Sitting of 3 July 1939

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
NEW WRIT.
For the Borough of Hythe, in the room of the Right Honourable Sir Philip Albert Gustave David Sassoon, Baronet, G.B.E., C.M.G., deceased.—[CaptainMargesson.]
PRIVATE BUSINESS.

  JARROW CORPORATION BILL.
  Lords Amendments considered.
  The Deputy-Chairman of Ways and Means (Colonel Clifton Brown): These are merely drafting Amendments.
  Lords Amendments agreed to.

  SOUTH STAFFORDSHIRE WATER BILL.
  Lords Amendments considered.
  The Deputy-Chairman of Ways and Means: These Amendments are mainly of a drafting nature.
  Lords Amendments agreed to.

  STALYBRIDGE, HYDE, MOSSLEY AND DUKINFIELD TRANSPORT AND ELECTRICITY BOARD BILL.
  Lords Amendments considered.
  The Deputy-Chairman of Ways and Means: There are three Amendments here of some substance, but they do not interfere with the objects of the Bill.
  Lords Amendments agreed to.
  Folkestone Water Bill[Lords],
  London County Council (Improvements) Bill[Lords,]
  Macclesfield Corporation Bill [Lords,]
  National Trust for Places of Historic Interest or Natural Beauty Bill[Lords],
  Read a Second time, and committed.

ORAL ANSWERS TO QUESTIONS.
  INDIA.

    RAILWAYS (STATISTICS).
    Mr. Dayasked the Under-Secretary of State for India the total number of employés working on State-owned rail ways in India at the last convenient date; and the estimated amount of mileage of railways in India that may be said to be at present under control of private companies?
    The Under-Secretary of State for India (Lieut.-Colonel Muirhead): The number of employés working on State-owned railways, at 31st March, 1938, was 636,194, of whom 368,208 were on lines worked by the State and the remainder on lines worked by companies. The mileage of company-owned lines, at the same date, was 4,143. In addition, there were 14,036 miles of State-owned lines worked by companies.
    Mr. Day: Are there any statistics to show how many of these employés are Anglo-Indians?
    Lieut.-Colonel Muirhead: I will look into that question; I could not answer it offhand.

    BROADCASTING.
    Mr. Sorensenasked the Under-Secretary of State for India whether he will give the House information respecting the proposed comprehensive radio system for the villages of India; and whether the principle of impartiality will be strictly observed in broadcasts, and opportunities given for broadcasts, by representatives of differing and divergent schools of political and other thought as in Great Britain?
    Lieut.-Colonel Muirhead: I have no information of a comprehensive scheme for village broadcasting in India, but I will make inquiries.
    Mr. Sorensen: Do I understand that there is no scheme of any kind for a wider transmission of broadcasting in India?
    Lieut.-Colonel Muirhead: No; my answer does not actually say that. The hon. Member's question refers to a proposed comprehensive radio system for the villages of India, and I said in my answer

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    that I have no information of a comprehensive scheme of broadcasting in India, but that I will make inquiries.
    Mr. Robert Gibson: May I ask whether the Government of India have it in mind to consider a matter of this sort?
    Lieut.-Colonel Muirhead: I think the Government of India always have the question of broadcasting under consideration.

  ANGLO-FRENCH-RUSSIAN CONVERSATIONS.
  Mr. Daltonasked the Prime Minister whether he can now make a further statement on the negotiations between His Majesty's Government of the Union of Soviet Socialist Republics?
  Mr. Thurtleasked the Prime Minister whether he has any further statement to make regarding the Anglo-Russian negotiations?
  Mr. Manderasked the Prime Minister whether he will consider the advisability of proposing to the Soviet Government the immediate publication of the proposals for an Anglo-Franco-Soviet pact up to date, with a view to the information of public opinion and to creating national support for the success of the negotiations?
  Mr. Vyvyan Adamsasked the Prime Minister whether he has any progress to report in the negotiations with the Union of Soviet Socialist Republics?
  Lieut.-Commander Fletcherasked the Prime Minister whether he is aware of the public anxiety at the delay of over 10 weeks in bringing the Anglo-Russian negotiations to a conclusion, especially in view of the fact that each country has declared itself sincerely anxious to reach a conclusion; and if he will consider making an interim statement on the present position of the negotiations in order that public opinion may be informed concerning any points still at issue?
  The Prime Minister (Mr. Chamberlain): Further instructions have been sent to His Majesty's Ambassador at Moscow, and, in company with his French colleague, he had another interview with M. Molotov on 1st July. His Majesty's Government are now awaiting the considered reply of the Soviet Government
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  and I do not think it would be advisable to make any further statement at this stage of the negotiations.
  Mr. Dalton: If I put down a question on Wednesday, has the Prime Minister any hope of being able to give a more definite and conclusive reply?
  The Prime Minister: If we get a definite and conclusive reply, I will certainly do what I can.
  Mr. G. Strauss: In view of the widespread concern over the delay that is taking place, does not the Prime Minister consider that the House should now be told what is the matter of principle that is preventing him from coming to some agreement?

  BALKANS.
  Mr. Cocksasked the Prime Minister whether he will consider sending a special envoy, not necessarily a professional diplomat, to the Near East, with headquarters at Sofia, whose principal object shall be to promote unity in the Balkans?
  The Under-Secretary of State for Foreign Affairs (Mr. Butler): While I appreciate the motives which prompt the hon. Member to make this suggestion, my Noble Friend does not consider that the end he has in view would be served by action such as he proposes.
  Mr. Cocks: Do the Government propose to take any steps to counteract disunity in the Balkans, in view of the fact that Herr Frick recently told Bulgaria that she was expected to fight for Germany in the next war, and that the Prime Minister of Bulgaria is leaving for Berlin to-day?
  Mr. Butler: I am aware of the latter point that the hon. Member has raised. Naturally, Balkan unity is a matter of concern to His Majesty's Government.
  Mr. Pilkington: In view of the detached position of this country, could we not take some initiative in this very important matter?

  BALTIC STATES (NAVAL VISITS).
  Mr. Cocksasked the Prime Minister whether his attention has been drawn to the visit of General Halder, chief of the German general staff, to Estonia and Finland; and whether he will consider sending a British naval squadron on a courtesy visit to the Baltic States and to Leningrad?
  Mr. Butler: The answer to the first part of the question is in the affirmative. With regard to the second part, the hon. Member's proposal will be borne in mind, but it is unlikely that it will be practicable to arrange a visit in the near future.
  Mr. Cocks: Will the Government take into consideration the fact that, as an ambassador of peace and a calming influence, a very effective agent is a British warship?
  Mr. Butler: Yes, certainly.
  Lieut.-Commander Fletcher: Has any request for a naval visit been received by the British Government?
  Mr. Butler: I should require notice of that question.

  FAR EAST (SITUATION).
  Mr. Ritsonasked the Prime Minister whether any reply has been received from the Japanese consular authorities regarding the protest made by His Majesty's Consul-General on the circumstances arising out of the death of Dr. Lillie?
  Mr. Butler: My Noble Friend has only just received the report of the inquest proceedings, and, pending full consideration, I am unable to say what action may be appropriate. In the meantime His Majesty's Consul-General at Shanghai has addressed a Note to his Japanese colleague reserving all rights regarding the events which led up to the tragedy.
  Mr. Bellenger: Have we any money rights in this matter? Might it not be possible to make some claim for damages on behalf of the wife of Dr. Lillie?
  Mr. Butler: That important aspect of the question will certainly be borne in mind.
  Mr. Priceasked the Prime Minister whether he is aware that the Japanese military authorities in China have established a new currency known as Hua-Hsing, which is linked to the Chinese dollar; that the intention in thereby indirectly to link the Chinese dollar to the yen and give Japan an economic hold over China, and eliminate foreign commerce; and whether the Government are considering steps to meet this danger?
  Mr. Butler: My Noble Friend is aware of the establishment of a new currency known as Hua-Hsing, which is said to
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  be convertible into Chinese dollars. As regards the second and third parts of the question, the situation is being closely watched by the Departments concerned.
  Mr. Price: Have the Government any actual ideas of how they can deal with this danger? Can the Under-Secretary give some indication of what they are contemplating doing to meet it?
  Mr. Butler: One cannot always indicate one's intentions, but the hon. Member may be satisfied that the matter is fully under consideration.
  Mr. V. Adamsasked the Prime Minister whether the insults sustained by our nationals in Tientsin at the hands of the Japanese have now ceased; and whether His Majesty's Government propose to take any steps in the matter?
  Mr. Butler: Until this morning there had been for some days no reports of British subjects being subjected to indignities. My Noble Friend has not yet received official confirmation of the incident reported to-day in the Press involving a young British subject. His Majesty's Ambassador has been instructed to inform the Japanese Government that any deliberate extension of such treatment to British subjects must imperil the success of the impending negotiations at Tokyo.
  Mr. Adams: Was that incident the alleged stripping of Mr. John Anderson?
  Mr. Butler: Yes, Sir.
  Mr. Noel-Baker: Have the Government received any confirmation of reports that the blockade of Tientsin is being intensified?
  Mr. Butler: We have no official confirmation at all.
  Lieut.-Commander Fletcher: When negotiations were opened with the Japanese Government about Tientsin were any conditions laid down as to the blockade or the cessation of insults?
  Mr. Butler: The whole position in regard to the negotiations was stated by the Prime Minister, and I have nothing to add to that statement.
  Mr. V. Adams: Is it not open to us to take certain retaliatory measures with regard to Japanese; nationals in our territories?
  Mr. Noel-Bakerasked the Prime Minister whether the Japanese Government have yet submitted any evidence to His Majesty's Government showing the guilt of the four Chinese accused of murdering a Chinese employed by a Japanese at Tientsin?
  Mr. Butler: I am not prepared to add anything to what has already been said on this point, in view of the fact that conversations in Toyko are about to start.
  Mr. Noel-Baker: May we take it for granted that the Government will not hand over the four Chinese until proof has been shown that they were guilty of this murder?
  Mr. Butler: That is a matter to be discussed during the negotiations.
  Mr. Wedgwood Benn: Does this mean that the Government have gone back on their statement that they would not hand over these men unless there were some evidence that they were guilty?
  Mr. Butler: No, Sir, it does not mean that the Government have gone back on their statement; but, in view of the negotiations, I do not propose to make a statement now.
  Mr. Arthur Greenwood: Could we not have some definite assurance that they will not be handed back pending the negotiations?
  Mr. Butler: There is no question of handing over these men pending the negotiations.
  Mr. Noel-Bakerasked the Prime Minister whether he can make a statement concerning the situation at Kulangsu?
  Mr. Butler: Further proposals for a settlement have recently been made to the Kulangsu Municipal Council by the Japanese Consul-General. These are at present under consideration.
  Mr. Noel-Baker: Could the right hon. Gentleman tell us the latest information about the Japanese blockade of Kulangsu and whether the food situation is still as acute as it was last week?
  Mr. Butler: I understand that the latest information is that quantities of firewood and beans have been recently landed by a British ship at Kulangsu, and that food supplies continue to arrive.
  Mr. Noel-Bakerasked the Prime Minister whether he can make a statement concerning the situation at Foochow and Wenchow?
  Mr. Butler: Arrangements are being made for the evacuation of those British subjects who wish to leave Foochow. Although there are no British ships at present in the harbour, the Japanese naval authorities have undertaken to leave a safe passage until 6th July for a ship to convey those wishing to leave. As regards the situation at Wenchow, my Noble Friend understands that the foreign community propose to remain. There are at present 11 British subjects there.
  Mr. Noel-Baker: Is it the case that booms have been laid, and that these Treaty ports are, in fact, blockaded?
  Mr. Butler: What amounts to a blockade is, in fact, taking place at these ports.
  Sir Archibald Sinclair: Have His Majesty's Government protested against this?
  Mr. Butler: His Majesty's Government have made their position quite clear.
  Mr. Thorne: Do the Government think there is any possibility of getting back to the same position as in 1929?

  GREAT BRITAIN AND POLAND.
  Mr. Priceasked the Prime Minister whether any steps have been taken to afford financial assistance in the form of a loan to Poland for the purchase of armaments?
  Mr. Butler: As the Prime Minister informed my hon. Friend the Member for Harborough (Mr. Tree) on 28th June, discussions are still continuing, and I regret that it is not yet possible to make any statement.

  PALESTINE.

    German Propaganda.
    Mr. Priceasked the Prime Minister whether he is aware that German propaganda has been containing stories of atrocities and torture in Palestine said to have been committed by British forces; that these stories are quoted as coming from the Arab centre in London; and whether steps are being taken to counter act this propaganda in Germany?
    Mr. Butler: Yes, Sir. I am aware that numerous mendacious reports have been circulated by various agencies with the intention of giving an entirely false impression of the situation in Palestine and of the actions of British forces there. Talks and news items dealing with the true facts of the situation are appropriately broadcast by the B.B.C. in their English and foreign language broadcasts.
    Mr. Maxton: Could not the House of Commons have this precise knowledge? When I asked a question of the Colonial Secretary last week, he said he would have to communicate with the High Commissioner.
    Mr. Butler: I will certainly see that the material from the foreign broadcast is taken down and brought to the attention of the hon. Member.
    Mr. McGovernsIs the Under-Secretary aware that these documents are going out to a considerable number of people in this country? Surely we ought to have a complete repudiation of these alleged atrocities while they are being circulated from the centre?
    Mr. Butler: I understand that my right hon. Friend the Colonial Secretary has repudiated these mendacious reports, and the news items to which I have referred also include a categorical repudiation.

    ILLEGAL IMMIGRATION.
    Mr. T. Williamsasked the Prime Minister what efforts have been made by representatives of His Majesty's Government to induce the Governments of a number of European countries to refuse transit visas to all Jewish applicants from Germany and Czecho-Slovakia with a view to checking illegal immigration into Palestine; and as this causes extreme hardship to refugees seeking to escape from persecution, will he undertake to make no more such representations?
    Mr. Butler: No efforts have been made by representatives of His Majesty's Government to induce the Governments of any European countries to refuse transit visas in respect of Jewish applicants in general. But, as the hon. Member will be aware, there have been attempts by Jews from various countries, including Germany and Czecho-Slovakia, to enter Palestine illegally. In these cases His Majesty's Government have been in con-
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    tact with a number of European Governments with a view to securing their cooperation to prevent this illegal traffic, which is a source of grave difficulties for His Majesty's Government, and not infrequently causes untold hardship to the refugees themselves.
    Mr. Williams: Do I understand the right hon. Gentleman to say that, in the conversations referred to, foreign Governments have not been invited to provide transit visas for these immigrants?
    Mr. Butler: His Majesty's Government's activities have been devoted to the question of illegal immigration.
    Mr. Williams: Is it not possible that, in the very legitimate attempt to prevent illegal immigration, grave hardship may be caused to fall upon many legitimate immigrants where facilities are afforded for them to enter Cuba or some other country?
    Mr. Butler: That aspect, of course, must be remembered. I am obliged to the hon. Gentleman for mentioning it.
    Captain Cazalet: Is it not the case that the German Government sometimes force these unfortunate people to leave their country?

  BROADCASTING (FOREIGN LANGUAGES).
  Mr. Godfrey Nicholsonasked the Prime Minister whether he is prepared to offer to place at the disposal of the German and Italian Governments some definite time or times on the British broadcasting system in exchange for similar times to be placed by those Governments at the disposal of the British Government?
  Mr. Butler: My Noble Friend will give consideration to this suggestion. The B.B.C. on their side would no doubt be prepared to co-operate in such a plan.
  Mr. NicholsonWhile thanking my right hon. Friend for his helpful answer, may I ask him whether he is aware that the whole world relies on the British Government not to neglect the remotest possibility of penetrating the barriers that have been erected between the German people and the outside world?
  Mr. Butler: Yes, Sir, I reciprocate that sentiment.
  Mr. Pilkington: Can some steps be taken to let the German and Italian peoples know that this offer is being made, if it is to be made?
  Mr. Butler: No doubt they will obtain a knowledge of it from the answer which has just been given.

  FOREIGN POLICY.
  Mr. Bellengerasked the Prime Minister whether His Majesty's Government will draw up a policy, either in conjunction with the United States of America, France, and Russia, or alone, as was done towards the end of the last War, stating objectives for European peace in precise terms, which we are prepared to support either by way of conference methods or diplomatic negotiations between the Great Powers in the first instance or, if necessary, to defend by armed resistance if such objectives are prejudiced by any other Power using or threatening to use force majeure?
  Mr. Butler: The general aims of the foreign policy of His Majesty's Government were stated in a speech made by my Noble Friend on 29th June, and I do not think any useful purpose would be served by elaborating that statement at the present juncture.
  Mr. Bellenger: In the event of armed conflict occurring, would it not be necessary at some stage to formulate a precise policy, and would it not be desirable to do that in advance?
  Mr. Butler: The hon. Member's question is based on a double hypothesis.
  Mr. Bellenger: What are your answers based on?

  DANZIG (SITUATION).
  Mr. Cocksasked the Prime Minister whether he will make a statement on the position in Danzig.
  The Prime Minister: Reliable reports indicate that extensive measures of a military character are being carried out in the Free City. A large and increasing number of German nationals have recently arrived in the Free City, ostensibly as tourists, and a local defence corps is being formed under the name of the Heimwehr. The Polish Government have received
  900
  from the German Government a notification of a visit by the German cruiser "Koenigsberg" to Danzig for three days from 25th August. The Polish Government are informing the Danzig Senate that they see no objection to this visit. His Majesty's Government are maintaining close contact with the Polish and French Governments regarding developments in the Danzig situation.
  Mr. Cocks: Is it a fact that these attempts to fortify Danzig are illegal? Do the Government propose to take steps to inform Herr Hitler personally that any attempt to change the status of Danzig by force will be instantly resisted by His Majesty's Government?
  The Prime Minister: As regards the question of treaty obligations or rights, I should like to have notice of any question on that. With regard to the other parts of the question, the position has been made perfectly clear by my noble Friend.
  Mr. Dalton: Will the Government cause to be conveyed to Warsaw the admiration which is felt in this country at the calm, the courage and the self-control which are being displayed by our Polish allies in the face of this gross provocation?
  The Prime Minister: The Government much appreciate the attitude of the Polish people.
  Mr. Noel-Baker: Is it not a fact that the fortification of Danzig is a plain violation of Article 5 of the Statute of Danzig?
  The Prime Minister: I have said that I would like notice of questions on that subject.

  INTERNATIONAL LAW.
  Mr. Sorensenasked the Prime Minister whether, in view of the need of encouraging respect for and acceptance of international law and the modification of national sovereignty to that end, His Majesty's Government will take early steps to intimate to our existing military allies, and to other Powers, that they are willing to consider means by which this principle can be implemented; whether he will explore the possibility of a preliminary acceptance of the principle among

  901
  democratic Powers; and whether he will approach the Governments of other powers to secure their co-operation for this purpose?
  Mr. Butler: His Majesty's Government are fully aware of the need for encouraging respect for, and the acceptance of, international law, and their views on this subject are widely known, not only in this country, but to all foreign Governments. As regards the measures suggested by the hon. Member, the present does not appear to be a favourable moment for His Majesty's Government to take the initiative,
  Mr. Sorensen: Could the right hon. Gentleman state the attitude of His Majesty's Government on this matter of modification of national sovereignty, in view of the fact that national sovereignty is one of the factors that may lead either to war or to peace?
  Mr. Butler: That is one of the aspects of international law to which His Majesty's Government attach the greatest importance. It would take longer than the time I have available at present to outline in full the attitude of His Majesty's Government on the matter.
  Mr. Sorensen: Are we to assume that His Majesty's Government already have accepted some modification by virtue of their loyalty to the League of Nations?
  Mr. Butler: I should like to write a treatise on that.

  TRADE AND COMMERCE.

    SOUTH AFRICAN AIRWAYS.
    Mr. Kennedyasked the Secretary to the Overseas Trade Department whether he will make inquiries as to the number of German air-liners purchased for South Africa airways this year, and whether tenders for the liners were invited from manufacturers in this country?
    Mr. R. S. Hudson (Secretary, Overseas Trade Department): I would refer the right hon. Member to the reply given by my hon. and gallant Friend the Under-Secretary for Air to a somewhat similar question on 10th May. I have no additional information. The matter is one entirely within the province of the appropriate authorities in the Union of South Africa.

    NEW YORK WORLD FAIR (FILMS, BRITISH PAVILION).
    Brigadier-General Spearsasked the Secretary to the Overseas Trade Department whether he has any statement to make on the success or otherwise of the films shown in the British Pavilion at the New York World Fair?
    Mr. R. S. Hudson: The films shown in the British Pavilion at New York have achieved a conspicuous success. Seven daily programmes are now being given, and the theatre is filled to capacity at practically all performances, the films being received with enthusiasm. I should like to take this opportunity of expressing my thanks to the members of the Joint Committee on Films of the British Council and Travel Association for their work in selecting these films.

    BRAZIL.
    Mr. Liddallasked the Secretary to the Overseas Trade Department whether any specific trade openings in Brazil for British productions were indicated to his Department other than those published in the departmental report on Brazil, No. 723, issued in May, 1939; and, if so, what steps he has taken through other channels to confer with United Kingdom traders who could avail themselves of such unpublished reports of trade openings in Brazil?
    Mr. R. S. Hudson: In this particular case the report contained information as to prices in Brazil of certain foreign manufactures which are in competition with similar United Kingdom manufactures. This information was omitted from the published report and was communicated to the United Kingdom Trade Associations covering the industries concerned.

    Consular Service.
    Mr. Dayasked the Secretary for the Overseas Trade Department the number of unsalaried members of the Consular Service of the various grades, at present maintained by His Majesty's Government in various cities and towns?
    Mr. R. S. Hudson: Three hundred and twenty-seven.
    Mr. Day: May we be informed how many of these 327 are non-British?
    Mr. Hudson: Ninety-two.

  NAVAL AND MILITARY PENSIONS AND GRANTS.
  Mr. Tinkerasked the Minister of Pensions whether he will have an examination made of all the cases of children of deceased or disabled soldiers who were given allowances up to the age of 21; and if, after such investigation, he is satisfied that hardship exists, whether he will take measures to bring before Parliament the need for altering the Royal Warrant which excludes payment after the age of 21?
  The Minister of Pensions (Sir Walter Womersley): I am afraid the suggestion in the first part of this question would be impracticable. Once an allowance has ceased to be payable, the Ministry have no further knowledge of cases of the type referred to which have at one time or another drawn pension or allowances in the past 20 years. With regard to the latter part of the question, suggestions to the same effect have on previous occasions received careful consideration, but the Warrant provisions in question involve an important principle which has been maintained by all successive Governments since the War. I am sending the hon. Member a copy of the full replies given on this subject, both by the right hon. Gentleman the Member for West Bromwich (Mr. F. O. Roberts) in 1930, and by my right hon. Friend the present Postmaster-General in 1935, to which I have nothing to add.
  Mr. Tinker: The hon. Member will be aware that there are a number of distressing cases. In view of that, and in order to do the fair thing by these people, why cannot he have an examination made? Then he can let Parliament know the actual position, and we can decide on the best way of doing our duty to people who have given their lives in the service of the country.
  Sir W. Womersley: I am aware that there are cases of hardship, including the one that the hon. Member brought to my notice a fortnight ago. I am prepared to look into all of them, and there are means whereby assistance can be rendered in cases of real hardship.
  Mr. Tinker: That is not adequate, and something more should be done for them.
  Mr. McGovernasked the Minister of Pensions the total expenditure on war pensions for each year from 1915 to 1939?
  Sir W. Womersley: As the answer involves a number of figures, I propose, with the hon. Member's permission, to circulate it in the OFFICIAL REPORT.
  Following is the answer:

  Expenditure on War Pensions.

  £

  1914–15

  …

  …

  1,086,960

  1915–16

  …

  …

  3,157,560

  1916–17

  …

  …

  10,160,973*

  1917–18

  …

  …

  24,410,069*

  1918–19

  …

  …

  50,984,391*

  1919–20

  …

  …

  98,934,666

  1920–21

  …

  …

  106,645,516

  1921–22

  …

  …

  95,559,616

  1922–23

  …

  …

  80,782,442

  1923–24

  …

  …

  72,447,925

  1924–25

  …

  …

  69,548,194

  1925–26

  …

  …

  66,916,268

  1926–27

  …

  …

  63,191,867

  1927–28

  …

  …

  59,791,947

  1928–29

  …

  …

  56,732,700

  1929–30

  …

  …

  54,100,384

  1930–31

  …

  …

  51,765,445

  1931–32

  …

  …

  49,466,537

  1932–33

  …

  …

  46,825,108

  1933–34

  …

  …

  45,051,587

  1934–35

  …

  …

  43,296,874

  1935–36

  …

  …

  42,460,934

  1936–37

  …

  …

  41,393,591

  1937–38

  …

  …

  40,200,427

  1938–39

  …

  …

  39,414,500†

  * These figures include the expenditure of the Statutory Committee, and its successor, the Special Grants Committee.

  † This figure is estimated.

  WHITE FISH INDUSTRY.
  Mr. Ellis Smithasked the Minister of Agriculture whether he has considered the copy of a resolution that was passed at a national rally of the National Federation of Fish Friers' Association, held on 18th June at Trentham Gardens, North Staffordshire; is it intended to take any action; is it intended to continue the restrictive policy; and will he call an early meeting of the National Joint Council of the Sea Fish Commission in order that they can give consideration to the restrictions?
  Mr. Leonardasked the Minister of Agriculture whether he has considered the protest from the National Federation of Fish Fryers against the Northern Waters Order, which it is held will increase still further the price of the fish they use; and if he proposes to intervene?
  Mr. Thorne: asked the Minister of Agriculture whether any reply has been made to the request made by the National Federation of Fish and Chip Fryers owing

  905
  to restrictions on fish landing that was sent to him on Monday last; and, if so, the nature of that reply?
  The Minister of Agriculture (Colonel Sir Reginald Dorman-Smith): I have received certain representations from the National Federation of Fish Friers and have considered the resolution passed at their meeting on 18th June. Of the measures to which they refer, the only one on which I have any power to take action is the maintenance in operation of the Sea Fishing Industry (Restriction of Fishing in Northern Waters) Order, 1938. That Order applies only to the months of June and July, and any amendment at this date, even if I were satisfied that it was warranted, would not affect landings until the latter part of July and so would anticipate only by a week or so the date when the Order will in any case cease to operate. I have, accordingly, informed the federation that I am not prepared to reopen the question. I have also indicated to them that, as regards the Trawler Owners' Voluntary Restrictions Scheme, I have no power to intervene. As regards the last part of the question, I understand that a meeting of the White Fish Industry Joint Council is being called at an early date.
  Mr. Shinwell: Is the Minister aware that, under the White Fish Industry Act, power is vested in the Commission referred to in the question of one of my hon. Friends to advise the Minister as to the action that ought to be taken in matters of this kind, and, therefore, why did he not consult this Commission or wait for negotiations before he came to a decision?
  Sir R. Dorman-Smith: As I said, the White Fish Industry Joint Council is being-called together at an early date.
  Mr. Adamsonasked the Minister of Agriculture whether the White Fish Commission has tendered him any advice regarding the inter-trading or closed-shop scheme which is to come into operation as between the fish merchants and the fish-friers and retailers; and what will be the effect of his scheme upon the registration, arrangements made under the Sea Fish Industry Act?
  Sir R. Dorman-Smith: No, Sir. With regard to the second part of the question, no voluntary scheme of this kind would
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  affect the obligations imposed by the Sea Fish Industry Act, 1938, as regards registration.
  Mr. Adamsonasked the Minister of Agriculture whether he has appointed any additional members to the White Fish Industry Joint Council to represent the interests of persons employed in the industry?
  Sir R. Dorman-Smith: No, Sir, but I am in communication with bodies representative of certain of those interests, with a view to some additional appointments being made at an early date.
  Mr. Adamson: Is the right hon. and gallant Gentleman considering them on a regional basis?
  Sir R. Dorman-Smith: No, Sir, it will be on a national basis.
  Mr. Shinwell: Is the Minister in communication with the workers' side of the industry?
  Sir R. Dorman-Smith: I am.

  AGRICULTURE.

    NOXIOUS WEEDS.
    Mr. De la Bèreasked the Minister of Agriculture the total prosecutions for the year 1938 for noxious weeds?
    Sir R. Dorman-Smith: In the year 1938, 1,071 occupiers of land were served with notices requiring the destruction of the injurious weeds specified in the schedule to the Corn Production Acts (Repeal) Act, 1921, growing on their lands. Of these 10 failed to comply and prosecutions were instituted in these cases.
    Mr. De la Bère: Will my right hon. and gallant Friend make more widely known that it is no use cutting down the weeds unless they are uprooted, as that does not seem to be as widely known as it should be?
    Mr. T. Williams: Is the Minister satisfied with the way that the Weeds Act is being carried out?
    Sir R. Dorman-Smith: It has to be carried out by the local authorities, and I have no reason to suppose that that is not being done
    Mr. Williams: Will the right hon. and gallant Gentleman take a journey with

    907
    me to Doncaster and see how many fields we pass on the road where the local inspectors ought to be operating?

    WAGES.
    Mr. John Morganasked the Minister of Agriculture the approximate number of agricultural workers in the county area of Holland, in Lincolnshire, who are now in receipt of wages of less than £2 a week throughout the year; and what would be the approximate cost involved in raising the wages of these men to £2 a week?
    Sir R. Dorman-Smith: My Department does not possess sufficient data to make a reliable estimate of the number of workers concerned or consequently of the cost of raising their wages, and I would refer the hon. Member to my reply to the question which he put on 26th June.
    Mr. Morgan: How does the Minister arrive at the figure he has given in this House showing that agricultural wages have been raised by 14 per cent. over the last few years?
    Sir R. Dorman-Smith: That is the general rise in wages.
    Mr. Morgan: How does the Minister arrive at that figure? If he cannot give the figure with regard to the districts, how can he give it for the whole country?
    Sir R. Dorman-Smith: If we take the country as a whole, we know that the minimum rate of wages has gone up from a certain figure to a higher figure, but this question deals with special classes of agricultural workers.
    Mr. Morgan: Is it not the fact that 20 per cent. of the men have gone off the land, and that, therefore, wages which should have increased have gone down in the last few years?

    POULTRY INDUSTRY BILL.
    Mr. V. Adamsasked the Minister of Agriculture whether he will give an assurance that the Poultry Industry Bill will be passed into law before the summer Recess?
    Sir R. Dorman-Smith: While the Government are anxious that the Poultry Industry Bill should proceed as rapidly as possible and have recently taken steps
    908
    designed to accelerate its progress, I regret that it is impossible, in view of the heavy Parliamentary programme, for me to give the assurance desired by my hon. Friend.
    Mr. Adams: Is my right hon. and gallant Friend aware of the importance attached by the industry to the passage of this Bill?
    Sir R. Dorman-Smith: Yes, Sir, that is why we introduced it in another place.

    MILK MARKETING.
    Mr. de Rothschildasked the Minister of Agriculture whether he has considered the complaint submitted on behalf of Mr. J. A. Thomas, of Wisbech, with reference to the manner in which, in May, 1938, the Milk Marketing Board terminated his contracts and ruined his business; and whether it is his intention to institute an inquiry into the conduct of the Board and its officers under Section 9 of the Agricultural Marketing Act, 1931?
    Sir R. Dorman-Smith: I am in process of directing the Committee of Investigation for England to consider and report to me on the complaint to which the hon. Member refers.

    ELECTRICITY SUPPLY.
    Mr. Vernon Bartlettasked the Minister of Agriculture whether the Government are satisfied that the supply of electricity to rural areas is consonant with the attainment of agricultural prosperity?
    Sir R. Dorman-Smith: The importance to agriculture of the application of electricity is fully recognised, and it is hoped that the Government's proposals for the re-organisation of electrical distribution will stimulate the development of supplies in rural areas. I am keeping in close touch with my right hon. Friend the Minister of Transport in this matter.
    Mr. Bartlett: Can the Minister give the House any idea when this necessary stimulant will be given?
    Sir R. Dorman-Smith: That question ought to be addressed to my right hon. Friend.
    Mr. T. Williams: If the right hon. and gallant Gentleman cannot state when the reorganisation is likely to be forthcoming, why does he make that the excuse for his reply?
    Mr. Morgan: Is the Minister discussing with anybody any particular scheme for electrifying the rural areas?
    Sir R. Dorman-Smith: No, Sir; I was talking about the general problem.

    FARM BUILDINGS.
    Mr. T. Williamsasked the Minister of Agriculture when the last survey of the conditions of farm buildings was made; who conducted the survey; and what report was made to his Department?
    Sir R. Dorman-Smith: I am not aware of any survey of the conditions of farm buildings in England and Wales. The second and third parts of the question, therefore, do not arise.
    Mr. Williams: Can the Minister say when the Government are going to take advantage of the Land Equalisation Act, 1931, and make a survey of farm buildings?
    Mr. Williamsasked the Minister of Agriculture whether he is aware of the dilapidated condition of all the farm buildings at the Woodlands Farm, Sykehouse, near Goole; that the landlord de clines to improve them or to give written consent for the tenant to improve them; and will he take steps to compel the land lord to restore these buildings, and make efficient farming possible?
    Sir R. Dorman-Smith: I am not aware of the dilapidated condition of the buildings on Woodlands Farm and have no knowledge of the circumstances out of which the question arises. It might be that the tenant is in a position to make use of the provisions of paragraph (29) of Part III of the First Schedule to the Agricultural Holdings Act, 1923.
    Mr. Williams: Is the right hon. and gallant Gentleman aware that the conditions of this farm typify conditions in every county in all parts of the country; and does not he think that the time has now arrived when, instead of giving a direct financial subsidy for one commodity or another, he ought to do something with regard to farm buildings to enable tenant farmers to make efficient farming possible?
    Sir R. Dorman-Smith: I do not accept those premises.

    PIGS.
    Sir Smedley Crookeasked the Minister of Agriculture whether, in view of the fact that the Development Board is anxious to do everything possible which would contribute to an increase in the supply of pigs for bacon, he will consider the advisability of amending the terms of the 1940 pig contract to offer inducements to farmers to contract for more pigs than were offered for this year?
    Sir R. Dorman-Smith: No contract for the sale of pigs to registered curers in 1940 has yet been prescribed. The determination of forms of contract is in any case primarily a matter for the Pigs Marketing Board in consultation with the Bacon Marketing Board, and I have no power to intervene.
    Mr. J. Morgan: Has not the Pigs Marketing Board made representations to the right hon. Gentleman recently that they were waiting for a word from him before proceeding with the scheme?
    Sir R. Dorman-Smith: That is a different question. That is a question of contracts.
    Mr. Morgan:This is a question of contracts too.

    SHEEP FARMERS (ASSISTANCE).
    Mr. J. Morganasked the Minister of Agriculture whether he consulted the Livestock Commission before formulating his legislative proposals for a subsidy to sheep farmers; whether they have expressed any views on the desirability or practicability of the proposals; and whether the House will be furnished with such views before the Agricultural Development Bill is further considered?
    Sir R. Dorman-Smith: No, Sir. The proposals for assistance to sheep farmers were decided upon by the Government in broad outline, in the form in which they appear in the Agricultural Development Bill, as a matter of policy. The Livestock Commission have been invited by the three responsible Ministers to prepare the detailed scheme for which provision is made in the Bill, and the Commission have readily agreed to undertake this task.
    Mr. Morgan: Has the Livestock Commission expressed any opinion as to the

    911
    desirability or workability of the scheme, and shall we know that before the Bill is proceeded with?
    Sir R. Dorman-Smith: I have no reason to doubt that they will be able to produce a workable scheme.
    Mr. Morgan: Have they expressed any views on the scheme?
    Sir R. Dorman-Smith: Not yet.
    Mr. Price: Is the Livestock Commission considering the scale of dressed carcase weights according to various grades?
    Sir R. Dorman-Smith: They are considering the whole working of the scheme.
    Captain Cazalet: Will my right hon. Friend expedite this scheme, as the delay is holding up a great many farmers from selling their stock?
    Sir R. Dorman-Smith: I have not got the Bill yet.

    MOLES.
    Mr. Hopkinasked the Minister of Agriculture whether he can now give the House the results of experiments in which red squill was used to kill moles; and, if the experiments were unsuccessful, will he now take steps to secure the release, if necessary under licence, of strychnine to farmers for the purpose of killing moles?
    Sir R. Dorman-Smith: The field experiments to test the effectiveness of red squill and other substitutes for strychnine for killing moles, to which I referred in the reply to the question put by the hon. Member on 13th February last, have not yet been completed. As my hon. Friend will appreciate, it will take some considerable time to carry out the exhaustive tests contemplated, and as at the moment no results of these tests are available the second part of the question does not arise.
    Mr. Hopkin: Is it possible for the House to know the right hon. Gentleman's own experience as regards red squill on his own farm?
    Sir R. Dorman-Smith: I am very much interested in the question.
    Mr. McGovern: Will the right hon. Gentleman tell us what is a red squill? Does it come from Moscow?

  OLD AGE PENSIONERS (PUBLIC ASSISTANCE).
  Mr. Kennedyasked the Prime Minister what reply he has returned to the representations made to him by the Scottish local authorities on the findings of the conference of Scottish public assistance authorities, Scottish Members, of Parliament and officials of the Old Age Pensioners' Association, held at Edinburgh on 24th June, at which a resolution was unanimously passed calling for increased old age pension allowances to an amount commensurate with the cost of living in order to relieve the public assistance authorities of the necessity of augmenting the pensions now being paid?
  The Prime Minster: I can find no trace of the receipt of the communication to which the right hon. Gentleman refers.
  Captain Sir William Brassasked the Minister of Health the number of old age pensioners who have been in receipt of relief in 1938 or in the first three months of 1939 in the towns of Clitheroe, Great Harwood and Padiham, respectively?
  The Parliamentary Secretary to the Ministry of Health (Mr. Bernays): I regret that the information desired is not available. The returns made to my Department of the number of persons in receipt of poor relief do not contain separate particulars for parts of an administrative county.
  Sir W. Brass: As this is a very important point, will the hon. Member make inquiries and see if it is possible to get the information?
  Mr. Bernays: I am afraid the information is not available as these statistics are not kept on the basis for which the hon. and gallant Member asks.
  Mr. Thorne: Is the hon. Member aware that the Minister some time ago was collecting information from all parts of the country on this point?
  Mr. S. O. Davies: Is not this information in the offices of the public assistance committees throughout the country, and that they are anxious it should be sent on to the Department?
  Mr. Bernays: I do not understand that. I understand that these statistics are available for the whole of the county, but not available for parts of the county.
  Sir W. Brassasked the Minister of Health the number of old age pensioners in the Lancashire County Council area whose pensions have had to be supplemented by relief during 1938 and the first three months of 1939?
  Mr. Bernays: Information in the exact form desired by my hon. and gallant Friend is not available, but on 1st January, 1939, there were 11,000 old age pensioners in the administrative county of Lancaster who were in receipt of poor relief. During the week ended nth March last the number of old age pensioners to whom outdoor relief in money or in kind was granted was 10,484.
  Sir W. Brass: In view of the answer which the hon. Member has given, is it not obvious that if the Lancashire County Council have this information for the whole of the county it includes these other towns, and surely it is possible for the hon. Member to find out this information for which we are asking?
  Mr. Bernays: I will make inquiries again, but I understand that statistics for parts of the county are not available.
  Mr. Silverman: Does the hon. Member suggest that the Lancashire County Council does not know the addresses of the persons to whom it is granting relief?
  Mr. Crossley: Can the hon. Member say what proportion the 11,000 bear to the whole number?
  Mr. Bernays: I understand it is about 10 per cent.
  Mr. Sorensen: Is it not the case that similar questions have been asked in regard to other parts of the country, and is it not in the national interest that this information should be collected?
  Viscountess Astor: Will the hon. Member find out who it is that is organising this push for information regarding old age pensioners?
  Sir W. Brass: In view of the serious condition which obtains in Lancashire in regard to these old age pensions, could not the hon. Member consider increasing the pensions?
  Mr. Hopkinasked the Chancellor of the Exchequer whether he has considered the terms of the petition from 97
  914
  old age pensioners of the Velindre post office district, Carmarthenshire; and what reply he has returned to this petition?
  The Financial Secretary to the Treasury (Captain Crookshank): The receipt of the petition has been acknowledged and its terms have been noted.

  COLONIAL ADMINISTRATION (MANDATES SYSTEM).
  Mr. Sorensenasked the Prime Minister whether the recent speech of the Secretary of State for Foreign Affairs signifying the intention of His Majesty's Government to secure the application of the mandates system to the whole of our Colonial Empire, represents the policy of the Government; whether this intention will be notified to the League of Nations, and whether he will invite other powers to accept this principle?
  The Prime Minister: The words used by my Noble Friend are not correctly repeated in the question. The statement of the Foreign Secretary was that we should be ready in the conduct of our Colonial administration
  "to go far upon the economic side, as we have already done on the political side, in making wider application of the principles which now obtain in the Mandated Territories."
  My Noble Friend's suggestion was, however, expressly made conditional upon the attainment of a fundamental agreement with other nations as to the methods and aims of Colonial administration, and this is clearly a prerequisite of the sort of action suggested.
  Mr. Sorensen: Will the right hon. Gentleman not agree that his Noble Friend's statement was open to the implication mentioned in my question, and may I further ask whether we are to take it now that His Majesty's Government repudiate the whole question of enlarging the principle of the mandates system to cover our Colonial Empire?
  The Prime Minister: In reply to the first part of the supplementary question, I must deprecate the practice of any hon. Member putting his own interpretation upon other people's words and then stating them as if they were the words used. In reply to the second part of the supplementary question, the answer is in the negative.
  Mr. Sorensen: Does not the right hon. Gentleman agree that the words of his Noble Friend were so ambiguous that they were liable to a variety of interpretations?
  The Prime Minister

  POST OFFICE.

    PARCEL RATES (BLIND PERSONS).
    Mr. Dayasked the Postmaster-General the number of parcels posted, during the 12 months ended to the last convenient date, for the use of the blind at a reduced rate of postage; and whether he will consider introducing legislation giving a total remission of postage on embossed literature for the blind?
    The Postmaster-General (Major Tryon):According to the latest information, it is estimated that the number of articles for the use of the blind posted annually is£,100,000. The special low postage rates on articles for the use of the blind already involve a sacrifice of postal revenue of more than £25,000 a year, and though I sympathise with the hon. Member's object, I regret that I am unable to adopt his suggestion.
    Mr. Day: Are we to understand that the cost to the Government is only £25,000 a year?
    Major Tryon: The figures I gave were correct. What we are doing is this, that whereas the public pay 6d. per parcel, the blind, owing to their special disadvantage, pay only one halfpenny for their literature.

  BRITISH BROADCASTING CORPORATION ("RADIO TIMES").
  Mr. Bellengerasked the Postmaster-General whether any payment was made by the British Broadcasting Corporation for the purchase of any publishing rights in the "Radio Times"; and, if so, what was the sum so paid?
  Major Tryon: I am informed by the British Broadcasting Corporation that no such payment has been made.
  Mr. Bellenger: Is the right hon. Gentleman aware that on the inauguration of the "Radio Times" it was done on a
  916
  sharing basis with a certain publishing company? Has he any knowledge of that?
  Major Tryon: I could not reply to that question without notice. The matter raised by the hon. Member is not for me but for the auditor.

  LONDON TRAFFIC (ALBION GATE).
  Sir William Davisonasked the First Commissioner of Works whether he is prepared to agree to the opening of Albion Gate for east-going vehicular traffic so as to relieve, to some extent, the congestion at Victoria Gate pending the carrying out of the necessary alterations?
  The First Commissioner of Works (Mr. Ramsbotham): Albion Gate was opened in 1937 for a period, and having regard to the experience then gained, I regret that I do not see my way to adopting my hon. Friend's suggestion.
  Sir W. Davison: Will the Office of Works use their good offices with the London County Council and the Ministry of Transport to get this congestion remedied in some other way?
  Mr. Ramsbotham: I hope that some improvement will take place as a result of good will.

  WAR RISKS (COMPENSATION AND INSURANCE).
  Sir W. Davisonasked the Attorney-General whether the Government are aware of the unfortunate position of large numbers of lessees who are bound under their leases to repair or reinstate premises in the event of their being damaged or destroyed by hostile aircraft in war-time, and are unable to obtain insurance against such liability; and what action the Government propose to take in the matter?
  The Solicitor-General (Sir Terence O'Connor): The point raised by my hon. Friend is, I think, covered by paragraph 5 of the report of the Committee on the Responsibility for the Repair of Premises damaged by Hostilities (Cmd. 5934), in which the Committee recommend that lessors or lessees should be relieved by Statute of any obligation

  917
  express or implied to repair war damage. As stated in the answer of my right hon. and learned Friend the Attorney-General to the hon. Member for Hitchin (Sir A. Wilson) on 26th June, the Government have accepted the recommendations contained in the report.
  Sir W. Davison: Is the Solicitor-General aware that this report was submitted to Parliament by the Lord Chancellor as long ago as February last, and that a large number of citizens are very seriously disturbed at their liabilities in this matter, and can he say when steps will be taken to act in the way suggested in the report?
  The Solicitor-General: I have told my hon. Friend that my right hon. and learned Friend the Attorney-General assured the hon. Member for Hitchin (Sir A. Wilson) that it is the Government's intention to implement the recommendations of the report.
  Colonel Nathan: Will the Solicitor-General say when the promise of the Chancellor of the Exchequer, made months ago, that legislation would be immediately introduced to deal with this grave matter, will be implemented, and in particular whether this legislation, of importance to vast numbers of people, will be passed into law before the House adjourns for the summer vacation?
  The Solicitor-General: The first part of the hon. and gallant Member's question should be addressed to my right hon. Friend the Chancellor of the Exchequer. With regard to the date of the legislation proposed to carry into effect the recommendation in the report I do not think it can be introduced except in the event of hostilities breaking out.
  Colonel Nathan: Is it within the Solicitor-General's recollection that there was no such reservation in the answer given by the Chancellor of the Exchequer, but that on the contrary he said that it was the intention to introduce legislation without any unnecessary delay, and that was many months ago?
  The Solicitor-General: I think the
  assurance given by my right hon. and learned Friend the Attorney-General and repeated by me to-day should be enough to allay the anxiety which is said to exist.
  Sir W. Davison: Is the Solicitor-General aware that there will be no anxiety if the lessee or the lessor can rely on the statement made to-day that the recommendation in the report will be carried into law at once?
  The Solicitor-General: Perhaps I might read the conclusion in the report to which I referred:
  " The Committee have come to the conclusion that the lessee or lessor should be relieved by Statute from his obligation, expressed or implied, to repair war damage."
  The Government intend to implement that view.

  MATERNITY AND CHILD WELFARE.
  Mr. Gordon Macdonaldasked the Minister of Health the names of the advisory committee for the area of the Lancashire County Council, set up in consequence of Circular 1705 of the Ministry of Health; and what consultations took place prior to the setting up of the committee?
  Mr. Bernays: I am informed by the county council that the committee is composed as follows:

  Chairman: Dr. Hall, County Medical Officer.

  Obstetric consultants: Professor Leyland Robinson, Professor Dougal.

  General Practitioners: Dr. Marsh, Dr. Winstanley.

  Before making these appointments consultation took place, as suggested in the circular, with the organisations of medical practitioners which appeared to the county council effectively to represent the opinions of practitioners in the county. The President of the Royal College of Obstetricians and Gynaecologists was approached with regard to the appointment of the two obstetric consultants, and the general practitioners and their deputies were nominated for appointment by the Lancashire and Cheshire Branch of the British Medical Association.
  Mr. Macdonaldasked the Minister of Health whether he is satisfied that the powers invested in the advisory committee, set up under Circular 1705, are not excessive, in so far as they interfere with the free and unrestricted practice of midwifery, etc., assured to every legally

  919
  qualified and registered practitioner under the Medical Acts; and whether he is aware that such a restriction has the disapproval of a large body of medical opinion?
  Mr. Bernays: The functions, which in Circular 1705 it is suggested might be exercised by an advisory committee of the kind referred to in the Circular, relate to a list prepared by a local authority for the purposes of a public service and my right hon. Friend cannot agree that they interfere with the rights of medical practitioners to practise midwifery. My right hon. Friend is not aware that the suggestions in the Circular respecting the functions in question have the disapproval of a large body of medical opinion.
  Mr. Macdonaldasked the Minister of Health whether, as it is possible for Circular 1705, sent out by his Department, to so limit the choice of an expectant mother as to prevent her from having the services of her family doctor should she so desire, he will so modify the Circular to do away with such a hardship?
  Mr. Bernays: The Circular does not impose or purport to impose such a limitation as is suggested in the question. The procedure suggested in the Circular contemplates that ordinarily some practioner on the list prepared by the local supervising authority will be acceptable to the expectant mother, but the Circular makes it clear that where this is not the case and the expectant mother desires the services of some other duly qualified medical practitioner, this practitioner should be called in by the midwife.

  NATIONAL HEALTH INSURANCE.
  Mr. T. Smithasked the Minister of Health how many of the recommendations of the Royal Commission on National Health Insurance have been carried into effect either by legislation or by administrative action?
  Mr. Bernays: The majority report of the Royal Commission on National Health Insurance contained 72 definite recommendations for modification of the scheme of national health insurance, and of these 59 have been carried into effect
  920
  either by legislation or by administrative action.
  Mr. Smith: Is the hon. Member aware that there is a growing feeling in the country about the inadequacy of the national health machinery both in regard to benefits and the limitation of medical benefits to injured persons, and can he say whether we may anticipate in the near future any legislative action on the lines suggested in the recommendations of the Royal Commission?
  Mr. Bernays: I am not in a position to make any statement on that matter.
  Mr. Rhys Davies: Is the hon. Member aware that the right hon. Member for Epping (Mr. Churchill) when he was Chancellor of the Exchequer deprived the national health insurance of millions of State subsidy—
  Mr. Speaker: That is entirely a different question.

  HIS MAJESTY'S SUBMARINE "THETIS" (SALVAGE).
  Mr. Loganasked the Parliamentary Secretary to the Admiralty whether he can yet state whether all hawsers and apparatus are now ready and when do they intend to attempt salvage of the "Thetis"?
  The Civil Lord of the Admiralty (Colonel Llewellin): The preparations for a further attempt to salvage His Majesty's Submarine "Thetis" have been completed by the Liverpool and Glasgow Salvage Association. A suitable lifting craft, the steamship "Zelo" has been chartered and the necessary hawsers obtained. In addition His Majesty's Ships "Ted-worth," "Hebe," "Gleaner" and "Speedy" are available to assist the salvage operations. The lifting craft is now present at the wreck and operations will commence as soon as the weather conditions are suitable.
  Mr. Logan: Is the hon. and gallant Member aware of the unseemly paragraphs which have appeared in the Press in regard to the question of the raising of this boat on account of a strike over pay, and will he get in touch with the persons concerned and see that proper arrangements are made in regard to those who are doing this dangerous job?
  Colonel Llewellin: I will certainly inquire into that matter. It has not been brought to my personal knowledge, but statements of that sort are to be deprecated.
  Mr. McGovern: Is the hon. and gallant Member aware of the great indignation throughout the country that this ship has not yet been salvaged; and are we to take it that these preparations are typical of the preparations which the Government are making in the event of war?
  Colonel Llewellin: If the hon. Member is correct it is because people generally do not realise the difficulties in getting a ship of this sort afloat once she has been submerged, but all possible preparations have been made, and the House may rest assured that the work will commence as soon as weather conditions are favourable.

  ICE CREAM VENDORS.
  Mr. R. C. Morrisonasked the Minister of Labour whether his attention has been drawn to the evidence given in a recent case in Birmingham in connection with the Eldorado Ice Cream Company, and to the dissatisfaction of the employés of that company with the conditions of their employment; whether he will instruct his conciliation officer to make inquiries into these conditions; and whether he will consider setting up a trade board to deal with this sort of employment?
  The Parliamentary Secretary to the Ministry of Labour (Mr. Lennox-Boyd): I would refer the hon. Member to the reply on this subject given on Thursday last to the hon. Member for Morpeth (Mr. R. S. Taylor).
  Mr. Morrison: Is the Parliamentary Secretary aware that this large firm is employing thousands of people throughout the country over 14 hours per day, without any recognised meal times, at a wage of 30s. per week; and does he not think that it is a matter which should be attended to by his Department?
  Mr. Lennox-Boyd: Without accepting the hon. Member's contention, the question of wages and the conditions in the retail distributive trades is considered in the unanimous report from the two sides of the industry which is now being made available. It seems better to deal with the retail distributive trades as a whole rather than piecemeal.
  Mr. Morrison: Will that report include these ice-cream vendors?
  Mr. Lennox-Boyd: Certainly.

  UNEMPLOYMENT (ALLOWANCES).
  Sir Richard Aclandasked the Minister of Labour whether he is aware that officials of the Unemployment Assistance Board are, in certain cases, making in one week a payment appropriate to that week together with the allowance or part of the allowance that may fall due in some future week, and in other cases making payments to applicants by way of loan; further, that in other cases they recover from an applicant the sum or part of the sum which has been paid out to him to cover a specifically recognised public need; and will he state by what statutory authority these actions are done?
  Mr. Lennox-Boyd: I am not clear as to what type of case the hon. Member refers in the first part of his question, but if he has any particular case in mind and will communicate with me I will have inquiry made. As regards the second part, the Board do not make payments of allowances by way of loan. As regards the third part, I assume that the hon. Member is referring to cases in which the Board make lump sum payments, in addition to the weekly allowance. In a small number of such cases the need for which the lump sum grant is made is of a kind for which the applicant might reasonably be expected to make provision out of his normal income and in such circumstances an adjustment of the weekly allowance is made under Clause IV 2 of the Statutory Regulations.
  Mr. George Griffiths: Is the Parliamentary Secretary aware that there are certain exchanges where the employer loans the. train fare to the people who go there, which is taken out of their wages afterwards?
  Mr. Lennox-Boyd: I am not aware of that.
  Mr. Griffiths: I thought not.

  MILITARY TRAINING (MEDICAL EXAMINATIONS).
  Mr. Parkerasked the Minister of Labour the number of conscripts medically examined to date in the different regional divisions; and the percentage placed in each grade in each division?
  Mr. Lennox-Boyd: I will if I may circulate in the Official Report a table showing the results of the medical

  MILITARY TRAINING ACT, 1939.

  Analysis of results of Medical Examinations during the period 8th June, 1939, to 24 th June, 1939.

  Grade.

  Numbers medically examined.

  London Divn.

  S.E. Divn.

  S.W. Divn.

  Mids. Divn.

  N.E. Divn.

  N.W. Divn.

  N. Divn.

  Scot. Divn.

  Wales Divn.

  Totals.

  I

  8,850

  4,800

  4,009

  7,915

  5,032

  6,272

  3,204

  5,362

  2,293

  47,737

  II

  382

  189

  203

  399

  157

  405

  103

  204

  143

  2,185

  II (a) (Vision)

  554

  254

  188

  363

  285

  384

  138

  230

  66

  2,462

  II(a) (Feet)

  132

  79

  77

  119

  73

  102

  22

  90

  23

  717

  Total of Grades II and II(a).

  1,068

  522

  468

  881

  515

  891

  263

  524

  232

  5,364

  Total of Grades I and II.

  9,918

  5,322

  4,477

  8,796

  5.547

  7,163

  3,467

  5,886

  2,525

  53,101

  III

  654

  261

  267

  467

  244

  431

  145

  309

  164

  2,942

  IV

  284

  138

  161

  221

  134

  232

  100

  169

  79

  1,518

  Grand Totals

  10,856

  5,721

  4,905

  9,484

  5,925

  7,826

  3,712

  6,364

  2,768

  57,561

  Grade.

  Percentages of men medically examined.

  London Divn.

  S.E. Divn.

  S.W. Divn.

  Mids. Divn.

  N.E. Divn.

  N.W. Divn.

  N. Divn.

  Scot. Divn.

  Wales Divn.

  Overall

  I

  81.6

  83.9

  81.7

  83.5

  84.9

  80.1

  86.3

  84.3

  82.8

  82.9

  II

  3.5

  3.3

  4.2

  4.2

  2.7

  5.2

  2.8

  32

  5.2

  3.8

  II (a) (Vision)

  5.1

  4.4

  3.8

  3.8

  4.8

  4.9

  3.7

  2.4

  2.4

  4.3

  II (a) (Feet)

  1.2

  1.4

  1.6

  1.3

  1.2

  1.3

  0.6

  1.4

  8.4

  1.3

  Total of Grades II and II(a)

  9.8

  9.1

  9.6

  9.3

  8.7

  11.4

  7.1

  8.2

  8.4

  9.4

  Total of Grades I and II

  91.4

  93.0

  91.3

  92.8

  93.4

  91.5

  93.4

  92.5

  91.2

  92.3

  III

  6.0

  4.6

  5.4

  4.9

  4.1

  5.5

  3.9

  4.9

  5.9

  5.1

  IV

  2.6

  2.4

  3.3

  2.3

  2.3

  3.0

  2.7

  2.6

  2.9

  2.6

  Grand Totals

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  LOCAL AUTHORITIES (PHYSICAL TRAINING ORGANISERS).
  Mr. Brookeasked the Parliamentary Secretary to the Board of Education how many local education authorities have not yet appointed physical training organisers; and whether he will circulate the names of these authorities in the Official Report?
  Mr. Bernays: I am circulating in the Official Report the names of 46 local
  924
  examination of militiamen up to 24th June.
  Following is the reply:
  education authorities who have not appointed physical training organisers, Several of these authorities, however, are known to have such appointments under consideration.
  Mr. Brooke: Will my hon. Friend convey to the Board of Education the desirability of taking further action in order to accelerate progress in this urgent matter?
  Mr. Bernays: I understand that the Board of Education are continually urging the local authorities to take steps.
  Viscountess Astor: How long can the local authorities go without taking action?
  Following is the list:

  Local Education Authorities who have not appointed Physical Training Organisers.

  ENGLAND.

  Counties.

  Huntingdonshire.

  Soke of Peter-

  Isle of Wight.

  borough.

  Isles of Scilly.

  County Boroughs.

  Barrow-in-Furness.

  Grimsby.

  Burnley.

  Smethwick.

  Burton-upon-Trent

  Stockport.

  Carlisle.

  Boroughs.

  Beverley.

  Ilkeston.

  Bridlington.

  Lytham St. Anne's.

  Chelmsford.

  Morecambe and Heysham.

  Chesterfield.

  Chorley.

  Mossley.

  Deal.

  Newcastle-under-Lyme.

  Dukinfield.

  Faversham.

  Peterborough.

  Folkestone.

  Ramsgate.

  Guildford.

  Rochester.

  Harwich.

  Salisbury.

  Hemel Hempstead.

  Stalybridge.

  Heston with

  Whitehaven.

  Isleworth.

  Workington.

  Hyde.

  Urban District.

  Ince-in-Makerfield.

  WALES.

  Counties.

  Cardiganshire.

  Radnor.

  Merioneth.

  Boroughs.

  Carmarthen.

  Llanelly.

  Urban Districts.

  Abertillery.

  Ebbw Vale.

  Barry.

  CINEMA ENTRANCE (PHOTOGRAPHERS).
  Mr. Parkerasked the Secretary of State for the Home Department whether he is aware that annoyance has been caused to persons attending performances of "Confessions of a Nazi Spy," particularly to refugees, by the attempts of German citizens to photograph them when entering the cinema; and whether such interference can be prevented, as likely to lead to a breach of the peace?
  The Under-Secretary of State for the Home Department (Mr. Peake): I am informed that two itinerant street photog-
  926
  raphers have for some time been permitted by the management to stand by the entrance to the cinema in question. Neither the police on duty at the spot nor the officials of the cinema have observed any other persons using a camera near the cinema.
  Mr. Parker: If I supply the hon. Gentleman with evidence in support of my question, will he look into it?
  Mr. Peake: Certainly, I will look into the evidence if the hon. Member will supply it.
  Mr. Poole: Is the hon. Gentleman aware that this film is an excellent piece of propaganda against the Nazi system, and may I recommend the whole Cabinet to go and see it?

  CORPORAL PUNISHMENT.
  Rear-Admiral Beamishasked the Home Secretary whether the governors of prisons for recidivists have been called upon for their opinions concerning the proposed abolition of corporal punishment; and, if not, will he state the reasons?
  Mr. Peake: If my hon. and gallant Friend will refer to the Report of the Departmental Committee on Corporal Punishment, he will see that the Committee heard evidence from a large number of prison officials, including governors, medical officers, and senior prison officers. In addition, the prison commissioners took steps to ascertain the views of prison governors as a whole and their views were submitted to and considered by the Committee.
  Rear-Admiral Beamish: Is my hon. Friend aware that a good many prison governors have the impression that their opinion has not been asked?
  Mr. Peake: If they have that impression, it is a totally false one, because they were asked by the prison Commissioners to give their views.
  Lieut.-Colonel Sir Thomas Moore: Did they consider the views of the victims?

  WORKMEN'S COMPENSATION (COMMISSION'S REPORT).
  Mr. Stephenasked the Home Secretary whether he can make any statement

  927
  as to when the Royal Commission on Workmen's Compensation Acts are likely to report, in view of the urgent need for the amendment of these Acts?
  Mr. Peake: I am afraid it would be quite impossible to make any such statement at the present stage. The Commission are engaged on a very difficult and complex inquiry and, as has already been pointed out in reply to previous questions, must deal with a very great mass of evidence, written and oral, before they can reach their conclusions.
  Mr. Stephen: Is the hon. Gentleman aware that there is very great discontent among trade unionists about many things in this connection, and cannot he get an interim report?
  Mr. Peake: This is a matter on which a great many previous questions have been answered, and I am afraid that at this stage I can only refer my hon. Friend to the previous answers.
  Mr. G. Griffiths: Does the hon. Gentleman know that coal miners are being killed every day?

  NEW ZEALAND LOAN.
  Mr. E. Smithasked the Chancellor of the Exchequer whether he can make a statement on the consultations and negotiations that have been held between representatives of the Government, the Bank of England, and Mr. Walter Nash, the Finance Minister of New Zealand; what has been the Government's policy in this matter; and what action has been or will be taken?
  Captain Crookshank: I cannot add anything at the present stage to the reply which my right hon. Friend gave on 21st June to the hon. Member for Govan (Mr. Maclean).
  Mr. Smith: Is the right hon. and gallant Gentleman aware that New Zealand is one of the most loyal members of the British Commonwealth of Nations, and that being so, are they not worthy of better treatment than they get from His Majesty's Government?

  WAR LOANS.
  Mr. Stephenasked the Chancellor of the Exchequer what is the total amount of the loans issued in connection with the
  928
  Great War; the total amount of interest paid on such loans up to the nearest available date; the total amount of such loans now outstanding; and the proportion of such which it is estimated is held by the banks?
  Captain Crookshank: Between 31st March, 1914, and 31st March, 1920, the deadweight debt increased in nominal value from£650,000,000 to£7,829,ooo,ooo, that is, by £7,179,000,000. Owing to repayments and conversions only a small proportion of the loans raised during that period still exist in their original form and it is not possible to give the other information asked for in the question. The whole amount of interest paid year by year on the debt will be found in the National Debt Return, Command Paper No. 5836 of 1938.
  Mr. Stephen: Can the Minister say what proportion is estimated to be held by banks?
  Captain Crookshank: No, Sir, for the reasons I have given in the reply.

  CONTRIBUTORY PENSIONS.
  Sir W. Brassasked the Financial Secretary to the Treasury whether he can give statistics showing at what rate the number of non-contributory old age pensioners is diminishing, their places being taken by old age pensioners under the Widows', Orphans' and Old Age Pensions Acts, and what annual saving to the Treasury results there from?
  Captain Crookshank: As the answer is a lengthy one and contains a number of figures, I will, with my hon. and gallant Friend's permission, circulate it in the Official Report.
  Sir W. Brass: Would it not be possible to use this surplus that is available to increase the present pensions of old age pensioners?
  Captain Crookshank: I think my hon. and gallant Friend had better read the reply that is being circulated.
  Following is the answer:
  The means of old age pensioners over 70 years of age who draw their pensions by virtue of the Widows', Orphans' and

  929
  Old Age Pensions Act are not investigated and it is, therefore, not possible to state what proportion of them would qualify for a non-contributory pension under the Old Age Pensions Act. Moreover, a small proportion of non-contributory pensioners, mainly where the first award was made before July, 1926, would be able to establish a contributory title if there were need for them to do so.
  The number of non-contributory pensioners in June, 1926, was 1,082,000. The number in March of this year was 576,000. At the latter date the number of pensioners drawing their pensions by virtue of a contributory title under the Widows', Orphans' and Old Age Pensions Act was 1,274,000. During the period of 12¾ years since the inception of the Contributory Pensions Scheme the increase in the total number of pensions is thus 768,000; the increase in the by-virtue pensions, 1,274,000, being offset by a reduction of 506,000 in the number of non-contributory pensions. Expressed in terms of money, the total increase in the old age pension cost is £20,000,000, namely, increase of by-virtue pensions £33,000,000, reduction of non-contributory pensions £13,000,000.
  The whole of the money required to provide pensions over the age of 70 is provided by the Exchequer under the Old Age Pensions Vote (Class V, Vote 6) which rises every year. As a result of the decennial increases in the rates of contribution, the first of which took place in 1936, young entrants into insurance and their employers do, in theory, contribute something towards the cost of their pensions over the age of 70, though the produce of these contributions is credited to the contributory Pensions Account. In fact, however, the contributions paid under the Contributory Scheme will never be sufficient to finance the whole of the cost of pensions under 70 and of widows' and orphans' pensions, and, therefore, in addition to the provision under the Old Age Pensions Vote (Class V, Vote 6), the Exchequer is required to make a substantial contribution which is increasing annually under the Widows', Orphans' and Old Age Contributory Pensions Vote (Class V, Vote 7). The Exchequer grant from this Vote would have to be correspondingly larger but for the credit of the decennial increases mentioned above.

  TRUNK ROAD, WREXHAM (CLAIM FOR DAMAGES).
  Mr. Thorneasked the Minister of Transport whether he can give any information in connection with the case against the Minister of Transport at Chester Assizes on Tuesday last; what were the damages and costs given against the Minister; and what was the total cost of the case?
  The Parliamentary Secretary to the Ministry of Transport (Captain Austin Hudson): Damages were claimed, against my right hon. Friend for alleged negligence and trespass by his servants and agents. The plaintiff alleged that she had suffered injury as a result of tripping over a survey peg placed on her land without her knowledge and consent, in connection with a scheme for the improvement of the trunk road near Wrexham. On certain points, particularly as regards the alleged trespass and the visibility of the peg, the evidence would have been conflicting, but on the advice of leading counsel the case was settled by the payment of £300 damages and the plaintiff's taxed costs. These costs have not yet been taxed and it is, therefore, not possible at present to state what is the total cost of the case.
  Mr. Thorne: May I ask who will pay this cost?
  Mr. Hudson: The payment will be made from the Road Fund.

  HOUSE OF COMMONS (DOMINION AND FOREIGN PRESS).
  Mr. De la Bère: I wish to ask for your guidance and assistance, Mr. Speaker, on a question of which I have given you previous notice, namely, whether, in view of the increasing importance of making known to the world what is said in the House of Commons, you will be good enough to take steps to increase the number of seats available for representatives of the Dominion and foreign Press?
  Mr. Speaker: The whole question of the position of the Dominion and foreign Press, and the facilities which they enjoy, is now being considered.
  Mr. McGovern: Further to that point, could there not be a reconsideration of the whole seating accommodation of this

  931
  House, as the Ladies' Gallery and others are scandalous things for a Mother of Parliaments to have?

BUSINESS OF THE HOUSE.
Mr. Greenwood: May I ask the Prime Minister for what purpose it is proposed to move the suspension of the Eleven o'Clock Rule?
The Prime Minister: We desire to conclude the Committee stage of the Finance Bill to-day. We also hope there will be time to take the Report and Third Reading of the Marriage (Scotland) Bill and the Patents and Designs (Limits of Time) Bill. It is proposed to move the suspension of the Eleven o'Clock Rule for this purpose.
Mr. R. Gibson: May I ask the Prime Minister whether he is aware that many Scottish Members are surprised that the Marriage (Scotland) Bill appears as Item 2 on the Order Paper? There is considerable surprise for the reason that during the Committee stage, when there were very considerable discussions, the right hon. Gentleman the Secretary of State for Scotland intimated to the Committee that he would consider whether or not it would be possible to meet certain objections by putting down Amendments.
Mr. Speaker: The hon. Member may not make a speech on the matter.
Mr. Gibson: I am raising a matter with regard to the Business of the House. There is surprise that, in view of the undertaking given by the Secretary of State, this Bill appears on the Order Paper without there having been any intimation of Amendments or any intimation that there were to be no Amendments. Accordingly, hon. Members are not in a position to discuss this matter to-day.
Mr. Maxton: Further to that point, it seems to me to be rather unfair that the Scottish Members should learn to-day.
without there having been any intimation or announcement when the Business was stated last Thursday, that to-night, at eleven o'clock, an important Scottish Measure is to go through an important stage of the proceedings. It seems to me that as to-morrow is to be a Scottish day, if the Bill has to be taken at eleven o'clock, to-morrow would be the appropriate day on which to do so. I wish to add my protest to that of the hon. and learned Member for Greenock (Mr. Gibson) about this very haphazard way of doing business.
Sir T. Moore: Is my right hon. Friend not aware that once a Bill has left the Scottish Standing Committee, there is nothing more to be said about it?
Mr. Maxton: I wish to ask whether the Marriage (Scotland) Bill is to be taken to-night, or whether it cannot be postponed until a time when Members can be properly informed of what is taking place?
The Prime Minister: In announcing the business on Thursday I said, as I always do on these occasions, that if time permitted other Orders would be taken. I was under the impression that this was a Bill which Scottish Members were anxious to have passed. With regard to the particular point raised by the hon. and learned Member for Greenock (Mr. Gibson), I have consulted my right hon. Friend the Secretary of State for Scotland, who says he will be prepared to make a statement in the Debate on the Bill.
Mr. Kennedy: May we assume that the Bill will not be taken at a late hour?
The Prime Minister: Not at a late hour.
Motion made, and Question put,
" That the Proceedings on Government Business be exempted, at this day's Sitting from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]
The House divided: Ayes, 220; Noes, 100.

ORDERS OF THE DAY.

  FINANCE BILL.
  Considered in Committee. [Progress, 29th June.]
  [Colonel CLIFTON BROWN in the Chair.]

  FINANCE BILL.

    NEW CLAUSE—(Reduction of duties on certain licences.)
    The duties on the following excise liquor licences, that is to say, retailers' on-licences for spirits, beer or wine, retailers' off-licences for spirits, beer or wine, shall be reduced by twenty-five per centum.—[Mr. Craven-Ellis.]
    Brought up, and read the First time.
    Mr. Daggar: On a point of Order. May I ask why a new Clause—(Extension of Section 19 of Finance Act, 1920)—which stands on the Paper in my name and that of other hon. Members has not been called?
    The Deputy-Chairman: It has been considered but has not been chosen.
    4.3 p.m.
    Mr. Craven-Ellis: I beg to move, "That the Clause be read a Second time."
    This is by no means the first time that this subject has been brought before the Committee. The Finance Act, 1910, as is well known no doubt, increased the licence duties by something like 100 percent. but I would draw the Committee's attention to the fact that at that time licensed premises were permitted to remain open from 17 to 19 hours daily. That is a period of opening which I do not approve, but I think it necessary to draw attention to those hours because when premises were open from 17 to19 hours daily the duty was 100 per cent. lower than it is to-day. The Licensing Act, 1921, reduced the licensed hours from 17 and 19 to nine per day. The House has already accepted the view that the licence duties are an unjust burden upon the licensing trade. The right hon. Member for Epping (Mr. Churchill), when Chancellor of the Exchequer in introducing his No. 2 Budget, which in fact did not get on the Statute Book, made this statement:
    " For many years it has been contended that the liquor licence duties which were imposed in 1910 stand at too high a level, in view of the curtailment of hours of sale. I stated on last year's Finance Bill that this
    954
    contention was justified so far as on-licences are concerned."
    There is an admission that this duty is too high. The right hon. Gentleman the Prime Minister, when Chancellor of the Exchequer, did make some very slight modification when the off licence trade was permitted to sell half bottles of spirits. The point to which I would direct attention is the fact that there was an understanding that if the opposition to the introduction of the' half-bottle trade was withdrawn, the licensees would be given a 25 per cent. reduction. That promise has existed for 10 years and I think it is time that it was implemented. No one will deny that the licensees are a very loyal section of the community and are fully conscious of their responsibility at this critical time, but having regard to the fact that a promise was made to reduce this duty by 25 per cent. it is contended, and I think with reason, that the Chancellor of the Exchequer, even in present conditions, should give some consideration to implementing that undertaking.
    4.7 p.m.
    The Financial Secretary to the Treasury (Captain Crookshank): The hon. Member for Southampton (Mr. Craven-Ellis) has raised a question which, as he reminded us, has been before the House and the Committee on several previous occasions. He went back to the proposals of the right hon. Member for Epping (Mr. Churchill) in 1929, and, as he pointed out, those proposals were not subsequently enacted, owing to a change of circumstances over which my right hon. Friend had not then complete control. It is true that concessions have since been made with regard to half bottles, but on this point of reducing licence duties, both on and off, by 25 per cent. the present Prime Minister in 1934, speaking on the Finance Bill of that year, said in Committee:
    " Let me say that, while I cannot accept this Clause now, because it would cost me about £1,000,000, which certainly therefore would not come within my possibilities, I do not deny that there is a good case for a reduction of the duty when circumstances permit it."—[OFFICIAL REPORT, 12th June, 1934; col. 1653, Vol. 290.]
    The matter has been raised again from time to time both with the present Chancellor of the Exchequer and with the Prime Minister, since 1934. It is therefore clear that the case for an eventual reduction has been submitted and has been considered. In fact the words of the

    955
    Prime Minister himself, which I have quoted—that there was a good case when circumstances permitted it—is the position, I am afraid, in the year 1939. The hon. Member for Southampton has perhaps done a good service to a very good body of men who serve the public all over the country, in keeping their case before the Committee and so showing that the question is still alive and of interest to any Chancellor of the Exchequer who will find himself in a position to reduce taxation, but I am afraid that this year we are not in that happy position, and on behalf of my right hon. Friend I must ask the Committee not to give a Second Reading to this Clause.
    Mr. Craven-Ellis: In view of the answer that this duty is one which should be removed at the first opportunity, I beg to ask leave to withdraw my Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Charge of national defence contribution not to apply to industrial and provident societies.)
    As from the first day of April, nineteen hundred and thirty-nine, Section nineteen of the Finance Act, 1937 (which relates to charge of national defence contribution), shall not apply to any trade or business carried on by a society registered under the Industrial and Provident Societies Act, 1893, unless such trade or business is carried on by a society existing primarily for the purpose of earning and distributing profits on its capital.—[Mr. Barnes.]
    Brought up, and read the First time.
    The Deputy-Chairman: This new Clause raises the same point as a new Clause on the Paper in the name of the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence)—(Charge of national defence contribution not to apply to housing associations)—and I suggest that the discussion might take place on both new Clauses, and that a Division be taken on the second one only if that be necessary.
    Mr. George Griffiths: Do I understand that the new Clause in the name of the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) and the Clause that you have called are to be discussed together? Are not these two separate Clauses entirely? Shall we take two Divisions after the Debate?
    The Deputy-Chairman: Both the new Clauses affect the charge for National Defence Contribution and I suggest that a broad discussion could take place on the first Clause
    Mr. Griffiths: Do I understand, then, that we shall be able to discuss both these Clauses together and take two votes instead of one?
    The Deputy-Chairman: That is my suggestion if the Committee approve
    4.12 p.m.
    Mr. Barnes: I beg to move, "That the Clause be read a Second time."
    I must apologise for not being in my place when this Clause was called. I hardly expected it to be reached so early in the proceedings. I think the Chancellor of the Exchequer is familiar with our main case, which is the origin of this New Clause, and on this occasion I do not propose to review the whole position, because I think that I gave it rather extensively on the Finance Bill of last year. We in no way go back on any of the arguments that were advanced on that occasion, and if I state that now perhaps the Chancellor of the Exchequer will accept the statement to avoid unnecessary repetition. But I would like to refer to the reply which the Chancellor gave last year to this proposal, when he stated the reasons or the principles that influenced him in exempting public utility companies from National Defence. The right hon. Gentleman will recall that our case is based upon the view that it is exceedingly unfair that co-operative societies should pay taxation of this description when there is exemption for certain classes of business, for the professions and for public utility companies. On 28th June, 1938, the Chancellor of the Exchequer used this argument in explaining why he exempted public utility companies from the operation of National Defence Contribution, but still insisted that societies registered under the Industrial and Provident Societies Act should continue to pay. I will quote the argument of the Chancellor on that occasion. He said, when dealing with public utility undertakings:
    "I cannot proceed on any other principle than that, in enacting this national contribution principle, we voluntarily decided to exempt companies where they are statutory undertakings, consisting, wholly or mainly.

    957
    in the United Kingdom or the Dominions, of certain services, such as the supply of water, gas, electricity and so forth."
    Later he stated:
    "I do not think that it would be possible for the House of Commons to take out individual cases and say, 'It is true you are within the definition, but I will tax you.' You must proceed on some definition, and the definition here is the best we can make"—
    I want the Chancellor particularly to note the next sentence:
    "though I confess that some of them are escaping when you might reasonably expect them to come in; that is because definitions sometimes break down on being interpreted. But the principle of the thing is as plain as possible. The principle is that where you have a public service company rendering public services in supplying water, gas, or electricity, where there are provisions which limit profits or charges, you are dealing with a special case rather different from the trader who is enterprising and endeavouring to carry on his business as successfully as he can."—[OFFICIAL REPORT, 28th June, 1938; cols. 1806– 7, Vol. 337.]
    I should like again to emphasise that the Chancellor voluntarily decided to exempt statutory companies when the statutory limitation of profits is in fact illusory, because in the Debate last year we advanced example after example of statutory companies engaged in gas, water, electricity and so on, whose profits and interest payments, not in an exceptional year, but over a long period of 10 or 15 years, averaged from 5 to 15 per cent., and in addition many of them made huge bonus distributions. The Chancellor has exempted professions and small businesses up to £2,000, and given modifications with regard to building societies under this scheme, and, therefore, our contention is that there are plenty of precedents in the arrangements made by the Chancellor himself for industrial provident societies being exempted. It will be observed that we specifically refer to the type of society which does not exist primarily for making profit.
    The second point that I would like to make is that our proposed new Clause does not offend the principle, which the Chancellor himself admitted, that governs public utilities. The Chancellor admitted that many of them should in fact be paying this tax, but he takes no steps at all to bring them under tax. These public utilities, the Chancellor argued, are different from the ordinary traders, but the differences, I submit, represent
    958
    advantage to the public utility companies, because they have a monopoly with their services, whereas industrial and provident societies have to compete with ordinary traders. Public utilities make handsome profits, because even 5 per cent. is a very reasonable profit in these days, and their profits are continuous, and in fact they represent sheltered businesses instead of the type of business that requires special privileges or assistance from the State. I think I am entitled, therefore, to argue that there is no case why they should be excused and why industrial and provident societies, not operating for profit, should be brought within the purview of the tax.
    Take the case of the shareholders who invest their money in public utility companies. There is no difference in principle between that form of investment and any other form. The shareholders put their money in not primarily for the purpose of rendering a service to the community. That is not the motive of the investors in a public utility. Their motive rests entirely on profit, on the reasonable certainty that they will get regular and good profits, so that the public service on which the Chancellor hangs his case for exemption is a secondary factor, if it exists at all, as far as the investor is concerned. With regard to public utilities, which achieve a monopoly, no public test of efficiency is applied by the State in any way, and we have no general guarantee that these services operate at a cheaper ratio merely because they are a monopoly. As a matter of fact, in this direction the normal test of industry does not apply, because having a monopoly they can practically do what they like. In the case of the London Passenger Transport Board we have had an instance recently of a company that has increased its charges to the public merely for the purpose of maintaining its relatively high rate of dividend, or for the purpose of increasing its dividend. No one can argue that the increase in charges in that case is for improving the standard of labour of those operating the services, because recently that was refused.
    Having stated that position, let me now consider the position of an industrial provident society. This type of business is organised—as a matter of fact, the Statutes lay it down—for improving the social conditions of the workers of this country. That is the test that is applied.

    959
    In the recent Prevention of Fraud (Investments) Act that was emphasised in Section 10, in endeavouring to give a definition to a society that should be registered under the Industrial and Provident Societies Act. So, here, Parliament lays it down that the primary purpose of an industrial and provident society must be that of improving the status or social or living conditions of the workers. Here is a type of business in which an investor is permitted to enter, not on the ground merely of making a profit or getting an assured rate of interest on his capital, but of aiming at a social purpose of the character that I have described. Then again, in public utilities, there is no limitation of share capital. A person can have £200 or £200,000 or more in a public utility company, but Parliament, for the purpose of ensuring that these societies are not used for the purpose of investment, has limited to £200 the amount of capital which a member can hold, and that is to ensure that the interest rate on invested capital in no way undermines the true purpose for which the society exists, namely, that any surplus arising should go to the members for their individual and collective improvement. If we take the average shareholding of the 8,000,000 members of the working and lower middle classes who are associated with this type of industrial organisation, we have proof that the societies have never moved away from the original purpose which Parliament had in mind when it passed these Statutes, in that the average shareholding works out at only about £18 per head. That is a clear indication that it is through this type of society that the great mass of the people have endeavoured to improve their social status and make their small wages go a little further than otherwise would be the case.
    When we come to the surplus in these societies, ordinarily termed profit, the Chancellor is fully aware of our main argument on that case, that, the surplus in this instance being derived by the members trading with themselves and not with a third party, which normally must be the case for a taxable item like profits to be chargeable to Income Tax, the whole basis of the trade of these societies is with their individual members—
    Captain Strickland Captain Strickland indicated dissent.
    Mr. Barnes: —and so the surplus becomes the difference between costs and the prices charged. That represents the great preponderance of the surplus arising through co-operative trade, and the amount of trade with what is known as the non-member is infinitesimal. Perhaps the hon. and gallant Member for Coventry (Captain Strickland) will permit me to state that since the principle of mutuality was originally departed from, in, I think, 1932, there has never been any desire on the part of the official machinery of the co-operative movement to avoid the problem of taxation of any trade done with non-members. I myself was present at an interview with the then Chancellor of the Exchequer, now the Prime Minister, just before the principle of mutuality was destroyed, when we offered that we would meet the difficulty by keeping separate accounts.
    Captain Strickland: I did not object to the statement of the hon. Member except in so far as that the trade of the co-operative societies was done exclusively on a mutual basis.
    Mr. Barnes: You really can say "exclusively," because the amount of business that is done with non-members is, as I indicated, infinitesimal. It is so small as hardly to count in the vast sum of £430,000,000 which represents the total all-in turnover of the co-operative movement.
    Captain Strickland: Has the hon. Member the figures?
    Mr. Barnes: No, but they have been got out from time to time, and they are so small that I think they are not worth bothering about. Nevertheless, I make this concession, that whether they are small or large, we have always recognised that the principle is there, and we have no real claim, except on the ground of the administrative convenience of the Treasury, that that amount of trade done with non-members should escape its legitimate charges. I was going on to explain that when the Prime Minister, as Chancellor of the Exchequer, in 1933 was contemplating this change that destroyed the principle of our mutuality position in Income Tax law, we made an offer to him that we were prepared to take any administrative action that was required for

    961
    the purpose of disclosing any trade with non-members so that it could be separately treated, if necessary. I have always regretted that the Treasury were not prepared on that occasion to explore that possibility, because I think it would have saved a long and unprofitable controversy. Members of the House should recognise that the feeling in the co-operative movement is not entirely with regard to the sum involved, although the sum under this progressive method of taxation, now that our mutuality position has been breached, tends to become larger. Apart from the sum there is a greater feeling in the co-operative movement that this mutuality position should have been destroyed in law, because we feel fundamentally that that is an injustice and a discrimination against almost half the population of these islands who have sought the co-operative movement as a method of investment.
    Chancellor. We recognise as responsible elements in the community that the nation is faced with an abnormal situation. We recognise that the Chancellor must get the necessary money to discharge his liabilities. If the country were in a position where the Chancellor had adopted the attitude that because we were faced with abnormal expenditure, abnormal measures of taxation were necessary, and that he had to embark upon a method of taxation that was entirely different from the principles of taxation practised in this country hitherto; and if he had stated that that would apply to all, that there would be no exemptions, and that it would be outside the conditions applying to Income Tax, he might have had some case, but that has never been the Chancellor's position. National Defence Contribution falls within the four walls of Income Tax law and administration. The Chancellor himself, when he introduced the National Defence Contribution No. 2, proceeded to exempt certain categories of trade. Traders who are in business and making a profit up to £2,000 a year cannot be said to be doing a negligible business. Very often it is a considerable business to make £2,000 a year. The Chancellor himself introduced all these exemptions, and in our case the change has been aggravated because he has created a fourth category for co-operative societies.
    962
    Let me give the three categories of modification which the Chancellor has produced in National Defence Contribution No. 2. The complete exemptions are the public utility corporations, small businesses whose profits are under £2,000, and professional people. Then there are partial exemptions or modifications for companies whose profits are between £2,000 and up to£12,000 a year. Then there are modifications for building societies, private companies and certain classes of insurance. With regard to the third category, the Chancellor stated that companies which came into the National Defence Contribution will have to pay this 5 per cent. of their taxable profits, which will, in fact, be in the nature of one-fifth, or 20 per cent., increase in their Income Tax liabilities.
    I submit that the industrial and provident societies do not come within any of these three categories. I ought to say to avoid any misunderstanding that a cooperative society whose surplus is less than £2,000 is exempted like any private trader. I ought to admit that a co-operative society whose surplus is between £2,000 and £12,000 gains the same advantages as other traders. When, however, we come to those societies whose surpluses are over £12,000, they do not fall within the third category of the companies which pay one-fifth of their Income Tax liability. For instance, I have the case of a society, which I will call Society A, whose Income Tax liability is about £126 10s., but under National Defence Contribution their payment will amount to £400. In another case of Society B, their Income Tax liability under the 1933 change is £178, but with their National Defence Contribution it amounts to £412. Members of the House have never really faced up to this particular fact. That is because the Treasury in this case have changed their practice with regard to co-operative societies. For this purpose they have charged the interest of co-operative societies and levied the National Defence Contribution on the full interest liability. When you take into consideration that 80 per cent. of our membership are not liable to Income Tax in any circumstances with regard to their personal income, it does aggravate the injustice. Once more we bring this new Clause forward in order to emphasise that if modifications are to be made for professions, public utility

    963
    companies and building societies there is an overwhelming case for the exemption of industrial provident societies. In any circumstances, the Chancellor is guilty of a gross injustice to this great group of citizens in changing the administrative practice of the Treasury in that regard.
    4.38 p.m.
    The Chancellor of the Exchequer (Sir John Simon): Each year since the National Defence Contribution No. 2 has been enacted this matter has been raised on the Committee stage of the Finance Bill. The hon. Gentleman who has just spoken was justified in claiming that he had put the arguments forcefully on previous occasions and he endeavoured to summarise them on this occasion without, I think, any loss to their force. In the same way, I hope I shall not be expected to deliver any lengthy reply, because really our respective positions are the same. I do not think that the hon. Gentleman has produced any novel argument, and it may be that in what I have to say he will feel that I have not produced any novel defence. The bare bones of the matter can be laid down once again, and they are fairly simple. In the first place, in 1933 this Imperial Parliament, in the Finance Act, enacted that the surplus arising from transactions of cooperative societies should, be regarded as profits or gains for the purposes of Income Tax. Before that there was from the legal point of view a great deal to be said for the view that this was not within the statutory conception of income, but since 1933 the law has undoubtedly been what I have just stated. That being so, when the National Defence Contribution No. 2 was imposed, it was imposed with the provision that the rules to be applied should be, subject to some necessary modifications, the same as the rules that apply in the case of Income Tax. Therefore, there can be no doubt whatever that the provisions of the Act of 1933 do apply to co-operative societies
    The dispute has been whether, when the National Defence Contribution was devised, it was right or wrong to make that application. As I have pointed out before, it is as well to remember that this result did not follow because any special provision has been made in the National Defence Contribution Clauses to catch co-operative societies. It is due
    964
    to the fact that once we have said that Income Tax principles shall apply they are automatically included. If the hon. Gentleman's proposal is adopted it will mean that there would have to be a special exception for the purpose of securing that the ordinary law is not applied. I do not think that that is in the circumstances a reasonable thing to do.
    I will not again go through the explanation why it is that the charge in the case of the co-operative societies is the amount which the hon. Gentleman has just referred to. Their situation is exactly the same as that of a limited company which makes a profit of, say, £100,000, and distributes £60,000 of it, and retains £40,000. The amount of the Income Tax which the company would have to bear is the same as that of a co-operative society which had £100,000 surplus, distributed £60,000 and retained £40,000. The difference is this: It is true that under National Defence Contribution, neither in the case of a limited company nor in the case of a cooperative society, was any attention paid to the question of whether or not what is to be distributed is distributed among a great many people who are people of small incomes, or whether it is distributed among fewer and more wealthy people. That is the only difference there is, and it is not a difference which makes a co-operative society different from a company under the National Defence Contribution provisions.
    There remains the point, which I admit is a serious one, with which the hon. Gentleman began. Anyone listening to him might have been excused for thinking that he was arguing that co-operative societies should be exempt and that certain other bodies such as public utility companies should be taxed. I agree that the comparison is a very natural one to make. I am just as much disturbed about any instances there are in which public utility companies which are exempt are known to make substantial incomes. Instances were given to me by the right hon. Member for Hillsborough (Mr. Alexander) two years ago. I looked at the matter with a great deal of attention, but the difficulty is that if you are going to make a change in this respect it must be made, not by picking out a number of companies, but by a general change. I think it is right to say that the public

    965
    utility company, whose profits are strictly limited and whose charges are strictly controlled, should be regarded as being in a special position when you come to impose upon them an. extra tax of this sort. Such a company is not free by law to adopt all the methods which other people may adopt, but it is the case that some public utility companies do, in spite of those limitations, make considerable profit, and I am as much disturbed about it as anybody else. As I said last year, that must be dealt with, and I think very soon dealt with, by stricter provisions in the case of electricity undertaking Bills. What I cannot do is to pick out certain members of this group and say that they shall pay National Defence Contribution No. 2 and that the rest shall not. I think that, on the whole, the general principle that public utility companies should not pay is probably the right one.
    I have set forth the considerations which have influenced me in my decision, but I feel sure that I have not convinced or converted either the hon. Member or the right hon. Gentleman on the Front Bench, and they may be equally sure that their arguments, which are not more novel than mine, have not convinced me, and I hope that the Committee will reject the Clause.
    4.46 p.m.
    Mr. Pethick-Lawrence: In accordance with your permission, Colonel Clifton Brown, to raise upon this new Clause the matter which occurs in the form of a separate new Clause in my name, I desire to put before the Chancellor of the Exchequer the position of housing societies. The Chancellor said, in reply to my hon. Friend the Member for East Ham South (Mr. Barnes), who spoke of the position of co-operative societies, that he raised no new point, and that from his point of view the position remains the same as it was last year. As regards housing societies, I venture to say that the position is in one respect, and that a very important one, substantially different this year from what it was last year. In order to make that point clear I should like to recall to the Chancellor what he said on 11th July last year when I brought a similar matter to his attention. In the Official Report for that date he said:
    " The societies for which the right hon. Gentleman is pleading are, as he said, bodies
    966
    established for the purpose, among other purposes—I call the attention of the House to the words 'among other purposes —of constructing, improving or managing or facilitating or encouraging the construction or improvement of houses for the working classes."
    At the foot of the next column he said, referring to the housing societies:
    " I would point out that they have these housing purposes among other purposes, and my advisers are alarmed at the idea that there should be exemption in their favour, because it would be easy to have a housing association the object of which includes the provision of houses but also includes a lot of other purposes with a view to supplementing the money that is available for the main object."—[OFFICIAL REPORT, 11th July, 1938; cols. 1030–32, Vol. 338.]
    The new point which I wish to bring to the attention of the Chancellor is that those remarks of his, which had a certain validity last year, are very much affected by the passage of the Prevention of Fraud (Investments) Act of the current Session, because as a result of the passage of that Act industrial and provident societies must henceforth be either bona-fide co-operative societies or societies conducted mainly for the purpose of improving the conditions of living or otherwise promoting the social well-being of members of the working classes or otherwise for the benefit of the community. Housing associations are not co-operative societies and do not in a general way include bodies working as distinct from housing work for the benefit of the community. It therefore follows that henceforth industrial and provident societies which are not housing associations are operated mainly for the purpose of improving the conditions of living of the working classes, and in view of that fact the position is very different from what it was when the Chancellor made his remarks last year. But I am aware that he did not base his opposition solely on that ground. He based it also on the ground which is contained in his words on the same day:
    "The ground on which a public utility company is given exemption is not that it does not work for profit or that the profit is limited; the ground is that it is one of those enterprises supplying gas, water, transport, electricity and so on which render a public service which puts it in a special category."—[OFFICIAL REPORT, 11th July, 1938; col. 1031, Vol. 338.]
    But though he made that statement on that occasion, a year previously when he was introducing National Defence Contribution he spoke of the public utility coms-

    967
    panies and said that the reason for their exclusion from National Defence Contribution was that they were not free, as others might be, to make what profits they please or to charge what they like. This afternoon he himself has been confessing that public utility companies as such are not wholly limited and do sometimes make quite substantial dividends—I do not want to exaggerate, a few may —but there is no doubt that the housing societies on behalf of which I am speaking are definitely limited to a rate of interest of which the Treasury approves, and therefore there can be no question that they do come under the words which the Chancellor used on 30th June, 1937, when he was introducing National Defence Contribution.
    Therefore, I think I have succeeded in showing that the second of the two points which the Chancellor made is hardly applicable to the case of N.D.C., especially in the case of housing societies, because they are limited, often to a greater extent than public utility societies. With regard to the first point, if they are industrial and provident societies the objection which he raised last year no longer applies, owing to the passage of the Act to which I have referred. It is just possible that the Chancellor may claim that he has a right to retain his objection of last year on the ground that all housing societies are not necessarily industrial and provident societies. I am informed that out of some 138 housing associations there are only two or three which are companies registered under the Companies Acts. If that is the point which the Chancellor makes, I should be quite willing to accept an Amendment framed not in the words in which my Clause is framed, but in such words as the Chancellor himself may decide upon, which would exclude housing associations formed under the Companies Acts. I cannot ask him to accept my new Clause, because it is not being called, but I hope that I have convinced the Chancellor that the main ground which he raised against my Amendment last year no longer applies, and in view of that fact I ask him to consider whether he cannot exclude from N.D.C. the housing associations, which on fair and reasonable grounds, ought not to have to bear this burden. It was designed for an entirely different set of
    968
    people and ought not to fall upon the public-spirited and philanthropically-minded people who are undertaking this work. In days gone by the Chancellor has from time to time expressed his appreciation of these associations, and I hope that to-day he will show it in a practical form by excluding them from the operations of this tax.
    4.55 p.m.
    Mr. A. V. Alexander: My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) has put the case for the housing associations, but I am sure the Chancellor will not expect this part of the Debate to finish without some reply being made to his extraordinary hardness about the case of N.D.C. in relation to industrial and provident societies. It is always obvious to me, in listening to his very lucid but not convincing statements on this tax, that he continually finds himself in some difficulty about it. In the old days he had a good record with regard to his views about mutual profits and mutual organisations, and has given very sound advice to those organisations, and it is obvious that he finds great strain in producing an argument which can be said to be really effective in resisting our just demands in this matter. To paraphrase the Chancellor's words, he says, "I have nothing up my sleeve. There is no catch in it. We have been just following the ordinary rules relating to Income Tax and applying them to N.D.C. since 1937." That is so; but I want to take the matter back to 1933, because that is where the catch comes in. Ever since 1933 the industrial and provident societies have been suffering under a Section of the Statute which was so drawn that it is out of order for any representative of the taxpayers in this House to move for a redress of grievances. Apparently it was deliberately drawn for that purpose. There is the catch. There are no means of raising the matter except by putting to the Chancellor over and over again the double hardship which has existed since 1933 and since the introduction of N.D.C.
    I should like the Chancellor, with his forensic outlook, to see what a great hardship is imposed upon members of industrial and provident societies. The law of 1933 was enacted in such a way that we are not entitled to move for a redress of grievances in this House before the grant

    969
    of supply. In 1937 the Chancellor was good enough to say, in reply to me, that he had never had the slightest difficulty in understanding our argument as it used to apply, and he admitted both the logic and the force of the argument, but whenever he has attempted to justify the additional burden which he is placing upon the industrial and provident societies he seems to have forgotten the logic and force of the argument. My hon. Friend the Member for East Ham, South, has put the general case, and I am not going over it. But there are one or two special points to which I would draw attention. In 1937 the Chancellor sought to justify his imposition of N.D.C. upon cooperative societies by saying: "They are very successful, and therefore they can afford to pay. This is not a question of dealing with the taxation of poor persons." That is no argument at all. The fact is that at least 99 per cent. of the surplus which arises in the accounts of industrial and provident societies is made out of mutual trading among their own members. In so far as you take first the Finance Act, 1933, and, secondly, the extra imposition of the 1937 National Defence Contribution, you actually take away from poor people, who have already paid all their taxable dues to the State, some part of what they ought then to be able to save by their mutual association in the spending of their net income. That is a very great injustice and hardship.
    We must remind the Chancellor of the case which was put to him in 1937. If it were, as he seeks to imply this afternoon, merely a question of applying automatically National Defence Contribution to all trading organisations who were to suffer the tax, there would be some force behind it, but it is not true. The right hon. Gentleman referred, for example, to building societies, to whom he is giving relief purely on social grounds. There is no other ground for giving relief, except that otherwise it might possibly tend to restrict to some extent their operations. No hon. Member on these benches would object to a concession being given to building organisations who wish to use their power for the purpose of furthering the provision of housing for the working class, but the important fact is that the special treatment of building societies is based upon that social ground. We say that there is no organisation in the State per-
    970
    forming a social service in relieving the poor people of this country by giving them an opportunity for mutual association, which compares with the magnitude of the co-operative movement. There is no question about it. To-day we are giving back to the people spending power which otherwise they would not have after they had paid their ordinary dues to the State. From that point of view the Chancellor has not, I think, fully considered the matter.
    When the Prime Minister was Chancellor of the Exchequer in 1933 he yielded to the demands, not of a sound fiscal system but of our competitors in trade, in putting a new burden of Income Tax upon the co-operative societies. He was advised by the Board of Inland Revenue that in the computation in the case of each society it was laid down that it would be necessary in the interests of the Treasury and of the people concerned to set off as a charge against the gross assessment not only the loan interest paid but the share interest which is paid, just as in the case of public utility societies at a fixed and very low rate. The figures that my right hon. Friend gave this afternoon show the inequity of the charge now made for National Defence Contribution upon the co-operative societies. In many cases they are very much higher than they should be, but the inequity of the charge for Income Tax arises almost entirely from the fact that in the case of the National Defence Contribution you do not allow to be charged against the gross computation the share interest, while you do, in the case of the Income Tax. On this point we have never had a satisfactory answer from the Treasury, and on these grounds alone the matter needs to be reconsidered.
    Mr. Beverley Baxter: The right hon. Gentleman has said that this National Defence Contribution extra tax upon cooperative societies has caused a great deal of hardship. It must have been estimated how much each customer spends in a year; would the right hon. Gentleman tell us how much hardship he thinks there is upon each customer?
    Mr. Alexander: It must vary a great deal in varying districts. The hon. Member may be sufficiently aware of cooperative development and of what it has done for the people to see that the result

    971
    of the Income Tax and of the N.D.C. is really to impinge upon the collective power of the people concerned to improve their trade and their status all the way through, because it taxes their capital reserves.
    Mr. Baxter: The right hon. Gentleman speaks in general terms. Could he not reduce them, because one thinks of hardship rather as personal than collective? To be felt as a cruelty a hardship must reach the individual breast or heart of some woman. We should like to know where this happens and to what degree the average co-operative member suffers?
    Mr. Alexander: The answer to the hon. Gentleman is that in so far as you restrict the power of an organisation by its capital reserves to go in for new development in which the poor people can join, you inflict hardship upon them. The last thing I want to say is, the Chancellor has essayed to reply to my hon. Friend with regard to what he said about special exemption which he has seen fit to give to the public utilities and similar organisations. I am sure he did not wish to present the case as though my hon. Friend were asking for new taxes to be placed upon the public utility companies. What we need to emphasise is that many of those companies are able to distribute large dividends upon shares, and not always upon small shares but sometimes considerable shares. They escape the tax altogether now. If it is found necessary to exempt those companies upon what are social grounds because they are engaged more or less in the monopoly provision of a necessary service, there is an equally strong argument for the same type of exemption to be given to other organisations who are doing equally important social work. Instead of exemption, the Chancellor of the Exchequer is imposing this additional burden of unfair taxation upon an organisation which is almost alone in the distributive trade in providing fair wages and conditons for its employés.
    Mr. Bracken: That is a most astonishing statement. Can the right hon. Gentleman tell us why there are so many co-operative strikes?
    Mr. Alexander: I shall be very pleased to answer that question and to give the
    972
    hon. Member chapter and verse. I will start with the facts of the situation. In the co-operative societies to-day, 96 per cent. of their hundreds of thousands of workers are members of trade unions. The second point is that not 6 per cent. of the employés of the competitive organisations in the distributive trades are in the trade unions at all. For three and a half years I have been sitting, under the direction of the Minister of Labour, on employers' conferences with regard to wages in the distributive trades. An attempt has been made to get a decent minimum wage, but we are hardly in any measure advanced in that direction except that a draft scheme has now been submitted to the Minister. In the course of these conferences a few trade union agreements have been made by some of the larger organisations, but the pressure on the trade unions concerned is very great because of the lack of trade union support in other cases. The wages that have had to be accepted under these agreements in the case of the ordinary distributive workers has been as much as 10s. below the rate paid by co-operative societies, and in the case of branch managers much more. I think the hon. Member for North Paddington (Mr. Bracken) will agree that I have stated my case.
    Mr. Bracken: Not at all. Does the right hon. Gentleman contend that cooperative employés are absolutely satisfied with their wages?
    Mr. Alexander: I do not want to think of any great body of workers as satisfied and unwilling to take further measures for their own improvement. The number of trade union disputes with co-operative organisations is far smaller than in the case of other trades in which there is power for the workers to organise in trade unions. You do not get so many disputes in the distributive trades because the employés are not organised. That is the real position. You must have regular conciliation machinery sitting locally with arbitrators who judge disputes. We have no reasonable dissatisfaction with the general state of satisfaction in the cooperative movement. I must apologise to the Chancellor of the Exchequer for having had to deploy arguments in this direction as a consequence of interruptions from some of his hon. Friends below the Gangway, but I had to make the position clear. This is another of the great social

    973
    grounds on which, if there is to be exemption or partial exemption such as the Chancellor has given to the building societies and the public utilities, he should grant our reasonable request.
    5.11 p.m.
    Sir J. Simon: I listened with interest to what the right hon. Gentleman said on the subject of housing associations. I have in the past taken a great interest in these matters, and I am sure that these associations do a most admirable work. I made inquiries in regard to the new point which he made about the Prevention of Fraud Act, and I am told that that Act does not prevent a society having purposes other than housing. It appears merely to prevent undesirable registration, and although that may be a somewhat inhibiting factor, it will still be possible for a housing association to pursue its bona fide housing purposes, and other purposes, too. I must point out once more that I do not think it would be possible to give exemption to housing associations, because the question is at once raised whether building societies should be entirely exempt. I do not see how we can avoid that question. I have already got into trouble in another direction, in that building societies are treated in a modified way, and I am not prepared to start this new difficulty. The Housing Association movement deserves our support and encouragement, but I must point out that they make profits, although very limited profits, and that I do not think the excellence of their object would in itself be a sufficient reason for making any change.
    In regard to the co-operative societies, I hope that the right hon. Gentleman will excuse me if I do not fight all those battles over again. It was natural that he should say what he did about them, but I noticed that his speech very much broadened the complaint. He said that the real complaint was the Finance Act, 1933. It is that Act, which lays it down that the co-operative societies' surpluses shall be regarded as taxable. That may be right or it may be wrong, but it is now the law, and it is my function to recognise that law and to apply my new taxation to that situation. I must say that I did not myself appreciate another point which the
    974
    right hon. Gentleman made. It is not for me to rule or decide on it, but I understood him to say that there was some special obstacle or difficulty, devised by the draftsman or by the wickedness of my predecessor, which prevented him from bringing the main issue before the Committee. I can only say that it does not quite appear to me why it would not be possible to propose to repeal that Section of the Finance Act, 1933.
    Mr. Alexander: It has been ruled continuously by the Chair that the repeal of that Section would impose a charge on the few societies exempted by the Section.
    Sir J. Simon: It may be so; I do not know; but, at any rate, if there really is a view which can be sustained in the House that the provision of 1933 in this regard was unjust, I am quite certain that the House would be prepared to consider that claim, as it would any other claim, and deal with it accordingly. I must say that, although it was not the practice according to the technical view of Income Tax liability as interpreted before 1933, I regard the Section as being one which to a great many people would seem reasonable. You go down a street, and find on one side of the street a grocer's shop, or a provision shop, supplying people with various articles that they want. That shop is liable to Income Tax on the profit that it makes, and I think it would strike many people as curious if a co-operative society on the other side of the street, doing exactly the same thing by what is really in substance the same method, were not liable to Income Tax. I perfectly understand —no one better, if I may say so the legal argument by which it would be certainly asserted, as I have always asserted, and assert now, that before 1933 that was the law in regard to co-operative societies, but the House of Commons in 1933 said in substance that they ought to be under the same dispensation as other traders. So it was in 1933, and so it was when we came to the National Defence Contribution in 1937.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 110; Noes, 201.

    Division No. 210.]

    AYES.

    [3.52 p.m.

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

    Assheton, R.

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

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

    Astor, Viscountess (Plymouth, Sutton)

    Beit, Sir A. L.

    Albery, Sir Irving

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

    Bennett, Sir E. N.

    Alexander, Brig.-Gen. Sir W.

    Balniel, Lord

    Bernays, R. H.

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

    Barrie, Sir C. C.

    Bird, Sir R. B.

    Anstruther-Gray, W. J.

    Baxter, A. Beverley

    Blair, Sir R.

    Aske, sir R. W.

    Beamish, Rear-Admiral T. P. H.

    Boulton, W. W.

    Boyce, H. Leslie

    Granville, E. L.

    Procter, Major H. A.

    Bracken, B.

    Grattan-Doyle, Sir N.

    Ramsbotham, Rt. Hon. H.

    Brass, Sir W.

    Greene, W. P. C. (Worcester)

    Rankin, sir R.

    Briscoe, Capt. R. G.

    Gridley, Sir A. B.

    Rathbone, J. R. (Bodmin)

    Broadbridge, Sir G. T.

    Grigg, Sir E. W. M

    Rawson, Sir Cooper

    Brocklebank, Sir Edmund

    Grimston, R. V.

    Reed, Sir H. S. (Aylesbury)

    Brooke, H. (Lewisham,W.)

    Guinness, T. L. E. B.

    Reid, W. Allan (Derby)

    Brown, Rt. Hon. E. (Leith)

    Hacking, Rt. Hon. Sir D. H.

    Remer, J. R.

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

    Hambro, A. V.

    Rickards, G. W. (Skipton)

    Bull, B. B.

    Hammersley, S. S.

    Ropner, Colonel L.

    Bullock, Capt. M.

    Hannah, I. C.

    Rosbotham, Sir T.

    Burgin, Rt. Hon. E. L

    Haslam, Sir J. (Bolton)

    Ross, Major Sir R. D. (Londonderry)

    Burton, Col. H. W.

    Heilgers, Captain F. F. A.

    Royds, Admiral Sir P. M. R.

    Butler, Rt. Hon. R. A.

    Hely-Hutchinson, M. R.

    Russell, Sir Alexander

    Caine, G. R. Hall-

    Hepworth, J.

    Russell, S. H. M. (Darwen)

    Cary, R. A.

    Horsbrugh, Florence

    Salmon, Sir I.

    Castlereagh, Viscount

    Howitt, Dr. A. B.

    Salt, E. W.

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

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

    Salter, Sir J. Arthur (Oxford U.)

    Cazalet, Thelma (Islington, E.)

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

    Sandeman, Sir N. S.

    Cazalet, Capt. V. A. (Chippenham)

    Hulbert, Squadron-Leader N. J.

    Sandys, E. D.

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

    Hunloke, H. P.

    Scott, Lord William

    Channon, H.

    Hunter, T.

    Selley, H. R.

    Chapman, A. (Rutherglen)

    Hurd, Sir P. A.

    Shaw, Captain W. T. (Forfar)

    Chapman, Sir S. (Edinburgh, S.)

    Jarvis, Sir J. J.

    Simon, Rt. Hon. Sir J. A

    Chorlton, A. E. L.

    Kerr, Colonel C. I. (Montrose)

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

    Churchill, Rt. Hon. Winston S.

    Kerr, Sir J. Graham (Scottish Univ.)

    Smiles, Lieut.-Colonel Sir W. D.

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

    Keyes, Admiral of the Fleet Sir R.

    Smith, Bracewell (Dulwich)

    Clarry Sir Reginald

    Kimball, L.

    Smithers, Sir W.

    Cobb, Captain E. C. (Preston)

    Lamb, Sir J. Q.

    Somerville, Sir A. A. (Windsor)

    Colville, Rt. Hon. John

    Lambert, Rt. Hon. G.

    Southby, Commander Sir A. R. J.

    Conant, Captain R. J. E.

    Lancaster, Lieut.-Colonel C. G.

    Spears, Brigadier-General E. L.

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

    Leighton, Major B. E. P.

    Stourton, Major Hon. J, J.

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

    Lennox-Boyd, A. T. L.

    Strauss, H. G. (Norwich)

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

    Liddall, W. S.

    Strickland, Captain W. F.

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

    Little, J.

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

    Cox, H. B. Trevor

    Llewellin, Lieut.-Col. J. J.

    Stuart, Hon. J. (Moray and Nairn)

    Craven-Ellis, W.

    Lloyd, G. W.

    Sueter, Rear-Admiral Sir M. F.

    Croft, Brig.-Gen. Sir H. Page

    Locker-Lampson, Comdr. O. S.

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

    Crooke, Sir J. Smedley

    Mabane, W. (Huddersfield)

    Thomas, J. P. L

    Crookshank, Capt. Rt. Hon. H. F. C.

    Macdonald, Capt. P. (Isle of Wight)

    Thorneyoroft, G. E. P.

    Crossley, A. C.

    McEwen, Capt. J. H. F.

    Thornton-Kemsley, C. N.

    Davison, Sir W. H.

    Macnamara, Lieut.-Colonel J. R. J.

    Titchfield, Marquess of

    De la Bère, R.

    Makins, Brigadier-General Sir Ernest

    Touche, G. C.

    Denman, Hon. R. D.

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

    Tree, A. R. L. F.

    Danville, Alfred

    Marsden, Commander A.

    Tryon, Major Rt. Hon. G. C.

    Doland, G. F.

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

    Tufnell, Lieut-Commander R. L.

    Donner, P. W.

    Medlicott, F.

    Wakefield, W. W.

    Dorman-Smith, Col. Rt. Hon. Sir R. H.

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

    Walker-Smith, Sir J.

    Drewe, C.

    Mills, Sir F. (Leyton, E.)

    Wallace, Capt. Rt. Hon. Euan

    Duggan, H. J.

    Mills, Major J. D. (New Forest)

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

    Duncan, J. A. L.

    Mitchell, H. (Brentford and Chiswick)

    Ward, Irene M. B. (Wallsend)

    Eden, Rt. Hon. A.

    Mitchell, Sir W. Lane (Streatham)

    Wardlaw-Milne, Sir J. S.

    Edge, Sir W.

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

    Warrender, Sir V.

    Edmondson, Major Sir J.

    Moreing, A. C.

    Watt, Lt.-Col. G. S. Harvie

    Elliot, Rt. Hon. W. E.

    Morgan, R. H. (Worcester, Stourbridge)

    Wayland, Sir W. A

    Emmott, C. E. G. C.

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

    Wedderburn, H. J. S.

    Emrys-Evans, P. V.

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

    Wells, Sir Sydney

    Entwistle, Sir C. F.

    Munro, P.

    Whiteley, Major J. P. (Buckingham)

    Errington, E.

    Nicholson, G, (Farnham)

    Willoughby de Eresby, Lord

    Evans, Colonel A. (Cardiff, S.)

    Nicholson, Hon. H. G.

    Windsor-Clive, Lieut.-Colonel G.

    Evans, D. O. (Cardigan)

    O'Connor, Sir Terence J.

    Winterton, Rt. Hon. Earl

    Findlay, Sir E.

    O'Neill, Rt. Hon. Sir Hugh

    Womersley, Sir W. J.

    Fox, Sir G. W. G.

    Peake, O.

    Wood, Hon. C. I. C.

    Furness, S. N.

    Peat, C. U.

    Fyfe, D. P. M.

    Pickthorn, K. W. M.

    TELLERS FOR THE AYES.—

    Gluckstein, L. H.

    Pilkington, R.

    Captain Waterhouse and Captain Dugdale.

    Graham, Captain A. C. (Wirral)

    Plugge, Capt. L. F.

    Grant-Ferris, Flight-Lieutenant R.

    Pownall, Lt.-Col. Sir Assheton

    NOES.

    Acland, Sir R. T. D.

    Cluse, W. S.

    Gardner, B. W.

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

    Clynes, Rt. Hon. J. R.

    George, Megan Lloyd (Anglesey)

    Adamson, Jennie L (Dartford)

    Cooks, F. S.

    Gibson, R. (Greenock)

    Adamson, W. M.

    Collindridge, F.

    Greenwood, Rt. Hon. A.

    Banfield, J. W.

    Cove, W. G.

    Grenfell, D. R.

    Barnes, A. J.

    Daggar, G.

    Griffiths, G. A. (Hemsworth)

    Batty, J.

    Davies, R. J. (Westhoughton)

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

    Bellenger, F. J.

    Davies, S. O. (Merthyr)

    Hall, J. H. (Whitechapel)

    Benn, Rt. Hon. W. W.

    Day, H.

    Hardie, Agnes

    Benson, G.

    Dunn, E. (Rother Valley)

    Harris, Sir P. A.

    Broad, F. A.

    Ede, J. C.

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

    Brown, C. (Mansfield)

    Edwards, A. (Middlesbrough E.)

    Henderson, J. (Ardwick)

    Charleton, H. C.

    Edwards, Sir C. (Bedwellty)

    Henderson, T. (Tradeston)

    Chater, D.

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

    Hills, A. (Pontefract)

    934

    935

    Hopkin, D.

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

    Smith, E. (Stoke)

    Isaacs, G. A.

    Muff, G.

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

    Jenkins, Sir W. (Neath)

    Nathan, Colonel H. L.

    Smith, T. (Normanton)

    Kennedy, Rt. Hon. T.

    Naylor, T. E.

    Sorensen, R. W.

    Lansbury, Rt. Hon. G.

    Noel-Baker, P. J.

    Stephen, C.

    Lathan, G.

    Oliver, G. H.

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

    Leach, W.

    Paling, W.

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

    Leslie, J. R.

    Parker, J.

    Summerskill, Dr. Edith

    Logan, D. G.

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

    Thorne, W.

    Lunn, W.

    Poole, C.C

    Thurtle, E.

    Macdonald, G. (lnce)

    Price, M. P.

    Tinker, J. J.

    McEntee, V. La T.

    Ritson, J.

    Viant, S P.

    McGhee, H. G.

    Roberts, W. (Cumberland, N.)

    Watkins, F. C.

    McGovern, J.

    Sanders, W. S.

    Wedgwood, Rt. Hon. J. C.

    MacLaren, A.

    Seely, Sir H. M.

    Wilkinson, Ellen

    Mainwaring, W. H.

    Shinwell, E.

    Williams, T. (Don Valley)

    Mathers, G.

    Silvernman, S. S.

    Windsor, W. (Hull, C.)

    Milner, Major J.

    Simpson, F. B.

    Young, Sir R. (Newton)

    Montague, F.

    Sinclair, Rt. Hon. Sir A. (C'thn't)

    Morgan, J. (York, W.R., Doncaster)

    Smith, Ben (Rotherhithe)

    TELLERS FOR THE NOES.—

    Mr. Whiteley and Mr. Groves.

    Division No. 211.]

    AYES.

    [5.19 p.m.

    Acland, Sir R. T. D.

    Griffiths, G. A. (Hemsworth)

    Paling, W.

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

    Groves, T. E.

    Parkinson, J. A.

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

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

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

    Anderson, F. (Whitehaven)

    Hall, J. H. (Whitechapel)

    Poole, C. C.

    Aske, Sir R. W.

    Hardie, Agnes

    Price, M. P.

    Banfield, J. W.

    Harris, Sir P. A.

    Pritt, D. N.

    Barnes, A. J.

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

    Ritson, J.

    Bartlett, C. V. O.

    Hayday, A.

    Roberts, W. (Cumberland. N.)

    Batey, J.

    Henderson, J. (Ardwick)

    Sanders, W. S.

    Bann, Rt. Hon. W. W.

    Henderson, T. (Tradeston)

    Seely, Sir H. M.

    Benson, G.

    Hills, A. (Pontefract)

    Shinwell, E.

    Bevan, A.

    Hopkin, D.

    Silverman, S. S.

    Brown, C. (Mansfield)

    Jagger, J.

    Simpson, F. B.

    Burke, W. A.

    Johnston, Rt. Hon. T.

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

    Charleton, H. C.

    Kennedy, Rt. Hon. T.

    Smith, Ben (Rotherhithe)

    Chater, D.

    Lansbury, Rt. Hon. G.

    Smith, E. (Stoke)

    Cluse, W. S.

    Lathan, G.

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

    Clynes, Rt. Hon. J. R.

    Leach, W.

    Smith, T. (Normanton)

    Cooks, F. S.

    Leslie, J. R.

    Sorensen, R. W.

    Collindridge, F.

    Logan, D. G.

    Stephen, C.

    Cove, W. G.

    Lunn, W.

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

    Cripps, Hon. Sir Stafford

    Macdonald, G. (Ince)

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

    Daggar, G.

    McEntee, V. La T.

    Summerskill, Dr. Edith

    Davies, R. J. (Westhoughton)

    McGhee, H. G.

    Thorne, W.

    Davies, S. O. (Merthyr)

    McGovern, J.

    Thurtle, E.

    Day, H.

    MacLaren, A.

    Tinker, J. J.

    Dunn, E. (Rother Valley)

    Mainwaring, W. H.

    Viant, S. P.

    Ede, J. C.

    Maxton, J.

    Watkins, F. C.

    Edge, Sir W.

    Messer, F.

    Wedgwood, Rt. Hon. J. C.

    Edwards, A. (Middlesbrough E.)

    Milner, Major J.

    Williams, T. (Don Valley)

    Edwards, Sir C. (Bedwellty)

    Montague, F.

    Wilmot, John

    Foot, D. M.

    Morgan, J. (York, W.R., Doncaster)

    Wilson, C. H. (Attercliffe)

    Gardner B.W.

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

    Windsor, W. (Hull, C.)

    George, Megan Lloyd (Anglesey)

    Muff, G.

    Young, Sir R. (Newton)

    Gibson R.(Greenock)

    Naylor, T. E.

    Greenwood, Rt. Hon. A.

    Noel-Baker, P. J.

    TELLERS FOR THE AYES.—

    Grenfell, D.R.

    Oliver, G. H.

    Mr. Whiteley and Mr. Mathers.

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

    Owen, Major G.

    NOES.

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

    Colville, Rt. Hon. John

    Grimston, R. V.

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

    Conant, Captain R. J. E.

    Gunston, Capt. Sir D. W.

    Albery, Sir Irving

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

    Hambro, A. V.

    Alexander, Brig.-Gen. Sir W.

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

    Hammersley, S. S.

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

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

    Hannah, I. C.

    Anstruther-Gray, W. J.

    Cox, H. B. Trevor

    Haslam, Sir J. (Bolton)

    Assheton, R.

    Craven-Ellis, W.

    Heilgers, Captain F. F. A.

    Astor, Viscountess (Plymouth, Sutton)

    Crooke, Sir J. Smedley

    Hely-Hutchinson, M. R.

    Baillie, Sir A. W. M.

    Cross, R. H.

    Hepworth, J.

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

    Crossley, A. C.

    Hopkinson, A.

    Balniel, Lord

    Davison, Sir W. H.

    Horsbrugh, Florence

    Barrie, Sir C. C.

    De la Bère, R.

    Howitt, Dr. A. B.

    Baxter, A. Beverley

    Denman, Hon. R. D.

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

    Beamish, Rear-Admiral T. P. H.

    Denville. Alfred

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

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

    Doland, G. F.

    Hulbert, Squadron-Leader N. J.

    Beechman, N. A.

    Donner, P. W.

    Hume, Sir G. H.

    Beit, Sir A. L.

    Drewe, C.

    Hunloke, H. P.

    Bennett, Sir E. N.

    Duggan, H. J.

    Hunter, T.

    Bird, Sir R. B.

    Duncan, J. A. L.

    Hutchinson, G. C.

    Boulton, W. W.

    Eden, Rt. Hon. A.

    Kellett, Major E. O.

    Bracken, B.

    Edmondson, Major Sir J.

    Kerr, Colonel C. I. (Montrose)

    Briscoe, Capt. R. G.

    Ellis, Sir G.

    Keyes, Admiral of the Fleet Sir R.

    Brooke, H. (Lewisham, W.)

    Emmott, C. E. G. C.

    Kimball, L.

    Brown, Rt. Hon. E. (Leith)

    Emrys-Evans, P. V.

    Lamb, Sir J. Q.

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

    Entwistle, Sir C. F.

    Lambert, Rt. Hon. G.

    Bull, B. B.

    Errington, E.

    Lancaster, Lieut.-Colonel C. G.

    Bullock, Capt. M.

    Evans, Colonel A. (Cardiff, S.)

    Leighton, Major B. E. P.

    Burgin, Rt. Hon. E. L.

    Everard, Sir William Lindsay

    Lennox-Boyd, A. T. L.

    Burton, Col. H. W.

    Findlay, Sir E.

    Liddall, W. S.

    Gary, Ft. A.

    Fox, Sir G. W. G.

    Little, J.

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

    Furness, S. N.

    Lloyd, G. W.

    Cazalet, Thelma (Islington, E.)

    Fyfe, D. P. M.

    Mabane, W. (Huddersfield)

    Cazalet, Capt. V. A. (Chippenham)

    Gluckstein, L. H.

    M'Connell, Sir J.

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

    Gower, Sir R. V.

    McCorquodale, M. S.

    Channon, H.

    Graham, Captain A. C. (Wirral)

    Macdonald, Capt. P. (Isle of Wight)

    Chapman, A. (Rutherglen)

    Grant-Ferris, Flight-Lieutenant R.

    McEwen, Capt. J. H. F.

    Chapman, Sir S. (Edinburgh, S.)

    Granville, E. L.

    McKie, J. H.

    Chorlton, A. E. L.

    Grattan-Doyle, Sir N.

    Macnamara, Lieut.-Colonel J. R. J.

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

    Greene, W. P. C. (Worcester)

    Macquisten, F. A.

    Clarry, Sir Reginald

    Gridley, Sir A. B.

    Makins, Brigadier-General Sir Ernest

    Cobb, Captain E. C. (Preston)

    Grigg, Sir E. W. M.

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

    976

    977

    Medlicott, F.

    Rickards, G. W. (Skipton)

    Sueter, Rear-Admiral Sir M. F.

    Meller, Sir R. J. (Mitcham)

    Ropner, Colonel L.

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

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

    Rosbotham, Sir T.

    Thomas, J. P. L.

    Mills, Sir F. Leyton, E.)

    Ross, Major Sir R, D. (Londonderry)

    Thorneycroft, G. E. P.

    Mill., Major J. D. (New Forest)

    Royds, Admiral Sir P. M. R.

    Thornton-Kemsley, C. N.

    Mitchell, H. (Brentford and Chiswick)

    Ruggles-Brise, Colonel Sir E. A.

    Titchfield, Marquess of

    Mitchell, Sir W. Lane (Streatham)

    Russell, Sir Alexander

    Touche, G. C.

    Moreing, A. C.

    Russell, S. H. M. (Darwin)

    Tree, A. R. L. F.

    Morgan, R. H. (Worcester, Stourbridge)

    Salt, E. W.

    Tufnell, Lieut.-Commander R. L.

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

    Sandeman, Sir N. S.

    Walker-Smith, Sir J.

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

    Sanderson, Sir F. B.

    Wallace, Capt. Rt. Hon. Euan

    Munro, P.

    Scott, Lord William

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

    Nicholson, G. (Farnham)

    Selley, H. R.

    Ward, Irene M. B. (Wallsend)

    Nicholson, Hon. H. G.

    Shaw, Captain W. T. (Forfar)

    Wardlaw-Milne, Sir J. S.

    O'Neill, Rt. Hon. Sir Hugh

    Simon, Rt. Hon. Sir J. A.

    Warrender, Sir V.

    Orr-Ewing, I. L.

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

    Waterhouse, Captain C.

    Palmer, G. E. H.

    Smiles, Lieut.-Colonel Sir W. D.

    Wayland, Sir W. A.

    Peake, O.

    Smithers, Sir W.

    Wells, Sir Sydney

    Pickthorn, K. W. M.

    Somerville, Sir A. A. (Windsor)

    Whiteley, Major J. P. (Buckingham)

    Plugge, Capt. L. F.

    Southby, Commander Sir A. R. J.

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

    Procter, Major H. A.

    Spears, Brigadier-General E. L.

    Willoughby de Eresby, Lord

    Raikes, H. V. A. M.

    Spent, W. P.

    Windsor-Clive, Lieut-Colonel G.

    Rathbone, J. R. (Bodmin)

    Stourton, Major Hon. J. J.

    Winterton, Rt. Hon. Earl

    Rawson, Sir Cooper

    Strauss, H. G. (Norwich)

    Wood, Hon. C. I. C.

    Reed, Sir H. S, (Aylesbury)

    Strickland, Captain W. F.

    Reid, W. Allan (Derby)

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

    TELLERS FOR THE NOES.—

    Remer, J. R.

    Stuart, Hon. J. (Moray and Nairn)

    Captain Dudgale and Lieut-Colonel Harvie Watt.

    New Clause—(Charge of national defence contribution not to apply to housing associations.)
    As from the first day of April, nineteen hundred and thirty-nine. Section nineteen of the Finance Act, 1937 (which relates to charge of national defence contribution), shall not apply to any society or company which is a housing association as defined in Section one hundred and eighty-eight of the Housing Act, 1936, and Section twenty-five of the Housing
    (Scotland) Act. 1935.—[Mr. Pethick-Lawrence.]
    Brought up, and read the First time.
    Mr. Pathick-Lawrence: I beg to move, "That the Clause be read a Second time."
    Question put "That the Clause be read a Second time."
    The Committee divided: Ayes, 109; Noes, 204.

    Division No. 212.]

    AYES.

    [5.27 P.m.

    Acland, Sir R. T. D.

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

    Owen, Major G.

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

    Hall, J. H. (Whitechapel)

    Paling, W.

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

    Hardle, Agnes

    Parkinson. J. A.

    Anderson, F. (Whitehaven)

    Harris, Sir P. A.

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

    Banfield, J. W.

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

    Poole, C. C.

    Barnes, A. J.

    Hayday, A.

    Price, M. P.

    Bartlett, C. V. O.

    Henderson, J. (Ardwick)

    Pritt, D. N.

    Batey, J.

    Henderson, T. (Tradeston)

    Ritson, J,

    Benn, Rt. Hon. W. W.

    Hills, A. (Pontefract)

    Roberts, W. (Cumberland, N.)

    Benson, G.

    Hopkin, D.

    Sanders, W. S.

    Bevan, A.

    Jagger, J.

    Seely, Sir H. M.

    Brown, C. (Mansfield)

    Jenkins, Sir W. (Neath)

    Shinwell, E.

    Burke, W. A.

    Johnston, Rt. Hon. T.

    Silverman, S. S.

    Charleton, H. C.

    Kennedy, Rt. Hen T.

    Simpson, F. B.

    Chater, D.

    Lansbury, Rt. Hon. G.

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

    Clynes, Rt. Hon. J. R.

    Lathan, G.

    Smith, Ben (Rotherhithe)

    Cocks, F. S.

    Leach, W.

    Smith, E. (Stoke)

    Collindridge, F.

    Leslie, J. R.

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

    Cove, W. G.

    Logan, D. G.

    Smith, T. (Normanton)

    Cripps, Hon. Sir Stafford

    Lunn, W.

    Sorensen, R. W.

    Daggar, G.

    Macdonald, G. (Ince)

    Stephen, C.

    Davies, R. J. (Westhoughton)

    McEntee, V. La T.

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

    Davies, S.O. (Merthyr)

    McGhee, H. G.

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

    Day, H.

    McGovern, J.

    Summerskill, Dr. Edith

    Dunn, E. (Rother Valley)

    MacLaren, A.

    Thorne, W.

    Ede, J. C.

    Mainwaring, W. H.

    Thurtle, E.

    Edwards, A. (Middlesbrough E.)

    Mathers, G,

    Tinker, J. J.

    Edwards, Sir C. (Bedwsllty)

    Maxton, J.

    Viant, S. P.

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

    Messer, F.

    Watkins, F. C.

    Foot, D. M.

    Milner, Major J.

    Wedgwood, Rt. Hon. J. C.

    Gardner, B. W.

    Montague, F.

    Williams, T. (Don Valley)

    George, Megan Lloyd (Anglesey)

    Morgan, J. (York, W.R., Doncaster)

    Wilmot, John

    Gibson, R. (Greenock)

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

    Wilson, C. H. (Attercliffe)

    Greenwood, Rt. Hon. A.

    Muff, G.

    Windsor, W. (Hull, C.)

    Grenfell, D. R.

    Naylor, T. E.

    Young, Sir R. (Newton)

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

    Noel-Baker, P. J.

    Griffiths, G. A. (Hemsworth)

    Oliver, G. H.

    TELLERS FOR THE AYES.—

    Mr. Whiteley and Mr. Groves

    NOES.

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

    Findlay, Sir E.

    Palmer, G. E. H.

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

    Fox, Sir G. W. G.

    Peake, O.

    Albery, Sir Irving

    Furness, S. N.

    Pickthorn, K. W. M.

    Alexander, Brig.-Gen, Sir W.

    Fyfe, D. P. M.

    Pilkington, R.

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

    Gluckstein, L. H.

    Plugge, Capt. L. F.

    Anstruther-Gray, W. J.

    Cower, Sir R. V.

    Procter, Major H. A.

    Aske, Sir R. W.

    Graham, Captain A. C. (Wirral)

    Raikes, H. V. A. M.

    Assheton, R.

    Grant-Ferris, Flight-Lieutenant R.

    Rathbone, J. R. (Bodmin)

    Astor, Viscountess (Plymouth, Sutton)

    Granville, E. L.

    Rawson, Sir Cooper

    Baillie, Sir A. W. M.

    Grattan-Doyle, Sir N.

    Reed, Sir H. S. (Aylesbury)

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

    Greene, W. P. C. (Worcester)

    Reid, W. Allan (Derby)

    Balniel, Lord

    Gridley, Sir A. B.

    Remer, J. R.

    Barrie, Sir C. C.

    Grigg. Sir E. W. M.

    Rickards, G. W. (Skipton)

    Baxter, A. Bevereley

    Grimston, R. V.

    Ropner, Colonel L.

    Beamish, Rear-Admiral T. P. H.

    Gunston, Capt. Sir D. W.

    Rosbotham, Sir T.

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

    Hambro, A. V.

    Ross, Major Sir R. D. (Londonderry)

    Beechman, N. A.

    Hammersley, S. S.

    Royds, Admiral Sir P. M. R.

    Beit, Sir A. L.

    Hannah, I. C.

    Ruggles-Brise, Colonel Sir E. A.

    Bennett, Sir E. N.

    Haslam, Sir J. (Bolton)

    Russell, Sir Alexander

    Bird, Sir R. B.

    Hely-Hutchinson, M. R.

    Russell, S. H. M. (Darwen)

    Boulton, W. W.

    Hepworth, J.

    Salt, E. W.

    Bracken, B.

    Hopkinson, A.

    Sandeman, Sir N. S.

    Briscoe, Capt. R. G.

    Horsbrugh, Florence

    Sanderson, Sir F. B.

    Brooke, H. (Lewisham, W.)

    Howitt, Dr. A. B.

    Scott, Lord William

    Brown, Rt. Hon. E. (Leith)

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

    Selley, H. R.

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

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

    Shaw, Captain W. T. (Forfar)

    Bull, B. B.

    Hulbert, Squadron-Leader N. J.

    Simon, Rt. Hon. Sir J. A

    Bullock, Capt. M.

    Hume, Sir G. H.

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

    Burton, Col. H. W.

    Hunloke, H. P.

    Smiles, Lieut.-Colonel Sir W. D.

    Cary, R. A.

    Hunter, T.

    Smith, Sir R. W. (Aberdeen)

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

    Hutchinson, G. C.

    Smithers, Sir W.

    Cazalet, Thelma (Islington, E.)

    Kellett, Major E. O.

    Somerville, Sir A. A. (Windsor)

    Cazalet, Capt. V. A. (Chippenham)

    Kerr, Colonel C. I. (Montrose)

    Southby, Commander Sir A. R. J.

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

    Keyes, Admiral of the Fleet Sir R.

    Spears, Brigadier-General E. L.

    Channon, H.

    Kimball, L.

    Spens, W. P.

    Chapman, A. (Rutherglen)

    Lamb, Sir J. Q.

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

    Chapman, Sir S. (Edinburgh, S.)

    Lambert, Rt. Hon. G.

    Stourton, Major Hon. J. J.

    Chorlton, A. E. L.

    Lancaster, Lieut.-Colonel C. G.

    Strauss, H. G. (Norwich)

    Clarke, Colonel R. S. E. Grinstead)

    Leighton, Major B. E. P.

    Strickland, Captain W. F.

    Clarry, Sir Reginald

    Lennox-Boyd, A. T. L.

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

    Cobb Captain E. C. (Preston)

    Liddall, W. S.

    Stuart, Hon. J. (Moray and Nairn)

    Colville, Rt. Hon. John

    Little, J.

    Sueter, Rear-Admiral Sir M. F.

    Conant, Captain R. I. E.

    Lloyd, G. W.

    Tasker, Sir R. I.

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

    Mabane, W. (Huddersfield)

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

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

    M'Connell, Sir J.

    Thomas, J. P. L.

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

    McCorquodale, M. S.

    Thorneycroft, G. E. P.

    Cox, H. B. Trevor

    Macdonald, Capt. P. (Isle of Wight)

    Thornton-Kemsley, C. N.

    Craven-Ellis, W.

    McKie, J. H.

    Titchfield, Marquess of

    Crooke, Sir J. Smedley

    Macnamara, Lt.-Col. J. R, J.

    Touche, G. C.

    Cross, R. H.

    Macquisten, F. A.

    Tree, A. R. L. F.

    Crossley, A. C.

    Makins, Brigadier-General Sir Ernest

    Tufnell, Lieut.-Commander R. L.

    Davison, Sir W. H.

    Manningham-Buller, Sir M.

    Walker-Smith, Sir J.

    De la Bère, R.

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

    Wallace, Capt. Rt. Hon. Euan

    Denman, Hon. R. D.

    Medlicott, F.

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

    Denville, Alfred

    Meller, Sir R. J. (Mitcham)

    Ward, Irene M. B. (Wallsend)

    Doland, G. F.

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

    Wardlaw-Milne, Sir J. S.

    Donner, P. W.

    Mills, Sir F. (Leyton, E.)

    Warrender, Sir V.

    Dugdale, Captain T. L.

    Mills, Major J. D. (New Forest)

    Waterhouse, Captain C.

    Duggan, H. J.

    Mitchell, H. (Brentford and Chiswick)

    Wayland. Sir W. A.

    Duncan, J. A. L.

    Mitchell, Sir W. Lane (Streatham)

    Wells, Sir Sydney

    Edge. Sir W

    Moreing, A. C.

    Whiteley, Major J. P. (Buckingham)

    Edmondson, Major Sir J,

    Morgan, R. H. (Worcester, Stourbridge)

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

    Ellis, Sir G.

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

    Willoughby de Eresby, Lord

    Emmott, C. E. G. C.

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

    Windsor-Clive, Lieut.-Colonel G.

    Emrys-Evans, P. V.

    Munro, P.

    Winterton, Rt. Hon. Earl

    Entwistle, Sir C. F.

    Nicholson, G. (Farnham)

    Wood, Hon. C. I. C.

    Errington, E.

    Nicolson, Hon. H. G.

    Evans, Colonel A. (Cardiff, S.)

    O'Neill, Rt. Hon. Sir Hugh

    TELLERS FOR THE NOES.—

    Everard, Sir William Lindsay

    Orr-Ewing, I. L.

    Lieut.-Colonel Harvie Watt and

    Captain McEwen.

    NEW CLAUSE.—(Additional information to be supplied.)
    Sub-section (1) of Section one hundred of the Income Tax Act, 1918, shall have effect as if at the end thereof there were added the following paragraph:
    (c) particulars of the amounts of any settlement or settlements made during the period of assessment, not being a settlement
    980
    of an amount less than fifty pounds per annum or a capital sum of one thousand pounds, as the case may be, together with the names and addresses of the person or persons on whose behalf the settlement or settlements shall have been made. For the purposes of this paragraph the expression "settlement" shall have the same; meaning as defined in paragraph (b) of Subsection (9) of Section twenty- one of the

    981
    Finance Act, 1936, that is to say, it shall include any disposition, trust, covenant, agreement, arrangement, or transfer of assets.—[Mr. Pethick-Lawrence.]
    Brought up, and read the First time.
    5.35 p.m
    Mr. Pethick-Lawrence: I beg to move, "That the Clause be read a Second time."
    This Clause arises out of a proposal that I made to the Chancellor of the Exchequer when the Budget Resolutions were under discussion. I am rather disappointed that the Chancellor of the Exchequer has not seen the value of the proposals, and incorporated, on his own initiative, some such Clause in the Finance Bill. I think it was an act of kindness and consideration on my part, as representing the Opposition, to suggest to the Chancellor of the Exchequer a method by which he might fortify his Revenue. I hope that, now I have put something down in black and white, it may make him see that he ought to adopt it, but the fact that he has not yet done so will not encourage me, if we are in the same position on a future occasion, to do the same thing.
    When the Income Tax forms are sent out the taxpayer has, in accordance with the law, to answer certain questions; and on the answers, after they are checked by the Inland Revenue authorities, he is assessed for taxation. During the passage of this Finance Bill through Parliament, as has been the case during the passage of a number of other Finance Bills in the past, it has been made clear that a practice is arising of trying to find a way of evading taxation. The Inland Revenue, although it has a very shrewd suspicion of the extent to which this evasion has been practised in the past, can never be quite sure, for the simple reason that it never knows whether a person has evaded taxation. All that is known is that the person does not appear to come within the law as it is at present framed. It is of the utmost importance that the Inland Revenue should know when people have taken steps to put themselves outside the Income Tax law and the extent to which that has been done. It seems to me quite reasonable that the taxpayer should be required to answer questions which will supply that necessary knowledge to the Inland Revenue. The object of this Clause is to give the Chancellor an oppor-
    982
    tunity of calling upon the taxpayer to supply the information.
    The Clause relates to one important method of evasion, that of settlements. It is proposed here that the taxpayer shall be called upon to state the amount of any settlements made during the period of assessment. With a view to not making it unduly harassing, a limit has been fixed so that information need not be given of settlements of an amount less than £50 per annum or £1,000 capital sum. The taxpayer is called upon to make disclosure of all settlements above those figures, together with the names and addresses of persons on whose behalf the settlements have been made. If the Chancellor takes exception to the Clause, I shall be interested to know on what grounds. It seems to me quite fair that the person should be called upon to disclose such facts. If he were hiding something which he ought to disclose, he would be committing an offence in failing to disclose it. There might be some objections to the limit fixed in the Clause, but that could be the subject of another Debate, when it would be easy to meet such objections.
    5.42 p.m.
    Sir J. Simon: I recall the suggestion which the right hon. Gentleman made when we were discussing the Budget at an earlier stage. On that occasion, I took note of the suggestion. Just as I am glad to receive contributions in a monetary sense from all quarters, so I am glad to receive contributions from people as experienced as the right hon. Gentleman with a view to making a tax work better. When the suggestion was made in the first place, I asked for it to be examined. So far from resenting, or not wishing to adopt, suggestions which might be useful because of the quarter from which they come, I am always ready to make use of them. The right hon. Gentleman knows the Treasury well enough to appreciate that. I will have the matter examined further, in the light of what the right hon. Gentleman has just said, but the examination which has been made leads me to think that the proposal, in this form, ought not to be adopted.
    As the right hon. Gentleman said, the Clause deals only with settlements. There are other elaborate and artificial arrangements for the purpose of avoiding taxation. The right hon. Gentleman's

    983
    definition of a settlement is taken from an earlier Act, and is very wide. It includes any transfer of assets. There is no virtue in settlements. There is already a requirement in the form that people must state what are the charges or settlements in respect of which they make a payment, and for which there is to be a deduction for Income Tax, and I think that, in practice, if a Surtax payer is seen to have a sudden drop in income, the revenue authorities do make inquiries. Therefore, the view is put to me by my advisers that this particular suggestion would not really be one of so much value as the right hon. Gentleman appears to think.
    Broadly speaking, the reason why we have to try to stop the holes in legislation in elaborate ways is not that it is impossible to keep track of what is being done, but because what is being done, as things stand, is not outside the law. It is true that there is in this particular field money running to waste where tax is not being paid on little settlements. We have to devise a system of network which will catch these cases. These are the general considerations which are put to me. My advisers feel that the return form which is presented to every taxpayer of very different degrees of education and business experience ought to be as far as may be simple and suitable for all kinds of people to fill up. It is inevitable that the buff-coloured form should contain a lot of partitions and questions, but these are designed to obtain simple statements of sources of income and the amounts derived from them. I doubt whether it would be a satisfactory medium for obtaining detailed particulars of evasion. While I say that, and it is the view of my advisers, I do not wish to reject the suggestion without more thought. I certainly could not advise the Committee to adopt the suggestion to-day, but, at the same time, if in connection with the efforts which we are making to stop evasion and secure full information as to what we want to know, this or something like it turned out, on further examination, to be useful, I should only be too pleased to adopt the suggestion of the right hon. Gentleman.
    5.48 p.m.
    Mr. Macquisten: I cannot see that the Clause can achieve any purpose unless arrangements or settlements are made
    984
    whereby the money comes back to the person who makes the settlement. That would be fraud and conspiracy. The person who made the settlement would be making an incorrect return of Income Tax. When a man has given away his money the thing is done and finished and he has got so much less left. The more the funds are distributed the better. So long as a man does not follow King Lear and give everything away. Unless there is conspiracy and there is not a genuine settlement and there is an arrangement for a refund, there is no purpose in this Clause, for there would be no tax to evade or defeat.
    5.49 p.m.
    Mr. Benson: The right hon. Gentleman said that the wording of this Clause was too wide, and that it would bring in all kinds of really extraneous operations under the phrase of "or transfer of assets," when, as he himself said, these words are definitely taken from the Finance Act, 1936, and specifically relate to settlements on children. That is the definition of a settlement there. If the Board of Inland Revenue are operating under a definition of settlement already, there is no reason why a similar definition should not be adopted in this respect. The Chancellor of the Exchequer said that wherever there is a drop in income which is not immediately obvious as to its cause, inquiries are to be made. That is true no doubt, but if you want to avoid disclosing a settlement you do not do it in such a way as to show a definite drop in income. You hide some casual profit. You can do it in an expanding year where you get a casual profit which does not come into the Income Tax return. Such as some windfall from the Stock Exchange, etc.
    Mr. Macquisten: That does not happen. There has been no windfall on the Stock Exchange for the last three years.
    Mr. Benson: The hon. and learned Gentleman says that does not happen, but how does he know? He is almost as wise as the Chancellor of the Exchequer in this matter. The Chancellor of the Exchequer himself is extraordinarily wise. He says, "We know the extent and the bounds of our own ignorance." The right hon. Gentleman said there are not many of these settlements that are not known. How does he know that? How can he measure the number of settlements that are not known to him?
    Mr. Macquisten: May I point out that most of these settlements have to be stamped, and if the Inland Revenue adjudication stamp is on them, they know all about them.
    Mr. Moreing: Is it not that the right hon. Gentleman knows only what he wants to know, and not what he ought to know?
    Mr. Benson: I would point out to the hon. and learned Gentleman the Member for Argyllshire (Mr. Macquisten) that the Chancellor of the Exchequer has said that they know most things, but that they do not claim to know all of them. According to the reasoning of the hon. and learned Member, they should know all. It is impossible to know how much the Inland Revenue know and how much they do not know. All that we are asking is that a certain amount of information should be made statutory so that the information as to settlements could be increased. We are not suggesting any imposition or burden, but simply asking that in respect of a case in which a very large amount of evasion has already taken place further information should be supplied to the Board of Inland Revenue. This is a perfectly reasonable Clause. The Chancellor of the Exchequer himself has not turned it down. He merely says that the Board do not think that they will get very much information, but how do they know until they try? I certainly hope that my right hon. Friend will press this very reasonable Clause to a Division
    5.54 p.m.
    Mr. Bracken: It seems to be rather odd that the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) should want to be so helpful to the Chancellor of the Exchequer. The right hon. Gentleman and his supporters on these benches want to take away the cat from the Home Secretary and give it to the Chancellor of the Exchequer, and to arm him with the thumb-screw as well. They say that you must harass the taxpayer even more. I cannot see how any sensible person would endow the Chancellor of the Exchequer with power to pry into every small settlement made by taxpayers. We are still a free country. When the Socialist party come along with a carefully devised Clause which exempts the great mass of the voters but gives another opportunity of harassing the so-called capitalist class.
    986
    who are poor and perfectly honest we should say to the Chancellor of the Exchequer, who has been extremely mellow, not to say, kindly in giving the right hon. Gentleman's suggestion a certain amount of approval, that he really ought not to waste his time trying to pry further into settlements made by small people in this country. I never heard of such an unnecessary thing. If one listens to the Socialists one would imagine that the public were made for the Treasury, and not the Treasury for the public. It is time that we realised that a taxpayer has rights like anybody else and that there should not be set up a kind of Ogpu or Gestapo to pry into every taxpayer's settlement in the country. The right hon. Gentleman the Member for East Edinburgh wants to borrow from the policy of Dr. Goebbels —perhaps I should say from M. Stalin. We should not be doing our duty to our constituents or to this country if we failed to oppose this new Clause.
    5.56 p.m.
    Mr. Silverman: I often listen with a great deal of interest to the hon. Gentleman the Member for North Paddington (Mr. Bracken), and I have never listened to him with greater interest than I did during the last part of his speech. I support the Clause, but I am very glad to see the hon. Member's new-found hatred of the State prying into the home life of the people. I hope that the next time the Minister of Labour's Vote is before the Committee we may call upon the hon. Member for North Paddington to join us in our indignant protest against the daily prying that goes on in the homes of the meanest and poorest of the people, those who are both honest and poor. Their honesty and poverty have placed them into such a position that the hon. Member and his friends think that it is right that every penny, halfpenny or farthing going into the small household should be subject to the closest and narrowest scrutiny before a grateful community doles out the small pittance necessary to keep its members alive
    Mr. Bracken: Why do trade unions exercise supervision in administering their interests?
    Mr. Silverman: I do not think that there is a single trade union in this country that would dare or desire to exercise against one of its own members the kind

    987
    of harsh and oppressive examination and scrutiny exercised in every relief office in the country and in every application under the Ministry of Labour's unemployment regulations. There is no trade union that does that.
    Mr. G. Griffiths: Let the hon. Member mention one.
    Mr. Silverman: He knows that he cannot.
    Mr. Macquisten: Will the hon. Member for Nelson and Colne (Mr. Silverman) consider this point. The money of the taxpayer is always taken from him by the Chancellor of the Exchequer, whereas the person in receipt of unemployment benefit after his insurance is exhausted is getting money from the taxpayer.
    Mr. Silverman: That is a very important distinction, and I am grateful to the hon. and learned Member for drawing my attention to it. When the State takes Income Tax from a man he has very considerable income left and is able to carry on. I should not mind in the least paying Super-tax and every other tax provided I had the income with which to pay it and was left in peaceful enjoyment of the remainder. What matters in taxation is not what is taken away, but what is left. The hon. and learned Member has a right to point out this kind of scrutiny, but at the other end of the scale scrutiny is going on against people who have nothing whatever. I think that the distinction is good and sound and I ask him to think it over. I hope, at the same time, he will examine his interjection of a few minutes ago when he suggested that the Treasury knew all about every one of the settlements because there is a stamp on the deeds. I understand that the hon. and learned Member was once a member of that department of the profession to which I belong. I have had a certain amount of experience of going into offices with deeds. These are examined by a clerk who assesses what stamp is due, and the stamp is bought and put on the document, but I have never observed that there has ever been any record of the document. It is perfect nonsense, and I am sure the hon. and learned Member must know that what I am stating is the case.
    Mr. Macquisten: Certainly not.
    Mr. Silverman: There was, at any rate, a time when the hon. and learned Member did know. He knows that what I have said it true.
    Mr. Macquisten: I contest that statement. The document has to go to the Inland Revenue Department and is carefully examined, and you find that all Government Departments are in communication.
    Mr. Silverman: The hon. and learned Member can deceive himself as much as he likes, but he cannot deceive me. I say that there are a great many of these documents which are not stamped at all, and I challenge him to deny my assertion that no record of a document is kept by the Stamp Office when the stamp is attached to it.
    Mr. Macquisten: A record is kept. We record them in Scotland. If they are not stamped they are not binding till they are stamped.
    Mr. Silverman: It may be that in Scotland measures have been found necessary that are not necessary in other parts of the United Kingdom. Certainly, that is not true anywhere else. If the hon. and learned Member tells me that the practice is different in Scotland, I must accept that, but he must also accept the statement from me that it is not the practice in England. I should like to say a few words in reply to the hon. Member for North Paddington (Mr. Bracken). If he were to be more consistent in regard to this kind of business one could listen with more sympathy to what he says, but when we find him voting in favour of the means test and all that it means, when there is an opportunity of voting against it, and then when it comes to a proposal of this kind he protests against a man who, ex hypothesi, is in possession of considerable capital and income, disclosing to the State what he has done with that capital or income in any particular year, then we find him as unjust as he is inconsistent. Let him consider also that the kind of objection he raises to this new Clause is not shared by the right hon. Gentleman, the Chancellor of the Exchequer. I do not suppose that makes any difference to him, but it is of some interest to note the fact that we have not found the Chancellor of the Exchequer or any member of the Government too

    989
    anxious to press these matters. There is a time lag in the year and I think there is a lag in will as well as in time; but when we find the right hon. Gentleman not bringing forward the kind of objection which has been advanced by the hon. Member, then I think we are entitled to take notice of the inconsistency.
    Mr. Bracken: The right hon. Gentleman is more moderate than I am
    Mr. Silverman: Perhaps he does not want to take as much as the hon. Member would like to give.
    Mr. Bracken: I mean, by training, by reputation, by character and by learning.
    Mr. Silverman: I do not know whether the hon. Member suggests that the right hon. Gentleman is more moderate in character, but perhaps we had better
    not pursue that too far. It comes to this that the right hon. Gentleman's objection is not based on any kind of objection to the nature of the inquiry. He cannot object to it for that reason, because the Clause is to be found being used for other purposes in previous Finance Acts. The only question at issue is whether or not the Clause will strengthen his hands. I certainly support the arguments of those hon. Members who have spoken in favour of the Clause, and who have said that it cannot weaken his hand but will give him some powers which he has not at present. If he really means business, he will take that power.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 115; Noes, 207.

    Division No. 213.]

    AYES.

    [6.5 p.m.

    Acland, Sir R. T. D.

    Grenfell, D. R.

    Owen, Major G.

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

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

    Paling, W.

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

    Griffiths, G. A. (Hemsworth)

    Parkinson, J. A.

    Anderson, F. (Whitehaven)

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

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

    Banfield, J. W.

    Hall, J. H. (Whitechapel)

    Poole, C. C.

    Barnes, A. J.

    Hardie, Agnes

    Price, M. P.

    Bartlett, C. V. O.

    Harris, Sir P. A.

    Pritt, D. N.

    Batey, J.

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

    Ritson, J.

    Bellenger, F. J.

    Hayday, A.

    Roberts, W. (Cumberland, N.)

    Benn, Rt. Hon. W. W.

    Henderson, J.(Ardwick)

    Sanders, W. S.

    Benson, G.

    Henderson, T. (Tradeston)

    Seely, Sir H. M.

    Bevan, A.

    Hills, A. (Pontefract)

    Shinwell, E.

    Broad, F. A

    Hopkin, D.

    Silkin, L.

    Brown, C. (Mansfield)

    Isaacs, G. A.

    Silverman, S. S.

    Burke, W. A,

    Jagger, J.

    Simpson, F. B.

    Charleton, H. C.

    Jenkins, Sir W. (Neath)

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

    Chater, D

    Jones, Sir H. Haydn (Merioneth)

    Smith, Ben (Rotherhithe)

    Cluse, W. S.

    Kennedy, Rt. Hon. T.

    Smith, E. (Stoke)

    Clynes, Rt. Hon. J. R.

    Lansbury, Rt. Hon. G.

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

    Cocks, F. S.

    Lathan, G.

    Smith, T. (Normanton)

    Collindridge, F.

    Leach, W.

    Sorensen, R. W.

    Cove, W. G.

    Leslie, J. R.

    Stephen, C.

    Cripps, Hon. Sir Stafford

    Logan, D. G.

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

    Daggar, G.

    Lunn, W.

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

    Dalton, H.

    Macdonald, G. (Ince)

    Summerskill, Dr. Edith

    Davies, R. J. (Westhoughton)

    McEntee, V. La T.

    Thorne, W.

    Davies, S. O. (Merthyr)

    McGhee, H. G.

    Tinker, J. J.

    Day, H.

    McGovern, J.

    Viant, S. P.

    Dunn, E. (Rother Valley)

    MacLaren, A.

    Watkins, F. C.

    Ede, J. C.

    Mainwaring, W. H.

    Westwood, J.

    Edwards, A. (Middlesbrough E.)

    Maxton, J.

    Whiteley, W. (Blaydon)

    Edwards, Sir C. (Bedwellty)

    Messer, F.

    Wilkinson, Ellen

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

    Montague, F.

    Williams, T. (Don Valley)

    Foot, D. M.

    Morgan, J. (York, W.R., Doncaster)

    Wilmot, John

    Frankel, D.

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

    Wilton, C. H. (Attercliffe)

    Gardner, B. W.

    Muff, G.

    Windsor, W. (Hull, C.)

    George, Megan Lloyd (Anglesey)

    Naylor, T. E.

    Young, Sir R. (Newton)

    Gibson, R. (Greenock)

    Noel-Baker, P. J.

    Greenwood, Rt. Hon. A.

    Oliver, G. H.

    TELLERS FOR THE AYES.—

    Mr. Mathers and Mr. Groves.

    NOES.

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

    Astor, Viscountess (Plymouth, Sutton)

    Bennett, Sir E. N.

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

    Baillie, Sir A. W. M.

    Bird, Sir R. B.

    Albery, Sir Irving

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

    Boulton, W. W.

    Alexander, Brig.-Gen. Sir W.

    Balniel, Lord

    Bracken, B.

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

    Beamish, Rear-Admiral T. P. H.

    Braithwaite, J. Gurney (Holderness)

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

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

    Briscoe, Capt. R. G.

    Anstruther-Gray, W. J.

    Beechman, N. A.

    Brooke, H. (Lewisham, W.)

    Aske, Sir R. W.

    Beit, Sir A. L.

    Brown, Rt. Hon. E. (Leith)

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

    Hepworth, J.

    Reid, W. Allan (Derby)

    Bull, B. B.

    Herbert, A. P. (Oxford U.)

    Remer, J. R.

    Burton, Col. H. W.

    Hopkinson, A.

    Rickards, G. W. (Skipton)

    Cary, R. A.

    Horsbrugh, Florence

    Ropner, Colonel L.

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

    Howitt, Dr. A. B.

    Rosbotham, Sir T.

    Cazalet, Thelma (Islington, E.)

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

    Ross, Major Sir R. D. (Londonderry)

    Cazalet, Capt. V. A. (Chippenham)

    Hulbert, Squadron-Leader N. J.

    Royds, Admiral Sir P. M. R.

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

    Hume, Sir G. H.

    Ruggles-Brise, Colonel Sir E. A.

    Channon, H.

    Hunloke, H. P.

    Russell, Sir Alexander

    Chapman, A. (Rutherglen)

    Hunter, T.

    Russell, S. H. M. (Darwen)

    Chapman, Sir S. (Edinburgh, S.)

    Hutchinson, G. C.

    Salmon, Sir I.

    Chorlton, A. E. L.

    Kellett, Major E.O.

    Salt, E. W.

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

    Kerr, Colonel C. I. (Montrose)

    Sandeman, Sir N. S.

    Clarry, Sir Reginald

    Kerr, Sir J. Graham (Scottish Univ.)

    Sanderson, Sir F. B.

    Cobb, Captain E. C. (Preston)

    Keyes, Admiral of the Fleet Sir R.

    Scott, Lord William

    Conant, Captain R. J. E.

    Kimball, L.

    Selley, H. R.

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

    Lamb, Sir J. Q.

    Shaw, Captain W. T. (Forfar)

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

    Lambert, Rt. Hon. G.

    Simon, Rt. Hon. Sir J. A

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

    Lancaster, Lieut.-Colonel C. G.

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

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

    Leighton, Major B. E. P.

    Smiles, Lieut.-Colonel Sir W. D.

    Cox, H. B. Trevor

    Lennox-Boyd, A. T. L.

    Smith, Sir R. W. (Aberdeen)

    Craven-Ellis, W.

    Liddall, W. S.

    Smithers, Sir W.

    Crooke, Sir J. Smedley

    Little, J.

    Somervell, Rt. Hon. Sir Donald

    Crookshank, Capt. Rt. Hon. F. C.

    Lloyd, G. W.

    Somerville, Sir A. A. (Windsor)

    Cross, R. H.

    Mabane, W. (Huddersfield)

    Southby, Commander Sir A. R. J.

    Crossley, A. C.

    M'Connell, Sir J.

    Spears, Brigadier-General E. L.

    Davies, C. (Montgomery)

    McCorquodale, M. S.

    Spens, W. P.

    Davison, Sir W. H.

    MacDonald, Sir Murdoch (Inverness)

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

    Da la Bère, R,

    Macdonald, Capt. P. (Isle of Wight)

    Stourton, Major Hon. J. J.

    Denman, Hon. R. D.

    McEwen, Capt. J. H. F.

    Strauss, H. G. (Norwich)

    Denville, Alfred

    McKie, J. H.

    Strickland, Captain W. F.

    Doland, G. F.

    Macnamara, Lieut.-Colonel J. R. J.

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

    Donner, P. W.

    Macquisten, F. A.

    Stuart, Rt. Hon. J. (Moray and Nairr)

    Dugdale, Captain T. L.

    Makins, Brigadier-General Sir Ernest

    Sueter, Rear-Admiral Sir M. F.

    Duggan, H. J.

    Manningham-Buller, Sir M.

    Tasker, Sir R. I.

    Edge, Sir W.

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

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

    Edmondson, Major Sir J.

    Marsden, Commander A.

    Thomas, J. P. L.

    Ellis, Sir G.

    Meller, Sir R. J. (Mitcham)

    Thorneycroft, G. E. P.

    Emmott, C. E. G. C.

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

    Thornton-Kemsley, C. N.

    Emrys-Evans, P. V.

    Mills, Sir F. (Leyton, E.)

    Touche, G. C.

    Entwistle, Sir C. F.

    Mills, Major J. D. (New Forest)

    Tree, A. R. L. F.

    Errington, E.

    Mitchell, H. (Brentford and Chiswick)

    Tryon, Major Rt. Hon. G. C.

    Evans, Colonel A, (Cardiff, S.)

    Moreing, A. C.

    Tufnell, Lieut.-Commander R. L.

    Everard, Sir William Lindsay

    Morgan, R. H. (Worcester, Stourbridge)

    Walker-Smith, Sir J.

    Findlay, Sir E.

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

    Wallace, Capt. Rt. Hon. Euan

    Fox, Sir G. W. G.

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

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

    Fyfe, D. P. M.

    Munro, P.

    Ward, Irene M. B. (Wallsend)

    Gluckstein, L. H.

    Nicholson, G. (Farnham)

    Wardlaw-Milne, Sir J. S.

    Gower, Sir R. V.

    Nicolson, Hon. H. G.

    Warrender, Sir V.

    Graham, Captain A. C. (Wirral)

    O'Connor, Sir Terence J,

    Waterhouse, Captain C

    Grant-Ferris, Flight-Lieutenant R.

    O'Neill, Rt. Hon. Sir Hugh

    Wayland, Sir W. A.

    Greene, W. P. C. (Worcester)

    Orr-Ewing, I. L.

    Wells, Sir Sydney

    Gridley, Sir A. B.

    Palmer, G. E. H.

    Whiteley, Major J. P. (Buckingham)

    Grigg, Sir E. W. M.

    Pickthorn, K. W. M.

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

    Grimston, R. V.

    Pilkington, R.

    Willoughby de Eresby, Lord

    Guinness, T. L. E. B.

    Plugge, Capt. L. F.

    Windsor-Clive, Lieut.-Colonel G.

    Gunston, Capt. Sir D. W.

    Ponsonby, Col. C. E.

    Winterton, Rt. Hon. Earl

    Hammersley, S. S.

    Procter, Major H. A.

    Womersley, Sir W. J.

    Hannah, I. C.

    Radford, E. A.

    Wood, Hon. C. I. C.

    Haslam, Sir J. (Bolton)

    Raikes, H. V. A. M.

    Hely-Hutchinson, M. R.

    Rathbone, J. R. (Bodmin)

    TELLERS FOR THE NOES—

    Hepburn, P. G. T. Buchan-

    Reed, Sir H. S. (Aylesbury)

    Mr. Furness and Lieut.-Colonel Harvie Watt.

    NEW CLAUSE.—(Exemption from duty of agricultural implements and raw materials.)
    Goods imported into the United Kingdom of the categories specified in the Schedule (Agricultural implements and raw materials to be imported free of duty) to this Act, being articles used as implements or raw materials in agricultural production, shall be imported free of any duty.—[Sir R. Acland.]
    Brought up, and read the First time.
    6.14 p.m.
    Sir Richard Acland: I beg to move, "That the Clause be read a Second time."
    992
    This Clause relieves from import duties the raw materials bought by and used by the farmers of this country. I cast my mind back to the election I fought in my present constituency in 1931, when the great influence against us was the conviction in the mind of the agricultural community as a whole, farmers, farm workers and those who depend upon agriculture, that they were all going to have a wonderful time arising out of the tariff promises that were being made to them by Conservative candidates from one end of the country to the other.

    993
    We did our best to warn them that the introduction of Protection would not be to their advantage, but, on the contrary, to their disadvantage, that they would get the dirty end of the stick all the time and that tariffs would be imposed on the things they had to buy. That has turned out to be the case, and anyone who addresses a meeting of farmers to-day will not find them blessing the Government for any great benefits they have received through tariffs or expecting that any great benefits are to come. I do not propose to go through the Schedule which is attached to the new Clause, because I want to deal with the matter as a general issue. But I should like to quote a speech made by the right hon. Gentleman who is now Minister of Agriculture, on the 16th December, 1936, to show that the sum total of the duties which I am attacking does have a serious effect on agriculture. The right hon. Gentleman said at that time:
    " We have to buy a tremendous amount of goods which are taxed, taxes which are borne by the farming industry alone. … Taxes on our fertilisers range from £4 ton to £1a ton; implements and machinery 30 per cent.; shovels, spades, scythes, forks, 15 per cent.; hay and grass mowers, the humble plough, planters and seeders, reapers and binders, 15 per cent.; wire 33 ⅓ per cent., barbed wire, nails and staples —nearly everything we have to buy is taxed in some way or other."
    It is only fair to the right hon. Gentleman to say that he did not make that speech to show that there was a very appreciable burden of taxation being paid by the farming community, or that he was in favour of the new Clause which I am moving. He quoted those figures in order to ask that further tariffs should be put on. In the course of that speech he used one sentence which sounds rather surprising to-day:
    " I loathe these subsidies and would sooner have my taxes."—[OFFICIAL REPORT, 15th December, 1936; col. 2354, Vol. 318.]
    Compare that with the proposals of the Bill which the right hon. Gentleman is now piloting through Committee. It has been estimated that the total burdens which are drawn exclusively from farmers amount to about £3,000,000. In relation to some of the articles on the list in the Schedule, there has been grave dissatisfaction expressed from no less a source than the hon. Member for Evesham (Mr. De la B ère) as well as from other sources, to which I think the Front Bench opposite pays more attention, rightly or
    994
    wrongly. There is more than a suspicion that a number of the interests now selling to the farmers are making rather higher profits than the farmer who purchases from them. There are branches of the agricultural industry which have been brought to distress not because of the competition of the wicked foreigner, but because of the rising prices charged for feeding-stuffs, manures and other necessary raw materials and equipment. In our view it would be a good thing, in view of the somewhat well-founded suspicions, to clear away the duties and tariffs which do make increased prices profitable, and then give an opportunity to the industry to prove their case. Let us examine their case, and if they can show that they are not profiteering something may be done for them, but let us put it up to them to prove their case.
    It would be absurd if I did not deal with the answer which was made to us from the Front Bench when we moved a similar Amendment some years ago. They said nothing whatever on the merits of the Amendment, nothing whatever about the principle, or the lightness or wrong-ness of increasing the farmer's difficulties, of taxing the things he has to buy. The beginning and end of their reply was that this matter falls to be dealt with by the Import Duties Advisory Committee, and that it is not for the House to deal with such matters at all. If we were talking of some small proposal such as a tax on toothbrushes the answer of the Government might be adequate, but I submit that if hon. Members have any regard for the proper authority of this House they ought to safeguard from falling into the hands of a committee, over which the House has no control, matters of great principle. I think hon. Members will agree that on matters of principle and policy this House should control the Import Duties Advisory Committee, not vice versa. The hon. Member for Oxford University (Mr. A. Herbert) has been pointing out that the Import Duties Advisory Committee may be a good instrument for administering policy on general principles laid down by the House of Commons, but is not a good instrument for the making of policy. More and more that body is taking over the functions of making policy, and I think the House would be taking a long step towards redressing the balance if it were to say that this is not a matter of

    995
    detail but a matter of principle, on which the House is entitled to say whether raw materials shall or shall not be taxed.
    6.24 p.m.
    Sir Herbert Williams: I do not blame the hon. Member for having a brief run on the subject of Free Trade but I think he might have taken a little more care with the Schedule. The fourth item in the Schedule is wheat. I rather gather that under the Anglo-American Trade Agreement wheat was to be on the free list. Perhaps those who prepared his brief were in arrear with their work and prepared it in a hurry. But the implication behind the new Clause and the Schedule is presumably that the duties have had an adverse effect upon somebody. Going through the list I cannot, broadly speaking, find that there have been any complaints. I think there was one case of a particular form of tractor of a kind not made in this country which was the subject of a duty, and quite clearly that is a case to be put on the free list. Going through the bulk of the items in the Schedule no one has alleged that the prices have been adversely affected by the duty. I do not think the hon. Member would get much support from the agricultural community to place oats on the free list because the low price has had a most adverse effect on agriculture in certain parts of the country, and especially in Scotland. Take the manufactured articles mentioned on the list. I cannot remember any successfully sustained case that any of these has been adversely affected in price so far as the consumer is concerned. I should have thought that the hon. Member would have brought forward some more serious documentary evidence in support of his new Clause, and without some such argument it is really a waste of time to discuss a matter of principle which has been established for so long —in order to establish the opposite principle —and in respect of which there have been no complaints whatever of the kind anticipated by the Liberal party when they were opposing the adoption of Protection.
    6.27 p.m.
    Mr. Craven-Ellis: I do not gather the real significance behind this proposed new Clause. If I heard the hon. Member for Barnstaple (Sir R. Acland) correctly he said that it would have an effect upon
    996
    the £3,000,000 duty on the several articles to which he referred as being purchased by the agricultural industry. I want to point out that the turnover of the agricultural industry is about £250,000,000, and I speak as one who farms a fairly big area and who gets among farmers who are dependent entirely upon the industry for their living. I must confess that I have not yet heard of any general or even minute objection to tariffs. What we farmers feel is this —we are perfectly satisfied that it is the position —that as a result of the expanding general industry of the country the workers have a considerably increased purchasing power, and that if the £3,000,000 has any material effect upon the production of British farms it is not felt. I do not intend to say that the agricultural industry is in the position I would like to see it. As a matter of fact it is not. I should call for more tariffs if it was in order.
    Mr. Bracken: The hon. Member will forgive me. Apparently he has not read the recent speeches of the Minister of Agriculture. Perhaps he will address his remarks to the Minister.
    Mr. Craven-Ellis: I am dealing with the new Clause, and I do not in any way commit myself to the recent speeches of the right hon. Gentleman. I am speaking from my own experience as a man who farms land, and I am satisfied that more tariffs are wanted to deal with foreign competition which is competing with British fanning. If I thought that the new Clause would in any way assist farmers—I have been fighting the farmers' case for some years—I would willingly support it, but I am satisfied that the hon. Member is approaching the matter entirely from the wrong angle if he has any intention whatever of assisting British agriculture.
    6.30 p.m.
    Mr. W. Roberts: I should like to make a few comments on the speeches that have been made by the hon. Member for Southampton (Mr. Craven-Ellis) and the hon. Member for South Croydon (Sir H. Williams). It may be within the recollection of some hon. Members that on the last occasion when a new Clause similar to this one was moved, the Scottish Farmers' Union held quite a different opinion on the subject, and circularised their Members in the House in support of

    997
    it. This would suggest that the hon. Member for Southampton —
    Mr. Craven-Ellis: Perhaps the hon. Member was not in the Committee a few minutes ago, when we were told that conditions in Scotland are entirely different from conditions in this country.
    Mr. Roberts: Scotland would come under the Clause, and I should be glad to hear in what way the Scottish farmers are at a greater disadvantage than the English farmers in paying these tariffs on their purchases. Moreover, I well remember that the Farmers' Union of England were very much concerned about the effect of the duties, not on one type of tractor only, but on tractors in general. There is also the question of the position of the poultry farmers. In 1937, particularly, the position of the poultry farmers was very serious. This is an industry which is not expanding now as it was in 1929, and the numbers of poultry are now declining. The greatest difficulty of the poultry farmers in those years was the high price of feeding stuffs.
    Sir H. Williams: Will the hon. Member mention which feeding stuff in this country has risen above world prices, during any period he cares to mention, as a result of any duties we have imposed?
    Mr. Roberts: What exactly world prices are it is somewhat difficult to ascertain. If the duty was paid entirely by the foreigners—which I presume is what would be argued by the hon. Member—there would be some ground for saying that it made no difference to the poultry farmers. What I am suggesting is that it was the strong opinion of the poultry farmers that the rise in the prices of feeding stuffs was affecting them very seriously, and that that rise was partly accounted for by the duties affecting many feeding stuffs.
    Sir H. Williams: Did that rise include ordinary maize?
    Mr. Roberts: No, it did not, but it included flat white maize.
    Sir H. Williams: Which constitutes one per cent. of the imports of maize into this country.
    Mr. Roberts: White maize is used very largely for fattening poultry. The hon. Member for South Croydon referred to
    998
    oats. If the duty on oats does not raise the price, why did he suggest that the farmers of this country who grow oats would regret the removal of the duty? The case of the Protectionists is always such a delightful one. When it is a raw material which is being imported into this country it does not affect the price; when it is something that is produced in this country, it is the only salvation of the producer of the commodity. They cannot have it both ways. I do not wish to go into a long discussion of the matter, but I should like the Parliamentary Secretary to the Board of Trade, when he replies, to give an estimate of what these duties which cost the British farming community since they were imposed. We hear that the agricultural output of this country is between £200,000,000 and£250,000,000 a year; I believe the estimate is that it is £220,000,000, which is no greater than it was when the National Government came into office. What percentage of that are these duties estimated to cost the farmers? It may be £2,000,000, £3,000,000 or £5,000,000. I should like the hon. Gentleman to give an estimate of the increased cost which the farming community is paying as a result of these duties.
    Sir H. Williams: The hon. Member seems to have been under some misapprehension. I mentioned the case of Canadian oats which enter duty free. The hon. Member will find that, practically speaking, there are no foreign oats imported into this country at the present time, and that they are almost entirely Canadian. If he will examine the general average price of oats, he will find a figure that will surprise him. In the case of maize, 99 per cent. of the imports are in the particular category known as flat maize, and they are duty free from all countries. The magnitude of the imports is so great that it dominates the price of feeding stuffs in this country. It is not in the slightest degree true that the tariffs have in any way affected the price of feeding stuffs to poultry farmers. The decline in the poultry industry is due to an extensive disease among the poultry.
    Mr. Roberts: I know that many of these feeding stuffs come in duty free from the Empire. It is equally true that the effect of the duties has been to a considerable extent to divert the imports from foreign

    999
    sources to Empire sources, but I have yet to be convinced that that diversion has not enabled the Empire producer to obtain a better price for his products. If that is not the object of the duty, what is the object?
    6.38 p.m.
    The Parliamentary Secretary to the Board of Trade (Mr. Cross): I cannot follow the hon. Member for Barnstaple (Sir R. Acland) through the vicissitudes of his election in 1931, but he will be very conscious of the fact that a new Clause in similar terms to this one was moved two years ago and rejected. He will also expect me to say that the new Clause is unacceptable, and I do indeed assure him of that. The hon. Member said that he hoped I would not give a reply similar to the one that was given on the last occasion, but in view of the fact that he has put down the same new Clause, and further, that I think there was some substance in the reply then given, I hope he will bear with me if, to some extent, I do give a similar reply. The hon. Member has put down a list of goods which he desires to see imported free of duty into this country, and which are goods of which the agricultural community are either the users or the consumers. As far as I understood the hon. Member, he is not particularly concerned with the interests of the producers, but that, no doubt, is because he has no belief in the efficacy of tariffs in benefiting the producers. He will be conscious of the fact that the majority of hon. Members do not share his view, and feel that tariffs are of benefit to the producers as a whole and that no special section of producers should be deprived of those benefits.
    I have looked through the list of goods proposed by the hon. Member. As my hon. Friend the Member for South Croydon (Sir H. Williams) pointed out, that list is somewhat out of date in one respect, namely, the very important item of wheat, of which we import the best part of £40,000,000 worth a year, so that it is rather a large oversight. There is a number of other items which we are precluded by trade agreements from putting on the free list; namely, oil-seed cakes and rice, which we are precluded from putting on the free list under the agreement with India; flat white maize, by the agreement with South Africa; wheat flour and
    1000
    barley, by the agreement with Australia; and grass seeds and clover seeds by the agreement with New Zealand. I am sure that the hon. Member would not wish the new Clause, including those items, to go through at the present time and thus result in the unilateral abrogation of these trade agreements.
    For the rest, the new Clause is unacceptable because, if I may repeat the substance of the reply given previously, the House would have to set up special machinery for the purpose of dealing with the thousand and one details which there are in the formidable list of items in the Schedule. The hon. Member said that he suspected, or believed, that there are cases of manufacturers who are making rather too large profits out of the articles which they are selling to the farmers. If the farmers and their representatives feel that this is so, they can take their case to the Import Duties Advisory Committee and try to establish it there. I must repeat what my predecessor said on another occasion. The Treasury has the right, on the recommendation of the Import Duties Advisory Committee to direct by Order that goods of any description may be put on the free list. If a good case can be made for putting these goods on the free list, the fanners can use their opportunities of making representations to the Import Duties Advisory Committee.
    The hon. Member attempted to establish that there is a special position for the agricultural users of these products. The list he has put down appears to me to consist of goods which are either produced in this country, or which directly compete with goods produced in this country, or which would be affected by trade agreements and in respect of which, therefore, we get a compensating advantage in our exports. If there are any exceptions, then they are exceptions of an isolated nature in connection with which the farmers can go, and should properly go, to the Import Duties Advisory Committee. The main answer to the hon. Member, surely, is that the list as a whole does consist of goods that are enjoying protection because it is the general policy of the Government to protect the producer in this country, whether he produces for home consumption or for export, as well as to care for the consumers. I submit that we cannot except different classes of producers in virtue of the particular

    1001
    class of consumers whose needs they fulfil. We cannot say that the producer of motor cars shall enjoy a particular kind of protection, while at the same time the maker of horticultural and agricultural implements shall not enjoy a parallel advantage. It seems to me that one cannot make a separate case for any one class of consumers, but that all must be dealt with alike.
    Mr. Dingle Foot: Is it not a fact that when the Import Duties Act was passed, a special exception was made in the case of steel used in shipyards; and was not that singling out a particular class of consumer?
    Mr. Cross: If the hon. Member had allowed me to go a little further I was about to say that the agricultural producer, the farmer, certainly does not enjoy the same degree of advantage from tariffs as industry as a whole, but he does enjoy off-setting advantages of other kinds. It is in that way that we achieve the balance between industry and agriculture. The proposed new Clause would be destructive of that balance and for that reason, among others, I must ask the Committee to reject it.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 121; Noes, 240.

    Division No. 214.]

    AYES.

    [6.46 p.m.

    Acland, Sir R. T. D.

    Groves, T. E.

    Parker, J.

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

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

    Parkinson, J. A.

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

    Hall, J. H. (Whitechapel)

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

    Anderson, F. (Whitehaven)

    Hardie, Agnes

    Pools, C. C.

    Banfield, J. W.

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

    Pritt, D. N.

    Barnes, A. J.

    Hayday, A.

    Ritson, J.

    Bartlett, C. V. O.

    Henderson, J. (Ardwick)

    Roberts. W. (Cumberland, N.)

    Batey, J.

    Henderson, T. (Tradeston)

    Robinson, W. A. (St. Helens)

    Bellenger, F. J.

    Hills, A. (Pontefract)

    Sanders, W. S.

    Benn, Rt. Hon. W. W.

    Hpkin, O.

    Sexton, T. M.

    Benson, G.

    Isaacs, G. A.

    Shinwell, E.

    Bevan, A.

    Jagger, J.

    Silkin, L.

    Broad, F. A.

    Jenkins, Sir W. (Neath)

    Silverman, S. S.

    Brown, C. (Mansfield)

    John, W.

    Simpson, F. B.

    Burke, W. A.

    Jones, Sir H. Haydn (Merioneth)

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

    Charleton, H. C.

    Kennedy, Rt. Hon. T.

    Smith, Ben (Rotherhithe)

    Cluse, W. S.

    Lansbury, Rt. Hon. G.

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

    dynes, Rt. Hon. J. R.

    Lathan, G.

    Smith, T. (Normanton)

    Cocks, F. S.

    Leach, W.

    Sorensen, R. W.

    Collindridge, F.

    Leslie, J. R.

    Stephen, C.

    Cove, W. G.

    Logan, D, G.

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

    Dagger, G.

    Lunn, W.

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

    Dalton, H.

    Macdonald, G. (Ince)

    Summerskill, Dr. Edith

    Davies, R. J. (Westhoughton)

    McEntee, V. La T.

    Taylor, R. J. (Morpeth)

    Davies, S. O. (Merthyr)

    McGhee, H. G.

    Thorne, W.

    Day. H.

    McGovern, J.

    Viant, S. P.

    Dunn, E. (Rother Valley)

    MacLaren, A.

    Walkins, F. C.

    Ede, J. C.

    Mainwaring, W. H.

    Watson, W. McL.

    Edwards, A. (Middlesbrough E.)

    Mander, G. le M,

    Wedgwood, Rt. Hon. J. C.

    Edwards, Sir C. (Bedwellty)

    Mathers, G.

    Westwood, J.

    Evans, D. O. (Cardigan

    Maxton, J.

    White, H. Graham

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

    Milner, Major J.

    Whiteley, W. (Blaydon)

    Foot, D. M.

    Montague, F.

    Wilkinson, Ellen

    Frankel, D.

    Morgan, J. (York, W.R., Donsaster)

    Williams, T. (Don Valley)

    Gardner, B. W.

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

    Wilmot, John

    George, Megan Lloyd (Anglesey)

    Muff, G.

    Wilton, C. H. (Attercliffe)

    Gibson, R. (Greenock)

    Naylor, T. E.

    Windsor, W. (Hull, C.)

    Greenwood, Rt. Hon. A.

    Noel-Baker, P. J.

    Young, Sir R. (Newton)

    Grenfell, D. R.

    Oliver, G. H.

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

    Owen, Major G.

    TELLERS FOR THE AYES.—

    Griffiths, G. A. (Hemsworth)

    Paling, W.

    Sir Hugh Seely and Sir Percy Harris.

    NOES.

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

    Beamish, Rear-Admiral T. P. H.

    Brooklebank, Sir Edmund

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

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

    Brooke, H. (Lewisham, W.)

    Albery, Sir Irving

    Beechman, N. A.

    Brown, Rt. Hon. E. (Leith)

    Alexander, Brig.-Gen. Sir W.

    Beit, Sir A. L.

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

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

    Bennett, Sir E. N.

    Bull, B. B.

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

    Bernays, R. H.

    Burgin, Rt. Hon. E. L.

    Anstruther-Gray, W. J.

    Bird, Sir R. B.

    Campbell, Sir E, T.

    Aske, Sir R. W.

    Blair, Sir R.

    Cary, R. A.

    Assheton, R.

    Bossom, A. C.

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

    Astor, Viscountess (Plymouth, Sutton)

    Boulton, W. W.

    Cazalet, Thelma (Islington, E.)

    Baillie, Sir A. W. M.

    Bracken, B.

    Cazalet, Capt. V. A. (Chippenham)

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

    Braithwaite, J. Gurney (Holderness)

    Channon, H.

    Balniel. Lord

    Brisooe, Capt. R. G.

    Chapman, A. (Rutherglen)

    Chapman, Sir S. (Edinburgh, S.)

    Hulbert, Squadron-Leader N. J.

    Remer, J. R.

    Chorlton, A. E. L.

    Hume, Sir G. H.

    Rickards, G. W. (Skipton)

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

    Hunloke, H. P.

    Ropner, Colonel L.

    Clarry, Sir Reginald

    Hunter, T.

    Rosbotham, Sir T.

    Cobb, Captain E. C. (Preston)

    Hutchinson, G. C.

    Ross, Major Sir R D. (Londonderry)

    Colville, Bt. Hon. John

    Jarvis, Sir J. J.

    Ross Taylor, W. (Woodbridge)

    Conant, Captain R. J. E.

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

    Royds, Admiral Sir P. M. R.

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

    Kellett, Major E. O.

    Ruggles-Brise, Colonel Sir E. A.

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

    Kerr, Sir J. Graham (Scottish Univ.)

    Russell, Sir Alexander

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

    Keyes, Admiral of the Fleet Sir R.

    Salmon, Sir I.

    Cooper, Rt. Hon. T. M. (E'burgh, W.)

    Kimball, L.

    Salt, E. W.

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

    Lamb, Sir J. Q.

    Sandeman, Sir N. S.

    Cox, H. B. Trevor

    Lambert, Rt. Hon. G.

    Sanderson, Sir F. B

    Craven-Ellis, W.

    Lancaster, Lieut.-Colonel C. G.

    Scott, Lord William

    Crooke, Sir J. Smedley

    Lees-Jones, J.

    Selley, H. R.

    Crookshank, Capt. Rt. Hon. H. F. C.

    Leighton, Major B. E. P.

    Shakespeare, G. H.

    Cross, R. H.

    Lennox-Boyd, A. T. L.

    Shaw, Captain W. T. (Forfar)

    Crossley, A. C.

    Liddall, W. S.

    Simon, Rt. Hon. Sir J. A.

    Davison, Sir W. H.

    Little, J.

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

    De la Bère, R.

    Llewellin, Colonel J. J.

    Smiles, Lieut.-Colonel Sir W. D.

    Denman, Hon. R. D.

    Lloyd, G. W.

    Smith, E. (Stoke)

    Denville, Alfred

    Loftus, P. C.

    Smith, Sir R. W. (Aberdeen)

    Doland, G. F.

    Lyons, A. M.

    Smithers, Sir W.

    Donner, P. W.

    Mabane, W, (Huddersfield)

    Somervell, Rt. Hon. Sir Donald

    Dugdale, Captain T. L-

    M'Connell, Sir J.

    Somerville, Sir A. A. (Windsor)

    Duggan, H. J.

    McCorquodale, M. s.

    Southby, Commander Sir A. R. J.

    Eastwood, J. F.

    MacDonald, Sir Murdoch (Inverness)

    Spears, Brigadier-General E. L.

    Edge, Sir W.

    Macdonald, Capt. P. (Isle of Wight)

    Spens, W. P.

    Edmondson, Major Sir J.

    McEwen, Capt. J. H. F.

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

    Ellis, Sir G.

    McKie, J. H.

    Storey, S.

    Emrys-Evans, P. V.

    Macmillan, H. (Stockton-on-Tees)

    Stourton, Major Hon. J. J.

    Entwistle, Sir C. F.

    Macquisten, F. A.

    Strauss, H. G. (Norwich)

    Errington, E.

    Magnay, T.

    Strickland, Captain W. F.

    Evans, Colonel A. (Cardiff, S.)

    Makins, Brigadier-General Sir Ernest

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

    Everard, Sir William Lindsay

    Manningham-Buller, Sir M.

    Stuart, R(. Hon. J. (Moray and Nairn)

    Findlay, Sir E.

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

    Sueter, Roar-Admiral Sir M. F.

    Fox, Sir G. W. G.

    Marsden, Commander A.

    Tasker, Sir R. I.

    Furness, S. N.

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

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

    Fyfe, D. P. M.

    Mellor, Sir R. J. (Mitcham)

    Thomas, J. P. L.

    Gluckstein, L. H.

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

    Thorneycroft, G. E. P.

    Gower, Sir R. V.

    Mills, Sir F. (Leyton, E.)

    Thornton-Kemsley, C. N.

    Graham, Captain A. C. (Wirral)

    Mills, Major J. D. (New Forest)

    Tinker, J. J.

    Grant-Ferris, Flight-Lieutenant R.

    Mitchell, H. (Brentford and Chiswick)

    Touche, G. C.

    Greene, W. P. C. (Worcester)

    Moreing, A. C.

    Train, Sir J.

    Gridley, Sir A. B.

    Morgan, R. H. (Worcester, Stourbridge)

    Tree, A. R. L. F.

    Grigg, Sir E. W. M

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

    Tryort, Major Rt. Hon. G. C.

    Grimston, R. V.

    Munro, P.

    Tufnell, Lieut.-Commander R. L.

    Gritten, W. G. Howard

    Nicholson, G. (Farnham)

    Turton, R. H.

    Guest, Lieut.-Colonel H. (Drake)

    Nicolson, Hon. H. G.

    Walker-Smith, Sir J.

    Guinness, T. L. E. B,

    O'Connor, Sir Terence J.

    Wallace, Capt. Rt. Hon. Euan

    Gunston, Capt. Sir D. W.

    O'Neill, Rt. Hon. Sir Hugh

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

    Hambro, A. V.

    Orr-Ewing, I. L.

    Ward, Irene M. B. (Wallsend)

    Hammersley, S. S.

    Palmer, G. E. H.

    Wardlaw-Mine, Sir J. S.

    Hannah, I. C.

    Peat, C. U.

    Waterhouse, Captain C.

    Haslam, Sir J. (Bolton)

    Pickthorn, K. W. M.

    Wayland, Sir W. A.

    Hely-Hutchinson, M. R.

    Pilkington, R.

    Webbe, Sir W. Harold

    Heneage, Lieut.-Colonel A. P.

    Plugge, Capt. L. F.

    Wells, Sir Sydney

    Hepburn, P. G. T. Buchan-

    Ponsonby, Col. C. E.

    Whiteley, Major J. P. (Buckingham)

    Hepworth, J.

    Pownall, Lt.-Col. Sir Assheton

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

    Herbert, A. P. (Oxford U.)

    Procter, Major H. A.

    Willoughby de Eresby, Lord

    Hoare, Rt. Hon. Sir S.

    Radford, E. A.

    Windsor-Clive, Lieut.-Colonel G.

    Hogg, Hon. Q. McG.

    Raikes, H. V. A. M.

    Winterton, Rt. Hon. Earl

    Holmes, J. S.

    Rathbone, J. R. (Bodmin)

    Womersley, Sir W. J.

    Hopkinson, A.

    Rawscn, Sir Cooper

    Wood, Hon. C. I. C.

    Horsbrugh, Florence

    Reed, A. C. (Exeter)

    Wragg, H.

    Howitt, Dr. A. B.

    Reed, Sir H. S. (Aylesbury)

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

    Reid, Captain A. Cunningham

    TELLERS FOR THE NOES.—

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

    Reid, W. Allan (Derby)

    Lieut.-Colonel Kerr and Lieut.-Colonel Harvie Watt.

    The Chairman (Sir Dennis Herbert): With reference to the proposed new Clause—(Taxation of friendly societies) —in the name of the hon. Member for Broxtowe (Mr. Cocks), I had not proposed to select it for discussion but I am prepared, if the hon. Member wishes to do so, to allow him to make a short explanation of any reason which he can find why I should select it.
    6.55 p.m.
    Mr. Cocks: This Clause deals with a simple matter, but it has been transformed by the draftsman into a very complicated looking proposal. I am told that any Clause dealing with Income Tax must always be unintelligible, otherwise it would be out of order. I can best explain the meaning of this new Clause by stating that at the present time a small

    1005
    registered friendly society with an income of only £160 a year is exempt altogether from Income Tax, but if its income happens to be only a fraction of a pound over £160 a year, it has to pay the full Income Tax of £45. The object of the proposed new Clause is to substitute for this arrangement a graduated scale between £160 of income and £320 of income, in order to avoid that sudden imposition of £45.
    The Chairman: The hon. Member has been giving an explanation of the measure of the proposed Clause itself. I asked him to explain any reason he could give why I should select it for discussion.
    Mr. Cocks: Because it deals with an anomaly which seems to have been overlooked.
    The Chairman: I think the hon. Member had better proceed.

    NEW CLAUSE—(Taxation of friendly societies.)
    Sub-section (1) of Section thirty-nine of the Income Tax Act, 1918, shall have effect as if there were added the following proviso:
    " Provided that an unregistered friendly society which, not being exempt as aforesaid, proves that its income is less than three hundred and twenty pounds, shall be entitled to have the amount of Income Tax payable in respect of its income if it would but for the provisions of this Sub-section exceed a sum equal to one-half of the amount by which the income exceeds one hundred and sixty pounds, reduced to that amount."—[Mr. Cocks.]
    Brought up, and read the First time.
    6.58 p.m.
    Mr. CocksI beg to move, "That the Clause be read a Second time."
    As I have said, this deals with a very simple matter although the Clause seems complicated, a fact which, I am sure, the Chancellor of the Exchequer will regret as much as I do. There is in my constituency a little town called Eastwood which is celebrated as the birthplace of the Midland Railway Company and also of the novelist D. H. Lawrence. It is the scene of many of his novels, including "Sons and Lovers." In that town there is a small society which for 50 years has been doing a very good work among the boys up to 16 years of age and the girls of any age —the sons and lovers of the
    1006
    present and the future. The society in return for a small subscription makes provision for cases of sickness. It has a membership of 229 boys and 381 girls or a total of 610 young people. It has wisely invested its funds in Government securities. Three years ago its income was £158 7s. 6d. and on that income it had to pay no Income Tax. In the following year the income increased to £160 5s. 3d., and to their astonishment those in charge of the affairs of the society found that they had to pay £40 Income Tax in that year and £45 in the following year. In other words, on an income of £160 no Income Tax was payable, but when the income was only 5s. 3d. above that amount there was a charge for Income Tax of £40 —a very heavy expenditure for a small society many of whose members are quite small children. Feeling that this was an anomaly I put down this new Clause.
    The effect is as follows: If the income of such a society is £160, it pays nothing at present; if it is £180, it pays £45 at present, and under my proposal it would pay £10; if it is £200, it pays £50 at present, and under my proposal it would pay £20; if it is £220, it pays £55 at present, and under my proposal it would pay £30; if it is £240, it pays £60 at present, and under my proposal it would pay £40; if it is £260, it pays £65 at present, and under my proposal it would pay £50; if it is £280, it pays £70 at present, and under my proposal it would pay £60; if it is £300, it pays £75 at present, and under my proposal it would pay £70; then when the income gets to £320 it pays £80 at present, and it would pay the same amount under my proposal. These societies, therefore, would not, under my proposal, escape paying Income Tax; in fact they would have to pay a full 10s. in the pound on any income over £160, but below that they would be exempt. It seems to me that such a sliding scale as I suggest would be fairer than the existing position. I know the Chancellor of the Exchequer always wishes to be fair to the poor and weak, and I hope he will accept the new Clause.
    7.3 p.m.
    Captain CrookshankMay I explain the matter by bringing to the notice of the Committee the different treatment meted out to registered and unregistered friendly societies? The new Clause deals merely with unregistered friendly

    1007
    societies. They are exempt from Income Tax when the income is under £160; their Income Tax exemption, that is to say, is dependent only on the size of the society's income. In the case of a registered friendly society there is a difference. They are entitled to exemption from Income Tax under Schedule A, Schedule C and Schedule D, not according to the amount of the income but according to the benefits which they give. If the gross assurance cannot exceed £300 or if the annuity is not more than £52, they get exemption from Income Tax.
    I quite recognise that the proposal is intended to deal with the marginal cases. If the relief of an unregistered friendly society depends upon income, it is very unfortunate when its income is balanced just on the wrong side of the £160. To that extent, it is true, there is a hardship between one society and another, or between one year and another in the case of a particular society. In passing, may I say that I think the actual balancing point would not be £320 but slightly higher—about £355—in order to achieve the object which the hon. Member has in moving the new Clause. My right hon. Friend's difficulty is that it is impossible to say how many unregistered friendly societies there are, nor have we any idea of what the total income of the unregistered friendly societies may be—what, in short, would be the effect of a concession of this kind. It is probable that it is not a very large sum, but there is no way of ascertaining.
    The hon. Gentleman suggested that the dividing line of £160 was an anomaly which had been overlooked by the Treasury. That is not so. As a matter of fact, the whole thing is an anomaly because the Royal Commission on Income Tax suggested that any exemption for unregistered friendly societies should be withdrawn, and we have left the exemption, in spite of that recommendation. So I think my answer to the hon. Gentleman must be this, that we cannot meet the case along the lines which he has suggested; if this is considered to be a hardship to unregistered friendly societies it seems to me that they have their remedy by becoming registered. Of course, I do not know on what sort of scale these boys and girls are entering the hon. Member's society, but
    1008
    perhaps the annuities would not be as much as £52 and it is not likely that the gross assurance would be more than —300. If that is so, by merely registering itself the society would be exempt, provided that the benefits they offer are below the figures I mentioned. As there is a possible remedy to what the hon. Member calls an anomaly, we must, as at present advised, ask the Committee not to accept this proposal.
    Mr. Lees-Smith: What is the provision with regard to registered friendly societies? I understand they are exempt if the annuity is not more than £52. Suppose the annuity were £55, would a registered friendly society then be mulcted in this large sum of £30, £40 or £50 a year corresponding to the scale that my hon. Friend brought forward?
    Captain Crookshank: Yes, as far as I know, subject to correction, because I am giving an answer on the spur of the moment.
    7.10 p.m.
    Mr. Watkins: It seems to me that the problem lies within certain definite limits. This concession can apply only to those unregistered friendly societies whose income is between £160 and £320 a year—or £355 according to the right hon. Gentleman. The Treasury must know what Income Tax it collects in those cases under the present scale, and it can readily work out what it would collect under the suggested scales, and the difference would be the money value of the concession asked for. It seems that in the relatively small number of cases to which this proposal applies the disparity as between one year and another, or between one society and another, is really so unfair that the concession ought to be made, in order to allow these very helpful societies to carry on their work.
    7.11 p.m.
    Mr. Lees-Smith: I do not remember this point being brought to the attention of the Committee in any previous year, and it is not a point on which we should necessarily want to go to a Division. Seeing that the point is new, would the Financial Secretary see that inquiries are made by the Treasury to ascertain the number of societies which would be affected by this proposed new Clause, and then perhaps, in answer to a question, he could give us the result of these inquiries? Because

    1009
    the present position is not satisfactory. There are very many quite good reasons why societies do not want to register. They are not important societies. There is a great deal of formality about registration, which is not really justified in the case of fairly simple societies of this kind. And, of course, the right hon. Gentleman has made no attempt whatever to justify the anomaly.
    7.12 p.m.
    Captain Crookshank: I think the right hon. Gentleman is right, and the matter has not been raised before, but there is a lot to be said for the alternative solution which I suggested that these societies should register. I must therefore not be taken as giving any pledge or promise, but I am prepared to say that we will inquire and see if we can find out what this concession would cost.
    Mr. Cocks: I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Allowances for blind persons.)
    A totally blind single person shall be allowed two hundred pounds of income free of tax as personal allowance, a totally blind husband shall be allowed two hundred and fifty pounds of income free of tax, and a totally blind husband and wife shall be allowed three hundred and sixty pounds of their joint income free of tax.—[Sir J. Wardlaw-Milne.]
    Brought up, and read the First time.
    7.13 p.m.
    Sir John Wardlaw-Milne: I beg to move, "That the Clause be read a Second time."
    I have the satisfaction of feeling that this new Clause will be received with great sympathy in every part of the Committee. At present the Blind Persons Act makes provision for poor blind people fairly generously, but there is no provision at all in favour of blind people who are self-supporting, and who receive from investment, trade or business an income on which tax has to be paid. I believe that the State has never given them any special concession at all. I think the Committee will recognise that every blind person has increased expenses, in the employment of a guide or by way of clerical assistance, for example, as compared to persons who have not lost their sight. It is true that the inspectors of taxes try to treat blind
    1010
    people generously in regard to this extra expense, and make such allowances as are within their powers, to cover the charges to which blind people are put, but there is no statutory provision or ruling giving the blind person any help. My suggestion in this new Clause is that a totally blind single person should have his exemption limit raised from £100 to £200. In the case of the totally blind husband and wife, I suggest that the exemption should be raised from £180 to £360. I have inserted between these cases what one might describe as a new class from a tax point of view, namely, that of the totally blind husband, and I suggest that the present allowance in the case of that family, i.e., £180 should be raised to £250. The suggestion is, therefore, that a single totally blind person should have an exemption of £200 instead of £100, that a totally blind husband with a wife not blind should have an increased exemption from £180 to £250, and that when both husband and wife are totally blind the allowance should be raised from £180 to £360.
    Mr. Denman: Why does the hon. Member omit the totally blind wife?
    Sir J. Wardlaw-Milne: Because the wife's income is combined with the husband's. Whether they are assessed separately or not, the two incomes are taken together, as the Committee knows, for the purpose of Income Tax, so that there is no object in putting down the blind wife separately as entitled to an extra allowance. I am proposing the allowance for the bread-winner.
    Mr. Lansbury: What about a single woman?
    Sir J. Wardlaw-Milne: There is nothing that exempts a single woman in my Clause which deals with "a totally blind single person." I have been trying to ascertain what this concession would cost, but I am bound to say that any information that I can get is, I will not say inaccurate, but at any rate indefinite. It must, however, be a quite small amount. The Clause affects only those who are totally blind, and practically it affects mainly those earning small incomes, in professions and businesses, those who are competing with people who have full sight. I think that on the whole the Committee will agree that it is a very desirable amendment of the Income Tax

    1011
    Acts and one which would confer a great benefit on a small number of people throughout the country, and it is a concession which, I am certain, would cost the State a very small amount.
    There are two points that I want to make in conclusion. It seems to me rather unfair that we should make a special allowance to a widower, for example, for the assistance of the housekeeper that he requires to help him with his family and his house, but do nothing in the way of a special remission of tax for a person who suffers a disability such as total blindness. I dare say it might be said that it is not always possible to differentiate between the totally and partially blind, but that should really be a very simple matter. A medical certificate could be forthcoming at once in the case of the totally blind, and I do not think there would be any difficulty on that score. We do make allowances, under the Blind Persons Act, in the case of poor persons who are blind, and I hope we shall get a concession for those who are blind but who are not necessarily poverty stricken, but are endeavouring, in competition with those who have their full sight, to carry on some small business or take part in some profession. I do hope that my right hon. Friend will feel able to make this concession.
    7.20 p.m.
    Sir J. Simon: My hon. Friend was perfectly right when he began by saying that what he was proposing would arouse a feeling of sympathy in all parts of the Committee, and he was also right when he said that this particular concession would not involve the Treasury in any very great sacrifice of money, but I am sorry to say that, sympathetic as we may feel, I think we ought not to accept this proposal, for it is one of an entirely novel character to which there really is no end. It is essential for the purposes of the Income Tax as it has been devised and administered by various Governments in this country that the reliefs that are given should not be those given on personal grounds of disability or suffering, but are simply reliefs to different categories. You make a provision by which a married man is granted a certain relief because there is a very large class of married men, and you make provision in the same way for children in a family. All that you can do
    1012
    is to make broad categories of that sort, but if you go on to include persons' disabilities and illnesses, it is obvious that the case of the totally blind person, pathetic as it is, is merely a specimen of many. There is the person who is permanently bedridden, there is the person who is severely crippled, and one could make no end of a list. You cannot really hope to start this form of abatement or relief unless you are prepared to take a great many other cases into consideration as well.
    The Royal Commission on Income Tax had before it all sorts of suggestions, including this one, but they also had before them all sort of applications of a parallel kind and from other members of the community who are unhappily handicapped in one way or the other, and what they said in their report, in paragraph 237, was this:
    " We have been asked to recommend allowances for expenses arising out of illness or disability, such as the travelling expenses of attendants of disabled persons; or to give compassionate rebate to persons who are compelled to maintain and pay personal attendants; or special relief to" disabled persons in view of their decreased earning capacity. These claims, while differing in degree, all arise out of the personal or domestic circumstances of the taxpayer, and although we are conscious that in particular cases the operation of the general rule may result in individual hardship, we feel that we cannot advise any general relaxation of the principles on which the tax is levied."
    I think the Committee, facing it from the point of view of the administration of the Income Tax Acts, will see that such a concession as is asked for by the proposed new Clause would not be easy to administer. I do not see either how we could take total blindness and distinguish it from a very high degree of bad sight, and I am afraid I must take the view which my predecessors have taken, and which the Royal Commission took, that we really cannot graft on to the Income Tax Acts a series of special exceptions for groups of persons suffering from particular ailments. It would not really be required in all cases, and in other cases it would be more than would be required, and I am afraid that we cannot attempt to modify the Income Tax at every point where a certain section of our fellow citizens is suffering from a rather exceptional handicap. I am sorry to take this view. I feel just as the hon. Member does about it, but I do not believe that

    1013
    we shall improve our Income Tax laws in this way. Though we all agree that this would be a small matter in money, I am afraid that it would lead to all sorts of other appeals to which no sort of answer could be given.
    7.26 p.m.
    Sir J. Wardlaw-Milne: I quite realise that it might be difficult to close the door to other forms of serious disability if it were once admitted in the case of the blind, but I think it will be agreed by my right hon. Friend that the case of the totally blind is rather exceptional, and especially the case of those who have to endeavour to make a living in competition with people possessed of their full sight. When my right hon. Friend goes on to say that the Income Tax Acts have never made any exception of this kind, I think he has forgotten the case that I quoted of a widower, who has a definite allowance for a housekeeper. If a man suffers the loss of his wife and gets a definite extra exemption on that account to pay for the extra expense which he has to
    incur, surely there is an argument for those who are totally blind getting some further exemption than in the case of those with full sight. I do not feel, in view of the Chancellor of the Exchequer's attitude, that there will be any value in dividing the Committee on this matter, because it would merely delay our proceedings. At the same time, I am bound to say that I hope very much that my right hon. Friend may be able to reconsider the matter. Perhaps on another occasion we shall be able to get a little further with it, and possibly in easier times he will not worry so much with the question of principle but give me what I want, and what I am sure the whole Committee would desire, if it were possible to have it. In the circumstances, I ask leave to withdraw my Clause.
    Hon. Members: No.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 122; Noes, 219.

    Division No. 215.]

    AYES.

    [7.28 p.m.

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

    Hardie, Agnes

    Pritt, D. N.

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

    Harris, Sir P. A.

    Ridley, G

    Banfield, J. W.

    Hayday, A.

    Riley, B.

    Barnes, A. J.

    Henderson, J. (Ardwick)

    Ritson, J.

    Bartlett, C. V.O.

    Henderson, T. (Tradeston)

    Roberts, W. (Cumberland. N.)

    Batey, J.

    Hills, A. (Pontefract)

    Robinson, W. A. (St. Helens)

    Bellenger, F. J.

    Hopkin, D.

    Seely, Sir H. M.

    Benn, Rt. Hon. W. W.

    Isaacs, G. A.

    Sexton, T. M.

    Benson, G.

    Jagger, J.

    Shinwell, E.

    Bevan, A.

    Jenkins, Sir W. (Neath)

    Silkin, L.

    Broad, F. A.

    John, W.

    Silverman, S. S.

    Brown, C. (Mansfield)

    Jones, Sir H. Haydn (Merioneth)

    Simpson, F. B,

    Burke, W. A.

    Kennedy, Rt. Hon. T.

    Sinclair, Rt. Hon. Sir A. (C'thn't)

    Charleton, H. G.

    Lansbury, Rt. Hon. G.

    Smith. Ben (Rotherhithe)

    Chater, D.

    Lathan, G.

    Smith, E. (Stoke)

    Cluse, W. S.

    Lawson, J. J.

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

    Clynes, Rt. Hon. J. R.

    Leach, W.

    Smith, T. (Normanton)

    Cocks, F. S.

    Leslie, J. R.

    Sorensen, R, W.

    Cove, W. G.

    Logan, D. G.

    Stephen, C.

    Cripps, Hon. Sir Stafford

    Lunn, W.

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

    Daggar, G.

    Macdonald, G. Ince.)

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

    Dalton, H.

    McEntee, V. La T.

    Summerskill, Dr. Edith

    Davies, R. J. (Westhoughton)

    McGhee, H. G.

    Taylor, R. J. (Morpeth)

    Davies, S. O. (Merthyr)

    MacLaren, A.

    Thorne, W.

    Day, H.

    Mainwaring, W. H.

    Thurtle, E.

    Dunn, E. (Rother Valley)

    Mander, G. le M.

    Tinker, J. J.

    Ede, J. C.

    Mathers, G.

    Viant, S. P.

    Edwards, A. (Middlesbrough E.)

    Maxton, J.

    Walkden, A. G.

    Edwards, Sir C. (Bedwellty)

    Milner, Major J.

    Watkins, F. C.

    Evans, D. O. (Cardigan)

    Montague, F.

    Watson, W. McL.

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

    Morgan, J. (York, W.R., Doncaster)

    Westwood, J.

    Foot, D. M.

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

    White, H. Graham

    Frankel, D.

    Muff, G.

    Whiteley, W. (Blaydon)

    Gardner, B. W.

    Naylor, T. E.

    Williams, T. (Don Valley)

    George, Megan Lloyd (Anglesey)

    Noel-Baker, P. J.

    Wilmot, John

    Gibson, R. (Greenock)

    Oliver, G. H.

    Wilson, C. H. (Attercliffe)

    Greenwood, Rt. Hon. A.

    Owen, Major G.

    Windsor, W. (Hull, C.)

    Grenfell, D. R.

    Paling, W.

    Young, Sir R. (Newton)

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

    Parker, J.

    Gritten, W. G. Howard

    Parkinson, J. A.

    TELLERS FOR THE AYES.—

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

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

    Mr. Anderson and Mr. Groves.

    Hall, J. H. (Whitechapel)

    Poole, C. C.

    NOES.

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

    Glyn, Major Sir R. G. C.

    Radford, E. A.

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

    Gower, Sir R. V.

    Raikes, H. V. A. M.

    Alexander, Brig.-Gen. Sir W.

    Graham, Captain A. C. (Wirral)

    Ramsbotham, Rt. Hon. H.

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

    Greene, W. P. C (Worcester)

    Rathbone, J. R. (Bodmin)

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

    Gridley, Sir A. B.

    Rawson, Sir Cooper

    Aske, Sir R. W.

    Grimston, R. V.

    Reed, A. C. (Exeter)

    Assheton, R.

    Guest, Lieut.-Colonel H. (Drake)

    Reid, W. Allan (Derby)

    Astor, Viscountess (Plymouth, Sutton)

    Gunston, Capt. Sir D. W.

    Remer, J. R.

    Baillie, Sir A. W. M.

    Hambro, A. V.

    Rickards, G. W. (Skipton)

    Balniel, Lord

    Hammersley, S. S.

    Ropner, Colonel L.

    Beamish, Rear-Admiral T. P. H.

    Hannah, I. C.

    Rosbotham, Sir T.

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

    Harbord, Sir A.

    Ross, Major Sir R. D. (Londonderry)

    Bernays, R. H.

    Haslam, Sir J. (Bolton)

    Ross Taylor, W. (Woodbridge)

    Bird, Sir R. B.

    Heilgers, Captain F. F. A.

    Royds, Admiral Sir P. M. R.

    Blair, Sir R.

    Hely-Hutchinson, M. R.

    Ruggles-Brise, Colonel Sir E. A.

    Bossom, A. C.

    Hepburn, P. G. T. Buchan-

    Russell, Sir Alexander

    Boulton, W. W.

    Hepworth, J.

    Salt, E. W.

    Braithwaite, Major A. N. (Buckrose)

    Herbert, A. P. (Oxford U.)

    Samuel, M. R. A.

    Braithwaite, J. Gurney (Holderness)

    Hogg, Hon. Q. McG.

    Sanderson, Sir F. B.

    Briscoe, Capt. R. G.

    Holmes, J. S.

    Schuster, Sir G. E.

    Brocklebank, Sir Edmund

    Horsbrugh, Florence

    Selley, H. R.

    Brooks, H. (Lewisham, W.)

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

    Shakespeare, G. H.

    Brown, Rt. Hon. E. (Leith)

    Hume, Sir G. H.

    Shaw, Captain W. T. (Forfar)

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

    Hunloke, H. P.

    Shepperson, Sir E. W.

    Bull, B. B.

    Hunter, T.

    Simon, Rt. Hon. Sir J. A.

    Burgin, Rt. Hon. E. L.

    Hutchinson, G. C.

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

    Campbell, Sir E. T.

    Jarvis, Sir J. J.

    Smiles, Lieut.-Colonel Sir W. D.

    Cary, R. A.

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

    Smith, Sir R. W. (Aberdeen)

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

    Kellett, Major E. O.

    Smithers, Sir W.

    Cazalet, Capt. V. A. (Chippenham)

    Kerr, Sir J. Graham (Scottish Univ.)

    Somervell, Rt. Han. Sir Donald

    Channon, H.

    Keyes, Admiral of the Fleet Sir R.

    Somerville, Sir A. A. (Windsor)

    Chapman, A. (Rutherglen)

    Kimball, L

    Southby, Commander Sir A. R. J.

    Chorlton, A. E. L.

    Lamb, Sir J. Q.

    Spears, Brigadier-General E. L.

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

    Lees-Jones, J.

    Spens, W. P.

    Clarry, Sir Reginald

    Lennox-Boyd, A. T. L.

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

    Cobb, Captain E. C. (Preston)

    Lewis, O

    Storey, S.

    Colville, Rt. Hon. John

    Liddall, W. S.

    Stourton, Major Hon. J.J

    Conant, Captain R. J. E.

    Little, J.

    Strauss, H. G. (Norwich)

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

    Llewellin, Colonel J. J.

    Strickland, Captain W. F.

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

    Lloyd, G. W.

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

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

    Locker-Lampson, Comdr. O. S.

    Stuart, Hon. J. (Moray and Nairn)

    Cooper, Rt. Hon. T. M. (E'burgh, W.)

    Loftus. P. C.

    Sueter, Rear-Admiral Sir M. F.

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

    Lyons, A. M.

    Tasker, Sir R. I.

    Cox, H. B. Trevor

    Mabane, W. (Huddersfield)

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

    Craven-Ellis, W.

    M'Connell, Sir J.

    Thomas, J. P. L.

    Crooke, Sir J. Smedley

    McCorquodale, M. S.

    Thorneycroft, G. E. P.

    Crookshank, Capt. Rt. Hon. H. F. C.

    MacDonald, Sir Murdoch (Inverness)

    Thornton-Kemsley, C. N.

    Cross, R. H.

    Macdonald, Capt. P. (Isle of Wight)

    Touche, G. C.

    Crossley, A. C.

    McKie, J. H.

    Train, Sir J.

    Davidson, Viscountess

    Macmillan, H. (Stockton-on-Tees)

    Tree, A. R. L. F.

    Davies, C. (Montgomery)

    Macquisten, F. A.

    Tryon, Major Rt. Hon. G. C.

    De la Bère, R.

    Magnay, T.

    Tufnell, Lieut.-Commander R. L.

    Denman, Hop. R. D.

    Makins, Brigadier-General Sir Ernest

    Turton, R. H.

    Denville, Alfred

    Manningham-Buller, Sir M.

    Wakefield, W. W.

    Doland, G. F.

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

    Walker-Smith, Sir J.

    Drewe, C.

    Marsden, Commander A

    Wallace, Capt. Rt. Hon. Euan

    Dugdale, Captain T. L.

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

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

    Eastwood, J. F.

    Mills, Sir F. (Leyton, E.)

    Ward, Irene M. B. (Wallsend)

    Eckersley, P. T.

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

    Wardlaw-Milne, Sir J. S.

    Edge, Sir W.

    Moreing, A. C.

    Waterhouse, Captain C.

    Edmondson, Major Sir J.

    Morgan, R. H. (Worcester, Stourbridge)

    Watt, Lt.-Col. G. S. Harvie

    Elliot, Rt. Hon. W. E.

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

    Wayland, Sir W. A.

    Ellis, Sir G.

    Nicolson, Hon. H. G.

    Webbe, Sir W. Harold

    Emrys-Evans, P. V.

    O'Connor, Sir Terence J.

    Wells, Sir Sydney

    Entwistle, Sir C. F.

    Orr-Ewing, I. L.

    Whiteley, Major J. P. (Buckingham)

    Errington, E.

    Palmer, G. E. H.

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

    Evans, Colonel A. (Cardiff, S.)

    Peat, C. U.

    Willoughby de Eresby, Lord

    Everard, Sir William Lindsay

    Perkins, W. R. D.

    Windsor-Clive, Lieut.-Colonel G.

    Findlay, Sir E.

    Pickthorn, K. W. M.

    Womersley, Sir W. J.

    Fleming, E. L.

    Pilkington, R.

    Wood, Hon. C. I. C.

    Fox, Sir G. W. G.

    Plugge, Capt. L. F.

    Wragg, H.

    Furness, S. N.

    Ponsonby, Col. C. E.

    Fyfe, D. P. M.

    Pownall, Lt.-Col. Sir Assheton

    TELLERS FOR THE NOES.—

    Gluckstein, L. H.

    Procter, Major H. A.

    Lieut.-Colonel Kerr and Mr. Munro.

    The Chairman:Mr. Tinker.
    Mr. Mander:On a point of Order. As I gather you are not proposing to call my proposed new Clause—(Conscription of
    1016
    wealth preparatory provisions)—I was wondering whether you would extend to me the same advantage as you gave to the hon. Member for Broxtowe (Mr. Cocks) of explaining why.
    The Chairman: In this case I have found no need to ask for any explanation.

    NEW CLAUSE.—(Relief for voluntary contributors under the Widows', Orphans' and Old Age Contributory Pensions Acts.)
    Section thirty-two of the Income Tax Act, 1918 (which relates to relief in respect of life insurance premiums, etc.), shall have effect as if paragraph (b) of Sub-section (1) thereof were extended to apply to a voluntary contributor under the Widows', Orphans' and Old Age Contributory Pensions Acts, 1936 and 1937.—[Mr. Tinker.]
    Brought up, and read the First time.
    7.36 p.m.
    Mr. Tinker: I beg to move, "That the Clause be read a Second time."
    In 1925 an Act of Parliament was passed which caused people in certain employments to be compulsorily insured for pensions for widows and orphans. The same Act gave to those who were not in those employments 12 months to take advantage of the opportunity of becoming voluntary contributors. Later, anyone who left those employments was given 12 months to become a voluntary contributor, in which case he had to pay his own and the employer's contribution. It has been found since thot that who had to pay as compulsory contributors were able to obtain relief for Income Tax purposes in respect of the amounts they paid. Voluntary contributors, however, have not been allowed that benefit. In 1937 owing to much agitation in the country, another Act was passed which gave opportunities for a vast number of people who could not join under other circumstances to become voluntary contributors. A man had to pay is. 3d. a week if he wanted full benefit and a woman paid 6d. It has been discovered that people who joined under that scheme were also refused relief of Income Tax in respect of their contributions. We on these benches contend that both classes ought to be entitled to relief.
    To emphasise my point I would draw the right hon. Gentleman's attention to what is being given to people who insure for large sums of money. This new Clause mentions Section 32 of the Income Tax Act, 1918, which relates to relief in respect of life insurance premiums. Certain privileges are given to people who insure for large sums. We read on page 4 of the Income Tax return that, subject 1018
    to certain restrictions, allowances for premiums paid for a life assurance or for a contract for deferred annuities are given at the following rates of relief: Assurances effected after 22nd June, 1916, 2s. 9d. in the £ assurances effected before 22nd June, 1916, 2s. 9d. in the £where the total income does not exceed £1,000; where it exceeds £1,000 and is not more than £2,000, 4s. 1 ½d.; and where it exceeds £2,000, 5s. 6d. is allowed. That shows that the House had in mind giving some protection for those people who made provision for their families when they pass away. Not only that, but anyone who takes a life insurance policy when the amount insured is drawn after a certain number of years is allowed Income Tax relief. In my case I have a life insurance for £100. I pay £7 10s. a year for that and I am allowed seven times 2s. 9d. from Income Tax. At the end of a certain time I shall get that £100, and if I die before that time those who follow me will be entitled to It. I thus get relief for something which I pay to protect myself, yet these voluntary contributors, who are probably in worse circumstances, who pay is. 3d. a week, or £3 5d. a year, are not allowed any relief at all.
    It is evident that the House has not examined the question thoroughly. If we felt it right to allow relief to those who become insured in order to get a pension of 10s. at 65, and also to those who pay big premiums, then we ought to give the same advantage to these voluntary contributors. In order to bring this anomaly to the notice of the Chancellor, I asked him on the 27th June why those who were compulsorily insured were exempt from Income Tax while the voluntary contributor was not. The Chancellor replied:
    " Relief from Income Tax in respect of compulsory contributions under the Widows', Orphans' and Old Age Contributory Pensions Acts is allowed under provisions of the Income Tax law which authorise relief in respect of certain payments which a person is liable to make under an Act of Parliament for securing a pension for himself or for his widow or children. The condition of allowance of this relief is not satisfied in the case of a voluntary contributor, and there is no provision of the law under which relief can be allowed in respect of such person's contributions."—[OFFICIAL REPORT, 27th JANUARY, 1939; col. 207, Vol. 349.]
    We have already passed an Act to bring these people within the provisions of the

    1019
    Pensions Acts, and I can only imagine that this point was overlooked at that time because we did not fully realise what it meant. I submit that it is a question that should be examined and put right by the new Clause which I propose. I put a supplementary question to the Chancellor asking whether he was
    " aware that life insurance premiums are subject to certain remissions of Income Tax? Surely, the older people are entitled to the same recognition? "
    The Chancellor replied that he did not think the distinction was between one class of persons and another. I do not think the right hon. Gentleman fully understood what was behind my question. Many times we have found in examining the Finance Bill that certain things have been overlooked, and when they have been explained the House has put them right. I think that this is such a case, and that the House will agree that something ought to be done in the direction I have outlined. My final word is that it is only persons with incomes below a specified limit who can become voluntary contributors, and so we are not granting any concession to rich people.
    7.45 p.m.
    Mr. Ellis Smith: If the Committee believe in uniformity of administration and uniform legislation they must, logically, accept this proposal. Those affected by it are, generally speaking, men and women in industry who have been promoted to managerial or administrative positions, who have been put upon the staff. As a result they have improved their standard of living, and rightly so. They have sent their sons and daughters to secondary schools and taken on more commitments than they otherwise would have done. If we believe in promotion based upon merit we should be prepared to be as generous as we can to those who are promoted. Speaking generally the people affected are those who are earning between £5 and £6 a week. It is for those people in particular that we are speaking. Allowances are made for long term insurances, for endowments, for tools and in many other cases, and we say that when these people are maintaining their pension rights—and paying a relatively high contribution to do so, as they are—they ought to have this relief. We are not speaking critically of the contribution, because we believe our people would be will-
    1020
    ing to make a higher contribution in order to increase widows' and old age pensions. We hope the Chancellor will accept this proposal.
    7.48 p.m.
    Captain Crookshank: I am not sure that this point has been raised before in our Debates, and so we come once more to something that is new and refreshing in considering the new Clauses. The two hon. Members who have moved and supported the Clause are renowned in our discussions for always putting their case very moderately, and to-day they have run true to form. I think the only thing which has not emerged from their speeches, and which cannot emerge from mine is how much this concession is likely to cost, but the information available is insufficient for a proper estimate of the ultimate cost. All I can say is that from the very nature of the case it would not be a cheap concession. That must be obvious. As I understand it, the point which the hon. Member wishes to bring forward is this: An allowance is granted in respect of contributions under these Acts if the contribution is deducted compulsorily, but if it is a voluntary contribution there is no allowance. That, surely, is the exact distinction, and it is a distinction which has to be maintained. How could one justify the granting of some remission because this particular scheme to which a man is contributing voluntarily happens to be a State scheme?
    There are two classes of persons concerned here. There is the class of person who at one time was a compulsory contributor and kept up his contributions when he passed into another layer of remuneration; and then there are a great number of other people—I do not know how many, but there must have been hundreds of thousands—who took advantage of the opportunity last year to come within the Act on a voluntary basis. They were people who had not been in the scheme before. Some merely came in because they happened to be in the next layer of income and took advantage of the very favourable conditions which the Act laid down for those who, for want of a better term, were called the "black coated workers." The provisions covered a larger field than that, but that was the term used during those Debates.
    Therefore, I ask again, how can we justify the hon. Member's argument that

    1021
    because last year a certain man A has taken advantage of the voluntary provisions of that Act, and has come into the scheme and goes on paying his contributions, there shall be a remission of Income Tax, but in the case of somebody else, possibly with exactly the same income, who prefers to take out a deferred annuity policy with a company, the same conditions shall not apply? He may have had such a policy before the Act came in and have said: "I prefer to go on with the policy on which I have been paying all along." How can we justify not giving that man any kind of remission?
    Mr. Tinker: Take my own case. I have voluntarily taken out a policy for £100 and I get a remission of Income Tax. Where is the difference?
    Captain Crookshank: I was coming to that point.
    Mr. Tinker: You had overlooked it.
    Captain Crookshank: Indeed I had not. The insurance of which the hon. Member is talking is an insurance on his life
    Mr. Tinker: No. In 15 years' time I shall get that sum if I am alive.
    Captain Crookshank: That is the case of insurance for life or where the policy matures after so many years. What the Act provides in these cases is a payment of so much a week until death. It is quite a different kind of policy
    Mr. Silverman: If we are to debate this, let us debate it according to the facts as they are and not as they are not. If a man voluntarily enters into a contract with an insurance company for an endowment for his old age, which may very well take the form of an annuity, how does the right hon. and gallant Gentleman distinguish between him and the contributor under the State Scheme?
    Captain Crookshank: It is a different class of insurance, and the point I was making was how one could justify, in the same class of insurance, giving exemption in the case of a man who entered into a State Scheme voluntarily and the man who was taking out another form of insurance of the same nature with a company. That was the distinction which I was trying to draw, and it had nothing to do with the other point which the hon. Member had raised, which was the case
    1022
    of a policy maturing at death or providing for a payment at the end of a certain number of years in the form of a capital sum.
    Mr. Silverman: What is the difference?
    Captain Crookshank: It is another case altogether.
    Mr. Silverman: No.
    Captain Crookshank: This Clause deals with the voluntary contributor who comes into the widows', orphans' and old age pensions scheme. It is not a case which we think can be dealt with at the present time, and therefore I ask the Committee not to accept the argument which has been put forward. It is a new case, and no doubt hon. Members may want to argue it further, but, as we see it, it is not one in which we can make concessions, more particularly as we have no means of knowing at all what sum of money is involved. For that reason I ask the Committee not to accept the Clause.
    7.56 p.m.
    Mr. Lees-Smith: The Financial Secretary has argued along a line which I do not think was the one followed by my hon. Friend. He has argued as though the main point made by my hon. Friend was to draw an analogy between those who were insured compulsorily and those who insured themselves voluntarily. That point was made, but it was not the main argument of my hon. Friend. The main argument was the parallel between an ordinary professional man who insures for old age by an endowment policy and the small people who insure against old age under this scheme. The point the right hon. and gallant Gentleman seemed to make was that in the case of a professional man who insured—and normally he insures on a policy which is either an endowment policy under which he receives a certain sum at a certain date, or a life policy—unless he insures for a capital sum, he does not get any concession under the Income Tax law. I say that argument is too technical to bear the weight which the right hon. and gallant Gentleman put upon it. A capital sum was included in the provisions as to exemption of insurance premium from Income Tax in order to correct certain abuses which had arisen, and not because

    1023
    it was felt that to insure simply for old age was a kind of insurance which ought to be discouraged.
    The broad principle is this, that for years we have given these concessions in regard to insurance premiums because the State has wanted to encourage thrift, to encourage men to make provision for their old age. That is exactly the same principle as the State has tried to encourage in the case of these voluntary insurers under the various Insurance Acts. It is the kind of thrift which is suited particularly to smaller incomes and to the workers. We now have a provision in the Finance Acts by which thrift on the part of professional men is encouraged, whereas a corresponding form of thrift on the part of the wage earner or the small salary earner lacks such encouragement. That distinction cannot be defended on any ground of precedent and I am rather surprised that this is the first time the point has been raised. But the Committee will see that it is not the kind of thing which will be dropped in future years. We have now planted another hardy annual, and my experience is that after two or three years something begins to happen. Therefore I think my hon. Friends have performed an enormous service to the whole Income Tax system by having brought this subject forward for the first time, and I venture to predict that the successor of the right hon. and gallant Gentleman, who may easily be drawn from this side of the Committee, will give the concession which is now asked for.
    8.0 p.m.
    Mr. Foot: I should like to wish this Clause a good start upon what I hope will not be too long a career and to congratulate the hon. Member for Leigh (Mr. Tinker) for having drawn attention to the matter. The right hon. Gentleman who has just addressed the Committee referred to the case of the man who insured with a private company against old age and the other man who did so as a voluntary contributor. There is an even more striking analogy than that. The average man takes out a policy in order to provide for his wife and family in the event of his death. That is the main reason, I should suppose, why people carry on as voluntary contributors. In each case the motive is precisely the same. The
    1024
    Financial Secretary has failed to meet the main arguments advanced by the hon. Member for Leigh. In each case it is for precisely the same purpose that the insurer takes out his insurance policy.
    We were told that this concession would cost a very great deal, but the Financial Secretary to the Treasury did not venture upon any estimate. I should have thought it possible to arrive at an estimate. The number of voluntary contributors must be known and it should be possible to make a rough calculation of the amount which would have to be paid. It is not likely to be very great. I have not worked out the figures exactly, but I should think that the voluntary contributors would pay not more than £3 a year and that in the great majority of cases they would pay Income Tax only upon the lower scale, if they paid it at all. That means that the amount which they would pay in Income Tax would be small, and therefore that the amount in respect of which relief would have to be given would also be very small indeed. In justice and logic they are entitled to this relief. It was very surprising to me to hear that the cost would be very heavy to the Exchequer. Before the Committee accepts that statement some kind of estimate should be given.
    8.3 p.m.
    Mr. Silverman: Considerations of what this concession, if it be a concession, would cost the Treasury, are entirely irrelevant. The point is, is the State entitled, in matters of penal legislation, to make what is nothing but a class distinction? I suppose most people think of Income Tax law as in one way or another penal legislation. It is all very well for the right hon. and gallant Gentleman to say that this proposal might cost a lot of money; has he ever estimated what it would cost? If he has, would he tell the Committee what it would cost the Treasury to grant the allowances which are made in the normal Income Tax procedure to voluntary assurances of all kinds? The right hon. and gallant Gentleman is not entitled to say: "I cannot grant this concession to a very poor section of the community because it will cost us too much," unless he is prepared to follow that argument to its logical conclusion by withdrawing allowances from those who now enjoy them, thereby saving to the State the very much larger

    1025
    sum which the State now loses by making those concessions.
    It seems to me that the Committee agree with our point of view and that if the Whips were not on there would be no dispute about it at all. The Financial Secretary has entirely failed to establish the distinction which he tried to draw. You have only to look at the Income Tax form to see how lamentably his distinction falls to the ground. The allowances on life assurances are referred to and I would draw attention to this passage:
    " Subject to certain restrictions, allowances for premiums paid for life assurances or contracts for deferred annuities …"
    that is to say, contracts with insurance companies to pay so much a year during a man's life beginning at some agreed age. What is the difference? I hope that I have the attention of the right hon. and gallant Gentleman.
    Captain Crookshank: I am making notes of what the hon. Gentleman is saying.
    Mr. Silverman:I hope that they will result in the necessary enlightenment. What is the difference between the deferred annuity referred to there and what is done by the voluntary contributor under the State scheme? Does not the voluntary contributor enter with the State into precisely the same contract for a deferred annuity? It must be so, and if it is, the distinction which it was sought to draw fails completely. There are no doubt cases where a man has been a voluntary contributor from the start. He has decided for himself whether he will join this scheme or not. The State goes to a considerable amount of expense in order to induce people to join the scheme. The State makes representation about the value of the scheme and brings a good deal of pressure to bear upon people to join. Apparently we think it is good that people should join and take some part in making provision for their old age. There is no distinction between what is being done by such people and what is done by people of greater means when they enter into a contract with an insurance company for a deferred annuity.
    A great many so-called voluntary contributors are not voluntary contributors in any real sense. They began by not being voluntary. Their circumstances changed in such a way as to leave them
    1026
    the right to continue their contributions or not, as they chose. Suppose they had chosen not to continue. A man's circumstances have changed and he may say: "Very well I will not continue any more. It is entirely within my own will and choice." What happens? He loses the whole of the benefit of the contributions which he has already made. If he is a prudent man and likes to take some thought of what he is doing by making provision in the way that he is invited by the pamphlets to do, he is bound to say: "Although not legally compelled, I can decide for myself whether I will continue or not. I have to take into account that up till this moment I was compelled to contribute, and that unless I go on I shall lose the benefit of everything I have already paid. Therefore, although they tell me that I may go on paying or not, I am, in fact, compelled to do so." There is also this: not only is he compelled, in this economic sense, to continue to pay, but he now loses the Income Tax relief.
    The only attempt made by the right hon. and gallant Gentleman to justify this position has been the distinction which he tried to make between the contract of an insurance company and that of the State. At one time he was inclined to think that they were contracts for different things, and that whereas it was in one case a contract for a pension it was a contract in the other case for a lump sum at the end of a period or a lump sum to the contributor's estate when he dies. I hope that the right hon. and gallant Gentleman is satisfied now that that is not so. There is no distinction, and there ought not to be a distinction in the Income Tax reliefs. If, in face of these facts, the right hon. and gallant Gentleman persists in granting relief to those who have large insurances, pay large premiums and have large incomes, and persists at the same time in refusing Income Tax relief to the people at the bottom of the scale who save their meagre coppers in order to safeguard themselves against the inclemencies in our social system, he must not complain if it is said up and down the country that the Government are quite happy when they relieve the rich at the expense of the poor.
    8.13 p.m.
    Mr. Dunn: I hope that the Financial Secretary to the Treasury will give further and more detailed consideration to our proposal, which seems to have been brushed aside without careful con-

    1027
    sideration of its implications. It seemed to me that the Financial Secretary was very badly briefed when he replied for the Government. There are several types of people involved in the proposal which we make and our case is certainly entitled to a little more consideration than has been given to it. I do not propose to follow my hon. Friend who has just put a legal argument and who has made out a very strong case, but I would ask the Financial Secretary whether, at this late hour, he will not give further detailed consideration to our proposal.
    Who are the people involved in that proposal? It has been stated that they axe key men in industry, and that is true. The key men whom I have in mind are the responsible men in industry, such as miners' secretaries in local branches of the Miners' Federation of Great Britain and the class known as checkweighmen at collieries. There is also a numerous type of professional man slightly above the ordinary wage-earner. Many of these people have entered into commitments which will keep them very poor for the remainder of their lives. They like to lift themselves a little bit beyond the ordinary wage-earner and they have entered into considerable commitments. This small concession would be a very real help to them. The kind of person I have in mind is represented by those engaged in the big local government services of the country, men whose salaries may be anything between £250 and £400 a year. They have to dress well; they have to live in a decent house; and these people have now had an extension from the old system into the new voluntary system of contribution. It seems to me that they are a type of people who ought to be considered, and not brushed aside in a haphazard way as the Financial Secretary has done up to now. He comes down here to-night, briefed very badly, I think, because surely no one here is going to believe that the Treasury have not full information with which to supply him. These people who were brought within the scope of the new legislation from 1st January, 1939, are an entirely new type of people, and the Treasury must know how many there are under this heading.
    I will take the figure which has been put forward of £3 or £3 5s. per person
    1028
    per year, and will take also the figure quoted in the House by the Minister of Health, who told us he was glad that 500,000 had contracted in readiness for 1st January, 1939. I do not think that that figure would meet the case, because I understood that there would be approximately 2,000,000 if the full field was covered. As I work it out, this small remission to a very noble set of people in this country would not be likely to cost the Treasury more than from £100,000 to £150,000 a year. If that is anything like the figure, and I am advised that it is, it seems to me that we are perfectly justified in pressing the Financial Secretary to reconsider the question, even at this late hour. I feel sure that the Chancellor of the Exchequer is by no means satisfied in refusing this Clause, because one has seen his anxiety on the matter; one has seen his consultations with the gentlemen under the Gallery, and the movements which have been taking place. It seems to me, having regard to the number of people involved and the small cost to the Treasury, that even now we are justified in asking him to reconsider the matter, and I hope that on reconsideration he may find it possible to accept the Clause.
    8.18 p.m.
    Mr. Peat: I do not want to delay the Committee for more than a very few moments, but I would like to put on record the fact that I personally think that a very good case has been made out by the Opposition. It is a case in principle. The arguments which have been put forward from the other side have been largely unnecessary, except that they stressed the principle involved; the first two speeches were quite adequate as far as I was concerned. This is one of those situations which arise almost unobserved. It comes very largely as the result of a better distribution of the wealth of the community, of better education, perhaps, and a desire to save and look after one's children, in a class of people who probably until recent years were not in a position to do this. Although I sympathise with my right hon. and gallant Friend in not being able to accept the new Clause immediately, I did not read into his remarks a blank negative, but rather expect that, if he has an opportunity or is desirous of addressing the Committee again, he will say that in principle he sees that there is a good deal of right within the

    1029
    new Clause, and I should like to try, if I can to persuade him not to shut the door, because I think it would be a bad thing to have a Division on the Clause.
    We do not want to divide on it and have a definite negative if we can avoid it, so I would press my right hon. and gallant Friend, if he can, to accept the principle, to have another look at it, to struggle hard against the deadly inertia which is always discovered when one tries to do anything in the nature of reducing taxation, and to look into the matter again. I do not believe, personally, that it is going to cost very much money. I think that probably the figure mentioned by the last speaker is a little below the mark, but it probably would not be in the nature of many millions. I would press my right hon. and gallant Friend to leave the matter open.
    8.21 p.m.
    Captain Crookshank: The right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) said in a jocular way that a new hardy annual was being planted, and from that I inferred that he did not expect anything in the way of fruit now. I certainly could not at this moment accept the principle off-hand; that would be far in excess of anything one could do at this stage. The expectation that this would be a hardy annual implies, I think, by inference, that the matter will have to be considered further before next year, and, if that is what hon. Members opposite have in mind, I should think the very fact that this discussion has taken place to-night will ensure that that is the case. I do not find myself in a position to go any further than I did before. Obviously, if the matter is to come up year by year, we shall have to consider it in the light of the arguments which have been submitted. There is only one thing that I would say at this stage. Broadly speaking, these voluntary contributions can be classed as deferred annuities, and it is the fact that premiums paid to an insurance company to secure a deferred annuity are not normally subject to relief
    from Income Tax. Premiums payable to an insurance company are not normally admissible for relief, unless they are payable on a policy securing a capital sum at death, whether there is any other benefit or not. When that was brought in the Act of 1916, it specifically exempted cases which arose before 22nd June, 1916. That is the existing position, and, therefore, I must ask the Committee this year to reject the Clause.
    8.23 p.m.
    Mr. Batey: The Financial Secretary, in his first speech, referred to my colleagues on this side as having run true to form. Since all that has been said from this side of the Committee has had no effect on him, I am not going to attempt to repeat any of the arguments, but will simply content myself with saying that we shall run true to form and go into the Division Lobby against the Government.
    Mr. Silverman: I do not want to delay the Committee for more than a moment or two—[Interruption.] Is it in order, Major Milner, for people who are outside the Chamber to try to take part in the Debate?
    The Temporary Chairman (Major Milner): It is certainly not in order.
    Mr. Silverman: I should be very sorry, in what I consider to be a good case, to make a false point. If I have made one, I would like to be corrected; but I do not think I have. The form distributed by the Treasury itself and the Income Tax Commissioners says that subject to certain restrictions, an allowance for premiums paid for contracts for life assurance and for deferred annuities is given. It seems to follow that a contract entered into to-day for a deferred annuity will get relief of Income Tax. I do not think there is any doubt about that.
    Question put, "That the Clause be read a Second time."
    The Committee divided: Ayes, 124; Noes, 186.

    Division No. 216.]

    AYES.

    [8.27 p.m.

    Acland, Sir R. T. D.

    Benn, Rt. Hon. W. W.

    Cluse, W. S.

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

    Benson, G.

    Cocks, F. S.

    Anderson, F. (Whitehaven)

    Bevan, A.

    Collindridge, F.

    Banfield, J. W.

    Broad, F. A.

    Cove, W. G.

    Barnes, A. J.

    Brown, C. (Mansfield)

    Cripps, Hon. Sir Stafford

    Bartlett, C. V. O.

    Buchanan, G.

    Daggar, G.

    Batey, J.

    Burke, W. A.

    Dalton, H.

    Bellenger, F. J.

    Chater, D.

    Davies, S.O. (Merthyr)

    Day, H.

    Lawson, J. J.

    Roberts, W. (Cumberland, N.)

    Dunn, E. (Rother Valley)

    Leach, W.

    Robinson, W. A. (St. Helens)

    Ede, J. C.

    Lee, F.

    Rothschild, J. A. de

    Edwards, Sir C. (Bedwellty)

    Leslie, J. R.

    Seely, Sir H. M.

    Evans, D. O. (Cardigan)

    Logan, D. G.

    Sexton, T. M.

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

    Lunn, W.

    Shinwell, E.

    Foot, D. M.

    Macdonald, G. (Ince)

    Silkin, L.

    Frankel, D.

    McEntee, V. La T.

    Silverman, S. S.

    Gardner, B. W.

    McGhee, H. G.

    Simpson, F. B.

    George, Megan Lloyd (Anglesey)

    MacLaren, A.

    Smith, Ben (Rotherhithe)

    Gibson, R. (Greenock)

    Maclean, N.

    Smith, E. (Stoke)

    Greenwood, Rt. Hon. A.

    Mainwaring, W. H.

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

    Grenfell, D. R.

    Mander, G. le M.

    Smith, T. (Normanton)

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

    Mathers, G.

    Sorensen, R, W.

    Griffiths, G. A. (Hemsworth)

    Maxton, J.

    Stephen, C.

    Groves, T. E.

    Montague, F.

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

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

    Morgan, J. (York, W.R., Doncaster)

    Summerskill, Dr. Edith

    Hall, J. H. (Whitechapel)

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

    Taylor, R. J. (Morpeth)

    Hardie, Agnes

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

    Thorne, W.

    Harris, Sir P. A.

    Muff, G.

    Thurtle, E.

    Hayday, A.

    Naylor, T. E.

    Tinker, J. J.

    Henderson, J. (Ardwick)

    Noel-Baker, P. J.

    Viant, S. P.

    Henderson, T. (Tradeston)

    Oliver, G. H.

    Walkden, A. G.

    Hills, A. (Pontefract)

    Owen, Major G.

    Watkins, F. C.

    Hopkin, D.

    Paling, W.

    Watson, W. McL.

    Isaacs, G. A.

    Parker, J.

    Westwood, J.

    Jagger, J.

    Parkinson, J. A.

    White, H. Graham

    Jenkins, Sir W. (Neath)

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

    Williams, T. (Don Valley)

    John, W.

    Poole, C. C.

    Wilmot, John

    Johnston, Rt. Hon. T.

    Price, M. P.

    Wilson, C. H. (Attercliffe)

    Jones, Sir H. Haydn (Merioneth)

    Pritt, D. N.

    Windsor, W. (Hull, C.)

    Kennedy, Rt. Hon. T.

    Ridley, G.

    Young, Sir R. (Newton)

    Lansbury, Rt. Hon. G.

    Riley, B.

    Lathan, G.

    Ritson, J.

    TELLERS FOR THE AYES.—

    Mr. Charleton and Mr. Whiteley.

    NOES.

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

    Eastwood, J. F.

    Kerr, Sir J. Graham (Scottish Univ.)

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

    Eckersley, P. T.

    Kimball, L.

    Alexander, Brig.-Gen. Sir W.

    Edge, Sir W.

    Lamb, Sir J. Q.

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

    Edmondson, Major Sir J.

    Lees-Jones, J.

    Aske, Sir R. W.

    Elliot, Rt. Hon. W. E.

    Lewis, O.

    Assheton, R.

    Ellis, Sir G.

    Liddall, W. S.

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

    Emrys-Evans, P. V.

    Little, J.

    Astor, Viscountess (Plymouth, Sutton)

    Errington, E.

    Llewellin, Colonel J. J.

    Balniel, Lord

    Evans, Colonel A. (Cardiff, S.)

    Locker-Lampson, Comdr.O. S.

    Beamish, Rear-Admiral T. P. H.

    Everard, Sir William Lindsay

    Loftus, P. C.

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

    Fleming, E. L.

    Lyons, A. M.

    Beechman, N. A.

    Fox, Sir G. W. G.

    M'Connell, Sir J.

    Bernays, R. H.

    Furness, S. N.

    Macmillan, H. (Stockton-on-Tees)

    Bird, Sir R. B.

    Fyfe, D. P. M.

    Macquisten, F. A.

    Blair, Sir R.

    Gluckstein, L. H.

    Magnay, T.

    Bossom, A. G.

    Glyn, Major Sir R. G. C.

    Makins, Brigadier-General Sir Ernest

    Boulton, W. W.

    Gower, Sir R. V.

    Manningham-Buller, Sir M.

    Braithwaite, Major A. N. (Buckrose)

    Graham, Captain A. C. (Wirral)

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

    Braithwaite, J. Gurney (Holderness)

    Granville, E. L.

    Marsden, Commander A.

    Briscoe, Capt. R. G.

    Greene, W. P. C. (Worcester)

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

    Brooke, H. (Lewisham, W.)

    Gridley, Sir A. B.

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

    Brown, Rt. Hon. E. (Leith)

    Grigg, Sir E. W. M.

    Moreing, A. C.

    Bull, B. B.

    Grimston, R. V.

    Morgan, R. H. (Worcester, Stourbridge)

    Burgin, Rt. Hon. E. L.

    Gritten, W. G. Howard

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

    Campbell, Sir E. T.

    Guest, Lieut.-Colonel H. (Drake)

    Munro, P.

    Cary, R. A.

    Guinness, T. L. E, B.

    Nicolson, Hon. H. G.

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

    Gunston, Capt. Sir D. W.

    O'Connor, Sir Terence J.

    Chapman, A. (Rutherglen)

    Hambro, A. V.

    Orr-Ewing, I. L.

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

    Hammersley, S. S.

    Perkins, W. R. D.

    Cobb, Captain E. C. (Preston)

    Hannah, I. C.

    Pickthorn, K. W. M.

    Colville, Rt. Hon. John

    Harbord, Sir A.

    Pilkington, R.

    Conant, Captain R. J. E.

    Haslam, Sir J. (Bolton)

    Plugge, Capt. L. F.

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

    Heilgers, Captain F. F. A.

    Ponsonby, Col. C. E.

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

    Hely-Hutchinson, M. R.

    Procter, Major H. A.

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

    Hepburn, P. G. T. Buchan-

    Radford, E. A.

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

    Hepworth, J.

    Raikes, H. V. A. M.

    Craven-Ellis, W.

    Herbert, A. P. (Oxford U.)

    Ramsbotham, Rt. Hon. H.

    Croft, Brig-Gen. Sir H. Page

    Hogg, Hon. Q. McG.

    Rathbone, J. R. (Bodmin)

    Crooke, Sir J. Smedley

    Holmes, J, S.

    Reed, A. C. (Exeter)

    Crookshank, Capt. Rt. Hon. H. F. C.

    Hopkinson, A.

    Reed, Sir H. S. (Aylesbury)

    Davidson, Viscountess

    Horsbrugh, Florence

    Reid, W. Allan (Derby)

    Denman, Hon. R. D.

    Howitt, Dr. A. B.

    Remer, J. R.

    Denville, Alfred

    Hunloke, H. P.

    Rickards, G. W. (Skipton)

    Doland, G. F.

    Hunter, T.

    Ropner, Colonel L.

    Drewe, C.

    Jarvis, Sir J. J.

    Rosbotham, Sir T.

    Dugdale, Captain T. L,

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

    Ross, Major Sir R. D. (Londonderry)

    Duncan, J. A. L.

    Kerr, Colonel C. I. (Montrose)

    Ross Taylor, W. (Woodbridge)

    1032

    1033

    Royds, Admiral Sir P. M. R.

    Spent, W. P.

    Wallace, Capt. Rt. Hon. Euan

    Ruggles-Brise, Colonel Sir E. A.

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

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

    Russell, Sir Alexander

    Stourton, Major Hon. J. J.

    Wardlaw-Milne, Sir J. S.

    Russell, R. J. (Eddisbury)

    Strauss, H. G. (Norwich)

    Waterhouse, Captain C.

    Salt, E. W.

    Strickland, Captain W. F.

    Wayland, Sir W. A.

    Samuel, M. R. A.

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

    Webbe, Sir W. Harold

    Sanderson, Sir F. B.

    Sueter, Rear-Admiral Sir M. F.

    Wells, Sir Sydney

    Scott, Lord William

    Tasker, Sir R. I

    Whiteley, Major J. P. (Buckingham)

    Selley, H. R.

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

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

    Shakespeare, G. H.

    Thomas, J. P. L.

    Willoughby de Eresby, Lord

    Shaw, Captain W. T. (Forfar)

    Thorneycroft, G. E. P.

    Windsor-dive, Lieut.-Colonel G.

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

    Titchfield, Marquess of

    Womersley, Sir W. J.

    Smith, Bracewell (Dulwich)

    Touche, G. C.

    Wragg, H.

    Smithers, Sir W.

    Tree, A. R. L. F.

    Somerville, Sir A. A. (Windsor)

    Turton, R. H.

    TELLERS FOR THE NOES.—

    Spears, Brigadier-General E. L.

    Walker-Smith, Sir J.

    Mr. James Stuart and Lieut.-Colonel Harvie Watt.

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

    First Schedule agreed to.

    Second Schedule—(Sugar, etc.)
    8.34 p.m.
    Captain CrookshankI beg to move, in page 31, line 32, column 3, to leave out "6 10.8," and insert "7 0.4."
    This Amendment deals with the Sugar Duty. The change it involves is in the nature of an adjustment of the preferential margin. It must be known to hon. Members that the preferential margins on Empire sugar which are stabilised are those set out in the Finance Act of 1928 and they are repeated in the first column of Part I of this Schedule. The duties on Empire sugar are derived from the duty on foreign sugar by deducting the stabilised margins. Since the modern scheme of sugar duties going back to 1901 there has not been any distinction between the duty at polarisation 98–99 degrees and duty at 99 degrees in the case of the duties on foreign sugar. Since 1928 the duty on Empire sugar at 98–99 degrees has been graduated with the duties on Empire sugars at lower polarisations, and the maintenance of this scheme has led to the need for an adjustment at this polarisation. The result of making a calculation in that way has been that the duty in the Bill as printed is really 1.6d. a cwt. higher on the polarisation 98–99 than the strictly proportionate rating would require. We propose to make the adjustment by reducing the Customs preferential duty at this level, and Excise automatically follows. The cost of this concession will be £120,000 this year and £140,000 in a full year.
    Those who study these extremely technical matters will recognise that this is a readjustment which it is proper to make and if the Amendments on the Paper are adopted the reduced rates of duty which they provide will have effect as from 5 o'clock p.m. on the 25th April
    1034
    so that traders who have paid duties on the higher rates provided in the Budget Resolutions will be entitled under Section 1 (1)(d) of the Provisional Collection of Taxes Act, 1913, to repayment of the difference between the duty paid under the Budget Resolution and the duty payable at the lower rates now proposed.
    Mr. Pethick-Lawrence: I understand what is being effected is a slightly higher preference in sugar of higher polarisation.
    Amendment agreed to.
    Further Amendments made:
    In page 33, line 9, column 2, leave out "3 10.3," and insert "3 8.7."
    In page 34, line 9, column 2, leave out "5 11.1," and insert "5 9/"—[Captain Crookshank.]

    THIRD SCHEDULE.—(Provision as to duties, drawbacks and rebates on photographic plates and film.)
    8.39 p.m.
    Sir J. Simon: I beg to move, in page 38, line 7, after "for," to insert "sub-paragraph (ii) of."
    I think it would be right that I should state very briefly the effect of the numerous Amendments which appear on the Order Paper to this Schedule. They carry out the change which I announced earlier in respect of the duty on films, and, taken together, they carry out completely the changes then announced. There is also one further adjustment which I should specially mention. The result will be that, in addition to the disappearance of the Excise Duty, the Customs Duties on blank film will be, in the case of imported blank cinematograph film, the rate of one-third of a penny per foot of standard width,

    1035
    and other widths in proportion, and to that extent we return to the position before the Budget. As regards imported foreign blank photographic films and plates, we also revert to the pre-Budget position.
    There is a change of importance introduced in respect of Customs Duties on exposed cinematograph films. At present the higher rate of duty is imposed only on the imported negatives, and, as I explained, by a device of importing a positive in the first instance, which paid a lower rate of duty, it was possible very largely to evade what certainly Parliament intended to be the Customs Duty on this class of import. I propose to change that, by arranging that there will be a higher charge on the first imported copy of any film, whether positive or negative, the charge being 5d. in the case of the first copy, and Id. on those which follow afterwards. There are altogether four exceptions to the principle that the first copy imported should pay a duty of 5d. per foot. There is, first of all, the case of the sub-standard exposed cinematograph film that is less than the usual standard width which, even though it is the first copy, will pay one penny per foot import duty. There is the case of the single sound track, which again, though a first copy, will pay one penny per linear foot. There is the further exception, to which I will refer in a moment, more at length, of news films which are imported and will pay one penny per linear foot; and there is, lastly, the case of the single copy film, sometimes called Continental film, not introduced in this country for copying purposes at all, but which is prepared in a single version for exhibition here. Here again the duty will be at the rate of one penny per linear foot.
    I promised to explain why I propose that in the case of imported film, which is not feature but is a news film, the duty should be Id., and not 5d. It is partly because the imported news film, as I am informed, is in quantity very much greater than the amount that is exhibited. Only about one-tenth is really used and reproduced. Much of it is put into libraries and may be useful in certain circumstances hereafter. As I have reminded the Committee, the justification for treating news films quite differently is that it is the very nature of the news
    1036
    film that it enjoys its value for a very short time, except so far as it is stored for possible use thereafter. There have to be a great number of exhibitions of it, and it is not simply passed round from one cinema to another in the course of a series of weeks. Therefore, the proposal is fair both to the home news reels and to news reels imported from abroad.
    Take the very recent example we had of the perfectly splendid pictures we have seen of the visit of their Majesties to Canada and the United States. Those were pictures of great merit and they will not be in any way obstructed. I think the Committee may safely take it that the scheme has now been fitted in with precision. It has had the advantage of careful examination by the hon. Member for the Don Valley (Mr. T. Williams), and I think we have got a system that is satisfactory all round. I must, however, insist that it is right that we should impose a higher duty on the first copy of the imported film, whether positive or negative. I am quite clear that it is the general intention of Parliament to do that, because a certain amount of protection should be given to the home industry, which is justified. It would certainly not be justified if we were to give a blank cheque by the introduction of the positive copy and enable it thereby to escape four-fifths of the duty.
    8.47 p.m.
    Mr. T. WilliamsI should like to express thanks on my own behalf and on behalf of many others who are more deeply involved than I am, for the right hon. Gentleman's concession. I should, however, like to ask two questions with regard to the news reels. As the right hon. Gentleman truly said, in the process of manufacture very often 10 times as much copy is produced as is exhibited on the screen. Some portion of that copy not used on the screen may be diverted to the library and fished out perhaps 10 or 50 years hence. Can the right hon. Gentleman say, in view of the Amendments, whether the portion of the news reel imported and not literally destroyed but diverted to the library, would have to pay the ordinary Id. per linear foot duty? This is a highly complicated business and it is difficult for anyone to get even an elementary grasp of it. If it was felt that the comparatively small burden of the present Import Duty of Id. on news reels was such as not to make it

    1037
    worth while to import that portion of the film which was desired for library purposes and not for exhibition purposes, it might very well be that such parts of such imported copies as the right hon. Gentleman referred to last week would need a library, which would perhaps have to be set up in Paris or elsewhere to store British historic films. Can he tell me whether that is the case or not? The other question which I intended to ask was in regard to the sub-standard film, but it is so highly complicated that I do not think I will put the question to-night, but will leave it to correspondence, out of which perhaps we can make much better progress than by trying to work out meticulously this highly complicated problem here.
    8.49 p.m.
    Sir J. SimonI thank the hon. Gentleman for sparing me the extreme technicality of dealing with the sub-standard film. Knowing that he was an expert I spent a little time in preparing myself and, therefore, I suppose I am rather disappointed at not having to explain the sub-standard film. I understand that the sub-standard film has this advantage that being composed of much smaller pictures it travels at a much slower rate across the camera. For example, 400 feet of 16 millimetre and 200 feet of eight millimetre sub-standard film contain as many pictures and therefore show for as long a time as 1,000 feet of 35 millimeteres. With this abstruse explanation I am preparing my hon. Friend for the correspondence which is to take place between us.
    As regards the news reel, it has always been admitted to this country on the basis that it pays the duty whether it is all shown, in this country or not. I do not think in the circumstances the Customs authorities can be asked to apply any other test. It cannot be ascertained by inspecting at the port, whether it is to be shown, whether it is to be put into a library or what will happen to it. That is more than the poor Customs officer can be expected to know. It always has paid Id. and it should continue to pay Id. duty. The public who look at news reels have by this rearrangement got a very considerable advantage. There will be no duty at all so far as the home news reel, printed at home, is concerned, and that is the greater part of the day to day exhibition of news
    1038
    reels; there will be no higher duty on imported news reel. I think these things, put together, will enable us on both sides of the auditorium to be satisfied that no obstruction is being put in the way of what is most desirable for the presentation of news on the screens in this country.
    Amendment agreed to.
    Further Amendments made:
    In page 38, line 7, leave out the second "paragraph," and insert "sub-paragraphs."
    Leave out lines 10 to 22.
    In line 23, column 1, leave out "(v)," and insert "(ii)."
    In line 24, column 2, leave out "9d. per square," and insert "⅓d. per linear."
    In line 25, column 1, leave out "(vi)," and insert "(iii)."
    In line 27, column 1, leave out "or."
    In column 2, leave out "2d.," and insert "1d."
    In line 29, column 1, leave out "or."
    In column 2, leave out "2d.," and insert "1d."
    In line 29, at the end, insert:

    " (c) shown to the satisfaction of the Commissioners to consist wholly of photographs (with or without sound track) which at the time of importation are means of communicating news

    1d. per linear foot."

    In line 34, column 1, leave out "sixpence," and insert "fivepence."
    In line 35, column 2, leave out "2d.," and insert "1d."
    In line 36, column 2, leave out "6d.," and insert "5d."
    In page 39, line 3, leave out from beginning, to "shall," in line 4.
    In line 5, at the end, insert:
    " and in the case of unexposed sensitized cinematograph film of less than the standard width, the Customs duty chargeable shall be-decreased in proportion to the extent to which the width is less than the standard width."
    In line 10, leave out "sub-paragraphs (i), (v) and (vi) of."
    In line 15, leave out "(i), (v) and (vi)," and insert "(ii) and (iii)."
    In line 18, leave out "said sub-paragraphs of the."
    In line 21, leave out "sub-paragraphs (i) and (v)," and insert "sub-paragraph (ii)."
    In line 22, leave out from "Table," to "and," in line 26.
    In line 31, leave out "(vi)," and insert "(iii)."
    In page 40, line 25, leave out paragraph 7, and insert:

    "7. Where two or more equal lengths of exposed cinematograph film are imported together and it is shown to the satisfaction of the Commissioners that they all represent the same objects and are intended to be used as a set, each complementary to the others, in the production of a coloured picture, and are not suitable to be used separately, they shall be charged as a set with the duty that would be chargeable if one length only were being imported.

    8. Where in the case of any exposed cine matograph film security is given to the satisfaction of the Commissioners—

    (a) that no duplicate will be made in the United Kingdom from the film or from any part thereof or from any duplicate of the film or of any part thereof except for the purpose of preparing a single version adapted for exhibition in the United Kingdom; and

    (b) that the film and any duplicate made from the film or from any part thereof will be destroyed or otherwise disposed of to the satisfaction of the Commissioners within such period as they may require,

    the duty of customs chargeable on the film shall be at the rate of one penny per linear foot.

    9. Where, in the case of any exposed cine matograph film, it is shown to the satisfaction of the Commissioners—

    (a)that customs duty was paid on the film at the rate of fivepence per linear foot;

    (b) that no duplicate has been made in the United Kingdom from the film or from any part thereof; and

    (c) that no duplicate of the film or of any part thereof has been imported into the United Kingdom;

    there shall, if the film has been destroyed or otherwise disposed of to the satisfaction of the Commissioners, be allowed a rebate at the rate of fourpence per linear foot."

    In line 35, leave out "sixpence," and insert "fivepence."
    In line 43, leave out paragraphs 9, 10 and 11.
    In page 41, leave out lines 36 to 40.
    n page 42, line 1, after "film," insert "representing the same objects."
    In line 3, after "or," insert:
    "by reason that the objects are represented on different scales and the dimensions of the lengths of film are correspondingly different, or."
    In line 4, leave out "represent the same objects and."
    In line 8, leave out "8," and insert "10."
    In line 14, leave out "and 7,"and insert "to 9."
    In line 22, leave out "12," and insert "11."—[Sir J. Simon.]
    Fourth and Fifth Schedules agreed to.

    SIXTH SCHEDULE.—(Repeal of Enactments relating to Medicine Stamp Duties.)
    Question, "That this Schedule be the Sixth Schedule to the Bill," put, and negatived.
    Seventh Schedule agreed to.

    EIGHTH SCHEDULE.—(United Kingdom—India Trade Agreement.)
    Motion made, and Question proposed, "That this Schedule be the Eighth Schedule to the Bill."
    9.0 p.m.
    Mr. Foot: I rise only to say that I had intended to ask one or two questions of the Board of Trade arising out of this Schedule, which is the India Trade Agreement Schedule, but as there is no representative of the Board of Trade present it would be better if I raised this matter in the same way as was suggested a few moments ago by the hon. Member for the Don Valley (Mr. T. Williams).
    Ninth Schedule agreed to.

    PART I.
    Adaptation of Income Tax Provisions as to Computation of Profit.
    1.The profits shall be taken to be the actual profits arising in the year or charge able accounting period and the principles of computing profits by reference to any other period and of allowing losses sustained in any other period to be carried forward shall not be followed.
    2.There may be deducted in respect of any such year or chargeable accounting period a sum (ascertained on the like basis as the amount of a deduction for wear and tear is ascertained under Rule 6 of the Rules applicable to Cases I and II of Schedule D) which represents the diminution in value by reason of wear and tear during that year or

    1041
    period of any plant or machinery in respect of which a deduction can be made under the said Rule 6, plus in the case of a year constituting or comprised in the- standard period, 10 per cent., and, in the case of a chargeable accounting period, 20 per cent, of that sum.
    3.—(1) Where any buildings, plant or machinery have, after the beginning of the year nineteen hundred and thirty-seven, been provided for the purpose of fulfilling armament contracts by the persons carrying on the business, then, if either—

    (a) on such date as Parliament may hereafter declare to be the date of the restoration of normal conditions as respects the requirements of the Crown for armaments, the buildings, plant or machinery have, wholly or partially, become obsolete or ceased to be required and the value thereof is less than the net cost thereof; or

    (b) the buildings, plant or machinery are sold before the said date at a price which is less than the net cost there of,

    there shall be allowed in respect of each chargeable accounting period such proportion of the deficiency as is properly attributable to that period, less the amount of any allowances for wear and tear or depreciation already made for that period in respect of the buildings, plant or machinery, otherwise than under this paragraph, and if any plant or machinery provided as aforesaid is replaced, no allowance other than that made under this paragraph shall be made in respect of the amount expended in the replacement thereof.
    (2) Pending an ascertainment whether any allowance falls to be made under sub-paragraph (1) of this paragraph in respect of buildings, plant or machinery, the Commissioners, if they are satisfied that any buildings, plant or machinery provided as aforesaid are of such a character that it is likely that the conditions specified in the said sub-paragraph will be fulfilled in the case thereof, may allow in any chargeable accounting period such sums as they think fit, not exceeding 10 per cent, (or, if the chargeable accounting period is less than a year, a proportionately reduced amount) of the net cost of the buildings, plant or machinery, but any such allowance shall be provisional only and on the coming of the said date, or, as the case may be, on the previous sale of the buildings, plant or machinery, the amount thereof shall be adjusted so as to accord with the provisions of the said sub-paragraph.
    (3) In this paragraph the expression "net cost" means, in relation to any buildings, plant or machinery, the cost of the provision thereof less any sum provided, or to be provided, directly or indirectly, out of the Consolidated Fund of the United Kingdom or of Northern Ireland, or out of moneys provided by the Parliament of the United Kingdom or the Parliament of Northern Ireland, towards the cost of the provision of the buildings, plant or machinery, or towards any depreciation thereof.
    4. The principles of the Income Tax Acts under which deductions are not allowed for
    1042
    interest, annuities or other annual payments payable out of the profits, or for royalties or (in certain cases) for rent and under which the annual value of lands, tenements, hereditaments or heritages occupied for the purposes of a business is excluded and under which a deduction may be allowed in respect of such annual value, shall not be followed:
    Provided that—

    (a) nothing in this paragraph shall authorise any deduction in respect of any payment of dividend or distribution of profits;

    (b)for the purposes of this paragraph any additional deduction allowable for Income Tax purposes by virtue of the proviso to paragraph (2) of Rule 5 of the Rules applicable to Cases 1 and 11 of Schedule D and any deduction allowable for those purposes under Section eighteen of the Finance Act, 1919, shall not be treated as a deduction in respect of annual value.

    5.The provisions of Sub-section (4) of Section twenty-seven of the Finance Act, 1920 (which disallows deductions on account of the payment of Dominion Income Tax) shall not apply.
    6.No income received from investments shall be included in the profits; and where the person carrying on the business is the beneficial owner of any investments and a deduction would, apart from the provisions of this paragraph, fall to be made in respect of interest on borrowed money, the deduction (if any) to be made in respect of that interest shall be computed as if the principal of the borrowed money were reduced by the value of those investments:
    Provided that where the person carrying on the business is not a body corporate, no deduction shall be treated as made in the principal of any borrowed money in respect of any investments unless those investments are mortgaged, charged or pledged as security for the repayment of that money and the interest thereon.
    7.No deduction shall be made on account of liability to pay or payment of United Kingdom Income Tax, the national defence contribution, or armament profits duty.
    8.No deduction shall be made in respect of any transaction or operation of any nature if and so far as it appears that the transaction or operation has artificially reduced the profits, or would artificially reduce the profits.
    9.In the case of a business carried on in any chargeable accounting period by a company the directors whereof have a controlling interest therein,—

    (a) if the standard profits for the company are computed by reference to a standard period, no deduction shall be allowed in respect of directors' remuneration in excess of the amount paid for directors' remuneration in respect of the standard period or, if the standard period is longer than the chargeable accounting period, in excess of so much of the sum paid for directors' remuneration in respect of the standard period as bears to the total amount thereof the like proportion as the length of the chargeable accounting period bears to that of the standard period;

    1043

    (b) if the standard profits are not computed by reference to a standard period, no deduction shall be allowed in respect of the remuneration of the directors.

    10. Where the performance of a contract extends beyond the year or chargeable accounting period, there shall (unless the Commissioners, owing to any special circumstances, otherwise direct) be attributed to the year or period such proportion of the entire profit or loss which has resulted, or which it is estimated will result, from the complete performance of the contract as is properly attributable to the year or period, having regard to the extent to which the contract was performed in the year or period.

    Part II.
    Provision for computing capital.
    1.—(1) Subject to the provisions of this Part of this Schedule, the amount of the capital employed in a business (so far as it does not consist of money) shall be taken to be—

    (a)so far as it consists of assets acquired by purchase on or after the commencement of the business, the price at which those assets were acquired subject to the deductions hereafter specified;

    (b)so far as it consists of assets being debts due to the person carrying on the business, the nominal amount of those debts subject to the said deductions;

    (c)so far as it consists of any other assets which have been acquired otherwise than by purchase as aforesaid, the value of the assets when they become assets of the business, subject to the said deductions.

    (2) The price or value of any assets other than a debt shall be subject to the following deductions—

    (a) deduction of any sum contributed, directly or indirectly, out of the Consolidated Fund of the United Kingdom or of Northern Ireland, or out of moneys pro vided by the Parliament of the United Kingdom or the Parliament of Northern Ireland, towards the acquisition of the asset;

    (b)any such deductions for wear and tear or for depreciation as are authorised by the Income Tax Acts or Part I of this Schedule,

    and, in the case of a debt, the nominal amount of the debt shall be subject to any deduction which has been allowed in respect thereof for Income Tax purposes.
    (3) Where the price of any asset has been satisfied otherwise than in cash, the then value of the consideration actually given for the asset shall be treated as the price at which the asset was acquired.
    (4) For the purposes of the provisions of sub-paragraph (2) of this paragraph relating to deductions for wear and tear or depreciation, any additional deduction allowable for Income Tax purposes by virtue of the proviso to paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D, and any deduction allowable for those purposes under Section eighteen of the Finance Act, 1919, shall be treated as a deduction for depreciation.
    2. Any borrowed money and debts shall be deducted, and in particular any debt for Income Tax computed by reference to the standard rate or for the national defence contribution or the armament profits duty in respect of the business shall be deducted:
    Provided that any such debt for Income Tax or the national defence contribution or the armament profits duty shall, for the purposes of this Part of this Schedule, be deemed to have become due—

    (a)in the case of Income Tax, on the first day of January in the year of assessment for which the tax is assessable;

    (b)in the case of the national defence contribution or the armament profits duty, on the first day after the end of the chargeable accounting period in respect of which the contribution or duty is assessable;

    notwithstanding that the tax, contribution or duty may not have been assessed until after those dates respectively
    3. Any investments and any moneys not required for the purposes of the business shall be left out of account, but where any investments in the beneficial ownership of the person carrying on the business are so left out of account the sum (if any) to be deducted under the last preceding paragraph in respect of borrowed money shall be computed as if the principal of the borrowed money were reduced by the value of those investments:
    Provided that where the person carrying on the business is not a body corporate, no reduction shall be treated as made in the principal of any borrowed money in respect of any investments unless those investments are mortgaged, charged or pledged as security for the repayment of that money and the interest thereon.
    4. For the purpose of ascertaining the average amount of capital employed in a trade or business during any period, the profits or losses made in that period shall, except so far as the contrary is shown, be deemed—

    (a)to have accrued at an even rate throughout the period; and

    (b)to have resulted, as they accrued, in a corresponding increase or decrease, as the case may be, in the capital employed in the business.—[Sir J. Simon.]

    Brought up, and read the First time.
    9.2 p.m.
    Sir J. Simon: I beg to move, "That the Schedule be read a Second time."
    The Committee will see that these provisions closely follow the provisions we made, by general approval and consent, in respect of National Defence Contribution. I think the new Schedule speaks for itself. I am not aware that there is any point of controversy, but if there is I will do my best to meet it.
    Mr. Pethick-Lawrence: I understood from the Financial Secretary, when we were discussing the corresponding Clause,

    1045
    that we should get some rather detailed explanation from the Chancellor of the Exchequer on this Schedule. I do not know whether it is more convenient to the right hon. Gentleman to give it now or on the Amendment which I propose to move. It does not matter to me which course the right hon. Gentleman takes, but we do want some explanation of the point in regard to special depreciation.
    Sir J. SimonI think it would be better to get the Second reading of the new Schedule and to make my explanation on the right hon. Gentleman's Amendment.
    9.3 p.m.
    Mr. Pethick-Lawrence: I beg to move as an Amendment to the proposed new Schedule, in line 39, to leave out "ten," and to insert "six."
    I have put down this Amendment not because I am particularly enamoured of the figure six but, in the first place, to get from the Chancellor of the Exchequer in a little more detail than we have had what precise ideas he has in fixing this 10 per cent, for extreme depreciation. An ordinary business is entitled in calculating profits in ordinary circumstances to write off, from its capital, depreciation which may vary to a considerable extent according to the nature of the things which are being depreciated. Sometimes it may be as low as a few per cent., and it may rise to over 20 per cent. In the last few years depreciation for ordinary Income Tax purposes has been increased first by 10 per cent, and then subsequently to 20 per cent, so that ordinary depreciation in normal circumstances for Income Tax purposes may be not very much or it may run to a considerable figure. That, of course, corresponds to a real physical deterioration of the subject-matter of the depreciation. It may be a piece of machinery which is likely to be in normal use for a considerable number of years but the actual fittings of which may wear out, or it may be that in certain cases a plant is likely, in the normal course of trade, to become obsolete after 10 years, or even less, and, therefore, in addition to the physical deterioration of the subject-matter there may be a notional depreciation due to the expected retirement of plant.
    We are now faced with the question of the capital used for the production of
    1046
    armaments, and that is something which is rather special. We are in this emergency, and none of us knows how long it will last, although we hope it will last a very short time indeed. During the emergency, it is a question of all hands to the pump, and we are pressing forward with the creation, on a vast scale never before, contemplated, of armaments of all kinds—all the things called armaments in the definitions in the Clauses concerning the Armament Profits Duty. It is very uncertain how long the capital plant which the firms and companies have called into being will serve its purpose. If, happily, the emergency is over in the course of a few months, it may be that a great deal of the plant will be of no further utility. We all hope that may be so. On the other hand, the emergency, or at any rate the necessity, in the opinion of the Government, for producing armaments, may go on for a very considerable time. Therefore, I can quite understand that it is very difficult for the Government, the Inland Revenue authorities, or any one else, to be able to judge what is the appropriate depreciation that should be allowed to any firm in existing circumstances.
    I am not very clear as to precisely what the Government have in mind. As I understand the position, the Government say that they cannot tell what is going to happen and that they will not know until the emergency is over, but they agree that when the emergency is over the time of reckoning will come, and that if by then the plant, which is the subject matter in question, is either quite worthless or ceases to exist, or what is more likely, has a value only as scrap iron, they will recognise that fact not only for Income Tax purposes, but more particularly for the purpose of the Armament Profits Duty, and will write down all the plant to the figure at which it actually stands at the end of the period of years during which the emergency lasts. That may be the only equitable method of dealing with the matter, but it will, of course, present a very grave problem to those who have to administer the tax, because if there is a firm which, in endeavouring to meet the wishes of the Government, has provided a very considerable amount of capital at its own expense—a great many firms are not doing that at the present time, because the Government are providing the money for capital extensions—the depreciation,

    1047
    during the very few years which we hope the emergency will last, will be so great each year that it may easily wipe out a very large part of the profit. If it is all to remain in suspense until the emergency is over, there will be very large sums of money in connection with which we shall be uncertain as to whether they will ultimately find their way as taxes into the revenue, or will be retained by the firm in order to meet the capital loss on its plant.
    I do not offer any very severe criticism of that method, because I cannot see a very much better way of doing it; but I have moved this Amendment in order to deal with the provisional attitude of the Government towards the matter. I should like to hear from the Chancellor what are his views with regard to his proposal. His proposal is that, in addition to the ordinary Income Tax provisions, we should provisionally in each year allow an additional 10 per cent., and that at the end of the time there should be a reckoning. Of course, the 10 per cent, we are now considering is a very different thing from the 10 per cent, and the 20 per cent, increase in depreciation allowed a few years back, because then it was a question of I0 per cent, and 20 per cent, of the sum allowed for depreciation, whereas this 10 per cent, is one-tenth of the capital value expended. There is sometimes some confusion on the part of people when discussing a percentage, owing to their not knowing very often of what it is a percentage. This proposal has reference to 10 per cent, of the capital value. Therefore, if the ordinary Income Tax depreciation allowed is 7 per cent., or 10 per cent., or it may be 12 per cent., then the company will be allowed to write off 17 per cent., 20 per cent., or 22 per cent, altogether. This means that, broadly speaking, the whole value of the capital will disappear in the course of four or five years. I can conceive of circumstances in which that might be right. On the other hand, if the expenditure on armaments is going to last very much longer, or if the capital plant is not by any means to be used solely for armaments and therefore, may have quite a considerable value at the end of four or five years, even when the emergency is over, it seems to me that to allow 17 per cent., or 20 per cent., or even more, off
    1048
    the capital value, is to allow a very large sum.
    If the Government are going to allow these firms to distribute in dividends the whole of that large amount, then it may be found that, in five or six years' time, when there is a settling up, the firms will have got rid of all their money and there will be nothing available for the Armament Profits Duty, and although the Government ought to be able to have the money as it will not be there. Without disputing the general principle that, owing to the emergency, these firms, if they have been called upon to provide this capital and if it does work out at very little after the emergency is over, must be allowed depreciation over the period, I cannot help thinking that 10 per cent, is a rather high figure. It is for that reason that I have inserted 6 per cent, in the Amendment, in order that I may hear what the Chancellor has to say on the matter.
    I do not want it to be a question of heads the private firms win and tails the Revenue authorities lose. I am a little inclined to think that it may be so in this case. I shall listen with great attention to hear what defence the Chancellor of the Exchequer will offer to the Committee of the figure which he has chosen, and I would ask the right hon. Gentleman, at the same time, to expound the whole subject of this depreciation allowance a little more fully than has been done up to the present, so that we may understand exactly what the Government's proposals are.
    9.15 p.m.
    Sir J. Simon: The right hon. Gentleman has put the matter before the Committee in a most reasonable way. No complaint can be made of the manner in which he has put his questions and I will try, for my part, to be equally reasonable in dealing with what is certainly a rather complex and difficult affair. We are dealing here with what I may call Rule 3 of my proposed Schedule. I think "Rule" is the right word to use in this connection. It is the third paragraph of the Schedule beginning with the words:
    " Where any buildings, plant or machinery have, after the beginning of the year nineteen hundred and thirty-seven, been provided for the purpose of fulfilling armament contracts by the persons carrying on the business."

    1049
    That is to say, we are considering what would be the right arrangement to make for what may be called exceptional depreciation of assets. Before we come to consider anything exceptional, let us consider what is the ordinary arrangement for purposes of Income Tax. It is, of course, right that deductions should be permitted in respect of depreciation of, let us say, factory buildings, and wear and tear of plant and machinery. You cannot arrive at a true statement of the profit that has been made by the firm during the year under consideration, unless you make such a deduction. That deduction, as the right hon. Gentleman reminded us, has recently been the subject of certain increases, but it is well to bear in mind the fact that it is not a fixed amount applying to all kinds of enterprises and to all varieties of plant. The thing is worked out and settled in reference to the particular kind of business which is being dealt with. For instance, a business which uses very heavy machinery may have a different amount of percentage allowance for wear and tear, from another business which uses light machinery and factory plant which is exposed to a great deal of vibration and knocking about, will be allowed a bigger rate of depreciation than factory plant of another kind, and so on. That is the ordinary Income Tax rule which is well understood by the Revenue, by accountants, by business people and by all who have to study it closely.
    What is the amount which, in such a Schedule as this, we propose to permit? It will be not only the ordinary allowance for wear and tear—which of course is involved in applying the Income Tax rules—but also an allowance for exceptional depreciation of assets. As the right hon. Gentleman so clearly explained, there may well be cases in which these armament firms, and still more, perhaps, firms which were not previously armament firms, but have taken to armament making under the pressure of the times in which we live, are providing themselves with all sorts of special plant. Not only is the value of this exceptional plant depreciated by use in the ordinary way, but its value may come to a very sudden end altogether. The right hon. Gentleman said, and I associate myself with him entirely in this, the sooner it does come to an end the better—if we could only manage to live in a better world. It
    1050
    is distressing to think how much has been spent in providing these factories and armament works with the most wonderful and detailed machinery, purely for the purpose of making arms and weapons—methods of killing other people. It would be an immense gain if they did lose their value because it would mean that they would not be wanted any more.
    We have, therefore, to provide for the possibility of this very considerable and sudden loss in value, but nobody can say when that will arise. Thus, it is necessary to make an adjustment now for exceptional depreciation of assets which is only provisional, and we must have some arrangement by which, later on, when we know better where we are, when, it may be Parliament declares as the Schedule says, that we have reached the date of the restoration of normal conditions as regards requirement of armaments, or the like—we must have a provision by which we can then revise any provisional allowance. It is necessary to give the firm the possibility of some provisional allowance now, because you cannot in common fairness keep them waiting it may be for an indefinite time, to know when they are to have the true figure of their profit for the year—profit which might be unduly bloated, if some such allowance were not made to bring it down to the proper total. Consequently, the scheme of the Schedule necessarily is, first, that there should be applied, in connection with Armament Profits Duty those Income Tax adjustments which will give these firms their ordinary allowance for wear and tear; secondly, that you should give them, also, the possibility of an exceptional and additional allowance for wear and tear for the reasons with which I have dealt, and, thirdly, that the exceptional allowance should be provisional only, because nobody can tell at present what is the length of useful life of this plant, and, therefore how to spread whatever further allowance may be decided upon.
    As far as I followed him, the right hon. Gentleman stated the scheme of the Schedule accurately except in one particular. Perhaps it was only an accidental phrase, but he spoke as though the Schedule provided that there should be an additional, exceptional allowance of 10 per cent. In fact, I think he used that expression twice. That is not so. What we have provided is that in respect of

    1051
    buildings, plant and machinery, where the question of exceptional allowance arises,
    " the Commissioners, if they are satisfied that any buildings, plant or machinery provided as aforesaid are of such a character that it is likely that the conditions specified in the said sub-paragraph will be fulfilled "—
    that is to say, that they will lose their value and require to have an exceptional amount of depreciation allowed—
    " may allow in any chargeable accounting period, such sums as they think fit not exceeding ten per cent."
    It does not say that they shall allow 10 per cent, or that 10 per cent, is to be the amount. That is the maximum amount which they could allow. Then there is an exceptionally important provision which operates both ways, namely, that whatever may be the provisional allowance which they make up to 10 per cent., that shall be subject to revision. I had better read the actual words:
    " Any such allowance shall be provisional only and on the coming of the said date "—
    That is the date when Parliament declares that normal conditions in this respect have been restored—
    " or, as the case may be, on the previous sale of the buildings, plant or machinery, the amount thereof shall be adjusted so as to accord with the provisions of the said sub-paragraph."
    In other words, it would be possible, when you come to the end to imagine a case where a firm would say: "You have allowed us, provisionally, 9 per cent, or 8 per cent., or possibly 10 per cent., but that is not enough and we contend that it ought to be more." The Revenue on the other hand when the time comes may say: "We allowed you provisionally too much. Now that we have worked it out we find that you are in debt to the Crown in respect of the difference." I agree with the right hon. Gentleman that we may find that there are people who receive very large sums who are unable to pay any of the money back. That is, of course, the concern of the Inland Revenue when they make a provisional allowance. But it is clear that such a provision as is involved in this exceptional writing off—the right hon. Gentleman conceded it, with his usual fairness—was a thing that had to be done,
    1052
    otherwise we should not be able to charge our A.P.D. next year or the year after aright.
    There are two points I should like to make. Of course, the only exceptional allowance which we shall permit under this Schedule will be an exceptional allowance for the years that come under the tax. If it be the case that a particular firm has acquired its exceptional plant a year ago, or two years ago—before the A.P.D. begins to be applied—and continues to use it till some future date, which cannot yet be specified, it will not under this provision have the benefit of the writing off against the A.P.D. of the exceptional depreciation for the whole period. That would be chopped up into years, and what the firm would get would be in respect of the years for which it was assessed.
    The last thing that arises is the question of the percentage. I have pointed out to the Committee, and I think it is understood, that what we have put in is a maximum. It is a maximum in the hands of the Commissioners of Inland Revenue. There is no particular inducement there to use it recklessly; I am sure they will proceed to use their powers fairly. We thought it right to put in a maximum, very much for the reason which the right hon. Gentleman suggested, namely that if you provisionally give way too much, you may find it extremely difficult to get it back again when it is adjusted. But as a matter of fact 10 per cent, has appealed to us, after a good deal of consideration as to what would be the right figure, as about the fair maximum—a certain guide, not a very precise guide. But, of course, in the case of plant and machinery, when you are considering the annual wear and tear allowance under the Income Tax Acts—which is not the same for all kinds of business—the average allowance under Income Tax, taking into account these increases enjoyed by industry in compensation for the increased standard rate is over 8 per cent, of the written-down value.
    If that is true with reference to standard machinery which is being used in the industry for the purpose of producing things which a civilised community would continue to want, it does not seem a very surprising thing if it should be the case that the addition that has to be made in

    1053
    respect of some kinds of specialised machinery, which will have no use at all except for armaments, is very large indeed. At any rate, it is pretty clear that, in cases of very specialised plant for armaments work, when the rearmament programme is over—and it will be over some day, and the sooner the better—that plant will have only a scrap value. We do not know what it will fetch, but at any rate there is an enormous difference between hydraulic presses and looms and all the fit-out of a regular commercial factory on the one hand and on the other some of these highly specialised implements which we now have to get and use, but which may lose their value very rapidly.
    I hope I have succeeded in giving the Committee a general account which is fairly intelligible and plain of the scheme of this Schedule. I am grateful to the right hon. Gentleman for raising the point which he did, and I do not think there is a real difference between us in the House on the general method we have employed. But I did not know how to do it except by providing exceptional writing off in some provisional way, and then providing that later on, when we do know, we shall correct what I dare say, in many cases, will turn out to have been a somewhat inaccurate estimate.
    9.31 p.m.
    Mr. Benson: The discussion on this Amendment has been rather wide, and it was put down by my right hon. Friend and myself primarily for the purpose of evoking a discussion, and possibly a wide discussion, on the question of depreciation. I should like to know whether it would be possible on this Amendment to raise one or two specific points in connection with the Schedule on the subject of depreciation, or whether that must be left over till the Motion is made that the Schedule stand part.
    The Deputy-Chairman: I think it would be more convenient if the hon. Gentleman raised that now.
    Mr. Benson: We were very anxious for a wide discussion on the question of depreciation because the Chancellor will no doubt be fully aware that it was on the subject of depreciation, repairs, maintenance and renewals that the old E.P.D. during the War was, so far as the Exchequer was concerned, most costly. It is true that the E.P.D. produced enormous
    1054
    sums for the revenue, but also it produced enormous costs. One really does not want the same thing to happen here on a smaller scale. Rule 3 begins:
    " Where any buildings, plant and machinery have …been provided for the purpose of fulfilling armaments contracts …"
    Is there any evidence of purpose required, that is to say, before one can get this exceptional allowance for depreciation has the Ministry of Supply, or any other body, to agree that that is a plant which could be specifically put in primarily for the purpose of an armament contract? Then Rule 3 (b) runs:
    " the buildings, plant and machinery are sold before the said date at a price less than the net cost thereof."
    Apparently a firm which has built or purchased a building for the purpose of an armament contract may sell this building at any time convenient to itself, and apparently at any price. Once the building has been used for armament contracts any loss is written off against the Government. What safeguards are there in respect of that? Has the building to be scheduled, as it were, for the purposes of the tax, as built or provided for that purpose, and, secondly, what control will there be of the firm when it comes to sell the building? I think buildings enter more directly into the question than plant; at any rate, I am more concerned with them.
    There are two points here. It might be quite possible to contract for a sale in which there was a definite intention of tax avoidance. That is one point. I do not suggest that any reputable firm would do that, and I do not suppose that it is likely to be done frequently; but there is, on the other hand, another and perhaps more important factor, and that is that if any firm may look to the Government for the difference between the purchase price and the selling price, they themselves will have no interest in getting a good price for the buildings or plant. As the Chancellor knows, buildings are not sold across the counter, regularly and in large quantities. If you are to get your price for a building, you may have to maintain it for two or three years and wait until the willing buyer comes along. Every valuer of a building for probate or any other Government purpose invariably refuses to accept a forced-sale price, but uses the fiction of a willing buyer and a willing seller. If you are to get your

    1055
    price, there must be the willing buyer in the market, and I want to know what safeguards there are here to prevent the Exchequer finding itself in the position of having to make heavy repayments owing to the fact that there has been no concern, on the part of the owner of the building, to sell it to the best advantage.
    Mr. Radford: Surely when the owner of a building realises, and at a loss, all that that loss secures to him is a 60 per cent, reduction of his tax, whereas he loses the whole 100 per cent, of any price that he fails to get.
    Mr. Benson: That may be true, but it is not apparent.
    Sir J. Simon: I think that what my hon. Friend the Member for Rusholme (Mr. Radford) has said is quite right, and it is the answer that I was preparing to give. We must, of course, see that there is no loophole for the hypothetical person to misuse this Schedule to his own advantage—we all agree about that—but I do not think it is a very practical point, because all that a man who threw away his building by selling it for a half-a-crown would lose would be that he would save the tax, but he would lose on the price. It is not really his interest except to sell at the best price he can. I think that is the answer, but I will look at the point carefully.
    Mr. Benson: As a matter of fact, my first impression was that that was the answer, and I read through the Schedule half-a-dozen times to try to make out whether I could find anything in the Schedule to that effect. I am not a lawyer, and the interpretation suggested by the right hon. Gentleman may be correct, but, frankly, it is not apparent on the face of it.
    Sir J. Simon: Let me look into it.
    Mr. Benson: I shall be glad if the right hon. Gentleman will. There is one other point, relating more precisely to the Amendment and the 10 per cent. I was rather frightened of the additional 10 per cent., in that it brings depreciation up to a possible 18 or 20 per cent., which in three years brings down the book value of the assets 60 per cent. What made me afraid was this, that if you got a
    1056
    theoretical figure fixed in the books, it might be very difficult to adjust that figure upwards against the Government. Once a firm has it on its books that certain assets are worth a certain figure by depreciation, the Government will have a very much harder struggle to get that depreciation back than they would have to moderate the rate of depreciation in the first case. It is an old saying that you cannot get butter out of a dog's throat, and that applies in more respects than one to armament profits. It applies, I am afraid, to the general tax, and I do not want it to apply in its smaller degree to this question of depreciation.
    9.40 p.m.
    Mr. Pethick-Lawrence: It is quite clear that if a person deliberately throws away his assets and gets a very small price for them, he is, as the Chancellor said, giving away the whole of the money and saving himself only 60 per cent, when it comes to taxation. Nobody would be so foolish as to do that in that simple form, but what I think may happen—and what did happen in the case of the Excess Profits Duty, so that it is not purely imaginary—is that a person either spends money recklessly or sells things at a low price, and he does not do that quite for nothing, but gets something out of it. I am not suggesting, any more than did my hon. Friend, that it will be a usual case, but you do get rather loose things done where certain interests are concerned. They sell to somebody—machinery, it may be, or buildings—below the proper figure in a general deal in which the other party to the bargain gives them something at some other point, and in that way they may not lose the whole amount that they appear to -be throwing away. They may not lose even 60 per cent. Therefore, I do not think it is quite so negligible a factor as the right hon. Gentleman suggests. With regard to Excess Profits Duty, apparently it was to their good not to waste their money, though we know that they did waste very large sums of money, because they said that 80 per cent, of it would be paid for by the Government. It may very well be that, I will not say unscrupulous people, but careless people, people not too nice in matters of money, may have to be watched by the Chancellor to see that undue advantage is not taken of this provision in the Bill.
    9.43 p.m.
    Sir J. Simon: We have had, I think, a very Interesting and important Debate. I will certainly look at the point very carefully, and it may be that there is something to be done in the way of tightening it up before we finally pass the Bill. As regards the point that the right hon. Gentleman has just put by way of illustration, when he says that you may have people who appear to be selling their property at a price, but they are getting something else in return, all that I can say is that neither in commerce nor in law could I describe the price they get then as the net price. If they get, by way of exchange, something of value, I regard the net price as what they get on the whole transaction, and I think everybody will agree about that. As regards the question put to me first by the hon. Member for Chesterfield (Mr. Benson), namely, who should decide whether the buildings were buildings provided for the purpose of fulfilling armament contracts, I think that is like any other provision in taxing
    law where there is a description which has to be applied. If there is no difference between the parties, it applies without question. If there is a difference, if necessary the matter can be tested in the Law Courts. I agree with what the right hon. Gentleman opposite said at the end. I, too, have a certain recollection of the Excess Profits Duty. There is no doubt that in practice it led to a good deal of loose spending, and I know the authorities are very much alive to that. We have tried to take advantage of the lessons of the past, though we may not have been entirely successful. We shall want the co-operation of every one. In the light of what has been said I will have the Schedule carefully examined and, if there is anything that can be suggested as an improvement, I shall be glad to consider it.
    Question put, "That the word 'ten' stand part of the proposed Schedule."
    The Committee divided: Ayes, 209; Noes, 107.

    Division No. 217.]

    AYES.

    [9.47 p.m

    Acland, Sir R. T. D.

    Denman, Hon. R. D.

    Hely-Hutchinson, M. R.

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

    Denville, Alfred

    Hepburn, P. G. T. Buchan-

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

    Doland, G. F.

    Hepworth, J.

    Alexander, Brig.-Gen. Sir W.

    Drewe, C.

    Hogg, Hon. Q. McG.

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

    Dugdale, Captain T. L.

    Holdsworth, H.

    Aske, Sir R. W.

    Duggan, H. J.

    Holmes, J. S.

    Assheton, R.

    Dunoan, J. A. L.

    Hopkinson, A.

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

    Eastwood, J. F.

    Horsbrugh, Florence

    Balniel, Lord

    Eckersley, P. T.

    Howitt. Dr. A. B

    Barrie, Sir C. C.

    Edge, Sir W.

    Hunloke, H. P.

    Beamish, Rear-Admiral T. P. H.

    Elliot, Rt. Hon. W. E.

    Hunter, T.

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

    Ellis, Sir G.

    Hutchinson, G. C.

    Beeehman, N. A.

    Emery, J. F.

    Jarvis, Sir J. J.

    Bernays, R. H.

    Emrys-Evans, P. V.

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

    Bird, Sir R. B.

    Erskine-Hill, A. G.

    Jones, Sir H. Haydn (Merioneth)

    Bossom, A. C.

    Evans, Colonel A. (Cardiff, S.)

    Kerr, Colonel C. I. (Montrose)

    Boulton, W. W.

    Evans, D.O. (Cardigan)

    Kerr, Sir J. Graham (Scottish Univ.)

    Braithwaite, J. Gurney (Holderness)

    Everard, Sir William Lindsay

    Kimball, L.

    Briscoe, Capt. R. C.

    Findlay, Sir E.

    Lamb, Sir J. Q.

    Brookleblank, Sir Edmund

    Fleming, E. L.

    Leighton, Major B. E. P.

    Brooke, H. (Lewisham, W.)

    Foot, D. M.

    Lennox-Boyd, A. T. L.

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

    Furness, S. N.

    Lewis, O.

    Bull, B. B.

    Fyfe, D. P. M.

    Liddall, W. S.

    Burgin, Rt. Hon. E. L.

    George, Megan Lloyd (Anglesey)

    Little, J.

    Campbell, Sir E. T.

    Gluckestein, L. H.

    Llewellin, Colonel J. J.

    Cary, R. A.

    Glyn, Major Sir R. G. C.

    Looker-Lampson, Comdr. O. S.

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

    Gower, Sir R. V.

    Loftus, P. C.

    Chapman, A. (Rutherglen)

    Grant-Ferris, Flight-Lieutenant R.

    Lyons, A. M.

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

    Greene, W. P. C. (Worcester)

    M'Connell, Sir J.

    Cobb, Captain E. C. (Preston)

    Gridley, Sir A. B.

    Magnay, T.

    Colville, Rt. Hon. John

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

    Makins, Brigadier-General Sir Ernest

    Conant, Captain R.J. E.

    Grigg, Sir E. W. M.

    Mander, G. le M.

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

    Grimston, R. V.

    Manningham-Buller, Sir M.

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

    Gritten, W. G. Howard

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

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

    Guinness, T. L. E. B.

    Marsden, Commander A.

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

    Gunston, Capt, Sir D. W.

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

    Cox, H. B. Trevor

    Hambro, A. V.

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

    Craven-Ellis, W.

    Hammersley, S. S.

    Moreing, A. C.

    Croft, Brig. Gen. Sir H. Page

    Hannah, I. C.

    Morgan, R. H. (Worcester, Stourbridge)

    Crooke, Sir J. Smedley

    Harbord, Sir A.

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

    Crookshank, Capt. Rt. Hon. H. F. C.

    Harris, Sir P. A.

    Nicholson, G. (Farnham)

    Cross, R. H.

    Haslam, Sir J. (Bolton)

    Nicolson, Hon. H. C.

    Davidson, Viscountess

    Heilgers, Captain F. F. A.

    O'Connor, Sir Terence J.

    Orr-Ewing, I. L.

    Salmon, Sir I.

    Tasker, Sir R. I.

    Owen, Major G.

    Salt, E. W.

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

    Peat, C. U.

    Samuel, M. R. A.

    Thomas, J. P. L.

    Perkins, W. R. D.

    Sanderson, Sir F. B.

    Thorneycroft, G. E. P.

    Peters, Dr. S. J.

    Sandys, E. D.

    Titchfield, Marguess of

    Pickthorn, K. W. M.

    Schuster, Sir G. E.

    Touche, G. C.

    Pilkington, R.

    Scott, Lord William

    Tree, A. R. L. F.

    Plugge, Capt. L. F.

    Seely, Sir H. M.

    Tufnell, Lieut.-Commander R. L.

    Ponsonby, Col. C. E.

    Selley, H. R.

    Turton, R. H.

    Pownall, Lt.-Col. Sir Assheton

    Shakespeare, G. H.

    Walker-Smith, Sir J.

    Procter, Major H. A.

    Shaw, Captain W. T. (Forfar)

    Wallace, Capt. Rt. Hon. Euan

    Radford, E. A.

    Shepperson, Sir E. W.

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

    Raikes, H. V. A. M,

    Simon, Rt. Hon. Sir J. A.

    Wardlaw-Milne, Sir J. S.

    Ramsbotham, Rt. Hon. H.

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

    Waterhouse, Captain C.

    Rathbone, J. R. (Bodmin)

    Smiles, Lieut.-Colonel Sir W. D.

    Watt, Lt.-Col. G. S. Harvie

    Reed, A. G. (Exeter)

    Smith, Braoewell (Dulwich)

    Webbe, Sir W. Harold

    Reed, Sir H. S. (Aylesbury)

    Smith, Sir R. W. (Aberdeen)

    Wells, Sir Sydney

    Reid, W. Allan (Derby)

    Smithers, Sir W.

    White, H. Graham

    Remer, J. R.

    Somerville, Sir A. A. (Windsor)

    Whiteley, Major J. P. (Buckingham)

    Rickards, G. W. (Skipton)

    Spens, W. P.

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

    Ropner, Colonel L.

    Stanley, Rt. Hon. Oliver (W"ml"d)

    Willoughby de Eresby, Lord

    Rosbotham, Sir T.

    Stourton, Major Hon. J. J.

    Windsor-Clive, Lieut.-Colonel G.

    Ross, Major Sir R. D. (Londonderry)

    Strauss, H. G. (Norwich)

    Womersley, Sir W. J.

    Ross Taylor, W. (Woodbridge)

    Strickland, Captain W. F.

    Wragg, H.

    Rothschild, J. A. de

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

    Royds, Admiral Sir P. M. R.

    Stuart, Rt. Hon. J. (Moray and Neirn)

    TELLERS FOR THE AYES.—

    Russell, Sir Alexander

    Sueter, Rear-Admiral Sir M. F.

    Major Sir James Edmondson and Mr. Munro.

    Russell, R. J. (Eddisbury)

    Sutcliffe, H.

    NOES.

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

    Hayday, A.

    Poole, C. C.

    Adamson, Jennie L. (Dartford)

    Henderson, J. (Ardwick)

    Price, M. P.

    Adamson, W. M.

    Henderson, T. (Tradeston)

    Pritt, D. N.

    Anderson, F. (Whitehaven)

    Hills, A. (Pontefract)

    Richards, R. (Wrexham)

    Banfield, J. W.

    Hopkin, D.

    Ridley, G.

    Barnes, A. J.

    Isaacs, G. A.

    Riley, B.

    Bartlett, C. V. O.

    Jagger, J.

    Ritson, J.

    Batey, J.

    Jenkins, Sir W. (Neath)

    Robinson, W. A. (St. Helens)

    Bellenger, F. J.

    John, W.

    Sexton, T. M.

    Benn, Rt. Hon. W. W.

    Johnston, Rt. Hon. T.

    Shinwell, E.

    Benson, G.

    Kennedy, Rt. Hon. T.

    Silkin, L.

    Broad, F. A.

    Lathan, G.

    Silverman, S. S.

    Buchanan, G.

    Lawson, J. J.

    Simpson, F. B.

    Burke, W. A.

    Leach, W.

    Smith, E. (Stoke)

    Chater, D.

    Lee, F.

    Smith, T. (Normanton)

    Cluse, W. S.

    Leslie, J. R.

    Sorensen, R. W.

    Cooks, F. S.

    Logan, D. G.

    Stephen, C.

    Collindridge, F.

    Lunn, W.

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

    Cove, W. G.

    Macdonald, G. (Ince)

    Summerskill, Dr. Edith

    Cripps, Hon. Sir Stafford

    McEntee, V. La T.

    Taylor, R. J. (Morpeth)

    Daggar, G.

    McGhee, H. G.

    Thurtle, E.

    Dalton, H.

    McGovern, J.

    Tinker, J. J.

    Davies, R. J. (Westhoughton)

    MacLaren, A.

    Viant, S. P.

    Davies, S. O. (Merthyr)

    Maclean, N.

    Welkden, A. G.

    Dunn, E. (Rother Valley)

    Mainwaring, W. H.

    Watson, W. McL.

    Ede, J. C.

    Mathers, G.

    Westwood, J.

    Edwards, Sir C. (Bedwellty)

    Maxton, J.

    Whiteley, W. (Blaydon)

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

    Milner, Major J.

    Wilkinson, Ellen

    Frankel, D.

    Montague, F.

    Wilmot, John

    Gardner, B. W.

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

    Wilson, C. H. (Attercliffe)

    Gibson. R. (Greenock)

    Naylor, T. E.

    Windsor, W. (Hull, C.)

    Greenwood, Rt. Hon. A.

    Noel-Baker, P. J.

    Woods, G. S. (Finsbury)

    Grenfell, D. R.

    Oliver, G. H.

    Young, Sir R. (Newton)

    Griffiths, G. A. (Hemsworth)

    Paling, W.

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

    Parker, J.

    TELLERS FOR THE NOES.—

    Hardie, Agnes

    Parkinson, J, A.

    Mr. Groves and Mr. Charleton.

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

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

    9.55 p.m.
    Captain Strickland: I beg to move, as an Amendment to the proposed new Schedule, in line 51, at the end, to insert:
    " (4) If any person proves to the satisfaction of the Board of Referees that after the end of the last chargeable accounting period he has incurred any loss or expense arising out of or as a consequence of armament contracts (including a fall in value of stocks and stores) or in the termination of commitments and liabilities, the amount of any such losses and
    1060
    expenses, so far as the same shall not have already been allowed, shall be deemed to be an allowable deduction in arriving at the profits of that business for the purpose of the Armament Profits Duty, and any necessary repayment shall be made accordingly."
    We are approaching the end of the discussions on the Armaments Profits Duty and I was very much struck by a phrase used by the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) when

    1061
    he said that he wanted to make quite sure that it was not a case of "Heads the manufacturer wins and tails the Government loses." I want to put forward a case where that position is completely reversed. The purpose of this taxation is that where excess profits are made as a result of the heavy expenditure which the Government have undertaken in the course of rearmament they shall be subjected to this duty. It is obvious that a company might make a profit for, say, two years, on which they would pay Armaments Profits Duty, and that in the third year, for some unforeseen reason, there might be a very grave loss. At the present time it is hardly realised that under the Socialist State in which we live to-day in this country the Government is a preferential shareholder to the extent of 27½ per cent, in every successful business in the country and does not recognise in any way losses which are made in industry. It is a preferential shareholder taking 27½per cent, out of the profits but taking no liability whatsoever for any losses made, which have to be borne by the companies themselves.
    This is a special tax, and I ask in all fairness that my Amendment should be accepted, at least in principle, if not in the terms in which I have framed it, and examined very carefully by the Government to see whether it does not make out a very reasonable case. We are going to take 60 per cent, of the excess profits that are made, and it will be a grave injustice if a company are left to make a loss after they had paid on what was supposed to be an excess profit. My Amendment provides that if at the end of the time it can be proved, not by the capitalist concerned, not even by the Government, but by the referees, or in the case of Income Tax, by the Commissioners, that a greater sum has been taken by the Government than represents the excess profits that have been made, there should be relief.
    The case of buildings, plant or machinery, and, in the case of the staff, compensation for cessation of employment at the end of the period—for any of these reasons which were so obvious at the end of the War and were then provided for, there should be the possibility of a man who has been charged more than he ought to have been charged under this duty being able to make out his case. In the case of buildings, plant and machinery he would go to the Board of Referees and
    1062
    in the other case submit the facts to the Commissioners of Inland Revenue, and if he can prove that the amount of A.P.D. which he has been called upon to pay is not justifiable from the point of view of fair play between the State and the company, he should have a chance of getting a fair and square deal. I do not want to labour the point, because I think it is one which the Government and the Committee are either willing to concede as being a fair proposition or are unwilling to concede.
    10.0 p.m.
    Captain Crookshank: The hon. and gallant Member for Coventry (Captain Strickland) has quite clearly indicated the extent of his Amendment. It is to the effect that if at the end of the last chargeable accounting period of the Armaments Profits Duty a person can show that he has incurred losses arising out of or consequent upon armaments contracts, including a fall in the value of stocks and shares or in the termination of commitments and liabilities, the loss shall be allowed backwards against profits or the chargeable accounting period within the three years of the life of the duty. I do not doubt that he has raised this question to-day having in mind certain provisions which were made at the termination of the Excess Profits Duty under the Finance Act, 1921, when various options were given to traders who could show that at the end of the period of liability to Excess Profits Duty they had suffered a loss through a fall in the value of the stocks which they held at or about the date of termination.
    I do not think I need discuss the matter beyond saying that it seems to be unnecessary, and, in fact, is impracticable at this particular stage, to come to any final views as to what ought to happen when this duty should come off in three years' time. After all, we cannot begin to hazard a guess as to what trade conditions may be then or whether there will then be any need to make provision for relief in respect of a fall in the value of stocks and the like. My right hon. Friend feels that this is a subject which will have to be considered in the light of circumstances far nearer the time when it is likely to be applied, if it has to be applied at all, that is to say, somewhere nearer the date when the duty comes to an end, instead of before it

    1063
    begins to be collected. I think that perhaps the Committee will agree that it is premature to insert in this Finance Bill provisions of this kind, and for that reason I hope that my hon. and gallant Friend will not press the matter to-night.
    10.4 p.m.
    Mr. Pethick-Lawrence: I do not know whether the hon. and gallant Member who moved the Amendment quite appreciates what the words of it seem to imply. It does not speak of a loss in the latter part of the accounting period, but, as I read it, it may mean that though during the whole period of the years when the tax is running a company may make so much profit in excess of standard profit that it attracts this duty, if subsequent to that period—it does not say how long afterwards—it makes a loss and that loss arises on armament contracts it can then set that loss, made after this period has come to an end, against the profits made during the chargeable period. I do not know whether that is the intention of the hon. and gallant Member, but it seems to me an extraordinary proposition and I am glad that the Chancellor of the Exchequer is not prepared to entertain it.
    10.5 p.m.
    Mr. Peat: I feel that my right hon. and gallant Friend has already a precedent for granting this Amendment, in that the Chancellor of the Exchequer has laid it down that in the case of redundant plant which may, after the end of the period have been a considerable loss to the manufacturer of arms, the manufacturer shall be compensated for that loss. That is a consequential loss, and is, I gather, the whole purport of this Amendment. It may appear after the end of the period, and it is proposed that the actual losses during the period shall be taken into consideration and offset against any duty which may be paid on the profits which may have been made during that period. I can see no reason why the principle should not be conceded in this case. Just as truly as you may have redundant plant, you may have expenses which are not entirely able to be judged until the end of the period. I would ask my right hon. and gallant Friend to take this matter into consideration before he turns down this Amendment.
    10.6 p.m.
    Sir H. Williams: The Amendment raises considerations of great importance. I was for some years the secretary of an organisation known as the Machine Tool Trades Association —
    Miss Wilkinson: Shame.
    Sir H. Williams: I do not quite see why it should have been a shame. They remunerated me, any way, and I still have an affection for that industry with which I had a connection for many years. The effect of the War on the industry was to force them to produce in four years an output which was normally produced in eight or ten years. As soon as the War was over, all those firms passed through a very difficult period. There were great masses of plant. Some of it was specialised plant, but some of it was of a very general character suitable for all sorts of jobs. During the next five or six years most of the people concerned passed through a period of acute difficulty. Some of the firms ceased to exist. Some of the Departments have been faced with the problem of a machine tool industry which is too small because the Excess Profits Duty destroyed part of it. The scale of this industry's operations had been magnified, with the result that, while their profits had been very much increased, some 40 per cent, or 80 per cent, of them was taken away. Then they went through a period of about six years, during which all of them were running in unfavourable circumstances. The capital which they ought to have retained to carry them through the lean period had been taken away by the Treasury.
    I heard the other day about a gentleman who had recently started in business. He did not know much about it. He had not been a Member of Parliament and in touch with things. He received a request from the Inspector of Taxes, so he went along. He had one of those assessment forms to fill up. He asked the inspector: "What does it all mean?" The inspector said: "If you make any money, out of every 20s. you make I take 5s. 6d. from you."The man said: "I see; but suppose I lose 20s., do you give me 5s. 6d?" The inspector said: "No." So then the man said: "Well, I won't join." That story illustrates what is behind this Amendment. Remember that under the Ministry of Supply Act

    1065
    these activities are going to be forced upon people. [An HON. MEMBER: "They need not join."] They may not want to join but it will be forced upon them. Believe me, much of this armament business is not very profitable.
    Mr. McGovern: Says you.
    Sir H. Williams: I say it quite deliberately. I am a director of one or two companies. I was at one to-day at which we considered our annual report. We have done a good deal of what amounted to Government work, but we found that the profit on it was about one-half what we expect to make on ordinary work. Let hon. Members not run away with the idea that all this Government work is very profitable. I must congratulate those responsible—in this case it happened to be the Office of Works—on the way in which they induce people to take on contracts. When this Government work comes to an end a great many firms will have built up large plants consisting of a great quantity of machinery. Some of it will be able to be adapted to civil work, but before the firms can get the civil contracts much time may pass away, and they may find themselves in very great difficulty. It is not so easy to adapt plant which has been used for the production of munitions to the production of other things. I remember when Woolwich Arsenal was in very great difficulty. The War had stopped and nearly all operations had been cut down. The Government of the day decided to build locomotives. The cost of those locomotives was the greatest joke in the engineering world.
    When a manufacturing department turns over from the production of one article to the production of another, it experiences very great difficulty. Take the history of the War and that of the great armament firms. I have no interest in them. In 1919, 1920 and 1921 they were in difficulties, and they had to scale down their capital. Messrs. Vickers, Messrs. Armstrong, Whitworth and all the rest of them had difficulties. It is because of my observation of the Excess Profits Duty that I do not view the matter with any enthusiasm at all from the long-range point of view of the prosperity of the country and the employment of our people. The only difficulty about this tax—
    The Deputy-Chairman (Colonel Clifton Brown):I would remind the hon. Gentle.
    1066
    man that we are discussing the tax, and that there is an Amendment before the Committee. We have been a long time in getting to it.
    Sir H. Williams:I was led astray, partly because it is the first time I have taken any part in the Debates on the Armament Profits Duty. I am getting beyond the scope of the Amendment. The object of the Amendment is clear, that is to say that we should take into account the whole effect of the armaments contract and the whole effect of the duty. You should not say you will merely apply, the duty over that restricted period during which it is presumed that these armament contracts are in being, and, on paper at least, large profits are being made, but, if substantial losses are incurred, they should be set off against the profits. In other words, the story I used earlier in my speech, about the new gentleman in business who said he was not prepared to join on the ground that the Government took 5s. 6d. out of every £1 of his profits while they were not prepared to subscribe 5s. 6d. towards every £1 of his losses, is pertinent to this Amendment, and for that reason I hope that my right hon. Friend, although he cannot accept the Amendment to-night, will give the matter further consideration. If consideration is not given to it now, it will have to be given later on, not only by Members on this side, but by Members opposite, when they see large numbers of people, whom they profess to represent because they belong to various trade unions, dismissed from their employment as a result of the evils that have been produced by the fact that abnormal profits over a short and temporary period are not going to have set off against them the losses which are inevitable during the subsequent period.
    10.17 p.m.
    Miss Wilkinson: The hon. Member for South Croydon (Sir H. Williams), instead of being secretary of the Machine Tools Association, ought to be secretary of a society for the prevention of cruelty to capitalists. I wonder whether he imagines that he can get away, after our experience of the last 20 years, with the sort of speech he has just made. He said how unfortunate it is, because the poor things do not want to make these profits, but have had them pushed on to them, and so much is taken away from them by the Treasury which they ought to be able to

    1067
    use to tide over bad times. There is no Member on this side of the Committee who represents one of the big distressed areas which were the heavy armament towns during the last War who would not echo the statement that the high profits made during the War were distributed, and no reserve was left to meet the difficult times which followed. Why was that? Surely the whole reason, as is shown by the history of firms like Palmers of Jarrow or Dorman Long of Middlesbrough, was the haste, after the War and just at the end, not only to distribute profits in the form of bonus shares, but to buy up subsidiary concerns at inflated prices, to use cash reserves in order to give very large profits to a few people, and then to unload the subsequent losses on the public. The consequence was that at the end some people did make very large profits, and did get away with enormous and highly inflated amounts of capital, for they sold their shares at very high prices to the long-suffering public, who have had to bear the losses ever since because they have got no dividends.
    If the Amendment were carried, it would be possible for all kinds of jiggery-pokery to take place at the end of such a period as we envisage after a war, so that not only would the inner ring of shareholders in armament firms be able to do all the taking away, but they would be able to make these arrangements among themselves and then unload a proportion of the consequent losses on the Treasury as well as on the public.
    Captain Strickland: I hoped I had pointed out that I was not defending a position like that, but that the case would have to be proved to the referees. I think the referees would be capable of dealing with that kind of thing. I do not want to be misrepresented in the matter; I have no wish to help people to profiteer unfairly or unduly at the expense of the State; I only want to see fair play.
    Miss Wilkinson: I am glad that the hon. and gallant Gentleman admits the general case I am putting forward. But surely, in view of the sort of things that happened in the shipping world, the insurance world, and the steel world immediately after the War, he knows perfectly well the sort of time the referees would have
    1068
    in disentangling what had really happened behind the scenes. It was 10 years, in some cases, before the truth was really known. If the Amendment were passed, these people would be able to get away with that in the hectic years that would follow a war, or if we were to have a bad period of depression, for we have got to a stage in employment now when an outbreak of peace is only less fearsome than an outbreak of war, because of the appalling social consequences that would result. In a condition like that the people in the inner ring would be able to capitalise, to clear out with all the swag, and to unload all their losses on to the Treasury. I do not think the provision with respect to the referees would be anything like a sufficient safeguard in view of what happened after the last War.
    10.21 p.m.
    Mr. Radford: My hon. and gallant Friend, in moving this Amendment, made it clear that he did not wish to adhere strictly to its words if the Government would accept its purpose. The Amendment says:
    " If any person proves to the satisfaction of the Board of Referees that after the end of the last chargeable accounting period he has incurred any loss or expense arising out of or as a consequence of armament contracts …"
    As the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) pointed out, there appears to be no limit to the period when claims for such losses might be made, but I think it is clear that what my hon. and gallant Friend meant was that the period should be the last accounting period, when it was known that the rearmament scheme was coming to an end. Then the raw materials which such a firm had would probably be falling in value. It is perfectly obvious that the intention of the Committee and of the Government is that 60 per cent. of the excess profits shall be paid over the whole accounting period, and, therefore, the aggregate of the results of the accounting period ought to be taken into account. Under the Excess Profits Duty, deficits at the end of any year were taken into account. This Duty is on absolutely parallel lines. I think the promise of the Financial Secretary that the matter will be duly considered is as much as we can hope for tonight, although it is hardly a satisfactory answer, because hon. Members opposite

    1069
    may be in power then, and we know the kind of sympathetic treatment that any manufacturing concern will receive at their hands.
    Amendment negatived.
    10.24 p.m.
    Sir Arnold Gridley: I beg to move, as an Amendment to the proposed new Schedule, in line 65, at the end, to insert:
    " (c) where any expenditure is incurred by a person carrying on a business following an Order by the Minister of Supply or by any other Minister (with the exception of the Minister for Civil Defence) for the purpose of the protection of buildings, plant or personnel, such expenditure, so far as it is not met by capital repayment by His Majesty's Government, shall be allowed as a deduction in calculating the amount of excess profits assessed to Armament Profits Duty."
    I have no doubt that every Member of the Committee shares with me a measure of relief that this is the last Amendment which we have to consider on this lengthy Schedule. Under the power of the Civil Defence Minister, manufacturing firms have to make, and have in most cases made, provision for the safety of their employés in the event of air raids. There is a new obligation which the Minister of Supply, under the Bill which is now in another place, may impose upon industry by calling for the provision of measures for the protection of buildings and plant. The financial provisions, as far as one can follow them—and I hope that I am right in the deductions that I have made—really amount to this, if I may give a simple example by way of illustration. If an undertaking is called upon to spend £40,000 on protective measures, there is a capital grant of £10,000 towards such expenditure. If the firm is engaged to the extent of 50 per cent, on armament work, half the difference between £10,000 and £40,000, namely, £15,000, may be added to the contract price. What is clearly intended to be given by way of a grant would be taken back to the extent of 60 per cent, under the A.P.D. tax, which we have been considering for the last few days. The purpose of the Amendment is to rectify what obviously seems to have been an oversight. It is absurd to give a relief with one hand and take a large measure of it back by a tax on the other. For that reason
    1070
    I and my hon. and gallant Friend have put down this Amendment, which I hope the Financial Secretary to the Treasury will see his way to accept.
    10.28 p.m.
    Captain Crookshank: My hon. Friend is relieved that we are coming towards the end of the Committee stage—he is nothing like as relieved as I am—and he hopes that we shall be able to meet him in this Amendment. It is a great tribute to any Member of this Committee that hope can go on springing, as it has throughout this Bill. I quite appreciate, and so does my right hon. Friend, the point which my hon. Friend has put forward. It is true that if the Ministry of Supply Bill passes into law in its present form the Minister of Supply will be empowered to order Government contractors or sub-contractors to take such measures as are necessary to secure the functioning of some of these works in the event of war. He will also be empowered to make to contractors a grant equal to an appropriate proportion of the capital expenditure which is given in that Bill in terms of 5s. 6d. in the £ or 27 ½per cent. I do not know whether there is any confusion on this subject, but the basis that we have been putting forward on the Schedule and in the earlier new Clauses with regard to Armament Profits Duty is that the plan of assessing profits is on the lines of Income Tax assessment. Capital expenditure, therefore, would not be allowable as a deduction in computing profits. No ground therefore exists for the Amendment. The fact that the Minister of Supply will have power to make a certain grant, calculated in a certain way, towards capital expenditure does not really have any bearing, particularly on the question of non-allow-ability of the expenditure as a deduction from profits for taxation purposes. It would look as if we were trying to do two entirely different things if we accepted the Amendment of my hon. Friend and for that reason I ask the Committee not to accept the Amendment.
    Amendment negatived.
    Schedule added to the Bill.
    Bill reported, with Amendments; as amended, to be considered upon Thursday, and to be printed. [Bill 182.]

  MARRIAGE (SCOTLAND) BILL [Lords.]
  Order for Consideration, as amended (in the Standing Committee,) read.
  10.34 p.m.
  Mr. Robert Gibson: I beg to move, "That the Bill be recommitted to a Committee of the Whole House."
  I make this Motion because there is on the Order Paper at the present time no Motion proposing a new Clause. As the Bill left the Committee there was in the minds of most hon. Members of the Committee the view that considerable Amendments would be placed on the Order Paper for the Report stage. That view arose necessarily from the statement of the right hon. Gentleman, the Secretary of State for Scotland, that he would look into several matters that had been the cause of complaint and which had impressed him in the Committee stage. Some of us waited to see whether any Amendment would be forthcoming from the Secretary of State and would appear on the Order Paper in his name. We waited in vain, and this morning for the first time we find that the Bill appears on the Order Paper. In these circumstances I had in hand the formation of a new Clause but that new Clause, according to the Standing Orders, cannot be moved at this stage, and it is for that reason that I move the recommital of the Bill.
  10.36 p.m.
  The Secretary of State for Scotland (Mr. Colville): May I reply to the points put by the hon. and learned Member? During the course of our proceedings in Committee I gave one undertaking, and I will read it in the words which I used. The matter under discussion at the time was the question of marriage in the case of emergency, owing to accident or sudden illness. I stated that I was surprised that the criticism on Clause 2 had been deferred until then and was not raised on the Clause itself. I went on to say:
  " In devising the Clause the Government had fully in mind the terms of the Morrison Report and the general views which have been expressed on the subject, and they thought the machinery was satisfactory, but in view of the discussion that has taken place my right hon. and learned Friend and I will review what had been said and the machinery that has been devised to see whether any change is desirable."—[OFFICIAL REPORT (Standing Committee on Scottish Bills,) 6th June, 1939, Col. 57.]
  1072
  That was the undertaking; and in the time which has intervened between the Bill leaving the Committee and appearing in the House my right hon. and learned Friend the Lord Advocate and I have reviewed carefully the machinery of the Clause. We have also consulted members of the Opposition. During last week my hon. and learned Friend the Solicitor-General for Scotland conducted a searching inquiry to see whether any change was desirable. We have come to the conclusion that in our view the present machinery is satisfactory to meet the purposes of an emergency marriage. I think that the undertaking I gave has been completely implemented, and the inquiries which we have made have convinced us that the machinery in the Bill is satisfactory and should not be altered.
  Mr. R. Gibson: In view of the statement of the Secretary of State, although I personally had no knowledge of the position, I beg to ask leave to withdraw the Motion
  Mr. Speaker: The hon. and learned Member cannot withdraw the Motion.
  Question, "That the Bill be recommitted to a Committee of the Whole House," put, and negatived.
  Bill, as amended (in the Standing Committee), considered.

  MARRIAGE (SCOTLAND) BILL [Lords.]

    CLAUSE 1.—(Marriage before registrar.)
    10.40 p.m.
    Mr. R. Gibson: I beg to move, in page 1, line 10, to leave out paragraph (i).
    This paragraph deals with the publication of banns and notification under the Marriage Notice (Scotland) Act. The Clause is the part of the Bill which introduces a novel form of marriage in Scotland, namely, marriage before a registrar. This being a new process, one has to consider what is the most practical form that the new process can take. We had the advantage in Committee of a very considerable discussion on the publication of banns in Scotland. While the discussion there was on the question of extending that practice, there was general agreement that the publication of banns served no useful purpose. My hon. Friend the Member for Coatbridge (Mr. Barr) indicated that church proclamation as a means of publicity was quite obsolete, and in so saying, he was quoting

    1073
    from a report that was adopted unanimously by the United Free Church Assembly in Scotland. That was a very powerful statement, and it did not rest there, because the Lord Advocate himself indicated that banns were obsolete, and the best that he could say about banns was that the publication of banns does nobody any harm. Consequently, what is the use of cumbering a new form of marriage in Scotland with this obsolete machinery? It does not do anybody any harm, but surely a new form of procedure that is supposed to be quick and ready and easily available to people should not be cumbered by unnecessary procedure.
    The proclamation of banns may be very useful in connection with a marriage by a clergyman or a minister in Scotland, but Clause I of the Bill is not dealing with that matter. Surely, it is intended to be something that is practical, and if banns have become obsolete and are merely a relic of something that is antique, then in the creation of a new machine altogether that is to have practical utility, the relic should be left out because it does not serve any useful purpose. Accordingly, if this were left out, the parties who desired to be married would go straight to the registrar and the procedure set out in the next two paragraphs of Sub-section (1) would be carried out and the registrar would go on with his duties as set out in Sub-section (2). With regard to the practical significance of banns or intimation by notification, in the terms of the Act of 1878, what is the purpose? I put questions to the right hon. Gentleman the Secretary of State asking for information as to the marriages that had been objected to after the proclamation of banns, and the answer was that there was no information available. I tested it over different times. I took, first, the whole period as far back as he could go. That was ineffective in getting any positive information. Then I brought it down to the last year, and again it was impossible, as far as I could gather from the answer, to trace a single case in which a proclamation of banns of intended marriage had resulted in an objection being forthcoming that caused proceedings to be taken or the marriage to be postponed.
    The same was the case in connection with intimations of intended marriage outside the registrar's office in the terms of
    1074
    the Act. There was no information available of any useful purpose having been served. Accordingly, from the practical point of view, I submit that it is a serious blot on the Clause that this antique, un-useful and ineffective machinery should be continued. It can only cause unnecessary delay and delay which is productive of no useful result to the parties who intend to be married. I, therefore, move the omission of paragraph (i).
    Mrs. Hardie: I beg to second the Amendment.
    I agree that this procedure should be simple and easily understood, and there is no reason whatever why it should be necessary to give this notice when a contract of marriage is about to be entered into between certain parties.
    10.46 p.m.
    The Lord Advocate (Mr. T. M. Cooper): The Amendment of which the hon. and learned Gentleman gave me notice a short time ago is, I understand, confined to the deletion from Clause 1 of the first paragraph of Sub-section (1). The hon. and learned Member supported his Amendment by certain arguments directed, in the main, to the usefulness or uselessness of the proclamation of banns. The paragraph which he seeks to delete has nothing whatever to do with banns. It is concerned solely with the civil substitute for banns which was introduced by the Marriage Notice (Scotland) Act, 1878, the substitute, namely, of an intimation given in the registrar's office. That substitute has been in habitual use in Scotland for 61 years.
    Mr. Buchanan: It is time it was altered.
    The Lord Advocate: In the report of the Morison Committee there is no suggestion of any alteration of the law in that respect. On the contrary, there is commendation of the practice introduced by that Act and since habitually employed in Scotland. Further, I might observe that in another place where this Bill was first introduced, on its Second Reading in this House and during the Committee stage upstairs, practically every conceivable alteration in the law of marriage that commended itself to the ingenuity of the hon. and learned Member for Greenock (Mr. Gibson) was proposed at one stage or another. It is only now, at this late stage in the consideration of the Bill, that the suggestion is made for the first time, that

    1075
    notice to the registrar should be dispensed with as a requirement in connection with the civil form of marriage which the Bill proposes to introduce.
    As I say, the hon. and learned Member's argument was misdirected to the question of the usefulness or otherwise of banns. I shall confine my reply to the question of the usefulness or uselessness of the notice to the registrar. On that topic, I would say that the hon. and learned Gentleman is in error if he supposes that these notices are never productive of results in the shape of objections from persons who have a right to take objection to a proposed marriage. I have evidence in my hand that during the last ten years no fewer than 20 cases were subject to objections, stated officially, in the cities of Edinburgh, Glasgow, Inverness, Aberdeen and Dundee.
    Mr. Buchanan: None in Greenock
    The Lord Advocate: I have no figures to suggest that anything of that kind happened there—which may account for the hon. and learned Gentleman's ignorance of the fact that this machinery has been so effective. But, apart from that, I do not measure the usefulness of giving prior notice by the number of official objections. The fact that notice has to be given is in itself one of the best guarantees of the bona fides of the parties.
    Mr. Buchanan: That has nothing to do with the point of what the hon. and learned Member for Greenock (Mr. Gibson) said about banns. You are confining yourself to the civil procedure.
    The Lord Advocate: I do not think the hon. Gentleman could have been here when I began.
    Mr. Buchanan: I have been here the whole time.
    The Lord Advocate: Very well then, I can only repeat that the question of banns does not arise under this Amendment at all; it is concerned solely with the substitute for banns, the notice to the registrar. But on that point the recommendation of the Morison Committee, in dealing with the provisions for a new civil marriage, was that the requirement of the notice under the Act of 1878 should be observed, and the argument given by the
    1076
    Committee in favour of that course was that if the parties, however retiring or secretive they might wish to be, really intended to enter into a civil contract of marriage, it was not too much to expect that they would go to the office of the registrar in their own neighbourhood and give him the necessary particulars, and return when they had received their certificate. In that way, they said, an honourable matrimonial intention would be apparent and unequivocal. On those grounds I submit that this belated suggestion to dispense with an integral and valuable part of the new civil marriage should not be accepted by the House.
    10.53 p.m.
    Mr. Maxton: I approached this question with a very open mind, but I would point out, first of all, that this procedure is not with reference to marriages that will be conducted by clergy, and the notices the Lord Advocate referred to, when 20 objections were taken, were notices given to a registrar with reference to marriages that were going to be performed subsequently by clergymen. Here we are dealing with marriages which are going to be performed by a registrar, and this is in substitution of marriages that were formerly conducted before the Sheriff—a marriage system which worked reasonably well in Scotland for an extended period of time, and for which no notice at all was required. It seems to me that the Lord Advocate has given a very flimsy reply to the hon. and learned Member for Greenock (Mr. Gibson) and made a debating point out of the use of the word "banns," which, I take it, he only used to mean that previous notice had been given. The hon. and learned Gentleman the Lord Advocate tells us about 20 objections being taken as a result of these notices, and he was very sketchy about that. He did not tell us how many of these objections were sustained. Presumably, the registrar who was to conduct a marriage ceremony would take reasonable steps to see that there was no impediment to his performing the marriage in a legal way.
    Sir Edmund Findlay: How could he?
    Mr. Maxton:Under this procedure all that he does is to stick out a board. Nobody reads the board except the reporter in the local newspaper, and I suppose that that is the interest of the hon.

    1077
    Member opposite who asked the question. I shall support the Amendment of the hon. and learned Member for Greenock, and if he proposes to take it to a Division, I shall go into the Lobby in favour of it.
    Question put, "That the words proposed to be left out stand part of the Bill."
    The House divided: Ayes, 155; Noes,23

    Division No. 218.]

    AYES.

    [10.58 p.m.

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

    Gritten, W. G. Howard

    Reed, Sir H. S. (Aylesbury)

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

    Hacking, Rt. Hon. Sir D. H.

    Reid, W. Allan (Derby)

    Alexander, Brig.-Gen. Sir W.

    Hannah, I. C.

    Remer, J. R,

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

    Haslam, Sir J. (Bolton)

    Rickards. G. W. (Skipton)

    Anderson, F. (Whitehaven)

    Heilgers, Captain F. F. A.

    Ridley, G.

    Aske, Sir R. W.

    Hepburn, P. G. T. Buchan-

    Riley, B.

    Baldwin-Webb, Col. J.

    Hepworth, J.

    Ropner, Colonel L.

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

    Herbert, A. P. (Oxford U.)

    Royds, Admiral Sir P. M. R.

    Benson, G.

    Hogg, Hon. Q. McG.

    Russell, S. H. M. (Darwen)

    Bird, Sir R. B.

    Holdsworth, H.

    Salt, E. W.

    Bossom, A. C.

    Holmes, J. S.

    Samuel, M. R. A.

    Boulton, W. W.

    Hopkinson, A.

    Sanderson, Sir F. B.

    Braithwaite, J. Gurney (Holderness)

    Horsbrugh, Florence

    Shakespeare, G. H.

    Briscoe, Capt. R. G.

    Howitt, Dr. A. B.

    Shepperson, Sir E. W.

    Bull, B. B.

    Hunloke, H. P.

    Simon, Rt. Hon. Sir J. A.

    Burgin, Rt. Hon. E. L.

    Hunter, T.

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

    Campbell, Sir E. T.

    Jarvis, Sir J. J.

    Smith, Ben (Rotherhithe)

    Chapman, A. (Rutherglen)

    Jenkins, Sir W. (Neath)

    Smith, E. (Stoke)

    Cobb, Captain E. C. (Preston)

    John, W.

    Smith, Sir R. W. (Aberdeen)

    Collindridge, F.

    Johnston, Rt. Hon. T.

    Smithers, Sir W.

    Colman, N. C. D.

    Jones, Sir H. Haydn (Merioneth)

    Sorensen, R. W.

    Colville, Rt. Hon. John

    Kerr, Sir J. Graham (Scottish Univ.)

    Strauss, H. G. (Norwish)

    Conant, Captain R. J. E.

    Lathan, G.

    Strickland, Captain W. F.

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

    Lennox-Boyd, A. T. L.

    Tasker, Sir R. I.

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

    Liddall, W. S.

    Taylor, R. J. (Morpeth)

    Cox, H. B. Trevor

    Little, J.

    Thorneycroft, G. E. P.

    Croft, Brig.-Gen. Sir H. Page

    Llewellin, Colonel J. J.

    Tufnell, Lleut.-Commander R. L.

    Crooke, Sir J. Smedley

    Loftus, P. C.

    Turton, R. H.

    Crookshank, Capt. Rt. Hon. H. F. C.

    Lunn, W.

    Wakefield, W. W.

    Cross, R. H.

    M'Connell, Sir J.

    Walker-Smith, Sir J.

    Dalton, H.

    McKie, J. H.

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

    Davidson, Viscountess

    Magnay, T.

    Ward, Irene M. B. (Wallsend)

    Denman, Hon. R. D.

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

    Waterhouse, Captain C.

    Dugdale, Captain T. L.

    Mathers, G.

    Watson, W. McL.

    Duggan, H. J.

    Medlicott, F.

    Watt, Lt.-Col. G. S. Harvie

    Duncan, J. A. L.

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

    Webbe, Sir W. Harold

    Ede, J. C.

    Mitchell, H. (Brentford and Chiswick)

    Wells, Sir Sydney

    Edge, Sir W.

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

    Westwood, J.

    Edmondson, Major Sir J.

    Moreing, A. C.

    White, H. Graham

    Edwards, Sir C. (Bedwellty)

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

    Whiteley, W. (Blaydon)

    Elliot, Rt. Hon. W. E.

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

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

    Emery, J. F.

    Munro, P.

    Willoughby de Eresby, Lord

    Erskine-Hill, A. G.

    Nicolson, Hon. H. G.

    Windsor, W. (Hull, C.)

    Evans, D. O. (Cardigan)

    O'Connor, Sir Terence J.

    Womersley, Sir W. J.

    Findlay, Sir E.

    Orr-Ewing, I. L.

    Woods, G. S. (Finsbury)

    Fleming, E. L.

    Paling, W.

    Wragg, H.

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

    Pethick-Lawrence, Rt. Hon. F. W

    Wright, Wing-Commander J. A. C.

    Furness, S. N.

    Pilkington, R.

    York, C.

    Fyfe, D. P. M.

    Plugge, Capt. L. F

    Young, Sir R. (Newton)

    Gower, Sir R. V.

    Price, M. P.

    Greene, W. P. C. (Worcester)

    Radford. E. A.

    TELLERS FOR THE AYES.—

    Gridley, Sir A. B.

    Raikes, H. V. A. M.

    Lieut.-Colonel Kerr and Mr. James Stuart.

    Grimston, R. V.

    Rathbone, J. R. (Bodmin)

    NOES.

    Adamson, Jennie L. (Dartford)

    Macdonald, G. (Ince)

    Silverman, S. S.

    Adamson, W. M.

    Maclean, N.

    Stephen, C.

    Buchanan, G.

    Maxton, J.

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

    Burke, W. A.

    Parker, J.

    Tinker, J. J.

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

    Parkinson, J. A.

    Wilkinson, Ellen

    Hardie, Agnes

    Poole, C. C.

    Henderson, T. (Tradeston)

    Ritson, J.

    TELLERS FOR THE NOES.—

    Hills, A. (Pontefract)

    Seely, Sir H. M.

    Mr. McGovern and Mr. Gibson.

    Lawson, J. J.

    Sexton, T. M.

    Bill read the Third time, and passed, with Amendments.

  PATENTS AND DESIGNS (LIMITS OF TIME) BILL [Lords.]
  As amended (in the Standing Committee) considered; read the Third time, and passed, with Amendments.

  RIDING ESTABLISHMENTS BILL (changed from "RIDING ESTABLISHMENTS (REGISTRATION AND INSPECTION) BILL ").
  As amended (in the Standing Committee) considered; read the Third time, and passed.
  The remaining Orders were read, and postponed.

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

BILL PRESENTED.
  SENIOR PUBLIC ELEMENTARY SCHOOLS (LIVERPOOL) BILL,
  "to facilitate the provision in Liverpool of public elementary school accommodation for senior children," presented by Mr. Lindsay; supported by Captain Crookshank; to be read a Second time To-morrow, and to be printed. [Bill 180.]
  SENIOR PUBLIC ELEMENTARY SCHOOLS (LIVERPOOL) BILL,
  Ordered, That the Examiners of Petitions for Private Bills do examine the Senior Public Elementary Schools (Liverpool) Bill, with respect to compliance with the Standing Orders relative to Private Bills.—[Mr. Lindsay.]

AIR MINISTRY (HESTON AND KENLEY AERODROMES EXTENSION) BILL.
Minutes of Evidence taken this day reported from the Select Committee.
Minutes of Evidence to lie upon the Table, and to be printed.[No. 141.]
Bill reported, with Amendments, from the Select Committee.
Bill, as amended, re-committed to a Committee of the whole House for Thursday, and to be printed. [Bill 181.]
Minutes of Proceedings to be printed. [No. 141.]

POST OFFICE.
  TELEPHONE EQUIPMENT CONTRACTS.
  TELEPHONE EQUIPMENT CONTRACTS.
  DANGEROUS ANIMALS (ESCAPE SAFEGUARDS).
  DANGEROUS ANIMALS (ESCAPE SAFEGUARDS).
  TELEVISION SERVICE EXTENSION.
  TELEVISION SERVICE EXTENSION.
  CZECHO-SLOVAKIA (ASSETS).
  CZECHO-SLOVAKIA (ASSETS).
  NEW BUILDINGS, ABINGDON STREET, WESTMINSTER.
  NEW BUILDINGS, ABINGDON STREET, WESTMINSTER.
TRADE AND COMMERCE.
  STEEL IMPORTS.
  STEEL IMPORTS.
  JAPANESE UNDERWEAR AND HOSIERY IMPORTS.
  JAPANESE UNDERWEAR AND HOSIERY IMPORTS.
  BACON IMPORTS
  BACON IMPORTS
MERCANTILE MARINE.
  WAR RISKS (COMPENSATION AND INSURANCE).
  WAR RISKS (COMPENSATION AND INSURANCE).
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  FISHING INDUSTRY
  FISHING INDUSTRY
AGRICULTURE.
  APPRENTICESHIP FOR BOYS.
  APPRENTICESHIP FOR BOYS.
  ALLOTMENTS.
  ALLOTMENTS.
  SUPPLY OF HORSES.
  SUPPLY OF HORSES.
  MILITARY TRAINING ACT (CIVIL SERVANTS).
  MILITARY TRAINING ACT (CIVIL SERVANTS).
  CIVIL DEFENCE (EVACUATION).
  CIVIL DEFENCE (EVACUATION).
LEAGUE OF NATIONS.
  CZECHOSLOVAKIA.
  CZECHOSLOVAKIA.
  FRANCO-TURKISH TREATY.
  FRANCO-TURKISH TREATY.
  AFFORESTATION (SCOTLAND).
  AFFORESTATION (SCOTLAND).
ROYAL AIR FORCE.
  CLOTHING AND EQUIPMENT.
  CLOTHING AND EQUIPMENT.
  FOOD SUPPLY.
  FOOD SUPPLY.
  ROYAL NAVY (CLOTHING).
  ROYAL NAVY (CLOTHING).
  BAKING TRADE.
  BAKING TRADE.
BRITISH ARMY.
  MILITIA.
  MILITIA.
  CLOTHING AND EQUIPMENT
  CLOTHING AND EQUIPMENT
  NEW BARRACKS, SHRIVENHAM.
  NEW BARRACKS, SHRIVENHAM.
  FOOD SUPPLY.
  FOOD SUPPLY.
  TERRITORIAL FORCE MANUALS.
  TERRITORIAL FORCE MANUALS.