Sitting of 25 November 1947

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT

    Macclesfield and Congleton
    Air-Commodore Harveyasked the Minister of Labour how many unemployed males and females were registered at Macclesfield and Congleton at the latest convenient date.
    The Minister of Labour (Mr. Isaacs): At 10th November, 45 males and nine females at Macclesfield and 51 males and nine females at Congleton.

    Payment by Results
    Mr. William Shepherdasked the Minister of Labour what percentage of workers engaged in productive capacities are affected by payment by result arrangements.
    Mr. Isaacs: Amongst the manual workers employed by firms in manufacturing industries in April last, 30 per cent. were paid by piece rates or by other forms of payment by results. Details in respect of individual industries were given in the October issue of the "Ministry of Labour Gazette." Information is not available as to the proportion of persons actually employed on productive processes who were so remunerated.
    Mr. Shepherd: Is it not a fact from the details available that the percentages now and in 1938 remain almost static; and in view of the Government's pretensions on this method of payment what are they going to do about it?
    Mr. Isaacs: Until I am satisfied that the observations in the first part of the hon. Gentleman's Question are correct, I could not make any comment on the second part.
    Mr. Shepherd: Surely the right hon. Gentleman knows that a Committee has been appointed by his own Department and can give this information?
    Mr. Isaacs: I have answered the hon. Gentleman's Question on the Order Paper, and if he wants more information I shall be glad to get it for him.

    Displaced Persons
    Mr. Butcherasked the Minister of Labour if he will give further information about the proposal to bring 10,000 fatherless youths from Germany to assist in the coal mining industry; and whether any similar arrangements are being made for fatherless girls to train them for work of national importance such as textile operatives, hospital orderlies, etc.
    The Parliamentary Secretary to the Ministry of Labour (Mr. Ness Edwards): No arrangements of the kind mentioned are being made. If the hon. Member refers to recent Press reports relating to young orphan displaced persons, there appears to have been misapprehension, for the numbers of such young persons are in fact small.

    Industrial Disputes
    Mr. Osborneasked the Minister of Labour how many working hours have been lost through unofficial strikes during the two years, October 1945–47; which are the main industries that are affected; and how these figures compare with the years 1919–20.
    Mr. Isaacs: As the reply includes a table of figures, I will, if I may, circulate it in the OFFICIAL REPORT.
    Mr. Osborne: Is the Minister satisfied that his Department cannot act more quickly and so save a local dispute from growing into a big national affair?
    Mr. Isaacs: I have the weekly reports of the industrial relations officers, and I think the Ministry act as quickly as possible. It is also fair to say that, although we get an unnecessary number of unofficial disputes, the number of such disputes which are stopped by the prompt action of trade union officials is very high indeed.
    Following is the reply:
    Statistics are not available as to the number of working hours lost by disputes, but the Table below shows the number of working days lost by all stoppages of work due to disputes during the periods in question, distinguishing the principal industries. The information available does not enable a distinction to be made between official and unofficial stoppages.

    WORKING DAYS LOST OWING TO TRADE DISPUTES.

    Industry.

    Two years October 1945 to September 1947

    Calendar years 1919 and 1920

    Mining and Quarrying

    1,284,000

    25,221,000

    Metal, Engineering and Shipbuilding

    1,607,000

    15,662,000

    Textile

    56,000

    9,603,000

    Clothing

    181,000

    966,000

    Building

    43,000

    1,180,000

    Transport

    1,851,000

    4,749,000

    Other

    547,000

    4,155,000

    TOTAL

    5,569,000

    61,536,000

    Mr. Vernon Bartlettasked the Minister of Labour how many working days have been lost through strikes in the United Kingdom since V.E. Day; and how many days were lost through the same cause in a comparable period after Armistice Day, 1918.
    Mr. Isaacs: The total number of days lost in industrial disputes since V.E. Day has been about 6½million. In the corresponding period after November, 1918, 89½ million days were lost.
    Mr. Bartlett: Will the right hon. Gentleman consult his colleagues on the Front Bench to ensure that those figures are published as widely as possible overseas, to counteract the defeatist propaganda often carried on by British subjects?
    Mr. Isaacs: I thank the hon. Member for that suggestion. We will follow it up.
    Mr. Austinasked the Minister of Labour whether he has been asked to intervene in the strike at Metro-Vickers, Trafford Park; and if he will make a statement on this matter.
    Mr. Isaacs: The stoppage commenced on 17th November, and work was resumed on 19th November. I was not asked to intervene.

    Royal Palaces (Insurable Workers)
    Mr. Emrys Hughesasked the Minister of Labour how many insurable workers are employed at Buckingham Palace and Windsor Castle.
    Mr. Isaacs: This information is not separately recorded and I do not propose to make special inquiries.

    Polish Resettlement Corps
    Mr. Sidney Shephardasked the Minister of Labour which trades are open to skilled Poles at present in the Resettlement Corps.
    Mr. Ness Edwards: Members of the Polish Resettlement Corps can, speaking generally, be empleyed in any trade, provided that the wages and conditions are not less favourable than a British worker would receive in a similar capacity and that there is no suitable and willing British worker available for the job. Vacancies in certain undermanned industries are:

    —

    Men.

    Women.

    Coalmining

    8,131

    —

    Agriculture and Forestry

    7,788

    —

    Building brick and allied industries

    4,648

    —

    Cotton

    3,625

    19,594

    Textile bleaching, finishing, etc

    360

    954

    Mr. Shephard: Is it not a fact that there are many skilled Polish technicians in this country who are unable to obtain employment because of trade union opposition? In view of the overall labour shortage here, will the right hon. Gentleman consider taking some action to overcome the objections?
    Mr. Ness Edwards: I will, with permission, circulate in the OFFICIAL REPORT a list of 40 agreements that have been made with various industries. I think that the emphasis should be laid on the other side, that is, that Poles cannot live in this country without contributing something to its economy.
    Following is the list:
    Agreement as to the conditions under which Poles may be submitted to vacancies has been reached in the following industries:

    Coalmining.

    Wholesale Clothing.

    Gas.

    Bespoke Tailoring.

    Agriculture.

    Boot and Shoe.

    Building Brick and Allied Industries.

    Railways.

    Pottery.

    Whiting and Concrete Products.

    Land Drainage.

    Furs.

    Refractories.

    Hosiery.

    Tin Plate and Sheet Steel.

    Chemical.

    Baking.

    Quarrying.

    Hairdressing,

    Building.

    Ball Clay and China Clay.

    Civil Engineering.

    Iron and Steel.

    Rayon.

    Plasterboard.

    Textile Bleaching and

    Sand and Gravel.

    Finishing.

    Asbestos Cement.

    Woollen and Worsted.

    Inland Waterways.

    Cotton.

    Home Grown Timber (England and Wales).

    Electricity Supply.

    Silk.

    Cement.

    Rubber Manufacture.

    Cooperage.

    Trawler Fishing.

    Narrow Fabrics.

    Tin Mining.

    Mr. Shephardasked the Minister of Labour what facilities are available to Poles in the Resettlement Corps to undertake a vocational training course.
    Mr. Ness Edwards: Members of the Polish Resettlement Corps are eligible for courses under the Vocational Training Scheme on the same terms as British ex-Service men provided that their allocation to a training vacancy would not deprive a British subject of a training opportunity and provided that the representatives of the industry concerned have agreed to the absorption of Polish trainees.
    Mr. Shephard: Could the Minister say how many Poles have taken advantage, of this opportunity?
    Mr. Edwards: I could not, without notice. Perhaps the hon. Member will put the question on the Paper.

    Railway Wagons (Manufacture and Repair)
    Mr. Scott-Elliotasked the Minister of Labour what steps he is taking to increase the supply of labour for the manufacture and repair of railway wagons.
    Mr. Isaacs: Priority in the supply of labour has been accorded to this work and further steps are being considered in conjunction with the Ministry of Transport and the railway companies.
    Mr. Scott-Elliot: Is my right hon. Friend aware that his basic instructions do not give these workers top priority? I believe I am right in saying that they are in the second priority class.
    Mr. Isaacs: It is very difficult to decide what at one moment is top and what at another moment is just under the top. These workers come into the first rank of priority. Labour will be provided as soon as arrangements have been made in the establishments to carry on the work.

    Appointments Department (Registrations)
    Mr. E. P. Smithasked the Minister of Labour how many men and women were registered with the Area Offices of the Appointments Department as unemployed on 31st March, 1947, and 30th September, 1947, respectively; and if he will state the total number of unemployed persons registered at the Appointments Department for the same two dates.
    Mr. Isaacs: As the answer contains a number of figures I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
    Following is the answer:

    NUMBERS OF UNEMPLOYED PERSONS REGISTERED WITH THE APPOINTMENTS DEPARTMENT ON THE NEAREST STATISTICAL DATES.

    —

    10th March, 1947.

    15th Sept., 1947.

    1. With the 14 Regional Appointments Offices:

    Men

    13,422

    11,697

    Women

    1,438

    1,411

    2. With the Technical and Scientific Register

    1,199

    1,061

    Total for Appointments Department

    16,059

    14,169

    Mr. Smith: Is it not a fact that these comparable figures are surprisingly static? If that is so, does not the Minister realise that, without some explanation, the impression is given that his Appointments Department is not doing a very good job of work?
    Mr. Isaacs: If the figures were static they might give that impression, but I do not accept the suggestion that the figures are static.

    Vocational Training Scheme (Photographers)
    Wing-Commander Roland Robin-sonasked the Minister of Labour whether he has now been able to consider the information supplied to him by the hon.

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    Member for Blackpool, South, with regard to the proposed termination of the vocational training of ex-Service men who have passed the Institute of British Photographers intermediate examination; and whether, in view of the fact that his Department gave a' definite promise in writing of a two-year course to these men, he will now reverse his decision.
    Mr. Isaacs: As I promised the hon. and gallant Member, I am looking into the matter and will communicate with him in due course.
    Wing-Commander Robinson: In looking into the matter will the right hon. Gentleman bear in mind that the qualifications for suitable employment in this industry are the completion of the vocational training course and not the passing of what is, at its best, only an interim examination?
    Mr. Isaacs: I hope the hon. and gallant Gentleman will forgive me if I do not express an opinion on this matter at the moment. If we find that a pledge has been given which has been disregarded, we will put the matter right.

    Control of Engagement Order
    Mr. Goronwy Robertsasked the Minister of Labour (1) the actual or estimated number of persons who have assumed work of national importance outside Caernarvonshire as a consequence of the application of the Control of Engagement Order; in how many cases was direction used; and in how many cases are proceedings for noncompliance contemplated;
    (2) the actual or estimated number of persons who have assumed work of national importance as a result of the application of the Control of Engagement Order; in how many cases was a direction issued; and in how many cases proceedings for non-compliance are contemplated.
    Mr. Isaacs: I hope to have available about the middle of December the results of the operation of the Control of Engagement Order. As I have already promised the House, I will place in the Library a monthly report on the effect of the Order. One hundred and one directions were issued during the four weeks ended 29th October; 91 in respect of coalmining and agriculture, which were
    1768
    already covered by a Control of Engagement Order before 6th October. Thus only 10 directions were issued as a direct consequence of the new Order during this period. In none of these are proceedings for non-compliance at present contemplated. The number of persons registering at local offices in Caernarvonshire who were placed in employment outside that county during the period 6th to 31st October was 100, including 37 within daily travelling distance. No directions were issued during this period.

  NATIONAL SERVICE (NATURALISED BRITISH SUBJECTS)
  Mr. Symondsasked the Minister of Labour in what circumstances British subjects, by naturalisation, are not called up under the National Service Acts; and, in view of the desire of such persons to fulfil all their obligations of British citizenship, if he will take whatever steps are necessary to enable them to do so.
  Mr. Isaacs: Until the National Service Act, 1947, comes into force in January, 1949, the only men liable to be called up are those covered by a Royal Proclamation. The last Royal Proclamation was issued in May, 1944, and does not cover men who were not then British subjects. After January, 1949, Royal Proclamations will not be necessary, and naturalised British subjects will then have the same liability as other men of military age. I do not consider it desirable that a fresh Royal Proclamation should be issued for the special purpose of imposing liability on the small number of men to whom my hon. Friend refers.
  Mr. Symonds: Is the Minister aware that the men referred to will feel it very keenly if they are to be treated in some way as a separate group of people? Having been given the privileges of British citizenship, they are only too anxious to carry out all the obligations if they are allowed.
  Mr. Isaacs: The Royal Proclamation under which I have to act imposes a liability on British subjects on the date of the Proclamation. Therefore, I have no power to call them up, but if they are anxious to serve they can volunteer to do so.
  Mr. Symonds: Is my right hon. Friend aware that two instances have been brought to my notice where the employment exchanges declared that the men were ineligible however much they might wish to volunteer?
  Mr. Isaacs: I will look into that point. My information is that there are only 20 cases and I am covered by the Royal Proclamation and cannot act.
  Mr. Boyd-Carpenter: In view of the Minister's suggestion that these men should volunteer, is he aware that they can only do so for a considerably longer period than the compulsory period of service?
  Mr. Isaacs: That is so, but I thought, if they were so terribly anxious to serve the country they would want to serve longer.

  SCOTLAND

    Hill Farming Schemes
    Mr. Snaddenasked the Secretary of State for Scotland (1) whether it is the policy of his Department, before approving a scheme under the Hill Farming Act, 1946, to insist that such a scheme must be completed regardless of any increase in costs arising between approval and completion;
    (2) whether he regards failure to complete all the projects of an approved scheme under the Hill Farming Act, 1946, as a result of increased costs as reasonable ground for variation of the scheme under Section 4 of the Act; or whether such failure is treated as cause for revocation of the scheme in terms of Section 6.
    The Secretary of State for Scotland (Mr. Woodburn): It is not my intention to stipulate, as a condition of approval of a scheme under the Hill Farming Act, 1946, that it must be completed regardless of any increase of costs arising thereafter. I am afraid that I cannot undertake to deal in advance with the hypothetical question posed by the hon. Member about the position after a scheme has been approved. The course of action to be taken would depend upon the facts and circumstances of each case, which would require to be considered on its merits and in the light of my statutory powers under the Act.
    Mr. Snadden: Since the right hon. Gentleman has answered both those Questions together may I ask him whether he realises that the Hill Farming Act owes its very existence to the poverty of the industry? What happens to a man who has £1,000 to spare and, having spent it, he finds his scheme is incomplete? Can the scheme then be varied or revoked, and if it is revoked does not the man lose the whole of his money?
    Mr. Woodburn: I have power to vary these schemes, but each case must be decided on its merits. I can assure the hon. Member that any such case will be treated sympathetically by us.
    Mr. Snadden: Does not the period of revocation prevent the submission of a scheme?
    Mr. Woodburn: I am afraid that no guarantee can be given to carry on the grant no matter what he does. Clearly the State must have some protection against failure to do the job properly.

    Housing (Timber)
    Colonel Gomme-Duncanasked the Secretary of State for Scotland if he is aware of the amount of timber lying unused in timber yards in Scotland; and what steps are being taken to apply this urgently to the building of houses in rural areas in Scotland.
    Mr. Woodburn: I would refer the hon. and gallant Member to the reply given on 6th November to the hon. and gallant Member for East Grinstead (Colonel Clarke) by the Minister for Economic Affairs. Within the allocation of timber made available for housing, a special priority is granted for houses intended for occupation by the agricultural population.
    Colonel Gomme-Duncan: Is the Minister aware of the amount of timber which is actually lying about in Scotland? That is the important point which the farming communities are anxious to know about. They want to know what is to be done with it and why they cannot get on with it.
    Mr. Woodburn: The point is that timber comes into the country at certain times of the year and that enough timber must be accumulated at this time of the year to enable us to carry on until the next supply becomes available.
    Colonel Gomme-Duncan: What about the home-grown timber which has been cut and is still lying in these yards?
    Mr. Woodburn: All timber in this country, whether home-grown or imported, is part of the general pool from which we supply all our needs.
    Lieut.-Commander Clark Hutchisonasked the Secretary of State for Scotland if he will issue timber licences to builders to enable houses, the shells of which are already built, to be completed.
    Mr. Woodburn: The issue of timber licences depends on the amount of timber available but within the present restricted supplies special consideration is given to houses which are in an advanced stage of construction.
    Commander Galbraith: Is the right hon. Gentleman keeping in mind the number of houses which are ready for the timber for their roofs and on which the work cannot proceed? Would he not allocate the timber which is available now so that these houses may be completed instead of letting them deteriorate as the result of the winter weather?
    Mr. Woodburn: That, of course, is being done as far as timber is available, but timber is one of our great shortages and there are other things than housing for which timber is required. Each section of the country has its allocation for these vital purposes. I can assure the hon. and gallant Member that timber for housing is being allocated just in the way he suggests.

    Forestry and Agriculture
    Colonel Gomme-Duncanasked the Secretary of State for Scotland what steps have been taken, or are contemplated, for ensuring that the activities of the Forestry Commission in Scotland are closely co-ordinated with the needs and interests of farming.
    Mr. Woodburn: Co-ordination of forestry and agriculture was secured by the Forestry Act, 1945, which placed responsibility for both services on the same Minister—in Scotland the Secretary of State.
    Colonel Gomme-Duncan: Is the Minister aware that farming districts in Scotland, particularly in the Centre and the North, are anxious about this matter,
    1772
    because co-ordination is not really taking place and there are counter-claims between agriculture and forestry which ought to be correlated very carefully?
    Mr. Woodburn: I can only think that the hon. and gallant Member has been misinformed, because any such difficulty comes immediately to me as Secretary of State for Scotland, and is settled in accordance with the needs of agriculture, taking forestry needs into account.

    Scottish Estimates (Standing Committee)
    Lieut.-Commander Hutchisonasked the Secretary of State for Scotland whether he has any statement to make in regard to the proposal that the Scottish Estimates should be discussed by the Standing Committee on Scottish Bills.
    Mr. Woodburn: I am giving urgent consideration to this and other suggestions about the arrangements for dealing with Scottish business; but I am not yet in a position to make a statement.
    Lieut.-Commander Hutchison: Will the right hon. Gentleman indicate when he is. likely to be able to make a statement—in one week or a fortnight?
    Mr. Woodburn: I do not think I could state it as nearly as that, but I am, hopeful.
    Mr. J. S. C. Reid: Will the right hon. Gentleman be able to make a statement by the time the Scottish Estimates are introduced in order that if this procedure is adopted, it can be used in this Session?
    Mr. Woodburn: All I can say is that I started to deal with this question the day I came into office and I have been dealing with it urgently ever since. I will make a statement as soon as possible.

    Skilled Agricultural Labour
    Mr. Emrys Hughesasked the Secretary of State for Scotland to what extent there is a shortage of skilled labour for agriculture in Scotland; how many skilled agricultural workers are still in the forces; and what steps he will take to secure the release of these men for work on the land.
    Mr. Woodburn: At present there is no general shortage of skilled agricultural labour in Scotland. As regards the second part of the Question my right hon. Friend the Minister of Labour and

    1773
    National Service has said that the information required is not readily available but that no experienced farmworkers have been called up since February, 1946. Those who were called up before that date have already been offered release in Class B.
    Mr. Hughes: Is the Minister aware that there is general disagreement in farming circles in Ayrshire with the statement that there is plenty of skilled agricultural labour? That is general throughout Scotland. Will he impress on the Minister of Labour the necessity for some clear indication of the position in Scotland?
    Mr. Woodburn: If the hon. Gentleman and his friends will communicate with me, we will see what can be done from our end of it in St. Andrew's House.
    Mr. Maclay: Will the right hon. Gentleman's reply apply after all the German prisoners of war have gone from Scotland?
    Mr. Woodburn: I am assured that, as far as we can see, the position will be satisfactory.
    Mr. Hector Hughes: Is the right hon. Gentleman aware that there is a shortage of labour in other fields of production in Scotland, and will he do something to secure the release of potential workers so that they can take part in the production drive?
    Mr. Woodburn: There are shortages in all kinds of industries.
    Major Guy Lloyd: Would the right hon. Gentleman bear in mind that the best action which can be taken by His Majesty's Government and himself is to provide houses for agricultural labourers?
    Mr. Woodburn: Yes, Sir, we agree that that is a very wise suggestion.

    Direct Building Labour, Ayrshire
    Mr. Emrys Hughesasked the Secretary of State for Scotland what has been the output of the building workers employed by direct labour by the Ayrshire County Council on the housing scheme at Kilmaurs; and how it compares with that of workers employed by private contractors.
    Mr. Woodburn: I am informed by the County Council that bricklayers employed under direct labour on the Kilmaurs Scheme have laid an average of 630 bricks a day, and that the output of bricklayers on contractors' schemes in the county is estimated to range from 350 to 600 bricks a day.
    Mr. Hughes: In view of this striking proof of the success of direct labour, will the right hon. Gentleman circulate these figures to the other authorities with the object of increasing output throughout Scotland?
    Mr. Woodburn: We are very pleased to see these figures, and we hope that the example will be copied in all districts.

  MINISTRY OF PENSIONS

    Hospital Cases
    Mr. Shepherdasked the Minister of Pensions what is the number of persons in the permanent hospital category, as the result of the First and Second World Wars respectively.
    The Minister of Pensions (Mr. Buchanan): The number of pensioners of the 1914 War permanently maintained in hospitals or homes is in the region of 4,500. It is not yet possible to give any reliable estimate for the 1939 War, but I am hopeful that the numbers of persons who will have to be permanently maintained in hospital as the result of that war will be considerably less than for the 1914 War.
    Mr. Shepherd: Can the Minister say that he is satisfied with the arrangements for those falling in the latter category? I have had complaints about the hospital arrangements so far available.
    Mr. Buchanan: If hon. Members have complaints, I wish they would let me have them. If such a thing were even suggested, I would be very worried and I would take action on it. I do not like using the word "permanently." My view is that we ought to try to get away from the attitude that most of these people are permanently there. I rather tend to take the view that nowadays science should overcome that "permanent" point of view.;

    Artificial Limbs
    Colonel Wheatleyasked the Minister of Pensions if he is aware of the long delay in delivering artificial limbs, etc., to ex-Service men and women; and will he take urgent measures to remedy this state of affairs which causes much extra suffering.
    Mr. Buchanan: The hon. and gallant Member will be pleased to know that there is in general no undue delay at the present time in the delivery of artificial limbs to ex-Service men and women. There have been difficulties with the supply of surgical boots and appliances. I am, however, glad to say that additional labour experienced in the making of surgical boots has been obtained and as a result production is now showing a welcome increase. Difficulties still exist as regards skilled labour for the making of surgical appliances but the combined production of my contractors is now about equal to the current demands of the war disabled. More skilled labour is still required to overtake outstanding orders and I am continuing my efforts to this end with my right hon. Friend the Minister of Labour.
    Colonel Wheatley: Is the Minister aware that it has taken an ex-soldier four years to get a replacement for an appliance for his arm and that even now he has got it, it is incorrect and he has to go through with the business again?
    Mr. Buchanan: As I stated, the position is a great deal better. For instance, in October our supply of surgical boots was almost 2,000 and our needs were just about 1,500, so we now have a slight excess in supply. I would not say that the position is absolutely equal but I can assure the hon. and gallant Member that it has been somewhat improved.
    Mr. Lipson: Can the hon. Gentleman say how many outstanding orders there are?
    Mr. Buchanan: I would not like to say without notice, but if the hon. Gentleman puts down a Question I will gladly supply the information.
    Lord Willoughby de Eresby: Now that there has been some improvement in the supply of artificial limbs, will the hon. Gentleman turn his attention and energy to the supply of stump socks, which is still falling behind?
    Mr. Buchanan: I answered a Question about that rather fully last week. Perhaps the hon. Gentleman will look at that, and if he has any other point to raise, I would be grateful if he would put a Question down.
    Commander Galbraith: Is the hon. Gentleman aware of the very great delay in the repair of artificial limbs, and will he look into the matter?
    Mr. Buchanan: I am assured that the position has improved. I went down to Roehampton, which is our main place, and found the position a good deal better; but the real difficulty is in getting the very highly skilled labour. We cannot allow just anybody to do this work, and the highly skilled labour which is necessary is just not available in the abundance one would like.

    Schizophrenia
    Mr. Edward Evansasked the Minister of Pensions how many men and women discharged from the services as suffering from schizophrenia have been refused pensions; how many have appealed and in how many cases the appeal has been successful.
    Mr. Buchanan: I hope I may be forgiven, Mr. Speaker, if I make any mistakes in pronunciation. In the statistics maintained by my Department schizophrenia is grouped with other diseases of a psychotic nature. In addition appeals at the notification stage are not recorded by disease. The Statutory Tribunals have, however, determined 2,100 appeals against the rejection of pension under the broad heading of psychosis. Of these they have allowed 450.
    Mr. Evans: Is the Minister aware that the attitude of the Ministry towards this very distressing malady is causing a great deal of disquiet among the friends of these men? Will he try to adopt a much more sympathetic attitude than that which has been adopted in the past?
    Mr. Buchanan: I can give an assurance that whatever sympathy and understanding are required in this very distressing class of case, we will do our best to meet the need.
    Dr. Segal: Is the Minister aware that in many cases the incidence of this disease is attributable to hereditary factors and that it cannot always be attributed to war service?
    Mr. Buchanan: I hope that my hon. Friend will not press that too hard on me. There are enough persons against the war people already without the hon. Member entering into it.

  BRITISH ARMY

    Garrison Engineer's Staff, Preston
    Dr. Segalasked the Secretary of State for War what is the total staff at present employed at Cuerden Hall, Preston; and what reductions in establishment have been effected since the duties have diminished to the care of three requisitioned premises.
    The Secretary of State for War (Mr. Shinwell): I understand that my hon. Friend is referring to the staff of the Garrison Engineer, which consists, in addition to the Garrison Engineer himself, of two clerks of works, one clerk, one typist and one driver. As regards the last part of the Question, the Garrison Engineer's responsibilities include a large camp, certain clearance and demolition work, and any other engineer work required in an area of about 240 square miles. The establishment was recently reduced by the abolition of one clerk of works post.
    Dr. Segal: While I thank the Minister for that reply, may I ask if he is aware that this is only one other instance of many hundreds of cases of spivs in uniform for which his Department has been directly responsible?
    Mr. Shinwell: I cannot accept that at all, and if my hon. Friend persists in his allegations, he must substantiate them by producing evidence.

    R.T.O. Staff, Germany
    Mr. Shepherdasked the Secretary of State for War the number of persons employed on the R.T.O. staff in Germany.
    Mr. Shinwell: The number is 367.

    Premises, Islington (Tenants)
    Mr. Eric Fletcherasked the Secretary of State for War whether he will give an assurance that no steps will be taken to evict tenants from premises in Islington belonging to the Territorial Army and Air Force Association until alternative accommodation has been found for them.
    Mr. Shinwell: I regret that I cannot give the assurance for which my hon. Friend asks. All the occupants of these quarters have had very long periods of notice. The quarters are urgently needed for Regular Army staff instructors and their families who are living in conditions of the most extreme hardship.
    Mr. Fletcher: But will my right hon. Friend at any rate delay taking eviction action until the procedure suggested by the Minister of Health, in fullest consultation with the local authorities, has been carried out?
    Mr. Shinwell: According to my advice, "notice to quit" was served on 13th February last, and I understand that the procedure to which my hon. Friend refers has been fully carried out.
    Colonel J. R. H. Hutchison: Is the right "hon. Gentleman aware that this difficulty is by no means confined to the area in question, and that in one case in Scotland, at least, the permanent staff instructors have been unable to find any accommodation and have been billeted on squatters?
    Mr. Shinwell: I am well aware that the case referred to by my hon. Friend is not peculiar. There is a great deal of trouble about this, but I really must find accommodation for the Regular Army staff instructors.
    Mr. Fletcher: But will my right hon. Friend make sure that, before these tenants are actually evicted, arrangements are made with the Minister of Health and the local authorities for them to be rehoused somewhere else?
    Mr. Shinwell: As I have said to my hon. Friend, the procedure has been fully carried out. There have been consultations with the appropriate Government Departments and the local authorities, but if in the end, alternative accommodation cannot be found, I must take the action to which I have referred.

    War Graves (Relatives' Visits)
    Mr. Gerald Williamsasked the Secretary of State for War if he will now announce the arrangements to be made to enable next-of-kin to visit war graves in Europe, including the occupied territories.
    Mr. Shinwell: I regret that I am not yet in a position to make any announcement about this matter.
    Mr. Williams: Can the Minister seriously consider giving these people, who have been unable so far to get abroad to see these graves, special permission, and, failing that, would he give us some indication of when the long-promised photographs of the graves will be given to the next-of-kin?
    Mr. Shinwell: As regards the second part of the supplementary question, I would like to see it on the Order Paper; as regards the first part, the fact is that, although the matter is under consideration, there is a great difficulty about transport facilities.

    Victory Club, Hamburg
    Mr. H. D. Hughesasked the Secretary of State for War what has been the total expenditure on the Victory Club, Hamburg; when work was commenced on the project; what he estimates the final cost will be and when it is likely to be completed.
    Mr. Shinwell: I am obtaining a report on this matter from the military authorities overseas. When it has been received I will write to my hon. Friend.

    Married Quarters, Tidworth
    Mr. John Morrisonasked the Secretary of State for War if he is aware that there is a considerable amount of W.D. accommodation empty in the Tidworth area; and, in view of this, what was the reason for the evictions of Service and ex-Service families in the Bulford and Larkhill areas.
    Mr. Shinwell: The empty accommodation at Tidworth is not fit for occupation in its present condition without extensive works to reinstate the barracks, including the married quarters. This work must be spread over a long period owing to shortage of labour and materials.
    Mr. Morrison: Is the right hon. Gentleman aware that if a little money and labour was spent on this permanent accommodation, it could be useful, and that it seems rather extraordinary to turn people out of their homes on to the street when this other accommodation is there for the mending?
    Mr. Shinwell: I saw this barracks a fortnight ago. It is in a very bad state and would require a considerable volume of labour and expenditure to put it right.
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    I am trying to get it put right, but when it is put right, I shall want it for my own Department.

    Proposed Mortar Range, Upper Hulme
    Mr. A. Edward Daviesasked the Secretary of State for War whether his attention has been directed to a proposal to establish a field-firing range in the Staffs area of Upper Hulme, which is part of the National Park; and whether his investigations in respect of Dovedale will also cover this area.
    Mr. Shinwell: I am aware of a proposal to establish a training area, including a mortar range, in the district referred to. This proposal, which will not involve the exclusion of the public from any large area, has not yet been considered by the Inter-Departmental Committee on Services Land Requirements.
    Captain Crookshank: But is it not very odd that anybody should put up such a proposal at all, whether it has been considered or not?
    Mr. Shinwell: All sorts of people put up odd proposals.
    Mr. A. Edward Daviesasked the Minister of Town and Country Planning whether he is aware of the proposal to establish a field-firing range at Upper Hulme, which is part of the Peak District National Park and the regular resort of those in search of recreation; and whether he will consult the War Office with a view to avoiding misuse of a beauty spot.
    The Parliamentary Secretary to the Ministry of Town and Country Planning (Mr. King): My right hon. Friend has been notified by the War Department of their requirement for a training area, including a mortar range, at Upper Hulme. On receipt of the regional reports the case will be' examined by the Inter-Departmental Committee on Services' Land Requirements on which all interested Departments, including the War Department, are represented. The preservation of the recreational value of the area will be amongst the matters which will be considered by the Committee.

    Lodging Allowance
    Mr. Bowdenasked the Secretary of State for War if he will issue lodging allowances to married men living at home

    1781
    with their wives, where no barrack accommodation is provided, in the same way that it is issued to men who are billeted out.
    Mr. Shinwell: No, Sir. Marriage allowance includes provision for the accommodation of the soldier when he is residing with his family. In these circumstances the only substantial additional expense is for his food and for that he draws ration allowance of 22s. 2d. a week.

  PRISONERS OF WAR

    Escapes
    Mr. Skeffington-Lodgeasked the Secretary of State for War how many German prisoners of war in this country have escaped since the end of hostilities and still remain untraced.
    Mr. Shinwell: The number is 80.
    Mr. Skeffington-Lodge: Can the Minister say to which category the bulk of these escapees belong?
    Hon. Members: Escapers.
    Mr. Shinwell: I am afraid not.

    Letters (Censorship)
    Mr. Symondsasked the Secretary of State for War why letters sent by British subjects, resident in this country, to German prisoners of war in camps in this country are subject to censorship.
    Mr. Shinwell: It is not always possible to determine whether an incoming letter is from a British subject resident in this country and some degree of censorship of incoming prisoner of war mail is necessary for disciplinary and control purposes.
    Mr. Symonds: As the prisoners now have the use of sterling, can use the ordinary postal facilities and, if necessary, accommodation addresses, is not a continuance of this practice a complete farce?
    Mr. Shinwell: No, and I would say that that suggestion rather provokes me to suggest further action.

    Christmas Parcels
    Mr. Skeffington-Lodgeasked the Secretary of State for War whether he will so relax the restrictions on what prisoners of war may send home as to
    1782
    allow each one who wishes to do so, to despatch a Christmas parcel containing unrationed food and other articles which, while not infringing the customs regulations, will be limited only as to weight.
    Mr. Shinwell: These restrictions are the same as those which apply to any one else in the United Kingdom who wishes to send parcels to Germany. They are necessitated by the limited stocks of the various commodities in this country.
    Mr. Skeffington-Lodge: But is not my right hon. Friend aware that a considerable number of prisoners have made toys for their children at home, and is not it particularly hard that they should be unable to send them over to Germany at Christmas time?
    Mr. Shinwell: I was not aware that this applied to toys manufactured by the prisoners themselves—no reference was made to that in the Question—but I will look into the matter.

    Deaths, Middle East
    Mr. Skeffington-Lodgeasked the Secretary of State for War the number of deaths, and their causes in categories, which have taken place among prisoners of war in the Middle East and what percentage this represents of the numbers held for the years 1945 and 1946.
    Mr. Shinwell: This information is not immediately available but I am obtaining it and will write to my hon. Friend.

    Personal Property
    Mr. Dumpletonasked the Secretary of State for War what regulations have been issued regarding the personal property which prisoners of war are permitted to take with them on repatriation; what articles are prohibited, and why.
    Mr. Shinwell: Prisoners are allowed to take with them on repatriation all personal property which they have legitimately acquired, except articles of which the export is prohibited under Board of Trade regulations. They may also take up to 15 lb. weight of foodstuffs and 300 cigarettes or the equivalent in tobacco.
    Mr. Dumpleton: Is my right hon. Friend aware that there seems to be some ambiguity about this, because different commandants are interpreting these in different ways, some prohibiting prisoners

    1783
    of war from taking home with them such things as shaving soap, candles, and cotton thread which they have purchased out of their small moneys?
    Mr. Shinwell: No doubt that question will be taken note of in my Department.

    Civilian Status
    Sir Waldron Smithersasked the Secretary of State for War if he has considered the details which have been sent to him concerning German prisoner of war camp administration; and if he will make a statement.
    Mr. Shinwell: The proposals submitted by the hon. Member would involve a change to civilian status for the general body of prisoners of war and I am not prepared to adopt them. A scheme of release to civilian status for a proportion of the prisoners employed in agriculture has been in operation since June and this scheme is to be extended shortly in accordance with the statement made on 27th October by my right hon. Friend the Minister of Agriculture in reply to a Question by the hon. Member for Thirsk and Malton (Mr. Turton).
    Sir W. Smithers: Assuming that the policy of His Majesty's Government is to wean these prisoners away from Nazism to the British way of life, will he give all the encouragement he can to German prisoners who show that they are yielding to treatment?
    Mr. Shinwell: I am doing what I can, in conjunction with my other right hon. colleagues, to try to make things easier for these people, but I am afraid we cannot go quite so far as some people wish.

    Christmas Leave
    Mr. Gunterasked the Secretary of State for War if permission will be given for prisoners of war being entertained by civilians on Christmas Day to remain overnight with their hosts, where no transport facilities are available to return them to their camps.
    Mr. Shinwell: Yes, Sir. I will, with permission, circulate details in the OFFICIAL REPORT.
    Mr. Skeffington-Lodge: Can my right hon. Friend tell me whether the five-mile limit is to apply in these cases, and
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    if so, will he consider relaxing that particular restriction?
    Mr. Shinwell: Yes, I am relaxing the five-mile limit, so far as Christmas Eve and Christmas Day are concerned. The limit will be 100 miles, and the concessions are substantial.
    Following are the details:
    Prisoners of war who are eligible may be allowed to be absent from their camps or hostels between 2 p.m. on 24th December, and 6 p.m. on 26th December in order to accept invitations to stay with members of the public. Such invitations must be addressed to the Commandants of the prisoners of war concerned and must state the addresses at which they will be accommodated. The hosts must accept all responsibility for the prisoners of war who are their guests, including prepayment of their fares, if the prisoners of war are unable to pay the cost of their journey. The addresses to which prisoners of war may go will be limited to a radius of 100 miles from their camps or hostels. This will avoid too great a strain on public transport services at this period.

    Complaints, Horbling
    Lord Willoughby de Eresbyasked the Secretary of State for War what action has been taken to deal with the complaints sent to him by the Parish Council and Women's Institute of Horbling, Lincs., about the behaviour after dark of Ukrainian prisoners of war from the Horbling prisoner of war camp.
    Mr. Shinwell: These complaints are being investigated and I will write to the hon. Member when the investigations have been completed.

    Repatriation
    Mr. Sorensenasked the Secretary of State for War how many German prisoners of war have been repatriated from Egypt and Palestine during the last three months; how many more are to be repatriated during the next three months; and when it is expected that no more German prisoners will be in those areas.
    Mr. Shinwell: I regret that separate figures for Egypt and Palestine are not readily available; the numbers of German prisoners of war repatriated from all parts of the Middle East during the last

    1785
    three months were given in reply to a Question by my hon. Friend the Member for Ipswich (Mr. Stokes) on 4th November. It is expected that about 3,750 prisoners of war will be repatriated from the Middle East during the next three months, and that repatriation of German prisoners of war from the Middle East will have been completed by the end of next year.
    Mr. Sorensen: Is it possible to contemplate a rather quicker rate of repatriation than that, seeing that the residence of these persons in the Far East is detrimental to their health? Many of them have been out there for a long time.
    Mr. Shinwell: We are fully conscious of the facts, and we are anxious to get these men repatriated as speedily as possible, but there are transport difficulties.

    Agricultural Work
    Mr. Sorensenasked the Secretary of State for War, approximately, how many German prisoners of war have accepted the opportunity of continuing in this country for a further six months beyond the date of their repatriation; and how many who are performing agricultural work have applied for, and have been accepted for, permanent residence in this country.
    Mr. Shinwell: As regards the first part of the Question, the number is approximately 3,600. There is no arrangement under which German prisoners of war can be released for permanent residence In this country. In addition, however, some further 1,900 have so far taken advantage of the arrangements under which they can be released to civilian status for agricultural work on a contract for service for a limited period of months.
    Mr. Sorensen: Is there at least a possibility that those who are of good record and are doing good work on the land might be able permanently to settle in this country ultimately?
    Mr. Shinwell: That would require very careful consideration.
    Mr. Mikardo: Would not my right hon. Friend consider giving such permission to those who have married British women in this country, and have had children born in Britain?
    Mr. Shinwell: That is another point which will require careful consideration.

  ECONOMIC POLICY (INDUSTRIAL CONSULTATIONS)
  Mr. Osborneasked the Prime Minister if he will keep the House informed of the talks he and his Cabinet colleagues are having with the Trade Union Congress and Employers' Federation representatives on the steps to be taken to overcome the economic crisis, and give an assurance that data disclosed at these talks will be made available to the House; and that any agreements which result will be communicated to the House as soon as possible.
  The Prime Minister (Mr. Attlee): Discussions of this nature have for many years been part of the normal practice of government, and have been of the utmost value as a means of consultation between Ministers and the two sides of industry on current problems of common interest. In many cases such consultations are of an informal character, and the material under discussion necessarily confidential. I would hesitate to give any assurance which might result in the value of such discussions being impaired. I can, however, assure the hon. Member that the House will continue to be kept fully informed on all matters relevant to the country's economic situation.
  Mr. Osborne: May I press on the Prime Minister that we should have these reports fairly regularly, otherwise we have to depend on reports which appear in the Press, and sometimes they are not reliable?
  The Prime Minister: We endeavour to give as full reports as possible, but the hon. Member will realise that in informal discussions, statements made about particular parts of the country and particular industries have not necessarily been given to the House. So I did not wish to be more precise.

  NATIONAL FINANCE

    Death Duties
    Sir W. Smithersasked the Chancellor of the Exchequer if he has considered the letter sent to him concerning retrospective taxation in Death Duties, and the hardship imposed on those who rely on incomes from small legacies; and if he will make a statement.
    The Chancellor of the Exchequer (Sir Stafford Cripps): This matter was debated at the Report stage of the Finance Bill last summer, and I would refer the hon. Member to what was said on that occasion.
    Sir W. Smithers: Does not the right hon. and learned Gentleman realise now that he is in the office of Chancellor that we hope for better things? Does he not also realise that many people saved and were thrifty to provide for their old age, but now, owing to unforeseen legislation, they are reduced to very restricted circumstances, and it is very hard on them?
    Sir S. Cripps: If the hon. Member will read the report, which I mentioned, he will appreciate the argument.

    Subsidies
    Mr. Osborneasked the Chancellor of the Exchequer on what grounds it has been decided to discontinue the subsidies on utility clothes and footwear whilst maintaining them on food; and since both groups enter into the family budgets of the lowest paid workers, if he will make a full statement.
    Sir S. Cripps: On the grounds stated by my predecessor in his Budget Speech, that it is desirable to reduce the number of separate commodities on which price subsidies are paid.
    Mr. Osborne: Why should the Chancellor pick on clothing as against food? What is the difference in principle?
    Sir S. Cripps: It is because, in the view of my predecessor and myself, food is more important than clothing.
    Mr. Norman Bowerasked the Chancellor of the Exchequer whether an increase in food rations would automatically involve an increase in subsidies; or whether, if the total amount of the subsidies remained unaltered, it would be accompanied by an increase in prices.
    Sir S. Cripps: An increase in food rations, so far as those foods are subsidised and buying prices remain unaltered, must obviously involve either an increase of subsidies or an increase of prices to the consumer.
    Mr. Bower: Will the Chancellor give an undertaking that he will not exert any pressure to keep rations down, in order
    1788
    to avoid the unpleasant alternative of increased subsidies or increased prices?
    Sir S. Cripps: There never has been any such idea at all.

    Income Tax Repayments (Interest)
    Sir W. Smithersasked the Chancellor of the Exchequer whether in view of the fact that he is imposing interest on delayed payment of Income Tax, he will pay interest at the same rate on delayed payments of sums due by the Treasury, including rebate of Income Tax and War Damage.
    Sir S. Cripps: No, Sir.
    Sir W. Smithers: Does the Chancellor of the Exchequer realise that what is sauce for the goose is sauce for the gander?

    Exchange Guarantees (Agreements)
    Colonel J. R. H. Hutchisonasked the Chancellor of the Exchequer what agreements exist with foreign countries or Dominions whereby their sterling balances are guaranteed in terms of gold and thus protected against any possible fluctuation in the sterling exchange rates; and what are the sums so guaranteed in each country or Dominion.
    Sir S. Cripps: I am circulating in the OFFICIAL REPORT a list of the countries with which agreements exist for exchange guarantees in terms of gold or reciprocal exchange guarantees. No such agreement has been made with any Dominion. I regret that I cannot disclose figures of the sterling holdings of other countries, to which these guarantees apply.
    Following is the list of countries:
    Argentine, Belgium, Belgian Congo, Brazil, Iran, Paraguay, Portugal, Sweden and Uruguay.

    Income Tax (Allotment Holders)
    Mr. De la Bèreasked the Chancellor of the Exchequer whether, with a view to encouraging a greater demand for land to increase our national food production, and to stimulate a greater effort by all concerned, he will consider granting a small rebate of Income Tax to all allotment holders.
    Sir S. Cripps: Much as I appreciate the efforts made by allotment holders, I am afraid that I could not adopt the hon. Member's suggestion. I would remind him that Schedule B tax is not in practice charged on allotments.
    Mr. De la Bère: Can the right hon. and learned Gentleman give an assurance that at least something will be done to give real security of tenure, in view of the importance of increased food production, which is needed by the country today, especially in potatoes?
    Sir S. Cripps: That is quite a different question.
    Mr. De la Bère: The Government are doing nothing about potatoes.

    Foreign Travel (France)
    Mr. Keelingasked the Chancellor of the Exchequer for what reason the recent French proposal for resumption of tourist traffic to France was rejected.
    Sir S. Cripps: I have nothing to add to the reply given to my hon. Friend the Member for West Leicester (Mr. Janner) on 28th October.
    Mr. Keeling: But does the Chancellor know that no reason was then given? Is he also aware that, according to "The Times" of 6th November, an official announcement was made in Paris after an Anglo-French Conference, stating that the British Government took the view that foreign travel by the wealthy and leisured classes was an infringement of the austerity principle? Is that correct, and is he aware that a great number of wage earners, whether wealthy or not, would like to travel to France?
    Sir S. Cripps: I am not prepared to make any alteration in the arrangements made by my predecessor, as stated on 28th October.
    Mr. Keeling: I beg to give notice that I will raise the matter again.

    Government Departments (Committee Work)
    Mr. Geoffrey Cooperasked the Chancellor of the Exchequer what record he has of the total number of man-hours expended on committee work by officials of Government Departments, shown separately by Departments; if he will give this information, stating the year in which
    1790
    the record was made; and if he will have a check made for some convenient month during the present year.
    Sir S. Cripps: No record such as my hon. Friend suggests is kept. And since I do not believe it would serve the purpose he has in mind, I should be unwilling to spend the man-hours required to compile it.
    Mr. Cooper: Does the Chancellor of the Exchequer recall that there was in fact a. check of this sort made during the war, when the manpower shortage was acute, and that it disclosed the fact that more than 2,000 man-years were spent at that time by senior officials in committees? If the check was worth while then, may it not be worth while making now, when the manpower shortage is equally acute?
    Sir S. Cripps: I do not think it would be worth while, as a great deal of most useful work is done in meetings between officials in committee.

    Gift Clothing (Duty)
    Major Mott-Radclyffeasked the Chancellor of the Exchequer whether he is prepared to admit into the United Kingdom, free of duty or Purchase Tax, gifts of second-hand or shop-soiled clothing from overseas, provided that these are earmarked for bona fide charities.
    Sir S. Cripps: Gifts of clothing, whether new or secondhand, for free distribution, consigned to bona fide charitable organisations approved for the purpose by the Commissioners of Customs and Excise are already admitted free of duty and Purchase Tax.
    Major Mott-Radclyffe: Is the right hon. and learned Gentleman aware that on a number of occasions charities have had to refuse offers of gifts of clothing from overseas where the clothing contained silk, or artificial silk, because the Purchase Tax of 16⅔ per cent. rendered the offer unacceptable?
    Sir S. Cripps: If the hon. and gallant Member will send to me the cases he has in mind I will have them looked into.
    Colonel Gomme-Duncan: Would that apply to individuals to whom parcels are addressed, when they are working for organisations and the parcels are addressed to the individual, and not to the organisation?
    Sir S. Cripps: Perhaps the hon. and gallant Member will put that question on the Paper.

    Bank of England (Special Accounts)
    Colonel Crosthwaite-Eyreasked the Chancellor of the Exchequer the number of special accounts recognised by the Bank of England under paragraph 3 (b) of S.R. & O., No. 1785, dated 20th August, 1947.
    Sir S. Cripps: None, Sir. The Treasury Order referred to ceased to have effect on 1st October. It was in effect replaced by S.R. & O., 1947, No. 2072, under which six accounts are so recognised.
    Colonel Crosthwaite-Eyre: Can the Chancellor say why the particular category of six accounts had to be instituted for one particular South American country?
    Sir S. Cripps: They were instituted under this Act for the purposes of the regulation set out in the regulation which instituted them.
    Colonel Crosthwaite-Eyre: While I thank the Chancellor for that most illuminating answer, may I ask him why this particular South American country has been selected for this treatment?
    Sir S. Cripps: No, Sir, I would not be prepared to say that.

    Sterling Payments (Argentina)
    Colonel Crosthwaite-Eyreasked the Chancellor of the Exchequer why it is the policy of His Majesty's Government to insist on payment in sterling for exports to the Argentine; and what steps are taken to limit the number of accounts from which such sterling may be drawn.
    Sir S. Cripps: In accordance with the Economic Agreement of 17th September, 1946, trade with Argentina both ways is in sterling, now as in the past. Payments for exports to Argentina can be made from approved accounts only.
    Colonel Crosthwaite-Eyre: Does that mean that all our imports from the Argentine are now paid for in sterling?
    Sir S. Cripps: Yes, Sir, it means that the account is kept in sterling both ways.

    Persia (Payments Agreement)
    Colonel Crosthwaite-Eyreasked the Chancellor of the Exchequer the terms of the payments agreement made by His Majesty's Government with Iran, the conclusion of which was officially announced in Teheran on 8th November, 1947.
    Sir S. Cripps: In place of a previously existing liability to make gold payments to Persia, arrangements have been made under which Persia may transfer sterling to American accounts in payment for essential supplies not otherwise available on equivalent terms. All Persian official holdings of sterling will carry a guarantee against any depreciation of sterling in terms of gold. I regard these exceptional arrangements, which are subject to termination at three months' notice, as satisfactory, having regard to the importance of Persia as a source of oil.
    Colonel Crosthwaite-Eyre: Is it true that under the agreement His Majesty's Government have given £20 million of convertible sterling to Persia this year?
    Sir S. Cripps: That is another question.

    Building Society Resources
    Mr. Ronald Chamberlainasked the Chancellor of the Exchequer whether, in view of the need for the curtailment of new capital expenditure, he will take steps to utilise the financial resources of building societies in connection with the Government's housing programme.
    Sir S. Cripps: No, Sir. New capital expenditure is being curtailed by other means.
    Mr. Chamberlain: Is my right hon. and learned Friend aware that there is in fact a tremendous flow of mortgage repayments, which amounted last year to about £140 million, and in general this is not being used to the national advantage?
    Sir S. Cripps: It would be very well invested in any of the Government securities.
    Sir W. Smithers: Question.

    Suits (Purchase Tax)
    Mr. David Jonesasked the Chancellor of the Exchequer whether, to remove doubts as to the charging of additional Purchase Tax on suits ordered

    1793
    before 12th November, but not delivered until after that date, he will state the position of suits made from cloth in hand before 12th November, but delivered after that date.
    Sir S. Cripps: Registered tailors, like other traders registered for Purchase Tax purposes, buy their materials tax free, but are liable to pay tax on the goods they make at the rate in force on the date of the delivery of the goods to the customer, no matter when they acquired their materials. Unregistered tailors (e. g., those with a yearly turnover under £500) buy their materials tax paid, but naturally pay no further tax on the goods they make from them, and would have no excuse for putting up their price in respect of clothes made from materials already in stock at the date of any increase in tax.
    Sir W. Smithers: Is the right hon. and learned Gentleman aware that I have had many complaints on this score? Is he aware that it is most unfair, especially in one case of a gallant Merchant Navy officer who ordered his clothes, put the money by to pay for them, and now cannot afford the extra amount, because, after he tried them on, the tax has gone on?
    Sir S. Cripps: Whenever there is an increase in taxation some people suffer.

  TRADE AND COMMERCE

    Thermos Flasks
    Brigadier Petoasked the President of the Board of Trade if he is aware that the stocks of Thermos flasks held by retailers are now considerable; that very few permits are issued for their purchase; and if he will now make some relaxation in their control.
    The Parliamentary Secretary to the Board of Trade (Mr. Belcher): No, Sir; I am not aware that any considerable stocks of Thermos flasks are at present held by retailers. Vacuum flasks are now being supplied under the permit scheme at the rate of about 500,000 flasks a year, and I hope shortly to be able to expand it to meet the increased demand from priority users. I cannot, however, see my way to drop this scheme or to increase permit-free supplies on the home market since vacuum flasks form a very valuable export, and I am asking the manufacturers to send as many as possible abroad.
    Brigadier Peto: Will the Parliamentary Secretary consider increasing the allocation to the Ministry of Agriculture and Fisheries before January and February, so that they may have an increased allocation of permits during those two very cold months?
    Mr. Belcher: I am quite prepared to look into the possibility of meeting genuine needs of that kind.
    Mr. Vane: Does not the Parliamentary Secretary realise that half a million a year is far below the demand, and that it will take 80 years at least at that rate to satisfy the country, reckoning one flask per head?
    Mr. Percy Wellsasked the President of the Board of Trade if he will arrange for a supply of Thermos flask interiors to be available, for purchase without permit, and so save labour and material.
    Mr. Belcher: Yes, Sir; small supplies of glass inners for Thermos flasks are made available from time to time for sale free of permit.

    Woollen Underwear (Exports)
    Mr. Shephardasked the President of the Board of Trade, in view of the fact that stocks of woollen underwear are extremely low, if he will give an assurance that these goods will not be exported in such volume as to constitute a danger to the nation's health.
    Mr. Belcher: It is our aim to maintain supplies of underwear at about 1946 levels; but I cannot guarantee that the supply position may not for a time become more difficult, though I hope this can be avoided.
    Mr. Shephard: Is the Minister aware that this is a most dangerous situation, and will he look into it again? If these goods are being exported in such quantity as to constitute a danger to the health of this country, it is time that he did something about it.
    Mr. Belcher: I am intrigued by the suggestion that I should look into the woollen underwear. I can assure the hon. Member that we are aware of the necessity to provide these articles, but, as he knows, it is the shortage of woollen yarn

    1795
    which is generally responsible for the present position. In so far as anything can be done to increase the supply of woollen yarn, we shall be prepared to do it.
    Mr. Shephard: Is not the position due to the fact that too large a quantity is being exported?
    Mrs. Leah Manning: Is my hon. Friend aware that far from. it being a danger to people's health to go without woollen underwear, the fact that they wear it is a sign that they mollycoddle themselves, and would be better off without it?

    Artists' Materials
    Mr. Keelingasked the President of the Board of Trade whether he is aware that British artists find it impossible to obtain smooth Bristol board and Gillott artists' nibs; and whether he will, arrange for a sufficient proportion of the production of these necessities of British painting to be placed on the home market.
    Mr. Belcher: I am aware that Gillott artists' nibs are difficult to obtain but the firm is unable, because of a shortage of skilled labour, to increase its output, and I am most anxious not to ask them to reduce the valuable contribution which they are making to exports. Supplies of all boards generally are difficult but if the hon. Member will give me further details, I will look into the matter.
    Mr. Keeling: Are the Board of Trade alive to the importance of British art for its own sake? Even if they are not, and take a purely commercial view, do they not think an exported picture made on Bristol board with a Gillott nib is more valuable to the country than an exported board and nib?
    Mr. Belcher: I am quite prepared to concede the value of British art as such, but perhaps the hon. Member does not know that one ton of steel, applied to the manufacture of these nibs for export, provides a value of £16,000, which is a high conversion rate.
    Mr. Keeling: What about the export value of pictures?
    Mr. Belcher: We have no guarantee that a picture will be exported.

    Wheat Prices (Soviet Union)
    Dr. Barnett Strossasked the President of the Board of Trade what was the price of wheat offered to Britain by the Soviet Union in the recent discussion on trade; and what is the price of wheat today in the open markets of Canada, U.S.A., Argentine and Australia.
    Mr. Belcher: It would not be in the public interest to disclose details of offers made in the course of trade negotiations but I would point out that in the discussions with the Soviet Union, agreement was reached on the price of wheat and, as the House is aware, it was not on this question that the negotiations failed to achieve success. I understand from my right hon. Friend, the Minister of Food, that the current spot price for wheat in Canada is £32 10s. per long ton, f.o.b. and in the U.S.A. £30 12s. There is no open market price in Argentina or Australia.
    Dr. Stross: Would not my hon. Friend agree that we appear to have lost some advantage through not concluding these negotiations earlier, and may we have an assurance that they will be re-opened and pressed forward as soon as possible?
    Mr. Belcher: That assurance has been given by my right hon. Friend on a number of occasions.
    Mr. Baldwin: Could the hon. Gentleman, when giving replies about the price per ton, give it in ordinary tons, not in long tons or bushels, so that we can understand?
    Mr. Belcher: I gave that reply because that is the normal commercial way of dealing with these transactions.

    Cloth and Leather (Subsidies)
    Mr. Piratinasked the President of the Board of Trade what steps he is taking to ensure that no extra profits are obtained arising from the increased cost of clothing as a result of the withdrawal of the £33 million subsidies from cloth and leather.
    Mr. Belcher: It will be some months before the removal of these subsidies affects the price of clothing on sale in shops. Meanwhile, I shall be considering with the manufacturers and distributors what changes in maximum prices and margins may be necessary because

    1797
    of the removal of these subsidies and I shall do my best to ensure that any increases in price that may be necessary are limited, as far as possible, to the amount of the subsidies that are to be withdrawn.
    Mr. Piratin: Can the hon. Gentleman give the House an assurance that no steps will be taken by tradesmen to raise their prices until a decision has been taken in conjunction with the Board of Trade?
    Mr. Belcher: I am afraid I cannot give any assurances as to what will be done by traders, but the situation will be watched by my Department.

    Commodity Markets
    Mr. Toucheasked the President of the Board of Trade if he will give an estimate of the average annual prewar earnings of invisible exports of the Liverpool Cotton Exchange, and the Mincing Lane and Mark Lane Commodity Markets.
    Mr. Belcher: It is believed that the contribution of produce brokerage as a whole to the balance of payments was of the order of £10 million per annum.
    Mr. Touche: Would the Parliamentary Secretary consider re-opening these markets as an obvious way of obtaining invisible exports?
    Mr. Belcher: That is a different question. I was asked to give an estimate of the amount of money earned by those markets.

    Country.

    Nature of Delegation.

    Date of Discussions.

    Scope.

    Austria

    Delegation of Officials

    September, 1946

    Resumption of trade.

    Representative businessmen

    April, 1947

    Visits to Government Departments, and to industry.

    Belgium

    Official Delegation

    January, 1947

    Balance of trade and payments.

    Brazil

    Official Delegation led by Brazilian Minister for Foreign Affairs.

    September, 1946

    Mutual trade arrangements.

    Czechoslovakia

    Trade Delegation led by Dr. Kuraz of the Czechoslovakian Ministry of Foreign Affairs.

    October to November, 1945– Expert discussions continued into 1946.

    These discussions resulted in (a) a Monetary Agreement between the U.K. and Czechoslovakia (Cmd. 6694); (b) a Property Agreement between the U.K. and Czechoslovakia (Cmd. 6695) (c) Understandings about Anglo-Czechoslovak trade; and (d) lifting of Trading with the Enemy restrictions on trade with Czechoslovakia (S.R. & O. Number 1357, 1358 and 1359 of 1945).

    Mr. Erroll: Can the Parliamentary Secretary give an estimate of how much was earned by the Liverpool Cotton Exchange?
    Mr. Belcher: I am afraid that I cannot break down the figure.

    Foreign Trade Delegations
    Mr. Austinasked the President of the Board of Trade if he will enumerate for the years 1946 and 1947 the identity of foreign trade delegations received in this country, together with an outline in each case of trading results achieved.
    Mr. Belcher: With my hon. Friend's permission I will circulate in the OFFICIAL REPORT a list of the official foreign trade delegations that have visited this country in 1946 and 1947, with an indication in each case of the scope of the discussions. Most of these discussions have been of a general character and the results in terms of trade cannot be assessed in quantitative terms.
    Mr. Austin: Is my hon. Friend satisfied that facilities offered to these delegations are sufficient, or has he any further provisions in mind for improving such facilities?
    Mr. Belcher: It has not been suggested to me that facilities are insufficient, but if my hon. Friend has any information on the matter, I shall be glad to receive it.
    Following is the information:

    Country.

    Nature of Delegation.

    Date of Discussions.

    Scope.

    Delegation led by Dr. Nied-erle, Plenipotentiary of the Czechoslovak Government for Compensation.

    June to July 1947.

    Discussions were concerned with the compensation to be paid for British property in Czechoslovakia which has been nationalised. Considerable progress was made and agreement reached on a number of points. These discussions are to be resumed at a date to be agreed.

    Denmark

    Official Delegation

    September and December 1946 and January 1947.

    Food contracts and expansion of exports to U. K.

    September, 1947

    Ministry of Food talks.

    Finland

    Official Delegation

    March 1946 and, March, 1947

    Mutual trade arrangements.

    France

    Anglo - French Economic Committee.

    October 28th to November 4th, 1946.

    Review of Balance of Trade and Payments.

    Anglo - French Economic Committee.

    February. 1947.

    Review of Balance of Trade and Payments.

    French Zone of Germany.

    Delegation of Officials

    November, 1947

    Examination of possibilities of trade between the French Zone and the sterling area.

    Holland

    Official Delegation

    March, 1947

    General trade and payments arrangements.

    Hungary

    Official Delegation headed by Dr. Robert Hardi.

    November, 1946

    Resumption of trade in foodstuffs and manufactured goods.

    August, 1947

    Follow up of food talks in November, 1946.

    Italy

    Official Trade Delegation led by Signor Mascia of the Italian Ministry of Foreign Affairs.

    December, 1946

    General review of Anglo-Italian Trade. Agreement to set up an Anglo-Italian Standing Committee of officials to review the course of trade as necessary.

    Official Financial Delegation led by Signor Menichella, Vice-Governor of the Bank of Italy.

    March, 1947

    Review of outstanding financial questions leading to the signature of the Financial Agreement. (Cmd. 7118).

    Poland

    Official Trade Delegation led by Dr. Lychowski, Polish Ministry for Trade and Industry.

    March to June, 1947.

    Agreement was reached on a plan for the future development of Anglo-Polish trade. The plan is summarised in Sir Stafford Cripps' reply in the House on 8th May, 1947, to my hon. Friend the Member for Luton.

    Russia

    —

    November, 1946

    Purchase of U. K. herrings.

    Sweden

    —

    March and September, 1946 and March and October, 1947.

    Mutual trade arrangements.

    Yugoslavia

    Delegation led by M. Pet- rovic, Minister for Foreign Trade.

    February to June, 1946.

    Trade and payments; property and shipping agreements; debt settlement.

    The debt settlement and shipping agreement were signed on 31st July, 1947.

    Delegation led by M. Kopcok, Deputy Minister of Industry.

    Began 18th August, 1947 and still in progress.

    Trade and payments and settlement of British claims for compensation for property nationalised in Yugoslavia; property agreement.

    Parapanit (Import Licences)
    Colonel Sir Charles Mac Andrewasked the President of the Board of Trade if he will grant import licences for Par-
    1800
    paint, made by Greigy & Co., Switzerland, to individuals suffering from Parkinson's Disease in cases when it is prescribed by the patients' doctors.
    Mr. Belcher: Yes, Sir, where the application for a licence is supported by a medical certificate. I assume that the hon. and gallant Member is referring to Parapanit.

  MINERS' HOSTEL, COWDENBEATH
  Mr. Gallacher (by Private Notice)asked the Minister of Labour if he will withdraw the eviction notices issued to industrial workers occupying hostels in the area of Cowdenbeath for the purpose of accommodating displaced persons until suitable alternative accommodation has been found for these workers.
  Mr. Isaacs: This is one of the National Coal Board hostels. I understand that they have given notice to leave the hostel to certain industrial workers who were occupying places in it on a purely temporary basis pending the accommodation being required by miners. My welfare officers are doing their best to help the men to find alternative accommodation.
  Mr. Gallacher: Is it not very undesirable that Scottish workers should become displaced persons in order to provide accommodation for other displaced persons; and would not this action, in itself, make the situation of the displaced persons problem very difficult in that area in a manner not in any way helpful to production?
  Mr. Isaacs: The hostel was established for miners. I am not in a position to
  1802
  say whether or not those who are going in are displaced persons. I only saw this Question quite recently. These men are, in fact, miners with work waiting for them in the mines, and they can only go down the mines when they get accommodation in the hostel. As far as the other men are concerned, we have already found alternative accommodation for 30 of the industrial workers and, in conjunction with other organisations, we are actively engaged in finding other accommodation.
  Mr. Scollan: Has not the Minister missed the point? The resentment that will be felt by the local people being put out by displaced persons coming to that area will make it very difficult to secure the proper conciliatory feeling that might be obtained amongst the miners who are to train the displaced persons. Is it not well worth reconsidering this matter?
  Mr. Isaacs: The point is that they are miners hostels, and the miners want them. As to their welcome in the locality, it is only fair to say that up to now we have found that a very ready and warm welcome has been given to these people when they settle down. The crux of the point is that these industrial workers were told that they could only have this accommodation temporarily and must give it up when required.
  Mr. Scollan: There was no alternative.
  Mr. Charles Williams: Are not these hostels in precisely the same position as tied cottages?

BUSINESS OF THE HOUSE
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)."—[Mr. Whiteley.]
The House divided: Ayes, 238; Noes, 116.

Division No. 32.]

AYES.

[3.33 p.m.

Allen, A. C. (Bosworth)

Forman, J. C.

Mulvey, A.

Allen, Scholefield (Crewe)

Gallacher, W.

Murray, J. D.

Alpass, J. H

Ganley, Mrs C. S.

Naylor, T. E.

Anderson, A. (Motherwell)

Gibson, C. W

Nicholls, H. R. (Stratford)

Anderson, F. (Whitehaven)

Glanville, J E. (Consett)

Noel-Buxton, Lady

Attewell, H. C.

Gordon-Walker, P. C

Oldfield, W. H

Attlee, Rt. Hon. C. R.

Granville, E. (Eye)

Oliver, G. H

Austin, H Lewis

Grenfell, D. R.

Orbach, M.

Awbery, S. S.

Grey, C. F.

Paling, Will T. (Dewsbury)

Ayles, W. H.

Grierson, E.

Palmer, A. M F.

Ayrton Gould, Mrs. B

Griffiths, D. (Rother Valley)

Parkin, B. T.

Bacon, Miss A.

Griffiths, Rt. Hon. J. (Llanelly)

Paton, Mrs. F. (Rushcliffe)

Balfour, A.

Griffiths, W. D. (Moss Side)

Pearson, A.

Barstow, P. G.

Gunter, R. J.

Peart, T. F

Barton, C.

Guy, W. H.

Perrins, W.

Battley, J. R.

Haire, John E. (Wycombe)

Piratin, P.

Bechervaise, A. E.

Hale, Leslie

Poole, Cecil (Lichfield)

Bellenger, Rt. Hon. F. J

Hall, Rt. Hon. Glenvil

Popplewell, E.

Benson, G.

Hannan, W. (Maryhill)

Porter, E. (Warrington)

Bing, G. H. C.

Hardy, E. A.

Porter, G. (Leeds)

Binns, J.

Harris, H. Wilson

Price, M. Philips

Blackburn, A R.

Hastings, Dr. Somerville

Proctor, W. T.

Blyton, W. R.

Henderson, Joseph (Ardwick)

Randall, H. E.

Bowden, Flg.-Offr. H. W.

Herbison, Miss M.

Ranger, J.

Braddock, Mrs. E. M. (L'pl, Exch'ge)

Hicks, G.

Reid, T. (Swindon)

Braddock, T. (Mitcham)

Hobson, C. R.

Rhodes, H.

Bramall, E. A.

Holman, P.

Ridealgh, Mrs. M.

Brook, D. (Halifax)

Holmes, H. E. (Hemsworth)

Robens, A.

Brooks, T. J (Rothwell)

House, G.

Roberts, Goronwy (Caernarvonshire)

Bruce, Maj. D. W. T

Hudson, J. H. (Ealing, W.)

Royle, C.

Buchanan, G.

Hughes, Emrys (S. Ayr)

Scollan, T.

Burden, T. W

Hughes, Hector (Aberdeen, N.)

Scott-Elliot, W.

Burke, W A.

Hughes, H. D. (W'lverh'pton, W.)

Segal, Dr. S.

Callaghan, James

Hutchinson, H L. (Rusholme)

Shackleton, E. A. A

Carmichael, James

Isaacs, Rt. Hon. G. A.

Sharp, Granville

Castle, Mrs. B. A.

Janner, B.

Shawcross, C. N. (Widnes)

Chamberlain, R. A

Jay, D. P. T.

Shinwell, Rt. Hon. E.

Chater, D

Jeger, G. (Winchester)

Shurmer, P.

Chetwynd, G. R

Jones, D. T. (Hartlepools)

Silverman, S S. (Nelson)

Cluse, W. S.

Jones, Elwyn (Plaistow)

Skeffington-Lodge, T. C.

Cocks, F. S.

Keenan, W

Skinnard, F. W

Coldrick, W

King, E. M.

Smith, H. N. (Nottingham, S)

Collick, P.

Lawson, Rt. Hon. J J.

Smith, S. H. (Hull, S. W.)

Colman, Miss G. M

Lee, F, (Hulme)

Snow, J. W.

Comyns, Dr. L.

Lee, Miss J. (Cannock)

Solley, L. J.

Cook, T. F.

Leonard, W.

Sorensen, R. W.

Cooper, Wing-Comdr. G

Leslie, j. R.

Soskice, Maj. Sir F

Corlett, Dr J.

Levy, B. W.

Sparks, J. A.

Cove, W. G.

Lewis, J. (Bolton)

Stamford, W

Cripps, Rt. Hon. Sir S

Lewis, T. (Southampton)

Steele, T.

Cunningham, P.

Lipson, D. L

Stewart, Michael (Fulham, E.)

Daggar, G.

Lipton, Lt.-Col M

Stross, Dr. B

Daines, P.

Logan, D. G

Stubbs, A. E.

Davies, Clement (Montgomery)

Longden, F

Summerskill Dr. Edith

Davies, Edward (Burslem)

Lyne, A. W.

Swingler, S.

Davies, Haydn (St Pancras, S. W.)

McEntee, V La T

sylvester G O

Deer, G.

McGhee, H. G

sylvester, G O.

de Freitas, Geoffrey

Mack, J. D.

Symonds, A. L.

Diamond, J.

McLeavy, F,

Taylor, H. B. (Mansfield)

Dobbie, W.

Macpherson, T (Romford)

Taylor, R. J. (Morpeth)

Dodds, N. N

Mainwaring, W. H

Taylor, Dr. S. (Barnet)

Donovan, T.

Mallalieu, J. P. W.

Thomas, D. E. (Aberdare)

Dugdale, J. (W. Bromwich)

Manning, Mrs. L. (Epping)

Thomas, I. 0. (Wrekin)

Dumpleton, C. W.

Marquand, H. A.

Thurtle, Ernest

Dye, S.

Mathers, Rt. Hon. G

Tiffany, S.

Edwards, A. (Middlesbrough, E.)

Medland, H. M.

Titterington, M. F.

Edwards, N. (Caerphilly)

Mellish, R. J.

Tolley, L.

Edwards, W. J. (Whitechapel)

Mikardo, Ian

Tomlinson, Rt. Hon. G

Evans, A. (Islington, W.)

Mitchison, G. R.

Vernon, Maj. W. F.

Evans, E (Lowestoft)

Monslow, W.

Viant, S. P.

Evans, S. N. (Wednesbury)

Moody, A. S.

Wallace, G. D. (Chislehurst)

Ewart, R.

Morley, R.

Wallace, H. W. (Walthamstow, E.)

Farthing, W. J

Morris, P. (Swansea, W.)

Warbey, W. N.

Fletcher, E. G. M. (Islington, E.)

Morris, Hopkin (Carmarthen)

Watkins, T. E.

Foot, M. M.

Moyle, A.

Watson, W. M.

Webb, M. (Bradford, C.)

Willey, O. G (Cleveland)

Young, Sir R. (Newton)

Wells, P. L. (Faversham)

Williams, D. J. (Neath)

Younger, Hon. Kenneth

White, H. (Derbyshire, N. E.)

Williams, J. L. (Kelvingrove)

Whiteley, Rt. Hon. W

Williams, W. R. (Heston)

TELLERS FOR THE AYES

Wilkes, L

Woods, G. S

Mr. Simmons and

Wilkins, W. A.

Wyatt, W

Mr. Michael Adams.

NOES.

Amory, D Heathcoat

Hare, Hon. J. H. (Woodbridge)

Pitman, L. J

Assheton, Rt. Hon. R.

Harvey, Air-Comdre. A. V

Ponsonby, Col. C. E.

Astor, Hon. M.

Haughton, S. G

Poole, O. B. S. (Oswestry)

Baldwin, A. E.

Head, Brig. A. H.

Raikes, H. V.

Barlow, Sir J.

Headlam, Lieut.-Col. Rt. Hon. Sir C.

Raid, Rt. Hon. J. S. C. (Hillhead)

Beechman, N. A

Henderson, John (Cathcart)

Roberts, H. (Handsworth)

Bennett, Sir P.

Hollis, M. C.

Roberts, Maj. P. G. (Ecclesall)

Birch, Nigel

Hutchison, Lt.-Com. C. (E'b'rgh W.)

Robertson, Sir D. (Streatham)

Boles, Lt.-Col. D. C. (Wells)

Hutchison, Col. J. R. (Glasgow, C.)

Ropner, Col. L.

Boothby, R.

Jarvis, Sir J.

Sanderson, Sir F

Bossom, A. C

Jennings, R.

Scott, Lord W.

Bower, N

Keeling, E. H.

Shepherd, W. S. (Bucklow)

Boyd-Carpenter, J. A.

Kerr, Sir J. Graham

Smiles, Lt.-Col. Sir W.

Bromley-Davenport, Lt.-Col. W

Langford-Holt, J.

Smith, E. P. (Ashford)

Buchan-Hepburn, P. G. T.

Law, Rt. Hon. R. K.

Smithers, Sir W.

Bullock, Capt. M.

Lennox-Boyd, A. T.

Snadden, W. M.

Butcher, H. W.

Lloyd, Maj. Guy (Renfrew, E.)

Spearman, A. C. M

Carson, E.

Lloyd, Selywn (Wirral)

Spence, H R.

Churchill, Rt. Hon. W. S

Low, A. R. W

Stanley, Rt. Hon. O.

Clifton-Brown, Lt.-Col. G.

Lucas-Tooth, Sir H.

Stoddart-Scott, Col. M.

Conant, Maj. R. J. E.

Lyttelton, Rt. Hon. O.

Strauss, H. G. (English Universities)

Crookshank, Capt. Rt. Hon. H F C

MacAndrew, Col. Sir C.

Sutcliffe, H.

Crosthwaite-Eyre, Col. O. E

MacDonald, Sir M. (Inverness)

Taylor, C. S (Eastbourne)

Crowder, Capt. John E.

Macdonald, Sir P (I of Wight)

Taylor, Vice-Adm. E. A. (P'dd'l'n, S.)

Cuthbert, W. N.

Maclay, Hon. J. S.

Thornton-Kemsley, C. N.

Davidson, Viscountess

Macpherson, N. (Dumfries)

Thorp, Lt.-Col. R. A. F.

De la Bère, R.

Manningham-Buller, R. E.

Toushe, G. C.

Dodds-Parker, A. D.

Marsden, Capt. A.

Turton, R. H.

Drayson, G. B.

Marshall, D. (Bodmin)

Vane, W. M. F.

Drewe, C.

Mellor, Sir J

Webbe, Sir H. (Abbey)

Dugdale, Maj. Sir T. (Richmond)

Moore, Lt.-Col. Sir T.

Wheatley, Colonel M. J.

Eccles, D. M.

Morrison, Maj J. G. (Salisbury)

Williams, C. (Torquay)

Eden, Rt. Hon. At

Morrison, Rt. Hon. W. S. (Cir'nc'ster)

Williams, Gerald (Tonbridge)

Elliot, Rt. Hon Walter

Mott-Radclyffe, Maj. C. E

Willoughby de Eresby, Lord

Erroll, F J

Noble, Comdr. A. H. P

York, C

Galbraith, Cmdr T. D

Nutting, Anthony

Young, Sir A S. L (Partick)

George, Maj Rt. Hn. G. Lloyd (P'ke)

Osborne, C

Gomme-Duncan, Col. A.

Peake, Rt Hon. O.

TELLERS FOR THE NOES:

Gridley, Sir A.

Peto, Brig. C. H. M.

Commander Agnew and

Grimston, R. V

Pickthorn, K.

Mr. Studholme.

Question put, and agreed to.

ORDERS OF THE DAY

  FINANCE BILL
  Order for Second Reading read.
  3.44 p.m.
  The Financial Secretary to the Treasury (Mr. Glenvil Hall): I beg to move, "That the Bill be now read a Second time."
  This Finance Bill has, as my right hon. Friend, the ex-Chancellor of the Exchequer said when making his Budget statement, one object and one object only. This is to strengthen still further and without delay our defences against inflation. The risk of a runaway inflation has, of course, been with us ever since the coming of war in 1939. Thanks, however, to rationing, to subsidies, to price controls, to very high taxation and to the success in the past of the National Savings Movement, inflation has been kept in check.
  Indeed, as I tried to show when winding up the Debate on the second day of the Budget Resolutions, we have in this country, in this direction, a great deal to be thankful for. I then ventured to quote certain cost-of-living figures for basic foods in this and other countries, which did show, in my view, and in the view, I think, of my hon. Friends behind me, that runaway inflation has been prevented. In addition, as my right hon. Friend indicated when making his Budget statement, the total of currency notes in circulation, which is some guide, though not a complete guide, in these matters, fell from the August peak of £1,421 million to £1,364 million in the first week of this month. The House, will, I am sure, be gratified to know that last week there was a further fall of £12 million—a most unusual thing at this time of the year. As "The Times" said in commenting on this matter:
  "A continuation of this contraction would be regarded as an encouraging symptom of the relaxation of inflationary pressure."
  In reminding the House of these facts, I do not wish to imply that we think that the risk of inflation has faded. This risk is still with us, and my right hon. and learned Friend the Chancellor fully realises it. None of us have any desire to minimise it, particularly as it has recently received fresh emphasis in more than one direction from the decisions of the Government to meet the present
  1808
  dollar crisis. As the House knows, the Government have decided to curtail imports from hard currency countries and to step up our exports still further, and far more quickly, in order to narrow the gap in our overseas balance of payments. These decisions will inevitably, for a time, diminish the merchandise in the shops and increase the temptation—to use a phrase which has now become hallowed by repetition—of "too much money chasing too few goods." I repeat therefore that the proposals contained in this Bill have one single purpose, and that is to fortify still further the anti-inflationary defences. What we are doing in this Finance Bill is to place further well-filled sandbags along the dam which already exists.
  What are the proposals contained in this Bill? Looking at them, the question immediately arises—and it has already been posed by right hon. and hon. Gentlemen on the other side of the House—of whether they are reasonable and sufficient in the circumstances facing this country today. They have been criticised on the ground that they are not drastic enough, and our opponents have stressed the fact that their total estimated yield during the present financial year will be not more than £48 million. Indeed, some have gone so far as to say that, this being so, the Bill was scarcely worth introducing. This is, of course, an incorrect way of looking at this matter.
  We must remember that this Bill is supplementary to the Finance Act passed by this House earlier this year, and that it must be taken in conjunction with that Measure. The present Bill only expects to raise, during the rest of this financial year, a sum of about £48million; but we must not forget that more than half the year has already passed. What we have to do is to look at the yield in a full year, not only at the yield in a full year from these additional proposals, but at the yield in a full year from the two Measures taken together. If we look at the revenue which it is estimated will be raised by the proposals made in the Finance Act passed earlier this year, together with the proposals made here, the House will see that we are raising, in this financial year, no less a sum than £3,500 million. I venture to suggest that this is a colossal sum to raise in peacetime, even in years so near to a devastating war.

  1809
  The estimated surplus for this year, if we add the £48 million to the £258 million which my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) estimated he would get from his first Budget, will be £306 million. Although it is not for me to prophesy, it is possible that this surplus may well be more, because, as the House will be interested to hear, the estimated surplus of £258 million has already accrued before we have come to the most profitable months of the financial year, as far as income is concerned. If we assume that no changes are made in taxation next April, and if the yield which I have mentioned continues at its present rate, then, after making allowances, as one should to be quite fair, for the non-recurring items which have occurred in the accounts for this year, it will still be true to say that we shall be raising no less than £3,200 million next year.
  These tax increases are, of course, not the whole story. They are only one side of the Government's proposals to meet the nation's present difficulties. They must be taken in conjunction with the Government's decision to reduce commitments at home on capital investment account, and commitments overseas in various directions. When these facts are remembered and taken as a whole, I think that the House—and certainly the outside public—will agree with me that what is proposed here is reasonable and sufficient within the limits set by the circumstances in which we find ourselves. I say "within the limits set by circumstances" deliberately, because, when my right hon. Friend the Member for Bishop Auckland framed this supplementary Budget, he had to bear two things constantly in mind. The first was the possible effect of any increase in direct taxation on the incentive of workers and employers alike, and the second was the possibility that, if indirect taxation such as Purchase Tax were increased too steeply, there might also be a vast increase in the temptation to evade. The House will realise that we have not the staff available to counteract that kind of activity.
  I now turn briefly to the Clauses of the Bill. As the House will recollect, this is the fourth Measure of its kind with which we have had to deal in the course of about two years. Fortunately, it is very much shorter than any of its predecessors—it runs to only ten Clauses—
  1810
  and I am glad to say that it is far less complicated than those which have gone before. This time, there are no specific Treasury Clauses; Customs and Excise and Inland Revenue cover the field. Only one new impost is proposed. This is not, necessarily, because the resources of civilisation in this direction are exhausted. It is because, again as my right hon. Friend said when opening his Budget, tax increases in this interim Budget should be simple, straightforward, and capable of being administered with the least expenditure of manpower. In a supplementary Budget of this sort, there is no point in entering new and untried fields which would involve a very great expenditure of manpower, both in the Civil Service and elsewhere. It was felt wiser and more proper to stick to the taxation about which we know something and which. could be collected with the staff available than to go too far into new fields.
  The first four Clauses of the Bill, together with their relative Schedules, raise the present duties on alcoholic drinks. As the House knows, beer of average strength, whatever that may be, is to go up by about id. a pint. I think that this raises the total duty from 7d. to 8d. a pint. Whisky is to go up by 3s. 10£d. a bottle, and wines by 5s. or 10s. a gallon, according to strength. For the first time in history, British wines are to be divided into two groups, light and heavy. No doubt there will be a discussion of this arrangement when we reach the Committee stage, and criticism will then be levelled at the fact that this has been done for the first time.
  Clause 5 deals with Purchase Tax. As the House will already have noticed, no article not subject to Purchase Tax at the present time is brought within its scope, and no article, with certain narrow exceptions, has been taken out of one category and put into another, or exempted altogether. The rates of tax which formerly ran in four stages from i6⅔ per cent. to 100 per cent. on the wholesale value, have, since 13th November, run from 33⅓ per cent. to no less a figure than 125 per cent. Motor cars and motor cycles are excepted from the increase, and the House will be interested to see in the Bill that my right hon. and learned Friend has similarly excepted pedal cycles, thus implementing the promise he gave when he wound up the Debate in the Committee of Ways and

  1811
  Means on the Budget Resolutions. The increased yield will be something like £80 million a year. It is by far the largest amount to be collected by any single impost in this Bill. It will add one-third to the present yield, which is very considerable.
  I think we all realise what a difficult tax the Purchase Tax is. It is quite impossible to give notice to traders in advance, for fear of forestalling, and yet, whenever a change is made, whether it be up or down, it leads to anomalies and difficulties. This is one of the penalties which we have to pay for the general desire—and I think it is a general desire—that a fair amount of the taxation levied should be in the form of indirect rather than direct taxation.
  Clause 6 provides for an excise duty of 10 per cent. on stake monies laid on pool betting. This new duty will mainly affect the dog race totalisators and football pools, but it will also cover any other type of pool betting, such as pool betting on jockeys, for example. However, it will not affect betting on totalisators set up under the authority of the Racecourse Betting Control Board. When we were discussing this matter before, hon. Members asked why such betting should be excepted. The reason for the exemption is that the Control Board is a non-profit making body. It already contributes something like 10 per cent., deducted from the bets made, to a statutory fund for the benefit of the industry, and this, after the cost of running the tote has been deducted, is devoted to the development of horse breeding, the improvement of racecourses, the advancement of veterinary science, veterinary education and things of that kind. Moreover—and I am sure this will appeal to hon. Members in all quarters of the House—this industry has earned for this country no less than £3 million in exports in the first nine months of this calendar year. It certainly cannot be said of greyhound racing that it has helped our export trade.
  Sir Alan Herbert: Would the right hon. Gentleman tell the House how much money was spent last year, or in any other year, for the purpose of horse breeding out of the money put through the horse tote? [An HON. MEMBER: "Does the hon. Gentleman
  1812
  know? "] I do, but I wonder whether the Financial Secretary knows.
  Mr. Glenvil Hall: I am sorry I have not the exact figure by me, but if it is available, I will most certainly get it and see that the hon. Gentleman has it. The amount which was available last year for the various purposes which I have enumerated was something in the nature of £328,000.
  Sir A. Herbert: I am sorry to interrupt again, but the question I asked was, what money was spent on horse breeding purposes? Horse breeding purposes were mentioned by the right hon. Gentleman in his speech. The sum spent last year was £34,000 out of £14 million put through the tote. Therefore, the whole of this business about horse breeding is really nonsense.
  Mr. Glenvil Hall: I do not know what the hon. Gentleman means "by" £14 million put through the tote," but if I understand him to mean the gross amount of money laid in the case of bets, that figure is quite irrelevant because a great deal of that money goes back in winnings to the people who have been fortunate enough to back the right horse. What I am saying—and I challenge the hon. Gentleman on this—is that an amount approximating to 10 per cent. is deducted by the Racecourse Betting Control Board from all bets made on the horse race totalisator, and that after deducting the expense of running the tote, that money is devoted to good objects, including the breeding of racehorses. The proof that the objects are good is that this industry has assisted the country this year to the tune of £3 million of exports.
  There is really no analogy between the horse race and the dog race totalisators. I myself have never been to a dog race. The dog race totalisators are very profitable things and make considerable profits for their shareholders. Unlike horse race totalisators, they apparently "have a knack of holding their own against the bookies, and it has been pointed out to us that if we attempted to penalise or tax still further the horse race totalisator, the net effect would be. that the bookie would receive an even greater advantage over the tote than he now has on the horse racecourses. For these reasons, therefore—and we have

  1813
  quite an open mind on this matter—I hope the House will see that there is a great difference between a totalisator on a horse racecourse and a totalisator at the dogs.
  When we come to levy an imposition of this kind for the first time we should not only levy it so that we get the money, but also so that what we do is right and proper. I know that some hon. Members opposite—and I think the right hon. Member for West Bristol (Mr. Stanley) had something to say about this—feel that if we are going to tax the dogs and the football pools—
  Mr. Oliver Stanley: I had an open mind, but I was very much influenced by what the right hon. Member for Bishop Auckland (Mr. Dalton) said last April.
  Mr. Glenvil Hall: At the moment what I have most in mind is what the right hon. Gentleman himself said both in Committee of Ways and Means and when he broadcast the same evening. I have no desire to do him an injustice, but I have read more than once what he said, and I came definitely to the conclusion that he seemed a trifle disappointed that horse race totalisators had not been included in this impost and that bookies had been missed out. Personally, I was rather shocked to hear such a distinguished member of a family which in the public mind is associated with the sport of kings, apparently talking in this way.
  As to bookmakers, we would like to get at them if we could, but, as was once said by the Leader of the Opposition, who tried hard to reach them and found it impossible, they are extremely elusive creatures. It is possible to paraphrase a famous saying to the effect that "Never in the whole field of human endeavour was so much owed by so many bookmakers to so few Customs officials." We have to remember that we have a small staff. Bookmakers are difficult to get hold of, and if we are going to levy an impost on betting, it is much better to levy it where we can get some return with the minimum of staff employed. The proposed date for the coming into force of this new, duty is 4th January, 1948. This should allow a margin for the passage of the Finance Bill, and for the setting in operation of the necessary machinery for collection, which is outlined in the Fifth Schedule.
  1814
  With regard to Profits Tax, Clause 7 doubles the existing rates. This means that distributed profits will pay at the rate of 25 per cent., and undistributed profits at 10 per cent. The profits of companies generally are now running at a very high level and in spite of the differential rate which was inserted in the Finance Act, 1947, there have been cases where increased dividends have been declared. Therefore, it is the view of my right hon. and learned Friend that profits should bear their share of any change in taxation in a Budget dedicated to mopping up surplus purchasing power and to the reduction of the inflationary pressure. It has been said by way of criticism that whilst, perhaps, it is just that distributed profits should bear a higher rate, undistributed profits which are ploughed back into business ought to be left where they are. That argument is plausible, but the Government have taken the view that both kinds of profits should bear some of the increased taxation which now, unfortunately, has to be levied. It is hoped that, by taking more than formerly of the undistributed profits, it will tend to reduce expenditure in the capital goods market.
  The additional imposition in the way of Profits Tax has been, on the whole, I think, well received both in the City and in this House. It had been felt by many who study these things that some increase, at any rate, was inevitable. What criticism there has been has centred round the date from which this applies, namely, 1st January last, on the grounds that difficulties may result in cases in which dividends have already been declared. I have no doubt that this aspect of the proposal will be canvassed both during the Debate today and when we reach the Committee stage, and I am sure that the Chancellor will listen to what is said with the utmost sympathy.
  I will say just a word on the interest on tax arrears. Interest at 3 per cent. on all arrears outstanding three months and in excess of £1,000 is to be charged on Surtax, E.P.T., Profits Tax, and Income Tax in so far as Schedule D assessments are concerned and on those taxes only. The interest charge will only apply once the tax is actually due. Where a case is under consideration, or has been queried, or is being appealed against, the interest will not begin to run. But where

  1815
  tax is actually due, then the interest at this rate will begin to run as soon as it has been outstanding three months. Subsection (4) of Clause 8 does allow for subsequent adjustments where too much interest has been paid owing to a downward adjustment of a liability to tax. Any sum overpaid may be refunded.
  Mr. Joynson - Hicks: Would the right hon. Gentleman clarify a little more the definition of the time at which the tax does begin to become liable to interest? In certain cases the taxpayer is liable to pay the tax whether it is assessed or not, I understand. Does it automatically carry interest from the day when payment becomes due, or does there have to be agreement between the inspector of taxes and the taxpayer as to when the tax is agreed? What exactly is the date on which interest becomes chargeable?
  Mr. Glenvil Hall: Normally, these things are done through accountants, and, therefore, I do not think difficulties will arise in practice. It will easily be known between the parties when the sum due has been agreed. It is from that date that the three months will begin to run, and thereafter interest will begin to be charged.
  Mr. Stanley: When it is agreed?
  Mr. Glenvil Hall: Yes.
  Mr. Jennings: Is the right hon. Gentleman not stating, in fact, that anybody who puts in an appeal against his assessment will stop interest running on unpaid taxation? Surely, that is what he is saying.
  Mr. Glenvil Hall: No. What I am trying to show is that we are anxious to be fair in this matter. The new arrangements will apply in the main to fairly substantial company accounts, and we must surely rely on chartered accountants, who normally deal with these matters, to play fair, and not to put in appeals simply for the sake of trying to avoid the starting of interest. If there is any query—and, normally, it may be that there will be no query at all—then the time and the interest begin to run in the way I have said as soon as agreement is reached. I see no difficulty in practice in this matter at all.
  1816
  Let me come now to advertising expenses. This proposal has, I think, aroused far more interest than any other in this Bill. It disallows, for the purpose of Income Tax and Profits Tax, 50 per cent. of certain advertising expenses. The provision applies only to advertising and the expenses of advertising the trade or business in question, or its products, and it is limited to advertising in the United Kingdom on cinema screens, or in newspapers and periodicals, apart from trade and technical journals, and on hoardings, posters, plaques, or signs other than those which may be erected oh the business premises. Let me make it clear that the change does not apply to pre-Budget expenditure. Provision is made, as hon. Members who have read the Bill will have realised, in Clause 9 for splitting expenditure, so that that which occurred before 13th November can be segregated from that which has been expended after Budget day—and may, therefore, be disallowed.
  At this juncture of our history tax free expenditure which can be spent on advertising wants tightening up, particularly just now, when we want, if we can, to concentrate on selling goods in overseas markets and damping down as far as we can the demands here at home. Often the goods advertised are in short supply or are luxury goods. Even advertising uses materials which are needed elsewhere in the shape of wood for hoardings and paper. Therefore, there is a good deal to be said for some form of taxation or control of this type of expenditure. This proposition is, however, new. Its application is not easy, and that is freely admitted by my right hon. and learned Friend. For this reason in Subsection (3) he has provided for some elasticity in its incidence, and variations can be made by Treasury Order if good reason can be shown for such variation. I have his authority to say that he will listen with the greatest sympathy to what is said here tonight in order to see what modifications, if any, should be made when that Order comes forward.
  These are our proposals. They are short, and we hope the House will agree with us in saying that they make a substantial contribution towards meeting the additional inflationary pressure which may result from the Government's economic plan. The planned use of a Budgetary surplus is a new thing in our

  1817
  financial policy. We must use it with a certain amount of caution, feeling our way, and not overdoing it, until we are quite sure of our ground. The chief need today is for increased production, coupled with increased saving. While this may be wishful thinking, I am not alone in believing that within the last week or two there has been a most definite change for the better.
  Captain Crookshank: That is the new Chancellor.
  Mr. Glenvil Hall: Production has gone up, both in the coalfields and elsewhere. These, and other signs—such as the attitude of certain workers over the week-end, who worked long, hours of overtime in order to turn round railway wagons—are encouraging. At any rate it is our belief that this country will weather its present difficulties, and that between us we shall win through. It is my earnest hope that the proposals made in this Budget will help us t (c) achieve what I am sure is desired by all—irrespective of part}'—that this country should regain its old and rightful place among the nations of the world.
  4.23 p.m.
  Captain Crookshank: The right hon. Gentleman has limited his speech to describing the Bill to us, except in his peroration, where he seemed to be sitting prettier and prettier. I mean no disrespect to him, but I am sorry that the order of the Debate was not reversed, because I had hoped that we might have heard something further from the Chancellor on the general situation.
  "We have never had any kind of reasoned statement from the Chancellor of what, in his view, his contribution is to the general economic policy of the country as it was debated in a three days' Debate on the economic situation, in this House and in another place."
  Here, of course, I am talking about the Chancellor as Chancellor.
  "The Chancellor took no part in that Debate, the general idea being that he could not anticipate his Budget statement. But the Budget statement was made, and he never told us anything on that occasion about how he was going to use the financial weapon to help us in our very serious economic situation."—[OFFICIAL REPORT, 19th May, 1947; Vol. 437, c. 2021.]
  That is a quotation from a speech made in this House six months ago. Yet exactly the same thing has happened
  1818
  again. The ex-Chancellor did not give us a review in his Budget Statement, and while it would be perhaps presumptuous to say "ditto to Mr. Burke" in that context, I can at least say ditto to the right hon. and gallant Member for Gainsborough, because he it was who said that on 19th May, and he it is who repeats today that, it is a pity that we have not yet had any considered statement. I quite agree that the present Chancellor has hardly had time to do it, but my criticism there is directed to the Budget Statement itself, and to the fact that the then Chancellor told us nothing.
  The right hon. and learned Gentleman comes to these Debates with our good wishes, which I hope he will accept. We welcome him in his new position, and we hope he will be able to get the country out of some of the difficulties into which his predecessor plunged it. So far, of course, he has been very loyal to his predecessor's Budget. I quite understand that, because a Budget involves the collective responsibility of a Government. However, the Financial Secretary has just told us that on, at any rate, one topic, the Chancellor has an open mind. I hope he has an open mind on more than one topic because while the general idea may be the collective responsibility of a Government, the actual details are, and always have been, so far as I know, the particular predilection of the Chancellor himself. He has one way, or another way, or a third way, in which he can deal with the problem, and the actual choice and the very mechanics of budgeting and of Treasury arrangements have to be made by him, so that the right hon. and learned Gentleman can quite safely jettison the bad bits in these proposals, without any loss of face to himself and without an undue slap in the face to his predecessor.
  The present Chancellor said the other night that this Budget and this Finance Bill were not intended as a major financial operation. In my view they should have been, in the face of the crisis with' which we are confronted. This is, if not the first, certainly one of the very rare Budgets which has been introduced, at least on the face of it, not for any purely budgetary financial reasons, but as a weapon in the economic armoury. The Financial Secretary has just pointed out that, according to his present figures, the Budget surplus—which, I may say in

  1819
  passing, we consider completely bogus because of the method in which it was built up by the former Chancellor; but I am accepting for the moment that there was a surplus—is likely to be even larger than was anticipated on that basis. Therefore, there is no technical financial reason for this. It has been brought in, rightly—I hope the right hon. and learned Gentleman does not think I am objecting to it, but it merely adds point to my argument—and we have had produced a weapon to be put to some use, about which we are not quite sure, officially, from the Exchequer.
  So far in these Debates no guess has been given to us to the size of the present inflationary gap, as it is called. The implication has been that this Budget and Finance Bill are meant to deal with the extra accumulation of inflationary pressure which is due to the ending of the American and Canadian Loans, and that whatever inflationary gap there was before that had been looked after by the first Budget and first Finance Act of the year. Of course, we do not accept that premise at all, so we cannot very well accept the conclusions. But if we look—as the Financial Secretary just now had a look—at the general financial situation for the year, to put the matter in its proper perspective, I must remind the House that the Chancellor said there had already been passed just on £10 million worth of Supplementary Estimates; and although the December ones are not yet out, we can be quite certain that there will be a good deal more on that side of the account.
  The ex-Chancellor said, "Oh, yes, but on the other side we have already paid in £31 million more than we had anticipated from the sale of war stores." I was about to say that that may well be, but that is the case as he told it to us. It is not necessarily anything to get excited about, because there has been a general rise in prices all the time, and people will have paid more for the things which have been sold; anyhow, what is being sold this year, and what is being kept for next year, is a matter very largely in the hands of the Government. We must remember that there are bound to be some losses of revenue in the earlier part of the year, because of people not taking up motor licences due to the abolition of basic
  1820
  petrol. Therefore, the figures are not absolutely straightforward. I concede that if we were to accept, which I do not, that there was a genuinely large Budget balance as a result of the previous Finance Bill, there ought not to be over the whole field a diminution of that figure, but possibly an increase. But I do not consider it a real surplus.
  To deal with the situation, it seems to my hon. Friends and myself that one of the most important things which could have been done, which should have been done, and which should now be in the course of being done, is a. drastic cut down of public expenditure. It is not as if this was anything new. It is not new, because both the right hon. and learned Gentleman and the previous Chancellor of the Exchequer have recognised for months past that it was the right thing to do. The last Chancellor of the Exchequer, on 17th April this year, said:
  "There is much scope … for a reduction in some selected parts of our domestic expenditure."—[OFFICIAL REPORT, 17th April, 1947; Vol. 436, c. 461.]
  In his Budget speech the other day, he said:
  "We must reduce the total expenditure."—[OFFICIAL REPORT, 12th November, 1947; Vol. 444, c. 396.]
  In his broadcast that night, he said:
  "There are a lot of other items in our expenditure which, I think, we can cut down without doing any damage to essential national interests."
  Finally, the right hon. and learned Gentleman, in his first speech as Chancellor of the Exchequer, said:
  "Of course, next year the Estimates will be scrutinised with a view to eliminating any unnecessary expenditure."—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 940.]
  Therefore, both the right hon. and learned Gentleman and his predecessor are not only agreed that it must be done, but are agreed that there is a field in which it can be done. It is a glimpse of the obvious to say that next year's Estimates will be. scrutinised with a view to eliminating any unnecessary expenditure, because that is the permanent function of a Chancellor of the Exchequer; by bringing that hoary chestnut out of the' bag, he must have meant that there will be an extra special effort on his part.
  The point I wish to press on the right hon. and learned Gentleman is that in view of all these statements and the

  1821
  obvious rightness of this kind of policy, it is waiting a very long time to see what next year's Estimates are, when one remembers that there is still one-third of the financial year to run. Quite a lot can be done in that time. It is not as if legislation is necessarily required, or anything more than a blue or red pencil with which to slash expenditure that is now running. Admittedly, the right hon. and learned Gentleman has promised us a White Paper indicating the reductions in capital commitments, but I have no idea why this is being so long delayed, unless it is that the Gravesend by-election is affecting the time of its issue. It is very questionable whether the sum of £200 million is anything like enough in this field. There are some economists who say that the slash in capital commitments today should be very much larger.
  Would not the right policy have been to do what we did in wartime, namely, to make and mend on a vast national scale? It is surely better to put up with the inconvenience of the slowing down of capital development, always excepting anything to do with the export trade, or any field of activity which will make it possible for us to develop and feed ourselves, than to risk the possibility, or the probability, of reduced rations all round and further reductions in the ordinary standards which are pretty low already. I urge the right hon. and learned Gentleman that not only in the field of Civil Estimates, as has been admitted, but in the field of capital commitments, about which I spoke six months ago in this House, a great deal should be done and done urgently.
  There is this further point. The right hon. and learned Gentleman said something the other night, which I did not quite appreciate, when he was discussing this point. He said.
  "It is essential that private capital investment, especially in buildings and new machinery, should be limited as far as possible."—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 934.]
  It is not only in the private sectors that that needs to be done, if we are to get out of our difficulties. I hope he was not implying that Government capital expenditure was not also capable of a possible reduction.
  Mr. Austin: Will the right hon. and gallant Gentleman give way?
  Captain Crookshank: No, because this speech was made by the Chancellor of the Exchequer, not by the hon. Member. I understand that the right hon. and learned Gentleman is quite a lucid man, and he is perfectly capable of explaining what he meant in answer to my question. If we take the net annual income at somewhere about £9,000 million, we now find that the sum total of taxation income, plus the rates, plus social insurance contributions, which are in a way a form of tax, come to £3,600 million—that is to say, something like 40 per cent. of the national income. Except in the very short run, that cannot continue. If it is therefore necessary to have a large Budget surplus, we have to cut down both expenditure and taxation. I hope that the right hon. and learned Gentleman will consistently bear that in mind, and will see that both are done.
  This is the first Finance Bill we have had since the introduction of our new Standing Orders. It is already apparent that it has been inconvenient, to put it mildly. We were not able to have a full discussion, after seeing the text and hearing the preliminary proposals, on the Report stage of the Resolutions, which will inevitably mean that this Debate will largely become a Committee stage on points which might have been cleared up then. I regret that, and I expect that the Junior Burgess for Oxford University (Sir A. Herbert) regrets it still more, because he was forced into the difficult position of voting against the proposed Betting Duty, although from what I have heard, his views are that there should be more betting duties all round. He had, therefore, to cast his vote without having any opportunity of explanation. His attitude is, of course, well known, but there are a lot of other hon. Members who would not be prepared to put themselves in that position on that account. It is a pity.
  I do not want to traverse the whole ground, but there are two topics which I should like to discuss, which does not mean that the others are not important. First of all, we shall strenuously oppose the advertisement tax in its present form. We are fortified in doing so, because this Budget and Finance Bill is meant to deal with the increasingly grave situation now developing, and this tax does not profress to bring in one single

  1823
  penny during this Financial Year. It certainly goes against one of the principles of taxation, as the right hon. Member for the Scottish Universities (Sir J. Anderson) said the other day. Not only does it do that, but it also goes a very long distance towards something else, which is equally obnoxious, and that is leaving great powers to the Treasury to decide whether any particular bit of expenditure is or is not advertising within the meaning of the order or regulation to be made. That is a very serious proposition, and, on these two grounds alone, the tax should not be accepted. Beyond that, it is based on a most extraordinary supposition, as I understand it, that is, apparently, that all firms in every trade and in every industry, and, I think, charities and such other organisations as have to advertise or do advertise—the supposition that all these are spending twice as much on advertising today as they should spend.
  That is a most extraordinary assumption. It certainly will fall very unequally between one industry and another, one trade and another. For example, there are great masses of businesses which have to advertise; they cannot help themselves. It is not a question of selling things. How does the right hon. and learned Gentleman suppose that auctioneers can get on unless they advertise where, when and what is going to be auctioned? What about theatres, cinemas and books; what about the mail order business? What about the separation which, I understand, he has in mind, if it is workable, which, of course, it is not, between advertising for the export trade and advertising for the home trade? Does he not realise that over a great field of advertising, advertising in the home field is, in fact, advertising for the export trade? I instance cinemas, for example. If there is a tremendous splash in London about a particular film, the repercussions of that obviously spread far wider than the Metropolis. Then there is the kind of advertising which is, I suppose, almost semi-statutory, like issuing prospectuses, company notices and all that kind of thing.
  One could elaborate it, and I dare say my hon. Friends will elaborate it, but all I would say to the right hon. and learned Gentleman is that I hope he will not feel himself to be committed in this matter
  1824
  by his predecessor's plan. I put it to him that his wisest course is to withdraw the whole proposal. His predecessor drew the curtain aside, and said, "Here is a possible field." Well, let the curtain go back. If, in his wisdom, he really thinks that the Financial Secretary's reason is a good one, and that by taxing advertisements in this way, a certain amount of wood from the hoardings will be saved, let him apply to the Timber Control to see if they cannot put a check on that, without having this complicated machinery to deal with the problem. Let him withdraw it, and, if he finds it necessary—I do not necessarily prejudge the position that there may not be something in the proposal and that somehow or other some revenue could be got from this source—I just do not know—but supposing it was found to be necessary, and supposing it was found possible to do it in some other way—the right hon. and learned Gentleman could do it next year. He will not get anything from this before then. He has no advantage in any way, so far as I can see, by doing it now. This particular plan, whatever one may say about the merits, ethics and common sense or otherwise of taxing advertisements, simply will not bear examination; so let us all save ourselves a lot of time and trouble and when the right hon. and learned Gentleman gets up tonight let him say, "That is the end of that."
  Another point on which I would like to say something is the Profits Tax. Although, naturally, the right hon. and learned Gentleman was not following our Debate so closely in the summer as in future he will have to follow these Debates, he will, no doubt, remember that we offered considerable opposition to it then, largely on the ground that the Chancellor of the Exchequer had propounded it at an earlier period of his existence, and as one writer said:
  "A Profits Tax is wrong in principle, and after the rate has been doubled, the Tax is twice as obnoxious as before."
  I think that has, perhaps, got something in it. What is a much more disturbing argument, and one which is much more strange, is the proposal that the Tax should be doubled on all undistributed profits. I find it very hard to accept the arguments of this Chancellor of the Exchequer—it is very confusing to know which one one is talking about—when he last spoke, when he said that by doubling

  1825
  both taxes there is a greater inducement not to distribute now than there was before. Furthermore, he talked of undistributed profits as a good anti-inflationary measure, which would stop people spending so much money at this moment in the capital goods market. I find that extremely difficult to understand. It seems to me that the argument put up by the right hon. Member next to me is much more correct, and that is, if you double this tax on the undistributed profits, there is much more likely to be a temptation for the money to be spent in the ordinary way of business, and never to go into profits at all, whether distributed or undistributed. If the answer is "To stop people spending so much money in the capital goods market," and if the argument of the right hon. and learned Gentleman is" Oh, no, that cannot be true; they cannot spend it as they want because of all the controls that exist against expenditure," then why do not these controls work equally well at the other stage?
  It seems to me that this particular proposal is silly—the argument that it will tend to stop people spending so much money in the capital goods market— be-cause there is nothing, so far as I can see, to prevent them spending it at an earlier stage, except the controls which should be working over all. The right hon. and learned Gentleman modestly disclaimed taking up all the threads of financial policy in a few days, but I am afraid that in his modesty he must have picked up some of his predecessor's brief, particularly that part of it which is egregious nonsense. The difference is, of course, that he uses it not with the jokes we expected but with all the solemnity and dignity we have learnt to respect in him; but it does not make it any the less nonsense. For example, he said that one of the reasons he was doing this was that the general volume of profits had been excessive over the last year or two. I must admit that I was rather surprised at that statement, and I put the question to the right hon. and learned Gentleman, "Is it a fact, because the ordinary evidence does not show anything of the kind?" The right hon. Gentleman said just now that one or two companies had paid higher dividends than before, but these things are analysed and the statisticians work over a period of years to see what has happened.
  1826
  If the right hon. and learned Gentleman, or anyone else, likes to look at the analysis of over 2,000 companies quoted by the statisticians of the "Economist," this is what he will find in this field. If they are wrong, I think that the Government should admit it; if, on the other hand, they are right, the statement put into the mouth of the right hon. and learned Gentleman by his predecessor is completely wrong. If you take 1939–40 as 100 for the index—the index of the profits was largely stabilised during the war by 100 per cent. E.P. T.—it rose in 1946–47—that is the index—to 137. That is not excessive even at that stage but that, of course, is not distributed. Very wisely, a good deal was ploughed back into businesses following advice from and appeals by, the Government. The analysis shows that the gross ordinary dividend was 130. If we deduct tax the net ordinary dividend in that year, 1946–47, over the whole field, is 111 compared with 100 in 1939–40. I therefore ask the right hon. and learned Gentleman to tell us whether he thinks that is grossly excessive or not? After all, the people, who receive these net ordinary dividends are still subject to the general rise in prices which everybody else has had to experience and, of course, to the drop in the value of money.
  In passing—because the thing is so apt to be linked together—the right hon. Gentleman will also note that, according to the Ministry of Labour Index of Wages for 1939–40, the index of 100 found itself, in September, at 169. As it would be legitimate to take off 10 per cent. for the general run of taxation, P.A.Y.E., and the like, he will see that there has been a different proportionate rise in the two indices. If the argument is that the general volume of profits has been excessive, I say—and I do not think I shall be contradicted—that that is a gross exaggeration. The very premise on which this doubling of the tax on industrial profits is based is wrong. The right hon. Gentleman said earlier that not only would this tax be anti-inflationary, in stopping people from spending so much money at this time in the capital goods market, but he followed that up by saying that he hoped people would invest the money in Government securities. What does he think happens to it now? I leave that thought with him.

  1827
  I conclude by saying that the Budget and this Bill, in view of the deepening economic crisis, are merely a step in the dark. The Chancellors, present and past, think that this enormous increase in taxation over the next financial year, with a very small effect this year, will be sufficient. We do not; we say that what should be done now is drastically to cut public expenditure in the last one-third of this year. Under no system of tax proposals can very much be got in at the tail end of a financial year, because the machinery and all the rest of it have to be established, and staffs collected, and so on. But the cutting down of public expenditure can be done, and in view of what the Chancellor said the other night, and his predecessor said before him, I feel sure that he will take this advice most seriously to heart.
  We do not propose to vote against the Second Reading of this Bill, because we know quite well that much ought to have been done and should be done now—"now" is the important word—to deal with our present situation. We also know that, as usual, the Government have gone mostly the wrong way about it. They have the knowledge, information and best estimates of what the situation is that we have to meet and if, with that knowledge, they wish to sin against the light there is nothing we can do to stop them. We also know this, and I expect every one else in the country is beginning to know it too, that if it had not been for this Government we would not have been in our present situation. The errors, more particularly the financial errors, of the most disastrous Chancellor of modern times are the Government's errors, but the cost that has to be paid for those errors, misjudgments, and miscalculations, has to be borne by the whole nation. The real answer to this Budget and this Bill is the one which has been given so many times in this House before, and which will be repeated to the end—we must get rid of the Government.
  4.53 p.m.
  Mr. Ronald Chamberlain: The right hon. and gallant Member for Gainsborough (Captain Crookshank) has deplored the fact that we are not discussing a wide-range Budget such as we normally have earlier in the year. Those
  1828
  on these benches agree, I think, with the ex-Chancellor and the present Chancellor that a general survey was not necessary at this time, nor was it the purpose of the present Budget. Indeed, it has been made quite clear that the Budget has one purpose, and one only—to take measures against inflationary tendencies. The right hon. and gallant Gentleman also referred to the necessity for cutting down public expenditure, but he did not make it clear to this side of the House what public expenditure he would cut down.
  We have pressed Members opposite to make that point clear, but we are just as much in the fog as ever. We do know this much: that the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) would have delayed the introduction of certain social Measures which we consider of paramount importance. He has made that quite clear, and in his speech on the Budget, in April, he made it clear that he would have cut down the food subsidies this year. The right hon. Gentleman seemed to fog the general issue in his recent speech by quoting only a part of his earlier statement. If Members will look at Column 202 of HANSARD, which gives the right hon. Gentleman's speech on 16th April this year, they will see that the right hon. Gentleman suggested that food subsidies should be reduced now. I do not think that any of the process of "fogging" which went on a few days ago can get the right hon. Gentleman out of that position.
  There are some on all sides of the House who feel that this Measure does not go far enough in various directions, that in some ways it is inadequate, tentative, and out of focus. We differ, of course, very much on the question of how we would wish to deal with the present situation, and on what I consider to be the inadequacy of the Budget proposals. My approach to this matter—and I hope it is clear—is that we have made in this Bill strenuous efforts to catch a lot of little fish while allowing the big fish to get away with it. No wonder indeed that the Stock Exchange rallied immediately the Budget proposals had been made known. No wonder, if I may say so, that my right hon. Friend the Financial Secretary said that the Budget proposals, in particular those with regard to the Profits Tax, had

  1829
  been, to use his own words, "well received in the City." In the opinion of myself, and many on these benches, it has been far too well received in the City. While these endeavours have been made to catch what I call the little fish, the ordinary people of this country, who have had fresh imposts put on them in the way of Purchase Tax—it is largely they who pay the Purchase Tax—the additional penny on beer and the Betting Duty, yet the Profits Tax, which the right hon. and gallant Gentleman the Member for Gainsborough deplored, though my deploring is of a very different nature, has only gone up from one eighth to one quarter. In my view it should have gone up, and I hope it will go up, considerably higher.
  Mr. Beverley Baxter: Would the hon. Gentleman tell us in what way the Betting Duty is hard on the people who bet? In what way does it take money out of their pockets?
  Mr. Chamberlain: I will refer to the Betting Duty later on. I was at the moment indicating that there are imposts in a general way, including those I mentioned, on the ordinary people which are hard for them to bear; whereas these tremendous profits which are still slipping through the net, and will continue to do so, are hardly being touched. The Chancellor of the Exchequer, last April, said:
  "I cannot pretend to be satisfied with the large increases in distributed profits and the higher dividends which have been paid out in so very many cases in the last 12 months…. These increased dividends are the clearest case, anywhere in our national economy, of an inflationary element."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 84.]
  My right hon. Friend the Financial Secretary to the Treasury said that profits were running at a very high level. That, in my view, despite what the right hon. and gallant Member for Gainsborough said, is an understatement of the fact. In the Debate on the Address I referred to, and I want again to refer to, what I called then, and will call again, the "golden harvest" which is being reaped. One has only to look at the "Financial News," or, any other financial records, any day of the week, and, despite what all the statisticians may like to evolve—and they can evolve anything out of figures, par-
  1830
  ticularly with a selected number of firms—it will be seen that the profits are running at a tremendously high level. I have in my pocket a number of examples quoted from the "Financial News" over a period, and I would give them to the House if it were desired. I noticed only a day or two ago that a firm owning 46 licensed houses—Levy and Franks—have just declared a final dividend of some 150 per cent., making a total of 225 per cent. No wonder their shilling shares are being quoted at 23s. 9d.
  Mr. E. P. Smith: Would the hon. Member inform the House of the amount of capital on which that dividend is declared?
  Mr. Chamberlain: I have not got the actual figures here.
  Mr. Smith: It is £25,000.
  Mr. Chamberlain: Whatever the capital may be, it does not alter the statement that it is a golden harvest being reaped. At this time when the Chancellor is anxious to avoid inflation, that amount should be heavily reduced. I do not think all the talk in the world will get over the fact that a golden harvest is being reaped. Messrs. Kleemans, a firm of plastic manufacturers—and one can see this in today's "Financial Times "—have declared a final dividend of 150 per cent., making a total of 270 per cent. There are dozens of examples of that kind of thing to be seen. Their net profit was £214,000 this year, compared with £64,000 a year ago. In case after case—I could give many more if it were necessary—there are dividends of 25 per cent., 50 per cent., and 75 per cent. being paid. I think it is totally inadequate that the Profits Tax should be raised merely from I2½ per cent. to 25 per cent.
  The whole distribution of the national income has got to be reviewed by the Chancellor of the Exchequer and by the Government if we are ever to reach a proper perspective and a proper balance in this matter. It may interest the House to realise from Treasury figures, which can be verified, of the Income from Work and Property last year, that the amount represented by interest, profits and rent was 41 per cent.; even after the imposition of Income Tax, the item of interest, profits and rent represents 33 per cent. of the total income of the country. In this year of grace it is my opinion that

  1831
  far too heavy a proportion of unearned income is represented by that figure—that there should be practically one-third represented by interest, profits and rent, even after the deduction of tax. Only when the Government have tackled thoroughly that unbalance and lack of perspective in the whole national income, shall we ever get a proper state of balance and a real avoidance of inflation. In this Bill taking Purchase Tax, which, in the main, is paid by the people of this country generally, and beer—I do not add any other item—they together in a full year will be paying £113½ million, in addition to the imposts already upon them, whereas the Profits Tax net additional impost in the whole year will merely be £47 million. I repeat £113½ million on those two items that I have mentioned as against £47 million, and yet we have the squeal from the other side of the House that they, and the industries and businesses they are defending are being hardly dealt with.
  My own desire and wish, and the wish of many on this side of the House, is that if no further impost is levied on profits this year in this present Budget—and I would like an assurance on the point—something much more drastic will be done in the April Budget about what I continue to call the "golden harvest." Let me say, to show I am not hide-bound in my views, that I entirely agree with what the right hon. and gallant Member for Gainsborough said when he regretted there was an increase in the tax on undistributed profits. I think that there, again, we are out of perspective. There should have been a considerable tax—I suggest 50 per cent.—on distributed profits, but I would prefer to have seen the figure of 5 per cent. retained on undistributed profits. It would be a wise policy and would have tended to retain finance and to have ploughed back into businesses a considerably increased amount.
  I disagree with the proposal made from this side of the House at this time for a capital levy. Twenty-five years' ago I, and I expect many others on this side of the House, were preaching the rightness and justice of the capital levy, and I still think the time may come when that should be imposed, since the crushing burden of the National Debt can only be alleviated in
  1832
  that way. But. I do not think that the present is the moment to do it. I think its present effect would be more inflationary than deflationary.
  I want to commend to the Chancellor of the Exchequer the need to look at capital appreciation. During the Debates on the Budget statement, we have had many examples of capital appreciation. The hon. Member for Dover (Mr. J. R. Thomas) told us about certain greyhound-racing tracks which had been purchased a few years ago at a quarter of a million pounds and was sold the other day by an individual for £1 million. An additional three-quarters of a million pounds went into that man's pocket absolutely scot-free, while ordinary people all over the country are being expected to pay their additional penny on beer and are being prevented from exercising any inflationary tendencies. While this capital appreciation is an extremely difficult thing with which to deal, and perhaps in some ways as elusive as the bookies, it would be very unsatisfactory if no measure could be designed to catch that tremendous harvest that is being reaped, not only on race-tracks but also on the sale of houses, which has already been mentioned, although I know that that is in a somewhat different category in that the seller of a house has generally to purchase another. However, there is house property in the shape of blocks of property, shop property and a thousand and one other things of that kind which do enjoy tremendous capital appreciation and which go absolutely free of any kind of tax. It is wrong that it should be free of tax for it is an inflationary element of the worst sort. Again, I commend that point to the Chancellor of the Exchequer.
  I want to say one word with regard to the Betting Duty. I want to reinforce what has been said on all sides of the House, namely, that it seems wrong that one particular form of betting, that is dog totes, should suffer this tax, and that horse racing, despite all the specious arguments which we have heard from the Financial Secretary to the Treasury and which are wearing a little thin, should escape untaxed. It is certainly wrong that the bookies should go free. I am bound to quote what the former Chancellor of the Exchequer said so very definitely and deliberately in April. He said:

  1833
  "… to tax 'totes' and pools alone, and let the bookmakers go free, would be wrong, it would be unjust, it would be repudiated by all right-thinking men and women."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 78.]
  I cannot think that inside a few short months either he or the Government should change their mind so far as the rights or wrongs of this matter are concerned. [An HON. MEMBER: "There are obstacles."] It may be there are obstacles, and if the Members of the Opposition disagree with this differentiation in that respect, I am with them, as are many on this side of the House. The Government must have the courage of their convictions, if those were the convictions which were indicated by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), and they have, as the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden) said, to deal with this matter as one of principle. If a thing is right in principle, a mechanism has got to be found, and we ought to be able to find the mechanism. Therefore, I hope there will be registration of bookmakers, and that the whole matter will be dealt with in the April Budget not in this half-hearted and sloppy manner, but properly, comprehensively and scientifically.
  Finally, I want to reinforce the three points that I have made and, in so far as it is practicable to alter these things, to appeal for action in a drastic manner. I want an assurance from the Chancellor of the Exchequer when he replies tonight, firstly, that the Betting Duty will be put on what I consider to be a proper basis instead of on the halfhearted basis on which it stands at present; secondly, that in the next Budget there will be a radical increase of the Profits Tax, certainly on distributed profits, although personally I should like to see a decrease in regard to the undistributed profits; and thirdly, that full consideration will be given to the question of a tax on capital appreciation. Only when these measures are put into a further Bill and brought to fruition shall we see what is, I think, the basic principle of this whole matter, which has been enunciated from the Front Bench again and again—a real equality of sacrifice between all classes of the community, instead of a lopsided measure of sacrifice, as I consider it to be at present. And only by such measures will we get the financial
  1834
  picture put into its proper and permanent perspective.
  5.17 p.m.
  Sir Arnold Gridley: I was going to confine what I have to say to the advertising Clauses, but before I do so I am provoked by the hon. Member for Norwood (Mr. Chamberlain) to say two things about the points he has endeavoured to make. He has tried to create prejudice by quoting the cases of a very small number of companies which are paying what is admittedly a high rate of dividend. He knows perfectly well that there are thousands of companies, by far the greater proportion engaged in industry, that pay but a modest dividend to their shareholders. It is quite misleading to quote the circumstances as he did, without disclosing, what perhaps he does not know, all the details and not being able to deal with the capital structures to prove whether the dividends are really extravagantly high or not.
  Mr. Chamberlain: May I answer that point? I can assure the hon. Member for Stockport (Sir A. Gridley) that I have in my pocket sheaves of notices in regard to high dividends and record profits, statements that no profits of that nature have been declared since 1929, and so on. With regard to the other point he has mentioned, I would be very glad to welcome a graduated tax, if that would satisfy the Chancellor and my hon. Friend, so that it would be graduated to bear relation to the capital concerned.
  Sir A. Gridley: It would be very interesting to know whether these companies of which the hon. Member said he had a long list in his pocket, are doing what the Chancellor wants them to do, namely, their utmost to deal with the expansion of the export trade of this country.
  Mr. Chamberlain: Some of them are.
  Sir A. Gridley: I have no doubt they are. The hon. Member said he would like to see a 50 per cent. Profits Tax on distributed profits. Let him consider for a moment what the position of a company will be which has debentures, and say £500,000 in preference and £250,000 in ordinary shares. If a tax like that were put on the profits, what would be left,

  1835
  after paying the debenture interest and preference dividend, for the ordinary shareholders?
  Mr. Chamberlain Mr. Chamberlain rose—
  Sir A. Gridley: No, I am not going to give way again. The hon. Member might make another speech on the subject. I do not want to offend hon. Members by being too long on my feet. I want to come at once to these advertising Clauses. In the short time that has been available to me since the Finance Bill appeared in the Vote Office, it has not been possible to have adequate discussions with those of my colleagues engaged in industry throughout the country, but so far as we have been able to confer with one another, and between one industry and another there is unanimity of opinion that these Clauses are utterly impracticable and quite unworkable. If the Treasury attempt to impose them, they will meet with utter failure. I hope to show why in a very few sentences.
  What is the objective of these Clauses? We understood from the ex-Chancellor of the Exchequer and also from the present Chancellor that the objective is to make better use of manpower, to reduce the amount of material used and, in particular, to reduce the present inflationary pressure. It is estimated that the tax will raise £10 million, but that is, I believe, considered of secondary importance. Will manpower and material be saved? Will the inflationary pressure be reduced, by allowing people to go on advertising to a very great extent, as this Clause proposes, if indeed one knows where one may advertise or what one may advertise, because of the very indefinite way in which the Clauses have been drafted?
  The Financial Secretary to the Treasury, if I understood him correctly, said that all that would be defined presently by a Treasury order. Industry is completely in the dark at the moment as to how their advertising programmes are to be affected or to what extent then-accounts will be affected, until the order in question can be seen—when it comes. The first objection to the order has already been referred to by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank). It is that this type of tax violates a long established principle of taxation. In all business
  1836
  transactions and conduct, working expenses are treated as revenue expenses, which are allowable from profits before profits are taxed. If it is attempted to provide a capital asset out of income, however, that is not allowed. For the first time, I believe, here is a tax proposed which vitiates that long established and wholesome principle. For that reason such a tax should be avoided by any Government, unless there is no alternative method of raising the finance required.
  I would like to find anyone who can define what advertising is. I have tried to do so in the past few days. There are a hundred and one forms of advertising. It would surpass the wit of man to give a definition. I challenge anyone in this House to endeavour to define advertising, going through all the various types of advertising that are possible. What is advertising? What is intended to be caught by the provisions of the Bill, and what is not? Would the Bill include, for example, advertising not only goods which are to be sold but goods which one wants to buy? I have had letters from people in my constituency who are very much concerned about this matter. They do a mail order' business, which is done entirely by advertising and by the distribution of booklets which advertise what the firm may from time to time have to sell. If they are prevented from advertising, there will be the gravest risk of their business being completely smashed.
  The only alternative left to them would be to employ salesmen to go round the country to advise their customers what they might have to sell during the next quarter or the quarter after that. That, surely, would absorb more labour and not less? That is one reason why I very much doubt whether the objective which the Treasury have in mind is likely to be reached. Again, as my right hon. and gallant Friend pointed out, how is it possible, in connection with advertising, to divorce what part of the advertisement affects the home trade and what part affects the export trade? It is utterly impossible to divorce the two. That is another dilemma which will face the Government if they go on with this proposal.
  Difficult as it is to decide what is advertising and what is an advertisement, who can decide what are trade journals?

  1837
  That is another headache. I am particularly interested to know the answer, and I would like the Chancellor to tell me whether the Chambers of Commerce journals which are circulated in big towns and cities, and the cost of which is covered by advertisements, will be allowed to continue. If advertising is disallowed, those journals will cease. One consequence will be that we shall not be able to do what we are doing today, endeavouring to give our members through those journals information on how firms which never did export business before can get into touch with exporting houses or with firms with whom they might be able to arrange sub-contracting and so increase the exports which are so vital to us at the present time. Great damage can be done to the export industries of the country if arguments of this kind are not given the most careful consideration.
  I pity officials of the Inland Revenue who will have to decide with accountants of companies or their auditors what has been properly allocated to advertisement expenditure and what has not. We know that Inland Revenue staffs are hopelessly overburdened at present and are months behind-hand with their work and that the Local Government Bill will, after it is passed into an Act of Parliament, throw upon them still more burdens. Now it is proposed to add yet another burden upon those harassed, overworked people by calling upon them to act as policemen when the accounts of companies are investigated, in order to see what is or what is not liable for taxation.
  Again, there will be severe discrimination between one set of industries and another. There are industries which are price controlled and there are others which are free from price control. This Budget will act very hardly upon those whose prices are controlled. Companies which are free to charge what prices they can get within reason will be able to pass on to their customers any increases of taxation they may have to pay under these Clauses, but industries which are price controlled will not be able to do so. Why is there to be this discrimination?
  With regard to the allocation of advertising and development expenditure, I should find myself in a very great difficulty, in dealing with the concerns with which I am associated, in trying to make
  1838
  a fair allocation. Let me explain what I mean. Some of my concerns advertise extensively. Others take a stand at an engineering exhibition at Olympia or, as we intend, in spite of the Bill, at the British Industries Fair in Birmingham in a few months' time. We have been accustomed to charge the expenses in regard to these items to advertising. It is one method of advertising, just like putting goods into a shop window in order to let people know your goods and your prices. Do the Government wish to discourage us from exhibiting in this way? We expect foreign buyers to come in their thousands to Birmingham, and we are anxious to show them what we can make and what we are prepared to export. It would be a shocking thing if we were not allowed to treat that as a proper working expense. What we ask is that expenditure of that kind should, without any doubt, be treated as proper working expenditure.
  I have said that the Government wish to do something to reduce the present inflationary pressure. We are all anxious, even though we may be adversely affected by these Clauses, to help the Government in some better and workable way—not this impracticable way—to attain their objective. I reinforce the appeal made by my right hon. and gallant Friend the Member for Gainsborough, who pointed out that these Clauses would bring in no revenue in this financial year. Therefore, what is the need to rush through Clauses like these which will pro"-duce nothing this financial year? Why not withdraw them, as has been suggested; think again, and be ready when April comes to put forward a better alternative which will produce the result which we are all anxious to see secured?
  Mr. Glenvil Hall Mr. Glenvil Hall indicated dissent.
  Sir A. Gridley: The Financial Secretary shakes his head—
  Mr. Glenvil Hall: Might I remind the hon. Member and the House that this is not a tax, but a disallowance of certain expenses for tax?
  Mr. Jennings: It is much the same thing.
  Mr. Glenvil Hall: No, Sir. We are not expecting revenue from it in the sense that a tax levied in the ordinary way brings in revenue.
  Captain Crookshank: It says something about £10 million in the White Paper.
  Sir A. Gridley: However we may like to interpret it, the effect is precisely the same. It will be an additional burden upon industry in a way never before proposed. I was saying that the Financial Secretary was shaking his head. Let me remind him that the Treasury had some very objectionable Clauses, Nos. 12 to 17, in the preceding Finance Bill, and they were quite prepared to stand and fight for them until they heard the arguments. After hearing the arguments against those five Clauses, they went away and had second thought, and they withdrew the lot and substituted one or two much less obnoxious Clause, to which we were able to give our approval. I suggest that similar action be taken now. The Financial Secretary is aware that talks are going on at present behind the scenes in an endeavour to find an alternative method of helping the Government to achieve what they wish to secure. I hope the Chancellor will be able to tell us that he is willing to withdraw these Clauses on the understanding that the matter may have to be dealt with again next April, not in this form, one hopes, but in some better alternative form which has been agreed between the industries affected and himself.
  5.34 p.m.
  Mr. Palmer: It seems to be my fate to follow the hon. Gentleman the senior Member for Stockport (Sir A. Gridley), but he will forgive me if I do not carry on his argument, because he dealt with a specialist topic and I want to make some rather more general points. As stated by my right hon. Friend, the purpose of this Bill is to counteract in the home market the special danger of inflationary pressure and of inflation itself brought about by the new intensive export policy and the import cuts. This kind of argument does not suit hon. Gentlemen opposite. They do not like the justification for the Bill put in that way.
  The right hon. and gallant Member for Gainsborough (Captain Crookshank) said, in effect, that the Spring Budget had left an inflationary gap yawning in the national economy, and he argued that, besides performing this special task, the present Finance Bill should repair what he said was the neglect of its predecessor.
  1840
  I do not think any of us on this side dispute the existence of an inflationary potential, but we do dispute the argument that there has been some neglect by the Government in dealing with it. If the Government is charged by the Opposition with not dealing with this inflationary pressure by using the Opposition's methods, I hope the Government will plead guilty; but the Government, because it does not use the methods advocated by the Opposition, is not guilty in the eyes of most of us on this side, and I am convinced that the Government is not guilty in the eyes of many millions outside this House.
  While hon. Gentlemen opposite may be very genuinely interested in reducing the inflationary pressure, it is their method of doing it which captures their imagination, and, for that matter, captures the imagination of hon. Members on this side. I hope that my right hon. and learned Friend the new Chancellor of the Exchequer—we all wish him every success in his great task—will be very much on his guard against the subtle suggestions of the Opposition. The Opposition are most anxious to make those suggestions to him. The right hon. and gallant Member for Gainsborough is quite prepared to select the tools for the Chancellor of the Exchequer to use if the Chancellor of the Exchequer can be persuaded to do the job. If in this process they can persuade the new Chancellor of the Exchequer to demolish the work of his predecessor, they think that would be all to the good and something on the side of virtue, as far as they are concerned. Naturally, hon. Gentlemen opposite are extremely careful in their approach. They rather sneered in our previous Debate about the concern of this side of the House for electoral considerations, but they are by no means blind to electoral considerations. The economic realism of the City must be balanced at every stage against possible electoral consequences. That, of course, is the eternal Tory problem.
  After listening to the Debate that we had on the Budget Resolutions, I came to the conclusion that if the views of the right hon. Gentleman the Member for West Bristol (Mr. Stanley) and of the right hon. and gallant Member for Gainsborough were added to those of the right hon. Member for the Scottish Universities (Sir J. Anderson), and we subtracted the.

  1841
  views, for instance, of the right hon. Member for Bournemouth (Mr. Bracken)—
  Mr. Brendan Bracken: I have not got any.
  Mr. Palmer: I do not think any of us will accept that as a plausible remark from the right hon. Gentleman. Then if we add to that—
  Captain Crookshank: Can we have a blackboard?
  Mr. Palmer: This is certainly a kind of mathematical statement, but it is the result which is so interesting. If we add to that, say, the view of the hon. Member for Monmouth (Mr. P. Thorneycroft), squared—and I think in this matter he has possibly been squared—it comes to this: that the views of hon. Members on the other side can be put under two headings. The first is that they believe that public purchasing power is too great and should be reduced; secondly that State expenditure is too high and should be curtailed. There is one action alone which if taken, would correct both these defects if they be defects. Obviously, increased taxation will not correct them because that reduces purchasing power but still permits an extremely high level of State expenditure. Nor will cuts in the Armed Forces, for the opposite reason. Of course, many hon. Members on this side are very much in favour of cuts in the Armed Forces. No, the only thing likely to satisfy hon. Members opposite is a cut in the social services and that, of course, is their real policy—[An HON. MEMBER: "Perfectly ridiculous."] It is not perfectly ridiculous. They simply have not the honesty to admit the truth, and they are not likely to do so until the result of the Gravesend by-election is known.
  The hon. and gallant Member for Ayr Burghs (Sir T. Moore) said it was nonsense to suggest that the Tory Party has in view any cut in the social services. Yet many hon. Members opposite have been arguing in favour of a cut in food subsidies and, in the present circumstances, food subsidies are an extremely important and valuable social service to the people of this country. In fact, I think hon. Members opposite are so obsessed with this idea of a cut in food subsidies that they have given up worrying about whether or not it will counter
  1842
  inflation effectively. For instance, the hon. Member for Monmouth, who I am sorry is not here this afternoon—[An HON. MEMBER: "He is at Gravesend "]—but who is quite typical of his hon. Friends, though he expresses himself a little more plainly than most of them, said:
  "If we tackle these food subsidies, if we are bold about our policy in relation to indirect taxation, then we should and must reduce direct taxation. Again, I shall not be pendantic about precisely how we should reduce that taxation. We should reduce that by an amount which is equal to 6s. 8d. in the pound in Income Tax."—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 880.]
  I suggest that in these matters we should call things by their right names, and to cut food subsidies under present conditions is not anti-inflationary; it is a transference of income from the not-so-well-off to the better off. I think, therefore, that the wisest policy in these matters is that which is being pursued by the Government, to dam back the inflationary pressure by relying on physical controls, rationing and so on as the main auxiliary to taxation and savings.
  I believe that this Bill, generally, is a good Bill and adequate for its admittedly limited purpose. I think it is justifiable to increase the Purchase Tax under present circumstances on not absolute necessities. I do not think anyone claims seriously that the advertising tax proposals will cripple industry, but I hope that in Committee my right hon. and learned Friend will look favourably on any Amendment which seeks to modify the form of tax allowance to suit conditions of particular businesses—a good example of that is the mail order business. I am in favour of the limited duty proposed on pool and greyhound gambling as an experiment. I have no particular objection to it as far as it goes, but it does not go far enough.
  I thought my right hon. Friend the Financial Secretary was particularly weak when he answered the interjection made by the senior Burgess for Oxford University (Sir A. Herbert); he did not seem to believe in his own arguments as far as the new duty on gambling and betting was concerned. In the long run I feel that we must either tax gambling as a whole or not tax it at all, though this may be a preliminary canter. Under the present proposals the bookmaker will have an advantage, and in that connection I would refer the House to an article

  1843
  which has appeared in that very moderate and sensible publication, "The Tribune," for this week. In that article my hon. Friend the Member for Reading (Mr. Mikardo) puts up a persuasive argument for a special licence for book-makers. I suggest that my right hon. Friend the Financial Secretary pays some attention to that article, which will not take him long. It certainly impressed me with its good sense, but then perhaps I am easily impressed.
  In the few minutes that are left to me, I come to a point of criticism. The main objective of this country under the present admittedly difficult conditions—though not as difficult as they would be if hon. Gentlemen opposite were in power—is to do more with far smaller resources than we possessed in pre-war years, and everything that makes for increased and better production is good, while everything that operates the other way and reduces production is bad. That applies to hours, controls, economic and financial policy. Therefore, I applaud the Finance Bill for sticking firmly to the principle of as much equal sharing of burdens as can be managed, and I recognise the Bill to be a substantial contribution towards mopping up any threatened inflationary pressure. However, an omission, which I think can be repaired in the Bill we shall have in the Spring, is that very little has been done in this Bill to strengthen production incentives. It is not beyond the wit and ingenuity of the present leaders of the Treasury—it was not beyond their wit and ingenuity under the leadership which has been enjoyed since the General Election of 1945—to devise new systems of taxation.
  I throw out this suggestion to them: why cannot we have a system of taxation by which every company or manufacturing unit which exceeds its production figures shall be entitled to claim certain taxation rebates, provided, of course, that these rebates can be shared on an agreed basis between managements, employers and workpeople? The method to be devised for making the share-out could be on the agenda of the production committee. I know that hon. Members opposite do not like to be told this, but we must go on telling them. They must understand that the system in which, curiously,
  1844
  they still believe, in which all win any prizes they can, may give results after a fashion, but in the view of those of us on this side of the House, only at a tremendous price in suffering and poverty. The great majority of people are no longer prepared to pay that price. So far as this party is concerned, the new organisation of the productive processes under conditions of full employment has come to stay. I therefore press this on my right hon. Friends on the Front Bench. Without output of real national wealth, stimulated by financial policy as much as by every other kind of policy, there can be no real permanent hope of a steadily increasing standard of life for the people of this country.
  5.52 p.m.
  Mr. Edgar Granville: The hon. Member for Wimbledon (Mr. Palmer) will forgive me if I do not follow him in his detailed argument, with much of which I would not find myself altogether in complete agreement. In any event he has beaten up a certain liveliness in the Debate in which so far a great deal of interest had not been shown. Ever since this Budget and Finance Bill were introduced, there has not been a great deal of interest, and it may be this afternoon that the Debate on the state of the nation, in another place not so many miles away, is arousing more interest than is evinced in the Debate in this House.
  I wish to refer to three points, the Profits Tax as it affects production, the advertising tax, or disallowance, as we have been told by the Financial Secretary to call it, and to overheads in expenditure as they affect the Budget, which were referred to by the right hon. and gallant Member for Gainsborough (Captain Crookshank). I do not complain of the doubling of the Profits Tax. There is some question about the date of its imposition, but we accept the fact that the Chancellor of the Exchequer has to get his revenue. I criticise it because it is unimaginative. Let me suggest to the Chancellor that if production is the vital curb on inflation and exports depend upon it—and all the pundits on inflationary pressure, gaps, targets, and so on tell us that this is so—I would like to see the Treasury produce some sort of tax rebate on increased production over and above a certain amount. In association with that kind of

  1845
  rebate, a rebate on what is known as the overtime tax—that part of a worker's earnings which, when he is working overtime, becomes subject to taxation—could surely be devised by the experts in the Treasury. The rebate could be given the worker in the form of national bonds, which would be an additional form of savings for the country, and an incentive to increased production. I criticise the Profits Tax not so much because of its incidence, but because at this crucial period in our economic crisis, although the Budget and the Finance Bill bear all the hallmarks of having been hastily prepared and produced, something in the nature of an economic and imaginative tax should have been prepared by the Government. I am sorry that the hon. Member for Norwood (Mr. Chamberlain) is not in his place. In his speech he read from reports in the "Financial News."
  Mr. Stanley: The "Financial News" does not exist.
  Mr. Granville: The "Financial Times." I am of course grateful for the correction. The reports showed a number of company annual dividends and profits. I hope that his hon. Friends who support the Government will not believe that that is the whole story of the present financial and company-profit earning position of the country, and that when they read these accounts they will not allow themselves to live in "cloud cuckoo land" and believe for one moment that that is the real economic state of the nation at present. Anyone who has anything to do with industry today knows that a considerable shake-up is going on. As I listened to the Financial Secretary, who was speaking optimistically, I felt perfectly certain that if he consulted the Board of Trade they would tell him something of what is happening in trade and industry today. Maybe it is a change-over; the old cost plus system, which did not matter during the war and when a sellers' market was good, but the sellers' market is fading fast, and the Board of Trade know that. Banks are tightening credit to business men every day on a considerable scale all over the country. I hope therefore that hon. Members opposite will not take current annual reports which cover the past year as indicative of what is happening in industry today.
  1846
  Affecting this interim Budget, and much more the Budget of next April, is something of a more serious character. That is the drastic export shake-up going on at present.' This may be a temporary trend, in which event it is all right, but, if the trend continues, it may undermine the whole of the financial calculations for the next Budget. Orders abroad are being cancelled on a very large scale. Ministers deal with questions of production in round figures when referring to coal, iron and steel and so on. These are not the main export industries and commodities making up our exports. I prophesy that we have to introduce an emergency export scheme within the next six months to direct production to new markets. Orders are being cancelled by overseas customers to an alarming extent as the importer in foreign markets cannot get the currency because his country happens to be short of it except for bare essentials. The result is that importers cannot get import licences.
  I have heard of many instances of goods being exported from this country and having to be sent back, and also of goods being dumped on the quayside with licences cancelled. As the Financial Secretary knows, the growing anxiety of the Department of Overseas Trade is that while our workers in this country may be bending every effort for maximum production our markets abroad are drying up. Foreign countries' import lists are getting shorter and shorter. The Chancellor of the Exchequer, in a previous speech, referred to the fact that we may have to store these unwanted goods in this country. Let us not live in an optimistic haze and quote 150 per cent. dividends as an indication of present economic trends. If we have to store exports on a large scale, which will affect our overseas balance and our overseas purchases of goods and foods, the revenue and the next Budget might be seriously imperilled, as the right hon. and learned Gentleman must know.
  I turn to the advertising tax, or disallowance, as the right hon. Gentleman called it. However one looks at the tax—and this afternoon the right hon. Gentleman has given another explanation to soften the blow—it hits the little man. It hits new enterprise, fresh ideas, and the development of possible products for export. The Treasury gets its revenue from the little man in this country. Let

  1847
  hon. Members opposite attempt to introduce a new product today against the big monopolies. The man, for instance, who comes from out of the Forces and starts his business, or thinks out a new idea, a new design or a new product, has to advertise it to make it known, and he is in competition with people who have been advertising an established product for 20 years. This tax is slamming the door in his face. It hits the small business. I am becoming increasingly concerned about this tendency. Ministers seem to like the "big boys," and big industry, the large monopolies. I wonder why. This Government have never tried to tackle monopolies. There is no Sherman Anti-Trust bill in this country. In our Estimates here we unblushingly pour thousads of pounds per year into the hands of the big concerns, but the Government think nothing about slamming the door in the face of the little man. In the future we may have to depend on the little man for our home trade and for much of our export trade, and I join in supporting the right hon. and gallant Member for Gainsborough in appealing to the Government to reconsider this unfortunate tax.
  I know it is the fashion of hon. Members opposite to challenge anything that is said on this side of the House about cutting down overheads by asking, "How would you cut down national expenditure?" Do hon. Members think that the present national administrative machine is efficient? Whether it be a business or a nation, if the overheads are too big, its administration is inefficient because of that. Something will happen before long. The national overheads of this country are top-heavy. They are an excessive oncost on production. The workers know it. There are 23,000 agricultural workers still in the Services. I would get them out of the Forces and put them to work en food production, where they would be earning something for the National effort. I would take a great number of people from certain Departments of State.
  As I have said, businesses have had to make a transition from war to peace. Under the old cost-plus system, it does not matter what is charged, the Government pay. Now it has become essential in businesses to cut down the costs of one's overheads. Is it
  1848
  being done in all Government Departments? I heard a Minister state the other day that Government Departments are hopelessly overcrowded and short of offices, which is another way of putting the point I am making. It may be that the Government or the Treasury have never had the time to prune and get efficiency and economy in national administration, but the national overheads including the Forces, are such an enormous burden on the productive effort of the industries of this country that the Government will be forced to take that action. That is what I meant when the hon. Member asks me about reducing national overheads.
  Successive Chancellors and Financial Secretaries tell us from that Box, Budget after Budget, interim Budget after interim Budget, that all we have to do is to make an extra effort and we are round the corner. It is rather like getting round Tattenham Corner—calling on a horse for a spurt round the corner to get into the straight, only to find, on getting there, that someone has moved the winning post, and that anyway someone has lodged an objection for bumping and boring. I do not think that we shall get through by making those appeals from that Box. This interim Budget, this Finance Bill, is something of an anti-climax. Let us make no mistake, the financial and economic question which we shall have to face five months from now is whether we can maintain the present standard of life of the masses of the people of this country. All else is mere academic discussion.
  I believe that the Budget which the Chancellor of the Exchequer may have to present next April may redesign the whole of our national economy, and nothing less than that. Of course the answer lies with the Chancellor of the Exchequer. It is very much in his hands, but he cannot succeed without the full confidence of the nation behind him, because in all these matters, just as in 1931 the magic word is "confidence." [An HON. MEMBER: "Confidence trick."] That may be, but it was not thought to be a confidence trick by people abroad who had lost their confidence in this country. We are an international country round which we cannot build a wall and say that it does not matter to the rest of the world. The right hon. and learned Gentleman knows and appreciates that.

  1849
  An hon. Member mentioned Gravesend. I do not believe that Gravesend can unscramble this omelette. This is a policy which has been initiated by this Government and it cannot be unscrambled in bits and pieces. If I were an elector at Gravesend, I would, in our present economic difficulties, vote for the man, even irrespective of party, who would make the most sincere and effective contribution to the vital debates which lie ahead in this House in the future. Parliament will have to become a Council of State if we are to get through the crisis. The Chancellor of the Exchequer and, as I believe he still is, the Minister for Economic Affairs, has a giant's job. We should all back him up to the best of our ability to try to get a united effort. For that reason, I shall support the Second Reading of this Finance Bill.
  6.10 p.m.
  Sir Alan Herbert: We have all, I am sure, enjoyed an interesting though disturbing speech by the hon. Member for Eye (Mr. Granville). There has been much talk about rebates, share-outs and so on, and what he called, I think, "imaginative taxes." May I, on that, report a suggestion made to me? It has been said that nobody is against the principle of betting taxes nowadays, and others have even mentioned lotteries. The suggestion made to me was that the principle of the lottery should be linked with the payment of Income Tax. The idea is that certain Income Tax receipts should win prizes, always provided that payment had been made within, say, three weeks of the first demand, so that there would be an incentive to rapid payment which would be much better than the interest charge on arrears provided in this Bill. The prizes would be in proportion to the amount of tax paid, so that there would be an incentive to vigorous and sustained earnings. We should have people now outside the scope of Income Tax struggling to get in. Business men would be imploring the tax inspector to cut their expenses scale down so that they might win larger prizes. I put that forward as one of the most ingenious though simple ideas that I have heard.
  I am glad to see the Chancellor of the Exchequer return to his place; for I should like to give him a very special word of good wishes. I do not think that he is the first Chancellor of the Exchequer
  1850
  to come from our great school at Winchester;. but certainly, he is the first Chancellor of the Exchequer of whom I can claim that he gave me my football colours. On that fatal Thursday when his predecessor made his unhappy exit, not knowing what had happened, or was to happen, I sent a nice little note to the late Chancellor. I said, "I congratulate you on your brave betting effort, all the more brave because it is so illogical and so vulnerable in argument." But I added, "I assume that it is only an instalment." There were words in the Budget speech of the late Chancellor which suggested that he might have that in his mind. He said that "on this occasion "he was not going to go after the bookies. He added, "If I do so and so 'now,' there will be such and such results." I thought that in easier times he might go right ahead and do what most of us want—tackle this thing thoroughly.
  It is true that the present Chancellor has not had time to study these things very closely, but he did not give out any such hopes; nor did the Financial Secretary today. I want the Chancellor to say tonight, if he can, that he will tackle this thing thoroughly as soon as possible or, if not, that he will chuck it altogether. I say that although I have been fighting for a betting duty for 12 years in this House and elsewhere. The present proposals are so illogical and unjust that they will make us as legislators such a laughing stock that I say the Chancellor ought not to do this if it is all that he intends to do.
  What will be the situation if this Bill becomes law? If a man bets through a totalisator on a horse, he will be a part of the export drive—a capital fellow. If a man bets through a totalisator on a dog. he will be a low fellow but he will contribute to the revenue, and that is something. But if a man bets on either quadruped through a bookmaker, he will be merely a low fellow—but he may get better odds. People are always talking about 1926, when the right hon. Member for Wood-ford (Mr. Churchill) made an experiment which failed. It failed for various reasons which it is not necessary to go into now. But nobody ever mentions what happened thereafter in 1932, when a very powerful Royal Commission went into the whole business of the betting industry, their staffs and betting legislation. The Commission

  1851
  made recommendations which, had they been in force when the right hon. Gentleman made his experiment, would have made the whole thing much simpler.
  I must wearisomely repeat—I apologise for doing it again—that I at least acted upon that Royal Commission, for I drafted a Bill, based on their Report, which I introduced in 1938, and it is on the records now. I tried to introduce it two years ago; but we know what happens to Bills which we try to introduce in these days. The proposals were that all book-makers and their staffs should be registered and licensed and that cash betting should be legalised; and there were many other things. The Royal Commission suggested control, registration and licence. I have always added "tax." I realise that in the old days it might have been a very long and controversial affair to get legislation through the House. But this powerful Government, who can tackle anything, the nationalisation of land, mines, railways and steel without thinking of it, are surely now not going to be baffled by the bookmakers? The right hon. and learned Gentleman, of all people, who fears nothing anywhere. He talks about this "insoluble problem." It is not at all insoluble. I will tackle it tomorrow if he will let me introduce my Bill and I will get it through. It would take, now, I believe, no more time to get it through the House than it will take for the Parliament Bill to go through and it would have a much stronger impact on practical affairs.
  How shocking, to treat the bookmaker in this manner, to put a premium upon lawlessness and evasion—to say' to anybody, "We do not think you will pay; we do not know where you are; therefore, there will be no tax upon you." Really, I wish that was done with theatrical managers in relation to Entertainments Duty. The theatre with which I am connected at the moment has handed over the sum of £50,000 to the State by way of Entertainments Duty in the last few months. In view of Clause 9, I will not mention it by name. No army of civil servants has been necessary to collect that money. The management themselves collect the money and calculate it with their own staff, and I think a Customs inspector as a routine matter visits the theatre about once every six weeks. I do not suppose that there have been more
  1852
  than four official visits in order to get that £50,000 out of the till into the Treasury. If bookmakers are to be let off because they are not quite so law abiding and are not registered and so forth, I may be compelled to offer a little advice to theatrical managers that in future they should become more elusive and less law-abiding; for it would be easy for them to do the same kind of thing as we are told the bookies will do.
  The other anomaly is this magnificent distinction between horses and dogs. I do not want to tease the present Chancellor too much because he came into the picture very suddenly, and I do not suppose that he has that vast knowledge of the betting world which some of us have. I offered to take his predecessor to the dogs one Saturday night, and I make the same invitation to him. On the point about the bookmakers, by the way, he would see that the totalisators and the bookmakers are operating within a few yards of each other. One is to be taxed and the other is not. Of course, in Australia, and I think in all other civilised lands, both are taxed. This is one of those things which can only not be done in England. In Australia, when I was there, long ago, whether one went to the totalisator or to the bookmaker, one paid a tax of 10 per cent. of one's bet. Both the bookmaker and the totalisator were controlled.
  But, to return to the dogs, the present Chancellor of the Exchequer, in his speech on the Budget, used these words:
  "So far as the horses are concerned, it has been explained that they already make a contribution to the national interest in the form of a fund which is put aside for breeding horses."—[OFFICIAL REPORT,4 17th Nov., 1947; Vol 444, c. 941.]
  My first point is to ask what in the world that has to do with this Budget, this anti-inflationary-gap Budget, designed, I understand, to stop us spending money on almost anything and especially on undesirable objects? However, this has now become a desirable object because 10 per cent. is deducted from the money put into the horse totalisator and that is used for breeding horses.
  I took the trouble this morning to get hold of the 18th and last report of the Racecourse Betting Control Board, and I found some very interesting figures. The total turnover last year was more than £14 million. I do not know, by the way,

  1853
  whether hon. Members realise it or not, but it is the fact that, while horse betting is far more extensive than dog betting, far more money goes through the dog tote than the horse tote—£200,000,000 in one case and £14,000,000 in the other. That figure which I have quoted is double what it was the year before. Fourteen million pounds went through the tote, and, after expenses were paid, taxation allowances and so on, £478,000 was left. Of that sum, £32,800 was paid over to the Race-course Totalisator Charity Trust, which distributes the money for various worthy purposes.
  There are sums devoted to veterinary research and to other worthy objects, such as making racecourses more comfortable, which means making betting more comfortable; and all these things are, no doubt, very worthy, but not very obviously necessary in an anti-inflationary Budget. In the full year up to 31st August, 1946, the vast sum of £14,760 was spent to improve the breeding of horses, and, since then—that is, up to June this year—£34,400 has been spent for the same purpose. In other words, £14 million goes through the tote, and, of that sum, £34,000, less than ½d. in the pound, or about a quarter of 1 per cent., goes for horse breeding. On that flimsy foundation is erected this great idea of the value to this country of horse betting by the tote. If we maintain such an argument we shall become a laughing-stock.
  Of course, there is a more serious point. I remember, I think it was on the first Budget in this Parliament, saying rather pompously that this betting business, in which I take a small part from time to time—indeed, I now confess, although I am not prejudiced in any way by the fact, that my wife is now the nominal owner of a greyhound which has the fitting name of "Gambler's Despair" so I cannot take too high-minded a line about it but—I said that this had become a national cancer—this vast and ever-increasing expenditure for these purposes, and I believe that is true, I said then that before this Parliament was over the Government would have to deal with it from the economic and the moral point of view. Well, they have begun to deal with it from the economic point of view, but they will have to deal with it more firmly than this before they can say that they have tackled it from the moral point of view.
  1854
  I sympathise with the right hon. and learned Gentleman who has been brought in so suddenly to tackle this ticklish question. But I hope that tonight he will give us an assurance that this is only an instalment, and that, when the time avails, and he can get a promise from his legislation committee that the time will be provided for it, he will go ahead and make the necessary alterations in the law. If he can give us any such assurance, I shall support him heartily in the Committee stage, but, if not, we had better all get together and sling the whole thing out.
  6.26 p.m.
  Mr. Wyatt: Unfortunately, the junior Burgess for Oxford University (Sir A. Herbert) has just made almost the entire speech which I was going to make, although he has made it much more wittily than I could ever hope to do. I will only try to underline some of the points which he has made and give him a certificate of trustworthiness. I have also read the Bill which the junior Burgess presented before the war. It was a very sound and practical Bill, and I am sure that it would, in fact, have done the things which he suggested it would do. I think, however, that the hon. Member was a little too gloomy when he said that it is wrong to make any start with this Betting Duty at all. I do not think it is quite true to say that because the duty works unequally, we must not apply it. I am sure he will agree that betting is a complete luxury and that no one can claim any moral backing for the right to bet. If one person is taxed, and another is not, it is really just a piece of luck, perhaps of gamblers' luck, which should not worry us seriously.
  The point upon which the 1926 duty broke down was the difficulty of tracking down these nebulous cash transactions. The intangible way in which money passes from one hand to another makes it extremely difficult to keep track of it, but, now that the Chancellor has begun with a duty on betting, we simply cannot be defeated on this thing. I doubt whether the House realises how much money is being spent in every year on this occupation. In 1946, on a most conservative estimate, the figure was some £780 million for the year. All that this present duty is going to touch is some £250 million out of the total, because the amount of

  1855
  betting on horses is far greater than that on greyhounds, and most of it goes to bookmakers. One thing which the Chancellor has not done, and which was working quite successfully in the period 1926–29, when the first betting duty was in operation, is to charge a certificate fee for bookmakers. In the period of the old betting duty, the fee was only £10 per head on bookmakers, and, when the Betting Duty was removed, the certificate fee was left. Under the first Labour Government, of 1929–31, it was removed—on moral grounds, not because it was fiscally difficult to collect—because the Chancellor of the Exchequer said that he would remove the last taint of that despicable tax by which the Government had given a moral sanction to betting. I should think that the certificate fee could now be imposed again, and that it might be £50 or £100.
  We have also to register the bookmakers with the police. Then they must be made to get licences, just in the same way as the man who runs a public house has to get a licence. That licence should be issued to him in exactly the same way. Of course, his employees must also be registered, and any infringement of the law by either the employees or the bookmaker himself must be accompanied with the removal of the licence from the bookmaker, who would then be prevented from practising his business. That would tend to stamp out some of the illegal street betting that goes on at the moment.
  Then, we could put the duty on bookmakers, and have no difficulty in collecting it. At the same time, the Chancellor might work for a wider and larger objective concerning the bookmakers generally, and perhaps find ways of eliminating the bookmaker altogether by substituting offices of the totes and setting them up at the same places where the bookmakers have been accustomed to operate. Then we can legalise cash betting. It is no good trying to put legal restrictions on something which is done by four out of five people in the country, who will continue to do it no matter how many laws are passed. Until we make cash betting legal, we shall continue to force people to engage in illegality, and the law can never do more than keep pace with what the public is prepared to do. We can make
  1856
  betting legal and have it conducted on an open and decent basis, and, at the same time, eliminate tax evasion. Until that is done there is no point in the Government introducing this duty.
  The trouble with the tax on dog totes is, of course, that it is going to drive a tremendous amount of business to the bookies. That must be corrected, because, if the Chancellor leaves matters as they are, he will find that in a very short time he will be collecting not £15 million, but something rather less, and the bookies will be getting rather more. As far as football pools are concerned, I think that the tax could be much higher than 10 per cent. If the Chancellor wishes to deter people from making use of football pools in order to save labour, then 10 per cent. is not enough; it ought to be 20 or 30 per cent. I should have thought that there was a very good case for setting up a State "Unity" pool which would save labour, and which would, incidentally, be of benefit to the investor because the more money going in, the higher the dividend. There would also be no question of some firms keeping back more than others.
  The last item to which the Chancellor should turn his attention on the betting front is the question of the illegal traffic in sweepstakes to which the hon. Member the junior Burgess for Oxford University has not referred. At the moment, all sweepstake lotteries, except for one or two specialised ones, are illegal in this country. Nevertheless, some, £6 million or £8 million a year pass in connection with lotteries. Only last year £4 million worth of Irish Sweepstake tickets were illegally sold in this country. We cannot prevent something which the majority are determined to do. If we have lotteries. why not do what the Royal Commission on lotteries and betting suggested we should do? They said that if we are going to have lotteries at all, the best agency to run them is the State. All the machinery exists already, and the Royal Commission suggested that the tickets should be sold through the post offices. That, after all, is something we used to do in this country many years ago. It only broke down because it was not done very systematically or in a very orderly manner, and because there were various ramps on the Stock Exchange which finally brought it to an end.

  1857
  But it is worth considering it again. It might help to brighten for some of us the days of austerity which we have to face at the moment. I think that if the Chancellor will eschew the sentiment which he expressed the other night of not wanting to have his fingers burnt by the bookmakers, and will tackle this job wholeheartedly and take an overall compass and view of it, he will find that he can regularise betting, make it official and open, and, at the same time, he can collect something like £1oo million a year instead of a paltry £15million.
  6.34 p.m.
  Major Haughton: The last two or three speeches have dealt more particularly with the Betting Duty. That is a matter to which, for a rather particular reason, I will refer a little later on. I wish, first of all, to speak about the general effect of the increase in the Profits Tax upon production. Of course, that is a subject which will be debated and discussed for a long time. But there is one thing which is certain, and that is that a tax on undistributed profits tends towards extravagance in management, and, in some cases, to worse, at a time when thrift and salvage are of vital importance to the nation. Another effect of the disparity between undivided and divided profits is, of course, to emphasise the unfairness as between ordinary shareholders and debenture and preference shareholders.
  However, it is not my intention to pursue the general consideration; I want to deal particularly with the suggestion that taxation should be retrospective. Once that creeps into our taxation system, confidence is badly shaken, and uncertainty begins to reign at a time when we need confidence and want to remove as many uncertainties as possible. To make the rates of taxation in Clause 7 retrospective to 1st January, 1947, is grossly. unfair to a multitude of companies who, in the light of the Finance Act, 1947, decided their dividend policy and published their balance sheets. In doing that, are they to be blamed? Were they breaking any law or order, and why should they be penalised? While I was glad to hear the Financial Secretary hold out some little hope that this matter might be reconsidered, I would make the strongest appeal to the Chancellor that the date from which this tax should operate should be that on which the Resolution is passed.
  1858
  I now turn to the suggested Betting Duty. I am particularly interested in this because I was chairman of the committee in Northern Ireland which is called upon to report on the betting laws. It has been sitting for two years, and has reviewed the whole history of the matter. It brings right up to date the various commissions from the date mentioned by my hon. Friend the junior Burgess for Oxford University (Sir A. Herbert). He mentioned that of 1902, but the Northern Ireland Committee deals with all the laws since then. I humbly suggest that a study of the majority and minority reports might dissipate the Chancellor's idea that the problem cannot be tackled, and that it is insoluble. I know that the Churches' Committee on gambling regard this proposal with dismay because they are of the opinion that a moral and social calamity may follow and that it is anti-social. It is a little difficult to reconcile that view with the fact that totalisators, dog racing, and football pools are already legal. It is very hard to see how a tax on the funds that pass through the totalisators or football pools can either strengthen or weaken something which is already legal.
  The suggestion is made that horse racing should be exempt because it provides a very valuable export in thoroughbred racehorses. But, surely, that argument is not sound. Is every industry which produces exports to be privileged and exempt from taxation? As my hon. Friend the junior Burgess for Oxford University said, those who are interested in greyhounds can also argue that they are producing very considerable exports by promoting dog races in America and by the shipment of greyhounds. Mention was made by an hon. Member opposite of the total volume being gambled. It is very hard to estimate the exact amount, but I would put the figure at £960 million. If the proposal that only greyhound racing and football pools should be taxed were carried through, it would mean that only £260 million out of that vast sum would be touched.
  In conclusion, I want to say something about the advertising tax, and here I think it is right that I should declare my interest. I was the administrator of the Advertising Exhibition in 1920, and a director of advertising agencies, and, although I do not now serve on the boards, I have still a considerable interest

  1859
  in them. It has never been my practice to say bitter or provocative things across the Floor of this House. I am sorely tempted at the present time to say some pretty hard things about the suggested tax on advertising. It is absolutely ridiculous at a time when we are trying to increase production and exports, because advertising is really the very breath of life to some forms of industry. The Minister of Health, faced as he might be with a dread epidemic in the country, might just as well go to the Chancellor of the Exchequer and say, "This is the time to clamp a heavy tax on our iron lungs."
  The proposals set forth in Clause 9 are very hard to understand, and if any meaning can be found in them one is driven to say that the Treasury would have to decide what part of an appropriation would go to the home trade and what part would go to export. In the arranging of an advertising appropriation it will be found that the two go together. Take, for instance, Horrockses cotton sheets which are known all over the world. They could not be advertised with the same effect abroad unless they were well known at home. I hope those Clauses will be completely reconsidered.
  During the Debate on the Address the Chancellor himself made certain remarks which I noted with great care and which I have repeated over and over again since. He deplored the fact that the prestige of British goods had suffered very much by the export of inferior goods. If there is one way to maintain the quality and prestige of British goods it is by branding and advertising, and by the maintenance of quality which must follow. We hear too much of the expression "Too much money chasing too few goods." What we want are more goods. I hope the motto which will guide us will be on the lines of "Enough money for plenty of goods."
  6.43 p.m.
  Mr. Austin: I find myself in agreement with one aspect of the speech of the hon. and gallant Member for Antrim (Major Haughton). That was on the question of the betting duty. In fact it is safe to say that there have been very few dissentients from the general line of criticism of the Chancellor on this question of a partial betting tax. But, on the
  1860
  issue of advertising, apart from reservations which I hope will be made by the Government in relation to trade, technical and export advertising, which, of course, are very important, in the main, advertising today is purely prestige advertising. It is true that, in some degree, the export market is no longer a sellers' market, but the home domestic consumer market is nothing less than a sellers' market at the moment. Almost everything that can be made by an industrialist can easily be absorbed in the home market. Therefore, there is no reason for the wholesale advertising that has been going on in the past.
  Sir Arthur Salter: I hope the hon. Gentleman will exclude from that statement businesses such as theatres, cinemas, the book trade and so on. They obviously must have advertising, not for the general prestige purpose but for the conduct of their normal business.
  Mr. Austin: Curiously enough, I was just coming to the question of theatrical advertising, because this afternoon I received a telegram from a constituent of mine who apparently organises a theatrical agency and he complains that this tax will affect him greatly. I am very sorry for my constituent, but I have to weigh up his place in the economic society of today and consider its importance in the sphere of economics as we know it. We must give first place in advertising to those who make some contribution to the productive economy of our country. This sanction may in some way affect my constituent adversely and others in similar business. I regret it very much, but I am afraid that it is essential at the moment; and the Government are right in eliminating a great deal of the present day advertising and in diverting some of the labour from advertising. This is not a tax gathering idea at all. The main idea is to divert a great deal of the labour and resources which at the moment are being expended on advertising to more productive objects.
  I want to turn to another matter, and that is the failure of the Opposition so far to put up constructive alternative proposals to the Government's in this Finance Bill. The right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) who, I regret, is not in his seat, made references in his speech to the question of public expenditure and

  1861
  the need for reductions there. I twice tried to interject but he did not give way. What aspects of public expenditure do we find commented on by the Opposition? The hon. Member for Louth (Mr. Osborne) was honest enough to demand a withdrawal of the food subsidies. The hon. Member for Monmouth (Mr. P. Thorneycroft) made a qualified appeal for the withdrawal of food subsidies. From the Opposition Front Bench, however, we get nothing but vague, abstract generalisations regarding reductions in capital expenditure and other reductions, hinting at the social services and at the food subsidies. Surely, it is the function of the Opposition, if they are to oppose us, to come forward with some constructive proposals honestly and decently, in day-light, instead of hiding in this furtive fashion.
  One thing always strikes me when they are making any proposals about reductions, and that is their omission of a very vital way in which reductions could be made, and that is in the field of the Armed Forces. I notice—and I hope my right hon. and learned Friend will take this into consideration—that we are going to save something like £31 million in the sale of certain war products. Does he realise the unbalance of our present expenditure? As I see it, the expenditure for the current financial year is something like £3,100 million. Of that, we find the expenditure on the Armed Forces is £900 million. Is that not altogether out of proportion? Is that not putting on the people an undesirable burden that they should not be asked to bear? Something like 27 per cent. of our present-day expenditure is on the Armed Forces, which means petrol is being diverted, transport is being diverted, marmalade on the mess tables in the barracks, for instance, is being diverted—all being diverted from the consumer in the home market to the non-productive consumer in the Armed Forces. I submit to the Government that it is about time they did something about a drastic reduction in the Armed Forces. When one considers the figures, that for food subsidies is comparatively low—£392 million. Surely there is ample room therefore for further reductions in the Armed Forces; and at all costs must we retain the food subsidies in the interests of the general consumer.
  I want to say this to the Chancellor. I, perhaps in common with many other
  1862
  back benchers, was very perturbed and worried as to his attitude to the Budget and to our economy in general, following his succession to my right hon. Friend the Member for Bishop Auckland (Mr. Dalton). I noticed with some concern the blandishments and the overtures of the Opposition to my right hon. and learned Friend. I want to say, therefore, that the Labour Party came into being originally with the purpose of protecting and safeguarding the working class. I hope that in no circumstances will he forget that. I do not want to see any animus against any other class, whether the middle class or the wealthy upper class. But the primary function of the Labour Party is to protect the the great mass of the people of this country who compose the working class, and I hope that as time goes on, and as he unfolds to the House his financial policy, he will resist the further blandishments of the Tories.
  I turn to the question of the removal of subsidies from cotton, wool and leather; I do feel that the Chancellor has been very lucky in getting away with this so lightly. It may be that Members on this side of the House were so relieved to find that the food subsidies were not going to be touched that there was no real criticism of these three other subsidies. I remember a little while ago that the price of a pair of blankets went up by 15s., and that is quite a burden on a working class housewife. I understand that the price now of a pair of shoes is going up in relation to quality by something like 3s. to 8s. or 9s., and we can see utility suits going up by 5s. or 6s., and the costumes and dresses for our womenfolk going up proportionately.
  I must ask the Chancellor to bear this in mind, that with our present wage structure being held fast on a firm basis, it is unfair to impose on the working class this additional burden of higher prices for their clothing, and I hope that between now and the next April Budget he will do what he can to restore in part, perhaps, these subsidies on textiles and leather. Related to this point is the question of passing on to the consumer any further increase in the price of food. Is it fair, because of circumstances beyond -our control, that the rises in prices of commodities bought abroad should be passed on to the consumer? Surely, the

  1863
  Chancellor has to equalise the burden, and lessen the burden on the shoulders of the working class whom taxation almost always affects with the greatest severity.
  In regard to the removal of subsidies, surely here is a heaven-sent opportunity in a possible Budget surplus. We are told it is in the region of £250 million. Apparently the target outlined by the previous Chancellor is already reached. We have a Budget surplus of £250 million today. It is anticipated by the Financial Secretary that it will be in the region of £320 million or £330 million by the time of the next Budget. Is there any particular virtue in having a Budget surplus? I am no expert in economics. I make no apology for that. I am a layman. My economics have been the difference between a full and a hungry belly in the past—and, perhaps, that would be better for the economics of hon. Gentlemen opposite. Surely, however, here is a heaven-sent opportunity for upholding the food subsidies, which will affect the great majority of the people of this country, and for saving them other impositions in the way of Purchase Tax, which I resent very much. Surely, we could use that surplus for such purposes. Perhaps, my right hon. and learned Friend would be good enough to give his observations on that possibility when he replies to the Debate.
  I want to make a comment in passing on the Betting Duty. I agree with observations made by hon. Members on both sides of the House that this partial tax is not only unfair but unrealistic. The sooner we realise and accept the reality of betting as a social phenomenon, the sooner shall we be able to deal with this difficulty. Until last Saturday I had not been to greyhound racing since I was 19 years of age. The last time I went, apart from last Saturday, was in 1930. On Saturday last I went to a London greyhound track because of a Question I had put down relating to the exclusion of juveniles from greyhound tracks. I believe that today betting at greyhound racing tracks is a social phenomenon which is worthy of observation by the Mass Observation group. It would make a very worthwhile study. I made inquiries from various people and I found that a great deal of the betting had been diverted from the tote to the bookmaker, and I
  1864
  heard bookmakers calling out, "Come and bet with a bookie and avoid the 16 per cent. tax." That related to the 10 per cent. tax on betting and the six per cent. which I understand is deducted for the purpose of profit sharing. It is obvious that the partial Betting Duty has in no way mopped up or absorbed the spending power of the people. If they are not spending it on the totalisator, they are spending it on the bookies.
  Apart from that, it is about time we regulated this element in our lives. Betting goes on, as my hon. Friend for Aston (Mr. Wyatt) has pointed out, among something like four out of five people. It is time we recognised it and legalised it, and thus allowed the Government to profit not only financially but in the sense of the country being cleansed to a great extent, of certain evil influences which are attendant on the clandestine betting which goes on today. In addition, I would like to see further regulations regarding football pools. It is well known, as was pointed out. by my hon. Friend the Member for Bilston (Mr. Nally) in an Adjournment Debate, that investors in football pools are very often not treated fairly, and the sooner the Government come to grips with this problem the better it will be in the interests of the nation.
  If one were to sum up the Budget and this Bill in betting parlance, it would be in the phrase, "The bookies first and incentives nowhere." There has been some discussion regarding the question of incentives in industry, and I confess that I was greatly disappointed at the fact that the Chancellor did not see his way to make certain suggestions regarding incentives. We must realise that we have have not yet implanted in the breasts of people that element of service for the community which we desire, and which we fervently hope will come to fruition. The incentives today are material, and we have to realise that people work mainly for reward. I think there should be an incentive in the form of concession to married women. At the moment I understand married women's earnings for the purpose of taxation are lumped together with those of their husbands. We are asking women to enter the textile and engineering industries, but I can well understand and sympathise with the view of a married woman who says, "No, I do not see why I should go to

  1865
  work and have my income lumped together with my husband's income and have a great deal of it taken away in Income Tax." It indicates a failure on the part of the Government to seize a heaven-sent opportunity of recruiting women.
  Again, there are certain industries which involve dangerous and sometimes dirty work, such as mining, agriculture and foundry work, and I should have thought that there is scope in those industries for further concessions in taxation, so that for the immediate purpose of our reconstruction in the next three or four years those employed in those industries are classed as members of privileged industries. Why could not we have lowered the standard rate of Income Tax of men in the mining industry, in agriculture, in the foundries, and so on? That would have created a great incentive for recruiting to those industries—and, heaven knows, we need a far greater number of recruits in those industrial fields.
  In addition, would it not be possible to work out an overall coal export target bonus, by means of which men in various pits, scattered throughout the country and grouped regionally, would benefit if their target were reached and we were able to export to other countries the coal which they need so badly, and from whom we could receive in return their commodities, so badly needed by ourselves? Surely, that is the sort of tax concession incentive which ought to have been made in the Budget? Again, would it not have been possible to have given some tax concession incentive to manufacturers engaged in export trades? After all, we do ask the present day manufacturers to help the Government in the export drive, they are taxed—and I hope we will tax them severely—but I think a good deal could be done by way of a tax concession incentive to manufacturers helping in the export drive.
  One other proposal which has been referred to in this Debate from time to time—and for repeating which I do not apologise—is the recalling of the currency. Must we see the Government behind public opinion in this matter, as in many others? In my view, ultimately the Government will have to recall the currency. The other day I read in a newspaper how an individual went into a Great Portland Street showroom, put down £4,500 in £1
  1866
  notes and drove away in a Rolls Royce car. Multiply that a thousandfold among the other commodities and goods now being purchased in £I notes and one has ample evidence for the necessity of recalling the currency. The Government would there find ample opportunity to mop up spending power, not from the consuming power of the working class, with the increased Purchase Tax and the removal of certain food subsidies, but from the surplus spending power which rests in the pockets of those who have come by their money illegally, and are now spending those illicit earnings on luxury articles—whether it be cars for themselves or fur coats for their wives. Something ought to be done about that. Secondly, a recall of the currency, with a limited surrender limit of currency to each individual, would also help the Savings Movement, for one can easily envisage the amount of money which would pour into the Savings Movement if people had to give up their present currency in exchange for another. I hope, therefore, the Chancellor will consider some of the suggestions I have been fortunate enough to have had the opportunity of making.
  7.4 p.m.
  Mr. David Eccles: I hope the hon. Member for Streford (Mr. Austin) will forgive me if I do not follow his speech, except that I will try not to be furtive about what it is right that we should do. Owing to an unhappy experience with a bad duck-egg, I have not had the opportunity of catching your eye Mr. Deputy-Speaker, since the early days of July. In the interval much has happened. The American Loan has disappeared; sterling is under the disgrace of inconvertibility; and we are throwing our last reserves of gold and free exchange into the unbridgeable gap between our dollar earnings and out goings. These are the unmistakable signs of a national crisis which far transcends party politics. Yet I find that the Government have decided upon another round of Socialism as the best remedy, and that they have adopted compulsion as the ultimate sanction of their economic policy. Part of that economic policy is monetary and fiscal, and we are told that this Bill has been brought forward to decrease the inflationary tendencies which now exist, or which are likely to develop before April when the annual Budget is brought in.

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  The new Chancellor has said that the Bill is adequate for that limited object. I doubt that; but I think it is much more important to discuss whether the limited object itself measures up to the crisis in our national fortunes. I agree with the right hon. Gentleman that no one can measure and assess accurately the inflationary pressures, but surely we know enough about them to determine what it is right to do now. A dog cannot define a rat, but the mere sight of a rat is sufficient to stimulate a good dog to the appropriate action. As I see it, my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) was correct when he said that this inflation is everywhere, at all levels in our economy, and the Chancellor was following too closely in his predecessor's footsteps when he claimed that the pressure is mostly in the area of Capital goods.
  Suppose that all the controls were taken off at one stroke. Which prices do hon. Members think would rise fastest and furthest? The prices of foodstuffs or the prices of capital goods? The prices of potatoes, eggs and bacon, or the prices of machinery and power stations? It is very important, when considering how to check inflation, to realise that the heaviest pressures are against the necessities of life, although, of course, it is true that the pressures against capital goods have so far had more chance to show themselves. I agree that no one can measure accurately this inflation, but we cannot mistake its consequences. Today, we have two price levels, one which embraces all those goods which are rationed or controlled, or otherwise prevented from commanding their natural prices, and the other which embraces the goods and services which are not controlled or rationed; and the consequence of Daltonian inflation has been steadily to widen the gap between these two sets of prices. Labour, management and materials are pulled towards the production of the uncontrolled articles and away from the production of the necessities of life. If that were not so the Government would not have introduced direction of labour in peacetime.
  We find, therefore, that this inflation expresses itself through the public spending too much of its money on the wrong things. There is only one effective cure for this unhealthy pattern of spending,
  1868
  and that is to expand the production of the right things. But that is not the cure which this Bill proposes. This Bill attempts to reduce the inflationary pressure by making the public spend more of its money on things which do not matter. Like the tobacco tax last April, the consumption taxes in this Bill are designed to make us spend more on non-essentials, and, if the public does not choose, in the months ahead, to lay out more money on beer, betting, and luxuries, then this Bill will fail in its anti-inflationary object.
  The surplus purchasing power will not have been mopped up, but will still be running loose, and it will be all the easier for it to break-out elsewhere, because the range of the Purchase Tax has not been widened in the Bill. It is very curious to note that if this Bill is to succeed in its object, it must do so because of the constancy of human nature, which is expected to preserve the pattern of spending, in spite of the new taxes. The constancy of human nature is at the root of the Bill, and yet the case for Socialism has time and again been that it rests upon the ability of its exponents to change the economic motives which have hitherto moved mankind. I commend to the intellectual bigwigs sitting opposite this interesting contrast between the theory and practice of Socialism.
  If the Bill is not adequate to its limited purposes, the purpose itself is much less adequate to the crisis in our economy. The Bill makes only a negative and half-hearted attack upon inflation. At the very best, it will Help to stabilise poverty where it is today. Surely, it is time to stop thinking that we can again raise the prosperity of England by making more expensive the cost of things which do not matter? Is there no way in which we can make a positive attack upon inflation, and make more attractive the production of the things which matter? Apparently, the last Chancellor of the Exchequer did not think so. His vindictive policy was to restrict what he did not like.
  The right policy is to expand what the people want. How is that to be done? As far as the Finance Bill is concerned, one obvious way is to reduce the cost of living subsidies in the manner proposed by my hon. Friends. In the course of the recent Debates, which I have read, many right hon. and hon. Members spoke for

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  and against these subsidies. If my hon. Friends will allow me to say so, not one of them made the case for the reduction of subsidies half as well as it was made last Wednesday at Question time by the Minister of Food. One of his hon. Friends tackled him about the rising price of mackerel, and he defended himself with much less of that unctuous confidence which I associated with him when I was last in the House. Having admitted that the price had doubled, he said that "the supplies are about double too." That is the point. Raising the price doubles the supplies. These are the words of the Minister of Food. Who can doubt that if a year ago the prices of potatoes had been sharply increased, the same results would have been achieved?
  Mr. House: Surely, the doubling of the price of tobacco does not in itself explain the doubled increase in smoking?
  Mr. Scollan: Surely, the hon. Member is not contending that the catches of the fishermen are controlled by the prices the Minister of Food puts on fish? If that is the case, why did they dump herrings into the sea to keep up the price?
  Mr. Eccles: The Minister of Food thinks that it is so, and so do I. The Minister of Food states that the prices and supplies have doubled. Furthermore, I am convinced that the same would have happened with potatoes. When bread rationing was introduced, I warned Ministers that it would lead to a shortage of potatoes. Why did they not there and then sharply increase the price, which would have called forth far larger supplies this season?
  The Secretary of State for Scotland (Mr. Woodburn): Is the hon. Member aware that the farmers of this country are cultivating every acre of land, and that if we increased the crops of potatoes, we could only do it by decreasing the crop of something else?
  Mr. Eccles: The right hon. Gentleman is entirely wrong. He cannot know much about agriculture, and he knows still less about gardens and allotments. How many gardens and allotments have this year grown few or no potatoes? The right hon. Gentleman does not know how potatoes can be grown. Let him double
  1870
  the price, and then he will see. The Minister did not do it, because the Government were afraid to touch the cost of living. They held that these food subsidies were sacred no matter what the effects of their bigotry has been upon the supply of food, or upon the volume of cash free to chase after non-essential goods. We should look at these subsidies objectively. I have no objection in principle to the food subsidies. My father was a doctor, and he very frequently remarked how foolish it was to fill children's heads with education, when there was not enough good food in their stomachs to enable them to benefit by their lessons. It must be clear that for some children free milk and dinners are just as important as arithmetic or modern languages, but there is always a limit to the amount of money which it is wise to spend upon any one particular social service. There is always an overriding duty to see that that expenditure does not do more economic and social harm than it does good.
  What is the test we can apply to the food subsidies to see whether their effects are good or bad upon our economy? The simplest test I can think of is to compare the amount of money which the public as a whole is now spending upon food and non-alcoholic drinks, with the amount of money which it is now spending on tobacco and alcohol. The White Paper, which was issued with the last Budget, showed that for every 5s. we are spending on food and non-alcoholic drinks, we are spending 4s. on tobacco and alcohol. I imagine that when the effects of last April's tobacco tax and the present penny a pint on beer have worked themselves out, we shall be spending shilling for shilling on these two major categories of consumption. From whatever angle that pattern of spending is looked, at, economics, social welfare or morals, it is. quite indefensible. Other industrial nations, like the Swedes or the Americans, spend a far higher proportion of their incomes on food.
  Miss Jennie Lee: No.
  Mr. Eccles: The hon. Lady says "No," but I have just been there and tested it for myself.
  Miss Lee: So have I.
  Mr. Eccles: The British pattern is unique. It was built up in the days of

  1871
  free trade, when we were able to buy, often at shockingly low prices, the spillovers and gluts of all the food-producing countries in the world. These days have gone for ever. It is a delusion for the new Chancellor of the Exchequer to hope, as he did in his winding-up speech the other night, that the food subsidies are a convenient remedy for a temporary difficulty. The Chancellor of the Exchequer knows as well as anyone that the increased sterling costs of feeding our people is not a temporary difficulty at all; first of all, because the whole world has been aroused to the importance of raising nutritional standards, secondly, because the sterling cost of producing and importing food, and especially the wages of farm workers, have risen permanently compared with prewar. Thirdly, because the problem of the British balance of payments will be with us for many a year. We cannot begin too early to make the long-term adjustments in our economy, which will enable us to work towards a new equilibrium. On economic grounds, it is sheer nonsense to believe that we can go on spending shilling for shilling on food, on the one hand, and on tobacco and alcohol, on the other.
  Major Bruce: The hon. Gentleman has been developing an interesting theory that increasing the price of a particular commodity makes call for a further supply. Would he say that also applies to beer—that increasing the price of beer will call for more supplies of beer?
  Mr. Eccles: The increased price of beer, I trust, will not call for a greater allocation of barley and sugar with which beer is brewed, and, therefore, the operation of supply and demand will not work. But I think that His Majesty's Government may say that they are able to stimulate the maximum production of food at home without raising retail prices. That is not true. As I said in the case of mackerel, that is disproved by the Minister of Food.
  I would add two further observations. First, if the United States had held down their food prices there would not now be supplies of food in that country with which to help Europe. Anyone who has studied the agricultural position in the United States knows that it was the rise in prices that called for the great increase in the
  1872
  acreage last year. Secondly, administrative madness is involved in our own policy of food subsidies. One army of officials is employed in policing the food trade; another army of officials is required to manage the agricultural programme, and to finance the operation of these two armies, a third army of tax collectors take the money out of one of our pockets to put it into the other. This triplication of administration is lunacy. We have to put up with it because the Government have not the courage to tell the people that they must concentrate their spending on those things which are necessary to their bare survival. I understand, of course, why the Government are afraid to make a move in this direction. The Chancellor of the Exchequer is quite right in saying that if a reduction in the food subsidies were followed by an all-round increase in wages, we should have more and not less inflation, and so long as he and his colleagues fear that result, they will not touch the subsidies.
  Miss Lee: Does not the hon. Gentleman fear it?
  Mr. Eccles: Why are they afraid?
  Miss Lee: If the hon. Gentleman will permit me, I think that he must also work out what it will cost to any household if prices go up for food with no corresponding increase in wages. It is a very substantial fear.
  Mr. Eccles: I agree that it is a substantial fear, but worse will happen if we do not tackle it. The reason why the Government are afraid is because they have not had the courage to tell the people what will happen to their rations if wages and prices are left where they are, and if the Americans do not make available to us a vast new supply of dollars. This Bill—and this is my main criticism against it—is a mere gesture to pass the time while His Majesty's Government wait and see whether the Americans will make fresh loans and gifts to us. I am certain that the Americans will be generous, irrespective of the colour of our Government, but that help, as I will explain, is not likely to come soon enough to prevent a further drastic cut in our food supplies. If that is the case, it is a scandal that a beginning is not made in this autumn Budget to shift the spending of the people from nonessential to essential goods.

  1873
  What are the facts about our prospective import of foods and other necessities? Last August, we ran out of borrowed dollars. We were left with £500 million or £600 million of gold and free reserves. About the same time, the Paris Committee, studying the Marshall plan, estimated the dollar requirements of Great Britain in 1948 at 2.6 billion or £650 million. That figure of £650 million had already been cut down at the request of the Americans who descended upon the conference. That figure made no allowance for the exhaustion, then unforeseen, of our stocks and reserves between August and the end of this year. That figure was based on a price level which has substantially increased since. As hon. Members know, in the Marshall plan wheat is taken at 2.60 dollars and it was sold in Chicago yesterday at 3.14 dollars. By all sober reckoning, the figure of £650 million is far too low.
  What did the former Chancellor of the Exchequer do to impress upon the Americans the need to hasten aid to the British people, if their rations are not to be cut by an intolerable amount? What he did or did not do, I do not know, but we can all see the effects of his action. The effect of his presentation of the British case in America is that this country is not in the queue for interim or winter aid. France, Italy and Germany are in the queue. Britain is not in the queue, although we saved the one and helped to defeat the others. The day will come when this House will disapprove the action of the Foreign Secretary in lumping the credit of Great Britain in with the countries she either saved or defeated.
  The result of this policy is that we can expect no help before the late spring, when the main Marshall plan will, we trust, be voted. What will happen? Are the Government prepared to say that our economy can hold out until that date? Are they prepared to say that before that time the stocks and goods in this country will not be run down beyond the danger point? Are they prepared to say that there will still be sufficient reserves in the banking system to finance the trade of the sterling area, without which we cannot live? For my part, I fear a disastrous interval during which, whether further help comes to us in the late summer of 1948 or not, we cannot maintain the supplies in the pipe-line. What then is the good of fiddling about with this little Bill
  1874
  which has no object whatever except to persuade people to spend more of their money on the wrong things? Why are we not this afternoon beginning to make a positive, constructive national effort to expand the production of the things which the people need? Although the first steps, such as cutting the food subsidies, would be unpleasant and painful, we must take them one day in an orderly manner which we decide ourselves, or they will happen in a cruel and disorderly fashion. It is cowardice and party politics that bedevil us.
  As the House knows, I have never underrated the vast difficulties, temporary and deep seated, that came crowding on to this country at the end of the war. All the strength and all the spirit of a united and unwearied nation would have been taxed to the full to overcome them; no party politics, no partisan Government, could have surmounted them. But look at us now—poorer and hungrier every month, ignorant of the basic facts, wanting in common purpose, sniping at each other in the class war, miserably divided. I wish the new Chancellor were here, because he towers over his quaking colleagues. I would ask him to go back to the electors now, and make a fresh start. Let us go back and ask for a new mandate, not for party programmes but for survival. Hon. Members opposite know quite well that the longer they put off the Election the more seats they will lose—
  Mr. Soollan: We have not lost one yet.
  Mr. Eccles: Such losses, although a consolation to me, weigh nothing in the balance against the earliest opportunity of making a fresh start, facing reality, and again inspiring the vigour and spirit of our people.
  7.32 p.m.
  Mr. Warbey: We can congratulate the hon. Member for Chippenham (Mr. Eccles) on one thing at least—being more frank with us in respect of the cuts in public expenditure than was his colleague the right hon. and gallant Member for Gainsborough (Captain Crookshank), who talked so vaguely about them earlier today. The hon. Member for Chippenham was not perhaps quite as frank as his colleague the hon. Member for Louth (Mr. Osborne) who, in the Debate on the Budget Resolutions, said that he would cut out food subsidies com-

  1875
  pletely; nor was the hon. Member as frank as his colleague the hon. Member for Monmouth (Mr. P. Thorneycroft), who said he would reduce the food subsidies to £300 million; nor was he quite as frank as his colleague the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), who said, or indicated clearly, that if he had been in power he would have reduced the amount being spent on family allowances and old age pensioners—
  Mr. Quintin Hogg: He did not say that.
  Mr. Warbey: He did, or at least he implied it.
  Mr. Hogg: No.
  Mr. Warbey: If the hon. Member will listen I will tell him what the right hon. Gentleman the Member for the Scottish Universities did say. He said that the Government had been over hasty in introducing old age pensions increases and family allowances; in other words, that if he had been in power he would not have introduced family allowances or made those increases.
  Mr. Hogg: He did not say that.
  Mr. Warbey: There is no doubt whatever of the implication of the right hon. Gentleman's argument. Following my brief word of congratulation to the hon. Member for Chippenham, may I now say that I found his argument more full of muddled thinking and fallacies than any argument I have heard in this House for a long time. He asked why this country is not in the queue for interim aid from the United States, why Austria and Germany are getting aid and we are not? I wonder if he is aware that those countries are enduring living standards far below the level which, fortunately, exists in this country.
  Mr. Hogg: You wait.
  Mr. Warbey: Apparently the hon. Member will be only too pleased when the standard of living in this country is reduced.
  Mr. Hogg: The hon. Gentleman should not say that.
  Mr. Warbey: I have not given way—
  Mr. Hogg: On a point of Order. If I cannot make the hon. Gentleman grant the usual courtesy, Sir, I will do so on a point of Order. Is it in Order for a Member to accuse another of being pleased, or suggesting that he would be pleased, if the people of this country had to suffer more starvation than the incompetence of this Government has made them suffer already?
  Mr. Deputy-Speaker (Major Milner): I do not think a point of Order arises.
  Mr. Hogg: Then may I have your guidance?
  Mr. Deputy-Speaker: No, the hon. Gentleman cannot insist on having my guidance. I have ruled that the hon. Gentleman's point was not a point of Order.
  Mr. Hogg: May we take it, then, that your Ruling is this: that Members on the other side may accuse us of being pleased at the sufferings of people in this country without having to undergo any kind of rebuke from the Chair?
  Mr. Deputy-Speaker: The hon. Member has no business to make that remark. I, personally, did not hear what the hon.-Member for Luton (Mr. Warbey) was saying, and no one knows better than the hon. Gentleman himself some of the things which are frequently said from both sides of the Chamber. I do not think I am called upon to intervene on this occasion.
  Mr. Hogg: As you did not hear what the hon. Member opposite said, Sir, may I repeat it, and ask for your Ruling? The hon. Gentleman said that I should be pleased if the standard of living of our people was further reduced. In my submission, I am entitled to a Ruling on that, because whether or not a great many improper things have been said in this House before, I claim that that is a direct and personal attack on a Member of the House. A Member so attacked is entitled to the protection of the Chair, no matter on what side he sits.
  Mr. David Jones: On a point of Order. May I point out that when my hon. Friend the Member for Luton was making a comparison between the standards of living in Austria and Germany with this country, the hon. Member for Oxford (Mr. Hogg) retorted, "You wait?"
  Major Bruce: Further to that point of Order. May I draw the attention of the hon. Member for Oxford to the advice once given by the Leader of the Opposition—not to be thin-skinned on these occasions?
  Mr. Deputy-Speaker: Personal allegations are always undesirable; there is no question about that. I do not think I am called upon to say any more on this occasion.
  Mr. Warbey: If I may be allowed to resume my speech, now that the hon. Member for Oxford has somewhat cooled off, perhaps we may get back to the point I was making, which was that one of the minor fallacies in the speech of the hon. Member for Chippenham was his reference to the fact that this country would not be receiving interim aid from the United States during the coming winter. We are certainly not in the position of Germany and Austria nor, whatever the hon. Member for Oxford may think, are we likely to be in the near future. As for a comparison with France and Italy, we are perhaps in the unfortunate position of not having a very large Communist Party in this country. If we had, we might have qualified for American aid somewhat sooner, because it seems that the recipe for American aid is to have a large Communist Party.
  The hon. Member for Chippenham suggested, with general agreement, that if all controls were removed, the highest and sharpest rise in prices would be in the field of the necessities of life. That, of course, follows from the fact that elasticity of demand for the necessities of life is not very great. If there is even a comparatively small deficiency of supply compared with demand, there will be a disproportionately large increase in price. It is precisely for that reason that this Government have followed, and will, I hope, continue to follow, the policy of subsidising the necessities of life to help to keep prices within reasonable bounds. The hon. Member went on to say that to attract a larger production of commodities, we should increase prices. I can understand that he should want to restore the operation of the free price mechanism in this country.
  That is his argument and the argument of several hon. Members opposite. They would like to see a state of affairs in which, following deflation, we had the
  1878
  restoration of what is euphemistically called a reserve pool of unemployed. They would like to see wages falling according to the law of the market to their natural level. They would like to see, in addition, a rise in the price of commodities, and a reduction in the social services, and the general standard of living of the common people of this country. That is the programme of hon. Members opposite, and it is right to hear it frankly stated sometimes. I hope it will be as frankly stated at the Gravesend by-election.
  Mr. Joynson-Hicks: Will not the hon. Member say that that is his impression, and not what we stand for on this side of the House?
  Mr. Warbey: I am afraid it is much more than that. We have heard from hon. Members opposite, from the hon. Member for Chippenham, and others, definite arguments in favour of those things. In the case of food subsidies and social services we have on previous occasions heard arguments in favour of general deflation. The whole of this argument about the vast inflationary gap—which is very much inflated in the minds of hon. Members opposite—is really a disguised argument for a policy of deflation which has been advocated in the "Economist," that spiritual guide of hon. Members opposite, for many months past. The "Economist," moreover, has not concealed the nature of that policy, which is to restore a free market in wages, as well as in the prices of commodities, in order that they may be brought down to a lower level. The whole argument for a cut in food subsidies is, in fact, an argument for lowering the standard of living of the masses of the people in this country and for reversing the process of retracting income in favour. of the lower income groups which has been the policy of this Government since it came into power.
  Mr. Spearman: May I ask the hon. Member if he is therefore advocating that food prices should be stabilised at the present level? I would point out-that that is not what the Government are doing. They are spending £392 million, which will, perhaps, have such an inflationary effect, that it will raise prices far above the present level.
  Mr. Warbey: That is a perfectly fair point. I entirely agree that the Government have said, through the former and the present Chancellor of the Exchequer, that the present policy is to fix a ceiling limit of £392 million for food subsidies. Personally, I rather regret that. In my view the policy of keeping the cost of necessities stable is one that we should continue to pursue. If there is a further rise in the prices of these necessities, that rise should be met by increased subsidies out of increased taxation.
  Mr. Spearman: That is not the Government policy.
  Mr. Warbey: I have already said it is not. The Government policy is to continue to maintain the subsidies at the present level, whereas the policy of the hon. Members opposite is to make a smashing reduction in those subsidies. That is the difference. It is a very big difference indeed, a difference, advocated by the hon. Member for Monmouth, of £300 million a year; of 2s. 3d., as he admitted, per head for every man, woman and child in this country. Now I come to one more most astonishing fallacy of the hon. Member for Chippenham, which he will see himself as soon as it is pointed out. He said, quite rightly in certain very limited cases today, that you may secure an increased amount of production by offering higher prices. You do that by offering the higher price to the producer. That is what the Government have been doing in their agricultural policy. You do not achieve that by compelling the consumer to pay a higher price to the retailer. If the consumer pays more for his loaf of bread as a result of the removal of food subsidies, that will not produce one single loaf more in this country.
  Mr. Eccles: I expect I am very foolish, but it hurts me to think I am as foolish as the hon. Member makes out. Naturally, I assume that the increased price would be passed back to the producer. I know quite well, and so does he if he knows anything about village life, that the production in this country today is far below what it would be if the prices were higher to those who grow food in their gardens and allotments, and on their farms.
  Mr. Warbey: I think the hon. Member has forgotten that that was part of his
  1880
  argument for the reduction of food subsidies. He said that reducing food subsidies would increase the price which was paid to the producer. Of course, it would do nothing of the sort. These are two separate cases. The point is so elementary that I heardly need to explain it further. Food subsidies have nothing whatever to do with the raising or lowering of the prices paid to the producer.
  Mr. Eccles: If the hon. Member thinks that the price of eggs today is anything like what it would be if there were no subsidy, he is wrong. Supposing the subsidy were taken off eggs and the price of eggs allowed to go up with the demand, there would be an extraordinary increase in production.
  Mr. Warbey: I think that what the hon. Member is advocating now is not merely that we should remove the food subsidies but, in addition, that we should remove also the price control. Is that what he is meaning?
  Mr. Eccles: On eggs, certainly.
  Mr. Warbey: On eggs, and on all essential foods?
  Mr. Eccles: No.
  Mr. Warbey: On most of them?
  Mr. Eccles: I cannot go through all the items, but I certainly would bring the prices paid to the British farmer up to world prices, and even a little more, for everything he produced. I can assure the hon. Gentleman that that is the only way to get an expansion of production. There are already certain prices offered by the Minister of Agriculture which are fairly satisfactory. In those cases he would not need to do anything. But it is necesary to do something desperate to increase food production in this country.
  Mr. Warbey: I am grateful to the hon. Member for his frankness. We have now been told that, not only are we to increase the cost of living by removing the food subsidies, but we are further to increase it by raising the prices to the producers. I wish the hon. Member would go down to Gravesend and tell that to the electors there, and find out what their response would be tomorrow. I think he would have a shock. I hope it will go out to Gravesend in time for them to know before they record their votes tomorrow.

  1881
  We have had in this Debate a great deal of discussion about measures to deal with the inflationary gap, and I entirely agree that this is a question of the very greatest importance; but I think it is worth noting, and worth placing on record more than once, that this Government have been more successful in their measures to resist the inflationary process than any other Government in the world, not excepting the United States—as we know to our cost. That is something for which other countries ought properly to envy us, and of which we in this country ought justly to be proud. I hope that when the hon. and gallant Member for Central Glasgow (Colonel J. R. H. Hutchison) goes to the United States, as I understand he soon will, as an unofficial ambassador and spokesman of this country, he will tell America all about what we are doing in this country to resist the inflationary pressure, and perhaps he may be able to give some good advice to the Americans on the subject.
  I was very glad when the Chancellor of the Exchequer, in his winding-up speech on the Budget Resolutions, laid emphasis on the various ways by which inflationary pressure can be resisted and overcome. He pointed out that the inflationary pressure can be overcome not merely by definite fiscal measures, but also by other means, many of which may be regarded as more important perhaps than even the proposals contained in this Finance Bill. The first and most important of all is an increase of production in order to raise the volume of goods in circulation and so in that way meet the inflationary gap.
  I fully realise that at least one of the measures of this Finance Bill, the proposal to increase the Profits Tax, will be a considerable stimulus to increased production. The workers of this country will, I am sure, be induced to put further effort into what they are already doing by the knowledge that some part of their increased effort will go, not merely into the pockets of private employers and shareholders, but for the general benefit of the country and for the benefit of the national Exchequer. Frankly, I should like to see rather more done in this direction. I believe that there are other fields in which we can stimulate greater effort from the producers of this country by ensuring a greater degree of equality of sacrifice.
  1882
  There are far too many people still living on tax-free money—people living and enjoying a good life upon money which results from capital appreciation; or living on free capital; or living on inflated expenses accounts; or living by buying and selling on the side and in various other ways in which it is possible to make or use money for immediate consumption.
  I should like to see further efforts made by the Chancellor of the Exchequer, if not in this Finance Bill then in next year's, to mop up some of these inflated sources of expensive living which still exist. Of one thing I am absolutely convinced—that during this very difficult period through which we are passing the mass of the people of this country will be prepared to go all out in order to put this country again on its feet upon one condition, and that is that they are satisfied that all the people of this country are taking a fair share of the burden, with the heaviest burdens falling on the broadest shoulders, and with no one being allowed to dodge the column. If we can get to that position we need not fear about the contribution that will be forthcoming from the working people of this country.
  There is another very important field in which it is possible to close the inflationary gap without increasing taxation, and that is by a reduction in public expenditure, an argument favoured by hon. Members opposite. It must never be forgotten, however, that the greatest single direct inflationary element in our national economy, which is most directly under the control of the Government, is the expenditure on our Armed Forces and overseas commitments. In the Finance Bill last spring the sum estimated for this in the current year was £899 million, an enormous expenditure out of which considerable saving must be effected. We have been told rather vaguely by the former and the present Chancellor that a cut is to be made in this field, but we have not been given anything very precise. We should like to know—and we ought to be told—what will be effected in savings on expenditure in the reduction of the Armed Forces between now and 31st March next.
  The Minister of Defence said, in reply to a Question the other day, that it is likely not to be very great. I must say that is rather startling when one considers the seriousness of our position in regard to shortage of dollars and our general

  1883
  balance of payments situation. This was known as far back as the beginning of August of this year; that is to say, after only half of the financial year had passed we were in the position of taking necessary measures to make really drastic cuts in the fields of inflated expenditure. I should be very sorry indeed—and I believe the people of this country would be very surprised—if the expenditure on the Armed Forces were not lowered by something like £200 million. Nothing less than that figure would be totally adequate in face of the position with which we are confronted at the present time.
  Finally, I should like to have some information on the one field of expenditure about which we have been given a precise figure, namely, a reduction in the expenditure on capital construction of £200 million. We are still lacking that information, which has been promised us in a White Paper. I have not the time to develop this point as fully as otherwise I should like to do, but I want to express the hope that the Government are not taking the line of reducing capital expenditure in the public sector because it is easier to control than capital expenditure in the private sector. A question has already been asked about the distribution of the proportions between these two fields, and I hope that not too great a sacrifice will be made in the public sector. I hope we are not going to take the laissez faire attitude which was expressed in the White Paper on Employment - Policy presented during the period of the Coalition Government—a laissez faire attitude that the private sector of capital expenditure is too difficult to control, and, therefore, all we can do through Government policy is to counteract excessive expenditure in the private sector by a reduction of expenditure in the public sector. I should like to have an assurance that that is not the policy that we are following; that, in fact, we have a definite plan of reduction in capital expenditure related to the actual economic position of this country and its future economic needs, and that, if necesary, we shall find a means of restricting expenditure in the private sector to the fullest extent that may be required.
  8.0 p.m.
  Lieut.-Colonel Sir Thomas Moore: Having listened to the whole of
  1884
  this Debate, I think that everything that can be said about the Betting Duty has been said, both by the experts, and the victims, and we have also heard the theorists from the other side, giving their views and experiences. Therefore, I propose to confine myself to a few general remarks on matters arising out of the Bill itself and the Budget from which it has sprung. I think the whole House will have admired the sympathetic and fraternal way in which the present Chancellor of the Exchequer supported the half-hearted Measure introduced by his colleague. I think also that the Financial Secretary to the Treasury has shown to the terms of that half-baked Budget a loyal adherence which deserves the full appreciation of his party and the sympathy of the House.
  There is no doubt in my mind that this is a very odd Bill, just as the Budget was a very odd Budget. Indeed, I think it will be generally agreed that there is some wonderment in the mind of every hon. Member why the Budget was brought in at all. Second thoughts, which are invariably more sensible, come, and then one realises that this is the Budget and the Finance Bill of frightened men. Indeed, this Finance Bill is due entirely to the result of the municipal elections. [Laughter.] Hon. Members may laugh, but it must be so, since the Bill has little or no connection with our present economic difficulties. So far as I can see, the student abroad will have nothing but doubt and consternation about the Bill, while at home the Bill has already created ridicule or—according to how it is received—relief. How, for instance, can the United States of America be expected to give us any help when they read its terms? How can we expect our own people either to worry or to work when they read the Bill?
  The only words which can describe the Bill are "fiddling, tinkering and fumbling." Are we in a crisis, or not? That was the question asked by my hon. Friend the Member for Chippenham (Mr. Eccles). That was the anxiety that ran through his whole speech. If the late Chancellor had studied the Press, he would have known and realised that our people, before he introduced the Budget, were prepared for anything. I wonder where the right hon. Gentleman's public relations officers were. They were certainly not in the queues. The queue

  1885
  today is where opinion is formed and expressed, and it is from the queues that the Government will be destroyed much earlier than they fear. From all this expectation, from this grim mountain of expectation, has come this timid mouse of proposal.
  What is proposed? Merely that the "dogs" shall yield us some of their unearned wealth, that the pool gamblers shall lose an infinitesimal portion of their unexpected fortunes, that the thirsty shall pay more for their thirst and that the downtrodden middle-class shall become a shade more crushed. Of course, there is this fantastic attack on the Press, through the advertisement tax. That I cannot understand. The right hon. Gentleman who introduced the Finance Bill today was himself, as one could see, uncertain about the origin of the tax and about its effects. He knows, as the House knows, that no newspaper can give its up-to-date, magnificent news service today without its advertisements. Let me take as an example a journal that many people in this country read, "Everybody's." I have no interest in that journal at all. Everybody knows that "Everybody's" gives for twopence first-class, informed and educative articles. That can be done only because of the advertisements, and of the circulation on which the advertisements depend. Therefore, by this silly, ill-considered tax, we shall ruin more of the cultural side of our community than we shall do by any other part of the Bill.
  In examining the Bill, one falls back upon one query: Where is the brake upon inflation? In what part of the Bill can that brake upon inflation be found? Where is the dynamic determination to halt our plunge downwards into financial destruction? Where is that dogged decision, which is inherent in our country and which should be represented in this House, to rescue our affairs from the dangers and disasters that threaten us, whatever the hardship, discomfort and misery that might be inflicted? I believe that the nation was waiting for inspired leadership, for an inspiring call and for inspired action. It has got none of them, either in the Budget or in the Finance Bill.
  Another very serious problem must be agitating the minds of those who represent industrial districts. Just because the
  1886
  Government have not the courage to touch their fat pay packets of good-looking money, the wage-earners of this country are living in a fools' paradise. It is caused by the folly of the Government. No one has yet told the wage-earners that that comfortable pay packet may not be worth more than a tenth of its purchasing power in the course of a few weeks. Even with that tenth there may be very little in the shops for the wage-earners to buy. That is where I think the Government are following a most dismal path, which a lot of us in this House are following too.
  The present Chancellor and his predecessor seem to be like charlatan doctors who would rather put a piece of newskin on a cancer than apply the harsh but effective knife of healing. Why do not the Government face the operation, tell the patient the truth and trust in the inherent guts and character of the British people? Fear and panic. Panic and fear are the dominating key words of this Administration. I ask this one simple question: why, instead of still further crippling the capacity of the middle-class to buy anything, do not the Government deny to the black marketeers their capacity to buy everything? As has been asked several times from the opposite side and also mentioned on our side, what about the possibility of calling in the existing Treasury issue? Then the Government would find those hidden millions that are now pursuing the scarce luxuries that we have heard about. The Government could fasten upon those millions and dig their possessors out of their holes. The Government would be able to readjust our financial affairs, knowing where they stood.
  If the Government have not the courage to do that, will they do something else? Will they make it illegal for anyone to pay any account more than £10 in cash? If not £1o, say £25. The cheque would, of course, always be paid to the order of the seller. I think those measures would have a tremendous effect upon the millions of pounds of paper money which are now denying to the people who have less the right to buy what they want. As I said before—and I say it again because I am so convinced of its truth—incentive is the answer to the Government's riddle. It has been said on the

  1887
  opposite benches and on these benches and I myself have said it, but apparently the Government do not trust us. They trust in the stick. That is most unfortunate. In providing incentives you not only give the people something to buy, and so halt inflation, but also increase the production you so badly need. That has already been proved in the mines, if the increased coal output means anything. Incentives have been given to the miners and they have produced more coal. Surely, that is an indication that we are on the right lines?
  Mr. Orbach: Nationalise the lot.
  Sir T. Moore: I am not talking about nationalisation but about the increased basic wages, amenities and food which have been given to the miners.
  Mr. Orbach: They have not got them yet.
  Sir T. Moore: It would probably mean draining our dollar reserves to their very last dreg, and it might even mean draining our £600 million gold reserves too, but if it is true, as we have been warned by hon. and right hon. Gentlemen opposite, economists and experts, that we are desperate, surely we should try anything that has already proved itself even so slightly as in the mines? That is my first suggestion.
  My second suggestion is to increase taxation, not only as the Chancellor has done on beer and whisky, but to restore the basic petrol ration and tax that, too—very heavily—and then let the public decide what they are prepared to go without. That would carry out the purpose of the Treasury and would certainly benefit the people of this country. Next—I know this is possibly revolutionary—I would abolish all Income Tax under P.A.Y.E. on incomes of less than £8 a week—£400 a year—as a temporary measure. This would appeal to those sections of the community on whom the Government depend for their survival. We could always make good any losses through indirect taxation. The Chancellor appears not yet to have seen the possibilities of indirect taxation. In that way one can make people pay for luxuries if they want them, but it must not touch the basic controlled ration.
  1888
  Now let us examine this question of the food subsidies. Hon. Gentlemen on this side have been taunted on that matter by hon. Members opposite. I know there will be a bleat from the other side at any suggestion of reducing the subsidies. I would like to say that no one has ever yet suggested removing them altogether, but when I asked the former Chancellor of the Exchequer a question on this point a couple of weeks ago, he said that if the food subsidies were abolished altogether—as I said, no one has suggested that—it would mean that Income Tax could be reduced by 3s. 3d. in the £, but it would add I2S. 6d. extra to the weekly budget of a household of four; that is, 3s. 1½d. per head per week. If 50 per cent. of the subsidies were taken off, it would mean a cost to the individual per head of is. 6d. per week—the price of a cheap cinema seat. For that we could have a reduction of is. 6d. in the Income Tax and so give that tremendous impetus to industry which would give that incentive from which the hon. Member for Luton (Mr. Warbey) suggested that even employers might benefit.
  Mr. John Hynd: It has been said clearly from the other side on many occasions that the cuts should be to the extent of £300 million. Is this a reduction?
  Sir T. Moore: I am making my own speech and not anyone else's. I know the hon. Gentleman will forgive me if I do not give way, because there are other hon. Members who wish to speak, and I am just coming to the end of my remarks. What I said on one occasion before—unfortunately it has not been taken up by the Chancellor—was that it is surely not beyond the wit and ingenuity of the Treasury to devise some method by which these subsidies could be eased so that we could present an honest balance sheet to the nation without at the same time harming the lower wage-earning groups.
  There are two final suggestions. One is the question of national lotteries. I know that it might offend a great number of honourable, honest, decent citizens of this country even to think for one minute of a national lottery recognised by the State, but we have recognised the bookmakers. We have not only recognised them, but have put them in a privileged position. Therefore, why should we squirm at being logical? My last proposal is that the

  1889
  right hon. Gentleman shall withdraw this Bill altogether, and substitute a Bill more adequate to the gravity and urgency of our present situation.
  8.16 p.m.
  Mr. Orbach: I will not follow the hon. and gallant Member for Ayr Burghs (Sir T. Moore) because I have listened carefully to the speeches delivered from the other side during the last three hours, and I can find only one thing they have in common with each other. That is that they would withdraw some part of the food subsidies. However, none of the hon. Gentlemen opposite has been prepared to say definitely and emphatically that he is opposed to food subsidies and would abolish them if it were in his power.
  I want to deal with one or two aspects of the Bill and, in particular, with the Purchase Tax changes. The Chancellor estimated that he would raise an extra £10 million this year by increasing the taxes on various luxury articles. He said that this tax brings in revenue, absorbs inflationary purchasing power, and also helps the export drive. I believe that is only true to a limited extent, and that when a Purchase Tax becomes unreasonable there are other dangers. On some of the luxury articles being sold in our stores today there is already a Purchase Tax of 100 per cent. I think that is unreasonable, and when such a Purchase Tax is raised to 125 per cent. plus 10 per cent. uplift for the made up article, we have reached a Purchase Tax which is fantastic. I doubt whether 25 per cent. of the revenue due on such articles is collected by the Customs and Excise; which means, of course, that 75 per cent. of the goods in these classes must find their way into the black market.
  I want to ask the Chancellor to consider the Purchase Tax again. In fact, I am hardly inclined to agree with the principle of a Purchase Tax. I believe that it imposes rationing by purchasing power on the basis of money available, and. it is wrong in principle that we on this side should be responsible for continuing that practice. It would help to restore the waning moral fibre of our people, if it is waning, if the new Chancellor would use the enormous power in his hands to prohibit completely the manufacture of luxury articles for home consumption, and to import only raw materials where the goods are being manufactured for
  1890
  export purposes. From my knowledge of industry and trade, I am convinced that the revenue is suffering and that a great deal of corruption has taken place amongst the trading classes as a result of the imposition of Purchase Tax at the rates suggested.
  I was interested to hear so many references to the United States this afternoon. It is interesting to discover, and I think our crypto-Americanos on the other side of the House in particular, will be pleased to hear that in the United States £250 million is collected each year by taxes on gambling. The United States is as religious a country as our own. Book-makers are licensed over there, in spite of the desire of the people to get away from gambling. I believe the Chancellor should make an overall gambling tax. He should licence bookmakers, and I support hon. Members who have made that suggestion during the Debate. At the same time, I cannot see any reason why in this Bill there is not a Clause for a capital appreciation tax. Such a tax would present no difficulty in collection, and it would be a real incentive to those who have only the skill of their hands or the intelligence of their brains to sell. In the United States such a tax goes up to 91 per cent. I am sure that if it were introduced in this country it would reduce inflationary pressure immeasurably.
  Mr. E. P. Smith: Is it not a fact that in America, in connection with the capital appreciation tax, they also make allowance for losses which, on balance, wipes out the difference?
  Mr. Orbach: I would not agree with the latter part of the hon. Gentleman's statement. I do not believe it wipes out the difference. They have a rebate for losses, but that does not exactly wipe out the difference. It certainly does not do so in an inflationary period.
  The taxation of 50 per cent. of advertising expenditure is justified in the main, but Inland Revenue officers will have to be very much on the alert. I cannot see why under the existing system a company should not double their advertising expenditure, beginning next year—
  Sir T. Moore: There is not enough paper.
  Mr. Orbach: All advertising is not done on paper. There are sales promotion

  1891
  campaigns, which are considered as advertising, and which I think would become liable to taxation under this Clause. I wish to make a plea for certain persons and industries or trades in regard to this tax. While it is justified, there are certain trades where advertising is as much a tool of the trade as is the spanner of the plumber. I have estate agents and auctioneers in mind. Those two professions depend on advertising more than any other occupation, and it would be most unjust if they were curbed in this way. If it is our purpose to handicap them, we ought to be honest about it, and achieve that result in a much better fashion.
  I wish to say a word about a subject which has been mentioned on this side of the House many times, and by an hon. Member opposite. I do not believe that there is a surfeit of idle money in the hands of the working classes or the middle classes. I know that professional and quasi-professional people are not too well off today, and civil servants are certainly suffering considerable hardship. I deprecate very much the use by both Front Benches, and even from the back benches, and in the Press, of the terms "spivs" and "drones" in their search for scapegoats. Why create a caricature of an individual when the actual persons are readily to hand and readily ascertainable? I refer to the type of people who always seem to get the unobtainable meals at restaurants, who always seem to be able to go into an overcrowded hotel and get rooms, or go on the night express which has been booked up at least a fortnight previously, people who always get in a huddle with the salesman in many departmental stores in London, who go behind a screen and come out perfectly satisfied with what has been transacted behind the screen; the people, in fact, who are able to pay cash for all they wish to purchase.
  I believe that they exert a terrific inflationary pressure. They also evade the Inland Revenue and Customs, they drag down our trading standards, demoralise our people and retard production by the comparison of the rewards of those who contribute something to our wellbeing and those who do their utmost to destroy us. These black market barons, who can be seen in all the places I have described, must be dealt with.
  1892
  I noticed the other day in the Press that a greengrocer was robbed of £2,500 in £I notes. I am not suggesting that he was a member of these classes, but might not much of this type of money be acquired by sales under the counter or sales to favoured customers? Questions ought to be asked in. all these cases. There is an inordinate amount of black money running around, and after talks with Inland Revenue officials and Customs and Excise officers, I have come to the conclusion that there is well over £50 million which could be gathered in if, in fact, the present Treasury issue was called in and questions were asked when issuing new notes in exchange for large amounts. There is an overwhelming case for the withdrawal of the present Treasury issue, and I hope it will be done without too long notice being given. I beg the Chancellor, who is so concerned with the moral tone of the nation, and who desires a commercial life free from corruption and bribery, seriously to consider this step, which I am sure will go a long way to restore our national fortunes.
  8.29 p.m.
  Mr. Butcher: The hon. Member for East Willesden (Mr. Orbach) began his observations by regretting that Purchase Tax was as high as 100 per cent. on certain items. I have no complaint that luxury goods should carry tax at that high rate, because if there is large-scale evasion as a result of the heavy rate of the tax, there would be equal evasion if the hon. Member's remedy were applied, namely, the absolute prohibition of their manufacture. In so far as the Budget increases Purchase Tax on luxury goods, it is a good Budget. Indeed, I much prefer to see the tax on furs and silks put up from 100 per cent. to 125 per cent. than to see an increase in the semi-essentials of life, because it will pinch there.
  The late Chancellor the right hon. Member for Bishop Auckland (Mr. Dalton) left to his successor a rather difficult and awkward Budget. The fact is that there is this inflationary pressure to which almost all speakers have referred. The Government are endeavouring to drain that inflationary pressure into certain channels, to reduce the purchasing power of the people in certain ways, to cause them to pay more money for

  1893
  certain items, and to provide other goods for them at less than the cost of production. The policy is changing. That is why the subsidies on cotton, wool and leather have been removed. There has been ample discussion in earlier speeches about the subsidies on food. My view is that in these matters one can never be entirely black or entirely white. Certainly, the food subsidies should remain on many of the main commodities. On the other hand, when there is one egg a week I fail to see any point in subsidising that one egg, particularly when it is at the expense of the tax we pay on scrubbing brushes. When there is one ounce of bacon a week, I see no virtue in subsidising that when it is paid in the increased cost of our tobacco.
  I join with the right hon. and gallant Member for Gainsborough (Captain Crookshank) in making an appeal to the Chancellor to re-examine the proposals in regard to advertising which he inherited from his predecessor. I believe that the more this matter is examined, from the point of view of both the Treasury and business, the more unworkable it will be found to be. I was very glad to hear from the Financial Secretary to the Treasury that it is not intended to make this disallowance retrospective. That is perfectly right. I hope that the Chancellor will adopt similar proposals in regard to Profits Tax. Either we believe that retrospective taxation is right or we consider that it is wrong. The Chancellor has not only the lucid mind to which the right hon. and gallant Member for Gainsborough referred, but he has the logical mind. Doubtless, he will come out as being absolutely against retrospective taxation on all questions.
  I would like to ask what is the proposal m regard to contracts entered into some time ago which still have long periods to run. There will be a revision of advertising expenditure, but what is the proposal with regard to people who have contracted with railway companies or cinemas for advertising for a long time ahead, or with regard to those who have entered into contracts for a series of booklets to appear over a number of years? Are those valid and binding contracts to be held to be free from tax, or are they to have the 50 per cent. deduction? I hope that if the right hon. and learned Gentleman considers this point of value, he
  1894
  will tell us whether contracts entered into before the coming into force of this legislation will be given special treatment.
  I consider that the approach to advertising is wrong. I do not think that advertising can be separated—apart from its wider context—from sales promotion. There are two methods of selling goods. One is to advertise a commodity so widely that everybody wanders into the shop and automatically asks for it. The discount then allowed to the retailer need not be very great. The other method of selling is that in which the commodity is not so widely advertised. On the other hand, the discount allowed to the shopkeeper is so large that the shopkeeper is always eager to push that particular kind of goods. Advertising is only one factor in sales promotion. Similarly, the man who has a large and expensive shop in a main thoroughfare is obviously going to lose very little if he is not able to advertise in his local paper, but what about his blitzed competitor who had to move around the corner? If he has an announcement about his goods, not in his shop window, but in the local newspaper, he will be penalised as a result, in contradistinction to the man who has the better and more extravagant premises.
  Hon. Members have made reference to the effect that this will have on the Press. I do not think that, so far as the national papers are concerned, it will have any very great effect at all. I think that the price at which we get our national papers is ridiculously cheap, considering the good material there is in them, and we could very well afford to pay 2d. or 3d. for our papers instead of 1d. I am very much concerned about the position of the provincial Press—the small local paper which is discharging a very useful function. I do not see how many of these papers are to be carried on unless there is a reasonable opportunity of their securing the local support of their tradespeople. I suggest to the Chancellor that, if he persists in going on with this tax, which I hope he will not, he might seriously consider the provincial newspaper, the county newspaper, having a limited field of circulation, being added to those journals which are to be exempted so as not to attract this tax.
  Advertising must be regarded as only one aspect of sales promotion, and as a single facet of the problem, and I would

  1895
  ask the Chancellor if he thinks this proposal is really the best way of handling the matter. To do it by order of the Treasury, which might mean that, from time to time, no advertising or business man and no accountant is quite clear as to what the position will be tomorrow after he has signed his contract, will bring confusion and inconvenience into the whole field. We admire the loyalty and courage with which the new Chancellor has taken over the burden of this Budget, a burden of which, I am quite sure, the right hon. and learned Gentleman is himself fully conscious. On the other hand, he has said that he has an open mind, and I believe that, in approaching his new task, in which we all wish him well—not politically, of course, because if he sinks we all sink with him, and there is no consolation in knowing whose fault it was when we are all swimming together—there is no reason why he should take over the whole of this burden or insist on preserving one of its worst features. I hope he will show independence of mind, and will not persist with this proposal.
  8.38 p.m.
  Mr. McAllister: I would like to follow the hon. Member for Holland with Boston (Mr. Butcher) on the subject of the advertising tax. Like hon. Members opposite, I have to declare my interest, in that I am a director of an advertising agency. In declaring my interest, I should also say that this tax is a special dispensation in my case, because it is a very great help to my particular company, which is concerned with the teclinical and trade publications, which are to be exempt. We have a special interest in that, because we deal with people in the technical industries and the technical trade Press. Nevertheless, I think that the Chancellor, if he goes forward with this proposal, is going to commit a grave error, not political but moral, and I am sure that the right hon. and learned Gentleman would rather do anything than commit a moral error. I think it is recognised in the country that the present Chancellor stands for a code of moral values which I believe will be of great assistance to the country in the present difficult times.
  It is very difficult to apprehend from the Bill itself what this tax on advertising
  1896
  really means. It is against all the principles of taxation that have ever been enunciated by any Chancellor of the Exchequer representing any Government of any complexion. I am sure that the present Chancellor would want to wait a long time before he deliberately turned his face against a well-established principle in the levying of taxation, that the working costs of promoting any industry should be a charge which is not subject to taxation. I think it is obvious that the tax which is now proposed will produce a completely negligible revenue. Therefore, as part of the general scheme to deal with the inflationary gap, it makes no substantial contribution. Indeed, the Financial Secretary to the Treasury, in putting the case for the tax, did not put forward any arguments relating to taxation. All he said was that the tax would save a certain amount of timber used in the erection of poster sites, and a certain amount of paper. These seem to be very trivial reasons for making such a grave departure from the taxation principles which have hitherto animated the Treasury.
  Mr. Austin: And a saving of manpower.
  Mr. McAllister: My hon. Friend the Member for Stretford (Mr. Austin) says that this tax will also lead to a saving of manpower. If that is one of the arguments in its favour, it was certainly not put forward by the Financial Secretary.
  I want to ask the Chancellor whether any consultation took place with any industry that is going to be affected by this tax in order to see what saving in timber and paper could be effected without resorting to the tax. I think it was the Junior Burgess for Oxford University (Sir A. Herbert) who suggested that this tax would hit the entertainment industry, the theatres and the cinema. That is only too palpably true. But has any consultation taken place with the entertainment industry to see whether by cutting down the size of posters, and in other ways, it could really achieve the saving which the Government profess to be anxious to make? It is very difficult indeed for one person in the entertainment field to make the decision by himself that he will voluntarily reduce the size of posters. Other competitors in the same field might not adopt that course, and he would, therefore, be at a great disadvantage. I

  1897
  would like to think that my right hon. and learned Friend, in consultation with the President of the Board of Trade, will have a look at that matter and see what can be done.
  The other objection to the tax, as now promulgated, is that it subjects industry to a kind of Treasury inspection to which it has never been subjected before. I do not believe that we want the Treasury to be snoopers into every little detailed aspect of the conduct of a business; I do not believe that my right hon. and learned Friend or the Government want anything of the kind; but if that is to be the position, then it will lead to all sorts of attempts to evade the tax and to find other categories under which legitimate expenses can be put down. That will mean that the least worthy industries will benefit, and that the most self-respecting and best citizens in industry will suffer. My hon. Friend the Member for Stretford, who spoke earlier in the Debate, said that the only advertising going on today is prestige advertising. I think that my hon. Friend has not observed the real trend of British advertising. British advertising during the war was intensely concerned with prestige advertising.
  Mr. Austin: My hon. Friend will remember that what I said was that in the sellers' market in domestic goods at home—I was not referring to the export market—there is no need for very much advertising today, because almost all that can be produced is immediately consumed by the public. Therefore, most advertising at home in the domestic field must be prestige advertising.
  Mr. McAllister: I think there is much more in what my hon. Friend is now saying than what he said in his speech. Of course, there is a great deal of truth in what he has just said, but it is not remotely the fact that the greatest amount of advertising addressed to the home consumer today is in respect of articles which are in such short supply that the demand will be there whether there is advertising or not. One cannot by any means separate the home market from the export market in a very large range of industries. To attempt to do so is to attempt the impossible and to court disaster.
  I now wish to deal with one or two other aspects of the Finance Bill. Frankly,
  1898
  I do not like this Finance Bill, partly because, as is agreed in every quarter of the House, the attempt to control inflation by this Bill fails. Another objection is that in every Clause of the Bill there is a strange failure to maintain a solid, decent financial principle.
  Let me illustrate that point by giving one or two examples. I think that some of the increases in the Purchase Tax are possibly necessary in the present circumstances, but I cannot understand how the Government can justify a Purchase Tax which has the following curious effect. If, Mr. Deputy-Speaker, you had ordered a new morning suit a few months before the Budget and your tailor had been unable to deliver it until a few months after the Budget, you would then be called upon to bear the increased Purchase Tax In spite of the fact that the retailer had bought the cloth long before the Budget and the process of making up had gone on long before the Budget, the mere fact that it was not delivered until after the Budget would mean that you would have to pay the increased Purchase Tax. If, on the other hand, you had gone to the same tailor after the Budget and bought a ready made suit from the peg, if that suit was bought by the retailer before the Budget you would not require to pay any increased Purchase Tax. That situation is causing a great deal of unnecessary ill feeling which could have been avoided by an attempt, in framing these financial proposals, to see that not only was the inflationary gap being closed to some extent, but that decent financial principles were being observed.
  With regard to the Profits Tax, I am entirely in favour of the limitation of dividends, but I am not in favour of the limitation of profits. I can see some case for the taxation—and even high taxation—of distributed profits, but I am almost entirely at a loss to find out what case there is for the taxation of undistributed profits. A tax on undistributed profits discourages management, puts a premium on inefficiency, and in no way helps our present drive to increase the productivity of the nation. I think that one of the things that has most seriously hampered British industry over a long period of years has been the failure to write down the cost of its capital equipment quickly enough.
  It may be that this tax on undistributed profits will persuade industrialists to take

  1899
  a longer time to write off their capital equipment. It may be that at the moment, and for a fleeting few months, there will be a slight gain, but I do not believe that the slow writing down of capital equipment will, even in a fairly short run, be good for the industry of this country. I know that the Chancellor of the Exchequer, perhaps more than any other Member of the Government, has tried to persuade industry, managements and workers, to co-operate. This tax is not likely to promote co-operation. It will act in a deleterious way in the long run on the ability of British industry to compete in the world.
  I agree with everything said in all parts of the House with regard to the Betting Duty. I think that, as the proposal stands at the moment, all that one can say is that the Government have flown a kite to see what the reaction in the country will be to a tax on the tote. I think it has been encouraging that there has been no enormous outcry by Nonconformists and the Churches, because the possibility of such an outcry has been an argument against a betting tax from time immemorial. There may be a moral issue involved, but so long as it is the fact that millions of our fellow citizens do gamble, and will go on gambling, we may as well recognise the fact and proceed to act on it in a wholesale, comprehensive way rather than to take in this way a mere nip at it.
  Dr. Morgan: This is a rather curious argument to me. I am, I suppose, an ordinary citizen. I do not bet. Am I to understand from the hon. Member's words that because a thing is done by a certain section of the community, even though he himself recognises that it may be immoral and a vice, he thinks it is legitimate to recognise it and to use it for revenue purposes?
  Mr. McAllister: No. The former Chancellor of the Exchequer, in introducing his Budget, said that the reason he would not tax bets placed through bookmakers was because we should have a new form of inflation with too few tax collectors chasing too many bookies. At least, however, he recognised that there are an awful lot of bookies and that an awful lot of betting is going on, and I think it is
  1900
  ridiculous for this Government or this House to live in a dream world in which they pretend that betting is not going on. There is something to be said for betting—although, rather like the hon. Member for Rochdale (Dr. Morgan), I bet very rarely—in that betting is one way in which the people of this country can take a chance, and it shows that they like to do so, and are not always looking for security and safety, but are willing to take a certain risk.
  Dr. Morgan: That is the most immoral argument I have ever heard in this House.
  Mr. McAllister: I have spent a good deal of time recently looking into the difficulties of labour in industry at the present time. There are high wages in some industries, but a good deal of the money earned is going on betting—not on the tote or even through the book-makers, but amongst the men themselves. Whether the hon. Member for Rochdale likes it or not there are a great many people in this country who like to bet and who like to gamble.
  Dr. Morgan: But there is a lot of prostitution going on in many countries in Europe, and in all civilisation.
  Mr. Gallacher: And in London.
  Dr. Morgan: And in London, of course, but no more in London than anywhere else.
  Mr. Keenan: Why not tax it?
  Dr. Morgan: When the hon. Member for Rutherglen (Mr. McAllister) is asking for a tax on the vice of betting, why does he not ask for a tax on the vice of prostitution, too?
  Mr. McAllister: That is just about the silliest argument I have ever heard.
  Dr. Morgan: But the hon. Member cannot answer it.
  Mr. McAllister: I will answer it. Prostitution is a vice, and I believe that in this country we try to deal with that vice. I believe, also, that we do not succeed. But to regard prostitution and betting on greyhounds, horses, or anything else, as being remotely in the same

  1901
  class shows that, although the hon. Member for Rochdale went to the same university as myself, the quality of education there was not quite so good in his time as it was in mine.
  I will finish by dealing with one other aspect. The great value of this Debate is not how it will affect the present Finance Bill, but how it will affect the shaping of Government policy when the Chancellor comes to present his first full Budget in the spring. I think that the Chancellor should have a look at the P.A.Y.E. system as it affects production. In certain industries very high wages are paid, very high incentive bonuses are paid, and very high overtime rates are paid. A man may make, say, £16 in a particular week, but when he gets his pay packet he finds he is getting, not £16, but only £11 or £12. That man says to himself, "Well, I put in an awful lot of hard work this week, and I do not seem to have got value for my money. Why should I work so hard as this for the Chancellor of the Exchequer?" That may be a very regrettable attitude, but it exists. Another aspect of P.A.Y.E. is that if there is an unofficial strike—and we have had a few—a man who has gone on that unofficial strike receives back from the Inland Revenue, instantly, some of the money he has previously paid in as P.A.Y.E.; and if it is an official strike he may receive quite considerable sums in addition to his strike pay, so that his total incomings may be regarded as a quite substantial sum. That makes unofficial strikes very much easier.
  A third point with regard to P.A.Y.E. is that under the old system, by which one received a demand note, men in industry who had been making high money but who had made no provision for the payment of taxation were looking for overtime and for opportunities to make more money. Consequently, there was a great desire to produce more in order to earn more money by means of overtime. I am quite certain that if the Chancellor looks into that problem as it affects, for example, the dock industry, he will find that one of the best things he could do to encourage the quicker turn round of shipping in this country would be to have a close examination of the effect of P.A.Y.E. on production.
  I conclude with a reference to the speech of the hon. Member for Chippenham (Mr. Eccles), because it was the best
  1902
  speech from the Opposition Benches, and because he stated quite clearly what the right hon. and gallant Member for Gainsborough (Captain Crookshank) and others had not taken the opportunity of saying. He was quite clear in his policy. He would cut down food subsidies; he would abolish price controls; and he dared to compare what we had done in this country with what had been done in the United States, as if he had not read President Truman's recent, most spectacular, and best speech, in which the President of the United States had to appeal to Americans to restore the price controls which they had so hastily abandoned. One can see the force of that when one realises that in the City of New York today, according to a commission of inquiry set up by the American Churches, 2,500,000 people are living on less food per week than is represented by the basic British ration, simply because the Americans have allowed their price mechanism to get out of control. The hon. Member for Chippenham said that we were poorer and hungrier every month, but he did not look as if he knew what it was like to be poor or hungry. Many on this side of the House know from their personal experience what poverty and hunger mean, and we are not going to allow any Government which we support recklessly to destroy the standard of living of the British people by a Tory policy of cutting food subsidies.
  9.1 p.m.
  Mr. Assheton: May I add my congratulations to those which the right hon. and learned Gentleman has received from all sides on his elevation to his high office? He will not expect me to suggest that either the taxpayer or Members of the Opposition are to be congratulated on that event, but my congratulations to him personally are none the less sincere. The right hon. and learned Gentleman has certainly inherited a Finance Bill which has called forth plenty of criticism and comment, not only from this side, but also from hon. Members sitting behind him. We have all listened with interest to the speech made by the hon. Member for Rutherglen (Mr. McAllister). In the earlier part of his speech he gave promise of becoming quite a good Tory, but his closing words were intended to dispel any suspicions of that possibility happening.
  Mr. McAllister: I hope that I showed no such promise. I was merely trying to examine the Finance Bill, as other hon. Members have done, without any party feeling in regard to any of its particulars.
  Mr. Assheton: I quite appreciate that, and I think that the hon. Member did it extraordinarily well. The hon. Member for Stretford (Mr. Austin) told us that we never put forward any alternative proposals. That is easy enough to say, but I do not think it is true, because there have been a good many speeches from this side which have made some positive proposals. The Bill is intended, according to the right hon. Gentleman who introduced it, and according to the right hon. and learned Gentleman who now occupies his position, primarily to deal with the question of the inflationary gap. I wish to suggest some of the things which I consider necessary for that purpose.
  The three things I propose to do are, first, to discuss the suggestion that the Chancellor of the Exchequer should modify the policy of ever cheaper money which his predecessor pursued; secondly, to suggest once again that he must greatly reduce both the annual and capital expenditure, particularly the expenditure of the Government and its various agencies, and above all curb waste and extravagance wherever it is found; and, thirdly, to suggest that the Chancellor of the Exchequer finds some way—and this will help the hon. Member for Rutherglen—before the next Budget substantially to reduce Income Tax, including P.A.Y.E., which is not only hindering trade and commerce, and discouraging workers and employers alike, but is also having a bad effect on savers.
  I will deal first with the question of cheap money. In his winding-up speech on the Budget Resolutions, the Chancellor of the Exchequer referred to the fact that there had been some criticism from this side of the House and other quarters of the policy of cheap money. I would like to make clear the position which we take up on this matter. We quite understand the advantages of cheap money, but what we have complained about is the method which the late Chancellor adopted and the length to which he pushed his policy. It was the aggressive pursuit of cheap money to which we objected.
  1904
  There is no doubt that this policy carried the interest rate much lower than was wise. Therefore, the Government were forced into the position of having to prevent a fall in their own securities by buying the securities themselves, and in order to buy the securities, money was created for the purpose. The Chancellor did not deal with that main criticism of the cheap money drive when he wound up the other night. He did not deal with the fact that during last year there was, as the hon. Member for North Battersea (Mr. Jay) pointed out, an increase in bank deposits of over £800 million, which, of course, created potential inflationary purchasing power.
  The Chancellor of the Exchequer dealt with another criticism made by my right hon. Friend the Member for West Bristol (Mr. Stanley), and he rather gave the impression that it did not matter very much whether or not the cheap money policy generated capital profits, if they were then spent, on the grounds that the money passed into the hands of someone else, but I think that he did recognise that the real danger point is reached when ultimately the Government is the purchaser of securities and creates money to purchase them. The City editor of "The Times," in one of his penetrating notes, pointed this out a day or two later, and I think that there is no doubt that when the ultimate chain leads to purchases by the Government, the Chancellor's argument, as he almost admitted, does not hold good.
  I would like to ask him whether, and to what extent, the various Departments were obliged to invest in long-term securities; the public were unwilling to buy anything except short-term securities because they were fearful of a fall in capital values, and, therefore, they were keeping out of the long-term market. If that was done, as I think it was, what it meant was that the Chancellor was investing the funds for which he was trustee—this is the late Chancellor of the Exchequer to whom I am referring—in long-dated securities at a moment when all prudent people thought it right to invest in short-dated securities. That does not seem to me a very sound or wise management of affairs on the part of a trustee. I hope that the new Chancellor will tell us that he intends to abandon that policy altogether. Reasonably cheap money is a

  1905
  very useful and important thing provided it is natural and not forced. Everyone I think, understands the importance of having a low rate of interest when there is a very large National Debt, but the late Chancellor of the Exchequer in attempting to force interest down to a 2½ per cent. or even a 2 per cent. basis, reached a point when it was really dangerous. I suggest to the House that if the new Chancellor should succeed in re-establishing some sort of confidence in the management of the nation's finances by the Chancellor and the Treasury, he would do well if he succeeded in establishing a 3 per cent. level for long-term securities.
  There is another point about cheap money which is worth making, and which was made by the hon. Member for Accrington (Mr. Scott-Elliot) the other day. He urged better terms for savers which is, in fact, the same thing as making an appeal for a rather higher rate of interest than the ex-Chancellor had thought fit to go for. I and my colleagues on this side of the House are most anxious to support the National Savings Movement, but we want to be assured, in doing so, that the investor is being offered fair terms, that his money will be worth as much when he gets it out as when he puts it in. Those are the conditions on which we think it right to support that movement, and I hope the Chancellor will make it possible for us to give that support. I am doing nothing more than urging upon him a policy of sound and honest money.
  The present Chancellor said that he wanted to deal with the capital expenditure which is encouraged by cheap money by means of physical controls, and by relying, to use his own expression, "on the good sense and patriotism of private investors." It is quite right that the right hon. and learned Gentleman should appeal to them, but he must have found out by now that physical controls are not altogether adequate, especially in peacetime. Indeed, the hon. Member for Chesterfield (Mr. Benson), who always makes such interesting contributions to our Debates on Finance Bills, told us that the allocation of raw materials was extremely clumsy and in-exact. How right he is. It is hard to convince individuals that the particular capital expenditure which they wish to make is not very important and very
  1906
  necessary. Of course, the whole machinery of a controlled and highly planned economy of this sort breaks down if there is no effective control of labour. Not only is the control of materials by the Government proving ineffective, because it is badly administered, but the control of labour is proving ineffective because people in this country, thank goodness, say they simply will not stand it. Therefore, the Chancellor will be forced, and, I think, rightly, to recognise the facts of the situation, which are that the financial control is the control which he will have to exercise.
  At any rate, the right hon. and learned Gentleman has at last reached the Treasury, and the very difficult position which obtained when there were two drivers of one chariot has come to an end. We had the ex-Chancellor and the Minister for Economic Affairs both trying to drive the same chariot, but with different wheels. I remember some time last year, on the Finance Bill, comparing the ex-Chancellor to Humpty-Dumpty, partly because he had the same initials. I also suggested that he would undoubtedly have a great fall, but I did not expect it to be the particular kind of fall from which he has just suffered.
  Mr. Gallacher: He will come up again.
  Mr. Assheton: One of the things which Humpty-Dumpty said was this, "The question is, which is to be the master? That is all." That question has been solved by an extraordinary set of circumstances, and the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) is no longer in control of one of the wheels of the chariot. It is extraordinary what a lot of useful things Humpty-Dumpty did say. Another thing he said on one occasion was "One of the most serious things that can possibly happen to anyone in battle is to get one's head cut off." That is just exactly what has happened to the late Chancellor in this particular battle. I am sorry I am having to conduct this argument about cheap money with his successor, who, for all I know, may be entirely blameless, and not with the right hon. Member himself.
  Mr. Gallacher: Tell us one about Old Mother Hubbard.
  Mr. Assheton: The hon. Member will have an opportunity to speak for himself

  1907
  later on, because this is exempted Business. A great deal has been said already about the Profits Tax. I think the most serious criticism that has been made is the fact that the Chancellor is proposing to increase the tax on retained profits as well as distributed profits. I hope before he comes to the Committee stage he will abandon the proposal contained in the Bill to make the Profits Tax retrospective. It is extraordinarily inconvenient when the accounts of a company have been made up, and the taxes and dividends paid, to come along and say that the whole taxation for that year has got to be reviewed. Indeed, in cases where a company has been wound up I do not know what will happen. I do not think it is a good principle to go in for retrospective taxation, and it is quite unnecessary. If the Chancellor chooses to make the tax operate from the date he introduced his Budget, no harm will be done. It will be a great advantage to the community as a whole, and to accountants and officials of the Inland Revenue, who will not want to reopen so many accounts that have been closed.
  The Profits Tax suffers, like other forms of direct taxation, from many ills. I would like to remind the House of some of the evils of excessive direct taxation, because we do sometimes seem to overlook them. Everybody recognises that it discourages saving because any return from investment is reduced. Then it encourages speculation, because people are tempted to seek profits in ways which are not taxed. It encourages evasion. That is very unsatisfactory, and something which should not be encouraged. It compels people to dip into their savings and into their capital. What is really very important is that it is a most powerful inducement to all undertakings not to give the greatest possible care and attention to the level of their expenses. That is one point about increased direct taxation which is definitely inflationary—the temptation which it puts in the way of those responsible for undertakings to spend more money than they otherwise would, on the ground that the Chancellor of the Exchequer is himself paying such a large share of it.
  The worst effect of all, which was referred to by the hon. Member for
  1908
  Rutherglen, and others, is the discouraging effect it has on work and enterprise. I am not going to enlarge upon that because the Chancellor of the Exchequer is only too fully aware of it. In view of all these formidable objections, I hope he will do what he can to see that the high level of direct taxation is dearth with, at any rate, when he comes to his Budget next April. If he does he will be taking a step of the greatest possible practical and psychological value. There have been several speeches on the Purchase Tax. I think from the point of view of the general public the continual piling up of this tax is probably resented as much as anything. I do not know if the Chancellor is so austere himself that he does not often want to purchase things, but let him think what the Purchase Tax means to a young couple trying to set up house. Everything they buy has to bear Purchase Tax.
  Mr. Palmer: No, not utility furniture.
  Mr. Assheton: Beds, blankets, sheets, furniture and eventually the perambulator all bear Purchase Tax.
  The Chancellor of the Exchequer (Sir S. Gripps)The Chancellor of the Exchequer (Sir S. Gripps) indicated dissent.
  Mr. Assheton: Perhaps the Chancellor will tell us then.
  Sir S. Cripps: Not utility furniture.
  Mr. Assheton: I inquired the other day and was told that many of these things have to bear Purchase Tax. At all events although the Chancellor, the economists and others may tell us that Purchase Tax is disinflationary, they cannot be surprised if the unfortunate people who pay Purchase Tax find it rather difficult to understand, because it appears inflationary in that it raises prices on all they have to buy; there has to be a very careful explanation as to why it is not inflationary when the prices of things are raised as they have been.
  I am not going to discuss the Betting Duty because my hon. Friend the Member for Oxford University (Sir A. Herbert) made an excellent speech about it earlier in the day and other hon. Members have contributed to the debate on that subject. We are not clear as to the proposal. We are agreed that the proposals made in this particular Budget are most inadequate, and when the time comes in the

  1909
  Committee stage we will go into all that. As far as advertising is concerned, my right hon. and gallant Friend the Member for Gainsborough has dealt with that very fully and there have also been admirable speeches by the hon. and gallant Member for Antrim (Major Haughton) and the hon. Member for Stockport (Sir A. Gridley). The Chancellor has received a deputation on this subject and I know he is going into the matter. Before the Committee stage I hope we shall have some news from the Chancellor that will please us all.
  I want to end up with the last of the three points which I said I wanted to make, and that is the question of the reduction of expenditure and in particular the reduction of waste and extravagance, of which there is always a great deal in large organisations whether they are run by the Government or by private enterprise. [Interruption.] There is always a lot of wasteful expenditure in large organisations, and the good organisation will try to check it and will largely succeed but the less good organisation will not succeed. We are looking forward to the proposals promised us in a White Paper as to the reduction in capital expenditure, and I hope very much that not only will it cover Government expenditure, but a great deal of the expenditure which is under Government agencies such, for example, as the Coal Board and also the local authorities.
  Mr. Gallacher: Specify.
  Mr. Assheton: I do not know which is the local authority of the hon. Member for West Fife (Mr. Gallacher), but I am sure it is one of the ones I should specify. Not only have local authorities and the Government agencies got to make their contribution to this cut, but the Chancellor of the Exchequer has got to do what my right hon. Friend the Member for North Leeds (Mr. Peake) said in his speech the other day—not only has he to go round mopping things up, but he has to turn off the tap. That is the real secret of the inflationary trouble. All the proposals for mopping up would not have had to be made if the inflationary tap was turned off. I do not know whether hon. Members ever study the Estimates, because when I was at the Treasury that is one of the things we had to do. They can be obtained at the Vote Office and they are interesting and useful documents.
  1910
  As I came into the House today I picked up two of them, and one has only to go through them to see all sorts of things which raise one's interest and which should make one wonder whether the expenditure is really worth while. I picked up those belonging to the Ministry of Supply because at one time I was in the Ministry of Supply, and I like to hear things about it. Some of the figures there are very startling. For example, I see the figures for the Royal Ordnance factories have gone up by over £6 million in this year and I see transport charges have increased by something like £2 million. I see that the hostels and the housing in the Royal Ordnance Factory service, which this year cost £1,600,000, cost only £329,000 last year. I am surprised because, during the war, when I knew something about Royal Ordnance factories, a lot of money was quite properly spent upon the hostels. Very good hostels were built. Why we have to spend £1,600,000 this year against £329,000 last year is something which needs explaining and looking into.
  All through the Estimates the same sort of thing is to be found. Another one I picked out relates to the Office of Works. Then, in connection with the Department of Central Information, I see that the item for poster advertising this year is £800,000 against £458,000 last year. I do not know what that advertising is. I suppose a good deal of it will be that wretched widow we had to look at for so long, or the "Work or Want" posters, both of which expenditures were an utter waste of money. All through these Estimates are matters which want inquiring into. In the old days, the House of Commons had far more time for looking into these things than it has now. The result is that we do not keep as close a grip upon expenditure as we ought to. It is the duty of all of us to keep the Government up to scratch. It is the duty of the Treasury to try to keep the Departments up to scratch in these matters. It is our duty to support the Chancellor of the Exchequer in bringing to bear all the pressure he can upon the Departments to be careful and economical in their expenditure.
  I would like to say this finally. Unless expenditure is reduced by our conscious effort as Members of Parliament and by the conscious effort of the Government,

  1911
  expenditure will reduce itself in the most unpleasant way possible. That is what inflation means. It means that money becomes worth less. That means that old age pensions, widows' pensions, health benefits and all the other benefits will be worth less than they appear. That is what comes of inflation. The only way to meet that inflation is by making a conscious effort ourselves to cut expenditure and decide what expenditure can be reduced. If we do not do it, the expenditure will be reduced automatically all round. The cuts will fall automatically everywhere. That is not what hon. Members opposite, nor hon. Members on this side of the House, want. Therefore, we must take the steps necessary to reduce this tremendous expenditure from which we are now suffering, and save the country from further inflation.
  9.28 p.m.
  The Chancellor of the Exchequer (Sir Stafford Cripps): We have had an interesting Debate this evening. A number of general points have been raised, and also a number of points of detail which will be more appropriately dealt with on the Committee stage. I would like to go through the Debate rather in the order in which the speeches were made, and therefore to deal with what the right hon. Member for the City of London (Mr. Assheton) has just said last.
  The right hon. and gallant Member for Gainsborough (Captain Crookshank) asked me what was the general purpose of the Budget and how it fitted in with the economic proposals of the Government. Its purpose is to reduce the inflationary pressure consequent upon the economic action which is being taken by the Government, and thereby to enable the economic policy and the physical controls to be more effective. The particular danger of inflationary pressure from this point of view is, I believe, in the field of capital goods which shows itself in a diversion of effort into unnecessary capital projects and so diverts energy and resources from the attainment of the export task. Physical control, such as the steel allocations or building licences or whatever they may be can be jeopardised by black market activities arising from inflationary pressure, and that same principle can, of course, apply to the market in consumer goods where
  1912
  in the same way rationing and other physical controls may be weakened by too great inflationary pressure. It is to assist this proper direction of the national effort particularly in times of stress and difficulty such as those through which we are now living, that financial measures are necessary to uphold economic planning. I hope that that explains to the right hon. Gentleman the interlinking of these financial proposals with the economic proposals of the Government.
  He then asked me why had not immediate savings been made in capital expenditure and Government expenditure. The answer is, of course, that they have been and are being currently made. The right hon. Gentleman was perhaps a little confused—not his fault, maybe—over what was said about the Estimates on a former occasion. What was pointed out by my right hon. Friend and also by myself was that it was impossible to quantify—[Interruption.]—those savings until we saw the Estimates for next year.
  Mr. Godfrey Nicholson: That is a frightful word.
  Sir S. Cripps: It is quite an understandable word.
  Mr. Nicholson: And you a Wykehamist.
  Sir S. Cripps: A scientific Wykehamist but not a classical Wykehamist. It was pointed out that it was not possible to quantify the savings until the Estimates were forthcoming for the coming period from the various Departments, which would translate the action that had been ordered into actual pounds, shillings and pence. That did not mean to say that no action would be taken; it was a mere question of not being able to quantify what that action was. I hope that by now the hon. Member for Farnham (Mr. Nicholson) is getting accustomed to the term.
  The right hon. and gallant Gentleman pointed out that, like other people, he had been waiting a long time for the White Paper. I apologise to him and to the House for its not having come out sooner, and I take the entire blame for that upon myself. I have been very anxious to make what is a very complicated and detailed subject matter as clear and understandable as is possible in the White

  1913
  Paper. The right hon. and gallant Gentleman and others will understand that when we are dealing with the whole range of capital expenditure, both private and public, it is not easy to get it into a form which may be fairly simply understood by the public. I hope that when it comes out it will be in a form which the House will easily be able to appreciate. I would assure him and the House that the arrangements for the reduction of capital expenditure have already been put in train and are now in course of being carried out.
  Captain Crookshank: That is something.
  Sir S. Cripps: The right hon. and gallant Gentleman also asked why I had emphasised the "point of asking private enterprise to curtail capital expenditure and whether that signified that Government capital expenditure was not being cut. That is not so. The reason why I made the appeal to private enterprise was that in that field the Government have not got the control they have in the other field, and it must therefore rest to a considerable extent upon the voluntary action of various firms in ordering machinery, buildings or whatever it may be, to prevent any unnecessary capital expenditure at present. In the final stage of the right hon. and gallant Gentleman's speech, he made an interesting remark that his party did not propose to vote against this Bill, for which I am grateful. But the reason was a rather curious one. He said it was because the Government had gone the wrong way about it. I am sure there is something quite profound in what the right hon. and gallant Gentleman says, because it seems to me to be the oddest reason for not voting against a Bill.
  The various items which have been discussed in the course of this Debate have really been the Profits Tax, the advertisements tax and the Betting Duty. Those are the three elements in the Bill that have been discussed, and I propose to deal shortly with those three matters. First, so far as the Profits Tax is concerned, the right hon. and gallant Gentleman put forward some figures from the "Economist" which, he stated, showed that there had been no undue rise in profits during the period from immediately before the war—I think 1939–40 was the first figure he gave—and 1946. But had
  1914
  he observed the fact that the article from which he quoted specifically stated that the profits were profits after the payment of Excess Profits Tax—before the payment of Income Tax, but after payment of Excess Profits Tax?
  Mr. E. P. Smith: Of course.
  Sir S. Cripps: The hon. Member for Ashford (Mr. E. P. Smith) says, "Of course," but I would point out that now Excess Profits Tax has gone it is not quite a good comparison with 1939–40 when there was not one; and to compare like with like one must add back the Excess Profits Tax to the second figure for 1946–47 in order to get a comparison between similar things. If that is done, it will be appreciated that the figures which the right hon. and gallant Gentleman quoted show a very large increase indeed in profits. Therefore, I am afraid, from his point of view, his figures do not assist him very much. Indeed, they tend to confirm what was said by my right hon. Friend, that in this year and last year the profits declared have been very large indeed.
  Therefore, it seems to be a right action, whether those profits be distributed or not, that some portion of them should be taken by way of taxation. That is the reason why the Profits Tax has been doubled both for distributed and for undistributed profits. It does, of course, increase the differential between the two taxes. It doubles the difference as well, of course, as doubling the two taxes, and therefore it tends to give a greater inducement not to distribute than there was before, which is all to the good. So far as the non-inflationary effect of charging the double tax upon the undistributed profits is concerned, there seem to have been several different views expressed. But one thing is certain, that at least an extra 7½ per cent. of those profits will not be able to be spent on any capital improvement, because that will be taken by taxation. Therefore, to that extent clearly it is a disinflationary movement.
  The other point that was raised upon Profits Tax was whether it should be retrospective or not. It was suggested that that was without precedent, but there are many precedents for it; in fact quite good examples are the Excess Profits Duty of 1914–18, and the Excess Profits Tax at the beginning of the recent war, both of which

  1915
  were made retrospective, one, I think, for over a year, and the other for nine months. Indeed, it has been quite a common factor that taxes upon profits put on for emergency purposes, as is this one, should be made retrospective. That has been the common practice of this House for that class of tax. I see no reason to depart in this case from that common practice.
  The hon. Member for Rutherglen (Mr. McAllister), in a speech which in some places seemed to be slightly critical of the Finance Bill, said he did not like this tax because he believed that it discouraged management and acted against incentive. I do not understand why it should be said that this discourages management, because management is not interested in profits—[AN HON. MEMBER: Oh, yes it is."] Certainly not. Management is the technician, who does not share in the profits. [An HON. MEMBER:" Think again."] I do not wish to think again. I am much obliged to the hon. Gentleman for his suggestion, but I have dealt with quite a lot of managers in my time, and I dare say he has also. The general matter in which management is interested is technical achievement and not profit.
  Mr. Assheton: Even when they own the business?
  Sir S. Cripps: In that case we are dealing with owners, which is a completely different matter. There may be one man who is both manager and owner, but he is then dealt with in two capacities, one as owner, and one as manager. In the vast bulk of businesses in this country management and ownership are separate. [AN HON. MEMBER:" What about shops?"] In shops also. As to it being against incentive, I should have thought that if people are striving to get as large profits as possible, to distribute for themselves or otherwise, a tax of this sort would be an incentive to earn more in order to counteract the payments under the tax. [Laughter.] I appreciate that hon. Members realise that that sort of argument cannot be disposed of by reason, but only by laughter.
  I gather from the course of the Debate that the advertisement tax has not the unanimous support of the House.
  Captain Crookshank: Or of anyone else.
  Sir S. Cripps: I have not heard the other people yet. I am dealing with the Debate here this evening. There is no particular reason, as some hon. Members seem to have thought, why advertising should be specially protected against taxation. Where it is necessary to levy taxes on all sorts of objects in a time of emergency, there is no argument why advertising per se should be exempted from taxation, and I do not see why anybody, except one or two extreme hon. Members who are interested in the profession—
  Mr. Eccles: That is unworthy.
  Sir S. Cripps: I am putting it quite frankly. Hon. Members have got up and said themselves that they are interested in that point of view. A criticism has been that this is not a desirable way in which to tax advertising. Surely, it must be accepted that in a time of stringency such as this a great deal of the advertising that takes place is unnecessary. It is not necessary to induce people to want goods which are not there. Indeed, that is a most inflationary action, because it tends to make more money chase the few goods that are there, and that is in itself, obviously undesirable. Nor is it wise to use national resources, whether of manpower or materials for this purpose at this time, when they are badly wanted for productive purposes. When one realises that the expenditure on advertising amounts to something like £80 million a year—[An HON. MEMBER:" Including Government advertising?"]—including all advertising, it is quite a material matter in the economy of the country.
  It is, therefore, desirable, in our view, that some steps should be taken in order to try to curtail this expenditure and stop this inflationary pressure on the buying public. I agree as to many of the difficulties which have been put forward. I appreciate that the different classes of advertisements are distinguishable. There is the pure announcement, the prestige advertisement, the auctioneer's advertisement, etc. I am quite prepared to consider any equivalent way by which this aim and object can be achieved. I have no particular desire to upset anybody by putting difficult or onerous tasks either upon the Inland Revenue or upon advertisers. I shall be quite prepared to

  1917
  consider, when we come to the Committee stage, any suggestions which are put forward as to a better way of achieving the same result.
  I pass to the Betting Duty. It is rather remarkable that there has not been a single speech which I at least have heard this evening in which there has been an objection expressed on principle to this tax. That being so, I think that it would be generally agreed, and it has been generally agreed indeed, that this is a desirable object of taxation. The complaint that has been made is that we have not gone far enough, which is not the usual complaint made against taxation. My justification of the steps we are taking is that we are at least making a good beginning, and that it is just as well, when starting a new tax, not to encounter all the difficulties at the same time. If one gets a tax established on a certain basis, one can always extend it to a wider basis later. I agree with one thing which was said by the junior Burgess for Oxford University (Sir A. Herbert), that this Government are certainly much more capable and courageous than the Government of which the right hon. Member for Woodford (Mr. Churchill) was a Member, as Chancellor of the Exchequer, in 1926. That goes without saying. I am only too delighted to get that testimonial from the hon. Member. It seemed to me from one remark he made that instead of having given him his football colours I ought really to have given him his betting colours at an earlier stage in his career, as I am sure he was undertaking a good deal of betting even at that time.
  Why is if that we made this selection on which to start? We have omitted horses, as has been said, and I repeat it, for a double reason. Firstly, because there is no profit made out of horse, totes; they are not run on a profit making basis, and when they were set up Parliament decided how they should be charged, that is to say, that a certain percentage should be devoted to certain objects. That is an entirely different set of conditions to those relating to the dog tote, the profits on which go to the promoters, and in relation to which Parliament did not lay down any method by which they should be charged at the time they were set up. We think that it is a good opportunity now for Parliament to remedy that defect
  1918
  and to put this charge upon them. It is a charge which we believe will not unduly handicap them, but if it proves in the event that it does so, then we must try and lighten it by putting another load on somewhere else.
  This is not an occasion when anybody would expect us to review the whole law of betting. That would not have been an appropriate subject matter for an interim Budget of this kind. It may be that one day someone will undertake that task. I think they may have rather a stormy passage when they try it out. But we shall certainly watch the bookies, as does the junior Burgess for Oxford University, and if it proves in the event that the tax ought to be extended to them, we shall, no doubt, take our courage in both hands and see what we can do about it. I come now to the speech of the right hon. Gentleman the Member for the City of London (Mr. Assheton)—
  Mr. I. J. Pitman: Before the right hon. and learned Gentleman leaves the question of taxation, might I ask him whether he rules out, as one of the alternatives, the abandonment of the tax on advertisements in consideration for a voluntary self-disciplining by advertisers in the two classes of advertisement which he wishes to see reduced.
  Sir S. Cripps: I do not rule out any useful suggestions made upon that or any other lines. If we can do things by voluntary effort without taxation, I am sure that it may be beneficial. I will be glad to see suggestions put forward.
  The right hon. Member for the City of London laid down a three point policy which smacks very much of the traditional Tory policy which one would expect to come from the City of London and which seems to me extraordinarily like that which was so peculiarly fatal after the last war. I do not think that we want to repeat that fatality. One thing I was glad to find him agreed upon was the policy for cheap money. I was glad to know that he agreed entirely with my predecessor in the objective, though I gather he had some little criticism upon the means by which it was reached. I also agree with the objective. There we are all at one. He mentioned that there had been some purchases by the Government of securities in the market. Of course, that is perfectly true, but I assure

  1919
  him that they were never any major factor in the price position of securities.
  There is one thing which I should like to point out to the right hon. Gentleman. If we are dealing with this as a question of inflation or deflation, he will bear in mind that the lower the rate of interest, the less money is distributed annually for expenditure. Therefore, that in itself is a deflationary measure. The lower we keep the interest, the less we distribute amongst the public for the purpose of spending. The right hon. Gentleman then pointed out what is perfectly true, that if one tries to accomplish what we are aiming at by physical controls alone, it is very difficult if we leave the financial side uncovered. As I tried to point out earlier, it was for that reason that we have introduced this Budget to match with the economic controls and the physical controls that we were using in order to decrease the amount of capital expenditure, increase exports, and do the other things we are trying to do.
  I am afraid that I completely failed to follow the right hon. Gentleman's analogy of the chariot with one person at each wheel.
  Mr. Assheton: Steering wheel.
  Sir S. Cripps: Oh. I never knew that chariots had steering wheels. I think that the right hon. Gentleman has got his history a bit mixed. I would agree with him that the very close co-operation which existed between the former Chancellor of the Exchequer and myself was very useful in bringing together the economic and financial sides of the policy of the Government. I hope that those who are at present responsible for those two sides of the policy of the Government will be able to work in as good amity as we were able to do.
  The right hon. Gentleman in his criticism of the Profits Tax stated, among other things, that it would eat into the savings and capital of individuals.
  Mr. Assheton: I did say that the Profits Tax was subject to certain disadvantages from which direct taxation also suffered, but I did not maintain that it suffered from all of them.
  Sir S. Cripps: I am much obliged. I think he did mention that particular point, and that raised the thought in my mind,
  1920
  which I think is perhaps typical of the spirit of his whole approach to this problem, that he preferred, rather than eat into the profits and capital of the individual, to tax the eating of the individual. In other words, he would rather protect the pocket and attack the stomach. We take precisely the opposite view. We believe that it is far more important to protect the standard of living of the mass of the people by continuing the food subsidies than to be too careful about the effect upon capital and profits which the doubling of the Profits Tax might have.
  In the same way, when we are considering economies in expenditure, which of course do not come into the Finance Bill, we are anxious that we should not economise on those things which benefit the large mass of the people of this country in their standard of living, and that we should concentrate upon economies on other lines which have no such direct effect.
  Mr. Osborne: Then why cut the clothing subsidies?
  Sir S. Cripps: I dealt with that at Question time, and will not repeat it again. The right hon. Gentleman did not give us any details of how he would reduce wasteful expenditure, nor did he tell us what wasteful expenditure was, in his view. He picked up some Estimates which he had got in a hurried entry into the House and criticised somebody for not having pointed out the various matters which he raised. May I point out to him that that is the duty of the Opposition on Supply Days, and I am very surprised that they have not taken up these points. Really, they must be grossly neglecting their duties. No doubt, the right hon. Gentleman will see that proper attention is given to these things at the proper time, but I am afraid that I cannot give him an answer on the details which come under the Estimates of the various Departments.
  Mr. Assheton: It is the responsibility of the right hon. and learned Gentleman. Does not the Chancellor look at them?
  Sir S. Cripps: Certainly, but this Chancellor did not, because they were last year's Estimates, and the party opposite had the whole of the Supply Days of last Session to question them had they wanted to do so. No doubt, they did not look, so they probably do not know what was in

  1921
  them. I do not think there is any really serious criticism of the fundamentals of this Bill, or of the money to be raised or of the purpose for which it is to be raised. Criticism of details can be dealt with on the Committee stage, and I therefore confidently ask the House to give the Bill a Second Reading.
  9.59 p.m.
  Mr. Jennings: I was not fortunate enough to catch your eye, Mr. Speaker, before the Chancellor rose, and I was surprised that he thought fit to speak so early, before certain other points had been raised on this Bill. There is one point that I want to raise very strongly with the Chancellor with regard to the advertising deduction. First of all, we had the Financial Secretary saying that there is no tax on advertising expenses. The Chancellor now says that if he can get the same result in another way, he is quite prepared to listen to suggestions. In my humble opinion, there is only one thing that the Chancellor ought to do with the suggestion to tax advertisement expenses. I am speaking now as a professional chartered accountant, and I say, without any hesitation, that the tax is a deviation from all the principles of taxation. Up to now we have had a system of taxation which allowed every item of expense in a company's accounts directly incurred in the earning of income to be free from taxation. Now it is proposed to single out one item of expense, that for advertising, and to disallow it to the tune of 50 per cent. That is quite wrong, and a deviation from the taxation system which we have had up to the present time.
  In my own constituency in Sheffield, there are two scientists who have invented an article which is very useful at the present time. They have only one possible way of putting it before the public, and that is by advertising it. If they cannot do that, the invention is lost. It will be very hard indeed for those two young people who have something which the world needs—never mind this country—if they cannot put it over to the public because their advertisement is subject to a 50 per cent. tax. Such a tax will be impossible to administer because there will be unfairness, from top to bottom, inside the whole system. All the Inspectors of Taxes who will have to deal with this matter will have to decide whether this
  1922
  or that item is an item of advertisement. Neither the Chancellor nor the Financial Secretary has attempted in this Debate to define what they mean by advertisement. I will go further and say that if they tried to define what they mean, it would be impossible for them to do so. We have got to bring some logic and some reason to bear on this panic Finance Bill.
  Mr. Fernyhough: Will the hon. Gentleman allow me to interrupt him for a moment?
  Mr. Jennings: I will not give way to the hon. Gentleman; I have sat here for five hours, and I am going to use the time available as best I can in order to stand up for the rights of the citizens. This afternoon, the Financial Secretary made what was, in my opinion, a most astounding reply to a Question. I am certain that he does not understand the position at all. I asked him quite plainly whether he was telling the House that, by sending in a notice of appeal against his assessment, any taxpayer could delay the interest running on arrears of taxation. He told me that if a taxpayer sent in an appeal, the interest would stop running. I suggest to the Chancellor and to the Financial Secretary that if that is the way to stop interest running on assessments, then the Inland Revenue will be flooded with appeals, and the whole system will break down. Surely, hon. Members opposite who are supporting this proposal for interest on overdue taxation ought to have found out a great deal more about how it is going to be brought into existence and how it will operate in practice, as otherwise an undue burden will be placed on the officials of the Inland Revenue.
  I am very concerned at the Chancellor's lack of appreciation of the trouble which this advertisement tax will cause. I would have thought that, having listened to the speeches from both sides of the House on this subject, he would have withdrawn the Clause completely. Instead of that, he has said that he will consider some other method of achieving the same end. In many businesses, advertisement expenses are just as much business expenses as rent and rates. Untold harm will be caused to businesses and industries in Sheffield, in particular, which depend very largely on advertisements. The Chancellor is going to stem their prosperity and kill the advertisement of their

  1923
  products up and down the country. If that is not a backward step, I do not know what is. I am sorry that many hon. Members opposite are not so well acquainted with this matter, but I assure them that if they accept this Clause, they are imposing a burden on industry and they ought to realise the full extent of the damage which will be caused.
  We have heard reference to the question of the continuance or non-continuance of food subsidies. It is no use bolstering up the cost of living by food subsidies if in six months' time the standard of living is going to be broken down. It is not honest, and it is a cruel thing to do to the masses of the people. The former Chancellor said that he had pegged the figure in respect of subsidies, and he would go no higher. That, in my opinion, showed the red light. He knew perfectly well that he was up against it, and he pegged that figure because he did not know what he would do in a few months' time. This Bill is a temporary makeshift piece of legislation, waiting for time and, like Micawber, hoping that something will turn up.
  10.8 p.m.
  Lieut.-Colonel Sir Walter Smiles: It is a great advantage to have waited through a whole Debate to speak because one has then heard what other people have said and also what other people have omitted. I propose to refer, first, to the speech of the Chancellor of the Exchequer. He said that a manager was a technician. That is news to me. I have worked as an engineer, an assistant manager, a general manager and a managing director, and when I was a manager I had chemists, engineers and chartered accountants to advise and assist me. The Chancellor of the Exchequer said that a manager was not responsible in any way for the profits of his company. [HON. MEMBERS:" No."] Well, he said that a manager was not interested in them. All I can say is that the right hon. and learned Gentleman must have been connected with different companies from those with which I was connected, because I am certain that if in the companies with which I have been concerned a manager showed a loss instead of a profit, he would have to hang his coat very near to the door.
  1924
  Another statement that the right hon. and learned Gentleman made was that this side of the House had pointed out no instances of wasteful expenditure. I will say for a start that the reason for this interim Budget is the dreadful mistake that the late Chancellor of the Exchequer made when he allowed sterling to be converted into dollars on 15th July. Had it not been for that dreadful, silly mistake there would have been no need for the interim Budget today. It might be advisable to remind the right hon. and learned Gentleman of the £59 million lost in Germany in currency transactions, which fortune would have kept us going in basic petrol for more than 10 years. There has been a certain amount of discussion in this Debate about the extra tax on whiskey and the tax that was not put on cigarettes. I believe that there are many people who, if they had the opportunity today, would pay more, if they were allowed to use it, for a gallon of petrol than for a gallon of whiskey or for 20 cigarettes. I offer that suggestion to the Financial Secretary.
  I have sat here through a good deal of this Debate, and I have heard many subjects mentioned; but there are two things I have not heard mentioned, and they are the necessity for thrift and the necessity for hard work. I was brought up in a lower middle-class family, and the idea of waste was extremely distasteful to my parents. We could do anything, but we were not allowed to waste. This Government are giving an example—a lesson—in self-denial and self-discipline. Indeed, the Chancellor of the Exchequer reminds me of a man whose wife died, leaving him to bring up a young family. The father said to his young family, "I am going to take you all to the pantomime on Boxing Day, if you work hard at school and if you behave yourselves. I am going to give you a treat." He is like the Lord President of the Council, too, who in a speech at Bournemouth said that the dividends were going to be paid in 1947 for what we were doing in 1946. And these are the dividends. Now, the parent of that family, when Boxing Day came, and the children were all ready, properly dressed in the hall, came to the children and said, "You are not going to the pantomime after all. This is a warning and a lesson to you now, that you must count on many disappointments

  1925
  and injustices in life." That is exactly what has happened to the poor people in this country under a Socialist Government.
  The Budget and the Finance Bill give no incentives for hard work. It used to be the case that the younger sons of families had to shift for themselves when they were 20 or 21 years of age; and they went abroad to earn their own livings and make their own way in the world; and many of them went to the Straits Settlements or to Africa, and when they had had some success, and thought to put their money into companies, they invested it in this country, because they felt they would get justice here. They were sent out, as was the late Mr. Neville Chamberlain, who, went out to the Bahamas to try to grow sisal and failed. Many others failed similarly and lost their relations' money; but it was their money they were losing, and not the taxpayers' money. In the old days—the good old days as we refer to them now—when profits were made the Government got a quarter of them, but when losses were made the people themselves had to stand the racket and the taxpayer had to pay nothing. I admit that we are living in a different world now. If there are any losses we taxpayers have to pay, which accounts, of course, for the very high taxation which we have to endure at the present time.
  The worst of the Budget is that the Government are discouraging foreigners from investing their money in this country. It was quite right during wartime, when everybody was willing to pay up, and did pay up to the hilt; but now, two years after the war, there is a rather different mentality. Let me point out some of the differences in taxation between this country and other countries. For instance just now the Chancellor mentioned the Excess Profits Tax which in this country is 100 per cent., but in India is 66⅔ per cent. Consequently, with £10,000 of excess profits for five years, a company in India would be £15,000 better off than a similar company paying tax on the same excess profits in this country.
  It is the policy of the Government to discourage commodity markets coming to the City of London or to England. As the Prime Minister has so often pointed out to my right hon. Friend the Member
  1926
  for Woodford (Mr. Churchill), that is not Socialist policy, and it is a Socialist policy which the Government are carrying out. Now, the Cotton Exchange in Liverpool is finished and done with, but there are other commodity markets in the City of London which, in the past, paid many millions of pounds to this country. I believe that the world money market has passed from the City of London to the City of New York, and I believe also that right hon. Gentlemen opposite are glad of it; it is part of the Socialist policy, and part of their taxation policy. Yet there are other commodities which have been very valuable to this country in the past, and which have paid a good deal of taxation.
  Take one commodity about which I know a little—tea. I do not believe that the present policy of the Government will ever get the tea market back to Mincing Lane again, yet there is no doubt that in the past it contributed substantial amounts to our Exchequer. Due to the Government's present policy the tea market will go to Calcutta, or Colombo, or perhaps to Java if they are ever settled there again. I already hear of tea being shipped direct from Calcutta to the United States of America and to the continent of Europe, which in the old days used to go through the City of London. Perhaps right hon. Gentlemen opposite say, "That is a good thing; we do not want that money; it is dirty money," but it did give a good deal of employment in the City of London, even if it were only sampling the teas, selling them to the United States, and moving them from perhaps a P & O liner to a Cunard liner. There is the same danger with a great many other commodities, if this ruinous taxation continues in this country. It will happen with rubber, and perhaps with copra and the world metal market.
  Another criticism I have to make of the Government's taxation policy is that it destroys the reason for economy. In the old days when I worked for a company, I remember the managing director, who had ridden out to me, asking me why I bought gilt nibs instead of steel nibs. It was only a matter of some 10s. in the whole year, when the company was making some thousands of pounds profit, but it was a sign of the old mentality in regard to thrift and economy. What happens today with profits? If you are spending £100, there is the temptation

  1927
  —I do not say people will do it—to say that more than half of this expenditure will be paid for by the Government. That is no incentive to thrift and hard work. Instead of foreigners seeking to start new businesses in England and invest their money in this country, they are looking out for some safer country in which to invest their money. The Budget is driving capital away from this country into other countries.
  Taxation can be over-done, I believe that the Government's taxation is having a long-term effect upon the finances of this country, and that whoever succeeds them will find it very difficult to put this country's finances in order again. I can remember, when serving my time as an engineer, a mate of mine being given the job of putting right a very complicated machine. I asked: "Do you think, Jim, that you can fix this machine? "He replied: "I do not know, but if I cannot do it, I will leave the machine in such a condition that no one else will be able to fix it." That, I believe, is the position with the present Government.
  10.23 p.m.
  Dr. Morgan: I rise now to express my disagreement with one item in this Budget. I have never believed and shall never believe in a tax on betting. I regard betting as a vice, and I do not think that vices in human nature should be treated as a source of revenue, but should be regarded purely from the moral point of view, and should be dealt with by disciplinary action if necessary. I understand the argument of the Chancellor of the Exchequer is that as this money is being spent in this way, we want to try to get some of it back into the nation's financial pool, and that is why he is proposing this tax. But, as I mentioned to my hon. Friend the Member for Rutherglen (Mr. McAllister), there are other vices which could be treated in the same way, such as the one mentioned by the author of "Mrs. Warren's Profession." I pointed out that that was also a vice which, if the principle of this argument held good, could be recognised as a suitable source of revenue for the country. [Interruption.] I am being told that I may be putting ideas into the head of the Chancellor of the Exchequer, but I have sufficient reliance on his moral fibre to know that he is not going to listen to any
  1928
  further suggestions of divergence from the true path of taxation.
  I remember that when such an issue was raised before, the Nonconformist conscience made the country ring with the idea that his was a discreditable means of bringing revenue into the country. I believe this to be a tax which will cut into the already deteriorating moral fibre of most of the nations of the Christian world, certainly those within our own sphere. I expect that at some time or another, if this sort of thing goes on, there will be a licence for burglars, with the proviso that part of the "swag" goes to the Chancellor of the Exchequer. When I made this point to the hon. Member for Rutherglen he said that he thought it was the silliest argument he had ever heard.
  There is one other matter on which I should like to touch, if I am in Order. I think that instead of taxing betting, the Government should cast their mind back to 1930 when the Chancellor of the Exchequer was trying to answer a question on the taxation of land values—the value of the land created by the community. It was suggested that a tax should be put on land values and the finance from that source should go into the common pool. I know that is an extraneous subject to mention now, but while we are searching for sources of taxation here is one at hand which every Government—Tory, Liberal or Labour—has so far failed to tackle, as if they were afraid to tackle one of the best sources of revenue in this country. I end by saying, as I said at the beginning, that on the moral ground, civic ground and every possible ground, I object, even if I am a lone voice in this House, very sincerely and genuinely to a tax on betting coming within the purview of this Budget.
  10.27 p.m.
  Mr. Sidney Shephard: I will not keep the House long, but there is a point which I wish to make. I hope hon. Members opposite will listen to me. There has been a good deal of loose talk in this Debate about the distribution of profits. Cases have been quoted of companies which distributed very small dividends previously distributing 150 per cent. I have made it my business to go through 39 of the leading industrial companies in this country with a capital of £456 million, and I think that it would be interesting for the House to hear ex-

  1929
  actly how their dividend record this year or last year compares with that of 1938.
  Mr. Scollan: Will the hon. Gentleman tell us whether the capital of £456 million is today's capital or the capital in 1938? Has it been built up out of profits?
  Mr. Shephard: It is today's capital.
  Mr. Scollan: What was the 1938 capital?
  Mr. Shephard: I have not the figures for 1938. I am trying to prove that these companies have not paid out extravagant dividends. Thirteen of these 39 companies paid the same dividends in the current year as in 1938. In eighteen of these cases the dividend is less than it was in 1938 and only in the remaining eight is the dividend higher, and only in one instance is the dividend more than 5 per cent. higher.
  Mr. House: All that the hon. Gentleman has stated is irrelevant unless he faces up to the question of my hon. Friend the Member for Renfrew, Western (Mr. Scollan). How does the present capital compare with the prewar capital and how is any difference made good?
  Mr. Shephard: I am replying to the charge made by the Chancellor of the Exchequer in his Budget speech in introducing the Profits Tax. He said:
  "I have noticed, with regret, a continuing and persistent inclination on the part of many concerns to declare increased dividends."
  He went on to say:
  "I, therefore, propose to double the Profits Tax."—[OFFICIAL REPORT, 12th- November, 1947; Vol. 444, c. 402–3.]
  That is the reason why he has done it—vindictiveness, nothing else.
  I have given the House those particulars. There are a few odd cases where dividend paid out this year is very much greater, but why judge the whole of British industry by one or two isolated cases? Look at the companies I have listed here. They include in brewing, Guinness and Bass; in heavy engineering, Stewart and Lloyds and Tube Investments; in textiles, Courtaulds and Tootalls; in motor cars, Rolls and Austin; in tobacco, Imperial Tobacco; in stores, Woolworths; in engineering, Ransome and Marles and Riley; and in miscellaneous, companies like Lever Brothers, Imperial Chemical Industries, Hovis and British Aluminium.
  1930
  I think that is a complete justification of the falsity of the Chancellor's statement. And when all is said and done, what is the position of shareholders today compared with what it was in 1938? Suppose a shareholder had an investment of £1,000 in a company which paid a dividend of 10 per cent. in 1938. He would pay tax at 5s. in the £ and have a net income of £75. What is the position today? He pays tax at 9s. in the £, which gives him a net dividend of £55, and that £55 on today's basis of value is worth about £25. If the shareholder wants to receive the equivalent money value of dividend to what he had in 1938, he would have to receive a dividend of something like three times that of 1938.
  Whatever justification the Chancellor of the Exchequer had for doubling the Profits Tax on distributed profits, I can see no justification for doubling it with regard to undistributed profits. It seems to be a complete reversal of the policy we have had for the last two or three years, in which the Chancellor of the Exchequer has encouraged companies to plough back their profits and has even gone to the length of giving allowances on new buildings and new plant. When one realises how difficult it is for a company today to make adequate reserves on the present basis of taxation and how vital it is that they should be in a position when they can spend money on plant and buildings to have the money there, then I think it is a very bad tax indeed. The day will come when British industry will want re-equipping, and want it badly. We cannot go on like this spending nothing. I hope we can weather the storm but for nine years now nothing has been done and many factories are obsolete, and much plant is out of date, because they are not allowed to put it in order today. We have only to look at the many reports of firms which say what they are going to do when they are allowed to do it. The cost of buildings and plant has more than doubled. This tax on reserves will create a future handicap on British industry.
  10.35 p.m.
  Sir Waldron Smithers: May I respectfully congratulate the hon. Member for Newark (Mr. Shephard) on the attack he has just made upon the Members on the other side of the House? His arguments are unanswerable, and it

  1931
  it only through want of appreciation of the seriousness of the crisis that hon. Members on the Government side answer with jeers and catcalls. On an occasion when we are debating exempted Business I think it is very discourteous to the House for the Chancellor, of the Exchequer to rise at 10 o'clock and go out of the Chamber and take no further notice of the proceedings.
  Mr. Glenvil Hall: May I interrupt the hon. Member? I am sure he would like me to tell the House that my right hon. and. learned Friend is very sorry, but he had to keep another appointment. He meant no discourtesy to the House.
  Sir W. Smithers: It is very difficult to attack the Financial Secretary to the Treasury because he is always so charming; but I must say that the Chancellor of the Exchequer on his first Finance Bill was in duty bound to stop here and hear the Debate out. I can only presume that he has gone to see M. Molotov to get some hints on how to conduct finance à la Russe. I have sat here for the best part of five and a half hours and listened to most of the speeches. Except for one or two parts of some of the speeches, the Debate, in my opinion, has been carried on in much too light-hearted a manner, and as if things were normal. But they are far from being normal. The Finance Bill, and the Budget Resolutions on which it is based, are what we would expect from a Chancellor of the Exchequer who was not master in his own house. It is obvious that the late Chancellor of the Exchequer was deterred by political considerations from making a frontal attack to overcome the greatest and gravest crisis in the history of this country. [HON. MEMBERS: "Oh."] Someone says "Oh." If hon. Members think I am using exaggerated language I would refer them to a recent pamphlet issued by the London Chamber of Commerce, entitled, "A Report on the Economic Crisis." It refers to many considerations, but it uses these words:
  "All these considerations are secondary to our survival as a nation."
  I wish hon. Members would read regularly—I am not a shareholder—the leading article in the "Statist" each week. It has used similar language on many occasions lately. I would point out to the House that neither of these papers is
  1932
  political. They speak from experience of trade and industry in the City of London. On 17th November the new Chancellor of the Exchequer, when he was winding up the Debate on the Budget proposals said:
  "I would like to make one thing clear at the outset, and that is that I was, and am, in full agreement with the proposals which my predecessor put forward in the Budget."—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 932.]
  Now we can take it that his more realistic speeches of the last few weeks are just camouflage and a smokescreen, because in reality we are out of the frying-pan into the fire. The Cripps furnace is heated seven times. Before he had the responsibility of high office, the Chancellor always advocated dictatorship. [Interruption.] I He did. He said once—and I am quoting from memory though I have nearly got it off by heart, I have said it so often—that the first job of a Socialist Government would be to pass in all its stages on the first day of their assumption of power an Emergency Powers Bill by which everything could be done by decree. Those decrees must be incapable of challenge by the courts, that power must be taken away from the courts. Now that he is economic and financial dictator of Britain, he is well on the way to achieving the ambition of his life.
  In order to shorten my remarks on this I am going to quote something, if I may, and it has reference to the Chancellor of the Exchequer. This is what it says:
  "As Minister for Economic Affairs he is in control of industry and commerce. As Chancellor of the Exchequer he is in control of the National Revenue. He towers above our Prime Minister as Beachy Head towers above the little lighthouse. The present situation is dangerous. It is the inevitable result of a planned economy. Every system of collectivism develops into dicatorship. It did in Germany, it did in Russia and today everyone can see the drift towards dictatorship in Britain."
  For that I am indebted to the brilliant columnist, Mr. Carson, of the "Recorder." [Laughter.]
  Mr. Ungoed-Thomas: Is that a non-political paper, too?
  Sir W. Smithers: The only answers of hon. Members opposite to someone who tells the truth are jeers and guffaws. The

  1933
  truth is that, whoever the man, when he has such powers as the present Chancellor of the Exchequer, he is a menace to the country. My point about dictatorship is reinforced by Dr. Hayek. He was a professor of economics in Vienna. He was naturalised in 1936, when he became a Britisher, and is now professor at the London School of Economics. This is what he says.
  Mr. House Mr. House rose—
  Sir W. Smithers: No, I will not give way.
  Mr. House: On a point of Order. What has this to do with the Budget and the Finance Bill?
  Mr. Marples: Hon. Members opposite cannot take it.
  Mr. Deputy-Speaker: The hon. Member is, I am afraid, out of Order.
  Sir W. Smithers: With very great respect, surely, it is in Order on the Second Reading of the Finance Bill to say that we have a Chancellor of the Exchequer who is a menace to the country? I will only make one short quotation. Dr. Hayek says in his book:
  "It is Germany's fate we are in danger of repeating."
  The present Government in their technique and policy at home are following much the same technique and policy as the Russian Government abroad. It is making war on Capitalism, and it does not want war, but the fruits of war. Its methods are the steady infiltration of the dangerous theories and ideologies of Communism into the body politic of this country. The Finance Bill does not face up to the magnitude of the crisis. It must be known to all people that it is a victory for the T.U.C. [Laughter.] Hon. Members may laugh, but there is nothing at which they should laugh.
  I now want to raise a point which I think is a matter of great constitutional importance. There has been a great deal of talk about Budget leakages. I hold in my hand a leaflet published from City Gate House, 39–45, Finsbury Square, London, E.C.2, which is notice No. 78K, dated November, 1947. It gives all the details about Purchase Tax, and it was printed and circulated to business offices
  1934
  before the late Chancellor made his speech on the Budget. It contains all the Purchase Tax increases, and yet, in one office at least, it was delivered by the morning post on the day the Budget was presented to this House of Commons. By what constitutional right has the Treasury the power to print and circulate this document before the increases in the Purchase Tax were passed by the House of Commons?
  There has also been a great deal said about savings. The ex-Chancellor, on 24th October, in column 415 of the OFFICIAL REPORT, appealed to investors to invest their money in Savings Certificates and Government securities, and also said that the savings movement had been lagging somewhat. On 12th November, in column 394, when introducing his Budget proposals, the ex-Chancellor said:
  "… the net figures of national savings since last April are very disappointing indeed. …."£[OFFICIAL REPORT, 12th November, 1947; Vol. 444, c 394.]
  Of course, they are, and they will be so, because it is conclusive evidence that the people have lost confidence in the Government, and the Government have rained the credit of Britain. No banker, no broker, could advise, with sincerity, any investor to invest in a concern of which the Prime Minister was chairman, the Chancellor vice-chairman, and the Cabinet the Board of Directors. Why should people invest in pieces of paper which they cannot cat or wear, and which are ever decreasing in purchasing power? That decrease has been accentuated by the policy pursued by this Government. What is the use of a thousand paper pounds a week if they are of no value, and there is nothing in the shops to buy? That is the position which we are fast approaching. The main object of this Bill is to stop inflation and yet the Government, in contradiction of their election promises, and after two years in office and with the responsibilities of office, have had to issue posters headed "Work or Want." And yet during the last few days there has been an increase for the miners underground of fifteen shillings, and ten shillings for the workers above ground.
  Mr. Deputy-Speaker: I have given the hon. Gentleman a good deal of latitude. Many of the matters to which he refers have no possible relation to the Finance Bill. Certainly the last point he has made has no relation either.
  Sir W. Smithers: With great respect, Sir, I want to prove that this is creating inflation and that the extra wages will do no good to the miners or anyone else, because if you increase—I am trying to answer your point, Sir—the miners' wages, up goes the price of coal, gas, electricity, transport, the cost of living, up again go wages, and you have a vicious spiral.
  Mr. Deputy-Speaker: I must point out to the hon. Gentleman that while those facts may or may not be true, he must relate his arguments to the Finance Bill. He is not doing that.
  Sir W. Smithers: With great respect, Sir, I am trying to show what the effects of the Finance Bill will be.
  Mr. Deputy-Speaker: The hon. Gentleman will forgive me—he is really not relating his remarks to the Bill. The fact that wages have been put up and so forth does not appear in the Finance Bill, and so as far as I know, has no direct relation to it.
  Sir W. Smithers: I will leave that point, Sir. Now, as regards cheap money, cheap money like anything else is cheap and nasty. I want to ask the Financial Secretary: will the new Chancellor of the Exchequer continue the policy of cheap money? Thank heaven, the mandate of this Government does not go beyond the shores of this country, for controlling the price of money in Britain, which was the financial centre of the world, is like trying to bale out the Atlantic with a teaspoon. I want to ask the Financial Secretary a question to which I know he cannot reply. The Financial Secretary has spoken once. I would be glad—
  Hon. Members: Sit down.
  Mr. Deputy-Speaker: Hon. Gentlemen are not entitled to interrupt in that fashion.
  Sir W. Smithers: I have been sitting here all the afternoon and I am feeling a bit tired. I want to finish and I will not give way. I want to ask the Financial Secretary if he will let me have a reply to this question in writing: what did it cost the Government to buy the gilt-edged market up to a 2½ per cent. long-term basis?
  Mr. Deputy-Speaker: Again, I doubt if that question has any direct relation to
  1936
  the contents of the Finance Bill. It may have some relation to the general financial policy of the Government but not to the Finance Bill.
  Mr. Oliver Stanley: Are we to understand that on the Second Reading of a Finance Bill it is not possible to discuss the general question of the financial policy of the Government, for it certainly has been made a topic of this Debate and so dealt with at considerable length by the Chancellor of the Exchequer.
  Mr. Deputy-Speaker: The matter discussed must clearly have some relevancy to the Bill. That is a rule that overrides all others—the rule of relevancy.
  Mr. Stanley: On a point of Order, Sir. We are told that the whole object of this Bill is to prevent inflation. Are we not entitled to discuss the causes of inflation and the remedy for it?
  Mr. Deputy-Speaker: The right hon. Gentleman knows that it is neither desirable nor customary to give general rulings, but I did think that the hon. Gentleman was going beyond the purview of the Finance Bill.
  Sir W. Smithers: With great respect, that policy of cheap money has been mentioned on all sides of the House. I made inquiries before the Budget Resolutions and understood—I say it with deep respect—that we were allowed to discuss on Second Reading the general purview of the financial condition and outlook of the country, and I want to illustrate the cheap money policy to the Chancellor by asking this question: I want to know if he is going to continue this policy, which I say is bucket-shop finance and disastrous. I want to ask him how much money he spent in buying up the gilt-edged market. I see "The Times" yesterday mentioned the amount of £800 million, when he got the market up to a 2½ per cent. long-term basis—
  Mr. House: On a point of Order, Mr. Deputy-Speaker. Is that Member in order in raising this matter?
  Sir W. Smithers: With great respect, this action of the Government in their cheap money policy is, in my opinion, one of the reasons for the supplementary Budget. They converted the Local Loan

  1937
  and issued 2½ per cent. Treasuries. I understand that this Treasury 2½ per cent. is tonight standing at 15 discount. I want to know who pays that loss on £800 million—if it is £800 million. It can only be the taxpayer, and if any directors of any company gambled in their own stocks and lost money like that they would find themselves at the Old Bailey. I want to know to what account that loss is debited, because I feel that it is one of the reasons—this mismanagement of finance—why we have to have a supplementary Budget. We still have to deal with two other factors of conversion. The Government have to find £300 million for the conversion of the Conversion Stock, and about £1,000 million to pay off the railway shareholders and debenture holders, and I want to know what they propose to do about them. Do they propose to repeat this bucket-shop finance and buy that market up again, or issue stock on a basis which is settled by the laws of supply and demand?
  There is another point. One of the main reasons for the Budget tonight is the money lost through bulk purchases and State trading. The late Chancellor of the Exchequer, when he first made the Budget proposals, complained of increases in world prices, and that the Minister of Food had to pay higher prices. I wish the Government would not blame world conditions. As Kipling said:
  "A servant when he reigneth throws the blame on someone else."
  The reason for the rise in food prices all over the world is because of State trading and bulk purchases.
  Mr. Deputy-Speaker: That is another matter which I do not think it is competent to discuss in detail on this Second Reading.
  Sir W. Smithers: With great respect—
  Mr. Deputy-Speaker: The hon. Member must again forgive my saying that this is a supplementary Budget, and it is not the occasion—nor, so far as I know, has it been so treated—for a review of economic causes, except in so far as they may relate to those matters which are dealt with in the Finance Bill, and food prices is not one of those matters.
  Sir W. Smithers: Surely, one of the reasons for this Budget is to try to tide
  1938
  over the winter without our people starving. We have no more dollars left. We cannot get enough food. The Government have had to ration potatoes, and to say that they might not be able to maintain the ration at three lbs. a week. I am trying to show the reason for this. They must stop bulk purchasing and allow the ordinary traders to get back in free competition, and go out into the world and get more food at cheaper prices. With great respect, I think that ought to be allowed, because one of the reasons is shortage of food. But to shorten my point, may I recommend hon. Members who want to study this to ask for Mr. Fehr's economic survey, 4, Bury Street, E.C.2, and a series of pamphlets issued by the Commodity and Allied Trades' Association, of Plantation House, E.C. They are non-political, and they show the mortal danger to this country of the continuation of State purchasing. In wartime production is stifled because of circumstances over which we have little or no control. In peacetime, or so-called peacetime, production is stifled because consumption is restricted. There is plenty of food in the world, but what has broken down is distribution. Wheat has gone up in price—
  Mr. Deputy-Speaker: I must really ask the hon. Gentleman either to deal with the matters before the House or to restrict his remarks. The fact of the price of wheat having gone up may be a factor in the food situation, but we cannot go into all these details of the economic situation generally on a supplementary Finance Bill. That is my view.
  Sir W. Smithers: With great respect, it seems so impossible, on this most grave Budget in our history, to be able to point out where the mistakes arose, that I really do not think it is much good my continuing.
  This supplementary Budget has been compelled by circumstances, and reveals the emptiness of the promises of 1945. It is further evidence of the incompetence and lack of foresight, and of the determination of the Government to enact their theories and ideologies and damn the consequences. The Socialists boast of freedom, but today Britain is one great concentration camp. One cannot do anything without a licence or priority

  1939
  from the dictators of Whitehall. It has been said this is a crisis Budget. The only hope for recovery is to place the responsibility for recovery in the only place where it can be put, and that is on the shoulders of each one of us.
  The only way to save the situation is to remove all priorities, all controls inside three months. That may—indeed, would—create a tremendous upheaval, but it would be as nothing to the complete disaster that will follow if freedom is not restored to the individual, and if individuals are not allowed to trade in the world. This Government cannot break the basic laws: they can only prove them. One of the reasons for this Budget—one of the reasons for the deplorable state of affairs at which we have arrived—is that this Government have tried to break or to transgress the basic laws of life. We can only prove the basic laws of life. Suppose that the Chancellor of the Exchequer tonight—I wish he would—were to walk over Shakespeare's Cliff at Dover. He would not be breaking the law of gravity: he would only prove it. The crisis is not a financial crisis. The reason for this Budget is not a financial, economic or a dollar crisis: it is a spiritual and moral crisis. The Socialists have taken the spirit out of—
  Mr. Deputy-Speaker: This is really not the occasion for a frontal attack on any "ism" of any kind, Socialism or Capitalism. The hon. Member is going far beyond the scope of the Second Reading of this Bill. I must ask him to make his remarks relevant to the Bill before us.
  Mr. Ungoed-Thomas: On a point of Order. Is it in Order for the hon. Member continually to ignore your Ruling, Mr. Deputy-Speaker, and to speak for- 40 minutes, in which he has made scarcely any reference to the Budget at all?
  Sir W. Smithers: I have not ignored the Ruling of the Chair. I have sat down every time Mr. Deputy-Speaker has risen—
  Mr. Deputy-Speaker: The hon. Member will appreciate that something more is required than that.
  Sir W. Smithers: My last word is this. You say, Sir, we must not talk about "isms." But it is Socialism that has brought us to this pass.
  11.9 p.m.
  Mr. Scollan: I want to say just a word because of the arguments put forward by the Member for Orpington (Sir W. Smithers). If hon. Members should read HANSARD tomorrow they will see reported in it a very damaging and culpable statement by the hon. Member for Orpington with regard to the need for the introduction of this supplementary Finance Bill. He placed the blame for it largely on the Government. I do not think that that should be allowed to pass.
  The hon. Member for Orpington said that the money market of this country, which was the money market of the world, had disappeared entirely, due to the policy of this Government; and he also said that the tea market of Mincing Lane had been in suspension and would disappear also. I want to tell the hon. Member that it is obvious that he does not realise that the whole system of society that built that money market and that tea market in London has completely collapsed due to the Second World War, and now for anybody to come forward and say they can put Humpty-Dumpty back again, that London can become the money market of the world again, is nonsense, when they ought to know that the very inflationary policy they have railed against has been in operation since 1939. This Government and the Coalition Government and the Caretaker Government had to freeze £3,000 million that we could not honour. We have had to freeze another £52 million that we could not honour. We have either to have gold behind our paper money, or silver, or goods.
  Mr. Deputy-Speaker: Again, this is not the occasion for a general economic dissertation.
  Mr. Scollan: This is an occasion to discuss the inflationary situation this Budget was brought, forward to meet. And the present situation, I submit to you, Sir, is due, as anyone with an elementary knowledge of the question will tell you, to too much paper money and not enough real value behind it. Consequently, the hon. Member ought to know, and it is particularly to the arguments he brought forward I am addressing myself, that the money market will not be established in this country again. The old monetary bases of the sterling area and hard cur-

  1941
  rency area are irreconcilable until we can get goods to replace the gold standard. That is the reason we are asking for more exports to redeem that money. If he did understand the system he is holding up, he would know that the competition which exists among the nations of the world, like every other form of competition, can only be won by work. They cannot all be winners in the competition. America has won. All the others have lost. And now we have to go to America whether we like it or not and ask them to disgorge what they have won to put the others on to their feet again. That is what the Marshall Plan is about. Obviously, we have here a case of a man living in and operating the capitalist system, standing up to speak and displaying complete ignorance of the very system he is operating. Therefore, I would ask the House when it discusses this little supplementary Measure to recognise it as one of the things necessary to keep this country going under Capitalism—not to keep Socialism going, but to keep Capitalism working—and to keep the wheels going between this country and the other countries of the world. Please think about that to-morrow.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the Whole House for Monday next.

  NATIONAL ASSISTANCE [MONEY]
  Considered in Committee. [Progress, 24th November.]
  [Major MILNER in the Chair]
  Question again proposed,
  "That, for the purposes of any Act of the present Session to terminate the existing poor lave and to provide in lieu thereof for the assistance of persons in need by the National Assistance Board and by local authorities, and to provide for other purposes (hereinafter referred to as "the new Act "), it is expedient to authorise:—
  A. The payment out of moneys provided by Parliament of—

  (i) Expenses (including expenses incidental to the giving of assistance) incurred by the said Board under the new Act—

  (a) in giving assistance to persons over the age of sixteen whose resources (if
  1942
  any) which are taken into account, including any such re sources of any dependants of theirs, are insufficient to meet their requirements and those of any dependants of theirs,

  (b) in the provision and management and re-establishment centres and reception centres, and

  (c) in making contributions to organisations maintaining such centres.

  and any administrative expenses of the said Board incurred under or by virtue of the new Act;

  (ii) any increase attributable to the new Act in the sums payable out of moneys provided by Parliament by way of salaries and allowances to the officers and servants of the said Board, and any expenses incurred under the provisions of the new Act relating to advisory committees and appeal tribunals;

  (iii) contributions in respect of accommodation provided by, or by arrangement with, local authorities under the new Act, being contributions payable for not more than sixty years and of the following amounts—

  (a) seven pounds ten shillings, or in Scotland eleven pounds, in respect of 3 single bedroom,

  (b) in respect of any other bedroom, not more than six pounds ten shillings, or in Scotland nine pounds ten shillings, multiplied by the number of persons for whom the room is intended;

  (iv) any' expenses of a Minister incurred in the exercise of default powers conferred by the new Act;

  (v) any increase in the sums payable out of' moneys provided by Parliament under the Old Age Pensions Act, 1936 which is attributable to amendments effected by the new Act in the said Act of 1936, being amendments providing that assistance grants and the value of accommodation, maintenance and services are to be left out of account in the calculation of means for the purposes of the said Act of 1936, and amendments relating to the determination of questions arising thereunder, to disqualifications for the receipt of pensions, to the date at which increases of pensions become payable, and to the suspension or resumption of pensions or their increase on a change of circumstances;

  (vi) any increase in the sums payable out of "moneys provided by Parliament under the National Health Service Act, 1946, or the National Health Service (Scotland) Act, 1947, being an increase attributable to provisions of the new Act as to services to be rendered by local health authorities, as to ambulance services, and as to payments by Regional Hospital Boards in respect of accommodation and facilities provided in premises formerly being part of a workhouse;

  (vii) compensation payable under the new Art to persons employed for the

  1943
  purposes of pension committees under the said Act of 1936;

  (viii) the administrative expenses of any Government department incurred under the new Act.

  B. The payment into the Exchequer of the amounts of reductions attributable to the new Act in the liabilities of any fund for arrears of benefits, pensions or allowances, and of the receipts under the new Act of the said Board or any Minister."
  11.14 p.m.
  Mr. Carmichael: I do not desire to detain the Committee unduly, but we have the time tonight for explanations that would have been quite impossible last evening. The Standing Order has been suspended and I want to raise two points on which I think the Financial Secretary might be able to give us some guidance. The first point is the financial responsibility that is excluded from this Bill and placed upon the shoulders of local authorities in regard to persons who may be regarded as redundant after the change over takes place. The other point I want to raise is that of National Health Insurance being denied a person who may require to apply to the Assistance Board. It may be that I can raise the second point in Committee. If so, I will depart from it tonight. But I want to raise the first point very acutely.
  It has been the practice of the Government in the past, when people have been regarded as redundant through transfer, to regard them as the financial responsibility of the Government of the day. I hope I am not saying anything which is causing uneasiness. I do not desire to place difficulties on the shoulders of those who are responsible, but I think the point is important, and I would like a little more attention paid to it. The right hon. Gentleman the Minister of National Insurance, yesterday pointed out that there was a possibility of the Government, with the extension of the services, taking over many of the local offices and, on the other hand, that people who are redundant because their offices were taken over by the Government might find, through the extension of local government services, occupation with the local authority, and that there would be very few people who ultimately would be regarded as redundant. The expense to the local authority, the right hon.
  1944
  Gentleman said, would be a very minor one indeed.
  I want to submit to the Government that it is very wrong to place a financial burden on the local authority. If it is admitted that the number of people involved will be very small, if it is equally admitted that the financial responsibility will be small, why does the Government depart from the well-established practice of looking after those whom they have been responsible for throwing out of employment. I do not want to continue the discussion further at this late hour of the night, but I understand that if I failed to raise the matter in this Committee now I would be unable to raise it in Committee or in any other way. I do not know a great deal about the procedure required, but I do think this point requires consideration. I have the backing of my Glasgow Town Council in this matter and the Council has actually sent letters to every hon. Member from Glasgow appealing to him to raise this matter. I hope it will have some consideration. If it is not considered I admit that I am prepared to accept the Measure which was presented to the House yesterday—I shall have a personal grievance because of the niggardly attitude adopted to this point in an otherwise good Measure.
  11.18 p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. John Edwards): I cannot add much to what was said_by my right hon. Friend yesterday evening. It is our confident anticipation that very few officers will, in fact, be redundant, and that in the nature of things they will be widely distributed—just an odd person here or there. We really think that it is nothing other than reasonable in this case, when we are sure that the number involved will be small, to leave the responsibility for compensation on the local authority. We think that to have any elaborate arrangement for compensation which would divide the cost between the central Exchequer and the local authorities would be unnecessary, and we hope, therefore, that our proposal will be acceptable.
  Resolution to be reported Tomorrow.

  HOUSING (TEMPORARY ACCOMMODATION) [MONEY]
  Considered in Committee. [Progress, 2ist November.]
  [Major MILNER in the Chair]
  Question again proposed,
  "That, for the purposes of any Act of the present Session to increase the sums available for defraying expenses incurred by the Minister of Works under section one of the Housing (Temporary Accommodation) Act, 1944, W is expedient to authorise the increase by twenty million pounds of the limit upon the sums which the Treasury may issue out of the Consolidated Fund for the purpose of defraying the expenses aforesaid."
  11.20 p.m.
  Mr. Charles Williams: When we were interrupted on the Committee stage of this Money Resolution on Friday I was commenting on the fact that, as so often happens in these days, the Financial Secretary was not present. It used to be in the House a point of honour, for the Financial Secretary to foe here. I have been here for some time.
  The Financial Secretary to the Treasury (Mr. Glenvil Hall): May I interrupt the hon. Gentleman. I know he sets himself up as an authority on Procedure in this House, but I should like to tell him that although it is often true that the Financial Secretary has been present when a Resolution such as this was taken, it is not strictly necessary, and I have made some inquiries. I find, too, that in the past it was not either essential or normal for him always to be there.
  Mr. Williams: In answer to the Financial Secretary, in the first place, I do not consider myself an expert. But I have been a Member of the House for some time and it has almost invariably been the custom of most Financial Secretaries, certainly in the Governments from 1931 to 1940, to be present for an Estimate of this sort when it was of a considerable size. Having said that might I resume the remarks I intended to make before the right hon. Gentleman interrupted me? I intended to say that I. welcomed the fact that the right hon. Gentleman is here tonight, after leading off the Debate earlier today, and I thank him for his courtesy in attending. That is what I intended as my original remarks and what the right hon. Gentleman would have heard if he had not
  1946
  blown up like a certain hatter in "Alice in Wonderland."
  I will try at this time to be as short as I possibly can on a matter involving a very large sum indeed. I had no intention of taking any part in the discussion on the Bill itself but I was forced to take part in this Debate not by any argument from this side of the Committee, but by two or three facts of a purely financial nature in regard to the sum of £20 million. I maintain that it is grossly beyond what we have any right to ask the taxpayers to find. The only point we can consider is whether we are justified, as representatives of the taxpayers in the country, in allowing an amount of this kind to be passed. In the first place, the hon. Member for East Woolwich (Mr. Hicks) made it perfectly plain in his speech on Friday that he considered the figure of £1,610 as far too big for the houses which were being built. I should like before I go any further to make it clear that I realise the necessity for these houses. I am not crabbing that, for I realise that but for them, a large number of people who are housed today would not be accommodated.
  What I am criticising is solely the cost. The hon. Member for East Woolwich, who has some knowledge of this matter, maintains that we are spending vastly too much on the house itself. Then I come to the speech, remarkable in many ways, of the hon. Gentleman the Member for Mitcham (Mr. Braddock). He told us he was a great expert, and on three occasions during his speech last Friday, he said—and I think it was with the fullest justification, although I do not propose to develop that point—that there ought to be an inquiry into the amount of money we are spending on this house; that is, the actual amount we are being asked to spend. He ended with an absolute condemnation of the Government policy in asking for so much money. I am not quarrelling with the Government asking for some money, but, at the present time, there is no justification for the Government asking for the full £20 million. He said:
  "… with regard to these temporary prefabricated houses, which, I repeat, are worth no more than 60 per cent. of the price now being asked."—[OFFICIAL REPORT, 21st November, 1947; Vol. 444, c. 1551.]

  1947
  In other words, we are being asked to provide £20 million for something worth only 60 per cent. of that amount. Or, in another way, it can be said that if the Government were efficient and knew their job, these estimates we are being asked to pass tonight, would be only in the nature of £12 million. That is what is suggested by a practical back bencher opposite. We are told that some hon. Members are practical, and we accept their views and give them credit for their self-confidence. What has been said is what one hon. Member thinks of this particular Government expenditure.
  I know that, at this time of the evening, we are not likely to get any withdrawal of the Resolution, but I suggest that it might save a certain amount of ill-feeling in the country if it was known that this money was being properly spent. Therefore, I think that the inquiry suggested from the Government benches should be made. This could be worked in, and if we give all this money to the Government, then either the right hon. Gentleman the Financial Secretary—whose courtesy in coming here tonight I much appreciate—or the Parliamentary Secretary to the Ministry should give further consideration to the protests made from the Government benches, as well as our own. If there is to be an official inquiry into the terrific cost of these houses, then I will be satisfied. But I say quite frankly, having listened to the Parliamentary Secretary's remarks—without quoting them at this late hour—that they did not begin to satisfy me. To say merely that the cost of something has gone up by 40 per cent., as has been said, does not really cover the matter at all. No matter how much things are going up here or there, it is obvious that the Government have mismanaged the whole business. Would it not be very much better, and very much more satisfying, to hold an Inquiry into this matter? Then, someone would be able to say if the hon. Member for Mitcham was right—as I think he was:—or whether, for once, the Government themselves were right.
  11.30 p.m.
  Major Peter Roberts: I support my hon. Friend in asking for this inquiry. I had not intended to get up until I heard
  1948
  his speech. He made it perfectly clear to me that there is a great deal of money here that we are asked to vote tonight, and looking at the Financial Memorandum I am reminded that this is £20 million on top of £200 million already voted, and from the experience which I gained in Sheffield on this matter—and I may add that in Sheffield we have a housing problem as bad as any in the country—I cannot see that this £20 million that we are discussing is going to solve the problem that the Financial Secretary is setting out to solve. The reason is that the programme has been more or less placed now in the hands of the local authorities. There are back-to-back houses in my constituency where there is great overcrowding, and there has been a Socialist majority on the City Council for over 20 years. We are not likely to get the problem solved by merely voting this £20 million. Either the amount should be considerably greater, so that we can in point of fact get the houses in order to accommodate these people, or else it is a complete waste of money and the matter should be left to others to carry out. I do not know at this stage which is the better procedure. It seems to me that what we are doing is essentially wrong. Either it should be a great deal more to get the houses for people who are grossly overcrowded, or else we are wasting, money as my hon. Friend has pointed out, and it should be left to other sources which, of course, I should not be in order to discuss.
  For those reasons I suggest that in order to solve the problem—as I say, in Sheffield, in my constituency, there is grave overcrowding, with back-to-back houses—there should be an inquiry into the way it should be dealt with and what money should be spent. Such an inquiry should be set up by the Government. We should not be asked as taxpayers to go into this without proper inquiry.
  Mr. Tiffany: Is it in Order, Sir, to discuss the pros and cons of an inquiry into this matter, and, if so, shall we be in Order in replying from this side of the House?
  Mr. Deputy-Speaker: The hon. Members are asking that an inquiry should be held, and I cannot rule such a request out of Order however unusual it may appear.
  11.33 p.m.
  Mr. Marples: I would like to support the suggestion made by my hon. Friend the Member for Torquay (Mr. C. Williams). If an inquiry cannot be granted, would it be possible for the Government to produce a White Paper giving the breakdown of the increase of £20 million? In 1944 the original amount for which the Government asked was £100 million. In 1945, the right hon. Gentleman who is now the Minister of Education asked for a further £50 million. Now, in 1947, the Government are asking for an additional £20 million on this temporary housing programme. The money has not been spent very well, for aluminium houses cost £1,010, when a private builder is only allowed to build permanent houses for £1,300. It shows a clear waste of money. When the Government first asked for the £50 million they produced a White Paper (Command 6686) which gave a very detailed analysis of the figures of breakdown of the cost per house which went to make up the £50 million for which they were asking. The cost per house, they said, was £268. The details per house were: site preparation, £89; superannuation, £96; fittings, £25; drainage, etc., £15; Ministry of Works' costs, £20; contingencies, £23; total cost, £268.
  I am grateful for the presence here tonight of the Financial Secretary, because this is the second increase for which the Government have asked. They gave us a White Paper on the first increase, and, surely, we are not out of Order in asking for another on the additional £20 million? The first figure was £120 million and the second—on which they gave us the White Paper—was £50 million. Now they ask for another £20 million, and have not even produced a breakdown of that figure to show how it is arrived at. I would ask the Financial Secretary for a reply on that point. If they will not give an inquiry, then the least the Government can do is to give as much information as they can.
  11.36 p.m.
  The Parliamentary Secretary to the Ministry of Works (Mr. Durbin): Three points have so far been raised in this discussion. It is difficult to answer the first without traversing the ground covered in the Debate on the Second
  1950
  Reading. I must repeat that so far as the cost of the aluminium houses is concerned, nearly half of the increased cost is attributable to changes in specification and an increase in aluminium content, first, to strengthen the houses and secondly, to save steel. That, therefore, is no criticism of the efficiency with which the programme has been carried through. The great bulk of the remaining half arises from increases in the costs of the manufactured components going into the houses, and that again does not cast any reflection on the efficiency with which the houses are constructed.
  The second point raised was the matter of an inquiry, raised by the hon. Member for Torquay (Mr. C. Williams), and that of a White Paper, raised by the hon. Member for Wallasey (Mr. Marples). I think the hon. Member for Wallasey made it clear that so much information was provided in the past on the breakdown of costs and the reasons for increases that it would be difficult to say that there was a case for specific inquiry. As to his suggestion that there should be a White Paper I will call the attention of my right hon. Friend the Minister of Works to that, and he will no doubt make his decision known at a later stage of the Bill.
  The other question I was asked was whether this was or was not an adequate sum? This arose, I think, from a slight misunderstanding of the nature of the Resolution. This is only concerned with a sum of money to meet financial costs of temporary house construction, which has almost reached its end, and has nothing to do with the solving of the future housing problem.
  Major Roberts: Does that mean there will be further demands coming before the Committee for further programmes for temporary housing?
  Mr. Durbin: Oh, no. The temporary housing programme has nearly reached its end.
  Mr. C. Williams: I am sorry that the Parliamentary Secretary has seen fit to refer to the remarks recorded in the OFFICIAL REPORT at column 1570, which I have read carefully. It really does not meet the case. What was wanted was a much clearer breakdown. Those who have had

  1951
  a long experience in these matters realise that the answer is totally and absolutely useless. It is too late to have a Division tonight, but that course would other wise have been forced by the sort of repetition and the hopelessly incompetent answer that has been made.
  Notice taken that 40 Members were not present;
  Committee counted, and, 40 Members being present—
  11.43 p.m.
  Mr. Orr-Ewing: On a point of Order. I very much regret having to draw attention to the unsatisfactory nature of the reply given by the Parliamentary Secretary. We had hoped on this side that we should have been given more facts on this matter. We are dealing with a very large sum of money. Nobody who listened to the Debate on the previous occasion when the House discussed this matter, last Friday, could possibly have felt satisfied with the explanation then given. Even Ministers admitted that further explanations were to be given. I submit that this was the proper occasion on which those explanations should have been given, and I feel very sorry this chance was not taken, because now we are forced to the position in which the Committee is voting public money without the full facts, and without all the information to which we are entitled. I must make this protest, without blaming the Parliamentary Secretary, that this Committee is being asked [HON. MEMBERS:" This is not a point of Order."]—If I am not in Order the Chairman will call me to Order, and not hon. Members opposite. I must make this protest, that we have not been given the full facts before the Committee is asked to sanction such a large sum of money.
  Mr. Leslie Hale: On a point of Order, may I call attention to the fact that after a count had been called at .11.40 there were only four Members on the Opposition benches to respond to that count?
  Resolution to be reported Tomorrow.

  NORFOLK AND SUFFOLK BROADS
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Pearson.]
  11.45 p.m.
  Mr. Edward Evans: I apologise for detaining the House at this very late hour, especially as I myself have, unfortunately, lost my last train home. The question I wish to raise is that of the deterioration of the Norfolk and Suffolk Broads. I say Norfolk and Suffolk Broads, because there is a tendency always to refer to them as the Norfolk Broads, and I would remind hon. Members that the Broads overflow a good deal into Suffolk. The subject it not only of local interest as might be inferred from the name I have given it: it has national implications of various kinds, and it is very gratifying to know that the claims made for the Broads to be included in the National Parks scheme have been so warmly endorsed by the Report of the National Parks Committee presented to the Minister of Town and Country Planning. These claims have the very strongest support from those people who live among the Broads; from those who earn their livelihood in the ancient craft of boatbuilding; those who ply their boats for hire and depend very much on the preservation of the Broads; and of all, I am sure, of the many millions of people who have enjoyed the amenities of the Broads as a holiday centre.
  Among all the proposed National Parks, the Broads are unique. They provide facilities for relaxation and enjoyment not found in other parts of the country; they have their individual character and a type of scenery and extensive broad waters. It is because they are so well worth preserving as a projected National Park, that I desire to call the attention of the House and of the Minister to the disasters which not only threaten their future as a National Park, but which, if not tackled now, will make them a grave liability, indeed. There can be no doubt that the Broads are deteriorating rapidly as a. holiday centre, as they have already done as a commercial highway. The Norfolk and Suffolk Broads comprise at present about 90 miles of navigable waters to which may be added 2,600 acres of open water in lakes of various

  1953
  sizes and diversity of character. From time immemorial they have been the public means of transport in the area, and until the construction of modern roads and railways they were the only means available for the transport of goods, cattle, farm produce, and, also, of people. But during the last 100 years they have developed into a fine holiday centre, and it is on that aspect that they come into the category of a National Park.
  The amenities available are sailing, first of all. Here thousands have learned to manage a sailing craft. Nelson himself, it is said, learned to handle a tiller there. Many who ran the Dunkirk gauntlet and manned the little ships that fetched our soldiers home learned on the Broads how to manage their craft. There are canoeing, fishing—the Broads have been called an angler's paradise—skating in the winter, and ice sports. There is a wealth of flora, and the bird life comprises some of the richest and rarest specimens of wild fowl, including bittern, heron, and many others. All this beauty and all these sports are available at small cost, and are easily accessible from London and other centres of population. About 1,000 craft ply for hire on the Broads in the holiday season, and about 80,000 people use them. About 20,000 can be accommodated in hotels and hostels, and an average of about 50,000 visit the Broads in a season on coach excursions. The value of the tourist traffic is estimated at £600,000 a year. Despite the benefit of all this business to the authorities in the region—the rural district councils, the parish councils, the county council, the catchment boards and drainage boards—not one of these authorities makes any contribution to the upkeep or the expansion of the Broads for recreational purposes. All these amenities are in gravest danger of being seriously restricted through causes which it is well within the capacity of the authorities to prevent.
  It should be the aim to develop, extend and improve them and it is disquieting to find that the area still available to the public today is not one half what it was a century ago. The area grows less every year, Those who have known the Broads for 10 and 20 years have only to cast their own memories back to find a marked deterioration in the space available to the public. The loss in acreage
  1954
  open to the public is due to two main causes. The first is the most iniquitous and arbitrary enclosure of certain broads and waterways by private persons, riparian owners and dwellers by the waterways. They have no legal right to have these public waters closed. In my opinion—and I say this having well considered the word—it is nothing less than sheer robbery over the years. Since 1892 over 550 acres of open water and a great number of narrow waterways have been shut to the public. It is a very easy thing to do. A chain is thrown across a narrow waterway, or a heap of stones is gathered and weeds inserted. The history of these enclosures constitute a gross scandal and a disgrace not only to those whose greed and selfishness have made them carry out this robbery, but to the authorities who have permitted them to get away with it. I beg the Minister to consult with the local auhorities to see if something can be done to restore to the public these rights of access.
  The second cause is the neglect by the authorities to deal effectively with the growth of weeds and other aquatic vegetation. The waterways are steadily becoming choked with weeds, some of which spread hundreds of yards. The total area lost in this way cannot be less than 1,200 acres. Another danger to the enjoyment and, indeed, to the health of the people, is the pollution by sewage from craft and riverside dwellings. Breydon Water suffers, as my hon. and gallant Friend the Member for Great Yarmouth (Squadron-Leader Kinghorn) will tell the House, by the backwash of sewage from that town. For many years the use of the river bank and. open waters for towing and mooring was a common right and it was stipulated in the leases granted by the Drainage Commissioners to dwelling holders on the bank that as far as nine feet wide in front of the house should be available for common mooring and towing. These rights have been gradually filched away. Now there are notices everywhere, "No mooring" and "Private mooring." This grave abuse is quite illegal and indefensible.
  There is no proper repair and maintenance of. stages and landing places, with the result that timbers break away and great baulks are allowed to drift out into the waterways and are not taken out. Many of the waterways are overhung with trees. All sailors in narrow waterways

  1955
  know of the terrific loss in sails torn by overhanging vegetation. Another consideration that might engage the attention of the Minister and those who want to preserve the amenities of the Broads is he regulation of the size, speed and type of craft. There is great danger that the backwash of those almost ocean-going motor and house boats which career up and down the Broads will gradually disintegrate the banks. There is also the danger of submerged stones, wrecks and fallen trees. It seems to be nobody's business to clear these away. A visit to the Broads, instead of being an invigorating, inspiring holiday, is almost one of the saddest spectacles of wilful neglect it is possible to see.
  Our greatest enemy is time. That is why we are anxious to have these facts put before the Minister. Every year the cumulative effect of neglect makes the position worse. If the Broads are to play their full part in the scheme of National Parks, these abuses and dangers must be dealt with without delay. The Broads form a natural playground for our people in the best British tradition. Immense rewards, economic, physical and social, are to be gained from them. But these rewards may be lost through neglect and greed. I have been fortunate in securing a collection of photographs which emphasise much more forcibly than I can, what this deterioration means, and I hope that hon. Members, and particularly the Minister, will take the opportunity of seeing them in the Library. I do ask the Minister to give all the attention he can to this very vital danger of the almost complete deterioration of the Broads if the trouble is allowed to go on as now.
  11.57 p.m.
  Mr. Medlicott: I welcome this opportunity to intervene for a moment or two, because just as the whole of the Suffolk Broads are, I believe, within the constituency of the hon. Member for Lowestoft (Mr. Edward Evans), so the whole of the Norfolk Broads happen to fall within the constituency which I have the honour to represent. I am glad he has raised the matter at this moment, because there is no doubt that the Broads are quite seriously being lessened in area, and the rate of lessening is going to accelerate as the years go on. But I cannot join the hon.
  1956
  Member for Lowestoft in laying any great part of the blame upon the enclosing of certain Broads by private owners. In any case, he has referred to the loss of some 550 acres, but there are some 2,600 acres of Broads still open to the public, so that enclosure is only a relatively small part of the problem. I suggest, also, that whatever has been done has been carried out in strict accordance with the rights of the riparian owners. I cannot agree that there has been any departure from the law by owners of land surrounding the Broads.
  It is, however, an important matter that the fullest use should be made of the Broads in the interests of holiday-makers. We shall have fewer opportunities to go overseas for some years to come, and this is a magnificent place for holidays at home. But there are two things which must be borne in mind. First of all, the channels must be cleared, because there are large stretches of water which are no longer navigable. Those channels must be cleared by the most efficacious means which can be adopted. There are other matters which perhaps fall outside the purview of the Minister of Town and Country Planning. For instance, there is need for the provision of riverside hostels and other forms of accommodation, because, although we are anxious to make this into an even greater holiday resort, we do not want it to become a "Coney Island." The natural beauty of the surroundings must be preserved from commercialisation, and it would never do to have a vast additional number of people attracted into this area unless there were proper accommodation for them. These two things need to be harmonised—the need to increase the river accommodation, and, at the same time, to increase the accommodation for people to stay.
  The other point I wish to make is of equal importance. We are asking for help and guidance from the central Government. We shall need finance especially, because the cost of dredging the silted channels cannot be borne by the local authorities alone. But we do ask that whatever plans are carried out shall be carried out under the advice of, and very largely by, local people. Local knowledge is essential in carrying out the work if this problem is to be tackled properly. There are certain local residents who know more about the Broads

  1957
  than all the Ministry's officials would learn in many years, and I urge upon the Minister to see that Norfolk people and residents are consulted and allowed to have a say in whatever is done to cope with this pressing problem.
  12 m.
  Squadron-Leader Kinghorn: In the three minutes allowed to me I hope to add my own little weight of evidence to that of the various speakers on his subject. It is true that technically my constituency is not in the Broads, but its second name after "The Herring Port "is" The Gateway to the Broads." It is from there that the holiday makers set out on their travels around these water-ways, which are unique. We have a great responsibility now that we are faced with the situation which has been outlined by my hon Friend the Member for Lowestoft (Mr. Edward Evans). I hope tonight we are going to start a small T.V.A. scheme, a sort of regional tackling of the problem which will lead to the danger being overcome.
  Further, I should like to remind the Minister that Members drawn from both sides of the House have been sitting for two years on a Committee which is tackling the question of coast erosion, and these things are inter-related. A small village which is very near to my constituency is in danger of being inundated by the sea. It is a few minutes from the Broads and it may be that the drains will be drained, the Broads made more acceptable to tourists and able to accommodate better boats and then coastal erosion will upset the whole scheme. I hope the Minister will have consultations with the Minister of Health on this subject so that they can tackle the trouble together. In my constituency we have the Breydon Water, which is a large lake with a bottleneck outlet under a bridge. The water in that lake ebbs and flows with the tide and would be most suitable for a lock to control the waters. That is a practical way of lessening the flooding in that area. With these few words I will close my remarks as we all want to hear what the Minister has to say.
  12.3 a.m.
  Mr. Gooch: As a representative of another Norfolk constituency greatly interested in this question, I should like to call the Minister's
  1958
  attention to one point. I have spent a good many happy days on the Broads myself, and as a member of the Norfolk County Council I know of what great concern to the members of that Council is any effort to ensure that everything possible is done to preserve the amenities there. A short time ago we held a general conference in Norwich at which were representatives of all interests. Out of that conference a Broads Committee was established to deal further with that question. A report has been issued by that committee and I want to ask that it be considered by the Minister. I should like the Minister to indicate if the report will receive consideration as I am sure it will, and that he will give it very careful thought, because suggestions are embodied therein with the object of promoting the welfare and development of the Broads area. I hope the Minister will be prepared to assist the Broads committee to carry out the suggestions which have been made by my hon. Friend the Member for Lowestoft (Mr. Edward Evans) who initiated this Debate.
  12.5 a.m.
  The Minister of Town and Country Planning (Mr. Silkin): On one point we shall all agree, and that is on the unique character of the scenery of the landscape of the Broads. Everyone who knows the Broads must recognise that there is something there which is very special indeed in English scenery.
  The Broads are, indeed, very difficult to know. The outstanding impression oh my mind is the difficulty of finding the Broads, and of getting to them at all. But the Broads have been recognised in the report of the National Parks Commission as one of the important scenic areas in this country, and while I am not in a position tonight to say what action the Government can take on this report, or when it may be able to do so, I can at any rate say that the Government, if able to undertake legislation, regard the Broads as one of the National Park areas. The House will not expect me in the limited time I have to discuss in detail the points raised tonight. We have had a Broads Preservation Committee, which sat for some time and has reported, and broadly my Ministry would agree with the recommendations of that Committee. We are aware that there has been a considerable reduction in the facilities open to the

  1959
  public, but I am not able to say if that is due to the causes suggested by the hon. Member for Lowestoft (Mr. Edward Evans), namely, the closing of the waterways with no moral or legal claim, or whether it is due to the fact that, since a number of these Broads are private property, the owners have only been carrying out their rights.
  Mr. Maclay: Will the Minister remember that there also arises the important question of the preservation of wild bird life to which the hon. Member for Lowestoft (Mr. Edward Evans) referred? There is the case of the bittern, and I think something ought to be done in this matter.
  Mr. Silkin: I am not prepared to answer in detail the individual points that have been raised, nor have I the time to do so. But they are all points meriting attention, although some of them are matters for which I have no special responsibility. Those responsibilities range over a wide field, and are not confined to the Ministry of Town and Country Planning. My right hon. Friends the Minister of Health, the Minister of Agriculture, and even, I think, the Minister
  1960
  of Transport, have responsibilities on this subject, and some of the matters raised tonight would require legislation to deal with them. But I do promise to examine all these points very carefully indeed, and then I will give a formal and definite reply to the hon. Member who raised the subject, and let him know the position specifically about each of the points which have been raised. I hope I may satisfy him when I say that if I do not deal with all these points tonight, it is not because of a lack of appreciation of the subject. I am personally most grateful to him for having raised this question of the Broads. It is a late hour at which to raise a question of this type but, on the other hand, it is always a pleasure to have a question of amenities raised in this House at any time of the night, and those hon. Members who are not here will, I am sure, read about this discussion with interest. So I hope my hon. Friend will realise that he has rendered service to the cause he has at heart, and when he receives, in due course, the information I will give him, he will know that he has justified his intervention.
  Adjourned accordingly at Ten Minutes past Twelve o'Clock.

EMPLOYMENT
  European Volunteer Workers
  European Volunteer Workers
  Ex-Service Men
  Ex-Service Men
PRISONERS OF WAR
  Agricultural Volunteers (Family Visits)
  Agricultural Volunteers (Family Visits)
  Repatriation
  Repatriation
BRITISH ARMY
  Requisitioned Land
  Requisitioned Land
  Civilian Employees (Accommodation)
  Civilian Employees (Accommodation)
  Motor Drivers
  Motor Drivers
TRADE AND COMMERCE
  Bulgarian and Hungarian Tobacco
  Bulgarian and Hungarian Tobacco
  Roumanian Feedingstuffs
  Roumanian Feedingstuffs
  Industrial Overalls
  Industrial Overalls
  Soft Furnishings (Dockets)
  Soft Furnishings (Dockets)
  Utility Furniture (Priority Classes)
  Utility Furniture (Priority Classes)
  Paper Allocation
  Paper Allocation
  Educational Textbooks (Paper Reserve)
  Educational Textbooks (Paper Reserve)
  Crockery Supplies
  Crockery Supplies
  Timber (Stocks and Licences)
  Timber (Stocks and Licences)
  Typewriters (Imports and Exports)
  Typewriters (Imports and Exports)
  Imported Marbles
  Imported Marbles
  Agricultural Implements (Timber Supply)
  Agricultural Implements (Timber Supply)
  LAND (NON-AGRICULTURAL USES)
  LAND (NON-AGRICULTURAL USES)
NATIONAL INSURANCE
  Family Allowances (School-Leaving Age)
  Family Allowances (School-Leaving Age)
  Miners' Diseases (East Midland Region)
  Miners' Diseases (East Midland Region)
  MACHINERY (BRITISH INDUSTRY)
  MACHINERY (BRITISH INDUSTRY)
  RAILWAY WAGONS (WEEK-END UNLOADING)
  RAILWAY WAGONS (WEEK-END UNLOADING)
  CHEWING GUM (IMPORT LICENCES)
  CHEWING GUM (IMPORT LICENCES)
FOOD SUPPLIES
  Imported Silver Hake
  Imported Silver Hake
  Potatoes (Distribution)
  Potatoes (Distribution)
  PALESTINE POLICE FORCE (FUTURE SERVICE)
  PALESTINE POLICE FORCE (FUTURE SERVICE)
  Potato Ration
  Potato Ration
  Vegetable Prices
  Vegetable Prices
  HOUSING, SCOTLAND
  HOUSING, SCOTLAND
NATIONAL FINANCE
  Death Duties
  Death Duties
  Purchase Tax (Clothing)
  Purchase Tax (Clothing)
  Ministers and Officials (Aircraft)
  Ministers and Officials (Aircraft)
  Anglo-Swedish Monetary Agreement
  Anglo-Swedish Monetary Agreement
  1914–18 WAR (OFFICIAL HISTORY)
  1914–18 WAR (OFFICIAL HISTORY)
  FOREIGN MISSIONS (U.K. PREMISES)
  FOREIGN MISSIONS (U.K. PREMISES)
FUEL AND POWER
  Licensed Coal Mines (Output)
  Licensed Coal Mines (Output)
  Supplementary Petrol Allowance
  Supplementary Petrol Allowance
AGRICULTURE
  Machinery
  Machinery
  County Committees (Staff)
  County Committees (Staff)
Preamble
The House met at half past two of the clock, The Lord Chancellor on the Woolsack.
Prayers.
Lord Mildmay of Flete—Sat first in Parliament after the death of his father.

LAW REFORM (PERSONAL INJURIES) BILL, [H.L.]
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I beg leave to introduce a Bill to abolish the defence of common employment, to amend the law relating to the liability in damages for breach of statutory duty and to the measure of damages for personal injury or death, and for purposes connected therewith. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read a.—(The Lord Chancellor.)
On Question, Bill read a, and to be printed.

JERSEY AND GUERNSEY (FINANCIAL PROVISIONS) BILL.
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911: read a, and to be printed.
STORNOWAY HARBOUR ORDER CONFIRMATION BILL [H.L.]
Returned from the Commons, agreed to.

GOVERNMENT CARS.
EARL HOWE: My Lords, I beg to ask the Government the question standing in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government whether a return can be furnished indicating the number and types of motor cars, classified according to horse power, on November 1, 1947:—

(1) At the disposal of each Government Department, apart from the Service Departments;

(2) How many are on order for each Department;

(3) How many are at the disposal of Ministers;

(4) How many drivers are employed,

and whether any orders have been issued restricting their use to save petrol since August 27, 1947, and, if so, the nature of such orders.]
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM): My Lords, answers to the first and fourth parts of the question are not as present available. A census of the vehicles held by Government Departments is in hand, and when the returns are complete, which may not be for some little time, I will send the noble Lord a copy. Drivers are not separately shown in staff returns and complete information could not be collected without a considerable amount of labour. Many departmental cars are driven by civil servants who use them in the course of their work. I will circulate in the Official Report a return Answering the second part of the question.
Thirty-six cars are allocated to individual Ministers, most of them being 27 h.p.
The Minister of Fuel and Power sent a letter to all Departments on August 21 reminding them of the need to set an example in petrol economy, and asking them to make every effort to secure an overall reduction of at least ten per cent. in the consumption of petrol both by Government cars and by private cars used by Government servants on official business.
[Following is the return referred to by Lord Pakenham:

Passenger Vehicles outstanding for Civil Departments as at 1.11.47.

Home Office:

Humber Super Snipes, 27 h.p.

28

Humber Hawks, 14 h.p.

39

Austin Saloon, 16 h.p.

4

Wolseley Saloon, 14 h.p.

2

Vauxhall Saloon, 12 h.p.

6

Vauxhall Saloon, 14 h.p.

4

Ministry of Education:

Ford Saloon, 10 h.p.

2

Imperial War Graves Commission:

Austin Saloon, 10 h.p.

2

Control Commission, Germany and Austria:

Austin Saloon, 16 h.p.

495

Humber Pullman, 27 h.p.

17

High Commissioner in Pakistan:

Super Snipe, 27 h.p.

1

Board of Trade:

Super Snipe, 27 h.p.

1

Ministry of Works:

Austin Saloon, 16 h.p.

1

Austin Saloon, 10 h.p.

75

Wolseley Saloon, 12 h.p.

34

D.S.I.R.:

Austin Saloon, 16 h.p.

1

Vauxhall Saloon, 12 h.p.

1

Ministry of Health:

Hillman Saloon, 10 h.p.

9

Ministry of Supply

Vauxhall Saloon, 14 h.p.

37

Austin Saloon, 10 h.p.

65

Wolseley Limousine, 25 h.p.

5

Wolseley Saloon, 18 h.p.

10

Humber Pullman Limousine, 27 h.p.

19

Hillman Minx, 10 h.p.

4

Humber Hawk, 14 h.p.

50

912

NOTE.—The type of car required is being reconsidered in some cases; for instance the Home Office are ready to substitute 16 h.p. cars for Humber Super Snipes.]

PETROL FOR GARDEN MACHINERY.
LORD HAWKE: My Lords, I beg leave to ask the question standing in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government whether they can guarantee to continue to grant petrol allowances in due season for labour-saving gardening machinery used in private gardens, including mowers.]
LORD CHORLEY: My Lords, I am afraid that in present circumstances the provision of petrol for gardening machinery used in private gardens must be
840
limited to machinery used for the regular production of food for the market, although an allowance is made for sports grounds and public parks. The restoration of the allowance for private gardens, like that of the basic petrol ration, will depend on the balance of payments position.
LORD SALTOUN: Will the noble Lord supplement that answer? Does that apply to market gardeners who purchase machines in future as well as to those which have been purchased in the past?
LORD CHORLEY: The question is directed to the use of labour-saving machinery used in private gardens and not in market gardens. I think the noble Lord must have misunderstood the purpose of the question.
LORD HAWKE: Do the Government wish to encourage people to grow food both for themselves and possibly as a surplus for the market later?
LORD CHORLEY: Certainly.
EARL DE LA WARR: Do the Government realize that a great number of private gardens, though not in any way registered as market gardens, do supply a great number of visitors and employees with food? The noble Lord has missed that in his answer.
LORD CHORLEY: I shall be very glad to bring the noble Lord's observations to the attention of my right honourable friend.

SUNDAY ENTERTAINMENTS ACT, 1932.
BOROUGH OF ALDEBURGH ORDER;
BOROUGH OF ST. IVES (HUNTS) ORDER;
URBAN DISTRICT OF LONG EATON ORDER;
URBAN DISTRICT OF OTLEY ORDER;
URBAN DISTRICT OF SEATON VALLEY ORDER;
RURAL DISTRICT OF NORTH COTSWOLD ORDER.
LORD WALKDEN: My Lords, I beg to move that these Orders be approved.
Moved, that the Orders made under the Act by the Secretary of State for the Home Department, for extending Section one of the Act to the said areas, be approved.—(Lord Walk den.)
On Question, Motion agreed to.

PONTYPOOL GAS ORDER, 1947;
LETCHWORTH AND DISTRICT ELECTRICITY ORDER, 1947;
PONTEFRACT ELECTRICITY ORDER, 1947;
CAERNARVON GAS ORDER, 1947;
SPENBOROUGH GAS ORDER, 1947.
LORD CHORLEY: My Lords, I beg to move, That the Special Orders, as reported from the Special Orders Committee on Wednesday last, be approved.
Moved, That the Special Orders, as reported from the Special Orders Committee on Wednesday last, be approved.—(Lord Chorley.)
On Question, Motion agreed to.

MANDATED AND TRUST TERRITORIES BILL, [H.L.]
2.40 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Viscount Hall.)
On Question, Motion agreed to.
House in Committee accordingly:
[The VISCOUNT MERSEY in the Chair.]
Clause 1 [Application and modification of enactments]:
On Question, Whether Clause 1 shall stand part of the Bill:
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, I want to make a few observations dealing with certain matters which were raised on the Second Reading of the Bill. Some of the difficulties mentioned in the debate then have been the subject of correspondence which I have had with the noble Viscount, Lord Maugham, and the noble Lord, Lord Altrincham, in an attempt to deal with them. To allay any possible misunderstandings I must make it clear that this Bill does not affect the law of any Dominion or of any trust or mandated territory under the administration of a Dominion. Government, and nothing in this Bill is, or could be, in derogation of the rights of Dominion Parliaments. This, of course, follows from the Statute of Westminster, under which no Act of the United Kingdom Parliament extends or is deemed to extend to a Dominion as part of the law of that
842
Dominion, unless it is expressly declared in the Act that the Dominion has requested and consented to the enactment.
What this Bill does affect are the provisions of Acts of the United Kingdom Parliament and of subordinate legislation made thereunder, having effect as part of the law of the United Kingdom and of the Colonies and other dependent territories. I might make this clear by giving an example. The Matrimonial Causes (War Marriages) Act, 1944, conferred jurisdiction on the Courts of this country to grant divorces in certain cases, and to provide for the recognition by Courts in this country and in Colonial territories of decrees made by Courts of the self-governing Dominions under any similar legislation which they might pass. Now any similar legislation by a Dominion Parliament might well apply to any mandated territory under its administration. The Act accordingly provides that it shall apply to any such territory as if the mandated territory were part of the Dominion. In other words, in that Act we refer to a mandated territory under the administration of a Dominion Government simply for the purpose of referring to its law, and not for the purpose of legislating for it ourselves.
When the present Bill becomes law the effect will simply be, as regards, for example, New Guinea, which is now under trusteeship administered by Australia, that the 1944 Act to which I have referred shall continue to have the same operation as it did in relation to New Guinea as a mandated territory. The case of South-West Africa, to which reference was made by noble Lords on Second Reading, is, however, different. That territory is still administered by the Government of South Africa in accordance with the provisions of the Mandate. In relation to South-West Africa, therefore, the Bill by Clause 1 (3) provides that the Matrimonial Causes Act, and any similar Acts, shall continue to apply to South-West Africa as a mandated territory. I have been in correspondence with the noble Lord, Lord Harlech, who unfortunately is unable to be present to-day, and with the noble Lord, Lord Altrincham, on this question of South-West Africa, and I am grateful to them both for their expression of satisfaction with the explanation which I have given them on this point. It is in the way I have quoted that South-West Africa

843
comes within the provisions of the Bill. It is certainly true that if at any time the Government of South Africa were to place South-West Africa under trusteeship the Bill would cover the case; but, since the South African Government have stated quite plainly that they do not intend to do so, the case is purely hypothetical. In order to remove any misapprehensions, I also wish to say that nothing in this Bill authorizes the placing by His Majesty under trusteeship of any territory, or deals in any way with that kind of question.
2.45 p.m.
VISCOUNT MAUGHAM: My Lords, I am sorry the noble Lord, Lord Harlech, is not here to state the nature of the objection he raised on the last occasion, but I am very glad to hear that he is quite satisfied with the explanation which has been given to him in correspondence by my noble friend opposite. So far as that is concerned, there is nothing more to be said. I confess that my intervention in the debate on the last occasion was to express the desire, which I have so often expressed in this House, that Bills which come before us and Acts of Parliament when the Bills reach that status, should be so clear that it should be possible for ordinary people to understand what the measures really mean. I was quite unable to construe this Bill when I first read it. Some light was thrown upon it by my noble friend Viscount Hall, and after that I was enabled to consider the matter, with his assent, with the gentlemen responsible for drafting the measure. After considerable efforts of that kind the Bill returns to your Lordships' House—I am not sure whether the Bill is feminine or masculine, but, if feminine, it returns intacta; there is not a single fine in it which has been altered.
I only want to say this with regard to it. I am still unable to understand it, and if I were an examiner presenting scholarships in respect of the position of Bills as puzzles which have to be solved at some future date by the Judges, while I should perhaps not give this particular Bill the first prize, I think, after all I have heard, I should fairly feel myself bound to describe the Bill as a proxime accessit. It really is a Bill which presents difficulties, and I am quite sure that it
844
need not have been so difficult to understand as it now is. One other thing that I would say, in the utmost seriousness, is this. During the last few years it has been the practice of noble Lords who are producing Bills here, if their meaning is challenged, to proceed, or to get a friend to proceed, to the corner on the right of the Throne, and after certain whispers they come back fully confident of the nature of the Bill, and what it means. Of late years what was very well known at one time in this House and elsewhere seems to have been forgotten, namely, that the very last people who ought to be asked to tell you what is the true construction of a particular Bill are the able gentlemen who have been responsible for the drafting of it. That is a question of psychology, and it has practically no exceptions. If a man has framed a clause with certain meanings in his mind as to the words and sentences, he is quite unable to say how Judges, after long arguments and consideration in this House and elsewhere, will be able to understand those words, and the sense which should be given to them.
I do think that that should be borne in mind in the future. I remember Lord Halsbury saying over and over again that the draftsmen of a measure were not the proper judges to understand it or to construe it. That is no reflection whatever on the draftsmen's powers. (Whoever they may be—they might be ex-Chancellors, and others—they should never be regarded as being the right people to construe the measure. That should be done by men who approach the matter with absolutely impartial and unprejudiced minds. With that statement, which I feel very strongly is one that should be borne in mind, I wish to thank the noble Viscount for his courtesy in this matter, to me in particular, and I can only express regret that this measure does not possess that clarity which I think all measures should possess.
2.49 p.m.
LORD ALTRINCHAM: My Lords, I have very great sympathy with the observations which have just fallen from the lips of the noble and learned Viscount, Lord Maugham. I think the drafting of Bills is becoming more and more complicated, and one can only say that the situations with which draftsmen have to

845
deal are themselves becoming more complicated. All the same, there is a lack of lucidity about a good deal of this legislation which requires attention. I am sure noble Lords in all parts of the House agree with what the noble and learned Viscount has said, that the last people to give an opinion on what a clause means are those who have drafted the clause, whatever their capacity. They necessarily believe the clause to mean what they intended it to mean, and it is not certain that the clause will mean what they intended it to mean. Despite that general warning, I am very glad to accept the assurances which the noble Viscount, Lord Hall, has given about the Bill itself.
When the Bill was read a second time I expressed some anxiety on two points. The first was whether the language of the Bill could in any way be held to derogate from the sovereignty of the Dominion. The noble Viscount has given us assurances on that point, and has himself made a statement in this House which is entirely satisfactory on that particular aspect of the Bill. I would only say this. It appeared to be part of his argument that no Bill in this Parliament could possibly be held to derogate from the sovereignty of a Dominion, because, in any case, that was covered by overriding provisions in the Statute of Westminster. I entirely agree with that, but the fact remains that the language of all our Bills should always be appropriate to the new status as created by the Statute. Only the other clay we found that the language of a Bill was totally inappropriate to the new status of the Dominions as established by the Statute of Westminster. I think care should be taken to see that, whatever may be the overriding effect of that Statute, the language of our Bills shows the most complete respect and understanding for the situation which has existed since that day. There is a tendency for, language which is now obsolete to continue in our Statutes.
As regards South-West Africa, it is quite clear from what the noble Viscount said that there can be no derogation from the sovereignty of the Union of South Africa in that respect. So far as we on this side of the House are concerned we are very glad that the Bill should go through in its present form.
The only point on which we made comment was the breadth of the power given
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to alter an enactment in a consequential or provisional sense by Order in Council. That is a power which we on this side of the House are anxious to study very carefully, because the tendency to extend the virtue of Orders in Council is always growing and should be watched. But I am satisfied that in this case the power taken is the power taken in previous Bills and particularly—as the noble Viscount has been good enough to tell me—in regard to free State legislation. There again, while noting the point, we do not wish to make definite objection. So far as we on this side of the House are concerned we quite agree that the Bill should go through in its present form.
VISCOUNT HALL: My Lords, I should like to express my appreciation of the assistance which the noble Lord, Lord Altrincham, has given. With regard to the points made by the noble and learned Viscount, Lord Maugham, I think I had better not interfere other than to say that I have often felt as the noble and learned Viscount has felt. I had better leave the matter as it is, but I will certainly call the attention of the Department to the points which were made by the noble Viscount.
Clause 1 agreed to.
Remaining clause agreed to.
Bill reported without amendment.
2.54 p.m.

BURMA INDEPENDENCE BILL.
Order of the Day for the Second Reading read.
THE SECRETARY OF STATE FOR BURMA (THE EARL OF LISTOWEL): My Lords, before moving the Second Reading of the Burma Independence Bill, I have it in command to acquaint the House that His Majesty, having been informed of the contents of the Bill, is prepared to place his prerogatives and interests, so far as concerns the matters dealt with by the Bill, at the disposal of Parliament.
This Bill, for which I am asking your Lordships' approval this afternoon, brings to fruition the policy of full self-government for Burma which has been pursued by successive Governments in this country for many years. The whole period of Parliamentary responsibility

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for the welfare of Burma, which has now lasted sixty-one years, has been in retrospect a striking example of the broadening path of political freedom in one of the largest dependencies of the British Crown. Until the incursion of the Japanese into Burma in 1942, we had an equally good record in two other respects no less vital to the well-being of the population; for we had established and maintained peaceful and orderly conditions in a country with a turbulent history, and the enterprise of our business and commercial undertakings had secured a much fuller utilization of its largely untapped resources of minerals, timber and rice. Burma had undoubtedly achieved a greater measure of security and prosperity during the years of British rule than she had ever experienced in the past. No longer decimated at regular intervals by outbreaks of war, famine or disease, her population had more than quadrupled between 1824 and 1947.
At the beginning of the last century the Irrawaddy Delta was high jungle and tall grass with an occasional lonely village in a clearing amid the trackless expanse of malarial swamp. Now it has become a fertile plain of green paddy-fields, larger in area than Wales. Its 5,000,000 inhabitants produce more rice than the whole country can consume, leaving a surplus that made Burma before the war the largest rice exporter in the world. When we came to Burma in 1824, Rangoon was a small town with a few thousand inhabitants built round its famous shrine, the Shwe Dagon, on the banks of the Irrawaddy. It is now one of the largest modern ports east of Suez with a population of 500,000 souls. History will not forget that these changes have all taken place since the British connexion with Burma.
The spirit that has informed our treatment of Burma throughout these years of Parliamentary control and responsibility will always remain, in spite of shortcomings we can readily admit, something of which we and the people of this country can be proud. Our attitude has been characterized by a peculiarly British conception of obligation and trusteeship quite unknown to the empires of the past. We started to associate the local inhabitants with the administration of Burma almost from the time that Upper as well as Lower Burma came under our rule. It
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was in 1897, only eleven years after the establishment of British sovereignty, that a Legislative Council was set up to advise the Lieutenant-Governor who was authorized to include, and did in fact appoint, a majority of citizens as distinct from civil servants among its members.
Under the Morley-Minto constitutional reforms of 1909, the size of the Legislative Council and the number of its unofficial elements were both expanded, and Burma became for the first time entitled to representation in the Central Legislature of India. There was some hesitation and doubt at the time, and a resulting delay, in applying the constitutional reforms which followed the First World War, the Montagu-Chelmsford reforms, to the province of Burma. But the logic of the earlier promise of responsible government for India was swiftly seized by the people of Burma to press home their claim for renewed constitutional advance. In 1923, after a successful protest against the continued withholding of the Indian reforms, the system of dyarchy was introduced, and Burma now acquired the same measure of self-government over the whole range of transferred subjects as the neighbouring provinces of India. Indeed, Burma did rather better than the Indian provinces by obtaining control of her forests, which had always been a feature of outstanding importance to her economy.
It is interesting to note that at this early date we had already begun to encourage the people of Burma to take an active part in the work of administration and to instruct them in an art of which we had always been the extreme exponents. Three out of the five members of the Executive Council chosen by the Governor in 1923 were Burmans, and from that day to this indigenous Burmans have played an increasingly important part at every level in the administration of the country. At the same time, the Legislative Council of Burma acquired a large majority of elected members, 80 out of 103 seats being filled by constituency representatives, who now gained complete Parliamentary control. These representatives were elected on a more popular franchise, owing to the high degree of literacy in Burma, than that enjoyed by any Indian province, and as long as twenty-five years ago one-fifth of the adult population of Burma became

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entitled to exercise the primary responsibility of citizenship.
The next step forward in Burma was taken as a result of the Report of the Indian Statutory Commission, which will always be associated in our minds with the name of the noble and learned Viscount, Lord Simon. Among the most important and, as it has subsequently proved, the wisest and most far-sighted of its recommendations was the advice that Burma should be separated from the main body of British India, from which it differed profoundly in history, language, religion, race and social institutions. This recommendation was accepted by the Government of the day. In January, 1931, the then Secretary of State for India made an announcement in Parliament that left an Indelible impression on the minds of the people of Burma. It was the first public acknowledgment of the political goal of Burma. It was construed in Burma as a British pledge that constitutional advance in Burma would keep pace with any similar advance in India, and that His Majesty's Government had placed themselves under a solemn obligation not to allow Burma to lag behind India on the road to self-rule. These words have had so much influence on the political development of Burma that I should like to quote them in full:
"The prospects of constitutional advance held out to Burma as part of British India will not be prejudiced by this decision"—
that is the decision to effect separation—
"and the constitutional objective after separation will be the progressive realization of responsible government in Burma as an integral part of the British Empire."
The process of separation then undertaken, and the guarantee of treatment no less favourable than that accorded to India, entailed the drafting of a new Constitution for Burma. After prolonged discussion with representatives of Burma in London, this new Constitution was finally embodied in the Burma Act of 1935. The penultimate stage in the political evolution of Burma witnessed a large increase in the powers of the Burma Legislature. It now had a free hand where it had previously been tied by the Montagu-Chelmsford division between transferred and reserved subjects, and it also inherited all the main functions of the Central Government of India save only currency, defence, external relations and the administration of the frontier areas.
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At this stage of its constitutional advance Burma forged ahead of India, which had failed to adopt the federal part of the India Act of 1935 and was, therefore, left with a Central Legislature and Executive dating back to the Montagu-Chelmsford era. It is sometimes forgotten that from 1937, after the first Parliament under the new Act had been summoned, until the Japanese invasion caused the suspension of Parliamentary government in 1942, the Constitution of Burma was actually in advance of India and on the same level in the Commonwealth and Empire hierarchy as that of Southern Rhodesia. At this period Burma was in a halfway house between the Colonial dependencies of the United Kingdom on the one hand, and the older Dominions on the other.
I should like to emphasize the fact that Burma was already, shortly before the war, so close to political maturity, because it has been suggested that the people of Burma are still unfiled for self-government and that we should, therefore, have waited somewhat longer to introduce this Bill. I remember when I was at the Burma Office as Under-Secretary in 1945, where I followed the noble Earl opposite, Lord Munster, examining very closely the conduct of Burma's Ministers and their administrative record since 1937. I wanted to find out, if I could, what weaknesses in the 1935 Constitution would have to be removed when Parliamentary government came to be restored in Burma after the war. I often discussed this question with my then Secretary of State, Mr. Amery, who was always himself a firm believer in the capacity of the people of Burma for self-government. We arrived at the conclusion that the departments run by Burma's Ministers had been managed with tolerable efficiency.
The real weakness of their Constitution, as it seemed to us, lay neither in the Executive nor in the Legislature but in the relationship the United Kingdom Parliament had ordained between the two. For the large number of political Parties in the Burma Legislature gave Ministers a precarious existence, too fleeting for a real mastery of their departmental duties. We wondered at that time whether Burma might not be obliged in the future to emulate another Constitution, such as that of the Swiss, which relieves the executive of continuous day-to-day dependence on the support of a Parliamentary majority.

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Little did either of us think in those days that the people of Burma would overcome this difficulty so soon, without any help from the British, and by machinery so different from what we had imagined. The present Government of Burma have exactly the stability for which we had been looking, not as a result of any rigid constitutional doctrine but thanks to the common sense of its political leaders, which has led them to fuse the principal political Parties in a solid coalition representing every shade of Parliamentary opinion between the Right and Left extremes.
After the war in Europe broke out in 1939, the Governor twice reaffirmed that the policy laid down in 1931 remained unchanged. The entry of Japan into the conflict in 1941 was soon followed by the invasion of Burma, by the heroic retreat of Lord Alexander in face of overwhelming odds, and by the temporary suspension' of Parliamentary rule on the withdrawal of the British administration from the country. In December, 1942, the Governor was obliged to resume the full powers of government and he continued to exercise these powers in exile from Simla until civil authority was restored in 1945. In the meantime, Burma had been liberated by the brilliant leadership of General Slim and Lord Mount-batten, in a campaign for ever memorable for the gallantry and endurance of our Forces. The seizure by the Japanese of the many territories within the future co-prosperity sphere of South East Asia stimulated everywhere the latent consciousness of nationality, provoking a new intensity of desire to cast off foreign rule. Japanese rapacity also brought into being throughout this area political organizations and military formations that became the spearhead of more vigorous and widespread national movements.
The general tendency prevalent in South East Asia was heightened in Burma by the Japanese promise of immediate independence, which resulted in the acquisition by Burma in 1943 of the outward trappings of a sovereign State, including an adipadi, or Head of State, to replace the King, and a number of ambassadors in foreign capitals. I do beg any noble Lords who consider this Bill precipitate or untimely to reflect upon the rapid growth and increasing strength of national movements in South East Asia in the last six
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years, and to ask themselves this simple question: Is it not a wiser policy, and one more in keeping with our traditional championship of liberty, to assist in the direction of these popular forces into paths of constructive statesmanship, where they can benefit the people they represent and the rest of the world, rather than to divert them, by trying forcibly to stem their advance into sterile, dangerous, and even destructive opposition to us and to every influence emanating from the West?
It was against this background of an organized, disciplined, widely supported and impatient national movement, forged in three years of bitter fighting which had left Burma almost destitute and overrun by armed dacoits, that the White Paper of May, 1945, was framed by what Mr. Churchill has called "the great Coalition"—a Government of which several noble Lords opposite were distinguished members. The essential soundess of that all-Party declaration of policy is shown by the degree to which it has foreshadowed the actual course of events. It foresaw the need for a General Election in Burma, as soon as internal conditions would permit, for the drafting of a Constitution by representative Burmans, unihibited by conditions or limitations imposed from without, and for the conclusion of a treaty to regulate financial and other matters arising from the grant of self-government. It is satisfactory to note, since the restoration of civil authority, the ease and rapidity with which the concluding stages of British responsibility, many of which were envisaged by the White Paper, have been run through, and the mounting cordiality and good will between Burma and Britain that has followed upon each further step towards the final goal.
In September of last year the Governor was able to form a representative Government from members of the A.F.P.F.L. Coalition Party, headed by U Aung San, which brought to an end the dangerous political instability and labour unrest that had prevailed in Burma during the spring and summer months. This formation of a popular Government was followed by a visit of U Aung San and his principal colleagues to London in January of this year. The outcome of this visit was the Attlee-Aung San agreement, according to the terms of which the forthcoming General Elections in Burma would be for a Constituent Assembly and not for a

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Legislature, it being undesirable and unnecessary to postpone the framing of a new Constitution by interposing a brief revival of the pre-war system of government under the 1935 Act. We also agreed, in the course of those conversations, that the Interim Government of Burma should be treated forthwith, like the Government of India, with the same close consultation and consideration as a Dominion Government. In this way, we were able to offer Burma the substance of Dominion status without the otherwise inevitable delay occupied by the passage of a Parliamentary measure.
The January agreement was followed in April of this year by a General Election for the Constituent Assembly designed to frame the new Constitution. The country was quiet during the election period, the voters were not intimidated, the polling was heavy and the candidates ranged from the conservative pre-war Parties on the right to the Communist Party on the left. The result of these elections was a resounding victory for Aung San's middle-of-the-road A.F.P.F.L. Party, which gained 170 of the seats in the Constituent Assembly. The Assembly met in Rangoon and sat at intervals between June and September. It was attended by representatives of the Frontier Areas and the Karenni States, as well as by elected members from the constituencies of ministerial Burma. It was, therefore, as a body, a genuine cross-section of opinion among the many different peoples inhabiting the hills and plains of Burma.
I should like to acknowledge at this point the part played in these preparatory stages in the advance of Burma to self-government, which included the Attlee Aung San agreement, the General Election in Burma and the setting up of a constitution-making body in Rangoon, by my predecessor in this office, the noble Lord, Lord Pethick-Lawrence. The successful fulfilment of the pre-conditions to the transfer of authority we are now contemplating owes much to the sympathetic understanding and sound judgment displayed by my noble friend at this critical time. Both during my predecessor's term of office and since I succeeded him, my right honourable friend, the Prime Minister, has been the principal figure in a team of Ministers working out our policy for Burma. His support and authority have been essential to its success, his personal interest in their affairs
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has been invaluable in winning the confidence of Burma, and his cool judgment and consistent liberalism (with a small "I") have, on several occasions, steered difficult decisions round sharp corners and so averted what would otherwise have been a disaster. No one will have a better title than my right honourable friend to be remembered as the British architect of Burma's freedom.
The labours of the Constituent Assembly were not interrupted by the foul murder on July 17 of U Aung San, who was shot with six of his colleagues as they sat together in Cabinet Undismayed by the loss of most of their Cabinet, including its chief, and with a promptitude which saved the country from the disturbing effect of an interregnum, the A.F.P.F.L. Party formed another Government on the day after the assassinations, headed this time by Thakin Nu. This quick decision to accept responsibility was only one among the outstanding services rendered to Burma by its present Prime Minister. He has a devout, scholarly, retiring personality, and his willingness to assume this uncongenial post is some evidence of his extraordinary devotion to duty. The success of the negotiations that led up to the Treaty owe much to Thakin Nu's moderation and good will, and the other arrangements connected with the transfer of power have been greatly facilitated by his friendly help. It is a good omen for the future of Burma that a worthy successor of Aung San will be at the helm at this critical juncture in its affairs, and for future relations between this country and Burma that he desires so keenly to bring about an even closer friendship than hitherto. May I quote one sentence from what Thakin Nu said at the signing of the Treaty?
"What both sides have sought, and I believe have achieved, is nothing less than arrangements which will form a firm and solid basis for Anglo-Burmese friendship."
It was at the final session of the Constituent Assembly in September that unanimous approval was given to the draft Constitution, which declared in its first clause that Burma is to become a sovereign, independent republic. There is no one here or elsewhere who will not profoundly regret this impending gap in the family circle formed by the nations of the British Commonwealth. But we have always maintained that the peoples

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of the Commonwealth must decide their own future. The choice could lie only with Burma, and it was freely made by the unanimous vote of a fully representative body. We here do not regard membership of the Commonwealth as something to be thrust by force upon a reluctant people, but as a priceless privilege granted only to those who deeply desire it and are conscious of its obligations as well as its advantages. The essence of the Commonwealth relationship is that it is a free association of nations with a common purpose, who belong together because they have decided of their own volition to give and to take their fair share in a world-wide partnership. Our willingness to accept the decision of Burma to withdraw is surely the best proof of the difference between the British Commonwealth and the older systems of Imperial rule. The critics of British Imperialism can no longer say, as they have so often said in the past and as some still say at the present, that we believe in freedom and equality for every nation save only for the weaker peoples in the British Empire.
It should not be supposed that the decision of Burma to leave the Commonwealth is due to a lack of good will towards us—the Treaty arrangements make this perfectly clear—or to any lessening of the affection and respect evinced by the people of Burma for the King and the members of our Royal Family. Your Lordships will probably have noticed that Burma has sent Princess Elizabeth a ruby necklace containing 96 rubies from the famous Mogok Mines, but you may not have seen the inscription on the ivory case which reads as follows:
"From the people of Burma, in token of their affection and esteem."
And I need hardly remind your Lordships that this magnificent present has come from a country that lost almost everything in the war.
The new Constitution of Burma is a remarkable and statesmanlike document, consisting as it does of many of the best elements in the written Constitutions and the constitutional practice of those countries in which the Parliamentary system of government has taken root. It proclaims a more varied list of individual rights, both male and female, than the Declaration of the Rights of Man or the Constitution of the United States of America and
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its acceptance of the duties of the State to secure the fulfilment of these rights is in complete accordance with the modern view of the functions of a welfare State. It is a delightful compliment to us that Burma has borrowed the essential principles of our system of Parliamentary government as the keystone of her own democracy. There will be a Parliament with two Chambers, to which Ministers will be responsible in the usual way. Parliament will itself be directly responsible to the electorate, which will chose its representatives by universal adult suffrage. One slight difference, which some noble Lords may consider an improvement on our practice, is that General Elections will take place at intervals of not more than four years instead of five. The civil liberties which we also associate with democracy as a genuine article—the freedom of the Press, freedom of speech, freedom of assembly and association, and, most important of all, freedom of conscience—are all enshrined in different provisions of the Constitution.
But everyone realizes that a written Constitution is not worth the paper on which it is printed unless it accords with the spirit of the people who will have to work it. For my part, I found the Burmans an intensely freedom-loving people, with a social system marked by far more de facto equality between the classes and the sexes than our own. I recall someone remarking to me in Burma that there will be no Death Duties under the new régime because there will be no rich men. Indeed, the absence of large estates, and the Burmese reluctance to enter the fields of industry and commerce, have resulted in an outstanding and exceptional degree of economic equality. The high standing of women in Burma, and their equal footing with men in every walk of life, is another aspect of Burmese society which promises well for a wise use by the whole people of their sovereign will. The large percentage of literates in the population of Burma, as compared with other Oriental countries, is also a factor that will favour the growth of an instructed electorate, not easily swept off its feet and able to weigh the issues submitted to its judgment. These are a number of indications, my Lords, that the soil of Burma is well adapted to rear the plant of a genuine democracy which its new Constitution has sown.

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I am sure your Lordships will expect me to say something about the future of the minorities in Burma and of the hill peoples inhabiting the frontier areas. The Government have been constantly mindful of their moral responsibility for securing, to the best of their ability, that the future of these people is not prejudiced by the termination of British rule. This responsibility has been enhanced in recent years by the unswerving loyalty of the minority races to our cause, and by the active assistance they gave to our forces during the war. I cannot accept the view that we are letting down our friends, and I hope to convince the House that this view is based upon a superficial acquaintance with the facts. Moreover, the internal peace and stability of Burma will depend, in time to come, on good relations between the Burmese and the non-Burmese elements in the population. It would have been a grave dereliction of duty on our part if we had handed over authority without satisfying ourselves in advance about the prospect of a friendly relationship between the different peoples of Burma.
Our policy in relation to the inhabitants of the frontier areas has been to allow them complete freedom to choose whether or not they wish to associate themselves with the Government of Burma and the future Burma Union. The first step was, therefore, to ascertain their own wishes. A conference was held in February of this year between representatives of Ministerial Burma and representatives of the Chin, Kachin and Shan peoples. It was agreed at the conclusion of this conference—the Panglong Conference—that co-operation should start forthwith, and each of these frontier races decided to send a representative to be associated with the Government of Burma. In May, a joint committee of Burmese and non-Burmese reported unanimously in favour of the participation of the frontier areas in the work of the Constituent Assembly. This recommendation was accepted by all concerned, and the frontier areas thereupon chose forty-five representatives to sit with the Burmese delegates in the Constituent Assembly. They made a useful contribution to the drafting of the new Constitution. When the final draft was submitted to the assembled delegates on September 25, it was carried by a unanimous vote, which included the
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assent of representatives of the plains Karens and Karenni States.
The willingness of the minorities and frontier peoples to collaborate with the' Burmese in the new State is explained by the safeguards and opportunities offered to them in the terms of the Constitution. Their interests are protected in two ways, by a guarantee of fundamental rights, and by the large degree of self-government they will obtain as units in the structure of the Federal Union of Burma. The Constitution provides that all citizens of Burma, irrespective of birth, religion, sex or race, shall have equality before the law, immunity from discrimination, and equal opportunity of entry into public or private employment. These rights are enforceable in the Courts, and cases can be carried on appeal to the Supreme Court of Burma.
The federal structure of the Constitution will allow the immediate creation of three semi-autonomous States, the Kachin, Shan and Karenni States, within the framework of the Union of Burma. Moreover, if a majority of the Karens in the hills and plains agree that they want a State of their own, a Karen State to include the promised Karenni State can be added at some future date to the present number. The Union Government will naturally deal with matters of common concern to the whole of Burma, such as defence, foreign relations, communications and currency, but the State Governments will have a free hand to manage their own internal affairs, the right to raise taxes to finance a wide range of administrative functions, including local communications and social services, and a Minister to urge their point of view in the Cabinet. As a further protection for their interests in the Legislature, the minority races are to have weighted representation in the Upper House, the Chamber of Nationalities, which will give them a majority of the seats as compared with the Burmese members. It should be noted that none of these constitutional provisions relating to the frontier areas can be altered without the consent of the majority of the members representing the race or races affected in the Chamber of Deputies.
I know, my Lords, that we all feel a particularly soft spot for the Karens, who played such a gallant part with Force 136

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in the war, when many of them parachuted back into Japanese-occupied Burma. In the course of my short stay in Rangoon in September I had most friendly talks with representatives of all sections of Karen opinion, and I was delighted to find that most of the Karens I met were anxious and willing to cooperate with the Burmese in the building up of a great new country. It is extremely reassuring to know that the present arrangements, which give the Karens a homeland in the new Karenni State, a special region with administrative autonomy in the Salwean District and perhaps adjacent areas, the right to run their own schools in the plains, representation in proportion to their population in the Lower House, and a Karen Minister to look after their minority interests in the Burmese Cabinet, have received the full approval of the majority of the Karen people.
If further evidence is required of the genuine desire of the Burmese to give the minority races a square deal, it is surely provided by their choice of a Shan—the Saohpalong of Yawnghwe, whom we have the honour to have listening from the Distinguished Strangers' Gallery this afternoon—as the first citizen of their country in his capacity as the President Designate of their new Republic. This settlement does the utmost credit to the generosity and statesmanship of Thakin Nu and his colleagues in the Government of Burma, and to the willingness of both sides to bury their past differences and to work together for the future greatness of Burma. It has laid the firm foundation for a strong and united country.
This sequence of events in the last eighteen months would not have turned out so happily but for the presence in Rangoon of our Governor, Sir Hubert Rance. It is impossible to over-estimate what we owe to him for his wise guidance of Burma through her post-war difficulties and in shaping the outline of a new relationship with us. His soldierly directness of speech, his capacity for inspiring trust, and his sympathy for their national aspirations have won him a unique place in the hearts of the people of Burma and their leaders. His administrative and organizing ability has also been of special value in the reconstruction of the country. He has been splendidly supported
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throughout his term by Lady Rance. In spite of ill-health, she has lightened his burden as only a wife can do, and has undertaken many tiring and exacting duties with a zest and cheerfulness that have made her second only in popularity to him.
My Lords, I feel I ought now to run briefly through the main provisions of the Treaty and the Bill. Your Lordships will observe from Article 15 that the Treaty, though it has already been signed—it was signed, as your Lordships know, here in London—will not be ratified until the date on which Burma becomes independent. As this date is fixed in Clause 1 of the Bill, the bringing into force of the Treaty is still subject to Parliamentary approval. The most important of the many subjects dealt with in the Treaty are the Services, defence, finance, and commercial relations. I will deal with them in that order. In Article 5 the Government of Burma have undertaken to meet a number of payments, including pensions and proportionate pensions, due to past and present British officers in the various Services. There is no mention here of compensation, but your Lordships will remember that an assurance on this head was given in the White Paper of August 12. I think that this might be a convenient point for me to make a digression from the Treaty, which I am sure the House will excuse, because I would like to pay my tribute to the ability and devotion with which, during the period of British rule, the civil and military services of the Crown in Burma have served Burma and its peoples. I am sure that in voicing this tribute I shall be speaking for the House as well as for the Government. The history of the Crown Services in Burma is very largely a history of the Indian Services in Burma—that is to say, the civilian All-India Services, both administrative and technical, and the Indian Army. Your Lordships have already on a previous occasion put on record by means of a formal Resolution the thanks of this House to the Indian Services for their work in India, and to-day I wish to add our thanks for the work which those Services have done in Burma, and for all that the Burma Services have achieved since the separation of Burma from India in 1937.
The record of the Crown Services is not so long in Burma as in India, but it

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has been no less distinguished. It is largely owing to the devoted labours of the European members of the Services and of their Burman, Indian and Anglo-Burman colleagues—who, as the years have gone by, have taken an increasing share in the work—that Burma is now on the eve of attaining the full self-government which has so long been our common objective. The Crown Services in Burma shared in large measure the tribulations which Burma herself underwent at the hands of the Japanese invader. Nearly all members of the Services suffered grievous loss of one kind or another with the over-running of the country. To some of these members of the Services, when the Japanese entered Burma, it fell to stay behind and cither serve the civil administration or play their part in organizing guerrilla activities and resistance to the Japanese. At a later stage the majority of those who had had to leave Burma returned as members of the Civil Affairs Service, and helped in the re-establishment of ordered government and in the rehabilitation of the country.
It is not possible for me to do more than mention each of the civilian Services or Departments which we remember with pride to-day. First of all, there are the administrative Services—the Indian Civil Service and the Burma Civil Service, the Indian Police and the Burma Police. Then there are the technical Services, all of which have their roots in the corresponding All-India Services—the Forestry Service, which has had the care of one of the most vital elements in Burma's economy, the Department of Agriculture, the Veterinary Department, the Education Department, the Medical Service, all three branches of the Engineering Service, the Marine Department, the Posts and Telegraphs Department, the Railway Service, the Customs and Excise Departments, and the Ecclesiastical Establishment. It is only proper, too, I think, that I should pay my tribute to the Judges of the Rangoon High Court, whether drawn from the Crown Services or from the Bar, who have been worthy successors to a great tradition. The servants of the Crown, over the long period of our association with Burma, have established a record of steady progress and solid achievement,
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which they have crowned by their invaluable contribution to the reconstruction of a devastated country.
The Burma Frontier Service holds a place of its own amongst the Services in Burma. Since it was formed in 1922, its members have given themselves, often at the cost of great personal sacrifice and loneliness, to the service of the peoples who inhabit the hill and forest areas encircling Burma on the north and northwest. It is a fitting culmination to the work of the Frontier Service that the peoples of these areas are now taking their appointed place in the Union of Burma. In the military sphere, the illustrious record of the Indian Army in Burma, both in peace and war, has in recent years been emulated by the Burma Naval Force (formerly the Burma Naval Volunteer Reserve), the Burma Army, the A.B.R.O. and the Burma Volunteer Air Force. To all members, past and present of each of the Services I have mentioned, we pay our tribute and offer our thanks to-day. In forming their new Services the independent Government of Burma will be able to build on the solid foundations they have laid. We cannot overestimate the value of the contribution which has been made by those who have gone before to the successful handling of the exacting tasks which lie before the new Burma.
Those who have served Burma in Whitehall are no less deserving of our thanks than those who have served her overseas. I can say, from my own experience of the efficiency and conscientiousness of my officials at the Burma Office, that their work has been sustained during a period of exceptional pressure, at the high level reached by their predecessors in my Department. Their tireless industry and devotion to duty at all times have been worthy of the best traditions of the finest Civil Service in the world.
Before I pass to the terms of the agreement in the Treaty Annexe about defence, I should like to acknowledge the part played in securing this agreement by my honourable friend the Parliamentary Secretary to the Ministry of Supply. To his skill as leader of our negotiating team in Rangoon the successful outcome was in no small measure due. These defensive arrangements between ourselves and Burma which do not constitute, as has

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sometimes been thought, a military or defensive alliance, and give us no bases in Burma, we expect to prove equally advantageous and helpful to both parties. We, on our side, have agreed to move all British troops out of Burma as soon as possible after the transfer of power. The actual timing will depend to some extent on administrative convenience. We are also waiving certain financial claims arising out of the war; we are contributing to the maintenance of three airfields of which in peace-time we shall have joint use; we are handing over a corvette and some small motor vessels to the Burma Navy; and we are providing a Military, Naval and Air Force Mission to train the three Armed Services of Burma. In return for this assistance from us in the organization of their national defences the Government of Burma have agreed not to receive a defence mission from any country outside the Commonwealth, to give our military aircraft the right in peace-time to fly over their territory, and to enjoy staging facilities on their airfields. With the consent of the Government of Burma, at the time, our Forces will also have access to Burma ports and airfields and territory for the defence of the Commonwealth in war.
The financial settlement, in Article 6, does not provide for any fresh loan or grant of British funds to the Government of Burma. It is an equitable arrangement for the gradual repayment of the sums we have lent Burma in the past, without imposing an intolerable strain on the economy of the country as it slowly recovers from the crippling effect of the war. We have agreed, as a contribution towards the reconstruction of Burma, to wipe off £15,000,000 from the total debt, and the Government of Burma have reciprocated with a willingness to repay the balance in equal annual instalments starting from 1952. The interval of five years should give Burma a reasonable opportunity to recover her favourable pre-war trade balance.
In settling our commercial relations with Burma on a temporary basis, pending a commercial treaty, we were anxious to secure conditions for British business interests which would enable them to continue their admirable work of helping Burma to develop her immense natural resources. The Government of Burma
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were no less anxious, we found, to encourage foreign capital and technical skill, pending the time they can supply these essentials for themselves. The result of the agreement about the immediate future of our trade and business interests is recorded in Articles 7 and 8 of the Treaty and in the exchange of notes in the Appendix. Your Lordships will observe that the future Government of Burma has taken over all the obligations and liabilities arising out of existing contracts between British firms and the Burma Government. But it was essential that an undertaking of this nature should not place any Government of Burma in conflict with the provisions of their own Constitution. The new Constitution sets out, as a principle rather than an immediate objective of the new State, that the right to exploit natural resources or to run public utility services shall be limited to State organizations and citizens of Burma, or to companies in which not less than 60 per cent. of capital is held by Burmese interests. If legislation to carry out this principle of the national life were, in the fullness of time, passed by the Parliament of Burma, and if it resulted in the expropriation in whole or in part of any United Kingdom firm, the Government of Burma have explicitly agreed to pay equitable compensation to such United Kingdom interests as may be affected.
I will now turn to the contents of the Bill. I will deal with them as speedily as I can, and I propose to outline only the salient points. Clause 1 provides for Burma becoming an independent country, not, like India and Pakistan, forming part of His Majesty's Dominions. The date proposed in subsection (2) for the independence of Burma, January 4, 1948, has been chosen in consultation with the Government of Burma. The three Karenni States on the Siamese border referred to in subsection (3) have never been British territory and their relations with us have been regulated by sanads and treaty agreements. This enactment will terminate all existing agreements with the States. But as they have already decided to throw in their lot with the Union of Burma as a single Karenni State, their future is no longer in doubt and we are satisfied that they have chosen wisely and well.
Clause 2 of the Bill and the First Schedule deal with the problem of nationality. They are somewhat complex,

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and indeed intimidating to the non-legal mind, but their effect is really quite simple. Under subsection (1) of Clause 2 the people described in the First Schedule lose their British nationality after Burma has become independent, while subsection (5) provides that the rest will remain British. Those individuals who will cease to be British owe their present British nationality solely to their connexion with Burma. This covers, as it is intended to do, most of the indigenous peoples in the hills and plains of Burma. Clause 2 goes on to specify a number of exceptions to this general rule. Under subsection (2) persons who are domiciled or ordinarily resident in the United Kingdom, or its dependencies, and who cease to be British under the terms of the Bill, are given a chance of keeping their British nationality by opting in favour of it within two years of the date of Burma's independence.
The following subsection saves anyone from the misfortune of becoming a Stateless person. If an individual loses his British nationality under the Bill, but does not qualify for Burmese nationality, he can recover under this subsection his present British nationality by the exercise of the right of option. In subsection (4) we agree to recognize as British subjects any Burmans domiciled or resident in the Dominions, provided, of course, that a Dominion Government decides to legislate as we are doing to give them the right to become British citizens, and they have chosen to take advantage of this legal right. There are many members of the Anglo-Burmese community who will find themselves, under the provisions of the Bill and of the Constitution of Burma, with dual nationality; but they have been enabled to choose for themselves, if they wish, which of their two nationalities they want to keep. In Article 3 of the Treaty, the Government of Burma have agreed to legislate so that people in this category can get rid of their Burman nationality, while they can part with their British nationality, if they so desire, under existing British law. I hope that I have expounded this difficult clause to the satisfaction of my noble and learned friend on the Woolsack.
Clause 3 provides for the continuation for the present of existing trade preferences after Burma has become independent. Burmese goods will enter this country free of import duty. There is,
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of course, a corresponding preference for British goods entering Burma. It is not likely that other countries will object to this arrangement, unique as it may seem, because the Charter of the International Trade Organization permits the continuance of preferential arrangements between the United Kingdom and Burma whatever the political relationship may be. It is surely another sign that Burma will be much closer to us after she has left the Commonwealth than other foreigr countries, that our trade relations with her will continue to follow the existing Commonwealth pattern.
The salient point in Clause 4 is that appeals from Burmese Courts to the Privy Council will not be permitted after the date on which Burma becomes independent. It would obviously be an anomaly for the Privy Council here to hear appeals from a foreign country. The Government of Burma will arrange for any cases not disposed of by the appointed day to be transferred to the Supreme Court of Burma, so that no hardship will be experienced by appellants. The Second Schedule of the Bill, which occupies eight out of the fifteen pages, specifies the particular Acts and parts of Acts on the United Kingdom Statute Book, which will be repealed when Burma becomes a foreign country. Orders in Council made under those Statutes will not have application to the new Burma. The most important of the Acts which will become a dead letter are the Government of Burma Acts of 1935 and 1945.
Let me conclude. I apologize for detaining your Lordships. I have never done so before, and I hope that I shall never trespass for so long on your time in the future. After a very close, and I hope objective, study of Burma, I believe that Parliament can relinquish the responsibility it has so honourably discharged with every confidence that Burma will be a well-governed country, with a happy and increasingly prosperous population and a strong desire for friendship and co-operation with the members of the British Commonwealth. Thakin Nu and his colleagues are men who put their country before themselves, and their personal honesty is beyond reproach. These are qualities that will ensure a clean and public-spirited administration in Burma. The Government they have formed promises to be strong and stable because it has the enthusiastic backing of a great

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majority of the inhabitants of Burma, who have found, for the first time, practical leaders in whom they can entirely trust and believe. The disturbed and disorderly conditions that inevitably followed the campaigns fought in Burma are already receding. A complete restoration of law and order and a rapid rate of economic rehabilitation are the two essentials required to make good quickly the damage done by the war and to ensure a speedy development of the immense natural resources of the country. Order and economic progress are the principal objects of the policy of the present Government. Though it has many serious obstacles to overcome—obstacles which no one will underrate—I believe that it has the patriotism and determination and toughness needed to bring Burma through its immediate trials and to make it a peaceful and prosperous country.
I know that the desire of Burma for our continued friendship is reciprocated on our side and that it is not confined to any one Party in the State. During my term of office I have on several occasions discussed my problems with members of the Parties opposite, and I gratefully acknowledge the help I have received from distinguished Conservatives and Liberals in both Houses, and the spirit of sympathy and friendship which they have always shown towards the people of Burma. It augurs well for the future of our relations with Burma that the vicissitudes of Party politics will not lessen the strength and sincerity of British good will. I am sure that I speak for every member of the House when I say that we wish Burma all success in her rebirth as a free and sovereign nation. We hope that our new relationship will open a fresh chapter of friendly collaboration between Burma and the British Commonwealth. I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(The Earl of Listowel).
3.48 p.m.
THE EARL OF MUNSTER: My Lords, I feel sure the whole House will have heard with pleasure the long speech which the noble Earl, the Secretary of State, has seen fit to make in introducing this Bill to your Lordships' House to-day. He dealt with much that was past history, but no doubt it was of great interest to
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a majority of noble Lords. But he also, if he will forgive me for saying so, skipped over the tragic decision of which we are all witnesses to-day. Never before in our long and ancient history has any Government ever presented to Parliament a Bill which releases a country from membership of the British Empire. That alone, to my mind, is a decision which we can deeply deplore, that Burma should in the course of a few weeks decide to leave the Empire and travel on the lonely road.
It is quite true, as the noble Earl himself said in the course of his remarks, that for some years now it has been the aim of successive Governments in this country to bring about the progressive realization of responsible government in Burma as an integral part of the British Empire. I believe if that course had been followed by His Majesty's Government to-day, Burma would have found herself associated with all the other members of the. Commonwealth on a footing of complete freedom and equality. I frankly confess that I have always regarded Dominion status as a prerequisite indispensable for any country of the Empire to pursue before it disavows that common connexion which holds us all together. Indeed, there would have been great advantages to seek through this intervening stage, for Burma would have found herself in the same position as all the other. Dominions of the Crown; that is to say, an autonomous community within the Empire, equal in status and in no way subordinate one to the other in any aspect of external or domestic affairs. Her people would then have had the opportunity of considering her future without heat or passion, and all her problems could then have been disentangled with calm and quiet deliberation. The words which are to be found on the first page of the Treaty, "complete freedom, equality and independence," would have equally applied, and the old suspicious belief which is prevalent in the minds of some Burmese politicians, that "Dominion" signifies servitude, would have disappeared in the light of experience. By the terms of the Bill, the comforts, the benefits and hopes to be achieved by Dominion status are completely and wholly eliminated.
What were the reasons which prompted the noble Earl and his colleagues to agree to Burma going without the Empire? As I understand it from the course of the

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noble Earl's remarks, the. decision was taken after the Constituent Assembly, which had been set up to form a Constitution in Burma, had elected to withdraw. That Assembly was composed of representatives who were returned at the General Election which had recently taken place. But your Lordships will no doubt remember that some political Parties boycotted the election altogether, and declined to take any part in it. The late Prime Minister, whose death I feel sure we all deeply deplore, was returned with an overwhelming majority, but only 43 per cent. of the whole of the registered electorate of Burma bothered to record their votes. It seems to me that, without any attempt on the part of the noble Earl to ascertain the views of the majority who did not vote, he was perfectly prepared to agree to the wishes of the minority, and to recommend his colleagues to follow that view. I feel bound to say that not one of the Burmans it has been my fortune to meet has ever expressed to me the belief that they would be a happier and more prosperous community outside the British Commonwealth of Nations.
Having said that, I should not like your Lordships to believe that during the brief period when I was at the Burma Office the future of that country was not discussed. On the contrary, it was almost under daily consideration, for we fully realized that to meet the urgent and formidable problems which would confront us at the conclusion of the war some complete plan would have to be drawn up and gradually put into operation and effect. Whilst we were fully committed to responsible government for Burma, there were two overriding and urgent problems that had to receive serious thought. The first was whether we could hold' out hopes of immediate self-government in a country whose economy had been shattered and devastated by the ravages of war; and the second, whether we could depend for the proper functioning of government upon Burmans assuming the control and administration of all and every one of the principal offices of State.
We know—the noble Earl must know it better than I do—that vast sums of money are required to rebuild the destroyed towns and villages, the ports
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and industries and all the communications. The noble Earl must know that the Burmans, who have expressed it many times, were fully aware of the fact that they had not the necessary experience for controlling and managing the great business enterprises of the country, though it is also true to say that in some of the Departments of State a small number of Burmans had proved competent and efficient administrators. But the recruitment into the Civil Service has always been, and still remains to-day, notoriously bad. Nevertheless, plans went ahead and blueprints were drawn up so that finally the economic redevelopment of the country could proceed hand in hand with political development. I need not take your Lordships through all the details connected with these discussions, but I believed then, as I believe to-day, that with whole-hearted cooperation and willingness to accept such a scheme we could have put it into effect and reached the goal of self-government in a short span of years, which would in itself have given Burma and her people a more prosperous and progressive country than they are likely to receive when they take over at the beginning of January.
I could never acquiesce—nor, indeed, it seems to me, would it be right and proper so to do—to granting self-government to Burma before we had restored her political and economic equilibrium. The noble Earl knows as well as I do that any one with experience of that country will feel that, in view of the economic and political immaturity of the Burmese masses, the constitutional sights have been set very high indeed, and the whole proposals of His Majesty's Government will be received with much foreboding. I do not believe that any Government should divest themselves of the responsibilities for governing a country unless they are sure beyond all reasonable doubt that the authority to whom they intend to hand over power is capable of discharging the functions of government.
Accompanying this Bill is a Treaty which, as the noble Earl has said, has been negotiated between the Governments, but which has not yet been ratified. The gist of that Treaty is concerned with defence, finance, commercial relations, and sundry other matters.

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There are various questions upon which we seek further information and enlightenment from the noble Earl when he comes to reply. I deal, first, with the position of civil servants serving in Burma who do not come within the term "the Secretary of State's servants." Provision for the group which comes under the term "the Secretary of State's servants" is already made under Article 5 of the Treaty, but no mention or provision is made for the non-Secretary of State servants. These men who are very few in number, and whose case I urge most strongly upon His Majesty's Government, were enlisted originally through the High Commissioner for India when he was acting as the agent for the Government of Burma. It now appears that some of them are to be dismissed, or at any rate will not be re-employed upon the transfer of power. On the termination of their services, in many cases prematurely, they are to receive proportionate pensions—indeed they have earned these—but no compensation whatsoever is to be payable as in the case of the Secretary of State's servants.
The noble Earl, during his visit to Burma, discussed this matter with the Provisional Government. He told your Lordships on a previous occasion that they were most anxious to meet the requirements of these men and had every wish to be fair to them. Reports have appeared—I cannot vouch for their accuracy—that during a conference in Rangoon which the Secretary of State held with these men or their representatives, he informed them that no compensation was to be payable to them as they were to be re-employed by the new Government of Burma. What has happened? A small number of these civil servants, men of a certain age, will not be re-employed and they will receive no compensation whatever. Surely it is usual for any servant of the Crown whose services may be terminated prematurely to receive not only the proportion of the pension which he has rightly earned but compensation as well.
The Government base their refusal to assist these men upon the fact that they have no legal responsibility because they were recruited, as I have said, through the Government of Burma and not through the Secretary of State. I must frankly own that I think that is a most
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shabby argument for the Government to employ regarding men who have given loyal, honourable and devoted service to the Government of Burma. If that Government for whom the noble Earl has such high hopes are not prepared to give them a fair deal, and if His Majesty's Government are not prepared to employ them in other Departments of State, then, in my judgment, the responsibility of the Government transcends all legal argument, for they have a moral duty to perform which they should undertake at once.
Secondly, I come to the question of British business in Burma, about which I should be glad to have further information. Your Lordships may know that there is a sum approaching £100,000,000 sterling invested in that country in the mining, oil and timber industries. These concerns over the years have given employment to countless thousands of Burmans and together with the great rice-producing areas they form the backbone of the economy of the land. Your Lordships will observe, therefore, that these commercial interests are very extensive. Yet the treatment that they will receive under the new Constitution is somewhat uncertain. It is true that the existing interests are, to some extent, safeguarded in the exchange of letters which your Lordships will find attached to the provisional Treaty. But if noble Lords will examine them with the Articles of Constitution it will be found that on the transfer of power at the beginning of January, the State can thereafter decline to grant a licence to any firm or any business functioning in Burma unless certain conditions are fulfilled, the most important of which is that 60 per cent. of the capital of that company should be owned by the State or by the peoples of Burma.
It is true that pending the conclusion of a Commerce and Navigation Treaty, the Burma Government have agreed to take no steps adversely affecting British interests during the interim period, but the whole of that is subject to the economic provisions of the Constitution which, as your Lordships know, lays down that all these companies must be nationalized. Nevertheless, as I see it, in spite of that safeguard, and in spite of the words which appear in the Constitution, on and after January 4 next these commercial interests can be slowly strangled and every form of

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interference placed in their way. I frankly say that I should have thought it would be possible for the noble Earl to have inserted in the Treaty a safeguard that no detrimental action whatsoever was to be taken against British business enterprises in that country until full and adequate compensation had been agreed and paid. I feel quite certain that all these firms operating in the country have nothing but good will towards Burma and her people. I can only hope that the Burmans, who have no business experience or knowledge of their own, will conduct their economic policy with prudence and care. I wonder if the noble Earl could give the House some information about discussions which I understand are now proceeding between the Provisional Government and the representatives of the Flotilla Company which is the first company to be taken over by the State? I should like to know whether the final agreed terms will be published, and whether they will receive the support of His Majesty's Government.
Thirdly, I come to the position of minorities. I understand that my noble friend Lord Rankeillour is speaking today and he will, no doubt, deal with this subject. Therefore I shall only deal lightly with it. Whenever a transfer of power takes place the position of the minorities should be made abundantly clear and the Government, as the noble Earl himself has said, should be mindful of their moral responsibility. In former days an equivocal pledge was given to the minorities and frontier tribes that they should not be forced under Burmese rule against their will. In fact, they did not form part of Ministerial Burma under the Act of 1935. If His Majesty's Government still accept that guarantee which was given some years ago they are, of course, bound to ensure that these tribes are happy and satisfied about their future status in the new Union.
The Chins, the Kachins, the Shans and the Karens, to mention the main minorities in the country, are one and all far divorced from Burmese stock, but nevertheless to them—and to the Karens in particular—we owe a deep debt of gratitude for their magnificent and heroic support of this country in the very darkest days of the war. It would really ill become us to see these tribes and these minorities transferred against their wishes
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to an untried form of government. I understand that differences of opinion have arisen between Burmans and the Karens in the past and that the noble Earl a short time ago on his visit to Burma endeavoured to smooth out some of these differences. Nevertheless, I am told that there are groups which are still dissatisfied with the position that they will now occupy. Perhaps the noble Earl could tell us something of the future of these tribes, because under Clause r of the Bill the suzerainty of His Majesty is to lapse on the passing of power, and presumably the guarantee of protection which we have given them in the past will expire also.
As to the minorities other than those I have mentioned, I would only draw your Lordships' attention to the position of the Indian community in Burma. They in association with ourselves were responsible for many of the big industries of the country. I see that no seats whatever are to be reserved for them in either House of Parliament, and in view of the very important economic position which they formerly held and will no doubt hold in the future, that may well prove to be a source of great disaffection.
Lastly I come to the question of defence, which is referred to in an annexe to the Treaty. As I understand that document, it provides not only for the early evacuation of British troops from the country, but also the dispatch of a joint Service Mission on a volunteer basis. That is to say that if His Majesty's Government fail to provide volunteers for this Mission then the Burmese Government are authorized under the terms of the agreement to go to other States in the world and ask them to provide a Mission instead. Under paragraph 8D, as I see it, His Majesty's Government during a period of three years will provide help and support for Burma in case of emergency, but at the conclusion of that period Burma should be able to defend herself from all external aggressions. Are the Government really satisfied that that country will be able at the end of three years to defend herself from all forms of aggression wherever it may come from? It seems to me to be hoping for the best when the worst is bound to occur.
I think I have said sufficient, but perhaps I might add this in. conclusion. We are now going to part company after an

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association of many, many years. The noble Earl and his colleagues must accept full responsibility for the decision they have reached, which we on this side of the House believe to be very ill-advised and far too hasty. We shall, of course, watch the future with interest and we shall see the progress of this small country now about to stand in an uneasy world alone.
4.14 p.m.
VISCOUNT SAMUEL: My Lords, the whole House will be grateful to the noble Earl, Lord Listowel, for the lucid and comprehensive speech in which he has presented to us this important measure, which is the result of long and complex negotiations; and I would congratulate the noble Earl himself on the successful completion of those negotiations. I know how close to his heart this whole matter has been ever since he held his present office and even before. The Burmese leaders also are to be congratulated on the statesmanship which they have displayed, and particularly in the degree to which it has been shown in their wise treatment of the difficult question of the minorities.
For myself, I do not propose to follow the noble Earl who has just spoken in making any comments on the specific provisions either of the Bill or of the Treaty. On the broad issue of policy, however, the view I would express on behalf of noble Lords on these Benches is not the same as his; for while he did not actually oppose this Bill, neither did he support it. One might rather say he deprecated it as being ill-advised and hasty, regretting that it should now be introduced. I am pleased, however, that he did not express his opposition in terms so vehement and in language so uncompromising as those used by the Leader of the Opposition in another place, who, after condemning the Bill roundly, led his Party into the Lobby to vote against the Second Reading. I would remind your Lordships of a document that was signed in 1941, during the course of the war—the Atlantic Charter. I would venture to recall to your Lordships' recollection the Preamble to and one of the Articles of that Charter, since they have a very close bearing on our discussion of to-day. The Preamble read as follows:
"The President of the United States and the Prime Minister, Mr. Churchill, representing His Majesty's Government in the United
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Kingdom, being met together, deem it light to make known certain common principles in the national policies of their respective countries on which they base their hopes for a better future for the world."
And the Article I would quote is this—
"… they respect the right of all peoples to choose the form of government under which they will live …."
It says, "of all peoples." It is true that a few weeks after that document was signed, Mr. Churchill explained in another place that in his view the Charter was not intended to have full application to the portions of the British Commonwealth and Empire. But he never explained on what ground he could declare that the operation of a principle which was stated to be of general application and which he regarded as right in itself was to be excluded by the frontiers of the British Commonwealth and Empire. He declared, under his own signature, the right of all peoples to choose the form of Government under which they would live. Would he declare that the Burmans are not a people? They are a nation of long and individual history; and they have declared by every constitutional means open to them what kind of Government it is under which they wish to live. Their choice is not open to doubt. That being so, I cannot see on what grounds Mr. Churchill would deny to them the advantage of the principle to which he himself had professed his adherence.
Further, he gave as ground for objecting to the signature of the Treaty and the conclusion of the Agreement for the Constitution, the personalities with whom in the first instance this policy had been negotiated—U Aung San and U Saw. He went back to their records during the war, on which he made some strong animadversions, and he added that the Government could "hardly be congratulated on the choice they made of the hands into which Burma, its fate and its future are to be delivered." A strange view of negotiations between the representatives of two peoples!, One side is to choose who shall be the representative of the other, and that is a matter upon which the British Government must be satisfied before they can accept the nominees of the people with whom they are to enter into discussion and negotiation! He ended his speech in very much the same terms as those in which the noble Earl, Lord Munster, ended his

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speech, by saying: "We accept no responsibility for this Bill. We wish to dissociate ourselves from the policy and the methods pursued by the Government."
When I read those words, I read them with surprise and regret. They seemed to evoke an echo in my mind of having heard very similar words in another place on another historic occasion. I looked up the discussion of now forty-one years ago, when Mr. Balfour, speaking from the place which is now occupied by Mr. Churchill, as Leader of the Opposition, used these words with reference to proposals in another place for conferring self-government on the Transvaal and the Orange Free State. Mr. Balfour said:
"I refuse to accept the invitation so kindly offered to us by the Under-Secretary for the Colonies that we on this side should make ourselves responsible with the Government for what I regard as the most reckless experiment ever tried in the development of a great colonial policy."
The Under-Secretary was Mr. Churchill. I well remember, as a fellow Under-Secretary in the Campbell-Bannerman Government, sitting on the Ministerial Bench in another place and hearing Mr. Balfour use those words. He condemned the measure then proposed, on the ground that we could place no trust in statesmen such as General Botha and Mr. Smuts who had lately been in arms against us. It is distressing now to see that the former Under-Secretary, who then adopted Liberal views on a not dissimilar issue, should himself be the leader of an intransigent opposition to a not dissimilar policy in a not unlike case. Although there were several dissentients amongst his own supporters, and many abstentions, the fact remains recorded in history that the Conservative Party as a whole, led by Mr. Churchill, went into the Lobby against the Bill for Burmese Independence.
I dwell upon this because it is a matter not merely of Party but of national interest; for in this age Britain is trying to persuade the world that she is no longer Imperialist, relying upon force and pressure to detain peoples under our dominion against their will, to insist upon conquest regardless of consent. We try to persuade the world that we believe in our declarations in the Atlantic Charter and that we are loyal to the spirit of the Charter of the
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United Nations; that the American War of Independence, that the long and bloodstained history of relations between England and Ireland, that the South African war and various episodes in Indian history are all things of a past age, and that we look upon the future with different eyes. But how are we able to answer our critics who say that all this is hypocrisy, and that at heart Britain retains the same ideas and would enforce them if she could, when the foremost figure of British politics at the present day, whose voice reverberates throughout the world, expresses so clearly the spirit of those old times and repeats almost textually the position advanced by Mr. Balfour in the previous generation in our relations with the Beers?
We are frequently told in these days that we Liberals differ so little from the Conservatives that we might safely associate ourselves with them in political affairs, and that the Liberal faith would now be safe in their hands. We have here, now that it comes to a concrete and definite test, a clear example of how insecure that trust would be. If other countries in the United Nations and in Europe ask who it is that really speaks the mind of Britain—whether, in such matters as these, it is Mr. Churchill, or whether it is others of other politics—the answer is given by the passage of this particular Bill through another place by a great majority, and the passage that it is about to receive in this House this afternoon, I presume, without the challenge of a Division.
I share the regret expressed by the noble Earl, Lord Munster, that the representatives of the Burmese people have decided not to remain as a Dominion within the British Commonwealth. The noble Earl said that such a thing has never happened before. He seems to have forgotten a little incident when the American Colonies decided no longer to remain within the Empire.
THE EARL OF MUNSTER: There was no Statute.
VISCOUNT SAMUEL: Was there not a Statute recognizing the independence of the American people? But whether or not a Statute was passed is unimportant. What is important is: Would it be right that we should now wait for riot and rebellion and refuse to pass this Bill,

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and then at the end pass, under duress, what we failed to do on request and by persuasion? I regret that the Burmese do not remain within the British Commonwealth, not chiefly for our own sakes, but in the interests of the Burmese and from the standpoint of world affairs. I think the Burmese would have gained, by retaining their connexion with the Commonwealth, in greater stability for their institutions, for their defence, and in finance and currency. But the matter, I repeat, is for them to decide. To say, as the noble Earl would say, that because we think their Civil Service will not be efficient or that they have not a sufficient number of Ministers who are really capable of conducting affairs with success—
THE EARL OF MUNSTER: I did not say that. I never mentioned Ministers, in the whole course of my speech, as not being able to conduct the affairs of Burma.
VISCOUNT SAMUEL: I thought the noble Earl said that there were some leaders who were incompetent, implying that there were some who might not be able to conduct affairs. If I have misinterpreted what the noble Earl said, I withdraw the interpretation which I wrongly placed on his words. The noble Earl certainly said that in his opinion the Civil Service of Burma would not be adequate to perform the functions of government with full efficiency and, furthermore, that we ought not to leave the country until we had succeeded in rehabilitating it, economically and industrially, after its ordeal in the war. But surely it is a matter for them to choose; it is not for us to decide whether we ourselves approve and then to enforce our own will against their opposite opinion.
As for the world point of view, I feel strongly that it is a mistake to break up such measure of unity as there is now in the great political units of mankind. There are too many separate States on the globe already, and we can see at once that if, for example, the United States of America were to break up into its forty-eight units, that would be no step in advance; it would rather be a measure of retrogression; and similarly with the British Commonwealth and Empire. Other such units
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might also be affected. So long as they combine full freedom of the parts with the unity of the whole, then the existence oi such integrations are of service to mankind. He is the truest patriot who is the best citizen of the world; and the good citizen of the world might remain content for a time with some measure of connexion rather than create yet one more independent Power with its own frontiers. Every frontier is an evil thing, and the more frontiers there are, the worse it is for the peace and prosperity of the human race.
It may be that we shall develop a new form of association with certain States. In the old days the choice was only between annexation and complete separation. Afterwards the device of Protectorates was adopted and many countries—not only ourselves, but France, Germany and others—occupied and still do occupy certain territories under the name of Protectorates. Later it was seen that a Protectorate was merely a colony under another name; it was governed in exactly the same way, and, while gaining the same advantages, suffered the same disadvantages. We had, after the last war, a system of Mandates under the supervision of the League of Nations, and now we have the system of Trusteeship under the supervision of the United Nations. It may be that in the case of a country such as Burma and other territories there might grow up a new form of association, neither under Mandate nor under Trusteeship; something more than an alliance and something less than sovereignty.
T. E. Lawrence—Lawrence of Arabia—wrote in one of his letters, quoted, with approval, by the late Lord Tweedsmuir in his admirable book Memory-Hold-the-Door.
"I think there is a great future for the British Empire as a voluntary association, and I'd like to have Treaty States on a big scale attached to it … We are so big a firm that we can offer unique conditions to small businesses to associate with us."
Possibly after a generation we may find, perhaps with surprise, that in Burma we have been building up a principle, growing out of the practical needs of the situation. Through co-operation piece by piece to meet the requirements of changing affairs, there may be established something in the nature of a new principle to which we may then give a new name. Meanwhile, we are glad to think that

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Burma, having decided to leave the Commonwealth, does so without enmity and even, looking back, with some measure of gratitude. It may be that if from now forward we are not to be fellow subjects of the same sovereign, we may yet draw close together as fellow servants of the same ideals.
4.32 p.m.
LORD RANKEILLOUR: My Lords, with regard to the speech to which we have just listened, it is no duty or business of mine to defend Mr. Churchill, but surely it is a most forced construction of the Atlantic Charter to say that any unit in an Empire or Federation, not content with choosing its own Constitution by internal government, has a right to break away from its allegiance by a majority vote. I am most surprised that the noble Viscount should express himself as he has, because I remember very well a debate in this House, during one of the various stages of the Indian problem, in which no one could have put it more lucidly than he did, that democracy, by a pure majority, might work in a homogeneous country, but it was not true to say that it could be expected to work in a country divided by deep racial cleavages; and he quoted in that connexion Ireland, Palestine and, I think, Switzerland. Of course, it has been satisfactorily worked in Switzerland on the basis of separate cantons.
VISCOUNT SAMUEL: If I might interrupt the noble Lord, Ireland and Palestine and India are cases that I gave where the question arises: What is a people? and whether you are dealing with a people or with two peoples. That is not the case that has been raised in this instance.
LORD RANKEILLOUR: I think we are dealing with at least five.
VISCOUNT SAMUEL: They are not separate.
LORD RANKEILLOUR: I do not agree at all. There are several peoples in Burma. I have read the proposed Constitution to the best of my power, and I am satisfied that they are not properly and permanently protected. Before I say anything more that may be described as critical, may I just thank the noble Earl, Lord Listowel, for his great courtesy and trouble in giving me information on this complicated matter?
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He has done so with the greatest affability, and I am the more grateful to him because I cannot suppose that he regards me as a close political friend. Indeed, the admirable qualities he has shown make me grieve the more because they are being employed in furtherance of the policy to which he is committed.
My noble friend Lord Munster has dealt at some length with the question of defence. If it is to be on a voluntary basis, built largely on what I may call the bodies that sprang up during the course of the war, is it really thought that the frontiers of Burma will be safe? They are peculiarly exposed and they were invaded in the last war from two angles on the same side, one from the north-east and one from the south-east. They are sill exposed to danger of invasion from the east and, I may say, quite possibly from the west too, under the new disposition of India. I cannot believe that any responsible military strategist would say that what was done was going to be a help to Burma.
I should like to reiterate what Lord Munster said about the non-Secretary of State Service officers. I know of very hard cases amongst them, and I could not quite follow what the noble Earl, Lord Listowel, said about what was to be done by them. I thought the matter was still in suspense, that it was still held up, and that there had not been received from the Burmese Government assurances that their interests would be properly considered. I hope possibly something more satisfactory may be said on that subject.
Now with regard to minorities. On the face of it the position there is much better than in the Indian Bill, where they were simply ignored completely. Of course, so far as the homogeneous communities go they are recognized as having their particular rights, but I do not think there has been any kind of plebiscite on whether they are willing to come into the union of Burma on the conditions specified. I trust that will be gone into before they are finally committed.
I should like to ask one question about the suggestion that an extra Karen State may be created under certain conditions. I did not quite follow what the noble Earl said about that. What would be its dimensions? What would be its location? I imagine somewhere on the

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Eastern frontier. Even if that is set up separately, there must remain a great number of Karens scattered about the plains and it is for the sake of them and other minorities—Anglo - Burmans, Chinese and Indians—about which the noble Earl, I think, said nothing, that I still remain concerned.
I find a good deal of difficulty in understanding the chapter of the Constitution which deals with fundamental rights. Section 10 says:
"There shall be but one citizenship throughout the Union; that is to say, there shall be no citizenship of the unit as distinct from the citizenship of the Union."
Then it gives a definition of the necessary qualifications for citizenship, which appears on the face of it to be satisfactory.
Section 13 states this:
"All citizens irrespective of birth, religion, sex or race are equal before the law; that is to say, there shall not be any arbitrary discrimination between one citizen or one class of citizens and another."
But Section 12 says this:
"Nothing contained in Section 1I shall derogate from the power of the Parliament to make such laws as it thinks fit in respect of citizenship and alienage, and any such law may provide for the admission of new classes of citizens or for the termination of the citizenship of any existing classes."
I cannot reconcile these sections with one another.
Of course, it may be said that the word "class" in this connexion does not cover "race." I do not know what ruling a Court of Law would give as to that. But even if "class" did not cover "race" it could be used—and one always has to think of the worst position that might arise—to the grievous detriment of particular communities. For example, if a Bill were brought in to provide for the alienation of, shall we say, merchants and financiers of alien origin, it would be perfectly lawful, apparently, to pass this under Section 12. Yet it would strike a deadly blow against many Indian and Chinese business houses, and I understand, from what I have been told, that such Indian and Chinese establishments are none too popular in Burma as it is.
But, putting that aside, what does it matter what you put into a Constitution of this kind if it is liable to be changed at any time by the actual body you are setting up? What does it matter when there can be no permanence at all
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about it? It is true that Section 209 provides for a two-thirds majority being necessary for a change in the Constitution. But taking the composition of the two Houses and bearing in mind the statistics of population, I think it is morally certain, indeed almost demonstrable, that the ruling races in Burma could always command that two-thirds majority. After all, apart from that, again, when you have given up control and granted complete independence you have done away with any protection that may have been given in the first instance. If there is a Treaty and it is broken, do you really suppose that there is any sanction attaching to it, do you suppose that there are any sanctions anywhere that either the United Nations or anyone else would take up and employ in order to do justice to a minority?
There is, moreover, always this to be considered. I have been told by experienced Indian Governors that where there have been racial differences it has not been so much in the matter of legislation that they have been shown but in the very subtle differences of administration which it is almost impossible for the Provincial Governors, with all their powers, adequately to check, so subtle they were, so open to argument in the Courts. That makes it the more necessary to take any possible precaution that can suggest itself to us that these minorities have the best rights which are possible, but which, I fear can never be permanently saved to them under the Constitution as now provided and in view of the fact that the old Imperial Government have given everything away.
On the occasion of the last discussion in this House on this matter, the noble Earl quoted words of mine to the effect that I trusted that what has happened in India would not be repeated in Burma. By way of defence of what has happened in India he said that the number of lives lost had been grossly exaggerated. Perhaps they have; but some say they have been under-estimated. It is impossible to say what is the truth but let it be presumed that they amounted to only 500,000. Is that a small price to pay for carrying the present Government's policy into effect? The eminent French statesman, M. Robespierre, sacrificed his thousands at the shrine of the Altar of Liberty. The policy pursued by this Government has caused hundreds of

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thousands to die. Can it really be supposed that if there were a strong Viceroy and strong British Forces anything like these dreadful things would happen? Of course, I do not say for a moment that the position is the same in Burma. There is no strong minority to fight there. Therefore, there is the more need for protection. When I see arguments put to the minorities which in effect amount to saying: "Oh, do make friends with the Burmese Government," I realize that it may be that there is nothing else for them to do. But they never ought to have been reduced to such a plight.
The whole thing seems to be a matter of wantonness of policy. What aspirations in Burma could not have been satisfied by something on the Canadian plan—full internal government, protection for minorities, appeal to an independent Court—not necessarily to the Privy Council here. Could not all those things have been provided for? Why should we not have faced up to it? I find it very difficult to understand why the Government should not have proceeded on such lines instead of going on with a blind faith in unchecked majority rule. But I think the reason is this. The Government appear to look upon dependencies of the Empire as encumbrances. We look upon them as trusts to be administered to the best of our power and to the best of our consciences, not for the sake of any majority in any country, but for the sake of the various elements in that country as a whole.
I was impressed in a sense by the argument with which the noble Earl began his statement. It was really a remarkable argument, which went something like this. Whereas we have been in Burma for a long period, whereas Burma has flourished exceedingly under our rule, and whereas the population has been quadrupled, and a great city and port have been built and her economic position has been enormously improved, therefore it was necessary for us to give it all up. In recent weeks the minds of the peoples of the whole Empire have been turned towards the Crown as a symbol of their unity and their common rights, and yet this is the moment when some millions of His Majesty's subjects are being abandoned to the risk of political oppression from which this rule has so long saved them.
4.52 p.m.
LORD PETHICK-LAWRENCE: My Lords, after the speech of the noble Earl, Lord Listowel, I had thought there would be need for me to say only a few words to your Lordships this afternoon. I felt I ought to say a few words as, under the guidance of the Prime Minister, I was responsible for the negotiations which led to the settlement which is now embodied in the Treaty and in this Bill. After listening to the speeches of the noble Karl, Lord Munster, and the noble Lord, Lord Rankeillour, however, I feel that a little more is required in defence of the policy of the Government. I hope that in what I say I shall not rub members of the Opposition up the wrong way, but I feel that some riposte from me is required in answer to their remarks. I would like to point out what seems to me to be the difference between the points of view of those on this side of the House and those on the other side. We are agreed on both sides that it would have been very much better had Burma remained in the British Commonwealth. There is no divergence on that point. We think it would have been better not only for ourselves but for Burma, and we regret the decision which has been taken by the Burman people.
The second point is also very important. As I understand the position—I do not think it applies to the noble Lord, Lord Rankeillour, but it applies to the Conservative Party as a whole, and certainly to the noble Earl who led for the Opposition—we are all agreed that Burma, like any other part of the British Commonwealth, would be entitled to a complete separation, provided only that she went through a stage of Dominion status. The only difference between us and the principal members opposite is that they say Burma should have gone through the intermediate stage and that His Majesty's Government ought not to have consented to Burma becoming a completely separate country without having passed through that stage. It was said in another place that that period should last for two to three years. I do no; think the Opposition would confine themselves to any period, but they say there should be some time of Dominion status before Burma becomes a separate foreign country. I think I have reduced the difference to much smaller dimensions than some

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people who are not fully aware of the various pledges given will realize.
Let me explain to noble Lords opposite what our position was. Suppose that we had said, "There shall be no separate Treaty with Burma as a foreign country," and that the only point we would permit the Burmese to discuss with the Government was Dominion status. That certainly would have led to abortive negotiations, if there had been any negotiations at all; and the result would have been that we would have to continue to govern Burma by force. There was the possibility that our Forces in Burma at the time might have been insufficient, and that we might have had to make a considerable addition to our physical forces. In that case the result would have been a bloody war, in which a large number of Burmans would have been killed and a large number of British soldiers would have gone to their death. That is one assumption.
Take a more hopeful view: that without a war we should have continued to govern Burma by force, probably for a considerable number of years, at the end of which we might have brought Burma into the position of a Dominion. If that had been done, she would have relinquished Dominion status and become a foreign country at the first possible moment; and she would have done so with the maximum of ill will. Was that really a better plan than that which was in fact decided upon? We took the will of the people of Burma, as expressed in the only way they could express it, and came to the conclusion that they strongly desired independent foreign status from the start. We have accordingly concluded the Treaty embodied in this Bill and we shall undoubtedly have the free support and good will of Burma towards us in the days that are to come. I cannot think that noble Lords, if they really face this issue, will prefer the other alternative.
The noble Earl, Lord Munster, made great play with the numbers who voted in the election. I think he must be aware that between the two sides in this country, and particularly with those who sit on the Liberal Benches, there is a great deal of play with elections. I would remind the noble Earl that in Burma there were a great number of uncontested elections and the number of votes cast is no guide to the opinions of the
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people. He seemed further to imply that because 43 per cent. were represented in these returns, the other 57 per cent. would like to remain in the British Commonwealth. So far as I came across any political views at all, I found that a great number of those who would have nothing to do with the negotiations, or who objected to the signing of the arrangement made, did so because they alleged that the British Government were being far too conservative and were refusing to give them what they demanded. So there is positive evidence that people did not vote because they did not think the Burmese representatives were going far enough. They wanted to insist that they received a far greater measure of independence than the British Government would confer.
I should like to say a word about Aung San. I do not want to go into the remoter past and refer to matters raised elsewhere, but I do want to say a word or two about the man as I found him as a negotiator. Aung San had very definite views as to what ought to be the relationship between this country and Burma. He proposed a great number of things which we were not prepared to do, but we succeeded in inducing him to come here to negotiate with us. We negotiated and, as in all negotiations, we made certain concessions and he made certain concessions. The great merit of Aung San, as I saw him as a man—it is the great merit of any statesman—was that, having made concessions and having been given concessions in return, he put his hand to and signed the document, and afterwards he went back and stood by his bargain. That, I think noble Lords opposite will agree, is the sign of an honest man and the sign of a statesman. It was because some of the men who came over here refused to put their hands to the document and went back to Burma and accused Aung San of having given away by concession more than he ought to have given, that he had a very heavy task when he went back to his own country. I am not at all sure that his death (which I mourn as a personal friend of his, and which I regard as a personal bereavement) was not in part due to the animosity that he caused by standing firm on his bargain and honouring the signature which he put at the foot of the document.

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Let me turn to one or two other points made by the noble Earl, Lord Munster. He dealt with the question of the minority tribes. I think I am right in saying that he used the word "wanton"—
THE EARL OF MUNSTER: No.
LORD PETHICK-LAWRENCE: I understand it was the noble Lord, Lord Rankeillour. I can assure the noble Lord that there was no wanton breach of the honourable promises made on behalf of this country towards the hill tribes and the other minorities
LORD RANKEILLOUR: May I so far withdraw as to substitute "needless" for "wanton"?
LORD PETHICK-LAWRENCE: I am obliged to the noble Lord. There is a substantial difference between the two words. Even so, I cannot accept that as the correct interpretation. I can only tell noble Lords opposite that His Majesty's Government went to infinite pains to insist that the Burmese as a people were not placed in control of the other peoples in that part of the world unless they succeeded in getting the consent of those minorities. I think it was the noble Lord, Lord Rankeillour, who suggested that we might have had a plebiscite. We recognized that you could not have an effective plebiscite with a people as primitive as some of the hill tribe people in Burma, but we did what we thought best. We got their representative men and, lest by any chance the views of their representative men might be misrepresented and they might be hoodwinked, we sent out first one and then another member of the Government, in order that he should himself be present at all the discussions and we might be assured that the views which it was alleged were being expressed were those which were actually expressed, and did represent, so far as we could judge, the views of the different tribes and different elements in the population.
LORD STANLEY OF ALDERLEY: How far could the noble Lord judge of their feelings?
LORD PETHICK-LAWRENCE: Someone has to judge of their feelings somehow. I can only say that we sent out two very capable members of the British Government. They reported on their return that the views of the representatives that the hill tribes themselves sent to the
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Conference were representative of the views of the hill tribes, and that those people were not cajoled into signing a document with which they did not agree. I may say, further, that when it actually came to framing the Constitution, all the representatives of the tribes who were present, as they were elected, put their signature to the Constitution. They agreed to be part of Burma, and they further agreed, in common with all the other representatives, to the independence of Burma. The noble Lord has withdrawn the word "wanton," but so far from wantonly or needlessly coming to this decision, we took infinite pains to assure ourselves that in allowing this Constitution to function we were in fact acting in accordance with the will, not only of the Burmese, but also of the other races in Burma.
I would like to say a word regarding the other remarks of the noble Lord, Lord Rankeillour. He said (and I was interested in it as, from my point of view, it was an admission) that there was no permanent security for any section of the minorities because—and I quite agree with him on this—unless the British Army were in permanent control there could be no ultimate sanction for the observance of the terms of the Constitution. That is true from our point of view, and I am not going to deny it for a moment. But let us see what follows from that. If that be true, and if it be so essential that we should preserve this permanent security, then in no circumstances must we part with that permanent control. That puts the noble Lord at variance with the policy of his Party, because they have said that they would be prepared to give up that permanent control provided the country went through the intermediate stage of Dominion status. The only condition under which the permanent security referred to by Lord Rankeillour could be achieved would be by abandoning that plan and saying that no part of the British Empire, or a British Dominion, should ever be allowed permanently and completely to separate itself.
LORD RANKEILLOUR: I meant only the kind of permanency that the French population enjoy in Quebec.
LORD PETHICK-LAWRENCE: I do not quite follow the point of that interruption. As I see it, you must have one way or the other. If you agree that in

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certain circumstances, in some way or other, you are going to allow a country to become a separate foreign country, then you must part with the permanent security that you yourselves can enforce. The best hope you can have is that, if you have brought the different parties in the country together and have got inserted in the Constitution certain safeguards, you may, through that, have a completely satisfactory position.
There is one further point I would like to make, in reference to a matter raised, I think, by the noble Earl, Lord Munster. He said: "You will have no guarantee that this country—this small populated country, in a dangerous part of the world—can protect itself against all its foes if left to fend for itself." Of course that is true. Equally, places like Denmark, Belgium and other countries in the world have no guarantee that they can protect themselves. I would remind the noble Earl and Lords opposite that if they were Burmese they might well say: "Even when we were part of the British Empire, the British Empire did not prevent the invasion or the temporary subjugation of our country by the Japanese." The fact is that in this modern world no country can defend itself, and even the great British Empire, with all its power, could not defend Burma from being invaded in the way it was in 1940.
THE EARL OF MUNSTER: I am sure the noble Lord does not mean to misquote me. At the end of the Provisional Treaty it says that within a period of three years the Mission shall withdraw. What I asked was whether it was intended that at the end of three years the Burmese would have an armed force sufficient to defend themselves from any external invasion.
LORD PETHICK-LAWRENCE: My answer is that I do not think they will. I do not think any country in the present conditions of modern warfare can possibly have an army sufficient to defend itself and prevent invasion and being overrun. It can make it very unpleasant. It is only a matter of degree. After all, the Swiss had not an Army large enough to prevent the Germans invading their country. They had an Army large enough to make them a porcupine to the Germans and very difficult to handle. They would
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have caused the Germans more trouble than if they stood outside, and therefore they secured independence. It is quite clear that even if the three years were ten years we should not succeed in making Burma a country which could quite certainly prevent invasion and be able to defend herself against aggression.
THE EARL OF MUNSTER: Then why send a Mission at all?
LORD PETHICK-LAWRENCE: You might argue that about many other countries in this world. Why does Belgium keep an Army, and why do Norway and Denmark do so, when we all know perfectly well that if a sufficiently large aggressor came those countries would crumple up like a house of cards, as in fact they did in the last war in so far as they were attacked by the great armies of Germany? In any future war no country can reckon itself absolutely certain to defeat aggression. I do not want to detain your Lordships much longer, or to bandy words with the noble Earl opposite, whom I have always regarded as a very good friend and whose opposition I fully understand. I am only putting certain points, and I want to explain to noble Lords opposite that those considerations were not absent from the minds of His Majesty's Government when they entered into these negotiations, but those considerations were overridden by the much more important ones which I have attempted to put forward.
As I see it, the step which we are asking this House to approve to-day and the negotiations which have been carried through, are of very great importance, and are fully worthy of support for the following reasons. In the first place, I think we are privileged to interpret the will of the people of this country. I believe that if you went to the people of this country and said: "You can get an agreement with Burma by which she will remain a nation friendly to the British Empire. She will even recognize a special relationship to the British Empire. You can get that agreement on the condition that you do not stand out for an intervening period of Dominion status. The alternative is to use force, to risk bloodshed, hostility, and perhaps a permanent estrangement between the two countries"—I am convinced that the people of this country, with their good common sense,

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would say: "For God's sake take the first course and not the second!''
In the second place, I say that this conclusion is of great benefit to Britain and to Burma. I am not going back for one moment on what I said at the beginning. Personally, I would have preferred, and His Majesty's Government, so far as I know the mind of His Majesty's Government (as I am sure my noble friend said in the course of his speech) would have preferred that Burma had remained within the British Commonwealth. We think it would be better for her and for ourselves. But as the Burmese chose the other course, and chose it with apparent unanimity, we think it wiser and more in the interests of both countries that they should come to an amicable arrangement along those lines than that we should endeavour to impose our will upon Burma.
In the third place, I think there are still higher considerations. I believe that what we are doing to-day constitutes an event of great importance to the peace of the world. I believe that we are setting a precedent which will long be remembered and, I hope, widely acted upon. Where there are two countries bound together by some bond which frets and irks one of the partners, and that country feels it necessary to claim the entire removal of that bond, and to become, if necessary, a separate and foreign country, the other partner will be wise in its own interests, wise in the interests of the country involved and wise in the interests of the peace of the world, to choose the path of negotiation and agreement rather than the path of force and domination.
5.15 p.m.
LORD STANLEY OF ALDERLEY: My Lords, I rise to address you this afternoon with some hesitation, because I believe that this is a question involving very deep and difficult decisions. Some of your Lordships, especially on this side of the House, may well deplore the necessity (as I regard it) for bringing forward the Bill under discussion to-day. That the Bill is necessary, I myself have no doubt whatever. The people of Burma have, as has been said from the Benches opposite, clearly and quite unequivocally determined that they wish to leave the British Commonwealth of Nations. I think we, in the British Parliament, in this place and in another place, must most
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certainly conform to the wishes of the Burmese people.
I think it idle to regret the past. It may well be that a more happy solution than the present Bill could have been found for the solution of the Burmese problem. However, that is past history, and we may as well accept the situation as it is. I do, however, beg leave to doubt whether His Majesty's Government, in their so-called wisdom, have in fact really produced the solution which is best fitted for all the parties concerned. I listened with rapt attention—I hope my eyes did not close too often—to the exposition of this Bill which we had from the noble Earl, the Secretary of State. I thought he made a certain number of assumptions which were not quite warranted. I should perhaps say that I believe it to be almost impossible to find a subject for debate in your Lordships' House where there is not a great expert ready to bring the weight of his knowledge to bear upon the matter under discussion.
So far as Burma is concerned, I think I am in the proud position of being tire only member of your Lordships' House—with the conspicuous exception of the Secretary of State—who has been in Burma during the last thirteen or fourteen years. I stand ready to be corrected, and the noble and learned Viscount on the Woolsack has apparently been there more recently than myself. At any rate, I have spent some months in Burma very recently, and that is the reason for my addressing your Lordships this afternoon. I do not want anything I may say to be taken as hostile to the Burmese people, with whom I find I have perhaps a greater sympathy than I have with noble Lords on the Benches opposite. Certainly they understand the art of living a great deal better than, shall we say, some of the noble Earl's colleagues in the Cabinet—I hesitate to say the Minister of Food or the Minister of Fuel, or any of the other gentlemen who organize our lives these days. I want it to be perfectly clear that in the remarks I have to make to your Lordships I am fully convinced of the necessity for this Bill and, at the same time, not quite happy about the steps, as I understand them, that have led to the formulation of this measure. The noble Earl opposite, the Secretary of State, has painted a rosy picture in rather vague,

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indeterminate colours. He has relied—and perhaps rightly—on the good will of the Burmese people, which he says has increased very considerably since we have negotiated towards giving them their complete independence.
I think I know as well as the noble Lord opposite the main figures in the Burmese scene, and I have no reason to doubt, that they are men of honour. I make no doubt of that at all. Yet Governments do change. One hopes even that the present Government in this country may change! Is the noble Earl opposite absolutely satisfied that Burma is faced with a long period of stable and statesmanlike government? Is he sure of that? It is a question to which I should like a specific answer when he comes to reply. Further, is he perfectly happy that Burma in the near future will be rid of many of the things that have tortured and twisted her during the last years—dacoity, violence, intrigue? Is he happy on these scores? If so he is a more sanguine man than he should be. Is he perfectly certain that the small whisperings of civil strife which in the last few days we have heard in the Arakan districts will not spread? Is he perfectly happy that this Treaty which he has signed on behalf of His Majesty's Government will be honoured in two or three or four years' time? Let him say so if he is. Let him give a perfectly clear answer to Parliament that His Majesty's Government are negotiating with a people whom they regard as being of good faith; and not only people of good faith but people who will be succeeded in all the chances and changes of political life in Burma by people of equally good faith. Is he satisfied as to that? If he is, God go with him and with this Treaty.
It is hardly for me to take up point by point the speeches made from the Benches opposite, both by the noble Earl, the Secretary of State, and by the noble Lord, Lord Pethick-Lawrence. They seem to me to be actuated by a woolliness, a hoping for the best, which characterizes the Christian Socialists. I hope that Christian Socialism has something in common with the religion of Burma. I myself regard the Burmans as being far more practical than His Majesty's Government. And let me emphasize again that I do not regard the members of the present Burmese
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Government, amongst whom I think I have many close friends, as anything more than very astute, able, honest men. Let me emphasize that as strongly as I can. I wonder whether the noble Earl has not invested the present rulers of Burma with perhaps a little more sentiment and good will than in fact they possess—which is a little less than he himself possesses.
It seems to me that the Government have rather carelessly drawn up a Bill which runs to some four pages of print. I dare say that those of your Lordships who are concerned with print could tell me how many words four pages contain. But in four pages, and small pages at that, we are handing over the whole of a great edifice which has been built up—and I say it without any sort of shame—for the benefit of Burma. There are the teak forests, the rice fields, the oil fields, and the Mogok diamonds, ninety-eight of which have gone as a present to Her Royal Highness on her wedding. I think I know the Burmans better than some noble Lords, and I doubt very much whether their present prosperity, torn as it is by the activities of war, could have been one-tenth or indeed one-hundredth part of what it is without the intervention of the British race. It may well be said that the annexation of Burma—and let us not mince words, annexation it was, under the great Lord Dufferin—was what is fashionably called in these days. Imperialism; and perhaps it had no ethical justification. At the same time I believe that there is no thinking Bur-man who would say that on balance the régime of the British in Burma has been anything but for the good of Burma.
Now I come to a specific point and I would draw the attention of the noble Earl, the Secretary of State, most carefully to this. There are in existence in Burma to-day a small number of British and Indian people who hold assets in Burma under a system of what was called "grant lands." Perhaps I should explain, in passing, that I have a small financial interest in this matter, and I think I should make that quite clear to your Lordships. The noble Earl knows this already. My interest is very small, and perhaps it will be understood that I speak from the point of view of justice rather than of self-interest. I am spokesman, however, for certain holders of lands

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in Burma. Those lands were granted to foreigners (foreigners from the Burmese point of view; some English, some Indian) who have since developed these lands, and have sunk considerable sums of capital into them. The lands are mostly rice or rubber estates; in all the cases of which I know the details, they are rice estates.
These people sank their capital at the specific request of the then authority for Burma, the India Office, as a matter of Colonial development under the policy laid down at home. It is quite clear from the speech of the noble Earl opposite that he and his colleagues in the Government view that development with the sympathy which one would expect, and with a kindly and paternal eye. No one will blame them for that. The spread of their doctrines throughout the world must be a matter of self-congratulation for them. But at the same time the Government of this country owe a debt to the citizens, whose servants they are; let that not be forgotten in these modern days. In spite of any action they may take, in spite of any self-satisfaction they may from time to time feel, the Government remain—at least I hope they remain—the servants of the people. Let that not be forgotten, either in this or in any other place. They are there to preserve the interests of the people who put them there, and if amongst them there are those who disagree with the political views of the Government, they are still, none the less, the servants of the people.
These holders of assets in Burma find themselves in a position of very considerable difficulty. In the exchange of notes between the Prime Minister and the Prime Minister of the Provisional Government of Burma, Thakin Nu, it is laid down that foreign-held assets in Burma, if the Burmese Government see fit, will be taken over against adequate compensation. At the same time the Prime Minister of the Provisional Government of Burma, Thakin Nu, has said that of course compensation will be paid; but only subject to it being within the ambit of the Constitution which has been laid down. That goes very far to the Left and, amongst other things, says that no large landholdings are to be tolerated in the new State. I hope that I shall carry your Lordships' House with me when I say that the Government have asked us
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to give passage to this Bill on the condition that the people with whom they have negotiated in Burma are honest and respectable. I emphasize once again that I am in agreement with the Government that they are honest and respectable people. At the same time, if the Government come and say: "You must negotiate with these men," they are taking a very serious responsibility on themselves. They are in fact guaranteeing the good faith of those with whom they are asking their employers, the people, to negotiate. I hope the noble Earl, Lord Listowel, will realize quite clearly that in accepting this Bill—it is only one facet of many other important things—those of us who are holders of assets in Burma are believing (a) in the good faith of the Government and (b) in the good faith of those whom the Government recommend to us as being reasonable people with whom to do business—the Burmese Government. Quite clearly, and without any equivocation at all, there rests on His Majesty's Government a very strong moral obligation to see that the provisions of the Treaty are carried out no matter what Government of the day happen to be the ruling body in Burma.
Lastly, I want to advert for a moment to a question which has been discussed already this afternoon—that of the minorities in Burma. It so happens that the minorities are those who have contributed most towards the profit and glory and the general upholding of the British race in Asia. I know well enough that the whole of Asia is at the moment a seething melting pot. Sad events in India to-day are only a symptom. You will find in Burma, though for slightly different causes, exactly the same unrest and upheaval. You find it in Indonesia, in Siam, in Indo-China and in China itself. I hope that it will be fully realized that the minorities in Burma are no more Burmese than your Lordships are. Indeed, they call themselves, as I understand it, "that" which means "stranger" or "foreigner." I do not believe for one single second that any measures taken by His Majesty's Government to determine the opinions of these people are worth a tuppeny ha'penny (if I may say so in your Lordships' House) damn. These are hill people; they are, for the most part, illiterate. I say so with great respect because I have seen, though I no longer see, my friend Saohpalong of

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Yaunghwe, who is a very different man from most of his countrymen. I do not believe that the whole people, particularly those of the Shan States, and the Karens, who again differ on religious grounds in that they are mostly Christians, had any idea what they were being asked to undertake. Their leaders saw a certain advantage, and advantage it may well be; that I am not discussing.
I beg of the Government: Do not run away with the idea that you have the good will of the people. Do not pretend that this is going to be a democracy run on Western lines. If you think that, then I am afraid there will be a harvest of terrorism, rape, murder and bloodshed. So long as you are aware of that danger it is all right. I conclude by saying that I believe this Bill for the Independence of Burma, and the Treaty that is concerned with it, is necessary. But let us not enter into this with any false ideas. Necessary it is, and let us only hope that the good will which undoubtedly has been established by His Majesty's Government will see Burma through to a happier and to a more settled age. Let us remember that she is torn by war, torn by faction, and can be helped only by the understanding wisdom of this country, and not by the foisting of temporary political doctrines, which sit uneasily on the Eastern mind, upon her.
5.38 p.m.
THE EARL OF SELBORNE: My Lords, I should not have troubled your Lordships at all had not it been for the paean of rejoicing that was uttered by the noble Viscount, Lord Samuel, this afternoon at the progressive disruption of the British Empire. I feel that that at any rate calls for some protest from these Benches. I should also like to protest against the use that the noble Viscount made of the Atlantic Charter by taking one isolated sentence out of it, and, on that, building the charge, if I understood him correctly, that Mr. Churchill had signed the Atlantic Charter with his tongue in his cheek. I am quite sure that the noble Viscount would not ever make a charge of political dishonour against the Leader of the Conservative Party, against Mr. Churchill. Although I have not a copy of the Atlantic Charter before me, I can assure the noble Viscount that Mr. Churchill was well aware of that type
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of use that might be made of the Atlantic Charter, and has, on more than one occasion, pointed out that the position of the British Empire and the existence of other empires also are fully safeguarded in the Atlantic Charter itself.
It is quite possible to indulge in a great deal of loose thinking and loose talk about self-determination and self-government, and the rest of it. I used to think that no great harm was done by people talking nonsense and thinking loosely; but it seems to me now that an enormous amount of human misery has been caused by the democracies of this country and of America absorbing ill-thought-out doctrines, erecting them into dogmas of universal application and applying them in circumstances which have resulted in appalling human misery, the like of which most of us never expected to live to see. I say to the noble Viscount, and to noble Lords opposite, that I am not ashamed of the British Empire, I am not ashamed of the record of the British Empire, and I am not ashamed of being an Imperialist. I think that the work that the British Empire has done has been enormously to the benefit of mankind. It has been one of the greatest agencies for good. In the conquest and annexation of backward nations it has been one of the greatest agencies in human progress in modern times.
The ethics of government are not so simple as one would believe from listening to speeches such as that of the noble Viscount. I suppose we should all agree that government by consent is the ideal to be aimed at, but it is absolute nonsense to pretend that government by force is not necessary in practically all States, and it is very difficult in a great many cases to draw the line between what is government by consent and government by force. The element of force has to enter into all government, and the element of consent has to enter into all government. To say that one government is a government by consent and another government is a government by force is not so easy as one would imagine from the doctrines we have been listening to this afternoon. These matters cannot be dealt with by wide generalizations.
To lump together the independence of America in 1786, the grant of self-government to the Transvaal, and the Irish Treaty, and to treat them all as analogous

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and similar events, and above all to compare them to Bills like this Bill or to events in India, is to compare a whole series of historical incidents, all occurring in totally different circumstances, about which there is no real comparison at all. The quarrel in 1786 was between two branches of the British race on the question of taxation without representation. 1906 was a gamble by the Liberal Government which turned out successfully, as gambles sometimes do; and no doubt it must have been a matter of extreme surprise to the noble Viscount, which he has never been able to get over, that the Liberal Government turned out to be right. At any rate, the fact appears to have made a very deep impression on his mind. As to 1920 and the Irish Treaty, if noble Lords are proud of that, I can only say I do not share their opinion. I do not believe it has brought any benefit to Ireland. It weakened us to the point of extreme danger in the last war, and caused the loss of the lives of many thousands of British seamen. If it had not been for the loyalty of Ulster we might well have lost the war. Ulster provided us with the essential base that we required to enable us to conduct operations.
I do not desire to go into these matters at length. I am merely protesting against statesmen of the experience and position of the noble Viscount citing that sort of case as an argument in favour of what the Government are doing in Burma. When we come to Burma, I quite agree that the position is entirely different from what is was in India—entirely different. But, nevertheless, it does seem to me to be very doubtful whether the area that we know as Burma can be considered to be the habitation of a homogeneous race. Those who are intimately acquainted with the country tell us that the difference between the hill tribes and the Burmese is profound, and I do not think you can argue in the least that the Karens and the Shans and the other hill races are in any sense Burmese. Therefore, one question which inevitably arises is: What moral right have we got to hand these people over from the Government of the British Empire to the Government of the Burmese?
My Lords, it is no good disguising the fact that when we conquered Burma we rescued the people from an appalling tyranny, and, so far from inflicting a
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deprivation of liberty on the Burmese people in 1886, we conferred the utmost boon upon them. We brought them a degree of individual liberty, justice and prosperity that they simply had not dreamed of before. In my view, personal liberty is far more important than political liberty. In fact, you cannot enjoy any form of political liberty, as we know it, until personal liberty is first secured. My complaint against noble Lords opposite, and against the leader of the Liberal Party, is that they are always pretending that political liberty can be enjoyed by countries where they know perfectly well that personal liberty will not remain once the Union Jack is. withdrawn.
I doubt very much if the Secretary of State will be able to give the assurances for which Lord Stanley of Alderley asked. I cannot speak with first-hand knowledge, but I shall be very much surprised if Burma, in a very few years, does not relapse into the same sort of chaos as that in which we found the country when we annexed it sixty years ago; and if that occurs, or anything like it occurs, who will have benefited? The self-satisfied Liberal and Socialist politician will be able to point to himself with pride and say: "I have observed all the dogmas of my creed." But In that country blood will run as it has not run in our generation. Injustice and misery will replace order and peace, the poor will suffer and the weak will go down. And you, my Lords, will be responsible.
5.50 p.m.
THE MARQUESS OF SALISBURY: My Lords, in the few remarks which I intend to make this evening, I am not proposing to go into the details either of the Bill or of the Burmese Constitution. Those matters have been already dealt with by my noble friend the Earl of Munster and by other speakers. They have asked a number of questions, and I hope that they will get answers to those questions from the noble Earl who is going to reply for the Government. My purpose in speaking is a simpler one. I rise merely to sum up, so far as I can, the main issues before the House, and to give advice, so far as that is needed, to those who sit on these Benches, as to the course which we should adopt about this Bill.
I propose, if I may, to speak quite frankly, but, I trust, in no offensive

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spirit. The debate which we have just had upon the Burma Independence Bill I can only describe as being, to my mind, in one respect, one of the saddest that it has ever been my fortune to hear since I came to your Lordships' House, for it marks the end of a connexion between Britain and Burma which, I think, is universally recognized in all parts of this House to have been fruitful for both countries. What is more, no one, so far as I can see—and I have listened to the whole of this debate—in any part of the House, believes in his heart of hearts that the severance of this British connexion, with No 1ntermediate stages, will be of benefit to the Burmese people themselves. We are told that it will provide them not only with independence but with a Constitution based on the model of Western democracy. But I do not think that anyone really supposes that, at their present stage of development, the Burmese people after the dislocation of the war, quite apart from everything else, will be fit to operate a Constitution based upon the principles of Western democracy, which is, of all forms of government, the most difficult to work, and which requires not only long political experience but a wide measure of wisdom and tolerance and a basic homogeneity among all sections of the community.
The noble Earl, Lord Listowel, in his opening speech seemed to imagine—I hope that I am not misinterpreting him—that it was merely a question of setting up the proper machinery. But it is not a question of machinery at all; it is a question of inherited experience, and inherited experience is a plant of very slow growth. No doubt it is the ultimate aim of our policy to train the less politically advanced peoples, the peoples with little experience of Parliamentary institutions, to take up the full responsibilities of government. That, I think, is common ground in all Parties. We regard ourselves not as the exploiters of these peoples but, as the noble Earl himself said in his speech, as trustees for them. That policy of trusteeship which was, I think, originally propounded by Edmund Burke, over 150 years ago, has been universally admitted to be one of the greatest contributions which Britain has made to the history of the world.
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But what the noble Earl, Lord Listowel, did not say is this: that the essence of trusteeship—and I say this particularly also to the noble Viscount, Lord Samuel—is not altered in any respect by the Atlantic Charter. The essence of trusteeship is that the trustee must continue to exercise responsibility over the affairs of his ward until that ward reaches maturity. That is the well-known basis of trusteeship. Were a trustee to abandon his responsibilities too soon, he would be a bad trustee, and the fact that the ward had himself demanded full control of his own affairs before he was in reality ready to exercise it would not be regarded by the Courts or by anyone else as an adequate excuse for such a dereliction of his duties on the part of the trustee. The noble Viscount, Lord Samuel, I know, will not accept that view.
VISCOUNT SAMUEL: In general I would.
THE MARQUESS OF SALISBURY: But not in any particular case that might arise.
VISCOUNT SAMUEL: It depends upon what you mean by maturity. I certainly would say that certain primitive people, in the African Colonies, for instance, would be greatly advantaged by the continuance of British rule. I have said as much on a number of occasions. The question here is whether people like the Indians or the Burmese are still to be regarded as wards when they themselves claim to be adults.
THE MARQUESS OF SALISBURY: My Lords, I would absolutely agree with the noble Viscount that all these matters are matters, of opinion, and matters of pace and of development. They are matters upon which everyone can argue. And, furthermore, these are matters on which a trustee must take his own view—on which he must have a view. Now the view of everyone in both Houses of Parliament has been shown to be that this will not react to the advantage of the Burmese people. All who have spoken have said how sorry they were about it, how much they regretted it, how much better it would have been if the connexion with Britain could have gone on. That is the view of a trustee, and that is the point I am making. We are going against our view as trustee, the view expressed by the representatives of every Party in the

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State. The noble Viscount, Lord Samuel, I sometimes feel, really hates the Empire.
Viscount SAMUEL.The noble Marquess really must not say that, because I have written and spoken on these subjects for pretty nearly fifty years and I have never expressed any view in the slightest degree like that. I am not in the least an adherent of the Little England school. There were Liberals of the nineteenth century who would have rejoiced over the dissolution of the British Empire, who thought that it was of no value. I have never taken that view in the past, and I do not take it now.
THE MARQUESS OF SALISBURY: If the noble Viscount says that, then I immediately withdraw, for I certainly do not wish to misrepresent him. The fact remains that I have heard speeches made by the noble Viscount at the time that the connexion of India with Britain was severed and now at the time when Burma is leaving the Empire, and in each case he has appeared to rejoice.
VISCOUNT SAMUEL: No, no.
THE MARQUESS OF SALISBURY: That is a matter of opinion. I think that anyone on these Benches would have got that impression from the noble Viscount's speeches.
VISCOUNT SAMUEL: I said to-day that I have much regretted—and in this I agreed with the noble Earl, Lord Munster—that the Burmese should have decided to separate from the Commonwealth. I have said that previously in a debate on Burma. That was the view that I expressed in the clearest possible terms. I said it was not merely in our own interest, but. even less in our interest than in theirs, and that it was in the interest of world affairs that they should remain within the Commonwealth. I said that I thought they were making a mistake, and that in my view a Commonwealth like ours in which the parts enjoy complete liberty is of great service to mankind.
THE MARQUESS OF SALISBURY: I am very glad to have secured that statement of his views from the noble Viscount and to say how sorry I am if I misrepresented him, because that was not my purpose. But there are many of us in all Parties—and I am very delighted to find that the noble Viscount belongs
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to this school of thought—who are very proud of the record of this country and believe we can still help by our guidance and control to lead other people forward to the higher standards of liberty we enjoy ourselves, whether it be in Burma or elsewhere. Can anyone say with absolute confidence, with their hands on their hearts, that the Burmese people, as has been pointed out this afternoon not by one but by many, have reached the stage when they can afford to discard our helping hand? Nobody has really attempted to do that, either in this House or another place.
What, after all, is the history of our connexion with Burma? Why did we go there and what is our record of achievement? I cannot do better, I think, than quote what the Prime Minister himself said in the speech he made in introducing this Bill in another place. This is what he said:
"Our earliest connexions with Burma derive from the activities of the East India Company. Burma at that time was a kingdom, and a very disturbed and troubled country; and, except for a short period, our relations with the rulers of Burma were difficult. Eventually, as the House knows, the whole country was annexed in 1886. Effective British rule over the whole of Burma has lasted just over sixty years. We came to a country that had suffered horn gross misrule, and under British rule much progress was made—moral, material and in every respect."
That is what he said, and very much the same thing was said in different words by the Secretary of State in the speech he made this afternoon. In fact we, the British, went to Burma to give ordered government to a country which was not able to provide ordered government for itself. And what reason is there to suppose that in the short space of sixty years, a mere passage in the history of a country, the Burmese character has so altered and developed mat it can be regarded as fit to exercise the full responsibility inherent in independence? I know of no reason.
It is very easy for us to muffle the hard facts by high-sounding phrases, to talk about freedom and independence as if they were exactly the same thing, but, as the noble Earl, Lord Selborne, pointed out, they are not necessarily the same thing, and it is not the slightest use bluffing ourselves that they are. What do we in this country mean by freedom? I can only give a definition, but I think it will be acceptable to everybody in

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every quarter of the House. We mean freedom for the individual citizen to say what he wills, to do what he wills, to think what he wills, within those essential limits imposed by the security of the community as a whole. We mean equal justice for rich and poor. We mean all those things comprehended in the phrase, the basic liberties of a people. Those are the rights which are enjoyed to-day in all British territories by all subjects of the King to whatever race, religion, or colour they belong. But those rights, those essential freedoms, are lamentably absent in many nations nominally independent, however admirable in theory their written Constitutions may be. I do not think I need mention them to-day. Your Lordships will all be aware of a good many, even in Europe.
What guarantee have we, I was going almost to say what likelihood have we, that those essential rights and freedoms will be preserved in an independent Burma which has within the last few-months already assassinated one Prime Minister and attempted to assassinate his successor? What reason have we to suppose, if we face up to hard facts, that Burma will not slip back into her old bad ways? We have seen what happened in India. In a few short months over a considerable part of that country the whole structure of law and order, which has been built up with so much care and trouble over a hundred years, has crumbled into ruin. Already millions of people have been delivered over to murder and rapine. Vast communities, as we know from our daily papers, are to-day drifting helplessly hither and thither in misery and terror. With that horrible example before them—for it is a horrible example—how can the supporters of the Government any longer hug their comfortable illusions? How can they run the risk of abandoning the people of another land, if not to the same fate, to a possible fate in some way similar? We were told this afternoon that independence represents the united will of the Burmese people. But after sixty years of the comfortable protection of British rule, is it certain that these people realize what may be in store for them? Is it not indeed, as in India, a limited category of politicians rather than the people who are the real protagonists
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of independence? And are these politicians, who are admittedly ambitious and who have, perhaps, not all of them quite the same high standard of public duty as we are accustomed to in this country—I do not want to put it higher than that—the men who can be trusted to operate the delicate and complex machine of democracy in the interests of their fellow citizens?
Not only the Burmese, but the world aspect must be considered. Burma is a country with great natural riches, militarily weak and surrounded by great and powerful neighbours. If she is thrown on her own resources, is that a situation which is likely to lead to greater stability throughout the Far East? That is an aspect no doubt unlikely at the present moment in the first flush of their enthusiasm to give pause to the politicians in Burma, but is it one from which we, in this country, can afford to dissociate ourselves? It is true, as the noble Lord, Lord Pethick-Lawrence, said this afternoon, that membership of the British Commonwealth did not prevent the invasion of Burma in the last war, but surely it would give an aggressor pause, or greater pause, if it meant that in invading Burma she was going against the whole might of the British Commonwealth. It will surely make a difference whether an aggressor has the British Commowealth up against her or merely this little, weak, distracted country. As your Lordships know, a world war can start in Asia equally well as in Europe, and there is no more fruitful cause for trouble than the small, weak, rich, independent country. Those are the preoccupations which are troubling us on this side, and I am sure none of the noble Lords opposite would say they are unworthy of our preoccupation.
I must confess that I have been rather appalled by the light-heartedness with which supporters of the Government—I do not mean in this House but rather in another place, where I do not think the debate maintained such a high level as it did here—seemed ready to abandon those in Burma for whom we have a moral responsibility. We have seen the result of our departure from India, but they seem to have learnt nothing and abandoned nothing of their unreasoning optimism. Any of your Lordships who are familiar with Voltaire's Candide will remember the eminent Dr. Pangloss who,

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while he passed from disaster to disaster, continued to murmur to himself, "All is for the best in this best of all possible worlds." I cannot help thinking that that is painfully reminiscent of the attitude of those who spoke for the Government in another place. I could not, if I may say so with all deference to him, help feeling slightly reminded of it from a large part of the Secretary of State's speech to-day. We were told by the noble Earl that this Bill was to usher in a new era of progress. To us it seems only too likely to lead to great further retrogression in the affairs of Asia. We gravely fear that much, if not all, that has been gained by sixty years of British trusteeship is to be needlessly and recklessly cast away.
Nor do British interests, which, after all, have contributed so much to the prosperity of Burma, fare any better under this Bill. There is uncertainty as to the future of minorities. I should have thought the welfare of minorities was a vital British interest. Then there is uncertainty, as I understand, as to the basis of the compensation which is to be paid to British concerns which are taken over by the Burmese Government. We were told by the Secretary of State this afternoon that it would be "equitable." I should like to have a little more accurate definition of what that term means. Who decides what is equitable, and what is not? No one seems to know. I should be glad if the noble Earl would tell us a little more about that when he comes to reply. Then there is uncertainty as to the compensation to be paid to members of the non-Secretary of State Services. As I understand it, they are to have their proportionate pension—which they would have been entitled to in any case, whether we left Burma or not—but no compensation, although they will, in effect, be deprived of their employment at an age when it is very often difficult for them to find any other.
I do not believe it is on such a basis of uncertainty between Burmese and British that further fruitful collaboration between the two countries can easily be hoped for. I recognize, and I suppose we all do, the complete sincerity of those who take a contrary view to ourselves. I do not want this afternoon in any way to question that sincerity, but I have a suspicion that subconsciously, if not consciously, some of them, at any rate, are
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not so much concerned to give independence to Burma as to rid this country of an inconvenient burden at an inconvenient time.
No doubt in saying what I have said to-day I shall be accused by some people of speaking in an improper and even a mischievous manner. I thought there was a great deal of nonsense of that kind talked during the debate in another place. Since when in this country has it become bad form to speak the truth as we see it? I believe we should be wanting in a true sense of public duty if we had not tried to face the House with the grim realities of the situation. I think it must be obvious to everybody that, feeling as we do we cannot support this Bill. To us it is a Bill that does not enshrine a policy based on a realistic consideration of the mutual interests of Britain and Burma. It is a policy based on the line of least resistance. It is a policy, as I think the noble Lord, Lord Stanley, said earlier in the debate, of hoping for the best. If we do not definitely vote against this Bill, it is only because we have never opposed, and we do not oppose now, in any way the general principle of a steady advance towards full self-government on the part of territories which are under the British Crown. Our complaint against this Bill is, in fact, not that it is wrong in principle—we do not think it is—but that it is so premature that it will not conduce to the happiness, to the prosperity or, in the truest sense of the word, to the freedom of the people of Burma. After all, we took, I think, close upon 700 years to fit ourselves for democracy as we know it to-day. How is it to be expected that the Burmese people can achieve the same results in sixty years? It surely would have been wiser and better to have proceeded by more gradual stages.
We may be wrong in our anxiety and prognostication, and if we are I am quite certain that no one will be better pleased than we shall be. To prove us wrong is the responsibility of the Burmese people themselves, and of the Burmese leaders, and it is a very heavy one. But we are deeply apprehensive and, holding the views which we do hold, we can only dissociate ourselves entirely both from this Bill and from the consequences which we feel are likely to flow from it. The Government who have decided, rightly or

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wrongly, on this course must take the full responsibility for their actions. One can only pray that their experience will be happier than in the case of India, of whose future so few months ago we had an equally rosy picture painted, and whose agony we are witnessing to-day. As I have said, to us at the present juncture this Bill represents the wrong course, and I believe it is a course which this country will regret.
In conclusion, I would remind the House, if I may, of certain extremely statesmanlike words which were spoken by the noble Viscount, Lord Samuel, in your Lordships' House in 1943 in regard to India. It was a debate that took place on April 6 of that year. I will not make a long quotation, but I hope I shall give fairly a sense of the whole passage. The noble Viscount said:
"In Professor Coupland's book Mr. Gandhi is quoted as saying on May 24, 1942:
'Leave India in God's hands, in modern parlance, to anarchy, and that anarchy may lead to internecine warfare for a time, or to unrestricted dacoities. From these a true India will rise in place of the false one we see.'"
That is the quotation from Mr. Gandhi, on which the noble Viscount comments:
"That is not democracy. Democracy stands for good government, orderly government, strong government, and so far as British Liberals are concerned we would not consent, in the supposed name of liberty, to Britain marching out of India in order that chaos may rush in, with confusion, riots, civil war, and economic collapse. For that to be the end of 200 years of beneficent. constructive, and pacific British activity in India would be an ignominious ending indeed. It would hold this country up to the scorn of our contemporaries and to the just censure of posterity in this country, in India and all over the world."
That is a very fine passage, and I agree with every word of it. It is for that reason that we are unable to do other in respect of this Bill than dissociate ourselves from all support for it to-day. We believe that we are marching out. We believe that that is contrary to the greatest principles of democracy, and we cannot, with the best will in the world, be associated with it.
6.10 p.m.
THE EARL OF LISTOWEL: My Lords, I think the House will agree that we have had a debate that has been fully worthy of a great occasion. Whether it has been
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a sad or a fortunate occasion is no doubt a matter of opinion, and there will be difference of opinion. But I am sure that everyone will agree that it has been a great occasion. What struck me almost more forcibly than anything else in listening to the speeches was the keen sense of responsibility for the welfare of Burma that lay behind the words of every speaker, whatever view he may have expressed. It surely is this sense of personal responsibility for the welfare of the peoples of the British Commonwealth that has built up and is keeping alive the Parliamentary tradition which has made our Parliament so worthy an heir of the founders of the British Commonwealth in times past. What I shall try to do in my few remarks will be to answer some of the questions which were put by noble Lords in the course of their speeches. I hope that those noble Lords who did not give me information in advance about the points they intended to raise will not be disappointed if I am unable to deal at such length with their questions as I shall endeavour to deal with the questions of which I had advance information.
I heard from the noble Earl, Lord Munster—and I am grateful to him for informing me in advance—that he was going to raise a number of points in the course of his speech which he would like answered at the end of the debate. I will endeavour to deal with as many of those points as I can. In the first place, the noble Earl challenged the validity of the Constituent Assembly. Of course it was the Constituent Assembly who decided that Burma was to leave the Commonwealth. The noble Earl said that it was based upon an election which did not represent the popular will. I have eneavoured to obtain figures about the percentage of the votes registered at the election, and my figure does not altogether tally with the figure given by the noble Earl. I have been given the figure of 49 per cent. of the total electorate as having cast their vote at the polls, whereas the noble Earl gave a figure of 43 per cent. I am not worrying about that, but I think the important thing is to compare this percentage with the percentage of votes cast at elections before the war. I do not think the noble Earl or anybody else has challenged the validity of elections in Burma under the 1935 Constitution.

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There was a pre-war average of 50.2 per cent.—that is to say, 1.2 per cent. greater than the figure of the electorate registering its vote in the election in April.
VISCOUNT SAMUEL: Can the noble Earl say what seats were uncontested? That was an important point made by the noble Lord, Lord Pethick-Lawrence.
THE EARL OF LISTOWEL: I cannot answer that question off-hand, I am afraid. I, of course, endorse what the noble Lord said on that head. A number of seats were uncontested and there were a considerable number of walkovers. That ought not to suggest that the electors in those constituencies were apathetic or hostile to the Government. Certainly a number of those uncontested seats were carried by supporters of the present Government, so that the number of people behind the Government is very much larger than the percentage which is registered as having voted at the election. Of course, the majority of that percentage went to the Government supporters. When it is remembered that the elections in April were held for the first time on a basis of universal adult suffrage, with an electorate of nearly 7,000,000, I do not think it can reasonably be contended that the result is not representative, or that the Constituent Assembly does not reflect the feeling in Burma as a whole. That was an extremely important point put by the noble Earl, and I would answer his other points without arranging them in order of importance.
THE EARL OF MUNSTER: If I may interrupt the noble Earl, may I say that I am grateful to him for correcting my figure from 43 per cent. to 49 per cent.? In point of fact, the 43 per cent. was a figure used by his own representative in another place, and I should have thought that that figure would have been good enough for the noble Earl.
THE EARL OF LISTOWEL: I will certainly look into that, although I think there may possibly have been some misunderstanding. The noble Earl asked whether I could say anything about the negotiations between the Irrawaddy Flotilla Company and the Government of Burma. I am afraid that I am not in a position to do so. Any discussions that have taken place have occurred direct between the representatives of the company and the Government of Burma and
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I have not been informed as to what has transpired. There is certainly no final outcome to the discussions.
The noble Earl also asked about the position of the very substantial Indian minority in Burma. I can assure him that I took pains to meet the members of the Indian community when I was in Rangoon. I ascertained their views and found that they were hopeful about their future in the new State of Burma. With regard to the representation of these Indians, of course Indians in Burma have hitherto been recognized as a statutory minority with reserved seats in the Legislature. At the same time, the Government of India and their representative in Burma have frequently made representations to the Government of Burma on their behalf. Now that Burma is becoming a foreign country it would be very difficult to argue that this double position should continue. I notice that Pandit Nehru, the Prime Minister of India, said in a speech in the Council of State in February last with regard to Burma, among other countries, that Indians would "have to choose whether they are Indian nationals or not. They cannot have it both ways." I would like to add that the Government of Burma recently issued an announcement promising fair opportunities to Burman citizens of Indian race to obtain a fair share of appointments in the public services. So far as I know, there has been no pressure from Indians in Burma on the Government of Burma for a special reservation of seats in the new Legislature. Of course, in so far as they become citizens of Burma they will be eligible to stand as candidates for the Burmese Legislature. That will have to depend upon the extent to which they feel it is in their interests to throw in their lot with Burma.
The noble Earl also referred to the Defence Agreement in the Treaty, and said that in the case of volunteers for our Military Mission not being forthcoming, the Burmese would then be in a position to ask immediately for a Mission from some foreign country. I am glad to be able to inform him that that is not the case. The agreement in the Treaty provides only that the parties will reexamine the matter in the light of what has happened. I think I can give the noble Earl the exact passage in the Annex

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to the Treaty. It is on page 9 and reads as follows:
"In the event of the United Kingdom being unable to provide a Mission capable of carrying out its task effectively, I agree with you that a new situation would arise and both parties could properly re-examine the matter in the light of Clause 9."
That is signed by the Chairman of the Mission.
LORD STANLEY OF ALDERLEY: Could the noble Earl tell us whether, under the Treaty, it would be possible for the Government of Eire to send a military mission to Burma, with whom they now have a certain kindred affinity?
THE EARL OF LISTOWEL: Certainly, if Burma is willing to accept missions from members of the British Commonwealth.
LORD STANLEY OF ALDERLEY: That includes the Government of Eire?
THE EARL OF LISTOWEL: Certainly. I am merely interpreting the legal construction of the Treaty. The noble Lord also raised a point about compensation payable to British business interests in the event of nationalization. I think there are two stages. In the first place there is the principle that is laid down in the Constitution on nationalization. In the second place there would have to be legislation, passed through both Chambers of the Burmese Legislature, before any scheme became operative. I think the noble Lord will find it is provided for in the exchange of notes in the Treaty, that if such a scheme of nationalization does become operative and affects a British firm, that British firm will be equitably compensated. After all, that is all we are asking in this country for firms that are nationalized. I do not think that anyone is asking for any treatment other than equitable compensation.
LORD STANLEY OF ALDERLEY: Do they get it?
THE EARL OF LISTOWEL: I am not on that point. If it is fair in this country it is surely no less fair in Burma
THE EARL OF MUNSTER: Who is the judge?
THE EARL OF LISTOWEL: I am coming to that.
VISCOUNT SWINTON: If it is challenged that compensation is not equitable, who is to interpret the Treaty—the Hague Court, the International Court, or the party who gives the compensation?
THE EARL OF LISTOWEL: I am glad the noble Viscount has raised that point because I regard it as of some importance. It was made by the noble Marquess, Lord Salisbury, and I have every intention of endeavouring to answer it. Before I pass to that point, may I finish replying to the noble Earl, the Earl of Munster? If he will be kind enough to note one sentence in my speech he will see that it covers the point about compensation. If he will allow me I will read it:
"If legislation to carry out this principle of the national life were, in the fullness of time, passed by the Parliament of Burma, and if it resulted in the expropriation, in whole or in part, of any United Kingdom firm, the Government of Burma has explicitly agreed to pay equitable compensation to any such United Kingdom interests as may be affected."
I will proceed to deal with the compensation point raised by the noble Marquess, Lord Salisbury. There, I think, the first stage would be to endeavour to obtain agreement between the two parties. If they agreed then nothing further would need to be done. But I also understand that if disagreement were to take place the Government of Burma would be willing to refer the matter to an impartial arbitral tribunal. We know from our experience in this country that there are many different devices for securing equitable compensation; and provided that there is good will, which I have no reason to doubt, such devices surely are likely to be introduced.
LORD STANLEY OF ALDERLEY: Can the noble Earl say which devices?
THE EARL OF LISTOWEL: I think I have already given your Lordships as full information as I can from my knowledge of this point.
I want to pay particular attention to the remarks made by the noble Earl on the subject of the non-Secretary of State officers in Burma, because that has aroused interest and sympathy in both Houses of Parliament. I should like to assure the noble Earl, that the non-Secretary of State services have from the outset received every sympathy from the Government. We have the utmost admiration for these loyal servants of the Government of

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Burma and we are anxious to secure that they shall be well provided for. At the time I was in Rangoon, I received a deputation representing these services so as to hear in person what they had to say. But the fact remains, they are, and always have been the servants of the Government of Burma, which recruited them for service under itself and which has always determined their emoluments and conditions of service. The Government of Burma has decided to terminate the engagements of their European officials, but to re-engage on fresh contract some twenty-five members of the Marine and Railway Departments.
Let me remind the noble Lord that I did not give an assurance, as he seems to have thought, that non-Secretary of State officers in Burma would be re-employed by the Government of Burma, and would therefore not need or receive compensation. I knew at the time I was there that the Government of Burma would dispense with the services of a number of these officials. Under the terms granted by the Government of Burma these European officers, on the termination of their appointments, will be covered by the undertaking of the Government of Burma in Article 5 of the Treaty—here again, I think the noble Earl has misconstrued the Treaty, because he thought they were excluded—to pay all sums payable from the revenues of Burma in virtue of all service prior to the date of the coming into force of the Treaty. They are, in fact, to be paid by the Government of Burma. Secondly, these officials are to receive the leave admissible to them from the date of the transfer of power under the existing rule. Thirdly, those to whom continued employment is not being offered are to be allowed to draw proportionate pensions. I would remind noble Lords that this privilege is one to which they are not entitled, under the terms of their engagements, and it cannot, therefore, be accepted as a matter of course. Finally, the members of the non-Secretary of State services will be able to make use of the various agencies which have been established for assisting the members of the Indian and Burma service to find suitable alternative employment.
The view was strongly expressed in the recent consideration of this matter in another place, that some further concession should be made to these officers,
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who have devoted their lives to the service of Burma, and whose work for her is now being brought to an end owing to the transfer of power. The views expressed on that occasion have been passed on to the Government of Burma who are, I know, considering this matter. I am confident that in reaching their decision they will give the fullest weight to the views which have been expressed in the course of the debate to-day by the noble Earl, and by other speakers. I need not say that I will make sure that these views are communicated to them immediately. I hope to be able to make a statement in the light of this further consideration by the Government of Burma on the Committee stage of the Bill.
I should like to pass on to make one general observation about the British business community in Burma. There are several noble Lords who have expressed anxiety about their attitude towards this important political change. I think the noble Lord, Lord Stanley of Alderley, was particularly concerned about the future of British property owners in Burma. On November 6 the leaders of the British commercial community in Burma sent a letter to the English and vernacular Press in Rangoon in the following terms:
"On the passage of the Burma Independence Bill by a large majority through the House of Commons, the Burma Chamber of Commerce and the Burma British Association"—
which include between them the great majority of British residents in Burma—
"wish to congratulate the people of Burma and their Government. The British community has watched Burma's swift passage to complete independence with sympathy and in particular welcomes and reciprocates the many assurances of continued friendship with Britain which have been made by responsible Burmese leaders. We all admired U Aung San's heroic and successful efforts in the cause of Burma's freedom and unity, and we shared the universal horror at the tragic assassination on July 19."
I would like to pass from that to the point raised by the noble Lord, Lord Rankeillour, which centred round the provisions in the Constitution for the protection of the minorities in Burma. The noble Lord asked first of all what I meant by the possibility of a Karen State being added to the existing States—which, as the noble Lord is well aware, are three in number—and in what way it comes into being. May I draw the noble Lord's attention to Clause 180 of the Constitution

919
because I think that that clause puts the position about the future potential Karen State much more clearly than I can? The noble Lord will there see that subsection (1), which is the important one in this connexion, reads as follows:
"The following areas, viz., (a) the Karenni State, (b) the Salween District, and (c) such adjacent areas occupied by the Karens as may be determined by a Special Commission"—
that is, a boundary commission—
"to be appointed by the President shall, if the majority of the people of these three areas and of the Karens living in Burma outside these areas so desire, form a constituent unit of the Union of Burma to be known as the Karen State, which shall thereupon have the same status as the Shan State."
So that, if a majority of the Karens change their minds—at the moment they are satisfied with the present arrangements that have been made and with their place in the Constitution of Burma—then the Constitution enables them to have a separate Karen State.
LORD RANKEILLOUR: It will have to be adjacent. I take it, to the already proposed Karen State. It cannot be detached as another part of Burma?
THE EARL OF LISTOWEL: The Karens are a fairly homogeneous community, as the noble Lord knows, and I think the object of this is to cover all the Karen majority districts in Burma; and the Karen majority districts are, generally speaking, contiguous. The second point raised by the noble Lord was in regard to citizenship. I do not think it is correct of the noble Lord to suggest—and it is undesirable to do so—that the effect of the provisions of Clause 11 of the Constitution regarding citizenship is theoretically capable of being nullified by Clause 12, which gives the Legislature the right to deprive people of citizenship. Every sovereign State must be free to amend and alter its nationality laws as it thinks fit. We certainly claim that right. We are introducing a Bill to alter our nationality laws, and I think we must allow the same right to Burma. Supposing we did not, the Government of Burma would be unable to carry out their undertakings under' Article 3 of the Treaty, under which, as a result of a declaration of alienage, a person can get rid of his Burmese nationality in order to retain his British nationality and be subject to British protection. So in the event, it is
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an advantage from our point of view that they should be able to manage their own nationality laws and arrangements.
LORD RANKEILLOUR: It is quite indeterminate in respect of time. Under this provision they might in the future deprive of citizenship any class whatever whom they chose to define. It may not be likely, but it is surely possible.
THE EARL OF LISTOWEL: Theoretically, in all these things a sovereign State can do as it likes, but, provided you have good will, it is not likely to happen. The same thing applies surely in this country, where you could deprive citizens of Scotland of their nationality.
VISCOUNT SWINTON: You very nearly have!
THE EARL OF LISTOWEL: The third point raised by the noble Lord is also an extremely important one from the point of view of the fair working of the Constitution. The noble Lord contended that people of Burmese race and extraction ought always to be able to command the two-thirds majority in a joint sitting of the two Chambers required for an amendment of the Constitution. I do not think that that assumption is really accurate and borne out by the facts. While in the Chamber of Nationalities, the Upper House, there will be no more than 53 Burmese members out of a total membership of 125—the noble Lord will remember that the other races predominate in that Chamber—the size of the Lower House has not yet been firmly decided, although it is likely to have about 250 members. I cannot say precisely how many will be non-Burmese until the constituencies have been determined, but it is probable that they will reflect the population ratio. There will be about 74 non-Burmese members. In a joint sitting of the two Chambers, therefore, non-Burmese would comprise about 146 out of 325, which, of course, is considerably more than one-third of the total membership.
LORD RANKEILLOUR: The population of the Burmans on the latest statistics, which are very old, I admit, was 9,000,000, and the total of all the others was something between 2,000,000 and 3,000,000 only.
THE EARL OF LISTOWEL: I can assure the noble Lord that this is as accurate a statement as I can get, and my forecast is based on reliable figures. The next point of the noble Lord was with reference to the position of these minority races, and whether they could not be deprived of their constitutional rights by a vote of the Legislature—the two Chambers in joint session. The constitutional position of the Shan, Kachin and Karenni States, and the special rights of the other Karens and the Chins, are also safeguarded, apart from the two-thirds majority rule, by subsections (4) and (5) of Clause 209. The effect of these safeguards is that the Constitution cannot be changed to the detriment of these minorities without the consent in the shape of a recorded vote of a majority in both Chambers of the representatives of any minority affected by a proposed change.
LORD STANLEY OF ALDERLEY: That means any one minority. If there were a difference between Kachins, Shans and Karens, any one of those would have to have a majority in the Chamber of Nationalities: am I right in understanding that?
THE EARL OF LISTOWEL: I do not think that that is precisely the point.
LORD STANLEY OF ALDERLEY: It is an important point.
THE EARL OF LISTOWEL: The point is that, if the Shan or Kachin or Karenni States are to have their rights curtailed, each of those States can decide for itself whether or not it wishes those rights to be removed. It cannot be deprived, for instance, by a simple majority vote, of the subjects on which it can legislate.
LORD RANKEILLOUR: But the words "special rights" would not apply to the scattered Karens in the plains.
THE EARL OF LISTOWEL: They also have their safeguard.
LORD RANKEILLOUR: That is, general rights?
THE EARL OF LISTOWEL: Yes. I hope that the noble Lord will look rather closely at what I said in my opening speech. Let me say that no one respects the views and the conviction of the noble Lord opposite more than I do. Although
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I differ from him, I do realize that his criticisms have always been prompted by the keenest desire for the welfare of these minorities in Burma.
Before I conclude, I should like to say something on two other subjects. Several noble Lords referred to the late Prime Minister of Burma, U Aung San. Of course, I realize as clearly as anyone that different opinions are held, and quite legitimately held, about his personality. But I should like to say something about him because I am sure that the veneration and esteem with which his memory is cherished in Burma has not been generally realized in this country. Whatever our own views may be, it is useful for us to understand the Burmese point of view. I am certain, for my part, that, once his significance to Burma has been rightly understood, the courtesy and respect for the feelings of others which we all share will restrain any expression of opinion, either in Parliament or elsewhere, that might be wounding to the sentiments of the people of Burma.
A public figure, wherever he may live, will be judged differently according to the scales in which he is weighed. He will be rated in one way by his opponents, in another by the impartial historian, and in yet another by his friends and those he loved. I believe I understood something of what the people of Burma feel about the leader they have so recently lost, as I watched the endless file of simple peasants and townsfolk bow their heads before the draped catafalque when; he lay in state in the Jubilee Hall in Rangoon. They felt that he had been a man of rare character, who had served them better than they had ever been served by their fellow countrymen before. Their silent homage was a tribute to the personality of their leader, his unique example of patriotism, and his sacrifice of himself in the common cause.
There is, moreover, an awareness among thinking people with a wider background of the magnitude of Aung San's historical achievement, and a consciousness of the immense debt which generations of Burmans will owe to his statesmanship and courage. For in less than a year he welded the five peoples of Upper and Lower Burma, whom the British administration had always kept apart on account of their extreme diversity, into a single united nation. He had also led

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Burma to the threshold of full nationhood after more than half a century of dependence. His tenacity of purpose had obtained through patient negotiation an agreed settlement of the independence issue. This agreement must have saved thousands of lives that would otherwise have been lost in the strife and bloodshed of a violent upheaval. It is for these reasons—and my noble friend, Lord Pethick-Lawrence, has testified to his patience as a negotiator—that Aung San is revered as a national hero in Burma, where his name will ever be held in honour by the Burmans in the way that the Italians honour their Garibaldi, the Americans their George Washington, or the French their Joan of Are. I say that only in order that there may be a better appreciation of the feelings of Burma towards their late leader.
Finally, my Lords, there were several noble Lords whose real opposition to the Bill was their doubt as to what would happen in Burma in the next two years. The noble Lord, Lord Selborne, seemed to expect Burma to relapse into anarchy. The noble Lord, Lord Stanley, had doubts about the stability of Burma in the immediate future, and I should like to say something that I think is rather encouraging for him in regard to what has taken place in the law and order situation in Burma in the last few months. Thanks to the firm and energetic measures taken by the Government of Burma, the country is gradually quietening down. These emergency measures started in the early spring. The dacoit gangs that terrorized many villages in certain areas of the interior were broken up between March and May by Operation Flush, carried out by troops and armoured cars which dispersed the gangs and killed or captured many of their leaders.
On September 27 last the Government launched a new drive to stamp out dacoity throughout Burma. People in unlawful possession of firearms or ammunition were called upon to surrender their weapons by the middle of this month, and after November 15, the date by which the process of giving up arms was to be completed, they would become liable to the severest penalty the Courts can impose—namely, life imprisonment or death. Rewards were offered on a graduated scale for arms thus surrendered. Large
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quantities of warlike material have been collected, including several hundred machine guns, tommy guns and Sten guns, and several hundred thousand rounds of automatic ammunition. At the same time, it was announced by the Government that after October 15 persons found guilty of dacoity or armed robbery would also be punished by life imprisonment or death. The Prime Minister backed up this drive by a personal tour of the disurbed areas, and he appealed to the public to co-operate on the ground that lawlessness was the main obstacle to the rehabilitation of the country.
The result of these energetic and drastic measures has been a steady improvement in the maintenance of law and order, which is shown by a progressive decline in the number of violent crimes since these steps were taken. The average monthly figure for robberies and dacoities between May and October of this year is 1,257, and for murders 183. In October, the last month for which we have figures, there were 782 dacoities or robberies and 139 murders. These figures suggest that there has been a steady decrease of violent crime in Burma as a whole during recent months, and that the situation is better now than it has been at any time since the end of the war.
That, my Lords, is all I have to say, except to express my thanks to the majority Party for its acquiescence in the Bill. It dislikes the Bill, but it has decided not to divide against it, as I understand it. This decision will have a most excellent effect in Burma. I was asked on several occasions in Burma, "What will the House of Lords do? Will the House of Lords throw out the Bill?" and I said, "The House of Lords has a very great constitutional sense and a considerable respect for the will of the people, and I think you may be reassured." It is most important that our present relations with Burma should continue, and I think that this decision of a Chamber in which the Conservative Party has a great majority will go far to convince the Burmese that they will have the same good will and friendly relationship, whatever Government may be in power in this country.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MEDICAL PRACTITIONERS AND PHARMACISTS' BILL. [H.L.]
Amendments reported (according to Order).
  EMPIRE SOCIAL INSURANCE.
  EMPIRE SOCIAL INSURANCE.