Sitting of 26 May 1938

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

PRIVATE BUSINESS.
Newcastle and Gateshead Waterworks Bill,
Ossett Corporation Bill,
Southern Railway Bill,
Read the Third time, and passed.
West Surrey Water Bill [Lords],
Read the Third time, and passed, with Amendments.
Royal Sheffield Infirmary and Hospital Bill [Lords],
As amended, considered; to be read the Third time.
Blackburn Corporation Bill [Lords] (by Order),
Read a Second time, and committed.
Gateshead and District Tramways and Trolley Vehicles Bill [Lords] (by Order),
Second Reading deferred till Monday next.
East Lothian Water Order Confirmation Bill,
Read the Third time, and passed.

ORAL ANSWERS TO QUESTIONS.

  INTERNATIONAL LABOUR CONFERENCE.
  Mr. Leslieasked the Minister of Labour whether he can give any information on the forthcoming International Labour Conference; and whether His Majesty's Government have formulated a policy on the questions on the agenda concerning hours of labour?
  The Minister of Labour (Mr. Ernest Brown): The 24th Session of the Inter-
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  national Labour Conference will open at Geneva on 2nd June. There are six items on the agenda, all of which are for first discussion. No conventions accordingly will be adopted except, possibly, on one item, concerning the collection of statistics of hours and wages, in regard to which it will be open to the Conference to proceed by single discussion and adopt a convention this year. Two Government delegates with advisers will attend the Conference, and I am appointing an employers' delegate and a workers' delegate, each of whom will be accompanied by 10 advisers. The answer to the last part of the question is in the affirmative. I may add, as I have already stated, that I hope that my hon. Friend the Parliamentary Secretary and I will attend.
  Mr. Leslie: Is the Minister aware of the number of countries that have already adopted shorter hours of labour, and does he not consider that a reduction of working hours might absorb some portion of the 1,250,000 unemployed workers?
  Mr. Brown: I am also aware that some countries which have adopted it have had to go back on it.
  Mr. J. J. Davidson: Does the policy which the right hon. Gentleman has formulated with regard to hours of labour involve support of the principle of a 40-hour week?
  Mr. Brown: That will be made clear at Geneva by the delegates concerned.
  Mr. Mander: Does my right hon. Friend and the Under-Secretary hope to remain for some considerable period during the Conference.
  Mr. Brown: When I come back the Parliamentary Secretary will go, and we hope to be there several days, as last year.
  Mr. Leach: Does the right hon. Gentleman promise to amend his very bad record there?
  Mr. Brown: The record is very good.

  UNEMPLOYMENT.

    ASSISTANCE.
    Mr. Ellis Smithasked the Minister of Labour whether he has considered the

    1357
    resolutions passed by the Distressed Areas Conference sub-committee; and what action does he propose to take?
    Mr. E. Brown: I would refer the hon. Member to the reply I gave the hon. Member for Everton (Mr. Kirby) on 28th April last, of which I am sending him a copy.
    Mr. Smith: I understand that the Minister met a deputation; has he given further consideration to the issues raised, and will he, in view of them, consider recommending amending legislation to deal with the grievances of the local authorities?
    Mr. Brown: If the hon. Gentleman will look at the answer, which is a long one, and the supplementary questions to it, he will see that I have dealt with that point and given the reasons.
    Mr. Buchananasked the Minister of Labour (1) whether he is aware that applicants for allowances under the Unemployment Assistance Board regulations are subject to investigation not only on their own and their family income but also as to their private lives, and the views held by them on political and other subjects, which are reported on by the investigator; whether he will state the full nature of the inquiries which are made; and take steps to see that this form is submitted to the applicant for his comments;
    (2) whether he will state the instructions which are issued to investigators under the Unemployment Assistance Board for their guidance when inquiry is made as to the means of applicants?
    Mr. Gallacherasked the Minister of Labour whether he is aware that the report of a means test investigating officer on the case of John Gellatty, of 182, Hospital Street, Glasgow, contains remarks about his alleged political opinions, and the fact that in his room was to be found a copy of the Unemployment Insurance Act, with the remark that he seemed to be well up in matters relative to that Act; why such information is considered as having any bearing on the man's claims; whether inquiries of this nature are sanctioned by the Ministry; and, if not, whether he will issue instructions that they be discontinued?
    Mr. Edeasked the Minister of Labour (1) whether he will make available for Members of the House blank copies of the form on which recently an applicant to the Unemployment Assistance Board in South Shields was described as a man holding extremist views and not a type to be encouraged;
    (2) whether he has given instructions that no regard is to be paid to the political and religious views of applicants for unemployment benefit or for allowances from the Unemployment Assistance Board; and whether he will make it clear that inquiries of this kind are not to be made, and that appropriate disciplinary action will be taken against officials who make such inquiries or record such information?
    Mr. Brown: The Board's officers are instructed to investigate and report upon such of the circumstances of applicants for allowances and their households as are relevant to the Act and Regulations relating to the assessment of needs. In view of certain recent cases in which irrelevant matters were introduced into these reports, the Board has issued express instructions in the following terms:
    " Reports by investigating officers must be strictly confined to the recording of matters which are relevant to the determination of allowances or to other decisions, e.g., in regard to eligibility for training which it is competent for officers of the Board to take. The religious or political views of applicants are wholly irrelevant to such decisions, and the greatest care must be taken by officers of all ranks to exclude any comments on such matters from their reports on the circumstances of the applicants and their households."
    As regards the last part of Question No. 6, the particulars recorded with regard to the membership and resources of the household are shown to the applicant and ordinarily signed by him. Any comments which the investigating officer may record in regard to the general circumstances of the case, as, for example, those relating to special needs or discretionary treatment, are not shown to the applicant, nor do I think it would be to his interest, or in the general interests of the administration of the scheme, that there should be a rule requiring them to be so shown. I should add that all information put before the tribunal in case of appeal is given also to the applicant or his representative. I am placing in

    1359
    the Library copies of forms B 6 and B 11 for the convenience of Members.
    Mr. Buchanan: Should not a document that has a bearing on a man's case be shown to him in order that he may have access to the information that is before the board?
    Mr. Brown: If need arises that is done.
    Mr. Gallacher: Can the Minister explain how in this investigation report we get information that the man expatiates on the cost of living and that he is a seditious type? Is the Minister aware that sedition is a crime, and is he prepared to protect the unemployed from what can only be considered a criminal libel by the investigation officer?
    Mr. Brown: The board and I are much obliged to the hon. Member for South Shields (Mr. Ede), who first called attention to a case of this kind, because it has enabled the board to issue this express instruction.
    Mr. Ede: With regard to the last part of Question 27, is it made clear to these officers that it is a serious breach of discipline to enter any of these comments on the forms supplied to them, and will steps be taken to enforce disciplinary action if there should be further breaches?
    Mr. Brown: There is no doubt about that. That is why the board have issued an express instruction to every one of their staff.
    Mr. Gallacher: Is the Minister aware that this photograph of the investigation reveals methods of investigation that are more in keeping with the methods of the Criminal Investigation Department than of the Unemployment Assistance Board, and will he take steps to see that the man responsible for this investigation is dealt with?
    Mr. Brown: I have already made the position perfectly plain.
    Mr. Stephen: Arising out of Question 12, will the Ministry refuse to accept responsibility in the case of an action by Mr. Gellatty against the board for libel?
    Mr. Brown: I should want notice of a question of that kind.
    Mr. Buchanan: I am not entirely satisfied with the answers to Questions 5 and 6, and I give notice that, as soon as possible, I will raise the subjects on the Adjournment.
    Sir William Jenkinsasked the Minister of Labour what number of persons in the county of Glamorgan received winter allowance from the Unemployment Assistance Board; and what number have received special allowance for the year 1937 and the latest date in this year?
    Mr. Brown: Information relating specifically to the county of Glamorgan is not available, but in the board's administrative districts of Cardiff and Swansea, which include almost the whole of the county area as well as the three county boroughs, there were on the 17th January last 25,436 applicants in receipt of winter additions. In reply to the second part of the question, perhaps the hon. Member will be so good as to inform me as to the type of allowance referred to as special allowance and the area in respect of which he desires information.
    Captain Arthur Evans: Will my right hon. Friend give separate figures for Cardiff?
    Mr. Brown: I am not sure that I can do so, but I will make inquiries to see.
    Mr. Thorneasked the Minister of Labour how many able-bodied unemployed persons were transferred to the care of the Unemployment Assistance Board on 1st April, 1937, in West Ham, Leeds, Sheffield, Liverpool, Manchester, Birmingham and Glasgow; how many were rejected on the grounds of their being unfit for work; and how many of those unfit for work have found employment between April, 1937, and 1938?
    Mr. Brown: As the reply contains a table of figures, I will, if I may, circulate it in the OFFICIAL REPORT.
    Mr. Kirkwood: With reference to Glasgow, which is one of the towns mentioned, and the last part of the question, can the Minister give us any idea of those unfit for work who have found employment in 1937 and 1938?
    Mr. Brown: If the hon. Member will look at the answer he will find two columns of figures, the first recording the number taken over from public assistance,

    1361
    which in the case of Glasgow was 18,931, and the other those who were not, numbering 529. I cannot say how many of the 529 found employment.
    Following is the reply:
    The table below shows in column (1) the localities in respect of which information is desired; in column (2) the administrative areas of the Board to which the figures in the table are related (these areas are not co-terminous with local authority areas of the same name); in

    Column (1)

    Column (2)

    Column (3)

    (a)

    (b)

    West Ham

    …

    …

    Canning Town

    …

    …

    705

    55

    Stepney

    Stratford

    Leeds

    …

    …

    Leeds (1), (2) and (3)

    …

    …

    1,779

    141

    Sheffield

    …

    …

    Sheffield (1) and (2)

    …

    …

    2,588

    178

    Attercliffe

    Walkley

    Liverpool

    …

    …

    Liverpool, Central (1), (2) and (3)

    …

    …

    11,317

    450

    Liverpool, South East (1) and (2)

    Riverside.

    Walton (1) and (2)

    Old Swan.

    Garston.

    Manchester

    …

    …

    Manchester Central

    …

    …

    2,934

    172

    Ardwick

    Newton Heath.

    Openshaw.

    Rusholme.

    Trafford Bar.

    Birmingham

    …

    …

    Birmingham (1) and (2)

    …

    …

    209

    27

    Glasgow

    …

    …

    Glasgow Central

    …

    …

    18,931

    529

    Glasgow South Side (1) and (2).

    Bridgeton (1) (2) and (3).

    Finnieston.

    Goven.

    Kinning Park.

    Partick

    Parkhead (1) and (2).

    Maryhill.

    Springburn.

    Information as to how many of the persons recorded in Column (3) (b) found employment between April, 1937, and April, 1938, is not available

    Mr. Davidsonasked the Minister of Labour whether he will recommend a special summer allowance to the unemployed during the summer months?
    Mr, Brown: No, Sir.
    Mr. Davidson: Will the Minister give consideration to the fact that during the summer the foodstuffs in working-class houses are apt to waste to a greater extent than in the winter and that that creates more hardship among the unemployed?
    column (3) the numbers of persons (exclusive of their dependants) in receipt of public assistance prior to 1st April, 1937, who on that day were (a) taken over from the public assistance authorities and (b) held to be outside the scope of the Unemployment Assistance Act on the ground that they were not capable of or were not available for work. It is not possible to give separate figures for these two grounds, which may of course be concurrent.
    Mr. Brown: I am more concerned with the fact that certain local authorities, about 19 in number, made an addition to the assistance given to the poor in the winter.
    Mr. Bateyasked the Minister of Labour the number of persons in Great Britain who were receiving payments in Great Britain in March, 1935, from the Unemployment Assistance Board, and the number on the latest available date; and the numbers for the same dates in the administrative district of Durham?
    Mr. Brown: The average weekly number of payments of unemployment assistance allowances in Great Britain in March, 1935, was 729,812; the number of payments in the week ended 8th April, 1938 (exclusive of payments in supplementation of insurance benefit), was 556,566. The corresponding figures for the Unemployment Assistance Board's administrative district of Durham were 40,594 and 24,096, respectively. Comparison of the figures for these dates is affected by the extension of the scope of the Unemployment Assistance Scheme as from 1st April, 1937, the Second Appointed Day.
    Mr. Graham Whiteasked the Minister of Labour whether the reductions in allowances by the Unemployment Assistance Board in respect of winter allowances will be limited to those applicants who have received such allowances?
    Mr. Brown: Yes, Sir.
    Mr. Whiteasked the Minister of Labour whether any estimate has been made of the saving to the Exchequer from the application of the needs test, having regard to the rise in the cost of administration of the Board?
    Mr. Brown: No, Sir, I have nothing to add on this question to the reply to the hon. Member for Stoke (Mr. E. Smith) on 19th May, 1938, of which I am sending the hon. Member a copy.
    Mr. White: Is the Minister in a position to state that the continuation of these means test inquiries does not cost more than they save?
    Mr. Brown: They undoubtedly save a great deal more than the extra cost—a great deal more.
    Mr. Thorne: Does the Minister think that the abolition of the means test will be brought about during the lifetime of this Parliament?
    Mr. Brown: No, I do not think so, nor under any Labour Government that comes in.

    TRADING ESTATES.
    Mr. W. Joseph Stewartasked the Minister of Labour what progress has been made on the Team Valley Trading Estate and the Pallion and South-West Durham Trading Estates; the number of factories
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    now completed; the number under construction; and the number of persons employed on each estate up to the most recent date?
    Mr. E. Brown: On 30th April, 1938, 44 factories had been completed on the Team Valley Trading Estate. Of these 42 were occupied by tenants, 35 of whom had begun production. On the same date 35 factories were in course of construction and agreements had been made with 18 further tenants for whom the building of factories had not begun. It is understood that approximately 1,000 persons were employed in the factories, and 1,450 persons were employed on the development work of the trading estate. The erection of two factories had just been begun and 13 workpeople were employed on the site acquired at St. Helen's, Auckland. Two factories were in course of erection, and 48 workpeople were employed at Pallion.
    Mr. Batey: Can the right hon. Gentleman say how many of the 1,000 persons employed on the Team Valley Estate are men over 21?
    Mr. Brown: If the hon. Gentleman will put that question down I will answer it.

    EMPIRE EXHIBITION (JOINERS AND BRICKLAYERS).
    Mr. Robert Gibsonasked the Minister of Labour how many joiners and bricklayers, respectively, were employed at the Empire Exhibition on Friday, l0th May, 1938, or the last convenient date; what were the corresponding numbers on the corresponding date in April, 1938; how many of these have been absorbed into house-building and other industrial enterprises, respectively; how many workmen formerly engaged on the erection and completion of the Empire Exhibition are at present unemployed; and whether he has any statement to make on the subject?
    Mr. E. Brown: According to my information, 73 joiners with 10 apprentices, and three bricklayers with two apprentices, were employed at the exhibition on 23rd May. Particulars of the numbers employed on 23rd April were stated in the answer given to the hon. Member by my right hon. Friend the Secretary of State for Scotland on 26th April. I regret that information is not available as to the number of these men, some of whom will

    1365
    have returned to other parts of the country, who have secured alternative employment or who are now unemployed; as regards the latter, if they register at their Employment Exchanges, they can be informed of any vacancies notified to the exchanges for which they are qualified.
    Mr. Gibson: May we take it that most of the men employed on the erection of the Empire Exhibition have been absorbed?
    Mr. Brown: If the hon. and learned Member will compare the figures, he will see that on the date to which my right hon. Friend referred there were 1,375 joiners, 27 apprentices and 42 bricklayers.
    Mr. Kirkwood: Does the Minister make any provision when a great work like this finishes to see that the men displaced are found employment instead of their having to go in a haphazard way to the Employment Exchange?
    Mr. Brown: There was an exchange at the exhibition and the men took advantage of it.

    BENEFIT
    Mr. Buchananasked the Minister of Labour whether he is aware that recently Mr. Peter Gibson, 18, Camden Street, Glasgow, was notified by express letter from the South Side exchange about 7 p.m. to go to a job the following morning; that he started work and received in payment for part of the day worked 2s. 8d.; that he would have received in benefit the sum of 5s.; and what action he proposes to take to see that the man is paid at least an amount equal to his benefit, and also to see that men in future are not penalised in this way?
    Mr. E. Brown: The facts are as stated in the question. It is the duty of the Employment Exchanges to inform unemployed workers of opportunities of employment. Mr. Gibson accepted this offer under the impression that he would be employed for a full day, and there is no action which I can take.
    Mr. Buchanan: Cannot the right hon. Gentleman see that a man is not penalised for working, and take steps to see that while he is working he at least gets equivalent to what he gets when unemployed?
    Mr. Brown: It depends on the arrangement between the employer and the employed when they meet. We act as agents to bring them in touch and it is for the man to decide whether to accept the offer. I understand that in this case he thought it was a full day, but it was not.
    Mr. Buchanan: Is not the right hon. Gentleman aware that the exchange allowed him to believe it was a full day, and will he take steps to see that a man who goes to a job at short notice is not penalised because of his desire to get employment?
    Mr. Brown: The point is that we offer the job and it is for the man to decide whether to take it or not. Hon. Members opposite would be the first to complain if any interference by the exchanges took place.
    Mr. T. Smith: What would happen if the man refused?
    Mr. Brown: A man is within his rights to refuse and he has his right to appeal. There have been cases where the umpire has often decided in favour of the man.
    Mr. David Grenfellasked the Minister of Labour the number of girls who have been recently denied benefit on account of their refusal to take up work at Reading and how many of them are resident in the Swansea Employment Exchange area; the number of vacancies reported by Messrs. Huntley and Palmer; and whether the Ministry of Labour has any difficulty in providing a sufficient number of girls to fill all bona fide vacancies reported by this firm?
    Mr. Brown: since 1st January, 1938, the claims of 120 women and girls in the Wales Division have been disallowed by the courts of referees on account of refusal to take up employment with Messrs. Huntley and Palmer, Limited, in Reading, and of these 27 women (all over 18 years of age) were resident in the Swansea Employment Exchange area. Figures for other divisions are not at the moment available. In the same period Messrs. Huntley and Palmer notified to the Department a demand for 200 girls and young women between the ages of 16 and 23 years and, as it was not possible fully to meet this demand from local labour, a representative of the firm arranged to visit suitable areas in Wales and the

    1367
    North-West in order to interview suitable applicants for transfer to Reading. Eleven girls (under 18 years of age) from Wales, and 61 women from Wales and the North-West have been placed with Messrs. Huntley and Palmer as a result of these interviews. In spite of the shortage of local labour the Department has so far been able partly by transferring people from other districts to meet the demands for labour made by Messrs. Huntley and Palmer.
    Mr. Tomlinsonasked the Minister of Labour whether he is aware that the court of referees disallowed benefit for two weeks for alleged industrial misconduct in the case of Joseph Speakman, of Farnworth; and, in view of the fact that this misconduct consisted of absenting himself from work in order to apply personally for another job, which would enable him to earn a better wage than the one he was receiving, namely, 28s. per week, and which, as a married man, he found he could not live upon, he will consider amending the regulation defining industrial misconduct?
    Mr. Brown: I have considered the circumstances of this case, but I do not think that any amendment of Section 27 of the Unemployment Insurance Act, 1935, is called for. That Section does not define the term "misconduct," and it is for the statutory authorities to decide whether disqualification has been incurred under this Section and to fix the period, within a maximum of six weeks, for which any such disqualification shall operate.
    Mr. Tomlinson: Is the Minister aware that as long as the present definition of "industrial misconduct" under which the statutory authority works remains, no person in the unfortunate position of this man can escape from an occupation without being penalised for so doing? If that is the case, will be not inquire whether some alteration can be made in the definition?
    Mr. Brown: As hon. Members know, this point has been the subject of discussion in connection with insurance for many years, and the House has always decided not to attempt precisely to define the phrase, and I think, looking at the matter all the way round, that is still the right decision.
    Mr. Tomlinson: May I ask the Minister to look into the matter again, in view of the fact that in Lancashire at the present time this particular case has been multiplied by the thousand? Will he consider whether in the altered circumstances a new definition is not required?
    Mr. Brown: I am, of course, aware of the difficulties in Lancashire, but I am not sure that this particular case will be multiplied by the thousand. However, I am willing to look into the matter again.

    STATISTICS.
    Mr. Davidsonasked the Minister of Labour the total number of registered unemployed in Great Britain for the years ended March, 1930, and 1938, respectively?
    Mr. E. Brown: The average numbers of unemployed persons on the registers of Employment Exchanges in Great Britain in the years ended March, 1930, and March, 1938, were 1,275,441 and 1,523,460 respectively.
    Mr. Davidson: Will the Minister take into consideration the tremendous increase in public relief during the same period, and is he satisfied with the unemployment figures to-day?
    Mr. Brown: That is an entirely different issue.
    Mr. Liddall: Will the right hon. Gentleman give the figures of unemployment in 1931?
    Mr. Brown: The total number of unemployed on 16th March, 1931, was 2,639,640.
    Mr. Davidson: Will the Minister keep in mind that in the eight years since 1930 we have had for seven years a National Government with an overwhelming majority?

    VILLAGES (FACTORY SITES).
    Mr. Leslieasked the Minister of Labour whether consideration is being given to the creation of factories and new industries at Port Clarence and Stillington, villages now derelict, where suitable sites are available and excellent transport facilities by road, rail, and sea?
    Mr. E. Brown: I am not aware of any proposals of the kind referred to by the hon. Member.
    Mr. Leslie: Does the right hon. Gentleman not think that it would be wiser to encourage firms to erect factories in these derelict villages where housing accommodation still exists rather than to send young people elsewhere or ask them to travel to the Team Valley Estate, 20 or 40 miles away?
    Mr. Brown: I would agree with the hon. Member, except that there is only a limited number of new industries, and that some can be attracted by the provision of facilities who would not be attracted in any other way.

    MERTHYR TYDFIL.
    Mr. S. O. Daviesasked the Minister of Labour what was the number of persons unemployed in the borough of Merthyr Tydfil on the last day for which information is available; the number in receipt of unemployment assistance allowances; and the number in receipt of statutory benefit?
    Mr. E. Brown: At 4th April, 1938, there were 8,298 persons aged 14 years and over, registered as unemployed at Employment Exchanges in Merthyr Tydfil. Of the 8,097 persons aged 16 years and over included in this total, 1,402 had claims admitted for insurance benefit, and 6,270 had applications authorised for unemployment allowances (excluding applications for allowances in supplementation of benefit).
    Mr. Daviesasked the Minister of Labour what percentage of the registered unemployed in the borough of Merthyr Tydfil have not been engaged in regular employment for one, two, three, four, five, and over five years?
    Mr. Brown: As the reply includes a table of figures, I will, if I may, circulate a statement in the OFFICIAL REPORT.
    Following is the statement:
    The only statistics available relate to the length of the last spell of registered unemployment of persons, aged 16 to 64 years, applying for insurance benefit or unemployment allowances, irrespective of the nature and duration of their previous employment.
    The following table gives the figures on this basis in respect of persons registered at exchanges in Merthyr Tydfil at 4th April, 1938.
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    Length of period on register.*

    Per cent. of total. applicants.

    Less than 1 year

    49

    1 year but less than 2 years

    10

    2 years but less than 3 years

    9

    3 years but less than 4 years

    5

    4 years but less than 5 years

    4

    5 years or more

    23

    100

    * Among persons who had been on the register for extended periods a proportion, which will increase as the period on the register increases, will have had one or more short spells of employment lasting not more than three days each during such periods.

    Mr. Daviesasked the Minister of Labour the number of unemployed persons signing at the Employment Exchanges of Merthyr Tydfil and Dowlais who received the winter and cost-of-living increases in allowances; and what was the average amount of such increase paid to such persons?
    Mr. Brown: Information relating to Employment Exchange areas is not available but in the Unemployment Assistance Board's administrative areas of Merthyr Tydfil and Dowlais which are served by the Merthyr Tydfil, Treharris and Dowlais Employment Exchanges the number of assessments current on 17th January last, which included winter? additions, were 2,149 and 1,245 respectively. The average addition was slightly over 23. per week in each case.

    JUVENILE ADVISORY COMMITTEES.
    Mr. Dayasked the Minister of Labour the number of advisory committees that are at present operating for juvenile employment in connection with the Employment Exchanges; and at what intervals a report of their work is presented?
    Mr. E. Brown: There are at present 197 juvenile advisory committees established by the Ministry in connection with the juvenile work of Employment Exchanges. A general account of their work is given in the annual reports of the Ministry.
    Mr. Day: Does the advisory committee still serve a useful purpose?
    Mr. Brown: It serves a very splendid purpose.
    Mr. Roland Robinsonasked the Minister of Labour why his Department refused to circulate to all employment committees the resolution of the Blackpool and Fylde District Employment Committee regarding the abolition of the Anomalies Regulations (Seasonal Workers) Order?
    Mr. E. Brown: The resolution in question was in general terms and demanded the reversal of a policy recently approved by Parliament. In these circumstances I felt that no useful purpose would be served by circulating the resolution to other committees.
    Mr. Robinson: Is it not to the general benefit that those who administer these regulations should be allowed to exchange views with other committees; and would the right hon. Gentleman say why, when resolutions from other committees are circulated, inevitably the resolution with regard to seasonal workers is refused circulation?
    Mr. Brown: My hon. Friend must not assume that the same view is taken in other unemployment committees as is taken in Blackpool, on this and other questions, or, that other committees are not equally competent with Blackpool to make up their own minds.
    Mr. Robinson: Why does the right hon. Gentleman not give Blackpool committee the opportunity of finding out what other people think?
    Mr. Brown: They are not seeking to do that at all; they are seeking to tell other people.

    SPECIAL AREAS (NEW INDUSTRIES).
    Mr. Manderasked the Minister of Labour whether he is aware of the fact that facilities granted to the Special Areas for attracting industries are likely to have an adverse effect on other industrial areas, and that already there have been cases of established concerns being drawn away from their home town to a Special Area, notably at Wolverhampton; and whether he will take steps to discourage this from occurring?
    Mr. E. Brown: In carrying out the duty placed upon him by Parliament in the Special Areas Acts of encouraging the development of new industrial enterprises
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    in the Special Areas, the Commissioner and his industrial advisers pay due regard to the position in other parts of the country. I am not aware of any cases in which established industries have been transferred.
    Mr. Mander: Is it the policy of the Government to encourage old-established businesses in the Midlands to go to other areas, and is the right hon. Gentleman aware that this has actually occurred at Wolverhampton?
    Mr. Brown: I am not aware that it has happened, and I should be very interested to have the facts. I have tried to make clear by my answer what has been made clear many times, that that is not the policy of the Special Areas Commissioner.

  COAL PRICES (DEPARTMENTAL COMMITTEE).
  Mr. Liddallasked the Minister of Labour whether, in view of the fact that the price of coal is now nearly double what it was in July, 1914, he will state some or all of the percentage increases in pit-head prices, in transport costs, dock costs, the costs of delivery from railway and / or dock to consumers' premises and in the profits of merchants and / or factors included in the 90 per cent. increase in coal prices for the year 1937 over July, 1914, as far as they operate in the cost-of-living index for 1937?
  Mr. E. Brown: The information in the possession of my Department does not enable me to give these particulars. I would, however, refer my hon. Friend to the reply given by the Prime Minister on 16th March last to the hon. Member for Wallsend (Miss Ward), in which he announced;that a Departmental Committee would be set up, the terms of reference of which would include the investigation of the various items which make up the differences between the prices received by the producers and those paid by the consumers of coal, coke and manufactured fuel.
  Mr. Grenfell: Can the right hon. Gentleman say whether the committee has yet been appointed or whether there is any information about prospective appointments?
  Mr. Brown: I am not sure. Perhaps the hon. Member will put the question down.
  Mr. Davidson: Will the Minister make it clear that it is of no use to complain of the price of coal and at the same time support Bills put forward by this Government which do not ease the situation at all?
  Mr. Brown: Hon. Members opposite will be very sorry if the Coal Bill is not passed, and so will the miners.

  ARMAMENTS MANUFACTURE (LABOUR TRANSFER).
  Mr. Liddallasked the Minister of Labour whether he has been advised of the fact that the establishment of aeroplane and similar factories for the purpose of rearmament is attracting by reason of higher wages labour which is ordinarily available to established manufacturing concerns; whether he is aware that embarrassment is being caused to those concerns which are unable to pay the high rate of wages necessary to retain their workpeople; and whether he will take steps to ascertain what can be done in the matter?
  Mr. E. Brown: While individual cases of men leaving their previous employment to take work with firms engaged in the manufacture of armaments have been brought to my notice from time to time, no satisfactory evidence has been forthcoming that the transfer was due to the offer of more than the recognised rate of wages. The question of securing sufficient labour for achieving the priority for defence requirements which the Government has already declared to be necessary, is at the moment the subject of discussion between the employers' organisations and the trade unions in the engineering industry. I have no doubt that it will be the desire of all parties to see that the necessary arrangements to this end are made with the least possible dislocation of the industry.

  KING'S NATIONAL ROLL.
  Mr. Radfordasked the Minister of Labour whether all the survivors of the 1,280,000 ex-service men who have received a disability pension at any time since the beginning of the Great War are
  1374
  eligible for employment under the King's National Roll scheme in common with the 400,000 men in the United Kingdom who now receive pensions for permanent war disablement; and does the total of 316,776 employed under the scheme include past and present pensioners in unknown proportions?
  Mr. E. Brown: The King's Roll scheme is intended to encourage the employment of ex-service men who are still in receipt of disability pensions or have commuted permanent disability pensions. An employer may, however, continue to count towards his Kings' Roll quota, a man whose disability pension has been withdrawn since the employer engaged him; such a man would not count towards another employer's quota if he left his present employment. The answer to the last part of the question is, therefore, in the affirmative. I will let my hon. Friend have a copy of the leaflet explaining the King's Roll scheme.

  EUROPEAN PRESS AGENCY, LIMITED, AND BRITISH GLY CERINE MANUFACTURERS, LIMITED.
  Mr. G. Straussasked the Secretary of State for the Home Department whether he has now completed his inquiries into the European Press Agency, Limited, and the British Glycerine Company; and whether he can make a statement?
  The Secretary of State for the Home Department (Sir Samuel Hoare): It appears as a result of inquiries that the European Press Agency, Limited, was incorporated in October last to finance a paper in Belgium, but no evidence has been found to support the allegation that German funds were offered or would be available to this company. Only a small fraction of the nominal capital of the company, which was £10,000, appears to have been subscribed and the company is now dormant. One of the original directors, a British subject, is now the subject of a warrant for fraudulent conversion in connection with quite a separate transaction. The objects of the British Glycerine Manufacturers, Limited, appear to have no connection with the European Press Agency, Limited. It was incorporated in October, 1Q36, for mak-

  1375
  ing glycerine, and has not started production. The managing director of this company, a Belgian subject, and two other aliens who stated that they had business to discuss with this company, have been refused leave to land because the immigration officer was not satisfied with the nature of the business which they wished to transact. No other aliens in this country appear to be connected with the management of this company.
  Mr. Strauss: Is the Home Secretary quite satisfied with the bona fides of both these firms?
  Sir S. Hoare: That is a very wide question.

  MURDER CHARGE, LEEDS.
  Sir C. Granville Gibsonasked the Home Secretary whether he is aware that during the recent trial, at the Leeds Assizes, of Jesse Peel on a charge of murder serious allegations were made that the police had used third degree methods of extorting evidence whilst the accused was merely under suspicion; whether the police are instructed or permitted to use such methods; and will he cause an inquiry to be made into this matter?
  Sir S. Hoare: I beg to apologise for the length of the answer. I am aware that such allegations were made and were denied and I have caused inquiries to be made about the matter, and am informed that the facts are as follows: The police who were making inquiries about the death of Mrs. Peel, told Peel that there were certain questions which they wished to ask him and he replied that he would answer any questions they wished. As he admitted in evidence, he voluntarily accompanied the police to Otley police station. He was cautioned and was invited to give an explanation of traces of human blood which had been found on his clothing. At the trial Peel alleged that the statement which was taken from him was obtained by improper methods, though he said he did not know which of the officers concerned was guilty of the alleged misconduct, but he admitted that he read the statement over several times and was given every opportunity to alter it and that he signed the statement. The statement contained a sentence in Peel's own handwriting in the following terms:
  1376
  " I have read the above, which is quite true."
  The allegations made by Peel against the conduct of the police were denied on oath by the police officers concerned, who were subjected to severe cross-examination but persisted in their denials. The Chief Constable of the West Riding informs me that in view of the allegations made against the police he made further inquiries into the matter, as a result of which he is satisfied that these allegations were quite unfounded. The Judges' rules were formulated for the purpose of explaining to police officers engaged in the investigation of crime the conditions under which courts would be likely to admit in evidence statements made by persons suspected of, or charged with, crime. The effect of these rules has been fully explained in a circular issued to the police by the Home Office. The police officers in question were fully acquainted with these rules, and I can find no ground for thinking that they failed to observe them.
  Sir C. Granville Gibson: Is the right hon. Gentleman aware that the public mind is greatly exercised in the West Riding over these serious allegations, and will he not cause a special inquiry to be made from the Home Office again into this matter, in order to clear the police of the suspicion that these allegations are true; or, on the other hand, if they are true, give instructions that these methods of extorting evidence should cease at once?
  Sir S. Hoare: I have made very careful inquiries from the Chief Constable in the West Riding, and I have also made a personal investigation into the case, and I am satisfied that there is no ground for the allegations made against the police.

  SILICOSIS.
  Mr. E. Smithasked the Home Secretary whether he has given consideration to the correspondence dealing with silicosis sent to him by the hon. Member for Stoke; and is it proposed to take any action?
  The Under-Secretary of State for the Home Department (Mr. Geoffrey Lloyd): The hon. Member has forwarded to my right hon. Friend two letters. One relates to the case of a workman who has been

  1377
  twice examined by the medical board. The board were satisfied on both occasions that he was not suffering from silicosis. The board is composed of experts with unique experience in the diagnosis of silicosis, and their decision is final. The other letter relates to alumina dust, which is being increasingly used as a substitute for flint dust, with a view to reducing the risk of silicosis. I am sending to the hon. Member a report by a committee of the Medical Research Council on this question.
  Mr. Smithasked the Home Secretary whether he is satisfied with the statistics in Command Paper 5722, pages 12, 13, and 26, with particular reference to silicosis; whether he is satisfied with the medical boards; if not, what changes are contemplated; and whether it is his intention to reconsider the question of liability and appeal?
  Mr. Lloyd: The number of cases is necessarily a matter of serious concern, and emphasises the necessity for taking all possible preventive measures. Much has been and is being done in this direction, and I am glad to note that, in several industries where stringent precautions have been adopted over a long period of years, there is now a marked reduction in the number of new cases. It is also to be borne in mind that the disease usually develops very slowly, and that many of the cases now occurring are the result of conditions existing before the necessary precautions were introduced. The medical board system appears to be working satisfactorily, and no material change is in contemplation.
  Mr. Smith: Does the Under-Secretary remember that he and the present Chancellor of the Exchequer were responsible for building up the hopes of many of us in the Debates on the Factory Bill; and may I ask what steps are being taken to implement the promises given in those Debates?
  Mr. Lloyd: I think the hon. Gentleman is thinking of an undertaking that we gave to consider any suggestions with regard to particular processes in the pottery industry. I understand that certain information is being considered, with a view to possible extension of the scheme to some additional processes.
  Mr. Hopkinasked the Home Secretary whether he is aware that, up to the
  1378
  end of 1937, 66 per cent. of the deaths due to silicosis in the South Wales coalfield, 65½ per cent. of the totally disabled, and 70 per cent. of the partially disabled cases, occurred in the anthracite coal districts; and, in view of this, what is the reason for the delay in issuing Mark IV respirators; and what immediate steps he proposes to take to deal with this problem?
  Mr. Lloyd: My right hon. Friend is fully alive to the importance of having supplies of such respirators available at an early date, and he is glad to learn that various difficulties which arose as to materials and otherwise have been overcome, and that the arrangements for supplying the manufacturers with requirements for production are now well advanced.
  Mr. James Griffiths: Will the hon. Gentleman consider trying these respirators experimentally in one colliery first; and will he bear in mind the fact that various medical men in this country are of opinion that the use of these respirators ought to be carefully checked?
  Mr. Lloyd: I am aware that the question is a very important one. For years it was impossible to make a respirator which was capable of resisting silica dust, but the matter was taken up by the Department of Scientific and Industrial Research and the respirator authorities, and they are now fully satisfied that a solution has been achieved.
  Mr. Grenfell: Does not all the information available point to the fact that the real remedy lies, not in respirators, but in the suppression of dust?
  Mr. Lloyd: The prevention of silicosis is a matter for the Mines Department.

  PRESERVATION OF AMENITIES (ADVERTISEMENTS).
  Mr. Rhys Daviesasked the Home Secretary whether he is aware that the Lancashire branch of the council for the Preservation of Rural England has recently passed a resolution in favour of effective legislation to enable local authorities to protect their districts from offence to local amenities caused by disfiguring advertisements; and whether he can hold out any hope for the introduction of such legislation?
  Sir S. Hoare: Yes, Sir. This matter is now before a Committee, set up in accordance with the proposal made during the debate on 8th December last, and I think it will be best to await their report.
  Mr. Davies: Has the right hon. Gentleman any idea when the Committee will report?
  Sir S. Hoare: No, Sir, but I think it will be in the comparatively near future.

  METROPOLITAN POLICE (EXPENDITURE).
  Mr. Thurtleasked the Home Secretary what items of expenditure of the Metropolitan Police service were omitted from the total expenditure of £9,400,000 recorded on page 107 of the Civil Appropriation Accounts, 1936, which led him to calculate the total expenditure for the period in question as being £8,700,000; and whether similar items were omitted in arriving at the figure of £2,700,000 as the total expenditure of the Metropolitan Police service for the year ended 31st March, 1913?
  Sir S. Hoare: No items of expenditure on the police service were omitted, but only those relating to the Metropolitan Police Courts, the probation service and costs in criminal cases. The figure of £8,700,000 is arrived at by excluding these and deducting the receipts shown under subheads "C" and "M" of the account and some £3,800 of the receipts shown under "N." The answer to the last part of the question is in the affirmative.

  DEPUTATION, LIMEHOUSE.
  Mr. James Hallasked the Home Secretary whether he is aware that unnecessary violence was exercised by the police when called upon by the officials of the Unemployment Assistance Board in Limehouse to expel an orderly deputation from their offices in West India Dock Road on 12th May; and will he inquire into the circumstances of this case?
  Sir S. Hoare: I have made inquiry and have been informed by the Commissioner of Police that the deputation left the building without incident on being requested to do so by the police. No
  1380
  person was removed from the building by force, and there was no disorder of any kind.

  AIR-RAID PRECAUTIONS.
  Mr. C. Wilsonasked the Home Secretary whether children at elementary schools will be supplied with one gas-mask for home and another for school, or whether it will be necessary for the mask to be carried from one place to the other; and if so, whether receptacles will be provided?
  Mr. Lloyd: All school children will be provided, in emergency, by the Government with respirators which they will carry with them to and from school. Containers will be provided.
  Mr. Sandysasked the Home Secretary whether he can make a statement as to the progress of plans for the evacuation of the civil population from areas which might be exposed to continuous air attack?
  Sir S. Hoare: Various aspects of the problem of transferring persons from areas which are likely to be exposed to continuous air attack, including the plans said to be in contemplation in other countries, have been examined by the Home Office. With the purpose of bringing the subject under full review, I have invited the right hon. Member for the Scottish Universities (Sir J. Anderson) and the hon. Members for South-West Bethnal Green (Sir P. Harris), Balham (Mr. Doland), and North Islington (Dr. Guest) to serve on a committee which will assist me in the preparation of plans. While this committee will, no doubt, begin its work on the problem of London, it will have in mind the application of its plans to other big centres of population.
  Mr. Sandys: Is my right hon. Friend aware that the knowledge that the Home Office are proceeding actively with their plans for evacuation has caused very widespread satisfaction?
  Mr. J. Griffiths: Will the right hon. Gentleman consult with those areas to which he is likely to evacuate the population?
  Sir S. Hoare: Certainly a question of that kind would come within the scope of the committee's investigation.
  Mr. H. G. Williams: Will they also consider whether, as ordinary human beings, people want their families broken up?
  Mr. Gallacher: Would it not be desirable that the Home Office should set up similar committees in other big centres which are likely to be attacked, rather than wait until everything has been prepared in London?
  Sir S. Hoare: I think it is best to begin with the most difficult part of the problem—the problem of London. If we find a satisfactory solution of the London problem, we shall be able to apply it to other big cities.
  Mr. R. C. Morrisonasked the Home Secretary whether he has been able to arrange a class of instruction upon air-raid precautions for Members of Parliament?
  Mr. Lloyd: My right hon. Friend will be happy to arrange for a course of instructional lectures and is inquiring through the usual channels as to the arrangements that will be most convenient to hon. Members.
  Mr. Mabaneasked the Home Secretary whether he is aware that many of those who offer themselves for training as air-raid precautions volunteers are required to undertake considerable outlay of cash quite apart from necessary personal expenses, in order to secure training, and that this outlay is demanded for books, training fees, equipment, and examination fees; and whether, as this is totally contrary to the spirit of the air-raid precautions service, he will take immediate steps to stop. this?
  Mr. Lloyd: It is intended that all training should be provided free for persons who are enrolled as members of public air-raid precautions services. Where they have individually incurred expenses, after enrolment, of the kind mentioned, it would be proper for the local authority concerned to repay them. My right hon. Friend is making arrangements which, I hope, will obviate the continuance of any such difficulties with the type of training in which it is most likely to have arisen, namely, training for first-aid services.
  Mr. Mabane: Will my hon. Friend take the initiative in suggesting to local
  1382
  authorities that they should make repayment of these sums that have been already paid?
  Mr. Lloyd: I think my answer is sufficient.
  Mr. Davidson: Will the Under-Secretary bear in mind also, that the burden on local authorities is excessive?
  Mr. R. C. Morrison: Will the hon. Gentleman also impress on them that they should not charge for instruction books for these classes?
  Mr. Lloyd: We have done that.
  Mr. Mabaneasked the Home Secretary whether the figures of 400,000 which he gave in his broadcast on 23rd May as the present total of air-raid precautions volunteers is based on returns from local authorities; to what date does the figure refer; and whether he will now state the exact official figure of the numbers of air-raid precautions volunteers who have been enrolled throughout the country?
  Mr. Lloyd: The number quoted by my right hon. Friend is an approximate estimate, based on figures collected from a number of representative authorities, of the present position. As the House has been informed, arrangements have been made for returns from local authorities of the full position, and the first of these returns will be available about the middle of next month.
  Mr. Cartlandasked the Home Secretary what are the additional powers with which it is proposed to invest air-raid wardens by special regulations in time of emergency?
  Mr. Lloyd: A.R.P. Memorandum No. 4, issued early last year, on the subject of air-raid wardens, stated that it was proposed to invest them with certain simple powers in time of emergency, but further examination of the position suggests that they will probably be able to carry out their functions without being invested with any special powers.
  Mr. Cartland: Does that mean that any suggestion that legislation will be introduced in the event of war breaking out to invest these persons with powers will not be implemented?
  Mr. Cartlandasked the Home Secretary by what method and under what authority air-raid warden officers are appointed?
  Mr. Lloyd: Air-raid wardens and head wardens are appointed by local authorities, as a part of the measures they take in preparing general precaution schemes under the Air Raid Precautions Act, 1937.
  Mr. Cartland: Is there, in point of fact, any uniformity? Has my hon. Friend seen the letter in the "Times" this morning?
  Mr. Lloyd: Yes, Sir. Certain suggested schemes of organisation were forwarded to local authorities, but the responsibility is theirs. If they wish to adopt a different form of organisation which they think is better suited to their local needs, they can do so.
  Mr. Mabane: Have air-raid wardens any security of tenure in their offices?
  Mr. Lloyd: They are volunteers under the local authorities.
  Mr. Cartlandasked the Home Secretary why gas masks for training are not issued to local authorities in sufficient quantities to provide one gas mask for every volunteer who undertakes training?
  Mr. Lloyd: Respirators are issued to local authorities in sufficient numbers to enable every qualified instructor to have a respirator for each member of his class.
  Mr. Cartland: How many have been issued for this purpose?
  Mr. Lloyd: About 350,000.
  Mr. Cartland: Can my hon. Friend say what the local authorities have done?

  CLUBS.
  Mr. Dayasked the Home Secretary whether, in view of the present position of clubs in the United Kingdom, he will consider introducing legislation for the purpose of restoring their pre-war privileges?
  Sir S. Hoare: No, Sir. I am not disposed to entertain this suggestion.
  Mr. Day: Can the right hon. Gentleman say whether he makes a regular report
  1384
  to the Cabinet on this subject; and, if so, when the last report was made?
  Sir S. Hoare: No, Sir; it would certainly be improper for me to say what I do or do not do in the case of the Cabinet.
  Mr. Day: Did not the right hon. Gentleman's predecessor in office state that written reports were made to the Cabinet?
  Mr. E. Smith: Will the right hon. Gentleman bear in mind that workmen's clubs are well conducted, and that they do not desire any change?
  Major Procterasked the Home Secretary whether he intends to deal with the control of bottle parties in connection with the legislation shortly to be introduced referring, in particular, to bogus clubs; and, if not, whether he will consider the desirability of consulting with the customs and excise authorities, with a view to ascertaining whether the problem of the bottle party can be dealt with by an alteration of the law which will result in the organisers of these parties making the same contribution towards the excise as is made by hotels, restaurants, and other licensed premises which provide alcoholic refreshment and entertainment?
  Sir S. Hoare: My hon. and gallant Friend's suggestion has been noted, but I am not in a position at present to make any statement.
  Major Procter: Is not the position a very bad one when, while other licensees have to pay very heavy contributions to the Exchequer, these institutions get off scot free?
  Captain A. Evans:Will my right hon. Friend bear in mind the large amount of revenue that is lost to the Treasury from this cause in the present state of legislation; and will not the Chancellor of the Exchequer see whether it is possible to include a Clause to deal with it in the Finance Bill which is at present before the House?
  Sir S. Hoare: The second supplementary question shows that the first supplementary question should be addressed to the Chancellor of the Exchequer.
  Mr. Thorne: Will the Home Secretary say what is really meant by bottle parties?

  ACCIDENT, PIMLICO STEPS.
  Sir Alfred Beitasked the Home Secretary whether his attention has been drawn to an accident which occurred at 4.10 p.m. on 30th April, 1938, off the Pimlico Steps, Grosvenor Road, Westminster, whereby a boy aged four years fell into the river and lost his life; whether he is aware that the steps are in a bad condition; who is responsible for seeing that these steps are protected so as to prevent children from gaining access to the river at this point; and what is being done to prevent a repetition of this accident?
  Sir S. Hoare: My attention has been drawn to this regrettable accident. I understand that the London County Council is responsible for the upkeep of the steps, and is looking into the matter, but my information does not suggest that the condition of the steps contributed to the accident.

  ADVERTISEMENTS.
  Mr. Manderasked the Home Secretary whether he is aware of the inconvenience and loss caused to purchasers of greenhouses and similar articles on the strength of advertisements which fail in many respects to comply with the expectations held out; and whether he will consider the advisability of introducing legislation dealing with the subject of such advertisements?
  Sir S. Hoare: I could not express any opinion as to the need for further legislation in this direction without knowing more of the circumstances to which the hon. Member refers. If he cares to send me particulars, I will consider the matter.
  Mr. Mander: I will send the right hon. Gentleman particulars of cases which have occurred in Wolverhampton and elsewhere.

  CUSTOMS CONVICTION, CROYDON AIRPORT.
  The following Question stood upon the Order Paper:
  Mr. Fleming: To ask the Secretary of State for the Home Department whether he is aware that Mrs. Elsie Hesse, a German Jewess, was convicted of attempting to avoid payment of Customs
  1386
  duties at Croydon airport; and if he has made a deportation order in this case?
  Mr. Arthur Henderson: On a point of Order. May I draw your attention, Mr. Speaker, to the fact that the lady referred to in the question is described as a German Jewess. Is it not undesirable to refer to the religion of an individual when it may have the effect of creating racial prejudice?
  Mr. Speaker: The hon. Member is quite right. I think it is undesirable.

  EDUCATION.

    NATIONAL FITNESS COUNCIL (GRANTS TO UNIVERSITIES).
    Mr. Rostron Duckworthasked the Parliamentary Secretary to the Board of Education what are the conditions under which the sum of £200,000 has recently been granted to the universities by the National Fitness Council?
    The Parliamentary Secretary to the Board of Education (Mr. Kenneth Lindsay): The grants offered to university institutions by the University Grants Committee, on behalf of the National Fitness Council, are grants in aid, the institution meeting the remainder of the capital charges as well as the charges of future maintenance involved by each scheme. Three considerations throughout have been the provision of skilled instruction by properly qualified staff; the provision of such arrangements for medical inspection as may be appropriate; and the desirability of the appointment at each institution of a University committee (with student representation) composed of those particularly interested.

    ELEMENTARY EDUCATION (COST).
    Mr. H. G. Williamsasked the Parliamentary Secretary to the Board of Education whether he is aware that the average number of children in attendance at the public elementary schools this year is expected to be 608,000 less than in 1932–33, and that the estimated expenditure of the local education authorities is expected to be £11,374,000 higher, though the salaries of teachers have risen only by £5,074,000; and whether he can furnish any explanation for the increase of £6,300,000 in the other costs of elementary education?
    Mr. Lindsay: The increase to which my hon. Friend refers is primarily due to the programme of educational reorganisation and development consequent upon the adoption by the Government of the policy contained in the Hadow Report, and to the necessary preparations for the raising of the school-leaving age in 1939. Other contributory factors are the increased cost of special services which provide for the health of the school child, the expenditure necessary to replace black list schools, and the provision of new accommodation necessitated by the shifting of population in recent years. I must also remind my hon. Friend that in 1932–33 the economy measures necessitated by the crisis of 1931 were in full operation, and the expenditure of local education authorities was in most cases cut down to the minimum compatible with efficiency..
    Mr. Williams: How long can we go on increasing the burden of local and national expenditure in this way, providing for an ever-diminishing number of children?
    Mr. Lindsay: My hon. Friend does not seem to appreciate that there is a very big change going on in the schools, to meet a public demand, and our concern is to meet this as economically as possible. Let me give an example. The average height of school children in Sheffield has increased since 1920 by 3¼ inches, and the average weight by 13¼ lbs.
    Mr. Williams: Does my hon. Friend suggest that the general change in the average height and weight of the population, which is found in all classes, irrespective of the type of school to which they go, is due to the present extravagance of his Department?
    Mr. Lindsay: I was simply concerned to show that one of the bigger items of our expenditure is the increased cost of special services; and I gave a practical example.
    Mr. J. Griffiths: Can the Parliamentary Secretary give the comparable increase in the cost of education, for the same period, of rich children in public schools?
    Sir Gifford Fox: Is my hon. Friend aware that some of these children, when they come to enlist, are found to be actually illiterate?
    Mr. Lindsay: I think I know the single case to which my hon. Friend is referring. I am trying to trace it back to the school.

    LIVERPOOL.
    Mr. Loganasked the Parliamentary Secretary to the Board of Education whether he will send a copy of the letter E. 91, G (6), page 7, dated 6th May, from the Board of Education on Liverpool's schools problem, to the Town Clerk of Liverpool, so as to make known at once to members of the Liverpool City Council the contents of that letter?
    Mr. Lindsay: The letter to which the hon. Member refers was addressed to the Town Clerk, as being the chief executive officer of the local education authority.
    Mr. Logan: In view of the importance of that letter will the hon. Gentleman ask the Town Clerk to disseminate that news to the council? I understand that it has gone to the education committee; I want it to go to the council.
    Mr. Lindsay: I think that is a separate question; but I understand that it has been done.

    ELEMENTARY SCHOOLS (ACCOMMODATION).
    Lieut.-Colonel Wickhamasked the Parliamentary Secretary to the Board of Education what is the total accommodation in public elementary schools, council and voluntary, administered by the Somerset County Education Committee; and what was the average attendance for the year ended 31st March, 1937?
    Mr. Lindsay: As the answer contains a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
    Following is the answer:
    The accommodation of many public elementary schools has not been reassessed for many years, and does not represent their effective accommodation on modern standards. Subject to that important qualification, the present recognised accommodation of the public elementary schools in the administrative county of Somerset is as follow:

    Council Schools

    27,207

    Voluntary Schools

    39,344

    Total

    66,551

    The average attendance for the year ended 31st March, 1937, was:

    Council Schools

    14,699

    Voluntary Schools

    19,944

    Total

    34,643

    Mr. Morganasked the Parliamentary Secretary to the Board of Education whether his attention has been drawn to the shortage of public elementary school accommodation in Harrow; and what steps are being taken to make good the shortage?
    Mr. Lindsay: My Noble Friend is aware that, owing to the rapid housing development in Harrow, the local education authority have found it difficult to keep pace with the increase in the numbers of children, an increase of about 1,500 per annum over the last seven years, requiring elementary school accommodation. I will, with my hon. Friend's permission, circulate in the OFFICIAL REPORT a statement setting out the present position.
    Following is the statement:
    From September, 1930, to April, 1938, the numbers on the rolls of the elementary schools in Harrow increased from 6,6o6 to 18,713, the average annual increase being about 1,500. During the seven years preceding November last, additional school accommodation in permanent buildings amounting to 7,326 places has been provided, and during the last seven months eight new departments with accommodation for 3,198 children have been opened. At the present time there are in the district 16,794 school places in permanent buildings, 2,222 places in huts specially erected for the purpose, and 800 places under temporary arrangements in church halls and similar buildings, a total of 19,816 places for a roll of 18,713 children. A new school for 850 children will be opened after the summer holidays; two others for 1,460 children will be opened within a year. Plans for a further 1,642 places are under consideration and an additional five sites have been acquired for which building plans have not yet been drawn.

    PHYSICAL TRAINING (TEACHERS).
    Sir Ernest Graham-Littleasked the Parliamentary Secretary to the Board of Education whether, in view of the greater importance which is now being attached
    1390
    to physical education in schools and the widely-experienced difficulty of securing adequately-trained instructors, partly because of the inadequate remuneration offered, he will press the Burnham Committee to review, at the earliest opportunity, the low-salary scales which are now paid to teachers of physical training, notwithstanding the fact that the course for the diploma of qualification in that subject is at least equivalent to the course for a degree?
    Mr. Lindsay: I assume that my hon. Friend refers to women teachers of physical education in secondary schools or technical institutions. It is open to those acting on behalf of the teachers affected to approach the Burnham Committee through the proper channels, but my hon. Friend will know that it would be inconsistent with present arrangements for my Noble Friend to bring pressure to bear, either directly or by implication, upon this body.
    Sir E. Graham-Little: Is my hon. Friend aware that diplomas in similar courses have been accepted, and does he not accept the diploma for physical training?
    Mr. Lindsay: I think the Question and Answer will show the position.

    VOLUNTARY SENIOR SCHOOLS, SURREY.
    Sir Percy Harrisasked the Parliamentary Secretary to the Board of Education whether his attention has been called to the report of the Surrey local education authority of 7th December, 1937, that, where proposals to erect new voluntary central schools were made, time was the essence of every scheme in order to have schools ready for the appointed day; whether he is aware that early in January, 1938, the Surrey diocesan officials announced that they would put forward schemes in 12 areas which they found possible and desirable, but that at present no agreement has been made for any one of these and no building in these 12 areas has been begun; and whether he will now take suitable action to assist the local education authority in their efforts to provide the necessary school accommodation?
    Mr. Lindsay: My Noble Friend is not aware of any projects for the provision of new voluntary senior schools in Surrey except those which have reached his De-

    1391
    partment. These have been, and will continue to be, dealt with as quickly as the procedure prescribed by Section 18 of the Education Act, 1921, permits. If and when it becomes clear that any of them will not materialise, the hon. Member may be assured that the Board will do their best to facilitate the provision of any necessary school accommodation by the local education authority. He will not, of course, overlook the provisions of Subsection (2) of Section 8 of the Act of 1936.

    HOUSING (STATISTICS).
    Mr. Barrasked the Minister of Health the total number of houses, as for England and Wales, completed with State assistance from 1919 up to 31st March, 1938, or the last available date, and the total amount of State subsidy paid in respect thereof?
    The Minister of Health (Mr. Elliot): The aggregate number of houses is 1,404,576. The total amount of State subsidy paid in respect of the houses from 1919 up to 31st March, 1938, was £193,304,622. As the answer to the remainder of the question includes a number of figure, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
    Following is the answer:
    The total number of houses completed by private enterprise in England and Wales with State assistance from 1919 up to 31st March, 1938, was 426,276. From 1919 up to 31st March, 1936, local housing authorities in England and Wales completed 829,851 houses with State assistance, and during the two years ended 31st March, 1938, they completed a further 148,449 houses. A small proportion of these houses did not specifically attract subsidy, but owing to the pooling arrangements brought about by the Housing Act, 1935, all houses now provided by a local housing authority share in any State assistance given to that authority in respect of their houses.

    LOCAL AUTHORITES' EMPLOYES (SUPERANNUATION CONTRIBUTIONS).
    Mr. Leachasked the Minister of Health whether he will consider introduce-
    1392
    ing legislation to abolish the power of local authorities to confiscate the superannuation contributions of employes who are dismissed for alleged misdemeanours, even though no charges are brought in court against them?
    Mr. Elliot: As the matter has so recently been decided by Parliament I am afraid it is not possible to comply with the hon. Member's suggestion.
    Mr. Leach: Can the right hon. Gentleman say how confiscation of superannuation contributions in circumstances as set forth in my question can possibly be defended?
    Mr. Elliot: This matter was reviewed by Parliament when the Local Government Superannuation Act was passed in 1937.

  PUBLIC HEALTH.

    BURNING PIT-HEAPS.
    Mr. Tinkerasked the Minister of Health whether he is aware that the health committee of the Manchester City Council have decided to get powers to experiment with a smokeless zone in one part of the city, as they are of opinion it will be beneficial to the health of the people; and will he consider giving powers to local authorities to control burning pit-heaps by establishing smokeless zones in the same way?
    Mr. Elliot: I am aware that the Manchester Public Health Committee have had this matter under review, but I have not been informed of the specific proposals in contemplation or the powers which they may think it necessary to seek. As regards the second part of the question, arrangements have been made for my alkali inspectors, in conjunction with the inspectors of the Mines Department, to visit the burning pit-heaps and to explore the practicability of abatement and prevention. It is doubtful whether legislation would facilitate the solution of this problem.
    Mr. Tinker: Should the local authorities desire this legislation, would the right hon. Gentleman give consideration to it?
    Mr. Elliot: I am afraid that that is a hypothetical question.

    WATER SUPPLY.
    Mr. Chorltonasked the Minister of Health the progress made by the special committee appointed to investigate the water position in this country as to the amount, relative quantity in each area, and facilities of supply; and whether he will give a table of districts in which no public supply is available?
    Mr. Elliot: I would refer my hon. Friend to the Year Book of the Inland Water Survey Committee published on the 11th of this month. As regards the second part of the question, no public water supply is available in one borough, and 11 rural districts. With permission, I will circulate the list in the OFFICIAL REPORT.
    Mr. Henderson Stewart: Will my right hon. Friend bear in mind that in many districts in Scotland there is almost a complete shortage of water with disastrous results to the prospects of housing?
    Mr. De la Bére: Is my right hon. Friend aware that in Evesham water is turned off at 10.30 at night?
    Following is the list:

    *The Borough of Eye.

    The Rural Districts of

    Broadwoodwidger.

    Holsworthy.

    Knighton.

    Launceston.

    Lodden.

    *Mitford and Launditch.

    Newton and Llandiloes.

    Painscastle.

    *Smallburgh.

    Swaffham.

    *Twrcelyn.

    * The local authorities for these areas have submitted applications for loan sanction for schemes of public supply.

    MILK (PASTEURISATION).
    Mr. Rostron Duckworthasked the Minister of Health whether any conversations have yet taken place with representatives of local authorities with regard to the suggested legislation under which they are to have power to decide whether or not there shall be compulsory pasteurisation of milk sold in the area under their control; and, if not, whether he proposes to have such consultations?
    Mr. Elliot: Yes, Sir. My Department and that of my right hon. Friend the
    1394
    Minister of Agriculture and Fisheries are in consultation with representatives of the associations of local authorities concerned.

    SMALL-POX.
    Mr. Leachasked the Minister of Health how many cases of small-pox, and how many deaths from that disease were registered in England and Wales in 1937?
    Mr. Elliot: Four cases of small-pox were notified in England and Wales in 1937. No deaths from this disease were registered during that year.
    Mr. Leach: Now that the work of the right hon. Gentleman's Department, in partnership with that of the local authorities, has abolished the dangers of smallpox practically, will he not also consider abolishing the vaccination laws?

    MENTAL DISEASE (INSULIN TREATMENT).
    Mr. Richardsasked the Minister of Health to what extent is insulin treatment of certain types of mental disease on the lines so successfully pursued by Dr. Manfred Sakel, of Vienna, employed in the public mental hospitals of this country?
    Mr. Elliot: As stated in reply to a recent question on this subject, insulin treatment is being applied in some 12 public mental hospitals in this country.
    Mr. Richards: Can the Minister say what is the cost of this treatment, and whether it is prohibitive at the moment in this country?
    Mr. Elliot: I cannot say without notice, but if the hon. Gentleman will put down a question, I will try to get the information.

  RATES AND DEBT CHARGES,CARDIFF.
  Mr. Hopkinasked the Minister of Health what were the total rates levied in the city of Cardiff in the years 1914 and 1937, respectively, and the debt charges for each of those years?
  Mr. Elliot: As the answer contains a number of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
  Mr. Hopkin: Is it possible for the Minister to say how much the debt charges were in 1937, and whether it is proposed to ask Lord Bute to pay these charges?
  Mr. Elliot: In 1937 they were £714,218, and that figure includes £507,948 in respect of trading undertakings and housing which are to a large extent productive services.
  Mr. James Griffiths: In view of what has recently happened in Cardiff, where a portion of land which years ago was a swamp has now been sold for untold millions, will the right hon. Gentleman consider this method of raising funds for local purposes?
  Following is the answer:
  In the City of Cardiff the total rates in the £ levied in the years ended 31st March, 1914, and 31st March, 1937, were 7s. 10d. and 12S. 1d. respectively, and the debt charges payable by the city council were for the former year £286,888 and for the latter year £714,218. The first mentioned figure included £137,023 and the last mentioned figure £507,948 in respect of trading undertakings and housing which are to a large extent productive services.

  PUBLIC ASSISTANCE (OUT-RELIEF STATISTICS).
  Mr. Davidsonasked the Minister of Health the total amount expended in out-relief in money and kind in Great Britain for the years ended January, 1930, and 1938, respectively?
  Mr. Elliot: The total amount expended during the year ended January, 1930, was £12,778,042. The corresponding figure for the year ended January, 1938, was £17,198,276. As regards Scotland, I would refer the hon. Member to my right hon. Friend the Secretary of State.
  Mr. Davidson: In view of the fact that the right hon. Gentleman is now established as Minister of Health, can he indicate what special steps he is taking to clear up this £7,000,000 of increase in Poor Law relief in this country in that period, while, at the same time, we have had an increase in unemployment?
  Mr. Elliot: That does not arise out of the question. It is too difficult to discuss the matter by question and answer, and the hon. Member's arithmetic is nearly £2,000,000 out.
  Mr. Davidson: Can the Minister indicate what steps —
  Mr. Speakerrose —

  HERRING INDUSTRY (ZETLAND).
  Major Neven Spence (by Private Notice)asked the Secretary of State for Scotland why the Herring Industry Board has fixed 14th June instead of 7th June as the starting date for herring fishing in Zetland in opposition to the wishes of the fishermen, curers and the German importers.
  The Secretary of State for Scotland (Mr. Colville): I am informed that the Herring Industry Board have fixed 14th June as the starting date for curing herring in Zetland. They have not, however, I understand, placed any restriction on fishing. I understand that an earlier date, for starting curing is desired by the local fishermen and curers, but that that desire is not shared by the industry in general in this country, or by the majority of the importers concerned. The fixing or curing dates is a matter within the jurisdiction of the Herring Industry Board, who reached the decision as to a commencing date after consideration of all the interests affected, and I am unable to interfere with their discretion.

  CZECHOSLOVAKIA.
  Mr. Noel-Baker (by Private Notice)asked the Prime Minister whether His Majesty's Government will propose the immediate despatch of an imparital international commission to the frontier between Germany and Czechoslovakia to investigate the alleged violations of the frontier and other incidents which may arise.
  The Under-Secretary of State for Foreign Affairs (Mr. Butler): The hon. Member's suggestion is one which His Majesty's Government will bear in mind should it appear likely to be helpful.
  Mr. Noel-Baker: Will His Majesty's Government bear in mind that in previous similar cases, when there was a danger of war, experience has shown that the presence of such an impartial commission has been a guarantee of peace for all concerned?
  Mr. Davidson: Is it possible for the Prime Minister to appoint an impartial commission?

BUSINESS OF THE HOUSE.
Mr. Attlee: May I ask the Prime Minister to state the business for next week?
The Prime Minister (Mr. Chamberlain): Monday.—Second Reading of the Imperial Telegraphs Bill, and Committee stage of the necessary Money Resolution; Second Reading of the Mental Deficiency Bill; consideration of Lords' Amendments to the Sea Fish Industry Bill.
Tuesday.—Conclusion of the Committee stage and Third Reading of the Air Navigation Bill; Committee stage of the Herring Industry Bill.
Wednesday.—Supply; Committee (8th Allotted Day). The Air-Raid Precautionary Services Vote will be considered.
Thursday.—Second Reading of the Essential Commodities Reserves Bill, and Committee stage of the necessary Money Resolution.
Friday.—The House will adjourn for the Whitsuntide Recess and meet again on Tuesday, 14th June.
It is hoped that there will be an opportunity to take the outstanding Import Duties Orders, including those relating to Pig Iron, either on Monday or on Tuesday.
On any day. if time permits other Orders may be taken.
After the Second Reading of the Finance Bill to-day, we propose to take the Report stage of the Herring Industry Money Resolution.
Mr. Attlee: Can the right hon. Gentleman say when the Essential Commodities Reserves Bill will be available?
The Prime Minister: To-day.
Mr. H. G. Williams: Can my right hon. Friend say whether it is anticipated that the Road Haulage Wages Bill will be concluded on Friday, and, if not, whether it is intended to carry it over until after Whitsuntide?
The Prime Minister: I cannot definitely say, but we hope to get it To-morrow.
Sir Irving Albery: When is it hoped to take the Committee stage of the Finance Bill?
The Prime Minister: We shall give notice in good time, but at the moment I cannot say.

BILL PRESENTED.
  ESSENTIAL COMMODITIES RESERVES BILL,
  " to enable the Board of Trade to obtain information as to commodities which in the opinion of the Board would be essential for the vital needs of the community in the event of war and to make provision for the maintenance of reserves of such commodities; and for purposes connected with the matters aforesaid," presented by Mr. Stanley; supported by the Chancellor of the Exchequer, Sir Thomas Inskip, Mr. Colville, Mr. W. S. Morrison, and Mr. Cross; to be read a Second time upon Monday next, and to be printed. [Bill 163.]

  MESSAGE FROM THE LORDS.
  That they have agreed>to:
  Aldridge Urban District Council Bill,
  London Midland and Scottish Railway Bill, with Amendments.
  Amendments to—
  Patents, & c. (International Conventions) Bill [Lords], without Amendment.
  That they have passed a Bill, intituled, "An Act to empower the Mayor Aldermen and Burgesses of the borough of Warrington to construct waterworks; to make further provision with regard to their water undertaking; and for other purposes." [Warrington Corporation Water Bill [Lords.]

  WARRINGTON CORPORATION WATER BILL [Lords].
  Read the First time; and referred to the Examiners of Petitions for Private Bills.
BILLS REPORTED.

  MANCHESTER CORPORATION BILL [Lords].
  Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.
  LONDON COUNTY COUNCIL (GENERAL POWERS) BILL [Lords].
  Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.

  MANCHESTER CORPORATION BILL [Lords].

    COWES URBAN DISTRICT COUNCIL BILL.
    Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).
    Bill, as amended, and Report to lie upon the Table; Report to be printed.

    SEA FISH INDUSTRY BILL.
    Lords Amendments to be considered upon Monday next, and to be printed. [Bill 165.]

    KITCHEN AND REFRESHMENT ROOMS (HOUSE OF COMMONS).
    Special Report from the Select Committee brought up, and read.
    Special Report to lie upon the Table, and to be printed.

ORDERS OF THE DAY.

  FINANCE BILL.
  Order for Second Reading read.
  Motion made, and Question proposed, "That the Bill be now read a Second time."
  3.50 p.m.
  Mr. A. V. Alexander: I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof:
  " this House regards with concern the continuing policy of unbalanced Budgets, and cannot assent to the Second Reading of a Bill which, while permitting excessive profits on rearmament and subsidies to private industry to make increasing inroads on the public purse, penalises road transport and adds to the already heavy burdens of people of small means, instead of raising the necessary revenue from the taxation of great wealth."
  We, as a House of Commons, have had a few weeks since the introduction of the Budget by the Chancellor of the Exchequer to consider in somewhat more detail the financial position with which the nation is faced, and I am bound to say that the more time one has for reflection upon that position, the more serious the outlook appears to us to be. We are faced in Europe to-day with a very serious position. We speak almost daily of international crises, and one cannot possibly separate the difficult international position from the problem of finance which the country has to face. It is hardly more than rough justice that the present Chancellor of the Exchequer should find himself compelled to bear the burden in the House of Commons of responsibility for the Government's proposals for the finance requisite at the present time, because he had so much responsibility for the foreign policy in the last six years which has contributed to the difficult situation which we have to meet.
  The financial crisis on which I desire to speak to-day-it is certainly a financial crisis that the nation is called upon to face-is in' large degree subject to two main causes. It is very largely due to the special contribution which His Majesty's Government call upon the country to make for armaments and, secondly, it is due in no small degree to the fact that ever since the National Government have been in office-even during
  1426
  the years when the present Prime Minister was Chancellor of the Exchequer—they have failed, in spite of the original purpose of their election in 1931, to deal with the finances of the nation on the basis of balanced Budgets. We make the first and the primary point in our Amendment the serious position which is created by this continuing series of un balanced Budgets, and at the outset this afternoon I wish to examine briefly the situation which has been created in that respect.
  In 1931, when the Labour Government went out of office, there was a total dead weight of National Debt of rather more than £7,400,000,000. To-day, before we begin to speak of the borrowing which will come in the present financial year, if I read the figures aright, the national dead weight debt stands at over £8,000,000,000 —£8,026,000,000. We have, therefore, over £600,000,000 increase in the dead weight debt. One of the answers that is made from the Government Bench is that we must not overlook the fact that the figures in the dead weight debt include the extent to which public credit has been used for financing the Exchange Equalisation Fund. I do not think the House as a whole is very happy about the position of the Exchange Equalisation Fund. It is true that we are indebted to the Chancellor of the Exchequer for having met a promise to submit certain information, which I gather is rather old, to the Public Accounts Committee, but the House itself has no real information as to what the ultimate position is likely to be in respect of the £550,000,000 which has been met from public credit in order to manipulate our position in relation to the pressure which arises from time to time from different international sources in regard to our exchange. The fact that we have to face is that we have not been able to provide for that work out of revenue. We have had to add to the National Debt the figures required for that purpose. We are, therefore, faced to-day with an increase in the National Debt already of over £600,000,000.
  The Chancellor of the Exchequer has been quite frank and honest about the present Budget, and that is one of the few things on which I can be complimentary to him. He admits that the Budget is not balanced, that even before the special steps were forshadowed by the

  1427
  Prime Minister, arising out of the annexation of Austria by Germany, we had projected borrowing £90,000,000 in the current financial year for armaments, which we could not meet out of revenue, and we have to face, in addition, the cost of Supplementary Estimates for the increased effort, the provision of funds for air-raid precautions and to meet any necessary charge which may arise during the financial year in regard to food storage. It seems clear to me, therefore, that the sum to be borrowed will not be £90,000,000, but is much more likely to be £115,000,000, and may reach £120,000,000. Therefore, at the end of the current financial year, on 31st March, 1939, it seems to me that the total dead weight debt will already have reached a figure of round about £8,150,000,000.
  The total cost of the armament programme was originally estimated at £1,500,000,000, but almost every authority who has examined the proposals of the Government admits that the cost will be much nearer £2,000,000,000. We have to contemplate borrowing another £300,000,000 or £400,000,000 in the course of that programme. That means that, even as we hope may be the case, if the international situation may become so auspicious that we can rest upon our armaments provision, we shall have a total dead weight debt of something like £8,500,000,000 to £8,600,000,000. That is an extraordinary position for the country to have to face at the end of eight or nine years of a National Government, which claims to be national because it is said to represent all parties—a Government which was brought in for the specific purpose of restoring financial confidence and financial stability and the return, as was said in 1931, to ways of orthodox finance. When I consider the relationship of the picture we have to face today with what were the circumstances in 1931, then I say that the financial crisis we have to face to-day is far worse in proportion and far more difficult and serious in its nature, because of the way in which revenue resources have already been tapped by the Government, than was the position in 1931. It is to that situation that we want the House of Commons to address its mind to-day.
  Let me examine the position for a moment. I have said that in 1931 our total deadweight debt on national account
  1428
  was just over £7,400,000, but in regard to revenue resources to be tapped to meet the demands at that time let us consider the situation in relation to what it is today. The Government come before us with a Budget which has raised Income Tax from 4s. 6d. to 5s. 6d. in the £. In addition, it has added to the burden of Income Tax the National Defence Contribution of Is. in the £ on practically all industrial and commercial profits. It is therefore, over a wide field of the ordinary Income Tax revenue producing resources, a tax of 6s. 6d. in the £. But in addition, following the fiscal policy for which it had no real mandate in 1931 but which it has steadfastly pursued, it is raising from the general taxpayer, from the consuming public, something like £110,000,000 a year more in taxation of commodities than was raised from that source in 1931. It is doing that in spite of the fact that in the interim it has had the good fortune to convert £2,000,000,000 of War Loan stock at an annual saving of £30,000,000, every penny of which apparently for the last five and a-half years has been liquidated in current expenditure.
  Let me add something else. I come back to a point which was the subject of a little exchange of views between the Chancellor and myself at the end of his wind-up speech on the Budget Resolutions. When the Labour Cabinet met in the time of the so-called crisis of 1931 it was presented by the Treasury with a Bill which the Treasury said the nation had to meet.
  The Chancellor of the Exchequer (Sir John Simon): I suppose it was presented by the Chancellor of the Exchequer.
  Mr. Alexander: I said the Treasury, but I suppose that the Chancellor spoke for them. I do not suppose that the present Chancellor, after his long association and intimate connection with the Treasury, finds it unnecessary to be advised by the very able staff of Treasury officials. In 1931 the Cabinet were presented with a Bill of £170,000,000, and included in that Bill of extra money to be raised in the following financial year were two items, £56,000,000 for the continuance of what we had always met, the annual contribution to the sinking fund for reduction of debt, and £39,000,000 for payment to the United States of America as a proper annual provision.

  1429
  So, of the £170,000,000, £95,000,000 was for the reduction either of the internal or external debt. Apart from meeting the contribution in the first following financial year, 1932–1933, to the United States of America, not one penny piece of those two commitments presented to the Labour Government in 1931 has ever been met by the present Government; and every year there has been this continuance of heavy expenditure. The Government have made no provision for the reduction of debt, and to-day, within a few months of the time when Ministers were talking about prosperity and boom, they are adding day by day, indeed hour by hour, to the deadweight debt that the country has to shoulder.
  I am making the statement as undeniable, that behind the facade of complacent, pharisaical humbug on the part of the Government, the real financial figures in relation to the British Exchequer to-day reveal a state of financial crisis beyond all doubt much more serious and much more devastating in the burdens that the country is being asked to meet, than was the case in 1931. [Interruption.] I heard a word or two, a noise or two from the benches opposite, as though that statement did not meet with unanimity. I make the statement not only with regard to the vast amount of expenditure the Government are asking the country to meet, not only with regard to the increasing burden of debt and unbalanced Budgets, but I state the fact that that is not all, for it is in spite of the Government having enormously increased existing taxation both upon the direct and indirect taxpayers; and I challenge the Chancellor to deny either of those main propositions.
  Apart from a purely verbal statement that they alone are the people who ought to have confidence placed in them, there they stand holding the reins of office, a dying Cabinet. [Laughter.] I notice that there is a little hilarity about that statement, too. When I look at the arrangements made in the last week or two for a reshuffle of the gentlemen who occupy the Government positions, and I find that the two latest additions of added strength, of new life and blood to this super-Cabinet, are the Noble Lord who sits for the Fylde Division of Lancaster (Lord Stanley) and the right hon. Gentleman who is now the Secretary of State for
  1430
  Scotland, both representatives in this House of the most popular and pleasant type of parliamentary colleague, but neither of them calculated to be, either in the mind of the House or in the opinion of the country, added bulwarks of strength to British statesmanship, and when I consider the manner in which this Cabinet has been deteriorating year after year and now month after month, and how they appear to be completely bankrupt of any real live reinforcement from their back benchers, I do not think it calls for dispute when I suggest that the Cabinet is a dying Cabinet, old, weak, feeble, but holding on to office when it ought to get out and let the country begin to deal on a new and rational basis with the greatest financial problem that it has ever yet been faced with in peacetime, far greater and more serious than was the position in 1931.
  I want to add one or two further comments about the present position in relation to the Chancellor's general proposals. In our Amendment we refer to the policy of the Government permitting excessive profits on rearmament and subsidies to private industry. We have had numerous debates in which in some form or other this question of armament profits has come up, but in dealing with the proposals of the Chancellor to meet the financial position it is essential that we should show that before the country is called upon to bear this increasingly heavy burden and at the same time to increase its national indebtedness, the country has a right to demand of the Government that even if every part of the rearmament programme should be found to be necessary, at least it should be provided in the most efficient and economical manner possible. We have warned the Government in the last two years that unless they have some really effective and rational system for dealing with the control of armament supplies, excessive profits at the expense of the nation would be certain to arise. We have already arrived at a situation which enables us not only to check the statement but to give the facts. I hope the House will pardon me if I give the names of a few firms' individual rises in profits. Take the well-known firm of Messrs. Baldwin's, Limited. I see that their net profit in 1933 was £142,000; in 1937 it was £521,000. The Consett Iron Company

  1431
  made a profit in 1934 of £91,000; in 1937 the figure was £636,000.
  Mr. Boothby: Under the National Government.
  Mr. Alexander: My answer at once is that I am glad the hon. Member reinforces my argument. I am charging the Government with the responsibility for such an utter lack of efficient control over armament expenditure that profits are rising to undue heights.
  Mr. Peat: Let us make the position clearer. Will the right hon. Gentleman tell us the capital investments of the companies to which he is assigning these profits?
  Mr. Alexander: I am giving quite clearly the figures of the net profits. I am not arguing about the remuneration upon the capital employed. If you take, as an example, a rise from £142,000 of net profits to £521,000 in the course of two or three years, it is an extraordinary rise.
  Mr. Peatrose —
  Mr. Alexander: I really cannot keep on giving way. I want to give the information that I have at my disposal.
  Mr. Boothby: Does the right hon. Gentleman say that all these profits have come out of rearmament?
  Mr. Alexander: They are very largely influenced by rearmament. I come next to Messrs. Dorman Long, whose net profit in 1934 was £38,000, and in 1937 had risen to £1,013,000. Here are some more figures: Lancashire Steel Corporation, 1933 profits, £96,000; 1937, £628,000. Tube Investments, 1933, £224,000; 1937, £825,000. Vickers-Armstrong, 1933, £188,000; 1937, £867,000. Vickers, Limited, 1933, £543,000; 1937, £1,351,000. I could go on and quote a large number of other typical steel firms dealing particularly with the raw material of armaments.
  I want to come to another aspect of the armament industry. I come to the air side, and I am all the more insistent in pressing home the responsibilities of the Government in this matter—if no other Minister will do it, then the Chancellor of the Exchequer should do it in the interests of national economy—because of the
  1432
  almost insulting way in which the Secretary of State for Air treated the House last night in his complacent reply to the Debate, in which he practically disdained to answer many of the questions put to him. I take the Bristol Aeroplanes, Limited. In 1935–36 they paid a net ordinary dividend, not of 5 per cent., but of 22½ per cent. I am not going to admit for a moment that in a time of national emergency, when the country is called upon to pay as it is now, there is any justification for the payment of dividends at the rate of 22½ per cent. on capital in respect of armament provisions, and I do not believe that the Chancellor of the Exchequer himself will justify it. I take the accounts of the de Havilland Aircraft, Limited. In 1933 the profits were £63,000; in 1937, £213,000. I take Fairey Aviation, Limited. In 1934, the profits were £47,000; in 1937, £248,000. In the case of Handley Page, the net profits in 1933 were £20,000; in 1936, £100,000—an ordinary dividend of 50 per cent. Is there any justification for the payment of dividends at the rate of 50 per cent. owing to the boom in the armaments industry?
  When the Chancellor of the Exchequer says that every worker in the country, or a large number of workers are proud to bear their share in the payment of the Tea Duty towards the armaments programme, we are entitled to draw attention to these cases and to urge that if the Government have not the good sense to see what they are doing and get out now, they should reform their ways and exercise some more effective financial control over this post-war repetition of profiteering at the expense of the nation, which was so rife and so disastrous during almost the whole period of the Great War from 1914 to 1918. It is a pretty comment upon the patriotism of the people who support this kind of thing to remember the answer which was made to me by the present Prime Minister some 15 months ago in debate, in which he asked me how I thought armaments were ever going to be provided for the country in its emergency unless profits were allowed. If that is the case, let me tell the Government that if they will get out and give us a Labour majority we will show how to get armaments without this kind of profit.
  Colonel Sandeman Allen: There has been an increase in wages.
  Mr. Alexander: I went to a by-election in Stafford the other day and the first meeting I addressed was in a small mining village. Some of the men employed in the pit talked to me about their wages. I asked one man what his conditions were, and he said "A six-day week with five days of nine hours each, and my pay docket is 39s. 3d." That is the marvellous effect of a National Government. These are the people who, the Chancellor of the Exchequer says, are proud to pay 2d. on every four ounces of tea which they consume in order to back up the lack of control of profiteering by the Government. [Interruption.] Hon. Members opposite, and also the Chancellor of the Exchequer, do not seem to understand the increase which is proposed on the Tea Duty. As a matter of fact the Chancellor of the Exchequer knows as well as anyone that the tax on foreign tea is 8d., and he also knows that although a substantial proportion of the tea comes from the Empire and is taxed at a rate of 6d. yet, in the long run, the consumer pays nearer 8d. than 6d. I have heard him argue that case many times when he was in a situation different from that which he occupies now, when he was a strong opponent of Imperial Preference and argued that a preference given to Dominions and Colonies was always reflected in the price of the foreign article to the consumer. I am not asking anything unreasonable in urging an increase of effective control of this armament expenditure when you consider its nature.
  The actual armament programme this year will cost 343,000,000, but that is not the end of the story. If you take the £343,000,000 in the fighting Services Estimates, you have to add to that a sum which is not less than £15,000,000 for Supplementary Estimates, and, in addition, the cost of air-raid precautions, food storage, and oil reserves, costing approximately £12,000,000. Therefore, our war preparation for the present year is L370,000,000. Does the House realise that £370,000,000 on war preparation is more than the total yield not only of Income Tax at 5s. 6d. in the £ but also of the National Defence Contribution as well? To raise £370,000,000, Income Tax would have to be 7s. in the £ that is the extent of the provision we have to make in this one Budget for war prepara-
  1434
  tions. Is it unreasonable in such circumstances to ask for greater and more effective control on armament expenditure? We have asked and pressed for a ministry of supply. I go further and say that, instead of having the whole range of shadow factories which are partly vested in private profit-making firms, I would undertake to provide whatever is required of an emergency character on behalf of the nation with no profits except the service of the Government capital employed. It can, and it should be done in the interests of the nation.
  I come to another matter to which the Chancellor of the Exchequer as Minister in a new office should give his attention. He is bound to face the problem of Budgets for some time to come of nearly £1,000,000,000, and I want him, therefore, to give his attention to the subsidy policy of the Government and to go into the question of the actual amount of the subsidies which are now a charge on the public purse. There is one subsidy which is of such long standing that people have begun to forget all about it. I refer to the derating subsidy. It is true that in the case of some of the heavy major industries, especially those of an exporting type, they would be in a difficult position if they had to meet to-day the full burden of local rates, but, as I pointed out during the course of the financial discussions in 1931, there are large numbers of very heavy profit-making firms in the country who are receiving part of this public bounty to-day, the only result of which is to increase the distribution on shares. I have referred previously to the fact that one large firm issued a balance sheet showing a dividend of 85 per cent., and that it was also distributing Li for every four 5s. shares held, and that it was getting this subsidy from public funds under derating.
  The Chancellor of the Exchequer and his successors who will have to grapple with this awful burden of financial responsibility are bound to look at these things unless the whole standard of life of the mass of the nation is, in the words of the Prime Minister, to be steadily lowered for a generation to come. It is not that we are arguing that necessarily every single subsidy which the State has been called upon to bear can be removed, but that now there is such a heavy drain on the public purse

  1435
  they should be reviewed, and that where subsidies are continued two conditions of great importance should be attached—first, that where you give a subsidy there should be guaranteed proper remuneration to the workers, and, secondly, that you should acquire a national interest in the industry which is subsidised. Both these points should be taken into the earnest and serious consideration of the Chancellor of the Exchequer.
  Now I come to the question of the inequitable distribution of the burdens which previous Budgets and the present Budget make in meeting the financial position. In the present Budget there are two outstanding proposals. One is the increase in the Petrol Duty and the other the increase in the tax upon tea. Both of them are symptomatic of the way in which the National Government have been moving the burden from the shoulders of the wealthy to the backs of the poor.
  Mr. Boothby: There has been an increase in Income Tax.
  Mr. Alexander: If the hon. Member had been listening carefully he will know that I have already referred to the increase in the Income Tax, and he need not be anxious, because I propose to refer to the wealth which can yet be taken from the wealthy before I sit down. But the burden to-day upon the poor is altogether out of proportion to that which they are able to bear. Take, for example, the kind of weekly wage to which I have already referred. Let hon. Members consider the family of a miner in that position. At the present time, there is not an article of their food, except bacon, which is not taxed directly, and even bacon is kept at an artificial price by other extra-fiscal methods. The right hon. Gentleman the Chancellor of the Exchequer was once a member of a party which always resisted to the last taxation on food, and now he is Chancellor in an administration which raises taxation on food. In the last financial year, the Government obtained roughly £40,000,000 from taxes on food, and with the addition of the Tea Duty —and we consider tea as a food, for it is a food to the working classes—an amount of £42,750,000 will be obtained from taxes on food alone. In the case of the Petrol Duty, do not for one moment
  1436
  think that that will be felt only be certain captains of industry and wealthy people who use motor cars. When one considers the extent to which the road transport industry enters into the national life nowadays in transporting essential goods, including food commodities, the additional burden that is placed upon that industry by the Petrol Duty is bound ultimately to have its influence on the poorer consumers. We say that these inequalities are not justifiable as long as there remain avenues of wealth in this country which can be taxed for the purpose of meeting the burdens which the country has to face.
  Moreover, there are certain proposals in the Bill which effect slight amendments to the tax which caused so much controversy last year, the National Defence Contribution; but I fail to notice in any of those proposals any relief from the burden in the case of societies which do not make profits, but are engaged in mutual trading, nearly all of which are owned and controlled by the heavily-taxed workers themselves. I do not find any indication in the Chancellor's Budget speech or in this Bill that he has done what he told me last year he would do, namely, look into the question of the profits of certain companies which provide public services, which may or may not be public utility companies, but the profits of which, as I quoted last year, are exceedingly heavy, and many of which are exempted altogether from the burden of the National Defence Contribution. As long as companies providing for public services, having public utility conditions and making large profits, are relieved, then it is completely unreasonable to ask the working classes to pay taxation upon their own mutual efforts or to pay increased taxation upon their food. Therefore, I draw attention particularly to the iniquity of these proposals.
  I could say a great deal about the Tea Duty, but as we had a Debate on it in Committee on the Budget Resolutions, and as no doubt we shall have other opportunities, I do not propose to enter into the details to-day, apart from saying that evidence has already accumulated in my own organisation, which is the largest distributor of tea in the world, that the whole tendency since the return to the tax on tea and its gradual increase during the last three or four years has been to

  1437
  concentrate demand in a larger degree upon the cheaper qualities, with a consequent rise in the price in those common qualities, and a stabilisation—and not an upward trend—in the case of the more expensive qualities of tea which are not used by the working classes. If at any time the Chancellor has any doubt about that, and wants to see the figures, I shall be pleased to show them to him. That is all I propose to say on the Tea Duty now.
  I suggest to the House that, with this nation in face of a growing financial crisis in the National Exchequer, the position is still as the party to which I belong has so often said, namely, that wealth is allowed to increase in limited sections of the community while poverty increases among other sections, and that when one comes to the national burden, it is inequitably distributed among those sections. We say that the Chancellor, in dealing with the very complex financial situation which he had to face, had the opportunity of going to other sources to meet the needs of the moment. Much was said in the course of the Debates on the Budget Resolutions about the fact that, for some reason or other, no recourse has been had to new revenue either from Surtax or from Estate Duties. I know it may be argued that any drastic revision of the rate of imposition on the Surtax payer might lead to the operation of the law of diminishing returns, but after reading carefully the various annual reports of the Board of Inland Revenue, I am satisfied that we have by no means exhausted the extent to which the national burden could be met from the Surtax.
  When I look at the record in regard to Estate Duties, I consider that the case of hon. Members on this side is absolutely proved, and that wealth continually increases in face of the continued deepening of the poverty of large sections of the community. I will quote to the House the figures of the yield from Estate Duties. In 1930–31, it was £82,000,000; in 1931–32, £65,000,000 (the fall was largely accounted for by the low market price of shares); in 5932–33, £77,000,000; in 1933–34, £85,000,000; in 1934–35, £81,000,000; in 1935–36, £87,000,000; in 1936–37, £87,000,000; and in 1937–38, a pound or two short of £89.000,000. During the last few years, there has been practically no change in the rates. In
  1438
  other words, the fortunes of a limited section of the community are increasing year by year. As far as I can see, there is no reason why, in dealing with the national financial burden, the Chancellor should not have refrained from overtaxing that section of the community which is so near, and in some cases below, the poverty line, and turned to those sources of wealth, and distributed the burden in a manner which was more equitable and just than has actually been the case.
  Moreover, that is not the only resource to which the Government can turn. As has been mentioned before by some of my hon. Friends, there is perhaps no more able and well-informed student than the Chancellor of the general principles and law relating to the tax on the unearned increment of land values. When one considers what has happened during the last few months in regard to land values, when one considers the extent to which in incident after incident there has been abuse of land values at a time of national necessity, when land is wanted for national emergency purposes, I should have thought that, considering all the years during which the Chancellor ardently advocated the obtaining of wealth from that source, no one would have been as bold as him in making proposals to the House in that respect. I feel that, however inadequately I have painted the picture this afternoon, we are at any rate justified in moving our Amendment. I repeat that the financial crisis which has arisen so largely from the failure of the Government's policy is far greater than the financial crisis in 1931. [Interruption.] I hear something more like a snort than anything else from the other side of the House. I will give a quotation from someone who is not a Labour Member of Parliament and not a Socialist. A book has just been issued entitled "Can 1931 come again?" This is how the situation is summed up in that book by Collin Brooks —
  "Behind the false facade of prosperity made by rearmament activity, Britain's true economic position is desperate. The remedies must be drastic. What is the disease we have to cure? These are its symptoms: (1) A lack of economic and commercial confidence in Britain itself …. (2) A lack of political confidence … (3) A general lack of confidence, felt abroad, in Britain's stability."
  [Interruption.] I am glad that causes amusement to hon. Members opposite.

  1439
  I shall not be upset if their amusement continues, because it will mean that they will continue to lose by-elections. If they remain in that position of complacency when we put such facts before them, they will go on losing by-elections; but, in the interests of the nation, we would rather that the House as a whole would give its attention to the problem that we have to face. We ask the Government to tackle these problems on the basis which we have outlined, or to make way for those who are willing to tackle them on a sound and rational basis. We ask them in the first place to apply to themselves, and in a more marked degree, the same medicine which they applied in a far lesser financial crisis to the Labour Government in 1931. As a matter of fact, with the grave problem of high Budgets which will come during the next few years, I do not believe that the Government will ever be able, with its political beliefs, to tackle the situation. Until there is a Government that will tackle the international situation on the basis of Labour's foreign policy and get rid of the drift from collective security, and relieve the problem of rearmament by getting a solution of the problem of collective security, it will not be possible to get any remedy. I do not believe we shall be able fully to meet the burden of these national Budgets until we get in office a Government which is prepared, not from the objective of private profit, but in the public interest, to plan and organise the whole of the resources of the nation in the public interest.
  4.44 P.m.
  Mr. Radford: I hope the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) will acquit me of any discourtesy if I do not follow his lengthy arguments, which I venture to predict will be dealt with at a later stage by one who is far more competent to deal with them than I am. I wish to confine my remarks to the matters contained in Clauses 2 and 3 of the Finance Bill, taking Clause 3 first. Clause 3 deals with the Excise duty which is proposed of 9d. per gallon on power methylated spirits. During the Debate on the Budget Resolutions some hon. Friends of mine put down an Amendment to reduce the proposed tax of 9d. to 4½d. I, myself, took part in the Debate and I told the House that
  1440
  I was not a disinterested party, because I was a director of one of the companies distributing this alcohol blend. For the information of any Members who were not present on that occasion, may I say this power methylated spirit, or power alcohol, as it is commonly known, is made in this country, and, to a great extent, from imported molasses. At the same time, there is a certain amount of home-produced molasses used in its manufacture, and it is capable of being made entirely out of indigenous vegetable matter. The Potato Marketing Board at present have a proposal in Section 74 of their proposed marketing scheme that they should be allowed to buy and use surplus potatoes and erect the necessary plant for manufacturing alcohol from those potatoes.
  The only argument that has ever been advanced in favour of the proposed Excise duty of 9d. per gallon on power methylated spirits, is that a certain percentage, somewhere about 15 per cent., of this alcohol has been blended with petrol and not being liable to duty, has caused a certain loss of revenue. This loss of revenue, even on my right hon. Friend's estimates, is on a maximum figure of I0,000,000 gallons, and that is far in excess of last year's consumption, which was 5,600,000 gallons. This loss of revenue from the expected figure of 10,000,000 gallons has occasioned these proposals, but the loss of revenue on between 50,000,000 and 60,000,000 gallons of benzol does not appear to have caused any distress or uneasiness to the Treasury. In fact the committee set up by the Government to report on the possibility of producing more of our motor spirit requirements at home specifically referred to this benzol. I will give their own words:
  " A production in 1936 of 51,000,000 gallons of motor fuel was a helpful contribution to the needs of the country."
  The Committee then point out how it would be possible for additional supplies to be produced here, and they were only sorry that no more than 20,000,000 gallons could be obtained. They were anxious, however, that that much should be obtained. There is a definite difference between this home-produced benzol and the oil made by the hydrogenisation process. In that process the making of oil from coal is the definite goal aimed at, and the coal is destroyed, whereas

  1441
  benzol is only a casual by-product. But in view of the fact that the alcohol, although made mostly from imported molasses, could be made entirely from home-grown vegetable matter, I regret that my right hon. Friend proposes to subject this power alcohol to an Excise duty equal to the duty on imported petrol.
  The only argument, as I have said, that has been advanced in defence of it, is that there is at present a certain loss of revenue. But there are other factors to be taken into consideration, primarily that of the national interest. There are innumerable cases where people buy home-manufactured articles and thereby occasion the Treasury a loss of revenue. Under the Import Duties Act, 1932, cotton and woollen goods for household use, brought from abroad, are subjected to a 20 per cent. import duty. But would anyone suggest for a moment that, because patriotic people were buying Lancashire cotton goods or Yorkshire woollen goods, which were not subject to Excise duty and using them in preference to imported articles, that was not in the national interest, because the revenue was losing money because people were using home-produced and not foreign-produced goods?
  Mr. McGhee: Very unpatriotic.
  Mr. Radford: I think the hon. Member must have been engaged in conversation with his neighbour, for he has got it the wrong way round. I was pointing out that, if they were patriotic and using home-manufactured goods, instead of imported goods, no one would say that, on account of the loss of revenue incurred, you should put an Excise duty on those home-produced goods. What is the attitude of other countries to this manufacture of power methylated spirits from vegetable matter and the blending of it with petrol? The attitude of other countries is more advanced than that of Great Britain. In Italy, about 15 per cent. of the total motor spirit requirements is provided by home-macle alcohol. In the case of our neighbours, Eire, they have a Measure before their Parliament, the Industrial Alcohol Bill of 1938, which will enact compulsory powers for alcohol to be blended with straight petrol in all cases. Japan, in 1937, passed a compulsory measure for the blending of this alcohol with all petrol brought into that country, and at the present time there
  1442
  are no less than 80 plants being constructed or projected for the making of this alcohol out of indigenous vegetable materials. Germany is much the same as Italy. She is making power methylated spirits out of potatoes and the like, in order to obviate her importing more motor spirit than she can help. That shows the view taken by go-ahead countries. Our own Potato Marketing Board is asking for these powers and intends to go in for wider planting of potatoes. Yet the Government have brought in a proposal to treat the product, some of which is even now made out of indigenous vegetable matter, and the whole of which could be made that way in a crisis, on the same terms as petrol imported from abroad. I am hoping, in view of what was said on the occasion of the Budget Resolutions Debate, when the Chancellor of the Exchequer and the right hon. Gentleman the Secretary of State for Scotland, the then Financial Secretary, promised they would look into the matter in the light of that Debate, that we shall hear that their proposals will be amended.
  To go a little further, the Chancellor of the Exchequer announced some eight days ago in answer to a question as to whether he was in a position to announce the decisions of the Government on the report of the Falmouth Committee:
  " His Majesty's Government have decided to accept the recommendations contained in the published report of the Falmouth Committee. Provision is accordingly being made in the Finance Bill to give effect to the recommendation for the extension for a period of 12 years of a guaranteed preference of 8d. per gallon on home-produced motor spirit and Diesel oil for use in road vehicles, subject to the adjustments recommended by the committee."
  My hon. Friend the Member for South Croydon (Mr. H. G. Williams) then asked:
  " Will the Resolution cover motor fuels made in this country from materials other than coal? "
  To which the Chancellor replied:
  " No, Sir. That was not what the Falmouth Committee recommended.''—[OFFICIAL REPORT, 18th May, 1938; col. 406, Vol. 336.]
  I would draw my right hon. Friend's attention to page 54, paragraph 274, of the Falmouth Committee's report, where they say, dealing with the question of future preferences:
  " The present guaranteed preference is available to all processes for producing motor spirit

  1443
  from indigenous materials, and the committee are of opinion that there is considerable advantage in preserving that basis in any extension of the preference."
  Am I not right in assuming that potatoes grown in this country are indigenous materials? Surely "indigenous materials" does not refer only to coal which certainly is a "most favoured commodity" in this country? Surely agriculture is entitled to as much consideration as the coal industry? I would ask my right hon. Friend whether the words I have read out of the Falmouth Committee's Report, namely, that they recommend a guaranteed preference, provided the motor spirit is made from indigenous materials, refers not only to coal but equally to home-grown vegetables? In his reply my right hon. Friend stated that the Government were following the advice of the Falmouth Committee. The Falmouth Committee recommended that there should be no differentiation between petrols made by an process, from indigenous materials. Are not homegrown potatoes indigenous materials? [Laughter.] Hon. Members opposite may treat this as a joke but there are industries which require all possible encouragement and they include not only coal but agriculture. Other enterprising and scientific countries find it possible to make this fuel out of home-grown vegetable matter. Surely it ought to be possible for Great Britain to do so. The Potato Marketing Board show by their proposal that they consider it possible. I ask the right hon. Gentleman, between now and the Committee stage, to make sure whether he is right in restricting this preference. In Clause 2 of the Bill there is a definition of "indigenous materials." The expression is said to mean:
  "coal shale or peat indigenous to the United Kingdom or products produced from those substances."
  Why should our country not be able to do what every other enterprising and scientific country is doing, namely, producing such things as potatoes or artichokes, in order to make this power' methylated spirit? Yet the wording of that definition appears to close the door on any possibility of developing the manufacture of power alcohol in this country from home-grown vegetable matter. I ask my right hon. Friend apart from the question of the proposed duty in Clause 3, to
  1444
  go carefully into that definition. The use of power methylated spirits as a blend with petrol is, as I have said, limited to a certain percentage which, it has been calculated, is about 15 per cent. In other words, if anyone were to have this power methylated spirit given to him to blend with petrol in the proportion of 50–50, he would not take it, because it would ruin the blend. There is, therefore, a limit to the extent to which it can be used. This is not a matter merely of ekeing out petrol. The blending of a suitable proportion of alcohol with petrol raises its anti-knock value or what is called in the trade its octane rating.
  If there is one problem which the country will have to face in time of war more serious than another, it is that of the provision of aviation spirit. By a suitable blend of power methylated spirits and benzol with petrol which would otherwise be unfit for aviation spirit, it can be raised to the level of aviation spirit. Let the House remember that we buy our aviation spirit mostly from the United States or South America, or the Dutch East Indies. Supplies from the Dutch East Indies would have to run the gauntlet of the Mediterranean and, as to the supplies from the United States, under the Neutrality Act of 1937, the export from the United States of what can be clearly defined as munitions, is prohibited in case of war, to either of the combatants, whether the combatant is a victim or an aggressor. The President has also power to prohibit the export of things which are in his judgment ancillary to the conduct of war. It is clear that under these conditions the export of aviation spirit to this country from the United States might well be prohibited, if we were involved in a war, even though we were the victims and not the aggressors.
  We do appeal to the right hon. Gentleman to consider the matter seriously before he decides finally on the imposition of this duty. This is a young industry and we feel that the right hon. Gentleman is in danger of discouraging it fatally. We also ask him seriously to consider the provisions of Clause 2 so that the guaranteed preference shall be available not only in accordance with the definition of indigenous materials contained in Clause 2 but shall also be available for the products of vegetable matter grown in this country.
  5.7 P.m.
  Mr. Graham White: I propose to make some observations later on the subject of power alcohol to which the hon. Member for Rusholme (Mr. Radford) has referred, and I say nothing more about it at the moment except to congratulate the industry upon having such an able advocate in this House. Without any interest in, or prior knowledge of, the industry, I look upon this new form of tax from an impartial point of view and I am bound to say that such evidence as has come before me, has led me to a conclusion which differs somewhat from that placed before the House by the hon. Member. To return, however, to the general and somewhat sombre aspect of our financial affairs, may I say that no one who has given much attention to the course of our finances would quarrel with the statement of the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) that we are in a condition of crisis and, furthermore, that the crisis is bound to continue as long as the international tension remains and we are obliged to make such tremendous efforts as we are making in the cause of Defence. Not only is this year's Budget conditioned, but future Budgets as far ahead as we can see, will be conditioned and controlled by the interests of Defence. We shall make a profound mistake if we think that there is any easy escape from these liabilities or if we underestimate the importance of maintaining, cost what it may, our financial structure on a sound basis.
  It is with a sense of gratitude that we see that the Chancellor of the Exchequer has avoided the devices which were suggested to him in various quarters. If we wish to see the consequences of unsound finance, we have merely to look at what has happened in other countries. If we are to avoid the dangers and difficulties which always follow the adoption of some form of closed economy, with all its restraints upon liberty and upon the remuneration of the worker, we need to steer our course very carefully at the present time, and we must be prepared to shoulder even heavier burdens than those which we are considering to-day. It is something that, in the present situation, we have turned away resolutely from devices which, though they might have served the purpose for the moment, would not have solved or even ameliorated our long-term problem.
  1446
  Other countries have found it necessary to curtail liberty and to submit to an extraordinary degree of control in all aspects of industrial life. They have adopted the expedient of "buffer Budgets" and even in this country, it is suggested that we might have something of that kind in order to help us to meet the expenditure upon armaments. But the "buffer Budget" is nothing more than a shock absorber. It is a series of dodges and devices for deferring default.
  If mankind is so mad or so foolish, as to continue to allow his efforts to be frustrated, by devoting the whole of the surplus available from those efforts to purposes of destruction, let us, at any rate, make up our minds that, as long as it is open to us, we will avoid any departure from the path of sound finance. It is true that the last War used up the resources which had been accumulated in this country on the foundation of sound finance laid by Mr. Gladstone. It is extraordinary to think that one of the most beneficient results of the labours of that great man was to enable the last War to be won on behalf of freedom. At the moment the actual position is that rearmament has just had the effect of cancelling out from an Exchequer point of view, the whole of the gain from the expansion of national revenue, since the National Government took office. That, in a sentence, is the net result of the Budget before us, and it is the arithmetical measure of the long series of lamentable events which has brought the foreign policy of the Government to such a lamentable conclusion.
  I have no doubt that if it should be necessary for us to shoulder even heavier burdens than those here proposed, we can do so. I believe the country would be willing to do so on certain conditions, and those conditions are fairly simple. The first is that the taxation which we are asked to pay should be fair as between one taxpayer and another. Adam Smith, who is little quoted in this House in these days, said that a tax must be "clear, definite and equal," and that is a useful test to apply to any taxation proposals even in these times. The second condition is that not only must there be no waste in expenditure, but that the people must be satisfied that there is no waste, and the last part of that condition is, in

  1447
  my judgment, even more important than the first. People are far from satisfied at the present time that there is no waste. We do not need the great array of figures and statistics quoted by the right hon. Gentleman who opened the Debate, to arouse the feeling in people's minds that there is waste. The third condition on which the country would be willing to undertake these added burdens is that the armaments which are being provided at such enormous cost will be used only for purposes of which the nation approves, and behind which the nation can rally in unity. There is one other condition. People must be satisfied that no undue profits are being made out of the necessities or misfortunes of the nation.
  The right hon. Gentleman the Member for Hillsborough made a passing reference to the Income Tax, and I would like briefly to draw attention to the change which is taking place, or appears to have taken place in policy as regards the Income Tax and the nature of our direct taxation. The Chancellor of the Exchequer, by increasing the standard rate of Income Tax, has altered the progressive character of our direct taxation. From the point at which the standard rate comes into operation up to the Surtax level of £2,000 the increase is equivalent, roughly, to 10 per cent., but from £2,000 upwards the proportionate increase falls away. That appears to be a change in the character of direct taxation, and significance is to be derived at the present time from the fact that while this year Income Tax is higher than in the crisis year 1931, Death Duties and Super-tax remain at the same level. It would not have been impossible by means of some combination of an increase in the standard rate of Imcome Tax with increases in other forms of direct taxation to bring before us an instrument which would have achieved the same, and possibly an even greater, revenue, with more efficacy and less disturbance to business as a whole.
  Bearing in mind the condition that taxes must be fair between one taxpayer and another I would say in passing that there is a feeling among some of the bigger insurance companies that they are not being treated quite fairly in relation to the National Defence Contribution. They do not in any way wish to contract out of the general liability for the National De
  1448
  fence Contribution, but they fail to see why, in respect of the income from those funds which they accumulate for the benefit of insurers against fire, burglary, accidents and one or two other forms of insurance, they should be called upon to pay anything to the National Defence Contribution as though it were an ordinary part of their trading profits. The result is that in comparison with other industrial corporations they are called upon to pay a higher and, as they say, an unjust proportion of the tax. In the later discussions we shall have an opportunity of dealing with this matter in more detail.
  I will now say a word or two with regard to the question of power alcohol which was raised by the hon. Member for Rusholme. It seems to me, on an examination of this matter, that it is a subject of taxation which seems to answer most of the qualities that ought to justify a tax. The growth of the manufacture of this material has been very rapid and almost phenomenal. The amount of power alcohol blended with petrol has risen from 18,000 gallons in 1931 to 6,369,000 now. The hon. Member said that the Chancellor's proposal would close this business down. I notice, however, that the Chancellor, in his estimates, budgets not for a decrease in the use of power alcohol, but for an increase of something like 3,000,000 gallons in the current year. That seems to me a most desirable thing, and I shall have something to say about it later. Here is an expanding production and the increase in taxation will not have the effect of choking down what the hon. Member says is a desirable development.
  Mr. Radford: By taking thought you cannot add a cubit to your stature, and because the Chancellor has said that during the coming year the gallonage will be so-and-so, that does not mean that it will actually be so.
  Mr. White: But I presume that the Chancellor, in making his estimates, has relied on the best advice which is available to him.
  Mr. Macquisten: The advice that he gets from his experts is not advice but prophecy.
  Mr. White: In a matter of opinion prophets must either agree or disagree, but when the Chancellor of the Exchequer, supported by the best advice

  1449
  available, comes to the House and gives us that advice, we should be well advised to accept it. The hon. Member for Rusholme went on to develop the matter further, and suggested it was a great pity that the distillation of this product from potatoes should not be encouraged. since this matter was first projected and brought before the House, considerable argument and controversy have developed in regard to it. In the "Manchester Guardian" there was an article which took a different view from the one which the hon. Member has put forward. The "Times" was on this matter in complete agreement with the "Manchester Guardian" and dealt with the arguments which the hon. Member has placed before the House, and dealt with them faithfully. I have here another paper, a less decorous but more popular paper. The matter seems to have become news, for in the "Daily Express" of 2nd May the whole matter is set out with captions of the kind which are usually reserved for the activities and antics of celestial bodies in the film world.
  Reference is made therein to the enormous profits which are being made by those who have demanded that this product should be free of tax and who are, in addition, receiving an Excise subsidy of something over 8d. a gallon. The right hon. Gentleman who spoke above the Gangway referred to the profits of armament firms, but some of the profits which are indicated as having been made in this commodity put anything which the right lion. Gentleman mentioned in the shade. There is one company—the Petroleum Storage and Finance Corporation—which between 1929 and 1931 seems to have doubled its capital and to have paid dividends of an amount that might be regarded as beyond the dreams of avarice. In 1929–30 the dividend was 8 per cent., and a year later 20 per cent. Then there seems to have been a setback when there is no dividend on the ordinary capital. But in 1935–36 it was 72 per cent. on the deferred capital, and in 1936–37 it was 344 per cent. on the deferred capital.
  Mr. Radford: I told the House I was a director of one of the companies that blended and distributed this motor spirit. That is the company in question. It would be only fair if the hon. Member mentioned that the deferred shares were Is. each and had been without dividend
  1450
  for many years previously. About three-quarters of that company's business did not touch alcohol at all. It did not, therefore, make its money out of what the hon. Member described as an article free from duty; and what about the people who distributed over 50,000,000 gallons of Benzol free of duty? Are they making nothing out of it?
  Mr. White: Those who know me in the House know that I am the last to wish to be un fair to anybody, and if I have exaggerated in any way I am sorry. These are not figures taken from the "Daily Express." I took them for greater accuracy from the Stock Exchange Year Book. In spite of the hon. Gentleman's intervention, I still cannot help thinking that on this occasion the Chancellor has found a subject of taxation which will commend itself to the House. I hope that he will not be prevented from carrying the Clause which he has inserted in this Bill.
  With reference to the Tea Duty, the Chancellor in the discussions on the Budget said that there was no such thing as a good tax. I do not know that I agree with him altogether, but perhaps I may have his acceptance of the proposition that in the category of necessary evils there may be variations in the degree of merit. The tea tax, I think, is a very bad tax, and there is really nothing to be said for it. I hope that anybody who may be tempted to defend it will not allow himself to say it is a tax that falls equally upon the consumers, because that is not the case. It was not the case when the tax was raised by 2d. before, nor is it the case on this occasion. The tax falls on the poorest members of the community because tea is their main beverage. The poorest consume far more than the average of 9 lbs., which is the average of the country as a whole. The poorest people are the only people who pay the full tax because there are no cheaper qualities which can be bought. Upon them falls the consequences which flow from the imposition of the tax, for it concentrates all the buying power of the market on the cheaper qualities and thus forces up the prices of the cheaper qualities.
  When the tax was put up 2d. two years ago, that process went on steadily, with the result that a further 2d. had to be

  1451
  added to the price of the cheapest blends. I do not know whether that will follow now, but the process has already started. since the Budget was introduced there has been an addition of one halfpenny to the price of tea in the auctions. It is inevitable that the imposition of the tax will attract to this country some undesirable and cheap qualities of tea from Japan and China. An effort will be made to try to produce a blend of tea which will be within the reach of the poorest people. If the Chancellor wishes to introduce a tax upon tea which will fall equally upon all consumers, he must arrange that all tea shall be of the same quality and sold for the same price. That is the only condition on which it can be done. This tax is placed on a product which is finding it hard to maintain its consumption, for it is competing with a large number of other beverages which are heavily advertised. The consumption is, in fact, declining. It is unfortunate that at a time when planters have devised a plan for popularising tea, and are spending about £50,000 upon advertising it, a step should have been taken which will neutralise the effect of what they are trying to do.
  I notice that some growers in Ceylon and India are petitioning the Governments of Ceylon and India to protest to the Home Government against the imposition of this increased duty. We do not wish to have any extension of the discord between India and ourselves. In the world to-day conditions are not very happy as regards trade, and we do not wish to have any further trouble over a thing of this kind. I would also remind the House of the great disadvantage which growers of tea in India and Ceylon suffer owing to the continuation of the preference of 2d. per lb. in the duty upon Empire tea. The result is to divert the natural flow of the exports of tea from India and Ceylon. As one illustration of what I mean, before the preferential duty the Australian market used to import about 75 per cent. of its tea from Imperial sources, India and Ceylon, but the quantity has now fallen to 25 per cent. I do not ask the House to rely upon my word in this matter. Here is the statement of the chairman of one of our biggest planting concerns, who said on 17th May:
  1452
  " He again emphasised the harmful effect on British Empire teas of the preferential duty applicable to them in this country. Teas displaced from the London market had in turn displaced Indian and Ceylon teas in outside markets, and he was convinced that it would be in the best interests of Empire producers if the preference were removed. The recent additional duty of 2d. per lb. would tend to accentuate the demand for commoner teas and diminish the demand for medium and better qualities."
  If the right hon. Gentleman wishes to help consumers in this country, to help planters, and to help the development of the tea trade, the simple course would be to do away with the differential duty. That is a proposal which has the support of the planters and of the practical experience of the trade.
  My right hon. Friend the Member for Caithness (Sir A. Sinclair), in his speech upon the Budget Resolutions, commended a series of proposals to the Chancellor of the Exchequer as a means of fortifying his Budget. Among them was a proposal for an investigation—on lines such as we have had experience of in our administration, or on some other appropriate lines—into the vast expenditure in our own country to-day. In his reply the Chancellor made rather light of that suggestion. He went over various items of expenditure in which he said, very truly, the House would not wish to see any economy made, and in that way, by a series of subtractions, he reduced the field of investigation to very small proportions. But I would point out that we are not dealing with a level of taxation which is going to decrease; indeed, we have increases in prospect, and I suggest in all seriousness that the sooner the right hon. Gentleman does institute some process of investigation into and control of expenditure the greater chance there will be of the people being willing to shoulder the vast burdens which he is calling upon them to undertake.
  Even as things are I am not by any means sure that waste is being avoided, and I will ask the right hon. Gentleman to give attention to one specific matter in connection with the social services. Nobody wants to curtail any benefit which comes to any individual who is a beneficiary under the great system of social services which we have built up in this country, but I would draw attention to the tremendous growth of the purely administrative expenditure of the Unem-

  1453
  ployment Assistance Board. In the year 1932–33 there was a weekly average of 988,000 payments to applicants for allowances, and the administrative cost was £3,385,000, or something like £3 4s. per head. The work at that time was being done by the Ministry of Labour in conjunction with the local authorities. In 1933–34 the number had fallen to 957,000 cases per week on the average, but the expenditure had risen to £3,740,000. The Unemployment Assistance Board took over the work in 1936, and for the year 1936–37 the average number of payments weekly was 600,000, something like one-third less, while the expenditure of the Board in making those payments had risen to £4,430,000, or something over £7 per head.
  There is no beneficiary under that scheme of public assistance who has derived any money benefit at all from that increased expenditure. I ask the right hon. Gentleman to direct his searchlight in that direction, and there are no doubt other directions in which he could look because this is an important matter. The stability of our finances, and the willingness of the country to bear the burdens which are placed upon it and which are grievous enough, demand that we shall have the knowledge that no waste is being incurred. I have already spoken longer than I had intended, but in conclusion I would ask the Government to realise that the only hope of any substantial amelioration of our financial position lies in the prosecution of a policy of appeasement.
  5.37 P.m.
  Brigadier-General Sir Henry Croft: The speech with which the right hon. Member for Hillsborough (Mr. Alexander) opened the Debate was forceful and wide in its compass, and interested everyone, I am sure. He had a few flings at His Majesty's Government, and among other things brought in a reference to the by-elections. He will forgive me, I hope, if I recall in passing a series of by-elections many long years ago when I was a young man seeking to enter the portals of this august assembly. There were no telephones in those days—perhaps that will not be believed—and I used to get a young man to cycle out to me in the middle of the night to tell me the latest triumphs in those by-elections. It was during a period when the
  1454
  fortunes of our party were very low, and I was delighted to think that the future for us was most rosy, because we won every one of those by-elections—I think there were six in all. I see one of Inc culprits in those night adventures sitting on the Government side of the House now, and I am sure he will remember that series of great by-elections which made us imagine that the country had changed its mind. The fact is that it is rather good for a Government to lose one or two by-elections, because they arc always won back in the General Election, and it stimulates interest in politics when it might otherwise be at a low ebb.
  Although later I may have to say a word or two of warning to my right hon. Friend the Chancellor of the Exchequer, which I hope he will not take amiss, I should like to say now, with regard to the general principles underlying the Finance Bill, that in my opinion the people of this country ought to be grateful to the Chancellor for the sanity of his policy and for the fact that he is not gambling at a time when things are so uncertain in the world. Gambling may be wise if there are definite indications of a movement towards prosperity, but it cannot be justified when conditions are static, or when there is the amount of disturbance in the world which we see at the present time. I, for one, feel that he has chosen wisely. As an income-tax paper I very much dislike this increased imposition, but who have been more guilty of asking for the insurance of the safety of this country by adequate defence measures than I and those who think with me? I am glad to find that hon. Members of the Labour party are also now demanding increased measures of defence. What right have we to demand that our country shall be made safe if we are not prepared to face the fact that it must inevitably mean a greater burden upon all classes? Therefore, I think we should realise that the addition to the Income Tax was an equitable form of increasing taxation. As to the Tea Duty, everybody dislikes a tea duty, but it must be admitted that if we want to tax a commodity which is consumed generally by everybody in the country there could not be a fairer choice.
  Mr. Silverman: Does the hon. and gallant Gentleman really say that the drinking of tea by people with incomes

  1455
  of his standard is so great in proportion, or is so important, as it is among people at the other end of the scale?
  Sir H. Croft: Not for one moment. What I was trying to convey was that probably everybody drinks tea, and that if, after the extra tax placed upon the rich, a still further contribution to revenue has to be found, you probably cannot find fairer taxation than the Tea Duty. It is quite understandable that the Opposition should make a great deal of the increase of 2d. in the Tea Duty; I should have done the same thing myself if I had been sitting on their benches; but I must remind them that when my right hon. Friend the Member for Epping (Mr. Churchill) was Chancellor of the Exchequer and took 4d. off the Tea Duty he got no blessing from them, and, indeed, was almost cursed. One of the most vigorous leaders of left wing thought in this country said, "What does this mean to a working-class family in the course of a year? Only 7s. 4d. Thank you for nothing." In the General Election people all over the country were told that this remission of 4d. was no advantage to them. If that were so, then an increase of 2d. in the Tea Duty cannot mean such an appalling burden as the hon. Member who has endeavoured to assist the fortunes of the Liberal party by his eloquent speech would have us imagine.
  In reference to the increases in both the Income Tax and the Tea Duty I would say to the people of this country that it is far more important that they should be able to live free from the fear of death than enjoy a little temporary ease or comfort. We have to face the fact that the money for Defence must be found, but I entirely agree with the hon. Member for East Birkenhead (Mr. G. White) that in view of the vastly increased expenditure upon armaments it is vital that we should look afresh at our general expenditure. We cannot carry both burdens. In one of our country districts not long ago I was talking to a distinguished man who remarked, "In the near future we are going to spend £400,000 upon educational establishments in this area." That is very good in good times, but when we know that the children of school age are decreasing in numbers, are we wise in going ahead, at this time,
  1456
  with great expenditure upon educational establishments? It is to satisfy a need which, though desirable, is not imperative.
  I should like to refer to the speech of my hon. Friend in relation to power alcohol. It was an eloquent speech. I look at this matter from a rather different standpoint from the hon. Gentleman who spoke before me. I submit that we have come to a decision that we should never discriminate, if possible, against home industries. Having, after due consideration, decided that we should give an advantage to certain power liquids, we should not go back upon it in the case of power alcohol. We should treat it in the same way as we treat benzine. The hon. Gentleman said: "Look at the profits," but the Chancellor of the Exchequer knows as well as any of us that he likes success from which he can recover the finances of this country in the days to come. Let us not hear criticisms, especially from the Liberal benches, suggesting that an industry must be taxed because it is a success. Successful industries are necessary in order that we may be able to wring taxation from them as a result of their high profits.
  One or two emphatic remarks were made by the right hon. Gentleman the Member for Hillsborough. He instanced four or five industries in this country, saying "Look at the increase in profits." If he really went into the history of those industries I wonder what he would find. I have not been able to check the facts, but the right hon. Gentleman cited Dorman Long. I am not in the City, and so I do not know. He cited the Consett Iron Company, and other companies, and called attention to their subscription lists. Does the right hon. Gentleman) realise that from the days of the blight when he and his colleagues were in control of the government of this country several of those companies have paid no dividend or only a very small one? Is it not a fact that some of the industries which he mentioned have issued great blocks of new capital and are expanding greatly; but is it a crime that the National Government are succeeding in bringing about expansions in industry which have given immediate employment to large numbers of people in all these industries?
  Mr. Alexander: And bonus shares to the shareholders.
  Sir H. Croft: Certainly. It must be of advantage if you are making an industry so successful that you are able to extend the advantage to the shareholders, as the right hon. Gentleman and those who take that line of argument are inclined to forget. I think I am right in saying—and were the hon. Member for Oxford University (Sir A. Salter) here at present he would probably bear me out because he, like myself is an economist. [Laughter.] Yes, I have been an economist all my life. I spend three hours every morning studying world returns. I may not be able to put my case well, but at any rate I study these matters as much as hon. Gentlemen. Until recovery came about four years ago, during the preceding eight years the average rate of interest on capital in this country did not exceed something between 4 per cent. and 4½ per cent. Even if you had a Socialist Government in this country British credit would hardly be able to borrow from the rest of the world at a rate much better than 4½ per cent. I am talking of capital invested as a whole.
  Hon. Gentlemen say: "Look at these vast ordinary profits," but I reply: "Look at the number of companies who paid no ordinary dividends at all until the recovery four years ago." We see increased profits to-day from firms who made no profit at all before. I mention this aspect of the matter because we ought to get a fair outlook upon the whole subject and not pick out two or three industries for castigation. I will give an instance of what I mean. Here I think the right hon. Gentleman will probably agree with me. We want to stop profiteering, but none of us will deny a reasonable profit on every article of armament which is required. You may say that the industry which is producing Zoo aeroplanes ought not to be allowed to make great profits, but if it is producing 2,000 aeroplanes we are always ready to see a reasonable profit on everything they turn out. Surely that is right. [HON. MEMBERS: "No !"] That is efficiency.
  Hon. Members: No!
  Mr. Alexander: If the hon. and gallant Gentleman were engaged in business would he not want a reduction upon a quantity?
  Sir H. Croft: Certainly, I would, but I would say that I was going to get speed
  1458
  in my production. If the profit upon the single article is not excessive I do not mind how much profit the industry makes. I might give the homely example of Messrs. Coats. I have not followed the fortunes of that firm lately, but I think they have made very great profits and that they have been rather an asset to this country. [Interruption.] I hope hon. Members will bear with me. I do not want to delay my speech on these points, but this is an example of what I am trying to point out. I think that the actual profit they made upon a reel of cotton was ½d. Who else would have been content with a profit like that? The cheap cotton thread that they gave to the housewife in this country was the result of their enormous production. If we got that production in aeroplanes, or in other munitions, it must be to the advantage of the State.
  Mr. Benson: Are we not getting that enormous production in aeroplanes?
  Sir H. Croft: I do not want to make a speech on that subject. Pressure came from various parts of the House that we must have greater expansion in air production. It would be folly to try to reduce the legitimate profits upon the article turned out. What we want to see is a speedy production. I am sorry to have been taken off my main theme.
  The adverse balance of trade of this country is a serious matter. Last year it was £443,000,000. I think the President of the Board of Trade gave a slightly different figure by eliminating silver at about £11,000,000 from the figure. Following upon the adverse balance of trade last year, taking all invisible exports into consideration the adverse balance was £52,000,000, and that of the year before at £18,000,000, and it appears that for the first four months of this year the adverse balance of trade has increased, taking the world over with ourselves, by £17,000,000. If that rate were continued for the whole year—although no one can prophesy on that subject—it would mean an increase of something like £68,000,000. If you add that to the adverse balance last year and to the increase in last year's balance, the total increase is over £100,000,000.
  Mr. White: £118,000,000.
  Sir H. Croft: I was going to say £120,000,000. Heaven forbid that we should make alarmist speeches, but it

  1459
  seems a good thing that we should take action early when we see tendencies approaching. I had the audacity in 1928, speaking in this House, to point out that the adverse balance of trade was going against us and that before 1932 we should have a very difficult situation unless steps were taken to rectify that adverse balance. I ask the Chancellor of the Exchequer whether, in view of the present tendency of world trade, we can hope that invisible exports will be much better than last year. I do not want an answer now, but I doubt whether they will be better, or that our interest on world investments will be much better than it was last year. If that is so, ought we not to take steps now to rectify that position? It may surprise hon. Members who have not followed these matters to be informed that we are importing practically as much into this country to-day as we were importing before the tariff was introduced. It is very surprising. We are importing at an increasing rate large quantities of manufactured goods which we are definitely capable of producing.
  When Lord Runciman was President of the Board of Trade in this country, he saw dangerous times, which were rather similar in a way, and he even went so far as to impose an abnormal Import Duty. If we see people losing their jobs in this country owing to greatly increased importations of foreign manufactured goods, would it not be wise once more for the Government to take a hand, apart from the Import Duties Advisory Committee, and put a check on the flood which is now coming in? In reply to questions, Ministers say that Opel cars are no longer coming in. If that is so, the probable reason is that Southampton Docks are so congested that it is no good sending any more. I travel by Southampton Docks every week. The place was black with them. It was like a swarm of bees, all coming in so suddenly. It has had a very serious effect upon the producers of cheap cars in this country. Think of all the men employed in these industries. Has not the time come for exceptional treatment in this matter?
  Did time permit I could give a long list of Class 3 manufactured goods, showing a surprising rise of imports in the last two or three years, not only in the bulk, but in the percentages; truly re-
  1460
  markable, but I shall not weary the House with the figures. Hon. Members are probably aware that out of the Class 3 list of goods—goods like textiles, silks, wrapping paper, typewriters, motor cars and other goods, which we have certainly proved able to produce ourselves—there is an enormous increase in imports in the last two or three years. If that is so, and if people are no longer being absorbed in larger quantities into employment, let us be frank. As the result of the policy of His Majesty's Government, we have 300,000 more people at work to-day than a year ago, and in April more people employed than ever before in our history.
  Mr. Quibell: Who is buying these cars?
  Sir H. Croft: I do not know, but I say, do not let them. I ask His Majesty's Government to consider these facts. Not only is there the rising tide of the adverse balance of trade, but even in the countries with which we have made trade agreements in recent years, the adverse balance is increasing against us. Perhaps I may just give, briefly, to show what I mean, the names of countries with whom we are on very good terms and with whom we have made trade agreements. In the case of Sweden, our adverse balance of trade has increased from £1,500,000 to over £3,000,000; in the case of Norway, from less than £500,000 to nearly £1,500,000; in the case of Denmark, from £3,750,000 to over £4,500,000; in the case of Germany, from over £1,000,000 to £1,500,000; in the case of the Netherlands, from £1,500,000 to £2,000,000, and in the case of Belgium the same. In the case of France, a favourable balance of £2,000,000 has become an adverse balance of £300,000. In the case of Japan, the adverse balance has increased from £1,250,000 to £2,000,000, and in the case of the United States of America from £11,000,000 to nearly £31,000,000.
  Surely our trade agreements, if they had been wisely drawn, would not have permitted of a progressive adverse balance of trade against us in all these cases. Everyone knows, of course, that the Government were really out to create a bigger flow of trade between these countries and ourselves. They are friendly countries, and I do not want to say anything unfriendly to them, but we

  1461
  do not want continually to see the balance of trade going against us, and surely that question must be considered when these treaties fall for reconsideration. In the case of the United States, the adverse balance has increased at a truly alarming rate during the last four months. We have had an adverse balance for the last three years of over £180,000,000, and during the last four months it has become greater than it was before. Surely this indicates that when we are discussing, as we want to do, the promotion of a trade agreement with the United States, we must insist that at least the main result of that agreement will be that the adverse balance will be greatly lowered, and that we shall be trading more on equal terms than has been the case in the past.
  The one hopeful picture,' looking round the world, has been the fact that the British Empire has been buying more from us than all the rest of the world put together during the last four months. That is a wonderful result of our longterm policy, and I believe that in these difficult days we should do everything we can still further promote trade between the various parts of the Empire and this country. With all the dangers of the world before us, can we not get together as a nation with the fraternity of British peoples overseas, and say that, if all the rest of the world is insane, we at least will be brethren and get together to extend our flow of trade and improve the lot of the workers in all our countries, for our mutual strength and unity. If His Majesty's Government can concentrate in the future on making the flow of trade between the various parts of the Empire still more liberal and still more rich, will not that be one way of ensuring the strength of this country, and, by ensuring our commercial strength, ensuring the defence of the British Empire as a whole?
  6.5 p.m.
  Mr. Poole: I claim the indulgence of the House, as this is the first occasion on which I have spoken in this Chamber. I was delighted to hear the previous speaker say that it was good for the Government to lose by-elections. I am very glad to have had the opportunity of bringing some goodness to this Government, who are badly in need of it. I have dared to intervene in this Debate only because of the circumstances following that most important by-election at
  1462
  Lichfield. My opponent gave, as the prime reason why he was not successful and I was, the fact that the Chancellor of the Exchequer had introduced a Budget which was very much in my favour and was certainly not in his favour. Therefore, I feel that my first act of worship in this House should be at the shrine of one who has made it possible for me to sit here, and for that reason I have ventured to intervene in this very important Debate.
  The whole House, I feel sure, is impressed with the magnitude of the burden which we as a nation are now called upon to face. The Chancellor of the Exchequer, in his Budget statement, made it abundantly clear that he would expect all sections of the community to bear their fair share of that burden. Whilst we on this side of the House may be prepared to accept that statement if the burden be equitably distributed, we place the responsibility, first of all, for the need for that burden, as the right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) has done, on the shoulders of the people to whom we think it rightly belongs, namely, the present Government, for their failure in foreign policy. That is the primary cause of the necessity for this burden. More than that, we feel that there is no equity in the distribution of the burden under the present Finance Bill.
  I have been endeavouring to imagine just exactly what it was that inspired the Chancellor of the Exchequer in fixing his taxation in the manner that he has. I visualised him, with the idea of equity of distribution of the burden, thinking that various classes of the community should pay their contribution towards this expenditure. I visualised him looking at the ordinary working-class man and woman and saying, "These are people who ought to pay, and they can only pay by taxation upon their basic commodity of food. Therefore, I will impose an extra 2d. on tea." Then visualised him coming to the middle class and saying, "What is there different in this class that I can tax, so that I may call upon them to bear their share of the burden?" and suggesting to himself that this class of the community were people who perhaps were fortunate enough to have motor cars, and that they might pay in the form of additional taxation upon motor spirit.

  1463
  Then I visualised him as coming to a higher stratum of society—I must confess I am not an authority on class distinctions—where the people were fortunate enough to pay Income Tax. I state openly in this House that I have never been fortunate enough to have to pay Income Tax. [Interruption.] It is not even coming to me. I have additional responsibilities, and I also have some knowledge of how to fill up an Income Tax return. I think I shall be fully exempted, even though I have achieved the status of an hon. Member of this House. The right hon. Gentleman arranged that that section of society should share the burden by paying another 6d. in the in Income Tax. There is still another stratum of society—and this is why we feel that the burden has not been equitably distributed—there is another section of the community who ought really to have borne a larger share of the burden, namely, the Super-tax payers, the armament manufacturers, the financiers in the City, who apparently are not going to be called upon to shoulder any additional burden.
  The injustice of the taxation as regards the poorest section of the community lies in the fact that it hits the homes of the workers of this country. What is 2d.? I can imagine hon. Members on the other side of the House saying that 2d. is such a small thing—that in the average working-class home, where they consume a pound of tea a week, they are only called upon to pay 2d. extra. I can quite sympathise with the inability of hon. Members to understand just exactly what an additional 2d. means in the budgets of some working-class homes. One can only appreciate the effect of a 2d. increase on a basic commodity in household use if one has felt the need of 2d. at some time in one's own experience. It is only when you have felt, perhaps through the grievous sickness of a child of yours, the necessity for providing for that child something that it needs, and have lacked even the elementary 2d. to pay for it, that you can understand the effect of a small tax of 2d. on a pound of tea. That is the difference, and that is why I am afraid the Chancellor himself and hon. Members opposite have failed to appreciate the tremendous significance of the additional 2d. on tea.
  1464
  The petrol tax, too, is a tax which of necessity must also hit the poorest homes in this country. What is that tax going to mean to the municipal transport undertakings? It is going to be reflected, of course, in increased transport costs and increased fares for the working-class housewife every time she requires to go from the new estate into the centre of the town to do a bit of shopping. Miners, factory workers and others who are called upon to travel long distances by bus will have to pay increased fares, which they can ill afford. Foodstuffs which are brought into our great industrial centres by road motor transport will of necessity have to be increased in price, because motor transport undertakings to-day cannot afford to bear any additional burden of taxation without its being reflected in the price they charge for the services they render, since price-cutting in road transport has now been reduced to such a fine art that 'there is no margin for taking on additional taxation such as this without passing it on in the price of the services rendered.
  In the division which I have the honour to represent, there is a large body of people who work in the city of Birmingham and in Coventry, many of them engaged in carrying out the rearmament programme of the Government. They are compelled to live some 15 or 20 miles away from their employment, having been driven right out of the industrial centres and into the arms of the building societies. Because of the restricted housing legislation of the Government, they have been compelled to engage, through building societies, in the purchase of their houses, and then, in an endeavour to eke out their income and make their position better, they have undertaken the purchase of a motor car in order to reduce the cost of transport to their employment. Here they are taxed again a second time. Their tea having been taxed, their motor transport to their work is also taxed. Therefore, I say that the burden is not by any means equitably distributed. Moreover, through the National Defence Contribution, these same people who are members of co-operative societies are taxed yet again to the extent of 3s. 6d. a year. Therefore, practically every aspect of the additional taxation except that of the Income Tax is hitting the same class of workers over and over again.

  1465
  I want to give expression, if I may. to some fears that arise in my mind with regard to the enormity of this burden and the proposals for shouldering it. I find that the Chancellor of the Exchequer, in the Debate on the Second Reading of the corresponding Bill in 1937, said:
  " Our prosperity does not depend upon rearmament. The recovery of the country was thoroughly well advanced before rearmament began, and the pace of recovery, though it goes on, has not noticeably quickened 4s the result of rearmament"— [OFFICIAL REPORT, 31st May, 1937; col. 712, Vol. 324.]
  I am wondering whether the right hon. Gentleman still holds that opinion, whether he believes that the recovery in the trade of this country is still advancing so well, even apart from rearmament, and whether the financial provisions during die present financial year are going to be based on that assumption. If so, I feel that the yield is going to be a disappointing one. Prior to coming to this House I can claim to have been in touch, not with any specific trade in the City of Birmingham, but to have touched all the staple trades of that city, and whereas, in the business in which I was employed, we came in the early part of the year to talk about a temporary lull in trade, and then about a recession of trade, before I was elevated to this House we were talking of it as an absolute slump. I believe we are facing a veritable slump in industry to-clay. I believe the danger is that if the yield the Chancellor is expecting, based on the assumption of improved trade, is not forthcoming, we shall have a repetition of the experiences we have had before, and an attack on our social services and the standard of life of the people of this country.
  Apart from the burden of this Bill, there are ever-increasing burdens on ratepayers and local authorities due to the war psychology. Air-raid precautions are causing the local authorities grave concern. The Fire Brigades Bill, in its local aspects, is causing local authorities grave concern. Public Assistance also is causing them grave concern. They are being compelled to cancel schemes of local expenditure because they cannot face the intolerable burden; so unemployment is growing and public works contractors are without work. In the circumstances which I have detailed, my fear is that this country is facing a slump. Should this arise, I have a very grave fear, knowing the past his-
  1466
  tory of this Government, that there will be an attack on our social services and the standard of living. I trust that my fears are unfounded; but, should they be borne out, we on this side will very definitely resist any encroachment on our social services or on the general standard of living. We are not going to tolerate any repetition of 1931. [HON. MEMBERS: "Hear, hear!"] Yes, "hear, hear," comes from the other side. The encroachments of 1931 also came from the other side; and, should there be any repetition, the resistance from this side will be much greater than it was in 1931.
  I want to thank you, Mr. Speaker, and the House for their indulgence to me this afternoon. I trust I shall be able, in the days to come, to make an effective contribution to the Debates, often criticising perhaps, but, I hope, making an effective contribution to the welfare of the people we represent. I trust that I shall always receive the toleration I have had this afternoon; but, knowing the temperament of hon. Members opposite and also my own temperament so much better, I very much doubt it.
  6.19 p.m.
  Sir J. Simon: We have reached a point in this discussion when, I think, it would be suitable for me to intervene. I am glad to do so at this stage, because it makes me the mouthpiece of the whole House; and I tender very sincerely our congratulations to the hon. Member for Lichfield (Mr. Poole) for his contribution. We shall always be glad to hear contributions from him as good tempered and as forceful as that which he has delivered this afternoon. Indeed, I owe him a special debt, because he has been good enough to pay me a compliment. I understood him to say that I am the sole cause, or almost the sole cause, of his coming here. He is new to the House, but I am sure that he will understand me when I say that any incense that is burned on the altar of the Treasury at this time of the year will be very gratefully received. The fact that the hon. Member's was a maiden speech after a by-election indicated, I think, the general character of the arguments which he presented, very forcefully and very effectively, I am sure, to his constituents.
  If I remark upon one aspect of what he said, it is not for the purpose of having

  1467
  a quarrel with him, but in order to correct what, I think, is a mistaken point of view. He said, and I was very glad to hear him say it, that he would accept the proposition that, in the circumstances in which we stood, contributions ought to be got from the community as a whole; of course, he objected to the proportion, but really it is a most profound error to speak as though the proposals embodied in this Finance Bill did not fall with very great severity on the rich. I think it is perfectly right that heavy contributions should be got from those who can contribute most. I have never differed from that view. It is a perfectly sound principle. But it is not correct to represent the main proposals of this Finance Bill as being a departure from that very necessary rule. I have raised the Income Tax to 5s. 6d. Quite true. But does everybody in this House and outside realise that no single soul in this country except a Surtax payer ever pays 5s. 6d. in the £ on the whole of his income? The scheme of our taxation is one which makes, as we all understand, a graduated scale, and the only people who can ever pay 5s. 6d., rather than a lower figure, on the whole of their income are people who, in fact, are within the Surtax limits. That is the result of the abatements which the hon. Gentleman so happily referred to by saying that he has only recently joined the chosen band of those who might have to pay.
  Let me illustrate the effect of this Bill on the richer members of our community. You can find out what is the total of the Income Tax, Surtax and Death Duties which are gathered in a year from the group of people who are within the Surtax limits; and these are the figures: in the case of Income Tax, something like £134,000,000; in the case of Surtax, another £62,000,000; and in the case of Death Duties, £69,000,000. That makes a total of £265,000,000 in the coming year, as far as can be estimated, which will be provided from those three taxes by those who are Surtax payers—only 100,000 people. Without discussing whether that is enough or too much, it really is presenting the matter without any sense of proportion, as it seems to me, if one does not realise that, taking those three taxes together, 100,000 Surtax payers are, in fact, contributing enough in this year to pay the cost of Defence
  1468
  charged to revenue in the year or, to look at it in another way, the cost of the social services.
  If you take those 100,000 Surtax payers, and select out of them those who are the richest of all, those with incomes exceeding £10,000—and there are about 10,000 of them—you will find that of that £265,000,000 which I have just spoken of as being produced by direct taxation within the Surtax limits, no less than £133,000,000 is contributed by the 10,000. I can understand the argument that there ought to be other ways of collecting wealth; but what I have said does show that it is not a fair description of the Budget to say that it is failing to get a very big contribution from the very rich people.
  Mr. Benson: Is the amount of Death Duties that the right hon. Gentleman has said could be got from Surtax payers an estimate, or can the Treasury actually link up the two taxes?
  Sir J. Simon: I had the same reflection when I saw the figure as the hon. Member has. It is a natural question to ask. I am informed that the estimate can be made, and I have given it as it is given to me. But it is a significant figure, because it shows that the £69,000,000 which comes from the Surtax paying class is £69,000,000 out of a total this year of, I think, £88,000,000. I am not seeking to make any controversial point; I am asking the whole House to consider whether it is not fair to say that the provisions in this Finance Bill are made with a view to getting substantial contributions from all quarters in a fair proportion.
  Mr. E. J. Williams: If the right hon. Gentleman will allow me —
  Sir J. Simon: I cannot give way too often. But no doubt the hon. Member has some original idea.
  Mr. Williams: I just wondered whether the right hon. Gentleman would take the other side of the balance sheet, and say how much the Surtax payer is receiving by way of interest on War stock out of the Budget.
  Sir J. Simon: I cannot do that; it would not be relevant. The real point is to see how the tax burden is distributed between different sections of the population. When I hear this argument about the increase in the tea tax, which is expected to produce this year £2,750,000,

  1469
  my answer is that I would never for a moment deny that that is by itself a more severe burden on a small income than it could be on a big income, but I think that I am justified in saying that, taking a fair view of the Budget as a whole, it is a perfectly honest attempt to spread the burdens as they ought to be spread through the whole community. I believe that outside this House that opinion is so widely held that a proposal which was expected to produce a great storm has been recognised as being, on the whole, tolerable, and I hope, as far as any tax can be, acceptable.
  I now turn to the speech of the right hon. Gentleman the Member for Hillsborough (Mr. Alexander). I will take, first, his statement that one of his objections to the Finance Bill was that it represented a continued policy of unbalanced budgets. Here again—he was good enough to say that I have been perfectly frank—I have made it clear from the beginning that if we were to rely on taxation alone, without resource to loan, there would be £120,000,000 to find—there would be at least that. There is a sense, no doubt, in which any Budget can be regarded as not balanced if tax provision for any service is supplemented by borrowing. At the same time I think that we are entitled to claim, as the hon. Member for East Birkenhead (Mr. White) said in his speech just now, that through these difficult times we in this country as a whole are struggling to keep on the straight road when we have many bad examples set us in various parts of the world. In the present case this borrowing of £90,000,000 for Defence purposes which we are meeting this year, is, it is fair to say, compared with the total defence expenditure of 340,000,000, a small proportion.
  The justification for the Defence loans have been discussed in this House again and again. While there is no hard-and-fast rule by which you can decide whether, in a given instance, the policy of borrowing is justified or not, I think that the argument for dealing with the matter as we have dealt with it is a strong one. There are some simple cases in which most people would have no difficulty in coming to a conclusion as to whether borrowing should be resorted to. If you have a project of a non-recurrent nature, if it involves expenditure of
  1470
  abnormally large sums within a short period, and if the expenditure is going to produce assets which will provide a constant revenue, if all these conditions are satisfied, the case for borrowing on the most classic principles would, I think, be met. We would be perfectly justified in borrowing, say, for telephone development. But we are not dealing with a case as simple as all that, but with a much more difficult and complex case. Some of these tests would be satisfied, and others of these tests would not. It is true that the outlay which we arc now facing is a terrific outlay, and it is also true that it is not being incurred simply for the benefit of the present year. There are large items of expenditure this year, such as the erection of these shadow factories, which certainly could not recur year after year. They represent the spending of money on something which will have a remaining value. It is true that our plans include a large element of what might be fairly called exceptional expenditure and that that expenditure is designed to be of advantage for years to come and not only for to-day. The figures are abnormally large. But it is very important, from the point of view of all who look seriously at our finances, to realise that, though this is vital and indispensable expenditure, which we must find and we must meet whatever happens, still it is not the sort of expenditure which produces revenue in future years. Rather it adds to our liabilities. Therefore, I willingly admit, and every serious student of the subject must admit, that this is a far more difficult case than a simple case of borrowing.
  I have asked myself, and I ask the House for a few minutes to reflect on what sort of considerations should guide our action about it. I have laid down for myself one or two warning propositions. I make this observation: Borrowing may mean paying later on rather than paying now, but it means paying all the same, and, after all, that is a very serious consideration for a Chancellor of the Exchequer to determine in a given year that he can resort to borrowing for meeting some portion of the burdens of the country. It is so easy—we all have it in our own sphere; it is a human failing—to see our immediate burden and our difficulty very clearly indeed, and we recoil and say, "I cannot do that. How can I get through next week?" It is much

  1471
  more difficult to look ahead, but by postponement there may none the less be a more difficult situation later on. That was the reason why I ventured to say in my Budget speech, that I knew perfectly well that, if I met all this extra expenditure by borrowing, I should be taking the easy course. But I warned the Committee then that it would be the easy course for the moment, but it did not follow that it would be an easy course when we looked at it later on.
  There is a second warning proposition which I would venture to make. We talk about abnormally high expenditure. We say, "These things should be postponed or put upon other shoulders because the expenditure is abnormal," when what we really mean is, that it is a great deal higher than it used to be. Expenditure on national defence not so very long ago was of the order of f £110,000,000, and certainly, as compared with that, we are facing very abnormal figures. There was much force in the observation made by more than one speaker this afternoon, that we must judge the abnormality of the expenditure by reference to the future rather than to the past. It is my duty to warn the House and all of us to look at this circumstance. We must not assume that we shall get back to lower figures as easily as we would wish. The expenditure we are incurring, absolutely necessary as it is, in its turn is going to mean that we shall have a larger outfit to keep in condition, and the maintenance of it, apart from everything else, will not be a small but may be a large figure.
  I am making these observations, I think the House will see, in an effort to serve the House, and not in the least with a desire to defend myself or anything of the kind. The responsibilities I have just now are pretty big, and I feel it my duty to take this opportunity to point out these considerations, somewhat gloomy and serious as they may seem. I think that our expenditure, as things have turned out, was abnormally low when we were trying to bring about unilateral disarmament, and we are now under an obligation to improve our defences. At the same time we must consider what is likely to be the development in the future, and not lightly assume that we shall get back to easier times.
  1472
  I think that in those circumstances we were justified in taking the middle course. As I expected, the middle course is criticised by two sets of people from opposite points of view. We get people, the purists, who tell you that you should not borrow at all. Let them sit down and imagine exactly what their proposals would have been on Budget day in respect of that additional £120,000,000 which was required? You get other people who have been inclined to suggest that the whole of the money should have been borrowed. It is now clear that the general good sense of the country, without partisanship—we have plenty of things to quarrel about—on these essential and fundamental financial arrangements, does take this middle view and recognises that it was right to make a modified use of both resources—of borrowing and of taxation. I would call attention to the fact that observers abroad, our critics over the world—and we have many—are not reproaching us for failing to pay our way or because we have used these two resources, taxation and borrowing. They are very much more impressed by the fact that the country as a whole is resolutely facing and bearing its burdens. It is that in which they are interested. Their interest is in the fact that Great Britain is not insisting upon having recourse to an easier method which would have avoided additional taxation, but that the people are willing to recognise that, in the times through which we are passing, it is right that a certain burden by way of additional taxation should be put upon the country as a whole. That, I think, is the broad defence to the criticism that has been made.
  The right hon. Gentleman opposite early in his speech gave point to his general criticism of the Budget by some reference to the deadweight debt. I do not think that the right hon. Gentleman's account of this matter is quite complete. It seemed to me that he gave a view of it which was extremely partial and, indeed, one-sided. It certainly is, as he said, a very sobering thought that the deadweight debt is over £8,000,000,000. I should be the last person with responsibility to minimise that fact, but really I do not think that such a deep point can be made of this contrast between to-day and 1931 in that respect. He said that if we took this £8,000,000,000—it was

  1473
  £7,400,000,000, or a little more, in 1931–32—there was an increase of nearly £600,000,000, and he asked everybody to observe how much that bore out his criticism. In the first place, as the right hon. Gentleman indicated, nearly the whole of that difference—£550,000,000—is due to the Exchange Equalisation Account. It is perfectly correct to speak of the deadweight debt as having increased, but it is somewhat satisfactory that practically the whole of that increase is represented by assets. That makes an enormous difference.
  The Exchange Equalisation Account, it is true, has been put into being by guar-teeing public credit to the tune of £550,000,000, but it is an asset, and is making a profit, which is not the same thing as an addition to our borrowing without anything to show for it. The small balance such as it is—and I have only been able to have the figures looked at a little hastily—I think I am right in saying, represents in part the expenses of the conversion of the 5 per cent. War Loan. If we are going to look at the matter as a whole we had better realise that the important thing is not the size of the deadweight debt, but the annual burden which rests upon the people to-day in respect of that deadweight debt. If you have to pay a higher rate of interest it is increased, but if something has happened to reduce the rate of interest, the burden is reduced. The position is that in 1931, the first of the two years taken, interest and management of the then debt cost the country the annual sum of £298,000,000. Interest and management in 1937 was £216,000,000. The right hon. Gentleman was good enough to say that the present Government had the good fortune to find that they could borrow money more cheaply. Good fortune comes to people who direct their policy in the right way. What has really happened is that the burden of the debt has been most materially reduced as compared with 1931. Those facts ought to be borne in mind when we are having a serious and powerful argument put forward in comparing the deadweight debt of 1931 with that of 1937.
  Mr. Alexander: We recognise that there has been that reduction, but we remember that you were not meeting the interest charges on the American debt, which we were doing in 1931.
  Sir J. Simon: That is a fair point to make. The interest and management cost in 1931–32 was £298,000,000, of which, so far as I can make out, the interest on the United States debt was £13,500,000. That is a correction that should be made. If I subtract that £13,500,000, I have a balance of £284,500,000. That is the right figure.
  Mr. Macquisten: We were collecting money from other countries at that time.
  Sir J. Simon: The two comparable figures are that the annual burden was £284,500,000 in 1931, and £216,000,000 in 1937.
  I should like now to take the opportunity of making a short statement, as was promised from this Bench to-day, on another subject, with one aspect of which I propose to deal by an amendment in the Finance Bill. It has to do with the very difficult question of whether anything can be done to ease the burden of expenditure for air-raid shelters by a modification in the instrument of taxation. It is a very difficult and complicated subject, as I am sure everyone who has studied it closely will admit. The suggestion has been made from many quarters, and I have been considering it very closely, whether or not it would be possible to secure under Schedule A that the annual values of property shall not be increased for the purpose of Income Tax by reason of expenditure incurred in structural alterations, or additions, or improvements made solely for the purpose of protection in the event of air raids.
  I have felt for some time that there was a good deal of force in that argument, and that when the community is pressing on everyone to take a hand in providing shelters and protection it seemed odd, perhaps anomalous, if the expenditure which they incurred in answer to that pressure should actually increase the amount of tax which they have to pay under Schedule A. One of the difficulties that had to be overcome is this: it is not, I suppose, absolutely necessary but, to say the least of it, it is traditional and very convenient, that Schedule A assessment and assessments for the purpose of local rates should be dealt with, broadly, on similar lines. Therefore, a rating question as well as a taxation question arises, and I have done my best to devise a plan which will cover both. It appears

  1475
  that it is not possible to introduce in the Finance Bill, within the Rules of Order, any amendment in the law relating to the assessment for local rates. That will have to be done by another Bill, and that shall be done and as a result of consultation with my right hon. Friend the Minister of Health and my right hon. Friend the Secretary of State for Scotland I am able now to make this statement:
  The Government have decided to introduce legislation to secure that the annual values of property shall not be increased for the purposes either of Income Tax under Schedule A or of rating by reason of expenditure incurred in structural alterations, additions or improvements made solely for the purpose of protection in the event of air raids. So far as Income Tax under Schedule A is concerned, however, the exemption will, in the case of rented properties, be subject to the condition that the additions, etc., are not reflected in the rents thereafter payable in respect of the properties. If a bigger rent is charged there is no reason why we should make an allowance in respect of Schedule A. The House will not expect to hear the details of the necessary legislation which will, broadly speaking, be on similar lines for both purposes. But it may be for the general convenience if I give the following outline of the proposals:

  (1) No assessment, whether for Income Tax or rating purposes, of any property shall be increased by reason of structural alterations, additions or improvements made solely for the purposes of protection in the event of air raids. This provision will apply both to properties which are already in existence and to those which are hereafter built, but will be subject in regard to Income Tax to the condition that no increased rent is payable in respect of the alterations, etc., in the case of leased properties.

  (2) Where a shelter, which is occupied and used solely for the purposes of shelter in the event of air raids, has been provided as part of new property, no regard shall be had, whether for Income Tax or rating purposes, to any additional letting value arising from the provision of the shelter. But where such property is let, regard will be had in determining the assessment to Schedule A, to any rent payable.

  1476

  (3) There shall be exemption from both Income Tax and rates for separately assessed properties which are occupied and used solely for the purpose of shelter in the event of air raids.

  There are many cases where air-raid shelters are being constructed independent of the main house. If that is done it is a new property, and if the shelter is occupied simply and solely for the purpose of shelter in the event of air raids there will be no rate payable and no Schedule A applied. A Clause will be introduced for inclusion in the Finance Bill, and in order to give effect to the corresponding proposals in respect of rates, my right hon. Friend the Minister of Health will introduce legislation in the course of this Session.
  Now I return to a subject which is dealt with in the Amendment and was referred to by the right hon. Gentleman. He returned very forcefully to the charge that in connection with the expenditure for which this Finance Bill provides we are permitting excessive profits on rearmament. If there is anybody who is really interested in preventing that, it is the Chancellor of the Exchequer. He has more to gain than anybody from anything that can be done in that direction. Therefore, I am not in the least disposed to cavil because the point is made a very important one as a subject of inquiry in the Amendment. But I hope the right hon. Gentleman will allow me to make this general comment on what he said. I think it is pretty clear that so far as the references are references to dividends paid on ordinary shares, such references are very likely to be illusory when it is attempted to argue from that, that excessive profits are being made on armament contracts.
  The truth of the matter is that in the structure of many companies the ordinary shares fluctuate very much in their productivity. It constantly happens that the ordinary shareholder or the deferred shareholder gets no return. None the less he regards his holding as of value and is prepared to keep it because the time may come when he will get a considerable yield on his ordinary shares. If you have money invested in an average range of ordinary shares you find that over a period of years you will not get more than a very moderate return. Some companies will cease paying dividends altogether, some will in certain

  1477
  years pay a high rate, but on the whole the return will be only an average one. That fact must be looked at if we are to judge fairly what is the remuneration that is being produced.
  I should have thought that the real test, the proper test, is the relation between the total profits and the total capital employed, and I must add that it would be a very serious mistake to assume that you can get at the total capital employed merely by looking at the share capital. That does not in the least follow. You may have a company with a comparatively modest amount of share capital which, none the less, is able to provide itself with capital for its business, for its plant, its materials and its buildings not because it is spending the capital which has been subscribed by the shareholders but because its credit is good and, through borrowing from the bank, it has acquired greatly additional resources, and it is earning a return not on the subscribed shares but on the whole totality of the capital that is involved in the business. These are perfectly manifest considerations which anyone who looks at the matter seriously must allow as legitimate.
  Moreover, if we are to get a fair view one has to remember that share capital may have been severely written down in recent times. Everybody knows that that has happened to a great many companies in the iron and steel trades, to which the right hon Member referred.
  Mr. Alexander: In many of the cases that I quoted the share capital has been written back since.
  Sir J. Simon: I am not putting this in any captious way, but these are elements to be properly explored if we are to pronounce a judgment. A further point. It is surely quite an unfounded assumption if we assume that all these companies are engaged wholly on armament work or in some cases mainly on armament work. I happen to have looked at a passage available to me from a certain publication and I find that in the case of the English Steel Corporation even in 1937 60 per cent. of the company's work was ordinary commercial work. I think it is true that the iron and steel trade is more prosperous than it was some years ago, and I am glad of it. I believe that that is partly because of the policy of the
  1478
  Government. At any rate it seems to me to be wrong to say that because you can show a great increase in the return on certain classes of shares that therefore that is proof that there has been vast profiteering in armaments contracts.
  What has really happened is this. As soon as our rearmament programme began we sought and obtained the very best expert advice we could find for the purpose of trying to devise an effective machinery to ensure that profits should be reasonable and not excessive, and I think that anybody who examines the elaborate system that we have will not treat the Government or the Government Departments as though they were indifferent on this subject.
  I am not at all saying that everything is perfect and nothing more needs to be done. I am not in the least complacent about it, but I ask the House to take a fair view about this, because it seems to me that it is a jaundiced and untrue view that Government contractors are left to their own devices to accumulate wholly unreasonable profits. I believe that the methods that are being adopted, which have been discussed in great detail both by the Public Accounts Committee and the Estimates Committee, and have been examined by many impartial persons, are very thoroughly and ingeniously devised to secure what must be secured, that the State when it places these contracts is not exploited.
  Mr. Alexander: What we are anxious about is that the Chancellor should consider two things. In the first place, the basis of his policy of check should not be that of allowing a fixed margin upon every single commodity produced, that is to say for an aeroplane £300, or a certain amount for a particular type of ammunition, gun or rifle. In the second place, we have had no answer yet to the case put by the hon. Member for Ipswich (Mr. Stokes) on the Budget Resolutions. I should like to know that those things are being inquired into.
  Sir J. Simon: I have not omitted to observe what was suggested, and that very suggestion is in course of being investigated. The Amendment mentions subsidies to private industries. I am always a little surprised when a Socialist raises this question. I myself, being a believer on the whole in private enterprise, think, other things being equal,

  1479
  that it is better to let private enterprise fight its battles, win them if it can, and sink if it cannot. I regard cases of helping particular industries by subsidies as essentially exceptional and as cases which must be justified, either because of special need or of special difficulties. But I am not a Socialist. I cannot understand a Socialist who wishes to see a vast variety of enterprises carried on, whether they make profits or losses —
  Mr. Montague: You cannot make a profit under Socialism. You ought to have studied the subject better than that.
  Sir J. Simon: The hon. Gentleman makes a most illuminating observation which throws a flood of light. He says that in a Socialist State you cannot make a profit.
  Mr. Montague: Or a loss. May I explain.
  Sir J. Simon: I really think I understand.
  Mr. Montague: You do not understand Socialism.
  Sir J. Simon: The system, I understand, is one in which there are to be no rich men and the whole of the revenue is to be got by taxing the rich. If any particular enterprise—railways, waterways or anything else—does not make a profit it does not matter a row of pins, because in the Socialist view there is no such thing as profit and no such thing as loss.
  Mr. Montague: Produce what you want and enjoy it.
  Sir J. Simon: It is a system under which you produce what you want and enjoy it. How you pay for it no one knows. [Interruption.] I shall have to apply to the hon. Gentleman for private instruction.
  I shall not speak on the duty on power alcohol, the subject of the speech of the hon. Member for Rusholme (Mr. Radford), except to say I hope very much that a tax of a little over rd. on each gallon of the particular mixture that he is interested in will not entirely destroy the fortunes of a company, which I understand last year made a larger amount of profit than the whole of its paid-up capital.
  Mr. Radford: Can the right hon. Gentleman tell me of any other commodity where a tax is applied with the intention of taking the profit, if it is available, as it cannot be passed on to the consumer?
  Sir J. Simon: On another point in the Amendment I do not think that the additional tax on oil that we are proposing is going to do the injury to road transport that is supposed. The capacity of the road transport industry to meet the demands of this taxation is very easily illustrated. The number of commercial passenger vehicles in use has increased from 45,700 in 1934 to approximately 51,000 in 1937. If you take commercial goods vehicles, as between the same dates they have increased from 403,000 to to 463,000, and the number of cars taxed according to horse power has risen in the same period from 1,308,000 to 1,798,000. I really think the motoring community is prepared to accept this additional contribution and recognises that it is not an unfair demand to make.
  I come lastly to more general considerations. For practical purposes we are facing a £1,000,000,000 Budget. When I look back to the days when I was a young Member the contrast is perfectly staggering. It is true, no doubt, that the State now undertakes a far widen range of duties than it used to undertake in the old days, and I think the change is all for the better. It is right that we should regard the instrument of taxation as a method by which we attempt to do something to adjust inequality and I believe that has become the general opinion of the country. There has been one Chancellor of the Exchequer in the last generation or two who never produced a Budget. That was Lord Randolph Churchill. In the autumn of 1886 he was preparing his estimates, but he resigned in December. What was the staggering prospect which caused him to break his career and resign? It was that the Defence Services were demanding no less than £31,000,000. Here we are facing a total of £300,000,000. We are unquestionably facing a very serious position. I am not at all disposed to minimise its seriousness, but, though we have to face it, and will face it, it is my firm belief that, if we do our utmost to maintain sound principles of finance we shall get through it. We are doing it most of all for the sake

  1481
  of the defence of our native land and the security of beliefs and convictions which we all share.
  When I first went to the Treasury and began to study the complicated and technical questions which every Chancellor of the Exchequer has to do his best to understand and pronounce upon, to one who has not been all his life a trained economist the task appears very serious and difficult indeed, but in this, as in so many other things, there are sometimes simple principles running through very complciated technical and difficult questions. This immense provision that we are calling upon our fellow-countrymen to make for Defence illustrates a very simple economic principle. We are spending this large sum for the sake of liberty. The law of supply and demand teaches that when things are abundant they can be got cheaply and when they become very rare they cost more. Liberty is not so abundant as it ought to be. This country has to preserve that precious thing and, in preserving it, it must pay the price.
  7.15 p.m.
  Mr. Bellenger: The right hon. Gentleman the Chancellor of the Exchequer in the course of his speech attempted to define Socialism. I am not going to attempt to explain what it really is, but if the right hon. Gentleman does want to know something about the subject and is thinking of using the knowledge he gets for political purposes, ha cannot do better than go to the hon. Member for West Islington (Mr. Montague). I was sorry to hear the hon. and gallant Member for Bournemouth (Sir H. Croft) refer to the cost of primary and secondary education in the manner he did. I do not think it is unfair to suggest that the education of his own children would be one of the last things upon which he would attempt to economise, and I suggest that it is false economy to cut down the expenditure on our educational services.
  Sir H. Croft: I hope the hon. Member will not imagine that I said any such thing. What I said was that the number of children approaching school age was decreasing and, therefore, in view of our armament expenditure we should be wise in not increasing our expenditure on school buildings in the immediate future.
  Mr. Bellenger: I understood the hon. and gallant Member to say that we should
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  decrease our total expenditure on education. In answer to a question as to the component parts of this expenditure the Parliamentary Secretary gave the figures which go to the cost of educating a child and also the figures for building costs. Many of the buildings in this country, particularly in rural areas, are totally unfit for the education which is to be given, and I suggest that it is false economy to reduce our building costs, just as much as it is false economy to leave slums standing. That is why hon. Members in all parts of the House are agreed that slums should be pulled down and rebuilding take place.
  Many of the things which the Chancellor of the Exchequer has said are fundamental and worthy of the consideration of hon. Members, wherever they may sit. Many of them are truisms, but there are certain aspects of his speech with which I cannot quite agree. The right hon. Gentleman referred to the burden of debt, and attempted to show that between 1931 and the present year it has been considerably reduced. As far as the figures go that is true, but the same would be true in the case of a person who purchases a house, borrows the money from the bank or from a building society, pays the interest on the money year after year, but makes no provision for the redemption of debt. That is what is happening in the case of the National Debt. The figures the right hon. Gentleman gave only showed the cost year by year of the maintenance of that debt, and no provision is made for redemption. Any provident individual, whether he has a hank loan or is buying his house through a building society, generally puts aside a certain sum of money for the reduction of the debt for what is generally a depreciating asset, and it would be well in the management of the country's affairs if some provision for amortisation of the burden of debt was made. A quarter of the National Debt consists of War Loan, provided during the years of the War for destructive purposes, and if we are unfortunately engaged in another war in the future it would necessitate more loans. I ask hon. Members to reflect on what the position is likely to be. Previous wars have caused the piling up of debt, and then the debt has been repudiated. I suggest to the right hon. Gentleman that we cannot continue piling up debt in the manner

  1483
  we are in non-productive enterprises, without at some future date envisaging the possibility of repudiating the capital sum we have borrowed.
  I want to deal with the Clauses of the Finance Bill which relate to tax evasion, but before doing so I want to make one or two observations on the Exchange Equalisation Fund. The right hon. Member for Hillsborough (Mr. Alexander) paid a tribute to the right hon. Gentleman for giving the House information as to the gold holdings of the fund, but the Chancellor of the Exchequer knows that the gold holdings are not the only asset of the fund. I think that we ought to get a balanced view of this fund. After all, there is £550,000,000 of credit in the hands of the Government about which the House knows very little indeed, and if the House of Commons is to be the guardian of the national finances, we should know as much as possible of all the transactions which take place. Would it be possible to disclose, in the same way as the right hon. Gentleman has disclosed the gold holdings of the Exchange Equalisation Fund, something about the other assets? Would it be possible for the Government to say something about the profits? I think the fund is an additional weapon in our economic armoury. I regret the necessity for this huge fund in different countries. It is hidden in mystery, but it can be a potent weapon in the economic warfare going on between countries, and I suppose that leaving the Gold Standard made it inevitable that a fund of this nature should be set up.
  On the Finance Bill, I regret that it has not been possible for the Chancellor of the Exchequer to make a better allowance to married men in the way of wife's allowance and children's allowance. I should like to have seen the right hon. Gentleman do something for a class of individuals who are most deserving and who in times like these ought to be encouraged. The burden of children on parents is extremely onerous especially in the early years of the children's lives, and I had hoped that the right hon. Gentleman would have reverted to the allowances which operated at the time of the economic blizzard.
  There are seven Clauses in the Bill dealing with tax evasion, and they occupy
  1484
  something like nine pages. So far, very little has been said about these Clauses, and the right hon. Gentleman did not find it necessary to refer to them. I think the Chancellor of the Exchequer has made considerable efforts to put a stop to this unworthy evasion of taxes by people who ought never to attempt it. Tax evasion is largely among Super-tax payers, and I think the House viewed with considerable alarm the fact which came out in a notorious law case recently that certain individuals in high places in this land, with more than adequate incomes, are attempting to evade their liabilities and obligations. As we say in our Amendment, if money is to be found it is obvious that it must be found in the taxation of those who are best able to bear the burden. I pay a tribute to the right hon. Gentleman's efforts to see that those who are able should pay their taxes.
  I should like to ask one or two questions on these Clauses. Clause 32 says:
  " where any such power as is referred to in paragraph (a) of this Sub-section cannot be exercised within the period of six years from the time when the first of the annual payments so referred to becomes payable."
  I should like to ask why the period of six years has been put in, and also what provision is made to insure that payments duly reach the trust or the objects of the settlement? I think it is possible that trusts may be set up and settlements made under the provisions of which money which is supposed to go to the beneficiaries actually never leaves the settlor, and remains in his pocket as his income. Is there any provision in the Bill to prevent that happening? A similar question arises later on in the same Clause. The Chancellor of the Exchequer has made provision in the Finance Bill, as his predecessor did, to stop tax evasion. It is a well-known principle of our tax law that the subject is only liable to pay taxes which have been provided for in the Finance Act or other Acts of Parliament, and if there is no provision in the law whereby he should pay taxes, then he need not pay taxation. Under that principle it has been possible for taxpayers to avoid liability, and in doing so they have provided a very nice income for lawyers.
  Would it not be more simple to do as I understand they do abroad, and that is to throw the whole onus on the owner of the income, and to say that where an indi-

  1485
  vidual has an income, of whatever sort and from wherever derived, it should be regarded prima facie as his own income and, therefore, liable to taxation, and that the onus should be upon the individual to show that it was not his own income? If some such method as that were adopted, instead of trying to stop leaks as they occur, and as they are likely to occur in the future, I think we should have a much simpler method of getting taxes in. We should not require the courts to adjudicate on all these intricate questions, with the cost to those engaged in trying to avoid taxation or even to the Commissioners of the Crown in trying to enforce taxation. It would be possible perhaps for the Special Commissioners to settle these things with a jury of the taxpayers themselves in a far simpler manner than is provided for in this Bill.
  I generally set myself about a quarter of an hour or 20 minutes when I rise to speak in this House, and I do not like exceeding that limit, particularly when there are others who want to speak, but may I say, in conclusion, that we on this side realise the difficulties of every Chancellor of the Exchequer, whatever his political views may be. We know that when the time comes for us to occupy the seats occupied at present by the Government supporters, our difficulties will be just as large as, and perhaps larger than, those of to-day's Government, but we suggest to the right hon. Gentleman that an attempt must be made, and not necessarily in the orthodox fashion which has been adopted by the right hon. Gentleman himself in this Bill, to put the finances of the country on a much more stable basis. It must be obvious to hon. Members opposite, many of them business men themselves and some of them financiers, that you cannot go on increasing the enormous debt of this country, and thereby piling up the current expenses of management and interest from year to year without sooner or later something terrible happening. We have seen this Government transfer £2,000,000,000 of War Loan from a 5 per cent. to a 3½ per cent. basis, and that was all to the good. It reduced the management part of the debt. But there is this tremendous capital debt piling up, which is likely to increase probably at a much heavier rate if our rearmament programme increases as we are led to believe that it will increase. What steps are the Government taking
  1486
  to deal with this very serious problem? It is because we believe that they are not taking the right steps to-day, that we have put down our Amendment.
  7.34 P.m.
  Mr. Hely-Hutchinson: I thank you, Sir, for this opportunity of speaking in support of the Finance Bill. As I listened to the hon. Member for Bassetlaw (Mr. Bellenger), I derived both refreshment and support from what he said—support because of the very strongly orthodox tendency of his remarks on the growth of the National Debt, refreshment from the more personal note when he made reference to the burden which all parents bear and suggested that the Chancellor might give us some additional relief. But when he went on to ask the Chancellor for an alteration of the whole basis of our Income Tax law, and to put the onus of determination of income on the taxpayer, I think he had not really thought out his problem. He said that everybody who receives income should have the onus on him of establishing that it was not his own income.
  Mr. Bellenger: What I said was that prima facie it should be accepted as the income of the taxpayer and, therefore, as liable to taxation, unless he could prove that it was not his own income, by the instruments that he is using to-day, by which, incidentally, in one of the Finance Acts, if he transfers money abroad, he can avoid payment of taxation, if he can prove that it was not transferred for the purpose of evading taxation.
  Mr. Hely-Hutchinson: Perhaps I misunderstood the hon. Member, but surely a definition of income is necessary before a taxpayer can be taxed upon it. There can be no such thing, for taxing purposes, as a definition of income other than a statutory definition. Any receipt of money is not necessarily income. It is not sensible that every receipt of money by a private individual or company is to be presumed to be income until the taxpayer has established that it is not.
  I find myself so heartily in support of the general outlines of the Finance Bill that I do not wish at this time to say very much in reference to them. There may be some minor points with which it may be more suitable to deal at a later stage, but I would like to refer to the speech of my hon. Friend the Member for Rusholme (Mr. Radford) on the sub-

  1487
  ject of the 9d. duty on alcohol, and to say that I am entirely in sympathy with the suggestion of the hon. Member for East Birkenhead (Mr. White) that the tax which is now proposed should be retained. The hon. Member for Rusholme very frankly admitted that he had a personal interest in the matter. For my part, I have no interest, so that the House need not regard this as a sort of internecine struggle between two deep-sea monsters. I feel that this tax, which is now proposed, falls on an article which is manufactured from a raw material 92 per cent. of which is imported from abroad, and on its way to us across the seas that article takes up two-and-a-half times as much tonnage space as the finished article would take if imported. When we are doing, as we must now be doing, everything with an eye to the necessity of economy of ocean tonnage in war time, I think this is an article to which we need not show any special favour.
  I would like also to associate myself with the remarks of the hon. Member for East Birkenhead on the subject of the incidence of the National Defence Contribution on the income from investments which constitute the reserves of insurance companies engaged in forms of insurance other than life insurance. I think those companies have made out a very strong case that the holding of investments is not a regular part of their business. The part of their profits which is properly the subject of taxation, and which, therefore, properly falls under the scope of the National Defence Contribution, is the excess of their premium income over their expenses and claims. I hope that my right hon. Friend will entertain the suggestion that the incidence of this tax should be confined, as it is in the case of other companies to whose operations investment is merely incidental, solely to the operating profits of those companies.
  Believing as I do in the general structure of the Finance Bill, I feel that there is very little that I need say in direct support of it, because I think it carries with it its own commendation. I propose, therefore, to confine myself much more to knocking down some of the ninepins which hon. Members opposite have kindly set up for us in the form of the Amendment which stands on the Paper in the name of the Leader of the Opposition. In the
  1488
  first place, may I say how cordially I welcome the opening phrase of that Amendment:
  " That this House regards with concern the continuing policy of unbalanced Budgets."
  I think that is a sentiment which finds an echo in every corner of the House. We none of us like to see unbalanced Budgets, but coming from hon. Members opposite, it is particularly interesting to me, because of an impression which I received in the first few weeks of my membership of this House, when I heard hon. Members opposite offering a direct challenge in words to the proposition that good finance and good government are merely different aspects of the same thing. I paid great attention to that challenge, because I feel that any views sincerely maintained by a considerable body of men must necessarily rest upon, or be presumed to rest upon, a rational process of thinking. The only explanation that I could find of that challenge to the proposition that good finance and good government are practically the same thing was the suggestion that perhaps hon. Members opposite looked at finance solely as a matter of money, and felt that there should be higher values than mere money considerations which should be taken into account in matters of government.
  I do not know whether I have correctly interpreted their views by that statement, but I would like to offer to hon. Members opposite a slightly different conception of finance. Finance is concerned primarily, as I understand it, with the making and fulfilment of promises. I believe the word itself in its derivation has nothing whatever to do with money. Money is merely incidental to it, because we happen to live in a money economy. Promises are capable of expression in terms of money, measurement in terms of money, and fulfilment in terms of money, and as government is little else than the making of a series of promises —

  ROYAL ASSENT.
  Message to attend the Lords Commissioners.
  The House went; and, having returned —
  Mr. SPEAKER reported the Royal Assent to—

  1. Increase of Rent and Mortgage Interest (Restrictions) Act, 1938

  1489

  2. Workmen's Compensation (Amendment) Act, 1938.

  3. Evidence Act, 1938.

  4. Patents, etc. (International Conventions) Act, 1938.

  5. Poor's Allotment in Hanwell Charity Scheme Confirmation Act, 1938.

  6. Forfar Corporation Water Order Confirmation Act, 1938.

  7. Irvine and District Water Board Order Confirmation Act, 1938.

  8. Bournemouth Corporation (Trolley Vehicles) Order Confirmation Act, 1938.

  9. Blackpool Improvement Act, 1938.

  FINANCE BILL.
  Question again proposed, "That the words proposed to be left out stand part of the Question."
  Mr. Hely-Hutchinson: I was venturing to suggest that finance provided the means for the expression, the measurement and the fulfilment of the promises of government in money, and that therefore, the proposition that good finance and good government constitute the obverse and reverse of the same coin may perhaps prove acceptable to hon. Members opposite. But there are special reasons why we may regard with concern the continuation of unbalanced Budgets, all the more because it is not a policy, but an inescapable sequence of events. The most depressing realisation which a newcomer to politics experiences is that when the Budget comes before Parliament, the item of expenditure has already been decided long ago, not merely when we pass the Estimates, not merely when Bills are passed previously in the Session, but we are dealing with the commitments of British Governments made over a very long series of years in the past, and the function of the Finance Bill is not to cut down expenditure, but to find what means there can be of raising the necessary money. I think that what I may say on this will be accepted possibly as the reflections of a tenderfoot in politics; but another aspect of the matter which causes a newcomer great concern is to realise that the competition between the great political parties in the State nowadays is not to show how economical they have been, but to prove how much they are spending.
  1490
  Hon. Members opposite go to their supporters in the country and say, "Vote for us, and we will give you a piece of pie." Hon. Members on this side have to devote their entire time to showing the country how much pie they are already handing out. As expenditure grows, it becomes increasingly difficult to resist each new item of expenditure. We are spending £I,000,000,000—why should we boggle at an extra £10,000,000, £20,000,000, or £30,000,000 for old age pensions? One realises that it has become well nigh impossible for the House to resist demands made on the public purse on compassionate grounds. While I realise that what I am now saying is not practical politics, it is nevertheless a matter for regret that no great political party dares to tell Englishmen, as a cardinal point of its policy, to rely on themselves. So it comes about that, in words which I read the other day, Parliament has come to be a place where A and B put their heads together and decide what C shall give to D. As far as D is concerned, that is a process which goes down very easily, but every now and then C, the taxpayer, makes a protest, and the art of politics has refined itself down to the scientific anaesthetisation of C so that the extraction may be as painless as possible.
  But the growing volume of taxation has an important bearing on certain features of the present Budget. One of the problems with which the Chancellor is faced is that of the evasion of taxes, and as we know that income can only be, for purposes of taxation, statutory income, as the level of taxation grows so do we find an increasing tendency on the part of taxpayers to avail themselves of all statutory provisions for avoiding liability to tax. Indeed, we had an example of it to-day. I should like incidentally to associate myself with others in congratulating the hon. Member for Lichfield (Mr. Poole) on the most attractive, forcible and sincere maiden speech which he made. It was interesting to note that the hon. Member referred to the fact that he had never been in the class of the Income Taxpayer, and that on arriving in the House he very quickly acquainted himself with those statutory provisions whereby he could avoid liability to unnecessary taxation. In so doing he was following the precept of a gentleman, no longer a Member of the House, Sir

  1491
  William Jowett, who was at one time Attorney-General in the Labour Government, whom I heard lay down in court the principle that every man was entitled so to arrange his affairs as not to attract the maximum amount of tax. That is a principle which becomes more and more acceptable to taxpayers the higher the rate of tax imposed.
  Passing from the central part of the Amendment moved by hon. Members opposite, we come to the really important part which is the sting in the tail. The right hon. Gentleman opposite castigated my right hon. Friend for not raising the necessary wealth from "the taxation of great wealth." I hope we shall hear a few more speeches from hon. Members opposite in order to define exactly what is meant by that phrase "the taxation of great wealth." I presume it does not mean great aggregations of wealth as such, because the largest aggregation of wealth in this country is that which is represented in this House by the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) himself. We are not, therefore, concerned with the taxation of great aggregations of wealth merely because of size. From what has been said by hon. Members opposite, I can only think that they have one body of people in mind when they talk of "the taxation of great wealth," and that is the Super-tax payers. My right hon. Friend has given figures showing the burden of taxation already borne by the Super-tax payer, but I happen to have been looking at the figures myself from a slightly different angle, and it is possible that the House might find another presentation of the case interesting.
  There are, in very round figures, 100,000 Super-tax payers in the country, or, roughly, one in every 450 of the population. Their income upon which tax falls is, again in very round figures, about £500,000,000, which is about one-eighth of the total national income. These 100,000 Super-tax payers are already paying nearly one-half of the total Income Tax collected from all taxpayers. It is very simple to show that 5s. in the £ on £500,000,000 is £125,000,000. On top of that, they are paying Super-tax which takes, on an average, the equivalent of a further 2s. 6d., or £62,500,000, so that already 7s. 6d. in the £ has gone
  1492
  from their income and they are left, on the average, with 12s. 6d. in the £. When we raise the Income Tax from 5s. to 5s. 6d. in the f, nearly half the total additional sum raised from the taxpayers comes from that class. Out of the £25,000,000 to £27,000,000 which is being raised this year out of the additional 6d. on the Income Tax, something like £12,500,000 comes from the Super-tax paying class. It is important to realise that the more we have already taken from the Super-tax payer the bigger proportion will the increase in tax bear to what he has left.
  Another consideration which is worth bearing in mind is that the average Super-tax payer has from 15 to 25 people dependent upon him in his household, taking into consideration his own family, his servants, and the wives and children of those of his servants who happen to be married. Thus the remainder of the 12S. 6d., which is now whittled down to some such figure as £312,000,000, is not the income of roo,000 people. It is the income of about 2,000,000 people. Regarded from that point of view, it does not look like the concentration of wealth in the hands of too small a number. With the growing amount of taxation it is an undoubted fact that the majority of Super-tax payers are living up to the level of their income; when they are faced with additional taxation, the only way they can meet it is by cutting down their expenses in some direction, and how can they do that without buying less from someone or else discharging one of their unfortunate servants towards whom they feel a sense of responsibility?
  I think this general proposition of trying to put every additional burden that arises on the shoulders of the Super-tax payers is advanced without fully thinking out the problem. I can hardly expect hon. Members opposite to take such a suggestion from me. [HoN. MEMBERS: "Hear, hear!"] Well, about seven or eight years ago, before I was a Member of this House, I happened to be in the Gallery listening to somebody to whom I think hon. Members opposite would pay attention. I refer to the late Lord Snowden, then Mr. Philip Snowden, who was Chancellor of the Exchequer in October, 1931. He was speaking on the Third Reading of the Emergency Finance Act which was found necessary that year to

  1493
  deal with the crisis—that crisis which the right hon. Gentleman the Member for Hillsborough has compared with what he describes as the present crisis. I dare say the arguments which obtained at that time carry force to-day. What Lord Snowden said on that occasion stuck in my memory. I have looked it up in the OFFICIAL REPORT and I think it might interest hon. Members to hear these words, spoken by him in October, 1931:
  " I put before the House of Commons and the country last February a statement of the financial position…. I addressed a special meeting of the Labour party…. What support did I get there? I got none. The only thing they did was to talk the usual clap trap about going to the Super-tax payer."—[OFFICIAL REPORT, 2nd October, 1931; col. 772, Vol. 257.;
  8.9 p.m.
  Mr. Stokes: I do not propose to follow the hon. Member for Hastings (Mr. Hely-Hutchinson) into an examination of unbalanced Budgets, but I cannot allow his remarks to pass unchallenged. I would remind him that the state of trade in the world in 1931 was very different from the state of trade to-day. Here we are at the height of a boom and the Government still find themselves unable to balance their Budget. The hon. Gentleman went on to talk about what he called, I think, "handing out cake." He said that we on this side went to the people and promised them the moon, whereas hon. Gentlemen on his side had to go and explain to the people why they could not have the moon. Be that as it may, it is strange to many of us, possibly on both sides of the House, that when war looms ahead there appears to be any amount of that curious thing called credit available for war purposes, but the moment there is any sign of peace the greatest restrictions are found necessary, and it is impossible to carry out the kind of social measures which we on this side desire. The hon. Gentleman expressed doubt about what we meant by "the taxation of great wealth" and he supposed that it meant going for the Super-tax payer again. I do not propose to go at length into the various methods of bringing about a better distribution of wealth, but I would remind the hon. Member that one of the biggest values in this country is the value of land, and one of the best ways of raising revenue is that described in the well-known phrase, "taxation of land values."
  1494
  I desire this evening to confine myself largely to two proposals, which, I think, might assist the Government in reducing the cost of rearmament and in maintaining our export trade and, therefore, helping generally to keep down the amount for which it is necessary to budget. I am glad to hear from the Chancellor of the Exchequer that he is examining proposals for the more direct control of profits, and I hope we shall hear in due course that his investigations have met with success. I want to refer once more to what I call the "racket" in raw materials which is having disastrous effects on our heavy industries in their export trade. I can see the time coming when rearmament will have come to an end and when, owing to raw material prices having risen out of all bounds, our heavy export trade will be reduced to a minimum, and what we have lost will be irrecoverable. I wish to give the House some figures on this point. In the heavy industries, pig iron is the material which matters most, and that has gone up by 55 per cent. since 1936. I am unaware that it costs more to produce iron ore. As far as my mechanical experience goes, I am certain it costs a great deal less. The fly in the ointment—and I am assured of this by one of the biggest pig iron manufacturers in the country—is that the price of coking slack has increased by too per cent., from 8s. to 16s. a ton. The inevitable result is that the cost of pig iron has increased. On top of that, the cost of manufactured steel has increased by 33 per cent. With regard to the coal side of the question, I would like to read an extract from a letter written by the gentleman to whom I have just referred, following a speech which I made in this House in March. He complained that I had not been fair to the pig iron producer and stated that the coal-owner was the responsible person, and, with regard to central selling schemes he wrote:
  " They were introduced in the belief that they were going to reduce the cost of selling and get better prices for the benefit of labour. They have resulted in better prices being obtained, but this has been the beginning and end of their achievement and, as far as selling costs are concerned, these have not been reduced, but substantially increased. In other words, the machinery set up for controlling sales has acted merely as a controller for purposes of increasing prices."

  1495
  I suggest to the Chancellor that he might turn his examination glass on to the cost of this raw material. In connection with the price of pig iron I would tell the House of an occurrence which took place last week. The same friend of mine was concerned with the rising cost of manufactured goods, and wished to bring down the cost of pig by 10s. a ton. At the association meeting it met with opposition, and it turned out after discussion that the reason why agreement could not be reached with regard to a reduction in price was that the Import Duties Advisory Committee had made representations that it would be extremely inconvenient for them if the cost of pig iron were brought down at this moment because they had fixed until 31st December, 1938. I have already agreed to keep the price of steel no reason to doubt that that is true, and it would be a good thing if we could have an assurance that that matter will be looked into.
  I have a second proposal which concerns the vexed and difficult question which was discussed yesterday. I have been informed, and have read it in the Press, that not more than a few days ago a certain offer was made by Continental manufacturers of bombing airframes which, I am told, are in every way comparable with the machines which we produce; and they suggested that they should be given an order for a certain number. I think they went further and suggested that the chief engineer or proprietor of this concern should come here to show us how to set about the mass production of aeroplanes. To engineers in this country that proposal is fantastic, but it has the germ of a good idea in two ways. Politically, on the international front, the mere fact that our new entente with Italy—because this proposal came from Italy —
  Mr. Deputy-Speaker (Captain Bourne): I do not see what this has to do with the Finance Bill, or how the Treasury can answer the point which the hon. Member is raising.
  Mr. Stokes: I was pointing out that if that offer were accepted it would save the Treasury a great deal of money in dealing with the peak load of aeroplane rearmament which was so much discussed yesterday, and that if the Government
  1496
  could purchase a few machines from this foreign country, for which I hold no brief, it might assist them in their expenditure. It would also assist the unemployment situation here, because these particular airframes are so constructed that the Rolls Royce Merlin engine and the Bristol Perseus engine which are built here can be fitted to them. It is within my knowledge that both these factories are not working to capacity. By avoiding the unnecessary expenditure of laying down huge aircraft factories in order to meet this peak load, we should be saving a considerable amount of money to the taxpayers.
  The Chancellor in his peroration said that we were all being asked to meet these burdens in order to defend our land. We on this side of the House, while recognising what he means, are sorry that he does not do something to deal with the land racket. Wherever the Government move now in order to complete the rearmament programme they are being held up to ransom by the private ownership of land. I hope that when the Financial Secretary replies to-night he will give some answer to the reference which was made to this matter by my right hon. Friend who opened the Debate. I hope, also, that we may soon have some kind of intelligible indications from the Government, now that they have decided that peace in the world is possible with all but a very few, of some constructive proposal which will indicate that peace with those remaining few Nations may be achieved in a short time.
  8.20 p.m.
  Mr. Assheton: We always enjoy a speech from the hon. Member for Ipswich (Mr. Stokes), and I wish he could have developed more fully his argument with regard to the taxation of land values. It would have given me great pleasure to have the opportunity of debating that issue with him. I do not propose to follow him in the question of the purchase of aeroplanes from abroad, for I am doubtful whether it would be in order. I felt obliged on a similar occasion last year to make some criticisms of the proposals in the Budget, and it is therefore with all the more pleasure that I take the opportunity of congratulating the Chancellor this year on a Budget, which seems to me to be both courageous and wise. If the Budget proposals met with

  1497
  any criticism in the first instance it was due to the fact that the country had not been expecting a severe increase of taxation, although I cannot understand how the public could have been free from anxiety on this score if they had followed the debates in this House as closely as some of us do. Perhaps it might be wiser when increases of taxation have to be made in future if the Chancellor prepared the House and the country for the shock by a series of gloomy prognostications on the subject throughout the winter. One often wonders whether the tremendous secrecy which surrounds these matters is as necessary as the Treasury thinks.
  If the enormous expenditure for which the Chancellor has budgeted is really necessary, I have little quarrel with the way in which he has decided to raise the additional taxation. He has appreciated the important fact that increased expenditure is best met by increased revenue. He has, therefore, adjusted his taxation as far as possible so to avoid crippling trade and industry. I welcome the additional allowance for depreciation which he has made. I can only hope that my right hon. Friend may take the valuable advice which my hon. Friend the Member for the City of London (Sir A. Anderson) offered in his speech on the Budget Resolutions to consider whether some allowance could be made for obsolescence in the case of buildings. If that had been done a generation ago we should not now have those dreary collections of offices and buildings which we have to look at, and the slum clearance problem would not have existed in anything like the degree in which it exists to-day.
  When I spoke on one of the Budget Resolutions I pointed out the grave anxiety with which the present rate of expenditure is viewed by many people. I refer not only to Government expenditure but to local government expenditure. The increased burden of taxation bears heavily upon all classes of the community, but the increasing burden of rates bears especially hardly on householders, and there is great unrest and anxiety in many parts of the country on this account. My hon. Friend the Member for Hastings (Mr. Hely-Hutchinson)—whose election to this House those of us who know him were very glad to sec—in an interesting speech which he
  1498
  made a little while ago inferred that it would not be possible to reduce the very high level of expenditure in which we are at present indulging, and I think he was supported in that suggestion by my hon. Friend the Member for East Aberdeen (Mr. Boothby). He went on to ask himself—or the House, I forget which—three questions. I think the Chancellor at one point in this Debate asked three questions, and I propose to do the same: In what direction can we spend less? 2. Can we spend our money better? 3. In what way can the money best be raised?
  How to spend less money is a question which everyone must be asking himself in these days of increased taxation and rising prices of so many things which we all want to buy, and I do not believe it is unreasonable to ask the Government to see whether there are not some directions in which they also can reduce expenditure. All of us in this House are convinced of the present need for a very large expenditure upon armaments, but perhaps we are not all convinced that the money is being spent as wisely as it might be, and though I am not one to suggest that there should be any undue delay in these matters I am certain that the cost must be carefully examined. There is one direction in which economy might perhaps be practised, and that is if the spending Departments got it into their heads that more might be done on the Ford principle rather than on the Rolls-Royce principle.
  It is always a very popular thing to appeal for economy in general, but never popular to appeal for economy in any particular case, and I might well be asked in what direction economies might be introduced. My answer to that is that I observe in the Civil and Revenue Estimates for this year an estimated expenditure of £519,000,000, against an audited expenditure of £317,000,000 only Jo years ago. I am sure that the country does not realise that apart from the gigantic expenditure upon armaments these Estimates are £200,000,000 higher than they were so short a time as 10 years ago; and that increase takes no account of the enormous increase in the expenditure which is borne by the local rates. I was very much interested by the speech made by my hon. Friend the Member for Huddersfield (Mr. Mabane) at an earlier stage. He asked whether

  1499
  we used our Supply Days well. I am not sure that we do. It seems to me that the control of the finances of this country is slipping out of the hands of this House, whose first duty it is to control them, and we ought to try to devise some method by which we can more adequately watch the interests of our constituents in that respect. In the Civil Estimates alone this year there is an increase of more than £20,000,000 over last year, whereas one would have hoped that in a year when there is such an enormous expansion in the expenditure upon armaments there might have been a reduction in some other direction.
  Page 4 of the admirable Memorandum which the Financial Secretary to the Treasury presents every year shows all the increases in the Votes, and the first item which I notice is an increase of £6,500,000 in the expenditure upon roads. I beg the House to consider, for example, whether that particular increase is really necessary. I think there is hardly an hon. Member who could not point to some unnecessary expenditure upon roads in his own constituency—I refer more particularly to the expenditure upon the secondary roads. Many unnecessary alterations are made, and amenities suffer all over the countryside, in order to satisfy what in my view is an unnecessarily high standard of technical efficiency.
  Mr. Macquisten: You must be a railway director.
  Mr. Assheton: I have nothing to do with railway companies, and I am not very sorry that I have not. We must think carefully of how we are going to spend our money. We all know instances of new roads which are being built almost parallel to old ones, and of improvements being carried out now which, apart from not being vitally necessary, would constitute a splendid reserve of work against that time of declining trade which I think we all realise must inevitably come to us. In these same Estimates in which there are these great increases of expenditure upon roads there is a decrease in expenditure upon water supplies in rural areas, one of the things which we neglect in this country more than anything else.
  As to the question, "Can we spend our money better?" I have not any doubt
  1500
  that we can. It is a very strange thing that we should spend so much upon some things, and none at all on other things. Our outlook in this matter is altogether too material. Let me give an example of what I mean. Anyone who is familiar with the expenditure upon education knows of the enormous amount of money which goes in new schools built upon an elaborate scale. I suggest that the most important factor in education is the teacher. Looking back at my own school days, I have most clearly in mind such advantages as I obtained from a brilliant teacher, and at this distance of time I cannot recollect whether the school room in which that brilliant teacher taught was a good one or a bad one. I am not suggesting that we should put up with second-rate schools, but if we have to save money let us save it upon the buildings rather than upon the teachers. I believe that a few hundred thousand pounds spent in giving teachers an extra year at a training college would be money perhaps better spent than millions spent upon bricks and mortar.
  There is another direction in which, I think, money might wisely be spent in the same sphere. It has always been an ambition of mine that there might one day be established in this country a Ministry of Arts. The Minister would not try to dictate to artists what they should create, but it should be his duty to see that a certain sum of money was wisely used in trying to encourage music, architecture, the theatre, and so on. It seems quite extraordinary that we in this country should impose heavy taxation upon the theatre—which is just as bad as proposing heavy taxation upon books.
  Mr. Tomlinson: Will the hon. Member explain how he reconciles this suggestion with saving money upon school buildings?
  Mr. Assheton: I was pointing out that I think we devote rather too much attention to the buildings and too little attention to the less material but perhaps more valuable side of education. There may be a case for spending more money in one direction and not so much in another.
  On the question of how we are to raise the money that we are to spend, it is clear from the Debate, and from the Amendment which the Opposition put down, that in their view the increased revenue should come from the taxation of great wealth. No one here would deny

  1501
  that great wealth already pays a very heavy contribution. The highest incomes are paying now 13s. 9d. in the £, and in addition heavy Death Duties have to be met. If the man who has the very highest of incomes sets aside sufficient to pay his Death Duties he will, of course, be paying very much more than 20s in the in taxation. I am not suggesting for one moment that taxation of the rich is wrong, but we want to make sure that we are not killing the goose that laid the golden eggs. I have often wondered whether heavy taxation of the rich is not very much better for the rich than for the community in general.
  If hon. Members would look at the report of the Commissioners of Inland Revenue they will observe that the last set of figures for Surtax shows that the income of all Surtax payers for the financial year was £424,000,000. That certainly appears to be a stupendous income for 85,000 citizens to have, but we must not forget, as has already been pointed out, that out of that comes £160,000,000 for Income Tax and Surtax, reducing the figure to £264,000,000. If you were further to reduce this income so that no Surtax payer received an income in excess of £2,000 a year, you would obtain only a further revenue of £96,000,000, less whatever was spent each year by that class of taxpayer in paying for Death Duties out of income. That, too, is only on the assumption that the enormously increased taxation would not discourage those who earned large incomes from continuing to do so. [Laughter.] That idea may not be quite so silly as it sounds. Let us take the example of a rich professional man. He might not be tempted to work himself to the bone—[HON. MEMBERS: Shame! "] —as much as he does, if he were not going to get a reward over and above a certain level.
  An Hon. Member: What about unearned income?
  Mr. Assheton: I was here referring to earned income. Suppose, however, I am wrong, and that everybody worked just as hard and just as much as they could to increase their incomes in the new circumstances; I ask hon. Members opposite to bear in mind that there is apparent from these figures a very clear limit to the amount available to the Chancellor. The idea that there is an
  1502
  inexhaustible surplus of wealth which is to be tapped by taxation is a proposition which the figures do not justify.
  There are, of course, other methods of raising taxation, but on the whole I always prefer direct taxation. I cannot help wondering why the Chancellor of the Exchequer has not considered the possibilities of the tax on betting which many of us on all sides of the House think should be imposed. It has been tried, and it has failed, but there is no reason why it should not be tried again. I am confident that success could be achieved if the right method were pursued. It has often occurred to me that a most valuable tax would be upon advertisements publicly displayed in rural areas. It might benefit the Exchequer and a great many others also. I am glad that the Chancellor of the Exchequer has done something to tackle the question of tax avoidance, but he has still further to go. Some cases of accumulated trusts exist to which he might very well direct his attention.
  The last resort of an embarrassed Chancellor of the Exchequer is borrowing, which inevitably brings inflation in its trail. At the present time, the fall in world commodity prices has to some extent obscured the inflation. Those who take an unorthodox view, as my hon. Friend the Member for East Aberdeen sometimes does, approve of inflation because they feel that it reduces the weight of taxation. Apart from such a view being inherently immoral, it cannot be justified as a policy except in the most exceptional circumstances, because it is discriminatory taxation against the holders of fixed incomes and Government securities. It means that the man who lends the Government one pound will receive back less than he lent. I urge my hon. Friend to take that fact into consideration.
  It may be highly impolitic for advocates of a policy of borrowing to talk too freely about the relief that will hereafter be obtained from a rise in money prices. Some news of it might come to the ears of possible lenders and might conceivably embarrass the gentlemen who had to undertake the problem of borrowing, and they might meet with unexpected difficulties.
  Mr. Macquisten: Like the London County Council.
  Mr. Assheton: One must realise that a rise in prices of 20 per cent. would not reduce the relative burden of taxation by anything like as much, because the debt charges amount only to some 25 per cent. of the total expenditure. Therefore, if other charges, such as pensions and salaries, rose in proportion to the inflation, which in due course they would do, the relief of a 20 per cent. inflation would be a relief of only 5 per cent. to the Budget, and much more than 20 per cent. inflation would therefore be necessary. The effects of such an inflation upon the whole structure of the country would be so serious that I hope no one in this House would suggest it unless it is necessary.
  It seems essential that we should try to follow a sound financial policy. Poverty and ignorance are two of the chief sources of our trouble and social discontent, and we desperately need money to spend on social services of all kinds. I suggest that we must be most careful not to squander our resources on the wrong things and in the wrong direction. We must spend them where best the money can do service to the community. Let us maintain our financial integrity so that we shall be able to do these things.
  On this subject of retaining our financial integrity, I would ask the Chancellor of the Exchequer one last thing: Will he see whether it is possible to come to some settlement of the American Debt? The present position certainly is a stain upon our reputation, and it may imperil our ability to borrow again in that market. It is already having the most disastrous effect on our debtors in different parts of the world. It cannot be denied that it is a most serious thing and I beg the right hon. Gentleman to give the matter once again his most serious consideration. My right hon. Friend the Member for the City of London told us in a speech the other day that to make ends meet is the acid test of democracy. Let us on both sides of this House co-operate to make it possible for this country to pass that test and to show the world that democracy really can display a true sense of its responsibility.
  8.44 P.m.
  Mr. Benson: I very greatly enjoyed the speech of the hon. Member for Hastings (Mr. Hely-Hutchinson) when he spoke on the Budget, but I was rather disappointed
  1504
  with what he had to say this evening. He said that he was a tenderfoot in the House of Commons; if I may say so without offence his speech failed this evening because he is rather inexperienced in the House. He dealt with the immense burdens of the Surtax payers and explained how, in his opinion, they were spending up to the hilt. When he has been here a little time he will find that my hon. Friends on this side are an extraordinarily callous lot when it comes to considering the sufferings of the Surtax payer.
  I happen to have a copy of the report of the Commissioners of Inland Revenue, and I have checked up what this expenditure-up-to-the-hilt meant. I took the 85 people in the maximum-income group of over £100,000. Their average income is £175,000 and they pay a fairly heavy tax. They pay, I agree, £100,000 per annum in taxation, but that leaves them £70,000 a year, or £1,400 a week, and any man who has an income of £1,400 a week and spends it all deserves to be taxed more heavily. But as a matter of fact, despite the very high rate of taxation in Surtax and in Death Duties, we are not likely as the hon. Member seems to anticipate, to kill the goose that lays the golden eggs. One of the most extraordinary things that one finds in studying the report of the Commissioners of Inland Revenue is the stability of the various strata of society, and the way in which, over any reasonably long period, both the wealth coming under review for Death Duties and the income coming under review for Surtax steadily increases.
  Mr. Assheton: The total amount assessed to Surtax in 1931 was £545,000,000, and the total on the latest date for which the figures are available was £424,000,000. There has, therefore, been a substantial decline.
  Mr. Benson: Yes, very largely due to evasion.
  Mr. Assheton: I hope the Chancellor of the Exchequer will stamp that out.
  Mr. Benson: The only explanation of that extraordinary decrease is evasion. As a matter of fact, the amount of capital held by these people has steadily increased over the same period. If you take £25,000 of capital as representing the level at which Surtax-paying income starts, and compare the increase in the

  1505
  growth of the estates coming under review for Death Duties in the last 10 years, you will find that there is an identical increase in growth below the £25,000 level and above the £25,000 level. That level more or less cuts in half the amount of the estates coming under review for Death Duties. Ten years ago, when Surtax-paying income stood at £595,000,000, again it was about half, while last year also the £25,000 level almost divided in half the estates coming under review for Death Duties. It will be found that, so far as capital is concerned, there is quite definitely an appreciation of equal amount both below and above the Surtax level. I am not prepared to admit that a decrease in income can happen at the some time as a considerable growth in capital.
  Mr. Assheton: Perhaps I may illustrate what I mean by reference to War Loan. Some years ago, the holder of £1,000 War Loan was drawing £50 a year in income. War Loan then stood at 8o, so that £800 of capital was producing £50 a year. To-day, War Loan stands at 101, so that £800 of capital brings in £35 a year. It is, therefore, quite clear that the reason why these capital values have increased so much is that money is cheaper, and capital values are therefore higher. Similarly, in the case of Surtax, the capital has increased but the revenue of Surtax payers has diminished.
  Mr. Benson: Then you get the very curious result that the incomes below £2,000 have not been affected in the same way, and that only those people who have incomes above £2,000 have been affected, by this drop in returns.
  Mr. Boothby: A large proportion of the incomes below £2,000 is entitled to the earned income allowance.
  Mr. Benson: Even making that very generous assumption, if you deduct the earned income calculated from the earned income allowance from the incomes below £2,000, leaving a selected income group which is unearned, you get exactly the same result, namely, that the unearned incomes below £2,000 have increased considerably, as well as the earned incomes. I am not prepared to agree that unearned incomes below £2,000 have not suffered and unearned incomes above £2,000 have suffered.
  1506
  I wanted to refer to some remarks of the Chancellor of the Exchequer, who has returned to the House at a most appropriate time. He said he was struggling to keep a straight course. I do not know much about navigation, but I think that to be 10 per cent. off one's course in navigation means that one is 36 degrees out, and I understand that that is rather a serious matter. The Chancellor said one thing with which I heartily agree, namely, that if you are to judge the present position, you must judge it by the future and not by the past. I think it is true that, as was said by the hon. Member for Hastings in the Budget Debate, and as a large number of Members agreed, we have to look forward in the future to Budgets of £1,000,000,000. That means that the figure of our present Budget is a normal figure. I know it is possible that there will be a decrease in our enormous expenditure on rearmament, but it will not be a decrease to the level which obtained before we started it; our expenditure on armaments will be very much higher than we were accustomed to before then.
  And then there is something as well which every Chancellor must take into consideration, and which must haunt Chancellors. That is the natural growth not of the revenue, but of expenditure. It is all very well saying, "We must economise; we cannot continue to spend all this; there is no possibility of economy." Your social services, unless you are prepared to cut them, will steadily cost more. Old age pensions are bound to increase, and increase rapidly, if the present tendency in age distribution is continued. I do not see any possibility of economy unless we are prepared to slash our social services. That means that we have got to treat our present Budget level as practically the normal. We cannot go on borrowing £90,000,000 a year indefinitely. If our £1,000,000,000 Budget is a normal Budget, it will have to be met by taxation, and not by borrowing. The Chancellor asked, what would anyone else who was Chancellor have done in his place, having to meet the problem that he had to meet? He suggested they would have met it in the same way: by taking a middle course. But future Chancellors will all have to meet this problem, of raising approximately £1,000,000,000, and they cannot always

  1507
  take the middle course, that is, borrow £90,000,000. Sooner or later, £1,000,000,000 will have to be regarded as the sum that this country has to meet by taxation. I admit that it is not a particularly happy outlook; but it is one that we shall have to meet.
  The Chancellor referred to the Exchange Equalisation Fund as an asset. He said we had £550,000,000 in gold in that as an asset. He said also that it is making a profit. It may be making a profit, but whether it is an asset I am not at all sure. With the present normal gold production in the world, and with the gold production continually increasing, the Exchange Equalisation Fund is only an asset as long as we continue purchasing gold. We keep our gold worth what we pay for it by continually buying more and more every year. We are steadily piling up an enormous asset, which we can only keep as an asset by increasing and increasing it. Where are we going to have an opportunity of unloading all this gold? France, the United States and other countries are steadily buying gold, which cannot possibly earn a dividend. Where is it going to end? I am not at all sure that the various Chancellors of the Exchequer will not have to get together and, in self-protection, buy up the gold mines and close them down.
  Mr. Assheton: A marketing board.
  Mr. Benson: I suggest that our present Chancellor should ask his advisers how long it is going to continue, and what we are going to do with the gold that is piling up. It may be a theoretical asset: it is worth what we have paid for it, as long as we do not let it go; but as soon as we try to realise it, it turns to ashes.
  Mr. Boothby: If the hon. Gentleman has any gold, he will find it quite easy to sell it.
  Mr. Benson: Yes, but I do not happen to have £550,000,000 worth. You can sell a little, but the hon. Gentleman knows perfectly well that the value of gold is a theoretical value. It is based on convention, and also it is based on scarcity.
  Mr. Macquisten: Is the hon. Gentleman aware that gold has kept its value for thousands of years, and that it was the
  1508
  basis for the wealth of the Queen of Sheba?
  Mr. Benson: I am perfectly willing to admit that this convention of gold is a very ancient one. I have not the advantage of the hon. and learned Gentleman in knowing the Queen of Sheba. All I said was that the value was a conventional one, and the convention depends on the value given it as a medium of exchange.
  Mr. Macquisten: It always has been.
  Mr. Benson: That is the attitude I have noticed in the hon. and learned Gentleman. It always has been; therefore, it always has to be. The fact remains that gold has a conventional value. Supplies are getting so enormous, and the burden of keeping up those supplies by steady purchase is so enormous, that sooner or later we shall break down.
  Mr. Macquisten: Is the hon. Gentleman aware that the demand for gold is increasing, and that part of the suffering in the world is due to the fact that gold supplies do not keep up?
  Mr. Benson: That may be perfectly true as long as you tie your currency to gold; but as soon as you remove your currency from gold and control it, a shortage of gold cannot cause the trouble to which the hon. and learned Member refers. If you tie your currency to gold, if you have £550,000,000 worth, and you issue currency to cover it, you get inflation. I repeat that gold has conventional value, and we only keep it at that value by buying more and more and burdening ourselves with a bigger and bigger debt to absorb the gold; and that, sooner or later, that policy must come to an end.
  9.4 p.m.
  Mr. Boothby: I am sure the whole House listened with great interest to the observations of the hon. Gentleman on the subject of gold. I have taken an interest in the same theme, but I do not intend to go into it in detail now. I want to ask the hon. Member a question. What does he mean by, "saddling ourselves with this burden"? It is no burden at all. If the hon. Member has £100,000,000 in the bank, would he call it saddling himself with a burden?
  Mr. Benson: I said that this gold was a burden, because we have already borrowed £550,000,000 in order to pur

  1509
  chase that gold. It is doing nothing, or very little. We have continued to buy more and more of it in order to maintain its value, and that is why I say that it is a burden.
  Mr. Boothby: Gold represents wealth and is generally recognised as such throughout the whole world, civilised and uncivilised, at the present time. As my hon. and learned Friend the Member for Argyll (Mr. Ma cquisten) said, gold has always been recognised, and it is the only thing to have been recognised at its intrinsic worth ever since the dawn of history and indeed of civilisation. [HON. MEMBERS: "Oh!" I Anyway its worth was recognised from the first moment that gold was discovered, and it was discovered at a very early stage. It is not so many years ago that all the nations of the world were assembled at Geneva for the purpose of discussing the alarming shortage of supplies of gold available for monetary purposes. That was not more than 15 years ago. All the experts were out there asking how they could possibly make the world's gold supplies go round in order to satisfy the credit demands of modem civilisation.
  If the hon. Gentleman wants to tamper with gold and fiddle about with the value of gold, he can do two things. He can reduce its value in terms of currency. If he does that, he increases in exact proportion the deadweight burden of all debts in every country all over the world. But he may go further than that and want not only to reduce the value of gold in terms of currencies but to destroy its value altogether. If he did that he would destroy the accumulated wealth of the United States of America and the British Empire, not to mention the economic system as we know it. All commodity values would crash. He might be able to build up a new form of Socialist economics on the ashes of the old system, but it is not a reform that I would like to see take place or could contemplate with any equanimity.
  Mr. Benson: I have never suggested that I wanted to do anything of the kind. I said that the main trouble was the automatic value of gold, which might break itself.
  Mr. Boothby: Gold is not in circulation either in America or in this country, and the more gold we have the easier it will
  1510
  be to finance that great expansion of credit, which is inevitable if we are to keep on with £1,000,000,000 Budgets, and keep human beings in all the civilised countries at the standard of living which the present day demands. We had one gold scare, as the right hon. Gentleman the Chancellor of the Exchequer well remembers, last Summer; and it caused a lot of trouble. Some people did not think that it would do any harm at the time, but in fact it threatened the whole world commodity price level, and it now turns out, and nobody would deny it, that it contributed largely to the industrial recession in which we find ourselves to-day. There are plenty of scares in the modem world without manufacturing artificial gold ones to add to all the evils. We have enough to go on with, without the hon. Gentleman trying to manufacture a new one to-night.
  I see on the Front Opposition Bench the right hon. Gentleman who opened this Debate, and I must join issue with him upon the subject of the hook which he had the audacity to quote with approval. It was "Can 1931 come Again?" by Mr. Collin Brooks. He gave us the analysis of Mr. Brooks on the situation:
  "The British Empire, and particularly the Government, was on the brink of disaster, and it was largely our own fault."
  He quoted with approval, and apparent agreement this analysis of the situation. He did not go on to mention the remarkable remedies put forward in this volume by Mr. Collin Brooks, who says that the first and most essential cure is a wholesale cut in wages right through the whole field; secondly, the standard of living of the middle classes has to be cut in half; and lastly most of the social services should be done away with altogether. If the right hon. Gentleman agrees with that diagnosis, presumably he agrees with the remedy.
  Mr. Alexander: I only quoted what were regarded as the symptoms. I agree with the symptoms, but I do not agree with his remedy at all. It has more interest for hon. Members opposite, for he has published to the world what, in a few years, will be their position.
  Mr. Boothby: My views in a few years or a few weeks will never be his views. His diagnosis is quite as foolish as is

  1511
  his remedy, and we should do well to steer clear of this book.
  Mr. Alexander: If the hon. Member will also refer to the remarkable catalogue of symptoms in the Treasury evidence before the Royal Commission on Unemployment Insurance in 1931 he will find exactly the same sort of thing.
  Mr. Boothby: We all know what the symptoms were in 1931. They were much less difficult than those which confront the present Chancellor of the Exchequer. But nobody had any confidence in the right hon. Gentleman, whilst everybody has confidence in the present Chancellor of the Exchequer.
  Mr. George Griffiths: They have had confidence in us at the last few by-elections.
  Mr. Boothby: Everybody seems to have confidence in the Chancellor of the Exchequer, except me on occasions. But on the whole the fact remains that the business, trading industrial and financial communities of this country and of the whole world have confidence in the present administration, and particularly in my right hon. Friend, whereas nobody had any confidence in the late Labour Government. The present Chancellor of the Exchequer is faced with a far more critical situation in several respects, but he is weathering the storm, and he is able to do it because he has confidence. There is no panic, and the Government are able to maintain cheap money. The whole struggle of the right hon. Gentleman was to try and prevent panic developing, and he struggled in vain.
  I would like to deal with one other part of the speech of the right hon. Gentleman, where he referred to the profits of the steel companies. This is a very important matter. The Chancellor of the Exchequer dealt with it, but I have some figures of interest in the light of what the right hon. Gentleman said. His figures showed a considerable rise in prosperity in the year 1937, and also a considerable rise in revenue, which ought not to be lost sight of. But he took no account of the capital structure of these companies. I would like to re-emphasise what the Chancellor of the Exchequer said, that iron and steel companies in particular are
  1512
  companies which are apt to have no profits of any kind and declare no dividends during periods of depression or semi-depression, and then, when they come into the upgrade, they make very big profits over a brief period. If you average out the dividends received by the ordinary shareholder who sticks to his holding in the ordinary iron and steel company, you will find that the average over a period of five and certainly ten years is not very high.
  I would like to give one or two figures with which I have been supplied from an authoritative source. These figures represent about 86 per cent. of the independent iron and steel companies in this country, the shares of which total in value just over £126,000,000. The financial results of these companies, as shown by the accounts published in the first quarter of 1938, after providing the charge for depreciation and debenture interest but without charging Income Tax, to be deducted from dividends, and before making any transfer to reserves, yielded an average profit of 12.8 per cent. on the total share capital, which compares with 11 per cent. in 1937 and 8.7 per cent. in 1936. In those years the dividends paid were 7.8 for 1937 and 6.4 for 1936. If you take the average over the 10 years from 1927 to 1937 you find that the profit is not more than 4 per cent., and the dividend of 3.29 per cent. Can any hon. Member say that that is wholly unreasonable? Of course, many shareholders will sell their shares if they see bad times coming; but no one can say that that is an unduly high rate on the capital over a period.
  Mr. Alexander: Those figures do not hold water when we find cases like this, of Vickers, Limited, giving a 5o per cent. bonus in 1935 and John Brown giving a capital bonus of 66⅔ per cent. in 1937. You must take all those capital movements into account.
  Mr. Boothby: The right hon. Gentleman is right when he speaks of all these capital movements, up and down, but you have to bear in mind that the nominal capital in the iron and steel trade has been written down during the past decade to the extent approximately of one-third of the total capital originally subscribed; that is to say by over £40,000,000. No one pretends that there has been a slump in the iron and steel trade during

  1513
  the last two years, but we must be fair in these matters. It is estimated, as far as the heavy steel makers are concerned, that until quite recently rearmament accounted for only about 10 per cent. of their total activity. The right hon. Gentleman tried to make out that the whole of this boom that took place in 1936–37 was due to rearmament. That is not true. If it were true it would be a very great argument in favour of public works. But we are only now coming to the peak of this gigantic rearmament programme, arid this is the moment when, according to all authorities, trade is slowing down. We are in a recession, and the great anxiety of everybody is to avoid a slump. During one period we were going right ahead and having a time of great prosperity, almost a boom period, when rearmament was very much less than it is at the present time. That goes to prove what some of us have always maintained, that the efficacy of Government spending on public works to cure a depression has been very much exaggerated. That argument can be greatly overdone. It may be possible to mitigate certain hardships by spending public money in times of depression and strictly regulating such expenditure in times of boom, but to say that public expenditure can stop a slump is not true. Hon. Members on both sides of the House, whether Socialists or capitalists, would do well to learn by experience and not to put too much faith in public expenditure as a method of controlling a trade cycle.
  Nevertheless, I should like to say that I share the views of the right hon. Gentleman in regard to the rearmament business, up to a point. I believe that, in the long run, a ministry of supply in this country will be found to be absolutely inevitable. The Government will be obliged, sooner or later, to set up such a ministry, and to arm it with the necessary powers by legislation, if the present pressure is kept up. If the pressure is relieved, if some agreement can be come to with Germany, it will of course be different, but if the present pressure is continued, and we have to go on expanding, particularly in the Air Force, to the extent which seems probable, I believe a ministry of supply, armed with great powers, and involving a great deal of industrial dislocation and interference with labour, is absolutely inevitable. I believe
  1514
  that the House as a whole is gradually reaching that conclusion.
  I should like to say a few words on the subject of the very heavy taxation that is being imposed in this Finance Bill. Hon. Members on both sides agree on this point. An Income Tax of 5s. 6d. in the £, plus National Defence Contribution, is an extremely heavy burden of direct taxation. And I think hon. Members on both sides will admit that the limits of indirect taxation have very nearly been reached. When we see the Supplementary Estimates which the Government have to produce for rearmament, I think we shall come to the conclusion that our expenditure is bound to run for many years at something in the neighborhood of £1,000,000,000, as the hon. Member for Hastings (Mr. Hely-Hutchinson) has said. Therefore, we are up against the absolute necessity of keeping up the national revenue, if we are to avoid a very serious financial crisis at some time or other. How are we to do that?
  We cannot cut down expenditure on armaments and we cannot cut expenditure down substantially on the social services. Everybody admits that. The only way that we can hope, in the long run, to meet our obligations and pay our way, is to maintain the national income and, if possible, to increase it. Otherwise some form of crisis is inevitable. At the present time the situation gives cause for a certain amount of anxiety, and I am sure the Chancellor of the Exchequer will admit that. For a long time we tried to pretend that there was no recession. Now we know that there has been a recession, and that at this moment there is still a considerable recession. This applies to all sections of industry, even to the iron and steel industry, and particularly to the textile industry. It applies pretty well over the whole field of export industry. Even the motor car industry is feeling it. It is not yet very serious or grave, but it is there, and we have to face it.
  An even more disquieting symptom of the present economic situation is the fall in world commodity prices. They have always been a barometer. I am not talking now of retail prices or the cost of living, but basic commodity prices for wheat, metals, and so on. If commodity prices fall below a certain point, primary

  1515
  producers can no longer make a living; therefore we lose our markets. [An HON. MEMBER: "Why are they falling?"] Because of the general world depression and the deflation which is in operation at the present time. I hope that very soon we shall be able to check this fall; everybody is trying to do so. During recent weeks the fall has unfortunately not been checked, but on the whole it has continued, and has caused considerable anxiety to those of us who study economic trends. At the same time our adverse balance of trade is increasing.
  All these things give cause for anxiety, and one asks oneself why they are happening. The day before yesterday the President of the Board of Trade gave an absolutely brilliant and most lucid survey of the economic situation in this country and in the world. It was fearless and clear, and fair, as the right hon. Gentleman always is on these economic subjects, and hon. Members on all sides would do well to study that statement, which is based on the very good information that we get from our trade officers throughout the world.
  Mr. Shinwell: Was not the statement made by the President of the Board of Trade a complete change from the statement he made only a few months ago?
  Mr. Boothby: That may be, but it was not only the Government but many other people as well who were trying to persuade themselves a few months ago that there was no serious recession. They were whistling to keep their courage up. And indeed there were good grounds for hoping that the adverse movement would be checked. Now it has gone too far, and we have to face up to the fact that there has already been a considerable recession. The President of the Board of Trade faced up to it, and gave an interesting analysis of the causes, in which he pointed first of all to the deliberate deflation in the United States, secondly to the adverse effects, which were for a long time. not wholly appreciated, of the Sino-Japanese conflict, which for the time being knocked out a gigantic market to which many people were looking forward 18 months ago as one of the greatest markets available for trade expansion, and thirdly to the European tension. I would add, for the benefit of the hon.
  1516
  Member opposite, the gold scare of last year, which he has tried to revive unsuccessfully to-night.
  The trouble about all these things is that they are interdependent. One affects the other. You get the fall in commodity prices, deflation in the United States, European tension and the Sino-Japanese war, and they all have an adverse effect on each other. Low commodity prices bring about the impoverishment of the Empire, weaken the whole economic system, and enable the dictator States, particular Germany, to buy raw material for rearmament purposes cheaper and in larger quantities, thus increasing the tension in Europe. A German friend of mine said the other day, "What we cannot understand in my country is the spectacle of the great United States of America and the British Empire, with all the gold, all the raw material, all the commodities, all the wealth of the world in their hands, going into something like a depression while we, with nothing, or very little, are able to maintain our people in full employment." [Interruption.] I am not arguing in favour of the totalitarian system. I am only saying that that is the sort of argument that they are putting over in Germany to-day.
  It is a very tragic thing that at this of all moments the United States and the British Empire should be definitely weakened by economic recession. I appeal to my right hon. Friend to see whether we cannot consult with the United States as to methods that we can take together to get out of the present difficult situation, and to stop the decline in wealth values and commodity values. We have a trade delegation arguing about tariffs. That is all very well and useful but, if we go on in the present way, there will be very little trade to negotiate about. I support the hon. Member who preceded me on this side and say that, if necessary, I should be delighted to see a debt settlement negotiated with the United States, provided we could really get together. We have at our service some of the great economists of the world. I need only mention Sir Frederick Leith Ross, who has performed so many valuable services for this country all over the world.
  I should like to see an authoritative mission, headed by the right hon. Gentleman or by a responsible Cabinet Minister, consulting with the Federal

  1517
  Government in Washington as to ways and means by which the democracies of the world can use their great wealth to restore their economic strength at a critical time. That, and a real effort to revive trade in Central and Eastern Europe, are the most hopeful lines of advance for the country at present. This economic recession is in the minds of many of us largely unnecessary. It need never have taken place. I believe it is largely artificial. It could be cured by effective co-operation between the great democracies of the world. So long as it continues, so long will the democracies be unnecessarily weakened, at a time when it is essential that they should be strong; and everyone knows that their economic strength is the fundamental strength of democracies, as against totalitarian States.
  9.31 p.m.
  Mr. Price: The hon. Member is always interesting and instructive on matters concerning finance, but I hardly think he did himself justice by trying to make capital out of the crisis in 1931 and hinting that this party failed to meet the situation because there was no confidence in them among the captains of industry and finance. I think the real truth is that the rank-and-file of this party refused to allow Lord Snowden to organise scarcity on the basis of the Gold Standard, and consequently refused to agree to the cuts. After all, the cuts having taken place for the purpose of keeping us on the Gold Standard, the Gold Standard was very soon abandoned. A good deal of sympathy has been expressed by certain Members opposite with the Super-tax payer. Certainly those who are Super-tax payers have to pay more under this Budget than before, but I think one has to compare the source of taxation to-day with the purpose for which that taxation is spent. If that is done, we shall see that the social services are being, to a large extent, financed out of indirect taxation.
  If you compare the increase of indirect taxation before the War with the increase in the cost of the social services, the two figures very nearly equal each other. In other words, there has been very little shift in the burden of taxation which goes towards the financing of the social services. It is true that direct taxation has increased considerably since
  1518
  1913, but a very great deal of that goes to cover the interest on the National Debt, which has increased enormously since the War. The whole tendency has been to increase indebtedness and then for that indebtedness to be paid for to a large extent by the increase of direct taxation, thereby leaving the indirect taxpayers to finance the social services, so that one cannot shed these tears in reason for the burdens of the Super-tax payer. Of course Super-tax payers do not like paying. I am a Super-tax payer and I do not like paying. I have told my children that they will probably inherit nothing from me except debts, and they must earn their own living. On an occasion like this, when the national accounts are before the House, I feel inclined to appear before the Chancellor of the Exchequer like the gladiators appeared before Caesar in the amphitheatre and say:
  " Ave Caesar morituri to salutant."
  " Hail Caesar, those about to die salute thee." This increase in direct taxation continues and is bound to continue, whether it is by the way of this Budget, in stopping leaks, quite rightly, or whether it is by a greater taxation on the higher accumulations of income. Let me say one word in reply to the hon. Member for East Aberdeen (Mr. Boothby) on the national income as a whole. He emphasised the necessity of keeping up the national revenue, but prior to that he seemed to contradict himself as he scouted the idea that very much could be done by Government expenditure on public works. That is where I join issue with the hon. Member. When the Budget Resolutions were before the House there were one or two speeches which seemed to me to strike the right note. The hon. Member for Stockton (Mr. H. Macmillan) said, quite rightly, that the national income was not to be regarded as something static. I agree. It is something dynamic, and Government policy can do a great deal towards increasing national income.
  I do not agree with the hon. Member for East Aberdeen that Government expenditure on public works is not likely to be of great value in assisting the national revenue. I have some figures from the United States of America as to the amount of money which has been spent on all forms of public works in recent years. If you take the Treasury

  1519
  receipts in the United States and deduct from them the sales of Government bonds, you get the net Government spending, and if you compare that with the index of industrial production—this is for the year 1936–37—you will see a very interesting and rather remarkable connection between the two. In the last half of 1936 the net Government expenditure of the United States amounted to 1,946,000,000 dollars, and the index of industrial production was 109. Twelve months later, in the last half of 1937, there was not only no Government expenditure but the Government receipts were in excess of Government expenditure, so that the expenditure was a minus quantity of 115,000,000 dollars. During that same period the index of industrial production began to go down; it was just over 100, indicating that in the United States, at least, Government expenditure had been playing a very big role in the boom of the year or two before. Of course, the President of the United States is following a policy of pump-priming by which he hopes to reverse the process.
  I am not arguing that Government expenditure alone will put this matter right. On the contrary, we say that where Government expenditure is made in the form of a subsidy to private industry State control must follow. It is an indication that a private capitalist system cannot be kept going without continual pump-priming by the State. It also indicates that capitalism is going rapidly into a decline. It is a natural process. Public expenditure is always taking a larger share of the national budget, and our argument is that public control must follow. If private enterprise cannot keep this machinery working, then public expenditure and public control must follow. I do not think the public realise how much greater is the power which now exists with the Treasury even under the present Government, which does not pretend to favour State enterprise as against private enterprise. The mere existence of the Exchange Equalisation Fund with its £550,000,000 for the purpose of equalising the exchanges is a usurpation by the Treasury of functions formerly exercised by the Bank of England. The Foreign Loans Advisory Committee controls to some extent foreign investments, and
  1520
  quite rightly, and the Exchange Credits Department brings the State directly in as a banker to assist the export trade.
  All this is in line with general world developments. The Fascist States have done it long ago. Private enterprise is there very much under control. Prices are fixed for industrial goods and profits are fixed, and there is a far greater control in the Fascist States than there is in democratic industrial States like this country, France and the United States. In Russia it has been carried to a far greater degree, and it seems to me that the problem which democratic States will have to face and solve fairly soon is how to increase public control over industry, but to do it in a different way from that of the Fascist States and Russia. I am not worried by the prospect of a £1, 000, 000, 000 Budget which is apparently to become something normal to this country. I see nothing unusual in it, having regard to the way in which the world is working. Hon. Members opposite cannot help themselves. They have had in the last few years to bring in measures of control over foreign investments, exchanges, and the process has to go on. You can call it what you like, it is Socialism all the same. We are merely concerned with an extension of the principle.
  It may be argued that public expenditure in the form of loans should be carried out for the purpose of financing our armaments. There, I agree with the Chancellor of the Exchequer. I think he is quite right in not listening to those who argue that the whole of the £30,000,000 deficit should be found by way of loan. I think it is unwise to finance the expenditure of what, after all, is a wasting asset, by way of a loan. I would much sooner see the national credit used for the purpose of creating a national asset, such as electricity supply, roads, industrial development of all kinds, bridges, and so on. We cannot say that the expenditure to which the nation is committed for defence is something which will bring in a revenue. It is necessary, of course, as an insurance, but I would not like to insure my life by borrowing, if I could help it. I would sooner pay for it out of income, if possible, particularly in view of the fact that, according to my information it is held in Germany to-day that warplanes, on the declaration of war, are not likely to be in existence for more than six

  1521
  months, the rate of destruction in modern warfare is so terrific, indicating that the wastage will be tremendous. This again shows that we must pass along this narrow, thorny way of financing ourselves as much as we can out of income rather than by loans, and leave loans, and public works financed by loans, for something which may be necessary when industrial depression comes. Industrial depression is beginning with us now, as everyone more or less admits. We do not want to waste our credit, therefore, by spending it on wasting assets, but we want to spend rather on something which will make the nation rich and able to withstand the difficult times which are ahead.
  9.47 P.m.
  Mr. Amery: I am sure the hon. Member for the Forest of Dean (Mr. Price) will forgive me if, at this late hour, I do not follow him in some of the rather abstract arguments which he has used, but address myself directly to the main subject of the Budget which underlies the present Finance Bill. It is, of course, a notable Budget and destined to be a milestone in our financial history, not because it is an abnormally large Budget, but because it is the first Budget, though certainly not the last Budget, of over £1,000,000,000 in times of peace. My hon. Friend the hon. Member for Hastings (Mr. Hely-Hutchinson), in an admirable maiden speech the other day, showed very clearly why it is out of the question for us to expect any substantial reduction below the £1,000,000,000 figure in the next few years. I would say, going even further, that we are bound to face a continuous process of increase. The tendency which, in the last 10 years, has added some £360,000,000 to our expenditure on comparable objects is bound to go on. As the hon. Member for the Forest of Dean very truly said, it is in line with the whole of that world development which undoubtedly has continually increased and is continually increasing the functions of the State, both in relation to our social and domestic life and no less in international competition.
  From that point of view we have to face the fact that our expenditure is still, and will inevitably continue to be, on the up grade. Our social services have been brought from £45,000,000 before the War, to, £345,000,000 to-day, not counting contributions from local taxation, by a process which is bound to con
  1522
  tinue. I say nothing about automatic increases of pensions and of the various forms of insurance, but there are new services which we have to face, which are necessary to create a really healthy nation. To do for some of the wasting diseases of the country what other countries are doing to-day, to give to our youth all that opportunity for healthy training and development, is going to cost a great deal more money than we are spending at present. Then there is another problem of vital consequence, not only from the point of view of immediate justice to the growing children in this generation, but from the point of view of the future existence of the nation, and that is the problem which the hon. Member for Bassetlaw (Mr. Bellenger) mentioned, the problem of the family and the unfair burden upon parents. That is going to involve expenditure. If it is to act effectively against the tendency to a diminishing population, it may involve a very large expenditure. Certainly we, on this side of the House, are pledged t0 a policy of continuing social reform, and I could hardly imagine that hon. Members opposite, if they came into office, would start by retrenching on social services. So we can definitely assume that those services will increase, though there is at any rate one thing about them, and that is that we have ourselves some measure of control on the pace that we set. We can postpone desirable reforms for the time if we believe at any particular moment that we cannot afford them.
  That is not the situation when we come to that aspect of our expenditure which is created by the policy of other countries. We had a Debate yesterday, and there was not a single speech on either side of the House, least of all from the Opposition Front Bench, which for one moment suggested that our efforts in rearmament should be measured by any financial standard of what we could afford. The whole standard which the House set itself unanimously yesterday was the standard of what we must afford in face of the dangers that may confront us. We may hope that those dangers will gradually diminish, we may hope that the kind of crisis through which we passed in the last few days will not recur too often. All the same, so long as you are dealing, as I fear you will have to deal for years to come, with unresolved conflicts of ideals and ambitions, right

  1523
  against right, or conflicts in which right is not wholly on one side, so long will great nations undergo sacrifices to secure their ends, and the measure of those sacrifices imposes upon us a corresponding measure.
  There is another form of expenditure in prospect which we have hardly begun to face, and that is the expenditure destined to arise through economic competition. As was very truly said by the hon. Member for the Forest of Dean there are other nations which control their economy very drastically. They do so not only to secure self-sufficiency as far as possible within their own territory, but also to compete effectively in the outside world against others. They do so by subsidies of every kind, direct and indirect. They subsidise their shipping on a large scale, they subsidise their exports by all kinds of measures, difficult for us even to grasp, because they are so interwoven with their whole control of exchange, finance, and internal markets. All the same, they create a danger to us, to our exports, which we are not going to meet by mere unaided individual competition. In one way or another, I venture to predict that year by year we shall find ourselves compelled, if our industries are to exist at all in the outside world, to give, directly or indirectly, State aid in forms that will affect our expenditure.
  How are we to meet that problem? The hon. Member for the Forest of Dean said that it did not worry him. I confess that, although it is an inevitable problem, it does worry me, and I think it ought to worry the House. We cannot meet it to any serious extent by economy. I entirely agree with my hon. Friend the Member for Hastings (Mr. HelyHutchinson) that no major economy involving many tens of millions is possible as long as our national policy at home and abroad is what it is to-day. I do not think we can meet it by steepening still further the rate of incidence of our taxation. We have reached a point in our direct taxation where evasion is becoming more and more difficult to cope with. We may soon reach a point where there is real discouragement to production and enterprise in this country. I do not believe that we can go much further in the direction of increased direct taxation, or increased indirect taxation for that matter. How are we to meet the diffi-
  1524
  culty? I venture to suggest that there is only one way, and that is by increasing the volume of national production out of which the expenditure of the State must necessarily come. That is the vital, and I fear the increasingly urgent, problem before us.
  Are we facing that problem to-day? I confess—and I agree with my hon. Friend the Member for East Aberdeen (Mr Boothby)—that the situation from that point of view is far from reassuring. The very able speech which the President of the Board of Trade delivered last Tuesday showed in detail the many factors, both temporary and permanent, which are tending to restrict our external trade. We are faced with the fact that to-day, when the recession has not yet gone very far, we have 1,750,000 men unemployed, nearly 350,000 more than in April of last year. We are faced, as the President of the Board of Trade admitted, with a very disquieting growth in the adverse balance of trade. That means, in simple language, that this country is not supporting itself year by year on what it produces; it is drawing from capital invested abroad or beginning to borrow, and putting itself into a position which is dangerous in time of peace, but infinitely more dangerous in time of war. After all, in 1914 we had a net balance on our transactions of over £180,000,000, and £3,000,000,000 of good, safe securities abroad.
  Mr. MacLaren: Free trade.
  Mr. Amery: Our relative position in regard to other countries might have been even stronger if we had adopted the right policy earlier. [Laughter.] The laughter is interesting, but, after all, we have been strengthening the position of this country very substantially during the last six years by following what the Government and their supporters believe to be the right policy, a policy which hon. Gentlemen opposite will be bound to pursue if they come into office. That is the question I wish to raise with regard to the Budget itself. To what extent does the Budget contribute effectively or not to the increase of national production? There is one item in the Budget from that point of view which I can at once applaud unreservedly, and that is the increase in the concession in regard to wear and tear given to industry. It is a concession

  1525
  which, I think, fully offsets anything that industry may conceivably suffer by the increase of Income Tax. I am not so sure that there are other features that I can applaud equally. I regret the decision, for it seems to be that, of the Chancellor of the Exchequer with regard to power alcohol. I was indeed surprised that he should use against my hon. Friend the Member for Rusholme (Mr. Radford) the very argument used by hon. Members opposite, which he so much deprecated, namely, judging taxable capacity by the profits of a single year. Has he inquired for how many years the particular company in which my hon. Friend is interested made losses? In any case, is it the right principle of taxation to base taxation not upon income generally, but to select a single industry on which to impose a special Surtax?
  My hon. Friend the Member for Hastings argued, in support of the Chancellor of the Exchequer, that this industry employs a great deal of shipping to bring those raw materials here. The employment of a great deal of British shipping in peace time is an admirable thing, and if that shipping can be released in time of war and domestic production substituted for the imported raw material—which I am afraid the present Finance Act is going to prevent—then that shipping is released for more important purposes. In any case, I regret any item of taxation which discourages, or neglects an opportunity of encouraging, a hopeful British industry.
  Neither in his Budget speech nor in his speech this afternoon did the Chancellor of the Exchequer make any reference to the protective duties in the present financial scheme, except to mention incidentally the total revenue from Customs and Excise; and yet, regarding them not merely from the point of view of their direct contribution but of their indirect contribution, they are not the least important part of the whole financial scheme. They have contributed, as the Chancellor of the Exchequer and all his colleagues never fail to assert, enormously to the recovery of strength of British industry, and by that, to the contribution of that industry to every tax in the Budget. Surely, at a time such as this, one of the first duties of the Chancellor of the Exchequer in presenting his Budget, I should have thought, would have been to make
  1526
  an examination of those particular taxes in order to ask himself whether they are contributing the maximum that they can contribute to British production and therefore, in the long run, to revenue.
  I venture to say that any such examination, conducted from the point of view of the present Government and not necessarily from a Free Trade point of view, would be bound to show that our present tariff, weakened as it has been by the gradual readjustment of monetary relationships and, therefore, losing the advantage which we first enjoyed when we went off the Gold Standard, is letting in far too large a volume, and an ever-increasing volume, of competitive foreign manufactures. The figure was over £170,000,000 last year, excluding semi-raw materials and things such as oils, resins and base metals. I venture to say that of that £170,000,000, at least £100,000,000 could, with advantage, be produced in this country, giving direct employment to some 400,000 workers and giving a great deal of valuable revenue to the Chancellor of the Exchequer.
  Mr. MacLaren: I am sorry to interrupt the right hon. Gentleman, but I wish to put a question to him. We have been talking about threats of war and the possibility of a great war. I want to ask him in all sincerity whether, if we kept out foreign trade to the extent that he desires, that would be conducive to bringing about peace in the world to-day?
  Mr. Amery: I have not noticed that similar action on the part of every other country except this country has led to the hostility of its neighbours. It is a policy which is pursued by all countries, and considered as natural by them. Similarly, I think the Chancellor of the Exchequer ought to have studied the extent to which that part of our tariff which is preferential in its effect has made its contribution to the export trade and the productive strength of this country. My hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) gave some very interesting figures from that point of view. I am not sure that I do not regret the imposition of the additional duty on tea, not on the grounds on which hon. Members opposite have criticised it, but because I think the right hon. Gentleman might have got the same revenue by imposing a duty on foreign sugar. That

  1527
  would have involved no greater hardship, if there be hardship, and it might have done a great deal to strengthen the production and improve the standard of living of our fellow citizens in the West Indies, while at the same time increasing the export trade of this country. All the same, I am not going to suggest that that particular aspect of our policy is sufficient, by itself, to meet the kind of problem with which we have to deal. We may have to take far bolder measures than we have ever taken yet, such as subsidies to shipping, cotton and other export industries and direct financial subvention of new industries and research, in order to put ourselves on a level with our competitors. We shall have to take heroic measures, and I venture to say that the closing sentence of the Chancellor of the Exchequer, in which he suggested that we could get through our difficulties by what is called sound finance, seemed to me to embody a very dangerous doctrine. Sound finance, by itself, is not going to avert a disastrous breakdown.
  There is just one other serious aspect of the matter to which I will devote a sentence. That is the fact that our population is declining. By 1975 there will be £10,000,000 fewer taxpayers in England and Wales alone than there are to-day. A reduction of 25 per cent. in the number of taxpayers means an increase of 33 per cent. in the burdens, which they will individually have to bear, if our Budgets then are only on the same level as the Budget of to-day. All these things cost money and effort, and only wise expenditure and a bold policy can meet the situation with which we are confronted. I venture to say that the economic danger is just as grave as the military danger and that we need a policy of economic rearmament just as effective and far-reaching as that which we are carrying through on the defensive side. But I would make this appeal. Do not, as in the case of Defence, allow the years to slide by and to be "eaten by the locust." Let us take the problem in hand now, and set to work without delay, by every means that will meet the case, to build up that national economic strength and production, from which, alone, future Budgets can be fed.
  10.8 p.m.
  Mr. Pethick-Lawrence: Many large issues arise on the Second Reading of this Finance Bill. They centre round the fundamental fact that this is a Budget unprecedented in peace time, when for the first time the total amount to be spent exceeds the vast sum of £1,000,000,000. We have had a very interesting Debate which has ranged over a large number of questions. Some of these have been minor matters of detail; others have dealt with larger issues of fundamental importance. I propose to devote a considerable part of what I have to say to the larger issues, but before I come to them there are one or two smaller matters to which I ought to direct the attention of the House.
  I am glad that on the first matter which I propose to mention, I hope to be able to give my hearty support to the proposal of the Chancellor of the Exchequer. He told us that he had been giving very careful consideration to the matter of air-raid shelters, and he outlined a proposal which will, I think, command the general approval of this House. Certainly prima facie the agreement of the House may be assured to the Chancellor of the Exchequer on this matter. We shall, of course, and I am sure the right hon. Gentleman will take no objection to it, examine the proposals in detail to see, in the first place, whether they go far enough to meet the needs of the case, and, in the second place, to assure ourselves that they are fair as between the public and the private individual. One question occurs to me which I do not attempt to decide one way or the other at the moment. How far will the provisions which individuals are expected to make be solely for themselves and their own immediate entourage? Are they in any way to be available for the general public? When the proposals come before us in specific form we shall have to consider this and other questions.
  There is a second part of this Finance Bill to which I think my hon. Friends and I can give, in the main, our broad agreement on principle. That is the attempt which the Chancellor is making to deal with tax evasion. I believe that in all parts of the House those who honestly endeavour to pay their own taxes, must welcome every attempt that is made to

  1529
  prevent others who are less honourable from evading the obligations which the State has put upon them. There again I do not think we can discuss the proposals in detail to-night. They are far too technical and complicated and it would be unfair to put any specific questions on these matters to the right hon. and gallant Gentleman who is to reply. He is new to the task to which he has been promoted, with, may I say, the general good will of the House. But I shall have something to say with regard to the taxation of the larger forms of wealth. I and those who sit with me on these benches consider that a far larger quota of the requirements of the present Finance Bill might have been secured by the Chancellor of the Exchequer from that source. In fact we maintain that that would be far more just than placing on some of the poorest of the population the burdens which the right hon. Gentleman proposes by the Tea Duty and other methods. It may well be that the Chancellor of the Exchequer, if he still holds that office next year, will find it necessary to raise substantially the rates of taxation along those lines. Therefore the proposal which he is making to-day to meet evasion must be welcomed in all parts of the House.
  There is another matter which has been raised in the course of this Debate, and that is the question of tariffs. It has been raised by the hon. and gallant Gentleman the Member for Bournemouth (Sir H. Croft), who I regret to see is not in his place, and the right hon. Gentleman the Member for Sparkbrook (Mr. Amery)—what we may call the long and the short of it. It seems to me to be this. The right hon. Gentleman and the hon. and gallant Gentleman who have throughout been passionate advocates of tariffs, have come to the conclusion to which tariff advocates generally come after tariffs have been in operation for a short time. They say, "This remedy which we have proposed is excellent, but the time has come when we find it totally inadequate to meet the difficulties of the situation, and that being so, we want an additional dose of it." The right hon. Gentleman the Member for Sparkbrook was careful to underline it and to say that we wanted not only an additional dose of tariffs, but additional subsidies, additional indirect subsidies, and so on. The experience of all tariff countries is being repeated here. The first round appears to achieve a cer-
  1530
  tain success, but that apparent success soon wears off, and the time comes when it is necessary to have a second round. That more speedily works to its conclusion, and so the tariff wall and the subsidies and counter-subsidies go on increasing and increasing until there is very little left of the free enterprise which used to be the boast of this country and of hon. Gentlemen opposite.
  I propose to say a word on the question of the National Defence Contribution. If I am not mistaken, the Chancellor does not propose to make any substantial alteration in the incidence of the contribution. I am inclined to think that he would have done well to have considered this matter from several points of view. I think with my right hon. Friend who opened the Debate that there are fields where the Chancellor might have been right in imposing its burden where hitherto he has refrained from doing so. On the other hand some of the societies which my right hon. Friend mentioned are entitled in my view to claim relief; and the same applies to another section, that is, the housing societies. They are subject to this tax and yet they are in effect public utility companies which are serving a very useful purpose. They are limited to a small rate of dividend and therefore cannot make indefinite profits. When the time comes I shall submit an Amendment to the Bill with a view to suggesting to the Chancellor that there should be some measure of relief for these housing societies.
  A good many points have been raised in regard to the Tea Duty. I do not think that at this stage of the Debate there is any need to add to the very thorough and careful remarks that have been made, not only by my hon. Friends on these benches, but in the informative speech that was made from the Liberal benches. I have dealt somewhat summarily with these important, though comparatively minor, points, because we shall have plenty of other opportunities of going into them in further detail.
  I now proceed to the larger perspective in which this year's Budget must be viewed. I said just now that it was unprecedented because it had passed for the first time in peace time the figure of £1,000,000,000. We are all wondering whether ever again we shall get down to a Budget the extent of the millions of

  1531
  which can be expressed in three figures. But it is not only that which makes it so peculiarly noteworthy. Another great fact is that it is for the first time a frank departure from classical finance. In a speech a little while ago I spoke of it as the end of Gladstonian finance, but I use the word "classical" finance this time because I think it is more appropriate. It is true that we have borrowed before to reach a balance in our Budget in war time, and we have for some years in peace time borrowed comparatively small amounts, and, of course, last year there was a Budget deliberately unbalanced by the right hon. Gentleman's predecessor the present Prime Minister; but there is this great difference, that last year the Prime Minister, when introducing his Budget, paid lip-service to classical finance. All that he was borrowing was going to be repaid when the peak expenditure upon armaments was passed and things came back to normal. There was going to be full payment of interest and of Sinking Fund at some future time, and in a period of something like 20 or 3o years everything would be as it should be and we should have normal Budgets again.
  We all listened to that patter, and though we on these benches disbelieved it, the Prime Minister himself pretended to believe it. I do not wish to cast any reflection upon him, but he appeared to believe that what he was saying was not patter but fact, and the House of Commons, broadly speaking, accepted that explanation. Now we know definitely—at least it ought to be known, though it may still be denied on the Treasury Bench—that there is going to be no peak in Government expenditure. It is a road winding uphill all the way. There is going to be no paying off by a Sinking Fund of the amounts we are borrowing at the present time, unless there is some change of attitude on the part of the Government or their successors. Therefore, I maintain that this Budget, whatever may be true of the last Budget, marks a frank admission that the Government deliberately propose to bring financial orthodoxy and classical finance to an end.
  Not only are we bringing to an end classical finance but we are bringing to an end classical economics. That is not a sudden action in this particular year,
  1532
  but it is the gradual process which the Governments of the last six or seven years are carrying into effect. We find, in the first place, a growth of tariffs. The conversion of the Chancellor of the Exchequer to a tariff system does not, of course, date from this year. Those who were in the House a few years ago will remember the famous speech of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George)—I am sure the Chancellor himself has not forgotten it—in which he eloquently likened the conversion of the Chancellor of the Exchequer to tariffs to a teetotaller finding his last resting place in an inebriates' home. It is not merely a question of overthrowing Free Trade, and not merely that we are entering upon the second round of the tariff-and-subsidy system which the hon. and gallant Member for Bournemouth and the right hon. Gentleman the Member for Sparkbrook are so anxious to see initiated; it is the disappearance of all the ordinary ideas which lie behind classical economics. On that aspect of the matter I shall have a word further to say a little later.
  Classical finance has gone, and classical economics has gone. That may be right. I am not expressing an opinion on that. But I am asking and I want to draw the attention of the House most carefully to this—what is the new system which the Chancellor of the Exchequer and the Government are putting in their place? As far as I can see, they have no new principles to take the place of those which are gone. They are to go on and on with borrowing, they are to go up and up with the National Debt and higher and higher with tariffs and subsidies. When we say that they are doing on a larger scale what they blamed us for doing in 1931, their answer is: "Ah, but we have the confidence of the country. You lost the confidence of the country and we have got it." [HON. MEMBERS: "Hear, hear."] I am glad to notice that I am expressing the views of hon. Gentlemen opposite. They say: "It does not matter whether we break all the laws of classical finance and economics. It does not matter that we have no special policy. We are doing it with the connivance and the confidence of the people and the industrialists of the country. As long as we have that, we are quite satisfied." That attitude separates them not only from the Labour Government of 1931 but from a very great

  1533
  man on the other side of the Atlantic, who also appears to have lost the confidence of the great industrialists. I am told that there are at the present time about 12,000,000 unemployed in the United States.
  I wish to take the House into a slight digression. I want to examine in what respect the economy of this present day differs from the economy and industrialism of the nineteenth century. In the nineteenth century we had a multiplicity of small industrialists, and therefore you had something like the perfect economy of Adam Smith. There was complete competition, and the laws which belong to a complete system of competition prevailed. All that is gone and instead of that multiplicity of small industrialists we have a few big industrialists. Just as the mechanism of a sand-heap differs from that of a pile of rocks, so the economy of the nineteenth century differed from that of the twentieth century, and this confidence upon which the Government rely really means that the few men who are the big industrialists of the country can count upon the Government toeing the line that they draw and coming to their heel and giving them whatever benefits they require.
  Mr. Assheton: Does the right hon. Gentleman think that that explains the confidence which other countries have in this Government?
  Mr. Pethick-Lawrence: I do not think that the Government have the confidence of other countries which the hon. Gentleman thinks they have. I do not see it.
  Mr. Assheton: They send their money here.
  Mr. Pethick-Lawrence: I do not think that that is altogether true. There has always been in days gone by a certain amount of money coming into this country, but that does not mean much confidence in the Government of this country. I am told that, whenever internationalists meet, the one thing they say is, "No one knows what the British Government will do in any of the emergencies that may happen."
  The fact is that we have come to a time when, instead of the small industrialists and real competition, we have a few industrialists and practical monopoly. The point about monopoly is
  1534
  that, while it may pay monopolists to get on with production, and while at certain times it does pay, it may pay the monopoly not to get on with production, but to stifle down production, to put up the shutters and retire. During the last few years it has paid the monopolists to produce, but a time may be coming when it may pay them not to produce. There are signs of that in some directions, though I hope it is not going to be so. What are the Government going to do if that state of affairs arises? They cannot wheedle industrialists into production; mere words will not do. They are accustomed to come down to this House and very smilingly and courteously deal with those who sit on this side. In Parliament the blandishments of the right hon. and gallant Gentleman and of his right hon. Friend may disarm criticism. But the industrialists are not going to be disarmed by mere words; they will want hard cash; I do not think it is too harsh to say that they will have to be bribed into action if they think it does not pay them to produce. That has come about in the United States, and it looks as though it might come about here, if not soon, at any rate after a while. Then the economic conditions on which the Government base their policy will break down.
  I have raised before the question of the higher taxation of great wealth. I believe that that could be applied to-day, and there may well come a time when the Government will find it necessary to put on a greater amount of additional taxation. But they cannot do that indefinitely, and, if there comes a time when the great monopolists think that it does not pay them to produce, then they will not go on manufacturing capital goods, and when unemployment rises to figures which may be startling to those who have been accustomed to the conditions of the last few years, this policy of indefinite subsidies may be quite impossible of realisation. What plans have the Government to meet that situation? They say it is a matter for the future, but I think it is a matter for very early decision.
  This brings me right back to the finances of the Bill and of the current year. It is not merely the fact that we are reaching a £1,000,000,000 Budget, but it is the proportion that that bears—and this has been expressed in all parts of the House to the total revenue of the

  1535
  nation as a whole. In 1914, the total expenditure of the State was slightly under £200,000,000, and at that time the total income of the nation was about £2,000,000,000, so that the expenditure of the State was roughly one-tenth of the national income. To-day, when the expenditure of the State runs to £1,000,000,000, the national income has increased to something in the neighborhood of £4,000,000,000; so that to-day, instead of one-tenth, we are taking one-quarter for the expenditure of the State. There may be something to put on the other side. It may be true that of the large expenditure of the State part goes directly back to the individual, and it may be that that is putting it a little high, but no one will disagree with the contention that the proportion which the expenditure of the State bears to the total expenditure is very much larger than in days gone by.
  What is the only way in which we are going to meet this bill? We are not going to meet it by cutting down the social services. We are not going to meet it by reducing the Defence forces, as long as they are required. I hope that the time will come when they will not be required, but that will not be in the early future. The only way is by a vast increase in the national income as a whole; and there is really no reason economically, potentially, why that should not come about. Industry is not prevented from producing to-day by the difficulties of production. Any engineer, any producer, any great organiser will tell you that the output of industry at the present time could be, I will not say indefinitely, but enormously, greater than at the present time. The problem of industry to-day is not production, but sale, and I have heard it said—and no one, I think, will disagree with this—of an expensive motor car that it costs more to sell it than to produce it. I expect that that applies to other industries as well.
  The fact is that industry is being held up, production is being curtailed at the present time, not because of the difficulties of production but because of the difficulties of distribution and sale. Production could perfectly satisfy all the legitimate needs of this country, provided the apparatus of industry was sufficient for the purpose. The trouble is
  1536
  that our present economic system is based on scarcity and cannot work on a basis of plenty. What the Government have to do is to find some means of making this national income adequate to bear the burden of the requirements of the State. The dictator countries, whether we go to Germany or to Italy or, under a somewhat different system, to Soviet Russia, depend on compulsion, and, certainly in Germany, to some extent at any rate, the motive on which they attempt to work is the motive of fear. We in this country can never subscribe to a doctrine of that kind. It is utterly repugnant to all British ideas that industry and the work of the people should be controlled by motives of fear.
  What we have to do—and this is what Members in all parts of the House have to think out—is how free institutions can secure the benefit of the effective production of industry, and what action is necessary to secure that national effort is pooled, not by motives of compulsion and fear but by the free development which the institutions of this country have always required. We have to enlist the services of the nation in this great effort. What are you going to offer the great organisers in place of the fabulous profit which falls to them under the present system? You have to create the idea of service. Hon. Gentlemen may say that that is not realism, that it is working in the realm of ideals. There are beyond that three things in the gift of a free democracy determined to pool the national effort on behalf of the public welfare of the world—honour, prestige and power. Honour, prestige and power are what men all down the ages have cared for more than they care for anything else. There is no reason why, under the system which we on these benches adumbrate, the men who contribute that splendid effort to the nation should not have these things conferred upon them.
  The Government have no such outlook, They still think that they can maintain private profit and that they can cajole the great industrialists and drive them, by tariffs and subsidies, to continue the hybrid system which they are trying to work at the present time. That system I do not believe can continue much longer to deliver the goods even in peace time. But surely even those who support

  1537
  it in peace time must realise that, if the catastrophe of war overtakes us, this hybrid system of private profit will fail. I trust that it will not be through any such calamity that the necessity of substituting a national system for it comes to be recognised.
  The existing system is crumbling, and all the clever people and the wiseacres think that what we are saying on these benches on this matter is foolishness and the babbling of children. No doubt we appear to be fools to the Chancellor of the Exchequer and his closer colleagues in the Government, but I would remind them of what was the last saying of that clever, wise and cunning statesman M. Clemenceau. He was asked what was the great lesson he had learnt from life, and he said:
  " The fools are always right."
  No doubt we may appear as children to some of the wise men on the opposite benches. But there was a greater than M. Clemenceau, who, confronted with the wiseacres in his time, gave thanks that the most important things in life were hidden from the wise and prudent and were revealed unto babes.
  10.45 p.m.
  The Financial Secretary to the Treasury (Captain Euan Wallace): During the very interesting Debate that we had yesterday my right hon. Friend the Member for Epping (Mr. Churchill) designated the new Air Minister as a round peg in a square hole. I understand that the Air Minister replied by designating the right hon. Gentleman as a square peg in a round hole. In spite of the kind words of welcome which have been addressed to me in this arduous situation by the right hon. Gentleman opposite, I must say that I feel like a very small peg in an absolutely enormous hole. I have, however, the satisfaction of knowing that before my maiden speech in the realms of high finance I have listened for practically the whole day to a Debate which has been a real Debate. We on the Government side know only too well that on many occasions the Government speakers from this bench are practically the only defenders in Debate of what we are proposing, and we have to listen to a good deal of criticism from the other side without any counterbalancing arguments from our own back benches. But to-night every one of the
  1538
  thoughtful speeches that have been delivered from the other side, either from the Front Bench or from the back benches, has been very effectively replied to from this side and I must say that I have been deprived of a good deal of material by the way in which one hon. Member has cancelled another out.
  To end this Debate, we have had an extremely thoughtful speech from the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence). While I cannot agree with everything that he said, yet there is always something in the way he puts his points which makes one want to agree with him as much as one can. There was one point which he made which I could not swallow, and that was when he spoke of last year as being the time when Gladstonian finance was first abandoned. I felt compelled to wonder what that eminent statesman would have said or thought about the first Budget of 1931. One further thing on which I might join issue with the right hon. Gentleman was his rather sinister reference to the power which was to be given to the industrialists who would come in to help. It seemed to me that it was rather against the conception of democracy which we have always understood was held on those benches, that power should be held out to a ny section of the community in such a blatant way.
  The task to which I have to address myself in the first place is the Amendment on the Order Paper, which was moved by the right hon. Member for Hillsborough (Mr. Alexander), with all his usual vigour. That Amendment makes six definite points, five of which are critical of the policy embodied in the Finance Bill, while the sixth may be taken as a constructive suggestion. His Majesty's Government is blamed for a Budget which is said to be unbalanced, for permitting excessive profits to be made in connection with the rearmaments programme, for giving subsidies to private industry, for penalising road transport and, finally, for greatly adding to the burdens of people of small means. The Amendment goes on to suggest that every one of these difficulties would be obviated by additional taxation on that small section of the community which possesses great wealth.
  My right hon. Friend the Chancellor of the Exchequer dealt very fully and

  1539
  faithfully with the Amendment, as I think anyone who heard him will agree, and in proposing to say something on each of its points I shall be only attempting to fill in the few gaps which my right hon. Friend, through pressure of time, was obliged to leave.
  The first accusation is that we have a series of unbalanced Budgets. But I must point out that last year we had a surplus of £28,750,000. Moreover the borrowing of £65,000,000 for Defence was part of a definite plan providing for the borrowing of a limited sum and for repayment within a limited period. For five years, until 1942, interest only is to be paid. After that the whole sum is to be repaid with sinking fund in 30 years, and I see no reason, and I think the world sees no reason, to suppose that that undertaking will not be complied with. The borrowing for Defence this year, £90,000,000 plus Supplementry Estimates, is part of the same plan. The same conditions apply, and it is not the uncontrolled and ill-defined borrowing to which reference has been made on previous occasions. I think we can claim that we are this year providing a very large proportion indeed of our defence expenditure out of taxation. Many hon. Members on all sides have said that we have a formidable problem to face, and this is true. Expenditure from revenue on Defence has grown from £124,000,000 in 1936 and £198,000,000 last year to no less, with air raid precautions, than £264,000,000 this year.
  To balance the Budget, apparently, to the satisfaction of the Movers of this Amendment, we should have to add at least another £90,000,000 to taxation this year. I do not think it is necessary to do more than ask the House in all seriousness the simple question, what effect an additional impost upon the people of the country of £90,000,000 in the current Budget would be likely to have on our trade prospects. One method of balancing the Budget was suggested by my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft), backed up by my right hon. Friend the Member for Sparkbrook (Mr. Amery). I hate to say anything to contradict him, for I learnt politics, so to speak, at his knee. But we must take the long and not the short view. The trade of the country
  1540
  will only grow to the volume to which we wish it to grow if we bring the whole world into our orbit.
  The right hon. Gentleman went on to talk about the trade balance. I should like to draw attention to the speech of my right hon. Friend the President of the Board of Trade only two days ago when, in a very carefully considered review of the economic position of the country, he said that the increase in the adverse balance of trade in 1937 was not in itself very frightening. It was not due to a decline in exports, which actually increased by 9½ per cent. in volume, but to an increase in the price of imports. That situation was not unexpected in view of the increased prosperity last year. As the House knows, the economic structure of this country has depended for years, and will continue to depend, upon the import of raw material and the export of the finished product, and in that case, when the country has been upon the up-grade, there must always be some lag and we must always expect an increase of imports at such a time. As the President of the Board of Trade said, this situation must be carefully watched, and I have no doubt that my right hon. Friend will continue to watch it.
  Sir H. Croft: Will the right hon. and gallant Member say what the Government are going to do about the increase in the imports of manufactures which have come in during the last few years?
  Captain Wallace: That may be due to some extent to the increased prosperity of this country. It is not for me to say what my right hon. Friend the President of the Board of Trade is going to do, but he made it perfectly clear that he intended to keep the situation in all its tendencies under the most careful observation.
  Let me come back to the point made by the right hon. Member who opened the Debate in regard to the year 1931. There is no doubt that he and his friends find it extremely hard to forget 1931, and find it difficult to realise that the situation today is in no way comparable with that of 1931. It may be very unlucky, but it is perfectly true that the credit worthiness of A is not the same as the credit worthiness of B, and, quite apart from the fact that the right hon. Gentleman and his friends were then borrowing in 1931, without limit and without provisions to repay, and

  1541
  were borrowing for immediate and current needs, what really matters is what the world thought about it. The right hon. Gentleman referred to our attitude in a striking phrase, "complacent and Pharisaical humbug," but the fact remains that in 1931 there was a panic and in 1938 the world is undisturbed by the modest measure of controlled borrowing which the Government propose.
  The second point in the indictment was the alleged laxity of Vie Government in allowing the hon. Member for Ipswich (Mr. Stokes) and his friends to get away with an undue degree of profit. There is no doubt that it is to the interests of everyone to see that excess profits are not made out of the necessity for providing armaments for the defence of all. But there is one person to whom this is of paramount interest, and that is the Chancellor of the Exchequer. My right hon. Friend has explained some of the precautions he has adopted, and has given an assurance that he is ready to consider any practicable plans to achieve the end we all desire; the only criterion is that they must be practicable.
  The right hon. Gentleman opposite went on to deal with the question of subsidies to private industries. The total of these subsidies this year is about £10,000,000, which will be increased, not I believe substantially, by new legislation in regard to milk and herring. Of that £10,000,000, civil aviation and transport in the Highlands and Islands will take about £I,000,000, which I do not suppose anybody will grudge. Then £2,500,000 goes to beet sugar, about which I do not think I need say any more, and i'6,500,000 out of the £10,000,000 goes to agriculture. Agriculture undoubtedly gets the lion's share of the subsidies, but agriculture, after all, is our greatest industry, and it provides the most employment in this country. The difficulties of agriculture are due principally to world conditions, and whatever may be the theoretical arguments for or against assisting agriculture in this country, there is not the slightest doubt that for practical reasons some form of extraneous assistance is essential. The Government are not giving these subsidies, to which objection is taken by implication, as mere doles or as premiums on inefficiency. Many of them, for instance, those for tramp shipping, North Atlantic shipping, bacon and milk, have been coupled
  1542
  with conditions as to reorganisation, and it has been made a rule that where assistance is offered to an industry we shall endeavour to see that, as in the case of tramp shipping, when the time for assistance expires the reorganisation remains. I think it must be pointed out in this connection that every nationalised industry would be subsidised if it made a loss.
  The next count in the indictment is the Oil Duty. This is a revenue tax. It has not got for its object either to assist or to penalise any form of transport. Heavy oil used as fuel on the roads bears the same tax as petrol. Actually it has a certain advantage because Diesel oil gives a greater mileage per gallon than does petrol, and if you work it out on the basis of mileage per gallon, I believe the fair tax on Diesel oil would be about 1s. 2d. If it bore less than the tax which my right hon. Friend intends to impose on it, there is no doubt that its increasing use on the roads would eat into the petrol duty revenue, deprive the Chancellor of a valuable source of supply, and eventually oblige him to look somewhere else. I do not think it can be considered that this tax has either stifled road transport development or is an intolerable burden on road users. The Chancellor himself gave some very striking figures as to the recent road transport development, and, of course, it is a fact, as the House knows, that the price of petrol fluctuates for commercial reasons quite independent of the rate of duty. It went up by id. after the Budget, but it has since come down by ½d., and to-day it is 1s. 7d., or actually less than a year ago. Therefore, I do not think it can be contended that this is an intolerable or unjustifiable tax on road-users.
  The right hon. Gentleman's Amendment goes on to refer to burdens placed upon the poor. He knows as well as I do that this is a subject on which it is difficult to talk without appearing to be smug, but I assume he was referring to the £2,750,000 to be raised by the increase of the duty on tea, part of which will fall on the very poor. I must point out to the House that the Chancellor, for reasons which are generally appreciated, has to find a large additional revenue this year, and of this estimated additional revenue, that is, the additional taxation which he is imposing, plus the increased

  1543
  yield of existing taxation, he is getting no less than £66,500,000 from direct taxation and only £11,000,000 from indirect taxation, of which £7,000,000 is from the Oil Duty and only £2,750,000 from the Tea Duty. I ask the House whether that is an excessive proportion. On the other side of the picture, increased expenditure on social services is more than four times as much as the whole of the increase in the Tea Duty. The estimates for the social services are actually £12,000,000 more than was spent last year.
  Those are the indictments against the Government. As to the remedy of obtaining all the additional taxation from the rich, I do not think it is necessary for me at this hour to add anything to the very clear statement of my right hon. Friend, first as to how we are at present soaking the rich, and then super-soaking the very rich. Probably the best answer to hon. Gentlemen opposite who asked whether it would not be possible to turn the screw a little tighter at the present moment was given by my hon. Friend the Member for Hastings (Mr. Hely-Hutchinson), who once more has made a notable contribution to our Debates on financial affairs, when he reminded the House of what the late Lord Snowden said in 1931 about the trouble he had with his hon. Friends who talked the usual claptrap about going to the Surtax payers. It is also worth remembering, as has been pointed out by my hon. Friend the Member for Hastings and my hon. Friend the Member for Rushcliffe (Mr. Assheton), that if you soak the rich, you soak those who serve them. I do not think there is much hoarding among people with big incomes, and I believe it is substantially true to say that if you take more than 13s. in the £ from certain people, the economies which they will be forced to make in the first instance will be personal economies which will bring unhappiness and trouble to other people. A great many points were made in other speeches with which I would like to deal, but I appreciate that in many cases this is not the best moment to do so. I would only say to those hon. Members, particularly the hon. Member for Bassetlaw (Mr. Bellenger), who raised the question of tax evasion, that we believe we are doing a great deal. We have definite provisions in the Bill, and we shall do our best to see that they effectively carry out their purpose. If defects in them can be
  1544
  pointed out, we shall be glad to have any suggestions, because everybody, irrespective of party, must agree that if a tax is imposed it is obviously fair that two people within the same range and scale of taxation should pay the same tax.
  The Second Reading of the Finance Bill does not lend itself to a peroration. At the best of times it is a reminder that all policies have to be paid for, and it is no more welcome either to hon. Members or to the country than that crop of bills with a little B which we are accustomed to receive quarterly, monthly or even more frequently. The Chancellor of the Exchequer has presented a bill, which, of necessity, calls for increased sacrifices. No one, as has been testified to-day, doubts the necessity for National Defence. No one doubts the desirability of maintaining our social services, nor if they were responsible for conduct of financial affairs, would hon. Members doubt the wisdom of meeting the charge for the service of our debt. The field of possible administrative economies, as my right hon. Friend pointed out in the Debate on the Budget Resolutions, is extremely small, and we might as well face the fact that if we wish to achieve a reduction of expenditure on a scale which would bring substantial relief to the taxpayer, we shall have to make fundamental alterations in our national policy of a kind which, I think, no party in the House is proposing at the present time.
  There is an old proverb which comes from my part of the world to the effect that "the man who pays the piper can call the tune." The converse is equally true and in this case, we have called the tune and the piper has to be paid. As to the exact division of that bill among those who are collectively responsible for meeting it, there may be legitimate divergences of view. It was only necessary to sit here to-day and hear the speeches from all sides of the House—none of them, I think prejudiced and all of them thoughtful and sincere—to realise the existence of those differences. Those which have been expressed in the shape of constructive criticism—to which I fear it would be impossible at this stage to reply in detail—will, I assure hon. Members receive the careful consideration of my right hon. Friend in the furfher stages of the Bill to which, I hope, the House will now give a Second Reading.

  1545
  Question put, "That the words proposed to be left out stand part of the Question."
  The House divided: Ayes, 250; Noes, 122.

  Division No. 220.]

  AYES.

  [11.14 p.m.

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

  Eastwood, J. F.

  Markham, S. F.

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

  Eckersley, P. T.

  Mayhew, Lt.-Col. J.

  Albery, Sir Irving

  Edmondson, Major Sir J.

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

  Alexander, Brig.-Gen. Sir W.

  Elliot, Rt. Hon. W. E.

  Mills, Major J. D. (New Forest)

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

  Ellis, Sir G.

  Mitcheson. Sir G. G.

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

  Elliston, Capt. G. S.

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

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

  Elmley, Viscount

  Moreing, A. C.

  Anstruther-Gray, W. J.

  Emery, J. F

  Morris-Jones, Sir Henry

  Apsley, Lord

  Emrys-Evans, P. V.

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

  Aske, Sir R. W.

  Errington, E.

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

  Assheton, R.

  Everard, W. L.

  Muirhead, Lt.-Col. A. J.

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

  Findlay, Sir E.

  Munro, P.

  Baillie, Sir A. W. M.

  Fleming, E. L.

  Nicholson, G. (Farnham)

  Baldwin-Webb, Col. J.

  Fox, Sir G. W. G.

  Nicolson, Hon. H. G.

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

  Fremantle, Sir F. E.

  O'Connor, Sir Terence J.

  Balniel, Lord

  Furness, S. N.

  O'Neill, Rt. Hon. Sir Hugh

  Barclay-Harvey, Sir C. M.

  Fyfe, D. P. M.

  Palmer, G. E. H.

  Barrie, Sir C. C.

  Gledhill, G.

  Patrick, C. M.

  Beauchamp, Sir B. C.

  Gluckstein, L. H.

  Peake, O.

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

  Goldie, N. B.

  Peat, C. U.

  Beit, Sir A. L.

  Gower, Sir R. V.

  Perkins, W. R. D.

  Bernays, R. H.

  Graham, Captain A. C. (Wirral)

  Petherick, M.

  Blair, Sir R.

  Greene, W. P. C. (Worcester)

  Pickthorn, K. W. M.

  Boothby, R. J. G.

  Gridley, Sir A. B.

  Pilkington, R.

  Bossom, A. C.

  Grigg, Sir E. W. M

  Plugge, Capt. L. F.

  Boulton, W. W.

  Guest, Lieut.-Colonel H. (Drake)

  Ponsonby, Col, C. E.

  Bower, Comdr. R. T.

  Guest, Hon. I. (Brecon and Radnor)

  Porritt, R. W.

  Boyce, H. Leslie

  Guinness, T. L. E. B.

  Pownall, Lt.-Col. Sir Assheton

  Brass, Sir W.

  Hacking, Rt. Hon. D. H.

  Procter, Major H. A.

  Briscoe, Capt. R. G.

  Hambro, A. V.

  Radford, E. A.

  Broadbridge, Sir G. T.

  Harbord, A.

  Raikes, H. V. A. M.

  Brown, Col. D. C. (Hexham)

  Haslam, Henry (Horncastle)

  Ramsay, Captain A. H. M.

  Brown, Rt. Hon. E. (Leith)

  Haslam, Sir J. (Bolton)

  Ramsbotham, H.

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

  Heilgers, Captain F. F. A.

  Rathbone, J. R. (Bodmin)

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

  Hely-Hutchinson, M. R.

  Reed, A. C. (Exeter)

  Bull, B. B.

  Heneage, Lieut.-Colonel A. P.

  Reed, Sir H. S. (Aylesbury)

  Bullock, Capt. M.

  Hepburn, P. G. T. Buchan.

  Reid, W. Allan (Derby)

  Burghley, Lord

  Hepworth, J.

  Remer, J. R.

  Burton, Col. H. W.

  Herbert, A. P. (Oxford U.)

  Rickards, G. W. (Skipton)

  Butler, R. A.

  Herbert, Capt. Sir S. (Abbey)

  Ropner, Colonel L.

  Caine, G. R. Hall.

  Higgs, W. F.

  Ross, Major Sir R. D. (Londonderry)

  Campbell, Sir E. T.

  Hope, Captain Hon. A. O. J.

  Ross Taylor, W. (Woodbridge)

  Cartland, J. R. H.

  Hopkinson, A.

  Royds, Admiral Sir P. M. R.

  Carver, Major W. H.

  Horsbrugh, Florence

  Russell, Sir Alexander

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

  Howitt, Dr. A. B.

  Russell, S. H. M. (Darwen)

  Cazalet, Thelma (Islington, E.)

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

  Salmon, Sir I.

  Chamberlain, Rt. Hn. N. (Edgb'l'n)

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

  Salt, E. W

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

  Hulbert, N. J.

  Samuel, M. R. A.

  Clarry, Sir Reginald

  Hunter, T.

  Sanderson, Sir F. B.

  Cobb, Captain E. C. (Preston)

  Hutchinson, G. C.

  Sassoon, Rt. Hon. Sir P.

  Colfox, Major W. P.

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

  Scott, Lord William

  Colman, N. C. D

  Keeling, E. H.

  Selley, H. R.

  Colville, Rt. Hon. John

  Kerr, H. W. (Oldham)

  Shakespeare, G. H.

  Conant, Captain R. J. E

  Kimball, L.

  Shaw, Captain W. T. (Forfar)

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

  Lamb, Sir J. Q.

  Shepperson, Sir E. W.

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

  Latham, Sir P.

  Simon, Rt. Hon. Sir J. A.

  Croft, Brig.-Gen. Sir H. Page

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

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

  Crooke, Sir J. S.

  Leech, Sir J. W.

  Smith, Bracewell (Dulwich)

  Crookshank, Capt. H. F. C.

  Lees-Jones, J.

  Smith, Sir R. W. (Aberdeen)

  Croom-Johnson, R. P.

  Leighton, Major B. E. P.

  Somerville, Sir D. B. (Crewe)

  Cross, R. H.

  Lennox-Boyd, A. T. L.

  Somerville, A. A. (Windsor)

  Crossley, A. C.

  Liddall, W. S.

  Spens. W. P.

  Crowder, J. F. E.

  Lloyd, G. W.

  Stanley, Rt. Hon. Lord (Fylde)

  Cruddas, Col. B.

  Locker-Lampson, Comdr. O. S.

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

  Culverwell, C. T.

  Loftus, P. C.

  Stewart, J. Henderson (Fife, E.)

  Davies, C. (Montgomery)

  Lyons, A. M.

  Storey, S.

  Davies, Major Sir G. F. (Yeovil)

  Mabane, W. (Huddersfield)

  Stourton, Major Hon. J. J.

  Dawson, Sir P.

  M'Connell, Sir J.

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

  De la Bére, R.

  McCorquodale, M. S.

  Strauss, H. G. (Norwich)

  Denville, Alfred

  MacDanald, Rt. Hon. M. (Ross)

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

  Dodd, J. S.

  MacDonald, Sir Murdoch (Inverness)

  Stuart, Hon. J. (Moray and Nairn)

  Dower, Major A. V. G.

  McEwen, Capt. J. H. F.

  Sueter, Rear-Admiral Sir M F.

  Duckworth, W. R. (Moss Side)

  McKie, J. H.

  Tasker, Sir R. I.

  Dugdale, Captain T. L.

  Maclay, Hon. J. P.

  Tate, Mavis C.

  Duggan, H. J.

  Macmillan, H. (Stockton-on-Tees)

  Thomas, J. P. L.

  Duncan, J. A. L.

  Makins, Brig.-Gen. E.

  Thomson, Sir J. Q. W.

  Dunglass, Lord

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

  Touche, Q. O.

  Tufnell, Lieut.-Commander R. L.

  Wayland, Sir W. A

  Wood, Hon. C. I. C.

  Wakefield, W. W.

  Wells, S. R.

  Wright, Wing-Commander J. A. C.

  Walker-Smith, Sir J.

  Whiteley, Major J. P. (Buckingham)

  Young, A. S. L. (Partick)

  Wallace, Capt. Rt. Hon. Euan

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

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

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

  TELLERS FOR THE AYES.—

  Ward, Irene M. B. (Wallsend)

  Windsor-Clive, Lieut.-Colonel G.

  Lieut.- Colonel Kerr and Mr. Grimston.

  Wardlaw-Milne, Sir J. S.

  Winterton, Rt. Hon. Earl

  Walt, Major G. S. Harvie

  Womersley, Sir W. J.

  NOES.

  Acland, R. T. D. (Barnstaple)

  Griffiths, G. A. (Hemsworth)

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

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

  Griffiths, J. (Llanelly)

  Poole, C. C.

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

  Groves. T. E.

  Price, M. P.

  Ammon, C. G

  Hall, G. H. (Aberdare)

  Pritt, D. N.

  Attlee, Rt. Hon. C. R.

  Hall, J. H. (Whitechapel)

  Quibell, D. J. K.

  Banfield, J. W.

  Hardie, Agnes

  Richards, R. (Wrexham)

  Barnes, A. J.

  Harris, Sir P. A.

  Riley, B.

  Barr, J.

  Hayday, A.

  Robinson, W. A. (St. Helens)

  Batey, J.

  Henderson, J. (Ardwick)

  Rothschild, J. A. de

  Bellenger, F. J.

  Henderson, T. (Tradeston)

  Salter, Dr. A. (Bermondsey)

  Benn, Rt. Hon. W. W.

  Hicks, E. G.

  Sexton. T. M.

  Benson, G.

  Hills, A. (Pontefract)

  Shinwell, E.

  Bevan, A.

  Hopkin, D.

  Silkin, L.

  Broad, F. A.

  Jagger, J.

  Silverman, S. S.

  Buchanan, G.

  Jenkins, Sir W. (Neath)

  Smith, Ben (Rotherhithe)

  Burke, W. A.

  John, W.

  Smith, E. (Stoke)

  Charleton, H. C

  Jones, A. C. (Shipley)

  Smith, T. (Normanton)

  Chater, D.

  Jones, Morgan (Caerphilly)

  Sorensen, R. W.

  Cluse, W. S.

  Kelly, W. T.

  Stephen, C.

  Cocks, F. S.

  Kennedy, Rt. Hon. T.

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

  Cove, W. G.

  Kirby, B. V.

  Stokes, R. R.

  Cripps, Hon. Sir Stafford

  Lansbury, Rt. Hon, G.

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

  Daggar, G.

  Leach, W.

  Summerskiil, Edith

  Dalton, H.

  Leslie, J. R.

  Taylor, R. J. (Morpeth)

  Davidson, J. J. (Maryhill)

  Logan, D. G.

  Thurtle, E.

  Davies, R. J. (Westhoughton)

  Lunn, W.

  Tinker, J. J.

  Day, H.

  McEntee, V. La T.

  Tomlinson, G.

  Dobbie, W.

  McGhee, H. G.

  Viant, S. P.

  Ede, J. C.

  MacLaren, A.

  Walkden, A. G.

  Edwards, Sir C. (Bedwellty)

  Marshall, F.

  Walker, J.

  Foot, D. M.

  Mathers, G.

  Watson, W. McL.

  Frankel, D.

  Maxton, J.

  Welsh, J. C.

  Gallacher, W.

  Messer, F.

  White, H. Graham

  Gardner, B. W.

  Milner, Major J.

  Whiteley, W. (Blaydon)

  Gibbins, J.

  Montague. F.

  Williams, D. (Swansea, E.)

  Gibson, R. (Greenock)

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

  Williams, E. J. (Ogmore)

  Graham, D. M. (Hamilton)

  Naylor, T. E.

  Windsor, W. (Hull, C.)

  Green, W. H. (Deptford)

  Noel-Baker, P. J.

  Woods, G. S. (Finsbury)

  Greenwood, Rt. Hon. A

  Oliver, G. H.

  Young, Sir R. (Newton)

  Grenfell, D. R.

  Paling, W.

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

  Parker, J.

  TELLERS FOR THE NOES.—

  Parkinson, J. A.

  Mr. Adamson and Mr. Anderson.

  Bill read a Second time.

  Bill committed to a Committee of the Whole House, for Monday next.—[Captain Margesson.]—

  HERRING INDUSTRY [Money].
  Resolution reported,
  " That, for the purposes of any Act of the present Session to amend the Herring Industry Act, 1935, to authorise the giving of further financial assistance to the Herring Industry Board and to herring fishermen, and for purposes connected with the matters aforesaid, it is expedient—
  (a) to authorise the payment out of moneys provided by Parliament—

  (i) in respect of the general administrative expenses of the Herring Industry Board (including the expenses of the Herring Industry Advisory Council constituted by the said Act and of any committee appointed by the Board), of sums not exceeding sixty thousand pounds;

  1548

  (ii) in respect of such other expenses of the said Board as may be specified in the said Act, of sums not exceeding the amount which with the sums paid in respect of the general administrative expenses of the Board will amount to one hundred and twenty-five thousand pounds;

  (iii) of grants to herring fishermen, for the purpose of assisting in the provision of new motor boats which could not be provided without such assistance, so, however, that no grant in respect of any boat shall exceed one-third of the total cost thereof and the aggregate of the grants shall not exceed two hundred and fifty thousand pounds;

  (iv) into the Herring Fund Advances Account of such sums not exceeding in the aggregate one hundred and fifty thousand pounds, as may he required for the purpose of making advances to the Herring Industry Board towards their expenses in the exercise of their powers for the purposes mentioned in subsection (3) of section nine of the Herring Industry- Act, 1935, as amended by the said Act of the present Session;

  1549

  (v) of remuneration to the members, officers, and servants of the consumers' committee and of the committee of investigation appointed under section four of the Herring Industry Act, 1935, and of such sums as may be necessary to defray the expenses of the said committees;

  (b) to authorise the payment into the Exchequer of all sums received by way of interest on, or repayment of the principal of, any advance made to the said Board."
  Resolution read a Second time.
  Mr. Speaker: The Amendment standing in the name of the hon. Member for Lowestoft (Mr. Loftus)—In line i5, leave out "motor"—is not in Order.
  Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
  11.24 p.m.
  Mr. Boothby: I do not want to detain the House, but there are one or two aspects of this Measure which have to be dealt with, because we are not getting it in Committee upstairs, as we had at one time expected, and that means that it will not receive the same exhaustive treatment. While the general terms of the Bill and its financial provisions have been improved, I think it can be said, from the point of view of the bulk of the Scottish herring fishery, as the Minister is no doubt aware, that widespread disappointment has been caused by the fact that it fails to make any financial provision for the fishermen in the immediate future, in the interim period. What they asked and what they hoped to receive by this Bill was something to help them with their running expenses in the coming season when things are so difficult. This financial provision is for certain grants to fishermen under conditions which we examined in the Committee stage of the Bill and which will not come into operation till an appointed day, which I believe is not to be until December. The grants themselves are not unsatisfactory, but in the meantime the fishermen have to get through the forthcoming summer and autumn fishings as well as they can. Nothing in this proposal will help them to meet one of their greatest problems, that of running costs. I put down a Question the day before yesterday, asking the Government when they would consider the possibility of doing something to secure that bonâ fide fishermen should be able to purchase the coal which is essential for their steam drifters at some
  1550
  thing below the market price of 37s. per ton. The Bill contains no proposal enabling them to purchase coal more cheaply or in other ways to reduce their running expenses, and that is the cause of a considerable amount of disappointment. I would like my right hon. Friend to state whether, even at this late hour, it would not be possible to insert some form of financial provision into the Bill to assist fishermen to reduce their running costs in the immediate future, and that the Bill should not be confined entirely to giving, in respect to motor boats, grants which will not come into operation until December.
  I should like to raise another point in respect of these grants, if it is in order. I believe it is, and there is no other way of raising it. I would ask the right hon. Gentleman whether it is possible to insert into the Bill provisions to make the grants for motor boats retrospective, even for a short period. The position is that a number of fishermen of enterprise and standing who have the credit facilities have actually built, or are having built to their order now, a certain number of motor boats of exactly the type covered by the Bill. I am sure I shall have him with me when I ask whether he thinks it is fair that these men, who have had the courage to go ahead on their own, having the credit at the bank, should be deprived of the benefits of the Bill. There are only five or six drifters concerned, and the concession for which I ask would cost but a negligible amount of money.
  Mr. Speaker: The hon. Member cannot suggest anything which would increase the amount laid down in the Money Resolution.
  Mr. Boothby: I was not aware of that. I bow to your ruling, Sir, that I am out of Order in asking that this grant be made retrospective. I think I shall be in Order in my last point. There is provision in the Bill which enables these grants to be made, provided that no other financial accommodation is available, or words to that effect. It looks at first sight something like a means test for these fishermen. The danger that some of us fear is an investigation into the means and standing of each fisherman who asks for a grant under the Bill. A good man who might be able to raise the necessary cash from his bank would not be able to get a grant, while the less good fisherman who

  1551
  had no credit facilities would be able to get a grant. I am sure my right hon. Friend will agree that that would not be fair, and I hope he may be able to give us some assurance.
  11.30 p.m.
  Mr. Loftus: I intervene bacause the Financial Resolution is so drawn as to strangle discussion in the Committee stage and prevent any reasonable Amendment to the Bill. I support the appeal of my hon. Friend the Member for East Aberdeen (Mr. Boothby) for some consideration of the question of the running costs of the fishermen. I understand that my Amendment to delete the word "motor" will not be called, but I would like to mention the question of the grant for motor vessels. I have looked up in the dictionary the definition of the word "motor," and I find that the Oxford Dictionary says it means:
  "Machine supplying motive power for carriage or vessel."
  In view of that definition I would ask the Secretary of State whether the grant should not include vessels propelled by steam, which would come under the definition in the Oxford Dictionary. This is my last chance of making this appeal. I would point out to my right hon. Friend that the cost of vessels of the same size is approximately the same. In 1937 a Diesel-engined vessel 80 feet long cost £7,800, and a steam vessel 85 feet long cost £7,700. As regards running costs, I know that the present steam drifters are extremely expensive to run, and, therefore, a case can be made out on their account. But the present steam drifters are old boats. Recently an experiment at the National Physical Laboratory showed that one thing only, an alteration in the shape of the hull, reduced the cost of fuel by 25 per cent. That is one indication of what steam under modern conditions can do. Then, in Germany, producer gas from coke is being used for running some 25 ships up to 1,000 tons, and one of these ships showed a saving on fuel of £120 a year. That shows that there are economical modern methods which may produce a cheaper-running vessel than the Diesel.
  It seems to me astonishing, in view of the fact that our fishing vessels are part of the national food production plant, that the Government should subsidise and encourage the running of part of our
  1552
  national food production plant on imported fuel rather than on fuel produced from coal. In wartime we might, owing to scarcity, find this important part of our food production partly immobilised for want of fuel. I submit that the mining interests in this House should carefully consider the fact that the drifter fleet uses approximately 150,000 tons of coal a year, and that in the national interest it is unwise to destroy that market and become more and more dependent on imported fuel.
  I regret this Resolution. In the first place, I understand from my right hon. Friend that the subsidy will only go to small boats. That means that the whole of the East Anglian fishing is ruled out; it means that probably not 5 per cent. of the subsidy will come to England. In the second place, the English boats are more heavily in debt than the Scottish. The Duncan Report gave the indebtedness of the whole fleet as £580 per boat; in one port it was £1,800 per boat, and that was an English port. Therefore, the fleet that is most heavily in debt will not receive any financial help. I believe that unemployment is being caused at the ports by knocking out coal and using petrol instead. My final point is again to say how astonished I am that in this House of Commons, where we are making every possible preparation for war, we should be faced with this proposal tonight to increase our dependence, without any necessity, on imported fuel.
  11.36 p.m.
  Mr. Dingle Foot: I have just a few words to say about the form which this Money Resolution takes. In the last year or two we have had a great many animated debates on the form of Money Resolutions. On the Special Areas Bill, the Tithes Bill and other Measures there were protests from all parts of the House at the unnecessary particularity with which many Resolutions are drawn, because it is felt, and rightly so, that this method has the effect of gagging the House and preventing reasonable Amendments being moved. It will be within the recollection of the House that so strong were the protests that the Government were constrained to set up a Select Committee on the subject. That Committee reported, in effect, that the protests were justified, and they made certain recommendations. The Government did not carry out the recommendations, but in

  1553
  the debate we had on the subject earlier in the Session the Prime Minister gave an assurance that a circular had been sent round to the Government Departments responsible, and that it enjoined on those who draw up the Resolutions that they should be drawn as widely as possible, so as not to fetter the chances of Amendments being moved. It is quite clear that that instruction has been ignored in the case of the present Resolution, because in the Resolution there appear the words, "new motor boats". Why should that reference to motor boats be necessary in the Money Resolution?
  In any case, both in the Resolution and in the Bill, there is a limitation of the amount to £250,000; so there can be no question of any increase in the charge. What is being done here, quite apart from the charge, is to put in this qualification, so that on the Committee stage it will be out of order for hon. Members representing herring ports to move that steam boats should be eligible for the subsidy in the same way as the other boats. That is entirely contrary to the instruction given a few months ago. It shows how useless these instructions are. Once again a deliberate attempt is being made to tie the hands of the House. It must be deliberate, because this matter about steam boats was raised in the debate on the Bill by several hon. Members —I know the hon. Member for Lowestoft (Mr. Loftus) expressed the hope that they were not to be ineligible. This Resolution is being brought forward after the Bill, and our hands are being tied by it. We ought to have some explanation from the Government as to the form the Money Resolution takes.
  11.40 p.m.
  Mr. Henderson Stewart: I think that most of us will join with the hon. Member for Dundee (Mr. Foot) in his protest against the close drafting of the Money Resolution. It is an old complaint in this House, and I imagine it will go on as long as our present methods continue. I join issue with the hon. Gentleman on the question of motor boats. I could with great pleasure enter into a debate with the hon. Member for Lowestoft (Mr. Loftus), but I do not want to do so at this late hour. I cannot imagine from what source he obtained his figures. In East Fife last year we built a 65 ft. motor diesel vessel for just over £3,000. It has been to Yarmouth, has taken part in the East
  1554
  Anglian fishing and has been very successful. A steam drifter of the same size, built to do the same kind of fishing, would cost about three times as much. There fore, as the expense of the diesel boat is only one-third of the steam boat, I am satisfied that it is proper to give this subsidy to motor boats at this time.
  I rise merely to support my hon. Friend the Member for East Aberdeen (Mr. Boothy) in making a protest to the Government on account of their failure to appreciate the real and the immediate needs of the herring trade. I have pleaded for grants for motor boats for many years in this House. Although I would be the last to be ungrateful for what is being done now—" For what we are about to receive, may the Lord make us truly thankful," and I hope that we may be—none of the provisions in the Bill is likely to be of the slightest immediate advantage to the herring trade this year or, I think, next year. I beg of the Government to reconsider the whole Bill with a view to recognising facts and producing satisfactory remedies. Is the House aware that we are losing men at such a rate in the herring trade that in ten years time, if the present rate is continued, there will not be any men left at all for the herring drifters. We are losing boats at such a rate that, if it is continued, in five years' time, there will not be one steam drifter left in Scotland. These facts must be faced by the Government if we are to maintain this essential trade.
  I thank the Government for this Measure as far as it goes, but I would be failing in my duty to my constituency if I did not make it abundantly clear, that it does not scratch the problem with which we are faced in the herring ports. That problem is one of making the herrings that we catch cheaper to sell. The only possible way that we can see of reducing their cost price is some grant towards expenses. My hon. Friend has suggested a loan to meet the increased cost of coal. I would like the basis chosen to be broader. I agree with the Herring Producers' Association and the deputation representing all sections of the trade which met the Government last year in asking for a grant of 25 per cent. covering all the many branches of expenses. The Minister refused that request and I now beg of him to reconsider the proposal most earnestly.
  11.45 p.m.
  Mr. Petherick: We have been listening to hon. Members representing Scottish constituencies. The trouble with them is that they are too greedy. Scotland is already getting the lion's share, under the Bill, of the £376,000 and on the top of that probably also £150,000 out of the Herring Fund Advances Account. I rise to make a plea on behalf of English Fishermen. It is a point which I raised on the Second Reading, and it is one of considerable importance. I am confirmed in that opinion by the fact that what I said has aroused a great deal of interest in Cornwall, and I understand also in Devon. The point was whether the advances to be made to herring fishermen are available for fishermen who catch herrings for part of the year, but not mainly for the whole year. In parts of Devon and certainly in Cornwall, there are men who go out during the winter months from November to, say, January, and catch herrings, and at other times they use their boats for catching pilchards, mackerel and, maybe, for fishing with long lines. It is important that it should be possible for them to obtain grants as part of their share of the money which is to be allocated for the building of boats. I have approached my right hon. Friend the Minister of Agriculture and Fisheries on this matter, and he has promised to look into it. I hope that he will be able to assure the herring fishermen that in this financial Resolution, and also in the Bill, they are covered, because they are certainly not less deserving than the Scottish herring fishermen, although they fish for herring for only part of the year.
  11.48 p.m.
  Mr. Gallacher: The hon. Member for Penryn and Falmouth (Mr. Petherick) is very supercilious about Scottish Members. If he thinks that my intervention is undesirable, the door is there, and there is no reason why he should stay here and suffer in listening to me. I discovered that it was too late for me to put down Amendments on the Financial Resolution, and I decided to draft Amendments for the Committee stage because, although I have miners and agricultural workers in my constituency, I have also a certain number of herring fishermen. Therefore, I have tried to give some consideration to the herring industry. I drafted Amendments for the Committee stage, and then I learned that they are out of
  1556
  Order. One Amendment, to provide that "motor" should be deleted, was out of Order, so I was told. I also discovered that an Amendment to provide that the sum total of the grants should be increased to £500,000, would be extremely out of Order. I also had an Amendment that in addition to the grants for boats there should be grants made to meet the current needs of the fishermen. I was told that that was out of Order. Therefore, my activities to get in my Amendments in good time, have not been of much avail.
  I take the opportunity of protesting against the Financial Resolution. It is obvious that the provision made in the Financial Resolution is not sufficient. Although the Government have been constrained to do something to help the herring fishing industry, the something they are doing is the absolute minimum. I am positive that a representative body of Government Members could not work out a plan of any kind that would give less to the herring fishermen. The method of allocation is simply tying the House of Commons hand and foot. We can think out the most effective way of distributing any money that there is to be distributed so as to be of the greatest advantage to the fishermen and, no matter how much thinking we may do, it is of no avail. Suppose we got meetings of fishermen at Lowestoft, on the Forth and at Aberdeen and discussed with them ways and means how the best possible use could be made of the money in order to meet their current needs, we come here and are told we are out of Order. It does not matter how bad and how dangerous is a proposal brought forward by the Government the Members behind them go into the Lobby as they are told. Here and there someone may get up and say a word or two to give the impression that he is free, but not a man dare stay out. With an automatic majority how is it possible to carry on the business of the country? [An HON. MEMBER: "What about Russia?"] I should like to divert a little.
  Mr. Deputy-Speaker (Sir Dennis Herbert): If the hon. Member means divert from what he was talking about back to the Resolution, I should have no objection.
  Mr. Gallacher: That is very subtle. I dearly like subtle things, so I will accept your advice, Sir Dennis. I ask the House

  1557
  not to pass the Resolution. It is not only the Lowestoft fishermen. National interests are involved. The hon. Member for East Fife (Mr. Henderson Stewart) tells us the Government are only scratching at the problem. Stop this scratching at the problem and deal with it in an effective manner. Hon. Members cannot support this Money Resolution if they are genuine towards their constituents. I want a Financial Resolution which will give fishermen assistance now for running costs and for other necessities. Neither the hon. Member for East Fife, the hon. Member for East Aberdeen (Mr. Boothby), the hon. Member for Lowestoft (Mr. Loftus) nor the hon. Member for Dundee (Mr. Foot) can support the Resolution. There cannot be any neutrality in this matter. Let us have a Division. Why not? It is an offence against the fishermen to let the Government get away with this Resolution. They are a thousand times more important than the collection of oddities who occupy the Government's Front Bench. If I can get any assistance I am prepared to go to a Division. The hon. Member has referred to greedy Scotsmen. Englishmen have been robbing Scotsmen for several centuries; they have been flourishing at the expense of Scotsmen.
  Mr. Loftus: The proper time to oppose was on the Second Reading. I did so, but perhaps the hon. Member was not present.
  Mr. Gallacher: I opposed the Second Reading, and I want to oppose the Resolution now. The proper time to oppose is when the subject comes before us, whether it is on Second Reading or on Financial Resolution. If we defeat it the Government will have to bring in another. I ask the hon. Members not to encourage any scratching with this serious problem, but to force the Government to face it in a manner which the great services that the fishermen have given to the country deserve. I hope the Resolution will be withdrawn.
  11.59 p.m.
  Mr. J. J. Davidson: I think that the Government should make no exception at all and in dealing with this industry should deal with it as a whole and not with particular sections of it. There must be no selection. It cannot be proved that a particular part of the industry is
  1558
  suffering more than any other. The herring industry has been sadly neglected for many years, and hon. Members on all sides are doing their utmost to see that assistance is given to it. The hon. Member for Lowestoft (Mr. Loftus) cannot deny that if it was right to support this proposal on the Second Reading it is right that he should support it to its logical conclusion. Have the hon. Members who put this proposal forward done it merely with a view to making speeches that will impress their constituents, but not with a view to taking action that will help their constituents? If so, they do not truly represent their constituents; they are shadow boxers. They are not carrying out their Parliamentary duties as they should do.
  Mr. Boothby: Both my hon. friend the Member for East Fife (Mr. Henderson Stewart) and I made it plain that we approved the Bill as far as it went, but regretted that it did not go further.
  Mr. Davidson: If the hon. Members desire to impress the Government with the necessity of going further and go to the extent of placing their view in an Amendment on the Order Paper, and the Government refuse to accept that view, it is their duty to press the Government by voting against them. The hon. Members have agreed that the Government have not gone far enough; that means that in their opinion the Government are not doing sufficient in their view for the herring industry. All they do is to make rebel speeches, and then, when the Chief Whip shows his face, they run away with their tails between their legs. Is that carrying out their duty to their constituents? Are they merely playing with the problem as politicians, or are they prepared as representatives interested in the herring industry to carry their views to their logical conclusion? We want to let their constituents know that we are watching their members who are such rebels in words, but such quitters in action. In view of the great volume of criticism on this point and the brilliant speeches which have been made by these fighting members on the Government side on behalf of the herring industry, I suggest that the right hon. Gentleman should delay this question and give the House a bigger opportunity of discussing it. I ask that as one who desires to assist the herring industry.
  12.5 a.m.
  Mr. Harbord: I wish briefly to register a strong protest against the action of the Government in not conceding to the request of those who represent the herring fishing ports of Great Britain. It seems that the appeals that have been made have fallen on deaf ears. I shall feel it my duty to vote against the Financial Resolution. Having made a strong protest, I feel that it is logical that I should vote against proposals which will result in a number of boats in the port which I have the honour to represent going out of operation and a number of men losing their livelihood. The Government will not grant the necessary financial assistance for the working of these boats, although, in all, the assistance for which we have asked would not involve an expenditure of more than £160,000 by the Government. Is this great national fishing industry to go to the wall because the Government will not grant the necessary financial assistance? I must express my disappointment and disgust that the Government have not accepted the case which has been put so strongly. I welcome the action which has been taken by my hon. Friend the Member for Lowestoft (Mr. Loftus), who has done his best for the fishermen of the port of Lowestoft. I make a last appeal to the Government to be more fair. This Bill is entirely a Scots Measure, and the English side of the industry has been neglected, apart from the provision for new boats.
  12.8 a.m.
  The Secretary of State for Scotland (Mr. Colville): The points that have been raised on the Report stage of the Money Resolution are substantially the points that were raised on the Second Reading of the Bill. On that occasion, I tried to demonstrate to the House why the Government had chosen to assist the industry in the way laid down in the Bill and the way provided for in the Money Resolution. At this time of night, I do not think the House would wish me to make my Second Reading speech over again, but perhaps I might underline that what I said on that occasion was that we recognised the difficulties from which the herring industry is suffering, difficulties mainly occasioned by the contraction of overseas markets; that we would do our best to secure for the British herring industry a share in those overseas markets, contracted though they
  1560
  were; and that by reconstituting the Board on. the lines which I explained, we believed a greater degree of efficiency could be obtained: but that, when all that was said and done, we felt that the best contribution we could make to the industry was to assist it in future in providing itself with efficient boats for the purpose of catching fish at a reasonable cost.
  I also endeavoured to explain that we had deliberately selected the motor boat for this purpose. I know that my hon. Friend the Member for Great Yarmouth (Mr. Harbord) and my hon. Friend the Member for Lowestoft (Mr. Loftus) have strong views on that subject, and I do not think I shall convince them: but I must say again that there were strong and cogent reasons which induced the Government to concentrate on re-equipment by means of new motor boats. We have studied the question carefully and have had in mind clearly the paragraph which was quoted by the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) from the Herring Industry Board's second report to the effect that the steam drifter is the most efficient machine for catching herrings at all seasons and in all regions, if used to full capacity. But we have also had to consider the claim of the advocates of the motor-boat, which is also dealt with in the report, that it is more economical in running and maintenance expenses, requires a smaller crew and could probably be used for fishing for white fish when no herring is available.
  The report went on to say that it was anticipated that a number of those craft could be built in time for the season of 1937 and that, if experience could be gained of their performance, it would be possible to form an opinion of their capability and suitability for the herring industry. Experience of the performance of such boats since that report was written, justifies the conclusion which the Government have reached, that it is the right type of boat to assist by Government grant. Such boats have shown themselves capable of pursuing herring fishing off the East Anglian coast not only in 1937 but in previous years. In the earlier Debate the hon. Member for Lowestoft quoted a passage from the Duncan Report to the effect that it was admitted that there was not enough experience of the suitability of the Diesel drifters of the larger size that would be necessary for the more arduous work of

  1561
  herring fishing in open waters and rough weather, the capital cost of which would be at least as great as that of the steam drifters. That, however, was written in 1934 and considerable experience has been gained since then showing that the motor boat is an efficient instrument for herring fishing. While it is true that their catching power is less than that of efficient steam drifters, they are an economical proposition. The present fleet of steam dritters is unable to find full-time occupation, and it seems essential for the steam drifter to keep in full-time occupation in order to make it a paying concern.
  This is an essential point in the Bill and, therefore, in the Money Resolution. Hon. Members have complained that the Money Resolution is drawn in such a way that, by using the word "motor," amendment and discussion on this point is precluded. As I have said, this is an essential part of the Bill and it was carefully explained in the discussion on the Bill, that we had chosen to concentrate our assistance on motor boats. The Committee stage of the Money Resolution passed without challenge and I think the majority of hon. Members at that time were convinced that the proposition which we made was based on a careful consideration of the advice given to us.
  Mr. Foot: Why should not this question of motor boats or steam drifters be threshed out on the Committee stage of the Bill? Why should you draft the Money Resolution so as to rule out of order any Amendment in favour of steam drifters?
  Mr. Colville: I cannot discuss that point now. This is the Report stage of a Resolution which received the King's Recommendation and passed its Committee stage and I have endeavoured to explain that the Government feel this to be an essential point in the Bill. I would remind hon. Members that, in this case, the Government are taking a new step and a great step by making grant available to the extent of £250,000. It is a step which was urged very strongly by the industry and, in taking that step, I think the Government were entitled to weigh up how they could best help the industry in the provision of efficient boats. Having weighed all the evidence, they came to the conclusion that they ought to devote the grant for this emergency period to the motor boat.
  1562
  Most of the other points which have been raised can be discussed on the Committee stage of the Bill. The hon. Member for East Aberdeen (Mr. Boothby) raised a point which, as Mr. Speaker pointed out, could not be pursued on this occasion. The hon. Member for Lowestoft said that the whole of the East Anglian fishing would be ruled out. I do not think that is a correct view. I believe there will be a very considerable share for the East Anglians. The hon. Member for East Fife (Mr. Henderson Stewart) said grace for what he had received but asked for more. I have tried to explain that the Government, in considering how best to help the industry, decided against a running grant and in favour of a new Board, the continuance of loans for certain purposes, and the considerable use of grants for the provision of boats of an efficient type.
  Mr. Boothby: Does my right hon. Friend rule out all hope of any consideration by the Government, of the possibility of reducing the price of coal to the fishing fleet?
  Mr. Colville: I do not think I can discuss that point on the Money Resolution. I hardly think it would he in Order. I will certainly consider what my hon. Friend has said. I know the importance of this matter to the fleet. The hon. Member for Penryn and Falmouth (Mr. Petherick) raised a point as regards the eligibility of Cornish fishermen for the grant and whether they would not have to be exclusively engaged in the herring fishing industry, to qualify for the grant under the scheme. Of course, the scheme is not yet made but the personal view I am expressing now is that they would not have to be exclusively engaged in herring fishing to qualify for such consideration. With those observations and having in mind the full explanation given on the Second Reading, I hope the House will now agree to the Resolution.
  Mr. E. J. Williams: Has the right hon. Gentleman considered the effect on the coal industry of permitting steam drifters to go out of commission?
  Mr. Davidson: Could the right hon. Gentleman not withdraw this Resolution now, and allow us at a later stage to discuss the whole issue as between motorboats and steam drifters?
  Mr. Colville: No, Sir. I could not hold out any hope of that being done. As for the point raised by the hon. Member for Ogmore (Mr. E. J. Williams), that is a consideration which, naturally, we have to bear in mind. I agree that anything which substitutes the burning of oil for the burning of coal is a matter to which we must pay great attention, but
  The remaining Orders were read, and postponed.
  It being after Half-past Eleven of the Clock upon Thursday evening, Mr.
  I assure the hon. Member that it was examined and taken into account when we were considering how best to help the herring fishing industry.
  Question put, "That this House doth agree with the Committee in the said Resolution."
  The House divided: Ayes, 76; Noes, 30.

  Division No. 221.]

  AYES.

  [12.19 a.m.

  Albary, Sir Irving

  Fremantle, Sir F. E.

  Munro, P.

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

  Furness, S. N.

  O'Connor, Sir Terence J.

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

  Greene, W. P. C. (Worcester)

  Petherick, M.

  Anstruther-Gray, W. J.

  Grigg, Sir E. W. M.

  Ramsbotham, H.

  Aske, Sir R. W.

  Grimston, R. V.

  Rathbone, J. R. (Bodmin)

  Balniel, Lord

  Guinness, T. L. E. B.

  Reed, A. C. (Exeter)

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

  Hambro, A. V.

  Reed, Sir H. S. (Aylesbury)

  Boothby, R. J. G.

  Heilgers, Captain F. F. A.

  Reid, W. Allan (Derby)

  Boulton, W. W.

  Hely-Hutchinson, M. R.

  Royds, Admiral Sir P. M. R.

  Boyce, H. Leslie

  Higgs, W. F.

  Salt, E. W.

  Briscoe, Capt. R. G.

  Hopkinson, A.

  Smith, Bracewell (Dulwich)

  Brown, Col. D. C. (Hexham)

  Horsbrugh, Florence

  Stewart, J. Henderson (Fife, E.)

  Bull, B. B.

  Hutchinson, G. C.

  Strauss, H. G. (Norwich)

  Carver, Major W. H.

  Keeling, E. H.

  Stuart, Hon. J. (Moray and Nairn)

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

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

  Thomas, J. P. L.

  Cobb, Captain E. C. (Preston)

  Locker-Lampson, Comdr. O. S.

  Tufnell, Lieut.-Commander R. L.

  Colfox, Major W. P.

  M'Connell, Sir J.

  Wakefield, W. W.

  Colville, Rt. Hon. John

  MacDonald, Rt. Hon. M. (Ross)

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

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

  McKie, J. H.

  Watt, Major G. S. Harvie

  Crookshank, Capt. H. F. C.

  Maclay, Hon. J. P.

  Wells, S. R.

  Crowder, J F. E.

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

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

  Dugdale, Captain T. L.

  Mayhew, Lt.-Col. J.

  Young, A. S. L. (Partick)

  Eastwood, J. F.

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

  Edmondson, Major Sir J.

  Mills, Major J. D. (New Forest)

  TELLERS FOR THE AYES.—

  Errington, E.

  Moreing, A. C.

  Captain Arthur Hope and Lieut. Colonel Kerr.

  Findlay, Sir E.

  Morris-Jones, Sir Henry

  Fox, Sir G. W. G.

  Muirhead, Lt.-Col. A. J.

  NOES.

  Barr, J.

  Jenkins, Sir W. (Neath)

  Robinson, W. A. (St. Helens)

  Benn, Rt. Hon. W. W.

  John, W.

  Silverman, S. S.

  Bevan, A.

  Kelly, W. T.

  Smith, Ben (Rotherhithe)

  Burke, W. A.

  Kirby, B. V.

  Smith, E. (Stoke)

  Cocks, F. S.

  Loftus, P. C.

  Stephen, C.

  Dalton, H.

  Logan, O. G.

  Tinker, J. J.

  Davidson, J. J. (Maryhill)

  Mathers, G.

  Tomlinson, G.

  Edwards, Sir C. (Bedwellly)

  Maxton, J.

  Williams, E. J. (Ogmore)

  Griffiths, J. (Llanelly)

  Milner, Major J.

  Hall, G. H. (Aberdare)

  Noel-Baker, P. J.

  TELLERS FOR THE AYES.—

  Harbord, A.

  Pritt, D. N.

  Mr. Foot and Mr. Gallacher.

  DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
  Adjourned at Twenty-eight Minutes after Twelve o'Clock.

  GERMANY (BRITISH SUBJECTS' PROPERTY).
  GERMANY (BRITISH SUBJECTS' PROPERTY).
SCOTLAND.
  OLD AGE PENSIONERS AND PUBLIC ASSISTANCE.
  OLD AGE PENSIONERS AND PUBLIC ASSISTANCE.
  TYPHOID OUTBREAK, HAWICK.
  TYPHOID OUTBREAK, HAWICK.
TRADE AND COMMERCE.
  COTTON INDUSTRY (ENABLING) BILL.
  COTTON INDUSTRY (ENABLING) BILL.
  GERMAN MOTOR CARS (IMPORTS).
  GERMAN MOTOR CARS (IMPORTS).
  GAS UNDERTAKING▿ PROFITS.
  GAS UNDERTAKING▿ PROFITS.
  STEAMSHIP "ANGLO-AUSTRA LIAN" (INQUIRY).
  STEAMSHIP "ANGLO-AUSTRA LIAN" (INQUIRY).
  BREAD SALE PROSECUTION, LONDON.
  BREAD SALE PROSECUTION, LONDON.
  OFFICIAL SECRETS ACTS.
  OFFICIAL SECRETS ACTS.
  AIR-RAID PRECAUTIONS.
  AIR-RAID PRECAUTIONS.
  CUSTOMS CONVICTION (CROYDON AIRPORT).
  CUSTOMS CONVICTION (CROYDON AIRPORT).
  CINEMATOGRAPH ACT, 1909.
  CINEMATOGRAPH ACT, 1909.
  CRIME STATISTICS (AGE GROUPS).
  CRIME STATISTICS (AGE GROUPS).
  CONVICTS (PETITIONS).
  CONVICTS (PETITIONS).
  NATIONAL HEALTH INSURANCE.
  NATIONAL HEALTH INSURANCE.
  PUBLIC ASSISTANCE, CARDIFF.
  PUBLIC ASSISTANCE, CARDIFF.
  MENTAL HOSPITAL, CARMARTHEN (CHILDREN).
  MENTAL HOSPITAL, CARMARTHEN (CHILDREN).
  SLAUGHTER OF ANIMALS.
  SLAUGHTER OF ANIMALS.
  RATES AND ASSESSMENTS.
  RATES AND ASSESSMENTS.
  WHISTON INSTITUTE, LANCASHIRE.
  WHISTON INSTITUTE, LANCASHIRE.
  BURNING PIT-HEAPS.
  BURNING PIT-HEAPS.
  OLD AGE PENSIONERS AND PUBLIC ASSISTANCE.
  OLD AGE PENSIONERS AND PUBLIC ASSISTANCE.
  PRUDENTIAL APPROVED SOCIETY.
  PRUDENTIAL APPROVED SOCIETY.
  PUBLIC ASSISTANCE (RATES STATISTICS).
  PUBLIC ASSISTANCE (RATES STATISTICS).
  TOWN AND COUNTRY PLANNING (AGRICULTURAL ZONES).
  TOWN AND COUNTRY PLANNING (AGRICULTURAL ZONES).
HOUSING.
  LOCAL AUTHORITIES' LAND ACQUISITION.
  LOCAL AUTHORITIES' LAND ACQUISITION.
  SLUM CLEARANCE (COMPENSATION).
  SLUM CLEARANCE (COMPENSATION).
  INCOME TAX ASSESSMENTS (BANKRUPT ESTATE).
  INCOME TAX ASSESSMENTS (BANKRUPT ESTATE).
GOVERNMENT DEPARTMENTS.
  EX-SERVICE MEN.
  EX-SERVICE MEN.
  MOTOR VEHICLES (HORSE-POWER TAX).
  MOTOR VEHICLES (HORSE-POWER TAX).
  INCOME TAX (HOUSEKEEPER ALLOWANCE).
  INCOME TAX (HOUSEKEEPER ALLOWANCE).
  PATENT MEDICINES DUTY.
  PATENT MEDICINES DUTY.
  HOUSE OF COMMONS (STATIONERY).
  HOUSE OF COMMONS (STATIONERY).
UNEMPLOYMENT.
  SEASONAL WORKERS.
  SEASONAL WORKERS.
  ASSISTANCE.
  ASSISTANCE.
  TRUCK ACT (LONDON DISPUTE).
  TRUCK ACT (LONDON DISPUTE).
  COCKFIELD AND STANHOPE (DURHAM).
  COCKFIELD AND STANHOPE (DURHAM).
COAL INDUSTRY.
  SAFETY APPLIANCES.
  SAFETY APPLIANCES.
  HOURS OF WORK.
  HOURS OF WORK.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
AGRICULTURE.
  POTATOES (EXPORTS TO SPAIN).
  POTATOES (EXPORTS TO SPAIN).
  WHEAT ACT.
  WHEAT ACT.
  MUTTON AND LAMB (PRICES).
  MUTTON AND LAMB (PRICES).
  RABBITS (DAMAGE TO CROPS).
  RABBITS (DAMAGE TO CROPS).
  CATTLE (SUBSIDY).
  CATTLE (SUBSIDY).
ROYAL NAVY.
  BRITISH AND FOREIGN MATCHES.
  BRITISH AND FOREIGN MATCHES.
  BRITANNIA BEAGLES, DARTMOUTH.
  BRITANNIA BEAGLES, DARTMOUTH.
  NORTHERN RHODESIA (ECONOMIC COMMISSION).
  NORTHERN RHODESIA (ECONOMIC COMMISSION).
  JAMAICA (SITUATION).
  JAMAICA (SITUATION).
  TRANSPORT (AUTOMATIC TRAIN CONTROL.)
  TRANSPORT (AUTOMATIC TRAIN CONTROL.)
  BARBADOS (DISTURBANCES).
  BARBADOS (DISTURBANCES).
  WEST INDIES (POPULATION STATISTICS).
  WEST INDIES (POPULATION STATISTICS).
Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
WARRINGTON CORPORATION WATER BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
ALDRIDGE URBAN DISTRICT COUNCIL BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
LONDON MIDLAND AND SCOTTISH RAILWAY BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
EAST LOTHIAN WATER ORDER CONFIRMATION BILL.
Brought from the Commons; read 1a; to be printed; and (pursuant to the Private Legislation Procedure (Scotland) Act, 1936) deemed to have been read 2a and reported from the Committee.

PATENTS, ETC. (INTERNATIONAL CONVENTIONS) BILL. [H.L.]
Order of the Day for the consideration of Commons Amendments read.
LORD TEMPLEMORE: My Lords, I beg to move that the Commons Amendments be now considered. In doing so, I would point out to your Lordships that the Amendments in all cases are either drafting or explanatory, and it is not thought that any of them raises a question of major importance. I am going to suggest to your Lordships that we should agree with all of them. With your Lordships' permission I shall explain the reasons for the Amendments on each clause and group the Amendments to that clause together when we come to them so as to save your Lordships' time,

599
because I know you wish to get on to the consideration of the important business still on the Paper. I beg to move.
Moved, That the Commons Amendments be now considered.—(Lord Templemore.)
On Question, Motion agreed to.

COMMONS AMENDMENTS.
[The references are to Bill No. 33.]
Clause 1, page 2, line 17, leave out ("in the patent") and insert ("as provided by subsection (8) of this section")
Clause 1, page 2, line 31, leave out ("in the patent")
Clause 1, page 2, line 39, leave out ("in a patent")
Clause 1, page 2, line 40, at end insert:
(" (4) No request or claim under the foregoing provisions of this section shall be entertained if it appears to the comptroller that the request or claim is based upon facts which, if proved in the case of an opposition under the provisions of paragraph (a) of subsection (1) of Section eleven of this Act by the person in respect of or by whom the request or claim is made (in this section referred to as 'the claimant') would have entitled him to relief under that section.")
Page 3, line 7, leave out subsection (5).
Page 3,line 28, at end, insert ("on the complete specification and in the register of patents")
Page 3,line 30, leave out from ("mentioned,") to ("ought,") in line 32, and insert ("as aforesaid")
Page 3,line 38, at end, insert ("and, if he does so, he shall rectify the specification and the register accordingly")
Page 4, line 1, leave out ("in a patent in pursuance of this section,") and insert ("as aforesaid")
LORD TEMPLEMORE: My Lords, the Amendments to this clause are put in for the following reason. Clause 1, as it left your Lordships' House, was intended to ensure that the actual deviser of an invention should in all cases be entitled to be mentioned as such deviser in the patent. The Commons Amendments deal with three points. In the first place, they provide that the deviser shall be mentioned not only in the Letters Patent but also on the complete specification and in the Register of Patents. Secondly, the Commons have reinserted in subsection (5) a provision that the allowance of an extension of time for making a request or claim under the clause shall be "subject to payment of the prescribed fee." I would point out that this provision was
600
omitted in your Lordships' House as a Privilege Amendment. Thirdly, it is now provided in subsection (4) of the new clause that, where the conditions are such that a claimant to recognition by the mention of his name as provided in the clause, could oppose the grant of the patent under the existing paragraph (a) of subsection (1) of Section 11 of the Act, he shall take that course instead of proceeding under the new provisions. If such a person establishes his position under Section 11, it means that the application for the patent was originally wrongly constituted, and the Comptroller has powers to deal with such a position when established under that section which are not given, and are not in general necessary, in respect of a successful application under the new clause. These are the Amendments to Clause 1, and I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Templemore.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
Clause 3, page 4, line 14, leave out Clause 3.
LORD TEMPLEMORE: My Lords, under our law, an applicant for a patent is required to disclose in his complete specification the best method of performance of the invention known to him when the specification is left at the Patent Office. On the other hand, an applicant for a patent with priority under the Convention is not allowed to cover in his complete specification improvements which he has made in the invention since he filed the foreign application upon which his claim to priority is based and so may not be able to comply with the first-mentioned requirement. To resolve this difficulty, Clause 3 provided that the obligation, in the case of an application claiming priority under the Convention, should be to disclose the best method of performance known to the applicant on the date for which he claims such priority. There are, however, other possible ways of meeting this difficulty, and it is thought that the problem can better be left over for further consideration as to the best method of solving it when the Patents Acts are under general review. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Templemore.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
Clause 6, page 6, line 6, leave out from ("the") to ("in") in line 7 and insert ("disclosure contained")
LORD TEMPLEMORE: My Lords, Clause 6 provides that, in comparing an invention for which priority of date is claimed in this country under the Convention with the invention for which a patent was first applied for in a foreign country, regard shall be had to the invention disclosed, whether formally claimed or not, in the whole of the relevant foreign documents. The Amendment proposes to provide instead that regard shall be had to the "disclosure contained" in the whole of those documents—wording which it is thought may better represent the intention, and meet a criticism by the noble Lord, Lord Strabolgi, when the Bill was before this House. I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Templemore.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
In the Schedule, page 10, line 4, at end insert:
("Eight A.—In paragraphs (a) and (b) the word 'foregoing' shall be omitted.")
LORD TEMPLEMORE: My Lords, the object of this Amendment is to provide for an extension of time for accepting a complete specification where an appeal is lodged upon a matter arising out of Section 91 in accordance with Clause 7 of the Bill. The provisions for such an extension of time in Section 8A of the Act are at present limited to appeals under any of the "foregoing" provisions of the Act, and it is thought that the proper course is to omit the word "foregoing" so as to include all appeals under the Act before acceptance of the complete specification. I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Templemore.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
Page 11, line 25, at end insert:
("Eighty-two.—After the word 'Act,' where that word first occurs, there shall be inserted the words 'or by the Trade Marks Act, 1938'; for the words 'under this Act,' where those words first occur, there shall be substituted the word 'thereunder'; and after the words 'under this Act,' where those words last occur, there shall be inserted the words 'or under the Trade Marks Act, 1938, as the case may be.")
LORD TEMPLEMORE: My Lords, the International Convention provides that, where the last day of the period for claiming priority under the Convention in respect of an application for a patent or for the registration of a design or a trade mark falls upon a dies non or a day when the Patent Office is not open to receive the deposit of applications, the period shall be extended until the first following working day. There is already statutory provision for this so far as patents and designs are concerned in Section 82 of the Act. The Amendment makes similar provision with regard to trade marks. I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Templemore.)
On Question, Motion agreed to.

COAL BILL.
House again in Committee (according to Order):
[The EARL OF ONSLOW in the Chair.]
THE LORD CHAIRMAN: I think we finished with Clause 26 last night. There are no Amendments to Clauses 27 and 28.
Clauses 27 and 28 agreed to.
Clause 29:
Restriction on working of coal vested in statutory undertakers.
29.—(1) Subject to the provisions of this section, coal the fee simple in which is at the commencement of this Act vested in statutory undertakers (that is to say, local authority, company or other body or person authorised by or under an Act of Parliament, or an order having the force of an Act of Parliament, to construct, work, or carry on a railway, canal, inland navigation, deck, harbour, tramway, gas, electricity, water, sewage disposal, or other public undertaking), having been acquired, under powers in that behalf conferred by any such Act or order

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as aforesaid, for the purposes of their undertaking, shall vest in the Commission subject, in addition to the matters mentioned in subsection (4) of Section four of this Act, to the restriction that the coal shall not be worked without the previous consent in writing of the persons in whom the undertaking is for the time being vested.
(5) A consent in relation to a restriction imposed by this section shall not be unreasonably withheld, but this provision does not preclude the right of undertakers whose consent is sought—

(a) to give consent subject, as far as may be reasonably requisite, to a condition that working shall not be such as to let down any land in which the undertakers are in terested, or shall be limited to working in particular places or in a particular manner, or to other conditions or limitations as regards the working consented to to the making good, or paying proper compensation for, damage arising therefrom; or

(b) to require, as a condition of consent, payment of a reasonable sum in respect of any legal or other expenses incurred in connection with the consent.

Any question arising under this subsection shall be referred to and determined by the Railway and Canal Commission, who shall have power to dispense with consent either without conditions or limitations or subject to any such conditions or limitations as aforesaid. In determining any such question the Railway and Canal Commission shall have regard primarily to the safety and efficient working of the undertaking in question.
VISCOUNT FALMOUTH VISCOUNT FALMOUTH moved, in subsection (1), to leave out "statutory" and insert "public supply." The noble Viscount said: The object of this Amendment is to place non-statutory public utility undertakings in the same position as statutory public utility undertakings in reference to this clause. It is difficult to see why non-statutory undertakings should be excluded. It is true that non-statutory undertakings are very much smaller and of less importance than large statutory public utility bodies. At the same time they do perform a very useful purpose to a number of small communities, and it is a little difficult to see why this particular class of undertakings should not enjoy the same advantages as the larger ones do under Clause 29, and particularly because there is no precedent for non-statutory undertakings not being treated in the same way as the statutory ones.
In the Rating and Valuation Act exactly the same clause dealt with the position of the non-statutory as well as the statutory undertakings in connection
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with the question of derating. Neither of those two bodies is allowed to enjoy any of the benefits of the Bill. There is very great interest in this matter in connection with Scotland, and I see that the noble Viscount, Lord Mersey, has put down an Amendment on this point. In certain Acts such as the Scottish Housing Act, and I believe also in the Air-Raid Precautions Act, there is definitely no difference made between these two classes of undertakings. I hope that when the noble Lord replies to this he will be able to give me some assurances that there will be no unfair discrimination between these two classes of undertakings.
Amendment moved—
Page 28, line 3, leave out ("statutory") and insert ("public supply").—(Viscount Falmouth.)
THE LORD CHANCELLOR (LORD MAUGHAM): This question was very carefully considered in another place, and perhaps I may tell your Lordships frankly that it has been very carefully considered by me before attempting to advise the Government as to whether this particular Amendment should be accepted. Something I think can be done which I hope will be sufficient to satisfy the noble Viscount, but I am unable to consent to the Amendment in this form, and that for several reasons. In the first place statutory undertakers are in a very special position. They are bound by law to maintain their works and to give certain supplies, and, it may be added, which is a matter of some importance, they are not within the protection given by Section 8 of the Mines (Working Facilities and Support) Act of 1923, because, as my noble friend probably knows, they are excluded from the provisions of that section by Section 13 in that Act.
Now the excellent bodies who are providing public facilities without the protection or the obligations of a Statute are in a very different position. They are traders carrying on very often merely for profit, and they do not differ essentially from the position of other people who are often engaged in works of great advantage to the public. There are large factories employing thousands of people, there are other bodies who have, for instance, hospitals, recreation grounds, town halls, housing estates and so forth, who have just as much claim as we see it as the non-statutory bodies who are providing,

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say, gas or water to the people in the neighbourhood. Accordingly, if the door were opened in this way the Government take the view that it would have to be opened a great deal wider, and they think that considerable difficulty would be caused to the Coal Commission in such a case. There are reasons of that kind why we do not think that it is possible to give this to the numerous small bodies—in Scotland, if I may mention Scotland to my noble friend Viscount Mersey, and in other places—which are carrying on this sort of business.
But what does occur to me is this. I want to be very sure, and I have thought it right that I should be very sure, that the safeguard given by Section 8 of the Mines (Working Facilities and Support) Act, 1923, should be open to these bodies. That Act imposes restrictions on the working of minerals required for support. There are certain conditions. Application has to be made to the Board of Trade and the Board of Trade refers the matter to the Railway and Canal Commission. That section has constantly been applied, and I believe that occasions no very great difficulty. It is the section under which practically all the bodies—except the statutory bodies, which are out of the question for the moment because they are in our Bill—obtain protection when it is needed. I must admit that, although it was thought in another place that that provision in Section 8 of the Act of 1923 would be available to the non-statutory persons whom it is desired to protect here, when I considered it I was not quite sure that they were safe in applying under that section. Accordingly I am prepared on Report to propose a clause— I have drafted one, but I do not think I have it here; still the precise form docs not matter now—to make it quite clear that these non-statutory undertakers shall have a right to make their application under Section 8 of the Act of 1923. I would suggest to my noble friend that that is really a sufficient protection to the various persons whom he desires to protect, and I hope that on that assurance he will be willing to withdraw his Amendment.
VISCOUNT HORNE OF SLAMANNAN: I am not quite sure that I follow the advice; which the noble and learned Lord Chancellor has given. Both statutory undertakers and non-statutory under-
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takers have a right to have, and indeed have, coal which is required for the support of their enterprises. The condition of being a statutory undertaker or a non-statutory undertaker in the case of a gas company does not involve any real difference in regard to the rights they are entitled to maintain. For example, in England, by an Act of 1934, non-statutory undertakers in gas enterprises were not only given the right to apply to the Board of Trade to be made statutory undertakers, but indeed the Board of Trade was in a position to require them to alter their position from being non-statutory undertakers to being statutory undertakers. The result was that in a very large number of instances non-statutory undertakers in gas enterprises in England became statutory undertakers. That Act did not apply to Scotland and the fact is that in Scotland most gas companies are non-statutory undertakings. But when inquiry is made as to whether they are interested in the coal beneath their particular properties it is discovered, according to my information, that these non-statutory undertakers in Scotland have, in proportion, a larger amount of coal in which they are interested than have other companies who have adopted the form of being statutory undertakers. There does not seem to be any real ground for discriminating between these two sets of people.
The matter can be easily remedied by putting in, instead of the words "statutory undertakers," "public supply undertakings" which would bring in the whole of these people who do not seem to differ as to the rights that they should be entitled to exercise. I confess that, using such intelligence as I have, I could not quite follow whether what the noble and learned Lord Chancellor suggested would enable these people to obtain similar rights of support in the case of their undertakings as are to be given to statutory undertakers. If I were assured of that, I should have nothing more to say, but it seems to me certain as matters stand under the Bill that non-statutory undertakers—largely in Scotland and to a certain extent in England also—will be deprived of a right which it would seem on general principles of equity ought to be just as much available to them as to statutory undertakers. I regret having to raise this point specially, and if I

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could be assured that their rights would be looked after I should not press the matter. Otherwise I should be very much concerned to support the Amendment moved by the noble Viscount, Lord Falmouth.
VISCOUNT MERSEY: May I point out to the noble and learned Lord that in a number of cases non-statutory undertakers are controlled by statutory undertakers? In the case of a holding company you may easily have a statutory company which holds all the shares and controls the policy of a non-statutory undertaking.
THE LORD CHANCELLOR: I hope there will be no misconception about what I have said, because the last thing I should wish is to convey an impression which is not quite that which I want to convey. The distinction between the two cases that was relied on in another place and is relied on here is twofold. In the first place statutory undertakers are bound by the Statute or the Provisional Order, whichever it may be, to maintain their works and to perform public duties. The other point is that they are not protected under the Act of 1923 because they are excluded by the final words of Section 13 of that Act. If my noble friend Viscount Home would like to look at that Act I can hand it to him now for his perusal. But a non-statutory undertaker can give up his business whenever he pleases, and, to deal with what my noble friend Viscount Mersey interjected, that is so whether the shares are held by a statutory undertaking or not. The body itself is not bound to perform public services and can give them up whenever it likes. You cannot, according to the view of my advisers and the view taken in the other place, distinguish between such a body, merely because it is performing certain public services, and all sorts of other bodies who have not got the special protection which is put in this clause.
I have mentioned some of them, and a number of others could be mentioned. A hospital is not a bad example. A hospital does not exist for making money; it is not protected by the Bill, and there are scores and scores of other similar institutions to which no special protection is given. But when it comes to a statutory undertaking, it is necessary to give protection, for the two-fold reason I have
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mentioned. First, it is under a duty to do something, and you must not interfere with its performance of that duty; secondly, it has not the protection of Section 8. I propose to make it perfectly clear that these non-statutory undertakings, which are, I agree, performing a business of great importance in the locality, shall have a right, if they are in any fear that their support is being interfered with, to make the application mentioned in Section 8 and have all the advantages of that application. On the other hand, I must admit that the machinery in Section 8 is not quite the same as the machinery in Clause 29 of the Bill.
But I would add this in conclusion. Having regard to what I have said about Section 8, it is not very likely that the persons involved in working coal and, a fortiori, in anything done or permitted by the Commission, who are going to act with the public interest in their mind, are going to do anything wilfully which will interfere with a gas or water undertaking in Scotland or in England. At any rate, if they do it, there is a remedy, which I propose to make perfectly certain, available to them under Section 8. I hope that I have explained the position which I am bound to take up on behalf of the Government, and I hope the noble Viscount will withdraw his Amendment.
VISCOUNT FALMOUTH: I wish to thank the noble and learned Lord for the explanation he has given, and to ask him if he intends on the Report stage to bring up an Amendment to that effect.
THE LORD CHANCELLOR: Certainly; I thought I said so.
VISCOUNT FALMOUTH: I did not quite understand. With the leave of your Lordships I will withdraw this Amendment.
Amendment, by leave, withdrawn.
VISCOUNT MERSEY: My Amendment is one which, mutatis mutandis, applies to Scotland and in the circumstances I will not move it.
VISCOUNT FALMOUTH VISCOUNT FALMOUTH moved, in subsection (5), to leave out all words after "A consent in relation to a restriction imposed by this section," and insert "may be given or withheld at the discretion of the undertakers who may attach

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to any consent given by them such conditions (including conditions as to the making of monetary payments) as they may think fit." The noble Viscount said: This deals with a different point from that of my last Amendment. A number of more enterprising public utility undertakers which have coal under their undertakings have from time to time purchased that coal in order that they may be assured that the undertakings for which they are responsible will not be let down owing to subsidence. It is, of course, quite clear that these utility undertakers perform an enormously important work for large districts, and it is essential that there should be no interference whatever in their supply, whether it is of gas, electricity or water. They have therefore in certain instances acquired the coal under their areas. By this Bill all this coal will be vested in the Commissioners.
It may happen that at a subsequent date an authority which has acquired the coal under its area ceases to require that area for the purpose of its undertaking. It has bought this coal at a market price although, when it bought it, it knew perfectly well that it was never going to mine the coal and only wanted it for support. This support coal will be acquired at a purely nominal figure by the Commissioners. If at a subsequent date the works are no longer required by the undertakers, then the coal under them will apparently, according to this Bill, be a windfall to the Commissioners, who will be able to work it and to pay nothing but a mere pittance, which is the value of the coal when it is only required for support purposes. This is not a fantastic suggestion, as has been held in some quarters. Even at the present moment there is before Parliament a Bill to unify a large number of gas undertakings in South Yorkshire. The purpose of this Bill is, of course, to enable certain of those smaller undertakings to be closed and a big distribution system to be established with a few central producing units. It may quite easily arise that certain of these gas works will be shut down. There will be coal under them, and that coal will be owned by those gas works. It will pass for a very small sum indeed to the Coal Commissioners and will be really a windfall to them. I consider that it would be only fair that the authority should be given
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anyhow, some fair remuneration for the expense to which it has been put in the first instance in acquiring this coal.
Amendment moved—
Page 28, line 35, leave out from ("section") to the end of line 15 on page 29 and insert the said new words.—(Viscount Falmouth.)
THE LORD CHANCELLOR: I am not quite sure of the meaning of this Amendment and I am rather in doubt whether the view I took of it in the first instance is one which the noble Viscount has given to it. I confess, reading it as I did, I did not quite understand what the precise object of it is. Clause 29 provides that the coal of statutory undertakers who happen to be the fee simple owners of the coal shall vest in the Coal Commissioners subject, in addition to the matters mentioned in subsection (4), to the restriction that the coal shall not be worked without the previous consent in writing of the persons in whom the undertaking is for the time being vested. I do not see why it is to be supposed that that coal is to be regarded as having no value. It seems to me that the amount to be paid for it, though subject of course to the fact that there is a necessity for a previous consent in writing, is there: it must be paid for at the value at the vesting date of such coal. The Commission will be entitled in certain events to work the coal and to get a consent for the working of the coal. Accordingly it is not put down that at the date of vesting the coal is of no value.
What the Amendment says is that you are to strike out the reference to the consent being not unreasonably withheld, and say that it "may be given or withheld at the discretion of the undertakers, who may attach to any consent given by them" any conditions they like. That is as much as to say that subsection (5) of Section 29 will be quite inoperative, and that even if the coal is not in the land needed for the purposes of the statutory undertakers, yet the statutory undertakers can exact, if they please, any sum they like or place any restrictions they like on the working of that coal. That is not in the public interest, and I venture to think it is not really in the interest of any statutory undertaking. I must apologise humbly to my noble friend if I have not correctly understood the effect of his Amendment,

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but if I do understand it I must frankly say that the Government are unable to accept it.
VISCOUNT FALMOUTH: I understand from the noble and learned Lord that at the vesting date this particular coal will be acquired at its value as coal. At a subsequent date this coal may become of great value, because the particular piece of land is no longer required to be supported by this coal. The undertakers have previously paid for this coal a perfectly fair price in the open market, and, if this clause goes through as it is, they will suffer very considerable loss because the difference in the price that they paid and the price given for it merely as support coal will be very considerable.
THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE): I do not think my noble friend realises the effect of his Amendment. The proposal in the Bill is that this coal shall be bought at the price which exists at the date of the valuation. Some of these undertakings may after forty or fifty years cease to be undertakings. It is proposed they should sell their coal forward, and those who have not had their coal worked would come to the Coal Commission and say: Will you pay for the coal you have not worked? It upsets the whole basis of the Bill.
THE EARL OF CRAWFORD: May I point out that this is not so unusual a state of affairs as the noble Earl seems to think. Coal is reserved at the bottom of the pit shaft; it is called "pillar support coal," and is paid for at the outset. It is normal that the coal pit comes to an end of its tenure, and the time comes when the pillar support coal is worked. It is the terminal coal of the coal bank, and it is very valuable, because it is near the shaft and least expensive of all the workings to work. I know of a pit which is going to come to an end in, say, three years from to-day. There is a very large area, in several seams, supporting the shaft. When the outer working of that coal has reached its outer boundaries, the company works backwards towards the shaft, gets this coal, and makes a very good profit out of it. To-day, that coal is not worth a penny, because if you work it the shaft sinks. In two or three years that coal will be worth a great deal
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of money, and it ought not to be confiscated.
EARL STANHOPE: It will not be confiscated. It comes into the valuation.
THE EARL OF CRAWFORD: I understand that if it has no value to-day it will have no value tomorrow.
THE LORD CHANCELLOR: We are dealing here merely as regards coal vested in statutory undertakings, which are defined, and coal vested, or at the commencement of the Act vested, in them in fee simple, and acquired by them for the purpose of their undertakings. That coal is not like the shaft coal which the noble Earl has been speaking of, but is just the coal underneath their land, and it is going to be purchased. In a sense it is support coal, but it is support coal which according to the terms of the clause has got to be considered, having regard to the fact that it may be worked, under subsection (5) of the clause, the consent not being unreasonably withheld to its working. The possibility of its being worked and turned into money is a thing which has got to be taken into consideration when the value of that coal is the value of a particular unit or owner of coal, pursuant to the clauses in the Bill. I do not agree that it has no value. That will depend upon a number of circumstances, but it has a present value.
It may be not quite as much as if you can work it straight away, but that is the case with the coal of a number of people which is not going to be worked immediately. It still has got to be valued. Its value at the date of the valuation will have to be properly ascertained and paid, and it would be putting these undertakers in a position different from that of anybody else if you said that the value will be ascertained, not at the valuation date but at some far-distant date, according to the value then, if it has come into the position of being immediately workable. I am afraid, with all respect to Lord Crawford, that his argument has not convinced me that this particular case comes within the principle which he has mentioned.
LORD BALFOUR OF BURLEIGH: Will the noble and learned Lord postulate an undertaking which has acquired coal necessary for support at the market price within the last few years? The statutory undertaking which I am postulating is

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one in a district where coal is workable, and the market price has been paid for it. On the valuation date the statutory undertaking is still proceeding with its work, and owing perhaps to some unforeseen circumstances, unforeseen on the valuation date, within a year or eighteen months before the vesting date the statutory undertaking comes to an end. All of a sudden, within those eighteen months, that coal becomes available. The Regional Valuation Board is still doing its work. If I understand the noble Viscount who moved the Amendment aright, he thinks it would be fair that as the market value of that coal before the vesting date has suddenly risen, the statutory undertaking ought to have the right to get it, and that it should not fall like a ripe plum into the hands of the Coal Commission, who have not paid anything for it and do not deserve it. Perhaps the Government will tell us how the valuation will be made in those circumstances.
VISCOUNT MERSEY: May I illustrate it simply? Supposing you had one of those large gas-holders entirely supported on a large block of coal. While that gasholder is in use the coal is of no value at all. But supposing that for some reason it is put out of use, and the gas made somewhere else; then the coal becomes available. I wish the noble and learned Lord would say whether the coal is considered for the purpose of valuation at its prior value or at its value after the gasholder has been put out of use.
THE LORD CHANCELLOR: The value will be ascertained according to the market value at the date of valuation, regard being had to the circumstances which attach to it. And although it is true that this particular coal conceivably, under the ingenious circumstances which have been put before your Lordships, might become of much greater value after the valuation date, that is a thing which is true as to great quantities of coal everywhere. They may become suddenly more valuable owing to the fact that, although it was not expected that they would be worked for thirty years, those quantities of coal might by some chance suddenly become immediately workable. Then of course it is of greater value. The Bill cannot deal with all the events, likely and unlikely, that might happen after the valuation date. When you have valued once you have valued once for all, and
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you are just like anybody else who has sold his property. It may turn out after it is sold that there was a gold mine under it, or again it might turn out that, although you got some money for it, it was perfectly worthless. Those are the chances which are inevitable in such a case, even though, as is unfortunately the case here, the sale is of a compulsory nature.
VISCOUNT HORNE OF SLAMANNAN: I have a distinct recollection that when this question was raised in another place the Attorney-General gave an undertaking which seemed to me to read to the effect that when such coal came to be worked compensation would be paid. My memory does not enable me to put it definitely to your Lordships, but perhaps we might raise it again on the Report stage in view of the learned Attorney-General's statement. But let me say this, in addition to what the Lord Chancellor has said. People readily accept the results of bargains which they voluntarily make. If the gold mine is in their property, and they did not know in time, then they put up with the consequences. But it is a very different thing when you are compulsorily deprived of your property.
THE LORD CHANCELLOR: I admit that. I thought I had said it. But it cannot be helped when there is a compulsory purchase. The same thing applies—you cannot reopen the purchase because it turns out it has been good or bad, on one side or the other. It is one of the disadvantages attaching to any compulsory purchase. But I may say at once that if my noble friend is right in thinking—something which is quite new to me—that some undertaking was given in another place, most undoubtedly that shall be very carefully considered, and if he is right it must be implemented on the Report stage.
VISCOUNT FALMOUTH: I take it that the noble and learned Lord when we come to the Report stage will reconsider this?
THE LORD CHANCELLOR: In the light of any undertaking that may have been given in another place.
VISCOUNT FALMOUTH: I am not very convinced by what the noble and learned Lord has said. It looks to me, even more so than it did before, that

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the Coal Commission are almost going to get something for nothing; but in view of the reply that we have had I do not wish to press this Amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
LORD GAINFORD LORD GAINFORD moved, after Clause 29, to insert the following new clause:
.—(1) Where in relation to any coal the fee simple in which is at the commencement of this Act vested in a person carrying on the business of coal mining the following conditions apply—

(i) The coal is not subject to a coal mining lease, and

(ii) the coal supports works or plant belonging to that person and used for the generation production or supply of electricity gas or water or any other works or plant of that person used for the purposes of his coal mining business

the coal shall vest in the Commission subject, in addition to the matters mentioned in subsection (4) of Section four of this Act, to the restriction that the coal shall not be worked without the previous consent in writing of the person in whom such works or plant are for the time being vested. Provided that the restriction imposed by this section shall have effect so long only as the coal is required for the support of works and plant belonging to a person carrying on the business of coal mining.
(2) A restriction imposed by this section shall not have effect in relation to working carried on in exercise of a right subject to which the coal in question vests in the Commission by virtue of this Part of this Act.
(3) A consent in relation to a restriction imposed by this section shall not be un reasonably withheld, but this provision does not preclude the right of the person whose consent is sought—

(a) to give consent subject, as far as may be reasonably requisite, to a condition that working shall not be such as to let down any works or plant of that person, or shall be limited to working in particular places or in a particular manner, or to other conditions or limitations (as regards the working consented to) to the making good, or paying proper compensation for, damage arising therefrom; or

(b) to require as a condition of consent payment of a reasonable sum in respect of any legal or other expenses incurred in connection with the consent.

Any question arising under this subsection shall be referred to and determined by the Railway and Canal Commission who shall have power to dispense with consent either without conditions or limitations or subject to any such conditions or limitations as aforesaid. In determining any such question the Railway and Canal Commission shall have regard primarily to the safety and efficient working
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of the works and plant supported by the coal.
(4) A restriction imposed by this section shall be enforceable by the person in whom the works or plant are for the time being vested in the like manner, and against the like person, as if it had been imposed by a covenant entered into by the Commission on the vesting date.
(5) A holding subsisting in coal that is to vest in the Commission subject to a restriction imposed by this section shall (notwithstanding the provisions of Section seven of this Act which require the value of a holding to be ascertained by reference to the amount which it might have been expected to realize if this Act had not been passed) be valued as if provision had been made before the valuation date for that restriction to take effect on the vesting date.
The noble Lord said: I am sorry that my noble friend Lord Merthyr is not able to be here and I am moving this Amendment on his behalf. I should like to read in support of it an extract from a letter sent by the Monmouthshire and South Wales Coal Owners' Association to the Mining Association. They wrote asking if that Association could support their views in connection with this new clause, and I may say that the Mining Association entirely approved of the clause and thought it a very reasonable one. They say in this letter:
"The South Wales Association have considered certain questions arising from the incorporation in the Bill of the Amendments relating to statutory undertakings which are found in Clause 29.
They think that the provisions of this clause should be extended to colliery companies for the reason that in many cases colliery companies have acquired areas of coal in order not only to work as much of it as they can, but also to support their surface properties, the chief of which are generally the power stations. We have actual cases where this arises. Moreover, in the particularly important case we have in mind this power station itself supplies considerable quantities of electricity to local authorities for distribution to consumers, and is therefore in the same position as if it were a properly incorporated statutory undertaking for the supply of electrical power.
It seems to us that such protection as is given to statutory undertakings should certainly apply to colliery companies. Nor do we take a very narrow view on this matter. We should be disposed to agree with any industrial undertaking having the same rights, and it should not merely be limited to the statutory undertakings set out in Clause 29.
After all, the question whether supply of a certain commodity or the performance of a service is done through a body which is incorporated through Statute is a mere matter of Parliamentary and administrative machinery."

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That is their case, and it seems to me that the powers of restricting the working of the coal and enabling the support to be given for the electrical plant owned by colliery companies are exactly in the same category here as those in the previous clause. I beg to move.
Amendment moved—
Page 29, after Clause 29, insert the said new clause.—(Lord Gainford.)
THE LORD CHANCELLOR: I am well aware that the noble Lord is one of the greatest, if not the greatest, expert in the House on all matters relating to coal. But I am in great difficulty as to whether in sponsoring this Amendment he has considered exactly to what it applies. This is a case where the colliery owner owns freehold coal which is in his possession and which he requires for the purpose of supporting his works or plant used for the generation of electricity, gas or water. What I am not able to understand is this. Do you want any clause to protect a man who is in possession and who is working the colliery from doing something to his own coal which will be disastrous to his undertaking? It is just like asking for a protection against a man from sawing off the branch on which he is sitting. I am quite willing to be persuaded that I am wrong, but at present I am unable to understand in what circumstances this could possibly apply since it relates to coal which is being worked by a colliery company which requires the coal for the purposes of supporting their own works. There is nobody else there who can come and do it.
LORD GAINFORD: Is the coal not transferred to the Commission?
THE LORD CHANCELLOR: The coal will vest in the Commission, but the assumption is that the coal is being used by a colliery company presumably under the lease—it must be under the lease—for the purpose of the generation of electricity, gas or water. That colliery company is in charge of it. It has got a lease of it. Even if it is a case of a colliery owner who owns freehold coal under Clause 12, he is entitled under the lease, either a peppercorn lease—we shall come to that later—or some other lease. It is the company which is in charge of this coal. I know, as I have said, what an expert the noble Lord is in this matter, and it may be, having taken up this
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Amendment rather quickly, he has not had time to consider all its implications, but may I say that if on consideration he finds there is something which shows that I am quite wrong in the point I have put, the Government will be very glad to consider it on the Report stage.
LORD GAINFORD: My noble friend Lord Merthyr will no doubt communicate with the Mines Department and have the matter reconsidered on Report if he desires to do so.
LORD CROMWELL: Would the effect of passing this Amendment in fact not be to take away the value from the coal and reduce it to nothing? It appears to me that that is the case. If it is reserved for support, presumably it will not be marketable for some considerable time, and therefore it will have no value when it is valued. That is the way I read it.
THE LORD CHANCELLOR: We are not dealing with value here, but with an Amendment which suggests that the coal is not to be worked without the previous consent in writing of the person, the colliery lessee, in whom such works or plant are for the time being vested. It is only a question of working. The objection I am taking to the Amendment is no more than this, that he is the man who is going to work it, and he can make up his mind whether he is going to work it or not. He is not going to cut his own throat. That is the short statement that I make in answer to this, but I am perfectly at one with the suggestion made by the noble Lord that Lord Merthyr can communicate either with the Mines Department or with me, and, if it is found there is something here that requires protection, that protection will, I think, be given on the Report stage.
LORD GAINFORD: I thank the noble and learned Lord, and beg leave to withdraw.
Amendment, by leave, withdrawn.
Clause 30:
Saving for certain statutory rights.
30.—(1) The matters subject to which by virtue of Section four of this Act the vesting in the Commission o£ any coal, mine of coal, property or rights is to take effect, and the contract referred to in that section for the sale of any coal, mine of coal, property or rights is to be deemed to have been made,

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shall include the following rights, that is to say: —
(a) …
and those rights shall not be treated for the purposes of this Part of this Act as constituting or conferring any interest in the coal or mine in respect of which they are exercisable.
THE MARQUESS OF LOTHIAN THE MARQUESS OF LOTHIAN moved to insert in subsection (1) after paragraph (c):
"(d) any right of any person to apply for and any right of the Railway and Canal Commission to impose restrictions on the working of minerals under Section eight of the Mines (Working Facilities and Support) Act, 1923."
The noble Marquess said: I hope the Government will accept this Amendment which is rather a simple one and one to which I do not think any objection can be raised. Unless this paragraph (d) is inserted, the Bill can be hereafter construed so as to deprive the surface owner of his existing right to apply to the Railway and Canal Commission under Section 8 of the Mines (Working Facilities and Support) Act of 1923. If your Lordships will read Section 8 of that Act, you will find it gives a right to surface owners to apply in cases of dispute or necessity to the Railway and Canal Commission for rights of support. I am aware of a certain public building where that question may arise, and this paragraph is merely suggested in order to make it quite certain that the rights which are already conferred by the section to which I have referred in the 1923 Act will be retained. It is simply to avoid any dispute as to the interpretation of Clause 30 that this Amendment is moved.
Amendment moved—
Page 30, line 16, at end insert the said new paragraph.—(The Marquess of Lothian.)
THE LORD CHANCELLOR: If any rights of this kind were being taken away, it is perfectly clear that the noble Marquess is right and that a saving provision should be inserted, but the only reason it is not there is that it is, as we think, really quite unnecessary for the reasons which I can shortly give, and which I hope will persuade the noble Marquess that he need not press this Amendment. Clause 18 expressly amends and limits the operation of other parts of the Mines (Working Facilities and Support) Act, and therefore shows quite clearly that
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Section 8 is not being in any respect repealed or affected. If the noble Marquess will look at page 54, line 27, of this rather large and complex Bill he will see in the Second Schedule that there is a reference to an application under Section 8 of the Mines (Working Facilities and Support) Act, 1923, which obviously involves that that section is not being, either impliedly or otherwise, repealed. Accordingly the precise words which he wants inserted are, in the opinion of the Government, unnecessary.
I only have to add this, that the portions (a), (b) and (c) of this Clause 30, subsection (1), were only inserted from an abundance of caution because it was suggested in another place that there was something in the Bill which might to some extent affect rights under this clause. Your Lordships will observe that the language of Clause 30 is:
"The matters subject to which by virtue of Section four of this Act the vesting … is to take effect … shall include the following rights …"
And really a reference to Section 8 of the Act of 1923 would be a little out of place in this particular clause. At any rate, I can say this, that my advisers and I have satisfied ourselves that Section 8 of the Act of 1923 is in no way affected and that the words suggested are unnecessary.
THE MARQUESS OF LOTHIAN: Subject perhaps to the noble and learned Lord agreeing that I might consult my legal advisers—for this is a legal question—as to whether that answer satisfies them, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 30 agreed to.
Clauses 31 to 34 agreed to.
Clause 35 [Limitation of costs payable in case of disputes between adverse claimants]:
THE LORD CHANCELLOR: The Amendment down in my name to this clause is consequential. I beg to move.
Amendment moved—
Page 33, line 7, after ("Commission") insert ("(other than the provisions of Section ten of this Act)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 35, as amended, agreed to.
Clauses 36 to 39 agreed to.
LORD STRABOLGI LORD STRABOLGI moved, after Clause 39, to insert the following new clause:
"Where the owners of a colliery undertaking consider that they are paying, or being asked to pay, an excessive price for surface wayleaves the Commissioners shall have the power to compel the owners of the surface wayleaves to negotiate with the Commission for a reduction of such wayleaves.
Failing agreement the Commission shall have power to submit the dispute to the Railway and Canal Commissioners whose decision shall be final and binding."
The noble Lord said: On behalf of my noble friend Lord Addison, I desire to move this new clause. I do so formally, and my noble friend will explain what I was going to explain to your Lordships. I had armed myself with arguments, but my noble friend will do it much better than I.
Amendment moved—
After Clause 39, insert the said new clause. —(Lord Strabolgi.)
LORD ADDISON: I should be obliged if the noble Chairman would give me a ruling on a point of order.
THE LORD CHAIRMAN: I cannot.
LORD ADDISON: I must apologise for not being sufficiently familiar with the procedure of this House. This is a clause which I have been asked to move by miners' representatives in another place. There are a number of cases, especially in the North of England, where, I am informed, serious hardship is occasioned by the excessive or high charges which are made for surface wayleaves Formerly these cases could be brought before the Railway and Canal Commission, but a case came to the Courts in 1935, and it appears there was a ruling then given by the Court of Appeal that, under the Mining Industry Act, 1926, the Railway and Canal Commission had no jurisdiction in these cases. I have had provided for me a number of cases where serious disabilities are occasioned by very excessive and in some cases unreasonably high charges levied for the transport of coal across a short line leading to the River Tyne, and also in other cases, and there is now no machinery for the companies concerned to have their case heard by any authority which can give a fair adjudication in the matter. This clause, if accepted, will provide that
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in these cases the companies concerned, if the Commission is so persuaded, can have their case submitted to the Railway and Canal Commission. I do not want to detain your Lordships by giving long details about these cases, but there really is a serious hardship to companies concerned in this class of case now owing to the judgment of the Court of Appeal to which I have referred. There is no machinery for having their grievances dealt with equitably.
VISCOUNT RIDLEY: Perhaps I can be of some assistance to the noble Lord who has just spoken by telling him that the case to which he referred is one that I think I know, for it concerned a company with which I am connected. The application to the Railway and Canal Commissioners was dealt with as he says; so it was possible to bring an application in a Court of Law, and that in fact was done and has been successful. I am not at the moment able to tell the noble Lord in which Court it was brought, or how it was brought, but such a case certainly can be and has been brought. In view of that fact he may not think it necessary to proceed with this Amendment.
LORD ADDISON: I assure the noble Viscount that, whatever that case is to which he referred, it clearly does not apply to a number of cases about which I have received full details. In one of the cases wayleaves for quite a short piece of line are equivalent to the payment of £165 an acre, and I am informed there is no machinery for appealing against that unreasonable charge. There are quite a number of other cases, so it is not merely a matter of one case.
THE EARL OF MUNSTER: Under the Mines (Working Facilities) Acts which are in force at the present time a colliery company which is asked to pay more for its surface facilities than it thinks is reasonable can apply to the Railway and Canal Commission, but the Amendment which the noble Lord seeks to put into the Bill is one which relates to cases in which the colliery is already paying too much under a current contract. I think, possibly, the case that he was referring to is that which came to be known as the Consett case in which the Court of Appeal reversed the decision of the previous Court, their reason being that the 1926 Act did

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not permit the Court to make a reduction during the currency of any contract. An Amendment of this character which seeks to alter existing contracts in order to allow a tenant to get out of what may possibly be a bad bargain is one which I hardly think would be accepted in this House, and I hope, therefore, the noble Lord will withdraw his Amendment.
LORD ADDISON: I must appeal to the noble Earl to give the matter a little further consideration. There is no suggestion here of an attempt to alter an existing contract. If the parties have entered into a contract and one of them has made a better bargain than the other, that is their affair. But that is not the proposal of this new clause. Perhaps the noble Earl will go so far as to allow me to put the case before him and give me a further opportunity of bringing it up on Report. If he will allow me to do so I will withdraw the Amendment now.
Amendment, by leave, withdrawn.
Clauses 40 to 42 agreed to.
Clause 43:
Duty of the Commission to reduce number of coal-mining undertakings where necessary in interests of efficiency.
(2) The Commission may, at any time, if they are of opinion that adequate progress in the reduction of the number of coal-mining undertakings is not being made, make a report to the Board of Trade recommending that the powers of the Commission under the said Section thirteen of submitting amalgamation and absorption schemes should become exercisable in any area specified in the report as an area in which such progress has in the opinion of the Commission been inadequate.
(3) After receiving any such recommendation from the Commission the Board of Trademay lay before Parliament the report in which the recommendation was contained and may then make a provisional order declaring that it is expedient in the national interest that the number of coal-mining undertakings should be reduced in the area with respect to which the recommendation was made and directing that the said powers of the Commission shall become exercisable in that area:
Provided ….
(4) A provisional order made under this section shall be of no effect unless it is con firmed by Parliament, but if the order is so confirmed, either without modifications or with modifications as to the area with respect to which the order is to have effect, it shall come into force on the date of the passing of the Act confirming the order or on the first day of January, nineteen hundred and forty, whichever is the later date.
THE MARQUESS OF LOTHIAN THE MARQUESS OF LOTHIAN moved, in subsection (2), after "Trade," to insert "setting forth the advantages which may be expected to follow a scheme of amalgamation or absorption in economy in working, in providing employment, in lowering the cost of coal in its production or distribution or in raising wages, and." The noble Marquess said: We now come to that part of the Bill which deals with the question of amalgamations, and the three Amendments which stand at the top of page 5 of the Marshalled List, two in my name and one in the name of the noble Marquess, Lord Londonderry, all deal more or less with the same subject. They purport in effect to require that the Commission, in submitting proposals under this clause for amalgamation, shall specify with far greater particularity than is provided in this Bill what they actually propose, and that Parliament shall have that information before it before it authorises a Provisional Order which will enable the powers for amalgamation conferred by this Bill to be exercised.
May I just read the particular subsections, which seem to me to be inadequate. Subsection (2) of Clause 43 reads:
"The Commission may, at any time, if they are of opinion that adequate progress in the reduction of the number of coal-mining undertakings is not being made, make a report to the Board pf Trade recommending that the powers of the Commission under the said Section thirteen of submitting amalgamation and absorption schemes should become exercisable in any area specified in the report as an area in which such progress has in the opinion of the Commission been inadequate."
All it has to do is to state that in its opinion progress has been inadequate in an area.
Then the clause goes on in subsection (3) to say:
"After receiving any such recommendation from the Commission the Board of Trade may lay before Parliament the report in which the recommendation was contained and may then make a provisional order declaring that it is expedient in the national interest that the number of coal-mining undertakings should be reduced in the area with respect to which the recommendation was made and directing that the said powers of the Commission shall1 become exercisable in that area:"
There is nothing to provide that they have anything more to say than that in an area specified the progress of amalgamation has been inadequate.
Then subsection (4) provides:
"A provisional order made under this section shall be of no effect unless it is confirmed by Parliament, but if the order is so confirmed, either without modifications or with modifications as to the area with respect to which the order is to have effect, it shall come into force on the date of the passing of the Act…"
It seems to me that the procedure is dangerously loose. What you want is that if the Commissioners come to the conclusion that progress in amalgamation has not been adequate, they should be compelled to particularise in far greater degree than is required by the Bill in what respect the progress has been inadequate, and to submit to the Board of Trade proposals in detail for remedying it, and that those proposals should be brought not only before the Board of Trade but before Parliament.
It is with the view of securing that the Commission shall give Parliament the information upon which alone it can reasonably judge as to whether there ought to be amalgamation or not, that I propose that the report shall set forth
"the advantages which may be expected to follow a scheme of amalgamation or absorption in economy in working, in providing employment, in lowering the cost of coal in its production or distribution or in raising wages,"
In other words, Parliament, who will have ultimately to settle the matter, should have full information as to why the scheme of amalgamation is put forward and, as I intend to propose in a later Amendment, that the report should include particulars of the scheme of amalgamation or absorption proposed. I hope that the Government will see their way to accept, not necessarily these words, but an Amendment which will ensure that the Commission shall submit recommendations pariicularising in detail, not only the area, but the kind of scheme of amalgamation which it proposes to ask for power to enforce.
Amendment moved—
Page 43, line 28, after ("Trade") insert the said words.—(The Marquess of Lothian.)
EARL STANHOPE: I agree with my noble friend opposite that as laid down in the Bill, the scheme does appear to be very indefinite and I am prepared to go a considerable way in the direction he desires. Really there are two stages of amalgamation schemes. First, there is
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the general proposal to be laid before Parliament. Then, if Parliament thinks fit to pass the Provisional Order, the scheme in all its details has to come before the Commission to be finally settled.
THE MARQUESS OF LOTHIAN: Do you mean the Railway and Canal Commission?
EARL STANHOPE: Yes. Our difficulty is that in this Amendment the noble Marquess lays down the whole thing in considerable detail. According to the wording of his Amendment it looks, I think, as if the President of the Board of Trade would have to be satisfied that all the suggestions he makes in his Amendment are fulfilled before he can submit his report to Parliament, and that the Select Committee will have to be satisfied on all these matters. I am sure that that is not what my noble friend desires. Therefore I think we can reach agreement by telescoping his Amendment and the next Amendment standing on the Paper in the name of the noble Marquess, Lord Londonderry. That Amendment proposes to insert a provision that
"such report shall set forth the proposals of the Commission in regard to that area."
We do not think that that goes quite far enough, and therefore we suggest that there should be inserted at the end of the Amendment as it is printed on the Paper the words
"and the advantages which are expected to follow therefrom."
That does not lay down exactly what the advantages are, but it does provide that the advantages will be shown in the report made to the President of the Board of Trade and by him submitted to Parliament.
I am sure my noble friend has as much respect as I have for Select Committees of Parliament and he will realise that no Select Committee would accede to a Provisional Order being granted unless satisfied in regard to a whole number of facts. Therefore, I think if we put in words of that character it will ensure that the report made to the President of the Board of Trade is a really complete one, such as would be necessary, I think, before Parliament would be satisfied by the draft of a Provisional Order. It does not bind the hands of Parliament too

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closely, but on the other hand I think it does fulfil the desire which my noble friend has in mind.
THE MARQUESS OF LOTHIAN: It is a very important point, for the reason that the principle and basis of amalgamation has to be settled by a Select Committee and the Railway and Canal Commission are completely debarred from considering merits, except whether the scheme is just as between the amalgamating companies. I have a further Amendment on the Paper which does not alter that principle but will make it clear that the Railway and Canal Commission should consider certain things which I think at present they are debarred from doing. Subject to its being understood that I shall have an opportunity of considering the words suggested by the noble Earl, what he has said does seem to secure my object that the body which has to decide whether amalgamation shall be carried out shall have full information, not only as to the area, but as to the scheme. Subject to my having the right to consider the words again, I am willing to withdraw my Amendment.
EARL STANHOPE: I hope my noble friend will not press the word "scheme," because in my mind that means the scheme in all its details before amalgamation can take place.
Amendment, by leave, withdrawn.
THE MARQUESS OF LONDONDERRY THE MARQUESS OF LONDONDERRY had on the Paper an Amendment to add to subsection (2) "and such report shall set forth the proposals of the Commission in regard to that area." The noble Marquess said: I was not fortunate enough to catch all that the noble Earl said, and I do not know exactly what he wishes with regard to the Amendment I have on the Paper.
EARL STANHOPE: What I suggest is that my noble friend should move his Amendment as it is printed on the Paper with the addition of the words "and the advantages which are expected to follow therefrom."
THE MARQUESS OF LONDONDERRY: I beg to move.
Amendment moved—
Page 43, line 33, after ("inadequate") insert ("and such report shall set forth the proposals of the Commission in regard to that
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area and the advantages which are expected to follow therefrom").—(The Marquess of Londonderry.)
On Question, Amendment agreed to.
THE LORD CHAIRMAN: There is an Amendment printed on page 7 of the Amendment Paper in the name of the noble Lords, Lord Snell, Lord Strabolgi and Lord Addison, and I understand it is desired to move that Amendment at page 43, line 33.
LORD STRABOLGI LORD STRABOLGI moved to insert at the end of subsection (2):
"Provided also that in any action taken under this or the next succeeding subsection to effect a reduction in the number of such undertakings the Commission shall have regard to any representation made to them by any local authority in the area or by the Commissioner for the Special Areas with respect to existing social facilities and works such as transport, roads, schools, housing, places of entertainment, lighting, water supply, and other facilities and works, and shall also have regard to the possible effect upon the wage standards and hours of labour of the persons employed in such undertakings, and shall take measures to provide for the transference or absorption of workers who may be displaced."
The noble Lord said: I am sorry that the Amendments have got printed out of order, and also if I have not given the Government sufficient notice, but I have only just discovered the error myself and arranged the right order with the Clerks and the Lord Chairman. On page 6 there is an Amendment in the name of my noble friend the Earl of Listowel and other noble Lords, "after Clause 43," in rather similar terms, except that it makes compulsory the measures in the Amendment which we are now discussing, which my noble friend and my other noble friends have put down. We do not propose, therefore, to move the Amendment on top of page 6, but we do propose, with your Lordships' leave, to move the Amendment which is printed on the top of page 7 in the name of my noble friends Lord Snell and Lord Addison and of myself. It is printed as an Amendment to Clause 44, and is in the wrong place; it refers to page 43 of the Bill at the end of line 33. Therefore it should be moved immediately after the Amendment which has just been accepted in the name of the noble Marquess. If your Lordships will permit me to move it as a Manuscript Amendment, all will be in Order-especially if the Government see their way to accept it!
This Amendment raises a very important matter, about which I do not think there can be much doubt in any part of the House. If we are going to effect under this Bill a reduction in the number of working pits, we may, if we are not careful, create new "special" or distressed areas, with all that means. You can make out a case for amalgamation, and by your amalgamation close down what are called "redundant" pits and be able to market coal a few pennies a ton cheaper to the consumer. A commercial case can be made out, and that sort of thing is, of course, happening in the ordinary course of business under the present régime in the coal industry. While you may be saving a few pennies per ton on your coal by these rationalisation schemes, you are devastating certain areas by closing down the pits which are the sole means of livelihood for a great portion of the inhabitants of those areas. You throw on the scrap-heap not only the men—who may or may not find other work; that is another matter—but also the social services which have been built up round those communities—the schools, the churches, the chapels, the places of entertainment, the sports grounds, the playgrounds, the clubs, the roads, the drains, and all the rest of the results of local endeavour which have made the district habitable and amenable.
A point comes where it does not suit the national interest, taking it as a whole, to render an area derelict, although from the balance-sheet point of view you can make out a case for the closing down of certain pits. I do not think it is necessary to labour this argument; it is, I am sure, very vividly in the minds of all of us. I would only cite, quite apart from the coal industry, the example of the shipyards. There was supposed to be a redundancy of shipbuilding yards, and a private company was formed under the auspices of the banks, with the blessing of the Treasury and the Government of the day, to buy up and close down these so-called redundant shipyards. We can now see, all of us, that that policy was overdone. You have such areas, as Jarrow, where a large part of the population depended for their livelihood on their work in the shipyards, which have been in the greatest distress ever since, and all sorts of steps have had to be taken to keep them alive, to bring new industries
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there, and so on. We do not want to see, I submit—and I am sure the Government do not want to see—a repetition of that sort of thing happening in the coal industry as a result of this Bill.
It has happened, as your Lordships are aware, notably in South Wales, where certain pits have been closed down which were the sole means of livelihood for practically all the inhabitants of a valley, with the result that you have had these awful conditions in South Wales ever since and many men have not worked for many years after that closing-down. You also lose all the social endeavours of the past by the local authorities, with Government assistance, to provide schools, roads, means of transport, drains and everything else. Therefore in this Bill we are asking that where any schemes come up for consideration involving the reduction of coal undertakings, regard should be had to the representations made by the local authorities in the area or by the Commissioner for Special Areas. The whole subject should be viewed widely, and there should be a balancing up of the gains and losses which the proposed amalgamation would bring. This is not a Party question, although my noble friends and myself happen to have put this Amendment down. It does not follow Party lines at all. We think that this is a necessary safeguard to have in the Bill. Your Lordships will observe that we do not put down any mandatory Amendment. We do not compel pits to be kept open because distress would be caused if they were closed down or local authorities would lose. We only ask that "regard should be had." I suggest that that is reasonable, and I very much hope that the Government will see their way to accept this Amendment, or, if the wording does not suit them, to suggest an alteration, always retaining the sense of the object which we have in view.
Amendment moved—
Page 43, line 33, at end, insert the said new subsection.—(Lord Strabolgi.)
THE EARL OF MUNSTER: On the Second Reading of this Bill I reminded your Lordships that the Government hoped that all amalgamations would be done voluntarily and that the compulsory powers contained in this portion of the Bill need not ever be brought into effect.

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The noble Lord opposite will remember that under Clause 2 the duty of this Coal Commission is to look after the property which has been transferred to it in the national interest, and when any compulsory scheme comes before the Select Committee there will be before that Committee also the representatives of local authorities, the miners' representatives, and others, who can come there and make their case. It would be far better to leave these proposals to that Select Committee, who will look to the amalgamation scheme in the light of the evidence submitted to them. If the noble Lord is referring to voluntary schemes, that is a thing which, of course, does not come under the Coal Commission in any way whatever. There is no reason at all why these voluntary amalgamations should not be continued by the industry itself without any reference to the Coal Commission. I hope that the noble Lord will realise that these important local authorities and miners' representatives can appear before this Select Committee, and that indeed the Commission, who are authorised to look after the coal in the national interest, will fulfil the function which Parliament proposes to transfer to them.
LORD ADDISON: I confess that I think the reply of the noble Earl is completely inadequate. This is a much more important matter than he suggests. I gather that the suggestion of the noble Earl as an alternative is that the local authority, or if not, someone on behalf of the Special Commissioner, will appear before the Select Committee to add, I take it, to the army of well-briefed counsel and others who will appear before that Committee, and prolong these proceedings accordingly. But the suggestion is something, if I may say so, much simpler and more sensible than that. The suggestion here is that when the Commission are considering the amalgamation of mining undertakings and making a report to the Board of Trade recommending amalgamation—that antecedent to the making of that report, before anybody is involved in the cumbrous procedure of Provisional Order Bills, they should give an opportunity to the local authority, and the Commissioner for Special Areas, to state what their views are on the subject. That is to say, before it comes to the making of the order at all.
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It surely, I suggest, is right and proper that before recommending amalgamation, which may have the grave effects which have not been a bit exaggerated by my noble friend—and I might go further and say that it ought to be almost an obligation, but we do not go as far as that—that the Commission should consult the local authorities concerned, who at great expense have provided all these amenities and special social services, and also those who are aware of the effects of the proposed amalgamation upon the miners and others employed in the area, so that before they make their report, or as part of the considerations which lead to the drafting of the report, they will necessarily have these matters before them, and not leave it until a much later stage has been reached, when the Provisional Order Bill is being considered by Parliament. This is quite clearly the right place in which the Commissioners should have these matters before them, and I hope the Government will adopt in some appropriate form this very simple and sensible procedure.
THE MARQUESS OF LONDONDERRY: The noble Lord has made a very interesting speech. We have been led to believe that this Part of the Bill is a very important one. I have understood that the Government have had it in their mind that the coalowners are very recalcitrant and are ready to place great obstacles in the way of amalgamations, and that therefore it is necessary to have a body of this description to keep the coalowners up to the mark in carrying out the policy in which the Government apparently believe. I am given to understand there is an idea that there are a great many amalgamations which could be brought about, and which are not brought about owing to some inherent vice in the coalowners. I ventured on Second Reading to give some of my experience in the amalgamation of collieries. My original ideas were much wider than those of the Government, but after long experience I have come to the conclusion that amalgamation is really a matter of evolution, and that it would be wrong to force it to go more rapidly than it would naturally go, and so bring about amalgamations which would not be in accordance with the well-being of the country.
I think that this question of amalgamations has been misrepresented in the

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minds of those who are responsible for the Bill. We know quite well that in the management of collieries the human factor is a very important one, and I would go so far as to say that if the Commission are proposing to take a more active part than I hope they will, we shall have to consider how great amalgamations can be controlled by the human factor of the human mind. I feel that we shall find that great conglomerations of collieries will act in a manner inimical to the best interests of the country. I am sure it would be wrong to have a large collection of collieries, with the idea of reducing expenses, because that is to a large extent a fallacy. With regard to those to whom noble Lords, on the Opposition Benches have referred, the question of safety is of the greatest importance, and larger undertakings are a great danger to the safety of the men who are in all our minds in looking to the well-being of the miners. Therefore, I feel that the less activity displayed by the Commission the better and that they should leave amalgamations to the evolution which is going on at the present moment. I challenge any assertion by the Government that the movement in this direction is slower than it ought to be. I would ask them to look at the figures of the last few years, and they will then see that it is going on to the satisfaction of all concerned at the present moment.
LORD HASTINGS: When Lord Minister made his reply to Lord Strabolgi he appeared to speak as if the noble Lord who moved the Amendment had been referring to voluntary amalgamations, and he went on to say what would happen. I understood that this Amendment had no reference to voluntary amalgamations, and I gather from the intimation now given by Lord Strabolgi that it refers only to compulsory amalgamations. I had to ask, because Lord Munster seemed to be a little bit doubtful. It seems to me that the two noble lords on the Front Opposition Bench have made out a strong case, and one in which they ought to be supported, not by mineral owners, because there will not be any when this Bill becomes law, but by surface owners, for more than one reason.
In the first place it is extremely desirable that the surface owners, as human beings, should have proper care for the men with whom they have been associated
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in the past as members of the community, that proper care and attention should be paid to their requirements and needs, and that they should not be placed at any disadvantage by reason of the business requirements of the coal trade and the necessity of amalgamations. There is also this point, that surface owners should bear in mind that surface buildings, which' are not to be interfered with in any way, or only in a very modified way by this Bill, will belong to them, and in a very large number of instances these amenities which have been set up for the benefit of the mining community are held by the community either on annual tenures or short leases, and in fact belong to the surface owners. It is a matter of importance to the surface owners that the villages which have until lately been thriving communities should not be rendered derelict. Surface owners' interests are identical in this matter with the interests of the mining community who live in the same area as they do. The hardships which would accrue to the working community in the event of certain of these compulsory amalgamations, and without proper regard being paid to the provision of work for them elsewhere—or not necessarily elsewhere: other forms of work in the same place—those same hardships would in a different degree, but to a considerable extent, attach to the owners of the buildings in which these men live and to the amenities which they enjoy.
I think that from the dual standpoint this Amendment deserves a very large measure of support. I hope the Government will accept it. It is in no sense mandatory, but it gives an indication to the Commission concerned as to what they should do, and a very useful indication too, because what is contained in an Act of Parliament is always a guide to their conduct, to the method of carrying out their business—much more valuable than if the local authorities and others interested merely had the right to appear, as of course, they have. But with this addition inserted in the Bill that right would be a statutory one, instead of one that is granted by courtesy.
LORD CROMWELL: In case I do not get another chance of supporting the Government I should like to say a word in support of what the noble Earl, Lord Munster, has said. The difference between what he said and what the noble

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Lord, Lord Addison, desired is as to the time at which the representations should be made. The noble Earl, Lord Minister, says they will have an opportunity to appear before a Committee of Parliament and Lord Addison desires that they should appear first before the Commission and state their case. I support the noble Earl for this reason, that if the Commission are to decide on national policy I think it is a mistake, because you cannot get away from the fact that the wording of this Amendment would involve the Commission's having to make a decision on national policy. They would have to decide whether it was in the interest of the nation or the local authority in these particular respects, quite irrespective of coal. They are taking the place of coal landlords.
LORD ADDISON: The noble Lord has misunderstood the proposal. It does not at all affect the duties of the Committees of Parliament which will deal with the Provisional Order Bill. This is to require the Commission before they make an order on which a Provisional Order Bill will be based to have regard to the views of the local authorities upon the effect in these respects of the order if they decide to make it. It does not affect the proceedings in these Houses of Parliament at all.
LORD CROMWELL: I quite appreciate that, but it affects the action which the Commission may take. The Commission may not recommend an amalgamation because in their opinion these conditions are not satisfied, and I do not think that is a matter to be placed in the hands of the Commission.
VISCOUNT RIDLEY: I think this is an Amendment which deserves support. It is quite clear that the Commission before making any report which is to be considered by Parliament must naturally consider all the circumstances of the case. One would expect them to have some contact with the owners of the various companies which it is suggested should be amalgamated, and one would equally expect that they should have regard to the other conditions as well. It is not really very easy for some of the local authorities mentioned here, who should in fact have their opinion heard, to go to the expense and trouble of laying their views before Parliament and of being re-
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presented by counsel. It is only too evident in the results which we have seen in the Special Areas what the effect has been in the past of the cessation of employment in some particular colliery, either by reason of amalgamations and the closing of certain pits or in cases where work ceases in collieries on economic grounds. If that can in any degree be avoided it is surely one of the responsibilities of the Commission, not in their function as landlords but as having to co-ordinate and amalgamate the industry.
The only difficulty I see is that when framing the scheme for amalgamation the Commission might not be able to forecast with any accuracy which of the pits which it is proposed to amalgamate will in fact be the ones which will be closed. No doubt they will be able to form a reasonable estimate, but it will not be very easy for them to get a very clear picture of it. Another difficulty that I see is in the last few words of this Amendment, which say that they "shall take measures to provide for the transference or absorption of workers who may be displaced." Knowing as we do the difficulties that have been found by the fairly elaborate organisation of the Commissioners for Special Areas to accomplish this very purpose, I think it will be rather difficult for the Commission to do very much in that direction. But nevertheless I think it is only sensible and right that they should have the responsibility of having to take that into account.
LORD STRABOLGI: I may say that my noble friend and myself are quite prepared, if we can get the Amendment accepted, to leave those last words out. We do see that there are some difficulties about the last sentence concerning absorption and transference.
VISCOUNT ELIBANK: If these words are not put into the Bill it seems to me that the Coal Commission will be converted into a landlord of the kind that is always held up to abhorrence in this country who only thinks of matters from the point of view of pounds, shillings and pence. I feed quite certain that where voluntary amalgamations take place the present coalowners or royalty owners always take into consideration these points which the noble Lord desires to put in the Bill. But if it is to go forth from Parliament that the Coal Commission is merely to be a landlord

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and to hold its position purely as a landlord who is to have no regard to the working people and their conditions and amenities, all I can say is that this will be an additional injury which this Bill will cause to the country.
THE EARL OF DUDLEY: I do not support the wording of his Amendment or the place in which it is put, but I certainly support its spirit. As one closely engaged in the industry I feel that if anything can be inserted in the Bill which will give greater confidence to the men engaged in the industry in regard to their future, it would be a most admirable thing. Those of your Lordships who are connected with the coal industry will know that it is becoming increasingly difficult to get colliery workers. It is very difficult to get pit boys, and that means that the future workers in the industry will not be available, and they are becoming increasingly difficult to train. I think that is largely due to a lack of confidence in the future, and this measure, which entails compulsory amalgamation, still further shakes the confidence of those, particularly the younger men, who are engaged in the industry. The Government ought to remember as well that a large number of persons who are likely to be displaced by compulsory amalgamations are small men who make a living out of little pits which they work themselves, where a large pit could not make such a living. Those little men are very useful—they are sometimes rather a nuisance to the larger colliery companies, I admit—and are performing a useful work. I feel that they are frightened about the effects of this Bill, and if something could be inserted which would give them greater confidence it would be an excellent thing. I would also like to add the lack of confidence they may feel in regard to being displaced, by compulsory amalgamations, from the houses in which they now live near the pit.
THE EARL OF ELGIN AND KINCARDINE: I should like to add a few words in support of this Amendment. I am thoroughly in favour of the principles already stated from many points of view, but there is one point of view which has not yet been stated, and that is the view of the local authority. The local authority is charged with the duty of providing the social services, amenities, and so
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forth, and if without consultation it is charged with the extra responsibility, on account of amalgamation, of making new amenities, new services, elsewhere, the rates of the local authority, which are extremely heavy at present, will be added to by a very great burden. It does seem reasonable that before such a step is taken in regard to these amalgamations the local authority, which, as Lord Strabolgi has said, has been charged with the duty of providing schools, water, drainage, and other services, should have an opportunity of being consulted as regards these services. In a mining area particularly the provision of these services is extremely difficult and very expensive, and if, as happens even now, a whole community shuts down, the services which have been put in at very large cost by the local authority are thrown away and the burden is put upon that local authority of finding them elsewhere. From that point of view as well as others, I heartily support the Amendment, and I hope the Government will see their way to accept it.
LORD STRABOLGI: Might I just say that I have consulted my noble friends, and we are quite prepared to leave out the last two lines after "undertakings" —namely,
"and shall take measures to provide for the transference or absorption of workers who may be displaced."
I have consulted the Lord Chairman, and, if I am allowed, I would move to leave out these words.
VISCOUNT RIDLEY: May I explain that I did not mean to imply it was necessarily right that this part of the question should be ignored. I only wanted to draw the noble Lord's attention to the difficulty.
Lord STRABOLGI: We see the difficulty, and we want to get half a loaf rather than no bread which may be offered.
EARL STANHOPE: I am not quite sure that some of your Lordships appreciate the fact that this clause only affects compulsory amalgamations. If noble Lords feel it is essential to strengthen these interests, no doubt they will be prepared to propose an Amendment on the Report stage by which the whole of these obligations will be necessary before voluntary amalgamations can take place either.

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After all let us consider what happens now. Colliery companies have to consider their shareholders, and they have to consider whether by amalgamation they can make a greater profit and get their coal cheaper and so on than they do under present conditions. Compulsory amalgamations come under the Coal Commission. The Coal Commission have no shareholders other than the general public, in the far distance, to whom the debt which is raised has to be repaid, but they are charged with the national interest.
Now let us see what happens. The Coal Commission charged with the national interest have to make a report, and the President of the Board of Trade, who is a member of the Cabinet, as soon as he begins to consider a subject of this kind, will at once be assailed on the one hand by the Minister of Labour and on the other by the President of the Board of Education who, for instance, has to provide out of his estimates fifty per cent, for the building of schools at the present time, by the Minister of Health, and so on. Is it likely that the Minister is going to come before a Select Committee of Parliament and put forward proposals disregarding all these things suggested by the noble Lord? Does my noble friend Lord Hastings take such a low view of a Select Committee of this House that he thinks it necessary to give statutory orders to a Select Committee to consider these matters? The Select Committee would consider matters of this kind along with all other matters, and any Minister who is going to ask for a Provisional Order from Parliament would have to take all these matters into account.
LORD ADDISON: The reply of the noble Earl is not appropriate at all. Voluntary amalgamations do not have to receive the consent of this House.
EARL STANHOPE: All the more reason why the obligation should be made statutory.
LORD ADDISON: It is for the Government to alter the form of the Bill. As far as we are concerned we can only propose Amendments which relate to the form of the Bill as it is now before us. The Bill is placing certain duties on the Commission, and all we ask is that the Commission, before undertaking the discharge of this particular duty, shall con-
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sult certain responsible persons. That is all. I suggest that it is an entirely reasonable Amendment. What happens with regard to other amalgamations is also equally appropriate. I agree that that should be taken account of, but that matter is not before us. We have no authority in that matter. It is not subject to the judgment of Parliament. This is. On this particular matter I hope the House wilt support us in the Division.
VISCOUNT SAMUEL: This is a matter on which all those who have studied this question must feel considerable difficulty. We have two opposite factors—the economic factor and the human factor—which may in a particular case conflict, and it is impossible to deny the cogency of both. Those who have listened to this debate realise to the full the hardship that must be imposed on a community if a particular pit is closed and the services which have been provided over a long series of years by the local authority become useless. On the other hand, the great trouble about the British coal industry is that it is an old industry which is laid out on a plan adopted in previous generations, and nothing could be worse for the coal industry than that the map of the industry, so to speak, should have been the map of 1850 or of 1900 or that, in years to come, it should be stereotyped in the map of 1938. That is the real trouble about the coal industry, and the obstacles to the improvement of the organisation of the industry are enormous.
Among those obstacles are those that have been mentioned to-day. The industry is not laid out in the most economical fashion for the best production of its commodity. It is quite certain that the British coal industry is enormously handicapped by having to inherit the bad layout from previous generations, and one of the worst features is the enormous number of separate undertakings. I beg noble Lords who feel hostile to anything in the nature of compulsory amalgamation, and who have been impressed that some amalgamations are carried too far or that unnecessary amalgamations may have been undertaken—I beg them to remember that if you do not have amalgamations this industry cannot flourish, and all the individuals connected with it, whether miners or consumers, thereby suffer. As to the voluntary amalgamations which have taken

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place, to which the noble Marquess, Lord Londonderry, referred, they are quite inadequate to the needs of the case. Apart from the smallest mines which have been also mentioned, there are no fewer than 523—I leave them out of account.
The pits which produce from 10,000 tons a year to 500,000 tons number no fewer than 320, and they produce nearly a quarter of the whole of the British product. Those are the pits which are now hampering the whole industry. In the other countries with which we are competing no such conditions have been allowed to prevail. In Germany, in the great coalfield of Westphalia some years ago we found that they had a production of about 100,000,000 tons a year, and the separate undertakings responsible for it numbered seventy. Seventy to produce 100,000,000 tons. I have been told there has been some little extension of the number lately, but I have not the particulars. In any case the German coalfield is organised in a wholly different fashion from ours. In France, in the Pas-de-Calais coal-field, an output of 20,000,000 tons was produced by sixteen undertakings. It is obviously possible to organise far more efficiently with such a number of undertakings than with the hundreds of separate undertakings which we have in Great Britain.
And that applies not only in the matter of production but also in the matter of selling, which is of great moment to this industry. Selling schemes are far more practicable if you have a dozen concerns than with one hundred or two hundred concerns. In 1926 a Departmental Committee was appointed on the question of selling schemes, under the Chairmanship of Sir Frederick Lewis, now Lord Essendon, consisting of a number of the ablest business men and others in this country, and they came to this conclusion. I will quote a few sentences from their recommendations:
"The development of organised marketing in the coal-mining industry is desirable in order to avoid excessive competition, to effect economies and improvements in the marketing of coal and to help to stabilize the industry."
They went on to say:
"The present lack of consolidation in the industry is a serious impediment, and the full development and benefits of organised marketing cannot be realised unless the industry can be consolidated, by amalgamations, into a much smaller number of units."
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This matter therefore was dealt with as long ago as 1926. It is of vital economic importance to the whole industry and therefore to the nation. Every one agrees that voluntary amalgamations are better than compulsory ones. No one suggests that there ought to be any rigid rule for amalgamations up to a certain size and the Commission is not endeavouring to effect that, but we do insist that there are cases in which voluntary amalgamations will not be effected, although they are desirable. The noble Marquess, Lord Londonderry, asked whether we suggest that there is some inherent wickedness on the part of the people who do not carry out the necessary schemes. Not at all. The reasons are very well known and are quite obvious.
THE MARQUESS OF LONDONDERRY: I take it the noble Viscount is agreeing that there is no inherent wickedness.
VISCOUNT SAMUEL: Certainly. He was rather suggesting that those in favour of amalgamations must attribute inherent wickedness to those who resist them. But we do not do that. We say the reasons are well known and obvious, and they are partly inertia, partly personal factors—persons do not wish to amalgamate with others and give up directorships they have previously held. These are wider considerations, and this debate has necessarily rather broadened out from the particular Amendment which is under discussion. These wider discussions must come in, and the speeches of the noble Marquess, Lord Londonderry, and others have broadened out the debate into the general question of amalgamation. My observations are directed to submitting to your Lordships that in considering this particular factor, this particular Amendment, we ought not to put more obstacles in the way of amalgamations than already exist in this Bill. The considerations mentioned in the Amendment will undoubtedly be taken into account by the Minister and by the Select Committees. If they are put into this clause there will be one more obstacle in the way of effecting a thing which is most desirable. Any scheme now under the Bill has to pass the gauntlet first of all of the Coal Commission, which will consist of very able men, not only bureaucrats and civil servants but able men of other types, then the President of the Board of Trade, then a

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Select Committee of the House of Commons, and then a Select Committee of the House of Lords. Now my noble friend Lord Lothian is proposing that certain points should be referable in part to the Railway and Canal Commission.
THE MARQUESS OF LOTHIAN: I am doing nothing of the sort.
VISCOUNT SAMUEL: My noble friend has given notice that he intends to move an Amendment to make certain matters referable to the Railway and Canal Com-
THE MARQUESS OF LONDONDERRY THE MARQUESS OF LONDONDERRY moved, in subsection (3), after "area," immediately preceding the proviso, to insert "in manner proposed by such report
mission which he thinks may not be within the purview of the Select Committees. Is that not so? My noble friend makes no reply, so we may take it that he agrees that my statement was right. I do suggest that the tendency of this House to-day ought not to be to put further obstacles into this Part of the Bill but ought to facilitate its operation.
On Question, Whether the said proviso shall be there inserted?
Their Lordships divided:—Contents, 52; Not-Contents, 65.

CONTENTS.

Northumberland, D.

Aberconway, L.

Gainford, L.

Addington, L.

Gerard, L.

Bathurst, E.

Addison, L.

Hastings, L.

Cawdor, E.

Arnold, L.

Howard of Glossop, L.

Dartmouth, E.

Balfour of Burleigh, L.

Ker, L. (M. Lothian.)

Dudley, E.

Belper, L.

Lamington, L.

Grey, E.

Clwyd, L.

Leconfield, L.

Lindsay, E.

Darcy (de Knayth), L.

Middleton, L.

Liverpool, E.

Daryngton, L.

Mowbray, L.

Malmesbury, E.

Dickinson, L.

O'Hagan, L.

Mar and Kellie, E.

Digby, L.

Oxenfoord, L. (E. Stair.)

Vane, E. (M. Londonderry.)

Doverdale, L.

Phillimore, L.

Dunmore, L. (E. Dunmore.)

Rushcliffe, L.

Bertie of Thame, V.

Elgin, L. (E. Elgin and Kincardine.)

Saltoun, L.

Elibank, V.

Shute, L. (V. Barrington.)

Hereford, V.

Elphinstone, L.

Snell, L.

Home of Slamannan, V.

Fairfax of Cameron, L.

Strabolgi, L. [Teller.]

Ridley, V. [Teller.]

Fairlie, L. (E. Glasgow.)

Strickland, L.

Teynham, L.

NOT-CONTENTS.

Maugham, L. (L. Chancellor.)

Stanhope, E.

Greville, L.

Hampton, L.

Hailsham, V. (L. President.)

Falmouth, V.

Harlech, L.

FitzAlan of Derwent, V.

Holden, L.

De La Warr, E. (L. Privy Seal.)

Goschen, V.

Hutchison of Montrose, L.

Halifax, V.

Jessel, L.

Hampden, V.

Mancroft, L.

Bath, M.

Samuel, V.

Marks, L.

Dufferin and Ava, M.

Oriel, L. (V. Massereene.)

Zetland, M.

Amulree, L.

Redesdale, L.

Basing, L.

Rennell, L.

Airlie, E.

Berwick, L.

Ritchie of Dundee, L.

Ancaster, E.

Biddulph, L.

Sackville, L.

Baldwin of Bewdley, E.

Bingley, L.

Sherborne, L.

Fitzwilliam, E.

Cadman, L.

Stafford, L.

Iddesleigh, E.

Cautley, L.

Stanley of Alderley, L. (L. Sheffield.)

Lucan, E. [Teller.]

Clanwilliam, L. (E. Clanwilliam.)

Midleton, E.

Strathcona and Mount Royal, L.

Mount Edgcumbe, E.

Cornwallis, L.

Munster, E.

Cromwell L.

Templemore, L.

Onslow, E.

Denman, L.

Trent, L.

Plymouth, E.

Eltisley, L.

Windlesham, L.

Radnor, E.

Elton, L.

Wolverton, L.

Shaftesbury, E.

Fermanagh, L. (E. Erne.)

Woodbridge, L.

Spencer, E.

Gage, L. (V. Gage.) [Teller.]

Wyfold, L.

Resolved in the negative, and Amendment disagreed to accordingly.

with such modifications (if any) as the said Board may think fit and within such period as may be prescribed by such Provisional Order." The noble Marquess said: We are of opinion that the insertion of these words is necessary in order

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to carry out what we have in view. As the subject has been dealt with on previous Amendments I do not think I need say anything further. I beg to move.
Amendment moved—
Page 43, line 42, at end insert the said words.—(The Marquess of Londonderry.)
THE LORD CHANCELLOR: The Government are content to accept this Amendment.
On Question, Amendment agreed to.
LORD GAINFORD LORD GAINFORD moved, in subsection (4), after "effect," where that word occurs for the second time, to insert "but not exceeding the area specified in the report referred to in subsection (2) of this section." The noble Lord said: This Amendment deals with a point which I understand the Government are not so ready to concede, but I thank the noble Lord for the way in which he has met the views of a great number of us in having accepted the last Amendment. It does ensure that the parties affected shall have some knowledge of the proposals in connection with amalgamations. The purpose of this Amendment is to make it quite clear that any modification shall not be by way of an increase in area by the Coal Commission. It is provided by Parliament, and I think properly, in many Statutes that powers should not be conferred upon a Minister to expand an area. In the same way in this Bill it is important that there should be some limit to the power to extend a proposed amalgamation to an area outside the proposal put forward to Parliament by this Commission.
It is quite possible that Parliament through its Committee might think that the amalgamation proposed was not quite in accordance with its own views. If that should be the case, the right procedure, I submit, is for the views of the Committee to be sent to the Commission, that the Commission should consider the alteration suggested by the Committee, and that then a new Provisional Order should be issued in connection with the amalgamation and it should be published. That is the only way which seems to be fair to the parties affected. If this procedure were not adopted, the collieries in an outside area might be included in the amalgamation and the parties affected have no knowledge whatever of the proposal. The proposal ought to emanate by
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a Provisional Order through the Commission. Although it might have been recommended by a Parliamentary Committee, the Committee should not have in itself the power to extend the area.
The year before last there was a Housing Act passed through Parliament. Local authorities had the power conferred on them by Parliament to purchase land compulsorily for demolition purposes and the Minister had powers of modification by Order. But Parliament restricted the Minister's powers of modification, and the Minister was not permitted to authorise the local authority to purchase compulsorily any land not in the original Order. That is an exactly similar case to this. It seems to me quite fair that the parties to be affected by any extension of the area ought to have exactly the same procedure through the Commission as the Commission might suggest should be adopted for an amalgamation in the first instance.
Amendment moved—
Page 44, line 14, after ("effect") insert ("but not exceeding the area specified in the report referred to in subsection (2) of this section").—(Lord Gainford.)
EARL STANHOPE: I am afraid this is one of the Amendments which we are unable to accept, as I have already informed my noble friend. We do not feel that it is right to fetter the powers of Parliament in this way by making it statutory that no Select Committee of either House can make an extension of this scheme. I can well visualise, and I am sure the noble Lord opposite can, occasions when, once a scheme is lodged, it may be fair that some other company should be brought into it, and that company may be quite willing to go into the scheme voluntarily. If this Amendment were carried, it would be entirely cut out, because it would be outside the area appearing in the original Order. As your Lordships know, Provisional Orders have to be brought before Parliament before a certain date each year. Therefore, once the thing began to be considered, you could not get a new Provisional Order published until the following year, and that would hold up the whole amalgamation for a further period. I cannot believe that a Select Committee of either House of Parliament would bring in large areas without giving them full warning and due opportunity of being

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heard before the Committee. I suggest it is very unwise to limit the powers of Parliament in the way proposed by the noble Lord.
LORD GAINFORD: There would be no trouble at all if a colliery desired to come into the amalgamation. What I was very anxious to secure was that a colliery should have an opportunity of knowing that it was proposed to be brought into a scheme which was approved by a Committee; otherwise it might be prevented from putting its case before the Select Committee. Having regard, however, to the reply which the noble Earl has made, I think that possibly some arrangement might be made to meet my point at a later stage, and I beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD ADDISON LORD ADDISON moved to insert after subsection (4):
"() A Provisional Order made under this section may be introduced and proceeded with at any time during the sittings of Parliament during any Session."
The noble Lord said: This Amendment is on a matter of procedure, and I am afraid it is too much to hope that we shall receive much support on it from the noble Lords below the gangway on the left, who fortunately saw fit to support us on the last Amendment. Where an amalgamation is desired, I think it is only right and proper that the full facilities of a Parliamentary Session should be available for such an Order. Under the existing Provisional Order procedure it will be necessary for the Bill to be submitted to Parliament every year before Whitsuntide. Of course, Whitsuntide is a variable feast, but still, in the main, it means that if we are limited to the calendar year, the activities of Parliament in the initial stages of a Provisional Order Bill will in fact be limited to about February, March, April and a portion of May—three and a half months. The Amendment is designed to provide that, whatever we may do with respect to other Provisional Order Bills, this class of Bill may be introduced at any time during any one Session of Parliament.
There is, however, one point on which, perhaps, if the noble Earl opposite could inform me in a certain way, there would
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not be a very strong case for this Amendment. The Standing Order of the House to which this refers is No. 101:
"No Provisional Order Confirmation Bill originating in this House shall be read a first time after Whitsuntide."
In the discussions which took place in the other House it seemed to be understood that this Provisional Order rule related to a calendar year and was in fact—shall I say?—invented when Parliament did not as a rule meet for a new Session in the autumn. But of late years, as your Lordships know, it has become the practice to begin a new Session in the autumn, in October or November. Therefore I ask the Leader of the House if he will tell me whether this Provisional Order procedure relates to a Session or to a calendar year. If it relates to a Session, it would mean that a new Bill could be introduced if a Session began, we will say, in November, so that there would be a longer time then for the Provisional Order Bill to make progress in the Houses of Parliament.
If, therefore, he tells us that the Government intend that this provision shall be so interpreted that it relates to Sessions of Parliament and not to a calendar year, then it would mean that the opportunities for the introduction of a Bill would date from the commencement of the Session of Parliament—it might be in October or November—until the following Whitsuntide. If so, there is not much point in my Amendment, and if it is the intention of the Government so to use the procedure, I will withdraw. As it stands, however, if it is interpreted in terms of a calendar year, and in the form in which, I am quite sure, until recent years this procedure was interpreted, it would mean that in fact Parliament was limited to about three and a half months out of each Session in which any of these Provisional Order Bills could be initiated.
Amendment moved—
Page 44, line 17, at end insert the proposed new subsection.—(Lord Addison.)
THE LORD CHAIRMAN: Perhaps I might be permitted to answer this question, as it is one of procedure. In the first place I should perhaps remind your Lordships that the House has been reluctant to pass—in fact I do not think it has ever passed—a clause in a Bill which has overridden its Standing Orders. Your Lordships will remember some years ago—I am speaking from memory now;

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I have not got the papers before me—that we had a Bill dealing with Sunday entertainment which was thought to interfere with and alter Standing Order No. 212. Your Lordships came to the conclusion that, although the suggested amendment to the law was quite an acceptable one, it should be carried out by altering the Standing Order rather than by introducing the alteration to the Bill. As regards this particular Standing Order, No. 101, the noble Lord behind me (Lord Addison) is correct in his assumption that it applies to a whole year. The Provisional Order can be introduced at any time from the beginning of the Session of Parliament in October, if it begins as early as that, up to Whitsuntide, and in fact it has very often been done.
For example, the Ministry of Health Provisional Order Confirmation (Keighley Water Charges) Bill was introduced to the House of Lords and read a first time on December 16, 1924, and the Ministry of Health Provisional Order Confirmation (Port of Manchester) Order on November 23, 1936. There are many other precedents. So your Lordships will see that it is possible—of course it takes some time as a rule—if the Provisional Orders Rule is dispensed with, for a Bill to pass through Parliament before Christmas. If we were to alter the Standing Order at present it would cause a good deal of inconvenience to petitioners. It might curtail the time for petitions. The reason why the Standing Order lays down that a Provisional Order Bill shall be introduced within two months before the end of the Session is to secure that sufficient time is given to interested parties to petition, and that the proper procedure with regard to Provisional Orders shall be carried out. Parliament has always been very tender in this kind of matter, and if there is not interference with the rights of petitioners, or difficulty as to the Standing Orders being subsequently suspended, has allowed the Provisional Order to be introduced after Whitsuntide. For the two reasons which I have put before you I hope that my noble friend behind me will agree and will not press his Amendment.
LORD ADDISON: After the explanation of the noble Earl I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 43, as amended, agreed to.
Clause 44:
Powers of the Commission as to obtaining information for purposes of Part II.
44. —(1) Any member or officer of, or technical or professional agent appointed by, the Commission, authorised in writing by the Commission to make inquiries on their behalf as to any coal-mining undertaking specified in the authority, may, for the purpose of obtaining information required by them for the discharge of the functions to be performed by them by virtue of this Part of this Act, enter any premises used in connection with the carrying on of that undertaking, and may inspect any such premises and may measure or weigh any stocks, and may take copies or extracts of any accounts, books, plans, or other documents, and may require copies or extracts of any such accounts, books, plans, or other documents to be delivered to the Commission.
(2) The Commission may require the owner of any coal-mining undertaking in an area in which their powers under Section thirteen of the Coal Mines Act, 1930, of submitting schemes are exercisable, to prepare such accounts, plans, or other documents, relating to the undertaking and such valuations of the property and liabilities of the undertaking as the Commission consider necessary for the discharge of the functions aforesaid, and may require copies thereof to be delivered to the Commission.
LORD GAINFORD LORD GAINFORD moved, in subsection (1), to leave out "specified in the authority" and insert "in an area in which the powers of the Commission under Section thirteen of the Coal Mines Act, 1930, of submitting schemes are exercisable." The noble Lord said: The Commission under the clause as it at present stands can appoint agents who will have considerable powers to enter any premises used in connection with a coal-mining undertaking; they can inspect any books or documents, or require any information which they may prescribe. Those are enormous powers to be granted to a Commission without any justification, and the coal industry take the strongest objection to giving such unlimited powers to any Commission. It is quite evident that a body of this kind, when once they get powers, exercise them in an extraordinary way. It shows what bureaucracy is. Once a body of officials is set up they try and expand themselves, and a clause like this gives them roving powers, and creates a feeling of uncertainty which is most undesirable in an industry of this kind.
Of course if there is a prima facie case for an amalgamation scheme in an area this will be demonstrable at once without

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the necessity for the detailed investigation of plans and accounts, which will only be required after an Order has been obtained and when the Coal Commission come to deal with the financial details of a scheme. It is proposed therefore by this Amendment to limit the powers of the Commission to a reasonable extent. They can get all the information they want without these excessive powers, and I hope the House will agree to the Amendment, which I have pleasure in moving.
Amendment moved—
Page 44, line 25, leave out ("specified in the authority") and insert the said new words.—(Lord Gainford.)
EARL STANHOPE: I am afraid I cannot accept the noble Lord's Amendment on this clause, because it interferes with the Amendment which we have just moved on the previous clause. I think we all agree that it is necessary that we should get as full information as possible with regard to amalgamation schemes before they come before Parliament to get a Provisional Order. The President of the Board of Trade is not in a position to say how many concerns should be brought into amalgamation until a good deal of information has been collected, and therefore it is impossible for him to make an order saying that those inquiring into a scheme shall only be allowed to make their inquiries within an area, as proposed by this Amendment, because he does not know what that area is. He must get a certain amount of information before he begins to draw up a scheme and therefore what is proposed by the Government, and is in the Bill, is that they shall be entitled to enter and require information as to any coal-mining undertaking "specified in the authority." If you limit them to an area, that area may prove after inquiry to be the wrong area, and therefore it shows the necessity of getting the information which we all agreed to on the last clause.
THE EARL OF DUDLEY: I do hope the Commission are not going to be allowed to have these wide powers of walking into anybody's premises and examining their books, like a policeman, in an area to which their commission does not apply. I think it is a most dangerous and most objectionable power to give them, and I hope we shall hear
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a little further from the noble Earl with regard to what they are going to be allowed to do. It seems to me that under this clause they will have a regular roving commission, as long as they get a ticket or commission form. If agreement cannot be reached now, I hope that at a later stage it will be possible to limit them to that area where their powers are exercisable.
THE MARQUESS OF LOTHIAN: May I put a further point? There is nothing under this clause to prevent the information so obtained from being published. As the noble Earl sees, anybody who gets authority can go in and do practically anything he likes, and I think this matter does require more consideration. My own view is that the Commission should be restricted to getting relevant information, on which we are all agreed, otherwise we shall be getting agents, or something in the nature of the Gestapo, with which we are acquainted abroad, introduced into this country without any explanation at all.
EARL STANHOPE: May I satisfy my noble friend on one point? Clause 49 gives ample safeguards against any disclosure of information.
THE EARL OF LINDSAY: This is really one of the most objectionable clauses in the whole of this Bill. It gives a roving commission to go into a person's undertaking, and to go through his books and everything he possesses. It must be borne in mind that a great many colliery undertakings have ancillary businesses. I know colliery concerns that hold hotels and other outside businesses. I think the Government should specify to what extent these persons may probe and inquire into the undertakings.
LORD GAINFORD: I take a very strong view that powers of this kind will be most unsettling to the industry. Suppose an agent suddenly goes to the pithead and says, "I have got authority to examine all your workings. I am also going into your offices to look at your books." We do not know why he is going to do that, we do not know how he is going to interfere. The whole thing is a most monstrous invasion of a company's privacy. Apparently the Commission's agent would have full liberty to do anything that the Commission

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ordered. These roving powers are most objectionable, and I shall most certainly go to a Division.
EARL STANHOPE: This is not a roving commission, as the noble Lord suggests. It is very severely limited under the Bill, and if he thinks that prior warning should he given before an agent goes to inspect premises I am quite prepared to consider it at the next stage. If he will read the clause he will see that it says that:
"Any member…appointed by the Commission, authorised in writing by the Commission to make inquiries on their behalf as to any coal-mining undertaking specified in the authority, may, for the purpose of obtaining information required by them for the discharge of the functions to be performed by them by virtue of this Part of this Act, enter any premises…."
That is definitely for amalgamation purposes and for nothing else. Therefore it is not a roving commission at all. If the noble Lord thinks some further safeguards are required I shall be only too glad to consider them, but the very last thing we want to do is to probe into people's businesses.
THE MARQUESS OF LOTHIAN: Then what is the remedy supposing an individual asks for information which in the opinion of the concern is not really relevant to the question of amalgamation? These are the ordinary elementary liberties of the subject. Can the Commission be cited for asking for information which is not relevant? Is it possible to ask questions in this House or another place? What is the remedy supposing the Commission begins to abuse its powers?
EARL STANHOPE: I was going to say, as soon as we had disposed of this Amendment, that I was prepared to accept the next two Amendments, which do make some difference and affect the matter which the noble Marquess has just referred to. I am quite prepared after the word "may" to insert "so far as is reasonably necessary" and later on, in subsection (2), to leave out the words "the Commission consider" and insert "are reasonably," so that it would read—
"…such valuations of the property and liabilities of the undertaking as are reasonably necessary for the discharge of the functions aforesaid…."
It has only to be proved that it is not reasonable and they would not get the information.
LORD BINGLEY: Personally I dislike the idea of compulsory amalgamations, but surely if we admit that powers are given to the Commission we must allow them to have complete information before they exercise them. Granted that there are penalties for the disclosure of information and that all the information is kept secret, I do not see how we can refuse to let the Commission get all the information necessary.
LORD GAINFORD: Supposing the Commission in certain circumstances were not able to find facts which would justify an amalgamation, and they proceeded to force an amalgamation which was not wanted. If this Bill remains in this form, in order to make out a case they are free to look through all the books and statistics of a great number of firms without any justification whatever. That is the point to which I take the strongest objection. I do not think these amalgamations are necessary. If compulsion has to come we are quite prepared to give the necessary information where it is required, but to seek that information in this kind of way is most objectionable, because they are trying to create a case when they have not got one. If they have a case of course all the information would be given. The noble Earl has kindly agreed to accept the next two Amendments. That will help, but at the same time I do think it is necessary between now and the Report stage for the Government to try to meet the point I have made, so that the unlimited powers conferred by this clause would be restricted to a prima facie case which would justify them in seeking for the information.
VISCOUNT HORNE OF SLAMANNAN: I venture to urge the Government to meet what I regard as a very reasonable request. This power given under this clause is undoubtedly immensely wide; in fact it is unlimited. You do not select a particular area in which you find that conditions are generally favourable to amalgamation and say that the Commission's agents may investigate there what the conditions are, but you select the whole country and you give power to go and make investigations, not where they regard the conditions as superficially reasonable for amalgamation, but in any part of the country where by chance they may discover a reason for amalgamation

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which previously they had never seen. I think that is far too wide a power to give, and I say so for this reason.
There is nothing more disturbing than having the whole of your business raked through, and having your officials put at the disposal of a Commission of this kind. It takes people off their work. I have known it to be said, and said with truth, in past times that a certain number of people in a very important industry were entirely unable to perform the proper functions of their enterprise because they were so constantly being brought up by Government to argue about this question and negotiate about that. These things may be necessary where the conditions are critical, but in the ordinary running of a business it would be intolerable to have people constantly coming to your office and investigating all your books and having your chief officials put at their disposal. Everyone knows that as soon as you set up a staff in a bureaucracy they tend to magnify their functions. They seek to justify their salaries, and they do a great deal more of this interfering business than they would ordinarily do if they had to be paid by results. I do beg the Government to consider this matter and see whether some alteration of the words cannot be made to remove what I regard as a very just complaint.
THE MARQUESS OF LOTHIAN: In a normal case of this kind the Commission may ask for information, and if that is unreasonably withheld then they may have these powers. This provision starts by saying they may send representatives into anybody's business at any time, and that I consider intolerable. Nobody wants to prevent the Commission getting all necessary information to enable them to discharge their functions. What we do want to prevent is their having a roving commission of the nature which would enable them to walk into anyone's office any day and say, "We are going through your books." It is that which causes resentment and seems to be quite unnecessary.
EARL STANHOPE: I should be very glad to consider that point before the next stage. I see the noble Marquess's point, but perhaps it is not quite so serious as he thinks, because this has
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definitely to be where a scheme of amalgamation is being considered. I am only sorry this did not come up after dinner, because after the noble Viscount (Lord Home) had returned to the House last night he was so impressed with the value of the Coal Commission that he was prepared to give it far wider powers than I am.
LORD GAINFORD: In the circumstances I hope the noble Earl the Leader of the House has no objection to limiting these powers. If he can give assent to that I am quite prepared to withdraw, but if he cannot give that I feel I must go to a Division, because the principle of the liberty of the subject is really involved.
EARL STANHOPE: I am prepared to say it requires some alteration, but I cannot guarantee, without consulting my advisers, how far I am prepared to go. As the noble Lord knows, I am not in that particular Department, and therefore I cannot commit it without having some further consultation.
On Question, Amendment negatived.
LORD GAINFORD LORD GAINFORD moved, in subsection (1), after the first "may," to insert "so far as is reasonably necessary." The noble Lord said: I beg to move this Amendment.
Amendment moved—
Page 44, line 25, after ("may") insert ("so far as is reasonably necessary").—(Lord Gainford.)
EARL STANHOPE: I accept this Amendment.
On Question, Amendment agreed to.
LORD GAINFORD LORD GAINFORD moved, in subsection (2), to leave out "the Commission consider" and insert "are reasonably." The noble Lord said: I beg to move.
Amendment moved—
Page 44, line 42, leave out ("the Commission consider") and insert ("are reasonably").—(Lord Gainford.)
On Question, Amendment agreed to.
LORD GAINFORD LORD GAINFORD moved to insert the following new subsection:
"(5) Any question as to whether a request made under this section is reasonably necessary shall be determined by arbitration and unless such question has been so determined

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in favour of the Commission and a reasonable opportunity has been given to the person concerned in the arbitration to comply with the request subsection (4) of this section shall not apply."
The noble Lord said: The purpose of this Amendment is to limit the information that may be required by the Commission to such information as is reasonably necessary and to provide that in the event of disputes the question of reasonableness shall be determinable by arbitration. I beg to move.
Amendment moved—
Page 45, line 31, at end insert the said new subsection.—(Lord Gainford.)
THE LORD CHANCELLOR: I regret the Government cannot accept this Amendment, but I venture to think that when certain Amendments have been made to the clause permitting search and inquiry there will no longer be the same reason behind the noble Lord's Amendment. What occurs to me is this. As the clause stood in the Bill originally, I agree there was nothing about what was "reasonably necessary," and there was therefore this to be said that if the Commission should take the step of seeking certain information on their own motion it would be impossible to resist it without the liability to a penalty, but the clause has already been altered by the Amendments admitted so that it has the effect that it is only if the Commission act reasonably—and what is required is "reasonably necessary"—that they have the power to make these inquiries. There are various words which can be inserted in the clause which will make that clear. I think it is also clear that notice should be given to the undertakers and that they should be told what it is in respect of which information is required. Then—and this is material to the Amendment now before the House—if the Coal Commission should act unreasonably, and require something which they cannot defend as being reasonably necessary, the people to whom a notice is addressed, and from whom they are seeking to get this information, are entitled to pay no attention to it. And if the Coal Commission are then so unwise as to try and exact a penalty, they will be met with scorn by the tribunals of this country, and will be very sorry for themselves. They are most unlikely to do it.
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That being the case, I think there is no need for an arbitration clause, because it will be observed by your Lordships that an arbitration on a matter like this is very undesirable. There would be constantly altering requirements, it might be, by the Coal Commission, and I do not know how many possible arbitrations there would be, whereby the whole thing would be hung up. It would be expensive and there are difficulties of that kind which I venture to think are important. But with the words that it is proposed to introduce and which have been already partly introduced, as I have said, the Coal Commission would be very unwise to attempt to exercise these powers unless they have acted in a strictly reasonable manner.
LORD GAINFORD: After the statement of the noble and learned Lord I will withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 44, as amended, agreed to.
Clause 45 agreed to.
Clause 46 [Amendment and continuance of Part I of 20 and 21, Geo. 5, c. 34]:
EARL STANHOPE: The Amendment down in my name to this clause is purely formal, and is moved as a result of the Expiring Laws Continuance Act, 1937, having been passed. The date has now to be changed. I beg to move.
Amendment moved—
Page 46, line 32, leave out from ("which") to ("shall") in line 35, and insert ("as continued by subsequent enactments, is limited to expire oil the thirty-first day of August, nineteen hundred and thirty-eight").—(Earl Stanhope.)
On Question, Amendment agreed to.
Clause 46, as amended, agreed to.
Clauses 47 to 52 agreed to.
Clause 53:
Reports to Board of Trade.
53. The Commission shall annually, at such date and in such form as the Board of Trade may direct, make to the Board a report as to their proceedings under this Act during the preceding year, and the Board shall lay every such report before Parliament, and the Commission shall also, if at any time they are directed by the Board so to do, make to the Board a report as to any matter relating to their functions specified in the direction.
THE LORD CHAIRMAN: The noble Lord, Lord Hastings, has withdrawn the Amendment to this clause which he had on the Paper and has handed in a manuscript Amendment. It is the same as the one printed on the Paper down to the word "lay" in the fifth line and then it goes on "before Parliament statements showing the total amounts of the certified valuations in each region in respect of principal and subsidiary coal hereditaments respectively, and."
LORD HASTINGS LORD HASTINGS moved, after "The Commission shall," to insert:
"(1) after receiving the certified valuations from the respective Regional Valuation Boards under subsection (6) of Section seven of this Act forthwith transmit the same to the Board of Trade and the Board shall as soon as may be lay before Parliament statements showing the total amounts of the certified valuations in each region in respect of principal and subsidiary coal hereditaments respectively, and
"(2)"
The noble Lord said: The reason for my finding it necessary to alter the form of the Amendment as it appears on the Paper was that it appeared on closer investigation that under the Amendment as drawn individual valuations would have to be laid before Parliament. Of course nothing of that kind was intended. It would be undesirable, it would be cumbersome, it would be purposeless. What was intended was to ensure that the aggregation of valuations of regions should be laid before Parliament, and that is the reason for the manuscript Amendment which the Lord Chairman has notified to the Committee. The clause would now read:
"The Commission shall (1) after receiving the certified valuations from the respective Regional Valuation Boards under subsection (6) of Section seven of this Act forthwith transmit the same to the Board of Trade and the Board shall as soon as may be lay before Parliament statements showing the total amounts of the certified valuations in each region in respect of principal and subsidiary coal hereditaments respectively, and…."
The purpose of this is quite plain. It is to give Parliament an opportunity of knowing what these valuations are.
Everybody will be inquiring at the end of the four years, when the valuations are complete, what the amounts total to, and questions are bound to be asked in Parliament and the information will be bound to be given. It seems to me, therefore,
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better that it should be put actually into the Bill now. It will be a matter of the greatest interest not only to mineral owners, who will then of course have ceased to be mineral owners, but also to the general public and Parliament to know exactly how the valuations when complete compare with the estimation of value which has been put upon them and under which they have been purchased. It is essential really to a proper understanding of the whole matter that these valuations should in due course be made public in aggregation region by region. This is not contentious; there is no great principle involved in this, but I think it would complete the Bill. It would make it statutory to provide under the Bill, this information which of course will have to be provided when asked for in one or other House of Parliament. It would not be possible to conceal it. It would be very improper if it was possible, and normally it would not be possible. I suggest therefore that it is far better it should go into the Bill now, so that in due course these valuations will be laid before both Houses of Parliament, and both Houses will have the opportunity of forming their opinions upon the completion of the Act which is to be put into operation. It will avoid some misunderstanding and a good deal of perhaps rather unpleasant questioning that might arise later on. In every way I think it is desirable and I beg to move.
Amendment moved—
Page 49, line 12, after ("shall") insert the said words.—(Lord Hastings.)
THE EARL OF MUNSTER: This Amendment has the effect which the noble Lord has suggested—namely, to make public the total valuations in each region, both principal and subsidiary. We are of opinion that it is hardly worth while to include them in this Bill. It would, I think, be far better if questions were asked or a Motion was put down in this House seeking the information which the noble Lord desires. I am not at all sure that it is wise to put into a Bill which will last for ever one small point which can be answered in either the House of Commons or in this place.
LORD BALFOUR OF BURLEIGH: I can quite understand that the Government may feel they have very good reasons for not wanting these totals to be made public.
THE EARL OF MUNSTER: The totals will appear if they are asked for. There is no reason to suppose we desire to hide the totals.
LORD BALFOUR OF BURLEIGH: In that case, if the Government do not want to hide them, why not put this into the Bill and allow them to be known?
EARL STANHOPE: For the simple reason that we try to make our Bills as short as we can. I should have thought that this Bill was long enough and complicated enough as it is without putting in unnecessary things. I submit that we do not want to put into an Act of Parliament something that can be ascertained by asking a question across the floor of this House, and I have no doubt this information will be asked for if noble Lords opposite are still members of this House. It seems to me quite unnecessary to put this into the Bill.
Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 53, as amended, agreed to.
Clause 54 agreed to.
THE LORD CHAIRMAN: Your Lordships will remember that last night you
LORD HASTINGS: I do not think that is quite an adequate answer. If the noble Lords on the Bench opposite were not rather anxious as to what the figures would disclose I think they would give way in this matter at once. It does not create a very good impression to use the argument that the Bill would be made longer by these few lines. That is really asking me to swallow rather too much. I very much hope the noble Earl will give way to-day. I would ask him to do so as a gesture. It is quite true that these figures will be extracted in due course. People will want to know. They will ask, and the Government of the day will find it extremely difficult not to give them the information. But it would create a much better impression if the obligation were put into the Bill.
On Question, Whether the proposed words shall be there inserted?
Their Lordships divided: Contents, 42; Not-Contents, 36.

CONTENTS.

Northumberland, D.

Hereford, V.

Gerard, L.

Wellington, D.

Horne of Slamannan, V.

Hastings, L.

Ridley, V.

Lamington, L.

Bathurst, E.

Middleton, L.

Dartmouth, E.

Aberconway, L.

Mowbray, L.

Dudley, E.

Balfour of Burleigh, L.

Palmer, L.

Fitzwilliam, E.

Belper, L.

Phillimore, L.

Grey, E.

Camrose, L.

Redesdale, L.

Lindsay, E.

Cromwell, L.

Saltoun, L.

Lindsey and Abingdon, E.

Darcy (de Knayth), L.

Shute, L. (V. Barrington.)

Liverpool, E.

Dickinson, L.

Stafford, L.

Malmesbury, E.

Elgin, L. (E. Elgin and Kincardine.)

Strickland, L.

Mar and Kellie, E.

Teynham, L.

Fairfax of Cameron, L. [Teller.]

Trent, L.

Bertie of Thame, V. [Teller.]

Wolverton, L.

Exmouth, V.

Gainford, L.

NOT CONTENTS.

Maugham, L. (L. Chancellor.)

Shaftesbury, E.

Fairlie, L. (E. Glasgow.)

Stanhope, E.

Fermanagh, L. (E. Erne.)

Bath, M.

Gage, L. (V. Gage.) [Teller.]

Zetland, M.

Elibank, V.

Hampton, L.

FitzAlan of Derwent, V.

Hare, L. (E. Listowel.)

Baldwin of Bewdley, E.

Halifax, V.

Holden, L.

Birkenhead, E.

Samuel, V.

Luke, L.

Iddesleigh, E.

Marchwood, L.

Lucan, E. [Teller.]

Addington, L.

Marks, L.

Midleton, E.

Arnold, L.

Stanley of Alderley, L. (L. Sheffield.)

Munster, E.

Bingley, L.

Onslow, E.

Clanwilliam, L. (E. Clanwilliam.)

Templemore, L.

Plymouth, E.

Windlesham, L.

Radnor, E.

Clwyd, L.

Woodbridge, L.

agreed to take Clause 12 after Clause 54. I have a mass of manuscript Amendments handed in, and perhaps the noble Earl the Leader of the House will consider the difficulty that there may be in reading them out to your Lordships and making them comprehensible.
EARL STANHOPE: I suggest that we should postpone Clause 12 until the end of the consideration of the Schedules. That will enable the various Amendments to be printed and we can consider them on Monday afternoon. It seems to me to be wise that we should break off now. There is a Royal Commission which is overdue, and I suggest that after that we should adjourn until a quarter past nine, and that then we should go on with the Schedules. I beg to move that the consideration of Clause 12 be postponed until the end of the Schedules.
Moved, That the consideration of Clause 12 be postponed until after the consideration of the Schedules.—(Earl Stanhope.)
On Question, Motion agreed to.
House resumed.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The Royal Assent was given to the following Bills:

Increase of Rent and Mortgage Interest (Restrictions),

Workmen's Compensation (Amendment),

Evidence,

Patents, etc. (International Conventions),

Poor's Allotment in Hanwell Charity Scheme Confirmation,

Forfar Corporation Water Order Confirmation,

Irvine and District Water Board Order Confirmation,

Bournemouth Corporation (Trolley Vehicles) Order Confirmation,

Blackpool Improvement.

House adjourned during pleasure.
House resumed.
[The sitting was suspended at ten minutes before eight o'clock and resumed at a quarter past nine o'clock.]

COAL BILL.
House again in Committee:
[The EARL of ONSLOW in the Chair.]

FIRST SCHEDULE.
Constitution and procedure of the Coal Commission.
1. The Commission shall consist of a chairman and four other members appointed by
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the Board of Trade. The Board of Trade shall nominate one of the members of the Commission other than the chairman to act as deputy chairman.
5. 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 coalmining or supplying or selling coal or the manufacture or sale of by-products of coal or machinery or plant for coal-mining.
6. It shall not be lawful for a member of the Commission white he holds office to acquire, directly or indirectly, for his own benefit any interest or securities in any such undertaking as aforesaid, and if a member of the Commission becomes entitled for his own benefit under any will or succession or otherwise to any interest or securities in any such undertaking he shall sell or dispose of it or them within three months after he has so become entitled thereto.
9. There shall be paid out of the revenues of the Commission—
(a) to the members of the Commission, or to any of them, such salaries and allowances for expenses as the Board of Trade with the approval of the Treasury may determine; and
THE MARQUESS OF LOTHIAN THE MARQUESS OF LOTHIAN moved to add to paragraph 1: "At least two members of the Commission shall be persons who have had executive responsibility in the coal-mining industry." The noble Marquess said: I venture to think that this Amendment is really much more important than it might seem to be at first sight. The Schedule provides for the appointment of a Chairman and four other members who are to constitute the Coal Commission, and under this Bill the Commission have broadly two very important sets of functions. On the one hand, they have to administer the coal industry and revise from time to time the rents, and at the end of leases to make new leases for every coal-mining undertaking in the country. On the other hand, they are entrusted with the duty of considering whether there are an excessive number of undertakings in any area, and of making proposals 1o Parliament for the amalgamation of those concerns, and asking Parliament to give them compulsory powers to bring about such amalgamations. Those are two very important functions, and the latter may mean, as indeed the first may, that in due time the Commission may become the most vital factor for good or evil in the mining industry of the country.
It seems to me it would be quite fatal ii the members of that Commission are of what I may call the ordinary Civil Service type, and that is not because I have not the very highest opinion of the Civil Service of this country. It is one of the greatest advantages which the country has that it has got a magnificent Civil Service. But the men in it are qualified by the conditions of the Service, which is intended to produce certain definite sets of qualities. They have security of tenure and they have great experience, but everybody knows that the Civil Service as such tends to lack the very qualities which are developed by private enterprise. We have a conspicuous example of that in the history of the Post Office. As long as the Post Office was administered as an ordinary Civil Service it was not successful, and the fundamental reason was that its members had security of tenure. Once a person got his foot at the bottom of the ladder and was ordinarily competent you could not get rid of him, whereas, as everybody knows, in a successful business getting rid of people who are not really up to their job, and putting other people in who are up to the job, is of the very essence of success.
It is absolutely vital that the experience of the members of this Commission should be that of people who really understand, and have spent some part of their life in, the practical business of coal mining. If you get that kind of person—of course with complete independence—then there is some chance of the Commission being a success, because the members will understand the problems, they will have sympathy with the managers, the workers and the owners, and they may work successfully. But if you get a body consisting of people who have not got that experience, and who may be looked upon as interfering without really understanding, you may get a serious condition in the coal industry. At any rate you will certainly not get the results which the Government look for from this Commission.
I therefore regard the question of the composition of the Commission as an absolutely vital matter, and in order to secure what seem to me to be the essential qualities which must be represented on it I am moving this Amendment, providing that at least two members of the Commission shall be persons who have had execu-
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tive responsibility in the coal-mining industry; that is to say, people who, when the proposals for amalgamation or leases come forward, will deal with managers or owners of coal mines as men having the same kind of experience of the industry as they have, and in making proposals for amalgamations will understand what amalgamations mean. Perhaps the Government already intend to do these things, but I am not sure that intentions are always the same thing as execution in dealing with public matters, and I have moved this Amendment in order to make certain that the Coal Commission do have that kind of experience.
Amendment moved—
Page 50, line 8, at end insert the said words.—(The Marquess of Lothian.)
LORD HASTINGS: I wish to support my noble friend in this matter. The Civil Service have the admirable qualities to which my noble friend has referred, but they do live a circumscribed and, if I may say so without offence, a hide-bound life which places them out of touch with the daily life of the people. To exclude a member of the Civil Service from this particular Commission would react to the advantage of the industry and to the proper conduct of the purposes for which this Bill is produced before Parliament. It is really essential to have persons who are in contact with the daily life of the people and who are familiar with the problems of industry, and not a member of the Civil Service who, through no fault of his own, has in early life entered a Service which takes him out of daily touch with the people which alone enables him to understand the problems which this Bill must present. It is for that reason that I beg to support my noble friend.
EARL STANHOPE: Frankly I have no idea who the gentlemen are whom my honourable and gallant friend has got in his mind, if he has anybody in his mind, as regards the members of the Coal Commission; but if my noble friend will consider what generally happens in this country he may change his mind on the subject. I do not pretend that this Government is a Government of experts in every particular. I cannot pretend, and I do not suppose most of my colleagues can pretend, that we are experts in the actual subjects which we have to administer in

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our respective Departments. There is one great exception in the shape of my noble and learned friend the Lord Chancellor, who is an expert in his particular subject, but the remainder of us are chosen for other reasons. Similarly, very often in regard to public companies or even private companies—for instance, take my noble friend Lord Home. I do not suppose he would set up as being a great expert on railway matters; but nobody would say he is not obviously a thoroughly suitable person to be head of a great railway company.
Why should a different system prevail in regard to the Coal Commission, particularly if you look at the second paragraph, which lays down that no one shall be a member for less than five years or for more than ten years? What follows from that? It means that if you take an expert from the coal industry, unless you take him at an age when he is going into retirement, which is in most cases undesirable, he is going to go back into the coal industry. Is it a wise thing that a man who works in one particular area, and with a certain section of the people in the coal industry, should be put as one of the five people in charge of the whole management of this great industry? Is it not better to get someone with general knowledge and fine capacity in other ways who relies on the expert evidence and expert guidance of his advisers, not civil servants in this case, but the equivalent of civil servants, except that they can be discharged if they are found not to be suitable; one who will rely on that evidence and guidance and bring an independent judgment to bear upon the problems presented to him? I suggest to my noble friend that he may find that under his proposal he is getting someone who perhaps does not come with an independent mind to the matter, but comes with an expert mind, rather inclined not to trust his advisers; one who thinks his opinion is right and who is rather allied to the people in one region rather than to the country as a whole. As directors of companies are not experts, but rely on experts to advise them, similarly the members of the Coal Commission should do the same thing in this case.
THE MARQUESS OF LOTHIAN: I am sorry I do not understand the argument the noble Earl has used at all. The com-
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parisons which he has made are, I think, completely irrelevant. I am not suggesting what the noble Earl says. I did not suggest that the head of a great Department of State should be an expert or that it was desirable that there should be an expert at the head of the Coal Commission. In the first place, except in the case of one or two, the Departments of State do not administer great services, and in the case of the great Services the Army Council consists of expert soldiers and the Board of Admiralty consists of Admirals. The Directors of the London Transport Board consist largely of people who have built up the London Transport. I am not suggesting for a moment that the Chairman or all the members of the Coal Commission should be experts. What I am suggesting is that it is essential that on this Commission you should have an effective representation of people who have real experience of the industry itself. If there is a difficulty in finding such persons because they have to retire after ten years, I would eliminate the ten years and let them serve for fifteen or twenty years. If you have a first-class man, why should we limit his period of service? All I am contending for is to secure that this Commission should have on its membership men who really do understand the inner workings and the life of the great industry over which they are to have an enormous influence.
EARL STANHOPE: They are really equivalent to a small board of five directors. Of course they have the whole of their expert advisers below them to advise.
THE EARL OF CRAWFORD: I think that the analogy of the Ministers of the Crown was not only irrelevant but really almost improper. We can very easily get rid of a Minister of the Crown, but I was very much surprised at the remark made by the noble Earl, Lord Stanhope, that these members must retire within five or ten years. I should like to ask the Lord Chancellor if that is the correct reading of the first few lines of page 51.
EARL STANHOPE: I think they can be reappointed.
THE EARL OF CRAWFORD: That is very important. Lord Stanhope indicated that these men were going to be retired after five or ten years. There is nothing in the first few lines of paragraph 2 to

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say that unless the term is a term which can be repeated they shall retire. It is important, and I think makes all the more necessary what Lord Lothian has suggested should be done—namely, that there should be one or more experts appointed qua experts. I cannot help thinking that read in connection wtih paragraphs 5 and 6 the reluctance of the Government to allow an expert to be put on to this Board is notable. Paragraphs 5 and 6, which later on I propose with the leave of your Lordships to try to omit, set out a number of limitations upon the qualifications of these gentleman. They have to sell out their possessions in certain types of industry in order to avoid all risks of corruption. I will move to omit the words. I think they are quite derogatory to the dignity and probity of the men to be appointed on this Commission. Meanwhile, I really do not see that Lord Stanhope has answered the case. It seems to me that a very simple, very straightforward and very convincing case was put forward by Lord Lothian.
THE EARL OF RADNOR: The noble Earl, Lord Stanhope, has in my opinion quite rightly likened this Coal Commission to a board of directors. So far as my limited experience goes—and I know many others in your Lordships' House have greater experience—two expert directors on a board of directors are most valuable, and probably the most valuable are those who are ex-officials who have been concerned in the business. It is most desirable in a case like this, which quite obviously is a most complicated business, that there should be expert directors on the Coal Commission.
LORD WOLVERTON: I should also like to support the Amendment. From my very limited experience I think it is absolutely vital to have two people with expert knowledge on a Board of this sort. I think on the Electricity Board there are two or more expert members as well as those with knowledge of finance.
LORD PHILLIMORE: I cannot help feeling grateful to the noble Marquess for endorsing the thesis which I put forward on Second Reading. The truth of this matter is that you are removing from the coal industry by this Bill one of the most valuable component parts that go to make up that industry. That is the essential mistake of the Bill. By eliminating the private landowner, who has skilled
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technical advisers, you have left a weakness which has got to be filled in, and the noble Marquess has provided one of the means by which that weakness can possibly be mitigated, although I should not agree that the mere appointment of two technical members of this Commission would be one quarter as effective as the present participation of the private landowners in this industry. I very much hope that he will develop his thesis and if necessary go to a Division.
THE LORD CHANCELLOR: May I say one word, because I think there is a little misapprehension about the position. The difficulty is not that the Government do not want to have two persons with technical knowledge, or more persons with technical knowledge, on the Commission. The difficulty is simply that if the Amendment is passed as it stands there is a possibility that at once, or from time to time, it may not be possible to get two completely suitable people who have had executive responsibility in the coal-mining industry. There is some difficulty in my mind as to what is meant by executive responsibility. The noble Lord who has just spoken has pointed out that very often coalowners are admirable people to assist in such work as that which will fall upon the Coal Commission. Those are not people who have had executive responsibility.
It is quite easy to agree that the Commission shall as far as possible include among its members not less than two persons—now I am venturing to suggest an alteration—with executive responsibility or other intimate acquaintance with the working of the coal-mining industry. If you put that in it can always be done, but if you leave it as it is it may force upon the people who have to appoint the Commission—and I rather think I am at the moment one of the people who have got to consider the matter—the appointment of two people who are not wholly as good as other people you could get, who have not the quality of being persons who have had executive responsibility. Something of the sort might be done, and I think it would carry out all the real objects of the noble Marquess, because I think the words "executive responsibility" are going to hamper very much the person who has to make this appointment.
LORD HASTINGS: Might I ask the Lord Chancellor a question which is really very interesting? Would the alteration which he suggests exclude the possibility of appointing two civil servants from the Ministry of Mines?
THE LORD CHANCELLOR: I have suggested words which I certainly think would exclude them. Whether they are effective or not I will not pledge myself at the moment, but they are intended to exclude them. I want two experts. If that is all that is wanted, I would not exclude for a moment some of the people who are coalowners and who, as I know, are experts, although they are not technical people with executive responsibility. They are people who really have an intimate knowledge of the coal industry. Two people of that kind can always be found for the members of the Commission.
LORD GAINFORD: I am aware that there is an enormous number of men who have had executive duties in connection with coal-mining but after a certain number of years underground have retired and are ready to be consulted, as they often are, by colliery firms in connection with underground and mining operations. I do not think, from my knowledge of the coal industry, that there would be any difficulty whatever in finding men, other than civil servants, who have had executive responsibility directly in the management of underground operations, know all about mining and are certificated mining engineers, who are no longer employed definitely except for purposes of being brought into consultation in connection with difficulties which occur in the collieries of this country. But so long as the words which the Government have suggested in place of those of my noble friend the Marquess of Lothian really mean that they are not to be reckoned as men of experience merely because they have been in the Civil Service, but that men who have had actual experience in connection with mining are to be appointed, I am satisfied.
THE MARQUESS OF LOTHIAN: I am very glad to accept the proposal of the noble and learned Lord. If he will introduce words of that kind to be considered at the Report stage, they seem to me all right. I think the purpose on which we are agreed is quite clear: that
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you do not want this Coal Commission to be an alien and foreign body; it must be something that is integrated with the real life of the industry, otherwise you will get into trouble. On that understanding I beg leave to withdraw.
THE EARL OF DUDLEY: Does the wording of paragraphs 1 to 7 make it quite clear that members of the female sex are excluded from this Commission? There seem to be very few Government Commissions so far into which they have not found their way.
THE LORD CHANCELLOR: I am not certain whether the noble Earl desires to include or exclude them.
THE EARL OF DUDLEY: I want to make quite sure that the wording of this Schedule definitely excludes them. The word "he" is used, and I hope that that is sufficient to exclude women.
LORD BALFOUR OF BURLEIGH: I should like to say that, if a member of the female sex is qualified, I do not see why she should not be appointed.
Amendment, by leave, withdrawn.
THE LORD CHAIRMAN: I have here a manuscript Amendment of the noble Earl, Lord Crawford: Page 50, line 26, leave out paragraphs 5 and 6.
THE EARL OF CRAWFORD THE EARL OF CRAWFORD moved to leave out paragraphs 5 and 6. The noble Earl said: These paragraphs say that the members of the Commission, soon after appointment, have to sell any interests they possess
"in any undertaking carrying on the business of coal-mining or supplying or selling coal or the manufacture or sale of by-products of coal or machinery or plant for coal-mining."
Those are very wide words. They prevent a man having investments in practically any iron and steel business, any business that makes machinery or electrical equipment, or rails, or wagons, or wires, or which sells pit props or ropes or bricks, and above all the by-products of coal, which of course include gas and electricity. Is it really necessary or desirable, in appointing these five gentlemen, to assume as definitely as this that they are going to be subject to jobbery and corruption, that they will be influenced in the granting or withholding of leases by their share-holdings in one or other of one hundred or possibly two hundred sidelines of industry in plant and equipment? That is what these two paragraphs do.
Certainly it is very inelegant, but is it necessary to suppose that these gentlemen are going to be subject to corruption or jobbery of this kind, or are going to give leases or withhold leases in order to further the business of a company which makes bricks and suchlike? I think it is very unfortunate if this sort of restriction has got to be imposed. I may just add this, that if you are dealing with men who are so liable to dishonesty as paragraphs 5 and 6 assume, they are not going to be deterred by having to sell their shares in a brickworks or gas company. Their methods of corruption would be far more subtle, and therefore far more dangerous. If they are dishonest they are not going to be deterred by not being able to hold their shares in a railway company. I therefore move that these paragraphs be left out, in order to find out if they are necessary, because I think they are throwing a needless slur and doubt upon men who will doubtless be the soul of honour.
Amendment moved—
Page 50, line 26, leave out paragraphs 5 and 6.—(The Earl of Crawford.)
VISCOUNT BERTIE OF THAME: I look upon this as a protection, because, human nature being what it is, if they give certain votes people will charge them with being influenced.
THE EARL OF RADNOR: There is another aspect of the question. To come back to the simile of the Leader of the House, this is a board of directors, and if you become a director you have to take qualifying shares in nearly every case.
VISCOUNT ELIBANK: I would like to support the noble Earl's Amendment. Presumably the Coal Commission are going to be a body of gentlemen upon whom we can rely to give us the best service. If we are going to ask the gentlemen who are going to sit on this Commission to get rid of all their holdings, or a great part of their holdings, we are going to get an entirely different class of man to sit on the Coal Commission. In the past we have always found, in this country at least, that the gentlemen who serve on Commissions of this sort have been, as the noble Earl has said, the soul of honour. We found that both during the War and in peace time. I suggest
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that these paragraphs will have a deterrent effect and prevent the employment on the Coal Commission of gentlemen who could render the best service.
THE EARL OF MUNSTER: These two paragraphs were put into the Schedule for one purpose only—namely, to secure the independence of the members of the Commission, and in the short time which has been available since this manuscript Amendment was handed in I have ascertained that they are the usual and general provisions which are inserted in connection with members of such bodies as this Commission. I am told that in the London Passenger Transport Act and the London Electricity Act these identical paragraphs are inserted.
VISCOUNT ELIBANK: The London Passenger Transport Board has in its membership gentlemen who do serve in other companies.
THE EARL OF MUNSTER: That does not alter the argument at all, and I am told that there are many more Acts of Parliament where exactly the same provisions are inserted.
THE EARL OF CRAWFORD: If that is the case I will accept it, but I am bound to say I should be a little surprised if I heard that Lord Ashfield is not permitted to hold shares in a brick-making company.
THE MARQUESS OF LONDONDERRY: I think this is a more important question than the noble Earl suggests. If the members of this Commission have to be individuals who really have no connection with any important commercial undertaking, you may have to go very far in order to find some individuals who are entirely unconnected with those undertakings which supply the coal trade. I believe we shall have to fall back on derelict Cabinet Ministers. It seems to me they will be the only individuals in the country who have no connection with any useful undertaking.
THE MARQUESS OF LOTHIAN: I think the intention of this paragraph is perfectly all right, but I think a little consideration ought to be given to it. What is clearly intended is that these gentlemen should have no connection with a coalmining concern; but to say that they must have no interest in any derivative of the coal industry is really almost absurd.
THE EARL OF MUNSTER: If it would satisfy the House we should be prepared to omit the words in lines 30 and 31 "or the manufacture or sale of by-products of coal or machinery or plant for coal-mining."
THE EARL OF CRAWFORD: I suppose my noble friend can put that down on the Report stage. I beg leave to withdraw.
Amendment, by leave, withdrawn.
THE EARL OF MUNSTER: Will the noble Earl move it in that way?
THE LORD CHAIRMAN: The noble Earl moves this as a manuscript Amendment—in paragraph 5 of the First Schedule, omit all words after "coal" in line 30.
THE EARL OF MUNSTER: I beg to move.
Amendment moved—
Page 50, line 30, leave out ("or the manufacture or sale of by-products of coal or machinery or plant for coal-mining").—(The Earl of Munster.)
THE EARL OF CRAWFORD: That will allow him to grow pit props if he likes!
THE EARL OF DUDLEY: I am not at all sure I can assent to this Amendment. It seems to me that it is giving a definite advantage to those who go in for low temperature carbonisation and other methods of manufacture. He can boost them as much as he likes, and help them as a shareholder in every possible way, to the detriment of ordinary coal-mining. I do think it ought to include "the manufacture of the by-products of coal." Would the noble Lord agree to the inclusion of these words?
THE EARL OF MUNSTER: If it would suit the convenience of the House I shall withdraw this Amendment and bring the matter up again, in some other words, on the Report stage.
Amendment, by leave, withdrawn.
VISCOUNT RIDLEY VISCOUNT RIDLEY moved, after paragraph 7, to insert the following new paragraph:
"8. The Commission shall by order, approved by the Board of Trade appoint one or more Regional Commissioners in each valuation region with the power and duty of carrying out in that region such administrative functions of the Commission under this Act as are specified in the order."
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The noble Viscount said: This Amendment is moved in much the same spirit as the one moved earlier this evening by the noble Marquess, Lord Lothian. The idea underlying it is to make the Commission more effective in its dealings with the coal trade. I do not know whether, in fact, I have put this Amendment down in the right part of the Bill. It might have been better in some other place, but, as this Schedule seems to describe the arrangements of the Commission, it may well find a place here. This Amendment is not in the interests of any particular section of the coal trade, but it is an attempt to ensure that the Commission will keep more in touch with coal-mining in the districts, more in touch with the people responsible for carrying on the work. It is, I believe, very important that a body such as this should decentralise as much as possible.
It may sound a little contradictory, in a Bill which has as its object the unification of royalties, to suggest anything that might appear to split up the body responsible for the management, but that is not the real intention. There is no suggestion that the ownership should be subdivided or that the management in matters of policy or principle should be affected in any way. It is simply a proposal that in matters of detail the Commission should work in and through the-districts where that work has to be done. The small day-to-day and week-to-week items should not have to be referred to the Commission in London if a decision has to be taken. I feel strongly on this point of centralisation. Your Lordships will be aware of many other examples connected with Government Departments, and the administration of local government where endless time is wasted through having to wait for decisions to be taken by the Department in London. There is a feeling in many walks of life in the country that too little attention is paid to local opinion, and the fact that that feeling exists is a bad and unhealthy sign.
This is a very important thing indeed. I could quote endless examples in other spheres of activity. Your Lordships will be familiar with many questions of local government which have to be decided subject to the approval of the Minister or the Department, not only questions of broad policies, but questions of detail in many cases. I would suggest that one-of the advantages of the present system

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is that in most cases those who direct the industry at least live in the district where the coal is mined. Their agents live there, and they are in intimate touch with the district and with the people who are conducting the trade. If any question of a decision has to be taken about the alteration of a boundary or about the method of working and so on, it is comparatively easy to get the mineral agent of the owner to consult with the owner. Perhaps ninety-nine times out of a hundred he is on the spot. I have put this Amendment down for the purpose of avoiding the delay and the awkwardness of having to wait while the application on behalf of the coal company has to go up and be considered, possibly not by the Commissioners themselves but, it may be, by the secretary or the general manager who are concerned with the administrative machinery.
I have not attempted in the Amendment to specify what functions should be delegated to the Regional Commissioners. I suppose in a Schedule of this sort it would be impossible to do so. I think your Lordships will appreciate the sort of thing I have in mind. The general tendency in most firms at the present time in regard to administration is towards over-centralisation, and this Bill is another example of that. I think a provision such as I have indicated would be of great importance. I beg to move.
Amendment moved—
Page 51, line 8, at end insert the said new paragraph.—(Viscount Ridley.)
VISCOUNT ELIBANK: As one who has had a certain amount of experience in this sort of administration in this country I should like to support my noble friend's Amendment. I cast my mind back to the pensions' administration which was set up during the War. I am referring particularly to pensions for Service men who had been discharged or were disabled and so on. One of the first Committees set up after the War by the House of Commons of which I had the honour to be a member was a Committee to decentralise the pensions administration in order to set up regional areas. It was found that under the original procedure there was a great deal of delay, as my noble friend has said, in administration, and there was a great deal of dissatisfaction owing to that delay, so that generally speaking, the Government were forced to decentralise that administration.
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During the War, so far as food control was concerned, the Government found it necessary to do that from the very commencement. After all, questions of pensions were to some extent matters that could afford a certain amount of delay; but when we come to the question of coal and coal prices and matters affecting the coal industry itself, these are matters that have to be settled with the greatest amount of celerity possible. If these questions are to be referred to London for settlement I can conceive that the administrative machinery of the Coal Commission will suffer many disabilities, and will be liable not only to break down in certain respects but to be the cause of very great embarrassment, not only to those in the coal industry but to the Government themselves. I hope sincerely that the Government will consider this Amendment which has been moved by my noble friend, because I feel sure that if they are able to accept it in some form or other it will save them from a very great deal of difficulty and trouble in the future.
THE LORD CHANCELLOR: In the opinion of the Government this Amendment is really quite unnecessary. This is not a case where there is a pension fund being established and administered or anything of that sort. This is a case where a Coal Commission, which everybody is going to respect, the members of which your Lordships have already decided are so high in character that it is unnecessary to leave paragraphs 5 and 6 in the Schedule, because it would be an insult to them, is going to do its best in the interests of the industry. The main duty of this Commission will be to grant leases. There are no doubt some incidental things, such as answering tenants on various subjects and giving consent to various things, but the main thing is the granting of leases. As regards that it must be done by the Commissioners as a whole, and it is for that reason that there is a quorum established for them, that they are to have a secretary, officers, agents and servants and a seal, and that they are to act as if they were in substance a corporate body.
It is true there will be some work to be done in regions some distance from London. They already have the power to appoint any agent—whether you call him a Commissioner or not does not matter—in any district to perform any of the more

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or less clerical duties and things of that sort that have got to be done in that part of the country. Anything important that comes before such an agent will be submitted by him to the Commission who will act in accordance with the provisions of the First Schedule and a proper quorum will decide. It is most dangerous, I would submit, to suggest that an individual can do anything but something of a Ministerial character. The right course is to leave it to this body of high-minded people who are interested only to do their best. You must leave it to them to decide what duties they would confer from time to time on a local agent. I would suggest that with that explanation the noble Viscount might be content to withdraw the Amendment.
VISCOUNT RIDLEY: I understand that the Commission will be capable of giving executive authority to agents in the district. My only comment is that in similar circumstances I observe that has not happened. I will not press my Amendment.
Amendment, by leave, withdrawn.
THE EARL OF CRAWFORD: Before we pass from this First Schedule I would like to make an observation about the Amendment I moved just now. The noble Earl, Lord Munster, said this was exactly what appears in the Act establishing the London Passenger Transport Board.
THE EARL OF MUNSTER: I did not. I said it was similar to that Act.
THE EARL OF CRAWFORD: The noble Earl, Lord Munster, mentioned the London Passenger Transport Board, which prompted me to observe that I learned with astonishment that the noble Lord, Lord Ashfield, is not allowed to possess any shares in a brick-making company. Here are the terms of the relevant clause—that a member of the Board shall within six months sell his interests in any company which is carrying on any passenger transport undertaking in the London Passenger Transport area. That is entirely different from the ridiculous provision which appears in paragraphs 5 and 6 of this Schedule.
First Schedule agreed to.
Second Schedule:

SECOND SCHEDULE.
PROVISIONS FOR DEFINING PROPERTY AND RIGHTS WITH WHICH, AND MATTERS SUBJECT TO WHICH, COAL IS TO BE ACQUIRED.

PART I.
General.
(4) In a case in which any of the conveying parties might, after the conveyance, be subject to any personal liability in respect of a restrictive covenant that adversely affects the coal or mine, the conveyance shall be deemed to contain a covenant entered into by the Commission with that party with the object and intent of affording to him and his successors in title a full and sufficient indemnity, but not further or otherwise, that the Commission will at all times after the vesting date duly perform and observe that restrictive covenant in relation to the coal or mine and will at all times keep that party and his successors in title effectually indemnified against all actions, proceedings, costs, charges, claims, and demands whatsoever in respect of that restrictive covenant.

PART II.
Vesting of rights to withdraw support.
6.—(1) In a case in which the fee simple in the coal or mine and the fee simple in land supported thereby was vested on the valuation date in the same person and no coal-mining lease of that coal or mine was then subsisting, there shall vest in the Commission with the coal or mine, such a right as is hereinafter mentioned, to the extent to which the existing owners of the coal or mine were competent on the valuation date to grant such a right by virtue of their interests in that land, that is to say, a right to withdraw support from that land so far as may be reasonably requisite for the working of any coal, subject to an obligation to make good, or to pay proper compensation for,—

(a) damage arising from such working to that land, exclusive of buildings or works thereon; and

(b) subject as hereinafter provided, damage arising from such working to buildings or works thereon.

(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, and, in the case of buildings or works whose construction is begun after the date of the first publication of the notice, the obligation to make good or to pay compensation referred to in the preceding sub-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 buildings or works to minimise damage in the event of subsidence.
LORD DARCY (DE KNAYTH)LORD DARCY (DE KNAYTH) moved, in sub-paragraph (4) of paragraph 2, to leave out "a restrictive" and insert "any." The noble Lord said: I have only seen this Amendment this afternoon for the first time and I am afraid the Lord Chancellor will probably tell me that there is very little in it, that it is all wrong and things of that sort. I rather imagine he will be right. But please do not think that I am unnecessarily taking up the time of the Committee, because there is a difficulty here and we want his assistance to enable us to deal with it. Under the Schedule any of the conveying parties to the imaginary conveyance that we have previously discussed, who might be subject to any personal liability on a restrictive covenant that adversely affects the coal or mine, have to be indemnified against the consequences of that covenant being broken. The difficulty we are up against here is that, although everyone knows quite well what a restrictive covenant is, not everybody has drawn his covenant to comply exactly with the term "restrictive covenant." We feel that where we have a covenant that is in substance a restrictive covenant, where the Commission could commit an act or refrain from committing an act, and they do intentionally commit an act, they ought to stand the racket if anybody is to stand the racket at all.
I have two examples that have been handed to me. One is that of a colliery company that was in negotiation with a royalty owner for a lease of certain coal and, in anticipation of the grant of a lease, drove certain headings into the coal. The negotiations were abandoned by mutual consent and it was agreed that it was necessary to leave a barrier round the heading. The colliery company paid to the royalty owner the royalty value of the coal left unworked and the royalty owner agreed that if at any future time he worked the coal, or the coal left unworked should be worked by a lease or a licence granted by the royalty owner, colliery A should have an allowance in respect of the payment that it had made. If they had only said that that coal should not be worked, all would have been well, but they said it should be worked on certain terms. Now if the Commission proceed to do it the wretched royalty owner would find himself liable in an action.
THE LORD CHANCELLOR: Indeed he will not. With all respect to the noble Lord it is not so. He has read out that it is only if the royalty owner or his licensee worked that coal, he is to make an allowance. That is not going to be the case here.
LORD DARCY (DE KNAYTH): I have been instructed by a very eminent firm of solicitors and I quite agree that this is rather a brief account that I read out. I should have thought it might have occurred to the Lord Chancellor that it would be almost inconceivable in such a case as that that the owner would have covenanted otherwise than with heirs, executors and assigns.
THE LORD CHANCELLOR: But his heirs, executors and assigns are not going to do it.
LORD DARCY (DE KNAYTH): I should have thought that the Coal Commission would have been assigns. I thought that was the purpose of the Bill. There was another case where the owners of unlet coal covenanted with each other that in certain events, which had happened, neither of them, nor their respective successors in title, would let his coal without first offering to concur with the other in making mutual arrangements for joint working or a joint lease. I do not think that is a particularly good case, but it does illustrate principles. It is not a case where I think any damages would be given, but we are interested here in the class of covenant, not in the fact that it is not going to cause any damage. An eminent counsel, who I think is the counsel mentioned in the discussion which we had a short time ago, has advised that this covenant did not create any interest in the coal in favour of the owner, but the owner is under personal liability to pay damages if the covenant is not performed. I am not asking the noble and learned Lord to give us an Amendment here and now, but I hope he will give us some assistance. I want to submit that where a covenant which adversely affects the coal, and is really of a negative character—that some act shall not be done, or only upon terms—it affects the value of coal as between a willing buyer and a willing seller. I submit that this is a matter that can be dealt with in this Bill.
Amendment moved—
Page 53, line 3, leave out ("a restrictive") and insert ("any").—(Lord Darcy (de Knayth).)
THE LORD CHANCELLOR: I will try to be brief. In the other place this question was raised by a very learned counsel, who in the first instance wished to have a general covenant, or rather an indemnity against any sort of covenant which affected the coal, and it was the subject of discussion among lawyers in the House. It was pointed out to him that he could not suggest any covenant other than a restrictive covenant which adversely affected the coal, which could impose any liability on the owner after this Bill had resulted in an Act and the property had passed to the Commissioners. It was said that if any such covenant could be suggested the Government would see that something was done to protect the person who might have been liable under such covenant, and I have already said privately to the noble Lord that if he can now suggest any such covenant, other than a restrictive covenant, against which the owner of the coal, one of the conveying parties, requires an indemnity, it shall be considered, but my strong belief is that no such covenant can be suggested. My view is rather confirmed by this, that he has given us two examples which have been put before him, and in neither of them is the owner of the coal left under any liability whatever. Accordingly I see no reason for putting in anything which will only occasion trouble, and I shall ask the noble and learned Lord to withdraw his Amendment.
LORD DARCY (DE KNAYTH): I think that my effort at prophecy when I introduced this Amendment has been carried out reasonably well, but I wish to thank the noble and learned Lord for replying in the very courteous way he has, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD HASTINGS LORD HASTINGS moved, in paragraph 6, to leave out all words after "subject to an obligation to" in subparagraph (1) to the end of sub-paragraph (2) and insert "pay reasonable compensation for damage due to letting down the surface of the land and buildings and works thereon. Any dispute as to the fact of such damage or the amount of such compensation shall, failing agree-
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ment, be determined by arbitration." The noble Lord said: In this Amendment we have reached a subject in which, the principle of transfer having once been, we will not say agreed, but no longer disputed, this particular point is perhaps not only of the chiefest interest to mineral owners now, but a perennial and continuing interest to surface owners in the future. The proposals contained in the Bill as drawn had better be dealt with for the moment on their merits. This particular part of the Second Schedule deals with the transfer of such rights as are now possessed by the owner of surface and minerals to the Coal Commission, and inasmuch as the surface owner who is also the owner of the minerals is in a position to safeguard his surface rights in his lease, so does the Coal Commission desire to obtain the same powers that the surface owner now possesses.
If that were all we might almost leave it at that, but it is by no means all. In this Schedule there are contained certain words, which, although not unfamiliar in certain mineral areas of Great Britain, are extremely unfamiliar in others. There are the words inserted before "pay compensation," "make good or." There is a vast deal of good between making good and paying compensation, and whereas making good is permitted in certain leases, in the majority of leases it is not permitted other than by the consent of the lessor, which makes the entire difference. It is not to be supposed that a lessor and a lessee are in constant variance in the matter of making good damage which has been necessarily inadvertently caused. There are innumerable cases where the lessee does make good and does pay compensation, but it is always with the consent of the lessor, who has the right to insist upon the payment of compensation.
LORD STRABOLGI: "Proper compensation."
LORD HASTINGS: Yes by all means, proper compensation. It is the words "to make good" that I am concerned with. It means that the lessee under the Coal Commission will have the right either to make good or to pay proper compensation, whichever suits him—not the surface owner—best. That is a very serious interference with existing surface rights. But it is as nothing to that which

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follows. There is a provision contained as the Schedule proceeds that unless the surface owner has complied with certain conditions in respect of the development of his surface he will not be entitled to compensation for damage in respect of that development. It is really hardly possible to exaggerate the effect that this must have upon the property and the potentialities of development of the surface owner after he has parted compulsorily with his minerals.
On the occasion on which I ventured to initiate a debate on Part I of the Bill, only last Thursday, I ventilated this subject at some length, but here we are now in Committee getting down to details, and this is the proper moment for dealing with it in detail. It is here proposed to impose upon the owner of the surface whose minerals will have been taken away from him an obligation which does not lie upon him. His lessee is under covenant to pay compensation for damage done upon the surface, and he, as I have said before and repeat, endeavours to have the best of both worlds and to arrange that the surface is not developed in such a manner as will depreciate the value of the minerals beneath his own surface, so that he may extract these minerals through the medium of his colliery tenant and later develop the surface. After the coal has been taken away from the surface owner, his interest no longer lies in coal; his interest will lie exclusively in the deveopment of the surface.
To impose upon him an obligation in rsepect of that development to which he is not now liable is to place upon him a financial liability which may be exceedingly serious. It will at least hinder him in his development, hinder him in any effort he may make to recoup himself for the losses which this Bill inevitably inflicts upon him, and it will incidentally make it difficult also for those whose interest in coal never was great, but who desire to occupy the surface and have had that surface withheld from them because the owner of that surface has desired not to hinder his colliery tenant.
THE LORD CHANCELLOR: I am loath to interrupt the noble Lord even for one moment, but I thought he was aware, and certainly a message was sent
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to him from which he would be aware, that on this point on which he is dilating with such eloquence the Government are prepared to make a full concession.
LORD HASTINGS: The noble and learned Lord has pleased me more than I am able to say, but no message was brought to me to that effect. It was hinted to me that the Government might be prepared to give a concession in this matter. If I had known, I should have spared the time of the Committee and my own voice. If the noble and learned Lord is prepared to give way I shall most gladly sit down and welcome what he has to say.
Amendment moved—
Page 54, line 11, leave out from the first ("to") to end of line 27 and insert the said new words.—(Lord Hastings.)
THE LORD CHANCELLOR: There are two questions which arise here, and I do not propose as at present advised to deal with them quite in the same way. The first point is whether it is wrong to give a working colliery owner an option to make good or to pay proper compensation. Your Lordships will observe that this is a matter which does not in any way affect the Commission. This is a matter for the ordinary people who are going to work the coal of this country throughout the land. My information, and I would add my experience, with regard to colliery leases is that it is the commonest possible practice to give the lessee who is letting down some surface an option as to whether he shall make good or pay proper compensation. I did not want to interrupt the noble Lord, but I thought he had finished what he wanted to say on that point.
With regard to that, as at present advised the Government do not make a concession, but with regard to the other point which he was dealing with when I am afraid I interrupted him but without any intention of being discourteous, the Government are prepared to omit the various provisions contained substantially in subparagraph (2) of paragraph 6, under which there is a qualification with regard to the nature of the construction and the nature of the building. With respect to that we propose to say that we do not insist on it. It is true we run a certain risk there, or rather the lessee will run a certain risk, for the reason that it has

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been hinted there are sometimes buildings put up, when subsidence is approaching, which it is known are going to tumble down; but it is for the lessees to say whether they wish to insist upon the clause as it is—that is to say, the people who are going to work the coal. The House must determine the matter as it thinks fit, but so far as the Government are concerned we are prepared to omit sub-paragraph (2) which will entail, a little alteration of (a) and (b) in subparagraph (1), lines 12 to 15. That is only verbal.
Now having omitted that, there remains only the question of making good or paying proper compensation. With regard to that I should like to remind the noble Lord, and to appeal to some of the noble Lords who have actual experience of this matter, that there are quite a number of large colliery companies who keep a staff accustomed to make good minor damage when it takes place on the surface, who do it with extraordinary expedition to the complete content of the people on the surface who have suffered some minor damage, it may be, to a shed or to the ceiling of a room or something of that sort. I am told there are cases when the damage, such as it is, resulting from long-wall working, is made good within twenty-four hours after it is done. I should suggest to your Lordships that it would be extremely unwise to impose upon the tenants who are going to work the coal in this country an obligation in every case to have a quarrel prima facie, unless the person on the surface is a very high-minded person, as to the precise sum which is involved in putting right a fence or making some minor repair to some farm buildings or even to cottage buildings. Far better, if the working colliery company is in a position to do it, that they should send in their own men and make the thing as good as new straightaway. That, as I submit and according to my instructions, is so common a provision that it cannot be suggested there is anything unreasonable in it. On that point, therefore, I propose to ask your Lordships not to accept the Amendment of the noble Lord. On the other point I am fully accepting what he wants, subject to alterations in sub-paragraph (1) between lines 12 and 15.
LORD HASTINGS: If I might be permitted to deal first with the lesser point
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of making good, the noble and learned Lord Chancellor states with perfect truth what is the custom in the great majority of colliery districts of Great Britain. It is no less than the truth to say that in the vast majority of cases the colliery staff does in fact make good the damage which is done. I agree that it would be most unreasonable to insist that they should in all cases pay compensation. It would not react to the advantage of the surface owner that that should be done. But he will not forget that at the present time making good is always done with the consent of the lessor, the consent of the surface owner. It is done as a matter of convenience and always with the consent of the lessor. If he would agree to insert "the consent of the lessor being necessary thereto" all the prospect of trouble and compulsory powers and the rest would be done away with. The lessor's rights would be safeguarded and colliery proprietors would not be put to greater expense than now. But not all colliery proprietors are model lessees. There are many whose practice and custom is above all reproach, but there are, as in all walks of life, some who are not entirely reliable. If you allow them to choose between making good and paying compensation you will have buildings, in respect of which compensation ought to be paid on account of damage, dealt with by unsatisfactory colliery lessees whose ideas of making good are not those which could commend themselves to any landlord. If it was made subject to the permission of the lessor there would be no further argument.
On the larger point I am more than grateful to the Government for having given way on this very vital matter the importance of which really cannot be exaggerated. I cannot speak with knowledge, but I hope that the lessees, in other words the representatives of the Mining Association, will not feel disposed to dispute the propriety of what the royalty owners have put forward as essential to them and which the Government have been courteous and gracious enough to acknowledge. I do not know how we are going to deal with the framework of the Amendment, which is neither to be dropped nor carried, but I should be very content to leave that to the Lord Chairman and the Government because I am confident that that will be put right.
VISCOUNT HORNE OF SLAMANNAN: May I ask the noble and learned Lord Chancellor exactly how this is going to read now. As I take it, it will read from line 10:
"… subject to an obligation to make good, or to pay proper compensation for damage arising from such working to that land, exclusive of buildings or works thereon—
then we omit everything thereafter. Am I correct in that assumption?
THE LORD CHANCELLOR: I think that is right. I would like my draftsman to go through it, but that is as I understand it.
VISCOUNT HORNE OF SLAMANNAN: That would mean, as I read it, that compensation would be paid for damage to the land but no compensation would be paid for any buildings.
THE LORD CHANCELLOR: I am sorry. That is just what I did not mean. I thought you said "inclusive" but I understand it was "exclusive" as you read it. It will read:
"to pay proper compensation for damage arising from such working to that land, including any buildings or works thereon."
VISCOUNT HORNE OF SLAMANNAN: Of course that makes a complete difference.
LORD STRABOLGI: I have listened with the greatest attention to this amiable exchange between the noble and learned Lord Chancellor and the noble Lord, Lord Hastings, and I am not quite clear what is proposed. I think we are entitled to know, and for this reason. Earlier in the proceedings on the Committee stage of this Bill, I had the privilege of moving an Amendment—which, of course, was not accepted—in an attempt to safe guard people from damage by subsidence. As far as I can gather, those who speak for the Mining Association—
VISCOUNT HORNE OF SLAMANNAN: My noble friend must not regard me as speaking for anything at all except as a member of this House.
LORD STRABOLGI: I was not quoting the noble Viscount, Lord Horne, but the noble Lord, Lord Hastings. He said that those who were speaking for the Mining Association—
LORD HASTINGS: But I said they were not in this House.
LORD STRABOLGI: I did not mean to say anything offensive at all. The noble Lord has, quite rightly, had expert advice.
LORD HASTINGS: That is perfectly right.
LORD STRABOLGI: From the people who advise the Mining Association. I am not imputing anything to the noble Lord or to any other member of this Committee. I was merely speaking of those who advised the noble Lord on behalf of the Mining Association. Is that right?
LORD HASTINGS: That is quite acceptable.
LORD STRABOLGI: They are satisfied with the concessions that the Lord Chancellor has had wrung out of him at a late hour, the third late night sitting on this Bill. But I understand from an interjection made by the noble Lord, Lord Balfour of Burleigh, that those who are advised by those who advise the royalty owners—I hope I am not going to give offence—are prepared to compromise or to accept this. I make no apology for asking this question: What is happening to the rights of the unfortunate people who built houses on the land perhaps carelessly or in ignorance, poor people who suffered severely from subsidence? Is their position going to be worsened as a result of this paragraph?
SEVERAL NOBLE LORDS: No.
LORD STRABOLGI: I think we are entitled to know that.
LORD HASTINGS: It will be strengthened.
LORD STRABOLGI: I am not quite sure about it. I think that the words in the Bill were vague enough as it was and I do not see what advantage we get by combining (a) and (b) of subparagraph (1) of paragraph 6.
THE LORD CHANCELLOR: Combining (a) and (b), if the noble Lord will allow me, means simply this. As the Schedule read, there was a qualification about the liabilities with regard to buildings—namely, the qualification contained in sub-paragraph (2). It is now going to run that there is to be compensation for "damage arising from such working to

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that land "and damage" arising from such working to buildings or works thereon." That is not going to hurt any living human being except possibly the people who have to pay. The persons who own land and buildings whom the noble Lord is desirous of protecting are going to get the benefit of this. I rather protest against the suggestion that anything has been wrung out of the Government, or that there has been an eleventh-hour compromise. That is not so at all. An Amendment has been put down on a paragraph in this Schedule, which after all is a very complicated and difficult matter and involves questions of law which are by no means easy; and after long consideration the Government have thought it fair to make the concession that I have made. There has been no compromise and nothing wrung out of the Government whatever.
LORD STRABOLGI: Suppose there had been something wrung out of the Government that is what the noble Lords are here for. That is their job. That is why the noble Lord, Lord Hastings, I presume, is on this side of the House although he usually sits on the other. We are here to wring concessions from the Government where we think concessions are called for. With the greatest respect to the noble and learned Lord he is the head of the legal profession of this country, but it so happens that I have done more active political work in one House of Parliament or the other than he has. It is the business of Members of Parliament in either House to fight as best they can for what is just, and if they can wring concessions out of the Government, then good luck to them! I tried myself to do so earlier in the afternoon, and if more of your Lordships had supported me, I should have succeeded.
When the Government have pressure brought to bear upon them, they make concessions. The noble Earl who leads your Lordships' House knows this very well, because he has a long acquaintanceship with another place. So has the Lord President of the Council, if I might draw him into this. Would they please advise the noble and learned Lord Chancellor that when I suggest that the Government have had something wrung from them I am only complimenting the Parliamentary skill of
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those who are getting some concessions. What I rose for was to probe a little further into the position of a man who owns a house which is suffering from subsidence. Is his position worsened by this? The Lord Chancellor says "No." Then I come to the next question. I am not very familiar with legal phraseology used in mining leases and similar documents, but if you look at line 11 it says, "to pay proper compensation." I am not familiar with any such term as "proper" in a legal document.
THE LORD CHANCELLOR: I thought perhaps the noble Lord was objecting to the use, in connection with compensation, of a word so simple as "proper," and would prefer to have the word "improper."
LORD STRABOLGI: I have always been taught that qualifying adjectives were dangerous in legal documents and Acts of Parliament. In the Amendment drafted by Lord Hastings and his friends "reasonable" is adopted, to which I objected. Why should it not be put down plainly as "compensation"? I think I have a right to ask whether, as a result of these exchanges and these comings and goings, with the bargain that has been struck—a perfectly proper bargain—the position of those who are likely in the future to suffer from subsidence will be worsened. I should be very glad if the noble and learned Lord could give an assurance.
LORD HASTINGS: I should like to say a word about this. Lord Strabolgi is quite properly agitated as to whether the small house-owner is going to suffer or be benefited. He forgets that the mineral owner is to be extinguished as such, that he is in future, where he is both the owner of the surface and of the minerals, to be the owner of the surface only, and that anything he can suggest as an Amendment should be designed to improve the situation of the occupier, tenant or freeholder of the surface. Clearly it must be to the interest of the man who is going to be interested only in the surface to safeguard the interests of others who are interested, as well as himself. Accordingly this particular Amendment, of which the Government have approved, is going to improve the position of all upon the surface, big or little, freeholders or tenants. That he can take from me to

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be the fact, or we should not have sought this Amendment. In so far as he has suggested that this concession has been wrung from the Government, I think the very fact that I began to develop the case as I did, and was checked by the Lord Chancellor, proves that I did not know that the Government were going to give way. As for wringing, indeed I had not begun to wring. I can but reiterate the gratitude which I feel to the noble and learned Lord, but I had only an inkling and nothing more of what was going to happen, although I admit I was confident as to my ability to carry the House with me.
LORD STRABOLGI: I thank Lord Hastings for giving me the explanation that I required.
VISCOUNT ELIBANK: I would like to know what will happen in the case of a dispute as to whether proper or improper compensation has been awarded? I understand from the Lord Chancellor that the words originally in the Bill regarding disputes will not be included in this paragraph. Is that the case? If so, what will happen if there is a dispute?
THE LORD CHANCELLOR: If the noble Lord will wait one minute there is another Amendment on the Paper which will deal with that question. That is the Amendment which stands in the name of Lord Hastings.
LORD BALFOUR OF BURLEIGH: May I add one word of thanks to the Lord Chancellor for the concession he has made. I feel very grateful to the Government, because this happens to be a point on which I personally felt very strongly. I would like to ask the Lord Chancellor whether he is now moving the Amendment in the form which he has described to the House because I personally would attach great importance to seeing this Amendment in that form when we reach the next stage of the Bill. I do not want it left on the understanding that something is going to be put in on the next stage; I would like to se it in now.
VISCOUNT BERTIE OF THAME: This Amendment has been on the Paper for some time, and I think in the past it has been the Government's practice when they are willing to compromise on an Amendment to put down in writing the rival Amendment, so that the two can be con-
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sidered together. It is very inconvenient that all these Amendments on which the Government are making concessions should be held over till Report.
THE LORD CHANCELLOR: I am willing to take whatever course is the most convenient to your Lordships. What I am told is that it would be better perhaps, and more satisfactory, if Lord Hastings were to withdraw his Amendment on an undertaking that we should submit upon Report the extent to which we agree with the Amendment. This will be the position then, that we shall strike out of the existing paragraph the words in (a) and (b), replacing them by the words which I in a sense agreed with the noble Viscount, Lord Home, and that we should also omit sub-paragraph (2). That will leave the clause with the words "make good, or"; and with regard to that it will be open on Report for Lord Hastings to move to strike them out by Amendment if he thinks so to do. If that is the convenient course, as I think it is, perhaps he might on that understanding withdraw the present Amendment.
LORD HASTINGS: The Lord Chancellor's proposal is quite satisfactory to me. He will understand of course that on Report there must be a suggested Amendment to the words "make good, or." I do not propose to cut them out again; I should propose to add "with the consent of the lessor," but this present Amendment I now withdraw.
THE LORD CHANCELLOR: The Government are going to leave in the words, and it will be for the noble Lord, Lord Hastings, to present another Amendment.
LORD HASTINGS: I understand. That is quite agreeable to me.
VISCOUNT RIDLEY: Do we understand that the noble and learned Lord is to include in his Amendment such part of the Amendment suggested by Lord Hastings as refers to compensation which "shall, failing agreement, be determined by arbitration"? I understand from something he has just said that he anticipated that would be so.
THE LORD CHAIRMAN: The Question is whether the Amendment is, by leave, withdrawn.
LORD BALFOUR OF BURLEIGH: Surely the next thing, Lord Hastings

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having withdrawn, is that we should have the Amendment proposed by the Lord Chancellor, otherwise it does not become part of the Bill as we understood it would do.
LORD HASTINGS: That is so. It will not be in the Bill.
THE LORD CHANCELLOR: I need not say that if I am wrong in this I shall admit at once, but what I thought was understood was that on the Report stage paragraph 6 would be as it is, (a) and (b) being altered as mentioned, and sub-paragraph (2) coming out. There is no difficulty, is there?
LORD HASTINGS: There will be some difficulty when the Bill is reprinted because unless an Amendment is made it will be reprinted as we leave it exactly as it is now, and that is not desired.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: With the leave of your Lordships, then, I should desire to move the Amendment. Can I move it without its being at this moment even in manuscript? I am sure I can put it right. I beg to move that paragraph 6, sub-paragraph (1), of the Second Schedule shall be altered by leaving out all words after "land" in line 12 to the end of the sub-paragraph, and replacing them with the words
"damage arising from such working to that land or for damage arising from such working to the buildings or works thereon."
Secondly, I request leave to move that sub-paragraph (2) of paragraph 6 be omitted.
Amendment moved—
Page 54, line 12, leave out from ("land") to end of line 15 and insert ("damage arising from such working to that land or for damage arising from such working to buildings or works thereon").—(The Lord Chancellor.)
LORD HASTINGS: That seems to be perfectly in order, but there is one point that does arise. In withdrawing my Amendment, and permitting it to be replaced by the words the Lord Chancellor has suggested, I dropped out any provision for disagreement. I think we shall have to have some provision provided for disagreement at the end of my Amendment, so that it "shall be determined by arbitration." I am not very particular whether it is determined by
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arbitration or by the Court, but we must have some kind of provision for determining disagreement.
LORD PHILLIMORE: I apologise for interfering, but I cannot help thinking we are labouring under great difficulty. Is it not possible for us to adopt a precedent which I understand has been recently discovered and postpone this particular paragraph?
THE LORD CHANCELLOR: May I suggest to Lord Hastings that the matter which he has just mentioned, which of course has to be settled, is one of the matters which could easily be settled on Report stage, the Amendment which I have already moved being assented to. So there will be two questions. He can raise his "to make good or" and, also how the question of disagreement shall be determined. May I add that the noble Chairman, I think, has not yet got an Amendment with regard to the omission of sub-paragraph (2).
THE LORD CHAIRMAN: That is the second Amendment. I have that.
LORD HASTINGS: I am agreeable to that. I merely mentioned it as a saver. There are the two points outstanding, the question of making good and the question of fixing the method of settlement of disagreement. I am quite agreeable to that procedure.
On Question, Amendment agreed to.
THE LORD CHAIRMAN: I think the noble and learned Lord should move the Amendment to omit sub-paragraph (2) now.
THE LORD CHANCELLOR: I beg to move that sub-paragraph (2) be omitted.
Amendment moved—
Page 54, line 16, leave out lines 16 to 27.—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD AMULREE LORD AMULREE moved, after subparagraph (1) of paragraph 6, to insert:
"(2) On granting to any person the right to withdraw support from any land the Commission shall require that person to give adequate security for the payment of any compensation likely to become payable as a result of the exercise of that right."
The noble Lord said: This Amendment is to secure that there should be some proper provision for compensation from any person who may have been found liable for

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damage. There should be adequate facilities for payment of compensation. This Amendment is in general terms and applies generally, but I move it more particularly with reference to local authorities. The Association of Municipal Corporations have had this matter under consideration, and they take a rather serious view of what may happen in the future. In Clause 29 certain provisions are made for the protection of local authorities in respect of their statutory undertakings. It provides that in the case of works carried on by a local authority, such as tramways, gas, electricity, water, sewage disposal and so on, they shall vest in the Commission subject to the restriction that the coal should not be worked without the consent in writing of the persons in whom the undertaking is for the time being vested.
That provision is a general one for the protection of all statutory undertakers and ought to apply also to a local authority. Then a later subsection makes provision for the conditions under which consent may be given and that gives adequate protection for a local authority in certain circumstances, but the section omits certain other matters affecting a local authority. For example, the site of a town hall or a building site is not covered by Clause 29. We therefore come back to the question of compensation under the Schedule. A local authority may have gone to very great expense in securing the freehold, including the coal, of a site upon which to build a town hall or a site required for a housing scheme. They have done that in order that they may secure for all time support against subsidence.
Under the Bill the coal under such land passes to the Coal Commission and under the Schedule the Commission have the right to grant permission to withdraw support subject to the obligation to pay compensation. There is no guarantee that the person causing subsidence will be able to pay compensation. My Amendment is to this effect:
"On granting to any person the right to withdraw support from any land the Commission shall require that person to give adequate security for the payment of any compensation likely to become payable as a result of the exercise of that right."
To go back to the local authority, they have secured land on which to build perhaps a town hall or museum, and they
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have secured the freehold including the coal in order that they may be secure for all time of adequate support for the building. This Bill comes along and takes away that security, takes away from them the support of the coal, and damage is done. There is no guarantee under the Bill that the person liable to pay compensation will be in a position to pay it. All I ask is that it shall be the duty of the Commission to require a person to give adequate security for the payment of compensation. It is putting no burden on the Commission and it seems to me a reasonable proposition that some such provision should be made.
Amendment moved—
Page 54, line 15, at end insert the said words.—(Lord Amulree.)
THE LORD CHANCELLOR: This would be entirely a new departure in legislation of this character. There is no reason that I have been able to see why in this particular case, and in no other case, a man should be required to give security for something which may never happen, and, if it happens, may be without any possibility of determining how much security should be given and without means of knowing when the security would be required to be had recourse to. It is common to have cases where people are allowed to let down and there are powers in the Mines (Working Facilities and Support) Act, 1923, under which the Railway and Canal Commission can do it. But I have never yet heard of any such provision as this, and I think it would be imposing upon the working lessees a very unfair burden to compel them to give what is called "adequate security," which means a complete guess as to the amount which is necessary in respect of possible damage done at some later time. We have the provisions that compensation is to be given, and I suggest to the noble Lord that this Amendment is one which should not be pressed.
VISCOUNT HORNE OF SLAMANNAN: The noble Lord, Lord Amulree, has raised a very important point. It is one of the extraordinary features of this Bill, which has been entirely unnoticed, or at least uncommented upon, that for the first time in the law of England, so far as I know it, the right to support has been withdrawn from the surface owner. It is the first occasion on which any person is entitled to work coal without providing support.

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A person who would have been prepared to sacrifice whatever he got from the coal in order that his ancient mansion house might be preserved has no longer, under this Bill, got the right to support. The coal can be mined by this Coal Commission under any place in the country on payment of compensation but without any regard to any amenities which have previously been held to be sacred to the proprietors of ancient properties. That in itself is a very striking feature of this Bill. But I think that if you are going to have this extraordinary change in the law, at least you must be assured that the person who is working the coal under, let us say, some very expensive house or establishment shall be in a position to pay for it.
I do not pretend to say to your Lordships to-night what is the best way to deal with the matter. I do not pretend that the right way is, as Lord Amulree suggests, that security should be exacted from the person who is actually working the coal. I am rather inclined to say that the Coal Commission should be the body ultimately responsible for this. Of course, the Coal Commission need not be damnified in this matter, because it is always in their power to put into the leases which they grant such stipulations as they choose. Ultimately, however, as it seems to me, if the Coal Commission have this power to undermine anybody's property or anybody's house in the future, it is the Coal Commission that should be ultimately liable to see that these people are properly compensated. I do not pretend to-night to suggest what the real solution is, but I think we must seriously take this point into consideration before the Report stage.
LORD STRABOLGI: The noble Viscount said, very much better, what I had intended to say myself, and I am very glad that I saw him through the back of my head getting up, and sat down in time. I would only add this in supporting the noble Lord, Lord Amulree, in this matter. The learned Lord Chancellor tells us that this is an entirely new principle in law. I am very diffident of doing so, but I am afraid that I must dispute that. The Lord Chancellor has, I presume, a motor car, or drives in a motor car. There is a third-party risk insurance policy in respect of that motor
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car without which it would be illegal to drive it. That is one example. This is really what Lord Amulree is asking for: a third-party risk insurance. There is also a case in commerce of people in a position of trust having to take out fidelity bonds. The Lord Chancellor said that this is an entirely new principle in law, that you have to make provision for something which has not happened and which may happen.
THE LORD CHANCELLOR: I thought I said "the law in relation to this subject," but if I did not, I intended to say it. I was not dealing with fidelity bonds!
LORD STRABOLGI: I am within the recollection of the Committee that the Lord Chancellor did not use those words. If he meant to use them, I accept that, but it is not a new principle in the Common Law to-day that such a provision should be made. It is in the nature of an insurance policy, and especially after the argument we have heard from Lord Home, I think there is much more in this than the Lord Chancellor allowed in his reply, and I hope Lord Amulree will stick to his point and find some form of words.
THE EARL OF CRAWFORD: Lord Amulree speaks with so much authority in this House, and represents so powerful a group of public interest, that anything he says requires very close attention from this House, but I do not think the Lord Chancellor's reply was very convincing. I think he showed that it is difficult to assess, to-day, damage which may happen twenty, thirty, or fifty years hence. Those are technical answers to a very serious proposition, but of course this is natural and inevitable from the dangerous principle underlying this Bill, of severance of ownership of coal from ownership of the surface. What Lord Home said just now is perfectly correct. There are any number of great and heavy buildings in this country which are being protected by having pit pillars beneath them. Every famous house in a mining area has a coal pillar beneath it. When the lease of Grassmoor pit comes to an end the Coal Commissioners will be entitled to let that property which is worth thousands of pounds to the neighbouring colliery, and the owner of Hardwick Hall will have no redress at all, and if the mining pillar gets to a certain point it is

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likely to fall to the ground. I think that the Government really must give a rather more considered reply, and not deal with this on the point of difficulty of making assessment, and that the Coal Commission shall be under an obligation to take certain circumstances of this character into consideration.
LORD BALFOUR OF BURLEIGH: May I say that the next Amendment on the Paper deals rather more drastically with this point.
THE MARQUESS OF LOTHIAN: I understand that the position is not quite like that which is stated by the noble Viscount, Lord Horne, and that the Coal Commission will not be perfectly free to give leases for the mining of coal, because there is a right of appeal to the Railway and Canal Commission, and that that Commission will be able to restrain the Coal Commission from mining any coal under the four heads mentioned.
VISCOUNT HORNE OF SLAMANNAN: Yes, but those are very exceptional cases. For example, coal under a mansion house will be mined in spite of the desire of the owner of the mansion house to keep his house intact. But there is no provision for the certainty of due compensation being paid in the event of the man who works the coal not being able to pay it.
THE MARQUESS OF LOTHIAN: The Amendment which I moved gives the right to any person to apply to the Railway and Canal Commission to impose restrictions on the work. The Lord Chancellor assured me that that was in the Bill as it stands.
VISCOUNT HORNE OF SLAMANNAN: What clause?
THE MARQUESS OF LOTHIAN: That is Clause 30, page 30, line 16. I moved an Amendment in order to ensure the right of private individuals to make that application, and the noble and learned Lord in his answer assured me that that right was already preserved in the Act.
THE LORD CHANCELLOR: May I intervene? The noble Marquess is perfectly right, only the view of what I said is not quite right. The noble Viscount, Lord Home, must forgive me for remarking that when I sent him over a copy of
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the Act of 1923, I am rather sorry that he did not have time to read it. There are two things clear under the Act. Under Section 8 any person having an interest in land who is not entitled to support, or sufficient support for any buildings or works—not statutory undertakings—erected or constructed, or intended to be erected or constructed, on or below the surface, who alleges that it is not reasonably practicable to obtain such support by private arrangement can go to the Board of Trade; and on the Board of Trade considering the application, and thinking that a prima facie case is made out, the matter goes to the Railway and Canal Commission. And that has been done ever since 1923, and so far as I know no difficulty has arisen in connection with it. The noble Marquess was perfectly right when he said that, in answer to a suggestion that that ought to be saved by the Bill, I pointed out that that section remains as it is. And, after all, 1923 is a good long time ago, and nobody has ever suggested, so far as I know, that there is any difficulty about it at all.
Then there is the other point. It is said there is a difficulty in connection with getting a right to let down the surface. The same Act applies to that. There is practically no coal in the land which can be worked at all without some risk of the surface being to some extent let down. Every landowner knows that. It may be a few inches, it may be much more. It depends on a number of circumstances, but you cannot be sure of working coal without letting down to some extent the surface. It was for that reason that the Act of 1923 was passed, and gave distinct right and clear authority to the Railway and Canal Commission to give rights to any person to work the coal whose proper and efficient working was unduly hampered by the inability or failure to obtain such rights, or an ancillary right. He could apply and could be given such ancillary rights as are mentioned in Section 3, subsection (2) of the Act of 1923, the first paragraph of which is "(a) a right to let down the surface." If you go a little bit further on you will find the circumstances or the conditions on which that right is granted, which are to be found in Section 6 (4), where it is provided that in granting the right to let down the surface regard shall be had to the value of the minerals, the value of the buildings

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which they are to support, and so on. Really the truth is that this right to let down, which it is suggested is a completely new right given to the Commission, is nothing of the sort. It has existed since the Act of 1923.
VISCOUNT HORNE OF SLAMANNAN: The difference is that the Coal Commission are entitled to go ahead with their working and withdraw support without application to anybody at all. They have got an initial right to withdraw support without requiring consent from anybody. That has never happened before.
THE LORD CHANCELLOR: Of course it happens every day where there is some sort of agreement. It is not a surprising thing. It happens constantly; but it was suggested by my noble friend, as I understood—I am within the recollection of the Committee—that a right to let down the surface to anybody was an extraordinary and unusual thing. If he did not say that, I am wrong, but, if he did say that, he is wrong, and my recollection is that he did. The other point is this question about buildings. The man who wants to support buildings has been entitled to get that support, in an appropriate case, ever since the Act of 1923 came into force. I am sorry to have interfered with the observations of the noble Marquess, but I did want to make it clear that we are considering something on a basis, up to the present time, that really has not been completely accurate. All these things have been considered. The noble Viscount seems to think that these provisions were inserted in the Bill without any proper consideration. There has been the fullest consideration given to them, and he must forgive me for saying that his criticisms are a very modern and recent acquisition as far as he is concerned.
VISCOUNT HORNE OF SLAMANNAN: Of course, I do not venture to dispute any question of law with the noble and learned Lord Chancellor, but the Committee will be in recollection of what I actually stated. It is perfectly true that for the first time in the legislation of this country, without any consent at all, the Coal Commission have been granted power to withdraw support from the surface. That is the proposition that I advanced, and probably it is a misapprehension as between the Lord Chancellor
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and myself that we are differing upon this subject. But I reiterate that that is a power that has been granted for the first time, and it has to be very carefully safeguarded. We think that the Commission that is granted that extraordinary power should become the body ultimately responsible for such compensation as may need to be awarded, and that is the proposition I put to your Lordships.
LORD STRABOLGI: Are we to understand that where this old right that has existed so long is granted, if damage results, compensation is to be paid?
THE LORD CHANCELLOR: Certainly.
LORD STRABOLGI: In that case why not see that the men taking the lease are not men of straw and that they put up securities and collateral as in the case of new insurance companies? The Leader of the House, who has been recently at the Board of Trade, knows you cannot start a new insurance company without putting up securities. I think it is the same with friendly societies. There are several cases where this sort of reserve fund is required. I am not thinking so much of the great mansions like the historical building mentioned by Lord Crawford. These people can look after themselves.
SEVERAL NOBLE LORDS: Oh, oh!
LORD STRABOLGI: They can brief lawyers and their watchdogs to look after their interests. I am thinking of the smaller people in great numbers, though I agree that great mansions over coalfields have an equal right of protection. May we have an answer to that point?
THE LORD CHANCELLOR: If the House will allow me to answer, it is this is it not? Has anybody ever heard of a colliery undertaking being carried on by a man of straw? The lease is granted by the Coal Commission which will require all sorts of work to be done, and the notion that some completely impecunious person is going to undertake the carrying on of an ordinary colliery really is a little remote, but if there is such a person it is no different. It seems to me that this is only liability for damage you can do in the ordinary way. People who commit torts have got to pay, but it is not possible in the ordinary way to

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get security before the damage is actually done. In any case it does seem to me that this is a most unfair obligation to attempt to put upon the ordinary collieries of this country.
LORD STRABOLGI: Has not the Lord Chancellor heard of the many cases of working men who, because colliery companies have gone bankrupt, have been deprived of their damages under the Workmen's Compensation Act? Is it to be supposed that colliery companies never go bankrupt? Has the Lord Chancellor never heard of Hatry? How many collieries did he control? I am sorry to say it, but the Lord Chancellor will not treat certain arguments put to him with the seriousness they deserve. I say that with all respect. He has not done so in the case of the Amendment of my noble friend Lord Amulree.
LORD CROMWELL: May I ask whether the Government are prepared to make the Commission responsible? If they are, it would end the whole question. If they are not, they must find some way out.
LORD AMULREE: I have listened with great attention to the observations of the Lord Chancellor. As far as I can make out his argument amounts to this, that my Amendment is something new to the law and therefore should be ruled out. My answer to that is that this Bill is something entirely new to the law and therefore my Amendment is in order. I mentioned the case of the local authorities acquiring a building site under the Housing Acts at great expense, and the land being afterwards let down. This Bill comes along and says that under certain
circumstances the support may give way, and, while compensation is payable, the company that has to pay or the man who has to pay may be a company or a man of straw. What is the use of that? I submit that the proper course is for the Commission, when they grant a lease, to require from the person to whom the lease is granted some adequate security so that compensation will be paid if compensation should be found to be payable.
LORD GAINFORD: May I point out a case in which such a security is quite impossible? There are in the County of Durham probably sixty small groups of miners working a mine. There may be only three or four men working in one of them. I know of a case of two men, one of whom works underground and the other sells the coal above. It is necessary in the interest of these sales in these tiny places and scattered all over the coalfield, that the community served by these miners should get their coal at a regulation price, and that the miners should get their living in that way. It is quite impossible to expect a group of three or four, or perhaps eight or ten, miners to put down security in connection with letting down the surface. I think it is quite unreasonable to say that in every case security should be produced to cover the amount of damage that may be done. Surely it is the duty of the Commission when they let coal to estimate the extent to which damage may be expected and if they are wrong in their estimate they ought to be responsible.
On Question, Whether the proposed words shall be there inserted?
Their Lordships divided:—Contents,41; Not-Contents, 33.

CONTENTS.

Northumberland, D.

Ridley, V.

Lamington, L.

Wellington, D.

Middleton, L.

Aberdare, L.

Mildmay of Flete, L.

Bathurst, E.

Amulree, L. [Teller.]

Mowbray, L.

Dartmouth, E.

Basing, L.

Oxenfoord, L. (E. Stair.)

Fitzwilliam, E.

Belper, L.

Palmer, L.

Grey, E.

Brassey of Apethorpe, L.

Redesdale, L.

Iddesleigh, E.

Cromwell, L.

Sandhurst, L.

Lindsay, E.

Darcy (de Knayth), L.

Sherborne, L.

Lindsey and Abingdon, E.

Fairlie, L. (E. Glasgow.)

Shute, L. (V. Harrington.)

Radnor, E.

Gerard, L.

Stafford, L.

Hampton, L.

Strabolgi, L.

Bridgeman, V.

Holden, L.

Wigan, L. (E. Crawford.) [Teller.]

Elibank, V.

Howard of Glossop, L.

Hereford, V.

Iliffe, L.

Wolverton, L.

NOT-CONTENTS.

Maugham, L. (L. Chancellor.)

Munster, E.

Ebbisham, L.

Onslow, E.

Fermanagh, L. (E. Erne.)

Hailsham, V. (L. President.)

Plymouth, E.

Gage, L. (V. Gage.) [Teller.]

Poulett, E.

Gainford, L.

De La Warr, E. (L. Privy Seal.)

Spencer, E.

Hastings, L.

Stanhope, E.

Hutchison of Montrose, L.

Luke, L.

Bath, M.

Samuel, V.

Saltoun, L.

Dufferin and Ava, M.

Stanley of Alderley, L. (L. Sheffield.)

Addington, L.

Airlie, E.

Cadman, L.

Strickland, L.

Birkenhead, E.

Clanwilliam, L. (E. Clanwilliam.)

Templemore, L.

Liverpool, E.

Teynham, L.

Lucan, E. [Teller.]

Daryngton, L.

Windlesham, L.

Resolved in the affirmative and Amendment agreed to accordingly.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved to insert at the end of paragraph 6:
"If any person interested in any land supported by coal or a mine of coal shall suffer injury or damage through the withdrawal of such support after the vesting date (otherwise than in pursuance of a right vested in the Commission under paragraph 5 or 6 of this Schedule and in accordance with any term or condition attached to such right under that paragraph) he shall have a right of action against the Commission in respect of such injury or damage."
The noble Lord said: I am indeed on very perilous ground. This is a legal question, and I feel that it may appear presumptuous to attempt to argue these legal questions which have been debated and on which there is a difference of opinion between the eminent legal authorities in your Lordships' House. The object of this Amendment is, however, to make quite clear that the owner who suffers damage by the wrongful withdrawal of support can bring an action against the Commission, who are the owners of the coal. That seems to me to be the right way to do it. The last Amendment put the onus, as it seems to me, on the lessee. This Amendment puts the onus on the Coal Commission, who are the owners of the coal. I should like to quote in support of this Amendment a paragraph from the Royal Commission on Mining Subsidence which reported in June, 1927. That was a Royal Commission under the Chairmanship of Lord Blanesburgh, a very weighty Commission, and it had reference to this very case of damage being done by subsidence, and cases where the owners of property destroyed, and particularly small people, were unable to get redress.
The Report said that in many cases the principal consideration for the miner
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is that his house must be near his work, and the Report went on to say:
"We are satisfied that so far as the owners of these small houses are concerned there are existent many cases of genuine hardship, and it is this circumstance which has seemed to most of us alone to justify the recommendation which with reference to existing houses of this type in private ownership we embody later in this Report."
They went on to make the recommendation that there should be a right to compensation for damage caused by the withdrawing of support through mineral working in cases where under the existing law that could not be established. That recommendation has never been put into effect, because, I think, of opposition from the lessees, upon whom that liability would have fallen. This moment, when this tremendous change in the law is being made and the property is being transferred to the Coal Commission, seems to me to be an appropriate moment to make, as Lord Amulree said, a corresponding change in the law which would be appropriate.
A great deal of hardship has been caused by inability to get this compensation. It was admitted by the Commission, who now have an opportunity of correcting it. There is just this point, that the Coal Commission are going to become the owners of the property, and in cases where the lessees do not provide in a proper way, if no alteration is made the Coal Commission will be drawing profits from a situation which is held to be unsatisfactory. I think this Amendment ought certainly to secure the support of His Majesty's Opposition, and I gather from Lord Strabolgi that he would favour the protection of the small man. It may very well be that the Lord Chancellor will tell me that this is a drastic change in the law, but I do not think it is unfair, as the Coal Commission are going to make this very large profit on the deal, that

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they should take the responsibility for cases of damage, even where a direct liability cannot be established against the lessees. If liability can be established against the lessees, then the Coal Commission will have redress. If it cannot be established, it seems to me they will have ample funds out of which to compensate all these people, in many cases poor people, who have suffered damage.
Perhaps one ought to have put down an Amendment which would have been discussed at that interesting moment last night when we tried to decide what was to happen to the surplus money. We had a Division on an Amendment by Lord Samuel, and that, I think, would have been the moment to suggest that there should be established a fund out of which compensation could be provided for such cases as this. Meanwhile, without attempting to argue the legal technicalities, of which I am not capable, I have moved the Amendment, the object of which is to provide that where support is wrongfully withdrawn, the Commission shall be responsible, and I leave it to the legal experts to say why that is impossible, if indeed it is impossible.
Amendment moved—
Page 55, line 3, at end insert the said words.—(Lord Balfour of Burleigh.)
THE LORD CHANCELLOR: The noble Lord who has moved the Amendment has moved it in a very plausible manner; but is it right to do this? An Amendment has already been passed providing that the Commission are to require the working colliery company to give adequate security for the payment of compensation. Accordingly the person who is going to be injured by the withdrawal of support has got the security which the Commission have required for the payment of the compensation. I must admit that I was caught out in a slight mistake when I addressed the Committee a short time ago, when I scoffed at the notion of there being people who could not pay. I agree I was wrong, and Lord Strabolgi was quite right. But you have now provided for the giving of security, and why should there be something else as well? Why should there be not only security but the right of action against the Commission? After all, it may not be the fault of the Commission at all. All the leases that are in existence at the present time have been granted before the vesting
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date, and on the average they will continue for another twenty years or so. Many of these people will be acting under rights under which they have to withdraw support after the vesting date, and not necessarily rights to withdraw support under the provisions in paragraph 6 of the Schedule.
This, as drawn, may lead to support being taken away by people in the ordinary course working their leases without any reference to the Coal Commission at all. Yet you are going to impose on the Commission an obligation to pay the injury or damage, presumably on the footing that the adequate security that has been given is not sufficient and that the man or the company which has really done the damage is not able to pay. But I ask your Lordships to come to the conclusion that this really, in the circumstances, is not a fair thing to impose upon the Commission. There is nothing impossible as a matter of law in this, but it is not an equitable thing which you are trying to impose upon the Commission, and I suggest that it should not be agreed to.
LORD STRABOLGI: Is not it a fact that the Amendment we have just passed and this Amendment of Lord Balfour's dovetail in together?
VISCOUNT HORNE OF SLAMANNAN: I suggest that this Amendment is a more desirable one than that for which we have just voted. As I indicated in the speech I previously made, I should much prefer the Commission to be the responsible body. I realise at once, and appreciate very much what the Lord Chancellor has just said, that leases have been granted before the date at which vesting has taken place, but I assume that in all these cases either power has been given to let down the surface in the working of the coal or stipulations have been made by which compensation will have to be paid if the surface is let down. Accordingly, if the lessee who at present enjoys a lease which must be taken over by the Coal Commission, lets down the surface under a lease in which he is entitled to let down the surface, then no compensation is payable and the Coal Commission will not be liable. On the other hand, if he lets down the surface under a lease where a stipulation had been made as to compensation, then the lessee will have to pay

711
and again the Coal Commission will not be damnified.
THE LORD CHANCELLOR: That is not what the Amendment says. The noble Viscount is perfectly right in his analysis that there are all these leases, many of which empower the lessee to let down the surface on the promise of paying compensation. Supposing one of these lessees lets down the surface, and knows he has to pay compensation, this Amendment still applies as drawn. The person who has suffered injury or damage is going to have a right of action against the Commission in respect of the injury or damage he has suffered, although that injury or damage was suffered by something which the Commission could not control in any way and had nothing to do with, and although the terms of the lease were that the surface might be let down on the lessee paying compensation. This Amendment as drawn will still hit the Commission.
VISCOUNT HORNE OF SLAMANNAN: I agree that in that respect the Lord Chancellor is entirely justified, and I should not be prepared to vote for the Amendment as it stands. What I am anxious to get at is this principle. The wording of the Amendment and the limitations which may be inserted are a different matter. What I would like to put before the Committee is this, and what I am anxious the Government should safeguard, is the principle by which, when damage takes place after the Commission are in operation—because all affairs beforehand would be regulated by their own terms—the Commission should be the body responsible for it. They can always safeguard themselves by the stipulations they make in their own leases. As to past leases, they will be regulated by their own terms. That is the principle I should like to see put into the Bill in whatever phraseology it may be couched. So far as this Amendment is concerned, I entirely agree with the Lord Chancellor that it will provide double damage for people in whose case leases were already in existence which provided for damage for letting down the surface. That would be entirely wrong, but do let us work at this principle, and put it in definite shape in this Bill, and we can surely do that by the Report stage.
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May I just be forgiven for one moment in saying that I did not read the 1923 Act so negligently as the Lord Chancellor suggested? The Lord Chancellor says that people who have experienced damage through their mansion or cottage being let down have got to go back to Section 8 of the Mines (Working Facilities and Support) Act, 1923. I have reinforced my recollection by going to the Library, where I obtained a copy of the Statute, and I found this. What right have I when I appear before the Railway and Canal Commission to establish a claim that restriction should be imposed upon the working of the coal? I find that, in order to safeguard my cottage, I have to show that it is in the national interest that my cottage should be sustained. That is the amount of the right that remains to one under the 1923 Act. I do not suggest that I am ever going to establish, no matter how much I love my cottage, that it is in the national interest that it should remain. I say again that this is the first time that, without consent of anybody, or the authority of any other body, a Coal Commission are to be appointed who are entitled to withdraw support from the surface. I am sorry to say this with so much vehemence, but I was rather disappointed to seem to be caught out in an error in what I put before the Committee. At any rate, so far as this matter is concerned, I suggest to the Government that the great majority of the Committee are of the opinion that some safeguard should be made to ensure that people whose interests have been injured should receive the compensation to which they are entitled, and the only way that can be safeguarded is by putting the duty upon the Coal Commission.
LORD BALFOUR of BURLEIGH: May I say, in view of what has fallen from the noble and learned Lord and my noble friend behind me, of course I did not intend to provide for double compensation. It is a legal matter and I naturally cannot understand the legal technicalities, but the position is that the Commission may withdraw support and we want to give redress. The end I want to achieve is that everybody should have recourse against the Coal Commission, preserving to the Coal Commission whatever recourse they may have against the lessee. That seems to me to be what is

713
wanted. There is no intention to have double recourse and if the Lord Chancellor would say that could be carried out I should be only too happy to withdraw my Amendment.
THE LORD CHANCELLOR: I do not quite understand what it is that is now wanted. I understand from my noble friend Viscount Horne that he agrees that this Amendment as it stands does not carry out that which is fair. There is of course a very great difference in the position of the Commission as regards leases they will grant, in view of the position of the Commission as people who come on the scene when leases are in existence, practically all of which permit of some terms or of some conditions for the letting down of the surface. As regards those, as I pointed out, the Commission cannot help it. Already the lessee is liable in respect of those matters where there is a condition to that effect. I think perhaps one might say that if that is what is required—namely, the liability of the Commission as regards leases granted by them and work done under those leases—the Government might fairly consider it on the Report stage. But the Amendment as it stands is one which, in the view of those with me and, as I understand it, in the view of the noble Viscount, Lord Horne, the Government cannot accept as it stands.
LORD BALFOUR OF BURLEIGH: In view of what has fallen from the noble and learned Lord, I think the right course is to agree to withdraw. The noble and learned Lord has been kind. He has promised us something. I must admit I had thought, in view of the fact that the Coal Commission are going to become possessed of the whole of the coal, that there was an opportunity of putting into effect the recommendations of the Blanes-burgh Commission, which would rectify some of the injustice to small people. But the hour is early and I think it better not to press the Amendment now. I thank the noble and learned Lord for his promise and I beg leave to withdraw.
Amendment, by leave, withdrawn.
Second Schedule, as amended, agreed to.

BUSINESS OF THE HOUSE.
EARL STANHOPE: I suggest that this would be a suitable moment for the House
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to resume. We shall continue the Committee stage on Monday next.
LORD STRABOLGI: May I ask the noble Earl to say at what time we shall meet on Monday?
EARL STANHOPE: The usual time, a quarter past four.
Moved, That the House do now resume.—(Earl Stanhope.)
On Question, Motion agreed to: House resumed accordingly.

YOUNG PERSONS (EMPLOYMENT) BILL. [H.L.]
THE EARL OF MUNSTER: My Lords, I beg leave to introduce a Bill to regulate the hours of employment of persons under the age of eighteen years employed in certain occupations; to amend the Shops Act, 1934, with respect to the hours of employment of persons under the age of sixteen years, and with respect to the determination of the number of working hours of persons under the age of eighteen years; and for purposes connected with the matters aforesaid. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read 1a.— (The Earl of Munster.)
On Question, Bill read 1a, and to be printed.

AROON KUMAR SINHA (PETITION FOR WRIT OF SUMMONS).
Petition of Aroon Kumar Sinha praying that this House will determine the question whether upon the assumption that the facts set out in paragraphs 2 to 8 of the Petition are subsequently proved to the satisfaction of the House, the Petitioner would establish his descent in Peerage law from the First Baron: Read, and referred to the Committee for-Privileges.

NEWCASTLE AND GATESHEAD WATERWORKS BILL.
OSSETT CORPORATION BILL.
SOUTHERN RAILWAY BILL.
Brought from the Commons; read 1a, and referred to the Examiners.
House adjourned at ten minutes past twelve o'clock.