Sitting of 28 June 1938

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

PRIVATE BUSINESS.
Private Bills [Lords] (Standing Orders not previously inquired into complied with),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:
West Yorkshire Gas Distribution Bill [Lords].
Stanmore Unused Burial Ground Bill [Lords].
Bilis to be read a Second time.
Canterbury Gas and Water Bill,
As amended, considered.
Ordered, That Standing Orders 240 and 262 be suspended, and that the Bill be now read the Third time.—[The Deputy-Chairman.]
Bill accordingly read the Third time, and passed.
Harwich Harbour Bill [Lords],
As amended, considered; to be read the Third time.

EXPERIMENTS ON LIVING ANIMALS.
Address for
"Return of Licences granted under the Act 39 and 4o Vict., c. 77, showing the number of experiments performed under the Act during 1937, and the registered places at which such experiments may be performed (in continuance of Parliamentary Paper, No. 135, of 1937).—[Earl Winterton.]

ORAL ANSWERS TO QUESTIONS.
  SCOTLAND.

    PROVOSTS, SMALL BURGHS.
    Mr. Kennedyasked the Secretary of State for Scotland whether he is considering amending legislation on the lines of the resolution, unanimously approved by the Fife Small Burghs Association, dealign with the position of the provosts of small burghs who, prior to the passing of the Local Government (Scotland) Act, 1929, were ex officio justices of the peace and, as such, eligible to act as justices of the county licensing and licensing appeal courts?
    The Secretary of State for Scotland (Mr. Colville): This question is, I am informed, under consideration by the committee appointed in December, 1937, to review the existing legislation affecting local authorities and local government and public health in Scotland. I propose to await the committee's report before deciding whether any action is called for on this matter.
    Mr. Henderson Stewart: Will the right hon. Gentleman bear in mind that many provosts at the moment are put in an invidious position?
    Mr. Colville: I will bear in mind all relevant circumstances.
    Mr. T. Johnston: During the period when the right hon. Gentleman is waiting for the report of the committee, can he not consult his friend the Lord Chancellor and get individual cases, where necessary, dealt with?
    Mr. Colville: I am hoping to have the committee's report before very long, but I will bear in mind what the right hon. Gentleman has said. I think it is wise to await the report before deciding on any action.

    HOUSING.
    Sir Douglas Thomsonasked the Secretary of State for Scotland (I) the total number of new houses required in Aberdeen to replace unfit houses and to put an end to overcrowding; how many houses were built for these purposes during 1937; and how many is it estimated will be built for these purposes during 1938;

    1677
    (2) the percentage of overcrowded houses in Aberdeen and how long will it take to end overcrowding in that area at the present rate of building?
    Mr. Colville: The report on the overcrowding survey carried out by the corporation in the winter of 1935, which contains the latest information available on the subject, shows that 23.8 per cent. of the fit houses in the city were overcrowded and that 7,088 new houses were required to put an end to overcrowding and to replace unfit houses. For these two purposes the corporation completed 526 houses in 1937, and they expect to complete 800 in 1938.
    Sir D. Thomson: Can the right hon. Gentleman say how this progress compares with the progress in other burghs in Scotland?
    Mr. Colville: I should require notice of that question.
    Mr. Gallacher: Is the right hon. Gentleman aware that unless something is done for the fishing population of Aberdeen, they will be quite unable to pay the rent for these new houses when they are taken out of their overcrowded conditions?
    Sir D. Thomsonasked the Secretary of State for Scotland how many houses have been built by the Scottish Special Areas Housing Association?
    Mr. Colville: Tenders have been approved by the association for 66 houses in timber, of which two have been completed and occupied. In addition, the association have commenced to build 494 concrete houses and have schemes in hand covering 1,350 additional houses.
    Mr. McGovernasked the Secretary of State for Scotland whether he can state the needs of Glasgow in new houses for the purpose of slum clearance, overcrowding, and those who at present are unhoused; the number of houses built last year; the number per month to be built this year; and how many years it will take to rehouse those sections at the present rate of building?
    Mr. Colville: At the beginning of 1936, the latest date for which information is available, the corporation estimated that a total of 65,000 new houses were required for the relief of overcrowding, the replacement of unfit houses and ordinary
    1678
    requirements. The number of houses completed by the corporation during 1937 was 1,841. With regard to the last part of the question, the corporation completed 1,081 houses during the first five months of this year and they expect to complete 2,054 additional houses by 31st December next, making a total of 3,135 for the whole year or an average of 261 per month.
    Mr. McGovern: As regards the last part of my question, how long will it take to house the population at this rate?
    Mr. Colville: It is really impossible to make a forecast, because the rate does not necessarily continue the same, but I am hopeful from the improvement which is shown that there will be an acceleration in the provision of houses.
    Mr. McGovern: In view of the great dissatisfaction regarding the rate of progress, will the right hon. Gentleman set up some form of inquiry into the housing question in Glasgow in order to see that all various methods of providing houses are gone into, as there is no chance of home life for a large percentage of the population unless this housing problem is solved?
    Sir John Haslam: Will the right hon. Gentleman send a deputation from these towns in Scotland to Lancashire, to towns like Manchester and Bolton, where they will get lessons in housing?
    Mr. Colville: I do not think I can deal with this subject by way of question and answer, but there may be an opportunity on the Estimates of discussing what I agree is an important point, that is, the progress of housing.
    Mr. McGovern: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter at the first available opportunity.
    Mr. Westwoodasked the Secretary of State for Scotland whether the negotiations with the local authorities, with reference to the rates of subsidy for housing in Scotland, are still proceeding and with what results?
    Mr. Colville: The negotiations are still proceeding, but I am not yet in a position to make any statement on the matter.
    Mr. Westwood: Will the right hon. Gentleman say when these negotiations will be concluded, because local authori-

    1679
    ties are afraid to proceed with their housing programme until they know exactly what the housing subsidies are to be?
    Mr. Colville: I cannot name a date, but I can assure the hon. Member that I realise the importance of arriving at a decision as soon as possible.
    Sir Malcolm Barclay-Harveyasked the Secretary of State for Scotland which local authorities in Scotland have already erected timber houses; and what is the number of houses erected in each case?
    Mr. Colville: Figures relating to the number of wooden houses built by local authorities in Scotland since 1918 were given in reply to a question by the hon. and learned Member for Greenock (Mr. R. Gibson) on 28th March. Since that date the Department of Health have approved tenders for the erection of 262 timber houses by the County Council of Lanark and four by the County Council of Angus.
    Mr. Maxton: As the people of Scotland could be housed in good solid granite and sandstone 100 years ago, will the right hon. Gentleman see to it that he does not descend to this inferior substitute now?
    Mr. Colville: I understood that the hon. Member's colleague a few moments ago wanted me to investigate every method which would help the housing conditions in Glasgow.
    Mr. Maxton: I hope that the right hon. Gentleman will not understand that he is expected to start jerry building?
    Mr. Colville: No, Sir, but timber may well be examined as an alternative building material in the present situation.
    Mr. Robert Gibson: Can the right hon. Gentleman say how long it would take to build a house of granite?

    OLD AGE PENSIONERS (PUBLIC ASSISTANCE).
    Mr. Cassellsasked the Secretary of State for Scotland whether he will obtain statistics to establish the number of old age pensioners in receipt of public assistance but whose wives are not entitled to any pension allowance?
    Mr. Colville: The statistics desired by the hon. Member could be obtained only
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    by means of a special inquiry on the part of local authorities, which I do not feel justified in asking them to undertake.
    Mr. Cassells: Does not the right hon. Gentleman consider this information of vital importance having regard to the constant demand which is made for an increase in 'old age pensions? Does he not consider it would be well worth while to obtain this information?
    Mr. Colville: I can assure the hon. Member that I did consider that aspect of the matter, but, as he knows, local authorities sometimes complain of the tasks they are asked to do, and it would involve a separate investigation into every case to get the figure required.
    Mr. Gallacher: Will the right hon. Gentleman consider setting up a Select Committee of this House to consider the question of old age pensions and to end all these anomalies?
    Mr. Cassells: Has the right hon. Gentleman personally made any approach to any local authorities to ascertain their opinion on this particular line of investigation?

    BURGH PROSECUTOR, AYR.
    Mr. Cassellsasked the Secretary of State for Scotland whether he is aware that the burgh prosecutor in Ayr burgh police court refuses in all cases under Section 12 of the Road Traffic Act, 1930, tried in that court, to furnish, on application by the accused person or his solicitor prior to the trial, the names and addresses of the witnesses for the prosecution; and whether he will take steps to make universal the practice followed by the instructions of the Lord Advocate in similar prosecutions in the sheriff courts in Scotland?
    Mr. Colville: It is the practice of this prosecutor, unless satisfied that there are special circumstances to justify him in giving the names and addresses of witnesses for the prosecution, to refuse these particulars. I have already represented to him the desirability of altering his practice so as to bring it into line with the practice followed in Sheriff Court cases, and I am now in communication on the subject with the town council, from whom he holds his appointment.
    Mr. Cassells: Is the Minister aware of the considerable degree of prejudice

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    which in cases similar to those referred to, is suffered by the accused person, and will he at the same time keep in mind the undertaking given by the Lord Advocate to hon. Members in the Scottish Standing Committee when this important problem was discussed, that he personally would bring pressure to bear on the Crown Office and all prosecutors, burgh and otherwise, to deal with this particular matter?
    Mr. Colville: The hon. Member will note the action that I have taken.

    FISHING INDUSTRY.
    Mr. Robert Gibsonasked the Secretary of State for Scotland what were the kinds, quantities, and respective value of fish landed at Greenock during each of the first four months of 1938, and the corresponding figures for 1937?
    Mr. Colville: As the reply involves a statistical table, I propose, with the hon. and learned Member's permission, to circulate it in the OFFICIAL REPORT.
    Mr. Gibson: Have the figures gone up this year as against last year?
    Mr. Colville: There has been a remarkable increase in herring, but a reduction in cod.
    Following is the table:

    Fish landed at the Port of Greenock.

    1938.

    Herring.

    Mussels.

    Cwts.

    £

    Cwts.

    £

    January

    …

    7,602

    2,594

    390

    30

    February

    …

    263

    94

    40

    3

    March

    …

    —

    —

    —

    —

    April

    …

    —

    —

    —

    —

    1937

    Cod.

    Mussels.

    Cwts.

    £

    Cwts.

    £

    January

    …

    —

    —

    300

    21

    February

    …

    —

    —

    310

    17

    March

    …

    —

    —

    350

    27

    April

    …

    4

    4

    12

    1

    RELIEF (APPEALS).
    Mr. Maxtonasked the Secretary of State for Scotland whether he is aware that, in cases where persons appeal to the Board of Health against either refusal of relief or the amount received, such
    1682
    decision is given in all cases without the person appealign being heard, and that in Glasgow the person so appealign is never heard at any time in person by a committee; and whether he will take steps to see that in all cases the person is given the right of hearing?
    Mr. Colville: In considering statutory complaints of inadequate relief, it is the practice of the Department, if they have any doubt about the adequacy or suitability of the relief offered by the local authority, to remit the complaint to a general inspector to make local inquiry; and the complainer is visited and interviewed at his home whenever the facts of the case indicate that this course is necessary or desirable. This practice is followed in dealign with complaints from any part of Scotland, including Glasgow.
    Mr. Maxton: If this is to be a proper appeal of a quasi-judicial kind, why cannot the person affected have the right to appear personally when his case is being adjudicated on?
    Mr. Colville: I am not prepared to suggest an alteration of the Department's practice without evidence that the present practice is unsatisfactory, and I am told that in fact there is little complaint of the manner in which appeals are conducted.
    Mr. McGovern: Is the right hon. Gentleman aware that frequently in the course of our duties we get applicants who have not been seen, and that a false case has been presented to the committee against the individual and he has had no chance to rebutt false evidence brought forward?
    Mr. Colville: If the hon. Member has a case in mind and would like to show it to me, I will look into it, but I have seen no evidence to suggest that I ought to propose an alteration.
    Mr. Maxton: Will the right hon. Gentleman take this question as being a complaint against the present practice?

    EVICTIONS, GLASGOW.
    Mr. Maxtonasked the Secretary of State for Scotland whether he is aware that at the Glasgow eviction court, when a decision is given to evict a tenant from his house, the decision is given as settled with the factor; that the tenant usually

    1683
    thinks this is not final, but means that he is to make an attempt to find a settlement, and in this he has failed to understand a decree for eviction was made; whether he will take steps to have this altered so that the tenant will be under no disadvantage in following the decision; and whether he will also take steps to see that in all such cases the decision is given in writing?
    Mr. Colville: I am informed by the Sheriff that where a decree of eviction is pronounced by the Sheriff Substitute in favour of the pursuer, with whom its enforcement rests, the tenant may sometimes be told to see if he can come to a settlement with the pursuer to obviate its enforcement. This suggestion which is made in the interest of the tenant, should not give rise to misunderstanding. The decrees are given in writing.
    Mr. Cassells: Is it not a well-known fact that in these eviction cases the individual tenants definitely have the right of suspension proceedings, and would it not be better to make that fact known to the tenants throughout the whole of Scotland?
    Mr. Thorne: Where do these evicted tenants go after they have been evicted?
    Mr. Maxton: Will the Minister personally investigate this, as I am quite sure his information is not exact, and this really is a scandal that ought to be investigated?
    Mr. Colville: Here, again, my information is that the suggestion which is made by the court is in the interests of the tenant, but I am prepared to examine the procedure in order to see whether it works satisfactorily.
    Mr. Thorne: Can the Minister state where these evicted tenants go? Do they go to prison, or to the workhouse?

    AIR-RAID PRECAUTIONS.
    Mr. J. J. Davidsonasked the Secretary of State for Scotland whether he is aware of the considerable amount of travelling expenses incurred by Scottish local government officials attending anti-gas schools in England; and whether he proposes to establish an anti-gas training school in Scotland?
    Mr. Colville: I would refer the hon. Member to the Reply given on 2nd June
    1684
    to a question on this subject by my hon. Friend the Member for East Fife (Mr. Henderson Stewart).
    Mr. Davidson: Is the right hon. Gentleman aware that since then the combined local authorities of Scotland have made representations that an anti-gas school should be established in Scotland and thus save them those expenses, and in view of the fact that this is a reasonable and legitimate demand from the Scottish local authorities, and that the refusal tends to act against efficient air-raid precautions schemes, will he reconsider the whole proposal?
    Mr. Colville: No, Sir. I should require to have fresh evidence submitted to me that, in fact, the present arrangement is unsatisfactory.
    Mr. Davidson: Will not the Secretary of State accept as evidence the fact that the whole of the Scottish local authorities say that it is unnecessary and expensive?
    Mr. Colville: I have received no such representation.

    DEVELOPMENT COUNCIL (ECONOMIC COMMITTEE'S REPORT).
    Mr. Davidsonasked the Secretary of State for Scotland when the report of the Economic Committee of the Scottish Development Council will be issued; and whether the report will be submitted to Scottish local authorities for their observations?
    Mr. Colville: I understand that a report by the Economic Committee of the Scottish Development Council on its second year of work will be available in the near future. The report will no doubt be available to local authorities.
    Mr. Davidson: Will the right hon. Gentleman answer the last part of the question? Will he, as Secretary of State for Scotland, issue this report to the local authorities and ask for their observations?
    Mr. Colville: The report is not made to me, but by the Committee of the Scottish Development Council to the Council. It is generally available in booklet form.
    Mr. Davidson: Will not the Secretary of State accept it as advisable that this report affecting Scottish affairs should be circulated to local authorities so that he could be fully informed of their beliefs on this question?
    Mr. Colville: It is not primarily a matter for me, but for the Council.
    Mr. Davidson: May I suggest to the right hon. Gentleman that it would do him a lot of good?

    LOCAL GOVERNMENT ADMINISTRATION.
    Mr. Mathersasked the Prime Minister whether he has considered the memorandum submitted by the Royal Sanitary Association of Scotland calling for the appointment of a Royal Commission to inquire into local government administration in Scotland; and whether he is prepared to comply with the request made?
    The Prime Minister (Mr. Chamberlain): I have seen the memorandum referred to and have consulted my right hon. Friend the Secretary of State. As at present advised, I am not satisfied that there are sufficient grounds for the appointment of a Royal Commission to inquire into Scottish local government administration, but the views expressed by the association have been noted and a careful watch will be kept on the working of Scottish local government arrangements, particularly in their relation to central Departments and commissions.
    Mr. Mathers: Does not the Prime Minister realise that this agitation has been going on for a number of years; and does he not recognise that in this memorandum there are very powerful reasons why a comprehensive inquiry should now be held into the question of Scottish local government?
    Mr. Davidson: Is the Prime Minister aware that Scottish local administration is retarded in its efficiency by bad national administration?
    The Prime Minister: I am aware that this is a question which has been raised from time to time over a considerable number of years. The matter has been carefully examined in the Scottish Office I understand, and the result of that examination is that, as at present advised, there is not sufficient ground for the appointment of a Royal Commission. But as I have said to the hon. Member, I myself have read the memorandum in question, and I recognise that there are important matters raised in it which will be kept under consideration.
    Mr. Mathers: Are we to understand that at some future time when more informa
    1686
    tion has been gathered, the question of appointing a Royal Commission to inquire into the whole matter will be considered?
    The Prime Minister: That is not excluded.

  COAL INDUSTRY.

    DISTRIBUTION COMMITTEE.
    Sir Arnold Wilsonasked the Secretary for Mines whether the Coal Distribution Committee under Sir W. Monckton will sit in public; and whether the evidence tendered will be printed and published as the inquiry proceeds?
    The Secretary for Mines (Captain Crookshank): This committee will take evidence in public except when it decides that it may be advisable to hear evidence from firms or individuals in private. The evidence taken in public will be printed and published as the inquiry proceeds.

    EXPORT TRADE.
    Mr. A. Jenkinsasked the Secretary for Mines whether any action is contemplated by either the Government or the colliery owners to deal with the serious decline in the export of coal from this country due to competition with heavily subsidised foreign coals, and, if so, what?
    Captain Crookshank: I would refer the hon. Member to the reply which I gave on 2rst June to the hon. Member for Llanelly (Mr. J. Griffiths). I am informed that the position of the coal export trade is engaging the serious attention of the coal industry: bat no detailed proposals for dealign with it have yet been put before me.
    Mr. Mander: Is not part of this decline due to the failure of the Government to protect British shipping from attack?

    UNDERGROUND WORKERS, YORKSHIRE (STATISTICS).
    Mr. T. Smithasked the Secretary for Mines the number of underground wage earners on colliery books in South and West Yorkshire, respectively, on the latest date available, and the comparative figures for 1937, 1932, and 1933?
    Captain Crookshank: As the reply involves a number of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
    Mr. Smith: Do the figures to-day show any improvement over a year or two ago?

    —

    Wage-earners on Colliery Books employed belowground at coal mines.

    June, 1932.

    June, 1933.

    June, 1937.

    June, 1938. (Estimated).

    Yorkshire, South

    …

    …

    …

    85,900

    78,800

    78,400

    79,500

    Yorkshire, West

    …

    …

    …

    39,500

    34,300

    33,300

    34,200

    CINEMATOGRAPH FILMS (DOMINIONS).
    Mr. Dayasked the Secretary of State for Dominion Affairs which of the Dominions have agreed now to introduce legislation comparable and covering the Sections introduced in the Cinematograph Films Act, 1938?
    The Secretary of State for Dominion Affairs (Lord Stanley): The Premier of New South Wales stated in March last that he was considering the amendment of the existing law in that State so as to provide for reciprocity with other British countries giving similar treatment to Australian films, but I am not aware that any Bill for this purpose has yet been introduced. I have no information as to the intention of Governments in the Dominions elsewhere. I would add that legislation of this nature is necessarily related to the conditions prevailing in the film industry in the country in which it is passed and that legislation similar to the Cinematograph Films Act, 1938, would not, therefore, necessarily be appropriate to the varying conditions in each of the several Dominions.
    Mr. Day: Are any communications passing between this Government and the Governments of the Dominions to see whether the Dominions intend to bring in legislation with regard to the working of this Act?
    Lord Stanley: None that I am aware of. Perhaps the hon. Member will put that question on the Paper.
    Mr. Mander: Was it not suggested in the Moyne Report that negotiations should take place with the Dominions on the subject? Are not the Government going to do anything about this?
    Captain Crookshank: Yes, Sir. In both cases they show an improvement over last year.
    Following is the information:

    NEWFOUNDLAND (COMMISSIONER FOR FINANCE).
    Mr. Creech Jonesasked the Secretary of State for Dominion Affairs whether the Commissioner for Finance in the Government of Newfoundland is an official of His Majesty's Treasury; whether he acts under the direct instructions from the Dominions Office or the Treasury, or whether he uses his unfettered judgment on matters which come before the Commission; and whether he exercises over the expenditure of the Departments under the other Commissioners any control analogous to that exercised by the Treasury in Great Britain?
    Lord Stanley: The present Commissioner for Finance in Newfoundland is an officer seconded from the Treasury in this country. As regards the second part of the question, any instructions from the Secretary of State are given to the Commission of Government as a whole, and not to individual Commissioners, and the position of the Commissioner for Finance is precisely the same in this respect as that of the other Commissioners. As regards the last part of the question, the position is analogous to that in this country, in that the control exercised by the Commissioner for Finance is subject to such decisions affecting expenditure as may be taken from time to time by the Commission as a whole.

  TRADE AND COMMERCE.

    GREAT BRITAIN AND UNITED STATES (TRADE AGREEMENT NEGOTIATIONS).
    Sir Louis Smithasked the President of the Board of Trade whether, in the negotiations for the Anglo-American treaty, he will consider the desirability of

    1689
    so framing the treaty that Japan will not be able under the Most-Favoured-Nation Clause to take advantage of all the concessions made to this country in respect of imports into the United States?
    The President of the Board of Trade (Mr. Oliver Stanley): The tariff treatment by the United States Government of imports from Japan is entirely a matter for that Government. I can assure my hon. Friend, however, that the question of ensuring that tariff concessions accorded to the United Kingdom under a trade agreement with the United States are so framed as to ensure benefits to those classes of goods in which the United Kingdom has a major interest is being fully kept in mind.
    Mr. Sorensenasked the President of the Board of Trade whether in the trade negotiations now proceeding with the United States Government, he will consider the advisability of arranging extensive tariff concessions on trade to and from the Colonial Empire?
    Mr. Stanley: The negotiations now in progress embrace trade between the Colonial Empire and the United States. I can assure the hon. Member that I am maintaining close touch with my right hon. Friend the Secretary of State for the Colonies.
    Mr. Sorensen: Does the right hon. Gentleman not realise that tariff barriers do affect very adversely the natives in our Colonial Empire, and can we take it that as a result of these negotiations the burdens upon these natives will be materially lightened?

    COTTON INDUSTRY.
    Mr. Rostron Duckworthasked the President of the Board of Trade whether, in view of the excessive depreciation of the Japanese yen and of the fact that wages in the Japanese textile industry are only about one-fifth of those ruling in Lancashire, he will take steps to have countervailing duties imposed in British Empire markets to compensate for this unfair advantage held by the Japanese cotton export industry?
    Mr. Stanley: The problem of Japanese competition in British Colonial markets has been dealt with by a system of quotas which have been applied generally except in cases where international engagements preclude that course. In my view this
    1690
    method is more effective than that suggested by my hon. Friend.
    Mr. Leach: Does the right hon. Gentleman look forward to the day when everything coming into the country will be tariffed and everything going out subsidised?
    Mr. Rostron Duckworthasked the President of the Board of Trade whether his attention has been drawn to the fact that £1,391,000 of cotton textiles were imported into Kenya, Uganda, Tanganyika and Nyasaland in 1936 from Japan, and £197,000 worth of such goods from the United Kingdom; and when action will be taken to modify the Congo Basin Treaties and thus enable us to limit the imports of Japanese textiles into these territories?
    Mr. Stanley: I am aware that the position is as stated by my hon. Friend, except that imports from Japan amounted to £1,296,000. As regards the last part of the question, I would refer to the answers which I gave on 31st May to the hon. Members for Withington (Mr. Fleming) and Burnley (Mr. Burke).
    Mr. Palign: Is the right hon. Gentleman aware that the reason why the natives cannot buy goods from this country is because they are paid less wages than the wages paid in Japan?
    Colonel Sandeman Allen: Are we to understand from that answer given in May that the Congo Basin Treaties cannot be altered at all?
    Mr. Stanley: Yes, Sir, except by general agreement.
    Mr. Kennedyasked the President of the Board of Trade whether he is aware that, while British cotton exports to India have to overcome a tariff barrier of 20 per cent., the cheaper Indian products are rapidly displacing the products of British industry in the home and world market; and whether he can state the extent to which the Indian cotton trade is owned and controlled by British bankers and financiers?
    Mr. Stanley: I am afraid I cannot accept the statements in the first part of the question. There is no evidence of any recent substantial increase of imports of Indian cotton yarns and manufactures into the United Kingdom; while total

    1691
    exports of Indian cotton piece-goods to all markets, although they have increased, are still very small compared with United Kingdom exports. The situation in Empire markets, in which Indian goods enjoy free entry, is being kept well in mind in the negotiations for a new trade agreement between the United Kingdom and India; and one of the major objects in these negotiations is a satisfactory settlement in regard to United Kingdom trade with India in cotton goods. I have no official information on the subject of the second part of the question, but I am not aware that United Kingdom bankers or financiers have any substantial interest in the Indian cotton industry, and I understand that the extent of the interest of United Kingdom industrialists and merchants in that industry is relatively small.

    SWITZERLAND.
    Major Raynerasked the President of the Board of Trade whether he has taken note of the fact that while imports into the United Kingdom from Switzerland in the first quarter of 1938 have increased by £200,000, as compared with the corresponding quarter of 1937, exports to that country have declined by £300,000; and whether he is making any representations to Switzerland in the matter?
    Mr. Stanley: The answer to the first part of the question is in the affirmative. As my hon. and gallant Friend is doubtless aware, negotiations are in progress for the conclusion of a trade agreement between the United Kingdom and Switzerland, and the facts to which he has drawn attention will be borne in mind.

    NORWAY.
    Major Raynerasked the President of the Board of Trade whether his attention has been called to the fact that a substantial increase in the imports from Norway during the first quarter of 1938 as compared with the corresponding quarter of 1937 has been accompanied by a decline in the British exports to that country; and whether he can offer any explanation of this situation?
    Mr. Stanley: The answer to the first part of the question is in the affirmative. With regard to the second part, I would refer my hon. and gallant Friend to the
    1692
    answer given on 23rd May to a similar question relating to Belgium by my hon. Friend the Member for Newport (Sir R. Clarry).

    BALANCE OF TRADE.
    Major Raynerasked the President of the Board of Trade whether his attention has been called to the fact that imports from foreign countries in the first quarter of 1938 are £13,500,000 higher than in the corresponding quarter of 1937, whilst the exports of British goods to foreign countries are nearly £4,000,000 lower, and re-exports to foreign countries £3,000,000 lower; and whether, in view of the adverse balance of trade at the end of the year 1937, he will take some steps to rectify this position?
    Mr. Stanley: Though there was an increase in the excess of imports over exports of merchandise for the first quarter of this year compared with a year earlier, a decline was recorded in each of the subsequent two months. The latter improvement in the adverse balance applied to both British and foreign countries. As regards the second part of the question, I would refer to the answer which I gave on 24th May to my hon. Friend the Member for South Croydon (Mr. H. G. Williams).

    FISHING INDUSTRY.
    Mr. Rostron Duckworthasked the President of the Board of Trade the total value of fish landed direct by British vessels in the last year for which statistics are available and also the value of the importation of fish from foreign countries?
    Mr. Stanley: During the year 1937, the value of fish landed direct in the United Kingdom by British fishing vessels was £15,934,000, and the value of fish imported into the United Kingdom from foreign countries was £8,335,000. The latter figure includes canned and preserved fish as well as fish brought by foreign vessels from the fishing grounds.

    WHEAT STOCKS.
    Mr. Maclayasked the President of the Board of Trade whether, as a result of the Government purchases of wheat, he anticipates that the total amount of wheat in the country will be the normal amount of wheat usually estimated on plus the additional Government purchases?
    Mr. Stanley: The answer is in the affirmative. The existence of the Government wheat reserve, maintained at a constant quantity, will not affect the requirements of the grain and milling trades and consequently should not affect either the price of wheat or the quantities normally held in stock by the trades concerned. The millers who have undertaken the custody and supervision of the Government wheat have given an undertaking that the amount of stocks which they normally hold will not be reduced because of the existence of the Government reserve.
    Mr. Maclay: Is the Minister aware that concern is felt in certain quarters that dealers in wheat in this country will tend to reduce their normal stocks, and does his reply mean that all persons connected with wheat who normally hold stocks have given a guarantee that they will not reduce stocks in view of the Government's purchases?
    Mr. Stanley: As I said, we have a guarantee from these large millers, but I cannot be expected to get guarantees from everybody. The point is that these stocks are immobilised. Nobody can rely on these stocks, and there is therefore no inducement to them to reduce their own stocks.
    Mr. H. G. Williams: Can the right hon. Gentleman say whether the Government imports of wheat are shown in the trade return?
    Mr. Stanley: That is another question.
    Mr. R. Gibson: What steps are being taken to increase storage accommodation, in view of the Government's policy?
    Mr. Stanley: That is a rather different question.
    Mr. Maclay: Unless the Minister can give the House an assurance that the vast majority of dealers will not reduce their stocks at all, is not the taxpayers' money being spent in vain?
    Mr. Stanley: If the hon. Gentleman will read my answer he will see that I state that there is no inducement in this method to private dealers to reduce stocks. I cannot get a guarantee from all the innumerable traders concerned, but our information is that in fact they are not doing so, and will not do so.
    Mr. Gibson: Is it not clear that unless there is additional storage accommodation, the Government's intention will be defeated?

    SPAIN (COASTAL TRADE).
    Mr. Marcus Samuelasked the President of the Board of Trade whether he has any information as to the date and exact provisions for the abolition of the Spanish Government shipping regulations whereby foreign vessels are now permitted to engage in Spanish coastal trade; and what are the details of that information?
    Mr. Stanley: I have not received any detailed information on the matter referred to by my hon. Friend, but I understand that for some time past foreign (non-Spanish) shipping has been allowed by the Spanish Government to participate in the coasting trade between their ports.

    CALCIUM CARBIDE.
    Mr. Rowlandsasked the President of the Board of Trade the amount of calcium carbide used by armament-producing firms in the United Kingdom during the years 1935, 1936, and 1937, respectively?
    Mr. Stanley: I regret that this information is not available.
    Mr. Rowlandsasked the President of the Board of Trade the average price per ton of the calcium carbide imported into the United Kingdom during the years 1935, 1936, and 1937, respectively?
    Mr. Stanley: The average value of the calcium carbide imported into the United Kingdom during the years 1935, 1936 and 1937 was –10.98, –11.03 and –10.88 per ton, respectively.
    Mr. Aneurin Bevan: Is the hon. Gentleman satisfied that this is a reasonable price?
    Mr. Stanley: That is a rather different question.

    JAPANESE TEA.
    Mr. DavidAdams asked the President of the Board of Trade whether he is aware that a large proportion of Japanese tea is sold in England as China tea; and whether he will insist on a clearer definition of origin so as to avoid any deception of the public?
    Mr. Stanley: I have not received any representations on this matter, but if the. hon. Member will communicate to me any

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    evidence that he may have in regard to it, I shall be glad to consider it.
    Mr. AdamsI shall be glad to do so.

    CROWN COLONIES (JAPANESE GOODS).
    Sir J. Haslamasked the President of the Board of Trade to what extent we are bound by treaty to admit Japanese goods into our Crown Colonies?
    Mr. Stanley: His Majesty's Government are not in a position to discriminate between Japanese and United Kingdom goods in the territories to which the Congo Basin Treaties apply, nor in Mandated territories. Discrimination between Japanese goods and the goods of other foreign countries is not possible in other parts of the Colonial Empire so long as the provisions of the Anglo-Japanese Treaty of 1911 apply to them, though this does not prevent the imposition of duties or quotas as long as such measures are applied to all foreign countries.
    Sir J. Haslam: Is it not possible to give notice for the abrogation of the Congo Basin Treaties and the Treaty of 1911 under which English trade is suffering so severely?
    Mr. Stanley: It has already been explained in the House that it is not possible to give notice to determine the Congo Basin Treaties, and the Anglo-Japanese Treaty does not prevent the imposition of quotas in the Colonial Empire, provided they are imposed against all foreign goods.
    Sir J. Haslam: Are we to understand that the Congo Basin Treaties are made for ever and can never be abrogated in any possible way?
    Mr. Stanley: That is a matter which has often been discussed in the House, and the opinion given by our legal advisers is that they cannot be determined by unilateral action but only by general agreement.
    Mr. Burke: Is it not possible to get all the signatories of the treaty together? Cannot the right hon. Gentleman take the initiative?
    Mr. Stanley: It would of course be possible, but the hon. Member will bear in mind that one of the signatories is Japan.
    Mr. H. G. Williams: Can the right hon. Gentleman say whether the treaty is
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    still in operation as between this country and Germany?
    Mr. Palign: Would not the consumption of British goods in these colonies be much increased, if the purchasing power of the natives was raised?

    IMPORTED FOODSTUFFS, LANCASHIRE.
    Mr. Chorltonasked the President of the Board of Trade the total imports of foodstuffs into the ports of Lancashire and what proportion they bear to the total imports of the country?
    Mr. Stanley: During 1936 the value of food and drink (including living animals for food and feeding stuffs for animals) imported at ports in Lancashire amounted to £71,000,000, almost one-fifth of the total value of such imports into the United Kingdom. The proportion was the same in the previous two years; figures for 1937 are not yet available.
    Mr. Chorlton: Can my right hon. Friend say what amount of foodstuffs there is in the county?
    Mr. Stanley: Not without notice.

    RUSSIA (BRITISH CONSULATES).
    Captain Ramsayasked the Prime Minister whether he has recently approached the Government of the Union of Soviet Socialist Republics with a view to negotiating for the re-opening of the British consulate at Leningrad and the establishment of consulates at those Soviet ports where British trade is heaviest?
    The Under-Secretary of State for Foreign Affairs (Mr. Butler): No, Sir.
    Captain Ramsay: Are the Government proposing to take any further action, in view of the hardship of British traders having no representation at all?
    Mr. Butler: In view of the attitude adopted at the time by the Soviet Government in regard to the closure of these consulates, we think that it would be useless to approach them again in this matter.

    FILMS COUNCIL (CHAIRMAN).
    Mr. Manderasked the President of the Board of Trade whether the new chairman of the Films Council will be engaged full-time on his duties; and what salary will be paid to him?
    Mr. Stanley: The Chairman of the Films Council will devote such time to the work of the Council as may be necessary, but it is not expected that his duties will absorb the whole of his time. He is receiving an honorarium of £500 a year for this work.
    Mr. Mander: Are any of the other members of the Council to be paid?
    Mr. Stanley: No, Sir.

    ACTS OF PARLIAMENT (COST).
    Mr. H. G. Williamsasked the Chancellor of the Exchequer whether he can furnish an approximate estimate of the cost, in a full year of operation, to the Exchequer and to the local authorities, respectively, of the legislation since the last General Election, including the Government Bills now before Parliament and excluding from the total any expenditure due to the Defence programme?
    The Chancellor of the Exchequer (Sir John Simon): As the answer is of considerable length, I will, with my hon. Friend's permission, have it circulated in the OFFICIAL REPORT.
    Mr. T. Williams: Will the statement include a full list of all direct and indirect subsidies which have been granted to various industries since the last General Election?
    Sir J. Simon: If the hon. Member looks at the statement he will see that it does not err on the side of brevity.
    Following is the statement:
    The incidence and nature of expenditure under Acts of Parliament vary so widely between one case and another that it is impossible to give a figure of total cost "in a full year of operation." While in some cases the cost reaches a stable figure as soon as the service has come into full operation, and thereafter continues at about that figure, there are other cases where the service is expressed to be temporary or where a specified sum is allotted to a service, and where therefore the expenditure disappears after a period, and there is a further type of case of long-term subsidies (e.g., housing subsidies) where the cost grows by annual steps over a long period of years because the expense of the subsidy granted in each year is added to the subsidies already
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    in payment in respect of the sanctions of preceding years. In estimating the cost of particular measures of legislation it is also necessary, in the majority of cases, to proceed upon certain assumptions and to attach various reservations.
    In these circumstances it appears that the information sought in the question can best be furnished in the form of a statement showing as far as possible the estimated cost of particular Acts or groups of Acts in chronological order and indicating the main assumptions made and the reservations attached to each. In the statement the phrase "cost to the Exchequer" means annual cost except where the contrary is clear from the context. Fuller explanations of the financial effect of the various measures are given in the Financial Memoranda which were attached to the Bills on presentation.
    In compiling the statement which follows, certain measures involving expenditure of relatively trivial amount have been ignored, as have also any additional administrative costs due to changes in taxation under the various Finance Acts or administrative costs where only incidental to the main purpose of an Act. It has also been assumed that the question does not cover cases in which liabilities have been assumed in the form of guarantees, cases of remission of taxation or waiver of claims to payment, and cases in which expenditure in certain directions has been covered by increased receipts or reductions of cost in other directions. The exclusion of defence expenditure mentioned in the question has been treated as applying to expenditure under the Air-Raid Precautions Act, 1937, and the Essential Commodities Reserves Bill, 1938.
    Subject to the above, the information required is as follows:
    Milk Acts, 1936 and 1937, and Milk Bill, 1938.
    The estimated additional cost to the Exchequer is £742,000. These measures extend the period of operation of the Milk Act, 1934. Section 9 of that Act relating to the Improvement of Quality of Milk Supplied was repealed by the Agriculture Act, 1937, which provided for such expenditure to be defrayed from the Diseases of Animals Account (see under Agriculture Act, 1937).
    Unemployment (Northern Ireland Agreement) Act, 1936.
    Additional cost to Exchequer, £112,000.
    Unemployment Insurance (Agriculture) Act, 1936.
    Additional cost to the Exchequer, £550,000.
    Sugar Industry (Reorganisation) Act, 1936.
    The estimated cost of this Act is £2,550,000. The Act continues, subject to certain modifications, the subsidy in respect of sugar which was authorised by the British Sugar (Subsidy) Act, 1925.
    Midwives Act, 1936.
    Maternity Services (Scotland) Act, 1937.
    The estimated additional cost of the former Act to the Exchequer and to local authorities is £345,000 and £345,000 respectively and of the latter Act £60,000 and £60,000 respectively. These Acts also impose temporary liabilities in respect of compensation to midwives who surrender their certificates.
    Education Act, 1936.
    Education (Scotland) Act, 1936.
    The additional cost to the Exchequer and to local authorities of the former Act is estimated at £1,695,000 and £665,000 respectively, and of the latter Act £235,000 and £95,000 respectively. The total cost to the Exchequer includes £230,000 in respect of the increased cost of children's allowances payable under the Widows', Orphans' and Old Age Pensions Act. The extension of school-leaving age will also have some effect on the State contribution under the Unemployment Insurance Acts but it is impossible to frame a reliable estimate of the sum involved.
    Air Navigation Act, 1936.
    This Act which repealed the Air Transport (Subsidy Agreements) Act, 1930, substituted a figure of £1½ millions, payable until 1953, for a figure of £1 million, payable until 1940, as the maximum annual subsidy for civil air transport. It also authorised the payment of a contribution, which has been fixed at a maximum of £12,000 per annum for five years, towards the expenses of the Air Registration Board.
    Merchant Shipping (Carriage of Munitions to Spain) Act, 1936.
    Additional cost to the Exchequer, £5,000
    Expiring Laws Continuance Act, 1936, and Special Areas (Amendment) Act, 1937.
    The Special Areas (Development and Improvement) Act, 1934, was continued under the first of these Acts from the 1st April, 1937, and was further continued and amended under the second Act. No estimate of the annual cost of this legislation can be given, but the following Exchequer commitments (to be liquidated over the next few years) have been incurred between 1st April, 1937, and 31st May, 1938, namely, grants £5,135,000, loans £2,964,000. Part of the sum shown as grants will, in certain circumstances, yield a return to the Exchequer; the figure shown as loans includes a subscription for share capital of a site company under Section 5 of the Amendment Act. Schemes financed in part by the Special Areas Commissioners under these Acts and in part by local authorities under other powers have involved those authorities in corresponding commitments amounting to £1,423,000.
    Trunk Roads Act, 1936.
    The estimated additional cost to the Exchequer of this Act in the current year is £1,500,000. The additional cost to the Exchequer of maintaining trunk roads is estimated at £660,000 per annum. No estimate of the cost of improvements in future years can be given, but the figure of £1,500,000 given above is the estimated additional cost of maintenance and improvements in the current year. The effect of the Act was to transfer expenditure from rates to the Exchequer and, as explained below, account was taken in arriving at the block grants under the Local Government (Financial Provisions) Act, 1937, and the Local Government (Financial Provisions) (Scotland) Act, 1937, of savings to local authorities on maintenance.
    Empire Settlement Act, 1937.
    This Act extended the Empire Settlement Act, 1922, and substituted a figure of £1½ millions for the previous figure of £3 millions as the maximum expenditure which might be incurred in any financial year on Empire Settlement.

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    Actual expenditure depends upon the number and nature of schemes qualifying for assistance, the provision in 1938 Estimates being £3,075.
    Local Government (Financial Provisions) Act, 1937.
    Local Government (Financial Provisions) (Scotland) Act, 1937.
    The estimated additional cost to the Exchequer of these two measures may be put at £4,552,000 and £1,345,000, respectively. The whole of these amounts are actual payments to local authorities, but are in the main in respect of increases in their expenditure during the preceding fixed grant period. The additional sums mentioned include the cost to the Exchequer of the discontinuance of Local Authorities' Unemployment Assistance Contribution, and in the case of England and Wales of compensation for the abolition of the Male Servants Licence Duty. When the general Exchequer Contributions for the current fixed grant period were fixed, and the results embodied in the Acts, account was also taken of the savings to Local Authorities under the Trunk Roads Act, 1936, mentioned above, and the Contributions would have been greater by £155,000 had this account not been taken.
    Diseases of Fish Act, 1937.
    Additional cost to the Exchequer, £20.
    Statutory Salaries Act, 1937.
    Additional cost to the Exchequer, £35,000.
    Ministers of the Crown Act, 1937.
    Additional cost to the Exchequer, £37,000 plus a further charge, which cannot be precisely estimated, in respect of pensions to ex-Prime Ministers.
    Widows', Orphans' and Old Age Contributory Pensions (Voluntary Contributors) Act, 1937.
    The estimated additional charge to the Exchequer may be put at £1,200,000. As this is a voluntary scheme, no reliable estimate of its cost can be made until the number of initial entrants is known. The financial basis of the Bill is to liquidate the cost of initial entrants over a 30-year period. On the assumption that there are 250,000 male initial entrants and 100,000 women initial entrants, the annual provision necessary for this purpose will be about £1,200,000 as already stated. In
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    15 years' time the additional burden will begin to fall upon the Exchequer in respect of pensions of special voluntary contributors who have reached the age of 70. No very reliable estimate can be made of the amount of this burden but in 30 years' time it may be between £1,500,000 and £2,000,000 a year. By that time, however, the capital liability referred to above will have been discharged.
    Physical Training and Recreation Act,1937.
    The main expenditure under this Act is in the form of capital grants and it is estimated that a sum of £2,400,000 will be spent over a period of three years ending 31st March, 1940. Certain annual expenditure is also involved which may amount to £240,000 a year. This cost will fall upon the Exchequer; some expenditure by local authorities will also be involved but it is not possible to estimate its amount.
    Livestock Industry Act, 1937.
    The estimated cost of this Act is £4,575,000. The Act replaces the Cattle Industry (Emergency Provisions) Acts, 1934 to 1936, which provided for the payment of a similar subsidy.
    Matrimonial Causes Act, 1937.
    Additional cost to Exchequer, £10,000.
    Factories Act, 1937.
    Additional cost to the Exchequer, £30,000. No material increase involved in the expenditure of local authorities.
    Local Government Superannuation Act,1937.
    Local Government Superannuation (Scot land) Act, 1937.
    The estimated cost to local authorities of the introduction of compulsory superannuation of officers under these two Acts is £250,000 and £50,000 respectively. The cost of the optional power to provide superannuation for local authorities' servants cannot be estimated.
    Agriculture Act, 1937.
    The estimated cost of Parts I, II and III of this Act is £1,282,439, £203,000 and £116,000 respectively. The cost of Part IV of the Act is estimated at £600,000, part of which would have been borne on the Milk Votes but for the repeal of Section 9 of the Milk Act, 1934 (see under Milk Acts, 1936 and 1937).
    Supreme Court of Judicature (Amendment) Act, 1937.
    Additional cost to Exchequer, £14,000.
    National Health Insurance (Juvenile Contributors and Young Persons) Act, 1937.
    The additional cost to the Exchequer is £120,000 declining to £90,000 in five years' time.
    Unemployment Insurance Act, 1938.
    Additional cost to the Exchequer, £110,000; to local authorities, £10,000.
    Blind Persons Act, 1938.
    The additional cost to the Exchequer is estimated at £160,000. The broad effect of the Act will be to diminish rather than to increase the cost to local authorities.
    Housing (Financial Provisions) Act, 1938.
    The estimated additional cost to the Exchequer and to local authorities is estimated at £539,000 and £404,000 respectively. The contributions authorised by this Act are mainly in substitution for those which would have been payable had the subsidies available under the Housing Act, 1936, continued unchanged. The figures given above represent net additions consequent upon the Act in respect of houses and flats estimated to be completed up to the 3oth September, 1942, before which date the contributions will be reviewed. The contribution in respect of each dwelling continues for 40 years.
    Eire (Confirmation of Agreement) Act, 1938.
    The additional charge to the Exchequer, as compared with the position existing prior to the Agreement, is estimated at £684,000 p annum. This figure does not take account, on the one hand, of the capital payment received from the Government of Eire or, on the other hand, of the reduction of revenue under the Irish Free State (Special Duties) Act, 1932, and the Import Duties Act, 1932.
    Sea Fish Industry Act, 1938.
    Additional cost to the Exchequer, £9,300.
    Air Navigation (Financial Provisions) Act, 1938.
    This Bill increases from£1½millions to £3 millions the annual maximum amount which may be paid as subsidies to civil air transport (see under Air Navigation Act, 1936, above).
    Housing (Rural Workers) Amendment Act, 1938.
    The estimated additional cost to the Exchequer and to local authorities is £110,000 and £106,000 respectively. This Act continues with some amendments until the 30th September, 1942, powers which would have otherwise expired on the 24th June, 1938. The figures given above represent an estimate of the annual cost of this extension at the peak year, i.e. in 1943. This cost will continue unabated for 17 years and disappear at the end of 20 years. From 1947 onwards there will be an offset as payments arising out of the earlier Acts terminate.
    Housing (Agricultural Population) (Scotland) Bill, 1938.
    Under Clause I of the Bill, additional charges of £18,000 and £5,500 will fall upon the Exchequer and local authorities respectively. These figures represent the estimated net cost in 1940–41, at which date the basis of the subsidy will be reviewed. The figures for 1940–41 will continue for 38 to 40 years. Under Clause 8 of the Bill, additional charges of £36,000 and £7,000 will fall upon the Exchequer and local authorities respectively. This clause expires after five years but the figures given will continue for 35 to 40 years.
    Fire Brigades Bill, 1938.
    The additional cost to the Exchequer is estimated at £25,000. The Bill will involve additional cost to local authorities in certain areas only, and this additional cost is not likely to exceed the produce of a penny rate.
    Bacon Industry Bill, 1938.
    The estimated average cost of this measure is £1,000,000.
    Herring Industry Bill, 1938.
    The estimated additional average cost of this Bill to the Exchequer may be put at £70,500.
    Supreme Court of Judicature (Amendment) (No. 2) Bill, 1938.
    Additional cost to Exchequer £21,000.

    GREAT BRITAIN AND MEXICO.
    Mr. Liddallasked the Chancellor of the Exchequer why, in view of the fact that the ratio of purchase of Mexican products by Britain, as shown by the Board

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    of Trade Return for the past three months, is as 11 to 3 of United Kingdom products exported to Mexico, an exchange clearing is not being set up to remedy the confiscation of British savings by the Mexican Government?
    Sir J. Simon: I would refer my hon. Friend to the reply given to my hon. Friend the Member for Tamworth (Sir J. Mellor) on 19th May, to which I cannot at.present add anything.

    BRAZILIAN LOANS (DEFAULT).
    Sir Joseph Leechasked the Chancellor of the Exchequer whether, in order to induce the Brazilian authorities to honour their obligations to British subjects, he will discontinue the protests and consultations with the Council of Foreign Bondholders which have proved themselves to be sterile, and put into operation prohibition of entry of imports from Brazil, as being the only method which will convince Brazil that £80,000,000 worth of British savings entrusted to Brazil cannot be annihilated with impunity?
    Sir J. Simon: No, Sir. I do not consider that the prohibition of imports from Brazil would be likely to succeed in achieving the object which my hon. Friend has in mind.
    Mr. Jenkins: Did not people who invested this money do so at their own risk, and if the suggestion made in the question were put into operation would it not lead to international complications and even war?
    Sir J. Simon: I do not know whether the consequences would be as serious as those suggested at the end of the supplementary question, but, as I have said, I do not think the method proposed is a good one. As to the investments, we shall be glad to do what we can to protect them, but not by this method.
    Mr. R. Gibson: Does not the right hon. Gentleman agree that the payment by Brazil of their debts would be rather helped by increasing the imports to this country from Brazil?
    Sir J. Simon: The hon. and learned Gentleman has correctly penetrated one of the reasons behind the original answer.

    CHINA AND JAPAN.
    Mr. Manderasked the Chancellor of the Exchequer whether he will consider the advisability of guaranteeing a loan for the supply of military material to China on the basis of the precedent set in the case of Turkey and in pursuance of our obligations under the Covenant of the League of Nations?
    Sir J. Simon: I would refer the hon. Member to the answer given on 14th June by my hon. Friend the Under-Secretary of State for Foreign Affairs in reply to a question by my hon. and gallant Friend the Member for the Isle of Wight (Captain P. Macdonald).
    Mr. Mander: Are there not important British interests at stake here that would justify action on these lines, apart from anything else?
    Sir J. Simon: The considerations are known to the hon. Member, and I cannot amplify my answer to-day.
    Mr. Sorensenasked the Prime Minister whether he will propose to the League of Nations the immediate consideration of means by which the economic needs of China and Japan can be assisted through League of Nations action and international agreement at the conclusion of hostilities, or earlier if opportunity offers?
    Mr. Butler: The League Assembly at its last session recommended Member States to consider how far they could individually extend aid to China, and the Council at its meeting last May urged Members to do their utmost to give effect to previous recommendations on this subject, and to take into serious and sympathetic consideration requests received from the Chinese Government. Also there has been in existence since 1933 a committee, appointed by the League Council, for technical collaboration with China. No request has been received for economic assistance to Japan through League of Nations action.
    Mr. Sorensen: Does the hon. Member realise that the economic factor is one of the most important causes of war, and requires far more initiative for His Majesty's Government to deal with it than they have exhibited up to now, and will he do his best to see that this important factor is kept in mind?
    Mr. Butler: As I have already informed the House, the importance of this matter is fully realised by Members of His Majesty's Government.
    Mr. Sorensen: Is the hon. Gentleman satisfied that everything possible is being done?
    Mr. Butler: Yes, Sir.
    Viscountess Astor: Is my hon. Friend aware that the failure of economic cooperation broke the heart of the late Mr. William Graham?

    ROAD USERS (TAXATION).
    Mr. Dayasked the Chancellor of the Exchequer what have been the sums contributed to the revenue by road users which have been appropriated for general taxation for the three years ended to the last convenient date?
    Sir J. Simon: The revenue from hydrocarbon oils used on the roads is estimated in round figures at £40,600,000 in 1935, £43,250,000 in 1936 and £45,500,000 in 1937. Motor vehicle duties retained in the Exchequer and sums transferred from the Road Fund to the Exchequer totalled £9,400,000 in 1935 and £10,500,000 in 1936. In 1937, the full produce of the motor vehicle duties, amounting to £34,600,000, remained in the Exchequer and the expenditure on roads was provided for in Votes of Parliament.
    Mr. Day: Does that include all luxury taxation on private motor cars?

    ESTATES COMPANIES (TAXATION).
    Mr. McGovernasked the Chancellor of the Exchequer the amount of money invested by the late Duke of Devonshire in the company known as the Chatsworth Estates Company; the amount of money left in this company; the total amount of taxation paid or due; and the amount which would have been paid, or due, if the capital had not been in this company?
    Sir J. Simon: No, Sir. I am not prepared to disclose information relating to the estate of an individual taxpayer.
    Mr. McGovern: Are we to take it that the right hon. Gentleman is not prepared to divulge evidence which has already been divulged in the Press but
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    which he himself stated last week he was not prepared to accept? Is he not prepared to correct it, and can he say why there should not be a statement made on an issue of this kind if there is collusion on the part of a Member of the House of Lords to prevent himself paying tax?
    Sir J. Simon: It is a very well understood principle, and one which the House will support, that information relating to the estate of an individual should not be made the subject of Question and Answer in the House of Commons. If that rule were departed from, it is obvious that many evils would result.
    Mr. Gallacher: On a point of Order. If a question is put on the Order Paper and is passed after consideration, are we not to take it for granted that it is a legitimate question, and is subject to an answer by the Minister responsible?
    Mr. Speaker: The Minister has said that it is not the practice to give this information, and it is not obligatory on the Chancellor to give it.
    Mr. Davidson: Is the right hon. Gentleman aware of the many questionnaires which are addressed to unemployed working-class men and women?
    Mr. Maxton: Does not another question arise here concerning Members of the Government holding directorships?
    Mr. McGovernasked the Chancellor of the Exchequer whether his attention has been drawn to the formation of a company named Shenly Park Estates for the purpose of conveying a private fortune to the heir without giving to the British Exchequer the necessary taxation; and what steps he proposes to take to stop this form of evasion?
    Sir J. Simon: I understand that the company to which the hon. Member refers was registered in March of this year. There is nothing to show that the purpose of its formation was such as he indicates. I would remind him that the Finance Bills of recent years contain provisions designed to check loss of taxation through the transference of property to companies.
    Mr. McGovern: If this latest estates company formed by Lord Cadman for the same purpose as the estates company of the Duke of Devonshire is to avoid taxation, would it be proper to ask the

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    Chancellor to divulge any proposals he intends to make to prevent rich men doing the thing that poor men are prevented from doing, and are imprisoned every week for doing in a small way?
    Sir J. Simon: I really think that the hon. Gentleman is not stating the matter quite fairly. If he will consult the Finance Act, 1930, he will find in it two elaborate Sections addressed to the very purpose of preventing evasion of taxation by the formation of companies; and no doubt the hon. Gentleman is aware that only last night we added another Clause to the Finance Bill to implement those provisions.
    Mr. McGovern: Can the right hon. Gentleman assure me that legislation which has been devised by him in the Finance Bill will prevent any repetition of that practice?
    Mr. Garro Jones: Do not these things resolve themselves into a game of hide-and-seek so that when one method of evasion is discovered another is found; and will the right hon. Gentleman realise that this problem will never be solved until he passes a general law making invalid business transactions which are designed to escape taxation?
    Mr. McGovern: I intend to raise this matter on the Adjournment.

    PROPERTY-INVESTMENT SOCIETIES (RETURNS).
    Mr. Bellengerasked the Financial Secretary to the Treasury how many property-investment societies have failed to send a return for the year ended 3rst December, 1937, to the Registrar of Friendly Societies?
    The Financial Secretary to the Treasury (Captain Euan Wallace): Twelve societies have failed to furnish annual returns for 1937. Three other societies sent in returns without the signature of the auditor. These returns have been sent back to the societies for the omission to be rectified.
    Mr. Bellenger: In the case of the 12 societies which failed to send in a return, is it proposed to take any action, and, if so, what?
    Captain Wallace: In regard to these 12 cases, in three summonses have been issued but not yet heard; in four the registrar has given notice of his intention to cancel the registry; and the other five will be looked into.
    Mr. Thorne: Is not the right hon. and gallant Gentleman aware that trade unions are heavily penalised unless they send a return every year to the registrar, and why should not these societies be treated in the same way?
    Captain Wallace: If the hon. Member had listened to my reply he would have seen that they are being dealt with.

    ESSENTIAL COMMODITIES RESERVES (INSURANCE).
    Mr. Lathanasked the President of the Board of Trade whether steps have been taken to cover by insurance the risks associated with the storage of the essential commodities acquired by the Government, whether those risks have been accepted by the Treasury or with what British insurance companies they have been covered?
    Mr. Stanley: The stocks of essential commodities are at present legally the property of the firms who purchased them for the Government and they are insuring them just as if purchased for their own use. When the Essential Commodities Reserves Bill becomes operative, the Board of Trade will be able to pay for the stocks and the question of insuring them when they are Government property is under consideration.
    Mr. Lathan: Do I understand that the responsibility for insurance rests upon the private companies, and not upon the Government?
    Mr. Stanley: Yes, at the moment, because the stocks are still the property of the private companies. Until the Bill has gone through we cannot pay for them, and until we pay for them they remain the property of the people who purchased them.
    Mr. Lathan: Are not the insurance arrangements made under the direction of the Government?
    Mr. Stanley: No, while the stocks are their property it is left to them to insure them in the way in which they are accustomed to insure their property.
    Colonel Nathan: Do the risks include war risks?
    Mr. Stanley: I must have notice of that question.

  BRITISH ARMY.

    AIR DEFENCES, WAR DEPARTMENT ESTABLISHMENTS.
    Sir L. Smithasked the Secretary of State for War whether adequate arrangements have now been made to provide air-raid protection in War Office industrial establishments?
    The Secretary of State for War (Mr. Hore-Belisha): Instructions have been issued for the guidance of the heads of War Department establishments in the matter of preparing passive air defence schemes, and an officer has been specially appointed to give advice on this subject.
    Sir L. Smith: When any of these arrangements are proceeding will my right hon. Friend consider inviting representatives of industries in this country to see what is being done, so that they may learn something of the details?
    Mr. Hore-Belisha: Yes, Sir, I will willingly do that.

    RECRUITING DEPOTS (MEDICAL OFFICERS' REMUNERATION).
    Mr. Denvilleasked the Secretary of State for War whether he has considered the complaints of medical officers attached to recruiting depots as to the insufficiency of their remuneration and of the insecurity of their engagement; and what steps he is taking to meet them?
    Mr. Hore-Belisha: No complaints have been received.

    ANTI-AIRCRAFT ORGANISATION.
    Mr. Mabaneasked the Secretary of State for War what modification of the present anti-aircraft organisation he is contemplating?
    Mr. Hore-Belisha: Perhaps I may be allowed to answer this question at the end of Questions.
    Later:
    Mr. Hore-Belisha: In 1935 the entire responsibility for anti-aircraft defence at home was vested in the Territorial Army. At that time the actual strength of air defence formations in the Territorial Army
    1712
    was under 2,000 all ranks. On 1st January, 1936, the first anti-aircraft division was formed. Its strength at the beginning of 1936 was 5,20o all ranks. By the beginning of January, 1937, a second anti-aircraft division was formed, its strength being just under 7,000. By the present month of this year the total strength of the two divisions had risen to 43,000.
    It is now proposed more than to double this figure. The existing Territorial antiaircraft units, with the addition of others about to be created, will be formed into five divisions instead of two. These five divisions will be under a corps commander with the rank of lieutenant-general. The corps commander will be responsible for training (including administration of his training grant), inspection and personal questions. He will be responsible to the Air Officer Commanding Fighter Command for operations. At the War Office an officer with the status of a Deputy-Chief of the Imperial General Staff and with the rank of lieutenant-general, to be designated Deputy-Chief of the Imperial General Staff (Anti-Aircraft Defence) will be appointed. He will be responsible, through the Chief of the Imperial General Staff, to the Secretary of State for antiaircraft defence, and he will devote his whole time to this important service. Under the Deputy-Chief of the Imperial General Staff (Anti-Aircraft Defence) a new Director of Anti-Aircraft Training and Organisation with the rank of major-general will be appointed.
    The purpose of the reorganisation which I have outlined is to secure that undivided attention may be given to every aspect and detail of anti-aircraft defence, and to ensure that this branch of defence shall be given a status commensurate with its rapidly expanding scope and importance.
    Mr. Mabane: Can my right hon. Friend indicate roughly the geographical distribution of these five new divisions?
    Mr. Hore-Belisha: They will cover all the appropriate areas in the United Kingdom.
    Mr. Thorne: Do we understand from the right hon. Gentleman's statement that he has no permanent anti-aircraft batteries at all?
    Mr. Hore-Belisha: There are Regular anti-aircraft units, but I was dealign with the Territorial units.
    Mr. Mabane: May I put my question more precisely to my right hon. Friend? I intended to ask him where the headquarters of the five divisions were. Of course, I understood that they would be in the United Kingdom.
    Mr. Hore-Belisha: The corps commander will take his seat with the fighter commander and he will be commander-in-chief of the fighter command, air-officer commanding.
    Mr. Bellenger: In view of the fact that the doubling of these figures probably means the recruiting of another 50,000 men, has the right hon. Gentleman any proposal for the recruitment of so large a number of individuals?
    Mr. Hore-Belisha: As I have shown by the figures which I have read to the House, recruiting has proceeded recently with accelerating speed, and we have no reason to doubt that the assistance that has been forthcoming from recognised associations and individuals, some of whom are found in all parts of this House, will achieve the required number.
    Sir Archibald Sinclair: Can the right hon. Gentleman tell us whether the guns, instruments and equipment are available for the equipment of these new formations?
    Mr. Hore-Belisha: I hope that as and when any additional units are formed they will have their proper quota, as have others already in existence their proper training equipment.
    Mr. Lees-Smith: Will this scheme include coast defence?
    Mr. Hare-Belisha: No, Sir; it is only anti-aircraft defence.
    Mr. Davidson: Can the right hon. Gentleman give any indication whether in Scotland there will be a Scottish Command, as we have in the Army and Territorial Force at present?
    Mr. Hore-Belisha: One of the divisions will cover Scotland, and to that extent the answer is "Yes."
    Mr. Mander: Will it be in order to ask questions about this new Department?
    Mr. Ellis Smith: In view of the fact that our modern anti-aircraft gun is one of the most efficient in the world, is the Minister satisfied that he is going to secure the maximum production in the minimum of time?
    Mr. Hore-Belisha: Yes, Sir. I think the production of the gun is quite remarkable. It is in production.
    Mr. Leach: Is the Minister satisfied that these elaborate arrangements will fully protect him against the approaching Sandys storm?

    ALDERSHOT TATTOO.
    Mr. Dayasked the Secretary of State for War the number of persons that visited the military tattoo at Aldershot during the 1938 season, and the particulars of the amounts that charities will receive from same?
    Mr. Hore-Belisha: The answer to the first part of the question is about 531,000. I am not yet in a position to answer the second part.
    Mr. Day: With reference to the second part, can the Minister say whether the charities also participate in the advertisement revenue?
    Mr. Hore-Belisha: They participate in the total sum available.
    Mr. Lees-Smith: Can the right hon. Gentleman say what were the total payments made by the public and how many troops were engaged in this entertainment?
    Mr. Hore-Belisha: I am not in a position to improvise the answer, but I think I can obtain that information.

    COMMISSIONS (UNIVERSITY CANDIDATES).
    Colonel Sir Charles MacAndrewasked the Secretary of State for War whether most seniority is invariably given to those university candidates for comissions who have taken honours degrees?
    Mr. Hore-Belisha: No, Sir.
    Sir C. MacAndrew: If a candidate for a commission takes his honours degree has he no advantage over a candidate who takes an ordinary degree?
    Mr. Hore-Belisha: Yes, he has a certain advantage in regard to whether he obtains a first or second class, but not otherwise. It is too complicated a matter to explain

    1715
    in answer to a question, but I will send my hon. and gallant Friend the particulars.

    OFFICE-WORK 4MECHANISATION).
    Mr. Graham Whiteasked the Secretary of State for War whether the process of mechanising the office-work of his Department in London and in the out stations has been completed?
    Mr. Hore-Belisha: The development of organisation, and the expansion of many establishments constantly provide new problems and possibilities for mechanising office work, especially in out stations, and the process of mechanisation of such work is, therefore, a continuous one. Trials are being constantly carried out with a view to ascertaining how far machine methods can be adapted to Army requirements.

    RECRUITING POSTERS.
    Mr. Manderasked the Secretary of State for War whether he will consider the advisability of introducing into some of the recruiting posters an appeal to the sentiments widely held in this country associated with the preservation of peace through collective security and mutual assistance in accordance with the ideals and obligations of the Covenant of the League of Nations?
    Mr. Hore-Belisha: Posters are technically designed to have the widest possible appeal.
    Mr. Mander: Is the Minister aware that there are large numbers of young men in this country to whom an appeal on these lines would be far more effective than would any other?
    Mr. Bevan: Is it not a fact that if an appeal were made on the lines suggested by the hon. Member, men would be recruited for the armed forces under false pretences?
    Mr. H. G. Williams: Does not my right hon. Friend think that collective security would probably involve us in more wars?
    Mr. Mander: Is not the real reason why such an appeal is not made that the Government do not believe in the policy?

    ANTI-AIRCRAFT UNITS, SCOTLAND.
    Mr. Davidsonasked the Secretary of State for War when the anti-aircraft
    1716
    units now established in Scotland will have their full complement of 3.7 mobile and 4.5 fixed guns?
    Mr. Hore-Belisha: What complement of available guns may be allotted to any particular unit depends upon the plan of defence.
    Mr. Davidson: In view of the fact that the Scottish local authorities are interested in the question of defence, surely the Minister's general staff have sufficient technical knowledge to be able to assure the people of Scotland when these units, now established, will be equipped properly for defence purposes?
    Mr. Hore-Belisha: Surely the hon. Member realises that no country in the world would publish the kind of information for which he has asked.
    Mr. Thurtle: Can the right hon. Gentleman give us an assurance that these anti-aircraft units in Scotland will not be given priority over anti-aircraft units in London?
    Mr. Davidson: In view of the thoroughly unsatisfactory answer I beg to give notice that I shall raise the question on the Adjournment.

    AFFORESTATION.
    Mr. Ellis Smithasked the right hon. and gallant Member for Rye, as representing the Forestry Commissioners, whether it is intended to initiate any schemes of afforestation or forest workers' holdings in Staffordshire; if so, in what part; is it intended to develop any scheme in the North Staffordshire area; and has a survey of the area been made and any land been acquired?
    Colonel Sir George Courthope (Forestry Commissioner): Afforestation has been undertaken by the Forestry Commission at Cannock Chase, Staffordshire, where they have acquired over 5,300 acres of land and have established it forest workers' holdings. The Department have particulars of all suitable areas in the county and although no further acquisitions are in immediate view they are prepared to negotiate for any suitable land which becomes available.
    Sir William Jenkinsasked the right hon. and gallant Member for Rye, as representing the Forestry Commissioners,

    1717
    what number of schemes for planting trees they have established since 1932, giving each year separately, to the latest available date; stating the number of acres of land bought or leased; the number of men employed on each scheme; the number of families established permanently; the number of full-time officials and salaries paid in each grade; and the rates of wages paid to the ordinary employés, with separate particulars for Scotland, England and Wales?
    Sir G. Courthope: The information required is contained in the annual reports of the Forestry Commissioners and the Department's annual estimates. To give the information orally would entail reading many pages from these publications. With the permission of the House, therefore, I will refer the hon. Member to these reports and estimates and hand him copies of the latest issues.

    NAVAL AND MILITARY PENSIONS AND GRANTS.
    Mr. Roland Robinsonasked the Minister of Pensions how many disabled ex-service men received hospital treatment for their disabilities during each of the years 1936 and 1937?
    The Minister of Pensions (Mr. Rams-botham): Apart from the cases numbering about 6,000 in mental hospitals, 8,517 officers and men in 1936 and 8,090 in 1937 received treatment in hospitals for their war disabilities.
    Mr. R. Robinsonasked the Minister of Pensions in how many cases during 1936 and 1937 disabled ex-service men applying for hospital treatment were informed that it was unnecessary but were subsequently admitted to hospital?
    Mr. Ramsbotham: I regret that I have no record of the number of cases of this description.

    UNEMPLOYMENT (ASSISTANCE).
    Mr. Johnasked the Minister of Labour whether he is aware that area officers in the Rhondda are sending unemployed persons who apply for nourishment allowance under the Unemployment Assistance Board's regulation to Pontypridd to be medically examined; and whether he will state the reason for the practice, seeing that each applicant for
    1718
    nourishment produces a certificate from his or her medical attendant certifying as to the need of nourishment allowance?
    The Minister of Labour (Mr. Ernest Brown): I dealt with this matter in my reply on 17th February last to the hon. Member for Rhondda, East (Mr. Mainwaring) when I stated that these arrangements under which certain cases are referred to regional medical officers have been in operation since 1935. The procedure is only used in exceptional cases.
    Mr. Bevan: If a medical certificate is sent with the applicant in the first place, is he then sent to a doctor as local medical referee?
    Mr. Brown: In a few very exceptional cases.

    AERODROME CONSTRUCTION, ST. ATHANS.
    Mr. Johnasked the Secretary of State for Air the number of contractors engaged in constructing the new aerodrome works at St. Athans, the number of workmen engaged and the number of hours worked per day?
    The Under-Secretary of State for Air (Captain Harold Balfour): Fifteen contractors, including sub-contractors, are at present engaged in the construction work referred to, and on 24th June, 3,177 workmen were employed. The hours at present being worked by the majority of the workmen are 10½ on Monday to Thursday inclusive, 8½ on Friday and four on Saturday.
    Mr. Johnasked the Secretary of State for Air whether he is aware of the growing practice adopted by the contractors at St. Athans of dismissing their workmen without notice on the plea that parts of the constructional work are not sufficiently advanced, and that whilst these workmen are sent to the Employment Exchange to obtain their cards others are employed at the works; and will he state the number so dismissed in the last eight weeks?
    Captain Balfour: I am informed that the practice of contractors and subcontractors is to give workmen the notice or pay in lieu of notice which is customary in work on constructional contracts. In such constructional work being

    1719
    carried out by a considerable number of contractors, it is difficult fully to coordinate the demands for new, and the release of existing, workmen from the very large number of men employed. In the case of skilled labour every man whose services are no longer required on a particular section of the work is passed through the temporary employment office established on the site for consideration for vacancies arising on other sections of the work, and by this means continuity of employment has been ensured for the bulk of skilled men. The case of unskilled men which involves larger numbers is more difficult and this system cannot be worked as systematically as that of skilled personnel. It may be that men have been discharged from a particular operation on one part of the site co-incident with the engagement of other labour for a different operation on another part. The names of men who have been previously employed and whose discharge is not due either to unsuitability or other cause are re-submitted through the temporary employment office with the result that the majority of these discharged men get back to work after a short period. The total number of men paid off during the last eight weeks is about 400 and the number engaged about 900, many of whom were found from among the 400 who had been discharged. If the hon. Member has specific cases in mind perhaps he will let me have particulars.
    Mr. John: Is it not possible to establish a similar policy for unskilled men as for skilled? A large number of men are employed? They are employed for four or five days, they pay 9s. for bus fares, they buy working gear, and are dismissed in three or four days without any chance of recovering the expense.
    Captain Balfour: As I explained in my reply, there is considerable difficulty in dealign with the large number of unskilled men as compared with the skilled men, but I am sure that my right hon. Friend desires to see the Employment Exchanges used to the utmost in order to facilitate the re-employment at once of any unskilled men who have been turned off. If the hon. Member will bring me any instances I will look into them.
    Mr. Jenkins: I gather from the reply that 400 men were dismissed and 900
    1720
    were engaged during the same period. Surely it would have been easy so to coordinate the proceedings that these 400 men might have continued in their employment?
    Captain Balfour: Among the 900 are included 400 who have been turned off by sub-contractors. It is always impossible to deal with the matter exactly, but we keep in touch as far as we can.
    Mr. Bevan: Is it not obvious that a clearing house for unskilled workers is far easier than for skilled men, and that the Minister's answer is, therefore, not reasonable at all?
    Captain Balfour: No, a clearing house for unskilled men is not easier, because the number of them is much larger than in the case of the skilled men, particularly when 15 contractors or sub-contractors may be taking on or turning off men, according to the particular time at which they are starting work.

    AERIAL WARFARE.
    Mr. Sorensenasked the Prime Minister whether he is now in a position to make a statement as to whether His Majesty's Government are prepared to initiate immediate action respecting the international abolition of aerial warfare?
    The Prime Minister: I would refer the hon. Member to the statement I made in the House on 2rst June, in which I explained that His Majesty's Government are already engaged in a survey of the questions at issue.
    Mr. Sorensen: Is the right hon. Gentleman not aware that when I asked a similar question he referred me to the Debate which was to follow, and is it not a fact that no reference was made in that Debate to the major part of that question?
    The Prime Minister: I do not know whether that was the case, but I think that the answer which I gave to the hon. Member gave all the information I could.
    Mr. Sorensen: May I take it that the right hon. Gentleman will take no initiative in this matter?
    The Prime Minister: Not until we have completed our survey.
    Mr. Mander: Is not action the last thing in which the Government are interested?

    NATIONAL HEALTH INSURANCE.
    Major Macnamaraasked the Minister of Health why the Ophthalmic Benefit Approved Committee, which is a statutory committee, do not give their names to bona fide persons who have to appear before them or have to have dealigns with them; and whether he will state their names to the House?
    The Parliamentary Secretary to the Ministry of Health (Mr. Bernays): My right hon. Friend is not aware that the Ophthalmic Benefit Approved Committee have declined or would decline to give the names of the members to any persons with whom they have official relations. The committee consists of 14 representatives of approved societies and an equal number of opticians, with the hon. Member for the Newton division of Lancaster (Sir R. Young) as chairman. There are also two official observers with no voting power, one from the Ministry of Health and one from the Department of Health for Scotland. With my hon. and gallant Friend's permission, I will give the names of the members of the committee in the OFFICIAL REPORT.
    Following are the names:

    COMPOSITION OF THE OPHTHALMIC BENEFIT APPROVED COMMITTEE.
    Chairman: Sir Robert Young, O.B.E., M.P.
    Approved Society Representatives:
    National Conference of Friendly Societies: Mr. S. L. Duff, C.B.E., Mr. H. W. Townley.
    National Conference of Industrial Assurance Approved Societies: Mr. C. G. Izard, Mr. J. S. Pike.
    National Federation of Rural Approved Societies: Mr. G. C. Bowers.
    National Association of Trade Union Approved Societies: Mr. G. W. Canter.
    National Federation of Employees
    Approved Societies: Mr. H. Lesser.
    Association of Deposit Societies: Mr. C. Tuckfield.
    National Federation of Dividing Societies: Mr. F. G. Harris.
    National Union of Holloway Friendly Societies: Mr. P. Rockliff.
    Scottish Association of Friendly and Approved Societies: Mr. T. William Wallace.
    Association of Welsh Approved Societies: Mr. J. G. Lewis.
    Chairman of the Approved Societies Consultative Council for England and Wales: Mr. C. A. Bamford.
    Chairman of the Scottish Approved Societies Consultative Council: Mr. J. Webster.
    Optical Representatives:
    Joint Council of Qualified Opticians: Mr. W. B. Barker (British Optical Association).
    Major W. H. Champness (Worshipful Company of Spectacle Makers).
    Mr. G. E. Houghton (Institute of Ophthalmic Opticians).
    Mr. J. H. Hayes (Joint Council of Qualified Opticians).
    Mr. T. J. H. Young (Optician Resident in Scotland).
    Mr. P. Randell (Optician Resident in Wales).
    National Association of Opticians: Mr. L. Moreton Parry.
    Institute of Chemist-Opticians: Mr. J. J. Laws.
    Ophthalmic Supplies Limited: Mr. J. W. Bowen.
    Association of Dispensing Opticians, Limited: Mr. J. R. Howard.
    Scottish Association of Opticians: Mr. D. L. Veitch.
    Association of Wholesale and Manufacturing Opticians: Mr. E. T. Cornwell, Mr. F. H. Wheway.
    Unattached Opticians: Mr. I. G. Aitchison.
    Major Macnamaraasked the Minister of Health whether he is aware that Messrs. Jameson and Company, who make spectacle frames, were required by the technical sub-committee of the ophthalmic benefit committee, whose subcommittee's seven members include three competitors of Messrs. Jameson and Company, to submit, under the new regulations, their spectacle frames to a test by a competitor of Messrs. Jameson and Company; that the latter refused, but suggested an independent test by a Government Department, which was refused; and whether he will intervene to protect the interests of small manufacturers, allow the independent test, and grant Messrs. Jameson and Company a continuation of their licence beyond 3oth June until the matter is settled?
    Mr. Bernays: My right hon. Friend is in communication with the Ophthalmic Benefit Approved Committee in this

    1723
    matter and will inform my hon. and gallant Friend of the result. My right hon. Friend is hopeful that the committee will now be able to find some way of arranging for a test by an authority to which Messrs. Jameson's could not take exception.
    Major Macnamaraasked the Minister of Health why his Department has neither asknowledged nor replied to a letter of 4th June, and a subsequent telegram, from Messrs. Jameson and Company, a firm who have been manufacturing spectacle frames for some time?
    Mr. Bernays: My right hon. Friend regrets that owing to an unfortunate misunderstanding the communications to which my hon. and gallant Friend refers, instead of being dealt with by his Department, were forwarded to the Ophthalmic Benefit Approved Committee. A reply has now been sent to Messrs. Jameson.

    SPAIN.
    Mr. Attlee(by Private Notice)asked the Prime Minister whether the Government have now received any reply to their protest to the Spanish Insurgent Authorities regarding the bombing of British ships?
    The Prime Minister: No, Sir. But a further communication has been sent to Sir Robert Hodgson instructing him to press the Burgos authorities for a reply forthwith, in order that he may return with it without delay.
    Mr. Attlee: Is any time limit laid down? In view of the constant sinking of our ships, is it not a serious matter when protests are made and no reply is received?
    The Prime Minister: No definite date has been laid down, but the right hon. Gentleman has heard the terms of the answer as I have read it.
    Mr. Attlee: If I put a question down on Thursday, does the Prime Minister hope to have a reply by then?
    The Prime Minister indicated assent.
    Mr. Macquisten: Are these shipowners who sent out ships for the purpose of private gain—[Interruption.]

BUSINESS OF THE HOUSE.
Mr. Attlee: May I ask the Prime Minister two questions on business? The first is, what will be the business for Friday; and the second is, whether he has any statement to make as to the Motion standing in the name of the hon. Member for Norwood (Mr. Sandys)—
["That a Select Committee of this House he appointed to inquire into the substance of the statements made on 27th June in this House by the hon. Member for Norwood and the action of the Ministers concerned, and generally on the question of the applicability of the Official Secrets Act to Members of this House in the discharge of their Parliamentary duties."]
The Prime Minister: The business on Friday will be: Supply, Committee, 14th Allotted Day (First Part). The Estimate for the Forestry Commission will be considered.
In reply to the right hon. Gentleman's second question, the Government propose to set up a Select Committee to inquire into the matter, and the terms of reference will be those contained in the Motion standing on the Order Paper in the name of my hon. Friend the Member for Norwood (Mr. Sandys). I propose that this Committee should consist of 10 members, and discussions will take place immediately through the usual channels as to the constitution of the Committee. The necessary Motion will be tabled as soon as possible. Provided that the Committee stage of the Finance Bill is concluded to-night, I hope that an opportunity will be found to debate the Motion on Thursday. I will make a further statement to-morrow.
Mr. Attlee: May I take it that, in the discussion on the Motion, the Prime Minister will make a statement as to what the attitude of the Government is with regard to the Official Secrets Act and Members of this House; because, if this Committee is to be set up, we may for some time be uncertain, unless we have an indication from the Prime Minister, what is the practice of the Government in this matter? May I ask, also, whether a statement will be made by the Secretary of State for War?
The Prime Minister: With regard to the right hon. Gentleman's first question, I think I should like to consider that; he did not give me notice of it. As to his

1725
second question, I understand that my right hon. Friend the Secretary of State for War is extremely anxious to make a statement at the earliest possible opportunity.

BILL PRESENTED.
  RIDING ESTABLISHMENTS (REGISTRATION AND INSPECTION) BILL,
  "to provide for the registration and inspection of riding establishments, and for other purposes connected therewith," presented by Captain Heilgers; supported by Sir Edward Ruggles-Brise, Mr. Hopkin, Mr. Tree, Mr. Graham White, Sir Thomas Cook, Sir Reginald Dorman-Smith, Mr. Ross Taylor, Colonel Clarke, Mr. Raikes, Mr. Goldie, and Wing-Commander Wright; to be read a Second time upon Tuesday next, and to be printed. [Bill 197.]

  ALIENS RESTRICTION (BLASPHEMY).
  Captain Ramsay: I beg to move,
  "That leave be given to bring in a Bill to prevent the participation by aliens in assemblies for the purpose of propagating blasphemous or atheistic doctrines or in other activities calculated to interfere with the established religious institutions of Great Britain, to amend the Aliens Restriction (Amendment) Act, 1919, and for other purposes connected therewith."
  May I say at the outset to hon. Members on both sides of the House that there is no intention of any sort whatever in my mind to affect or criticise the right of British citizens to think as they think fit as to whether religious principles shall be held or not? I wish to make that quite clear. If we lived in the days of those Victorian agnostic free-thought societies the details of which were circulated to us the other day, this Bill would certainly not be moved by me. My object in moving it is to make sure that these societies, with their respectable associations, shall not be used as a vehicle for Communistic or revolutionary propaganda. Since these organisations were founded, certain important events have taken place which must command the interest of all hon. Members on both sides of the House. The first was the launching by Moscow of the revolutionary campaign against religion. Then followed, in 1925, the formation of the International Proletarian Freethinkers, with the same
  1726
  directorate as the Militant Godless; the attack carried on for 11 years by these Proletarian Freethinkers on those respectable Victorian organisations; and their final merger two years ago at Prag. Hon. Gentlemen on the other side of the House may say, in the first place, that this propaganda will still be of the free thought nature, but I have here Mr. Jaroslaysky's handbook on the subject, in which he says—and, as he is president of the Militant Godless, he speaks with supreme authority on the point—
  "The revolutionary proletariat is not concerned with a merely paper war of the old style of Free-thought … it is an integral part of the revolutionary proletarian class struggle."
  If hon. Members on the other side of the House presume that at these congresses, when attended by members of this body, they will stick to atheism or religion, let me again quote from Mr. Jaroslaysky's handbook:
  "Proletarian freethinking as cultivated by the League of the Godless is, on the contrary, essentially part and parcel of the militant workers' class struggle; basically political and revolutionary from the start."
  I think I have shown that, in a merger of societies containing men with these beliefs, we have a vehicle and a facade for aliens coming over to this country, nominally to discuss religion, but actually as agents of an organisation to promote revolution. We are indebted to our Socialist friends for a book called "The Communist Solar System." This so-called Freethinkers' Union should be included in that book as the latest addition to the United Front. Those respectable Victorian societies had no Sir Walter Citrine to stand up for them and warn them of the wrath to come. An 11-years' battle was kept up between the proletarian freethinkers and our bourgeois societies, and finally it and they came to an end at Prag, when they gave up their individuality and were merged in the new joint Union of Freethinkers. I will give an idea of the atmosphere that prevailed at Prag when these respectable British citizens arrived, as sheep for the slaughter. I quote from "International Press Correspondence," Volume 16, page 21, of 2nd May, 1936:
  "The prolonged, frenzied applause which greeted the Soviet Delegation made it manifest that the freethinkers' organisation of the 12 countries that were represented at this congress recognised in the Soviet Union a

  1727
  country of Socialism, the chief support of their effort on behalf of freedom and on behalf of freedom among the people of the world."
  The next page shows how the recalcitrants were dealt with, and significantly concludes:
  "It can, however, be confidently stated that all these efforts at disruption were fruitless."
  The next page described the speeches of the Soviet delegation, in which they hardly touch on the question of religion at all but deal with agricultural collectivism, the Stakhanov movement, downwards through the whole range of politics. The final quotation is as follows:
  "Amalgamation is concluded. Amalgamation is not an end in itself but only a means to an end."
  I am glad from the cheers of hon. Members opposite to know that they concur in that statement: they may not like the conclusion, which was:
  "In order to divest the free-thought movement of its sectarian character and bring it into service for the world struggle."
  With prototypes such as Lenin and Yaroslaysky we know what that world struggle means—Red revolution; and it is against that I wish to warn my friends on both sides of the House.
  Now we come to the present congress, which is to take place in this country. I will quote from a Russian anti-religious paper and the quotation is vouched for by three reputable organisations, including the British Bible Union. I will give the actual words of Mr. Newman Watts of the last-named society:
  "At the end of September last I received from the Agence d'Information de l'Orient of Paris a bulletin regarding the International Godless Congress in London. I have since seen the actual issue of the Antireligioznik of 27th July which was worded thus: 'The proposition concerning the organisation of the Godless Congress in London is accepted. (2) In case the English Government should forbid the organisation of the Congress, it will take place in Holland or Belgium. (3) The Soviet Russian Organisation of the Godless spends 150,000 roubles on the expenses of the Congress'."
  If some people should say that we are going to give them publicity by raising this matter, I will reply that we have only to look at the names of the people who are organising this congress to realise that they need no publicity; they can get all they want. What we are going to give them is just the publicity they
  1728
  do not want. And that is of two kinds: firstly, to warn the innocents inside these organisations of who is now running them; and, secondly, to warn organised Christianity of the real nature of this attack. If my hon. Friends are going to reply on the basis of free speech, may I suggest that they have to make a reply on the basis of free speech for aliens who are members or are likely to be members of this revolutionary organisation. One final extract from a man who has been a Protestant speaker in this country for 40 years. He writes that he has been speaking on the United Christian Front platform for 13 months and that his meetings have been broken up time and again and that this has been nearly always done by aliens. It is to prevent further aliens of just that type from coming into the country that I move this Motion.
  Mr. Thorne: On a point of Order. During the whole time the hon. and gallant Member has been speaking he has not said a single word about the Bill he wishes to introduce.
  Mr. Speaker: I noticed the same thing myself.
  Captain Ramsay: I started by quoting the first two lines of my Motion and did not quote any more as I wanted to make the best use of my time, and it seemed to me that the Notice on the Order Paper made the matter sufficiently clear.
  Mr. Edmund Harvey: It is out of no lack of appreciation of the sincerity of the hon. and gallant Member that I ask the House to refuse leave to bring in this Bill, because I am convinced that the Bill is the wrong way to attempt to deal with the evils that the hon. and gallant Member seeks to meet. The method of the Bill is one which history has shown to be ineffective, and it is also profoundly at variance with the great tradition of religious liberty, which is one of our most precious heritages.
  Sir William Davison: The Bill deals not with religious liberty but with blasphemy.
  Mr. Harvey: I will deal with that point later, if I may. I repeat that this is a wrong way to deal with the matter. Those of us who venture to approach this problem as trying to be Christians have no higher authority than the teaching in the Gospel of the Parable of the Tares.

  1729
  We know that in that Parable the disciples were taught that the attempt to root up the tares growing among the wheat was a mistaken one; tares and wheat were to be left to grow together.
  Mr. Wise: Are you not forgetting that the tares were burnt?
  Mr. Harvey: Not by men, but at the consummation of the age. Men were not to interfere with the growing of the tares. The wisdom of that, the insight of it, has been proved again and again in history. The course of history, I think, confirms the view that I have ventured to take. At the beginning of the Christian Church the earliest missionaries of Christianity, coming from Asia, coming from another country to Europe, were greeted in Thessalonica by violent opposition and an angry mob went to the magistrates and complained that:
  "these that have turned the world upside down are come hither also."
  We get almost an echo of some of the arguments of the hon. and gallant Member. These early Christians were known by their opponents as Atheists; they were believed to be Atheists; they were regarded as the enemies of the human race.
  If we look at the history of our own country we find that aliens came in, to quote the Motion of the hon. and gallant Member, to further "activities calculated to interfere with the established religious institutions of the country." St. Augustine of Canterbury was an alien. St. Paulinus of York, when he went to King Edwin, was an alien coming to upset the religious institutions of the country. I am sure that the hon. and gallant Member will not consider that St. Augustine and St. Paulinus were mistaken in their mission or that their work was not blessed. Their weapon was the weapon of truth. I maintain that truth needs no
  other shield or weapon than itself. Whether it be political error or religious error, the right way to deal with it is by the weapons of argument and appeals to the highest. The only safeguard that truth needs is the light in which and by which it lives.
  Some of the darkest pages in the history of this House have been pages where we have tried as a House of Commons to go contrary to that spirit. Go back 300 years and think of the time when a Puritan House of Commons condemned for blasphemy a Quaker whose tongue was bored with a red hot iron and whose forehead was branded. I think that the House then dishonoured itself more than its victim. Go back some 50 years, and think of how the House shut out from its membership one whom they regarded as an Atheist, some perhaps as a blasphemer, and when he lay dying the House expunged from its Minutes the record of what it had done. We do not want to go back to that sort of thing. We want to remember rather that we are the guardians of the spirit which John Milton expressed in his noblest prose work. We need to remember his words to-day:
  "Give me the liberty to know, to utter and to argue freely according to conscience, above all liberties."
  That is a liberty which we ought to be proud and glad to share with men of every other nation.
  Question put,
  "That leave be given to bring in a Bill to prevent the participation by aliens in assemblies for the purpose of propagating blasphemous or atheistic doctrines or in other activities calculated to interfere with the established religious institutions of Great Britain, to amend the Aliens Restriction (Amendment) Act, 1919, and for other purposes connected therewith."
  The House divided: Ayes, 165; Noes, 134.

  Division No. 251]

  NOES

  [4.13 p.m.

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

  Brown, Col. D. C. (Hexham)

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

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

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

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

  Anderson, Rt. Hn. Sir J. (So'h Univ's)

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

  Croft, Brig.-Gen. Sir H. Page

  Anstruther-Gray, W. J.

  Bull, B. B.

  Crooke, Sir J. Smedley

  Apsley, Lord

  Burton, Col. H. W.

  Cross, R. H.

  Asks, Sir R. W.

  Carver, Major W. H.

  Crossley, A. C.

  Baldwin-Webb, Col. J.

  Cassells, T.

  Crowder, J. F. E.

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

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

  Davidson, Viscountess

  Barrie, Sir C. C.

  Cayzer, Sir H. R. (Portsmouth, S.)

  Davison, Sir W. H.

  Baxter, A. Beverley

  Channon, H.

  Dawson, Sir P.

  Beamish, Rear-Admiral T. P. H.

  Chapman, Sir S. (Edinburgh, S.)

  De Chair, S. S.

  Beaumont, Hon. R. E. B. (Pertsm'h)

  Chorlton, A. E. L.

  De la Bère, R.

  Bennett, Sir E. N.

  Christie, J. A.

  Despencer-Robertson, Major J. A. F.

  Blair, Sir R.

  Clarry, Sir Reginald

  Doland, G. F.

  Bossom, A. C.

  Cobb, Captain E. C. (Preston)

  Donner, P. W.

  Boulton, W. W.

  Conant, Captain R. J. E.

  Dorman-Smith, Maior Sir R. H.

  Briscoe, Capt. R. G.

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

  Drewe, C.

  Duckworth, Arthur (Shrewsbury)

  Lipson, D. L.

  Russell, S. H. M. (Darwen)

  Duckworth, W. R. (Moss Side)

  Logan, D. G.

  Salmon, Sir I.

  Edge, Sir W.

  MacAndrew, Colonel Sir C. G.

  Samuel, M. R. A.

  Emmott, C. E. G. C.

  Macdonald, Capt. P. (Isle of Wight)

  Sandeman, Sir N. S.

  Errington, E.

  McEwen, Capt. J. H. F.

  Scott, Lord William

  Evans, Capt. A. (Cardiff, S.)

  McKie, J. H.

  Selley, H. R.

  Fox, Sir G. W. G.

  Macnamara, Major J. R. J.

  Shaw, Captain W. T. (Forfar)

  Gibson, R. (Greenock)

  Makins, Brigadier-General Sir Ernest

  Shepperson, Sir E. W.

  Gledhill, G.

  Marsden, Commander A.

  Sinclair, Col. T. (Queen's U. B'If'st)

  Graham, Captain A. C. (Wirral)

  Maxwell, Hon. S. A.

  Smiles, Lieut.-Colonel Sir W. D.

  Grant-Ferris, R.

  Mayhew, Lt.-Col. J.

  Smith, Sir Louis (Hallam)

  Gretton, Col. Rt. Hon. J.

  Moller, Sir R. J. (Mitcham)

  Somerville, A. A. (Windsor)

  Hambro, A. V.

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

  Southby, Commander Sir A. R. J.

  Hannah, I. C.

  Mills, Sir F. (Layton, E.)

  Stourton, Major Hon. J. J.

  Hannon, Sir P. J. H.

  Mills, Major J. D. (New Forest)

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

  Harbord, A.

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

  Strauss, H. G. (Norwich)

  Haslam, Henry (Horneastle)

  Moreing, A. C.

  Sueter, Rear-Admiral Sir M. F.

  Haslam, Sir J. (Bolton)

  Morris, O. T. (Cardiff, E.)

  Tasker, Sir R. I.

  Heilgers, Captain F. F. A.

  Morris-Jones, Sir Henry

  Tate, Mavis C.

  Hepworth, J.

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

  Taylor, C. S. (Eastbourne)

  Higgs, W. F.

  Munro, P.

  Taylor, Vice-Adm. E. A. (Padd., S.)

  Holdsworth, H.

  Nall, Sir J.

  Thomson, Sir J. D. W.

  Horsbrugh, Florence

  Petherick, M.

  Thorneycroft, G. E. P.

  Howitt, Dr. A. B.

  Ponsonby, Col. C. E.

  Titchfield, Marquess of

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

  Power, Sir J. C.

  Touche, G. C.

  Hunter, T.

  Radford, E. A.

  Turton, R. H.

  Hurd, Sir P. A.

  Ramsbotham, H.

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

  Keeling, E. H.

  Rankin, Sir R.

  Ward, Irene M. B. (Wallsend)

  Kerr, Colonel C. I. (Montrose)

  Rayner, Major R. H.

  Wardlaw-Milne, Sir J. S.

  Kerr, H. W. (Oldham)

  Reed, A. C. (Exeter)

  Waterhouse, Captain C.

  Kerr, J. Graham (Scottish Univs.)

  Reed, Sir H. S. (Aylesbury)

  Watt, Major G. S. Harvie

  Keyes, Admiral of the Fleet Sir R.

  Reid, W. Allan (Derby)

  Wells, Sir Sydney

  Lamb, Sir J. Q.

  Rickards, G. W. (Skipton)

  Whiteley, Major J. P. (Buckingham)

  Lambert, Rt. Hon. G.

  Robinson, J. R. (Blackpool)

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

  Latham, Sir P.

  Ross Taylor, W. (Woodbridge)

  Windsor-Clive, Lieut.-Colonel G.

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

  Rowlands, G.

  Wise, A. R.

  Leech, Sir J. W.

  Royds, Admiral Sir P. M. R.

  Leigh, Sir J.

  Ruggles-Brise, Colonel Sir E. A.

  TELLERS FOR THE AYES.

  Liddall, W. S.

  Russell, Sir Alexander

  Captain Ramsay and Mr.

  Denville.

  NOES

  Acland, R. T. D. (Barnstaple)

  Hall, G. H. (Aberdare)

  Muff, G.

  Adams, D. (Consett)

  Hardie, Agnes

  Naylor, T. E.

  Agnew, Lieut.-Comdr. P. G.

  Harris, Sir P. A.

  Nioolson, Hon. H. G.

  Alexander, Rt. Hon. A. V. (H'Isbr.)

  Hayday, A.

  Noel-Baker, P. J.

  Ammon, C. G.

  Henderson, A. (Kingswinford)

  Palign, W.

  Asshaton, R.

  Henderson, J. (Ardwiek)

  Parker, J.

  Astor, Viscountess (Plymouth, Sutton)

  Henderson, T. (Tradeston)

  Parkinson, J. A.

  Attlee, Rt. Hon. C. R.

  Hills, A. (Pontefract)

  Pearson, A.

  Banfield, J. W.

  Hopkin, D.

  Poole, C. C.

  Barnes, A. J.

  Jenkins, Sir W. (Neath)

  Pritt, D. N.

  Batey, J.

  John, W.

  Richards, R. (Wrexham)

  Benn, Rt. Hon. W. W.

  Johnston, Rt. Hon. T.

  Ridley, G

  Bevan, A.

  Jones, A. C. (Shipley)

  Riley, B.

  Burke, W. A.

  Jones, Sir H. Haydn (Merioneth)

  Ritson, J.

  Cartland, J. R. H.

  Jones, Morgan (Caerphilly)

  Roberts, Rt. Hon. F. O. (W. Brom.)

  Charleton, H. C.

  Kelly, W. T.

  Roberts, W. (Cumberland, N.)

  Chafer, D.

  Kennedy, Rt. Hon. T.

  Rothschild, J. A. de

  Cluse, W. S.

  Kirkwood, D.

  Russell, R. J. (Eddisbury)

  Clynes, Rt. Hon. J. R.

  Lansbury, Rt. Hon. G.

  Salter, Dr. A. (Bermondsey)

  Collindridge, F.

  Lathan, G.

  Salter, Sir J. Arthur (Oxford U.)

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

  Lawson, J. J.

  Seely, Sir H. M.

  Cove, W. G.

  Leach, W.

  Sexton, T. M.

  Culverwelf, C. T.

  Leonard, W.

  Short, A.

  Daggar, G.

  Levy, T.

  Simon, Rt. Hon. Sir J. A.

  Davidson, J. J. (Maryhill)

  Lunn, W.

  Smith, Ben (Rotherhithe)

  Davies, R. J. (Westhoughton)

  Lyons, A. M.

  Smith, E. (Stoke)

  Day, H.

  Mebane, W. (Huddersfield)

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

  Debbie, W.

  McEntee, V. La T.

  Smith, T. (Normanton)

  Duggan, H. J.

  McGhee, H. G.

  Sorensen, R. W.

  Dunn, E. (Rather Valley)

  McGovern, J.

  Stewart, W. J. (H'ght'n-le-Sp'ng)

  Ede, J. C.

  Maclay, Hon. J. P.

  Strauss, G. R. (Lambeth, N.)

  Edwards, A. (Middlesbrough E.)

  Maclean, N.

  Summerskill, Dr. Edith

  Edwards, Sir C. (Bedwellty)

  MacMillan, M. (Western Isles)

  Thorne, W.

  Gallagher, W.

  Maitland, A.

  Thurtle, E.

  Gardner, B. W.

  Mander, G. la M.

  Tinker, J. J.

  Graham, D. M. (Hamilton)

  Marklew, E.

  Tomlinson, G.

  Green, W. H. (Deptford)

  Marshall, F.

  Viant, S. P.

  Greenwood, Rt. Hon. A.

  Mothers, G.

  Walker, J.

  Griffiths, J. (Llanelly)

  Maxton, J.

  Watson, W. McL.

  Groves, T. E.

  Montague, F.

  Wedgwood, Rt. Hon. J. G

  Guest, Hon. I. (Brecon and Radnor)

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

  Welsh, J. C.

  Guest, Dr. L. H. (Islington, N.)

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

  Westwood, J.

  1732

  1733

  Whiteley, W. (Blaydon)

  Windsor, W. (Hull, C.)

  TELLERS FOR THE NOES.—

  Wilkinson, Ellen

  Woods G. S. (Finsbury)

  Mr. Edmund Harvey and Mr.

  Williams, D. (Swansea, E.)

  Young, Sir R. (Newton)

  Benson.

  Williams, T. (Don Valley)

  Bill ordered to be brought in by Captain Ramsay, Sir William Davison, and Colonel Sandeman Allen.

  ALIENS RESTRICTION (BLASPHEMY) BILL,
  "to prevent the participation by aliens in assemblies for the purpose of propagating blasphemous or atheistic doctrines or in other activities calculated to interfere with the established religious institutions of Great Britain, to amend the Aliens Restriction (Amendment) Act, 1919, and for other purposes connected therewith," presented accordingly, and read the First time; to be read a Second time upon Thursday, and to be printed. [Bill 198.]

  LOCAL GOVERNMENT (HOURS OF POLL) BILL.
  Reported, with Amendments, from Standing Committee B.
  Bill, as amended (in the Standing Committee), to be considered upon Thursday and to be printed. [Bill 196.]
  Minutes of Proceedings to be printed. [No. 144.]

  BILLS REPORTED.
  MINISTRY OF HEALTH PROVISIONAL ORDER (BUCKS WATER BOARD) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (CHURCH STRETTON) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (CIRENCESTER) BILL.
  Reported, with Amendments, from the Committee on Unopposed Bills.
  Bill, as amended, to be considered Tomorrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (HORSFORTH) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (LLANDRINDOD WELLS) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (RAWMARSH) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.
  MINISTRY OF HEALTH PROVISIONAL ORDER (WATH UPON DEARNE) BILL.
  Reported, with Amendments, from the Committee on Unopposed Bills.
  Bill, as amended, to be considered Tomorrow.
  WEST HARTLEPOOL CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.

  MESSAGE FROM THE LORDS.
  That they have agreed to,—
  Swinton and Pendlebury Corporation Bill,
  Redcar Corporation Bill,
  London and North Eastern Railway Bill,
  Southern Railway Bill, with Amendments.
  That they have passed a Bill, intituled, "An Act to vary the limitations and trusts of the Will dated the 28th day of February, 1923, and the First Codicil thereto dated the 15th day of January, 1924, both proved in the Manchester District Probate Registry on the nth day of January, 1927, of Reginald Arthur Tatton, late of Cuerden Hall in the County of Lancaster." [Tatton Estate Bill [Lords.]

  TATTON ESTATE BILL [Lords].
  Read the First time; and referred to the Examiners of Petitions for Private Bills.
ORDERS OF THE DAY.

  FINANCE BILL.
  Considered in Committee [Progress, 27th June].
  [Captain BOURNE in the Chair.]

  FINANCE BILL.

    NEW CLAUSE.—(Repeal of customs duties on foodstuffs and Import Duties Act not to apply to foodstuffs.)
    As from the first day of September, nineteen hundred and thirty-eight, customs duties chargeable upon foodstuffs imported for human consumption under the provisions of the Import Duties Act, 1932, or the Ottawa Agreements Act, 1932, shall cease to be chargeable, and the provisions of the first-mentioned Act shall be deemed not to authorise the imposition of customs duties upon such foodstuffs.—[Mr. A. V. Alexander.]
    Brought up, and read the First time.
    4.23 p.m.
    Mr. A. V. Alexander: I beg to move, "That the Clause be read a Second time."
    We have just, I think lamentably, passed the First Reading of a Measure to restrict liberty. This is an attempt from this side of the Committee to free the consumers of this country from the shameful restriction which is at present put upon their purchasing power, and which is helping to keep such a large number of people below what is a proper standard of life. This Clause is two-fold in its purpose. It asks for the repeal of the food Customs Duties under the Import Duties Act and the Ottawa Agreements Act and it also asks the Committee to agree that in future the Import Duties Act shall not be used for authorising the imposition of new food duties.
    Since 1931 the House of Commons has witnessed a very great revolution in regard to taxation on food. I do not know whether the Chancellor of the Exchequer is likely to answer the case which is put for this Clause, but if he does I shall be very interested to hear how he reconciles the present position of himself, as the principal holder of the keys of the power to impose food taxation, with all his lifelong work for the free breakfast table for the people. The fact is that as a result of this revolution we are labouring to-day under the effect of duties imposed under the Ottawa Agreements Act upon wheat, butter, eggs, condensed milk, fruit and other things, and under the Import Duties
    1746
    Act we are being taxed in respect of potatoes, tomatoes, fruit, poultry, vegetables, and so on. I am unable to make any specific comment upon another important duty which is operating to-day, because it was passed under a separate Act. I refer to the duty on meat. I shall not be able to argue about that particular duty. All I can say is that all the duties I have mentioned are in addition to £5,000,000 on the people's meat.
    Recently the President of the Board of Trade gave a most gloomy view of the trade outlook. If he is found to be a true prophet, we must expect a continuous increase in unemployment and a consequent decline in our national standard of living unless the Government take some effective steps to check that tendency. It is imperative, therefore, in our view, that some steps should be taken to reduce the cost of living of the people. In 1933, as we have often reminded the House, the British Medical Association came to the conclusion that a family of five, consisting of the parents and three children aged, say, from 6 to 14, would cost to maintain on the British Medical Association minimum diet 22s. 6d. a week. A publication issued by the British Medical Association only last week showed that there has been an actual rise, according to the Association, in the cost of that diet of 4s. in the £ since that original statement was made. Therefore, the actual cost to-day of that minimum diet—which all of us on this side agreed at the time was inadequate really as a proper standard—has gone up to 27s. 4d. This rise has been due to the heavy import duties on foodstuffs. It was emphasised at the time that the British Medical Association diet provided the bare minimum necessary to maintain life.
    A recent investigation which I am going to recommend to the Chancellor for his personal study is described in a document called "A Report on Socialism and the Standard of Living," prepared and published by the Labour party and submitted to the recent National Conference of Labour Women at Leamington. According to that very excellent document, the cost of the British Medical Association diet last November—during the winter months—varied from 28s. to 32s. They collected that information by making studies in different districts. Many of the women engaged in that particular inquiry commented freely on the very

    1747
    poor qualities sometimes obtainable at the prices quoted. In the light of that situation, we consider it iniquitous that the total yield to the Chancellor of the Exchequer of these taxes on the stomach and health should have amounted to no less than £40,750,000 last year; and, with the addition of the increased Tea Duty, and probably a rather larger import of one or two commodities, you can reckon that the receipts the Chancellor will get from food taxes alone in the current year will be not less than £44,000,000. A very great part of that money going into the Chancellor's purse is at the expense of the stomachs and the health of the poorest people of this country. If you take the comparison between the financial year 1930–31 and the current financial year, our Customs impositions altogether, including the taxes on food, have risen by something like £106,000,000.
    I believe the Chancellor has had the matter put to him before, and I daresay some of my hon. Friends may refer to it, so I will not take time to refer in detail again to the very careful, considerate statements which Sir John Orr has made in the past as to what is really necessary if we are to have a fit nation. I do not think anybody is more insistent than he is that, however much you may promote national standards of physical training to secure national fitness, if you cannot have a dietary within the reach of the common people, you will not have an A. 'I nation to face whatever crises the nation comes up against. In the last depression it may be said that while wages fell, they did not fall at the same rate as retail prices fell, that unemployment rose steadily, short-time employment increased, and the standard of life of many sections of the workers was lowered. Since that time it has been a constant struggle for the organised worker, through his trade union, to try and recover the position which he had before the depression, and it is very difficult for the worker to recover that position if every time that he has to purchase his weekly necessities over the counter he has to face this very high and, under this Government, increasing burden of taxation. We are, therefore, only pleading in this respect for justice to the organised worker of the country.
    I am afraid also that unless we can get the second part of our Clause adopted,
    1748
    there is no guarantee that these very heavy food duties will not continuously increase. We have had experience of that already. We have had the constant descent upon the Import Duties Advisory Committee each year, as, for example, at Christmas time, with the demand for a special tax to be put on to keep out the cheap turkey required for the working-class household, which is able perhaps to have a little Christmas festivity; and you will find from time to time that without any prior discussion in this House, as the principal taxing authority, food taxes may be imposed and increased by the outside pressure of vested interests upon the Import Duties Advisory Committee. We hope, therefore, that the Chancellor of the Exchequer, in those circumstances and in the light of the fact that we want to see the country on a real and sound basis of prosperity, will give us the right to take out of the hands of the Import Duties Advisory Committee the power to initiate taxation, before this House has considered it, in relation to foodstuffs.
    There is one last point that I want to make. Some months ago now—I think it was last February—the Prime Minister said that the time was not yet ripe to discuss the proposals of M. van Zeeland in the direction of freer trade. Nearly five months have elapsed since that suggestion was made by the Prime Minister, and I think it is time that we should ask the Chancellor, having regard to the general trade outlook, whether this country is or is not going to give some lead in the direction of this move towards freer trade. We think that if the Government would accept this Clause, it might be some guarantee that on the general question of a move to freer trade between the nations of the world we were to have sympathetic consideration. I understand that at the present time the discussions with the United States for a trade agreement appear to be hanging fire, because of action taken, I am told—I make this statement on information given and not from my own knowledge—partly by the National Farmers Union and partly by the Federation of British Industries. Why do not the Government, in response to our request to-day, help the negotiations by reducing the Ottawa duties upon American products such as wheat, fruit, etc., in return for substantial reductions, which I believe they would be able to negotiate with the United States, upon our indus-

    1749
    trial manufactures from this country entering the United States? This principle of freer trade with other friendly, democratic countries might be extended to the Scandinavian countries.
    Speaking in the Debate on a similar question in 1936, I think on the Committee stage of the Finance Bill, the present Minister of Agriculture, who was then Financial Secretary, said, in regard to my reference to a revolution in fiscal policy:
    "There has been a change, but it was not a change that happened accidentally. It was a deliberate change inspired by policy and a change which, without transgressing the Rules of Order, I may claim has abundantly proved its wisdom and success."—[OFFICIAL REPORT, 17th June, 1936; col. 1037, Vol. 313.]
    The Government to-day do not adopt the position of the Chancellor of the Exchequer and Lord Runciman, as he now is, in 1931, when they first entered the National Government, that they would not stand for the taxation of food. They take credit to themselves that this taxation of food is a deliberate result of their policy, and they claim that it has been a success. We submit, on the other hand, that in the long run it is an injury to trade, trade taken in the bulk, that it is a wicked encroachment upon the standard of life of the masses of the workers of the country, and that, in the interests both of those workers and of the development of world trade, and therefore of employment and of an increased standard of life, this Clause ought to be accepted.
    4.38 p.m.
    Mr. Sexton: It gives me very great pleasure to support this Clause. The Finance Bill has the effect of evening out the income among the various sections of the community. One of the fundamentals of taxation ought to be that it should be placed on those who are able to bear it, and the criterion of the ability to bear ought to be the residue left for the purposes of life. Therefore, direct taxation seems to me to be the most desirable, because it can be ascertained how much is left. In my opinion, Income Tax is the most equitable form of taxation. Incomes are easily ascertainable, the burden to be borne is ascertainable, and the residue can easily be calculated. To me, indirect taxation is the most undesirable, for it is virtually a hidden tax, and it violates the fundamental of equality of,sacrifice by mulcting the poor on the
    1750
    same basis as the rich; instead of spreading out more evenly the national income, it causes unevenness. Taxation of food means that, by and large, each individual pays an equal sum in taxes, and surely such seeming equity is the very negation of equality of sacrifice, for the poorer classes have infinitely less substance left.
    These impositions of food taxes on people with small, fixed incomes, like widows, old-age pensioners and ex-service men, must lower the standard of life. They have two choices. First, they can buy less of the food which is taxed—and they already get far too little of the food that is necessary for them, as has been pointed out by my right hon. Friend the Member for Hillsborough (Mr. Alexander), when he referred to the reports of Sir John Orr and the British Medical Association—and secondly they can buy the same quantity of food, and then they will have less left with which to buy clothes and other necessities, to say nothing of comforts. It is possible for a family of four people in this country to have an income of £8 a week which is not assessable to Income Tax. The food taxes on those people would amount to about 15s. per head, on the figures quoted by the right hon. Member for Hillsborough, or £3 per year, or a weekly total per family of M. 2d., which works out at 0.375 per cent. of their income. At the same time in this country we could have at other family of four with an income of 21s. a week, whose food taxes would be at least the same, namely is. 2d. per week, more than 6 per cent. of their income, or 16 times as high a percentage as in the case of the higher paid family. What is left? In the first case you have £7 18s. ro10d. per week, and in the second case 19s. ro10d., or eight times less per week for those people to live on.
    Those figures are based on the total of food taxation for the past three or four years. The receipts from Import Duties for 1933–34 on food and drink were £5,988,000, for 1934–35 £5,604,000, and for 1935–36, £6,321,000; receipts from the Ottawa Duties in the same three years were 1933–34 £7,704,000, 1934–35 £7,526,000, and 1935–36 £8,117,000; and the total revenue from food taxes during the past three years, including taxes on feeding stuffs for animals and tea, sugar, and cocoa, were, in 1934–35, £31,265,000, in 1935-–36 £36,259,000, and in the last available year, 1936-–37, no less than

    1751
    £38,381,000. The "Ministry of Labour Gazette" figures of the cost of living show that with the increased and increasing food taxation, the prices of our most common articles of diet are rising. During the last four years we have had increases in prices as follows: Streaky bacon 3¼ d. per lb., flour 9½d. per stone, bread 2½d. per 4-lb. loaf, tea 4¾d. per lb., milk i1d. per quart, butter 1½d. per lb. fresh and 2½d. per lb. salt, cheese 1d. per lb., potatoes 62½d. per stone, and so I could go on. As these food taxes go up—and they have gone up—so fixed incomes like old age pensions, widows' pensions, and ex-service men's pensions, decrease in purchasing power, and in 1937, for the same money as was spent in 1933, only four-fifths of the quantity of food can now be purchased. Because these people with fixed incomes cannot afford a lower standard of life, as they are already below the poverty line, and because a great country like this cannot afford to plunge its deserving people farther down into the depths of poverty, I have great pleasure in supporting the proposed new Clause.
    4.44 P.m.
    Mr. Holdsworth: I think anybody taking his mind back and reading over the history of this House would never believe that we could have had such a small gathering when we were discussing such a vital thing as the taxation of the food of the people. It shows a really remarkable change in the attitude of this House when we can treat almost with indifference what, to my mind, is one of the most vital changes in the whole of our fiscal system. I want to make an appeal to the Chancellor of the Exchequer. During the whole of his political life he has called himself a Liberal, and, as far as I know, he has always been opposed to the taxation of food. I cannot help but think of the phrase "the free breakfast table," and it almost seems ironical that a Chancellor of the Exchequer of the Liberal persuasion should find it possible to get up and oppose a Clause of this nature. At a certain conference during last week it was shown how essential it was to keep in being the Liberal principles throughout the world. One of the first good principle is the freedom to purchase food at its cheapest cost in order to enable the people to enjoy the fullest and most
    1752
    healthy life possible without having to bear the terrible burden of food taxes. Taking my mind back to the great protagonist in this country of the change in our fiscal system, Joseph Chamberlain, almost the arch-Protectionist over the past 500 years, I cannot remember that he ever suggested that there should be taxation of the food of the people. It was always the maxim of those who believed in tariff reform that we should not tax raw material industrially, but, surely, the last thing that we ought to tax is the raw material of life itself. I suggest that the Chancellor of the Exchequer should listen with some sympathy to the case for this new Clause.
    I cannot help being struck by the effect of these taxes on the unemployed, particularly those who are relying upon the Unemployment Assistance Board for their very existence. I remember that during the Debates on the Unemployment Insurance Act in 1934, when we were discussing the basis of payment to people after they had got through what they were entitled to draw under ordinary unemployment insurance, the idea was to give these people just sufficient to enable them to live. It is doubtful whether it even does that, when one considers their position after a period of unemployment and they have drawn their insurance benefit for six months. There is a rising tide of people who have been unemployed for 12 months and longer, and to those very people to whom we give what we 'consider to be the lowest sum in order to enable them to live, we go and say, "Not content with seeing you in a position of mere existence, we are going to take a little from your small and inadequate sum in order that you can fulfil the patriotic duty of helping to keep the State going." I sometimes think that they must nearly scream when they hear that sort of nonsense.
    I have read with a good deal of interest many books during the past year or two as to whether the people of this country are getting sufficient nourishment or not. Some of the figures, I believe, are exaggerated, but it is undoubtedly true that there are large numbers of people who are really not able, because of the smallness of their incomes, to purchase the food they require. I believe that it is stated that there are 18,000,000 or 19,000,000 people who are not getting

    1753
    adequate nourishment. I listen with a good deal of interest to a lot of this talk about keeping fit. I listen sometimes almost with amazement to the hon. Lady the Member for Sutton (Viscountess Astor), who is always telling me that it is not because people cannot buy the proper things, but because the working folks of this country do not know what to buy and how to cook it. I would say to the Noble Lady and to the Committee in general that the working people of this country would know what to buy if they had the money with which to buy it. To take, as the hon. Gentleman who preceded me said, a sum of almost £40,000,000 out of the pockets of the wage-earners and deprive them in many cases of the real source of nourishment, and then in the next breath to appeal to them to link themselves with some keep-fit campaign is the height of political absurdity. If we enabled the people really to get the food at the cheapest possible price which would give to the producer adequate recompense for his labour, we should be doing far more to produce a really fit nation than anything that we can do by setting up a large number of classes and that sort of thing.
    It is usual in these Debates for the Minister to get up at that Box and say, "There is something to be said for all this, but in the year 1931 the price of hay was so-and-so, and now it is a bit less." That sort of argument cuts very little ice with me. My contention against food taxation is not merely based upon a comparison as between one year and another, but upon the fact that you are with deliberate intent making the food of the people dear. That I believe to be a wrong principle. I suggest to the Chancellor of the Exchequer that the best way of getting a healthy nation is to allow the ordinary folk who make up the greater part of the nation to obtain real and adequate nourishment at the cheapest possible price. It is a mistake to tax the vital things which we need. I know that milk is not taxed, but it is in effect, with all these wonderful schemes that you have in regard to meat and butter. My wife told me the other day that even the prices of vegetables almost made them prohibitive to the working classes. I suggest that one of the greatest signs that the Chancellor of the Exchequer can give to the Committee of his belief in Liberalism is to help to carry out the old principle
    1754
    of the free breakfast table. I support the new Clause.
    4.53 P.m.
    Mr. David Adams: One would have imagined, in listening generally to the discussions which have taken place in the country on the question of national fitness, that the entire.Committee would have been with the proposers of this new Clause. It is certain that if the Clause were submitted to the workers of the country it would be universally accepted. It is an extraordinary commentary upon a Government who persist in describing themselves as a National Government that they should continue to tax the food of the people. There is no direction in which one can turn without attention being drawn to the condition of the people. While the housing problem is being dealt with on national lines, the problem of the condition of the people, as far as their nutritional and health standards are concerned, is still left in abeyance, and, in fact, it is not only neglected but the problem is deliberately accentuated by the National Government. It was interesting to notice that at the last meeting of the British Association some of the leading scientists dealt with the question of the nutrition of the British people and demanded redress. The leading members of the Church of England, Nonconformists, economists, nutritional experts and the National Fitness Campaign are all directing attention to the conditions of the people.
    Last Friday's Debate upon the Report of the Unemployment Assistance Board forced public attention very specifically to the problem and no doubt the Government are paying some attention to the matter, seeing that it was to a large extent the voice of hon. Members on the Government side of the House more particularly. The right hon. Gentleman the Member for Sparkbrook (Mr. Amery), who has been a Cabinet Minister, and was First Lord of the Admiralty in a previous Government, directed the attention of the Government to the necessity of family allowances. He did so on the ground that that is an urgent protective measure against outside pressure and influences, such as food taxation, if you are to preserve the population of the future and the health of the nation at large. It was shown that no less than 23 per cent. of the workers are in receipt of 45s. or

    1755
    less; that 47 per cent. receive 55s. or less; and that no less than one-third of the working population are without the necessary resources to maintain themselves and their families in a state of nutrition and health. The report of the Unemployment Assistance Board indicated that in parts of County Durham there was a substantial number of the population whose weekly earnings were 4os. or less.
    What possible justification can the Government have in maintaining this intolerable burden upon the masses of the people? Mr. Seebohm Rowntree has shown us that not less than 55s. per week for a family of five is required to maintain a proper state of physical efficiency, and for rural workers 43s., assuming that a modest amount is expended upon rent and kindred outgoings. As I have pointed out, one-third of our population are in so depressed a condition that they are quite unable in a normal way to purchase the requisite foodstuffs for themselves and their families. I suppose that it is not disputed by the Chancellor of the Exchequer that £38,000,000 or £40,000,000 is in this way taken from the pockets of the industrial workers of the country. It is true that, while the cost of living can be overtaken by certain trades by wage agreements, the great mass of the people are excluded from the beneficent operation of such arrangements and their wages are not raised in harmony with the increased cost of living.
    It is futile for the Government to anticipate that their fitness campaign can be successful unless they direct their attention to the question of the food of the people. One might say further that, in addition to the taxation of food, the quota system and the exclusion of a considerable proportion of our foreign trade has meant a lessening demand for our coal and other products. Our mining population has particularly suffered, in the first place because the price of their foodstuffs are affected, and further because the production of coal is restricted. It is imperatively necessary, if we are to fulfil our obligations to the day in which we live, for the Government to take steps to deal with this situation. It cannot be said that there are not abundant directions in which they could raise the taxes they require. The National Defence Contribution has not brought in
    1756
    the amount of money that was contemplated, but one does not hear any suggestion from the Government of an increase of tax in that direction. One could point out different directions in which revenue could be raised—the Super-tax, Death Duties and a diversity of ways.
    The taxation of food should be the last extremity. It was hit upon by a reactionary Government, which was returned under conditions unprecedented in the history of the country. In 1931 the country was given to understand that taxation of this character would not be introduced before the most careful examination had been made, but no such examination has been made. It is, therefore, the duty of the Chancellor of the Exchequer to retrace the wrongful step taken by the Government and, in the general interest, to support the new Clause.
    5.3 P.m.
    Mr. Ridley: The right hon. Member for Hillsborough (Mr. Alexander) has delivered such an excellent speech that all that remains for other hon. Members to do is to attempt to underline one or two of the points that he raised. There are three points that I should like to underline. The first point is the effect of these duties on the existing stagnation of world trade. There must have been on the part of the Government some faint recognition of that fact, when they joined with the French Government in inviting M. van Zeeland to undertake an examination of the position. In the report of M. van Zeeland it is clear that everywhere there was a similar recognition of the evil that exists, but everywhere there was a similar reluctance to do anything courageous. In the matter of trade stagnation and in other correlated matters the world is waiting for a lead. One of the most important results of the adoption of this new Clause by the Government would be to give to the world a new hope of some economic recovery, because we should have begun to break down those tariff barriers which year by year have grown higher and higher and have made it more and more impossible for world trade to climb over them and for the ordinary channels of exchange to flow as freely as before.
    The second point is the contribution which these duties make to what we regard as the iniquitous balance of taxation.

    1757
    The hon. Member for Oxford University (Sir Arthur Salter) congratulated the Government, the other night, on the fact that the proportion of indirect taxation to direct taxation was steadily falling. That note of congratulation ought to have been conditioned a little by a further explanation of the facts of the case. It must not be assumed that indirect taxation is falling in quantum as it is falling in ratio. It is falling in ratio because of the increase of the ratio of direct taxation, but the quantum of indirect taxation has grown year by year under conditions for which this Government have been responsible, and it will need to fall a great deal further than it has fallen in ratio before it reaches the ratio which existed during the time of the Labour Government in 1930–31.
    The third point is the effect of this form of taxation on the lives of the low wage earners and the unemployed. I wish we could make the comfortable living people realise what sort of lives we are condemning millions of our people to experience and endure. It is no exaggeration to say that on the inadequate allowances provided by the Unemployment Assistance Board we are compelling between 2,000,000 and 3,000,000 of people to live a sub-standard life; a life which is steadily lowering their physical capacity and steadily lowering their capacity for disease resistance. We are extracting from their meagre incomes by import duties not less than £20,000,000 to £25,000,000 a year, taking it from their incomes not in mathematical proportions, but we are taking out of their daily diet, a pint of milk, a loaf of bread and an orange for their children. The removal of these import duties would in some families do something considerable to lift this sub-standard life that we are compelling them to endure, and would give them a chance to buy necessities a little less inadequately than is now the case under the allowances granted by the Unemployment Assistance Board.
    5.8 p.m.
    Mr. W. Joseph Stewart: The reason I intervene is to ally myself with my colleagues against this indirect taxation, which is interfering to an appreciable extent with the standard of living of our people. I was interested in reading a few weeks ago the report of a meeting, held in London, of physical instructors in
    1758
    our elementary schools. The great concern of the instructors was the fact that the physique of the children attending our elementary schools does not reach the standard that it ought to reach. In many instances it had been found necessary to set aside boys and girls so that they should not take part in physical exercise because they had not reached the required standard and, obviously, were suffering from malnutrition.
    At the close of the War I remember going through a summary of the findings of the various medical boards who, in summing up their examinations, stated that there was only one man in every nine presenting himself for medical inspection who was perfectly fit. The result was that at that time we concentrated on the physique of our people with a view to raising our manhood from a C3 to an Ar1 category. In the process we were willing to spend millions of pounds. Although we were prepared to do that in those days, by imposing duties on foodstuffs the Government have interfered with the standard of living of our people and prevented them in many instances from having sufficient quantities of food in tens of thousands of homes. The housewife, it will be readily admitted, is more acutely affected than anyone else by a rise in prices. Every rise in the price of necessaries adds to the housewife's work and to the degree of worry, which she cannot pass on to anyone else.
    In working-class homes a rise in food prices without a corresponding rise in wages means that something must be done without. If the same amount of food is to be bought, nothing can be spared for household replacements. When the income is already so low that expenditure on food and other things is limited and cut down to the lowest minimum, a rise in price generally means that the only thing to do is to buy less food, and that adversely affects the household. The effect of high prices on the unemployed and the old age pensioners has been referred to. Those with fixed incomes, those who are recipients of unemployment benefit, and those who come under the Unemployment Assistance Board, together with those who receive Poor Law relief, are the people who are the greatest sufferers.
    In Durham County, owing to insufficient income going into homes which are

    1759
    further penalised through the rise in prices, we have to pay in Poor Law relief to 52,000 persons no less than £1,690,000 this year. To old age pensioners, upon whose necessaries of life import duties are having a serious effect, we have to pay, in the case of 10,000 people, approximately £4,000 a week to help them to live. Apart from this expenditure, for the provision of dried milk to nursing and expectant mothers and liquid milk to children in our elementary schools, we have to spend another £50,000 or £60,000. We are seeking to do that in Durham in order to help our people to maintain a decent standard of living, so that they will not deteriorate physically, but at the same time the Government, by indirect taxation, are deliberately working in the opposite direction. By these Import Duties they are seriously affecting the health of our people and undoing the work that we are seeking to do.
    There is very great concern and alarm at the substantial rise in the indirect taxation levied on things which people need. Indirect taxation has been increased much more than direct taxation on income. In 1931–32 it represented 34.12 per cent. of the revenue, and in 1936–37 it represented 40.29 per cent. of the revenue. It means a shifting of the burden of taxation from the well-to-do to the working classes, who have to pay this taxation in higher prices in the shops. It has been said that since 1932 no less than £109,000,000 has been raised by new food taxes imposed by the Government under the Import Duties Act of 1932, by the Ottawa Agreements and by the Irish Free State Special Duties Act. From 1932 to 1937 under the Import Duties Act, which covers meat, dairy produce, fresh fruit and vegetables, fish, dried fruit and other things, no less a sum than £32,374,000 has been raised in taxation. The Irish Free State Special Duties on live cattle, meat, butter, eggs and cream realised during the same five years £43,000,000, and the Ottawa duties upon wheat, butter, cheese, eggs, condensed milk and fruit realised L£32,000,000. The beef duties imposed in 1936 realised for the first three months £541,000. That is a total of £109,697,000. In addition there is a revenue tax on tea, imposed in 1932.
    The Deputy-Chairman: I think we had better keep to the articles of taxation which are directly covered by the new Clause.
    Mr. Stewart: Housewives, therefore, since the beginning of 1932 have paid more than £132,000,000 across the shop counter in additional food taxes. The amount for the year 1936–37 was approximately £28,750,000, or nearly 12S. 6d. per head of the population. I submit that if import duties are imposed on poor households with a limited income, without any increase in wages, they are going to have a deterimental effect upon the physique of our people and will militate against the best interests of the nation.
    5.20 p.m.
    The Financial Secretary to the Treasury (Captain Euan Wallace): We have listened to six speeches on this new Clause, and it may be for the convenience of the Committee if I intervene now for a short period; it may perhaps enable the Committee to come to a decision on this matter and proceed to the great mass of business which is before us to-day. This Clause, or something analogous to it, has now been put on the Order Paper for five years running. In 1934 and 1935 it was discussed on Report stage, in 1936 on the Committee stage, last year the Chairman did not select it, and this year its scope has been widened to include the Ottawa Agreements Act of 1932, as explained by the right hon. Gentleman who moved it.
    The first difficulty which stands in the way of accepting the new Clause is a very real and serious difficulty of interpretation. Many substances, for example various grains, oils and foodstuffs, which can quite well be used as, or made into, food are in fact used for industrial or other purposes. Glycerine, for instance, can be used for explosives or for making sweets, barley can be used for cattle food or for distilling a beverage which by some may be regarded as an important human food. Vegetable oils can be used for washing in the form of soap, or for eating in the form of margarine, and hon. Members will know that there are alternative uses in the case of potatoes and rice. Milk itself is the source of an important industrial material known as casein, which is used for plates, cups, combs and umbrella handles.

    1761
    If the Clause were applied to all substances which can be used as foodstuffs, it would exclude from consideration under the Import Duties Act many substances which are in fact used for other purposes, like glycerine, potatoes, barley, rice and vegetable oils. If, on the other hand, it is in the minds of the Movers of this new Clause that it should be limited to products actually used for human consumption, I must explain that the Customs cannot at the time of importation make sure of the use to which any particular import is going to be put except by a burdensome and expensive form of control. Therefore the Committee is up against a formidable difficulty of interpretation. I quite admit that these practical difficulties, serious as they are, ought not to stand in the way of the removal of a genuine and widespread grievance, if in fact there is one. I want, therefore, to ask the Committee to consider two questions—first, whether the increase in the cost of food since the War is disproportionate to the general alteration in the value of commodities in terms of pounds, shillings and pence, and, secondly, whether the adoption of the proposed new Clause would in fact reduce materially the cost of living to the working people of the country.
    As regards the first question, the cost of food is not in fact so high to-day compared with pre-war levels as other items in the working-class budget. The cost-of-living index for 1st June shows an increase of 55 per cent. over July, 1914, for all items, but the increase is only 38 per cent. for food. That, I think, disposes of the first question. The second point is whether the increase in prices which has taken place in the last 12 months can be attributed to the operation of the Import Duties Act or the Ottawa Agreements Act, both of which were passed in the year 1932. Although we have made one or two minor adjustments, for instance in the duty on peppercorns and in an extension for a fortnight in the duty on foreign tomatoes, it is substantially true to say that no new import duties have been imposed on food during the last 12 months.
    I say with all respect to the right hon. Gentleman who moved the new Clause that in the view of my right hon. Friend and of hon. Members on this side of the Committee, comparisons in the cost of living in a working-class budget which
    1762
    start from the bottom of the depression are of no practical value. We had a long Debate before Christmas on this matter and in another capacity I endeavoured to establish the contention, I am afraid not to the satisfaction of hon. Members opposite but I believe to the satisfaction of people in general, that the fairer point of comparison with the conditions obtaining to-day is the year 1929, and if that datum line is taken it is true to say that the cost of living has not risen.
    There is another important point. The right hon. Gentleman opposite and most hon. Members who have followed him have advocated the acceptance of this new Clause as something more than a matter of expediency, something more than relieving, as they put it, some sections of the community from certain taxes on food. I understood that they advocated it as a matter of principle. The hon. Member for South Bradford (Mr. Holds-worth) at any rate spoke strongly in favour of a free breakfast table. I must therefore make it clear that this new Clause, if it is passed, is not going to provide a free breakfast table or anything like it. It deals with two specific forms of taxation on food, but there are many articles of general consumption which would not be affected if we accepted the new Clause. It does not touch the revenue duties on tea, cocoa, coffee, sugar and dried fruit, which are responsible between them for about £20,000,000. It does not touch the duties on foreign beef and veal under the Act of 1937 which come to about £3,500,000. In addition it does not, of course, touch the considerable range of foodstuffs already free of duty, which include meat (except foreign beef and veal and canned meat), bacon and all food products from the Dominions, except those which are subject to revenue duty. Hon. Members should realise that to-day over half of our butter, three-quarters of our meat, go per cent. of our cheese, two-thirds of our eggs in shell, the bulk of our vegetables as well as much of our fruit, pay no duty at all.
    Therefore, if we accepted this new Clause we should really produce an extremely anomalous position. The beef and veal duties and the revenue duties would remain, and of the £39,000,000 odd which should be collected from food taxes this year—the right hon. Gentleman said £44,000,000 but he did not allow for the disappearance of the Irish Free State

    1763
    duties 'which have now gone—only about £14,000,000 would be affected; and I would remind the Committee that, as the Ottawa duties cannot be reduced without the consent of the Dominions, we should, in order to achieve even that limited result, have to denounce both the Ottawa Agreements of 1932, and the Agreement which was made with Canada as recently as 23rd February, 1937.
    Mr. Holdsworth: Are we to understand from the right hon. and gallant Gentleman's speech that if the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) will withdraw the Amendment, the right hon. and gallant Gentleman will bring in a more comprehensive Clause taking off all the duties:
    Captain Wallace: I can only say with all respect that if the hon. Gentleman or anybody else has got that impression, he must have got into a profound fog. The denunciation of those agreements would lose us, of course, all the advantages which our trade in the Empire derives from them—that is a subject which I cannot discuss fully now. It would, moreover, deny to our home producers of food any chance of protection either now or in the future against foreign competition; it must be remembered that that is an advantage which is gained already from the Ottawa duties, and can also be achieved by means of the valuable weapon which is available to us through the Import Duties Act.
    The loss of revenue that would be involved by this proposal would be L£14,376,000. I think the Committee will appreciate that, whatever arguments may be adduced in favour of this Clause in theory, my right hon. Friend is not, in present circumstances, in a position to give up that amount. When there is added to that the fact that the acceptance of this Clause would mean serious anomalies in food taxation, and the denunciation of our agreements with the Dominions, with consequent damage to our export trade and to home producers of food, and when on the other side there is no evidence whatever of a compensatory advantage, since no one has succeeded in proving that the existence of these duties has had a material effect on the cost of living, I think the Committee will realise that this Clause is one which we shall have to ask them to reject.
    5.33 P.m.
    Mr. T. Williams: I think the right hon. and gallant Gentleman the Financial Secretary found himself in a profound fog. He said that he could not accept the proposed Clause for one or two reasons, which he explained very clearly. He emphasised the anomaly that would be created if we abolished duties on food amounting to approximately £14,500,000, but left taxation of £26,000,000 upon tea, coffee, cocoa, sugar, beef and so on. He said that the new Clause would have disastrous effects upon home agriculture, since the advantages of protection to it would be entirely gone. What apparently the right hon. and gallant Gentleman did not notice was that neither the Ottawa Agreements nor the Import Duties Advisory Committee was responsible for the duty upon beef. The same Parliamentary machinery that was used in that case could be used if it was desired to provide further protection for any other section of the agricultural industry. Therefore, that argument, which may have appeared to be a fairly sound one to agriculturists, was really not as solid as the right hon. and gallant Gentleman made out.
    Another argument which the Financial Secretary used was that if we could not dispose of all the duties on foodstuffs, why should we bother about disposing of some 35 per cent. of those duties, since that would create an anomalous position? But I feel that the items referred to in the Ottawa Agreements are so vital and fundamental from the point of view of nutrition that they cannot be ignored by the Financial Secretary and the Chancellor of the Exchequer. I appreciate the danger of denouncing the Ottawa Agreements, but the right hon. and gallant Gentleman and his right hon. Friend know that hon. Members on this side, from the time when the Ottawa Agreements were originally passed, have never hesitated to oppose the continuance of those agreements, which impose duties upon such foodstuffs as butter, cheese, tea, and one or two other items. I should like to ask the right hon. and gallant Gentleman, apart altogether from the question of the revenue derived from this source, what home agriculture obtains from a duty of 1½d. a pound on imported cheese. The right hon. and gallant Gentleman told us of the Empire butter that is imported duty free, but it is true to say that the duty paid on butter

    1765
    that is imported from foreign countries has a direct effect upon the price of butter imported from various parts of the Dominions. It is fair to assume that if we import 50 per cent. of our butter from the Dominions and 5o per cent. from foreign countries, the imposition of a duty on imports from foreign countries has an effect on the price of every pound of butter which we buy either from the Dominions or from foreign countries. Therefore, that argument of the Financial Secretary does not seem to me to carry much weight.
    It is true to say, as has been submitted in arguments from this side of the Committee, that there are millions of people in this country whose incomes are so small, through no fault of their own, that they cannot buy appropriate quantities of nutritious food, either because of one of two things or because of both—their small income, or the price of the article which they want to buy. I will not quote what has been said by the nutrition experts, but it is generally known that, although the average consumption of butter per person per week in this country is seven ounces, in the lower income categories the average consumption is only about three ounces. Clearly, the income of the home or the price of the commodity determines the quantity of butter which families are able to consume. If there is an absence of butter, which is one of the most nutritious of all foods, there is an absence of that physical fitness which all hon. Members are anxious to get in this country. The same thing applies to cheese. The right hon. and gallant Gentleman told us that 90 per cent. of all the cheese consumed in this country is free from duty. Is there any reason why we should impose a duty on the remaining 10 per cent., apart, of course, from the revenue which the Exchequer derives from these duties, which is perhaps a not inconsiderable item?
    It seems to me that it is justifiable at all times for the Opposition to safeguard the prices of foodstuffs as long as those foodstuffs are so important in the diet of the common people. We have been told that there are 4,500,000 people in this country in whose cases the income is so small that less than 4s. is available for expenditure on food each week. I noticed that in the "Times" yesterday
    1766
    there was a letter from the joint secretaries of the St. Pancras House Improvement Society, Limited, which is responsible for houses in which about boo families live. They stated that, despite the fact that the rents of those boo houses have been reduced materially, the income of a large number of those homes will not permit of the expenditure of 3s. per person per week on food—a figure far below the Rowntree estimate and the figure of the British Medical Association. Although coppers do not perhaps make much difference to people having an income of£10 or£15 a week, they make a vast difference to people in the lower wage categories.
    The only other thing I wish to say with regard to this new Clause has reference to the Import Duties Advisory Committee having further power to recommend to the Government and the House certain forms of taxation on food. I repeat what I have said before, that I do not think the Import Duties Advisory Committee are the appropriate body to recommend taxation upon food. They have no costing system, they have no knowledge of the cost of production of the article on which they recommend that a duty shall be imposed, and they take the figures supplied by the farmers or by the person or persons interested in the production of that commodity. I do not think they are the appropriate body to recommend an increase in the duty on imported tomatoes, potatoes, or any other article. It may very well be that in the case of certain luxury vegetables at certain periods of the year there is ample justification for doing something similar to what was done in the early part of 1932, when the Agricultural and Horticultural Import Duties Act was passed; but broadly speaking, the Import Duties Advisory Committee are not the appropriate body to safeguard the interests of the consumers. I do not think that the interests of the home producer or the taxing machinery of the State would be materially affected if that Committee were deprived of further powers to recommend taxation on food. I consider that on general lines, despite the effect on the Treasury of losing £14,500,000, a not inconsiderable item to them, this new Clause can be justified on the basis of a physically fit nation, and for that reason, I shall support the new Clause.
    Question put, "That the Clause be real a Second time."
    The committee divised; Ayes, 133; Noes, 203.

    Division No. 252.]

    NOES

    [5.43 p.m.

    Aeland, R. T. D. (Barnstaple)

    Harris, Sir P. A.

    Poole, C. C.

    Adams, D. (Consett)

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

    Ridley, G.

    Adams, D. M. (Poplar, S.)

    Heyday, A.

    Riley, B.

    Alexander, Rt. Hon. A. V. (H'Isbr.)

    Henderson, A. (Kingswinford)

    Ripon, J.

    Anderson, F. (Whitehaven)

    Henderson, J. (Ardwiek)

    Roberts, Rt. Hon. F. O. (W. Brom.)

    Attlee, Rt. Hon. C. R.

    Henderson, T. (Tradeston)

    Robinson, W. A. (St. Helens)

    Banfield, J. W.

    Hills, A. (Pontefract)

    Salter, Dr. A. (Bermondsey)

    Barnes, A. J.

    Holdsworth, H.

    Sanders, W. S.

    Betsy, J.

    Hopkin, D.

    Sexton, T. M.

    Ballenger F. J.

    Jenkins, A. (Pontypool)

    Short, A.

    Bann, Rt. Hon. W. W.

    Jenkins, Sir W. (Neath)

    Silkin, L.

    Benson, G.

    John, W.

    Silverman, S. S.

    Bevan, A.

    Johnston, Rt. Hon. T.

    Simpson, F. B.

    Broad, F. A.

    Jones, A. C. (Shipley)

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Bromfield, W.

    Jones, Sir H. Haydn (Merioneth)

    Smith, Ben (Rotherhithe)

    Burke, W. A.

    Jones, Morgan (Caerphilly)

    Smith, E. (Stoke)

    Cassells, T.

    Kelly, W. T.

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

    Chater, D.

    Kennedy, Rt. Hon. T.

    Smith, T. (Normanton)

    Close, W. S.

    Kirby, B. V.

    Sorensen, R. W.

    Clynes, Rt. Hon. J. R.

    Kirkwood, D.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Collindridge, F.

    Lanshury, Rt. Hon. G.

    Stokes, R. R.

    Cove, W. G.

    Lathan, G.

    Strauss, G. R. (Lambeth, N.)

    Daggar, G.

    Lawson, J. J.

    Taylor, R. J. (Morpeth)

    Dalton, H.

    Leach, W.

    Thorne, W.

    Davies, R. J. (Westhoughton)

    Leonard, W.

    Thurtle, E.

    Day, H.

    Leslie, J. R.

    Tinker, J. J.

    Debbie, W.

    Logan, D. G.

    Tomlinson, G.

    Dunn, E. (Rother Valley)

    Lunn, W.

    Viant, S. P.

    Ede, J. C.

    McGhee, H. G.

    Walkden, A. G.

    Edwards, Sir C. (Bedwellty)

    Maclean, N.

    Walker, J.

    Evans, D. O. (Cardigan)

    MacNeill Weir, L.

    Watson, W. McL.

    Frankel, D.

    Mender, G. le M.

    Wedgwood, Rt. Hon. J. C.

    Gardner, B. W.

    Marklew, E.

    Welsh, J. C.

    Gibson, R. (Greenock)

    Marshall, F.

    Westwood, J.

    Graham, D. M. (Hamilton)

    Maxton, J.

    White, H. Graham

    Green, W. H. (Deptford)

    Montague, F.

    Whiteley, W. (Blaydon)

    Greenwood, Rt. Hon. A.

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

    Wilkinson, Ellen

    Grenfell, D R.

    Muff, G.

    Williams, D. (Swansea, E.)

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

    Naylor, T. E.

    Williams, E. J. (Ogmore)

    Griffiths, J. (Llanelly)

    Owen, Major G.

    Williams, T. (Don Valley)

    Groves, T. E.

    Palign, W.

    Windsor, W. (Hull, C.)

    Guest, Dr. L. H. (Islington, N.)

    Parker, J.

    Woods, G. S. (Finsbury)

    Hall, G. H. (Aberdare)

    Parkinson, J. A.

    Young, Sir R. (Newton)

    Hall, J. H. (Whiteehapel)

    Pearson, A.

    Hardie, Agnes

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

    TELLERS FOR THE AYES.—

    Mr. Charleton and Mr. Mathers.

    NOES

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

    Cazalet, Thelma (Islington, E.)

    Dorman-Smith, Major Sir R. H.

    Agnew, Lieut.-Comdr. P. G.

    Cazalet, Capt. V. A. (Chippenham)

    Drewe, C.

    Albery, Sir Irving

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Duckworth, Arthur (Shrewsbury)

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

    Chapman, Sir S. (Edinburgh, S.)

    Dugdale, Captain T. L.

    Allen, Lt.-Col. Sir W. J. (Armagh)

    Chorlton, A. E. L.

    Duggan, H. J.

    Anderson, Rt. Hn. Sir J. (Sc'h Univ's)

    Christie, J. A.

    Duncan, J. A. L.

    Anstruther-Gray, W. J.

    Clarke, Frank (Dartford)

    Dunglass, Lord

    Asshetan, R.

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

    Eckersley, P. T.

    Astor, Viscountess (Plymouth, Sutton)

    Clarry, Sir Reginald

    Ellis, Sir G.

    Astor, Hon. W. W. (Fulham, E.)

    Cobb, Captain E. C. (Preston)

    Emmott, C. E. G. C.

    Baillie, Sir A. W. M.

    Colfox, Major W. P.

    Errington, E.

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

    Colman, N. C. D.

    Evans, Capt. A. (Cardiff, S.)

    Baxter, A. Beverley

    Colville, Rt. Hon. John

    Fox, Sir G. W. G.

    Beamish, Rear-Admiral T P. H.

    Conant, Captain R. J. E.

    Fremantle, Sir F. E.

    Beaumont, Hon. R. E. B. (Portsm'h)

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

    Furness, S. N.

    Bennett, Sir E. N.

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

    Fyfe, D. P. M.

    Bernays, R. H.

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

    Glyn, Major Sir R. G. C.

    Birchall, Sir J. D.

    Cranborne, Viscount

    Gower, Sir R. V.

    Blair, Sir R.

    Crooke, Sir J. Smedley

    Grant-Ferris, R.

    Brass, Sir W.

    Crookshank, Capt. H. F. C.

    Gretton, Col. Rt. Hon. J.

    Briscoe, Capt. R. G.

    Cross, R. H.

    Gridley, Sir A. B.

    Brown, Col. D. C. (Hexhem)

    Crossley, A. C.

    Grimston, R. V.

    Brown, Rt. Hon. E. (Leith)

    Davidson, Viscountess

    Hambro, A. V.

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

    Davies, C. (Montgomery)

    Hannah, I. C.

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

    Davison, Sir W. H.

    Hannon, Sir P. J. H.

    Bull, B. B.

    Dawson, Sir P.

    Harbord, A.

    Bullock, Capt. M.

    De Chair, S. S.

    Haslam, Henry (Horncastle)

    Burton, Col. H. W.

    De la Bern, R.

    Hely-Hutehinson, M. R.

    Gartland, J. R. H.

    Denville, Alfred

    Hepworth, J.

    Cayzer, Sir H. R. (Portsmouth, S.)

    Donner, P. W.

    Herbert, A. P. (Oxford U.)

    Herbert, Major J. A. (Monmouth)

    Mills, Major J. D. (New Forest)

    Simon, Rt. Hon. Sir J. A.

    Higgs, W. F.

    Moreing, A. C.

    Sinclair, Col. T. (Queen's U. B'Irst)

    Hoare, Rt. Hon. Sir S.

    Morris-Jones, Sir Henry

    Smiles, Lieut.-Colonel Sir W. D.

    Holmes, J. S.

    Munro, P.

    Smith, Sir Louis (Hallam)

    Hope, Captain Hon. A. O. J.

    Pleven-Spence, Major B. H. H.

    Smith, Sir F. W. (Aberdeen)

    Hopkinson, A.

    O'Connor, Sir Terence J.

    Smithers, Sir W.

    Howitt, Dr. A. B.

    Palmer, G. E. H.

    Somervell, Rt. Hon. Sir Donald

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

    Peaks, O.

    Somerville, A. A. (Windsor)

    Hume, Sir G. H.

    Peat, C. U.

    Southby, Commander Sir A. R. J.

    Hunloke, H. P.

    Perkins, W. R. D.

    Stanley, Rt. Hon. Oliver (W'm'I'd)

    Hunter, T.

    Peters, Dr. S. J.

    Stourton, Major Hon. J. J.

    Hurd, Sir P. A.

    Petheriok, M.

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

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

    Pickthorn, K. W. M.

    Strauss, H. G. (Norwich)

    James, Wing-Commander A. W. H.

    Pilkington, R.

    Stuart, Lord C. Criohton- (N'thw'h)

    Jones, L. (Swansea W.)

    Ponsonby, Col. C. E.

    Stuart, Hon. J. (Moray and Nairn)

    Kerr, Colonel C. I. (Montrose)

    Radford. E. A.

    Tasker, Sir F. I.

    Keyes, Admiral of the Fleet Sir R.

    Rathbone, J. R. (Bodmin)

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Lamb, Sir J. Q.

    Rayner, Major R. H.

    Thomson, Sir J. D. W.

    Lambert, Rt. Hon. G.

    Reed, A. C. (Exeter)

    Thorneycroft, G. E. P.

    Latham, Sir P.

    Reid, Sir D. D. (Down)

    Titchfield, Marquess of

    Law, Sir A. J. (High Peak)

    Reid, W. Allan (Derby)

    Touche, G. C.

    Leech, Sir J. W.

    Remer, J. R.

    Tree, A. R. L. F.

    Leighton, Major B. E. P.

    Riekards, G. W. (Skipton)

    Turton, R. H.

    Levy, T.

    Ropner, Colonel L.

    Wallace, Capt. Rt. Hon. Euan

    Liddall, W. S.

    Ross Taylor, W. (Woodbridge)

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

    Lipson, D. L.

    Rowlands, G.

    Ward, Irene M. B. (Wallsend)

    Mabane, W. (Huddersfield)

    Royds, Admiral Sir P. M. R.

    Wardlaw-Milne, Sir J. S.

    MacAndrew, Colonel Sir C. G.

    Ruggles-Brise, Colonel Sir E. A.

    Warrender, Sir V.

    Macdonald, Capt. P. (Isle of Wight)

    Russell, Sir Alexander

    Waterhouse, Captain C.

    McEwen, Capt. J. H. F.

    Russell, R. J. (Eddisbury)

    Whiteley, Major J. P. (suckingham)

    McKie, J. H.

    Russell, S. H. M. (Darwen)

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

    Maclay, Hon. J. P.

    Salt, E. W.

    Windsor-Clive, Lieut.-Colonel G.

    Maitland, A.

    Sandeman, Sir N. S.

    Winterton, Rt. Hon. Earl

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

    Samoan, Rt. Hon. Sir P.

    Withers, Sir J. J.

    Markham, S. F.

    Scott, Lord William

    Womersley, Sir W. J.

    Marsden, Commander A.

    Seely, Sir H. M.

    Wright, Wing-Commander J. A. C.

    Mason, Lt.-Col. Hon. G. K. M.

    Salley, H. R.

    Mayhew Lt.-Col. J.

    Shaw, Captain W. T. (Forfar)

    TELLERS FOR THE NOES.—

    Mills, Sir F. (Leyton, E.)

    Shepperson, Sir E. W.

    Major Sir James Edmondson

    and Major Harvie Watt.

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

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

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

    For the purpose of paragraph (b) of this Sub-section all emoluments at any time receivable by, or payable by, the employer in respect of a child in respect of whose training a premium has been paid shall be deemed to be receivable or payable by way of return of the premium, unless and except to the extent that the amount thereof exceeds in the aggregate the amount of the premium.
    (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.—[Mr. Tinker.]
    Brought up, and read the First time.
    5.50 p.m.
    Mr. Tinker: I beg to move, "That the Clause be read a Second time."
    The object of this Clause is that the rebate which is given in respect of children receiving instruction at educational establishments should apply also to young people who are undergoing courses of training in workshops and other forms of vocational training. Our idea is that the term "education" should not be taken as applying only to university education. I give one illustration which was referred to in a previous Debate on this subject. My hon. Friend the Member for Ince (Mr. G. Macdonald) mentioned then that in his own family there were two boys, one of whom was attending Manchester University while the other was being trained for a trade or occupation of a different kind. A rebate was granted in respect of the boy at the university but not in respect of the other boy because he was not in attendance at what is called

    1771
    an educational establishment. There we have a typical instance of how the present arrangement works. It may be said that in that case the parent is receiving the benefit in respect of the one child, but what about the case in which there is only one child who is receiving training of the sort which I now wish to have included? If education means anything at all, it means training in the broad sense and not in the narrow sense of university training.
    We hope that this proposal will receive more recognition to-day than it has met with on previous occasions. The Clause tries to make it clear that proof has to be given in respect of earning capacity. Previously it was argued that young people who were receiving training of this kind might be earning money. We have put into the Clause a provision that the child shall be articled for at least two years and that the emoluments shall not be more than £13 a year. If the child receives more than £13 a year the parent will be excluded from the benefit of the Clause. Last year the Attorney-General and the Chancellor of the Exchequer were both in sympathy with the principle of the Clause but explained that it was a question of cost. Previously the Chancellor had said—I think he made a mistake which he admitted later—that it might cost from £1,000,000 to 12,000,000 per year.
    The Chancellor of the Exchequer (Sir John Simon): Not this proposal standing by itself.
    Mr. Tinker: Afterwards the right hon. Gentleman made it clear that he was referring to the possibility that such a concession might lead to further claims which would bring the figure up to that total. Previous Chancellors have mentioned a figure of about £100,000 a year as the possible cost, but, whatever the figure may be, it appears to me that if we recognise one form of education in this way we ought to recognise other forms as well. I think we have moved on a little since the Act of 1920 was passed and that we are now adopting the broader view that education really means training in almost anything which is for the future benefit of the race. Training on the mechanical side is now recognised as a form of education. It is on those lines that we appeal to the Committee. We have made a
    1772
    similar appeal on previous occasions. When a previous Clause of this kind was discussed, the then Financial Secretary to the Treasury said that such a Clause had appeared on the Order Paper for five years in succession. The proposal which I am now advocating has been on the Order Paper for four years in succession and it is interesting to note the advance which it has made in favour year by year. In 1935, the majority against it was 135; in 1936, it was loo100; and last year it was only 32. So, it would appear that by progressive stages we are educating the House of Commons in the view which we hold on this matter.
    I notice that other hon. Members have a Clause of a similar kind on the Paper. It is not very different from that which I am now asking the Committee to accept. In fact I would not be against that Clause but it so happens that ours has been called first and we hope that those Members who have put their names down to the other Clause will support us. To pass this Clause will be a step in the right direction. It will show the country that we desire parents to give their children all the education possible, and if they can afford it to keep their children, after the age of 16, at schools or at any other establishment suitable for their training. The man who tries to give his children additional education after the age of 16 is doing something not only for the benefit of his family and himself but for the benefit of the State and if the State recognises that fact by giving him a rebate on his Income Tax in the one instance, I cannot understand why other forms of education should be excluded from that recognition.
    We submit this proposal on an educational basis and we believe that if the Committee examine the Clause in that sense they will agree with it. As to the question of cost, I say that a principle like this ought to be accepted on its merits and that the question of cost ought not to enter into the consideration of the matter at all. I ask the Chancellor of the Exchequer to listen to the plea which will, I am sure, be made in favour of this Clause from all sides of the Committee. Last year the hon. Member for Stone (Sir J. Lamb) and several other hon. Members joined in the appeal then made to the Chancellor. Those of us who believe in reforms of this kind go on advocating them year after year. We

    1773
    may be refused what we are asking for, but that does not remove from our minds the thought that what we advocate is right and will be accepted at some time or other. I ask the Committee in this case to grant the concession this year, if it is at all possible to do so.
    6.0 p.m.
    Mr. Ede: Each year since this Parliament has met, I have supported a proposal of this kind and have observed, with my hon. Friend the Member for Leigh (Mr. Tinker), the fact that the Committee is gradually coming round to an acceptance of the arguments which have been put forward, not from this side alone but from all parties. in support of that proposal. I desire to mention one or two issues which were not raised by my hon. Friend. There is no form of education which is less fairly distributed than technical education. One boy may live in a town and may be able to go to a technical school within a few miles of his home to receive his education. Another boy who happens to live in some other county or perhaps in some other part of that county which is remote from a school, cannot get this form of education, and his only way of acquiring technical skill and proficiency in his calling is to become apprenticed to some man in his village or town. It is ridiculous that the father of a boy who goes to a technical school to receive that form of instruction should receive exemption from Income Tax, whereas the father of the boy who is apprenticed does not secure such an advantage. If the question of the small payment which the boy receives is brought into account, it should be remembered that the boy attending a technical school may well receive the same amount as maintenance grant as the other boy receives during his apprenticeship. In many cases, therefore, these two boys are identical in everything except that, owing to the way in which formal educational opportunities are distributed, the one secures the benefit of this exemption for his father and the other does not.
    There is another reason which ought to weigh with the Chancellor. We all deplore the way in which some parents send their boys into what turn out to be blind-alley occupations, merely because there is a comparatively high immediate wage paid when the boy leaves school.
    1774
    The parent who is prepared to look beyond the immediate advantage to the family and to make some sacrifice in order that his boy shall get a thorough training in a useful occupation which will give him a trade in future life, deserves every encouragement that he can receive at the hands of the State. I advocate this proposal also because I believe that we want to make people of this country in all walks of life realise that these youths, whose abilities are mainly mechanical, are just as much an asset to the State as those whose abilities are on the academic, the literary and the mathematical sides. The right hon. Gentleman himself is a distinguished ornament of our university system, and, apart from politics, I am sure we all esteem him very highly in that regard. We could have wished that he could have gone to a better university, but for what it is worth we do realise that even Oxford was unable quite to spoil him.
    Those of us who have had the advantage or disadvantage of a university education ought to be the first to recognise that in this modern complex world those people whose gifts are practical engineering, who apply to metal, wood and other material substances the theories that are taught in institutions of learning, are equally with us citizens of this country and entitled to be held in honour if they are applying their particular gifts to the problems of to-day and to the maintenance of this complex civilisation of which we and they are both parts. Anything which seems to put these people into an inferior category is wrong to-day when, more than at any other time, it is essential that we should emphasise the fact of their equal importance in the State with people whose minds run on theoretical and general lines. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) has said that the late War was an engineers' war. Judging by what we can see going on around us on that side alone, the practical engineer is as important a man to-day as he was in 1914–18, and anything that we can do that will convince the people of this country that a person whose gifts are in the application of theory, even although they do not understand the theory, is equally important with the person who invents and teaches theory, is a good thing for the solidarity of the State.

    1775
    The hon. Member for Hitchin (Sir A. Wilson), the hon. Member for South Salford (Mr. Stourton), the hon. Member for South Croydon (Mr. H. G. Williams), the hon. Member for Colchester (Mr. Lewis) and certain other hon. Members have on the Paper a new Clause which, I understand, achieves the same purpose as this Clause, except that it is in a different form of words. I had hoped that that would convince the Chancellor that this is not a matter which can be debated in the Committee in any party spirit, or that it is not put forward with any desire to benefit any particular class. It should be evidence that a feeling in favour of this proposal has spread in the Committee and that if he could make this concession he would be meeting the general view. If last year, when the majority for the Government on this issue fell to 32, it had been left to a free vote of the Committee, the new Clause would have been carried. I do not think that anything has happened that can alter the opinion of the Committee this year. If the right hon. Gentleman does not feel that he can give us the concession, I hope that he will leave it to the free vote of the Committee. The amount of money involved is so trifling that the right hon. Gentleman cannot plead that it would upset a Budget of r£1,000,000,000 to give a concession which, at the most, could not cost more than £2500,000.
    If the argument is that if he gives way this year someone will ask him to give way next year on something else, or to make an extension, our experience on this side of the Committee is that the right hon. Gentleman has sufficient courage to refuse a concession when he does not want to give it; and I cannot see why a concession to argument this year should weaken him in any position he may have to adopt next year. I can think of no reason that can be adduced against this Clause that we have not heard in previous years. The Division last year indicated that the Committee, although it gave the Government a majority, was not convinced on the arguments that our case could be disproved. I hope, therefore, that to-day the right hon. Gentleman will find it in his heart to give the Committee—not my hon. Friend and those whose names are associated with him, but the Committee —the concession which three or four years
    1776
    of steady argument show it is entitled to receive.
    6.10 p.m.
    Sir J. Simon: I have personally taken a good deal of interest in this subject. I remember very well the discussion last year, and I am impressed by what has been said to-day. If I feel difficulty about it, it is not for want of any appreciation of much of the reasoning that has been adduced. I have been responsible this year in the Budget and the Finance Bill for increasing very substantially the total charge of Income Tax, and I felt that it was very necessary to consider how to ensure that that increase should not bear with too great hardship on the smaller Income Tax payer. The Committee will recall that the form which the relief took was that the first £135 after exemptions and abatements would be charged, not at one-third of the standard rate as had been done previously, which would have amounted to is. io10d., but at Is. 8d. That is, of course, a very material relief for the smaller Income Tax payer, and I justify it and defend it. It means relief in the sort of household of which the hon. Member for Leigh (Mr. Tinker) and the hon. Member for South Shields (Mr. Ede) have been speaking. It means that instead of paying a tax of is. 10d. on the first £135, they are to pay is. 8d. That is to that extent a relief to them which I am very glad to have been able to make. It is very material because it leaves some 2,000,000 taxpayers out of 3,500,000 unaffected by the increase.
    I regard this as a thing that we should discuss together, although the responsibility is that of the Chancellor of the Exchequer. It would never be right for me to throw a question like this at the Committee, for I am answerable in the sense that some other people are not for making the accounts balance and meeting the bills of the country. Before deciding to give this relief I surveyed the whole series of proposals that were made last year and the year before for the relief of the small Income Tax payer, and I came to the conclusion that on the whole the course that would do most good would be to keep the charge at is. 8d. for the reduced zone of income.
    At the same time, I must say that this particular corner of Income Tax law dealt with in this Clause gives me some concern because I entirely share the view

    1777
    that you do not want to draw a distinction between relief for one kind of education and relief for another. The proposal that was adopted some years ago by which the relief in respect of children did not stop, as it originally did, when the child became 16, but went on after the child continued in a school or college or the like for educational purposes, applied both for purely vocational training in a technical college as well as to literary training. The fact remains that, although it is not quite the same thing, I should very much like, if I could, to include the youth who is going through the ordered system of apprenticeship and is not bringing into the home anything more than a mere token amount, which, after all, is in some respects a very analogous case. It means in that case, as in the other, that probably there is a parent who is making a sacrifice for the future of the young man or young woman, instead of allowing the son or daughter to take some occupation which would give them some pocket money for a few years but leave them without any real permanent means of livelihood.
    My difficulty in meeting these cases has really been that there is a distinct risk, I will not call it a danger, that if I make this concession I shall immediately have a whole number of cases like it pressed upon me in their turn as deserving of concessions, and find myself pressed to give away revenue which I really cannot afford to relinquish; but my own wish is to meet this "corner" if I possibly can. I could not accept the words of this new Clause without examining them very closely, but if I am given the opportunity I will see whether it would be possible, without sacrificing too much of the revenue which I must preserve, to find some suitable form of words to meet the case of the young apprentice who is not bringing into the home any substantial income but who is really carrying out his own education in a mechanical or engineering sense more or less analogous to that of the youth receiving other forms of education.
    If I may be allowed to say so, I admire the pertinacity and the reasonableness with which my hon. Friend the Member for Leigh has tackled this question year after year. I have long been of opinion that there was a great deal of force in what he said, and my only reason for re
    1778
    sisting was that I did not see how we could afford the concession or, if we granted it, how we could stop any extension, and I would call upon hon. Members now not to use this concession hereafter as a reason why I should give all sorts of other concessions.
    Mr. T. Smith: Does the statement of the right hon. Gentleman mean that between now and Report Stage he will give this matter consideration and if possible put down a suitable form of words?
    Sir J. Simon: Yes, that is what I mean. I must look at the question with my advisers and if I can see a way of framing a watertight Clause which does not give away too much money I shall put clown that Clause.
    6.19 p.m.
    Sir Patrick Hannon: I think it ought to be said from this side of the Committee how much we appreciate the statement which the right hon. Gentleman has just made. Many of us who have had a good deal to do with the promotion of educational facilities for working-class people in the past have felt deeply the points made by the hon. Member for Leigh (Mr. Tinker) and the hon. Member who seconded his Motion. In this House our sympathies are always on the side of widening the opportunities for the children of the wage-earning class to reach the highest possible level of education, and I think the undertaking given by my right hon. Friend will receive sympathetic support throughout the whole country. The question has been debated upon every Budget for several years, and the news that the Chancellor is going to give it consideration and to see whether there is a possibility of meeting the request will give just as much satisfaction to Members on this side of the Committee as on the other.
    Mr. Tinker: After what has been said by the Chancellor of the Exchequer I beg to ask leave to withdraw the Motion.
    Motion, and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Extension of s. 19 of Finance Act, 1920.)
    Section nineteen of the Finance Act, 5920 (which, as amended by Section twenty-two of the Finance Act, 1924, and Section eight of the Finance (No. 2) Act, 1931, makes provision for a deduction in respect of relative

    1779
    or other person taking charge of widowers' or widows' children or acting as housekeeper), shall be extended so as to apply to a person resident with an unmarried person in the capacity of housekeeper, and in the said Section the expressions "widower" and "widow" shall be deemed to include, respectively, a husband living apart from his wife and a wife living apart from her husband.—[Mr. G. Griffiths.]
    Brought up, and read the First time.
    6.20 p.m.
    Mr. George Griffiths: I beg to move, "That the Clause be read a Second time."
    We are very desirous that the Chancellor of the Exchequer should give the same consideration to this Clause as he has promised to give to the Clause put forward by the hon. Member for Leigh (Mr. Tinker) which has just been under discussion. In this case we feel that there is a real hardship upon certain people, and we want to remove that hardship. The Clause says that Section 19 of the Finance Act, 1920, shall be extended
    "to a person resident with an unmarried person in the capacity of housekeeper, and in the said Section the expressions "widower" and "widow" shall be deemed to include, respectively, a husband living apart from his wife and a wife living apart from her husband."
    I see the hon. Member for Oxford University (Mr. Alan Herbert) in his seat. We have been told by the Press that the operation of the new Act dealign with divorce will mean that there will be more husbands and wives not living with each other, and they may require somebody to look after their children. The meaning of this new Clause is that if a man living apart from his wife has got a housekeeper he shall be regarded, as far as this question of Income Tax relief is concerned, as in the same position as a man whose wife is living with him, or as a widower who has a widow or spinster living in the house to look after the home and the children. I think the Chancellor of the Exchequer will see the force of this request. There is no doubt that people in this position have a grievance. A man has a housekeeper to look after the children but cannot get any relief from taxation in respect of that housekeeper. I shall not waste any more time in addressing the Committee, but I hope that someone else who will help me out in this matter may bring persuasive powers to bear on the Chancellor of the Exchequer
    1780
    in order to melt his hard heart, so that instead of shaking his head he will say, "I give in."
    6.24 p.m.
    Captain Wallace: I dare say the Committee will have realised that it is not possible for my right hon. Friend the Chancellor of the Exchequer to adopt the same attitude to this new Clause as he did, to the general satisfaction of the Committee, to the last Clause.
    Mr. G. Griffiths: It is only a little matter.
    Captain Wallace: It is not so little as the hon. Member thinks. This is a proposal to extend the housekeeper allowance of £50 in two directions, first to unmarried persons and, secondly, to husbands and wives living apart. Under the Finance Act of 1920 the housekeeper allowance was confined to a widow or a widower with young children and to an unmarried person maintaining a widowed mother or other female relative to look after his young brothers or sisters. This was in accordance with the recommendations of the Royal Commission on Income Tax of 1920. Each year following the grant of this housekeeper allowance demands were made in this House and outside it to have that allowance extended to widowers and widows without children, but those demands were unsuccessful until the year 1924, when the then Chancellor of the Exchequer, who was a Member of the party opposite, decided to extend the allowance, increased from £45 to £60, to cases where there were no young children.
    That change, which was effected by Section 22 of the Finance Act, 1924, has, perhaps not unnaturally, opened the door to further demands of the kind which the hon. Member for Hemsworth (Mr. G. Griffiths) is now making, namely, that the allowance should be available also to an unmarried person or to a husband and wife living apart. I think the Committee will appreciate that if we once go beyond the present position there is no logical stopping-place whatever, and that in this form of relief the admission of one claim only serves as a stepping stone to another. The case of a widower or a widow without children can to some extent be distinguished from that of the unmarried person on sentimental grounds—and sometimes we do pay attention in

    1781
    this House to sentimental grounds. I have not the slightest doubt that individual cases of hardship could be adduced by hon. Members in all parts of the Committee in support of this particular concession, but I must remind the Committee that the personal allowances which Income Tax payers enjoy cannot be extended so as to cover all individual cases of hardship. These allowances purport to be allowances for the general body of taxpayers, and they must be judged by reference to the general case and not by reference to the particular individual case.
    Actually, there is perhaps less reason for making this particular concession this year than there has ever been before because, as my right hon. Friend the Chancellor pointed out in dealign with the last new Clause, the smaller Income Tax payers this year, 2,000,000 people out of the 3,500,000 liable to Income Tax, are protected in this Finance Bill from the liability to increased direct taxation which will fail upon all the rest. Therefore, so far as these smaller incomes are concerned, and it is about them that the Mover of the Clause has been thinking, any extension of the personal allowances, such as would be the result of accepting this Clause, would have the effect of actually reducing the amount of taxation paid by many direct taxpayers this year as compared with last year. One may
    wish to see, on general grounds of amiability and sentiment, liability to taxation reduced for everybody, but I do not think that on reflection the Committee will feel that there is a strong case, in a year when we have been obliged, with general consent, to place considerably increased burdens upon taxpayers as a whole, for selecting one particular class, and saying that it is not merely to retain the status quo, as 2,000,000 out of 3,500,000 Income Tax payers will do, but is actually to pay less this year than last year.
    Sir P. Hannon: Will the right hon. and gallant Gentleman tell the Committee what would be the loss to the Exchequer in the finances of this year, if the proposed new Clause were accepted?
    Captain Wallace: I regret to say that it is not possible to give a precise estimate of the amount. I am advised that it would be considerable. Whatever the amount would be, it does not affect the general argument which I addressed to the Committee.
    Sir P. Hannon: It would be a substantial amount?
    Captain Wallace: Yes, Sir.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 142; Noes, 220.

    Division No. 253.]

    AYES.

    [6.31 p.m.

    Adams, D. (Consett)

    Edwards, Sir C..(Bedwellty)

    Johnston, Rt. Mon. T.

    Adams, D. M. (poplar, S.)

    Evans, D. O. (Cardigan)

    Jones, A. C. (Shipley)

    Alexander, Rt. Hon. A. V. (H'Isbr.)

    Frankel, D.

    Jones, Sir H. Haydn (Merioneth)

    Anderson, F. (Whitehaven)

    Gallacher, W.

    Jones, Morgan (Caerphilly)

    Banfield, J. W.

    Gardner, B. W.

    Kelly, W. T.

    Barnes, A. J.

    Gibson, R. (Greenock)

    Kennedy, Rt. Hon. T.

    Batey, J.

    Graham, D. M. (Hamilton)

    Kirby, B. V.

    Bellenger, F. J.

    Green, W. H. (Deptford)

    Kirkwood, D.

    Bonn, Rt. Hon. W. W.

    Greenwood, Rt. Hon. A.

    Lansbury, Rt. Hon. G.

    Benson, G.

    Grenfell, D. R.

    Lathan, G.

    Bevan, A.

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

    Leach, W.

    Broad, F. A.

    Griffiths, G. A. (Hemsworth)

    Leonard, W.

    Bromfield, W.

    Griffiths, J. (Llanelly)

    Leslie, J. R.

    Brown, C. (Mansfield)

    Graves, T. E.

    Logan, D. G.

    Buchanan, G.

    Guest, Dr. L. H. (Islington, N.)

    Lunn, W.

    Burke, W. A.

    Hall, G. H. (Aberdare)

    McEntee, V. La T.

    Casselis, T.

    Hall, J. H. (Whiteehapel)

    MoGhee, H. G.

    Chater, D.

    Hardie, Agnes

    Maclean, N.

    Cluse, W. S.

    Harris, Sir P. A.

    MacNeill Weir, L.

    Clynes, Rt. Hon. J. R.

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

    Mender, G. le M.

    Cocks, F. S.

    Hayday, A.

    Marklew, E.

    Collindridge, F.

    Henderson, A. (Kingswinford)

    Marshall, F.

    Cove, W. G.

    Henderson, J. (Ardwick)

    Maxton, J.

    Dagger, G.

    Henderson, T. (Tradeston)

    Milner, Major J.

    Dalton, H.

    Herbert, A. P. (Oxford U.)

    Montague, F.

    Davidson, J. J. (Maryhill)

    Hills, A. (Pontefract)

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

    Davies, R. (Westhoughton)

    Holdsworth, H.

    Muff, G.

    Day, H.

    Hopkin, D.

    Owen, Major G.

    Dobbie, W.

    Jenkins, A. (Pontypool)

    Palign, W.

    Dunn, E. (Rother Valley)

    Jenkins, Sir W. (Neath)

    Parker, J.

    Ede, J. C.

    John, W.

    Parkinson. J. A.

    Pearson, A.

    Simpson, F. B.

    Walker, J.

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

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Watkins, F. C.

    Poole, C. C.

    Smith, Ben (Rotherhithe)

    Watson, W. McL.

    Pritt, D. N.

    Smith, E. (Stoke)

    Wedgwood, Rt. Hon. J. C.

    Richards, R. (Wrexham)

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

    Welsh, J. C.

    Ridley, G.

    Smith, T. (Normanton)

    Westwood, J.

    Riley, B.

    Sorensen, R. W.

    White, H. Graham

    Ritson, J.

    Stewart, W. J. (H'ght.n-le-SP' ng)

    Whiteley, W. (Blaydon)

    Roberts, Rt. Hon. F. O. (W. Brom.)

    Stokes, R. R.

    Wilkinson, Ellen

    Roberts, W. (Cumberland, N.)

    Strauss, G. R. (Lambeth, N.)

    Williams, D. (Swansea, E.)

    Robinson, W. A. (St. Helens)

    Summerskill, Dr. Edith

    Williams, E. J. (Ogmore)

    Rothschild, J. A. de

    Taylor, R. J. (Morpeth)

    Williams, T. (Don Valley)

    Salter, Dr. A. (Bermondsey)

    Thorne, W.

    Windsor, W. (Hull, C.)

    Sanders, W. S.

    Tinker, J. J.

    Woods, G. S. (Finsbury)

    Seely, Sir H. M.

    Tomlinson, G.

    Young, Sir R. (Newton)

    Sexton, T. M.

    Viant, S. P.

    Silkin, L.

    Walkden, A. G.

    TELLERS FOR THE AYES.—

    Mr Charleton and Mr. Mathers.

    NOES

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

    Eastwood, J. F.

    Makins, Brigadier-General Sir Ernest

    Agnew, Lieut.-Comdr. P. G.

    Edge, Sir W.

    Manningham-Buller, Sir M.

    Albery, Sir Irving

    Edmondson, Major Sir J.

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

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

    Ellis, Sir G.

    Markham, S. F.

    Allen, Lt.-Col. Sir W. J. (Armagh)

    Elmley, Viscount

    Mason, Lt.-Col. Hon. G. K. M.

    Anderson, Rt. Hn. Sir J. (So'h Univ's)

    Emmott, C. E. G. C.

    Maxwell, Hon. S. A.

    Apsley, Lord

    Emrys-Evans, P. V.

    Mayhew, Lt.-Col. J.

    Aske, Sir R. W.

    Errington, E.

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

    Astor, Viscountess (Plymouth, Sutton)

    Evans, Capt. A. (Cardiff, S.)

    Mills, Sir F. (Layton, E.)

    Astor, Hon. W. W. (Fulham, E.)

    Fildes, Sir H.

    Mills, Major J. D. (New Forest)

    Baillie, Sir A. W. M.

    Fox, Sir G. W. G.

    Moreing, A. C.

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

    Furness, S. N.

    Morris-Jones, Sir Henry

    Beamish, Rear-Admiral T. P. H.

    Fyfe, D. P. M.

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

    Beaumont, Hon. R. E. B. (Portsm'h)

    Gledhill, G.

    Munro, P.

    Beechman, N. A.

    Glyn, Major Sir R. G. C.

    Neven-Spence, Major B. H. H.

    Bernays, R. H.

    Crofton, Col. Rt. Hon. J.

    O'Connor, Sir Terence J.

    Birchen, Sir J. D.

    Gridley, Sir A. B.

    O'Neill, Rt. Hon. Sir Hugh

    Bird, Sir R. B.

    Grimston, R. V.

    Peaks, O.

    Blair, Sir R.

    Hambro, A. V.

    Peat, C. U.

    Bossom, A. C.

    Hannah, I. C.

    Perkins, W. R. D.

    Braithwaite, Major A. N.

    Hannon, Sir P. J. H.

    Peters, Dr. S. J.

    Brass, Sir W.

    Harbord, A.

    Petherick, M.

    Briscoe, Capt. R. G.

    Haslam, Henry (Horncastle)

    Picklhorn, K. W. M.

    Brown, Col. D. C. (Hexham)

    Haslam, Sir J. (Bolton)

    Pilkington, R.

    Brown, Rt. Hon. E. (Leith)

    Heilgers, Captain F. F. A

    Ponsonby, Col. C. E.

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

    Hely-Hutchinson, M. R.

    Pownall, Lt.-Col. Sir Assheton

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

    Hepworth, J.

    Radford, E. A.

    Bull, B. B.

    Higgs, W. F.

    Raikes, H. V. A. M.

    Bullock, Capt. M.

    Holmes, J. S.

    Rathbone, J. R. (Bodmin)

    Carver, Major W. H.

    Hope, Captain Hon. A. O. J.

    Rayner, Major R. H.

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

    Hopkinson, A.

    Reed, A. C. (Exeter)

    Cayzer, Sir H. R. (Portsmouth, S.)

    Horsbrugh, Florence

    Reid, Sir D. D. (Down)

    Cazalet, Thelma (Islington, E.)

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

    Reid, W. Allan (Derby)

    Cazalet, Capt. V. A. (Chippenham)

    Hudson, Rt. Hon. R. S. (Southport)

    Romer, J. R.

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Hume, Sir G. H.

    Rickards, G. W. (Skipton)

    Chorlton, A. E. L.

    Hunloke, H. P.

    Robinson, J. R. (Blackpool)

    Christie, J. A.

    Hunter, T.

    Ropner, Colonel L.

    Clarry. Sir Reginald

    Hurd, Sir P. A.

    Ross Taylor, W. (Woodbridge)

    Cobb, Captain E. C. (Preston)

    Hutchinson, G. C.

    Rowlands, G.

    Colfox, Major W. P.

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

    Royds, Admiral Sir P. M. R.

    Colville, Rt. Hon. John

    James, Wing-Commander A. W. H.

    Ruggles-Brise, Colonel Sir E. A.

    Conant, Captain R. J. E.

    Jones, L. (Swansea W.)

    Russell, Sir Alexander

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

    Keeling, E. H.

    Russell, R. J. (Eddisbury)

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

    Kerr, Colonel C. I. (Mantras)

    Salmon, Sir I.

    Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)

    Keyes, Admiral of the Fleet Sir R.

    Salt, E. W.

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

    Lamb, Sir J. Q.

    Sandeman, Sir N. S.

    Cranborne, Viscount

    Lambert, Rt. Hon. G.

    Sanderson, Sir F. B.

    Crooke, Sir J. Smedley

    Latham, Sir P.

    Scott, Lord William

    Crookshank, Capt. H. F. C.

    Law, Sir A. J. (High Peak)

    Salley, H. R.

    Cross, R. H.

    Leech, Sir J. W.

    Shaw, Captain W. T. (Forfar)

    Crossley, A. C.

    Leighton, Major B. E. P.

    Shepperson, Sir E. W.

    Crowder, J. F. E.

    Levy, T.

    Simon, Rt. Hon. Sir J. A

    Culverwell, C. T.

    Liddell, W. S.

    Sinclair, Col. T. (Queen's U. B'lf'st)

    Davidson, Viscountess

    I. Ode, Sir E. Graham-

    Smiles, Lieut.-Colonel Sir W. D.

    Davison, Sir W. H.

    Loftus, P. C.

    Smith, Sir Louis (Hallam)

    De la Bère, R.

    Lyons, A. M.

    Smith, Sir R. W. (Aberdeen)

    Denville, Alfred

    Mebane, W. (Huddersfield)

    Somervell, Rt. Hon. Sir Donald

    Dorman-Smith, Major Sir R. H.

    MacAndrew, Colonel Sir C. G.

    Somerville, A. A. (Windsor)

    Draws, C.

    MacDonald, Sir (Inverness)

    Southby, Commander Sir A. R. J.

    Duckworth, Arthur (Shrewsbury)

    Macdonald, Capt. P. (Isle of Wight)

    Stanley, Rt. Hon. Oliver (W'm'Id)

    Duckworth, W. R. (Moss Side)

    McEwen, Capt. J. H. F.

    Stourton, Major Hon. J. J.

    Dugdale, Captain T. L.

    McKie, J. H.

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

    Duggan, H. J.

    Maclay, Hon. J. P.

    Strauss, H. G. (Norwich)

    Duncan, J. A. L.

    Maitland, A.

    Stuart, Lord C. Crichton (N'thw'h)

    1784

    1785

    Stuart, Hon. J. (Moray and Nairn)

    Walker-Smith, Sir J.

    Winterton, Rt. Hon. Earl

    Tacker, Sir R. I.

    Wallace, Capt. Rt. Hon. Euan

    Wise, A. R.

    Tate, Mavis C.

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

    Withers, Sir J. J.

    Taylor, C. S. (Eastbourne)

    Ward, Irene M. B. (Wallsend)

    Wolmer, Rt. Hon. Viscount

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Wardlaw-Milne, Sir J. S.

    Womersley, Sir W. J.

    Thomson, Sir J. D. W.

    Warrender, Sir V.

    Wragg, H.

    Thorneycroft, G. E. P.

    Waterhouse, Captain C.

    Titchfield, Marquess of

    Wells, Sir Sydney

    TELLERS FOR THE NOES.—

    Touche, G. C.

    Whiteley, Major J. P. (Buckingham)

    Major Herbert and Major Harvie

    Tree, A. R. L. F.

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

    Watt.

    Turton, R. H.

    Windsor-Clive, Lieut.-Colonel G.

    NEW CLAUSE.—(Definition of the expression "controlling interest.")
    The Fourth Schedule to the Finance Act, 1937, shall be amended by the addition at the end thereof of the following paragraph, namely-—
    " For the purpose of this Schedule, the directors of a company shall not be deemed to have a controlling interest therein unless they are by their own shareholdings in a position to exercise or insure a majority vote at a general meeting of the company."—[Sir Irving Albery.]
    Brought up, and read the First time.
    6.42 p.m.
    Sir Irving Albery: I beg to move, "That the Clause be read a Second time."
    My reason for proposing this Clause is that my attention has been drawn to the fact that there is no definition in the National Defence Contribution provisions of the 1937 Finance Act of the expression "controlling interest." I am told that as a result there are very considerable differences in the treatment by different inspectors according to the interpretation which they put upon the term. If the ideal to be aimed at is uniformity of treatment in the incidence of taxation, it seems to be highly undesirable that different inspectors should be left to use their own judgment in this matter, as at present. The result is that in some cases there is a wide definition of controlling interest, relating to directors fees and other charges, while in others, inspectors apply a much narrower definition. It must be to the advantage of everybody that some precise definition should be framed. I know that it is always difficult for a Private Member to draft a new Clause, above all to a Bill which is so technical as this, but I am not tied to the words which I have put upon the Paper and if the Chancellor of the Exchequer agrees that it is desirable that there should be a. definition and decides to consider the matter, he may be able to suggest a more appropriate form of words.
    6.44 p.m.
    Sir J. Simon: I am afraid that I cannot accept this proposal. My hon. Friend
    1786
    is quite right when he says that there is at present on the Statute Book no definition of the term "controlling interest," but I think I can satisfy the Committee in a very few words that this is one of the cases in which it is better not to attempt to lay down a long and elaborate definition. The very purpose of the test is that it should be applied in connection with the National Defence Contribution in cases in which the directors of the company have a controlling interest. In such a case the deduction allowed for the remuneration of those directors is limited, as regards whole-time directors, to 15 per cent. of the profits. Otherwise, if the directors had a controlling interest, they could vote the whole of the profits to themselves as directors' salaries. If my hon. Friend will consider this case, which is not the most complicated case that might arise, I think he will see at once that a definition would be inadvisable. Suppose that, in company A, the whole of the shares are owned by two persons, and that company A itself owns all the shares in another company, B. In these circumstances, the two persons who own all the shares in company A can manifestly secure that they are appointed directors of company B, but they will not hold any shares in company 18 at all. Being the only directors of company B, they will have control of it, and can vote the whole of the profits of company B as remuneration to themselves as directors. My hon. Friend suggests that we should say that no one should be regarded as a director having a controlling interest unless his own shareholding in the company is in a majority, but, in the case I have put, the directors would not hold any shares at all.
    The truth is that there are a good many cases where it is much better to rely upon a fairly plain, intelligible phrase, and trust to its being applied to the particular circumstances of the case, than to go about the frightfully difficult business of attempting a complete, absolute and watertight definition. As a matter of

    1787
    fact, this phrase "controlling interest" has been used before in our tax law without any definition. A very well-known revenue judge, Mr. Justice Rowlatt., said it seemed to him that "controlling interest" was a phrase that had a certain well-known meaning. He went Ion to describe what it meant, and added that he found no difficulty in applying it. I think it would be better, in determining whether in any individual case directors have or have not a controlling interest, to leave it to the good sense of the Special Commissioners or the General Commissioners, as the case may be. My hon. Friend will remember that it is not determined merely by an inspector. If his decision is not thought to be right and reasonable, it can always be decided, in case of difficulty, by a very skilled and impartial authority. I think we must all have a pretty good idea of what is a controlling interest. One is reminded of the observation of the wise man who said that he was quite unable to define an elephant, but that, if he met one, he knew it when he saw it.
    Sir P. Hannon: The Chancellor has spoken of an impartial authority. Might I ask what sort of impartial authority he has in mind?
    Sir J. Simon: I was thinking of the Special Commissioners, who are a judicial tribunal spending their whole time in administering the Income Tax laws and similar laws as between taxpayers and the Revenue.
    6.50 p.m.
    Mr. Maitland: This proposed new Clause, to which my name is attached, was put down, not so much in view of the type of case which the Chancellor had in mind in 1937, but rather to be quite certain that those people who have not a controlling interest are not unfairly treated. I should like to ask the Chancellor whether, after his experience, he is satisfied that there are substantially no grounds for thinking that anyone is being unfairly brought within the purview of the provision in question.
    Sir J. Simon: I have not had my attention actually drawn to any such cases. If either of my hon. Friends knows of any, I shall be very glad to look into them, but I think that what has been said to-day will help to clear away any misunderstanding. I will have the work
    1788
    ing of the Section watched, but I am strongly of opinion that it would be advisable to make no change at present, and I hope very much that a practice will be established which will be found to be satisfactory.
    6.52 p.m.
    Sir John Mellor: The Chancellor has given us by means of a particular instance a destructive criticism of the terms of the proposed new Clause, but I do not think he has made out quite so convincing a case for having no definition at all of what is a controlling interest. I do not think that this matter ought to be left as a question purely of fact for the decision of the court. I suggest that, unless the House of Commons knows its own mind, it is very difficult for the courts to make up their minds with any degree of confidence, accuracy and consistency as to what the term "controlling interest" should imply. The Chancellor has told us that a very learned judge, Mr. Justice Rowlatt, has succeeded in describing quite clearly what a controlling interest means. If that be so, I should not have thought it was beyond the power of the draftsmen to reduce that description to the form of a Clause. I suggest that, the more the legal implication of such expressions is left indecisive, the more litigation we are likely to have, and such litigation is apt to be highly expensive to the taxpayer.
    Sir I. Albery: In view of the fact that we have had so far very little experience of the working of the National Defence Contribution, and in view of what the Chancellor has said, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Charge of national defence contribution not to apply to industrial and provident societies.)
    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 trade or business carried on by a society registered under the Industrial and Provident Societies Act, 1893, unless such trade or business is carried on by a society existing primarily for the purpose of earning and distributing profits on its capital.—[Mr. Barnes.]
    Brought up, and read the First time.
    6.55 p.m.
    Mr. Barnes: I beg to move, "That the Clause be read a Second time."

    1789
    I should like to claim the indulgence of the Committee for making, perhaps, a rather longer statement on this Clause than is customary during our finance debates. I do not think the Chancellor will begrudge that, because he has made very satisfactory progress so far, and I assume that many Members in all part of the Committee would like to find an acceptable solution for the problem of the surplus of co-operative societies in relation to their Income Tax liability. The purpose of this Clause is not an innovation in connection with the National Defence Contribution, because the Chancellor himself has allowed many exemptions to important groups of trades that might have come within the ambit of this tax.
    I should like to remind the Committee of the various groups of exemptions or modifications which the Chancellor himself has initiated. First of all, there is the category of complete exemptions. Provision has been made for the exemption of public utility corporations and all small business undertakings—although I do not think the description "small" can really be applied to the whole of them—whose profits are under £2,000 a year are also completely exempted from this charge, as well as businesses the heads of which are professional persons. Then we have the partial exemptions or modifications, under which companies whose profits are under £12,000 a year come under a graduated scale. Building societies have been met by a special arrangement which has considerably reduced their contribution, and there are also modifications in the case of private companies and certain groups of policy holders in insurance companies. The third category consists of those companies which have to pay the full charge of 5 per cent. of their taxable profits.
    The Chancellor himself, in describing the operation of National Defence Contribution in the case of the third group of companies, which have to meet the full obligation, said that the tax was in the nature of an increase of one-fifth, or 20 per cent., in the Income Tax liability of traders. Language of that description conveys a very natural and legitimate impression that no trading body would have to pay more than one-fifth of the sum that it now pays, whereas, owing to the alteration of the practice of the Treasury with regard to co-operative societies in dealing
    1790
    with the interest sum administered within a co-operative society, this is now taken back into the charge for National Defence Contribution purposes, which means that a good many of our co-operative societies in fact pay more than one-fifth of the sum which they now pay in Income Tax. Therefore; many co-operative societies fall into a fourth category, and are subject to the incidence of this tax in a much more severe form than the Chancellor himself led the House to believe would be the case. I do not think, unless evidence can be submitted to the contrary, that any public company would have to pay more than one-fifth of the sum that it now pays in Income Tax—
    Sir P. Hannon: If the hon. Member's argument proceeds on these lines, I think he ought to give to the Committee examples of the instances in which the contribution of co-operative societies is more than one-fifth.
    Mr. Barnes: I shall be delighted to do that later on in my remarks, if the hon. Member will do me the favour of listening to the argument. I felt that it was desirable, first of all, to deal with the four groups for the purpose of bringing out the point that, if my contention is correct and some societies do pay more than one-fifth of their present Income Tax payments, it stands to reason that there must be some circumstances in regard to cooperative societies that are different from the general experience, and it is that information that I desire to bring out. There are two factors which, in the case of co-operative societies, produce that difference. One is the fact that the wages or incomes of 8o per cent. of our members or shareholders are below the Income Tax assessment limit. That would not prevail in any other trading corporation.
    The second fundamental difference between a co-operative society and an ordinary trading corporation is the fact that practically the whole of our surplus arises from mutual trade, and, therefore, is not profit for taxation purposes. Dividends, in any case, are not taxed, and our members who are eligible to pay Income Tax on their own individual incomes include the interest that they get from co-operative societies in their returns. In 1933, before the alteration in the law, co-operative societies paid the full rate of tax under Schedules A and B, and the Board of Inland Revenue at that

    1791
    time stated clearly and specifically that there was no loss to the Revenue as the result of that practice. In fact, in 1933, when we were in direct negotiation with the then Chancellor of the Exchequer, now Prime Minister, a special test was carried out throughout the whole of our retail societies and we were able to prove that, in paying the full rate under Schedules A and B, no society was escaping its burden of taxation in any way, although one or two of our federal bodies, owing to the fact that special circumstances represented a measure of nonmembers' trade, could not be brought within that category, but we made an offer for special arrangements to cover those exceptional cases. The Board of Inland Revenue in 1919 said:
    "The surplus that arises in a mutual concern from transactions with members, though it is sometimes described as profit, is not a profit chargeable to Income Tax. The Board of Inland Revenue are aware that this fact has at times been challenged, but the question is one of law, and, as such, the Board are advised, in the light of decided cases, it admits of no reasonable doubt."
    This does not rest merely on the opinion of the Board of Inland Revenue. There were certain cases decided in the courts, in one instance in the case of the New York Life Insurance Company and in the other of the South-West Lancashire Coalowners, Limited. In the discussion on a previous Clause the Chancellor quoted the decision of Mr. Justice Rowlatt as an authoritative opinion which should guide the decision of this Committee. We observe from the cooperative angle that, if our case has been supported by many important appeal test cases in the House of Lords, the decisions of the courts have been overridden in our case and will not be considered from the angle of our claim. Then it is important to note that the present Chancellor, in his capacity not as politician but as one of the most eminent lawyers in the country, gave the following opinion in 1920:
    "The main object of the co-operative society is to prevent any profit from arising at all. It is clear that the whole of the balance is nothing more than money provided by the members in excess of what was, as it turned out, actually required for the purchase of the goods, and there is in principle no difference whatever between that part of the balance that is handed back to the members as being not required and those parts with which their consent are used for purposes which are
    1792
    incidental to the operations of the society over and above the mere purchase of goods. None of this money can possibly be called a profit either of the society or of individual members."
    Sir P. Hannon: On a point of Order. The Clause has relation to the
    "Charge of National Defence Contribution not to apply to industrial and provident societies."
    The argument on which the hon. Member is now proceeding relates to the whole question of the extent to which the mutual earnings of a co-operative society should be subject to Income Tax. The argument ought to be directed to the responsibility of a co-operative society trading on the principle of mutuality to make its contribution for national Defence, and not to the general circumstances in which a cooperative society ought to be subjected to Income Tax.
    The Chairman (Sir Dennis Herbert): The National Defence Contribution being based upon the machinery of the tax, I cannot at present see that there is anything out of order in what the hon. Member has said.
    Mr. Barnes: That is the real point to which I am leading up, that if it were not for this position, automatically co-operative societies would have been without the charge of National Defence Contribution, and it has an important bearing on the case that I propose to make later. This is emphasised by the next opinion that I wish to quote of the right hon. Gentleman in his capacity as Chancellor of the Exchequer last year:
    "In 1920 I was asked to give an opinion on a matter affecting co-operative societies. The question then put to me was this. Here is a tax described as a tax on profits. Will you tell us whether, in your view, and with your knowledge of the law, this is a tax which will catch the co-operatiev societies? ' The answer was—and I think it was perfectly accurate—' The law does not regard as profit for the purpose of such a tax as this the advantage which co-operative societies make, and therefore we think that co-operative societies gains—I want to use a neutral word —will be exempt.' That was a perfectly correct opinion and I hope it was worth the money. What has happened in regard to National Defence Contribution? Years afterwards Parliament took up this subject and altered the law. I am not saying whether it was right or wrong."
    The Chancellor did not advance an opinion, but he made it quite clear that Parliament altered the law specifically in

    1793
    this case to apply to co-operative societies.
    "I hope I have made it plain, even to the hon. Member, that when I was asked in 1920 whether, seeing that the law was so-and-so, would so-and-so happen, I gave a correct answer. I am now pointing out that in 1933 the law was altered."
    That means that in this case Parliament overrode the courts' decisions, the opinion of the Board of Inland Revenue, and the opinion of one of the most important lawyers in the country at the time. If this had not been done we should not be discussing this issue to-day. The application of National Defence Contribution to co-operative societies emphasises the injustice that we suffered on that occasion, and the fact that it falls with greater severity on co-operative societies should bring home to the Committee the undesirability of further emphasising this inequity. Now it has come to the application of the National Defence charge to co-operative societies. It is the surplus a rising from mutual trade which is affected by this charge, less the sum paid out in dividends. The investment income is not affected. When we come to the administration of the National Defence Contribution charge, not only in our case but in the case of all trading corporations, certain allowances are provided within the present administration of Income Tax law. Allowances include wear and tear, interest on loans, pension funds, and similar expenditure. Again, as indicating that the Chancellor has made a variety of modifications and has not adhered strictly to previous practice with regard to Income Tax law in the case of National Defence Contribution, there are certain other allowances which are admitted which do not apply for ordinary Income Tax purposes. For instance, I understand that allowances are admitted for ground rent, royalties and annuities. If the Government can see their way to exempt certain groups of traders, if they can modify the charge to one group, if they can widen the scheme of allowances to corporations, why are they so adamant in refusing to meet the claim that we are putting forward, first, that we should not be charged National Defence Contribution, secondly, if we are, that in our case the interest charge and the alteration of Treasury practice should not be proceeded with? In our case the modification has not been to our advantage, while the modifications in every other direction have
    1794
    eased the burden of the paying body. The one charge that is applied in our case has added to the severity of the burden, and that is a very definite disadvantage.
    Now I come to specific cases. Taking a society which I will call A, its Income Tax liability this year will amount to £126 10s. With the total charge for National Defence Contribution added, it is £407 14s. The Income Tax charge of society B less National Defence Contribution is £178, with National Defence Contribution added it will be £412. I agree that they represent the exceptional type of case; but let me now quote the normal case of a Midland society of very large dimensions, with 6o0,000 members. Its Income Tax charge will amount to £7,000, while its National Defence Contribution charge will amount to 3,000—that is 42.8 per cent. of its Income Tax payment, whereas the Chancellor endeavoured to convey the impression that no company would pay more than one-fifth of its Income Tax payment. I do not think hon. Members can defend a situation of that character.
    Let me further illustrate it by taking the comparison of the building societies. I claim that a co-operative society conveys far greater social benefits to the public than a building society, although I do not wish to under-estimate the value of the part that building societies play in our national life. I am chiefly quoting this because last year the Chancellor made a special modification which has the approval of this Committee. In building societies there are just over 2,000,000 shareholders, while there are 8,000,000 shareholders in co-operative societies. The share capital of building societies is £480,000,000. The share capital of cooperative societies is approximately I£150,000,000. Although the shareholders of the building societies number only one-fourth of those of co-operative societies their share capital is immeasurably greater. The average capital holding of a shareholder in a building society is £240, and the round figure of interest which the individual member draws is in the neighbourhood of L£8 a year. The average shareholding of members of co-operative societies is £18, and the average share interest drawn works out at 15s.
    It is this small sum of interest per member—but which in the aggregate case of the millions of members amounts to

    1795
    a large sum—that is added together for the purpose of the National Defence Contribution charge, and which throws the whole Income Tax payment out of proportion. I say that that is grossly unfair. I am confident that there is not a Member of the Committee who would allow that to operate in any other form of business, and, if it were not for the prejudice developed in this direction, it would not be allowed in this case. When we come to the operation of National Defence Contribution in regard to the building societies, the Committee should remember that it was the original intention of the Chancellor to apply the full charge. What happened? It will be observed that the trade of the building society is in capital advances entirely. The whole of that £480,000,000, therefore, constituted, as it were, the trade of the building societies. The sum they would have to pay under National Defence Contribution would probably have amounted to £750,000 a year—an impossible and inequitable charge on building societies. I want to make it perfectly plain that cooperative opinion fully agrees with the special arrangement the Chancellor made for building societies. We would, in fact, go further and say that if public utility companies are entirely exempt, building societies should be. That is not my point for the moment.
    When you come to depositors, cash loan holders, of building societies, you find that the value of their loans amounts to £141,000,000. I would ask the Committee what would have been the position if the figures had been reversed, and the share capital had been £141,000,000 as against loans of £480,000,000? The problem would not have arisen in regard to building societies. It is this problem of share interest which distorts the whole thing. That vast sum which the Chancellor originally proposed to collect from building societies confronted them with this problem. They had only three ways of dealign with it: either to raise the guaranteed interest rate to borrowers, to take the money out of reserve, or to reduce the interest rate to depositors. If they had adopted the first, it would have had a most adverse effect on the incentive to people to purchase their own houses. The second was impossible; the sum was so large that it would have made
    1796
    them financially unsound in a very short period. The third would have put them out of the market so far as attracting capital to that particular form of investment was concerned. The Chancellor was wise to recognise this and make that special arrangement. But if the Committee agree with the wisdom of that decision, as they do, it removes any possibility of hon. Members disagreeing with the proposal I am now putting forward, because our case rests not only on the same facts as the case of the building societies but on wider, stronger and more comprehensive facts.
    Both in the case of building societies and of public utility societies, the person who invests capital does so in order to make a profit out of providing a service to another body of persons. In the case of shareholders of co-operative societies, they do not make their surplus through trading with another body of people; it arises through trading with themselves. Again, if the Chancellor admits the exemption to public utility societies and a modification in regard to building societies, he has not the slightest ground for refusing our contention with regard to co-operative societies. If you take the shareholders of building societies, more than 80 per cent. pay Income Tax as individuals, whereas more than 80 per cent. of the members of co-operative societies do not pay Income Tax, because they are too poor.
    We advanced in the Debates last year numerous and specific examples of companies that one would assume came within the definition of public utilities, to indicate the considerable profits which these organisations made and to prove, by the dimensions of those profits, that service to the public was not their primary object and consideration. We obtained no information from the Chancellor last year as to what type of organisation would come under this heading. I would invite the Chancellor definitely to state what is the test applied to transport, electricity or gas companies, or water boards to see whether they come within this category. Then we can judge this problem more from the angle of equity. If one tests the profits of almost all these types of company that the public generally classify as public utilities, it will be found that their profits vary between 7 per cent. and 20 per cent.; and they are in the habit of distributing periodically large cash and

    1797
    capital bonuses. Will the Chancellor please state what test the Treasury apply, so that one may not make public statements that are not founded on fact in discussing this matter?
    May I bring my remarks to a close by putting a number of further points to the Chancellor? On what ground is he justifying the exemption of the whole category of smaller traders that represent a very powerful competitive element in the distributive trades, whose profits may reach up to £2,000 a year? A business earning £1,800 or £1,900 a year may have a capital outlay of £100,000 to £20,000. How can the Chancellor exempt that type of business, and continue to charge National Defence Contribution to the smallest trader in the community, the individual member of the co-operative society, whose individual capital averages only £18 per member, and whose average interest drawn amounts to only 15s. a member? There must be many of our members who do not hold that amount of capital and draw that amount of interest. If the Chancellor can justify the exemption of public utility societies, which represent one of the soundest units of investment to-day, on the ground of their service to the public and limitation of interest—although their interest limitation is very high—on what grounds does he justify this continuance of taxation on co-operative societies, which operate on a limitation of interest much lower than these public utility corporations—usually operating on 3 per cent., and practically never more than 4 per cent.? If the Chancellor can justify exemption of building societies in order to enable people to buy their own houses, why is he so adamant in regard to co-operative societies, which assist people to buy their own food, clothing and furniture, to make their homes a little more comfortable to live in?
    I would urge the Chancellor to accept this Clause. If he is unable to see his way to do so, I hope the Committee will press the point upon him. I would remind the Committee that the membership of the co-operative societies represents a very laudable effort on the part of the great working classes of this country to share the general sense of independence that is characteristic of our people, who have learned that, except by directing their purchases through a co-operative society, they would be unable to secure part in the ownership of the industrial
    1798
    and commercial life of the country, and who have discovered that the accumulation of their dividends helps them to maintain themselves during unemployment. The accumulated dividend is a valuable asset in a time of sickness, and many people anxious to give their children a better education than they themselves enjoyed use this accumulated dividend to meet some of the excessive expenditure on education that their weekly wages do not permit.
    Many of them, in their efforts to buy their own houses under the intolerable conditions that prevail in the housing of the working classes to-day, fall back on these sums that they have accumulated in the co-operative societies to pay the very heavy mortgage interest rates, and many of them find this accumulation valuable to meet their rates to the local authorities. It assists also in the payment of insurance premiums, and at times, when heavy items fall in replenishing the family boots, clothing, and furniture, the co-operative society, above any other type of commercial organisation, helps the millions to meet this need. When you compare the service of public utility and building societies, professional bodies, and others, I say there is no comparison with the social service and value of the co-operative movement, and if this Committee is not lost to all sense of justice, it will accept this Clause.
    7.33 P.m.
    Sir P. Hannon: Before the Chancellor replies to the very interesting and indeed exhaustive speech which has been made by the hon. Member for East Ham, South (Mr. Barnes), may I, as an old cooperator, the oldest co-operator in this House, offer a few comments on the case which he has submitted? Is the Committee to understand that the Co-operative movement as it exists to-day is to make no contribution at all to national defence? Is it the argument of the hon. Member that because the Co-operative movement is trading on the lines of mutuality, it is not to take its part in making the necessary financial provision for the defence and security of the people of this country in the future? The hon. Gentleman would indicate to the Committee that the trading side of the Co-operative movement is a sort of sacrosanct section of the community to whom the ordinary obligation of contributing to the defence of the

    1799
    country must not apply. That seems to me to be a very hopeless case to put before this Committee in the present exigencies of the State.
    But the point that I would like to submit is this, that the Co-operative movement, as it exists and carries on its trading activities to-day, has departed very far from the original idea of the cooperators who were responsible for the foundation of the movement in the past. The Co-operative movement to-day is a trading community, in actual, direct, and positive day-to-day competition with masses of small traders all over the country. Take the great co-operative society in my own city of Birmingham, a most successful body, prosecuting its activities over many years on the most carefully considered business lines, acquiring large blocks of property from month to month, and exercising all the rights and privileges and taking advantage of all the opportunities of the ordinary business corporation in competition with the private trader outside. I do not take any exception to that, but what I take exception to is that if co-operative societies depart from the old principle of regulating their trade among their own members, and go into competition outside, taking pages of the daily papers to advertise the advantages that they can present in competition with the private trader of this country, who, after all, deserves some consideration from this House of Commons, I think the Committee ought to be very careful before it allows itself to accept a proposition of this kind.
    There is no real comparison between the position of the building societies and that of the co-operative societies. If the Co-operative movement in this country were conducted on the original principles upon which its founders stood, men with whom I co-operated in my younger days, men like George Jacob Hoiyoake., Vansittart Neale, Owen Greening, and others, Members who were in this House in the earlier years when I was here, we should all agree that exceptional consideration should be extended to it in relation to the imposition of national taxation, but the Co-operative movement today is a great business concern, competing with every private trader in the country, sending its ships overseas, acquiring great harbour facilities, controlling
    1800
    rates on railways. The Co-operative Wholesale Society in Manchester is one of the most influential bodies in this country, not merely from the economic standpoint, but from the political standpoint also, and I think this Committee ought to be extremely careful in lending its authority to the acceptance of a Clause of this kind, which would place the Co-operative movement as a whole in a position of exceptional preference in relation to the collection of the national revenue. Members of the Co-operative movement have the same obligation, whether they are shareholding to the extent of X18 or whatever it may be, to take their part in sustaining the national revenue and providing for the national defence as any other citizen of this country, and I think it almost amounts to sheer impertinence for the Co-operative movement to come here and ask to exempted from the general obligation which applies to every citizen of this country to take his part in defending his country in the difficult circumstances in which we find ourselves to-day
    7.39 p.m.
    Sir J. Simon: I am glad that the Committee should have had the vigorous speech from the old co-operator who has just sat down. I will not say that I stand as a neutral between the rival parties in this matter, but I would like to state two or three considerations which I think will really show the Committee that they should not exempt from the National Defence Contribution the cooperative societies and the Co-operative movement. The hon. Member for East Ham, South (Mr. Barnes) has made, as he always makes on this subject, an extremely well-composed and well-informed speech. He has assembled the points, but he will not think any the worse of me if I say that I think he has assembled them rather from his point of view.
    May I first get rid of what I have always thought to be a rather ridiculous hare? Certain observations have been made about an opinion which I gave in 1920 as to whether or not the proceeds or surplus of a co-operative society would be liable to, I think it was, Corporation Profits Duty. Although I would not say it of every legal opinion that I have given, that particular legal opinion was, I believe, perfectly right. There is no doubt that I was quite right

    1801
    when I said, when asked in 192o, "Do you consider that the profits or proceeds of our co-operative societies are caught by that tax?" that I did not think that they were so caught. The argument was that any surplus resulting from "mutuality trading," as my hon. Friend the Member for Moseley (Sir P. Hannon) called it, in the sense that all the members of the body were trading with one another, was not what are called profits for the purposes of the Corporation Profits Tax. I do not wish to withdraw from that view in the least, and if I was to be remembered by nothing else than by that opinion, I should be content that that opinion was correct. But it was not for me or for anyone else to prophesy what, 13 years later, would be done by the Imperial Parliament, and 13 years later, in the Finance Act of 1933, Parliament enacted this Section:
    "In the application to any company or society of any provision or rule relating to profits or gains… any reference to profits or gains shall be deemed to include a reference to a profit or surplus arising from transactions of the company or society with its members which would be included in profits or gains for the purposes of that provision or rule if those transactions were transactions with non-members."
    I think we shall all say that the moment that Parliament enacted that in 1933, we had this situation, that things which till then were not profits, because they were the proceeds of a co-operative society, became by the very language of Parliament profits for the purpose of Income Tax. Whoever may be to blame for that, a poor, miserable, struggling lawyer, writing an opinion in 19200, cannot be blamed for it at all.
    Mr. Alexander: The right hon. Gentleman was also a Minister in the Government that made the alteration. In the opinion that the right hon. Gentleman gave to the Co-operative movement in 1920, it is true that he stated the legal position, but he also argued that the proceeds of co-operative societies could not on any rational ground be said to create a taxable surplus.
    Sir J. Simon: That is perfectly right, but we must pay due respect to the enactments of the Imperial Legislature, which in 1933 proceeded to say that, for purposes of Income Tax, the surplus, as it was called, of a co-operative society should count as part of the taxable profits
    1802
    of the society. And I must say, since the right hon. Gentleman interposed just now, that if you consider the common sense of the position, it would be, I think rather remarkable to take three great enterprises which have been mentioned as all sharing in a common public service, that is to say, Messrs. Joseph Rank and Company, Messrs. Spillers, and the Co-operative Wholesale Society, three great bodies which lent their aid on equal terms to help the Government in getting food supplies—and we are all grateful to all of them—I think it would be very remarkable if, as a matter of fact, when we all have to make our contribution, having regard to our resources and abilities, we were to say that two of those bodies ought to make contributions to the national defence, but that the third of them should not. That would be against every possible judgment of common sense. I quite agree with the view taken. You have drawn a distinction, and I have always admitted that on that basis it is quite honest and that, if you use strict reasoning, it is perfectly arguable. But we are a fair people in this country—we do not want to victimise—and on the whole we thought it right and reasonable to ask for a contribution of Income Tax by co-operative societies. So much for that.
    Will the Committee please observe what follows from that? You would almost have supposed that as the National Defence Contribution is now on the Statute Book, having been enacted last year in the Finance Act, you might think that there was a provision which said that the co-operative societies should also, and especially, be made to pay National Defence Contribution. There is not a word about them in the Statute from beginning to end. They are not mentioned. The reason is that the National Defence Contribution was levied by Parliament upon profits arising from a trade or business in each accounting period, such profits to be computed on Income Tax principles. Since in 1933 Parliament laid down that the surplus of co-operative societies shall come within the conception of profit, it follows that when you got the new tax put upon profit arising from a trade or business computed on the Income Tax principle, automatically co-operative societies had their contribution to make. Therefore, the hon. Gentleman is press-

    1803
    ing upon us that we should insert in our legislation about National Defence Contribution a special clause which would specially exempt people who automatically fall under it.
    Mr. Alexander: That is perfectly true.
    Sir J. Simon: That, I think, is the real answer to the question. Is the surplus of the co-operative societies to be regarded as profit? The answer is, that by the deliberate act of Parliament in 1933, it undoubtedly is. The next question which arises is one which the hon. Gentleman also developed last year, when I did my best to deal with it. He has repeated it., which is quite natural, and I must, therefore, repeat my explanation. He says that the National Defence Contribution calls for a contribution from co-operative societies on an exceptional principle which really results in their having to bear a larger burden than they ought to bear. In order to understand this point it is necessary to give an example, and I am going to give the same example as that which I gave last year. With great respect to the hon. Gentleman, whose knowledge of the subject I very sincerely acknowledge, this is really all based on a confusion.
    Let us suppose that there is a successful co-operative society, and for the purposes of what I am saying I speak of profits, as it is no good continually using a different phrase. Suppose a co-operative society during a given period makes £I00,000 profit, and suppose it distributes, say, £60,000 of that sum as interest on share capital to its shareholders, and it keeps undistributed the balance, namely,£40,000. As the hon. Gentleman pointed out just now, quite correctly, the Income Tax to be applied to that co-operative society would be applied in this way. As far as drawing the cheque is concerned, the co-operative society would pay Income Tax on £40,000, and perhaps it is more convenient to take 5s. in the £— though unfortunately that is not the rate at the moment—because it is an easier calculation to make. The cheque in respect of Income Tax at 5s. in the £ on £40,000 would be £10,000. Now says the hon. Gentleman "Yes, but the National Defence Contribution of the cooperative society may be more than one-fifth." The reason of the Income Tax is
    1804
    this; and it is to be found in the Act of 1933. That Act provides that the figure on which the co-operative society has to be charged is £100,000, but it is to be treated as having met the claims of the Revenue if it first distributes a portion of that surplus to its shareholders, that is, £60,000, and draws a cheque in respect of tax on the balance.
    An exactly similar thing happens in the case of the ordinary limited company. Take a limited company which makes £100,000 profit. It also is charged Income Tax on the £100,000, which would be £25,000, but if it declares a dividend and distributes £60,000 out of the £100,000 to its shareholders, it deducts from the shareholder the 5s. in the for Income Tax. To that extent it recoups itself, and what the limited company itself bears in tax is, in the end, tax on what it does not distribute. That is to say, it is taxed on £40,000 which is £10,000. The two cases are exactly the same in the result. The difference is a difference of machinery, and it is due, as the hon. Gentleman said, quite justly, to the fact that it was realised that a very large number of the members of co-operative societies are poor people who even if they bear the tax in the first instance get it back. There are a great many limited companies who have also shareholders who are poor people, and there is no difference at all between the burden of the Income Tax on a limited company and the burden of Income Tax on a co-operative society. The figures are the same.
    The real criticism, if it is a criticism, as I pointed out last year, of National Defence Contribution—and with great respect to the hon. Gentleman, that is not the point which he urged—is that the tax simply does not pay any attention to the question as to how many fractions the money to be distributed is divided into, or whether the people who get the money are small shareholders or small co-operators or persons above or below the Income Tax limit. It really is a complete delusion to suppose that something special is being done in the case of co-operative societies. Except as a mere matter of machinery, the arrangement since 1933 is as I have described it. The result is that if we accept the view taken in 1933 we must regard them as making profits, and if we accept the provision of last year that National Defence Contribution is a tax upon

    1805
    trading profits made by enterprises in this country, there really is no justification at all for claiming that co-operative societies should be excluded from that tax.
    Co-operative societies enjoy, as they are perfectly entitled to, the concessions incorporated in the National Defence Contribution in various respects. For example, the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) knows very well—and this is very important—that National Defence Contribution does not seek, generally speaking, to exact any contribution from interest on investments. It addresses itself to trading profits, strictly so called. If the Imperial Chemical Industries, or Unilever, or any ordinary trading company, the butcher, baker or candlestick-maker, have investments, as many of them have, money which they have preserved and put away, and are receiving year after year income from those investments, the National Defence Contribution does not ask for any contribution; neither does it in the case of the Co-operative Society. That, in the case of the great co-operative societies—the great central one, for example—is very important. Take another example. In the course of trade many enterprises have to borrow by debentures or otherwise, and they have to find somehow or other out of their gross profits the interest to be paid on the loan. That is true, I suppose, of many private companies, and, no doubt, of co-operative societies. National Defence Contribution does not take any account at all of that portion of income needed for the purpose of paying interest on loans. The co-operative society is entitled to deduct that before the contribution begins to be paid. That, again, is exactly analagous to what is done in the case of the ordinary trader.
    I have not approached this matter with any sort of prejudice against the co-operative movement, but rather the opposite, for I have a great admiration for the services rendered by the co-operative society, which is an absolutely essential institution in many parts of the country, but I really cannot bring myself to believe that there is any good case to be made for exempting co-operative societies from a contribution to the National Defence Contribution. The hon. Gentleman made a reference, which was
    1806
    quite natural, though it is a little difficult for me to deal with it under the rules of Order, in which he proceeded to travel further afield and pointed to certain other people whom he thought got better terms. I will take one instance to which he referred. He said—and this was also mentioned last year—that the public utility companies have been given an exemption from National Defence Contribution, and he urged that in one sense the great movement for which he was speaking is also rendering a public service, which I am not disposed to deny. He challenged me to give a definition of public utility companies. Last year I remember very well that the right hon. Gentleman the Member for Hillsborough called attention to the fact that there were some instances within the public utility definition of enterprises which, though they wire serving, no doubt, a definite public purpose, none the less made a pretty tidy profit. He was quite right. I had those instances looked at, and I exercised my wits as well as I could to see what I could do, and I hope that when we have the opportunity of legislation, such as an Electricity Bill, or whatever it may be, we shall put upon them much stricter restrictions in cases where they are too lax.
    But I cannot proceed on any other principle than that, in enacting this national contribution principle, we voluntarily decided to exempt companies where they are statutory undertakings consisting, wholly or mainly in the United Kingdom or the Dominions, of certain services, such as the supply of water, gas, electricity, and so forth. I do not think that it would be possible for the House of Commons to take out individual cases and say, "It. is true you are within the definition, but I will tax you." You must proceed on some definition, and the definition here is the best we can make, though I confess that some of them are escaping when you might reasonably expect them to come in; that is because definitions sometimes break down on being interpreted. But the principle of the thing is as plain as possible. The principle is that where you have a public service company rendering public services in supplying water, gas, or electricity, where there are provisions which limit profits or charges, you are dealign with a special case rather different from the trader who is enter-

    1807
    prising and endeavouring to carry on his business as successfully as he can.
    I hope that I have made a full and fair statement, and I would urge the Committee to consider whether we can now adopt a Clause which would exclude co-operative societies from National Defence Contribution. I submit that that would not be a reasonable thing to do. The patriotism of these people nobody questions. It is perfectly true that the Co-operative movement is rendering very useful service in all parts of the country, but I think that the contribution they have been asked to make is a fair one, and I cannot but believe that on the broadest public grounds their members would be willing to make the contribution, and that Parliament should ask them to make it.
    8.1 p.m.
    Mr. Alexander: I have listened with great care to the Chancellor of the Exchequer's answer to the case for the new Clause which was made by my hon. Friend the Member for East Ham, South (Mr. Barnes). The right hon. Gentleman has completely failed to meet the main points in my hon. Friend's speech. In the first place, let us deal with the question of the legal opinion about which so much has been said to the Chancellor of the Exchequer in his presence and in his absence during the last five or six years. That legal opinion was given by the Chancellor of the Exchequer on the principle of mutuality in regard to Income Tax law in 1920. It was given not merely in regard to Income Tax law as it existed prior to the Finance Act of 1920, but also in relation to the Act of 1920 when, for the first time, by the imposition of the Corporation Profits Tax the principle of the exemption of mutual surpluses was encroached upon.
    The outstanding thing about that opinion was that the Chancellor of the Exchequer, with his usual facility in the use of words and ideas, went out of his way to argue not merely the legal basis of his judgment, but he stated that there was no rational ground in the actual process of mutual association for producing a profit as a profit. It is peculiarly interesting to me, in view of that statement, that in the opinion that he has enunciated to-night he advances as an argument of what is a profit something which is entirely new. Instead of its
    1808
    being related as it has always been in the past, to what is a profit on capital, he now relates it to an entirely new principle, and that is, what is to be regarded as profit for taxation purposes in the case of a co-operative society. Our real complaint about the Act of 1933 was that it changed not only what was the existing law, as described in the well known case which went to the Courts, but the law in actual practice.
    I come much nearer to the Chancellor of the Exchequer's real intellectual view of the situation when I follow more closely his record in dealign with this matter in the House of Commons. I cannot find in relation to his votes on the mutual principle anything on which he could be indicted as being different in intellectual outlook to myself, until he became Chancellor of the Exchequer. Take the vote in 1933. The Chancellor of the Exchequer may say that in 1933 he was so busy that he could not spare time to come and vote, but I regard it as highly significant that in the crucial Division in 1933 he did not bother to vote. Therefore, if he is entitled to claim absence, I am entitled to claim that the expression of his intellectual judgment of years before would not allow him, conscientiously, to come and assist his Government to put this penal imposition upon millions of working-class members of co-operative societies in this country. However, that decision was made, and we find him, in a position of national emergency, putting an increasing imposition upon us, and having to get up in the House of Commons and cast overboard his surplus cargo—the great judgment that he gave to our movement in 1920.
    Because of the excellent arguments put forward by my hon. Friend, I shall not take up too much of the time of the Committee, but there are a few other things that I must say in reply to the Chancellor of the Exchequer. He referred to the growth and the position now achieved by the co-operative movement and to the fact that in the very serious national provision which has to be made to meet what may be an impending danger, the co-operative movement is to be found side by side with great concerns, like Rank's and Spiller's, willing and able to serve the country. What has that to do with the question we are discussing to-night? It certainly disposes entirely of the contention of the hon. Member for the Moseley Division of Birmingham (Sir P. Hannon), who

    1809
    seemed to indicate that we were wishing to escape our real responsibilities to the State. That is not so. The Chancellor of the Exchequer knows that when it is a question of helping in any national emergency the movement I represent is always willing to help.
    Sir J. Simon: I am afraid that I want a money contribution also.
    Mr. Alexander: Let us look at the effect of the money contribution. In the case of the savings which are affected by the operation of mutuality, again and again the Chancellor of the Exchequer is bound to admit, if he will only examine the evidence that I gave before the Committee in 1932–33, that the ultimate effect of the operation of the mutual principle is to release from the worst forms of poverty tens of thousands of people who would otherwise be a partial charge upon the Exchequer, and certainly a charge upon the local rates. Thereby we are always making a substantial contribution to the revenue of the State. In the second place, there are large numbers of our shareholders and members who, by their mutuality, create the first little parcel of actual saving which they can put away, which brings them as individuals much more rapidly into the contributory field of taxation revenue than would otherwise be the case but for the exercise of the mutual principle.
    Because we put forward an argument for the exemption of mutuality, it is beside the mark for the hon. Member for the Moseley Division to suggest that we are not patriotic and not making our proper contribution to the State. The real fact is that the whole theory of Income Tax is that it is an individual tax. It is not a tax upon corporate funds. It is true, as the Chancellor of the Exchequer said, that if you make £100,000 profit in a public company and you distribute only £60,000 in interest upon the shares, you pay tax upon the sum put to reserve, but over and over again that is recovered. Again and again these companies escape the total charge of Income Tax, and when it comes to the distribution of the huge cash reserves they very nicely escape large amounts of Surtax which they would have to pay to the State.
    The Chancellor of the Exchequer has not been sufficiently comprehensive in his answer, and I am sure that on the moral ground as well as the technical and legal ground he will need to look into the
    1810
    matter again. Take his case about the Act of 1933 as applied to co-operative societies and its treatment of share interest. Do not let us argue as to what the Act does or does not do. Let us see how the Chancellor of the Exchequer acts. He says that the share and loan interest of industrial and provident societies shall be deducted after you have assessed the whole of the aggregate income of the society for tax. His case was that a large number of shareholders would be so poor that they would not be liable to Income Tax, and therefore it would not only be better for them but cheaper for the revenue to allow that to be deducted in that way. If that was a proper assessment, in justice, in relation to the individual shareholders of co-operative societies in 1933, why is it not an assessment, in justice, to individual shareholders of co-operative societies in regard to National Defence?
    It is no answer to say to us that in the case of Income Tax the small shareholder of a company also is put in this position. The point is that in respect of the Income Tax treatment of co-operative shareholders under the Act of 1933 the Exchequer make this special provision. I know that the Chancellor of the Exchequer argues that the net result is about the same in his treatment of a company arid in his treatment of an industrial and provident society for Income Tax. That is not wholly the case. It is true that we are allowed an Income Tax deduction in respect of share interest, but we are not treated like a building society, because every one of our shareholders who is liable to Income Tax has to pay separately on the share interest he receives. In the case of a company the shareholders do not pay twice.
    Sir J. Simon: There is a little difference of machinery, but I do not think it is more than that. Take a limited company. When I have distributed to me my share of the interest due to me, I get it less tax. Then I am left to get the tax back if I am able to prove that I come within the proper limits of exemption. In that case I do not have to bear the tax, but if I am within the taxable limit then I have to bear it. Exactly the same result is reached in connection with the cooperative society but by the reverse process. You begin by giving each shareholder his share interest without having deducted any tax. Suppose there is a

    1811
    shareholder who comes within the Income Tax limits, then, as the right hon. Gentleman correctly says, there has to be a separate assessment on him for Income Tax. Therefore, we arrive at the same result in the end. In the first case you start by deducting the tax and getting it back again if you are not within the Income Tax limit, and in the second case you give the interest gross and you assess the recipient separately if necessary.
    Mr. Alexander: We understand the machinery just as well as the right hon. Gentleman. The Chancellor of the Exchequer was very anxious to say that my hon. Friend the Member for East Ham, South put up a good argument from his point of view. The Chancellor of the Exchequer has put up a good argument from his own point of view. But what happens is this: that the Government use this special type of machinery in respect of co-operative societies in order to save money in collection, they do it deliberately, and leave co-operative societies to pay the tax upon the whole of the balance although the individual shareholder in the society has to pay direct. If the Government wanted us to be assessed for Income Tax under the 1933 Act—we do not concede the principle at all—then in fairness they ought to allow us to deduct the tax—because we are taxed on reserves—from everyone of our shareholders however small the amount may be. But not for the sake of justice, but mainly for the convenience and economy of the Treasury, they adopt the other method. If the Government decide that this is just treatment, we claim that we should not be worse off in respect of the machinery for National Defence Contribution than we are in respect of Income Tax. That is my general answer to the case put by the Chancellor of the Exchequer in reply to my hon. Friend the Member for East Ham, South.
    I am very concerned indeed that the Chancellor has ridden off in the way he has on the points put by my hon. Friend with regard to public utility societies and building societies. In the first place, the Chancellor of the Exchequer did not make any real answer to the case put in regard to building societies. We have made it plain that we are not critical of the wisdom of the action of the Chancellor of the Exchequer in giving special
    1812
    treatment to building societies, but it must be observed that the average depositor and holder of shares in a building society is a much wealthier person than the average member of a co-operative society, and that in a number of cases the revenue is robbed by wealthy families having three and four, and seven or 10 or a dozen holdings in a building society in order that their total income may pay at only half the Income Tax rate. It is only in that way that you keep up the average of the shareholding figures in building societies. But the Government have deliberately gone out of their way to scale down the National Defence Contribution in respect of building societies. Why? Not for the sake of the poor people who are shareholders, but in order that one of the alternatives mentioned by my hon. Friend shall not be taxed, and that is the reduction of the rate of share interest to these wealthy depositors in building societies. You give no such treatment to the 8,000,000 shareholders in industrial and provident societies, with only an average holding of f £18.
    In the second place the Chancellor of the Exchequer has ridden off on the case put in regard to public utility societies. What case is there at all for the exemption of public utility societies? If they are making the ordinary provision of the necessities of life for poor people day after day, electricity, water, transport, what is there of greater virtue about that than when co-operative societies provide tea and sugar and bacon and bread and milk? These are matters of daily necessities as much as other things. The only thing is that this great country in which we live has not gone as far forward in recognising the need for collective provision for these other commodities as they have in the case of electricity, water and transport. Yet you see behind the financial provisions of these public utility societies a very sound investment for the ordinary profit-making investor, and you exempt them from this extra imposition. Why? I am certain that we have not had the vestige of an answer, and if there is an answer I think we should have it before this Debate finishes.
    I apologise to my hon. Friends for having intervened perhaps too early, but I wanted to answer the Chancellor of the Exchequer while the points were in my mind. I feel myself far more convinced

    1813
    and much more determined in the rightness of our case as the result of the Debate, as far as this has gone, than I did last year, and I hope that my hon. Friends and fellow members throughout the country will stick to this job until we defeat this injustice.
    8.22 p.m.
    Sir J. Mellor: I feel that there is every reason why co-operative societies should pay their full share of taxation in general and of the National Defence Contribution in particular. One reason is that it is a great sheltered industry. It is sheltered in the sense that it is a distributing trade in the main part, and, therefore, sheltered from the difficulties which attend export businesses, and also is not so much subject to the fluctuation of prices which hits so hard and so often the primary producer.
    Mr. James Griffiths: Will the hon. Member develop that argument and show in what way co-operative societies are sheltered, and also whether public utility societies are not sheltered?
    Sir J. Mellor: That does not alter my argument in the least. Everyone recognises as a fact that primary producers are much more liable to be hit by fluctuations in prices than the distributive trades. Also, this is a very large concern. We have been told by the hon. Member for East Ham South (Mr. Barnes), who moved the Amendment, that the share capital of the co-operative societies amounts to £150,000,000. I do not know how much one ought to add to that in respect of loan capital in order to arrive at the amount of capital which is employed in the co-operative society movement generally. There is also this point, that as compared with other businesses, as compared with private enterprises, cooperative societies pay a very small amount of tax in proportion to their turnover and, therefore, I feel it is right that they should bear the taxation which is at present imposed upon them.
    Mr. Alexander: Can the hon. Member give me a single instance in which taxation either for revenue purposes or for National Defence Contribution has ever been based upon turnover?
    Sir J. Mellor: I do not suggest that it has been based upon turnover. I am pointing out that as the "divi" is
    1814
    treated, and properly treated, as a trade discount, the amount of profits in relation to the turnover which are subject to taxation in the case of co-operative societies, is very small indeed as compared with the position of private companies. My next point is that the Chancellor of the Exchequer not only needs to collect a fair proportion of taxation from the co-operative societies, but also to protect the Revenue. If the co-operative societies were put in a relatively privileged position, they would have an unfair advantage over competitive private enterprise, and one would expect the ultimate result to be that private enterprise would tend to be driven out of business. Hon. Members on my side of the Committee believe in the maintenance of private enterprise, but at the same time we recognise that cooperative societies are performing a very valuable function in this country. We recognise that they should have equality, but we do not see why they should have more than equality.
    Therefore, I say that the Chancellor of the Exchequer is perfectly right in requiring them to pay their full share of taxation in order to protect the Revenue, because if we allowed a privileged form of enterprise to drive out of business a form of enterprise which was much more heavily taxed, then the Chancellor would naturally lose revenue to an increasing extent every year. I do not think that hon. Members should press academic theory too far in their arguments on behalf of co-operative societies. In the Finance Bill we are passing retrospective legislation, which is contrary to all academic theory, in order, in some cases, to prevent evasion, where it is unquestionably right, but also, as was discussed yesterday, in certain other cases where it is much more doubtful. I think hon. Members ought to look at the realities of the position. I am certain that if a co-operative method had been used by, say, a certain number of rich men for the purpose of the evasion of taxation, hon. Members of the Opposition would have been the very first to say that we must not adhere too strictly to an academic theory of legislation, but must immediately set to work to put a stop to it.
    Mr. Alexander: I would point out to the hon. Baronet that my hon. Friend the Member for South East Ham (Mr. Barnes) introduced a Bill in 1929 which

    1815
    was aimed at preventing the co-operative principle being exploited by such misleading of the public.
    Sir J. Mellor: I see no objection to that. I feel that the theory of mutuality ought not to be pushed too far. I have already pointed out that co-operative societies have a very great advantage in their "divi" being treated as a trade discount, because it absorbs the great bulk of their profits before they become assessable to taxation. Therefore, I consider that the co-operative societies ought to be content to be on fair competitive terms with private enterprise. If they are content with that position, I am sure they will enjoy the good will of the country and of private enterprise itself.
    8.29 p.m.
    Mr. Ridley: I am grateful to the hon. Baronet the Member for Tamworth (Sir J. Mellor) for having addressed the Committee, since thet enables me to intervene with less trepidation than would otherwise have been the case. Most hon. Members on this side would hesitate before rising to address the Committee after the powerful speech made by my right hon. Friend the Member for Hillsborough (Mr. Alexander). The Committee has heard a very remarkable speech from the Chancellor of the Exchequer, not, as I hope to show, the first remarkable speech which the right hon. Gentleman has made in connection with this proposition. The Chancellor said that if we accepted the decision that was taken in 1933, we could not to-night accept the new Clause now under discussion. I am a tyro in these matters, but I thought that if there was one person in the Committee who did not accept the decision of 1933, it was the Chancellor. If I understand the position rightly, the 1933 decision extended the area to which Income Tax was applied. If the Chancellor's case to-night were that the National Defence Contribution was being applied to the whole of the area covered by Income Tax under the 1933 decision, he would have a stronger case than he has so far presented; but so far from accepting—
    Sir J. Simon: I interrupt the hon. Gentleman because I am sure that he is putting a difficulty which he really feels, and I will try to remove it. If he will look at the provisions of the Finance Act of
    1816
    last year concerning the National Defence Contribution, he will see this:
    "For the purpose of the National Defence Contribution, the profits arising from a trade or business… shall be so computed on Income Tax principles."
    That is the principle of 1933.
    Mr. Ridley: Surely, the 1933 decision added to the area to which Income Tax was applied, and if the National Defence Contribution was being applied to the whole of that area as added to by the 1933 decision, the right hon. Gentleman would have had a more justifiable case to submit to the Committee than he has now. But so far from accepting that decision, he goes out of his way to provide a very considerable number of exceptions to it. If the 1933 decision, considered in the light of the circumstances of the Finance Act of last year and the Clause before the Committee to-night, is seen to be an unfair decision, surely the Committee is not to be guilty of that sort of consistency which Emerson described as the hobgoblin of little minds.
    My hon. Friend the Member for South East Ham (Mr. Barnes) inquired as to what are public utility companies within the definition of the Finance Act of last year. I should like to ask what are professions within the definition of last year's Finance Act. I can understand a grocer complaining because an estate agent next door who is making a very considerable income is not required to bear the burden of the National Defence Contribution. I can understand his complaining because prosperous and opulent members of the profession which the right hon. Gentleman himself adorns do not have to bear the burden of patriotism known as the National Defence Contribution. I should like to know how far this exception goes in the matter of professions. Does it extend to great singers and great pugilists? To whom does the exception apply? In any case, it is applied to doctors, lawyers, public utility companies and building societies, thus destroying altogether the contention on which the Chancellor builds his case, that we are bound to stand by the 1933 decision.
    As I have said, this is not the first remarkable speech which the Chancellor has made on this subject. My general feeling after the discussions that took place last year on this matter was that

    1817
    the tax, applied to the co-operative movement, was an unfair tax. That general feeling has been strengthened by a further attempt to understand the problem, especially in the light of the case made by the right hon. Gentleman himself last year. I have attempted to find some justification for that case in the language which the Chancellor used last year and in the cases which he cited, but I am sorry that I cannot find any. The more I examine the problem, the more its unfairness becomes obvious even to the point of being monstrous. Stripped of all complexities, the simple issue is, what should be regarded as profit for the purposes of this form of taxation? The Chancellor has made a comparison, which my right hon. Friend has shown not to be justifiable, in seeking to link two great limited liability companies with the Co-operative Wholesale Society. The Chancellor made a similar, and as I think, a non-relevant comparison last year. Speaking in Committee on 15th July the Chancellor in imagination strolled down a village street in which were situated the general businesses of Messrs. X and Company, of Messrs. Y X in partnership, and the Cooperative Society. He suggested, with some show of moral indignation, that to apply the tax to Messrs. X and Company and to Messrs. Y X in partnership but not to the Co-operative Society would be very unfair.
    I often find it difficult to believe that the Chancellor persuades himself by the employment of his own arguments. If he does he must in that instance have been in his most persuasive mood to persuade himself that there was any taxable similarity between those three undertakings. Take X and Company. It is a public company. Its shares are on the Stock Exchange. They are bought by all sorts of people—by people who have no knowledge of grocery or of drapery, who are pure investors and who make a profit merely by lending or investing money. Most likely they spend none of their money with the firm in which their investments are made, either because they despise the goods which the firm sells, or because the firm has not a branch in Nice or Cannes. That is sheer profit, which is properly taxable. The investment too has propably been induced, if the Chancellor and I have the same firm in mind, by a remarkable financial experience in
    1818
    which, by selling inferior goods at superior prices and employing workpeople under unsatisfactory conditions, large profits have been made, high dividends paid and bonus shares distributed.
    None of these things is characteristic of the co-operative society, and therefore no comparison in that case can be sustained. I wander a little further with the right hon. Gentleman down the village street and examine the partnership of Mr. Y and Mr. X. It is very improbable that they will make a profit large enough to rank for tax, especially if they have managed to employ themselves with each other as joint managers at salaries in the fixing of which care is taken to avoid tax. Or, they may be absentee partners, far away in Arcady, not soiling their fingers with currants or calico. Again, there is no similarity between such a partnership and the ordinary co-operative society. The co-operative society is in the main a working-class community very frequently a community of low wage-earners or perhaps a community many of whom are not wage-earners at all. Many of them may be unemployed in mining areas or in the areas covered by the cotton industry of Lancashire. Some two or three thousand of these people band themselves together in a co-operative society. What for? Is it for Stock Exchange speculation like X and Company? Not at all. It is in order to make their meagre incomes provide a little more cover for life's necessities than would be possible either with X and Company or the Y and X partnership.
    This, I venture to suggest, is the best kind of thrift and is to be encouraged and not to be exploited. But there are dividends, a word which in this connection I feel tends to confusion. Those dividends do not arise from investments but from purchases. They are distributed, but they are spent and re-spent in hundreds of cases long before that. They are spent over and over again, so to speak, in a grim kind of speculation—speculation as to how far they will go and how much they will provide. Will the dividend provide a pair of boots for young John? Will it make a dress for mother? Will it buy a new carpet or a new rug? Will it replace worn-out sheets or unusable saucepans? Will it provide a ton of coal for the winter? How far will the dividend provide cover for all those grim necessities? It is a safe

    1819
    assumption and a very important assumption too, in my view, that almost every halfpenny of the co-operative dividend is immediately spent again with the cooperative society.
    It is that kind of cash purchasing power which is the basis of all good trade and which I submit we limit at our peril. But the Chancellor seeks to limit it, and here again, as in the case of the Tea Duty, he goes to the poorest of our community and pinches the barest necessities of our people. If the Chancellor urges that for the individual the tax cannot amount to more than a shilling or two, I reply that a shilling or two in households like these means much more than the most comfortable people in this Committee are able to realise. Further, the wickedness of the incidence is not only in its size but in its character. Some things are meaner by their smallness than by their enormity, and here again, as in the case of the Tea Duty, I say the Chancellor has stooped very low indeed to pick up so little from the individual. I conclude by expressing the view that the repercussions of this matter have been making themselves felt in the constituency which the right hon. Gentleman once frequented before he was sent as a wanderer on the face of the political earth in search of a safe Tory seat.
    8.42 p.m.
    Mr. Gallacher: The extraordinarily well-reasoned speech of the hon. Member for East Ham, South (Mr. Barnes), backed by the powerful arguments of the right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander), has presented a case which the Chancellor of the Exchequer cannot possibly answer. He has made no attempt to answer it. I was interested, however, in the speech of the hon. Member for Moseley (Sir P. Hannon), who said that co-operators should contribute in the same way as any other citizens, and added that it was something like impertinence on the part of hon. Members on this side to put forward such a proposition as this new Clause. One can only answer by saying that only ignorance of the subject can excuse the hon. Member for accusing hon. Members on this side of impertinence. He says the co-operators should pay their contributions the same as other citizens. All right, but I challenge the Chancellor of the Exchequer with the fact that he is
    1820
    demanding that the co-operators should pay more than other citizens. No member of this Committee has any right to allow his prejudices to decide his conduct on this question of justice to the co-operative movement. We had an example this afternoon of what prejudice can do. We were supposed to be discussing a Bill to deal with the protection of religion in this country against foreign freethinkers, but the hon. and gallant Member in charge of the Bill got up and talked about Bolshevism—
    The Deputy-Chairman: I think we had better keep to the Clause which is before the Committee.
    Mr. Gallacher: I was only giving an example of how prejudice works and I do not want to see prejudice against the co-operative movement influencing the voting of Members on this question. An hon. Member behind me spoke against this new Clause, and it was obvious that his concern for private trade and capitalism, which is to be continually shored up by the Government, weighed his mind against the possibility of justice to cooperators. When the National Defence Contribution was introduced by the Prime Minister when he was Chancellor of the Exchequer, he informed us that the idea of it was to ensure that the extra profits that were being made through armaments would contribute towards the armaments expenditure. The Chancellor cannot deny that that was the idea behind it.
    When the National Defence Contribution was introduced nobody dreamed that there was to be any attempt to make it a general tax applying to the mass of the people. Nobody has any such idea now, but it has become a general tax, not applying to the people as a whole, but applying to a section of the people, namely, co-operators. When the Prime Minister made his speech introducing the tax no one dreamt that the day would arrive when old age pensioners and poor workers would have to pay a share of it. That is the position we have now reached with this tax on the Co-operative movement. It is not old age pensioners and poor workers as a whole who have to pay, but only old age pensioners and poor workers who are co-operators. The Chancellor took the instance of a street in which there was a business run by X at one end and a business run by Y at the other, with a co-operative store in

    1821
    between. The Chancellor said that it was an extraordinary thing to suggest that X and Y should pay the tax and that the co-operative store should not. I drew attention to the absurdity of his argument on the last occasion, and it is necessary to mention it again in order to emphasise the point I am making that this tax, which was supposed to be of a particular character, has now become of a general character applying to a section of the community.
    The Chancellor of the Exchequer did not face this consideration of his own argument. The Chancellor these days seems to be better at dodging arguments than facing them. X makes a profit of £1,750 and Y at the other end of the street makes a similar profit. Between them they make a profit of £3,500. I ask the Chancellor how much they pay of this tax. They pay nothing. In between there is a co-operative store which makes £3,000 profit. It pays something. In this co-operative society there may be r1,000 members who have put in their shillings, and pounds if they can spare them, and have gradually built up a little business. These members have between them, out of their trading and selling among themselves, made £3,000. They are to pay tax. The two private traders with L£3,500 profit between them will pay nothing. Is there any justice in that? Take any tenant in Glasgow or any house where there are four families, poor working-class families having a hard and desparate struggle to live. Two of the families are represented by fathers and mothers who are old age pensioners. They trade in the co-operative society, having joined with others to build up a system of mutual co-operation in order to enable them to live. According to this tax which the Chancellor has imposed on the co-operative society, the poor old age pensioners who are members of the society have to contribute to the National Defence Contribution while the other two families do not have to contribute.
    Is it possible to justify taxation of that kind? Is it possible for any Member to get up and have the audacity to say that co-operative societies should pay a share? Every co-operative society in the country is involved in general taxation. All co-operators, like anybody else, pay
    1822
    the Tea Duty, but here is a tax which no Member of the Government can justify. The Chancellor says that he has a good deal of sympathy with the co-operative movement, but he imposes this penal tax on it. I would rather do without his sympathy if it would get rid of the tax. Let him take away the tax and we will give him back his sympathy He says that there is nothing here specially against the co-operative movement and that we will not find it mentioned in the Finance Bill. That is the trouble. We want to see it mentioned. The Chancellor can mention utility companies.
    One hon. Member argued that the cooperative movement is a sheltered industry with no competition from abroad. What about electricity companies, water companies and transport companies? Are they not sheltered? Of course they are, and making loads of profit out of other people. When does the Chancellor ever make any attempt to face the arguments of the hon. Member for East Ham, South? We find utility companies mentioned—not the co-operative societies. We find building societies mentioned—not the cooperative societies. I would appeal to hon. Members opposite. I know that it is very difficult to subdue prejudice—I have seen so much of it in all directions —but here is a case which has been argued well and powerfully by the representatives of the co-operative movement in this Committee, and the Chancellor of the Exchequer has not met, and has not attempted to meet, the case.
    Mr. Kirkwood: He cannot meet it.
    Mr. Ga!llecher: No, he cannot meet it in his own constituency, and that is why he has become known in this House as the outstanding political refugee in this country. I challenge any opponents of this Clause—and I know that I am safe in making the challenge, because no one on the whole of the Front Bench opposite will take it up—to face either the right hon. Member for Hillsborough or the hon. Member for East Ham on any public platform and try to justify their attitude. Therefore, not in the name of the cooperative movement, although I have been a member of it all my life, but in the name of justice I ask the Committee to put an end to this attempt to penalise the co-operative movement.
    Question put, "That the Clause be read a Second time
    The committee divided: Ayes, 149; Noes, 210.

    Division No. 254.]

    AYES.

    [8.58 p.m.

    Acland, R. T. D. (Barnstaple)

    Hall, G. H. (Aberdare)

    Parkinson, J. A.

    Adams, D. (Consult)

    Hall, J. H. (Whitechapel)

    Pearson, A.

    Adams, D. M. (Poplar, S.)

    Hardie, Agnes

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

    Alexander, Rt. Hon. A. V. (H'Isbr.)

    Harris, Sir P. A.

    Poole, C. C.

    Anderson, F. (Whilehaven)

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

    Price, M. P.

    Aske, Sir R. W.

    Hayday, A.

    Pritt, D. N.

    Attlee, Rt. Hon. C. R.

    Henderson, A. (Kingswinford)

    Quibell, D. J. K.

    Bonfield, J. W.

    Henderson, J. (Ardwick)

    Richards, R. (Wrexham)

    Barnes, A. J.

    Henderson, T. (Tradeston)

    Ridley, G.

    Batey, J.

    Hills, A. (Pontefract)

    Riley, B.

    Ballenger, F. J.

    Holdsworth, H.

    Ritson, J.

    Bann, Rt. Hon. W.

    Hopkin, D.

    Roberts, Rt. Hon. F. O. (W. Brom.)

    Benson, G.

    Jenkins, A. (Pontypool)

    Roberts, W. (Cumberland, N.)

    Broad, F. A.

    Jenkins, Sir W. (Neath)

    Robinson, W. A. (St. Helens)

    Bromfield, W.

    John, W.

    Salter, Dr. A. (Bermondsey)

    Brown, C. (Mansfield)

    Johnston, Rt. Hon. T.

    Seely, Sir H. M.

    Buchanan, G.

    Jones, A. C. (Shipley)

    Sexton, T. M.

    Burke, W. A.

    Jones, Morgan (Caerphilly)

    Sitkin, L.

    Charleton, H. C.

    Kelly, W. T.

    Silverman, S. S.

    Chater, D.

    Kennedy, Rt. Hon. T.

    Simpson, F. B.

    Cluse, W. S.

    Kirby, B. V.

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Clynes, Rt. Hon. J. R.

    Kirkwood, D.

    Smith, Ben (Rotherhithe)

    Cooks, F. S.

    Lansbury, Rt. Hon. G.

    Smith, E. (Stoke)

    Collindridge, F.

    Lathan, G.

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

    Cove, W. G.

    Lawson, J. J.

    Smith, T. (Normanton)

    Daggar, G.

    Leach, W.

    Sorensen, R. W.

    Dalton, H.

    Leonard, W.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Davidson, J. J. (Maryhill)

    Leslie, J. R.

    Summerskill, Dr. Edith

    Davies, R. J. (Westhoughton)

    Logan, D. G.

    Taylor, R. J. (Morpeth)

    Davies, S. O. (Merthyr)

    Lunn, W.

    Thurtle, E.

    Day, H.

    Macdonald, G. (Ince)

    Tinker, J. J.

    Bobbie, W.

    McEntee, V. La T.

    Tomlinson, G.

    Dunn, E. (Rother Valley)

    McGhee, H. G.

    Viant, S. P.

    Ede, J. C.

    McGovern, J.

    Walkden, A. G.

    Edge, Sir W.

    MacLaren, A.

    Watkins, F. C.

    Edwards, Sir C. (Bedwellty)

    Maclay, Hon. J. P.

    Watson, W. McL.

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

    Maclean, N.

    Welsh, J. C.

    Gallacher, W.

    Marklew, E.

    Westwood, J.

    Gardner, B. W.

    Marshall, F.

    White, H. Graham

    Garro Jones, G. M.

    Mashers, G.

    Whiteley, W. (Blaydon)

    George, Major G. Lloyd (Pembroke)

    Maxton, J.

    Wilkinson, Ellen

    George, Megan Lloyd (Anglesey)

    Milner, Major J.

    Williams, D. (Swansea, E.)

    Gibson, R. (Greenock)

    Montague, F.

    Williams, E. J. (Ogmore)

    Graham, D. M. (Hamilton)

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

    Williams, T. (Don Valley)

    Green, W. H. (Deptford)

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

    Windsor, W. (Hull, C.)

    Greenwood, RI. Hon. A.

    Muff, G.

    Woods, G. S. (Finsbury)

    Grenfell, D. R.

    Nathan, Colonel H. L.

    Young, Sir R. (Newton)

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

    Naylor, T. E.

    Griffiths, G. A. (Hemsworth)

    Owen, Major G.

    TELLERS FOR THE AYES.—

    Griffiths, J. (Lianelly)

    Palign, W.

    Mr. Groves and Mr. Adamson.

    Guest, Dr. L. H. (Islington, N.)

    Parker, J.

    NOES

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

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

    Davies, C. (Montgomery)

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

    Bull, B. B.

    De la Bère, R.

    Agnew, Lieut.-Comdr. P. G.

    Butcher, H. W.

    Denman, Hon. R. D.

    Albery, Sir Irving

    Campbell, Sir E. T.

    Denville, Alfred

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

    Cayzer, Sir H. F. (Portsmouth, S.)

    Doland, G. F.

    Allen, Lt.-Col. Sir W. J. (Armagh)

    Christie, J. A.

    Donner, P. W.

    Assheton, R.

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

    Dorman-Smith, Major Sir R. H.

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

    Clarry, Sir Reginald

    Drewe, C.

    Astor, Hon. W. W. (Fulham, E.)

    Cobb, Captain E. C. (Preston)

    Duckworth, W. R. (Moss Side)

    Baillie, Sir A. W. M.

    Colfox, Major W. P.

    Dugdale, Captain T. L.

    Baldwin-Webb, Cal. J.

    Colman, N. C. D.

    Duggan, H. J.

    Barclay-Harvey, Sir C. M.

    Conant, Captain R. J. E.

    Dunglass, Lord

    Beamish, Rear-Admiral T. P. H.

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

    Eckersley, P. T.

    Beauchamp, Sir B. C.

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

    Edmondson, Major Sir J.

    Beaumont, Hon. R. E. B. (Portsm'h)

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

    Ellis, Sir G.

    Beechman, N. A.

    Cranborne, Viscount

    Elliston, Capt. G. S.

    Bennett, Sir E. N.

    Croft, Brig.-Gen. Sir H. Page

    Emrys-Evans, P. V.

    Bernays, R. H.

    Crooke, Sir J. Smed'e

    Errington, E.

    Bossom, A. C.

    Crookshank, Capt. H. F. C.

    Evans, Capt. A. (Cardiff, S.)

    Bower, Comdr. R. T.

    Croom-Johnson, R. P.

    Everard, W. L.

    Boyce, H. Leslie

    Cross, R. H.

    Fildes, Sir H.

    Braithwaite, Major A. N.

    Crowder, J. F. E.

    Fremantle, Sir F. E.

    Brass, Sir W.

    Culverwell, C. T.

    Fyfe, D. P, M.

    Briscoe, Capt. R. G.

    Davidson, Viscountess

    Grant-Ferris, R.

    Greene, W. P. C. (Worcester)

    MacDonald, Rt. Hon. M. (Ross)

    Salt. E. W.

    Gretton, Col. Rt. Hon. J.

    Macdonald, Capt. P. (Isle of Wight)

    Samuel, M. R. A.

    Gridley, Sir A. B.

    Maitland, A.

    Sanderson, Sir F. B.

    Grimston, R. V.

    Makins, Brigadier-General Sir Ernest

    Scott, Lord William

    Gritten, W. G. Howard

    Manningham-Buller, Sir M.

    Selley, H. R.

    Hambro, A. V.

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

    Shaw, Major P. S. (Wavertree)

    Hannah, I. C.

    Markham, S. F.

    Shaw, Captain W. T. (Forfar)

    Harbord, A.

    Maxwell, Hon. S. A.

    Shepperson, Sir E. W.

    Harvey, Sir G.

    Mayhew, Lt.-Col. J.

    Simon, Rt. Hon. Sir J. A.

    Haslam, Henry (Horncastle)

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

    Sinclair, Col. T. (Queen's U. B'lf'st)

    Heilgers, Captain F. F. A.

    Mills, Sir F. (Leyton, E.)

    Smiles, Lieut.-Colonel Sir W. D.

    Hely-Hutchinson, M. R.

    Mills, Major J. D. (New Forest)

    Smith, Braoewell (Dulwich)

    Hepworth, J.

    Moreing, A. C.

    Smith, Sir R. W. (Aberdeen)

    Herbert, A. P. (Oxford U.)

    Morris-Jones, Sir Henry

    Smithers, Sir W.

    Herbert, Major J. A. (Monmouth)

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

    Somervell, Rt. Hon. Sir Donald

    Herbert, Capt. Sir S. (Abbey)

    Muirhead, Lt.-Col. A. J.

    Somerville, A. A. (Windsor)

    Higgs, W. F.

    Munro, P.

    Southby, Commander Sir A. R. J.

    Hope, Captain Hon. A. O. J.

    Nall, Sir J.

    Stanley, Rt. Hon. Lord (Fylde)

    Hopkinson, A.

    Neven-Spenee, Major B. H. H.

    Stanley, Rt Hon. Oliver (W'm'l'd)

    Horsbrugh, Florence

    Nicotson, Hon. H. G.

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

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

    O'Connor, Sir Terence J.

    Strauss, H. G. (Norwich)

    Hume, Sir G. H.

    Peaks, O.

    Stuart, Lord C. Crichton- (N'thw'h)

    Hunloke, H. P.

    Peat, C. U.

    Stuart, Hon. J. (Moray and Nairn)

    Hunter, T.

    Perkins, W. R. D.

    Sueter, Rear-Admiral Sir M. F.

    Hurd, Sir P. A.

    Petherick, M.

    Tasker, Sir R. I.

    Hutchinson, G. C.

    Pickthorn, K. W. M.

    Taylor, C. S. (Eastbourne)

    Jones, Sir H. Haydn (Merioneth)

    Pilkington, R.

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Jones, L. (Swansea W.)

    Ponsonby, Col. C. E.

    Thomson, Sir J. D. W.

    Keeling, E. H.

    Radford, E. A.

    Thorneycroft, G. E. P.

    Kerr, Colonel C. I. (Montrose)

    Wakes, H. V. A. M.

    Titchfield, Marquess of

    Keyes, Admiral of the Fleet Sir R.

    Ramsbotham, H.

    Touche, G. C.

    Lamb, Sir J. Q.

    Ramsden, Sir E.

    Tufnell, Lieut.-Commander R. L.

    Latham, Sir P.

    Rankin, Sir R.

    Turton, R. H.

    Law, Sir A. J. (High Peak)

    Rathbone, J. R. (Bodmin)

    Walker-Smith, Sir J.

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

    Rayner, Major R. H.

    Wallace, Capt. Rt. Hon. Euan

    Leech, Sir J. W.

    Reed, A. C. (Exeter)

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

    Leighton, Major B. E. P.

    Reed, Sir H. S. (Aylesbury)

    Ward, Irene M. B. (Wallsend)

    Levy, T.

    Reid, Sir D. D. (Down)

    Wardlaw-Milne, Sir J. S.

    Liddell, W. S.

    Rickards, G. W. (Skipton)

    Waterhouse, Captain C.

    Lipson, D. L.

    Robinson, J. R. (Blackpool)

    Wells, Sir Sydney

    Little, Sir E. Graham-

    Ropner, Colonel L.

    Whiteley, Major J. P. (Buckingham)

    Llewellin, Colonel J. J.

    Ross Taylor, W. (Woodbridge)

    Windsor-Clive, Lieut.-Colonel G.

    Loftus, P. C.

    Rowlands, G.

    Wise, A. R.

    Lyons, A. M.

    Royds, Admiral Sir P. M. R.

    Wragg, H.

    Mabana, W. (Huddersfield)

    Ruggles-Brise, Colonel Sir E. A.

    MacAndrew, Colonel Sir C. G.

    Russell, R. J. (Eddisbury)

    TELLERS FOR THE NOES.—

    MeCorquodale, M. S.

    Russell, S. H. M. (Darwen)

    Mr. Furness and Major

    Harvie Watt.

    NEW CLAtisUSE.-—-(Relief in respect of Income Tax assessment for Ministers of the Crown who are Members of the House of Commons.)
    For the purposes of assessment of Income Tax and Surtax, the first six hundred pounds of the salary of a Minister of the Crown who is also a Member of the House of Commons, shall be deemed to be salary on account of services rendered as a Member of Parliament. —[Sir I. Albery.]
    Brought up, and read the First time.
    9.7 P.m.
    Sir I. Albery: I beg to move, "That the Clause be read a Second time."
    This is, in a way, a rather interesting Clause. During the discussion of this Bill we have considered questions of evasion of taxation, and there has been agreement on all sides of the Committee that we should do what we can to prevent people avoiding their just dues as taxpayers by quibbling or trying to get round the letter and the spirit of the law. This Clause presents another side of the picture. I
    1826
    have put my name to it, not merely because I desire the Chancellor of the Exchequer and his colleagues to be dealt with fairly, but more because when the right hon. Gentleman comes to reply he will very likely say that one of his reasons for not accepting the proposed new Clause is that there are many other cases that are unjustly dealt with, and that he would like to deal with them all at the same time. My view is that nothing would give the other people more encouragement than his acceptance of this Clause. If he puts right the wrong from which he and his colleagues are suffering, we can claim that the other people who are suffering from injustices have every prospect of theirs being put right in the near future. Let me now explain in a little more detail what the injustice is.
    It appears that when a Member of Parliament is promoted to be a Minister of the Crown, perhaps as a junior Minister or a junior Whip, he becomes entitled, from a salary of £600 a year, to a salary

    1827
    of, say, £1,000 a year, but from that moment he no longer has the right to claim any relief on account of his expenses as a Member of Parliament. I understand that the argument under Income Tax law is that you cannot claim relief upon any remuneration which you receive on account of a different service. When that Member becomes a Minister he receives his salary as a Minister but nothing as a Member of Parliament, and he is therefore no longer entitled to claim on account of his expenses as a Member of Parliament. I do not think that that result could have been the intention of whoever framed those provisions. It seems clear that a junior Minister will have, in the main, exactly the same expenses as he had before he was made a junior Minister, and the effect under the present arrangement is that after he becomes a junior Minister he gets no increase of salary at all, in addition to which he may have to give up his employment, if he has private employment, and to devote the whole of his time in the office of the Minister. Financially, he finds himself no better off, and possibly worse off, than he was as a Member of Parliament.
    The Treasury or the Income Tax officials have taken that view for some time past. I am bound to say that it is their duty to exact from the taxpayer as much taxation as the law will enable them to exact, but that does not seem very different from the position of the taxpayer who avoids as much taxation as he can as long as he remains within the law. For that reason I consider the present moment an opportune one to raise this point. The Chancellor of the Exchequer will say, of course—he has already said it—that the present is not a good moment to make any tax concession, but this is a very small concession. On the other hand, it is a good moment to raise it. The letter of the law is that when a Member of Parliament gets to ministerial rank he should be deprived of his just relief. Legally, that is entirely in order, but, in my view, it is entirely against all views of justice and equity, and is against the spirit of the law.
    .9.14 p.m.
    Sir J. Simon: My hon. Friend has raised an interesting point, which arouses, on the face of it, a sympathetic feeling in certain breasts. I think his account of the situation is accurate. J admit, as
    1828
    one who has been a Minister of the Crown in various offices, that it bears harshly in certain cases. Income Tax law is perfectly clear. It is that the holder of any public office who is paid a salary because he holds that office is entitled, for the purposes of Income Tax, to deduct only those expenses which he incurs wholly, exclusively and necessarily in the performance of the duties of that office. That is the ordinary law which applies to every one, what-ever his office is. It follows that a Member of Parliament who receives k£600 a year is entitled to deduct from that i£600, for purposes of Income Tax, expenses that he wholly, exclusively and necessarily incurs in the performance of his duties as a Member of Parliament. As many hon. Members know, £100 is allowed as a matter of course, and, if any Member of Parliament can prove, as many can, that the expenses which are wholly, exclusively and necessarily incurred by him in the performance of his duties as a Member of Parliament amount to more than that, he can make a further deduction.
    Supposing, however, that a Member of the House becomes a Minister of the Crown, he becomes the holder of an office for which he receives a salary, and it might be supposed that thereupon he. would be entitled to deduct from his salary the same expenses which he had deducted when he was a Member of Parliament. But the law answers, "Ah, but those expenses which you want to deduct are really expenses which you incur in the performance of your duties as a Member of Parliament. The expenses which you incur in discharging your duties as a Minister will be at any rate almost entirely met out of public funds as part of the expenses of the office, and, therefore, you are no longer entitled to deduct anything at all; you must suffer Income Tax on your salary as a Minister without any diminution or deduction whatever." And that is what happens.
    It is not disputed, of course, that a junior Minister receiving perhaps £1,000 a year has to pay Income Tax on that £1,000 without any deduction at all, as a result of an accurate and perhaps rather refined application of the Income Tax law; but although he may incur expenses, as, for instance, for a private secretary to deal with his constituency correspondence and so on. he can no longer say that he is

    1829
    incurring those expenses in the discharge of his duties when holding the office of Minister, because they are really expenses incurred as a Member of Parliament, and he has become an unpaid Member of Parliament. That is how the matter stands. It is due, first, to the fact that that is the law; and, secondly, to decisions which were reached as long ago as 1911, when the position was expressed to be that there should be a payment to each Member of Parliament of, at that time, £400 a year, excluding any Member who was for the time being in receipt of the salary of an office under the Crown. What I have said will probably cause a number of hon. Members to feel that this is rather an artificial distinction and a hard rule, and it is true that some Ministers feel that they have some ground of complaint about it. But unquestionably it is the right application of Income Tax law.
    I am now asked whether I am prepared to accept this agreeable proposal to change the rule for the benefit of Ministers present and to come. I cannot do that, and I cannot do it for, among other things, this definite reason. The Committee may remember that last year a Bill was carried through Parliament called the Ministers of the Crown Bill. Indeed, I was myself responsible for piloting it through the House of Commons. We then rearranged the salaries of Ministers, putting them on a more orderly level, and in some cases raising the salaries; and one of the reasons given at that time on behalf of the Government—I gave it myself—was that it was thought that a certain readjustment of salaries, involving raising them in some cases, was justified, among other grounds, on the ground that, when a man became a Minister, he had to pay Income Tax on the whole of his Ministerial salary, and was not permitted to make any deduction on account of expenses incurred. I could not offer that argument to the House of Commons on 28th April, 1937, and now, at the present date, say that, the salaries having been altered, I think it is time to allow this deduction for expenses.
    Mr. Ede: It would not be the first opinion you have changed.
    Sir J. Simon: The hon. Gentleman is very encouraging, but in my view this is the thing that we cannot do. Whether some day, when we are dealing with the whole subject of a general revision of
    1830
    the Income Tax law, this is a case which might be reconsidered, I do not know, though frankly I think it operates a little harshly. When a man becomes a Minister, his correspondence with his constituents and so on does not cease, nor does he in practice, as far as my experience goes, do all that work at the expense of the State; and I imagine that a good many Ministers find that the expenses connected with such work are not in fact met out of the salary or out of the provision which is very properly made in the Departments for official purposes. However, I am quite clear that I could riot accept this proposed new Clause, and, therefore, more in sorrow than in gladness, I must tender the Committee my respectful advice that they should reject my hon. Friend's proposal.
    9.22 p.m.
    Mr. Pethick-Lawrence: This matter has been brought before me on more than one occasion and in varying circumstances, and I think that, at the first blush, I should have been inclined to agree with the hon. Member for Gravesend (Sir I. Albery), because, as the Chancellor has explained, this matter really turns on a technicality. If Parliament, when it gave salaries to Members of the House of Commons, had said that a Member of the House of Commons should receive a salary, and that the salaries of Ministers of the Crown should be diminished, if they were Members of the House of Commons, by the amount of their House of Commons salary, then, I think, they would have been entitled to make the same deduction as a Member of the House of Commons does. But that, of course, was not the case. It was decided at that time that persons who at the same time were Members of the House of Commons and Members of the Government should not receive their House of Commons salary, and therefore, they are not in the position of having any salary from which they can correctly deduct expenses. That, as the Chancellor has explained, is the technical position.
    At that time some Members of the Government were only in receipt of £700 a year, and, when a man was appointed to such an office and only held it for a certain number of months, it was quite true that, in view of certain expenses which attached to that office, he might in fact be really worse off through holding

    1831
    the office for some six or seven months than he was as a Member of Parliament in receipt of £400 a year from which he could deduct expenses. Had that been the position to-day, there would have been a great deal to be said for supporting the hon. Gentleman's proposal, but, in view of the fact that salaries have been very appreciably increased, in the case of the lowest-paid offices particularly, I do not think that equity any more than technical legality would support the hon. Gentleman's claim, and for these reasons I agree with the Chancellor of the Exchequer.
    9.25 p.m.
    Mr. Maitland: I can well understand that it is rather embarrassing for an occupant of the Front Bench to deal with a matter which has some regard to his personal position, but I am tempted to support my hon. Friend on the ground that this is the kind of case which is very often advanced by the Inland Revenue authorities in other matters and, whilst the right hon. Gentleman described this as an accurate but refined interpretation of the law as it stood, I think the House should be very careful that accurate but refined interpretations should not be responsible for the infliction of hardships upon people who are genuinely desirous of paying their proper proportion of the contributions due from them to the State. I support the Clause because it is a definite and concrete example of the kind of case which often results in a taxpayer in another capacity having to pay a certain amount of taxation which on all equitable grounds he should not be called upon to pay. I hope, although the Chancellor of the Exchequer cannot see his way to accept the Clause on this occasion, that he will be assured that there are others besides the hon. Member for Gravesend (Sir I. Albery) who recognise that here is a definite case where the Treasury is receiving in taxes more than it is equitably entitled to receive. I should be very glad if this might be taken as an example of the kind of case where relief may be given in a way which may not be accurate or refined but may be more equitable.
    9.28 p.m.
    Mr. R. C. Morrison: I should like to draw attention to a small point which seems to me to be a flaw in the technical argument which the Chancellor of the Ex
    1832
    chequer developed, and which he was careful to say was not his argument but that of the Department. It was that when a Member of Parliament becomes a Minister of the Crown he becomes automatically an unpaid Member of Parliament and the whole of his salary is liable to tax. It seems to me that not enough attention was paid to the fact that a Member of Parliament cannot become a Minister of the Crown without being a Member of Parliament and cannot remain a Minister of the Crown without remaining a Member of Parliament.
    9.29 p.m.
    Sir J. Simon: I think the answer to that difficulty is this. You are permitted to deduct expenses wholly, exclusively and necessarily incurred in the performance of the office for which you are receiving a salary. If you are not receiving a salary, there is nothing from which to make deductions. The moment a Member of Parliament becomes a Minister it is true that he remains a Member of Parliament but he ceases to be a Member of Parliament in receipt of a salary and, unless he can show that the expenses that he wants to deduct are expenses due to discharging his office for example as Chancellor of the Exchequer, it is nothing to the point to say, "They are expenses that I have to pay because I am discharging my duty as a Member of Parliament." It is fine-spun but it is a well understood distinction which is sometimes quite important. Incidentally, if the Clause were accepted, if a Minister happened to be in the House of Lords he would be in quite a different position from a Minister in this House.
    9.3o p.m.
    Mr. J. J. Davidson: I think we can all understand the difficult position in which the Chancellor of the Exchequer is placed. I think he is developing a habit of dealign more with only one side of a particular question and neglecting the other side. True argument cannot really be pressed unless both sides are thoroughly examined. He said that undoubtedly, from a business point of view, it placed a hardship upon Under-Secretaries. It would be much more interesting if we could get one of the Under-Secretaries who have obtained the plums of office to explain some of the general benefits that accrue. There are many things apart from the actual salary. I understand, merely from listening to Debates in the House, that

    1833
    hostesses seek their company. I understand that week-end parties are given to meet prominent Members of the Government who may be suffering this pecuniary hardship. We have heard of the weekend parties at Cliveden to budding young men who have attained a particular position. I think the right hon. Gentleman could have given some very interesting information. He is an experienced campaigner in that respect, and, if it was possible, I am sure that some of the Under-Secretaries would have given perhaps a more modern version of those benefits.
    Then we should keep in mind the difficulties of those who have to work out Income Tax returns. It would be placing a great burden on them to have to deal with the ever-changing Front Bench. Generally speaking, with the benefits to which I have referred and with the extra work that it would place upon the shoulders of an already overworked community, the whole thing would not be worth the candle, as we say in Scotland. I think I can make this offer with safety. I could assure the right hon. Gentleman of a quid pro quo. If he is prepared to withdraw the tax from the Co-operative movement, I am sure the Opposition will support this Clause.
    9.35 p.m.
    Mr. Garro Jones: No Under-Secretary who is suffering such hardship in existing circumstances has ventured to raise his voice in support of this proposal. That is a circumstance which reveals either considerable poverty of spirit or, at this hour, fulness of appetite. However, I hope to be able to say something in their place. I propose to address a few consolatory remarks to the hon. Member for Gravesend (Sir I. Albery) in view of the fact that his proposal has been turned down. The Chancellor attempted to dismiss it with that air of finality which is one of his forensic methods, but I think we should be able to make out a case that a greater part of the expenses which fall on a Member of Parliament in that capacity ought to be deductible from his Income Tax assessment in his capacity as a Minister.
    The first expense of a Member of Parliament is the private office which he keeps for his constituency correspondence and other duties; the second is the secretary, or part-time secretary; the third is
    1834
    postages and stationery; and the fourth is the extra domicile. It appears to me that Ministers fall into two classes: those whose duties are so important that they are provided with offices and secretarial assistance by the State, and those whose duties are not so important. I cannot say into which class the Minister for the Co-ordination of Defence falls. I am told that he has one typist. However hard it may be on the Under-Secretaries who are not here to-night in not being provided with these amenities, there can be no hardship on the Ministers who are. I have had the honour of serving in various Government. Departments in days gone by, and I never recollect that any Minister with whom I came into contact ever went to the elaborate trouble of separating his postages for constituency correspondence and those required for his official duties. It was never expected that they should, and in fact it wouid not be worth while. The same thing applies in regard to stationery. I am told that it is the rule that Members cannot use official stationery in their private offices without buying it. In the House they can get it free, but if they walk round to Abingdon Street to do their correspondence, they have to pay for it. I think that no Minister who is provided with an office ever pays for his stationery, and it would be foolish to expect that he should.
    The largest expense incurred is that of maintaining two domiciles. If the Under-Secretaries showed a little less of that poverty of spirit they would be able to make out a case with the Inland Revenue that maintenance of two domiciles is just as important for a Minister of the Crown as a private Member. I have yet to learn that the tenure of office of a Member of the present Government is so secure that he would be justified in giving up his ordinary residence. Therefore, I put it forward as the suggestion to the Under-Secretaries that they should return to the charge against the Board of Inland Revenue.
    9.39 P.m.
    Sir I. Albery: I regret that I cannot withdraw the Clause. I was disappointed that the Chancellor and the right hon. Gentleman on the Opposition Front Bench said they could not support this Clause because certain events had somewhat improved the emoluments of Ministers. That

    1835
    was not the spirit in which the Clause was moved. It was mainly intended to show one of the injustices and inequalities which are occasionally inflicted on the taxpayer. Neither the Chancellor nor the right hon. Gentleman on the Opposition Front Bench has said anything to assure me that
    I was wrong in assuming that these injustices do exist.
    9.40 p.m.
    Mr. Benson: I am very glad we have had the second explanation from the hon. Member as to what was behind this Clause. When it was put down I think we on this side all assumed that the hon. Member felt deeply the grievances of Ministers of the Crown. We find, however, from his second explanation, that, so far from that being the object, it is merely one more step in the continuous battle that hon. Gentlemen opposite are fighting against the Board of Inland Revenue, and part of the attempt to establish that the interpretation of Income Tax law by the board is harsh and unconscionable. In view of the motives behind this Clause, I, personally, am much more inclined to oppose it than I was before I knew what the motives were.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAusUSE.—(Prepayment of estate duty.)
    (1) For the purpose of facilitating the prepayment of Estate Duty during the lifetime of the taxpayer the Treasury may issue to any person owning an estate on which Estate Duty is payable on his death, a certificate bearing interest at a rate not exceeding 3 per cent. per annum, in accordance with regulations made under this Section by the Treasury, on payment by such person of the amount specified in the certificate and, on the death of such person, surrender of the certificate to the Treasury shall be accepted as satisfaction of the Estate Duty payable on the estate to the extent of the amount specified in the certificate, plus the interest accruing thereon. Hereafter in this Section such certificate is referred to as an Estate Duty prepayment certificate, and such interest is referred to as accrued interest.
    (2) Estate Duty prepayment certificates shall be issued in denominations of ten pounds, fifty pounds, one hundred pounds, and one thousand pounds, respectively, which certificates shall be registered and non-transferable: and the owner of an estate may obtain, on due payment, one or more Estate Duty prepayment certificates.
    (3) The accrued interest shall not be assessable to Income Tax or Surtax.
    (4) Estate Duty prepayment certificates may be redeemed at any time, after three months' notice, but no accrued interest shall be payable by the Treasury on their redemption.
    (5) The amounts specified in the Estate Duty prepayment certificates held at the date of death, shall be included in the Estate Duty account along with the remainder of the estate of the deceased person, but the accrued interest shall not be included, and shall be free of all death duties.
    (6) In any case in which the amounts specified in the Estate Duty prepayment certificates surrendered under this Section in satisfaction of Estate Duty exceed in the aggregate the amount of Estate Duty payable and any interest due thereon, the excess shall, on the application of the legal representative of the person on whose death the Estate Duty became payable, be repaid to such representative, but there shall be no payment on account of accrued interest.
    (7) The Treasury may make regulations under this Section providing for the issue and registration of Estate Duty prepayment certificates for their redemption, for their acceptance on surrender in satisfaction of Estate Duty, and for other matters connected therewith.
    (8) Every regulation made under this Section shall be laid before both Houses 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 next 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.
    9.42 p.m.
    Sir I. Albery: I beg to move, "That the Clause be read a Second time."
    This Clause follows on some remarks which I made during the Budget Debates. Taxation has reached a very high level in this country, and it seems to me that it is about time that in some directions we made it easier for the taxpayer to pay. This Clause has certain merits which should appeal to the Chancellor. It is not likely in any way to unbalance his Budget; on the contrary, it appears to me that he would, in all probability, receive a very considerable contribution over the next year or two, when conditions might well be a little difficult. That is one reason why it ought to appeal to the Chancellor. Another reason is that, so far as I can see, he is unlikely to be called upon to repay these sums. It is true that what he has received in prepayment of Estate

    1837
    Duty will not subsequently be due when the taxpayer dies and the duty on his estate has to be paid. On the other hand, the Chancellor will continue to receive prepayments which will more than compensate him for anything he will lose in that respect. So, from the point of view of the Chancellor, it appears to me to be a complete gain.
    I should also like to look at it from the point of view of the general community. It is a well known fact that during the period of depression through which this country recently passed very great inconvenience and a good deal of dislocation was caused owing to the fact that estates had to pay heavy Estate Duty and had to be liquidated at a time when there was no market which could readily absorb the securities which had to be sold. In that respect I believe the acceptance of this Clause would present very great advantages. If the taxpayer is able, in a time of comparative prosperity, when quotations in the City are high, to sell a portion of his securities with a view to making arrangements for the eventual payment of Estate Duty, and put them into the kind of certificates suggested in this Clause, he will have conferred upon himself a considerable advantage—[An HON. MEMBER: "Hear, hear."] I will deal with that point in a moment—and he will have conferred upon the State some advantage, because he will have liquidated his estate when it could easily be liquidated, but without causing inconvenience and dislocation, instead of being compelled to liquidate it at an inconvenient moment.
    Just now an hon. Member opposite said "Hear, hear," when I talked about some advantage to the taxpayer himself. I wish to explain that this Clause is not put forward with the primary object either of reducing tax liability or of making the actual tax payments of a taxpayer less. It is put forward in quite a different spirit. It is put forward because I believe it will assist the finances of the country. As regards the provision which I have put in the Clause, admittedly advantageous to the taxpayer, in the shape of interest which will accrue upon his prepayment of Estate Duty, free of tax, and not ultimately to be calculated for duty, I have put in what I believe will be a suggestion sufficiently attractive to induce a considerable amount of prepayment of Estate Duty, but I am not in any way tied to
    1838
    those conditions. If the Chancellor of the Exchequer believes that less favourable conditions would achieve the same object, I have nothing against it. Something had to be put in, and I put in what, in my judgment, was an advantage to the taxpayer, which would result in large amounts of prepayment, and a corresponding advantage to the Chancellor, and I believe also to the general community; but if it be the opinion of this Committee and of the Chancellor that some advantage less large, some lower rate of interest, would achieve the same object, I would not only willingly agree with that, but I should be equally glad. I only desired to put forward a Clause in a form in which it might be workable. It would be useless to propose a Clause of this kind, trying to induce the taxpayer to save money, to liquidate it at a time when it would be advantageous to the community, and to pay it over to the Chancellor, unless you could provide a sufficient inducement to make him do it. Therefore, it is a question of judgment and opinion, and it does not, in my view, remain a matter of any material importance in considering this Clause.
    9.50 p.m.
    Mr. Maitland: My hon. Friends and myself seem to have been particularly unfortunate in the Amendments which we have previously submitted, and I hope we may meet with better fortune on this occasion. May I say to hon. Members above the gangway who may be suspicious that this is not an attempt to evade taxation? If they will look at the marginal note, they will find that it deals with prepayment of Estate Duty, payment before the time when it would normally become payable. I think that, particularly in these days of very heavy taxation, it is a fundamental duty on the part of the Chancellor of the Exchequer to do whatever he can to ease the method of payment by which individual taxpayers have to meet their obligations to the State. I suppose that in any new tax which is proposed one of the conditions which appeals to a Chancellor in considering it is the ease with which it may be collected. This Clause in no way whatever deals with the question of liability for tax, but it does deal with a matter which is as important to the Chancellor of the Exchequer as it is to the taxpayer; it attempts to provide some

    1839
    means by which taxpayers may be enabled to meet their very heavy liabilities.
    I am not suggesting that there should be any departure from the well-established principle, which is acknowledged on all sides, that of course the richest citizen must pay the highest tax. There can be no question on any side of the Committee but that it is the wealthy taxpayer who must pay the largest share of the nation's taxation, but that does not do away with the responsibility of this Committee to do whatever is possible to enable the most wealthy taxpayer to meet his obligations with the minimum of inconvenience to himself, and although this suggestion may appear to be novel, I hope it will not be refused on that ground. In these days, when taxation is so very heavy and when large taxpayers have to pay so much to the national revenue, every possible consideration should be given to the individual taxpayers in assisting to meet the very heavy demands which the State makes upon them. Therefore, I trust that this Clause will be considered from that point of view, and from that point of view alone. Its purpose is not to enable a taxpayer to get some benefit out of the Treasury, but to enable him so to make his arrangements that he may have the opportunity of making prepayments to the Treasury in such a way as will cause a minimum of inconvenience to his estate at the time when he has to leave this troubled world.
    9.55 P.m.
    The Attorney-General (Sir Donald Somervell): My hon. Friend who moved the Clause, particularly, and my hon. Friend who supported it suggested that it might appeal to my right hon. Friend the Chancellor of the Exchequer. There are reasons which I shall put before the Committee, which, I think, will make the Committee see that there are also other reasons why my right hon. Friend would not like to see this proposition accepted. The Clause in essence is that a man may deposit a sum, for which he will receive a certificate bearing interest at a rate not exceeding 3 per cent. to be used for the discharge of Estate Duty. No Income Tax or Surtax will be paid by him on that accruing interest, and the accrued interest, when he dies, will not be subject to Estate Duty. It is in respect of large
    1840
    estates that what are called windfalls come to the Exchequer of this country particularly in the form of Estate Duty. It is worth while working out exactly how this particular provision would work.
    I will take two examples. Take the case of a man who is able in good times to set money aside under the existing law so that there may be a sum to satisfy Estate Duty when he passes away and his children succeed to the property. Let me consider the ordinary case of the man who takes advantage of this scheme and the case of a man who has an income of £50,000 a year. It is in connection with these very large estates that Estate Duty is highest, and, therefore, it is those people who would be particularly exempted under the scheme of my hon. Friends. A man who has an income of £50,000 a year pays something like 135. in the £ Income Tax and Surtax. If you give him, for the purposes of the accumulation and payment of Death Duties, interest of 3 per cent. you will be giving him a rate equivalent to over 9 per cent. It is perfectly clear that he cannot spend it, but this is how it will affect the Revenue. By investing in one of these certificates he would get over 9 per cent. for the money he put down for the purpose of discharging liability for Estate Duty. It does not rest there, because the accrued interest, when he died, would not be liable to Estate Duty. That would be another 5o0 per cent. advantage which he would get over the man, who, under the law as it is to-day, may be doing exactly the same thing.
    A provision of this kind would be extremely attractive if you had the good fortune to own large assets, but it would, in fact, be a very serious drain on the Revenue. When one talks about drains on the Revenue, as has been said more than once in the Debates in the course of the Committee stage, one wants always to realise that ultimately what one class of taxpayer saves will have to be collected from another class of taxpayer. This scheme would, I think, be taken advantage of on the whole by those who own large estates and consequently would be liable to high Estate Duty when they passed away, and that would necessarily mean so much less money coming into the Exchequer from such estates. That would be a loss that would have to be made up from other sources.
    Mr. Maitland: My right hon. and learned Friend has taken the extreme case. How would this scheme work out in the case of a man with £5,000 or £10,000 who had a business which he was anxious to consider, and who desired to avail himself of a provision of this kind?
    The Attorney-General: I could take many examples. In the case of those whose income amounts to iio£10,000 or £15,000, the Income Tax and Surtax would be at the rate of Hs. in the £. That is an all-over rate. Under this scheme you would be allowing such a person 3 per cent. free of Income Tax and Surtax. Under the present system he would receive from securities a gross sum of something like t£7, would pay us. Income Tax and Surtax, and would have £3 left. The reason, therefore, that my right hon. Friend cannot accept a Clause on these lines is that it would mean—though I appreciate that that is not the motive that those with large estates taking advantage of the scheme would pay very much less taxation, Income Tax, Surtax and Death Duties, than they would otherwise pay. There are certain advantages to the State in regard to people who will have to pay large sums as Death Duties making provision in good times so that they do not have to realise value, but there is nothing to prevent that under the existing law. Assume that a man with a certain fortune says "I want to provide that when I die, after paying all duties, my wife and family shall have V(£X net." There is nothing to prevent him so arranging his life so that year by year he could put aside, in War Loan or whatever it may be, such sum as was necessary. The proposed new Clause would give a preferential advantage to certain people, and it cannot be justified. Therefore, I would ask the Committee not to accept it.
    10.5 p.m.
    Sir I. Albery: In this case, also, I regret that I am unable to withdraw the proposed new Clause, because in so doing I should be admitting that the arguments advanced against it are convincing, and that is not in any sense my view. I stated carefully that the question of the rate of interest or the advantage that the taxpayer would get does not enter into the argument. I had to put down some figure. The right hon. and learned Gentleman in his reply has taken that figure, and no doubt statistics have been
    1842
    prepared for him on which he has spoken about a 9 per cent. advantage. I am unable to understand the calculation, but I do not stress the point, because it has no bearing on the matter. If that is the rate, then let it be reduced accordingly. The only object that I have in view is to achieve an advantage which, as I stated in moving the Clause, would give to the taxpayer simply a sufficient advantage to make him enter into the scheme. It is obvious that he is not going to prepay his tax if he does not get anything for doing it. I am sure that when the right hon. and learned Gentleman goes to his tailor if he pays cash he gets some advantage which is not obtained by the gentleman who does not pay cash. That is the ordinary commercial practice, and even Governments cannot get away from it. Even the Chancellor of the Exchequer cannot raise money without taking into account the time of payment and the rate of interest. Therefore, it is obvious that any taxpayer who is prepared to pay his tax in advance should get some advantage out of it.
    The only argument of the right hon. and learned Gentleman that could be accepted would be if he had satisfactorily refuted what I said about the scheme and he showed that the advantages which I claimed for it would not exist, and if he also showed that inconveniences do not arise from time to time when Death Duty has to be paid on large estates in times of depression. If those statements were wrong, he would have had some justification for refusing the Clause, but, so far as I know, not one of those arguments that I put forward has been refuted. The whole substance of the right hon. Gentleman's argument has been a purely mathematical one. He says that the terms would give some advantage to the taxpayer who pays his tax before it is due. Does he think that any taxpayer is likely to pay his tax before it is due, unless the State gives him some advantage for doing it? I say that the matter is worthy of consideration. I never expected that the Clause would be accepted. We go very slow. The Chancellor of the Exchequer is a cautious man, but I submit that the question is worth reconsideration.
    There is one last thing that I would say. What is the alternative that the taxpayer has at the present time? He usually has to take out insurance policies. Why should the taxpayer not settle his in-

    1843
    debtedness to the State on an ordinary commercial basis, with discount for cash? Why should he have to go to a third party and pay them a large profit in order to enable him to settle his indebtedness to the State? All that I am suggesting—and it ought to commend itself to hon. Members opposite—is to cut out the middleman and to allow the taxpayer to deal direct with the State, on a businesslike basis, instead of driving him to an insurance corporation, and making him pay them large profits for doing it. In the circumstances, I regret that I cannot withdraw the Clause.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Amendment of 24 and 25 Geo. 5. c. 32, s. 1.)
    Sub-section (2) of Section one of the Finance Act, 1934 (relating to the alteration of Customs duties on Colonial sugar, molasses, etc.), shall hve effect as though the words "but the quantity of sugar in respect of which such certificates are issued shall not in the financial year ending on the thirty-first day of March, nineteen hundred and thirty-five, exceed three hundred and seventy-five thousand tons, and shall not in any subsequent financial year exceed three hundred and sixty thousand tons" were deleted there-from.—[Captain A. Evans.]
    Brought up, and read the First time.
    10.11 p.m.
    Captain Arthur Evans: I beg to move, "That the Clause be read a Second time."
    The Clause relates to the extension of Imperial Preference to sugar credits in the British Colonial Empire, with particular reference to the West Indies. The effect of the Clause, if my right hon. Friend the Chancellor of the Exchequer finds himself able to accept it, will be purely permissive. It would enable the Treasury to extend the special preference certificate to any amount of Colonial sugar imported into this country up to a total tonnage of 997,000, which is the total permissible export from the West Indian Colonies to this country under the terms of the International Sugar Agreement. As the Committee is well aware, at the present time, under the restrictions contained in the Finance Act of 1935 the Treasury is allowed to issue special preference certificates up to 360,000 tons of sugar per annum. I understand that the Government have already laid it down
    1844
    that the number of these certificates will be decreased when the world price of sugar has reached per ton. We know that the price is L£5 a ton.
    If the new Clause is accepted the Chancellor of the Exchequer would then be enabled to allow the Treasury to vary the amount of the special preference certificates which are isued from time to time in accordance with the world price of sugar obtaining at the moment. Therefore, it must be clear to my right hon. and gallant Friend the Financial Secretary that the acceptance of this Clause does not commit the Treasury to one penny of fresh expenditure, unless they so desire and the conditions so necessitate. It will, however, free the hands of the Chancellor of the Exchequer to take the obvious and, in my modest judgment, the only possible action if the International Sugar Council at their meeting next month fail to persuade certain foreign countries who are parties to the International Sugar Agreement to reduce the quotas which they are at present enjoying, with a view to stimulating the price obtaining for sugar in the world to-day.
    Some weeks ago, in another place, the Under-Secretary of State for the Colonies used these words:
    " We signed the Agreement in June, 1937, and we are certainly not going to go back on our word now. We shall stick to our signature, but it is quite clear that if prices continue to be so unsatisfactory as at present, so that the Colonial sugar producer is quite unable to make a livelihood or to pay a proper rate of wage, something must be done."
    It is clear that if this unfortunate state of affairs continues and the International Sugar Council fails to stimulate the price of world sugar and fails to find a solution to the economic problem, this Clause would enable something to be done and done immediately by His Majesty's Government. I do not desire at this late hour to weary the Committee by repeating the arguments I adduced on the Committee stage of the Colonial Office Vote. The Committee is well aware by this time, from the Debates which have already taken place and from the prominence which this important matter has received in the Press of the country, of the lamentable conditions which obtain in the West Indies at the present time, particularly vis-a-vis the economic outlook. However, in order to make my argument clear I must quote a few figures

    1845
    to show the assistance which sugar producers are getting in various parts of the Empire. The price received to-day by the British West Indies and other Colonial producers of sugar is gi£8 lo10s. per ton. Cuban producers, as a result of the preference granted by the United States of America, receive an average of L£9 per ton. British beet sugar is guaranteed by this House a minimum price of £15, the Australian producer receives in Australia £22 per ton, and the South African producer a little over that figure. These are conditions which make it practically impossible for the producer of sugar in the Colonies to obtain a higher price for his product and so improve conditions which have shocked the conscience of the whole Empire.
    I do not desire to-night to anticipate or to attempt to prejudge any of the issues which will rightly come under the review of the Royal Commission which is shortly to be appointed by His Majesty's Government, but I feel that one thing is quite clear, that whatever their findings and recommendations may be they cannot deal with the economic depression which is at present crippling these Islands, and in the long run the Colonies and indeed this country must look to the economic aspect of the case which is largely governed by the world price of commodities. I need only quote the Colonial Secretary to support me in that view. Speaking in this House on r4th June, when he introduced the Colonial Office Vote, he used these words:
    "These Colonies… depend almost entirely on their exports of a comparatively small number of commodities like sugar, cocoa, bananas, and a few other things. They depend almost entirely for their wellbeing on what price they can get for those commodities in the markets of the world. If the price is good, so much the better; if the price is had, it is something like a disaster for those West Indian Colonies. If the price is bad, it quickly becomes beyond the power of those Colonies, out of their own resources, either by public or private enterprise, to give the peoples of the Colonies secure employment, good wages and good conditions."—[OFFICIAL REPORT, i14th June, 1938; col. 88, Vol. 337.]
    No one who has studied this problem from the economic point of view, or from the point of view of improving the social conditions in these islands, can possibly quarrel with the view of the Colonial Secretary. Unfortunately, the conditions to which my right hon. Friend referred cannot be altered in any way by any
    1846
    recommendation of any Royal Commission. These fundamental economic conditions must of necessity be a matter for the whole Government and the financial policy of the Chancellor of the Exchequer. It is clear, I think, that it is impossible to improve the wages in the West Indian Colonies, particularly in the sugar industry, unless some practical assistance is given to the industry as a whole. I say that because I noted with interest only the other day that those countries which are interested in what is known as the free sugar markets of the world, Java, Peru and San Domingo, pay a wage of only between 4d. and 6d. per day, precisely on account of the low sugar prices which prevail. I do not wish to argue to-night whether the wages paid by the sugar industry in the West Indies are adequate or inadequate, for that is obviously a question for the Royal Commission; but I think it is interesting to observe—if we are anxious to examine the economic basis of this industry to see whether it is possible to make it a paying proposition and so set the islands on their feet—that before the recent riots few, if any, of the decent-sized sugar estates in the British West Indies paid less than an average of 3s. per day.
    I am not suggesting that that is an adequate or an inadequate wage, but I invite the Committee to consider that those producers, paying that rate of wages, are having to compete in the free sugar markets of the world with Java, Peru, and San Domingo, which are paying wages of 4d. and 6d. a day. We know, of course, that through causes which are admittedly outside the control of His Majesty's Government, the price of sugar has fallen by 25 per cent., and as was stated in the House by practically all the speakers in the Debate on the Colonial Office Vote, it is clear that the population of these islands, at a time when labour conditions were difficult and when employment was decreasing, was increasing at an alarming rate. I find, in studying the statistics that over the last ro years the population has increased in Jamaica alone by no less than 21 per cent. It may be argued that sugar is only a factor in this situation, and that it is not the whole problem which has to be faced; but we all know that the other commodities in which the islands are interested have also fallen in value, except bananas, which unfortunately are suffer-

    1847
    ing from a very serious disease. I need only quote the view of the President of the United Fruit Company, who I think is admitted to be the greatest authority on the banana industry. He said:
    "The valuable Jamaica banana crop, which is the mainstay of that island at the present time, is likely to suffer severely from disease during the course of the next two years."
    Therefore, I think it is clear that we cannot look to the banana industry for any practical help in this matter, and that brings us back to the situation with regard to sugar. A well-known authority on the economic situation in the West Indies, Mr. De Lisser, who, as the Committee is probably aware, is the general secretary of the Jamaica Imperial Association, used these words the other day:
    "Even as matters stand to-day, unless a better price is obtained for sugar, it will not be possible for the factories and estates to continue to pay the wages they have agreed to pay, with the consequence that the present troubles will be but the prelude to a still more serious situation."
    My right hon. and gallant Friend when he replies may say, "But the balance-sheets of the West Indian sugar-producing companies do not bear out this talk of distress." I think it fair that one should anticipate an observation of that kind and draw the attention of the Committee to the fact that the balance-sheets which my right hon. and gallant Friend possibly has in mind relate to the prices which obtained last year and which were considerably higher than the present prices. The average over the 12 months to 1st October, 1937, was 6s. per cwt.; to i1st April, 1938, it was 6s. 7½213d.; to 1st June, 1938, it was 5s. 7d. and to i1st May of this year it was 5s. 3d. Being anxious to give as fair a picture as I could of the situation I was at some pains to study the sugar market reports issued at the end of last week's business, because I observed that, in spite of the optimistic views expressed by my right hon. Friend the Secretary of State for the Colonies as to the possible outcome of the meeting of the International Sugar Council on 5th July, the prices of colonial sugar have continued to decline. I quote this extract from the report of a leading firm of brokers in the sugar market:
    "The tone weakened perceptibly at the end of this week and final quotations show a decline of 2½d. per cwt. from the recent
    1848
    highest. Lack of trade support and a less optimistic feeling concerning the coming meetings of the International Sugar Committee were the chief factors in causing the downward movement. Professional opinion has never regarded the International Agreement with favour and its inability to grapple with the situation effectively has been evident from the outset. The plain truth is that there is too much sugar available under present conditions and unless the signatories recognise this fact and agree voluntarily to the necessary reduction in quotas, the Agreement will continue to be a failure. However, the British Government can and doubtless will use all its influence to create an improved state of affairs and the market awaits the issue with considerable interest."
    It is rather discouraging to find that on the eve of the meeting of the International Sugar Council, in which His Majesty's Government place great hope, the price of sugar continues to decline. When we bear in mind that freights, cost of material and in a particular minor instance wages have increased, I think we must realise that if we are anxious, as we are honestly anxious, to see an adequate rate of wages paid in the West Indies, and proper conditions of labour obtaining there, then we must take some practical action to assist those producers in disposing of their produce. Whatever the recommendations of the Royal Commission might be, we all want to see the better conditions for labour to which I have referredproper housing, extended education and adequate health services. I submit, in view of the economic arguments I have ventured to present, that it is only by assisting the sugar industry in a practical way that these results can be obtained. It is clear that a cash export crop is necessary for the economic prosperity of the islands and the only crop that fills the bill and for the production of which on a large scale the West Indians are eminently suitable, is sugar. Therefore, in conclusion, I beg my right hon. and gallant Friend to free himself from the present restriction and so arm himself with an instrument which can be used successfully, irrespective of the effectiveness or otherwise of any decisions which might be reached by an international body, thus facilitating the task of the Royal Commission shortly to be appointed and send to the West Indies a message of hope and a practical assurance that something will be done in the near future.
    10.32 p.m.
    Captain Wallace: It will be perhaps for the convenience of the Committee

    1849
    at this late hour if I intervene at once in order to indicate the views of my right hon. Friend the Chancellor on this important new Clause. Sub-section (1) of Section 1 of the Finance Act, 1934, provides that the general preferential rebate of duty for Colonial sugar shall be the same as for other Empire, that is Dominion, sugar, and also that there shall be a special additional rebate for Colonial sugar which is "accompanied by a quota certificate." This rebate is of 3s. a cwt. at a polarisation of 95 to 96 degrees and of corresponding amounts at other degrees. Sub-section (2) defines the quota certificate as a certificate issued by the Secretary of State for the Colonies certifying that the sugar forms part of the quantity of sugar which may be imported from the Colonies at the rates specified; it also imposes the limitation that for the financial year 1934–35 the quantity of sugar in respect of which these certificates were issued should not exceed 375,000 tons, and that in every subsequent financial year it should not exceed 360,000 tons.
    If the new Clause were accepted it would repeal the limiting proviso of 360,000 tons and would empower the Colonial Secretary to determine, by the issue of quota certificates, what quantity of imported Colonial sugar should in any year be allowed the additional rebate. It would be competent for him, if the Clause were carried, to certify for this purpose at his discretion any part or the whole of the imports of Colonial sugar. In an answer a few days ago to my hon. and gallant Friend the Member for Accrington (Major Procter) who asked what the cost of such a proposal would be, I replied that if it were pressed to its logical conclusion the additional cost to the Exchequer would be up to £3,000,000 a year. But I do not want at this moment to stress particularly the point about loss of revenue, because I wish to deal with this Clause on somewhat different lines. My hon. and gallant Friend who moved the Clause wrote to the Colonial Secretary on 2nd June and stated that in his view a proposal of this kind (carrying with it, by implication, the corollary that the number of certificates would be largely increased) was one of the few practical methods of giving assistance to the sugar industry in the West Indies, and he suggested that such action should be taken without waiting for the despatch, much
    1850
    less the report, of the Royal Commission which it is proposed to send to the West Indies.
    My hon. and gallant Friend also argued during the Debate on the Colonial Office Vote on r14th June that the fact that there had been set up an International Sugar Council for the purpose of regulating exports of sugar, and thereby assuring to the producers a price which would enable them to give decent conditions, did not relieve the Government of the responsibility for improving the economic conditions of the West Indies. I must point out that the hon. and gallant Member for the Isle of Wight (Captain P. Macdonald) said that he did not think that the sugar preference alone would save the economic position, a view with which, I think, my hon. and gallant Friend agrees. The object of this International Sugar Agreement, to which my hon. and gallant Friend has referred, which was signed on the 6th May, 1937, and came into operation provisionally on 1st September last year—the Committee will remember that we have already passed a Clause in this Bill dealign with the stabilisation of the Imperial sugar preference—was to bring about a better relation between the supply of and demand for sugar by regulating the export of sugar throughout the world. In this Agreement the British Empire was treated as a single unit and, therefore, as a sugar-importing and not a sugar-exporting country. In the Debate on 14th June the Colonial Secretary expressed very frankly the view that the Colonial sugar preference, despite its very generous value to the producers of L£4 15s. per ton, had failed to rehabilitate the sugar industry in the West Indies and other Colonies owing to the large excess of supplies over demand in the world market. He also admitted the failure for the time being of the International Sugar Agreement to provide a remedy owing to unforeseen disturbing factors in the world, of which, perhaps, the principal is the Sino-Japanese conflict. As regards a solution of this sugar trouble, he said:
    "I believe that we have to look for it through the machinery of the International Sugar Council, and that we have to try to persuade the Council to alter the quotas for production so that they are reduced in conformity with the reduced demand for sugar in these times."—[OFFICIAL REPORT, 14th June, 1938; col. 90, Vol. 337.1]
    The Colonial Secretary went on to say that the Council were meeting again in the

    1851
    early days of next month, and that he hoped they might be persuaded by further voluntary reductions in the supplies coming from foreign countries into the free market, to get equilibrium once more established. At any rate, in the view of the Colonial Secretary, which I think will command considerable respect in this House, the International Sugar Council is the right and proper machinery for dealing at this moment with the situation.
    There is actually a further objection to the proposed new Clause of my hon. and gallant Friend, but unless the Committee particularly wants me to do so I shall not elaborate it at this time of night. It is that Canada also gives a preference upon Empire sugar. In 1932 that preference was greater than the general British Colonial preference, but owing to the fall in the exchange value of the Canadian dollar, our preference here became more valuable than the Canadian preference, with the result that West Indian sugar was diverted from Canada to this country. The present arrangement was designed to make the British preferential rebate on Colonial sugar of less value than the Canadian, except for the fixed quantity of 360,000 tons, which has already been mentioned, and which is sugar which would have come into this country in any case. It would be a mistake to disturb that kind of inter-Imperial equilibrium.
    I fully appreciate the general considerations advanced by my hon. and gallant Friend, but I am certain that what is at the back of his mind is largely, if not wholly, the necessity for assisting the West Indies. I must point out to the Committee that an increase in the sugar preference for the Colonial Empire at large, such -as would be made possible if this Clause were accepted, appears to be a somewhat extravagant method of applying a remedy. If the Clause were passed and the Secretary of State for the Colonies certified all the sugar that he could certify, a very substantial proportion of it would be other than West Indian sugar, and the assistance would accrue to other Colonies, in particular to Fiji and Mauritius.
    I have tried to put these points as succinctly as I can. I would say, in conclusion, that the reason why I suggest that my hon. and gallant Friend should withdraw this proposed Clause can be summed
    1852
    up by recalling the views of the Colonial Secretary, who is the best person to judge on these matters, that it will be wisest to deal with this matter at present through the International Sugar Council.
    Sir P. Hannon: Will the terms of reference of the Royal Commission which it is contemplated to set up in relation to the West Indies, enable the commission to study the sugar situation?
    Captain Wallace: My hon. Friend has rather got me out of my depth, but I do not imagine that a Royal Commission going upon a mission of this kind would not include this question among those which it considers.
    10.44 p.m.
    Captain P. Macdonald: I support the arguments advanced by my hon. and gallant Friend the Member for South Cardiff (Captain A. Evans), in moving this Clause, and I must say that the answer of the Financial Secretary to the Treasury was very disappointing after the very able arguments put forward by my hon. and gallant Friend. As was pointed out at the outset, the proposed new Clause is only permissive. It empowers the Chancellor of the Exchequer or the Colonial Secretary, or whoever is their representative, to increase the preferential duty to £2 per ton beyond the 360,000 tons to which it is now limited. The argument of the Financial Secretary was that if the total exports of West Indian sugar were included the Exchequer would be involved in an expenditure of £3,000,000. That is a very feeble argument. We do not ask that the total exports of West Indian sugar to this country should be included, but we strongly urge that powers should be given to the Colonial Secretary to extend the preference beyond the 360,00o tons to which it is now limited, in order that he might have a valuable bargaining weapon when he entered into this International Sugar Convention. I do not share his optimism as regards the outcome of this convention. I could give many reasons why I think it is doomed to failure. The chief arguments have already been put forward by the Mover of the Clause when he said that the other countries taking part in the convention are already receiving such enormous subsidies and preferential duties from their own countries that it is not in their interest to meet us in this connection.

    1853
    I am not going over the same ground again, but will only refer to one or two cases. Cuba has been mentioned. It does not matter very much if Cuba, which sells 2,000,000 tons of its present production of 3,000,000 tons to the United States under a bigger preference than our own producers enjoy to-day. Java and San Domingo have been mentioned, and wage conditions have been compared. If all these factors are taken into consideration, I do not see any hope of success for any international sugar convention unless the representative of the sugar islands in our Colonial Empire is in a position to have some bargaining weapon such as this Clause would give. He would he in a much stronger position if he were able to say, "The House of Commons has included a Clause in the Finance Bill which compels us to increase the preference of £3 per ton which our Colonial sugar enjoys to-day provided you do not meet us in stabilising world prices for sugar." That is the basis of the whole argument; it is purely economic.
    Last week we had a Debate on Colonial affairs, and a very sad picture was painted by Members in all quarters of the House of the conditions in the West Indian Islands to-day. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) nearly brought tears to the eyes of Members of the House whc.en he pointed out the social conditions prevailing in Jamaica at the present time. He said he had just returned from a visit there, and would not keep a dog under similar conditions to those in Jamaica at the present time. I can endorse everything he said in that regard, because the conditions are appalling. No one denies that that is the fact. The Colonial Secretary said he was so impressed by the arguments that he was setting up a Royal Commission to go and investigate and report on the conditions. He also said, and it is a fact, that these sorry conditions have come about largely through economic factors. I did not maintain on that occasion, and I do not maintain nog;w, that sugar is the dominating factor in these arguments, but it is a very important one.
    Sugar is the one crop that we know the West Indies can produce, and, if the West Indies are given an opportunity, such as this Clause would give them, of increasing their production of sugar and increasing their markets for sugar, we know that at
    1854
    any rate that is one sphere in which we can assist these sugar islands, for which we are responsible, in their present very sorry economic plight. In spite of what the right hon. and gallant Gentleman says about the attitude of the Chancellor and the Colonial Secretary, I urge him to reconsider the matter and to accept the Clause. It is purely permissive and it need not necessarily be made use of, but it is a very useful bargaining weapon and one with which he should arm himself when the colonial representatives meet the International Sugar Convention.
    10.51 p.m.
    Vice-Admiral Taylor: I fully realise that the Colonial Secretary appreciates the serious position of the sugar industry in the West Indian Islands, and acknowledges the justice and the urgency of the Clause that some material assistance must be given to the sugar-producing Colonies. My right hon. Friend places his hopes for a solution of the problem on the finding of the International Sugar Committee. Not so very long ago the Colonial Secretary admitted that the International Sugar Agreement had already failed to find a solution, and I should like to ask my right hon. Friend on what he bases his hope that the Committee will now be able to find a solution, which they failed to do in the past. We have not been informed what new factors have come into being which will enable them to solve the problem. If he contemplates that the Committee will suggest a reduction of the quota all round in order to raise the price of sugar, that would reduce production, increase unemployment and aggravate the serious position in the West Indies. It would still further lower the standard of living of the inhabitants, and that is the last thing that we desire to happen, especially in view of the recent most regrettable outbreaks, due in the main to economic conditions, the low standard of living, bad housing conditions and lack of employment. Whatever the reasons are the Royal Commission will inquire into the whole matter and will, no doubt, propose measures to remedy the situation. But it must not be forgotten that we in this country are directly responsible for the welfare of the inhabitants of our Colonial Empire. To no other nation can they, or should they, turn for assistance. We should not shirk that responsibility.
    The Chairman: The hon. and gallant Member should keep to the subject of the

    1855
    Clause, and not discuss matters which are remote from it.
    Vice-Admiral Taylor: I have said we must not shirk our responsibilities to our Colonial Empire and the sugar industry on which they depend.
    The Chairman: The hon. and gallant Member need not repeat it. I have already said that that is remote from this Clause.
    Vice-Admiral Taylor: The history of the sugar industry in the West Indies is deplorable. There is no certainty for the sugar producers. They are entirely dependent on the world price for the prosperity of that industry. They have no alternative industry to which they can turn. Their lack of prosperity has not been their fault, but ours. If I am in order, I would like to draw a comparison between the small island of Porto Rico, under the Government of the United States of America, which is also a sugar-producing island, and our West Indian Islands. This very small island, only three-quarters of the size of Jamaica, is now supporting a population half as great again as Jamaica, and in 1936 it exported almost entirely to the United States as much as the export of the whole of the West Indian Islands taken together. That is not a very satisfactory parallel, so far as we are concerned. If one island can be rendered as prosperous as that, other islands in the same area, with the same climatic conditions and soil, could also be made as prosperous and their people could be living in the same prosperous and contented conditions.
    The Colonial Empire, so far as sugar production is concerned, is in a very disadvantageous position. In Australia and Natal, which are both sugar-producing countries, no sugar is allowed to be imported. They have a sheltered home market. The world price is not a matter of vital importance to them, although naturally it affects them. They already have a high price in their home market. They also, I am glad to say, get a preference in this country. So far as the beet sugar industry, which has already been referred to, is concerned, they have already a guaranteed minimum price. But when we come to the export of Colonial sugar, we find that they only
    1856
    obtain, together with their preference and with the preferential certificates, a sum of £4 15s. a ton for their sugar. That preference is not sufficient in view of the low price of sugar in the world market to-day. To them the world price is the deciding factor. They are never certain as to what their position will be. They are entirely dependent upon the world price; there is no reasonable certainty for their sugar industry. If we desire that this position shall no longer obtain in the West Indies, it is necessary for us to take some definite action, either in giving a greater preference or in giving this permission for the extension of preferential certificates. There is no other way in which we can give the Colonial producers a more stable industry, more employment for their people, and more contentment, which we all so ardently desire. It is a responsibility that falls upon us, and the question of the price that we shall have to pay for it should not be the main consideration.
    11.1 p.m.
    Brigadier-General Sir Henry Croft: I regret that, no doubt for very good reasons, the Colonial Secretary is not here in order to give us his advice, because we understood from him that the Royal Commission certainly was not primarily going to Jamaica to deal with the sugar question. The present position in Jamaica is entirely economic, and the situation undoubtedly depends upon three products, with regard to only one of which can we assist at present. What does my hon. Friend propose? He is asking the Government to consider whether it is not wise to take permissive powers in order that if the Sugar Convention does not meet the situation, he will be able to take subsequent action. To wait for a Royal Commission which may take two years to report, when everybody knows the situation in that island, seems to very many of us to be wholly unreasonable. If the Chancellor were to give us an assurance that this matter would receive reconsideration, it would give a great deal of happiness to a large number of people here, and at least would convey to those people in the West Indies, who have a vast surplus stock, the hope that this House will really tackle this question. I think it would be a new hope.
    If the right hon. Gentleman can give no such hope, I confess I hope my hon.

    1857
    Friend will go to a Division. Otherwise we must realise that, unless we are able to sustain the three staple industries in the West Indies by some means or other, this House will have a great sum to pay in the days to come. Therefore, from every point of view, and particularly- from the point of view of restoring the economics of that country, the only possible way is to give help to these people. I hope my right hon. Friend will not turn down this proposal in the somewhat abrupt manner which we have heard this evening, but that he will endeavour to meet the suggestion made, which does not commit the Chancellor or the Committee, but merely gives him power to act should to find that the Sugar Convention, when it meets, does not meet the situation. Many of us think the Sugar Convention's original arrangement gave a very poor deal for the British Empire as a whole, and it is surely time, as we have our responsibilities in the Colonial Empire, that we should see that they receive a fair deal. I hope my right hon. Friend will be able to give us some encouragement.
    11.5 p.m.
    Captain Wallace: Perhaps I did not make myself sufficiently clear. I should like to repeat again the words of the Colonial Secretary on the Colonial Office Vote on the 14th June. He was referring to the International Sugar Council and said that they were meeting again in the early days of next month, that that was the right and proper machinery for dealign with the present sugar difficulties, and that at least we have to exhaust the possibilities there before we begin to explore any other possible solution of the trouble. That seems to me to be the answer to this Clause. My right hon. Friend has said he feels that we should exhaust the possibilities of action by the International Sugar Council before we look round for some other solution. It appears to me that, if the Sugar Council fail, then will be the time to consider some other solution. If I gave my hon. and gallant Friend or the Committee the impression that I was turning down this Clause in an abrupt manner, I offer them my sincere apologies.
    Sir H. Croft: I apologise for using the word "abrupt." What I meant to say was that the effect of the reply to my right hon. and gallant Friend was an attempt
    1858
    to turn down the question. Is it not the fact that, supposing the Sugar Council does not fulfil these hopes, already so sadly disappointed previously, is not my right hon. and gallant Friend aware of the fact that a whole year will go by before we can take any action at all, and that is why I ask whether he cannot give the matter further consideration.
    11.7 p.m.
    Mr. C. S. Taylor: I rise to support the Clause because I look upon it as an insurance policy. If the Sugar Council fails, as my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) has said, we shall have to wait for another year. This Clause is a very moderate Clause. It does not ask for the total exclusion of foreign sugar, or of Cuban dumped sugar, which I should like to see. There is no doubt that, if this Clause were passed, in time to come we might see a rise in the price of sugar in this country. Then we should see the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) come down and reduce the House to tears, saying that the price of sugar to housewives in this country had gone up. Having been to the West Indies very recently I realise that you cannot have your cake and eat it. [Interruption.] Perhaps I should say you cannot have your sugar arid eat it. If we want to see better conditions in the West Indies a sacrifice will have to be made somewhere. If Cuban dumped sugar were kept out of this country altogether, it is estimated that the housewife in this country would have to pay something as small as a farthing increase on her sugar, and even then sugar would still probably be lower in price in this country than in most countries of the world, certainly than in the United States of America.
    This is an insurance policy. Supposing the Sugar Council were successful this Clause would not be operative, but if the Sugar Council were to break down and we did not see any really good effects we should be able to fall back on a Clause which makes provision for that case. I hope that, after the appeals which have been made from all sides—and I feel that hon. Members opposite must support this Clause—my right hon. and gallant Friend will help us and help the West Indian Islands by agreeing to accept the Clause.
    11.10 p.m.
    Sir P. Hannon: I wish to express my respectful disappointment at the reply of my right hon. and gallant Friend. At the present time His Majesty's Government contemplate the appointment of a Royal Commission to deal with a very serious economic and social situation in the West Indies, and I think it would have been helpful to that Commission if my right hon. and gallant Friend had made a little more generous concession on the Clause. The West Indian Islands at the present time are in a very difficult and embarrassing situation, and any gesture from this House which indicated the anxiety of the Government to help them out of their difficulties, would be most welcome. Therefore, I am glad to see the Chancellor of the Exchequer now present, and I hope he will see his way, pending the findings of the International Sugar Council, to give some indication that if the findings of that council are not favourable to the development and expansion of the sugar industry in the West Indies, His Majesty's Government will take definite action in order to improve the situation.
    I regret that the Secretary of State for the Colonies is not able to be present. A great responsibility rests with him in relation to the future of the West Indian Colonies. I do think that in dealing with this question which so much affects the economic and social progress of the West Indies, there might have been a more generous gesture to people who have been most loyal members of our Imperial family for generations. We founded our Navy years ago in these small communities of the West Indies, where the sugar industry is of such vital importance.
    11.13 p.m.
    Captain A. Evans: My hon. Friends who have supported the Clause, and I were anxious to be convinced by my right hon. and gallant Friend. I regret exceedingly that I must join in expressing my disappointment, because, if I understand him aright, the view of His Majesty's Government is that, having regard to the statement made by the Colonial Secretary when the vote was before the House, the Government are more or less pledged not to take any action until they are quite satisfied that the negotiations at the International Sugar
    1860
    Convention prove futile. We are not asking His Majesty's Government to take any action at this stage. If this Clause is accepted the Government will not be compelled to take any action. They will be arming themselves with an instrument, so that in the regrettable event of the negotiations proving a failure, they will be enabled to take practical action to assist the Colonies immediately.
    There was another point in my right hon. and gallant Friend's speech in reply to an interjection by my hon. Friend the Member for the Moseley Division (Sir P. Hannon) which was rather alarming. He said definitely that one question which the Royal Commission would obviously consider is the question of the future economic position of sugar.
    Captain Wallace: I prefaced my reply to that interjection by my hon. Friend the Member for Moseley (Sir P. Hannon) by saying frankly that he had caught me rather unawares. All I did was to express my own personal and impromptu opinion that the Royal Commission would probably take cognisance of such a situation; that is not to be taken in any way as an official pronouncement on the terms of reference.
    Captain A. Evans: I apologise if I have in any way misrepresented his remarks, because I quite understand that that is the only conclusion to come to in view of the present state of affairs, and it is reasonable to suppose that one of the first and most important subjects to come under the consideration of the Royal Commission will be the state of the sugar industry. But that was not the view of the Colonial Secretary. On 7th May I asked him this question:
    "whether in view of the cycle of riots and strikes which the British West Indies have experienced since 1935, largely as the result of the present state of the sugar industry, he will consider the appointment of a Royal Commission to investigate the whole question of the future of this industry and the conditions of the people employed therein?"
    My right hon. Friend replied in these words:
    "My Noble Friend is only too well aware of the series of distressing incidents, of the kind to which my hon. and gallant Friend refers, during the last year or two; but he does not share his view that a Royal Commission into the sugar industry is warranted. The economic difficulties of the sugar industry arise from circumstances of a worldwide character and there already exists an

    1861
    International Sugar Council which is charged with the duty of trying to find means of overcoming them."—[OFFICIAL REPORT, 11th May, 1938; col. 1571, Vol. 335.]
    If that reply means anything at all it certainly means that for the time being His Majesty's Government have pinned their faith not on the recommendations of the Royal Commission but on the machinery set up under the International Sugar Agreement of 1937. We therefore must press the new Clause. If we do not and the Government are faced with a breakdown of the machinery of the International Sugar Agreement they will have to come to this House for further legislation to give effect to their views. If they accept the new Clause it will not commit them to any action, but other countries who
    are involved in this complicated economic difficulty will realise that if they fail to reach a fair agreement there are means at the disposal of the Government to deal with the matter on a fair basis so far as the West Indian Colonies are concerned. In view of the fact that we are not asking the Government to commit themselves to any expenditure I hope they will reconsider the matter, accept the new Clause, and then if on further consultation they are still of the opinion which the Financial Secretary has expressed they will be at liberty to make an Amendment on the. Report stage.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 12; Noes, 226.

    Division No. 255.]

    AYES.

    [11.24 p.m.

    Croft, Brig.-Gen. Sir H. Page

    Macdonald, Capt. P. (Isle of Wight)

    Smiles, Lieut.-Colonel Sir W. D.

    Greene, W. P. C. (Worcester)

    Nall, Sir J.

    Taylor, Vice-Adm. E. A.(padd.,S.)

    Gretton, Col. Rt. Hon. J.

    Perkins, W. R. D.

    Herbert, A. P. (Oxford U.)

    Petheriok, M.

    TELLERS FOR THE AYES.—

    MacDonald, Sir Murdoch (Inverness)

    Poole, C. C.

    Captain Arthur Evans and Mr.

    C. S. Taylor.

    NOES

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

    Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)

    Hall, G. H. (Aberdare)

    Adamson, W. M.

    Cranborne, Viscount

    Hambro, A. V.

    Agnew, Lieut.-Comdr. P. G.

    Crooke, Sir J. Smedley

    Hannah, I. C.

    Albery, Sir Irving

    Crookshank, Capt. H. F. C.

    Hannon, Sir P. J. H.

    Anderson, Rt. Hn. Sir J. (So'h Univ's)

    Crowder, J. F. E.

    Harbord, A.

    Anstruther-Gray, W. J.

    Culverwell, C. T.

    Harris, Sir P. A.

    Asks, Sir R. W.

    Daggar, G.

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

    Assheton, R.

    Davies, C. (Montgomery)

    Moslem, Sir J. (Bolton)

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

    Davies, S. O. (Merthyr)

    Hayday, A.

    Attlee, Rt. Hon. C. R.

    Day, H.

    Heilgers, Captain F. F. A.

    Baldwin-Webb, Col. J.

    De la Bère, R.

    Hely-Hutchinson, M. R.

    Barclay-Harvey, Sir C. M.

    Bobbie, W.

    Henderson, J. (Ardwick)

    Barrie, Sir C. C.

    Dorman-Smith, Major Sir R. H.

    Henderson, T. (Tradeston)

    Beamish, Rear-Admiral T. P. H.

    Duckworth, W. R. (Moss Side)

    Hepworth, J.

    Beauchamp, Sir B. C.

    Dugdale, Captain T. L.

    Herbert, Major J. A. (Monmouth)

    Beaumont, Hon. R. E. B. (Portsm'h)

    Duggan, H. J.

    Herbert, Capt. Sir S. (Abbey)

    Beeechman, N. A.

    Duncan, J. A. L.

    Higgs, W. F.

    Bens, Rt. Hon. W. W.

    Dunease, Lord

    Holdsworth, H.

    Bird, Sir R. B.

    Ede, J. C.

    Holmes, J. S.

    Bossom, A. C.

    Edge, Sir W.

    Hopkinson, A.

    Bower, Comdr. R. T.

    Edmondson, Major Sir J.

    Horsbrugh, Florence

    Boyce, H. Leslie

    Edwards, Sir C. (Bedwellty)

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

    Braithwaite, Major A. N.

    Ellis, Sir G.

    Hudson, Rt. Hon. R. S. (Southport)

    Brass, Sir W.

    Elliston, Capt. G. S.

    Hunter, T.

    Briscoe, Capt. R. G.

    Emrys-Evans, P. V.

    Hutchinson, C. C.

    Broad, F. A.

    Errington, E.

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

    Brown, C. (Mansfield)

    Erskine-Hill, A. G.

    Jenkins, A. (Pontypool)

    Brown, Col. D. C. (Hexham)

    Evans, D. O. (Cardigan)

    Jenkins, Sir W. (Neath)

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

    Everard, W. L.

    John, W.

    Bull, B. B.

    Fildes, Sir H.

    Jones, Sir H. Haydn (Merloneth)

    Burke, W. A.

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

    Jones, L. (Swansea W.)

    Butcher, H. W.

    Fremantle, Sir F. E.

    Kerr, H. W. (Oldham)

    Campbell, Sir E. T.

    Furness, S. N.

    Kerr, J. Graham (Scottish Univs.)

    Carver, Major W. H.

    Fyfe, D. P. M.

    Lamb, Sir J. Q.

    Cary, R. A.

    George, Major G. Lloyd (Pembroke)

    Latham, Sir P.

    Christie, J. A.

    George, Megan Lloyd (Anglesey)

    Lathan, G.

    Churchill, Rt. Hon. Winston S.

    Gledhill, G.

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

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

    Gower, Sir R. V.

    Leech, Sir J. W.

    Cobb, Captain E. C. (Preston)

    Gridley, Sir A. B.

    Levy, T.

    Colfox, Major W. P.

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

    Liddall, W. S.

    Colman, N. C. D.

    Grimston, R. V.

    Lindsay, K. M.

    Colville, Rt. Hon. John

    Guest, Lieut.-Colonel H. (Drake)

    Llewellin, Colonel J. J.

    Conant, Captain R. J. E.

    Guest, Hon. I. (Brecon and Radnor)

    Lyons, A. M.

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

    Gunston, Capt. Sir D. W.

    Habana, W. (Huddersfield)

    McCorquodale, M. S.

    Ramsbotham, H.

    Spens, W. P.

    MacDonald, Rt. Hon. M. (Ross)

    Ramsden, Sir E.

    Stanley, Rt. Hon. Lord (Fylde)

    McKie, J. H.

    Rankin, Sir R.

    Stanley, Rt. Hon. Oliver (W'm'I'd)

    Maitland, A.

    Rathbone, J. R. (Bodmin)

    Stokes, R. R.

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

    Reed, A. C. (Exeter)

    Strauss, H. G. (Norwich)

    Marsden, Commander A.

    Reed, Sir H. S. (Aylesbury)

    Stuart, Hon. J. (Moray and Nairn)

    Marshall, F.

    Reid, W. Allan (Derby)

    Tate, Mavis C.

    Mather, G.

    Ramer, J. R.

    Thorneycroft, G. E. P.

    Maxwell, Hon. S. A.

    Rickards, G. W. (Skipton)

    Tinker, J. J.

    Mayhew, Lt.-Col. J.

    Ridley, G.

    Titchfield, Marquess of

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

    Robinson, W. A. (St. Helens)

    Tufnell, Lieut.-Commander R. L.

    Mills, Major J. D. (New Forest)

    Ropner, Colonel L.

    Walkden, A. G.

    Morris-Jones, Sir Henry

    Ross Taylor, W. (Woodbridge)

    Walker-Smith, Sir J.

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

    Rowlands, G.

    Wallace, Capt. Rt. Hon. Euan

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

    Royds, Admiral Sir P. M. R.

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

    Muirhead, Lt.-Col. A. J.

    Ruggles.Brise, Colonel Sir E. A.

    Ward, Irene M. B. (Wallsend)

    Munro, P.

    Russell, Sir Alexander

    Warrender, Sir V.

    Neven-Spence, Major B. H. H.

    Russell, R. J. (Eddisbury)

    Waterhouse, Captain C.

    Noel-Baker, P. J.

    Russell, S. H. M. (Darwen)

    Watt, Major G. S. Harvie

    O'Connor, Sir Terence J.

    Salt, E. W.

    Wells, Sir Sydney

    Palmer, G. E. H.

    Sanderson, Sir F. B.

    Westwood, J.

    Parker, J.

    Scott, Lord William

    White, H. Graham

    Parkinson, J. A.

    Seely, Sir H. M.

    Wilkinson, Ellen

    Pcake, O.

    Shepperson, Sir E. W.

    Williams, E. J. (Ogmore)

    Peat, C. U.

    Simon, Rt. Hon. Sir J. A.

    Windsor, W. (Hull, C.)

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

    Simpson, F. B.

    Wise, A. R.

    Pickthorn, K. W. M.

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Woods, G. S. (Finsbury)

    Porritt, R. W.

    Sinclair, Col. T. (Queen's U. B'If'st)

    Wragg, H.

    Price, M. P.

    Smith, Bracewell (Dulwich)

    Procter, Major H. A.

    Smith, E. (Stoke)

    TELLERS FOR THE NOES.—

    Radford, E. A.

    Smith, Sir R. W. (Aberdeen)

    Captain Hope and Lieut.-Colonel

    Raikes, H. V. A. M.

    Somervell, Rt. Hon. Sir Donald

    Kerr.

    Ramsay, Captain A. H. M.

    Southby, Commander Sir A. R J.

    Lords Amendments considered, and agreed to.

    11.28 p.m.
    Mr. Pethick-Lawrence: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
    I do so with the object of asking the Chancellor of the Exchequer, how far he proposes to go on this Bill to-night? I would point out that we have just spent an hour and a half in the discussion of one of these new Clauses. There are still on the Paper a number of new Clauses and Amendments to Schedules, some of which, at any rate, I understand, it is intended to call. My hon. Friends on this side have been very quiet during the discussion on the last two or three new Clauses put forward from the Government benches, not wishing to interfere with the domestic quarrels of the Government supporters, but the patience of my hon. Friends is not inexhaustible, and if the remaining new Clauses are to be discussed at the same length as the last one, then I am afraid it will not be found possible to complete the Committee stage to-night, and when daylight comes again we shall still be engaged on these new Clauses.
    11.30 p.m.
    Sir J. Simon: I agree that some time has been taken in the last discussions, and I acknowledge the very good example that has been set by some hon. Gentlemen on both sides of the Committee. I hope now that we may make more rapid
    1864
    progress. I do not think there will be any extended debates on such remaining Amendments as are to be dealt with. It will be unfortunate if we do not get the Committee stage to-night because we have a great deal of business to deal with, and I think we can do it with co-operation. May I ask at least that we should try to do it?
    Mr. Pethick-Lawrence: It is now half-past Eleven, and if we can get through the remaining Amendments by midnight we are prepared to do that; but if there is any idea of going on into the small hours, the proceedings will have to be adjourned. On the understanding that we get through the business by midnight I will withdraw my Motion.
    Sir J. Simon: I cannot guarantee that we shall finish all the remaining Amendments in half an hour, but I do not think we should be late. Let us go on and see what we can do.
    11.32 p.m.
    Mr. Alan Herbert: I should like to support the Motion. I have on the Paper a new Clause which is bound to be called, and I am grateful for that advantage. Last year there were five days for the Committee stage of the Finance Bill, but this year only four. When I hear my right hon. Friend, to whose patience I pay tribute, say that he expects to get through the remainder of the Amendments in a

    1865
    short time, because, apparently, they are not very important, I am bound to take some slight exception because my new Clause is one to which many people attach great importance, and I do not think it right that it should be squeezed in at the last moment.
    11.33 p.m.
    Mr. Ede: It is unfair to expect us to sit until the early hours of the morning, because that is what it means if we go beyond 12 o'clock. Most Members on this side find their last trains going about the same time as mine, at 12.16, and, frankly, after then I am prepared to sit until four or five in the morning when the trains start running again. The alternative is to pay 15s. taxi-fare in order to get home, and I would sooner be here listening to hon. Members opposite and encouraging them when they are flagging in their efforts, and get home in comfort by train in the morning. This side of the Committee has not delayed the proceedings, and it is unfair of the Chancellor to punish us for the activities of his own supporters.
    11.34 p.m.
    Sir J. Simon: Let us see whether we can make an arrangement. The entertainment we shall be glad to have from my hon. Friend the Member for Oxford University (Mr. A. Herbert) had better be postponed to a more suitable hour on another day. I hope, however, that we shall be able to deal with the new Clause which is about to be called, which is a small matter in which there is no difference of opinion, and the one, which is more important, in the name of my hon. and gallant Friend the Member for Clitheroe (Sir W. Brass). There we can stop.
    Motion, by leave, withdrawn.

    NEW CLAUSE.—(Refund of land tax.)
    A person who has paid land tax from which, by virtue of Section twelve of the Finance Act, 1898, as amended by the Finance Acts, 1920 and 1927, he might have claimed an exemption or abatement, shall be entitled to repayment of the amount overpaid, provided that the certificate of income mentioned in that section shall have been produced to the collector within twelve months after the expiration of the year of assessment.—[Mr. Keeling.]
    Brought up, and read the First time.
    11.35 p.m.
    Mr. Keeling: I beg to move, "That the Clause be read a Second time."
    1866
    I shall be very brief, not only because the hour is late and the subject of the Clause is not a very exhilarating one, but also because the Clause almost explains itself. It provides that a person who has paid Land Tax in error shall be able to recover his money, just as a person who has paid Income Tax in error can recover it.
    As the Committee are aware, a landowner whose income does not exceed £160 a year is exempt from Land Tax, and one with an income between £160 and £400 is liable for the tax at only half rate. There is, however, absolutely no provision for the repayment of any of the tax paid in error. I am well aware that payments in error are not very common, because for the purposes of exemption it is the income of the previous year that is taken into account, and therefore a landowner can normally claim exemption before he makes his payment. But hard cases do occur, and I submit that as income Tax paid in error can be recovered the same principle ought to apply to Land Tax, especially as the people chiefly concerned are farmers, who are not always very expert bookkeepers.
    Land Tax is normally collected from the occupier, and he may be a tenant who, after paying the tax, deducts the amount from the rent and sends the receipt for the tax to the landlord. In that case the landlord, if he is entitled to an abatement, may find himself with a receipt for an irrecoverable amount. I have here more than one case, supplied to me by the National Farmers' Union, in which that has recently happened. In another recent case Land Tax at the full rate was demanded, though the landlord was only liable at half rate. While his claim to abatement was under investigation by the inspector of taxes the collector sent in a peremptory demand for payment at full rate, threatening distraint. Under this threat the landlord paid the amount in full, thinking, in his ignorance, that if he established his claim he could recover what he had paid in excess. He found that under the law he could not. I could give other instances to the Committee, and I will send them to my right hon. Friend if he wishes to have them. I submit that the present law loads the scales of justice, however slightly, against the taxpayer and in favour of the Exchequer, and I suggest that it ought to be amended.
    11.37 p.m.
    Sir J. Simon: The new Clause which my hon. Friend has moved deals with quite a minor point, which arises very seldom. I have looked into it rather closely, and in view of the fact that the Land Tax Act makes no provision for the recovery of tax when once it has been paid, as in the hard case which my hon. Friend quoted as an illustration, probably everyone will agree that we ought to see whether such a position cannot be rectified. I could not accept the words of the new Clause in their present form, but if my hon. Friend will agree, I will see before the Report stage whether it is not possible to draft a Clause which will secure what is here aimed at, because I think it is not quite fair that there should be no case in which relief can possibly be obtained.
    Mr. Keeling: I am very grateful to my right hon. Friend, and I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    >NEW CLAUSE.—(Amendment as respects income from investments and other property in certain cases.)
    Paragraph 7 of the Fourth Schedule to the Finance Act, 1937 (which provides for the determination of income received from investments and other property to be included in the profits in the case of certain businesses) shall have effect, in respect of any accounting period beginning after the thirty-first day of March, nineteen hundred and thirty-eight, and in respect of such part of any accounting period as falls after that date, as if the following proviso were inserted at the end of sub-paragraph (a) of that paragraph—
    "Provided that in the case of the assurance business of a corporate body (other than life assurance business, capital redemption business, or annuity business) where the net premium revenue for any accounting period does not exceed the value at the end of that period of the investments and other property of the corporate body, there shall be included in the profits for that period in respect of income received from such investments and other property, as determined under the foregoing provisions of this paragraph, such a sum only as bears to the whole amount of that income the same proportion as such net premium revenue bears to such value."—[Sir W. Brass.]
    Brought up, and read the First time.
    11.4o p.m.
    Captain Sir William Brass: I beg to move, "That the Clause be read a Second time."
    1868
    I shall be as brief as possible in explaining this rather complicated Clause. What it really means is that insurance companies, who at the present time pay National Defence Contribution on the whole of their reserves, shall pay National Defence Contribution only on 100 per cent. of the premium income. In other words, if the income of an insurance company were £500,000, the Clause assumes that the reserves of the company would be £500,000, on the interest on which the company would pay the National Defence Contribution. I am not a lawyer, neither am I an actuary, but I will try to explain in the simplest way and in the shortest time the case for the insurance companies. The point is not that the insurance companies cannot pay; they are quite willing to do so if it is just and fair, but they consider that they have a grievance. I do not want to blame the Treasury. The real trouble arose last year when an Amendment was moved in the wrong place and was declared out of order. The Debate which we might have had then on the suggestions I am now proposing did not take place, and the Treasury could not answer or consider the suggestions.
    The National Defence Contribution was introduced as a temporary tax, and it was laid down that it should be for five years. It was to be made on the trading profits of businesses. It was not intended to be an extra Income Tax but a separate tax, although on Income Tax lines. Certain individuals were exempted from it because they were not expected to pay it in the same way as Income Tax. In its original form, this tax was on increased profits due to Government expenditure on the rearmament programme; that form was dropped, because the incidence of that tax was not fair, or was considered not fair, and as a result, the flat-rate tax was introduced—[Interruption.] Perhaps the hon. Member will go outside if he wants to discuss something, and discuss it there. It is a little more easy to talk without a discussion going on.
    I want to give one or two examples. The Imperial Tobacco Company buys its leaf, makes its cigarettes, pays its overhead charges, sells its cigarettes, pays its expenses for advertisements and then makes a profit, which is a trading profit, on which it pays the National Defence Contribution. That company has a

    1869
    reserve of £10,000,000, which is invested and produces an interest on which the contribution is not charged. The Shell Transport Company does the same sort of thing; they also have a reserve of £10,000,000, on the interest on which National Defence Contribution is not charged. That position is quite right, because the National Defence Contribution was intended as a tax on increased profits. It was expected that, as the result of the Government's expenditure on rearmament, there would be increased prosperity in the country and these companies would increase their profits, and it was felt that they should make, out of their trade profits, a contribution towards the rearmament programme. Insurance companies are in a different position, and do different business. They do different kinds of business. Their life assurance business is more or less an investment business, and, as far as life and redemption business are concerned, the companies have no objection to the way in which they are taxed at the present time for National Defence Contribution. The Prudential, which is the biggest of these companies, has, as reserves, invested assets of £330,000,000, 98½ per cent. of which relates to life business. The Pearl has £80,000,000 invested, of which £70,000,000 is life, and the Legal and General £39,000,000, of which all is life except £3,000,000.
    The investments of these big insurance companies are already, for the most part, liable to National Defence Contribution. But other insurance companies do fire, accident and general business, including motor business, employer's liability business, workmen's compensation, and so on; and there are also those which do marine business. I think I am right in saying that all these kinds of business are really trading business. The insurance companies in these cases sell risks, and Lord Sumner's view was that they should he treated as trading businesses. They collect their premiums, pay their overhead charges and expenses, and pay their claims, the difference being their profit. That is their trading profit, and that is what ought to be subject to National Defence Contribution, which of course is paid at the present time. But beyond that they ought to have some reserve.
    Some people think that an insurance company should be treated as an ordinary
    1870
    industrial company, and that all its reserves should be treated in exactly the same way as those of an ordinary business; but in my view insurance companies should have some reserves as a sort of stock-in-trade, and we suggest here that the reserve in the case of insurance companies should be roc) per cent. of the premium income. That means that, if a company has a premium income of £1,000,000, it would have behind it a reserve of £1,000,000, on the interest on which National Defence Contribution would be charged. Expenses and overhead charges absorb about 35 per cent. of the premium income, leaving 65 per cent. to meet claims. These claims usually account for about 55 per cent., leaving something like 10 per cent. as profit. The premiums do not all come in at the same time of the year, and there must be some reserve to meet claims as they come in during the year.
    What is suggested is that this reserve of zoo per cent. of the premium income should be for that purpose. First of all the reserves have to cover unexpired risks. There are certain unexpired risks that come in for it is estimated that that requires about 40 per cent. of the reserve that I am suggesting. In addition there are claims which have been made but have not been satisfied. That would account for another 35 per cent. We have added to that very generously I think, because 75 per cent. is ample to cover any risks that might be encountered, another 25 per cent. for contingencies. I am told—I cannot say this is accurate because it is difficult to calculate—that it will cost the Exchequer approximately £200,000. We must remember that these are very old companies. Some go back to 1710. They have been building up reserves for many years. How can it be contended that the National Defence Contribution can in any way be attached to the income from the old reserves of the companies? It is not a question of the companies not wanting to pay. It is a question of what is fair and what is not. If they are expected to pay National Defence Contribution on all their reserves, so ought all other companies. Courtalds, which have £15,000,000, and Shell Transport, which has £10,000,000, also ought to pay on their reserves, and it is not fair or right that insurance companies, apart from the amount I have suggested,

    1871
    should be made subject to a temporary tax intended to be paid out of increased profits supposed to accrue as the result of the rearmament programme.
    11.55 p.m.
    Sir J. Simon: I will do my best to state my view briefly. The National Defence Contribution is a tax upon profits of trade and business. That is the nature of the arrangement. It is not, generally speaking, a tax upon the earnings of investments. Indeed, a tax on the earnings of investments is excluded, generally speaking. Earlier in the day I had occasion to point out that investment income of co-operative societies does not attract any tax under this head. Broadly, the National Defence Contribution is a tax on the profits of business, and not upon investment income. But there are certain kinds of enterprise—perhaps a bank is the most obvious case—where really the making of investments and of profits from investments is the very business carried on. It would be absurd to say you were taxing the profits of business and then to refuse to tax the earnings of a bank's investments. The same is true of investment companies and, with certain adjustments, of life insurance companies. The life insurance company, generally speaking, receives premiums, invests them, keeps those investments for a number of years, and then pays out. In those cases we have to make an exception, because their real business is the making of investments. I have always taken the view that when you come to fire or accident insurance you are approaching a case which is betwixt and between. I was glad to hear my hon. and gallant Friend say he did not share the view, which I have heard advanced by the companies, that investment had nothing to do with their business. That is an absurd claim. Of course, they must hold investments or they cannot carry on their business. When that argument has been advanced I have always, on behalf of the Treasury, resisted it. But I think there is a great deal more to be said for this view, that when you come to consider fire or accident insurance it is rather a middle case. When any one of us takes out a fire policy it usually runs only for 12 months. You may change your company at the end of 12 months if you like. It would be quite wrong to say that investment
    1872
    has nothing to do with their business, but I am convinced, after detailed inquiry, that they are not in quite the same position as a bank or a life insurance company, where you may take it that the whole of the investments they may make are connected with the carrying on of their business. The fire and accident companies really have accumulated investments which are not necessary for the carrying on of their business.
    But I am not at all satisfied that my hon. and gallant Friend in this proposal has drawn the line at the right place. I think myself that there ought to be a larger contribution from investment income before you can say that you have got this thing fair as between different kinds of enterprises. But if my hon. and gallant Friend has followed what I have said—and I think it will appeal to the good sense of the Committee—he will, I am sure, take my assurance that I appreciate the difficulty and will consider the matter with a view to putting up a proposal on the Report stage. I shall be prepared then, to deal with it along the lines which I have suggested. I think it must be agreed that adequate provision ought to be made to get National Defence Contribution from the investment income of these fire insurance and accident insurance companies, but at the same time I can see that their position is not the same as that of the banks or the life insurance companies.
    It is right to say, in conclusion, that this matter would have been dealt with last year had it not been for the incident to which my hon. and gallant Friend has referred. As a matter of fact, the proposal then made appeared in the wrong place in the Amendments and was never discussed at all. I believe it should now be possible to achieve the object, which I am sure the Committee would all like to see achieved, of dealign with this matter fairly as between these different classes of companies. I am not prepared, however, to accept this new Clause. To do so would, I think, be giving more than I ought to give. I believe that I can find a figure which would be regarded by reasonable and sensible people as a fair settlement of the matter, and in the circumstances I suggest that my hon. and gallant Friend might be prepared to withdraw his proposal.
    Sir W. Brass: May I thank my right hon. Friend for the explanation which

    1873
    he has given to the Committee? He has quite definitely admitted the principle of this proposal.
    Mr. Ellis Smith: Yes, and it is a disgraceful bit of business—with the means test still on.
    Sir W. Brass: I agree with my right lion. Friend that it is now largely a question of amount, and I would only point out that the insurance companies have gone as far as they possibly could in this matter. I think, however, that on the question of amount the method suggested by my right hon. Friend is the right one and in the circumstances I shall ask leave to withdraw the proposed new Clause.
    Motion and Clause, by leave, withdrawn.
    Ordered, "That the Chairman do report Progress, and ask leave to sit again."—[Captain Waterhouse.]
    Committee report Progress; to sit again To-morrow.

    STREET PLAYGROUNDS BILL.
    The remaining Orders were read, and postponed.
    It being after Half-past Eleven of the Clock upon Tuesday evening, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
    Adjourned at Eight Minutes after Twelve o'Clock.

  AIR-RAID PRECAUTIONS.
  AIR-RAID PRECAUTIONS.
SCOTLAND.
  WIDOW'S PENSION (MRS. O'DOWD).
  WIDOW'S PENSION (MRS. O'DOWD).
  HOUSING, EDINBURGH.
  HOUSING, EDINBURGH.
  UNFIT AND OVERCROWDED HOUSES, ABERDEEN.
  UNFIT AND OVERCROWDED HOUSES, ABERDEEN.
  WESTERN ISLES (ROADS).
  WESTERN ISLES (ROADS).
  PROPOSED PIER, ISLE OF LEWIS.
  PROPOSED PIER, ISLE OF LEWIS.
  SMALLHOLDERS, ISLE OF HARRIS.
  SMALLHOLDERS, ISLE OF HARRIS.
TRADE AND COMMERCE.
  RUBBER INDUSTRY.
  RUBBER INDUSTRY.
  CALCIUM CARBIDE IMPORTS (STATISTICS).
  CALCIUM CARBIDE IMPORTS (STATISTICS).
  CIDER (CUBAN TARIFF).
  CIDER (CUBAN TARIFF).
  COASTAL SHIPPING (FOREIGN COMPETITION).
  COASTAL SHIPPING (FOREIGN COMPETITION).
PUBLIC ASSISTANCE.
  LIVERPOOL.
  LIVERPOOL.
  UNPENSIONED WIDOWS.
  UNPENSIONED WIDOWS.
  CONTRIBUTORY PENSIONS.
  CONTRIBUTORY PENSIONS.
  LAND ACQUISITION, WHITTLESEY.
  LAND ACQUISITION, WHITTLESEY.
BRITISH ARMY.
  MERITORIOUS SERVICE MEDAL.
  MERITORIOUS SERVICE MEDAL.
  IMPERIAL SERVICE MEDAL.
  IMPERIAL SERVICE MEDAL.
TERRITORIAL ARMY.
  STRENGTH OF UNITS.
  STRENGTH OF UNITS.
  RESERVE.
  RESERVE.
  MALTA (INDUSTRIAL EMPLOYÈS).
  MALTA (INDUSTRIAL EMPLOYÈS).
  HIS MAJESTY'S SHIP "WARSPITE" (RECONSTRUCTION).
  HIS MAJESTY'S SHIP "WARSPITE" (RECONSTRUCTION).
  ROYAL ORDNANCE FACTORY, BRIDGEND.
  ROYAL ORDNANCE FACTORY, BRIDGEND.
  GIBRALTAR DOCKYARD EMPLOYÈS (WAGES).
  GIBRALTAR DOCKYARD EMPLOYÈS (WAGES).
Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
WORKINGTON CORPORATION BILL.
Read 2a, and committed: the Committee to be proposed by the Committee of Selection.
COWES URBAN DISTRICT COUNCIL BILL.
Read 2a, and committed.
SWINTON AND PENDLEBURY CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
REDCAR CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
TATTON ESTATE BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
LONDON AND NORTH EASTERN RAILWAY BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
SOUTHERN RAILWAY BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
PIER AND HARBOUR PROVISIONAL ORDER (PLYMOUTH) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
SHEFFIELD GAS BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.
GREEN BELT (LONDON AND HOME COUNTIES) BILL.
Brought from the Commons; read 1a; and referred to the Examiners.

CENTRAL ELECTRICITY BOARD (GARSCUBE LANDS) ORDER, 1938.
THE EARL OF ERNE: My Lords, I beg to move that the Special Order, as reported from the Special Orders Committee on Tuesday last, be approved.
Moved, That the Special Order, as reported from the Special Orders Committee on Tuesday last, be approved.—(The Earl of Erne.)
On Question, Motion agreed to.

CRIMINAL PROCEDURE (SCOTLAND) BILL.
Order of the Day for the Second Reading read.
THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL): My Lords, I beg to move that this Bill be read a second time. This Bill, as its Title indicates, is mainly concerned with amendment of the law relating to criminal procedure in Scotland. The amendments embodied in the clauses are, in the main, unrelated to each other, though the principal ones are directed to one or other of the following purposes—firstly, to avoid imprisonment for failure to pay a fine, where the failure is due to lack of means—for example, Clause 1, which enables payment of fines by instalments, Clauses 2 and 3, which are analogous to provisions contained in the Money Payments (Justices Procedure) Act, 1935, and Clause 6, which extends the existing power to modify a sentence before imprisonment has followed—secondly, to obviate the necessity for the appearance of the accused person at certain more or less formal stages of the proceedings—this is done in Clauses 4 and 5—and thirdly, generally to simplify procedure, as in Clauses 8 and 11. Clause 12, on the other hand, is concerned with the criminal law rather than procedure. It clears up the doubt and perplexity into which the law relating to incest has been thrown in Scotland by the various Acts relating to the prohibited degrees for the purpose of marriage. The House will presumably
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not desire at this stage a detailed exposition of each clause, or of the somewhat technical points necessarily involved, but will no doubt be prepared to give the Bill a Second Reading on the understanding that full explanation of the details of any of the various provisions can be given, if so desired, when the Bill goes into Committee.
Moved, That the Bill be now read 2a.—(Lord Strathcona and Mount Royal)
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COAL BILL.
Order of the Day for the Third Reading read.
THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE): My Lords, I have it in command from His Majesty to signify to the House that His Majesty, having been informed of the purport of the Coal Bill, gives his consent, as far as His Majesty's interest is concerned on behalf of the Crown and on behalf of the Duchy of Cornwall, that the House may do therein as they shall think fit. I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Earl Stanhope.)
THE LORD CHANCELLOR (LORD MAUGHAM): My Lords, in supporting this Motion I do not intend to take up a great deal of your Lordships' time. The Bill is no doubt one of great complexity, and involves the interests of a great number of people. The provisions are difficult to understand without close attention. The measure therefore calls for careful examination and criticism in every detail, which I am glad to say it has received. For my part I wish to say quite clearly I welcome every criticism that has been made in reference to this Bill, and I admit at once that the noble Lords who are in many respects opposed to the measure, and who have moved Amendments, have been fair and reasonable in their proposals, and that those Amendments in practically every case had substance behind them, even in those cases where in the view of His Majesty's Government the Amendments were ill founded and the Government were unable to accept them. The result is that at this stage of the Bill I, for my part, have no

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complaints to make as to the way in which the Bill has been received, and I would add that I have some ground for thanking your Lordships for the patience with which you have listened to some rather prolonged speeches from me and to a number of interventions in debate which were so numerous that I was sometimes ashamed.
After a long and interesting debate, your Lordships will remember, the Second Reading was passed without a Division. This House realised, I think, that the measure came from another place with very strong support from the members in that place, and that it gave effect to successive King's Speeches promising to deal with the problem of the organisation of the coal industry by a comprehensive measure. Moreover, those who most imprecated the measure, and in particular that Part of it concerned with the compulsory acquisition by the Coal Commission of the fee simple of all the coal and mines of coal throughout England and Scotland—namely, Part I of the Bill—could not and did not fail to realise the true facts and the great importance of the point of view of the Government. The first was that the unification or the compulsory acquisition either by the State itself or by an independent body was approved by the unanimous Report of the Coal Commission of 1925, which contains the most elaborate account of the problem in question, and by the Coal Mines Reorganisation Commission of 1933. Your Lordships could not fail to recognise that, with all these independent bodies in favour either of the whole Bill or, at any rate, that Part of it which has been principally attacked, the Government had no option but to take some such step as they have taken in putting forward this Bill.
Secondly, your Lordships could not escape the realisation that with regard to the matter which was mainly concerned in reference to Part I of the Bill—namely, the global figure of £66,450,000—the Government really had no option, in the circumstances of which your Lordships are now fully aware, except to act on that figure and place it in the Bill as the sum to be paid for the property in question. The sum, as your Lordships well know, was ascertained by an independent and eminent Tribunal working upon an estimate which had been agreed between persons representing the Government and the
322
Mineral Owners' Joint Committee, after lengthy consideration of all the factors which had to be taken into account in arriving at that figure. I do not propose to weary your Lordships by again going through the whole of the history of that negotiation or the reasons which made it quite impossible for the Government to depart from that figure in the circumstances of the case. I only want to say once mote that I fully appreciate, and have appreciated from the start, that those persons who were not represented on the Mineral Owners' Joint Committee were, and are, perfectly justified in saying mistakes have been made, that they do not agree with the result arrived at, and that accordingly they think that the total global sum is an inadequate representation of the value of the property in England and Scotland.
That I have always admitted, but what I think your Lordships realised when you had to vote on the Second Reading of this Bill was this, that, whether that be so or not, the Government, at any rate, were constrained to accept the figure as having been fairly arrived at and that they would have been unworthy of their position if they had then purported to add substantial sums to what had been ascertained in a perfectly reasonable and fair manner. I think in another place and throughout the country there would have been most serious, damaging and justifiable criticism if the Government had said: "Well, we know more about it than an independent tribunal or than the persons who agreed upon the global figure, and therefore we are going to add substantial sums to the compensation which will have to be paid to the owners of coal throughout the country." It was no doubt for those reasons that this House, taking a sensible view of the matter, whatever the convictions of noble Lords were, gave the Bill a Second Reading without a Division.
Having taken that view I cannot conceive that there can be any doubt remaining in the minds of your Lordships as to the course that should be taken now that the Third Reading has come up for consideration; for, faulty as you may think the original Bill was when it came here from another place, it is certainly less faulty now according to your own views and your own contentions. In other words, this House, as has happened in a great number of cases since I have been a member of it, has greatly improved the

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measure, and many of the objections which were most seriously felt by those of your Lordships who were opposed to the Bill have been largely removed by the Amendments that have been made to it. At any rate, some of your Lordships' objections have been removed, and it may be right that I should here give your Lordships very shortly a statement of the main features, both in substance and in form, in relation to which the Bill has been greatly improved.
The first one I have to mention has reference to Clause 5 of the Bill. As your Lordships know, that dealt with what we call copyholders' rights, or what more accurately have been called ex-copyholders' rights, because, as your Lordships know, part of those rights has now ceased to exist. In regard to those matters, after your Lordships' objections had been under the consideration of those members of the Government concerned with this subject, it was agreed to insert a new clause which provided that excopyholders' rights are not to be acquired except in the few cases where the copy-holder has the right to work the coal under his copyhold without the consent of the lord of the manor. That was, I think, a beneficial clause for the owners of the coal, and increased the amount they would receive from the global figure. I do not say that was the reason of it, of course it was not; but the Government, for reasons I did my best to explain, acceded to the criticism with regard to those particular rights, and now that part of the Bill is, in my opinion, in a more satisfactory form from the point of view of the opponents of it.
The next clause which I recall to your Lordships' recollection is the present Clause 13, which we argued for many days. That relates to the rights of freeholders in possession of coal to a lease. There was a battle over that clause, and it was much considered both in the House and outside it. In the end, as the result of a great deal of consideration, an Amendment was made which provides that persons who are freeholders in possession of coal will get leases which will secure that their financial position in respect of their business of working coal shall be neither adversely affected nor improved by the fact that in lieu of remaining owners of the coal they will receive compensation, become liable to a
324
periodical rent fixed by reference to the time requisite for enabling the coal to be worked out, and cease to be liable as proprietors to pay Mineral Rights Duty and Royalties Welfare Levy. That is the second alteration in substance in the Bill.
There is a third which to my mind is one of substance, though I agree not of such great substance as the other, and that relates to a considerable alteration that has been made in the Second Schedule of the measure in reference to the withdrawal of support from the surface. There a reasonable arrangement was come to with certain noble Lords, and I think the Bill as it now stands in regard to that matter is fair and will be found to work out with reasonable justice to the persons concerned. The consent of the surface landowner to the making good of any damage done is not to be unreasonably withheld, and subject to that, proper compensation will be paid for damage arising from the working in cases in question. What is perhaps of more importance is that in the case of the coal which is referred to in paragraphs 5 and 6 of the Schedule the landowner is to be entitled, in respect of any damage to his land due to the exercise of the right for the withdrawal of support, to enforce against the Commission any liability to make reparation for damage which the lessee has failed to discharge. That, as I have already stated, I think is a reasonable but substantial concession on the part of His Majesty's Government, and will be found to prevent any injustice which otherwise might be occasioned to surface owners whose rights the Board interfered with and who suffered substantial damage and were unable to get redress.
There are a number of other improvements, but I now wish to remind your Lordships shortly of the matters in which the form of the Bill, and in a lesser degree the substance of the Bill, has been improved. First I claim on behalf of the Government that Clause 5 is now recast in a so much simpler form that it may be intelligible, I hope, to the majority of your Lordships. Secondly, that Clause 10 and the Fourth Schedule are now replaced by a new Clause 11, falling in with the idea of a number of your Lordships that it was sufficient in the case of apportionment of rent to have a simpler system than that which appeared in the Bill as it reached your Lordships' House. Then there is a new Clause 10 by which twelve months

325
arrears of rent may be acquired by the Coal Commission at the request of the owner of the coal. In the Third Schedule, in paragraph 20, there is an entirely new provision dealing with the division of compensation between diverse beneficial interests, a provision which I may say has occasioned a great deal of thought not only on the part of the Government but of the noble Lord who interested himself in this particular branch of the Bill.
There are a very large number of other Amendments which I will not take up time by enumerating, some of which will be of considerable value to the persons who are going to be affected by this Bill. Many of them, as I have said, are very considerable improvements, and I think it right to acknowledge the assistance which we have received from quite a number of your Lordships in relation to these Amendments. There are a few which will have to be dealt with on this stage of the Bill, but I think in substance they are matters of drafting and will not take up much of the time of your Lordships' House.
Before sitting down your Lordships perhaps will allow me to express my regret that in the first important measure in which I have had to take anything like a large share, it turns out, as it has happened, that we have been engaged in a combat which is rather of the nature of a civil war. There have been skirmishes, marchings and counter-marchings on both sides, and two pitched battles, but, I am glad to think, no bombing. I think it is fair to acknowledge that in this civil war the combatants have done their best from their point of view. In the old days, when war was conducted in a very different manner to that in which it is conducted now through the unfortunate and misapplied assistance of science, it was not unusual at the end of a battle or contest for a citadel for the conquerors to allow their opponents to march out with the honours of war, drums beating and flags flying. For myself I would say that I should be very glad if something of that nature could be done for those who I think must admit that in the end this measure must pass through Third Reading. In more prosaic language I would say that I hope when that metaphor is exhausted noble Lords will march to the right side of this House and take up their accustomed places.
LORD SNELL: My Lords, we have now spent much time and labour in trying to alter for the greater comfort of the royalty owners the provisions of a Bill which was based upon the careful research and findings of an expert and impartial Commission, findings which, before they came to this place, were submitted to a close and prolonged scrutiny by another place. We have now arrived at the stage when this Bill must be either accepted or rejected. Your Lordships will be well advised if you agree to pass the Bill. In any case I fear your Lordships must be prepared to hear some quite plain speaking as to our experience during the passing of this Bill. I desire to make only a few general remarks on this occasion. The Bill recognises a principle which we on these Benches have often commended to your Lordships' House. That principle is that wherever the interests of a section of the community appeared to clash with the interests of the whole community the interests of the nation and not of the section must be served. Now we feel ourselves, having listened carefully to the discussions on this Bill, rather scurvily treated, for whenever we have ventured to put forward this proposition we have been answered with a shrill chorus of wrath from those who thought we were undermining the very basis of the Constitution. We were accused of confiscation and spoliation and of tampering with the sacred institution of private property, and indeed of thwarting the struggle for existence, that beneficent capitalist principle which prompts one man to climb on to the shoulders of his neighbour and remain there as long as he possibly can.
During the passage of this Bill we have seen those who so admonished us rise to defend the provisions which it contains. What from us was red ruin and the breaking up of laws, from them is mere sensible and overdue reorganisation. This, however, is not a unique occasion. The first public flirtation with this menace of confiscation was when the Petroleum Bill was before your Lordships' House two years ago. We then had the pleasure of listening to the noble Marquess, Lord Londonderry, defending the provisions of that measure. He said that certain preconceived ideas of property were infringed by any proposition which contains an element of nationalisation, which is the acquisition by the Crown of property

327
hitherto held by individuals. The noble Marquess went on to show how inevitable, after all, and indeed how almost sublime, was this theory of nationalisation which has received such support from my noble friends and myself. On that occasion we felt that the capitalist classes had been delivered into our hands by the concessions which had been made.
During the debate, this Bill has received a most searching criticism, and some changes have been made which the noble and learned Lord on the Woolsack is generous enough to say have been improvements. Whether that view will be accepted in another place we must wait to see. At any rate, the discussions on this Bill will draw once more the attention of the nation to the composition of your Lordships' House. One interest in this matter has from my standpoint been over-represented, whereas other interests have not been represented at all. The royalty owners, with their lifelong experience and immediate personal interests, have been able to make a case for themselves which no one with equal experience was in a position to rebut, and as I listened to their speeches I became aware of the many injustices that I have escaped through not being a royalty owner. The miners, who, after all, are equally interested in this issue, are not represented in your Lordships' House at all. There has not been at your Lordships' disposal one working miner whose experience could have assisted you in your deliberations. My noble friends Lord Strabolgi and Lord Addison have been good enough to devote considerable attention to the details of the Bill and to criticise Amendments which have been very timidly resisted by His Majesty's Government.
I should like in passing to pay a tribute of very sincere and disapproving admiration to the pertinacity and the skill of the small group of members of your Lordships' House who have conducted the opposition to this Bill. They have shown what a few determined men who know what they want and mean to get it can do in adverse circumstances. I have during my lifetime, without receiving the slightest sympathy from other people, seen my own income reduced for the assumed good of the community, and I know how painful the experience is. But
328
I remember that whenever I have pleaded from this Box that the interests of the wage earners should be remembered, that their poverty should be considered and their needs not forgotten, I have not received any vocal support from those who have been so vociferous in their protests during these discussions. It would almost seem that they have only now become aware that there are injustices in the land. Like Shylock, they said, "The curse never fell upon our nation till now."
So resentful were those who have been criticising this Bill that they deserted the rich pastures which had for so long nourished them and trekked across the wilderness to pitch their tents as far as possible from the contamination to which they thought they were subjected. It reminds me of the old Fourth Party, which was created over fifty years ago, and the resemblance is all the more striking because of the presence in the group of my noble friend Lord Balfour and because of his great namesake, who was a member of that small Party. I have very great sympathy indeed with my noble friend Lord Arnold, who found his carefully-selected virginal territory invaded and occupied, thus depriving him once more of those opportunities for undisturbed meditation that he loves so much. But I should like to encourage him. It is not the habit of Fourth Parties to endure. They renounce and they denounce, but I venture the prediction that they will be unable to sustain the bitter winds of political adversity and will fold up their tents and silently steal back to the protection of the old fold. There were moments when they swelled over on to these Benches, and I had a thrill at the thought that I was going to receive new support, but I was in some doubt how I should induce them to become models of that good behaviour and modesty of which we are such striking examples. I should only like, in passing from that, to say that in comparison with this group of noble Lords we, who have some real grievances, are miracles of moderation, and our criticisms of His Majesty's Government ought really to make us accepted as angels of sweetness and light. The names they called His Majesty's Government have shocked us profoundly. The noble Lord, Lord Balfour, said that we had saved His Majesty's Government. If that grave accusation is correct, may

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Heaven forgive us for what we have done! But I cannot feel that the alterations which have been made in this Bill will be accepted generally as improvements.
I do not propose to deal with the provisions of this Bill to-day. They are perfectly well known to your Lordships and there is no point in wasting your time debating them. The Bill appears to us to contain two main things: the royalty owners are to be compensated, and the coalowners are to retain possession of their mines. On the other hand, there is no direct benefit to the working miners in this Bill, and the indirect benefits are at least problematical. It is very doubtful whether any compulsory amalgamations will be possible when these provisions come to be carefully examined. I regard this Bill as badly founded, and very bady drafted. I do not remember any Bill, in my political experience, that has had to be so altered to make it apparently intelligible. Whole clauses have had to be recast, and the number of Amendments that His Majesty's Government have themselves introduced show either that the measure was produced in haste, or that attention to its wording had not been sufficient. I regard it as a timid, inefficient and probably futile measure, which in the end will leave things much as they are at present. We could have produced a far better Bill, and one of these days we shall be in a position to do so; but the Bill does contain at least a recognition of a problem of very great importance, and I beg to ask your Lordships to give it an uncontested Third Reading.
LORD HASTINGS: My Lords, I have no desire to prolong proceedings which have been riot without an element of distaste, but I feel it would be impossible for me to permit this Bill to enter into its last stage without offering some further comment upon it. The noble and learned Lord on the Woolsack gave to the House a brief résumé of certain of the more important alterations which had been effected in the Bill since its arrival here, and I would propose, with your Lordships' permission, to follow him in that particular matter for a few moments. The Bill will return, if it does return, to another place almost unrecognisable in form. The number of Amendments which have been inserted in it here is very great, and in those particular matters the House has performed its particular function of a revising
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Chamber with—I have the Lord Chancellor's own authority for saying it—great efficiency.
But an analysis of these Amendments is, from the standpoint of the mineral owner, well worth while. The great bulk of those Amendments have been inserted in the Bill in most cases as a tardy and somewhat reluctant recognition on the part of His Majesty's Government of the bad drafting of their measure as it came up to this House, and it is to be assumed that Amendments of that character will not be questioned when, and if, the Bill returns to another place. Certain other Amendments of great importance have been agreed to by His Majesty's Government, particularly in regard to those matters which affect the actual position of the colliery proprietors of this country; but when it comes to Amendments affecting the interests of the mineral owner, it is true to say that the only Amendments which have been inserted in this Bill of major importance to the amelioration of the position of the mineral owners, are those which have been inserted through the medium of the Division Lobby.
The mineral owner has no occasion to be grateful to His Majesty's Government for what they have done for him during the prolonged proceedings on the Bill in this House. His position at the end of the period is identical with his position at the beginning of it, except in so far as Amendments have been inserted in the Bill by the aid of the Division Lobbies, to which I have already referred. It will be within the recollection of the House that His Majesty's Government have assented to a very great change in respect of the position of the freehold coalowners. From the lips of the noble Earl the Leader of the House, the coalowners, or more properly the colliery proprietors, had the felicity of learning that it was the intention of the Government that this Bill should leave them no worse off after its passage into an Act than they were before. The House will not suppose for a moment that I grudge to the colliery owners that concession. On the contrary, I regard it as a concession to nothing more than elementary justice, and I welcome it on their behalf as cordially as they could welcome it themselves. But what manner of treatment has been meted out to the mineral owners? What is elementary justice to the colliery owner

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is apparently weighed in a different balance altogether when the interests of the mineral owner are concerned.
He, throughout the proceedings on this Bill, has been treated as a public enemy, whereas in fact he is both in this House and in the constituencies one of the mainstays of His Majesty's Government, and is, moreover, a contributor to national revenue on an unprecedented scale. But he is not powerfully organised, he is not very numerous, and therefore the treatment meted out to him has been of a different character from that which has been given to other sections of the industry. Let me call to mind that which was done in this House when the concession on the old Clause 12, now Clause 13, was granted. On that occasion the Government missed a golden opportunity. There was presented to them a chance of ameliorating the position of the royalty owner without greater cost to the State. They could so easily, had they desired it, have permitted the valuation of the freehold coal to have been foregone, and the sum of money allotted in compensation by the Greene Tribunal to have been made available to those unfortunates who did not happen to be what is termed freehold owners. But almost before it was suggested the Leader of the House leapt to his feet and gave an assurance to the noble Viscount, Lord Samuel, that by no possibility would the royalty owners be permitted to profit by this concession and that the greatest care would be taken to see that they did not. The noble Earl's eagerness to give that assurance will not be so readily forgotten.
With that opportunity thrown away, the chance of ameliorating the mineral owners' position went for all time. There remained no hope whatever of improving the Bill to the advantage of the royalty owner, who, on all hands it has been admitted, has received a very raw deal in this matter. There remains nothing to be done other than to prevent the Bill from taking more out of his pocket. In that particular connection I should have been very glad to have heard from the noble and learned Lord on the Woolsack some indication as to how in another place His Majesty's Government propose that certain vital Amendments should be treated, for, whereas the Division Lobbies assisted us to place in the Bill quite a number of Amendments of importance,
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there are two in particular which have a financial tag hanging to them of very great importance.
I have already seen it misrepresented in the Press that your Lordships' House has postponed the vesting date. It has done nothing of the kind. It was neither the intention nor the purpose of those of us who were advocating some change in that particular clause to postpone the vesting date. What your Lordships have assisted us to do is this. We have it now in the Bill that, should the valuations not be completed by the date which was anticipated, then the vesting date shall not occur until those valuations have been so completed. There is at the present time no expectation that the valuations will not be complete by July 1,1942. But certain circumstances may arise beyond the control of all of us which may delay the completion of those valuations, and if such circumstances should arise then the vesting date will not occur. That is what your Lordships' House has done in this matter; and to say that the vesting date has been postponed is not a correct statement of the fact.
In this particular matter, bear in mind—and I do not think His Majesty's Government would deny this—that the royalty owners, owing to one cause or another, which we have debated at length and I do not propose again to go into, have received a very grave shock, and have been very gravely ill-treated. In view of those facts I would appeal to the Government to permit, without further discussion in this House at a later stage still, that particular Amendment to remain in the Bill. And there is another one; in the matter of expenses an Amendment has been inserted which means very much to the surface owner of the future. The mineral owners have really nothing to thank the Government for in what they have done for them in the course of the passage of this Bill through this House. What little they have been able to achieve has been achieved by their own efforts. If there is any attempt in another place to alter the little that they have achieved, I can assure the Government that it will meet with the strongest resistance here.
Leaving discussion of the Amendments, I would like for a moment to return to the more general subject. The Lord Chancellor, in his most moderate speech

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just now, claimed in effect that this Bill was inevitable. Inevitability usually arises from a demand which is irresistible, but in connection with this particular Bill it is impossible to discover or envisage the demand. It seems clear that no Party in the State desires this Bill. The Labour Party, realising that it contains within it nothing for the working miner, have cold-shouldered the Bill from the start. The Liberal Party have shown no enthusiasm for it, and it would be impossible to discover any individual Conservative in or out of Parliament who did not privately express his opinion upon this Bill in terms not complimentary to His Majesty's Government. The royalty owners, who are to be deprived of their property upon a basis of compensation which in effect is confiscation, have made their views known in this House and elsewhere. No mineral owner has risen in his place, or written to the Press, or addressed a public meeting advocating, or even supporting, any part of the measure which is now before the House. To the coal trade itself, the colliery proprietors, the Bill holds out nothing but an expectation of interference with their trade, and the Bill is as much anathema to them as it is to the royalty owners. To the working miner who is to get nothing out of it the Bill offers no advantage.
Where, then, does the demand, the inevitability of the Bill, arise? Sundry Royal Commissions have reported in favour of parts of this measure. Royal Commissions do not create demand. Demand arises from the public itself, and there has been, and is, no demand for this measure. How, then, does it come to be passed into law? I have discovered but three elements in the community who wish for the passage of this Bill. One of them would appear to be His Majesty's Government, another would appear to be The Times newspaper, and the third would appear to be the Civil Service. In so far as His Majesty's Government are concerned I suspect that they regard the Bill as something of a damnosa hereditas, which nothing but an unfortunate lack of courage has disabled them from throwing overboard. The newspaper in question, I feel, has been filled with compassion for the state to which His Majesty's Government have been reduced in argument, and out of pity has offered such support as it was able to give.
LORD STRABOLGI: It did not report the debates.
LORD HASTINGS: As for the Civil Service, there is a different story to tell. This Bill fulfils everything that the Civil Service hold dear—jobs arid power. The Coal Commission and its Chairman-designate must have reason to be grateful to His Majesty's Government for the creation of the Commission. General managers, managers, secretaries, assistant-secretaries, will be required in large numbers. What could be a more happy prospect for the Civil Service than this Bill? And when His Majesty's Government have at the same time given them a licence to interfere in the coal trade itself, their cup of happiness must indeed be full. No, I feel that when the inevitability of this Bill is pleaded the case is not made out. There is no case for this Bill, in so far as the Party supporting and providing the main support to this Government are concerned, and as I have said before and now repeat, both in this House and in the constituencies the reactions to this measure will be prolonged and severe.
The noble and learned Lord on the Woolsack terminated his speech with a very generous reference. He hoped that those of us who have had the temerity to oppose this Bill throughout would be permitted to march out with the honours of war. Whither shall we march? Things can never be quite the same again. For those of us who have been so shocked by the introduction of this measure and its passage through the House as to compel us to adopt the, to me at any rate, distasteful form which opposition to friends must always bring to us, it will be exceedingly difficult to accept the future as if the past had never been. I do not propose to delay the House for another moment, but I would not like the Bill to enter on this last stage of its passage through the House without once more expressing my abhorrence of it, my firm belief that it is contrary to the best national interests that it should pass, and my hope that it will do less damage than I anticipate it will.
VISCOUNT SAMUEL: My Lords, the noble Lord who has just spoken has presented to us the view that this Bill in the country has little or no support in any quarter. In that analysis of the situation I for one cannot concur. All those who

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have taken interest in the coal question will remember how prolonged, and often how bitter and sometimes how dangerous, have been the controversies which have racked the country from time to time on the question of the coal mines, and although in these days we live in times when this issue is quiescent, our memories go back to earlier days in which the attention of the whole nation was concentrated upon this industry. Those who in those times studied the matter came to the conclusion that the troubles in the coal industry were largely due to the bad planning and bad organisation of that industry, and that one of the main remedies was to be found precisely in the various proposals which are embodied in this Bill. Therefore, differing from the noble Lord who has just spoken, I would rather say that the general body of informed opinion in the nation of all Parties is in favour of the principles which are embodied in this measure.
But the House will feel troubled that the noble Lord and his friends have urged so strongly and with so much conviction as well as with such eloquence, power, and persistency that this Bill commits an injustice against them. All of us would have an uneasy conscience if we felt we had assisted in passing a measure which committed an injustice against any section of the community. Therefore, perhaps, your Lordships will allow me for a few moments to review once more the reasons why those of us who support the clauses of this Bill dealing with the nationalisation, or unification as it is called here, of mining royalties—
SEVERAL NOBLE LORDS: Hear, hear.
VISCOUNT SAMUEL: I regard it as, in effect, nationalisation except with regard to the ultimate disposition of the revenue that may come in. I would, as I say, endeavour to review the attitude of those of us who regard this measure for the purchase of royalties as not unjust. In the first place, the reason why it is claimed to be unjust is that the owners regard their present property, in the words of my noble friend Lord Lothian, as one of the most gilt-edged securities in the world. They consider that they have an absolute property which brings in an assured, stable, and continuous income, and that if they are compelled to surrender their
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property they ought to receive in exchange for it an equal income, also stable, secure, and continuous. That proposition is disputed. The largest owners of mining royalties in the country are the Ecclesiastical Commissioners, and the most reverend Primate told us this on the Second Reading. He said:
"For the last thirty years the Commissioners have set aside from their mineral income a sum of no less than £80,000 a year. That, I must point out, has been not in order to meet any possible expropriation of royalties but to meet any possible exhaustion of coal."
The Ecclesiastical Commissioners have ample uses to which to put all their revenues in the beneficent purposes with which they are charged. They would not have put aside £80,000 a year for thirty years wantonly or unnecessarily. They did it because their present income from mining royalties is not secure, stable, and continuous, but is a temporary and wasting income, and therefore they have been obliged to put aside this immense sum for that purpose.
If this is one of the most gilt-edged securities in the world, why should the largest owner of that security, year after year, put aside £80,000 for the purpose to which the most reverend Primate referred? I should mention that, of the £80,000, I understand £70,000 is in respect of coal royalties and £10,000 in respect of other minerals. Furthermore, the Ecclesiastical Commissioners, having put aside that sum of £70,000 a year for thirty years, now have a capital of £2,100,000 so accumulated. The most reverend Primate told us that that was put aside in order to meet any possible exhaustion of the coal. That sum therefore is provision against any cessation of their income from coal royalties. Consequently the interest upon that £2,100,000 is properly attributable to the function for which that sum was originally set aside—namely, to replace income from coal royalties. The Ecclesiastical Commissioners therefore have got the interest on that sum, which is nearly £70,000 a year at 3¼ per cent., plus the saving of £70,000 which they previously had been putting by and which they need no longer put by. They therefore should have under this head an income of £140,000 to replace their reduced income from coal royalties of £120,000. I cannot see that the Ecclesiastical Commissioners have really any grievance on financial grounds

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against the provisions of this Bill. Furthermore, if this is a continuous, stable and sure income, how is it that the law requires that in any parish in which there is a mineral income for the benefit of the glebe of the parish, that income is never to be looked upon as income at all, because the whole of it is required by Statute to be put aside and accumulated as capital?
This is said to be an assured, permanent gilt-edged income. When the Royal Commission of which I had the honour to be a member was sitting in 1925 the net income of coal royalties was £6,000,000 a year. Now in 1937 we are discussing a state of things in which the net income is £4,500,000. If this is a gilt-edged, assured, stable and continuous income, how is it that in twelve years it has been reduced by one quarter? Simply because the demand for coal is less. How do we know what the position will be twelve years from now? Suppose the demand for coal continues to decline, and coal continues to suffer from the competition of other fuels, or from the more economic use of fuels, it may well be that twelve years from now the same percentage of decline as in the last twelve years will have continued, and if this Bill were to be rejected now and brought up again twelve years hence after another long delay, it might be found that the annual figure to be multiplied by so many years' purchase was not £4,500,000 but £3,500,000. That would be another reduction, and if that were the case then the successors of the noble Lords who now complain of the injustice of this measure would bitterly regret that the more propitious moment of 1938 had not been seized when the income was £4,500,000.
There is a third reason why this income cannot be regarded as a gilt-edged security for which fifteen years' purchase is an inadequate compensation. I mentioned this on the Second Reading and there has been no adequate reply. If there is a continuous, stable and assured income, how is it that when it is valued for Death Duties it is only valued at ten or eleven years' purchase, or something of that kind? The noble Lord who has just spoken said on a previous occasion that the reason is that the Board of Inland Revenue cannot get out of the owners a larger sum than one based on
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ten or eleven years' purchase, or whatever it may be in a particular case. That argument is ingenious but not convincing, for no one suspects the Board of Inland Revenue of having any bowels of human compassion, and no one has suggested that in any other of the branches of our public finance any such consideration as that is allowed to operate. No, for many years past it has been the established custom to value this security at a low number of years' purchase precisely because it is not gilt-edged but is a wasting security of comparatively short life.
The independent Tribunal that was appointed to go into this very matter assessed the figure at fifteen years' purchase. Now since then—I must repeat this because those who have accused the Government and Parliament of injustice are inclined to ignore this fact—the Government have gone beyond the award and have consented to the coalowners receiving three and a half years of the present income after the passing of the Bill. I assessed the value of that as the equivalent of a lump sum of £7,500,000 to be added to the £66,000,000. The noble and learned Lord on the Woolsack gave a figure of £7,000,000. Now here I think my noble friend Lord Hastings, if I may call him so, scored a point against me and against the Lord Chancellor. He pointed out that we had not made allowance in that figure for the fact that this additional income, if received during the three and a half years' interval, is liable to Income Tax and Surtax, and that therefore it is not fair to him and his friends to regard it as though it were a complete addition. I think that is true. I had omitted that consideration. Therefore, the figure that I took of £7,500,000 should be very considerably reduced, perhaps to something like £4,000,000, but even that £4,000,000 is very nearly an additional year's purchase, and if this is taken into account the royalty owners are receiving not only the fifteen years' awarded to them by the independent Tribunal but sixteen years'.
Then, again, during the course of the passage of this Bill through this House that period of three and a half years has been made extensible. I do not say that it is actually extended by the terms of the Bill, but there is a new provision in the Bill to the effect that if the valuation of

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every holding in the country has not been certified by the end of the three and a half years, there is to be an indefinite extension until it has been certified. Thus, if there is litigation on particular points, that date might be postponed for a year or for two or three years, and during the whole of this time this bonus over and above the award of the Greene Tribunal will go to the royalty owners. That is an addition which, in my opinion, ought not to have been made by this House, and I sincerely hope it will not stand in the Bill when it passes into law.
With regard to what was Clause 12 in the Bill, dealing with the purchase of the freehold coal, I agree that there is much to be said for the change, and that there is no reason to demur to that particular Amendment in the Bill. The point that I wish to make under that head relates to one that was raised by the noble Lord who has just sat down. He suggested that following upon that Amendment the Government ought to have seized the opportunity, as one-eighth of the coal—that belonging in freehold to the mineowners—was being taken out of the purchase, of saying that the global figure should be left as it was, and distributed amongst the seven-eighths of the coalowners who remained. Consequently they would have got one-seventh more than the award allotted to them by the Greene Tribunal or another two years' purchase over and above that award. It seems to me quite impossible that the Government could have assented to that proposal. The matter having been referred to what was in fact an arbitration tribunal, and that tribunal having allotted fifteen years' purchase, the Government by a side wind have already given another one year, and to add another two years and make it eighteen years would have been intolerable to public opinion.
Furthermore, let it be remembered in this House when we are considering whether this measure is unjust to the royalty owners, that the figure of fifteen years' purchase is not the maximum but the average. There is nothing in this Bill to say that no one shall get more than fifteen years' purchase, and certainly a considerable number of the royalty owners will get less. Obviously a royalty owner whose property is going to be worked out in two, three or ten years, cannot expect the valuers to give him
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fifteen years' for that property; consequently a large number will get less than the fifteen years'. The sum so saved will go to the other royalty owners and those whose properties have a longer duration will certainly get more than the fifteen years' purchase.
I am sure the House is very grateful to those members of the Government who have conducted this Bill during the debates we have had. The Lord Chancellor has trod with a sure tread through the intricate mazes of the legal technicalities and has been of immense assistance to those of us who are interested in the Bill. He has been most ably supported, if I may say so, by the noble Earl the Leader of the House and by the noble Earl the Paymaster-General. I would congratulate the Government on having shown a very large measure of courage, resolution and firmness of purpose in resisting the terrific onslaughts to which they have been subjected by noble Lords who now sit below the gangway on this side of the House—a welcome contrast to the conduct of the Government in other departments of politics, for example in foreign affairs, where apparently they are firm only in their determination to be weak.
The noble Lord, Lord Hastings, has indeed threatened them with the most dire penalties. He said once in this House—and I confess I heard his words with great surprise, for I never expected to hear such language in either House of Parliament—
"There may be relatively few mineral owners, relatively few persons up and down the country affected by the Bill at all, but they arc, in the; majority of cases, people of some influence, people upon whom this Government are dependent for good will in the constituencies and they are very essential from a practical point of view. You cannot deliberately, with your eyes open, go and drive your own supporters into the Bankruptcy Court."
Your opponents, presumably, you may drive into the Bankruptcy Court, but not the supporters upon whom you are dependent for electoral support in the constituencies! I congratulate the noble Lord upon his frankness and candour, but not upon his political morality. I do congratulate the Government upon having withstood both those threats and those influences from the noble Lord, who in this case represents the Bourbons of property.

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With respect to amalgamation I am very glad that those provisions that were so seriously threatened from some quarters have been retained in the Bill, and in that connection perhaps I may take this opportunity of mentioning a slight animadversion upon something which I said on a previous occasion that fell from the noble Earl, Lord Lindsay. I said that one of the benefits of amalgamation was that emphasized by the Lewis Committee—the Committee which sat under the Chairmanship of Sir Frederick Lewis, now Lord Essendon—that amalgamations would make more feasible good arrangements for the selling of coal. The noble Earl opposite said that there was nothing in that point because now
"as things are, it is impossible for a company to sell an ounce of coal without the approval of the selling agencies set up in the various districts, so that in that respect amalgamations will be of no assistance."
I think on considering the matter the noble Earl will find that his point is not a sound one. In certain districts—and some of the most important districts—it is true that selling is vested in a central organisation, but in a large number of districts that is not so. In those districts collieries sell their own coal through their own salesmen to their own customers, subject to the requirements of a permit issued by a controlling authority for each sale. Therefore selling arrangements of individual collieries are of importance in this connection. That applies to Scotland, Northumberland, Durham, South Wales, Warwickshire Cannock Chase, North Staffordshire, Somerset, Bristol, Kent, North Wales and Cumberland. I ought to have made it clear that I was not speaking of the country as a whole but only of certain districts, but to those districts my observation did apply.
Noble Lords opposite who object to compulsory amalgamations seem to have a profound suspicion of the Commission under whose auspices they are now being brought about and of the successors of that Commission in future. Indeed the noble Lord, Lord Hastings, seems to hold in abhorence the Civil Service, whom he described as bureaucrats and parasites eating up the national income. The present Coal Commission which is endeavouring to effect these amalgamations consists of Sir Ernest Gowers, who indeed is a civil servant, and one of the highest character and capacity, but the other Commissioners, who are part-time officers,
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are Mr. Laurence Holt, director of the Blue Funnel and other steamship lines, and an ex-Lord Mayor of Liverpool; Mr. Joseph Jones, President of the Miners' Federation; Sir Felix Pole, Chairman of Associated Electrical Industries and formerly General Manager of the Great Western Railway; and Sir William Whyte, a Scottish solicitor who has taken a prominent part in local government activities in Scotland. They are not in the least the type of hide-hound bureaucrats knowing nothing of industry who have been described by the noble Lord who has just spoken. There is no reason to think that the new Commission which will be constituted will not consist of men of the same character and capacity.
One special regret I have in relation to the discussions in this House on this Bill arises from the fact that the only Amendment with which I myself troubled your Lordships was defeated by a small majority. It was an Amendment which dealt with the ultimate allocation of any surplus revenues that may remain after the specific requirements in the Statute have been disposed of. I urged that that surplus should be at the disposal of the State as a whole and not, as indicated—although not enacted in the Bill—he at the disposition of the mining industry itself. It appeared to many people that it ought to be regarded as national property and not as the property of any particular industry. That was defeated by forty-nine votes to thirty-five, and the minority were a most remarkable Lobby, including noble Lords on the Front Bench representing the Labour Party, the noble Lord, Lord Hastings, and many of his associates, some of those who sit on these Benches and many noble Lords from the other side. There never has been such a Lobby in which lions and lambs entered so amicably together.
If we were not successful in this matter, which does not deal with any immediate or any early issue but with an ultimate and perhaps distant issue, at any rate we have placed it on the records of Parliament that a number of members of your Lordships' House, belonging to various Parties and expressing various points of view, are of opinion that this revenue should ultimately belong to the community as a whole and not to any particular industry. That is placed on record for the information of those who come after us.

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The aim of this measure, I believe, is to promote better planning and better organisation of this great national industry, and I believe it will redound to the welfare of those engaged in it and of the country as a whole.
LORD BALFOUR OF BURLEIGH: My Lords, the noble Viscount who has just sat down has traversed a good deal of the ground which was traversed on the occasion of the Second Reading debate on this Bill. If I may say so, a large portion of his remarks was founded on what was a totally false premiss. He began by saying that the demand of those of us who have represented to your Lordships that the purchase price of this coal is inadequate is that royalty owners should receive on the transfer of their property to the Coal Commission an equal income to that which they had before, as well secured, as stable and as continuous. I think you can search the speeches which have been made from this quarter of the House with the greatest assiduity and you will never find that claim. We have never claimed that the royalty owners were to be put in the same position on the transfer of their property to the State as they were in before. What we have said, and what we continue to repeat, is that the number of years' purchase which is given is inadequate.
The noble Viscount was at pains to explain to us that these mining royalties are a diminishing asset, and he instanced very forcibly the figures given on behalf of the Ecclesiastical Commissioners. One might have thought, from what the noble Viscount said, that the Ecclesiastical Commissioners had no feeling of grievance about the Bill which is now before Parliament. I have here the remarks which fell from the most reverend Primate, and he made it very clear to your Lordships that he was grievously disappointed. He explained that most reluctantly he was not able to oppose the Second Reading of this Bill. He said he was greatly disappointed with the award, which would inflict grievous loss upon the Church, upon people who were very ill able to afford the loss. If the most reverend Primate did not feel able to oppose the Bill, it was because the Chairman of the Ecclesiastical Commissioners had been intimately connected with the working of the Mineral Owners' Joint
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Committee and the most reverend Primate therefore felt himself bound.
Then the noble Viscount referred to some remark of my noble friend Lord Hastings and mentioned that he—the noble Viscount—was of opinion that the Government had made a great concession to the royalty owners in regard to the vesting date. What the noble Viscount did not remind the House of was the remark of my noble friend when he suggested that, if to continue to receive one's royalties was in fact to receive additional compensation, then the Government might well postpone the vesting date for fifteen years. Let the royalty owners, he said, enjoy their royalties during those years, and full compensation would have been paid. The noble Viscount did not remind us of that. Of course, with great respect to the noble Viscount, it is rubbish to say that postponing the vesting date for three and a half years is an addition to the compensation. All that it is doing is to postpone for three and a half years the date at which this injustice will be perpetrated.
Then there was the Death Duties argument. That, one must admit, is a good debating point, and that is about all that it is. Death Duties, upon any scale which hurts, have not been levied for more than a comparatively few years, and only a small proportion of existing royalties have fallen under the Death Duty levy. A large section of the royalties—we know now it is one-eighth, or 12 per cent.—are accounted for by the freehold coal which is the property of the colliery companies. Colliery companies do not die, in the sense that they do not become liable to Death Duties; therefore that section of the royalties has never been tested in the Death Duty test. Nor has a great deal else. It is not fair to present the Death Duties argument as the complete answer which superficially it may appear to be. There are other considerations. In assessing Death Duties there is a large element of buying and selling. This ground has been gone over before, and it is quite untrue for the noble Viscount to say that the Death Duty argument has never been answered. It has been answered and it has been traversed.
I do not think this is the time to go all through the Second Reading debate, but if the noble Viscount is so concerned to

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tell your Lordships that the price is a fair one, I think I must repeat once more, very shortly, the reasons why I maintain that the price is not a fair one. The Greene Committee were instructed to value royalties in terms of a number of years' purchase of the global figure of £4,300,000—
THE PAYMASTER-GENERAL (THE EARL OF MUNSTER): No, it was £4,430,000. The noble Lord has made the same mistake as he made before.
LORD BALFOUR OF BURLEIGH: I am most obliged to the noble Earl, who has now corrected me twice and altered the figure from £4,300,000 to £4,430,000. I do not think it is a matter of such importance as to require two corrections, but I will try to remember it for another time. At all events the global figure—perhaps I had better refer to it as "the global figure," and then I shall not make the same mistake again—was valued at fifteen years' purchase, and the noble and learned Lord on the Woolsack told us—I do not dispute it; it is perfectly correct—that the coal as a whole represents a perpetuity. The holding of the individual royalty owner represents a terminable annuity. The Greene Committee were instructed to value the whole coal, and they said fifteen years' purchase. I believe it to be admitted—at all events it is the assertion of a number of experts whose authority would be very difficult to dispute—that there is a perpetuity in the existing leases which are being worked to-day and under which royalties are paid. If that is so, then fifteen years' purchase is being paid for the perpetuity in the existing leases, and it leaves separate and unaccounted for the whole of the reserves of coal which are not in lease to-day, which are undeveloped, and which are quite clearly additional to the coal in leases which is being acquired by the Government. Nothing, I should have thought, could more clearly demonstrate the fact that this property is being taken over at less than its real value.
I find myself in agreement with so much that was said by my noble friend Lord Snell that I am very sorry to have to express disagreement on just one of the things which he said, and which he said only in passing. The noble Lord referred to his Party and its devotion to the principle of the interests of the nation as contrasted with the interests of one
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particular class. Your Lordships, I understand the noble Lord to mean, are devoted more to the interests of a particular class than to the interests of the nation as a whole. The only comment I have to make upon that is that in my opinion there never was so obvious a class Party as the Party of my noble friend. Why, they call themselves the Labour Party; they never, or seldom, call themselves the Socialist Party. They call themselves the Labour Party in an attempt to maintain that they, and they alone, represent the working men of the country, I only mention that in passing; otherwise I find myself in very happy agreement with most of the things which the noble Lord said.
The noble and learned Lord upon the Woolsack said some very gracious things about the small Party down at this end of the House, who have had, I am afraid, all too much to say on this Bill. First of all he said—and I was delighted to hear it—that the Bill had been greatly improved. That is indeed a satisfactory announcement. From the way in which the noble and learned Lord spoke, one would think that this was a Private Member's Bill which had been picked up by the Government and out of which all the amateurishness, irrelevancies and inaccuracies had been removed by a paternal authority who had put the thing into order and were now going to offer it for the Royal Assent. Nobody could have imagined that this was the Government's own Bill, which had survived the whole of its stages in another place, and which nevertheless was found to contain so many of these important matters which have been left to your Lordships to put right. The noble and learned Lord concluded with a reference to the civil war which has been conducted here, and was kind enough to express the hope that the party, the vanquished party I suppose, should be allowed to march out with flags flying and drums beating. I was glad to hear that, because that is what should happen at the termination of hostilities, and I conclude from that that we are now dealing with the final stages of this Bill, and therefore there is no intention of sending it back to another place. Otherwise how can the hostilities have terminated and the flags fly and the drums beat? Perhaps my conclusion on that heading is a little premature.

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I do not want to keep your Lordships, but I must traverse one thing that the noble and learned Lord said, and that is with reference to the competence of the Mineral Owners' Joint Committee. Surely by this time it must be realised that the competence of that Committee is very seriously inpugned. The noble Earl, the Leader of the House, said that they represented some 70 to 80 per cent. of the value of the royalties, but no one knows what proportion of the number of royalty owners the Committee represented, and the noble and learned Lord on the Woolsack admitted that in the work before the Greene Committee there was no independent representation of the owners of undeveloped coal, as such. Therein resides the greatest objection to the method by which the compensation was arrived at.
The noble and learned Lord asked what were the Government to do. They submitted the matter to a competent Tribunal and by the result of that investigation they were bound to abide. I should have thought there was a course open to the Government. It was suggested, I thought, that we had pressed the Government to increase the compensation. We have never done anything of the kind. We never asked your Lordships to reject this Bill on the Second Reading, and there is no Motion for its rejection on the Third Reading. What we have been seeking to do is iron out some of the minor injustices and examples of bureaucratic departmentalism which disfigure the Bill. We have never asked for more money. What could the Government have done? I should have thought that from the moment when they discovered that the Mineral Owners' Joint Committee was not a representative Committee, that nobody had taken the trouble to refer to the individual mineral owners, and that this Committee had not a constitution which enabled it to bind its members, and no express power to bind the whole of the royalty owners in the country, they might have thought again, and thought twice and thrice, before bringing before your Lordships and another place this measure which we have claimed is manifestly unfair, and treats the royalty owners in a way which they had no reason whatever to expect from a Government which contains so
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great a Conservative, and therefore justice-loving, element.
I must remind your Lordships that at an early stage of the debates on this Bill I asked the noble Earl who leads the House whether he, as a reasonable man, could recommend this Bill to your Lordships as reasonable men. He has never felt himself able to give that assurance. He has always sheltered himself behind the Greene Committee, oblivious of the fact that there is the best reason for feeling that the Greene Committee's award covers but a very small part of the Bill, and that inadequately. I wonder whether there has ever been a major measure of any Government of which the Leader of the House of Lords did not feel able, before the Third Reading in this House, to say that as a reasonable man he presented it to your Lordships as reasonable men, for acceptance.
Now I suppose the campaign is not yet closed. I suppose that this Bill is going back to another place, and that another place is going to be asked to make some alterations. If that be so all I have to say to your Lordships is that we need not fear the issue of any controversy which may ensue. The merits of this case have never been before the country. It so happens that the Press of this country is divided more or less into two sections. One section supports the Government; another section does not. The section which does not support the Government has no love for the royalty owners. It has not been to the interest of that section to let the country know that there is a case against Part I of this Bill. The other section of the Press supports the Government, and it has not been to the interest of that section to show that the Government have done the shameful thing which they have done; with the result that the debates in this House have never been reported. We have had Division after Division, and they have been passed over without mention, whether in newspapers of the Left or of the Right. But if this is going to lead to controversy between the two Houses it will become an issue such as the public have a right to be informed of, and I repeat that we in this House have no reason to fear the light of public opinion on the alterations that we have made in his Bill. I hope that the campaign is ended, and that we shall not have to fight again the battles that we

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have fought during the last few weeks, but if we do I have no fear of the result. For myself I should be willing to go on public platforms in any part of the country and to justify these Amendments, and I feel that that is what it will come to if the Government try to reverse the decision of your Lordships in another place. This matter will then have to go before the forum of public opinion.
VISCOUNT HORNE OF SLAMANNAN: My Lords, I presume to utter one sentence only at this stage in the progress of this Bill. As we have been gratified to hear, the Lord Chancellor has been good enough to say that this Bill has been very much improved in its progress through this House, and he paid a handsome tribute to those of us who are temporarily occupying these Benches. As it seems to me, that sentence from the noble and learned Lord on the Woolsack completely justifies all the criticisms that we have put forward from these Benches. But it does riot merely do that, it does something which perhaps in one sense, from the point of view of what my noble friend has just said, is much more valuable, that is to say, it sweeps away in their entirety the kind of ignorant criticisms to which your Lordships have been subjected in some portions of the Press. Before sitting down I should just like to pay my own personal tribute to the Lord Chancellor for the patience and courtesy with which he has listened to our arguments.
LORD GAINFORD: My Lords, I should also like to pay my own tribute to the Lord Chancellor for the good humour with which he has debated this Bill under very difficult circumstances. It is a technical subject, and with great legal acumen he has argued it from the legal point of view, especially in connection with his main contention that the global figure which was established by the Greene Committee had to be accepted. I do not want to express any very strong opinions on the Third Reading, although I still maintain that this Bill will serve no good purpose in the coal trade. It certainly will not benefit the miners, and in my opinion it will not help to improve the organisation of colliery operations.
But there are one or two statements which have been made by my noble friend on my left (Viscount Samuel) on which I think I ought to express a contrary view. He alluded to the output
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of coal, and he regarded the global figure, £4,430,000, as a fair figure. In the speech which I made on Second Reading I pointed out that it was a very unfair figure, because during the period of seven years before 1937, which had been taken as the average, great concessions had been made voluntarily by royalty owners, abatements made not in accord with their lease terms, but the figures were accepted by the Treasury as accurate figures. No doubt they were accurate figures at the time, but I pointed out that even the Ecclesiastical Commissioners to my knowledge had given 25 per cent. abatement of their revenue in certain cases in order to help the coal industry and to help the miners to be employed, in this period of great depression through which we have passed. I further pointed out that if they had taken the year 1937, instead of the previous seven years, it would have been a very considerably larger sum than £4,430,000 upon which to base their fifteen years' purchase, and a much higher figure would have been justified at once as due to the royalty owners.
I therefore have contended all the way through this Bill that whilst the Greene Tribunal was an excellent Tribunal in itself, the points that were put before it upon which they were to base their fifteen years' purchase were not a fair indication of the condition of the coal trade. And I further contend that we ought not to assume that the output of coal which is now to be handed over to the Commission is going to diminish in quantity. I believe the amount of coal which will be produced under the Commission will be greater in the future than it has been even in the past. There is no reason why the output of coal should diminish. Although there are many saving appliances in connection with its use, at the same time the demand in connection with electricity is enormous, and the demand for small coal is much bigger than it ever was before. We are on the verge of establishing a system of obtaining oil from coal in increasing quantities, and there is no reason to apprehend that the property which has been taken over from the royalty owners has not got a very much greater value than that which will be paid for it.
My main desire this afternoon, however, is to thank the Government because

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in one particular they have tried to be fair and to give a fair deal in connection with the working proprietors' coal. They have told us that we will not be in a better or worse position owing to the transfer of our freehold coal. We accept that, and although they have refused a system of peppercorn rent as a better method of securing that object, at any rate they have tried to meet us. I want to acknowledge that in my final word in connection with the passing of this Bill.
LORD ADDISON: My Lords, there are one or two comments which I would like to add in support of what my noble friend behind me has said with respect to this Bill, because we note that it contains one very remarkable innovation, and I think the Third Reading of the Bill is a stage at which one might appropriately say a word about it. It is also accompanied by another and exceedingly unfortunate characteristic. As to the Bill being badly drafted, I cordially agree with what the noble Lords, Lord Balfour and Lord Snell, have said. For my part, with a fairly long and intimate experience of Bills passing through Parliament, I have never known a Bill which had to be chopped about so remorselessly as this one; and I must say that I felt a glow of pleasure when I heard the Lord Chancellor speak with satisfaction of the increased clarity which had been introduced into some of the clauses, mentioning particularly as the subject of his eulogium Clause 5.
I would commend to your Lordships this example of conspicuous and improved clarity:
"Where a direction might be given both as respects interests arising under a lease and as respects interests arising under a lease derived out of that lease, a direction shall not be given as respects the former unless a direction has been given or is to be given as respects the latter also."
I confess that I had that paragraph in mind, and when I looked it up I felt a glow of satisfaction that the noble and learned Lord was pleased.
But, apart from the clumsiness of the Bill, there are two features of it which are of first-rate importance. The first is with regard to the principle of compensation. On another occasion in a friendly aside I said that as the result of listening to three days' debates more or less I thought the mineral owners had had
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rather a raw deal, and I do. And may I just say a word on that matter, because it is very important? We Socialists—I accept the correction in title—believe that minerals should belong to the nation, and for that reason, apart from all the other trimmings and criticisms, we shall support this Bill. We believe, for example, that land should belong to the nation, particularly agricultural land, in which I myself am interested—we may be wrong, and I am not saying whether we are wrong or right—and the proposals which we have elaborated and talked about with great care are to the effect that the land should be purchased at a fair valuation for what it is worth, and that as a Party we are committed to recommend the nation to pay whenever that happy day arrives. But this Bill introduces quite a different principle in compensation. I am not saying whether the global figure is too little or too much: I express no opinion upon it.
This Bill embodies this principle: you say, for example, that the agricultural land of this country is worth x millions —£800,000,000 if you like—and you allot so much out of a lump sum to Lincolnshire. In this case you allot so much out of a lump sum to Yorkshire and you say, "We will allow that to be allotted to Yorkshire for the payment of all the mineral rights in Yorkshire." The plea on which that method is adopted is that it was not possible to value the different properties, but the case itself enshrines the necessity of so doing before you can distribute any of the money. Everybody, even if he owns a little bit of land, gets a buff paper on Schedule A some time or other which is based on a valuation, and to pretend that, with the existence of this fact, you cannot value all the different coal-mining properties for the purpose of paying the owners whatever their properties may be deemed to be worth is a pretence, I say with great respect, which has no support in actual daily experience. To value these royalties would be a bagatelle as compared with, for example, valuing all the agricultural land in the country. What the royalty owners have been inveigled into doing is acceptance of a lump sum as allotted to the whole district, to be paid, not on the value of their property, but in so far as that property is affected by the value of somebody else's property. That is a remarkable and novel method of paying

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compensation, and we Socialists note it with surprise as coming from a Conservative Government. We, no doubt, will read, mark, learn, and inwardly digest. But I am quite sure of this, that when the royalty owners, however the Committee may have been constituted—I know nothing about that—embarked on this process, little did they calculate that they were committed to this extraordinarily novel form of payment of compensation. That is what I meant when I said they had had a raw deal, and the ricochet of this raw deal, I can prophesy with much confidence, will not be pleasant.
There is another feature of the Bill, and the only other one on which I will comment at any length, and that is the disregard displayed with reference to the tens of thousands of miners who will be affected by the operation of the Bill. I would like to say that we on these Benches acknowledge the support we received from noble Lords, below the gangway on that. The country knows the attitude of the Government with regard to the protestations of some of the noble Lords, extraordinarily skilfully presented, I know; but all sorts of concessions have been made. Copyholders have got off scot free. How much that concession amounts to I do not know, but before the Government made that exemption they ought to have been able to give us some indication of how much coal this exemption will apply to. The reason they have not clone so, I am quite certain, is that they do not know themselves. But it must be a considerable amount.
There have also been other concessions. I am not saying that the cases were not good cases. Some I am sure were good cases; but all kinds of allowances have been made for mortgagees and others, and for those represented by my noble friend below the gangway, the freeholders. They seem to have got off with a very extraordinary deal. It is not for me to say—we are merely members of the Opposition—but how a person who was previously his own landlord, and could put aside what he liked for rent, will still be in as good a position when he is the tenant of somebody else, and cannot do so, I cannot understand. If it works we shall be surprised. At all events, it was a concession, and I am not saying that it was not a right concession. But no single concession of any sort or
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kind has been made to the workmen involved in this change. These amalgamations will undoubtedly affect miners. They must affect miners. If an amalgamation is economically sound—and that is the reason for making it—I take it that often it will mean that fewer men will be employed. It sometimes may well mean the dislocation of the social life of a whole district.
All we got in respect of that were some very friendly, nice words from the Leader of the House to the effect that he was quite sure they would take account of all these things. I hope they will. But that was no reason whatever for refusing to put into the Bill somewhere that when schemes of amalgamation were being worked out regard ought to be had to the extent to which they will dislocate or probably destroy the social life of the district, to the extent they will put miners out of work, and that sort of thing. There ought to have been an obligation somewhere or other in the Bill on those who draw up these schemes of amalgamation to take account of these important considerations. We are exceedingly disappointed that whilst the Government, no doubt out of political necessity—I am not denying it—perhaps out of a full and frank recognition of the justice of the case, have made very many concessions, some of them big concessions, they have not made a single concession in the whole Bill to the tens of thousands of workmen whose livelihood depends upon this industry. We have noted that with much regret. But for all that, because the Bill does bring these minerals under national ownership—I disregard the word "unification," it is national ownership of these minerals—the Party to which I belong will give it their support for what it is worth. At the same time we note the two outstanding features of the Bill so far as we are concerned—firstly, the introduction into British law and practice of an entirely different method of compensation for the acquisition of property by the nation; and, secondly, the complete disregard, so far as the Bill itself is concerned, of the livelihood and interests of the men who do the work.
LORD CROMWELL: My Lords, had there been a Motion for the rejection of this Bill this afternoon I should have hesitated to intervene in the debate because I feel that the speech to which we

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have just listened would have been quite enough to take every reasonable member of your Lordships' House into the Lobby in support of the rejection of the measure. We have had from all quarters of the House universal condemnation of the Bill except from one voice, and though that voice does not sit in the wilderness it is nevertheless still only one voice. If the Government had been sincere in their desire to return this Bill to another place improved, workable, and equitable, one can see that very little, if any, would have been left of the original wording which appeared in the Bill when it first came before your Lordships' House. It is doubtful whether even the title itself would have been able to remain, because in fact from the title it is now very difficult to understand what is contained in the Bill. Very early in our proceedings, in discussing this Bill, the Government said they were prepared to consider any Amendment which might improve the Bill. I was glad to hear the noble and learned Lord on the Woolsack say that the Bill had been very much changed, and that it had been much improved. One can fairly say that the majority of the Amendments put down were put down with the object of improving the Bill, but in spite of that none of the Amendments of any importance were conceded by the Government without very great moral pressure or, in most instances, without resort to the Lobby.
Perhaps it is a waste of time for me to continue the discussion any further, so much has already been said, but if I may crave the indulgence of the House for a few moments I should like to inform the Government—not that they mind—but for my own satisfaction, that there are members who have loyally supported them who sit on these Benches and have not migrated and who have their own view of this measure. The whole basis of the acquisition of the coal was to be that of a transaction between a willing seller and a willing buyer. No one who has listened to these debates can have thought that either party could be thus described. Certainly the present owners are not willing to sell upon any consideration. Sale has been forced upon them. It is equally obvious that the Government are not willing buyers in the sense that they are prepared to give a proper price for the coal. If I may, I
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will again refer to a statement made by the noble Viscount, Lord Horne. I am not going to use his exact words but to paraphrase them. In effect he said that whereas the royalty owners were bound by the award of the Greene Tribunal the Government made it quite plain that they themselves were not so bound. The noble Viscount, as your Lordships know, has a vast experience on which to draw. He also said that no reputable firm would have entertained this proposal for a moment. If one substitutes the word "Government" for the word "firm" that expresses my opinion. The much maligned Mineral Owners' Joint Committee did, it is true, say they would be bound by the award of the Tribunal, but I think one can say with confidence that they certainly would not have placed themselves in such a position if they had been negotiating with any party other than the Government, and the Government have, I think, used their privileged position to get a very one-sided bargain in their favour. They have been both judge and advocate all in one.
One word as to the future. With the possible exception of just one Amendment, I think that if this Bill comes back from another place with any of the Amendments which your Lordships have seen fit to insert in it deleted, their deletion should be resisted to the uttermost. If your Lordships are going to be asked to sacrifice your principles in order to avoid a clash between the two Houses, and if even the revising which is about all your Lordships can now do for a Bill is to be taken away from us—if the threat is to be held over us of a clash between the two Houses, then I say the sooner the clash comes or the sooner we shut up shop altogether the better. There is one notable omission which I must mention before I sit down. Both in the Committee and Report stages some of us made a very earnest attempt to ensure that the Government would insert in this Bill some clause that might alleviate the position of those people who will be put out of work owing to the effect of this measure when it comes into law. During the Committee stage we were defeated by one vote, and during the Report stage, when the Amendment was in a slightly different form, we were defeated by two or three votes. I do not think, personally, it is a very pleasant reflection for the Government, when there is a

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large body of opinion in this House determined if they can to help the people whom this measure is to put out of work, to know that they make no gesture of any sort in that direction.
VISCOUNT ELIBANK: My Lords, I cannot let this Third Reading debate pass without saying a few words, and I do so because of the precedent which has been set up by this Bill, a precedent that was referred to by the noble Lord, Lord Addison, in the speech he has just delivered. From the very beginning I have admitted that the Government had no option but to proceed with the unification of the coal royalties. I think that is a matter on which most members of your Lordships' House are agreed. But as to the other parts of the Bill, I have felt very strongly indeed from the commencement: I cannot see that a case has been made out for compulsory amalgamations, especially as the President of the Board of Trade in another place specifically said that he hoped these amalgamations would in spite of the Bill be upon a voluntary basis. And when it comes to the question of compensation, I feel that that particular issue has been dealt with in a manner that one could hardly have believed possible by any Government in this country, whether a National Government or a Socialist Government. Indeed we have heard from the noble Lord, Lord Addison, this afternoon, repeating what he said on a former occasion, that the coal royalties owners have had a raw deal. We all know they have had a raw deal, but what I cannot understand is how this basis of compensation was allowed to go forward by the present Government.
We are told that the Greene Committee reported in favour of it, but we have not been favoured with their Report, nor are we able to judge for ourselves how they arrived at the basis of compensation. It comes to this, that in the future any Government desiring to acquire private property, whether it be land or the undertakings of electrical companies or anything else owned by private individuals, have merely to set up an arbitration Committee, ask that Committee to report on what they consider to be the value of the properties the Government wish to take over, and, having received that Report, say: "We must abide by the advice of the Committee." What
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may not that lead us to in the future? If you have a Government not altogether nice in their ways of doing things, if I may put it in that way, they may appoint a Committee on which there are gentlemen all of whom think like the Government, or perhaps think even in a little more advanced way than the Government themselves, so that the Government have only to give a hint to that Committee that they wish compensation to be assessed on this or that basis. Then will arise a case once more in which it will be said: "The Committee have advised the payment of compensation on such and such a basis, and therefore we must pay it on that basis." It seems to me that that has been the result in this case and that is why we have this raw deal to-day. It is not because they have regarded it from the point of view I have just expressed, but because the Government themselves have not examined the Committee's Report in the way in which in my judgment they should have done.
We have listened in this House for several days and several nights to speeches made by noble Lords who understand this subject better than many, or perhaps most, other people in the country. Their criticisms have proved, at any rate to myself, even if I thought otherwise before, that the basis of compensation to the royalty owners is not a fair basis, that the payment which they will receive under this Bill does not compensate them fairly and squarely. I have spoken these words because I visualise other measures of this kind coming forward in the future, and if that should happen I wish it to be made quite clear as far as I am concerned that I will do all I can to defeat them if they are based on compensation methods such as have been incorporated in this Bill. It is really because a precedent may be set for the future, and quite apart from the question of justice for the present, that I have spoken these words and that I shall reluctantly see this Bill go on the Statute Book.
I would like to make one further remark with regard to what the noble Lord, Lord Cromwell, said about this measure going to another place. He said something about a clash with another place. I do not think he was speaking with absolute consideration when he made that statement. I do not think there is any one in your Lordships' House who would welcome thoughtlessly a clash with

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another place, and I do not see a clash arising on this occasion with another place. I hope and believe that these Amendments that have been passed after long discussions and great thought and great deliberation, when they get to another place will be received in the spirit in which we send them there. That there should be any clash between this House and another place I hope will never come into question.
EARL STANHOPE: My Lords, I think no one will deny that this Bill has received adequate consideration by your Lordships. Practically the whole of ten Parliamentary days have been devoted to the Bill and the speeches made filled more than 85o columns in the OFFICIAL REPORT before we began to-day's proceedings. At the Second Reading stage I said that the Government would be ready to listen to any proposals and Amendments put forward which would improve the Bill. I think no one will deny that the Government have more than fully met that promise. We considered more than 120 Amendments on the Committee stage and over one hundred further Amendments on the Report stage. Many of those Amendments were moved on behalf of the Government and many others were accepted by us.
One remark I would like to make at once. There has been considerable criticism from various parts of the House with regard to the drafting of this Bill. I am assured by my noble and learned friend on the Woolsack that this is perhaps one of the most complicated measures which have come before your Lordships' House during the last one hundred years. Certainly there has never been a Bill which I have found so difficult to understand or one within my experience which deals with such complicated questions of chancery law, the law of property and other things which are extraordinarily difficult to put into a Bill. When it is suggested that Amendments have been necessary because the draftsmanship was bad, may I remind your Lordships that the mere fact of accepting one Amendment means very often that a whole series of other Amendments have to be put into the Bill? Therefore when we talk about pages of Amendments do not let it be said that they were necessary because of bad draftsmanship, but because we have accepted Amendments of very considerable
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importance which have necessitated other Amendments.
The noble Lord the Leader of the Opposition remarked that a few determined men who know what they want can achieve much. I suspect that he was rather breaking the tenth Commandment when he said that, and that he was hoping that the few and determined men whom he leads would also be able to achieve much if they had the same cohesion as the noble Lords who sit, as they say, on Olympus. But we know from past experience that when his forces are increased by those who attend our debates rather infrequently, they by no means speak with one voice but with almost as many voices as there are people sitting behind him. Only to-day the noble Lord, Lord Addison, got up to make an explanation of what he meant by a "raw deal." I suspect that not all of his Party took the same view as regards a raw deal as he did when he expressed it and in the ingenious explanation he gives now he tries to ride off on the question of how the whole of the valuation is arrived at.
LORD ADDISON: Not a soul disagreed with me. I have never heard any one disagree.
EARL STANHOPE: Then I am mistaken, but I understood that; a large number of members of the noble Lord's Party, so far from thinking that fifteen years was too little—
LORD ADDISON: That was not what I said, if I may be allowed to interrupt. I do not care whether fifteen years is too much or too little. The point was that they had been let in for this method of division whereby the amount a man will receive for his property is not dependent upon its value but upon the value of some one else's property.
EARL STANHOPE: I quite understand the noble Lord's explanation now, but if he looks at their letter in The Times he will see that that is not the way in which it was accepted by the noble Marquess, Lord Lothian, or the noble Lord, Lord Balfour of Burleigh, nor is it the interpretation which I think will be put on it by the ordinary man in the street who reads what the noble Lord said. However, I am quite prepared to accept the noble Lord's new interpretation. I am not going over the full story again, because it has been debated at almost

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interminable length in your Lordships' House. I would, however, remind your Lordships that no one has contested that these proposals were originally put forward on behalf of mineral owners—I do not say all mineral owners—that there should be a global figure, that the global figure would be the best system of valuation, that it should then be divided up into regions and then into individual properties, and that if it were found impossible to agree on a figure between the owners and the Government the matter should be sent to arbitration. The arbitration Tribunal was agreed by both sides. It was only when the final figure came out as the result of the Report of the Greene Tribunal that we began to hear objections.
The noble Lord, Lord Balfour, challenges me to say whether as a reasonable man I think this a reasonable measure, and he said that I hide behind the Greene Committee. On this question I do hide behind the Greene Committee to the extent that I have not read the evidence before that Committee, that I have not read or seen the papers put before them before they arrived at that decision. If I set up to say that this is the right figure or the wrong figure, I should require to read and study the whole of those papers, and I have not clone so. I am satisfied that this matter was put before reasonable men for a decision and that they were given ample evidence on which to arrive at that decision, that that evidence was put before them by both sides and that they arrived at a decision. In my opinion—it can only be an opinion —I think that in years to come noble Lords who now oppose this Bill will see that they have by no means had such a raw deal as they now think that they have had, and I should not be at all surprised if the Government are not then accused of having made a bad bargain and of having given too much. I do not in the least agree, so far as I can see the trend of what is happening in business and in regard to the coal industry in particular, with what Lord Gainford has told your Lordships: that he thinks that the amount of coal which will be produced will be increased. Of course, the amount of coal produced may increase and can increase, but can it be sold? That is the only thing that matters. As I have said more than once in the course of these proceedings, we have realised over and over again how
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easy it is to flood the whole market with coal. That is why the whole of this inquiry has had to be held and these bodies set up to regulate the output of coal.
The noble Lord, Lord Balfour of Burleigh, said that he saw very little difference between a global figure of £4,300,000 and £4,430,000. It is only a small point, but of course, when you multiply that figure by fifteen years, it is £1,950,000. Therefore I should have thought that would have been an addition to the global figure which at any rate would not have been refused by the royalty owners. The Government would have thought it a very material increase indeed. He said that they had never asked for more money. I agree; it is true that he has never mentioned a particular figure of what the value of this property should be. But I must point out to your Lordships that over and over again, from the heights of Olympus where, so they claim, those four noble Lords sit, there have been bitter complaints of the amount of the global figure and of royalty owners not receiving the value for their property to which they are entitled. That obviously means that the price is too low and ought to be much higher. Therefore I think it is hardly fair to say that they have never actually asked for more money.
Two noble Lords opposite both said that no alteration had been made except for the benefit of the royalty owners. Of course this Bill deals almost entirely with the royalty owners except in regard to the amalgamation of coal companies. But I must point out that, as we have made the amalgamations more easy, so of course the profits of coal, if our expectations are fulfilled, will increase, and a very large proportion of the increase is devoted to an increase in the payment of wages of those engaged in the coal industry. The noble Lord, Lord Gainford, again raised the question of the seven years that were chosen for the global figure. May I again remind him that those years were themselves chosen by the Mineral Owners' Joint Committee, as appears in that pamphlet which I showed to your Lordships before, circulated with a preface by my noble friend Lord Hastings? And, of course, so I am informed, the fact that there were bad years in these seven years was very fully represented before the Greene Commission, and no doubt it was

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argued on the other side that those were average years and therefore should not be discounted too much.
Lord Cromwell remarked that no Amendments had been accepted by the Government except under pressure or as a result of Divisions. I do not quite know where he has been during the course of our proceedings. I heard some very long speeches from him more than once; I suppose that after he delivered them he left the House.
LORD CROMWELL: If I might be allowed to say so, I have not missed one single speech or minute of these debates.
EARL STANHOPE: All I can say is that the noble Lord cannot have followed it with the care which I should have expected from him, because a very large number of Amendments were accepted without any hesitation by the Government. In consultation with my noble and learned friend, we came to the conclusion that various improvements could be made to the Bill, and though sometimes those suggestions came from various quarters of the House and not from the noble and learned Lord or myself, I think that noble Lords would agree that we were by no means slow in accepting those Amendments when they were put forward. I do not propose to weary your Lordships by going through the many Amendments which have been accepted. They have been referred to by my noble and learned friend on the Woolsack, though I think perhaps he was too kind in shortening his remarks unduly by not putting in various Amendments which I thought were of considerable importance but which he did not mention. I recognise, however, that he feels that he has filled many columns of the OFFICIAL REPORT with the speeches which he has made to your Lordships, and I am only glad that from several quarters of the House great tribute has been paid to him for the immense help he has been to your Lordships, the great knowledge which he has of all these matters, and his patience and consideration in putting them forward to us.
That leads me to this point. It has been said outside in many quarters that your Lordships have taken a great deal of time over this Bill because it affects your private pockets. It is true that there have been a number of speeches made to meet
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the arguments which have been put forward with great skill and force by those who have opposed this Bill from beginning to end, or who at any rate dislike practically the whole of it. But a very large amount of your Lordships' time has been spent in improving, clarifying or rectifying the extraordinarily difficult provisions which have to be included in a Bill of this character. It is for this reason that I should like to impress, not only on this House but also on the public outside, that once again this House has fulfilled its duty, in the way in which it always does, of improving and clarifying measures, whether they come up from a Government Department or from a private Member of Parliament. I trust that in the criticism which is made of our proceedings on this Bill, it will be remembered that on behalf, not by any means of the mineral owners only but also on behalf of the public at large, we have endeavoured to improve this Bill and we have taken up a great deal of your Lordships' time in considering it with the care and attention which it has received.
There is only one more remark which I am afraid I must make in my duty as Leader of this House. That relates to the bitter attack that was again made by the noble Lord, Lord Hastings, against the Civil Service. We who are in public life are quite prepared to have things said against us, whether we deserve them or not. That is part of our lot when we are in public life. But an attack such as he again made this evening on the Civil Service is one that I hope will not be repeated in your Lordships' House. Those who have the privilege of working with civil servants know how extraordinarily able they are, how loyal they are, and, whatever their political convictions may be, how they endeavour to carry out their duty to the State without fear, without favour and without affection. Therefore I trust that we shall not again have an attack of that kind. I would close by saying that I trust that the care which the House has given to this Bill will be recognised as being not merely in support of any individual's rights but for the improvement of legislation, and that your Lordships will prove that you accept the general principles of this Bill, whatever you may think about the detail, by passing it without any further Division.
On Question, Bill read 3a.
EARL STANHOPE: My Lords, I do not know if it be your Lordships' wish to go on with the Amendments. Most of them are of a drafting character, and they ought not to take more than half an hour or forty minutes, so far as I can judge.
Clause 2 [General provisions as to functions of the Commission under Part I]:
THE LORD CHANCELLOR: My Lords, the Amendment to this clause is a drafting Amendment.
Amendment moved—
Page 2, line 23, leave out ("and performance").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause II [Apportionment of rent and determination of questions on severance of subsisting leases]:
THE LORD CHANCELLOR: My Lords, this is also drafting, and its purpose is to correct an obvious slip. It is really a printer's error.
Amendment moved—
Page 12, line 40, leave out ("valuation") and insert ("vesting").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 28 [Purposes for which the Commission may borrow]:
THE LORD CHANCELLOR: My Lords, this Amendment is consequential upon a new Clause 10 which was assented to on behalf of the Government.
Amendment mived—
Page 28, line 3, at end insert—
("(f) the payment of any sums payable by the Commission in respect of assignments to them of debts due in respect of rent payable before the vesting date;").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 34 [Restriction on working of coal vested in statutory undertakers]:
THE LORD CHANCELLOR: My Lords, there are four Amendments to this clause, and each of them is a purely drafting Amendment.
Amendments moved—
Page 30, line 24, leave out ("commencement") and insert ("date of the passing")
Page 30, line 42, leave out ("commencement") and insert ("date of the passing")
Page 31, line 8, leave out ("commencement") and insert ("date of the passing")
Page 31, line 24, leave out ("to the making good or paying proper compensation for") and insert ("or the payment of proper compensation for, or the making good of,").—(The Lord Chancellor.)
On Question, Amendments agreed to.
Clause 37 [Limitation as to information required to be given under the Registration Act]:
THE LORD CHANCELLOR: My Lords, the Amendment to this clause is also a purely drafting Amendment.
Amendment moved—
Page 34, line 26, leave out ("commencement") and insert ("date of the passing").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 41 [Persons to act for purposes of valuations, etc., in case of death or incapacity]:
THE LORD CHANCELLOR: My Lords, this is also a drafting Amendment.
Amendment moved—
Page 33, line 4o, leave out the first ("to") and insert ("Fourth and").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 45 [Interpretation of Part I]:
THE LORD CHANCELLOR: My Lords, there are two Amendments to this clause, and both are merely drafting.
Amendments moved—
Page 41, line 18, after ("and") insert ("any")
Page 41, line 19, after ("or") insert ("other").—(The Lord Chancellor.)
On Question, Amendments agreed to.
Clause 46:
Application of Part I to Scotland.
46.—(1) The provisions of this section shall have effect for the purpose of the application of this Part of this Act to Scotland.
(6) For references to the Lands Clauses Consolidation Act 1845, and to Section eighty thereof there shall be substituted respectively references to the Lands Clauses Consolidation (Scotland) Act, 1845, and to Section seventy-nine thereof; for references to the Railways Clauses Consolidation Act, 1845, and to Sections seventy-eight to eighty-five thereof there shall he substituted respectively references to the Railways Clauses Consolidation (Scotland) Act, 1845, and to Sections seventy-one to seventy-eight thereof; for any reference to the High Court there shall be substituted a reference to the Court of Session.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, at the end of subsection (6), to insert "and for any reference to a receiver of the rents and profits of premises there shall be substituted a reference to a judicial factor." The noble and learned Lord said: My Lords, this is a necessary addition to the clause relating to the application of Part I to Scotland, consequential on the new Clause 22 (Power of the Court to appoint a receiver and manager on the application of the Commission). I see that the noble Viscount, Lord Horne, is present, and if anybody wants to make any query with reference to this Amendment he can probably be referred to the noble Viscount.
Amendment moved—
Page 43, line 37, at end, insert the said words.—(The Lord Chancellor.)
On Question, Amendment agreed to.
VISCOUNT HORNE OF SLAMANNAN VISCOUNT HORNE OF SLAMANNAN moved to insert:
("(15) The aggregate of the values of (a) any coal or mine of coal and any property and rights vested in the Commission by virtue of this Act, and (b) any erections or structural improvements used exclusively for the purpose of working or cleaning such coal, entered in any Valuation Roll or Supplementary Valuation Roll for any period eliding after the vesting date, shall not exceed the value or values at which such coal, mine of coal, property and rights and such erections or improvements would have been so entered if this Act had not passed, and, notwithstanding anything contained in Section six of the Lands Valuation (Scotland) Act, 1854, as amended by any subsequent enactment, no entry shall be made in any such roll in respect of erections or structural improvements used exclusively for the purpose of working or cleaning coal by reason only of the fact, that in consequence of the vesting of the coal in the Commission under this Act, the land on which the said erections or structural improvements are situated is not included in the lease of the coal."
The noble Viscount said: My Lords, I do not propose to inflict upon the House again a disquisition upon the Scottish law of valuation. Luckily I am absolved from that duty because I have discussed this matter with the Lord Advocate, and he has met me in a most reasonable spirit. In fact, when two Scotsmen get together reason generally triumphs. Accordingly I hope the Government will be prepared to accept this Amendment.
Amendment moved—
Page 44, line 42, at end insert the said new subsection (15).—(Viscount Horne of Slamannan.)
EARL STANHOPE: My Lords, on behalf of the Government I accept this Amendment.
On Question, Amendment agreed to.
Clause 49 [Powers of the Commission as to obtaining confirmation for purposes of Part II]:
THE LORD CHANCELLOR: My Lords, the first of the Amendments to this clause is a drafting Amendment. The second is required to carry out a promise given by the Government on Report that the Commission, in giving notice of inspection, should also specify beforehand what information they wished to obtain. I do not think it is controversial.
Amendments moved—
Page 47, line 8, leave out ("giving notice to") and insert ("serving upon")
Page 47, line 9, after ("undertaking") insert ("a notice showing the general nature of the information required,").—(The Lord Chancellor.)
On Question, Amendments agreed to.

FIRST SCHEDULE.

  CONSTITUTION AND PROCEDURE, OF THE COAL COMMISSION.
  6. A member of the Commission shall, within three months after his appointment, sell or dispose of any interest or securities which he may hold in his own name or in the name of a nominee for his benefit in any undertaking carrying on the business of coal-mining or supplying or selling coal.
  THE EARL OF DUDLEY THE EARL OF DUDLEY moved, at the end of paragraph 6, to insert "or the manufacture or sale of by-products of coal." The noble Earl said: My Lords, these words were originally inserted in the Bill, as well as the words, as far as I remember, "manufacture of plant or machinery." That is to say, a member of the Commission was, after his appointment to the Commission, to sell or dispose of his interest in these various things. On the Committee stage Lord Crawford objected to the words "or the manufacture or sale of by-products of coal or machinery or plant for coal-mining," and the Government moved an Amendment on the last stage of the Bill to omit those words, but I think the words "or the manufacture or sale of by-products of coal" ought to be left in. I think coal should be regarded as the same, whether treated coal or raw coal, and in view of the reports issued by the Labour Party

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  as to the value of low temperature carbonisation, I think that a Commissioner interested in low temperature carbonisation should be equally free from bias. I hope the Government will see the reasonableness of this, and have these words reinserted.
  Amendment moved—
  Page 53, line 33, after ("coal") insert ("or the manufacture or sale of by-products of coal").—(The Earl of Dudley.)
  THE EARL OF MUNSTER: My Lords, the Government Amendment to leave out these words was originally moved to meet the wishes of Lord Crawford. I understand that Lord Crawford has no objection to the reinsertion of these words. It will meet his point, and therefore I suggest that your Lordships should accept the Amendment.
  THE EARL OF DUDLEY: I am very grateful. I should have said that before moving the Amendment I had obtained the assent of the noble Earl, Lord Crawford.
  THE MARQUESS OF LOTHIAN: My Lords, if you are going to exclude those who are concerned in low temperature carbonisation I think you ought to specify them by name. The by-products of coal are almost infinite. If you are going to say that everybody has to get rid of all his interests it seems to me absurd. I would beg the noble Earl to reconsider this. You ought to have some words which are more precise than these far-reaching words.
  THE EARL OF CRAWFORD: My Lords, it is really much too late to try to introduce any logic into this Bill.
  THE MARQUESS OF LOTHIAN: I would like to see introduced the words "low temperature carbonisation."
  EARL STANHOPE: I am afraid we cannot do it now because all Amendments on Third Reading have to appear on the Paper. It will have to be left to another place.
  THE MARQUESS OF LOTHIAN: Perhaps the noble Earl will give consideration to the question as to whether some words might not be introduced in another place?
  EARL STANHOPE: I agree that they are wide.
  THE MARQUESS OF LOTHIAN: They are ridiculously wide.
  On Question, Amendment agreed to.
  Second Schedule [Provisions for defining property and rights with which, and matters subject to which, coal is to be acquired]:
  THE LORD CHANCELLOR: My Lords, the next Amendment is purely drafting.
  Amendment moved—
  Page 56, line 27, after ("this") insert ("Part of this").—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  LORD GAINFORD LORD GAINFORD moved, after subparagraph (1) of paragraph 6, to insert:
  "(2) The Commission shall on the occasion of their first exercising, or granting to a lessee the benefit of, a right vested in them by this paragraph give public notice that they propose so to do by advertisement in the London Gazette and in one or more newspapers circulating in the locality.
  (3) When the construction of any buildings or works is to be begun after the first publication of such a notice as aforesaid on land liable to be damaged by the exercise of the right to which the notice relates the following provisions of this paragraph shall have effect:—

  (a) before the construction thereof is begun the person at whose expense they are to be constructed (in this sub-paragraph referred to as 'the building owner') shall notify the Commission of the proposal to construct them, and shall, if so requested by the Commission within fourteen days from the receipt by them of the notice, produce for the inspection of a person duly authorised by them in that behalf plans and specifications of the buildings or works showing the design thereof and the proposed materials for and method of construction of the foundations thereof, and shall, if so requested within that period or within seven days after the plans and specifications have been produced as aforesaid, furnish the Commission with copies of any such plans or specifications;

  (b) at any time within twenty-eight days from the time when any request made by the Commission with respect to the production or furnishing of copies of the plans and specifications has been complied with, or within such further period as the building owner may allow, the Commission may make such proposals as to the materials for and method of construction of the foundations as appear to them to be desirable for minimising damage in the event of subsidence, and, if they do so and the foundations are constructed otherwise than in accordance with the Commission's proposals, the obligation to pay compensation or to make good referred to in sub-paragraph (1) of this paragraph shall not extend to any damage that would have been avoided if they had been so constructed;

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  (c) the Commission shall have the right to have the foundations inspected by a person duly authorised by them in that behalf from time to time during the construction thereof as that person may reasonably require, and if it is alleged by the Commission that the foundations are being constructed otherwise than in accordance with any plans or specifications produced or furnished to them, or otherwise than in accordance with any such plans or specifications as modified in accordance with proposals made by the Commission, as the case may be, the Commission shall notify the building owner of the matter alleged to constitute a departure therefrom and any question arising in relation thereto shall be determined by arbitration;

  (d) the Commission shall pay all costs reasonably incurred by the building owner in the production or furnishing of copies of plans and specifications pursuant to a request made by the Commission under this paragraph, and the amount of any addition to the expense incurred by him in constructing the buildings or works which is attributable to giving effect to the Commission's proposals or to any postponement or interruption of the construction thereof consequent upon an allegation on the part of the Commission of a departure from plans and specifications which is determined not to have been well founded, and any question as to the subsistence of a liability of the Commission by virtue of this provision or as to the amount payable by them in respect of any such liability shall be determined by arbitration;

  (e) if the building owner fails to give notice to the Commission in accordance with this paragraph of the proposal to construct the buildings or works or to comply with a request made by the Commission thereunder, the obligation to pay compensation or to make good referred to in sub-paragraph (1) of this paragraph shall be limited to damage which could not have been avoided by reasonable and proper precautions taken in the design and construction of the foundations to minimise damage in the event of subsidence."

  The noble Lord said: My Lords, on the Report stage I explained the purport of a similar Amendment, but withdrew it with a view to enabling certain alterations to be made. The Amendment now on the Paper is an agreed Amendment which carries out exactly the purpose which I explained on the Report stage—namely, to give power to the Coal Commission to take steps to see that in certain circumstances proper foundations are ma de so as to prevent damage to house property by subsidence. I beg to move.
  Amendment moved—
  Page 57, line 28, at end insert the said new sub-paragraphs.—(Lord Gain ford.)
  THE EARL OF MUNSTER: My Lords, this Amendment, as has been stated by
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  Lord Gainford, has been drawn up in agreement with the Government and with my noble friend Lord Hastings. The purport of it was discussed fully on the previous stage of the Bill, and in these circumstances we hope that your Lordships will agree to it.
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: My Lords, the next Amendment is pure drafting.
  Amendment moved—
  Page 58, line 1, leave out from ("that") to ("this") in line 5.—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: My Lords, the next Amendment is consequential.
  Amendment moved—
  Page 56, line 9, leave out ("to be so given") and insert ("required by sub-paragraph (2) of this paragraph").—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: My Lords, the next three Amendments are drafting.
  Amendments moved—
  Page 58, line 25, leave out ("make good or to pay proper compensation for") and insert ("pay proper compensation for or to make good")
  Page 31, line 31,leave out("constructed") and insert ("construed")
  Page 31, line 39, leave out ("make") and insert ("pay").—(The Lord Chancellor.)
  On Question, Amendments agreed to.
  Third Schedule:

THIRD SCHEDULE.
  PROVISIONS AS TO COMPENSATION PAYABLE UNDER SECTION SIN OF THIS ACT.
    PART I.

      PRELIMINARY.
      Constitution of Valuation Boards.
      3.—(1) There shall be a Central Valuation Board consisting of the following members, that is to say—
      (a) an independent person, being a member of the legal profession, appointed to act as chairman of the Board;

PART III.

  VALUATION.
  Claims and Valuation Proceedings.
  11.—(1)…
  (5) As soon as may be after giving effect to the preceding provisions of this paragraph

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  in the case of any holding the Board shall settle their valuation thereof and shall give notice of their valuation in the prescribed form to the claimant and to each of the persons intervening if any, and in either of the cases aforesaid, to the Commission. The said notice to the claimant or any person intervening shall contain an intimation of the right of the person to whom it is given to have the valuation reviewed under the provisions of paragraph 12 of this Schedule.
  14. The Central Valuation Board shall have power to make, with the approval of the Board of Trade, rules as to the procedure to be followed in giving effect to the three last preceding paragraphs and for prescribing anything that is therein directed to be prescribed, and in those paragraphs the expression "prescribed" means prescribed by rules made under this paragraph
  THE MARQUESS OF LOTHIAN THE MARQUESS OF LOTHIAN moved, in sub-paragraph (1) of paragraph (3), to insert at the end of sub-sub-paragraph (a), "or a person who has had experience in the management of land or with business experience." The noble Marquess said: My Lords, I raise this matter as a general question of principle. I do so with a good deal of hesitation in view of the great discretion and wisdom with which the noble and learned Lord on the Woolsack has conducted the proceedings on this Bill. It strikes me as gratuitous that we should provide that the Chairman of tie Central Valuation Board must necessarily be a member of the legal profession. I have the very highest respect for the legal profession. Whenever I am in difficulties with the law I invariably consult them, and I have generally found that their advice on matters of law is excellent. I have not always found that their views on other matters are nearly as good, and sometimes they have proved in my case to be very expensive. This is a matter where you are appointing an expert valuation body, and while I have no reason to suppose that a member of the legal profession will not make a good member, I am not certain that the underlying idea that because you are a lawyer you are necessarily good at valuation is true at all. A lawyer is supposed to be a person of judicial mind, but when it comes to dealing with highly expert business of this kind he is not necessarily the best qualified person to do it.
  I suggest two other kinds of persons, first a person who has had a wide experience in dealing with the management of
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  land, and who is therefore accustomed to dealing with questions which enter very largely into the management of the coal industry, or a person of wide business experience—the word "with" on the Paper is a misprint for "wide" I think it has been really the general view of the British public throughout its history—and that is why it adopted the jury system—that while it regards the legal profession as indispensable it relies upon the sound sense and judgment of twelve honest men. In appointing the Central Valuation Board I submit it is desirable that some discretion should be allowed. If the Board of Trade cannot find a lawyer who is really well qualified they should be able to choose a person who has other experience, either a wide experience of business or a proper knowledge of valuation.
  Amendment moved—
  Page 61, line 26, after ("profession") insert the said words.—(The Marquess of Lothian.)
  THE EARL OF MUNSTER: My Lords, the Bill as it stands provides that the Chairman of the Central Valuation Board must be a member of the legal profession, appointed by the Board of Trade after consultation with the Lord Chancellor. I am advised that these words were put in at the express wish of the Mineral Owners' Joint Committee, who asked that the Chairman should be a lawyer, and a free and independent individual not connected in any way with the coal industry. The Schedule provides in sub-sub-paragraph (b) for the appointment of two other independent persons to the Central Valuation Board, and one of those two other independent persons might quite possibly be a man who has had experience in the management of land, and the other one with wide business experience. But the whole machinery clauses of the Bill were drawn up in consultation with the Mineral Owners' Joint Committee, and, as they particularly asked that the Chairman should be an independent person and a member of the legal profession, I suggest that we should be well advised to leave that portion of the Schedule as it stands.
  LORD BALFOUR OF BURLEIGH: My Lords, when are the Government going to pay some attention to people who are not represented by the Mineral Owners' joint Committee? I should have thought that it was patent to your Lordships that

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  enough harm had been done by lawyers in the proceedings leading up to this Bill to make all the royalty owners regret a provision that a lawyer should be the Chairman of this Central Valuation Board. I cordially support the noble Marquess and hope his Amendment will be pressed to a Division.
  LORD HASTINGS: My Lords, I beg to add my voice to that of the noble Lord who has just spoken. If the Mineral Owners' Joint Committee at any time desired a lawyer to sit as Chairman of the Central Valuation Board it was before they had experience of Sir Wilfrid Greene as Chairman of the Tribunal!
  EARL STANHOPE: My Lords, I do not think there is any objection to accepting this Amendment. I have no idea at all who the Chairman will be, but it does not follow from this Amendment, if we put it in the Bill, that he will not be a lawyer. I should point out, with regard to the word which has been misprinted, that the Amendment must be made as it stands on the Paper.
  THE MARQUESS OF LOTHIAN: My Lords, I am afraid it is my handwriting that is at fault. I had no opportunity of getting this Amendment typed.
  On Question, Amendment agreed to.
  LORD HASTINGS LORD HASTINGS moved, in sub-paragraph (5) of paragraph 11, after "Commission," to insert "and (in the second case aforesaid in which notice has to be given to the Commission) to all persons interested in the valuation of all other holdings in the valuation region." The noble Lord said: My Lords, I was disappointed that there should be no Amendment to cover this particular point in the name of the noble and learned Lord, the Lord Chancellor, or the noble Earl the Leader of the House, because when we were debating this point on the Report stage I pointed out to Lord Stanhope that in my view—and I hoped it might also be his view—the Amendment which had been inserted at the previous stage in Clause 12, now Clause 13, was held by us to cover the point which had been doubly covered by an Amendment inserted in the Third Schedule to give the Commission the right to appear before a selected person in opposition to any valuation made in the matter of freehold coal. When the concession was made to the
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  colliery proprietors in the matter of freehold coal, an Amendment was inserted in the Third Schedule to give the Commission the right to appear when, in their opinion, a freehold coal owner's property had been undervalued. The mineral owners felt—I think with justice—that if the Coal Commission were to have the opportunity of appearing in opposition to a valuation on the ground that they considered it too low, it was only right and proper that mineral owners in that district, who were intimately affected by the extent of the valuation made of the freehold coal in their area, should have the opportunity to appear, by their representative, before this same individual who heard objection from the Coal Commission.
  That, I think, is fundamentally sound and fair, and I suggested to the noble Earl that possibly the whole matter was met by the Amendment inserted in Committee in Clause 12. The noble Earl gave me an undertaking that he would consider the point, which was a new one to him. I had hoped he would have put an Amendment down which would have made it unnecessary for me to move the present Amendment and made it possible for him to have taken out the rather clumsy provisions in which the Commission have the right to appear in these circumstances. Nothing of that kind has been done, so I put this Amendment down again as a saver. I am disappointed that nothing has been done because it is hardly necessary to argue that where one party has the right to appear and object to a valuation on the ground that it is too low, other parties deeply interested in the matter ought to have the right also to appear through their representative to assert that a valuation is, if anything, too high. That is in conformity with our usual practice of law, and I shall hope to have an answer either from the noble Earl the Leader of the House or from the noble and learned Lord on the Woolsack. I am not at the moment proposing to press the matter further, but I attach very great importance to this particular Amendment and hope the Government will be able to accept it. I beg to move.
  Amendment moved—
  Page 70, line 25, after ("Commission") insert the said words.—(Lord Hastings.)
  EARL STANHOPE: My Lords, His Majesty's Government have, of course,

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  considered my noble friend's Amendment and discussed it at some length. We find that it is impossible to leave out these provisions in the Third Schedule, as the noble Lord suggests, because the proviso under Clause 13 does not compel the owner of coal to press his claim nor does it compel him to appeal. There is nothing whatever to make him lodge an appeal, nor of course would it be an offence under any of the rules of these Schedules. Therefore, as he has got no interest in getting an adequate valuation, because he is going to be left in the same position whatever his valuation, it is necessary that the Coal Commission should be represented before the Valuation Board in order to make their claim and, if necessary, to lodge their appeal. That is why it is necessary to retain that provision. As regards the Amendment my noble friend has put forward, as I told him on the Report stage that would enable all owners of coal to appear and be informed of a valuation of freehold coal, and only freehold coal. That goes a good deal too far, particularly in the way the Amendment is worded: "all persons interested in the valuation of all other holdings in the valuation region."
  I wonder whether my noble friend remembers that the Regional Valuation Board is composed of the mineral agents in the region? Therefore the valuations will come before that body in the first instance, and they Will be able to see at once whether in the case of freehold coal the valuation has been pushed too high with the result that their own clients—each of them having one or more clients—would get an inadequate amount of compensation because too big a proportion is being paid in respect of freehold coal, leaving too little for them. Therefore the Regional Valuation Board will see that the valuation is not pushed too high on the freehold coal as against the interests of those whom they represent. I hope for the reasons I have given that my noble friend will feel it is not necessary to press his Amendment. It has been given full consideration by the Government, and we feel we ought to resist it and insist on keeping the provisions in the Bill which were put in on the former occasion.
  LORD HASTINGS: My Lords, when the noble Earl says that it is necessary to retain in the Third Schedule the words
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  which give to the Commission the authority to appear in certain circumstances, I must say I should have thought that if the freehold coal owners comply with the conditions that prevail in the Third Schedule and with which they have got to comply in the new terms of Clause 13, the situation was completely safeguarded from the standpoint of the Coal Commission. I very much regret that it should be thought necessary to retain in the Bill these words giving the Coal Commission the opportunity to appear in certain circumstances. However, the Government must be the best judge of that. But when the noble Earl comes to answer me in respect to my own Amendment, and to give me reasons why the mineral owner really has nothing to fear from the particular provisions which have been inserted in the Schedule, he is really giving to one side an absolute authority to do certain things and holding out to the other side the reasonable expectation—I grant him "reasonable"—that these fears will not be realised because he already has in the constitution of the original Valuation Board persons who will see to it that his interests are not inimically treated. That may be so. I think that in actual practice it probably will be so. I would be willing to agree with him there.
  It is hardly, I think, quite fair that one side should be given a statutory opportunity and that the other should be merely given the hope, the expectation, even the reasonable expectation, of fair treatment but no statutory authority for establishing that treatment. I am disappointed that the Government have not been able to deal with this matter in a more comprehensive way. However, I do not regard it as of sufficient importance to put the House to the trouble of a Division. Although I am perhaps expecting too much, I would ask the Government once again to consider this, and, when the Bill is being discussed in another place and a very large number of Amendments are being there dealt with, see if they could give something which would give exact parity of opportunity to both parties in this matter. That would be to our advantage, and would be gratefully received by royalty owners in general. I beg to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  EARL STANHOPE EARL STANHOPE moved to insert in paragraph 14:
  "Provided that rules under this paragraph shall not be made until a draft thereof has been approved by a Resolution passed by each House of Parliament."
  The noble Earl said: My Lords, you will observe that there are three Amendments down dealing with the same matter. My noble friend Lord Hastings has down an affirmative Resolution giving power to make modifications or additions to rules, and my noble friend Lord Balfour of Burleigh has put down a negative Resolution. The Government naturally prefer their own drafting, and for this reason. The noble Lord, Lord Hastings, has, I think, taken his wording from what appears in the Government of India Act.
  LORD HASTINGS: I took it from one of the Local Government Acts, in point of fact.
  EARL STANHOPE: I think that is almost the only instance that is known of this particular provision, which happens not to have worked too badly with regard to two Acts, but there is this real difficulty. The procedure under these orders is entirely different from that of a Bill which starts in one House and then goes down to the other, and, if there is disagreement between the two Houses, that can be composed. With regard to these orders, they start really simultaneously. With respect to the Government of India Act what I believe normally happens is this. Another place considers the Draft Order and then adjourns it and it comes up here. If your Lordships make any alteration it then goes back to another place, and they then reconsider it in its new form. As long as the two Houses agree all well and good, but if there is any disagreement between the two Houses there is no machinery by which that disagreement can be resolved. Therefore we think that very much the better way, and probably the quicker way, is that if either House makes objections to these rules they should then be withdrawn and be reintroduced in the form that will make them acceptable to that particular House of Parliament which has objected.
  What we propose therefore is that there should be an affirmative Resolution necessary in each House, but that there should not be the power to amend because that, as I say, raises rather
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  difficult questions of procedure between the two Houses. I think that would really meet my noble friend's point which is that these rules should not be passed but should be both considered and approved by each House of Parliament This Amendment is a considerable step further than the Amendment which was clown on the Paper in my name on the previous occasion. It was then a negative Resolution. I think actually there is not very much difference between the two, but at any rate this ensures that the House has to consider the matter and say so, instead of just letting the rules go by default. I beg to move.
  Amendment moved—
  Page 72, line 26, at end insert the said proviso.—(Earl Stanhope.)
  LORD HASTINGS: My Lords, the Amendment which has just been moved on behalf of the Government does, of course, to a very large extent meet the particular point which my noble friend Lord Balfour and I desire. I am not disposed in the circumstances to move my Amendment in opposition to that which is down in the name of the noble Earl the Leader of the House, but, as was pointed out by the noble Earl, Lord Crawford, at the last stage, it is really essential that power should be reserved to this House and to another place, if not to amend these draft rules, at least to make suggestions for their alteration. I presume that this particular form which is preferred by His Majesty's Government, although it does not leave us able to amend these rules, would give an opportunity for debate during which the undesired portions of the rules would come under survey and suggestions would be made, possibly even divided upon, which would go back to the drafters of the rules giving them the knowledge of the points to which this House objected and those points which this House desired to be replaced in the draft. If I am correct in interpreting the purpose of the Amendment in that way, in effect what we desire is achieved by it. With that understanding I am quite prepared not to move the Amendment which stands in my name on the Paper, and to accept that which has been moved on behalf of His Majesty's Government.
  LORD GAINFORD: My Lords, may I ask one question in regard to procedure? In the event of rules being drafted and

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  then not approved by Parliament, would a similar period elapse to the twenty-eight days which I think is the usual period for the new draft rules to be placed on the Table of the House? If not there is a danger that if you do not revise at once the time for revision in connection with the new draft might be very much curtailed.
  EARL STANHOPE: My Lords, by leave of the House I will reply to my noble friend's question. I do not think it is necessary to have any time limit because these rules do not come into operation until they have received an affirmative Resolution from the House.
  LORD BALFOUR OF BURLEIGH: My Lords, I only wish to say just a word to the noble Earl who leads the House. I am very grateful to him for having met us to the extent he has. I think his solution is a good one. I have just one other matter to which I want to refer. I do not think it is of the smallest importance on this occasion, but I am interested in the order in which these three Amendments have appeared on the Paper. I wondered whether there was any rule as to how they should be dealt with. I have reason to believe that my Amendment was first on the Paper because it was down within a very short time of the conclusion of the last stage, and I think my noble friend Lord Hastings followed, a very good second, with Hs Amendment. The noble Earl the Leader of the House, I think, was third in the race to get his Amendment on the Paper; yet it appears first of the three. On this occasion, I do not think it is of any importance, but there might be circumstances in which it might be of considerable advantage to debate a particular Amendment. I am asking for information as to how the order in which the Amendments appear on the Paper has been arrived at.
  EARL STANHOPE: My Lords, the Government Amendment is to insert a proviso and I understand that a proviso takes precedence of a new sub-paragraph which was proposed by my noble friends.
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: My Lords, there are five drafting Amendments, all dealing with the same point. I beg to move that they be agreed to.
  Amendments moved—
  Page 79, line 47, after ("settlement") insert ("or trust for sale")
  Page 79, line 22, after ("on") insert—
  ("(a)")
  Page 79, line 23, after the first ("or") insert—
  ("(b)")
  Page 79, line 25, after ("Act") insert ("or"
  (c)")
  Page 79, line 36, after the first ("or") insert—
  ("(d)").—(The Lord Chancellor.)
  On Question, Amendments agreed to.
  THE LORD CHANCELLOR: My Lords, there is another drafting Amendment to this Schedule. I beg to move.
  Amendment moved—
  Page 84, line 3, at end insert ("and any reference to the trustees of the settlement shall he construed accordingly.").—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  Fourth Schedule [Lease Consolidation Schemes]:
  THE LORD CHANCELLOR: My Lords, there are two drafting Amendments to this Schedule. I beg to move.
  Amendments moved—
  Page 86, line 7, leave out ("the") and insert ("a").
  Page 87, line so, leave out ("and") and insert ("or").—(The Lord Chancellor.)
  On Question, Amendments agreed to.
  THE LORD CHANCELLOR: My Lords, there is a further drafting Amendment to make paragraph 6 coincide with another similar paragraph. I beg to move.
  Amendment moved—
  Page 87, line 25, leave out ("Board of Trade") and insert ("Lord Chancellor in the case of England or the Lord President of the Court of Session in the case of Scotland").—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  Seventh Schedule [Amendments of 20 & 21 Geo. 5. c. 34, ss. 5 and 8]:
  THE LORD CHANCELLOR: My Lords, there are five drafting Amendments to this Schedule. I beg to move.
  Amendments moved—
  Page 94, line 19, leave out ("the said")
  Page 94, line 24, leave out ("the said")
  Page 94, line 27, leave out ("the said section") and insert ("Section five")
  Page 94, line 34, leave out ("the said")
  Page 94, line 42, leave out ("of") and insert ("from").—(The Lord Chancellor.)
  On Question, Amendments agreed to.
  THE LORD CHANCELLOR: My Lords, there are three further drafting Amendments. I beg to move.
  Amendments moved—
  Page 96, line 1, leave out ("the said")
  Page 96, line 10, leave out ("the said")
  Page 96, line 19, leave out ("of the said Act").—(The Lord Chancellor.)
  On Question, Amendments agreed to.
  EARL STANHOPE: My Lords, I beg to move that this Bill do now pass.
  Moved, That this Bill do now pass.—(Earl Stanhope.)
  On Question, Bill passed, and returned to the Commons.

ARCHITECTS REGISTRATION BILL.
Read 3a(according to Order) with the Amendment.
Clause 3:
Offences.
3. If any person contravenes this Act he shall be liable, on summary conviction, to a fine not exceeding fifty pounds and to a further fine not exceeding ten pounds for every day on which the offence continues after conviction there for:
Provided…
VISCOUNT BERTIE OF THAME VISCOUNT BERTIE OF THAME moved, after "contravenes," to insert "the provisions of." The noble Viscount said: My Lords, this is the same Amendment which I ventured to move in Committee, which my noble friend the Earl of Crawford rather brusquely resisted. He said:
"I think if the Lord Chancellor were to look at this Amendment he would say it was quite tautological and superfluous."
It was my noble friend who appealed to the noble and learned Lord on the Woolsack. It was I who went to him and
384
discussed the matter with him, with the result that I have again ventured to put down the Amendment. I beg to move.
Amendment moved—
Page 3, line 39, after ("contravenes") insert ("the provisions of").—(Viscount Bertie of Thame.)
THE EARL OF CRAWFORD: My Lords, I accept this Amendment.
On Question, Amendment agreed to.
Bill passed, and returned to the Commons.

BUSINESS OF THE HOUSE.
LORD STRABOLGI: My Lords, may I ask on behalf of my noble friend the Leader of the Opposition if the noble Earl has any announcement to make with regard to the business for to-morrow?
EARL STANHOPE: My Lords, there is no other business except that which appears on the Paper. It was anticipated that we were likely to take a longer time over the concluding stages of the Coal Bill and therefore notice was given that the House would meet at three o'clock to-morrow. I think in the circumstances perhaps it would be well to let that arrangement stand. If we meet at three o'clock at any rate it will enable us to get away somewhat sooner than if we meet at the normal time. We will therefore meet at three o'clock and the only business will be that on the Order Paper.
LORD STRABOLGI: My Lords, there is no objection to that, but may I say that I think it was understood that it was possible that we might meet at three o'clock on Thursday also in case there was a lot of business on the Paper. Is it proposed that we should meet at three o'clock on Thursday?
EARL STANHOPE: Yes.
House adjourned at a quarter before eight o'clock.

Preamble
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the further Standing Orders applicable to the following Bill have been complied with:
Middlesex County Council (Sewerage).
The same was ordered to lie on the Table.

PENZANCE CORPORATION BILL. [H.L.]
The CHAIRMAN OF COMMITTEES The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn. The Order made on the 2nd of May last discharged, and Bill committed for To-morrow.
BRADFORD EXTENSION BILL.
Report from the Select Committee, That it is not expedient to proceed further with the Bill; read, and ordered to lie on the Table.
GUILDFORD CORPORATION BILL.

  WORKINGTON CORPORATION BILL.
  Report from the Committee of Selection, That the following Lords be proposed to the House to form the Select Committee for the consideration of the said Bills; namely:

  L. Saltoun,

  L. Ebury,

  L. Shute (V. Barrington),

  L. Dorchester (Chairman),

  L. Holden.

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  Agreed to; and the said Lords appointed accordingly. The Committee to meet on Tuesday, the 12th of July next, at eleven o'clock; and all Petitions referred to the Committee, with leave to the Petitioners praying to be heard by Counsel against the Bills to be heard as desired, as also Counsel for the Bills.

LONDON PASSENGER TRANSPORT BOARD BILL.

  LEE CONSERVANCY CATCHMENT BOARD BILL.
  Report from the Committee of Selection, That the following Lords be proposed to the House to form the Select Committee for the consideration of the said Bills; namely:

  E. Spencer,

  E. Effingham,

  L. Erskine,

  L. O'Hagan (Chairman),

  L. Merthyr.

  Agreed to; and the said Lords appointed accordingly. The Committee to meet on Tuesday, the 12th of July next, at eleven o'clock; and all Petitions referred to the Committee, with leave to the Petitioners praying to be heard by Counsel against the Bills to be heard as desired, as also Counsel for the Bills.

CANTERBURY GAS AND WATER BILL.
Brought from the Commons; read 1a; and referred to the Examiners.

KIRKINTILLOCH GAS ORDER, 1938.
Special Order proposed to be made on the application of the Provost, magistrates and councillors of the Burgh of kirkintilloch:
Laid before the House (pursuant to Act) for affirmative Resolution and referred to the Special Orders Committee.