Sitting of 25 May 1939

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

FOODSTUFFS (GREAT BRITAIN AND NORTHERN IRELAND).
Return ordered,
"of the latest available figures (approximate or estimated) showing the quantities of foodstuffs consumed in Great Britain and Northern Ireland per annum, giving the proportions imported and home-produced, as follow:

Commodity.

Home produced.

Imported.

Tons.

Tons.

Wheat and Flour in equivalent weight of wheat.

—

—

Malting barley

—

—

Meat, including bacon, hams, and pork.

—

—

Poultry, game, and rabbits Milk (fresh liquid) condensed.

—

—

Butter

—

—

Cheese

—

—

Eggs

—

—

Margarine

—

—

Sugar

—

—

Feeding stuffs for animals, including oats, feeding barley, and maize.

—

—

Live cattle for slaughter (number of head).

—

—

Live store stock (number of head).

—

—

—[Sir J. Lamb.]

PRIVATE BUSINESS.
Jarrow Corporation Bill,
To be read the Third time on Tuesday, 6th June.
Sheffield Corporation Bill,
Read the Third time, and passed.
Smethwick Oldbury Rowley Regis and Tipton Transport Bill [Lords,
Read the Third time, and passed, with Amendments.
Southern Railway Bill (King's Consent signified),
Bill read the Third time, and passed.
Tiverton Corporation Bill,
Read the Third time, and passed.

ORAL ANSWERS TO QUESTIONS.
  UNEMPLOYMENT.

    SCHEMES, DURHAM AND SOUTH WALES.
    Mr. W. Joseph Stewartasked the Minister of Labour the number of persons that have been placed in employment by Government schemes in Durham and South Wales, respectively, since 1932?
    The Minister of Labour (Mr. Ernest Brown): I assume the hon. Member has in mind the areas of Durham and Tyneside and South Wales, now classified as Special Areas. In addition to the benefits which have accrued to these areas from the Government's general industrial policy, the Government have taken special steps not only by the placing of factories and contracts in the Special Areas, but also through the Special Commissioner to attract new industries to the areas and to rehabilitate the social services. Statistics are not available as to the number of persons that have been placed in employment by these schemes, but it is estimated that in April of this year the number of insured persons in employment in both areas had increased by about 30 per cent. as compared with the corresponding date in 1932.
    Mr. Stewart: Do these figures take into account the number who have found employment under trading schemes?
    Mr. Brown: Certainly.

    ASSISTANCE.
    Mr. Tomlinsonasked the Minister of Labour whether the allowance paid to an unemployed parent on behalf of a child by the Unemployment Assistance Board is paid to the local education authority when such child is sent to an approved school and the parent no longer receives such maintenance though remaining unemployed?
    Mr. E. Brown: The Board has no power to pay any part of an allowance to an education authority.
    Mr. Tomlinson: Does not the Minister think it would be unfair to a local education authority to be deprived of an allowance which has previously been paid to a parent when the authority is called upon to foot the whole of the bill for the upkeep and maintenance of the child?
    Mr. Brown: Perhaps the hon. Member will send me the case he has in mind and I will look into it.
    Mr. Ridleyasked the Minister of Labour whether he is aware that officers of the Unemployment Assistance Board, in determining the amount of assistance to which an applicant is entitled, are taking into account widows' pensions where the widow, not being related to the applicant, is acting as housekeeper to his family; and under what provision or regulation such a calculation is authorised?
    Mr. Brown: I am informed by the Board that this normal practice is to regard a widow's pension belonging to a member of an applicant's household as appropriated exclusively to her own needs. If, however, the hon. Member has a particular case in mind and cares to send me the details I will have inquiries made.
    Mr. Ridley: May I ask the right hon. Gentleman whether, assuming that calculations are being made in the way I have indicated, he would regard that as an irregularity, and if so, will he make that known to the officials?
    Mr. Brown: I should like to look into the matter. There has been no general difficulty or trouble about this matter.
    Mr. Kirbyasked the Minister of Labour whether he is aware that of the free meals provided to school children by the Liverpool Education Committee approximately 51 per cent. are supplied to families dependent upon unemployment assistance, and 10 per cent. upon unemployment insurance benefit; and as this throws an undue burden upon the Liverpool ratepayers in maintaining persons classified as able-bodied, the responsibility of the National Exchequer, will he consider increasing the allowances and benefits of those concerned to a point that they will not need to apply for free meals, thus lessening the burden borne by Liverpool ratepayers in this respect?
    Mr. Brown: Any increase in the rates of benefit or of unemployment allowances are matters for the Statutory Committee and the Unemployment Assistance Board respectively. Since, however, free meals are given to school children by education authorities under statutory powers which provide for such meals being given on medical or educational grounds to children unable to take full advantage of the education provided for them, I cannot agree that the fact that children, whose parents are drawing unemployment benefit or unemployment allowances, participate in free meals so provided is in itself an indication that the rates of benefit or allowances call for revision.
    Mr. Kirby: Does the Minister appreciate the fact that these families who are in receipt of unemployment assistance have to go through the means test; that the allowances which are paid to them are supposed to be in accordance with their need and that it is clearly shown that 50 per cent. of these families do not get adequate allowances?
    Mr. Brown: I have already said that I do not accept that. There are other factors to be taken into consideration.

    LAND SETTLEMENT.
    Mr. Leonardasked the Minister of Labour how many estates have been purchased for land settlement through the Special Areas Fund; the number of holdings ready for occupation by settlers; the number occupied, and of the latter those held by persons still dependent on the Unemployment Assistance Board?
    Mr. E. Brown: Twenty-five estates have been purchased from the Special Areas Fund for land settlement in England and Wales. Five are held by the Welsh Land Settlement Society (four for co-operative farming and one partly for small holdings and partly for co-operative farming) and the remainder are held by the Land Settlement Association. In addition, assistance is being given towards the cost of settlement on 13 estates which have been acquired by other means. I propose to circulate in the OFFICIAL REPORT the other information desired by the hon. Member.
    Following is the information:

    LAND SETTLEMENT (ENGLAND AND WALES).

    —

    Present capacity (families).

    Families in Occupation.

    As tenants or as employés on co-operative farms.

    Undergoing training and in receipt of allowances.

    Estates purchased from the Special Areas Fund.

    Welsh Land Settlement Society:

    4 Estates for Co-operative Fanning

    170‡

    149

    —

    1 Estate partly for Co-operative

    34

    24

    —

    Farming and partly small holdings.

    Land Settlement Association:

    20 Estates for small holdings

    980§

    317*

    352

    In addition 12 men are undergoing preliminary training before being joined by their families.

    Estates not purchased from the Special Areas Fund but assistance being given from that fund towards settlement.

    Land Settlement Association:

    2 Estates for small holdings

    66

    37†

    24

    Durham County Council:

    9 Estates for small holdings

    192

    67

    125

    Glamorgan County Council:

    1 Estate for small holdings

    20

    —

    13

    Monmouthshire County Council:

    1 Estate for small holdings

    40

    40

    —

    * Includes ten Rural Tenants.

    † Includes five Rural Tenants. These tenants are placed on various estates for demonstration purposes.

    ‡ This total of 170 does not include the vacancies which will be available on one Estate which is not yet ready to receive settlers.

    § This total of 980 does not include the capacity of four estates which have been acquired, but where development is in suspense pending consideration of the forthcoming report of the Dampier Committee.

    DISABLED EX-SERVICE MEN.
    Mr. McEnteeasked the Minister of Labour how many men are on the King's Roll and registered as unemployed at the Walthamstow Employment Exchange?
    Mr. E. Brown: On 3rd April, 1939, 65 disabled ex-service men were registered at the Leyton and Walthamstow Employment Exchange as unemployed.
    Mr. McEntee: Is the right hon. Gentleman aware that in Walthamstow many war equipment contracts are being carried out, and will he make an effort to get the contractors to employ a reasonable percentage of these men?
    Mr. Brown: I have made inquiries and I find that four local authorities employ 108 ex-service men and 113 firms employ 616 men.
    Mr. McEntee: Is not that the ordinary percentage which they are compelled to
    2466
    employ to be on the Roll, and will the right hon. Gentleman make a special effort to get a larger percentage of these men employed?
    Mr. Brown: We are constantly doing that.
    Mr. McEnteeasked the Minister of Labour how many men are on the King's Roll in England and Wales, and are now unemployed; and will he consider making it a condition that those receiving Government contracts for war equipment shall employ a percentage of these men sufficiently high to absorb those now unemployed?
    Mr. Brown: On 3rd April last the number of disabled ex-Service men registered at Employment Exchanges in England and Wales as unemployed was 25,481. As regards the second part of the question, the hon. Member will be aware that, save in exceptional circum-

    2467
    stances, only firms on the King's Roll may tender for Government Contracts. As the local King's Roll committees are always on the look-out to increase the number of disabled ex-Service men employed by particular firms in the light of the circumstances of each case, I do not think any useful purpose would be served by trying to lay down a general rule such as the hon. Member suggests.
    Mr. McEntee: Does the right hon. Gentleman not think it is a pretty disgraceful thing that 25,000 people of this class can be out of work when we are spending hundreds of millions of pounds on war work?
    Mr. Brown: I do not agree with that. Of course if you take the total number of men employed the percentage would be shown to be very small.
    Mr. Poole: Is it not the case that many of these men are unemployed through premature old age due to War service, and will the right hon. Gentleman not take some steps, in conjunction with the Minister of Pensions, to see that these men receive reasonable consideration?
    Mr. Brown: That has been the policy of successive Governments since the War. Some of these men are able to work in ordinary industrial conditions, others are fit only for light work, and there are others who are unable to work owing to their bad disability.

    DISTRESSED AREAS.
    Mr. James Griffithsasked the Minister of Labour whether he is now in a position to announce the Government's proposals for assisting those distressed areas not covered by the existing Special Areas Acts?
    Mr. E. Brown: I regret that I am not yet in a position to make an announcement.
    Mr. Griffiths: In view of the fact that there has been a delay of many months, and that the session is rapidly drawing to a close, may we have an assurance that legislation will be brought forward this Session?
    Mr. Brown: That assurance has been given more than once.
    Mr. Griffiths: Will the right hon. Gentleman repeat it now?

    MERSEYSIDE.
    Mr. Kirbyasked the Minister of Labour how many men and boys were registered as unemployed in the shipbuilding and ship-repairing trades on Merseyside on 31st December last; and how such figures compare with 31st December, 1937?
    Mr. E. Brown: At 12th December, 1938, 4,678 insured men, aged 18–64, and 145 insured boys, aged 14–17, in the shipbuilding and ship-repairing industry classification were recorded as unemployed at Employment Exchanges in the Merseyside area. The corresponding figures for 13th December, 1937, were 4,443 men and 154 boys.
    Mr. Kirby: Can the Minister explain how it is that there is not a more apparent reduction in the number of unemployed, having in mind the work on rearmament, equipment of the Navy, and so on?
    Mr. Brown: I could not do that at Question Time.
    Mr. Kirbyasked the Minister of Labour the number of seagoing men and women of all grades who were registered at Merseyside Employment Exchanges as unemployed on the 31st December last, and the corresponding figure for 31st December, 1937?
    Mr. Brown: The available figures relate to wholly unemployed persons, aged 18 years and upwards, registered at Employment Exchanges as applicants for work as members of ships' crews (excluding fishing vessels) or as boatmen on tidal waters. The figures desired for Merseyside Employment Exchanges are 10,575 men and 197 women at 5th December, 1938, and 9,725 men and 179 women at 6th December, 1937.
    Mr. Kirby: Can the Minister explain why, in view of the rearmament programme and general activities in connection with it, there should have been more unemployed at the end of 1938 than at the end of 1937?
    Mr. Brown: The hon. Member will understand that that is why we are taking action with regard to the shipping industry.
    Colonel Ropner: Is it not a fact that there has been a large reduction in unemployment in shipbuilding centres during the last few weeks?
    Mr. Brown: That has not been equally spread, and the Merseyside is in a special position.
    Miss Wilkinson: Is it not equally true that owing to the activities of National Shipbuilding Security, Limited, there has been a decrease in the number of places where ships are built?

    CLAIMS, COURTS OF REFEREES.
    Mr. Dayasked the Minister of Labour the number of claims for insurance benefit or unemployment allowance that were considered by the courts of referees in Great Britain for the 12 months ended the last convenient date; giving particulars of how many were granted and/or disallowed?
    Mr. E. Brown: During the 12 months ended April, 1939, 491,577 claims for insurance benefit were considered by courts of referees in Great Britain, of which 123,102 were allowed and 368,475 were disallowed. In addition 8,203 claims for dependant's benefit were considered, of which 1,876 were allowed and 6,327 were disallowed. The hon. Member will, of course, recollect that appeals in connection with unemployment assistance allowances are dealt with not by courts of referees but by separate tribunals constituted under the Unemployment Assistance Act.
    Mr. Day: Are there any circumstances in which, when these cases are disallowed, the claimant has a right to appeal to the Minister?
    Mr. Brown: There is no appeal to the Minister, but of course, there is the right to appeal to the umpire.
    Mr. Poole: In view of the fact that only one in four of the claims are successful, does not this show that the tribunal is hardly the most sympathetic body to consider claims of hardship under the Military Training Bill?
    Mr. Brown: That is a most unfair conclusion to draw. If one wishes to draw a fair conclusion from these facts, one must take into consideration this proportion as against the total number of claims allowed without an appeal to the referees.

    NEW FACTORY, DOWLAIS.
    Mr. Charles Brownasked the Minister of Labour to what extent the firm
    2470
    of Bondor, who are makers of silk stockings, and who are erecting a factory at Dowlais, South Wales, are being assisted either by the Special Areas Commissioner or the Nuffield Trust; and what steps are to be taken to ensure that trade union conditions will be observed in this factory when it commences production at the end of August?
    Mr. E. Brown: A factory is being erected at Dowlais by the South Wales, and Monmouthshire Trading Estates Company, for Dowlais Hosiery Mills, Limited, which appears to be the firm to which the hon. Member refers. Assistance is being afforded to this company under the Special Areas (Amendment) Act, 1937, but it would be contrary to practice to give details of such assistance and I am not in a position to give information about the Nuffield Trust. In reply to the last part of the question, I would refer the hon. Member to the answers given to the hon. Member for Linlithgow (Mr. Mathers) on 1st December, 1938, and the hon. Member for West Fife (Mr. Gallacher) on 6th March, 1939. In the present case I am informed that the employers have agreed with the appropriate trade union to pay full union rates as soon as the personnel have been trained.
    Mr. Hicks: Is it not always guaranteed, if any public money is advanced, that the Fair Wages Clause is observed?
    Mr. C. Brown: Is the right hon. Gentleman aware that the conditions which they are prepared to observe mean that they are not prepared to pay trade union rates until four years after beginning production?
    Mr. E. Brown: If the hon. Member will look at the answer, he will see that I made full inquiries.
    Mr. A. Edwards: Will the right hon. Gentleman consider making it a condition of such grants in future that the manufacturers shall produce only stockings that will not ladder, and is he aware that such a process is available and that the manufacturers will not allow it to be-exploited?
    Mr. Brown: I am not aware of that.

    VOLUNTARY TRAINING.
    Mr. Brookeasked the Minister of Labour whether he will arrange to admit

    2471
    volunteers under 20 or over 21 years of age to training courses of a civil character for work of national importance on terms similar to those proposed for men who enter such a course in lieu of compulsory military training?
    Mr. E. Brown: The various training schemes of the Ministry are already available, subject to certain conditions, to unemployed persons of this age. I am not aware of any ground for extending these facilities as suggested.
    Mr. Brooke: May I take it that the Minister will not close the door to any further development of his own policy of voluntary training schemes?
    Mr. Brown: I shall do all I can to increase the instructional work of the Ministry.

    NEW ORDNANCE FACTORIES.
    Mr. J. Griffithsasked the Minister of Labour whether he will take steps to ensure that the recruitment of labour for the new ordnance factories is made through the Employment Exchanges; and whether he will undertake to see that preference is given to workmen who have been unemployed for a long period?
    Mr. E. Brown: As regards the first part of the question, I would refer the hon. Member to the reply which I gave to my hon. Friend the Member for Widnes (Mr. Pilkington) on 11th May. As regards the second part, I can assure the hon. Member that Employment Exchanges will continue to give, as they are giving, every consideration to the claims of suitable applicants who have been long unemployed.
    Mr. Griffiths: The right hon. Gentleman has referred to a reply to a previous question. Can he say what is the effect of that reply?
    Mr. Brown: I said that this particular point was under active consideration.

    CONSCIENTIOUS OBJECTORS.
    Mr. Sorensenasked the Minister of Labour whether he is aware that A. H. Gleave was dismissed from his employment by R. Fulding and Son, builders, of Blackpool, after the manager of the firm had inquired as to his attitude to military training; whether he is aware that H.
    2472
    Leggatt, of Leyton, was informed at the employment exchange that he was liable to suspension of benefit because he had refused, on conscientious grounds, an offer of work as an engineer at Woolwich Arsenal; what action he is taking to see that such men receive unemployment benefit, and are not penalised twice because of their convictions; and whether he will take steps to make it clear that the growing practice of victimisation and persecution by employers is not in the best interests of this country?
    Mr. E. Brown: I will make inquiry into these cases so far as regards any action alleged to have been taken by my Department. If a claim to unemployment benefit is made the hon. Member knows that it will be decided by the statutory authorities and is not under my control. As regards the last part of the question, I have had one or two letters on this subject, and I am looking into them.
    Mr. Sorensen: Is the right hon. Gentleman aware that the practice of victimising employés for their conscientious convictions is growing, and, in view of the fact that very strong opinions upon this subject are by no means confined to this quarter of the House, will he make a public statement to the effect that this persecution should stop?
    Mr. Brown: I am sure that it would not be the desire of the country that any such cases should happen.

  MILITARY TRAINING.

    YOUTHS (DISCHARGE FROM EMPLOYMENT).
    Sir Thomas Rosbothamasked the Minister of Labour whether he is aware that employers are dispensing with the services of young men approaching the age of 20; and what action he proposes to take to safeguard the employment of these young persons and their future prospects in life in such cases?
    Mr. Shinwellasked the Minister of Labour whether he is aware that evidence is accumulating daily of youths approaching the age of 20 being discharged from their employment; and whether the action proposed to be taken to prevent or penalise evasion of the responsibilities thrown upon employers under the Military Training Bill will be retrospective in character?
    Mr. E. Brown: I have had a few letters alleging that employers have dispensed with the services of young men approaching the age of 20 on account of their obligation to undergo military training, but I have no ground for supposing that these are other than isolated cases. There are powers under the Military Training Bill to enable me to make regulations restraining employers from terminating the employment of their employés in such circumstances, and I shall not hesitate to use these powers in any way that seems likely to be most effective. Any such regulations would take effect from the date on which they are made.
    Mr. Shinwell: Is the right hon. Gentleman aware that, in addition to the letters which he has received, many hon. Members have also received letters which indicate that these cases are more widespread than the right hon. Gentleman has suggested? As to the regulations, may I ask whether he intends to issue the regulations he has in mind immediately so as to restrain employers who have taken action, and, if not, what is to be done in the case of those men who have already been dismissed?
    Mr. Brown: I cannot make the regulations retrospective, or issue them until the Bill becomes an Act, which is not until to-morrow.
    Mr. Shinwell: Did not the Parliamentary Secretary in the Committee stage say that the regulations would be retrospective in so far as dealing with employers who sought to evade their responsibilities was concerned?
    Mr. Brown: I think the hon. Member is mistaken. He is recalling a statement made on another issue.
    Mr. Wedgwood Benn: Inasmuch as the regulations have been drafted with a view to being enacted to-morrow, will the right hon. Gentleman lay the regulations to-night so that we may see them?
    Mr. Brown: I have not said that they are in draft. I have said that I will produce them as soon as I can directly the Bill becomes an Act to-morrow.
    Mr. Benn: Are they in draft or not?
    Mr. Brown: Not at the moment.
    Mr. Mander: Pending the issue of the regulations what are those persons to do
    2474
    who claim to have been dismissed? Should they communicate with the right hon. Gentleman and state their case? There are many who would like to know.
    Mr. Brown: I should like to know the cases to which the two hon. Members are referring.
    Mr. Hammersley: Is the right hon. Gentleman aware that, although these allegations are fairly general, there is a great difficulty in obtaining confirmatory details as to whether the allegations are genuine or not?
    Mr. Brown: It is exactly that which made me ask for particulars. The House will understand that when I produce the regulations I want them to be effective to deal with the actual cases which have arisen.
    Mr. Shinwell: If the right hon. Gentleman receives information of the kind for which he has asked, will he promise to deal with the cases immediately and make full inquiry?
    Mr. Brown: Certainly, and without any delay.
    Mr. Benn: How can employers comply with regulations if they do not see them? Why does not the right hon. Gentleman produce them at once?
    Mr. Brown: The right hon. Gentleman would be the first to complain if I produced regulations before I am authorised to make them.
    Sir T. Rosbotham: Has the right hon. Gentleman read the letter I sent him, and will he verify the facts?

    OVERSEAS COMMERCIAL TRAVEL.
    Mr. Higgsasked the Minister of Labour whether he will make arrangements to prevent men being called up for military training when they have arranged to travel overseas for commercial purposes prior to the passing of the Act until their return to this country?
    Mr. E. Brown: If cases of this kind involve hardship there is provision under the Military Training Bill for application to be made to a hardship committee for postponement of the liability to be called up for military training.

    TRAINEES (MINISTRY OF LABOUR CENTRES).
    Mr. Ridleyasked the Minister of Labour what steps he proposes to take to

    2475
    deal with the cases of men who, when undertaking a course at a Ministry of Labour training centre, are required either to interrupt their course of training in order to carry out Militia service or are called up for Militia service after completing their training course without being able meanwhile to secure employment?
    Mr. E. Brown: Any man who is called up during a course of Ministry of Labour training will be allowed to complete his course at the end of his military training, and an extension of the Ministry of Labour training will be given where this appears necessary, owing to the break. Arrangements will also be made for men called up for military training shortly after completing their course at a training centre to be given a refresher course.

    SEASONAL INDUSTRIES.
    Mr. Leslieasked the Minister of Labour whether, in view of the hardship which would ensue upon small farmers dependent on family help if their sons are called to the Colours next month, he will postpone the date until October, so that sons of military age could assist in hay-time and harvest?
    Mr. T. Williamsasked the Minister of Labour whether he is in a position to state what arrangements he proposes to make under the Military Training Bill for the calling up during the off-season of persons engaged in seasonal industries; and whether he will have special regard to the position of agriculture?
    Mr. E. Brown: In the early stages of the military training scheme, it will not be possible, save in a small number of well defined cases, to depart from the procedure of calling up men according to age. It has, however, been decided to postpone until November the calling up of agricultural workers, men engaged in the fishing industry, and anthracite miners. Men in these industries will in general receive their calling up notices on or about 1st November, to report to their units a fortnight later. In the first group to be called up in July miners, other than anthracite miners, will be called up in the ordinary proportion, but it is not proposed to call up any more miners until next March. I should add that the arrangements must necessarily be subject to any postponements in individual cases on grounds of hardship.
    Mr. T. Williams: Are we to understand from the reply that should any agricultural labourer, or anyone in the other categories specified, be called upon by mistake, he will be permitted to appeal for a postponement of the date?
    Mr. Brown: The right of appeal to the hardship committee is quite unlimited. This is a general arrangement which is thought to be common sense in the case of these particular industries.
    Mr. Benn: Is this a decision of the Ministry of Labour? It has nothing to do with the hardship committee?
    Mr. Brown: It has nothing to do with the hardship committee. The hardship committee comes into operation only on appeals by the individuals concerned.
    Mr. Benn: Is it in the power of the Ministry of Labour to exempt widows' sons and those having one-man businesses?
    Mr. Brown: This is not an exemption, but a postponement.
    Mr. R. Acland: In view of the fact that in the holiday resorts there are people who have better opportunities of getting employment in the summer than in the winter, will the right hon. Gentleman arrange that these people should be called up in the winter, or at any rate allow them to state their case?
    Mr. Brown: That is the reason the Bill is drawn in the way it is.
    Mr. Lawson: Did I understand the right hon. Gentleman to say that the calling up of miners was to be postponed until March?
    Mr. Brown: That refers to the anthracite section. Non-anthracite miners will be called up in July, and after that, the official calling up will take place in March.

    CONTRACTUAL OBLIGATIONS.
    Mr. Shinwellasked the Minister of Labour whether he has any further statement to make on the subject of contractual obligations incurred by men who are called up for training under the Military Training Bill?
    Mr. E. Brown: I assume that the hon. Member refers to the power in the Military Training Bill to make provision by Order in Council for consequential

    2477
    matters that may arise as a result of the passing of the Bill. These matters are receiving urgent consideration and the draft Order in Council, which will require the approval of Parliament will be laid before the House as soon as possible after it resumes. It is proposed that the arrangements so approved should be summarised in an explanatory leaflet which will be available to all concerned.
    Mr. Shinwell: Do I understand that the right hon. Gentleman stands by the statement which he made during the Committee stage of the Bill, namely, that when the Orders in Council are produced the Government will accept contractual obligations incurred by these men; and how soon does he expect the regulations to be presented?
    Mr. Brown: I shall present them at the earliest possible moment. It is, obviously, in the interest of all concerned that the Government's view in draft should be laid before the House, that the House should discuss it and that the men should know it.
    Mr. Shinwell: How far does the right hon. Gentleman stand by the statements which he made during the consideration of the Bill?
    Mr. Brown: I stand by all the statements which I made.

    CLYDE APPRENTICES' RESOLUTION.
    Mr. Gallacherasked the Prime Minister whether he has considered a resolution from the Cyde apprentices protesting against conscription, demanding an immediate alliance with the Soviet Union and the granting of the youth charter; and what answer he proposes to return to these demands?
    The Chancellor of the Exchequer (Sir John Simon): I understand that a communication in the sense of the hon. Member's question, purporting to represent 15,000 Clyde apprentices, has been received at 10, Downing Street. The communication was not framed in such terms as to admit of a reasoned reply.
    Mr. Gallacher: Is the Minister aware of the character of the demands in the Youth Charter, and will he be prepared to give some consideration to them in order to make the conditions generally better for the youths who are employed in industry?
    Mr. J. J. Davidson: Does the Minister think that the Military Training Bill is framed in such a way as to bring about reasonable service from these youths?

    SCOTTISH TRADES UNION CONGRESS.
    Mr. Gallacherasked the Prime Minister whether he is aware that the Scottish Trades Union Congress has declared its intention of opposing conscription by all means in its power; that it has called on all its representatives to withdraw from National Service committees; and, in view of the opposition this represents, will he consider excluding Scotland from the operations of the conscription Bill?
    Sir J. Simon: The Prime Minister is aware of the resolution adopted by the Scottish Trades Union Congress before the Military Training Bill was introduced, but he cannot regard it as being of greater weight than the considered decision of this House with regard to the inclusion of Scotland in the Military Training Bill.
    Mr. Gallacher: Is the Minister not aware that this resolution was passed last Sunday, and is he of opinion that the Military Training Bill was introduced since last Sunday? May I further ask whether he is not aware that the Scottish people would give a response such as would shatter the dictators if there were a Government they could trust?
    Sir J. Simon: The resolution which I have before me is one dated 26th April and it begins by saying that the Congress is apprehensive of the statement about to be made by the Prime Minister that afternoon; but, be that as it may, I venture to think that if the Military Training Bill applied only to England it would not truly represent the position and that Scotland would not wish to be excluded.
    Mr. Gallacher: Will the Minister give some consideration to the resolution which was passed last Sunday by the Scottish Trades Union Congress and their decision to withdraw their representatives from National Service committees?

  NATIONAL SERVICE.
  Mr. Manderasked the Minister of Labour why the questionnaire on the

  2479
  subject of National Service, sent out to members of the Society of Authors at the suggestion of the Minister of Labour, asks them to give general particulars of their political views?
  Mr. E. Brown: My Department have had informal consultations with the Society of Authors on the subject of National Service. No request was, however, made that a questionnaire should be issued to their members, nor have I been informed that any such questionnaire has, in fact, been issued.
  Mr. Mander: Is the right hon. Gentleman aware that the Incorporated Society of Authors, Playwrights and Composers have sent out to all their members a circular which includes this statement:
  "We are, at the suggestion of the Ministry of Labour, inviting members of the Society to fill in the accompanying questionnaire."
  And the questionnaire asks them to give general particulars of their political opinions. Does the right hon. Gentleman ascept that or repudiate it?
  Mr. Brown: That is a matter which has been just brought to my attention. I have not seen the questionnaire.
  Mr. Mander: Do I understand that the Ministry of Labour are opposed to any inquiry respecting the political opinions of persons who volunteer for National Service?
  Mr. Brown: I should like to see the questionnaire before I answered that question.
  Mr. Mander: I beg to give notice that, owing to the unsatisfactory nature of the reply, I shall raise the matter on the Adjournment.
  Mr. Dayasked the Minister of Labour the number of persons, male and/or female, separately, that have volunteered to date for National Service; and in what way and with what success the entertainment industry has been asked to co-operate in this campaign?
  Mr. Brown: The number of applications for enrolment under the National Service Scheme, up to 20th May, including no doubt a certain number of applications by persons who applied to more than one service, was approximately 1,495,000 (1,045,000 by men and 450,000 by
  2480
  women). The co-operation of the entertainment industry has been freely given since the start of the campaign. The industry has invited National Service speakers to address theatre and cinema theatre audiences, and special facilities have been widely given in cinema theatres both upon the screen and for exhibits and recruiting stalls upon the theatre premises. I welcome this opportunity of expressing the Government's thanks for what the entertainment industry has done and is still doing for National Service.
  Mr. Day: Was that assistance given by all branches of the entertainment industry?
  Mr. Brown: Yes, as far as I understand.

  DOMESTIC SERVICE.
  Mr. Hicksasked the Minister of Labour whether he has now concluded his investigations into the wages and conditions of domestic workers in this country and, in this event, whether he is prepared to recommend the appointment of a Departmental Committee to investigate the whole of the problems associated with domestic service?
  Mr. E. Brown: I would refer the hon. Member to the reply which I gave to the hon. Member for Lincoln (Mr. Liddall) on 20th April.

  ICE-CREAM VENDORS.
  Mr. Rhys Daviesasked the Minister of Labour whether he will consider setting up a trade board to cover the 20,000 persons employed on tricycles in public places as ice-cream sellers?
  Mr. E. Brown: I have nothing to add to the reply which I gave to the hon. Member on 17th November last.
  Mr. Davies: Is the right hon. Gentleman aware of the very deplorable conditions under which these people are employed?
  Mr. Brown: I gave the hon. Gentleman a very full answer last November. Mr. Davies: That is many months ago.

  CIVIL DEFENCE.

    GRANTS.
    Mr. Tomlinsonasked the Lord Privy Seal whether he has considered representations from the Lancashire educa-

    2481
    tion authority respecting the differentiation in grant between the air-raid precautions works of the education committee and that of the air-raid precautions committee of the county council; and what action he proposes to take with respect thereto?
    Mr. Lipsonasked the Lord Privy Seal why the Cheltenham Education Committee has been informed that the Board of Education will pay only 50 per cent. grant on expenditure for purposes of air-raid precautions in public elementary schools, when the Government grant for general air-raid precautions expenditure is 70 per cent.?
    The Lord Privy Seal (Sir John Anderson): The exceptional rates of grant provided under the Air-Raid Precautions Act are directly related to the discharge of the general responsibilities of local authorities under that Act and are not in any way relevant to the measures which local authorities, in common with other bodies and persons, may have to take, and expenditure which they may have to incur, in meeting the requirements of civil defence in the sphere of their own specific responsibilities. Normally, Ciivl Defence measures in connection with a grant-aided service attract grant at the rate appriate to that service.
    Mr. Tomlinson: Is the right hon. Gentleman aware of the grave dissatisfaction which is felt in all local education quarters in consequence of this differentiation; and can he not do something to deal with a position in which the same people, administering the same Act of Parliament, are to receive two different rates of grants for what is to all intents and purposes the same service?
    Sir J. Anderson: I think it is a purely accidental circumstance that they happen to be the same people, and I would point out to the hon. Member that the anomaly, as he sees it, is not confined to the case of education, but applies to public utilities and in many other respects.
    Mr. Lipson: Is the right hon. Gentleman aware that local education committees and also local authorities regard this decision of his as a breach of the undertaking arrived at with them; and is it really worth while antagonising the local authorities, and losing their good will by
    2482
    allowing this question to arise; and will he re-consider the matter?
    Sir J. Anderson: It is not a decision of mine at all. My responsibility in this matter is confined to air-raid precautions in general.
    Mr. Denvilleasked the Parliamentary Secretary to the Board of Education whether he is aware that the St. Helens Borough Council, following a deputation to London, were informed by the Home Office, the Board of Education, and the Treasury that sanction could be given for protective measures by local authorities for council schools but not in the case of non-provided schools on the ground that it is the responsibility of the managers to provide protection in time of danger; and will he take action to grant the same measure of assistance to non-provided schools?
    The Parliamentary Secretary to the Board of Education (Mr. Kenneth Lindsay): My hon. Friend appears to be under a misapprehension. As indicated in paragraph 11 of the Board of Education Circular 1467, issued on 27th April, of which I am sending him a copy, approved expenditure incurred by local education authorities on the construction of shelter trenches or the provision of equipment and materials for sandbagging, protection of windows and first aid equipment in respect of non-provided as well as provided elementary schools will be eligible for grant from the Board. A deputation from the St. Helens local education authority were informed to this effect on 20th April last.

    EQUIPMENT (SUPPLIES).
    Mr. Ridleyasked the Lord Privy Seal how many areas are still not completely supplied with fire-fighting appliances, first-aid equipment, and gas masks for air-raid precautions purposes?
    Sir J. Anderson: Adequate equipment for training purposes in general air-raid precautions has been issued to all areas that have applied for it. A substantial amount of mobilisation equipment has been issued to the areas chiefly exposed to risk and further supplies are issued as and when they are received from manufacturers. No area is however fully supplied yet with all equipment. Civilian gas masks have been issued in full to all areas except remote districts where the

    2483
    risks of attack are considered small. Reserve supplies are available. As regards fire-fighting equipment no area has yet received its full equipment, but deliveries are now in general satisfactory.
    Mr. Ridley: Is the right hon. Gentleman aware that the absence of complete supplies is causing grave anxiety to a large number of people; and when is he likely to be in a position to make a more satisfactory statement?
    Sir J. Anderson: The House will realise that however greatly the programme of supplies may have been accelerated—and it has been very greatly accelerated—some substantial time must elapse before it can be completed.
    Mr. Poole: Is the right hon. Gentleman aware that there are some authorities who have applied for equipment and who have not the necessary equipment with which to train their air-raid wardens?
    Sir J. Anderson: There may be some such areas, but I think it will be found in all cases that they are remote areas, in which the risk of attack is not great. It is necessary to proceed on some system of priority.
    Mr. Poole: With all due respect, surely the Minister does not regard the Midlands as a remote area which is immune from attack?
    Sir J. Anderson: Portions of it may be.

    STEEL SHELTERS (COST).
    Mr. Stokesasked the Lord Privy Seal whether he is aware that the cost price of the standard unit steel shelter, the total weight of which is 8½ cwt., exclusive of distribution charges but including profit, should not exceed £5; and how many such shelters has his Department ordered?
    Sir J. Anderson: No, Sir. The production costs of the steel shelter are subject to investigation by the Import Duties Advisory Committee, and I am satisfied that the estimated average price which I gave in reply to a previous question by the hon. Member on 16th May is reasonable. That price included of course a substantial item representing cost of fabrication. The number of standard units ordered to date is 1,400,000.
    Mr. Stokes: In view of that reply and the reply which the Minister gave on 16th May, may I ask him whether he is aware that competent people estimate that the cost of these shelters should not exceed £5; and that if the order which the Minister implies has been placed by his Department for over 1,000,000 shelters is adhered to at the price indicated, it means that some manufacturer is clearing off with something like £2,000,000 on that particular order?
    Sir J. Anderson: It is not a question of "some manufacturer" because arrangements have been made with the federation and with the industry as a whole. The Import Duties Advisory Committee, with whom I am in touch, and who have undertaken an investigation into the case, are, from my point of view, the most competent and the most impartial body available for that purpose.
    Sir Irving Albery: Has the right hon. Gentleman received any offers from responsible firms to supply these shelters at a materially lower price?
    Sir J. Anderson: No, Sir.
    Mr. Stokes: Is the Minister aware that he will not get any competitive prices and he will have to insist on having the price reduced to the proper level?
    Mr. De la Bère: Is not this whole matter thoroughly unsatisfactory?
    Mr. Stokesasked the Lord Privy Seal whether he is aware that manufacturers of the Home Office type of steel shelter, the total weight which is approximately 800 lbs., are retailing them to the general public at £10 each, and, as the cost including delivery and a margin of profit should not exceed £7, what he is doing to control the price of these shelters to the public?
    Sir J. Anderson: If the hon. Member has in mind steel shelters of the standard Home Office design, I can only say that the manufacturers are under agreement not to sell this type of shelter to the general public. When adequate supplies are available I will make an announcement regarding the channel through which the general public may purchase the shelters, and the price.
    Mr. Stokes: Is not the Minister aware that the manufacturers are, in fact, quoting to the general public at this price

    2485
    and that competent people are satisfied that this kind of material should not cost more than £18 a ton delivered?
    Sir J. Anderson: The standard type of shelter is not quoted to the public.
    Mr. Stokes: Is the Minister aware that I myself have received a quotation from a manufacturer for this kind of material.
    Sir J. Anderson: Perhaps the hon. Gentleman will be good enough to send me particulars.
    Sir Percy Harris: Does not this suggest the necessity for a real Ministry of Supply?
    Sir I. Alberyasked the Lord Privy Seal whether he will obtain figures giving the highest and lowest inclusive costs for erecting Anderson shelters in certain selected districts in order that some useful guidance in this matter may be made available?
    Sir J. Anderson: The physical conditions which determine the cost vary so much from place to place that I do not consider that figures chosen in the manner suggested would, in fact, afford any useful guidance.
    Sir I. Albery: Does my right hon. Friend propose to take steps to provide some guidance as to the cost of erecting shelters, and has his attention been drawn to the fact that in some areas their erection is very expensive?
    Sir J. Anderson: I think that there is a misapprehension here. It is not a question as between one area and another, but between one type of soil and another, and the cost undoubtedly varies within a considerable range.
    Miss Wilkinson: If the right hon. Gentleman provided a suitable test case for a whole area, say, in London, which covered 2,000,000 people, surely that would provide sufficient guidance for a big area?
    Sir J. Anderson: I do not think it is necessary to provide guidance to the local authorities who are dealing with this matter, and who have their own competent advisers.
    Miss Wilkinson: But the people have to pay for these things?
    Sir J. Anderson: No, these things are being erected by the local authorities.

    AIR-RAID PRECAUTIONS SCHEMES.
    Mr. C. Brownasked the Lord Privy Seal why such long delays occur before the sanction or otherwise of the Home Office is given to schemes in connection with air-raid precautions put for ward by some local authorities, even after they have been asked by the Home Office to speed up certain work; and why the scheme for a cleansing station put forward by the urban district council of Sutton-in-Ashfield, Nottinghamshire, on 18th April, has neither been sanctioned or refused up to the present?
    Sir J. Anderson: The Department is making every effort to assist local authorities to expedite the progress of their Civil Defence measures: but decisions cannot be given without proper consideration, particularly in a case which, like that to which the hon. Member refers, raises technical problems and involves the acquisition of property. The Department's Regional Officer has been in communication with the scheme-making authority regarding this particular case, and I expect that a final decision will be taken very shortly.

    NORTH QUEENSFERRY.
    Mr. Gallacherasked the Lord Privy Seal whether he is aware of the grave dissatisfaction in North Queensferry, a particularly vulnerable spot in the event of air raids, at the refusal of the authorities to make adequate provision for air-raid precautions; that an air-raid precautions official has declared that only splinter proof shelters are required in the village, and that attempts have been made to dissuade from the use of a deep and efficient mineral railway tunnel situated nearby for air-raid precautions purposes; and whether he will arrange for a more thorough examination to be made on the spot with a view to arranging for the evacuation of the population of North Queensferry in whole or part on the out break of hostilities, and other means of ensuring protection to the people of North Queensferry?
    Sir J. Anderson: North Queensferry is included in the areas in which the Government's shelter policy will be applied in full, but I have not had referred to me any proposals for any special arrangements for shelter in this area nor any statement of the grounds on which it might be urged that such special provision is required.
    Mr. Gallacher: Is the Minister aware that North Queensferry lies at the north end of the Forth Bridge and will, as a consequence, be one of the areas in serious danger; and is he aware that there is deep dissatisfaction at the absence of arrangements for deep shelters or the use of the tunnel? Will the right hon. Gentleman arrange for one of his representatives to visit North Queensferry with me when I am there on Tuesday?
    Sir J. Anderson: I will see whether that is practicable, but I would like to make it clear that I must look to the local authority in the first instance to make representations on the subject.

    FREE SHELTERS (REMOVAL).
    Mr. R. C. Morrisonasked the Lord Privy Seal under what conditions householders are permitted to return their garden shelters?
    Sir J. Anderson: Under Clause 23 of the Civil Defence Bill it is within the discretion of the local authority to decide whether and in what conditions a shelter which has been provided or erected free of cost may be removed. I must make it clear however that the brick and concrete shelters of standard design are intended for cases in which the steel shelters are not suitable. Where these shelters are suitable they will not be replaced by shelters of any other design.

    UNDERGROUND CAR PARKS.
    Mr. Silkinasked the Lord Privy Seal whether he is aware of the confusion and uncertainty among local authorities as to the Government's attitude towards the erection of underground shelters having a peace time use such as car-parks; that, as a result, a number of local authorities are refraining from submitting schemes to protect the civilian population until the Government's position is made clear; and whether he will make a statement now or in the near future making quite clear what is the Government's attitude to the provision of underground car-parks which can be used as shelters in time of war?
    Sir J. Anderson: I would refer the hon. Member to the terms of the Clause dealing with the subject of underground car parks which was incorporated in the Civil Defence Bill in Committee last night. I think the terms of that Clause will make sufficiently clear the facilities which the
    2488
    Government are prepared to give for the purpose and the conditions under which these facilities can be secured.

    EVACUATION.
    Mr. Graham Whiteasked the Lord Privy Seal whether decisions have now been taken which will enable directions to be given with regard to the private evacuation, in time of emergency, of persons other than children, mothers and disabled persons; and whether such directions will have special regard to the use of roads and private vehicles?
    Sir J. Anderson: I would refer the hon. Member to the full statement on this subject made yesterday by my right hon. Friend the Minister of Health, on the Committee stage of the Civil Defence Bill.
    Mr. White: Will the right hon. Gentleman bear in mind in this connection the useful provisional code which he issued in advance of legislation in regard to the alteration of buildings in connection with air-raid precautions, and see whether he cannot usefully make some similar statement in this connection, having regard to a certain amount of public anxiety and indefiniteness in the minds of the public authorities?
    Sir J. Anderson: That is a suggestion which I have already under consideration.
    Dr. Haden Guest: Will the right hon. Gentleman draw special attention to the fact, as pointed out by the Minister of Health yesterday, that the priority classes include all women, all mothers with children under five, and all expectant mothers, because, judging from the Press reports this morning, that is not generally understood.
    Sir J. Anderson: I agree that that is a point which ought to be made perfectly clear.
    Mr. J. Griffithsasked the Minister of Health the reasons for classifying Llanelly and Buwry Port as reception areas under the evacuation scheme, in view of the fact that all the other ports in the Bristol Channel are classified as neutral areas?
    The Minister of Health (Mr. Elliot): I would refer the hon. Member to the reply which I gave to the hon. Member

    2489
    for Everton (Mr. Kirby) on 18th May, which indicates the considerations I have had in mind in classifying areas for the purpose of the Government evacuation scheme. I do not think that it will be necessary to utilise the two places to which the hon. Member refers for reception purposes under the plans as at present arranged.
    Mr. Griffiths: Do I understand that those two places will be removed from the reception area list?
    Mr. Elliot: No, Sir. I think it would be inadvisable to do so, although I do not think it will be necessary in present conditions to utilise them.
    Mr. Griffiths: Does not the right hon. Gentleman realise that local people cannot understand why those two places should be reception areas while ports on the Bristol Channel are not, and will he reconsider the matter?
    Mr. Elliot: It is sometimes difficult for local people to realise and understand the full considerations as much as the hon. Member and others would like.
    Sir John Mellorasked the Minister of Health whether he will give further consideration to boundary regions where evacuation areas and receiving areas are contiguous, where evacuation might, in some instances, consist of transferring people from their homes on one side of a boundary street to billets on the other side of the same street; and whether he will consider the demarcation of neutral belts along boundaries between evacuation and receiving areas?
    Mr. Elliot: Evacuation areas, and receiving areas, which are in any sense built up, are not normally contiguous, and there is no intention to transfer people from one side of a street to the other; but, as dispersal of the population is the objective, it is in certain cases advantageous to make use of areas that border on the evacuation areas but which are far from being congested. If my hon. Friend has any particular case in mind I shall be glad to look into it.
    Mr. Hepworthasked the Minister of Health how many local authorities in Yorkshire have made representations in relation to the classification of their district under the evacuation scheme; and the nature of such representations?
    Mr. Elliot: One local authority in Yorkshire has asked that its area, which has been classified as a neutral area, should be evacuated, and 24 local authorities have asked that their areas, classified as receiving areas, should be made neutral.

    WOMEN AMBULANCE DRIVERS.
    Mr. R. C. Morrisonasked the Minister of Health whether he is aware of the difficulty experienced by air-raid precautions departments in recruiting women motor-drivers for training in black-out conditions, due to the fact that in many industrial districts there are very few women motor-drivers, and, to overcome this difficulty, will he authorise the training as car-drivers of women who are prepared to drive ambulances in time of emergency?
    Mr. Elliot: Difficulties of the kind mentioned have been reported to me from a few areas. Where I am satisfied that it is not possible to recruit enough volunteers for the ambulance service who are already able to drive a car, I am prepared to approve suitable arrangements for providing the necessry tuition.

    LANCASHIRE AND NORTH STAFFORDSHIRE.
    Mr. Ellis Smithasked the Lord Privy Seal whether he is aware of the special attention that is required in the Lancashire and North Staffordshire areas where the density of population is greater than any other part of the country; that the inhabitants per square mile are nearly double any other part; is special attention being given to these special conditions, and what action he proposes to take?
    Sir J. Anderson: Density of population is a factor to be taken into account, especially in connection with the provision of shelters; and my Department and, I am sure, the responsible local authorities concerned, are fully alive to its importance.

    FIRST-AID POSTS, ISLINGTON.
    Dr. Guestasked the Minister of Health whether he is aware that in the Metropolitan borough of Islington, with a population of over 300,000 within 3,000 acres, there is a shortage of premises suitable for use as first-aid posts; that the board of management of the London Fever Hospital have refused to permit the borough council to equip and use a part

    2491
    of the hospital premises which is isolated from other buildings until the entire evacuation of the hospital has been carried out in time of war, although he has already approved the proposal in principle; and whether he will take steps to see that the management board of the hospital alter their decision?
    Mr. Elliot: I am aware that the borough council have had some difficulty in finding enough suitable premises as first-aid posts, but eight have now been located and these will be supplemented by four mobile units. The London Fever Hospital has now agreed that one of the eight posts should be located in the hospital.

  CURRENT EVENTS (GOVERNMENT NEWS-SHEET).
  Mr. De la Bèreasked the Prime Minister whether his attention has been drawn to the monopoly control exercised by certain persons over the Press; and as the exercise of this control is prejudicial to national interests and to supplying the public with accurate information of current events, he will consider issuing to the public a weekly news-sheet giving an authoritative report?
  Sir J. Simon: The standard of accuracy with which news is presented in responsible sections of the Press is happily high. While it is most desirable that the same high standard should be universally observed, this object would not, in my right hon. Friend's view, be attained by adopting the suggestion of my hon. Friend.
  Mr. De la Bère: Does my right hon. Friend realise the value of propaganda throughout the world and how desirable it is that British official statements should clear up misunderstandings in all parts of the world so that other countries may know what we really feel in this country and not what individuals want them to think we feel? As my right hon. Friend does not reply, may I assume that he agrees with me?
  Sir J. Simon: I think that the considerations to which my right hon. Friend referred are well understood, but there is a great deal to be said for a free Press.
  Mr. Mander: Is it not the case that when the Government have taken upon
  2492
  themselves the responsibility of issuing a statement it is often proved to be singularly inaccurate?
  Mr. Edwards: Is it not a fact mat two certain gentlemen who are dictators in certain countries in Europe have an absolute monopoly of the Press in this country and can do anything they like in the way of propaganda in that Press, whereas this country cannot get a line in their Press. Will the right hon. Gentleman consider that aspect?
  Sir J. Simon: I take it that the hon. Gentleman means that they have a monopoly of the Press in their own countries?
  Mr. Edwards: No, in this country. Every day the dictators can get everything they want in the way of propaganda published freely in this country.
  Mr. Garro Jones: Do we understand that when the right hon. Gentleman refers to a free Press he means freedom from the control of the Government, and not a Press which is in the hands of two or three private individuals?

  NATIONAL FITNESS COUNCIL.
  Mr. De la Bèreasked the Parliamentary Secretary to the Board of Education whether he will consider reorganising the National Fitness Council for England and Wales, in view of the unproductiveness of the council's work during the last two years?
  Mr. Lindsay: No, Sir, I cannot for a moment accept the suggestion that the Council's work has been unproductive. Over £1,500,000 has already been offered towards 865 schemes involving a capital expenditure of over £4,000,000 on playing fields, boys' clubs, youth hostels, gymnasia, swimming baths and expert leadership. In this way much has been done and much more will be done to meet the demands which the Act was designed to satisfy.
  Mr. De la Bère: Is my hon. Friend aware that the National Fitness Council have helped those who were not in need of help and have not helped those who really did need help; and is he further aware that when I was in Evesham yesterday I found that many of my constituents do not think the Council have done any good at all?
  Mr. Noel-Baker: Is the Minister aware that if the hon. Member will study the facts he will reach a very different conclusion?
  Mr. Acland: The Minister stated that £1,500,000 has been offered. Could he say how much has been spent?
  Mr. Lindsay: I should need to have notice of that question before I could state the exact amount, but I would point out that there is a time lag between the offering of the money and the spending of the money. In reply to the observation of my hon. Friend the Member for Evesham (Mr. De la Bère) I am glad to have had some contradiction from the Opposition benches.
  Mr. De la Bère: But he is a member of the council.
  Mr. Lindsay: The grants offered are graduated according to the poverty of the area, and the poorer areas get up to 80 or 90 per cent. grant.
  Mr. De la Bère: Is it not true that nearly the whole of this money has been wasted?
  Mr. Ellis Smithasked the Parliamentary Secretary to the Board of Education whether it is intended that this country, or an association of British people, are to be present, or represented, at the International Congress for Leisure and Recreation or Congress of Joy and Work?
  Mr. Lindsay: No, Sir. The representatives of the National Fitness Council have resigned from membership of the International Advisory Committee and other committees associated with the World Congress on Recreation and Leisure Time.
  Mr. Smith: Will the hon. Gentleman bear in mind that this decision will be welcomed by all people who have the future interests of Britain at heart, and will he point it out as an example to be followed by other people in high places, particularly certain lords and their women folk in this country?
  Mr. Mander: Will the Minister say why the British representatives resigned?
  Mr. Lindsay: Because the movement is being increasingly used by Germany as an instrument of political propaganda.

  PUBLIC ELEMENTARY SCHOOLS, COUNTY DURHAM.
  Mr. W. Joseph Stewartasked the Parliamentary Secretary to the Board of Education the number of children in average attendance at the elementary schools in the administrative county of Durham, the boroughs of Sunderland, South Shields, Darlington, Stockton, Gateshead, West Hartlepool and all Part 3 authorities in the county up to date?
  Mr. Lindsay: I will, with the hon. Member's permission, circulate in the OFFICIAL REPORT a table giving the information asked for.
  Following is the table:

  PUBLIC ELEMENTARY SCHOOLS.

  Average attendance for the year ended 31st March, 1939.

  Area.

  Average Attendance.

  Durham County

  …

  98,920

  Darlington C.B.

  …

  8,691

  Gateshead C.B.

  …

  16,225

  South Shields C.B.

  …

  14,919

  Sunderland C.B.

  …

  27,405

  West Hartlepool C.B.

  …

  9,753

  Durham B.

  …

  2,068

  Hartlepool B.

  …

  2,624

  Jarrow B.

  …

  5,228

  Stockton-on-Tees B.

  …

  9,589

  Felling U.D.

  …

  3,820

  Hebburn U.D.

  …

  3,617

  PUBLIC ASSISTANCE (NEWCASTLE-UPON-TYNE).
  Mr. David Adamsasked the Minister of Health whether he is aware that, during the first three months of the current financial year free milk was distributed at the rate of 175,242 pounds per annum at an estimated cost of £8,400 by Newcastle-upon-Tyne Corporation; and whether he is making inquiries as to the causes of the poverty indicated by this and other forms of public relief with a view to providing effective remedy for the same?
  Mr. Elliot: I am aware of the facts stated in the first part of the question. As regards the second part of the question, the Government have continually under review questions of the improvement of the condition of the people and undertake measures to secure such improvement wherever possible.
  Mr. Adams: Will the Minister kindly specify the measures which are being taken to deal with this poverty?
  Mr. Elliot: I could hardly be expected to do that in answer to a question, but I may mention the Special Areas Act as one measure.
  Mr. Adams: Does the Minister consider that the new taxes upon sugar and tobacco are aiding these people?

  VOLUNTARY HOSPITALS (FINANCIAL POSITION).
  Sir George Broadbridgeasked the Minister of Health whether he is aware of the serious financial condition of the voluntary hospitals of this country, particularly in London, due principally to reduced amount of subscriptions and falling off in donations and legacies; and whether, as this position is due to lower interest-bearing securities and increased taxation and generous public response to the Czecho-Slovakian and Jewish refugee appeals, he will take steps to assist these hospitals and so prevent them reducing the number of wards or closing down altogether?
  Mr. Elliot: I recognise the financial difficulties confronting certain of the voluntary hospitals. My hon. Friend knows that there has recently been consultation, in regard to London, between representatives of the London County Council, the King Edward VII Hospital Fund and the Voluntary Hospitals Committee for London. I am keeping in touch with these discussions and I have the matter under close consideration.
  Sir Henry Morris-Jones: Is my right hon. Friend aware of the very serious anxiety which the governing bodies of many of these hospitals in the big cities, and also the staffs, are going through at the present time? They have rendered a magnificent service to the State and will he consider the position they are in financially?
  Mr. Elliot: Yes, Sir, those are the matters which are being considered.
  Mr. Hicks: Does the Minister not think it is a tragedy that these wonderful matrons and nurses, with their great skill, have to spend so much of their time organising charities instead of utilising their skill?

  NURSING SERVICES.
  Mr. Rhys Daviesasked the Minister of Health whether, in view of the urgent necessity of attracting more young women for nursing and hospital work, and as inferior conditions have an adverse effect on such recruitment, he will take immediate steps to set up an authority on the lines of the Burnham Committee to lay down a scale of salaries for the nursing profession in accordance with the recommendations of the Inter-Departmental Committee on Nursing?
  Mr. Elliot: I have the recommendations of the Inter-Departmental Committee under consideration, but I am not yet in a position to make any announcement on the subject.
  Mr. Davies: Can the right hon. Gentleman say when a decision will be arrived at upon the points raised in this question?
  Mr. Elliot: I could not say.
  Miss Wilkinson: In view of the many appeals being made for young women to come forward as nurses does not the Minister think that the terrible conditions of nursing work in certain hospitals are one of the conditions that are militating against this great national service?
  Mr. Elliot: I have sent a circular round to the responsible authorities, and I think that to speak of "terrible conditions" is rather an over-statement at the present time.
  Sir Joseph Lamb: Is it not within the recollection of the Minister that when the matter was debated in this House he told me that a decision would be made very shortly?

  RENT RESTRICTIONS.
  Mr. James Hallasked the Minister of Health whether he is aware that, though the decontrolling provisions of the 1938 Rent Restrictions Act were justified on the grounds that they would produce no undue hardship, it can be proved that wherever the protection of the Rent Acts has been removed rents have been increased by amounts averaging between 5s. and 10s. per week; and whether, because of the hardship to many poor families, he will repeal the 1938 Rent Act and introduce a new Rent Act extending control to all working-class houses?
  Mr. Elliot: I have no information which would lead me to suppose that there has been any widespread increase in the rents of the comparatively small number of houses decontrolled under the Act of last year. I cannot adopt the suggestion in the last part of the question.
  Mr. Hall: Is the right hon. Gentleman not aware that the excessive rents charged in these cases are creating a good deal of dissatisfaction and disturbance, and is he not prepared to deal with the matter, which is of importance to a large number of working people?
  Mr. Elliot: One has to consider whether, by further legislation, one would not create greater hardship and injustice than would be removed.
  Sir P. Harris: Does the right hon. Gentleman realise the importance of this problem in London? Will he consider whether special provision cannot be made to deal with the acute problem in London where there is still a housing shortage?
  Mr. Elliot: I shall be glad to examine any evidence which the hon. Baronet cares to put before me.
  Mr. Silverman: Is the right hon. Gentleman not aware that in many working-class households the rent takes as much as 35 to 40 per cent. of the money, and does he not think that that fact alone is a justification for action?
  Mr. Elliot: There are 12,000,000 houses in this country, and 4,000,000 have been built since the War, and that is the best protection against high rents.

  SEWAGE SCHEMES, MID-GLAMORGAN.
  Mr. E. J. Williamsasked the Minister of Health the cost of the sewage schemes in the Mid-Glamorgan area, progress of construction and approximate date of their completion?
  Mr. Elliot: The cost of the trunk scheme of the Penybont Main Sewerage Board is estimated at £211,000. One section has been completed, and it is expected that the remainder will be completed within 18 months. Of the 13 schemes undertaken by the Penybont Rural District Council, work is in progress on one estimated to cost £70,000, and tenders are being in-
  2498
  vited for another, estimated to cost £1,500. The remaining schemes, which it is estimated will cost £105,500, are dependent on the trunk scheme and will be carried out as soon as the trunk scheme is completed.

  PRESERVATION OF THE COUNTRYSIDE.
  Mr. Sorensenasked the Minister of Health whether, in view of the increasing danger of the spoliation or destruction of places of natural beauty in Great Britain, particularly arising from the incidence of rearmament and similar activities, he will consult with appropriate organisations, both of a voluntary and municipal chracter, with a view to the making of a national survey of such places and the operation of swifter and more effective safeguards?
  Mr. Elliot: I do not consider that a national survey for the purposes suggested by the hon. Member would be of real use in present circumstances. The whole question of the preservation of the countryside has recently been under consideration by the Town and Country Planning Advisory Committee. In accordance with their advice I am taking measures to secure that fuller use is made of the existing powers of control.
  Mr. Sorensen: If a schedule of places were drawn up would not further data be likely to accrue?
  Mr. Elliot: The first essential is to make sure that the powers which do exist are intelligently used.
  Mr. Sorensen: Will the Minister act on the powers which he has in order to preserve these places?
  Mr. Elliot: I do not want to add to the powers until I am sure that the powers which already exist are being used.
  Viscountess Astor: Is there any way of compelling the use of the powers already in existence?
  Mr. Elliot: Intelligent public opinion must determine how Acts passed by this House are operated
  Mr. Acland: Is not the only way to prevent people from spoiling these places to pay the owner of them as much as he would get by spoiling them?
  Mr. Elliot: There are planning schemes which will eventually achieve that object.

  SMALLPOX.
  Mr. Dayasked the Minister of Health the number of cases of smallpox notified among the civilian population in England and Wales as at the 12 months ended to the last convenient date; and the total number of deaths registered during the same period which were classified as smallpox?
  Mr. Elliot: During the 12 months ended 31st December, 1938, 18 cases of smallpox among the civilian population of England and Wales were notified, and three deaths registered were classified as due to that disease.
  Mr. Day: Do the figures include those notified by the port sanitary districts?
  Mr. Elliot: They include all the cases notified among the civil population.
  Viscountess Astor: Can the right hon. Gentleman say whether all the cases had been vaccinated before?
  Mr. Elliot: No, Sir, not without notice.
  Viscountess Astor: I would like to know.

  ALIEN REFUGEES (PUBLIC ASSISTANCE).
  Colonel Sandeman Allenasked the Minister of Health whether information can now be obtained as to the number of alien refugees who have been granted public assistance to the latest convenient date?
  Mr. Elliot: I have no reason for thinking that more than a very small number of persons falling within the category which my hon. and gallant Friend has in mind are in receipt of poor relief; and in the circumstances I do not feel justified in calling for a special return from local authorities as suggested.

  PROPOSED STEEL WORKS, EDALE.
  Mr. Bossomasked the Minister of Health whether he is yet ready to make a statement concerning the preservation of Edale?
  Mr. Elliot: I am not yet in a position to add anything to my previous statements on this subject.
  Mr. Bossom: When will my right hon. Friend be able to do this, and will he give an assurance that no work will be undertaken until the matter has been straightened out?
  Mr. Elliot: Yes, Sir. I said on the last occasion that work had been stopped and that no further work was proceeding. I am unable to say when I shall be able to make a further statement in the matter. The firm is engaged in determining upon an alternative site, and until that examination has been concluded I shall not be able to make a statement.

  MEMBERS' SPEECHES.
  Mr. Edwards: I desire to ask you, Mr. Speaker, whether you are prepared to advise the House as to the best step that should be taken to enable a greater number of Members to take part in Debates on subjects which arouse general interest, such as foreign affairs?
  Captain Cazalet: May I put to you, Mr. Speaker, a point of view arising out of the recent Debate on Palestine? I am not, of course, raising any question about the absolute right of the Chair to call whom it likes when it likes, but merely the one issue of the inordinate length of speeches. Out of 11 hours' Debate on Monday and Tuesday, official party speakers and Privy Councillors occupied just over eight hours. The average length of their speeches was 40 minutes. Only seven ordinary back-bench Members spoke. One of these spoke for an hour; one delivered a maiden speech; and one was the hon. Member for Bridgeton (Mr. Maxton), who, perhaps, is hardly an ordinary Member. Excluding these, only four completely ordinary back-bench Members spoke, and all of them limited their speeches to the comparative brevity of 20 minutes. I would put it to you, Sir, that when a very considerable number of Members in all parts of the House feel strongly on a particular issue, that only some six out of 600 should be able to speak is really a denial of free speech and a negation of Parliamentary government. If the time for debate is strictly limited, speeches must also be limited. I recognise that one of the results—
  Mr. Buchanan: On a point of Order. [Interruption.] I understood that the hon. and gallant Member was putting a further question to you arising from the question addressed to you by the hon. Member for East Middlesbrough (Mr. Edwards).
  Sir I. Albery: On a point of Order. Is it in order, when one hon. Member has risen to put a point of Order, for another hon. Member also to rise to put a point of Order?
  Mr. Buchanan: The matter now appears to have become a subject of debate, and in that case I think I ought to be allowed to make similar comments to those of the hon. and gallant Member for Chippenham (Captain Cazalet).
  Mr. Speaker: I think it would probably be more convenient if I were allowed to answer the original question that was put to me. The subject which has been raised by the hon. and gallant Member for Chippenham (Captain Cazalet) is covered in the reply which I propose to give.
  Captain Cazalet: You have on former occasions offered to the House certain advice on this matter, but it has been followed for only a very short time.
  Mr. Speaker: I am quite prepared to advise the House as to the steps that might be taken to enable a greater number of private Members to take part in Debates, but whether it follows my advice or not is quite another matter. I have done so on previous occasions, and my advice has either fallen on deaf ears or on unruly tongues. The suggestion I have to make, and it is one that I have made a good many times to the House, is that Members—and when I speak of Members I make no distinction; I include, Ministers, Privy Councillors and private Members—should all curtail the length of their speeches. The remedy for that, unfortunately, is not in my hands; it is entirely in the hands of the Members concerned, and is a matter over which the Chair, as the Chair, has no control whatever.
  The hon. and gallant Member for Chippenham made some remarks with regard to Time-tables for Debates. Under the system which is now very often operated in this House, of a Time-table, either by agreement or by the Guillotine, under which the Debate is curtailed and a
  2502
  Time-table fixed, it seems almost an obvious corollary that there must be some time limit to the length of speeches. The Debate on Palestine last Monday, to which the hon. and gallant Member referred, was a flagrant case in which a few Members monopolised the time of the House. Twelve Members took part in the Debate, and, except for three short speeches, the other Members occupied an average of 40 minutes each. From these figures it would seem that the Chair is helpless to get more Members into the Debate.
  Perhaps, as my advice is not always taken on this subject, my experience may have a greater effect than my advice. I venture to say that no one has listened to more speeches than I have, nor has anyone been in a better position to judge of their merits. I assure the House that, with few exceptions, the short speeches are the best and most effective. It is reputed that Disraeli, when he was once asked by a new Member whether he advised him to take part often in the Debates of the House, replied, "No, I do not think you ought to do so. It is much better that the House should wonder why you do not speak than why you do." My advice in this matter is very much the same with regard to the length of speeches as that given by Mr. Disraeli; it is much better, when a Member resumes his seat after he has made a speech, for the House to have the feeling that they wish he had gone on longer instead of wondering why he did not stop sooner.
  Mr. Edwards: I am sure that the whole House appreciates very much the terms of your reply. If I may say so, it was a magnificent speech. There is one question I would ask you. I wonder whether you recall the statement made, I think by the right hon. Member for Epping (Mr. Churchill) who, following a certain hon. Gentleman who had taken an hour, said that no Member had compressed so many words into so few thoughts. I want to ask you, will you contemplate the position that Members may find themselves in if during the Recess we should happen to be suddenly recalled, as we have been recalled before, and 600 odd Members come here representing their constituents—I assume we all come here on a parity—but we come and follow the general practice, and we know for certain that at the beginning of the proceedings we shall listen to the Prime Minister, the Leader of the Opposition, the Leader of

  2503
  the Liberal party and perhaps the Leader of the Independent Labour party. We shall then listen to the right hon. Member for Epping and the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and the right hon. Member for Warwick and Leamington (Mr. Eden), who since he took a back seat has come very much to the fore; and then, perhaps, we shall have the hon. and learned Member for East Bristol (Sir S. Cripps) and the right hon. Member for Bow and Bromley (Mr. Lansbury). Do Privy Councillors have any special privileges in this House? Many of these right hon. Gentlemen never come to this House except when they want to speak. I think it is not unfair to say that many of them take no part whatever in the general work of the House; they walk in here, and seem to assume that they have a right to speak.
  Mr. Speaker: I must not myself disregard the advice I have just given, by making a long speech. It does appear that some Members are more often called than others, but on matters of great importance, such as foreign affairs, and so on, it is generally the Members who have some special knowledge of the particular subject before the House, who often speak as representing a considerable body of opinion. There are also the Members to whom the hon. Member has referred, the Privy Councillors, who by tradition and practice have a greater right to be called than other Members. [HON. MEMBERS: "Why?"] It has been the common practice of the House for many years. With regard to those Members, the Privy Councillors, I do make the suggestion that I hope they will show consideration for other Members who wish to be called, and will never abuse the privilege which, according to long-established practice, they undoubtedly enjoy.
  Wing-Commander James: Arising out of the original question. Having regard to the fact that there is some misunderstanding in the Press, particularly in the "Times," may I bring to your notice the fact that on the second day of the Palestine Debate, out of three hours and 23 minutes of debating time, and excluding a comparatively short winding-up speech, only 18 minutes fell to supporters of the Government Motion on the Paper?
  Mr. Speaker: I do not think that that alters the opinion which I have already given, as on the previous day some Members monopolised too much time.
  Mr. Sandys: It is sometimes the practice for the Chair to ask Members, before they are called, for an assurance that they will limit their remarks. I wonder whether that could not be a more usual practice, as it would ensure shorter speeches?
  Mr. Speaker: I do that myself. Some Members faithfully carry out this undertaking but there are some Members who tell me that they will speak for 10 minutes and then they speak for half an hour.

BUSINESS OF THE HOUSE.
Mr. Attlee: Will the Chancellor of the Exchequer state what will be the business, upon the resumption after the Whitsuntide Recess, and for what purpose he is moving to suspend the Eleven o'Clock Rule to-night?
Sir J. Simon: The business for the first week after the Whitsuntide Recess will be:
Monday, 5th June—Supply (7th Allotted Day), Committee. The Ministry of Labour Vote will be considered.
Tuesday, 6th June—Report and Third Reading of the Unemployment Insurance Bill, and of the Wheat (Amendment) Bill; Second Reading of the Air Ministry, (Heston and Kenley Aerodromes Extension) Bill and Committee stage of the Money Resolution; Committee and Remaining stages of the Public Trustee (General Deposit Fund) Bill, and, if there is time, Report and Third Reading of the Local Government Amendment (Scotland) Bill.
Wednesday, 7th June—Supply (8th Allotted Day), Committee. The Colonial Office Vote will be considered.
Thursday, 8th June—Second Reading of the Ministry of Supply Bill, and Committee stage of the necessary Money Resolution.
Friday, 9th June—Supply (6th Allotted Day—Second part), Committee. The Vote to be considered will be announced later.
On any day, if there is time, other Orders may be taken.

2505
As regards the suspension of the Eleven o'Clock Rule to-night, on which the Leader of the Opposition also put a question, I understand that the Lords Amendments to the Military Training Bill will shortly be received from another place. I am informed that the Amendments are mainly of a drafting character. Two, I believe are little more than drafting in character. One is a new Clause proposed in order to carry out an undertaking given by my right hon. Friend the Secretary of State for War during the Report stage in this House. Arrangements have been made for the Lords Amendments to be printed and made available in the Vote Office at about Eight o'Clock this evening. From conversations which have taken place through the usual channels it would seem to meet the general convenience of the House if the Amendments were taken tonight. Accordingly, it is proposed to suspend the Eleven o'Clock Rule in order that the Lords Amendments should be taken immediately after the Second Reading of the Finance Bill.
Mr. Shinwell: On the question of the business after the resumption, can the right hon. Gentleman say how soon after the passing of the Military Training Bill the Government will be in a position to present the regulations relating to the hardship committees and to the question of contractual obligations?
Sir J. Simon: I am afraid that I cannot give a date about that at the moment. Perhaps the hon. Gentleman will put the question again.
Mr. Shinwell: Does the right hon. Gentleman appreciate that it is desirable to have those regulations presented to the House at a very early date because of the uneasiness that exists among persons who will be called up and their dependants?
Sir J. Simon: I think an assurance has already been given that they will be presented as soon as possible.
Mr. Benn: Does the Chancellor of the Exchequer realise that the regulations will become operative between employer and conscript as from to-morrow, and that nobody yet knows what the regulations are?
Mr. R. C. Morrison: Would the right hon. Gentleman explain why it is that after an appeal was made to Members
2506
of all parties to assist the Government in getting the Civil Defence Bill through its Committee stage because it was urgently required, and after that appeal has been successful, a great deal of work having been got through by the wholehearted co-operation of all parties, the Government now propose to allow another week to pass without dealing with the further stages of the Bill?
Sir J. Simon: I think it is the case that some changes were made, and the Bill has to be revised, reprinted, circulated and considered. I imagine that these are the reasons why it is thought well to take this other business in the first week after we reassemble.
Mr. Maxton: Would it not be possible for the one substantial Amendment which the Lords have made to the Military Training Bill to be made available in other than printed form, for circulation among the parties, at an earlier hour than eight o'clock to-night? Surely it would be possible to have a few duplicated copies made? [HON. MEMBERS: "For whom?"] For circulation among the parties, as is frequently done.
Sir J. Simon: I quite understand the hon. Gentleman's reasons for desiring that, but we do not know as yet quite when we shall get the Bill from the Lords. We will consider whether something of that sort can be done, if there is time.
Mr. Benn: May I ask what really stands in the way of the circulation to the House of the draft regulations under the Military Training Bill? They must exist.
Sir J. Simon: I cannot personally give an explanation, because I do not know, but I am under the impression that the matter was raised with the Minister of Labour.
Miss Wilkinson: May I point out that there are very large numbers of transactions which will be affected when these young men are called up, and that Members of the House are being deluged with inquiries as to what is going to happen to the mass of contracts that have been entered into?
Sir J. Simon: I really do not think the hon. Lady need suspect that it is not appreciated that the regulations are

2507
wanted as soon as possible. The Minister of Labour has already said that he is doing it as quickly as he can.
Sir P. Harris: Is the right hon. Gentleman aware that some people have actually been dismissed in anticipation of the Bill becoming law? That makes it seriously urgent that the regulations should be published as early as possible, even if only in a preliminary form.
Sir J. Simon: I do not know that it would be wise to publish them in any other than the correct form, but I recognise, and I am sure my right hon. Friend
recognises, that it is the general desire to have the regulations as soon as possible.
Mr. Benn: How would an employer be subject to a regulation which is to become operative to-morrow when the regulation is not in his hands?
Mr. Gallacher: Why do you not do the country a service and resign?
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)."—[Sir J. Simon.]
The House divided: Ayes, 223; Noes, 113.

Division No. 153.]

AYES.

[4.9 p.m.

Acland, R. T. D. (Barnstaple)

Duckworth, Arthur (Shrewsbury)

Lyons, A. M.

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

Duncan, J. A. L.

Mabane, W. (Huddersfield)

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

Edmondson, Major Sir J.

MacAndrew, Colonel Sir C. G.

Albery, Sir Irving

Elliot, Rt. Hon. W. E.

MacDonald, Rt. Hon. M. (Ross)

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

Ellis, Sir G.

Macdonald, Capt. P. (Isle of Wight)

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

Emrys-Evans, P. V.

McEwen, Capt. J. H. F.

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

Entwistle, Sir C. F.

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

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

Everard, Sir William Lindsay

Macquisten, F. A.

Assheton, R.

Fildes, Sir H.

Maitland, Sir Adam

Astor, Viscountess (Plymouth, Sutton)

Fleming, E. L.

Mander, G. le M.

Balniel, Lord

Fox, Sir G. W. G

Manningham-Buller, Sir M.

Barrie, Sir C. C.

Fremantle, Sir F. E.

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

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

Furness, S. N.

Markham, S. F.

Beechman, N. A.

Fyfe, D. P. M.

Marsden, Commander A.

Bennett, Sir E. N.

George, Major G. Lloyd (Pembroke)

Maxwell, Hon. S. A.

Bernavs, R. H.

George, Megan Lloyd (Anglesey)

Meller, Sir R. J. (Mitcham)

Boothby, R. J. G.

Gluckstein, L. H.

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

Bossom, A. C.

Goldie, N. B.

Mills, Sir F. (Leyton, E.)

Boulten, W. W.

Grant-Ferris, Flight-Lieutenant R.

Mills, Major J. D. (New Forest)

Brass, Sir W.

Greene, W. P. C. (Worcester)

Mitchell, H. (Brentford and Chiswick)

Briscoe, Capt. R. G.

Gridley, Sir A. B.

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

Broadbridge, Sir G. T.

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

Moreing, A. C.

Brooke, H. (Lewisham, W.)

Grigg, Sir E. W. M.

Morgan, R. H. (Worcester, Stourbridge)

Brown, Rt. Hon. E. (Leith)

Grimston, R. V.

Morris-Jones, Sir Henry

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

Guest, Lieut.-Colonel H. (Drake)

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

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

Hambro, A. V

Munro, P.

Bull, B. B.

Hammersley, S. S.

Nall, Sir J.

Bullock, Capt. M.

Hannah, I. C.

O'Connor, Sir Terence J.

Burton, Col. H. W.

Harris, Sir P. A.

Orr-Ewing, I. L.

Butcher, H. W.

Hely-Hutchinson, M. R.

Palmer, G. E. H.

Cartland, J. R. H.

Heneage, Lieut.-Colonel A. P.

Patrick, C. M.

Carver, Major W. H.

Hapburn, P. G. T. Buchan-

Peake, O.

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

Hepworth, J.

Peat, C. U.

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

Herbert, Lt.-Col. J. A. (Monmouth)

Perkins, W. R. D.

Cazalet, Thelma (Islington, E.)

Higgs, W. F.

Peters, Dr. S. J.

Cazalet, Capt. V. A. (Chippenham)

Hore-Belisha, Rt. Hon. L.

Petherick, M.

Channon, H.

Horsbrugh, Florence

Pickthorn, K. W. M.

Chapman, Sir S. (Edinburgh, S.)

Howitt, Dr. A. B.

Pilkington, R.

Cobb, Captain E. C. (Preston)

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

Ponsonby, Col. C. E.

Colman, N. C. D.

Hunloke, H. P.

Pownall, Lt.-Col. Sir Assheton

Colville, Rt. Hon. John

Hutchinson, G. C.

Radford, E. A.

Conant, Captain R. J. E.

James, Wing-Commander A. W. H.

Raikes, H. V. A. M.

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

Jennings, R.

Ramsay, Captain A. H. M.

Cox, H. B. Trevor

Jones, L. (Swansea W.)

Ramsbotham, H.

Cranborne, Viscount

Keeling, E. H.

Rankin, Sir R.

Craven-Ellis, W.

Kellett, Major E. O.

Rathbone, Eleanor (English Univ's.)

Crooke, Sir J. Smedley

Kerr, Colonel C. I. (Montrose)

Rayner, Major R. H.

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

Kerr, H. W. (Oldham)

Reed, A. C. (Exeter)

Cross, R. H.

Keyes, Admiral of the Fleet Sir R.

Reed, Sir H. S. (Aylesbury)

Cruddas, Col. B.

Lamb, Sir J. Q.

Reid, W. Allan (Derby)

Culverwell, C. T.

Lancaster, Captain C. G.

Rickards, G. W. (Skipton)

Davies, C. (Montgomery)

Leighton, Major B. E. P.

Robinson, J. R. (Blackpool)

Davison, Sir W. H.

Levy, T.

Ropner, Colonel L.

De Chair, S. S.

Lewis, O.

Rosbotham, Sir T.

Da la Bère, R.

Lindsay, K. M.

Rowlands, G.

Denman, Hon. R. D.

Lipson, D. L.

Royds, Admiral Sir P. M. R.

Denville, Alfred

Little, J.

Russell, Sir Alexander

Doland, G. F.

Lloyd, G. W.

Russell, S. H. M. (Darwen)

Donner, P. W.

Loftus, P. C.

Salmon, Sir I.

Samuel, M. R. A.

Southby, Commander Sir A. R. J.

Wakefield, W. W.

Sandeman, Sir N. S.

Spears, Brigadier-General E. L.

Wallace, Capt. Rt. Hon. Euan

Sandys, E. D.

Spens, W. P.

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

Schuster, Sir G. E.

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

Ward, Irene M. B. (Wallsend)

Scott, Lord William

Stourton, Major Hon. J. J.

Wells, Sir Sydney

Seely, Sir H. M.

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

Whiteley, Major J. P. (Buckingham)

Selley, H. R.

Stuart, Hon. J. (Moray and Nairn)

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

Shakespeare, G. H.

Sueter, Rear-Admiral Sir M. F.

Windsor-Clive, Lieut.-Colonel G.

Shepperson, Sir E. W.

Sutcliffe, H.

Winterton, Rt. Hon. Earl

Simon, Rt. Hon. Sir J. A.

Tate, Mavis C.

Wise, A. R.

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

Taylor, C. S. (Eastbourne)

York, C.

Smiles, Lieut.-Colonel Sir W. D.

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

Young, A. S. L. (Partick)

Smith, Bracewell (Dulwich)

Thomas, J. P. L.

Smith, Sir R. W. (Aberdeen)

Thomson, Sir J. D. W.

TELLERS FOR THE AYES.—

Smithers, Sir W.

Thorneycroft, G. E. P.

Captain Waterhouse and Captain Dugdale.

Somervell, Rt. Hon. Sir Donald

Thornton-Kemsley, C. N.

Somerville, A. A. (Windsor)

Touche, G. C.

NOES.

Adams, D. (Consett)

Griffiths, G. A. (Hemsworth)

Poole, C. C.

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

Griffiths, J. (Llanelly)

Price, M. P.

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

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

Richards, R. (Wrexham)

Anderson, F. (Whitehaven)

Hall, G. H. (Aberdare)

Ridley, G.

Attlee, Rt. Hon. C. R.

Hall, J. H. (Whitechapel)

Sanders, W. S.

Banfield, J. W.

Hardie, Agnes

Sexton. T. M.

Barnes. A. J.

Hayday, A.

Shinwell, E.

Bellenger, F. J.

Henderson, A. (Kingswinford)

Silkin, L.

Benn, Rt. Hon. W. W.

Henderson, T. (Tradeston)

Simpson, F. B.

Benson G.

Hicks, E. G.

Sloan, A.

Broad, F. A.

Hills, A. (Pontefract)

Smith, Ben (Rotherhithe)

Brown, C. (Mansfield)

Hopkin, D.

Smith, E. (Stoke)

Buchanan, G.

Jagger, J.

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

Burke, W. A.

Jenkins, Sir W. (Neath)

Smith, T. (Normanton)

Cape, T.

John, W.

Sorensen, R. W.

Cluse, W. S.

Jones, A. C. (Shipley)

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

Cocks, F. S.

Kennedy, Rt. Hon. T.

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

Collindridge, F.

Kirby, B. V.

Taylor, R. J. (Morpeth)

Cove, W. G.

Lansbury, Rt. Hon. G.

Thurtle, E.

Daggar, G.

Lawson, J. J.

Tinker, J. J.

Dalton, H.

Lee, F.

Tomlinson, G

Davidson, J. J. (Maryhill)

Leonard, W.

Viant, S. P

Davies, R. J. (Westhoughton)

Leslie, J. R.

Walkden, A. G.

Day, H.

Logan, D. G.

Walker, J.

Dobbie, W.

Macdonald, G. (Ince)

Watkins, F. C.

Dunn, E. (Rother Valley)

McEntee, V. La T.

Watson, W. McL.

Ede, J. C.

McGhee, H. G.

Westwood, J.

Edwards, A. (Middlesbrough E.)

McGovern, J.

White, H. Graham

Edwards, Sir C. (Bedwellty)

Maxton, J.

Whiteley, W. (Blaydon)

Evans, E. (Univ. of Wales)

Milner, Major J.

Wilkinson, Ellen

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

Montague, F.

Williams, E. J. (Ogmore)

Frankel, D.

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

Williams, T. (Don Valley)

Gallacher, W.

Naylor, T. E.

Wilmot, J.

Gardner, B. W.

Noel-Baker, P. J.

Wilson, C. H. (Attercliffe)

Garro Jones, G. M.

Paling, W.

Woods, G. S. (Finsbury)

Green, W. H. (Deptford)

Parker, J.

Greenwood, Rt. Hon. A.

Parkinson, J. A.

TELLERS FOR THE NOES.—

Grenfell, D. R.

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

Mr. Mathers and Mr. Adamson.

NEW MEMBER SWORN.
John Wilmot, esquire, for the Borough of Lambeth (Kennington Division).
BILL PRESENTED.
  MINISTRY OF SUPPLY BILL,
  "to establish a Ministry of Supply and for purposes connected therewith," presented by Mr. Burgin; supported by the Prime Minister, the Chancellor of the Exchequer, Mr. Stanley, and Mr. W. S. Morrison; to be read a Second time To-morrow, and to be printed. [Bill 151.]

SELECTION (COMMITTEE ON UNOPPOSED BILLS) (PANEL).
Sir Charles MacAndrew reported from the Committee of Selection: That they
2510
had discharged the following Member from the Panel appointed to serve on the Committee on Unopposed Bills: Mr. Crowder; and had appointed in substitution: Mr. Pickthorn.
Report to lie upon the Table.

SELECTION (STANDING COMMITTEES).
  STANDING COMMITTEE A.
  Sir Charles MacAndrew reported from the Committee of Selection: That they had discharged the following Members from Standing Committee A: Colonel Ponsonby and Mr. Porritt; and had appointed in substitution: Mr. Hutchinson and Sir Harold Webbe.
  STANDING COMMITTEE B.
  Sir Charles MacAndrew further reported from the Committee: That they had added the following fifteen Members to Standing Committee B (in respect of the Water Supply Bill): Mr. Bernays, Mr. Butcher, Sir William Davison, Mr. Ede, Mr. Edwards, Sir Francis Fremantle, Mr. Garro Jones, Lieut.-Colonel Heneage, Mr. Hills, Major Neven-Spence, Major Procter, Mr. W. Roberts, Sir Archibald Southby, Mr. H. G. Williams, and Mr. Wise.
  STANDING COMMITTEE D.
  Sir Charles MacAndrew further reported from the Committee; That they had discharged the following Member from Standing Committee D: Major Rayner; and had appointed in substitution: Major Kellett.

  SCOTTISH STANDING COMMITTEE.
  Sir Charles MacAndrew further reported from the Committee; That they had discharged the following Member from the Standing Committee on Scottish Bills (added in respect of the Solicitors Amendment (Scotland) Bill [Lords]): Sir Thomas Cook; and had appointed in substitution: Mr. Medlicott.
  Reports to lie upon the Table.

BILLS REPORTED.
  MINISTRY OF HEALTH PROVISIONAL ORDER (HAILSHAM WATER) BILL.
  Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time To-morrow.

  MINISTRY OF HEALTH PROVISIONAL ORDER (LUTON WATER) BILL.
  Reported, with Amendments, from the Committee on Unopposed Bills.
  Bill, as amended, to be considered To-morrow.

  MINISTRY OF HEALTH PROVISIONAL ORDER (SOUTH KENT WATER) BILL.
  Reported, with Amendments, from the Committee on Unopposed Bills.
  Bill, as amended, to be considered To-morrow.

  STALYBRIDGE HYDE MOSSLEY AND DUKINFIELD TRANSPORT AND ELECTRICITY BOARD BILL.
  Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.

  LONDON PASSENGER TRANSPORT BOARD BILL.
  Reported, with Amendments [Title amended], from the Committee on Unopposed Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.

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

LONDON GOVERNMENT BILL [Lords].
Report from the Joint Committee, with Minutes of Evidence, in respect of the London Government Bill [Lords] (pending in the Lords), brought up, and read.
Report to lie upon the Table, and to be printed.

MESSAGE FROM THE LORDS.
That they have agreed to,—

Reserve and Auxiliary Forces Bill, without Amendment.

Military Training Bill, with Amendments.

Amendments to—

King Edward the Seventh Welsh National Memorial Association Bill [Lords].

Smethwick Oldbury Rowley Regis and Tipton Transport Bill [Lords], without Amendment.

MILITARY TRAINING BILL.
Lords Amendments to be printed. [Bill 152.]
ORDERS OF THE DAY.

  FINANCE BILL
  Order for Second Reading read.
  Motion made, and Question proposed, "That the Bill be now read a Second time."ߞ[Sir J. Simon.]
  4.15 p.m.
  Mr. Pethick-Lawrence: I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof:
  "this House cannot assent to the Second Reading of a Bill which continues a series of unbalanced Budgets, shelves all the major financial problems, adds nearly four hundred million pounds to the national debt, fails to exact from wealth an adequate special contribution to meet the emergency, and, under the pretext of spreading the burden equally among all classes, imposes additional taxes, some of which will press severely on the very, poor."
  After the remarks that have just fallen from your lips, Mr. Speaker, I rise with something of the trepidation of a Member making his maiden speech in this House. I hope I shall not offend either you or the hon. Members who are listening to the Debate and hoping to take part in it themselves. It will be seen that our Amendment condemns the Bill both for its sins of omission and its sins of commission. I propose to start with a few words on the first subject. The grave emergency with which the country is faced to-day has its immediate and urgent financial repercussions. One that leaps to the eye is the increase of no less than £250,000,000 in the expenditure as compared with last year, bringing the total up to the unprecedented figure of £1,320,000,000; and since the Budget statement there have been further increases owing to conscription, with all its financial repercussions, and extensive new agricultural and shipping subsidies; and there is no reason to think that we have now anything like reached the end. Such allowance as the Chancellor made in his Budget Speech for supplementaries is likely to be considerably exceeded, and the £250,000,000 increase surpassed. I ask the Chancellor, what is his contribution to meet this increase? I find that his tax contribution is some £20,000,000. In view of the gravity of the situation, this surely is a pill to cure an earth-
  2550
  quake. The Chancellor proposes to borrow at least £380,000,000, and he will probably, in fact, overtop the £400,000,000 mark; but even that is not the worst. What is to happen next year and the year after—not on the terrible assumption of war, but on the favourable assumption that war is averted? Ask the Chancellor when is borrowing going to stop; he does not know. Ask him what is going to happen when it does stop; he has not the faintest idea. Ask him whether the Budget can ever again be balanced, and I will reply not in my own words but in the words of the Prime Minister on 21st February this year:
  "One cannot help wondering whether the annual cost of maintenance of this increased armament, together with the cost of interest and sinking fund, may not be more than it is possible to extract from the taxpayers of this country out of current revenue."
  He was speaking, as I am, of several years ahead; and he goes on later to say:
  "It would be criminal to allow the situation to go on developing as it has been developing without making some determined effort to put a stop to it."—[OFFICIAL REPORT, 21st February, 1939; col. 233, Vol. 344.]
  We say that this Finance Bill is shelving all these major financial issues, and I challenge any hon. Member in any part of the House to deny it. Hon. Members may say to me, "What would you do?" I gave the answer in a speech on the Budget Resolutions a month ago; and I propose later to-day to develop my suggestions further, and to answer some of the questions and criticisms that were made against them in various parts of the House.
  But, before doing that, I want to deal with the second half of the Amendment, and its criticism of the sins of commission in the Bill. First there are the taxes on sugar and tobacco. To the majority of hon. Members opposite, these seem so small as not to be worth worrying about; and maybe that is true for the bulk of our population. But if you are an old age pensioner, on 10s. a week, you will bitterly resent this burden on your one solace in your dire poverty; or if you are a family on the means test having to account for every halfpenny, even the small increase in the price of sugar is grievous. The Chancellor of the Exchequer has no right in the name of equality of sacrifice, to harass this class of people, who are

  2551
  already living on the margin of starvation without giving them some compensating relief. He will hear more on this subject during the later stages of the Bill.
  I turn now to the increased horse power tax. I say frankly that when I first heard this proposal, I thought it had some ulterior purpose, namely, the damping down of the motor car industry in order to free more skilled men for munition works. But the Chancellor and the Financial Secretary to the Treasury have made it clear that that was not the object, and they defended it on purely financial grounds. I shall, therefore, deal with only that aspect. I suggest that this tax offends against all the canons of taxation, because it will cost the citizen far more than it will bring to the Revenue. I very much doubt whether it will bring in extra Revenue at all, when all the repercussions are taken into account, resulting from people buying smaller cars, putting them by for part of the year, reducing the mileage and the amount of petrol used, and various other causes. But the Motor Agents Association assure me that, owing to the immediate drop in the value of used cars, their members alone have lost something like £3,000,000 already, and the individual owners of motor cars must have also lost in the aggregate an amount greatly in excess of that figure. Therefore, between those two classes of people, there has already been a loss to the community in excess of the £6,250,000 which the Chancellor hopes to get by this duty—and that before a single penny of the actual taxation has been paid. Further, I say that the tax is antisocial, because it will be a burden on the citizens by inducing them to change their habits without bringing in revenue to the State. Finally, it will be felt severely by small people and commercial travellers, who between them use cars of 10-horse power and under to the number of over 1,000,000. For all those reasons this taxation is to be condemned.
  With regard to the Income Tax Clauses, I think I am speaking not merely for my party but for most Members of Parliament, if not all, when I say that all honest taxpayers want to see the evasion of proper liability checked. But it is not easy to tell, until we have had a meticulous discussion on the Clauses, how far this object is achieved. I am inclined to think that it is not achieved
  2552
  to any great extent. I cited a number of cases of avoidance in the earlier discussions on the Budget, and I am very doubtful whether any but a small proportion of those will be touched by the Bill. The House will await the explanation that the Chancellor has to give, and it will also await the explanation with regard to Clause 19, which deals with the expenses of employés and others. I confess that I am a little alarmed lest it produce more vexation than taxation, but I shall await what the Chancellor has to say with quite an open mind, because it is certainly my desire that all illegitimate evasion of this or any other kind shall be got rid of.
  I now revert to what is, after all, in my opinion, the major issue on the Bill, namely, its failure to check the rapid growth of the National Debt. Something like £400,000,000 is being added this year. Who will lend this money? In ordinary times the power to save, and therefore to lend, is a function of the family cycle. The skilled manual workers are in a position to save in early manhood and again in later years, but not during the early youth of their children. The professional classes also can save after their children have been educated. The rich classes save mainly when the estate is in the hands of a minor, when the actual expenditure is generally comparatively small. In ordinary times the results of this saving go into industry and increase the annual output of the country, and it is out of that increased annual output that the interest on such debt is paid. But in times of emergency the money arises either by the curtailment of industrial capital, or by the curtailment of expenditure, voluntary or compulsory, which the conditions may make desirable, and the money which is paid goes, not to increase production, but into the dead hole of armament expenditure, and interest which may subsequently be charged on it is, therefore, taken away from the natural income of the people of the country, and that is a very grave position. It is to meet this situation and to prevent, or at least to check, the indefinite expansion of the National Debt that I made the specific proposal a little while back to which I will now revert.
  The proposal that I made was for an emergency tax on wealth, and I pointed out that administratively it would be best to confine it to large fortunes. I estimated that a graduated tax at an average of

  2553
  1 per cent. on fortunes of over £50,000 each might be expected to bring in about £80,000,000 and that if it was extended to fortunes of over £20,000 each, it might bring in about £100,000,000. Those were conservative estimates, and they have not been challenged, so far at any rate. The proposal that I made was for an anuual tax for the duration of the emergency, and I deliberately did not call it a levy, because a levy suggests a single operation. Also I used the word "wealth" instead of the word "capital," because in a similar proposal some few years back I found that the word "capital" was misunderstood by a body of public opinion throughout the country. In the course of the discussion which followed, several hon. Members criticised my proposal, and I will endeavour as far possible to give them an answer to-day.
  Mr. Mabane: Will the right hon. Gentleman say whether he wishes us to consider his proposal on the basis of a 1 per cent. or a 3 per cent. tax?
  Mr. Pethick-Lawrence: Perhaps the hon. Member had better listen to what I have to say. I want first to answer a specific question which the Chancellor of the Exchequer put to me, when he said, "Is this tax to be an addition to or in substitution of the Death Duties?" I have long thought—and I think the opinion will be shared by hon. Members on both sides of the House—that the Death Duties are not a wholly equitable form of taxation. They have certain objections, the most important being that they fall unequally. One estate may change hands, owing to death, four or five times, and pay tax every time, while another may change hands only once and pay only one tax. I have come to the conclusion that a permanent annual tax on capital of so much per mille might, therefore, work out more equitably and more smoothly in substitution of the higher ranges of the Death Duties; and somewhat the same remarks apply to a less extent to Surtax. That is a matter which may be considered by the Chancellor of the Exchequer at some future time. But it is quite a different thing from the proposal that I am making to-day, which is, by an annual tax, to raise a substantial additional amount for the duration of the emergency. Therefore, for this emergency period it would be an addition to and not a substitution for the Surtax and the Death Duties. If
  2554
  the Chancellor seriously proposed to adopt this proposal and in so doing proposed to relieve the Estate Duty payer and the Surtax payer of the increases which he is imposing this year—which are quite negligible in their aggregate amount and which must of necessity be negligible to deal with the emergency position—I, personally, would not be disposed to object.
  Now let me come to the major criticisms. In the first place, it is said generally that the scheme is unworkable. I would remind hon. Members that precisely the same thing was said by the forerunners of hon. and right hon. Members opposite when the Supertax was proposed and when the Death Duties were put up, and even, if you go further back, when the Income Tax proposal itself was commenced. Yet these impositions are the sheet anchor to-day upon which Governments of all parties rely to give them the sinews of national finance. Of course, the same criticism was made with regard to the proposal of the capital levy, which was put forward almost simultaneously by me in a book and by the man who is now the Noble Lord, Lord Arnold, in a speech in this House. That criticism, that it was unworkable, was refuted by the present Lord Privy Seal, who at the time was the Chairman of the Board of Inland Revenue. He showed that not merely our proposal but a far more complicated proposal, involving two valuations, both in past time, were quite practicable of solution. Hon. Members called the capital levy at that time a new method of "soaking the rich," and I have no doubt that they look upon my proposal in the same light. It was very much to their surprise that they discovered that no worse Conservative than Mr. Bonar Law himself was in favour of it, and I am not sure that either now or a little later they will not discover a similar support for my scheme.
  It has been said that the valuation would be impracticable. I think that was put forward by the hon. Member for Hastings (Mr. Hely-Hutchinson), and the Chancellor of the Exchequer said that it might easily take a year or more. I have myself been an executor for a considerable number of estates, and I believe this view to be quite unfounded. I would remind the House that the number of fortunes to be brought under review on the higher basis is comparatively small,

  2555
  some 50,000 in all, and I would remind them, further, that whereas in the case of Death Duties, the original owner is dead, in the present case there will be the very considerable advantage of forming the valuation with the possessor of the fortune alive. Further, he would generally be a Surtax payer. Quite clearly in the matter of stocks and shares, which form an exceedingly large part of the kind of estates of persons I am thinking of—I believe it is more than 50 per cent.; I have even seen the figure, for which I will not vouch, of over 75 per cent. quoted—no difficulty will arise. So far as any difficulty does arise in the matter of house property or land, there is always Schedule A in the background if a more suitable form of valuation is not available. A small difficulty may be experienced in the matter of the valuation of private businesses and firms, but I do not think that that in any way would be insuperable. A number of other things may occur to other hon. Members, but I believe that they can be met, and if there was any delay in valuing, some conventional method of valuation might be adopted, and we should not get so very far astray, because this would only form a very small part of the total wealth that we are considering.
  It has been said that the matter of paying the tax will provide great difficulties. The hon. Member for Hastings, I think, said, or his argument practically amounted to this, that there would be sellers of securities and no buyers. He surely forgets that this proposal comes at a time when the Chancellor is intending to increase borrowing by £400,000,000, and whatever scheme be adopted, there will have to be lenders, who will have to find the new money. It may not be the whole £400,000,000, because some of it may be met by financial means, but a large part will have to be new money, and those who provide it will be the buyers to come in in the case with which I am dealing. I am satisfied that this matter of payment can be easily met, first of all, because it will fall only on a few people with substantial fortunes, and the tax can be paid in title deeds or in money. I think generally they would prefer money, for the reason that they have in nearly all cases a very large amount of stocks and shares and marketable
  2556
  securities, which they can realise. If there be a few exceptions, I do not believe they will present any insuperable difficulty.
  Now I come to the effect on future revenue. The Chancellor painted a gloomy picture on the lines of killing the goose that lays the golden egg. He suggested that private wealth would be reduced and that private incomes would be falling year by year, and therefore the yield on all taxes would steadily decline. But the right hon. Gentleman forgot two salient and essential facts. The smaller one, which will at once occur to anybody who thinks about it, is that at the same time enormous profits are being made through armament manufacture and other things; but the much larger reason is that the Chancellor himself proposes to create £400,000,000 of new debt, and though no doubt it will be an obligation on the Exchequer, it will, of course, be an asset in the hands of the people who own the debt. The emergency tax is at best a partial set-off against this vast new debt.
  I come to the gravamen of the criticism, which is, that it imposes an unfair hardship on the class assessed. Let us see how it works out. Take a fortune of £100,000, a sort of middle figure in the kind of amounts that we are considering, on which it is fair to assume that the average would probably be the actual tax imposed. The hon. Member for Huddersfield (Mr. Mabane) asked me to state precisely how much the tax would stand at, and, of course, I cannot answer that question. It will be for the Chancellor of the Exchequer to decide the precise rate he imposes, but I suggest 1 per cent. or 2 per cent., 1 per cent. bringing in £80,000,000 to £100,000,000 and 2 per cent. bring in double that amount.
  The Chancellor of the Exchequer (Sir John Simon): The right hon. Gentleman has suggested 1 per cent., but owing to the fact that there have been proposals for military service, he said that he would propose to double or treble that. I understand him now to suggest 1 per cent.
  Mr. Pethick-Lawrence: I do not think that the Chancellor of the Exchequer has anything of which to complain in what I am saying. I am saying that if the Chancellor of the Exchequer has to impose the tax, it will be for him to decide what it is to be. I frankly state that, if we are

  2557
  to have the conscription of life, 1 per cent. is a small amount, and I am prepared to stand by 2 per cent.
  Mr. Mabane: You said three.
  Mr. Pethick-Lawrence: I said that it should not be out of proportion to the conscription of life. I am going to take the average figure of 2 per cent. which is quite a reasonable amount. Take the man with £100,000, and supposing there is a 2 per cent. tax, it will mean that he will have to hand over to the State in that particular year part of his wealth to the amount of £2,000. The Chancellor of the Exchequer says "This is equivalent to some 10s. in the £ Income Tax, and if you add that to his other liabilities he really will not be getting any income or very little income at all." But that really is an attempt to criticise the tax by misrepresenting its purpose. This does not pretend to be, and is not, an income tax. It is something quite different. Let me illustrate my point in one or two ways. When an estate passes from father to son, and there is, say, a tax of 20 per cent. Estate Duty paid on it, the amount is equivalent to something like five years' income. But you do not say that the son has no income for five years. You say he has had to sell out part of his capital and thereby reduce the corpus of his estate. Take another illustration of what has actually been happening during the last two years and a half. If hon. Members look at the figures, they will find that since October, 1936, gilt-edge stocks have depreciated by something like 15 per cent. in market value during the period. The holders of these stocks would be very surprised if you told them that they had had no income in these years during this depreciation. What they have really had is a hidden capital levy not of 1 per cent. or 2 per cent. but of no less than 15 per cent. during that period. If the policy of unbalanced budgets and rapidly increasing debt continues, this process will continue, as it did during the War, when capital values fell 30 per cent., 40 per cent. and in some cases nearly 50 per cent. Personally, with a fortune of £100,000, I would far rather hand over £1,000 or £2,000 of that for several years during the emergency than I would suffer that enormous depreciation in capital value.
  Finally, as to injustice. There are two things for which this country may be
  2558
  called upon to fight—liberty and wealth. Two things are necessary to win this fight—men and money. When I say "to win the fight," I mean also the preparation to win the fight. Men are being conscripted to-day not merely for six months' military training in peace time, but to be ready to give their lives, if necessary, in war. Is money not only not to be conscripted but not to make a fractional special contribution annually during the emergency? Am I to be told that my proposal is unfair and unjust? What, then, about the pride of patriotic sacrifice? Is the old age pensioner to glow with pride when he surrenders his one solace, or the child of the unemployed man when he tightens his belt? Is the young stripling on the threshold of manhood to offer his life willingly for his country? And is the owner of wealth alone to remain unmoved, cold and unaffected? Truly, how hard is it for the rich man to enter into the Kingdom of Heaven.
  4.52 p.m.
  Mr. Clement Davies: The answer to the question put by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) at the end of his speech, surely, is in the affirmative. Wealth has been conscripted, and will be conscripted. There is one part of that speech with which I am in entire agreement, and that is the expression of doubt on his part as to the equity of the Death Duties which are at present levied. I am glad to know that he and I, in expressing doubt as to the equity of that, are in the very good company of the former Liberal Chancellor of the Exchequer, Mr. Gladstone. This tax was certainly introduced by a Chancellor of the Exchequer of the Liberal party, but it was after the retirement of Mr. Gladstone. One has felt all along that, though it has led to the distribution of wealth and the prevention of the accumulation of wealth in great quantities in the hands of the individual, nevertheless, it is in essence an inequitable tax, following as the right hon. Gentleman himself has pointed out, by accident perhaps, only occasionally in certain instances, and then in quick succession in other instances.
  The time has come for a review of the whole situation created by that tax which has been in force since 1894. A long time has elapsed, and we have had the experience of its working. It has undoubtedly

  2559
  put a heavy burden upon agriculture and upon agricultural estates. They have suffered much more than any other form of property. I have had occasion before in this House to point out that if a man is the holder of shares in a company, and when he dies, the estate has to find money to meet the Estate Duty, those shares can be sold. What really happens is that they are distributed among a great number of people. It does not necessarily follow that any man is put out of work or that it has any effect whatever upon the business or the factory. But when a landowner dies and money has to be found to meet the Estate Duty, only too often it means the cutting down of immediate expenditure on that estate. It leads to the discharge of a great number of people and to poorer farming and a falling off in the improvements that otherwise would have been made upon the land.
  Mr. Tinker: Can the hon. and learned Member cite any case?
  Mr. Davies: Certainly. I well remember the estate of the landlord of the farm on which I was brought up, my father being the tenant. The owner had died in 1897. At that time there were about 25 people employed upon that not very large farm. There were carpenters, bricklayers, hedgers, ditchers, and people who assisted the tenant farmer in drainage work. Money had to be found to meet the Estate Duty. Unfortunately, the whole of the money was sunk in the estate, and one of the first things that had to be done was to cut down expenditure on the estate. I shall never forget that black Friday, young as I was, when 22 out of the 25 people received notice. It was a real black Friday in my little village. It has never been forgotten. As a result, unfortunately, the condition of the farms on that estate has gone back steadily since that time. There have not been the repairs of the kind hitherto carried out, and the buildings and houses are not in as good a condition as they were at that time. The field drains have become blocked up. That is one of the effects which I myself have witnessed.
  I am not going to follow the right hon. Gentleman the Member for East Edinburgh with regard to his most interesting suggestion as to a further form of taxation. I would have expected him as a
  2560
  purist not to be in favour of increasing the methods of raising money, but rather decreasing them. As I understand his suggestion, he will be selecting a certain class of people who will be subjected to indirect taxation of all kinds, who will have to pay Income Tax (Schedule A), Super-tax, and be liable also for Estate Duty, and at the same time be called upon to meet this extra expenditure. Apart from all else, I think that his argument was weakest when he came to deal with how he was going to make and to assess the valuation. I am bound to point out to him the tremendously long time that was taken in valuing estates after the famous Budget of 1909–10; the work had not really been completed by 1914. That was one of the reasons why some of those taxes which I wished to be kept on had to be done away with, because even up to 1920–21 they were producing very little. I hope, and everybody will hope, that the emergency and crisis will have passed away long before such a long period has elapsed as was the case when they were trying to assess the true valuation—

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

  1. Wild Birds (Duck and Geese) Protection Act, 1939.

  2. Reorganisation of Offices (Scotland) Act, 1939.

  3. Limitation Act, 1939.

  4. Camps Act, 1939.

  5. Public Health (Coal Mine Refuse) (Scotland) Act, 1939.

  6. Reserve and Auxiliary Forces Act, 1939.

  7. Conway Gas Act, 1939.

  8. All Hallows Lombard Street Act, 1939.

  9. Northmet Power Act, 1939.

  10. Wear Navigation and Sunderland Dock Act, 1939.

  11. Mumbles Pier Act, 1939.

  12. City of London (Various Powers) Act, 1939.

  13.London and North Eastern Railway (Superannuation Fund) Act, 1939.

  2561

  14. Willenhall Urban District Council Act, 1939.

  15. Gosport Corporation Act, 1939.

  16. Saint Nicholas Millbrook (Southampton) Church (Sale) Act, 1939.

  17. Methodist Church Act, 1939.

  18. King Edward the Seventh Welsh National Memorial Association Act, 1939.

  19. London Midland and Scottish Railway Act, 1939.

  20. Royal Wanstead School Act, 1939.

  21. Scottish Union and National Insurance Company Act, 1939.

  22. Smethwick Oldbury Rowley Regis and Tipton Transport Act, 1939.

  FINANCE BILL.
  Question again proposed, "That the words proposed to be left out stand part of the Question."
  5.12 p.m.
  Mr. C. Davies: I think the Chancellor of the Exchequer, either in his Budget speech, or in moving the Second Reading of the Bill to-day, ought to have given us the benefit of a general review of the financial position of the country as compared with other countries, especially the European countries. No one is better served so far as advice is concerned than the Chancellor of the Exchequer. I suppose that we have the finest advisers that can be found in any country. Again, as we all know, no one can present the advice that has been given to him in a clearer or more attractive form than the Chancellor of the Exchequer. I only wish that the House and the country had had the benefit of what I might call a general exposition of the situation to-day, what are the principles which are really guiding him, why he is taking so much from revenue and so much from capital, what are his reasons for doing it and what, he hopes, will be the position during the course of the year.
  A great change has occurred since the Finance Bill of last year was introduced. Since last year we have entered inexorably into the war atmosphere, and we are expanding and perfecting our armaments so as to defend ourselves and to assist in the defence of our friends. All this intense preparation for war has necessitated, and will necessitate, profound changes in the economic life of the nation. The folly of the slogan "Busi-
  2562
  ness as usual" was soon apparent in 1914, and to try and act upon it to-day would be more than madness. The Germans have recognised this, and their economic journals for some years now have, week after week, devoted pages to the economics of defence. What is more, they have carried their theoretical speculations into practical effect.
  If war should come, the interference with the economic life of the country would be so intense as to make the position unrecognisable from what it is in peace time. But even if war does not come, there is little chance of a return for many a long year to the peace economy to which we have been accustomed. The totalitarian States have for some years been conducting their affairs on a war basis, and if and when a change of policy arrives the transition from war economy to peace economy will take a very considerable time. Unfortunately, the younger generations have been reared in a war atmosphere, an atmosphere of extreme nationalism, intolerance and hatred, and it will take at least one generation before we can again enter the placid waters of tolerance, understanding and friendship.
  In the coming years we shall need courage, which fortunately this country has never lacked, and we shall also need vision, and too often that vision has been dimmed and blurred. For the moment labour and materials have been diverted from the production of what I may call everyday articles to the production of armaments and means of defence, and although we have at the moment a surplus of labour and a productive capacity to engage in this task, that reserve is not inexhaustible and, therefore, we shall have less to consume, and we shall have to work much harder in order to obtain it. Therefore, it is necessary to direct our financial policy so that it may promote the production of essential everyday goods. We can congratulate the Chancellor of the Exchequer on a judicial planning of his calls upon the nation's reserve; his call upon the revenue for one part and on its savings for the other.
  Should war come, which God forbid, I certainly do not doubt or fear the issue, but should it fortunately be avoided, then we must not sit back and rest in an attitude of sweet complacency. Imports are bound to rise, and we shall also be carry-

  2563
  ing, as we are to-day, the deadweight of a huge bureaucracy. The economic and financial fabric of the country, and, indeed, of the Empire and the world, depends upon the balance of payments for both capital and current account. We shall have need to stimulate exports. We cannot afford in the future to conduct ourselves in a disorganised manner. We must meet organisation with organisation. More and more the old doctrine of laissez faire will have to be sacrificed, and many of our great industries which have provided in the past, and are providing to-day, our main exports, will need not only overhauling, but complete reorganisation to meet the organised competition which is bound to come from the totalitarian States with their organised industries.
  Particularly is it necessary to encourage our mutual trade within the Empire. They are the suppliers of our necessary raw materials and of our foodstuffs, and in turn they, of course, should be the main buyers of our manufactured goods in order to pay for the goods which they supply to us. It is necessary to stimulate still more that trade to-day so that we may strengthen one another at this hour of common peril. It is of the utmost importance to look to the future and what should be done in order to organise the country to meet that future, and I should have liked the assistance of the Chancellor of the Exchequer.
  Let me pass to another subject. The Chancellor of the Exchequer, I feel, must be congratulating himself to-day on the fact that he and the Prime Minister in 1937 dropped their first proposal for a National Defence Contribution and adopted the alternative suggestion that we should have a flat tax on profits. As events have developed since 1937 his proposal, which was an Excess Profits Tax, would have yielded but a modest return. The profits of 1938 were down on those of 1937, and so far as we can see the profits of 1939 promise to be even worse than those of 1938. If the Chancellor of the Exchequer had stuck to his original proposal he might indeed to-day have had to bring in a minus quantity by reason of the deficiencies. But this development from which the Chancellor of the Exchequer was saved brings out what I may call the basic injustice of the National Defence Contribution.
  2564
  The tax was conceived in a burst of optimism in 1937 by reason of the expenditure on Defence. It was thought that profits would increase and that these profits would accrue to the equity holders. It was a tax on equities in anticipation of a coming prosperity. The holders of priority shares and preference shares were not to be called upon to make any contribution as it was said they would not be sharing in the prosperity. But what has happened? The expected prosperity was still-born and the political unrest which has created the need for arms is stifling business and depreciating and deflecting profits. The prosperity and increased profits, therefore, did not come, but, nevertheless, equity holders remained last year, and under this Bill will still remain, saddled with a prosperity tax at a time when they are suffering the major burdens of a recession of business. It is time that this was recognised and the burden raised from the selected few and put upon the more general body of taxpayers. In 1937 I was partially responsible for the suggestion to the Chancellor and the Prime Minister of the proposal which was ultimately adopted, but I pointed out then that I only preferred it to the one which had been suggested by the Prime Minister and the Chancellor of the Exchequer. Speaking for myself then, as now, I prefer to place it on incomes, which, after all, however much grumbling it may cause, is the fairest of all taxes.
  In 1937 the Chancellor of the Exchequer said that an increase in the Income Tax would be prejudicial and, therefore, he was not going to raise his revenue from that source. But in 1938 he had changed his mind, and added another 6d. to the Income Tax to provide himself with the, £26,000,000 which was required. He realised in 1938 that the prophecy he made in 1937 of coming prosperity had not materialised, and he could not add, therefore, to the National Defence Contribution tax when the prosperity was not there. It would have been far better if he had been quite logical in 1938, and if he had been logical again to-day and recognised that the equity holder has not had the prosperity which was prophesied in 1937, and do away with this tax and place it upon the Income Tax. There is another matter. The machinery of the tax is creating many anomalies indeed, and there is dissatisfaction at the hard

  2565
  manner in which it is administered. The Revenue have staked out their claims, leaving the taxpayer with the option of paying or fighting. The amount involved as a general rule does not justify the expenses of a law case, especially as the taxpayer runs the risk of having to pay the costs whether he wins or loses. Therefore, what the taxpayer does is to pay. His option, if I may so describe it, is that of Hobson's Choice. He has to pay, and has no remedy whatever against any injustice.
  There is one other matter I want to deal with. I want to make an appeal to the Chancellor of the Exchequer to lighten the burden upon the Colonial civil servant. I and three of my colleagues in this House recently visited the West Coast of Africa where we were most hospitably received by the Colonial civil servants. We could see the tremendous strides that have been made in West African conditions during the last 20 years, and everyone agreed that, in the main, life had been made much easier and better in West Africa thanks to British wives being able to go out there and look after their husbands. We were told what the conditions were as recently as 1920 before wives began to go out. Now they are allowed to go out. We saw one who had gone out as a bride taking her wedding presents with her, and whose house was almost the same as that of any young couple in this country. Right out in the bush she had made a home of it for herself and her young husband, and was prepared to go with him day by day and share the same risks and trials which he had to bear.
  When a young family begins to arrive she has to come home. The child is born here, and after a few weeks she goes back to her husband but she cannot take the child with her; she has to leave him or her here. Back she goes to look after her husband. But one feels all the time that while physically she is in one place, mentally, worriedly and anxiously she is in another place. If she is here with her child she is worried about her husband, and if she is in West Africa she is wondering how her child is getting on. She is undoubtedly adding to the economic wealth of the country, because she has so improved conditions that her husband is able to give better service than he has ever been able to do before. What happens? If she comes home fairly often
  2566
  and stops here for a period of three months or longer, all the money which the husband sends home from his salary becomes subject to Income Tax in this country, and it specially becomes subject to Income Tax if in the end these two have saved sufficient to enable them to buy a house.
  I have several friends who are situated in the way in which I have described. Fortunately, I am able very often to take their children to my little home in the country, either at Christmas or at Easter. I and my family do our best to make the children think they are at their home, but the children realise only too well that it is not their home. That is the story of all these children who have not a home, whether they are left with their grandparents or with relatives. At last, the parents succeed in buying a house in order to put the child there, so that the child can say, "This is my home." I had an instance of this when I went to Nigeria; one of the finest civil servants in Nigeria had only recently succeeded, at long last, in buying a small cottage so that his boy of six could have a home. When he had bought the house, he was immediately served with Income Tax papers. I ask the Chancellor of the Exchequer to give some consideration to these people, especially when the women are doing so much, by assisting their husbands and looking after them in those tropical lands, for the economic welfare and prosperity of the Colonies. I hope my right hon. Friend will listen to this appeal and will do something to meet it.
  I come now to another matter. Some time ago I asked the Chancellor whether he would consider making any change in the rules which at present prevail with regard to double taxation. At the present time, money which is earned in some foreign country is subject to the taxes that are levied in that country, and then when it is brought home, it is subject to tax here. That is what is known as double taxation. Either double taxation is right and should be continued, or it is wrong and something should be done to meet it. I think the feeling is that it is wrong, because within the Empire itself rules have been made in order to relieve the situation so created, and the results in greater business. But when I have asked the Chancellor whether he would consider an extension of those rules so

  2567
  as to further trade between this country and other countries, I have been met with a flat negative. At a time such as this, when we are so anxious to increase our foreign trade and to improve our exports to foreign countries, surely every encouragement ought to given to them rather than that a damper should be put upon them by continuing this double taxation.
  There is one other matter to which I want to refer. One of the taxes which the Chancellor is increasing is the tax on motor vehicles. I do not intend to enter into the merits of that tax one way or the other, except to say this. Transport is the handmaiden of every form of industry, and transport is a nuisance, but a very necessary nuisance. Therefore, for the sake of the community, it should be as efficient and as cheap as possible; for at all times it is the community that has to pay the cost of transport. If it is inefficient or if it is expensive, the producer has to go with less and the consumer has to pay more for a service which, after all, is only a necessary nuisance. I should have thought that, especially at this time, the Chancellor would have borne that in mind. While I do not know whether this tax will increase efficiency or decrease it, undoubtedly it increases the expense, and any expense placed upon the community which does not bring in a return to the community, is wrong.
  5.36 p.m.
  Mr. Graham White: Several topics have been raised by the hon. and learned Member for Montgomery (Mr. C. Davies) on which I find myself in sympathy with him, and on which, if I were not anxious to adhere to the advice given to us this afternoon by Mr. Speaker, I should be tempted to follow him. There is one observation made by the hon. and learned Member with which I should like to associate myself, and that is his appeal that we should have a general exposition of our financial position. I think that would be of value, especially if it included the various extra-Budgetary funds of one sort and another in the country, and would reveal the strength of our financial position. Also, as the hon. and learned Member said, it would enable us better to make a comparison between the resources of our country and those of other countries with which we might be in conflict.
  2568
  The Finance Bill is one of the instruments of our preparedness. It is the instrument of financial preparedness for an emergency of any kind, and also for maintaining our economic fabric and the most important element of the social services. From the point of view of preparedness for the emergency of war, I am not sure that finance is not the most important of all things. Certainly, it is of very great consequence, for in the long run our strength will depend upon the fact that we are better able than any other European country to divert a larger proportion of our national net income to defence, and to do so for a longer time than any other country. I must go on to say that, at the present time, we know less of our financial preparedness than we know of any other aspect of our arrangements for defence. In Civil Defence, we know the policy and a great many of the means of carrying it out, and in military matters, the same thing applies; but in finance, all is lost in obscurity and uncertainty. I think that there is at least one sentence in the Amendment which must appeal to every hon. Member. It states that the Bill
  "shelves all the major financial problems."
  It is true that the Bill deals with some great financial matters, but equally it is true that many of the major financial problems that will clearly confront us in the very near future are shelved. It is time that we were giving our consideration to those problems. To a large extent, the Bill presents an artificial view of the position, because since the Budget was introduced new burdens have been placed upon us and new financial problems have been raised; and the Bill does not give any indication of the principle on which those major problems are to be faced. When we started on the rearmament programme, there was a principle that only non-recurrent expenditure would be raised by loan and that recurrent expenditure would be raised from taxation. I do not know how far and for how long that applied, but it has little or no application to the situation at the present time.
  I should like now to deal with the speech that was made by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). I think he has done a public service by raising the question of what he called an emergency tax. By whatever name it may

  2569
  be called, something of that kind is necessary. Whether it be by the right hon. Gentleman's scheme or by some other scheme, somebody has to produce a plan that will deal with the financial emergency which is upon us. The right hon. Gentleman terminated his speech with an eloquent oratorical question, which I gathered the hon. and learned Member for Montgomery answered in the affirmative. The right hon. Gentleman said that in order to wage modern warfare, men and money are required, and that if conscription is applied to man, it should be applied also to money. With regard to the question of an emergency tax or levy—whatever it may be called—I think there is a general acceptance of the idea in every quarter of the House. The generality of that acceptance, however, is accompanied by a general ignorance as to exactly what it means, and as to how it should be applied. It is vitally necessary that we should consider how and when a further portion of our national resources can be diverted to the immediate purposes which lie ahead of the nation. Perhaps a moral issue is involved, but I do not think there is any difficulty over that, for it has only to be stated to be swept away. The essential thing, in considering any such tax, is that it should be considered solely from the point of view of its effectiveness in achieving its purpose. As the hon. and learned Member for Montgomery said, it involves no new principle, for compulsion is applied to many aspects of our national life, not least that of finance. But if it be suggested that, because there is compulsion in the matter of Income Tax, Death Duties, Supertax and the like, that answers the case sufficiently, then I must differ; and in doing so, I call the Prime Minister to my aid.
  In introducing the conscription scheme to the House, the Prime Minister recognised that it would be unjust to apply conscription to manpower without providing for conscription of wealth. He went on to say—and there were some who thought this would be carried out in the Bill—that the Government would introduce legislation to tighten the control of armaments profits. He said that in time of war, measures would be taken to impose special penalties on profiteering—there were some of us who hoped that measures would be taken to prevent
  2570
  profiteering arising at all—and to provide that any increases in profits or in individual wealth should be appropriately controlled to the benefit of the State. The right hon. Gentleman stated that his proposals would meet the case justly. I do not think anyone will suggest that either justice or the necessities of the case would be met in this case merely by taking steps to curtail an increase in profits or an increase in private wealth. Anyone who contemplates the situation as it exists to-day, and as it is likely to exist, will realise that there must also be further heavy exactions upon income and wealth, in addition to those which are made to-day.
  Whether the scheme which the Prime Minister eventually brings forward will enable us to meet these financial necessities or not, I do not pretend to say; but I venture to express the opinion that it is a scheme which can be worked only in time of peace. In time of war it would be impracticable, for various reasons into which I need not go in detail, to carry out such a suggestion. In time of war the State would have no use for collections of property such as grouse moors in Scotland, or shares in insurance companies carrying with them liabilities, which the State would have to shoulder, or shares in companies abroad involving all sorts of difficulties. Such a scheme would not be a practical aid to the State in time of war. Indeed it would probably add to our difficulties. But whether some such scheme would be practicable in peace time is a question to which we ought to apply our minds from now onwards.
  The problem of the State in time of war is how to acquire spending power, and this can be done in various ways. One is by means of inflation, which was a method used during the last War, but which, I hope, will be ruled out now, because it is clumsy, unjust and hopelessly inefficient. The other way is that of persuading the citizen to make the necessary contribution either in the form of loans or of taxation. A little consideration shows that in the interest of the community this expansion of spending power should be obtained in the form of taxation rather than that of loan. To quote Mr. Chancellor of the Exchequer himself, the piling up of loans merely transfers the burden to a later date and if we were to proceed, in a time of emergency or of war, to transfer the spending power of the

  2571
  citizens to the State by means of loans, we should be faced afterwards with the intolerable legacy of a grossly inflated National Debt. It is, therefore, to taxation, whether it takes the form of an excess Income Tax, whether it is by the development of well-tried existing taxes or by the introduction of some new tax such as that suggested by the right hon. Gentleman the Member for East Edinburgh, that we must look for the solution of the very difficult problem which will arise, even if we continue, as I hope and pray we may, at peace.
  With regard to the actual content of the Bill I would make this observation. One of the considerations which make the payment of these vast and growing exactions from the private citizen tolerable, and cause them to be borne as cheerfully as possible, and one of the things which will enable us to maintain the incentive to productivity and the creation of taxable capacity, is certainty in the mind of the individual that there is no waste and that there is wise direction of spending. For that reason I am surprised that no reference has been made to the suggestion of my hon. Friend the Member for South-West Bethnal Green (Sir P. Harris). He reminded the House in a previous Debate that in 1917, when the country was engaged in a terrible war, a Select Committee was set up presided over by Sir Herbert Samuel, as he then was, to deal with questions of this kind. The terms of reference of that committee required it to examine current expenditure defrayed out of moneys provided by Parliament, and to report what, if any, economies consistent with the execution of the policy decided by the Government, could be effected therein. That committee as I say was set up in time of war. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was then Prime Minister, and the late Mr. Bonar Law was Chancellor of the Exchequer. I cannot help feeling that if it was worth while in a time of war and of great anxiety to establish a committee of that kind, it might be much more worth while in a time of peace such as we are in at the present.
  At Question Time to-day, there was an incident which impressed this matter more forcibly upon me and fortified my opinion about it. The hon. Member for Ipswich
  2572
  (Mr. Stokes) raised a question with the Lord Privy Seal regarding the price of air-raid shelters. It was suggested by the hon. Member—and we know that he is not likely to make such a suggestion lightly—that it was possible to obtain quotations at very much less than what has been stated to be the standard price. The hon. Member for Evesham (Mr. De la Bère) then asked whether this whole matter was not wholly unsatisfactory. I do not go as far as to suggest that what the hon. Member for Evesham suggests to-day, the whole of England will think to-morrow. But this I do know, that these quotations and prices will be looked into and canvassed from one end of the country to the other, and unless some definite step is taken to put this matter right and to arrest and allay these suspicions, a situation will arise which will not be calculated to promote confidence in those who are responsible for air-raid precautions. That is without question. If we had a committee such as I am suggesting, a matter of that kind could be referred to it and dealt with promptly. I hope, therefore, that some consideration will be given to the suggestion.
  I desire to associate myself with the remarks of my hon. and learned Friend the Member for Montgomery with regard to the taxation of transport, and also to support what was said by the right hon. Gentleman the Member for East Edinburgh on the same subject. I hope the Chancellor of the Exchequer will consider some modification of his proposals in this respect, with a view to lightening the crushing burdens and the capital losses which are being inflicted upon those engaged in this business. I have some difficulty in understanding this tax. I believe it is intended to be purely a revenue tax. I could understand the Chancellor of the Exchequer saying that it was in the national interest that the manufacture of high-power cars should cease, because we required the skilled labour employed in their manufacture for other national purposes which could not otherwise be fulfilled. We must remember that it is not the use but the manufacture of high-power cars which absorbs labour. I hope that something will be done in this matter and some concession made. I make bold to say that, if the time should come when it will be necessary for the Chancellor of

  2573
  the Exchequer to say to those engaged in this business, "We require your plant and your skilled labour," these firms will willingly co-operate, but in the meantime I suggest that in the interests both of the revenue and of transport, some modification might be made in this proposal.
  Then I am at a loss to know why at a time when money is so badly needed, the Chancellor of the Exchequer should have so precipitately abandoned an income of £750,000 a year in connection with the remission of the Medicine Stamp Duties. Perhaps the word "precipitately" was ill-chosen since the matter has been under consideration for about a century or more, but after the report of the Select Committee I cannot conceive any reason why it need have been dealt with at this particular time and why this revenue should be thrown away. I admit that the position in regard to these duties was unsatisfactory in some aspects, and the Chancellor of the Exchequer seems to have been haunted by the memory of Sir Harbottle Grimston and his Book of Tunnage and Poundage. I do not see any reason why this income should be abandoned at this stage. There is a case for reviewing the position and seeing whether, out of the recommendations of the Select Committee, some better and more appropriate way could be found of dealing with this subject and perhaps increasing the revenue. In fact, it has been suggested that it would not be unsuitable, if the Excise stamp or registration stamp were doubled.
  I would also ask whether the Ministry of Health were consulted and what is the opinion of the Minister of Health on this question. There is no wish to curtail the privileges of those who have been in the habit of selling and distributing these products, but it seems to me that the way will now be open for the sale of drugs without disclosure of content or formula, through slot machines, by hawkers and in other ways and I do not think any one can suggest that that is desirable in the interests of the health of the community. Many of these prescriptions and nostrums are in the nature of pain killers. A person who has a pain takes one to relieve the pain. Then he goes on taking them and inflicts great injury upon himself. It will give satisfaction in every quarter of the House if the right hon. Gentleman promises to reconsider this matter.
  2574
  Clause 19 requires information to be supplied on a matter which is, I think, a very proper subject for inquiry, namely, the practice which, I understand, prevails of paying remuneration in the form of a small salary and large allowances for expenses. That is a practice about which information ought to be obtained, and as far as it exists to the detriment of the revenue it should be rigorously stopped. I would point out, however, to the Chancellor a difficulty which arises in this connection in relation to paragraphs (a), (b) and (c) of Subsection (1) of the Clause. In the case of many large businesses no allowance is made to employés for expenses, but there are small amounts incurred as expenses by them, for which they have to be reimbursed by their employers. These amounts are not such as would affect any tax liability, but under the Clause as it is now drafted in the case, say, of a large insurance company transacting its business through perhaps 60,000 or 70,000 agents scattered throughout the country, the mere task of compiling the returns called for under this Clause will be an immense addition to the labours of the company, although they are not of the type or description which are sought to be caught by the operations of the Clause.
  I wonder whether it will be possible to put some limit into the Sub-section which will save an enormous amount of work. The point is of greater practical importance at this moment than it might be at any other time for a reason that will appeal to the Chancellor of the Exchequer. Many businesses are now engaged in considering their staff questions in order to decide how they can let men off for the Territorials. They are also facing difficulties in the junior sections of their staffs and are having to consider how they will be placed when men are called up for military training. At a time when they have all these staff difficulties they should not have to set to work to make returns in great volume and detail which will not serve any practical purpose or lead to the production of a single pound to the Treasury. I hope that that matter may receive some consideration at a later stage of the Bill.
  If we are to face these growing responsibilities and growing exactions on capital or income, whichever it may be, we shall, as time goes on, have no

  2575
  choice whether we shall impose them or not. The only choice will be as to the method by which we shall divert income or capital and the resources of the citizen for the service of the State. If that is the case, there are certain conditions which must be complied with. They must be just as between one section of the community and another, and I do not think we are in a position in this House at the moment to say what is just between one class of taxpayer and another. We used to have a balance struck between the direct and indirect taxpayers, but to-day nobody knows what the burdens of the indirect taxpayer really are, because we have set up so many independent machines outside Parliament which are, in fact, taxing instruments. There are so many boards of one kind and another which raise the prices of various articles, such as sugar, wheat and the like, that nobody knows exactly what burdens they are placing upon the indirect taxpayer. The best estimate I have seen puts the sum at something like £100,000,000.
  That is another reason why I should like to see a full statement of the national finances, as called for by the hon. and learned Member for Montgomery, because then we should really have some comparative figures in regard to our internal taxation and be able to compare the taxation of this country with other countries. This will enable us to have a true picture such as we cannot obtain at the present time. Let us have justice as between one class of taxpayer and another. We must have certainty that there is no waste and that there is wise spending. We want a thoroughly well-equipped, full-powered Ministry of Supply working in co-operation with the Treasury and the financial Departments of the spending Ministries so that the productive capacity of the country may be devoted in the most efficient and effective way to the nation's needs.
  6.5 p.m.
  Mr. Mabane: As was said by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), this is no ordinary Budget. Indeed, Budgets now are quite different from those we used to know. That is indicated in the change in the nature of the Debates in this House. In earlier days we used to examine closely the estimates of expendi-
  2576
  ture and revenue, feeling that it was the duty of the Chancellor to present estimates which would not vary in the course of the year, and by our examination to discover how the burdens on the taxpayer might be lightened. In recent years we have become accustomed to Budgets that are not fixed. One by one items of varying character have been introduced into the Budget beginning with the provision for unemployment assistance and going on now to the vast provision we have to make for rearmament. Even as we look at the estimates for the present year, we can be fairly certain that before the year is ended they will be altered. There is in the present Budget a margin allowed for supplementary estimates, and more than likely that margin will have to be increased during the year.
  It appears to me, therefore, that there are two ways in which we might look at this Bill and the Budget which lies behind it. We might, as some hon. Members have already done, concentrate on the question whether, within the limits of the tax revenue, the methods proposed by the Chancellor are the best; or we might, as has been done by the right hon. Gentleman the Member for East Edinburgh, concentrate our attention rather on the question whether the amount of tax revenue should be larger, or, in other words, whether the allocation of expenditure between loan and tax is justifiable. On the first question I do not propose to say much. There are small variations in the tax proposals within the limits of the Budget. I may perhaps be permitted to refer to one, namely, the reduction in the Entertainments Duty on the living theatre, because I have had the privilege of working with other Members to persuade the Chancellor of the Exchequer that this was a wise and justifiable reduction to make. The fact that it has excited no opposition from any quarter is some justification for the point of view we took. There have been other alterations to which reference has been made, such as the Motor Vehicle Duty and the abolition of the Patent Medicine Stamp Duty, and in certain directions we hope on the Committee stage to persuade the Chancellor to make changes. On the manner in which the revenue is provided, there has been little criticism. As the right hon. Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair) said, the Budget might

  2577
  have been worse. I am sure the Chancellor will not judge the criticism merely by its existence, but by its volume, and this year the volume of the criticism of the tax changes and proposals has been very small.
  It is not surprising, therefore, that the Opposition has based its major attack on the question of the amount of revenue which might have been collected. I think that that is clearly what the right hon. Gentleman the Member for East Edinburgh was endeavouring to do. He wants less money to be provided by loan, and he seemed, by his argument, to agree by implication that existing measures of taxation are now stretched pretty well to the limit. He proposes, in order to secure more revenue, to go outside the ordinary and existing methods of taxation and resort to a new, extraordinary and unorthodox measure. I want to consider this proposal which, according to the right hon. Member for Keighley (Mr. Lees-Smith) would mean that no portion of expenditure need be met by loan. I do not know whether the Opposition have fallen into discord on this matter, but the right hon. Member for East Edinburgh this afternoon seemed to indicate that some money would still have to be provided by loan, whereas the right hon. Member for Keighley said that this proposal would extinguish all need for loan. The basis of the proposal by the Opposition is that the times are unusual; we can all agree on that. Also that we are now living in a state of emergency; we can all agree on that. We can agree, too, with the rhetoric at the end of the speech of the right hon. Member for East Edinburgh, but it did not seem to me a sufficient argument to justify a proposal of this character to suggest that it merely satisfies a sentiment.
  In order to justify his proposal for an emergency tax on wealth the right hon. Gentleman must do something much more than that. It is interesting to note that he and the Opposition generally now prefer this phrase "an emergency tax on wealth" rather than the phrase "conscription of wealth," or the other phrase, now a little fly-blown, "a capital levy." I was interested to listen to his speech on 26th April, when the right hon. Gentleman suddenly produced this proposal for an emergency tax on wealth. I took it, at first, for an almost unpremeditated aside. I was more surprised
  2578
  when I heard him say that he outlined it in embryo last year. I have searched his speeches and have been unable to find such a suggestion. Last year he said something quite different about the outlook of our national finances. He said:
  "What is the only way in which we are going to meet this bill?"
  I emphasise the phrase "the only way." He went on:
  "The only way is by a vast increase in the national income as a whole; and there is really no reason economically, potentially, why that should not come about.—[OFFICIAL REPORT, 26th May, 1938; col. 15–36, Vol. 336.]
  In saying that he was agreeing with the sentiments expressed by many hon. Members last year, including the hon. Member for Hastings (Mr. Hely-Hutchinson), the hon. Member for Stockton-on-Tees (Mr. H. Macmillan), myself and others. We can agree with that sentiment. We took the view, and we still take it, that revenue now can best be increased, not by increasing the ratio of taxation to total wealth, but by securing that our economic and financial policy shall so be guided that the gross total of wealth shall be increased. Thus will it be possible to increase confidence and to create a condition in which enterprise may prosper and wealth increase. The right hon. Gentleman, however, has this year apparently abandoned that notion. He has changed his tune and now wants an emergency tax on wealth. He relates it to the mobilisation of man-power. The phrase "the mobilisation of wealth" is a very easy phrase like "taking the profit out of war." It indicates a sentiment with which we can all agree, but I think we may rightly feel some suspicion with the proposals now made and wonder whether they are made because they are considered to be the most direct way of meeting the expenditure with which we are faced.
  Some us feel that the Opposition see in the present abnormal times an opportunity to kill one bird while pretending to aim at another, to achieve the redistribution of wealth and, possibly, some degree of nationalisation under the guise of an emergency tax for purposes of defence. I have no objection to the redistribution of wealth providing two conditions are satisfied. The first is that the intention shall be frankly declared, and the second is that we should be certain that the result would not be a diminution in the total of wealth. Sentiment alone,

  2579
  particularly at the present time, is not a justification for a proposal such as this. We must be satisfied that any such proposal will really do the job.
  Whatever gloss we may put on this proposal for an emergency tax on wealth, it is, as the Chancellor said, nothing more nor less than an annual capital levy. The right hon. Member says that his proposal is temporary, but I observe that neither to-day nor formerly did he set a term of time to this tax. What does he desire? I gather that he is not quite certain about it. From his earlier speech I gathered that he desired to extract from capital fortunes of more than £20,000 in value an annual levy at an average rate of 3 per cent. There is no doubt that on the occasion when he first put this proposal to the House he did propose a levy at the rate of 3 per cent.
  Mr. Bellenger: 1, 2, and 3 per cent.
  Mr. Mabane: I certainly observed that during his earlier presentation of the case, so carried away was he by his own exuberance, that he managed in the short course of five minutes to increase the amount of the tax from £80,000,000 to £300,000,000. He began with a tax of 1 per cent. on fortunes over £50,000 and he ended within five minutes with a tax of 3 per cent. on fortunes over £20,000, which would bring in an amount of £300,000,000. That is his own proposal, and stated in that simple form such a tax would in practice clearly be a kind of Income Tax calculated in a different, an extraordinarily difficult, and a most unfair manner, devised, apparently, to let off the spendthrift and to penalise the saver—a kind of exaltation of the prodigal son. He does not appear to be quite certain about it, but I think the right hon. Member intends to add this tax to existing Income Tax, Surtax and Estate Duty, and if that is so it needs only a little simple arithmetic to demonstrate that, as the Chancellor of the Exchequer said, on a great range of incomes the amount actually taken would then be 20s. in the £, or even more. If that alone were not sufficient to put this proposal completely out of court I think there are quite compelling reasons why the House should now show its entire disaproval of and scotch at the very outset this proposal for emergency tax on wealth. I think this proposal, of which, unless we deal with it promptly, we shall probably
  2580
  hear a lot in the country, deserves condemnation as a means of meeting our present needs because it is not practical, because it is not fair and because it will be economically disastrous.
  It is not practical. We have to imagine that if hon. Members opposite were in power they would have to present to the House a Measure indicating the manner in which this tax would be arranged. First of all that Measure would have to provide for capital assessment I gather that what my right hon. Friend had in mind is that the capital shall be assessed in the same way as estates are now assessed for probate, but it is clear that if in any one year we had to assess not merely the estates of those who had died but the whole of the estates in the country we should be presenting the Treasury with a task of almost incalculable magnitude. But the difficulties do not stop there. The calculation would have to be made not once but in every year, for capital values would vary up and down, some passing either below the taxable limit or above it. Therefore, clearly, the calculation would have to be made every year.
  I do not know whether the Opposition feel that either the House or the country would support any such proposal. I think not. Then, even if they were able to suggest a reasonable method of getting over this difficulty of capital assessment they would be in further difficulties over the collection of the tax. They would be faced with this dilemma—are they going to insist on money, or will they accept assets of another kind? If they insist on money clearly they destroy the value of capital, because it is indisputably the case, as the hon. Member for Hastings said, that all would then be sellers; and if they are not going to insist upon money but will accept assets it seems to me that at best they will be getting not the money they want but only the title to the income while, at worse, they will be getting a lot of useless lumber.
  Next, the proposal is not fair. Income Tax is fair. Of all taxes it appears to me to be the fairest. It falls upon all. A year or two ago we put upon the Statute Book a tax which I think is not fair, the National Defence Contribution. It is not so fair as Income Tax because it is discriminatory as between incomes and is not graduated. But if that is not fair how much more is this proposal of the right hon. Gentleman not fair. I take

  2581
  it that anyone with an income of £10,000 a year who was wise enough to spend it all would completely escape. The thrifty man who saves would be caught. If such a proposal did not stop saving altogether at any rate it would discourage it.
  I come to my third point which is that the effect of such a levy upon the economic life of the country would be disastrous. It has been suggested that this proposal is but little different from the proposal for a capital levy which was made after the War. I suggest that there is a very little in common between this proposal and the post-war proposal for a capital levy. In my view the great argument for a capital levy after the War lay in the inflation that had then taken place. A capital levy then would not have been unlike the reconstruction of a company and getting down to bed-rock again. And, anyhow, the capital levy after the War was to be a levy once and for all. Today there is no inflationary tendency yet a tax of this character would undoubtedly tend to create a deflationary tendency, and thereby it would destroy confidence and destroy the sources of revenue on which we at present depend. In short it appears to me that this proposal of an emergency tax on wealth as proposed by the right hon. Member for East Edinburgh is nothing more than a clumsy attempt at the simplification of a problem which is not really simple at all.
  We are all agreed that we desire to prevent the undue accumulation of wealth, and that in times of emergency all our material resources must be thrown in, but to achieve that desire is not a simple task and cannot be solved in this simple way. Before very long we may have to consider further means of enlisting our material resources for the great national purpose on which we are engaged. It has already been indicated, both by the Prime Minister and the Chancellor of the Exchequer, that some proposal to that end will shortly be laid before us. We are all agreed that there should be national service for wealth no less than for men.
  Mr. Bracken: Will the hon. Member explain what he means by that?
  Mr. Mabane: I was going on to explain the sort of thing which I understand to be meant by these phrases that are so commonly used, this talk about the "conscription of wealth." But I take it that the hon. Member will not
  2582
  differ from the general statement that in the event of war the whole of the resources of the country must be devoted to prosecuting that war to a successful conclusion. I take it that the hon. Member fully agrees with that, that silence, as usual, gives consent.
  Mr. Bracken: I was waiting for an answer to my question.
  Mr. Mabane: I wanted at the outset to know whether I had the agreement of the hon. Member to my main proposition that in the event of war we are all agreed that, whatever our possessions may be, they must be thrown into the national pool. I suggest that there are three, and possibly four, steps we might take which would certainly be practicable, which can be safely applied, and which will secure general assent. The first is the control of costs at the source in the rearmament programme. The right hon. Member for East Edinburgh knows as a member of the Public Accounts Committee that steps are being taken by the various Departments to control costs. We know perfectly well that that control is by no means complete or as satisfactory as we would wish it to be, but those who have had occasion to study in detail as members of the Public Accounts Committee the measures taken would certainly agree, on whatever side of the House they sit, that the measures being taken are improving as time progresses. The next step we should have to consider is a further use of the existing methods of taxation. It was suggested earlier that if there is further need then we must consider increasing Income Tax. I am quite sure that the country will accept further increases when it is clear the need exists.
  The third method, and one which we should, I am sure, adopt in the event of another war would be to limit the area of spending more rapidly and more drastically than was done during the last War. It has been suggested that the Chancellor, by his increase of the motor licence duties, desires in one small direction to limit the area of spending. Clearly in the case of an emergency we should rapidly and drastically limit the area of spending by negative measures, by restrictions. Fourthly, if we then found it necessary to appropriate wealth for the national purpose there is then a further measure to be considered. It was suggested during the last War and secured, I

  2583
  think, a great deal more approval than the proposal for a capital levy, and that is the proposal for a forced loan. In the last resort it seems to me that a forced loan indicates what should be intended by the phrase "conscription of wealth."
  By these four means which we may well have to employ progressively if the emergency continues, and certainly if ever we are flung into war again, and not by the one simple measure such as is suggested by the right hon. Gentleman, shall we meet our financial difficulties and carry through the struggle while maintaining our financial integrity. It is clear that we are already beginning to develop these methods as the emergency continues, and I am certain that such measures are likely to achieve the end desired far better than any of the proposals we hear from the other side of the House. Surely it is one of the greatest tributes to the present Finance Bill that the Chancellor of the Exchequer has been able to introduce it without shaking the confidence of business and of finance in this country, I cannot imagine that any proposals coming from the other side of the House, particularly if they were of a character such as has been suggested by the right hon. Member for East Edinburgh, would have been similarly received. On the contrary, they would be likely to destroy confidence, likely to destroy business enterprise, and for that reason I much prefer the proposals now before the House to any which I can imagine might come from the benches opposite.
  6.29 p.m.
  Sir J. Simon: It might, perhaps, be convenient to the House if I now deal briefly with some of the matters which have been raised. The Financial Secretary, who will be speaking at the end of the Debate, will deal, no doubt, with other topics if they have not yet been sufficiently developed. On occasions like this two kinds of questions always arise—queries about the actual proposals in the Finance Bill regarding particular taxes and the like, and more general questions which, I agree, are specially appropriate to a discussion on the Second Reading of the Finance Bill. I should like to say something on both classes of subject, but I would make one or two comments to begin with on the more detailed criticisms.
  Take, for instance, the point that was mentioned more than once by hon. Mem-
  2584
  bers and particularly by the hon. Member for East Birkenhead (Mr. White). He called attention to Clause 19, the object of which is to extend the powers of the Treasury to obtain information from employers about payments which they may make to persons employed in their trade or business, payments which may go by the name of expenses, but in some cases should be further examined. When we come to discuss the Clause I do not think the House will doubt that it is right that the Inland Revenue Department should have further powers than they possess to-day. We really must see to it that matter which is properly subject to Income Tax does not escape Income Tax because it is called by the wrong name. This does not mean that you should seek to charge Income Tax on expenses as though expenses were a profit; they are not a profit, they are an expense. If cases arise, however, in which a man receives, in addition to his salary, a very generous and even extravagant additional payment which is labelled "expenses," whereas in fact it does not represent his expenses at all, but is in the nature of an additional salary, everybody would agree that that sort of case should not escape proper treatment.
  I wish to make two points quite plain, because I know that many people are concerned about this Clause for fear it may involve too elaborate an inquisition and may even develop into something which is oppressive. The Clause does not make payments for expenses to employés liable to tax. It does not extend the present area of taxation at all. If the payments in fact are expended by the employé to meet expenses in performing his duties they will not attract Income Tax in future any more than they have done in the past, but if they are not so expended, and if, in substance, they constitute remuneration, they are liable to tax under the existing law. A good many people, I dare say quite honestly, imagine that because the sum they are receiving is called expenses, and because they get it for expenses, they are justified morally and legally in saying: "That need not be included in my Income Tax return because it is expenses."
  Mr. Bellenger: May I interrupt the right hon. Gentleman? I take it that the purpose of the inquiry will be to ascertain whether such payments are expenses or

  2585
  income? If it is found that they are not really expenses, how will the tax fall? On the firm who remit the expenses to the employé and under Schedule D, or will the individual be taxable on that part of his expenses assessed as income?
  Sir J. Simon: I think the answer to that is clear. We are not discussing at the moment the details of the Clause, but if it is the case that a company pays to a director a director's fee of £500 a year and £2,000 for his expenses, and if, in point of fact, the director does not incur £2,000 in expenses but something much smaller, that director ought to pay Income Tax not only on the first sum but on part of the larger amount. I think that is a principle which everybody recognises.
  Then there is the second point, which I wish to make plain at once, that if this necessary power which we wish to have were used foolishly and without real reason, it might produce in many cases a great deal of wholly unnecessary anxiety and a great deal of unnecessary work. I realise that, and I have had in mind what I know the Inland Revenue also realise, that instructions shall be issued that this power shall not be used to put concerns to the trouble of reporting all such payments, however small and however obviously reasonable. It is not in the least necessary to do that. If we get this power we intend to use it in practice so as to exclude from the return of expenses those payments which are really no more than a recoupment of or provision for expenses actually incurred by an employé in the carrying out of his duties. It would be intolerable if everybody in the country were to be made to answer questions about this matter because he had allowed a proper expense to a servant or an employé.
  I am confident that the good sense of the Department and the co-operation of all reasonable and honest citizens can make it possible to apply this new power, if we are granted it in this Finance Bill, in a way that is reasonable in itself and satisfactory to every honest citizen, who knows, of course, that he ought to pay Income Tax on what is really the total of his genuine income. I want to make that observation now because I wish to relieve anxiety which is felt, I know, in some quarters, lest this principle should
  2586
  be applied so literally that it becomes an unnecessary burden.
  Mr. Watkins: In view of what the right hon. Gentleman says and which seems to be admirable, is it necessary to fix the limit so low as £15 a year? Would not that low figure mean that employers and employed would be put to an extraordinary amount of unnecessary work with no advantage whatever to the Treasury?
  Sir J. Simon: I am obliged to the hon. Gentleman for making the suggestion. It is very proper that he should make it now, and perhaps he will excuse me if I do not actually deal with it. It will be considered, and when we come to discuss the Clause I hope that we shall come to a general agreement on the matter.
  Mr. Macquisten: If the trade unions are to be put under the microscope in this matter, might it not be most embarassing?
  Sir Adam Maitland: Does the right hon. Gentleman not think that the kind of case which he has in mind might be met by asking individuals when making their returns to state the amount which they receive either by way of remuneration or by way of expenses? It would then be for the Revenue to determine from the individual returns to what extent the tax should be charged without involving a great deal of unnecessary work on the part of accountants.
  Sir J. Simon: I am not sure whether that would meet the case, but my hon. Friend has been kind enough to make the suggestion here and now, and I will have it considered so that we may deal with it in the right way when we come to Clause 19.
  There is another point on which I should like to make an extremely short statement, because we are not yet discussing the Clause in question. I have very much in mind the advice which was given us in regard to the Medicine Stamp Duty. I would only say with reference to that proposal that it is not correct to say, as was stated by an hon. Member below the Gangway, that I took the action precipitately. As a matter of fact, I mentioned the topic in my Budget Speech a year ago, when I said that I must examine it closely before I decided what I

  2587
  could do. There has been most careful work done on the subject by a Select Committee of the House, to whom we are all grateful. I have examined the report of the Committee most carefully.
  The Committee were entirely convinced that the present archaic scheme of taxation should be repealed and they suggested something to take its place. I should naturally much prefer on this subject to lose no revenue at all, because this is not the time to lose revenue; I am just as conscious of that as is anybody else, and perhaps more so. In point of fact, the present duties could not be maintained, for the reason that they are unworkable and that we are challenged whether we are working them lawfully. I am advised that it would be impossible to say that they are being worked lawfully as a practical scheme. I hope that the House will accept from me the view that the alternative scheme suggested, though worked out diligently by the Committee, is not a practicable scheme. Naturally, members of the Committee will not agree with me, but when we come to discuss the matter in detail I think I shall be able to show very good reasons.
  I must in candour add that I do not think that the proper way to deal with quack medicines—even if you could identify them by this sort of process—is by charging a small tax on those which are sold. It is essentially a matter for control and regulation by the law of public health. I cannot think it is sound to say: Some medicines are good and those we are not going to tax; others are quack medicines and these we will permit people to sell provided that they pay a small tax. It is the most difficult thing in the world to draw a line between a good medicine and a bad. Hon. Members will no doubt appreciate the kind of difficulty which faced the Chancellor of the Exchequer when he had to do something in the matter. The hon. Member for East Birkenhead asked whether there was any fear that by such a repeal of the Stamp Duties anything would be done to injure public health. That was a very important question and in connection with it I would call attention to an answer which was given on Tuesday, 23rd May, in this House. In answer to a question whether the Minister of Health was satisfied that the proposal in the Finance Bill
  2588
  to repeal the tax on proprietary medicines was in the interest of the health of the nation, the answer given by the Parliamentary Secretary to the Minister of Health was:
  "My right hon. Friend does not think that the repeal of the Medicine Stamp Duty should have any adverse effect on the health of the nation."—[OFFICIAL REPORT, 23rd May, 1939; col. 2117, Vol. 347.]
  Before deciding on the subject I was concerned with that aspect of the matter. Although I had nothing to do with the answer to that question, and I saw it only by accident in the OFFICIAL REPORT, it corresponded with the information of a witness before the Committee, on behalf of the British Medical Association who, I understand, expressed the same conclusion. I do not ask that we should discuss to-day this extremely difficult question of quack medicines and all their ramifications, because it is a very large subject. There is, for example, the question of advertisements in many of our newspapers. We had better not discuss it now, but I thought it right that I should make that statement because it was raised by hon. Gentlemen.
  Mr. Lathan: While the Committee concerned in reviewing this question were appreciative of the difficulties, and were, I think, agreed on the point to which the right hon. Gentleman has referred, they did not recommend repealing the duties. Is the right hon. Gentleman aware that there is the greatest apprehension that the repeal of the duties may mean additional income to those who have purveyed these patent medicines and so-called remedies, and a corresponding loss in revenue?
  Sir J. Simon: I am most unwilling to prolong the discussion on this subject, but let me answer one of the points put by the hon. Gentleman. He speaks as a member of that Committee. Of course, it was some little time ago but, on looking at the report of the Committee, what I notice is:
  "Your Committee reached the following conclusions,"
  and the first conclusion is:
  "(1) that the existing Stamp Acts passed over 100 years ago are out-of-date, largely obsolete and quite inappropriate to modern requirements."
  The Committee proceed to say:
  "Your Committee therefore make the following recommendations,"

  2589
  and the first recommendation, the first of all, is:
  "that the Acts of 1802, 1804, 1812, Section 2 of the Finance Act, 1927, and all other existing legislation on the subject of the Medicine Stamp Duties, be repealed."
  Sir Reginald Blair: As another Member of the Committee, may I point out that further on we asked for a simplification of the law? We never thought that it was going to be repealed altogether.
  Sir J. Simon: I understand my hon. Friend's feeling, and I sympathise with him. All I am saying is that there is really no difference between us in our view that the existing laws are in fact perfectly unworkable, and, indeed, I am advised that, in our attempt to work them, it was extremely doubtful whether we were not ourselves breaking the law.
  Mr. Macquisten: Is it not the fact that all this money will simply go into the pockets of the newspapers who do the advertising?
  Sir J. Simon: I have no doubt that I shall hear a good deal on that point when we come to the Clause, and I shall be well prepared to deal with it. On the Second Reading I cannot be expected to argue the case from beginning to end.
  I was asked a more general question by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick- Lawrence). He pointed out that, large as the proposals of the Budget were for raising money, the development of our defence preparations continued to increase, and it was not until the day after the Budget speech that the announcement was made on the subject of compulsory military training. The right hon. Gentleman suggested that this might have the result of throwing the calculations of the Budget out of scale. The House may remember that I did point out that, since my previous statement, I think in February, of the way in which I was contemplating the division of defence expenditure this year between loan and taxation, there had been a substantial increase, and I selected a figure which I thought would mean another £50,000,000 added to the figure I had first mentioned, and I indicated that it might be more. I do not think that the particular circumstance to which the right hon. Gentleman referred requires me to revise my figure now. I had, of course, thoroughly in mind the decision which was announced on the
  2590
  following day, but I was not in a position to mention it when I made my Budget speech. I think there are quite good reasons for hoping that we shall be able to keep within the sort of limit which I had in mind; at any rate, I do not think the year's requirements ought to be greatly in excess of the figure I named. I take the view that there is reasonable ground for hoping, in the light of the general trend of recent days and the diminution of unemployment, which I hope will be found to be continuing, that the revenue yield will be favourably influenced by those facts, and that the Budget outturn may show a surplus available for covering any further Supplementary Estimates. Therefore, I have been disposed to form the view that the very substantial additional provision of £50,000,000 does not require to be still further revised in the light of what has now been announced. That is not to say that the new proposals are not, from the point of view of finance, a very serious addition. Of course they are. But I am concerned with the provision for the year, which is already some way through, and I am not disposed on that ground to revise the figure I have presented to the House.
  I should like now to say a word on the subject which was developed by the right hon. Gentleman to-day and which was also examined by other hon. Members including my hon. and learned Friend the Member for Montgomery (Mr. C. Davies) and my hon. Friend the Member for Huddersfield (Mr. Mabane). I agree entirely with the right hon. Gentleman opposite that it is possible to conceive of the construction of a system of taxation of accumulated wealth either by taking something from the owner of it every year as an annual percentage, or by the process of exacting a large fraction of it in the form of Death Duties when the property changes hands on the death of the owner. I agree that either method is conceivable as a fiscal instrument, but it seems to me that there are very considerable practical difficulties in preferring the method of an annual percentage taken from the capital total. It is a very serious point to be weighed that that would necessarily mean an annual valuation. Anyone who has had anything to do with the valuation of an estate when Death Duties accrue, knows that it is a most complicated business. The revenue autho-

  2591
  rities spend a great deal of time on it, because it is necessary to do the whole thing as exactly and justly as possible; and complications can easily arise, and do arise, which may cause such a valuation to extend even over several years. I think the right hon. Gentleman suggested that there might be 50,000 cases to be dealt with in the course of the year, and on these figures, merely from the point of view of practical administration, I should have feared that it would be an almost impossible matter for the revenue authorities on the one hand and the representatives of the owners of these accumulations on the other hand. I do not in the least agree with the further observation of the right hon. Gentleman that it would be so much easier to do this because the owner was alive. I should have thought it would be much easier to do it when he was dead. I am convinced that we should have thousands of people complaining, "What in Heaven's name is the Revenue doing? It was only yesterday that, with a great rush, I finished my valuation for last year, and here I am asked now to pro duce the figures for next year." Properties change in size, and, what is much more important, in value, from year to year—
  Mr. Macquisten: From day to day.
  Sir J. Simon: I hope the right hon. Gentleman understands that I am not saying that on this ground it is an impossible principle, but one of the most important tests of a good tax is whether it is devised in such a way that it can be administered without inflicting on people an incredible amount of trouble and inconvenience. As I said before, I can conceive that you might take an annual percentage of the global total of an estate, and that you could regard that as a different way of stating what would happen if a larger amount were taken at longer intervals, but I have the greatest difficulty in seeing how you can do both. It is no use blinking the fact that the Death Duties are tremendously high. That is a matter about which there is not likely to be any difference of opinion; anyone can test it by looking at it. I can understand the argument that, even after heavy taxation, the richest people are left with more than others have, but that does not alter the fact that the Death Duties are tremendously high, and if you
  2592
  had, in addition to the Death Duties at their present extremely high rate, this additional tap, tap, tap every 12 months, and put the two things together, I cannot see that you are going to create a very successful fiscal system. Unquestionably you would diminish at a very rapid rate the size of the estates, you would reduce at the same time the Income Tax or Surtax which they produce, and I should fear that the result of such a system would be that you would not in the end bring to the resources of the State the constant large contribution that we are seeking, and would not conserve the sources of future Income Tax and Surtax, but would, by a steadily descending process, slide and slither down until the country had lost the factor on which it depends for taxation, that is to say profits and income. [Interruption.]I have no doubt that the hon. Member for West Fife (Mr. Gallacher) has a different theory, and it may be that it would work very well, but I am thinking, in my modest, bourgeois way, of the practical business of producing a great deal of money this year, next year and the year after for various national purposes. I throw out these observations, not in the least as conclusive or final, but as reflections that I would put forward to the right hon. Gentleman.
  I desire to say just a word on the phrase "conscription of wealth." I am rather sorry that this phrase has come into common use, because it appears to me to be one of those phrases which may easily be employed as a substitute for thought and for really fairly facing what the true position is. I certainly count myself among those who consider that the people who are fortunate enough in this country to have the largest incomes and the largest accumulations of wealth are the people who ought to be made differentially to pay a big contribution. I have not the slightest reservation about that. But really, if we are to employ the word "conscription," a word which has been long in use, I suppose it implies that force will be applied, and that you have to do the thing whether you like it or not, because it is done in the interests of the State, to make the State stronger. If these are the tests of the conception of conscription, they must undoubtedly apply to most direct taxation. I can assure the House that there are very few volunteers in the payment of taxes. As far as I

  2593
  know, as regards taxation everyone is a conscript, and there are no conscientious objectors—
  Mr. Gallacher: But there are a lot of artful dodgers.
  Sir J. Simon: The Income Tax payer who came forward and said that he would willingly make his contribution, if it were not for the fact that his conscience told him it was wrong, would get short shrift. I should have thought it might well be said as a matter of analogy that taxation of incomes, etc., is a form of conscription. My only concern, however, is whether the contribution to be got from the very rich, whether in respect of income or of total accumulation, is adequate. Do not let us make the profound mistake of thinking that a country which has to raise every year the sort of sums we are now spending could get them all out of the very rich. It simply is not true. Anyone who looks at the revenue returns sees that the proportion between the number of people who are in that fortunate position and the great mass of people who enjoy more moderate wealth is such that it really is not arithmetically possible to say that you can get the whole of this vast revenue out of a short list of specially fortunate people. Get from them by all means the differential contribution which is right, and no doubt can be and ought to be made, but do not fall into the delusion, because the circumstances of the country do not admit of it, that you can raise such sums as are now needed for the purpose of our annual revenue by the process known in certain quarters as soaking the rich. Fortunately or unfortunately, the process of raising revenue is bound to be spread throughout the population and it is not possible to say that a limited number of people of great wealth ought to be made to carry that great burden.
  Now I wish to endeavour to meet the challenge about a general review. As I conceive it, a Chancellor of the Exchequer who has the responsibility of proposing to the House of Commons the scheme of finance for the year has to do his best to produce a plan which will satisfy several conditions, and it is not at all an easy thing to satisfy them all. What is the prevailing characteristic of the present situation which is bound to govern his plan? I think it is this: We are living in a period of rising expendi-
  2594
  ture, and the main explanation of that rising expenditure is Defence expenditure and rearmament, though there are other elements too. I am not going to touch on the subject of the social services. I know how some hon. Members opposite feel about it, but let us remember that we have succeeded in doing what I do not think any other country has done. We have succeeded in fact in maintaining, as we all mean to maintain, our social services. We are finding this year something like £50,000,000 out of taxation more than was found—I will not go back to a particular year—some years ago. Our social services unquestionably as a whole are the finest in the world, but we must not eat into them.
  In the second place, it is essential that we should so frame our Finance Act as to maintain confidence as far as we can. There may be Members who do not think that as important as I do. I am looking at it simply as a necessary condition of raising revenue. There is nothing easier than to find your revenue slipping away. This very year the return from Income Tax was not as big as I hoped it would be. Undoubtedly that is explained by the shocks and the anxiety that we have passed through. You ask for a principle. Here is one. I said to myself, "I must frame this Budget in such a way as will not, by the very proposals of the Budget, further tend to undermine any growing confidence." There was a very special reason why I should do that. In February I announced that out of a total charge this year of £580,000,000 for defence—an enormous sum—it seemed to me that we ought to divide it in the particular way that I mentioned as between borrowing and taxation, and undoubtedly that announcement had a directly encouraging effect on the creation of some confidence where confidence was needed.
  In April I had some extra difficulties to face. I asked myself, "Can I properly devise a Budget in such a form as will not knock down again that rising spirit of confidence which I believe is going to be so important for all of us, not only psychologically but from the point of view of future financial prosperity? Then comes this, which may not be a principle. It may be called nothing more than a rule of thumb but it is a necessary thing to bear in mind. I should like the House to realise that it is not possible to make between one year and another so

  2595
  stupendous an increase in taxes as to fill the whole of the gap that has to be filled in expenditure rising as rapidly as our expenditure has risen in the last year.
  The right hon. Gentleman the Member for East Edinburgh has moved an Amendment which reproaches the Budget because it relies on borrowing. His patent medicine or specific would not bridge the gap at all. You cannot, by simply turning the screw of taxation between one year and another, fill up such an enormous gap. On the other hand, it is the height of imprudence and folly to seek to borrow it all. There is a very definite limit to what you can borrow and, broadly speaking, it is conditioned by the amount of money that there is to borrow. Savings are normally invested or used to assist the financing of business, or lent to local authorities, or to foreign countries though this is not a time when we can do that and we have to put restrictions and limits on foreign issues. But there is a certain amount which you may fairly expect to be able to borrow and, as long as you bear that in mind, I believe it is possible in difficult times like these to carry the finance of the country by resort to a certain amount of borrowing combined with a certain amount of taxation.
  Consequently my principle was this: We must not go beyond the point which is safe for borrowing. We must not make such increase in taxation as is going to dislocate the whole machine and throw everyone into gloom. We must see whether it is possible to divide this great burden in such a way as is best calculated to cause these two sources of strength to be used together. Whether my division is right or whether someone else's is better no one can say, but what I do know is that the load of taxation which we are asking the people of the country this year to carry is a most tremendous burden. I believe it is possible for us to get the assistance of borrowing to provide the sum that I have mentioned and that we shall succeed in meeting the difficulties of this year by a combination of the two.
  The right hon. Gentleman referred to what the Prime Minister said about the future. It will be no good for any of us to be too lighthearted and careless about the future. I certainly take the view that we are living in times and under conditions which cannot possibly be expected
  2596
  to go on for ever and ever. We are passing through a period which we all hope will soon be seen to end in a turn for the better. That does not depend merely on finance but on a lot of other things. If you challenge the Chancellor of the Exchequer as to his principle, you are not entitled to accuse him of living from hand to mouth because he recognises the undoubted fact that we are passing through a critical period which we have to finance by methods such as this. I hope, therefore, that the House will feel that I have not acted without any principles, and I think the principles which I have expounded are principles which will commend themselves to the House of Commons.
  7.12 p.m.
  Mr. Benson: The right hon. Gentleman has told us that the principle upon which he constructed his Finance Bill is that we should not shake public confidence. We have often been told by the party opposite that an increase in direct taxation is one of the surest methods of shaking public confidence. If we had in the country an informed public, surely one would expect that confidence would be shaken far more by the State having to borrow because it is having a series of deficits rather than by the State meeting its expenses year by year out of revenue. Surely it is deficits which should shake confidence rather than increased taxation. The hon. Member for Birkenhead (Mr. White) raised a very interesting point, which was taken up by the hon. Member for Huddersfield (Mr. Mabane)—the question of war-time finance. I think really it is time we were considering—not necessarily in the House of Commons, because it is rather a complicated matter—what we propose to do from a financial standpoint if we have to face war. It is certain that our present financial machine and the old methods adopted in the last war are not going to carry us through, and that no financial structure is going to stand the piling up of another £7,000,000,000 on top of the present debt. If we have to face war we shall have to envisage an entirely new financial and possibly industrial structure. The hon. Member for Huddersfield suggested control of costs. We are trying to do that now—more or less ineffectively. He suggested the extension of existing taxes; but he himself said that already these taxes were at a maximum. He suggested a forced loan instead of a capital

  2597
  levy; but a forced loan has all the disadvantages of a capital levy. It has to be based on some valuation of assets, and to the State it has the disadvantage that it is a loan and not an influx of assets.
  The last War was an example of how a great national emergency should not be financed. We finished that War with a National Debt of £7,000,000,000 or £8,000,000,000. We ought to have finished with a National Debt of not more than £2,000,000,000, against which we should have had assets—doubtful assets, I admit—of loans to other countries amounting to £1,000,000,000. We borrowed £1,000,000,000, which, in effect, we lent to our Allies, and we sold securities of foreign investments amounting to approximately another £1,000,000,000. The whole of the rest of the material costs of the War were created year by year in this country, and the wealth that was created year by year, month by month, ought not to have been allowed to flow into private pockets and then lent to the Government. Had we taken the wealth as it was created, our total increase in debt would have been £1,000,000,000, which we borrowed from America, and our total decrease in wealth—apart from human life—£1,000,000,000 of assets sold abroad. We shall not be able to finance our next war in that way. We shall certainly have to see that the cost of the war is borne by the day-to-day creation of wealth in this country, and there will be no possibility of the loan-monger intervening between production and the community.
  If I may get back to something more germane to the Finance Bill, I should like to refer to the evasion Clauses. I see that the Chancellor is still going on with the slow business of trying to stop up one hole at a time. I am sceptical as to whether he will be any more successful now than he has been in the past. I am very doubtful whether he will get any increased yield from his increased Surtax, because he is also enormously increasing the incentive to avoid Surtax. The tremendous avoidance of Surtax which has taken place, and which I hope to show is still taking place, dates very largely from the increase in Surtax that took place in 1929 and 1930. Surtax then jumped from 6s. on the maximum income to 8s. 3d., and the result was an enormous increase in
  2598
  evasion. Income Tax and Surtax now run up to 13s. 9d. on the top incomes.
  Mr. Hely- Hutchinson: Will the hon. Member remember what Government was in power in 1929 and 1930?
  Mr. Benson: I am not concerned with what Government was in power; I am merely stating a fact. Nor am I concerned with making debating points against the party opposite. If you put Surtax at 13s. 9d., you are putting an enormously increased premium on evasion.
  Mr. Macquisten: And people am also not trying to earn the money.
  Mr. Benson: I am not concerned with that now. The Chancellor has increased his safeguards against evasion simply by one or two Clauses which really come down to one very tiny, narrow point. I said that evasion was going on on a large scale. I want to give some facts to show that that is so. I am willing to admit that a good deal has been done to prevent what I might term the cruder forms; transference of assets abroad, I am told, is now practically impossible as a method of avoidance; but it is quite obvious that there are other methods still going on. It is very curious that although the country as a whole has completely recovered from the 1929–31 world economic slump, and is possibly even wealthier than before 1929—[Interruption.] The index of production is from 21 per cent. to 30 per cent. higher than in 1929. There are more than 2,000,000 more people employed than in 1929. Surely that is an indication that the wealth of the country has increased; and if we take the taxable income of the country, and exclude from it the taxable income of the weekly wage earners and of the Surtax payers, we find that from 1929 until now there has been a sharp increase.
  I think there is every reason to say that the country is wealthier now than it was before the great slump, but the curious thing is that this recovery—I will not press the question of increased wealth; I will take my stand on the fact that we are no worse off than in 1929—appears to affect everybody but the Surtax payer. Wages are up, Income Tax is up—[An HON. MEMBER: "Surtax is up."] No it is not, except the rate. The yield is not up, and neither is the amount of income coming under review for Sur-

  2599
  tax. If we take 1928–29 as the basis—that is the first year in which Surtax was separately assessed—and compare the figures with those for 1936–37, which are the latest given in the Board of Inland Revenue returns, we find an extraordinary thing. We find that Surtax income is down—and down very much more in the higher ranges than in the lower ranges. Where the incentive to avoidance is greatest, there is the greatest drop. If you take Surtax incomes below £10,000, the drop is only 11 per cent., but on those over £10,000 the drop is 31 per cent. Does anybody really believe that in the period between 1928–29 and 1936–37 the very rich really lost one-third of their income?
  Mr. Hely-Hutchinson: There is no doubt about it.
  Mr. Benson: There is certainly no doubt that their returns suggest that, but whether their returns are accurate is an entirely different thing; and I dispute very strongly any suggestion that those returns are accurate. The Chancellor of the Exchequer, quite unintentionally, in his Budget Speech gave evidence that avoidance was still going on. He referred to the fact that last year he had received an increased yield from Surtax, and he said that it was materially due to the evasion legislation. If that is correct—and nobody has a better chance of knowing than the Chancellor—what has happened to the increase in prosperity that seems to have missed the Surtax payer? In the year 1936–37, to which the Surtax returns for last year applied, there was shown in non-Surtax incomes an increase of £130,000,000. It was only the Surtax payer who did not share in this expansion. There should have been a double growth in Surtax returns: a growth as a result of our tax evasion legislation, and another growth as a result of the Surtax payer sharing in the increase in our national prosperity that year. But there was only one growth, which was due to legislation. Obviously, that means that there is still avoidance going on, and the Surtax payer, although caught partially by the legislation, was able to sidestep his share in the increase of national prosperity.
  Colonel Sandeman Allen: Has the hon. Member considered the effect of high
  2600
  Death Duties on Surtax payers in recent years?
  Mr. Benson: I am glad the hon. and gallant Member has referred to that, because I am going myself to refer to it in a moment—or not so much Death Duties as estates coming under review. Either there has been a redistribution of wealth, a shift of wealth from the very rich down the social scale, or there has been avoidance. There is no third alternative. Let us for a moment examine whether there has really been any redistribution. I think we shall find that that explanation simply will not stand. In the first place, we have the long-term examination of such statisticians as Messrs. Danuls and Campion, of Manchester University, who inquired into the distribution of wealth between 1914 and 1934. After the most careful examination, they came to the conclusion that there had been no wealth shift. In 1914, 60 per cent. of the wealth of this country was held by 1 per cent. of the population, and that an identical amount of wealth was held by exactly the same percentage of the population in 1934. Mr. Colin Clarke in 1937 made a similar calculation, that the most remarkable thing about our social system was the relative stability of the economic distribution of wealth. On a long-term scale, sccording to our economists and statisticians, there is no evidence of this extraordinary shift of wealth which the Surtax figures would seem to suggest.
  The hon. and gallant Member for Birkenhead, West (Colonel Sandeman Allen) raised the question of the Death Duties. Here we have, in the annual returns for estates coming under review for Death Duties some index of the actual distribution of wealth. Had there been this extraordinary diminution in the wealth of the very rich, it ought to have shown itself in the estates that came under review for Death Duties. If there was a decrease of 30 per cent. in the incomes of the taxpayers with £10,000 a year and over, that decrease ought to have shown itself, not in the amount of estates coming under review, but in the proportions of those of very rich folk. I am not trying to argue that because the value of estates has gone up in 10 years, therefore incomes ought to have gone up—differential rates of interest make that rather complicated—but it is fair to say that if you get an enormous decrease in

  2601
  the amount of the incomes paid, while at the same time the incomes of the rest of the community are either as large as or greater than they were, there ought to be some shift in the proportion of the estates over the previous 10 years, but if we turn again to the Board of Inland Revenue returns, we find that there is no such shift. Take the proportions of the three groups—up to £10,000, between £10,000 and £100,000, and between £100,000 and £1,000,000. For the year 1928–29 the proportions were 27, 39, 23; 10 years later they were 31, 41, 21—practically no change at all. I hope the hon. and learned Member for Ashford (Mr. Spens), if he is going to reply, will explain how it is that you can get an enormous shift in the proportion of incomes, but no shift in capital values.
  More than anything else it is the fact that the very rich are still, when they die, presenting for taxation exactly the same proportion of estates that makes me convinced that that drop of 30 per cent. per annum in the incomes of the over £10,000 a year Surtax payers is not a real drop, but a fictitious drop, and is largely due to some form of tax evasion or avoidance. We have very largely stopped the cruder forms of evasion, but I am told that there has recently been a very large development of the formation of irrevocable trusts for settlement upon children, not under, but over 21 years of age. I do not raise the question of whether this is or is not justifiable. We are discussing the question of the yield of taxation, and our prime concern is the defence of the fisc. If it is found that for the purpose of avoiding high differential taxation, parents are making large settlements upon their adult children, this House will have to take cognisance of it, and it may be that we shall have to raise the age at which the income remains the income of the settlor from 21 possibly up to 30. I am not suggesting that as a definite, concrete proposal. It may be that the age will have to be varied according to the size of the settlement, but it is obvious that we shall have to take some cognisance of what is obviously a very large loophole in our assessment of Surtax. Although it may be perfectly natural for parents to say, "I may as well give it to my son as to the Exchequer," we shall have to take steps to deal with the matter. In this Budget the Chancellor of the Exchequer has very largely increased the in-
  2602
  centives to evasion, and he has taken a very, very timid further step in checking it. It deals simply and solely with companies that own companies that own companies, and it is only one very limited method of evasion. What we shall have to do is completely to overhaul the whole question of our tax evasion machinery; we shall have to take far more drastic steps and, if necessary, adopt entirely new methods.
  7.37 p.m.
  Mr. Spens: I entirely agree with the hon. Member for Chesterfield (Mr. Benson) that every increase of Surtax increases the incentive to try and avoid it. There was a time when the increase of the duty on whisky had the result of less and less whisky being drunk in this country and less and less revenue coming in. Every time you raise taxation, there comes a point at which your revenue begins to decrease. I think the hon. Member is right, and that so high is the existing Surtax that at present measures are still being taken to avoid the payment of those rates. When the hon. Member says there is a drop of 31 per cent. in the highest classes, again I would not differ from him. I differ from him only in this, that I am satisfied that the method of avoidance now, when so many gaps have been stopped up, is that certain persons are giving in their lifetime to their children or relations what would ordinarily pass at their death, and that has the result of lowering them from the topmost category and of increasing the numbers in the lower Surtax category. The figures which he quoted appear to justify my assumption.
  Mr. Benson: If these Surtax payers in the higher ranges are actually giving their wealth away during their lifetime, why does it not show when their estates come under review for death duties?
  Mr. Spens: I will try and deal with that point in a moment. I hope both the House and the hon. Member will realise that I am answering a speech of which I had no forecast and which has given one a good deal of difficult conundrums to answer. The one thing that, it seems to me, this House cannot do at the present time is to prevent people giving away their property out and out. You cannot prevent people giving away their property to individuals any more than you can

  2603
  prevent them giving it away to charity, and I believe that the only loophole that really exists for a very rich man to get out of the highest category—and he will get out of it if he has to pay enormous sums, as he has at present—is by actually bringing himself into the lower category by giving away his property out and out. I cannot see how any legislation will stop that. You cannot say that what a man has given away out and out shall be deemed to remain his property when someone else is using it and has become the owner of it.
  Let me now deal with the second point, which occurred to me thanks to a short discussion with an hon. Friend behind me. Surtax income, of course, does not come solely from capital; it comes as well from earnings, and there is a large proportion of the higher class of Surtax payers who in fact have an earned income as well as an income derived solely from capital. Therefore, you will never get an exact proportion or relation between income which is subject to Surtax and capital which subsequently passes at death. I promised that I would make only a very short speech, and I am supposed to keep my promise, though perhaps five or six minutes have been used in trying to answer the hon. Member for Chesterfield. I want to criticise from quite a different point of view these definite proposals for reducing tax avoidance. The hon. Member says that they are confined to one particular type or method of avoidance. Certain it is that the most savage attack is made in these Clauses on what is called the small private investment company. It is perfectly true that the small private investment company, known as the one-man company, has been a method which has been used since the Surtax got high as a method of trying to get out of the high rate into a lower rate, and, therefore, to the extent to which it is stopping up gaps against those who use the small private investment company to avoid taxation, all of us must be with the Chancellor in his efforts to do so.
  The first point that I want to make is this: The small private investment company—what we used to call the small private company—was, of course, brought into existence by Parliament, not for anything to do with taxation, but in order to encourage the trade and industry of
  2604
  this country, to enable individuals who were trading, and who would otherwise be liable to their creditors to the last penny that they possessed, to limit their liability by incorporating themselves either in small private companies under the Companies Act or in small societies under the Industrial and Friendly Societies Act. So far as they actually carry on trade or business, the provisions against them in this Bill are negligible, but in the course of time it is constantly found that you get a small private company which is incorporated for the purpose of becoming the controlling company owning the shares of a number of industrial concerns. It is incorporated solely for the purpose of carrying on those businesses. It is a bit of machinery, and it is generally incorporated for the purpose of doing the finance of these subsidiary businesses.
  Take a specific instance of a father and three sons, engineers, incorporating themselves in a small private company for the purpose of acquiring the shares of five or six actual industrial concerns connected with the engineering trade. The controlling company do the finance. They do not distribute anything like all their profits; they retain them for the purpose of financing the actual trading concerns that they control. The reserves and so forth are in the controlling company. Technically, under the definition of investment company in the Clauses with which we are dealing, that controlling company will come under the full rigour of this law. The persons who own that controlling company will be deemed to have distributed every year—no option is given to them—every penny from every available source of income, and they will be charged to Surtax on every single penny of that income. What was the previous position? It was that the Special Commissioners only made a determination to that effect if they were satisfied that money was not being distributed in order to avoid taxation, or, in other words, otherwise than for the benefit of the company. If you are getting at the people we all want to get at, you are certainly going to do severe damage to one type of small private company which is an important part in the machinery of industry in this country. Therefore, I suggest to my right hon. Friend and to the Financial Secretary that at some stage we should have a

  2605
  better definition of the investment company—the one-man investment company—which we want to get at than we have at present.
  There are other types of these small companies besides those intimately connected with trade much narrower than the pure investment company which also have nothing whatever to do with avoiding taxation. Constantly, when you come to wind up a difficult estate, you do, in fact, find that you have a block of shares which control some big business, or something of the kind. These may be left in a man's will to, say, four girls, two of whom are infants and two just of age, who have no more idea of business or of how to deal with shares than any child. It is the commonest bit of machinery in these circumstances to incorporate a small private company and to put a trained accountant or somebody in charge of it, so as to preserve and work out the estate for a period of years for the beneficiaries. There, again, in the past the Special Commissioners have not dreamed for one moment of suggesting that that type of private company should have to distribute every penny of its income and make the people liable to Surtax if they did not do so. Whatever has been the reasonable business point of view to take has been taken without question, and if that type of company is to be caught under this provision, then we must look into the definition of an investment company which is going to be affected by this Bill. It is not companies only, because coming within the definition of companies are also societies under the Industrial and Friendly Societies Act, and so forth. This goes a great deal beyond companies incorporated under the Companies Acts.
  Now I come to the investment company proper. These are very severe measures. The only criticism I have to make is one which I have made before. When you come to hunt your quarry like this, it is perfectly legitimate to do it as from this year or as from a date of which the Chancellor of the Exchequer has given a warning, but it is not legitimate to do it from a date long before there has been any warning, or before anybody has had any reason whatever to consider that they were doing anything which brings them within this sort of penal provision. I would draw the attention of the House to the provision of Clause 13 (5). This
  2606
  is a provision which we have never before seen in an Act of Parliament, the savageness of which, as a matter of retrospective taxation, almost appals one:
  "The provisions of this Section shall have effect for the purposes of assessments for the year 1936–37 and subsequent years, and shall so have effect in the case of all persons notwithstanding that the liabilities of those persons to tax have been finally determined in whole or in part before the passing of this Act, and notwithstanding that all or any of the relevant powers of the Special Commissioners have, by virtue of something done or omitted to be done before the passing of this Act, ceased to be exerciseable."
  Retrospective legislation is all very well, but this is retrospective legislation which is going to open up assessments of four years ago, and actually, when we come to work out the provisions of this Clause, it will be found that some people will have paid tax which they otherwise would not have had to pay, and that those people who have paid tax and have their receipts for it and think that it is all over, will have their assessments opened up again for these series of years.
  Mr. Bellenger: For two years.
  Mr. Spens: In 1936–37, 1937–38, and 1938–39. The period is three years.
  Mr. A. Edwards: Is it not true that the Chancellor of the Exchequer at the time warned these people?
  Mr. Spens: No, but it is a very technical point. Parliament made a slip in the drafting of the Bill in 1937. In the Finance Act of that year they made a slip with regard to the sub-apportionment where one of the five members of one of these companies happened himself to be a company. It is a very technical point.
  There is another matter to which I wish to refer. We are getting at people who are receiving, or have, or ought to have, received the income from these companies, but here, for the first time, we are putting into a Clause—Clause 15 (3)—that a Special Commissioner shall be given power to say that someone who is not a member of the company in any legal sense, who has no legal or equitable claim to any part of its income, but who, the Special Commissioners think, is likely to be able to cause the people who are controlling the company to act as he wishes, shall have to pay the whole of the Surtax on the income of the company. If we are going to give to any tribunal—and I have often said in this House that no one has a

  2607
  greater respect for the Special Commissioners than I have—the right of saying that A, B, C, D and E are five members of the company, but the brother of C, or the sister of E, or the mother of A are in a position that they may be able to get part of this income out of these members, and therefore they themselves are to be treated as members and are to be taxed, then I say, "Why not do what has been suggested before and give to the Special Commissioners the right generally, once and for all, to say that any transaction which in fact does avoid, and which, in their opinion, was entered into for the purpose of avoiding, taxation shall be invalid against the Crown? If you were to give this tribunal, or any other tribunal, such enormously wide powers to go the whole hog and to have a Clause to say that any transaction which did avoid, or which, in the opinion of the tribunal, was intended, or mainly intended, to avoid any transaction should be invalid against the Crown, you could not give them greater powers than you are giving them here. I do not know what sort of appeal there is to be against them. This is the strongest thing that this House has ever contemplated, and I view it with very considerable dismay.
  7.55 p.m.
  Colonel Sandeman Allen: I would like to join in offering thanks to the Chancellor of the Exchequer for the explanation which he gave of some of the Clauses about which some of us were worried. I was surprised when he repealed the Patent Medicine Stamp Duties, and I feel sure that he has gone into the matter very carefully and realises the effect it is going to have upon the chemists themselves and upon various other aspects of our national life. I, personally, am very grateful to him for having reduced the Entertainments Duty, because the hon. Member for Central Newcastle (Mr. Denville) and I and others had done a considerable amount of work to show that it was going to make a tremendous difference to the life of the theatre; we hoped that he would have been able to go further than he has done this year, but I am grateful for what he has done.
  The object of taxation is to obtain revenue, but as far as the horse-power tax on motor cars is concerned, I am not
  2608
  at all satisfied that the Chancellor of the Exchequer will obtain the revenue he hopes to receive. No tax is popular, but when we are imposing taxation we have to look at four questions. First of all, Will it bring in the revenue that is required? Does it affect other taxes so as to reduce them in bringing in that revenue? Does it penalise a particular section of the community? How will it affect the national life? This tax in particular one might call a voluntary tax, because the taxpayer can control the amount which he is going to pay. He can refrain from buying a new car. He can buy a car of a smaller horse power than he would have normally bought. He can change a higher horse-power car for a smaller horsepower car. He can lay up his car in the winter or during certain other periods of the year, and each action he takes in that direction will have the effect of lowering the licence duties and of lessening the amount of petrol duty received by the Chancellor of the Exchequer.
  Each defect places a burden upon certain sections of the community. The motor agents, as the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) rightly pointed out, have already lost over £3,000,000 in capital value, never mind the private owner. It is unfair that one section of the community, because in their normal trade they have a fairly large stock of secondhand cars, should suddenly be fined over £3,000,000, none of which has found its way into the pocket of the Chancellor of the Exchequer. The manufacturers are keen sufferers from this tax, and in particular the manufacturers of high-powered cars. I am not going into the details of the tax, because I hope to do that on the Committee stage of the Bill. A car, to a great many people, is a necessity, and especially to some of the smaller people who have gone to live on the estates outside large towns. They have gone there with their income very carefully worked out, and they have bought a car in order to take their children to school and to use it in order to go to business.
  To increase the tax so suddenly is a very important thing for them, but much more important from the point of view of the Chancellor of the Exchequer is the danger to the export trade. Any retardation of the output of the high-powered

  2609
  cars—it is the high-powered cars which are sent abroad—will retard the advance in design of these cars. It will ultimately put up the cost of production and make it more difficult for us to compete. Take the first reaction. The Americans are saying, "This is a good thing. We do not gain very much in the British market, because we have not a very big foothold there, but we are going to get what the British manufacturers are now exporting to the rest of the world." I hope the Chancellor of the Exchequer will go extremely carefully into that matter, on which I shall enlarge in the Committee stage, unless my right hon. Friend can see his way to reduce the taxation from 25s. to 20s., which I believe would be accepted by everybody and would not dislocate industry as the present proposed taxation undoubtedly has done so far.
  There is one small point which I hope the Chancellor of the Exchequer will look into, and that is the question of making the licences payable at monthly intervals instead of by annual payments. The small man is accustomed to getting his income monthly or even weekly, and if arrangements were made for the licence to be payable monthly it would be very convenient. There seems to be no reason why it should not be paid monthly. At the present time if I want to license my car to the end of June I cannot do so, but I have to take out a 12 months licence and then to claim at the end of June for a six months rebate, whereas at the end of June I can take out a six months licence to the end of the year. The machinery needs overhauling in this respect and I hope the Treasury will see their way to do it. It is perfectly simple, although I suppose they will say that difficulties may arise.
  The question of the administration of Income Tax where it touches the administrator, the trader or the soldier who is serving overseas, also calls for attention. For example, the officers who are serving overseas find that they are being charged by the Cingalese Government on the income they receive beyond their military pay and allowances, no matter whence it is derived or where it is spent. If it is income received from investments in this country the tax is deducted here, and these officers are having extraordinary difficulty in getting the matter adjusted as between the Cingalese authorities and the British Treasury. Some of them, I
  2610
  know, at the present time are out of pocket to the tune of about 7s. in the £. To the rich man that is not a great inconvenience, but to the officer who is not particularly rich it is a matter of great importance, especially when he may be transferred in the interim and has the expense of moving, and all the while he is trying to recover money from the Treasury. I hope the Treasury will collaborate more with the Colonial Office over this matter.
  I should like to reinforce what my hon. and learned Friend the Member for Montgomery (Mr. C. Davies) said on the question of colonial officials and their wives on the west coast of Africa. I will not repeat what he said, because he said it very clearly and forcibly. I agree with every word that he said. He did not, however, mention the case of officers who are home on sick leave. If they stay here for a certain period they become liable to pay Income Tax. That is not in the interest of the inhabitants of this country or of the Colonial Service, because a man who suddenly finds that he is taxed because he is staying longer on account of being physically unwell, decides that he cannot afford to be ill any longer and goes back to the tropics, not fully recovered, in order to sacrifice his health for the benefit of his wife and children. That needs grave consideration by the Treasury, in consultation with the Colonial Office. I hope they will look into this matter, because it is extremely important that a man should not be penalised owing to ill-health. I hope that I have made my point reasonably clear.
  I will not detain the House much longer, because many of the points with which I had hoped to deal have already been made. I was, however, glad to hear what the Chancellor of the Exchequer said about Clause 19. It seemed to me as if he was using a steam hammer to crack a nut. If that Clause can be overhauled, the question of insurance companies and the expenses paid to their various agents and travellers can be looked at more from the point of view of trapping those who are using that method of expenses to avoid taxation, rather than putting people to a lot of unnecessary trouble and expense in finding out twopenny-halfpenny returns. The Finance Bill certainly deserves a Second Reading and I doubt very much whether the Opposition will think that it is worth while to oppose it.
  8.11 p.m.
  Mr. Ridley: Life, according to Horace Walpole, is a comedy for those who think but a tragedy for those who feel. If it were not for the seriousness of the problem of tax evasion it would be a comedy to watch hon. Members on the other side of the House chasing their own criminal friends and even pretending to chase themselves. I am sure there are other hon. Members who would be amused by the lament of the hon. and learned Member for Ashford (Mr. Spens) that in this case the criminal has not been warned that if he committed the crime again he would be rather severely dealt with. He said that some of the measures that were being taken against tax evasion were to be retrospective for two years, and he thought that was cruel. The inference was that he thought that they might at least have had a warning in order that they might get away from punishment. When I think of the sort of punishment that is meted out to humble men in my constituency and in many other constituencies who, goaded by cruel hunger, seek not to disclose particulars of all their family income in connection with the determination of the means test, I cannot think that the terms in the Finance Bill in regard to rich tax evaders are more severe than they ought to be.
  We are told that increase in taxation must in the end tend to diminish revenue. I hold in my hand a series of quotations from speeches made in this House in 1907 when it was proposed to increase the Income Tax to 1s. in the £. The gloomy forebodings that were expressed in 1907 have been entirely unjustified by subsequent events, and so will the gloomy forebodings made now by the hon. and learned Member for Ashford. I am sorry that the Chancellor of the Exchequer is not present because I desire to say a few words about some of his observations. No one can show so much pride in his own accomplishments as the right hon. Gentleman. He spoke of the rising spirit of confidence. Many of us still live in our own little world and have no knowledge of the world in which other people live. I do not want to say this for the sake of introducing pathos, but there is no rising spirit of confidence in Durham, in South Wales or in my own constituency. On one day last week a pit closed down in my division, and there is now a stricken village. There may be rising confidence in Throgmorton Street, but not in the Special or depressed areas.
  2612
  I do not think that any Government in modern history has so frequently changed its attitude in regard to major events and has managed to persuade itself at the same time that it stands exactly where it did, as has the present Government. The right hon. Gentleman spoke with optimism and rather discounted the idea that we need necessarily anticipate a further expansion in arms expenditure or an increase in the amount of money to be raised by loan, such as seemed to be his view recently. He discounted that view because of what he described as the favourable turn of events in the last few days. That favourable turn of events means that the Government have had to take a course which they have vigorously opposed. They have been compelled to bend under the pressure in this House and under the pressure of public opinion. That has created a change which in the view of the right hon. Gentleman may mean that there will be a decrease in the armaments burden and in consequence a decrease in employment. It is in these days a grim prospect that many men can only earn a living if they can manage to find employment in producing instruments by which other men will die.
  The right hon. Gentleman spoke with ringing pride of the rise in the employment figures. There would be justification for pride if that rise was a planned rise; if it was a rise which was the consequence of a planned economy. It is not. The Government have consistently refused in the last seven years to engage in any kind of planned economy designed to raise the employment figures. To the extent that there has been a rise in the last year or so or in the last few months, it has been a rise due not to planned economy but because of the grim necessity of a situation brought about by the Government's foreign policy. Therefore, in our opinion there is no justification for pride on the part of the right hon. Gentleman.
  I am sorry that the hon. Member for Huddersfield (Mr. Mabane) is not in his place. He delivered a speech which was a debating speech but not in the best sense of the word. He said that in regard to the proposal to place an annual levy on wealth, made by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) it was best to deal with it once and for all, so that we might hear no more about it. I suppose that when the hon. Member sat down he

  2613
  thought that he had dealt with it once and for all and therefore there would be no occasion for supposing that we would introduce the subject again. It must be clear that the whole political issue of the future ranges round this simple question—who is to bear the cost of the defence burden? Is it to be borne in increasingly uncomfortable measure by people who cannot afford to bear it, or is it in some way, whether it be the way devised by my right hon. Friend the Member for East Edinburgh or in some other similar fashion, to be borne by people so comfortably situated that they can the more easily afford to pay.
  The hon. and gallant Member for West Birkenhead (Colonel Sandeman Allen) spoke about motor taxation with a familiarity that I am afraid I cannot equal. I cannot say what the tax on my motor car will be next year, because I do not possess one. I saw in New Palace Yard last night a most extraordinary car owned by a Member of this House. I cannot believe that the owner of that car could not afford to bear this extra taxation. Even if he had to buy a cheaper car it would still be a costly car. Certainly, he could well afford to pay heavier taxation than is now the case.
  Let me deal with the terms of the Amendment which is before the House. The policy which has been pursued by the right hon. Gentleman in the matter of taxation is in our view a violation of equity and justice. In the last two Budgets there has been a substantial increase in indirect taxation. In former days the right hon. Gentleman was a strong advocate of taking all taxes off the people's food, and providing them with a free breakfast table. What justification can there be in these days for the right hon. Gentleman to abandon these sound canons of taxation? If he will look into hundreds of homes in many constituencies he will find uncomfortably abundant evidence of food insufficiency. Our people cannot buy in sufficient quantities, or in quality, the right food. They lack meat, milk, butter, fish, eggs; all the protective foods, and the right hon. Gentleman by his food taxation in the Budget of last year adds to that grave insufficiency in the Budget of this year in a totally unnecessary and despicable fashion. He deepens poverty and sharpens cruelly unbearable hunger. It was Burns who said:
  2614
  "An idiot race to honour lost;
  Who know them best, despise them most."
  I do not propose to employ terms so strong as that to hon. Members opposite, but I have no copyright in the quotation, and if any other hon. Member likes to use it he is at liberty to do so. There are many other ways in which this money could have been raised without so much discomfort. The hon. Member for Chesterfield (Mr. Benson), whose knowledge on these matters is very great, quoted from the latest returns of the Commissioners of Inland Revenue. May I give one more quotation from it? The Chancellor of the Exchequer said this afternoon that Estate Duty was very high indeed. What are the figures? About 95,000 people left £578,000,000, and the Death Duty was less than £80,000,000, so that they were still left, or their heirs were still left, with some £500,000,000 of inherited wealth entirely free from taxation. Of the total number who died last year, 78 per cent. died without nay property at all, 8 per cent. left only 3 per cent. of the property, and 13 per cent. left 90 per cent. of the property chargeable to Estate Duty. The hon. Member for Huddersfield inquired whether the proposals of the right hon. Member for East Edinburgh were designed only for the specific purpose in view or for the wider purpose of the party on this side of the House; an equal distribution of wealth. If the proposals did both things at the same time they would have in our opinion a double value and virtue. Of course they are designed to do both things. I think it was Mr. Irving Fisher, the American economist, who said:
  "The distribution of poverty depends on inheritance, constantly modified by thrift, ability, luck and fraud."
  It depends also, in my view, on being able to pack the legislature with people who desire to see the process continued. The number of people who pay Surtax rises year by year. In 1933–34 there were 84,000 and in 1936–37, 95,000; and they had property of £483,000,000. If you make the maximum deduction from that £487,000,000 in Income Tax and Surtax, you still have 95,000 people with an income in excess of £300,000,000 a year, and it is owned by .0002 per cent. of the total population. In the matter of the Surtax there is still an instrument which can properly be used to secure a more equitable distribution of wealth and also

  2615
  for the more immediate purpose of lightening a burden which falls with unjustifiable severity on the lowest-paid sections of the community. I think much more serious and special attention should be given to incomes in excess of £100,000 a year. There are 80 of these in the last returns, with an average income of £190,000 a year. Nobody can justify an income of that kind on ethical or economic grounds. It is outrageous that there should be incomes such as these. They should be taxed more heavily and with a much steeper gradation of tax throughout. There is no reason why the basis of the Surtax should not be dropped from £2,000 to £1,500 with a less steep gradation in the lower incomes.
  Let me say a word or two about the Amendment which appears on the Order Paper in the names of other hon. Members and myself, which draws attention to the question of land values. I have had in this matter a curiously informative experience. Fourteen years ago I lived in what we humorously described as the last house in London. From my doorstep there was six miles of open country to Harrow, the poorest grazing land around London and not worth more than £40 or £45 an acre. Great arterial roads were made, public authorities came along with plans and the Government gave grants. Huge fortunes have been flying into the pockets of people who have done nothing to provide any sort of public amenities or services and who have made no sensible contribution to the development of what is now a very thriving suburb. It has all gone to enrich the private speculator. I would not mind so much if it had gone to enrich the original owners, but it has not always done so in this case. The Treasury ought not to stand idly by in a matter like this and Watch these huge fortunes being made without tapping this tremendous reservoir of wealth.
  A tax on land values would go a long way towards solving our present financial problems, would enable us to extend our social services and develop those things which bring happiness and comfort into the homes of our people. In the matter of our social services it is obvious that the objectives of the two sides of this House are entirely different. That is typified in this Budget. On this side we
  2616
  increased the prospects of world peace and world security. This Government believes in neither. This Government is typified in the Budget of to-day. It desires to do nothing whatever except to defend the imperial economic and territorial interests of those who electorally support it. It must be realised that the question propounded by the hon. Member for Huddersfield epitomises the point around which the great political struggle of the future must necessarily rage, that is whether it is to be a society typified in this Budget, which leaves certain people with an extravagant income of £50,000 a year, enabling them to live entirely and completely unhealthy lives, or whether the instrument of taxation will be used to equalise wealth on the one hand and to diminish the discomforts invariably associated with poverty on the other.
  8.25 p.m.
  Mr. Wakefield: The Chancellor of the Exchequer has an unenviable task at any time, but in this year of all years, owing to the international situation, it is particularly so, and I think we can congratulate my right hon. Friend the Chancellor upon doing his best to raise the necessary revenue to meet an increased expenditure for social services as well as the gigantic expenditure required for National Defence purposes. I should like, first, to refer to the increase in the horsepower tax, by which my right hon. Friend presumably proposes to raise some extra revenue. My hon. and gallant Friend the Member for West Birkenhead (Colonel Sandeman Allen) made considerable reference to this matter. He pointed out that there was a likelihood, not of increased revenue, but of decreased revenue as a result of the greatly increased taxation on the horse power of cars. I should like to add that by increasing the horsepower tax, the Chancellor is seriously jeopardising the export trade that is now being built up in this industry. Eighty per cent. of the cars of the world are over 16 horse power, and if the manufacturers of this country are to have their home market almost completely cut off, they will not be able to export these cars into the markets which they were beginning to gain in other parts of the world.
  This will mean unemployment in an industry which, I think, it is of the utmost importance to foster. People will not buy new cars. They will lay up their

  2617
  high-powered cars and buy smaller cars, and worse, the people who have been using smaller cars will not use a car at all. This means that the motor industry will suffer from unemployment. I should have thought that it was of the utmost importance, from the National Defence point of view, to encourage employment in this important engineering industry. Should war come, the more men we have trained in engineering production, and particularly internal combustion engines, the more valuable will it be from the point of view of National Defence. Men who are accustomed to making and repairing motor cars will obviously be required for all forms of transport, which will have to be increased in time of war. I should have thought that it would have been the endeavour of the Chancellor, not to decrease employment in this industry, but to do everything possible to encourage more youths leaving school to become apprenticed in the industry and to try to earn their living in it. I hope that my right hon. Friend will see his way at any rate to reduce the tax from 25s. to £1. If he did that, I feel that he might well expect to obtain an increase of revenue rather than the decrease which I think is bound to occur if the present proposals are maintained. The Chancellor also referred to the repeal of the Patent Medicines Stamp Duty.
  Mr. Edwards: Before the hon. Member leaves the subject of the horse-power tax, I would like to put one point to him. He said that 80 per cent. of all the cars in the world are of high horse power. Is it not a fact that most of the cars in this country are light cars, and if the increase in the horse-power tax drives people from heavy cars, will it not be to the advantage rather than the disadvantage of the manufacturers of this country? The hon. Gentleman also said that the increase in the tax will mean that our manufacturers will lose some of their export trade in heavy cars. Can he tell me what percentage of the production of cars is for the export market?
  Mr. Wakefield: The hon. Member said, quite rightly, that the bulk of the cars in this country are small cars, and it is for that reason, I think, that we are not exporting into the world markets in the way that we ought to do. He suggested that the increase in the horse-power tax will cause people to buy small cars rather
  2618
  than large ones, and that in that way the sales of small cars will be increased. That may be so, but surely there are far more people who were looking forward to the pleasure of purchasing a small car but will not do so now because of the increase in the tax. That is a point which must not be overlooked. Moreover, we want to develop our export trade, and to do that, there must be some basis on which to work. If there is no demand for any high-powered cars in this country, it means that the export market, which is very wide and open to our manufacturers, will not be exploited by them, because, as I think the hon. Member will agree, in order to be successful in the export market it is of great assistance to have first some assured home market on which to base costs and estimate factory production. If there is that basis, one can go into the export market with confidence; but if that basis is not present, it is impossible to develop the export market. At this time, when in many countries there is a very real desire to buy British goods and British cars, it seems to me to be the height of folly to cut off a valuable export market. After all, it must be remembered that the motor industry is the third largest industry in the country.
  Before the hon. Member interrupted me, I was about to deal with the repeal of the Patent Medicines Stamp Duty. The Chancellor said that the present tax might be unable to be collected because it was illegal, and he said that he would explain the position further on the Committee stage. He also quoted a reply to a question that was put to the Minister of Health to the effect that that Department did not think that the health of the people would suffer as a result of the repeal of these duties. I should like to know the reason for that statement, because as far as I can gather, informed medical and other professional opinion very definitely is that harm may come to the people as a result of the repeal of these duties. It is generally felt that the door will be left fairly wide open for indiscriminate advertising and for placing various remedies on the market in a way which cannot be done now. This will, undoubtedly, be harmful to the health of the people. I hope we shall have some further information in support of the statement that no harm will be done to the people of the country as a result of this step.

  2619
  There is a professional body of men who will be harmed by the repeal of these duties. I refer to those qualified chemists who have spent several years in being trained for their profession, and who constitute an essential unit in our National Health Insurance system. Up to the present these chemists have had certain privileges in the sale of these medicines, and it is only right that they should have those privileges having regard to the money which has been spent in providing them with special knowledge and to their years of training and experience. In that way the public has been safeguarded. If these privileges are no longer to be given to chemists, there will be a considerable falling off in the number of suitable candidates for the profession, and in the years to come that will interfere with the proper provision of a suitable dispensing service.
  Mr. A. V. Alexander: What is the privilege which is to be withdrawn by this action?
  Mr. Wakefield: Chemists, as is well known, have certain privileges in the sale of medicines.
  Mr. Alexander: Does the hon. Member mean that in the past the qualified dispensing chemist has been excused from the payment of stamp licence duty upon ordinary common remedies manufactured by wholesale chemists and yet has been able to charge the same price as that which is charged elsewhere and thus make an extra profit? I take it that these chemists are not to have the privilege of supplying these medicines withdrawn. This simply means that they are not now to have that sheltered competition which existed previously.
  Mr. Wakefield: It is true that there is a certain amount of sheltered competition, and surely it is important that that sheltered competition should be maintained, because of the service which these professional men render to the community as a whole. If you remove this sheltered competition, you will not get efficient service such as has been enjoyed by the public generally hitherto. I hope that the Chancellor of the Exchequer will look into this matter with the greatest care and sympathy. He is throwing over £750,000 of revenue, and I hope he will look for some other means of securing that revenue, while, at the same time, protecting a section of the community
  2620
  which deserves some form of protection for the service which it renders to the public at large.
  We have frequently heard of late from hon. Members opposite that it is high time that wealth was conscripted. The answer given from this side to that argument has been that wealth is now conscripted. We have heard this evening of the amounts which are taken from people by way of Super-tax, Death Duties, and so forth. I would put this case to hon. Members opposite. Suppose any hon. Member opposite were given £1,000,000, on condition that after the normal period of a generation that sum was to be handed back intact. The person to whom the £1,000,000 was given would have the use of it for that period and the enjoyment of the interest upon it. It would be impossible for such a person to hand back that sum intact, even though he had had full enjoyment of interest on it at the normal rate applicable to gilt-edged stock and presuming that there had been no capital appreciation or depreciation. What with Super-tax and Estate Duty that sum would be well eaten into before the time arrived to return it. I do not see how it can be shown that wealth is not conscripted at the present time. I am not saying that that course is not just or that the present position is not right. I am merely pointing out that the argument that wealth is not now conscripted cannot hold water, and I hope that in future hon. Members opposite will not use an argument which is not true.
  8.42 p.m.
  Mr. Sexton: I rise to support the Amendment. It refers first to the question of unbalanced Budgets and in that connection I would point out that in 1931 when the Labour party ceased to hold office, it was largely because of a world economic blizzard, accompanied by a high peak of unemployment. But on the ground that they had an unbalanced Budget, they were driven out of office by hon. Members opposite. Ever since that time we have had a continuation of unbalanced Budgets, in spite of the existence of a Government of all the qualities. I take it that there are three ways of maintaining a balanced Budget. The first is to cut your coat according to your cloth; the second is to borrow, and the third is to tax. The National Government have followed the two last methods

  2621
  but have not done what an unemployed person has to do when his budget becomes unbalanced, namely, Jo without. The old age pensioner and the ex-service man would frequently have unbalanced budgets if they did not cut out even some of the necessities of life.
  The reason for this year's unbalanced Budget is stated to be the demands of national defence The present state of chaos seems to be growing permanent in character and is increasing in cost. It would appear that no future Budget will be balanced, and it has therefore become necessary to do something of a major and fundamental kind to prevent the debt of this country mounting higher and higher. We on this side have frequently recommended some form of levy on capital, it may be for one year. Whatever form it may take, a major operation in the financial affairs of the country is essential if we are to bring about financial stability. What is certain is that borrowing cannot go on year after year. The piling up of debt for posterity will incur, and rightly incur, for us the wrath of our successors, and the legacy which we shall leave to them will be a legacy of lunacy. The National Debt is staggering enough, in spite of the fact that the payment of interest on it during the last 20 years amounts to more than half of the total sum of the Debt, and yet the Debt, instead of being smaller, is actually greater now than it was then. I was born into this scheme of things with my share of the National Debt as about £22. By 1900 that had been reduced to £15. After the Great War every child born into the country had for an inheritance a debt of £160. By the present Budget that will be increased by another £10, so that the legacy of debt to the children born now will be about £170. Even the "Times" has been alarmed recently at this increase of debt. On 23rd February it said in the leading article:
  "Every month of armament expenditure at the present rate implies a further addition to a debt structure which is already excessive and will make the restoration of economic order the more difficult if and when the normal conditions of peace return."
  When sanity does return to the nations of the world the job of rebuilding this shattered universe, shattered financially if not by war, will be infinitely difficult. I repeat, therefore, that something more fundamental must be done to the financial
  2622
  arrangements of this country if our economic future is not to be jeopardised. All those who have great possessions must yield more to ensure the greater possession of a sound economic position.
  The Amendment speaks of the failure to obtain from those who own wealth an adequate contribution to meet the emergency. Time and again reference has been made in the Debate to the returns of the Inland Revenue Commissioners. These returns show the enormous wealth which is concentrated in few hands. People who have £2,000 a year or more number only 95,000—a very small handful in a nation of almost 50,000,000 people. Their total income is astronomical, amounting to £483,000,000 a year, an average of £5,050 each. The net tax on that income was £57,000,000 a year, and after paying Surtax and Income Tax these people still have left on an average no less than £3,500 per year. In the higher realms of people who have £10,000 a year or more, there is a small coterie of 7,500 people with an income of £155,000,000 a year, or an average of £20,000 each.
  There is little need, therefore, for the increases in the taxes on tobacco and sugar. I have related before in the House how the old age pensioner lives, and I remember telling of one old age pensioner who told me that his only solace was half an ounce of Empire twist. Imagine the irony of it—a citizen of the greatest Empire the world has ever known, whose only solace is half an ounce of Empire twist, the cheapest form of tobacco, for which he paid 4d. before the increase in the tax. He will now not be able to buy his half an ounce of tobacco. The National Government have denied him that solace, and they have no right to do it. If the Budget had been the Budget it should have been, the old age pensioner might have had his pension raised to 15s. a week. An increase of 1s. in the £ on that big total of £483,000,000 would have produced £24,000,000 a year, and that would have gone a long way towards paying an increase in the old age pension of at least 5s. That would still have left these rich people with enormous incomes. It would still have left them with £65 a week, or as much as the old age pensioner gets in two and a-half years. Steeper taxation on high incomes would have provided more also for the Special Areas. More

  2623
  money could have been spent in those districts referred to by my hon. Friend the Member for Clay Cross (Mr. Ridley), the county of Durham, Scotland, South Wales, and other distressed parts of the country. Schemes of afforestation could have been extended—
  Mr. Deputy-Speaker (Colonel Clifton Brown): We are not now discussing how to spend money, but how to raise taxes.
  Mr. Sexton: I bow to your Ruling. I was saying what could be done if the Government really tried to redistribute the income of the country. We have heard a lot about the conscription of wealth from the other side, but their idea of conscription differs very much from our idea, and it differs very much from the conscription of the young men whom they are taking over. In South Wales and Durham this Budget could have provided far more work, and it could have done something to bring joy to the people there. The amount to be spent on Special Areas in the Budget is reduced to almost one half of last year's amount. I cannot see, therefore, how there is to be any hope for the people who live in those areas. Several Commissioners of the Special Areas have resigned. I do not know whether they resigned because their hearts were broken, but I do know that they have left behind them the broken hearts of people who have looked longingly with hope to the Government to do something to relieve them. I would make an appeal to hon. Members on the other side of the House to think on all possible occasions of the great wealth that this country has produced, produced by the workers and by the 10s.-a-week old age pensioners; wealth which is enjoyed now by the millionaires to whom I have referred. When we are trying on this side of the House to get an increase for these old people, I ask hon. Members opposite to line up with us and demand from the Government, as we demand from the Government, something more for them. We on this side of the House cry shame on the National Government who have denied these old folk the little addition to their pensions which they have for so long desired and deserved.
  8.54 p.m.
  Miss Horsbrugh: I would have liked to follow the last speaker into a discussion of expenditure on social services and where
  2624
  money could be expended in a better way, but, as we have already been informed from the Chair, that would be out of order. We have merely to discuss on the Finance Bill the question of taking money rather than of spending it. I want to plead that in viewing the taxation which is in this Finance Bill we should bear in mind, above all things, that the greatest social service, that which must lead to the greatest benefit to the people of this country at present which is the prosperity of trade and consequent increase of employment; and that in dealing with the taxation which we have before us in this Bill we have to bear in mind how it can be arranged to dislocate as little as possible the trade of the country, which is the livelihood of the people. I would refer in particular to the taxes on cinematograph film, a subject which has interested us for some time and was referred to in the Debate on 2nd May. So intricate is this industry and so intricate is this form of taxation that even at that time I think it was not realised what an enormous tax was suggested and how difficult it would be for the industry.
  This would not be the occasion to go into the subject of the tax in detail, but I would like hon. Members in all parts of the House to consider it from this point of view. Here we have an industry that Parliament, by the Act passed last year, has definitely taken upon itself to foster, to try to see whether we cannot get a prosperous film industry in this country for the sake of employment, for the sake of entertainment and for the sake of its publicity value throughout the world. When that Act was passed it was with the idea of helping the British industry. The tragic thing, it seems to me, is that the taxation in the form in which it is presented to us will bear a great deal more hardly on the British film industry than on the films sent in from other countries.
  I should like to explain that point. One of the great difficulties of the British film industry, and perhaps it is a natural result of what has happened in the past, is to get sufficient capital put into it to make it possible to produce good films. By the excise duty we put a tax on the raw material, the film. The British film industry will have to pay that tax upon the whole of its output. The American films made outside this country, not bearing, of course, the excise duty on the film, can

  2625
  bring back into their industry the capital that is necessary to it; and besides having that assured market, a tax-free market, behind them, they can show them also in this country, bearing the cost of the import duty. It is only a very small proportion of their takings that will come under the duty which is put on as an import duty. Their big market, which finances the industry, is outside this country.
  Another point I wish to make is that the tax bears very unfairly as between the producers of one class of films, the expensive films, and another. Figures were given by the hon. Member for Don Valley (Mr. T. Williams) on 2nd May, and now that we have gone into the matter more clearly I think that those figures were not large enough. The fact remains that the film that earns, say, £20,000, will be paying £800 in taxes, and the film that earns £100,000 will also be paying £800. I think that cannot be considered a fair measure of taxation. We are going to tax the raw product, the film. It may be suggested that more copies will be made of the picture that is going to earn £100,000, because the tax is not levied simply on the first copy. I have been into the matter carefully and I find that at least 50 copies are necessary. It may be said that as the cheaper films will not have so great a popularity there will be no need for 50 copies of them, but when a programme is being arranged it includes one of the more expensive films and one of the less expensive. The less expensive film will have no chance of being shown unless the same number of copies of it are made as of the more expensive film, because the programme must be made up of the two. I believe that the British film industry cannot be built up simply on the super film, the film which we are dealing with under the quota system. Behind that we must have the less expensive film, the type which I believe is the nursery of the British film industry, and it is that film which is going to be hit, and hit tremendously hard. The exhibition of a film like that will not earn a large amount of money. The return will be absolutely out of proportion to that from the expensive film, because the tax is on the raw material.
  Now I come to the news reels, and to the question of the import duty on the news reel and the excise duty on the film. I wish they could both be abolished. When we get into Committee on the Bill
  2626
  I hope that we may be able to salvage the news reels at least. It is a tragic thing that at this moment there are in bonded warehouses in London thousands of feet of news reel that will never be seen by the public, because it is not economically possible to pay the excise duty to take them out of bond in order to show them. As a consequence we shall have smaller or less varied news reels, and that at a time when all our people want to see, and ought to be able to see, as much as possible of what is going on in Canada and will be going on in the United States. Thousands of feet of news reel which will be sent over here will be subject to this import duty. As a result, a small proportion of it is taken to be mingled with other news. The public cannot be shown the full footage which they ought to see. That remark applies not only to news films coming from the United States, but news films of the work in general, although we are to-day trying to get the different peoples to know more about one another, want to be able to bring the world closer together, and want to be able to show people what is happening in this land. That is of importance from the educational point of view and it may have the biggest consequences for human beings all over the world.
  I remember the Debates in this House on the subject of newsprint being put on the free list. We said then that nothing must be done to hinder the circulation of news. That is the very thing we shall be doing if we cannot get some different arrangement in regard to this taxation upon news reels. Apart from the imported news reels dealing with events in other parts of the world there are the news reels made in this country to be shown here and for export. I believe that if the tax remains as it is at present that side of the industry will be killed. The excise duty on film is bad enough in the case of the feature film, and it is very heavy on the smaller and less expensive film, but it is a quite impossible burden for the news reel, which has only a limited life and then is of no use. There are feature films showing now which we saw, perhaps, several years ago. For several years they have ranked for quota. It has even been suggested that those more than four years old should be brought out again and ranked for quota. Such a feature film can be shown over and over again, but

  2627
  news reel films cannot. The expensive taxed raw material is going to be too expensive for these temporary films.
  I feel that a blow is being dealt at the British film industry and I hope very much that, as the Chancellor said on 2nd May, it may be possible to reconsider some of these proposals. Such action would give this industry, which is struggling for a chance, some hope. We know the difficulties of the past, but I believe they are being overcome, though it is going to be slow work. We want to get finance into the industry, but not only shall we drain finance out of it, but we shall prevent more finance coming in, because with this tax it will be seen that it is not a paying proposition. I think it was not realised at first how serious this duty would be. To say that a man whose film can earn only £20,000 has to pay as much as the man owning the film which earns £100,000, is not applying taxation fairly.
  I do not wish to keep the House, but I have a little more to say. On 2nd May, another Resolution was put forward. I did not realise at that time that because a Resolution dealing with linseed oil was on the Paper, the Indian Trade Agreement would be fully discussed. I realised that my right hon. Friend the President of the Board of Trade, when speaking on the subject of a drawback on linseed oil, was able to explain what he hoped would be the advantages to the cotton industry in that agreement. I knew very little about the procedure of this House. I was told then that upon the Second Reading of the Finance Bill that subject could be raised. The Second Reading of the Finance Bill can never be a very exhilarating performance; it is not a recreation. We find very little to cheer us as we turn the Paper, but on this occasion I found something which was very disappointing, and which I had never found before in the Finance Bill, when I saw the results of the Indian Trade Agreement there.
  This House passed a Resolution that in the next trade agreement—a trade agreement had just taken place with India—the jute trade would be put in the forefront. It does not even come in at the tail end. It has been entirely left out. We talk about the subject of, employment; that is the thing which the people of this country are demanding. It is something that must mean much more
  2628
  than the ½d. on sugar. I know that 36,000 workers in the jute trade will not have a chance of decent and steady employment unless something is done. I know the difficulties at the present time. I realise them and I am told that we still have a chance of helping the jute trade in Article 15 of that trade agreement. It seems that that is the only consolation given to us who have been working for the jute trade for many years. The position, however, appears to me as though, from a vessel that was going through bad weather certain of the passengers had been thrown overboard in order that the others might have a better chance. Those that have been thrown overboard are told that they must struggle still in the sea, but they may be rescued by Article 15. They are told: "You sink and come up three times before you go down finally, and by Article 15 we will do our best to see whether we can throw you a lifebelt just in time." If Article 15 is to be used in that trade agreement it must be used in time, and when we are not going down for the third time. At the present time one part of the jute trade is, I agree, in a better position because of the orders connected with Defence. I ask that the powers that exist be used before we go through such a severe time of depression as we have had in the past. Use those powers in time, if they are really there.
  I have spoken of employment because I believe that more people in this country are realising what finance and taxation mean. An hon. Member opposite said that we wanted an informed public opinion on finance. I think the thing which has struck me ever since I came into this House in 1931 and had anything to do with politics, is the extraordinary fact that men and women living on the smallest possible means, where shillings are to them more than appears, while we here talk in millions have, in the majority of cases, a considerable sense concerning finance and industry. They are demanding not so much an increase in the social services but a chance to work. They believe that their chance to work will be jeopardised if money is not collected as in the Budget, and they are prepared to bear the burden. It is difficult for them to realise, as it is for us, why the Chancellor has given up the Stamp Duties, which were bringing in £750,000, and why it looks as though

  2629
  we were about to ruin a trade which has been just going up again, the film trade.
  It is difficult for us to understand why those things are done. We are told that these taxes are archaic, and we are told the time has come to take them off. I would reply to the Chancellor of the Exchequer that if they have gone on so long let them go on for another two or three years. We are told that it is expected to get £1,000,000 from the film industry but £750,000 is being given up by the repeal of the Medicine Stamp Duty. I would point out to the Chancellor of the Exchequer that £1,000,000 may be got in one year but after that there will be ruin to a trade, and because of that I would ask him to consider the facts and to see whether it is not possible to have the archaic duties on medicines a little longer, in order that the health and prosperity of trade may be considered.
  9.11 p.m.
  Mr. Ellis Smith: I have asked one of my hon. Friends to be good enough to pull my coat when I have been speaking for 14 minutes. The Chancellor of the Exchequer referred to the social services and said that he knew we were very interested in them, although he did not intend to say much about them. I desire to spend my time dealing with the social services, speaking in particular to the Amendment which is on the Order Paper in the name of my hon. Friend the Member for Leigh (Mr. Tinker), other hon. Members and myself, and which reads:
  "That this House declines to proceed to the Second Reading of a Bill that makes no provision to increase the weekly allowance paid to old age and widow pensioners and does not provide for the wives of old age pensioners to receive the pension at the same time as their husbands."
  I have sat here during the whole of to-day and I have thought time after time that if only I could have more time I could answer a number of hon. Gentlemen who have spoken from the other side. The best answer would have been to give extracts from the "Economist," which has been dealing with this question during the past three weeks. The "Economist" has made a suggestion in one of its articles that the time has arrived when we should seriously consider the introduction in this country of a new tax, to be called the Excess of Income Tax. If I had much more time I should be delighted to show the need for the introduction of a tax of
  2630
  that character. My purpose, however, is to deal only with the social services, and I shall quote more figures than usual because the time has arrived when, from the working-class point of view, those figures should be placed on record. If any Member desires to check my figures I hope he will obtain from the Vote Office Command Paper 5906, which deals with the public social services. He will be able to check every figure which I will attempt to give this evening.
  I base my analysis upon the financial position of this country, as I desire to show, after making that analysis, that the proportion of money being spent on the social services is less now than it was 10 years ago. Differently from my hon. Friend the Member for Chesterfield (Mr. Benson) I say there can be no doubt that production in this country has enormously increased during the past few years, and, secondly, there can be no doubt that there has been an increase in the aggregate total of profits in this country. Had there been time I could have produced the "Economist" which would have proved the point beyond any doubt. In addition to that, there has also been an increase in the production of wealth. A few weeks ago the ''Economist'' made an examination of the profits made in this country during the past 50 years and showed the trend of total profits. As a result of that examination the "Economist" proved the case that we are making to-night.
  As a result of the examination of that Command Paper 5906—I shall quote from official figures all the time—I find that the net expenditure on public social services in 1922 was £277,000,000 and that in 1936 it had gone up to £354,000,000. The contributions paid by the people we represent to National Health Insurance and Unemployment Insurance—and this is a fact that is too often lost sight of—which amounted to £70,000,000 in 1922, had gone up by 1936 to £79,000,000. The national income in 1922 was £4,000,000,000, and it had gone up in 1936 to £4,800,000,000. The figure for industrial production in this country, according to the Board of Trade figures, was 100 in 1922, and in 1936 it had gone up to 128.6. Anyone, therefore, who examines these figures will see that relatively speaking the insured contributors in industry are paying more in insurance

  2631
  contributions in proportion to their wages than they were paying in 1922. Industrial production had gone up by 28.6 per cent., and we say that the social services ought to have increased at least in the same proportion. Seeing that that has not been the case, we on this side consider it reasonable to suggest an immediate increase in old age and widows' pensions and in unemployment benefit, and the introduction of family allowances, in order that the standard of living of our people may be maintained in the same proportion as the increase in the production of wealth. Here are some other figures which ought to be examined when we are considering the social services. An estimate was made by the Colwyn Committee, and this was supported by the Westminster Bank Review of September, 1937, which says:
  "It is improbable that the present position differs very greatly."
  The Colwyn Committee in 1925–26 said that a person with an income of £100 a year paid 11.9 per cent. of his income in taxes, while in the case of a person with £200 a year the percentage was 10.2. It is necessary to remember, when we are considering the position of people with incomes of £100 to £200, that, in addition to paying their ordinary taxes and their indirect taxes, they also have to pay National Health Insurance and Unemployment Insurance contributions. In the case of persons with £500 a year, the percentage of incomes paid in taxes goes down to 6.2, and they are not paying one penny towards the maintenance of those who are unemployed or sick, or old age pensioners. These figures show, also, that people with incomes up to £5,000 a year are taxed relatively less than they are in any Continental country. If anyone doubts these figures, they have only to examine the Colwyn Report, the Westminster Bank Review, and a number of other official publications which can be obtained in the Library at any time. They show that the national income, and especially profits, have increased considerably faster than expenditure on social services during the past few years.
  Another way in which our people are affected is in regard to Customs and Excise. My hon. Friend the Member for Barnard Castle (Mr. Sexton) spoke feel-
  2632
  ingly on this matter, because he comes from an area where the economic conditions are such that any Member of the House who does his duty is bound to consider them. The Customs and Excise figures show that in 1913–14 we were paying £75,000,000 in this respect, In 1927 the figure had gone up to £250,000,000. In 1930, as the result of a Labour Government, there was a reduction in Customs and Excise to £245,000,000, but in 1938 the figure had again gone up to £344,000,000. This brings me to a question that I have asked on two occasions in the House during the past few years. On 9th February, 1939, I asked the following question of the Financial Secretary to the Treasury:
  "Whether he can state the estimated amounts in customs and excise revenue per head of the population for the year ended March, 1938, in respect of food, drink, and tobacco?"—[OFFICIAL REPORT, 9th February, 1939; cols. 1142–3, Vol. 343.]
  I asked a similar question in 1936. In reply I was told that the estimated amount of taxation in Customs and Excise revenue per head of the population of Great Britain for the year ending on 31st March, 1936, in respect of food, including tea, coffe and cocoa, was 15s. 6d., and the corresponding figure for 1938 was 18s. In the case of drink, including alcoholic liquors, table waters and fruit juices, the figure for 1936 was £2 5s. 7d., and that for 1938 £2 8s. 2d. In the case of tobacco, the figure for 1936 was £1 12s. 3d., and that for 1938 £1 15s. 4d. Thus a higher percentage of the incomes of our people is now spent on these commodities than is spent upon them by people who are relatively better placed. A very high proportion of the income of people with less than £300 a year is spent on food, and, therefore, this continued increase in Customs and Excise taxation per head of the population is a very serious matter for our people. They are also affected by the increase of rates; it cannot be emphasised too strongly that the main burden of rates falls upon our people, and the lower middle class people in particular. The Westminster Bank Review of September, 1937, stated that:
  "Local rates paid as a part of weekly rentals must form additional taxation running up to as much as 5 per cent. of total incomes of, say, £3 a week or under."
  It is clear, therefore, that the rate burden of the expenditure on social services is mainly paid by the people themselves.

  2633
  It is too often forgotten that, in proportion to their income, working' people have relatively high taxes to meet in the form of indirect taxation, Income Tax, rates, and National Health and Unemployment Insurance, and I want to emphasise, as arising out of these figures, that the social services are certainly not a present from the rich people of this country, but are being paid for by the people who are benefiting from them. I would appeal to the House to give serious consideration to the question of the need for an increase in old age and widows' pensions. I realise that one has to be careful because of the Rules of the House, but the Finance Bill proposes to allocate expenditure in a number of directions. I am pleading that some of this finance should have been allocated in a different direction in order to enable the Chancellor of the Exchequer to carry out our desire.
  Mr. Deputy-Speaker: I must point out that the Finance Bill makes no allocation of money.
  Mr. Smith: I thank you, Sir, for your guidance. I am getting a little tired of speaking about this. Going about the country and meeting the people that we do meet, who come to us with tears in their eyes, makes us feel that it is time we tried to bring even greater pressure than we have done in the past. It is with that in our minds that my hon. Friends and I placed our Amendment on the Paper. We know that it will not be called but, when we are embarking upon an expenditure of millions of pounds in other directions, we feel that our people should have a better income when they reach the age of 65.
  9.28 p.m.
  Mr. Boothby: I have been for 15 years in the House and I have never spoken for more than 22 minutes, although nobody believes it, which is a reflection upon me. I hope to keep well within that limit to-night, as the hon. Member who has just spoken kept within his. I agree with his concluding sentences about old age pensions; and there are a great number of us on this side who go as far as to say that we think that some increase has become very necessary, and that we should like to see something done in this direction. We hope and believe that the Chancellor of the Exchequer, as soon as any possible opportunity presents itself, will give very
  2634
  favourable consideration to this reform; because I am sure Members on all sides are agreed that it is the most urgent of all measures of social reform at the present moment.
  With regard to the Budget as a whole, I think my right hon. Friend has struck an admirable balance between taxation and borrowing. I cannot bring myself to believe that the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) really thinks that at this moment, when we have still the best part of 1,500,000 unemployed, my right hon. Friend should have substantially raised taxation. It seems to me that he has reminded us all, by imposing an additional £20,000,000 of taxation, that one day we shall have to pay the bill. But in existing circumstances, by being courageous enough to announce his intention of borrowing £380,000,000, he has done, from the economic point of view, precisely the right thing. I still believe, in spite of the criticism that has been offered, that the horse-power tax is fundamentally sound in principle! and, in so far as it will divert skilled workmen from the manufacture of luxury cars to the manufacture of essential mechanical war materials, it will be a good thing, and it is no good disguising from ourselves that that will be one of the effects. Minor adjustments in the tax will have to be made—they are inevitable sooner or later in all new taxation—but I am convinced that the tax in principle is sound.
  I should like now to say a word on the question of tax evasion. I want to ask the Chancellor whether he really thinks we ought to go on indefinitely with this intricate and somewhat exhausting process of pursuing, stage by stage and step by step, the deliberate tax-dodger. It involves from time to time retrospective legislation, which I believe is in itself a rather vicious thing; and I do not believe in the long run you can ever hope to succeed, because we always start some way behind and, by the time we have caught him up on one point, he is likely to have thought of a better one. So the process goes on almost interminably. Then what about the legitimate tax-dodger? I mean in particular the man who seeks to avoid Death Duties. Under the existing system a man may find himself and his family pilloried in the House and in the national Press, or commiserated with, according to whether he succeeds or fails in evading a

  2635
  certain proportion of Estate Duty. It is regarded as trmendously bad luck if someone dies at the wrong moment. On the other hand, if someone dies at the right moment, everyone congratulates him. It does not seem to me that this is a very equitable system of taxation. If an estate should pay duty, say so, and impose the duty. If a proportion of an estate should, in the interests of the State as a whole, be transferred and relieved of duty, then say what proportion can legitimately be transferred.
  Another point to which I would direct attention is the question of insurance. I have never quite been able to see why people should not only be allowed but encouraged to insure against Death Duties. That goes some way to meet the point raised by the right hon. Gentleman the Member for East Edinburgh. It would mean an annual toll on very rich estates; but I think, if that were to be permitted or encouraged, it would be necessary not to aggregate the whole estate into one unit for the purpose of assessing the duty payable. I submit that far too much at present depends on the caprice of the individual, and the accident of death, and any tax which is as dependent as the Estate Duty is upon pure caprice and fortune is not fundamentally a sound or equitable tax.
  There is another aspect of the question which I hope my right hon. Friend will look into before the next Budget, and that is the question of one-man companies. The distinction that is drawn between public and private companies was made when the capitalist system was in its early stage of rapid expansion and it is not applicable to modern conditions. To-day there is no real fundamental distinction between public and private companies. I think that is a point which ought to be considered from a long-term point of view by the Chancellor. I sometimes wonder whether the ultimate long-term solution to the whole of this problem may not be found in the appointment of a permanent independent commission or tribunal, "with powers to send for persons and papers": a tribunal or commission to decide in all doubtful cases the amount of income on which tax should be paid, with full knowledge of the facts. That may be found to be the solution to the problem of deliberate tax evasion, which this House is showing in-
  2636
  creasing reluctance to allow to continue. I think the House looks to my right hon. Friend, with his great experience in the law and his tremendous reputation, to study this problem from first principles; and I am sure the House will be ready to take from his hands, either next year or the year after that if it is necessary to take so much time to consider it, any long-term permanent solution. I believe the present situation is completely unsatisfactory, and I do not think that, by introducing two or three extremely intricate Clauses in the Finance Bill, in an attempt to pursue the tax-dodger to the point which he reached 12 months ago, you are ever going to succeed in dealing radically with this very difficult problem.
  My right hon. Friend has not told us in precise terms how he intends to finance the rearmament programme of the Government, and he has told us why. This Finance Bill is merely an indication—and an encouraging indication, I think—of the way his mind is moving. The problem confronting the Chancellor is of absorbing interest, not merely to financiers and economists, but to the workers. In this Bill, my right hon. Friend is pulling levers which are bound to alter fundamentally, if not to obliterate, the problem of unemployment as we have known it since the War. I do not think the opinions of Mr. Keynes are seriously challenged in any quarter at present. I do not say that the problem will be completely solved in the next six months; but it will differ enormously from that which we have hitherto known.
  In the beginning of 1938, there was every indication that we were heading for a bigger and nastier slump than that of 1931. The second post-war boom ended in the summer of 1937, with the "gold scare." There seemed little doubt at that time that we were once again on the slippery slope of the downward phase of the trade cycle—and it was a very steep slope. Then suddenly, almost miraculously, the tide turned. Can anyone doubt that the main cause—I might almost say the sole cause—was the rearmament programme of His Majesty's Government, which forced my right hon. Friend to spend more than he raised in taxation? This is a very significant fact, which I think will be pondered over for many generations to come; and it may mark a turn in the economic development of the world.

  2637
  I hope that the Chancellor is never again going to under-estimate the enormous power that he wields. He is at present in absolute control of money—of its volume, of its purchasing power, and of the rates of interest it commands at any given moment. A few months ago so staid and orthodox a paper as the "Economist" went so far as to say that the Chancellor of the Exchequer in this country was in such a position that he could announce the rate of interest he thought right, and the market would accept that rate. I believe that that is not an exaggerated statement.
  Mr. Bellenger: Can the hon. Member explain how it was that not even the Chancellor of the Exchequer was able to prevent a considerable rise in short-term loans?
  Mr. Boothby: I am coming to that. The Chancellor's instruments are open market operations by the Bank of England, acting as agent for the Treasury; and the Exchange Equalisation Account. Under the old system, before we left the Gold Standard, if gold left this country the Bank of England automatically raised its rate and restricted credit until the gold flowed back, and vice versa. If hon. Members will forgive me, I will now refer to one paragraph of the Cunliffe Committee on Currency, which reported, just after the War, on the effect of a rise in the Bank rate:
  "The raising of the Bank discount rate necessarily caused a rise in general interest rates and a restriction of credit. New enterprises were, therefore, postponed and the demand for constructional materials and other capital goods was lessened. The consequent slackening of industry also lessened the demand for consumption goods, while the holders of stocks of commodities held largely with borrowed money, being confronted with high interest charges, found difficulty in renewing their loans, and the prospect of a fall in prices tended to make them press their goods on a weak market. The result was the general decline of prices in the home market."
  That acknowledgment, by the Cunliffe Committee itself, does clearly show the blighting effect on trade, industry and finance of a rise in the Bank rate. It is a most remarkable thing that the withdrawal of practically all the foreign balances accumulated in London in the years 1936 and 1937 should have been accomplished without any rise in the Bank rate at all. During the accumulation the Exchange Equalisation Fund prevented
  2638
  an undue rise in sterling by buying gold. Subsequently, when the balances were withdrawn, they sold the gold and bought Treasury bills; and at no point was it found necessary to raise the Bank rate.
  Now I come to the point raised by my hon. Friend. There was a curious interlude a few weeks ago. It looked, for one appalling moment, as if we were at the end of cheap money. There was a shortage of Treasury Bills. That was due to the sale of gold by the Exchange Equalisation Fund. It was inevitably followed by a shrinkage in bank deposits. Then the cash basis of the banks began to be seriously impaired. Still the authorities failed to increase the supply of bills, and at the same time they did not increase the cash basis. On the contrary, the cash basis was further reduced. The result was that, for one comparatively brief moment, we entered upon what seemed to be a deflationary trend. The banks began to sell their gilt-edged securities, the gilt-edged market fell, all interest rates began to rise—short-term, medium and long-term rose in roughly the same proportion. Then my right hon. Friend announced in this House that it was his intention to continue a policy of cheap money, and the cash basis of the banks was restored. In a few days the whole position was completely restored. This episode—and thank God we can now describe it as only an episode—is one more illustration of the enormous power wielded by my right hon. Friend; and that makes his position and his problem all the more interesting with regard to the future.
  I believe that the right policy to carry out is the policy which my right hon. Friend has adopted during the past few months and that is, a policy of expansion—so long as we still have a considerable volume of unemployment—of expansion plus confidence. I believe that one of the greatest mistakes that people all over the world have made during recent years is to suppose that you cannot pursue an expansionist policy without loss of confidence. The present Prime Minister showed that he could do it when he was Chancellor of the Exchequer. My right hon. Friend has carried on that tradition; and it has been, I think, carried to an even more strikingly successful conclusion by M. Paul Reynaud in France than by anybody else, because he has always been what some hon. Members would call an

  2639
  inflationist by nature, or what I would call an expansionist; and at the same time he has always recognised the necessity of maintaining confidence if an expansionist policy was to be successful. If I may respectfully say so, there is another and even higher authority on the other side of the Atlantic who has not yet grasped the necessity for maintaining confidence if an expansionist policy is to be successful.
  With regard to general policy, if my right hon. Friend is to succeed in his long-term financial policy he has to see that revenue expands; he has to see that the national income expands; he has to see, therefore, that production expands; and also that trade expands. The essential basis of all those four things, the expansion of revenue, income, production, and trade, must be, for the time being at any rate, a cheap money policy. If money is to be kept cheap—and I have said this in this House till I am tired of saying it, but it does pot do any harm to repeat it—the Government must see that always and at all times the cash reserves of the joint stock banks in this country are ample; and they have it in their power to do so. Deflation under existing conditions can only affect adversely the volumes of funds available for investment, and increase the cost of borrowing to the Government. It is, therefore, clear that until the rate of interest is low enough to suit my right hon. Friend, he ought to finance our rearmament programme by means of Treasury bills. He can afford to wait. The market is bound to come his way as there is bound sooner or later to be a flow of savings into the longer-dated Government stocks. And when these have risen to the level which my right hon. Friend requires, then will be the moment to issue new loans. That is the way in which he can keep the rate of interest, in my judgment and in that of many other people, at least down to 3 per cent., and, I hope, to 2½ per cent.
  On the question of raising additional taxation, there is the interesting suggestion put forward by the right hon. Member for East Edinburgh for a tax on capital, which ought, I think, to be considered very carefully; but it cannot be done on the first day on which it is put forward. All these suggestions for increasing taxation will arise when we
  2640
  get to a condition of full employment in this country; but until that time comes there is no danger of real inflation. Therefore, I think the Chancellor of the Exchequer is perfectly right to borrow on the scale in which he is borrowing at the present time. The time for increasing taxation, the time for increasing rates of interest, has not yet arrived; and it will not arrive until the whole of the slack has been taken up, until at least another 700,000 or 800,000 men are absorbed into industry.
  The last point that I wish to put to my right hon. Friend—and I assure hon. Members opposite that it is my last point—is that anxiety is being caused about the balance of payments, and I think that anxiety will increase during the months and years that lie ahead. We need raw materials; and we shall need them in greater quantities than ever as our rearmament programme proceeds and as war requirements and reserves need to be replenished in this country. We need raw materials not only for current consumption, but for storage. I suggest that we should take them as far as possible from our Allies—and we have quite a lot of Allies, I am glad to say, in the world to-day. These Allies on their part need arms, equipment, capital goods, and manufactured goods from us; and they are not at present getting these things. I want to say, very emphatically, that I do not believe that our present machinery for the conduct of export trade is either powerful enough or sufficiently flexible. I do not think the resources of the Export Credits Guarantee Department are anything like adequate for the purpose of conducting British export trade under existing conditions, in competition with Germany. I think that the Act which we passed the other day, with £75,000,000 odd to be peddled out under conditions very tightly drawn, is wholly inadequate for the purpose immediately in view; and I believe that in this field of export trade we are at present making very little progress in competition with Germany.
  This is a point to which I am sure the House, and the Chancellor, and the Government, will have to direct their serious attention in the weeks and months that lie immediately ahead; because it is absolutely vital, if other things are to be kept in equilibrium, that we should maintain an adequate volume of exports to enable us to pay for the imports of which we

  2641
  shall stand ever more urgently in need. I beg my right hon. Friend to direct his attention to this particular aspect of the problem, which seems to me to be a greater cause of anxiety than anything else in the economic field. Meanwhile, he has a tremendous opportunity for experiment, and I hope it will be bold experiment; and he has almost unlimited power. I think that hon. Members on both sides of the House will wish him the best of luck and success in his task, which is no less, and probably more, important than the task of any other Minister in the Government at the present time.
  Mr. Mathers: Before the hon. Member sits down, may I ask him whether he is aware, if his statement that he has never previously spoken for more than 22 minutes is correct, that he has now delivered the longest speech in his career?
  Mr. Boothby: I am delighted to hear it.
  9.53 p.m.
  Mr. Gallacher: I am due to finish by 10 o'clock, according to the arrangements that have been made for the Front Bench speakers. I am sure that no one who listened to the speech of the Chancellor of the Exchequer could do anything but admit that the bourgeois money-changers of this country have an efficient special pleader. Were it not for my association with Marxist economics, I might even have been persuaded that the Income Tax or the Super-tax was eating into the wealth of the wealthier classes. That is the idea that the Chancellor of the Exchequer tried to get over, but never was there anything further from the truth. I would like to direct his attention to this fact—and I am prepared to provide the necessary figures or to meet the Chancellor or any other representative of the other side on any platform anywhere on this fundamental proposition—that the rate of exploitation of the working class increases far more rapidly than any increase of Income Tax or Super-tax. As a matter of fact, Income Tax and Super-tax have always followed behind the rate of exploitation, with never any possibility of catching up with it; and so you get this situation, that in spite of all the talk there is about the enormous amount of Income Tax and Super-tax, the wealth of the wealthy does not decrease, but increases. Nobody can dispute that—[Interruption.] The hon. Member opposite, from the depths of his Conservative lack of knowledge, may
  2642
  laugh, but the facts are indisputable. The wealth of the wealthy is increasing all the time.
  An hon. Member opposite suggested that if an hon. Member on this side were given charge of £1,000,000 to be handed back at his death, that with full right to the income, with no appreciation or depreciation, when he came to die, there would not, owing to Death Duties, be £1,000,000 left to hand back. If I were responsible for £1,000,000 and invested it at 5 per cent. and there was no depreciation or appreciation, when it came to my death, if it was 20 years hence, the £1,000,000 would be handed back and a fortune would be handed over to those who were to come after me. But there must always be a very considerable appreciation. You might get a slight depreciation in some directions, but because of the character of exploitation, there is always, year by year, an enormous appreciation of any capital.
  The Chancellor of the Exchequer says that he is not going to interfere with the social services, and that we have the greatest social services in the world. That also I would challenge, but I will not introduce the question of the Soviet Union into this discussion, because I am certain that it would not be in order, although the Chancellor of the Exchequer said that he was dealing in his Budget with a critical period and he hoped that very soon there would be a turn for the better. No doubt the Chancellor of the Exchequer, when he was making that remark, had in mind the Soviet Union, because it is quite clear that, if we become allied with the Soviet Union, there will be a very considerable turn for the better as far as our financial commitments are concerned. The Chancellor of the Exchequer speaks very highly of our social services. Nobody will dispute the importance of our social services, but I would remind him that this is the most highly industrialised country in the world, with an industrial population in relation to the general population far in excess of any other country. That means that there is a greater degree of depreciation in the human material year by year, and, therefore, there is a greater need for social services than there is in any other country in the world.
  Has the Chancellor of the Exchequer ever considered that? If it were not for the social services the population of this

  2643
  country would be wiped out because of the ravages of capitalist exploitation. An enormous amount of money is spent every year on social services, and yet the population is not maintaining its own against the ravages of disease and death. The population is declining. Try to imagine the depopulation of this country that there would be if it were not for the social services, which are an attempt to overcome the terrible ravages of the capitalist method of exploitation. That is the situation.
  I wanted to deal to-night with the question of the Sugar and Tobacco Duties, and I would remind the hon. Lady the Member for Dundee (Miss Horsbrugh) that, while no one will justify the tax on films, I am certain that her constituents will be more concerned about the taxes on sugar and tobacco, and about the need for increasing old age pensions than they are about news reels, however desirable and important news reels are. If the Chancellor of the Exchequer had any real consideration for the most deserving section of the community, he would have raised the necessary £70,000,000 of £80,000,000 in his Budget in order to provide increased old age pensions. When the hon. Member for East Aberdeen (Mr. Boothby) was speaking about old age pensioners and the necessity for consideration being given to them, I saw the Chancellor of the Exchequer nodding his head. I wish that the Chancellor of the Exchequer, or whoever is to reply, would make a statement to-night that at any rate an investigation of some kind will be made to see by what means the necessary finance can be raised. The working classes of this country—the men and women who have to live under very great difficulties and hardships in many cases—I am sure, would be willing to contribute a little more to ensure security and comfort for the old folks.
  I would appeal to the Chancellor of the Exchequer because this would mean so much not only to the old age pensioners, but to their sons, daughters and relatives and to the masses of the people in every industrial and agricultural area in the country. I ask the Chancellor of the Exchequer—and I can speak on behalf of every Member on this side of the House as far as this question is concerned, and it is also the desire of most
  2644
  of the Members on his own side of the House—to say that consideration will be given to this question, and that an effort will be made to discover ways and means whereby the necessary £60,000,000, £70,000,000 or £80,000,000 may be raised in order to bring about this necessary and essential measure of relief for the deserving old folks of the country.
  10.2 p.m.
  Mr. David Grenfell: After this very interesting Debate I will endeavour to make a brief address and to direct my remarks, as far as I can, to the Amendment which we are submitting to the House. The Chancellor of the Exchequer has given us the benefit of his presence during the whole of the day, and I think that the whole House was grateful to him for the very clear exposition he gave of certain passages in the Budget and the principles which are involved. The House is concerned about the tremendous financial problem which this Budget envisages. It is a Budget on the way towards larger and larger expenditure. The figures on this occasion have reached a total higher than that which this country has ever known before. In the Budget of 1938–39 we raised by way of ordinary revenue no less than £927,250,000. That is a tremendous figure, but that has to be taken into account with the expenditure of that same year. In the last financial year the Treasury and the Chancellor of the Exchequer were responsible for the disposition of an expenditure of no less than £1,204,750,000. The Chancellor of the Exchequer, in his Budget speech, and again to-day, gave some account of the disparity between these two huge amounts. He has not said to-night, but he did say in his Budget speech, that the deficiency in the ordinary revenue was slightly over £12,000,000, but the excess spending was a sum of no less than £277,750,000. He gave an account in his Budget speech of the gap between the ordinary revenue and the extraordinary and ordinary expenditure. These details are given in the Financial Statement, and I have no time to-night to examine any of them, and I do not think that it would be profitable to do so at this stage.
  I would like to comment upon something to which the Chancellor of the Exchequer gave attention to-night. The Chancellor of the Exchequer reminded us in his Budget speech—and it cannot be

  2645
  said too often both inside and outside this House—of the enormous growth of national expenditure. The hon. Member for West Fife (Mr. Gallacher) said it revealed a tremendous change in our industrial life and capacity, and in the measure of our production. The Chancellor of the Exchequer said that in 1853 Mr. Gladstone brought in a Budget for an expenditure of £53,500,000, and he looked upon the collection of that amount as a great achievement. Mr. Gladstone was called a great Chancellor of the Exchequer, and rightly so. Working on slender resources, it was a tremendous achievement to have made that financial provision in those days. That is less than two generations ago, and for every 1s. which Mr. Gladstone collected then the present Chancellor of the Exchequer collects almost exactly £1. For every 1s. that Mr. Gladstone expended in 1853 the present Chancellor of the Exchequer last year had to provide for an expenditure of 24s.
  There is no attempt on the part of the Chancellor of the Exchequer to balance his Budget nowadays, but Mr. Gladstone always balanced his Budget. He was a financial purist and would probably never have survived the shock if there had been any deficit in any of his Budgets. The present Chancellor of the Exchequer never attempts to balance his Budget. He has declared that last year, although he collected a certain amount, there was a very large deficit, which had to be made up by borrowing. For the next year he said that he was going to raise by normal methods of taxation, from normal sources, £942,000,000, but that he will have to borrow, in addition, £380,000,000. I think the Chancellor of the Exchequer said tonight that his estimate of future borrowing was on the low side. We do not know the exact amount, but we do know that he has declared that he has no intention to balance his Budget. All that he has been able to say to-night is that he has been carefully considering the balance between these two methods—the claims of taxation against borrowing and borrowing against taxation. The hon. and learned Member for Montgomery (Mr. C. Davies) congratulated the Chancellor of the Exchequer upon the judicious blending of these two methods, but expressed some doubt as to whether, having given his congratulations, there was not some danger that the Chancellor of the Ex-
  2646
  chequer might go too far in one direction and fail to hold the exact balance which he believes to be essential.
  The hon. Member for East Birkenhead (Mr. White) said that much of the present expenditure was in the way of preparedness, but I gather that he was not much in favour of borrowing, because he feared inflation. The Chancellor of the Exchequer has not told us where he thinks the danger of inflation may come in. He has not told us where lies the line of demarcation when he borrows £400,000,000 this year, and perhaps next year £600,000,000. How can you add to your National Debt in this way without very serious consequences? The right hon. Gentleman dared not commit himself. He does not know. He was optimistic about next year in regard to the prospects of employment and the national turnover. It would be very strange if we spent £500,000,000 to £600,000,000 on armaments without the national turnover increasing, employment increasing, and the taxable capacity increasing. But we must remember that every loan that we issue adds to the National Debt.
  Hon. Members who are familiar with the history of this process know that in 1931 this National Government came into existence because it was said the previous Government were incurring excessive national liabilities. Since 1931, with a National Government pledged to economy, our National Debt has increased by £600,000,000, and before the next Finance Bill the debt will have gone up by more than £1,000,000,000. That is a very dangerous thing. When is the right hon. Gentleman going to stop borrowing, and what are the conditions upon which he will venture to make the demand upon capital which my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) has adumbrated several times and again to-night? There must come a time when you must stop borrowing in peace. In time of war you may have to buy loyalty and service, but it seems to me that there is no good reason why this country cannot organise its finances in emergency without having to pay special rewards to special classes.
  The right hon. Gentleman said: "I must so base my plans so that I shall secure the support of a small list of people." That is, the fortunate, rich people. They are the small list of

  2647
  people who have this financial capacity. The right hon. Gentleman must know that he cannot do justice to the nation as a whole if he considers primarily, mainly, the interests of this small list of fortunate people. These people may be small in numbers, and one might think that they are rich because of some Divine right, but they are not. They are rich because of the many Budgets that have been made in their favour. It is because the Budgets of the present Chancellor of the Exchequer and other Chancellors of the Exchequer, in the last seven years in particular, have enabled the rich people to become richer at the expense of the poor.
  Sir J. Simon: I should be very sorry to leave the hon. Member under a misapprehension, because he is always so fair. He is mistaken. I was not using the argument that I had specially to consider the favoured few. It was in quite a different connection that I was using the argument. What I was pointing out was that in a community where the number of people who are very rich are few and the great mass of the population is not in that condition, it is not really possible to raise the whole of the revenue that the country needs solely by what is called "soaking the rich."
  Mr. Grenfell: I remember the phrase "soaking the rich," and although I may have put it badly, the right hon. Gentleman was, I think, warning the House about killing the goose that lays the golden egg, the goose being represented by this small body of rich men who can be relied upon to meet taxation at all times.
  Sir J. Simon: It is rather that the goose is too small and will not lay enough eggs. Other people must lay a few as well.
  Mr. Grenfell: There are two nations in this country, and the Amendment calls attention to that fact. There is a large body of people in this country numbering at least 50 per cent. of the people who are not exempt from taxation. There are 10 per cent. of the people of this country with an income per week of less than 10s.; the next 20 per cent. have an income between 10s. and 15s. per week and the next 20 per cent. have an income of between 15s. and £1 per week. Half of the population of this
  2648
  country have an income of £1 or less per week. That is the condition of the mass of the people of this country, and it is a condition which this Budget does nothing to ameliorate. The question of nutrition has been referred to. It is well known that 40 per cent. of the income of people with small incomes goes in the purchase of food, and the remainder in the purchase of necessities.
  We complain that in this Budget there is heavier taxation on the poorest of the poor. I am not a smoker, but I have lots of sympathy with the old workman who has always bent his back to the performance of his daily task and in his old age must have his pipe and tobacco. I have every sympathy with such persons, and it is rank injustice to require the aged worker to pay more for his tobacco which is a solace and a comfort to him. Then there is the tax on tea, which is the great beverage of the poorest people in this country. They cannot get any other beverage. There are large masses of the people of this country who just have to buy what is within their power, and to tax tobacco and tea, the modest indulgences of millions of our people, is to fail to appreciate the great needs of these people. The Government have put a heavier tax upon them this year. There is also sugar, and then the question of the pictures. I am a believer in the pictures. I think they have a tremendous influence for good in the lives of our people, and I do not see why the poor people should not be relieved from the entertainments tax when they go to the pictures or to a theatre. At the present time they have to pay a contribution which is far greater in proportion to their means than the much higher contributions which are paid by other classes of the community.
  I must refer to the old age pensioner. I have been a workman all my life; I could never be anything else but a workman. I do not want to lose the intimate direct contact with people to whom I belong and who understand me. In my first election address I referred to working class conditions, visualising the problem of employment. If we had not the special conditions to which the Chancellor of the Exchequer has referred, if there was no armament programme to-day in Europe, unemployment would bring down civilisation with a crash. At the present time, there would be tens of millions of unemployed men in European countries

  2649
  and scores of millions of unemployed men in the world, were it not for armaments work. In spite of all this, however, the machine is playing an increasing part in displacing men. I do not intend now to argue whether that need be so. I say it need not. But in the conditions that have been supported by hon. Members opposite, the machine has been brought into competition with men, and the economic value of men has declined as the economic efficiency of the machine has improved. I foresaw the problem of unemployment in my first election address, and in that address I pledged myself to demand retirement pensions for all men and women at 60 years of age. That may have been a very ambitious, a very optimistic, and some may say an unreasonable thing to do, but I won my election. [Interruption.] I did not make foolish pledges; the people in my constituency know me to be serious. I have fought seven elections and I have made the same claim at each one of them.
  Therefore, in this House I am under an obligation to claim that pensions should be given to these men who have spent themselves in the service of the nation and have made their contribution to the building up of that immense fabric of national wealth which enables the Chancellor to have £1,000,000,000 a year at his beck and call. How is it that those £1,000,000,000 can come into the hands of the Chancellor each year? It is because men work, it is because they produce more than they consume. I am exceedingly disappointed that in this Budget there is no provision for pensions for men of 60 years of age. The Chancellor is content still to allow the burden of supporting the aged poor to remain on the shoulders of the distressed areas, such as Merthyr Tydfil and the Rhondda Valley. This House is unwilling to accept the responsibility. I think that the Chancellor would do well, even before the passage of this Finance Bill, to consider the financial possibilities of giving these pensions. He could do it without causing any dislocation or difficulty. It is simply a question of his will and the will of the Government and hon. Members opposite. We on this side are pledged to the pensions scheme. The difficulty lies on the other side of the House. I ask the right hon. Gentleman and his colleagues to take this opportunity of making that
  2650
  honourable provision for these men and women.
  There is another matter to which I wish to refer—the horse-power tax. This is not a subject that comes within my special interest, but I know something of the way in which men of modest circumstances get their motor cars. I have been tempted on some occasions to venture so far myself, but I have kind friends who pick me up and drive me in their cars, so that I have been saved the risk of committing myself to the purchase of a car. But I know that a large number of people of modest means want to buy cars, and these people, in buying a car, have always very closely to count up the costs of insurance, taxation, repairs, maintenance and garage accommodation. To my knowledge, there is a proportion of people who would have been buyers of new cars this season, but who have been scared off because they cannot contemplate paying the additional £6 or £8 horse-power tax that would be an additional burden of maintenance of the car. I should like to call the attention of the Chancellor to the worst aspect of this increase in the tax. The majority of people who buy new cars have old cars to sell. The process is, "New cars for old." Anybody in a small way who buys a new car, hands in his old car in part payment and the allowance in respect of it, is determined by the market for second-hand cars.
  If somebody were to write the autobiography of a car, it would be a very interesting story. It would show the first appearance in all its shining youthfulness of the new car, careering and cavorting along the roads, enjoying all the respect which is tendered to a new member of the fraternity of the road. Then could be shown its gradual decline in efficiency, the first appearance of old age, the development of the chronic infirmities to which old age is subject and, finally, its creaking pilgrimage to the scrap-heap. All cars pass through that circle of operations, always under the watchful eye of the car retailer, who takes his part in the transition of the car from the higher to the lower levels. It is in this way that the ambitious purchaser of a new car is helped. In many cases, unless he is able to realise on his old car he cannot buy a new car, and there is always on the market an enormous number of used cars—I think the figure is about 180,000.
  Already it is becoming much more difficult to sell these old cars. Their value

  2651
  has depreciated. The stock of old cars which was valued, I am told, at £12,000,000, has already declined in value by £3,000,000. There is a steady decline in value which will, one day, result in the retailers being unable to buy any more used cars. The way of the new car out of the factory will be blocked by the procession of old cars standing there immobile and immovable, because of the action of the Chancellor of the Exchequer. I ask the right hon. Gentleman to look at that aspect of the question. I do not know the relation of his financial policy to industrial policy, but I know that here is a problem which goes much further than the mere transaction in the factory or the retailers shop, and I would like the Chancellor to pay close attention to it.
  In my last word in this Debate I would make an appeal not only on my own behalf but, I feel sure, on behalf of a large number of hon. Members on the other side of the House. I appeal, on behalf of all those who will join with me in doing so, to the Chancellor to take into account the claims of our older people and to see whether it is not possible, in this Budget, to squeeze out a sufficient financial provision to help these old people and to make due recognition of their life work in the form of an addition to the old age pension.
  10.28 p.m.
  The Financial Secretary to the Treasury (Captain Crookshank): Not only in his final words but in the earlier part of his speech the hon. Member for Gower (Mr. Grenfell) dealt with the case of the old age pensioner. I do not propose to go into that aspect of our national problem to-night but I would like to be clear upon this point. I understood the hon. Member to say that at the last seven Elections, he pledged himself to vote for a pension of £1 a week at the age of 60. In 1929 and 1930 he was a Parliamentary Private Secretary. He was not himself in office, but he was in Government circles and was in and out of the Department in which he gave assistance. He said just now that any Government could do this. I think he probably found out then, as a great many other hon. Members opposite found to their surprise, that it is one thing to make these extraordinary pledges in the
  2652
  country and that it is quite a different thing, when one is in a position of responsibility, to say how these projects are to be financed. The difficulties in 1929 and 1930 were considerable against adopting a proposal of this kind, but the House will realise that the general financial situation of today would make it immeasurably more difficult.
  I want to come back for a moment, as one normally does during a Second Reading Debate, to discussing the principle of the Bill with which we are concerned before we pass to some of the details. I think that, as unfortunately my right hon. Friend spoke when the House was not as full as I should have liked it to have been to hear his remarks, it is worth while reconsidering for a moment the principle which had animated him in framing his Budget. What was obviously at the back of his mind, what was his chief object, was to try and raise the vast sums with which we are concerned with as little harm to industry as possible. That seems to me to be the guiding principle, and his new taxes were proposed with that consideration in mind. It is quite true, of course, that both Surtax and Death Duties are increased; but not the standard rate of Income Tax. It is true also that the tax on horse-power is increased for private vehicles; but not for trade vehicles or public service vehicles. The object is the same in both cases—to avoid placing further burdens on industry as a whole or on industrial transport.
  If that is the principle on which these further moneys are being collected from the taxpayer, let us look at it from the taxpayer's point of view and see the use to which the £492,600,000 which is to be raised is to be put. After all, the nation is entitled to know what it is getting for the money; the Finance Bill is the method by which we raise it, and it is not a bad thing that the world at large should know what it is with which we are coping. If we exclude the £5,000,000 which my right hon. Friend has set aside for Supplementary Estimates we find that £442,500,000 is required for Civil Supply Services—£12,000,000 more than last year. This is not the time or place to go through the whole expenditure, but I would like to ask the House to remember three points that this amount covers and compare them with the position

  2653
  10 years ago. As the hon. Gentleman opposite has raised the question of old age pensions, let me give the figures. Ten years ago the non-contributory old age pensions cost £35,500,000. This year the estimate for them is £49,000,000, an increase of nearly £14,000,000 in a decade. As to contributory pensions—old age, widows' and orphans'—in 1929 they were only at the beginning of their career and the cost to the Exchequer was no more than £4,000,000. To-day the figure is nearly £20,000,000. So that in that decade the cost of these pensions to the Exchequer has risen from £39,500,000 to £69,000,000.
  In housing, 10 years ago the cost to the Exchequer was just under £13,000,000. This year it is to be £18,500,000. Again, education 10 years ago required from the Budget £48,500,000; this year the amount has grown to £58,000,000; and—in passing—in spite of all our other preoccupations, this year is seeing the raising of the school-leaving age. Those are, of course, only three instances. One could go through the whole list. I think that the fact that we are able to pay for these great social services at a time when so much public attention and public expenditure are, unfortunately, but necessarily, as I think we all agree, directed towards rearmament, is a very great tribute to the British taxpayer and to the financial strength of our country.
  It shows that rearmament has not pushed out social improvement. But the very magnitude of our expenditure must remind us that all these resources become available only when trade and industry have confidence not only in their own future—and that is the answer to points which have been occasionally raised in the Debate—but also in the general financial policy of the Government of the day. There is another contributory factor to that confidence to be found in this consideration, that in this country we have full public information always available about national expenditure. There are no secret taxes and there is no secret expenditure—except, of course, the one small item of Secret Service. The Estimates have all to be presented here, they are all debatable, every taxpayer can find out exactly in what direction the money which has been voted goes, and ex post facto the Public Accounts Com-
  2654
  mittee investigate and make quite sure that it has gone in the right direction according to the law. Those are, I think, very valuable safeguards. It is nothing new to remark upon them, but it is just as well for the House to be reminded of their importance. I am taking no credit for them, but they are a great credit to our national system which we all share, and they are inherent in the long-established practice of this House. I think that that fact of itself is of great importance from the point of view of ensuring confidence.
  While we may feel some pride in the resiliency still shown by the direct taxpayer, it is also worth while to keep in mind that although Income Tax does bear very heavily on the higher ranges of income there are millions of wage-earners and salary-earners entirely outside the scope of it—and very properly so. No one is questioning that, but I think hon. Members do not always realise how very large is the number of people entirely outside this form of taxation. For example, do hon. Members realise that a married man with two children—the number which is usually taken as the normal when discussing these problems—can earn as much as £375 a year, or over £7 a week, without paying a single penny in Income Tax at all, and can earn as much as £635 a year, or £12 a week, before he has to pay as much as 1s. in the £ in Income Tax. I am merely pointing out some factors which make for the financial strength of our country, because I think I should be right in saying that, compared with the taxpayers of certain other great European countries, the corresponding classes of wage-earners or salary-earners here are, from this point of view, considerably better off, indeed, in a very favourable position.
  The other great charge with which we are dealing through this Finance Bill is Defence expenditure. The figures have already been quoted so often, both during the Debate and previously, that it is not necessary to go into details except to recall that the expenditure, borrowing and taxation together, which was £265,000,000 two years ago and was £400,000,000 last year, will be £630,000,000 this year.
  The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) in his very interesting opening speech to-day, during which he carefully

  2655
  did not mention the Finance Bill and I do not think mentioned his Amendment at all, or only very casually, continued—as was perhaps more valuable in the circumstances—the discussion of the proposals which he had outlined at an earlier stage. This is a very interesting way of carrying on a discussion. Of course, the right hon. Gentleman has had three weeks in which to think of the answers to the questions which my right hon. Friend propounded to him, but my right hon. Friend has answered in less than three hours the further addition made to-day by the right hon. Gentleman, and in doing so my right hon. Friend showed all his customary skill. This may develop, and perhaps the arguments between the two right hon. Gentlemen will reach the height of interest of the old arguments which we used to get between the late Lord Snowden and the right hon. Gentleman the Member for Epping (Mr. Churchill), which were carried on through a long series of Budgets.
  The right hon. Gentleman did casually mention the increase in the horse-power tax on motor cars which he described as anti-social. I am not quite sure what the use of that expression means in connection with a higher tax on motor cars, but other hon. Members have also discussed this, matter generally. It is, of course, true that since my right hon. Friend proposed this tax there has been a considerable amount of public discussion upon it. I do not think it is necessary in the few minutes which remain to me to detain the House by re-arguing the case. We can do it later on in Committee, but it is necessary to remind the House that this is direct taxation and graduated taxation. I would also remind hon. Members that while, stated baldly, an increase of two-thirds in the rate does sound a very heavy increase, they should put the matter to themselves in this way: Last September, which is the last period for which I have the licensing figures. 58 per cent. of the cars in this country, that is over 1,000,000 cars, did not exceed 10 horsepower. The additional contribution that that section of the motoring public is being invited by this taxation to make is something less than 2s. per week. About half a million of these will only pay 1s. 6d. a week. I do not know how many hon. Members would maintain that a burden of this size—think of what a gallon of petrol costs—which is estimated at less
  2656
  than 2s. a week will really mean that any very large part of that section of the community will give up its motor cars.
  If you take the next group, between 11 and 15 horse power, which represents something like 28 per cent. of the motor cars in this country, or 500,000 motorists, the increase in licence duty is less than 3s. a week. The remaining 14 per cent., or 300,000 motorists, who have cars over 15 horse power, will pay more than 3s. a week. Of course any extra taxation has its disadvantages, but I find it very hard to accept the argument that an extra impost of 1s. 6d. to 2s. per week for the smaller cars, 4s. for the medium cars and 6s. for the very largest cars, will stop many people, not this year at all but next January, from using the motor cars which they do now. In passing I may point out that the additional payment in respect of the motor cycles is very small indeed. Those who have expatiated on the burden on workers using motor cycles for going to their labours and so on may be reminded that, in the case of the lightest type of motor cycle, the extra impost comes to 1¼d. per week, and on the medium size to 3½d. [An HON. MEMBER: "48 per cent.!"] It is no use talking about percentages in a matter of this kind. People do not pay percentages out of their pockets; they pay pennies or shillings.
  As I have said, these matters can be enlarged upon during the Committee stage, but I would like to answer now a point that was made by the hon. Member for East Birkenhead (Mr. White). He asked whether it would be possible for a Select Committee to be set up to deal with various aspects of public expenditure, on the lines of the Committee of 1917. I think that what he had in mind was that such a committee should deal more particularly with contracts. I was not here in this House in 1917; I was busily engaged on more military matters; but I recognise that the work of the Committee at that time was extremely valuable. I would, however, like the hon. Gentleman to bear in mind that in 1917 we were at war, and that very likely owing to the rapid expansion which had taken place between 1915 and 1916, some of the customary checks had gone by the board, and a considerable amount of waste was apparent, or at any rate discoverable by that Select Committee.

  2657
  The position to-day is surely very different. In the first place, we are not at war; and, secondly—and this is an important factor—we have the benefit of all the experience that was gained at the time of which the hon. Gentleman was speaking, including the reports of that Committee. Moreover, to-day there is a far greater control over this contract expenditure than there was formerly. The matter has already been explained to the House on many occasions, and the system itself has been investigated both by the Public Accounts Committee and by the Estimates Committee, which latter, of course, is a post-War body, and did not exist in 1917. Besides this, there is the Treasury Inter-Service Committee to watch the problem. I would ask the hon. Gentleman to agree with me that there may be some danger in indiscriminately multiplying inquiries at a time when all concerned are working at great pressure, but I assure him that the Government are very anxious—indeed, no one is more anxious than those who sit on these benches—to see that there is no waste and that we get our money's worth. These matters are under our constant review, and the hon. Gentleman's suggestion, like many others that we have received, will certainly be borne in mind.
  The hon. Lady the Member for Dundee (Miss Horsbrugh) spoke about films, and I should like to say a few words on that subject, not to answer the whole argument, but to remind the House that on the Report stage of the appropriate Budget Resolution my right hon. Friend did deal at some length with various considerations involved in his proposal. On that day he concluded his remarks by saying that he strongly commended to the House the basis and principle of this new tax; but at the same time he gave the assurance that he appreciated that modifications might be necessary, and that he would consider the question with the help of the trade. The hon. Lady will recognise that we were entering into a very difficult and technical field in these proposals, and since that date there have been close consultations between the interests which are most knowledgeable on the subject and our advisers in the Customs and Excise Department. Only on Thursday of last week my right hon. Friend received a deputation which represented all sections of the film industry and he is now giving very careful consideration to their representations.
  2658
  But, as these questions are very technical and complicated, I would ask hon. Members to await the completion of that survey without pressing for an indication of our intentions in regard to any particular section of the trade. I can, however, say that my right hon. Friend is now satisfied that certain adjustments will be required in order to meet claims of hardship and inequality which have been brought to our notice. I have every hope, as has my right hon. Friend that the alterations and easements which are in contemplation will go a very long way to meet the genuine difficulties of certain sections of the film industry. Perhaps this matter had better be discussed on the Committee stage of the Bill. It is my right hon. Friend's intention that the Amendments shall be placed on the Order Paper well ahead of the Committee stage, and he hopes to table them soon after the House resumes after Whitsun, because it is obvious that as much time as possible should be available for discussing these technical points.
  I want to take up one more point which is referred to in the Amendment, and that is the question that has been raised by several Members complaining that this is one of a series of unbalanced Budgets. Of course, to have a Budget unbalanced is obviously a very serious matter. No one would minimise that. The hon. Member for Barnard Castle (Mr. Sexton) said that in 1931 they had an unbalanced Budget. It may have been only a little unbalanced, but it created a great deal of despondency and alarm and it cost a large number of hon. Members opposite their seats. The hon. Member was a little sore that other Governments have unbalanced Budgets and that these dire calamities do not occur to them. That brings me back to what I said at the beginning, that the keynote of this problem is the confidence which people have in the future of their business, their trade, and their industry and in the general financial policy of the Government. As a matter of fact, this talk about a series of unbalanced Budgets is by no means an exact statement because, if hon. Members take all the Budgets for which different Chancellors of the Exchequer of the National Government have been responsible, they will find, first of all, that there have been more surpluses than deficits. They will find over the whole period 1932–38 that there is a net surplus of just about £20,000,000. They

  2659
  will also find that the net surplus and the annual new Sinking Fund together have during that period resulted in the application of £115,000,000 from revenue for the redemption of debt.
  So that I do not accept this theory of a series of unbalanced Budgets. If by unbalanced Budgets hon. Members refer to the fact that borrowing has been necessary for defence purposes, the right hon. Gentleman opposite propounded a scheme by which extra taxation could be raised, but at the end of it all he had to admit that there would have to be some borrowing for defence purposes. He envisaged himself an unbalancing of the Budget since his scheme still left a gap which would have to be made up by borrowing to meet the present heavy programme of expenditure on defence.
  It may be just as well at this stage to repeat two of the warnings which my right hon. Friend the Chancellor gave last year on the corresponding occasion. He pointed out firstly—and I quote his words:
  "Borrowing may be paying later on rather than paying now, but it means paying all the same."—[OFFICIAL REPORT, 26th May, 1938; col. 1470, Vol. 336.]
  His second warning was that we must not assume that we should get back to lower figures as easily as we should wish. As a result of the programme of expanion of our Defence Forces, we have to look forward to an annual cost of maintaining these armaments which when the cost of interest and sinking fund on the borrowing is included represent a truly formidable load on the taxpayers.
  I beg the House and the country to bear those two considerations in mind. And now let us look for the last time at the official Amendment. In seems to make some complaint about using borrowing powers to finance part of the Defence programme; but in the circumstances of the time, in view of the magni-
  tude of the sums involved, there is no alternative. The financial resources of the nation cannot meet out of revenue alone the whole charge of the Defence programme, including all non-recurrent items and all capital costs. But let us not forget that in the last four Budgets Income Tax has been raised by a shilling, Death Duties raised, Surtax raised; and the net result of the increased direct taxation imposed is just on £100,000,000 a year. It is idle to contend that that is not a very heavy contribution, and the largest contribution comes from what the Opposition calls wealth. Direct taxation is at an unprecedentedly high level, and when the Amendment speaks of additional taxation of the very poor, as being done under the pretext of spreading the burden equally among all classes, it makes a false point. The policy of spreading the burden over the whole community is no pretext; it is right and necessary. By far the larger part of the new taxation imposed by this year's Budget is imposed on the rich and well-to-do; and, on reflection, I think that most people will agree that some further portion of the burden of the common task of Defence expenditure should be shared generally. The increase in the Sugar Duty was advisedly left small for the reason that it presses more heavily on the smallest purses.
  I do not think the House will want to pass the Amendment. To expect the House to welcome these new burdens would be, perhaps, rather optimistic. But I think that what the House will do in the next minute or two will be to accept the budgetary facts as they are, and with firm determination press on with the urgent and necessary tasks to which we have set our hand.
  Question put, "That the words proposed to be left out stand part of the Question."
  The House divided: Ayes, 228; Noes, 110.

  Division No. 154.]

  AYES.

  [11.0 p.m.

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

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

  Brooke, H. (Lewisham, W.)

  Albery, Sir Irving

  Beechman, N. A.

  Brown, Rt. Hon. E. (Leith)

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

  Bennett, Sir E. N.

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

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

  Bernays, R. H.

  Bull, B. B.

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

  Blair, Sir R.

  Bullock, Capt. M.

  Assheton, R.

  Boothby, R. J. G.

  Burghley, Lord

  Baldwin-Webb, Col. J.

  Bossom, A. C.

  Burgin, Rt. Hon. E. L.

  Balfour, G. (Hampstead)

  Boulton, W. W.

  Burton, Col. H. W.

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

  Braithwaite, J. Gurney (Holderness)

  Butcher, H. W.

  Balniel, Lord

  Brass, Sir W.

  Campbell, Sir E. T.

  Barrie, Sir C. C.

  Briscoe, Capt. R. G.

  Cartland, J. R. H.

  Beauchamp, Sir B. C.

  Brocklebank, Sir Edmund

  Carver, Major W. H.

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

  Hoare, Rt. Hon. Sir S.

  Reed, Sir H. S. (Aylesbury)

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

  Hogg, Hon. Q. McG.

  Reid, W. Allan (Derby)

  Cazalet, Thelma (Islington, E.)

  Hore-Belisha, Rt. Hon. L.

  Remer, J. R.

  Cazalet, Capt. V. A. (Chippenham)

  Horsbrugh, Florence

  Rickards, G. W. (Skipton)

  Channon, H.

  Howitt, Dr. A. B.

  Ropner, Colonel L.

  Chapman, Sir S. (Edinburgh, S.)

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

  Rosbotham, Sir T.

  Cobb, Captain E. C. (Preston)

  Hume, Sir G. H.

  Rowlands, G.

  Colman, N. C. D.

  Hunloke, H. P.

  Royds, Admiral Sir P. M. R.

  Colville, Rt. Hon. John

  Hutchinson, G. C.

  Russell, Sir Alexander

  Conant, Captain R. J. E.

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

  Russell, S. H. M. (Darwen)

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

  Jennings, R.

  Salmon, Sir I.

  Cox, H. B. Trevor

  Keeling, E. H.

  Salt, E. W.

  Cranborne, Viscount

  Kellett, Major E. O.

  Samuel, M. R. A.

  Craven-Ellis, W.

  Keyes, Admiral of the Fleet Sir R.

  Sandeman, Sir N. S.

  Croft, Brig.-Gen. Sir H. Page

  Knox, Major-General Sir A. W. F.

  Sanderson, Sir F. B.

  Crooke, Sir J. Smedley

  Lamb, Sir J. Q.

  Schuster, Sir G. E.

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

  Lambert, Rt. Hon. G.

  Selley, H. R.

  Cross, R. H.

  Lancaster, Captain C. G.

  Shakespeare, G. H.

  Cruddas, Col. B.

  Latham, Sir P.

  Simon, Rt. Hon. Sir J. A.

  Culverwell, C. T.

  Leighton, Major B. E. P.

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

  De Chair, S. S.

  Liddall, W. S.

  Smith, Bracewell (Dulwich)

  Denman, Hon. R. D.

  Lipson, D. L.

  Smith, Sir R. W. (Aberdeen)

  Denville, Alfred

  Llewellin, Colonel J. J

  Somervell, Rt. Hon. Sir Donald

  Donner, P. W.

  Lloyd, G. W.

  Southby, Commander Sir A. R. J.

  Duckworth, Arthur (Shrewsbury)

  Locker-Lampson, Comdr. O. S.

  Spears, Brigadier-General E. L.

  Dugdale, Captain T. L.

  Loftus, P. C.

  Spens, W. P.

  Duggan, H. J.

  Mabane, W. (Huddersfield)

  Stewart, J. Henderson (Fife, E.)

  Duncan, J. A. L.

  Macdonald, Capt. P. (Isle of Wight)

  Strauss, H. G. (Norwich)

  Eckersley, P. T.

  McEwen, Capt. J. H. F.

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

  Eden, Rt. Hon. A.

  Maitland, Sir Adam

  Stuart, Hon. J. (Moray and Nairn)

  Edmondson, Major Sir J.

  Makins, Brigadier-General Sir Ernest

  Sueter, Rear-Admiral Sir M. F.

  Ellis, Sir G.

  Manningham-Buller, Sir M.

  Tasker, Sir R. I.

  Emery, J. F.

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

  Tate, Mavis C.

  Emrys-Evans, P. V.

  Marsden, Commander A.

  Taylor, C. S. (Eastbourne)

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

  Maxwell, Hon. S. A.

  Thomas, J. P. L.

  Everard, Sir William Lindsay

  Medlicott, F.

  Thomson, Sir J. D. W.

  Fleming, E. L.

  Meller, Sir R. J. (Miteham)

  Thorneycroft, G. E. P.

  Fox, Sir G. W. G.

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

  Thornton-Kemsley, C. N.

  Fremantle, Sir F. E.

  Mills, Major J. D. (New Forest)

  Titchfield, Marquess of

  Furness, S. N.

  Mitchell, H. (Brentford and Chiswick)

  Touche, G. C.

  Fyfe, D. P. M.

  Mitcheson, Sir G. G.

  Tree, A. R. L. F.

  Gluckstein, L. H.

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

  Tryon, Major Rt. Hon. G. C.

  Glyn, Major Sir R. G. C.

  Morgan, R. H. (Worcester, Stourbridge)

  Wakefield, W. W.

  Goldie, N. B.

  Morris-Jones, Sir Henry

  Wallace, Capt. Rt. Hon. Euan

  Gower, Sir R. V.

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

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

  Graham, Captain A. C. (Wirral)

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

  Wardlaw-Milne, Sir J. S.

  Grant-Ferris, Flight-Lieutenant R.

  Muirhead, Lt.-Col. A. J.

  Warrender, Sir V.

  Greene, W. P. C. (Worcester)

  Munro, P.

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

  Grimston, R. V.

  Nall, Sir J.

  Wayland, Sir W. A

  Guest, Lieut.-Colonel H. (Drake)

  Nicholson, G. (Farnham)

  Webbe, Sir W. Harold

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

  O'Connor, Sir Terence J.

  Wells, Sir Sydney

  Gunston, Capt. Sir D. W.

  Orr-Ewing, I. L.

  Whiteley, Major J. P. (Buckingham)

  Hacking, Rt. Hon. Sir D. H.

  Peake, O.

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

  Hammersley, S. S.

  Peters, Dr. S. J.

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

  Hannah, I. C.

  Petherick, M.

  Windsor-Clive, Lieut.-Colonel G.

  Hannon, Sir P. J. H.

  Pickthorn, K. W. M.

  Winterton, Rt. Hon. Earl

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

  Purbrick, R.

  Wise, A. R.

  Heilgers, Captain F. F. A.

  Radford, E. A.

  Wood, Hon. C. I. C.

  Hely-Hutchinson, M. R.

  Raikes, H. V. A. M.

  Wright, Wing-Commander J. A. C.

  Heneage, Lieut.-Colonel A. P.

  Ramsay, Captain A. H. M.

  York, C.

  Hepburn, P. G. T. Buchan-

  Ramsbotham, H.

  Young, A. S. L. (Partick)

  Hepworth, J.

  Rankin, Sir R.

  Herbert, A. P. (Oxford U.)

  Rathbone, Eleanor (English Univ's.)

  TELLERS FOR THE AYES.—

  Herbert, Lt.-Col. J. A. (Monmouth)

  Rayner, Major R. H.

  Captain Waterhouse and Lieut.-Colonel Kerr.

  Higgs, W. F.

  Reed, A. C. (Exeter)

  NOES.

  Acland, R. T. D. (Barnstaple)

  Cocks, F. S.

  Green, W. H. (Deptford)

  Adams, D. (Consett)

  Cove, W. G.

  Greenwood, Rt. Hon. A.

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

  Dalton, H.

  Grenfell, D. R.

  Adamson, Jennie L. (Dartford)

  Davidson, J. J. (Maryhill)

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

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

  Davies, R. J. (Westhoughton)

  Griffiths, J. (Llanelly)

  Ammon, C. G.

  Davies, S. O. (Merthyr)

  Groves, T. E.

  Attlee, Rt. Hon. C. R.

  Day, H.

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

  Banfield, J. W.

  Dobbie, W.

  Hall, G. H. (Aberdare)

  Barnes, A. J.

  Dunn, E. (Rother Valley)

  Hall, J. H. (Whitechapel)

  Beaumont, H. (Batley)

  Ede, J. C.

  Hardie, Agnes

  Bellenger, F. J.

  Edwards, A. (Middlesbrough E.)

  Harris, Sir P. A.

  Benn, Rt. Hon. W. W.

  Foot, D. M.

  Hayday, A.

  Benson, G.

  Frankel, D.

  Henderson, T. (Tradeston)

  Broad, F. A.

  Gallacher, W.

  Hicks, E. G.

  Buchanan, G.

  Gardner, B. W.

  Hills, A. (Pontefract)

  Burke, W. A.

  Garro Jones, G. M.

  Hopkin, D.

  Charleton, H. C.

  George, Major G. Lloyd (Pembroke)

  Isaacs, G. A.

  Cluse, W. S.

  George, Megan Lloyd (Anglesey)

  Jagger, J.

  2662

  2663

  Jones, A. C. (Shipley)

  Naylor, T. E.

  Smith, E. (Stoke)

  Kennedy, Rt. Hon. T.

  Noel-Baker, P. J.

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

  Kirby, B. V.

  Oliver, G. H.

  Stephen, C.

  Lansbury, Rt. Hon. G.

  Parker, J.

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

  Lathan, G.

  Parkinson, J. A.

  Taylor, R. J. (Morpeth)

  Lawson, J. J.

  Pearson, A.

  Thurtle, E.

  Lee, F.

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

  Tinker, J. J.

  Leonard, W.

  Poole, C. C.

  Tomlinson, G.

  Leslie, J. R.

  Price, M. P.

  Viant, S. P.

  Macdonald, G. (Ince)

  Pritt, D. N.

  Watkins, F. C.

  McEntee, V. La T.

  Richards, R. (Wrexham)

  Watson, W. McL.

  McGhee, H. G.

  Ridley, G.

  Westwood, J.

  McGovern, J.

  Riley, B.

  White, H. Graham

  Mathers, G.

  Sexton, T. M.

  Whiteley, W. (Blaydon)

  Maxton, J.

  Shinwell, E.

  Wilson, C. H. (Attercliffe)

  Messer, F.

  Silkin, L.

  Woods, G. S. (Finsbury)

  Milner, Major J.

  Silverman, S. S.

  Montague, F.

  Simpson, F. B.

  TELLERS FOR THE NOES.—

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

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

  Mr. Adamson and Mr. Anderson.

  Nathan, Colonel H. L.

  Smith, Ben (Rotherhithe)

  Question, "That this House doth agree with the Lords in the said Amendment," put, and agreed to.

  MILITARY TRAINING BILL.
  Order for Consideration of Lords Amendments read.
  Motion made, and Question, "That the Lords Amendments be considered forthwith" put, and agreed to.—[Mr. W. S. Morrison.]
  Lords Amendments considered accordingly.

  MILITARY TRAINING BILL.

    CLAUSE 2.—(Exemption of certain classes of persons.)
    Lords Amendment: In page 5, line 26, after "force," insert "or been appointed to be an officer thereof."
    Mr. W. S. Morrison: I beg to move, "That this House doth agree with the Lords in the said Amendment."
    It is a drafting Amendment.
    Mr. J. J. Davidson: I do not think this Amendment can be described as merely a drafting Amendment.
    Mr. Henderson Stewart: Speak up.
    11.12 p.m.
    Mr. Davidson: That is the first time I have ever been told to speak up. If hon. Members, instead of talking in individual groups, would listen, they could hear me. I was saying that I do not think this can be described as merely a drafting Amendment, and I should like the Chancellor of
    2664
    the Duchy of Lancaster or the Secretary of State for War to give us some explanation of what is meant by the words, "or been appointed to be an officer thereof." It would seem that if "he has been appointed to be an officer thereof" he will be exempt. Does that mean that someone who has applied for a commission and has been promised a commission but was not actually trained for a commission, will come in under this category?
    The Secretary of State for War (Mr. Hore-Belisha): The Amendment is really drafting. The Clause as it stands says:
    "A person who has, before the twenty-seventh day of April nineteen hundred and thirty-nine, been accepted for service in one of His Majesty's reserve and auxiliary forces, and who has neither—

    (a) failed to comply with any directions given by the competent authority requiring him to join that force, nor

    (b) been notified by that authority that his services in that force are not required, shall not be liable to be called up for military training under this Act, notwithstanding that he may not yet have been entered or enlisted in that force," etc.

    The hon. Member will see that the words "entered or enlisted in that force" would not cover an officer, failing the making of this drafting Amendment.

    CLAUSE 3.—(Conscientious objectors.)
    Lords Amendment: In page 9, line 44, at the end, insert:
    "or by any person who satisfies such a tribunal that he is a relative or personal friend of the party he proposes to represent."
    The Chancellor of the Duchy of Lancaster (Mr. W. S. Morrison): I beg to move, "That this House doth agree with the Lords in the said Amendment."

    2665
    This Amendment is moved in order to meet a wish which was generally expressed, to include among the representatives of a person appearing both before the tribunal a relative or personal friend. The Clause as it stands does not make that provision and the Amendment makes it possible.
    Mr. Edmund Harvey: I should like to express the thanks of those hon. Members who pressed for this Amendment. It is very satisfactory to have this provision in the wording of the Bill.

    CLAUSE 5.—(Calling up persons for military training.)
    Lords Amendment: In page 12, divide Clause 5 into two Clauses, the first to consist of Sub-section (1) and Sub-sections (8) to (12) inclusive, and the second to consist of Sub-sections (2) to (7) inclusive.
    11.15 p.m.
    1The Minister of Labour (Mr. Ernest Brown): I beg to move, "That this House doth agree with the Lords in the said Amendment."
    This Amendment deals with the case of men who are called up, and this arrangement is made to make the provisions much simpler.
    Mr. Garro Jones: Does not this involve a new and novel principle in drafting? I do not think we have seen an Amendment proposed in this form before and it seems to me it will be impossible for the draftsman to alter all the references in the Clauses and Sub-sections throughout the Bill. It is true that the Government have very fine draftsmen but a draftsman may go wrong in so very complicated a matter, and what safeguard is there that he may not make some mistake which will be discovered only after the Bill is passed? Why should this new departure be undertaken at all? Why split Clause 5 into two Clauses. Is there not a better and more orthodox way of carrying out the proposal?
    Mr. E. Brown: The hon. Member will see that the Clause will be much simpler if it is amended in this way.
    Mr. Garro Jones: I am asking why this precedent? Is it merely to hurry the Bill on to the Statute Book. There is no reason why the Bill should be passed until after Whitsuntide.
    Mr. W. S. Morrison: I do not think this is a precedent. There is no other way of expressing what is desired. As regards consequential amendments, I can assure the hon. Member that they will be made.
    Mr. Pritt: I do not want to delay matters but this is rather important. The right hon. Gentleman says that there is no other way of doing it. I think he underestimates the capacity of the English brain. At any rate, I ask the Government not to do it again.
    Lords Amendment: In page 12, line 17, leave out "following provisions of this" and insert "provisions of Subsections (2) and (3) of the last foregoing".
    11.17 p.m.
    Mr. W. S. Morrison: I beg to move, "That this House doth agree with the Lords in the said Amendment."
    Mr. Pritt: I want to ask the right hon. Gentleman a question on this Amendment. As I understand the effect of this Amendment it is simply this. As the Clause has been split up Sub-section (2) of Clause 5 will become Sub-section (1) of Clause 6, and then the phrase "subject to the following provisions of this Section" would not be satisfactory and a number of Sub-sections which have ceased to be "the following provisions of this Section" have become the provisions of a Sub-section of an earlier Section. What I am a little anxious about is this: It looks to me as if some of the provisions of the Clause will still be "the following provisions of Section 6," which by this Amendment are taken away from exercising any control over what is going to be Sub-section (1) of Clause 6, and I think might not to be taken away from the control. I hope the right hon. Gentleman can tell us whether the matter has been carefully checked and can be relied upon. If my question is utterly incomprehensible to anybody—even to hon. Members of this House, who are so distinguished in their intelligence—it is not my fault, but is due to the fact that the House is leaving legislation to be done by the draftsmen afterwards.
    Mr. Garro Jones: Surely the Minister is going to vouchsafe an answer to my

    2667
    hon. and learned Friend. The right hon. Gentleman has been met to a very large extent by the House, and I think there will be a great deal of further interrogation if he does not give answers.
    11.21 p.m.
    Mr. W. S. Morrison: I can only speak again by leave of the House. I can assure the hon. and learned Member for North Hammersmith (Mr. Pritt) that there is no difficulty about this. In Committee and in the other stages, the Clause gathered accretions in the way of Amendments that were moved from all parts of the House, and the result was that in the Clause the Civil and Service Departments got intermingled. Therefore, it was necessary to separate the Clause, for the sake of clarity, into Sub-sections. I assure the hon. and learned Member that there are no grounds for the apprehensions he expressed.
    Lords Amendment: In page 20, line 21, at the end, insert new Clause A:—
    (Discharge of prisoners claiming to be conscientious objectors.)
    "A. (1)—If any person undergoing a term of imprisonment of three months or any greater punishment imposed on him by a court martial in respect of an offence committed while he was undergoing a special course of training which he was required to undergo by virtue of Sub-section (2) of Section five of this Act, claims that the offence was committed by reason of his conscientiously objecting to undergoing military training or to obeying any order in respect of which the offence was committed, then he may apply in the prescribed manner to have his case considered by the appellate tribunal constituted under Part II of the Schedule to this Act, and that tribunal shall, whether or not it finds that the offence for which he was sentenced was committed by reason of such a conscientious objection as aforesaid, have power to recommend to the Secretary of State that he be discharged from the army reserve as soon as may be after serving the sentence imposed upon him, but if the tribunal finds that the said offence was not committed by reason of such a conscientious objection it may order him to undergo immediately after his discharge from the army reserve the like training and subject to the like conditions as if he had been a person ordered to comply with the requirements of Sub-section (8) of Section three of this Act so however, that the period for which he is required to undergo such training shall be specified in the order and shall not exceed six months from the date of his discharge from the army reserve.
    (2) If any person ordered under this section to undergo such training as aforesaid fails to comply with the order, or while undergoing such training is discharges therefrom for serious and wilful misconduct, he shall be guilty of an offence and be liable on summary conviction thereof to be imprisoned for a term not exceeding two years."
    11.21 p.m.
    Mr. Hore-Belisha: I beg to move, "That this House doth agree with the Lords in the said Amendment."
    This Amendment is in fulfilment of a pledge that the Government made. The House was very much moved by the speeches that were made by the hon. Member for South Tottenham (Mr. Messer), and the hon. Member for Shipley (Mr. Creech Jones), and in this Clause we have endeavoured to meet the case which they presented. I consulted the hon. Members, through the hon. Member for South Tottenham, and I think they accept this as an honest endeavour to meet the position.
    11.22 p.m.
    Mr. Dingle Foot: I wish to draw attention to one feature of this Clause. In Sub-section (2), it is stated that
    "If any person ordered under this section to undergo such training as aforesaid fails to comply with the order, or while undergoing such training is discharged therefrom for serious and wilful misconduct, he shall be guilty of an offence and be liable on summary conviction thereof to be imprisoned for a term not exceeding two years."
    That is to say, courts of summary jurisdiction are to be given power to give imprisonment of two years. That seems to me to be a very remarkable provision. In the ordinary way, courts of summary jurisdiction are empowered only to give imprisonment up to six months. It is an amazing thing that, under the Clause, magistrates—possibly lay magistrates—are to be empowered to impose this very heavy penalty. That was something which was never contemplated by the House when the Clause was under discussion. Certainly, it was not part of any agreement. The position is a little obscure. Will a person who is charged with an offence of this kind be entitled to be tried by a jury? In the ordinary way, any man who is charged with an offence for which a penalty of more than three months' imprisonment can be inflicted is entitled to say that he prefers to be tried on indictment, that is to say, by a jury. Will he have that alternative under the Clause as it stands?
    Mr. Hore-Belisha Mr. Hore-Belisha indicated assent.
    Mr. Foot: I am glad that is the interpretation placed on this Clause, but, even so, it does not seem to me entirely to meet the objection. Under the Clause, courts of summary jurisdiction, if a man chooses to be tried summarily, will have power to impose this very heavy penalty. I should like to know whether the Secretary of State can point to anything in the Debates in this House which contemplated this particular provision being made.
    11.25 P.m.
    Mr. Benson: I should like the Secretary of State to consult with the Attorney-General as to the wording of this extraordinary proposal in connection with Clause 27 of the Criminal Justice Bill.
    Very strict regulations are laid down in Clause 27 of that Bill as to the sending to prison of anybody under the age of 21 by a court of summary jurisdiction. If in one Measure, we give courts of summary jurisdiction the power to send to prison persons under 21, while in another Measure we seek to make it impossible for them to do so, we shall get into a tangle. I recognise that the right hon. Gentleman has honestly tried to meet us, but I do not think he has succeeded and I would draw his attention to the desirability of pursuing the same policy in these two Bills which are now passing through Parliament.
    11.26 p.m.
    Mr. Messer: The House should realise that the Government have gone a long way in their effort to meet the points which we raised. I feel that in this life nothing is completely satisfactory and I suppose unless I had had the drafting of the Clause myself, it would not satisfy me. It should be placed on record, however, that the Government have gone very far to meet us, and having regard to the undertaking given I do not desire to offer any further criticism.
    11.27 p.m.
    Mr. Maxton: I think the Minister, in this Clause completely carries out the undertaking that he gave to the House, on the basis of the discussion that took place in the House; at the same time, there is considerable force in the point made by the hon. Member for Dundee (Mr. Foot). While recognising, therefore, that the Minister has carried out the
    2670
    undertaking which was given, I suggest that he ought to consider whether he cannot go a step further, to prevent a man being sentenced for this offence under conditions which would not apply in the case of any of the ordinary crimes. Here it would appear that the conscientious objector, if the court of summary jurisdiction did give him a sentence of two years' imprisonment, would be even more severely treated than the ordinary criminal could be treated under the ordinary law. I am not challenging the fact that the right hon. Gentleman has carried out his promise, but I would be grateful if he could go a step further in the direction I have indicated.
    Mr. Goldie: If a sentence of two years' imprisonment were passed by a court of summary jurisdiction, surely there would, at once, be an appeal to quarter sessions and quarter sessions would most probably revise the sentence.
    11.29 p.m.
    Mr. Hore-Belisha: I think hon. Members who were interested in the Clause have agreed that the Government have made an honest endeavour to carry out their desire. As the hon. Member for South Tottenham (Mr. Messer) says, it is impossible in a case of this kind to make provision which is completely satisfactory, because you are dealing here with a matter of conscience. Here is a man who has been before the tribunal to establish his conscientious objections. He has appealed and he has failed. By mischance he finds himself within the Army. We provide a very special procedure for him. It was suggested in the Amendment moved by the hon. Member for South Tottenham originally, that the man should be liable to imprisonment for two years. That was moved by him in this House as an Amendment. They moved it so as to give an indication of their sincerity that a conscientious objector, finding himself in the Army in these circumstances, would be willing to undergo two years' imprisonment. I have to take them at their word. The two years is only if the man, having got out of the Army and participated in the ordinary training for a conscientious objector, then fails as a conscientious objector to carry out what is required of him. It is in these circumstances that he can be sentenced to a maximum of two years' imprisonment, and he can elect to go

    2671
    before a jury. This is an honest attempt to meet hon. Members and it is a little late to make any further amendment now.
    11.31 p.m.
    Mr. T. Smith: I understand the position to be that if a man is sentenced by a military tribunal to two years he would have no right of appeal. These cases have now been brought by this new Clause for a military tribunal to the civil court, for which a man will have a right of appeal and elect to go before a jury. The only thing that alarms us is that it might establish a precedent and that it might be argued at a later date that if the magistrates have power to give two years' hard labour in a quasi-military case, that power should be extended to civilian cases. On the other hand, I appreciate that the man will now have a right of appeal, which he would not have had before.
    11.32 p.m.
    Mr. Silverman: It is only fair to say that the Clause fully carries out the pledge which the right hon. Gentleman gave, and I think he has largely met the points which have been made in this Debate. I have, however, a slight misgiving about the answer he gave as to the right to be tried by jury. This is not in any sense an indictable offence, and it is not made such by this Clause. I would like to be certain about it, because the Clause does not say that the accused person in such a case will have the right to be tried at quarter sessions or in the High Court by a jury.
    11.33 p.m.
    The Attorney-General (Sir Donald Somervell): There are many questions on which we had discussion on this Bill when it was suggested that the penalty should be increased above three months in order to give the right of election to go before a jury.
    Mr. Foot: Will the Attorney-General say how many precedents there are for giving courts of summary jurisdiction the power to impose two years' imprisonment?
    The Attorney-General: I am afraid I cannot give that information now. There are many cases of six months. I would not like to pledge myself, but I believe there are cases of a greater period.
    11.34 p.m.
    Mr. Pritt: There are certainly not many of these cases where the magistrates can impose longer sentences than six months. Hon. Members will probably recognise that the Government have gone a long way to meet them in this Clause. It is not in every case that a man can claim the right to go before a jury and I am not certain whether in this Bill there is any provision that in these cases he has such a right. In any case, I think a man would probably do better to risk getting even two years from a magistrate than risk going before a jury, who might be more prejudiced than a magistrate in these cases. There is another difficulty, but I do not see any way out of it. Even in the exceptional circumstances of these cases it is a little hard that a man should be liable for imprisonment for two years because somebody else has dismissed him from his job. The Clause refers to a man who—
    "while undergoing such training is discharged therefrom for serious and wilful misconduct."
    He may have a perfect defence, but if he is in fact discharged on an allegation of serious and wilful misconduct and is then prosecuted and says "I want to put up the defence that I was not guilty of serious and wilful misconduct," the magistrates will be bound to say "That was the ground given for your dismissal and we cannot go behind it." Would it be possible for the right hon. Gentleman, without delay to insert the word "rightfully" before the word "discharged"?
    11.36 p.m.
    Mr. Davidson: Many bouquets have been thrown this evening. It is the first time since I have been in this House that the feeling among all parties has been so unanimous. We have seen the return of the right hon. Gentleman who was missing from the Government Lobby on the occasion of the Palestine Debate; we have heard the hon. and learned Member for North Hammersmith (Mr. Pritt) passing a word of praise upon magistrates; and we have heard hon. Members making glowing references to the Government keeping one pledge. It is, I think, a good augury for this Clause, and I hope the Opposition Members will keep a good heart and continue to press their ideas upon the Government, because we can see that with continued pressure some of them at least will be accepted.

    SCHEDULE.
    Lords Amendment: In page 26, line 8, leave out from "person" to "nominated," in line 10.
    11.38 p.m.
    Mr. W. S. Morrison: I beg to move, "That this House doth agree with the Lords in the said Amendment."
    The effect of this Amendment is to omit the requirement that the chairman of the appeal tribunal should be a barrister of at least 10 years standing or a member of the Faculty of Advocates or a solicitor. In our discussions some apprehension was expressed by hon. Members opposite as to these qualifications, and this Amendment was accepted by the Government in another place with the object of securing the possibility of appointing some one who would command general respect and confidence irrespective of whether he had legal qualifications or not. In my opinion this Amendment does improve the Bill by giving a wider choice, and I recommend the House to accept it.
    11.39 p.m.
    Mr. Maxton: I was interested in this matter and I questioned very strongly the low qualifications which were suggested for the man who is to hold this position. I do not know whether my
    2674
    point is being met or not, because the Clause now specifies no qualifications. I take it that anybody, even I myself, might be appointed to this position. I certainly think that the change is for the better, but I recognise that we are now entirely in the hands of the Lord President of the Council and of the Lord Chancellor.
    11.40 p.m.
    Mr. Pritt: I should like to draw attention to the fact that without any protest from any of the numerous lawyers in the House a potential job has been taken away from them.
    Mr. Foot: It is an extraordinary position that we insist upon very definite and high qualifications in the person who is to preside over the local tribunal and no qualifications at all in anybody presiding over the appellate tribunal.
    The remaining Orders were read, and postponed.
    It being after Half-past Eleven of the Clock, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
    Adjourned at Nineteen Minutes before Twelve o'clock.

AGRICULTURE.
  WAR RESERVE MACHINERY.
  WAR RESERVE MACHINERY.
  EGGS.
  EGGS.
  MILK.
  MILK.
  LAND DRAINAGE (EMPLOYMENT).
  LAND DRAINAGE (EMPLOYMENT).
  WHITE FISH INDUSTRY JOINT COUNCIL.
  WHITE FISH INDUSTRY JOINT COUNCIL.
  COPYRIGHT ACT (ORDNANCE SURVEY SHEETS).
  COPYRIGHT ACT (ORDNANCE SURVEY SHEETS).
  SPAIN.
  SPAIN.
SCOTLAND.
  REGISTRARS (SALARIES AND FEES).
  REGISTRARS (SALARIES AND FEES).
  HERRING INDUSTRY ADVISORY COUNCIL.
  HERRING INDUSTRY ADVISORY COUNCIL.
  DANZIG.
  DANZIG.
  BURMA-CHINA RAILWAY.
  BURMA-CHINA RAILWAY.
  CREWS' ACCOMMODATION; VESSELS, GRIMSBY.
  CREWS' ACCOMMODATION; VESSELS, GRIMSBY.
  NATIONAL CAMPS CORPORATION.
  NATIONAL CAMPS CORPORATION.
  MEDICINE STAMP DUTIES.
  MEDICINE STAMP DUTIES.
  LOCAL AUTHORITIES' STAFFS (MILITARY SERVICE).
  LOCAL AUTHORITIES' STAFFS (MILITARY SERVICE).
  CONTRIBUTORY PENSIONS (EMPLOYED PERSONS OVER 65).
  CONTRIBUTORY PENSIONS (EMPLOYED PERSONS OVER 65).
  RATING AND VALUATION ACT.
  RATING AND VALUATION ACT.
  LAND ACQUISITION, NOTTINGHAM.
  LAND ACQUISITION, NOTTINGHAM.
  DISTRESS FOR RENT.
  DISTRESS FOR RENT.
  RENT RESTRICTION.
  RENT RESTRICTION.
CIVIL DEFENCE.
  EVACUATION.
  EVACUATION.
  AIR-RAID PRECAUTIONS EXPENDITURE.
  AIR-RAID PRECAUTIONS EXPENDITURE.
  AIR-RAID SHELTERS (PRICE).
  AIR-RAID SHELTERS (PRICE).
BRITISH ARMY.
  OFFICERS' EMERGENCY RESERVE (BADGE).
  OFFICERS' EMERGENCY RESERVE (BADGE).
  YEOMANRY REGIMENTS (CLOTHING).
  YEOMANRY REGIMENTS (CLOTHING).
  LANCASHIRE TERRITORIAL UNITS.
  LANCASHIRE TERRITORIAL UNITS.
  213TH ANTI-AIRCRAFT BATTERY.
  213TH ANTI-AIRCRAFT BATTERY.
  CLASS B RESERVISTS (DEPENDANTS).
  CLASS B RESERVISTS (DEPENDANTS).
  MILITARY TRAINING EXEMPTION.
  MILITARY TRAINING EXEMPTION.
TRADE AND COMMERCE.
  INTERNATIONAL SUGAR AGREEMENT.
  INTERNATIONAL SUGAR AGREEMENT.
  UNITED KINGDOM AND SOUTH AFRICA (PREFERENCES).
  UNITED KINGDOM AND SOUTH AFRICA (PREFERENCES).
  NEW FACTORIES.
  NEW FACTORIES.
  PROCESSED MILK IMPORTS.
  PROCESSED MILK IMPORTS.
MILITARY TRAINING.
  CIVIL SERVANTS (PAY).
  CIVIL SERVANTS (PAY).
  APPRENTICES, CLYDESIDE.
  APPRENTICES, CLYDESIDE.
  TERRITORIAL ARMY ENLISTMENT.
  TERRITORIAL ARMY ENLISTMENT.
  MOTOR VEHICLES DUTY.
  MOTOR VEHICLES DUTY.
  CZECHO-SLOVAKIA (ASSETS, GREAT BRITAIN).
  CZECHO-SLOVAKIA (ASSETS, GREAT BRITAIN).
  MACHINE TOOLS.
  MACHINE TOOLS.
  NON-INFLAMMABLE CINEMATOGRAPH FILMS.
  NON-INFLAMMABLE CINEMATOGRAPH FILMS.
  CROWN COLONIES (REFUGEES).
  CROWN COLONIES (REFUGEES).
  DISTURBANCES, JARROW (POLICE ACTION).
  DISTURBANCES, JARROW (POLICE ACTION).
  SPECIAL CONSTABULARY (OFFICIAL CORRESPONDENCE).
  SPECIAL CONSTABULARY (OFFICIAL CORRESPONDENCE).
  YOUNG PERSONS (HOURS OF EMPLOYMENT).
  YOUNG PERSONS (HOURS OF EMPLOYMENT).
  FACTORIES ACT.
  FACTORIES ACT.
  OFFICIAL SECRETS ACT (MANCHESTER PROSECUTION).
  OFFICIAL SECRETS ACT (MANCHESTER PROSECUTION).
  GERMAN PROPAGANDA.
  GERMAN PROPAGANDA.
  REFUGEES.
  REFUGEES.
  SUMMARY JURISDICTION COURTS PROCEDURE.
  SUMMARY JURISDICTION COURTS PROCEDURE.
  NOISE ABATEMENT (STREET MUSICIANS).
  NOISE ABATEMENT (STREET MUSICIANS).
  IRISH REPUBLICAN ARMY OUTRAGES.
  IRISH REPUBLICAN ARMY OUTRAGES.
  INDUSTRIAL DISEASES (WORKMEN'S COMPENSATION).
  INDUSTRIAL DISEASES (WORKMEN'S COMPENSATION).
  FISHING INDUSTRY.
  FISHING INDUSTRY.
  RENT ARREARS (DISTRESS LEVIES).
  RENT ARREARS (DISTRESS LEVIES).
UNEMPLOYMENT.
  RHONDDA.
  RHONDDA.
  NEEDS DETERMINATION (APPEALS, SCOTLAND).
  NEEDS DETERMINATION (APPEALS, SCOTLAND).
  PUBLIC ASSISTANCE.
  PUBLIC ASSISTANCE.
  CHATHAM AND GRAVESEND.
  CHATHAM AND GRAVESEND.
  DOCKYARD WORKERS, HULL.
  DOCKYARD WORKERS, HULL.
  ELECTRICITY SUPPLY, LINDSEY.
  ELECTRICITY SUPPLY, LINDSEY.
EDUCATION.
  ST. LAWRENCE SCHOOL, RAMSGATE.
  ST. LAWRENCE SCHOOL, RAMSGATE.
  SCHOOLMASTERS (MILITARY SERVICE).
  SCHOOLMASTERS (MILITARY SERVICE).
  ROAD RECONSTRUCTION, HORNCHURCH (EMPLOYMENT).
  ROAD RECONSTRUCTION, HORNCHURCH (EMPLOYMENT).
ROYAL NAVY.
  VOLUNTEER RESERVE (TRAINING).
  VOLUNTEER RESERVE (TRAINING).
  FISHERMEN, SCOTLAND.
  FISHERMEN, SCOTLAND.
  ACCIDENTS, ROSYTH DOCKYARD.
  ACCIDENTS, ROSYTH DOCKYARD.
  POST OFFICE EMPLOYES (MILITARY SERVICE)
  POST OFFICE EMPLOYES (MILITARY SERVICE)
  COASTWISE SERVICES.
  COASTWISE SERVICES.
Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
COLNE VALLEY WATER BILL.
Read 2a, and committed: the Committee to be proposed by the Committee of Selection.
SOUTH STAFFORDSHIRE WATER BILL.
Read 2a, and committed.
CAMPS BILL.
Returned from the Commons, with the Amendments agreed to.
PUBLIC HEALTH (COAL MINE REFUSE) (SCOTLAND) BILL.
Returned from the Commons, with the Amendments agreed to.
THE KING EDWARD THE SEVENTH WELSH NATIONAL MEMORIAL ASSOCIATION BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.
SMETHWICK OLDBURY ROWLEY REGIS AND TIPTON TRANSPORT BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.

BUSINESS OF THE HOUSE.
THE FIRST LORD OF THE ADMIRALTY (EARL STANHOPE): My Lords, as your Lordships will see, I have a Motion on the Paper which is not in the ordinary form that we sometimes use before a Recess. I have put it down in the exact form in which it was moved in your Lordships' House by the late Lord Curzon in November, 1920, to give power to the Lord Chancellor or, in his absence, the Chairman of Committees,
216
after consultation with the Government, to call your Lordships together if necessary, in the event of an adjournment for more than two days. This will probably be to the convenience of your Lordships, particularly later on, when judicial sittings come to an end and the House might adjourn from Thursday to Tuesday. The Government might have a statement to make, or something might happen when your Lordships might desire to be called together earlier. I have put down the Motion in this way, and I hope it will receive the approval of your Lordships.
Moved to resolve, That whenever during the present Session of Parliament the House stands adjourned for more than two days, and it appears to the satisfaction of the Lord Chancellor (or if the Lord Chancellor is absent, to the satisfaction of the Lord Chairman of Committees after consultation with His Majesty's Government), that the public interest requires that the House should meet at any earlier time during such adjournment, the Lord Chancellor or the Lord Chairman of Committees, as the case may be, may give notice to the Peers that he is so satisfied, and thereupon the House shall meet at the time stated in such Notice, and shall transact its business as if it had been duly adjourned to that time.—(Earl Stanhope.)
On Question, Motion agreed to, and ordered accordingly.

RESERVE AND AUXILIARY FORCES BILL.
Read 3a (according to Order), and passed.

MILITARY TRAINING BILL.
EARL STANHOPE: My Lords, I beg to move the Motion that stands in my name.
Moved, That Standing Order No. XXXIX be considered in order to its being dispensed with for the purpose of passing the Military Training Bill through its remaining stages.—(Earl Stanhope.)
On Question, Motion agreed to, and ordered accordingly.
Amendments reported (according to Order).
Clause 1:
Classes of persons liable to be registered and called up for military training.
(3) The Minister, if satisfied that there is good cause for so doing, may permit any person to be registered in the Military Training Register before he attains the age of twenty years, or may permit any person registered in that Register, on application made by him within the prescribed period after being so registered, to postpone his liability to be called up for military training, and in the latter case, the period of one year for which he is liable to be so called up shall begin with the date to which his liability is postponed instead of the date on which he was so registered; and where application for such permission is made to the Minister on grounds of hardship, the Minister shall, unless he grants the permission, refer the application to a Military Training (Hardship) Committee constituted under Part I of the Schedule to this Act.
3.8 p.m.
LORD ADDISON LORD ADDISON moved, in subsection (3), after "registered," where that word last occurs, to insert "or may permit any person so registered to be exempt on the ground of his industrial skill from his liability to be called up for military training." The noble Lord said: My Lords, I regret very much having to return to the charge, but I was so seriously dissatisfied with the reply that the Government gave yesterday to this important Amendment that I feel sure it should receive a little further consideration. I only hope that, on reflection, the members of the Government may have seen fit to modify their opinion as expressed yesterday. I should like to say that I am not moving this Amendment in any Party spirit whatever. It is not a Party matter at all. I am moving it simply because I happen to have had painful, prolonged, and first-hand experience of the mistake which would be committed if the Bill passed in its present form.
I shall not waste your Lordships' time by restating the case. Briefly, it is that, as the Bill stands, every man between the ages of twenty and twenty-one will be required to enrol and will be called up for service unless a case of hardship or conscientious objection is made out. That will mean that large numbers of highly skilled men in most critical occupations, just at the end of their apprenticeships, when their skill is almost at its highest point, will be called up. There is no escape from it. As the Bill stands that will be so. It is really impossible to
218
exaggerate the foolishness of these proceedings, and I use the term with great respect. It will mean that in some of our most critical establishments from the drawing offices and the tool rooms and other places young men will be called up whom you will wish you had never called up. It will prejudice the output of munitions, and often in the most critical way lead to wholesale delays. It will be an unmitigated nuisance, and I am perfectly certain that people who will make the greatest outcry about it will not be the men themselves but the employers who have lost their skilled men and will have their plans of work dislocated. Therefore I move that, in addition to what is provided in the Bill, it should be lawful for the Minister to permit any person to be exempt on the ground of his industrial skill from liability to be called up for military training.
The Minister may exercise this power within as narrow limits as he chooses, but at the present time he cannot exercise such an option at all and refrain from requiring a person to be registered if that person has such skill that in the interests of national defence he should really stay where he is. The Amendment explains itself and I do not think I need go further into it. I only want to say again that it is not moved in any Party spirit; it is moved because I am sure this would be a sensible thing to do. As I say, it can be done on as strictly limited a scale as the Minister likes, but he ought to have the power to do it.
Amendment moved—
Page 2, line 55, after ("registered") insert ("or may permit any person so registered to be exempt on the ground of his industrial skill from his liability to be called up for military training").—(Lord Addison.)
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW): My Lords, I would like to say one or two words on this matter. I do not quite understand the working of the Bill in certain cases, and what I am going to put to your Lordships is perhaps rather more limited than the cases which my noble friend Lord Addison has mentioned. I should like to put the case of doctors. It is quite inconceivable that a doctor can be employed in the Army in any capacity other than that of an officer of the R.A.M.C., but in war time he may, of course, be also employed to look after the civil population or take part in other activities. He

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will, however, always be employed as a doctor, and in no other capacity, whether as an officer of the Army or as a civilian. Now it seems to me that the young medical student of twenty or twenty-one doing this six months training in the Army will really be—I do not say wasting his time, because I am sure it will do him a lot of good and it will be of advantage to him if he happens to be an officer later in the Army to have familiarity with Army conditions, but I think that if he is taken away from his training as a doctor for so long as six months it will really be contrary to the public interest, because we want him as a doctor and not as a soldier.
That being the case, it seems to me that the medical student is of the same category as the cadet at Woolwich or Sandhurst. He is working for his profession, which will be a military or semi-military profession in time of war, just as the cadet at Woolwich or Sandhurst is working for his profession, and it seems to me that the medical student should be treated in the same way, or in a somewhat similar way, as the cadet. I believe there are means by which this can be done, and I want to ask my noble friend if I am correct. The medical student might serve perhaps for a month, or two months, doing military training. I do not think that would hamper him very much, because he then might go back to his hospital or even to a military hospital, which would perhaps teach him more than he might learn if attached to the R.A.M.C. Reserve; or he might do other training if required. I do think that there should be some means by which a doctor can do as I have suggested. I take the case of a doctor because it is the most obvious one; but of course there are other cases in regard to which the Minister should have some discretion to allow these people to get on with learning the business in which they will be absolutely indispensable in war time, thereby really training themselves more efficiently and more satisfactorily than would be the case if they spent the whole of their training time in camp.
There is another point that I should like to mention. A man who is in a reserved occupation cannot join the Territorials because he will be turned down when he goes to join a Territorial unit. He will be told that he is not allowed to join
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because he is in a reserved occupation. I am inclined to think that it would be of advantage that such persons should be allowed to join the Territorials because that would not occupy so much of their time. They would be able to go on with their training while they were serving in their ordinary business and should make themselves efficient. Although they would not be in what I might call a special reserved occupation I think it is a little hard that they should be absolutely barred from joining the Territorial Army when other people are not so barred. I think, however, that really does not arise, because the reserved occupations can always be altered by administrative means, but in the case of doctors and others—I only take doctors as a special example because they are so obvious—there ought to be some means by which the Minister or Secretary of State can by regulation deal with a case of that kind.
LORD MANCROFT: My Lords, may I make an appeal to the Government representative who is dealing with this point, as raised and explained by the noble Lord, Lord Addison? The argument I am going to use is not a hypothetical argument; it comes from my own experience at the War Office twenty-five years ago. The very point which the noble Lord, Lord Addison, has made fits in with what I saw there at that time, and I cannot understand why the Master-General of Ordnance has not pointed out to the draftsman of this Bill that there is a blot here which ought to be wiped out. In the Bill as it stands there is an unforeseen possibility of mischief which ought to have been provided against. A man of twenty who is nearly out of his apprenticeship is very valuable as a skilled worker in helping to make munitions. I suggest that these men working upon jigs and gauges are irreplaceable; yet you are going to draw these men out from their occupations. I hope that something will be done to alter this Bill in that respect as a result of the suggestions now made.
It would be a great mistake to draw these men away from their occupations. The men themselves are eager to fight, but if you draw them out now and if there should, unfortunately, be war, you would be bound to take steps to get them back again. You must get them back because you cannot do without them. The

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Master-General of Ordnance will tell you so. Why not prevent the trouble at the outset? Why not stop the creation of trouble? It will have to be put right eventually by these men being brought back. Why not now put in the Bill something to prevent that? I do not confine myself to the words proposed by Lord Addison, but at any rate I suggest that the Master-General of Ordnance should be consulted. There must be on the files of the Contracts Department of the War Office information which would show the person who drafts this Bill, and the Minister in charge of the Bill, that there is a difficulty to be faced and one that ought to be faced before this Bill becomes law.
THE EARL OF BIRKENHEAD: My Lords, we appreciate very much on this side of the House the spirit in which the noble Lord moved this Amendment. We are quite aware that he did so in no partisan spirit. The effect of this Amendment would be that the Minister would be able to give a permanent exemption from military training to a person upon the ground of his industrial skill. My noble friend has in mind the importance to industry of a number of young men between the ages of twenty and twenty-one. We heard a good deal on the Committee stage, and we have heard a certain amount this afternoon, on the question of the position of apprentices. We should, I think, remember that the Bill makes provision for dealing with apprentices and those provisions enable the Minister to make regulations to secure the adjustment of contracts of service or apprenticeship.
LORD ADDISON: Where is that?
THE EARL OF BIRKENHEAD: It is in Clause 7 (3). But apart from that clause it is open to an apprentice, if he wishes, to apply for postponement under Clause 1 (3). It should be remembered that this age group which will be called up for training is a very young age group, and although the noble Lord, Lord Man-croft, and my noble friend opposite have stressed the skill to which these young men have attained, they are not, at that age, fully skilled tradesmen. They are either at a late stage of apprenticeship or are in what is known as the improver stage. The Government have given very careful consideration indeed to this question, and they do not feel justified in taking power to exempt men of this age
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group from their military training. They hope and believe, however, that most of these men will have their training upon some of the large number of technical jobs, which now exist in the Army.
As I said on the Committee stage, and as I would again remind your Lordships, the Army requires large numbers of skilled tradesmen, and it is the intention, as far as possible, to train young men between the ages of twenty and twenty-one, who have technical qualifications of the type now under discussion, in various technical units—for example, in the Royal Engineers, the Royal Army Ordnance Corps, the Royal Army Service Corps and the Royal Signals. I believe, also, there are many jobs of a mechanical kind in the non-technical units. As regards the importance of avoiding mistakes which were made in the early days of the last War, the Government are determined to avoid the mistake of taking highly skilled men out of industry and then afterwards having to comb the Services, in many cases unsuccessfully, to try to get them back. Evidence of the Government's determination in that respect is to be found in the Schedule of Reserved Occupations. The Government will continue to bear in mind the needs of industry in the event of war, and the great necessity for preserving a proper balance in man power, but they are convinced that they would not be justified in applying an industrial discrimination to men of this young age group.
THE EARL OF ONSLOW: Would the noble Earl answer my question?
THE EARL OF BIRKENHEAD: I beg the noble Earl's pardon. The question he asked is a very important one. I think that question can be answered and my noble friend in charge of the Bill tells me that he will deal with it on Third Reading.
LORD ADDISON: My Lords, I am quite sure that in fact the question put by the noble Earl cannot be answered. There is no ground for exempting a medical student, who perhaps would be entitled to take his qualifying examination a month after reaching the age of twenty-one. There is nothing to prevent his being called up. It cannot be done by regulation, with great respect to what the noble Earl may be going to say on Third Reading. He has got to be called up as the Bill stands. The noble Earl's reference to Clause 7 (3) does not in any way reply

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to my point. It gives the Minister power to vary contracts of apprenticeship and so forth. That power will only require to be exercised if the man is called up. If the man is left at his bench, doing his ordinary job, there is no need to exercise the powers given in Clause 7 (3). It does not help us out a bit. The noble Earl suggests that these young men will find some useful job in various units of the Army. I know that quite well, but I also know that there will be an outcry about the shortage of scientific instruments, gun sights and other things, on which these men would be employed. The point is, what is the most useful way of utilising their skill in the national interest? I am sure that any man who answers faithfully will tell you that if he is taken from his job and spends six months away from it, it will be several months afterwards before he recovers his skill. The noble Earl has done his best to bolster up a bad case, but I hope the House will express an opinion on it.
EARL STANHOPE: My Lords, may I be allowed to say a few words on this matter? The Government had to decide,
Clause 3:
Conscientious objectors.
(12) The regulations made under this Act regulating the procedure of such tribunals as aforesaid shall make provision for the Appellate Tribunal to sit in two divisions, of which one shall sit for Scotland, and shall empower the tribunals to take evidence on oath, and shall make provision as to the representation of parties to proceedings before
as a question of principle, whether they were going to allow a large number of people to escape from doing service because of their various qualifications, or whether they were going to make, as far as possible, no exceptions at all. We choose the latter alternative. In the short debate this afternoon, it has become obvious that once you begin to open the door you will have to open it very wide indeed. The noble Lord talked about industrial skill, and at once the noble Earl, Lord Onslow, talked about medical students. I was only surprised that my noble friend the Earl of Radnor, or some other noble Lord interested in agriculture, did not say that men specially skilled in work on the land ought to be excluded. So you go on and go on. The only thing the Government could do was to say that, provided he was a British subject, living in this country, every man should serve under the terms of the Bill unless there was a conscientious objection or some medical reason why he should not do so.
On Question, Whether the proposed words shall be there inserted?
Their Lordships divided:—Contents, 5; Not-Contents, 32.

CONTENTS.

Birmingham, L. Bp.

Noel-Buxton, L.

Snell, L.

Addison, L. [Teller.]

Ponsonby of Shulbrede, L. [Teller.]

NOT CONTENTS.

Maugham, L. (L. Chancellor.)

Bridgeman, V.

Fairlie, L. (E. Glasgow.)

Bridport, V.

Fermanagh, L. (E. Erne.)

Zetland, M.

FitzAlan of Derwent, V.

Harmsworth, L.

Mersey, V.

Holden, L.

Birkenhead, E.

Trenchard, V.

Mancroft, L.

Cavan, E.

Rennell, L.

De La Warr, E.

Addington, L.

Strathcona and Mount Royal, L.

Fortescue, E.

Birdwood, L.

Howe, E

Blythswood, L.

Templemore, L. [Teller.]

Lucan, E. [Teller.]

Chatfield, L.

Teynham, L.

Midleton, E.

Denman, L.

Wolverton, L.

Munster, E.

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

Stanhope, E.

Resolved in the negative, and Amendment disagreed to accordingly.

the tribunals which shall include the right to appear either in person or by counsel or a solicitor or by a representative of any trade union to which they belong.
3.36 p.m.
LORD ADDISON LORD ADDISON moved, at the end of subsection (12), to insert "or by any person who satisfies such a tribunal that he is a relative or personal friend of the party he proposes to represent." The noble Lord said: My Lords, this is an Amendment which I moved in another

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form yesterday and which received friendly support from the Lord Chancellor. I have put it down in an amended form which I hope will be acceptable to the Government. I moved yesterday simply to acid at the end "or by a friend," but I have been given to understand that there are some people going about, or likely to be going about, who might perhaps be described as "professional" friends. We do not want them. This is a bona-fide intention that a person who is poor and unfamiliar with proceedings shall be able to get a real friend—a personal friend or a relative—to state his case for him, and not anybody who happens to go about and offer to be a friend to anybody. I have therefore altered the words, under advice, to try to meet that point, and I hope that the Government will accept the Amendment in this modified form.
Amendment moved—
Page 9, line 44, at end insert ("or by any person who satisfies such a tribunal that he is a relative or personal friend of the party he proposes to represent").—(Lord Addison.)
EARL STANHOPE: My Lords, the Government are very glad to accept this Amendment, and I am pleased to see that the noble Lord has amended it, for the reasons he has stated to the House, and made quite clear that the friend is to be a personal friend. Some people were suggesting another adjective.
On Question, Amendment agreed to.
Clause 14:
Discharge of prisoners claiming to be conscientious objectors.
14.—(1) If any person undergoing a term of imprisonment of six months or any greater punishment imposed on him by a Court-Martial in respect of an offence committed while he was undergoing a special course of training which he was required to undergo by virtue of subsection (1) of Section six of this Act, claims that the offence was committed by reason of his conscientiously objecting to undergoing military training or to obeying any order in respect of which the offence was committed, then he may apply in the prescribed manner to have his case considered by the Appellate Tribunal constituted under Part II of the Schedule to this Act, and that tribunal shall, whether or not it finds that the offence for which he was sentenced was committed by reason of such a conscientious objection as aforesaid, have power to recommend to the Secretary of State that he be discharged from the Army Reserve as soon as may be after serving the sentence imposed upon him, but if the tribunal finds that the said offence was not committed by reason of such a conscientious objection it may order
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him to undergo immediately after his discharge from the Army Reserve the like training and subject to the like conditions as if he had been a person ordered to comply with the requirements of subsection (8) of Section three of this Act, so however that the period for which he is required to undergo such training shall be specified in the order and shall not exceed six months from the date of his discharge from the Army Reserve.
3.38 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (1), to substitute "three months" for "six months" where those words first occur. The noble and learned Lord said: My Lords, this is an Amendment in manuscript form, of which notice has been given to, I think, everybody who is interested in the matter. It is designed to meet a point which was raised last night but which was not the subject of an Amendment before your Lordships and with which, perhaps, I was unable to deal satisfactorily at the time because I had no notice that it was to be raised. My noble friend Viscount Samuel desired, as I understood, that the preliminary words in the clause should be entirely omitted. I may have been wrong in taking that view, and I am not quite sure now whether he wanted to go as far as that. The Government took the view that some such words were necessary, for a reason which I think I can explain. But I am conscious, and I may say I was conscious then, that what I said did not quite cover the question as to the length of the sentence which had to be imposed before the person in question was given a right on alleged conscientious grounds to apply to the tribunal.
The main object of the clause was, I think, to prevent a cat-and-mouse arrangement of the sort which was found so unsatisfactory and was objected to so strongly during the last War. We are dealing with the case of a person who may or may not have claimed to be exempt from military service upon conscientious grounds. We have, however, to remember that there may be a case of a person who either has been decided against, having raised the contention of his conscientious scruples, or has never raised the contention at all; and it is certainly, I think, desirable that it should not be possible for people to complain of an order made while a man is serving as a member of His Majesty's Forces under the Act and raise a point of conscience

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which may have no real foundation at all. If you have no limit as to the length of the sentence it would be open, I suppose, to anybody who at the moment might have lost his temper with the drill sergeant or who objected to the conditions of his service, to claim—since there is no condition to the claim apart from the one found in the first two lines of the section—that his case should go before the tribunal. It might cause very great inconvenience and I venture to think it would be subversive of discipline. On the other hand, the Government gave a pledge that they would introduce a clause of this kind and the form in which it has been introduced is of course a matter for consideration.
I am afraid that yesterday I rather nettled the noble Viscount, Lord Samuel, by a phrase of mine after certain interchanges of Parliamentary observations. I regret that he should have thought I was asserting that he was of the nature of a conscientious objector. I am glad to think that if he were a few years younger than he now is it might be taken for granted that he would not be a conscientious objector at all. I hope he will be satisfied with the Amendment made after very careful examination. It is that six months shall be changed to three months in future. It will allow anybody who has been convicted for a period of three months or more to claim that his case should go before the Appellate Tribunal. I will add this, which is I think an observation which I made before, that if you look at the clause you will see that the tribunal is not intended to be bound to make a statement that the man has acted from conscientious objection. The tribunal shall,
"whether or not it finds that the offence for which he was sentenced was committed by reason of such a conscientious objection as aforesaid, have power to recommend to the Secretary of State that he be discharged from the Army Reserve as soon as may be after serving the sentence imposed upon him."
With some knowledge of how tribunals work I think that, having that before them, they probably will not come to a definite conclusion in any ordinary case that, where the matter has been before a tribunal before, that tribunal was wrong.
The other matter has already been discussed on an Amendment by Lord Addison, and perhaps your Lordships will allow me to say now, in order not to take
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up your time hereafter, that I have carefully considered, with the assistance of competent advice on the subject, whether I was right yesterday in saying that the form of the clause does not in the least interfere with the power of the Secretary of State to discharge the residue of the sentence of the prisoner in question if he is satisfied that that is the right course. Accordingly, there is nothing here in lines 34, 35 and 36 on page 20 that requires any such Amendment as Lord Addison suggested last night. In other words the Secretary of State can discharge the man from the Service after he has served the remainder of his sentence. Perhaps I might also say that I have considered the question which Lord Samuel raised as to the meaning of a man being "found guilty." I am afraid that is in the other Bill.
VISCOUNT SAMUEL: It is in this Bill, too.
THE LORD CHANCELLOR: I am advised that the view which I expressed that the phrase in question referred to a conviction by a civil court was correct. I beg to move.
Amendment moved—
Page 20, line 22, leave out ("six") and insert ("three").—(The Lord Chancellor.)
VISCOUNT SAMUEL: My Lords, I am grateful to the noble and learned Lord for the trouble which he has taken over this question, and for moving the Amendment to meet the point which I raised, and also for having dealt with another point and given a ruling thereon which is in accordance with what I had expected would be the ruling given. This provision now in the Bill was not there when the Bill was introduced, but it was moved in yesterday, and I ventured in an humble and inquiring spirit to ask why it was there was this limitation, that a punishment of six months must have been inflicted upon a man before he could exercise any right of appealing for discharge from the Army. On the face of it, it would have seemed right either that the decision of the tribunal that he was not a conscientious objector before entering the Army should hold, and if he refused to obey orders he should be punished and that should be the end of it, or else, if he were given the opportunity of having the matter once more reviewed, that it should be a wide opportunity and not limited to persons

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who had been sentenced to six months imprisonment.
I was somewhat astonished to have evoked from the noble and learned Lord a suggestion that I must be one of those who thought that the utmost consideration should be paid to the conscientious objector, and not so much to the serving soldier. That has never been my point of view, and I thought I had made that clear in the observations which I addressed to the House on the Second Reading of this Bill. I am sorry that there should be any conscientious objectors. I do not myself sympathise with their point of view at all; but if there are conscientious objectors, I agree with the Government that provision has to be made to meet that case, otherwise circumstances arise which are very much to be regretted. Therefore, referring to an observation that has just fallen from the noble and learned Lord on the Woolsack, if the emergency should take place, and conscription were to be applied to people in the late sixties, I certainly should not invoke the conscientious objector's clause, though I should not find myself in the same regiment as the Lord Chancellor, as he would certainly be regarded as belonging to a key occupation.
Since this discussion took place yesterday, I have looked up the debate on this point that was held in another place, and there I find that when a similar clause was first moved from the Labour Benches, the Attorney-General on behalf of the Government refused it, and said the Government thought this was a matter to be decided by the tribunals who considered the application of a man to be regarded as a conscientious objector, and that when that had once been decided, the matter was ended. However, as the debate went on it appeared that it was a case to be considered, and those who have read that debate must have been greatly struck, as the House of Commons was struck, by the speech of another Labour Member, Mr. Creech Jones, who recounted his own experiences. He had been adjudged by the local tribunal to be a conscientious objector, but the Appeal Tribunal held that he was not, and he was consequently sent into the Army. Being a man of extremely strong convictions and great tenacity, he refused to obey military authority, was court-martialled and was sentenced to six months imprisonment, which he served. On release
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he was sent back to the Army, again refused to obey orders, again was court-martialled, and was then sentenced to twelve months imprisonment, which he served. On his release from the second term, he was again sent back to the Army, again refused, was again court-martialled and was sentenced to two years. And altogether, he told the House, he had been in prison for about three and a half years.
In those circumstances, it became clear that there was a case to be met, and consequently a promise was given that, when the Bill came to your Lordships' House, the Government would take steps to meet it, and that was why this clause was put down. I think that your Lordships will agree that, in the circumstances, it is a right and proper provision. But then arose the question which I put: Why should this apply only to people who have been sentenced to six months, and to that I think the answer might have been given in the terms that were used in the debate in the House of Commons. It was there stated that if there was no limitation at all a man who was not a genuine conscientious objector, but who got into some trouble and found himself uncomfortable in the Army, and refused to obey some military order of a trivial kind, might run the risk of having to serve a short term of confinement to barracks, or some other punishment, and then take the chance of going back to be adjudged as a conscientious objector, and perhaps be discharged from the Army altogether—that what was intended to be a just and proper provision might be misused by contumacious and perverse people to commit trivial offences and then put this machinery into motion.
Consequently it was agreed on all hands that there ought to be some restriction; that this procedure should be a very exceptional procedure, as it ought to be, and should not be lightly invoked, and for that reason there ought to be some measure of the gravity of the offence, so that if a man takes this course he should run the risk of having a really serious punishment if it were found that it was really a fraudulent use of the machinery. For that reason, six months was inserted. I wish that an explanation on those lines had been given yesterday, but it was not, and I think that when that explanation is given we see that there is a reason for imposing a limitation of time. But then

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the Lord Chancellor thought a three months period would probably on the whole be more just and would give sufficient scope without opening too wide a door. I am glad that the Government have proposed that Amendment, and I gratefully accept the proposal of the Lord Chancellor, with many thanks for his kindness and courtesy.
LORD ADDISON: My Lords, may I intervene just to elicit the precise form of the interpretation which the Lord Chancellor ruled should apply with regard to the words to which I called attention yesterday. I am making no case to excuse a contumacious person, but in the small number of cases where the tribunal, having heard the case, decides that the man acted from conscientious motives, and that he ought not to be in the Army at all, if such a man is undergoing a sentence of, we will say, eighteen months or a year, and he still has a considerable part of it to serve, say, nine months, I understand that the ruling of the Lord Chancellor is that, notwithstanding the words remaining in the clause, that he should "be discharged from the Army Reserve as soon as may be after serving the sentence imposed upon him," those words will not preclude the Secretary of State from releasing the man before the remainder of his sentence has been served. I understand that that is so. If so, I accept that interpretation from the highest legal authority in the realm, and all that I can say is that, having accepted the interpretation, I regard the words as meaningless.
THE LORD CHANCELLOR: My Lords, may I say one word in answer to the noble Lord, because he has not observed the difference between a recommendation by the tribunal and the act of the Secretary of State? The tribunal, whether or not the man has acted from conscientious motives, has power to recommend the Secretary of State that he be discharged. The words of the clause are "discharged from the Army Reserve as soon as may be after serving the sentence imposed." That means that a tribunal, which of course has no power to direct a Secretary of State to do something, may have power to make a recommendation to the Secretary of State—namely, that after the man has served his legal sentence, he be discharged from the Army Reserve. The Secretary of State is to be recommended to take a particular
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course; the clause does not say anything about the Secretary of State being prevented from taking that course under the existing sections of the Army Act. The sections in the Army Act under which the Secretary of State can remit a sentence remain totally unaffected. I could give other illustrations, but I hope the matter is clear.
On Question, Amendment agreed to.
THE EARL OF MUNSTER: My Lords, the remaining Amendment is drafting, and I beg to move.
Amendment moved—
Page 21, line 11, leave out ("conviction thereof by a court of summary jurisdiction") and insert ("summary conviction thereof").—(The Earl of Munster.)
On Question, Amendment agreed to.
4.1 p.m.
Then, Standing Order No. XXXIX having been dispensed with:
THE EARL OF MUNSTER: My Lords, I beg to move that the Bill be read a third time.
Moved, That the Bill be now read 3a.—(The Earl of Munster.)
VISCOUNT BRIDGEMAN: My Lords, on the Second Reading of the Bill I expressed some anxiety which was felt on account of the Officers Training Corps and the Cadet Corps. Since then, I understand, representatives of the headmasters have been in touch with the War Office and are now led to suppose that the War Office authorities really appreciate the importance, not only of honouring what I believe to be a contract between the War Office and the holders of certificates of proficiency, but also the importance of giving the Officers Training Corps a really effective place in the new plan for national defence. I am sure that those who feel the importance of this subject will be extremely grateful to the Secretary of State for War for that assurance. At the same time it is only an assurance, and it seems to me that the matter will still want careful watching, particularly in the early stages, so that the Officers Training Corps and the Cadet Corps do not lose their popularity and their appeal, which would be difficult to recover at a later stage. I shall say nothing on the subject of the Universities, for in his place I see my noble and gallant friend Lord Birdwood, who can speak with such authority on the subject.
4.3 p.m.
LORD BIRDWOOD: My Lords, I trust it may not be too late for the Secretary of State for War to make certain amendments in the conditions of service on which young men will now enter the Militia. Possibly some of your Lordships are aware that practically the whole of my service has been passed in very close association with soldiers, and during that time I have had the privilege of raising, organising, and training corps of men from this old country and from Australia and India. In doing that one has recognised, and naturally recognised, that the greatest difficulty is the production of officers—a difficulty which increases enormously in proportion to the number of troops you are raising. Here we are faced with the question of raising 200,000 men simultaneously, almost immediately. The difficulty would be far greater if one did not see, as I do, two pools into which we can dip to obtain some of the material we want. The first of these pools I have in mind are young men of the age of those who are now coming up to be enlisted—twenty and twenty-one.
For the last seven years I have been fortunate in being Chairman of the Military Studies Board at Cambridge, during which time I met almost daily members of the University, undergraduates, who wished to join either the military forces or the Royal Air Force. I also came into very close touch with the members of the O.T.C. and the squadron of the Air Force, and I know well what really fine and fit young men they are—men determined to do their best, keen, energetic, and able. Many of these are men who have done three or four years with their Cadet Corps in their schools before coming up to the University, where they again do three years in the O.T.C., many of them obtaining A and B certificates which do require a certain amount of military knowledge which would be most useful. It strikes me that it would be an absolute waste of material and, what is more important at present, of time, if these young men all have to join the ranks in the units to be raised for the Militia. In saying this I do not want to be misunderstood about the democratisation of the forces, because I entirely believe it is right that every young man, of whatever status, should join the new units as a private. That should be the case
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in normal times, but the present is far from normal—it is abnormal—and time may be an absolutely vital factor. I therefore think it would be quite wrong that we should waste the time of these young men by making them join in every case as privates.
There are, I understand, certain exceptions already. I would like the War Office to agree that any men who have served, say, at least two years in the O.T.C. and have taken their certificates should, instead of joining these units as privates, be drafted to a special training college—training colleges probably—for officers which should be formed. We have quite a good nucleus for them already. There are three corps—the Honourable Artillery Company, the Artists, and the Inns of Court. All these units did invaluable work during the War in training young officers, and they still continue to do so. I suggest that they should be used as a nucleus, in conjunction with any other school that may be raised, for training these young men in the higher duties of officers.
In recommending that to your Lordships, I speak from a certain amount of personal experience. Your Lordships may remember that after Lord Kitchener gave up his appointment as Commander-in-Chief in India in 1909 the Governments of New Zealand and Australia asked him to go out to those Dominions to organise and make recommendations regarding their Defence Forces. He went out early in 1910, his recommendations were accepted, and I have always felt it was as the result of that that those two great Dominions were able to put into the field, as they did in 1914, the magnificent organised forces that helped us so much throughout the War. I had the privilege of taking over the command of Australian and New Zealand troops in Egypt in 1914. They served with me during the Dardanelles campaign and later in France. One point I noticed as soon as I took over the New Zealanders was the extraordinarily good training of their young officers. Among Lord Kitchener's recommendations had been one that young men out there in the same category as those I have mentioned as members of our O.T.C., instead of being sent into the ranks in New Zealand units, should go into a small military college formed for them. That was done, and when I was talking to the Prime Minister

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of New Zealand after the War about the efficiency of these young officers, he said he attributed it entirely to the excellent training they had received at these military colleges. I cannot help thinking it would be an enormous advantage if we could do the same thing in this case.
The other pool consists of officers who have left the Army. The Secretary of State for War a year or two ago formed a Committee under the Chairmanship of a very distinguished member of your Lordships' House, Lord Willingdon, to draw up proposals for the conditions of service of officers in the Army. These recommendations were accepted. Among them was one which equalised to a very great extent and improved and accelerated the conditions of promotion of officers in the Army, and also reduced the age at which officers must compulsorily retire. As a result there are now a considerable number of officers in this country of both the British and Indian Armies, of the rank of major mostly, with some senior captains, all of whom would be available and I know would willingly come forward to do their bit. A great number of them have not private means except small pensions, and they should be given allowances which would in any case prevent their being out of pocket by reason of their services. I trust that the Secretary of State for War may take into consideration the suggestions I have made.
4.10 p.m.
VISCOUNT MERSEY: My Lords, I should like to say a few words in general support of this Bill. About eight months ago my noble friend Lord Buckmaster and myself tried to press upon the noble Earl, the Leader of the House, the desirability of introducing some form of universal service, but at that time the noble Earl was not able to say that the Government were willing to concede our request. I am very glad, however, that what I consider a happy event has at last arrived. I share not only the point of view of the noble Viscount and that of my old friend the noble and gallant Field-Marshal on the Cross Benches about officers, but also what has been said with regard to the benefit of this Bill to the young people of the country. They are going to have a most wonderful opportunity of improving themselves in every way. They are going to have good con-
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ditions of service, good food, good barracks and an opportunity of training for other professions afterwards. Moreover, they will have instilled into them a sense of responsibility and patriotism which some of them, unfortunately, have not got at the present time.
I speak with some slight knowledge, because I myself have served in three campaigns and I constantly have to go to Germany. The young men you see everywhere, in Germany, in the country and in the streets, compare advantageously with what we often see in this country. One has only got to go to the Royal Military Tournament to see splendid examples of what can be done, particularly by the Air Force, with young men who have had a short period of training. They are tall, lithe, smart, effective, healthy young men. In contrast, unfortunately, one sees very often in the streets here, round-backed, narrow-chested, sloppy young fellows who seem to take very little interest in anything. I think that this is a great opportunity for our young men, and not something to be regarded as an onerous burden. From what we have heard in the course of the discussions on this Bill I think we can regard this as a great event which will benefit both our young men and the country generally.
4.14 p.m.
THE EARL OF MUNSTER: My Lords, it is my privilege to offer on behalf of His Majesty's Government our most sincere congratulations to the noble and gallant Field Marshal on the occasion of his maiden speech to your Lordships. My noble friend, as the House knows only too well, has served with great distinction throughout his life in the armed forces of the Crown, and it is only natural that your Lordships should listen attentively to any views that he may wish to express not only on this but on any future occasion on which he sees fit to address the House.
Our discussions on this Bill are now drawing to a close, and I have no desire whatever to weary the House with a Second Reading speech at this stage. Instead, I shall endeavour to reply to some of the questions which were addressed to the Government yesterday in the course of the Committee stage proceedings and again to-day on the Report stage of the Bill. There was in the course

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of our discussion yesterday a question raised by three noble Lords, Lord Addison, Lord Howe and Lord Radnor, as to the possibility of reinstating in the Territorial Army these men who have completed their military service. I told the noble Lords yesterday that I would be prepared to discuss this matter with the Secretary of State for War, and he has approved to-day that regulations will be issued to all Territorial Army units that when a man is called upon to perform his duties in the Militia for a period of six months, he will at the conclusion of his training be automatically allowed to rejoin his unit provided, as I said yesterday, that his conduct and behaviour have been satisfactory during his period of training. I want to make it quite clear at this stage that any man, whether or not holding some rank in the Territorial Army, on joining the Militia will do so as a private. If his qualifications are such as to justify selection, he will, as I mentioned in my speech at the Second Reading, be transferred to a Section Leader School for the last two months of his service during which time he will hold the acting rank of lance-corporal.
I think my noble and gallant friend Lord Birdwood will observe that these young men from the Universities who have either certificate A or both certificates A and B will not in fact be wasting their time. They will have four months training, after which time, if they are selected, they will go to this Section Leader School which is to be formed at Netheravon for the particular purpose. I am glad to hear my noble friend Lord Bridgeman state that the Headmasters' Conference do appreciate that the War Office are taking every step and regards the junior O.T.C. as a very important officer-producing unit in this country. I feel certain that my right honourable friend will most carefully watch all that happens with regard to this force, and indeed it is gratifying to know that the Headmasters' Conference do realise that my right honourable friend is doing as much as he possibly can for that particular unit. A question was raised yesterday, I think by the noble Lord, Lord Addington, as to whether the six months Militia service of any man would count as qualifying service for the efficiency medal. I have made inquiries into this question, and I find that, as the militiamen are being
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enlisted under Section 30 of the Territorial and Reserve Forces Act, 1907, they do appear to come within the provisions of the Royal Warrant dealing with this medal. Therefore, this six months will count as a qualifying service towards that medal.
Finally, there is the question, raised by my noble friend Lord Onslow on the Report stage of this Bill, concerning medical students who may be called upon to undergo their training. This matter is one which is at the present moment under active consideration. There are three factors which we have to take into account in dealing with this problem. First, there is the period in their course at which medical students do their military training. If that is postponed for the period until they gain their certificate, I understand they will come up for training at the age of twenty-five, and in that case this period will not occur till three years have elapsed. Secondly, the number of medical students at one time and the training facilities which will be available have also to be taken into consideration; and, lastly, the fact that the Royal Army Medical Corp Militia require men who will remain in the R.A.M.C. as nursing orderlies when they are required has also to be taken into account. The noble Earl will observe, therefore, that these are all matters which we are now taking into consideration, and about which I can, unfortunately, give him no further information at this stage. I was glad to hear the remarks which fell from my noble friend Lord Mersey, speaking on behalf of a portion of the Liberal party.
VISCOUNT MERSEY: Two or three.
THE EARL OF MUNSTER: I am happy to think, anyhow, that two or three members of the Liberal Party associate themselves with him in endorsing the views of His Majesty's Government that this training of certain types of young men in this country will be of the greatest benefit to them and will probably encourage them in large numbers to join the Regular Forces of the Crown. I say no more. I know the Government are grateful to noble Lords who, we are prepared to admit, have been somewhat rushed in dealing with this Bill. I trust that when the period of three years has elapsed the pro-

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visions of this measure will be no longer required.
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
5.0 p.m.
The following Bills received the Royal Assent:
Wild Birds (Duck and Geese) Protection,
Reorganisation of Offices (Scotland), Limitation,
Camps,
Public Health (Coal Mine Refuse) (Scotland),
Reserve and Auxiliary Forces,
Conway Gas,
All Hallows Lombard Street,
Northmet Power,
Wear Navigation and Sunderland Dock,
Mumbles Pier,
City of London (Various Powers),
London and North Eastern Railway (Superannuation Fund),
Willenhall Urban District Council,
Gosport Corporation,
Saint Nicholas Millbrook (Southampton) Church (Sale),
Methodist Church,
The King Edward the Seventh Welsh National Memorial Association,
London Midland and Scottish Railway,
Royal Wanstead School,
Scottish Union and National Insurance Company,
Smethwick Oldbury Rowley Regis and Tipton Transport.

  HIGHWAY EXPENDITURE.
  HIGHWAY EXPENDITURE.

Preamble
The LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that no Standing Orders are applicable to the following Bills:
Ministry of Health Provisional Order Confirmation (Bethesda) [H.L.],
Ministry of Health Provisional Order Confirmation (Bradford) [H.L.].
The same was ordered to lie on the Table.

SHEFFIELD CORPORATION BILL. SOUTHERN RAILWAY BILL. TIVERTON CORPORATION BILL.
Brought from the Commons; read 1a, and referred to the Examiners.

SUTTON-IN-ASHFIELD GAS ORDER, 1939.
Special Order proposed to be made on the application of the Sutton-in-Ashfield Urban District Council:
Laid before the House (pursuant to Act) for affirmative Resolution, and referred to the Special Orders Committee.

LONDON GOVERNMENT BILL. [H.L.]
Reported from the Joint Committee, with Amendments, and committed to a Committee of the Whole House, and Bill to be printed as amended. Minutes of evidence (with the proceedings of the Committee) laid upon the Table, and to be delivered out.