new Clause. As
    1080
    the Mover said, it is not a Clause to help individuals but one to help the agricultural industry of this country as a whole. It was rather unfortunate that the learned Solicitor-General should appeal to the House and say that this proposal would help the wealthy man but not the poor man. There are a very large number of landlords in a small way, farmers who have been compelled to buy their farms and have to keep up their farms. They are benefiting agriculture, and it rests with the Ministry of Agriculture to say whether these are really improvements to the land and therefore improvements to agriculture. We ask that these permanent improvements should be scheduled and that they should not be taxed when a man dies. I sincerely hope that if the Government cannot accept the Clause tonight they will consider the question. It is one way by which we can benefit agriculture. Only to-day we have heard that further money will have to be provided by the Treasury for the assistance of agriculture, and here we are suggesting a way which would be a permanent benefit to agriculture.
    11.19 p.m.
    Mr. Benson: I hope that the Government will take into serious consideration the points which have been raised on this new Clause. One speaker after another has pointed out the enormously heavy taxation which makes it practically impossible for landlords to do their duty to agriculture. It is obvious that landlords cannot expect to be treated differently in the matter of taxation from every other person. The only possible thing on their own showing is that, as they are incapable of running the land and agriculture as it ought to be run the Government should go a step further and not only deal with taxation, but take over the land as well.
    Question, "That the Clause be read a Second time," put, and negatived.
    11.21 p.m.
    Sir J. Simon: I beg to move, "That further Consideration of the Bill, as amended, be now adjourned."
    We have made good progress on the Report stage of the Finance Bill to-day and I hope that to-morrow we shall dispose of the rest of it.
    Mr. Pethick-Lawrence: I think that the right hon. Gentleman has every reason to be satisfied.
    Bill, as amended, to be further considered To-morrow.

  GOVERNMENT OF INDIA ACT, 1935, AND GOVERNMENT OF BURMA ACT, 1935.
  Order read for resuming Adjourned Debate on Question [30th June]:
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 309 of the Government of India Act, 1935, praying that the Government of India (High Court Judges) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  Resolved,
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 309 of the Government of India Act, 1935, praying that the Government of India (High Court Judges) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  To be presented by Privy Councillors or Members of His Majesty's Household.
  Order read for resuming Adjourned Debate on Question [30th June]:
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the Government of Burma (High Court Judges) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  Resolved,
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the Government of Burma
  1082
  (High Court Judges) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  To be presented by Privy Councillors or Members of His Majesty's Household.
  Order read for resuming Adjourned Debate on Question [30th June]:
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the Government of Burma (Adaptation of Laws) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  Resolved,
  "That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the Government of Burma (Adaptation of Laws) (Amendment) Order, 1938, be made in the form of the draft laid before Parliament."
  To be presented by Privy Councillors or Members of His Majesty's Household.

  PROTECTION OF ANIMALS (No. 2) BILL.
  Order for Committee read, and discharged; Bill withdrawn.
  The remaining Orders were read, and postponed.

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

  RACECOURSE BETTING CONTROL (CASH BETS).
  RACECOURSE BETTING CONTROL (CASH BETS).
  PRISONS (STATISTICS).
  PRISONS (STATISTICS).
  MOTOR CAB DRIVERS, LONDON (PROSECUTIONS).
  MOTOR CAB DRIVERS, LONDON (PROSECUTIONS).
  EX-POLICE INSPECTOR SYME.
  EX-POLICE INSPECTOR SYME.
  SHANGHAI (DANGEROUS DRUGS TRAFFIC).
  SHANGHAI (DANGEROUS DRUGS TRAFFIC).
  REFUGEES.
  REFUGEES.
  MANCHUKUO (OPIUM IMPORTS).
  MANCHUKUO (OPIUM IMPORTS).
  SPAIN.
  SPAIN.
  LEAGUE OF NATIONS (COVENANT).
  LEAGUE OF NATIONS (COVENANT).
  ANGLO-JAPANESE TREATY, 1911.
  ANGLO-JAPANESE TREATY, 1911.
AGRICULTURE.
  WAGES (REGULATION) ACT ENFORCEMENT, DORSET.
  WAGES (REGULATION) ACT ENFORCEMENT, DORSET.
  INSECT PESTS (METHALLYL CHLORIDE).
  INSECT PESTS (METHALLYL CHLORIDE).
  WITHAM CATCHMENT BOARD.
  WITHAM CATCHMENT BOARD.
  SOIL SURVEY.
  SOIL SURVEY.
  AIR-RAID PRECAUTIONS.
  AIR-RAID PRECAUTIONS.
TRANSPORT.
  CAMBRIDGE ROAD (WIDENING).
  CAMBRIDGE ROAD (WIDENING).
  SUBSIDENCE, NEWHOUSE CROSS-ROADS, LANARKSHIRE.
  SUBSIDENCE, NEWHOUSE CROSS-ROADS, LANARKSHIRE.
ROYAL NAVY.
  RATINGS (TRAVELLING EXPENSES).
  RATINGS (TRAVELLING EXPENSES).
  CHIEF PETTY OFFICERS (MARRIAGE ALLOWANCE).
  CHIEF PETTY OFFICERS (MARRIAGE ALLOWANCE).
  BRITISH ARMY (MILITARY MEDAL AWARDS).
  BRITISH ARMY (MILITARY MEDAL AWARDS).
  ABYSSINIA (ITALIAN ARMY RECRUITING).
  ABYSSINIA (ITALIAN ARMY RECRUITING).
  COAL INDUSTRY (COMMITTEES OF INVESTIGATION).
  COAL INDUSTRY (COMMITTEES OF INVESTIGATION).
POST OFFICE.
  TELEGRAPH ESTABLISHMENTS.
  TELEGRAPH ESTABLISHMENTS.
  BOY MESSENGERS.
  BOY MESSENGERS.
UNEMPLOYMENT.
  BENEFIT DISALLOWED (DAGENHAM).
  BENEFIT DISALLOWED (DAGENHAM).
  HOLIDAYS WITH PAY.
  HOLIDAYS WITH PAY.
  EX-SERVICE MEN (DURHAM COUNTY).
  EX-SERVICE MEN (DURHAM COUNTY).
  ROYAL AIR FORCE (NOISE OF AEROPLANES).
  ROYAL AIR FORCE (NOISE OF AEROPLANES).
  INDIA (OFFICERS, COMPENSATORY ALLOWANCES).
  INDIA (OFFICERS, COMPENSATORY ALLOWANCES).
Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
MINISTRY OF HEALTH PROVISIONAL ORDER (MID-STAFFORD SHIRE JOINT HOSPITAL DIS TRICT) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
COWES URBAN DISTRICT COUNCIL BILL.
Returned from the Commons, with the Amendments agreed to.

PERTH AND KINROSS EDUCA TIONAL TRUST SCHEME, 1936.
LORD AMULREE LORD AMULREE had given Notice that he would move, That an humble Address be presented to His Majesty, praying His Majesty to withhold his approval to such parts of the Combined County of Perth and Kinross Educational Trust Scheme, 1936, as may affect or refer to the MacDougall Bursary Fund. The noble Lord said: My Lords, this question arises under the Combined Counties of Perth and Kinross Educational Trust Scheme, 1936, purporting to be made under the Educational Endowment (Scotland) Acts, 1928–1935. The objectors to the scheme are the trustees of the MacDougall Bursary Fund, the University of St. Andrews, and certain other persons. The Educational Endowment (Scotland) Acts, 1928–1935, gave the Commissioners appointed under those Acts powers of a very general nature for the reorganisation of educational endowments, but they were enjoined to have special regard to the spirit of the intention of the founders, to the interests of the locality to which the endowment belongs, to the possibility of effecting economy in administration, to the need for continuing the provision for endowments of competitive bursaries at universities, etc., and to the interests of the beneficiaries designated by the founders.
The Statute further made provisions for the procedure of the Commissioners in holding an inquiry; and eventually, after the Commissioners have held an inquiry and taken certain steps they frame a scheme and submit it to the Scottish Education Department. The Scottish Education Department, having received the scheme, have to give certain information to all persons interested and a notice stating they will receive objections, if any. The power of the Department under the Act of 1928 was either to approve the scheme or to remit it to the Commissioners for amendments. They had no further power. Then there was the further provision that if any interested party was dissatisfied with this scheme after it had been approved by the Department, the objector might present a petition, before the expiration of two months, praying that the scheme should be laid before both Houses of Parliament. Either House was given power either to approve the scheme as a whole or withhold approval of part of the scheme. To-day I ask your Lordships to resolve to pray His Majesty to withhold approval of part of a scheme.
Four years ago a debate in this House was initiated by the noble Earl, Lord Leven and Melville, on the general administration of the Commissioners under these Acts. Various criticisms were made, to which I need not refer because they are immaterial to this present matter. Two points were made, however. It was complained that the Commissioners gave no reason or no sufficient reason for changes in the existing endowments, and that the power of the Education Department to deal with schemes was too limited, in the sense of reviewing any scheme of the Commissioners. Following upon, and probably in consequence of that debate, and also in consequence of certain severe criticisms made by Judges in the Court of Session when cases had come before them, a Bill was introduced in 1935 giving effect to certain amendments.
First of all the Bill continued the office of the Commissioners, which was a limited one, till December 31, 1936, and that date is important. Further, the Bill introduced certain amendments. One required the Commissioners to state their reasons for interfering with any particular endow-
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ment. Section 4 of the Act of 1935 says this: (1) that the Commissioners shall prefix to their scheme a memorandum stating the reasons for which, in the view of the Commissioners, reorganisation of the endowment is necessary; (2) the respects in which the draft or scheme or amended scheme involves any substantial alteration of the purposes to which the endowment is applied; and (3) the reasons for any such alteration. The Act also provided that the memorandum containing the reasons was deemed to be part of the scheme. A further amendment gave to the Education Department further power in dealing with the scheme, the additional power being that the Department, after consultation with the Commissioners, might disapprove the scheme. The Department now had power to approve the scheme or disapprove of it after consultation with the Commissioners or remit the scheme to the Commissioners for the purpose of amendment.
The MacDougall Bursary Fund referred to in the Motion was created under the will of the late Miss Isabella MacDougall. Miss MacDougall was a lady who during her life time took a great interest in education. She was a highly cultured lady and a good classical scholar. Under her will she made certain specific bequests, and included in those bequests was one vesting in the trustees under the will certain property which was to be let off to poor men and women in the County and City of Perth whom the trustees might select, free of rent, and the trustees were to raise a fund for repairs and insurance, rates and taxes. In fact they did so, and the amount received for that purpose was £8 10s. a year. It was of course before the War. The residue of the estate was left to create a fund for bursaries for persons born in the County and City of Perth, such bursaries to be held at the Universities of Edinburgh, Glasgow and St. Andrews. The bursars were to be elected by examination, the examination to be held by competent persons, and in point of fact the examinations have always been held by professors of various universities. The bursaries were to be tenable for three years, and were not to exceed £50 a year.
The trustees appointed were to be the incumbents of four churches of the Church of Scotland in the City of Perth.

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This is important, as showing the intention of the testatrix that the trustees should be persons who had been students themselves and knew students' ways. The Trust has been carried out in an excellent way. The trustees themselves kept in close contact with the bursars. They received reports on their work twice a year. They advised them from time to time, and interviewed them at frequent intervals. Between the trustees and the bursars there was a personal touch. The Trust Fund has been most carefully nursed. The amount of the Fund when it was created was about £10,000. By careful supervision it has now increased to about £15,000, and the income is about £700 a year. The amount available for bursaries has increased 70 per cent. The successful bursars were allowed to choose their own universities. The trustees have always moved with the times. When, for example, the universities were opened to women the trustees applied to the Court for leave to amend the trust deed, to make the bursaries available for girls as well as for lads. The trustees advised the bursars from time to time and saw them at frequent intervals. The trustees have received numerous letters from bursars after they have gone out into the world thanking them for the great kindness and friendly counsel they received when they were students. There was thus a personal touch between the bursars and trustees which was perhaps more valuable than the bursary itself.
The proceedings in regard to the scheme before your Lordships took the normal course. The hearing of the draft scheme took place in May, 1936, and the final scheme, which is dated December 26, 1936, appears to have been issued on the last day that the Commissioners held office. The Commissioners went out of office on December 31, 1936. The trustees took objection to the scheme, and they as objectors were heard by the Department. The result of that hearing was abortive. At the conclusion of the hearing they were told that the only power the Department had was to approve. They could not disapprove of the schema because there were no Commissioners to consult. They could not remit the scheme to the Commissioners for there were no Commissioners. All they could do was simply to approve the scheme. The other power they had of disapproving the
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scheme or of remitting it to the Commissioners to amend had gone. They could only disapprove after consultation with the Commissioners, but there were no Commissioners, therefore they could not disapprove. They could not remit the scheme for amendment to the Commissioners, for there were no Commissioners. The whole structure so carefully prepared by Parliament was defeated. The safeguards which were conferred by the Act of 1935 were circumvented. The objectors were in a worse position than objectors before the relief Act of 1935.
The position would thus seem to be clear. The trustees, having been deprived of their statutory rights, are entitled to say that the scheme—at least so far as it relates to the Trust—should cease to operate and that they should be left out of the scheme. There are serious objections to the scheme itself. The Commissioners seem to have disregarded the duty imposed upon them by the Act of 1935. They were required by the Act to state the reasons for which reorganisation of the endowment is necessary, that is, the particular endowment in this case, the MacDougall endowment. They have not done so. The only reasons given, as stated in the memorandum, were the coordination between public expenditure upon education and the expenditure of educational endowments, administrative convenience, and an over-all reduction in the expense of administration. This provision is to ensure that unless there be adequate reasons applicable to a particular endowment there shall be no reorganisation of that endowment or any substantial alteration of the purpose. This has been ignored.
The scheme provides that:
"unless for reasons satisfactory to the governing body no person shall be accepted as a candidate who has left school more than twelve months prior to the date of the examination."
This is against the provisions of the trust deed. The will and the trust deed have no limit. A young person of school-leaving age may have to go out to earn in order to supplement the family earnings. He could not qualify to enter unless for some special reason which may be satisfactory to the governing body of trustees. What a position to put him in. The young person may have been working to supplement the family income for four or five years and preparing himself by

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private study, and then he has to trust to good luck that he will obtain the approval of the governing body to sit for examination. Young people may leave school for reasons of health or because of family circumstances, and may afterwards by private study be in a position to enter a competition; but in this case if twelve months have elapsed they are disqualified. It is unfair to the children of poor parents who may be withdrawn from school to work and supplement the family income.
"Reasons satisfactory to the governing body" may have no meaning. The scheme will cause injustice to the more competent and meritorious candidates, since it provides that the examinations will be held at three separate universities. This will defeat the purpose of the trust. The sum of £600 a year is to be administered in bursaries. The income from the fund is £700. Apparently £100 is to be devoted to other purposes foreign to the Trust, save a sum for expenses. This scheme provides for the provision of hostels, grants for special equipment at schools, playing fields, clubs and school excursions. I submit that this is entirely outside the Trust. The testatrix intended that this foundation should be for persons proceeding to the university. The intention of the testatrix is disregarded and the money is being applied for other purposes. The scheme relates to the County of Perth and the County of Kinross. In this way income from the Fund may be devoted to objects outside the County of Perth and certainly not within the spirit of the intention of the founder. I submit, for these reasons, that this Motion be agreed to.
Moved, That an Humble Address be presented to His Majesty, praying His Majesty to withhold his approval to such parts of the Combined County of Perth and Kinross Educational Trust Scheme, 1936, as may affect or refer to the MacDougall Bursary Fund.—(Lord Amulree.)
LORD ALNESS: My Lords, I desire quite briefly, but with all the earnestness at my command, to support the Motion which has just been moved. The observations which my noble friend Lord Amulree has made disclose, I think, quite clearly that a question of broad and im-
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portant principle is here involved. Were it not so, neither he nor I would trouble your Lordships' House with the matter. At this point let me say that of course one makes no reflection upon the sincerity of the Commissioners in the discharge of what is, no doubt, a difficult and delicate duty. If they have erred, as I am going to submit they have certainly and obviously erred, then that of course was not done perversely but inadvertently, and under pressure of somewhat exceptional circumstances.
I venture to think that their decision with regard to the MacDougall Trust is a most regrettable one—I had almost said a deplorable one. My noble friend Lord Amulree has indicated some of the reasons why he thinks so too. I do not propose to detain your Lordships by discussing these reasons on the merits; I content myself by saying that I am in entire agreement with what my noble friend said. It seems strange that a Trust so successfully and usefully administered, of an important character and covering a period of half a century, should have been, I will not say wantonly interfered with, but slumped with forty-nine or fifty other trusts of a quite different character, and so destroyed. It is argued that this is contrary to the "spirit of the intention of the founder." These are the statutory words, and, if I may say so, neither as a Judge nor as a legislator have I ever been quite sure that I understood precisely what they meant. However that may be, there is a good deal to be said for the view that the intention of the founder of this Trust has been frustrated by this act of administration. But, as I say, on the merits I am not going to delay your Lordships further.
I do desire, however, to emphasize two points which seem to me to be of importance from the legal point of view. I suggest that the Commissioners on this occasion have in two matters sinned against the statutory provisions which they are supposed to have been administering. Both points have been mentioned by my noble friend, and I desire to underline them. The first is that under the Act of 1935, the amending Act, this provision is made. It is a new provision, as my noble friend reminded the House. I remember it very well because I had the honour of making my maiden speech on that Bill when it was introduced to your Lordships' House. In Section 4, sub-

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section (1), of the Act, that provision set forth that the Commissioners should prefix to each of their decisions in future
"the reasons for which, in the view of the Commissioners, reorganisation of the endowment"—
endowment in the singular number—
"is necessary."
And then, if there is any alteration, the alteration of the purposes to which the endowment is applied or applicable must be set forth. Having read the scheme which the Commission passed in this case, I do say that they have not complied with that explicit direction in the Act of Parliament. It is true that they have prefaced their decision with a memorandum, but I cannot think that a vague statement that the educational interests of the County of Perth as a whole will be advanced by treating fifty endowments in a particular manner approximates to setting forth what the Act tells them they shall set forth—the reasons for disturbing the organisation of this particular endowment. I venture to think that this is a slipshod method of procedure which should not receive countenance from your Lordships' House, and which is contrary in my humble view to the provisions of the Act of Parliament. Thai is the first point.
The other, to which I attach even greater importance from the legal point of view, is this. The Act of 1928, the principal Act, provided that when a scheme tame before the Scottish Education Department they could do one of two things. They had an option conferred upon them. They could either approve the scheme de plano, or they might remit it back to the Commissioners for amendment. What happened, as my noble friend has told your Lordships' House, in this case, was that, for some reason which I do not know, the Commissioners held up this scheme until the last day on which they were in office, being the last day of the year 1936. Will your Lordships be good enough to observe what the necessary implication of that procedure was? The necessary implication was that the Scottish Education Department were disabled from remitting the scheme back for amendment to the Commissioners. The result of that procedure was that the trustees of the MacDougall Endowment were precluded from effectively objecting to the scheme or from
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having it amended. I venture to say that such procedure—I do not use the words in any sinister significance—was a fraud upon the Act of Parliament. An option was conferred upon the Department, an option was conferred upon the Commissioners. Both options were wiped out by the decision of the Commissioners on their last day of office to promulgate this scheme.
For aught I know, at the interview that took place with the Scottish Education Department when the scheme was discussed by the trustees of the MacDougall Trust with the Department, it may well have been, from the shorthand notes which I have read, that the Department were convinced that a case for amendment of the scheme had been made out, but, in consequence of the death of the Commission, as the Secretary of the Scottish Education Department himself said—I quote his words—
"the Department could not make any amendment. Had the Commission still been in existence the Department could have remitted it to the Commissioners suggesting amendments, but the Commission is dead, and I think if this scheme is to be amended at all it has to be started de novo."
Let your Lordships observe what that means. It means, as I said a few moments ago, that the trustees of this endowment have been disabled from effectively objecting to the scheme, and the Scottish Education Department have been disabled from remitting the scheme back to the Commissioners for reconsideration.
I venture to think that that is a fatal flaw in procedure. The trustees come to your Lordships' House to exercise what is a most exceptional form of remedy, and they would not have done so, I feel quite convinced, but for the exceptional circumstances in which they find themselves. They are advised that they have no other remedy, and I should think your Lordships would be slow to leave them in the position in which they find themselves, through no fault of their own, disabled from objecting to a scheme of this kind and with no remedy except the remedy which my noble friend Lord Amulree has proposed I will only add this. If I read the Statute aright, to withhold the assent of your Lordships' House to this particular scheme in so far as it concerns the MacDougall Trust will not be in any way fatal to

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the rest of the scheme. As I read the Statute, the Education Department, in place of the Commissioners, will be able to initiate a new scheme, with this difference, however, that when this scheme has been initiated it will be within the right of the trustees, if they desire it to be amended, to go to the Court of Session and have that done. Of all these options the trustees at this moment have been deprived, and I venture to think that in these circumstances, which are entirely exceptional, your Lordships will not hesitate to agree to the exceptional remedy proposed by my noble friend.
LORD MACMILLAN: My Lords, I should like very strongly to support the reasons which have been adduced by my two noble and learned friends who have preceded me. This is not an ancient endowment. It is an endowment made in 1883, and there is no suggestion whatever that it has not been admirably administered. We have been fortunate in Scotland in having many such trusts which are the result of benefactions by those who are interested in education, and if the trusts are to have their schemes demolished by Commissioners, as this scheme has really been demolished, it would be a poor encouragement to others to formulate similar benefactions. The work of the Commissioners has been excellent in the cases to which it was fairly applicable, for there have been a great many ancient trusts, many now practically obsolete, which of course required to be put on a proper foundation, and to this difficult and often rather thankless task the Commissioners have addressed themselves with admirable assiduity.
But I venture to say that this particular Trust in no way falls within the mischief which the Commissioners were set up to remedy. It is not a case where the purposes of the Trust are obsolete, or a case where the amount of the expenditure is out of proportion to the benefits given, or a case where the machinery which has been devised for its administration was defective. In every way this has been an efficient and admirable Scottish Trust for education, and it has been carried out in conformity with the wishes of the lady who founded it, and no reason whatever has been adduced for interfering with her wishes, which have been
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loyally carried out. In reference to what has been said about one single preamble I would point out that it is really difficult to see how the fifty-one trusts, with all their diverse circumstances, can be covered by a single preamble which can give the reasons for the demolition of the whole of them holus-bolus. No individual reasons are assigned for interfering with this Trust.
What to my mind is a much more serious circumstance is this. Be the scheme of the Commissioners good or bad, the unfortunate trustees who have hitherto, without any default, administered the Trust have been deprived of the means which the Statute contemplated they should have of being heard upon the matter. When a body whose period of life is a stipulated period reaches the end of its legal existence and expires, as this Commission has expired—and perhaps I might say expired unwept in Scotland, but at any rate has expired—it is impossible of course to carry out the procedure which it was intended that this Commission should carry out. It is no longer there to do so. The MacDougall trustees have been deprived, therefore, of the opportunity of criticising or objecting to this scheme because, being issued on the last day, there is unfortunately no appeal after death. It is impossible therefore to appeal to the Commissioners and put reasons before them, because the Commissioners as such are defunct.
Consequently this is one of those cases that sometimes happen. There has been a breakdown in machinery due to postponement for office reasons, and for some reason or other the Commissioners' last and death-bed action was to issue this scheme affecting fifty-one Scottish trusts, and one of the trusts is the one on whose behalf I am putting these considerations before your Lordships. It is a Trust which has a strong and rooted objection to the scheme, and in these circumstances I think the case has been made out for asking His Majesty's Government to withhold approval of the particular scheme in so far as it affects this single Trust. I have pleasure in supporting what has already been said in this matter. I should have thought that the Commissioners themselves, whenever their attention was brought to it, would at once have recognised the propriety of withdrawing this particular scheme.
LORD KINNAIRD: My Lords, I will not detain the House for more than a moment or two. It is not necessary for me to do so, because so strong a case has already been made out by my noble friends Lord Amulree and Lord Alness. It seems to me as a layman that the case which has been made is an unanswerable one. But I would like to say this. The legal case has been put so very clearly from the point of view of some of the possible beneficiaries, that it seems to me, having heard what the noble Lord, Lord Alness, said, that there should be a reconsideration of this scheme by the educational authorities, and that we must consider the case of certain children of Perth City who will be ruled out of benefit. It seems to me that your Lordships' House should not agree that because, by an unfortunate lapse of time, a case has not been able to be heard, we could not rule out the proposal that is made when it will damage for all time a certain number of children who will not henceforth be able to participate in benefits which the benefactor wished them to get. I should like to say how very strongly I support the case that has been made out. I should add that I am a member of the Perth County Council, but I have not had an opportunity of hearing what that Council has to say, and I have merely put forward my own personal opinion.
THE EARL OF ELGIN AND KINCARDINE: My Lords, I feel that I am in rather an invidious position to-day, because, as the noble Lord, Lord Macmillan, has reminded the House, there is no appeal after the grave, but when one who has had charge of certain work hears reference made to that work as being wanton, a frustration of an Act of Parliament, indeed fraudulent frustration, I think even a dead man should be excused if he turns in the grave. But the point before your Lordships is really whether a scheme which was devised by the Commission over which I had the honour to preside was in any way not created in accordance with the Statute which set up that Commission, and also whether anything that has happened in the procedure since that scheme was first made is still not in accordance with what the Statute laid down. I do not think it is right and proper that I should take the responsibility of what has happened since the death of the Commission. The paternity of the child now rests on the
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Department, and I have no doubt that the noble Lord who replies for the Government will deal with that particular point.
The matter which I should like to bring before your Lordships is this. For what is an educational endowment intended? How can we arrive at what is the spirit of the intention of the person who created that endowment? That really was the problem with which the Commissioners were faced time after time during the seven years in which they operated in reviewing the educational endowments in Scotland. Surely the first question is easily answered in this way. An educational endowment is meant to give the beneficiary something in advance of what the child can get through the ordinary medium of education under the State. When these endowments were started, when each trust was founded, the founder had some particular object in view; he or she wanted to give a special inducement, a special advancement, to the beneficiary, and they all created these trusts to give effect to such a purpose. I should like to pay a very cordial tribute to all those people who have spent days and hours in carrying out the difficult duties of these trusts. We had before us during the hearings by the Commission hundreds of these bodies of trustees, and I should like to pay a tribute to them for the work they have given so wholeheartedly to carry out the duties entrusted to them.
But, while saying that, I feel bound to say that I had and my colleagues also had a general feeling of disappointment. Time after time, when we put to these trustees the question, "Have you considered whether the advance of legislation has brought different possibilities before the Trust, have you considered whether these advantages and benefits are not now normally provided by the State, and do you not think your powers might well be widened?" we had this answer, "As a body we have never considered that." Now I do feel, in view of that, that it is perhaps easy to understand that in principle the Commissioners came to the conclusion that it was an advantage to amalgamate these endowments, that it was an advantage to create a new spirit, to bring in fact, into the action of the endowments, what we felt, and truthfully felt, was the spirit of the

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intention of the endower rather than to allow a definite continuance of the particular terms of the endowment. That, I think, is a reason for the general form of the schemes adopted by the Commission.
The scheme now definitely before your Lordships brings out in two points, I think, illustrations of what I mean. I think it was the noble and learned Lord, Lord Macmillan, who said that this was not dealing with a scheme that was obsolete. Is that perfectly true? Have there been no changes in legislation, and in the advantages given to the youth of Scotland, since 1883? The noble and learned Lord surely has not forgotten the Education Acts passed since then. For that reason it did seem to the Commissioners that there was a solid reason for reorganising this particular endowment. The other illustration, I think, again brings out the reason. I think it was the noble Lord, Lord Amulree, and the noble and learned Lord, Lord Alness, who pointed out the benefits of university bursaries. If you look at this scheme, is it not a benefit that the result of the scheme is to make available these bursaries not only at one Scottish university but at all the Scottish universities? Through the utilisation of the ordinary machinery of examinations, without the expense of a special examination, the fund is enabled to give another bursary, an extra bursary above those given under the original scheme.
Another point is the question of school bursaries. Everyone in Scotland now admits that to give money from endowment funds to school bursaries is not applying that money to the best advantage. Education is so well provided at both primary and secondary schools that the employment of endowment funds for this purpose is really unnecessary. For that reason the Commissioners came to the conclusion, as narrated in this scheme, that the continuation of subsidies to the McLaren Trade School was unnecessary. But, as I have said, the Commissioners adopted a main principle in this and all the schemes with which they dealt. That was to give the widest possible discretion to the governing bodies under the scheme to utilise the funds at their disposal by means of a plan submitted for the approval of the Department and enable them to find a great many different forms of help to
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the scholars. All these are narrated as options at the disposal of the governing body. It is this want of freedom of action in the old endowments which has brought a good many of them to the stage of being, as the noble and learned Lord, Lord Macmillan, described them, obsolete.
I do not wish, and I do not think it would be right for me, to deal with other matters which were referred to, but I should like to assure your Lordships that there was no deliberate holding up of these schemes on the part of the Commission. The Commissioners worked, for the seven years during which they were entrusted with these duties, as hard and as intensely as they possibly could. There were laid down in the Act certain stages which had to be carried through. Certain periods had to elapse. I cannot from memory speak exactly as to what happened between the first hearing of this particular scheme and the time when the scheme was promulgated, but I can assure your Lordships that there was no deliberate policy on the part of the Commissioners to deal with this scheme otherwise than with their full energy, and that there was no intent to hold it up or to make it difficult for those concerned to adopt any procedure of appeal to which they were entitled under the Act.
LORD HUTCHISON OF MONTROSE: My Lords, I think we have all listened with great interest to what the noble Earl, Lord Elgin, has just told us about the work of the Commission. In general I agree entirely that in regard to schemes which have got out of date, and in view of the great advance which has taken place in our educational system, it was right and proper that the Commission should examine the various bequests in Scotland. But that does not mean that in this case a mistake has not been made. Everyone who has any knowledge of the working of the MacDougall Trust knows how well that Trust has worked in the past, managed within the Church of Scotland and dealing with a very fine bequest from Miss MacDougall. Year by year, through a competitive examination, certain individuals went to the Scottish universities with scholarships. Under the scheme that competitive examination is in part done away with and now there are separate examinations in the various universities instead of one examination,

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conducted by very competent examiners, as anyone who looks at the list of examiners in past years will admit. Therefore, I think that this scheme ought at least to have been in such a form that the trustees could have put forward their views to the education authorities. I do not for a moment suggest that it was a deliberate act on the part of the Commissioners that the scheme was put forward at the last minute. I would suggest that perhaps this scheme was so good that it was only at the last minute that they thought of putting it forward. At any rate, be that as it may, I think a very good case has been made out for this prayer.
I do not want to touch on the legal side—my noble friends who are versed in the law are much more competent than I can be to put that point of view—but there is a point I would like to put. It is that under the new scheme if an applicant for examination for one of these bursaries has left school more than twelve months, he is, I understand, ruled out of taking part in the examination. As we know, many of our youths in Scotland leave the secondary school, go into industry or into offices and continue their education, and then are only too willing to come forward and accept a bursary such as this to study in the university. I think that point has been overlooked and that that kind of amendment would have been put forward if the scheme had been subject to amendment at the time when it was issued. A great many schemes have been dealt with. Something like fifty or more have been dealt with in relation to various bequests for educational purposes in Scotland. It is only reasonable that mistakes should be made and I think a mistake has been made in regard to the MacDougall Trust. I hope that the noble Lord who speaks for the Government will accept this prayer and say that something may be done to put this scheme right.
LORD MACMILLAN: Before the noble Lord replies for the Government, may I draw the attention of the House to what may be an eirenicon by which the difficulty may be avoided? The Act lays down that, after the expiry of the powers of the Commissioners, the Department may have the like powers, except in the case of a university endowment or of the
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Carnegie Trust, as are conferred by the Act on the Commissioners. Therefore, although the Commissioners are dead, my noble friend opposite will have the satisfaction of knowing that they rise phœnix-like from the grave in the shape of the Scottish Education Department. Therefore the fact that His Majesty's Government withhold their approval from this scheme does not mean that this scheme is immune from amendment in any shape, but that the Department can promulgate a scheme applicable to the MacDougall Trust, which will then go through practically the same procedure as before, and any necessary amendments can be made in it. Therefore the worst that can possibly happen, if amendment be required to the MacDougall Trust, is that the amendment will be postponed. It will be effected without leaving behind it the sense of injustice which every person always feels when he has not had an opportunity of putting his objection. It is not a case of leaving the MacDougall Trust outside the scope of the amendment, but merely that an amendment, if there be an amendment, will take place through the instrumentality of the Scottish Education Department instead of through the Commissioners, and after all parties have been heard.
THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL): My Lords, I am grateful to my noble and learned friend Lord Macmillan for stepping in at the last moment with this suggestion, but before I take advantage of this suggestion it would be appropriate that I should give your Lordships the view of His Majesty's Government on this matter in view of a great many important points which were raised by the noble Lord, Lord Amulree, and others who spoke, and also because this is the first occasion on which a Motion has been moved in this House for art Address to His Majesty praying Him to withhold approval to a scheme prepared by the Endowment Commissioners appointed under the Educational Endowments (Scotland) Act, 1928. The noble Lord, Lord Amulree, in moving his humble Address, dealt particularly with that part of the scheme which concerns the MacDougall Bursary Fund. He has urged that the fund should be allowed to continue to function as at present and should not be included in the general

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scheme for the endowments of the County of Perth. That, I must confess, is not the view of the Department of His Majesty's Government concerned, and I should have hoped that, for the reasons which I am about to give your Lordships, you might be prepared to agree with His Majesty's Government that in this case the prayer need not be granted.
One of the main objections which has been voiced this afternoon is against the inclusion of this fund in the general scheme for the County of Perth. These amalgamations have been and are being proposed for some time on considerations of general policy. Under the Educational Endowments (Scotland) Act, 1928, the Commissioners were given specific power to prepare schemes for grouping, amalgamating or combining educational endowments. The Commissioners' functions were examined by the Court of Session in several cases, and in the last case the Lord President pointed out that these powers were given by Parliament with the intention that they should be exercised. The general considerations which guided the Commissioners to their conclusion and have led the Department to approve it were as follows. The Commission of 1882 reorganised the endowments on what I might briefly call a parish basis, and it is a natural development of the policy of the 1882 Commission to move towards a county basis, and the effect of subsequent legislation on these schemes and of the more recent policy of placing public education on a county basis has resulted in that move towards the placing of these matters on a county basis.
The policy of amalgamation has also several positive advantages. It enables a wider experience to be applied to the administration of an endowment and a wider view to be taken of the methods by which the favoured areas could best be benefited by the endowment funds. Moreover, the policy of amalgamation ensured a closer co-ordination between the public expenditure on education and expenditure from educational endowments. It is clear that this was one of the matters which Parliament had in view in passing the Act of 1928, because the Commissioners were directed to have regard to existing conditions, social and educational. Further—and I am not sure
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that this point has been mentioned this afternoon—it was anticipated that the abolition of a large number of governing bodies with their attendant clerks would reduce the costs of administration to the advantage of the beneficiaries. This forecast is verified by the result of a recent audit, which shows that only 5 per cent. of the expenditure under 45 endowment schemes was upon administration. This represents a substantial general decrease.
Now, my Lords, an account of the MacDougall Bursaries themselves. Objection has been taken to the changes in detail which have been made by the Commissioners in the conditions of award and tenure of the bursaries. These changes are designed to reduce the expense of awarding the bursaries and to bring the conditions of award and tenure into line with the conditions of award and tenure of many other bursaries. So far as can be ascertained, those conditions are proving satisfactory in practice in the case of these other bursaries. It has been said that a candidate will be deterred from obtaining a bursary if he had left school more than twelve months prior to the date of the examination. I think Lord Amulree raised that objection also. But it ignores the saving clause which has been inserted in Section 30 of the scheme in order to meet this very point. That section now provides that
"Unless for reasons satisfactory to the governing body"—
those are the words which should be noted—
"no person shall be accepted as a candidate who has left school more than twelve months prior to the date of the examination."
Those words, it is contended, provide all reasonable elasticity.
Another point to which exception is taken is the departure from a common examination for all MacDougall bursary candidates. Under the existing arrangements the trustees conduct at considerable expense an ad hoc examination for the award of the bursaries, and at this examination all the candidates compete on a common footing. When the order of merit has been adjusted by the trustees in the light of the examiners' reports, the candidate first on the list is given his or her choice of attending St. Andrews, Glasgow or Edinburgh University. The candidate second in merit may

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then go to either of the two universities not chosen by the first candidate, and the third candidate, if he wishes to take advantage of the bursary, is obliged to go to whichever university is not selected by either of the two prior candidates. Under the scheme the allocation between the universities will be preserved, but the ad hoc examination will be abolished. Instead, the candidates will be required, firstly, to select the university which they will attend and, secondly, to compete at the ordinary bursary competition of that university. This arrangement involves no real hardship and it has some positive advantages.
Candidates will be enabled to compete at one examination for two sets of bursaries—the MacDougall bursaries and those administered by the university. Thus a candidate who does not obtain a MacDougall bursary has a chance of gaining a university bursary without having to sit for a second examination. Another advantage is that the abolition of the special examination, with the resultant saving in administrative expenses, has enabled the Commissioners to provide for the award of twelve bursaries as against the eleven which are at present awarded. This in itself is a substantial gain for the future candidates. In these circumstances we are satisfied that the arrangements indicated in the scheme are as satisfactory as can be attained without departing entirely from the founder's desire to allocate her bursaries between the three universities.
Another point of objection is based on the ground that the terms of the memorandum prefixed to the scheme do not comply with the requirements of the Act of 1935. This is a point of law which in terms of the Endowments Acts the objectors had the opportunity of submitting to the Court of Session within one month of the scheme's submission to the Department. They did not take advantage of the opportunity. In fact we are satisfied that the memorandum complies with the requirements of the Act. But the main bone of contention this afternoon deals with the question of what I would call date. A complaint has been made on the ground that, as the Commissioners submitted the scheme to the Department on their very last day of office, the Department had no opportunity of remitting it to the Commissioners, with such declara-
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tion as the nature of the case seemed to them to require, and that the trustees were thereby deprived of the opportunity of claiming the right of having the scheme remitted back to the Commissioners with suggested amendments as often as occasion might require. This objection presupposes that the action of the Commissioners prevented the Department from taking any action other than that of approving the scheme. Such a presumption is without foundation. The scheme received exhaustive consideration by the Department over a period of more than a year, and my right honourable friend the Secretary of State for Scotland, as the responsible Minister, personally satisfied himself that the scheme was one which should receive approval. Had he arrived at any other conclusion there would have been no hesitation in abandoning the scheme and starting de novo, as was done in the case of another scheme—the Edinburgh Educational Endowments Scheme—in similar circumstances.
Any statement that the trustees were deprived of the opportunity of claiming the right of having the scheme remitted back to the Commissioners is based upon a misconception of the terms of the relative Statute. No governing body had the right to have a scheme remitted. The remission or approval of a scheme was a matter entirely within the discretion of the Department. If my right honourable friend had considered that the terms of the scheme were such as would have warranted a remit had the Commissioners remained in office, he would have had no hesitation in abandoning the scheme, and the Department would then have prepared a draft scheme giving effect to the amendments which were considered desirable.
It is also maintained that if the Commissioners had not submitted a scheme it would have fallen to the Department to prepare a scheme, in which case the trustees, in the event of their being dissatisfied with the merits of the scheme, would have had the right of petitioning the Court of Session for amendment of the scheme or for the substitution of a new scheme. This argument could, of course, have been put forward by any body of objectors at any time during the Commissioners' period of office, and it would have had equally little force. The I policy of Parliament, as expressed in the

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Act of 1928, is quite clear. The original work of preparing schemes under the Act was to be done by the Commissioners, the reviewing bodies being the Department and Parliament. After the original work had been done, the preparation of any schemes which were needed was to be undertaken by the Department, and the governing bodies were to have the choice of the reviewing body, which might be either Parliament or the Court of Session.
I have gone into this question at some length, because I thought it only right that your Lordships should be told in full what is the view of the Department on this matter. I hope you will agree with me that in this instance there is no reason to depart from the normal procedure, which has taken place on previous occasions, but a suggestion was put just now to your Lordships' House by Lord Macmillan, who I think pointed out that if this prayer is adopted there is no great disadvantage, inasmuch as I understand that the scheme would be submitted to His Majesty in Council for approval, and thereafter that portion dealing with the MacDougall bursaries would be left out. It is for your Lordships to decide which way you wish to act on this matter, and I have merely done my best to indicate what are the views of the Department.
THE LORD CHANCELLOR (LORD MAUGHAM): I think, my Lords, that the Motion requires verbal Amendment, for the reason that as it stands it might wipe out part of the scheme, and all parts in one sense affect all the other charities in the scheme. I understand that the noble Lord desires to amend his Motion.
LORD AMULREE: I am very much obliged to the noble and learned Lord, and if I may I would amend the Motion, so that it will read: "That an humble Address be presented to His Majesty, praying His Majesty to withhold his approval to the Combined County of Perth and Kinross Educational Trust Scheme, 1936, in so far as it may affect or refer to the MacDougall Bursary Fund."
On Question, Motion, as amended, agreed to: the said Address to be presented to His Majesty by the Lords with White Staves.

BACON INDUSTRY BILL.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF FEVERSHAM): My Lords, the House will no doubt be aware of the difficulties which have led to the need for legislation dealing specially with the bacon industry, but I would like, if I may, to refresh your Lordships' memory by a few words of a historical character. Your Lordships will no doubt recall that until about ten years ago little or nothing was done to stimulate pig production for the home market. In 1930 the output of bacon in Great Britain was less than 1,500,000 cwts. and only one-seventh of the total demand. Broadly speaking, British producers concentrated on the pork market and left the expanding bacon market to their foreign competitors. In these other countries, particularly Denmark and Holland, the pig populations were increasing by enormous amounts, and the total imports into this country rose to a total of 12,000,000 cwts. in 1932—that is, more than twice the imports in the five-year period preceding the War. This pressure of foreign imports created a serious situation for the pig industry in this country equally with the industry abroad, and there was an all-round fall in prices. For example, the prices received by Danish producers fell by more than half between 1929 and 1933.
In this country a Reorganisation Commission was set up in 1932 under the Agricultural Marketing Act. The Commission was appointed to prepare a scheme for the marketing of pigs and pig products, and sat under the able Chairmanship of the noble Lord, Lord Bingley, who, I am sorry to say, has been prevented from being in his place to-day. On the basis of the Commission's recommendations marketing schemes were brought into operation. They were not, as your Lordships are aware, in any sense forced on the industry, but were established as the result of voluntary action by producers. The two main principles on which these schemes were founded were the regular supply of bacon from all sources, and the orderly supply of home-produced pigs suitable for conversion into bacon. The first objective

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was secured by quantitative regulation of imports under the Agricultural Marketing Act, 1933, and the second was achieved through the system of annual contracts between producers and curers.
It may be said that the marketing schemes established a British bacon industry, producing a commercial product capable of competing in price and in quality with the finest imported. The pig population reached in 1936 a record figure of over 4,000,000, whereas in 1931, at 2,900,000, it had been almost the same in 1867. Similarly, the output of bacon in Great Britain was doubled between 1930 and 1936, when it amounted to 2,750,000 cwt. It is worth remarking that this increase took place mainly in Wiltshire-style tank cured bacon, which is similar to Danish bacon. These satisfactory results showed that the schemes had been on the right lines. Nevertheless there remained certain outstanding problems which led to the breakdown of the contract system in the autumn of 1936.
The first main problem is that of redundant bacon factories. There are today about 790 licensed curing establishments in Great Britain. These do not include small butchers and retailers producing very small quantities of bacon. But some 490 of the 790 establishments are small curing premises, so that there are only about 300 effective bacon factories, and these are capable of dealing with about 3,750,000 pigs per annum. The number of home-produced pigs available for curing in 1936 was about 2,250,000; if Irish pigs and imported frozen carcases are included, the total becomes about 2,600,000. Even allowing for a considerable increase in the home production of bacon pigs, it is obvious that there is a substantial surplus of curing capacity. Factories have been working at two-thirds capacity or even less during the past three years, and therefore overheads have been correspondingly heavy. It is understandable that anxiety to secure an economic through-put led the curers to insist upon the annual contract being conditional upon a minimum number of pigs. More pigs were taken for bacon than the total supply warranted, with the result of forcing up the prices in the pork market. The difficulty was increased by heavy "open market" buying by curers who were short of pigs. In 1936 open market purchases amounted to one-fifth of the number of pigs de-
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livered under contract. The cumulative effect was that farmers who did not contract were able to secure higher prices than those who did, and necessarily then confidence in the contract system was seriously undermined.
The other main difficulty which arose was the rise in feeding costs from 1936 onwards; the amount of this increase was as much as 40 per cent. This upward swing in production costs was not accompanied by any corresponding rise in bacon prices which would have enabled the curers to offer higher prices for pigs. The contract for 1937 was, therefore, put before producers at a very difficult time. The curers demanded 2,200,000 pigs; the producers offered 1,900,000 and the contract accordingly failed. After the breakdown of the contract system, curers reverted to buying in the open market. Despite the fact that prices rose well over those provided for in the contract, curers could not even obtain the 1,900,000 pigs which had been offered on the annual contract. Moreover the pig censuses of June and December, 1937, and March, 1938, indicated that a decline in the pig population had set in. I am glad to say there are, however, hopeful signs of a recovery in the pig population which may well be due to returning confidence among pig producers in anticipation of the effect of the proposals in this Bill.
The views of the Government were announced in July last. While recognising the difficulties of the industry, which I have endeavoured to enumerate, the Government stated their belief that if the industry were founded on a smaller number of efficient factories provided with regular and adequate supplies of pigs of good quality and conformation, sufficient economies could be secured to enable the industry to be maintained during periods of high feeding costs. Nevertheless the bacon industry could not be expected to achieve rationalisation in face of a falling output, especially in view of the current high level of feeding stuffs prices. In the Government's view, therefore, a measure of financial assistance is necessary over a temporary period while reorganisation is being effected.
I now come after that historical explanation to the provisions of the Bill itself. Part I is concerned with organisation. Experience has shown that the co-ordinating body, the Development Board, lacked necessary powers to effect

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reforms. The Bill therefore establishes a new Bacon Development Board with wider powers of control and with five instead of three independent members. This new Board derives its authority from the Act, and is not brought to an end by the revocation of one or other of the marketing schemes, which might have happened to the old Development Board. In Clause 2 the Development Board is given authority over the two Marketing Boards in those matters regarding which there is no express direction that the Marketing Boards shall act independently of the Development Board. These powers of control include all major issues of policy.
Part II of the Bill deals with the problem of redundant manufacturing capacity. The machinery for dealing with this problem is a factory rationalisation scheme prepared and submitted by the industry, and, if Parliament approved, brought into operation in much the same way as an agricultural marketing scheme is to-day. The purpose of a factory rationalisation scheme is to increase the efficiency of the industry by regulating the extent of the facilities for producing bacon. A scheme can enable the Development Board to exercise a power which it cannot exercise otherwise—namely, the power to revoke licences on payment of compensation. This is the direct method of attacking the redundancy problem. I should add that small curers are not subject to a rationalisation scheme. It will be found that throughout the Bill there are provisions for the withdrawal of certain powers in the event of a rationalisation scheme not being in force within two years of the passing of the Act, or within such shorter period as the Minister may determine. If a rationalisation scheme is not in force within this time limit, the internal protection which curers will enjoy under the Act will be withdrawn. This indicates the importance which the Government place on an effective scheme of rationalisation being carried through.
Part III is devoted to licences, and it redrafts the power of the Development Board to license factories. By Clause 8 various small curing concerns—those not producing more than forty hundred-weights in eight consecutive weeks—are excluded from such licences. Part IV
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relates to the re-establishment of the contract system and to financial assistance. Experience has shown that a hundred per cent, contract system is almost impracticable. A more fluid and workable system is therefore introduced. The principal method of contracting will be the "long contract," which means for a period of twelve months. The Pigs Board will be responsible under the directions of the Development Board for the distribution among curers of all pigs offered on contract. This distribution of pigs by a central authority will mean that all curers get a fair share of the available supply. If a producer wishes to sell pigs under the prescribed contracts, he is given certain options. He may sell on "open offer," that is to say, he does not nominate any curer as the person to whom he wishes his pigs to be sold. The pigs accordingly become immediately available for allocation by the Pigs Board. For this valuable service which the producer renders, he is given an addition to the price which is termed an "allocation premium" of an amount previously fixed. Alternatively a producer may nominate a curer as the person to whom he wishes the pigs to be sold. This choice will be complied with unless the Board exercises its right to transfer the pigs to another curer. For every pig so transferred a premium of 1s. per pig is payable, 6d. of which goes to the producer and 6d. to the nominated curer in consideration of the expense to which he presumably has been put in obtaining the nomination.
The existence of this option should maintain existing links between producers and curers so far as is consistent with the wider and very important interest of securing a fair distribution of contract pigs among the factories. Another option, which is contained in Clause 22 and is intended specially for the small producer, is the "group" option through which he can join with other small producers, so that collectively they will be able to maintain regular contract deliveries. These group contracts, like the open contracts, will be immediately available for allocation, and accordingly the same allocation premium will be earned. The Pigs Marketing Board has the right, independently of the Development Board, to prescribe the contract terms not later than fourteen weeks before the beginning of the contract, or with the consent of the Bacon

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Marketing Board not later than ten weeks before the contract is due to begin. If at that time the terms have not been issued, the right to prescribe passes to the Development Board.
Subsidy provisions are contained in Clauses 26 to 28. For a period of three years bacon curers will be required to pay a standard price for a standard pig, and this price is related for the first time to a feeding-stuffs price of 8s. 6d. per cwt. If the cost of a standard feeding-stuffs ration exceeds 8s. 6d. the curer pays to the producer and recovers from the Exchequer 10.3d. per score for every 1s. per cwt. rise in the cost of the ration. When the cost of the ration falls below 8s. 6d. there is a payment back to the Exchequer. In order to enable curers to pay the standard price it is assumed that they will require to realise a certain price for their bacon. If bacon prices are below a standard level the Exchequer makes up the difference; if they are above, there is a payment back to the Exchequer.
The initial pig price of 12s. 6d. per score is coupled with a bacon price of 94s. 9d. per cwt., but provision is made for a "taper" in these standard prices over the proposed three year period of Exchequer assistance, the standard pig price of 12S. 6d. per score being reduced by 1d. in the second year and a further 2d. in the third year, while the bacon price of 94s. 9d. in the first year will be reduced by 1s. in the second year and a further 2s. in the third year. These "taper" provisions are a practical indication that the industry is expected to achieve that improved efficiency which will enable both pig producers and bacon curers to effect economies in their costs of production. Subsidy is only payable on pigs sold on annual contract and in respect of bacon made from such pigs, and the number of pigs eligible for subsidy will be limited to 2,100,000 in the first year, 2,400,000 in the second year and 2,500,000 in the third year. These maximum figures will permit a substantial increase in home production in the three years. Such an expansion is not only desirable in the interests of home agriculture but it is necessary if the bacon curers are to have a fair chance of tackling the problem of redundant factory capacity in relation to the number of pigs available.
Part V deals with the fixing of selling quotas of curers. Part VI contains
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general provisions. An important feature of the Bill, which should be specially mentioned to your Lordships' House, is the power of the Development Board to undertake comprehensive schemes of research and education. The relevant provision will be found in Clause 41. There is, I think, wide scope here for highly important work for the betterment of the industry by improvement of quality and reduction of costs.
The provisions of the Bill, although extremely complicated, do not involve any new departure of policy. The proposals have been worked out in close consultation with the industry and the general plan has been agreed by both parties. The machinery of the Marketing Boards has been retained, with certain adaptations and modifications, and full use has been made of the public safeguards provided in the Agricultural Marketing Acts where they apply. It is unnecessary for me to say in this House that the value of the pig industry amply justifies the aim of establishing that industry upon a sound basis. Pig production is not only admirably suited to our soil and climate, but it is a valuable store of fats, and is an important factor in the fertility of the land. Therefore it is well worth attempting, in the light of the experience that we have gained, to provide conditions both of security and stability in which the producer and the curer may co-operate; in the elimination of waste and in the elimination of inefficiency in every stage of the production of the pig. I beg to move that this Bill be read a second time,
Moved, That the Bill be now read 2a.—(The Earl of Feversham.)
LORD ADDISON: My Lords, the charming speech to which we have just listened from the noble Earl would not, I am sure, lead any uninformed person to suspect that this Bill is in fact a presentation of a new set of proposals because the Government have made an unexampled muddle of the administration of the Marketing Act of 1931. That is what is really behind it, and I shall not have any difficulty at all in displaying that that is so. I am glad the noble Earl emphasized the importance of this industry. Perhaps many noble Lords are not aware of the size of it, or perhaps they may take it for granted that the Government are always right, otherwise we might have had more

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noble Lords present to examine these proposals to-day. Let me direct your Lordships' attention to the purposes of the Marketing Act of 1931 and to an examination of how they were frustrated and how the muddle that has arisen on their frustration has necessitated the production of this complicated Bill.
The purpose of the 1931 Act so far as bacon is concerned was to equip the producers—that is, the farmers—with facilities for selling their bacon advantageously. The destiny of the ordinary bacon that you buy in the shop is to pass through a curing establishment. Therefore it would have been necessary, if the scheme had been properly designed and worked out, for the producers and the Board, either to come to an agreement with the curing industry or themselves to create factory facilities for dealing with their product so that the producers themselves might receive the full advantage of their own labours. That is what the Act was intended to enable them to attain, but what in fact happened was something quite different. What in fact happened was that two Boards were brought into existence. No hint of this emerged from the noble Earl's speech. I do not blame him for concealing it. It is a lamentable fact, but unfortunately it has been, shall I say, further entrenched in some of the provisions of this Bill.
There were two Boards, one was the Pigs Board, which the farmers set up to enable them to sell their pigs. That is right. But coincidently with this another Board was brought into existence which was not interested in the well-being of the farmers at all. That was called the Bacon Board. The Bacon Board was a Board of curers. Well, of course, the business of a curer of bacon is to obtain pigs as cheaply as he can—I am not blaming him, that is his job—and to sell his produce at as high a price as he can get. That necessarily is the business of a curer, and I am not blaming him. But that is not identical with the interests of the farmer. The farmer wants a reliable price for his produce. The result of the creation and the coincident operation of these two Boards was chaos, for this reason. The purpose and intention of the Bacon Board representing the curing interest was, naturally, to get pigs for as
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low a price as possible, while the farmer wanted as good a price as possible. The result was that the farmers more and more began to find that they could not get a good price from the Bacon Board and they began to sell their pigs as pork.
There is another strange feature attaching to these schemes. It is almost incredible, but it is a fact, and it is perpetuated by this Bill. When a pig weighs 160 lbs. it needs a Board, but if it only weighs 155 lbs. it does not. That is an extraordinary fact. You have a Board to deal with pigs that have attained a weight of eight score or upwards, but when those pigs are called pork they take their luck. That position is going to be perpetuated under this Bill. Of course, the rational thing would be to have an organised system of marketing appropriate for all pigs. The result was that between 1934 and 1936, with the curers in control of the Bacon Board and naturally wishing to get their pigs for as little as possible, there was great dissatisfaction among farmers who began to find that they did better by selling their pigs as pork. The result was that factories, as the noble Earl well and truly said, found themselves short of supplies. The reason why they were short of supplies was that there were two Boards with different interests—one Board out quite properly to promote the interests of the producer, while the interest of the other Board, the Bacon Board, was to get pigs for as little as possible because then they made a better profit. I happen to know, because I was responsible for the Act of 1931, that it would have been possible with proper management to have achieved a quite workable scheme, with the goodwill of the curing industry, which would have been worked for the purpose of promoting the well-being of the farming industry, which was the intention of the Act. But, as I said some time ago, it has been frustrated by this double-bar-relled arrangement which was allowed to come into existence.
Now let me call your Lordships' attention to another circumstance. The result of setting up a Board representing purely the curing side of the business was that lots of people rushed into it. That is why you have these 790 establishments, over 490 of which are so small that they have to be cleaned up somehow or other. They have come into existence because of this. It is not in the interest of agriculture at

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all. It was because an organisation was brought into being that could take advantage of this business which was originally designed to help the farmer but which in fact operated to keep down the price he got for his pigs. Now we have at long last this proposal whereby somebody has to pay compensation to wipe out this plethora of establishments which ought never to have been created. We should never have been landed in the position of having 790 different curing establishments, even the best of which are only working at about 60 per cent, of their capacity, and of having to buy out somehow or other some 490 of them because they are redundant. It is true that they are redundant and we are having to pay for allowing this redundancy to spring up. That is what is the matter.
But that is not anything like the whole story. The Reorganisation Commission—and I regret as much as the noble Earl that the Chairman is not able to be present to-day—recommended that there should be some corporation which would gradually absorb the whole curing trade. That was our intention in 1931, that there should be a corporation dealing with the curing side, operating in the interest of the farriers for the purpose of stabilising prices and giving them security, and gradually developing the industry, as it has been developed, I am told, in Denmark and in other countries and could be developed here. As late as 1936 the Food Council reported to the President of the Board of Trade on this matter in these words:
"We consider that the present situation emphasizes the need for control by a more independent body who can ensure that contract prices for bacon pigs are as high as the curing industry can afford and that such prices offer to producers in general a stronger inducement than do open market dealings."
That is the finding of the Food Council, which is not affected by the heresies with which I and my friends are charged. It is quite right that we should have an independent body not serving sectional or trade interests but working in the interests of the producing community on the one side and the consumers on the other. That was the kind of development which the Act of 1931 was designed to promote, but this other arrangement was allowed to grow up, and in order to fortify it the Government have been
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responsible for another set of actions which has had very deplorable results.
In our view—I am speaking now for my political friends—prices should be managed quite differently. We would manage prices deliberately so that the producers were assured of a fair price, not leaving it to an interested Bacon Board to force them down until they refused to sell their pigs. We would have a deliberate scheme of management. But the Government have set out to bolster up prices by inducing scarcity, and the result is this scheme of what is called quantitative regulation. Everybody recognises that you must have proper management of market supplies, but the system is liable to become discredited by what has happened. It was started in November, 1932, when there was a voluntary reduction of Danish imports of 15 per cent. In February, 1933, there was a further cut of 2½ per cent, and in November, 1933, another reduction of 16 per cent. The idea of these reductions was to keep the price up for the British farmer. What actually happened was something quite different. At the end of that twelve months the British farmer was getting as near as may be a penny per lb. more for his bacon but the consumer was paying 2½d. per lb. more.
This business of restricting supplies in the hope of maintaining the price of the producer has now gone to this extent: that while the consumption of bacon in 1932 was 20,500,000 cwt., imported and home, it has fallen to something below 18,000,000 cwt. The consumption per head has diminished by 12.6 per cent. But when I refer your Lordships to the story of retail prices, you will then see what the case is. Bear in mind that this breakdown of the scheme is because the farmers were dissatisfied with the prices they were receiving. Quite right; they were entitled to be dissatisfied. But, while they were so dissatisfied, this is what has been happening to the consumers. Take the prices which the Ministry of Agriculture quote for streaky bacon in November of each year: in 1932, 10d. per lb., in 1933, 11d., in 1934, 1s. 1¾d., in 1935, 1s. 1¾d., in 1936, is 2¼d., in 1937, is. 3½d. The rise in retail prices, in other words, during this period has been 5½d. a lb. There is no wonder that they have diminished the consumption of bacon. The result of

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these blundering operations has been to restrict supplies while doing nothing to control or to manage prices in the interests of the farmers on the one side or of the consumers on the other. The result has been that you have had this upheaval and the necessity for this Bill.
This Bill proceeded at long last to set up a disinterested Board to deal with the curing of bacon, making proper terms, which I know they could have made, anyhow, with the curing industry, to operate in the interests of the producer, We should have been glad that the Government at long last were seeing the error of their ways. But what they are actually doing is something quite different, and it did not emerge from what the noble Earl said. A scheme may be prepared under this Bill for eliminating surplus bacon factories—now that they have been allowed to grow up like mushrooms during the past five or six years. But neither the Development Commission, the strengthening of which we all welcome, nor the Minister can decide what that scheme is going to do, because, if your Lordships will refer to Clause 6, you will find this amazing provision. Although a scheme may be got together for the amalgamation of these factories—we hope, in the interests of the farmers—the scheme may be proposed either by the Development Board or by the Bacon Board; you notice, not by the Pigs Board, not by the farmers. Then, if the Development Board are preparing a scheme and the Bacon Board are also, the Development Board must mark time; their scheme goes into cold storage while the Bacon Board, the interested curers' Board, all the time proceed with this scheme.
Finally the Minister may prepare a draft of the scheme, but your Lordships will find this provision in subsection (6) of Clause 6:
"Provided that before laying a draft of a scheme before Parliament the Minister shall communicate the draft to the Bacon Marketing Board and shall not lay the draft unless within twenty-eight days or such longer time as the Minister may allow that Board has by resolution approved the draft."
In other words, the Minister of Agriculture cannot put the scheme before Parliament, the Development Board cannot prepare a scheme, until that scheme has received the blessing of the Bacon Board, the Board of the curing industry
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—frankly an interested industry. I am not blaming them for that, but they are not representing the interests of agriculture. Even the Minister himself is estopped by the provisions of the Bill from submitting to Parliament a scheme for the improved organisation of this business unless the interested Board itself gives its blessing to the scheme. I confess that I hardly ever expected to live to see the day when I should see this capitulation of a British Minister to an interested trade body; because that is what it is, nothing less. The whole of Parliament is held up until these proceedings can receive the blessing of the Bacon Board.
We are also to perpetuate the system under which other pigs, which are so fortunate or so unfortunate, as the case may be, as not to weigh 160 lbs., are to be left to the mercies of Providence, or the market, or the dealers, or the jobbers, or what not. There is to be nothing at all, no organisation, in regard to them. It is not for us to advocate our policies in this House, and I do not suppose they would receive much sympathy if we did. But at the same time I am quite sure that you could give a stabilised price to the producers—for a good quality product, of course—without this grotesque inflation of retail prices and without depriving the people of a large amount of food they ought to be able to buy.
May I finally draw your Lordships' attention to one other significant fact? Not only is a Board competent to operate on behalf of the producers practically shut out from this Bill, but there is no mention in the Bill from the first word to the last of the people who buy the bacon. There is not a word in it to stop this atrocious rise in the retail price of bacon, which has gone on concomitantly with the dissatisfacton of the producer with the price he is getting. There is not a word about that in the Bill. One other thing. I had hoped, I remember, when I was responsible for the original Act that these Boards would operate on behalf of the farmers in helping them to obtain their supplies under more advantageous terms. I am glad to see those provisions of the Bill which have to a certain extent a sliding scale of prices as feeding-stuff costs vary. But it should have been the business of a Producers' I Board to help the farmers to obtain their

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supplies with the advantages of big bulk contracts attached to them. As I happen to know in other ways, you certainly could obtain supplies, as, for instance, the Land Settlement Association does for its suppliers, at a substantial reduction per ton, certainly 10s., as compared with what most of the farmers have to pay now under their piecemeal method of purchase.
The only glint of hope in that connection is Clause 44. I would direct your Lordships' attention to that, and express the hope that perhaps we shall hear something more about it in Committee, because there is one thing that the Farmers' Board will be enabled to do. Under the Act of 1931, which is really re-enacted here, the Farmers' Board may do all sorts of things, if they want to do them. They may buy and sell pigs, they may produce bacon and other commodities from pigs or sell, grade, pack, store, and adapt for sale, pigs bought or commodities produced thereby, and lots of things which are all set out in Clause 44. In other words, the Farmers' Board is authorised to do the same thing as the Bacon Board is brought into existence to do. Whether the Board will ever do them I do not know, but it would be interesting to know why that power is put into the Bill. I guess that the real reason is that it is suspected that this business will break down, and I have not the shadow of doubt that it will, because the farmers will not continue to be satisfied with having to sell their produce to an organisation whose interest is not the benefit of agriculture, but the making of profit at the expense of agriculture.
The farmers will not continue to be satisfied with that position which will be brought about under this Bill, and that is why it is that, as a sort of saving clause, Clause 44 is put in the Bill. It will in some dire circumstances, which I am certain will arise, enable the farmers to do something to help themselves, which is what the Act of 1931 was designed to do; but, I am afraid, that will be made much more difficult by the provisions of this Bill. The Bill does, anyhow, bring into existence one organisation, the Development Board, which will begin to have some powers, although nothing like enough; and because there is that beginning of a better organisation my friends and I do not propose at all to obstruct or object to the Bill.
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We do, however, recognise that it is a poor and feeble compromise. It ought to go the whole way, and introduce a proper scheme of organisation, designed to build up and promote the interest of producers on the one side and consumers on the other, instead of putting in between a fortified body whose business in life it is to make as much profit as it can out of them both. That is where this Bill is wrong, but somehow or other, because of its other provisions, that wrong is more likely to be righted, and that is why we shall support the Bill.
THE EARL OF FEVERSHAM: My Lords, the burden of the argument of the noble Lord who has just sat down is that if the Government, when they came into power in succession to the Labour Government in 1931, had carried out the policy and intention of the Agricultural Marketing Act, 1931, it would have been unnecessary to have the provisions contained in this Bill. In the first place, what was that Act of 1931? It was essentially an Act to enable sections of the agricultural industry, producing a certain commodity, to organise themselves for marketing purposes. That is exactly what the Bacon and Pigs Marketing Boards succeeded in doing. The noble Lord would be the first to recognise, as a progenitor of the original Marketing Act, that it enabled sections of the industry, without compulsion, to reorganise themselves. But it was impossible for them to undertake this task until the Report of the Reorganisation Commission for pigs and pig products had been published in 1932—a Report which made a thorough analytical investigation of the conditions surrounding both the production of pigs and the curing of pigs for the home market. The scheme which was finally inaugurated followed the recommendations of the Lane-Fox Commission and so I cannot accept Lord Addison's contention that if the Labour Government had remained in power, by adhering to the provisions of that original Marketing Act, there would have been any greater likelihood of a continuing success of the bacon and pigs marketing schemes than has been the case during the course of the last few years.
With regard to the future, there can be no possible conflict of policy as between the two Marketing Boards, since each will now work under the direction of the

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Development Board on major matters. And the Development Board, as the noble Lord has pointed out, has five independent members whereas previously, under the development scheme of 1935, it only had three independent members. The noble Lord next went on to refer to the fact that factory capacity in this country was such as to result in overhead charges which increased the final cost of bacon. The noble Lord, Lord Addison, assumed in putting forward that argument that, owing to the great and rapid developments of the bacon industry between 1930 and 1936, the numbers engaged in the curing industry had increased during that time to the figure of 790 at which they are now. I am informed that at the time when the noble Lord was himself Minister of Agriculture there were about the same number of curers as there are to-day. Therefore it is not strictly accurate to say that the problem of redundant factory capacity has arisen because of divergence of opinion between the Pigs Board and the Bacon Board.
The next point to which the noble Lord turned was the alleged restriction of supplies. In the past we have worked to an adjusted total of supplies of 10,800,000 cwt. per annum, which again was based upon the Lane-Fox Report. But in arriving at this figure the Commission took as their basis the supplies in the years 1925 to 1930, which were good years, when the purchasing power of the people was relatively high and when bacon prices were for the most part much higher than they are to-day. Your Lordships will be aware that imports are regulated according to the recommendations of the Market Supply Committee, which in turn is advised by the Bacon Supplies Consultative Committee. On this question of future supplies my right honourable friend has stated in another place that the regulation of bacon supplies will be continued so as to maintain reasonable prices in the general interest, but the Government do not regard themselves as restricted to any given total.
The noble Lord then referred to the Food Council's Report in respect of prices during those years when the marketing scheme has been in operation. The bacon marketing scheme came into operation in July, 1933. Since then the index numbers of general food have been substantially lower than for the cost of living as a
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whole, and the index numbers of streaky bacon in particular have been several points lower than the general level of food prices. The noble Lord will remember that the Food Council, commenting on the position in 1936, said that since the initiation of the pigs and bacon marketing schemes bacon prices had been steadier. Prices to pig producers did not appear to have been excessive, and retail prices, while substantially higher than in the slump period 1931–32, did not seem unreasonable when compared with the average of the five years preceding the schemes and with other food prices.
LORD ADDISON: I do not want to interrupt, but why does not the noble Earl quote the conclusion? I know it is too long a story. I gave the conclusion.
THE EARL OF FEVERSHAM: I would, with due respect, say to the noble Lord that it is a fair conclusion that they did not think the prices were unreasonable compared with the average price of the five years preceding the schemes and with other food prices. The noble Lord, Lord Addison, then turned to the question of the pork market and the production of pork pigs being left out of this Bill altogether. Again I can only refer back to the Reorganisation Commission which said in its Report that:
"Any bacon policy must … seek to eliminate the influence of the 'pig and feed' cycle upon the production of bacon pigs. It would be desirable to discourage these maleficent influences also in the case of bacon imports and home pork production, but in the latter case elimination would probably be impossible without a stringent regulation extending over every phase of pig production, which we are anxious to avoid."
Further in that Report, in respect of including all pigs in a scheme of regulation, they say on page 63:
"Expansion of the home pig industry must take the form of increased bacon production, as the capacity of the pork market is limited. We therefore recommend that the pork pig and bacon pig markets should be segregated so far as possible, and we make no provision in our scheme for the regulation of the marketing of pork pigs."
Apart from that careful recommendation of the Lane-Fox Report, as far as I am aware no practicable suggestion covering the inclusion of pork pigs in a general scheme has yet been made. However desirable it may appear on the face of it, it has seemed impossible to go to such lengths of regulation as would be needed to cover both sides of the industry.

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The last point on which I would like to touch in reply to the noble Lord is in regard to the rationalisation scheme as provided for in this Bill. The Bacon Marketing Board's right of veto over the factory rationalisation scheme is based on the analogy of the Agricultural Marketing Acts, and is therefore a continuation of the policy which the noble Lord first inaugurated. Under the Agricultural Marketing Acts a scheme cannot come into operation unless it is approved by the registered producers voting at a poll. Moreover I believe there is an even closer parallel in Section 1 of the Marketing Act of 1931, which provides that before making any modification of a scheme the Minister shall give notice of the proposed modification to the promoters of the scheme, and unless within four weeks, or such longer period as the Minister may allow, more than half of them notify their assent, the Minister is unable to lay the scheme before Parliament. That was contained in the noble Lord's Act of I93r, and the same principle is applied in this Bill to a rationalisation scheme.
LORD ADDISON: No.
THE EARL OF FEVERSHAM: The noble Lord dissents from that, but I suggest it would be hard for him to prove that it is not the same principle. To take away the industry's last word would surely be a very undesirable departure from the principle of the Agricultural Marketing Acts on which this Bill is founded. If no rationalisation scheme is in operation within two years after the passing of this Bill (or if there is no prospect of the rationalisation scheme being in operation the Minister can if he so desires make it a shorter time), the consequences to the curing industry would be most serious, since all the internal protection given by this Bill would be withdrawn. It will be within the knowledge of the noble Lord that at the present time such a scheme is being prepared, and it is anticipated that that scheme will be submitted at an early date. It would be improper, on the principle of allowing the industry to propose plans for its own reorganisation, for the Development Board at the same time to prepare such a scheme. Therefore it is provided in the Bill that if the scheme of the representatives of the bacon curing industry breaks down or does not
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materialise the Development Board should have the right to prepare such a scheme to submit to the Minister. For the reasons I have given the decision to veto the rationalisation scheme is not one which the Bacon Board will lightly assume.
The noble Lord has dealt with other features of this Bill, but I have already taken up the time of the House in replying to the main points which the noble Lord levelled against these provisions. I trust that at a later stage of the Bill it will be possible to pursue further the points which have not been dealt with at this stage.
On Question, Bill read 2a and committed to a Committee of the Whole House.

ESSENTIAL COMMODITIES RESERVES BILL.
Order of the Day for the Second Reading read.
THE PAYMASTER-GENERAL (THE EARL OF MUNSTER): My Lords, I beg to move that this Bill be read a second time. It will be within the memory of noble Lords that the Chancellor of the Exchequer announced in the course of his Budget statement that the Government had made certain purchases of essential commodities—namely, wheat, sugar, and whale oil, and that in order to avoid any undue fluctuations of the market these purchases had been carried out with the utmost secrecy. The action which has been taken by the Government has, I think, been received with general satisfaction by all Parties in the Slate, but although the procedure adopted has been unusual, the course we have taken is undoubtedly justified when all the relevant circumstances are considered. This Bill is, therefore, necessary to legalise and approve the action already taken by the Government, and to enable further expenditure to be incurred in increasing stocks of food, forage, fertilisers, and petroleum products. The creation of this reserve is an essential part of national defence, and an assurance that in the event of a sudden emergency stocks of essential commodities shall be maintained at a level sufficient for the needs of the civil population during the early months of any such emergency.

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It will be quite apparent to noble Lords that if war broke out and that hideous form of insanity again engulfed this country and the world, there would conceivably be a serious dislocation of the machinery of distribution of food supplies consequent upon the destruction of property by aircraft and upon the diversion and delay of merchant shipping. It would be imprudent of any Government not to take adequate precautions in peace time against any delay that might occur from the causes which I have mentioned. The creation of these reserve stocks is not advocated as a means of maintaining a beleaguered nation, but rather as a safety measure against occasional and temporary shortage. Our freedom and our security depend upon the command of the seas, and every Government plans and prepares its defence measures with a view to final victory and a successful conclusion of hostilities.
Before I enter into an explanation of the Bill before the House, it would be useful if I gave a brief outline of the arrangements made by the Government for the custody of the stocks already purchased and the proposals for the replacement of such stocks to avoid loss by deterioration. The first commodity essential and vital for preservation of human life is wheat, and it is generally known that wheat is not a commodity which will keep for any length of time. Accordingly, when the Government made this purchase through Messrs. Rank and the Co-operative Wholesale Society of England, its custody was entrusted to these two firms and to the Co-operative Wholesale Society of Scotland and Messrs. Spillers, Limited, who will at the appropriate time take over this wheat in order to avoid deterioration. They have at the same time given an undertaking that they will maintain their own commercial stocks at the normal level and no remuneration or commission will be paid for their services apart from out-of-pocket expenses. By this course it will be possible to avoid the necessity for the Government to sell wheat on the open market which might seriously interfere and disturb the normal business in this commodity. All wheat so purchased will be stored in the ports almost entirely on the West Coast. Reliance is being placed
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on the principle of dispersal and the wheat reserve will be spread over as many centres as practicable.
Next I turn to sugar which has already been purchased and will be placed in the custody of the British Sugar Corporation, who will be responsible for the technical supervision of this reserve and will undertake in consultation with the Food Department of the Board of Trade the turning over of this stock when necessary for the purposes of avoiding deterioration. I understand that the reserve will consist of "preferential raws" the greater portion of which is home-grown. It will be stored at various centres in this country and arrangements have already been completed for the erection of new warehouses to accommodate this commodity. The British Sugar Corporation is giving its services without cost and only actual expenditure will be repaid. Lastly, I come to an explanation of the purchase of whale oil which is by far the most suitable source of edible oils for storage purposes on account of its superior keeping qualities, for it can be kept for long periods without any fear whatever of deterioration. Accordingly the problem of turning over stocks of this commodity is much simplified. We intend that this reserve shall be used during an emergency for the manufacture of margarine and cooking fats. Although arrangements are not so far advanced as in the case of sugar and wheat, the purchase has been completed and steps are now being taken for its custody and supervision. Those are the three commodities which have already been purchased and the Government do not at present contemplate any further purchase of these products.
Before I sit down I think I should give your Lordships an explanation of the principal clauses of the Bill. Clause 1 gives power to the Board of Trade to obtain information as to the amount of existing stocks and storage accommodation. Although we have received considerable assistance from the majority of traders by voluntary methods the object of this clause is to require a few persons who have not yet responded to fall into line. Subsection (1) of Clause 2 gives power to the Board of Trade to enter into arrangements for additional reserves to be held of any essential commodity by the trader concerned, the trader remain-

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ing the owner of the additional stocks and being recouped of his expenses if necessary. Arrangements may also be made for assisting traders to provide increased storage accommodation and the necessary statutory authority is also provided for payments being made to traders by way of grants or loans for these purposes. The second subsection of this clause gives power to the Board of Trade to acquire and store stocks of any essential commodity and to erect the necessary accommodation for the preservation of stocks acquired. The third subsection is, I think, of the utmost importance. If it became apparent that the reserves were no longer necessary the question of the disposal and liquidation of these stocks is a matter requiring careful consideration and accordingly these reserves will not be disposed of except after subsequent legislation. By this method we shall remove anxiety among traders that the reserves might be suddenly thrown into the market with a heavy fall in price, and I believe we may confidently anticipate that the ordinary methods of the sale and purchase of stocks on the open market will remain undisturbed.
Clause 3 establishes an essential Commodities Reserve Fund into which moneys voted by Parliament will be placed, and all expenses will be paid from the fund subject to the approval of the Treasury. I do not think I need weary the House with any explanation of the last three clauses, which are, I think, practically self explanatory, but your Lordships will note that the Schedule to the Bill sets out the commodities which may be declared to be essential commodities. That is the history of this important Bill. I now beg to move that it be read a second time.
Moved, That the Bill be now read 2a.—(The Earl of Munster.)
LORD STRABOLGI: My Lords, I am sure your Lordships would wish me to thank the noble Earl the Paymaster-General for the very full and clear explanation which he has given in the fewest possible words of this complicated and important measure. It raises very large issues which I will deal with as briefly as possible. But in the first place I would like to ask a question of which I have given short previous notice to the Paymaster-General. Your Lordships will observe that the Bill empowers the Govern-
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ment to store against emergency certain limited articles of food, forage for animals, and fertilisers for land and the raw material for the production of the same, and, in addition, petroleum and petroleum products. That is in the Schedule and we are limiting the reserves of these commodities, which broadly speaking, are food and petroleum.
I would like to ask why the Bill has not been extended to include other necessities and raw materials, and in particular certain metals. Your Lordships will be aware that this is a Bill to meet the possible emergency of war and should that emergency arise the supply of certain raw materials, particularly metals, will be absolutely necessary. To give three examples, I include in metals copper, tin and nickel. It would be very dangerous indeed if we were caught short of certain of these commodities which do not come within the terms of the Schedule. In that connection may I draw your Lordships' attention to the importance of mercury for the manufacture of explosives? The main supply of mercury is in Spain and is no doubt an object of prize for either the Germans or Italians in the Spanish Peninsula, and the time may come when we may find supplies of mercury cornered by Germans or Italians. I make no apology for mentioning this matter. Furthermore—and I want this next remark of mine to be treated with discretion—it may not be a bad thing in the present state of the world to take off any surplus of these essential metals for munition production from the market, not a bad thing at all; in fact for a long time in my personal capacity I have advocated that the Powers friendly to ourselves should go out of their way to corner the world supplies of certain essential metals. We should have heard far less of war dangers in Europe if that had been done when it was first advocated by my friends and myself.
With regard to the general question of essential commodities being stored, it is very remarkable how either a war or some apprehension of war brings in a measure of Socialism. This is, of course, a Socialistic measure and I welcome it on that account. It has long been part of the policy advocated by my noble friends and myself and by my honourable friends in another place that Import Boards should be established. We want to keep

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prices stable by making bulk purchases of just these kinds of commodities—wheat, sugar and whale oil—in order to prevent fluctuations in price which are so disadvantageous to producers and also to consumers, and with the object of course, in the end, of keeping down prices to consumers. When there is an emergency or an apprehension of emergency then we get a limited instalment of this policy brought in by a so-called National Government, and I congratulate the Tories on one more phase of Socialism forced on them by recent events and recent threats from certain quarters on the Continent. The only thing we wish is that it had been carried a little further, because we have always advocated this, not as a war policy or as a preparation for war, but as a peace policy. Long before the clouds gathered over the European horizon we were advocating this very principle which the Government are now putting into force.
The next matter I would like to refer to is this. The operation of this scheme is limited. I understand from what was said by the Minister for the Co-ordination of Defence in another place that the cost of this in the first instance is of the order of £7,500,000. I see the noble Lord, Lord Ritchie, in his place. He knows something about imports into the Port of London and other ports. I think I am right in saying that £7,500,000 covers about a fortnight's supply of wheat and sugar and whale oil. That is not very much. We hear from time to time that supplies of food in the country suffice for only about six weeks. I have always said that that was an exaggeration, but when we are told that we must build up the Navy and so on one of the reasons given is that we have only six weeks' food supply in the country. This will only increase it to eight weeks. It is not very much. I should have thought that if we are going to do this job at all we should do it thoroughly. This money is not wasted, because it will be turned over. I presume that the price paid was a fair one, that it was a cheap price. Indeed, it is an investment. I would much rather see the country's resources going into the necessities of life than into gold which is sterilized in the vaults of the Bank of England. I suggest, therefore, that although the policy is a good one it has been conceived on too narrow a basis.
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There is another suggestion I would like to make to the noble Earl the Paymaster-General, to His Majesty's Government and to noble Lords opposite. It is all very well storing wheat which deteriorates, and sugar which deteriorates, and whale oil which keeps for a long time, but I suggest that in the end the best storehouse is in the productive, well-fertilised soil of the country. Since noble Lords opposite have been in office 1,000,000 acres of land have gone out of cultivation. Flocks and herds are the natural store place of food supplies. If we have a flourishing agriculture we need not have such fear of trade routes being temporarily interrupted or ports destroyed. This matter is very important indeed. I am not going to develop it to-day, because my noble friend Lord Addison is going to bring it up in debate to-morrow, but there is a great deal in what I have ventured to say to your Lordships. The Conservative Party particularly have been most remiss, if I may be allowed to criticise the dominant Party in the present Government, in allowing this deterioration in the agriculture of the country.
I would like to be allowed to say that I agree with the Paymaster-General in what he said with regard to command of the sea and the defence of trade routes. Of course we must keep command of the sea. That is self-evident. But now we have a new weapon in the long-range bomber. All the time bombing aeroplanes are increasing in range and power. As we have seen by the recent almost miraculous flight of a Royal Air Force formation, even further distances are capable of being covered by these dreadful weapons of destruction. We have a precedent created in Spain again by the bombing of the harbours there, to the loss and detriment of British seamen and British ships, with the connivance of the present Government and with almost the approval of the present Prime Minister. It is a precedent that may serve us very ill in the future. When my noble friend Lord Snell protested in debate against what is going on in Spain, it was not simply because he has natural sympathy with the Republican Government of Spain but because he and my other noble friends have taken a much longer view of the interests of this country. It will be of little use placing our stores on the west coast as the noble Earl, the Paymaster-General

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described. Indeed, with a balloon barrage on the East coast it may be easier for high flying bombers to reach the west coast ports. I should have thought the obvious point of attack would be where the attackers were not expected. The problem may well be to defend the long western seaboard.
This is a very real danger. We may have an interruption of food supplies for a considerable time. If that is the case, I should have thought this Bill should have been drawn much more widely. However, it is permissible. There is no limit, as I read the Bill, to the amount of money that can be expended on the storage of essential commodities. I presume that this is only an instalment. I can understand perfectly well that the Government had to act secretly and quickly in their first purchases, and I dare say they will have to act quickly and secretly in further purchases. Giving them credit for that, I do not want to probe too deeply into the matter. With regard to the principles of the Bill, as the noble Earl the Paymaster-General said, it has been welcomed by all three Parties, and, speaking for my noble friends, we offer no opposition to the Second Reading.
LORD RITCHIE OF DUNDEE: My Lords, I should like to make one or two observations about this Bill. The noble Earl who introduced it told us that the Government are to lake powers to augment stocks of essential commodities in two ways—by granting loans to traders to enable them to augment their stocks and improve their storage facilities, and by the Government themselves acquiring and holding stocks. Of the former of these methods I have no criticism to make at the moment, provided that traders are not restricted in any way as to the port or place in which the increased stocks shall be stored, and that they are free to import their goods through the port they consider to be most suitable for the needs of their business. But I am convinced that if the Government pursue the latter method—that is, the method of themselves acquiring and holding stocks—they will not only fail to achieve their object of augmenting the total quantities held in the country generally, but they will bring about precisely the opposite result. I say that you cannot expect merchants to carry on their normal
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business and to import and hold their normal stocks in the country when they have the nightmare of Government-held stocks which may be realised any day owing to the fact that they are perishable, weighing on the market. I earnestly hope that the Government do not intend to pursue this policy, because I believe it will be disastrous to trading interests generally and will result in the diminution rather than the augmentation of stocks throughout the country.
But there is another aspect of this question which concerns me as Chairman of the Port of London Authority. What effect is this policy likely to have upon the Port of London? I know that the policy of the Government is to store goods almost anywhere except in London because of its supposed vulnerability to enemy aircraft. In time of war, of course, every sacrifice must be made. But if, before the emergency arises, the policy of the Government is to accumulate stock of all such commodities as may be considered essential in time of war and store them elsewhere than in London, the effect on the Port of London will be disastrous. I suppose there are probably something like £80,000,000 of money invested in the docks, wharves and warehouses in the Port of London and that there are something like 30,000 men engaged in handling the goods that come in and out of the Port of London. It is hardly necessary for me to point out what would be the result upon the Port of London Authority and the other owners of property in the Port, and upon the men employed in the Port, if trade were seriously diverted. I suggest that it is unnecessary, until the emergency arises, to interfere with the trade of the Port of London, and undesirable, provided arrangements are made to ensure the evacuation of essential commodities from the warehouses in time of emergency.
I am informed by those intimately connected with the wharfage and warehousing operations in the Port of London that stocks of important commodities could be speedily removed should the occasion arise, and that a scheme of evacuation could be brought into operation when necessary, before or during war, and that thus the grave dangers of dislocating established trades and incurring heavy losses would be avoided. I

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should like to assure the noble Earl that the Port Authority are anxious to assist the Government in the proposals contemplated in this Bill. We are, however, aware of the complexities of the various trades concerned and of the sensitiveness of markets. We fear that operations by the Government under the suggested powers may dislocate markets and possibly involve the Government in heavy losses without achieving the object which the Government have in view of increasing the total stocks of essential commodities in the country.
I would venture to offer this suggestion to the noble Earl: that in any future transaction in other essential commodities than those with which the Government have already dealt, where the trade is in the hands of importers, merchants, brokers or dealers, the best course would be to use only the powers in the Bill which enable the Board of Trade to make grants or loans to the traders concerned for the purpose of inducing the augmentation of the stocks of any such commodities held by them; and that the traders with whom arrangements are made for the augmentation of stocks should be free to import their goods by the ports they consider to be most suitable for the needs of the business. I would suggest this, too, for the Government's consideration: that all retailers and provincial distributors should be induced to increase their stock of suitable foodstuffs and possibly to enlarge the storage accommodation in their shops. By this means large quantities of such foods as canned goods, tea, coffee and cocoa could be distributed to every town and village in the country and be a valuable reserve in time of emergency.
THE EARL OF CRAWFORD: My Lords, I should like to say a word or two about the speech to which we have just listened. I agree with Lord Ritchie that the storage by the retailer is a very profitable method of placing reserve goods in various parts of the country. At the present moment the storage of wheat is storage as wheat, and everybody knows that the wheat is all in the ports, and of course the ports are probably the more vulnerable for air raiding in consequence. The best way to hold reserves of foodstuffs is not in the form of wheat, but in
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the form of flour. That is the second stage of rendering it consumable; and, of course, as Lord Ritchie has said, it can be much more widely distributed than by means of the mills. Measured in numbers, I suppose there are four big milling companies in the country, and there must be nearly forty thousand retailers of flour. That gets it nearer to the consumer.
But after that I really do not think that I agree with anything which Lord Ritchie has said. He asked the Government to limit their Bill to using loans. Loans are a purely subordinate part of the Bill. They are not the operative part of the Bill. Loans are put in for the convenience of the trader, to enable him to perform the major operation. Lord Ritchie looked upon it as if it were the principal object. Then he suggested that traders should be entitled to choose their place of storage and, still more striking, that the trader should be allowed freedom as to the destination of his goods. That is to me quite inconceivable, and is entirely to forget all the lessons of the Great War. Of course the trader can have no freedom whatever to settle the destination of his goods, and after the war has been on a fortnight he will not have any freedom in the choice of his goods. Let us recognise that fact at once. The goods will have to be brought to this country by means of convoy, and that the trader in London should be entitled to say that his goods shall not go to Liverpool or elsewhere is impossible.
LORD RITCHIE OF DUNDEE: I did not say during a war.
THE EARL OF CRAWFORD: We have to prepare these things before war breaks out, but the noble Lord wants us to go blindly on and then when war breaks out to extemporise some operations. I think the Government have done the right thing. I think it is hateful to have to trade in this way, but it is one of the inconveniences of war. I would make one other observation. Lord Ritchie said there is the nightmare of Government held stocks. We experienced that during the War. In those days it was the Government entirely, operating and buying and selling foodstuffs and commodities. With a little care this nightmare can be exorcised. So far as wheat is concerned, private industry and enter-

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prise in importing and distributing wheat in this country was rehabilitated during the Great War, and it was done in such a way that I do not think anybody lost a penny. By taking the importing and distributing trade into the confidence of the Government these things can be rehabilitated without loss, as was shown during the last War. I approve of this Bill very much indeed, and I hope that the Government will not delay until war begins the essential organisation for looking after the food supplies of the country.
THE EARL OF MUNSTER: My Lords, the Bill of which I moved the Second Reading is one which appears to have had support from all the political Parties in the State, but there were one or two very critical remarks made by Lord Ritchie to which I will reply in the course of a few moments. Lord Strabolgi addressed one or two questions to me. He asked why the Schedule was so limited in scope. He criticised the Schedule, and said that it should include pig iron, and, I understand, copper, mercury and other substances. I think, if my noble friend will, he should look at this subject in this light, that this is a matter of policy as to what additional quantities of various commodities should be stored in this country in the event of any emergency. My right honourable friend has made very careful inquiries into many of the substances and products which the noble Lord mentioned, and he is satisfied that at the present moment it is not necessary to take the power, by extending the scope of the Schedule, to include those commodities and products which the noble Lord mentioned.
As regards agriculture, I hardly think that this is the appropriate moment to elaborate the agricultural policy which the Government have in mind, but I have no doubt whatever that that question will be amply debated and discussed upon the Motion which the noble Lord, Lord Addison, has put down for to-morrow. The noble Lord opposite also raised the question of how long these food supplies would last in this country. Of course it would not, obviously, be in the national interest to disclose the period during which these essential commodities will last, but I can assure the noble Lord that it is certainly not a fortnight, which I think was the figure
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he mentioned in the course of his remarks; and I think—I endeavoured to make a point of it during my Second Reading speech—that if we hold the command of the seas we shall in all probability not have an interruption of imports for any very prolonged time.
I turn from that to one or two points made by Lord Ritchie. He first of all discussed the question of the nightmare of Government-held stocks. In the course of the remarks which I made on the Second Reading I did draw your Lordships' attention to the clause in the Bill which sets out that these commodities must not be disposed of, except by subsequent legislation. I cannot help thinking, in my own mind, that that really does answer the whole question which Lord Ritchie raised.
LORD RITCHIE OF DUNDEE: Even if perishable?
THE EARL OF MUNSTER: Even if perishable. These stocks are going to be turned over, and the companies will take the stock over to avoid deterioration. If in the future we find that we can rid ourselves of these commodities which the Government have purchased, then additional legislation must be introduced, and come before this House, to sanction the disposal of those commodities. Therefore I really cannot see the fear which the noble Lord expressed, that this might seriously damage the various trading concerns, for it was the very intention of the Government, in insisting upon future legislation, to avoid any sudden collapse in market prices due to any flooding of the markets. Of course I cannot give the noble Lord any undertaking whatever that in any future transactions the trader shall have the opportunity of saying where these commodities are to be stored. It raises the whole question of the vulnerability of various districts in London, and in the British Isles as a whole, and of course that is one matter which my right honourable friend has to take into consideration in arranging for the storage of any of these commodities. I am not sure that there are any other points with which I need deal at the present time, but I hope that I have satisfied the noble Lord in regard to the criticisms which he has made and

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which I cannot believe to be anything but unfounded.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

BRITISH MUSEUM BILL, [H.L.]
Read 3a (according to Order); an Amendment (Privilege) made; Bill passed, and sent to the Commons.
House adjourned at twenty minutes past six o'clock.

LONDON PASSENGER TRANSPORT BOARD BILL.
The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn. The Orders made on the 25th of May and 28th of June last discharged, and Bill committed.
LEE CONSERVANCY CATCHMENT BOARD BILL.
The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn. The Orders made on the 15th and 28th of June last discharged, and Bill committed.
GUILDFORD CORPORATION BILL.
The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn. The Orders made on the 17th of May and 28th of June last discharged, and Bill committed for Wednesday next.